— Sustainability —Initiatives for Environmental Issues

Mitigation and Adaptation to Climate Change

Basic Approach

The Oji Group established Environmental Charter in 1997 with the basic philosophy of rolling out its corporate activities in harmony withthe environment from a wide global perspective and contributing to the realization of a truly affluent, sustainable society. As our vision
toward mitigating climate change based on the Charter, in 2020 we formulated our Environmental Vision 2050 centered around thegoal of net-zero carbon, and we also set a milestone target to achieve that goal in our Environmental Action Program 2030 of reducing
our greenhouse gas (GHG) emissions by at least 70% compared to FY2018 levels. To achieve the target, we focus on reducing actualemissions by reducing coal consumption and other emission sources, and increasing the net increment in carbon stocks by forests.

GHG Emissions Reduction Target and Emissions Results

GHG Emissions(kt-CO2e)10,000

Actual emissions (Scopes 1 + 2)
Net increment in carbon stocks by forests
Base year emissions (Scopes 1 + 2)

7,836

8,000

-16.5%
6,542

7,470

6,000

-20%
6,269

Net emissions

70%reduction
20%...... from reduction in actual emissions
50%...... from expanded net increment in carbon stocks by forests

4,000
2,000

2,351

0-928

-2,000-50%-4,000-3,918Net
zero

FY2030targets

FY2050target-6,000

FY2022
results

FY2018 (base year)
resultRoadmap for GHG Emissions Reduction toward FY2030

Reduction inactualemissions

Category

Sub-category

Improve energy
efficiency

Maintain energy conservation

Increase thepercentage of
renewable energy
useReduce coal consumption
Install private solar powersystems, etc.

200

2.6%

1,007 12.9%3604.5%

2021

2022

3,918 50.0%
Plant fast-growing trees

Total

2024

2025

Shut down 1 boiler
To shut down 1 boiler
Technical research and test for changing the fuel composition

2026

2027

2028

2029

2030

Installation planningStudies and decisions on facility

Investment decisions

To shut down 6 boilers
Implementation
Installation

Install solar power systems on factory roofs and idle land
Reduction of 366 kt-CO2e (4.7%)
Overseas production forests 256,000 ha

Expand forest plantations

2023

Reduce energy consumption intensity by 1.0% or more per year, averaged over five yearsReduced by 3.8% on average between FY2018 and 2022

1,567 20.0%

Subtotal
Expansion of
net increment Invest in forest
in carbon conservation andstocks byplantation
forests

GHG
GHG
reduction reduction(kt-CO2e)rate

279,000 ha

400,000 ha

Assessment of business feasibility
Search for sites, land surveys
Consideration of acquisition, decision
KTH to be a consolidated subsidiary
Continue forest tree breeding (breed improvement) and elite trees’ plantation
Net increment in carbon stocks by forests: 928 kt-CO2e (11.8%)

Improve Energy Efficiency
We are working to improve our energy efficiency with a target
reduction in energy consumption intensity of at least 1% peryear, averaged over five years. Our mills and plants regularly
hold energy conservation meetings, attended by personnel
from energy management and manufacturing divisions todiscuss facility renovations and change of operation methods.
In FY2022, our domestic business companies made energy
conservation investments of 1.6 billion yen, thereby reducing
energy consumption corresponding to approximately 1%of the total energy consumption across the Group (crude oilconversion 47 thousand kL). Energy consumption intensity
was reduced by 3.8% per year on the average between
FY2018 and FY2022.

Increase the Percentage of Renewable Energy Use
The Oji Group has increased the percentage of renewableenergy use by utilizing black liquor (byproduct from its global
pulp production operations), wood residue, and bark as fuels.
Aiming to further improve energy efficiency, we are working
to reduce coal consumption while introducing solar power
generation systems.
In FY2022, the percentage of renewable energy use was54.7%.
Reduce Coal Consumption
Of the 16 boilers in Japan that were burning coal as of FY2018,
we will disuse eight coal-only-fired boilers by FY2030 which donot include backup boilers, and switch to gas fuels in a transition
phase toward decarbonization. We shut down a coal boiler atOji Materia Nayoro Mill in FY2021 as part of restructuring ofproduction systems, and also shut down a coal boiler at Oji
F-Tex Ebetsu Mill in FY2023. We are also considering reducing
coal consumption by changing the composition of fuels at coal
co-fired boilers. With the investment of about 100 billion yen,
we expect to reduce GHG emissions by about 1,000 kt-CO2e.
As achieving net-zero carbon emissions will require further
reduction of the use of fossil fuels including gas, in the future,
we will also consider using hydrogen, ammonia, and synthetic
methane (e-methane) as fuels.

Consumption (crude oil conversion)

Oji Holdings joined the GX League which began full-scale activities in May 2023.
The League is a forum for companies endeavoring for carbon neutrality to discussand carry out a transformation of the entire socio-economic systems (greentransformation) in cooperation with the Japanese Government, universities, andfinancial institutions.

Intensity per unit of net sales(1,000 kL oile)(kL oile / ¥ mil.)
7.00

7,000
6,000

5,822

5,660

5,000
4,000

3.75

3,000

3.75

5,219

5,400

6.00

5,440

5.00
4.00

3.84

3.19

3.67

3.00

2,000

2.00

1,000

1.00

00.00

2018
2019
2020
2021
2022 (FY)A star mark indicates that FY2022 figure for energy consumption has
been assured by KPMG AZSA Sustainability Co., Ltd.
For the calculation method, see page 111.

Changes in Fuel Composition Ratio
Fossil fuels
FY1980
FY1990FY2005
FY2022

Fuels made from waste

9.0%

53.0%
33.2%*

0.0%

Renewable fuels

1.0%
1.0%

71.0%
64.0%
12.1%

20.0%

40.0%

60.0%

28.0%
35.0%
38.0%
54.7%

80.0%

100.0%*Breakdown: Coal 11.4%, gas 8.7%, oil 7.3%, and purchased energy 5.8%

Installation of Solar Power Systems
We have been installing solar power systems on factory roofs
and idle land. A new warehouse built in August 2022 at Oji
Nepia Edogawa Factory uses electricity generated from solarpower. At Oji Container Tochigi Plant, a solar power generation
facility scheduled to start operation in September 2023 will
supply all of the power used by the plant during the daytime.

Solar power generation facility at Tochigi Plant, Oji Container

5,485 70.0%

TopicsParticipation in the GX League

Energy Consumption and Intensity

Initiatives for Environmental Issues — Sustainability —carbon stocks by forests.
In FY2022, the net GHG emissions were reduced by 16.5%
compared to the FY2018 levels, to 6,542 kt-CO2e.

Our goal is to reduce net emissions (actual emissions minus
net increment in carbon stocks) by at least 70% compared tothe FY2018 levels by FY2030. Of this, 20% is to be achievedby reducing actual emissions (total of Scope 1 and Scope 2),
and 50% is to be achieved by increasing the net increment inReducing Actual Emissions

We are working to improve energy efficiency and increase the percentage of renewable energy use to reduce GHG emissions throughour business activities. In FY2022, the actual GHG emissions were reduced by 4.7% compared to the FY2018 levels, to 7,470 ktCO2e.

Efforts for a Shift to Black Pellets FuelAt the boiler #6 of Oji Paper Tomakomai Mill, where waste-derived fuels (RPF, wastetires, sludge, etc.) and coal are co-fired, a demonstration test for a shift from coal toblack pellets to reduce CO2 emissions is underway.
Three tests were conducted in FY2022 to collect basic data on the fuel such astransportability and combustibility. Now we will draw up a plan for a long-run testin view of stable regular operation, to identify issues and consider whether boiler
retrofitting is needed.
Black pellets (biomass-fuel wood pellets that aresemi-carbonized)

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The Oji Group Integrated Report 2023

The Oji Group Integrated Report 2023

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Initiatives for Environmental Issues— Sustainability —Mitigation and Adaptation to Climate Change

Expand Forest Plantations

TopicsRenewable Energy Power Generation BusinessWe sell electricity generated by biomass, hydropower, and solar power, indirectly contributing to the reduction of GHG emissions
by electricity consumers. In FY2022, we sold 1,103 GWh of electricity through the feed-in tariff (FIT) system for renewable energy
under which electric utilities purchase electricity from renewable energy at a fixed price. This is equivalent to a reduction of 480
kt-CO2e in electricity consumer emissions*.
* Calculated by multiplying the amount of electricity sold by the national average emission factor used to calculate emissions from electricity use under theMandatory Greenhouse Gas Accounting and Reporting System.

Expansion of Net Increment in Carbon Stocks by Forests
The Oji Group owns a total of 603,000 ha of forests(comprising 455,000 ha of production forests and 148,000 haof conservation forests) in Japan and overseas and practices
sustainable forest management taking into consideration theenvironment, society, and economy. The actual carbon stocksof these forests reached 122,450 kt-CO2 at the end of FY2022,
and the annual average net increment in carbon stocks byforests between FY2018 and FY2022 was 928 kt-CO2*1. The
amount of O2 released during the same period averaged 675 kt
per year*2. To achieve our Environmental Action Program 2030,
we aim to increase the net increment in carbon stocks by
Annual CO 2 absorption
with growth
The amount of carbon fixedby annual tree growth isconverted to CO2 (tons).

The net increment in carbon stocks by forests is calculatedby the gain-loss method (except for CENIBRA). CENIBRA
calculates the figure by the stock difference method which ismore accurate. CENIBRA has obtained assurance for the netincrement in carbon stocks by forests in FY2021 and FY2022
from a third party organization.

CO2 absorption with growth of trees

Carbon stocks in the trees felled

Felled during
the period

Stock Difference Method
The forest carbon stocks at the end of a period and the forest
carbon stocks at the beginning of the period are calculated andthe latter is subtracted from the former.
Forest carbon stocks at the beginning of the period

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The Oji Group Integrated Report 2023

Artificial pollination of eucalyptus

Topics

Net increment incarbon stocks byforests:
928 kt-CO2/year

Forest carbon stocks : The CO2 stocks in Oji Forests as ofend of FY2022.
Net increment in carbon stocks by forests : The amount of
CO2 absorbed by the trees in Oji Forests minus the amount of
CO2 stored in the trees felled which are subtracted as emissions. Annual average between FY2018 and FY2022.

148,000ha

Productionforestsoverseas

279,000ha

Production
forestsin Japan

176,000ha

176,000ha

FY2022 results

FY2030 targets

Annual net incrementin carbon stocks byOji Forests928(kt-CO2/year)

400,000ha

4,000(kt-CO2/year)

more than 20 thousand trees obtained through artificial
pollination efforts. KTH, Indonesia, also continues to breed
forest trees. Planting high-quality tree species developedby each business increases the growth rate of forest trees,
facilitating carbon absorption and fixation.

*1 The figures of carbon stocks and net increment in carbon stocks exclude
those by CENIBRA’s forests planted by third parties and forests less than
two years after plantation.
*2 Calculation assuming that the same amount of O2 as CO2 absorbed (inmoles) is released.
Source: National Institute for Environmental Studies
https://www.nies.go.jp/kanko/news/25/25-3/25-3-04.html (Japanese only)

The amount of CO2 absorbed with growth of trees and theamount of carbon stocks by the trees felled during the period
are calculated and the latter is subtracted from the former.

Annual CO2emissions
with felling

148,000haConservation
forests

forests to 4,000 kt-CO2 by expanding plantations and planting
fast-growing trees.

Gain-loss Method

Forest carbon
stocks:122,450 kt-CO2

724,000ha

Initiatives for Environmental Issues — Sustainability —Woodchip carrier GT SELENE (built in 2022)

603,000ha

0Plant Fast-growing Trees
In our overseas forest plantation business, we plant fastgrowing trees, including hardwoods such as eucalyptus andacacia as well as softwoods such as radiata pine. We harvest
and replant trees in a shorter cycle than general forestry
practices, for example, in a 6-to-10-year cycle for eucalyptus
and acacia and in an approximately 30-year cycle for radiatapine.
In addition, CENIBRA, Brazil, has long been breeding forest
trees. More than 10 types of high-quality varieties with highgrowth rate and pulp productivity were selected from among

Reducing Emissions from Wood Chip Carriers
Most of the wood chips used as raw material for paper are transported by shipfrom overseas plantations. With international efforts underway to reduce GHG
emissions from ships, Oji Group’s chip carriers now navigate at lower speeds toreduce GHG emissions by increasing fuel efficiency. In addition, newer vessels
built in recent years generate lower GHG emissions than conventional types,
contributing to GHG emissions reduction.

With KTH in Indonesia becoming a consolidated subsidiary inFY2022, the net increment in carbon stocks by Oji Forests has
increased. We are considering acquiring more sites for forest
plantation primarily in South America, Oceania, and Southeast
Asia, where we have been operating our forest plantation
business. Our target is to expand the area of our overseas
production forests to 400,000 ha by FY2030, at an estimatedacquisition cost of about 100 billion yen.

Forest carbon stocks at the end of the period

Felled during
the period

Tree nursery, CENIBRA

Challenges for Japanese Forestry and Action to Mitigate Climate Changes

About two-thirds of Japan’s land area is covered by forests,of which plantations account for about 40%. Most of theseplantations were planted in the years after World War II to theAbsorption throughphotosynthesis
period of rapid economic growth. Now that half of these trees
are over 50 years old and are ready to be fully utilized (timeAbsorption/to harvest).
emission
Because respiration relative to carbon absorption is greater
Emission from respiration
in a mature forest than in a young forest in the growing
phase, the net carbon absorption capacity decreases as a
Forest carbon stocks
plantation matures. For this reason, felling and replanting
trees in plantations is considered desirable not only forTree age
circular resource use, but also for mitigating climate change.
However, the rate of carbon fixation (approximately equal tocarbon dioxide absorption) by forests has been declining due to the gradual decrease of young forests in the growing phase, asthe circular use of forests has been impeded by such problems as declining number of forestry workers, the underdeveloped
forest road networks, and slow progress of replanting and cultivation due to falling timber prices.
In Oji Forests in Japan, we intend to fell and replant approximately 400 to 500 ha of plantations every year. We will continue towork to overcome challenges for forestry in cooperation with the government, local communities, and other companies to help
the circular use of plantations to increase carbon absorption.

The Oji Group Integrated Report 2023

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