The Task Force on Climate-related Financial Disclosures (TCFD) was established by the Financial Stability Board (FSB) at the request of the G20 to examine how to disclose climate-related risks and opportunities, and how financial institutions should respond to the disclosures. The TCFD recommends that all companies disclose climate-related information in line with the four thematic areas: governance, strategy, risk management, and metrics and targets. We will thus disclose our information in accordance with the four disclosure recommendations.

Governance

• ・The Steering Committee is organized under the guidance and supervision of the Board of Directors. The Director and General Manager of the Administration Division serves as the Head of the Committee. The General Managers of the divisions have a key role in overseeing overall risk management policies.
• ・Four times a year, the General Managers of the divisions examine climate-related risks and opportunities for our business, which arise from mid- to long-term climate change impacts, and take necessary measures in cooperation with the departments involved in the risk management.
• ・The results are reported to the Steering Committee. If there is a case that may have a significant impact on our business, the results are reported to the Board of Directors, which makes necessary decisions after receiving a request for decision, twice a year.
• ・The Audit and Supervisory Committee provides advices to the Steering Committee as appropriate.

〈Governance and Risk Management Organization Chart〉

Strategy

(1) Business Strategy

We assessed where and how the climate-related risks and opportunities have influenced our business. The risks and opportunities refer to "transition" risks and opportunities that arise from changes in social demands such as policies and regulations, or to "physical" risks that arise from extreme weather events. Each risk category specifies the items that could have an impact on the company’s profit and loss.

We performed scenario analysis by using the “science-based scenarios” piloted by the International Energy Agency (IEA) and other organizations to assess where and how our business would be influenced. At this time, the scenario analysis coverage is the entire supply chain of the Group, which includes the purchasing, development, manufacturing, sales, and disposal of products and services. We used two scenarios, the IEA 4°C scenario and 1.5°C scenario, to investigate and assess the climate change impacts in 2030.

We aim to achieve the "net zero" CO2 emissions from electricity by 2025 and to reach carbon neutrality by 2050. By using the publicly available climate-related scenarios at this time, we calculated climate-related impacts on our group business. The results of the analysis show that we have been playing a part in reducing global CO2 emissions by focusing our business on xEVs to lower carbon emissions as well as by reducing carbon footprint of our own business. 
Specifically, we are committed to reducing energy consumption to mitigate negative impacts, replacing production equipment with energy-efficient appliances to improve energy use intensity, and focusing on xEV-related businesses and local production for local consumption to drive positive impacts. Besides, we have been using recycled materials for our products and improving production efficiency through reassessing the manufacturing processes.

(2) Analysis of climate-related impacts on our business and finance

Under the 4°C scenario

The 4°C scenario assumes that, if any actions were not taken to respond to climate change, the average global temperature would increase by approximately 4°C by the end of the 21st century compared to the level of pre-industrial times. While the level of physical climate risks such as worsening extreme weather events and sea level rise would increase, no stricter restrictions on business and consumption activities than they are today would be imposed in the future.

From what we understand, the business impact under the 4°C scenario would be the temperature-related health risks of employees who work in areas where we run our business, which would lead to higher response costs. Besides, supply-chain disruptions caused by extreme weather events could delay or suspend material purchasing, which would make it harder for us to continue our business.

The profit impact for FY2029 would be a decrease of approximately 0.6 billion yen, premising that we will meet our long-term vision target of net sales of 100 billion yen by FY2029. (Note)

Under the 1.5°C Scenario

The 1.5°C scenario assumes that, if global efforts to reach carbon neutrality were accelerated, the average global temperature rise would be limited to about 1.5°C by the end of the 21st century compared to the level of pre-industrial times. While physical climate risks would not increase, restrictions on business and consumption activities would be more tightened by imposing taxation and legal regulations.

From what we understand, the business impact under the 1.5°C scenario would be additional costs generated by introducing carbon taxes and expanding emissions trading if global activities were intensified to achieve carbon neutrality. Meanwhile, opportunities for our products to meet the growing demand for low-carbon technologies including renewable energy and xEVs to build a zero-carbon society would increase.

The profit impact would be an increase of approximately 3.1 billion yen, promising that we will have net sales of 100 billion yen by FY2029. (Note) 

Note: An estimated impact on gross profit, compared to the FY2020 level (unit: billions of yen) 

Risk Category and Impact Analysis

(Note)

• １ Transition risks and opportunities (chances) refer to risks and opportunities that have an impact on corporate revenue and financial conditions, which arise from policies, regulations, legal systems, as well as from changes in social demands and business environment associated with them.
• ２ Physical risks and opportunities refer to the risks and opportunities that a company's revenue and financial status are affected by physical phenomena, including extreme weather events such as more intensified typhoons mainly due to increasing greenhouse gas emissions and rise in average global temperature and sea level.

Risk Management

• ・Our climate-related risks are identified, evaluated and managed at the Steering Committee.
• ・Based on the results of risk assessments conducted by each division, the need for measures and priorities are considered and reported to the Steering Committee.
• ・As a result of the risk assessments, cases and responses that may have a significant business impact are reported to the Board of Directors, which makes necessary decisions on them after receiving a request for decision.
• ・Each division creates and implements a risk mitigation plan under the instructions and guidance of the Board of Directors as well as the Steering Committee.
• ・The Company has also developed an environmental management system based on ISO 14001. The climate-related risk management includes the monitoring of risks such as compliance risk, which is based on the ISO management system.

Metrics and Targets

As the following targets are set for reducing greenhouse gas emissions, we are working on solar system installation, plant automation, energy-saving practices through production efficiency improvement by increasing the efficiency of plating lines, and switchover to renewable energy. In the future, we will also respond to carbon pricing.

〈Sustainable Development Goal〉

・Numerical Target

・Other Goals

• ・ Product development for contributing to society’s carbon neutrality and review of power usage for supporting technological development, including chemical recycling, etc.
• ・Choosing companies that have low CO2 emissions and renewable energy sources

For ESG data such as the company’s electricity consumption, greenhouse gas emissions, see this page.