Climate Change Initiatives
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 materiality. 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).
Climate change related disclosure
In participating in international frameworks for climate change disclosure, the JGC Group has responded to CDP surveys since 2021 (when the Group received a B rating in fiscal 2022) and has followed TCFD disclosure guidelines as a supporter, including securities reports.
For further information, refer to JGC's CDP Climate Change 2023 Response[PDF:664KB].
Governance
The JGC Group responds to climate change issues under the leadership of the representative director and CEO, who is responsible for ensuring that environmental issues are addressed in Group business strategies and targets. One facet of this is assessing and managing climate-related risks and opportunities. Accordingly, 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 these risks and opportunities. Monitoring of climate change issues is conducted by the Sustainability Committee, which formulates policies and action plans related to sustainability, including the Group response to climate change, and deliberates to evaluate and promote relevant action.
Strategy
The JGC Group recognizes risks and opportunities related to climate change, which are reflected in strategies.
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. |
Business areas contributing to achieving societies in harmony with environment (2040 Vision)
Based on analysis of the above scenarios and the risks and opportunities, Energy Transition, Circular Economy and High-Performance Functional Materials are positioned as business areas for building the JGC Group’s purpose. Additionally, the introduction of policies in the SDS 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.
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.)
Metrics and Targets
Commitment to Carbon Neutrality by 2050
While the core domain of the JGC Group has long been Oil & Gas, we announced our "Commitment to Carbon Neutrality by 2050" in 2020 as a sign of our dedication to enhancing corporate value in a sustainable manner through transformation toward achieving planetary health.
Targets in the commitment to carbon neutrality by 2050
From fiscal 2020, we have been calculating and disclosing Scope 1+2 and Scope 3 for our six main group companies*. While net sales for fiscal 2022 increased significantly over the base year, the amount of Scope 1+2 emissions was kept at only a slight increase, resulting in a 28% reduction in emissions intensity per base unit of net sales (compared to fiscal 2020).
- *Six main group companies: JGC Holdings Corporation, JGC Corporation, JGC Japan Corporation, JGC Catalysts and Chemicals Ltd., Japan Fine Ceramics Co., Ltd., and Japan NUS Co., Ltd.
Key initiatives for reducing CO2 emissions
The JGC Group is coordinating efforts between relevant departments under the framework of sustainability promotion to study ways to reduce our CO2 emissions including the use of carbon credits, etc., and enhancing information disclosure.
Promotion of studies for reducing CO2 emissions toward achieving carbon neutrality by 2050
In fiscal 2022, we studied measures for reducing the JGC Group's CO2 emissions with the view to achieving net-zero CO2 emissions by 2050. During fiscal 2023, we are planning to first identify specific action plans aimed at reducing Scope 1+2 emissions, formulate a roadmap toward implementation, and gradually put them into action.
Active participation in climate change-related initiatives
In addition to compliant disclosures as a company endorsing TCFD, the JGC Group joined the TCFD consortium from January 2023 and has been taking part in various events, such as roundtable discussions with investors. We are working on enhancing our response to climate change and disclosure of information by facilitating the exchange of information with other companies and investors.
Since May 2023, the JGC Group has also been participating in the "GX League" led by the Ministry of Economy, Trade and Industry. The Company plays an active role in discussions as part of working groups within the GX League on the state of the carbon credit market and frameworks to suitable assess contributions made by Japanese companies to address climate change.
