Participation in Third-party Initiatives

TCFD

The IHI Group became a signatory to the Task Force on Climate-related Financial Disclosures (TCFD) by resolution of the Board of Directors in May 2019. This framework plays a role as a tool to formulate strategies able to strengthen risk management and cultivate business opportunities.

GX League Basic Concept

In February 2022, the IHI Group endorsed the GX League Basic Concept announced by the Ministry of Economy, Trade and Industry, joining it in April 2023.
The GX League is a group of companies that are actively working on Green Transformation (GX), established as a forum for discussion on reforming socioeconomic systems and practices in their entirety for the creation of new markets, together with government, academics, and financial players who are also taking part in the GX challenge.

Relationships with Industry Associations

The IHI Group is a member of various industry associations including the Japan Society of Industrial Machinery Manufacturers and the Society of Japanese Aerospace Companies. The Group also participates in seminars and other events held by government and industry groups to gather information and share it within the Group.
The IHI Group sets targets and takes action to meet or exceed the climate change targets set by governments and industry organizations.

Responses to and Support for Public Regulations

The IHI Group supports laws, policies, regulations, and so on relating to climate change and responds to them appropriately at each domestic and overseas business site.
In particular, IHI is a specified business operator under the Act on Rationalization of Energy Use and Shift to Non-fossil Energy (the Energy Conservation Act), and as such, is obligated to make efforts to reduce energy consumption intensity by an average of 1% per year. In the IHI Group Environmental Action 2023 plan, which covers fiscal 2023 to fiscal 2025, the Group sets reduction targets in line with the Energy Conservation Act. By implementing energy-saving measures at each site, the entire Group is promoting the efficient use of energy.

Structures for Implementing Initiatives to Become Carbon Neutral

The IHI Group deliberates on and determines approaches and important matters concerning climate change countermeasures through the Environment Committee, a Group-wide body.
In fiscal 2021, the Group established a task force comprising members from different divisions to promote initiatives to become carbon-neutral throughout the entire value chain. Until fiscal 2023, the Administration Division and Corporate Planning Division served as the secretariat to the task force, but in fiscal 2024, the secretariat was consolidated within the General Affairs Division to carry out these activities more efficiently and accelerate their implementation. Reports on the activities of the task force are made to the Environment Committee, which deliberates on them. The details of discussions by the Environment Committee are reported to the ESG Management Promotion Committee, and feedback received from management is disseminated throughout the Group.
Amid discussions at these meetings and committees, matters related to important management decision-making are deliberated on by the Management Committee, which serves as the decision-making body for management execution, and are then submitted to the Board of Directors.

IHI Carbon-Neutral 2050

The IHI Group is committed to achieving the Paris Agreement’s effort target of “Keeping the global average temperature increase to 1.5°C compared to pre-industrial levels” by promoting “IHI Carbon-Neutral 2050.”
The Group aims to halve direct and indirect greenhouse gas emissions (Scope 1, 2) from its business activities compared to 2019 by fiscal 2030 and achieve effectively zero emissions by 2050. As short-term measures, the Group established the IHI Group Environment Action Plan 2023 (FY2023–FY2025) and set targets of reducing total Scope 1 and 2 emissions by 12,000 t-CO₂e and reducing energy intensity (energy consumption per unit of sales) by 3% compared to fiscal 2022 through capital investment.
The Group also aims to achieve effectively zero greenhouse gas emissions released in upstream and downstream processes (Scope 3) by 2050. The Group formulated the Scope 3 Emissions Reduction Roadmap, will reduce emissions with a focus on category 11 (use of sold products) and category 1 (purchased products and services), which have particularly large emissions, to achieve carbon neutrality across Scopes 1, 2, and 3.
Possessing decarbonization technology, the IHI Group will take the lead in contributing toward the realization of a global carbon-neutral society through its efforts in achieving this goal.

Risk and Opportunity Due to Climate Change

The IHI Group conducted simple scenario analyses of four business domains significantly impacted by climate change: the energy business, bridge and water gate business, vehicle turbocharger business, and the civil aero engine business.
The first step set ① a carbon-neutral world as the highest transition risk and ② a world greatly impacted by climate change as the highest physical risk in our own independent scenarios drafted with reference to external scenarios created by the International Energy Agency (IEA) and Intergovernmental Panel on Climate Change (IPCC). The second step identified risks and opportunities for all four business domains. The third step assessed the impact each business has. The fourth and last step drafted countermeasures according to our findings.
Countermeasures set to address the two extreme worlds anticipated by these IHI scenarios enhance the resilience of IHI Group businesses against future risks.
The IHI Group can also reduce risks against the harshest world facing both these scenarios (① and ②) at the same time by integrating the countermeasures for each.
The IHI Group divides the risks and opportunities identified for each of the four business domains and the countermeasures into two categories: 1. risks, opportunities, and countermeasures specific to each business and 2. risks, opportunities, and countermeasures shared across all businesses.
Risks, opportunities, and countermeasures in 1. are shown in the table below while those in 2. are shown in the table on the next page.
In the future, the IHI Group will enhance its ability to leverage scenario analyses in business strategy through efforts, such as assessing the financial impact of climate change.
The IHI Group will proactively incorporate the concepts pursued by TCFD signatories in management policies and business strategies, contributing not only to the sustainable development of our Company, but society as a whole.

Scenario Analysis Process

External reference scenarios:

• A carbon-neutral world
  IEA 2DS (qualitative assessment based on the ETP2017 Global technology penetration in LDV stock by scenario, global electricity generation, etc.)
• A world greatly impacted by climate change
  RCP 8.5 (qualitative assessment based on the portions relating to wind and flood damage risk of IPCC AR5 WG2)

IHI Group Scenarios

1. High-transition risk scenario
   This scenario presents ① a carbon-neutral world where society at large shifts to mitigate climate change and stop all greenhouse gas emissions.
2. High-physical risk scenario
   This scenario presents ② a world greatly impacted by climate change that needs to adapt to the physical impact and directly confront drastic devastation by natural disasters.

CO₂ Emission and Energy Consumption Targets and Results (IHI Group Environmental Action Plan 2023 [FY2023–2025])

GHG Emissions (Scope 1 and 2) and Energy Consumption

(Scope: IHI and consolidated subsidiaries)

1. The total value for each item is rounded off and may not match the figures in the breakdown.
2. Net sales revenue as the denominator.
3. GHG emissions intensity in FY2023 is 14.2 t-CO₂e/100 million yen, excluding special factors.
4. Energy consumption intensity in FY2023 is 15.6 TJ/10 billion yen, excluding special factors.

Third-party Verification of Data

Mitigating Climate Change (Initiatives to Become Carbon Neutral)

The IHI Group aims to make its complete value chain carbon-neutral by 2050. We are striving to reduce direct and indirect (Scope 1 and 2) GHG emissions from our business activities as well as Scope 3 emissions from the upstream and downstream processes in our value chain.

Initiatives to Become Carbon Neutral

• Reduction of CO₂ Emissions During Procurement and Production

  We are working to reduce CO₂ emissions in procurement and production activities to achieve carbon neutrality throughout the value chain.

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• Using Ammonia as Fuel

  We are working on the development of power generation technologies using ammonia as fuel and the construction of a value chain that envisions a society where ammonia utilization is expanded.

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• Lighten Products, Electrify, and Convert Fuel for Transport Systems

  In the aviation and automotive sectors, we are developing and implementing various technologies such as electrification to achieve carbon neutrality.

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• Using Recycled Carbon as an Energy Source

  To prevent an increase in atmospheric CO₂, we are conducting research on the technological development and social implementation of the separation, recovery, and effective utilization of emitted CO₂.

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Adapting to Climate Change

• Adapting to Climate Change

  Through the development of resilient infrastructure and the utilization of water management systems that make use of weather forecasting, we aim to achieve a safe and secure living environment.

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