Status of compliance with TCFD and TNFD disclosure recommendations
We have identified the tackling of climate change as one of our materialities (important issues). By formulating policies and plans to address the risks and opportunities identified based on the principles of the Task Force on Climate-related Financial Disclosures (TCFD) and the Task Force on Nature-related Financial Disclosures (TNFD), we will ensure that risks are mitigated and that opportunities expand.
Governance
We have formulated and announced our “Carbon-neutral Strategy 2030,” which is a mid-term strategy for environmental initiatives, and the “7th Environmental Action Plan,” which is a short-term plan (2021-2025), and are promoting activities throughout the entire group to achieve these goals. In order to carry out these initiatives steadily and speedily, we have organized an Environmental Committee, clarified the roles of the Board of Directors and management meeting, and their relationships with each other through a corporate governance system, and are implementing them using the PDCA cycle.
| Disclosure recommendation |
TCFD | TNFD | Related information links |
| Board supervision of risks and opportunities | The Board of Directors receives regular reports on, and reviews, progress of the mid-term Carbon-neutral Strategy. Regarding the budget to execute this strategy, the Board makes comprehensive resolutions each fiscal year, exercising judgment and oversight over annual plans. For projects requiring significant investment, the Board receives individual reports and makes resolutions. | ||
| Management’s role in assessing and managing risks and opportunities | The company-wide Environmental Committee, chaired by the President, determines the Carbon-neutral Strategy, which will serve as our policy for addressing risks and opportunities; approves targets and implementation plans; and oversees the progress and review of those plans. | ||
| How human rights policies and related activities, and oversight are conducted with respect for stakeholders, while also respecting indigenous peoples and local communities. [TNFD recommended disclosures] |
We formulated the Tokai Rika Group Human Rights Policy and respects internationally recognized views on human rights, such as the International Bill of Human Rights and the ILO Declaration on Fundamental Principles and Rights at Work, and supports the UN Guiding Principles on Business and Human Rights. We announced that we would continue to promote initiatives to respect human rights. We hope that stakeholders will understand and support our policies through information disclosure, and we will also actively engage in dialogue regarding negative impacts on human rights and provide feedback on our activities. | ||
Strategy
Regarding climate change, we have established two distinct scenarios, where transition risks and physical risks each reach their maximum levels, and have conducted scenario analysis to identify risks and opportunities. For risks, the Environmental Committee will consider initiatives to strengthen resilience and incorporate them into the mid-term plan, thereby enabling the company to respond in a reliable and systematic manner. We believe this approach will ensure Tokai Rika’s business activities can adapt to the societal conditions projected under each scenario.
1.5°C Scenario
A society that has successfully limited temperature rise to within 1.5°C. In this scenario, society works collectively to curb global warming, speeding up decarbonization as a result of greenhouse gas and renewable energy policies, technological innovation, and infrastructure development.
While physical risks from rising temperatures are mitigated, transition risks are set as the highest in this scenario due to the need to adapt to societal changes, such as stricter regulations and shifting stakeholder demands.
4°C Scenario
A society where global warming could not be halted, resulting in a 4°C temperature rise. Climate change accompanying this temperature increase is projected to increase acute risks from natural disasters, such as more frequent torrential rains and typhoons. Chronic risks will also emerge, such as water shortages due to altered rainfall patterns. This scenario represents the maximum physical risk.
| Type | Risks and opportunities over the short, medium, and long term | Impact on business, strategy, finance | ||||
|---|---|---|---|---|---|---|
| Category | Description | Timeframe | Likelihood | Cost of impact (yen) | ||
| Transition (1.5°C) |
Regulatory | Risk | Increase in operating costs due to the introduction of a carbon tax | Medium-term | High | 1.0 billion |
| Opportunity | Cost reduction (carbon tax, electricity charges, etc.) by reducing greenhouse gases | Medium-term | – | 1.5 billion | ||
| Reputational | Risk | Termination of business with customers due to not aiming for decarbonization | Long-term | High | 20.0 billion | |
| Opportunity | Stable funding through information disclosure regarding carbon-neutral measures | Long-term | – | – | ||
| Technological | Risk | Increase in material costs due to material changes aimed at lower carbonization | Long-term | Medium | 5.0 billion | |
| Opportunity | Increase in orders by developing low-CO2 products | Long-term | – | 1.0 billion | ||
| Physical (4°C) |
Acute | Risk | Sales decline due to intensified natural disasters causing plant suspensions and supply chain disruptions | Long-term | Medium | 10.0 billion |
| Chronic | Risk | Increase in air conditioning costs due to the rise in average temperature | Long-term | High | 0.1 billion | |
| Risk | Water-supply shortage due to changes in precipitation | Long-term | Low | 3.0 billion | ||
| Risk | Initiatives to strengthen resilience |
|---|---|
| Increase in operating costs due to the introduction of a carbon tax |
|
| Termination of business with customers due to not aiming for decarbonization |
|
| Increase in material costs due to material changes aimed at lower carbonization | Develop low-CO2 materials |
| Sales decline due to intensifi¬ed natural disasters causing plant suspensions and supply chain disruptions | Formulate a business continuity plan |
| Increase in air conditioning costs due to the rise in average temperature | Upgrade air conditioning equipment to most energy-efficient models |
| Water-supply shortage due to changes in precipitation | Reduce water withdrawals by reusing water in manufacturing processes |
| Type | Risks and opportunities over the short, medium, and long term | Impact on business, strategy, finance | ||||
|---|---|---|---|---|---|---|
| Category | Description | Timeframe | Likelihood | Cost of impact (yen) | ||
| Transition | Regulatory | Risk | Suspension of plant operations due to stricter water quality regulations for river discharge water and the inability to discharge water into the river | Long-term | Low | 3 billion |
| Reputational | Opportunity | Improvement of evaluation from stakeholders through active efforts in biodiversity conservation activities | Medium-term | – | – | |
| Opportunity | Stable funding through information disclosure regarding nature and biodiversity conservation measures | Long-term | – | – | ||
| Technological | Opportunity | Increasing orders by developing products that contribute to biodiversity conservation | Medium-term | – | 100 million | |
| Physical | Acute | Risk | Suspension of product manufacturing due to unavailability of natural resources as a result of loss of the natural environment | Long-term | Medium | 1 billion |
*Timeframe: Short-term is less than 5 years; Medium-term is between 5 and 10 years; Long-term is 10 years or more.
Risk management
We conduct impact analysis based on scenarios such as NZE scenario (IEA WEO2023), RCP85 (IPPA AR6), and Aqueduct Water Risk Atlas (WRI), and identify risks and opportunities.
| Disclosure recommendation | TCFD | TNFD | Related information links |
| Risk and opportunity identification and assessment process |
We conduct analyses based on climate change scenarios such as IEA (International Energy Agency) Net Zero by 2050 and IPCC (Intergovernmental Panel on Climate Change) RCP, identify risks, and assess impacts. We strive to quantify the impact in monetary terms and understand the impact on finances. | ||
| Risk and opportunity management process | For identified risks and opportunities, specific responses and goals are incorporated into mid-term and annual plans for environmental initiatives, and progress is managed. In addition, the evaluation of risks and opportunities will be periodically reviewed based on the latest scenarios and social trends in order to improve the accuracy of the evaluation. | ||
| Integration and communication status for risk management throughout the organization | In the materiality analysis of the entire organization, the preservation of the natural environment, which is the foundation of society, is taken up as an analysis item, and among these, “response to climate change” and “biodiversity conservation” are identified as important issues. Responses to issues are incorporated into the sustainability and carbon-neutrality policies, which take precedence over the central policy and each department's policy, thus our risk response is managed. | ||
Indicators and goals
In the mid-term strategy “Carbon-neutral Strategy 2030” and the short-term plan “7th Environmental Action Plan,” activity indicators and goals for each item are set by working backward, and the progress of activities against the goals is confirmed and monitored by the Environmental Committee. By doing so, we carry out planned execution.
| Disclosure recommendation | TCFD | TNFD | Related information links |
| Indicators used to assess and manage risks and opportunities |
The degree of impact caused by risks and opportunities is determined by the amount of financial impact, and responses are prioritized based on the calculated amount of impact. Regarding responses to risks and opportunities, we set indicators for each initiative and manage their progress. [Climate change related] [Nature related] |
||
| Indicators used to assess and manage dependency relation and impacts on nature [TNFD recommended disclosures] |
Use of natural resources: Water withdrawal (㎥) |
||
| Indicators | Target | Goals | FY2024 | ||||
|---|---|---|---|---|---|---|---|
| Base year | Target year | Goals | Single year goal | Results | |||
| Climate change related | Plant CO2 emissions (t-CO2) |
Consolidated | FY2013 | FY2025 | ▲25% (97,920t-CO2 or less) | 102,882 t-CO2 or less | 93,756 t-CO2 |
| FY2030 | ▲60% (52,224 t-CO2 or less) | ||||||
| Unconsolidated | FY2013 | FY2025 | ▲25% (42,320t-CO2 or less) | 43,495 t-CO2 or less | 35,938 t-CO2 | ||
| FY2030 | ▲60% (22,570 t-CO2 or less) | ||||||
| Renewable energy rate (%) |
Consolidated | FY2025 | 15% or more | 12.8% or more | 19.0% | ||
| 2030 | 70% or more | ||||||
| Transport CO2 emissions (t-CO2) |
Unconsolidated | FY2013 | FY2025 | ▲12% (2,831t-CO2 or less) | 2,863 t-CO2 or less | 2,829 t-CO2 | |
| Water withdrawal (thousand ㎥) |
Unconsolidated | FY2019 | FY2025 | Below base-year results (551 thousand ㎥ or less) |
551 thousand ㎥ or less | 488 thousand ㎥ (cubic meter) |
|
| Nature related | Discharge of waste materials (t/million pieces) | Unconsolidated | FY2018 | FY2025 | Below base-year results (0.37 t/million pieces or less) |
0.37 t/million pieces or less | 0.20 t/million pieces |
| Discharge of plastic waste (t) | Unconsolidated | FY2018 | FY2025 | Below base-year results (610 t or less) |
610 t or less | 339 t | |
| Water quality of river discharge water | Unconsolidated | Below voluntary criterion value (set in addition to legal regulation value) |
Below voluntary criterion value | No target value exceeded | |||
| Biodiversity conservation activities | Unconsolidated | Set for each activity (habitat area of target alien species, etc.) |
Set for each activity | Achieved each activity | |||
| FY 2023 | FY 2024 | ||
|---|---|---|---|
| SCOPE 1 | Direct greenhouse gas emissions by Tokai Rika itself. | 125,809 | 87,687 |
| SCOPE 2 | Indirect emissions from the use of electricity, heat, or steam supplied by others. | 93,404 | 78,210 |
| SCOPE 3 | Emissions by others related to : Tokai Rika's activities. | 1,508,278 | 1,473,557 |
| CATEGORY 1 | Purchased goods and services | 1,324,065 | 1,267,551 |
| CATEGORY 2 | Capital goods | 80,847 | 115,925 |
| CATEGORY 3 | Fuel- and energy-related activities not included in Scope 1 or Scope 2 | 12,703 | 12,968 |
| CATEGORY 4 | Upstream transportation and delivery | 50,786 | 49,068 |
| CATEGORY 5 | Waste generated in operations | 497 | 405 |
| CATEGORY 6 | Business travel | 2,743 | 3,327 |
| CATEGORY 7 | Employee commuting | 22,897 | 10,603 |
| CATEGORY 8 | Upstream lease assets | Included in Scope 1 or Scope 2 and Category 1 | |
| CATEGORY 9 | Downstream transportation and delivery | Not applicable | |
| CATEGORY 10 | Processing of sold products | 6,802 | 6,738 |
| CATEGORY 11 | Use of sold products | 36 | 44 |
| CATEGORY 12 | End-of-life treatment of sold products | 6,902 | 6,928 |
| CATEGORY 13 | Downstream lease assets | Included in Scope 1 or Scope 2 and Category 1 | |
| CATEGORY 14 | Franchises | Not applicable | |
| CATEGORY 15 | Investments | Included in Scope 1 or Scope 2 and Category 1 or Category 2 | |
| Total | 1,727,491 | 1,639,454 | |