AGC’s sustainability journey
Sustainability is an evolving theme in management discussions. While some see it as an additional task on top of growth and profitability, pioneers in this field hold a different perspective. Rather than a strain on limited resources, growth and profitability are the natural results of internalising societal goals such as sustainable development and environmental protection. The path towards sustainability, however, is not naturally profitable. The transition is challenging, gruelling even, and littered with failed transformations. With dire warnings from the Intergovernmental Panel on Climate Change (IPCC) 6th Assessment Report, embracing sustainability is a matter of companies’ and humanity’s survival. With tightening environmental regulations, the message that profitable companies in the future are also sustainable companies is clear. For an example of a company that has successfully transformed and continues to innovate and adapt, one needs to look no further than AGC.
Sustainable Development Goals (SDGs)
AGC has a strong history of being the frontrunner in benefitting society. In 2021, AGC established the Sustainability Committee which directly reports to the Board of Directors. A demonstration of clear commitment, with support from the highest echelons of the organisation, towards crafting policies for implementing and achieving sustainability targets. This is the continuation of a series of transformations since 2005, when the corporate social responsibility (CSR) committee was established, to accelerate Group-wide sustainability management and initiatives. These efforts reflect the choices AGC made to be a company that contributes significantly to a healthier global society, be a trusted corporate citizen and communicate responsibly with stakeholders. Such aspirations resonate with United Nations (UN) Sustainable Development Goals (SDGs) which are a call to action for global partnerships to realise peace and prosperity for people and the planet, now and into the future. To that end, the AGC Sustainability Division works in generating social value related to the SDGs.
The commitment to sustainability suggests a culture that is not satisfied with ‘just enough’ but seeks to push boundaries to benefit the customers and society. This is well encapsulated in the Group’s brand statement “Your Dreams, Our Challenge”, where AGC aims to ‘help make even greater achievements possible, and bring bolder ideas to life” and they are doing it. Through the products, technologies and corporate activities, AGC has been generating positive changes relating to the majority of the 17 SDGs. For example, by using supplier selection based on human rights and environmental protection requirements, AGC has made the world a better place by contributing to reduced inequalities and responsible consumption & production. Similar corporate governance and social value generating activities are embedded throughout AGC’s wide spectrum of businesses from the built environment, mobility, and pharmaceuticals To understand how the unique culture of innovation and sustainability took hold, we need a trip into the past.
A peek into the past
“There are not many Japanese companies that have been in business for over 100 years and continued to create new businesses. It is also rare for the management team to be leading the way.” AGC seems to have a knack for innovation and it has been dubbed the “DNA to tackle challenges”. Diving into the company’s origins, a mere 7 years after its founding in 1907, it faced supply chain disruptions due to World War I and was unable to import raw materials and kiln bricks for glass manufacturing. In overcoming this challenge through developing some of the raw material supply businesses in-house (for example, as Japan’s first soda ash producer), it propelled AGC into adjacent industries of chemicals and ceramics. Fast forward a century later, these 2 businesses have evolved and contributed about 42 percent of total net sales for FY 2021.
The spirit of continuous innovation was seen again in 2010 when AGC recorded its highest profits thanks to glass substrates for the Display business. Despite the profits, the then management harboured a cautious sense of crisis. Dr Hirai (now AGC Group CEO) was appointed as the 1st head of the business development office to develop new businesses that can reduce the reliance on Display business. “In the materials industry, it is normal for it to take 10 to 20 years from the start of R&D to commercialisation. That is why we keep thinking about what to do next before one business reaches its peak,” said Dr Hirai. The foresight has paid off in recent years as AGC’s biotechnology and contract pharmaceutical business boomed amidst the COVID 19 pandemic.
This characteristic of considering longer horizons results in AGC identifying ‘Environment’ as one of 4 shared values (others being ‘Innovation & Operational Excellence’, ‘Diversity’ and ‘Integrity’). This shared value manifested in AGC in the form of the target to achieve net-zero carbon emissions by 2050. A truly ambitious task, considering that the manufacturing of glass is an energy-intensive industry, amongst other challenges. As part of the decarbonisation effort and behaving with the rigours of a sovereign state, AGC has introduced internal carbon pricing (ICP) to drive low-carbon investment. When making investment decisions, ICP is used to evaluate the profitability of projects by taking future carbon costs into account. The effect is reduced dependence on fuel combustion in glass melting facilities through electrification. The melting is made cleaner through the conversion to gas/oxygen combustion instead of oil combustion. In terms of carbon efficiency, the conversion of heavy oils to natural gas reduces about 20% of CO2 emissions during combustion. However, the drive toward net-zero carbon emissions does not end there as AGC engages in ongoing research efforts such as carbon-free ammonia combustion. Their other efforts recognise the necessity of resource circularity in reducing carbon footprint. When it comes to raw materials for glass manufacturing, AGC uses glass cullet (refuse glass) as a substitute for raw materials such as silica sand. This reduces the environmental degradation associated with natural resource extraction and reduces waste in landfills through the recycling of urban construction waste.
The net-zero carbon emissions target by 2050 takes into account Greenhouse Gases (GHG) directly emitted by AGC owned/controlled sources and indirect emissions from the generation of purchased electricity, steam, heating and cooling consumed by AGC. This is no mean feat for a global materials manufacturer of glass, chemicals and electronics industry. Beyond the company’s operations, AGC’s carbon reduction efforts can help to reduce other companies’ GHG emissions. This has not gone unnoticed as AGC received the 2022 Supplier Award from Honda Motor in the Sustainability Category, a recognition for their efforts which allow carbon reduction to propagate through the supply chain, benefitting even the final consumer.
AGC Group Vision – “Look Beyond”
The vision captures the company’s philosophy to “anticipate and envision the future”, “to have perspectives beyond our fields of expertise” and “to pursue innovations, not becoming complacent with the status quo”. This vision is guided by management policies such as “Building a better future for the coming generations” and applied in its Asia Pacific regional headquarter AGC Asia Pacific Pte. Ltd. (AAP). Following one of the company’s founding spirits “A sense of mission leads us to advance”, AAP consistently engages and shares knowledge with built environment stakeholders in the region. The partnership between AAP, regional green building councils, and other stakeholders culminated in AAP becoming one of the Founding Partners of the World Green Building Council (WorldGBC) Asia Pacific Regional Network (APN) in 2017.
This partnership aligns with WorldGBC’s emphasis that collaboration between the private and public sectors is critical in catalysing sustainable built environments for everyone, everywhere. The need for collaboration can be seen in the Net Zero Carbon Buildings Commitment, which garnered 129 signatories across 28 cities worldwide, and the Beyond the Business Case report 2021, which demonstrated irrefutably the co-benefits of investing in a sustainable built environment in the financial and social value cases. However, the situation today is vastly different from the early 2010s. The Asia Pacific region contains 16 of the world’s 28 mega-cities (cities with a population of 10 million and above), spans 11 time zones and has climates ranging from temperate to tropical. Adding to the complexity is the different economic development status, government regulations and culture. The gap between countries was wide. While countries more advanced in green buildings were tackling technicalities of energy efficiency, some others lack the awareness and thus did not even emphasize sustainability in the built environment.
Before 2017, the role of the APN Regional Manager was performed by a built environment practitioner on a rotation and part-time basis. The stakeholders recognise that the sharing of knowledge and best practices is essential for the capability development of the whole industry. Thus, it becomes apparent that the requirements to engage and collaborate with 15 regional green building councils (GBCs) and build awareness and capability exceed that of an APN Regional Manager’s part-time role. After the 2016 WorldGBC APN meeting, there was a consistent collective voice among regional GBCs to invite partners to organise, coordinate and support APN activities and business cases. With the strong build material expertise, corporate sustainable vision and governance, AGC was a natural choice. Echoing the vision to ‘Look Beyond’, AAP gladly accepted the challenge to collaborate and help realise the positive benefits of green building.
Walking the talk
How was AGC able to readily take the leap in 2017? In 1992, the Asahi Glass Foundation, which was established in 1933 to commemorate the twenty-fifth anniversary (1932) of the founding of AGC, established the Blue Planet Prize. The award is presented annually to individuals or organizations worldwide in recognition of outstanding achievements in scientific research and its application that have helped provide solutions to global environmental problems. The award’s name was inspired by the remark “the Earth is blue,” uttered by the first human in space, Russian cosmonaut Yuri Gagarin, upon viewing our planet. The Blue Planet Prize was so named in the hope that the award can encourage efforts in healing Earth’s environment so that our blue planet, this shared asset of ours, can sustain human life far into the future. It speaks volumes about the Asahi Glass Foundation’s foresight in sustainability as the Blue Planet Prize’s inaugural winner (in 1992), Dr Syukuro Manabe, was awarded The Nobel Prize in Physics 2021 for “the physical modelling of Earth’s climate, quantifying variability and reliably predicting global warming”.
It is not just what AGC does that breathes sustainability but also the impact of its products. In Singapore, AGC is the first glass manufacturer to have its products certified under the Singapore Green Building Product (SGBP) labelling scheme. To date, its product continues to hold the highest level of product certification in the market, a testimony to its ability to achieve architectural needs while achieving energy-saving requirements. This has long-lasting effects as the CO2 emitted at the time of manufacturing is offset 10 folds due to the products’ contribution to CO2 emissions reduction throughout its lifetime in urban built environments. AAP’s various technologies and commitment to helping the world achieve a more sustainable environment were recognised with the Singapore Green Building Council (SGBC) – Building and Construction Authority (BCA) Leadership in Sustainability Awards in 2018. Through the years, AAP has never stopped offering its expertise and assistance in eco-friendly materials.
Never one to keep innovations with social value to themselves, over the years AGC shared their continuous efforts in energy efficiency and achieving zero energy building at various Green Building Congresses and seminars. Their experience comes from the strong research development and the construction of the administrative building of the Kashima Plant (Kamisu, Ibaraki Prefecture) with a net-zero energy certification and the AGC Glass Europe headquarters building with a nearly zero-energy categorisation. In the Kashima Plant, the front façade utilised glass that combined heat insulation effects and photovoltaic modules, achieving air conditioning energy consumption reduction and renewable energy generation. With the knowledge gained from products and materials that made Zero-Energy Buildings (ZEB) possible, AGC shared it amongst the built environment stakeholders through their involvement in the APN Technical Task Force, contributing to the Embodied Carbon Primer Report and Net Zero Readiness Framework.
Not taking the easy way out
Sustainability has come a long way and though the focus might have shifted over the years, from environment protection to tackling climate change, what stayed constant is that sustainable efforts are never easy and it takes strong partnerships to advance the industry together. The founding spirit of Mr Toshiya Iwasaki who established the company in 1907 is “Never take the easy way out, but confront difficulties”. This remains ‘the AGC spirit’ that has been handed down from one generation to the next. At AGC, breathing the spirit of not taking the easy way out, the organisation gladly took on the responsibility to improve internally and innovate new solutions and products to continue to deliver excellence in sustainability and beyond.