Climate Change Initiatives

Towards Carbon Neutrality

Climate change is affecting the global environment and a variety of impacts that threaten our way of life and the sustainable development of companies—such as abnormal weather, rising sea levels, and changing ecosystems—are emerging. There are concerns that continued global warming will further exacerbate these influences in the future. To mitigate the negative impacts our business causes on climate change, we have established our Carbon Neutrality Policy, which covers the whole Sumitomo Seika Group, and are working to reduce our greenhouse gas (GHG) emissions. Moreover, we will improve the continuity and resilience of our business activities by endeavoring to avoid or mitigate the climate-related risks that are predicted to emerge.

Applicable SDGs

Carbon Neutrality Policy

Becoming carbon neutral is an issue of vital importance, and something we cannot avoid if we wish to achieve sustainable growth. Going forward, we will actively promote efforts to reduce our GHG emissions, and strive to help make society carbon neutral by 2050.

Reducing our own GHG emissions
We will endeavor to minimize the GHG emissions we generate as part of our production activities, while providing technologies that enable this to other companies in the Sumitomo Seika Group.
Supplying low-GHG products and environmentally friendly products
For our products and services, we plan to offer those that consider lifecycle assessments (LCA) to contribute to carbon neutrality, in order to innovatively reduce GHG emissions.
Assisting with society's carbon cycle
We want to create a circular economy together with local communities and society as a whole, and to that end we will continuously make technical innovations to recover, utilize, and fix GHGs.

Furthermore, by working with diverse partners, we will set ourselves the target of helping to bring about that kind of society, and we will promote efforts to that end.

Goals

Reduce Scope 1 and 2 GHG emissions

We aim to reduce emissions for the whole Group by 54.6% compared to FY2022 levels by FY2033, and by 46% compared to FY2013 levels by FY2030 on a non-consolidated basis. We aim to be carbon neutral by 2050.

Reduce Scope 3 GHG emissions

For Category 1 (purchased goods and services) and Category 12 (end-of-life treatment of sold products), we aim to reduce emissions by 32.5% compared to FY2022 levels by FY2033.
Carry out lifecycle assessments (LCAs) for each product, and continue to strive to reduce emissions systematically.
Calculate the carbon footprint (CFP) for each product by 2025, and contribute to reduce GHG emissions on the whole supply chain together with our stakeholders.

Puesure on technical innovations

Innovate Sumitomo Seika products and technologies, and contribute to bringing about a carbon-neutral society.

Develop CO₂ capture technology
Develop methods of utilizing CO₂ as a resource
Expand our lineup of environmentally friendly products

Accreditation by the Science Based Targets Initiative (SBTi)

In fiscal 2023, the Sumitomo Seika Group formulated a set of new reduction targets for GHG emissions aligning with the targets laid out in the Paris Agreement, which aims to limit the rise in global average temperatures to below 1.5℃ above pre-industrial levels by the end of the 21st century.
Under the new targets, we aim to reduce our GHG emissions by 54.6% for Scope 1 and 2 (aligned with the 1.5℃ target), and by 32.5% for Scope 3, specifically Category 1 (purchased goods and services) and Category 12 (end-of-life treatment of sold products), by 2033 compared to 2022 levels—aligned with the well-below 2℃ (WB2℃) target.
These targets were accredited under SBTi in July 2024. The Sumitomo Seika Group will remain committed to the realization of a carbon-neutral society by working to reduce GHG emissions not only within the Company but across its value chains.

SBTi is a joint initiative set up in 2015 by the WWF, CDP, World Resources Institute (WRI), and UN Global Compact organizations.

Organizational Framework for Achieving Carbon Neutrality

We launched an organization, called the Carbon Cycle Society Task Force, to work toward carbon neutrality and to act as an executive body to oversee the entire Group. Project teams, each addressing a different objective, are working on a variety of issues. In order to roll these outcomes out into society at large, we are collaborating with diverse partners.
Moreover, we will work to mitigate climate change by continuously and quantitatively examining its potential impacts and adding other necessary activities circumstantially.

Internal carbon pricing

To advance our climate change initiatives, we introduced internal carbon pricing in fiscal 2023, converting CO₂ reduction values into costs to serve as a guiding indicator for our investment decisions.
Internal carbon pricing: ¥10,000/t-CO₂ (fiscal 2023 – fiscal 2025)
Please note that the above pricing is subject to change, depending on changes in the external conditions.

Organizational Framework for Achieving Carbon Neutrality

Greenhouse Gas Emissions

Scope1 & Scope2

（kt-CO₂）
	FY2021	FY2022	FY2023
Group	282	286	252
Non-consolidated	187	185	159

Scope3^*

（kt-CO₂）
Category	FY2021 (Non-consolidated)	FY2022 (Group)	FY2023 (Group)
1. Purchased Goods and Services	432.7	1,011.3	1,051.0
2. Capital Goods	5.6	14.8	26.5
3. Fuel- and Energy-Related Activities (Not Included in Scope 1 or Scope 2)	23.0	59.7	57.1
4. Upstream Transportation and Distribution	8.5	39.0	39.0
5. Waste Generated in Operations	5.3	7.3	9.2
6. Business Travel	0.1	0.2	0.2
7. Employee Commuting	0.7	0.6	0.6
8. Upstream Leased Assets	2.1	─	─
9. Downstream transportation and distribution		10.6	11.4
10. Processing of sold products		─	─
11. Use of sold products		188.0	285.9
12. End-of-life treatment of sold products		436.8	458.9
13. Downstream leased assets		─	─
14. Franchises		─	─
15. Investments		1.2	1.2

Emissions for FY2022 have been revised due to reviews of category classifications and calculation methods.

Above calculation of GHG emissions and energy usage is verified by the third-party.

Roadmap for Carbon Neutrality

Scope 1 & Scope 2

Despite an increase in total production at our three plants in Japan during fiscal 2023, we have reduced GHG emissions well ahead of our initial plans. This achievement is due to our systematic efforts, including energy-efficiency initiatives, streamlining of production processes, and switching to electricity sourced from renewable energy. Moving forward, we plan to expand the scope of these activities to ensure continued and steady reductions in emissions.

Theoretical Scenario Analysis

We have identified and analyzed risks and opportunities that will arise if global warming continues, in line with +4°C or +1.5°C global temperature rises. The analysis has been conducted with reference to the long-term scenarios (IEA NZE2050, IPCC AR6, AR5, SR1.5, etc.) published by the International Energy Agency (IEA) and Intergovernmental Panel on Climate Change (IPCC). We have also evaluated the degree of impact that the main risks and opportunities would have on our group, and are now looking into countermeasures for these.

Physical risks (in a +4°C world): Medium-to-long term to long term

Changes to society	Major risks	Impact	Main responses
Growing severity of climate related disasters (Heavy rain, tropical cyclones, etc.)	Halt to business activities due to water ingress risks (flooding, high tides, high waves, etc.) Long-term halts at production sites Severed supply chain	Medium	Continuously strengthen BCP measures Bolster water ingress countermeasures at major sites Reinforce the supply chain
Rising temperatures Water shortages or worsening water quality	Dropping productivity due to worsening working environments Dropping operating rate due to shortages and worsening quality of water	Medium	Continuously improve working environments Understand and work to combat water stress

Transitional risks (in a +1.5°C world): short-to-medium term to medium-to-long term

Changes to society	Major risks	Impact	Main responses
Stricter measures/regulations	Major increase in related infrastructure and technology development investments in case of raised NDC targets Increase in costs that go along with introduction of new measures or regulations, such as for higher carbon pricing	High	Promote GHG emissions reductions Saving energy, streamlining process, CO₂ separation and recovery, energy transition, etc.
Technology innovations	Major increase in energy costs Major increase in prices connected to moving to non-oil-based raw materials	High	Minimize energy and material consumption Streamline super absorbent polymer processes and develop recycling technologies Develop carbon recycling technologies, such as CCU (technology that utilizes separated and recovered CO₂)
Market changes	Stronger calls for reductions to environmental impact Appearance of new rivals with new competitive angle	High	Reduce carbon footprint for each product Develop environmentally friendly products

Opportunities (limiting rise to +1.5°C): medium to medium-to-long term

Changes to society	Major risks	Impact	Main responses
Increased energy efficiency	Increased demand for energy-related materials	High	Develop materials for batteries and semiconductors
Transition to a recycling-oriented society	Expanded needs for gas separation and recovery Increased demand for products that help reduce environmental impact, such as recycled products	High	Improve performance of PSA and expand the PSA business Develop recycling technologies

Water-Related Risks

Whether we can continue to secure a stable supply of high-quality water in the future will have a significant impact on the sustainability of our group as a chemical manufacturer. Therefore, we believe it is highly important to look into the types of water-related risk that each of our production sites faces and consider appropriate measures to address them.

Current evaluation results

We applied the SSP5-8.5 scenario^*1 to the WRI Aqueduct^*2 to evaluate the probability of water risks at all of our production sites. In terms of acute risks, we have identified the likelihood of water ingress due to storm surge at many of our facilities in coastal locations. In response, we are putting in places measures such as raised embankments and barrier walls to minimize risks. Regarding chronic risks, we have identified facilities at which water stress will rise in the future. It is estimated that water stress is less likely to come about because of a decrease in the supply of water from river basins, and more likely because of gradually increasing demand resulting from economic development. We will therefore roll out initiatives to improve the efficiency of our water usage at relevant facilities as preparation to ensure we do not have a significant impact on this trend.

This scenario by the Intergovernmental Panel on Climate Change (IPCC) imagines a maximal amount of GHG emissions if development remains reliant on fossil fuels and no climate-related measures are introduced.
Aqueduct is an evaluation tool by the World Resources Institute (WRI) to measure water risk.

Water-related risk rating

	Baseline (current)	2050 Forecast (SSP5-8.5)
Himeji Works	Low to medium	Low to medium
Befu Works	Low to medium	Low to medium
Chiba Works	Medium to high	Medium to high
Yangzhou Works	Low	Low
ChangPing Works	Low to medium	Low to medium
Arkema Works	Medium to high	High
Yeosu Works	High	Medium to high
Jangan Works	Medium to high	Medium to high
Paju Works	Low to medium	Medium to high
Singapore Works	Low	Low

Sustainability