Climate Change Initiatives
(Disclosure Based on TCFD Recommendations)
The Teijin Group has designated "climate change mitigation and adaptation" as an important issue (materiality). Accordingly, the Group has been leveraging lightweight and energy-efficient technologies to contribute to the transition to a carbon-free society. At the same time, the Group has been making efforts to reduce greenhouse gas (GHG) emissions from its business activities.
We have also announced our support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in March 2019. We promote information disclosure on climate change in line with it.
Governance
Under the guidance and supervision of the Board of Directors, the Teijin Group is making efforts to address climate change-related issues as part of its efforts toward sustainability and risk management, and has put the Chief Sustainability Officer (CSO) in charge of these efforts.
The Board of Directors grasps the situation and provides instruction based on reports from the Total Risk Management (TRM) Committee twice a year as well as reports from the CSO regarding the performance status of their duties.
In addition, management assesses the response to climate change through TRM Committee meetings and CSR Committee meetings, and promotes initiatives accordingly.
Strategy
Opportunities and risks related to climate change
We view climate change mitigation as a business opportunity and are providing solutions centered on the transition to lightweight, highly durable mobility realized through high-performance and high-value-added materials.
For climate change adaptation, we are offering solutions that help reduce damage and facilitate a prompt recovery in the event of a natural disaster, through infrastructure reinforcement materials that make use of high-performance materials and technologies and services in the IT and healthcare domains. In addition, we are striving to provide solutions that help contribute to the establishment of a circular economy, with a view toward achieving carbon neutrality.
- Materiality 1 Climate Change Mitigation and Adaptation
- Materiality 2 Achievement of a Circular Economy
Meanwhile, in an effort to reduce the impact our business activities have on the global environment, we are phasing out coal-fired thermal power while promoting energy conservation and renewable energy and pursuing process innovation and other types of technological innovation.
In addition, we analyzed the impact of climate change-related transition risks and physical risks on our operations from the three perspectives listed below. Based on this analysis, we have established long-term environmental targets and are making efforts to reduce our CO2 emissions accordingly.
Climate change-related opportunities and risks
| Category | Major opportunities | Time frame | Major initiatives |
|---|---|---|---|
| Opportunities concerning products and services | ・Increase in profits through the provision of solutions that contribute to "climate change mitigation and adaptation" | Short term-Long term | ・Provision of solutions that leverage lightweight and energy-efficient technologies ・Provision of solutions that help reduce damage and facilitate a prompt recovery in the event of a natural disaster |
| Category | Major risks | Time frame | Major initiatives | |
|---|---|---|---|---|
| Transition risks | Policies and legal regulation | ・Increase in costs due to carbon tax, EU Emissions Trading Scheme, etc. | Short term-Long term | ・Monitoring of trends in various policies and regulations ・Introduction of internal carbon pricing system targeting capital expenditures that can lead to an increase/decrease in CO2 emissions |
| Market and reputation | ・Decrease in corporate value and worsening of reputation due to an increase in Group CO2 emissions | Medium term-Long term | ・Management of CO2 emissions of Group companies both in Japan and overseas, including affiliated companies ・Formulation and implementation of road map for achieving long-term environmental targets |
|
| Physical risks | Acute and chronic risks | ・Suspension of business activities as a result of increased intensity of natural disasters such as typhoons and floods, long-term temperature increases, and rising sea levels, stemming from climate change | Short term-Long term | ・Regular review of business continuity plan (BCP) and implementation of various disaster prevention drills |
Road map for reducing Group CO2 emissions (Scope 1 + Scope 2)
The Teijin Group aims to achieve net zero carbon emissions by 2050. To that end, we are phasing out coal-fired thermal power in an effort to reduce CO2 emissions resulting from our business activities while promoting energy conservation and renewable energy and pursuing process innovation and other types of technological innovation.
In FY2022, Teijin (Thailand) Limited transitioned away from using coal as fuel for boilers that supply steam to its plants and adopted the use of natural gas instead, which is extremely energy efficient and can help to significantly reduce CO2 emissions. Moreover, in Japan, we decided to convert fossil fuel-based power generation facilities at the North Plant of Matsuyama Factory to a cogeneration system running on city gas. Through these efforts, we expect that we can completely phase out the use of fossil fuels to generate power both in Japan and overseas.
Continuing on from the introduction of renewable energy at our European bases, we commenced the introduction of such energy at Teijin Polyester (Thailand) Limited in FY2021, and Teijin Polycarbonate China Ltd. and Teijin Lielsort Korea Co., Ltd. in FY2022, among other locations.
In our efforts to enhance energy efficiency and promote energy conservation, we aim for a 1% improvement in energy efficiency each year and are promoting efforts to achieve this goal at each base. Spearheaded by the Energy Strategy Department, we are promoting energy initiatives across the Group by assessing the status of energy use by facilities at each base and calculating the effects of energy conservation efforts.
Converting to gas cogeneration system at the North Plant of Maruyama Factory
In October 2022, the Teijin Group made the decision to convert the in-house fossil fuel-based power generation facilities currently in use at the North Plant of Maruyama Factory to a cogeneration system* running on city gas.
- *Cogeneration systems supply both electricity and heat on premise, and their high energy efficiency result in significant reductions in CO2 emissions.
With regard to the Group's specific targets for net zero emissions by FY2030, allowing for future business growth, this target requires us to reduce CO2 emissions by roughly 600,000 tons compared with FY2018 levels. The introduction of this gas-based cogeneration system in the North Plant of Matsuyama Factory is expected to achieve a reduction of 200,000 tons a year, or around 30% of this reduction.
The total investment is expected to be over JPY 10 billion, including the replacement of existing aging power receiving and distribution equipment, and the generating capacity of the new power plant is expected to be approximately 30,000 kW.
Introduction of internal carbon pricing system*
In FY2020, the Teijin Group established and introduced an internal carbon pricing (ICP) system targeting capital expenditure plans throughout the Group that can lead to an increase or decrease in CO2 emissions. In FY2021, we began applying this ICP system to our capital expenditures.
In April 2023, we revised the ICP system, making changes to such aspects as set pricing and scope of application, taking into account such factors as the raising of our target for Groupwide CO2 emissions reductions and the recent changes in the external environment.
With regard to ICP, we raised this price from €50/t-CO2 to €100/t-CO2 to better reflect the increased risks of carbon taxes being introduced and rising tax rates as well as higher emissions trading prices in various countries, especially in Europe.
We have expanded the application of our pricing system for in-house CO2 emissions to include investments such as M&A, as well as decisions related to reducing emissions that do not necessarily involve capital investment, such as switching to renewable energy. In addition, with regard to indirect emissions from partners in our upstream value chain (Scope 3 Category 1), the revised ICP will be applied to capital investments for switching to recycled or biomass-derived raw materials purchased from other companies, thereby encouraging the reduction of CO2 emissions throughout the supply chain.
- *A system that creates economic incentives to reduce CO2 emissions by establishing internal carbon prices to quantify CO2 emissions as costs, thereby promoting internal efforts to respond to climate change
Scenario analysis related to climate change
After identifying businesses and industries that have the potential to be significantly impacted by climate change, the Teijin Group has been conducting an analysis of the level of this impact based on the 2℃ scenario and the 4℃ scenario,* referencing World Energy Outlook (WEO), published by the International Energy Agency (IEA).
We have also been closely monitoring the changing trends in the industry due to the COVID-19 pandemic and examining appropriate investment timing and resource allocation.
- *2℃ scenario: IEA WEO Sustainable Development Scenario/IEA WEO 450; 4℃ scenario: IEA WEO Stated Policies Scenario
We are once again conducting scenario analysis as we formulate the next medium-term management plan. In addition, we are examining specific measures to enact during the period of the next plan so that we are able to adhere to our road map for CO2 reductions.
Risk Management
Groupwide management methods for climate change risks
We position climate change-related risks as "Serious Group Risks" and are working to manage them accordingly under our TRM framework. Transition risks and physical risks faced by Group companies are identified and responded to alongside other risks via our TRM risk assessment.
For transition risks, we have established a road map for achieving net zero CO2 emissions while monitoring the trends of government policies around the globe. We have also introduced an ICP system that targets capital expenditures linked to increases or decreases in CO2 emissions. Furthermore, we are striving to reduce Groupwide GHG emissions and GHG emissions within the supply chain. Through such efforts, we are curtailing the impact of transition risks.
In April 2023, the scope of the system was expanded to include investment projects such as M&A and projects that require decision-making related to the reduction of CO2 emissions without capital investment, such as conversion to renewable energy as a result of changing suppliers.
In addition, to address physical risks such as those involving rising temperatures and sea levels, we are evaluating and implementing the necessary measures to respond to water risks. At the same time, we are revising our BCPs as needed and implementing various kinds of disaster prevention drills.
Risk management structure
- 1.Each business implements risk management in accordance with the frontline operations.
- 2.CSO confirms and makes instructions on the risk management status of each business at the CSR Committee and the CSO review.
- 3.CSO reports and makes proposals related to Groupwide risk management at the TRM Committee, followed by discussions and instructions.
- 4.CSO reports the contents of discussions at the TRM Committee to the Board of Directors. The Board of Directors deliberates on basic TRM plans.
Indicators and Targets
To accelerate efforts to realize net zero CO2 emissions, we raised the FY2030 target for Groupwide GHG emissions from a 20% reduction compared with FY2018 to a 30% reduction.* These targets were validated as targets that limit global temperature rise to "well below 2C," thereby receiving approval from the Science Based Targets initiative, which recognizes GHG emission targets that are scientifically consistent with the targets of the Paris Accord.
For two-thirds of our total CO2 emissions within the supply chain, we established a target of achieving a 15% reduction in these emissions by FY2030 compared with FY2018 to reinforce efforts toward realizing a carbon-neutral society.
- *Equivalent to a 47% reduction in CO2 emissions compared with FY2013 (Reference information: Japanese government target of 46% reduction in GHG emissions compared with FY2013)
Avoided CO2 emissions
We aim to reduce CO2 emissions throughout the entire supply chain by using our long-cultivated technologies for reducing weight and increasing efficiency. By the early stage of FY2030, we aim to make the amount of our avoided emissions larger than our total emissions, which comprise our Groupwide CO2 emissions and CO2 emissions from the upstream supply chain (Scope 1 and 2 and upstream Scope 3).
We have also been making efforts toward Life Cycle Assessments (LCA), which visualize the environmental burden of a product across its entire life cycle. Through these efforts, we aim to reduce CO2 emissions throughout the entire supply chain. In FY2023, we established the LCA Promotion Expert Meeting under which we are proceeding with Groupwide LCA initiatives.
Achieve goal of making the amount of avoided CO2 emissions larger than total CO2 emissions by FY2030The Group’s targets
Group CO2*1 emissions*2
Through the early phase-out of all coal-fired power generation and the gradual transition to renewable energy sources for our electricity, we are working to decouple our business growth from GHG emissions.
- *1Includes CO2, methane, and N2O
- *2CO2 emissions are calculated with the GHG Protocol as reference. The amount of CO2 emissions equivalent to the amount of energy sold to other companies has not been deducted from this data. In addition, the scope of calculation includes non-energy-derived CO2 emissions from carbon fiber production, calculated based on the chemical reaction balance. With regard to coefficients for fuel, we use emissions coefficients based on the Law Concerning the Promotion of the Measures to Cope with Global Warming. As for emissions coefficients for electricity, we use adjusted emissions coefficients of individual electric power companies for power purchased in Japan. For power purchased overseas, we use power company-specific coefficients, in principle. However, in cases where the power company-specific coefficient is unknown, we apply the latest available IEA country-specific emissions coefficient.
The Group’s targets (KPI)
FY2030: 30% reduction (vs. 1.48 million t-CO2 in FY2018)
FY2050: Net zero emissions
Supply chain CO2 emissions*
We have set a KPI pertaining to two-thirds of our total supply chain CO2 emissions and are working to reduce these emissions across the entire supply chain.
- *Covers Scope 3 emissions in Category 1 (purchased goods and services) except emissions from products purchased in the Fibers & Products Converting Business for the purpose of sale.Category 1 emissions are calculated by multiplying the weight or purchased value of purchased goods and services by the emissions intensity in units of weight or value. Emissions intensity data for monetary units is from Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by "Organizations Throughout the Supply Chain (Ver. 3.2) (March 2022) (Emissions Unit Values Database V. 3.2)," published by the Ministry of Economy, Trade, and Industry and the Ministry of the Environment. Emissions intensity data for weight units is based on the intensity data of the Ecoinvent Database (operated by Ecoinvent Association) or the LCA for Experts (GaBi) Database (operated by Sphera).
Group target (KPI)
FY2030 Reduction of 15% compared with FY2018
Efforts to Reduce CO2 Emissions
Avoided CO2 emissions
In FY2022, our avoided emissions increased 29% compared with the previous fiscal year, to 3.17 million t-CO2, due to such factors as the increase in sales of carbon fibers.
Trends in total CO2 emissions and avoided CO2 emissions
| Total CO2 emissions* | Avoided CO2 emissions | |
|---|---|---|
| FY2020 | 5.18 million t-CO2 | 1.65 million t-CO2 |
| FY2021 | 5.07 million t-CO2 | 2.46 million t-CO2 |
| FY2022 | 5.03 million t-CO2 | 3.17 million t-CO2 |
- *Total CO2 emissions are calculated for Scope 1, Scope 2, and Category 1 (Purchased goods and services), Category 2 (Capital goods), Category 3 (Fuel- and energy-related activities not included in Scope 1 and Scope 2), Category 4 (Upstream transportation and distribution), Category 5 (Waste generated in operations), Category 6 (Business travel), and Category 7 (Employee commuting) in Scope 3.
Group CO2 emissions
In FY2022, Group CO2 emissions decreased 4% compared with the previous fiscal year, to 1.32 million t-CO2
(Scope 1: 0.75 million t-CO2, Scope 2: 0.57 million t-CO2), owing to the introduction of renewable energy at overseas bases, among other efforts. This result represented an 11% decrease in emissions compared with FY2018.
Trends in Group CO2 Emissions
- * Includes CO2, methane, and N2O. CO2 emissions are calculated with the GHG Protocol as reference. The amount of CO2 emissions equivalent to the amount of energy sold to other companies has not been deducted from this data. In addition, the scope of calculation includes non-energy-derived CO2 emissions from carbon fiber production, calculated based on the chemical reaction balance. With regard to coefficients for fuel, we use emissions coefficients based on the Law Concerning the Promotion of the Measures to Cope with Global Warming. As for emissions coefficients for electricity, we use adjusted emissions coefficients of individual electric power companies for power purchased in Japan. For power purchased overseas, we use power company-specific coefficients, in principle. However, in cases where the power company-specific coefficient is unknown, we apply the latest available IEA country-specific emissions coefficient.
Supply chain CO2 emissions
In FY2022, our supply chain CO2 emissions were 2.57 million t-CO2, on a par with the level of the previous fiscal year, representing an 11% decrease compared with FY2018.
Supply Chain CO2 Emissions
- *Covers Scope 3 emissions in Category 1 (Purchased goods and services) except emissions from products purchased in the Fibers & Products Converting Business for the purpose of sale. Category 1 emissions are calculated by multiplying the purchased weight or purchased value of purchased goods and services by the emissions intensity in units of weight or value. Emissions intensity data for monetary units is from Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by "Organizations Throughout the Supply Chain (Ver. 3.2) (March 2022) (Emissions Unit Values Database V. 3.2)", published by the Ministry of Economy, Trade, and Industry and the Ministry of the Environment. Emissions intensity data for weight units is based on the intensity data of the Ecoinvent Database (operated by Ecoinvent Association) or the LCA for Experts (GaBi) Database (operated by Sphera).
Reducing CO2 emissions in logistics
In FY2022, CO2 emissions associated with the logistics domain amounted to 5.75 thousand tons, down 0.77 thousand tons from the previous fiscal year.
In FY2022, although there was a recover in demand for aircraft and automobile applications, the overall volume of freight transportation decreased 4.8 thousand t-km compared with FY2021, due in part to the slowdown in the Chinese economy.
In addition to the respite from the increase in drayage distance and small-truck transport due to logistics disruptions, CO2 emissions in logistics were down year on year as a result of ongoing measures to reduce the environmental burden of logistics that we implemented in FY2022, to the greatest extent possible, including improving the truck loading rate and promoting a modal shift (utilizing Japan Railway transportation and shipping).
Following these reduced emissions, in the entire Group's logistics, CO2 emissions per unit of transportation decreased 0.05 compared with the previous fiscal year. The standard basic unit per 1,000 t-km (tons-CO2/1,000 t-km) was 1.05 (against 1 in FY2011).
In FY2023, in addition to shortening drayage distance by changing the point of discharge and to promoting container round use, we will continue efforts to lower emissions per unit by increasing vehicle size (expanding bulk transportation), improving the truck loading rate, and promoting a modal shift.
Trends in CO2 Emissions in logistics and CO2 Emissions per unit of transportation amount
- *The scopes for calculating CO2 emitted by logistics for each fiscal year are as follows.
FY2011: Teijin Limited (excluding the aramid fiber business), Teijin Film Solutions Ltd., and the former Teijin Fiber Co., Ltd.'s apparel business that was consolidated with Teijin Frontier Co., Ltd.
FY2017: Teijin Limited, Teijin Film Solutions Ltd., Teijin Frontier Co., Ltd., Teijin Pharma Limited, Toho Tenax Co., Ltd., Teijin Cordley Limited, and Teijin Engineering Ltd.
FY2018 and FY2019: Teijin Limited, Teijin Film Solutions Ltd., Teijin Frontier Co., Ltd., Teijin Pharma Limited, Teijin Cordley Limited, and Teijin Engineering Ltd.
(*)In FY2018, the former Toho Tenax was transferred and integrated into Teijin Limited.
FY2020: Teijin Limited, Teijin Frontier Co., Ltd., Teijin Pharma Limited, and Teijin Cordley Limited (*)Teijin Film Solutions Ltd. and Teijin Engineering Ltd. are not included.
FY2021 and FY2022: Teijin Limited, Teijin Frontier Co., Ltd., Teijin Pharma Limited, and Teijin Cordley Limited (*)Teijin Engineering Ltd. is not included.