Environmental Strategies
Initiatives toward the realization of the Daiken Global Environment Vision 2050
In October 2021, we formulated the Daiken global environment vision 2050, in which the Daiken Group’s attitude for the long-term initiatives, policies, and goals for environmental issues are established. We aim to contribute to the realization of a sustainable society from thethree perspectives of the promoting resource recycling, mitigating climate change, and coexisting with nature and will put effort into theresolution of social issues, such as environmental issues.

DAIKEN Global Environmental Vision 2050
VisionFor a future full of smile
The overall aim of the Daiken Group is to realize a sustainable society towards 2050
by promoting resource recycling, mitigating climate change, and coexisting with nature.
Policy and the long-term goals upheld in the Global Environment Vision 2050
Environment PolicyLong-Term Goals

1

Promotion of resource recycling

2

Mitigation of climate change

3

Coexistence with nature– Waste reduction and reuse of resources –– Realization of carbon neutrality –100% waste recycling
Net zero greenhouse gas
emissions
Reduce the impact on thenatural environment– Conservation of biodiversity –Structure to promote environment management
President
Sustainability Promotion Committee

QEMS Manager

 Chairperson: Representative Director, President Secretariat: Sustainability Promotion Department andCorporate Planning Department

Secretariat: Quality Assurance Department
and Sustainability Promotion Department
QEMS Internal Audit Team(Key agendas concerning environment in fiscal 2023)
 Progress of the medium-term management plan’s
ESG goals (environment) Response to the climate change-related issues

Each department/Group company
QEMS Manager* QEMS: Quality and Environment
Management System

ISO 14001 certificate acquisition status (As of the end of March 2023)(1) The percentage of the offices that acquired the certificate in all offices inJapan: 90.8% (Based on the consolidated number of employees)(2) The percentage of the offices that acquired the certificate in all overseas
offices: 71.2% (Based on the consolidated number of employees)

44 offices and plants at 9 companies

5 offices and plants at 5 companies

51

DAIKEN GROUP REPORT 2023

1

Promotion of resource recycling
Reduction of final disposal of waste in landfills
Trends in final disposal of waste in landfills(1,000 t)

250

Amount of recycled resources*
Amount of simple incineration
Final volume disposed of in landfill

Amount generated

210.5

Amount generated

200

176.2

Recycling
93%

150

Recycling
92%

20
Simple incineration

Simple incineration

1%

11.8
0

Final volume disposedof in landfill 6%

Fiscal 2022

1%

11.8

Final volume disposedof in landfill 7%

Fiscal 2023

10.0

Final volume
disposedof in landfill
15% reduction
compared tofiscal 2022

Fiscal 2026 Goals*Amount of recycled resources = Valuable + Use for materials + Use for heat2

Daiken Group’s Value Creation

The Daiken Group aims to realize a recycling-oriented society and puts effort
into recycling waste, such as reusing the defectives generated in the
manufacturing process as product raw materials to the extent possible, andusing those as fuel for production, if not suitable for raw material itself. In fiscal
2023, we promoted initiatives to increase the use of waste for materials in
addition to the use as fuel for production by stably operating biomass boilers.
On the other hand, the final waste volume disposed of in landfill that is set as
one of the medium-term management plan’s ESG goals (goal in fiscal 2026:
15% reduction compared to fiscal 2022) went sideways from the results in theprevious fiscal year and as a result, there is an issue left unsolved. Toward theachievement of the goal, we will put effort into the further consideration andexecution of the recycling measures.

Mitigation of climate change

Initiatives for the reduction of greenhouse gas emissions linked to the business activities

2

162.7

160

151.2

(1,000 t-CO2)

180
140

145.1

162.7
80.2

120
160

151.2
69.8

80
120

93.9

80.2
82.5

91.1

69.8
81.4

100
60
80
40

99.3

93.9

91.1

20
0

2018
Results

2018
Results

2019
Results

82.5

2020
Results

2019
Results

81.4

2021
Results

2020
Results

10% reduction
compared
136.1 to25% reduction
compared tofiscal 2022

fiscal 2022

113.4

Overseas
136.1
65.0
80.1

113.4

Overseas
Japan

20
60
0
40

compared to

65.0
145.1

100
140
99.3

compared tofiscal 2022 gas emissions
fiscal 2022
Greenhouse(Scope 1+2)

2022
Results

2021
Results

2022
Results

80.1
2023
Results

To achieve net zero
greenhouse gas
emissions

Reduction image
in the future

Japan

2023
Results

Strategy for Value Creation

As milestones toward the realization of carbon neutrality upheld in the Daiken global environment vision 2050, the Daiken Group has set the greenhousegas emission reduction goals by fiscal 2026 and by fiscal 2031. Regarding the goal by fiscal 2026, 10% reduction (Scope 1+2) compared to fiscal 2022
and 6% reduction (Scope 3) compared to fiscal 2022 have been upheld as one of the medium-term management plan’s ESG goals In the goal by fiscal
2031, 25% reduction (Scope 1+2) compared to fiscal 2022 and 13.5% reduction (Scope 3) compared to fiscal 2022 have been upheld, and we obtained
the certification of the Science Based Targets initiative, which is an international initiative, in June 2023 as the goal was science-backed Well Below 2°C,
which is consistent with the levels required by the Paris Agreement. In fiscal 2023, with the impact of the rationalization of the production bases and thefluctuation of the electric power supplier’s emission factor, in addition to the utilization of renewable energy, energy-saving activities, and promotion of theinitiatives
for productivity improvement, Scope 1+2 was 4% reduction compared to fiscal 2022, and Scope 3 was 3.7% reduction compared to fiscal(1,000 t-CO )180 We will continue the initiatives for the reduction aimed2022.
at realizing carbon
neutrality.
10% reduction
25%
reduction

2026
Goals

2031
Goals

2026
Goals

(To realize carbon neutrality)

achieve
2051To(Fiscal
year) net zero
Goals greenhouse gas
emissions

Reduction image
in the future(To realize carbon neutrality)

2031
Goals

2051 (Fiscal year)
Goals

Note 1: Overseas group bases’
3,500emissions have been combined since fiscal 2021 results.
Note 2: For the values in and after fiscal 2022, the reviewed calculation method has been used as we obtained the SBT certification. In addition, values exclude Pacific Woodtech
Corporation’s results as the company became an equity method affiliate from a consolidated subsidiary in August 2022.
3,000
3,500

Greenhouse gas emissions (Scope 3)(1,000 t-CO2)

6% reduction

13.5% reduction

reduction
1,991.1 6%1,942.8

13.5% reduction
compared
1,787.8 to

2,500
3,000

compared tofiscal 2022

2,000t-CO2)(1,0002,066.8

compared tofiscal 2022

1,500 1,763.8
2,000

2,066.8

1,000
1,500 1,763.8

1,991.1

fiscal 2022

1,942.8

1,787.8

500
1,000
0
2021
500 Results

Data

2,500

compared tofiscal 2022

To achieve net zero
greenhouse gas
emissions

Reduction image
in the future2022
Results

2023
Results

2026
Goals

2031
Goals

Note 1: Combined figures of the emissions in Japan and overseas(To realize carbon neutrality)

achieveyear) net zero
2051To(Fiscal
Goals greenhouse gas
emissions

Reduction image
in the future(To realize carbon neutrality)

0 Note 2: For the values in and after fiscal 2022, the reviewed calculation method has been used as we obtained the SBT certification. In addition,

2021 values
2022
2026 Corporation’s results as
2031
2051 (Fiscal year)
exclude2023
Pacific Woodtech
the company became an equity method affiliate from a consolidated
subsidiary in
Results
Results
Results
Goals
Goals
Goals

August 2022.

(%)
Futureinitiatives toward reduction
100l Pursuit of the productivity improvement and efficiency in production
bases
(%)
l
E xpansion of the use of renewableenergyand20
consideration
19 of 17
21
100
21
22
purchasing
green
electricity
22
80

22

21

21

20

19

17

Other

l Consideration of the introduction of internalcarbon pricing for
MDF
investment
MDF decisions
Plantation timber (Imported)18
l Considerationof fuel conversion basedon technology
development,
19
Domestic
timberOther
price trends, and negative emissions Lauan(collection
and storage of CO2)
wood (Imported)
MDF
18
19
Plantation timber

MDF

Plantation
DAIKENtimber
GROUP(Imported)
REPORT 2023
Domestic timber

52

22

20

3,000

0

2018
Results

2019
Results

2020
Results

2021
Results(1,000 t-CO2)

2,500

2022
Results

2023
Results

2026
Goals

6% reduction

2,000

2,066.8

1,991.1
3,000

1,500 1,763.8

31,942.8(1,000 t-CO2)

2051 (Fiscal year)
Goals

compared tofiscal 2022

Coexistencewith nature
1,787.8
6% reduction

2,500

13.5% reduction

compared tocompared to2022
fiscal 2022 of lauan wood
Initiatives fiscal
towardzero usage
2,000

1,000

2,066.8

1,991.1 1,942.8
For the purpose of the reduction of the risks of stabletimber procurement and currency exchange fluctuations, in addition to the reduction of
1,787.8
1,763.8
environmental burden, we1,500
have been proceeding with the switch from natural lauan wood (tropical natural wood) to plantation timber, MDF, andTo achieve net zero
domestic timber to be used for flooring substrates produced by the Daiken Group. In fiscal 2023, regarding the floors for apartments for which greenhouse
lauan
gas
500
plywood base materials areused, we introduced a new product of the MDF basematerial;
however,
becausethelaunchwasinthesecondhalfof the1,000
emissions
Reduction image
fiscal year, it will be in and after fiscal 2024 when the new product will be reflected in the figures as the reduction effect. While the timber procurement(Tonetrealizecarbon neutrality)
To achieve
zero
in the futureenvironment worsens on a500
global scale, as we strived for stable supply of products by reviewing the procurement balance between plantation
timberandgreenhousegas
0(Fiscal
year)
2021
2022
2023
2026
2031
2051
emissions
image
domestic timber, the usage of domestic timber resulted in a decrease to 45%. The timber Reduction
procurement
environment continues to be in a toughsituation
Results
Results
Results
Goals
Goals
Goals
(To
realize carbon neutrality)
in thecompared
futurebut toward the achievement 0of the usage of lauan wood for flooring substrates to reduce by 50%
to fiscal 2022, which was set as one of the
2021
2022
2023
2026
2031
2051 (Fiscal year)
medium-term management plan’sgoals, andzero use Goalsof lauan wood beyondGoals
the ESG goal, which is upheld in the Daiken global
ResultsESGResults
Results
Goalsenvironment vision
2050, we will further put effort into the development of technologies while optimizing the balance among plantation timber, MDF, and domestic timber
and their stable procurement.

Ratio of flooring substrates
(%)
100

Other

Other

22

21

21

22

20

21

21

19

19

20

17

17

18

18
MDF
19

MDF

MDF timber (Imported)
Plantation

MDF
19

Domestic
timbertimber (Imported)
Plantation
Lauan wood (Imported)

Domestic timber
Lauan wood (Imported)

80

23
32
60

23

40
43

27

20

20

Plantation timber
16(Imported)
20
Pursue the sustainable useof base materials toward
the stable supply of products

Active use of domestic timber

40

24
4

Plantation timber
16(Imported)

27

28

32

28

20

30

41

34

47

51 Domestic timber
45

Pursue thesustainableuse
To achieve
theglobal towardof baseDaikenmaterials
environment
the stable vision
supply2050of products

11

Active use of domestic timber
20

28

30

24

51 Domestic timber

Reduction of the use of lauan
47wood

26

34

41

23

21

19

17

15

2017

2018

2019

2020

2021

11

16

(To realize carbon neutrality)

2031
Goals

13.5% reduction

compared tofiscal 2022

Environmental Strategy
3,500

40

26

greenhouse gas
emissions

Reduction image
in the future0

To achieve the zerouse of lauan wood
in
2050
To
achieve the45

15
Lauan wood (Imported)
Lauan wood (Imported)
15
7

2015

2016

2022

2023
Results

Daikenglobal2051 (Fiscal year)
environment
vision 2050

2026
Goals

Response to TCFD

Under
the Daiken
globalenvironment
Reductionof theuse oflauanwood vision 2050, which indicates the long-term direction of the initiatives for the environment, the Daiken Group expressed
achievethatthe zeroan agreement on the recommendation by the TCFD (Task Force on Climate-related Financial Disclosures) in October 2021. WeTo
acknowledge
are one of the 15
important management issues that lead to the risks and opportunities
inand wood
17 change,1519 such as climate
21 responses,
23 environmental
usebusinessof lauanLauanwood
disclose information on governance, strategies, risk management, andindicesand(Imported)
goals, which are the disclosure items recommended by the TCFD.

2017

2018

2019

2020

2021

15
Governance

2022

53

DAIKEN GROUP REPORT 2023

7

2023

In the sustainability promotion committee in which the representative director and presidentisResults
the chairperson, we identify important climate change-related risks and opportunities,
disseminate them to each department and group company, and appropriately conduct
management. Regarding risks, as we established the risk and compliance management
committee (hereinafter referred as the “RCM committee”) in which the deputy president andexecutive officer is the chairperson and disseminate them to each department and groupcompany, the sustainability promotion committee is responsible for the responses to theclimate change-related risks and opportunities and has been proceeding with the responses
by cooperating with the RCM committee. These results are regularly reported to the Board.
From now on, through the continuous promotion of the Daiken global environment vision 2050,
we will analyze the risks and opportunities to be brought to the Daiken Group’s businesses
and value chains by climate change, as well as the financial impacts associated with them,incorporate them into the management strategies, and disclose information.

in 2050

Lauan wood (Imported)

2026Promotion structure
Goals

2051 (Fiscal year)

The Board

ReportingResponSustainability
sible forTCFD Promotion Committee
Chairperson: Representative Director,
President
Secretariat: Sustainability Promotion
Department and Corporate Planning
Department

Risk and ComplianceManagement Committee(RCM Committee)
Chairperson: Deputy President Executive
Officer
Secretariat: Corporate Planning Department
and Legal Department

Cooperate each other in regard to the risks

Sustainability promotion
department
Promotion departments

Departments responsible for risks
Department responsible for legal affairs

Each department/Group company

Strategy
We grasped the risks and opportunities related to the Daiken Group’s businesses in regard to the climate change and organized important risks andopportunities. We organized them based on the results of the risks that had been sorted out, evaluated, and responded by the RCM committee. In fiscal
2023, we referred to the 2°C (1.5°C) scenario and the 4°C scenario based on the TCFD recommendation and conducted our group’s business activities
and impact evaluations. We will apply the results of scenario analyses and lead to the formulation of countermeasures and development of plans.
Preconditions of scenario analysesl Short term: Fiscal 2026 (Final fiscal year of GP25) l Medium term: Fiscal 2031 (Fiscal year of the SBT goal)l Long term: Fiscal 2051 (Fiscal year of the Daiken global environment vision 2050 goals)

2 Scopel Domestic market (Physical risks are for domestic production bases)

3 Overview of the scenario setting
The scenario to be able to suppress the earth’s average temperature rise to 2°C

The earth’s average temperature rise will be 4°C compared to the level before the*Major external scenarios referred: RCP2.6, IEA WEO, etc.

*Major external scenarios referred: RCP8.5, IEA WEO, etc.

Industrial Revolution as the policies, regulations, and social initiatives toward the
The 2°C (1.5°C) compared to the level before the Industrial Revolution as the introduction of
The 4°C
reduction of CO2 emissions will not progress. The scenario where the impact of(1.5°C) policies and regulations, as well as market changes, rapidly progress toward carscenario
climate change, such as a disaster, will become extensive.
scenario bon neutrality in 2050.

4 Impact

Large: 5 billion yen or more, Medium: 500 million yen or more and less than 5 billion yen, and Small: less than 500 million yen

Daiken Group’s Value Creation

1 Assumed period

Risks and opportunities of the climate change
Classification
Policy/Regulation
Transition
risks

Market(Changes incustomerrequests)

Item

Scenarioz Difficulty in obtaining wood chips (product raw materials and fuels) by promoting biomass
power generationz An increase in procurement costs due to the timber price hike (Regulations for tree
trimming etc.)
z An increase in costs due to traceability of products and materials and responses to life
cyclesz Procurement risks and an increase in costs due to the shift to environmentally friendly raw
materials and materials

Time
axis

Large

z Sales expansion by newly developing and commercializing
environmentally friendly products
Medium z Capital investments using subsidies
z Pursuit of the productivity improvement and efficiency inproduction basesz Enhancement of the BCP measures for production and sales
bases
z Responses made by insurance for damage caused by naturalLarge
disastersz Enhancement of the BCP measures for suppliers andlogistics warehouses

An increase in
the averagetemperaturez Damage on and shutdown of production and sales bases due to natural disasters anddelays in member procurement, shipment, and delivery due to disruption of the logistics
networkz Delays in goods deliveries due to suppliers and logistics warehouses being affected bynatural disasters

4˚C
Short
term
- longterm

z An increase in the cooling costz Appeal to customers by recycling raw materials (Improvement of corporate value)

Resource
efficiency

z Appeal to customers by increasing the usage of recycled materials (Improvement ofcorporate value)

Small z Promotion of the operation to suppress power consumption
z Improvement of corporate value by enhancing the system forresource circulation and expansion of environmentally friendly
products
Large
z Improvement of corporate value by enhancing the system forresource circulation and expansion of environmentally friendly
productsz A decrease in costs by efficient transportationz Optimization of transportation by using digital technology

z An increase in demand due to the establishment of the production processes that do notemit greenhouse gases

Opportunities

2˚C (1.5˚C)z Formation of the markets for and expansion of demand for energy-saving products andenvironmentally friendly products (New wood industrial materials etc.)
Products,
services, andmarkets

Resilience

Strategy for Value Creation

Physical risk

Countermeasurez Expansion of suppliers (New supplier acquisition)z Sales expansion by newly developing and commercializing
environmentally friendly productsz Conversion to the materials with less market fluctuationsz Responses to certified materials, carbon footprint, etc.
z Sales expansion by newly developing and commercializing
environmentally friendly products

2˚C (1.5˚C)Energy saving/ z An increase in costs associated with the responses for decarbonization of the existing
Decarbonizaproduction facilities (Capital investments etc.)tionz Expansion of the use of renewable energy and an increase in the cost to introduce theregulations
green electricity certificate
Frequent
occurrence ofa typhoon/
Heavy rain

Impactz Sales increase due to the mitigation of climate change and expansion of the sale ofadaptive products (expansion of the sale of timber products from the perspective of carbon
storage)z Improvement of corporate value by newly developing and commercializing environmentallyfriendly products by taking advantage of our strengths of the technologies to use timberz Improvement of the reliability of the supply chain by revitalizing investments for BCP
measuresMedium z Pursuit of the productivity improvement and efficiency inproduction basesz Shift to renewable energy, fuel conversion, etc.
z Enhancement of the responses to zero destruction of nature
Large z Enhancement of the change from petroleum-derived tonature-derived
Small

z Review of the product design criteria based on circular
economy, carbon footprint, etc.

Largez Expansion of the environmentally friendly productsz Appeal of the technology to use timber

Small z Enhancement of the BCP measures

Risk management

Indices and goals
We have set Mitigation of climate change – Realization of carbon neutrality – as a pillar in the environment policy of the Daiken global environment vision
2050 and aim for net zero greenhouse gas emissions as a long-term goal toward 2050. Toward the reduction of greenhouse gases that have asignificant impact on climate change, we used backcasting from how we should be in 2050 and set and proactively put effort into the fiscal 2026 goals
in the ESG goals of the medium-term management plan GP25 3rd Stage. In addition, we have set the reduction plan and goals in fiscal 2031 as themedium-term goal and have been certified by the SBT initiative in June 2023.
Fiscal 2026
goals
(Goal of GP25 3rd Stage)

Gross emissions in Japan andGreen- overseas (Scope 1+2)
house
gas Gross emissions in Japan andoverseas (Scope 3)

10% reduction (Ascompared to fiscal 2022)
6% reduction (Ascompared to fiscal 2022)

Fiscal 2031
goals
(SBT Goals)

Gross emissions in Japan andGreen- overseas (Scope 1+2)
house
gas Gross emissions in Japan andoverseas (Scope 3)

25% reduction (Ascompared to fiscal 2022)
13.5% reduction (Ascompared to fiscal 2022)

DAIKEN GROUP REPORT 2023

54

Data

Climate change is one of the important external risks and we acknowledge that it is the risk to be addressed by the entire company. We enhance theeffectiveness by the sustainability promotion committee and the RCM committee cooperating with each other and proceeding with it in the environment
management system and the company-wide risk management system. We will put effort into the improvement of processes to further evaluate theclimate change-related risks.