The CO2 concentration in the atmosphere has been rising because of humans activities. Due to the greenhouse effect of CO2 and other greenhouse gases, the global temperature has increased by 0.3℃ to 0.6℃ in the past 100 years. Furthermore, it is predicted to increase by 1.4℃ to 5.8℃ in the next 100 years. Temperature rise causes climate change. There is serious concern that climate change will greatly affect the ecosystem and human lives through extreme weather, sea level rise, and increase in species extinction for example.
Reduction of greenhouse gas (GHG such as CO2) emissions and stopping temperature rises are a global issues. In 2020, the Japanese government declared that Japan will achieve greenhouse gas (GHG) reduction in 2030 by 46% compared to that in FY2013, then will achieve carbon neutrality* in 2050.
- Carbon neutrality: Refers to the state of net zero CO2 emissions achieved through the use of renewable energies and the absorption of CO2 by forests and other means.
Policy
As a chemicals manufacturer, the Sanyo Chemical Group contributes to the carbon neutrality of society as a whole by reducing GHG emissions from its business sites and developing and offering products that help reduce CO2 emissions.
GHG emission reduction and energy savings
GHG emission status (FY2022)
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| Emission / Absorption / Product contribution classification |
GHG type | Emissions volume (CO2 equivalent) |
|---|---|---|
| Emission | Direct emissions from fuel oil combustion (Scope 1) | 130 thousand tons |
| Methane (generated from septic tanks) | 10 tons | |
| Nitrous oxide (by-product of combustion) | 36 tons | |
| other GHG（NF3、PFC、SF6） | No emissions | |
| Fluorocarbons leakage from refrigerators and air conditioners | 339 tons | |
| Indirect emissions from the use of electricity, heat, or steam supplied by others (Scope 2) | 125 thousand tons | |
| Supply chain emissions (Scope 3) | 2,513 thousand tons | |
| Absorption | Increase in forest CO2 absorption (based on tree thinning project) | 11 tons |
| Product contribution | CO2 reduction by using our products | 493 thousand tons |
Of GHG emissions from business sites, the main gases other than CO2 are methane from septic tanks, nitrous oxide, which is a combustion by-product, and fluorocarbons, which leak from refrigerators and other equipment (385 tons in total in CO2 equivalent). Emissions of these GHGs other than CO2 account for 0.15%, which is very small compared to the emissions of Scopes 1 and 2. Almost all emissions from the supply chain, including Scope 3, are CO2.
Click here for details of Scopes 1, 2, and 3
Midterm to long-term goals of greenhouse gas emission reduction plan (Scope1+Scope2)
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| FY | Target (CO2 equivalent) |
Note |
|---|---|---|
| 2013 | 309 thousand tons | Base year |
| 2030 | 154 thousand tons | Intermediate target (50% reduction compared to base year) |
| 2050 | Net Zero | Final target (carbon neutrality) |
Additionally, in FY2018, we changed the sales management policy to selectively sell high value added products and stop selling low value added products. As a result, domestic production volumes decreased have significantly decreased. Overseas, although the production volumes had been increasing until FY2020, the Chinese affiliate’s production volume has been decreasing particularly largely since FY2021, as a result the group-wide production volume decreased by 20% compared to FY2018. Because of the product mix change and production volumes decreases through sales policy changes and the CO2 reduction measures of by the Work Group, CO2 emissions in FY2022 were 255 thousand tons. In terms of energy consumption in crude oil equivalent, it is also decreasing for the same reasons.
Measures toward carbon neutrality
Most of the GHG emissions from business sites of our Group are CO2. Thus, we aim to achieve carbon neutrality across the supply chain by focusing on efficient utilization through the establishment and operation of an energy management system, and on energy transition (from fossil fuels to sunlight and hydrogen) in Scopes 1 and 2. Meanwhile, in Scope 3, we use low-GHG raw materials (that contribute to carbon neutrality, such as biomass raw materials) and develop technologies for energy conservation, GHG emissions reduction, and resource conservation when using our products and technologies that contribute to CCU (Carbon dioxide Capture and Utilization). The roadmap is shown on the page for information disclosure based on recommendations by the Task Force on Climate-related Financial Disclosure (TCFD).
Monozukuri Transformation (Manufacturing Innovation)
As part of the Reformation of Existing Business set out in the New Medium-Term Management Plan, we have been working to reform the operational process throughout the supply chain based on digital transformation (DX). The production and research teams work together to promote initiatives that lead to carbon neutrality, such as a fundamental review of the production process for existing products and the use of low-GHG raw materials.
Products using biomass
Bio-based raw materials (biomass*) are renewable and sustainable raw materials compared to petrochemical raw materials. Thus, petrochemical raw materials have been increasingly replaced by biomass raw materials. Basic chemicals, such as acrylic acid and ethylene glycol, have also been increasingly derived from biomass. Defossilization of raw materials (a shift to biomass) is expected to accelerate into the future. In fact, we have developed superabsorbent polymers, which have acquired the Biomass Mark, and polyethylene glycol, which has been certified under the ISCC system.
Click here for products using biomass
- Biomass: A concept that represents the amount (“mass”) of biological resources (“bio”). Biomass refers to “renewable, bio-based organic resources excluding petrochemical raw materials.” Unlike CO2 released from the combustion of petrochemical raw materials, CO2 released from the combustion of biomass is CO2 absorbed from the atmosphere through photosynthesis during the growth process of living organisms. Thus, biomass is regarded as “carbon neutral” resources that do not emit additional CO2 into the atmosphere.
Support Initiatives
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| Initiative | Sponsoring organization |
|---|---|
| TCFD | Task Force on Climate-related Financial Disclosure |
| Keidanren Challenge Zero | Keidanren (Japan Business Federation) |
| GX League | Ministry of Economy, Trade and Industry |
| 2050 Zero CO2 Emissions from Kyoto Ordinance | Kyoto City |
Fluorocarbons
Fluorocarbons were heavily used in the mid-20th century as refrigerants and solvents, but it became apparent that fluorocarbons were the causative substance for ozone depletion and were greenhouse gases. Today, substantial restrictions have been imposed on the use by various international agreements and laws, such as the Montreal Protocol.
In Japan, the Fluorocarbon Emissions Control Act was enacted in 2015. In this law, companies who use the air conditioners and refrigerators/freezers including fluorocarbons as a refrigerant are obliged to inspect the devices and report the fluorocarbons leak volume. Our domestic facilities own about 800 devices and annually inspect them in accordance with the law. The total of fluorocarbons leak volume level in FY2022 was 102 kg (of this amount, 20 kg was the leakage ozone depleting fluorocarbons), and this was 339 tons of CO2 equivalent.
Disclosure based on TCFD recommendations
As a chemical manufacturer, the Sanyo Chemical Group uses fossil fuels in its manufacturing processes for various products and emits CO2. For this reason, it focuses on reducing CO2 emissions from business sites, and aims to achieve carbon neutrality by developing and spreading the use of products that contribute to energy conservation and CO2 emissions reduction.
Considering that response to climate change is an important management issue, we showed support for the recommendations by the Task Force on Climate-related Financial Disclosures (TCFD) in December 2021.
Assessing the risks and opportunities that climate change may pose to Sanyo Chemical, we will proceed with initiatives based on our scenario analysis. We will actively work on initiatives across the Group toward a “50% reduction in CO2 emissions by 2030 (compared to the FY2013 level) and net zero by 2050,” which are the targets of our Sustainability Action Plan, while aiming to reduce emissions across the supply chain.
Recommendations by the Task Force on Climate-related Financial Disclosure (TCFD) require information disclosure regarding the governance, strategy, risk management, and metrics and targets of climate change. Our Group has been taking action in line with the TCFD recommendations.
Governance
Since FY2021, the Sustainable Management Committee (chairperson: President and CEO) has been in place to study appropriate response to issues that may pose management risks, including climate change, and to make decisions under the supervisory system of the Board of Directors. The committee discusses the response to TCFD recommendations and reports important matters to the Board of Directors.
The CSR Promotion Management Committee formulates and implements specific measures to reduce CO2 emissions. The committee builds systems and mechanisms and reports the status of CSR activities, which are conducted under the initiative of the committee, to the Sustainable Management Committee.
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Strategy
The Group conducts scenario analysis as the first step toward formulating the strategy, risk management, metrics, and targets for climate change. We selected business risks and opportunities in the 1.5°C scenario, which aims to achieve a shift toward a decarbonized society, assessed their importance, and compiled their impact on the Group. The scope of analysis was the business of the Company and SDP Global Co., Ltd.
We conducted a qualitative scenario analysis of the Group's major business areas, including the Toiletries & Health Care, Petroleum & Automotives, Plastics & Textiles, Information & Electrics/Electronics, and Environmental Protection & Construction. The assessment results were discussed by the Sustainable Management Committee and reported to the Board of Directors.
The scope of analysis will be expanded to our Group companies, and the 4°C scenario will be assessed to formulate measures.
The 1.5°C scenario
Referring to the scenario of strong control of CO2 emissions to limit temperature rise to "+1.5°C" (the long-term outlook "Net Zero Emissions by 2050" at the International Energy Agency), we considered tighter regulations and major social and market transformations as the central scenario of transition risk. The scenario was based on the following assumptions.
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| World anticipated in the 1.5°C scenario |
|
|---|
Risk management
We anticipate tighter regulations due to policies, including carbon pricing toward decarbonization, and a shift in demand for materials suitable for decarbonization as the main climate change risks of the Group. We also study the risks of the accelerated shift toward a circular economy, and the emergence of innovative technologies toward a decarbonized society.
As countermeasures, we will study the possibility of carbon dioxide capture and utilization (CCU) and energy shift to hydrogen, etc. t the Nagoya Factory and the Kashima Factory, and in the SDP Group, which account for a large proportion of the CO2 emissions of the Group. We will also improve the processes and reduce CO2 emissions from our business sites.
Regarding opportunities, we contribute to reducing CO2 emissions by actively promoting sustainable management, including the review of our business portfolio.
The Group’s countermeasures to the main risks and opportunities of climate change
The Group’s countermeasures to the main risks and opportunities and the results of impact assessment were compiled. Regarding the impact assessment, the impact in terms of the amount of money was estimated and classified into three categories (high, intermediate, and low), depending on the magnitude.
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| Climate change risk item |
Impact of climate change risks ● Risk 〇 Opportunity |
Impact assessment | Countermeasure |
|---|---|---|---|
| Introduction / raising of carbon tax |
|
High |
|
| Reduction of CO2 emissions |
|
High |
|
| Replacement with low-carbon products |
|
Intermediate |
|
| Recycling regulations |
|
Intermediate |
|
| Changes in consumer behavior |
|
High |
|
Metrics and targets
Target of CO2 emissions reduction
■ Emissions (Scopes 1+2)
The Group set long-term targets to achieve net zero CO2 emissions by 2050 in Scopes 1 and 2*, and created a roadmap to reduce CO2 emissions by 50% by 2030 (compared to the FY2013 level). We aim to reduce CO2 emissions significantly by introducing CCU in addition to increasing energy use efficiency through the use of renewable energy and the introduction of an energy management system, reviewing the manufacturing processes, and changing the product portfolio.
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- Emissions are expected to increase during the period of the new medium-term management plan (FY2023-FY2025) as production volume increases, but we will continue to improve manufacturing processes and reduce CO2.
- A 50% reduction is targeted for FY2030 (compared to FY2013) through the use of CCUs and green hydrogen.
Roadmap toward carbon neutrality
We aim to reduce GHG emissions significantly by introducing CCU in addition to GHG emissions reduction measures, including energy transition (introduction of energy management, introduction of solar power generation and green hydrogen, and expansion of cogeneration), review of the manufacturing process, and changes in the product portfolio.
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Emissions through the supply chain (Scope 3)
We will also set metrics to promote sales expansion and the development of products that contribute to the reduction of CO₂ emissions, and will work on the reduction of CO₂ emissions in Scope 3 (emissions through the supply chain). Starting in FY2022, we use a standard questionnaire tool (common SAQ) formulated by the Global Compact Network Japan to reduce CO2 emissions through the supply chain.
Toward the future
We will continue to conduct scenario analysis in line with the recommendations by TCFD, quantitatively evaluate the impact of climate change, and expand the scope of evaluation to Group companies. We will also practice PDCA by periodically reporting the review results to the Board of Directors and holding deliberations each year to disclose information about target setting and progress.