Of the 17 sustainable development goals (SDGs) for 2030 adopted at the U.N. summit in 2015, the seventh deals with energy. It simply states, “ensure access to affordable, reliable, sustainable and modern energy for all,” but this is a rather difficult challenge. Currently, to achieve this goal “for all” we must use fossil fuels, but to achieve it on a “sustainable” basis we have to restrain the use of fossil fuels.
Idemitsu is in position to take the lead in solving this difficult challenge.
First, Idemitsu has a responsibility to supply the petroleum products and coal that currently are indispensable to supporting people’s lives and the economy. Nothing can happen unless we are alive to do it.
On the other hand, Idemitsu is already working to achieve net-zero greenhouse gas emissions—carbon neutrality— from its operations by 2050 and will continue helping customers who use our products to reduce their emissions. The Company is producing and supplying carbon-free synthetic liquid fuel (e-fuel) derived from carbon dioxide and hydrogen and is striving to transform its current coal-fired power plants into ammonia-fired and black pellet-fired power plants.
In May 2021, Idemitsu revised the Medium-term Management Plan covering fiscal 2020 through 2022. The policies we worked out will open a path toward carbon neutrality. The revised policies include turning all complexes, including refineries, into carbon neutral transformation centers, turning apollostation outlets into smart one-stop shops, commercializing lithium solid-state electrolytes, and expanding renewable energy power sources, such as solar, wind, biomass, and geothermal power.
Simultaneously pursuing this many initiatives is a major characteristic of Idemitsu and is proof that the Company can
become a leader in “ensuring access to affordable, reliable, sustainable and modern energy for all.”
When I became the first outside director to be appointed chair of the Board of Directors, I felt a bit apprehensive. Taking on the legacy of the two previous chairs, I will continue working hard to ensure active and positive Board of Directors meetings.
The petroleum industry is currently facing two major structural changes: a long-term decline in demand for petroleum in Japan and a growing shift toward carbon neutrality. Idemitsu must work to address these challenges head on, using the revised forward-looking Medium-term Management Plan to gain a foothold.
The role of the highest decision-making body, the Board of Directors, in this process is very important. It has been two years since the business combination. The period of introspection, in which we firmed up the results of the integration, has come to an end, and we are now entering into a time of looking outward as we leverage the achievements of the integration to affect the broader society. We need to positively integrate a backcast perspective, in which we work backwards from our 2050 vision to figure out what should be done now, as well as a forecast perspective, in which we take a direct and honest look at the current reality and set out to accomplish target after target.
To achieve this, we will need active and constructive discussions at the Board of Directors. The Board of Directors meetings are where leadership in being “truly inspired” begins and the board must lead the way ensuring the Company’s fulfillment as “Your Reliable Partner for a Brighter Future.” I intend to do everything I can as chair to realize this and more proactively communicate this idea as an Outside Director than before.
※As of October 29, 2021
Outside Director Mitsunobu Koshiba
Around the world, awareness of the threat posed by global warming is rapidly increasing. In addition, the new Biden administration has acted as a major catalyst for drafting and executing measures to combat global warming, especially the audacious goal of achieving carbon neutrality by 2050. Although we were able to predict that this kind of world would arrive eventually, the truth of the matter is that Idemitsu and other Japanese companies are struggling to convert their business portfolios to achieve not only the goal of carbon neutrality but also to achieve the goal of reducing global warming gas emissions by about half by 2030. On the other hand, the Board of Directors of Idemitsu, which underpins Japan’s energy, has garnered acclaim for taking the lead on declaring its goal of carbon neutrality.
Key to achieving these lofty goals will be the technical skills of each business company. Furthermore, the commitment and leadership of management will be important in conducting a bold business transformation with a broad overview not bound by conventional business strategies. I can also offer high praise for Idemitsu’s development of advanced materials, promotion of digital transformation (DX), and stance toward taking on the global warming problem, which encompasses entering into the next-generation mobility business, which is linked to regional revitalization, via the Company’s nationwide network of service stations. Although management resources are limited and it will eventually be necessary to convert the business portfolio and select new business fields, I think it is probably time now to boldly try out new possibilities to achieve these lofty goals.
I have recently been appointed as chair of Idemitsu’s Nomination and Compensation Advisory Committee. In fiscal 2021, Idemitsu integrated its nomination and compensation advisory committees, amending the composition so that only Outside Directors serve as members. (Previously, Outside Audit & Supervisory Board Members could also serve on the committee.) The purpose of the amendment is to enable rational discussions regarding the performance evaluations of management, including the selection and termination of top management, and important management issues, such as succession. Although the committee comprises diverse Outside Directors, adding the President and Representative Director as a sponsor for proposals to the advisory committee enabled the opinion of the executive side to be reflected in the discussions of the advisory committee. Opportunities are provided to discuss the selection and termination of top management as well as the evaluation of operating results among only the advisory committee members. The responses are provided to the Board of Directors, ensuring transparency and effectiveness in the resolution process.
An overview of corporate management in the 2020s seems to indicate that the decade will see corporate managers focusing on achieving not only short-term operating results but also sustainability and resilience amid increasing unprecedented instability and volatility in global affairs and market environments. Accordingly, the advisory committee, which is composed of Outside Directors, objectively and fairly evaluates the performance of Idemitsu’s management by tapping into the experience of the committee members in this rapidly changing environment. We then provide the Board of Directors with advice that addresses shareholders’ concerns.
※As of October 29, 2021