Environment : Mid-term to Long-term Environmental Vision

PGI was established with the following thoughts to stop global warming. Addressing the scale of both of the Panasonic Group's 'responsibility' that is to reduce emissions from our business activities and 'opportunity' that is to contribute to avoiding emissions for society, by accumulating each of our diligent efforts (Act), we aim to achieve carbon neutrality (CN) through reducing CO₂ emissions from our business activities and from society and working in concert with society. With the aim of creating a carbon neutral society by 2050, we have developed a strategy for each of our business fields backcasted from the social reforms to be implemented by 2030. In April 2022, with a classification of PGI into ❶ OWN IMPACT, signifying fulfillment of own responsibilities, ❷ CONTRIBUTION IMPACT, referring to opportunities to contribute, and ❸ FUTURE IMPACT, along with INFLUENCE (+) that means the positive ripple effects on our customers and society, we announced our plan to create an impact by 2050 from our emissions reductions of more than 300 million tons*² in total for ❶, ❷ and ❸: that is approx. 1% of the global CO₂ emissions of 31.7 billion tons*¹ today. This was followed by our milestone announcement in July 2022, 'to achieve net zero emissions for all of our operating companies (Scope 1 and 2 in ❶)' and 'to create avoided CO₂ emissions of approx. 100 million tons (initiatives in ❷), together with establishment of "the GREEN IMPACT PLAN 2024", our action plan for 2022-2024.

*1 2020 energy-derived CO₂ emissions (Source: IEA)
*2 The emissions factor for the size of our contribution to reducing CO₂ is based on the 2020 emissions level.

❶ OWN IMPACT
We plan to achieve net zero emissions from all of our value chain (110 million tons*³), as well as a decarbonization effect on society*⁴. Net zero will be achieved for total emissions from our business activities (Scope 1, 2, and 3), including from our factories (Scopes 1 and 2) by fiscal 2031, for emissions in parts and materials production (Scope 3, Category 1), and for emissions in product use (Scope 3, Category 11). Efficient reduction of emissions can become the driving force behind our competitiveness.

*3 Fiscal 2021 actual results
*4 CO₂ emissions factor for electricity can be turned positive through advances in decarbonization at various electric power suppliers.

❷ CONTRIBUTION IMPACT
In our present business fields, we plan to contribute 100 million tons or more in avoided emissions from society and our customers. We plan to visualize avoided emissions by each product and service, for example, by promoting wider use of environmentally friendly vehicles through improvements in the performance and cost of automotive batteries, by replacing fossil fuels in towns and at homes with heat pump water heaters that use electricity, and by providing optimized solutions for inventory and transport to business flow of customers from material procurement to market supply. This visualization of emissions will be employed as a benchmark shared with society at large. Additionally, we plan to make investments in fields where contributions can be made and to boost our competitiveness, in order to grow our business and increase our contribution.

❸ FUTURE IMPACT
We plan to achieve avoided emissions of 100 million tons or more by creating new technologies and business fields.
+ INFLUENCE
Through communications related to PGI initiatives, we plan to have positive ripple effects on reforms in the energy supply and demand for the society as a whole and decarbonization through changes of demands and behaviors of customers, other business operators, as well as governments and investors. Although the direct impact on reduction cannot be calculated at present, we will move forward in this direction, being convinced that this is part of our mission to build a carbon neutral society as quickly as possible.

The Panasonic GREEN IMPACT is the long-term vision of the Panasonic Group, reflecting our sincere determination to address global environmental issues and contribute to solving them through the impact of our business actions.
Acknowledging the contribution of resource efficiency to decarbonization as well as a necessity for decreasing resource consumption due to the earth's limited natural resources, we establish this Panasonic Group-wide Circular Economy Policy as a contribution to achieving a sustainable society.

Circular Economy describes an economic system aiming for the most efficient use of material resources along the product lifecycle. Within the frame of this policy, Panasonic Group Companies define their dedicated approaches, targets, and individual action plans based on the following circularity principles:

1. Maximize the product lifetime and maintain the material value with a focus on circular business models and product design, extended servicing, as well as through further enhancing recycling activities.
2. Minimize the use of materials and extend the usage of recycled and renewable materials.
3. Take a joint approach with customers and partners for establishing circularity-oriented business operations, information sharing, and product usage options.

By establishing this circular economy policy, we will promote the transition of our business from linear to circular as part of our green transformation (GX) activities inside and outside Panasonic.

As milestones in reaching the 2050 targets set in "the Panasonic GREEN IMPACT", our long-term environmental vision, we set out the fiscal 2031 target linked to our groupwide business strategy, and formulated "the GREEN IMPACT PLAN 2024 (GIP 2024)", the three-year environmental action plan from fiscal 2023 to fiscal 2025, for which we are working on. Under GIP 2024, we have set out the fiscal 2025 targets for OWN IMPACT: CO₂ emissions reduction across our entire value chain (VC) (Scopes 1, 2 and 3), CONTRIBUTION IMPACT: contribution to avoided CO₂ emissions in society and the resource/circular economy (CE) as our materiality issues.

In OWN IMPACT, we plan to cut down CO₂ emissions from our entire VC of 110 million tons in fiscal 2021 to 16.34 million tons in fiscal 2025 and to 31.45 million tons in fiscal 2031 respectively with our business growth. In our plan to achieve net zero CO₂ emissions in our factories ('Zero- CO₂ factories') for all of our operating companies by fiscal 2031 under the drive to achieve net zero emissions from our business activities (Scopes 1 and 2), we are planning to achieve net zero CO₂ emissions at 37 factories by fiscal 2025.

In CONTRIBUTION IMPACT, we plan to achieve avoided emissions of 93 million tons* in fiscal 2031 and 38.3 million tons in fiscal 2025*. It must be noted that international standardization of the method to calculate 'the avoided CO₂ emissions' for which the Panasonic group is involved, is underway. If the calculation method to be standardized is different from the method our Group has adopted, we plan to explain the difference and at the same time revise our targets accordingly to achieve them.

There are three areas of resources/CE activities. One is maintaining the global waste recycling rate consistently at 99% or more, aiming at reaching zero emissions for factory wastes. The second is the amount of recycled resin used that we would double the quantity in three years to 90,000 tons over the result of the preceding medium-term plan (GP2021; 43,300 tons from fiscal 2020 to fiscal 2022). The third is the CE business model aimed at effective utilization of resources and maximization of customer that will be rolled out in a total of more than 13 businesses by fiscal 2025.

Additionally, we plan to continue working on the issues of 'biodiversity', 'water', 'chemical substances', 'local communities', and 'compliance', paying attention to the scale of social issues and empathy with our customers and society and corresponding to our business fields and regional characteristics and needs.

* Calculated with emissions factor at the time of the PGI establishment (IEA 2021)

CO₂ emissions for our entire value chain (VC) increased to 129.21 million tons (negative in OWN IMPACT) with increase of 21.70 million tons from 107.51 million tons in fiscal 2021.For the Scopes 1 and 2, there had been progress in both energy conservation and energy recycling, with 31 Zero-CO₂ factories and CO₂ reduction of 0.36 million tons. For the Scope 3, the reduction volume increased for product use (increase of 9.1 million tons) and other categories, thanks to expansion in the scope of business fields. On the other hand, avoided emissions for our customers and society increased to 37.23 million tons, because of, in part, progress of new visualization of CO₂ emissions. In the area of resources/CE, the waste recycling rate was maintained at 99.1% globally, with recycled resin use at 12,400 tons. As four new CE business models were started up, total 10 CE business models are now in operations.

GREEN IMPACT PLAN 2024 (Fiscal 2025, 2031 targets and Fiscal 2023 actual results)

CO₂ emissions (upper part of the figure)
The CO₂ emissions in product use (Scope 3, Category 11) that accounts for approximately 80% of total value chain emissions, decreased from 85.93 million tons for 33 products in fiscal 2021 to 72.86 million tons (reduction of 13.07 million tons) in fiscal 2023, thanks to the improved energy efficiency of our products, increase and decrease in sales, refinement of the calculation method, and the emissions factor turning positive. On the other hand, to expand the scope of our responsibilities and contributions of the Panasonic group, we newly visualized 13.14 million tons in the CO₂ emissions from 17 more businesses. Regarding Refrigerant related equipment of HVAC Company and Cold Chain Solutions Company aiming to reduce CFC emissions of their product use by wider use of refrigerants with low environmental impact (CO₂ refrigerant/propane) and wider-scale recovery of refrigerants disposed of by customers, we have added estimated refrigerant-related emissions after their visualization (total of 15.81 million tons). Together with an increase in procurement amount (increase of 5 million tons), the CO₂ emissions of 107.51 million tons in fiscal 2021 rose to 129.21 million tons in 2023, i.e. an increase of 21.70 million tons (negative in OWN IMPACT). However, if the new emissions boundary for fiscal 2023 is applied to the fiscal 2021, the volume indicates an improvement of 9.39 million tons from the point of the new emissions boundary.
We will continue to actively work to improve accuracy by reviewing the boundary and method of calculation for Scope 3.

Avoided CO₂ emissions (lower part of the figure)
For avoided emissions to society and customers, the number of visualization of the subject business has increased from 28 businesses in fiscal 2021 to 49 in fiscal 2023. Total reached 37.23 million tons is approaching the fiscal 2025 target of 38.3 million tons. Contributions have hugely increased from 26 businesses that have been visualized up to now (28 as of fiscal 2021). At the same time, new 23 more businesses have been visualized (total 2.61 million tons) and their PDCA cycle based activities have begun.

The Panasonic GREEN IMPACT(PGI) serves as a benchmark for achieving carbon neutrality through the accumulation of each diligent effort (ACT) together with society, by addressing both our responsibility and opportunity in the urgent need to stop global warming. Since 'CO₂ emissions' and 'avoided CO₂ emissions' differ in its concept and objectives, our responsibility (CO₂ emissions) cannot be canceled out by contribution to customers (avoided CO₂ emissions). We believe that firstly we should understand their relationship is inextricable as they linked to each other and, then, should accelerate respective initiatives. In particular, as for 'the avoided CO₂ emissions', the flexibility of conditions for its calculation is high, and it has not been internationally standardized as of now. Although there are so many practical issues that need to be addressed before 'the avoided CO₂ emissions' can serve as a social benchmark, we plan to report on the progress of the PGI as a whole, employing 'the avoided CO₂ emissions' as an indicator to show the acceleration in reform and growth, by enhancing our competitiveness in electrification, energy conservation, energy conversion, resources recycling, etc., and contributing to the early achievement of the decarbonization scenarios.

GREEN IMPACT PLAN2024 (GIP2024) Points of change in fiscal 2023

The CONTRIBUTION/FUTURE IMPACT of Panasonic GREEN IMPACT, commonly referred to as the avoided emissions, is an indicator of the value of the amount of CO₂ emissions contributed to the reduction of CO₂ emissions by customers and society by introducing our group products and services, compared to the amount not introduced (baseline). In fiscal 2023, CONTRIBUTION IMPACT totaled 37.23 million tons in 49 businesses covering products and services sold in the same year. Most of this is in the living business, which includes air conditioners and lightings, and the energy business, which includes EV rechargeable batteries, accounting for about 50% of Group sales. Our group’s main business is to provide electrified products and services (electrical and electronic equipment) by converting to electric appliances that are more efficient in energy use than those that use fossil fuels, we are able to reduce CO₂ emissions. The widespread use of electric appliances will increase demand for electricity, but by continuously increasing the efficiency of energy use in appliances and spaces, and by controlling and optimizing demand through energy storage and energy management, we will reduce the load on grid power in each region and promote renewable energy.

On the other hand, although there is no internationally uniform standard for the avoided emissions (as of August 2023), our company has participated in WBCSD*¹, IEC*¹, and the GX League*¹, and has worked with like-minded government departments and companies to promote dialogue on the need for the avoided emissions. In March 2023, the WBCSD and the GX League released guidance and guidelines on the avoided emissions*², and we are working on a calculation based on these guidelines in conjunction with discussions at the IEC*³, which aims to achieve international standardization. The baseline (comparison target) is the period of use (durable life, etc.) of our group products and services compared to the market average condition expected for each business, and the annual electricity consumption in terms of design and calculated rationally under conditions judged to be objectively reasonable after discussions within the Panasonic Group. The basic structure of the calculation formula is as follows: activity volume (sales volume, etc.) × annual reduction per activity volume (difference in energy consumption compared to baseline, etc.) × duration (lifespan, etc.) × CO₂ emission factor. This calculation method and the data on which it is based have been verified by a third party, and this is our group’s first disclosure in this report.

The concept and purpose of use of these two indicators are very different. The emissions cannot be offset by “avoided emissions (reduction contribution to customers)”. The emissions reduction is the company’s responsibility. Our mid-term to long-term reduction targets are certified as SBTs 1.5 degree targets*⁴ in May 2023. Panasonic group aims to realize a decarbonized society early by accelerating the PDCA cycle of both responsibility and contribution.

*1 World Business Council for Sustainable Development (WBCSD), International Electrotechnical Commission (IEC), GX League is a forum for cooperation between a group of companies, the government and academic institutions in order to meet greenhouse gas reduction targets and increase industrial competitiveness by using Japan’s goal of carbon neutrality by 2050 as an opportunity for economic growth.
*2 “Avoided Emissions Guidance” by WBCSD, “Basic Guidelines for Disclosure and Evaluation of Opportunities for Climate Change” by GX League
*3 IEC63372 (“Avoided CO₂ emissions” international standard to be issued in 2024.)
*4 Companies play their part in combating climate change by setting GHG emissions reduction targets that are aligned with reduction pathways for limiting global temperature rise to 1.5℃ or well-below 2℃ compared to pre-industrial temperatures. These targets are termed science-based targets (SBTs).

For further examples of our avoided emissions products that contribute to CO₂ reduction for consumers and society, see the following website.

*1 A2W: Air to Water

Product life stages subject to avoided CO₂ emissions

*4 CFP (Carbon Footprint of Products): CO₂ emissions converted from GHG emissions throughout the entire product life cycle - from raw material procurement to disposal and recycling of a product and service (per one unit).

Product life stages subject to avoided CO2 emissions

*2 CFP (Carbon Footprint of Products): CO₂ emissions converted from GHG emissions throughout the entire product life cycle - from raw material procurement to disposal and recycling of a product and service (per one unit).

Product life stages subject to avoided CO₂ emissions

*1 CFP (Carbon Footprint of Products): CO₂ emissions converted from GHG emissions throughout the entire product life cycle - from raw material procurement to disposal and recycling of a product and service (per one unit).

Product life stages subject to avoided CO₂ emissions

*1 CFP (Carbon Footprint of Products): CO₂ emissions converted from GHG emissions throughout the entire product life cycle - from raw material procurement to disposal and recycling of a product and service (per one unit).

Product life stages subject to avoided CO₂ emissions

*2 CFP (Carbon Footprint of Products): CO₂ emissions converted from GHG emissions throughout the entire product life cycle - from raw material procurement to disposal and recycling of a product and service (per one unit).

Product life stages subject to avoided CO₂ emissions

*1 CFP (Carbon Footprint of Products): CO₂ emissions converted from GHG emissions throughout the entire product life cycle - from raw material procurement to disposal and recycling of a product and service (per one unit).

Under the GHG Protocol, it is possible to calculate CO₂ emissions from our business activities; however, it does not take into account the contribution to society through our business (opportunities, i.e. business chance) as of now. On the other hand, although there is a concept of avoided emissions, as of now, the avoided emissions is not well recognized by society and no uniformed standard for the avoided emissions has been established.
Therefore, it is a must to prepare an environment where the corporation's contribution to decarbonization is appropriately evaluated to further encourage corporate efforts (technological development and innovation) and thereby accelerate such activities to achieve carbon neutrality.

Our environmental vision, Panasonic GREEN IMPACT (PGI), sets out the CO₂ emissions reduction targets not only for our company but also for society as a whole. It is important for companies and financial institutions who share the same goals to work together to spread significance of the avoided emissions as 'a standard measurement' to evaluate the corporation's contribution to decarbonization efforts and increase recognition of the avoided emissions. Therefore, we are currently implementing the following activities regarding the avoided emissions towards its global standardization, increase of its recognition and making the avoided emissions well known.

In March 2023, activities of standardization of a new IEC standard started with Japan’s proposal. The activities includes calculation of the avoided emissions from new technologies, such as AI, IoT, and a digital twin; providing requirements for calculation methods; and establishment of requirements for communications and information disclosure.
The members have been working on the finalized standard to be published in 2024 as “IEC63372: Quantification and communication of GHG emissions and emission reductions/ avoided emissions from electric and electronic products, services and systems - Principles, methodologies, and guidance”. The Panasonic Group members has been involved in the above activities since their initial stage.

WBCSD is a global organization with members of some 200 forward thinking companies who aim at sustainable development; the members are collaborating each other to contribute to transformation to sustainable society. Endorsing the principles of WBCSD, Panasonic Holdings Corporation (PHD) became a member of WBCSD in 2022 to accelerate the Panasonic Group's PGI activities. We participated in creating ‘the Guidance on Avoided Emissions' which was published in March 2023. Now, we are working to revise the guidance.

Six leading companies in the GX League, including PHD, along with 73 league members, participated in the GX Business Working Group (hereafter, GXBWG) for 'rulemaking to create markets' that is one of activities of GX league. GXBWG announced 'the Guidance on Avoided Emissions' in March 2023 to establish an appropriate system to evaluate CO₂ emissions and the like by the products and services Japan's companies provide to markets towards achieving global carbon neutrality. In 2023, GX League published 'the Guidance on Avoided Emissions'.

* GX stands for 'Green Transformation'. In February 2022, the Industrial Science and Technology Policy and Environment Bureau of the Ministry of Economy, Trade and Industry (METI) announced the GX League Basic Concept. GX League was launched as an apparatus where the company groups who are proactively working for GX with players in industry, government, academia and financial institutions who challenge towards GX as a whole to discuss transformation of a whole society, economic and environmental system and implement activities to create new markets.

In the Global Green Transformation Conference 2022 (GGX 2022) held by Japan's METI in October 2022, we advocated the significance of the avoided emissions to appropriately evaluate companies’ contribution to decarbonization and increase its global recognition.

'The annual Sustainable Bond Conference 2022' was held in November 2022, jointly hosted by the International Capital Market Association (ICMA) and the Japan Securities Dealers Association (JSDA). At this conference, based on the management policy to solve social issues through business activities, the Panasonic Group announced it would further increase its avoided emissions through the business, considering finding solutions for global environmental issues as urgent matters with the highest priority. Taking batteries for electric vehicles as an example, we emphasized the significance of being valued for increase of avoided emissions because of the spread of eco-conscious vehicles (opportunity), not only from the viewpoint of controlling of increasing CO₂ emissions that would increase along with increase of production volume (=risks).

In November 2022, in a seminar at COP 27 with a theme of the avoided emission, the Panasonic Group gave presentation on the background and purpose of PGI, as well as the significance of the avoided emissions and related issues. With the other panelists, discussions were made on how to establish a standardized measurement method for the avoided emissions not to be considered 'Green Wash' i.e. a company superficially presents its environmentally responsible public image, while securing transparency and reliability Then, the discussion went on how companies would be evaluated in an opportunity for companies evaluation.

In the CES 2023 press conference held in January 2023, we explained that we were working on standardization of calculation methods of the avoided emissions through our participation in WBCSD and IEC, and called for joining to support the standardization.