Climate Change

Initiatives to address climate change are a management priority for Kioxia Group as we seek to help achieve a decarbonized society. We refer to these priority areas as “sustainability materiality.” We aim to reduce greenhouse gas emissions and energy consumption across our operations—both in terms of our business activities and product lifecycles—throughout our value chain.

Aiming to Achieve Net-zero Greenhouse Gas Emissions by 2050

In April 2023, Kioxia Group announced that by FY2050, the company aims to achieve net-zero Scope 1 greenhouse gas emissions (direct emissions from our business sites) and Scope 2 emissions (indirect emissions resulting from our use of purchased energy) across our global operations.

We have additionally set a target of procuring 100% of our energy from renewable sources by FY2040. Since January 2023, we have installed three solar power generation systems at our Kitakami and Yokkaichi plants, the largest of their kind at any semiconductor plant in Japan,1 and the third generation system commenced its operation in July 2024. While we continue to expand the use of these systems, we are also moving forward with the procurement of non-fossil certificates2 to boost our use of renewable energy.

Regarding direct emissions from our manufacturing sites, since 2011 we have installed abatement equipment in 100% of our targeted facilities, aiming to eliminate during our manufacturing processes the emission of PFCs3 with high global warming potential.

In addition to these energy conservation initiatives, we will continue implementing measures to combat climate change in the course of our business activities. 

1 Based on our own research (as of November 2023)
2 Certificates that allow the trading of the environmental value of renewable power sources that do not emit CO2 during generation.
3 CFC alternatives with high global warming potential used in semiconductor manufacturing. Those used by the Kioxia Group include CF4, C4F8, CHF3, SF6, NF3, CH2F2, CH3F, CH4, and N2O.

Solar power generation system at Kioxia Iwate Corporation’s Plant (Fab 1)

Solar power generation system at Kioxia Corporation’s Yokkaichi Plant (Fab 5)

Disclosures Aligned to TCFD Recommendations

In June 2021, Kioxia Group announced our endorsement of the recommendations published by the Task Force on Climate-Related Financial Disclosures (TCFD).4 We believe that accurately ascertaining the climate-related impact of our business, disclosing such information to stakeholders, and deepening mutual understanding are indispensable for achieving sustainable corporate growth, and we proactively disclose that information in accordance with the TCFD recommendations.

4 A task force established by the Financial Stability Board which devises methods of disclosing climate-related financial information; an initiative to promote the disclosure of information related to climate-related risks and opportunities.

Governance and Risk Management

Kioxia Group undertakes various activities aimed at mitigating climate change under its sustainability management structure.

At Sustainability Strategy Meetings chaired by the President and CEO, executive officers discuss our strategies and policies and check the level of achievement, while consulting with the Board of Directors on key issues. The Sustainability Committee, chaired by the Executive Officer in Charge of Sustainability, discusses and formulates key themes, including climate change, and sets key performance indicators (KPIs) based on the strategies and policies formulated at the Sustainability Strategy Meetings.

We have also set up Environmental Taskforce under this conference body to tackle important sustainability issues across the organization; the task force reports on their areas of focus and progress to the Sustainability Committee. We are reviewing the impact of climate change by referencing the following items, based on the recommendations of the TCFD: scenario analysis, analysis of climate-related risks and opportunities, and strategies, metrics and targets.

For more information on how we promote sustainability, please refer to the below website.

Strategy

Scenario Analysis

Kioxia Group analyzes the impact of climate change on our operations, considering its effects on our stakeholders, business activities, and our overall value chain. In addition to ongoing assessment using two scenarios stipulated by the International Energy Agency (IEA) and other organizations—the 2℃ Scenario and 4℃ Scenario5—in FY2023 we also began to consider the use of the IEA’s 1.5℃ Scenario. Under this scenario, we believe government action, regulatory strengthening and the preferences of customers and other stakeholders will have a significant impact. For example, we assume that there will be an increase in the costs associated with the implementation of measures to reduce greenhouse gas emissions at manufacturing sites, and higher research and development costs arising from the need to develop more energy-efficient products with increased capacity. Under the 4℃ Scenario, we project the emergence of physical risks to our company bases.

5 These are terms commonly applied to climate-related scenarios depicted by the IEA and other organizations. Each scenario includes specifications of the economic measures needed to suppress rising temperatures and the envisaged environmental damage in the event such increases in temperature occur.

Risks and Opportunities

Kioxia Group assesses the risks and opportunities in both the short and medium-to-long term, based on scenario analysis. The potential risks and opportunities envisaged as of 2030 are outlined in the table below.

We recognize the transition risks posed by the migration to a low-carbon economy, such as increased power supply costs resulting from the introduction of a carbon tax, and the cost of installing additional equipment to remove PFCs in line with increases in our manufacturing output. In addition, we recognize the potential for physical risks such as an increase in clean room air-conditioning costs resulting from a rise in outdoor temperatures.

In terms of potential opportunities arising from the transition to low-carbon economies, we envisage expanding business opportunities through the manufacture of more efficient products that consume less electricity, and by reducing our own power consumption during manufacturing through the implementation of energy conservation measures.

To clarify the potential effects of climate-related risks and opportunities on our business activities, our Environment Task Force, working under the Sustainability Committee, conducts detailed calculations of their financial impact. Given the expansion of our business and the demand from our stakeholders for us to respond to climate change, we believe that the financial impact of both risks and opportunities in our research and development, our transactions with customers, and the cost of our electricity will be significant, regardless of the scenario. However, we believe that the cost of installing PFCs abatement equipment and the associated renewable energy and energy-saving equipment will have a relatively small financial impact.

We will continue to address any risks related to climate change, seeing these more as opportunities.

* Table can be scrolled horizontally.

External events   Risks   Opportunities
Type Potential Financial Impact Type Potential Financial Impact
Introduction of carbon pricing (e.g., incorporating carbon taxes)   (Transition Risks)
Policy and Legal
  • Increased cost of power.
  • Increased cost of installing manufacturing equipment.
  • Increased construction costs.
 
Conversion to renewable energy (Transition Risks)
Technology
  • Increased cost of deploying renewable energy supplies.
(Transition Opportunities)
Energy Sources
  • Enhanced reputation resulting from switch to the use of renewable energy.
(Transition Opportunities)
Resource Efficiency
  • Reduced electricity cost due to deployment of energy-efficient manufacturing equipment.
  • Improved productivity resulting from enhanced processes.
Stricter promotion of energy saving measures during manufacturing (Transition Risks)
Technology
  • Increased cost of installing energy-efficient manufacturing equipment.
Improving environmental awareness of stakeholders (Transition Risks)
Markets
  • Increased R&D costs of products with highly efficient energy consumption.
(Transition Opportunities)
Products
  • Expanded business opportunities resulting from the development of products with highly efficient energy consumption.
(Transition Risks)
Reputation
  • Boycotts by local residents or consumers due to insufficient communication about our initiatives to protect the environment.
  • Impact on fundraising due to inadequate communication with stakeholders, including NGOs and financial institutions.
(Transition Opportunities)
Markets
  • Increased customer trust due to strengthened BCM6 leading to stronger branding power and higher corporate value.
Transition to manufacture of low carbon products

(Transition Risks)

Reputation

  • Impact on our business due to demands from customers to reduce GHG emissions and make greater use of renewable energy sources.
  • Increase in carbon credit procurement costs aimed at achieving net-zero carbon emissions.

(Transition Opportunities)

Markets

  • Positive impact on our business of responding to demands to reduce GHG emissions and making greater use of renewable energy sources.
  • Increased corporate value and fundraising capabilities resulting from strengthened ESG activities.
(Transition Risks) Technology
  • Increased cost of introducing PFCs abatement equipment in the new building.
Upgrading electricity infrastructure

(Transition Risks)

Technology

  • Unstable power supply due to expansion of renewable energy usage.
(Transition Opportunities)
Energy Sources
  • Stabilization of power supplies and reduced electricity costs through early securing of renewable energy sources.

Extreme weather conditions

(Physical Risks)

Acute

  • Extreme weather conditions, resulting in suspension of operations, etc.
  • Supply chain disruption, resulting in suspension of operations, etc.
Water shortages

(Physical Risks)

Chronic

  • Operations halted due to decreased water source capacity or water shortages, etc.
Rising temperatures

(Physical Risks)

Chronic

  • Increased air-conditioning costs.
Toward Minimizing Risks and Maximizing Opportunities
  • Introduction of renewable energy
  • Promotion of energy-saving activities
  • Efficient use of water resources
  • Development of high-capacity products with highly efficient energy consumption
  • Reinforcing BCM and supplier engagement
  • Introduction of carbon credits
  • Promoting biodiversity

Business Continuity Management

Metrics and Targets

To help achieve net-zero greenhouse gas emissions by FY2050, Kioxia Group has established KPIs related to our energy consumption, our environmental impact, and the use of our products. We review the degree of achievement of these at Environmental Management Review meetings held every six months.

For example, with regard to Scope 2-related energy consumption, we are promoting energy-saving activities with the stated goal of reducing the volume of emissions by 1% each year compared to the previous fiscal year. For details, please refer to “Greenhouse Gas Emissions Across our Entire Value Chain” and “Our Efforts to Adapt to Climate Change” below.

Moreover, we have set the long-term goal of using 100% renewable energy by FY2040. Through the creation of an energy portfolio that incorporates energy conservation activities and the use of renewable energy certificates, we will work to secure the optimal and stable procurement of renewable energy in line with the expansion of our business. We will also work to install renewable power generation systems and carbon-neural city gas supplies in our factories.

Greenhouse Gas Emissions Across Entire Value Chain

Scope 1, 2 and 3 CO2-equivalent greenhouse gas emissions from Kioxia Group’s business operations in FY2023 are shown in the chart below. The figures in the table below cover emissions from Kioxia Corporation, including the company’s Head Office, Yokohama Technology Campus and Yokkaichi Plant, Kioxia Iwate Corporation, and the Solid State Storage Technology Corporation (SSSTC).

(Dash cells (–) in the below list indicate “not applicable”)

Scope 1 (Direct emissions)

CO₂ Emissions in FY2023 (t-CO2)

Category Outlines

410,400

Direct emissions from in-house fuel use and our business processes

Scope 2 (Indirect emissions)

CO₂ Emissions in FY2023(t-CO2)

Category Outlines

1,870,400

Indirect emissions from the production of electricity, heat and steam purchased by the company

Scope 3 (Other indirect emissions not covered by Scope 1 and 2)

* Table can be scrolled horizontally.

Category

CO₂ Emissions in FY2023
( t-CO2)

Category Outlines

1. Purchased goods and services

4,596,026

Emissions resulting from activities up to the processing of raw materials and the manufacture of parts, packaging, etc.

2. Capital goods

617,730

Emissions resulting from the construction and manufacture of our own capital goods

3. Fuel- and energy-related activities not included in Scope 1 or 2

340,479

Upstream emissions of purchased fuels/electricity, etc.

4. Upstream transport and delivery

6,343

Emissions arising from the transportation of products and waste in Japan (excluding overseas transportation and suppliers' transportation)

5. Waste generated in operations

26,472

Emissions from the treatment of waste

6. Business travel

1,414

Emissions arising from employees’ business travel

7. Employee commuting

12,209

Emissions arising from employees’ commuting

8. Leased assets (upstream)

9. Downstream transportation and delivery

10. Processing of sold products

11. Use of sold products

460,014

Emissions arising from the use of sold products

12. End-of-life treatment of sold products

13. Downstream leased assets

14. Franchises

15. Investments

Scope 3 (Total)

6,060,687

Breakdown of Scope 1 direct emissions (FY2023)

Breakdown of Scope 1 direct emissions (FY2023): CO2 17%, CH4 0%, N2O 5%, HFCs 3%, PFCs 60%, SF6 2%, NF3 13%

Achievements in the areas of energy consumption and greenhouse gas emissions

The graph below shows Kioxia Group’s energy consumption and Scope 1 and 2 greenhouse gas emissions. In order to achieve our goal of 100% renewable energy usage by FY2040 and net zero greenhouse gas emissions by FY2050, we are introducing solar power generation systems and progressing with the purchase of renewable energy certificates in respect of some of the electricity we use, among other initiatives.

Since June 2024, we have been participating in the Catalyze program7 as a supplier, helping the industry’s transition to renewable energy.

A collaboration between sponsoring companies and Schneider Electric, with the aim of accelerating the transition to the use of renewable energy by involving suppliers involved in the semiconductor industry. Suppliers providing products to sponsor companies can take advantage of benefits such as insights and information useful for the introduction of renewable energy by participating in this program. As of August 2024, the companies sponsoring the program include Applied Materials, ASM, Cisco, Edwards, Google, HP, and Intel. https://hub.zeigo.com/catalyze別ウィンドウ

Volume of Energy Used (MWh)

Volume of Energy Used (MWh)

Notes:
(1) The percentage of our total energy consumption accounted for by renewable energy in FY2023 was 0.3%.
(2) Subjects are Kioxia Corporation, Kioxia Iwate Corporation and SSSTC.

Scope 1 + Scope 2 Emissions (t-CO2)

Scope 1 + Scope 2 Emissions (t-CO₂)

Note: Subjects are Kioxia Corporation, Kioxia Iwate Corporation and SSSTC.

Efforts to Adapt to Climate Change

Kioxia Group is progressing efforts to adapt to climate change throughout our value chain, taking into account the identified risks, opportunities and their impact.

Product Development

In the data storage market, the need for low-power consumption-type products is growing extremely rapidly, and we expect to expand sales opportunities by further developing these products. We are working on the research and development of more energy-efficient processes and increased capacity through the development of advanced integrating technology. Specifically, we have set the challenging target of reducing the energy consumption of our memory and SSD products by 50% per unit of 1GB data from 2017 levels by FY2025.

To gauge the environmental impact of our products during manufacture and use, Kioxia Group has started implementing the Life Cycle Assessment method8 of certain products. In FY2023, we conducted third-party verification for six products.

A method for quantitatively assessing the environmental impact of a product or service throughout its life cycle (raw material extraction, manufacture, transportation, usage, and waste disposal or recycle) or at a specific stage in its life cycle.

Please see below for details.

Operation of Manufacturing Sites and Research Development Facilities

Kioxia Group has set the goal of achieving net-zero Scope 1 direct emissions and Scope 2 indirect emissions resulting from our use of purchased energy.

To help achieve the reduction of Scope 1 emissions, we have been proactive in the installation of abatement equipment to deal with PFCs – greenhouse gases with high global warming potential. Since FY2011, we have installed PFCs abatement equipment in 100% of the target facilities. We are striving to improve the efficiency of operations through the introduction of online monitoring via the Internet of Things (IoT) and to enhance the performance of abatement equipment in cooperation with our suppliers. The number of abatement equipment installations exceeded an average of 145 units per year from 2020 to 2023, and the cumulative abatement effect since FY2017 is 4.57 million t-CO2.

We have also started using carbon-neutral city gas.

The contribution of PFCs abatement equipment to Scope 1 direct emissions reductions since FY2017 (t-CO)

The contribution of PFCs abatement equipment to Scope 1 direct emissions levels from FY2017 (t-CO2)

Note: Subjects are Kioxia Corporation, Kioxia Iwate Corporation and SSSTC (SSSTC results are in respect of the period from FY2021 onward).

The Flagship Building, a new research development building at the Yokohama Technology Campus completed in 2023, is the first building in the Group that has acquired ZEB-Ready certification.9 The other newly constructed building, Shin-Koyasu Technology Front, features a clean room with an environmentally conscious design.

9 ZEB stands for net-Zero Energy Building. “ZEB-Ready” is one of the grades assigned by Japan’s Building Energy-efficiency Labeling System, certifying buildings that provide a comfortable indoor environment while reducing their primary energy consumption by 50% or more, excluding renewable energy.

Flagship Building at Yokohama Technology Campus

Shin-Koyasu Technology Front

We will continue to reduce the amount of Scope 2 indirect emissions resulting from our use of purchased energy by making more use of renewable energy sources.

In order to optimize the efficiency of our energy consumption, Kioxia Group’s manufacturing sites have the stated goal of reducing Scope 2 energy consumption by 1% compared to the previous year's total, in line with the directives contained in the Act on Rationalizing Energy Use and Shifting to Non-fossil Energy (hereinafter, “the Energy-Saving Act”) in Japan.

In FY2023 we achieved our goal of reducing energy use through various energy-saving activities, recording an actual reduction of 23,000 t-CO2 emissions per year against a target of at least 19,000 t-CO2. From FY2017 to FY2023 the result of our energy conservation programs was a cumulative reduction of approximately 150,000 t-CO2 emissions.

To promote energy conservation and efficiency at each facility, we endeavor to improve and incorporate new technologies. These include smart factories and waste heat utilization as well as improvements in manufacturing and testing processes and temperature management of auxiliary equipment. We have established processes whereby we periodically address priority areas and assess the progress of improvements.

We have also started visualizing CO2 levels across the whole company to improve the operational efficiency of manufacturing facilities and raise awareness of the need for energy conservation. At SSSTC, in 2023 we introduced a system that visualizes the sources and amounts of CO2 emissions within each business location. The CO2 emission data of Kioxia Corporation's Yokkaichi Plant is posted on the plant's intranet site.

Promoting Energy Conservation

At Kioxia Corporation’s Yokkaichi Plant and Kioxia Iwate Corporation, our energy saving promotion team is leading efforts to improve the energy efficiency of their business operations. We have also set up subcommittees for each target facility and manufacturing process, who select key items and check the progress of these in collaboration with other departments. Since 2019, the combined number of items and projects monitored at both plants has exceeded 1,500, resulting in a cumulative CO2 reduction of 120,000 t-CO2.

As an example of initiatives implemented in 2023, Kioxia Corporation's Yokkaichi Plant changed part of the cleanroom’s product transport system. Overhead Hoist Transporters (OHTs), which carry products in the cleanroom, traditionally require a continuous supply of power through power lines installed in ceiling tracks. However, the new battery-powered solution that was installed eliminates the need for a continuous power supply, except during charging, thereby reducing electricity consumption. In the area where this switch was made, CO2 emissions were reduced by around 15 t-CO2 annually.

Kioxia Iwate Corporation has also launched a new initiative for recovering waste heat from refrigeration units. The heat emitted during the operation of the refrigeration units is typically used to regulate the temperature of cooling water through heat exchange, but in winter, the external air temperature is low, and the cooling water temperature is kept relatively high. By forecasting outside air temperatures to calculate the required amount of heat, they were able to recover waste heat from the refrigeration units that could supply the necessary heat, while reducing electricity consumption by lowering the cooling water temperature in units not involved in heat recovery. In 2023, they reduced CO2 emissions by 562 t-CO2 .

Energy-saving measures for manufacturing equipment are also a key challenge. We are working with equipment suppliers to reduce power consumption, optimize equipment cooling, and shorten processing times.

Structured energy-saving activities have been carried out at SSSTC, with 10 key initiatives in 2023 reducing CO2 emissions by 350 t-CO2 .

Value Chains

As climate change continues in the form of global warming, damage caused by water-related natural disasters including typhoons and heavy rains is becoming more apparent every year. These events impact on the production of component manufacturers and on logistics, increasing the risk of disruption to our manufacturing processes and product supplies.

Kioxia Group has targeted all business units with the drafting of business continuity management (BCM) policies, and has established response protocols that take account of a variety of risks, including natural disasters.

Under our BCM policy, we strive to be fully conscious of the status of our materials and products even at times of no disruption, and ensure we have multiple suppliers. Furthermore, we are making efforts to ensure we are able to swiftly assess the situation in the event of an emergency, and to minimize any effects on the business at such times by means of a collaborative process designed to ensure the early recovery of services. Addressing climate change is also an important issue for our customers and suppliers, and we closely communicate with them on the related challenges and responses. We also participate in the CDP Supply Chain Program, collecting information regarding environmental impact from key suppliers.

We will continue to work with our partners across the entire value chain to expand the market for products that consider environmental impacts and help realize a decarbonized society.

Taking Part in External Initiatives Related to Climate Change

The Kioxia Group is helping to address climate change, gathering information and making recommendations to the government through participation in industry associations and other activities.

Following the announcement by Kioxia Holdings Corporation of its endorsement of the TCFD in 2021, we have been participating in the activities of the TCFD Consortium since 2022. In 2024, we also joined the Semiconductor Climate Consortium (SCC), established by the industry association Semiconductor Equipment and Materials International (SEMI). As a member of the semiconductor value chain, we are accelerating efforts to address climate change.

Kioxia Corporation is involved in the addressing of energy and global warming issues as a member of the Environmental Working Group of the Japan Electronics and Information Technology Industries Association (JEITA), a group representing the electronic device industry. As a supporting member of the Japan Climate Leaders’ Partnership (JCLP), a corporate group that aims to achieve a decarbonized society, we have collaborated in measures aimed at achieving the targeted 1.5℃ reduction stipulated in the Paris Agreement, as well as in discussions about proposals to be made to the government.