The responsible officer for the Corporate Sustainability Committee oversees our efforts to address climate change.
Policy, strategy, and planning to address climate change are discussed at the Corporate Sustainability Committee. Results of discussions are reported to the Management Committee. Particularly important matters are decided and supervised by the Board of Directors upon discussion at the Company-wide Strategy Committee and deliberation by the Management Committee.
Furthermore, we have established the Circular Economy Center of Excellence (CoE) under the Corporate Sustainability Committee.
The Circular Economy CoE comprises the steering committee and three working groups (biomass, recycling, and climate change). It conducts detailed discussion on climate change, and it is structured so that matters for discussion by management are raised to the Corporate Sustainability Committee.
Endeavor to create a circular economy
Implementing the recommendations of the TCFD
The Mitsui Chemicals Group announced its support of the recommendations of the Task Force on Climate-related Disclosures (TCFD) in January 2019 and continues to disclose information on its efforts to tackle climate change.
Recently, we expanded our efforts to assess materiality of climate-related risks and quantify business impacts to all of our business segments and implemented a review accordingly.
Disclosure item 1: Governance
Disclosure item 2: Risk management
The Mitsui Chemicals Group has established a Group-wide risk management system, which also covers climate-related risks.
Regarding climate-related risks in particular, as part of risk management under VISION 2030 and the carbon neutral strategy, risks are identified and assessed by all divisions under the Group-wide risk management system, and these risks are managed centrally on a Group-wide basis.
We reflect our efforts to develop and execute responses in our budget and medium-term business plan, and we implement a steady PDCA cycle.
Disclosure item 3: Strategy
The Mitsui Chemicals Group works to understand risks posed by and opportunities arising from climate change by conducting scenario analyses with reference to the United Nations Intergovernmental Panel on Climate Change scenario (IPCC RCP8.5) and the 2022 International Energy Agency World Energy Outlook (NZE2050).
We also reflect the results of the analyses in VISION 2030—our transition plan for achieving a low-carbon society—and our carbon neutral strategy to guide progress.
1. Identifying and defining the range of scenarios
We have created views of potential worlds (scenarios) based on predictions of how climate change may affect the Group’s business environment.
3-4°C world (A world where responses to abnormal weather are crucial) | 1.5-2°C world (A world where bringing about a carbon-free society is the top priority) |
---|---|
Implementation of current climate change policies only
| Implementation of ambitious climate change policies
|
A society dependent on fossil resources
| Circular economy society
|
Catastrophic worsening of natural disasters caused by abnormal weather
| Worsening of natural disasters caused by abnormal weather
|
3-4°C world (A world where responses to abnormal weather are crucial) |
---|
Implementation of current climate change policies only
|
1.5-2°C world (A world where bringing about a carbon-free society is the top priority) |
Implementation of ambitious climate change policies
|
2. Quantifying business impacts
We have quantitatively estimated the anticipated impact in the context of implementing decarbonization measures toward VISION 2030, including the carbon neutral strategy.
Group-wide risks
Risk classification | Events | Impact calculation target | Calculation approach | Impact | |
---|---|---|---|---|---|
Medium-term (2030) | Long-term (2050) | ||||
3-4°C world | |||||
Physical risks | Catastrophic worsening of natural disasters | Increase in damage at production sites due to river and coastal flooding | Calculated asset damage at production sites due to flooding, taking into account the probability of occurrence *1*2*3 | ¥-5bn | ¥-40bn |
1.5-2°C world | |||||
Transition risks | Strengthened laws and regulations | Increased costs due to introduction of carbon tax*4 | Cost increases calculated assuming that no decarbonization measures are taken | ¥-90bn | ¥-160bn |
Cost increases calculated assuming that decarbonization measures are taken *5 | ¥-67bn (GHG emissions reduction rate (Scopes 1 and 2) compared to FY2013: 40%) | ¥0 (GHG emissions reduction rate (Scopes 1 and 2): 100%) | |||
Market changes | Increased cost of fuel and electricity | Cost of fuel and electricity calculated based on inflation rate *6*7 | ¥-60bn | ¥-70bn *2040 |
*1 FY2020 baseline.
*2 Does not include operational impact. We plan to consider this in future.
*3 Reference: IPCC RCP8.5
*4 Carbon tax calculated based on predicted carbon price (with reference to IEA NZE2050) and FY2021 GHG emissions.
*5 Investments related to the carbon neutral strategy up to 2030 are estimated at 140 billion yen.
*6 FY2018 baseline for fuel and electricity costs.
*7 Reference: IEA WEO, EIA, and Agency for Natural Resources and Energy forecasts
Group-wide opportunities
Opportunity classification | Events | Impact calculation target | Calculation approach | Impact | |
---|---|---|---|---|---|
Medium-term (2030) | Long-term (2050) | ||||
3-4°C world | |||||
Transition opportunities | Increased demand for products and services that contribute to adaptation | Increased sales revenue of Rose Value™ products, which contribute to disaster prevention/mitigation measures and prevention of infectious disease | Set as a non-financial metric *1*2 | Rose Value™ products sales revenue ratio of 40% | - |
1.5-2°C world | |||||
Transition opportunities | Increased demand for products and services that contribute to mitigation | Increased sales revenue of Blue Value™ products, which contribute to reduction of GHG emissions | Set as a non-financial metric *3*4 | Blue Value™ sales revenue ratio: 40% | Blue Value™ sales revenue ratio: 70% |
*1 FY2022 Rose Value™ product results: sales revenue of 390.0 billion yen, sales revenue ratio of 21%
*2 Reference: the Group’s VISION 2030
*3 FY2022 Blue Value™ product results: sales revenue of 410.0 billion yen, sales revenue ratio of 22%
*4 Reference: the Group’s VISION 2030
Risks and opportunities for individual business segments
We examined business risks and opportunities in the 1.5-2°C world, 3-4°C world, and scenario-independent market environment, accounting for changes in related markets.
Note | Opportunity for Blue Value™ products |
Opportunity for Rose Value™ products | |
Risk |
Changes in related markets | Risks and opportunities |
---|---|
3-4°C world | |
(1) Stable food supply | Creation of agrochemical active ingredients and expansion of overseas operations |
(2) Infrastructure service-life extension and disaster prevention/mitigation | National resilience: Expanded green-infrastructure demand for nonwovens |
(3) Public health and hygiene | Development and marketing of new insecticides for malaria vector mosquitoes to help eradicate the disease |
Provision of high-performance antibacterial and anti-mold agents | |
Expanded demand for hygiene supplies (masks, gowns, etc.) resulting from pandemics | |
Growing needs and expanded demand for simple testing and diagnosis solutions to prevent the spread of infectious diseases | |
1.5-2°C world | |
(1) Reduction of environmental impact in the supply chain | Expanded demand for lens materials using plant-derived raw materials (Do Green™) |
Sales promotion for highly active biocatalysts (acrylamide, etc.) | |
Hollow, thin products (AIRYFA™) to meet demand for weight reduction | |
Establishment of recycling business and development of products meeting recycling needs | |
(Reference) Scenario-independent market environment | |
(1) Economic growth, population growth, and urbanized, health-conscious lifestyles in emerging countries | Further spread of high-refractive-index ophthalmic lens materials (MR™) |
Expanded demand for oral care and oral diagnostics | |
Expanded demand for disposable diapers | |
Pursuit of higher quality medical care and longer healthy life expectancy: Entry into new business areas (orthopedics, testing and diagnosis, nucleic acid medicine CDMO, nutrition) | |
(2) Changes in the mobility market | - |
(3) Consideration of environmental impact | Expanded demand for agrochemicals derived from natural materials |
Waste reduction/labor saving by producing dental prosthetics through 3D printing and related products | |
Approaches to risks and opportunities | |
- | Improve production and supply capacity to cope with market changes and meet expanding demand |
Further increase the resilience of global supply chains | |
Create new products and businesses that help address social challenges | |
Financial information | |
Rose Value™ products sales revenue ratio | 82% (FY2022) 85% (FY2030 target) |
Strong business areas (based on FY2022 information) | Ophthalmic lens materials: 45% share of the global market (market growth rate: 3% per year) |
Agrochemical products: 180 billion yen in sales revenue (FY2030 target) | |
Financial target (FY2030 operating income before special items) | 90 billion yen Significant contributions from Rose Value™ products |
Changes in related markets | Risks and opportunities |
---|---|
3-4°C world | |
(1) Stable food supply | - |
(2) Infrastructure service-life extension and disaster prevention/mitigation | Expanded demand for concrete surface reinforcement agent |
(3) Public health and hygiene | - |
1.5-2°C world | |
(1) Reduction of environmental impact in the supply chain | Expanded demand for parts for renewable-energy applications (highly durable TAFMER™) |
Expanded demand for products contributing to reductions in painting processes (PP compounds) | |
Creation of products utilizing renewable raw materials | |
Expanded demand for lithium-ion battery components | |
Expanded demand for the development of materials to reduce the weight of EVs, extending their driving range (rigid and lightweight PP) | |
Expanded demand for E-Axle | |
Difficulties in passing on the costs of decarbonization measures | |
Reduced demand for components for gasoline vehicles as the shift to EVs continues | |
(Reference) Scenario-independent market environment | |
(1) Economic growth, population growth, and urbanized, health-conscious lifestyles in emerging countries | Development of module concepts for vehicle interiors, etc. that help enhance comfort in mobile spaces |
Decline in number of new vehicles being manufactured | |
(2) Changes in the mobility market | - |
(3) Consideration of environmental impact | - |
Approaches to risks and opportunities | |
- | Improve production and supply capacity to cope with market changes and meet expanding demand |
Further increase the resilience of global supply chains | |
Financial information | |
Blue Value™ products sales revenue ratio | 54% (FY2022) 80% (FY2030 target) |
Strong business areas (based on FY2022 information) | PP compounds: Second-largest share in the world and second-largest share in the Asia |
Lighter/paintless bumpers, instrument panels, etc. | |
Raw materials for battery components | |
Financial target (FY2030 operating income before special items) | 80 billion yen Significant contributions from Blue Value™ products |
Changes in related markets | Risks and opportunities |
---|---|
3-4°C world | |
(1) Stable food supply | Expanded demand for ICT products with spread of industrial farming (semiconductor components/gas-permeable films) |
(2) Infrastructure service-life extension and disaster prevention/mitigation | Expanded demand for components for solar panels and stationary-storage batteries as corresponding needs grow (MILLET™, SOLAR ASCE™, etc.) |
Expanded demand for drinking-water filters (MIPELON™) | |
(3) Public health and hygiene | - |
1.5-2°C world | |
(1) Reduction of environmental impact in the supply chain | Expanded demand for eco-friendly packaging materials (coating materials and paper replacements for plastic) |
Horizontal recycling (mono-material packaging) | |
Expanded demand for EV batteries/semiconductors and calls for their improved functionality | |
(Reference) Scenario-independent market environment | |
(1) Economic growth, population growth, and urbanized, health-conscious lifestyles in emerging countries | Expanded semiconductor & assembly solutions market |
Imaging solutions: Expanded smartphone and XR markets | |
(2) Changes in the mobility market | Expanded demand for automotive lenses, sensors, and high-frequency materials |
(3) Consideration of environmental impact | - |
Approaches to risks and opportunities | |
- | Transition to solutions business |
Financial information | |
Blue Value™ products sales revenue ratio | 40% (FY2022) 56% (FY2030 target) |
Rose Value™ products sales revenue ratio | 53% (FY2022) 60% (FY2030 target) |
Strong business areas (based on FY2022 information) | ICROS™ Tape: Largest share of the global market (market growth rate: 7% per year) |
APEL™ (cyclic olefin copolymer): Largest share of the global market at over 50% | |
Pellicles: Largest share of the global market (market growth : 9% CAGR, 2019-2027) | |
Financial target (FY2030 operating income before special items) | 70 billion yen Significant contributions from Blue Value™ and Rose Value™ products |
Changes in related markets | Risks and opportunities |
---|---|
3-4°C world | |
(1) Stable food supply | Expanded demand for packaging raw materials that help maintain food quality |
(2) Infrastructure service-life extension and disaster prevention/mitigation | Expanded demand for raw materials for polyethylene pipes, etc. |
(3) Public health and hygiene | - |
1.5-2°C world | |
(1) Reduction of environmental impact in the supply chain | Expanded demand for the development of materials to reduce the weight of EVs, extending their driving range (rigid and lightweight PP, polyurethane materials) |
Expanded demand for eco-friendly packaging materials | |
Difficulties in passing on the costs of decarbonization measures | |
Expanded demand for lithium-ion battery components for EVs | |
Reduced demand for components for gasoline vehicles as the shift to EVs continues | |
(Reference) Scenario-independent market environment | |
(1) Economic growth, population growth, and urbanized, health-conscious lifestyles in emerging countries | Expanded market for ICT- and mobility-related products, including photoresists and liquid-crystal materials |
Development of module concepts for vehicle interiors, etc. that help enhance comfort in mobile spaces | |
Decline in number of new vehicles being manufactured | |
(2) Changes in the mobility market | - |
(3) Consideration of environmental impact | - |
Approaches to risks and opportunities | |
- | Provide reliable supplies of raw materials to growing businesses |
Enhance efforts in green chemicals | |
Expand provision of products with high added value | |
Financial information | |
Blue Value™ products sales revenue ratio | 6% (FY2022) 12% (FY2030 target) |
Strong business areas (based on FY2022 information) | Manufacturing of derivatives using bio-based raw materials, technological development for advanced recycling |
Provision of green materials to other business segments | |
Synergy with Honshu Chemical Industry | |
Financial target (FY2030 operating income before special items) | 50 billion yen |
Toward minimizing risks
- While the medium-term asset damage from catastrophic worsening of natural disasters is not that great, we will assess its impact, including the impact on operations, and where necessary incorporate it into the Basic Strategy of VISION 2030, “Management and business transformation,” in order to respond.
- The business impact of increased costs due to introduction of carbon tax and increased cost of fuel and electricity will become large over the medium- to long-term. As part of our carbon neutral strategy measures, we will promote carbon-free raw materials and fuels and energy efficiency, while also pushing forward with introducing renewable energy by fiscal 2030. Furthermore, we will progress with steady reductions of GHG emissions through further considerations.
- We are projecting 140 billion yen in investments for our carbon neutral strategy through 2030. Considering that the carbon tax burden would amount to 90 billion yen per year if no carbon-neutrality measures were taken, we believe that the investment amount is appropriate in light of the impact on carbon reduction.
Toward maximizing opportunities
- The impact assessment identified many potential opportunities for Blue Value™ and Rose Value™ products.
Reflecting the opportunities in our Group-wide strategy, we will work to contribute to the building of a sustainable society and seize more opportunities for the Group. - Reductions in GHG emissions are deeply related to expanding the revenue of the Group, and it is therefore necessary to not only execute the announced carbon neutral strategy measures but also continually examine and add further measures.
- In addition to further increasing the resilience of our global supply chain by adding to the number of our raw-materials suppliers and production sites, we will also improve our production and supply capacity to cope with market changes and meet market needs as we look to successfully seize business opportunities.
- As capturing the opportunities listed in the table links into the growth of the Group, we have set them as VISION 2030 business targets (non-financial targets) and will continue to manage their progress.
Improving resilience
- The results of the scenario analyses validated the resilience of our strategies for the 1.5–2°C and 3–4°C worlds.
We will continue to enhance the precision of our impact assessments. - In our Group-wide strategies, including our business strategies and site strategies, we will work to improve the Group’s resilience in the aim of minimizing risk and maximizing opportunities.
Disclosure item 4: Metrics and targets
The Group sets metrics and targets for use in managing climate-related risks and opportunities.
We have positioned these as non-financial metrics and business targets for VISION 2030 and are managing their progress.
Classification | Metric | FY2022 results | Target (FY2030) | Target (FY2050) | |
---|---|---|---|---|---|
Mitigation | GHG emissions reduction (Scopes 1 and 2) | GHG emissions reduction rate (vs. FY2013) | 27% | 40% | 100% |
Maximizing avoided emissions | Blue Value™ products sales revenue ratio | 22% | 40% | 70% | |
Adaptation | Contribution to disaster prevention/mitigation measures and prevention of infectious disease | Rose Value™ products sales revenue ratio | 21% | 40% | - |
In addition, information in accordance with the climate-related metrics categories is as follows.
(1) GHG emissions |
|
---|---|
(2) Transition risks | Outlined in “Disclosure item 3: Strategy” |
(3) Physical risks | Outlined in “Disclosure item 3: Strategy” |
(4) Climate-related opportunities | Outlined in “Disclosure item 3: Strategy” |
(5) Capital deployment |
|
(6) Internal carbon pricing (ICP) | ICP is set at 15,000 yen/t2e, and IRR that takes ICP into account (c-IRR) is used as a factor in decision-making for large-scale investments. |
(7) Executive compensation |
|
*1 Mitsui Chemicals non-consolidated
*2 Not including alliances, M&A, financial assistance, etc. For FY2023–2025