Contributing to Building a Low-carbon Society

Efforts to Save Energy and Reduce CO₂ Emissions

Sumitomo Pharma aims to reduce greenhouse gas (GHG) emissions (Scope 1+2) to zero by fiscal 2050 through fossil fuel substitution. This will be achieved through the active use of energy saving and carbon dioxide eliminating technologies, which are expected to advance in the future, and renewable energy which is forecast to expand.

In fiscal 2022, we successfully reduced GHG emissions (Scope 1+2) by 47% (non-consolidated) compared to fiscal 2017 by fiscal 2030, achieving our target ahead of schedule that aimed to reduce GHG emissions by 35%. The key driver for this success was the shift to 100% renewable energy sources for electricity used^*1 at Oita Plant from November 2021 and for electricity purchased^*2 at Suzuka Plant from April 2022.
In fiscal 2023, we raised the target to “reduce GHG emissions (Scope 1+2) by 42% (consolidated) compared to fiscal 2020 by fiscal 2030” while also setting a Scope 3 target, which seeks to reduce GHG emissions (Scope 3 Category 1：Purchased goods and services) by 25% (consolidated) compared to fiscal 2020 by fiscal 2030. These targets for fiscal 2030 have been approved by the SBT Initiative in October 2023 as “targets for 1.5℃.” To attain the targets in Scope 1+2, we will further introduce non-fossil energy sources, such as renewables, and systematically pursue capital investments that contribute to energy saving and CO₂ reductions through switching to LED lights and introducing energy-efficient facilities, taking into consideration the cost effectiveness in terms of CO₂ reduction (yen/t-CO₂) and the payback period of each measure, and we have switched the purchased electricity at the Tokyo Head Office to 100% renewable energy in April 2024. Additionally, we support all policies in addressing global warming prevention, including the Japanese Government’s carbon neutral declaration. In support of “Decokatsu^*3” initiative which is being promoted by the government, we made the “Decokatsu” declaration in January 2024. We are actively raising awareness among our executives and employees by using the “Decokatsu” logo as well as the icons for Sustainable Development Goal 7 and 13. Each of us engage steadily in energy saving actions, such as thoroughly controlling air conditioning temperatures, reducing the use of air conditioners by dressing appropriately, and green driving. Furthermore, we support Japan’s laws and regulations concerning energy saving and climate change, such as the Act on Rationalizing Energy Use and Shifting to Non-fossil Energy, the Act on Promotion of Global Warming Countermeasures, and the Climate Change Adaptation Act. We also appropriately report our energy consumption and other relevant information to the government on a regular basis.

• *1Sumitomo Chemical Co., Ltd. Press Release: https://www.sumitomo-chem.co.jp/english/news/detail/20211021e.html
• *2 By adding environmental value to the electric power procured by Chubu Electric Power Miraiz through the use of non-fossil fuel energy certificates for sources of renewable energy such as hydroelectric electric power plants owned by the Chubu Electric Power Group, it is in effect achieving zero CO₂ emissions
  Press Releases: https://www.sumitomo-pharma.com/news/20220408.html
• *3 Decokatsu is a Japanese Government initiative to change people's behavior and lifestyles toward the achievement of the 2030 GHG emission reduction target and carbon neutrality in 2050 (https://ondankataisaku.env.go.jp/decokatsu/en/).

CO₂ Emissions (Energy Sources) Trends

The figure below shows the transition of GHG emissions toward the fiscal 2022 target: “Reduce GHG emissions (Scope 1+2) by 35% (non-consolidated) compared to fiscal 2017 by fiscal 2030.” The target was achieved ahead of schedule in fiscal 2022, with emissions reduced by 47%.

Proportion of Renewable Energy Use

In fiscal 2022, renewable energy comprised approximately 12% of total energy use. We will continue to introduce renewable energy systematically to increase the proportion used.

Solar Power Generating Systems

Sumitomo Pharma has installed solar power generation systems at our Central Research Laboratories and the Osaka Research Center and the amount generated at our Central Research Laboratories in fiscal 2022was 89 MWh. The total amount generated at our Osaka Research Center could not be calculated for fiscal 2022 due to instrument faults but the system generated electricity throughout the year. The solar power generation is displayed real-time on a monitor screen inside the research building to enhance environmental awareness of the employees.

Accounting of CO₂ Emissions across the Supply Chain

We work to monitor CO₂ emissions across the supply chain. CO₂ emissions both by Scope and by Category (in Scope 3) are as shown in the table below. Our Scope 3 emissions gradually decreased from fiscal 2020 to 2022 primarily due to the decrease in CO₂ emissions in Category 1 (purchased goods and services). In fiscal 2020 and 2021, the amount of business travel plunged as a result of countermeasures against COVID-19. In fiscal 2022, however, it largely recovered to pre-COVID levels, leading to a significant increase in Category 6 (business travel) CO₂ emissions compared with fiscal 2020 and 2021.
In fiscal 2022, Sumitomo Chemical Co., Ltd. joined the CDP Supply Chain Program^*4. As a member of Sumitomo Chemical Group, we request disclosure of GHG emissions from our main suppliers, in accordance with the program and as part of our ongoing effort to use primary data^*5 to determine Scope 3 Category 1 emissions. In a bid to promote sustainability in the entire value chain, we have established the “Sustainable Code of Conduct for Business Partners"^*6, which sets five priority categories that we expect our business partners to work on. As for the environment, one of the key categories, our business partners are requested to set targets for GHG reductions voluntarily and take actions to achieve them. Additionally, we have set a new consolidated target to reduce GHG emissions (Scope 3, Category 1) by 25% compared with fiscal 2020 by fiscal 2030. We work on reducing Scope 3 emissions through the CDP Supply Chain Program and collaboration with our business partners.

• *4CDP Supply Chain Program: https://www.cdp.net/en/supply-chain
• *5Compilation of primary data: Calculating emissions using data obtained directly from suppliers, etc., without using the database of emission intensity such as emission intensity contained in Ministry of the Environment DB
• *6Sustainable Code of Conduct for Business Partners（PDF/269KB）

CO₂ Emissions by Scope

CO₂ Emissions by Category (Scope 3)

Japanese Ministry of the Environment database (Ver. 3.1 applied to fiscal 2020 emissions, Ver. 3.2 applied to fiscal 2021 emissions, Ver. 3.3 applied to fiscal 2022 emissions): The database on emissions unit values for accounting of greenhouse gas emissions, etc. by organizations throughout the supply chain

LCI database: LCI database IDEAv2 (for calculation of greenhouse gas emissions throughout the supply chain)

• Note:
• As for Category 1 (purchased goods and services) and Category 2 (capital goods), figures for fiscal 2022 were calculated considering consumption tax. This is because “the Japanese Ministry of the Environment’s database on emissions unit values for accounting of greenhouse gas emissions, etc. by organizations throughout the supply chain (ver. 3.3)” states that the consumption tax is included in the emissions intensity. Figures for emissions before fiscal 2021 do not include consumption tax, but no adjustment has been made because the effect is insignificant.
• As for Category 3 (fuel- and energy-related activities not included in Scope 1 or 2), some figures have been corrected due to errors in the data from fiscal 2020 and 2021.
• As for Category 9 (downstream transportation and distribution), figures for CO₂ emissions of pharmaceutical wholesaling in fiscal 2021 were used for calculations of CO₂ emissions in fiscal 2022, because CO₂ emissions of pharmaceutical wholesaling in fiscal 2022 have not been released yet. As for total sales of pharmaceutical wholesaling and sales of our products in pharmaceutical wholesale segment, we used figures for fiscal 2022.

Partnership Initiatives

Partnership with Federation of Pharmaceutical Manufacturers' Associations of JAPAN

We participate in activities of the Federation of Pharmaceutical Manufacturers' Associations of Japan (FPMAJ) through our membership in the Japan Pharmaceutical Manufacturers' Association (JPMA), an FPMAJ member. FPMAJ is member of the Japan Business Federation (KEIDANREN), which supports the Japanese Government's "2050 Carbon Neutral Declaration," has expressed its determination to work together with the Government to achieve it and drawn up a "Carbon Neutral Action Plan." Based on this action plan, FPMAJ has set the long-term vision of the Carbon Neutral Action Plan for the pharmaceutical industry as "achieving net-zero CO₂ emissions by 2050" and established the Phase II target of "reducing CO₂ emissions by 46% (research laboratories, plants, offices, and sales vehicles) from fiscal 2013 level by fiscal 2030," and is thus promoting the reduction in CO₂ emissions. We are also participating in this action plan. Furthermore, we are proactively working to advance the action plan not only serving as chairman of the Environmental Committee (now the Environmental Issue Committee) of JPMA in 2018 but also serving as vice-chairman of the Environment Committee of FPMAJ in 2019.

Also, in line with Japanese Government policy, FPMAJ is working on reducing emissions of chlorofluorocarbons, which are also GHGs, and has established "Chlorofluorocarbon Study Subcommittee," a specialist subcommittee. The subcommittee has drawn up a voluntary action plan including numerical goals and in addition to carrying out activities to control emissions of chlorofluorocarbon substitutes (HFCs) used in quantitative spray aerosols is supporting policy execution through regular reporting to the Industrial Structure Council of the Ministry of Economy, Trade and Industry. Since Sumitomo Pharma imports and sells Qvar^®, an inhaled steroid asthma therapy containing HFC-134a as a propellant, we participate in subcommittee efforts to reduce HFCs and collaborate with the regulatory authorities.

Participating in Japan Climate Initiative

Japan Climate Initiative (JCI) is a network of companies, local governments, NGOs and others in Japan that actively tackles climate change with an aim to strengthen information dissemination and information exchange to realize a decarbonized society. In an endorsement of JCI's declaration that it is "Joining the front line of the global push for decarbonization from Japan," Sumitomo Pharma has been participating since October 2018. By publishing messages and sending letters to the Government, JCI has been seeking stronger measures against climate change. Sumitomo Pharma endorses the following JCI messages.

• "Long-term Strategy Demonstrating Japan's Leadership in Achieving a Decarbonized Society to the World" published on May 16 2019^*7
• "JCI Message to the Japanese Government Calling for Ambitious 2030 Goals to Realize the Paris Agreement" published on April 19 2021^*8
• "Now is the time to accelerate renewable energy deployment -Calling for stronger climate change action in the midst of the fossil energy crisis-" published on June 3, 2022^*9
• "Overcoming Two Crises with Renewable Energy and Carbon Pricing" published on April 12, 2023^*10

• *7https://japanclimate.org/english/news-topics/messageonlongtermstrategy_en/
• *8https://japanclimate.org/english/news-topics/call-for-ambitious-2030-target/
• *9https://japanclimate.org/english/news-topics/jci-message-re-release/
• *10https://japanclimate.org/english/news-topics/jci-message-g7-release/