• Policy
• Reducing GHG Emissions
• Efforts to Reduce CO₂ Emissions
• Asahi Kasei green bond

• Click here to read our response concerning CDP Climate Change 2023

Asahi Kasei Group's Carbon Neutrality Policy

In accordance with its Group Mission, the Asahi Kasei Group is committed to contributing to life and living for people around the world. The Asahi Kasei Group has long been aware that climate change is a global issue that will have a significant impact on both the natural environment and society, and we see it as our mission to use the chemistry expertise we have cultivated since our founding to deal with this issue leveraging our combined strength.
In May 2021, the Asahi Kasei Group adopted a policy for carbon neutrality as described below.

Greenhouse gas (GHG) emissions targets for the Asahi Kasei Group^*

Initiative Policy

In addition to reducing GHG emissions from our own business activities, we believe that it is also important to help to reduce GHG emissions in society¹ through our diverse array of technologies and businesses to deal with climate change. The materiality also set forth our commitment to "Decarbonization," and in April 2021, we launched the Green Solution Project. We are studying the creation of new businesses to help society become carbon neutral.
In April 2022, we launched a Carbon Neutrality Project² to share and discuss scenario analysis and consolidate efforts to achieve our 2030 GHG emissions reduction targets and carbon neutrality by 2050.
Regarding "Care for Earth," we are committed to addressing climate change issues group-wide, both in terms of (1) reducing the amount of our own GHG emissions and (2) contribution to reducing the amount of GHG emissions in society through our businesses and technologies.

• ¹See our Environmental Contribution Products for our contribution to reducing the amount of GHG emissions in society.
• ²See Disclosure under TCFD Framework > Governance

• The Asahi Kasei Group's ESH & QA and Health Management Policy
• The Asahi Kasei Group's Global Environmental Policy

Reducing GHG Emissions

Concrete measures to reduce GHG emissions and their projected impacts

We are targeting a reduction in GHG emissions by at least 30% by 2030 as compared to fiscal 2013, with a goal of becoming carbon neutral by 2050. Measures will be advanced as described below.
In the first stage, by 2030 we aim to reduce our GHG emissions by approximately 300 thousand tons by adopting low-carbon methods for in-house power generation, by 100 to 200 thousand tons through the purchase of non-fossil fuel power, and by 100 to 200 thousand tons by curtailing emissions from our manufacturing processes. We will also promote GHG emissions reductions through transformation of our business portfolio, etc.
In the second stage through 2050, we will work toward greening both electricity and steam and the promotion of process innovation through practical application of technologies developed by Asahi Kasei, such as alkaline water electrolysis and CO₂ separation and recovery. In addition, we will promote further transformation of our business portfolio, etc., and move forward with reductions toward attainment of our objectives.

Scope 1 and 2 GHG emissions

All production sites of Asahi Kasei Corp. and its consolidated subsidiaries under management control are subject to calculation of Scope 1 and Scope 2 GHG emissions of the Asahi Kasei Group, and GHG emissions from generation of electricity and steam sold outside the Asahi Kasei Group are included.
In fiscal 2023, our Scope 1 GHG emissions were 2.39 million tons of CO₂-e, and Scope 2 GHG emissions were 0.79 million tons of CO₂-e, bringing the total of Scope 1 and 2 to 3.18 million tons of CO₂-e This is a reduction in GHG emissions of approximately 38% compared to the 5.11 million tons of CO₂-e released in the baseline year of 2013.

• Note:The figures for fiscal 2023 Scope 1 and 2 are based on data prior to implementation of third-party verification.

• Global greenhouse gas emissions by segment (ESG Data)
• Overseas greenhouse gas emissions by fiscal year (ESG Data)

Scope 3 emissions

• ^*The figures for fiscal 2023 Scope 1 and 2 are based on data prior to implementation of third-party verification.
• ^*Scope 3 emissions: Greenhouse gases emitted indirectly by a company throughout its supply chain. The methods for calculating Scope 3 emissions from Category 1, 5, 11 and 12 are described in Environmental data.

• Scope 3 emissions by fiscal year (ESG Data)

Efforts to Reduce CO₂ Emissions

Renewable energy

Asahi Kasei Group has jurisdiction over 9 hydroelectric power plants in the Nobeoka/Hyuga region, which provide approximately 2% of the Group’s (Japan and overseas) electricity use. Generation of the equivalent amount of purchasing electricity would result in approximately 20 thousand tons^* of CO₂ emissions annually.
We also have a biomass power generation facility.

• ^* Using Japan's Ministry of Economy, Trade and Industry and Ministry of the Environment, Order No. 3 of 438 g CO₂/kWh.

The table below shows the amount of renewable energy purchased and generated.¹

Type of energy	Unit	FY2023
Hydroelectric power generation	MWh	56,701
Solar power generation	MWh	256
Biomass-based2 generation	MWh	55,550
Purchased non-fossil certificates	MWh	157,108
Biomass-based2 steam	GJ	317,192

• ¹Hydroelectric power generation with no environmental value under the FIT system is excluded from the tally.
• ²The calculation is made by multiplying the amount of electricity and steam generated by the input ratio of biomass fuel in the co-combustion power generation of biomass and coal.

• Note:The figures for fiscal 2023 purchases of renewable energy and amount of electricity generated are based on data prior to implementation of third-party verification.

Using Renewable Electricity in the Homes Business

As part of its efforts to address climate change, Asahi Kasei Homes joined the RE Initiative in 2019, aiming to achieve sustainable urban living through both a decarbonized society and resilience, and it became the first Japanese home builder to successfully achieve this.
Asahi Kasei Homes has progressed with its target to procure 100% of the electricity consumed for its business activities from renewable energy sources, successfully achieving RE100 in fiscal 2023, well ahead of the 2038 target set at the time of our participation.

• Asahi Kasei Homes Sustainability

Domestic energy saving in logistics

• CO₂ emissions from product shipment (ESG Data)

Domestic promotion of low emission vehicles

The Asahi Kasei Group is phasing in low-pollution vehicles for use in marketing and within plant grounds. In fiscal 2023, some 93% of company-owned vehicles were low-pollution vehicles.

• Low-pollution vehicles (ESG Data)

Asahi Kasei green bond

Please see here for more details.

• Asahi Kasei green bond (2020)
• Asahi Kasei green bond (2023)

• Annual Reporting (fiscal 2020)
• Annual Reporting (fiscal 2021)
• Annual Reporting (fiscal 2022)
• Annual Reporting (fiscal 2023)

Climate Change Initiatives (Disclosure based on TCFD¹ Framework)

Updated on August, 2024

Awareness surrounding climate change

The IPCC’s² Sixth Assessment Report, released in March 2023, pointed out that global average temperatures have already risen by 1.1°C since the Industrial Revolution, and that even if all national greenhouse gas (GHG) reduction targets are met, the Paris Agreement's goal of keeping the temperature rise to less than 1.5°C by the end of this century will not be achieved. Against this backdrop, the G7 Ministers’ Meeting on Climate, Energy and Environment, which was held in April of the same year and following year, issued a communique to underscore their commitment to “implement immediate, short- and medium-term action in this critical decade.”
The Asahi Kasei Group recognizes that there is a growing sense of crisis around the world over the progress of global warming, and that policies for adaptation and mitigation are accelerating.

Asahi Kasei’s stance

Over the century since our founding, we have developed our business by challenging ourselves in response to the social issues that have changed with the times, transforming ourselves in the process. As climate change forces major change on entire social systems, we are attempting to achieve a carbon-neutral society and sustainably grow corporate value by 2050, while transforming our business portfolio and continuously improving productivity.
Additionally, we will continue to steadily reduce our greenhouse gas emissions (Scope 1 and 2), and further work to reduce emissions throughout the entire supply chain, including Scope 3 emissions.

• ¹ TCFD: Task Force on Climate-related Financial Disclosures. Established by the Financial Stability Board (FSB) in 2017, the TCFD has published its final report (TCFD recommendations). It was dissolved in October 2023 and succeeded by the International Financial Reporting Standards (IFRS).
• ² Intergovernmental Panel on Climate Change

Governance

Asahi Kasei consider green transformation (GX), which focuses on initiatives related to climate change, to be an important management issue, and we are working toward GX by positioning it as one of the core subjects of our management strategy.
Our climate change policy and high priority concerns are deliberated on and determined by the Board of Directors, while the Management Council and other executive decision-making bodies discuss and decide on specific matters. In fiscal 2023, we decided to participate in the GX League, and set targets for reducing domestic GHG emissions and a non-fossil ratio target for electricity purchased in Japan.

Main deliberations and decisions:

• GHG emissions reduction targets, results, and measures
• Medium-term management plan, progress/results, and measures
• Investment plans (taking point of view regarding GHG emissions into account), etc.

In formulating the medium-term and annual management plans, individual discussions are held between business and staff divisions, where plans are formulated as a group for GX, etc., which are then discussed and decided by the Management Council and Board of Directors.

In order to promote these decisions by the Board of Directors and Management Council at a business level, we have a Sustainability Committee chaired by the President, where members of executive management share and discuss issues concerning sustainability, including climate change. Minutes of the committee meetings are reported to the Board of Directors, which discusses topics including appropriate company-wide initiatives.
The Carbon Neutrality Project, which is led by the Executive Officer for GX, reviews scenarios and specific measures to achieve our targets for reducing GHG emissions. In the review process, the President, Executive Officer for Corporate Strategy, and others work to strengthen the content of the program, while regularly confirming its direction. Moreover, we launched the Circular Economy Project in April 2024 in order to accelerate the transition to a circular economy, which is closely linked to action on climate change. This project examines our company policies and direction related to the circular economy.

In the Material and Homes sectors, the sustainability departments of each business unit promote initiatives toward carbon neutrality and a circular economy in cooperation with business units and the company-wide sustainability functions.

Strategy

Having identified and analyzed key opportunities and risks associated with various climate change scenarios, we are working to control risk while actively seizing opportunities in accordance with our medium-term management plan.

Underlying assumptions

While a variety of scenarios can be envisaged, depending on the progress of measures to counter global warming, we have analyzed the following two representative scenarios.

• A scenario where GHG emissions are strongly curbed in order to limit global warming to “+1.5°C” since the Industrial Revolution (WEO: Net Zero Emissions by 2050 Scenario [NZE]³)
  - A scenario centered on transition risks from tightened controls and major social and market transformation
• A scenario where not enough progress is made to prevent global warming, and the temperature increase is “+4°C” (IPCC SSP3-7.0⁴)
  - A scenario centered on physical risks from extreme weather events with social and ecological changes

We considered the opportunities and risks to our business from the above scenarios.

• Note: These analyses are based on a variety of assumptions, and changes to these assumptions may result in actual risks and opportunities differing significantly.

• ³One of the scenarios listen in the International Energy Agency (IEA)’s WEO (World Energy Outlook) 2023. A scenario that will allow us to achieve worldwide net-zero in 2050 in order to limit the temperature increase to 1.5°C by 2100.
• ⁴One of the scenarios included in the IPCC’s Sixth Assessment Report. “SSP” stands for “Shared Socioeconomic Pathways” and the SSP3-7.0 is a scenario in which regional rivalry results in climate policies not being adopted, and temperatures rise by up to 4°C in 2100.

Opportunities

We are advancing business portfolio transformation to provide value in anticipation of megatrends, such as the shift to a carbon-neutral society. There are climate change-related opportunities in all of the GG10 growth-driving businesses, and in our medium-term management plan we aim to invest approximately ¥700 billion for GG10 over the three years through fiscal 2024. We are investing management resources with particular emphasis on energy storage and hydrogen-related areas, and expect to invest up to ¥300 billion over the three years of the current medium-term management plan.
We plan to invest approximately ¥60 billion over the next three years through fiscal 2024 in decarbonization-related activities.
In addition, we have established a “Care for Earth Investment Framework” ($100 million over 5 years from fiscal 2023 to fiscal 2027) in our CVC activities and are investing in startup companies in the environmental field, as we aim to incorporate and collaborate on new technologies, particularly in response to climate change.

We recognize that the direction of our business development can provide business opportunities with a variety of products and services in climate change mitigation and adaptation.

For example, the battery and hydrogen markets are expected to grow significantly in order to achieve carbon neutrality by 2050. These two areas are one of our highest priority business fields.

• ⁶ Graphs by Asahi Kasei based on the IEA’s World Energy Outlook 2021. Furthermore, according to World Energy Outlook 2022, the demand for batteries in the transportation sector under the NZE scenario will increase over 16 times between 2021 and 2030.
• ⁷Graphs by Asahi Kasei based on the IEA’s World Energy Outlook 2023.

• *Japanese Document
• ⁸ZEH (Net Zero Energy House) and ZEH-M (ZEH-Mansion): Houses and apartment buildings with a net energy consumption of zero or less as a result of advanced insulation and energy saving combined with power generation such as solar
• ⁹ Asahi Kasei sustainability briefing materials (January 2023), p. 15
• ¹⁰A product’s GHG emissions from material extraction to production

Risks

Based on these scenarios, we have analyzed the climate change risks to Asahi Kasei from various perspectives.

The +1.5°C scenario assumes risks from tighter regulations under national policies, such as carbon pricing, demand shift to carbon-neutral products and services, acceleration of the transition to a circular economy, and changes in market structure due to the emergence of innovative technologies aiming to achieve carbon neutrality. Related risks include the company not being selected where investor and customer expectations on carbon neutrality surpass our level of commitment, and damage to our reputation in society.
The +4°C scenario assumes mainly physical risks, such as extreme heatwaves, heavy rain, and flooding. In particular, we recognize the risk to production facilities from serious storm and flood damage at our key hubs in Japan and overseas.

We understand that these risks could develop in the future as climate change progresses, and we will strive to mitigate them.

• ¹¹ Asahi Kasei GHG emissions in 2023 (Scope 1 and 2 preliminary figures): 3.18 million t-CO₂e. When the carbon cost is set at ¥15,000/t-CO₂, with reference to the CO₂ price level in 2030 by NEZ scenario of WEO 2023,etc.

Risk management

Asahi Kasei positions climate change risk as a Significant Group Risks, and as such, climate change risk management is a key priority.

GHG emissions monitoring

We track the reliability of performance figures for Scope 1, 2 and Scope 3 (key categories) while obtaining third-party verification. We share our progress toward targets with the Sustainability Committee and its subcommittees, such as the Global Environment Committee, to discuss and confirm future initiatives.

When formulating and reviewing management plans, we check the status of initiatives to reduce GHG emissions and other factors, and link them to business strategies and measures. We also monitor relevant situations and share information with senior management on a monthly basis.

Internal carbon pricing (ICP)

In order to accelerate actions toward carbon neutrality, we conduct profitability assessments using ICP for capital investment and utilize them in investment decisions. We set ICP prices while taking into account carbon and market prices projected by the International Energy Agency (IEA), as well as our own cost projections for carbon neutrality.

Metrics and goals

Asahi Kasei considers the following metrics to be related to climate change opportunities and risks.

Others

• ¹⁵ Includes Scope 1 GHG emissions directly linked to Asahi Kasei business activities (our own direct GHG emissions) and Scope 2 emissions (indirect emissions arising from use of electricity, heat, and steam supplied by other companies)

We have also set a goal to increase the sales ratio of products and services (Environmental Contribution Products) that help to reduce society’s GHG emissions for the entire value chain, and to more than double our contribution to reducing GHG emissions by fiscal 2030 compared to fiscal 2020.

Overview of the our response to climate change