Strategy (Stance, Approach, Risks and Opportunities)

Furthermore, we will renew our understanding toward the interrelated nature of such environmental issues as climate change, resource recycling, water-related risks, and biodiversity, and bolster efforts to consider solutions that do not involve trade-offs throughout the product lifecycle as we carry out these endeavors.

These analyses are reviewed once a year in light of social trends related to environmental issues, the policies of each country, and status of the Group. As a result of the above analyses, the following risks and opportunities are considered.

In order to revitalize our activities and accelerate efforts to resolve issues, the Group believes that it is necessary for each employee to be aware of different environmental issues and not only to become a group with a strong ability to contribute to solving issues, but also to promote activities in partnership with all stakeholders.
Backcasting from our vision for 2050, we set milestones on a medium-term basis, and established an environmental roadmap.
In fiscal 2023, we promoted initiatives based on this environmental roadmap.

By achieving all of these environmental issue-related long-term goals, we aim to achieve

For each environmental issue, we have drawn up a roadmap backcasted from our goals in 2050, and have set medium-term milestones. Environmental issues are interrelated, and choosing and promoting solutions that do not involve trade-offs will lead to the simultaneous realization of long-term goals. For this reason, we will focus on improving the quality of solutions to environmental issues under our current Medium-term Management Plan.

SEKISUI CHEMICAL Group is promoting SEKISUI Environment Sustainability Plan: EXTEND, its environmental medium-term plan that covers the three years from fiscal 2023. As previously mentioned, using backcasting to achieve the goals we have set for 2050 in our Long-term Environmental Management Vision, SEKISUI Environment Sustainability Vision 2050, we are aiming for milestones established for the Medium-term Plan and implementing initiatives for each important working item.

The key environmental issues that the Group must address are climate change, water-related risk, and resource recycling. With regard to biodiversity, which is directly or indirectly related to these issues, we recognize the importance of understanding the issues and working to progress of biodiversity conservation.
In order to accelerate the resolution of issues aimed at achieving our long-term goals, we have set creating and expanding the market for Products to Enhance Sustainability, reducing environmental impact, and environmental conservation" as items on which to focus.
We have also established the following items as specific measures to be taken.

Under the current Mid-term Management Plan, we are promoting initiatives to achieve the following targets.

The Environment-Contributing Products program, which preceded Products to Enhance Sustainability, was launched in 2006. Since then, we have registered products that make a significant contribution to solving environmental issues based on internal standards. We have made a commitment to society to increase the ratio of Group-wide products registered, and have promoted the creation of products that solve social issues while working to expand the market. From the beginning of the program's operation, the Group has aimed to accelerate the resolution of environmental issues through products and realize a balance between ecology and economy.

In fiscal 2017, we expanded the scope of Environment-Contributing Products to include not only the natural environment, but also the social environment, including human and social capital. Our goal is to improve people's lives and the global environment. We believe that it is essential to resolve the issues set out in the SDGs adopted by the United Nations in 2015. This includes promoting well-being and health and securing resilient infrastructures to improve people's lives as well as mitigating and responding to climate change to improve the global environment. We are focusing our efforts on solving these issues.

In fiscal 2020, the name of the product program was changed to Products to Enhance Sustainability. This measure was designed to improve the Group's sustainable management capabilities and profit-generating capacity to sustainably solve social issues, including the environment, and to grow as a Group by solving social issues. At the same time, the following two systems have been launched.

With regard to the issue of climate change, we have set a long-term target of zero greenhouse gas emissions by 2050. In order to achieve this goal, we have drawn up a path to achieve the 2°C target. We were able to achieve the milestones set in the roadmap for greenhouse gas reduction halfway into the previous Medium-term Management Plan (fiscal 2021). As a result, we revised our roadmap to achieve a target of 1.5°C with the aim of accelerating our efforts.
We have not changed our milestone of converting all purchased power (Scope 2) to renewable energy by 2030. However, we will also focus on reducing greenhouse gas emissions with a view to switching to alternative fuels, and aim for a 50% reduction compared with fiscal 2019.

Under the current Medium-term Management Plan, we will actively promote the reduction of fuel-derived greenhouse gases, in addition to the conversion of electricity used at production plants to renewable energy. We have identified the period from fiscal 2023 as the time for production process innovation. Our goal is to convert 70% of purchased power to renewable energy, and are continuing to implement measures to support this conversion. For fuel-derived sources under Scope 1, we are continually promoting energy conservation activities at our production sites, including more efficient operations and energy conversion to electricity by replacing aging facilities.

Products manufactured under these initiatives are low-carbon products that emit low levels of GHGs throughout the product life cycle. We are working diligently to create and expand markets for Products to Enhance Sustainability with a low carbon footprint (CFP) for use in products that allow customers to engage in low carbon manufacturing and ultimately to a decarbonized society. In order to reduce GHG emissions throughout the product lifecycle, it is vital to reduce GHG emissions (Scope3) in the supply chain.
In upstream corporate activities, we are calling on the cooperation of suppliers and strengthening efforts to convert to non-fossil-based and recycled raw materials in a bid to reduce raw material-derived GHG emissions. In downstream corporate activities, we are endeavoring to increase the sales ratio of net-zero energy houses (ZEH) and are promoting increased awareness toward the recovery and disposal methods of used products at the product and business model design stages in order to reduce GHG emissions at the time of products use.
As far as disposal methods at the product disposal stage are concerned, we are engaging in a variety of activities. This includes coordinating with waste contractors and the industry as well as refining proprietary technologies. One such technology to emerge from these efforts is the Group’s Biorefinery (BR) technology that produces ethanol from waste using microorganisms.
Taking the aforementioned into consideration, the Group recognizes that resource recycling contributes significantly to the reduction of Scope 3 emissions, and is promoting initiatives accordingly.

In fiscal 2020, we set realizing societies with abundant access to clean water as our goal for 2050. We set milestones for priority items by backcasting and formulated a roadmap for water-related risk reduction. Based on the aforementioned, we will continue to reduce the volume of water consumed throughout the Group and promote recycling, while also working to improve the quality of water discharged into rivers based on COD indicators. In addition, we work to ascertain water-related risks specific to each region and formulate and implement risk reduction measures tailored to the region for sites with high risks.
As far as efforts to mitigate water intake risks are concerned, we recognize that one measures is to incorporate water intake risks in the formulation of BCPs at each production and business site. This is also an effective measure in efforts to adapt to climate change.
In addition to such environmental management measures as the prevention of pollution during both regular and non-regular periods, efforts to improve the quality of wastewater are also one measure to reduce water discharge risk. We recognize that these endeavors will help reduce the negative impact on biodiversity.
Through these measures, we will strive to improve the water environment in basins centered on production sites and reduce water-related risks in the supply chain, thereby reducing water-related risks for companies and society.
Looking in particular at the supply chain, we will share and recognize risks through dialogue with suppliers (Environmental Due Diligence) while working together to consider and implement measures to improve risks in an effort to reduce the water-related risks associated with the raw materials procured.

With regard to resource recycling, we will strive to reduce the total amount of waste, even as the scope of our operations doubles toward 2030. At the same time, we will focus on recycling and promote initiatives to realize a recycling-oriented society and a circular economy by 2050. Recognizing that efforts to recycle resources in the supply chain are indispensable to realizing a decarbonized society, we formulated a resource recycling policy, strategy, and a resource recycling roadmap to achieve a circular economy in 2050 in fiscal 2020.

With innovation centered on the creation of Products to Enhance Sustainability for resource recycling, we have initiated steps to strengthen our efforts to convert existing products into raw materials and to recycle valuable materials from waste discharged in the production process.
From a waste recycling perspective, we are considering and promoting in-house measures so that we can select high-quality material recycling methods. Among a host of endeavors, we are evaluating the degree to which we contribute to other environmental issues, including the reduction of GHG emissions, conservation of biodiversity, and recycling.
As a technology to accelerate resource recycling not only in-house, but also in society, we established and demonstrated a Biorefinery (BR) technology to produce ethanol from waste using microorganisms. Moving forward, we will continue to work toward social implementation.
We believe that solutions to environmental issues will accelerate as the entire supply chain works together. We will develop and implement measures that emphasize supply chain management that spans the lifecycle of our products.
In order to realize a recycling-based society, it is necessary for society to recognize the value of recycled raw materials, biomass, and their use in products, and to acknowledge activities that were previously treated as external diseconomies as economic costs.
In order to raise social awareness, the Group is vigorously participating in and driving activities through various rule-making and other initiatives, including the certification of recycled products and recycling processes.

SEKISUI CHEMICAL Group’s Long-term Environmental Management Vision is to realize an earth with maintained biodiversity where the ecosystem hierarchy is kept healthy and in a nature-positive state. We believe that this goal will be achieved when all environmental issues are resolved.
The Group recognizes the dependence and impact its corporate activities have on natural capital, and strives to maintain returns that exceed the natural capital used. Going forward, we will reduce the dependence and impact on natural capital from the perspective of five impact drivers (climate change, resource consumption, water and land use, pollution, and invasive species) that affect natural capital through corporate activities. Specifically, we will implement the following seven measures.

Furthermore, with regard to biodiversity issues, we recognize the importance of ensuring that the impact imposed by corporate activities is positive based on the concept of no net loss. At the same time, it is equally important to understand the impact of each area, and to not only reduce any negative impact, but to promote a positive result. As with other environmental issues, we will also consider activities that include initiatives that encompass the supply chain.