Initiatives for Climate Change

To address prevention global warming, we at the Kaneka Group are working to promote energy conservation and reduce CO2 emission intensity through various measures, for example by utilizing our own environmental capital investment program.
We also use carbon-Life Cycle Analysis (cLCA) to calculate CO2 emission reduction benefits by quantitatively assessing CO2 emissions throughout product lifecycle, making comparisons with similar products. We also calculate indirect greenhouse gas (GHG) emissions (Scope 3) associated with our business activities through supply chains.

Initiatives for Climate Change: Achieving TCFD and Carbon Neutrality

In March 2021, we expressed our support for the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. In fiscal 2020, we conducted a structural analysis of the group activities centered on risks and opportunities in line with the recommendations of TCFD, and from the perspective of importance and urgency, we have decided that the following items should be addressed: ① Reduction of GHG emissions, ② Contributing to a recycling-oriented society, and ③ Increasing production of food resources.
Our initiatives in line with the four TCFD recommendations: Governance, Strategy, Risk Management, and Metrics and Targets are as follows. For details, please see the Initiatives for Climate Change section of Management Strategies > Toward Social Implementation of Solutions to “Make it Real”
We will strengthen and accelerate our initiatives for the realization of carbon neutrality by 2050. For details, please see the Initiatives for Carbon Neutrality section of Management Strategies > Toward Social Implementation of Solutions to “Make it Real”

Energy Conservation Efforts

We are engaged in energy conservation activities, using the energy intensity index as an indicator for management.
The energy intensity index for all parent manufacturing sites in fiscal 2020 was 92.4, a decrease of 2.6% from the previous fiscal year, and reached our goal of an annual average decrease of 1%. The average rate of change over the five-year period was an increase of 0.1%, which did not reach our goal (an annual average decrease of 1%). This was due mainly to differences in the purchased fuel mix and other materials in fiscal 2016, the first year of the five-year period, as well as differences in the product mix, including a decrease in production volume.
Kaneka’s energy consumption was 446 thousand kiloliters, an increase of 3.3% from the previous fiscal year, mainly due to an increase in production volume.

For details, please refer to “Calculation Methods for Data of Indicators related to Environment”.

Energy Consumption (Crude Oil Equivalents) and Energy Intensity Index

Chart:Energy Consumption (Crude Oil Equivalents) and Energy Intensity

Note: Due to a change in the calculation method of GHG emissions, electricity or steam sold by Kaneka to outside parties that was previously deducted from Kaneka’s energy consumption under the Energy Saving Law (Act on the Rationalization etc. of Energy Use of Japan) is no longer deducted. Data for prior fiscal years has been recalculated accordingly.

Initiatives to Cut CO2 Emission Intensity

At Kaneka, we are working to reduce CO2 emission intensity, using a CO2 emission intensity index as an indicator for management, based on CO2 emissions from energy consumption associated with production activities.
In fiscal 2020, the index for all parent manufacturing sites was 91.6, achieved our fiscal 2020 target of 93.2. Kaneka’s GHG emissions decreased by 0.9% from the previous year to 1,022 thousand tons-CO2e, due to a reduction in the CO2 emission factor for electricity. We will continue to set medium to long term targets based on the carbon-neutral strategy now under discussion and streamline production processes through innovation to reduce GHG emissions.

GHG Emissions and Energy Origin CO2 Emission Intensity Index

Chart:GHG Emissions and Energy origin CO<sub>2</sub> Emission Intensity Index

Note: The method for calculating GHG emissions has been changed to comply with the Greenhouse Gas Protocol, “A Corporate Accounting and Reporting Standard REVISED EDITION”. Data for prior fiscal years has been recalculated accordingly. GHG emissions originated from electricity and steam sold by Kaneka to outside parties that was previously deducted from Kaneka’s GHG emissions under the Act on Promotion of Global Warming Countermeasures is no longer deducted. In addition, emission factors for the purchased electricity of Kaneka and Group companies in Japan have been changed from the basic emission factors based on the Act on Promotion of Global Warming Countermeasures to adjusted emission factors.

GHG Emissions from Business Activities throughout the Supply Chain

We have calculated indirect GHG emissions (Scope 3) associated with our business activities through supply chains. The following tables show Kaneka's GHG emissions by scope and Scope 3 emissions calculated by category.

Scope 1 and 2 Emissions (Kaneka)

Category Fiscal 2020 results
(Thousand tons-CO2e)
Scope 1 Direct emissions(*1) 759.9
Scope 2 Indirect emissions from energy consumption(*2) 262.5
Total of Scope 1 and 2 emissions 1,022.4

Scope 3 Emissions (Kaneka)

Category Fiscal 2020 results
(Thousand tons-CO2e)
Scope 3 Other indirect emissions (upstream/downstream) (*1) 2,905.0

*1 Non-energy origin CO2 emissions and CO2-equivalent of methane and N2O emissions are included.

*2 As emission factors for electricity, the adjusted emission factor for each power company was used for calculation. GHG emissions calculated using the location-based method were 352.0 (+9.4%).

Scope 3 Emissions Calculated by Category (Kaneka)

Category GHG emissions
Fiscal 2020 results
(Thousand tons-CO2e)
1 Purchased goods/services 1,742.6
2 Capital goods 46.2
3 Fuel-and energy-related activities not included in Scope 1 or Scope 2 148.8
4 Upstream transportation and distribution 20.9
5 Waste generated in operations 5.4
6 Business travel 2.3
7 Employee commuting 0.9
8 Upstream leased assets 0.0
9 Downstream transportation and distribution -(*3)
10 Processing of sold products -(*3)
11 Use of sold products -(*4)
12 End-of-life treatment of sold products 528.7
13 Downstream leased assets 0.0
14 Franchises -(*5)
15 Investments 409.2
Total of Scope 3 emissions 2,905.0

*3 GHG emissions for this category were not calculated because we were unable to determine a rational calculation method due to the high percentage of intermediate products.

*4 Some products generate emissions when used. However, since it was confirmed that this represented less than 0.1% of total Scope 3 emissions, such emissions were excluded from the calculation range.

*5 GHG emissions for this category were not calculated because we have no franchise stores.

Investments in Energy-Efficient Facilities

To continue reducing energy intensity and CO2 emission intensity, we are implementing our own environmental capital investment program, with an annual budget of 200 million yen for small and medium investments that have a relatively long payback period, through activities in three areas – global warming prevention, effective use of resources, and environmental impact reduction – that are priorities in Kaneka's environmental management program. In fiscal 2020 we continued allocating a large portion of this fund to projects that address climate change, including broader initiatives such as visualizing energy consumption. Judging that these efforts have achieved a certain effect, we increased the annual budget to 300 million yen from fiscal 2021, and will continue to use this investment program effectively to promote actions which to reduce energy and CO2 emission intensity.

Results of Our Own Environmental Capital Investment Program

Fiscal Year Investments Number Reduced CO2 Emission of the Year
2016 ¥200 million 23 1,688 tons-CO2
2017 ¥200 million 15 1,654 tons-CO2
2018 ¥200 million 24 1,748 tons-CO2
2019 ¥200 million 29 1,227 tons-CO2
2020 ¥200 million 27 1,010 tons-CO2

Energy-Efficiency Initiatives in Logistics

To achieve an annual 1% reduction in energy intensity and a continuation of 1% improvement in five-year average energy intensity as a specified consigner under the amended Act on Rational Use of Energy, we continued working plant by plant towards implementing modal shifts, promoting joint distribution, and improving cargo load ratios.
In fiscal 2020, the transportation volume (ton-kilometer) decreased year-on-year. Meanwhile, our CO2 emissions decreased by 1.0 thousand tons-CO2 year-on-year due to the promotion of shipping transportation, resulting in an improvement of 2.9 points in the energy intensity index.

CO2 Emissions and Energy Intensity Index from Logistics (Kaneka)

Chart:CO<sub>2</sub> Emissions and Energy Intensity Index from Logistics

Response to the Fluorocarbons Emission Control Law

Complying with the Act on Rational Use and Appropriate Management of Fluorocarbons in Japan, we are promoting the replacement of aging equipment as well as strengthened management of equipment. The estimated leakage of fluorocarbons in fiscal 2020 at all manufacturing sites was 1,351 tons CO2e, a decrease of 1,006 tons CO2 from the previous fiscal year. Group companies in Japan, there were no estimated leakage of fluorocarbons exceeding 1,000 tons-CO2.
To reduce the estimated leakage of fluorocarbons to less than 1,000 tons-CO2, we will continue to systematically update aging equipment, selecting equipment with low global warming potential (*6) and promoting fluorocarbon-free production. We will also reduce the leakage of fluorocarbons by inspecting equipment to detect and eliminate fluorocarbon leaks at an early stage.
We plan to completely phase out equipment using CFCs by 2023, which is a specific fluorocarbons—ahead of the original target date of 2025.

*6 Global warming potential is a figure that shows, on the basis of carbon dioxide, how other greenhouse gases have the property of causing global warming.

Estimated Leakage of Fluorocarbons at Kaneka

Estimated Leakage of Fluorocarbons at Kaneka

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