Big Japanese companies reduced their carbon dioxide emissions relative to sales by nearly a third in 2024 compared with three years earlier, in a sign that they are balancing lower CO2 output and earnings growth.
The cuts were driven by a shift to renewable energy sources for powering factories and offices, but companies face a higher hurdle in lowering emissions from their own operations.
For 2024, the median emissions figure per JPY 1 million (or around USD 6,500) in sales was 0.17 tons, down 18% from 2023 and down 31% from 2021, based on data from about 400 companies compiled by KPMG AZSA.
Particular reductions were noticeable among companies in the electronics and precision machinery industries, Nikkei research shows.
Printer maker Seiko Epson completed its shift to renewable energy at its domestic plants in 2021 and at all group locations, including overseas, in 2023. Emissions per unit of sales fell by more than 80%, helped by sales growth.
Murata Manufacturing, a supplier of electronic components for companies including Apple, increased its renewable energy usage to 36.5% in the fiscal year ended March 2024, more than double the level of three years earlier. Emissions per unit of sales fell by about 30%.
Greenhouse gas emissions per unit of sales help gauge whether companies can shrink their CO2 output without hurting their business.
Japan aims to reduce greenhouse gas emissions by 46% by 2030 compared with 2013 levels. Emissions from the industrial sector account for about 30% of the country’s total.
“Thanks in part to pressure from investors and government support, efforts to reduce emissions have made some progress, mainly among large companies,” said Hiroki Yoda, a researcher at Japan’s Daiwa Institute of Research.
Reductions were also seen in the materials, construction, and food industries. Seasonings maker Ajinomoto halved its emissions per unit of sales for the fiscal year ended March 2024, thanks in part to a switch from coal to biomass fuel at its Southeast Asian offices.
Packaging maker Toyo Seikan Group Holdings reduced emissions per unit of sales by 30% through energy conservation and the introduction of solar power generation. The company is also studying the use of hydrogen in glass manufacturing, and a spokesperson said it “sees a significant reduction in Scope 1 emissions.”
The KPMG data covers both Scope 1 and Scope 2 emissions, referring respectively to emissions produced as part of companies’ own business activities and those from indirect sources such as electricity purchases. Half of the companies included in the study were corporations with annual sales of JPY 100 billion (USD 6.5 billion) or more.
Companies made progress in reducing Scope 2 emissions. Median emissions per unit of sale in 2024 were down nearly 60% compared to three years ago, thanks to the increased use of renewable energy and energy-saving initiatives. Scope 1 emissions remained flat.
Scope 1 emissions are harder—and costlier—to cut.
“Companies need to step up capital investment to reduce emissions,” said Daisuke Tsuchiya, a managing director at KPMG AZSA. “Investment in actions on global warming will worsen capital efficiency in the short term, so they will be forced to make difficult decisions.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.