Harmony with Nature (Environmental Initiatives)
Harmony with Nature (Environmental Initiatives)
Actions to Climate Change Issues
Response to Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)*1
Climate change issues are one of the key issues that affect business activities. In August 2020, we declared our agreement with the TCFD recommendations. To achieve sustainable growth, we will appropriately assess our climate-related risks and opportunities, clarify their impact on our business operations and necessary measures, and actively disclose such information to a wide range of stakeholders, including investors.
Furthermore, we are a member of the TCFD Consortium,*2which was established to promote the collective efforts of Japanese companies and financial institutions supporting TCFD recommendations.
*1: A private international organization established by the Financial Stability Board (FSB) at the request of G20 members, which recommends that businesses disclose climate-related information that has an impact on financial affairs in their annual financial reports.
*2: TCFD Consortium: https://tcfd-consortium.jp/en
At a meeting chaired by the President& CEO, we discuss the risks and opportunities surrounding us that arise from climate change and countermeasures. Subsequently, the president of each operation, who is charged with execution, leads implementation in the Company. Material issues and their progress are subject to supervision of the Board of Directors, which regularly receives report from the director in charge of Strategic Manufacturing Operation, who is in charge of company-wide environment.
We identify highly important business risks and opportunities in accordance with the degree of change in business environment driven by climate change and its effect, and then respond to such risks under the Medium-Term Management Plan. For example, from the viewpoint of strengthening competitiveness of existing businesses, we are working to transition to a production and supply structure given the change in the passenger vehicle market. In addition, with a correct recognition of the risks and opportunities arising from climate change, we assess their impact on our business strategy and conduct a scenario analysis to be used for formulating a future business strategy. Through the scenario analysis we verify the appropriateness of our current responses and identify the future issues.
【Climate Change Scenario, Impact on Main Operations, and Countermeasures】
We assess and analyze the impact of risks and opportunities arising from climate change on our main operations: Electronics Operation and Ceramics Operation.
We evaluate impacts of transition risk and physical risk on our operations based on scenarios*1 and consider the countermeasures against them. The transition risk involves risks and opportunities associated with changes in government policies, regulations, markets, and technologies caused by acceleration of the transition to a decarbonized society. The physical risk involves those related to rising temperature, environmental change, and an increase in natural disasters caused by climate change.
*1: The followings are the major scenarios and reference data used for the analysis:
To conduct the transition risk analysis, we referred primarily to the 2°C Scenario (2DS) and the Reference Technology Scenario (RTS) from Energy Technology Perspectives (ETP) of the International Energy Agency (IEA).
To conduct the physical risk analysis, we referred primarily to the Representative Concentration Pathways (RCPs) 2.6 and 8.5 developed by the Intergovernmental Panel on Climate Change (ICPP), together with the Climate Change Knowledge Portal (CCKP) of the World Bank.
*2: Impact on manufacturing costs
The Group procures both electricity and fuel directly from suppliers. Should the carbon tax be assessed on fuel, the price of allowances under the EU's Emissions Trading System (ETS) will be about 700 to 800 million yen based on the fact that our latest emissions are equivalent to about 140,000 t-CO2. On the other hand, if we have to pay allotted charges as a consideration for the purchased electricity, based on the latest electricity we bought (about 1,000 GWh per year on average), we have to pay about 1,000 million yen of charges assuming the charges of about 1 yen /kWh.
In the company-wide risk management process, we analyze a wide variety of risks surrounding management and addresses items that will seriously impact our business. The company-wide Risk Management Committee chaired by the President & CEO is held annually to confirm material risks and decide how to respond to them including how to avoid them or how to mitigate impacts in case they occur.
The risks and opportunities related to climate change issues are recognized by sections responsible for each risk category, followed by the confirmation and assessment in the appropriate meeting as necessary, and then the response policy is discussed and determined.
Metrics and Targets
In fiscal year 2020, we set the fiscal year 2030 target for the reduction of GHG emissions to achieve our Environmental Vision 2050.
In addition to existing energy-saving activities, we have promoted to use hydro-electric generation, solar electricity, and low-carbon energy. Going forward, we will take further steps to shift to low-carbon production processes and further expand the use of renewable energy in cooperation with our suppliers to create a production system capable to sustain our competitive advantage even after the transition to a decarbonized society. In fiscal year 2021, we formed a dedicated division to supervise our energy-saving activities across the Group. To facilitate the future initiatives, we will consider introducing an internal carbon pricing system.
Measures to Supply Clean Energy
IBIDEN owns three hydroelectric power plants in the upstream section of Ibigawa River in Gifu Prefecture. Hydraulic power generation uses the potential energy of water to create clean energy without greenhouse gas emissions. To maintain and increase its power output, IBIDEN implements repair work at its three hydroelectric power plants (Higashi Yokoyama Power Plant, Hirose Power Plant, and Kawakami Power Plant) systematically by repairing water supply tunnels* and updating generators to the latest models.
*Water supply tunnels: Tunnels for providing water to power plants
IBIDEN's hydroelectric power plants satisfy the standards for the renewable energy buyback program (Feed in Tariff program). We established a facility at the Ogaki-Kita Plant for connecting our power grid to that of electric power companies. We made electricity generated by each hydroelectric power plant available for sale to local electricity users, contributing to reduced CO2 emissions.
To use low-carbon energy, we actively introduce large-scale gas cogeneration systems with high power generation efficiency to increase the ratio of privately generated low-carbon energy. In fiscal year 2019, we installed the latest cogeneration equipment to promote energy conservation, and worked to strengthen our BCP. These initiatives were highly appreciated by the Advanced Cogeneration and Energy Utilization Center JAPAN (ACEJ)*, and we were granted the grand prize of the Cogeneration Award by ACEJ.
Moreover, we install solar power generation equipment in each plant to generate renewable energy. In the future, we aim to establish a system whereby each plant is connected to our own power grid so that privately generated electricity can be optimally supplied in accordance with demand between each plant.
*the Advanced Cogeneration and Energy Utilization Center JAPAN (ACEJ)：https://www.ace.or.jp/index.html
Projects to Promote Renewable Energy
IBIDEN Engineering Co., Ltd., a member of the IBIDEN Group, has initiated projects in the field of energy solution by making optimal use of the Company's technologies to maintain equipment for hydroelectric power plants as well as manage co-generation systems. Established an integrated approach, in which its business includes design proposal, construction and maintenance, IBIDEN Engineering has a track record in many power generation business such as ranging from equipment for hydroelectric power plants and power substations to systems for solar power generation plants and small hydroelectric power plants. We will continue to promote business solutions for the energy problems.
Purchase of Green Power Certificates
We purchase green power produced in Ogaki City, home to our head office. Green power comes from natural energy sources, including solar power, and thus provides environmental value, such as consuming no fossil fuel and generating no CO2 emissions.
Of electricity generated by solar PV power generators installed in each household in the city, Ogaki City purchases environmental value (green power) of electricity consumed in-house and translates it into the form of Green Power Certificates for sale. By purchasing the certificates, we contribute to the local consumption of locally produced energy.
The amount of purchased green power in fiscal year 2020: 20,000 kWh
As the Group consumes a large amount of energy through its production activities--whether it is the temperature control during the manufacturing process of electronics or the electric furnaces used for ceramics--energy conservation is an important issue for us. Having established in fiscal year 2021 a specialized body that supervises our company-wide energy saving efforts in a cross-sectional manner, we are working with the production divisions and related functional divisions in operating the energy-saving management cycle across the organization. We also monitor risk factors, such as energy cost increases, and work on improvements based on the idea that enhancing energy efficiency is linked directly to strengthening the Company's competitiveness.
For example, we promote the efficient use of energy by quickly adapting to changes in production volume in order to minimize energy loss during production and energy use during production stoppages.
In addition, we evaluate energy-saving points that need to be dealt with, such as energy use, and adoption of heat insulation construction and high-efficiency equipment, in the environmental assessment at the time of establishment or relocation of manufacturing facilities in order to ensure implementation of energy-saving designs.
Trends of GHG emissions
Energy-saving activities are conducive to reducing emissions of CO2, a greenhouse gas (GHG). We set CO2 emissions reduction targets for the medium term, aiming to reduce during the period from fiscal year 2018 to fiscal year 2030 our total emissions by 16%, and emissions per unit of sales by 50% compared to fiscal year 2017.
In fiscal year 2020, two units of a high efficiency gas engine cogeneration system newly started operation at the Ogaki Central Plant, leading to an increase in our self-generation ratio of gas-fuel-derived power--lower carbon energy than those purchased from power companies. In addition, we reduced the amount of energy consumption by consolidating production lines in operation according to the orders received. These initiatives have enabled us to reduce our total CO2 emissions by about 14% compared to fiscal year 2017, and to improve emissions per unit of sales to 80 with the results for fiscal year 2017 indexed to 100. We will continue to perform our energy saving efforts at our existing plants, to incorporate energy conservation design into new plants, and to utilize low carbon energy sources in a bid to improve our CO2 emissions, thereby achieving the targets.
*1: With regard to the CO2 emission factor at the time of calculation, we used the factor provided by the "List of Calculation Methods/Emission Factors in the Calculation, Report and Publication System" of the Ministry of the Environment and the Ministry of Economy, Trade and Industry in Japan as well as by gas distribution companies. From fiscal year 2020, when calculating the CO2 emissions in Scope 2, we use the conversion factors (IEA Emissions Factors 2020) published by the International Energy Agency when the CO2 emission factors of electric utility companies are uncertain, in order to provide information closer to the actual state. The CO2 emissions in fiscal year 2020 are recalculated using the emission factors as of January 2022.
*2: CO2 emissions indicate emissions from all production bases related to production in Japan and overseas.
*The scope of verification is limited to energy-derived emissions, and does not include some IBIDEN overseas and domestic Group companies. The verification coverage is at least 95% of the total emissions of the entire Group.
Cooperation with organizations outside the group
Our company, agreeing with the primary aim of the Council on Gifu Prefectural Global Warming Countermeasures Action Plan,*1 was installed as a director of the Council, and introduces our company's efforts, exchanges opinions, and makes proposals regarding the reduction of greenhouse gas emissions and global warming countermeasures of Gifu Prefecture as a representative of the manufacturing industry of the prefecture.
Also, as an expert committee member of the Committee on Energy and Environment of the Chubu Economic Federation,*2 our company develops our scientific research and recommendation activities, as well as request-making and promotional activities concerning energy and environmental preservation, including climate change issues.
In addition, agreeing with the purpose of the Challenge Zero project launched by the Japan Business Federation (Keidanren), our company declares that it will boldly take on the challenge of promoting innovations that contribute to realizing a decarbonized society, and discloses its initiatives.*3
Our company also reports to the Carbon Disclosure Project (CDP),*4 which in cooperation with institutional investors around the world, requires companies to disclose their climate change strategies and greenhouse gas emissions.
*1: An organization established in order to formulate the Gifu Prefectural Global Warming Countermeasures Action Plan related to measures to reduce greenhouse gas emissions and to maintain and strengthen greenhouse gas absorption based on the provisions of the Act on Promotion of Global Warming Countermeasures and Gifu Prefecture's Principal Ordinance on Global Warming Prevention
*2: A wide-area comprehensive economic organization with activity areas in the Chubu Region's five prefectures--Nagano, Gifu, Shizuoka, Aichi, and Mie
*3: Challenge Zero IBIDEN CO.,LTD. Innovation examples： https://www.challenge-zero.jp/en/member/26
*4: A project in which institutional investors work together to require companies to disclose their climate change strategies and specific information on their greenhouse gas emissions. https://www.cdp.net/en
Resource Circulating Activities
IBIDEN believes that it is an important responsibility of businesses to make effective use of the world's scarce resources and to take part in a global effort to conserve resources. We promote the so-called 3R activity, which consists of initiatives to Reduce, Reuse and Recycle the resources we consume. In doing so, we aim to improve the resources efficiency. We are currently advancing our efforts to separate and recycle industrial waste in each plant and Group Company. Since 2004, IBIDEN domestic plants have been maintaining a zero-emission* status in terms of solid waste.
Our approach is based on indicators to control the generation of waste. As the medium-term reduction target for the amount of solid waste, we aim to reduce the solid waste per unit of sales by 5% compared to the fiscal year 2017 level over the five-year period from fiscal year 2018 to fiscal year 2022.
The solid waste per unit in fiscal year 2020, with the results for fiscal year 2017 indexed to 100, improved to 87 as a result of such an effort to consolidate our production amid the increasing production in the Electronics Operation. We will continue to promote the proper use of resources and the reduction of waste according to fluctuations in the production volume so that we will be able to achieve our reduction target.
*IBIDEN defines zero emission as a state in which no solid waste emitted from the production process is dumped directly in landfills.
Effective Utilization and Reduction of Water Resources(Water Conservation Efforts)
A large amount of water resources is used in the manufacturing process of electronic products, particularly for cleansing. Ogaki City in Gifu Prefecture, where our domestic production bases are concentrated, is rich in underground water thanks to the Ibigawa River system. However, water shortages are a serious problem in the world today. Based on the principle of so-called 3R activity--initiatives to reduce, reuse, and recycle resources--the Group carries out business activities by integrating environmental technologies into manufacturing technologies, which has reduced the amount of industrial water use. To ensure the optimum control of wastewater and effluent and the facilitation of 3R activity for water resources, relevant divisions have discussions monthly to check progress and report.
We carry out risk assessment of water resources in-house by referring to data released by the World Resources Institute (WRI) and other data, and we have thus identified IBIDEN Electronics (Beijing) Co., Ltd. as our Group companies with a high water resource risk. IBIDEN Electronics (Beijing), which uses particularly large amounts of water, has been increasing the use of recycled water inside its industrial park since fiscal year 2012. As a result of such efforts, the ratio of water recycling has been maintained at over 90%.
Our approach is based on the indicators to control water withdrawal per production volume. As the medium-term reduction target for the amount of water withdrawal, we aim to reduce the water withdrawal per unit of sales by 5% compared to the fiscal year 2017 level over the five-year period from fiscal year 2018 to fiscal year 2022. The water withdrawal per unit in fiscal year 2020, with the results for fiscal year 2017 indexed to 100, improved to 97 as a result of such an effort to consolidate our production amid the increasing production in the Electronics Operation.
We will continue with our efforts to reduce the water withdrawal per unit by bringing to reasonable levels the frequency of initial make-up of the electrolytic bath in chemical tanks and the amount of chemical injection, and reusing water treated in-house so that we will be able to achieve our reduction target.
Appropriate Chemical Control
Compliance with Laws and Regulations related to Substances Contained in Products and Chemical Substances in the Manufacturing Process and Management of the Work Environment
A variety of chemical substances are used in the manufacturing process in the Group. They may cause environmental pollution or pose health hazards to humans. It is a great responsibility for businesses to properly manage chemical substances to secure product safety, reduce environmental burdens, and promote occupational safety. Regarding chemical substances, the laws and regulations of each country, including the REACH Regulations and the RoHS Directive, as well as the standards demanded by our customers, are becoming increasingly stringent. To prevent risks caused by chemical substances, we are working to properly manage chemical substances throughout the entire supply chain by identifying substances whose use should be eliminated or reduced in the Green Procurement Guidelines.
In the course of operating the Chemical Control Committee as an internal organization, we established and have made use of a system to swiftly identify and properly meet social demands related to chemical substances, as shown in the REACH system in EU, at production bases in both Japan and overseas. Also, The Company takes part in the industry-wide discussion and information-sharing on issues such as regulations regarding chemical substances by serving as a trustee for the Japan Electronics Packaging and Circuits Association and participating in its Environmental Safety Committee.
Initiatives for Laws and Regulations related to Chemical Substances
Although some chemical substances used in the ceramic business fall under the category of substances whose inclusion in products is restricted under the EU REACH Regulations, we completely replaced them with alternative substances in fiscal year 2018.
IBIDEN and its domestic Group companies are working systematically, based on the national government's basic plan, to complete the removal and disposal of Polychlorinated Biphenyl (PCB)-containing equipment and waste ahead of the deadline. While we successively replace PCB-containing equipment in accordance with the equipment replacement plan, we ensure complete disposal of equipment that falls under PCB waste by transporting it to disposal facilities on a timely basis after appropriate storage and management based on the related laws and regulations. Specifically, we have proceeded with our activities with the aim of completely disposing of PCBs during the fiscal year of 2023, three years before the disposal completion deadline. In fiscal year 2020, we completed the disposal of all high-concentration PCB waste we had stored, and will proceed according to plan with the disposal of low-concentration PCBs as well.
Considerations on the Health of Employees with regard to Chemical Substances
To ensure the health and safety of our employees, we provide employees who handle chemical substances with education regarding the harmfulness and proper handling of such substances before the employees are assigned to such operations. When they engage in the operations, they are provided with appropriate protective equipment and are obliged to wear it.
Approach to the Supply Chain
Cooperation throughout the entire supply chain is essential to address environmental issues including chemical control as well as to push forward with CSR. We have issued green procurement guidelines to our business partners in an effort to check the status of our business partners' measures for environmental management and chemical control, and conduct surveys* on the status of inclusion of chemical substances that may cause a significant environmental burden. The Company conducts content examinations not only on substances already designated as examination items by regulation, but also those that are likely to receive such a designation in the near future. We are also organizing a structure that will allow us to work collaboratively with suppliers to address nations' environmental regulations in a timely manner.
*Agreeing with "chemSHERPA," an information communication scheme newly developed under the leadership of the Ministry of Economy, Trade and Industry, we began conducting surveys using chemSHERPA from October 2017.
Influence on Biodiversity
Initiated from the power of water, the Group's business activities are blessed with the benefit of biodiversity such as maintaining a stable water supply. And our activities also have some impact in the area of biodiversity. Just as we need to cope with the issues of global warming due to climate change, biodiversity conservation is one of the most important tasks to tackle. Aiming to contribute to constant social advancement, in line with the values stressing "Harmony with Nature," IBIDEN will act responsibly as a global enterprise by working together with society.
Conserving Biodiversity and Concrete Approach to its Sustainable Use
We will contribute to conserving biodiversity in local communities and its sustainable use by practicing forest conservation activities that support stable water source and social contribution activities in collaboration with the local community mainly upstream along the Ibi River, where the IBIDEN Group originated.
We have also participated in the Japan Business and Biodiversity Partnership established by the Japan Business Federation (Keidanren).
Environmental Contribution through Business
Product Life Cycle Assessment
IBIDEN is promoting a design that takes into consideration safety/environmental rules and regulations, energy conservation and resource conservation from the initial stage of product development. In design reviews to examine product development/design, we have added environmentally conscious design guidelines for product and process safety, environmental regulations/safety of materials used and energy conservation consciousness reflected in the production process as examination items. We are building a system to confirm whether products developed and produced by IBIDEN are environmentally friendly. By following environmentally conscious design guidelines, we conduct information searches on chemical substances in novel materials during the technical development phase. We promote environmentally conscious design as a routine activity by linking environmentally conscious design reviews with product design reviews. If any chemical substances in chemical substance information collected and extracted at the time of examining materials fall under control substances for compliance reasons, alternative substances are examined.
Projects That Contribute to Both Disaster Prevention and Environmental Protection
In Japan, which is a mountainous country, in order to boost the protection of slopes in difficult weather and soil conditions and to ultimately prevent the loss of life in landslide disasters, practices for securing artificial slopes have undergone many changes over the years with many improvements based on the testing of various methods and technologies through trial-and-error. Currently, in addition to a disaster prevention function, an environmentally-friendly "greener" construction method is expected for artificial slopes. IBIDEN Greentec Co., Ltd., a member of the IBIDEN Group, which has continued to provide new construction methods that achieve both disaster prevention and environmental protection, such as the "Totally Green" method, will create an environment where everyone can live safely and peacefully.
Automotive Exhaust System Components
Our ceramics products, such as Diesel Particulate Filter (DPF), which can trap 99% or more of the black smoke emitted by diesel engines, and catalyst carrier for exhaust gas cleaning, have contributed to reducing environmental burdens.