Climate Change Initiatives
Initiatives to Tackle Climate Change
In March 2022, DKS pledged its commitment to the Task Force on Climate-Related Financial Disclosures (TCFD), based on a recognition of how important the risks and opportunities of climate change are to our business. We will promote the disclosure of information regarding the impact of climate change on our business activities, and aim to achieve a sustainable society by striving to realize a decarbonized society throughout the entire supply chain.
❶ Governance
We established the Sustainability Committee as a core sustainability promoting organization. It is chaired by the director in charge of sustainability and consists of members from throughout the Company. The Committee formulates basic policies and targets related to our actions to address climate change, specifies and analyzes material issues, promotes activities and checks their progress. Reports on the discussions of the Sustainability Committee are regularly submitted to the Sustainability Meeting, which is composed of members of the Management Committee. The Sustainability Meeting determines policies, deliberates proposals, makes decisions and checks progress. The Sustainability Committee also submits recommendations and progress reports to the Board of Directors at least once a year, providing a framework to ensure supervision of final decisions regarding strategies, targets, and their integration into our management strategies.
to scroll
❷ Strategy
We conduct scenario analyses to assess the impact that climate change risks and opportunities have on our business activities. Referencing the climate change scenarios published by the IEA (International Energy Agency), the IPCC (Intergovernmental Panel on Climate Change) and other organizations, we use a below 1.5 °C/2 °C scenario for transition risks, which presupposes tighter national measures, and a 4 °C scenario for physical risks, which presupposes more severe disasters. As risks and opportunities manifest, we quantitatively assess their impact on our operations and finances, formulate measures to address them and increase the resilience of our business strategies.
As a result of the scenario analyses, we found that policy risks, such as the introduction of carbon pricing, will have a significant impact, particularly through higher raw material prices due to the introduction of a carbon tax. The impact on factories due to the increasing severity of natural disasters as a physical risk is expected to increase over the medium to long term. Meanwhile, demand for products with low environmental impact is expected to grow due to increased environmental awareness. Our products and technologies give us opportunities to expand our business by meeting new market demands related to climate change mitigation. We will conduct R&D to address climate change challenges, responding to market needs with solutions such as energy-saving products which shorten manufacturing processes and products that contribute to the realization of clean energy to prevent global warming.
to scroll
| Classification | Risk / Opportunity | Urgency Level | Impact Level | Impact on Business | DKS Countermeasures |
|---|---|---|---|---|---|
| Transition | Increasing environmental awareness (changes in demand) | Medium term | Medium |
|
|
| Transition | Introduction of carbon pricing | Short term | Medium |
|
|
| Transition | Development of energy saving technology | Long Term | Medium |
|
|
| Transition | Rise in raw material prices |
Medium Term | Large |
|
|
| Transition | Rise in fuel prices | Medium Term | Small |
|
|
| Physical | More frequent natural disasters | Medium Term | Medium |
|
|
| Physical | Rising temperatures, rising sea levels | Long term | Small |
|
|
Urgency Level: Short term: within 5 years Medium term: within 10 years Long term: within 30 years
Impact Level: Large: At least ¥3 bn impact on profits Medium: At least ¥1 bn impact on profits Small: Less than ¥1 bn impact on profits
❸ Risk Management
Our Risk Management Control Committee is chaired by the executive general manager in charge of risk management, and it consists of representatives of each division and Group company. The Committee is engaged in activities for reducing the risks that may hamper the achievement of our business objectives to an appropriate level. Climate change risks are integrated into the Group-wide risk management system, and more important risks are managed by the Committee which assigns employees to be responsible for handling specific risks and monitors and reviews the planning and progress of measures.
❹ Indices and Targets
We believe that greenhouse gas (GHG) emissions are an indicator for assessing climate change risks. Previously, we set the target of reducing the domestic DKS Group’s GHG emissions (Scope 1, Scope 2) by 30% compared with the fiscal 2013 level by fiscal 2030. Additionally, we set the new long-term target of reducing these emissions by 45% compared with the fiscal 2013 level by fiscal 2035.
Targets
Reduce the Scope 1 and Scope 2 greenhouse gas emissions of the entire DKS Group in Japan by 30% by fiscal 2030, compared to fiscal 2013
Reduce the Scope 1 and Scope 2 greenhouse gas emissions of the entire DKS Group in Japan by 45% by fiscal 2035, compared to fiscal 2013
Greenhouse Gas Emissions
Scope 1 and Scope 2 (DKS Group in Japan)
to scroll
| FY 2030 Targets | FY 2022 Results | FY 2023 Results | FY 2024 Results | |
|---|---|---|---|---|
| Greenhouse gas emissions reduction rate vs. fiscal 2013 (%) | 30 | 16.9 | 22.9 | 16.4 |
| Greenhouse gas emissions (thousand t-CO2e) | 36.2 | 43.0 | 39.9 | 43.3 |
Scope 1, Scope 2, Scope 3(DKS non-consolidated)
(1,000 t-CO2e)
to scroll
| Fiscal 2022 Results | Fiscal 2023 Results | Fiscal 2024 Results | |||
|---|---|---|---|---|---|
| Scope 1 | 15.5 | 12.7 | 14.3 | ||
| Scope 2 | 12.0 | 11.5 | 13.2 | ||
| Scope 3 | 200.7 | 184.0 | 195.1 | ||
| Category 1 | Purchased Goods and Services | 173.3 | 158.2 | 169.2 | |
| Category 2 | Capital Goods | 4.7 | 4.3 | 6.9 | |
| Category 3 | Fuel- and Energy-Related Activities Not Included in Scope 1 or Scope 2 | 12.0 | 10.3 | 4.3 | |
| Category 4 | Upstream Transportation and Distribution | 5.7 | 5.8 | 6.5 | |
| Category 5 | Waste Generated in Operations | 4.8 | 5.1 | 8.0 | |
| Category 6 | Business Travel | 0.1 | 0.1 | 0.1 | |
| Category 7 | Employee Commuting | 0.2 | 0.2 | 0.2 | |
Initiatives for a Decarbonized Society
Based on our long-term green transformation (GX) strategy, we encourage energy-saving activities and are pushing forward with decarbonization efforts.
Use of renewable energy
Yokkaichi Chemical’s Rokuromi Plant switched to electricity derived from renewable energy in June 2022. Chin Yee Chemical Industries Co., Ltd installed solar panels able to generate 491 kW of electricity at its Guanyin Plant and began generating electricity at the end of 2022. In August 2024, we began solar power generation at our new head office. In addition to promoting energy-saving activities, we will continue to increase our use of renewable energy to reduce GHG emissions.
| Location | Renewable energy type |
|---|---|
| Headquarters | Solar power (company-owned system) |
| Ohgata Plant | Biomass power |
| Rokuromi Plant, Yokkaichi Chemical Co., Ltd. | Renewable electricity |
| Kyoto Elex Co., Ltd. | Solar power (company-owned system) / Renewable electricity |
| Guanyin Plant, Chin Yee Chemical Industries Co., Ltd. | Solar power (company-owned system) |
Acquisition of the Eco Rail Mark
We transport products from our plants to customers and logistics centers across Japan by land. As the CO2 emissions per unit of rail freight are approximately one-tenth of those of truck freight, we are promoting a modal shift to rail container transport for long-distance shipments to reduce emissions. As of November 10, 2023, we were certified as an Eco Rail Mark company, as our share of rail transport for shipments over 500 km exceeds 15%. Our goal for fiscal 2030 is to increase the share of shipments transported by rail to at least 40%.
We have been certified as an Eco Rail Mark participating company by the Eco Rail Mark Management and Review Committee, established by the Ministry of Land, Infrastructure, Transport and Tourism and operated by the Railway Freight Association. This certification recognizes companies that make a certain level of use of environmentally friendly freight rail transportation.