Initiatives Aimed at Preventing Global Warming

Recognizing climate change as an issue of the utmost importance to society and a critical factor affecting its businesses, the DIC Group is working as one to reduce energy consumption and promote decarbonization and in its DIC111 medium-term management plan, announced in fiscal year 2019, has pledged to reduce greenhouse gas emissions from its sites. As a manufacturer of fine chemicals with a global presence, the Group is also leveraging its technological capabilities to develop products that will contribute to the realization of a low-carbon society.
At the 2015 United Nations Climate Change Conference (the 21 annual session of the Conference of the Parties (COP21) to the United Nations Framework Convention on Climate Change (UNFCCC)), participants adopted the Paris Agreement, a move aimed at accelerating efforts to tackle this urgent challenge. In May 2019, the DIC Group declared its support for the TCFD,* which was announced in 2017, pledging to disclose climate-related information in line with TCFD recommendations going forward.

• The TCFD was established under the auspices of the Financial Stability Board (FSB) and announced in 2017 with the aim of mitigating climate change–related instability and risk in financial markets, which has the potential to affect performance over the medium to long term.

Basic Approach to Preventing Global Warming

Global warming—a principal cause of climate change—is an increasingly pressing issue for the entire world. Believing that measures to prevent global warming are critical to effective management for a chemicals manufacturer, the DIC Group is actively promoting a variety of efforts, as outlined below.

• Undertake energy-saving initiatives worldwide
• Deploy effective strategies through working group activities
• Operate energy-saving cogeneration systems (combined heat and electric power generating facilities)
• Employ energy from renewable sources (biomass boilers, wind power and solar power) at suitable sites
• Conduct energy-saving analyses and deploy energy-saving initiatives at DIC Group companies, including those overseas
• When installing or expanding facilities, purposefully select energy-efficient equipment and formulate related rules (investment in environmental value)

• Note: A total of 16 of the DIC Group’s 32 sites and 20 offices and research facilities in Japan have earned certification under the country’s Designated Energy Management Factory system.

Framework for Promotion

DIC and DIC Group companies in Japan have established an Energy-Saving Promotion Committee at each site. Committee activities include confirming the progress of initiatives, engaging in discussions and conducting patrols. DIC has also set up an Energy-Saving Working Group at each site, comprising members chosen by the site, to foster the exchange of information and research pertaining to new items and to promote the horizontal deployment of effective measures across the Group. This combination of site- and Group-level initiatives forms the framework under which the DIC Group endeavors to reduce its CO₂ emissions. Overseas, DIC Group companies promote a wide range of independent energy-saving initiatives that align with the Group’s policy. The Production Management Unit provides support on multiple fronts, including the deployment of management systems and the training of employees. Critical initiatives are debated by and the progress thereof is reported on by the Sustainability Committee, which answers directly to the president and CEO.

Principal Initiatives in Fiscal Year 2020

01Energy Consumption and CO₂ Emissions by the Global DIC Group

Energy consumption by the global DIC Group in fiscal year 2020 declined 3.1% from fiscal year 2019 and 16.9% from the fiscal year 2013 base year. CO₂ emissions by the global DIC Group amounted to 552,123 tonnes, down 4.3% from fiscal year 2019 and 23.6% from fiscal year 2013, while CO₂ emissions per unit of production, at 271.7 kg/tonne, edged up 0.6% from fiscal year 2019 but fell 16.9% from the base year.
The DIC Group’s diverse product portfolio includes printing inks, polymers, pigments, LCs, engineering plastics and compounds. Recent years have seen an uptrend in the output of energy-intensive fine chemicals and a downtrend in the output of general-purpose items, the production of which is comparatively energy efficient. Against this backdrop, the Group’s success in achieving a reduction in the volume of CO₂ it emits worldwide in excess of its target for the year included a decline in production volume due to COVID-19, as well as efforts by companies worldwide to break down the target—an average annual decrease of 2.1% from fiscal year 2018—set forth in the DIC111 medium-term management plan to ensure achievement of its long-term target of a 30.0% reduction from the fiscal year 2013 level by fiscal year 2030. This achievement also reflected the promotion of energy-saving and decarbonization initiatives beyond what had been necessary to achieve its previous annual reduction target of 1.0%. Some of these initiatives are outlined below.
Going forward, the Group will continue to implement a variety of energy-saving measures, including introducing highly efficient facilities, promoting process improvements and boosting capacity utilization rates, while at the same time further advancing its use of renewable energy by shifting to biomass and other clean fuels and installing solar power facilities.

02Energy Consumption and CO₂ Emissions by the DIC Group in Japan

Energy consumption by the DIC Group in Japan—the 54 sites in Japan operated by DIC and domestic DIC Group companies—in fiscal year 2020 was down 8.5% from fiscal year 2019 and 13.0% from the fiscal year 2013 base year. Energy consumption per unit of production totaled 3.733 GJ, an increase of 0.8% from fiscal year 2019 but a decline of 10.5% from the base year. CO₂ emissions by the Group in Japan amounted to 194,364 tonnes, a decrease of 12.0% from fiscal year 2019 and 20.5% from fiscal year 2013, while CO₂ emissions per unit of production amounted to 189.6 kg/tonne, down 3.1% from fiscal year 2019 and 18.2% from the base year.
Principal factors behind lower CO₂ emissions by the Group in Japan included a decline in production volume attributable to the COVID-19 pandemic, as well as the implementation of 468 energy-saving initiatives at sites and start of operations of solar power facilities at six sites, including the Sakai Plant, with a combined annual generating capacity of 1,277 kW. As of December 31, 2020, the total generating capacity of solar power facilities at DIC Group sites in Japan was 4,341 kW.
Other contributing factors included a decrease in the incineration of waste oil and waste plastic using a rotary kiln at the Chiba Plant and by Group company DIC Decor, Inc., which resulted in a decline in CO₂ emissions attributable to the incineration of waste equivalent to 2.7% of total emissions attributable to the Group in Japan in fiscal year 2019.

Renewable Energy as a Percentage of Total Energy Used in Japan: 15.2%

The bulk of renewable energy used by DIC Group companies in Japan is natural energy generated by a biomass boiler and wind and solar power facilities at the Kashima Plant. In fiscal year 2020, DIC Group companies in Japan used 687,000,000 GJ of renewable energy (equivalent to 17,725 kl of crude oil), up 32.4% from fiscal year 2019 and representing 15.2% of total energy (steam and electric power) consumed by these companies. The increase in renewable energy use was attributable to a variety of factors, including the fact that electric power generated by the Kashima Plant’s wind power system (two 2,300 kW–capacity wind turbines) fell sharply in fiscal year 2019 as a result of repairs, which required close to three months to complete, and an increase in the positive impact of biomass boiler performance.
In fiscal year 2020, DIC completed the installation of new solar power facilities at six sites in Japan (the Sakai and Komaki plants, the Central Research Laboratories and Group company DIC Kyushu Polymer Co., Ltd., and Group company DIC Kitanihon Polymer Co., Ltd.’s Hokkaido and Tohoku plants) with a combined annual generating capacity of 1,277 kW. As a consequence, the total generating capacity of solar power facilities at DIC Group sites in Japan as of December 31, 2020, was 4,341 kW, while solar power generated by the DIC Group in Japan during the period rose 42.0%, to 4,341 kWh, from 3,064 kWh in fiscal year 2019.
The use of renewable energy by DIC Group companies in Japan in fiscal year 2020 accounted for reduction in CO₂ emissions of 43,526 tonnes, or 18.3%, from the previous fiscal year. Going forward, DIC will continue to take decisive steps to advance its use of renewable energy with the aim of achieving its long-term target for reducing CO₂ emissions from DIC Group sites by 30.0% from the fiscal year 2013 level by fiscal year 2030.

Solar Power Facilities Installed in Japan in Fiscal Year 2020

03Independent Electric Power Generation in Japan

In fiscal year 2020, electric power consumption by the DIC Group in Japan declined 5.6%, to 255,860,000 kWh, approximately 25.0% of which was generated independently, with that generated using renewable energy accounting for 9.4% and that generated using cogeneration systems representing 15.6%. Despite an increase in independently generated solar power, total independently generated power edged down 0.2%, owing to the temporary stoppage of the Gunma Plant’s cogeneration system.

DIC Wins New Energy Foundation Chairman’s Award in the Adoption and Application Category of the 2018 New Energy Awards

In December 2018, DIC won a New Energy Foundation Chairman’s Award in the Adoption and Application Category of the 2018 New Energy Awards in recognition of the expanded use of renewable energy at the Kashima Plant. The awards program, which was presented by the New Energy Foundation, was established with the aim of encouraging the introduction of new energy and promoting awareness by commending particularly excellent initiatives.
The Kashima Plant has installed multiple renewable energy–powered generating facilities, including biomass and methane gas boilers, as well as wind power and solar power systems. As a consequence, 50% of electric power and 80% of heat consumed annually by the site is generated by using renewable energy. These facilities also contributed to a reduction in annual CO₂ emissions in fiscal year 2018 of more than 36,000 tonnes. Looking ahead, the department responsible for the plant’s energy supply will continue working to enhance the combustion effi ciency of generating facilities, including biomass and methane gas boilers, by upgrading maintenance and management technologies and accumulating know-how.
The Chairman’s Award recognizes the positive results of these steadfast efforts. DIC will deploy know-how accumulated by the Kashima Plant at sites both in Japan and overseas with the aim of increasing its use of renewable energy and reducing its emissions of greenhouse gases around the world.

04Protecting the Ozone Layer

Hydrofluorocarbons (HFCs) are used widely as refrigerants in equipment and facilities. While not an ozone-depleting substance (ODS), HFCs have a warming potential 100–10,000 times that of CO₂ and their use is expected to account for a 0.5°C increase in the global average temperature by the end of the 21st century. At the 28th Meeting of the Parties in Kigali, Rwanda, held in October 2016, the Parties to the Montreal Protocol on Substances that Deplete the Ozone Layer reached an agreement to phase out the production and use of HFCs (the Kigali Amendment). Japan subsequently amended its Act on the Protection of the Ozone Layer Through the Control of Specifi ed Substances and Other Measures in line with the amendment, which as of October 3, 2020, had been ratifi ed by 105 Parties. (Having surpassed the condition of ratifi cation by at least 20 Parties, the Kigali Amendment entered into force on January 1, 2019.)
In April 2015, Japan also revised its Fluorocarbons Recovery and Destruction Law. The same month, the Act on Rational Use and Proper Management of Fluorocarbons entered into force, compelling stakeholders to ascertain and report leaks of fl uorocarbons from commercial equipment and facilities.
In fiscal year 2020, leaked fl uorocarbons from DIC sites were equivalent to 418 tonnes of CO₂. (Leaks in excess of 1,000 tonnes per site or per company must be reported to the Japanese authorities.) The Company has worked to effectively manage fluorocarbons since the Act on Rational Use and Proper Management of Fluorocarbons entered into force and has managed to keep leaks below the level requiring reporting. Leaked fl uorocarbons in fiscal year 2020 were lower than in an average year as a consequence of the replacement of fewer chillers. (Leaked fluorocarbons are calculated as the difference between amount filled into new equipment and amount recovered when equipment is dismantled.) The DIC Group will continue to select air conditioning and other equipment using nonfluorocarbon and other refrigerants that do not negatively impact the environment with the aim of reducing the amount of leaked fl uorocarbons for which it is responsible.

05Energy Consumption and CO₂ Emissions by the DIC Group Overseas

Notwithstanding a 0.2% dip in production volume by the DIC Group overseas in fiscal year 2020, CO₂ emissions edged up 0.4%, despite being down 25.2% from the fiscal year 2013 base year, while CO₂ emissions per unit of production rose 0.6%, but were down 14.2% from fiscal year 2013. Energy consumption edged up 0.3%, but declined 19.0% from the base year.
F actors contributing to the increase in CO₂ emissions included the fact that efforts by individual DIC Group companies to break down the Group’s emissions reduction targets and promote decarbonization initiatives were countered by the inclusion beginning in fiscal year 2020 of production facilities operated by affi liates in the PRC and Taiwan.

Asia–Pacific Region

The 22 DIC Group sites in the Asia–Pacific region account for roughly 19% of the Group’s total global CO₂ emissions. With production volume in fiscal year 2020 down 5.7% from fiscal year 2019 and 5.2% from the fiscal year 2013 base year, energy consumption by Group companies across the region decreased 1.0% from the previous fiscal year, despite being up 3.4% from fiscal year 2013, while CO₂ emissions edged up 0.7% from fiscal year 2019, but were down 7.1% from the base year. Indonesia is home to the Group’s mother plant for pigments, production of which is comparatively energy intensive. The pigments business accounts for more than 50% of the Group’s energy consumption and CO₂ emissions in this region, underscoring its influence on results for the region as a whole. Accordingly, the Group continues to promote a variety of initiatives at this site—including replacing a portion of the coal used to fire boilers with palm kernel shells (PKS), a biomass fuel, an effort that began in fiscal year 2016, and earning certification under ISO 50001, the International Organization for Standardization’s benchmark for energy management systems—with the aim of reducing its regional CO₂ emissions.
As part of its effort to ensure achievement of the CO₂ emissions target set for the global DIC Group, corporate headquarters assists regional Group companies by formulating and implementing energy-saving plans; promoting ongoing energy-saving analyses to support the identification of energy-saving themes and the implementation of remedial measures; deploying a practical energy management manual and best practice case study materials to establish management practices and promote horizontal deployment; and launching and providing support for energy-saving and carbon-reduction projects at suitable sites.

Greater China

The DIC Group’s 18 sites in Greater China account for approximately 10% of the Group’s total global CO₂ emissions. Production volume in fiscal year 2020 was down 4.0% from fiscal year 2019, but up 2.4% from the fiscal year 2013 base year. Energy consumption by Group companies across the region decreased 1.9% from the previous fiscal year, although it was 3.9% higher than in fiscal year 2013, while CO₂ emissions declined 2.0% from fiscal year 2019 and 5.8% from the base year. Significant improvements were seen in energy consumption per unit of production at manufacturers DIC Graphics (Guangzhou) (printing inks), Changzhou Huari New Material (synthetic resins) and DIC Synthetic Resins (Zhongshan) Co., Ltd. (synthetic resins and metal carboxylates).

Americas and Europe

The DIC Group has 122 sites in the Americas and Europe (this category also includes sites in Africa), which account for roughly 35% of the Group’s CO₂ emissions. In fiscal year 2020, production volume was down 3.3% from the previous fiscal year and 4.9% from the fiscal year 2013 base year. Energy consumption by DIC Group companies across the region edged up 0.2% from the previous fiscal year, but was down 20.9% from fiscal year 2013, while CO₂ emissions declined 0.3% from fiscal year 2019 and 27.6% from the base year.
DIC Group companies in the Americas and Europe promote a variety of measures with the aim of lowering CO₂ emissions. These include making use of biomass energy (landfill biogas), solar and small hydroelectric power, employing outsourcing to contract energy-efficiency consultants to advance the reduction of energy consumption, and promoting the integration of production facilities alongside measures to boost production effi ciency. These initiatives have yielded consistently positive results since fiscal year 2014.
In fiscal year 2019, the Group’s regional headquarters, Sun Chemical, installed solar power facilities with an annual generating capacity of approximately 800 kW with the goal of expanding its use of renewable energy. Going forward, companies in the Americas and Europe will continue to implement ambitious initiatives that contribute to the reduction of its global CO₂ emissions.

Sun Chemical’s Approach to Sustainability

Sun Chemical promotes innovation with the aim of improving the sustainability of its manufacturing processes and products, maintaining a constant awareness of environmental impact. The company strives to use manufacturing processes that demonstrate environmental excellence through reduced waste generation, lower energy and water use, and a strong safety performance as measured using key metrics such as greenhouse gas emissions, energy and water consumption, carbon footprint and safety record. Sun Chemical is also committed to meeting local regulatory requirements in the countries and territories in which it operates and to working proactively with government, industry organizations and business partners in its value chain to better defi ne, measure and promote sustainability.
Product stewardship and risk management are important components of Sun Chemical’s sustainability policy. The company continues to take a responsible, analytically based approach to fulfi lling its role as a steadfast leader in this area. Through such ongoing efforts, the company increases environmental effi ciency by helping its customers enhance the sustainability of their manufacturing processes and products. Sun Chemical’s longstanding reputation for quality, service and innovation and its dedication to improving sustainability infl uences both its daily operations and its global strategic direction.
Along with DIC, Sun Chemical has committed to a long-term strategic target for CO₂ emissions, which is to achieve a reduction of at least 30% by fiscal year 2030, with fiscal year 2013 as the base year, following the Paris Agreement, which succeeded the Kyoto Protocol (1990–2012) as the global framework for addressing the challenge of dealing with greenhouse gas emissions. This level, if implemented across all industries, would limit the increase in global average temperature due to climate change to below 2.0°C above pre-industrial levels. To achieve this target, Sun Chemical will focus on investments in sustainable energy, as well as on measures to improve the effi ciency of its manufacturing processes.

Sun Chemical Steps Up Investment in Renewable Energy by Introducing Solar Panels

Sun Chemical has concluded a solar power purchase agreement (PPA) with Onyx Renewable Partners and installed solar panels on the roof of the parking structure at its R&D site in Carlstadt, in the U.S. state of New Jersey. The use of clean energy thus generated was expected to reduce the facility’s carbon footprint. Installation of the panels began in fall 2017 and was completed in January 2018. The system came on line in March 2018.
Sun Chemical has since completed a year-round solar panel operating configuration at the site that makes it possible to generate enough solar power on sunny days to satisfy 90% of the site’s needs. Between May 14, 2018 and May 13, 2019, the system generated a total of 871 MWh of power, reducing CO₂ emissions by an estimated 1,358,092 pounds (616 tonnes) over the same period.

Solar panels installed on the roof of the Carlstadt R&D site’s parking structure

Adoption of Renewable Energy by DIC Group Companies Overseas

Against a global trend toward decarbonization, DIC Group companies overseas are working to popularize the use of renewable energy. Companies in the Asia–Pacifi c region, Greater China, and the Americas and Europe are making use of government subsidies and support to, for example, install biomass boilers and solar power facilities. In fiscal year 2020, new solar power facilities with a combined annual generating capacity of 1,277 kW commenced operation. As of January 2021, the Group’s global solar power generating capacity (for internal consumption) was 6,445 kW, comprising 4,341 kW in Japan and 2,104 kW overseas. The DIC Group will continue to promote efforts to expand its solar power generating facilities worldwide. In fiscal year 2021, the Group plans to install new solar power generating facilities with a total generating capacity of 2.5 MW worldwide.
In fiscal year 2020, the global DIC Group used a total of 781,542 GJ of renewable energy, an increase of 20.1% from 650,996 GJ in fiscal year 2019. The use of renewable energy accounted for a reduction in the Group’ s global CO₂ emissions of 49,319 tonnes.

Initiatives in Areas Other than Production (Offices and Research Facilities)

In fiscal year 2020, energy consumed by the DIC Group’s 22 production and research sites in Japan (excluding the Central Research Laboratories) declined 0.3%. Of particular note, DIC’s headquarters, the most energy intensive of the 22 domestic sites, achieved a decrease of 11.4%. Principal energy-saving initiatives implemented include replacing aged light fixtures and air conditioning equipment with newer, highefficiency models that satisfy standards set by the Energy Conservation Center, Japan (ECCJ) for its Top Runner program, turning off lights when not needed and implementing mandatory 22°C winter and 28ºC summer air conditioning settings, working with facility management companies to implement diligent energy-saving measures and promoting efforts in line with Japan’s Cool Biz and Warm Biz campaigns.

Grasping CO₂ Emissions Across the Supply Chain

Regarding CO₂ emissions across its supply chain (Scope 3* emissions), in fiscal year 2017 DIC participated in a lecture on the Science Based Targets (SBT) initiative organized by Japan’s Ministry of the Environment. As a consequence, DIC now reports global data for all categories of Scope 3. The Company also obtains third-party verification for its data for waste generated in operations.

• Scope 3 emissions are indirect emissions from production, trans port, business travel, commuting and other activities in the supply chain.