Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Sustainability
• Responsible Procurement
• Supply Chain Management
• Occupational Health & Safety
• Chemical & Product Safety

Environmental Achievements

• Decreased energy use and CO2 emissions (Scope 1 and 2) in FY2020 due to production adjustment and telecommuting in response to COVID-19 (Note: per unit emissions increased).
• 100% waste recycling rate achieved in some years (though not in FY2020 due to asbestos-containing waste and bricks from demolition).
• No environmental fines or penalties in FY2020.

Social Achievements

• Improved supplier scores through discussions and improvement requests for those below 70 points in CSR procurement survey.
• Provided support to partner companies overseas for health and safety activities and deepened communications for problem-solving.
• Implemented Responsible Care (RC) activities since FY2010, encompassing environmental, occupational health & safety, and chemical & product safety.

Governance Achievements

• Established ESG Committee chaired by the Representative Executive Officer & Co-President, reporting to the Board of Directors at least four times a year.
• Identified climate-related risks and opportunities critical to the Group's strategies and assessed their financial impact.
• Supports TCFD recommendations.

Climate Goals & Targets

Environmental Challenges

• Increased operating energy costs and additional costs related to capital investment and technology development for decarbonization due to potential global warming tax increases.
• Risk of sales decline due to damage on plants and production suspension from increased severity and frequency of floods and other extreme weather events.
• Supply chain disruptions due to various factors (e.g., COVID-19, typhoons, earthquakes).

Mitigation Strategies

• Considering sourcing of renewable energy to mitigate carbon tax risks.
• Formulating business plans in line with group-wide targets and action plans, including water management policies on a global basis and risk identification using AQUEDUCT.
• Purchasing raw materials from at least two suppliers to reduce the risk of supply disruption.
• Monitoring significant risk factors using a simultaneous inquiry system.

Supply Chain Management

Supplier Audits: 90% of purchases covered in CSR procurement survey (2020)

Responsible Procurement

• Procurement guidelines based on a policy clarifying items suppliers and Group members must observe.
• Prioritization of quality, cost, delivery (QCD) and ESG issues.

Climate-Related Risks & Opportunities

Physical Risks

• Floods and other extreme weather events

Transition Risks

• Increased carbon taxes
• Regulatory changes

Opportunities

• Expanding sales of products that improve ship fuel efficiency, reduce CO2 emissions at automobile manufacturing plants, and mitigate the rise of road surface temperature.

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 14001 (seven operating companies in Japan and all subsidiaries)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Products that improve ship fuel efficiency, reduce CO2 emissions at automobile manufacturing plants, and mitigate the rise of road surface temperature.

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Climate Change
• Resources and Environment (waste and water)
• Safe People and Operations

Environmental Achievements

• 8% reduction in Scope 1 and 2 greenhouse gas emissions
• 14% reduction in energy consumption
• 4% reduction in water withdrawal
• 5% reduction in energy consumption intensity
• 5% reduction in CO2 emissions intensity (Scope 1 and 2)
• 80% of waste solvent reused at DuluxGroup Rocklea manufacturing site

Social Achievements

• 10% reduction in lost workday case injuries
• Implementation of Dulux Trade Australia’s “Fit for Life” program using wearable technology to analyze manual handling stresses

Governance Achievements

• Established global policies on waste and effective use of resources, prevention of environmental pollution, and effective use of water
• Established a global policy on occupational safety and health

Climate Goals & Targets

Environmental Challenges

• Increased waste generation (6%) due to increased production volume and improved data capture
• Three fatalities (one employee, two contractors) in NIPSEA Group
• Increased energy costs due to potential global warming taxes
• Risk of sales decline due to extreme weather events damaging plants
• Carbon taxes impacting operating costs
• Manual handling as a significant non-fatal injury risk at DuluxGroup

Mitigation Strategies

• Working more closely together via a newly established working group to identify top risks and opportunities
• Considering sourcing of renewable energy to mitigate carbon tax impact
• Developing products that contribute to reducing CO2 emissions
• Implementing energy saving measures (e.g., switching from heavy oil to LNG)
• Investing in treatment facilities to improve recycling and reuse of VOCs
• Introducing hybrid fleet vehicles at DuluxGroup
• Implementing corrective actions and evaluating them for workplace safety at Dunn-Edwards
• Investing in pneumatically operated hook lifts at tinting stations at DuluxGroup
• Developing non-burn technology through electrolysis to reduce VOC volatilization

Supply Chain Management

Supplier Audits: Annual basis for NIPSEA Group

Responsible Procurement

• Supplier Code of Conduct for NIPSEA Group

Climate-Related Risks & Opportunities

Physical Risks

• Floods and other extreme weather events

Transition Risks

• Higher energy costs due to carbon taxes
• Increased costs for decarbonization

Opportunities

• Expanding sales of products that reduce CO2 emissions (e.g., ATTSU-9 ROAD®)

Reporting Standards

Frameworks Used: TCFD

Sustainable Products & Innovation

• ATTSU-9 ROAD®, water-based and solvent-free paint products, powder paint

Environmental Metrics

ESG Focus Areas

• Climate Change
• Resources and Environment (waste and water)
• Safe People and Operations
• Diversity & Inclusion
• Sustainable Procurement

Environmental Achievements

• Dulux business achieved 50% recycled content in packaging for the envirO 2™ range in 2022.
• Commenced purchase of renewable power in Japan Group.
• Solar installations at 8 factories in China (NIPSEA Group) with 13 more planned in 2023.
• Cromology commenced 100% renewable power purchase in all European countries.
• JUB commenced large solar installation at Serbia plant (planned completion in 2023).

Social Achievements

• No fatalities across the group in 2022 (improvement from prior year).
• Recordable case rate for employees and contractors decreased 1% to 0.90 recordable injuries and illnesses per 200,000 hours worked.
• NIPSEA Group clocked a total of 1,626,370 hours on employee training in FY2022.
• Increased female representation at all levels of DuluxGroup, particularly in leadership.
• Launched DEI Training and phase 2 of DEI curriculum for all employees at Dunn-Edwards.

Governance Achievements

• Established the Procurement Guidelines aligned with the Supplier Code of Conduct 2022.
• Developed Supplier Sustainability Questionnaire; more than 166 suppliers responded (representing about 22% of Nippon Paint’s total procurement value).
• Global Code of Conduct established in January 2022, articulating focus on diversity and respect for human rights.

Climate Goals & Targets

Environmental Challenges

• Increased greenhouse gas emissions (Scope 1 and 2) and total energy consumption due to acquisitions and production issues.
• Increased waste generated, waste recovered, water withdrawn, and water consumed due to acquisitions and a major flooding event.
• High-consequence disaster and fatality risks associated with operating plants.

Mitigation Strategies

• Established Environment and Safety working group to benchmark, share best practices, and agree on common metrics.
• Developed action plans to achieve 2030 targets for greenhouse gas emissions reduction and renewable electricity consumption (DuluxGroup Pacific).
• Implementation of site energy efficiency improvements, solar installations, renewable power purchase, and electric vehicle fleet adoption (DuluxGroup Pacific).
• Waste-water recycling, rainwater recovery, and polymer recovery from waste water implemented at Betek Boya.
• Thermal oxidizer implemented at China Jinshan to treat VOC emissions.

Supply Chain Management

Responsible Procurement

• Supplier Code of Conduct 2022
• Supplier Sustainability Questionnaire

Climate-Related Risks & Opportunities

Physical Risks

• Increased extreme weather events (e.g., floods) impacting operations and supply chain

Transition Risks

• Regulatory changes and impacts, such as carbon pricing and greenhouse gas emission reduction targets
• Increased supplier costs from climate adaptation and decarbonization actions
• Changes in customer and consumer expectations and behavior during the transition to a low-carbon future

Opportunities

• Market growth for sustainable products
• Development of new products and services to capture climate-related business opportunities

Reporting Standards

Frameworks Used: TCFD

Certifications: Global GreenTag™

Sustainable Products & Innovation

• Dulux envirO 2™
• Decorative films for photovoltaic modules
• High adhesion primer for pouch-type LIB package

Environmental Metrics

ESG Focus Areas

• Climate Change
• Water
• Biodiversity

Environmental Achievements

• Reduced Scope 1 and 2 emissions by 9.3% due to renewable energy consumption and other emissions reduction activities.
• Achieved 14% renewable energy share in domestic electricity consumption.

Social Achievements

• Launched initiatives to improve water, sanitation, and hygiene (WASH) services for all employees, achieving 100% coverage.

Governance Achievements

• Established five Global Teams focused on material ESG issues, reporting directly to the Co-Presidents and the Board of Directors.
• Publicly available board diversity and inclusion policy.

Climate Goals & Targets

Environmental Challenges

• Increased energy costs due to carbon pricing mechanisms in Japan.
• Risk of fines and penalties due to potential water pollution incidents at the Tochigi Plant.
• Risk of decreased revenues due to reduced production capacity from extreme weather events affecting facilities and suppliers.

Mitigation Strategies

• Implementing energy conservation measures, switching to low-carbon fuels, and procuring renewable energy.
• Investing in equipment upgrades and flood prevention measures at the Tochigi Plant.
• Increasing supplier diversification and encouraging customers to increase inventory levels.

Supply Chain Management

Supplier Audits: Questionnaire surveys to 100 major suppliers in 2023, expanding to 450 in 2024.

Responsible Procurement

• Supplier self-assessments on environmental initiatives.
• Prioritizing engagement with top 30 raw material suppliers based on CO2 emissions.

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Typhoons
• Torrential rain

Transition Risks

• Carbon pricing mechanisms
• Increased cost of raw materials

Opportunities

• Increased demand for low-carbon products (e.g., fuel-efficient ship-bottom paint).

Reporting Standards

Frameworks Used: TCFD, Greenhouse Gas Protocol

Certifications: ISO 14001

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 6 (Clean Water and Sanitation)
• Goal 13 (Climate Action)

Initiatives contribute to these goals through emissions reduction, renewable energy procurement, water efficiency improvements, and responsible wastewater management.

Sustainable Products & Innovation

• Fuel-efficient ship-bottom paints (LF-Sea, A-LF-Sea)
• Low-VOC paints (FASTAR)
• Water-based paints
• Powder paints
• Thermal barrier paints

Awards & Recognition

• Minister of the Environment’s 2019 Commendation for Global Warming Prevention Activity
• 2020 Kinka Chemical Society (KCS) Award in Environmental Technology
• GREEN4SEA TECHNOLOGY AWARD