Feb 01, 2024

Generating Sustainable Impacts / Feature Story


Toward Decarbonized Society: Panasonic Group Advancing Future-Focused Green Transformation Strategy

Business activity is estimated to account for more than 80 percent of Japan’s total annual CO2 emissions. To achieve the Japanese government’s national goal of net-zero by 2050, companies are being called upon to strengthen their ongoing efforts to reduce CO2 emissions.

Since 2020, when the drive toward carbon neutrality gained momentum, committing to carbon neutrality has become an obligation for every business. It is now common practice for companies to incorporate decarbonization and sustainability into their guiding principles. Meanwhile, the rising cost of energy, triggered by global unrest, has led society as a whole to seek green transformation (GX) business models that are less dependent on fossil fuels.

In response to these trends, the Panasonic Group formulated its long-term environmental vision Panasonic GREEN IMPACT (PGI) in January 2022. Through PGI, the Group seeks to achieve net-zero CO2 emissions (Scope 1 and 2) at all operating companies by 2030, and aims to have reduced the impact by more than 300 million tons—or approximately one percent of total global CO2 emissions—by 2050.

What exactly are the strategies and initiatives that the Group is taking? This article is based on a presentation by Kaoru Manabe, Sustainability Strategy Lead, Strategic Headquarters, Panasonic Corporation, who answered this question on the first day of the Nikkei BP online seminar, “What Is Decarbonized Management for Surviving the Energy Crisis?” held October 18–19, 2023.

Photo: Shigenori Jimbo, Nikkei BP Research Institute (left) and Kaoru Manabe, Panasonic Corporation

Shigenori Jimbo, Nikkei BP Research Institute (left) and Kaoru Manabe, Panasonic Corporation

Green transformation gives companies competitive edge

Since Panasonic Corporation alone accounts for about 90 percent of the Panasonic Group’s CO2 emissions, “we have enormous responsibility when it comes to promoting decarbonization,” said Manabe, who is responsible for developing Panasonic Corporation’s GX strategy.

Panasonic Corporation’s Mission is “Life tech & ideas for the wellbeing of people, society and the planet” and its Vision is “We are the best partner of your life with human centric technology and innovation.” The company has established priority businesses for achieving both. B2B segments include air quality and air-conditioning equipment, electrical materials, energy solutions/hydrogen, showcases, and CO2 refrigeration equipment, among others, while B2C segments focus on home appliances.

Photo: Kaoru Manabe

Kaoru Manabe, Sustainability Strategy Lead, Strategic Headquarters, Panasonic Corporation

We want to achieve sustainability through every single one of these businesses,” explained Manabe. Describing the significance of Panasonic’s commitment to the GX strategy, he said: “Every day, consumers and B2B customers are becoming increasingly more environmentally conscious. We believe that they will avoid companies that do not address environmental and GX issues; in other words, it will be harder for these companies to survive.

“A significant amount of capital is flowing into the area of sustainability, with recent data indicating that total global ESG investment is now worth approximately 4,150 trillion yen. We are also beginning to see the potential for generating new revenue from CO2 reductions, such as carbon credits. Against this backdrop, Panasonic believes that environmental and GX investments are an important element in strengthening corporate competitiveness over the long term.

Carbon neutrality, circular economy are core pillars of Panasonic Green Transformation Strategy

Due to the nature of its business, energy and resources are critically important to Panasonic. For this reason, the company has formulated a GX strategy that is supported by the two pillars of carbon neutrality and circular economy, and is building a management system required to accelerate the transition to both.

Illustration: Panasonic’s GX strategy emphasizing both carbon neutrality and circular economy

Panasonic’s GX strategy emphasizes both carbon neutrality and circular economy

The transition to carbon neutrality is being driven by “electrification,” “hydrogen,” and “natural refrigerants.” In the case of electrification, Manabe cited how Panasonic heat pumps—which have been growing their market in Europe—are helping customers move away from fossil fuels; in the case of hydrogen, he mentioned renewable energy solutions powered by 100 percent renewable energy; and in the case of natural refrigerants, he explained how CO2 refrigerators with low environmental impact are being used in showcases in supermarkets and other retail outlets. “We believe we can contribute to society by pursuing the decarbonization of infrastructure that is closely linked to people’s daily lives,” said Manabe.

Turning to circular economy, Manabe explained that this pillar will focus on three areas: reducing new resource inputs; transitioning to a circular business model that extends the practical lifecycle of resources; and creating a mechanism for circulation.
Panasonic’s MULTISHAPE modular personal care system, launched in Europe in 2022, is a perfect example of how the company is designing products to reduce the amount of new resource inputs. MULTISHAPE is a single rechargeable base with five interchangeable heads, eliminating the waste generated by duplication of rechargeable batteries and AC adapters and contributing to an estimated 60 percent reduction in resources used. Meanwhile, in Japan, the company has been reducing the size of personal care products such as hair dryers and shavers—some by 27 percent.

MULTISHAPE modular personal care system

ICP System promotes investment in sustainable businesses

The pillars of carbon neutrality and circular economy are supported by a management system. This Internal Carbon Pricing (ICP) system, announced in June 2023, allows the benefits of CO2 emission reductions to be incorporated into investment decisions. “Adding the benefits of the apparent CO2 reductions increases the number of projects that can meet investment criteria, and accelerates decarbonization activities, such as developmental investments that enhance competitiveness from a long-term perspective,” explained Manabe.

Illustration: Internal Carbon Pricing (ICP) system

Under the ICP system, Panasonic is targeting Scope 3 emissions across the product life cycle as well as an avoided emissions contribution to society. Trials will begin in fiscal year 2024 at the Living Appliances and Solutions Company, the division company within Panasonic Corporation responsible for the home appliance business, and will be expanded sequentially from fiscal year 2025 onward.

We are committed to taking a firm approach to Scope 3, which accounts for 99 percent of our CO2 emissions, and to avoided emissions,” said Manabe. “For example, we plan to apply this program to demand response (DR)-compliant products, contributing to avoid emissions, and to initiatives that lead to the realization of a business model based on longer product lifecycles and recycling.”

“RE100” Solution demonstrates hydrogen’s potential

Panasonic began a demonstration of its “RE100” Solution in April 2022 (H2 KIBOU FIELD, Kusatsu City, Shiga Prefecture). The project uses an advanced Energy Management System (EMS) to connect and control the pure hydrogen fuel cells (developed in-house), solar panels, and storage batteries to power a factory manufacturing fuel cells with 100 percent renewable energy.

Illustration: Panasonic’s “RE100” Solution using three types of batteries

Panasonic’s “RE100” Solution uses three types of batteries—pure hydrogen fuel cells, solar panels, and storage batteries—to provide power regardless of weather conditions or natural disasters

Although the current project is for a factory, Panasonic also envisions its “RE100” Solution being used for buildings, commercial facilities, and modest-sized (<1,000 unit) smart towns. In November 2022, the President of the Federal Republic of Germany and approximately 80 other individuals, including German government officials and business leaders, visited the site and showed great interest in the project. From 2024, Panasonic plans to expand demonstrations of this solution to its bases in the U.K. and Germany.

Photo: Panasonic's factory in the UK

“EMS, the core technology for stable use of this solution, makes it possible to generate energy only as much as it is used, by controlling the entire system. The more data we have from the demonstration, the more accurate the matching of supply and demand will become,” said Manabe. “As of today, we’re able to match supply with demand up to 98% of the time. In this way, energy isn’t wasted, which is also attractive. Being able to achieve supply-demand balance will be a big step toward commercialization.

Another important characteristic of Panasonic’s “RE100” Solution is its ability to provide value tailored to customer conditions. “It is generally believed that solar panels and storage batteries are all that is needed, but hydrogen has the advantage of extremely high energy density,” said Manabe. “If you want to cover a reasonable amount of electricity demand with solar panels alone, you are going to need a significant amount of land, and unstable output will be a bottleneck; by combining pure hydrogen fuel cells with solar panels, you can reduce the land required to one-seventh and the initial investment cost to one-third.” 

Steadily advancing into the next generation

Although development and implementation of its business model for the era of sustainability has just begun, Panasonic is making steady progress toward the next generation of businesses. “This is a long-term initiative that will take 10 to 20 years of step-by-step transformation,” said Manabe. “We would like to collaborate with a variety of partners.”

*This article is based on a lecture given by Panasonic Corporation at the online seminar “What is Decarbonized Management for Surviving the Energy Crisis?” hosted by Nikkei BP on October 18 and 19, 2023. Original Japanese article: Published on November 9, 2023 (Thu) “Mirai Kotohajime,” Idea Bank for Solving Social Issues

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