Energy and Carbon Management

【Basic Policy on Energy Use】
The Daio Group is committed to promoting sustainable energy use with the goal of achieving carbon neutrality by FY2050.
In line with the Daio Global Environmental Charter, we have implemented various initiatives to reduce environmental impact, including energy conservation measures and the utilization of biomass fuels.
In 2021, we formulated a carbon-neutral roadmap built on three core pillars: energy transition, energy conservation, and carbon sequestration, and have been advancing concrete initiatives accordingly.
Furthermore, under Daio Group Transformation 2035, we have set forth the theme of “transitioning from fossil fuels (coal) to waste-derived fuels and woody biomass in harmony with local communities,” accelerating our use of sustainable resources.
Recognizing climate change as one of our most critical management issues, we will continue to promote sustainable energy use while ensuring transparent information disclosure in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

【Indicators and Targets】
The Daio Group is committed to promoting sustainable energy use with the aim of achieving carbon neutrality by FY2050.。

【2030 Medium-Term Targets】
The Daio Group aims to reduce fossil fuel–derived CO₂ emissions across all sites by 46% compared to FY2013.
In addition, we aim to continuously achieve a 1% annual reduction in energy intensity compared to the previous fiscal year.
For greenhouse gas emissions, we have set the following targets: Scopes 1 and 2 (all sites): 20% reduction compared to FY2013
Scope 3 (Categories 1 and 4, domestic sites): 15% reduction compared to FY2022

【Overview of Initiatives at Our Mills】

Energy Transition
In 2023, we reduced coal consumption at the Mishima Mill by shifting a biomass power generation facility—originally operated for electricity sales (commissioned in 2020)—to in-house consumption. To further accelerate the transition away from coal, we are planning to install a new recycling-based power generation facility that utilizes waste-derived fuels.
Additionally, we brought forward the in-house consumption of the FIT-certified biomass boiler, initially scheduled for implementation after 2030, and began the transition in FY2023. In April 2023, we converted the equivalent of 55,000 kW of power generation from coal to biomass. By shutting down certain production lines and consolidating operations into more efficient equipment, we also optimized the overall energy efficiency of the mill.

Transition to Renewable Electricity (Solar Power Generation)
The Daio Group is actively expanding the use of solar power. By the end of FY2025, our combined domestic and overseas solar power capacity is expected to reach 9,386 kW. This contributes to an annual reduction of approximately 8,442 tons of CO₂ emissions across the Group.

【Fuel Transition to Cleaner Energy】
To reduce emissions, we are shifting from heavy fuel oil to natural gas, which contains less carbon compared with coal and heavy oil. At our main production site, the Mishima Mill, we have installed an LNG satellite terminal to accelerate this fuel conversion. In addition, affiliated companies are also transitioning to a lower‑carbon production system by replacing heavy‑oil boilers with gas‑fired boilers.

【Energy Efficiency Improvements】
Paper mills consume large amounts of steam, and therefore we are working to reduce unnecessary steam usage by installing new heat exchangers and strengthening the maintenance of steam traps. At the same time, we are promoting electricity savings by introducing the latest energy‑efficient equipment and switching from large pumps to small pumps according to production requirements, thereby reducing unnecessary energy consumption on a daily basis.
We are also actively advancing the use of LED lighting—not only within our mills but also in offices and product warehouses.
Furthermore, in offices, we are eliminating unnecessary energy use by combining LED lighting with motion‑sensor–based automatic on/off systems and optimizing temperature settings for air‑conditioning systems.

Water Resource Management

【Basic Policy on Water Resource Use 】
The paper and pulp manufacturing process requires large volumes of water, making the sustainable and efficient use of this limited resource a critical environmental priority for our company. Under the Daio Global Environmental Charter, we position water resource conservation and risk management as key management issues.
We continuously work to reduce water intake at production sites, promote water recycling, and improve water-use efficiency through purification and circular use. In addition to evaluating and addressing water-related risks across our business operations, we have also established a governance structure in which the President and CEO holds ultimate responsibility for water-resource strategies and performance at the management level.
Within the Daio Group, we identify regions with high water risk and prioritize the reduction of water withdrawal and the strengthening of water recycling in these areas. Across our entire production process, we strive for efficient and circular water use, while incorporating water-withdrawal volumes and water-intensity management into annual plans. These indicators are monitored under quantitative targets.

【Water Risk Management】

As a manufacturer of paper and pulp products, appropriate water management is essential to our operations. We face potential risks such as unstable supply of forest-derived raw materials due to water scarcity, interruptions in production caused by restricted water supply, and increased production costs resulting from higher water-use fees.
In line with the Daio Global Environmental Charter, we work to mitigate these risks through appropriate water resource management. In addition to risk assessments, we analyze the regions where our business activities depend on—or impact—local water resources. Using the Aqueduct Water Risk Atlas, we assessed water stress across our operating locations. While no significant water stress risks were identified, the analysis revealed that two domestic mills and several forests in Chile are located within or near Key Biodiversity Areas (KBA) or protected areas, classifying them as regions requiring special attention.
Based on these findings, we are strengthening our initiatives for sustainable water resource management and environmental conservation.

【Opportunities Related to Water Resources】

Following the COVID‑19 pandemic, heightened hygiene awareness is expected to drive continued demand for products that maintain cleanliness without relying on water. Products such as our Elleair Disinfecting Alcohol Wipes provide hygienic solutions without water use, offering value from the perspective of reducing the burden on water resources.
These products are particularly effective in regions facing water scarcity or in disaster-affected areas where water supply infrastructure may be disrupted. By actively providing such solutions, we contribute to addressing hygiene challenges and improving quality of life (QOL), while also creating business opportunities aligned with social issue resolution.
We will continue to expand products and services that contribute to solving societal challenges, helping advance the realization of a sustainable society.

【Governance Structure for Water Resource Management】/strong>
The Daio Group integrates the management of water resource use—and sustainability overall—under the Sustainability Committee. Within the committee, the Environmental Impact Reduction Subcommittee evaluates climate-related and nature-related risks and opportunities identified by each division and discusses corresponding response measures.
Progress on sustainability strategies, policies, and related initiatives is reported quarterly to the Management Committee as “Progress on Sustainability Initiatives,” and, depending on content, further reported to the Board of Directors.
Additionally, under quantitative targets such as water withdrawal and wastewater discharge, the environmental management departments conduct measurement and monitoring to ensure proper water resource management across the organization.