Planet

GHG Emissions (Scope 1 and 2) and Initiatives of the Kuraray Group

Total GHG emissions of the Kuraray Group decreased by 6.8% from 2,896 thousand tons-CO₂e in 2022 to 2,700 thousand tons-CO₂e in 2023 (down 16.4% compared to 2019*).
*Base year for GHG emission reductions in the Planet section of the Kuraray Group Sustainability Medium-Term Plan

GHG emissions of the Kuraray Group in Japan decreased from 1,236 thousand tons - CO₂e in 2022 to 1,144 thousand tons - CO₂e in 2023. This was largely due to the decrease in energy consumption accompanied by lower production in each business, though, each Kuraray Group production site in Japan continued to work on GHG reduction measures, such as improving product yield, recycling raw materials and utilities, upgrading to energy-saving equipment, and carrying out energy-saving activities (waste elimination activities). In 2023, we implemented measures to reduce 17 thousand tons - CO₂e. In addition, the Kurashiki Plant stopped using coal-fueled in-house power generation facilities in 2022 and switched to using electricity purchased from outside the company and steam from small once-through boilers. This has contributed to GHG emissions reduction.

GHG emissions of the Kuraray Group overseas decreased from 1,660 thousand tons - CO₂e in 2022 to 1,555 thousand tons - CO₂e in 2023. (In 2023, the Kuraray Group obtained unbundled energy attribute certificates equivalent to 60 thousand tons - CO₂e. The GHG emissions in 2023 include the reduction of GHG emissions of these certificates.). The overseas Kuraray Group is also continuing to work on energy saving and product yield improvement that leads to GHG emission reductions at each production site. Although production volume increased at a new plant in Thailand, which has newly started operation, GHG emissions decreased due to lower production volume at many overseas Kuraray Group.

The sales intensity of energy consumption in Kuraray Group, which was set as the targets in the Sustainability Medium-Term Plan for Planet reduced by 16.7% (improvement) in 2023 compared to 2019, far exceeding our target of the "Reduction (improvement) of 5% or more in 2026". Going forward, we will continue to work on further improvement of sales intensity through energy-saving activities that will lead to reduce GHG emissions.

The Kuraray Group’s total GHG emissions increased in the period from fiscal 2014 to fiscal 2019 due to the incorporation of businesses through M&A, such as the acquisition of the vinyl acetate business and the activated carbon business (Calgon Carbon Corporation). In particular, the acquisition of Calgon Carbon Corporation in 2018 resulted in a significant rise in the Kuraray Group’s GHG emissions. The GHGs emitted by Calgon Carbon Corporation consist largely of the CO₂ generated as a byproduct in the process of producing activated carbon products. Activated carbon is produced by burning a part of coal used in the process to form micropores on its surface. At this stage of the process, the carbon removed from the surface of the coal to form the micropores is released into the atmosphere as CO₂. In this way, activated carbon emits a large amount of CO₂ during production. On the other hand, activated carbon is widely used around the world as an indispensable product for the adsorption and removal of hazardous chemical substances contained in factory exhaust gas and for the purification of industrial effluents and raw water for drinking. Activated carbon thus contributes greatly to improving the global environment and reducing environmental impact. The Kuraray Group plans call for executing CAPEX of 80 billion Japanese yen by 2030, and will continue to consider establishing the technologies to implement Carbon dioxide Capture, Utilization and Storage (CCUS) system, which the CO₂ is a by-product of the production process. We will also work on energy-saving investments and convert electricity to renewable energy. In addition, in our efforts to convert our own power generation facilities, which a large source of our Company’s GHG emissions, we aim to achieve Carbon Net Zero by 2050 by identifying and using the effective future technologies such as green hydrogen, green ammonia, and other technologies.

GHG Emissions(Scope 3)

The GHG Protocol^* classifies GHG emissions into three categories: Scope 1, 2 and 3.

Mandated under the law by which businesses calculate and report Scope 1 and Scope 2 to the government, we report these figures for the whole Kuraray Group to the government and publish the results mainly in the Kuraray Report and on the Kuraray Group’s website.

On the other hand, Scope 3, which means the GHG emissions based on the entire supply chain related to us other than Scope 1 and Scope 2, is indirect GHG emissions generated from the viewpoint of a life cycle such as raw material procurement, product distribution, product use and disposal as well as the direct emissions related to our business activities. Since fiscal 2013, we have made and are publishing Scope 3 calculations for some categories in the Kuraray Group in Japan. In Sustainability Medium-term Plan for Planet, the scope of calculation will be expanded not only to Japan but also to the entire Kuraray Group, while the accuracy of calculation will be improved, seeking to identify categories that account for two-thirds of all Scope 3 emissions.

In 2023, among the 15 categories in the total of Scope 3, we calculated actual values for 5 categories [(1) to (5)] with a relatively large emission amount, excluding those not applicable to us and those having a limited calculation coverage in the products of the Kuraray Group. We will also continue to quantify our environmental contribution based on evaluations on the life cycle of our products.

* GHG Protocol (Greenhouse Gas Protocol) is an initiative to develop international standards and related tools on greenhouse gases and climate change led by the World Resources Institute (WRI) and World Business Council for Sustainable Development (WBCSD) and participated in by corporations, NGOs, government institutions and other organizations throughout the world.

Conceptual Image of Control on Emissions of Greenhouse Gases in Entire Scope 3 Supply Chain ((1) to (15) show categories of Scope 3） (Scope covered: Kuraray Co., Ltd.)

＜GHG emissions（Scope3）^*1＞

（Unit:thousand tons-CO₂e）

• *1 Boundary is Kuraray Group in Japan. （Coverage：40%）
• *2 Calculation method: Purchased amounts of major 57 raw materials were multiplied by emission index (purchasing price and amount basis) of each raw material.
• *3 Offices, electric appliances and company cars are leased. These are included in Scope 1, 2.
• *4 No assets are leased to other company.
• *5 Franchise system is not applied.
• *6 Other company's stock was not held for investment purpose as reported in the Securities Report.
• *7 Optional category indirectly related to corporate activity except for Category 1 to Category 15

<Example of Scope 3 GHG Emission Reduction Efforts (Reduction of Environmental Load during Product Transportation)>

We are working to reduce GHG emissions at the logistics stage, when transporting products to users. For example, to improve the efficiency of transportation by truck, we are consolidating the storage locations of products (warehouses) to ship products previously shipped from multiple locations from a single location. Through such large-lot transportation hubs, we are working so that products previously transported using multiple trucks can be loaded onto a single trailer. We also continue to pursue a modal shift, switching from trucks and other motor vehicles to modes of transportation with less environmental impact, such as freight trains and ships. In addition, in 2019 we submitted a declaration of voluntary activities in support of the White Logistics Movement being promoted by the Japanese government.