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Management Strategy and Sustainability

Long-Term Outlook Policy (Environmental Vision 2050)

Adopted in 2015, the Paris Agreement contains a target for the latter half of this century of reducing greenhouse gas emissions to net zero and limiting global warming by less than 2°C compared to pre-industrial levels. In the spirit of the Paris Agreement, Daikin has formulated Environmental Vision 2050, with a target of reducing greenhouse gas emissions to net zero by 2050. We have established a reduction target for 2030 and incorporated this into our efforts under the Fusion 25 Strategic Management Plan.

Formulation of Environmental Vision 2050

Looking long term, we have predicted how society will change by 2050 and have made a list of the risks and opportunities for Daikin's business. Based on this, we have set a direction we must take in using our resources to solve environmental problems.

Forecast of Society in Which Daikin Will Operate in 2050

Based on the relationship between Daikin's business and the global environment, we came up with a long-term environmental to-do list that takes into account what the world will be like for Daikin's business in 2050 judging by current social scenarios.

Forecast of Society in Which Daikin Will Operate in 2050

Daikin referred to the following reports when making its forecasts

World Population Prospects: The 2017 Revision, by the United Nations
The World in 2050, by PwC
World Urbanization Prospects: The 2018 Revision, by the United Nations
Estimates and Forecasts for the World's Waste Generation, by the RISWME
World Energy Outlook 2017, by the International Energy Agency (IEA)
The Future of Cooling, by the International Energy Agency (IEA)
The Future of Forests: Emissions from Tropical Deforestation with and without a Carbon Price, 2016-2050, by the Center for Global Development (CGD)
The Problem of Worldwide Resource Restrictions by 2050, by the National Institute for Materials Science (NIMS)
OECD Environmental Outlook to 2050, by the Organization for Economic Cooperation and Development (OECD)
Quantitative risk assessment of the effects of climate change on selected causes of death, 2030s and 2050s, by the World Health Organization (WHO)

How Daikin Should Proceed Based on Risks and Opportunities

Daikin came up with business risks and opportunities in relation to the environmental problems specified above.
We determined how we should proceed in order to solve these problems based on the company's resources.

How Daikin Should Proceed Based on Risks and Opportunities

Environmental Vision 2050

We will reduce the greenhouse gas emissions generated throughout the entire lifecycle of our products.

Furthermore, we are committed to creating solutions that link society and customers as we work with stakeholders to reduce greenhouse gas emissions to net zero.

Using IoT and AI, and open innovation attempts, we will meet the world's needs for air solutions by providing safe and healthy air environments while at the same time contributing to solving global environmental problems.

Daikin Environmental Vision 2050

Growth Strategy Based on Risks and Opportunities

Future predictions about the sharp increase in demand for space cooling represent an important opportunity for us because air conditioning is our core business. At the same time, the increase in electricity consumption and greenhouse gas emissions attributed to air conditioning represents a major risk to the continuity of the air conditioning business in a society that demands de-carbonization because climate change is a worldwide issue.

Therefore, in addition to mitigating environmental and climate change impacts by curtailing electricity consumption and preventing refrigerant leakage, we will develop and spread higher energy-efficient air conditioners and refrigerants with a lower global warming potential. Daikin will also create new environmental solutions, such as the efficient utilization of energy tied to buildings. This will enable us to balance contributions to social issues including climate change with the further growth of our businesses.

IEA The Future of Cooling Forecast

In May 2018, the International Energy Agency (IEA) released The Future of Cooling. The report looks at air conditioning and how the rise in its use is driving global energy demand.

According to The Future of Cooling, estimates are for air conditioning demand to rise rapidly and for energy demand for space cooling to triple by 2050.

Worldwide Air Conditioner Stock (Number of Units) and Electricity Demand

Worldwide Air Conditioner Stock (Number of Units) and Electricity Demand
Graph figures compiled by Daikin based on IEA The Future of Cooling

Medium- to Long-Term Strategy toward Achieving Environmental Vision 2050

Daikin has established a greenhouse gas emissions reduction target after analyzing the future of its business operations in order to reduce these emissions to net zero while bringing the added value nature of air to people around the world. With the base year set at 2019, we aim to reduce greenhouse gas emissions by 30% or more in 2025 and by 50% or more in 2030 compared with emissions without measures (business as usual (BAU)). Measures to achieve these goals will be implemented under Fusion Strategic Management Plans.

Making a Medium- to Long-Term Strategy toward Achieving Environmental Vision 2050

Initiatives in the Medium-Term Management Plan for Achieving Environmental Vision 2050

The three themes of the growth strategy for achieving our environmental vision have been incorporated into the nine key themes of the Fusion 25 Strategic Management Plan. We will now implement this plan aiming to strike a balance between resolving social issues and business growth.

Fusion 25 Offer new value for the environment and air to realize both contributions to a sustainable society and Group growth

Through products

Challenge to Achieve Carbon Neutrality

  • Reduce emissions of energy-induced CO2 and HFCs/PFCs in development and production processes
  • Global acceleration of conversion to inverter units to lead other companies with environmental products (energy-saving equipment)
  • Positioning Europe and North America as the priority regions to accelerate conversion of combustion heaters to heat pump space and water heaters
  • Various measures connecting to refrigerant-induced CO2 emissions reductions to lead the environmentally conscious society and industry
  • Initiatives toward market expansion and CO2 reduction contributions
  • Research on leading-edge technologies on CO2 decomposition, recovery, and reuse specific measures to obtain those technologies

Through solutions

Promotion of Solutions Business Connected with Customers

  • Solutions for service/inspections, value-added proposals during equipment operation, and retrofits/replacements to establish a business model that provides customers with experiences
  • Global business expansion by deploying energy-saving and environmental technologies Daikin has cultivated in the AC domain

Through the power of air

Creating Value with Air

  • Market creation from opportunities presented by growing IAQ/Ventilation demand. Creation of new products and services to establish a large-scale IAQ/Ventilation business
  • Accumulating and analyzing air conditioning data and vital data to create value with IAQ/AE for people’s physical and mental well-being

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