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 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, so it is necessary to implement reliable CO2 reduction measures in business activities.
In the TDK Group, the environmental officer serves as the manager of the Group's environmental activities, including climate change issues, and the Safety and Environment Group of the Sustainability Promotion HQ leads the promotion of and support for the Group's environmental activities. We make decisions on important matters for management of the Group's environmental activities based on deliberation by the Executive Committee 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 load 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

CO2 emissions from energy use at manufacturing sites have been recognized as a major environmental load at TDK for a long time, 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 logistics was established in fiscal 2007, when the revised Energy Conservation Act was enacted, and energy reduction activities related to logistics have been carried out.

Expansion of contributions to reduction of CO2 emissions by products

TDK has been conducting product assessments since 1997, in which we assess the environmental impact of a 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-conscious 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. We have been disclosing information about the products certified as excellent environment-conscious products on our website and promoting the creation and dissemination of products that contribute to reducing the environmental load.
In addition to these activities, expanding the reduction of CO2 emissions through products (product contributions) is one of the core initiatives within the TDK Environmental Vision 2035 and Environment, Health and Safety Action 2025. To mount potent appeals for the social contributions by TDK products as the fruits of technical initiatives, these product contributions have been calculated and disclosed since the TDK Environmental Action 2020 (the company’s previous medium- to long term plan).
Public awareness activities are also being advanced to gain understanding of the contributions of electronic components as intermediary parts, along with moves to formulate coherent industry standards for calculation methods positioned to serve as the basis for earning appropriate evaluations of product contributions performance, and the results were released in the form of guidance by industry groups.
Based on these results, TDK established the Guideline for Calculation of Product Contributions and is promoting the diffusion of global calculation work throughout the entire TDK Group by adding the calculation of product contributions to assessment requirements at the product development stage.
In fiscal 2022 TDK’s sustainability activities, including the reduction of CO2 emissions by its products, were highly acclaimed and commended by customers. Going forward, TDK will continue to establish calculation rules and endeavor to disseminate them throughout the Group.

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 risks and opportunities to our business 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

◆Board’s oversight of climate-related risks

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 and, if necessary, the Board of Directors.

◆Management’s role in assessing and managing climate-related risks

(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 strengthen the risk management framework, TDK has established committees directly under the Executive Committee. Of them, the Enterprise Risk Management (ERM) Committee has been set up with the aim of ensuring a company-wide 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 intensity by 2035).
Among environmental risks, including climate change, important matters are reported through the ERM Committee to the Executive Committee 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 major 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 and, if necessary, the Board of Directors.

Strategy

In the Medium-Term Plan “Value Creation 2023” that started in fiscal 2022, 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 to 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 we 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 these circumstances, TDK conducted scenario analysis with the aim of analyzing business risks and opportunities in problems related to climate change and reflecting the results in strategy.

Results of scenario analysis

In accordance with the Practical guide for Scenario Analysis in line with the TCFD recommendations issued by the Ministry of the Environment, TDK implemented scenario analysis based on the following preconditions:

Preconditions

  • Assumed period: Fiscal 2031
  • Applicable scope: Entire TDK Group
  • Adopted scenarios: 2℃ scenario (Sustainable Development Scenario [SDS] and New Policies Scenario [NPS] of the International Energy Agency [IEA]), 4℃ scenario (the IEA’s Current Policies Scenario [CPS], Stated Policies Scenario [STEPS], and Representative Concentration Pathway [RCP] 6.0 scenario)

The following are the main risks and opportunities identified based on the scenario analysis. Under the 2℃ scenario, in which countries’ regulations through decarbonization policies become stricter, we understood the possibility of transitional risks occurring with the introduction of carbon pricing and higher cost of renewable energy. The analysis estimated the financial impact of these risks in 2030 to be 5.9 billion yen in the case of carbon pricing and 17.6 billion yen for renewable energy. In the automotive market, which is one of TDK’s key markets, since the shift to electric vehicles will progress, we also recognized the possibility of expanded sales opportunities for EV-related products and battery-related risks and opportunities.
Under the 4℃ scenario, the analysis also showed the possibility of increased risks of flooding due to the frequent outbreak of abnormal weather.

Classification Risks and opportunities Main countermeasures
Transition risks Carbon pricing / carbon-emission targets of each country Risk
  • Promotion of the effective use of energy, expanded use of renewable energy, etc. at manufacturing sites toward the realization of net-zero CO2 emissions in 2050
Increase of energy costs due to rise in renewable energy ratio Risk and opportunity
  • Promotion of the effective use of energy at manufacturing sites toward the realization of net-zero CO2 emissions in 2050
  • Promotion of the development of products for renewable energy, etc.
Increase in price of cobalt and lithium Risk
  • Monitoring of raw material price trends and implementation of risk hedging at time of procurement
  • Implementation of long-term supply contracts
  • Reduction of amount of cobalt and lithium used in products, etc.
Increase of new business chances due to expansion of EV market Opportunity
  • Promotion of product development with an eye on EV market expansion
Development of next-generation battery materials Risk and opportunity
  • Promotion of the development of all-solid-state batteries
Increase of customer demands regarding RE100 Risk and opportunity
  • Analysis of customer initiatives to respond to climate change
  • Compilation of plan to introduce renewable energy, etc.
Physical risks Increase of business risks due to rise in flooding Risk
  • Implementation at sites of measures to counter flooding risks
  • Promotion of BCP response, building of BCM framework, etc.

Risk Management

Important risks for management are assessed in the ERM 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 and, after completion of the countermeasures, obtains the approval of the Executive Committee.

Metrics and Targets

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

Fiscal 2022 Goals and Achievements / Evaluations and Future Activities

Fiscal 2022 Goals Achievements
Reduction of CO2 emissions at manufacturing sites
Improve CO2 emission intensity from energy use by 1.8% compared with the previous fiscal year
Improved by 25.2% compared with the previous fiscal year
Reduction of CO2 emissions from logistics activities
Improve CO2 emission intensity in logistics by 1.0% compared with the previous fiscal year (Japan)
Worsened by 6.7% compared with the previous fiscal year
Expansion of contributions to reduction of CO2 emissions by products
Improve the intensity of contribution to CO2 reduction by products by 2.7% compared with the previous fiscal year
Worsened by 12.3% compared with the previous fiscal year
Breakdown of environmental load (CO2 emissions)

CO2 Emissions by Category and Scope

Scope Outline CO2 emission
  (Category) (t-CO2)
Scope1 Production 146,774
Scope2 Production 1,554,703
Scope3 1 Purchased goods & services 8,740,800
2 Capital goods 1,042,135
3 Fuel- and energy-related activities 936,628
4 Upstream transportation & distribution 504,216
5 Waste generated in operations 6,998
6 Business travel 24,532
7 Employee commuting 7,702
8 Upstream leased assets Not applicable
9 Downstream transportation & distribution Not applicable
10 Processing of sold products Not applicable
11 Use of sold products 14,557,430
12 End-of-life treatment of sold products Not applicable
13 Downstream leased assets Not applicable
14 Franchises Not applicable
15 Investment Not applicable

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
In fiscal 2022 CO2 emissions decreased by 3.8% from the previous year to 1.701 million tons due to the expanded introduction of renewable energy. Going forward, we will promote reduction efforts rooted in manufacturing activities across the entire Group based on a policy, as advocated in TDK’s materiality, of achieving the effective use of energy and the expanded use of renewable energy toward the realization 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 2022 amounted to 5,460 tons, up 6.7% over the previous year. This represented a decline of 9.2% from the fiscal 2015 level, meaning 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 of CO2 emissions by products
The contribution to CO2 reduction by products in fiscal 2022 amounted to 2.969 million tons. The intensity decreased by 12.3% from the previous year, meaning that our target was not achieved. 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 2022 Progress

Reduction of CO2 emissions at manufacturing sites

Trends in CO2 emissions at manufacturing sites (global)*
Production base graph
  • *Intensity data have been revised to take account of the increase in the number of sites due to mergers and acquisitions.
  • *The measurement and calculation methods, as well as the numerical results for fiscal 2020 and beyond, have been verified by a third-party.
Fiscal 2022 emissions by region (TDK Group total emissions)
Fiscal 2022 emissions 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

Trends in CO2 emissions from logistics activities (Japan)*
  • *Corrected data for fiscal 2021.
  • *Calculated based on Japan's Energy Conservation Act.

Expansion of contributions to reduction of CO2 emissions by products

Trends in CO2 emission reductions by product*
Product graph
  • *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."

Initiatives

Reduction of CO2 emissions at manufacturing sites

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

In fiscal 2022 TDK’s site in Deutschlandsberg, Austria, introduced a photovoltaic power generation system to cover part of its electricity consumption. As a result of the operation of this system, it is expected that CO2 emissions will be reduced by the equivalent of 124 tons a year.

・TDK Electronics GmbH & Co. OG (Deutschlandsberg, Austria) (500kWp) From August 2021

The photovoltaic power generation facility at Deutschlandsberg is part of a pilot project testing whether the use of sustainable energy contributing to the saving of resources has further potential. Financial assistance is received from the European Regional Development Fund (ERDF).

For detailed information about the IGJ/ERDF program, see https://www.efre.gv.at/.

Installation of off-site solar farm

The TDK Group’s largest photovoltaic power generation facility began operating in India in April 2021. The generated solar power is supplied to the Nashik Factory via a dedicated line and, as a power requirement from a renewable energy source, covers about 50% of the factory’s power consumption. As a result, the factory’s CO2 emissions are cut by about 8,200 tons.

・Nashik Factory, TDK India Private Limited
 100,000 m2 solar farm

Solarpark Nashik

Promotion of Renewable Energy Installation (As of March 31, 2022)

The following 21 sites procure 100% of their power consumption from renewable energy:

・TDK Head Office (Tokyo, Japan)
・TDK Museum (Akita, Japan)
・TDK-Lambda Nagaoka Technical Center (Niigata, Japan)
・TDK-Lambda UK Ltd. (Devon, United Kingdom)
・TDK-Lambda Ltd. (Karmiel, Israel)
・TDK-Lambda (China) Electronics Co., Ltd. (Wuxi, China)
・Headway Technologies, Inc. (CA, USA)
・SAE Components (ChangAn) Ltd. (Dongguan, China)
・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 Electronic Components S.A.U. (Malaga, Spain)
・TDK CROATIA d.o.o. (Kutina, Croatia)
・TDK Foil Iceland ehf. (Akureyri, Iceland)
・TDK Electronics do Brasil Ltda. (Gravataí, Brasil)
・Tronics Microsystem SA (Crolles, France)
・Tronics MEMS, Inc. (TX, USA)
・TDK (Zhuhai FTZ) Co., Ltd. (Zhuhai, China)
・TDK (Zhuhai) Co., Ltd. (Hongqi, China)

The following sites have procurement contracts for renewable energy covering at least 80% (but less than 100%) of their power consumption:

・Dongguan Amperex Technology Limited (Dongguan, China)
・Dongguan NVT Technology Co., Ltd. (Dongguan, China)

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

・TDK Foil Italy S.p.A. (Milan, Italy)

The ratio of renewable energy used in power consumption in the whole world is 30%.

Reduction of CO2 emissions in logistics

TDK is promoting the following efforts to reduce CO2 emissions in the logistics stage:

  • Modal shift
  • Increased efficiency in inter-factory transportation through the concentrated location of manufacturing sites
  • Shortening of freight transportation distances by direct shipment
Expansion of product contributions to reducing CO2 emissions

The environmental contribution of multilayer ceramic capacitors (MLCCs) is calculated from the lighter weight of single products for in-vehicle applications. Since fiscal 2020 the Ceramic Capacitors BG has been expanding the production of products for in-vehicle applications, such as the C series and the CGA series, and it addresses the monthly management of environmental contributions as a theme in its environmental management program. In fiscal 2022 product contributions amounted to a reduction of the equivalent of 4,014 tons of CO2. Going forward, backed by increased sales for EVs and further compactness, product contributions are expected to continue expanding.

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