Risks and opportunities related to climate change are investigated under the leadership of the Environment Management Committee, the Climate Change Sub-Committee, which was established under the Environment Management Committee, and the TCFD Study Working Group. They identify, analyze, and evaluate risks and opportunities that may have an impact on business. For more details, please refer to our website on Information Disclosure Based on the TCFD Recommendation.

ONO has been working toward decarbonization by setting ambitious targets from an early stage, setting a goal of zero emissions (Scope 1+2) for the company itself by 2050, which was approved by SBTi in October 2019 as a 1.5°C target, the highest level at that time. (For more information, please visit here.) In order to accelerate our efforts, in FY2023 we set a new goal of achieving carbon neutrality* for our own emissions (Scope 1+2) by 2025, and moved up the target date for achieving zero emissions from 2050 to 2035.

• Carbon neutrality refers to virtually zero greenhouse gas emissions by offsetting with carbon offsets.

In terms of energy, we will further increase our use of renewable energy sources (we joined RE100 in June 2020).

As for the results of progress against the greenhouse gas emission reduction targets in FY 2022, which were established based on our medium- to long-term environmental vision, our Scope 1+2 (on a market basis*¹) for FY2022 was reduced by 38.2% against the reduction target of 21.0% or more compared to FY2017 (FY2017: 29.8 kt-CO₂, FY2022: 18.4kt-CO₂). Meanwhile, our Scope 3 was reduced by 30.3% against the reduction target of 11.5% or more compared to FY2017 (FY2017: 75.1 kt-CO₂, FY2021: 52.3kt-CO₂). Regarding a portion of Scope 3 emissions (Category 1 and 9), figures were calculated based on the previous-year emissions because current-year data for our major business partners and pharmaceutical wholesalers had not been published at the time of calculation. Scope 1+2 GHG emissions do not include CO₂ offsets from voluntary credits (for purchases of carbon-neutral city gas). Including the amount of CO₂ offset by voluntary credits (for purchases of carbon-neutral city gas), Scope 1+2 GHG emissions will be reduced by 40.5% compared to FY2017 (FY2022: 17.7kt-CO₂).
Regarding the use of renewable energy, in line with the RE100*² international initiative (which we joined in June 2020), we achieved the FY2022 target (a renewable energy utilization ratio of 21.0% or more of total power consumption) and attained 21.5%.

• GHG emissions calculated using the emission factors released by each electric power company
• An international initiative which aims to have companies utilize 100% renewable energy for electricity used in their operations

Greenhouse gas emissions (Scope 1+2)

• Covered Locations: Fujiyama Plant, Yamaguchi Plant (added from FY2018), Joto Pharmaceutical Product Development Center, Minase Research Institute, Fukui Research Institute, Tsukuba Research Institute, Head Office, sales offices and other offices, etc.
  GHG emissions are calculated using the following formula.
  GHG emissions = Purchased electricity × adjusted emission factor published by the electric company + Σ (Fuel consumption × Unit calorific value × Carbon emission factor × 44/12)+Σ (Fluorocarbon leakage amount x global warming potential)
  The amount of green electric power certified under the Green Energy Certificate, the amount of renewable energy certified under the J-Credit Scheme and the Non-Fossil Fuel Certificate quota are deducted.

Energy consumption

• Covered Locations: Fujiyama Plant, Yamaguchi Plant (added from FY2018), Joto Pharmaceutical Product Development Center, Minase Research Institute, Fukui Research Institute, Tsukuba Research Institute, Head Office, sales offices and other offices, etc.

Electricity consumption and renewable energy utilization rate

Creating a road map for reduction of GHG emissionsActions against TCFD risks

• Creating a road map for reduction of GHG emissions
  In order to achieve our new medium- to long-term targets that we reviewed in FY2022, we created a GHG emission reduction road map, incorporating new technologies, etc. that are under development. We also identified social movements by participating in environment initiatives, such as GX League, etc., and engaging in dialogue with companies developing next-generation technologies, and we determined the time to introduce measures at each site.

Company-wide roadmap

• Discussion on GHG emissions reduction policy
  In FY2020, we revised our GHG emissions reduction policy based on factors, such as recent energy market trends, costs, and emission factor fluctuation forecasts, etc. Referring to the Greenhouse Gas Management (GHG) Hierarchy of IEMA, we raised the priority of carbon-neutral energy procurement as compared to credit utilization, and the priority order of our measures was defined as promotion of energy-saving activities, installation of renewable energy facilities, procurement of carbon-neutral energy, and credit utilization. The roadmap above was established based on the reduction policy.

• Source of IEMA's GHG Management Hierarchy: Institute of Environmental Management and Assessment (IEMA) Greenhouse Gas Management Hierarchy, first published in 2009 (updated 2020), www.iema.net

Priorities in ONO’s GHG emission reduction measures
(Source: Prepared by ONO based on materials from ENECHANGE Ltd.)

Promotion of energy-saving activities

Green sustainable chemistry initiativesActions for TCFD opportunities

We have embraced the concept of Green Sustainable Chemistry (GSC) in order to work on the development of a more environmentally conscious manufacturing process for active pharmaceutical ingredients (APIs) from the research and development stage. The aim of the GSC concept is to minimize the environmental burden throughout the entire process, from the selection of materials to manufacturing and disposal. The concept has gradually become widespread in the pharmaceutical industry since the mid-2000s. In order to introduce the GSC concept, we established the GSC Working Group at each site in 2018 and have been working on the development of the manufacturing process for APIs while minimizing the waste from the development stage and utilizing Process Mass Intensity (PMI)* as an evaluation indicator for API manufacturing efficiency. This initiative has been recognized by TCFD analysis as one of the climate change-related opportunities.

• PMI is calculated by dividing the total weight of raw materials and materials required for manufacturing APIs by the weight of the API that was manufactured.

Initiatives to introduce a continuous manufacturing systemActions for TCFD opportunities

The continuous manufacturing system is a production method in which raw materials are continuously charged to the manufacturing process and finished products are continuously discharge. Since compact devices are connected and automated, energy saving, production and resource efficiency are expected to be better than batch production system, which is the mainstream method in pharmaceutical manufacturing. We are changing one of the manufacturing processes, "wet granulation," from the batch method to the continuous method (see the following figure "Continuous manufacturing processes in which we are currently investigated"). We anticipate that doing so can reduce the raw materials required for development by approximately 13%* in weight. In the future, we will further expand the scope of applying this continuous manufacturing system in order to further reduce energy and raw material consumption. This initiative has also been recognized by TCFD analysis as one of the climate change-related opportunities.

• A numerical value that compares the raw material reduction effect achieved from changing our company’s “wet granulation” process to a continuous one with general batch-type equipment.

Continuous manufacturing processes in which we are currently investigated

Power load leveling

• Shifting and cutting the peak power usage from daytime hours to nighttime through the use of the nighttime heat storage system and cogeneration system
• Protecting production line during occurrence of instantaneous voltage drop and shifting daytime peak power usage by using large-capacity power storage system (NAS battery system)

Participation in demand response

Demand response is positioned as an "optimization of electronic demand" under the Act on Rationalizing Energy Use and Shifting to Non-fossil Energy ("Revised Energy Conservation Act"). We have been striving to optimize the balance of demand and supply of electricity, in addition to electricity saving during regular time since FY2020 by saving and storing electricity (response) in response to the requests from power companies (demand).

Fluorocarbon management

In accordance with the Act on Rational Use and Proper Management of Fluorocarbons (Fluorocarbon Emissions Control Act), we conduct activities, such as the identification of equipment subject to the Act, simple inspections/periodic inspections, generation of records, and calculations/reporting of leakage, etc. In FY2022, the calculated leakage of fluorocarbons remained at a low level of 0.2 tons-CO₂. We will continue to prevent leakage and promote the introduction of non-CFC (chlorofluorocarbon) and low-GWP (global-warming potential) equipment in view of the reduction of fluorocarbons emissions. At the same time, we promote the total abolition of devices using CFCs, which include ozone-depleting substances.

Introduction of energy-saving equipment

• Replacing fluorescent lights with LEDs
• Upgrading heat source facility to module-type heat pump chiller
• Introduction of ultrahigh efficiency amorphous transformer with extremely low standby power
• Introduction of low air volume (push/pull type), ultrahigh speed variable air volume (VAV) local ventilation device
• Introduction of sterile isolator system that can limit the area subject to high-grade washing

Improvement of operation

• Heat collected from high-temperature waste water to be used as heat source
• Reviewing the operating hours and temperatures of the equipment

Environment-friendly office design

• When planning our new office in the US, we selected a building that received the LEED*¹ Gold Certification. Meanwhile in Japan, our company-owned building in Tokyo has been certified as CASBEE^® (Comprehensive Assessment System for Built Environment Efficiency)*² Class S. We will further pursue an environment-friendly office design.

• The Leadership in Energy and Environmental Design (LEED) is a rating system for building and site utilization developed and operated by the U.S. Green Building Council (USGBC), which promotes energy-saving and environmentally-friendly building and site utilization.
• The Comprehensive Assessment System for Built Environment Efficiency (CASBEE) is a method for evaluating and rating the environmental performance of buildings. The quality of buildings is evaluated in a comprehensive manner based not only on considerations for the environment including use of energy-saving and environment-friendly materials, but also on the comfort of the indoor environment and considerations for the surrounding landscape. A class S rating is the highest rating in this five-level rating system.

Introducing renewable energy

• Introducing and operating solar power generation facilities: Head Office building (FY2003), Minase Research Institute (FY2015), Tokyo Building (FY2017)

Procuring carbon-neutral energy

• Purchasing electricity under a renewable energy-based electricity menu contract: Minase Research Institute (from FY2019), Yamaguchi Plant (from FY2022), Fujiyama Plant (from FY2023), and Tsukuba Research Institute (from FY023)
  Purchased electricity will be changed to 100% renewable energy from FY2023 at Fujiyama Plant, Yamaguchi Plant, and Tsukuba Research Institute.
• Introducing carbon neutral city gas: Tsukuba Research Institute (from FY2021), Joto Pharmaceutical Product Development Center (from FY2021), and Yamaguchi Plant (from FY2023)
  Carbon-neutral city gas is a type of city gas that utilizes carbon neutral LNG, or liquefied natural gas (LNG) which offsets greenhouse gases generated in the processes from the extraction to the burning of natural gas with CO₂ credits (carbon offset) and assumes that no CO₂ is generated on a global scale even if it is burnt. The credits are issued by highly reliable international organizations and consist of projects that meet the procurement requirements, quality standards, etc. of the companies that adopt them. These procurement requirements, quality standards, etc., include points such as no significantly adverse effects on the region or ecosystem (in the case of forest projects, avoiding logging and deforestation).

(Source: Created by ONO with reference to materials from Toko Electrical Construction Co., Ltd.)

Credit utilization

• Purchasing Green Energy Certificates (from FY2018), J-Credits (from FY2019) and Non-Fossil Fuel Certificates (from FY2021)
  We are promoting the use of renewable energy by purchasing certificates for electricity generated by renewable energy (Green Energy Certificates) and J-Credits.

Carbon pricing

We have incorporated carbon pricing* into our environment-related investment decisions. We use the carbon pricing to raise the priority of decarbonization investment.

• To price greenhouse gas emissions from facilities and to reflect it in management decisions in order to promote activities towards decarbonization.

External evaluation of our climate change-related effortsActions for TCFD opportunities

• In the survey conducted by the UK-based CDP on climate change, we were selected as an A-List company, the highest rating, for four consecutive years (in FY2018-FY2022).
• We won an award in the Activity Implementation and Promotion category of the Minister of the Environment’s 2019 Commendation for Global Warming Prevention Activity (the Ministry of the Environment).
• The Minase Research Institute received the Osaka Governor's Award of the Osaka Stop Global Warming Award for FY2020.
• Our offices in Osaka won the Osaka Governor’s Award for Climate Change Measures for FY2020.
• Under the Act on Rationalizing Energy Use and Shifting to Non-fossil Energy ("Revised Energy Conservation Act"), we have received the highest S rank for eight consecutive years in corporate energy conservation excellence (FY2015-FY2022).
• We were introduced in a collection of case studies on energy efficiency & conservation (published by the Kansai Bureau of Economy, Trade and Industry) as among specified businesses who have remarkable achievements in various aspects of energy conservation.

For more details, see our website of the "External Evaluation."

External activities for expanding the introduction of renewable energyActions for TCFD opportunities

Our basic stance is to communicate and engage in constructive dialogue with all stakeholders, including patients, healthcare professionals, shareholders and investors, business partners, local communities, employees, and related government and industry groups. In particular, in order to accelerate the reduction of GHG emissions, it is important to cooperate with other companies to encourage the government to expand the introduction of renewable energy. In March 2021, RE100, with the cooperation of the Japan Climate Leaders’ Partnership (JCLP)*, supported a letter to the Japanese government calling for the expansion of renewable energy introduction, together with 52 companies in Japan and overseas (JCLP*, March 2021 news). We believe that if such inter-company collaboration can reduce renewable energy costs and lead to an expansion of the way in which renewable energy is obtained, it will be easier for companies to utilize renewable energy and contribute to the reduction of GHG emissions in society as a whole.

• JCLP supports the participation and activities of Japanese companies as an official regional partner of RE100.

GHG emissions in our supply chain (Scope 3) have been divided into 15 categories under the Ministry of the Environment’s guidelines, and calculated for our sites in Japan since FY2014. Together with our business partners in the supply chain, we are strengthening our sustainability-related activities, such as the natural environment, human rights and the labor environment (click here for details). In January 2023, we started joint transportation of ethical pharmaceuticals in Japan and also started to engage in CO₂ emission reduction by making transportation more efficient (click here for more details).

• The emission factors used for calculation are figures stated in the "Emission Factor Database on Accounting for Greenhouse Gas Emissions throughout the Supply Chain (FY2021, Ver. 3.2; FY2022, Ver. 3.3)," published by the Ministry of the Environment, Government of Japan.