Mitigation and Adaption to Climate Change

Policy and Philosophy

In formulating its medium-term management plan starting in 2021, Kumiai Chemical recognized that the reduction of cultivated land due to climate change would have a significant impact on the Company's risks and opportunities, and selected "SDGs, contribution to a recycling-oriented society, and ESG-oriented corporate activities" as its business strategy, and established the "Kumiai Group Sustainability Basic Policy" and "Basic Environmental Policy" regarding sustainability including climate change.
"Basic Policy on Sustainability" clarifies that we will promote the provision of environmentally friendly products and services and contribute to the realization of a low-carbon society and a recycling economy.

Basic Policy on Sustainability, Promotion Structure, and Other Policies

Kumiai Group Basic Policy on the Environment

System

Kumiai Chemical has established the Sustainability Promotion Committee headed by the Representative Director, President to discuss and examine issues related to sustainability, including climate change, and has organized three subcommittees under the Sustainability Promotion Committee for each ESG category. The Committee and the three subcommittees discuss and examine targets and progress about sustainability issues, and promote initiatives to realize a sustainable society.

Governance

Climate-related issues are discussed and reported at the Executive Committee held twice a month. The most important issues are reported to the Board of Directors meeting held about once a month and are supervised by the Board of Directors. The Company decided on a policy to establish innovative technologies that will contribute to "both improvement of productivity and sustainability of the food, agriculture, forestry, and fisheries industries." These also respond to environmental protection and energy issues, which were included in the "Strategy for Sustainable Food Systems, MeaDRI" formulated by the Ministry of Agriculture, Forestry and Fisheries.

Risk Management

For risk management, we clarify risks and opportunities recognized by each division in the company and also select issues by referring to the recommendations of external organizations such as TCFD and climate-related risks and opportunities recognized by other companies in the industry. We evaluate the selected issues, taking into account their financial impact, and determine the level of importance.
Selected risks are discussed by the Risk and Compliance Committee, chaired by the President and Representative Director, which determines measures to address the issues.

Indicators and Targets

In November 2022, we announced our support for the "TCFD (Task Force on Climate-related Financial Disclosures) recommendations." After that, we have established targets for reducing greenhouse gas (GHG) emissions from Kumiai Group by 30% by FY2030 compared to FY2019.
In addition to Kumiai itself, we have identified seven group companies that are expected to emit large amounts of GHGs (companies with factories and logistics companies) and have set total GHG emissions for these companies as targets for reduction.

Our Group's GHG emissions reduction targets and progress

KPI	FY2030 target	FY2022 results	Achievement rate for FY2022	(Reference) Base year FY2019 results
GHG emissions for Kumiai Group (scope 1 and scope 2)	30% reduction compared to FY2019 :46,906 t-CO2	66,124t-CO₂	4.4%	67,009t-CO₂

Indicators: GHG emissions and energy use

			GHG emissions (t-CO₂/year)
			FY2019	FY2020	FY2021	FY2022
Scope 1	Direct Emissions		47,846	46,718	47,702	47,982
Scope 2	Indirect Emissions according to market-based method/Generated by use of electricity, heat, and steam provided by other companies		19,164	17,307	17,459	18,142
Scope 1+2	Total emissions		67,009	64,024	65,162	66,124
Scope 1+2	Emissions per net sales unit (t-CO2/Millions of yen)		0.705	0.644	0.605	0.503
Scope 3 Category	1. Purchased goods and services		ー	ー	ー	198,660
	2. Capital goods		ー	ー	ー	27,470
	3. Fuel and energy related activities		ー	ー	ー	15,290
	4. Upstream transportation and distribution		ー	ー	ー	11,715
	5. Waste generated in operations		ー	ー	ー	7,676
	6. Business travel		ー	ー	ー	221
	7. Employee commuting		ー	ー	ー	1,003
	8. Upstream leased asset		ー	ー	ー	0
	9. Downstream transportation and distribution		ー	ー	ー	769
	10. Processing of sold products		ー	ー	ー	0
	11. Use of sold products		ー	ー	ー	0
	12. End-of-life treatment of sold products		ー	ー	ー	3,729
	13. Downstream leased assets		ー	ー	ー	66
	14. Franchises		ー	ー	ー	0
	15. Investments		ー	ー	ー	0
	Total emissions		ー	ー	ー	266,599

		Unit	FY2019	FY2020	FY2021	FY2022
Energy consumption (crude oil equivalent)		KL	33,067	32,899	33,559	33,199
Amount of purchased electricity		Mwh	54,875	56,317	57,016	55,992
Amount of renewable energy		Mwh	12,525	12,544	12,635	12,420

The seven companies are KUMIAI CHEMICAL INDUSTRY, RIKEN GREEN, IHARA NIKKEI CHEMICAL, K-I CHEMICAL INDUSTRY, Ihara Construction Industry, ONOMICHI KUMIKA INDUSTRY, and KUMIKA LOGISTICS. The ratio of the seven companies to consolidated net sales (coverage ratio) is 90.6% (in FY2022).

Initiatives

Following the Law Concerning the Rational Use of Energy (Energy Conservation Law) and the Law Concerning the Promotion of Measures to Cope with Global Warming (Global Warming Prevention Law), Kumiai Chemical and its group companies report energy consumption and unit energy consumption by business category to the competent authorities. In addition, we have supported the TCFD and have been promoting information disclosure since 2022.
Furthermore, to achieve our GHG emissions reduction target (30% reduction from FY 2019 levels by 2030), we are considering installing solar panels, introducing CO₂-free electricity, and switching fuels at our plants.

Engagement

We are a member of the Japan Chemical Industry Association (JCIA) and participate in the Responsible Care Committee.
The JCIA has stated in its "Ideal Chemical Industry" that it will promote efforts to reduce GHG emissions following the Paris Agreement. Furthermore, as a global solution provider, the chemical industry aims to develop new technologies to reduce GHG emissions and to propose and disseminate them internationally.
We have supported the JCIA's policy on GHG emissions reduction, and we are not only working to reduce GHG emissions in the manufacturing process of our products, but also developing new technologies to reduce GHG emissions in agriculture, which is closely related to our business field, and working to put these technologies to practical use.

Sustainability