In June 2022, we expressed our support for the TCFD (Task Force on Climate-related Financial Disclosures) recommendations. We will proceed with information disclosure based on the TCFD framework (Governance, Strategy, Risk Management, Metrics and Targets) regarding risks and opportunities for our business caused by climate change, and work towards realizing a sustainable society together with a wide range of stakeholders, including shareholders and investors.
1. Governance
We established the Sustainability Committee in May 2021, chaired by the CEO, as an organization to identify and manage basic policies and significant risks and opportunities related to climate change. The Sustainability Committee identifies sustainability-related issues, formulates response plans, and promotes and supports initiatives across the entire Group. We have also established a system where the Board of Directors properly manages and supervises these activities by monitoring progress and reporting the results to the Board of Directors regularly.
2. Strategy
The Group used two scenarios regarding future climate change, the '1.5°C scenario' and the '4°C scenario,' to conduct scenario analysis and evaluation across the categories of 'Transition Risks,' 'Physical Risks,' and 'Opportunities' to assess the materiality of climate-related risks and opportunities. The evaluation results regarding the details and financial impact of each risk and opportunity are as follows.
Qualitative Assumptions for 1.5°C and 4°C Scenarios
| Scenario | Assumptions |
|---|---|
| 1.5℃ | A scenario where society as a whole undergoes transformation toward decarbonization based on the Paris Agreement, halting global warming. While stricter environmental regulations such as carbon taxes are expected, the severity of damage from extreme weather is suppressed. |
| 4℃ | A scenario where temperatures rise significantly and global warming progresses further. Development based on fossil fuels continues, and the intensification of extreme weather accelerates. |
Risks and Opportunities
| Category | Content | Business Field | Details of Assumed Risks/Opportunities | Financial Impact | ||
|---|---|---|---|---|---|---|
| 1.5℃ | 4℃ | |||||
| Transition Risks | Policy & Regulation | Carbon Tax & Pricing | Company -wide | Increase in office power procurement costs due to the introduction of carbon tax and rising carbon prices | Small | － |
| Response to GHG Regulations | Company -wide | Increase in equipment renewal costs associated with shifting private power generation facilities to green energy due to stricter GHG emissions regulations | Small | － | ||
| Market | Energy Prices | Company -wide | Increase in power procurement costs due to rising energy prices | Small | － | |
| Reputation | Investor Evaluation | Company -wide | Decline in corporate value/rating if initiatives for climate change and environmental measures are judged insufficient by investors | Medium | － | |
| Physical Risks | Acute | Intensification of Extreme Weather | Company -wide | Inundation damage to some assets due to floods/storm surges and temporary suspension of operations/sales | － | Small |
| Chronic | Sea Level Rise due to Warming | Company -wide | Impact of sea level rise is limited, but potential temporary suspension of operations/sales if combined with floods/storm surges | － | － | |
| Opportu -nities | Energy Source | Corporate Value Rise via Enviro Initiatives | Company -wide | Improvement in corporate value due to increased attention and expectations for our services in response to intensifying natural disasters caused by climate change | Large | Large |
| Products/ Services | Increased Demand for Green Energy | Sea | Deployment of new navigation support services centered on environmental indicators corresponding to the shift of vessels to green energy | Large | － | |
| Sea | Increased demand for support services for construction and maintenance of power generation facilities accompanying rising demand for offshore wind power | |||||
| Land | Increased demand for power supply/demand balance estimation services as the ratio of green energy in power supply/demand rises | |||||
| Reduction of Fossil Fuel Usage | Sea Sky Land | Increased demand for support services leading to reduced fossil fuel usage, and new development of transport planning support services utilizing synergies between sea, air, and land businesses | Medium | － | ||
| Internet | Increased demand for personal power supply/demand forecast services in response to rising power-saving awareness among individuals and households | |||||
| Market | Shift to Eco-consciousness | Land | Increased expectation and demand for food loss minimization services accompanying consumers' shift to eco-consciousness | Medium | － | |
| Resilience | Rising Needs for Countermeasures against Disasters caused by Extreme Weather | Sea Land | New development of compensation services for damage caused by extreme weather, such as ship arrival delays and sports event cancellations | Medium | Large | |
| Land | Increased demand for business continuity risk measurement/countermeasure services (TCFD response) such as inundation risk for land facilities like factories, warehouses, and power plants due to intensifying natural disasters | |||||
| Land | Increased demand for calculation of impact on business due to increased natural disasters and acute risk analysis services (1.5°C scenario) Increased demand for impact analysis on crop growth/harvest per production area and yield prediction services (4°C scenario) | |||||
| Land | Increased demand for insurance services and health monitoring services for heatstroke risks during exercise/work, which increase due to rising temperatures | |||||
| Internet | Increased demand for personal disaster prevention/mitigation information services due to heightened sense of crisis regarding the increase and intensification of natural disasters | |||||
3. Risk Management
As the environment surrounding companies becomes complex and uncertainty increases, accurately dealing with risks that have a significant impact on corporate activities is essential for executing management strategies and business objectives. The Group positions climate change-related issues as risks that have a significant impact on management, and appropriately reviews and manages them at the Sustainability Committee. We also share this information with the Risk Management Committee, which oversees risk management and crisis management in light of business continuity, and build a system to establish basic policies for risk management, such as supervision before risks occur and response policies immediately after risks occur.
4. Metrics and Targets
The Group promotes the improvement of technologies and solutions that enable both the reduction of environmental impact and the maximization of corporate business profits, as well as global partnerships, and works toward realizing a sustainable society as an industry and society as a whole.
As part of this initiative, we are promoting the reduction of greenhouse gas (GHG) emissions in line with science-based targets validated by the Science Based Targets initiative (SBTi), an international initiative.
＜Science Based Targets (SBT Validated)＞
Scope 1+2: Reduce GHG emissions by 50% by FY2030 (compared to FY2022)
Scope 3: Reduce GHG emissions by 25% by FY2030 (compared to FY2022)
In addition to achieving the above SBT validated targets, we aim for virtually zero GHG emissions (Scope 1+2) by FY2030 as a higher target level.
