Climate Change Data

Environmental Metrics

ESG Focus Areas

• Safety
• Human Resources
• Renewable Energy
• Compliance
• Corporate Governance
• Work Style Reform
• Community Engagement
• Environmental Sustainability

Environmental Achievements

• Construction of various renewable energy generation plants, such as wind power and biomass, to contribute to the realization of a carbon-free society.
• Operating 49 solar power plants, with a total generation capacity of over 90MW.
• Received an order for the construction of an ultra-large-scale solar power plant (480MW) in Ukujima, Nagasaki Prefecture.

Social Achievements

• Active recruitment of engineers and technicians, ranked number one in the industry.
• Establishment of Kyudenko Academy for human resource development.
• Introduction of a new personnel evaluation system in FY2019 to encourage employees to take on new challenges.
• Initiatives for childcare support exceeding the standards of the Childcare and Family Care Leave Act.
• Annual community program dedicating contributing activities to the local community.
• Kyudenko Track and Field Team's contributions to the community and sports.

Governance Achievements

• Introduction of the Executive Officer system to separate decision-making and oversight from operations.
• Establishment of the Compliance Committee and Internal Control Committee.
• Establishment of the “Kyudenko Corporate Governance Guidelines”.
• Implementation of measures to prevent recurrence of fraud.

Climate Goals & Targets

Environmental Challenges

• Rapid increase in construction volume exceeding human resource development capacity, leading to overtime work and increased turnover.
• Increased construction quality issues and serious misconduct.
• Difficulties in securing labor due to a fall in the number of workers in the construction industry.
• Declining profit margins due to price competition.
• Impact of COVID-19 on order acquisition and construction.
• Weakening needs for construction of large-scale solar power generation plants due to a decline in purchase prices under the FIT scheme.

Mitigation Strategies

• New Mid-term Management Plan (FY2020-FY2024) focusing on reforms in construction capability, productivity, and governance.
• Strengthening hiring of engineers based on a long-term workforce plan.
• Reviewing technical education to reduce the turnover rate of young engineers.
• Promoting multifunctional workers.
• Promoting rationalization and labor saving through the use of cutting-edge technology and IT.
• Implementing measures to prevent recurrence of fraud.
• Strengthening and thoroughly implementing a governance system based on the Kyudenko Corporate Governance Guidelines.
• Shifting focus to new renewable energy fields (wind power and biomass generation), energy services, and maintenance work for existing solar plants.
• Developing a construction system capable of flexibly responding to construction volume and cutting costs.

Supply Chain Management

Responsible Procurement

• Use of dedicated material purchasing company Q-mast Co., Ltd.

Climate-Related Risks & Opportunities

Opportunities

• Expansion of renewable energy business.

Sustainable Products & Innovation

• Kyudenko EMS (energy management system)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Diversity
• Governance
• Human Rights
• Community Engagement
• Safety

Environmental Achievements

• Endorsed TCFD recommendations and set medium- to long-term goals for reducing greenhouse gas emissions.
• Achieved a reduction in CO2 emissions intensity per sales of completed construction by at least 50% (compared to 2013).

Social Achievements

• Introduced an employee engagement survey.
• Established the Diversity Promotion Office.
• Launched the Women’s Active Participation Promotion Team.
• Implemented initiatives for problem-solving using quality control (QC) techniques.
• Implemented a new personnel evaluation system that recognizes employees taking on new challenges.
• Held a community program, dedicating contributing activities to the local community.

Governance Achievements

• Shifted to a company with Audit and Supervisory Committee.
• Increased the ratio of Outside Directors on the Board of Directors to 50%.
• Established the Sustainability Promotion Committee.
• Established the Compliance Committee.
• Introduced a whistleblowing system.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic impacting project timelines and procurement.
• Soaring material and labor costs.
• Shortage of workers in the construction industry.
• Economic sanctions against Russia impacting material prices and delivery delays.
• Intensification of competition for orders.
• Trend towards ever-larger construction projects impacting profitability.

Mitigation Strategies

• Unified sales activities to secure orders for target projects.
• Implemented profit margin improvement measures focusing on pre-order and post-order processes.
• Implemented front loading and other measures to improve profit margins.
• Promoted price negotiations to reflect rising material and labor costs.
• Proper allocation of construction capability to ensure progress is made in construction.
• Actively recruiting human resources through various methods (mid-career hires, semi-recent graduates, referral recruitment, and re-employment programs).
• Promoting DX initiatives to improve operational efficiency and labor-saving.

Supply Chain Management

Responsible Procurement

• Compliance with laws and regulations, prevention of corruption, elimination of anti-social forces and organizations, and adherence to safety standards are required in construction contracts with subcontractors.

Climate-Related Risks & Opportunities

Physical Risks

• Intensification of extreme weather
• Increase in average temperature

Transition Risks

• Introduction of carbon pricing
• Recycling and other regulations
• Increased replacement cost for low-carbon technologies and products

Opportunities

• Increase in sales and profit due to growing demand for energy creation-related construction and business
• Increase in sales due to growing demand in the energy conservation field
• Increase in sales and profit due to higher demand for construction work related to water reuse
• Promote new businesses utilizing next-generation technologies
• Contribute to rapid recovery from disasters
• Increase in sales due to growing demand for disaster prevention and mitigation measures

Reporting Standards

Frameworks Used: TCFD

Sustainable Products & Innovation

• Kyudenko EMS

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Set medium- to long-term goals for lowering greenhouse gas (GHG) emissions and performed an analysis of the financial impact on their business based on the TCFD recommendations.
• Installed Kyudenko EMS at Ogi City Hall in Saga Prefecture, their first in Japan.
• Currently own 498MW of solar and wind power facilities, anticipating CO2 reductions of 330,000 tons.

Social Achievements

• Established the Workstyle Reform Promotion Office to address personnel shortages and overtime work regulations.
• Launched an employee engagement survey in 2021, expanding to all employees in 2022.
• Established the Women’s Active Participation Promotion Team to improve women's participation and develop women leaders.
• Singapore-based subsidiary APECO received a CARE Award 2023 for its workplace culture initiatives.

Governance Achievements

• Transitioned from a Company with Audit & Supervisory Board to a Company with Audit and Supervisory Committee.
• Adopted the “Executive Officer system” to separate decision-making and oversight from operations.
• Established an “internal control system” to harmonize risk management, efficiency, and legality of operations.

Climate Goals & Targets

Environmental Challenges

• Chronic shortage of personnel in the construction industry.
• Regulations limiting overtime work.
• Rising material and labor costs.
• Price competition among industry peers.
• Securing human resources due to factors such as an aging population with declining birth rates.
• Deteriorating working environment for workers due to frequency of outside work.
• Collapse of power generation facilities affected by natural disasters.
• Declining profitability due to price competition among industry peers.
• Declining profitability due to soaring material prices against the backdrop of higher commodity prices.

Mitigation Strategies

• Implementing the “promotion of price negotiations reflecting rising material and labor costs”.
• Accelerating work style reforms through all-hands-on-deck construction.
• Established the Workstyle Reform Promotion Office.
• Transferring some administrative tasks related to construction work from engineers to clerical staff.
• Promoting multifunctional engineers and technicians.
• Shifting human resources to recurring revenue businesses.
• Aggressively recruiting specialized personnel from external sources.
• Implementing profit margin improvement measures focusing on pre-order and post-order processes.
• Promoting the introduction of third-party models (corporate PPA, leases, etc.), EMS, and storage batteries.
• Establishing KYOCERA GREEN INNOVATION, LLC for renewable energy service business.

Supply Chain Management

Responsible Procurement

• Establish material procurement system in cooperation with Q-mast

Climate-Related Risks & Opportunities

Physical Risks

• Intensification of extreme weather
• Damage to the Company’s solar power generation facilities resulting from a disaster
• Increased costs to address labor shortages and declining productivity resulting from deteriorating work environments at construction sites
• Decrease in electricity sales revenue due to higher temperatures resulting in lower power generation at the company’s solar power generation facilities

Transition Risks

• Introduction of carbon pricing (carbon tax)
• Increased material procurement costs in line with the development of the circular economy
• Increased R&D costs to acquire new technologies

Opportunities

• Increase in sales and profit due to growing demand for energy creation-related construction and business
• Increase in sales due to growing demand in the energy conservation field
• Increase in sales and profit due to higher demand for construction work related to water reuse
• Promote new businesses utilizing next-generation technologies
• Contribute to rapid recovery from disasters
• Increase in sales due to growing demand for disaster prevention and mitigation measures

Reporting Standards

Frameworks Used: TCFD

Sustainable Products & Innovation

• Kyudenko EMS

Awards & Recognition

• CARE Award 2023 (APECO)