Climate Change | Environment | Sustainability | Asahi Kasei

Climate Change

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 new policy for carbon neutrality.

Greenhouse gas (GHG) emission targets for the Asahi Kasei Group

2050
Carbon neutral
2030
Emissions reduction of 30% or more (from fiscal 2013)*
  • * Scope 1 (direct GHG emissions) and
  •  Scope 2 (indirect emissions use of electricity, heat, and steam supplied by other companies), absolute quantity

While our former target was to reduce GHG emissions relative to sales (emissions intensity), we have changed to an absolute reduction target to clarify our path toward the goal of becoming carbon neutral.

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. In April 2021, we launched a Green Solution Project reporting directly to the President, and we are working to create new businesses for a carbon neutral society.
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.

  • Contributing to a carbon neutral and sustainable society (1) Reducing our own GHG emissions  ・By 2050, carbon neutral ・ By 2030, emissions reduction of 30% or more (from fiscal 2013) Key points of out initiatives Reduced energy use/energy decarbonization/innovation in manufacturing processes/R&D/ business portfolio transformation  (2) Reducing GHG emissions throughout society ・Environment/Energy ・Home & Living ・Mobility ・Life Material Main perspectives Renewable energy, energy conservation, EV, CO2 sensors, digitalization, circular economy, etc.
    Key Points of Effort for Carbon Neutrality

Reducing GHG Emissions

Scope 1 and 2 GHG emissions

All production sites (Sage Automotive Interiors, Inc. is for the United States only) 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 2020, our Scope 1 GHG emissions were 3.01 million tons of CO2-eqmark, and Scope 2 GHG emissions were 0.9 million tons of CO2-eqmark, bringing the total of Scope 1 and 2 to 3.91 million tons of CO2-eqmark. This is a reduction in GHG emissions of approximately 23% compared to the 5.11 million tons of CO2-eq released in the baseline year of 2013.

  • *Figures withmarkhave received independent assurance by KPMG AZSA Sustainability Co.,Ltd.(March 2022 updated)
  • Japan+Overseas Fiscal Year 2016 4.35 million tons CO2 equivalent, Fiscal Year 2017 4.22 million tons CO2 equivalent, Fiscal Year 2018 4.16 million tons CO2 equivalent, Fiscal Year 2019 3.99 million tons CO2 equivalent, Fiscal Year 2020 3.89 million tons CO2 equivalent
    GHG emissions

Global Scope 3 emissions

The domestic Japanese portion of Scope 3* emissions has been calculated for all operations except for companies with insignificant emissions. In fiscal 2017 we began including Scope 3 emissions of overseas operations in our calculation.

  • Global Scope 3 emissions 10.16 million tons CO2-eq Purchased goods and services 4.14 Capital goods 0.36 Fuel- and energy-related activities not included in scope 1 or scope 2 0.21 Upstream transportation and distribution 0.25 Waste generated in operations 0 Business travel 0 Employee commuting 0.03 Upstream leased assets 0 Use of sold products 0.65 End-of-life treatment of sold products 4.52
    Global GHG emissions
  • * Scope 3 emissions: Greenhouse gases emitted indirectly by a company throughout its supply chain. The methods for calculating Scope 3 emissions fromCategory 1,11 and 12 are is described in Environmental data.
  • *Figures withmarkhave received independent assurance by KPMG AZSA Sustainability Co.,Ltd.(March 2022 updated)

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 in FY2020. Generation of the equivalent amount of power at thermoelectric plants would result in approximately 80 thousand tons* of CO2 emissions annually.
Furthermore, our biomass power generation facility in Nobeoka started operation in August 2012.

  • * Using Japan's Ministry of Economy, Trade and Industry and Ministry of the Environment standard of 445g CO2/kWh.
  • Total 2,830 GWh Thermal 37.0% Hydroelectric 6.5% Purchased 56.6%
    Electricity sources, FY2020 (global)

Using Renewable Electricity in the Homes Business

As part of its efforts to address climate change, Asahi Kasei Homes joined the RE100 Initiative on September 10, 2019, aiming to achieve sustainable urban living with both decarbonization and resilience.
Asahi Kasei Homes is targeting procurement of 100% of the electricity consumed by 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.

Domestic energy saving in logistics

The Asahi Kasei Group promotes environmentally friendly railway shipment.
Product shipments for our operations in Japan amounted to some 1.1 billion ton-kilometers in fiscal 2020―an 7% decrease from fiscal 2019―generating approximately 88 thousand tons of CO2 emissions―a 1% increase. In cooperation with the transport firms contracted for shipment, a wide range of measures are employed to reduce energy consumption and alleviate the environmental effects of physical distribution.
We have received Eco-Rail Mark certification in recognition of our preferential shipment of products by rail, an ecological mode of transport which results in lower CO2 emissions for a given weight and distance than many other means of transportation.

Asahi Kasei Group promotes environmentally friendly railway shipment. The Eco-Rail Mark

The Eco-Rail Mark

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 2020, some 95% of company-owned vehicles were low-pollution vehicles.

Asahi Kasei green bond

Please see here for more details.

Climate Change Initiatives (Disclosure based on TCFD* Recommendations)

Carbon dioxide emissions have increased significantly since the industrial revolution, and in particular during the 20th century with its major population growth. The global scientific consensus is that carbon dioxide accumulation is causing climate change. The climate change is progressing slowly but steadily, and we recognize that worldwide cooperation and the implementation of specific measures to address it is an urgent issue.
In the century since our founding, we have developed our business in response to the needs of society. Now that climate change measures have become a social necessity, we are committed to Care for Earth as part of our management strategy to contribute to the global environment.
As the impact of climate change on business is of great concern to investors and other related parties, companies need to be clear about its potential impact and maintain an ongoing dialogue with them.
Based on the framework provided by the TCFD recommendations, we examined the shifts that are expected to occur as a result of climate change and their impact on our businesses from various perspectives in the business sectors of Material, Homes, and Healthcare. As a result, although the financial impact of climate change is expected to be significant in the medium term, the financial risk to the company as a whole was found to be limited due to a diversified business portfolio that mitigates risk and creates opportunities. We also identified the potential to benefit from these new opportunities through our various businesses and technologies.
We will contribute to the realization of a sustainable society, making further effort to be an organization in harmony with the environment while reducing the risk of climate change and developing new business opportunities through adapting mitigation measures.

  • *TCFD: Task Force on Climate-related Financial Disclosures, established and announced by the Financial Stability Board (FSB) in 2017.
  • Vision of founder Shitagau Noguchi "As industrialists, we must be cognizant that, to improve the living standard, our ultimate mission is to contribute to people by supplying abundant highest-quality daily necessities at the lowest prices." 1933  Care for People Care for Earth  Contributing to sustainable society  Social needs Addressing the aging population and environmental issues for a sustainable future  Diversity & Capability to change  Acceleration of globalization  Const. mat./homes Healthcare Electronic devices/materials  Petrochemicals/synthetic fibers  Chemical fertilizer/regenerated fiber/explosives  Social need Higher standard of living in developing countries  Social need Comfort and convenience  Social need Abundance of goods  Social need Establishment of livelihood base  1920s 1950s 1970s 2000s

Governance

Measures to tackle climate change are an important management issue and we consider it one of the central themes of our management strategy. In our current Medium-term Management Initiative, "Care for Earth" is one of the pillars along with "Care for People." The progress of their implementation is discussed at the Management Council and the Board of Directors.
For example, to reduce GHG emissions from our business activities, in May 2021, the Board of Directors decided to target emissions reduction by 30% or more by 2030 compared to fiscal 2013, and it set the goal of becoming carbon neutral (effectively zero emissions) by 2050. As important as reducing our own GHG emissions is reducing global GHG emissions by tens of billions of tons. We contribute to this through a system that promotes environmentally friendly products that do extremely well in life cycle assessments (LCA).
To accurately identify climate change issues group-wide and discuss countermeasures, the President chairs a Sustainability Committee to discuss related issues. In addition, the Executive Officer for Technology Functions heads the Global Environment Committee—a related subcommittee—to hold more thorough discussions on the global environment. Details concerning implementation from the Sustainability Committee are reported to the Board of Directors.

Board of Directors (Management Council) President Administrative staff Strategic Business Units, Core Operating Companies Sustainability Committee Global Environment Committee Other subcommittees Risk Management & Compliance Committee Responsible Care Committee

Sustainability Committee

  • A venue to discuss Environmental, Social, and Corporate Governance (ESG) in general, including climate change
  • Chair: Asahi Kasei President, Committee members: Executive Officer for Technology Functions, Executive Officer for Business Management Functions, Executive Officers for the 3 business sectors

Global Environment Committee

  • A venue to discuss issues of climate change and plastic waste
  • Chair: Executive Officer for Technology Functions, Committee members: Presidents of SBUs, Senior General Manager of the Production Center, Senior General Manager of Corporate Production Technology, Senior General Manager of Corporate Research and Development, etc.

Strategies: Analysis of Opportunities and Risks

■Underlying assumptions
A variety of scenarios could unfold regarding climate change depending on the implementation of prevention measures. We examined two standard scenarios, one where average global temperature rises by 4°C, and one where it rises by less than 2°C.
Without sufficient steps to curb global warming, global temperatures rising by 4°C we consider a "physical risk" involving intense heat and severe storms. A scenario where the temperature rises by less than 2°C we consider a "transitional risk." It would involve social changes geared toward curbing global warming including technological innovation and tightened regulations.
For each of these, we referred to various documents and examined the impact on the business from a 2050 perspective in the business sectors of Material, Homes, and Health Care.
The Asahi Kasei Group's growth model adapts its business portfolio in response to the business environment, reducing risks from climate change and maximizing opportunities through changes to our portfolio. In this analysis, in keeping with the intent of TCFD's recommendations, we show that the current state of our business would be at risk in light of the view from 2050.

Opportunities
  Important changes Main opportunities Principal initiatives
Global temperatures rising by 4°C Serious storm and flood damage ・Increasing need for disaster-resilient housing Greater emphasis on resilience in housing building and urban development
・Hardware/software
・Unit homes/community
Higher incidences of heat stroke and infectious diseases ・Increased demand for existing medicines, new medicines, and the critical care business ・Provision of emergency medicines and medical equipment for infectious diseases and heat stroke
・Provision of consumables, equipment, and services for biopharmaceutical manufacturing processes
Global temperatures rising by less than 2°C Decarbonization ・Promotion of the spread of Net Zero Energy Houses (ZEH)* through government policies ・Decarbonization of homes and communities
Spread of electric vehicles
(EVs)
Increase in EV-related demand
・Battery components
・Materials for reducing vehicle weight
・Provision of components and systems for next-generation mobility
・Strengthening of collaboration with automobile and battery manufacturers
Advent of a hydrogen society ・Increased demand for water electrolysis that utilizes renewable energy ・Utilization of alkaline water electrolysis system
  • *ZEH: Houses 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
Risks
Important changes Main risks Principal countermeasures
Global temperatures rising by 4°C Serious storm and flood damage "Physical" production risks
・Suspension of production due to plant damage
・Disruption of raw material supply network due to suppliers suffering from disasters
・Continuous revision of BCP and reinforcement of preemptive response (review inventory levels, consider switching to multiple suppliers/locations, etc.)
Rise in temperature "Human" production risks
・Deterioration of working environment and productivity at construction sites
・Promotion of industrialization and utilization of IT in housing construction
Global temperatures rising by less than 2°C Decarbonization ・Rise in cost due to stricter regulations*
 (manufacturing and raw material costs)
・Changes in materials needs
 (decarbonization requirements, necessary specifications)
・Expansion in utilization of renewable energy, etc.
・More efficient energy use;
  development and commercialization of industrial processes for decarbonization
・Decarbonization of raw materials
  • *Example: If the amount of GHG emissions in FY2020 is approximately 4 million tons, and this is multiplied by a carbon tax of 10,000 yen/t, this would total approximately ¥40 billion per year.
  • Physical risks Serious storm and flood damage Rise in temperature  Transition risks Policy and social changes ・Decarbonization ・Spread of EVs ・Advent of a hydrogen society  Asahi Kasei's Strengths Diversity Capability to change  ・Development of decarbonization technology ・Energy ・Processes ・CO2 chemistry ・Enhancing resilience ・Portfolio transformation ・Internal and external connections   Creating opportunities Reducing risks  Businesses that contribute to a sustainable society
    What we are aiming for

Risk management

In the annual review of our Medium-term Management Initiative, we consider the climate-related opportunities and risks for each of our businesses, and then assess and address the situation group-wide. A sustainable perspective that includes climate change is one of the decision-making criteria we use when determining our business portfolio, including the allocation of management resources.
We also confirm the sustainability of capital investments as they relate to GHG emissions.
Regarding our emissions performance, the emissions of the entire Asahi Kasei Group are calculated once per year. Progress towards our goals is managed by the Sustainability Committee and the Board of Directors.

Metrics and goals

Our GHG emissions goal and target are as follows.

By 2050, carbon neutral
By 2030, emissions reduction of 30% or more (from fiscal 2013)
Even in the midst of the COVID-19 pandemic, there was no significant reduction in global GHG emissions. Because we believe we must further accelerate our efforts to achieve a sustainable society, we announced a new GHG emissions target on May 25, 2021 and switched our target from one based on emissions intensity (emissions/sales) to one based on a reduction in absolute emissions. Besides reducing GHG emissions from our own business activities, we believe that it is important to help reduce GHG emissions throughout society using our diverse array of technologies and businesses, and we will make group-wide efforts to deal with global warming.