Decarbonizing the Entire Supply Chain: Common Challenge to Support a Sustainable Future—Furukawa Electric and Fujitsu’s Efforts

Decarbonization throughout the supply chain supports a sustainable future

Efforts are underway to decarbonize the entire supply chain for the goal of carbon neutrality by 2050. How do you recognize the importance of decarbonization?

Suzuki: Furukawa Electric recognizes that decarbonizing its entire supply chain is essential for companies to grow sustainably. In particular, it is important for companies to cooperate with each other from a long-term perspective to achieve carbon neutrality by 2050. We believe that reducing environmental impact is our corporate social responsibility and a common challenge to leave a sustainable society for future generations.

As one of our initiatives, in 2020, we have endorsed the Task Force on Climate-related Financial Disclosure (TCFD)—an international framework to visualize the risks and opportunities caused by climate change and disclose its financial impact. We are disclosing information based on TCFD recommendations and strengthening the relationship of trust with our stakeholders.

We are promoting efforts to reduce CO2 emissions at the same time by formulating Environmental Vision 2050 to achieve carbon neutrality by 2050 and Environmental Target 2030 by backcasting from this vision. We reduced more than 20,000 tons of CO2 emissions at the Mie Plant in FY2023 through energy conservation and fuel conversion at plants, as well as efforts to increase the ratio of renewable energy used. FITEL Products Division is working to develop energy-saving products for customer use.

Terada: Another easy-to-understand example of our efforts is the Nikko Plant, which owns hydroelectric power plant to provide 100% of the electricity it uses. Other examples of renewable energy include power generation using solar panels at each of our business sites.

Many companies are aware of the importance of decarbonization efforts, but are hesitant to make such efforts because they are rarely linked to profits. When we think about decarbonizing the entire supply chain, we need cooperation of suppliers.

Suzuki: We believe that the perspective of looking ahead is most important. Profit is of course important to us as well. On the other hand, we have a strong sense of crisis: “If we stop this initiative now, we may not be able to pass on to the future.” As a company, we have a strong mission to preserve our assets for the future and to pass them on to the next generation. We are working with the idea that the environment is one of our most important assets.

Terada: A company must always consider its contribution to society. Furukawa Electric has a wide range of products, including communication cables, submarine cables, automotive parts, and copper products. If we can reduce CO2 emissions in the manufacturing process of such products and contribute to society by preventing global warming and protecting the environment, it would be very meaningful. These are the motivations behind our efforts.

Anxiety about unprecedented initiatives—Nothing will happen if you don’t take actions .

What were some of the challenges you faced in making such an effort?

Terada: First of all, because our product line is so diverse, we had to calculate CO2 emissions based on various criteria. In addition, the suppliers and partners who deliver materials and parts to us range from large corporations to small businesses, making it difficult to calculate CO2 emissions by uniformly applying a certain standard. In addition, there are differences in environmental awareness among suppliers and partners.

We decided to solve these issues by properly calculating our own CO2 emissions and providing this information to our customers. We have been preparing to measure and calculate data with transparency, objectivity, and accuracy.

Under these circumstances, the calculation of PCF for device products and greenhouse gas emissions in the supply chain had been performed using a database compiling emissions intensity (secondary data). At the time when we were feeling the need to shift from this to primary data based on actual supply chain information, we learned that Fujitsu had a similar view of the issue. Fujitsu told us about their efforts to link data to reduce CO2 emissions throughout the supply chain, and we felt that this would help us solve our issues. Therefore, we participated in a framework to link supply chain together while promoting life cycle assessment (LCA) calculations.

Did you have any concerns before participating in Fujitsu’s initiative?

Terada: We had never worked on data linkage in the supply chain before, so we had some unknown concerns. When we entered data to calculate CO2 emissions, we could not predict what the actual figures would be. Moreover, we did not know whether the numbers would have a positive or negative impact on business. Nevertheless, we decided to participate in the framework and thought it would be a good idea to communicate our concerns in order to dispel them.

Of course, there was also the expectation that there would be something for us to gain from our participation. For example, the accuracy and freshness of data will be improved through supply chain collaboration. Also, by providing data to Fujitsu as a supplier, we can actually feel the same concerns and anxieties that many suppliers might feel. We thought that this knowledge would give us hints on how we should approach our suppliers .

Another reason is that the project could show Furukawa Electric’s commitment to environmental activities, including LCA. As this was something we have not done before, we thought it would be a good opportunity to demonstrate our transparency and commitment to resolving environmental issues by participating and sharing our sense of the challenges at an early stage. These were the main reasons we decided to participate.

Suzuki: Since this initiative actually involves data linkage in the supply chain, we were also interested in how our partners would respond and how much support we would receive from them. We will be able to see the true feedback by implementing this project. In that sense, it was something that we had to try at some point. We feel that this time was a good occasion that gave us the backing we needed.

Confidence that both companies are looking to decarbonize the entire supply chain

I believe that you had various concerns about the project, but how did you feel after overcoming those concerns and actually participating?

Terada: Currently, there is a certain range of international calculation rules. For this reason, I felt it was difficult to determine which data should be provided and at what level of accuracy. It was also not easy to determine how much information we should provide as suppliers.

One of the reasons why many suppliers are afraid to link their data is because they are concerned that the calculated figures may have a negative impact on their business, for example, “We will limit our business with suppliers who deliver parts with higher CO2 emissions.” In other words, there is a concern that the result of honest cooperation will be a disadvantage. To avoid such a situation, we felt it necessary to communicate that emissions are not a factor in parts purchase decisions.

Despite these concerns, many suppliers, including Furukawa Electric, participated in the initiative because of the underlying trust between Fujitsu and them. This initiative is not for selecting suppliers. What both Fujitsu and the suppliers were aiming for was the reduction of CO2 emissions in the entire supply chain, and it was important for us to feel secure that the goal was the same.

What are the specific effects and results you are currently observing?

Terada: It is difficult to observe an increase in demand in the telecommunications equipment industry because demand fluctuates greatly depending on the market environment. In that sense, I feel that the actual supply chain collaboration has been valuable. Also, through Fujitsu’s initiatives and interactions with several suppliers, we learned about each company’s current challenges regarding LCA and carbon footprint (CFP), and were able to exchange opinions. This was a very good experience.

We decided to participate in the initiative in order to demonstrate our commitment to environmental activities and to gain experience in practical collaboration. I believe most of them have been accomplished. At the same time, I recognize that expanding the collaboration to other partners and including information from other systems are new challenges.

In addition, the actual process of entering data to calculate CO2 emissions on Fujitsu’s platform was very easy. The interface was easy to understand, instruction manuals were prepared, and support was excellent. For example, the system supports the input of data not only by product but also by large category, such as factory emissions, and the many input methods made it very easy to use. In addition to PCF data input, LCA and CO2 emissions data per factory can also be input*1 , so even if you are not yet ready for PCF calculation, we encourage you to try it without hesitation.

*1 The ESG Management Platform allows Scopes 1, 2, and 3 data to be allocated by delivery amount to each supplier. This enables PCF calculation and data linkage for each organization.

Collaborating with more suppliers to rationally reduce CO2 emissions throughout the supply chain

We would like to ask you about the future outlook. What do you think Furukawa Electric should do to further promote this initiative?

Suzuki: I think we should expand our collaboration with more suppliers, build up data, and share information on CO2 emissions to improve the accuracy and objectivity of our emissions figures. By doing so, we hope to promote effective reductions throughout the supply chain. If we can promote collaboration with other systems and platforms, we believe that information can be shared even more and, as a result, CO2 emissions can be effectively reduced throughout the entire supply chain.

I also think that in the future, we can expect data collaboration that is beneficial to both Fujitsu and its suppliers, for example, by mutually utilizing data collected in the supply chain. In fact, such talks are already taking place.

Terada: In the future, we hope that the ESG Management Platform will be improved so that it can be linked with other platforms and systems, and the data volume will expand. We would also like to actively ask our suppliers to participate and cooperate in our initiatives.

Another direction we should consider is data utilization. Currently, calculated data is mainly used to determine increases or decreases in CO2 emissions. For example, thermal power plants are hot spots with large CO2 emissions. However, it cannot be argued that they should simply be closed because of their large emissions. If we can link CO2 emissions data over a wider area, we will be able to make rational decisions on where to reduce emissions in accordance with actual economic activities and people’s lifestyles. I believe that the method of utilizing data and making decisions based on that data will become more important in the future.

In closing, I would like to ask you a message for Fujitra News readers.

Suzuki: This initiative to decarbonize the entire supply chain was an endeavor that used primary data, and it was very meaningful for Furukawa Electric. I believe that many companies have commenced the process of measuring CO2 emissions and setting reduction targets. However, decarbonizing the entire supply chain is not a task that can be achieved by individual companies. Rather, it is a common challenge that must be tackled through collaboration and cooperation over the long run. I think that this is not a narrow perspective of the interests of individual companies, but rather a major theme of what kind of future we can leave behind for the next generation. Let us take a step forward with the values of the new era in order to leave a better future for future generations. It is important to look forward to that positive change and take actions. We believe that it is our mission to collaborate to realize a sustainable future and leave a society and planet we can be proud of to the next generation.

Terada: I consider reducing CO2 emissions to be a means of improving efficiency as well. In this sense, there may be more that both companies and individuals can do. If we focus only on reducing CO2 emissions, people may think that it is enough to lower the figures, but that is not the case. It can be thought of as a positive approach, such as improving work efficiency and considering ways to improve productivity at the plant. CO2 emissions can be thought of as an indicator of efficient plant operations and work practices, and we think it would be ideal if everyone could think about it from such a perspective.