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Response to Global WarmingResponse to Global Warming

Mitigation of Global Warming

The Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC) indicates there is a high probability that the increase in average temperature worldwide will reach 1.5 degrees Celsius compared to before the Industrial Revolution within the next 20 years. The cause of global warming is greenhouse gases emitted by humankind. For this reason, humankind must urgently mitigate the progress of global warming by controlling these emissions. The Kagome Group is working to reduce greenhouse gases (CO2) from its business activities to mitigate humankind's pressing issue of global warming.

Policy on Reducing CO2 Emissions

The Kagome Group engages in business by selling agricultural produce made from nature's bounty and processed food products. As a result, we recognize that an interruption in the procurement of raw ingredients is the greatest risk facing the continuity of its business operations.
Climate change has resulted in unseasonable weather patterns, including massive typhoons and strong wind and rain, which have caused extensive damages in areas where raw ingredients are grown.
To avoid this risk and ensure sustainable business growth in the future, the Kagome Group has been proactively reducing its greenhouse gas emissions after taking the initiative in implementing the Paris Agreement*.
*Paris Agreement: an international agreement on curbing climate change adopted at COP21 on December 12, 2015.
(Keeping temperature rises compared to before the Industrial Revolution at less than 2 degrees Celsius)

Medium- to Long-term Targets for Reducing CO2 Emissions

Kagome established medium- to long-term targets for reducing CO2 emissions in 2018 in order to mitigate risks associated with climate change. Going forward, we will speed up our initiatives to prevent global warming and move ahead with our review of targets to align them with the certification levels of the SBT initiative*.
*SBT (Science Based Targets) initiative is an international initiative to ensure consistency between the greenhouse gas reduction targets of companies with the standards set out in the Paris Agreement.

Additionally, we are participating in the JCI* and we have endorsed the JCI Message to the Japanese Government Calling for an Ambitious 2030 Target for Japan to Realize the Paris Agreement Goal of April 2021.
*JCI is an acronym for Japan Climate Initiative; a network of 105 companies, local governments and NGOs actively working on climate change countermeasures.

Kagome Group's CO2 Emissions

Scope 1 and Scope 2 CO2 Emissions
Unit:t-CO2
Countries
with
business locations
2018 2019 2020
Scope 1 Scope 2 Total Scope 1 Scope 2 Total Scope 1 Scope 2 Total
Japan 56,482 26,274 82,756 44,976 26,326 71,302 45,295 25,234 70,529
Portugal 23,858 7,163 31,021 26,249 5,183 31,433 24,647 4,505 29,152
Australia 17,003 8,812 25,815 16,967 8,969 25,936 18,923 11,167 30,090
United States 5,347 6,702 12,049 5,592 5,587 11,179 4,701 4,927 9,627
Italy 907 1,395 2,302 815 1,219 2,034 607 1,069 1,676
Taiwan 627 1,597 2,224 555 1,322 1,877 777 1,672 2,450
China 0 74 74 0 0 0 0 0 0
Total 104,226 52,016 156,242 95,154 48,607 143,761 94,949 48,574 143,524
Composition of Energy Usage
Composition of Energy Usage

The Kagome Group is promoting the use of renewable energy both inside and outside of Japan in order to reduce CO2 emissions. In 2020, we used 2,372 MWh of renewable energy, which cut our CO2 emissions by 683 tons.
As of 2020, renewable energy (solar power) accounted for 2.3% of the Kagome Group's total power consumption.

Scope 3 CO2 Emissions
Category CO2 emissions (tons) Ratio (%) Remarks
(1) Purchased goods and services 1,078,720 82.0
(2) Capital goods 27,333 2.1
(3) Fuel- and energy-related activities (not included in Scope 1 and Scope 2) 27,904 2.1
(4) Upstream transportation & distribution 52,974 4.0
(5) Waste generated in operations 5,031 0.4
(6) Business travel 349 0.0
(7) Employee commuting 1,196 0.1
(8) Upstream leased assets 606 0.0
(9) Downstream transportation & distribution 65,706 5.0
(10) Processing of sold products 37,002 2.8
(11) Use of sold products - 0.0 Excluded from scope of calculation
(12) End-of-life treatment of sold products 16,381 1.2
(13) Downstream leased assets 2,038 0.2
(14) Franchises - - No applicable franchise businesses
(15) Investments - - No applicable investment businesses
Total 1,315,239 100.0

Third-Party Verification of Greenhouse Gas Emissions

Kagome obtains third-party verification reports on its greenhouse gas emissions (Scope 1, 2 and 3), recognizing the need for disclosure of highly reliable data on greenhouse gas emissions. Regarding our greenhouse gas emissions in 2020 (January 1 to December 31), we obtained a verification report from the Japan Management Association (JMA), which examined our data and calculation method for the Kagome Group's greenhouse gases from its plants in Japan and abroad (Scope 1, 2) and from the Kagome Group in Japan (Scope 3) was in compliance with ISO 14064-3:2006.
Furthermore, the Scope 1 and 2 CO2 emissions for which verification was obtained account for approx. 80% of the Kagome Group's entire CO2 emissions.

Results of the CDP Climate Change Score

CDP, an international non-profit organization, evaluates the initiatives of companies in terms of climate change and water globally. CDP assigns one of eight different scores: A, A-, B, B-, C, C-, D and D-. Kagome received a score of B in CDP Climate Change 2020.

CDP

CO2 Reduction Initiatives

Domestic Plants

Reducing Energy Used

Our production activities require large amounts of energy from natural gas (LNG) and electricity. Kagome is implementing energy conservation activities at all of its plants in Japan. We are working to ensure the efficient use of energy by continuously monitoring results, identifying issues and reviewing improvements.

Trends in Energy Used
Trends in Energy Used

Reducing CO2 Emissions

CO2 emissions from all of our plants in Japan in FY2020 totaled 40,000 t-CO2, marking a 4.5% reduction over FY2019. Emissions per unit of production volume were 94.4% of the previous year's level.

CO2Trends in CO2 Emissions
Trends in CO2 Emissions
Reducing Energy Waste and Loss: Energy Conservation Campaign at Domestic Plants

At our plants in Japan, we are implementing an energy conservation campaign where we solicit ideas for reducing waste and loss in terms of energy usage broadly from employees. In FY2020, we held an energy conservation contest to recognize particularly excellent ideas and promote further diligent application of energy conservation practices. This contest effectively helped us to lower CO2 emissions.

Energy Conservation at Domestic Plants

All of our plants are proactively working to improve efficiency of energy usage by replacing aging equipment with energy efficient ones, streamlining operation control methods, and recovering heat from hot wastewater.

Switch to LED lighting inside plants
Switch to LED lighting inside plants
Review of production line cleaning and sterilization requirements
Review of production line cleaning and sterilization requirements
Examples of Energy Conservation in 2020
Category Energy conservation example Plant(s) where introduced
Reduction of power consumption ・Increased efficiency of air compressor operations Kozakai
・Switched to blowers for water droplet removal Komaki
・Replaced with high efficiency air conditioners Nasu, Kozakai
・Switched to LED lighting Nasu
・Replaced with high efficiency substation facilities Kozakai
Reduction of gas usage ・Introduced drain recovery from steam pipes Nasu
・Reviewed facility operation conditions Komaki, Fujimi, Ibaraki
・Reviewed production line cleaning requirements Komaki, Ueno
・Replaced with energy efficient models Fujimi

Introduction of Solar Power Generation Systems

We installed solar panels at the Kozakai and Ibaraki plants, which began generating electricity in April 2021. This electricity is used to power these plants. Going forward, we will continue to utilize renewable energy as a way of lowering our CO2 emissions.

Kozakai Plant
Kozakai Plant
Solar panels installed on the plant's rooftop
Overseas Plants

Energy Conservation at Overseas Plants

Most of the CO2 emitted by the Kagome Group originates from its plants and farms in Japan as well as overseas plants which juice tomatoes and produce concentrate. Our overseas plants are working on a number of energy conservation activities, including improving the energy efficiency of their facilities and increasing production efficiency.

(Main energy conservation activities)
・Increase energy efficiency by recovering exhaust heat of boilers
・Reduce energy loss by insulating steam pipes, etc.

Insulation around steam valves
Insulation around steam valves

Introduction of Solar Power Generation Systems

Kagome Inc. in the United States installed solar panels covering the plant's entire rooftop in December 2017 in order to generate its own electricity. The plant decided to install solar panels to address rising electricity prices which are expected to continue increasing in the future and to reduce CO2 emissions. In FY2020, solar power generation helped the plant to reduce its annual CO2 emissions from power consumption by approx. 26%.

Kagome Inc. in the United States

Kagome Australia Pty Ltd. began generating solar power in June 2019. As a result, in FY2020 the plant was able to reduce its annual CO2 emissions from power consumption by approx. 3%.

Kagome Australia Pty Ltd.

Use of Electricity from Renewable Energy

Holding da Industria Transformadora doTomate, SGPS S.A. of Portugal began purchasing electricity generated from 100% renewable energy in July 2021. As a result, in 2021, the company expected to reduce its annual CO2 emissions from power consumption by approx. 4,000 tons, representing a reduction of 80 to 90%.

Commercial Greenhouses

Kagome cultivates tomatoes in commercial greenhouses in order to deliver safe and delicious fresh tomatoes to markets throughout the year.
The large-scale commercial greenhouses that Kagome uses are heated in order to maintain the right temperature for cultivation. Environmentally friendly LP gas is used as the heat source, while the CO2 emitted from the incineration process is effectively utilized for the photosynthesis required to grow tomatoes.
Starting in 2020, we have been using the warm wastewater and CO2 contained in boiler exhaust gas of the Fujimi Plant in Nagano Prefecture for the cultivation of tomatoes at the nearby Yatsugatake Mirai Farm.
In addition, some of the electricity used at Hibikinada Farm in Fukuoka Prefecture is sourced from the large-scale solar power plant constructed nearby, ensuring the effective use of natural energy.

Yatsugatake Mirai Farm
Yatsugatake Mirai Farm
Effective use of exhaust heat and CO2 from the plant
Use of solar power at Hibikinada Farm
Use of solar power at Hibikinada Farm
Sales and Administrative Departments

The Kagome Group's Head Office, branches, and research institutes are implementing energy conservation and resource conservation activities.

Reduction of Power Consumption in Offices

Kagome participates in the annual Cool Biz and Warm Biz campaigns, under which we encourage air conditioner thermostats to be set at just the right temperature for the season. We also encourage energy conservation by reducing the number of lighting appliances, switching lights off when not in use, and reducing administrative equipment through the introduction of multifunction devices.
Furthermore, we are curbing unnecessary power consumption in offices by promoting streamlined operations through switching to flex time working hours, utilizing remote meetings, and sharing individuals' schedules online as part of our work style reforms.
Our office power consumption per floor area in FY2020 decreased approx. 10.5% from the FY2019 level, to 137 kWh/m2.

Trends in Power Consumption in Offices (per floor area)
Trends in Power Consumption in Offices (per floor area)
Efficient Use of Company Vehicles

Kagome owns a fleet of vehicles used by its division offices, branches, and business offices nationwide in Japan. We are shifting to more efficient sales activities and working to curb CO2 emissions from gasoline consumption by innovating the way we use company vehicles.

(Main measures at business sites)
・Utilization of public transportation and rental cars
・Sharing of company-owned vehicles among more than one employee (reduction of fleet size)

Logistics
Reducing CO2 Emissions

Kagome was designated as a Specified Consigner*1 pursuant to the Act on the Rational Use of Energy.
In FY2020, CO2 emissions from transportation and delivery of cargoes by Kagome increased 3.8% from the FY2019 level, to 28,540 t-CO2. Emissions per unit of sales volume in terms of weight were roughly unchanged from FY2019 at 41.5 kg-CO2/t. We will continue to reduce CO2 emissions from transportation and delivery through measures such as increasing the rate of use of large-sized delivery vehicles, decreasing the number of vehicles in operation by facilitating the use of vehicles returning from their destinations, shortening the distance of transportation and delivery, promoting joint transport services, and optimizing the loading ratio by reviewing the frequency of transportation on each route.

*1: A consigner whose volume of freight transportation consigned to freight carriers (including in-house distribution) involved in its business activities is 30 million ton-kilometers or more annually.

Trends in CO2 Emissions in Logistics
Modal Shift

The Kagome Group continues to make a modal shift to reduce the environmental impacts of its product transportation and delivery. A modal shift refers to a shift of transportation methods to those with a reduced environmental impact, such as rail.
As a result of these efforts, Kagome has obtained the Eco Rail Mark certification from the Ministry of Land, Infrastructure, Transport and Tourism of Japan, recognized as a company that uses railway transport proactively.
In addition, Kagome Tomato Ketchup, Kagome Sauce Worcester Jojuku, Kagome Sauce Chuno Jojuku, and Kagome Sauce Tonkatsu Jojuku obtained the Eco Rail Mark Product certification in February 2014 under a program organized by the Ministry of Land, Infrastructure, Transport and Tourism of Japan and the Railway Freight Association.

Eco Rail Mark
Joint Transport Services

In 2015, six domestic food companies* began exploring the establishment of a joint logistics platform intended to realize an efficient and stable logistics system. F-LINE Corp. was jointly established in April 2019 by five food companies* as a culmination of these efforts.
F-LINE's mission is threefold: (1) nationwide rollout of joint transport service structure; (2) redevelopment of medium range trunk line transport services; and (3) standardization of logistics systems. F-LINE is expected to play a role in resolving various logistics issues, including the recent shortage of truck drivers, rising logistics costs, and response to environment conservation including CO2 reduction.
To date, F-LINE has launched joint transport services in the Hokkaido and Kyushu areas, which has reduced the CO2 emissions of the six companies by approx. 15% (results for 2019).

*The six domestic food companies: Ajinomoto Co., Inc., Nisshin OilliO Group, Nisshin Foods Inc., House Foods Group Inc., Mizkan Holdings Co., Ltd. and Kagome
*The five food companies: Ajinomoto Co., Inc., Nisshin OilliO Group, Nisshin Foods Inc., House Foods Group Inc. and Kagome

Areas for Joint Transport Services and Month/Year of Launch
Areas for Joint Transport Services and Month/Year of Launch

Adaptation to Global Warming

At the same time as working to mitigate global warming by controlling greenhouse gas emissions, there is also a need to adapt to a warming environment. The Kagome Group is working to adapt to global warming by utilizing its proprietary technologies to ensure that it can sustain business activities including ingredient procurement even in a future natural environment that is more severe.

Examples of Adaptation to Global Warming

Adaptation by Developing Disease-tolerant Plant Varieties

United Genetics Holdings LLC., with operations in eight countries including the state of California in the United States, develops its own varieties of vegetables including tomatoes, and it supplies the seeds and seedlings of these vegetables to customers in over 80 countries around the world. Developers known as breeders modify varieties over long periods of time using conventional cross-breeding technologies without genetic modification and repeat this trial and error process until they arrive at varieties suited to the cultivation environment and market needs of each country.
In recent years, the habitat of the tobacco whitefly is expanding in countries around the world including Japan due to climate change. This pest, which carries a disease virus called TYLCV can decimate tomato production by causing tomato yellow leaf curl disease. In response, United Genetics Holdings LLC is actively developing TYLCV-resistant tomato varieties and introducing them in regions with growing damages. This avoids disease risk and also reduces the amount of pesticides used.

Adapting to Drought-prone Regions by Minimizing Water Usage

In March 2015, our Agri-Business Research and Development Center in Portugal began developing cutting edge cultivation technology for tomatoes for processing using big data. Specifically, the center is working on agricultural solutions that increase added value and minimize environmental impacts. This work involves maximizing harvest yield using the least water, fertilizers and pesticides possible based on tomato growth and climate conditions determined using data obtained from various sensors installed at a test farm for climate and soil, satellites, and drones and data obtained from agricultural management practices such as irrigation and manuring.
Research suggests that there will be increased frequency of droughts around the world in the future due to climate change caused by global warming. We will pursue development that enables sustainable agriculture in regions with few water resources.

Achieved harvest yield of 127 t/ha in Portugal in 2019, which is 1.3 times the average
Achieved harvest yield of 127 t/ha in Portugal in 2019, which is 1.3 times the average

Adapting to Extreme Weather Using a Worldwide Tomato Procurement Network

Selling processed tomato products year-round requires a system for the stable procurement of raw ingredients from around the world. Regions suited to high quality tomato cultivation are found predominantly between 35 degrees north latitude and 40 degrees south latitude. This region is known as the tomato belt. The harvest arrives around July in the Northern Hemisphere countries of Spain, Portugal, Italy and the United States (California) as well as Japan, while the harvest in the Southern Hemisphere countries of Australia and Chile is around January.
In recent years, tomato cultivation areas have been impacted by extreme weather, such as heavy rainfall and drought caused by climate change. Kagome has an extensive worldwide procurement network for tomatoes, which enables it to adapt to climate change and to access stable procurement channels.

Avoiding Risk of Operational Stoppage Due to Natural Disaster

Taking into account weather damages caused by climate change and the occurrence of major earthquakes, Kagome has formulated "BCP Emergency Standards" outlining the roles and initial response of related departments for specific management resources (people, goods, facilities, information) based on consistent and prompt decision making by these departments led by management. This covers the initial response to BCP*, from disaster occurrence to establishment of an internal disaster headquarters headed by the President. Following the BCP Emergency Standards, during a disaster the SCM Division takes the lead in securing a logistics network for resuming product shipments as quickly as possible.
To prepare for floods, our business sites in Japan are preparing response manuals that outline detailed countermeasures for high risk locations pursuant to the hazard maps of local governments. These manuals also stipulate actions to take during each threat level for heavy rainfall or typhoons.
In addition, all of Kagome's business locations in Japan have an emergency earthquake reporting system. This system is for advanced users who can obtain highly accurate prediction information at the location of the business site. It broadcasts within the business site the predicted seismic intensity and the time until the earthquake will strike. Moreover, we have introduced a safety confirmation system and conduct training drills to confirm the safety of employees over a short period of time.
These mechanisms will help us to safeguard employee lives and ensure the continuity of our business operations.
*BCP: business continuity plan



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