Responding to Climate Change

The Eiken Group recognizes that responding to climate change is an especially vital issue for the sustainability of society. One key task is to reduce emissions of CO₂ and other greenhouse gases that are factors in climate change. The Group sets medium-to-long term targets for reducing these emissions, as part of energy-saving activities under its environmental management system, and carries out activities to achieve them. As climate disasters grow more intense and frequent, the world’s attitude to global warming is changing, as the Paris Agreement and other landmark events testify. In view of these trends, the Eiken Group is strengthening its efforts to achieve carbon neutrality by 2050. In the past, the Group has framed its reduction targets in terms of CO₂ emission volume per unit of net sales. In 2024, our GHG reduction targets at 2030 were certified by the international NGO SBTi (Science Based Targets initiative).

In February 2023, the Eiken Group announced its endorsement of the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD).
In 2015 the Financial Stability Board (FSB), an international body based in Switzerland, established the TCFD. In its final report, tabled in June 2017, the TCFD recommended that companies disclose climate-related information that may affect their finances. The TCFD recommends disclosure of risks and opportunities presented by climate change in terms of four elements: governance, strategy, risk management, and indices and targets.

The Eiken Group recognizes the risk climate change poses for financial markets. In addition to reinforcing its current battery of measures to tackle climate change, the Group is advancing disclosure in accordance with the TCFD recommendations.

The Eiken Group recognizes climate change as a materiality. The Group’s Sustainability Committee, chaired by the president and representative director, drafts targets and action plans and manages progress. Activities to tackle climate change as deliberated upon by the Sustainability Committee are reported to and supervised by the Board of Directors and some of their results are reflected in evaluations of the business results of executive officers. In terms of its framework for environmental management, the Group strives for continuous improvement through the Environmental Management Committee, which is chaired by an executive officer from the Business Management Division.
▶ Environmental Management

The Eiken Group recognizes that climate change is an important management issue affecting the economy and society. In accordance with the framework of the TCFD recommendations, the Group is examining the risks and opportunities associated with climate change from a wide range of perspectives, to identify those risks and opportunities that the Group deems most important.
To analyze the potential financial impact on the Group of the risks and opportunities associated with climate change, the Group has examined two scenarios: a scenario of 2°C of warming or less, in which regulatory and other responses to climate change will proceed on their current course, and a scenario of 4°C of warming, in which natural disasters and the spread of infectious diseases will become more serious.
To gather the information necessary for our inquiries, we referred to resources such as the International Energy Agency (IEA)’s World Energy Outlook 2022 (WEO 2022): Net Zero by 2050 and the same agency’s Energy Technology Perspectives 2020 (ETP 2020).

The Eiken Group’s understanding of the business environment in each scenario and the expected impact on its operations are summarized below.
 

• The 2°C-or-less scenario

Private-sector responses and government regulations will continue in a bid to restrain the rise of atmospheric temperatures. Whole societies will shift toward a low-carbon framework. The main effect on the operating environment will be the realization of transitional risk, as described below.

【Impact on society】
Governments and organizations all over the world respond actively to climate change, introducing regulatory measures such as carbon taxes and restrictions on greenhouse-gas emissions. Companies unavoidably bear the cost of complying with these measures and higher prices passed on from suppliers.

【Changes in the Group’s business environment】
As the shift to renewable energy progresses and new carbon-reduction technologies emerge, customer awareness changes, driving up demand for products and services that contribute to the formation of a low-carbon society. The promotion of measures to reduce plastic use and recycle plastics can be expected, as represented by regulations on plastics already in force in Europe. The Group will have to respond, as Eiken products use a great deal of plastics.

• The 4°C scenario

Serious efforts to grapple with climate change are not taken. As a result, physical risks such as the spread of infectious diseases and the ferocity of natural disasters grow more severe, having the following impacts on the business environment.

【Impact on society】
Regulations and policies on climate change have little effect and fail to deliver significant results in terms of operations. The rise in atmospheric temperatures proceeds unrestrained. Large-scale natural disasters become more frequent and more severe.

【Changes in the Group’s business environment】
In addition to direct damage from natural disasters, the rise in global temperatures is expected to aggravate the spread of infectious diseases and change disease trends. As a result, the social responsibility of the Group, as a developer and supplier of clinical diagnostics, is anticipated to expand significantly.

* Definitions of expected time-frames: Short-term: Less than 3 years; medium-term: 3 years or more but less than 10 years; long-term: 10 years or more
** Definitions of financial impact: Minor: Less than ¥100 million; intermediate: ¥100 million or more but less than ¥2.5 billion: major: ¥2.5 billion or more

Through its environmental management system, the Eiken Group evaluates the environmental impact of its business operations every year, including from a compliance perspective. As part of its risk management, the Group conducts a comprehensive risk assessment once a year.
Building upon the TCFD Recommendations, the Eiken Group assesses the risks and opportunities engendered by climate change through the deliberations of the Sustainability Committee and its subordinate organization, the Environmental Management Committee. The Group strives to reduce the risks and capitalize on the business opportunities identified by these two Committees.

The Eiken Group aims to become carbon-neutral by 2050. The Group has set a further target of reducing CO₂ emissions (Scope 1 and Scope 2) by 56% compared with FY2021 by FY2030. Scope 3 has been calculated since FY2020, and we have set a target of 25% reduction by FY2030 (compared to FY2022).
The Group have disclosed our Scope 3 results in our “ESG Data” and will work toward setting reduction targets.

Eiken Chemical aims to be carbon neutral (Scope 1 and 2) by 2050 and is promoting the introduction of sustainable power. As one of our efforts, we have adopted "Tochigi Furusato Denryoku", which is power generated solely from water without emitting CO₂ during power generation, at our Nogi Plant (Nogi-machi, Tochigi Prefecture) since March 2022, and Nasu Plant(Otawara-shi, Tochigi Prefecture) since March 2023. Tochigi Furusato Electricity" is a locally produced and consumed renewable energy provided by Tochigi Prefectural Government and Tokyo Electric Power Energy Partner, Inc. A portion of the electricity charges are used for environmental conservation projects in Tochigi Prefecture, thus contributing to the local community, and we are working to achieve both community partnerships and global environmental conservation.

At the Company, an initiative to calculate supply chain greenhouse gas emissions as Scope1, Scope2, or Scope3 is underway. At each step from procurement of raw materials to shipping products, usage, and disposal, the steps with the largest greenhouse gas emission volumes and potential for reduction can be identified. In this way, we can reduce not only our own emissions but also those of raw material suppliers, product buyers, and other parties within the supply chain as a whole. This can also promote the sharing of information with the companies that make up the supply chain, helping to build understanding among these related parties so we can all work together to reduce greenhouse gases.

• •*Scope1: Direct emission from own fuel usage or usage in manufacturing processes of the Company
• •*Scope2: Indirect emissions from usage of electricity or heat purchased by the Company
• •*Scope3: Indirect emissions related to processes other than Scope1 and Scope2 (procurement of raw materials, product shipment, usage, and disposal, employee commuting, business trips, etc.)

The Company is always carrying out environmentally-conscious initiatives for product development. The polyvinyl chloride used in conventional products has been reduced by planned replacement, and this material is currently no longer used in our products. One specific initiative is the transition of storage requirements from freezing to room temperature for the TB-LAMP tuberculosis detection system which is also used in developing countries. This reduces the energy requirements related to cooling during shipping and also eliminates the need for a refrigerator in testing facilities, making examinations possible without concern for electricity. This also links to reduced plastic requirements for examinations, reducing waste and achieving a more environmentally-conscious product. Through initiatives for detail-oriented design and development of medical devices to meet customer demands, we are working to improve characteristics such as miniaturization, weight reduction, power conservation, short-term processing, and recyclability. Installation of the latest energy conservation equipment and high-performance processing machinery is promoted by setting goal values for each fiscal year.

Once a year, Eiken Chemical conducts environmental impact assessments of all existing products. The criteria applied differ by type of product. For reagents and fixtures, criteria include sales volume, storage conditions, shipping load, expiration date, inclusion of toxic substances, user complaints and environmental requirements. For devices, criteria include number of units installed, service life, power consumption, use/non-use of consumables, device materials and packaging, user complaints and environmental requirements. Similar criteria are applied to new products, which are assessed before product launch.