Climate Change

Basic approach

The Glasgow Climate Pact was adopted at the 26th Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26) in 2021, with the aim of addressing the global issue of climate change. The Pact incorporates a commitment to strive to keep the rise in average global temperatures within 1.5°C, which would have a less severe impact than the earlier target of 2°C, by utilizing the latest scientific know-how, and it thus set a de facto goal for the world to work toward. The Pact confirmed that the next 10 years will be vitally important for realizing this, and that it is important to reduce overall global CO₂ emissions by 45% by 2030 compared to 2010, and to cut emissions to net zero by 2050.

Toyobo group recognizes climate change as a very significant social issue that will have a critical impact on our business. We support the “Paris Agreement^*” and "Glasgow Climate Pact" and aim to achieve carbon neutrality by the fiscal year 2051, consistent with the global 1.5°C target.

We also believe that it is important to collaborate with our customers, business partners, industries, local communities, the national government, and society as a whole in order to resolve climate change issues. Our group engages in discussions and dialogue with various stakeholders and works collaboratively to realize the net zero emissions and the goals of the Paris Agreements.

• The Paris Agreement is a global framework adopted in COP21 in 2015 to reduce greenhouse gas emissions after 2020. For the first time in history, it is a fair agreement involving all countries and including the goal of keeping temperature rise below 2 degrees Celsius, and preferably 1.5 degrees Celsius.

Structure

President & Representative Director, CEO & Co-COO has the highest responsibility for climate change-related issues. The Board of Directors receives regular reports on climate change policies and significant matters discussed by the Sustainability Committee and provides supervision and guidance. The Sustainability Committee, chaired by the President & Representative Director, CEO & Co-COO, handles company-wide issues and risks, including climate change issues. In fiscal 2023, the Sustainability Committee met four times, and in response, the Board of Directors was reported five times, including regular reports and extraordinary reports. Following a resolution at the Board of Directors, we announced Sustainable Vision2030 in May 2022, and in April 2023, we officially joined the GX League, which was established by the government of Japan.

• Structure on corporate environmental issue

Targets

With regard to Scope 1 and 2^*1 greenhouse gas (GHG) emissions associated with our business activities, we have set ourselves the target of realizing net zero emissions by fiscal 2051. In response to the growing momentum toward the realization of a decarbonized society, the Board of Directors passed a resolution to raise our intermediate-term target for fiscal 2031 to a target of reducing emissions by at least 46% compared to fiscal 2014 in May 2022.

In order to contribute toward realizing the decarbonized society, we are proceeding with efforts to reduce GHG emissions from the entire value chain deriving from activities that are related to our own business, while also working to expand the contribution that we make toward reducing GHG emissions through our products and services.

Approved by SBTi

In December 2022, the Toyobo group's targets of reducing GHG emissions by fiscal 2031 have been validated by the Science Based Targets (SBT^*2) initiative.

The targets approved by SBTi are as follows.

The target for Scope 1 and 2 corresponds to a reduction of GHG emissions by at least 46% by fiscal 2031 compared with fiscal 2014.

*1

Scope1: Direct emissions from owned or controlled sources
Scope2: Indirect emissions from the use of purchased electricity, heat, and steam

*2

A target to reduce greenhouse gas emissions in line with what is considered to be a state-of-the-art climate-science requirement to meet the Paris Agreement targets

*3

Scope 3: Indirect GHG emissions other than Scope 1 and 2. The SBT validation is concerned with emissions from purchased goods and services and use of sold products.

Results

Scope 1 and 2

The three site (Tsuruga, Iwakuni and Inuyama) account for approximately 70% of GHG emissions from our business activities (Scope1 2).

As regards the results in fiscal 2023, total Scope 1 and 2 GHG emissions came to 894 thousand tonnes CO₂, 26.4% reduction from FY2014. While sales increased by 6.4%, GHG emissions remained at roughly the same level as in fiscal 2022 because we were implementing energy-saving activities and measures to enhance production efficiency.

Consolidated: TOYOBO CO., LTD. and consolidated subsidiaries

Scope3

As regards the results in fiscal 2023, total Scope 3 GHG emissions came to 5,290 thousand tonnes CO₂, an increase of approximately 55% compared to the previous year. The main reason for the rise is a leap in the category 1 and 11 emissions. The category 1 emissions increased compared to fiscal 2022 due to the impact of soaring raw material cost and raw fuel prices. The increment in category 11 was mainly caused by a big leap in emissions from VOC treatment equipment which TOYOBO group provided worldwide. Sales of the equipment for Lithium-Ion Battery (LIB) separator plants were strong due to increased demand for LIB because of the global shift to EV. Accordingly, the emission of the category 11 was increased.

Independent Verification by third party

To increase reliability of our information, we have obtained independent verification from KPMG AZSA Sustainability Co., Ltd., that covers our Scope1,2, a portion of Scope3, and data on energy-consumption for fiscal 2023.

• Top > Sustainability > External Assurance

Initiatives related to our manufacturing business

Reduction of Scope 1 and 2 emissions

Formulating roadmap for Carbon Neutrality

We have formulated a decarbonization strategy with a roadmap for Scope 1 and 2 emissions reduction aimed at realizing carbon neutrality. Based on the strategy, we have raised our intermediate-term target for fiscal 2031 to a target of reducing emissions by at least 46% compared to fiscal 2014, and we are proceeding with emissions reduction activities. As we expand our business toward fiscal 2031, our production volume will increase, and GHG emissions may increase in the future under a business-as-usual (BAU^*) scenario. With the roadmap, we are targeting reductions in Scope 1 and 2 in fiscal 2031 by at least 46% compared to fiscal 2014 through energy optimization measures that involve energy conservation (including increased production efficiency), fuel conversion(away from coal), and adoption of renewable energy.

• An acronym for “Business as Usual,” indicating a case in which no particular GHG emission reduction measures are taken.

Roadmap for Carbon Neutrality

Energy efficiency and conservation

TOYOBO CO., LTD. has set a shared goal of improving energy-efficiency^* by 1.0% or more annually. In fiscal 2023, TOYOBO CO., LTD. achieved the target through various energy-saving efforts. Specifically, this was due to the addition of waste heat recovery systems at in-house power plants and production lines, and the introduction of energy-saving equipment. Besides, the three sites (Tsuruga, Iwakuni, and Inuyama), which emit particularly large amounts of GHG in TOYOBO group, have set even higher targets and are actively working to reduce their use of energy.

In addition, TOYOBO group hold monthly meetings of the Energy Use Efficiency Committee. The committee consists of members from our main business sites and plants. They monitor the energy conservation activities of individual site and provides training on energy conservation (sharing knowhow, etc.). Additionally, each committee member conducts simple audits (“Energy-saving patrols”) at each factory site as appropriate to maintain and improve the level of activity.

• Energy consumption per sales and production volume in accordance with Japan's act on rationalizing energy use

Fuel conversion (away from coal)

We are also implementing a transition toward low-carbon energy use, by switching to fuels with lower carbon contents for our in-house electricity generating equipment and installing additional gas co-generation system^* equipment. We will begin by renewing our in-house thermal power generation plant at the Iwakuni Production Center, converting the fuel from coal to liquefied natural gas and RPF.^*2 Major reductions in GHG emissions, approximately 80 thousand tonnes CO₂, are expected from the operation, scheduled for fiscal 2024. We also added a gas co-generation system at Inuyama Plant and started operation in August 2023. It has improved the energy-efficiency of Inuyama Plant as a whole. We are carrying out GHG reduction measures including fuel conversion at other business sites as well.

• Gas co-generation systems are systems that use natural gas to generate electricity, with the waste heat being harnessed to produce steam and hot water that are used in manufacturing processes, for supplying hot water, for air conditioning, etc.
• An acronym for “Refuse-derived Paper & Plastics Densified Fuel,” solid fuel made mainly from used paper and waste plastic

Introduction of renewable energy

We are proceeding with the installation of photovoltaic power generation at each of our business sites, making use of roof spaces and unused land. In March 2023, Inuyama Plant began operating a photovoltaic power generation facility, which generated approximately 50MWh amounts of electricity in fiscal 2023. Utsunomiya Plant is also scheduled to begin operations of solar power generation facilities and other plants and offices are also considering the introduction of the system.

Initiatives related to the entire value chain

Reduction of Scope 3 emissions

TOYOBO group aims to reduce Scope3 and is implementing reduction measures mainly for Category 1^*1 and Category 11^*2 emissions, which account for a particularly large share of Toyobo group's Scope 3 emissions.

In Category 11, we have introduced new technologies and energy-saving technologies to VOC recovery equipment^*3 to reduce the use of utilities (steam, electricity, etc.), thereby reducing GHG emissions and, at the same time, reducing the burden on environment.

• Scope 3 emission (361KB)

*1

Emissions from activities (such as manufacturing) relating to purchased goods and services

*2

Emissions from use of sold products

*3

Equipment that removes VOC, Volatile Organic Compounds, by an adsorptive method, an absorptive method, or a chilling method, and recovers VOC as a liquid organic solvent. CO₂ emission from VOC decomposition is zero. Moreover, the recovered organic solvent can be reused. VOC is a generic term for volatile organic compounds such as toluene, ethyl acetate, and dichloromethane. It causes atmospheric pollution / air pollution and is responsible for asthmatic and other health-related problems.

Expanding our avoided emissions

Most of the Toyobo group's products are materials or intermediate goods and many of these products contribute toward reducing GHG emissions. Typical examples of them include reverse-osmosis membranes (RO membranes) used in seawater desalination, and VOC treatment equipment, which controls emissions of VOC (volatile organic compounds) that are feared to have an adverse effect on atmospheric pollution / air pollution and the human body. We are making calculations to quantitatively understand GHG avoided emissions^* of these products throughout their life cycles.

In fiscal 2023, in order to unify the internal calculation rules and expand the range of products subject to calculation, we developed our own guidelines that summarize methods for calculating GHG avoided emissions, etc. We have formulated the guidelines in accordance with the "Guidelines for Assessing the Contribution of Products to Avoided Greenhouse Gas Emissions" of the Institute of Life Cycle Assessment, Japan, and calculate avoided emissions according to the guidelines. We also refer to the “Guidelines for Quantifying GHG emission reductions of goods or services through Global Value Chain” issued by the Ministry of Economy, Trade and Industry in Japan.

We will expand our contribution to reducing GHG emissions by increasing sales of these products help to reduce GHG emissions.
For more information on avoided emissions calculation, please refer to the following sections.

• Eco-Conscious Products > LCA Calculation Initiatives

• GHG emissions that can be reduced by our customers' use of our products compared with conventional technologies.

Energy-saving initiatives in logistics

Our annual goal is a 0.5% year-on-year reduction in CO₂ emissions per unit of transportation in relation to logistics.

In the Logistics Department, we launched the Green Logistics Promotion Project in 2006, and as well as working to improve quality and cost rationality, we are also continuously working on environmental conservation such as energy saving, resource saving, and prevention of global warming. Up until now, we have implemented a variety of measures in order to reduce the environmental impact of logistics. These measures include shortening transportation distances by using the nearest port to our production sites, and using efficient stacking and bulk transport of cargo in order to reduce the number of vehicles used. We are also actively promoting the usage of ship and rail transportation which have lower specific energy consumption than truck transportation, together with lower CO₂ emissions.

We have been introducing a logistics system since 2019. Based on dispatch simulations, we worked to further improve loading efficiency by optimizing the allocation of vehicles and we were able to reduce CO₂ emissions.

As a result of these efforts, we were able to reduce CO₂ emissions per unit of transportation by approximately 5% in fiscal 2023 compared to the previous year.

Strengthening climate change measures

Structure to achieve carbon neutrality

In April 2021, Toyobo established the Carbon Neutral Strategies Council and the Carbon Neutral Strategies Cross-Functional Team (CN-CFT) to formulate and promote strategies to achieve carbon neutrality.

In order to make steady progress towards the realization of carbon neutrality, we also established working groups (WGs), with members from different units across the entire company, within the CN-CFT.
In fiscal 2023, the structure was reviewed, and a new Climate Change and Biodiversity Committee was established. We will promote companywide climate change responses with a view to internationally applicable sustainability standards.

WGs' main initiatives

• Promotion of obtaining SBT certification
• Formulation of the roadmap for Carbon Neutrality for Scope 1 and 2 emissions reduction (covering the period through to fiscal 2051)
• Introduction of internal carbon pricing system

Introduction of internal carbon pricing system

On April 1, 2022, we introduced an internal carbon pricing (ICP) system in which the company use its own standards to set a theoretical price on each tonne of GHG emissions for reference in making capital investment. By using the ICP system as a yardstick for evaluating investment decisions, we will accelerate making investments not only in low or net-zero emission facilities and energy-saving technologies, but also in relevant equipment and facilities for research and development.

Outline of Toyobo's ICP system

Disclosure based on TCFD

Recognizing the scale of the impact of climate change on our group and stakeholders, we have identified “a decarbonized and circular society“ as one of our materialities. In January 2020, we announced our support for the recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD), and have been working on initiatives and disclosures that follow them.

In fiscal 2023, we expanded the scope of our scenario analysis to all our businesses. Based on the below 2℃ scenario (decarbonization scenario) and the 4°C scenario (warming progression scenario), we extracted the risks/opportunities of our group specializing in climate change. We have estimated the financial impact of risks and opportunities that we recognize as particularly important. For details, please refer to the integrated report.

Disclosure based on TCFD Recommendations in the Integrated Report 2023 (310KB)

Development of technologies that contribute to the realization of a decarbonized society

Osmotic power generation using high-salinity geothermal water, a source of renewable energy, has been receiving public attention. Toyobo has developed a forward osmosis (FO) membrane for the power plant core used in this method, and it has been used in osmotic power generation plants of Danish venture firm SaltPower.
In April 2023, it was installed at Nobians saltworks in Denmark and is now in operation.

Geothermal water osmosis power generation uses the high osmotic pressure of geothermal water with high salt concentrations pumped from underground. Compared with solar and wind power, the weather and time of day does not affect geothermal power generation. In addition, it does not emit harmful substances such as nitrogen oxides and sulfur oxides normally emitted during combustion.

Find more information about the other technologies here.

• Toyobo’s hollow-fiber FO membrane used at osmotic power plant

Collaboration with Stakeholders

Toyobo group believes that it is important to collaborate with our customers, business partners, industries, local communities, the national government, and society as a whole in order to resolve climate change issues. Our group engages in discussions and dialogue with various stakeholders and works collaboratively to realize the net zero emissions and the goals of the Paris Agreements.

Communication and Collaboration with business partners

Our group has established CSR Procurement Guidelines and asks our suppliers to cooperate in initiatives that support the development of a sustainable society throughout the supply chain. At the guidelines, we ask our suppliers to maintain and strengthen their environment activities, including initiatives aimed at solving the following climate change issues.

• To strive to reduce greenhouse gas (CO₂ and other gases) emissions, and mitigate climate change
• To strive for effective use of resources and energy savings such as improving the efficiency of water and energy use

In addition, our procurement department conducts CSR procurement survey based on the guidelines to monitor the status of efforts to reduce GHG emissions and other initiatives. As a result of the survey, we ask suppliers to make improvements if they have any problems. For the latest survey results and countermeasures (corrective measures), please refer to the following sections.

• Supply Chain Management > CSR procurement survey
• CSR Procurement Guidelines

Involvement in organizations dedicated specifically to climate-related issues

GX League

We endorse the Japanese government's "GX League Basic Concept." GX refers to the transformation of the entire socioeconomic system toward achieving carbon neutrality by 2050 and Japan’s target of reducing greenhouse gas emissions by 2030.

In fiscal 2023, we participated in a forum for dialogue and rule-making organized by the Japanese government (Ministry of Economy, Trade and Industry), where we exchanged opinions with the policy makers. As a result, the Board of Directors has decided to participate in GX League, which will begin full-scale operation in April 2023. We will accelerate our internal efforts and work together with companies that actively engage in GX, as well as government agencies, universities, financial institutions, and other entities, with the aim of transforming the entire economic and social system.

Green x Digital Consortium

We participate in the "Green x Digital Consortium", which aims to create a new society and market using digital technology to achieve carbon neutrality in society as a whole.

Keidanren Carbon Neutrality Action Plan

As a member of the Japan Chemical Industry Association (JCIA), our group participates in the "Carbon Neutrality Action Plan" of the Japan Business Federation (Keidanren). Through the initiative, we confirm the Japanese government's climate change policy and reflect it in our group-wide policy. We are working with the association on a variety of engagement activities related to climate change measures, including the submission of comments on government policies, and are working to realize a decarbonized society.

Keidanren “Challenge Zero” initiative

In support of the “Challenge Zero" managed by the Japan Business Federation (Keidanren) in cooperation with the Japanese government, we have announced specific initiatives for challenge innovation to create a decarbonized society.