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Business trends

Almost 40% of Nikkei 225 companies pledge net-zero emissions

Tally has doubled this year with Sony pushing for cuts along supply chain

Kirin Brewery is having solar equipment installed at four plants, including this facility near Nagoya.   © Kyodo

TOKYO -- Nearly 40% of the 225 companies in Japan's Nikkei Stock Average have set goals to achieve net-zero greenhouse gas emissions within the next few decades, amid growing pressure from investors and Tokyo.

The tally roughly doubled from the end of 2020 to 85 at the end of April, suggesting that the government's target of net-zero emissions by 2050, announced by Prime Minister Yoshihide Suga in October, has spurred leading businesses to set new goals of their own or move existing ones forward.

Given that the public and private sectors together generate 80% of Japan's greenhouse gas emissions, such efforts will be critical to reducing the country's carbon footprint. They may also be key to competing with companies in the U.S. and Europe that have already seized the initiative.

Kirin Holdings aims to cut emissions by 50% from 2019 levels by 2030 and reach net-zero by 2050. Subsidiary Kirin Brewery is adding solar power generation equipment at four plants, which will be installed and run by a power provider that will sell the electricity directly to the company -- an arrangement rarely seen in Japan.

Sony Group plans to switch to 100% renewable energy by 2030 in the U.S. and globally in 2040, and has already made the transition in Europe and China. The biggest hurdle to its worldwide goal is Japan, which accounts for 80% of the group's emissions. Sony is encouraging suppliers and manufacturing partners to reduce their carbon footprints as well.

Retailer Marui Group targets a 40% reduction from 2016 levels by 2030 and an 80% cut by 2050. It is transitioning to renewable energy at all of its stores, and urging tenant restaurants to recycle waste in order to reduce greenhouse gases generated from burning garbage.

But companies like Sony and Marui that are addressing emissions along their supply chains are in the minority.

Only about a quarter of Nikkei 225 constituents with net-zero targets are taking steps to meet this higher bar, which blocks companies from shifting their carbon footprint onto suppliers or subsidiaries. Businesses cite the difficulty of measuring emissions from their supply chains and making clear where responsibility lies.

Corporations in Europe and the U.S. have moved more aggressively. The Science Based Targets initiative, an international organization promoting emissions-reduction goals, listed 1,445 participating companies as of Friday. American businesses made up the largest share with 239, followed by the U.K. with 217, while Japan placed a distant third with 131.

Apple aims to make its supply chain and products carbon neutral by 2030, and said in March that more than 110 of its manufacturing partners are switching completely to renewable energy. The company says this will eliminate 15 million tons of carbon dioxide per year, equivalent to taking 3.4 million cars off the road annually. has pledged to reach net-zero emissions by 2040 and launched an initiative to encourage other companies to do the same, with Microsoft and Daimler among the businesses signing on to the pledge.

This difference between the West and Japan owes in large part to pressure from consumers and investors. Businesses that fail to follow the trend may pay a price through reduced access to capital, for example.

BlackRock has voted against the reelection of directors at companies deemed to be deficient in addressing climate change, while supporting shareholder proposals that call for environmental action.

Japanese institutional investors have begun to move in a similar direction. Dai-ichi Life Holdings aims to cut the emissions of companies and real estate in its portfolio by 25% from 2019 levels by fiscal 2025, while also lowering its own CO2 emissions to net-zero by fiscal 2040.

Japan's heavy reliance on fossil fuels presents an obstacle to companies across the board. The country generates more than 70% of its power from fossil fuels, compared with less than 40% in the U.K.

The government's "green growth strategy" released last year calls for nearly tripling renewables' share of power generation to between 50% and 60%, as well as supporting the development and adoption of low-carbon technology.

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