• 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 scientific 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.

Greenhouse gas (GHG) emission 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 society through our diverse array of technologies and businesses to deal with climate change. We launched a Green Solution Project in April 2021 to study creating new businesses for carbon neutrality.
In April 2022, we launched a Carbon Neutrality Project to share and discuss scenario analysis and consolidate efforts to achieve our 2030 GHG emission 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 GHGs emitted by our own business activities and (2) helping to reduce GHGs throughout society through our businesses and technologies.

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

Reducing GHG Emissions

Concrete GHG reduction measures 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 introduction of innovative processes 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 2022, our Scope 1 GHG emissions were 2.83 million tons of CO₂-eq, and Scope 2 GHG emissions were 0.83 million tons of CO₂-eq, bringing the total of Scope 1 and 2 to 3.67 million tons of CO₂-eq. This is a reduction in GHG emissions of approximately 28% compared to the 5.11 million tons of CO₂-eq released in the baseline year of 2013.

• *Figures withhave received independent assurance by KPMG AZSA Sustainability Co.,Ltd. (March 2024 updated)

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

Global Scope 3 emissions^*

• *Figures withhave received independent assurance by KPMG AZSA Sustainability Co.,Ltd. (March 2024 updated)
• *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

The Asahi Kasei Group has 9 hydroelectric power generation plants in the Nobeoka Region, which provided approximately 6% of the total electricity we used both in Japan and overseas. Generation of the equivalent amount of purchasing electricity would result in approximately 60 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 434g CO₂/kWh.

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

Type of energy	Unit	FY2022
Hydroelectric power generation	MWh	106,289
Solar power generation	MWh	56
Biomass-based*2generation	MWh	63,870
Purchased non-fossil certificates	MWh	18,305
Biomass-based*2steam	GJ	348,448

• *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.
• *Figures withhave received independent assurance by KPMG AZSA Sustainability Co.,Ltd. (March 2024 updated)

Using Renewable Electricity in the Homes Business

As part of its efforts to address climate change, Asahi Kasei Homes joined the RE100 Initiative in 2019, aiming to achieve sustainable urban living with both decarbonization and resilience.
Asahi Kasei Homes has a target of procuring 100% of the electricity consumed for its business activities from renewable energy sources, and is on track to achieve this in 2025, significantly sooner than the initial outlook of 2038.

• 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 2022, some 91% 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
• Annual Reporting (fiscal 2020)
• Annual Reporting (fiscal 2021)
• Annual Reporting (fiscal 2022)

Climate Change Initiatives (Disclosure based on TCFD¹ Recommendations)

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 2023 issued a communique saying, “We underscore our commitment to implementing 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. At this time of great upheaval, when climate change is an issue for the entire social system, we will continue to work toward the goal of a carbon-neutral society by 2050 while transforming our business portfolio and improving productivity through our medium-term management plan for fiscal 2024 focused on the theme “Be a Trailblazer.”
Additionally, we will continue to steadily reduce our greenhouse gas emissions (Scopes 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. TCFD was established and its recommendations were officially announced by the Financial Services Board in 2017.
• 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 specific matters relating to these areas are deliberated on and determined by the Management Council, our decision-making body for business execution.

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 management plan and annual business plans, business units and corporate divisions discuss matters related to GX, including emissions reductions, and after group-wide plans are aggregated, proposals are made to the Management Council and Board of Directors for deliberation and decision-making.

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. Results of Sustainability Committee meetings are reported to the Board of Directors, which discusses topics including appropriate company-wide initiatives.
Additionally, in fiscal 2022, we considered scenarios for achieving our GHG reduction targets within a dedicated project (Carbon Neutrality Project) under the direction of an Executive Officer. In reviewing scenarios, the President, Executive Officer for Corporate Strategy, and others regularly discuss the course of action and work to strengthen initiatives.

In the Materials and Homes sectors, we have established sustainability departments within strategic business units and core operating companies where initiatives are being worked on toward carbon neutrality and a circular economy in collaboration with business units and the Group-wide sustainability department.

Strategy

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 in which CO₂ emissions are strictly controlled in order to limit the temperature rise to 1.5°C above pre-industrial levels (WEO: Net Zero Emissions by 2050 Scenario [NZE]³)
  — We consider strengthening of regulations and significant transformation of society and markets as the baseline transition risk scenario
• A scenario in which measures to counter global warming make insufficient progress and temperatures rise by 4°C (IPCC SSP3-7.0⁴)
  — We consider extreme weather events and changes to society and ecosystems as the baseline physical risk scenario

With reference to each of these scenarios, we explored impacts on our current business toward 2050, as well as new opportunities.

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

• ³ One of the scenarios listen in the International Energy Agency (IEA)’s WEO (World Energy Outlook) 2022. 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.
• ⁴ One of the scenarios in the sixth report of the Intergovernmental Panel on Climate Change (IPCC). “SSP” stands for “Shared Socioeconomic Pathway” 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

Asahi Kasei is working to transform its business portfolio in light of megatrends such as the transition to a carbon-neutral society. Specifically, the medium-term management plan sets out 10 growth-driving businesses, referred to as "10 Growth Gears" (GG10), to which we will focus resources with a target of decision-making for investment of approximately ￥600 billion in these businesses over three years.
In particular, we will focus management resources on hydrogen-related business, battery separators, digital solutions, and critical care. We also plan to invest approximately ¥60 billion over the three years until fiscal 2024 on decarbonization-related areas.
In addition, we have established an investment framework of $100 million over the five-year period from fiscal 2023-27, targeting startup companies in the environmental field, which includes efforts to address climate change. From the perspective of the overall supply chain, we have set a goal of increasing the percentage of sales of products and services (Environmental Contribution Products) that help to reduce the world’s GHG emissions, and more than double the amount of GHG reduction contribution by fiscal 2030 compared to fiscal 2020 levels.

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 among Asahi Kasei’s 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 2022.

• *: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.

In a scenario in which global temperatures rise by 1.5°C, we primarily anticipate risk in the form of a shift in demand toward materials conducive to carbon neutrality, alongside strengthening of regulations through carbon pricing and other policies aimed at moves toward carbon neutrality. We also anticipate risk in the form of changes in market structures brought about by an accelerating transition to a circular economy and the advent of innovative technologies aimed at carbon neutrality.
In a scenario in which global temperatures rise by 4°C we primarily anticipate physical risks such as intense heat, heavy rain, and flooding. In particular, we perceive damage to production sites caused by the effects of increasingly severe storms and floods and the resultant cost of such damage to be a risk for our major sites in Japan and overseas.

While the above risks vary in their intensity, we view all of them as having the potential to arise amid the climate change to come, and we will continue to pursue risk reduction initiatives.

• ¹¹ Asahi Kasei GHG emissions in 2022 (Scope 1 and 2 preliminary figures): 3.68 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 2022,etc.

Risk management

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

As well as understanding GHG emissions results once a year with third-party assurance, the results, together with progress toward our targets, are shared with the Sustainability Committee and its subcommittee the Global Environment Committee with future initiatives discussed and confirmed.

In addition, during the formulation of medium-term management plans and annual reviews, we confirm initiatives to reduce GHG emissions, linking them to business strategies and measures. Related matters are also assessed on a quarterly and monthly basis.

In terms of capital investment, profitability is evaluated and implementation is decided in light of our internal carbon pricing system. Furthermore, in July 2023, we raised our internal carbon pricing from ¥10,000/t-CO₂ to ¥15,000/t-CO₂ in order to further promote actions toward carbon neutrality.

Metrics and goals

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

Others

• ¹³ 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)
  Global greenhouse gas emissions by segment (ESG Data)

Overview of the Asahi Kasei Group's climate change initiatives