Sustainability / Environmental ReportInformation Disclosure in Line with TCFD Recommendations

  1. Basic Approach
  2. Governance
  3. Strategy
  4. Risk Management
  5. Metrics and Targets

Basic Approach

The Daicel Group endorsed the TCFD* recommendations in November 2021. In accordance with the recommendations, the Group will continue to disclose information on each item related to climate change for governance, strategy, risk management, and metrics and targets.

*Task Force on Climate-related Financial Disclosures

Participating Initiatives and External Evaluations

Governance

Our response to climate change is discussed at the management level. At the Sustainable Management Committee held three times in FY2025/3, discussions mainly focused on responses to climate change, including the implementation of the “Certification System for the Contribution to Build a Circular Society" (System name: CycloVia), initiatives to reduce GHG emissions, and the implementation of an internal carbon pricing system, with the details reported at the Board of Directors.

Sustainability Management

Strategy

In order to examine strategies and organizational resilience in light of climate-related risks and opportunities, the Daicel Group conducted a scenario analysis using the following procedures with reference to climate change scenarios from the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC) and considered the impact as of 2030.

● Implementation procedures for scenario analyses

Scenario analyses follow the procedures listed below.

Implementation procedures for scenario analyses Scenario analyses follow the procedures listed below

● Scenario analysis conditions and overview

  1. ①Scenario analysis scope

    The following businesses were evaluated as the Group's main business areas.

    • Engineering Plastics Business (Polyplastics)
    • Acetyl Business centered on cellulose acetate (Material SBUs)
    • Safety Business (Safety SBU)
  2. ②Time frame

    We examined transition risks, physical risks, and transition opportunities in 2030.

  3. ③Assumed scenarios

    Based on information from the IPCC, IEA, and other sources, we examined the risks and opportunities of two scenarios: one in which decarbonization progresses (1.5°C/2°C scenario) and the other in which decarbonization does not progress (4°C scenario).
    As the temperature increase in 2030 in both the 4°C scenario and the 1.5°C/2°C scenario is around 1.5°C and not significantly different from one another, the physical risk in 2030 is assumed to be similar in both the 1.5°C scenario (in part, below 2°C scenario) and the 4°C scenario. Therefore, no distinction is made for each of the two scenarios in terms of physical risk, and the same situation is predicted for 2030.

Scenario overview

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1.5℃/2℃ 4℃
Societal changes
  • In order to limit the increase in average temperature to less than 1.5/2°C by the end of this century, bold legislation and technological innovation will be promoted.
  • Efforts are being made to realize a decarbonized society around the world, and environmental performance (low environmental impact) is a value provided to customers on a par with QCD.
  • In the chemical industry, companies and businesses that cannot adapt to a decarbonized society will be weeded out, and procurement risks for raw materials and fuels will increase as consolidation progresses.
  • Public scrutiny of non-compliance with environmental policies will increase (a condition for stopping transactions from customers).
  • An increasing proportion of renewable energy will destabilize the power supply.
  • There is a gap between regions where bold legislation is prompt, mainly in Europe, and regions where the emphasis is on economic growth and the introduction of strict regulations is slow, especially in emerging countries. This gap results in a lack of progress in GHG reduction.
  • Customers evaluating environmental performance (low environmental impact) are limited.
  • In the fossil fuel and chemical industries, there is no active investment, and procurement risks for raw materials and fuels will increase as consolidation of companies and businesses in such industries progresses due to the aging facilities.
  • Public scrutiny of non-compliance with environmental policies will increase (a condition for stopping transaction from some customers).
  • An increasing proportion of renewable energy will destabilize the power supply in some regions.
Technological innovation
  • Technologies related to CCU* and resource recycling (circular economy) have been actively developed and put into practical use in 2030.
  • Investment in energy-saving and CO2-saving technologies is becoming more active, and the acquisition of these technologies is directly linked to cost competitiveness.
  • Rising energy prices will increase investment in energy-saving technologies, and the availability of technology acquisition is directly linked to cost competitiveness.
Climate change
  • The scale of disasters such as typhoons and floods will increase.
  • Extreme weather, such as high temperatures, is progressing.
  • The scale of disasters such as typhoons and floods will increase.
  • Extreme weather, such as high temperatures, is progressing.

*Carbon dioxide Capture and Utilization

● Scenario Analysis Results -Risks and Opportunities-

The following table shows the risks and opportunities related to climate change in the analyzed businesses, their degree of impact, and proposed countermeasures.

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Risks/
Opportunities		 Category Details Overall Engineering Plastics
(Polyplastics)		 Acetyl Chain Safety Response
4℃ 1.5/2℃ 4℃ 1.5/2℃ 4℃ 1.5/2℃ 4℃ 1.5/2℃
Transition Risks Policies and Regulations Increased operating costs due to the introduction and strengthening of carbon pricing (taxes) ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Promote activities to achieve the GHG emissions reduction target (50% reduction in total compared to FY2019/3)
Quantify risks associated with ICP implementation
By introducing and strengthening carbon pricing (taxes), the increased costs to upstream business partners are passed on, resulting in higher procurement costs ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● Reduce the impact by promoting the reduction of GHG emission intensity in cooperation with suppliers
Switch to low-GHG raw materials
Strengthening of GHG emissions regulations based on carbon emission targets and policies of each country, including EU Carbon Border Adjustment Measure ● ● ● ● ● ● - ● Promote activities to achieve the GHG emissions reduction target (50% reduction in total compared to FY2019/3)
Switch to energy-saving, low-GHG raw materials, and change suppliers
Market Price fluctuations of petrochemical-derived raw materials to realize a low-carbon society ● ● ● ● ● ● ● ● ● ● Optimize inventory management
Promotion of multiple purchases, simplification of raw materials through formulations, and standardization of quality through improvement of manufacturing technology
Technology Increase in equipment investment costs for energy saving and productivity improvement ● ● ● ● ● ● - Resolve risks by accelerating the development of technology and know-how for formulation design and technical services
Reputation Identification of and response to risks and opportunities related to climate change, and increasing demand for disclosure of environmental management information ● ● - - Reinforce systems and structures related to environmental measures
Continue disclosing information related to the environment in accordance with the changing needs of society
Physical Risks Chronic/
Acute		 Intensification of disasters due to abnormal weather conditions (heavy rain, floods, and typhoons), resulting in suspension of operations and damage to raw materials and products
Supply chain disruptions		 ● ● ● ● Strengthen BCP for climate change
Chronic Worsening working conditions and the spread of infectious diseases due to the rise in average temperature - - - - Continue making work environment improvements
Transition Opportunities Market Expansion of new markets for environment-friendly products
(Biodegradable plastics, EVs, renewable energy, recycling, and water resource conservation)		 ● ● ● ● ● ● ● ● ● ● Develop recycling business (re-compounding business)
Develop low-GHG products (utilization of CCU technology, and development of bio-based products)
Functionalize cellulose acetate, develop new fine cellulose, and commercialize BIC*1 projects
Develop market for EV current interrupters
Operate CycloVia*2
Resource
Efficiency		 Reduction of operating costs through energy saving and productivity improvements ● ● ● ● ● ● ● ● ● ● Adopt DAICEL Production Innovation and the Autonomous Production System
Other Reduction Activities*3 ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●

(Impact) ● ● ●：Over 10 billion yen, ● ●：Several billion yen, ●：Less than 1 billion yen, -: Almost no impact

  1. *1Biomass Innovation Center: The research division of our company aiming to convert biomass resources into raw materials.
  2. *2CycloVia: Name of our in-house certification system, the “Certification System for the Contribution to Build a Circular Society.”
  3. *3Other reduction activities: Investment for a 50% reduction in GHG emissions (Scope 1, 2), reducing the impact of carbon pricing due to GHG emission reductions, transitioning to low-GHG raw materials, overall reduction activities in the supply chain, etc.

Scenario Analysis Results［PDF：22KB］

Risk Management

The Daicel Group regards climate change as a major risk in sustainable management, and we conduct risk assessments, formulate responses, and confirm implementation status as part of the Group's risk management system. The Sustainable Management Committee conducts detailed examinations for key issues.

Risk Management

Metrics and Targets

The Group has listed “Respond to climate change,” “Provide environment-friendly materials and technology,” and “Contribute to the development of a circular society” as three of its 15 key sustainability issues (materiality), and has set KPIs for each. For “Respond to climate change” we will further develop energy-saving measures to achieve GHG emission reduction targets and carbon neutrality by 2050. In addition, in January 2025, we launched an in-house certification system, the “Certification System for the Contribution to Build a Circular Society” (System name: CycloVia). In April 2025, we also implemented an internal carbon pricing system. We will build a new structure by utilizing these systems as indicators of risks and opportunities.

Materiality Metric Target Results
(FY2025/3)		 Note
Respond to climate change GHG emission reduction rate of our Group*1 Scope 1 and 2
FY2031/3: 50% reduction (compared to FY2019/3)		 0.5% reduction
  • *1Achieve carbon neutrality by 2050 (Scope 1, 2, and 3)
Provide environment-friendly materials and technology Rate of recyclable raw materials*2 used in products FY2031/3: 30% or more 16.5%
  • *2Biomass raw materials, use of atmospheric CO2, reuse of waste, and recycling
    The targets are the main resin materials for Daicel, Polyplastics and Daicel Miraizu
Contribute to the development of a circular society Number of external proposals for resource recycling systems using natural materials FY2026/3: 3 cases 1 case

Materiality

The Group's Sustainable Management Policy includes the development of circular processes that coexist with the global environment. We will continue to discuss products and services that contribute to a low carbon economy and consider setting better metrics and targets.