Basic Environmental Policy

The Group is undertaking activities to contribute to the development of a sustainable society by striving for regional environmental conservation through proper responses to environmental risks under our Basic Environmental Policy and in compliance with laws and regulations.

Initiatives to achieve carbon neutrality

The Group recognizes global climate change as a major threat to the survival of humanity, and thus views bold efforts to achieve carbon neutrality by 2050 to maintain a sustainable global environment and realize decarbonization as a key challenge of sustainability management.
To tackle this key challenge, in 2022, we formulated policy for achieving carbon neutrality by 2050, and are moving forward with business, and R&D to reduce CO2 emissions.

CO2 Emissions Reduction Scenario

The Group has up until now engaged in proactive energy-saving activities, transitioned to higher energy efficiency, and made other efforts to reduce CO2 emissions, and has launched initiatives to achieve the target of reducing emissions by 45% and more from 2015 levels by 2030 in an effort to achieve carbon neutrality by 2050.

Roadmap toward Carbon Neutrality

Efforts to Reduce CO2 Emissions

The Group produces ferroalloys―namely ferromanganese, one of its main products―by using a reduction reaction that removes oxygen from naturally occurring manganese ore. This reduction reaction inevitably produces CO2 emissions because coal cokes is currently the optimal reduction agent for the process. The Group will continue transitioning to higher efficiency electricity and gas and converting to green energy in addition to tackling the challenge to develop and commercialize an innovative manufacturing process for reducing CO2 emissions in the process of manufacturing ferroalloys.

Initiatives

Research on innovative high-carbon ferromanganese reduction technology

We proposed “The Technology Development for Decarbonization and Energy Conservation in the Ferromanganese Production Process” to the incubation R&D phase of the “Program to Develop and Promote the Commercialization of Energy Conservation Technologies to Realize a Decarbonized Society,” which is publicly solicited by New Energy and Industrial Technology Development Organization (NEDO), and our proposal was adopted in June 2024.
Thanks to the outcomes of the R&D, our project passed the Stage-Gate screening of NEDO, and progressed to the commercialization phase (until FY2030) in April 2026.
In this phase, we will proceed with the development of technologies for addressing major issues related to the adoption of new processes, and aim to realize both decarbonization and energy saving in the reduction reaction process of ferroalloy production.

Installation of gas-engine power generation equipment at the Tokushima Plant

We have decided to install the gas-engine power generation equipment at the Tokushima Plant as part of our CO2 emissions reduction measures.
It utilizes byproduct gases generated during the production of ferroalloys at electric furnaces, and is expected to reduce CO2 emissions by 3,000 tons per year.
The installation will begin in 2026, with the operation scheduled to start in April 2029.
The investment is expected to be approximately 1.7 billion yen, and we plan to utilize subsidy amounting to approximately 0.6 billion yen from the “Energy Efficiency Investment Promotion & Demand Structure Transformation Support Program” by the Ministry of Economy, Trade and Industry.
We are also planning to install more equipment in the future so as to further promote the reduction of CO2 emissions.

Climate Change Initiatives

The Group recognizes global climate change as a major threat to the survival of humanity, and thus views bold efforts to achieve carbon neutrality by 2050 to maintain a sustainable global environment and realize decarbonization as a key challenge of sustainability management. As part of this initiative, in February 2022, we announced our endorsement of the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and will disclose important information related to climate change in line with the TCFD framework as follows.

Governance

In January 2022, the Group established the Sustainability Committee as an organization directly under the Board of Directors to promote sustainability initiatives, including the response to climate change, and to further enhance corporate value in the medium/long term. This committee meets once a quarter and is chaired by President and CEO. The Sustainability Committee reviews companywide measures and monitors initiatives (reduction of GHG emissions as a KPI).
In addition, the committee chairperson will report on the matters discussed at the committee to the Board of Directors at least once every six months, and the Board of Directors makes recommendations to the Sustainability Committee on issues related to sustainability and climate change that have been discussed at the committee.

Strategy

Analysis process

The Group believes that to realize sustainability management, it is important to analyze the impact of climate change on our business by classifying and risks and opportunities and ensure that our corporate management reflects appropriate responses. So, we have taken the following steps to review the risks and opportunities that climate change issues pose to our business. Specifically, using two climate change scenarios, the 1.5℃ to 2℃ scenario and the 4℃ scenario, we conducted analyses related to the transition in policies and market trends (transition risks/opportunities) as well as an analysis of physical changes due to disasters (physical risks/opportunities).

About climate change scenarios

1.5℃ to 2℃ scenario (decarbonization scenario)

This scenario aims to limit the rise of global average temperature to less than 1.5℃ to 2℃ compared to pre-industrial times, as efforts to achieve carbon neutrality become more active in order to mitigate the impact of climate change. In the 1.5℃ scenario, it is assumed that among the transition risks, the impact of policies and regulatory risks will be greater than in the 2℃ scenario.

4℃ scenario (high-emissions scenario)

This scenario assumes that no progress will be made in measures against climate change, and that the global average temperature will rise by approximately 4℃ by the end of this century compared to pre-industrial times. It is assumed that the impact of extreme weather events and the risk of rising sea levels will increase in terms of physical risk.

Assessment of Impacts of Risks and Opportunities and Selection of Countermeasures

Risk

In the below-2℃ scenario, there is a risk of increased costs due to the need to switch to renewable energy and low-carbon materials due to stricter regulations, while in the 4℃ scenario, there is a risk of increased costs due to intensifying natural disasters.

Opportunity

Environmentally friendly businesses are expected to expand.

• Scenarios used: [Transition risks] IEA WEO2023 NZE2050 / [Physical risks] IPCC RCP8.5 and IPCC AR6 SSP5-8.5
• Timeline: [Short term] within 1 year [Medium term] till 2030 [Long term] till 2050
• Impact level: [Large] Profit before income taxes of 1 billion yen or larger [Medium] Profit before income taxes of 100 million to less than 1 billion yen [Small] Profit before income taxes of less than 100 million yen

Risk Management

Process for identifying and assessing climate-related risks

After the TCFD identifies risks associated with climate change and we report them to the Sustainability Committee, the committee discusses the risks once a year. Risks that are deemed particularly important are reported to the Board of Directors once a year.

Process for controlling climate-related risks

The Sustainability Committee will monitor the identified climate change risks and deliberate countermeasures.
After reviewing the countermeasures, the Sustainability Committee will share them with relevant departments and take action to mitigate the risks.

Integration process for company-wide risk management

We have established an Internal Control Committee to manage non-climate-related company-wide risks identified by each department and group company in a unified manner. The Sustainability Committee reports transition risks, physical risks, and countermeasures to the Internal Control Committee, which then reports to the Board of Directors.

Metrics and Targets

CDP Score: “B” rating for climate change in 2025

CDP is a UK charity-controlled non-governmental organization (NGO) that operates a global information disclosure system to help investors, companies, nations, regions, and cities manage their own environmental impact.
For the second consecutive fiscal year, we have received a “B” rating for climate change.