Basic Approach to Climate Change

Okura Industrial Group has defined sustainability materiality in response to social issues encapsulated by the SDGs and the requirements of stakeholders. This specifically refers to “promoting management for decarbonization (climate action measures)”, “further promoting resource recycling measures”, “creating and expanding Environmental Contribution Products”, “promoting CSR procurement”, “gaining a competitive advantage by promoting digital transformation (DX)”, and “conducting research and development geared to creating innovation”. By tackling these issues, the Group will seek to provide solutions to society and achieve sustained growth as a company.
Investors and other stakeholders are particularly concerned about the impact of climate change on companies. Okura Industrial Group, for its part, has analyzed the impact of climate change and begun to respond to it in line with the TCFD’s climate change information disclosure standards. The analysis has made clear that while the long-term financial impact of climate change risk is obvious, there are also, simultaneously, many opportunities.
Based on this analysis, the Group intends to work to reduce climate change risk and expand business opportunities, helping to bring about a more sustainable society.

Governance

Okura Industrial Group regards solutions to sustainability-related issues for society and companies as business opportunities. The issues include addressing climate change and other problems affecting the global environment, respect for human rights, and fair and appropriate business activities for all stakeholders, including employees. To promote initiatives for these issues, the Group established the Sustainability Committee, which is chaired by the Director, Executive Operating Officer who is in charge of promoting sustainability and made up of Directors and Operating Officers.
In addition, in April 2021, the Group established the Sustainability Promotion Department to formulate and promote basic plans on ESG activities that cut across the organization. Plans related to environmental protection developed and proposed by the Sustainability Promotion Department are deliberated on by the Environmental Protection Promotion Committee.
Under these systems, the Group actively discloses information on the status of initiatives to stakeholders, including climate action measures, the most important theme, and manages them through an environmental management system and other mechanisms while continually making improvements, with management reviews being conducted on the results.

Strategy

The Group developed two scenarios to clarify its climate change risks and opportunities. One is a 4℃ scenario, which assumes that climate action measures do not make headway and the temperature continues to rise on the same trajectory and that physical risks and opportunities occur as a result of this. Based on this scenario, analysis was performed for acute and chronic risks. The other is a 2℃ scenario that assumes various activities will be conducted to prevent warming and looks at risks and opportunities connected with the transition to a carbon-free society. Analysis in this scenario was conducted related to government policy and regulations, technology, markets, and reputation.
In conducting scenario analysis, value chains were identified and specific considerations made for each of Okura Industrial’s main business divisions, the Plastic Film Division, the New Materials Division, and the Building Materials Division. Then the financial impacts of key risks and opportunities were calculated and response measures were considered.

Summary of scenario analysis results

  • An increase in direct costs to the Group from the introduction of a carbon tax and an increase in raw material costs from the tax being levied on suppliers are thought to be the main factors that will reduce earnings.

    Cost increase example: Using the figures in WEO 2023, IEA (NZE scenario) and the exchange rate as of January 31, 2024 (1 USD = 147.23 JPY) and estimating that cost increase from carbon tax, etc. is 20,612 yen/t-CO2, the annual cost increase in 2030 will be roughly 1.6 billion yen if CO2 emissions targets (Scope 1 and 2) are met, and roughly 2.2 billion yen if they remain at the same level as the present.

  • At the same time, based on areas targeted for CO2 reduction—films that use recycled raw and biomass materials, barrier films that help reduce food loss, peripheral components that contribute to vehicle electrification, and particleboard using construction waste—the increase in demand for carbon storage through cascade use of wood products and increased use of wood in buildings, for example, became clear as a business opportunity.

The Group will promote climate action measures integrated with management strategy while clarifying response measures for individual key risks and opportunities.

General Overview of Okura’s Risks and Opportunities (2℃ Scenario)

General Overview of Okura’s Risks and Opportunities (4℃ Scenario)

Measures in Response to Key Risks and Opportunities

Major
category		 Category Subcategory Risk/
Opportunity		 Assumed impact on company business Potential response measures
Transition
risk		 Government policy and regulations Stronger regulations on GHG emissions Risk Manufacturing costs increase from introduction of carbon tax Increase productivity
Install energy-saving facilities
Introduce renewable energy
Revise product prices
Technology Development and spread of next-generation technologies Opportunity Remote work and remote technologies progress, increasing sales of IT-related products Increase productivity by automating manufacturing processes for IT-related products
Market Changes in energy demand Risk Energy (electricity, fuel) costs increase, causing manufacturing costs to rise Install energy-saving facilities
Conduct energy-saving measures
Use of wood chips for energy progresses, causing shortages in particleboard materials Increase wood-chip suppliers
Opportunity Vehicle electrification accelerates, increasing sales of peripheral components Increase production capacity for peripheral components
Changes in demand for low-carbon products Risk Manufacturing costs increase due to changes in raw material demand Revise designs of existing products
Expand use of recycled materials
Packaging film sales decrease due to reductions (thinner, simpler) Revise designs of existing products
Deepen technologies for film thinning
Opportunity Sales of environmental products increase Promote development of environmental products
Introduce mass balance system via ISCC certification
Market for non-residential wooden buildings expands, increasing sales of related products Respond to and sell non-residential wooden buildings
Reputation Changes in evaluations by stakeholders Risk If ESG investment lags behind, corporate value decreases Consider SBT initiatives
Opportunity Corporate value increases by conducting environmental measures like tree-planting in collaboration with local governments Purchase forests and Conduct tree-planting for carbon offsetting
Sponsor environmental measures, including tree-planting, taken by local governments
Physical
risk		 Chronic Environmental changes caused by global warming Risk Labor environment deteriorates due to rising temperatures, making it difficult to secure workers, which inhibits operations Achieve labor savings through automation of manufacturing processes
Particleboard manufacturing costs increase on the impact of rising temperatures and prolonged rainfall Reassess wood chip storage locations and manufacturing facilities
Opportunity Demand for display-related products increases due to social isolation and stay-at-home related demand Increase productivity through automation of manufacturing processes
Acute More extreme natural disasters Risk Raw materials cannot be procured due to natural disasters, inhibiting production activities Obtain certifications for alternative raw materials
Company plants shut down due to natural disasters, causing sales to decline Obtain certifications for multiple manufacturing sites
Install onsite power generating facilities and storage batteries
Opportunity Demand for high-strength wood products increases, boosting sales of related products Develop and sell relevant products

Risk Management

The process used by Okura Industrial Group to select and evaluate climate change risks and opportunities is conducted by each business division in the following steps. Management of risks and opportunities will be carried out under the system indicated in the “Governance” section.

* You can scroll left and right

Indicators and Targets

Reduce CO2 emissions

Okura Industrial Group has set a 2030 CO2 emissions reduction target for Scope 1 and 2, and is working to reduce CO2 emissions.

  • CO2 emissions (Scope 1 and 2)

    Business sites in Japan
    2024:12% reduction compared to 2021 (equivalent to a 30% reduction compared to 2013)
    2030:37% reduction compared to 2021 (equivalent to a 50% reduction compared to 2013)
    Our results for 2023 were a reduction of approximately 13% compared to 2022 or 14% compared to the base year, 2021 (32% compared to 2013). We will continue to promote initiatives to reduce CO2 emissions, aiming to achieve our targets.

*Graph can be scrolled left and right [Periods covered]
2013–2020: From April of each year to March of the following year
2021–2023: From January to December of each year
[Third-party verification]
2021–2023: Audited
[Emission factors]
2013–2020: Figures for Scope 2 emissions are calculated using the basic emission factor for each electricity supplier
2021–2023: Figures for Scope 2 emissions are calculated using the adjusted emission factor for each electricity supplier
[Covered entities]
Okura Industrial Co., Ltd., 11 consolidated subsidiaries, and 4 affiliate companies
Okura Hotel Takamatsu: Not included from 2015 to 2017; not included for 2019 and later due to sale

CO2 emissions reduction target (Scope 1 and 2)

Business sites in Japan and overseas
The result for 2023 was 108,092 t-CO2. We are endeavoring to calculate the CO2 emissions from our business sites overseas more accurately.

*The following information relates to overseas sites only (see above for information on sites in Japan).
[Third-party verification] Audited
[Emissions factors] Figures for Scope 2 emissions are calculated using IDEA Ver.3.3
[Covered entities] Wuxi Okura Packing Material Co., Ltd.

  • CO2 emissions (Scope 3)

    Since 2022, the Group also calculates Scope 3 emissions (indirect emissions other than the above Scope 1 and 2 emissions in the supply chain from raw material procurement to product disposal). We revised the calculation method for CO2 emissions in 2023.
    The calculation has revealed large volumes of Category 1 emissions.
    We will continue to improve the accuracy of calculations based on the results of the calculation for 2023. We aim to set a Scope 3 CO2 emissions reduction target and formulate an action plan to work towards the reduction of CO2 emissions throughout the supply chain.

CO2 emissions (Scope 3)

Category 1 568,903t-CO2/year
Category 2 37,838t-CO2/year
Category 3 17,814t-CO2/year
Category 4 54,833t-CO2/year
Category 5 2,517t-CO2/year
Category 6 338t-CO2/year
Category 7 1,177t-CO2/year
Category 9 16,722t-CO2/year
Category 11 3,177t-CO2/year
Category 12 83,011t-CO2/year
Category 13 12t-CO2/year

[Periods covered] From January to December 2023

Composition of Scope 3 emissions

Category 1 72.3％
Category 2 4.8％
Category 3 2.3％
Category 4 7.0％
Category 5 0.3％
Category 6 0.0％
Category 7 0.1％
Category 9 2.1％
Category 11 0.4％
Category 12 10.6％
Category 13 0.0％

  • Emissions subject to accounting, accounting method, and covered entities for CO2 emissions (Scope 1, 2 and 3) in 2023

    Category Unit Emissions subject to accounting Accounting method Covered entities*8
    Scope1
    Direct emissions from the use of fuel and industrial processes by the Company     		ｔ-CO2 CO2 emissions from burning kerosene, light oil, bunker A, gasoline, LPG, city gas, and the use of gasoline and distillate in vehicles Annual amount of each type of energy purchased × unit calorific value × CO2 emissions unit value
    The calorific value per unit and the CO2 emissions unit value are based on the Mandatory Greenhouse Gas Accounting and Reporting System based on the Act on Promotion of Global Warming Countermeasures.     		Okura Industrial Co., Ltd.
    Consolidated subsidiaries*1、7
    Affiliate companies, etc.*2
    Scope2
    Indirect emissions from the use of electricity, heat and steam supplied by other companies     		ｔ-CO2 Indirect CO2 emissions from the use of electricity Annual amount of electricity purchased × CO2 emissions unit value for electricity
    The emissions unit values for each electricity supplier is used for the CO2 emissions unit value
    Figures based on IDEA Ver.3.3 are used for overseas business sites     		Okura Industrial Co., Ltd.
    Consolidated subsidiaries*1、7
    Affiliate companies, etc.*2
    Scope3 Category 1
    Purchased goods and services     		ｔ-CO2 CO2 emissions from the manufacture, etc. of purchased raw materials, goods and services Volume of major raw materials purchased × CO2 emissions unit value + monetary amount of products and services purchased apart from major raw materials × CO2 emissions unit value
    Figures are based on IDEA Ver.3.3 for the CO2 emissions unit value used for the volume of major raw materials purchased and based on the Emissions Unit Values Database for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver.3.4) (Ministry of the Environment) for the CO2 emissions unit value used for the products and services purchased apart from major raw materials     		Okura Industrial Co., Ltd.
    Consolidated subsidiaries*1、7
    Affiliate companies, etc.*4
    Category 2
    Capital goods     		ｔ-CO2 CO2 emissions from the construction or manufacture of constructed or manufactured facilities, equipment, etc. Capital expenditures on facilities, equipment, etc. × CO2 emissions unit value
    CO2 emissions unit values are based on the Emissions Unit Values Database for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver.3.4) (Ministry of the Environment)
    Where construction or manufacturing takes several years, emissions are recorded in the final year of construction or manufacture     		Okura Industrial Co., Ltd.
    Consolidated subsidiaries*1、7
    Affiliate companies, etc.*3
    Category 3
    Fuel and energy related activities not included in Scope 1 or 2     		ｔ-CO2 CO2 emissions from upstream processes for the electricity and fuel we use Annual amount of each type of energy and electricity purchased × CO2 emissions unit value
    Figures based on IDEA Ver.3.3 are used for the CO2 emissions unit value     		Okura Industrial Co., Ltd.
    Consolidated subsidiaries*1、7
    Affiliate companies, etc.*2
    Category 4
    Transportation and delivery (upstream)     		ｔ-CO2 CO2 emissions from the upstream transportation (inbound and outbound logistics; e.g. of procured or sold products) we own [Inbound]
    Transported ton-km (volume of purchased raw material × transported distance) × CO2 emissions unit value
    [Outbound]
    Transported ton-km (volume of product shipments × transported distance) × CO2 emissions unit value
    Figures based on IDEA Ver.3.3 are used for the CO2 emissions unit value
    Figures reported by specified consignors based on the Act on Rationalizing Energy Use and Shifting to Nonfossil Energy (Ministry of Economy, Trade and Industry) are used for the volume of product shipments
    Transported distance, maximum truck load, and loading rate are calculated through established scenarios     		[Inbound]
    Okura Industrial Co., Ltd.
    Consolidated subsidiaries*5

    [Outbound]
    Okura Industrial Co., Ltd.
    Consolidated subsidiaries*5
    Affiliate companies, etc.*4
    Category 5
    Waste generated in operations     		ｔ-CO2 CO2 emissions from the transportation and processing of waste generated from our business activities (excluding general waste from business activities and valuables) Weight by waste type × CO2 emissions unit value by waste type
    CO2 emissions unit values are based on the Emissions Unit Values Database for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver.3.4) (Ministry of the Environment)     		Okura Industrial Co., Ltd.
    Consolidated subsidiaries*1
    Affiliate companies, etc.*2
    Category 6
    Business travel     		ｔ-CO2 CO2 emissions from fuel and electricity consumption from transportation used by employees for business travel Number of employees × CO2 emissions unit value
    CO2 emissions unit values are based on the Emissions Unit Values Database for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver.3.4) (Ministry of the Environment)     		Okura Industrial Co., Ltd.
    Consolidated subsidiaries*1、7
    Affiliate companies, etc.*2
    Category 7
    Employee commuting     		ｔ-CO2 CO2 emissions from fuel and electricity consumption from transportation used by employees for commuting to plants and business sites Number of employees for each work format and class of city × Number of business days × CO2 emissions unit value
    CO2 emissions unit values are based on the Emissions Unit Values Database for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver.3.4) (Ministry of the Environment)     		Okura Industrial Co., Ltd.
    Consolidated subsidiaries*1、7
    Affiliate companies, etc.*2
    Category 8
    Leased assets (upstream)     		ｔ-CO2 (Not applicable)
    While some of our company cars and business locations fall under leased assets, their activities are included in Scope 1 and 2. This category is therefore not applicable.     		ー ー
    Category 9
    Transportation and delivery (downstream)     		ｔ-CO2 CO2 emissions from the distribution of manufactured and sold products Transported ton-km (volume of product shipments × transported distance) × CO2 emissions unit value Figures based on IDEA Ver.3.3 are used for the CO2 emissions unit value
    Figures reported by specified consignors based on the Act on Rationalizing Energy Use and Shifting to Nonfossil Energy (Ministry of Economy, Trade and Industry) are used for the volume of product shipments
    Transported distance, maximum truck load, and loading rate are calculated through established scenarios     		Okura Industrial Co., Ltd.
    Consolidated subsidiaries*5
    Affiliate companies, etc.*4
    Category 10
    Processing of sold products     		ｔ-CO2 (Not applicable)
    Our products are intermediate products and used for a variety of purposes as raw materials for manufacturing end products. In addition, our products account for a very small ratio in the end products. This category is therefore not applicable.     		ー ー
    Category 11
    Use of sold products     		ｔ-CO2 CO2 emissions from the use of software sold by Okura Information System Co., Ltd. and electronic equipment attached to houses sold by Okura House Co., Ltd.
    (Calculated for products for which usage as a final product can be ascertained within Okura Industrial Group)     		[Software]
    Estimated useful lifespan of the product × Number of units sold in the reporting period × Annual electricity consumption × CO2 emissions unit value
    [Houses]
    Estimated useful lifespan of equipment attached to houses × Number of units sold in the reporting period × Annual consumption of each type of energy × CO2 emissions unit value
    Figures based on IDEA Ver.3.3 are used for the CO2 emissions unit value     		Consolidated subsidiaries*6
    Category 12
    End-of-life treatment of sold products     		ｔ-CO2 CO2 emissions from the disposal by users of the products we manufactured and sold Volume of products shipped or sold × CO2 emissions unit value
    Calculated based on the assumption that all shipped products will be disposed of
    CO2 emissions unit values are based on the Emissions Unit Values Database for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver.3.4) (Ministry of the Environment)     		Okura Industrial Co., Ltd.
    Consolidated subsidiaries*5
    Affiliate companies, etc.*4
    Category 13
    Leased assets (downstream)     		ｔ-CO2 CO2 emissions from the operation of assets owned by Okura Industrial as a leasing business and leased to others Annual electricity consumption from leased assets × CO2 emissions unit value
    The emissions unit values for each electricity supplier is used for the CO2 emissions unit value     		Okura Industrial Co., Ltd.
    Category 14
    Franchises     		ｔ-CO2 (Not applicable)
    We engage in the manufacturing and processing of plastic products, and no part of our business involves franchises. This category is therefore not applicable.     		ー ー
    Category 15
    Investments     		ｔ-CO2 (Not applicable)
    We engage in the manufacturing and processing of plastic products, and do not invest in third parties as a business. This category is therefore not applicable.     		ー ー
    • *1KS Okura Co., Ltd., Kyushu Okura Co., Ltd., Saitama Okura Co., Ltd., Okura Products Co., Ltd., Okura Hotel Co., Ltd., Okura Precut System Co., Ltd., Okura Information System Co., Ltd., Okura House Co., Ltd., Union Gravure Co., Ltd., Okura Pack Kagawa Co., Ltd., Kanto Co., Ltd.
    • *2Okura Sangyo Co., Ltd., O.L.S. Co., Ltd., Otomo Kasei Co., Ltd., Okura Health Insurance Association
    • *3Otomo Kasei Co., Ltd., O.L.S. Co., Ltd.
    • *4Otomo Kasei Co., Ltd.
    • *5KS Okura Co., Ltd., Kyushu Okura Co., Ltd., Saitama Okura Co., Ltd., Okura Products Co., Ltd., Union Gravure Co., Ltd.
    • *6Okura Information System Co., Ltd., Okura House Co., Ltd.
    • *7Including the overseas consolidated subsidiary Wuxi Okura Packing Material Co., Ltd.
    • *8See each item for details of the scope covered.

Creating and expanding Environmental Contribution Products

The Okura Group has specified company products that help reduce environmental impact in such ways as CO2 reduction and effective resource use for the Group and its supply chain as a whole, and has set a goal of increasing sales of the products.
Regarding this initiative as well, the Group will pursue both social contributions (in the area of the environment) and business contributions.

Target Environmental Contribution Products as 100% of sales in the living support category by 2030