Climate Change

Policy and Basic Approach

As Sojitz seeks to create value and prosperity as described in our Corporate Statement, we aim to maximize our two types of value—“value for Sojitz” and “value for society.”

Through our previous business activities, we have sought to transform the solution to social issues into our strength as a company as we have expanded and grown our businesses. We have been involved in a number of resource businesses in Japan and overseas to help solve society’s need for energy and security, and these efforts have been reflected in our earnings.

While climate change is attracting more attention and the world’s shift towards carbon neutrality continues to accelerate, simple energy generation and consumption is no longer sufficient; more eco-friendly power generation and consumption methods are needed.

To this end, we have set forth our contribution to the realization of a decarbonized society in the Sustainability Challenge, our long-term sustainability vision for the year 2050. In addition to accelerating the reduction of CO2 emissions from Sojitz Group's existing businesses to increase our resilience in a decarbonized society, we will also utilize this transition as an opportunity to build a wide range of new businesses in a variety of fields, not only in the energy sector, as we move forward. In this way, we will expand our profit-earning opportunities as "value for Sojitz " as we seek to create "value for society " in the form of achieving a decarbonized society.

Goals and Targets

We have set policies and targets for both existing and new businesses based on forecasted technological trends and a careful examination of risks and opportunities.

For existing businesses, emission reduction targets will be set based on separate international protocols for CO2 emissions (Scope categories). For new businesses, Sojitz views the transition towards a decarbonized society as an opportunity for growth, and the company will actively promote diverse new businesses.

Existing Businesses

Aim of Scope1 and Scope2

Scope1 encompasses all of the CO2 generated directly by the company from burning resources such as gas, etc. Scope2 mainly refers to the CO2 generated by the company’s consumption of electricity. Sojitz Group recognizes its responsibility to reduce Scope1 and Scope2 emissions as it develops a wide range of businesses. For all existing businesses acquired prior to April 2020, Sojitz aims to reduce overall emissions by 60% before 2030, which includes reaching net zero emissions for Scope2. For Sojitz businesses acquired from April 2020 onwards, we aim to achieve net zero emissions by 2050.

Scope1+2 Reduce emissions 60% by 2030; achieve net-zero emissions by 2050 *1
For Scope2: Net-zero emissions by 2030 *2
Coal-fired power generation No current projects nor future projects planned

*1, *2 Reductions from base year of FY2019, scope includes Sojitz Corporation (non-consolidated), consolidated subsidiaries, and unincorporated joint ventures subject to reporting based on Sojitz approach toward control of management

Scope3 Targets (Natural Resource Interests)

Scope3 refers mainly to the indirect CO2 emissions generated in the supply chain. Trading companies have extensive supply chains from upstream to downstream. If all of Sojitz’s current natural resource interests were burned, it would generate approximately 200 million tons of CO2. This amount greatly exceeds the 1 million tons of CO2 emissions generated from Sojitz Group’s direct energy use (Scope1 and 2). Sojitz therefore views addressing these Scope3 emissions as a major social responsibility.

For this reason, Sojitz has established the following strategic targets for natural resource interests. In its coking coal-related business, Sojitz will actively engage in new business opportunities associated with technological innovations, such as CO2 capture and new iron-making methods.

Targets (Natural Resource Interests)

Thermal coal interests Reduce interests to half or less by 2025 zero interests by 2030 *3
Oil interests Zero interests by 2030
Coking coal interests Zero interests by 2050

*3 FY2018 serves as the base year, and targets are based on the book value of assets in coal interests. In May 2019, Sojitz announced its original goal of reducing thermal coal interests to half or less by 2030.

New Businesses

For all new businesses, Sojitz aims to realize net-zero carbon emissions by 2050.

Moreover, these targets are based on a roadmap of technological and societal trends forecasted in each decade leading up to the realization of a decarbonized society, and we formulate our actions and approach in line with these trends.

As a result, the aforementioned goals are based on the current future forecast and will be subject to flexible review in accordance with social trends and technological innovations.

In formulating and updating this decarbonization roadmap, we invite outside experts to stakeholder dialogues every year to stay up to date on the latest trends.

In addition, we hold internal discussions with the COOs of each business division, and make policy decisions based on discussions held by the Board of Directors, the Management Committee, and the Sustainability Committee.

Sustainability Promotion Cycle

Based on the policies outlined above, we will reduce our share of carbon-heavy “brown businesses,” and increase our share of “green businesses” that contribute to CO2 reduction in society as well as of businesses that support this transition, so as to make our overall business portfolio greener. Global debate is still ongoing on definitions of green, brown, and transition businesses. We will continue to monitor developments, including the most-advanced EU taxonomy.

Systems

Sojitz Group's actions taken in response to climate change are discussed by the Sustainability Committee and reported to the Management Committee and the Board of Directors. The Board of Directors supervises these activities and gives direction.

In addition, when deliberating business investments and loans, the Sustainability Committee analyzes and evaluates risks related to climate change, confirms the value the project, and makes the determination to move forward with the investment or loan.

We have established the Corporate Sustainability Department as a working organization to support the Sustainability Committee. The Corporate Sustainability Department carries out the instructions of the Sustainability Committee and confirms the deliberations of the Finance & Investment Deliberation Council from the perspective of sustainability, including climate change.

Sustainability Committee

The Sustainability Committee's activities include establishing company-wide sustainability-related policies and goals, constructing frameworks for their implementation, and monitoring various measures that utilize the ISO 14001 environmental management system standard.

Sustainability Committee Members (Current as of June 18, 2024)

Committee Chair
  • President, COO
Members
  • Chairman, CEO
  • CFO
    Executive Management of Corporate Departments
    COO, Corporate Planning Department
  • Managing Executive Officer,COO, Human Resources Department
  • Executive Officer, COO, PR Department, IR Office, Corporate Sustainability Department
Observers
  • Full-time Audit and Supervisory Member
  • General Manager, Legal Department
  • General Manager, Corporate Planning Department
Secretariat
  • Corporate Sustainability Department

Initiatives

<1> Endorsement of TCFD

  • Sojitz Group is actively working to disclose information and improve transparency by utilizing the TCFD*1 framework regarding risks and opportunities related to climate change.

    • In August 2018, Sojitz declared its endorsement of the final recommendations of the TCFD (Task Force on Climate-related Financial Disclosures).

<2> Minimizing Risk

Reduction Measures for Scope1 and 2 Emissions

<Existing Businesses>

  • Initially focus on electricity (Scope2) where clear alternatives exist, i.e. renewables
  • Review businesses from perspective of decarbonization, etc. against obsolescence risks with view to possibility of exiting
  • For Scope1, priority on switching away from low-efficiency coal- and oil-fired power generation assets as renewal becomes due. Longer time horizon for gas-fired power generation as alternatives such as hydrogen and ammonia not yet economically justifiable and require further technological innovation.
  • Carbon offset certificates may be utilized for remaining CO2 emissions but only minimally

<New Businesses>

  • Sojitz aims to achieve net zero emissions by 2050, just as we aim to achieve net zero for existing businesses. Midterm milestones for 2030 to be established as required.
  • Sojitz is considering implementing support mechanisms for each business to facilitate smooth transitions.

Sojitz has included these mechanisms in its 30-billion-yen MTP2023 budget for non-financial investment in human capital and organizational reform.

Measuring and Tracking Scope3 Emissions

Scope3 mainly refers to indirect CO2 emissions in supply chains. However, as trading companies are involved in extensive supply chains from upstream to downstream, it is difficult to clearly ascertain these emissions.

We will therefore identify business areas that have a significant impact on our growth and business performance, as well as on society. We will therefore measure and track their Scope3 emissions for these areas. Next we will then consider individual policies to implement in each business area.

As a first step, we have addressed the coal interests held by Sojitz Group. If all of the coal interests (thermal coal and coking coal) currently held by Sojitz Group were burned, it would generate approximately 200 million tons of CO2. Because this potential amount is so large, we have established a policy of reducing our interests in coal used for power generation (thermal coal)—which can already be replaced by renewable energy—to zero by 2030, and to reduce our interests in coking coal (which is used as a reductant in steel production) to zero by 2050, assuming that alternative reductants such as hydrogen and ammonia will become widely used in the 2040s and beyond.

Approach
  • Scope3 refers to annual CO2 emissions in the supply chain.
  • In addition to existing initiatives across Sojitz Group, it is necessary to include measures to reduce CO2 emissions throughout supply chains.
  • Sojitz acknowledges that segments of our supply chain with high Scope3 emissions can be considered high risk due to future emissions reduction pressure.
Policy(*)
  • Reduce thermal coal interests to half or less by 2025, and to zero by 2030.
  • Reduce coking coal interests to zero by 2050.
Action
  • Sojitz Group will identify sectors with high CO2 emissions and use qualitative analysis to assess Sojitz’s supply chains.
  • We will prioritize improvement measures for the power sector for thermal coal and gas businesses, which have a significant impact on earnings and high CO2 emissions.
  • Sojitz Group will quantify Scope3 for thermal coal and gas in the power sector.
  • We will set emissions reduction policies for natural resource interests (stocks) which affect the company and have a global impact.
  • (*)Approach to reducing interests

    Setting FY2018 as the base year, Sojitz plans to reduce its total interests in thermal and coking coal at a rate that exceeds the reduction rate in seaborne trade of coal as described in the 1.5℃ scenario.

<3> Seizing Business Opportunities

Opportunities under Scope4

Sojitz Group sees Scope3 emissions not only as a risk, but also as an opportunity to create new business that contribute to a reduction of CO2 emissions throughout supply chains as part of initiatives which tie into company growth. In the future, Sojitz will increase Scope4 initiatives which contribute to avoided CO2 emissions.

To achieve these aims, Sojitz established the Energy Transformation Department as part of Medium-term Management Plan 2026. The Energy Transformation Department is an organization that operates cross-organizationally to accelerate the creation and advancement of businesses and projects in the fields of new energy and decarbonization.
Additionally, we have consolidated our resources in the business fields of 1) the environment (including renewable power generation in Japan and overseas), 2) other forms of power generation, and 3) healthcare, and reorganized these assets under the Energy Solutions & Healthcare Division. We aim to continue to expand business in these fields going forward.

Recent Releases:

■Carbon Neutral

■Gas-Related Business (Transition)

■Circular Business (Recycle)

<Analysis of Scope3 and Scope4 Emissions across the Supply Chain>

Sojitz performs qualitative analysis of the risks and opportunities it faces based on a matrix that uses industries with generally high CO2 emissions on the vertical axis and the stages of each supply chain on the horizontal axis. In addition, quantitative assessments are performed with regard to the power generation sector, which has been judged to entail particularly high emissions.

<4> Collaborating with Stakeholders

Sojitz participates in METI’s GX League, a forum for cooperation between companies, government, and academic bodies to achieve METI’s strategy for carbon neutrality by 2050. Sojitz is also a member of a GX Business Working Group under the same organization.

Performance

The environmental data marked with ★ has been guaranteed by an independent third party, KPMG Azusa Sustainability Co.

■ CO2

Sojitz Corporation’s CO2 Emissions

1. Data and Results

(unit:t-CO2e)

  FY2019 FY2020 FY2021 FY2022 FY2023
Scope1
(Direct emissions from use of fuels such as city gas)
14 25 28 24 25★
Scope2
(Indirect emissions from use of purchased electricity and heat)
Location based method 1,203 1,198 1,178 1,109 1,132★
Maket based method - - - - 911★
Total Scope 1+Scope 2 Location based method 1,217 1,223 1,207 1,133 1,157★
Maket based method - - - - 935★

2. Boundary of Data

Sojitz Corporation: Head office, Kansai Office, and branches (Hokkaido, Tohoku and Nagoya)

3. CO2 Emissions factors

For electricity
Location based method: We use the actual emission factors announced by the Electric Power Council for a Low Carbon Society (ELCS)
Market based method: We use the adjusted emission factors of each electric power company (published by the Ministry of the Environment and the Ministry of Economy, Trade and Industry in December 2023).
Emission factors used for city gas is as specified by the Act on Promotion of Global Warming Countermeasures.
At the Kansai Office, we utilize CO2-free electricity through non-fossil fuel certificates supplied by the owner of the building.

Sojitz Group’s CO2 Emissions

1. Data and Results

(unit:t-CO2e)

  FY2019 FY2020 FY2021 FY2022 FY2023
Scope1
(Direct emissions from use of fuels such as city gas)
979,348 721,934 721,769 751,233 577,458★
Scope2
(Indirect emissions from use of purchased electricity and heat)
Location based method 152,108 206,283 219,180 206,851 207,278★
Maket based method - - - - 204,475★
Total Scope 1+Scope 2 Location based method 1,131,456 928,217 940,948 958,084 784,736★
Maket based method - - - - 781,933★

2. Boundary of Data

Sojitz Corporation, all domestic and overseas consolidated subsidiaries, and unincorporated joint ventures subject to reporting under the operational control approach

  • Emissions of greenhouse gases(CO2) from energy sources

3. Target for CO2 Emissions Reduction

Group companies in Japan including Sojitz Corporation aim to reduce domestic CO2 emissions by a 1% reduction rate per fiscal year.

4. CO2 Emissions factors

Units of heat produced and the emission factors are calculated using the standards found in the “Act on the Rational Use of Energy” and “Act on Promotion of Global Warming Countermeasures.”
For electricity,
Location based method: In Japan, we use the actual emission factors announced by the Electric Power Council for a Low Carbon Society (ELCS) . Overseas, we use the factors according to country, as published by the International Energy Agency (IEA)
Market based method: We use the factors of each electric power company in principle, but if it is not available, use the emission factors based on location based method.
At the Kansai Office, we utilize CO2-free electricity through non-fossil fuel certificates supplied by the owner of the building.
Previous years' data has been revised to reflect a revision of the boundary of data collection

Sojitz Group's CO2 Emissions - Changes in Output

(unit:t-CO2e per person)

FY2019 FY2020 FY2021 FY2022 FY2023
59.6 46.9 44.5 45.3 34.3

(CO2 emissions by Sojitz Group companies worldwide, including Sojitz Corporation,divided by the number of employees belonging to consolidated subsidiaries worldwide)

CO2 emissions for supply chains in the power sector (Scope 1, Scope 2, and Scope 3)

1. Data and Results (FY2023)

Thermal coal

Scope Emission volumes
(t-CO2e)
Calculation methods / Other
Scope 1 and 2 23,065 Sojitz Corporation, all domestic and overseas consolidated subsidiaries, and unincorporated joint ventures subject to reporting under the operational control approach.
category(*)
Scope3 1 Purchased goods and services 591,429 Calculated by multiplying the production of thermal coal traded by Sojitz by an emissions factor.
2 Capital goods 947 Calculated by multiplying the consolidated subsidiary's capital investment by an emissions factor.
3 Fuel- and energy-related activities
(not included in scope 1 or scope 2)
3,244 Calculated by multiplying the consolidated subsidiary's fuel and electricity consumption by emissions factors.
4 Upstream transportation and distribution 130,244 Calculated by multiplying the sold thermal coal traded by Sojitz (including that from the mines in which Sojitz holds equity interests) by transportation distance and emissions factors, or by multiplying fuel consumption by emissions factors. Transportation distance is calculated up until the trader in the case where the sales destination is a trader and Sojitz is unable to ascertain the destination beyond them.
5 Waste generated in operations 0 Calculated by multiplying the waste generated in operations by an emissions factor.
6 Business travel - -
7 Employee commuting - -
8 Upstream leased assets - Not applicable based on the specific attributes of the business
9 Downstream transportation and distribution - -
10 Processing of sold products - Not applicable based on the specific attributes of the business
11 Use of sold products 11,962,667 Calculated by multiplying the thermal coal traded by Sojitz by an emissions factor.
12 End-of-life treatment of sold products - Not applicable based on the specific attributes of the business
13 Downstream leased assets - Not applicable based on the specific attributes of the business
14 Franchises - Not applicable based on the specific attributes of the business
15 Investments - Scope 1 and Scope 2 emissions of the coal mines in which Sojitz holds equity interest.
Total 12,688,531
Total for supply chain 12,711,596★
  • Supply chain categories are in accordance with established GHG protocol

Oil & Gas

Scope Emission volumes
(t-CO2e)
Calculation methods / Other
Scope 1 and 2 27,931 Sojitz Corporation, all domestic and overseas consolidated subsidiaries, and unincorporated joint ventures subject to reporting under the operational control approach.
category(*)
Scope3 1 Purchased goods and services - Not applicable based on the specific attributes of the business
2 Capital goods - -
3 Fuel- and energy-related activities
(not included in scope 1 or scope 2)
4,102 Calculated by multiplying the fuel and electricity consumption of the consolidated subsidiaries operating power plants by emissions factors.
4 Upstream transportation and distribution - Not applicable based on the specific attributes of the business
5 Waste generated in operations - -
6 Business travel - -
7 Employee commuting - -
8 Upstream leased assets - Not applicable based on the specific attributes of the business
9 Downstream transportation and distribution - Not applicable based on the specific attributes of the business
10 Processing of sold products - Not applicable based on the specific attributes of the business
11 Use of sold products - Not applicable based on the specific attributes of the business
12 End-of-life treatment of sold products - Not applicable based on the specific attributes of the business
13 Downstream leased assets - Not applicable based on the specific attributes of the business
14 Franchises - Not applicable based on the specific attributes of the business
15 Investments 1,471,140 The sum of the emissions from the power plants of the companies in which Sojitz holds equity interest, calculated by multiplying the fuel and electricity consumption by emission factors, and the emissions calculated by multiplying the production of oil and gas by emission factors.
Total 1,475,242
Total for supply chain 1,503,173★
  • Supply chain categories are in accordance with established GHG protocol

2. Boundary of Data

Power sector supply chain (Sojitz Group’s supply chain related to thermal coal interests, thermal coal sales, and oil and gas power generation-related businesses)
In order to assess risks related to decarbonization, Sojitz conducts analysis of CO2 emissions for the entire supply chain (Scope 1, Scope 2, and Scope 3). We prioritize refining our quantitative data in the power sector as it accounts for high CO2 emissions and has a large-scale impact on our business.

3. CO2 Emissions factors

Calculated with the emission factors specified in the “Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain," and "Act on Promotion of Global Warming Countermeasures" published by the Ministry of Economy, Trade, and Industry and the Ministry of the Environment.

CO2 emissions for supply chains in the steel sector (Scope 1, Scope 2, and Scope 3)

1. Data and Results(FY2023)

Coking coal

Scope Emission volumes
(t-CO2e)
Calculation methods / Other
Scope 1 and 2 95,857 Sojitz Corporation, all domestic and overseas consolidated subsidiaries, and unincorporated joint ventures subject to reporting under the operational control approach.
category(*)
Scope3 1 Purchased goods and services 105,959 Calculated by multiplying the production of thermal coal traded by Sojitz by an emissions factor.
2 Capital goods 10,414 Calculated by multiplying the consolidated subsidiary's capital investment by an emissions factor.
3 Fuel- and energy-related activities
(not included in scope 1 or scope 2)
12,297 Calculated by multiplying the consolidated subsidiary's fuel and electricity consumption by emissions factors.
4 Upstream transportation and distribution 55,347 Calculated by multiplying the sold coking coal traded by Sojitz (including that from the mines in which Sojitz holds equity interests) by transportation distance and emissions factors, or by multiplying fuel consumption by emissions factors. Transportation distance is calculated up until the trader in the case where the sales destination is a trader and Sojitz is unable to ascertain the destination beyond them.
5 Waste generated in operations 1 Calculated by multiplying the waste generated in operations by an emissions factor.
6 Business travel - -
7 Employee commuting - -
8 Upstream leased assets - Not applicable based on the specific attributes of the business
9 Downstream transportation and distribution - -
10 Processing of sold products - Not applicable based on the specific attributes of the business
11 Use of sold products 6,162,928 Calculated by multiplying the coking coal traded by Sojitz by an emissions factor.
12 End-of-life treatment of sold products - Not applicable based on the specific attributes of the business
13 Downstream leased assets - Not applicable based on the specific attributes of the business
14 Franchises - Not applicable based on the specific attributes of the business
15 Investments 283,133 Scope 1 and Scope 2 emissions of the coal mines in which Sojitz holds equity interest.
Total 6,630,080
Total for supply chain 6,725,937★
  • Supply chain categories are in accordance with established GHG protocol

2. Boundary of Data

Steel making sector supply chain (Sojitz Group’s supply chain related to coking coal interests and coking coal sales)
In order to assess risks related to decarbonization, Sojitz conducts analysis of CO2 emissions for the entire supply chain (Scope 1, Scope 2, and Scope 3). We prioritize refining our quantitative data in the sector as it accounts for high CO2 emissions and has a large-scale impact on our business.

3. CO2 Emissions factors

Calculated with the emission factors specified in the “Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain," and "Act on Promotion of Global Warming Countermeasures" published by the Ministry of Economy, Trade, and Industry and the Ministry of the Environment.

Sojitz Corporation’s Scope 3 Emissions

Logistics-related CO2 Emissions

1. Data and Results

See the graph below to view Sojitz Corporation’s freight transport-related CO2 emissions in Japan, where Sojitz Corporation is classified as the owner of the goods according to the Energy Conservation Law.

2. Initiatives

Energy reduction initiatives include modal shifts, selecting the most appropriate type of vehicle, and strategically selecting transportation routes.

CO2 emissions resulting from overseas business trips

1. Data and Results

(unit:t-CO2e)

FY2019 FY2020 FY2021 FY2022 FY2023
2,828 33 178 1,266 1,718

2. Boundary of Data

Refers to flights to/from Japan taken by Sojitz Corporation employees. We have divided business trip destinations into six areas and selected a major airport from each area to use in determining distances for the calculation of passenger kilometer data.

3. CO2 Emissions factors

Calculated with the emission factors specified in the "Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain," published by the Ministry of Economy, Trade, and Industry and the Ministry of the Environment.

CO2 emissions resulting from commuting

1. Data and Results

(unit:t-CO2e)

FY2019 FY2020 FY2021 FY2022 FY2023
472 722 756 702 743

2. Boundary of Data

Emissions from trains and buses used by Sojitz Corporation employees.

3. CO2 Emissions factors

Calculated with the emission factors specified in the "Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain," published by the Ministry of Economy, Trade, and Industry and the Ministry of the Environment.

(CO2 emissions by Sojitz Group companies worldwide, including Sojitz Corporation,divided by the number of employees belonging to consolidated subsidiaries worldwide)

■ Electricity

Sojitz Corporation’s Electricity Consumption and CO2 Emissions

1. Data and Results

(unit:thousand kWh)

  FY2019 FY2020 FY2021 FY2022 FY2023
Total electricity consumption 2,610 2,599 2,623 2,596 2,554★
-Of total electricity, amount of electric power from renewable energy used 0 0 10 0 223
-generated internally utilizing renewable resources 0 0 0 0 0
-purchased renewable energy electricity amounts 0 0 0 0 223
-purchased non-fossil fuel certificates 0 0 10 0 0

2. Scope of Data

Sojitz Corporation: Head office, Kansai Office, and branches (Hokkaido, Tohoku and Nagoya)

Sojitz Group’s Electricity Consumption

1. Data and Results

(unit:thousand kWh)

FY2019 FY2020 FY2021 FY2022 FY2023
Total electricity consumption 220,930 263,805 266,035 295,834 311,811★
-Of total electricity, amount of electric power from renewable energy used 162 210 760 3,015 8,929
-generated internally utilizing renewable resources 0 4 70 1,582 3,290
-purchased renewable energy electricity amounts 162 206 680 1,433 5,639
-purchased non-fossil fuel certificates 0 0 10 0 0

2. Boundary of Data

Sojitz Corporation, all domestic and overseas consolidated subsidiaries, and unincorporated joint ventures subject to reporting under the operational control approach.

  • Previous years' data has been revised to reflect a revision of the boundary of data collection

Change in Natural Resource Interests Assets