Responses to climate change
Murata undertakes business operations with “reinforcement of climate change countermeasures” as a priority non-financial issue (material issue).
Until the present, Murata has established its own standards for capital investment related to energy conservation, and we have responded to the issue of climate change by actively conducting capital investment to allow us to save energy. We obtain third-party certification of our greenhouse gas (GHG*1) emissions and proactively disclose information, for which we receive high evaluations from outside the company, such as in the CDP*2 climate change survey.
However, in addition to increased production due to the recent expansion of our business, several mergers and acquisitions (M&As) and the development of new businesses have caused a rapid increase in our emissions of greenhouse gases. In order to both halt this increase and reduce our emissions, we continuously take action, led by Climate Change Commitee that asssinged vice president as chairman and assinged director as sub chairman.
Countermeasures that is chaired by the responsible vice president and the Initiative Promotion Subcommittee, a subsidiary organization, to set greenhouse gas reduction goals based on the SBT*3 concept, discuss the details of information disclosures relating to the TCFD*4 Recommendations, and reduce greenhouse gas emissions.
In addition, we are supplementing our existing capital investment-based approach to energy conservation by beginning to optimize our use of energy during production through the creation of new energy management systems that utilize Murata sensing and IoT technologies.
We also participate in the Japan Climate Leaders Partnership, an organization that is ambitiously addressing the issue of climate change in Japan. In addition to making use of knowledge from outside the company to assist us in speeding up our own initiatives, we are also examining the possibility of cooperating with other participating companies to launch projects that will contribute to climate change initiatives globally.
GHG: Greenhouse gas. Gases that contribute to the greenhouse effect.
An international nongovernmental organization (NGO) that surveys and evaluates the environmental initiatives of entities such as companies and cities and publishes the results.
SBT: Science-based targets. Quantitatively derived scientific targets established in relation to long-term scenarios for the reduction of greenhouse gases.
Task Force on Climate-related Financial Disclosures. An organization that supports businesses that discloses information on climate change risks and opportunities.
Method of calculating total greenhouse gas emissions
Following the GHG Protocol, a global calculation standard, we calculate total emissions within the three scopes defined below:
Scope 1: Direct emissions of greenhouse gases generated by emission sources either owned or managed by the business
Scope 2*5: Indirect emissions of greenhouse gases accompanying the use of electricity, steam, and heat
Scope 3: Indirect emissions other than those covered by Scope 2 (business trips by employees, transportation and delivery of products, etc.)
Reinforcement of climate change countermeasures
The Special Committee on Climate Change Countermeasures is positioned as a subsidiary organization to the CSR Management Committee, which is chaired by the Representative Director and comprises company vice presidents. The Special Committee comprises representatives of production plants, Business Departments, Development Departments, and staff, and works to conserve energy and promote the use of renewable energy via a company-wide system.
Specific initiatives that have been advanced by the Special Committee include the horizontal rollout of energy conservation measures throughout the entire company and the introduction of heat pumps to production facilities.
The Committee is revising our criteria for investment decisions in relation to energy conservation overall and working to enhance our energy conservation initiatives. In parallel with these initiatives, we are actively introducing solar electric power generation systems and purchasing renewable energy certificates, contributing to the advancement of renewable energy.
In fiscal 2020 we also established the Initiative Promotion Subcommittee as a subsidiary organization of the Special Committee on Climate Change Countermeasures. The Subcommittee will determine the CO2 calculation scope and establish calculation methods for acquisition of SBT certification and discuss the details of information disclosures in accordance with the TCFD Recommendations.
In recent years, companies have been asked to contribute to the world’s efforts in transitioning into a circular use of resources and a decarbonized society in order to address serious environmental issues in different parts of the world. In particular, with climate change, companies are facing not only closer scrutiny but also stronger demand for information disclosure. It has become a major issue for companies to disclose how they grasp and manage risks and opportunities posed by climate change.
Murata has set reinforcing responses to climate change as priority issues for the Company to manage and is continuously working towards being able to respond accurately to society’s wide-ranging requirements.
Murata endorsed recommendations by the TCFD*2 established by the FSB*1. We will analyze risks and opportunities brought on by climate change and work to disclose information related to governance and strategies in accordance with the TCFD recommendations.
The followings outlined Murata’s efforts in the four thematic areas specified in the TCFD recommendations, namely, governance, strategy, risk management, and metrics and targets.
*1 Financial Stability Board
*2 Task Force on Climate-related Financial Disclosures
Murata has set up a Climate Change Committee,which meets at least once every six months, to bolster measures for managing risks brought on by climate change across the entire Group.
The Climate Change Committee reports to the CSR Management Committee, which is chaired by the President and in turn repor ts to the Board of Directors.
A Vice President in charge and a Director serve as chairperson and vice chairperson, respectively, of the Climate Change Committee, which comprises representatives from related divisions, including production plants, business divisions, and development divisions.
The Climate Change Committee oversees Murata’s greenhouse gas (“GHG”*3) emissions and develops systems, including relaxation criteria for capital expenditure on energy conservation, to ensure energy conservation measures are taken throughout the company and to promote the introduction of renewable energy. The Climate Change Committee plans to step up ef forts in reducing the environmental impact of Murata’s products, par ticularly in the design phase of production processes.
In 2019, Murata launched an Initiative Promotion Subcommi t tee, under the Cl imate Change Committee, comprising managers of relevant divisions, with an aim to reinforce responses to climate change and better serve societal needs.
*3: Greenhouse gas: gases that cause the greenhouse effect.
We expect demand for Murata’s products to continue growing as more products are computerized; communications equipment acquires more sophisticated functionality and higher speed; and vehicles acquire self-driving functions and are electrified. At the same time, the world faces grave challenges, such as climate change, depletion of resources and increasing income gaps, as highlighted in the international framework of the United Nations’ Sustainable Development Goals (SDGs). Murata has identified these issues as material to our business and as a starting point for us to contribute to resolving these societal issues through our business activities.
In assessing the potential impact of climate change on Murata’s business, we classify opportunities and risks by type and timeframe, and analyze them under different scenarios.
- Abnormal weather phenomena, including typhoons and torrential rains, are among the physical risks that can affect our manufacturing plants and supply chain. For example, floods and blackouts can completely halt operation of key plants, while abnormal weather can cause disruption in the supply of materials. We will need to take additional measures as abnormal weather events increase amid climate change; however, this is where Murata’s technology can be utilized. For example, Murata acquired a lithium-ion battery business in 2017 and subsequently developed all-in-one energy storage batteries and high voltage direct current (HVDC) storage battery units. We believe this new solution, which uses cutting-edge technology, will aid in enhancing resilience of plants affected by blackouts or power shortages.
- The risk of rising energy costs due to factors such as the introduction of carbon tax in regions where Murata operates is a potential transition risk that should be accounted for in financial planning and capital expenditure decisions. The Climate Change Committee is robustly promoting energy-conserving measures and the introduction of renewable energy. This includes efforts to ensure the introduction of energy-conserving measures across the company and a review of the criteria for investment decisions with impact on overall energy conservation. The Climate Change Committee is also discussing a plan to introduce an internal carbon pricing system.*4 We believe we can reduce transition risk by continuing these activities.
- We expect demand for Murata’s compact and energy efficient electronic components to increase over the medium- to long-term amid rising attention to climate change and the tightening of related regulations. The reduction of Murata products’ carbon footprint is a key agenda for the Climate Change Committee and the Initiative Promotion Subcommittee.
- We conducted analysis under RCP 2.6*5 climate scenario to consider our climate change strategies. The analysis revealed that we would not be able to achieve the reduction goal through energyconservation measures alone. We thus have been introducing solar power systems at plants and purchasing renewable energy-derived power and certificates. The amount of renewable energy we used in fiscal 2019 totaled about 35 million kWh.
In February 2020, Murata committed to setting emissions reduction targets in accordance with the latest standard by the SBT initiative*6. Going forward, we aim to look into other climate scenarios and assess potential impact on our business and assets under these scenarios.
*4: Carbon pricing system: a measure to attribute prices to CO2 emissions in a company to give monetary value to reduction in CO2 emissions and promote reduction in CO2 emissions by the company.
*5: Representative Concentration Pathways (RCP) 2.6: a scenario developed under the goal of limiting the future rise of atmospheric temperature below 2°C by 2100.
*6: Science Based Targets (SBT) initiative: a joint international initiative by CDP, an international non-governmental organization committed to environmental issues, including climate change, United Nations Global Compact (UNGC), World Resources Institute (WRI) and World Wide Fund (WWF). It certifies CO2 emissions reduction targets set by businesses in line with scientifically sound reduction scenarios, in order to achieve the Paris climate agreement’s goal of keeping a global temperature rise below 2°C above pre-industrial levels.
Murata recognizes the importance of managing risks associated with climate change. We believe this requires working out appropriate strategies to identify latent risk factors in a timely manner and enhance the resilience of our businesses against risks that may materialize. When evaluating Murata’s exposure to climate risks, we will:
- Classify risks into physical and transition types
- Consider time horizon in the short-, medium- and long-term
- Keep watch on regulatory changes in countries and regions where we have operations
In assessing potential impact of risks, we take into consideration both the possibility of being af fected and potential degree of impact. The Climate Change Committee reports outcomes of the assessment to the CSR Management Committee and works with other committees, including the Board of Directors and the Risk Management Committee, as necessary.
Currently, we collect information on social developments that may lead to risks, such as moves to tighten regulations, at regular intervals through industry groups. Going forward, we plan to launch a program for exchanging views with stakeholders, to strengthen Murata’s climate change strategies and information disclosure. We believe this new program will help us improve effective assessment of climate change-related risks and the planning of strategies against them.
Metrics and targets
At Murata, we estimate the amount of GHG emissions in accordance with the Greenhouse Gas Protocol, a globally used greenhouse gas calculation
We obtain certification on our data from an independent verification body to ensure their reliability.
Our total GHG emissions (Scope 1+2) was 1.47 million t-CO2, down about 0.16 million t-CO2 year on year, in fiscal 2019.
*1 Scope1: direct emissions of greenhouse gases from sources owned or managed by a business operator
*2 Scope2: Indirect emissions of greenhouse gases associated with use of electricity, steam or heat
Our GHG emissions had steadily increased in recent years as we increased production output to keep pace with business expansion as well as M&As and new business activities, but we were able to reverse the upward trend in fiscal 2019 through efforts such as energy conservation activities and introduction of renewable energy throughout the year. Through the activities of the Climate Change Committee, we aim to achieve our reduction targetof keeping emissions to 1.40 million t-CO2 in 2021.
Murata’s total greenhouse gas emissions
In fiscal 2019, we had achieved to reduse about 160,000t-CO2 compered last fiscal year because of expanding continuous energy conservation and rationalization of energy use.
Toward achiving reduction goal with 1.4 million t-CO2 or less in 2021, we work on to expand energy conservation and renewable energy, and we will consider various of measures such as the introduction of carbon pricing, we will accelerate our implementation of such measures.
Murata is a member of the Japan Electronics and Information Technology Association (JEITA). The electrical equipment and electronics associations, including JEITA, participate in KEIDANREN’s Commitment to a Low Carbon Society with an eye to 2020, and aim to improve the energy efficiency of production processes by 1% per annum. In order to achieve this target, Murata is also working to improve energy efficiency through energy-efficiency measures at factories and offices, etc.
Breakdown of SCOPE 1 and SCOPE 2 Emissions in FY2019 (CO2 equivalent)
Third-party assurance of greenhouse gas emissions
As initiatives to tackle climate change have become essential for companies, Murata manages its greenhouse gas emissions based on reliable data that has been certified by a third party. Murata believes that disclosure of highly reliable data is a first step and receives third-party assurance of greenhouse gas emissions each year. Furthermore, Murata is actively working toward the introduction of solar power generation, and hence, it also receives certification of the amount of solar power generated.
Link: Independent Assurance Statement
PFCs are chemical substances that contribute to global warming and are a target for reduction under the Kyoto Protocol. Murata is a member of the Japan Electronics and Information Technology Industries Association (JEITA), and we stand behind the organization’s voluntary action plan. Murata itself has set a fiscal 2020 target of achieving a 65% reduction in liquid PFCs against fiscal 2002 in terms of CO2 equivalent, and has worked to realize this goal. From 2015, we have been successively introducing PFC regeneration and recovery equipment to worksites that use large amounts of liquid PFCs, and in fiscal 2019 we realized our target, achieving a reduction of 76% against fiscal 2002.
Reduction of environmental impact arising from distribution
We strive to reduce environmental burden at the distribution stage of products in addition to manufacturing stages.
In addition to reducing CO2 emissions by making transportation more efficient, we are also promoting eco-friendly physical distribution based on the 3Rs.
Tracking CO2 emissions in domestic distribution and overseas distribution
Until fiscal 2015, we set targets for the reduction of CO2 emissions every year based on our 5th Environmental Action Plan and worked to realize them. As a result, we achieved a specific outcome in relation to CO2 emissions during distribution in Japan (a reduction of more than 70% in emissions per unit of net production against figures for fiscal 2007).
Having realized this result, in our 6th Environmental Action Plan in effect from fiscal 2016, we did not stipulate a new set of targets for the reduction of emissions during distribution but made these reductions a feature of standard operations. Going forward, we will continue to implement distribution management that considers the environment, monitoring emissions daily.
- In fiscal 2019, our CO2 emissions during domestic distribution were 402 tons per month, a 71% reduction in CO2 emissions per unit of net production against fiscal 2007.
- Murata’s CO2 emissions during distribution for the entire world were approximately 14,412 tons per month.
Reducing energy consumption
At Murata, we are developing electronic component manufacturing equipment that has a high rate of energy efficiency. Our indicator for the energy savings realized by this manufacturing equipment is energy consumption per unit of production (per unit of net production). We are developing the new equipment with the goal of a 25% or higher reduction in energy consumption against benchmark machinery (conventional manufacturing equipment).
We have also been proceeding with energy-saving improvements to the existing manufacturing equipment in operation at our plants. In fiscal 2019, we focused on a horizontal rollout of approximately 70 energy-saving measures for manufacturing equipment that we have formulated to date.
We have made improvements, focusing on measures with a large greenhouse gas reduction effect. Our main energy-saving initiatives included 1) updating to high-efficiency equipment, including refrigeration equipment; 2) introduction of thermal recovery equipment; 3) reducing electricity use when equipment is on standby; and 4) reducing air-conditioning power by optimizing the pressurization of clean rooms.
In addition, every year we conduct energy-saving training workshops for production equipment design engineers in their second year of employment, providing them with expertise in relation to the design of production equipment in order to realize energy savings.
In fiscal 2020, Murata will investigate the introduction of new energy-saving technologies and, as a new initiative, will build an energy measurement system combining sensors and wireless systems developed in-house in an effort to conserve energy and increase productivity.
Contributing to the prevention of global warming through energy-saving activities that put our organizational capabilities to work
Murata is working actively on the visualization of energy in its business, using in-house technology, and is establishing a system that will allow us to plan and effectively implement energy-saving measures. Specifically, we are moving ahead with the introduction of an energy management system that enables energy usage to be analyzed at both plants and the head office. The system uses wireless sensors developed by Murata to gather such data as temperature and humidity in a plant and the current value of various pieces of equipment and sharing them online. This system has won a Good Design Award and a Chairman Prize of ECCJ in the Energy Conservation Grand Prize for excellent energy conservation equipment in fiscal 2017. Thus far, Komoro Murata Manufacturing has used this energy management system to optimize its air-conditioning and reduce standby power of equipment through energy visualization, resulting in a 2.2% reduction in greenhouse gas emissions for the plant overall. Murata will continue making efforts to introduce advanced energy-saving measures such as the energy management system throughout the Group, which has operating bases around the world.
Introduction of renewable energy
As one of its “reinforcement of climate change countermeasures” initiatives, Murata is working to increase the volume of renewable energy consumed in business activities. As a global company, we have actively promoted the introduction of solar power generation both in Japan and in other countries such as Thailand. In fiscal 2019, we generated a total of 35 million kWh of electricity from renewable energy sources such as photovoltaic power generation facilities, which contributed approximately 20,000 t-CO2 to our greenhouse gas reduction efforts. We will continue to consider introducing renewable forms of energy in Japan and other countries with the goal of contributing to environmental load reduction.
One specific measure for the introduction of renewable energy undertaken in fiscal 2019 was using the 1,200-space parking lot owned by Okayama Murata Manufacturing Co., Ltd. (located in Setouchi City, Okayama Prefecture) to install one of Japan’s largest parking lot mega-solar systems. Operation started in March 2020. Instead of conventional panels that generate electricity only on the surface, Murata’s solar panel system uses double-sided panels that are photosensitive on the reverse side as well. As a result, electricity is generated not only from direct sunlight hitting the panel surface, but also from light reflected by parked cars and the ground onto the reverse side, improving the electricity generation ratio per unit of installation area. The system has the capacity to generate the electric power used by approximately 600 standard households and is expected to reduce CO2 emissions by 1,698 tons annually. The company also plans to install double-sided panels in a 500-car parking lot in fiscal 2021.
Also in fiscal 2020, we installed solar panels on the roofs of six plant buildings at our production site in Thailand (Murata Electronics (Thailand), Ltd.), and in August 2020, we put into operation a 4-MW mega solar system, which is the largest of its kind in Murata. The Thailand plant, which has abundant sunlight, is expected to generate 5,586 MWh of electricity and reduce our CO2 emissions by 2,642 tons per year. All of the electricity generated will be consumed within the Thailand plant, and together with the existing solar power generation system, it will supply about 7% of the power needs for the entire factory.
We will continue to work on the adoption of solar power generation and other systems, both in Japan and internationally, with the aim of expanding our renewable energy.