Relationship with the Environment
Global warming and other global environmental problems are becoming increasingly serious with each passing year, threatening people's health and livelihoods. These problems could have a significant impact on our ability to provide a stable supply of pharmaceutical products, and on business continuity. The Kissei Group treats addressing these environmental challenges as a key management issue and has set medium- to long-term goals to strengthen and promote environmental management toward the realization of a decarbonized and circular society.
The Group believes that this approach will contribute to the development of a sustainable society and lead to the sustainable growth of the Company. The Kissei Group, which consists of its Pharmaceutical Business, Information Services Business, Construction and Facility Maintenance Business, and Merchandising Business, established the Kissei Group Basic Environmental Policy in March 2025 as a means to reinforce environmental initiatives that leverage the strengths of each Group company and maximize in-Group synergies. Furthermore, the Group has set unified targets for reducing CO2 emissions. These actions will accelerate Groupwide efforts to address environmental issues and contribute to the realization of a sustainable society.
Kissei Group Basic Environmental Policy (Established March 20, 2025)
1. Basic Philosophy
Under the group management philosophy of "Kissei will make contributions to society by creating harmony among the Group’s working parts ," we will actively work to preserve the global environment as part of our corporate social responsibility, and contribute to the realization of an affluent and comfortable society.
2. Basic Policy
(1) We take global environmental issues seriously and promote the reduction of environmental impact throughout the value chain, recognizing that many of our corporate activities have various impacts on the environment.
(2) In order to help preserve the global environment, we will evaluate and analyze the impact of our business activities on the environment and nature, and set medium- and long-term goals to achieve net zero CO2 emissions by 2050, while striving for continuous improvement.
(3) Actively promote resource recycling, including energy and resource conservation, waste reduction, introduction of renewable energy, preservation of biodiversity, and appropriate use and discharge of water resources.
(4) Each and every employee will strictly adhere to all relevant environmental laws, regulations, agreements, and other requirements, and will actively promote activities to prevent environmental pollution by raising environmental awareness and improving ethical standards through environmental education.
Disclosure Based on the Recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD)
The Kissei Group recognizes that global warming and the intensification of climate change are common challenges for humanity, threatening our lives, business continuity, and the sustainable development of society. We aim to strengthen resilience to climate-related risks by evaluating and analyzing the impacts of climate change on our business activities. Additionally, we strive to improve our business environment by appropriately seizing opportunities presented by climate change through decarbonization and energy-saving measures, aiming for environmental management integrated with our business activities.
Kissei Pharmaceutical has identified "Promotion of ESG management" as one of its material issues and has expressed support for the TCFD recommendations. Regarding risks and opportunities related to climate change, the company analyzes the impact on its business activities from a medium- to long-term perspective in accordance with the TCFD framework. Based on the degree of impact on business strategy, it sets priorities and promotes initiatives to respond to the intensification of weather-related disasters and to achieve carbon neutrality.
Understanding the TCFD
The TCFD was established in 2015 by the Financial Stability Board (FSB) to investigate ways to disclose information related to climate change and engage with financial institutions. Under its international framework, the TCFD recommends that companies disclose the risks and opportunities related to climate change according to the following four categories.
| Governance | Organizational governance in line with climate-related risks and opportunities |
| Strategy | Actual and potential impacts of climate-related risks and opportunities on business, strategy, and financial planning (if material information) |
| Risk Management | Climate-related risks identification, assessment, and management status |
| Metrics and Targets | Metrics and targets used to assess and manage climate-related risks and opportunities (if material information) |
Governance
The Kissei Group has established the Group Environmental Conservation Officers’ Council, led by the chair of the Sustainability Promotion Committee, and consisting of environmental conservation officers from each Group company. This council promotes decarbonization, climate change risk response, and other environmental conservation activities across the Group and tracks the results of related activities.
Policies and progress of these activities are managed and overseen by the Sustainability Promotion Committee, which submits and reports to the Board of Directors and the Audit & Supervisory Board at least once every six months, managed and overseen by the Company’s Board of Directors.
Strategy
Regarding the impact of climate change on the Company’s business, the Sustainability Promotion Committee, using the TCFD framework, is conducting scenario analysis. In Fiscal 2021, they focused on the Pharmaceutical Business, the central business of the Group, to identify risks and opportunities using the 1.5℃ scenario for transition risks related to decarbonization, and the 4℃ scenario for physical risks assuming a 4℃ rise in global average temperature if decarbonization is not achieved. In Fiscal 2022, they conducted quantitative analysis on these elements.
These identified risks and opportunities were analyzed and assessed in terms of their financial impact and their likelihood of occurrence, then possible measures were considered and prioritized based on their impact on our business strategy. As a result of the analysis and assessment, there were no risks identified that could have a significant impact on the business strategy.
< Results of Scenario Analysis >
| Classification | High-Priority | Impact on the Company | Degree of Impact*2 | Countermeasures | Business Risks*3 |
1.5℃ Scenario*1 Transition Risks |
Enhanced policies and regulations related to decarbonization | Addition of carbon tax Company could incur higher costs due to carbon pricing. The cost in Fiscal 2030 is estimated to be approximately ¥200 million (at a rate of US$140 t-CO2*3). |
Medium | ・Reduce CO2 by introducing renewable energy, upgrading to energy-saving equipment, and further promoting activities to save energy |
Low |
| Capital investment costs could increase as a result of new or enhanced decarbonization policies such as CO2 emissions regulations | Low | ・Systematically switch to energy-efficient equipment when upgrading and consider taking advantage of subsidies or other avenues |
Low | ||
| Implement climate change initiatives | Stakeholders’ evaluation of the Company could decline due to insufficient efforts to address climate change | High | ・Gain stakeholder trust via sustainable efforts to address climate change-related issues and through appropriate disclosure |
Low | |
4℃Scenario*1 Physical Risks |
Intensification and increased frequency of natural disasters | Flooding could cause damage to key locations, suspending operations, requiring the Company to incur expenses to restore these operations (approx. ¥3.6 billion total), and possibly affecting the development pipeline and impacting the steady supply of products | High | ・Take appropriate measures to minimize damage to locations from floods and other disasters |
Low |
| Disasters could disrupt manufacturing due to damage incurred by suppliers or hinder the steady supply of drugs by affecting the transportation network | High |
・Maintain and improve the system for steady drug supply by keeping an inventory of drugs, in conditions suited to their respective characteristics and in decentralized locations ・Reduce procurement risks by establishing multiple supply lines |
Low | ||
| Water shortages | A lack of water resources could lead to restrictions on water use, thereby disrupting operations, while costs related to securing water resources could increase | Low | ・Increase information collection related to water withdrawal in surrounding areas and construct an emergency response system that factors in the risk of acquiring water resources*1 |
Low |
Opportunities
| Opportunities | Category | Impact on Pharmaceutical Business | Degree of Impact*2 |
| Resource efficiency | Costs for energy procurement and raw materials could be reduced by introducing new, efficient technology and equipment | Low | |
| Energy | Key energy sources are heavy oil, gas, and electricity. Currently, 80% of the electricity used comes from renewable sources | Low | |
| Market | Demand and development opportunities could increase for treatments in disease fields where morbidity increases as temperatures rise | - | |
| Resilience | Climate change risk assessments and the continued implementation of climate change-related measures could minimize risks and enhance business stability | - |
*1 1.5℃ scenario created with reference to the International Energy Agency’s (IEA’s) Net Zero Emissions by 2050 Scenario (NZE) and others; 4℃ scenario created with reference to the International Energy Agency’s (IPCC’s) RCP8.5 scenario and others; water risks determined with reference to the AQUEDUCT Water Risk atlas
*2 Degree of impact is based on the following criteria: high (over ¥500 million per year), medium (¥100-¥500 million per year), low (less than ¥100 million yen per year)
*3 Business risks are evaluated comprehensively, taking into consideration the degree of impact, frequency of occurrence, order of response, and other factors
*4 Carbon prices in 2030 for advanced economies under the NZE scenario according to IEA World Energy Outlook 2024
Risk Management
Kissei has positioned risks related to climate change as important management risks and the risks identified under the TCFD framework are reviewed at least once a year for their impact on business activities. Based on the degree of impact, we consider cost-effectiveness and urgency, then prioritize, investigate, and implement countermeasures.
The Sustainability Promotion Committee then discusses and reports on the management of these risks to the Board of Directors, the Audit & Supervisory Board, and the Risk Management Committee (an advisory body to the Board of Directors), to promote comprehensive Companywide risk management.
Metrics and Targets (Reduction of CO2 Emissions)
The Kissei Group has set the following medium- to long-term goals toward the realization of a decarbonized society, and is promoting activities to achieve them.
- • Fiscal 2030 reduction target for Scope 1 and 2 CO2 emissions: 42% reduction compared with Fiscal 2020
- • Fiscal 2050 reduction target for Scope 1 and 2 CO2 emissions: Net zero
In Fiscal 2024, Scope 1 and 2 CO₂ emissions amounted to 10,696 tons, of which 9,983 tons were Scope 1 emissions and 712 tons were Scope 2. This constitutes a 39% reduction from Fiscal 2020. Notably, annual Scope 2 emissions have decreased by 7,072 tons compared with Fiscal 2020, due to the use of renewable energy, which was gradually introduced from Fiscal 2022 and accounted for 80% of total energy use in Fiscal 2024.
Going forward, we will focus on reducing Scope 1 emissions.
Business locations that have introduced renewable energy are listed below.
Climate Transition Plan
The Kissei Group formulated a climate transition plan in Fiscal 2024 as a guideline for achieving its long-term goal of net-zero CO2 emissions by Fiscal 2050. Under this plan, Kissei Pharmaceutical, working with HASHIBA TECHNIOS and external experts, will first analyze energy consumption based on onsite measurements at locations with high Scope 1 CO2 emissions—namely plants utilized by the Pharmaceutical Business and research laboratories—and identify equipment that can be used effectively to reduce emissions. Based on the results of this investigation, we plan to systematically switch to energy-saving equipment and environmentally-friendly fuel when replacing existing equipment. These actions will be part of the ¥6.0 billion in environmental investments earmarked for the five-year period of Beyond 80, our medium-term management plan. We are also making continued efforts to conserve energy in our daily operations and optimize energy usage through a multifaceted approach that includes a review of temperature and humidity control standards, based on scientific evidence. Backed by this approach, by the end of Fiscal 2029 we are aiming to reduce CO2 emissions by 49% (approximately 7,600 tons) compared with Fiscal 2020. This exceeds our medium-term target for Fiscal 2030.
The "Central Building," currently under construction on the headquarters premises in Matsumoto City, is designed to function as a Net Zero Energy Building (ZEB). This facility, which includes an employee cafeteria, reception area, and meeting rooms, aims to enhance energy-saving performance and further reduce greenhouse gas emissions compared to conventional facilities. By utilizing a geothermal heat pump system that harnesses natural energy, high-efficiency air conditioning equipment, and ventilation systems with CO2 sensor-controlled airflow, along with the installation of solar power generation and battery storage systems, the building significantly reduces energy consumption during normal operations. Additionally, in the event of a disaster, the building is designed to supply power to specific critical systems, ensuring the safety of employees and the continuity of operations.
(Conceptual drawing)
As we continue these optimization efforts, we will also consider the introduction of additional renewable energy sources. Furthermore, we will investigate the introduction of new energy sources likely to be commercialized after 2040. Together, these efforts will actively contribute to the realization of a decarbonized, recycling-oriented society.
Scope 3 GHG emissions in the Supply Chain
Indirect CO2 emissions produced across the entire supply chain (Scope 3 emissions) for the Pharmaceutical Business of Kissei Pharmaceutical have been calculated based on the Basic Guidelines for Calculating Greenhouse Gas Emissions (Ver. 2.4), published by the Ministry of the Environment and the Ministry of Economy, Trade and Industry. In Fiscal 2024, total emissions (Scope 1, 2, and 3) for the Company totaled 107,946 tons. Of this amount, 91%, or approx. 98,194 tons, were Scope 3 emissions. Among Scope 3 emissions, 82%, or approx. 80,499 tons, fell under Category 1, purchased goods and services.
To achieve net-zero CO2 emissions (carbon neutrality) by Fiscal 2050, we will have to reduce CO2 emissions throughout the supply chain with the understanding and cooperation of our suppliers and other business partners. This is not limited to Kissei; The Japan Pharmaceutical Manufacturers Association (JPMA) views this as an issue for the entire pharmaceutical industry, and is working to achieve carbon neutrality via its Carbon Neutral Working Group, which the JPMA established as part of its Environmental Issues Study Group. As a member of this working group, we are working with the pharmaceutical industry as a whole to reduce Scope 3 emissions.
Environmental Management System
The Kissei Group supports the Japanese government’s goal of achieving carbon neutrality and promotes activities in compliance with the Act on Promotion of Global Warming Countermeasures, the Act on Rationalizing Energy Use and Shifting to Non-Fossil Energy, the Water Pollution Prevention Act, and the Act on Waste Management and Public Cleaning.
Kissei Pharmaceutical’s Pharmaceutical Business consumes large amounts of energy. For this segment, the Group conducts environmental management based on ISO14001, the international standard for environmental management systems. The general manager of the General Administration Department, who is also the vice-chair of the Sustainability Promotion Committee, serves as the supervisor general for environmental management. In addition, an environmental manager is appointed at each business location. Altogether, this creates an organized environment management system that is in constant operation. From 2000 to 2007, each business location obtained ISO14001 certification, followed by full transition to the ISO14001:2015, the revised version of the standard. This ensures environmentally-friendly activities are promoted throughout the Company.
KISSEI COMTEC CO., LTD. and HASHIBA TECHNIOS CO., LTD. are also ISO14001:2015 certified, with each company having a system in place to promote environmental conservation while working to reduce environmental impact.
ISO14001 Certification Status
| Kissei Pharmaceutical | Month and Year of Acquisition |
| Head Office / Matsumoto Plants | September 2000 |
| Shiojiri Plants | September 2000 |
| Nutritional Business Center | September 2000 |
| Safety Research Laboratories | September 2006 |
| Tokyo Head Office | September 2006 |
| Central Research Laboratories | September 2007 |
| KISSEI COMTEC CO., LTD. | June 2002 |
| HASHIBA TECHNOS CO., LTD. Head Office |
February 2002 Starting sequentially from September 2000 |
* Incorporated into the EMS organization as the facility management department of Kissei Pharmaceutical, sequentially acquired for each business site
An Overview of the Environmental Impact of the Kissei Group
The Kissei Group quantitatively assesses the amount of energy and resources used in its business activities (input) and the amount of emissions and waste generated in the course of its activities (output) in an effort to reduce its environmental impact. The diagram below provides an overview of the Group’s environmental impact in Fiscal 2024. Regarding efforts to conserve energy, conserve resources, and recycle resources, we have set environmental targets based on our environmental management system, and are moving forward with upgrades to energy-saving equipment, more efficient resource use in research and manufacturing processes, paperless operations, and promoting the 3Rs (Reduce, Reuse, Recycle).
As a resource, water is both a vital necessity for human life, and an important resource for the Group’s production of pharmaceutical products and noodles. We strive to understand any risks associated with flooding and water usage that may exist at each business location, and promote appropriate and efficient water usage after assessing the impact of our business activities on the water environment. In particular, we have set voluntary standards in accordance with laws and regulations to manage chemical substances used in the Pharmaceutical Business alongside a stringent management system to prevent air, water, and soil pollution from these substances.
*1 Covering Head Office / Matsumoto Plants, Shiojiri Plants, Nutritional Business Center, Central Research Laboratories, Safety Research Laboratories, Joetsu Chemical Laboratories, Tokyo Head Office, Tokyo Head Office (Koishikawa)
*2 Data from business locations that handle one or more tons of applicable chemical substances annually
*3 Covering Head Office/Matsumoto Plants, Shiojiri Plants, Central Research Laboratories, Safety Research Laboratories, Joetsu Chemical Laboratories
The promotion of water resource circulation
Water is an essential resource for people's lives, economic activities, and the maintenance of ecosystems. In our group's business activities, including pharmaceutical manufacturing, high-quality and sufficient quantities of water play a crucial role in supporting the foundation of our operations.
In recent years, environmental issues related to water resources, such as water pollution, water shortages due to climate change, and flood risks, have become increasingly severe worldwide. In response to these challenges, our group has established a target for reducing water intake by Fiscal 2030, set in 2025, to enhance the sustainability of our operations and promote the recycling of water resources. To efficiently use water resources, we are implementing measures such as thorough management of municipal and groundwater usage, reducing cooling water consumption by improving the efficiency and air-cooling of heat source equipment, and ensuring proper management of wastewater quality in compliance with regulations.
Targets
- • Water intake for Fiscal 2030: 2.5% reduction from Fiscal 2024
- • The number of instances of exceeding standards in wastewater quality inspections at specified facilities under the Water Pollution Prevention Control Act: Zero instances
Risk Assessment and Response
We conducted a water risk assessment for the headquarters, factories, and research facilities of our group's major business locations, utilizing the water risk assessment tools from the World Resources Institute (WRI AQUEDUCT) and the World Wildlife Fund (WWF Water Risk Filter). The assessment revealed that none of our sites were classified as having high or extremely high water stress, which is an indicator of water scarcity measured by dividing the annual water usage by the available annual water volume in a region. However, two sites were evaluated as high risk concerning physical risk (quantity).
Currently, we have determined that there are no urgent water scarcity risks at our group's locations. Nonetheless, we are committed to reducing water usage and optimizing water utilization to contribute to the realization of a sustainable water resource cycle society.
Specifically, we are implementing measures such as reducing the use of cooling water by air-cooling refrigeration units, improving water use efficiency by upgrading to new heating and cooling water generation systems, and promoting awareness activities related to reducing domestic water consumption.
＜AQUEDUCT：Water Stress＞
| Water Stress Level | Name |
| Low | Nothing |
| Low-Medium | Kissei Pharmaceutical：Head Office / Matsumoto Plants、Central Research Laboratories, Safety Research Laboratories, and Siojiri Plants Kissei Shoji Co., Ltd：Head Office, Takushian Noodle Workshop KISSEI COMTEC CO., LTD.：Head Office HASHIBA TECHNIOS CO., LTD：Head Office |
| Medium-High | Kissei Pharmaceutical：Tokyo Head Office、Joetsu Chemical Laboratories |
| High | Nothing |
| Extremely High | Nothing |
＜AQUEDUCT：Physical Risk (Quantity)＞
| Water Stress Level | Name |
| Low | Nothing |
| Low-Medium | Kissei Pharmaceutical：Central Research Laboratories, Safety Research Laboratories, and Siojiri Plants |
| Medium-High | Kissei Pharmaceutical：Head Office / Matsumoto Plants Kissei Shoji Co., Ltd：Head Office, Takushian Noodle Workshop KISSEI COMTEC CO., LTD.：Head Office HASHIBA TECHNIOS CO., LTD：Head Office |
| High | Kissei Pharmaceutical：Tokyo Head Office、Joetsu Chemical Laboratories |
| Extremely High | Nothing |
Wastewater Management
Within the locations of our group's pharmaceutical business, Head Office / Matsumoto Plants, Central Research Laboratories, Safety Research Laboratories, and Joetsu Chemical Laboratories are classified as specified facilities under the Water Pollution Prevention Act. At these locations, regulated substances are specially managed as hazardous materials. In addition to adhering to the discharge standards of the Water Pollution Prevention Act, each location has independently established stringent self-management standards, approximately one-tenth of the legal standards, and conducts wastewater quality inspections based on these standards. This approach allows us to monitor the release of hazardous substances and prevent environmental impact proactively.
Furthermore, our major business locations have obtained ISO14001 certification, and under the environmental management system, we systematically engage in sharing information on legal amendments, educating employees, conducting emergency response drills, and performing regular evaluations and improvement activities. Through these initiatives, we achieved our target of zero instances of exceeding discharge standards in Fiscal 2024. We will continue to rigorously manage wastewater and strive to reduce environmental impact.
Promoting Material Recycling
In addition to conserving resources and reducing the amount of waste it generates, the Kissei Group strives to improve its material recycling rate in an effort to realize a society rooted in resource recycling. To that end, we are implementing a variety of measures that include turning general-use paper and metals into valuable resources, recycling plastic PET bottles, and turning food waste into raw materials for feed and fertilizer.
We launched the following initiatives in Fiscal 2024.
・Material Recycling for PTP Sheets
Press-through packaging (PTP) sheets are used to package tablets, capsules, and other pharmaceuticals and are made from plastic and aluminum foil. Because such composite materials are difficult to separate, they have traditionally been incinerated for thermal recovery. In Fiscal 2024, we began outsourcing to a company with the technology to separate PTP sheets into plastic and aluminum, making it possible to recycle both materials. This has the extra benefit of reducing CO2 emissions associated with incineration.
・Reusing Physicochemical Equipment
We utilize a second-hand trading platform to facilitate the reuse of physicochemical equipment no longer needed in our laboratories and factories, specifically targeting domestic research institutions. Not only does this support environmental conservation by reducing waste, but it also supports research within Japan.
・Recycling for Liquid Waste Containing Precious Metals
Metal catalysts are used in the drug discovery research process, which generates liquid waste that contains precious metals. We are currently working on finding ways to refine this waste and recycle the precious metals obtained.
Environmental Accounting
We have incorporated environmental accounting since fiscal 2004 to ascertain the cost of environmental conservation within business activities.
Going forward, we will continue to engage in effective environmental conservation activities.
- Target period:
- April 1, 2023, to March 31, 2024
- Scope of calculation:
- All business locations
- Calculation method:
- Based on “Environmental Accounting Guidelines 2005 edition,” Ministry of the Environment
- Investments and expenses:
- Investment amounts indicate the amount of investment in environmental-related facilities in a given fiscal year, and expenses indicate the amount of expenditures incurred for the purpose of environmental conservation and do not include depreciation expenses.
Environmental Conservation Costs
| Environmental Conservation Cost Categories | Investments＊ | Expenses | ||
| Costs within business area | ①Pollution prevention costs | Maintenance and management of air pollution prevention, water pollution prevention, etc. | 24,470 | 7,999 |
| ②Environmental conservation costs | Energy-saving measures, energy-saving equipment, etc. | 93,075 | 71,212 | |
| ③Resource recycling costs | Waste reduction, recycling, disposal and treatment costs, etc. | 0 | 38,871 | |
| Up/downstream costs | Container and packaging recycling consignment fees, etc. | 0 | 16,071 | |
| Management activity costs | Maintain and manage ISO14001, etc. |
33,000 | 22,284 | |
| R&D costs | ー | 0 | 0 | |
| Social activity costs | Sponsorship fees, etc. for environmental conservation groups, etc. | 0 | 230 | |
| Environmental damage response costs | ー | 0 | 0 | |
| Total | 150,545 | 156,668 | ||
＊ Total of 11 investments of ¥500,000 or more
Environmental Conservation Effects
| Fiscal 2023 | Fiscal 2024 | Change(%) | |
| CO2 emissions*1(t-CO2) | 10,383 | 9,752 | -6.1% |
| Energy used*2（GJ） | 295,813 | 292,350 | -1.2% |
| Water used*3（×103 ㎥） | 156 | 158 | 1.3% |
| Wastewater*3（×103 ㎥） | 114 | 115 | -0.2% |
| Waste generated（tons） | 395 | 392 | 1.8% |
| Recycled（tons） | 351 | 354 | 0.8% |
| Final disposal（tons） | 12 | 16 | 42.3% |
*1 Calculation methods were revised in Fiscal 2024 and figures from previous years have been revised retroactively to reflect this change.
*2 Starting from Fiscal year 2024, the unit of aggregation will be changed to GJ and figures from previous years have been revised retroactively to reflect this change.
*3 Total for Head Office, Tokyo Head Office, two plants, three research centers, and the Nutritional Business Center. Branch offices and sales offices have been excluded due to negligible impact.
