Accelerating Efforts to Reach Carbon Zero by 2040 and Carbon Negative by 2050

By implementing Innovation in Reduction and Innovation in Recycling with regard to CO2, Kao Corporation is aiming to achieve carbon zero by 2040, and carbon negative 2050 in its business activities. In April 2019, Kao established its ESG strategy, the Kirei Lifestyle Plan, which outlines 19 leadership actions, one of which is decarbonization. In 2022, the company took steps including the following actions: used internal carbon price, the cost of which was increased in 2021, and developed products contributing to CO2 reduction and formulated new medium- and long-term strategies for reducing Scope 3*1 emissions related to procurement and use of raw materials. The following is a report of progress made in 2022.

*1 Greenhouse gas emissions by other than businesses and other entities.

Innovation in CO2 Reduction/Targets to Achieve Carbon Zero by 2040 and the 2022 Results 

Continuing the measures implemented in 2021, in 2022 Kao employed renewable energy sources by entering into a corporate Power Purchase Agreement (PPA)*2 , adopting photovoltaic power generation facilities and using the non-fossil fuel certificate system*3 . Kao also continues to accelerate the use of renewable electricity by approving the company-wide carbon price system—which was raised from ¥3,500/ton-CO2 to $168*4 /ton-CO2 in 2021—to introduce a water heat pump system at the Toyohashi Plant (scheduled to be completed in May 2023) and a photovoltaic power generating facility at the Kashima Plant (scheduled to be completed in January 2024).

*2 Scheme whereby users enter into long-term agreements directly with energy retailers to buy renewable energy.
*3 The non-fossil fuel energy certificate system provides energy retailers with proof that the portion of energy under the certificate is from renewable energy sources, which allows for the identification of power plants that contribute environmental value.
*4 Changed from JPY to USD as the baseline currency beginning in Februrary 2023.
Kao´s European Factory in Darmstadt, Germany, has already been running on renewable energy since 2014 and has recently changed its hot mixing processes to cold mixing to reduce the needed energy and consequently CO2 during its production processes. 

By 2030, Kao will have reduced Scope 1+2*5 CO2 emissions (absolute value) by 55% (taking 2017 as the base year)
(Certified by the global Science Based Targets initiative (SBTi) as a 1.5°C target)
2022 results: 26% (2021: 20%)
*5 The volume of greenhouse gases emitted directly by business enterprises and other organizations.
 
By 2030, 100% of the electricity used will be sourced from renewable energy
(Kao is a member of the international initiative RE100, which aims to power businesses using 100% renewable electricity.)
2022 results: 49% (2021: 40%)

By 2030, Kao will have reduced CO2 emissions (absolute value) throughout the product lifecycle*6 by 22% (taking 2017 as the base year)
(Certified by the global Science Based Targets initiative (SBTi) as a 1.5°C target)
2022 results: 6% (2021: 4%)

*6 The volume of CO2 emissions deriving from raw materials procurement, manufacturing, transportation, product usage, and disposal of used products. This covers Scope 1, Scope 2, and part of Scope 3 emissions.

Looking at different stages of the product lifecycle, procurement of raw materials and product use generate a high percentage of CO2 emissions. To reduce emissions, Kao will continue decreasing its use of raw materials and use recycled plastics when procuring raw materials, developing water-saving products to reduce business partners and consumers' water use-related CO2 emissions, and using plant-based and other natural raw materials and cutting down on the use of plastics for packaging at the disposal and recycling stage.

Kao is taking steps to reduce CO2 emissions, which are especially high at the raw materials procurement and product use stages. In 2022, 69% of PET plastic containers sold in Japan used recycled PET plastics as material at the raw materials procurement stage. At the product use stage, Kao has introduced many products aiming to reduce CO2 through water saving, for example concentrated liquid laundry detergent Attack ZERO, which requires only one rinse cycle, quick-rinsing CuCute dishwashing liquid and water-saving Bioré u The Body foam body wash spread by hand.

In Europe, some of Kao´s leading brands have significantly step changed their use of plastic by switching to the use of rPET or refill packs: British luxury brand Molton Brown is using 50% rPET for its bottles and is offering hand wash refill pouches, hair care brand Guhl has recently moved to the use of 99% recycled material for its new shampoo bottle bodies and Kao Salon Division has introduced refill pouches for many brands of its professional salon portfolio, reducing plastic usage for these products by up to 70% compared to bottles.

Kao has also started new projects aimed at reducing CO2 over the medium to long term. In the area of procurement of raw materials, it is a founding member, together with Genomatica and Unilever, leading companies in sustainable materials, of a venture business set up in the United States to supply an alternative to palm oil to the market. Where disposal and recycling are concerned, Kao has been delegated by New Energy and Industrial Technology Development Organization (NEDO) to start a study on a manufacturing model for utilizing cassava residue.
 
Amount of CO2 emissions reduced as a whole by using Kao's products and services: 10 million tons by 2030
2022 results: 4,230,000 tons (2021: 4,564,000 tons)

Kao's Consumer Products Business and its Chemical Business are working to develop products, services and technologies that will contribute to a sustainable future. The company has also introduced an index comparing reduction of CO2 emissions (reduction contribution amount) over product lifecycles between new and existing products and services. Contributing to decarbonization, the Consumer Products Business reduced emissions by 1,936,000 tons by adopting containers using less plastic and offering water-saving products, while the Chemical Business cut emissions by 2,294,000 tons through the use of plasticizers for wire harnesses and solvents for fuel-efficient tires.

CO2 Related Innovation in Recycling/Targets to Achieve Carbon Negative by 2050 and the 2022 Results

Kao is continuing its efforts to develop technologies using CO2 as a raw material and implement emissions-reduction measures by 2030.

The Kao Group adopted the Kao Group Mid-term Plan 2025 (K25) in 2021, promoting the vision of "protecting future lives" and "sustainability as the only path." The Kao Group will continue to integrate its ESG strategy into its management practices, develop its business, provide better products and services for consumers and society, and work toward its purpose, "to realize a Kirei world in which all life lives in harmony."