Dialogue 04

Ryosuke Mizouchi, Senior Executive Officer and Head of CSV Strategy for Kirin Holdings, and Paul Simpson, CEO of CDP, had a dialogue at Spring Valley Brewery Tokyo in November 2019, while Mr. Simpson was visiting Japan.

Mr.Mizouchi: England did very well in the Japan Rugby World Cup. I think Japanese people did a pretty good job hosting guests from abroad during the Cup. What did you think?
Mr.Simpson: It was disappointing to lose the Final, but I’m proud of the way England played. I think Japan’s hospitality was perfect. It has a great atmosphere. It’s clean. It’s safe. When I come to Japan, I always feel it’s a great place to come.
The typhoon that struck Japan during the Cup and the damage it caused received a lot of attention in the UK media.
Mr.Mizouchi: I thought it really was a climate crisis.
Mr.Simpson: Unfortunately, there have been many natural disasters around the world this year. There were the floods in Venice and bush fires in Australia due to extreme heat are out of control. Five million people are affected by smoke in Sydney. Last year, with the release of the IPCC 1.5°C special report, a lot of things started moving. More than that, however, I think these natural disasters are making people all over the world realize the seriousness of climate change and recognize the need for more ambitious initiatives to combat it.
Mr.Mizouchi: In Japan, as well, many people are actually seeing and experiencing it, which is expanding awareness.
Mr.Simpson: I think Japan is accelerating its response. At a symposium I attended yesterday, Japan’s new Environment Minister said he wanted Japan to become the top country for the number of companies participating in the SBT Initiative^*1. You also have more than 200 companies declaring their support for TCFD^*2.
By the way, the only complaint I have about the World Cup was that the games were being played at 9 o’clock in the morning UK time. The English’s favorite thing is to drink beer when they watch the rugby, but I was not that keen on drinking it at 9 o’clock in the morning.
Mr.Mizouchi: Kirin sells Heineken in Japan. Heineken was the global sponsor of the Rugby World Cup and sales of Heineken tripled while the Cup was on.

Mr.Simpson: So it contributed greatly to sales, didn’t it? By the way, is Spring Valley Brewery Tokyo Kirin’s only craft brewery?
Mr.Mizouchi: We have breweries in Kyoto and Yokohama as well.
Mr.Simpson: I’ve been to Kyoto before. I went there on the bullet train when I visited Japan ten years ago. I always like to take the bullet train.
Mr.Mizouchi: If you ever have the chance to go to Kyoto, we would be happy to invite you to our Spring Valley Brewery in Kyoto. By the way, last time, I told you about our craft brewery in Christchurch that used 100% renewable energy. Several months ago, it launched a carbon neutral^*3 can beer. The Lion Australia operation has announced that all of its beer breweries will go carbon neutral from next year.

Mr.Simpson: That’s fantastic! The climate change issue has risen up the agenda in Australia, so that’s very good.
There is growing serious concern in the UK as well about the impact of climate change on ecosystems, and consumers are becoming more interested in what they should buy and from where. So, I think it is wonderful that Kirin is starting to move toward becoming carbon neutral. There are a lot of craft breweries in the UK. Does Kirin have any there?
Mr.Mizouchi: We own two craft breweries in England, Fourpure and Magic Rock. Fourpure is pursuing environmental consciousness in its ingredients and one of its products is made from unsold bread.
We have acquired New Belgium Brewing in Colorado in the USA. That brewery is also extremely environmentally conscious and is introducing renewable energies.
Mr.Simpson: Last time we spoke, you told me that Spring Valley Brewery Tokyo here is using 100% renewable electricity.
Mr.Mizouchi: Yes. We purchase wind power from Yokohama City by utilizing certificates. When we first took up the SBT, our target was 2°C, but we want to aim as soon as possible for 1.5°C.

Mr.Simpson: That’s a great approach. I sit on the board of the SBT, and when the 1.5°C report came out from the IPCC, I felt that the SBT needed to set even more ambitious targets. Many companies have already set targets of 2°C or well below 2°C, and I think it is important that they be ambitious and set their targets at 1.5°C.
Of course, it will take time to achieve, and they will have to find ways to solve the challenges.
Mr.Mizouchi: Kirin wants to be carbon neutral, not just in our Australian operations, but across the entire Group by 2050. However, we will face many challenges to achieve that. One of those is the fact that it is not easy to obtain renewable energy in Japan.
Mr.Simpson: The Environment Minister I met yesterday has great energy and enthusiasm. I explained that what we want to see is a commitment to energy transition from Japan, and that it was important that the Japanese government be more involved for the expansion of renewable energies in Japan. This year, there were major disruptions to power supply in Japan due to the typhoons. Diversified energy such as solar power can actually help to increase the resilience of the power supply. Japan is a technologically advanced country, so it should be able to introduce more renewable energies.
Mr.Mizouchi: One of the reasons Kirin has been able to more toward carbon neutral in Australia and other places outside Japan is because cheap renewable energies are available. We need that here in Japan as well.
Mr.Simpson: Renewable energies have been around for about 20 years in the UK. A lot of the UK’s electricity is now from offshore wind and investors are pouring capitals actively in that. I will keep encouraging the Japanese government whenever I have the opportunity.
Mr.Mizouchi: Yes, please do so. This year, with so many natural disasters happening all over the world, people are starting to take global warming extremely seriously. Japanese consumers are learning how important it is to minimize greenhouse gas emissions and I believe they will want to support carbon neutral products.

Mr.Simpson: That will be necessary in the near future. However, it is not easy for companies to reduce their Scope 3 emissions.
Mr.Mizouchi: That’s because we need the cooperation of our business partners. Kirin has presented its suppliers with a procurement policy that includes human rights and other issues as well as the environment. For example, in Japan, Kirin makes it mandatory to use FSC® certified paper for paper containers by the end of 2020. In Australia and New Zealand, we are targeting 100% Sedex by 2021.
Further, we will review the long-term environmental vision of the Kirin Group and we want to set more ambitious targets.
We have also announced our support for TCFD. We have done a good job in the scenario analysis, which was well received. We want to strengthen our resilience through activities to obtain a high rating in the CDP and to reflect our TCFD analysis on strategies.
Mr.Simpson: I think that is why I rate Kirin so highly. Kirin has a strong resolve to solve the problem of climate change and has indicated that to the outside world. You need to have ambitious targets and to announce them. By setting targets, we will find the ways of achieving them. If you are going to aim to be carbon neutral by 2050, many innovations will become possible.
Do you think that investors understand that Kirin has such a high level of engagement?
Mr.Mizouchi: I think long-term investors do understand. However, the alcohol business accounts for a large proportion of Kirin’s business, so we also need to respond appropriately to alcohol issues and obtain investors’ understanding about that.
Mr.Simpson: Certainly, alcohol issues do need to be considered. However, it is also important to maintain quality of life. I think a sustainable world should be a world in which we can be safe and healthy and where we can relax and have fun. I love beer, like most Brits do. Beer plays an important role in the UK culture.
Mr.Mizouchi: Well, I think we should leave the discussion there and enjoy some craft beer.

1. SBT Initiative: The Science Based Targets Initiative is an organization established jointly in 2015 by the four organizations of the CDP, UN Global Compact, World Resources Institute (WRI), and World Wide Fund for Nature (WWF) to promote the achievement of greenhouse gas emission reduction targets that are based on science, aimed at suppressing the rise in temperatures to less than 2°C above pre-industrial levels.
2. TCFD: The FSB Task Force on Climate-related Financial Disclosures, which was set up in 2016 by the Financial Stability Board (FSB), an international organization for the stabilization of financial systems. It announced its final recommendations aimed at the following in June 2017. The Kirin Group conducts disclosures based on these final recommendations.
3. Carbon neutral: Offsetting any greenhouse gases emitted by a company that the company is unable to reduce itself with volumes reduced and absorbed in other places to achieve zero emissions in substance.