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Shin-Etsu Group and Climate Change

Plan for Realizing Carbon Neutrality
Disclosure of TCFD-Recommended Items

Plan for Realizing Carbon Neutrality by 2050

The Shin-Etsu Group has formulated a plan to reduce greenhouse gas emissions (Scope 1 and Scope 2) to net zero, with the aim of achieving carbon neutrality by 2050.

Our Efforts to Date

1) Efforts to reduce greenhouse gas emissions that are included in the Company’s management

In various economic activities, there is a need to attain both sustainable development and higher living standards while reducing environmental impact. Meanwhile, businesses must strive to keep their cost competitiveness in order to grow. In this light, the Group has long focused on maximizing the efficiency of its resource and energy use. Such efforts will lead to reducing greenhouse gas emissions and are considered highly compatible with carbon neutrality.

A leading example of our initiatives to attain the maximization of efficiency is the polyvinyl chloride (PVC) business. In the 1970s, to sustain our business in the highly competitive domestic PVC industry, our technical team took on the challenge of maximizing efficiency, including in the production of monomers, the raw materials for PVC. In other words, the aim was "to extract the highest possible production volume from the input raw materials" and "to minimize consumption of energy such as electricity and gas.“

Our proprietary PVC manufacturing technology developed and introduced at the Shin-Etsu Chemical Kashima Plant was also introduced to our US subsidiary Shintech Inc., which began production in 1974. It was the former Chairman Chihiro Kanagawa who proposed and planned the Company’s establishment. Since then, Shin-Etsu Chemical's PVC manufacturing technology has been combined with Kanagawa's streamlined management to eliminate waste, and Shintech has kept its costs low enough to stay competitive in the fierce global PVC market. There are no bounds to Kanagawa’s efforts to push the envelope in terms of efficiency. Indeed, we have grown into the world’s largest PVC manufacturer by introducing a stream of innovative technologies to that lift productivity to the utmost in regard to plant construction and expansion.

In 1990 when Kanagawa assumed the position of President of Shin-Etsu Chemical, the rational management and production efforts that Shintech had practiced were reimported to Shin-Etsu Chemical. Under Kanagawa’s leadership, the G-Committee, a committee structure for rationalization, was established in 1992, and Shunichi Koyanagi, Executive Vice President, became the chairman of the committee. The motivated G-Committee worked without rest to rationalize and improve productivity in the manufacturing sector. When current Representative Director, Chairman of the Board Meeting Fumio Akiya succeeded as chairman of the committee in 2004, the G-Committee grew even more active and expanded its scope to include Shin-Etsu Handotai and other group companies. In addition, the G-Committee has achieved significant rationalization every year through synergies with Six Sigma programs¹. In fact to date, the committee has handled more than 25,000 rationalization projects for Shin-Etsu Chemical alone, helping to strengthen our global competitiveness.

¹ Six Sigma programs

Quality improvement method developed by Motorola in the 1980s. Focusing on processes with quality variation, it is designed to minimize variations within the processes, thereby reducing the incidence of quality defects. This approach has been adopted across the Group.

2) Our reduction results to date

The Group established the medium-term goal in FY2010, which is to “reduce greenhouse gas emissions in terms of intensity to 50% of the FY1990 level by FY2015.” Furthermore, the Group established the new medium-term goal in FY2016, which is to “reduce greenhouse gas emissions in terms of intensity to 45%（i.e. down 55%) of the FY1990 level by FY2025,” and has strived to attain this objective through energy conservation and the introduction of a cogeneration system.

The actual results for the FY2022 are 54.2% (i.e. down 45.8%) from the FY1990 level for the Group, and 46.8% (i.e. down 53.2%) for Shin-Etsu Chemical from the same level.

Energy usage accounts for 94% of the Group's greenhouse gas emissions. Japan's Act on Rationalizing Energy Use (Energy Conservation Law) sets a target of attempting to reduce energy consumption by at least 1% per year in terms of intensity. If the annual reduction is 1% from FY1990, the “to-date” reduction rate in the FY2022 would be approximately 28% compared to the FY1990 level. Our track record of reducing greenhouse gas emissions, however, significantly exceeds the target set by the Energy Conservation Law.

Measures for Achieving Carbon Neutrality by 2050

As mentioned above, the Group has been striving to reduce greenhouse gas emissions in terms of intensity. In addition to the reductions in terms of intensity we have been working on so far, we have formulated a plan to achieve carbon neutrality by cutting greenhouse gas emissions in absolute quantities.

1) Current reduction measures

In addition to further strengthening the initiatives described in the preceding paragraph, we are currently working on the following reduction measures. We will also focus on considering new reduction measures.

Reduction measures	Details
(1)Power-related	・Reduce CO₂ emission factor ・Purchase of renewable energy ・Installation of solar power generation equipment
(2)Improvement and innovation of manufacturing technologies, etc.	・Improvement of heat recovery capacity ・Introduction of energy-efficient equipment ・Switching from boilers to heat pumps ・Expansion in order to increase the production of charcoal reducing agents
(3)Utilization of carbon-neutral natural gas (natural gas with emission credits), hydrogen, etc.	・Co-firing in cogeneration systems
(4)Promotion of recycling	・Further promotion of recycling of PVC products and rare-earth contained in rare-earth magnets that has already been implemented

2) Initiatives toward 2050

Measures of the reductions currently supposed are as follows.

Reduction measures	Details
(1)Power-related	・Carbon neutralization of electricity
(2)Utilization of green and blue hydrogen	・Single fuel firing in cogeneration systems ・Use as boiler fuel
(3)Continued improvement of manufacturing technologies, etc.	・Continuous thorough rationalization and efficiency improvement
(4)CO₂ separation and recovery, and utilization	・Full-scale introduction of separation and recovery equipment, and utilization of methanation technology
(5)Utilization of biomass fuel	・Power and steam supply through introducing biomass cogeneration systems, etc.
(6)Promotion of recycling	・Establishment of a recycling system for products other than PVC and rare-earth magnets that have already been implemented
(7)Carbon offset	・Examination of a wide range of carbon offsets, including those from tree planting

The Group's reduction measures

* “Manufacturing methods, improvements and innovations, etc.” includes the use of hydrogen, use of biomass fuel, and promotion of recycling. “Related to electric power” includes the purchase of renewable energy and the installation of solar power generation equipment.

The components of reduction measures toward 2050 that the Company currently supposes are as described in the above pie chart. We will select the optimal ways to reduce emissions as technology evolves in the future.

As our US subsidiary Shintech Inc., plans to increase its production capacity in the years ahead, the Group’s greenhouse gas emissions are expected to increase around 2025, but then fall as the aforementioned measures take effect.

Other Initiatives to Help Realize a Carbon-Neutral Society

1) Initiatives for carrying out Life Cycle Assessment

By conducting life cycle assessment, the Group will contribute to the reduction of greenhouse gases throughout the supply chain.

2) Reduction of greenhouse gas emissions in logistics

We are working to reduce greenhouse gas emissions during product transportation. This initiative will contribute to the reduction of scope 3 greenhouse gas emissions.

Reduction in logistics
Examples	Scope 3 emissions categories contributing to reductions
Modal shift^* in methanol transport(switched from tank truck to railcar)	Category 4: "Emissions from product transport"
Modal shift in silicon wafer transport (switched from aircraft to ocean vessel)
Modal shift in silicone products transport (swhiched from truck to railcar)

^*Modal shift
Shifting from trucks and other freight transports to railways or ships with less environmental impact.

Shin-Etsu Chemical Naoetsu Plant Certified as Eco-Rail Mark Company

In March 2022, Shin-Etsu Chemical Naoetsu Plant was certified by the Ministry of Land, Infrastructure, Transport and Tourism as an Eco-Rail Mark company.
Compared to other modes of transportation, rail cargo transportation is an environmentally friendly means of transportation that emits much less CO₂. The Eco-Rail Mark is a system that certifies companies that are actively switching to rail cargo transportation as eco-friendly companies. We have been promoting a modal shift in the transportation of products from Naoetsu Plant and have now been certified as an Eco-Rail company because our annual rail usage volume meets the requirements for certification under the Eco-Rail Mark system.

Products being loaded onto freight cars at the freight terminal of JR Freight Kuroi Station.

Products are transported from Naoetsu Plant in tank containers on trucks.

3) Expand manufacturing and sales of products that contribute to reducing greenhouse gas emissions

Our group's products are used in a wide range of fields, including housing, infrastructure, electric vehicles, DX and GX, and support the foundations of people’s lives and industries. Many of these products also help reduce greenhouse gases. In June 2021, The Japanese government has identified 14 essential areas to aim for carbon neutrality in 2050. The ratio of sales in these 14 areas to the Group's consolidated sales in FY2022 is approximately 70%. We will continue to contribute to the carbon neutrality of society as a whole by focusing on developing, manufacturing, and expanding sales of these products.

Sustainability > Achieving a Sustainable Society > Comfortable living

Sustainability > Shin-Etsu Group and Climate Change >Strategies for addressing climate change > 2) Business opportunities arising from climate change

14 areas of expected growth

Source: Green Growth Strategy Through Achieving Carbon Neutrality in 2050
(announced by the Japanese government in June 2021)
https://www.meti.go.jp/press/2021/06/20210618005/20210618005-3.pdf

Shin-Etsu Chemical Group Products and Technologies Contributing to the Realization of a Carbon Neutral Society

	Products and technologies listed in the Green Growth Strategy	Shin-Etsu Chemical Group products and technologies that contribute to green growth strategies²
(1) Offshore wind, solar and geothermal industries (Next-generation renewable energy)	・ Offshore wind power generation ・ Photovoltaic power generation (next-generation technologies such as perovskite, next-generation inverter and grid control system technologies) ・ Geothermal power generation	・PVC (wire coating) ・Semiconductor materials³ ・Rare earth magnet ・Silicone ・Photocatalyst Coatings ・Low Friction Compound(Wire coating) ・Photovoltaic power generation related technology (initial deterioration prevention technology)
(2) Hydrogen and fuel ammonia industry	・ Hydrogen power generation ・ Hydrogen vehicles (fuel cell vehicles) ・ Fuel cells for household use ・ Hydrogen transportation and storage (e.g., liquefied hydrogen carriers,) ・ Hydrogen production (e.g., water electrolyzers) ・ Burners for power generation, such as ammonia co-firing burners ・ Ammonia production plants	・PVC (wire coating) ・Semiconductor materials³ ・Rare earth magnet ・Silicone ・Cellulose derivative (fuel cell parts) ・Liquid Fluoroelastomers ・Low Friction Compound(Wire coating) ・Hydrogen associated with soda industry, etc.
(3) Next-generation heat energy industry	・ Gas decarbonization (e.g., directly using of synthetic methane and hydrogen, introducing LNG with carbon offsets, using CO₂separation, recovery and utilization technologies, etc.)	・Semiconductor materials³
(4) Nuclear power industry	・ Fast reactors ・ Small modular reactors ・ High-temperature gas reactors ・ Nuclear fusion	・Semiconductor materials³
(5) Automotive and storage battery industry	・ Electric vehicles, fuel cell vehicles, plug-in hybrids and hybrids ・ Various infrastructures for autonomous driving, etc. ・ Storage batteries	・PVC (wire coating) ・Semiconductor materials³ ・Rare earth magnet ・Silicone ・Cellulose derivative (battery part) ・Anode material for storage batteries ・Liquid Fluoroelastomers ・Fluorinated Anti-smudge Coating ・Viewing angle, optical path control film ・Input device　Touch switch ・Wafer vacuum superposition device ・FPD panel vacuum superposition device
(6) Semiconductor and information and communication industry	・ Semiconductors such as power semiconductors and memory ・ Optoelectronics ・ Data centers ・ Information and telecommunications infrastructure	・PVC (wire coating) ・Semiconductor materials (silicon wafers, photoresists, mask blanks, sealing materials, pellicles, synthetic quartz, high-purity silane, etc.) ・Rare earth magnet ・Rare earth (Spray coating of semiconductor manufacturing equipment) ・Preform for optical fiber ・Silicone ・Wafer Cases ・Input device　Touch switch ・Electronic component transport tape ・Wafer vacuum superposition device ・FPD panel vacuum superposition device ・Micro LED Process Equipment
(7) Shipbuilding industry	・ Ships with hydrogen and ammonia engines ・ Highly efficient LNG-fueled vessels ・ Introducing energy-efficient vessels	・Semiconductor materials³ ・Silicone(Ship bottom paint) ・Room temperature curing type silicone rubber tape(Maintenance of piping inside the ship)
(8) Logistics, people flow and civil engineering infrastructure industry	・ Smart transportation (e.g., autonomous driving) ・ Green logistics (e.g., introducing fuel cell railroads) ・ Saving energy in sewage systems and promoting waste heat utilization ・ Utilizing ICT in construction work ・ Drone logistics (e.g., cargo transport using drones) ・ LED road lighting	・PVC (wire coating) ・Semiconductor materials³ ・LED encapsulant ・Silicone ・Cellulose derivative (fuel cell parts) ・Room temperature curing type silicone rubber tape(Maintenance of transportation infrastructure)
(9) Food industry, agriculture, forestry and fisheries	・ Reducing chemical pesticides and fertilizers, curtailing fossil fuel use ・ CO₂ absorption and fixation ・ Blue carbon (carbon storage by marine ecosystems) ・ Promoting use of new materials such as modified lignin and cellulose nanofiber (CNF) ・ Reducing methane and other emissions from agricultural and livestock industry ・ Developing and promoting new materials derived from woody biomass Utilizing unused wood as energy Developing new food production technologies using plant proteins	・PVC (agricultural film) ・Semiconductor materials³ ・Cellulose derivative (plant-based meat binder) ・Synthetic pheromones(Pest control agent) ・Biodegradable runner clips(Crop fixing material) ・Biodegradable pest control sheet
(10) Aircraft industry	・ Hydrogen Aircraft ・ Reducing weight and improving efficiency of airframes and engines ・ Bio-jet fuel, synthetic fuel	・Semiconductor materials³ ・Rare earth magnet ・Silicone ・Cellulose derivative (fuel cell parts) ・Viewing angle, optical path control film
(11) Carbon recycling and materials industry	・ CO₂-absorbing concrete ・ Carbon-recycled fuels (synthetic fuels) ・ Synthetic methane ・ Green LNG ・ Plastic raw materials by artificial photosynthesis ・ Plastic raw materials such as waste plastic, waste rubber and direct CO₂ synthesis ・ Technology to separate and recover CO₂ in exhaust gas ・ Developing and supplying zero-carbon steel using carbon-free electricity and carbon-free hydrogen ・ Expanding resource recycling and extending service life ・ Decarbonizing heat sources and petrochemical complexes	・PVC recycling ・Semiconductor materials³
(12) Housing, building industry, and next-generation electric power management industry	・ ZEH and ZEB (zero energy homes and buildings) ・ Energy management using AI, IoT and electric vehicles ・ Improving energy efficiency of houses (expanded use of building materials such as heat-insulating sashes and equipment such as high-efficiency air conditioners) ・ Reducing cost and expanding use of stationary storage batteries ・ Promoting local production for local consumption of electricity and heat energy	・PVC (resin window, PVC pipe, wire coating) ・Semiconductor materials³ ・Rare earth magnet ・Silicone ・Anode material for storage batteries ・Photocatalyst Coatings ・Room temperature curing type silicone rubber tape (Infrastructure maintenance)
(13) Resource circulation industry	・ CCU (Carbon Capture and Utilization) plants at waste incineration facilities ・ Technology to generate methane and ethanol from exhaust gases	・PVC recycling ・Rare earth magnet recycling ・Semiconductor materials³
(14) Lifestyle-related industries	・ Total management of housing and transportation (combination and optimization of ZEH, ZEB, demand-side equipment, local renewable energy, electric vehicles and fuel cell vehicles, etc.)	・PVC (resin window, PVC pipe, wire coating) ・Semiconductor materials³ ・Rare earth magnet ・Silicone ・Anode material for storage batteries ・Photocatalyst Coatings ・Low Friction Compound(Wire coating)

¹ Source: "Green Growth Strategy Through Achieving Carbon Neutrality in 2050" (announced by the Japanese government in June 2021)
https://www.meti.go.jp/policy/energy_environment/global_warming/ggs/index.html
² Future products are included. The colors of the letters of products and technologies indicate business segments.
【Business segments】　Infrastructure Materials　Electronics Materials　Functional Materials　Processing, Trading & Specialized Services
³ Semiconductor materials refer to silicon wafers, photoresists, mask blanks, sealing materials, pellicles, synthetic quartz, high-purity silane, etc. Semiconductor materials fall under the semiconductor industry in field (6), but semiconductors manufactured using semiconductor materials contribute to control systems and other applications in a variety of fields, so they are also listed in fields other than (6).

Sustainability > Shin-Etsu Group and Climate Change >Strategies for addressing climate change > 2) Business opportunities arising from climate change

Disclosure of TCFD-Recommended Items

Governance

The Sustainability Committee is working with each of the Group's business divisions to address climate change. The Sustainability Committee is one of the committees for each material management task in the Group's corporate governance system. Chaired by the president, the committee consists of about 60 members, including directors, corporate officers and divisional managers of Shin-Etsu Chemical, as well as persons in charge of sustainability at Group companies, and develop initiatives that integrate business and sustainability initiatives.

Sustainability > Management > Structure of Sustainability Initiatives

In FY2021, we established a Carbon Neutral Task Force within the Committee to examine each issue related to climate change. The Task Force held a general meeting every three months and reported the latest information to the president, who received this report and decided on a policy. Based on this policy, the Task Force conducted investigations and deliberations, and reported on climate change-related initiatives at meetings of the Managing Directors’ Meeting and the Board of Directors attended by all directors, audit & supervisory board members and corporate officers. After these efforts, we formulated a plan to achieve carbon neutrality in 2050 and announced it at the end of May 2023.

Strategy

The Group considers the promotion of plans to achieve carbon neutrality by 2050 as an important management issue. While promoting information disclosure based on the TCFD recommendations, including scenario analysis, we identify important risks and opportunities that affect our business through these analyses, and reflect them in our management.

Senario analysis

In FY2021, we conducted a scenario analysis of some of our businesses to identify the risks and opportunities that climate change poses to our business activities.

1) Assumed scenarios

Considering the impact of climate change, we have assumed scenarios for a 1.5°C rise and a 4°C rise for the year 2050.

the flow of vapor and electricity, in plant

Source: Sixth Assessment Report, Intergovernmental Panel on Climate Change (IPCC)

Event	1.5ºC scenario	4ºC scenario
Extreme high temperatures on land areas	The frequency of extreme high temperatures (+1.9ºC compared to 1850–1900) on a once-in-a-decade scale will increase 4.1 times in 2081–2100.	The frequency of extreme high temperatures (+5.1ºC compared to 1850–1900) on a once-in-a-decade scale will increase 9.4 times in 2081–2100.
Heavy rainfall on land	The frequency of extreme wetting (+10.5% compared to 1850–1900) on a once-in-a-decade scale will increase 1.5 times in 2081–2100.	The frequency of extreme wetting (+30.2% compared to 1850–1900) on a once-in-a-decade scale will increase 2.7 times in 2081–2100.
Global mean sea level	Compared to the 1995–2014 average, global mean sea level will increase by 28 cm to 55 cm by 2100.	Compared to the 1995–2014 average, global mean sea level will increase by 63 cm to 101 cm by 2100.
Percentage of renewable energy in power supply composition	Renewable energy ratio will account for 90% of total electricity generation in 2050.
Financial impact	Economic slowdown due to the introduction of the carbon tax and the impact of higher electricity prices on corporate profits.	Economic stagnation and increased insurance premiums due to severe wind and flood damage.

Source:
Sixth Assessment Report, Intergovernmental Panel on Climate Change (IPCC)
International Energy Agency (IEA) "Net Zero by 2050"
Mitsubishi Research Institute "Climate Change Response / Environmental Disclosure (TCFD)"

① Business opportunities arising from climate change: A scenario for a 1.5°C rise

Applications	Details	Revenue Impact
Resin windows	Polyvinyl chloride resin is used for resin windows because of its excellent heat insulation properties. Demand for resin windows is expected to increase along with the spread of energy-saving homes.	Large
Electric vehicles, hybrid vehicles, fuel cell vehicles	Semiconductor silicon is used in power semiconductor devices such as inverters to control the number of rotations of motors, logic semiconductor devices for automatic driving system and AI. High-performance and compact rare-earth magnets can reduce the overall weight of a vehicle and improve its fuel efficiency, which will expand their use in the drive motors of electric, hybrid, and fuel cell vehicles, as well as in a variety of other motors in vehicles. Silicone heat-dissipating materials are used in lithium-ion batteries and various electronic control devices. Demand is expected to grow as it helps prevent malfunctions and failures caused by heat. Sustainability -Achieving a Sustainable Society -With the environment	Large
Wind power generators	Demand for rare earth magnets is expected to grow as they contribute to higher efficiency in offshore wind turbines and lower maintenance costs for generators. Demand for vinyl chloride used for wire sheathing is also expected to increase due to the development and expansion of the power grid.	Large
Air conditioners	Demand for semiconductor silicon is expanding as it is used in inverter control devices for compressor motors and contributes to power saving by adjusting the rotation speed of the motor to an appropriate level. Demand for rare earth magnets is expected to grow as they improve the energy efficiency of air conditioner compressor motors and reduce energy consumption.	Medium
Aircrafts	Rare earth magnets are indispensable for the electrification and hybridization of small aircraft and for the electrification of hydraulic drive units in large aircraft. Demand for rare earth magnets is expected to increase as their small size and high power will help reduce the weight of the aircraft and improve fuel efficiency.	Medium
Motors for industrial use	Demand for rare earth magnets is expected to grow as they increase the efficiency of industrial motors and reduce the amount of electricity consumed.	Medium
Robots for services	Semiconductor silicon is increasingly being used in semiconductors for energy-saving robot control motors for manufacturing, logistics, agriculture, and other applications, as well as in medical and disaster response robots.	Medium
Binder for plant-based meat alternatives	A diet centered on plant-based foods may reduce CO₂ emissions by 1.6 gigatons per year *. " Metolose MCE-100TS", one of the products of cellulose derivatives, is used as a binder for alternative meats derived from plants. The global market for plant-based meat is expected to grow at a double-digit rate annually, and further market expansion is expected. Sustainability -Achieving a Sustainable Society-Comfortable living	Medium

* From "DRAWDOWN – The Most Comprehensive Plan Ever Proposed to Reverse Global Warming" edited by Paul Hawken

② Business risks due to climate change and countermeasures: 1.5 ℃ scenario (transition risk)

Events	Risks to the Company	Impact	Countermeasures
Introduction of carbon taxes and establishment of carbon emission quotas around the world	Payment of carbon tax Incurring costs of purchasing emission credits to meet carbon emission quotas Increased costs of measures to reduce greenhouse gas emissions	Large	Reduce scope 1 emissions - Further promotion of more efficient production processes and introduction of highly efficient equipment, etc. - Use of energy sources that do not emit carbon dioxide, such as hydrogen and ammonia - Use of CCUS - Use of carbon-neutral natural gas(natural gas with emission credits) as a heat source Use of hydrogen-reduced iron materials Achievement of reduction targets in the absolute amount of greenhouse gas emissions Collection of information on environmental regulations such as carbon taxes in each country and implementation of countermeasures
Widespread use of electricity derived from renewable energy sources and rising electricity prices resulting from tightening regulations on greenhouse gas emissions	Increase in electricity costs	Large	Reduce scope 2 emissions - Further promotion of production processes that use less electricity, introduction of high-efficiency equipment, etc. - Introduction of cogeneration systems using carbon-neutral natural gas (natural gas with emission credits)

③ Business risks due to climate change and countermeasures: 1.5°C scenario (Physical risk)

Events	Risks to the Company	Impact	Countermeasures
Increase in the frequency of extreme weather events	Flooding of production sites Disruption of the supply chain	Large	Raising the ground level of production sites, installation of watertight walls around critical facilities, installation of instrument rooms in areas with low risk of flooding, installation of seawalls at production sites close to ports Multiple production bases Diversification of raw material procurement sources Securing product inventory Enrollment in damage insurance
Increased frequency of flooding caused by changes in precipitation patterns, etc.		Large
Introduction of carbon taxes and establishment of carbon emission quotas in some countries	Payment of carbon tax imposed on greenhouse gases emitted from production sites in the said countries Costs of purchasing emission credits and payment of surcharges will be incurred if our greenhouse gase emmisions do not meet the carbon emission targets established by the said countries.	Small	Reduce scope 1 emissions - Further promotion of more efficient production processes and introduction of highly efficient equipment, etc. - Use of energy sources that do not emit carbon dioxide, such as hydrogen and ammonia - Use of CCUS - Use of carbon-neutral natural gas(natural gas with emission credits) as a heat source Use of hydrogen-reduced iron materials Achievement of reduction targets in the absolute amount of greenhouse gas emissions Collection of information on environmental regulations such as carbon taxes in each country and implementation of countermeasures
Electricity price	According to the IEA scenario analysis (current measures scenario), electricity prices will not increase. Therefore, there is no risk to the Company.	ー	ー

Risk management

The Risk Management Committee works to prepare for and eliminate the various risks surrounding our business, including risks posed by climate change. The Committee is chaired by a managing corporate officer and consists of approximately 20 members, including our directors, corporate officers, and department managers.
Our Group has established Risk Management Regulations to identify potential risks associated with our business activities and address these risks appropriately. The Risk Management Regulations clearly state specific risks, risk management systems, and responses to risks that materialize. The Risk Management Committee reports to the Board of Directors, Managing Directors’ Meeting, Audit & Supervisory Board, and relevant parties in a timely manner on important risk management issues, and works to address them appropriately.With regard to the risks related to climate change, which have become increasingly important in recent years, the Sustainability Committee works with the Risk Management Committee to ascertain risks through scenario analysis.

Sustainability > Management > Risk management

Climate-related physical risks include increased spending due to CO₂ emissions trading and carbon taxes, transition risks such as rising manufacturing costs due to rising energy prices, damage to equipment due to the wind disaster, and damage to electrical equipment due to flooding, or plant shutdown resulting from such cases. Among these risks, we defined serious risks such as accidents, explosions, fires, and other major disasters that cause operations to be stopped for one day or more, and environmental pollution incidents that exceed legal standards values or regulation values.

Metrics and Targets

The Shin-Etsu Group aims to achieve net zero greenhouse gas emissions (Scope 1 and 2) by 2050. Furthermore, we will continue to promote the reduction of greenhouse gas emissions in terms of intensity. We will work to achieve the new medium-term target set in FY2016 of “Reduce greenhouse gas emissions in terms of intensity to 45% of the ＦＹ1990 level by ＦＹ2025.”

Long-term target
Achieve carbon neutrality by 2050 (scopes 1 and 2)

Result in FY2022
6,613 thousand t-CO₂ (scope1　2,246 thousand t-CO₂, scope2　4,367 thousand t-CO₂)

Mid-term target
Reduce greenhouse gas emissions in terms of production intensity to 45% (i.e. down 55%) of the ＦＹ1990 level by ＦＹ2025.¹

Result in FY2022
Acheives reduction to 54.2% (i.e. down 45.8%) for the Shin-Etsu Group² and 46.8% (i.e. down 53.2%) for Shin-Etsu Chemical.

Changes in Greenhouse Gas Emissions in Terms of Production Intensity
Relative to the FY1990 Level

¹ For the calculation of emissions, CO₂ emission factors for electricity are averaged from 2000 to 2009 so that efforts to reduce electricity can be clarified.
²Includes non-consolidated group companies.

Sustainability > Key Sustainability Issues > Energy-saving, resource-saving, and reduction of environmental impacts > Response to Climate Change

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Achieving a Sustainable Society

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