Initiatives for TCFD recommendations
In May 2021, we expressed our support of TCFD (Task Force on Climate-related Financial Disclosures) recommendations. We identify the risks and opportunities posed by climate change in our business and reflect them in our management strategies. We also disclose information based on TCFD recommendations. Through dialog with a wide range of stakeholders, the Group will further strengthen its efforts to address climate change and contribute to the sustainable development of society through its business activities.
Governance
The Group has established the Sustainability Committee as an organization to promote sustainability management, and has established a system to report its efforts to the Board of Directors as appropriate.(For an overview of the Sustainability Committee, see here)
Strategy
Responses to the risks and opportunities assumed from the scenario analysis results, in line with the TCFD recommendations, are applied to business activities as measures for related materialities such as “Reduce energy loss” and “Respond to climate change.” In addition, we concentrate our R&D resources on areas that lead to “carbon neutrality (environmental impact reduction and decarbonization)” and the “pursuit of safety and comfort” and are accelerating our R&D activities for future growth.
Risk management
Our financial condition, results of operations and cash flows could be impacted by extreme weather conditions (such as shutting down operations and businesses due to heavy rain, floods or storms) associated with climate change (temperature increases), and by stricter environmental regulations (such as increased procurement costs for raw materials and energy due to the introduction of carbon taxes) in the countries and regions in which we operate.
Regarding the effects of climate change (temperature increases), the risks and opportunities assumed based on the scenario in which the temperature rise during the 21st century is “4 °C” and “less than 1.5 °C” are as follows.
■Outline of the future vision assumed in scenario analysis
When the temperature rises by 4 °C (Physical) |
When the temperature rises less than 1.5 °C (Transition) | |
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The future vision assumed |
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■Risks and Opportunities
Classification | Anticipated risks and opportunities | Our countermeasures | Related materiality | |
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Risks | Physical | Downtime at our plants and within the supply chain due to extreme weather conditions (heavy rain, floods, storms) |
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Risk of heat stroke among employees at plants and such |
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Transition | Increase in procurement and operating costs due to carbon taxes, etc. |
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Opportunities | Physical | Increase in demand for solutions that are useful in preparing for natural disasters and in the event of disasters |
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Transition | Increase in demand for energy saving in mechanical devices |
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Spread of wind power generation equipment |
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Spread of hydrogen energy |
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Spread of EVs and electrified vehicles |
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Metrics and targets
Among 13 items of materiality, the target of “respond to climate change” is “Achieve carbon neutrality by the fiscal year 2035 (by the fiscal year 2050 for the entire supply chain).” Also, we have set a “50% reduction in CO2 emissions in business activities in the fiscal year 2030 compared to the fiscal year 2018” as KPIs (management indicators) for the fiscal year ended March 2023 and beyond.
For the fiscal year ended March 31, 2023, CO2 emissions were reduced by 22.6% compared to the fiscal year 2018, relative to the KPIs (management indicators). We recognize the need to strengthen further our efforts to achieve the plan. As of April 1, 2023, we have established the Carbon Neutrality Strategy Promotion Department, a dedicated organization for promoting carbon neutrality, to strengthen the promotion of various measures to achieve carbon neutrality.