Toray Industries : Initiatives for Global Environmental Issues (P32-35)

Toray Group is working to expand the Green Innovation (GR) business, which has been engaged so far in renewable energy, hydrogen, and materials related to electrification, and to develop products that help absorb greenhouse gases (GHGs), such as CO2 separation membranes, in an effort to make a contribution to reducing GHG emissions throughout society and in achieving carbon neutrality by 2050 for society as a whole. Also, the expansion of these GR businesses will be returned to Toray Group as sustainable energy and raw materials to reduce GHG emissions. In addition, the Group will promote further reduction of GHG emissions (Scope 1 and 2) through innovative processes and CO2 recycling technology that utilize CO2 as a resource, aiming to become carbon neutral in its business operations in 2050. The Group will also work to reduce Scope 3 GHG emissions for the purpose of decreasing emissions throughout the supply chain.

Moreover, the Group assumes that realizing carbon

neutrality in 2050 will require transformations based on unprecedented ideas, as well as discontinuous technological innova- tions, and that it will be necessary to engage in these efforts, not simply as an individual company, but in unison with indus- tries, the Japanese government and society as a whole. Toray Group engages in discussions and dialogue with the economic organizations and industry associations in which it holds mem- bership, as well as the government and other entities, and works in cooperation with these partners towards realizing carbon neutrality in 2050 and the goals of the Paris Agreement.

• Nippon Keidanren (Japan Business Federation): Subcommittee on Global Environment, Committee on Environment
• Japan Association of Corporate Executives: Environment and Energy Committee
• Japan Chemical Industry Association: Technical Affairs Committee
• Japan Chemical Fibers Association

Increase the contribution to GHG reduction

through GR Businesses

Support the advancement of carbon-neutral technologies in the GR business, including renewable energy, hydrogen, and materials related to electrification.

Introduction of GHG reduction technologies in

business operations

Reduce total emissions through the use of sustainable energy and raw materials, innovative processes, carbon recycling technologies, etc.

Return from GR businesses

Society-wide GHG emissions

Contribution to reduction

Contribution to absorption

GR Businesses

• Commercial brand & +TM, utilizing used polyester (PET) bottles
• Carbon fiber for compressed vessels

• Carbon fiber for wind turbine blades

• Battery separator film for lithium-ion batteries
• CO2 separation membrane

Contribution

to GR

businesses

Toray Group’s GHG emissions

Present 2050

• Maximize the use of zero emission electricity and fuel
• Increase the efficiency of existing production processes
• Develop innovative low GHG emission manufacturing technologies
• Develop and maximize the use of recycling and biotechnology
• Challenge for carbon recy- cling and CO2 absorption

Governance System Related to Climate Change

Through the Sustainability Committee chaired by the President, Toray Group draws up overall medium- to long- term roadmaps and action plans for achieving the Toray Group Sustainability Vision, and deliberates on annual action plans for the Green Innovation Business Expansion Project (GR Project), the Life Innovation Business Expansion Project (LI Project), and the Challenge 30 Project, and oversees and manages execution issues and the status of initiatives. The Sustainability Committee is additionally responsible for overseeing the implementation of efforts to address climate change and discusses important policy matters and topics related to climate change. It also collaborates with the CSR Committee, Risk Management Committee, Safety, Health and Environment Committee, and Technology Committee to address climate change-related issues for the entire Toray Group.

At least once a year, the Board of Directors receives a report summarizing the matters discussed by each group-wide committee, and issues guidance to the committees and makes decisions. When formulating business strategies and making management decisions, the Board of Directors considers climate change-related issues as one of the important elements of its overall deliberations and decision-making.

the Group conducted scenario analyses regarding the potential impacts of the opportunities and risks of climate change.The Paris Agreement target is to limit global warming to well below 2°C, preferably to 1.5°C, compared to pre-industrial levels. Looking to help achieve this target and build a decarbonized society, Toray Group primarily analyzed the 1.5°C increase scenario, but also considered the 2°C increase scenario. The Group also looked at the 4°C increase scenario assuming insufficient progress on efforts to ameliorate global climate change. Each analysis covered the period from 2030 to 2050.

Risk Management

On climate change, Toray Group seeks to contribute to solving environmental issues through its business and considers the reduction of GHG emissions to be extremely important to both stakeholders and Toray Group, and has therefore established KPIs that it uses in its efforts to reduce risk. Toray Group addresses group- wide risks including those associated with climate change under the direction of the Risk Management Committee. Specifically, the Group conducts periodic risk management (priority risk mitigation activities) and routine risk management (monitoring trends in and outside of Japan and through risk detection, assessment, and monitoring).

Impact Analysis of Climate Change

Toray Group announced its support for the TCFD recommendations in May 2019. Following its announcement,

KPIs and Targets

Toray Group has disclosed its sustainability targets for fiscal 2030 and fiscal 2022 along with the results related to these targets achieved in fiscal 2021 (see p.29).

Social change

Increase in ratio of renewable energy

Establishment and raising of carbon taxes and GHG emissions reduction targets

Main risks, opportunities

Responses by Toray Group

Magnitude of opportunity, risk*2

1.5°C 2°C 4°C

large

large

large

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Promoting Life Cycle Management

In addressing global environmental issues, it is vital to consider the entire life cycle of products and services in order to reduce environmental impact while also delivering improved economic and social value. In this respect, Toray Group practices life cycle management (LCM).

LCM is the basis for Green Innovation (GR) prod- ucts, and the Group has adopted life cycle assessment*1 and the Toray Eco-Efficiency Analysis (T-E2A)*2 tool and is working to establish LCM as a tool to measure CO2 reduction in the entire life cycle of products and services. Those products that are able to demonstrate objective evidence of providing an effective solution for global environmental issues are certified as GR products, only after the products are subjected to a two-stage screening process by the divisional committees and the group-wide Green Innovation Certification Committee.

*1 Life cycle assessment is a method for quantitatively assessing the resources that have gone into a product and the impact the product will have on the environment and ecosystems over its life cycle.

*2 T-E2A is an environmental analysis tool developed by Toray Industries, Inc. It produces a map of multiple products plotted along the axes of environmental impact and economic performance, enabling users to select the most environmentally-friendly and economical products.

Toray’s Life Cycle Management Approach

Environmental Accounting

Toray has been practicing environmental accounting since 1999, to track investments and gauge their cost effec- tiveness. The value of environmental facility investments in fiscal 2021 amounted to ¥1.82 billion, an increase of

¥300 million over the previous fiscal year, while environmental conservation costs amounted to ¥6.75 billion, a decline of ¥810 million.

Greenhouse Gas Emission Reduction Initiatives

As its greenhouse gas emissions reduction target for CSR Roadmap 2022, Toray Group presented the goal of reducing greenhouse gas emissions per unit of revenue by 20%* compared with fiscal 2013 levels for the entire Toray Group on a continuous basis through fiscal 2022, for which purpose it has implemented systematic reduction measures.

Greenhouse gas emissions for the entire Toray Group during fiscal 2021 increased 10.5% over the previous fiscal year to 5.49 million tons-CO2 due to a recovery in production volumes. Meanwhile, the Group minimized greenhouse gas emissions from these higher production volumes versus the increase in revenue, thereby maintaining greenhouse gas emissions per unit of revenue at 20.6% below the fiscal 2013 levels.

In fiscal 2021, greenhouse gas emissions from Toray and its group companies in Japan also increased 11.7% over the previous fiscal year due to the recovery in production volumes, whereas greenhouse gas emissions per-unit-of-revenue improved 7.9% over the previous fiscal year, ultimately falling 26.4% below fiscal 2013 levels.

* For Scope 1 and 2

Greenhouse Gas Emissions and Greenhouse Gas Emissions Per-Unit-of Net Sales (Per-Unit-of Revenue) (Toray Group)

Greenhouse gas emissions per-unit-of net sales (per-unit-of revenue)

Installing Renewable Energy Systems

Toray Group is systematically installing renewable energy systems. The Group installed a solar power generation system at Toray Plastics Precision (Zhongshan) Ltd., in fiscal 2020, and solar power generation systems at Seta Plant 3 and at Toray Precision Co., Ltd., in fiscal 2021, each of which is currently in operation. In addition, the Tokai Plant began co-combusting sludge fuel as boiler fuel from fiscal 2017.

In practice, the Group also switched over all power consumed by Toray’s headquarters to 100% renewable energy starting in April 2022. This move is expected to reduce greenhouse gas emissions by an estimated 1,500 tons-CO2 annually on a global basis.

Energy Conservation Measures

Toray is vigorously working on energy conservation activities with the goal of reducing its per-unit energy consumption *1 by 2% annually. In fiscal 2021, a recovery in production volumes led to an 8.6% increase in energy consumption over the previous fiscal year. Per-unit energy consumption, however, improved 12.1% over the previous fiscal year due to the recovery in production volumes. Compared with fiscal 1990, the baseline year for reductions in per-unit energy consumption, this is an improvement of 20.1%.

Toray Group organizes energy conservation teams to help carry out annual energy conservation diagnostics at plants in Toray and its group companies around the

Energy Consumption and Per-unit Energy Consumption Index (Toray Industries, Inc.)*2

*2 The energy consumption shown in this graph does not include renewable energy.

world. In fiscal 2021, these activities were conducted at two of Toray’s plants and three group company plants in Japan. The energy savings thereof effectively reduced greenhouse gas emissions by approximately 3,400 tons-CO2 per year.

*1 Energy consumption per converted production volume

Biodiversity Initiatives

Toray Group views conservation of biodiversity as a critical global environmental issue that is of equal importance to reducing greenhouse gas emissions. As part of its environmental risk investigations conducted at the time of product safety review and capital investments for all products, Toray Group employs an environmental assessment checklists to verify that regulated substances released through exhaust gas, wastewater, waste products, and other means during the manufacturing stage remain below legal standards. This initiative serves to assess the Group’s impact on biodiversity, and aims to realize a sustainable society.

As one of its biodiversity conservation initiatives, the Group conducts periodic surveys of products to determine if their production uses bio-based raw materials, and applies rules that check for impacts on biodiversity at the development stage for all products.

Among bio-based raw materials, the Group views palm oil as a raw material that should be followed with priority, and, over the three-year period from fiscal 2020 to 2022, worked to investigate whether products use certified raw materials and to advance the switch to alternative mate- rials. In fiscal 2020, the Group investigated whether certified raw materials were used in regard to raw materials made from palm oil, and completed its investigation of 93% of relevant suppliers. As a result of its ongoing efforts, it completed its investigation of 100% of relevant suppliers in fiscal 2021. Moreover, in fiscal 2021 the Group investigated whether products failing to use certified raw materials made from palm oil could be switched to using certified raw materials. As of the present time, the Group has completed its advisability judgement for 100% of relevant sup- pliers. Going forward, the Group will conduct follow-up investigations regarding raw materials that are difficult to replace, and will carefully examine the possibility of switching each raw material to a certified raw material.