Environment Climate Change Initiatives

Climate change is an environmental problem that has a significant effect on the continued existence of life, including human beings, and efforts to prevent it are now a major challenge for the global community. The Group has positioned climate change initiatives as an important management theme and will promote measures to mitigate greenhouse gas emissions and to adapt to the effects of climate change.

Reduction of Greenhouse Gas Emissions

To mitigate climate change, the Group is reducing its energy consumption and greenhouse gas emissions by preventing the leakage of fluorocarbons.

CO2 Emission Reduction Targets

The Group has set its CO2 emission reduction target (with 2010 as the base year and 2020 as the target year, we seek 40% reduction in Japan and 35% globally) in the current Medium-Term Environmental Action Plan (2016-2020). In fiscal 2020, along with the next Medium-Term Environmental Action Plan target (2021-2025), we will set a 2030 target for reducing greenhouse gas emissions that is consistent with the Paris Agreement and plan to continue our efforts to mitigate climate change.
Since 2018, the Group continues to participate in the Ministry of the Environment's “Carbon Deforestation Promotion Network,” and since 2019, in the “SBT* setting support project.”

*”SBT (Science Based Targets) Initiative” is a joint international initiative comprised of CDP, an international NGO that works on environmental issues such as climate change, the UN Global Compact (UNGC), the World Resources Institute (WRI), and the World Wildlife Fund (WWF). It certifies CO2 emission reduction targets for companies that are consistent with science-based reduction scenarios toward the goal of the Paris Agreement of “keeping the global average temperature rise since the pre-industrial revolution to below 2°C.”

Greenhouse Gas Reduction Overview

In fiscal 2019, the Group's greenhouse gas emissions (derived from base energy, company vehicle fuel, and leaked fluorocarbons) were 11% lower in Japan and 6.2% lower globally compared to the previous fiscal year. The reduction in greenhouse gas emissions is thought to be due to reduced energy consumption at domestic bases.

On the other hand, the CO2 emission targets in the medium-term action plan were 47% lower than in fiscal 2010 in Japan and 40% lower globally, exceeding the target.

Greenhouse gas emissions

CO2 emissions (derived from base energy)

Supply Chain Greenhouse Gas Emissions Reduction Overview

Scope 3 emissions in category 1 accounted for 76.5% of all supply chain greenhouse gas emissions in fiscal 2019. Supply chain greenhouse gas emissions in fiscal 2019 decreased by 7.4% for Scope 1, decreased by 12% for Scope 2, and increased by 15.4% for Scope 3. “Overseas” was added to the scope of calculations in Scope 3, category 7.

FY2019 supply chain greenhouse gas emissions rate

Scope 1 greenhouse gas emissions

Scope 2 greenhouse gas emissions

Scope 3 greenhouse gas emissions

Category Definition GHG emissions (tons-CO2eq)
1 Purchased goods and services 540,640
2 Capital goods 57,347
3 Fuel- and energy-related activities not included in Scope 1 or 2 14,494
4 Transport and delivery (upstream) 2,392
5 Waste generated in operations 2,071
6 Business travel 908
7 Employee commuting 2,119
8 Leased assets (upstream) Added to Scope 1 and 2
11 Use of sold products Not applicable
12 End-of-life treatment of sold products 385
14 Franchises Not applicable

Reduction of Energy Used

We have created a system of energy management that covers the entire domestic Group and regularly hold liaison committee meetings with environment-related departments and the people in charge at each base. The liaison committee promotes energy conservation Groupwide by discussing changes in energy use and energy-saving measures and implements them.

Energy consumption (thermal equivalent) in fiscal 2019 decreased 4.8% year on year in Japan and declined 4.1% year on year overseas. Energy consumption in Japan decreased from the previous year due to energy-saving activities at each base and base consolidation.

Energy used

Initiatives to Reduce Greenhouse Gas Emissions

Energy-Saving Initiatives at Bases

The table below shows the energy-saving activities conducted at domestic bases in fiscal 2019.

Energy-saving activities at domestic bases

Classification Base Activity
Reduction of steam transportation loss Yokohama Site Reduce distance of steam transportation by changing steam supply from a central to an individual system
Install energy-saving equipment in new buildings Onoda Plant Install total heat exchange ventilator, low-emission glass, and LED lighting
Energy-saving campaign All bases Campaign poster display (summer and winter)
Ecological activities Kashima Site Certified as an “Excellent Ecological Commuter Office”*
Tokai Branch Certified as an “Eco Office”
Head Office/Kashima Site Registered under the “Kansai Eco Office Declaration”
Promotion of eco-driving East and West Japan Distribution Center Improved fuel efficiency by installing safety recorders

*Certified and registered as a Ministry of Land, Infrastructure, Transport and Tourism “Excellent Ecological Commuter Office”

Introduction of Hybrid Vehicles

The Group is introducing hybrid vehicles and eco-driving to reduce greehnouse gas emissions from company-owned vehicles.

As of the end of fiiscal 2019, there were 1,709 company-owned vehicles (down 6.7% year on year) within the domestic Group that are driven outside the base, of which 1,145 (67%) were hybrid vehicles. On the other hand, in fiscal 2019, CO2 emissions from company-owned vehicle fuel were 4,200 tons-CO2 (down 12% year on year).

Renewable Energy Use

Use of renewable energy that does not emit greenhouse gases is an effective measure to contribute to climate change mitigation.

The Group has installed solar power panels on the rooftops of the Kashima Site office buildings and the Tokyo Head Office. The amount of power generated in fiscal 2019 was 167MWh at the Kashima Site and 3MWh at the Tokyo Head Office.

Solar power panels on a rooftop of the Kashima Site office building

Controlling Fluorocarbons Emissions

The Group is working to prevent leaks of fluorocarbons, which show the effects of ozone layer depletion and greenhouse gases. We comply with installation standards and conduct regular inspections of equipment containing fluorocarbons installed in domestic bases. In addition, when disposing of equipment containing fluorocarbons, we are working to implement steady recovery/destruction of fluorocarbons. In addition, when installing equipment containing fluorocarbons, we selected a model that takes into account global warming potential and energy-saving performance.
In fiscal 2019, at the Group's domestic production and research bases, the volume of fluorocarbons recovered and destroyed was 1,989 kg, and the leakage volume was 22 kg (40 tons-CO2). The CO2-equivalent leakage volumes for domestic Group companies were below the threshold for reporting to the national government for all years since 2015 when the leakage reporting system was established.

Donation of Greenhouse Gas Emission Credits

Since we collaborate with Zero Carbon Saitama* operated by Saitama Prefecture, the surplus greenhouse gas allowance (1,770 tons-CO2) generated by the Toda Site's greenhouse gas reduction efforts was donated as a credit established by Saitama Prefecture's target-based emissions trading system.

*Zero Carbon Saitama is a general term for collaboration with the 2020 Tokyo Olympics Carbon Offset and Realization of Zero Carbon Three Days in 2019.

Analysis and Evaluation of Climate Change Risks and Opportunities

In promoting mitigation and adaption to climate change, it is important to understand the impact of extreme weather and natural disasters as well as the impact of the transition to a low-carbon society on our business.

The Group uses two types of climate change prediction tools, A-PLAT WebGIS*1 and NK-ClimVault*2 and promotes climate change predictions at production and research bases in Japan and overseas using representative concerntration pathway scenarios (RCP2.6: 2°C scenario, RCP8.5: 4°C scenario)*3.

Understanding the impact of climate change on the supply chain is also important for sustainable procurement of raw material. The Group began analyzing the impact using the above prediction methods.

We have evaluated the impact of climate change on the Group's businesses in terms of both risks and opportunities based on the predictions.

We will continue to analyze and evaluate, and pursue measures necessary to make our business more resilient.

Classification Content Management method
Physical risk Increasing natural disasters due to abnormal weather resulting in product supply delays and equipment restoration costs caused by damage to production facilities. Evaluate climate change risk of production bases
Prepare BCP manual, take disaster prevention measures, secure emergency power supply
Crop failure of vegetable-based raw materials due to bad weather or disruption of the supply chain caused by natural disaster hinders the procurement of raw materials. Evaluate climate change risk of suppliers
Conduct supplier surveys
Consider alternative purchasing methods
Increasing maintenance and management costs for research and production facilities due to rising average temperatures Augment conditioning equipment, etc.
Regulatory risk Stricter regulations on greenhouse gas emission and introduction of the carbon tax increase operating costs Use renewable energy
Fuel conversion
Convert to low CO2 emission equipment
Reputation risk Worsening stakeholder evaluations of Company's climate change response causes sales to decrease Actively promote mitigation and adaptation measures for climate change
Appropriately disclose information about initiatives
Opportunities (Products/Services) Expansion of medical needs in areas such as infectious diseases due to climate change effects Analyze medical needs
Strengthen vaccine business, research and develop drugs to treat malaria and NTDs (neglected tropical zone infectious diseases)
  • *1A tool for evaluating the impact of climate change developed by the Climate Change Adaptation Information Platform (A-PLAT)
  • *2A tool for evaluating the impact of climate change developed and released by Nippon Koei Co., Ltd.
  • *3Prediction of future changes in temperature and precipitation by inputting future predictions of greenhouse gas concentrations in the atmosphere (emission scenarios) into a climate model. The tool is commonly used internationally, such as in the IPCC Fifth Assesment Report.
Infectious diseases expected to increase due to climate change, and drug discovery

As climate change progresses, the number of infectious diseases carried by mosquitoes is expected to increase.

The Group supports creating new drugs for infectious diseases such as malaria and neglected tropical diseases by investing in the Global Health Innovative Technology Fund (GHIT Fund), which was set up by governments, companies, and citizens across sectors. In addition, through the GHIT Fund, we provided a compound library to the Medicines for Malaria Venture (MMV), a research institute for malaria treatment, obtained three promising hit compounds through collaborative research, and from one of them, we obtained two lead compounds as candidates for new antimalarial drugs. Collaborative research with MMV moved into the next stage in April 2019, and we are promoting a two-year program to create pipeline candidates utilizing a grant from the GHIT Fund.