We believe that climate change issues may lead to risks and opportunities for the Company as well, and are working to enhance the quality and volume of information disclosure while improving governance and risk management systems.

Governance

The Company has established the Sustainability Committee, an advisory body to the President, as a platform for enhancing the effectiveness of sustainability transformation in terms of management supervision and business execution.
The Sustainability Committee is chaired by the Sustainability Promotion Administrator (Managing Executive Officer) appointed by the President. With the participation of the President, Director Managing Executive Officers and Executive Officers, the Committee discusses and determines policies, materiality, strategies, risk management, etc. related to sustainability issues including climate change based on proposals and reports from the Secretariat, and promotes cross-functional activities and initiatives.
Regarding the issue of climate change, the Climate Change Working Group, established under the Committee, monitors GHG emissions, analyzes risks and opportunities, and considers countermeasures, and reports its activities to the Sustainability Promotion Administrator.
The Sustainability Promotion Administrator reports the results of the activities of the Sustainability Committee and the Working Group to the President, and also reports on deliberation items.
Activities of the Sustainability Committee are reported to the Board of Directors through the President, and the Board of Directors supervises the initiatives.

Strategy

In order to consider the impact of climate change-related issues on the Company’s business, it assessed the financial impact in terms of transition risk and physical risk, using the 1.5°C and 4°C scenarios. The 1.5°C scenario assumes a higher risk of increased operational costs due to the strengthening of the carbon pricing policy and a lower preference for our products and services due to changes in customer preferences, values, and behavior. In the 4°C scenario, the impact of physical risks to manufacturing sites due to windstorms, floods, and other factors is considered to be significant. The main climate-related risks assessed based on the scenario analysis are as follows.

Time horizon: “Short-term” is assumed to be within 3 years, “Medium-term” within 10 years, and “Long-term” more than 10 years.
Impact: “Small” is assumed to be less than ¥100 million, “Medium” is assumed to be between ¥100 million and ¥500 million, and “Large” is assumed to be ¥500 million or more (based on operating income).

In order to strengthen its resilience to climate change mitigation, the Company has set our medium- to long-term environmental theme as “Promoting GHG emissions reduction throughout the value chain and establishing a foundation for environmental management with an eye toward a circular economy,” The specific initiatives in the mid-term management plan starting in FY2024 are “reduction of Scope 1 and 2 GHG emissions,” “promotion of supplier engagement,” and “reduction of actual power consumption through improvement of added value (productivity) of products.” The Company believes that the physical risks to its Thai factory and other facilities due to windstorms, floods, etc. are generally acceptable by maintaining a production capability that allows the Company to continue production at the minimum level necessary in Japan.

Risk Management

The Company’s risk management system promotes risk management under the leadership of the President who has ultimate responsibility for risk management and the Managing Executive Officer serving as the Risk Management Administrator, together with the persons in charge at each department and BU as risk owners. The Risk Management Secretariat summarizes the status of management activities related to all risks, including strategic risks, reports to the Risk Management Administrator, and promotes on-site guidance and awareness-raising activities. The Risk Management Administrator regularly reports and makes proposals to the Board of Directors and the President regarding the status of risk management.
Regarding risks related to sustainability issues, including climate change, the Sustainability Committee Secretariat analyzes and examines the impact on management and business, and the Sustainability Committee and the Board of Directors discuss and decide on materiality and the policy to deal with it.
These results are disseminated to related departments and BUs and managed under their respective risk management activities. The Risk Management Secretariat comprehensively manage and monitor these efforts across divisions.

Metrix and Targets

In order to assess and manage the impact of climate change on our business and strengthen its resilience to climate change mitigation, the Company has set a target for Scope 1 and 2 GHG emissions of 38% reduction in FY2030 compared to FY2021 (4.2% reduction per year), consistent with the 1.5°C target.
In fiscal 2023, the Company renewed the CO2-free electricity contract for the Hamamatsu area where its head office is located. The new head office building completed in October has acquired Nearly ZEB certification, which indicates that energy consumption has been reduced by 75% or more through energy conservation and energy creation compared to the standard primary energy consumption under the Act on the Rational Use of Energy for Buildings.
Regarding Scope 3, the Company promoted activities such as the use of paper-based ink cartridges instead of conventional plastic in FY2023, and we will set indicators and targets for future reductions and transition plans as part of our mid-term management plan starting in FY2024. However, we will continue to study the establishment of indicators, targets, and transition plans for future reductions based on the specific initiatives in our medium-term management plan starting in fiscal 2024: “promotion of supplier engagement” and “reduction of actual power consumption by improving the added value (productivity) of our products.”

Scope 3 Breakdown

Sustainability Index