Addressing Climate Change
Basic Stance
As we work toward a sustainable society, addressing climate change has become a global challenge. JGC Group has identified "societies in harmony with the environment" as a material issue. Besides taking climate action through environmentally conscious business activities, the JGC Group studies and formulates business strategies accounting for scenario analysis in recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
Framework for Governance
As with all other aspects of management, our response to climate change is under the jurisdiction of the JGC Group representative director and CEO. Moreover, the long-term management vision and medium-term business plan announced in May 2021 were established through Board discussions based in part on results of climate change scenario analysis and an assessment of risks and opportunities. Monitoring of climate change issues is conducted by the Sustainability Committee, an advisory body to the representative director, which formulates policies and action plans related to sustainability, including the Group response to climate change, and deliberates to evaluate and promote relevant action.
Risk Management
The JGC Group is working to reduce and prevent risks from climate change and other factors under a framework that includes the Group Risk Management Committee. (Click here to see our Risk Management.)
Recognition of Climate-Related Risks and Opportunities
| New regulatory risks | Introduction of global carbon pricing may lead to higher equipment and fuel costs, which may affect business costs in the future. We also recognize that introduction of carbon taxes and stricter emission targets in various countries poses a risk of fewer contract opportunities, from a decline in oil & gas projects. |
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| Technology risks | Lower gasoline demand from the spread of electric and fuel cell vehicles poses a risk of fewer contract opportunities for plants in the oil & gas industry. A similar risk is posed by the spread of decarbonized materials and a shift to renewable energy driven by the spread of high-performance storage batteries. |
| Regulatory risks | Firms bidding on plant construction projects are likely to face stricter information disclosure requirements regarding their climate change measures. This poses a risk of lost opportunities or unsuccessful bids, which may affect the corporate reputation. |
| Market risks | Lower plant demand in the oil & gas industry may result in fewer contract opportunities. An aversion in financial and capital markets to business related to fossil fuels also poses a risk that projects may not be approved. |
| Policy and legal risks | Failure to maintain or build on our reputation as an enterprise with the technical expertise to contribute to climate change solutions such as carbon reduction, renewable energy, and hydrogen applications may adversely affect the JGC Group in various ways, such as contract opportunities, financing, or securing human resources. |
| Acute physical risks | More frequent extreme weather events such as heavy rain, storms, typhoons, and flooding attributed to climate change may physically damage materials, equipment, and JGC Group facilities, adversely affect employees, and delay procurement. |
| Chronic physical risks | Higher average temperatures may make longer construction periods more common, due to lower labor productivity at construction sites in temperate and tropical regions. Another concern is increased costs for countermeasures and accident compensation, due to higher occupational safety risks. There is also a risk of higher shipping costs from a lack of ports if sea levels rise in coastal areas. |
| Products and services | The JGC Group has an extensive record in renewable energy plants such as solar and biomass power plants, which, as the international community shifts toward decarbonization, may increase contract opportunities. The JGC Group has also taken steps to expand orders by establishing an organization dedicated to the promising segment of offshore wind power generation. |
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| Oil & gas sector applications of CCS, for which the JGC Group has completed multiple projects in Japan and overseas, and CCUS, for which joint development is underway, are expected to expand contract opportunities. | |
| The JGC Group is engaged in technological development and other initiatives in hydrogen, ammonia, and SMRs applications aimed at a decarbonized society. More contract opportunities here can be expected in the future. | |
| Greater worldwide demand for a circular economy can be expected to drive demand for technologies under development by JGC Group, which include chemical recycling of plastic waste, recycling of fiber waste, and SAF. |
Scenario Analysis
Strategy
The introduction of policies in the transition scenario on matters such as expanded renewable energy use and carbon pricing that supports reduced greenhouse gas (GHG) emissions are viewed by the JGC Group as an opportunity to expand into related business areas by leveraging Group core competencies. Energy transition and circular economy are positioned as axes of climate-related business plan. (Click here to see our Long-Term Management Vision.)
Metrics and Targets
The medium-term business plan pledges net-zero Scope 1 and 2 GHG emissions by 2050 from Group business activities at our own sites, besides targeting a 30 % reduction in emissions volume per unit of net revenue relative to fiscal 2020 levels by fiscal 2030. Scope 1 and 2 GHG emissions in fiscal 2021 stood at 133,573 tons CO2 equivalent, an increase of 2 % on a net sales basis. Scope 3 emissions in fiscal 2021 stood at 702,873 tons CO2 equivalent (all figures based on CDP survey responses).
Targets in the commitment to carbon neutrality by 2050
Climate Action Initiatives
This fiscal year marked the start of our participation in surveys conducted by the global environmental impact nonprofit CDP. The JGC Group has also declared support for recommendations of the Task Force on Climate Change-related Financial Disclosures (TCFD).
For further information, refer to JGC's CDP Climate Change 2022 Response[PDF:597KB].
