Climate Change

We are committed to addressing social issues while achieving sustainable business growth, and have positioned the “environment” as one of our key corporate priorities. Within the environmental field, one of our highest-priority issues is mitigating climate change, namely achieving carbon neutrality. To help realize a carbon-neutral society, we are working company-wide on this critical initiative as one of our top management priorities.

Products such as automobiles enhance convenience and quality of life, while also being associated with environmental impacts, including greenhouse gas emissions. Recognizing that our business activities are closely linked to climate change, we are committed to reducing environmental impacts across our manufacturing operations, products, and supply chain, thereby contributing to the realization of a sustainable society.

Based on the “1.5°C scenario*” presented following COP21 (the Paris Agreement), which aims to limit the increase in global temperatures to no more than 1.5°C above pre-industrial levels, we have established the following CO₂ reduction and carbon neutrality targets, taking into account the needs of various stakeholders as well as our own ambitions and challenges.

* 1.5°C Scenario: A scientifically established emissions pathway (IPCC) aimed at achieving net-zero global CO₂ emissions around 2050 and limiting global warming to within 1.5°C above pre-industrial levels.

Targets Related to Climate Change (CO₂ Emissions Reduction) (Base Year: FY2020)

To achieve our 2025 targets, we have advanced initiatives based on our longstanding commitment to thorough energy conservation efforts. These initiatives include globally expanding the installation of in-house solar power generation systems and transitioning externally procured electricity to renewable energy sources. In addition, CO₂ emissions derived from fuel consumption have been offset through the use of carbon credits, supporting efforts toward achieving carbon neutrality.
These initiatives have been promoted in collaboration with approximately 190 group companies in Japan and overseas. Looking ahead to 2035, in addition to further advancing these activities, transitioning away from fossil fuels will become an increasingly important challenge. Achieving decarbonization from fossil fuel use will require not only our own technological development efforts, but also collaboration with society in areas such as the development of social infrastructure. We will continue working with a wide range of partners to help realize a fossil fuel-free society.

To achieve carbon neutrality, we are prioritizing energy conservation by advancing two complementary approaches: “production engineering development” and “workplace-driven improvement activities involving all employees.” Energy conservation is not an initiative that can be accomplished solely by a limited number of specialized divisions. We believe that sustainable results can only be achieved when each individual on the front lines takes “ownership” of energy use and continuously implements improvements through their daily work. The accumulation of these efforts leads to ongoing progress and long-term impact.
What we value is a management approach that fosters a continuous “improvement mindset” by clearly defining long-term visions and targets and encouraging ongoing challenges in development and operational improvement. By properly recognizing improvement efforts and creating an environment that supports proactive challenges, we have continuously evolved our energy conservation activities for more than 30 years.
Going forward, we will continue to advance and strengthen our energy conservation initiatives by combining workplace-driven improvements with technological development aimed at achieving even higher goals.

We participate as a member of both the Japan Auto Parts Industries Association (JAPIA) and the Japan Business Federation (Keidanren) and are involved as a committee member in decision-making processes, including advisory councils within these organizations.
Both JAPIA and Keidanren recognize climate change as a critical global issue and support the “carbon neutrality goals” advocated by the Paris Agreement as well as the policies and direction established by the Japanese government. We support the direction pursued by the international community, the Japanese government, and industry organizations, while incorporating carbon neutrality into our environmental strategy objectives. From the perspective of automotive components and systems, we are advancing electrification initiatives and striving to establish carbon neutrality in our manufacturing processes through decarbonization efforts. In addition, by applying thermal management and materials technologies cultivated through our automotive business, we have launched demonstration projects for Solid Oxide Fuel Cells (SOFCs), which generate electricity from hydrogen, and Solid Oxide Electrolysis Cells (SOECs), which produce hydrogen from electricity. Through these initiatives, we aim not only to reduce our own CO₂ emissions, but also to contribute to carbon neutrality across society as a whole by supporting broader reductions in CO₂ emissions.
Within JAPIA in particular, one of our executive officers serves as Chair of the Environmental Committee and plays a leading role in promoting carbon neutrality throughout the automotive parts industry. For example, we actively support industry-wide carbon neutrality efforts through initiatives such as study sessions and surveys for member companies, as well as the development and sharing of implementation guidelines. We also engage in scientific discussions, policy recommendations, joint demonstration projects, and exhibition activities related to climate change mitigation in collaboration with the Japanese government, the Japan Automobile Manufacturers Association (JAMA), and other industry organizations. Through these wide-ranging activities, we will continue working proactively with governments, industries, and industry associations to advance the achievement of carbon neutrality.

Toward the realization of a carbon-neutral society, mobility needs vary significantly depending on countries, regions, and applications. To address these diverse societal needs, we are advancing technology development that provides a wide range of solutions, from internal combustion engines compatible with carbon-neutral fuels to electrified vehicles. By developing technologies spanning from core technologies to integrated systems, we support the evolution of diverse mobility solutions.

Reduction of CO₂ Emissions from Energy Use

We are contributing to the realization of a circular energy society by establishing technologies that enable the highly efficient use and utilization of energy regardless of location or time constraints, and by promoting their widespread adoption throughout society.
For example, by applying the thermal management and materials technologies cultivated through our automotive business, we have launched demonstration testing of SOFCs^*1, which generate electricity from hydrogen, and SOECs^*2, which produce hydrogen from electricity. Through various future demonstration projects, we will pursue both higher efficiency for maximizing the use of green hydrogen energy and durability for ensuring the long-term safe operation of these systems, while taking on the challenge of developing technologies that balance environmental sustainability with economic viability.^*3

^*1 SOFC: Solid Oxide Fuel Cell (a solid oxide-type fuel cell)
^*2 SOEC: Solid Oxide Electrolysis Cell (a solid oxide-type water electrolysis cell)
^*3 This initiative is being promoted with support from the “Hydrogen Society Construction Technology Development Project” of the New Energy and Industrial Technology Development Organization (NEDO).

To achieve carbon neutrality at our plants, we began introducing Internal Carbon Pricing (ICP) into business feasibility evaluations used for investment decision-making in 2021. The purpose of this initiative is to accelerate investments in energy-saving and renewable energy generation facilities by incorporating a hypothetical financial value for CO₂ emissions into business feasibility assessments when evaluating capital investment projects with associated increases or decreases in CO₂ emissions.
ICP pricing is determined by region based on a comprehensive consideration of factors such as market prices for emissions credits and our future emissions reduction targets, and the pricing is reviewed and updated annually.

We have positioned “contributing to the resolution of social issues through our business operations” as the foundation of our management approach. Believing that contributions toward carbon neutrality will lead to sustainable competitiveness, we introduced a framework in FY2021 to regularly review and restructure our business portfolio. We visualize CO₂ emissions, profitability, and growth potential across each business domain, and discuss the positioning and future direction of each product group at Strategic Council meetings attended by all executive management members.

To help realize a carbon-neutral society by 2050, we will continue to address this as one of our highest-priority management issues through company-wide efforts. In addition, we promote our carbon neutrality initiatives in alignment with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), taking into consideration both climate-related risks and opportunities.