3-4. Carbon Neutrality Goals and the Role of the EHS Department

With companies worldwide accelerating their commitment to 2050 carbon neutrality, Japanese companies are also finding it essential to embrace "decarbonization management." In this context, the EHS (Environment, Health, Safety) department is expected to evolve from merely managing environmental compliance to becoming a key driver of the company's overall carbon neutrality strategy. Here's a look at the relationship between carbon neutrality goals and the role of the EHS department.

1. Carbon Neutrality and Corporate Management

Carbon neutrality is the effort to reduce a company's greenhouse gas (GHG) emissions and offset any remaining emissions to achieve a net-zero balance. This is not just an environmental measure but a crucial management issue that directly impacts ESG investment and the procurement standards of business partners. Companies are required to understand their entire supply chain's emissions (Scope 1, 2, and 3) and build a system for phased reduction.

2. The Role of the EHS Department

In addition to its traditional responsibilities of ensuring environmental legal compliance and occupational safety, the EHS department plays the following roles in driving carbon neutrality:

• Data Management: Accurately collect and manage energy consumption and emissions data, organizing it in a way that can be explained to third parties.

• Planning Reduction Measures: Promote the adoption of energy-efficient equipment, utilization of renewable energy, and waste reduction.

• Inter-departmental Collaboration: Work with production, procurement, logistics, and human resources departments to embed CO2 reduction efforts throughout the company.

• Reporting and Disclosure: Transparently publish progress in integrated reports and sustainability reports.

3. Concrete Steps for Implementation

It's crucial to implement the EHS department's practical decarbonization work in a phased manner:

1. Set a Baseline and Assess Current Status: Calculate emissions for a baseline year based on the GHG Protocol.

2. Set Goals: Clearly define medium- and long-term reduction targets (e.g., "50% reduction by 2030").

3. Draft Measures: Include high-efficiency capital investment, green electricity procurement, and preparations for carbon pricing.

4. Manage Progress: Set key performance indicators (KPIs) and monitor progress quarterly.

5. Obtain External Verification: Seek third-party verification to enhance the credibility of your data.

4. Supply Chain Response

Scope 3 (supply chain emissions) often accounts for 70-80% of a company's total emissions. The EHS department must collaborate with the procurement department to request emissions reports from suppliers and promote joint reduction projects. In global corporations, it is increasingly common to make the submission of a renewable energy ratio or reduction plan a mandatory condition of a business contract.

5. Link to Enhanced Corporate Value

Carbon neutrality is not merely an environmental challenge but a way to build trust with investors and customers and to enhance competitiveness. By leading the development of a decarbonization roadmap, the EHS department can help a company avoid reputational risks and achieve sustainable growth.

The EHS department is expected to evolve from a "defensive management department" to a "proactive strategic department," serving as the driving force for achieving carbon neutrality.