Sustainability | EnvironmentClimate Change Initiatives

Background of Goals

Anthropogenic greenhouse gas emissions, which contribute to global warming, are on the rise, and the sense of crisis about climate change is increasing as represented by the Paris Agreement that was adopted at the COP21 in December 2015. Above all, carbon dioxide (CO2) is a major emission source that makes up 76% (from the IPCC 5th Assessment Report). of greenhouse gases, and it is necessary to implement reliable CO2 reduction measures in business activities.
In the TDK Group, the directors responsible for environmental matters serve as the managers of the Group's environmental activities, including climate change issues, and the Sustainability Promotion Division Safety and Environment Group leads the promotion of and support for the Group's environmental activities. We make decisions on important contents for management of the Group's environmental activities based on deliberation by the management meetings and, if necessary, the Board of Directors. The TDK Environmental Vision 2035 was established as the goals of specific activities, and we strive to reduce the environmental impact from a life cycle perspective, from the use of raw materials to the use and disposal of products.

Reduction of CO2 emissions at manufacturing sites

Energy-derived CO2 emissions at manufacturing sites have been recognized as a major environmental burden at TDK from the past, and we continue to promote reduction activities.

Reduction of CO2 emissions from logistics activities

At TDK, we are working to reduce CO2 emissions from logistics activities for the purpose of contributing to global warming countermeasures, improving transportation efficiency, and reducing transportation costs.
In Japan, a committee to improve energy conservation in distribution was set up in FY2006, when the revised Energy Conservation Act was enacted, and energy reduction activities related to logistics are carried out.

Expansion of contributions to reduction of CO2 emissions from products

TDK has been conducting product assessments from 1997 where we assess the environmental impact of the product over its entire life cycle. In the mechanism we adopt, only products approved by this product assessment are commercialized and distributed into the market. The excellent environment-considerate products (ECO LOVE products) accreditation system was introduced in 2008 as a measure to continuously create products with high environment-conscious effects based on the assessment results of the product assessment. In addition to disclosing information about the products certified as excellent environment-considerate products on our website, we have also been promoting the creation and dissemination of products that contribute to reducing environmental impact.
In addition to these usual activities, we focused on the reduction of CO2 emissions achieved by products and know-how. From FY2011, we have been developing calculation standards to quantify them as environmental contributions, and in FY2015, we established guidelines for assessing the contribution of products that summarize these results. We are promoting activities to reduce CO2 emissions from products through operation using product assessment.

Response to TCFD

In May 2019 TDK expressed its approval of the Task Force on Climate-related Financial Disclosures (TCFD), which makes recommendations to analyze and disclose information on the impact of climate change on corporate finances. Established in 2015 by the Financial Stability Board (FSB), an international body that aims to stabilize the financial system, the TCFD makes proposals that are expected to be a catalyst for promoting information disclosure within companies and organizations, and encouraging dialogue between financial institutions and business corporations.
Believing that assessing the business risks to and opportunities due to climate change and appropriately disclosing information are going to be essential for both achieving corporate growth and building a sustainable society in the future, TDK is steadily addressing these matters.
In this section, in accordance with the TCFD framework, we disclose TDK’s initiatives to tackle the problem of climate change.

Governance

◆Supervision of climate-related risks by environmental officer

At TDK, the environmental officer carries out a management review more than once a year of the state of progress in environment-related matters, including climate change, as well as plans and risks. The results of the management review and matters requiring management decisions are deliberated in the Executive Committee Meeting and, if necessary, the Board of Directors.

◆Assessment of risks relating to climate change and role of management in administration

《Positioning 》

Regarding risks relating to the environment, including climate change, TDK has clarified the responsibilities of the environmental officer, who is appointed by the chief executive officer.
In addition, to fortify the risk management setup, TDK has established committees directly under the Executive Committee Meeting. Of them, the ERM (Enterprise Risk Management) Committee has been set up with the aim of ensuring a companywide response to factors impeding the achievement of business targets and business operations, including climate change. The ERM Committee discusses important matters among environmental risks, including climate change. The chair of the ERM Committee is a corporate officer appointed by the CEO.

《Responsibilities》

Regarding a company’s social responsibility, TDK recognizes that coexistence with the global environment is an important issue in management and has established the post of environmental officer. Appointed by the CEO, the environmental officer takes responsibility for environmental management in general, including climate change. In addition, the head of the Safety and Environment Group of the Sustainability Promotion HQ, which has been established under the environmental officer, is given responsibility for implementing environmental management, including climate change.
In the TDK Group, all business groups, departments, sites, manufacturing subsidiaries, and head office functions come together in unison to work toward realizing the goals of the TDK Environmental Vision 2035 (operate under an environmental load within natural circulation and halve the life-cycle CO2 emission basic-unit by 2035).
Among environmental risks, including climate change, important matters are reported through the ERM Committee to the Executive Committee Meeting and the Board of Directors.

《Content of responsibilities》

The Safety and Environment Group of the Sustainability Promotion HQ sets Group-wide targets for environmental matters, including climate change, and identifies environment-related risks for the Group. The ERM Committee identifies Group-wide risks in accordance with risk management regulations and handles problems relating to climate change as one aspect of Group-wide risks.

《Monitoring》

The achievements of environmental activities, including activities relating to climate change, are reported in the management report, and more than once a year the environmental officer carries out a management review, discussing and deciding important matters in the promotion of environmental activities, such as the compilation of reports and medium- to long-term targets for key KPIs and energy-saving investment. In addition, matters in this management review that are deemed to exert an important impact on management, such as visions and large-scale investment, are discussed in the Executive Committee Meeting and, if necessary, the Board of Directors.

Strategy

In the Medium-Term Plan “Value Creation 2023” that started in fiscal 2021, TDK advocates the basic policy of accelerating digital transformation (DX) and energy transformation (EX) in order to enhance customer experience and consumer experience (2CX) and create value for a sustainable society. As well as setting the TDK Group’s Materiality as management issues that should be tackled to realize the Medium-Term Plan, we have positioned EX (contributing to energy and environmental solutions by minimizing waste heat and noise with electronic devices) as a business domain on which TDK focuses for both social value creation and corporate growth and are addressing it as one aspect of our business strategy.
Specifically, we are promoting the effective use of energy and the expanded use of renewable energy toward the realization of net zero CO2 emissions in 2050. Furthermore, we are striving to provide products and solutions for creating clean energy to realize a zero-carbon society and to supply products and solutions for bringing about an efficient energy society through the storage, conversion, and control of energy.
In analyzing business risks and opportunities due to climate-change-related problems and considering strategy, TDK has adopted two scenarios as premises for climate change—the International Energy Agency’s Beyond 2°C Scenario (B2DS) and Current Policies Scenario (CPS)—and begun trial scenario analysis.

Risk Management

Important risks for management are assessed in the ERM (Enterprise Risk Management) Committee as a part of comprehensive risks. Regarding risks deemed by the assessment to require Group-wide efforts, the ERM Committee checks the progress of countermeasures approved by the Executive Committee Meeting and, after completion of the countermeasures, obtains the approval of the Executive Committee Meeting.
At present, we are imagining climate-change risks based on various information sources and scenario analysis test results and, in consideration of the scale of impact on business, identifying risks thought to be important. Regarding national and regional water risks also, we are conducting surveys and adopting countermeasures in areas with particularly high risks of drought or flooding.

Transitional Risks (Examples)

  • Extra expenses for responding to customer demands to introduce renewable energy and loss of chance to receive orders due to delayed response
  • Extra expenses, production shutdown, or loss of chance to receive orders due to the introduction of carbon taxes and tightening of environmental laws and regulations around the world

Physical Risks (Example)

  • Occurrence of equipment and production restoration expenses resulting from unexpected flooding due to increased size of typhoons or sudden torrential rain

Metrics and Targets

We have set the indicators and goals used when assessing and managing climate-related risks in line with the concept of "reducing CO2 emissions intensity by half by 2035 from a life cycle perspective," which was stated in the TDK Environmental Vision 2035.

Fiscal 2020 Goals and Achievements / Evaluations and Future Activities

Fiscal 2020 Goals Achievements
Reduction of CO2 emissions at manufacturing sites
Improve CO2 emissions basic-unit from energy use by 1.8% compared with the previous FY
Worsened by 4.6% compared with the previous FY
Reduction of CO2 emissions from logistics activities
Reduce the amount of CO2 emissions in logistics by 3.0% of FY 2014
Reduced by 1.5% compared with FY2014
Expansion of contributions to reduction of CO2 emissions from products
Improve product-based CO2 reduction contributions basic-unit by 2.7% compared with the previous FY
Improved by 7.1% compared with the previous FY
Breakdown of environmental load (CO2 emissions)

CO2 Emissions by Category and Scope

Scope Outline CO2 emission
  (Category) (t-CO2
Scope1 Production 136,021
Scope2 Production 1,631,989
Scope3 1 Purchased goods & services 6,501,648
2 Capital goods 1,102,326
3 Fuel- and energy-related activities 764,632
4 Upstream transportation & distribution 323,464
5 Waste generated in operations 5,803
6 Business travel 19,357
7 Employee commuting 7,271
8 Upstream leased assets Not subject to calculation
9 Downstream transportation & distribution Not subject to calculation
10 Processing of sold products Not subject to calculation
11 Use of sold products 9,898,070
12 End-of-life treatment of sold products Not subject to calculation
13 Downstream leased assets Not subject to calculation
14 Franchises Not subject to calculation
15 Investment Not subject to calculation

Methods of Calculating CO2 Emissions in Scope 3

Category Outline Calculation method
1 Purchased goods & services Products purchased in the fiscal year concerned multiplied by the emission intensity for each purchase price. Regarding materials, the purchase price of the main constituent materials in each product (excluding semifinished products) multiplied by the emission intensity.
2 Capital goods The price of equipment and other capital goods acquired in the fiscal year concerned multiplied by the emission intensity for each investment amount.
3 Fuel- and energy-related activities Calculated according to emissions in the extraction, production, and transportation of purchased fuel and fuel used when purchased electricity is generated. Fuel: Each fuel purchased in the fiscal year concerned multiplied by the emission intensity. Electricity: Purchased electricity quantity multiplied by the emission intensity.
4 Upstream transportation & distribution Calculated according to emissions involved in the procurement of purchased products and services and emissions involved in the transportation of manufactured products. Regarding purchased products and services, each of the same items as in Category 1 multiplied by the emission intensity involved in procurement. Regarding manufactured products, expenses involved in shipment multiplied by the emission intensity.
5 Waste generated in operations Regarding waste at manufacturing sites excluding valuables, financial value of the waste multiplied by the emission intensity.
6 Business travel Business travel expenditure is calculated by multiplying expenses involved in employee travel by the domestic employee commuting/business travel expense ratio. Emissions are then calculated by multiplying this business travel expenditure by the emission intensity taking account of the content of business travel.
7 Employee commuting Commuting expenditure is calculated by multiplying expenses involved in employee travel by the domestic employee commuting/business travel expense ratio. Emissions are then calculated by multiplying this commuting expenditure by the emission intensity assumed from the means of commuting.
8 Upstream leased assets Not subject to calculation
9 Downstream transportation & distribution Not subject to calculation
10 Processing of sold products Not subject to calculation
11 Use of sold products Electricity consumed by TDK products (components) multiplied by the lifelong operating time of set items contained in the product, conversion coefficient, and quantity of TDK products (components) sold.
12 End-of-life treatment of sold products Not subject to calculation
13 Downstream leased assets Not subject to calculation
14 Franchises Not subject to calculation
15 Investment Not subject to calculation

Evaluations and Future Activities

Reduction of CO2 emissions at manufacturing sites
Partly due to the impact of an increase of new sites, CO2 emissions at production sites in fiscal 2020 amounted to 1.768 million tons, up 13.5% over the previous fiscal year. Going forward, we will promote reduction efforts rooted in production activities across the entire Group based on a policy, as advocated in TDK’s materiality, of realizing the effective use of energy and the expanded use of renewable energy toward the achievement of net zero CO2 emissions by 2050.

Reduction of CO2 emissions from logistics activities
As a result of increased product transportation due to a rise in production volume, CO2 emissions in logistics in fiscal 2020 amounted to 4,924 tons, up 18.0% over the previous year. This represented a decline of 1.5% from the fiscal 2014 level, which meant that we did not achieve our target. Going forward, the entire TDK Group will endeavor to promote reduction activities. We have begun efforts at overseas sites to reduce CO2 emissions in logistics, and we are studying a mechanism to gauge emissions so as to properly reflect them in reduction activities.

Expansion of contributions to reduction on CO2 emissions from products
Product-based CO2 reduction contributions in fiscal 2020 amounted to 2.633 million tons, up 16.2% over the previous fiscal year. The CO2 emission basic-unit improved by 7.1% year-on-year, so we were able to achieve our target. Going forward, we will strive to develop eco-friendly products that contribute toward reducing the environmental load of customers and society and to popularize such products by publicizing their value.

Fiscal 2020 Concrete Progress Report

Reduction of CO2 emissions at manufacturing sites

Changes in CO2 emissions at manufacturing sites (global)*
  • *Basic-unit data have been amended to take account of the increase in the number of sites due to M&As.
  • *The measurement and calculation method and the numerical results for fiscal 2019 and beyond have undergone third- party verification.
FY2020 emission ratio by region (TDK Group total emissions)
FY2020 emission ratio by scope (TDK Group total emissions)
  • * Scope: Emission range defined by the GHG Protocol, an international calculation standard for greenhouse gas emissions. We refer to direct emissions from facilities owned and controlled by the company as Scope 1 and emissions from the production of energy consumed at facilities owned and controlled by the company as Scope 2.
  • *TDK's CO2 emissions calculation standard
    • CO2 emissions is calculated by multiplying the CO2 conversion factor to the amount of electricity purchased and fuel (such as gas and oil) used at each business site.
    • The factors defined in the Act on Promotion of Global Warming Countermeasures are used for the CO2 conversion factor for fuel.
    • The latest conversion factor that was publicly known at the time of planning in the beginning of the term is used for the CO2 conversion factor for purchased power.
    • The published value has been certified by a third-party verification.

Reduction of CO2 emissions from logistics activities

Changes in CO2 emissions from logistics activities (Japan)*
  • *The FY2019 data have been revised.
  • *Calculated based on Japan's Energy Conservation Act.

Expansion of contributions to reduction of CO2 emissions from products

Changes in CO2 emissions from products*
  • *The calculation method was reviewed by a third party.
  • *The product contributions have been calculated based on the internal guidelines compliant with IEC's "TR62716 Guidance on Quantifying Greenhouse Gas Emission Reductions from the Baseline for Electrical and Electronic Products and Systems"; The Institute of Life Cycle Assessment, Japan's "Guidelines for Assessing the Contribution of Products to Avoided Greenhouse Gas Emissions"; and JEITA's "Guidance on Calculating GHG Emission Reductions Contribution of Electronic Components."

Related links

Concrete Activities

Reduction of CO2 emissions at manufacturing sites

Installation of photovoltaic power generation systems at sites in Japan and overseas

In fiscal 2020 TDK newly installed photovoltaic power generation systems to provide some of the electricity consumed at five sites. The operation of these systems is expected to reduce CO2 emissions by the equivalent of 1,750 tons per year.

*TDK Philippine factory (10 kilowatt-peak [kWp]): from April 2020
*Johor Bahru Factory of the TDK Electronics Group in Malaysia (511.7 kWp): from September 2020
*Asama Techno Factory in Japan (450 kWp): from December 2020
*Malaga Factory of the TDK Electronics Group in Spain (57 kWp): from December 2020
*Kalyani Factory of the TDK Electronics Group in India (1,000 kWp): from March 2021

Asama Techno Factory in Japan

TEG’s Malaga Factory in Spain

The photovoltaic power generation systems were planned on the initiative of the factories concerned and installed either in the factory grounds or on rooftops. The electricity thus generated is consumed on-site. The largest system generates enough electricity to cover 6% of the factory’s demand.

Photovoltaic power generation for car park outdoor lighting

The car park outdoor lighting was switched to a type powered by solar energy.

*TDK-Lambda Malaysia factory: 12 units; 10,541 kWh/year
*TDK Philippine factory: 13 units; 11,232 kWh/year

We can contribute to reducing the environmental load not only directly in the production process but throughout the entire lifecycle of products by promoting the expanded use of renewable energy.

Going forward, senior management and factory members will come together and seek to reduce the environmental load by promoting both the efficient use of energy and the expanded use of renewable energy.

Promoting the introduction of renewable energy

The following site procures 100% of its consumed electricity from renewable energy sources:

*TDK-Lambda UK Ltd. (Devon, United Kingdom)
*TDK-Lambda Ltd. (Karmiel, Israel)
*Headway Technologies, Inc. (CA, USA)
*TDK Museum (Akita, Japan)
*TDK Electronics AG - HQ (Munich, Germany)
*TDK Electronics AG (Heidenheim, Germany)
*TDK Sensors AG & Co. KG (Berlin, Germany)
*TDK Electronics GmbH & Co OG (Deutschlandsberg, Austria)
*TDK Hungary Components Kft. (Szombathely, Hungary)
*TDK CROATIA d.o.o. (Kutina, Croatia)
*TDK Foil Iceland ehf. (Akureyri, Iceland)
*TDK Electronics do Brasil Ltda. (Gravataí, Brasil)
*Tronics MEMS, Inc. (TX, USA)
*TDK (Zhuhai FTZ) Co., Ltd. (Zhuhai, China)
*TDK (Zhuhai) Co., Ltd. (Hongqi, China)

The following site procures 100% of its purchased electricity from renewable energy sources:

*TDK Foil Italy S.p.A. (Milan, Italy)

Of the electricity used by TDK worldwide, the ratio of renewable energy used is 23.9% (as of March 31, 2021).

Reduction of CO2 emissions from logistics activities

The following initiatives are promoted to reduce CO2 emissions in the logistics stage.
・Modal shift
・Streamlining inter-factory transportation by consolidating production sites

Expansion of contribution to reduction of CO2 emissions from products

Power capacitors for offshore wind power generation plants

The power capacitors used in HVDC*1 power transmission systems for offshore wind power generation plants, which enable efficient long-distance transmission from remote places, have reduced energy loss compared with HVAC (high-voltage alternating current) power transmission systems. In fiscal 2020 the power capacitors used in HVDC power transmission systems contributed toward reducing CO2 emissions by 2,360 tons.*2

Power Capacitor for HVDC (Weight : 130~140kg)

Power Capacitor for HVDC
(Weight : 130~140kg)

Power capacitors are used to smoothen electricity in offshore substations like the one in the center of the photo.

  • *1 HVDC, which stands for high-voltage direct current, is a technology for transmitting power from the generating plant to electricity infrastructure not by alternating current but by high-voltage direct current of 200–500 kilovolts.
  • *2 Estimated from the power capacitor contribution ratio of the entire HVDC system contribution.

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