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Measures to Fight Climate Change -Information Disclosure Based on TCFD Recommendations-

The Financial Stability Board's Task Force on Climate-Related Financial Disclosures (TCFD) asks all companies to assess climate-related risks and opportunities using climate change scenarios and disclose them in their business strategies and risk management. The Kyocera Group endorses the TCFD recommendations and has established a governance system that implements risk management and business strategies and sets metrics and targets as part of efforts to promote these initiatives.

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Governance

The Kyocera Group considers climate change to be a priority management issue. The Kyocera Group Sustainability Committee (held twice yearly) is attended by top management and used to deliberate and determine goals and measures for addressing climate change. Sustainability activities including Climate change measures are reported to the Board of Directors and the Group's climate change is shared at the International Management Meeting attended by the Group's top executives. In addition, a task force operating under the Kyocera Group Sustainability Committee has been established to promote climate change measures in an aim to meet the Kyocera Group's Long-term Environmental Targets.

Risk Management

The Kyocera Group regularly conducts scenario analysis on climate change to ascertain, assess, and manage risks and opportunities.

Risk Management Process

Our risk assessment process involves identifying risks and opportunities related to climate change for each value chain, which are then screened from the perspective of the level of awareness among companies and investors, and the degree of impact assumed by companies and investors in a three-step priority assessment where items with the highest priority given a "Major" priority rating.

Level of awareness among companies and investors: Evaluated based on survey results of external trends from answers given by other companies to corporate assessments of climate change, policies addressing climate change, and other factors.

Degree of impact assumed by companies and investors: Evaluated by external institutions based on the probability of an event occurring and its impact upon occurrence.

Risk Management Process
Category Items Priority level Summary of risks () and opportunities ( ) Greatly impacted value chains
Transition risks Policy A Carbon prices Major
  • Increased manufacturing and procurement costs if a carbon tax is introduced.
  • The introduction of a carbon tax will increase demand for renewable energy, leading to expansion in the renewable energy, storage battery, and fuel-cell businesses.
Manufacturing / Development
B Each country's carbon emission target Major
  • Increased costs in introducing renewable energy facilities and green power purchasing in response to these targets.
  • Increased demand in the renewable energy, storage battery, and fuel-cell business, leading to business expansion.
Manufacturing / Development
Sales / Use
C Energy-saving measures Medium
  • Increased cost to invest in new facilities.
  • Promoting energy-saving measures will lead to improved energy efficiency and cost cutting.
Manufacturing / Development
D Subsidy policies for renewable energy and other initiatives Major
  • Reduced costs for introducing renewable energy facilities through the use of renewable energy subsidies.
  • The introduction of renewable energy for residential energy will lead to expansion in the renewable energy, storage battery, and fuel-cell businesses.
Manufacturing / Development
Sales / Use
E Regulations on recycling Medium
  • The introduction of product recycling regulations will increase costs in response.
  • Leading the way in the development of recycling technologies will lead to increased sales.
Manufacturing / Development
Sales / Use
Technology F Increased adoption of next-generation electronic components and semiconductors Major
  • Increased capital investment to support increased production.
  • There is a risk that delays in adapting to next-generation technology will lead to reduced sales.
  • The expansion of digital technologies such as AI, IoT, and Smart Cities will lead to increased demand.
  • Increased demand for storage batteries with the introduction of renewable energy and the increased adoption of EVs.
  • Next-generation technology development will lead to business opportunities.
Manufacturing / Development
Sales / Use
G Increased adoption of next-generation technologies in energy-related business fields Major
  • There is a concern that research and development expenses will increase due to intensifying competition in the development of energy-related technologies.
  • Increased demand for renewable energy, and the development of power management and hydrogen technology driven by a push toward decarbonization in society will lead to business expansion.
Manufacturing / Development
Sales / Use
Market/reputational changes H Changes in priority products/product pricing Medium
  • There is a concern that the promotion of electrification and use of renewable energy on a broader scale will increase demand for copper, lithium, and other resources, and drive up prices as a result.
Procurement of raw materials
I Shift in consumer opinion in electronic components and semiconductors Major
  • There is a concern that failing to address avenues for reducing the environmental impact of products and the circular economy may lead to reduced sales.
  • Shifts in consumer awareness will increase demand for low carbon products.
  • Using renewable raw materials and extending product life cycles may act as a competitive advantage.
Manufacturing / Development
J Shift in consumer opinion in the energy business Major
  • Long-term operation of photovoltaic power generation equipment will become the norm, and reliability based on long product life has been reaffirmed, leading to increased demand.
  • Demand for integrated solutions for energy consumption may increase in the ICT market.
Manufacturing / Development
K Changes in investor/consumer opinion Major
  • There is a concern that insufficient disclosures may result in a loss of trust among investors, causing the Kyocera Group to face a drop in share price and a decline in enterprise value.
  • There is a concern that a failure to meet decarbonization targets may result in a loss of trust among customers, causing a decline in sales as consumers look elsewhere.
All
Physical risks Acute L Changes in precipitation patterns and rises in average temperature. Medium
  • There is a concern that costs such as those resulting from suspension of operations, reduced production, and equipment restoration will be incurred due to natural disasters.
  • Increased costs from natural disaster mitigation measures and insurance premiums.
  • Promoting natural disaster mitigation measures will lead to increased trust from customers.
Manufacturing / Development
Chronic M Intensifying extreme weather patterns Major
  • There is a concern that our manufacturing capacity will decrease due to water shortages, etc.
Manufacturing / Development

Strategy

The Kyocera Group analyzes risks and opportunities posed by climate change to the Kyocera Group in consideration of the impact of climate change on the Company's business, and changes in customer industries for 2030 using an 1.5°C scenario*1 and a 2.6°C scenario*2 based on information provided by the IPCC(Intergovernmental Panel on Climate Change). In particular, due to the importance that trends toward decarbonization plays in Kyocera's renewable energy business, energy adoption patterns and other considerations set under the 1.5°C scenario were applied, and the financial impact of risks and opportunities for each pattern were evaluated and analyzed. Based on these analysis results, we aim to achieve our greenhouse gas emission reduction targets for by FY 2030, and achieve carbon neutrality by FY2050.

  • Scenario where temperatures rise between 1.0 and 1.8°C in 2100 compared to average global temperatures compared to pre-industrial levels (IPCC Sixth Assessment Report: SSP1-1.9)
  • Scenario where temperatures rise between 2.1 and 3.5°C in 2100 compared to average global temperatures compared to pre-industrial levels (IPCC Sixth Assessment Report: SSP2-4.5)

Scenario

Scenario Overview
1.5℃

A rise of +1.0 to 1.8°C in 2100 compared to the pre-industrial levels
We also conducted analyses of unique scenarios looking at changes in energy resources and energy infrastructure by 2030.

Scenario
2.6℃ A rise of 2.1 to 3.5°C in 2100 compared to the pre-industrial levels

Main references:
RCP8.5, RCP4.5, RCP2.6, IEA ETP 2DS, IEA ETP B2DS, IEA450, IEA NPS, IEA ETP 2017, IEA NZE2050, IEA Sustainable Development Scenario, IEA WEO2022 Scenario, WRI Aqueduct Water Risk Atlas, Practical Guidelines on Flood Mitigation Planning in Consideration of Climate Change, etc.

Assessment of Business Impact

Items of major importance were assessed for their impact on the business. Although the business was forecast to suffer major impacts from flooding damage under the 2.6°C scenario, while under the 1.5°C scenario, the business was expected to be deeply impacted by carbon prices, and Kyocera sees this as a major opportunity for its renewable energy and hydrogen-related business. The main business impact assessments results are depicted below.

Category Risks/opportunities Change in operating profit Reference materials and calculation methods
2.6°C scenario 1.5°C scenario
Manufacturing services Increase in carbon prices 0 billion yen ▲9 billion yen Assuming reduction targets for 2030 are met, as referenced in the IEA "World Energy Outlook 2022"

Calculation method: Future emissions for Kyocera x Future carbon prices
Increase in energy prices 3 billion yen ▲1 billion yen Assuming renewable energy introduction targets for 2030 are met, as referenced in the IEA "World Energy Outlook 2018"

Calculation method: Future grid-based power consumption level x Electricity prices x Percent increase in power costs
Damage from natural disasters ▲7 billion yen ▲3 billion yen Estimates based on case scenarios where all areas inside and outside Japan at high risk of flooding are affected by 2030, referencing materials including the Flood Control Economic Survey Manual (draft), Hazard Maps, and Populations in Areas at Risk of Flooding by Prefecture prepared by the Ministry of Land, Infrastructure and Transport, and WRI: Aqueduct

Calculation method: Future cost of damages to Company sites by Inundation height x Rate of increase in the frequency of flooding - current cost of damages by future inundation height (Cost of damages to Kyocera sites by inundation height based on an analysis of direct and indirect damages)
Sales and consumption Expansion of Energy Business 0 billion yen 6.5 billion yen - 8.5 billion yen
(Results of Company-specific scenarios)
Estimates based on the EV Outlook 2022 by the IEA, the 2030 Energy Mix Proposal (Version 1) by the Renewable Energy Institute, 2050 Zero Scenarios for Decarbonizing Japan by the WWF, and the Basic Energy Plan and Energy Supply and Demand Forecasts for 2030 by Japan's Ministry of Economy, Trade and Industry

Calculation method: Sales of related businesses x Business profit margins x Market growth rate

Measures

Measures Addressing Increases in Carbon and Energy Prices

In order to implement measures for reducing greenhouse gas emissions, the Kyocera Group will look to strengthen energy saving in production facilities and implement renewable energy solutions, while also introducing a data visualization system at each plant across four stages from FY2019 to FY2030.

  Stage 1
FY2019 to FY2021
Stage 2
FY2022 to FY2024
Stage 3
FY2025 to FY2027
Stage 4
FY2028 to FY2030
Implement renewable energy solutions
[On-site] Install solar power generation facilities at domestic/overseas affiliate companies
[Off-site] Install solar power generation facilities in Japan
 
[Off-site] Install solar power generation facilities in Japan (PPA)
Promote energy savings
Introduction of waste heat recovery facilities
Implement top-runner utility facilities
 
Energy visualization and efficiency improvements to production equipment
Shift away from steam-based solutions (electrification/humidification) and fossil fuels
(transition to natural gases, etc.)
Review hydrogen/ammonia
use

Introduction of renewable energy

In addition to installing solar power generation systems on building roofs at business sites, in factory premises, and in parking areas both inside and outside Japan, since FY2020, the Kyocera Group has been working to expand the scope of power use derived from renewable energy sources by introducing solar power generation systems on off-premises land through a self-consignment system*1 and off-site PPAs*2.

  • Self-consignment system: A system where the power generated at company sites is supplied to other company sites via a power transmission and distribution network of an electric power provider
  • PPA (Power Purchase Agreement): A power purchase agreement entered into between an electric power provider and specific users

[On-site] Installation of a solar power generation system

image: Carport extension at Keihanna RC (133 kW)
Carport extension at Keihanna RC (133 kW)
image: Additional cycle ports at KYOCERA Vietnam Company Limited. (583 kW)
Additional cycle ports at KYOCERA Vietnam Company Limited. (583 kW)

Introduction of Solar Power Generation Systems

  Site Generating capacity (kW) Installation/Additional year (FY)
Japan Hokkaido Kitami Plant 759 FY2011 (Final extension: FY2019)
Yamagata Higashine Plant 611 FY2020 (Final extension: FY2022)
Fukushima Koriyama Plant 2,401 FY2014 (Final extension: FY2021)
Niigata Shibata Plant 411 FY2020
Toyama Nyuzen Plant 360 FY2020
Nagano Okaya Plant 327 FY2011 (Final extension: FY2021)
Kawasaki Plant 47 FY2020
Shiga Gamo Plant 571 FY2011 (Final extension: FY2016)
Shiga Yohkaichi Plant 2,480 FY2006 (Final extension: FY2023)
Shiga Yasu Plant 1,178 FY2011 (Final extension: FY2021)
Kyoto Ayabe Plant 2,406 FY2014 (Final extension: FY2021)
Kagoshima Sendai Plant 1,419 FY2011 (Final extension: FY2020)
Kagoshima Kokubu Plant 2,157 FY2006 (Final extension: FY2023)
Kagoshima Hayato Plant 189 FY2006 (Final extension: FY2021)
Keihanna Research Center 605 FY2019 (Final extension: FY2023)
Tochigi Moka Office 172 FY2021
Chiba Sakura Office 493 FY1985 (Final extension: FY2014)
Yokohama Office 58 FY2012
Yokohama Nakayama Office 266 FY2012 (Final extension: FY2023)
Headquarters 306 FY1999(Final extension: FY2022)
Headquarters of Kyocera Document Solutions Inc. 12 FY2008
Kyocera Document Solutions Inc. Tamaki Plant 922 FY2011 (Final extension: FY2021)
Kyocera Document Solutions Inc. Hirakata Plant 60 FY2006
Chiba old factory site 855 FY2016 (Final extension: FY2022)
Overseas Kyocera International, Inc. (USA) 279 FY2006
KYOCERA Mexicana, S.A. de C.V. (Mexico) 100 FY2011
KYOCERA Document Solutions Espana S.A.
(Spain)
36 FY2008
KYOCERA Document Solutions Belgium N.V.
(Belgique)
9 FY2010
KYOCERA Document Solutions Deutschland GmbH. (Germany) 16 FY2008
KYOCERA Vietnam Company Limited. (Vietnam) 1,544 FY2021 (Final extension: FY2023)
KYOCERA Thailand Co. Ltd. (Thailand) 1,660 FY2021 (Final extension: FY2022)
DONGGUAN SHILONG KYOCERA CO., LTD.(China) 196 FY2022
KYOCERA (TIANJIN) SOLAR ENERGY CO., LTD. (China) 93 FY2011
KYOCERA AVX Industries, Pte. Ltd. (El Salvador) 2,058 FY2023
Total 24,954  

[Off-site] Installation and use of solar power generation systems in Japan (self-consignment)

The Kyocera Group installs solar power generation systems on unused land and consolidates and bundles the renewable energy generated for transmission to factories and business sites on a self-consignment system.

image: [Off-site] Installation and use of solar power generation systems in Japan (self-consignment)

[Off-site] Installation and use of solar power generation systems in Japan (PPA)

The Kyocera Group purchases surplus power generated by solar power generation systems installed in ZEH rental apartments operated by major rental housing companies, which is consolidated and bundled together to be transmitted to plants and business sites.

image: [Off-site] Installation and use of solar power generation systems in Japan (PPA)

Promotion of energy-saving measures

Example of cutting-edge utility facility installation
Installation of exhaust heat recovery chillers

Exhaust heat recovery chillers have been installed in the air conditioning system at the Kyoto Ayabe Plant as part of energy conservation efforts. Exhaust heat recovery chillers use heat pump technology to recover low-temperature heat for use. The exhaust heat generated when cool water is produced for air conditioning is recovered, reducing the hot water load for air conditioning. These facilities are scheduled to be rolled out in stages across the Kyocera Group.

image: Kyoto Ayabe Plant: Exhaust heat recovery chiller
Kyoto Ayabe Plant: Exhaust heat recovery chiller

 CO2 emissions reduction (estimated): 325 (t-CO2/year)

Replacement with alternative CFC refrigerator equipment

Production and import of specified CFCs (HCFC) are regulated to protect the ozone layer, and the production of specified CFCs (HCFC) stopped in developed countries in 2020. As a result, we are replacing our air conditioning systems with alternative CFC refrigerants (HFC). For packaged air conditioners and chillers, 15-year-old equipment will be replaced by FY2025, and other equipment, including dryers and small chillers, will be replaced by FY2028.

 CO2 emissions reduction (estimated): 12,300 (t-CO2/year)

Update to LED

Since 2012, we have been replacing fluorescent lamps with LEDs, mainly in areas where energy-saving effects are significant. The plan is to replace all fluorescent lights, except for those in special areas such as explosion-proof areas, by FY2024, and to replace exterior lights, downlights, etc. with LEDs by FY2029.

 CO2 emissions reduction (estimated): 2,200 (t-CO2/year)

Example of energy visualization and efficiency improvements to production facilities

Progress is being made on visualizing the level of CO2 emissions by segment, business division, department, and business site. By tracking targets and performance in a timely manner, Kyocera is looking to tie this data back to efforts seeking to reduce CO2 emissions. In addition, Kyocera strives to efficiently reduce CO2 emissions by promoting visualization efforts by production facilities and reducing equipment standby power consumption at sites with high CO2 emission levels.

Plant building visualization screen image
Plant building visualization screen image
Equipment or facility-based energy consumption
Equipment or facility-based energy consumption

 CO2 emissions reduction (estimated): 11,000 (t-CO2/year)

Steps to move away from reliance on petroleum-based fuels (transition to natural gas, etc.) and steam (electrification/water humidification)

Kyocera's Kitami Plant in Hokkaido, Nyuzen Plant in Toyama Prefecture, and Sendai Plant in Kagoshima Prefecture are working to reduce CO2 emissions by converting their production fuel from petroleum-based fuels to city gas or LNG (natural gas), which has a low CO2 emission coefficient.

 CO2 emissions reduction (estimated): 5,130 (t-CO2/year)

Breakdown: {Hokkaido Kitami Plant: 160 (t-CO2/year)、Toyama Nyuzen Plant: 1,870(t-CO2/ year)、Kagoshima Sendai Plant: 3,100(t-CO2/ year)}

LNG Satellite (Sendai Plant)
LNG Satellite (Sendai Plant)

Measures Addressing Damage from Natural Disasters

In addressing physical risks, the Kyocera Group takes the optimal approach to implementing countermeasures by ascertaining the potential for disasters to occur based on geographical considerations, which are addressed by installing water bars at each site, and by taking inundation height into account when positioning facilities that are being renewed or newly installed, among other measures.

image: Power receiving, transforming, and distributing facility (Kawasaki Plant)
Power receiving, transforming, and distributing facility (Kawasaki Plant)

Expansion of Energy Business

The Kyocera Group seeks to improve the rate of renewable energy use across the Kyocera Group while looking to branch out externally into the environmental management business and other areas by purchasing surplus power generated by homes, companies, and large-scale solar power plants, and coordinating and matching the supply and demand for renewable energy, while also utilizing this renewable energy in-house.

image: Vision for renewable energy services provided by the Kyocera Group

Metrics and Targets

The long-term targets set for the Kyocera Group are as follows. Greenhouse gas emission targets are certified SBT (Science Based Targets).

  • Scope 1, 2*1, GHG emissions (1.5℃ level) : Reduce 46% by FY2031 compared to FY2020 levels
  • Scope 1, 2*1, 3*2 GHG emissions (1.5℃ level) : Reduce 46% by FY2031 compared to FY2020 levels
  • Renewable energy adoption: Increase 20x by FY2031 from FY2014 levels
  • Carbon neutral by FY2051
*1 Scope 1: Direct emissions associated with fuel consumption and production processes
Scope 2: Indirect emissions associated with consumption of power or heat purchased from outside
*2 Scope 3: Indirect emissions other than Scope 1 or 2 (Including procurement of raw materials, transport, use and disposal of products, as well as employee commuting and business trips)
SBT Logo

Scope 1, 2 GHG emissions

Scope 1, 2 GHG emissions

Scope 1, 2, 3 GHG emissions

Scope 1, 2, 3 GHG emissions

Data have been updated to improve the accuracy of data aggregation for some locations.