Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Sustainability
• Social Responsibility
• Governance

Environmental Achievements

• Four products received internal certification for environmental friendliness (Heat Recovery (HR) Series, EvaCryo™ vacuum vapor degreaser, vehicular turbocharger, Toyosu Foresia™ green office building)
• CO2 emissions from business activities: 275,000 tons

Social Achievements

• Introduced the Network Leader program to foster the development of female employees.
• Completed the IHI Human Resources Development & Communication Center (I-STEP Shonan) for human resources training.
• Sponsored WFP’s Walk the World, a charity walk to raise awareness of food supply issues.

Governance Achievements

• Established the Appointment Advisory Committee to improve corporate governance.
• Increased the number of outside directors from two to three.
• Established the Compensation Advisory Committee to ensure propriety in director remuneration.

Climate Goals & Targets

Environmental Challenges

• Declining profitability of large-scale offshore structures
• Worsening business performance of some major projects and extraordinary losses on investments in a Brazilian shipbuilding firm.

Mitigation Strategies

• Reinforced risk management framework in offshore structures.
• Implemented measures to minimize the impact of new business risks while maintaining steady growth.
• Strengthened risk management by calibrating response to risks associated with national or regional circumstances.

Supply Chain Management

Supplier Audits: 1,332 companies surveyed in 2013

Responsible Procurement

• IHI Group Basic Procurement Policy (fair and impartial procurement, mutually beneficial partnerships, adherence to compliance and society’s expectations)

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, Global Reporting Initiative (GRI G4), Ministry of the Environment, Japan (Environmental Reporting Guidelines)

Sustainable Products & Innovation

• Heat Recovery (HR) Series
• EvaCryo™ vacuum vapor degreaser
• Vehicular turbocharger
• Toyosu Foresia™ green office building

Environmental Metrics

ESG Focus Areas

• Climate Change
• Human Resources
• Social Sustainability
• Governance

Environmental Achievements

• Launched Nanatsujima Biomass Power Plant, reducing CO2 emissions by approximately 200,000 tons per year compared to conventional fossil fuels.
• IHI Terrasun Solutions expanded energy management services business in North America, installing more than 320 MWh of energy storage.
• Bio-jet fuel manufactured from microalgae received international standards certification (ASTM D7566 Annex 7).

Social Achievements

• Introduced a Group-wide Career Development Program (CDP) to encourage independent career development.
• Initiatives to develop management talent to lead change, including succession planning and job grading.
• Kurumin Certification for supporting child raising and Eruboshi Certification for promoting women's participation.

Governance Achievements

• Strengthened corporate governance by separating management supervision and business execution functions.
• Established IHI Group Code of Action and IHI Group Quality Declaration to ensure uncompromising compliance.
• Implemented Quality & Compliance Training for all directors, officers, and employees.

Climate Goals & Targets

Environmental Challenges

• COVID-19 pandemic significantly impacting Civil Aero Engines Business and Vehicular Turbochargers Business.
• Declining demand for fossil fuel power generation equipment.
• Shrinking market for turbocharged vehicles due to vehicle electrification.

Mitigation Strategies

• Implemented short-term countermeasures, including securing financing, freezing/reducing investments, and reducing costs.
• Reexamining the current medium-term management plan and working on formulating the next plan.
• Accelerating the transformation of the business model with a focus on ESG.

Climate-Related Risks & Opportunities

Physical Risks

• Damaged offices and plants caused by typhoons, floods, or other natural disasters
• Disrupted supply chains caused by frequent severe weather

Transition Risks

• Introduction of carbon taxes
• Stronger industrial waste regulations
• Declining demand for products and services with high CO2 emissions

Opportunities

• Increasing demand for fuel conversion, carbon capture and storage (CCUS)
• Increasing demand for regulated power supplies, storage energy, and Power-to-X
• Increasing demand for turbochargers for electric vehicles

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, GRI Sustainability Reporting Standards

Certifications: Kurumin, Eruboshi, Resilience Certification

Sustainable Products & Innovation

• Nanatsujima Biomass Power Plant
• Energy management services
• Bio-jet fuel from microalgae
• Electric aircraft engines

Awards & Recognition

• S&P/JPX Carbon Efficient Index
• Kurumin Certification
• Eruboshi Certification
• Health & Productivity Companies 2020 (White 500)
• Resilience Certification
• PRIDE Index Gold Award 2019

Environmental Metrics

ESG Focus Areas

• Climate change
• Human rights
• Diversity and inclusion
• Securing and maintaining stakeholder trust

Environmental Achievements

• CO2 emissions intensity (t-CO2/100 million yen) in fiscal 2021 was 18.8 t-CO2/100 million yen, achieving our target of 3% reduction from 22.2 t-CO2/100 million yen in fiscal 2018.
• Achieved CO2-free power generation using only liquid ammonia as fuel, reducing greenhouse gas emissions during combustion by over 99%.

Social Achievements

• Increased ratio of female managers (3.9% from 3.4%), and ratio of new female graduate hires (20.2% from 16.5%).
• Increased male employees taking childcare leave (70.8% from 26.5%).
• Launched Yokohama Logistics Laboratory showcasing three-dimensional picking system "SKYPOD".

Governance Achievements

• Established ESG Management Promotion Committee chaired by the CEO.
• Revised policy for determining officer remuneration.
• Improved Board of Directors effectiveness through annual evaluations.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to the COVID-19 pandemic and geopolitical risks.
• Soaring raw material prices.
• Growing interest in climate change issues requiring significant mindset shifts and transformations.
• Insufficient dialogue with stakeholders.

Mitigation Strategies

• Strengthening cost structure and accelerating expansion of life cycle businesses.
• Implementing financial strategies to strengthen earnings foundations.
• Securing investment capital through asset sales and transition bonds.
• Improving cash generation capabilities.
• Increasing communication with investors and NGOs.

Supply Chain Management

Supplier Audits: 173 suppliers in fiscal 2021

Responsible Procurement

• IHI Group Procurement Policy: Fair and impartial procurement, mutually beneficial partnerships, legal compliance, and societal needs.
• CSR procurement considering human rights, labor conditions, occupational safety and health, environment, and information management.

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events causing delays in construction and production.
• Supply chain disruptions due to severe weather.

Transition Risks

• Declining demand for products with high CO2 emissions.
• Rising costs due to carbon taxes and regulations.

Opportunities

• Increasing demand for decarbonization technologies.
• Opportunities for fuel conversion, CCUS, and renewable energy.

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, GRI Sustainability Reporting Standards

Sustainable Products & Innovation

• Ammonia combustion technologies.
• Electric turbochargers for FCVs.
• Methanation technology.
• CO2 conversion technologies.

Awards & Recognition

• Minister of Land, Infrastructure, Transport and Tourism award for maintenance and rehabilitation of First and Second Bosphorus Bridge.

Environmental Metrics

ESG Focus Areas

• Corporate Governance
• ESG Management

Governance Achievements

• Strengthened the decision-making and supervisory functions of the Board of Directors by implementing an Executive Officer system.
• Established the ESG Management Promotion Committee to consider basic policies and specific measures for ESG management.
• Established the Remuneration Advisory Committee and the Nomination Advisory Committee to ensure the suitability and objectivity of officer remuneration and the appropriate appointment of officers.
• Increased the ratio of independent outside directors and audit & supervisory board members.

Climate Goals & Targets

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• climate change
• human rights
• diversity and inclusion
• securing and maintaining stakeholder trust

Environmental Achievements

• Reduced CO2 emissions (Scope 1, 2) by 13% compared to FY2019.
• Achieved the world’s first 100% combustion of liquid ammonia on a gas turbine.
• Commenced large-scale ammonia combustion (20% of heating value) at JERA Hekinan Thermal Power Station.

Social Achievements

• LCB revenue (excluding Aero Engine, Space & Defense) increased by 35% compared to FY2019.
• Launched the 1st STEP Conference for new employees to promote understanding of company policies.
• Introduced a system to support concurrent positions inside IHI and a second job system.

Governance Achievements

• Established the ESG Management Promotion Committee in FY2021.
• Revised basic approach to corporate governance and established basic policies.
• Began evaluation of Board of Directors (every year since FY2015).

Climate Goals & Targets

Environmental Challenges

• Generating operating cash flow.
• Social environment instability.
• Securing human resources and passing on skills.
• Shortage of engineers and operators in infrastructure management.
• Impact from the increasing shift of passenger cars to EVs in the vehicular turbocharger market.

Mitigation Strategies

• Establish a system that will organically tie the businesses together and heighten overall strength of the Group.
• Implement the “Group Management Policies 2023” focusing on four challenges: Realizing a carbon-neutral society, Achieving a global ecosystem resilient to climate change, Building and improving industrial ecosystems, and Economic, national, and energy security.
• Promote the recruiting and developing human capital and the advancement of digital infrastructure.
• Promote preventive maintenance and comprehensive maintenance management.
• Forcefully promote selling price improvement activities as automobile production normalizes globally and aim to sustainably improve profitability by gradually reducing the impact of soaring prices of materials through VA/VE activities, and optimizing fixed costs.

Supply Chain Management

Responsible Procurement

• CSR procurement monitoring for business partners.
• Formulating the IHI Group Code of Conduct for Business Partners.

Climate-Related Risks & Opportunities

Opportunities

• Development of carbon solutions (ammonia combustion, methanation).
• Development of sustainable aviation fuel (SAF).

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, IFRS Foundation, GRI Sustainability Reporting, Global Reporting Initiative

Certifications: Kurumin, Eruboshi

Sustainable Products & Innovation

• Ammonia combustion technology
• Methanation equipment
• Carbon neutral concrete

Awards & Recognition

• S&P/JPX Carbon Efficient Index constituent brand
• FTSE Blossom Japan Sector Relative Index constituent brand
• Health & Productivity Companies 2023 (White 500)
• EcoVadis Silver Medal
• Digital Transformation Stock (DX Stock) Selection 2023
• PRIDE Index 2022 Gold Award
• Resilience Certification

Environmental Metrics

ESG Focus Areas

• Climate Change

Environmental Achievements

• Reduced Scope 1 and Scope 2 GHG emissions in 2022 compared to 2019.

Social Achievements

• Not disclosed

Governance Achievements

• Established an ESG management promotion council chaired by the CEO in 2021, including an environmental committee and a carbon neutral task force.

Climate Goals & Targets

Environmental Challenges

• Significant Scope 3 emissions from the value chain.
• Increasing GHG emissions projected due to business expansion.

Mitigation Strategies

• Implementing energy-saving equipment, renewable energy, and fuel conversion in factories.
• Developing alternative sourcing strategies.
• Actively pursuing new technologies and securing renewable energy sources.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• CSR procurement

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Development of energy-efficient products and services

Reporting Standards

Frameworks Used: Green Bond Principles, Green Loan Principles, Climate Transition Finance Handbook (ICMA), Climate Transition Finance Basic Guidelines (Japanese Government), Green Bond Guidelines (Japanese Government), Green Loan Guidelines (Japanese Government), TCFD

Certifications: Third-party verification for Scope 1 and 2 GHG emissions (2021 and 2022)

Third-party Assurance: Third-party verification for GHG emissions data is planned annually.

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 9 (Industry, innovation, and infrastructure)
• Goal 12 (Responsible consumption and production)
• Goal 13 (Climate action)
• Goal 17 (Partnerships for the goals)

Initiatives contribute to these goals through various projects related to renewable energy, clean technologies, resource efficiency, climate change mitigation, and international collaborations.

Sustainable Products & Innovation

• Lightweight aircraft components, electric aircraft engines, SAF, ammonia value chain, carbon recycling technologies, electric turbochargers, small modular reactors (SMRs).

Awards & Recognition

• Not disclosed