Reporting in Line with the TCFD Recommendations
The Mitsubishi Chemical Group is working to enhance its climate change-related measures in areas such as reducing environmental impact, driving energy-saving activities, promoting renewable energy use, and adding to its range of products that contribute to greenhouse gas (GHG) emissions reductions. Through these measures and progressive enhancement of information disclosure, we are targeting an increase in our corporate value.
In October 2018, Mitsubishi Chemical Group Corporation announced its support for the final recommendations of the Task Force on Climate-related Financial Disclosures (TCFD*).
A body established by the Financial Stability Board in 2015. In June 2017, it announced its final recommendations concerning information disclosure to encourage companies to voluntarily disclose the impacts of climate change-related risks and business opportunities on corporate finances.
Governance
The Group has identified reduction of GHG emissions, reduction of environmental impact, and a circular economy as the climate change-related material issues to be addressed. Under the supervision of the Board of Directors, the Sustainability Committee, which consists of the Company’s executive officers and other members, will regularly monitor progress and steadily promote measures to address these issues.
| Role | Activities | Content of report | |
|---|---|---|---|
| Board of Directors |
・Formulation of the basic management policy |
・Supervision based on the reports from executive officers |
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| Director Liaison Committee |
・Sharing of important management information |
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Sustainability Committee [Structure] Chairperson: President & CEO Committee members: Corporate executive officers, etc. Secretariat: Sustainability Department |
・Deliberations on the Group's sustainability policy and related matters |
・Monitoring based on the management indices (MOS Indices) |
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Director remuneration
The performance-based remuneration of corporate executive officers is determined based on the degree of achievement of the targets for each fiscal year. In addition to economic efficiency and innovation, the evaluation factors consist of individual performance evaluations and the KAITEKI Value evaluation, which includes indices related to improvement in sustainability. For fiscal 2024, the indices related to sustainability were selected as factors that should receive particular attention by corporate executive officers, which includes reduction of GHG emissions.
Strategy and Risk Management
Climate change-related risks
The Group is evaluating the impact of climate change that is expected in the years up to 2030 through scenario analysis.
We evaluated transition risks based mainly on the Net Zero Emissions by 2050 Scenario (NZE Scenario) of the International Energy Agency (IEA) and other factors. As a result, we were able to recognize risks with a particularly high impact, including rising carbon prices and a rise in climate action in stock markets.
In addition, as a result of evaluating physical risks based on the RCP8.5 scenario of the Intergovernmental Panel on Climate Change (IPCC), we have recognized the possibility of operational losses due to abnormal weather. We plan to take proper measures to deal with these risks and continue to monitor their conditions.
Overview of risks based on scenarios
| Risk category |
Category | Risk recognized |
Outline of risk based on the scenario*１ | Impact on the Company | Financial impact*2 | Response to potential risk | |
|---|---|---|---|---|---|---|---|
| Transition risk |
Policy／legal regulation | Rise in carbon prices | Increase in operating costs due to higher carbon prices | 1.5℃ | Rise in operating costs | ＋＋ | Reduce GHG emissions in line with our basic policy for achieving carbon neutrality |
| Market | Regulations concerning plastic product usage | Decrease in virgin demand for petrochemicals as plastic recovery rates increase | 1.5℃ | Decreased demand for petrochemical products | ＋ | Focus on businesses that contribute to achieving carbon neutrality | |
| Reputation | Rise in climate action in stock markets | Decline in market capitalization due to inadequate responses as institutional investors focus on climate change | 1.5℃ | Decrease in market capitalization | ＋ | Enhance disclosure and engagement on sustainability, including for climate change | |
| Physical risk |
Acute | Operational losses due to extreme weather | Increased flood risk in Asia will have a greater impact on factory operations | ４℃ | Loss of sales and assets such as manufacturing facilities and inventories from the shutdown of coastal factories due to disaster damage | ＋ | Implement measures to prepare for major natural disasters to minimize damage and ensure business continuity |
１ See the NZE Scenario of World Energy Outlook 2023 for 1.5℃ and the IPCC RCP8.5 scenario for 4℃.
２Quantitative 2030 evaluation results for the financial impact on the Group are indicated as follows: +: ¥10 billion or more and less than ¥100 billion ++: ¥100 billion or more.
Transition plan
The Group set a target for a 29% reduction in GHG emissions by fiscal 2030 compared with fiscal 2019, and a further reduction to net zero in 2050 to achieve carbon neutrality. We plan to reduce GHG emissions in line with this road map.
In addition to optimizing manufacturing processes and implementing energy conversion, going forward, our portfolio management will include a carbon-neutral perspective, which will enable us to remain competitive in a society that is in transition to carbon neutrality.
Business opportunities related to climate change
To ensure its competitiveness as society transitions to carbon neutrality, the Mitsubishi Chemical Group will focus on businesses that contribute to the realization of carbon neutrality by transforming its business portfolio based on three criteria―consistency with our vision, competitive advantage, and potential for growth. Specifically, we will increase scale and profitability in the five business focus areas of our new management vision KAITEKI Vision 35: stable supply platform for green chemicals, eco-conscious mobility, advanced data processing and telecommunications, food quality preservation, and technology and equipment for new therapeutics.
In addition, demand continues to rise among customers and society for the effective use of resources and the utilization of renewable resources with the aim of realizing carbon neutrality and a circular economy. Against this backdrop, we will promote the conversion to environmentally friendly raw materials, as we believe this will lead to long-term business opportunities.
One of our recent achievements is the completion of construction and start of trial operation of a chemical recycling facility at the Ibaraki Plant to convert waste plastics into oil, a collaborative effort with ENEOS Corporation. The establishment of this facility, the largest of its kind in Japan, marks a significant step forward in our efforts to realize carbon neutrality and a circular economy. Furthermore, we announced an agreement with Abu Dhabi Future Energy Company PJSC (Masdar) and INPEX CORPORATION to conduct a joint feasibility study for the production of polypropylene from CO2 and green hydrogen in Abu Dhabi, United Arab Emirates.
Process of Risk Identification, Evaluation, and Management
Portfolio management
In line with its management vision, the Group will manage its business portfolio by focusing on both growth potential and climate resilience and leveraging its competitive advantages.
Risk management
By establishing and operating a Groupwide and comprehensive risk management system, the Group is promoting risk management based on proactive risk control and appropriate risk-taking and aims to manage sustainability-related risks in an integrated manner.
Metrics and Targets
Metrics and targets to assess risks and opportunities
Among the management indices (MOS Indices) used to measure progress with material issues, we set a medium-term target for the GHG emissions reduction rate and plan to evaluate the progress made annually.
Scope 1, Scope 2, and Scope 3 greenhouse gas emissions
Content of report
Please see fiscal 2024 GHG emissions performance in “Non-Financial Data.” We have received independent assurance for GHG emissions and are working to disclose highly reliable information.
