Climate Change Initiatives

To address global warming, we at the Kaneka Group are working to promote energy conservation and reduce CO2 emissions through a range of measures, including our own environmental capital investment program.
We are implementing life cycle assessment (LCA) for our main products and intend to successively expand the range of products covered going forward. We are also working to introduce carbon-life cycle analysis (cLCA), which calculates the contribution to GHG emissions reduction relative to comparable products, and indirect GHG emissions calculation, which covers business activities throughout the supply chain (Scope 3 emissions).

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 2021, we conducted an impact analysis associated with the shift to low-carbon energy and a natural disaster risk assessment for each site.
In the impact analysis associated with shift to low-carbon energy, we compared two scenarios and estimated the respective impact: (a) introducing green energy at the current usage ratio of electricity and heat sources, and (b) introducing green energy after shifting to electricity to the greatest extent possible. Regarding the natural disaster risk assessment for each site, we estimated the degree of risk that could occur at our main sites, the Takasago Manufacturing Site and the Osaka Manufacturing Site, and estimated the projected damage in each case.
We summarized our efforts in line with the four TCFD recommendations: Governance, Strategy, Risk Management, and Metrics and Targets.

TCFD

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We will strengthen and accelerate our initiatives for the realization of carbon neutrality by 2050.
(For details, please see Management Strategy: Carbon Neutrality.)

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 2021 was 90.4, a decrease of 2.1% from the previous fiscal year, and reached our goal of an annual average decrease of 1% or more. The average rate of change over the five-year period was a decrease of 0.4%, which did not reach our goal of an annual average decrease of 1%. Although products that have a high impact on intensity saw improved intensity compared to the fiscal 2013 benchmark, their intensity was significantly worse when compared with fiscal 2017, the first year of the five-year average. This and the production of specialized products that have higher intensity than simple products were the main reasons for falling short of the goal.
Kaneka and Group companies in Japan used 558 thousand kiloliters of crude oil equivalents, an increase of 7.4% 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

Energy Consumption (Crude Oil Equivalents) and Energy Intensity Index

Kaneka Group Energy Consumption(Fiscal 2021)

Kaneka and Group companies in Japan Group companies outside Japan Total
Energy Consumption (Crude Oil Equivalents) [10 thousand kiloliters/year] 55.8
(Of which Kaneka 48.4)
16.2 71.9
Energy Consumption (GWh Conversions) [GWh/year] 4,247.1
(Of which Kaneka 3,731.2)
1,226.8 5,473.9

Initiatives to Reduce 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 2021, the index for all parent manufacturing sites was 85.8, achieving our fiscal 2021 target of 92.3 (toward a fiscal 2030 target of 84.3).
GHG emissions for Kaneka and Group companies in Japan increased by 4.1% from the previous year to 1,220 thousand tons-CO2e, due to the impact of increased production volume. Going forward, we will continue to take energy saving actions and, based on our strategy for carbon neutrality, will work to reduce GHG emissions by means of actions such as streamlining production processes through innovation and switching to alternative fuels.

GHG Emissions and Energy Origin CO2 Emission Intensity Index

GHG Emissions and Energy Origin CO2 Emission Intensity Index

Scope 1 and 2 Emissions (Kaneka)

Scope 1 and 2 Emissions (Kaneka)

Scope 1 and 2 Emissions (Fiscal 2021)

(Thousand tons-CO2e/year)

Kaneka and Group companies in Japan Group companies outside Japan Total
Scope 1 direct emissions(*1) 811.4
(Of which Kaneka 736.1)
100.6 912.0
Scope 2 indirect emissions from energy consumption(*2) 408.2
(Of which Kaneka 335.6)
227.7 635.9
Total 1,219.6
(Of which Kaneka 1,071.8)
328.3 1,547.9

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

*2 Scope 2 emissions calculated using the location-based method for Kaneka and Group companies in Japan were 546.8 thousand tons CO2e (including 407.2 thousand tons CO2e for Kaneka). For Group companies outside Japan, Scope 2 emissions were the same calculated using location-based and market-based methods.

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 Scope 3 emissions calculated by category.

Scope 3 Emissions Calculated by Category (Fiscal 2021 results at Kaneka)

Category GHG emissions [Thousand tons-CO2e/year]
1 Purchased goods/services 2,044.4
2 Capital goods 77.2
3 Fuel-and energy-related activities not included in Scope 1 or Scope 2 169.9
4 Upstream transportation and distribution 21.7
5 Waste generated in operations 5.8
6 Business travel 1.6
7 Employee commuting 1.0
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 560.6
13 Downstream leased assets 0.0
14 Franchises -(*5)
15 Investments 462.4
Total of Scope 3 emissions 3,344.6

*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.

Scope 3 Emissions (Kaneka)

Scope 3 Emissions (Kaneka)

Note: The reason for the large increase in Scope 3 emissions from fiscal 2018 to fiscal 2019 was the addition of a category to the scope of calculation.

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 300 million yen (the budget was 200 million yen until fiscal 2020 but we increased it in fiscal 2021 to strengthen our climate change response). Investments are 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 2021 we continued allocating a large portion of this fund to projects that address climate change, including broader initiatives such as visualizing energy consumption. We 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 (million yen) Number Reduced CO2 Emission of the Year
2017 200 15 1,654 tons-CO2
2018 200 24 1,748 tons-CO2
2019 200 29 1,227 tons-CO2
2020 200 27 1,010 tons-CO2
2021 300 36 1,757 tons-CO2

Eco-Friendly Products

The Kaneka Group has focused on eco-friendly management since fiscal 2017. We have enhanced and expanded our lineup of eco-friendly products*, which we define as products that help reduce the burden on the natural environment compared to conventional products at the customer use, disposal, and recycling stages (see the table below).

Eco-Friendly Products

Eco-friendly products have been defined as follows.

Type of Environmental Contribution Qualitative Definition
GHG Reduction Products reducing greenhouse gas (GHG) emissions
Energy Saving Products lowering energy consumption
Energy Creation Products creating energy
Energy Storage Products storing energy
Waste Reduction Products reducing waste
Resource Saving Products achieving resource savings
Biomass Products (derived from non-fossil materials) reducing reliance on fossil materials
Water Resources Products saving water and improving the water environment
Chemical Pollution Products preventing chemical pollution
Biodiversity Products conserving biodiversity
Intermediate Materials Intermediate materials essential to ensuring that finished products contribute to the environment
Disaster Control Products helping disaster prevention and preparedness and reducing environmental impacts during a disaster
Adaptive Contribution Products adapting to global warming

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 2021, CO2 emissions were down due to a decrease in transportation volume (ton-kilometer), but in terms of sales volume (ton-kilometer), a greater proportion of truck transportation resulted in an overall increase of 0.8 thousand tons in CO2 emissions. The result was a worsening in the energy intensity index 5.8% from the previous year.

CO2 Emissions and Energy Intensity Index from Logistics (Kaneka)

Emissions and Energy Intensity Index from Logistics (Kaneka)

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 2021 at all manufacturing sites was 3,902 tons CO2e, an increase of 2,551 tons from the previous fiscal year due to a problem with one piece of large equipment. As a result, we did not achieve our target. We have upgraded the equipment in question to a model that does not use fluorocarbons, and expect a significant reduction in fiscal 2022. At 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.

*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 (Kaneka)

Estimated Leakage of Fluorocarbons (Kaneka)

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