As global efforts toward carbon neutrality continue to reshape market dynamics, businesses must formulate strategic responses aligned with green transformation (GX). The NEC Group as a whole has established a one-stop system to provide support for solving organizational issues associated with corporate GX, from supporting the visualization of greenhouse gas (GHG) emissions at the corporate and product levels through the provision of the GX Platform, to supporting the formulation of GX strategies through GX Consulting, and further, to supporting the implementation of specific GHG emission reduction measures through GHG Reduction Solutions. This paper provides an in-depth look at the unique features of the GX Consulting service provided by the NEC Group.

1. Introduction

In recent years, there has been a growing emphasis on non-financial disclosure, which is now considered as important as financial information, and corporate disclosure officers are being asked to respond to Green Transformation (GX) and Sustainability Transformation (SX). Several factors are driving this trend:

Given these developments, businesses are required to adopt a more strategic approach to non-financial information disclosure, as well as in sourcing materials and energy.

2. Strategies Required for Businesses

As the world transitions toward green transformation (GX) and social transformation (SX), companies, particularly those in energy-intensive sectors, must prioritize three key strategies.

2.1 Building a Cross-Organizational PDCA Cycle

The first strategy is to establish a Plan-Do-Check-Act (PDCA) cycle across all relevant divisions within the organization. To promote the reduction of greenhouse gas (GHG) emissions throughout the company, it is necessary to work with a wide range of departments, not only the sustainability department, which promotes the disclosure of information at the corporate level to external parties. Other departments need to be involved, such as the development/design department, which designs products; the production department, which manufactures products; the procurement department, which manages suppliers of raw materials, etc.; the sales department, which responds to customer requests for product CFP disclosure; and the planning department, which formulates the company's business plans and budgets.

Therefore, to minimize the risks associated with promoting GX in the future, it is important for each relevant department within the company to set individual action plans and KPIs based on the company-wide GX strategy. In addition, by establishing an integrated progress management system not only for each department, but also for the entire company, it is possible to visualize the status of GHG emission reduction targets for the entire company. This helps to quickly identify problems and efficiently achieve GHG emission reduction targets.

2.2 Reviewing the GHG Reduction Roadmap to Adapt to Environmental Changes in the Market

The second strategy is to review the GHG reduction roadmap in response to changes in the market environment. As GX is promoted globally, domestic markets may see the introduction of schemes such as emissions trading and carbon taxation. Companies also face other uncertainties, such as fluctuating electricity market prices due to increased use of renewable energy and rising fossil fuel costs. In other words, it is expected that the market environment that companies assumed when formulating their GHG reduction roadmap will continue to change in the future. Therefore, it is important for companies to continuously gather information on changes in the external market environment, analyze how these changes will affect their originally formulated GHG reduction roadmap, and make necessary revisions based on the results. In this way, companies can implement GHG reduction measures with a high return on investment for the entire company.

2.3 Implementing GHG Reduction Measures Through External Collaboration

The third key strategy is implementing GHG reduction measures through collaboration with external partners. To achieve carbon neutrality by 2050, companies must reduce GHG emissions not only within their own operations (Scopes 1 and 2) but also across their entire supply chain (Scope 3). This is particularly crucial for manufacturing industries, where a large proportion of emissions originates from raw material procurement classified under Scope 3, Category 1. In these cases, partnering with suppliers to implement GHG reduction strategies is essential.

To facilitate this, the procurement division should enhance engagement with suppliers and establish systems for efficiently collecting primary data from them. It is also important to support suppliers in visualizing their GHG emissions, setting targets, and formulating reduction roadmaps. Through these collaborative efforts, companies can more effectively promote GHG reduction initiatives together with their suppliers.

3. The NEC Group’s GX Support Services

3.1 Overview of NEC Group’s GX Services

The NEC Group offers a series of services, such as the "GX Platform," for visualizing GHG emissions at both the corporate and product levels (product carbon footprint), GX Consulting for strategy development, and GHG Reduction Solutions for implementing targeted emission reduction measures (Fig. 1), to help companies address organizational challenges related to their green transformation (GX) efforts with a one-stop system.

In this section, we outline the specific support offered by GX Consulting to assist in developing effective GX strategies. For more information about the GX Platform, refer to the paper in this special issue titled, "The GX Platform Accelerates Green Transformation.” Additionally, details on the CFP can be found in the paper, "Towards Implementing Activity Based GHG Emission (ABG) Management."

3.2 GX Consulting Provided by the NEC Group

3.2.1 GHG Emission Visualization Support

The first essential step in developing a GX strategy is the visualization of GHG emissions. This is particularly important in the manufacturing sector, where there is a need to calculate emissions both at the corporate level to meet investor requirements and at the product level (carbon footprint of product) to satisfy customer demands.

The NEC Group assists in this process by supporting the calculation of corporate-level GHG emissions, including Scope 3, and providing detailed calculations at the product level (Fig. 2).

When calculating the CFP, taking into account the impact of future GHG reduction measures on the carbon footprint, simplified pro-rata calculations based on sales and transaction volumes are not sufficient. An accumulation calculation approach using detailed information from the Bill of Materials (BOM) and Bill of Processes (BOP) is also required. To achieve this, in addition to analyzing the current situation by reviewing and organizing the management status of the information sources required for accumulation calculations, the NEC Group provides support for building accumulation calculation processes, including the construction of data collection processes and systems required for efficient product CFP calculations that comply with various frameworks and guidelines, such as the Pathfinder Framework.

3.2.2 GHG Reduction Roadmap Development Support

In order for companies to make incremental reductions in GHG emissions to achieve carbon neutrality, it is important to develop a GHG reduction roadmap to achieve the goal. However, in terms of GHG reduction measures, it is important from a management perspective to prioritize measures with high financial benefits and balance GHG reduction with financial performance after quantitatively evaluating the investment effectiveness of each measure, such as energy conservation measures (operational improvements), on site/off site PPAs, and fuel switching. The NEC Group supports companies in this effort by assisting in the creation of a Marginal Abatement Cost Curve (MAC Curve), which quantitatively evaluates the GHG reduction costs (in yen per ton of CO₂) for potential measures. This helps companies compare the priority of various strategies. The NEC Group also aids in developing a GHG Reduction Roadmap, which defines the priority and schedule of necessary reduction measures to achieve targets (Fig. 3 and 4). Furthermore, we offer ongoing support for updating the roadmap to enhance the effectiveness of reduction strategies, incorporating the latest social trends, regulations, and discussions from initiatives like SBT and RE100.

3.2.3 Supplier Engagement Support

To effectively reduce GHG emissions within a company’s supply chain, implementing strategies for cutting Scope 3 emissions is crucial. Particularly in the manufacturing industry, emissions from Scope 3 Category 1—those related to raw material procurement—account for a significant portion. This underscores the importance of collaborating with suppliers to carry out GHG reduction initiatives.

The NEC Group offers a Supplier Engagement Support service that leverages the expertise we have gained from working with the suppliers in our own operations on GHG reduction efforts. We assist corporate procurement departments in developing and implementing strategies to reduce GHG emissions through supplier collaboration, providing hands-on support to achieve tangible reductions. Based on ABeam Consulting's knowledge and experience, as shown in Fig.5, we offer support services from developing reduction strategies and visualizing emissions to setting reduction targets and implementing reduction measures, all tailored to the supplier's specific stage in the process.

3.2.4 Support for Constructing Renewable Energy Sharing Models

As companies work to achieve carbon neutrality, securing the environmental value of renewable energy is crucial to reducing GHG emissions. With the expected increase in domestic demand for renewable energy, sourcing reliable sources may become a challenge. Therefore, it is crucial to proactively secure long-term access to renewable energy with "additionality" through Corporate Power Purchase Agreements (CPPAs).

This is because CPPAs typically require long-term commitments of around 20 years but are often more feasible for large corporations and less accessible to small and medium-sized enterprises. To address this issue, the NEC Group supports the creation of Renewable Energy Sharing Models as a new procurement strategy. As illustrated in Fig. 6, this model facilitates collaboration between large companies, local governments, and multiple suppliers to jointly procure and share renewable energy. This approach not only ensures that large companies can secure additional renewable energy sources, but also supports the reduction of GHG emissions throughout their supply chains (Scope 3) as well as in their own operations (Scopes 1 and 2).

4. Conclusion

In this paper, we introduced the increasing need for companies to adopt a more strategic approach to non-financial disclosure and energy procurement, as well as three key points for implementing the strategies recommended by ABeam Consulting and the consulting offerings by the NEC Group. As mentioned in other papers, the NEC Group is equipped with GX management tools and reduction solutions aimed at helping companies achieve carbon neutrality. We are committed to leveraging the full strength of our group to support businesses at various stages of their journey toward carbon neutrality.

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