Aligned SLB

Nishimatsu Construction Co., Ltd is a large multinational Japanese construction company, primarily engaged in civil engineering projects and real estate development. In 2022, Nishimatsu reported total GHG emissions of 3.3mt CO2, of which approximately 2% were scope 1 and 2 emissions, and 98% scope 3. Scope 3 category 11 emissions associated with energy use during the operational phase of completed and delivered buildings comprise over 75% of total emissions. 

To achieve carbon neutrality by 2030, Nishimatsu has developed a CO2 Emissions Reduction Plan (ZERO30 Roadmap) that outlines comprehensive Scope 1, 2, and 3 targets covering all material sources of emissions.

As part of this plan, Nishimatsu Construction issued its first Sustainability-Linked Bond in July 2023.

The company aims for a 45.3% reduction in scope 1 and 2 emissions by 2025 and 54.8% by 2030, both against 2020 baselines. The remaining emissions in 2030 will be offset using renewable power generation, which represents <1% of Nishimatsu’s total footprint, well below the 10% threshold required by the SLBD Methodology.

The targets for reductions in scope 3 targets of 26% by 2025 and 27% by 2030 (v. 2020) cover category 11 emissions, relating to energy used in their completed buildings. Target emission levels have also been identified for each interim year between the reporting period of 2022 to 2030.  Together, these SLB targets represent 85.2% of the company’s total emission footprint, above the 80% threshold required by the SLBD Methodology. The Science Based Targets initiative (SBTi) validated these targets as significantly below the emission reduction level required to limit warming to 2°C, and the company is seeking SBTi 1.5°C certification by 2024. 

Nishimatsu’s action plan quantifies short- and medium-term levers, such as energy factor reduction, energy conservation, and introduction of renewable energy. The company’s strategy for scope 3 emissions entails expanding zero-emission buildings (ZEBs) construction, so that it becomes the default for projects by 2050. This will be supplemented by the development of carbon-reduction technologies and construction materials, as well as increasing supplier engagement. Robust annual reporting practices indicate that these levers have kept Nishimatsu on track to deliver on short-, and medium-term goals as of 2022.

Nishimatsu’s targets are detailed, front-loaded, and more ambitious than the SBTi 1.5°C emission level. Additionally, the granularity of forward and backwards-looking reporting for levers and strong governance practices is to be commended. Even so, Climate Bonds would urge greater transparency in emission data reporting and caution against offset-reliant pathways.