Tokuyama TCFD Report 2024

Disclosures Based on
TCFD
Recommendations
Governance
Boardʼs oversight of climate-related risks and opportunities
Managementʼs role in assessing and managing climate-related risks and opportunities

Strategy
Climate-related risks and opportunities the company has identiﬁed over the short,medium, and long term; andthe resilience of the companyʼs strategy,

taking into consideration diﬀerent climate-related scenarios,
including a 2°
C or lower scenario
Impact of climate-related risks and opportunities on the companyʼs businesses,
strategy, and ﬁnancial planning〜 

Risk Management
Companyʼs processes for identifying and assessing climate-related risks
Companyʼs processes for managing climate-related risks
How processes for identifying, assessing, and managing climate-related risks areintegrated into the companyʼs overall risk management

Metrics and Targets
Metrics used by the company to assess climate-related risks and opportunities
in line with its strategy and risk management process
Scope 1, Scope 2, and, Scope 3 greenhouse gas (GHG) emissions, and the related risks
Targets used by the company to manage climate-related risks and opportunities
and performance against targets
Issued by Carbon Neutral Strategy Div. and Corporate Social Responsibility Div. Tokuyama Corporation on June 28, 2024

The Tokuyama Group announced its support
for the TCFD recommendations in February
2021 and has been studying climate change
measures based on the TCFD framework. In
FY2023, the Group issued its second TCFD
report. It reveals that we have enhanced ouranalysis of climate change risks andopportunities, set new reduction targets for
Scope 3 emissions, and shared stakeholder
evaluations of our emissions reduction eﬀorts.
Tokuyama discloses its climate change eﬀorts
in line with the TCFDʼs four thematic areas that
represent core elements of how companies 
〜 

operate: Governance, Strategy, Risk
Management, and Metrics and Targets.

1

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

GovernanceTokuyama Group has identiﬁed climate change as oneof its most signiﬁcant management risks. Accordingly,
contributing to global warming mitigation is one of the key
objectives under its current Medium-Term Management
Plan, which began in FY 2021.

Figure 1: Medium-Term Management Plan［FY2021 to FY2025］❶ Transform business portfolio

Increase growth businesses share of consolidated
net sales to over 50%

Contribute to mitigation

Expedite development/commercialization of next-gen energy
technologies; reduce GHG* emissions 30％** by FY2030

Practice socially

Step up high-priority CSR initiatives to lay groundwork forfurther growth and realize our vision❷ of global warming❸ responsible management：Greenhouse Gas* GHGBaseyear FY2019**

Two months after announcing our support for the TCFD

Figure 2: Organizational Position of the Carbon Neutral Strategy Div.

recommendations in February 2021, we established Carbon

Corporate Social Responsibility Div.

Neutral Strategy Dept. directly under the president . With the

Corporate Planning Div.

transition from the concept stage to the implementation phase,

Digital Administration & Planning Div.

Tokuyama has now accelerated its eﬀorts by establishing
Carbon Neutral Strategy Div., which has the status of an

New Business Div.

independent division.

Carbon Neutral Strategy Div.
Procurement & Logistics Div.
President

Carbon Neutral Planning Dept.
Biomass Business Dept.

General Aﬀairs & Human Resources Div.
Research & Development Div.
Cement Business Div.
Chemicals Business Div.
Electronic & Advanced Materials Business Headquarters
Life Science Business Div.
Eco-Business Div.
Tokuyama Factory2

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Boardʼs oversight of climate-related risks
and opportunities

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Figure 3: Corporate Governance Structure

As of April 1, 2024 


In order to determine the Groupʼs sustainability policies
and goals and eﬃciently proceed with the relevant activities,  

includes all executive oﬃcers, and the meetings are attended

 Business Operations

  reported to the Board of Directors, which provides oversight of 






sustainability issues. The decisions made by the council are   Assist

important matters, including the implementation of appropriate
corporate governance and risks and opportunities related to



meets once a year in principle. Chaired by the President, it

outside directors. At meetings, the council members discuss 

the Group has established a CSR Promotion Council, whichby the Audit and Supervisory Committee members, including
  

        
 the body, and then reﬂected in the Groupʼs strategy.

 Matters related to climate change are discussed by the
Executive Committee, which then adopts resolutions as  necessary. Such matters include corporate policies for 

 

       
    

addressing climate change, the formulation of medium andlong-term strategies to achieve those policies, and theselection of investment projects, etc. The resolutions are thenreported to the Board of Directors. Additionally, decisions on
matters of particularly high importance are taken by the Boardof Directors after deliberation by the Executive Committee.

Table 1: Process and Frequency for Reporting and Approval of Climate-Related Matters      *●      ●          ●              

●    ●          ­    

●           ●     

* Regarding the Board of Directors, in addition to the above, there were five written resolutions that were deemed to have been a Board of Directors resolutions.
3

Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Managementʼs role in assessing and managing
climate-related risks and opportunities

year in principle. Its role is to lead the Group's CSR eﬀorts,
including climate change response measures. Under thesame council, the Group has also created an Environment

energy conservation activity reports, etc., with the aim ofaccelerating the Group s climate change initiatives. After

Climate-Related Targets



●          
●                        


   ●       
●         



  Committee, which meets once a year in principle. Its role isto oversee group-wide environmental audits and compile

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management
 

 ●    





   



  

Under the CSR Promotion Council, the Group has
established a Sustainability Committee, which meets twice a

Climate-related Metrics

Risk Management Processes


governance related to climate change. The president bears
climate change.

Risk ID and Assessment Processes

Figure 4: System to Promote Carbon Neutrality Achievement

Tokuyama has established an approval process for
ultimate responsibility for the Groupʼs eﬀorts to help combat

Metrics and Targets

 


   ●        

analyzing the risks and opportunities posed by climatechange with respect to the Group's business activities, wehave incorporated the results into our measures for fulﬁlling
the Medium-Term Management Plan 2025.
All the executive oﬃcers and outside directors
participate in seminars to learn more about global warming
and attended three such activities in FY2023. These seminars
monitor the latest trends and regulatory systems related toclimate change and is making preparations to enable rapid
response as necessary.

Table 2: Process and Frequency for Receiving Reports, and Monitoring Mechanism       

 
 ­ *        


  ­                            

   ­               

    ­                        



  ­            
                 

        ­      

    ­           

*Regarding the Executive Committee, in addition to the above, there was one written resolution that was deemed to have been an Executive Committee resolution.
4

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Strategy






 ①   
 

addresses both the risks related to climate change, and thepotential new business opportunities in the environmentalﬁeld. The risk mitigation measures include making visible thecarbon costs arising from the introduction of carbon pricing,  

addressing the impact of potential changes in customer②   

procurement policies, and identifying the impact on
ﬁnancing arising from potential policy changes at ﬁnancial
International Energy Agencyʼs (IEA) transition risk scenarios  

③  

  (such as the Net Zero Emissions by 2050 Scenario [NZE]),
and the Intergovernmental Panel on Climate Changeʼs (IPCC)
physical risk scenarios (such as RCP8.5 and SSP3-7.0), we④ 




conducted risk and opportunity analysis using 1.5°
C and 4°C
warming scenarios covering a period from the present to2050. Our aim is to monetize promising business

opportunities while reducing climate change risks by shifting 

⑤  our portfolio from energy-intensive to value-creating   
 

companies.

Climate-related risks and opportunities
the company has identiﬁed over the short,medium, and long term;andthe resilience of the company s
strategy, taking into consideration diﬀerent
climate-related scenarios, including a 2°
C orlower scenario
In FY2021, we began analyzing the risks andRisk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Table 3: Risks Posed by Climate Change (scenario analysis)

The Groupʼs Medium-Term Management Plan 2025

and investment companies. Moreover, by referring to theMetrics and Targets

 
  

⑥ 

 
  

⑦ 

 
   


 

●   








●    








● 
 






●  
  
  








●  
  
 
●       

● 








●                ●    ●       ●           
 ●                ●        
       ●                ­ ●              ●        
          ●  ●        








●          
          ●     ●           
●     ●         ●  ­
    
   






●  ●  
        







●  ­
   
  ●   
   



●   

   
●     
     ●       





● 
          

Short term: by FY2025; medium term: by FY2030; long term: by FY2050

Group of those risks and opportunities, the potential timing

opportunities that the Group faces due to climate change. Inof their occurrence, the impact on business, and the

FY2022, we evaluated the potential ﬁnancial impacts on thepriorities for addressing these risks and opportunities.

Based on the results, we proceeded with theconsideration of speciﬁc measures in FY2023.

5

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Government policy and regulations① Carbon pricing andenergy procurement costs

Impact on Tokuyama Group

Increase in operating costs due to expandedcarbon pricing (medium to long term)
Tokuyama uses coal mainly for onsite power plants.

established. Guidelines for quantitative targets to beachieved by FY2030 have also been implemented forindustries with substantial emissions.
Tokuyama has set the following targets based on

We paid approximately 1.6 billion yen in environmental

established objectives.

taxes (Japanʼs petroleum and coal tax, and carbon tax) in• Cement production: Achieve a non-fossil fuel ratio of 50%

FY2023, which is equivalent to approximately 6.3% of

in co-ﬁring processes (179％ compared to the guideline)

operating income.

• Chemical industry (soda industry): Reduce coalMoreover, under the Japanese governmentʼs
growth-oriented carbon pricing plan, Phase 1 of emissions
trading will begin in FY2023, with full-scale emissions trading
starting in FY2026. Then a carbon levy will be introduced in
FY2028, which will gradually increase thereafter.
Japanese carbon pricing will be introduced in stages.

consumption by 45% compared to FY2013 (150％compared to the guideline)
Tokuyama will set targets based on establishedguidelines and work on conversion to greener fuels.
While there are no penalties for failure to achievetargets, if the performance of an organization is found to be

Since the details of these programs have not been fully

signiﬁcantly inadequate, recommendations and/or

determined yet, it is diﬃcult to estimate the ﬁnancial impact

announcements will be made after considering the level ofon the Group at this time. However, assuming a tax ofthe relevant technology and the situation for non-fossil

10,000 yen per ton of CO₂ emissions from fuels-derived, if

energy supply.

our CO₂ emissions remain at the same level as in FY2022,
the annual cost will be approximately 48 billion yen.

Tokuyama is working to achieve a 50% reduction in
fuel-derived GHG emissions from onsite power plants by
FY2030 compared to FY2019 and aims to switch to

Increase in mitigation measure costs due totightening of GHG emission regulations(medium to long term)

non-fossil fuels (biomass and ammonia) to meet this goal. To

In April 2023, Japan implemented the Revised Act onneed to be invested in biomass technology along with about

Rationalizing Energy Use. Under this law, in addition toachieve a 30% reduction in GHG emissions through co-ﬁring
with biomass and a 20% reduction through co-ﬁring withammonia, we estimate that approximately 11 billion yen will
15 billion yen in ammonia.

conventional promotion of energy conservation,requirements for conversion to non-fossil energy have been6

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Government policy and regulations① Carbon pricing andenergy procurement costs

Response measures

Initiatives to reduce GHG emissions throughfuel conversion (biomass and ammonia)
The Group needs to steadily reduce its GHG

Promoting GHG emission reduction measuresby adopting internal carbon pricing
In order to promote GHG emission reduction

emissions to mitigate the risk of increased manufacturing

measures, Tokuyama has added internal carbon pricing (ICP)

costs due to carbon pricing.

to its evaluation criteria for investment projects (10,000

Tokuyama is aiming to achieve a 50% reduction in

yen/t-CO2). This will promote energy conservation activities

GHG emissions from onsite power plants compared toin the short and medium term, and we are working to

FY2019 by 2030, and it plans to switch to non-fossil fuels

reduce coal use by co-ﬁring with biomass or ammonia at(biomass and ammonia) for onsite power plants. The rate of

power plants. In FY2023, the investment eﬀect taking ICP

co-ﬁring with biomass will gradually increase starting in

into account was used as a reference value when deciding

FY2023. Co-ﬁring with ammonia is scheduled to begin

on biomass co-ﬁring investments.

starting in FY2028 and beyond. A basic plan for biomass andammonia adoption is currently being implemented, as part ofa project sponsored by Japanʼs Agency for Natural
Resources and Energy (FY2023 Oil Supply Structure
Advancement Project Cost Subsidy: Project to Promote
Transition to a Stable Supply of Next-Generation Fuels).
To cover the cost of this emissions reduction project,

Enhancing initiatives to help promote
green transformation by participatingin the GX League
As a member of Japanʼs GX League since FY2023, theTokuyama Group has been sharing data relating to its

we will utilize government subsidies, and pass on theemissions reduction and green transformation (GX) eﬀorts,

remaining costs through higher product prices.

while also conducting emissions trading. While actively
working toward GX and disclosing our progress, we arelearning from the initiatives of other companies in the GX
League and striving to carry out even more eﬀective
emissions reduction activities.

7

Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Technology② Green process adoption
measures

Impact on Tokuyama Group

Increased green energy production andprocurement costs (medium term)
Tokuyama has four coal-ﬁred power plants, one ofwhich is a circulating ﬂuidized bed boiler that can also
operate on biomass exclusively. In FY2023, we began to

Increased costs for green material
procurement and green process conversion
costs due to the lack of technology andmarket maturity (medium to long term)
In order to achieve carbon neutrality, not only does

increase the biomass co-ﬁring ratio for that plant, and as aenergy input need to be green, but also raw materials andresult we reduced the amount of coal used for onsite power

production processes. Many of these processes are still

generation by 170,000 tons compared to FY2019. On the

being developed, as relevant markets and technologies areother hand, the remaining three boilers are pulverized

yet to be established. Since many green technologies andcoal-ﬁred boilers, and capital investment will be required tomarkets are still immature, there is a risk of increased costs.

convert them to biomass or ammonia use. If we reduce our
GHG emissions by 30% through biomass co-ﬁring and by
20% through ammonia co-ﬁring, approximately 11 billion yen
will need to be invested in biomass technology along with
about 15 billion yen in ammonia equipment. At the sametime, operating costs are expected to increase due to the
procurement of biomass and ammonia.

8

Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Technology② Green process adoption
measuresResponse measures

Investigation of ammonia supply chain
establishment at the Shunan petrochemicalcomplexThrough the development of black pellets bysemi-carbonizing biomass from FY2023, the Group aims toincrease the types of biomass fuel it can use and thereby
ensure an aﬀordable and stable supply.

Building a large-scale supply chain is essential for
reducing the cost of green energy. To procure biomass fuel,the Group installed equipment for handling wood pellets at
the Port of Tokuyama. We are making eﬀorts to eﬃciently

Calculation of product carbon footprints
The ﬁrst step towards making greener products is

unload biomass fuel, which we will need more of going

being able to accurately calculate the GHG emissions

forward.

related to each one. As part of eﬀorts to better meet

To obtain ammonia, we are working with relevant

customer needs, in FY2023, we calculated the cradle-to-gatecompanies to build an ammonia supply chain in the Shunan

carbon footprint for each of our products (from theIndustrial Complex.

extraction of raw materials to the point where the productleaves the manufacturing facility) based on accepted andEnsuring stable procurement of certiﬁed
biomass fuel by building relationships
with suppliers
Development of black pellets

proposed standards and guidelines. Going forward, we will
update our calculation method based on anticipatedchanges in the guidelines and customer needs, in order toprovide even more accurate carbon footprint data.

Due to the global transition to decarbonization, there
will likely be a tight supply situation for internationallycertiﬁed biomass fuels, going forward. Until now, we haveused palm kernel shells (PKS) as fuel in our power plants.
Thanks to the good relationships we have built with our
suppliers over the years, we have been able to secure
certiﬁed products from an early date and have increased ourbiomass fuel usage.

9

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Evaluation③ Evaluation by stakeholders

Impact on Tokuyama Group

Decline in market value and increase in ﬁnancing
costs due to a poor evaluation of carbon
neutrality initiatives（medium to long term）
Our stock price could suﬀer if investors see the ownership of

Response measures

Improving information disclosure andsteadily working to reduce GHG
emissionsWith the ultimate goal of achieving carbon
neutrality by FY2050, Tokuyama Corporation and its

coal-ﬁred power plants as a high risk. Moreover, we could be

consolidated manufacturing subsidiaries are working

charged higher interest rates on our borrowing if we are evaluatedto reduce Scope 1 and 2 GHG emissions by 30% by

as a high-risk company, and our ﬁnancing costs would then increase.

the end of FY2030, compared to FY2019. We arealso calculating and disclosing these emissions in

Risk of litigation by local residents to shut down
or decommission coal-ﬁred power plants owned
by Tokuyama(medium to long term)
In Japan, lawsuits have been ﬁled against constructions ofaccordance with the GHG Protocol. For Scope 3
emissions, Tokuyama and its consolidated
manufacturing subsidiaries have set a goal of
reducing GHG emissions by 10% by FY2030,
compared to FY2022.
We also follow the TCFD recommendations

coal-ﬁred power plants by local residents, and there have beenand proactively disclose information thatcases where such construction plans have been cancelled. As

stakeholders are seeking.

Tokuyama owns four coal-ﬁred power plants, we could be sued to
shut down or decommission these facilities if our eﬀorts to reducecoal consumption are seen as insuﬃcient.

Sustainability risks of biomass fuels（medium to long term）
While the Group uses palm kernel shells (PKS) as fuel, they
have been tied to issues such as deforestation and labor conditionsin the palm oil industry. Moreover, falsiﬁcation of wood pellet
certiﬁcation has been discovered in Vietnam, and so expanding the
procurement of biomass fuels comes with certain risks.
10

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Evaluation③ Evaluation by stakeholders

Response measures

Dialogue with the local community
In FY2023, we supported the implementation of a
Shunan regional dialogue, environmental class visits
provided to technical high schools in Shunan City, and a
symposium entitled A carbon-neutral society of the future
made possible by Shunan.
As part of the Shunan regional dialogue, Tokuyama
gave a presentation on the company s environmental
conservation eﬀorts under the banner of Building a safer
and more livable city as part of the green transition,
followed by a factory tour and a social gathering. In theenvironmental class visits, we explained Tokuyama s carbon
neutrality and CSR initiatives, giving speciﬁc examples, tothird-year students who were studying industrial chemistry in
the Environmental Systems Department at Yamaguchi
Prefectural Tokuyama Commercial Technical High School.
The students also participated in experiments and a study
tour of the Tokuyama Factory.
The symposium was hosted by the Shunan Industrial
Complex Decarbonization Promotion Council and supported
by Tokuyama. In addition to the lectures, we held panel
discussions with high school students to spread information
to Shunan residents about Tokuyama s initiatives to achievecarbon neutrality.
The Group will continue building good stakeholder
relationships by including local residents in its environmental

Business portfolio transformation
As a key issue under the Medium-Term Management
Plan 2025, we are promoting eﬀorts to transform ourbusiness portfolio.
In FY2023, we conducted an evaluation of our legacy
businesses, assuming future carbon pricing. By identifying
potential changes in our competitiveness due to thetransition to a low-carbon society, we began devising anappropriate business strategy.
Moreover, the Group plans to make large-scale
investments to achieve carbon neutrality, which will total
approximately 18 billion yen over the three-year period fromFY2024 to FY2026.

Procurement of certiﬁed biomass fuelAs the Group is increasing its use of biomass co-ﬁring
to reduce GHG emissions, it is important that we ensuresustainability by procuring biomass fuel that meets the levelof certiﬁcation required by the Japanese government's
renewable energy feed-in tariﬀ system. Starting in FY2024,
we have adopted Green Gold Label certiﬁed palm kernel
shells (PKS) for our internal power production. We are also
promoting CSR procurement, which is one of our key CSR
issues (materialities), while working to minimize risks bytrying to source from regions with low sustainability risks.

initiatives and by actively participating in community
activities.

11

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Market④ Penetration of green
procurement by customers

Impact on Tokuyama Group

Rejection of products by the market basedon large carbon-footprint evaluation(medium to long term)
In recent years, the rules for calculating the carbon

Deterioration of proﬁts due to an inability torecover green initiative costs by raising prices(medium to long term)
Tokuyama is investigating fuel conversion and green

footprint (CFP) of products over their life cycle continue topower procurement to reduce GHG emissions frombe reﬁned. Since Tokuyama emits a large amount offuels-derived, but we also assume that energy costs will risegreenhouse gases, customers may require us to disclose ourgoing forward. Therefore, we need to assume an

CFP and set reduction targets for each product. If we fail toappropriate green market energy price that takes into

achieve these targets, sales of our products could be

account the rising costs associated with fuel conversion.

aﬀected. In particular, sales to customers who are actively

However, there is a risk of lower proﬁt margins if the costs

working to combat global warming could very wellrelated to green process adoption cannot be passed on

decrease.

through higher product prices.

12

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Market④ Penetration of green
procurement by customers

Response measures

Steadily reducing GHG emissions throughenergy conservation and fuel conversion, etc.
To ensure that our products remain the choice of ourEnhancing supply chain cooperation forproper green market formation
Businesses that directly emit GHG emissions arecustomers and survive in the marketplace, we must meet

responsible for reducing those emissions. However, theour GHG emission reduction targets for FY2030.

prevailing view is that the relevant costs will likely not beFirst, we will further promote ramp up energy-saving

borne entirely by those businesses, but by society as a

activities to fully eliminate any energy loss. Tokuyama willwhole. Therefore, we will strengthen cooperation with othersteadily reduce GHG emissions from fuels-derived bystakeholders so that the entire supply chain can work to

steadily adopting co-ﬁring with biomass and ammonia.

help create a sound green market.

Over the short term, we have promoted energy

In FY2023, we surveyed our major suppliers about

conservation activities in each manufacturing department as

their GHG emissions initiatives to get a picture the actual

shown below, and reduced coal consumption by co-ﬁring

situation.

with biomass and hydrogen at the Group s onsite power
plants.
• Polycrystalline silicon: Improved production process• Cement: Installation of high-eﬃciency equipment
In FY2023, we were able to reduce GHG emissions
by 80,000 t-CO₂e through energy-saving activities.

Construction of a carbon footprint
evaluation system
In order to make greener products, GHG emissions
data needs to be made available for the entire product life
cycle, including the calculation method. In FY2023, weCreation of green products based on massbalance approach certiﬁcation
Since Scope 1 emissions from electricity and steam

established a system for calculating product carbon
footprints based on accepted and proposed standards andguidelines for determining cradle-to-gate GHG emissions,
including the upstream supply chain. Going forward, we will

generation cannot be reduced using carbon oﬀset credits,

continue to improve the reliability of our data, throughand since the Tokuyama Factory generates all its own

measures such as system-based calculation and third-party

power, we need to ensure that all the electricity produced

veriﬁcation.

by the factory is green in order for it to make green
products. Therefore, we are currently considering obtaining
certiﬁcation for biomass electricity and steam under themass balance method.

13

Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Market⑤ Lost opportunities due to a failure tokeep up with green market expansion

Impact on Tokuyama Group

Lost opportunities due to the delay inestablishing a green supply chain（medium to long term）
We are currently working to bolster the

Response measures

Prompt implementation of measures
Tokuyama will ensure that it seizes business
opportunities by steadily implementing the response
measures outlined on pages 17 to 21. Moreover, in 2023,

competitiveness by creating a large-scale green supply chain

we joined Japan s Circular Partners initiative. It wasthat includes ammonia in the Shunan petrochemical

established to promote organic collaboration among

complex. We recognize that any delay in this eﬀort to enter

ambitious and pioneering companies, as well as government

the green market could result in lost business opportunities.

agencies and academic institutions. The aim is to build a
circular economy that maximizes added value while

Lost opportunities due to insuﬃcient eﬀorts
for entering the circular economy and thecarbon recycling ﬁeld
（medium to long term）

promoting eﬃcient and circular use of resources. We arepromoting collaboration with other companies to help build
a circular economy.

Carbon recycling involves the capture of carbon fromCO₂ emissions for use as a raw material, while the creationof a circular economy promotes waste recycling to mitigate
resource procurement risks. Tokuyama is investigating
initiatives for these two eﬀorts, as they are expected to be
implemented worldwide. We recognize that any delay in thiseﬀort could result in lost business opportunities.

14

Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Physical risks (acute)⑥ More frequent extreme weather
events and sea level rise

Impact on Tokuyama Group

Response measures

Wind and ﬂood damage to production
facilities; production plans delay andincreased costs due to supply chain
disruptions, etc. (long term)

Enhanced Business Continuity Plan measures

Since the Tokuyama Factory is situated in a coastal

To mitigate the risk of plant shutdown due to natural
disasters, the Tokuyama Factory is strengthening its
infrastructure. As a measure to protect against storm surges
during typhoons, which are deemed to be the greatest

industrial complex, if extreme weather events (such as heavy

threat in terms of natural disasters, the factory constructed arains, lightning strikes, and major typhoons) increase due toseawall during the period from FY2000 to 2016. Considering

the eﬀects of climate change, production could be

the greatest potential wave height estimates for the next 15

interrupted due to facility ﬂooding. In the past, large

and 30 years, the height of the seawall was raised fromtyphoons have not caused suﬃcient damage to aﬀect

C.D.L* 4.7 to 5.5 meters. This cost about 300 million yen in

operations, but they have caused water and other damage

total, including materials, transportation, labor,

to some equipment. In 2018, when torrential rains caused

administrative work, and other expenses.

landslides that damaged the JR Sanyo Main Line, we were

In 2019, the high waves generated by Typhoon No.15

forced to shift some transport from rail to truck, which(Hagibis) caused ﬂooding beyond designated storm surge

increased transportation costs by 52 million yen.

zones, so Japanʼs national standards were revised. Based on

Since Tokuyama transports most of its raw materials

that, Yamaguchi Prefecture also updated its standards inand products by sea, more frequent storms could

2022. In the same year, we used the prefectureʼs revised

signiﬁcantly reduce proﬁtability whenever marine transport isstandards and sensitivity analysis to predict potential ﬂood

delayed or halted as a result.

damage to the Tokuyama Factory due to high waves from atyphoon, using various potential typhoon courses andmagnitudes. Going forward, we will set typhoon protection
standards for the Tokuyama Factory, compare the required
seawall height with its existing height, and plan
improvements such as raising the seawall height to meet therequirement. Our analysis also revealed that storm surges
could cause ﬂooding damage to the factory throughbackﬂow and overﬂow in the plant s discharge channel, so
we will consider measures to rectify this as well.
C.D.L: The chart datum level indicates the baseline from which water depths are*calculated
for each port.

15

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Physical risks (chronic)⑦ Long-term intensiﬁcation of
extreme weather eventsand rising sea levels

Impact on Tokuyama Group

Response measures

Decrease in production capacity due toinsuﬃcient factory cooling capacity causedby rising average temperatures (long term)

Maintaining capacity through equipment
modiﬁcations, etc.
To maintain cooling capacity, current cooling tower

Situated in a coastal industrial complex in Shunan

capacity will be increased by expanding the evaporation

City, Yamaguchi Prefecture, the Tokuyama Factory contains

area, increasing the capacity of circulation pumps, andmany manufacturing facilities and produces a wide variety of

improving the piping design. This will require an investment

products. Recirculating water is used to cool theof at least several hundred million yen.

manufacturing equipment. Once this water has captured
heat from the manufacturing process, it is cooled by theeﬀects of evaporation in cooling towers, and thenrecirculated. If equipment cooling capacity decreases due toan increase in average air or water temperatures, there is arisk of a corresponding decrease in production capacity.

Production halts due to storm surges causedby rising sea levels (long term)
As it is located in a coastal industrial complex, theTokuyama Factory is susceptible to ﬂooding caused bystorm surges. If one manufacturing facility within the
Tokuyama Factory were to be shut down for 10 days, theestimated losses would be approximately 300 million yen.

16

Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Climate-related risks and opportunities
the company has identiﬁed over the short,medium, and long term;andthe resilience of the company s
strategy, taking into consideration diﬀerent
climate-related scenarios, including a 2°
C orlower scenario

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Table 4: Climate Change Opportunities (scenario analysis)

  

①     

   

●    

         


 

  

●  
 ­      



●
­   ­  ­          ­ ­   ­     ­ ●           ­              ­   
②   

  
  




③      
 

●         

●        




17

Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Market① Expanding demand in theenvironmental market

Impact on Tokuyama Group

Response measures

Expansion of businesses
oﬀering waste disposal,
eﬀective utilization of
resources, and measures tocombat global warming

Commercialization of renewable resources and energy

Waste recycling is expected tofurther expand in response to rising

While using co-ﬁring with PKS biomass as a measure to reduce coal consumption,
the Group is continuing to study the development and commercialization of alternative
biomass fuels in order to ensure stable fuel procurement. In December 2023, we decided
to build a pilot plant for the development of black pellets, which has the potential to be a
new biomass fuel that eliminates various issues with existing biomass fuels.
In September 2023, group company Tokuyama Chiyoda Gypsum Co., Ltd. (TCG)

environmental awareness and the need toopened a new recycling plant in Muroran City, Hokkaido, its third such site in Japan.

mitigate resource procurement risks

Established in 2011 as a joint venture between Tokuyama and Chiyoda Ute Co., Ltd., TCG

heightened by geopolitical factors. While

operates a waste gypsum board recycling business. It uses the world's ﬁrst technology forrenewable energy use is growing, there iscontinuous large recrystallization of waste gypsum, a process developed by Tokuyama. In

also demand for carbon-neutral thermal

2013, TCG began operations at the Mie Headquarters Factory, and in 2016, it started

power generation in the manufacturing

operations at the Kanto Plant in Sodegaura City, Chiba Prefecture. Currently, both plants

industry, which requires heat forrecycles approximately 100,000 tons of waste gypsum board in total annually. Gypsum

production.

board is widely used as a ﬁreproof material for walls and ceilings in residential
construction, but the amount of waste from renovations and demolition is increasing eachyear. There are also growing needs for recycling due to factors such as a shortage ofmanaged landﬁll sites and a decrease in waste gypsum raw materials due todecarbonization eﬀorts.
The Nanporo Industrial Park is located in Nanporo Town, Sorachi District, Hokkaido.
In 2019, the Group built an experimental facility there for the development of catalyst-based
technology for recycling photovoltaic cell modules. With the aim of helping to make solar
power a mainstay electricity source, this project has been adopted by Japan s New Energy
and Industrial Technology Development Organization (NEDO) as a project for technology
development relating to solar cell module separation and material recycling. With thistechnology development, the Group aims to commercialize solar equipment recycling and
be ready for the huge expected increase in solar panel disposal in the 2030s. In March
2024, we supplied glass sheets separated from solar panels using this technology to AGC
Inc. The company conducted demonstration testing for the recycling ﬂoat sheet glass, andthis became the ﬁrst successful demonstration of its kind in Japan.

18

Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Market② Shift to carbon neutrality
by regions
and industrial complexes

Impact on Tokuyama Group

Response measures

Enhancing site competitiveness bypromoting large-scale green supply chainsfor energy materials

Green supply chain construction conducted
and promoting green technology
development through the Shunan
Industrial Complex Decarbonization
Promotion Council

For the Group, the challenge of achieving carbon
neutrality all on its own presents a number of diﬃcult
problems, such as the need to procure new energy materials
on an individual-company basis.
However, if this is viewed as a regional issue and, for

The Shunan Industrial Complex Decarbonization
Promotion Council was established in February 2022 withthe aim of achieving carbon neutral of the site while

example, the entire industrial complex strives to achieve

maintaining and strengthening its industrial competitiveness.

carbon neutrality, it becomes possible to examine and

The Council comprises companies with operations at theaddress energy materials issues on a regional basis.

Shunan Complex, the city of Shunan, and the Society of

Although it will still require high levels of technology

Chemical Engineers, Japan. In May 2023, the Council

development and innovation, if this can be achieved, thereleased a grand design and a roadmap for the complex,

region can gain new added value as a carbon-neutral

with targets established through backcasting.

industrial complex and become highly competitive.

Currently, various themes are being investigated bysubcommittees established under this council. Tokuyama
and four other companies in the complex requested
consultation with the Japan Fair Trade Commission
regarding planned joint activities to promote carbon
neutrality at the Shunan Complex. In February 2024, theCommission responded that these activities should pose noissues under Japan s Antimonopoly Act, except in cases
where they ended up restricting competition, such as cartel
behavior when setting product prices. As a result, the Groupwill accelerate its eﬀorts to help achieve a carbon-neutral
industrial park, including discussions on how to create acarbon-free ammonia fuel hub within the Shunan Complex.

19Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Resource use Eﬃciency③ Requests for
CCU-related products

Impact on Tokuyama Group

Response measures

Entering new businessﬁelds by establishing acarbon recycling system

Accelerating R&D, demonstration projects, and actual green
technology adoption in business operations

While carbon pricing isdemonstration testing for CO₂ capture, as well as feasibility studies concerning themaking CO₂ emissions morecostly, it also means increasing

As part of eﬀorts to establish a carbon recycling system, the Group is conducting
manufacture of valuable materials using the captured CO₂.
For the demonstration testing, CO₂ capture equipment manufactured by Mitsubishi

the value of carbon in other

Heavy Industries Engineering, Ltd. (currently Mitsubishi Heavy Industries, Ltd.) was installed

words. Carbon is indispensable forat a Group cement plant in 2022 and 2023. It captured CO₂ from the plantʼs exhaust

human life, and the supply ofgases, and the reliability of long-term continuous operation was evaluated. We alsocarbon will become ever more

analyzed data obtained concerning impurities in the captured CO₂ gas, and veriﬁed therestricted due to limitations

feasible application of optimal CO₂ capture technology in cement plants.

imposed on the use of fossil

For the Groupʼs feasibility studies, we are continuing to research the commercial

resources. Therefore, in the near

feasibility of methanol production, utilization, and sale. Methanol is expected to become afuture, carbon recycling could

useful product for building a carbon-neutral society. By leveraging manufacturing

become an important technology.

technology developed by Mitsubishi Gas Chemical Company, Inc., we could produce

In other words, any company thatmethanol using CO₂ captured from the emissions of the Tokuyama Factory. In thisemits a lot of CO₂ will also have aprocess, hydrogen would ﬁrst be produced using green electricity generated from biomasssource of carbon. Tokuyama has aat the same factory, and then reacted with the captured CO₂ to produce methanol.

long history of using soda ash

In March 2024, Tokuyama and eight other members of the Shunan Industrial

by-products as a raw-material for

Complex Decarbonization Council submitted a proposal to NEDO entitled, Study for

cement. Applying the power of

the Implementation of a Carbon Recycling Project through Industrial Collaboration atchemistry to make eﬃcient use of

the Shunan Complex. It was subsequently adopted by NEDO as the Project for thematerials that were once

Development of Carbon Recycling Technologies and the Development and Promotion

considered useless is a challengeof Next-Generation Thermal Power Generation Technologies / Project for thethat we, as a chemical company,

Implementation of Carbon Recycling Technologies through Industrial Collaboration.

must take on.

With the aim of helping to build a carbon-neutral society through inter-industry
collaboration, the Council will conduct a feasibility study on a carbon recycling project
to lower CO₂ emissions, while taking into account the characteristics of thepetrochemical complex.
20

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Impact of climate-related risks
and opportunities on the companyʼsbusinesses, strategy,
and ﬁnancial planning

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Table 5: Investigation of Business Opportunities Arising from Climate Change 

   

Using our analysis of opportunities arising from climatechange, and after examining business opportunities in the   

●   ●   
●   
   

●    


●   





 



  



























  


environmental ﬁeld, we determined more speciﬁc details
and evaluated the relevant time scope, ﬁnancial impacts and●      priorities.

 

●   ●  

●  

  
● 



  

 

●  

● 
●  ● ●     ●     

●      
  

●  

 

● 

●    

●  

●     
●    

   ●        ●         

Business opportunities         ­21

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Risk Management
For Tokuyama Group, corporate management risks
include any events or factors that could damage its
corporate value, aﬀect the sustainability of its businesses, orMetrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Figure 5: Expert Committees and Meeting Bodies in Charge of Risks  
    hinder the achievement its organizational goals. These risks  ­ 

also include any such events or factors that would require       

cross-organizational response. We have a management
system in place to ensure that we can appropriately mitigate 

these enterprise risks.

    

   

    

               ­  

          ­ 

         

Companyʼs processes for identifying andassessing climate-related risks  

To direct our group-wide enterprise risk management
system, we have established a Risk Management andCompliance Committee chaired by the director responsible
for CSR, which is positioned under the CSR Promotion  

Council chaired by the president. All executive oﬃcers who
supervise each division are members of this committee,
which is open to attendance by Audit and Supervisory
Committee members, including outside directors, andregularly prioritizes risk responses for Group-wide enterpriserisk management.
Speciﬁcally, by monitoring international trends and                  

            ­   ­ ­  

            
   ­  

      

working with its expert committees, the Risk Management
and Compliance Committee examines events and factorsthat have just emerged or that have changed in terms of thepotential level of impact. These are then visualized andof impact, etc.), frequency of occurrence, probability, andmapped using risk levels from both the quantitative andvulnerability. The relevant expert committees then identify

corrective aspects, taking into consideration impact levels

the Group s new risks and determine the appropriate(such as monetary losses, reduced market share, and scale

mitigation measures.

22Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Companyʼs processes for managing
climate-related risks
In FY2023, the Risk Management and Compliance
Committee redeﬁned the subcategories under its Risks from
Adapting to a Carbon-Free Society, which are signiﬁcantrisks that require urgent measures by the Group. In responseto recent global trends and issues, the Committee added

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Table 6: List of Enterprise Risks (FY2024) 




new subcategory risks such as water risks and biodiversity,

Metrics and Targets*The chairperson of each committee is a director who has responsible for the relevant risks  * 

 

­                                
            ¡       ­                etc., which the Group needs to mitigate.

­      ­          
                                                                     
       

 

­  ­             
             
           

                
          

  ­­                  ­             
              

  ­­  ­            
                

     ­               
             
 

 ­  ­          

             
         
                     

       23

Governance

Strategy

Board Oversight

Risk Management

Risks and Opportunities;

Managementʼs Role

and

Resilience of Strategy

Impact on Organization

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Figure 6: Mapping of Signiﬁcant Enterprise Risks (FY2024)

Deﬁnitions of major risk categories■…Hazard risk (External environment risk)


Risks posed by the external environment
and potential events
­
■…Business risk (Strategic risk)

Risks posed by the quality and accuracy of corporate
strategies that aﬀect performance and corporate value■…Operational risk (Business process risk)

Risks arising from deﬁciencies in internal processes
related to business execution, or from inadequate functions

Deﬁnition of scale of damage and impact















 



Large Damage that threatens the survival of thecompany, as well as substantial damage suchas loss of assets

Moderate Signiﬁcant decrease of proﬁts, or minor loss of assets
Small Little impact on corporate proﬁts and assets
Deﬁnition of occurrence frequency and probability
High Occurs more than once a year

Will almost certainly occur in the near future

Moderate Occurs several times a decade
Low Occurs once every decade or more







Deﬁnition of vulnerability



High

Mitigation measures have not been
implemented or are completely inadequate

Moderate

Some measures have been implemented, butthey are still insuﬃcientLow

Eﬀective measures have been implemented
and a management cycle is in place24Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

The expert committees, chaired by the relevant

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets  

risks they are responsible for (including risk reduction,
policies, the Group plans and implement measures to

Risk ID and Assessment Processes

Figure 7: Process of Identifying Enterprise Risks

directors, examine and determine mitigation policies for the
avoidance, transfer, and retention). Based on the determined

Metrics and Targets   ­        

manage risks. It also conducts periodic reviews to ensure
performance based on the risk management system.

      

Having identiﬁed Risks from Adapting to a Carbon-Free   

Society as the Groupʼs most signiﬁcant risk category, theRisk Management and Compliance Committee has
Environmental Committee is responsible for risks related to
non-compliance with environmental laws and regulations,  

  

established several expert committees to address it. The   
 

          

the Safety Committee is responsible for physical risks suchas storm surges at manufacturing sites, and the Sustainability
Committee is responsible for risks stemming from a failure to    

    

­       

          

follow non-binding environmental guidelines and principles
relating to public information disclosure and initiatives tohelp combat climate change. These expert committees areworking together to address these issues.
The Sustainability Committee is actively addressing
sustainability issues and disclosing the Group s initiatives. In
terms of disclosure of corporate information related toclimate change, we have expanded the content of our TCFD
report and set Scope 3 emission targets for the entire
Group.
Regarding individual activities to address climatechange, for example, the Tokuyama Factory regularly holds
energy management committee meetings chaired by thefactory general manager. The members discuss and checkthe progress made on planned activities for energy-saving,
including improvement of energy intensity. Moreover,important matters related to risk management are reported
as necessary to the Executive Committee and the Board of
Directors.

How processes for identifying, assessing,and managing climate-related risks areintegrated into the companyʼs overallrisk management
The Groupʼs competitiveness is based on highly eﬃcient
integrated production processes at Tokuyama Factory, while its
earnings have been driven by energy-intensive businesses that rely

Therefore, under the Medium-Term Management Plan
2025, we have updated our mission, which is now To
create a bright future in harmony with the environment, in
collaboration with our customers, based on chemistry. Oneof the priority issues of the plan is Contribute to mitigationof global warming, and we are pursuing group-wide
initiatives to achieve this.
As mentioned above, sustainability opportunities andon coal-ﬁred power plants. Now however, with the acceleration

risks are addressed using a corporate structure headed byof industrial structure transformation, along with increased public

the CSR Promotion Council, but matters involving importantenvironmental awareness and stricter regulations to promote amanagement decisions such as investments are reported torecycling-oriented society, we believe proﬁtability andthe Executive Committee and the Board of Directors ascompetitiveness can only be ensured by creating and expanding

necessary.

businesses that represent a departure from past models.
25Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Metrics and Targets

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

before the end of FY2030 (compared to FY2022). To

As Categories 1, 3 and 4 account for more than 90%
of Tokuyama Group s total Scope 3 emissions, we aim toachieve this goal, we will further enhance our supply chain

reduce total emissions for these three categories by 10%

engagement activities.

For the purpose of setting management indicators andtargets, Tokuyama Group considers the period up throughFY2025 (the ﬁnal ﬁscal year for the Medium-Term
Management Plan 2025) as the short term, with the medium
term extending through FY2030, and the long term throughFY2050.

Metrics used by the company to assessclimate-related risks and opportunities inline with its strategy and risk
management process

Figure 8: GHG Emissions (Scope 1 and 2) Reduction Targets

800
700

emissions (Scope 1 and 2) compared to FY2019 by FY2030,
and the attainment of carbon neutrality by FY2050.
Moreover, when calculating compensation for all
executive oﬃcers, we look at performance with respect torelevant material issues determined by the Group as

200
180

2022

2023

2030

186

2050

 

168

160
140

(FY)



 ­  

120
80

relevant factors.

60

neutrality across its entire supply chain.

2021

Figure 9: Supply chain emissions (Scope 3) medium- to long-term reduction targets (Categories 1, 3 and 4)

speciﬁc roles and responsibilities are taken into account as

for Scope 3 emissions, with the challenging to carbon

2020(Ten thousand tons-CO₂e)

100

Tokuyama has also set new emission reduction targets

2019

Base year

indicators and evaluate each oﬃcer accordingly. As a result,

Reduction targets for Scope 3 emissions 



200

new Medium-Term Management Plan 2025, however, wemanagement targets. These are a 30% reduction in GHG

508

300

0





400

In the past, the Group has measured its GHG

group-wide GHG emissions and achieving certain

500

100

aim to help mitigate global warming by measuring total 

726

600

Reduction targets for Scope１and 2 emissions
emissions, GHG intensity and energy intensity. Under the*The fuel-derived GHG include emissions from coal as a thermal energy source(Ten thousand tons-CO₂e)



40
20
0

2022

Base year

2023

2030

2050

(FY)

26

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Other important metrics and targets related to climatechange are listed here.

SBTs: Start investigation for SBT Certiﬁcation
After submitting a letter of commitment to the SBT
initiative in March 2023, and while drafting the next
Medium-Term Management Plan to be implemented two
years from now, we are now considering updating ourtargets in line with the Science Based Targets (SBT) initiative.

Water Use Metrics and Targets

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

ammonia is scheduled to begin in FY2028 and beyond. A basic
plan for biomass and ammonia adoption is currently being

Metrics (initiatives) related to internal carbon pricing
In FY2019, Tokuyama adopted internal carbon pricing

implemented, as part of a project sponsored by Japan s Agency(ICP) as a criterion for evaluating investment projects tofor Natural Resources and Energy (FY2023 Oil Supply Structure

promote GHG emissions reduction. Initially, the price of carbon

Advancement Project Cost Subsidy: Project to Promote Transition

was set at 3,700 yen per ton of CO₂, based on the European

to a Stable Supply of Next-generation Fuels).

Union Emissions Trading System (EU-ETS) price. In order toThrough this initiative, the Group aims to achieve arenewable energy ratio of 30% by FY2030.

further enhance our eﬀorts to reduce GHG emissions, in
FY2022 we raised our internal price of carbon to 10,000 yen

The ratio of renewable energy use for the entire Groupin FY2023 was about 3.3%.

per ton of CO₂. Using ICP, we will promote activities aimed at
decarbonization over the short and medium term.

During the analysis of the Groupʼs climate-related risks
and opportunities, it became clear that climate change andwater use issues are also highly relevant.
To manage the industrial water the Group uses forfacility cooling and processes, we check the dam reservoir
level every day, and adjust water conservation rate according

Figure 10: Renewable Energy Results and Targets(Total power generated by biomass and ammonia as renewable energy sources)
Energy consumption (including electricity sold)Along with recirculating cooling water, we use
plants as eﬀectively as possible to conserve water. For ourrecirculated cooling water, we use just 100,000 cubic meters ofindustrial water or less per day, compared to our total required
water usage of 1.5 million cubic meters per day.



   
 
 

（TJ）

70000

     

to the reservoir accumulation rate.
condensation water from steam generated at our power  



60000
50000
40000

With our condensation water, we eﬀectively utilize
approximately 25,000 cubic meters per day.
With respect to water consumption, we are committed
to conserving water, and our goal is to keep water
consumption no higher than the FY2019 level.

Energy consumption targets

30000
20000
10000

Tokuyama Group is aiming to achieve a 50% reduction in
GHG emissions from fuels-derived compared to FY2019 by
FY2030, and it plans to switch to non-fossil fuels (biomass andammonia) for onsite power plants. The rate of co-ﬁring withbiomass will gradually increase starting in FY2023. Co-ﬁring with

0

2019

2020

2021

2022

*Due to a change in calculation method following the April 2023 amendment of the Act on Rationalizing Energy use
and Shifting to Non-fossil Energy , renewable energy usage has decreased in FY2023.

2023

2030
(Estimate)

（FY）

27

Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Scope 1, Scope 2, and, Scope 3
greenhouse gas (GHG) emissions,and the related risks

GHG emissions (Scope 1 and 2) by 13% from the base year

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Table 7: Scope 1, 2 and 3 GHG Emissions

The Table 7 shows the changes in GHG emissions(Scope 1, 2, and 3). In FY2023, we were able to reduce

FY2020

FY2021

FY2022

FY2023   

487.6

460.5

467.7

438.5

419.2

    

203.2

188.6

185.7

180.2

166.6

25.3

26.5

27.0

32.1

29.6

    ¢

0.4

0.4

0.5

0.5

0.7

    ¢

0.0

0.0

0.0

0.2

0.7



3.1

3.7

1.5

3.9

3.7

    ¢

1.4

0.9

1.0

1.0

0.7

    ¢

5.3

5.9

6.8

8.3

10.7



178.7

173.7

176.8

176.0

166.2

    ­

169.7

166.7

168.5

167.8

157.5

    ¢   ­

ー

ー

ー

3.3

3.1

    ¢   ­

ー

ー

ー

15.1

16.3

Scope1

of FY2019 by carrying out the co-ﬁring with biomass andScope2

Scope3（Ten Thousand tons-CO₂e)

Third-party veriﬁcation

FY2019

vigorously pursuing energy-saving activities.

Metrics and Targets* GHG emissions from biomass combustion in FY2023 results were 350,000 tons-CO₂e28

Governance
Board OversightManagementʼs Role

Strategy

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

The Table 8 shows the breakdown in GHG

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Table 8: Scope 3 GHG emissions by category （Ten Thousand tons-CO₂e)emissions (Scope 3). In FY2023, we were able to

FY2022

FY2023

71.2

68.8

   ¢   ¢

1.6

1.3

11.7

12.0



84.4

82.2



45.0

39.0

   ¢   ¢

0.4

0.4

2.1

2.9



47.5

42.4



51.6

49.7

   ¢   ¢

1.3

1.4

1.3

1.3



54.2

52.4



167.8

157.5

   ¢（  ­）    ¢

3.3

3.1

15.1

16.3



186.1

176.9

reduce GHG emissions (Scope 3) by 5% from thebase year of FY2022.

   ­Methodology explanation Scope 1, 2
● Greenhouse Gas Emissions Calculation andReporting Manual (Ver. 5.0) February 2024, Ministry of theEnvironment and Ministry of Economy, Trade and Industry● Emission Coeﬃcients by Electric Utility (forcalculating greenhouse gas emissions of speciﬁed emitters) ‒FY2022 Results ‒ Released December 22, 2023 by the
Ministry of the Environment and the Ministry of Economy,
Trade and Industry

Scope 3
● Basic Guidelines on Accounting for Greenhouse Gas
Emissions throughout the Supply Chain (Ver. 2.5) March
2023, Ministry of the Environment and Ministry of Economy,
Trade and Industry● Emission Intensity Database for Calculating
Greenhouse Gas Emissions of Organizations Across Supply
Chains (Ver. 3.4), March 2024, Ministry of the Environment
and Ministry of Economy, Trade and Industry● LCI Database IDEAv2 (for supply chain greenhousegas emissions calculation), Sustainable Management
Promotion Organization (SuMPO), December 2019

Obtained third-party verification* Due to rounding, the total value may not always be accurate29

Governance

Strategy

Board Oversight

Risk Management

Risks and Opportunities;

Managementʼs Role

and

Resilience of Strategy

Impact on Organization

GX League

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

requirement set by this coalition. Speciﬁcally, we have set

calculated based on the GHG Protocol, because of diﬀerent

targets for Tokuyama and consolidated manufacturing

calculation protocols, the original emissions data is theannounced by Japan s Ministry of Economy, Trade andsubsidiaries Scope 1 and 2 emissions in Japan, along withsame and the reduction targets are consistent.

Industry, and then joined the League when it began full-scale

GHG emission reduction targets set based on the GHG

activities in FY2023.

Protocol.

In FY2022, we endorsed the GX League Basic Conceptfrom the base year of FY2021.

Even though the emissions data and base years

As a member of the GX League, Tokuyama has

submitted to the GX League is diﬀerent from thoseestablished emission reduction targets based on the

Figure 11: GX League emission reduction targets (Scope 1 and 2)

Table 9： Tokuyama Group GHG Emissions (GX League)
Obtained third-party verification to meet the GX League requirement
Obtained third-party verification to meet the GHG Protocol standard(Ten thousand tons-CO₂e)

800
700

Scope2

FY2022

FY2023

471.9

438.5

419.2

188.1

175.8

166.6

Consolidated manufacturingsubsidiaries in Japan

0.4

0.5

0.7

Total Scope 1 (GX League)

660.4

614.8

586.5

2.8

3.9

3.7

Scope2 Consolidated manufacturingsubsidiaries in Japan

1.1

1.0

0.7

Total Scope 2 (GX League)

3.9

4.9

4.4

664.3

619.7

590.9

664

Tokuyama(non-consolidated)
Scope1500

458

Compared to
FY202131%

reduction

400

300

200

(Ten thousand tons-CO₂e)

FY2021
Base year

Scope1600

Fuels-derived(GHG Protocol)
Materials-derived(SHK standard)

Tokuyama (non-consolidated)

Total Scope 1, 2 (GX League)* Average from FY2019 to FY2021

100
0

In FY2023, we were able to reduce emissions by 11%

2021

Average from
FY2019 to FY2021

2022

2023

2030

(FY)

30

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Targets used by the company to manage
climate-related risks and opportunities
and performance against targets
We have set a long-term goal of becoming carbon
neutral by FY2050. We will accomplish this primarily by
reducing GHG emissions from fuel consumption and raw
materials, and by developing innovative technologies. We
will reduce CO₂ emissions from energy generation, which
accounts for about 70% of our total emissions, by further
promoting energy-saving measures. These include measures

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Figure 12: Medium- to long-term GHG emission reduction targets (Scopes 1，2)
(Ten thousand tons-CO₂e)

800
726



700

632 ❶Fuels-derived

600❸Waste-derived

500
400



 508



❹Fuels-derived

❷ Materials-derived

that have already been implemented while also switching tocarbon-neutral fuels such as biomass and ammonia.

300❻Waste-derived

The Group will reduce GHG emissions from raw
materials-derived by reducing the amount of limestone used

200

in its cement, and by increasing other cement mixture
materials and recycling calcium. We will proceed with
development and introduction of these measures while
evaluating the economic eﬃciency. At present, however, itappears that reducing these emissions to zero will bediﬃcult, and CO₂ capture, utilization, and storage (CCUS) will 



❺ Materials-derived

100
0

2019

Base year

2023

2030

❼Innovativetechnologies

2050

likely be necessary. The Group will proceed with the(FY)❽Carbon offsets

development and introduction of such measures.

❶ ▶     ▶  ▶     ▶  ❷ ▶             ❸ ▶ 
▶ ▶     
→  
▶     
❹▶   ▶         ▶  

     

❶❹Reduction of fuels-derived

   ­   £▶ ❺ ▶ 
▶  ❻ ▶ ❼ ▶    
❽▶     
▶  ¢   ❽Carbon offsets   ­   ¤   ¥   31

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

The major sources of the Groupʼs GHG emissions are
onsite coal-ﬁred power plants (GHG emissions fromfuels-derived) and cement production (GHG emissions from

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Figure 13: Reduction plan for fuel-derived GHG emissions from onsite power plants(Ten thousand tons-CO₂e)400

raw materials-derived and waste-derived).

Reduction for fuel-derived GHG emissions fromonsite power plants
The Group is aiming for a 50% reduction in GHG

350  ­   


emissions from fuels-derived (not related to cement)
compared to FY2019 by FY2030, and we are currently
drafting and implementing plans to achieve this goal. For

­
250

co-ﬁring with biomass, we will still use palm kernel shells,
construction waste and wood chips as fuel. However, we are ­
 

300





200

planning to procure biomass fuel and invest in co-ﬁring
equipment in order to further increase the level of co-ﬁring
starting in FY2025. The Group estimates that the total

150

100

FY2030. With regard to co-ﬁring with ammonia, we are
currently investigating the installation of relevant equipment.
The Group estimates that the total investment required to ­   
Equipment for co-ﬁring withammonia will be installed

Through these measures, we will
gradually replace coal with
non-fossil fuels and reduce GHG
emissions from onsite power plants.

investment required to reduce GHG emissions by 30%
through co-ﬁring with biomass will be 11 billion yen by

We will increase the level of
co-ﬁring using biomass by making
further investment to increase
co-ﬁring capacity starting in FY2025

50

reduce GHG emissions by 20% using ammonia co-ﬁring willbe 15 billion yen by FY2030. As both biomass and ammonia
co-ﬁring require large amounts of investment, we plan tomake steady progress while assessing economic feasibility
and seeking government support.

0

2019

 

2020

2021

2022

2023

2024




2025

2026

2027

2028

2029

2030 （FY）

   ¦  £ ⬅ ➡ 32

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Reduction for GHG emissions from raw
materials-derived,
waste-derived, and fuels-derived(cement production)

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Figure 14: Reduction plan for GHG emissions from raw materials-derived,
waste-derived, and fuels-derived (cement production)(Ten thousand tons-CO₂e)*GHG emissions are classiﬁed by substance400

Over the short and medium terms, we plan to increase
the use of waste, especially waste plastic. Using waste
plastic as alternative thermal energy increases GHG


350  emissions from waste-derived. Nevertheless, the Groupintends to increase its waste use because there are currently300  

no alternative energy that are economically viable, and it
wants to reduce its coal use as a priority. Over the longterm, the aim is to use hydrogen and ammonia as heat250

sources, and the necessary investigation is now being
carried out. The Groupʼs GHG emissions from raw

200

materials-derived arise mostly from limestone (calcium
carbonate) use. Cement production requires large amountsof calcium. However, since there are currently no raw

150material candidates to replace limestone, dramatic
reduction measures are diﬃcult. The Group is now
investigating ways to reduce these emissions per unit ofproduction by increasing the use other materials while
reducing the amount of clinker (a mix of limestone and

100

50

minerals) per unit of cement.
While it is our responsibility as a company to steadily
reduce GHG emissions, we also recognize that reducing
GHG emissions through the use of our products in society isalso an important role. In the future, we will contribute to
the achievement of carbon neutrality in the world byexpanding our environment-friendly products and further

0

2019

2020

2021

2022

2023

2024




2025

2026

2027

2028

2029

2030 （FY）

   ¦  £ ⬅ ➡ developing innovative technologies.

33

Governance

Strategy

Board Oversight

Risk Management

Risks and Opportunities;

Managementʼs Role

and

Resilience of Strategy

Impact on Organization

The following details the progress of speciﬁc measures
regarding the Groupʼs initiatives in FY2023.

● Improvement of energy eﬃciency
at the petrochemical complex
and adoption of negativeemission technology (CCUS)❶❹Reduction offuels-derived

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

December 2022. This activity is based on an agreement forforest maintenance and the utilization of woody biomass
material signed with Shunan City, Idemitsu Kosan Co., Ltd.,
Tosoh Corporation, and Marubeni Corporation. By building asustainable forest management model through reforestation
using fast-growing trees, Tokuyama and its partners will
promote the utilization of local forest resources and aim for
local production of woody biomass for local consumption.

❽Carbon offsets

Participating in Shunan Industrial Complex
Decarbonization Promotion Council
The Shunan Industrial Complex Decarbonization
Promotion Council was established by Shunan City, theSociety for Chemical Engineers Japan, and companies
belonging to the Shunan Industrial Complex (Idemitsu Kosan
Co., Ltd., Nippon Steel Stainless Steel Corporation, Zeon
Corporation, Tosoh Corporation, and Tokuyama). In order tohelp achieve carbon neutrality, the councilʼs aim is to lay out
a vision for decarbonization, and to promote eﬀorts to     
 
                 
                           ­                           ­­   
                     
               

enable its adoption by society, including relevant technology
development, evaluation, and demonstration, as well as
making policy recommendations. The members of the


council all face the new challenge of balancing
decarbonization with the need to maintain and enhance thecompetitiveness of the Shunan Industrial Complex. Several
months after discussions began in February 2022, the▶   ▶ 


▶     ・   
・  
・    ・­ 
・  

▶  ▶       ▶     ▶  ▶  

council was able to announce at the end of May 2023 a
grand design for the Shunan Industrial Complex to achieveby 2050. In FY2023, we set up subcommittees to addresseach theme and conducted more detailed studies.

● Utilization of locally sourced energy ❶❹Reduction offuels-derived

Concluding a partnership agreement for theutilization of woody biomass materials

Tokuyama employees planted fast-growing trees inMarch 2024, following a similar tree-planting session in   ­     ­   ­ ❶         ­    §              
Fast-growing trees: Species that grow faster than Japanese ceda and cypress­    ­ ­            ­    ❷  ­ 

 
①          
②       34

Governance

Strategy

Board Oversight

Risk Management

Risks and Opportunities;

Managementʼs Role

and

Resilience of Strategy

Impact on Organization● Co-ﬁring with biomass
and ammonia❶❹Reduction offuels-derived

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

   ­ ­    ­  ­     ­ 

The Transition Promotion Project Based on a
Stable Supply of Next-Generation Fuels   ­  

Idemitsu Kosan Co., Ltd., Tosoh Corporation,
Tokuyama Corporation, and Zeon Corporation jointly
Structure Advancement Project Cost Subsidy: Project toPromote Transition to a Stable Supply of Next-Generation   ­    ­  ­   ­ 
 

Fuels) oﬀered by Japanʼs Ministry of Economy, Trade andComplex, and the construction of an ammonia supply
infrastructure for each company in the complex (demandside). Moreover, based on this project, the four participatingcompanies propose constructing in the Shunan region        
      
   

a shared ammonia supply site for the Shunan Industrial

the Tokuyama Factory of Idemitsu Kosan for development as2030. The investigation covers use of the storage facility atammonia per year at the Shunan Industrial Complex by        

 

This project aims to investigate the establishment of a         

Industry and the Agency for Natural Resources and Energy.
zero-carbon system to supply more than one million tons of¨¢    ©  ª  «applied for and were granted the FY2023 Oil Supply

Metrics and Targets

    ­ ­      
    
      

Source: Advisory Committee for Natural Resources and Energy, 5th Meeting; joint meeting of the Hydrogen Policy Subcommittee of the Energy Conservation and New Energy Sectional Committee
together with the Ammonia and Other Decarbonized Fuel Policy Subcommittee of the Resources and Fuels Sectional Committee

Japan's ﬁrst ammonia supply chain and are taking various
initiatives such as demonstrating ammonia combustion using
actual equipment.
In the area of biomass use, construction work toconvert one of the Group s coal-ﬁred power plants toenable co-ﬁring with biomass will begin in FY2024. We plan
to operate the plant with a co-ﬁring rate of approximately
25% by caloriﬁc value starting around autumn FY2025.

35

Governance

Strategy

Board Oversight

Risk Management

Risks and Opportunities;

Managementʼs Role

and

Resilience of Strategy

Impact on Organization● Carbon offsets

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets❽Carbon offsets

Blue carbon oﬀset
Tokuyama is participating in the Tokuyama Kudamatsu
Port and Oshima Tidal Flat Blue Carbon Oﬀset Program,which utilizes J Blue Credits issued by the Japan Blue
Economy Association (approved by the Minister of Land,
Infrastructure, Transport and Tourism).

     Blue carbon describes the type of carbon that issequestered when carbon dioxide in the atmosphere isabsorbed by marine organisms such as seaweed. It is now
attracting attention as a new option for CO₂ capture.
Under the Tokuyama Kudamatsu Port and Oshima
Tidal Flat Blue Carbon Oﬀset Program, the amount of CO₂
captured as a result of activities to conserve the seaweed       ­    

    

beds near the Oshima tidal ﬂat is certiﬁed as J-Blue Credits.
Through purchase and utilization of these credits, the Groupcan oﬀset GHG emissions from its production activities. In
FY2023, we purchased credits equivalent to 3.1 tons of CO₂.
By supporting activities to conserve marine   ­ ­ ­    ­   

   
 
 

­      ­   ­ 

ecosystems through this Blue Carbon Oﬀset Program, theGroup is helping to build a sustainable world based on
beautiful, thriving natural environments from the mountains
to the sea.
Blue carbon:
A type of carbon capture where carbon dioxide in the atmosphere isabsorbed and sequestered by marine organisms such as seaweed. It is
attracting attention as a new option for CO₂ capture.

36

Governance

Strategy

Board Oversight

Risk Management

Risks and Opportunities;

Managementʼs Role

and

Resilience of Strategy

Impact on Organization● Adoption of negative emission
technology (CCUS)

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets❽Carbon offsets

Development of carbon negative concrete   

      ­   ­            

Carbon-negative concrete is a type of concrete that
reduces the net amount of CO₂ generated through concrete
production by combining technologies to reduce andcapture CO₂ emissions. Tokuyama is working with Denka          
  

Company Limited to develop CO₂ ﬁxing admixtures to be
used in CO₂-absorbing concrete. This is part of a project for
the Development of Materials, Construction Technology,
and Quality Evaluation Technology for Innovative
Carbon-Negative (CN) Concrete under the Green
Innovation Fund created by the New Energy and Industrial
Technology Development Organization (NEDO).

 ­             ­     ­ 
  ­­ ­    
  ­    ­        ­    ­        ­ ­              

Tokuyama is mainly responsible for developing theCO₂-ﬁxing admixture produced by utilizing calcium-containing
industrial waste as a raw material. We are investigating how
various components in the waste can aﬀect the mineralcomposition of the admixture. By taking these eﬀects into
consideration in the material design, we have conﬁrmed thatthe quality of the admixture is good enough, even when® 


 
 


   ¬  ®  ®       ¬   
   

waste comprises about 50% of the component raw

®  


     ¬ ®       
Source: Materials from Kajima Corporation,
Denka Company Limited, and Takenaka Corporationmaterials.
The Group will continue to develop technologies foreﬀective waste utilization and for manufacturing carbonnegative concrete products to help decarbonize society.
* Green Innovation Fund Project (GI Fund):Toward the goal of achieving carbon neutrality by 2050, the Japanese
government has established a Green Innovation Fund of two trillion yen to
be administered by the New Energy and Industrial Technology
Development Organization (NEDO). The fund provides continuous support
to companies and other organizations that are committed to taking on, as
management issues, the challenge of achieving speciﬁc ambitious targets
shared by the public and private sectors, from R&D through todemonstration to social implementation over the next 10 years.
Project format:
A consortium of over 40 companies, 10 universities, and 1 research institute   ­  ­                   ­        ­   ①   ­­    

 ­ ­      ­

②  ­­    ­ ­         

③  ­­    ­   37

Governance

Strategy

Board Oversight

Risk Management

Risks and Opportunities;

Managementʼs Role

and

Resilience of Strategy

Impact on Organization● Adoption of negative emission
technology (CCUS)❽Carbon offsets

Using a CO₂ capture test facility at Mitsubishi Heavy
Industries, Ltd., we conducted a veriﬁcation test of CO₂
capture from cement production exhaust gas.
Based on the knowledge already gained through thisinitiative, we will calculate the necessary investment, identify
issues and take appropriate measures, and then proceedwith demonstration and implementation of this technology.

   ­    ­   Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Development of alkaline
water electrolyzers

Business
opportunities

Tokuyama and Nippon Shokubai Co., Ltd. are carrying

Conducting a veriﬁcation test forCO₂ capture from cement production ●       
●           ®     

­       ­   ­ 
­ 

Initiative at the Centerfor Commercialization ofAdvanced Technology

Business
opportunities

out the Project to Develop Large-Scale Alkaline Water

With the global drive toward carbon neutrality,

Electrolyzers and Separators Suitable for High-Pressure

Tokuyama has decided to enter the electrolyzer business,

Systems. It is a NEDO-commissioned project as part ofleveraging the electrolysis technology and hydrogen

Technology Development for Multi-Purpose Utilization ofhandling know-how developed by the Group over the last

Fuel Cells within the framework of the Joint

70 years. The Center for Commercialization of Advanced

Problem-Solving Industry Academia Government

Technology in Yanai City (Yamaguchi Prefecture) has

Collaborative Research and Development Project for Rapidly

become our base of operations for this initiative.

Expanding the Use of Fuel Cells, etc.
A high-pressure alkaline water electrolyzer (AWE) is a

At this site, we will begin manufacturing large sodium
chloride electrolyzers that can achieve the world's highest

device that produces hydrogen and oxygen by supplying anlevel of energy-saving performance. We will also establish aalkaline aqueous solution to cells divided by separators andsystem to manufacture alkaline water electrolyzers using theelectrolyzing the solution. Hydrogen is attracting attention assame production line.

a next-generation energy source, and expectations are high

By incorporating Tokuyamaʼs zero-gap salt electrolysis

worldwide concerning green hydrogen produced fromtechnology, we have developed a sodium chloride

renewable electricity.

electrolyzer that can achieve the world's highest level ofThis project combines Nippon Shokubai's

energy-saving performance. Our aim is to makedevelopment of a large separator suitable for high-pressurehigh-eﬃciency sodium chloride electrolyzers widely available

systems with Tokuyama's development of an internal

for caustic soda production, enabling energy savings in thoseelectrolytic cell structure that maximizes separator

operations.

performance. The aim is to develop a world-class   ­        ­­     ­   ­                     

Metrics and Targets

Through this project, Tokuyama seeks to help build ahigh-pressure AWEs that is very competitive. The separatorhydrogen supply chain that enables eﬃcient energy use, fromdeveloped by Nippon Shokubai will be incorporated into thehydrogen production to utilization. This will help build ahigh-pressure AWE prototype developed by Tokuyama, andhydrogen-powered society through renewable energy adoption

the project R&D activities will proceed from there.

worldwide and local consumption of local energy production.

By utilizing electrolyzer technology developed overmany years in Tokuyamaʼs sodium chloride electrolysis
business, we will develop and demonstrate high-pressure
alkaline water electrolyzers, which should bring prices downeven further. In this way, we intend to help promote thesupply of next-generation fuels.

38

Governance

Strategy

Board Oversight

Risk Management

Risks and Opportunities;

Managementʼs Role

and

Resilience of Strategy

Impact on Organization

Eﬃciently utilize biomass
combustion ash and CCS

Metrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Business
opportunities

Since combustion ash (ﬂy ash) discharged by biomass
power plants contains potassium and other elements, its use
in cement production is limited. Therefore, technology needs
to be developed for eﬀective utilization of this material.
For this joint research with ITOCHU ENEX Co., Ltd.,
using Tokuyama technology still under development, we aim­     

to utilize biomass ﬂy ash that has adsorbed CO₂ to make aconstruction material product (trademark: Recycle Beads).

  

The goal is to create a method for CO₂ capture and storage
that can be widely adopted.

¯ ­°   ±    

Distribution

In FY2023, the Group developed a process technology
whereby CO₂ captured from exhaust gases emitted by
Tokuyamaʼs cement plant is ﬁxed to biomass ﬂy ash
generated by its power plant. The treated ash was then­ ­    ­

used as a raw material to manufacture CO₂-ﬁxing Recycle・   
・    ・   
・  

Beads™ by an aﬃliate of ITOCHU ENEX Co., Ltd. The
resulting product was ﬁnally utilized at the Tokuyama
Factory. We conﬁrmed that the CO₂ emissions attributable    

to the raw materials and energy used in all the processes
required to manufacture the CO₂-ﬁxing Recycle Beads
amounted to 34.2 kilograms of CO₂ per ton of recycled
beads, while the amount of CO₂ ﬁxed was 61.0 kilograms
per ton. Thus, the trial manufacture achieved a net carbon
sequestration of 26.8 kilograms of CO₂ per ton of beads.
Through this initiative, both companies aim to help
realize a decarbonized, recycling-oriented society.

RB
Recycled Beads

Presented by ITOCHU ENEX

* CCS (Carbon dioxide Capture and Storage)* Recycle Beads is a roadbed material and weed control product producedby KANOU FA Co., Ltd., a company in which ITOCHU ENEX Co., Ltd. has a
49% stake.

39

Governance

Strategy

Board OversightManagementʼs Role

Risk Management

Risks and Opportunities;
andResilience of Strategy

Impact on Organization

Mass production begins formagnesium hydride,a next-generation hydrogen carrier

Business
opportunities

In collaboration with Biocoke Lab Co., Ltd. we haveinstalled a hydrogenation reactor to produce magnesium
hydride (MgH₂) at the Tokuyama Factory and have begun
mass production with the goal of producing 30 tons per
year.
Hydrogen is considered a key energy source forbuilding a decarbonized society. However, since it is a gas
with a low density, it generally needs to be transported at
low temperature and high pressure. Therefore, the added
costs for storage and transportation pose an issue forMetrics and Targets

Risk ID and Assessment Processes

Climate-related Metrics

Risk Management Processes

Scope 1, 2, 3 GHG Emissions

Integration into Overall Risk Management

Climate-Related Targets

Features of magnesium hydride
Enables safe and inexpensive hydrogen transport,
as is stable at room temperature and normal atmospheric pressure.
Since it is very lightweight (speciﬁc gravity of approx.
1), it can be stored safely and transported inexpensively.

Enables high-density hydrogen storage,exceeding that of ammonia (NH₃). *Per unit volume
Magnesium hydride

Easy extraction of hydrogen gas:
Can generate twice the amount ofhydrogen per carrier unit compared to hydrolysis.

hydrogen compared to conventional fuels.
Magnesium hydride is a solid material capable ofstoring hydrogen at high density, and it maintains chemical
stability at room temperature and at regular atmospheric

Magnesium hydride manufacturing and sales processpressure. This makes it a substance with the potential to be

Biocoke Lab. Co., Ltd.

a next-generation carrier for safely storing and transportinghydrogen.
When Tokuyama manufactures caustic soda, hydrogen
is obtained as a byproduct. This is reacted with magnesium
to produce magnesium hydride, which is then sold by

Processing

Biocoke Lab.

Hydrogenation

Sales

The two companies are aiming to develop a market
for convenient hydrogen products as part of eﬀorts to build
a hydrogen-powered society.

Magnesium ingots

Activated magnesium
tablets

Magnesium hydride
tablets

40