Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Renewable Energy
• Recycling
• Bioplastics
• Hydrogen Energy
• Battery Materials
• Bio Healthcare (potential)
• Governance
• Shareholder Return

Environmental Achievements

• Reduced CO2 emissions from 6.8 million tons in 2019 to a target of 5.01 million tons by 2030. Pursuing RE100.

Social Achievements

• Plans to expand Recycle/Bio Plastic products to 1 million tons.
• Increased focus on high-value-added products (target of >50%).

Governance Achievements

• Shareholder return policy: 30% dividend payout ratio (based on separate net income), interim dividend (once a year, semi-annual basis), and a 300 billion won share buyback plan over 3 years.

Climate Goals & Targets

Environmental Challenges

• Weak 1Q22 earnings (380 billion won, significantly below consensus of 1,440 billion won) due to rising naphtha prices and reduced spreads from increased Asian supply.
• Supply chain disruptions and reduced demand due to the COVID-19 pandemic and geopolitical factors (Russia-Ukraine conflict).

Mitigation Strategies

• Aggressive investment in new businesses (hydrogen, battery materials, recycling) to achieve 50 trillion won in revenue by 2030, with 60% from high-value-added/green businesses and 40% from general petrochemical businesses.
• Strategic investments in new specialty business opportunities.

Supply Chain Management

Climate-Related Risks & Opportunities

Opportunities

• Development of hydrogen energy and battery materials businesses.

Sustainable Products & Innovation

• Recycle/Bio Plastic products
• Hydrogen
• Battery materials

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• The report does not explicitly mention ESG-related challenges.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

Climate Goals & Targets

Environmental Challenges

• Systemic risk centered around banks, particularly the risk of contagion among smaller banks due to commercial real estate (CRE) exposure.
• Rising commercial real estate (CRE) vacancy rates, especially in office spaces, leading to decreased profitability and potential loan defaults.
• Increased cap rates (property yield rates) accelerating the decline in CRE prices.
• High concentration of CRE loans in smaller banks (67.2% vs. 32.8% in larger banks), increasing their vulnerability to CRE-related risks.
• Upcoming maturities of CMBS (Commercial Mortgage-Backed Securities) increasing the refinancing challenges for smaller banks.

Mitigation Strategies

• Federal Reserve interventions like the Bank Term Funding Program (BTFP) and other liquidity support measures to alleviate immediate liquidity concerns.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Governance

Governance Achievements

• Increased focus on corporate governance improvements, including strengthening shareholder rights and promoting board diversity.

Climate Goals & Targets

Environmental Challenges

• Low PBR (Price-to-Book Ratio) for many Japanese companies, indicating undervaluation and potential for improvement.
• High proportion of policy-held shares (cross-shareholdings) hindering corporate governance and efficiency.
• Increasing shareholder activism leading some companies to choose delisting.

Mitigation Strategies

• Government initiatives and stock exchange reforms aimed at improving corporate governance and increasing shareholder value.
• Encouraging share buybacks, stock splits, and increased dividend payouts.
• Promoting transparent disclosure and communication with investors.
• Establishment of the JPX Prime 150 index to highlight high-value companies.

Supply Chain Management

Climate-Related Risks & Opportunities