SDGs Goal 7: Best Practices by Japanese Companies
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The introduction of renewable energy in all sectors is active, and it is one of the most mentioned goals. This goal should focus on both energy stability and greenness, but in many cases the emphasis is on greenness. Therefore, at the individual level, switching from fossil fuel-derived power to renewable energy-derived power, and at the social level, it is easy to talk about the transition to a decarbonized society. I would like to compare the medium-term management plan on how Japanese oil distributors, who are most vulnerable to the transition to a decarbonized society.
JXTG Holdings has set up carbon neutrality in the latest medium-term management plan for FY2020-2022 as the one it wants to achieve in 2040, and has listed the next generation energy platform as a means of realizing it. Most of them are energy-saving, but the use of hydrogen seems to be renewable energy. It is currently conducting demonstration experiments to build an overseas hydrogen supply chain. It will be interesting to see if it can be implemented, because implementation of large-scale solar and wind power generation like US and Europe will not be realistic.
Cosmo Energy Holdings aims to become a leading offshore wind power company in its medium-term management plan from FY2018 to FY2022. The Company estimates ordinary income for the business, which is less than JPY 5bn in FY2017, to more than JPY 20bn by FY2030. It has a realistic view that full-scale profit improvement will be after this medium-term management plan. Therefore it will focus on developing business plans and building power plants during the current medium-term management plan period.
Idemitsu Kosan has set quantitative targets for 2030 and 2050 under its medium-term management plan from FY2020 to FY2022. It announced tagets of reducing CO2 emissions by 15% compared to 2017 by 2030 and 30% reduction in CO2 emissions per unit of energy by 2050 compared to 2017. This is a common goal, but it is advanced that the degree of carbon breakaway of company-wide earnings is set as the KPI (key performance indicator). The KPI represent how the company raise the level of revenue per unit of CO2 emission (all CO2 emission minus CO2 reduction throughout the value chain), ie. how much revenue is raised without emissions. Monetizing the renewable energy business will lead to better KPIs, making it more acceptable to managers than just expanding renewable energy.
Each company has diverse focus on renewable energy and profitability of its business. However we should focus on which company can survive in the aforementioned trend of the transition to a decarbonized society. I would like to look forward to seeing which company's strategy works most.
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