Our Impact
Response to TCFD Recommendations
The Task Force on Climate-related Financial Disclosures (TCFD) is an international initiative established by the Financial Stability Board (FSB) to encourage companies to disclose information on the financial implications of climate-related risks and opportunities for their businesses.
Our group uses electricity and fossil fuel in our production processes, which generates GHG. At the same time, we have decarbonization technology in the area of transportation, and technologies and knowhow to create products and automotive space that contribute to energy saving. We recognize risks and opportunities related to climate change as our important management issues. We analyze and evaluate our business according to the TCFD recommendations to reinforce our sustainability management.
Governance
To comprehensively manage our ESG activities, we appoint an Executive Officer in charge of ESG
Promotion who organizes a cross-functional Sustainability Planning Meeting. Under the monitoring of
plans and progress by the ESG Promotion Executive Officer, relevant functions and members address
climate change and other environmental issues on a practical level.
Among the important issues identified in the Sustainability Planning Meeting, those that require
decisions by the management are presented by the ESG Promotion Executive Officer to the Management
Meeting for discussion and conclusion. As for the climate change, we also set KPIs that link with the
management’s remuneration, thereby reinforcing commitment to achieve our carbon neutrality target.
Strategy
Scenario Analysis Overview
- We used two scenarios: the 4°C scenario (IPCC SSP5-8.5 and IEA STEPS), where global average temperatures reach 4°C above preindustrial levels; and the 1.5°C scenario (IEA NZE).
- Based on the TCFD Framework,*1 we evaluated the impact from climate change on our businesses, identified related risks and opportunities, assessed their financial impact, and undertook relevant measures.
Risks and opportunities associated with climate change
- We deemed to have a meddle impact on the strengthening of global environmental regulations through carbon pricing. Thus, we realized that it is important to stabilize business by introducing and expanding renewable energy and energy-saving technologies to reduce carbon tax and energy costs.
- We deemed to have a large impact that people's sense of mobility will change due to climate change, resulting in a market downturn. Thus, we realized that it is important to create a new mobility value to reduce risks of conflict between social demand for carbon neutrality and our business models.
- The large-scale introduction of renewable energy has created trade-offs with environmental conservation. We will choose appropriate renewable energy suppliers and manage renewable energy usage risks to prevent such renewable energy use from leading to new environmental and waste issues.
- We take account that average global temperatures have already risen 1.5°C above preindustrial levels, analyze further risks, diversify supply chains, and use renewable energy from various sources.
- Climate change is expected to increase the need for climate change adaptation and eco-consious products. We will create new business opportunities through efforts such as the transformation of Software Defined Vehicle, product carbon footprints, and the use of recycled resins.
Business and Financial Impact
| Risk and Opportunity Types※2 | Priority Items | Influence on Our Business | Temperature rise※3 | Time span※4 | Financial Impact※5 | Countermeasures | |
|---|---|---|---|---|---|---|---|
| Transition Risks | Policy and Legal | Restrictions on business from environmental regulations | ○ Business costs increase due to rising energy costs driven by
introduction and expansion of carbon pricing ○ Manufacturing limits due to environmental regulations |
4℃ | Mid- to long-term |
Middle | [A] Reduce business costs through energy-saving facilities and
schemes. [B] Promote eco-conscious design. [C] Select appropriate supply chains and establish material traceability. |
| 1.5℃ | Short- to long-term |
||||||
| Market | Changes in business models (expansion of car sharing and subscription) | ○ Loss of business opportunities and reduced sales due to slowdown in car sales | 4℃ | Mid- to long-term |
Large | [D] Create new mobility value. | |
| 1.5℃ | Mid- to long-term |
||||||
| Policy and Legal (Legal responsibility risks) | Aging renewable energy facilities | ○ Failures in renewable energy facilities due to natural disasters and aging | 4℃ | Mid- to long-term |
Small | [E] Select appropriate facility providers and waste disposal | |
| 1.5℃ | Long term | ||||||
| Physical Risks | Chronic | Frequent major natural disasters | ○ Interruption of material supply and factory operations due to supply desruption | 4℃ | Mid- to long-term |
Large | [F] Regularly review Business Continuity Plans (BCPs). [G] Establish and implement measures against evaluated water risks. [H] Diversify supply chains and reinforce measures. [ I ] Diversify renewable energy facilities (solar, wind, etc.). |
| 1.5℃ | Mid- to long-term |
Middle | |||||
| Opportunities | Products/Services | Climate change responses | ○ Demand increase for disaster-ready | 4℃ | Mid- to long-term |
Large | [J ] Offer in-vehicle products and automotive space that can provide environmental information (e.g. disaster & flood warnings, power charging points, etc.). |
| 1.5℃ | Mid- to long-term |
||||||
| Products/Services | Adaption of eco-conscious design (changes in customer needs) | ○ Adaption of Software Defined Vehicle ○ Demand increase for eco-conscious products |
4℃ | Mid- to long-term |
Middle | [K]Strengthening SDV-related products [L]Product carbon footprint [M] Energy savings through product process optimization. |
|
| 1.5℃ | Short- to long-term |
Large | |||||
| Energy Source | Renewable energy utilization | ○ Business costs minimization by utilizing renewable energy | 4℃ | Long term | Middle | [N] Utilize renewable energy and expand energy saving. | |
| 1.5℃ | Short- to long-term |
||||||
- 2 Categorized according to TCFD risks and opportunities
- 3 The 4°C scenario: Assumes that major natural disasters would occur more frequently due to failure in
acting against climate change in some countries.
The 1.5°C scenario: Assumes that the frequency of major natural disasters remains the same as now thanks to action against climate change across the globe. - 4 Short term: One year; Mid-term: Three years; Long-term: More than three years
- 5 Small: 0 to 500 million yen; Medium: 500 million to 10 billion yen; Large: More than 10 billion yen
Our Approach to Climate Change
| Adaption to the upcoming SDV era. Virtualization Technology and Standardization. | [Ｋ] |
| Advance further energy-saving performance in products and expand the product range that uses recycled resin. | [Ｂ][Ｍ] |
| In our major net-zero CO2 emission factories, reduce further energy consumption through energy-saving activities. Also, start using the corporate PPA program to reduce external energy dependency. | [Ａ][Ｅ][Ｉ][Ｌ][Ｎ] |
| Offer delivery streamlining services and delivery options that suit diversifying customer needs. | [Ｄ] |
| Measures against road traffic congestion in Kamakura city utilizing big data Analysis through industry-government-academia collaboration | [Ｄ] |
| Offer more comfortable automotive space by combining cabin UX, sensor technologies and vehicle control models. Enable setting of optimum temperatures and cabin temperature control using thermal sensors and cameras to maximize comfortability for each passenger. | [Ｄ][Ｊ] |
| Use VR simulators to test the car cockpit human machine interface (HMI) in a virtual space. | [Ｄ] |
| Vehicle camera as installed in compact satellite, CURTIS. | [Ｄ] |
| Carry out Scope3, identify specific categories, and target setting. | [Ｂ][Ｃ][Ｈ][Ｌ][Ｍ] |
| Climate change adaptation into business continuity plan. | [Ｆ][Ｇ][Ｈ] |
Risk Management
According to our approach to risk management, we identify risks concerning climate change and confirm and discuss risk management status. Issues related to scenario analysis based on the TCFD recommendations evaluation of risks, opportunities, and financial impact and related countermeasures are reported to the ESG Promotion Executive Officer in the Sustainability Planning Meeting, and to the Management Meeting.
Metrics and Targets
Our group’s Indicators linked with executives’ remuneration is to reduce unit energy intensity by １％ per year to achieve carbon neutrality in its business activities. In addition, we are working to achieve 3% energy saving rate every year and increase usage ratio of the renewable energy in our own sites to 50% by 2030. The progress of these indicators is monitored by the Energy Conservation Committee.
