Discussion
What is Biodiversity to a Chemicals Manufacturer?

Corporate activities are deeply connected to the global environment; this, of course, also applies to the JSR Group.
Of particular notice is biodiversity, which we recognize as presenting both risks and opportunities to our sustainable growth as a company.
This section presents a dialogue between Naoki Adachi and Koichi Kawasaki, Managing Officer of JSR Corporation, on the relationship between a chemicals manufacturer and biodiversity.
(The discussion was held on May 15, 2012)

Efforts Accelerated by Companies to Conserve Biodiversity

Dr. Adachi: It has been two years since the 10th Conference of the Parties to the Convention on Biological Diversity (COP10) was held. COP11 is to be held this autumn. Time really flies! One of the biggest achievements of COP10 was the establishment of the Aichi Biodiversity Targets. They require us not simply to conserve nature for the next decade, specifically toward 2020, but also to adopt a sustainable method when using biomaterials and natural resources for business activities. This means that business society is called on to make preparations to ensure sustainability over the next 10 years. They have been set as international goals, with a concrete target year specified. I believe this is an outstanding achievement. In Japan, COP10 stimulated many companies to develop an interest in their relationships with living things. However, with the end of COP10, some such companies lost interest, while others, especially internationally advanced companies, are taking actions toward realizing the Aichi Biodiversity Targets.

Amid such a trend, what I feel strongly about nowadays is the emergence of companies that are trying somehow to reduce the environmental impacts generated by their business activities to zero. If the environmental impacts generated by a company's business activities are, for example, at level 10, the company aims to reduce the level to zero, rather than to nine or eight. Many more companies are now increasingly setting such targets. Business activities involving the use of resources and lands necessarily entail the generation of environmental impacts. On top of diminishing the environmental impacts due to its business activities in one area, the company also promotes biodiversity conservation activities in another area. By combining these two efforts, the company strives to reduce its environmental impact level to as close to zero as possible, sometimes even seeking to generate positive environmental impacts. I am aware of an increasing number of companies that have set such a goal as their official target. Even if it might be difficult for the companies to realize such a goal right now, there is a move toward its achievement by 2020, or in the case of advanced companies, by 2015. I believe that this is one of the points to be noted.

In June this year, RIO+20, a global environmental conference, will be held in Rio de Janeiro, Brazil. Exactly 20 years have passed since the Earth Summit was held in Rio de Janeiro. The RIO+20 will feature a review of the progress made so far and the establishment of new targets. The keyword of the event is "green economy." The green economy here refers to efforts to realize the limits of our planet and not to exceed those limits, rather than simply referring to an environmentally friendly economy, in order to prevent any further destruction of the currently existing environment. I think this represents a major break from the past. To this end, the concept "natural capitals" plays an important role. Business activities entail a wide variety of capitals, including financial, human, and social capitals. The larger a business activity becomes, the greater the amounts of capitals the activity requires; the greater the amounts of resources the activity uses, the more diversified the activities the company can promote. This applies, of course, to natural capitals. Since nature itself is a capital that businesses depend on, it should be increased and strengthened as it is used. I believe many people used to think natural capitals were infinite. They thought that they could use resources as they liked and didn't have to care about decreases in the resources. Nowadays, however, I feel that there is a movement toward creating a new type of economy under which due attention should be paid to avoiding decreases in natural capitals, and, if possible, to gradually increasing the resources sufficiently to sustain the population that is expected to further grow in the future.

Kawasaki: As you just mentioned, many more companies in a wide range of fields have now set their targets based on their relationships with and their philosophies on biodiversity. The JSR Group belongs to the chemical industries field. Are there any changes expected in this field?

Dr. Adachi: Honestly speaking, I think that things are getting tougher for chemicals and materials manufacturers. This is because it is evident that petrochemical business operators, such as the JSR Group, cannot use petroleum forever as they have done so far. Such companies need to make a shift sometime in the future. I believe that many companies are now realizing the fact more and more keenly. For example, I hear that a Japanese tire manufacturer is focused on developing crude rubber tires, and that another manufacturer has developed chemical free-tires made of only natural materials. There is an ongoing active switch to bioplastics that can also be seen in other fields. Although such a shift does not have to be made right away, a company will inevitably be required to change its raw materials to natural ones by promoting its research and development and other efforts, and also to provide products that are of even higher quality than those it has offered so far. What do you think about such a trend from your perspective as a member of the chemical industry?

Kawasaki: Well, all the examples of tire manufacturers aren't necessarily practical or economically possible, and I think that it's still difficult to manufacture such tires. Still, it is certain that such a trend exists. Research is underway to make natural rubbers not from rubber trees but from other plants. On the other hand, for some of our products, synthetic rubbers must be used to form their molecular structures or achieve their performances. We don't believe that everything we use at present can be replaced. In this regard, we would like to offer customers products with total value. For example, it is very significant to provide materials that will enable a reduction in the energy consumed while manufacturing tires and a decrease in the CO₂ emissions discharged while the vehicles are driven. By improving our commitment in such a field, we would like to develop our businesses, while contributing to society.

Dr. Adachi: What makes environmental problems particularly challenging is that they consist of a wide variety of elements – not only biodiversity, but also CO₂ emissions, environmental efficiency, and waste. The problem is, with consideration to such elements, how to reduce environmental impacts in total, and how to further increase sustainability. As you said, the problem cannot be solved simply just by replacing the raw materials you currently use. Nowadays, especially in the minerals-related industry, there is growing concern over the scarcity of rare metals and rare earths. Since it is impossible to continue to extract them indefinitely, it is important to recycle what has already been used by human beings in society. I believe that this holds true of chemical substances and other petrochemical products. Of course, the results will differ in terms of properties from those of items made only from natural materials. But I believe that the utilization of a wide variety of technologies will enhance the possibilities of recycling.

Meanwhile, the abuse of natural capitals stems from the idea that natural capitals are very inexpensive, or free of charge. In terms of economics, this is a form of "external diseconomy." Careful thought would tell you that natural capitals have their own values, and that it is impossible to conserve resources without recognizing such values. Today, I feel a noticeable trend toward endeavoring to internalize such external diseconomies. Many more actions are now being taken to measure the values of natural capitals from the aspect of economy and to pay an appropriate price for these values. This is a welcome step from the viewpoint of the conservation of the environment and biodiversity. At the same time, this generates the problem of rising prices of items. Although it might be still difficult for B-to-B business operators, such as the JSR Group, movements are being generated among B-to-C business operators to encourage their end users, namely consumers, to understand that it is necessary to pay an appropriate price. By explaining to consumers that their commitment will contribute to the safety of the future generation, such business operators seek to ask consumers to accept an appropriate cost, even if it is a little high. If such movements spread more widely, a trend will be generated whereby companies that make products for consumers will request materials manufacturers to provide appropriate materials.

Kawasaki: Certainly, some of our customers say they prefer products with total merits, such as products which will eventually lead to a reduction in the costs for recycling and disposal by using them, even if their prices are higher than those of other products. If our customers that manufacture end products come to realize their consumers' awareness and decide to reflect such awareness in their suppliers, things will change drastically for us.

Identifying Relationships between JSR and Biodiversity; and Promoting Far-Sighted Activities

Kawasaki: While promoting our biodiversity efforts, the JSR Group has participated in the Japan Business Initiative for Biodiversity (JBIB) to expand our knowledge. Since we are a manufacturer, we first began by identifying the environmental and biodiversity impacts generated by manufacturing and production activities. Last year, we devised our version of the Business & Biodiversity Interrelationship Map to analyze how our production activities depended on and impacted the ecosystem, and began to consider the next steps to be taken. One of our focuses was on land use. We assessed how our manufacturing bases affected the natural environments surrounding them. Another focus, with the consideration for our business continuity, was placed on determining whether we could secure a stable supply of raw materials necessary for our production in the future.

Dr. Adachi: How did all that go? Are you gaining some achievements?

Kawasaki: Well, yes. For land use, assessments were carried out at each plant in accordance with JBIB's guidelines, enabling us to recognize points to be improved. We have already begun to work on such points. To reduce our impacts on ecosystems as much as possible, or to reduce them to zero if possible, we have recently formed working teams to promote activities at their plants. Regarding materials, our procurement team took the lead in comprehensively checking how many naturally derived raw materials we utilized. Although we now understand approximately how many such raw materials we use, we have not yet checked the environmental impacts generated when the raw materials are harvested or extracted. We think that this is the next step we should take without hesitation.

Dr. Adachi: What convinces me of your excellence is the fact that you have already begun your efforts regarding two of the most important areas. One thing I would like to add here is that there is usually a limit to what can be achieved by one company alone, especially in Japan. I guess it would be even better for the JSR Group to consider its connections with other companies in an industrial complex. This will help develop the perspective of mutual prosperity with living organisms across the entire community. I think this is an exciting idea. What I would also like to indicate is the fact that your assessments were carried out this time only at your domestic plants. I guess many more manufacturing bases will be established in foreign countries, especially in developing regions. Such regions have richer biodiversity, and there is a concern that economic development is being promoted at the expense of biodiversity. Consideration for your overseas business establishments is also needed.

Meanwhile, as for raw materials, I'm sure that some of the relationships with living things that you identified in your assessments were those you had never expected. As you indicated, in some special cases involving living things, it is difficult to identify how and where environmental impacts are generated. It is a great burden and also tough for an individual company to check technical matters on its own. In Europe, for example, there is an ongoing effort to create a system in which a calculation formula is employed to determine how much environmental impacts are generated by a certain pattern of activity.

Kawasaki: It's basically a version of LCA for living things, isn't it?

Dr. Adachi: That's right. It might be possible for an individual company to measure each impact on its own. If you use that kind of system, in which the input of data on the relevant raw material will enable automatic calculations regarding the impacts generated by the material on biodiversity and water, you will be able to grasp the entire picture more easily. However the database available now is far from perfect, and it's related only to major raw materials. Accordingly, if a company—say the JSR Group—uses raw materials that are not often used by other companies, the JSR Group needs to check the materials and add to the database the data that the Group gathers regarding the materials. This will gradually increase the scope of coverage of the database. Another thing to note is that the environmental impacts generated by the same natural resource differs depending on where the natural resource grew. Even if the same species of tree is concerned, its environmental impacts differ considerably depending on whether it was grown in Japan, Indonesia, or North America. Since this factor also needs to be considered, I believe that it is necessary to add much more data to the database and improve it.

Kawasaki: We have set land use and raw materials as our mid-term goals; we will focus on them for the next few years. In 2011, we formulated our biodiversity policies. Our first emphasis in the policies is on land use and raw materials. As our next step, we will incorporate the perspective of biodiversity into our product development. We would like to try methods that will create value by not merely avoiding the generation of environmental impacts, but actually making positive impacts. These methods may include the addition of elements relating to biodiversity conservation to our assessment standards for material design development, in order to identify themes with higher levels of contribution. Another thing we'd like to try is to lead cooperation with local communities. We would like to organize activities in which our employees will consider biodiversity not only from the perspective of those working at their plants, but also from the viewpoint of cooperation with the local communities, including those of the places where the employees live. We would like to develop efforts in which both companies and individuals can participate together.

Future Growth Supported Not Only by Biodiversity but Also by Diversification of Raw Materials and Manufacturing Methods

Dr. Adachi: What has impressed me about you is that you have been actively preparing for the future. I'd like to share a few things that might benefit you. First, research and development is a very important source of the strength of a materials manufacturer like the JSR Group. I believe what you are saying is that you will incorporate the perspective of what should be done to minimize risks regarding biodiversity into research and development . This is extremely significant as a first step. Another thing, as I said previously, is that it is of great consequence in the long run to promote research on how much and what types of petroleum-derived materials can be replaced by naturally derived or biologically derived materials, even though it might be impossible to replace all the materials used. Although natural resources are sustainable, their amounts are usually determined by areas of lands therefore limited. The use of natural resources for producing your materials must not be at the expense of food production. The former methods of using natural resources have not been effective at all. If you consider a switch to natural resources, I hope that you will utilize your technologies to make more effective use of natural resources that are currently being wasted.

I also would like to introduce the concept of "biomimicry," which is now gaining considerable attention. Biomimicry is coined from the words "biology" and "mimicry." There are often cases where it is effective and makes sense to mimic substances generated by living things, as well as their forms and ways of living. A good example of this is the threads of a spider's web. They look very fine, weak, and fragile. But actually, they only are weak because they are so fine. I hear that if they were thick enough, they would be extremely strong. If their width were that of a steel wire, their intensity would be five times greater than that of a steel wire, and the threads would have a stretch capability twice that of nylon. These indicate that spiders' threads are an outstanding, excellent high-performance material. Currently, tires are required to achieve the two contradictory characteristics of strength and the elasticity. Some hints for creating such tires might be found in what has been made by living things. Also, there is a possibility that mimicking living things in their production processes might reduce the generation of environmental impacts. In this regard, I believe that it is valuable not only to conserve biodiversity, but also to make a good use of living things by researching and mimicking them.

Kawasaki: I hear that in the United States and Europe, there are ongoing research and development efforts regarding the synthesis of chemical substances using the power of biology. Some studies have found that it is possible to synthesize butadiene and isoprene, which are materials of synthetic rubbers, with the use of microorganisms. These studies are now being promoted by venture companies. We are also very interested in these studies. We expect that it will become very difficult in the future to secure the materials we need. Accordingly, we think that in order to secure stable supplies, it will be important to diversify our materials. When promoting such diversification, as you indicated earlier, we will need to adopt a philosophy under which we will not use edible materials as raw materials for our products but rather select inedible materials as our starting materials.

Dr. Adachi: I feel that "the diversification of materials," which you are talking about now, plays a very significant role. "Biodiversity" can be summarized as the idea that there are many living things that live in a wide diversity of ways. It is believed that living things in prehistoric times were much simpler and encompassed a much smaller range of types, and that they have developed their diversity over long periods of time. Thanks to this diversity, even if some living things with certain ways of living cannot adapt well to changes in the environment and cannot survive, others can do so. I think that this also applies to materials. It is important to select not only one type of material based on efficiency and cost, but to use such a material as a main selection and to also always secure many other options. By so doing, even if there is a drastic change in the environment surrounding you in the future, I'm sure that you will be able to continue your business in a suitable way. The diversity of products, manufacturing processes, and all other elements will be important for companies.

This also holds true of contribution to local communities. On top of making economic contribution, such as that achieved through providing employment and paying taxes, you can conserve living things in your local areas together with local people, thereby contributing to strengthening those communities. The importance lies in featuring a wide variety of aspects and a wide variety of contacts.

Kawasaki: That's right. When JSR was established, the gas and other substances discharged by our plants caused pollution. To tackle this problem, we made innovations for technologies to minimize the troubles to the areas surrounding our plants, such as those related to the atmosphere and discharged water. In recent years, we have had no environmental complaints. Although we have so far been satisfied with the lack of complaints, we now realize that this will not be enough in the future. We will strive to transform ourselves into a company that will promote various activities in various contacts with local communities, and that will be highly valued for such activities. We aim to be a company that will be urged by local residents to continue operating in their communities forever.

Dr. Adachi: When the JSR Group was founded, emphasis was placed on economic development, and it was probably a kind of common sense to think that pollution would be unavoidable to some extent. In a way, I feel that there was no choice in those days. However, now, there are no business operators who think that way any more. Common sense is always evolving. I believe that the same holds true of biodiversity. Just a few years ago, many people said that they had no idea what biodiversity was or why companies needed to engage in it. Nowadays, many more advanced companies, like the JSR Group, are gradually taking on the challenge as a way of improving their competency. When you visualize the future of your company, you will probably imagine that the company will come to respect and depend on biodiversity even more so than today. I'm sure that when you look back at the past in 10 or 20 years' time, you will probably think "it was tough at that time, but now we understand that it was a matter of course." If you stick to your traditional means, you will end up lagging behind the times. However, the JSR Group is leading the way ahead of others. I hope that the Group will continue to take on challenges and continue to be exert itself as a leading company.

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