The Group will gradually disclose the 11 recommended disclosure items in the TCFD recommendations.
|(1) Oversight by the
Board of Directors
|• Execution management: quarterly progress reports||Resolution by the Board of Directors in August 2022|
|• Short-term plan (1 year): discuss at the time of budget formulation||Resolution by the Board of Directors in August
2022 (Started in FY2023)
|• Medium-term plan (3 years): discuss at the time of medium-term management plan formulation||Resolution by the Board of Directors in August 2022|
|(2) Role of management||Important matters such as basic policies for the environment as a whole, including climate change issues, are discussed and resolved by the Board of Directors||Resolution by the Board of Directors in August 2022|
|Board of Directors: manage execution and advise on the bigger picture||Resolution by the Board of Directors in August 2022|
|Exco Meeting: determine and implement executive policies and measures||Resolution by the Board of Directors in August 2022|
|Assignment of a Sustainability Officer||Scheduled to be established in FY2023|
|Establish a permanent sustainability promotion organization||Scheduled to be established in FY2023|
The following information will be gradually disclosed.
|Category||Recommended Disclosure Items||Specific Activities||Main Means of Disclosure|
|Strategy||(3) Risks and opportunities||• Disclose short-, medium-, and long-term climate-related risks and opportunities based on the 1.5°C and 4°C scenarios
• Review scenario analysis annually and update disclosures
|(4) Impact on business, strategic and financial planning||• Align strategy with the latest scenario
• Disclose changes in strategies and risks
• Estimate financial impact of changes
|(5) Description of resilience of scenario-based strategies||• Disclose details of resilience enhancement through supply chain renewal|
|Risk management||(7) Risk management process||• Identify risks and development of criteria for their impact on the Group||Integrated Report
|(7) Risk management process||• The Sustainability Promotion Committee checks for any significant changes in the scenario analysis (for example changes in assumptions due to epidemics, wars, disasters, etc.).
• Company-wide action policy derived from the scenario analysis is discussed and resolved by the Board of Directors
• Action plans of each business unit are deliberated and resolved by the Exco Meeting and incorporated into the medium-term management plan and annual organization and budget (investment and risk management expenses)
• The Sustainability Promotion Committee compiles the approved action plans every quarter, and reports and discusses them at the Exco Meeting and Board of Directors meetings.
• The Risk Management Committee and the Sustainability Promotion Committee share information closely.
|(8) Whether (6) and (7) integrated into comprehensive risk management||Integrated management of (6) and (7)
• Annual budget
• Medium-term management plan
|Strategy briefing (Medium term management plan)
|Indicators and targets||(9) Indicators used to assess risks and opportunities||• Gradual disclosure of information related to transition risk, physical risk, climate related opportunities, and capital deployment
• Consideration of carbon pricing and compensation
|(10) Scopes 1 and 2, and if applicable, Scope 3 emissions||• Overseas information collection through GDP
• Improve the scope and accuracy of measurement of raw material information and raw material and product logistics information by renewing the Japan supply chain.
• Negotiate each department’s information sharing and collaborative disclosure with external parties (customers, suppliers, logistics, etc.)
|(11) Goals and results used to manage risks and opportunities||• Set targets in annual plans and medium-term management plans, and measure and disclose actual results.||Integrated Report|
In order to publish information based on the TCFD recommendations, we have examined the factors that cause change in the market environment in which our business operates. In developing our business of producing and supplying paints and related services, we must consider the environmental changes that may affect items that will be painted, namely our customers’ assets and products.
This includes a wide range of objects, such as automobiles, buildings, infrastructure, and industrial products. Therefore, we referenced various scenarios and forecasts related to climate change published by different organizations, scenarios published by industry organizations, and also scenario analyses including risks and opportunities made by customers. In our scenario analysis, we decided to draw a vision of society in the market environments of each region of the world in 2030 and 2050 in two different scenarios, a climate change countermeasure scenario (1.5°C rise) and a Business-as-Usual scenario (4°C rise).
We are working to identify risks and opportunities based on market environment scenarios. In the process of assessing the impact on each business field, since we have discovered new factors for the market environment, we are improving accuracy while repeating this identification process and making corrections to the scenario.
|Classification||Specific Example||Impact Term|
|Transition risk||Policies and laws||• Costs for carbon tax and climate change countermeasures||●||●|
|Technology||• Restrictions on the use of chemicals in general||●||●|
|• Raw material supply issues due to material conversion||●|
|Markets||• Changes in our business environment with existing customers||●||●|
|Reputation||• Evaluation of chemical companies||●||●|
|Acute||• Impact on the company and supply chain due to abnormal weather, wind, or flood damage||●||●|
|Chronic||• BCP risks due to global warming and rising sea levels||●|
|Opportunities||Efficient use of
|• Increased opportunities for long-term durable products and services||●||●|
|Energy sources||• New products and services aimed at saving energy in customer production processes||●||●|
|• New needs related to climate change countermeasures and resource circulation||●||●|
|Markets||• Emergence of new businesses due to changes in industrial structure||●||●|
|Resilience||• Business needs for fields that promote environmental resilience||●|
The Group provides common market environment scenarios and examples of risks and opportunities to business units and Group companies, then verifies scenarios in each business environment and identifies risks and opportunities. Each business unit responds to risks and adjusts strategies based on the identified risks and opportunities, then lists up financial impact items, and determines their degree of impact. Finally, we identify (list up) and quantify the financial impact on the Group.
We are promoting initiatives through industry-academia collaboration with Kyoto University, with the aim of information disclosure based on TCFD recommendations.
In the development process of market environment scenarios in scenario analysis, through sessions with FUJIMORI Shinichiro, Associate Professor of Graduate School of Engineering (Department of Environmental Engineering), Kyoto University, we have taken into account events and economic impacts (impacts on GDP, etc.) that are assumed in the climate change countermeasure scenario (1.5°C rise) and the Business-as-Usual scenario (4°C rise). In addition, we heard opinions from various perspectives on how our lifestyle will change and what kind of social environment we will encounter in promoting climate change countermeasures, and gained a deeper understanding through discussions.
as case studies to simulate changes in the market size for 2030 and 2050. In that simulation, in addition to forecasts based on conventional GDP per capita and population growth, we reflect factors such as the impact on GDP from countermeasures against climate change, and the impact of various social changes such as changes in people’s travelling distance. By doing so, we are examining risks and opportunities due to climate change in each of our businesses, quantifying the impact on financial indicators, and creating basic data to improve accuracy.
(Industry-academia collaboration with Kyoto University is carried out through Kyoto University Original Co., Ltd., a wholly owned subsidiary of Kyoto University.)
Changes in automobile sales by country/region were estimated, assuming population, GNP per capita, and the various impacts of policy and infrastructure changes due to climate change countermeasures, under the Business-as-Usual scenario (4°C) and climate change countermeasure scenario (1.5°C).
Automobile sales will continue to increase in the future, and especially in the climate change countermeasure scenario, there will be remarkable increases in Africa and the Asia-Pacific regions.
We estimated the changes in architectural paint sales volume by country under the Business-as-Usual scenario (4°C) and climate change countermeasure scenario (1.5°C). However, there was no significant difference between the scenarios, and our estimation results showed that countries with high sales volume growth rates will be concentrated in the Africa region, mainly due to population growth.
As for architectural paints, the impact of climate change countermeasures on the market scale will be limited; therefore, we believe it to be necessary to consider secondary changes in needs, such as heat countermeasures caused by climate change.