Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• CO2 emissions down 2%, thanks to improvement activities. (Expect to achieve 5% reduction in fiscal 2016)
• Total waste on a unit basis decreased 6% over the previous fiscal year, and the final disposal ratio was below 1%, maintaining zero emission status.
• Major VOCs decreased 23% on a unit basis, but dichloromethane emissions were up 13% and the amount of heavy metals handled jumped 47%.
• Activities were undertaken a total of five times in Hyogo Prefecture, Miyagi Prefecture, and Kochi Prefecture.
• The amount of water used was down 8% from the previous fiscal year on a unit basis, while the amount of wastewater increased 19%.

Social Achievements

• Implemented an initiative targeting the global human rights and labor issues of child labor and forced labor to confirm that no company under the Group umbrella is involved in such practices and to declare that none will ever employ such practices.
• All Group companies, including those overseas, prepared CSR Procurement Guidelines, which cover respect for human rights, and called on business partners to work as a team to uphold these guidelines.
• Kawasaki was selected for the Health & Productivity Stock Selection in 2015.
• Kawasaki was selected for Nadeshiko Brand as one of 40 companies among TSE-listed about 1,800 major companies in 2015.

Governance Achievements

• Introduced an outside director system in 2013 to strengthen the management supervision structure and elicit constructive advice on management activities.
• With the approval of shareholders at the recent general meeting of shareholders, an additional outside director was appointed to the Board of Directors, bringing the number of outside directors to two.
• Using the introduction of the Corporate Governance Code as an opportunity to enhance governance practices, we are actively conducting discussions at the management level and are pursuing specific actions to fortify the governance structure, including the establishment of a compensation advisory committee and a nomination advisory committee.

Climate Goals & Targets

Environmental Challenges

• Severe conditions in the shipping industry, the shipbuilding market has not fully recovered.
• Decline in overseas sales to customers in North America.
• Intensifying competition in emerging countries and an increase in fixed costs.

Mitigation Strategies

• Reinforce the superiority of our technologies in LNG and LPG carriers and submarines, and fulfill our role as a center for advanced technology, specializing in energy saving, environmental load reduction, and other areas.
• Increase production of component parts for the Boeing 787 and promote the development of derivative models.
• Improve the efficiency of global supply chain management.

Supply Chain Management

Responsible Procurement

• CSR Procurement Guidelines

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI G4

Sustainable Products & Innovation

• Kawasaki Green Products

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Achieved an energy cost reduction of 7.1% in fiscal 2017 through energy-saving activities.
• Added 10 products to the Kawasaki-brand Green Products registration program, bringing the total to 41.
• Large LNG carrier achieved the world’s lowest real BOR of 0.05%/d.

Social Achievements

• About 30% of college-graduate administrative hires are women.
• Opened a nursery at Kawasaki Motors Enterprise (Thailand) Co., Ltd.
• Established Kawasaki Heartfelt Service Co., Ltd. to promote the active employment of people with disabilities.

Governance Achievements

• Appointed two new outside corporate auditors, resulting in a majority of corporate auditors being from outside the company.
• Strengthened risk management through all stages, from before order acceptance to after completion.
• Constantly review the corporate governance system based on the gist of the Corporate Governance Code and the Stewardship Code.

Climate Goals & Targets

Environmental Challenges

• Tough business environment and sizable losses for Ship & Offshore Structure.
• Huge project losses.
• Increasingly fierce competition with China and South Korea in shipbuilding.
• Prolonged slump in shipping market.
• Intensifying price wars in emerging markets for motorcycles.
• Tougher environmental regulations.

Mitigation Strategies

• Restructuring committee set up to fundamentally revise Ship & Offshore Structure’s structure.
• Strengthening risk management through visualization of risk amount, quick identification of status changes, and sharing of insights.
• Segment restructuring measures to achieve before-tax ROIC of at least 8% by fiscal 2021.
• Deepen demand-chain reforms, deepen reforms to enhance competitive edge of products, deepen supply chain reforms and promote change in overall management system.
• Establish stronger financial platform.

Supply Chain Management

Supplier Audits: Questionnaire-based survey with about 1,400 domestic business partners in fiscal 2017.

Responsible Procurement

• Basic Policies for Material Procurement: Fair and impartial procurement, relationships with business partners, compliance, consideration for human rights, labor and occupational safety and health, harmony with the global environment.

Climate-Related Risks & Opportunities

Opportunities

• Demand for vessels with low environmental load due to tougher environmental regulations.
• Recovery in carrier demand, owing to growing demand for LNG.
• Greater automation, using IoT and AI.

Reporting Standards

Frameworks Used: GRI G4, IIRC International Integrated Reporting Framework, Ministry of the Environment Environmental Reporting Guidelines (2012 Edition)

Certifications: ISO 14001

Sustainable Products & Innovation

• Kawasaki Green Products
• Large LNG carrier with world’s lowest real BOR
• Motorcycles with AI technologies
• High-pressure hydrogen trailer
• Liquefied hydrogen container
• Gas turbine using a mixed hydrogen combustion system

Awards & Recognition

• Kurumin Mark (2010)

Environmental Metrics

ESG Focus Areas

• Low-carbon society (product-based contributions)
• Low-carbon society (business activities)
• Human rights
• Providing safe and secure, clean, comfortable movement of people and transportation of goods by land, sea and air
• Creating clean energy
• Improving social infrastructure, especially in emerging countries
• Responding to needs of aging society and shortage of labor through automation

Environmental Achievements

• CO2 emission reduction through product-based contributions: about 22.9 million tons
• Reduction of CO2 emissions through energy-saving activities: about 15,000 tons

Social Achievements

• Established the Compliance Reporting and Consultation System (whistle-blower system)
• Introduced K-Win (Kawasaki Workstyle Innovation) Activities to promote workstyle reform
• Kawasaki Heartfelt Service Co., Ltd. obtained the Certifi cation of Outstanding Organization for Employment of People with Disabilities

Governance Achievements

• Welcomed two new outside directors—Yoshiaki Tamura and Jenifer Rogers
• Increased the number of outside directors from two to three
• Established the Project Risk Management Committee

Climate Goals & Targets

Environmental Challenges

• Manufacturing defects in series N700 Shinkansen bogie frames
• Loss on major project in Ship & Offshore Structure segment due to sluggish natural resource development market
• Worsening profitability on a local train contract in Rolling Stock segment
• Potential huge losses in Rolling Stock segment and unavoidable losses on engine business in Aerospace Systems segment

Mitigation Strategies

• Established the Companywide Quality Control Committee to uncover the root cause of defects and explore corrective measures
• Established the Project Risk Management Committee to prevent huge project losses and ensure seamless risk management
• Established the Rolling Stock Business Restructuring Committee to achieve drastic reinforcement in project management
• Business restructuring in Ship & Offshore Structure segment
• Focusing on business restructuring and improving the organizational structure in Rolling Stock segment

Supply Chain Management

Responsible Procurement

• Basic Policies for Material Procurement: Fair and Impartial Procurement, Relationships with Business Partners, Compliance, Consideration for Human Rights, Labor and Occupational Safety and Health, Harmony with the Global Environment Through Green Procurement

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI, IIRC, Ministry of the Environment Environmental Reporting Guidelines (2012 Edition)

UN Sustainable Development Goals

• Goal 7
• Goal 9
• Goal 11
• Goal 13

Kawasaki's business activities contribute to these goals through providing safe and secure transportation, creating clean energy, improving social infrastructure, and responding to the needs of an aging society.

Sustainable Products & Innovation

• Green Gas Engine
• CCK System
• Successor robot system
• Autonomous underwater vehicles (AUVs)
• efWING bogie

Awards & Recognition

• 2018 Health and Productivity Management Outstanding Organizations (White 500)

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced CO2 emissions per unit of net sales by 22.6% from the fiscal 2013 level in fiscal 2021
• Achieved a landfill disposal rate of 0.2% in fiscal 2021 (target achieved)
• Reduced CO2 emissions by 17,390 kt-CO2 through environmentally friendly products

Social Achievements

• 83% of employees (Kawasaki Heavy Industries, Kawasaki Motors, Kawasaki Railcar Manufacturing) answered "I want to continue working at the Kawasaki Group" on the Employment Engagement Survey
• Implemented human rights training for 13,245 employees
• Opened an on-site nursery at Kawasaki Motors Enterprise (Thailand) Co., Ltd.

Governance Achievements

• Established the Kawasaki Group Policy on Sustainability Management
• Revised materiality to reflect Group Vision 2030
• Strengthened corporate governance systems

Climate Goals & Targets

Environmental Challenges

• Climate change risks (major changes in energy composition, tightening of regulations related to CO2 emissions, increase in raw material costs, customer demands for improved product performance)
• Quality control and quality assurance risks
• Cyber security risks

Mitigation Strategies

• Conducting scenario analyses using the TCFD framework
• Implementing measures to mitigate climate change risks in the medium to long term
• Promoting the development of products with a low environmental load
• Strengthening internal control systems and risk management structures
• Drafting a global security policy conforming with the NIST cyber security framework

Supply Chain Management

Supplier Audits: 395 major suppliers responded to a sustainable procurement survey in 2021

Responsible Procurement

• Kawasaki Group CSR Procurement Guidelines

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather

Transition Risks

• Major changes in energy composition
• Tightening of regulations related to CO2 emissions
• Increase in raw material costs
• Customer demands for improved product performance

Opportunities

• Hydrogen-related business
• CCUS business
• Electrification
• Alternative fuels

Reporting Standards

Frameworks Used: GRI Standards, TCFD Recommendations

Certifications: ISO 14001, ISO 45001, ISO 9001, ISO 27001

Third-party Assurance: SGS Japan Inc.

UN Sustainable Development Goals

• Goal 4
• Goal 15
• Goal 17

Kawasaki's initiatives contribute to these goals through education programs, forest conservation, and partnerships.

Sustainable Products & Innovation

• Hydrogen-fueled gas turbine
• Hydrogen-fueled aircraft
• Electric motorcycles
• Products certified under the Kawasaki Ecological Frontiers system

Awards & Recognition

• Gold in the Pride Index 2021
• Outstanding Health & Productivity Management Organization 2022

Environmental Metrics

ESG Focus Areas

• Climate Change
• Supply Chain Sustainability
• Human Rights
• Diversity & Inclusion
• Corporate Governance

Environmental Achievements

• Reduced direct-to-landfill waste to 0.1% of total waste generation.
• Achieved 13,538 MWh of renewable energy consumption in FY2022 (8,955 MWh used in-house).
• CO2 emissions reduction through product-based contributions was about 24.37 million tons in FY2022.

Social Achievements

• Launched K-Win activities to promote workstyle reform and improve work-life balance.
• Implemented human rights due diligence among subsidiaries and suppliers.
• Maintained LTIFR (Lost Time Injury Frequency Rate) below the average for all industries and manufacturing industries in Japan.

Governance Achievements

• Established a Nomination Advisory Committee and a Compensation Advisory Committee.
• Majority of Board of Directors are Outside Directors (7 out of 13).
• Zero cases of serious fraud or scandals in FY2022.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to geopolitical risks and climate change.
• Cybersecurity risks in a digitalized environment.
• Shortage of human resources, particularly in digital transformation-related fields.

Mitigation Strategies

• Developing alternative sourcing strategies and strengthening business continuity plans.
• Implementing a global security policy aligned with the NIST cybersecurity framework.
• Promoting reskilling of employees and fostering diversity and inclusion in human resources.

Supply Chain Management

Supplier Audits: 535 companies surveyed in FY2022 (82% of total procurement expenditures)

Responsible Procurement

• Kawasaki Group Sustainable Procurement Guidelines
• Supplier hotline for reporting compliance violations

Climate-Related Risks & Opportunities

Physical Risks

• Abnormal climate conditions

Transition Risks

• Changes to the external environment, including major changes to the energy composition, tightened regulations on CO2 emissions such as the introduction of carbon taxes, a surge in raw material prices, and greater customer demand for improvements to product performance.

Opportunities

• Development of hydrogen energy technologies and decarbonized products.

Reporting Standards

Frameworks Used: GRI, TCFD, UNGC

Certifications: ISO 14001, ISO 45001, ISO 27001

Third-party Assurance: SGS Japan Inc., KPMG AZSA Sustainability Co., Ltd.

UN Sustainable Development Goals

• Goal 4
• Goal 15
• Goal 17

Initiatives contribute to these goals through education programs, forest conservation, and partnerships.

Sustainable Products & Innovation

• Electric motorcycles
• Hybrid motorcycle
• Hydrogen engine motorcycles (planned)
• Power generation equipment that allows for mixed hydrogen or exclusive hydrogen firing
• Hydrogen aircraft (under development)

Awards & Recognition

• Gold rating in the Pride Index (until 2022)
• Eruboshi certification
• Kurumin Mark
• MONISU Certification
• Outstanding Health & Productivity Management Organization 2023

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Introduced CO2 visualization systems
• Reduced CO2 emissions by approximately 4,000 tons through systematic energy-saving facility investments
• Achieved a landfill disposal rate of 1% or less
• Implemented systematic disposal of PCB waste
• CO emissions reduction through products sold was about 16.30 million tons

Social Achievements

• Increased ratio of employees for whom both "supportive environment" and "employee engagement" are high to 29%
• Increased proportion of women in managerial positions to 2.7%
• Increased rate at which women, foreign nationals, and individuals with mid-career hires are promoted to senior manager or above to 8%
• Increased rate at which male employees take childcare leave to 25%
• Implemented SAQ targeting four overseas subsidiaries (manufacturing sites in developed countries)

Governance Achievements

• Appointed the Company's first female Internal Director to the Board
• Zero cases of serious fraud or scandals
• Improved compliance awareness to 71 points

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to geopolitical risks, rising materials costs, inflation, etc.
• Cybersecurity risks due to increasing sophistication of cyberattacks and digital transformation
• Shortage of human resources and personnel
• Climate change and carbon neutrality
• Natural disasters in Japan

Mitigation Strategies

• Implementing company-wide total quality management (TQM) activities; design and manufacturing process innovation; promotion of production improvement activities; and personnel education
• Developing personnel and organizations with contract-related skills and boosting intellectual property strategies
• Strengthening compliance management for all of the Group's businesses
• Boosting the entire Group's supply chain, ensuring business continuity, and training personnel in the context of security clearance systems
• Developing a global security policy conforming with the NIST cyber security framework, establishing information security regulations, building a technical defense mechanism, and promoting employee education and awareness raising
• Implementing employee re-skilling, diversification of human resources, and new workstyles that actively incorporate robotics and AI
• Promoting hydrogen businesses and rendering existing business environmentally-friendly
• Implementing business continuity and post-disaster relief initiatives

Supply Chain Management

Supplier Audits: 533 companies responded to the sustainable procurement survey in fiscal 2023

Responsible Procurement

• Kawasaki Group Sustainable Procurement Guidelines
• Human rights due diligence
• Promotion of decarbonization
• Efficient use of resources

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters

Transition Risks

• Changes to the external environment, including major changes to the energy composition, tightened regulations on CO2 emissions, a surge in raw material prices, and greater customer demand for improvements to product performance

Opportunities

• Development of energy-efficient products
• Hydrogen business
• CCUS business

Reporting Standards

Frameworks Used: GRI, TCFD

Certifications: ISO 9001, ISO 14001, ISO/IEC 27001, IEC 62443-2-1

Third-party Assurance: KPMG AZSA Sustainability Co., Ltd.

UN Sustainable Development Goals

• Goal 4
• Goal 15
• Goal 17

Kawasaki's initiatives contribute to these goals through education programs, forest conservation, and partnerships.

Sustainable Products & Innovation

• Electric motorcycles
• Hybrid motorcycle (planned)
• Hydrogen engine motorcycles (planned)
• Power generation equipment that allows for mixed hydrogen or exclusive hydrogen firing
• Hydrogen aircraft

Awards & Recognition

• Nadeshiko Brand
• Eruboshi
• Kurumin