Response to Climate Change
Using the adoption of the Paris Agreement in 2015 as an opportunity, the Company—its stated mission in summary being to “contribute to the development of society”—revised its environmental policy in 2016 amid the rapidly growing global interest relating to climate change. We are aiming to achieve both the development of society through the proliferation of products that contribute to reducing CO2 emissions and environmental impact, and the resolution of environmental issues such as climate change.
In November 2022, the Company announced its endorsement of the final report of the Task Force on Climate-related Financial Disclosure (TCFD). In addition to identifying, analyzing, and evaluating the risks and opportunities that climate change poses to management, we are working to enhance the quality and quantity of information disclosure that contributes to engagement (constructive dialogue) with all stakeholders, including shareholders and investors.
Governance
At a Board of Directors’ meeting held in October 2022, a resolution was passed to establish a Sustainability Promotion Committee, and full-scale operations are scheduled to begin in April 2023. The Sustainability Promotion Committee will submit proposals, reports, and provide information on matters related to ESG management, including responses to climate change. The Committee will also be subject to regular oversight by the Board of Directors.
The Board of Directors gives consideration to climate-related issues when reviewing medium-term management plans and making investment decisions.
Please refer to the page of Sustainability Management for Sustainability Promotion Structure.
Risk Management
The Sustainability Promotion Committee identifies, assesses, and manages risks related to climate change.
In scenario analyses, the Committee extracts the relevant parameters to identify risks and conducts assessments on a regular basis. The Committee also manages risks by quantitatively evaluating the financial impact of each risk.
Going forward, we will report the results of risk assessments in scenario analyses to the department in charge of risk management and link them with company-wide risk management.
Strategies (Scenario Analysis Overviews)
Scenario Analysis Overviews
Through scenario analyses, the Group ascertained the changes in the Group and its customers’ industries in 2030 and 2050—under the 1.5°C/4°C scenarios, based on scientific information such as from the International Energy Agency (IEA)—and analyzed climate change risks and opportunities. In all of the scenarios used in these analyses, we confirmed that resilient management is possible in the businesses targeted for analysis.
Under the 1.5°C scenario, a major change in policy toward decarbonization is assumed. In addition to the introduction of a carbon tax, soaring raw material and energy costs will require a shift to a more decarbonized business model. In contrast, in the 4°C scenario, the impact of physical risks will increase, and it will be necessary to respond to risks such as plant shutdowns and supply chain disruptions.
Scenario Analysis Results
Based on the previous section’s vision of future society with a 1.5°C rise, the Group recognizes that while business opportunities will increase due to increased demand for energy-saving products, the impact of physical risks will increase at 4°C.
Based on the results of these analyses, the Group will sequentially verify initiatives for maximizing opportunities while addressing recognized risks, starting with those with the highest feasibility, and promote reflecting and integrating those initiatives into management strategies.
Opportunities | Details of opportunity | Degree of impact | Countermeasures | ||
---|---|---|---|---|---|
Main Category |
Middle Category |
1.5℃ scenario | 4℃ scenario | ||
Development of energy-saving products |
Products that save more energy | In accordance with energy-saving policies and rising temperatures, electrification and automation at customer factories will advance, demand for products that raise productivity and improve energy-saving performance in factories and at facilities will increase | Large | Small |
|
Demand to save manpower |
In accordance with declining labor productivity due to rising temperatures, demand for labor saving and efficiency improvement at production sites will increase |
Small | Small |
|
Transition risks
Risk | Details of risks |
Degree of impact |
Countermeasures |
||
---|---|---|---|---|---|
Main Category |
Middle Category |
1.5℃ scenario |
4℃ scenario |
||
Carbon price | Scope 1, 2 |
Increase in manufacturing costs due to introduction of carbon taxes in each country, emissions trading, and border carbon adjustment measures |
Medium | Small |
|
Raw material cost |
Scarce resources |
Increased procurement costs due to restrictions placed on raw materials and purchases due to emission regulations |
Small | Small |
|
Cost of plastic |
Increased costs for materials containing plastic due to regulatory restrictions placed on their use and requirements that recycled plastic be used |
Medium | Small |
|
|
Energy cost | Electricity cost |
Electricity costs are increasing due to decarbonization of the Company’s plants and offices as well as popularization of renewable energy |
Medium | Medium |
|
Air-conditioning cost |
Due to rising temperatures, operating rate of air conditioning in plants, etc. rises, and thus air-conditioning costs increase |
Small | Small |
|
|
Distribution cost |
Distribution cost rises due to shift to EVs for large vehicles |
Medium | Medium |
|
Physical risk
Risk |
Details of risks |
Degree of impact |
Countermeasures |
||
---|---|---|---|---|---|
Main Category |
Middle Category |
1.5℃ scenario |
4℃ scenario |
||
Physical cost | Restoration/operating costs |
Increasing costs from expenses for restoring equipment following the effects of abnormal weather, etc. |
Small | Large |
|
Indicators and Targets
Curbing global warming by reducing CO2 emissions is becoming an essential activity for realizing a sustainable society. To fulfill its responsibility, the Hirata Group is promoting measures to reduce CO2 emissions in its business activities. As a goal for reducing the environmental impact of our business activities, we are also considering more in-depth global, medium- to long-term goals while referring to the greenhouse gas reduction target announced by the Japanese government in April 2021. In the years to come, we will carefully examine the indicators that are important to the Group from the risk and opportunity items in the scenario analyses, while continuing to monitor CO2 emissions (Scope 1, 2, 3).