Sustainability

Climate Change Initiatives (Disclosure Based on TCFD Recommendations)

In Medium-Term Management Plan 2020-2022, the Group has designated "climate change mitigation and adaptation" as an important issue (materiality). Accordingly, the Group is leveraging lightweight and energy-efficient technologies to contribute to the transition to a carbon-free society. At the same time, the Group is making efforts to reduce greenhouse gas emissions from its business activities.
We have also announced its 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 Social Responsibility Officer (CSRO) in charge of these efforts. The direction, planning, and progress of the Group's climate change efforts are deliberated by the organizations mentioned on the right. The Board of Directors provides instruction on these efforts.

  • Deliberations on basic plans and reports of their progress take place at the Total Risk Management (TRM) Committee. The details of these discussions are then reported to the Board of Directors (twice a year).
  • The CSRO reports the performance status of their duties to the Board of Directors (once a year).

Strategy

Risks and opportunities related to climate change

When formulating the medium-term management plan, we analyzed opportunities and risks by referencing the SDGs and considering our vision for the Group in 2030 and then thinking in reverse on how to achieve that vision.

We view climate change mitigation as a business opportunity and are providing Environmental Value 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 Safety, Security, and Disaster Mitigation Solutions, which 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.

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 Environmental Value Solutions that leverage lightweight and energy-efficient technologies
Opportunities concerning resilience Short term-long term ・Provision of Safety, Security, and Disaster Mitigation Solutions that help reduce damage and facilitate a prompt recovery in the event of a natural disaster
Category Major risks Time frame Major initiatives
Transitional risks Policies and legal regulation ・Increase in costs due to the introduction of a 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 of road map for achieving long-term environmental targets
Physical risks Acute and chronic risks ・Suspension of business activities as a result of climate change, including increased intensity of natural disasters such as typhoons and floods, long-term temperature increases, and rising sea levels Short term-long term ・Regular review of BCP and implementation of various disaster prevention drills

Roadmap for reducing Group CO2 emissions (scope 1 + 2)

The Teijin Group seeks to achieve net zero CO2 emissions by 2050 through the early phase-out of all coal-fired power generation facilities and a transition to renewable energy sources for electricity.

Roadmap for Reducing CO<sub>2</sub> Emissions

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. Under this system, we apply a uniform internal carbon price (€50/t-CO2) Groupwide and globally, thereby quantifying CO2 emissions as costs that we can consider when making investment decisions. Through the launch of this system, we will promote capital expenditure plans that help reduce CO2 emissions with the aim of achieving our long-term goals for CO2 emission reduction and to prepare the Company for expected future rises in global carbon prices.

  • *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
  • インターナルカーボンプライシング制度の仕組み

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).

  • *2℃ scenario: IEA WEO Sustainable Development Scenario/IEA WEO 450; 4℃ scenario: IEA WEO Stated Policies Scenario

In FY2020, we reviewed our base scenario in light of the changing trends in the aircraft industry due to the COVID-19 pandemic and revised our plans for profits in the carbon fibers business following the delayed growth in demand for carbon fiber intermediate materials for aircraft. Going forward, we will continue to closely monitor trends as we examine appropriate investment timing and resource allocation.

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 total risk management (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 internal carbon pricing (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 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. 1.Each business implements risk management in accordance with the frontline operations.
  2. 2.CSRO confirms and makes instructions on the risk management status of each business at the CSR Committee and the CSRO review.
  3. 3.CSRO reports and makes proposals related to Groupwide risk management at the TRM Committee, followed by discussions and instructions.
  4. 4.CSRO 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, in July 2021, 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 2°C," 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.

We also established a target for reducing GHG emissions in the supply chain --a 15% reduction by FY2030 compared with FY2018.

  • *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

The Teijin Group aims to reduce CO2 emissions throughout the entire supply chain by using its long-cultivated technologies for reducing weight and increasing efficiency. Also, we calculate the impact of using our products on reducing CO2 emissions in the downstream supply chain as “avoided emissions.” By 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 (Scopes 1 and 2 and upstream Scope 3).

The Group’s targets

Achieve goal of making the amount of avoided CO2 emissions larger than total CO2 emissions by FY2030

Group CO2*1 emissions*2

We aim to reduce our greenhouse gas emissions by 30% compared to the FY2018 level by FY2030 and to achieve net zero emissions by FY2050.

  • *1Includes CO2, methane, and N2O
  • *2Calculated 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. 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 tons-CO2* in FY2018)
FY2050: Net zero emissions

Supply chain CO2 emissions*

In FY2020, we set the supply chain CO2 emissions targets for the period until FY2030. The target for supply chain CO2 emissions covers Scope 3 emissions in Category 1 (purchased goods and services) except trading businesses.

  • *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 GaBi Database (operated by Sphera).

Group target (KPI)

FY2030 Reduction of 15% compared with FY2018

Efforts to Reduce CO2 Emissions

Avoided CO2 emissions

In FY2021, our avoided emissions increased 49% compared with the previous fiscal year, to 2.46 million t-CO2, as sales volumes of various applications recovered from the impact of the COVID-19 pandemic.

Trends in total CO2 emissions and avoided CO2 emissions

Total CO2 emissions* Avoided CO2 emissions
FY2019 5.35 million t-CO2 3.28 million t-CO2
FY2020 5.18 million t-CO2 1.65 million t-CO2
FY2021 5.07 million t-CO2 2.46 million t-CO2
  • *Total CO2 emissions are calculated for Scope 1, Scope 2, and Category (C)1 (Purchased goods and services), C2 (Capital goods), C3 (Fuel- and energy- related activities (not included in scope1 and scope 2), C4 (Upstream transportation and distribution), C5 (Waste generated in operations), C6 (Business travel), C7 (Employee commuting) in Scope 3.

Group CO2 emissions

In FY2021, although Group CO2 emissions increased 1% compared with the previous fiscal year, to 1.38 million t-CO2, as production activities recovered from the impact of the COVID-19 pandemic, this result still represented a 7% decrease in emissions compared with FY2018. In FY2021, Scope 1 emissions were 0.77 million t-CO2, and Scope 2 emissions were 0.61 million t-CO2.

Toward the realization of a carbon-free society, we are working to abolish all in-house power facilities that use coal-fired thermal power as early as possible and gradually replace our current source of electricity with renewable energy sources. By doing so, we are working to decouple our business growth with greenhouse gas emissions.

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. 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 FY2021, supply chain CO2 emissions decreased 5% compared with the previous year, to 2.56 million t-CO2 , a 11% decrease compared with FY2018.

Supply Chain CO2 Emissions保証対象指標

  • *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 GaBi Database (operated by Sphera).

Reducing CO2 emissions in logistics

In FY2021 CO2 emissions in logistics amounted to 6.52 thosand tons, up 0.64 thosand tons from FY2020.

In FY2021, following economic recovery despite the impact of COVID-19, the overall volume of freight transportation increased (up by 5.3 thosand t-km/year).

As an ongoing measure to reduce the environmental load, in FY2021 we also improved our truck loading rate and implemented a modal shift (utilizing Japan Railway transportation and shipping). However, due to an increase in drayage distances caused by logistics disruptions and an increase in light-duty truck transportation, CO2 emissions increased compared with the previous year.

As a result, in the entire Group's logistics, CO2 emissions per unit of transportation increased 0.004 compared with the previous year. I The standard basic unit per 1,000 t-km (tons-CO2/1,000 t-km) was 1.10 (against 1 in FY2011).

In FY2022, in addition to shortening the drayage distance by changing the point of discharge and container round use, we will continue our 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: Teijin Limited, Teijin Frontier Co., Ltd., Teijin Pharma Limited, and Teijin Cordley Limited (*)Teijin Engineering Ltd. are not included.