Responding to Climate Change

By continuing to truly focus upon babies, we want to make the world more baby-friendly.
At the same time, we aim to achieve sustainable growth as a company by reducing environmental impact and solving social issues surrounding babies and mothers in all countries and regions where we conduct business activities. We particularly recognize the urgency of climate change. Pigeon’s Seventh Medium-Term Business Plan identifies climate change as one of the most important management challenges and outlines measures to tackle it.

Report in line with the TCFD Recommendations

In December 2021, Pigeon publicly declared its support for the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD). Going forward, along with analysis of climate-related risks and opportunities, we will enrich our information disclosure from the perspectives of governance, strategy, and risk management. In 2021, we performed a qualitative analysis of climate-related risks and opportunities in relation to nursing bottles, nipples, and our skincare business, and the results are disclosed in the Pigeon Group TCFD Report 2022.

Governance and Risk Management for Climate-Related Risks and Opportunities

Among the climate-related challenges facing our company, some risks have a relatively high probability in the short to medium term and are directly connected to business continuity, such as operation interruptions due to flooding. Management of these risks are centered around the GHO Risk Management Committee.

Challenges that require a more long-term perspective that cuts across multiple businesses are addressed by the Sustainability Committee, which sets medium- and long-term Group targets related to environmental conservation, including climate change, and evaluates progress made toward them.

Both the GHO Risk Management Committee and the Sustainability Committee are chaired by the Director for GHO, and both committees report the results of their deliberations to the Board of Directors.

In our 7th Medium-Term Business Plan (2020–2022), we set the companywide target of reducing CO2 emissions (Scope 1 & 2) per unit of sales by 10% in 2022 compared to 2018. This indicator is one of the non-financial indicators linked to stock remuneration for directors (excluding independent outside directors).

Strategy

1. Climate Scenario Analysis

The Pigeon Group provides a range of products and services to customers in over 70 countries around the world. We began our analysis of risks and opportunities using climate scenarios with a focus on nursing bottle, nipple, and skincare manufacturing and sales in our Japan and China Businesses, which are our core businesses.

Two scenarios were used for analysis: one in which the world makes progress toward decarbonization in order to keep the increase in average global temperature to 1.5°C (the “1.5°C scenario”), and one in which carbon emissions are high and average global temperature increases by 4°C (the “4°C scenario”). The world of 2030 (2050, for physical impacts) under these two scenarios was hypothesized as follows:

1.5°C scenario world 4°C scenario world
  • Environmental awareness among consumers rises.
  • Regulations on greenhouse gas emissions and combustion and materials derived from fossil fuels are introduced and greatly strengthened.
  • Regulations on palm plantations are greatly strengthened.
  • Greater risk of natural disasters, including floods and droughts, relative to the present.
  • Environmental awareness among consumers do not rise as high as in the 1.5°C scenario.
  • Strong regulations toward decarbonization are not introduced.
  • Much greater risk of natural disasters, including floods and droughts.
  • Uncertainty about the future for babies may become a factor in decreasing birth rates.

2. Risks and Opportunities for Our Nursing Bottles, Nipples, and Skincare Business

2-1. Changes in the Consumer Market 

Nursing bottles and nipples, which are core products for Pigeon, will continue to be essential parenting products needed by babies regardless of the climate situation or policies. However, because great changes in the climate and environment are expected under the 4°C scenario—such as more common and severe natural disasters—we expect that uncertainty about the future for babies may become a factor in decreasing birth rates, which could affect sales of nursing bottles and nipples.

Under the 1.5°C scenario, consumers’ preference for ethical choices would be expected to grow stronger. This would increase the importance of product strategies focused on both making products with consideration for the environment across the entire value chain and promoting these efforts to consumers.

Under both the 1.5°C and 4°C scenarios, the climate would be expected to change and natural disasters to become more frequent. As a results, demand would be expected to rise for products that address heat, humidity, and dryness, and products that use less water than current products—or no water at all—during interruptions of water service due to drought or flood.

 

2-2. Policy and Regulatory Changes

Under the 1.5°C scenario, the introduction of strong decarbonization policies and regulations can be expected, and there is a risk that a carbon tax will be applied to our greenhouse gas emissions, or that these emissions will become subject to an emissions trading scheme.

Additionally, globally strengthened decarbonization policies can be expected to lead to price increases for electricity, transportation costs, raw materials containing components derived from oil palm, and plastics derived from fossil fuels. These will be factors in increasing manufacturing costs, development costs, and costs to invest in equipment, and so Pigeon will perform quantitative analysis of their financial impact in future.

 

2-3. Increased Incidence of Natural Disasters

Because both the 1.5°C scenario and the 4°C scenario involve average global temperatures rising even higher, they can be expected to result in higher incidence of extreme weather; more supply chain and distribution network disruption and operation stoppages due to drought, flood, and infectious disease; and repair costs when natural disasters do occur.

To maintain stable manufacturing, the Group has adopted policies involving temporarily switching production to our other manufacturing sites, buying each key raw material from at least two suppliers (dual sourcing), and other measures.

Because Pigeon uses water to formulate skincare products, clean equipment, and generate steam, we will also perform analysis and assessment of the risk of future water shortages at our skincare product manufacturing plants.

TCFD Report

For details about climate-related governance, strategy, risk management, metrics, and targets, see the Pigeon Group TCFD Report.

CO2 Emissions Reduction Targets and Performance

In our 7th Medium-Term Business Plan (2020–2022), we set the companywide target of reducing Scope 1 & 2 CO2 emissions per sales in FY2022 by 10% compared to FY2018, and have promoted activities to achieve the target.


Target for FY2022
Reduction of CO2 emission intensity
(Scope 1 & 2) 10% from 2018 base year.
Result in FY2021
11.7% reduction from 2018 base year
Target for FY2022
Reduction of CO2 emission intensity
(Scope 1 & 2)10%from 2018 base year.
Result in FY2021
11.7% reduction
from 2018 base year

Note: The values of intensity for FY2018, FY2019 and FY2020 have been restated as a result of recalculation of net sales according to the revised Accounting Standard for Revenue Recognition. 

Pigeon Group CO2 Emissions (Scope 1 & 2) 

Our CO2 emissions across the entire group in FY2021 were 2,855 tonnes for Scope 1 and 20,655 tonnes for Scope 2 (total: 23,510 tonnes). Scope 1&2 emissions decreased by 4,693 tonnes (16.6%) compared to FY2018.

Unit: tonnes of CO2

Business segment FY2018
(base year)
FY2019 FY2020 FY20201
CO2 Emission CO2 Emission Reduction
(vs. FY2018)
CO2 Emission Reduction
(vs. FY2018)
CO2 Emission Reduction
(vs. FY2018)
Group total 28,203 26,931 -1,272 24,973 -3,230 23,510 -4,693
   Japan Business 6,232 5,496 -737 5,265 -967 3,947 -2,285
   China Business 9,884 8,886 -998 8,923 -961 8,737 -1,147
   Singapore Business 11,305 11,306 1 10,442 -863 10,610 -695
   Lansinoh Business 782 1,243 461 343 -439 216 -566

Note: The CO2 emissions for FY2018, FY2019 and FY2020 have been restated due to a review of past data.

■Boundary of calculations

Pigeon Corporation and all of the consolidated subsidiaries in Japan and overseas.

■Calculation method

Scope 1 emissions: Calculations are based on energy-derived CO2 emission. For the Japan business unit, CO2 emission factors specified in Japan's Act on Promotion of Global Warming Measures are applied. For the overseas businesses, CO2 emission factors published by local governments are used where available, otherwise, the emission factors published by IPCC or specified in Japan's Act on Promotion of Global Warming Measures are used.

Scope 2 emissions: Where supplier-specific CO2 emission factors are available, those are applied. Otherwise, the average CO2 emission factors of the local country or electricity grid are applied. CO2 emission factors for electricity consumption corresponding to the amount of purchased Renewable Energy Certificates are set to zero.

Independent Verification on CO2 emissions

To enhance the credibility of CO2 emissions data, three manufacturing subsidiaries in Japan and four manufacturing subsidiaries overseas engaged third parties to provide verifications on Scope 1 and scope 2 CO2 emissions for FY2020. A total of scope 1 and scope 2 CO2 emissions for these seven subsidiaries was 14,684 tonnes of CO2 in FY2020, this account for 58.8% of 24,973 tonnes of CO2 for the Pigeon Group.

Seven companies that their emissions were independently verified 

Verified Organization Verification agency

Issue Date of

Verification Report

Pigeon Home Products Corporation
Pigeon Manufacturing Ibaraki Corporation
Pigeon Manufacturing Hyogo Corporation

Japan Quality Assurance Organization November 26, 2021
Pigeon Manufacturing (Shanghai) Co., Ltd. SGS-CSTC Standard Technical Services Co., Ltd. June 25, 2021
Thai Pigeon Company Limited Lloyd’s Register International (Thailand) Ltd. August 30, 2021
Pigeon Industries (Thailand) Company Limited Lloyd’s Register International (Thailand) Ltd. August 30, 2021
Pigeon India Pvt. Ltd. BSI India November 27, 2021

Scope 3 Greenhouse Gas Emissions for Japan Business

We calculated our Japan Business’s Scope 3 greenhouse gas emissions for FY2020 and arrived at a total of 132 thousand tonnes of CO2e for all categories*1 included in the calculation. The largest proportion of this was made up of Category 1 emissions (from purchased goods and services), which accounted for 106 thousand tonnes of CO2e. GHG emissions accompanying purchases of nonwoven fabrics and baby drinks made up a large portion of these emissions.

In 2022, we will calculate our Scope 3 greenhouse gas emissions, with our China Business and Singapore Business included in the scope for calculation.

*1 Of the 15 categories defined in the GHG Protocol, we calculate emissions in 10, excluding the 5 categories of Upstream Leased Assets, Downstream Leased Assets, Downstream Transportation and Distribution, Processing of Sold Products, and Investments.

GHG Emissions for Japan Business

  FY 2020
Scope 1 (Thousand tonnes of CO2) 1
Scope 2 (Thousand tonnes of CO2) 3
Scope 3 (Thousand tonnes of CO2e) 132
  Purchased Goods & Services  106
  Capital Goods  2
  Fuel-and energy related activities  1
  Upstream Transportation & Distribution  5
  Waste Generation in Operations  3
  Business Travel  0.2
  Employee Commuting  1
  Use of Sold Products  5
  End-of -Life Treatment of Sold Products  9
  Franchises 0.02
  FY 2020
Scope 1 (Thousand tonnes of CO2) 1
Scope 2 (Thousand tonnes of CO2) 3
Scope 3 (Thousand tonnes of CO2e) 132
  Purchased Goods & Services  106
  Capital Goods  2
  Fuel-and energy related activities  1
  Upstream Transportation & Distribution  5
  Waste Generation in Operations  3
  Business Travel  0.2
  Employee Commuting  1
  Use of Sold Products  5
  End-of -Life Treatment of Sold
  Products
9
  Franchises 0.02

■Boundary of calculations
Pigeon Corporation, Pigeon Home Products Corporation, Pigeon Manufacturing Hyogo Corporation, Pigeon Manufacturing Ibaraki Corporation, Pigeon Tahira Corporation, Pigeon Hearts Corporation, Pigeon Manaka Corporation

■Calculation methods for scope 3 emissions
GHG emissions are calculated using "Database of emissions unit values for calculating greenhouse emissions throughout the supply chain Ver.3.1 (July, 2021)", published by Japan's Ministry of the Environment and Ministry of Economy, Trade and Industry, hereafter, "Emission factors DB", as well as the "LCI database IDEA version 2.3" developed by the IDEA lab for Society and LCA of Research Institute of Science for Safety and Sustainability, National Institute of Advanced Industrial Science and Technology(AIST) .
Purchased Goods & Services: GHG emission is calculated for products sold in Japanese market by Pigeon Group as a general rule. GHG emissions from products purchased from other companies, and raw materials and other materials purchased to produce our own products are calculated. It excludes purchased products and materials for exports to overseas and any purchase of raw materials and other materials consumed to produce OEM products produced based on requests from other companies. For the products and materials those weight are identified, GHG emissions are calculated based on the weight of each product/material. However, for those items of which weight were not identified, purchased monetary amounts are used for calculations. In addition, purchased goods and services accounted as advertising expense, sales and promotion expense, research and development expense and manufacturing supplies expense, which are relatively large portions of sales and general administrative expenses, are included in the calculation.
Use of Sold Products: This category covers emissions from the use of Pigeon's electric appliances such as Electric Breast Pumps, Electric Milk Warmers, Electric Nose Cleaners, as well as emissions derived from energy consumed when Pigeon's nursing bottle users sterilize their nursing bottles by boiling or by using microwaves. The numbers of Pigeon's nursing bottle users, the numbers of each user who sterilie by boiling and by using microwave are based on our own estimations.
End-of-Life Treatment of Sold Products: Products those weight are identified are in the scope of the calculation. Emissions are caluclated by using an emission factor by waste type included in Table 9 of Emission Factors DB.
Franchises: This category covers childcare business.

Lansinoh Group's Long-term Targets for Reduction of Greenhouse Gas Emissions

The Pigeon Group recognizes that measures to counteract climate change must be implemented throughout the entire value chain. To take appropriate measures against Scope 3 emissions, we have set specific reduction targets for the Lansinoh Group.

These targets are consistent with keeping global warming to 1.5C above pre-industrial levels and are recognized by the Science Based Target Initiative (SBTi) as science-based targets in line with the Paris Agreement.

  • LANSINOH LABORATORIES INC. COMMITS REDUCE ABSOKUTE SCOPE 1&2 GREENHOUSE GAS(GHG) EMISSIONS 46% BY 2030 FROM A 2019 BASE YEAR. LANSINOH LABORATORIES INC. COMMITS REDUCE ABSOKUTE SCOPE 3 SCOPE 3 GHG EMISSION 69% PRE VALUE ADDED BY 2030 FROM A 2019 BASE YEAR.

Lansinoh Group's Greenhouse Gas Emissions (Scopes 1, 2 and 3)

  FY2019

FY2020

tonnes-CO2e Ratio tonnes-CO2e Ratio
Scope 1 Total 149 1% 100 0%
Scope 2 Total 1,153 6% 338 2%
Scope 3 Total 19,005 94% 21,816 98%
  Purchased Goods & Services 12,705 63% 14,647 66%
  Capital Goods 353 2% 342 2%
  Upstream Transportation Distribution 958 5% 1,256 6%
  Waste Generation in Operations 5 0% 6 0%
  Business Travel 577 3% 92

0%

  Employee Commuting 319 2% 211 1%
  Downstream Transporation & Distribution 2,244 11% 3,310 15%
  Use of Sold Products 101 0 108 0%
  End-of -Life Treatment of Sold Products 1,743 9% 1,843 8%
Scope 1, 2 & 3 Total 20,306 100% 22,255 100%

CO2 Reduction Initiatives

Use of Renewable Energy

The Pigeon Group advances the use of renewable energy as a means of reducing emissions of greenhouse gases. In 2021 renewable energy comprised 9.3% of total energy consumed by the Group, contributing to a 2,127 tonnes reduction in CO2 emissions.

On August 1, 2021, the Pigeon Group’s head office in Chuo Ward, Tokyo began purchasing renewable energy. The Group head office thus became the first Pigeon Group facility to achieve 100% use of renewable energy, reducing CO2 emissions by 63 tonnes per year.

The Group began introducing solar power generation facilities in May 2019 with projects in two Group companies located in China, Pigeon Industries (Changzhou) Co., Ltd. and Pigeon Manufacturing (Shanghai) Co., Ltd. Subsequently, solar power generation facilities were introduced at Pigeon India Pvt. Ltd. in October 2019, at PT Pigeon Indonesia in September 2020 and at Thai Pigeon Co., Ltd. in Thailand in January 2021.

In Japan, Pigeon Manufacturing Hyogo Corporation and Pigeon Manufacturing Ibaraki Corporation have purchased electricity from renewable sources since FY2020.

In addition, we have begun purchasing renewable energy electricity certificates starting in FY2020.

The Pigeon Group will continue to expand its adoption of renewable energy in Japan and overseas, and further advance our efforts for reduction of greenhouse gas emissions.

  • PIGEON INDUSTRIES (CHANGZHOU) CO., LTD.

  • PIGEON MANUFACTURING (SHANGHAI) CO., LTD

  • PIGEON INDIA PVT. LTD.

  • PT PIGEON INDONESIA

  • THAI PIGEON CO., LTD.

  FY2019 FY2020 FY2021
Amount of Usage
(MWh)
Ratio of Electricity Consumption of Pigeon Group (%) CO2 Reduction
(tonnes of CO2)
Amount of Usage
(MWh)
Ratio of Electricity Consumption of Pigeon Group (%) CO2 Reduction
(tonnes of CO2)
Amount of Usage
(MWh)
Ratio of Electricity Consumption of Pigeon Group (%) CO2 Reduction
(tonnes of CO2)
Electricity generated from renewable energy sources 880 2.2% 711 1,928 4.9% 1,233 3,649 9.3% 2,127

Of which, electricity generatd by own solar panels installed at our manufacturing sites

880 2.2% 711 1,159 2.9% 944 2,328 5.9% 1,617

PIGEON INDUSTRIES (CHANGZHOU) CO., LTD.

578 1.4% 465 774 2.0% 623 743 1.9% 588

PIGEON MANUFACTURING (SHANGHAI) CO., LTD.

255 0.6% 205 156 0.4% 126 295 0.8% 234

PIGEON INDIA PVT. LTD

47 0.1% 40 217 0.5% 184 263 0.7% 208

PT PIGEON INDONESIA

- - - 12 0.03% 10 198 0.5% 173

THAI PIGEON CO., LTD.

- - - - - - 829 2.1% 414

Of which, purchased electricty from renewable energy sources

- - - 769 1.9% 289 1,321 3.4% 510
Renewable Energy Certificates Purchased - - - 1,855 4.7% 800 3,364 8.6% 1,462

Our efforts to reduce CO2 Emissions in Logistics

To reduce CO2 emissions through logistics, we are shortening transportation distances, reducing transportation frequency, and switching to transportation methods that emit less CO2.

1. Reduction of transportation distance

We are working to shorten transportation distances by reviewing unloading locations and shipping bases.

  • Shortened transportation distances by eliminating our own logistics bases and outsourcing to outside logistics providers located near ports (PIGEON MALAYSIA (TRADING) SDN.BHD.).
  • Shortened the transportation distance of industrial waste by changing the industrial waste processor (PIGEON INDUSTRIES (THAILAND) CO.)
  • Changed the port of shipment for imported raw materials to shorten the transportation distance (LANSINOH LABORATORIES MEDICAL DEVICES DESIGN INDUSTRY AND COMMERCE LTD.)

 2. Reduction of transportation frequency

We are working to reduce the frequency of transportation by improving loading efficiency, reducing the percentage of empty vehicles, and improving procurement efficiency in cooperation with suppliers.

  • Efforts are underway to change the number of items placed in the outer box, the method of packing in the box, and the size of the outer box (Pigeon Corporation).
  • Reviewing packaging specifications to eliminate the need for inner layer material (Lansinoh Group)
  • Collaborated with suppliers of secondary materials to improve the accuracy of demand forecasting and inventory control, and to reduce the frequency of transportation. (LANSINOH LABORATORIES MEDICAL DEVICES DESIGN INDUSTRY AND COMMERCE LTD.CO., PIGEON SINGAPORE PTE.LTD. and PIGEON MALAYSIA (TRADING) SDN.BHD.)
  • Switched from wooden pallets to paper slip sheets, forest certified, and improved loading rates and significantly reduced transportation weight (LANSINOH LABORATORIES MEDICAL DEVICES DESIGN INDUSTRY AND COMMERCE LTD.CO., LANSINOH LABORATORIES, INC.)

 3. Switching to transportation methods that emit less CO2

We are also switching to trucks that use cleaner fuels for transportation.

  • Use of natural gas and biodiesel vehicles (THAI PIGEON CO., LTD.)

Further Initiatives

Although we have not introduced ICP (Internal Carbon Pricing), we are discussing the setting of long-term reduction targets in consideration of the future rise of carbon taxes and Japan's reduction target of carbon neutrality by 2050. During the discussion process, we refer to the IEA's forecast of carbon tax increase in order to promote shifts to renewable energy, application of renewable energy certificates, and capital investment for the purpose of energy conservation and on-sites renewable energy generation.