2021 ESG Sustainability Report

Forward Looking Statements This report has been prepared by Canadian Solar Inc. (the “Company” or “Canadian Solar”) solely to facilitate the understanding of the Company’s performance and strategies on sustainability-related topics. The information contained in this report has not been independently verified. None of the Company or any of its affiliates, advisers, or representatives will be liable (in negligence or otherwise) for any losses incurred from any use of this report or its contents or otherwise arising in connection with the report.

Message from the Chief Executive and Chief Sustainability Officers Effectively navigating the risks posed by climate change, social injustices, and other, ever more pressing global issues will require continuous, proactive efforts from businesses like our own. As part of the green energy revolution, we at Canadian Solar recognize the crucial role we will play in those efforts. Our commitments to environmental sustainability, human rights, and positive social impact thus represent both our efforts to safeguard our shared future and our dedication to building long-term value for all our stakeholders. In last year’s report, we reaffirmed our longstanding commitment to reducing our environmental impact while empowering our customers to do the same. Our use of more comprehensive environmental standards has helped us deliver more energy and materially efficient products with lower carbon footprints in all stages of production, such as our BiHiKu6 and BiHiKu7 modules, unveiled in 2021. Likewise, despite expanding production output, we achieved year-on-year improvements in energy intensity, water intensity, and waste intensity in 2021 and kept increases in GHG emissions intensity within 4% even after recalculating our environmental metrics using more holistic calculation standards. Overall, we remain on track to meeting our goal of using 100% renewable energy in our operations before 2030.

Manufacturing Capacity Expansion Roadmap In 2021, we increased our level of vertical integration, ramping up manufacturing capacities of crystalline ingots, wafers, cells, and modules to 5.4 GW, 11.5 GW, 13.9 GW, and 23.9 GW, respectively. The combined production output of our manufacturing operations, once converted to a common unit in Megawatts (MW), rose by 37% year-over-year, with actual production outputs of our ingot, wafer, cell, and module operations increasing by 91%, 56%, 14%, and 40%, respectively. The increase in production scale, along with the shift to monocrystalline ingoting technology, led to higher absolute energy consumption, water withdrawal, and waste production in 2021.

Our GHG emissions are primarily driven by Category 2 (Scope 2) indirect emissions, i.e., emissions generated from the electricity purchased and other forms of imported energy used in our operations, which contributed to approximately 94% of total GHG emissions. Emissions in 2021 increased by 37% from the year 2020, mainly driven by the establishment of new production sites (+13% contribution) and increased production output in our existing factories (+24% contribution). A detailed comparison with our 2020 GHG emissions, broken down into sub-categories, can be found in the table below. Within Category 1 or Scope 1 emissions, we observed an increase in process emissions related to a new cell manufacturing process we deployed in 2021. While this translated to an approximately 2% increase in our cell process carbon intensity, this new process could also significantly improve our cell efficiency by around 0.5%, largely offsetting the additional carbon emissions from this source by reducing silicon usage per watt. Overall, we expect this new process to thereby reduce the carbon intensity of our upstream ingoting activities.

Module Carbon Footprint Improvement The CRE module carbon footprint analysis is more comprehensive than the corporate GHG emissions intensity analysis, as it also includes the indirect GHG emissions from the upstream manufacturing of raw materials, up to material mining. When we expanded our competitive low carbon footprint supply chain to include our BiHiKu6 and BiHiKu7 products in 2021, we also implemented new third party Life Cycle Assessment (LCA) analysis in our most recent production facilities in accordance with ISO14040/44:2006 environmental management standards. LCA methodology requires analysis of all stages of product manufacturing, including raw material extraction and making of materials used; transportation of raw materials and intermediate products; manufacturing of all components, including packaging, energy and water consumption, emissions, and waste, as well as infrastructure dedicated to product manufacturing.

This report was designed to highlight our ESG strategy and disclosures based on feedback from the investment community and other stakeholders. The reporting period of this report is from January 1, 2021 to December 31, 2021, unless otherwise specified. We did not seek third-party verification for this report. However, the data collection and calculation of our greenhouse gas emissions inventories of scope 1 and scope 2 sources were based on the methodology advised by SGS, a qualified, well-known, and international inspection, verification, testing and certification organization.


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