Deal with Climate Change

Response to Climate Change Policy

We consider climate change as a universal issue. Therefore, the Kewpie Group is thoroughly devoted to reducing CO2 emissions at all stages of our business, including procurement, production, distribution, sales, and in offices.
Our initiatives for the material issue for sustainability: “Reduction of CO2 Emissions (Response to Climate Change)” specifies a clear target for the reduction in CO2 emissions at all domestic locations.

Reduction of CO2 Emissions

In response to the progression of climate change, we have reviewed and revised upward our CO2 emission reduction targets.
All companies within the Kewpie Group are working to reform manufacturing and processing operations and discussing the installation of renewable energy sources to achieve a carbon-free society. To this end, in addition to existing initiatives, we are looking to improve efficiency at production plants and install energy-saving equipment to further reduce CO2 emissions.
In terms of distribution, we are actively promoting a modal shift from long-distance truck transportation to rail and ship, while also engaging in joint transportation operations with manufacturers in other industries.
In our offices, we are working to optimize energy usage by utilizing new technologies such as AI.

CO2 Emissions

Targeted plants: Kewpie Group production plants
Emission intensity are calculated based on the Kewpie Group domestic production plants

Making Use of Renewable Energy

The Kewpie Group is steadily installing renewable energy at our locations in Japan and abroad. Solar panels have been installed on the roof of the Kewpie Kobe Plant and began operating on February 1, 2022. The Kobe Plant provides the space for the solar power generation system, which was installed and managed by Kansai Electric Power Company, Inc. under the "on-site PPA model." The system is expected to generate 6.3% of the total electricity used at the plant, thereby reducing CO2 emissions by approximately 170 tons per year.
We will continue to actively convert the electricity used at the Group's offices and production sites to renewable energy.

Installation start date Base name
February 2022 Kewpie Kobe Plant (on-site PPA model)
December 2021 BEIJING KEWPIE CO., LTD.
December 2021 KEWPIE VIETNAM CO., LTD.
November 2021 Ome Plant, Shunsai Deli Co., Ltd.
February 2021 Hanno Plant, Kewpie Egg Corporation
April 2020 Akishima Plant, Shunsai Deli Co., Ltd.
April 2018 KEWPIE (THAILAND) CO., LTD.
December 2016 Kewpie Goka Plant
February 2016 Enshu Plant, Salad Club, Inc.
September 2015 Fujiyoshida Kewpie Co., Ltd.*
January 2015 Green Factory Center Shirakawa
April 2014 Shiga Plant, Kewpie Jyozo Co., Ltd.
October 2013 Sengawa Kewport
April 2013 Head Office Plant, Kpack Co., Ltd.
March 2012 Kewpie Fine Chemicals Headquarters Goka Plant

*In 2021, the business was transferred to Hakubaku Co., Ltd. The solar panels installed by Kewpie on that site are still owned and managed by Kewpie.

Kewpie Kobe Plant solar panel facility

TCFD Initiatives

The operations of the Kewpie Group are highly dependent on the blessings of nature. Accordingly, these operations could incur impact from climate change in a variety of ways, including through lower harvest yields and reduced quality of ingredients. Moving forward, we will address and respond to future climate-change related events as management risks, while at the same time identifying new opportunities and incorporating them into our corporate strategies.

The Kewpie Group endorses the Task Force on Climate-related Financial Disclosure (TCFD)*1 and has joined the TCFD Consortium*2, which serves as a forum for collaborations among companies and financial institutions that support TCFD. Internally, the Kewpie Group created the TCFD Project and has engaged in its own initiatives since 2021.

*1Established by the Financial Stability Board (FSB) in 2015 at the behest of the G20. The TCFD recommends that companies assess the financial impacts of climate change risks and opportunities on management and disclose information pertaining to governance, strategies, risk management, metrics and targets.
TCFD website

*2Established in 2019 as a forum for discussing efforts leading to effective corporate information disclosure and the disclosure of information facilitating appropriate investment decisions by financial institutions and other organizations. Companies and financial institutions that support the TCFD recommendations are promoting the initiative.
TCFD Consortium website

Governance

The Kewpie Group has established the "Kewpie Group Basic Approach to Sustainability" to contribute to the improvement of social sustainability and achieve sustainable corporate growth. The Sustainability Committee, chaired by the director responsible for sustainability, formulates policies and plans to achieve targets on material issues related to sustainability, including climate change, and promotes sustainability initiatives. The Sustainability Committee submits reports to the Board of Directors in addition to the Management Committee (an advisory body to the Representative Director, President and Chief Executive Corporate Officer), and the Board of Directors discusses on the content of the Sustainability Committee's deliberations as appropriate, thereby ensuring supervision by the Board of Directors.
To realize the Kewpie Group's "Our Ideal" and the "Kewpie Group 2030 Vision," we will work with various stakeholders to solve social issues.

Meeting bodies,
other structures
Roles and responsibilities
Board of Directors Supervision of responses to clime change
Sustainability Committee Formulation of sustainability-related policies and plans including climate change initiatives, identification of key issues, and promotion of initiatives on Material issues
Officer in charge Nobuo Inoue (Director, Executive Corporate Officer in charge of sustainability)

Strategy

The Kewpie Group identifies the various risks and opportunities associated with climate change in the short, medium, and long term, according to their significance. We also periodically review our analysis and evaluation in light of changes in the external environment. For our analysis, we have identified two key scenarios in line with the scenarios published by IPCC*1 and IEA*2. In the first scenario, the temperature will rise 1.5-2 degrees Celsius above pre-industrial levels by 2100, and environmental policies are developed (hereinafter referred to as the "Environmental Policy Progress Scenario"). In the second scenario, the temperature will rise 2.7-4 degrees Celsius above pre-industrial levels by 2100 and no additional measures are taken to address climate change (hereinafter referred to as the "BAU Scenario"). In the Contingency Scenario, the impact of climate change on our business in 2030 is calculated. We will consider measures to deal with the risks and opportunities identified, incorporate them into our single-year and medium-term management plans, and promote them.

*1IPCC
We will gradually expand the scope of the analysis in the mid-term management plan, which covers the period from FY2021 to FY2024. In FY2021, we analyzed the climate change risks and opportunities for mayonnaise and dressings (especially deep-roasted sesame dressing) in domestic and overseas markets. Most notably, in terms of the main raw materials of these products (oil, egg, and vinegar), we recognized that crops, mainly grains, are affected by climate change. Thus, we are considering a strategy to reduce dependence on specific crops over the medium to long term.

*2IEA
The International Energy Agency (IEA) is an autonomous organization established in 1974 after the first oil crisis within the framework of the Organization for Economic Cooperation and Development (OECD). It provides the medium- and long-term supply and demand forecasts needed for crafting energy policy.

Applying Scenario Analysis

We will gradually expand the scope of the analysis in the mid-term management plan, which covers the period from FY2021 to FY2024. In FY2021, we analyzed the climate change risks and opportunities for mayonnaise and dressings (especially deep-roasted sesame dressing) in domestic and overseas markets. Most notably, in terms of the main raw materials of these products (oil, egg, and vinegar), we recognized that crops, mainly grains, are affected by climate change. Thus, we are considering a strategy to reduce dependence on specific crops over the medium to long term.

Major Climate Change Risks and Opportunities

<Environmental Policy Progress Scenario>
Strict environmental regulations and high carbon taxes will be introduced, and the world will achieve carbon neutrality. The agriculture, forestry, and fishery sectors will achieve zero CO2 emissions, while suppliers' environmental response costs will rise. Consumers will become more health-conscious and will thus increase their intake of salads and other vegetables.
The risks and opportunities for the Kewpie Group identified in the Environmental Policy Progress Scenario are as follows.

Risk items Risks Opportunities Time* Impacts
Primary categories Medium categories Sub-categories
Transition Risks Policy and Legal Introduction of carbon taxes   Medium-term Small
Regulation of plastics packaging   Medium-term Small
Valorization of unused resources   Medium-term Small
Market Increased demand for highly sustainable products   Medium-term Small
Increase in the procurement costs of environmentally friendly raw materials   Medium-term Small

*Definition of timelines
Short-term: up to 2024 Medium-term: up to 2030 Long-term: up to 2050

<BAU Scenario>
Despite the progress of low-carbonization initiatives, carbon neutrality will not be achieved by 2050 and temperature rise will increase the frequency and severity of natural disasters. Consequently, the frequency of flooding damage at suppliers' and companies' production sites will increase. Lower crop yields caused by heat stress will also lead to a rise in the cost of procuring raw materials.
The risks and opportunities for the Kewpie Group identified in the BAU Scenario are as follows.

Risk items Risks Opportunities Time* Impacts
Primary categories Medium categories Sub-categories
Physical risks Chronic Increased cost of procuring raw materials due to reduced crop yields caused by heat stress   Medium-term Medium
Acute Damage to production facilities, power outages, and stagnation or suspension of operations due to flooding   Short- and long-term Medium

*Definition of timelines
Short-term: up to 2024 Medium-term: up to 2030 Long-term: up to 2050

Measures to Address Climate Change Risks and Opportunities (● Preparing for risks 〇 Taking advantage of opportunities)

In response to the risks and opportunities identified through scenario analysis, we will promote the following themes/measures and utilize them to achieve sustainable growth.

〇Respond to markets where environmental policies have progressed

  • Respond to increased demand for environmentally friendly products
  • Technological innovation to exploit agricultural products (vegetable oil) and other products
  • Conversion to a structure that is resilient to shifts in raw material markets
  • Weight reduction of container and packaging plastics
  • Active introduction of recycled plastics and biomass plastics
  • Reduce environmental impact by proposing ways to use products

〇Reduction and effective use of food waste

  • Effective use of unused parts of vegetables (conversion to feed and fertilizer)

●Reduction of CO2 emissions

  • Capital investment using an indicator to achieve CO2 emissions reduction (promotion of electrification, introduction of internal carbon pricing)
  • Review of heating and sterilization processes in the manufacturing process
  • Introduction and utilization of renewable energy
  • Collaboration with suppliers

●Flood preparedness

  • Focused measures according to flood risk assessment
  • Business Continuity Plan (BCP) for main products in case of disaster

Risk Management

The response to climate change is a top-priority issue for the Kewpie Group due to the high expectations of stakeholders and the social impact of the Kewpie Group.

We operate the cross-organizational TCFD Response Project to identify and assess the climate change risks affecting the Kewpie Group. The TCFD Response Project was established by a resolution of the Sustainability Committee comprising the committee leaders: director of Management Promotion Division, secretariat: Sustainability Promotion Department, Corporate Planning Department, and Risk Management Office. The Sustainability Committee approves the climate change risks and measures identified by the TCFD Response Project and manages its progress. The project’s output is reported to the Management Committee and the Board of Directors.

Indicators and Targets

The indicators we use to measure and manage climate change risks and opportunities are as follows.

Material Issues Initiative Theme Indicators FY2021
Results
FY2021
Target
FY2024
Target
FY2030
Target
Deal with Climate Change Reduction of CO2 emissions Reduction rate in CO2 emissions (compared to FY2013) 24.0% At least 7.5% At least 30% At least 50%

In calculating CO2 emissions, we refer to "Japan Ministry of the Environment, Law Concerning the Promotion of the Measures to Cope with Global Warming, Superseded by Revision of the Act on Promotion of Global Warming Countermeasures (2005 Amendment)."

The indicators used to measure and manage the risks and opportunities associated with the "effective use and recycling of resources" are as follows.

Material Issues Initiative Theme Indicators FY2021
Results
FY2021
Target
FY2024
Target
FY2030
Target
Effective Use and Recycling of Resources Elimination and Effective Utilization of Food Loss Food waste reduction rate 39.0% At least 50% At least 65%
Effective utilization rate of unused portions of vegetables Main vegetables: Cabbage, etc. 62.1% At least 30% At least 70% At least 90%
Reduction rate in volume of product waste (compared to FY2015) 61.3% At least 25% At least 60% At least 70%
Reduction and Reuse of Plastic Emissions Reduction rate in volume of plastic waste (compared to FY2018) 5.3% At least 8% At least 30%
Sustainable Use of Water Resources Water usage (basic unit) reduction rate 2.1% At least 3% At least 10%

Note: In light of conditions in FY2021, a portion of this content has been revised. In addition, the "Food waste reduction rate" indicator also includes the "effective utilization rate of unused portions of vegetables."

Having analyzed the risks and opportunities in the value chain, these material issues were identified by analyzing the risks and opportunities associated with social change and identifying the social issues that the Kewpie Group should address through its business operations, with reference to the Sustainable Development Goals (SDGs). Next, for each social issue, we assessed the level of expectation from stakeholders and the level of impact on society that the Kewpie Group can have in order to identify "Material Issues for Sustainability." In assessing materiality, we refer to the international sustainability standards GRI, ISO 26000, and SASB and various ESG assessments, and reflect the ideas of the "Kewpie Group 2030 Vision."

Each of the sustainability targets is linked to "Material Issues for Sustainability" and is an indicator of what the Kewpie Group will be working on. The sustainability goals announced in 2019 have been reviewed in light of the rapidly changing social situation. Specifically, for the purpose of contributing to the mitigation of the climate crisis and implementing adaptation measures, we have upwardly revised our "reduction rate in CO2 emissions" target by reorganizing our manufacturing sites, reviewing our manufacturing processes, and promoting renewable energy planning. We have also upwardly revised our targets for the "effective utilization rate of unused parts of vegetables" and "reduction rate in volume of product waste."
The greenhouse gas (GHG) emissions for Scope 1, Scope 2, and Scope 3 are as follows.

The Scope 3 GHG emissions data is for Kewpie Corporation on a non-consolidated basis. We will continue to monitor the data for the entire Group.

Additionally, the remuneration of directors varies according to the achievement of the key indicators of the medium-term business plan (including sustainability targets and goals for employees) and the mission of each individual.

Production Initiatives

Reducing CO2 Emissions by the Production Division

The Kewpie Group is committed to saving energy by improving the efficiency of production processes and by installing new equipment. We are converting from using Heavy Fuel Oil A to city gas and natural gas, and we are promoting the use of co-generation and solar power. We are also working to reduce CO2 emissions by sharing and developing the outstanding initiatives taken by group plants.

Promoting Energy Conservation in the Production Division

The Kewpie Group is promoting the "visualization of energy use" by installing energy measurement devices in all processes at production sites, improving facility operation and maintenance, and introducing energy-saving equipment to promote energy conservation.

Energy Conservation Reduction Targets for the Production Division
  • Reduce energy consumption by 1% or more from the previous year.

Energy consumption at Kewpie Group production plants in FY2021 was 3,365,000 GJ, a decrease of 1.8% from the previous fiscal year. Energy consumption per ton of production volume (basic unit) was 4.37 GJ, a 1.8% decrease from the previous fiscal year.
The decrease in consumption and the basic energy unit is mainly due to efficient production through factory reorganization regarding condiment products, efficient production through business reorganization in the egg business, and planned energy-saving facility upgrades for each business.

Targeted plants: Kewpie Group production plants

Utilizing Natural Refrigerants

The Kewpie Group is installing energy-saving equipment and working to optimize the operation of our facilities. By incorporating natural refrigerants when upgrading our freezer units, we have reduced CO2 emissions and eliminated fluorocarbon use.
In 2018, we introduced natural refrigerants when we upgraded the freezer units at our Nakagawara Plant (Fuchu, Tokyo). We are continuing to verify their effectiveness in reducing CO2 emissions.

Ammonia freezer units

Logistics Initiatives

The Kewpie Group is collaborating with business partners and Group companies to reduce the environmental burden of all transport and delivery operations, from the transportation of raw materials to the delivery of products.
We are working to improve efficiency by shortening transportation and delivery distances and by improving load efficiency. We also implement eco-friendly driving, which consumes less fuel and offers greater safety. Furthermore, we are promoting a modal shift from long-distance truck transportation to rail and ship to reduce CO2 emissions.
CO2 emissions from the transportation and delivery of Kewpie products in FY2020 was 22,000 tonnes and a 2.3% decrease from the previous year.

CO2 Emissions from Transportation and Delivery

    FY2020 FY2021 Year-on-year comparison
Kewpie products Transport volume (1,000 tonne-km) 138,443 136,590 -1.3%
CO2emissions (tonnes) 22,010 22,026 +0.1%

Promoting a Modal Shift

We acquired ten exclusive-use 31-foot containers (of which four are freezer containers) and are coordinating with transportation professionals to promote modal shifts*1.
In July 2019, Kewpie was certified with the Eco Rail Mark as a company that uses cargo trains for more than a certain percentage of product transportations.
Our modal shift ratio*2 was 33% in FY2020, a decrease from the previous year as a result of increased transportation and delivery.

*1Modal shift: Shifting long-haul trucking of 500 km or more to container transportation via railroads and ships.

*2Modal shift ratio: Ratio of tonnes shipped by railroads and ships to total tonnes shipped 500 km or more.

We acquired six 31-foot containers for rail and ship transport and are promoting modal shifts in coordination with freight carriers.

Change in the modal shift ratio

Joint transportation initiatives with businesses in other industries

Having completed Sengawa Kewport in October 2013, the Kewpie Group is proceeding to consolidate the location of its offices, including the head office and research departments. We have adopted energy-saving designs and equipment, are collaborating between offices to share know-how on achieving the best energy-saving performance, and are making ongoing operational facility improvements and repairs.

Office Initiatives

Since February 2022, we have been procuring electricity with environmental value (FIT Non-Fossil Certificate with Tracking*1) generated by solar panels at three Group sites (Green Factory Center Shirakawa, Fujiyoshida Kewpie Co., Ltd.*2, and Salad Club Enshu Plant) from the Japan Electric Power Exchange through TEPCO Energy Partner, Incorporated. The electricity used at the Kewpie Shibuya Head Office and Sengawa Kewport is now 100% renewable. This initiative is expected to reduce CO2 emissions by approximately 1,600 tons per year.

*1This is a certificate representing the "value being derived from a non-fossil power source" of electricity generated by a non-fossil power source. The certificates are procured by retail electricity providers in the non-fossil value trading market and used in electricity sold to customers, thereby allowing them to reduce greenhouse gas emissions.

*2In 2021, the business was transferred to Hakubaku Co., Ltd. The solar panels installed by Kewpie on that site are still owned and managed by Kewpie.

Initiatives at the Shibuya office

The Shibuya office (Shibuya Toyu Building) of the Kewpie Group has a double-skin glass facade that achieves a high degree of thermal insulation from natural ventilation between the glass layers. The office has installed highly efficient air conditioners, LED lighting, and other energy saving equipment.

The double-skin glass facade of the Shibuya office.

hrough such environmental designs, the Shibuya office building has been given an overall rating of A by the Comprehensive Assessment System for Built Environment Efficiency (CASBEE).
In addition, the building has been designated a project for receiving interest subsidies to promote green financing.*

*Project for receiving interest subsidies to promote green financing: These are projects selected through a public offer by the Ministry of the Environment to receive a subsidy for part of the interest paid on the financing of capital expenditures addressing global warming.

Initiatives at Sengawa Kewport

Natural ventilation system

Energy saving features of Sengawa Kewport include air wells providing natural ventilation, a co-generation system, solar power generation, and LED lighting. To maximize the performance of energy saving design, we are deepening our collaboration with equipment makers and are surveying many employees at Sengawa Kewport to operate energy saving equipment more precisely.
Furthermore, in collaboration with Tokyo Gas Engineering Solutions Corporation, we established an optimized operational pattern based on weather forecast data and the operating status of air conditioners (chillers, heat pumps, gas boilers, and cogeneration power generation) using AI on a cloud server.
Compared with before the introduction of the system, energy consumption (crude oil equivalent) for air conditioning equipment was reduced by approximately 15% in summer and winter, and by approximately 20% in mid-season (spring).
We are taking further steps to automate driving.

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