Environmental Addressing Global Climate Change (Carbon Neutrality)

Policy and Basic Mindset

Management System

This system is the same as that described in “1. Governance System” within the Information Disclosure Based on the TCFD Recommendations section.

Targets and Results

SBT^*1 Certification

In November 2023, we received an acknowledgement that our fiscal 2030 GHG emission reduction targets across the entire UBE Group supply chain were aligned with the standards and recommendations of the certification organization SBT initiative (hereinafter SBTi).^*2 In particular, the UBE Group's GHG emission reduction targets for Scope 1 and 2 emissions were recognized as conforming with initiatives to limit the temperature increase to 1.5°C above pre-industrial levels.

Summary of Targets

Targets related to reducing corporate GHG emissions are evaluated in accordance with SBTi's quantitative and qualitative standards as well as target inspection protocols, and are certified when satisfying all applicable requirements. A summary of two such items that were certified in this evaluation follow.

The range of reductions in Scope 3 covers emissions associated with purchased goods and services, end-of-life treatment of sold products, and investments (which are proportional to Scope 1 and 2 GHG emissions attributable to equity method affiliates, etc., and accounted for by equity stakes)

• *1Science-Based Targets (SBT): GHG emission reduction targets set by companies in accordance with levels requested in the Paris Agreement.
• *2Science-Based Targets Initiative (SBTi): An international organization that urges corporations to set ambitious emission reduction targets based on cutting-edge climate science, with the goal of accelerating corporate initiatives to halve emissions by 2030 and achieve net zero emissions by 2050.
• *3Scope 1: Emissions generated directly by a business (burning fuel, factory processes)
  Scope 2: Indirect emissions generated through the use of electricity, heat and steam provided by other organizations
  Scope 3: Covers all emissions throughout a business's supply chain, including those from its upstream and downstream constituents, other than the emissions generated by the business itself

Initiatives

Greenhouse Gas Reduction Initiatives

• Progress toward GHG Emissions Reduction Targets^*

  

  • *Excluding cement-related business transferred to Mitsubishi UBE Cement Corporation.

• Fiscal 2024 GHG Emissions by Segment^*

  

  • *Please refer to this page for Scope 3.

Roadmap for Carbon Neutrality

GHG emission reduction targets

While continually promoting thorough energy efficiency and reforms to production processes, we also promote maximal use of renewable energies and minimal use of fossil fuels. Furthermore, because the development of revolutionary technology is indispensable to achieving carbon neutrality by 2050, we are tackling this issue from a medium- to long-term viewpoint and transitioning to non-fossil fuels, including via external collaboration, while further researching, developing and adopting technologies that utilize CO₂.

• *Top Runner Program: A system based on the Act on the Rational Use of Energy where machines and equipment showing the highest performance in efficient energy consumption are selected as Top Runners by the Ministry of Economy, Trade and Industry.

Environmentally Friendly Products and Technologies

We promote the development of environmentally friendly products and technologies. Accordingly, we seek to contribute to the carbon neutrality of the UBE Group and society in general by providing more of such products and technologies to our customers.

• *Excludes cement-related operations that have been transferred to the Ube Mitsubishi Cement Group.

The UBE Group has formulated guidelines based on the revised ISO 14001:2015 and has defined environmentally friendly products and technologies.

<Related Information>

• Environmentally Friendly Products and Technologies

Introduces the UBE Group’s environmentally friendly products and technologies as well as the environmental product brand “U-BE-INFINITY™”

Business Structure Reforms

Our shift to specialty businesses is connected to reducing GHG emissions and transitioning to a business structure that will not be swayed greatly by market conditions. By putting specialty businesses at its core, the UBE Group strives to be outstanding in regard to profitability and create a business structure with a low environmental burden.

As their near-future profitability falls, we have decided to withdraw from or scale down our production of ammonia, caprolactam, and nylon polymers at our Japanese and Thai locations. Specifically, in Japan, we will halt production of caprolactam (main remaining period) and nylon polymers in March 2027 as well as ammonia in March 2028 and in Thailand will halt production of caprolactam in March 2027 and scale down production of nylon polymers. The production processes for ammonia and caprolactam generate particularly high amounts of GHGs, so we predict that we will be able to achieve our fiscal 2030 target of reducing GHG emissions by 50% in fiscal 2028 through these business structure reforms.

Fiscal 2024 Initiatives

Participating in GX League and GX-ETS

UBE has participated in the GX League and the GX-ETS (Emission Trading Scheme) since April 2023, and submitted our three-year plan for fiscal 2023–2025 as well as our fiscal 2030 GHG emission reduction targets in September of the same year.

A framework that pushes ahead with movement toward carbon neutrality to promote GX,^* the GX League was established based on the GX Basic Concept devised by the Ministry of Economy, Trade and Industry. GX-ETS is an emission transaction system within the GX League, and, while it is being managed as an independent transaction marketplace in Phase 1 (fiscal 2023–2025), this system will begin operations in fiscal 2026. The UBE Group strives to disclose information and reduce GHG emissions through GX-ETS activities.

• *Green transformation (GX): Activities that aim to reform and realize the use of green energy while minimizing the use of fossil fuels

Deploying a System for Calculating Product GHG Emissions Data

UBE and NTT DATA Japan Corporation have jointly created a system to calculate product GHG emissions. In January 2023, we began providing data from that system to customers, including from the upstream supply chain. This information makes it easier for customers to assess GHG emissions across their supply and value chains and helps them efficiently implement measures to reduce overall emissions.

We are using this system to make calculations for products produced at the Ube Chemical Factory, the Sakai Factory and the Ube Elastomer Chiba Factory.

Engagement with Primary Suppliers

In May 2023, we conducted a survey related to initiatives addressing global environmental problems as our first step toward engagement with each of our main primary suppliers of important resources. The results of this survey helped us better understand the present condition of initiatives among our primary suppliers while pinpointing future issues, and we conducted interviews with important primary suppliers based on these results in fiscal 2024. UBE will continue to improve cooperation with our primary suppliers through such activities as well as to strive to contribute to solving global environmental issues across the entire supply chain.

Information Disclosure based on the Task Force on Climate-Related Financial Disclosures (TCFD) Recommendations

These recommendations were established by the Financial Stability Board (FSB) in 2017 and published in a final report (the TCFD Recommendations). After the TCFD was disbanded in October 2023, these recommendations were succeeded by the International Financial Reporting Standards (IFRS).

1. Governance Structure

The UBE Group established the Global Environmental Issues Committee to identify and act on problems related to global environmental issues. The President and CEO chairs the Strategic Management Meeting (Sustainability Committee), which receives deliberation reports from the Global Environmental Issues Committee, deliberates on action plans and important issues, supervises relevant efforts, provides instructions, and constantly monitors progress on countermeasures. Reports on important matters go to the Board of Directors regularly, which the Board of Directors uses to provide appropriate oversight.

2. Strategy

In view of efforts to tackle climate change and transition to a low-carbon, decarbonized economy, management assessed a range of scenarios for 2030 and beyond, analyzed risks and opportunities for the UBE Group under each scenario, and formulated the required strategies. The scenarios covered all business units, including the Construction Materials Company, although the assessment below excludes information relating to that entity.

We explored and developed 2ºC and 4ºC transition scenarios as well as a physical risk scenario and analyzed Group risks and opportunities in each scenario. Our findings showed that while impacts are unavoidable in various scenarios if risks materialize as predicted, we were able to verify the potential for continued improvement in corporate value if we take advantage of opportunities that we expect to arise simultaneously with such materialization.

These scenario analyses were conducted in 2019, and we will evaluate future revisions based on a 1.5ºC scenario.

• 2℃ scenario: Based on the WEO's^*1 SDS,^*2 the NPS,^*3 the ETP's^*4 RTS,^*5 and the 2DS,^*6 we have utilized various resources to reinforce the Company's scenario projections and conduct evaluations. Our risk analysis included the evaluation of multiple scenarios, including a carbon pricing scenario, a coal price scenario, and an alternative fuel scenario. In 2025, we also created an outlook for 2030 based on data projections for 2040 as well as a response scenario for in-house power generation. For opportunity analysis, we predicted enhanced support for electric vehicles and alternative fuel leading to the widespread use of both, as well as an increase in the supply of renewable energy. In addition, we analyzed risks and opportunities for a scenario in which government policies support expanded plastic recycling as well as a scenario where such policies support the implementation of CCUS^*7 across the industrial sector. Using this wealth of data, we formulated a scenario regarding future demand for UBE products as well as the likely path of research and development projects. Moreover, we conducted an analysis that referenced development paths for energy systems as well as CO₂ emission routes showing that the probability that average global temperatures rise less than 2℃ by 2100 is at minimum over 50%.
• 4℃ scenario: Evaluations were conducted based on the WEO and NPS as well as Japan's NDC^*8 and the IEA's^*9 coal pricing scenarios.
• Physical scenario: Taking a long-term perspective based on an IPCC AR5^*10 temperature rise scenario known as RCP8.5,^*11 we estimated the impacts of such factors as rising sea levels, extreme rainfall, and higher occurrence rates of destructive typhoons and other such disasters on UBE's infrastructure equipment and employees, as well as the degree of such impacts. We also took into account regional characteristics when undertaking such efforts as creating hazard maps for areas where our factories are located.

Scenario Analysis Assessment Steps

• Evaluate business unit performances under each scenario, including forecasts for private power generation
• Analyze UBE Group prospects based on findings for each scenario
• Develop a long-term resilience strategy for 2030 in preparation for 2050

Findings from the aforementioned scenario analysis with heavy financial impacts in the vicinity of 2030 are as follows.

Findings from Scenario Analysis

• *1World Energy Outlook
• *2Sustainable Development Scenario
• *3New Policies Scenario
• *4Energy Technology Perspectives
• *5Reference Technology Scenario
• *62℃ Scenario
• *7Carbon Capture, Utilization and Storage
• *8Nationally Determined Contribution
• *9International Energy Agency
• *10Intergovernmental Panel on Climate Change Fifth Assessment Report
• *11Representative Concentration Pathways 8.5 Scenario. RCP2.6, RCP4.5, and RCP6.0 also exist, with higher numbers indicating more GHG emissions.

3. Risk Management

The UBE Group’s responses to climate change have been registered and managed under a risk management system that monitors the unitary management of risk information and the status of countermeasures taken. Risks registered in the system are classified as operational, major, medium, and minor in line with their risk impacts. Operational and major risks are deliberated upon in Strategic Management Meetings, and are reflected in specific strategies and measures.

Regarding climate change countermeasures, specific strategies and countermeasures related to global environmental issues are reflected and deliberated upon in Strategic Management Meetings (Sustainability Committee) before being regularly reported to the Board of Directors, which conducts appropriate monitoring. In this way, risks related to climate change across the entire Group are identified and classified, enabling the Environmental Issues Committee, which is a Companywide entity chaired by the executive officer in charge of the Sustainability Department, to formulate and implement countermeasures and initiative policies.

4. Metrics and Targets

The Ube Group has designated targets for fiscal 2030 regarding initiatives addressing global environmental issues as follows.

• *Scope of calculation: Scope 1 and 2 for major business sites of consolidated target companies, etc.

The UBE Group has decided to halt or scale back the production of ammonia, caprolactam, and nylon polymers at sites in Japan and Thailand. We predict that we will be able to achieve our fiscal 2030 target of reducing GHG emissions by 50% in fiscal 2028 through these business structure reforms. We also believe that such efforts will allow the potential minimization of financial risks.

Internal Carbon Pricing

The UBE Group sets internal carbon pricing as a guideline for evaluating CO₂ prices in capital investment.