Addressing Climate Change

The JAL Group recognizes that action to address climate change is a particularly important issue for the sustainability of society. In June 2020, we announced our commitment to achieve net zero CO₂ emissions by 2050 in order to steadily promote various initiatives including CO₂ emissions reduction as an air transport operator's responsibility. Also, we announced our support for the recommendations from the Task Force on Climate-Related Finance Disclosures (TCFD) in February 2021, and for the Science Based Target (SBT) initiative in March 2022.
In accordance with the Medium Term Management Plan-Rolling Plan announced in May 2022, the JAL Group will work to achieve the long-term goals specified in JAL Vision 2030 and long-term growth through risk and opportunity management, placing ESG strategy at the center of our management strategy. As a result, we aim to increase corporate value.
The JAL Group has established an environmental policy based on this concept and a promotion system under this policy. As a corporate citizen, we will strive to protect the environment and remove impediments to our progress.

The Board of Directors deliberates and decides JAL Group policies and important matters to combat climate change. Important goals and initiatives are discussed and decided by the Sustainability Promotion Council, chaired by the President, and are reported to the Board of Directors four times a year. Initiatives to achieve specific targets go through the PDCA cycle in the Environmental Management System (EMS) and results are reported to the Sustainability Promotion Council.
The Medium Term Management Plan includes actions we will take in our management strategy to address climate change and provides 22 sustainability issues across four areas to solve social issues through our business. With a strong will to achieve sustainable business operations and increase corporate value through steady efforts to address these issues, external ESG assessments and CO₂ emission reduction targets are reflected in remuneration of directors as indicators.

Since the global outbreak of COVID-19, the global community has established the 1.5℃ scenario as the standard climate change scenario and global action to achieve the 1.5℃ has been growing, such as stronger environmental laws and regulations in Europe, the U.S. return to the Paris Agreement, Japan‘s carbon neutral declaration, revisions to Nationally Determined Contributions (NDC), and the COP26 agreement to meet the 1.5℃ target.
In 2018, the JAL Group participated in the “Project to Support Analysis of Scenarios of Climate Risks and Opportunities in line with TCFD Recommendations” organized by the the Ministry of the Environment of Japan and predicted the society in 2030 based on two scenarios (RCP8.5^＊1, RCP2.6^＊2) of the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC), that is, keeping global warming to below 4℃ and below 2℃ by the end of the century.

※1　RCP8.5 scenario: A scenario with the highest emissions in the IPCC Fifth Assessment Report (a pathway with the highest greenhouse gas emissions in 2100)
※2　RCP2.6 scenario: A scenario with the lowest emissions to stabilize global warming in the IPCC Fifth Assessment Report (limit the increase of global mean temperature to 2℃)

However, taking into account demands of society to decarbonize aviation, ICAO (International Civil Aviation Organization) has started studies on establishing a long-term CO₂ reduction target by 2050, which is likely to spur stronger CO₂ emissions regulations and a stronger emissions trading system by governments.
Under these circumstances, the JAL Group announced, at the June 2020 General Meeting of Shareholders, its commitment to achieve net zero emissions by 2050 by limiting global warming to 1.5℃. We have created a roadmap based on the IEA SDS*3, scenario taking into account risks and opportunities, and have reflected it in the 2021 Medium Term Management Plan and 2022 Rolling Plan. We are also actively working to utilize SAF, which we recognize as a priority issue, to achieve net zero CO₂ emissions.

※3　IEA SDS scenario: A Sustainable Development Scenario of the International Energy Agency (IEA), a roadmap to fully achieve the Sustainable Development Goals（SDGs)

Climate change is likely to have a negative impact on the air transportation business, where business operations are viable in a “safe and secure society,” resulting in serious business continuity risks.
Furthermore, actions to address climate change, such as reducing CO₂ emissions from aircraft, are likely to have financial impacts, such as upgrades to fuel-efficient aircraft and participation in carbon pricing.
The JAL Group has identified and studied these business risk factors in accordance with TCFD’s classification of climate risks and opportunities, which are shown in the table below. The period and impact categories are as follows.

※4　SAF (Sustainable Aviation Fuel) = Aviation fuel which can reduce CO₂ emissions by an average of 80% compared with conventional jet fuel in the life cycle from production and procurement of raw materials to manufacture, transportation and combustion.
※5　CORSIA = Carbon Offsetting and Reduction Scheme for International Aviation
A program which mandates the purchase of emission credits for excess emissions on international routes in 2019

The JAL Group defines risk as an event or action that impedes the achievement of an organization‘s mission, objectives or goals, and conducts a semiannual risk survey and assessment. Items evaluated as having a particularly large impact are identified as priority risks, and deliberations and decisions are made by the Group Risk management Council, chaired by the President, and its subcommittee, the Risk Management and Information Security Committee.
Furthermore, as risks associated with climate change are recognized as material risks, each climate risk is identified in the PDCA cycle through the the Environmental Management System (EMS), and is managed, taking into account global trends on legislation and policy. Details are reported to the Board of Directors for discussion and evaluation.

Transition risks and physical risks associated with climate change are managed in the risk management framework of the JAL Group.

In order to leave a greener environment for the next generation, the JAL Group has set targets on environmental data such as reduction of CO₂ emissions, waste materials and water consumption, and discloses progress and performance.

Due to the nature of the air transport business, aircraft emissions account for about 99% of CO₂ emissions. Accordingly, we will address reduction of aircraft emissions with top priority. We also have set high targets for CO₂ emissions from ground facilities and are working hard to achieve them.
Although achieving the targets is by no means easy, we will continue to stand at the forefront to support the aviation industry in reducing CO₂ emissions, in line with the Japanese government‘s Clean Energy Strategy and international frameworks, while strengthening coordination and collaboration with stakeholders in Japan and overseas.

To reduce CO₂ emissions from JAL Group aircraft, we are discussing issues and considering measures that we can take, on studying emissions scenarios targeting 2050, with reference to the latest materials of ICAO and IATA based on the 1.5℃ pathway and ATAG’s^＊6 WAYPOINT 2050^＊7.
In creating scenarios, we set the growth of RTK (Revenue Ton-Kilometers) based on total international and domestic passenger demand respectively, calculated the total volume of CO₂ emissions up to 2050, and reflected the impact in each initiative.

※6　ATAG (Air Transport Action Group): A global coalition to promote sustainability in the aviation industry.
※7　Waypoint 2050Open link in a new window

The JAL Group's target of reducing total emissions by 10% by 2030 from 2019 levels is one of the most ambitious targets among global airlines. We will boldly take on this challenge through such initiatives as upgrades to fuel-efficient aircraft based on a stable financial base, the steady implementation of JAL Green Operations, and strategic procurement of SAF on setting specific SAF loading targets.
Moves to manufacture SAF and build supply chains are accelerating overseas. The Japanese government has clearly stated its intention to promote the manufacture and distribution of SAF in its “Basic Policy on Economic and Fiscal Management and Reform 2022” and “Grand Design and the Action Plan for a New Form of Capitalism.”　In order to achieve our ambitious goal of replacing 10% of all onboard fuel with SAF by 2030, the JAL Group will actively work to commercialize SAF through public-private partnerships and cooperation with domestic and international stakeholders.

In September 2019, the Airbus A350 entered service on domestic routes, and in October 2019, the Boeing 787, which had been in service on international routes since 2012, entered service on domestic. These aircrafts are fuel-efficient and produce less noise, and can reduce the amount of CO₂ emissions by 15% to 25% compared with conventional aircrafts.
Utilizing funds raised in public equity offering in 2020, the JAL Group will steadily continue to upgrade to fuel-efficient aircrafts in fiscal year 2021 and beyond.

Based on the fundamental premise of aviation safety's adherence to the principles, a variety of measures to reduce CO₂ emissions are devised, including eco-flight initiatives by devising the timing and choice of handling during flight operations, reducing weight of aircrafts, and improving fuel efficiency through regular engine internal cleaning.
In addition, by promoting JAL Green Operations, a cross-organizational activity, which monitor the status of each initiative and share the progress within the company, thereby promoting the PDCA cycle to reduce CO₂ emissions.

Aiming to be a leading airline in the use of SAF, the Group is working on a variety of projects, including the use in capital contribution of Fulcrum, a US-based SAF manufacturer, use of SAF produced in Japan for the first time in scheduled flights, and collaboration with partner companies to build supply chains for Japan domestic SAF.

In addition to responding to the ICAO CORSIA, the Group also offers JAL Carbon Offset, in cooperation with CHOOOSE AS, as a unique initiative that allows passengers to offset their own CO₂ emissions on their flights.

Disclosure regarding Climate Change of the JAL Group was selected as a good disclosure example in the TCFD Annual Report (see p. 49)

Furthermore, in the TCFD Consortium's "Guidance on Climate-related Financial Disclosures 3.0 (TCFD Guidance 3.0)" case examples, our disclosure was introduced as a good example, covering past emissions, targets and measures, enabling understanding the positioning of emissions reduction in the face of increasing demand, and setting an interim target for 2030 in conjunction with 2050 target. (page 30)

In the ground facilities field, initiatives with the goal of reducing unit energy consumption by 1% or more on average have been promoted. Under the "operator classification evaluation system" of Act on the Rational Use of Energy (Energy Conservation Act) implemented by Ministry of Economy, Trade and Industry, the Group has been certified by S Class good business operator classification for 7 consecutive years since 2015. In addition to reducing the volume of CO₂ emissions in aviation and ground facilities, the Group is working to reduce the volume of CO₂ emissions in the entire supply chain, including the volume of leftovers in inflight meals and lounges and food waste during cooking, as well as the volume of foodstuffs produced. We are also working to address to climate change in a variety of ways, including by cooperating with "the CONTRAIL Project", an atmospheric observation project.

• Reduction of Plastic Usage
• Reducing Food Loss & Waste
• Initiatives at Ground Facilities