Climate Change

Turning to major matters discussed and determined by the Board of Directors, the Sustainability Committee deliberates on policies and strategies in advance, based on conditions surrounding the Group as a whole regarding such environmental issues as climate change that have been discussed and summarized by the Environmental Subcommittee. In addition, based on the policies, strategies, and transition plans finalized by the Board of Directors, the Environmental Subcommittee discusses specific measures and goal setting while managing progress.

Aim: Decarbonization/zero GHG emissions

SEKISUI CHEMICAL Group is working to significantly improve energy efficiency in its production processes in order to reduce the Group’s environmental impact. By transforming and improving production processes and continuously upgrading equipment, we are taking steps to visualize energy use and to reduce consumption.
Since fiscal 2020, we have been promoting the conversion of purchased power to renewable energy on a global basis. We are working to reduce electricity costs from a long-term perspective by introducing solar power generation facilities at our production sites through capital investment and consuming the power generated in-house.
Since fiscal 2023, we have also worked to innovate our production processes and consider ways to reduce fuel-derived greenhouse gases.

SEKISUI CHEMICAL Group develops products that contribute to the resolution of issues related to the natural and social environments, and continues to disclose and disseminate details of specific results. Through these efforts, we are managing risks that arise from changes in market needs against the backdrop of such global issues as climate change. At the same time, we believe that this will be enable us to seize opportunities attributable to increased demand.
In particular, by quantifying as much as possible the size (degree of contribution) of each product's contribution to the resolution of issues, we believe that we can magnify the impact we create, which in turn will lead to opportunities to create markets that help solve global issues and further heighten the awareness of consumers.
In fiscal 2020, we established the MINASE INNOVATION CENTER (MIC) as an organization to promote open innovation with stakeholders. The goals here are to strengthen partnerships with stakeholders and to engage in activities to increase our contribution to solving issues through co-innovation (fusion) while accelerating solutions through early dissemination.
Through MIC, we are actively engaging in technology exchanges with startup companies that possess low-carbon technologies as well as materials and other technologies that contribute to resource conversion, and are initiating steps to accelerate the resolution of social issues.

If climate change worsens and the minimum and maximum temperatures become increasingly severe, people engaged in manufacturing and construction may not be able to work. SEKISUI CHEMICAL Group believes that it is also possible to minimize the impact of climate change by proposing construction and engineering plans that take into consideration the seasonality of each region.
Each divisional company and Group subsidiary has formulated a BCP tailored to its own circumstances as a means of mitigating the risk of a loss in operations and employment opportunities caused by natural disasters or other events.

SEKISUI CHEMICAL Group was the first company in the chemical sector to acquire SBT certification in 2018. The Group set a target of reducing GHG emissions by 26% by 2030 compared with the levels recorded in fiscal 2013. In order to achieve this goal, we have promoted energy consumption innovation, including the replacement of aging facilities, and such energy procurement innovation initiatives as the conversion of purchased electricity to renewable energy and the installation of solar power generation facilities for on-site consumption.
As a result, the ratio of renewable energy ratio to the Group’s total purchased electricity reached 49.5% in fiscal 2023. The rate of GHG emission reduction was 32.8% compared with fiscal 2019.
As climate change countermeasures become an even more urgent social issue, we have decided to increase our 2030 GHG emission reduction rate target by pursuing the technically difficult task of reducing fuel-derived GHG emissions ahead of schedule. This includes the use of electric power at facilities that consume fuel, switching to low-carbon fuels, and innovating production processes.
With the aforementioned in mind, we updated our SBT certification to the 1.5°C target in March 2023.

<Progress in FY2023>
Scope 1+2: Reduced greenhouse gas emissions by 32.8% compared with FY2019
Scope 3: Reduced greenhouse gas emissions by 8.8% compared with FY2019

In the future, we will continue to recognize our responsibility as a driving force within the industry and strive to lead and implore society as a whole to deal with climate change.

We recognize that climate change is not only a major social issue, but also a major risk factor for the Group. In August 2020, we joined RE100, an international initiative which aims to procure the energy consumed in business activities entirely from renewable energy sources, in order to accelerate efforts that contribute to solving this issue throughout society. In the future, we will promote activities in cooperation with member companies and organizations.
We will promote thoroughgoing energy conservation measures and the shift to renewable energy in a bid to achieve zero GHG emissions from our business activities by 2050 as well as the GHG emissions target certified by the SBT Initiative by 2030.
Moreover, we will shift to renewable energy for all of the electric power we purchase from outside sources by 2030, and ensure that all electric power is derived from renewable energy sources, including co-generation systems, by 2050.

When we begin or continue to undertake business with our suppliers, we ask them to establish environmental management systems that comply with ISO 14001 and t to reduce their environmental impact. In particular, with regard to the issue of climate change, we are taking steps to ascertain the progress made in setting and tackling reduction targets.
Furthermore, we monitor the volume of raw materials used by the Group as well as the impact on the environment.
With regard to wood, which is considered to have a significant impact on biodiversity issues, we have formulated procurement guidelines^* specific to wood in an effort to procure all of our needs from sustainable forests. Looking ahead, we will identify risks and conduct due diligence to reduce risks through supplier surveys.

The volume of GHG emissions that falls under the Scope 3 category is substantial at the raw material procurement and product use stages. Based on this, we are stepping up efforts to reach out to raw material suppliers. We recognize that the reason for the large volume of emissions at the raw material procurement stage is the nature of our business as a chemical manufacturer.
In order to reduce GHG emissions when procuring raw materials, we reviewed our selection criteria for new materials. From a raw material perspective, we are requesting the presentation of GHG emissions data during raw material manufacture from more than 10 manufacturing companies, while promoting efforts to reduce greenhouse gases under Scope 3 in the future for the four major resins that are purchased in large volumes and have high levels of GHG emissions In this manner, we are working to reduce Scope 3 GHG emissions in the future.
While the Group obtains only a portion of the total data from suppliers, by using this data we are able to grasp the volume of GHG emissions over the entire lifecycle.
Drawing on the IDEA database, we are studying measures to reduce GHG emissions and promoting reduction activities across the supply chain.
In addition, we have confirmed with suppliers the possibility of providing lower-carbon biomass-derived raw materials and recycled materials, and have begun to consider alternatives.
In specific terms, we will switch to non-fossil sources for resin materials, which account for 50% of purchased products and services (Category 1), and expand the use of recycled materials. This will help reduce GHG emissions from the disposal of products sold (Category 12).
Moreover, we will promote the recycling of waste plastics and work to reduce the amount of waste (Category 5) generated by our operations.
Meanwhile, GHG emissions at the product-use stage are largely attributable to the substantial volumes of greenhouse gases emitted as a result of the energy consumed by the houses we sell.
Regarding the use of products sold (Category 11), higher sales of ZEH homes with Sekisui Heim's energy-saving performance and large-capacity photovoltaic/large-capacity storage batteries have contributed significantly to reducing GHG emissions. We will continue to expand sales of ZEH homes, which will lead to further reductions.

SEKISUI CHEMICAL Group has been promoting the use of renewable energy by installing solar power generation systems at its production sites in Japan and overseas.
Since fiscal 2020, we have also actively promoted the switch to renewable energy sources for electricity purchased. As of the end of March, 2023, 41 business sites in Japan and overseas have switched to renewable energy sources for all of their electricity purchased. Electricity consumption derived from renewable energy sources in fiscal 2023 was 355GWh, which is equivalent to 49.5% of all electricity purchased (including solar power generation for in-house use) and 44.2% of total electricity consumption, including electricity generated in-house by co-generation systems.

In fiscal 2023, the following 5 business sites newly installed solar power generation systems for in-house use, bringing the total number of business sites to 20.

In renovating the building, steps were taken to utilize Low-E double glazing, which improves indoor comfort while reducing air conditioning power consumption, thanks to its high thermal insulation and solar radiation shielding properties. We recognize that the renewal and continued use of aging buildings is not a conventional scrap and build approach, but a concept of building use that is critical to a resource-recycling society. Improving the durability of buildings and using them for a long time can save resources and reduce waste, reduce the amount of energy needed to manufacture building materials, and in turn, reduce GHG emissions throughout the lifecycle of buildings. In addition, more than 20 of the Group's products that contribute to the safety, durability, and environmental performance of buildings and infrastructure were used in the renewal. In October 2023, film-type perovskite solar cells, which are currently under development, were installed on the exterior walls of the building. This is the first such case of exterior wall installation in Japan.

SEKISUI CHEMICAL Group is collaborating with other companies and organizations in an effort to achieve its long-term goals and ultimately to contribute to the resolution of climate change issues. Through collaboration, we hope to expand our contribution and achieve milestones ahead of schedule.
The Group aims to achieve the goals set out in the Paris Agreement, namely the 1.5°C target, and to ensure carbon neutrality. We participate in and register with various initiatives, forums, and other organizations after confirming that their founding intentions, direction of initiatives, goals, etc. are consistent with the will and direction of the Group. To continue this participation, we check each year to see if there are any discrepancies in the direction we are taking, and to then make the necessary decisions. If we determine that the direction differs, we will take steps to withdraw.