Environment
Disclosure based on TCFD recommendations
Based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD*), we will actively disclose information to stakeholders from the four perspectives of “Governance”, “Strategy”, “Risk Management” and “Metrics and Targets” and promote management with greater awareness of climate change.
* TCFD: Task Force on Climate-related Financial Disclosures, established by the Financial Stability Board at the request of the G20, which recommends understanding and disclosing the risks and opportunities posed by climate change in terms of financial impacts.https://www.fsb-tcfd.org/
Governance
We recognize that addressing climate change is an important management issue. Under the supervision of the Board of Directors, the Sustainability Management Committee, an advisory body to the President, deliberates on important issues such as formulating basic policies on climate change and managing climate change risks and opportunities. The Sustainability Management Committee includes the heads of business and corporate divisions, and has established a system to make appropriate management decisions on climate change issues and promptly reflect the results in management.
Prior to deliberations by the Sustainability Management Committee, a Climate Change Working Group, comprised of members from each business unit, identifies and assesses climate change risks and opportunities.
We plan to proceed with a detailed analysis of risks and opportunities that are expected to have a significant impact on our business, and will consider how to respond to them and incorporate them into our strategy.
Climate Change-related Governance Structure Chart
Strategy
We conducted a scenario analysis based on climate change scenarios from the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC) and considered the impact of identified risks and opportunities on our business and policies on responding to the identified risks and opportunities.
We aim to reduce GHG emissions (Scope 1 and 2) by 50% from the 2019 level by 2030. Therefore, we set the period until 2030 as the time frame for the above scenario analysis.
Reference Scenario
| Category | Scenario outline | Key references |
|---|---|---|
| Below 2℃ scenario | Toward the realization of a decarbonized society, policies and regulations such as carbon pricing and energy conservation regulations will be strengthened, and demand for semiconductor products with high efficiency and low power consumption will increase. |
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| 4℃ scenario | New climate-change-related policies and regulations are not introduced, and the shift of demand to high-efficiency semiconductor products with low power consumption is limited. Meanwhile, the risk of damage to our locations will increase due to the increasing severity and frequency of natural disasters. |
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Identified risks and opportunities
High: More than 6 billion yen
Medium: More than 1 billion yen and up to 6 billion yen
Low: Up to 1 billion yen
| Classification | Division | Climate Change Factors | Risk/ Opportunity |
Impact on Our Company | Degree of Impact | Action Policies |
|---|---|---|---|---|---|---|
| Transition risk, Opportunity |
Policy, legislation |
Introduction of carbon tax | Risk | Increase in the cost of purchasing goods resulting from the introduction of carbon taxes causing suppliers' manufacturing costs to increase. | High | Adjusting sales prices and switching to logistics operators with low GHG emissions |
| Stricter CO2 emission regulations | Risk | Increase in logistics costs resulting from progress in decarbonization using alternative aviation fuels such as SAF | Medium | Reducing costs through the improvement of the efficiency of logistics leveraging the expertise of logistics partners | ||
| Risk | Decline in net sales resulting from direct sales from suppliers to customers, which are promoted to reduce GHG emissions from logistics | High | Providing high-value added services, which are impossible in direct sales, by fully leveraging DX based on commercial rights and human resources (networks) | |||
| Technology | Improvement of transportation technologies | Opportunity | Decline in logistics costs as a result of the improvement of technology and the fuel efficiency of aircraft | Medium | Adjusting sales prices and maximizing sales quantity | |
| Market | Increased demand for products and services adapted to climate change impacts | Opportunity | Increase in net sales of products including high-efficiency memory semiconductors with low power consumption, which will result from progress in the decarbonization of data centers which consume large amounts of power and electronic devices (such as smartphones and PCs) | High | Increasing Samsung's share of the memory semiconductor and other markets as Samsung boasts world-leading energy-saving technologies | |
| Opportunity | Increase in net sales of high efficiency, low power consumption automotive semiconductors which will result from progress in the decarbonization of automobiles (computerization and electrification) | High | Expanding the Company's market share across the entire automotive industry using the Toyota Tsusho Group's global network and sales expertise | |||
| Physical risk | Acute | Increased severity and frequency of natural disasters/extreme weather events (heavy rainfall, floods, typhoons, water shortages, etc.) | Risk | Loss of sales opportunities resulting from damage to our locations or supply chain | Medium | Continuing to formulate, manage and operate the business continuity plan (BCP) |
| Chronic | Rise in average temperature | Risk | Increase in the cost of relocating logistics bases due to sea level rise | Medium | Continuing to formulate, manage and operate the business continuity plan (BCP) |
Risk Management
Risks related to climate change are identified and assessed by Climate Change Working Group under the Sustainability Management Committee. Then the Sustainability Management Committee manages climate change risk in cooperation with the Risk Management Committee, which manages all risks for the company. The Risk Management Committee determines and prioritizes the importance of company-wide risks, including climate change risk, based on two evaluation criteria: “likelihood/probability of loss” and “scale of loss/impact on management.”
Metrics and Targets
Metrics
We have established GHG emissions(Scope 1, 2 and 3) as metrics for managing climate-related risks and opportunities.
Results
Trends in Scope 1 and 2 GHG emissions results
Trends in GHG emissions results (Scope 1 and 2)
The increase in emissions during FY2022 and FY2023 is attributed to the Company beginning to operate its own warehouses in January 2022.
(Scope 1 and 2 emissions are calculated on a calendar year basis (January to December) and total of the Company and consolidated subsidiaries)
Changes in the breakdown of Scope 3 emissions by category (Unit: t-CO2)
| FY2022 | FY2023 | |
|---|---|---|
| Category 4 - Upstream transportation and distribution | - | 1,634.33 |
| Category 6 - Business travel | 39.99 | 115.4 |
| Category 7 - Employee commuting | 10.01 | 21.99 |
(Scope 3 emissions are calculated on a fiscal year basis (April to March) and only of the Company(non-consolidated))
● Category 4
Scope of calculation: Greenhouse gas emissions associated with air transportation for Tomen Devices' imports from outside Japan and its exports to countries outside Japan, and greenhouse gas emissions associated with domestic transportation (truck transportation) where Tomen Devices is the cargo owner
Calculation standard: Calculated in accordance with Ministry of the Environment “Greenhouse Gas Emissions Calculation and Reporting Manual” (version 4.9)
Scope 3, category 4 emissions in FY2022 were excluded from the scope of calculation because it was difficult to collect data needed for their calculation.
● Category 6
Scope of calculation: Greenhouse gas emissions associated with business trips made by Tomen Devices employees in Japan
Calculation standard: Calculated by multiplying the amount of the travel allowances paid by the mode of transportation by emission intensity
Emission intensities from the Database on Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (ver. 3.3) were used in accordance with the Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain Ver. 2.4.
● Category 7
Scope of calculation: Greenhouse gas emissions associated with the commutes of Tomen Devices employees in Japan
Calculation standard: Calculated by multiplying the amount of the travel allowances paid by the mode of transportation by emission intensity
Emission intensities from the Database on Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (ver. 3.3) were used in accordance with the Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain Ver. 2.4.
Targets
The Toyota Tsusho Group has set a target to reduce GHG emissions by 50% by 2030 (compared to 2019) and to be carbon neutral by 2050. As a member of the Toyota Tsusho Group, we are working to reduce GHG emissions based on this target. Specifically, we will first implement thorough energy-saving activities within the TOMEN DEVICES Group (power saving in offices and other locations by use of LEDs etc.) and we will work to reduce CO2 emissions in our own logistics and other operations.
