Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental preservation
• Safety in Navigation and Cargo Operations
• Human Resources
• Corporate Governance

Environmental Achievements

• Achieved many milestones set in the “K” LINE Environmental Vision 2050 (adopted in 2015) well ahead of schedule.
• Lowered CO2 emissions by approximately 2% from 2018, bringing the total reduction from 2011 to 17.28%.
• Revised Environmental Vision 2050 with a new target to improve CO2 emission efficiency in 2030 by 50% compared to 2008, exceeding the international target set by the International Maritime Organization for a 40% from 2008.
• Building LNG-fueled ships that vastly reduce greenhouse gas emissions
• Introducing an automated kite system for wind-assisted propulsion
• Cooperating to conduct demonstration tests for hydrogen-fueled carriers.

Social Achievements

• Certified as a 2020 Kurumin Childcare Support Company
• Renewed certification as a Business Operator Providing Superior Occupational Accident Prevention for Seafarers
• Established the “K” LINE Maritime Academy in the Philippines

Governance Achievements

• Increased the number of outside directors from three to four (of the 10 directors)
• Selection to the ESG indices
• Reduced cross-shareholdings from 23 companies at the end of March 2015 to just four companies at the end of March 2020.
• Adopted the Unit Supervisory System

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impacting social lifestyles and economic activity, causing a significant slowdown in marine cargo movement and affecting business performance.
• Market deterioration in containerships and dry bulk transportation.
• Stricter environmental regulations and the need to decarbonize.
• Shortage of seafarers with advanced technology skills.

Mitigation Strategies

• Controlling vessel capacity and lowering operating costs by reducing ship speed, decreasing frequency of sailings, and laying up ships.
• Returning charter ships to owners and actively disposing of older vessels.
• Ensuring ample ready liquidity in the form of cash reserves and bank lines of credit.
• Supplementing equity capital by disposing of old ships and selling real estate and other assets.
• Applying AI and digital technology to support safety, environmental, and quality initiatives.
• Strengthening and accelerating existing measures for key issues.
• Expanding and accelerating safety, environmental, and quality initiatives.
• Strengthening technical and sales capabilities.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Serious natural disasters due to climate change

Transition Risks

• Stricter environmental regulations

Opportunities

• Development of energy-efficient products
• Increased value of businesses with good environmental performance
• Creation of new services to meet changes in customer needs

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, ISO 26000, Environmental Reporting Guidelines 2018, The Ministry of the Environment of Japan, Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative Value Creation, The Ministry of Economy, Trade and Industry of Japan

UN Sustainable Development Goals

• Quality education
• Decent work and economic growth

Initiatives such as the “K” LINE Maritime Academy in the Philippines contribute to quality education and decent work.

Sustainable Products & Innovation

• LNG-fueled car carriers
• Kawasaki Integrated Maritime Solutions

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Achieved the highest rating, A, for five consecutive years in CDP 2021 Climate Change A List.
• Improved CO2 emission efficiency by 50% compared with 2008 (beyond the IMO target of 40%).
• Delivered “K” LINE’s first LNG-fueled car carrier, CENTURY HIGHWAY GREEN, in March 2021.
• World’s first CO2 capture plant on a vessel installed on coal carrier CORONA UTILITY in August 2021.

Social Achievements

• Awarded Kurumin 2020 certification, recognizing us as a childcare support company.
• KMDS CO., Ltd., a consolidated subsidiary, achieved Kurumin 2021 certification.
• Established onboard internet environments enabling individuals to contact their families and friends.
• Introduced a Long-Term Evolution (LTE) network on CENTURY HIGHWAY GREEN to improve onboard work efficiency.

Governance Achievements

• Increased the number of outside directors from three to four (40% of all directors) in 2019.
• Appointed a female director in 2020.
• Established the Nomination Advisory Committee and Remuneration Advisory Committee in 2015.
• Introduced the Unit Supervisory System in 2016.

Climate Goals & Targets

Environmental Challenges

• Insufficient efforts to reduce GHG emissions, possibility of 4°C warming scenario and intensification of physical risk.
• Securing maritime technical personnel.
• Maintaining high quality of all vessels operated.
• Preventing accidents, particularly oil spills.

Mitigation Strategies

• Formulated road maps for preparing for the anticipated negative (risks) and positive (opportunities) aspects of both the “below 2°C warming scenario” and the “4°C warming scenario”.
• Dispatching maritime technical personnel to give lectures at various maritime universities and schools.
• Established KL-QUALITY, a set of quality guidelines, for conducting vessel inspections.
• Established the Ship Safety Promotion Committee and Accident Information Management System (AIMS).

Supply Chain Management

Responsible Procurement

• “K” Line Group Companies Purchasing Policy
• “K” Line Group Companies CSR Guidelines for Supply Chain

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters (acute risk): More typhoons and cyclones, Intensifying natural disasters
• Changes in the natural environment (chronic risk): Rising sea levels, Changes in the land environment, Changes in the ocean environment

Transition Risks

• Stricter regulations, such as a carbon tax
• Customer actions to realize low or zero-carbon emissions

Opportunities

• Development of energy-efficient products
• New low-carbon and decarbonized energy supply and transportation

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, GRI standards for sustainability reporting, ISO 26000, The United Nations Global Compact, Environmental Reporting Guidelines 2018, Ministry of the Environment of Japan, Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative Value Creation, Ministry of Economy, Trade and Industry of Japan

Certifications: ISO 14001

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 13 (Climate action)

CSR action plans are aligned with the UN SDGs.

Sustainable Products & Innovation

• LNG-fueled ships
• LPG-fueled ships
• Ships using ammonia and hydrogen fuels
• Seawing automated kite system
• Kawasaki Integrated Maritime Solutions

Awards & Recognition

• CDP 2021 Climate Change A List
• Nikkei SDGs Management Survey 4.0-star rating
• Kurumin certification
• Daiwa Investor Relations Co. Ltd. Excellence Award
• EcoVadis Bronze rating

Environmental Metrics

ESG Focus Areas

• Safety/Ship quality management
• Advancement of environmental technologies
• Digital transformation
• Human resources
• Management base

Environmental Achievements

• Improved CO2 emission efficiency by 50% compared with 2008 (beyond the IMO target of 40%)
• Reduced CO2 emissions by over 20% by harnessing wind power with Seawing
• Achieved a Green 1 (T) rating for Japan’s first climate transition finance transaction
• Selected for the 7th consecutive year on the CDP Climate Change A List

Social Achievements

• Formulated the “K” LINE Group Basic Policy on Human Rights
• Received Kurumin 2022 certification for childcare support
• Recognized for the fourth time in three consecutive years under the Health & Productivity Management Organization Recognition Program
• Increased the number of new graduate hires by approximately double the number from previous years

Governance Achievements

• Increased the independent outside director ratio to one-third
• Revision of the officer remuneration system
• Introduced the Unit Supervisory System

Climate Goals & Targets

Environmental Challenges

• Climate change risks (physical and transition risks)
• Securing LNG for LNG-fueled vessels due to global situation
• Shortage of human resources
• Cybersecurity risks with increased digitalization

Mitigation Strategies

• Formulated road maps for preparing for climate change scenarios
• Participating in LNG bunkering business
• Implementing a plan for high-level training and development to enhance the quality of human resources and increase the number of new graduate hires
• Strengthening cybersecurity measures on ships and on land

Supply Chain Management

Responsible Procurement

• “K” Line Group Companies Purchasing Policy
• “K” Line Group Companies CSR Guidelines for Supply Chain

Climate-Related Risks & Opportunities

Physical Risks

• More typhoons and cyclones
• Intensifying natural disasters
• Rising sea levels
• Changes in the land and ocean environment

Transition Risks

• Stricter regulations (carbon tax)
• Customer actions to realize low or zero-carbon emissions

Opportunities

• Development of energy-efficient products and services
• New energy supply and transportation businesses
• Green ship recycling

Reporting Standards

Frameworks Used: Integrated Reporting Framework, GRI Standards, ISO 26000, UNGC, TCFD

Certifications: ISO 14001

Sustainable Products & Innovation

• Seawing
• Kawasaki Integrated Maritime Solutions
• LNG-fueled vessels
• LPG-fueled vessels
• Ammonia and hydrogen-fueled vessels

Awards & Recognition

• CDP Climate Change A List
• Nikkei SDGs Management Survey 4.0-star rating
• Kurumin certification
• Health & Productivity Management Organization Recognition Program
• DX Certified Business Operator
• Daiwa Investor Relations Co. Ltd. Excellence Award
• EcoVadis Bronze rating

Environmental Metrics

ESG Focus Areas

• Environmental protection rooted in low-carbon/decarbonization
• Safety in navigation
• Recruiting and developing human resources
• Reinforcement of corporate governance
• Promotion and reinforcement of compliance

Environmental Achievements

• Improved CO2 emission efficiency by 42% compared with 2008 levels
• Reduced total CO2 emission volume by 51% compared with 2008 levels
• Installed ballast water treatment systems on 94% of vessels (aiming for 100% by June 2024)
• Achieved zero oil spill accidents

Social Achievements

• Increased the percentage of female employees in managerial positions to 7.4% (aiming for 15% by FY26)
• Maintained zero serious maritime accidents
• Reduced average monthly overtime working hours to 6.8 hours (aiming for within 40 hours)
• Increased the ratio of male employees taking childcare leave to 88.5% (aiming for 20%)
• Achieved 88% stress check examination rate (aiming for 90%)

Governance Achievements

• Increased the number of outside directors to 5 out of 9 (55% of all directors), with 4 being independent
• Revised the Officers’ Remuneration System to further focus on medium- to long-term performance-based remuneration (stock)
• Introduced new KPI for business performance-based remuneration, including a safety factor (serious maritime accidents) as a negative indicator

Climate Goals & Targets

Environmental Challenges

• Climate change posing physical risks (e.g., natural disasters) and transition risks (e.g., stricter regulations, shift to carbon-free society)
• Uncertainty in U.S.-China relations affecting shipbuilding and maintenance
• Geopolitical risks impacting cargo movements and supply chains

Mitigation Strategies

• Implementing scenario analysis based on TCFD recommendations and setting net-zero GHG emissions target by 2050
• Diversifying shipbuilding and maintenance locations, and consulting with experts to minimize risk
• Developing sales structure to proactively respond to customers’ needs and adapting to changes in supply chains
• Utilizing a portfolio strategy to allocate resources to growth-driving businesses

Supply Chain Management

Responsible Procurement

• K Line Group Companies Purchasing Policy
• K Line Group Companies CSR Guidelines for Supply Chain

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters (e.g., typhoons, cyclones)

Transition Risks

• Stricter regulations (e.g., carbon tax)
• Customer actions to realize low or zero-carbon emissions

Opportunities

• Development of energy-efficient products and services
• New energy supply and transportation businesses

Reporting Standards

Frameworks Used: Integrated Reporting Framework, GRI Standards, ISO 26000, UNGC, TCFD

Certifications: ISO 14001

Sustainable Products & Innovation

• Seawing automated kite system
• Kawasaki Integrated Maritime Solutions
• LNG-fueled vessels
• Ammonia-fueled vessels
• Hybrid EV tugboats

Awards & Recognition

• CDP Climate Change A List (8 consecutive years)
• CDP Supplier Engagement Leader (6 consecutive years)
• MSCI ESG Ratings BBB (2023)
• Morningstar Sustainalytics ESG Risk Rating of 20.3 (Medium risk)
• Nikkei Research Inc. 4.0-star rating
• Kurumin certification (3 times)
• Health & Productivity Management Organization Recognition Program (5 times)
• DX Certified Business Operator
• Daiwa Investor Relations Commendation Award (6 consecutive years) and Excellence Award in Sustainability Disclosure (first time)
• EcoVadis Bronze rating (2023)