Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Resource Recycling
• Limiting Environmentally Hazardous Substances
• Coexisting with Local Communities
• Wellness (Healthy Lifestyles)
• Ensuring the Well-being of Employees
• Reinforcing Group Governance

Environmental Achievements

• Reduced CO2 emissions by 6.4% over fiscal 2013 (105,000 t-CO2)
• Food recycling rate exceeding 95% government target

Social Achievements

• Launched Women’s Participation and Advancement Promotion Project, resulting in approximately 60% of surveyed employees reporting improved working environments
• Increased percentage of women in managerial positions from 1.5% in fiscal 2018 to 13.9% in fiscal 2021
• Reduced rate of accidents associated with days away from work from 1.72 in fiscal 2018 to 1.23 in fiscal 2020
• Various COVID-19 support activities in Japan and abroad

Governance Achievements

• Reduced number of directors from 20 to 9 in June 2020 to separate supervisory and business execution functions
• Plans to establish a nomination and compensation committee with independent outside directors making up the majority following the June 2022 general shareholders meeting
• Implemented Air Water Group Quality Compliance Guidelines in 2018 to reduce quality compliance risks

Climate Goals & Targets

Environmental Challenges

• Tightening of waste treatment restrictions and increasing treatment costs
• Spread of environmental issues and risks due to the depletion of resources and population increases
• Negative impact on material procurement and production activities due to droughts and worsening water quality
• Increase in costs in line with tightening of chemical substance restrictions
• Tightening of plastic restrictions
• Deterioration of regional economies due to declining populations and urban concentration
• Increase in severity of damage from natural disasters
• Increase in operation and maintenance costs due to aging social infrastructure
• Increase in medical fees in line with extreme population aging and healthy longevity
• Changes in disease patterns, including chronic and complex lifestyle diseases
• Drop in labor productivity and loss of personnel without appropriate measures
• Drop in employee health
• Diversification of employee values in line with globalization of business
• Business continuity risks and unforeseen losses in line with insufficient internal controls
• Loss of social credibility through compliance violations
• Insufficient risk management following M&As and business expansion
• Use of fossil fuels and tightening of CO2 emissions regulations
• Shrinking of current energy markets and decline in demand due to energy conversions
• Negative impact on production activities and logistics functions caused by increasingly severe natural disasters

Mitigation Strategies

• Creation of a local-production local-consumption energy supply system using biomass
• Conversion from petroleum-based energy to low-carbon energy, and provision of related devices
• Provision of decarbonization solutions such as next-generation fuels (hydrogen and liquefied biomethane)
• Provision of collection, refining, and purifying systems for industrial emissions
• Reduction of waste through promotion of recycling and reuse
• Creation of a waste-recycling supply chain
• Provision of waste gas refining equipment, water treatment equipment, and purification and treatment products
• Use of plastic alternatives
• Provision of solutions to minimize risks from natural disasters
• Provision of products and services that contribute to improved sewage systems and other social infrastructure
• Creation of businesses that increase regional employment and revitalize regional economies
• Provision of products and services that contribute to the advancement and remote control of medicine
• Provision of products and services that enable self-medication
• Promotion of ICT-based workstyle reforms and work-life balance
• Promotion of employee career development and diversity management
• Creation of a workplace environment where employees can work with peace of mind and good physical and mental health
• Strengthening of internal control functions through integration and reorganization of subsidiaries
• Thorough compliance and enhanced risk management
• Improvement of stakeholder relations through better transparency

Supply Chain Management

Responsible Procurement

• Air Water Group Sustainable Procurement Policy

Climate-Related Risks & Opportunities

Physical Risks

• Negative impact on production activities and logistics functions caused by increasingly severe natural disasters (high waves, floods, etc.)

Transition Risks

• Use of fossil fuels and tightening of CO2 emissions regulations
• Shrinking of current energy markets and decline in demand due to energy conversions

Opportunities

• Creation of a local-production local-consumption energy supply system using biomass
• Conversion from petroleum-based energy to low-carbon energy, and provision of related devices
• Provision of decarbonization solutions such as next-generation fuels (hydrogen and liquefied biomethane)

Reporting Standards

Frameworks Used: International Integrated Reporting Framework (IIRC), TCFD

Certifications: ISO 14001

Awards & Recognition

• Kurumin certification

Environmental Metrics

ESG Focus Areas

• Climate Change
• Resource Recycling
• Environmental Impact Substances
• Coexistence and co-prosperity with local communities
• Wellness (Healthy living)
• Ensuring the well-being of employees
• Group governance
• Human Rights

Environmental Achievements

• Reduced GHG emissions by 266 thousand t-CO2e in FY2022 compared to FY2021.
• Achieved 80% waste recycling rate in FY2022 (target was 80% for FY2030).
• Reduced water consumption intensity by 8.7% in FY2022 (target was 10% reduction by FY2030).

Social Achievements

• Launched internal recruitment system in FY2023 to expand career choice opportunities for employees.
• Increased percentage of women in managerial positions (5.1% in FY2022, targeting 10% by FY2024).
• Established a specialized department to promote DE&I activities.
• Implemented employee engagement surveys in FY2023.

Governance Achievements

• Expressed support for TCFD and joined the TCFD Consortium in August 2021.
• Gradually expanding disclosure information in line with TCFD recommendations.
• Established the “Hometown Support H Program” providing donation support to Hokkaido municipalities.

Climate Goals & Targets

Environmental Challenges

• Climate change related risks (physical and transition risks)
• Human rights risks in occupational health and safety, foreign technical interns, and suppliers.

Mitigation Strategies

• Scenario analysis to identify climate change risks and opportunities.
• Implementation of GHG reduction measures (energy conservation, greener electricity, fuel conversion).
• Human rights risk assessment and development of mitigation strategies for key issues.

Supply Chain Management

Responsible Procurement

• Air Water Group Sustainable Procurement Policy

Climate-Related Risks & Opportunities

Physical Risks

• Shutdowns by physical damages to facilities and transportation infrastructure

Transition Risks

• Increased costs due to switching fossil fuel-derived products
• Increased costs due to higher renewable energy levy
• Decreased sales of gases with greenhouse and potentially environmentally damaging effects
• Decreased competitiveness and sales of buildings that lack sufficient decarbonization performance
• Increased energy costs due to new carbon tax system
• Increased investment to shift from fossil fuels to alternative fuels

Opportunities

• Increased demand for safety services and infection control products
• Expanded business opportunities in carbon-neutral energy and hydrogen markets
• Increased sales from products using carbon recycling technology

Reporting Standards

Frameworks Used: TCFD

Third-party Assurance: Japan Quality Assurance Organization (JQA)

Sustainable Products & Innovation

• Wood biomass power generation
• V-Satellite
• Hydrogen gas generator “VHR”, Nitrogen gas generator “NSP-Pro”

Environmental Metrics

ESG Focus Areas

• Greenhouse gas emissions
• Water consumption
• Industrial waste emissions
• Workforce diversity
• Safety

Environmental Achievements

• Reduced Greenhouse gas emissions (Scope1+2) from 3,441 t-CO2e in FY2021 to 3,119 t-CO2e in FY2023

Social Achievements

• Increased percentage of women in new graduate hires to 53.8% in FY2023
• Reduced Lost time injury frequency rate (while on duty) from 1.32 in FY2020 to 1.04 in FY2023 (Air Water Inc. only)

Governance Achievements

• Increased percentage of women in managerial positions from 29.3% in FY2021 to 33.9% in FY2023
• Increased percentage of women in supervisory positions from 29.8% in FY2021 to 36.4% in FY2023

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Carbon Neutrality
• Agriculture
• Digital and Semiconductor Related Businesses
• Overseas Expansion
• Human Capital Management
• Community Partnerships
• Diversity
• Environmental Initiatives
• Occupational Health and Safety
• Human Rights
• Sustainable Procurement
• Quality and Assurance

Social Achievements

• Promoting Community Partnerships and Social Contribution Activities
• Diversity Roundtable

Climate Goals & Targets

Supply Chain Management

Responsible Procurement

• Sustainable Procurement

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: International Integrated Reporting Framework (IIRC), Guidance for Collaborative Value Creation 2.0 (METI, Japan)

Environmental Metrics

ESG Focus Areas

• Carbon Neutrality
• Agriculture
• Digital and Semiconductor Related Businesses
• Overseas Expansion
• Human Capital Management
• Community Partnerships
• Social Contribution
• Diversity
• Environmental Initiatives
• Occupational Health and Safety
• Human Rights
• Sustainable Procurement
• Quality and Assurance

Social Achievements

• Promoting Community Partnerships and Social Contribution Activities
• Diversity initiatives

Climate Goals & Targets

Supply Chain Management

Responsible Procurement

• Sustainable Procurement

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: International Integrated Reporting Framework (IIRC), Guidance for Collaborative Value Creation 2.0 (Ministry of Economy, Trade and Industry of Japan)

Environmental Metrics

ESG Focus Areas

• Carbon neutrality
• Agriculture
• Social issues

Environmental Achievements

• Reduced CO2 emissions (specific figures not provided, but mentioned as a goal in business overview and risk management section)
• Worked on "VERPA," a vertical solar power generation system
• Built a bio-methane supply chain

Social Achievements

• Restructured its agriculture production and processing business structure in Hokkaido
• Formed capital and business alliances among the industry's four major companies to strengthen the platform for distribution and processing of fruit and vegetables

Governance Achievements

• Established “Security Export Control Regulations” and “Security Transaction Control Standards”, providing guidance and advice on export control and other matters within the Group
• Built a cross-Group risk management system leveraging know-how and insights gained from overseas M&A, including strengthening our system for checking business partners and end users through the implementation of KYC (compliance tools)

Climate Goals & Targets

Environmental Challenges

• Global business risks (differences in language, legal systems, tax systems, political, social, and economic security risks)
• Natural disaster risk (interruption of lifelines, reduction or stoppage of production capability, reduction in sales)
• Quality risks (product defects, recalls, product liability damages)
• Institutional change risks (revisions of medical service fees or drug prices)
• Procurement risks (rising power costs, scarce natural resources, changes in supply and demand)
• Foreign exchange risk (fluctuations in exchange rates)
• Accident risk (serious accidents in logistics business)
• Environmental risks (strengthened environmental laws and regulations, carbon taxes)
• Infectious disease risk (new waves of infections)
• Non-financial asset impairment risk
• Information security risk (cyber-attacks, unauthorized access)

Mitigation Strategies

• Research and information gathering on political/economic/social situations, establishment of security regulations and standards, cross-group risk management system, KYC implementation
• Stable supply infrastructure network, disaster prevention drills, bolstering disaster supplies, spreading farming of vegetables
• Strengthening quality compliance, quality compliance guidelines, quality risk surveys, quality compliance audits, comprehensive liability insurance
• Developing and improving products/services to support higher work efficiency for medical institutions
• Revising sales prices, increasing stockpiles, securing alternative sources, preparing for alternative fuels, developing new procurement routes
• Exchange contracts, diversification of procurement routes, unification of transaction currencies
• Strict safety management and traffic safety management regulations, thorough operation management and safety education
• Reduction target for total greenhouse gas emissions, adopting/upgrading high-efficiency plants, energy-conservation activities
• Cost reduction in all businesses, measures to prevent contagion and ensure safety, careful selection of M&A and capital investments
• Periodic impairment tests, ascertaining and properly handling appraised values
• Reinforcing information security systems, countermeasures to restrict access, detect attacks, and detect malware intrusion, development of group regulations, security training programs

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: IFRS

Third-party Assurance: KPMG AZSA LLC

Sustainable Products & Innovation

• VERPA (vertical solar power generation system)
• Bio-methane production from livestock excreta