Oji Holdings: Oji : Efforts to Address Environmental and Social Issues

Efforts to Address Environmental and Social Issues Mitigation and Adaptation to Climate Change Basic Approach In 2020, the Oji Group formulated its Environmental Vision 2050 centered on the goal of net-zero carbon, while also positioning the Environmental Action Program 2030 as a stepping stone toward achieving its medium-term targets. In a bid to achieve our target of reducing greenhouse gas (GHG) emissions by 70% compared with FY2018 levels, we are working to reduce actual emissions by reducing coal consumption and other emission sources, and increasing the net increment in carbon stocks by forests. Business Model Targeting Decarbonization The Oji Group engages in a wide array of business activities, including the manufacture of pulp and paper. In light of the substantial amounts of heat (steam) and electricity consumed, these activities accordingly lead to the emission of GHGs commensurate with this energy use. By working to reduce GHG emissions from energy use and promoting CO 2 absorption by forests, we are contributing to climate change mitigation. Pulp and paper mills generate steam and electricity from black liquor produced in the wood pulp manufacturing process and waste wood unsuitable for use in pulp raw materials. The CO 2 emitted during combustion is offset by the CO 2 absorbed by trees during growth. In addition, the waste heat (steam) after generating electricity is reused in the manufacturing process in an effort to promote the effective use of energy. Moreover, we have been using the electricity generated by the Chitose No. 1 Hydroelectric Power Plant in Hokkaido since 1910 and, in recent years, solar power systems on factory roofs. Over and above in-house consumption at mills, we also expand the renewable energy generation business using biomass, hydroelectric, and solar power, and are considering wind power generation projects on company-owned sites. In addition to practicing sustainable forest management through replanting following harvesting, as well as the planting of elite trees with high growth rates, every effort is made to maintain and promote the CO 2 absorption functions of forests. GHG Emissions Reduction Target and Emissions Results Our target is to reduce net emissions (actual emissions minus the net increment in carbon stocks) by at least 70% compared with FY2018 levels by FY2030. Of this, 20% will be achieved through reductions in actual emissions (total of Scope 1 and Scope 2) and the remaining 50% by increasing the net increment in carbon stocks by forests. In FY2023, net GHG emissions were reduced by 28.1% compared with FY2018 levels, to 5,635 kt- CO 2 e. Maintaining and promoting absorption Reducing emisisons CO 2 CO 2 Fuel ・ Black liquor ・ Wood residue Forests Wood Raw Mills materials Sustainable Expand Renewable energy use Effective use of energy Biomass-fuel (e.g., black liquor, wood residue) Use of waste heat after forest management forest plantations ・ ・ Hydroelectric power generating electricity ・ ・ Replanting following harvesting ・ ・ Solar power Saving energy GHG emissions Actual emissions (Scope 1 + 2) Net increment in carbon stocks by forests Net emissions Base year emissions (Scope 1 + 2) (kt-CO 2 e) 8,000 7,836 6,800 6,849 6,269 5,635 5,600 4,400 3,200 2,351 Net 2,000 zero 800 -400 -1,600 -1,214 -2,800 -4,000 -3,918 FY2018 FY2023 FY2030 FY2050 (base year) result results targets targets 60 Oji Group Integrated Report 2 0 2 4 Oji Group What the Oji Group Value Creation Story Value Creation Human Resource Green Innovation Efforts to Address Environmental Governance Data Section Aims for and Roadmap Strategy by Business Strategies and Social Issues Mitigation and Adaptation Climate-related Information Disclosure Sustainable Forest Nature-related Information Disclosure Circular Use of Responsible Raw Respect for Ensuring Workplace to Climate Change Based on the TCFD Recommendations Management Based on the TNFD Recommendations Resources Materials Procurement Human Rights Safety and Health Roadmap for GHG Emissions Reduction To achieve the FY2030 target for emissions reduction, we are focused on reducing actual emissions and increasing the net increment in carbon stocks by forests. Of the 16 boilers in Japan that were burning coal as of FY2018, we will terminate operations at all eight coal-only-fired boilers by FY2030, excluding backup boilers, and switch to gas fuels in a transition phase toward decarbonization. Operations were discontinued at two boilers by FY2023. Plans are in place to discontinue the use of two additional boilers, one each at the Sobue Mill and the Saga Mill of Oji Materia by FY2027. We are also considering reducing coal consumption by changing the composition of fuels at coal co-fired boilers. Roadmap for GHG Emissions Reduction toward FY2030 Further reducing the use of fossil fuels including gas is essential to achieving net-zero carbon emissions from FY2030. To this end, we are considering the use of alternative fuels, including hydrogen, ammonia, and e-methane (synthetic methane). Moreover, to increase the net increment of carbon stocks, we are advancing efforts to acquire overseas forest plantations. Making the most of the tree breeding and forest plantation technologies nurtured over our considerable history, we are engaging in the cultivation of elite fast-growing trees best suited to each region. Moving forward, we are promoting CO 2 absorption while expanding forests with a high net increment of carbon stocks. Topics Commenced a joint study on the manufacture of e-methane In conjunction with TOKYO GAS CO., LTD., and Tokyo Gas Engineering Solutions Corporation, we launched a joint study on the manufacture of e-methane at the Oji Paper Tomakomai Mill. This joint study will examine the domestic production and use of e-methane by investigating the reaction of green hydrogen, produced using electricity from existing hydroelectric facilities and future solar power generation facilities, with CO 2 derived from carbon neutral fuel generated and recovered in the pulp manufacturing process. GHG GHG Category Sub-category reduction reduction 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 (kt-CO 2 e) rate Improve energy Maintain energy Reduce energy consumption intensity by 1.0% or more per year, averaged over five years 200 2.6% efficiency conservation Reduced 5.0% on average from FY2019 to FY2023 Reduction Reduce coal ● Shut down one coal-only- ● Shut down ● To shut down 4 boilers in Actual Increase the 1,007 12.9% fired boiler one boiler To shut down 2 boilers consumption Technical research and testing to change the fuel composition Studies and decisions on facilities Implementation emissions percentage of renewable Install private solar Installation planning Investment decisions Installation energy use 360 4.5% power systems, etc. Install solar power systems on factory roofs and idle land Subtotal 1,567 20.0% Reduction of 988 kt-CO 2 e (12.6%) Expansion Expand forest Overseas production forests 256,000 ha 275,000 ha* 400,000 ha Search for sites, land surveys Assessment of business feasibility Consideration of acquisition, decision of net Invest in forest plantations increment conservation and 3,918 50.0% in carbon plantation stocks by Plant fast-growing Continue forest tree breeding (breed improvement) and elite trees' plantation forests trees Net increment in carbon stocks by forests: 1,214 kt-CO 2 e (15.5%) Total 5,485 70.0% * Area as of the end of FY2023. This does not include the 20,000 ha of production forest acquired in Uruguay in FY2024. 61 Fossil energy Waste energy Renewable energy Conservation forests Production forests Oji Group Integrated Report 2 0 2 4 Oji Group What the Oji Group Value Creation Story Value Creation Human Resource Green Innovation Efforts to Address Environmental Governance Data Section Aims for and Roadmap Strategy by Business Strategies and Social Issues Mitigation and Adaptation Climate-related Information Disclosure Sustainable Forest Nature-related Information Disclosure Circular Use of Responsible Raw Respect for Ensuring Workplace to Climate Change Based on the TCFD Recommendations Management Based on the TNFD Recommendations Resources Materials Procurement Human Rights Safety and Health Reducing Actual Emissions We are working to improve energy efficiency and increase the percentage of renewable energy use to reduce GHG emissions through our business activities. In FY2023, the actual GHG emissions (Scope 1 + 2) were reduced by 12.6% compared with FY2018 levels, to 6,849 kt-CO 2 e. Expansion of Net Increment in Carbon Stocks by Forests We are expanding the net increment in carbon stocks by forests by expanding plantations and planting fast-growing trees. In the 600,000 ha* 1 of forests owned and managed by the Oji Group in Japan and overseas, actual carbon stocks reached 124,560 kt-CO 2 at the end of FY2023, and the annual average net increment in carbon stocks by forests from FY2019 to FY2023 was 1,214 kt-CO * 2 . The Improve Energy Efficiency Energy consumption ★ (1,000 kL oile) Intensity per unit of net sales (kL oile / ¥ mil.) 2 amount of O 2 released during the same period averaged 883 kt per year* 3 . In FY2023, our major domestic companies made energy conservation investments of ¥0.93 billion, thereby reducing energy consumption by 47 thousand kL (in crude oil equivalent). Across the entire Group, energy consumption intensity was reduced by 5.0% per year on average from FY2019 to FY2023. Increase the Percentage of Renewable Energy Use 5,660 5,219 5,400 5,440 5,160 3.75 3.84 3.67 3.19 3.04 2019 2020 2021 2022 2023 (FY) ★ A star mark indicates that the FY2023 figure for energy consumption has been assured by KPMG AZSA Sustainability Co., Ltd. *1 This does not include the 35,000 ha of forest acquired in Uruguay in FY2024. *2 The figures of carbon stocks and net increment in carbon stocks exclude those by CENIBRA's forests planted by third parties and forests less than two years after plantation. *3 Calc