Idemitsu Kosan Co.,Ltd.
Representative Director,
President and Chief Executive Officer
Shunichi Kito
As of January 2023
We have formulated and released our Medium-term Management Plan which begins from FY2023. We have five business domains: Petroleum, Basic chemicals, Functional materials, Power and renewable energy, and Resources. Of these, a majority of these businesses are related to fossil fuel, including not only petroleum and resources, but also basic chemicals made from oil and gas, and electric power. The assets of these related businesses account for approximately 70% of the Company’s total assets.
Among our shareholders, dealers, suppliers, affiliated companies, and employees, there are some individuals who are concerned about the future of our company. We have received many requests asking us to present a vision and a roadmap for where we are headed toward the era of carbon neutrality by 2050, in other words, how and in what time frame we intend to change our fossil fuel-dependent business structure. We have, therefore, formulated this Medium-term Management Plan in order to present our current solutions to these issues in response to these requests.
In formulating this Plan, we started by asking what the value of our existence is and what value we provide to society, followed by a discussion of what our strengths are and which fields will be our main battlegrounds.
This time, we have defined the value provided by our company as “Social Implementation Capability.” To realize a carbon neutral and circular society, it is essential to work with diverse partners. In order to bring together people with different interests and values, a greater good that serves as the North Star is necessary, and we believe this is what our purpose is, which values considering and working for the good of the countries and local communities.
Based on the above, we have formulated our Vision for 2050.
In May 2021, we formulated our corporate Vision for 2030, “Your Reliable Partner for a Brighter Future.” To achieve carbon neutrality by 2050, discontinuous technological innovation is required. Conversely, energy supply must be continuous. While it is important to protect the future global environment, we must not abandon our responsibility to continuously supply the energy that supports people’s daily lives and industrial activities today.
Recently, with the military invasion of Ukraine by Russia and other events, the environment surrounding energy is changing at a pace that has never been seen in the past, and the importance of fossil fuel is being reaffirmed worldwide in the gap between the ideal and the reality. Nevertheless, we cannot afford to regress in our response to climate change issues. We believe that it is the mission of our company to present “a roadmap for both a stable supply of energy and solutions to climate change issues as realistic solutions.”
We will fulfill our
through the implementation of:
With an eye on the coming carbon neutral and circular society, we will fulfill our responsibility to support people and their daily lives and to protect the global environment now and in the future through the social implementation in the three business domains: “Energy one step ahead,” “Diverse resource conservation / circulation solutions,” and “Smart Yorozuya.” We strive to continue to contribute to local communities by effectively utilizing our existing fossil fuel assets as infrastructure to produce and supply the next generation of energy, and to remain a main player in energy and carbon neutral solutions.
Many of those who have concerns about the future of our company may see the arrival of a carbon neutral society by 2050 as a crisis that will threaten the very existence of Idemitsu, which is primarily a fossil fuel-based company.
However, I rather see this as an opportunity for business structure reforms and a chance to take a leap forward. This is because in building an energy system for the era of carbon neutrality, we believe that the experience in manufacturing and handling high-pressure gases and hazardous materials, as well as the bases and infrastructure that we have developed through our fossil fuel business, are indispensable.
In order to implement future technological innovations such as hydrogen / ammonia-fired power generation and thermal power with CCS* in the power generation domain, synthetic fuel and second- generation biofuel in the transportation domain, and hydrogen reduction methods in steelmaking in the industrial domain, we must have the people to manufacture and supply them. In these domains, we would like to fully demonstrate the true value of our supply chain, including our refineries and complexes, as well as the knowledge and experience that we possess.
Steady supply of diverse, eco-friendly CN energy
CN solutions for industrial activities and regular consumers
Diverse energy and mobility centers that support regional lifestyles
The three business domains established this time present our company’s future business model after the current five business segments are organically combined and reorganized.
The “Energy one step ahead” domain includes the petroleum business, which is shifting to hydrogen, ammonia, synthetic fuel, and the resources business, which provides low-carbon solutions such as black pellets; the “Diverse resource conservation / circulation solutions” domain includes the basic chemicals and the functional materials businesses, which are shifting to biochemistry, and the power and renewable energy businesses, which are further engaged in panel recycling; and the “Smart Yorozuya” domain includes service stations in about 6,200 locations where petroleum is sold and the electric power and renewable energy businesses, which are developing distributed energy.
The realization of carbon neutrality and the establishment of a circular economic system form an inseparable part of one another, and therefore, “Energy one step ahead” and “Diverse resource conservation / circulation solutions” cannot be disconnected. It is essential for service stations to become “Smart Yorozuya” in order to maintain a supply base for future transportation fuels and dispersed power. In other words, we can achieve our corporate Vision for 2050, “Shaping Change,” only when all three business domains are in alignment. In order to make the above our core business by 2050, we must accumulate knowledge and capabilities in preparation for this, and we believe that we must achieve the social implementation of many of them by 2030, or at the latest, by the early 2030s.
Our basic policy toward 2030, while continuing the policy of the current Medium-term Management Plan (FY2020-FY2022), is to engage in ROIC management as an investment in business structure reforms, and to combine the maximization of both employee growth and employee engagement as investments in human capital. Together with the evolution of a business platform that supports these, we will continue with the social implementation of various measures and promote a shift away from a fossil fueldriven business portfolio.
The cash obtained from improving capital efficiency in existing businesses will be appropriated for investment in business structure reforms toward carbon neutrality and generate new earnings to achieve “operating+equity income of 270.0 billion yen” and shift away from a mainly fossil fuel-driven business portfolio. We anticipate that the scale of investment in business structure reforms will total 1 trillion yen by 2030.
Along with investments in business structure reforms, we are also making investments in human capital. In investments in human capital, we will further promote investments in human growth with the aim of maximizing employee growth and job engagement. We have a philosophy for management that has remained unchanged over the years. We believe that the irreplaceable management resource is “people,” and have always valued the idea of “People-Centered Management” and “people are capital.” Since our founding, “Ningen-Soncho (Respect for human beings)” has been our origin of management, and our aim has always been to promote the growth of people through our business, rather than to nurture people as a means to increase profits. Nobody can predict the future, but as long as individuals are nurtured in spite of any environmental changes, those who inherit our company’s legacy will be able to open the door for a new era.
We will strengthen board functions and renew the executive and director compensation system as a foundation for steadily achieving this Medium-term Management Plan (FY2023 - FY2025) in order to advance governance. The Board of Directors will strive for effective management, focusing on discussions that contribute to the enhancement of corporate value, such as management strategy. We will also review the executive and director compensation system to make it more performance-linked by reducing the ratio of fixed compensation, and to make it more focused on improving corporate value over the medium to long term and sharing value with shareholders.
For the medium-term target toward carbon neutrality, we have raised the target from the previous one to a 46 percent reduction of CO2 emissions in 2030 (compared to the 2013 level). This will be achieved mainly through business portfolio transition and negative emission initiatives.
For Scope 3 (emissions throughout the value chain), we also aim for carbon neutrality by 2050 by providing carbon neutral solutions to businesses and consumers.
Amid major environmental changes, such as soaring resource prices due to global inflation and the rapid depreciation of the yen, our company’s earnings environment has remained relatively firm. However, under the current situation, in terms of shifting our business portfolio toward a future decarbonized society, we are still dependent on the petroleum and resources businesses of our fossil fuel business for revenues.
With no signs of an end in sight to the drastic changes in the world situation and a series of unforeseen events occurring successively, we are determined to continue to fulfill our social mission as an energy company by accumulating concrete results for constant innovation and growth, while keeping our strong resolve.
“Ensuring safety” and “quality assurance” are key issues for us as an energy business, and we will continue to pursue safe and stable operations and compliance with laws and regulations, with the target of achieving zero accidents.
We will continue working to create new value by overcoming these hardships, which can be seen as a turning point for energy and to bring together the power of people in collaboration with all our global customers, regional communities where we operate, dealers, logistics and safety affiliates, business partners (including suppliers in Japan and overseas, such as oil-producing countries), and our employees with diverse backgrounds.
Despite the protracted COVID-19 pandemic, we will continue working to exceed your expectations through our transition initiatives toward a carbon neutral and circular society, always with an emphasis on dialog, and we ask for your continued understanding and support of our business.
| Current status*1 (2022 forecast) |
FY2025 | FY2030 | ||
|---|---|---|---|---|
| Profits (excluding inventory impact) | Operating + equity income | ¥160 bn | ¥190 bn | ¥270 bn |
| Net income | - | ¥135 bn | - | |
| Capital efficiency | ROE | 7.6% | 8% | 10% |
| ROIC | 4.1% | 5% | 7% | |
| Fossil fuels business profit contribution *2 |
95% | ≤70% | ≤50% | |
| Current status (2021 results) |
FY2025 | FY2030 | |||
|---|---|---|---|---|---|
| CO2 reduction (Scope1+2) vs. 2013 | -10.6% | - | -46% | ||
| Human capital investments | Idemitsu Engagement Index*1 | 67% (FY2022 results) |
≥75% | ≥80% | |
| D&I | Female recruiting ratio*2 | 23% | ≥50% (As of April 2026) |
≥50% | |
| Female ratio in managerial positions | 3% | ≥5% (As of July 2026) |
≥10% | ||
| Male ratio taking childcare leave | 56% (As of September 29, 2022) | ≥80% (As of March 2026) |
100% | ||
| Investments in training per employee | ¥43,000 | ≥¥100,000 (Top class in Japan) |
≥¥100,000 (Top class in Japan) |
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