Response to the TCFD Recommendations

1. Philosophy

JSR Group sees responding to the problem of climate change currently facing society as one of the most important issues for the company because of its large correlation to the Group’s businesses, and we are therefore actively working to reduce greenhouse gas (GHG) emissions both internally and externally.
JSR Group’s manufacturing sites and supply chain directly impact climate change in various ways. At the same time, JSR Group aims to become a solution provider using innovation as a driving force. Thus, we can help mitigate climate change indirectly through our products and services. We understand that our response to climate change must be mindful of both these facets.

It is in this context that JSR Group expressed its support for the TCFD*1 Recommendations in October 2020. We believe that these recommendations will contribute to the development of a sustainable society that is transitioning to a decarbonized economy. As a chemical company that takes climate change seriously, we seek to more deeply understand the opportunities and risks that impact the Group’s business activities. We take action accordingly and strive to disclose our initiatives proactively and publicly. We will seek to achieve net-zero emissions by 2050 as JSR Group announced in 2021 and to reduce GHG emissions through our products.

*1 TCFD (Task Force on Climate-related Financial Disclosures): Founded by the Financial Stability Board in 2015. In June of 2017, the TCFD recommended that financial institutions, companies, governments, and the like disclose their climate change impacts in their financial reports. More than 4,500 organizations around the world have endorsed the recommendations (as of May 2023; from data published by the TCFD).

Governance Strategy Risk Management Indicators and Targets
Development of a managerial governance structure relating to climate change risks and opportunities Analysis of impacts that climate change-related risks and opportunities will have on business, strategic and financial planning Development of framework for assessing and managing climate change-related risks and opportunities Establishment and progressive disclosure of metrics and targets for managing risks and opportunities

2. Governance

JSR utilizes a supervisory structure, overseen by the Board of Directors, to examine and carry out appropriate responses to issues that could potentially pose business risks or represent business opportunities. With the aim of strengthening supervision of risks and opportunities related to sustainability, including responses to climate change, the Board of Directors receives progress reports twice a year, examines them as identified themes, shares issues, and discusses and deliberates on future activities. In addition, the executive officer in charge of promoting sustainability (CSO) concurrently serves as a director. In this manner, we have established a system that enables the Board of Directors to thoroughly implement sustainability management.

In addition, JSR has established the Sustainability Promotion Committee, chaired by the CEO and President, as a cross-functional meeting body to advance the implementation of sustainability activities. Under the Sustainability Promotion Committee, we established the Sustainability Planning Committee, Environment, Safety and Quality Committee, the Risk Management Committee, and the Corporate Ethics Committee (each chairperson of which concurrently serves as a member of the Sustainability Promotion Committee), with the Sustainability Promotion Committee overseeing all of these committees.
In particular, with regard to climate change response, the Sustainability Planning Committee is responsible for setting the direction of sustainability-related strategies, the Environment, Safety and Quality Committee is responsible for approving the action plan of the entire organization and evaluating and verifying the results of activities, and the Risk Management Committee is responsible for implementing and improving response policies and response plans according to actual and potential crises. The Sustainability Promotion Committee supervises and guides the activities of these three committees and strives to strengthen and advance management through regular meetings held four times a year and extraordinary meetings. In principle, the Sustainability Promotion Committee reports its activities to the Board of Directors quarterly.

Board of Directors discussions that included climate change (FY2022)
  • Activity reports from each committee and results of ESG rating agency assessments (July)
  • Progress of addressing materiality (October)
  • JSR Group’s activities to advance sustainability management (February)

Director Remuneration Linked to Climate Change Response

The yearly bonuses of the CEO and President are determined based on Group performance (90%) and a non-financial evaluation (10%). This means that bonuses are linked to progress on Group-wide sustainability management indicators such as reducing GHG emissions and promoting DE&I. The amount of remuneration based on non-financial evaluation is first discussed by the Remuneration Advisory Committee and then decided by the Board of Directors, who can set it to any amount from 0% to 200%.

3. Strategy

The vision of JSR Group's Medium-Term Management Plan is to generate value for all stakeholders and to create a resilient organization that adapts to all environmental changes with the aim of achieving sustainable growth. The entire JSR Group is working on climate change as one of the themes to be addressed.

In formulating strategies, risk management, indicators, and targets related to climate change, JSR Group has been conducting scenario analysis in line with the TCFD recommendations since FY2019. In FY2022, we worked on designing calculation software for quantitative simulations. In FY2023, we will use this software to conduct simulations under conditions based on multiple scenarios and continue to conduct quantitative analysis.

On the other hand, we have incorporated internal carbon pricing (ICP) into the decision-making process for future investments. Specifically, the cost of investment assets is calculated based on ICP, future cash flows are calculated, and reflected in return on investment. Based on the characteristics of each investment, we then determine the appropriateness of the payback period.

Climate-Related Risk Significance Assessment
  • Socio-economic scenario assumptions
  • Formulation of business impact scenarios and determination of degree of impact
Climate Change Scenario Analysis (Qualitative Determination)
  • Investigation of risk and opportunity impact stemming from changes in JSR's business environment (scenarios) as a result of climate change
Climate Change Scenario Analysis (Quantitative Determination)
  • Quantification of impact that JSR scenarios will have on future business strategy and financial affairs, and strategic incorporation of results
Identification of Potential Implementation Measures
  • Determination of climate change strategy implementation measures and selection of management metrics

Climate-Related Risk Significance Assessment

For those social environments associated with JSR Group business, we assumed climate change impacts over the short term (five years), medium term (10 years), and long term (30 years).

* External information utilized includes IPCC_RCP1.9/2.6, RCP8.5, and IEA_B2DS.

Climate Change Scenario Analysis (Qualitative and Quantitative Determination)

A climate change impact-related scenario analysis for JSR business was performed based on the gravity of the climate-related risks.
JSR Group has set a target to achieve net-zero GHG emissions (Scope 1 & 2) by 2050 and, as an intermediate target, we have announced our commitment to reduce GHG emissions (Scope 1 & 2) by 30% by 2030 compared to 2020 levels. We will plan scenarios based on the assumption that we will make the necessary investments, and examine their financial impacts.

Assessment Targets

Digital Solutions Business, Life Sciences Business, and Plastics Business were chosen as JSR Group’s core business domains.

Assessment Method
  1. (1)Based on the socio-economic scenario assumptions, relevant business impact scenarios were formulated and the degree of business-specific impact determined.
  2. (2)Based on the potential for, and impact on business (human loss, financial impact, etc.), of the above, particularly significant risks and opportunities were categorized while upholding examples of other companies to further define the direction of JSR Group’s response.
Assessment Results
  1. (1) Impact Scenarios and Degree of Business-Specific Impact

      Small ← Size of Impact → Large

High-Impact Risks / Opportunities Risk Opportunity Impact on Business Impact period
Digital Solutions Life Sciences Plastics
World of +1.5℃
Increased opportunities for life-cycle CO2 reduction (bring attention to climate change challenges)         Short term
Strengthening of GHG emissions regulations         Medium term
Establishment and increase of carbon costs        
Emergence of customers demanding decarbonated products (e.g., RE100)        
Evolution of low-carbon energy sources      
Increased demand for environmentally-beneficial products      
Fundamental lifestyle transformation        
Mainstream adoption of sustainable finance        
Change in how human resources are secured         Long term
Popularization of advanced decarbonization technology      
Change in automotive industry / Increased mainstream adoption of EV      
Increased need for recycling / reuse of tire materials
Expansion in demand for recycled and recyclable resins
More frequent flooding and more severe storm and flooding damage in Japan        
World of +4℃
Increased opportunities for life-cycle CO2 reduction (bring attention to climate change challenges)         Short term
More frequent flooding and more severe storm and flooding damage         Medium term
Rise in sea levels         Long term
Rise in temperature        
Supply chain disruption due to more severe storm and flooding damage        
Fundamental lifestyle transformation        
  1. (2)Significant Risks and Opportunities and Direction of JSR Group’s Response
    For those classified as transition risks, items identified from the 1.5°C scenario will have a significant impact earlier than in the 4°C scenario. Conversely, items classified as physical risks identified from the 4°C scenario have a significant impact earlier than in the 1.5°C scenario. Therefore, we believe that the most sustainable and resilient response for JSR Group is to anticipate and respond to transition risks in the 1.5°C scenario and physical risks in the 4°C scenario as the scenarios that will have the greatest impact.
Anticipated Environmental Changes Category Factors (qualitative analysis results) Direction of JSR Group’s Response Remarks/Supplementary Explanation
Increased energy costs because of carbon pricing Transition
  • Stronger GHG emissions regulations
  • Carbon price setting and steep price rises
  • Emergence of customers who demand decarbonized products (RE100, etc.)
Drive to net zero GHG emissions
  • Capital investment in measures to reduce emissions (energy conservation)
  • Capital investment in measures to reduce emissions (fuel switching)
  • Greater energy cost burden (switch to renewable energy electric power)
  • As a measure to reduce GHG emissions, we will first advance energy conservation efforts at our business sites and facilities with the goal of reducing the total amount of energy used by 1% every year. Particularly, we are planning to change the temperature and humidity control system in clean rooms where energy consumption is large. We also plan to gradually switch the electricity used by each business site to renewable energy. We will implement these initiatives ahead of schedule wherever possible with the goal of reducing GHG emissions by at least 30% of our initial emissions by 2030. In addition, from 2030, we will gradually advance fuel conversion at each business site, aiming for net-zero emissions by 2050.
  • In the 1.5°C scenario case, which will have a large impact, impacts from the increase in energy compliance costs and soaring raw materials prices due to regulatory compliance and levies (carbon taxes) are expected to be significant. The carbon price in 2030 is expected to be 18,260 yen/CO2 ton (using the value of the NZE scenario in IEA WEO 2022 converted using 130 yen to one U.S. dollar); thus, we can assume a financial impact of up to about 3 billion yen due to carbon pricing.
  • In anticipation of the possibility of rising raw materials prices, we are planning to encourage upstream supply chains to collaborate to reduce GHGs in the future. We aim to reduce the environmental impacts of the entire supply chain, including JSR.
  • The 4°C scenario is not expected to have as much of an impact as the 1.5°C scenario. Thus, we will advance measures based on the 1.5°C scenario as a response to changes.
Rising prices for raw material because of carbon pass-through
  • Advance of low-carbon energy sources
  • Greater raw materials cost burden
Ensuring corporate value
  • Mainstreaming of sustainable finance
  • Changes in how human resources are recruited
  • Winning trust by disclosing sufficient information
Damage caused by disaster Physical (acute)
  • More frequent flooding and more severe storm and flooding damage in Japan
  • Sufficient preparation in advance of disasters
  • BCM/BCP formulation in preparation for disasters
  • Regarding preparations for physical natural disasters and BCM/BCP in the event of their occurrence, we have been taking suitable measures at each business site according to the environmental conditions specific to each region, and we will continue to take address each situation with climate change in mind. In particular, based on the 4°C scenario, we have been working to identify areas that may be damaged by storm surges or floods by 2050. Based on this, we will explore minimizing the financial impact through measures in the supply chain.
  • The 1.5°C scenario is not expected to have as much of an impact as the 4°C scenario. Thus, we will advance measures based on the 4°C scenario.
Maintenance of work and social environment Physical (chronic)
  • Air temperature rise
  • Preservation of the business environment
  • Environmental conservation in the supply chain and response to changes
Anticipated Environmental Changes Factors (qualitative analysis results) Direction of JSR Group’s Response Remarks/Supplementary Explanation
Industry growth resulting from responding to environmental changes
  • Increasing momentum to reduce life cycle CO2 (closer scrutiny of climate change problem)
  • Spread of advanced decarbonization technologies
  • Increasing demand for products that benefit the environment
  • Changes in how lifestyles are structured
  • Impact of changes in automobile industry / EVs becoming mainstream
  • Increased demand for recycled & recyclable plastics
Digital Solutions Business
  • Business response to conserve energy in IT equipment and advance IoT built to respond to climate change

Life Sciences Business
  • Business response to accelerating drug development, advancement of personalized medicine

Plastics Business
  • Business response to diversification (lighter, quieter) resulting from transition to EVs and evolution of circular economy
JSR Group engages in three major business activities with very different market environments. We have anticipated environmental changes caused by climate change for each of these businesses and are responding to them by seizing opportunities. In anticipation of future market trends, we will make preparations from a long-term perspective and take timely and prompt actions, including modifying our strategies (response).

Digital Solutions Business

In order for the IT industry to help reduce the climate impact of business and industry as a whole, many high-impact companies have already announced net-zero targets. We plan and provide solutions that can reduce emissions in society and the economy as a whole by applying the technologies and systems of each company. JSR Group is helping to solve climate change issues by continuously providing materials that are compatible with these solutions*2. We participate as a founding member of the Semiconductor Climate Consortium (SCC), which aims to advance measures to reduce greenhouse gas emissions globally. This allows us to confirm the role of JSR Group in the entire supply chain and link this to our activities. Further advancements will be made in the energy efficiency of IT equipment and IoT as part of the response to climate change, which are expected to lead to the growth of both markets and businesses.

*2 For details, see “Contribution to Preservation of the Global Environment”

Life Sciences Business

We anticipate changes in the living environment due to climate change will increase the importance of health management, which will lead to greater business opportunities. We expect that the acceleration of drug development, including in vitro diagnostics, and the response to advancements in personalized medicine will be further required in the future, and we will achieve sustainable growth by strengthening synergies throughout the Group and adding next-generation development activities.

Plastics Business

In the automotive industry where JSR Group supplies products, the market is expected to grow further in the future, and the shift to EVs is set to accelerate. JSR Group is advancing the development and provision of products that meet the performance requirements (weight reduction and quietness) associated with the shift to EVs. At the same time, we are also planning new materials such as naturally derived materials. Furthermore, we are working with client companies to study material recycling systems. Aiming to provide materials and systems that are friendly to the global environment, we will continue to develop and provide sustainability products*3 that can contribute to society.

*3 For details, see “Contribution to Preservation of the Global Environment”


JSR Group's vision is to aim for sustainable growth, generate value for all stakeholders, and create a resilient organization that adapts to all environmental changes. Our strategy for responding to risks and opportunities based on scenario analysis is follows this vision.

JSR Group is preparing to address anticipated regulatory issues such as carbon pricing head-on, incorporating them into financial plans, while continuing efforts and investments to mitigate climate change, such as reducing GHG emissions at its own facilities. At the same time, we will not miss opportunities to expand our business in response to changes in the social environment, such as increased demand from new markets for sustainable products.

In order to remain sensitive to changes in society and perceive environmental issues as potential opportunities, we will need to create a resilient organization. The Five Foundations define a series of actions to advance the desirable shift to a lean organization and flexible thinking as required by the management policy in order to achieve sustainable growth. The Five Foundations, which are comprised of Sustainability, Innovative Culture, Digitalization, Globalization, and Operational Excellence, serve as important guidelines for solidifying our management foundation and enhancing corporate value. By taking on the challenges of responding to climate change-related risks and opportunities from an early stage, we will further increase resilience.

We will continue to conduct scenario analysis, identify potential countermeasures, and understand the financial impacts of risks and opportunities associated with climate change. The results of reviews will be regularly reported to the Board of Directors for deliberation and implementation of the PDCA cycle.

4. Risk Management

JSR Group believes that preventing major crises and minimizing their effects on business activities should they occur are important management issues. Given this, we have formulated Risk Management Policies and empowered the Risk Management Committee to lead our risk management efforts.

We have been operating our own independent risk management system since FY2009, and under the leadership of the Risk Management Committee, we regularly identify risks in all units in Japan and abroad, including Group companies. Climate change risks, such as carbon pricing and global regulatory issues, which are particularly urgent and very important, are also regarded and discussed as management-level risks. With regard to climate change issues, we organize and assess transition risks as risks related to business strategies and physical risks as risks associated with business operations.

The risks identified are mapped based on the degree of impact on management and the frequency of occurrence. Risks that may have a significant impact on business continuity are positioned as "JSR Group Risk Factors" and are addressed based on priority. By monitoring and periodically reviewing risks identified by management, we are working to build and maintain a system to prevent risks and prepare for crises.

Please refer to "Risk Management" for more details.

5. Indicators and Targets

We have established KPIs and targets to monitor and manage JSR Group’s priority issues (materiality)*4.

*4 For details, see "JSR Group Materiality (Priority Issues)."

With regard to climate change, as with other social issues, we have designated GHG emissions as one of our KPIs and set targets that we are working to achieve. JSR Group has declared our aim of becoming carbon neutral in terms of our own GHG emissions (Scope 1 & 2) by FY2050. To establish milestones along the way, we formulated intermediate environmental targets for FY2030.

FY2050 Targets

We in JSR Group will continue working actively toward our aim of “net-zero” GHG emissions by FY2050.

FY2030 Intermediate Targets

Globally, we are taking measures to conserve energy and switch to renewable energy, with the aim to reach GHG emissions that are 30% or more lower in FY2030 than they were in FY2020. We are also challenging ourselves to implement innovative energy technologies and promoting the development of eco-friendly businesses and products to help shape a low-carbon, recycling society*5.

*5 For progress in FY2022, see "Climate Change Mitigation" and "JSR Group Materiality (Priority Issues)."

GHG Emissions Reduction Image
GHG Emissions Reduction Image

6. Participation in Related Group

  • Supporting member of the Japan Climate Leaders’ Partnership (JCLP)
  • Founding member of the Semiconductor Climate Consortium (SCC)
  • TCFD Consortium