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Environmental Management

Basic Approach

SHI Group recognizes that conservation of the global environment and climate action are issues that are to be prioritized in our effort to realize a sustainable society, and we endeavor to reduce our environmental impact across all operations, including the entire lifecycle of our products, in accordance with our Sustainability Basic Policy.

SHI Group Environmental Policy

In December 2021, SHI Group revised the SHI Group Environmental Policy with the aim of further reducing the environmental impact of all business activities, including the entire product lifecycle, so that we may address environmental issues such as the pressing challenge of climate change.

Environmental Policy
  1. 1SHI Group will work to conserve the global environment and endeavor to prevent environmental pollution.
  2. 2SHI Group will strive to reduce environmental impacts through efforts such as reducing carbon dioxide emissions and waste, reusing and recycling resources, and using energy more efficiently, and work toward achieving a decarbonized and circular society.
  3. 3SHI Group will work to address impacts of its operations on nature and ecosystems and conserve biodiversity.
  4. 4SHI Group will strengthen its environmental management structure and continue to operate and improve its environmental management system.
  5. 5SHI Group will not only comply with environmental laws and regulations but will also establish and apply voluntary standards to assess its environmental performance as needed.
  6. 6SHI Group will work to raise environmental awareness of everyone involved in its operations through continuous environmental education and awareness programs.
  7. 7SHI Group will share with and communicate and disclose to all stakeholders this Environmental Policy.

Promotion of Environmental Management

We are committed to environmental management. Every three years since FY2005, we have formulated medium-term environmental plans that set out specific activity targets.

Environmental Management Structure

Management of SHI Group-wide environmental activities is implemented by the General Manager of the General Administration Group and the Environmental Management Division under the supervision of the Officer in Charge of General Administration who is appointed by the President. As the person with ultimate responsibility, the President approves and determines SHI Group's Environmental Policy.
Environmental audits are conducted in conjunction with local status checks to verify the status of environmental management at all manufacturing sites including those of affiliated companies, and the results of these activities are reported and problems shared at environmental management meetings. In addition, environmental education is provided to inform our employees of SHI Group's Environmental Policy, environmental targets, and initiatives.

Activities

Environmental audits (once/year)
We audit our manufacturing sites in Japan, China, and Southeast Asia to assess overall environmental management from the perspectives of environmental incident prevention, legal and regulatory compliance, and global warming prevention.
Audit results are evaluated on a five-point scale for each division based on our own evaluation standards, and reported to the Executive & Operating Officers Meeting for improvement.
Examinations by General Administration Group General Manager (as required)
In conjunction with environmental audits, the General Manager of the General Administration Group conducts a separate examination and provides guidance to those divisions that the General Manager deems necessary (such as divisions where environmental incidents occurred the previous year, divisions where environmental targets were significantly underachieved, etc.).
Environmental management meetings (twice/year)
Environmental Management Meetings are held for works and affiliated companies in Japan to report activity results and share problems. China Environmental Management Meetings are also held for affiliated companies in China with the aim of raising the level of environmental activity performance of these companies.
Regional activities
In each region, intraregional meetings are held on the topics of global warming prevention, energy efficiency enhancement, and other themes. Reports are provided on activity progress, case studies presented, and other information shared.

Environmental Risk Assessments

SHI Group regularly conducts environmental risk assessments at each of our sites to preempt environmental incidents.
Additionally, if an environmental incident occurs, we take appropriate action and thoroughly analyze the incident as part of our efforts to prevent any recurrence as well as similar incidents involving comparable equipment or substances at other sites.
SHI Group operates in a manner that bolsters prevention of potential environmental incidents by addressing events that may someday trigger an environmental incident even though the event itself is not classified as such.

6th Medium-Term Environmental Plan

The 6th Medium-Term Environmental Plan, which covered FY2020 to FY2023, set out four material issues and promoted activities to address these.
In FY2023 the final year of the 6th Medium-Term Environmental Plan, we achieved most all of our targets.

Material Issues
  1. 1Strengthen environmental risk management
  2. 2Reduce CO2 emissions in a consciousness response to climate change
  3. 3Reduce the environmental footprint of business activities
  4. 4Conserve biodiversity

Targets & Results (FY2023)

Benchmark Item FY2023 Target FY2023 Results
Environmental Management Major environmental incidents 0 0
Climate change adaptation CO2 emissions Total amount (Market-based) ー 18% reduction
Reduction in CO2 from energy-conserving activities *1 Japan: 4% reduction
(compared to FY2019)		 5.7% reduction
Total (excluding renewable energy) *1 Japan: 4% reduction
(compared to FY2019)		 4.4% increase
Environmental footprint reduction Volume of waste generated (basic unit) *2 Japan: Maintain
(compared to FY2017~2019)		 26.6% reduction
Overseas: 3% reduction (compared to FY2019) 24.5% reduction
VOC emissions Japan: Maintain
(compared to FY2019)		 17.6% reduction
Overseas: 1% reduction (compared to FY2019) 28.3% reduction
  1. *1Comparison based on FY2019 actual calculation coefficient
  2. *2Including hazardous waste

7th Medium-Term Environmental Plan

The 7th Medium-Term Environmental Plan establishes three material issues and promotes initiatives to address these with the aim of achieving SHI Group’s target of carbon neutrality by 2050. Single-year targets are also set and progress monitored.

Material Issues
  1. 1Reduce total CO2 emissions
  2. 2Reinforce environmental management
  3. 3Alleviate environmental footprint accompanying business activities

Data

Environmental Data

The scope of non-financial data provided covers Sumitomo Heavy Industries Ltd., consolidated subsidiaries, and equity method affiliates. Context changes are duly noted in the report.

Site-Specific Environmental Impact Data

SHI Group compiles and manages data on the environmental impact of our works, group companies manufacturing in Japan (outside our works), and key group companies manufacturing overseas.

Environmental Accounting

SHI Group performs environmental accounting based on the Environmental Accounting Guidelines 2005 issued by the Ministry of Environment, which serve as the benchmark for measuring investments, costs and their effects as they relate to environmental conservation.

Environmental Conservation Costs and Effects (Classified According to Business Activity)

(Unit: Million yen)
Environmental conservation costs Environmental conservation effects
Classification Principal initiatives Investment Cost Economic effect Key points
FY
2021		 FY
2022		 FY
2023		 FY
2021		 FY
2022		 FY
2023		 FY
2021		 FY
2022		 FY
2023
(1) Costs within business segment Maintenance/depreciation of equipment reducing environmental load 808 768 1,329 1,010 1,209 788 381 501 445  
Itemization (1)-1 Pollution prevention costs Maintenance and management of equipment to prevent air and water pollution, and measurement of equipment noise and vibration 207 71 393 253 189 271 0 0 0  
(1)-2 Global environmental conservation costs Investment in energy-saving measures (power consumption monitoring, energy-saving devices, replacement of lighting, etc.) 593 682 857 112 110 43 93 170 36 Reduction in expenses due to energy/resource savings and 3Rs
(1)-3 Resource recycling costs Waste reduction, recycling investment (recycling, use of recycled resources) 8 15 80 645 911 475 287 331 410 Reduction in expenses due to waste reduction
Sales of valuable resources
(2) Upstream/downstream costs Product packaging material reduction, home appliance recycling, and use of both sides of paper 1 1 1 2 2 2 0 0 0  
(3) Management activity costs ISO14001 standard maintenance and administration, and green space expansion 13 16 0 155 133 159 ― ― ― Economic effect (substantive effect) achieved with environmental conservation measures shown in an appended table.
(4) Research & development costs R&D for reducing environmental product footprint, and environmental equipment R&D 3,306 1,442 3,464 222 1,303 3,105 ― ― ―
(5) Social activity costs Regional environmental conservation and greening activities 2 1 1 19 2 3 0 0 0  
(6) Environmental damage compliance costs Imposition on air pollution load, and charges for green belts and pollution compensation ― ― ― 1 0 0 0 0 0  
Total 4,129 2,228 4,796 1,408 2,648 4,058 381 501 445  

Table Showing Change in Environmental Conservation Costs During Last Three Years

(Unit: Million yen)
Description of effects FY2021 FY2022 FY2023
Total environmental conservation costs 5,537 4,877 9,300
Total investment 4,129 2,228 4,796
Total costs 1,408 2,648 4,058
Total research & development costs 3,528 2,744 445

Economic Effects Associated with Environmental Conservation Measures (Substantial Effects)

(Unit: Million yen)
Description of effects FY2021 FY2022 FY2023
Revenues Business revenues obtained by recycling waste or used products 287 331 410
Cost savings Reduction in energy costs (electric power and fuel costs) from energy savings 93 170 36
Reduction in waste disposal costs from resource savings or recycling 0 0 0
Reduction in costs (labor, materials, repairs and other maintenance and operation costs) 0 0 0
Total 381 501 445

Environment & Energy-Saving Capital Investment

SHI Group systematically and actively updates dilapidated equipment and introduces new technologies from the standpoint preventing environmental incidents as well as saving and enhancing energy efficiency. In addition, capital investment amounts are ascertained using a three-point classification comprising environmental equipment, manufacturing energy, and energy efficiency.
In FY2023, SHI Group invested ¥1.63 billion in relevant equipment.

  FY2023 Environment-related capital investment (million yen)
Environment-related Manufacturing energy
(Solar power equipment)		 Energy-saving related Total
Japan 423 587 473 1,483
Overseas 0 97.5 57 155
Total 423 684.5 530 1,638

External Assessments & Third-Party Assurances

ISO 14001 Certification

SHI Group has been engaged in environmental activities based on the SHI Group Environmental Policy, and working to obtain certification at each of our works in Japan since 1998.
In 2018, we acquired unified certification for the SHI Group in order to integrate environmental management operational rules and make it more efficient to maintain certification. Currently, we have 43 sites that have been certified.
In addition, all our affiliated companies in Japan and overseas that are not included in the unified certification have acquired certification individually, and we are making every effort to ensure appropriate environmental management. In 1998, we also started acquiring certification for key manufacturing plants overseas. As of 2023, 21 of our sites have acquired certification.

Percentage of SHI Group with certification (based on sales): 79.8%
As we move forward, we will also review environmental activities as a challenge to be addressed in our business and promote such activities throughout the SHI Group.

Third-Party Assured Environmental Impact Data

To provide more reliable environmental impact data, SHI Group has engaged Bureau Veritas Japan to provide third-party assurance of this data.

<Target Data>
The following environmental data for the period from January 1, 2023 to December 31, 2023
･Energy usage in business activities at 31 SHI Group sites in Japan and 41 sites overseas
･Scope 1 and 2 greenhouse gas emissions (CO2 by energy source)
･Scope 3 greenhouse gas emissions (Categories 1, 2, 3, 4, 5, 6, 7, and 11)*

  1. *Calculated according to SHI Group rules