Analysis of Climate Change Risks and Opportunities for the Maxell Group

Since the Paris Agreement came into effect, companies must reduce their total greenhouse gas (GHG) emissions, regardless of business expansion. Maxell has been actively working to minimize environmental impact in manufacturing. We have identified "Creating Economic Value through Environmental Activities" as a key issue (materiality) and are aligning our business operations with this goal.

As we look toward 2050, we will continue to conduct energy-conservation activities at our factories, to introduce renewable energy, and to utilize non-fossil certificates, and, via the societal implementation of decarbonization technologies to be developed at Maxell Group, we will also contribute to achieving carbon neutrality (global Scope 1 and 2) by fiscal 2050 and realizing a sustainable society.

Basic Approach

Climate change is a threat to the health of both humanity and the earth, affecting our businesses, customers, and supply chain. As one of the companies addressing climate change, we believe that we have a significant role to play in contributing to global efforts to prevent climate change. Whereas we understand that climate change poses risks, such as increased costs and business disruption, we also see it as an opportunity for Maxell to create new value by meeting the societal needs that emerge.

Maxell announced its endorsement of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in October 2021. We will conduct scenario analysis in accordance with the guidelines laid out by the TCFD and will work to disclose relevant information such as our governance and strategies. Maxell is implementing initiatives in accordance with the framework below, which covers the four core elements of the TCFD recommendations: governance, strategy, risk management, and metrics and targets.

Scenario Analysis

The analysis focuses on the production sector, which is expected to be most affected by climate change at Maxell.
We considered scenarios with temperature rises of 1.5℃ and 4℃, identified risks and opportunities, and examined countermeasures.

• Assumed Scenarios: 1.5℃ (RCP1.9/SSP1) and 4℃ (RCP8.5/SSP5)

Governance

The Board of Directors is responsible for decisions relating to Maxell's climate change initiatives.

• The Board of Directors is our highest decision-making body and is responsible for all decisions, including those concerning climate change-related issues.
• The president and representative director is in charge of climate change-related issues. The president also serves as the head of the Environmental Committee, and is responsible for incorporating all environment-related issues into our corporate strategy and targets.

Board of Directors decisions on climate change-related initiatives

1. 1.Endorsement of TCFD recommendations (October 2021)
2. 2.Set the medium- to long-term goal of "Reducing domestic CO₂ emissions by 50％ or more by 2030 (vs. FY2013)" and a commitment to focus on addressing environmental issues (November 2021)
3. 3.Introduction of solar power generation for in-house consumption (December 2021)
4. 4.Disclosure of TCFD scenario analysis (September 2022)
5. 5.Establishment of Environmental Vision and declaration of Carbon Neutrality (July 2023)
6. 6.Reporting the results of TCFD scenario analysis for all Maxell business divisions (July 2023)

• We have established an Internal Control Committee to ensure and strengthen the effectiveness of corporate governance for the enhancement of the entire Group's corporate value and the achievement of management objectives. As for climate change, the Environmental Committee is responsible for establishing and strengthening the management system for the entire Group.
• The Environmental Committee is responsible for drafting Maxell Group's overall strategy for climate change and managing the Group's progress toward achieving its climate change-related targets. The committee is composed of environmental promotion officers and environmental management officers from business divisions at each business site, as well as the chairs of specialized subcommittees. The committee meets three times a year.

Climate-change related matters that were confirmed and decided
by the Environmental Committee in FY2023

1. 1.Established criteria for selecting outstanding products from amongst eco-friendly CSR/CSV products (Eco Excellence)
2. 2.Drafted an action plan to reduce CO₂ emissions by 50％ or more by FY2030 (vs. FY2013), and conducted progress reviews (every three months)
3. 3.Drafted an action plan for energy conservation measures for the current fiscal year, and conducted progress reviews (every three months)
4. 4.Promote thorough awareness on the Environmental Vision and Declaration on Carbon Neutrality

• The Environmental Committee works with four subcommittees - the Eco-Factory Subcommittee, the Environmentally Conscious Products Subcommittee, the Chemical Substances Management Subcommittee, and the Green Procurement Subcommittee - to discuss climate change-related policies, policy planning, and promotion activities.
• In fiscal 2023, the Environmental Committee discussed policies, policy planning, and promotion activities for a carbon-free and recycling-oriented society, discussed setting the achievement of carbon neutrality as a goal for fiscal 2050, and, to achieve a circular society, discussed setting a goal of reducing waste and starting the recycling of composite plastics as a goal for fiscal 2030.

　

Strategy

In July 2023, Maxell established an Environmental Vision to clarify the ideal features of its environmental management from a long-term perspective, positioning the resolution of environmental issues as one of the top priorities. In the Environmental Vision, we set a goal of achieving carbon neutrality by fiscal 2050 and, in order to achieve a recycling-oriented society, we set a goal of reducing waste and of starting to recycle composite plastics by fiscal 2030.

Environmental Vision
Maxell aims to achieve "a carbon-free society" and "a recycling-oriented society" by pursuing innovation and contributing to the realization of a sustainable society in which everyone can live with peace of mind.

• Environmental Management
  Environmental Vision

While the manifestation of climate change poses risks for each business division, it can also become an opportunity to utilize technologies that we have accumulated over many years. We will view climate change as both an opportunity and a risk, demonstrating our competitive advantages and putting into practice activities so that we will be recognized by society as a sustainable company.
In fiscal 2021, we began a climate change scenario analysis using Maxell's Energy Division as a model case. In fiscal 2022, we extended this analysis to cover Maxell's three other business divisions: the Functional Materials Division, the Optics & Systems Division, and the Life Solution Division. Then, in fiscal 2023, we rolled out this analysis to our group companies and completed the analysis of the entire Group.

In our analysis, we focused on production sectors where the Maxell Group is likely to be the most affected by climate change, and envisioned society with a temperature rise of 1.5℃ and 4℃, identifying risks and opportunities while also considering ways to address them.
In terms of medium- to long-term risks, we found that in the 1.5℃ rise scenario, the introduction of a carbon tax will increase the tax burden on our business activities, and changes in consumer behavior will have a major impact on our business, while in the 4℃ rise scenario, the intensification of extreme weather such as storms will have a major impact on our business.

Risks and Opportunities

　Assumptions for Scenario Analysis:
1.5℃ Scenario: Strengthen regulations and measures to achieve zero CO₂ emissions by 2050.
4℃ Scenario: Abnormal weather events will be intensified with no progress in climate change measures due to lack of additional policies.

Response to Risks Based on Climate Change Scenarios

We have considered our response to the risks in the 1.5℃ temperature rise scenario from the impact of an increased tax burden due to the introduction of carbon taxes on business activities. Going forward, we will plan and implement specific improvement measures to reduce the identified risks. Specifically, by systematically reducing Scope 1 and 2 emissions, we will reduce the burden from a future carbon price and will be prepared to reliably meet customer demands for decarbonization.
　In addition, by reducing the amount of raw materials we use and shifting to recycled materials, we will lower our Scope 3 emissions, thereby reducing future business risks and leading to the acquisition and expansion of business opportunities.

　We will reduce our CO₂ emissions and lower our carbon tax burden through energy-conservation activities, the introduction of renewable energy generation for in-house consumption, and the promotion of non-fossil certificates.
　To mitigate risks associated with the potential impact on our business by changing consumer behavior, we will continue to provide products and services that help to resolve societal issues through the introduction of environmentally conscious products based on a new set of criteria, which we have set as an action plan.
　In the 4℃ temperature rise scenario, we anticipate impact from intensified abnormal weather events such as severe storms. To address this risk, we will enhance our business continuity planning to minimize damage and strengthen our resilience against disruptions in our own operations and in our supply chain.

Response to Opportunities Based on Climate Change Scenarios

Based on the climate change scenarios, we believe that many opportunities will arise for products developed through harnessing the Analog Core Technologies of each business unit of Maxell (refer to page 51)

Risk Management

Climate change risks are managed by the Environmental Committee. The Environmental Committee is responsible for overseeing climate change risks, opportunities, and strategies, as well as for managing the progress of the Group's overall climate change targets. Significant risks and opportunities are discussed and approved by the Board of Directors.

Metrics and targets

The Maxell Group has set and announced the following goals:

Efforts to Achieve a Decarbonized Society

• FY2050 target: Achieve carbon neutrality (global Scope 1 and 2)
• FY2030 target: Reduce CO₂ emissions by 50％ or more (domestic Scope 1 and 2; compared to FY2013)

Initiatives for renewable energy

• Renewable energy ratio FY2030 target: Proportion of renewable energy used: 15％or higher

Efforts to Achieve a Recycling-Oriented Society
(Resource Conservation and Recycling of Plastics, etc.)

• FY2030 Waste intensity per production*: 0.0450 (tons/million yen) or less (19％ reduction compared to FY2021)
• Start of chemical and material recycling of composite plastic waste
  * Waste intensity per production: An indicator of the amount of waste generated, expressed as waste mass (tons) / production amount (millions of yen)

Efforts to Achieve a Carbon-free Society

Our group is working towards achieving the medium- to long-term environmental goals of "Reduce CO2 emissions by 50％ or more (domestic Scope 1 and 2; compared to FY2013)" and "Renewable energy ratio: 15％ in FY2030." We are formulating and implementing CO2 reduction plans through energy-saving measures (such as reviewing manufacturing methods and introducing high-efficiency equipment) and the use of renewable energy (including solar power and renewable energy certificates) at domestic factories. The CO₂ emission reduction rate in FY2023 was 42％ (compared to FY2013).
The decrease from 47％ in FY2022 is due to a significant deterioration in the CO2 emission factor of our main power supplier. We will continue to reduce electricity consumption through energy-saving activities, the introduction of solar power generation (PPA), and improving the non-fossil certificate ratio, aiming to achieve a 50% reduction by FY2030.
　

Efforts Toward Renewable Energy

In fiscal 2022, the Kobuchizawa Works, Kyoto Works, and Ono Works began solar power generation for in-house consumption. In fiscal 2023, the Kyoto Works generated 256 MWh, while the Ono Works generated 734 MWh. We also started purchasing non-fossil certificates in fiscal 2022. These efforts allowed the Group to exceed the "Renewable energy ratio of 10％ by fiscal 2030" KPI in fiscal 2023, and we therefore set a target of "Renewable energy ratio of 15％ by fiscal 2030" as a new KPI.
　

Efforts to Achieve a Recycling-Oriented Society
(Resource Conservation and Recycling of Plastics, etc.)

The Maxell Group formulates an environmental action plan annually and conducts improvement activities using waste intensity per production and per sales as indicators. We also aim to continue achieving "Zero Emissions" (*1) at domestic manufacturing sites. In 2023, we set goals to reduce waste generation intensity to 0.0450 or less by FY2030 and to start chemical and material recycling of composite plastic waste. In FY2023, the waste intensity (t/million yen) was 0.0512, achieving the target of 0.0538. We have maintained Zero Emissions at domestic manufacturing sites for 23 consecutive years.

To achieve "Zero Emissions," the Maxell Group thoroughly separates waste, promotes the monetization of valuable materials through information sharing at each site, and expands in-house intermediate processing. For example, in the lithium-ion battery manufacturing process, we separate and hand over scrap and paint residues generated in each process to appropriate contractors, recycling metals such as cobalt, copper, and aluminum (20 tons in FY2023). The Ono site also recycles silver oxide (1.7 tons in FY2023). Similarly, we recycle single-material plastics.

We also continuously promote the elimination of defective products in the manufacturing process. As a result of these activities, the amount of valuable waste generated domestically in FY2023 decreased by 3％ compared to the previous year. These waste reduction efforts contribute to reducing energy costs and CO2 emissions.
*1 Criteria for zero emissions (criteria for each business site): Final waste disposal volume less than 5 tons/year and final disposal ratio less than 1%/year

• Environment | Sustainability
• Environmental Performance Data