Since 2009, Japan has been faced with a declining population due to low birth rates and an aging society, while developing countries continue to experience population growth. As countries pursue economic development, the demand for essential resources such as water, energy, and food is escalating, increasing environmental stress and exacerbating disasters. In light of these challenges, Yutaka Ukegawa, Corporate Executive Vice President and President of Cross-Industry Business Unit at NEC, joins Soichi Noguchi, Executive Chief Fellow and Chief Technology Officer at the International Institute for Socio-Economic Studies (IISE), the NEC Group’s think tank, to discuss how NEC's technology and expertise are driving the global green transformation. They share insights into the initiatives and goals behind these efforts.

Introduction

Noguchi: As an astronaut, I've had the privilege of traveling to space three times—in 2005, 2009-2010, and 2020-2021. During each mission, I observed Earth from space and was alarmed by the rapid shrinking of Arctic ice. The pace at which it is melting is extremely heart wrenching. Equally distressing is the ongoing loss of tropical rainforests in jungle regions, which I also witnessed from above.

Ukegawa: Your experience is incredibly valuable. I am also concerned about the issues caused by rising temperatures. Melting ice at the poles not only raises sea levels but also triggers a cascade of problems, including extreme weather events and health issues. These, in turn, exacerbate poverty and food insecurity.

Noguchi: Witnessing these changes on Earth fills me with a sense of urgency. We have only one planet to share, yet we are depleting its resources through overconsumption driven by population growth. In addition, marine pollutants, such as microplastics, are damaging ecosystems in ways we never imagined.

Rising Interest in Climate Change Adaptation and NEC’s Technologies

Ukegawa: Between 2000 and 2019, natural disasters caused estimated economic losses of about USD 3.8 trillion (approximately JPY 420 trillion) globally. As the pace of environmental degradation accelerates, we're also witnessing a growing economic divide. To effectively address these interconnected environmental challenges, it's necessary to take a holistic approach, looking at entire systems rather than tackling each issue in isolation.

Noguchi: Absolutely. In recent years, international efforts to address climate change have made significant progress. Initially, the focus was on mitigation, or reducing greenhouse gas emissions. However, as it becomes clear that some impacts of climate change are unavoidable, attention is turning to adaptation to minimize these negative impacts. At the 29th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP29), held in Baku, Azerbaijan in November 2024, adaptation was a major topic, with specific discussions on concrete measures to support developing countries.

Ukegawa: I believe that Japan has a significant advantage when it comes to climate change adaptation strategies. As a country that frequently faces natural disasters, Japan is in a unique position to leverage its extensive expertise in disaster prevention to minimize the impact of climate-related challenges. During the 28th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP28) in Dubai in 2023, NEC introduced the NEC Digital Adaptation Finance proposal, which applies digital technology to adaptation finance. This innovative approach received considerable attention from participating countries and regions.

We've been actively promoting NEC Digital Adaptation Finance within the Cross-Industry Business Unit. Since the establishment of the Japan Consortium for Adaptation Finance in March 2024, with you, Mr. Noguchi, as the representative director, we've been developing concrete use cases together with consortium members. At COP29, where financing climate adaptation in developing countries was a major theme, we showcased these use cases with your invaluable support. At the Japan Pavilion, we presented a solution that uses satellite image analysis and generative AI technologies from the Global Innovation Business Unit to visualize the value of adaptation value and assess the effectiveness of adaptation strategies. This innovation attracted significant interest from UN officials, international financial institutions, and representatives from various countries and regions, facilitating discussions on potential partnerships.

Noguchi: NEC Digital Adaptation Finance is critical not only for technology development, but also as a framework for effectively leveraging private funding alongside public funding. As disasters related to rising temperatures increase globally, this framework has the potential to be applied to environmental change beyond disaster response. We've seen significant progress since our proposal at COP28.

Ukegawa: Yes, we have. In addition to launching the Japan Consortium for Adaptation Finance, we're also promoting solutions that can be applied globally. For instance, NEC Indonesia has signed a Memorandum of Understanding (MoU) with Samakta Mitra, an IT subsidiary of Sinar Mas Land, to develop practical use cases for urban development projects. As Indonesia, like Japan, is prone to natural disasters, we aim to use NEC Digital Adaptation Finance to improve regional resilience and accelerate urban development.

Collaborations in Circular Economy and Nature Positivity

Noguchi: Circular economy initiatives, or efforts to shift from the traditional "extract, use, dispose" model to an efficient resource reuse model, are gaining traction. The European Union has taken the lead globally, launching out the Circular Economy Action Plan in 2015 and moving from setting targets to establishing market rules.

Ukegawa: Developments in Europe are being closely watched, especially as they skillfully create market rules through environmental regulations that act as barriers to entry. These trends are also noteworthy from an economic security perspective. Japan is responding proactively, with the government spearheading frameworks such as the Ouranos Ecosystem, which aims to integrate virtual and physical spaces for economic development and industrial advancement. NEC is also participating in these initiatives.

Noguchi: Could you share some specific initiatives that NEC is engaged in?

Ukegawa: Certainly. We are actively pursuing several collaborative research and development projects with academic institutions. For instance, with the University of Toyama, our Cross-Industry Business Unit we are working together to build an advanced aluminum circular economy using ICT. Similarly, through the Digital Platform Business Unit, we are working with Tohoku University to improve the traceability of plastics. In addition, we have entered into a partnership with Maruki Sangyo in Takaoka City. In this collaboration, our Global Innovation Business Unit is using NEC-developed AI technology for materials informatics to improve the manufacturing efficiency and quality of recycled plastics. Recognizing Europe's leadership in Scope 3 emissions management, we are also developing a supply chain data platform equipped with data sovereignty and data trust in collaboration with the Cross-Industry Business Unit and the Enterprise Business Unit. These initiatives are critical in shaping the future framework for manufacturing supply chains.

Noguchi: The concept of nature positive, which involves restoring natural capital and enhancing biodiversity, is also gaining ground. It's not just about stopping negative impacts such as pollution, but actively regenerating ecosystems. This concept has been incorporated into international frameworks, such as the 2030 targets set out in the Kunming-Montreal Global Biodiversity Framework at the 15th Conference of the Parties to the Convention on Biological Diversity (CBD-COP15). There's a demand for concrete action from companies in this regard.

Ukegawa: Nature positivity is indeed crucial for balancing economic growth with environmental conservation. NEC has been a pioneer in this domain, being the first among domestic IT companies to disclose a TNFD (Task Force on Nature-related Financial Disclosures) Report. This achievement has earned us many consulting requests, and we’re delivering services in collaboration with GX Concierge, a joint venture between ABeam Consulting and Sumitomo Corporation.

NEC's Unique Insights and Technologies for Green Transformation

Noguchi: While biodiversity loss poses a significant economic risk, it also presents business opportunities, doesn’t it?

Ukegawa: Yes, indeed. One of the reasons NEC is pursuing green transformation (GX) is because of our ability to leverage existing knowledge to solve environmental challenges. We believe we can contribute to society’s GX by digitizing environmental information, ensuring the reliability and confidentiality of data distribution, and utilizing AI and digital twins.

Noguchi: The areas where NEC's technological expertise can contribute to GX are quite extensive.

Ukegawa: Absolutely. Our technologies are particularly valuable to industries with high environmental impacts, including their supply chains and related social infrastructure, which are often managed by government agencies and municipalities. Thanks to the trust NEC has built through various projects with these entities, we are uniquely positioned to address key areas such as greenhouse gas emissions management, resource cycles, climate change risk adaptation, and natural capital.

For example, there is a growing interest in incorporating green infrastructure elements into regional redevelopment projects, particularly smart city developments. These initiatives aim to harness the functions of the natural environment for disaster prevention, mitigation, environmental protection, and other challenges. We plan to propose concepts in these areas in the future.

NEC can also demonstrate its expertise in environmental strategy and provide consulting services to the manufacturing sector based on the knowledge we create through Client Zero initiatives. The trust we've built with government and industry is particularly important and essential to providing thought leadership.

Noguchi: Indeed. Thought leadership is about shaping future visions and creating new value as a market leader. At IISE, we are actively involved in various initiatives to support these efforts.

Ukegawa: In the past, thought leadership has been a challenging area for NEC. However, through our collaboration with IISE, we are now effectively demonstrating our capabilities in areas such as NEC Digital Adaptation Finance and natural capital. These efforts are beginning to yield tangible results.

The Role of Space Technology in Environmental Challenges

Noguchi: In my area of expertise, space technology can play a critical role in addressing environmental challenges. The potential in this area is enormous. For example, satellite-based Earth observation data can be used to measure greenhouse gases, monitor illegal deforestation, and support disaster risk reduction and sustainable agriculture. NEC's AI technology, especially when combined with generative AI, holds great promise in this area.

Ukegawa: Combining AI with satellite data has the potential to truly democratize environmental solutions, making them more accessible to a wider audience.

Noguchi: Exactly. Democratization here means empowering everyone, not just experts or specialists, to participate in solving environmental challenges. These are global challenges that require the mobilization of resources from around the world.

Ukegawa: I'm also confident that NEC can play a leading role in advancing the use and application of environmental data by combining AI with satellite-derived information. We have invested considerable effort in building a platform that promotes effective collaboration with a wide range of stakeholders to address these challenges.

Noguchi: Addressing environmental challenges requires more than a single solution; it requires a comprehensive approach that considers entire systems. Collaboration with a wide range of stakeholders from different sectors is essential. I believe the NEC has the potential to lead such transformative efforts. At the 30th session of the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP30) in Belém, Brazil, this November, I plan to actively present our proposals and contribute to the discussions.

Ukegawa: Your vision of using space-based approaches to address environmental challenges is perfectly aligned with the strengths of the NEC Group. In today's world, where addressing environmental challenges is paramount, we want to contribute to driving transformative change on a global scale. As the government prioritizes green transformation (GX) as part of its growth strategy, we see this as a significant business opportunity. We are committed to meeting the expectations of all stakeholders and will work diligently to achieve success.

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