Osaka Organic Chemical Industry Ltd. : The leading company in acrylic acid esters

Responses to the TCFD Recommendations

In response to risks and opportunities related to climate change, the TCFD recommendations are recommendations for disclosure of information on the following four areas:Governance, Strategy, Risk Management, and Metrics and Targets.
The OOC Group will strive to win the trust of society and stakeholders by incorporating the climate change-related initiatives it has conducted to date into a framework based on the TCFD recommendations and by disclosing information on the risks and opportunities it has analyzed.

Governance

The Sustainability Committee was established as an organization to carry out initiatives for building OOC resilience.This organization is composed of cross-organizational members led by the CEO.
Important matters, such as basic policies, are deliberated and resolved by the Board of Directors while other matters are deliberated by the Sustainability Committee (twice a year), and deliberation results are reported to the Board of Directors (twice a year) for its deliberation and approval as necessary.Any new risks identified are discussed by the Risk/Compliance Committee first, and if deemed relevant to the TCFD, the Sustainability Committee conducts a scenario analysis and identifies key risks.
The analysis results are reported to the Risk/Compliance Committee and the Board of Directors.

Governance System Diagram

Scenario Analysis

The OOC Group performed scenario analysis on opportunities and risks created by climate change for its business in accordance with the TCFD framework based on the conditions summarized below.
For the analysis conditions, we developed two scenarios:1.5ºC scenario and 4.0ºC scenario. The former represents the situation where various measures are taken to curb climate change, and the latter represents the situation where no such measures are taken.
We also identified opportunities and risks for the business segments of OOC under the same conditions.

Analysis Conditions

	Ref	1.5°C scenario		4.0°C scenario
Reference conditions		IPCC：SSP1-1.9 IEA-WEO：NZE		IPCC：SSP5-8.5 IEA-WEO：STEPS
Year	2020	2030	2050	2030	2050
Global CO₂ emissions (Gt-CO₂)		26	0	37	34
Carbon taxes (USD/t-CO₂)		15 to 90	55 to 200	0	0
Ratio of electrical energy in total energy consumption (industry)	22%	28%	46%	23%	25%
Mix of power sources Coal and petroleum Natural gas Nuclear energy Renewable energy	Coal and petroleum: 38% Natural gas: 23% Nuclear energy: 10% Renewable energy: 28% Other: 1%	Coal and petroleum: 9% Natural gas: 17% Nuclear energy: 10% Renewable energy: 61% Other: 3%	Coal and petroleum: 0% Natural gas: 0% Nuclear energy: 8% Renewable energy: 88% Other: 4%	Coal and petroleum: 27% Natural gas: 21% Nuclear energy: 9% Renewable energy: 42% Other: 1%	Coal and petroleum: 14% Natural gas: 18% Nuclear energy: 8% Renewable energy: 60% Other: 0%
Sea level rise (through 2100)	0	0.28 to 0.55 ｍ		0.63 to 1.01 ｍ
Average annual precipitation (through 2100)	0	Increase by 0 to 5%		Increase by 1 to 13%

1.5°C Scenario

Transition/ physical	Item	Risks / Opportunities	Description	Term	Impact	Responses
Transition	Policies and regulations	Opportunities	To reduce energy costs by increasing efficiency of production and transportation ・Lower prices of solar panels, wind power generation, and power storage equipment	Medium term	Small	・Diversify the sources of raw materials and transportation methods
		Opportunities	To reduce procurement costs as a result of the general acceptance of renewable energy ・Development of products suitable for resource saving	Short term	Small	・Curb electricity costs by introducing off-grid power generation equipment, such as solar power, wind power, etc. ・Purchase green electric power or electric power generated from renewable energy sources ・Develop products suitable for resource saving
		Risks	Increase in costs to meet tighter GHG regulations ・Increase in manufacturing and shipping costs due to soaring crude oil and electricity prices ・Increase in operating costs due to carbon pricing Estimated cost increases if GHG emissions are not reduced 　In 2030: 80 to 490 million yen 　In 2050: 300 to 1,080 million yen Estimated cost increases if GHG emissions are reduced in accordance with the reduction targets of OOC 　In 2030: 60 to 360 million yen 　In 2050: 0 yen	Short term	Medium	・Curb total GHG emissions by streamlining manufacturing processes
		Risks	Higher prices and/or procurement dif culty of certain materials to meet tighter GHG regulations ・Increase in costs of raw materials, such as naphtha ・Increase in disposal costs, such as cost of disposing of waste oil	Short term	Medium	・Consider switching raw materials ・Curb heavy oil consumption and reduce disposal cost by using heat from waste oil boilers and other sources
	Technology	Opportunities	Increase in business opportunities due to increase in demand for environmentally friendly technology
	Technology	Risks	Increase in investment and R&D costs for environmentally friendly technology	Short term	Small	・Develop decarbonized energy technology and provide a wide range of energy technologies
	Reputation	Opportunities	Improvement of corporate image through enhanced disclosure of climate-related information	Short term	Small
		Risks	Decline in the value of corporate brand due to delay in responses	Short term	Medium	・Provide timely information disclosure
		Risks	Downgrades of external assessment due to a lack of information disclosure	Short term	Medium	・Enhance information disclosure

4.0°C Scenario

Transition/ physical	Item	Risks / Opportunities	Description	Term	Impact	Responses
Physical	Acute	Risks	Decline in capacity utilization at business sites due to a sudden disaster ・Shutdown, fire, or leakage caused by a typhoon, tsunami, etc. ・Logistics disruption caused by heavy snowfall	Long term	Large	・Develop BCP measures at each site
			Interruption of operations due to disaster damage to supply chain ・Shutdown of suppliers and manufacturers due to disaster damage	Long term	Medium	・Implement supply chain management to achieve sustainable procurement
			Spread of an epidemic ・Decline in production and shipping efficiency due to epidemic infection of employees	Long term	Small	・Educate employees on symptoms, control measures, etc. of infectious diseases and prepare response flows
	Chronic	Risks	Chronic climate change (sea level rise, temperature rise,etc.)	Long term	Small	・Enhance resource-saving features of products
			Decrease in the precision of manufacturing processes and increase in management costs due to temperature rise ・Decline in production efficiency due to the deterioration of working environment or work-related injuries at manufacturing sites ・Increase in electricity costs due to need for stronger air conditioning ・Decline in preservation stability in non-refrigerated warehouses due to storage temperature rise ・Decline in product stability during transportation	Long term	Small	・Enhance break rooms and install local cooling fans ・Establish management standards that take account of climate change and consider the use of 25ºC temperature warehouses ・Evaluate the necessity for temperature management during transportation
			Destabilization of supply of natural resources, water,electric power, raw materials, etc.	Long term	Medium	・Monitor and address water risk and diversify the sources of raw materials

Opportunities and Risks Related to Business

Business domains	Risks / Opportunities	Description	Term	Impact	Responses
Common	Opportunities	Increase development projects or obtain new themes by adding new functions, such as energy saving and efficiency improvement	Short term	Small	・Obtain market information on an ongoing basis and strengthen development on new themes
Common	Risks	Decline in product competitiveness due to soaring heavy oil prices, increase in raw material, process, and transportation costs, and soaring product prices caused by GHG emission regulations	Short term	Medium	・Reduce the man-hours in heavy oil processes or replace them with electric processes
Chemical products	Opportunities	Replace raw materials for existing products with bio-derived raw materials	Medium term	Medium	・Expand the line-up of products that use bio-derived raw materials, such as biomass acrylate
	Opportunities	Expand OOC’s share of materials for UV curing by capitalizing on increase in demand for energy saving processes	Short term	Small	・Promote the sales of materials for UV curing
	Risks	Decline in product competitiveness due to increase in the cost of distillation processes	Short term	Medium	・Reduce the man-hours in heavy oil processes or replace them with electric processes
	Risks	Supply shortage of biomass raw materials due to increase in demand for them	Medium term	Small	・Secure and diversify the supply sources of biomass raw materials
Specialty chemicals	Opportunities	Increase own product sales by capitalizing on increase in demand for cosmetics with reduced environmental impact	Short term	Small	・Develop materials for cosmetics with reduced environmental impact
Specialty chemicals	Opportunities	Increase own product sales by capitalizing on increase in demand for cosmetics for heat care, such as cooling cosmetics	Short term	Small	・Promote the sales of cosmetics for heat care
Electronics materials	Opportunities	Increase in demand for semiconductor products resulting from the shift to high-speed communications, larger data volume, and faster processing, which is caused by increase in demand for power saving	Short term	Large	・Enhance manufacturing facilities for materials for semiconductors
	Opportunities	Increase in demand for semiconductors due to the advancement of indoor IoT as a result of increase in indoor activities	Short term	Medium
	Risks	Major changes in manufacturing methods due to increase in energy costs and associated significant decrease in demand for materials	Long term	Medium	・Obtain industry information from customers on an ongoing basis
Shinko Organic	Opportunities	Increase in demand for solvents for semiconductors due to increase in demand for semiconductors	Short term	Medium	・Consider enhancing manufacturing facilities
Shinko Organic	Risks	Decrease in demand for solvents for paints due to increase in demand for energy saving processes	Short term	Medium	・Obtain market information on an ongoing basis and develop new themes

CO₂ Emission Reduction Targets and Measures

The OOC Group has recognized the importance of addressing climate change through a transition to a decarbonized society,and medium- to long-term targets have been set by OOC’s Carbon Neutralization Study Committee established in 2021.
For the business segments of the Company, we have also identified specific measures to achieve the targets as shown in the table below, in addition to those rationalization and energy saving measures that we have been implementing. We will strive to achieve carbon neutrality by meeting these targets.

	Reduction targets (as compared with fiscal 2013)	Specific measures
Short term	20% or more by fiscal 2026	・Reduce environmental impact and Scope 1 CO₂ emissions through the reuse of waste solvents ・Develop biomass products ・Reduce Scope 2 CO₂ emissions by introducing renewable energy sources (such as solar panels) ・Reduce Scope 2 CO₂ emissions through the purchase of green electricity
Medium term	30% or more by fiscal 2030	・Development of biomass products ・Reduce Scope 1 CO₂ emissions by promoting the shift of energy sources from heavy oil to electricity
Long term	100% or more by fiscal 2050	・Scope 1 CO₂ reduction by promoting electrification of energy derived from heavy oil ・Development of biomass products ・Reduce Scope 1 CO₂ emissions by considering the introduction of energy sources that use carbon-free fuels(such as H₂ and NH₃) ・Reduce Scope 1 CO₂ emissions by reusing CO₂ by way of fixation and conversion of CO₂ into valuables ・CO₂ reduction by utilizing carbon offset, etc.

Metrics and Targets

Toward a decarbonized society, we have set the following measurement and reduction targets for CO₂ emissions from the Company’s own activities (Scopes 1 and 2) and indirect CO₂ emissions (Scope 3):

Scope 1 + 2	・Reduce CO₂ emissions by 30% by 2030 (as compared with fiscal 2013) ・Reduce CO₂ emissions by 100% or more by 2050 (as compared with fiscal 2013)
Scope 3	・Announce a reduction roadmap by 2025 ・Reduce CO₂ emissions by 100% by 2050 (as compared with fiscal 2023)

TCFD Declaration

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Sustainability