Sustainability

Response to Climate Change

In 2022, we announced our endorsement of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and released information on climate-related risks and opportunities based on the TCFD recommendations. Going forward, we will continue to enhance climate change-related information disclosure and strive to further increase our corporate value by resolving social issues and growing our business.

Governance

Based on our Sustainability Basic Policy, we have established the Sustainability Promotion Committee to promote sustainability management, including climate change. The committee is chaired by the president, with internal directors serving as committee members. Furthermore, in order to enhance opinions from an external perspective and lead to deeper discussions, outside directors are allowed to attend the meetings of the Sustainability Promotion Committee as observers. The Sustainability Promotion Committee submits proposals and reports, and provides information on matters related to ESG management. The Committee will also be subject to regular oversight by the Board of Directors.

The Sustainability Promotion Committee discusses targets and plans to support the aims to enhance opportunities for more proactive discussions on climate change countermeasures in light of business activities.

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.
We added climate change and other sustainability-related items to the Hirata Risk Map on which the Company’s risks are listed.

Strategies (Scenario Analysis Overviews)

Strategies

Through scenario analyses, in fiscal 2021, we ascertained the changes in our and our customers’ industries in 2030 and 2050—under the 1.5°C and 4°C scenarios, based on scientific information such as that from the International Energy Agency (IEA)—and analyzed climate change risks and opportunities.

Based on the results of the analyses, we worked to expand energy-saving products and reduce physical risks. Specifically, we will expand the product lineup of our Eco Electric Series, make proactive arrangements to reduce procurement risks, switch to in-house energy (renewable energy), and carry out other initiatives.

In particular, for our Eco Electric Series (see page 44), we will implement initiatives that will lead to the realization of carbon neutrality worldwide, including within the Company, such as reducing CO2 emissions at plants by approximately 75%.*

* Compared with our conventional products

Indicators and Targets

Curbing global warming by reducing CO2 emissions is becoming an essential activity for realizing a sustainable society.

In order to curb global warming, we aim to achieve net zero CO2 emissions (Scopes 1, 2, and 3) from our business activities by 2050 (carbon neutrality).

In order to achieve this target, we have made achieving net zero CO2 emissions (Scopes 1 and 2) by the Company an intermediate target and are considering the formulation of reduction plans and reduction measures. We are also considering a plan to prioritize our supply chain CO2 emissions (Scope 3) in the high-emission categories.

Scenario Analysis Results

Based on the aforementioned 1.5°C Scenario, the Company recognizes that, while business opportunities will increase due to increased demand for energy-saving products, the impact of physical risks will increase in the 4°C Scenario.

Based on the results of these analyses, we will sequentially verify initiatives for maximizing opportunities while addressing recognized risks, starting with those with the highest feasibility, and promote the reflection and integration of those initiatives into management strategies.

Opportunities		Details of opportunity	Degree of impact		Countermeasures
Main Category	Middle Category	Details of opportunity	1.5℃	4℃	Countermeasures
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, and demand for products that raise productivity and improve energy-saving performance in factories and at facilities will increase.	Large	Small	Expand local production for local consumption business models, such as local manufacturing and sale of parts and repair parts that have already started in some regions, and consolidation of production bases. Introduction of eco-friendly electrification products and design and development of products for which lightness and longevity have been taken into account, etc.
Development of energy-saving products	Demand to save labor	In accordance with declining labor productivity due to rising temperatures, demand for labor-saving and efficiency improvement at production sites will increase.	Small	Small	Development of products for automated warehouses, automated guided vehicles, etc.

Transition risks

Risk		Details of risks	Degree of impact		Countermeasures
Main Category	Middle Category	Details of risks	1.5℃	4℃	Countermeasures
Carbon prices	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	Setting of carbon emission reduction targets such as carbon neutral declarations Ascertaining of Scope structure for carbon emissions, building a monitoring system, etc.
Raw material costs	Scarce resources	Increased procurement costs due to restrictions placed on raw materials and purchases due to emission regulations	Small	Small	Promoting the reuse and recycling of equipment and parts through remodeling and repair services, including renewal of aging robots, etc.
Raw material costs	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	In addition to reviewing excessive packaging in product packaging, reducing the amount of plastic used by switching to recycled paper and returnable boxes, etc.
Energy costs	Electricity costs	Electricity costs are increasing due to decarbonization of the Company’s plants and offices as well as popularization of renewable energy.	Medium	Medium	Promotion of energy saving by installation of LED lighting, etc. Examining installation of in-house power generation equipment (solar power generation equipment) and the utilization of leasing services Introduction of optimal operation by means of energy management systems, starting with buildings and plants where said systems are already installed or being considered and gradual expansion to locations where they have not yet been, etc.
	Air-conditioning costs	Due to rising temperatures, operating rate of air conditioning in plants, etc,. rises, thus air-conditioning costs increase	Small	Small	Operational improvements, including ventilation reviews, measures against air leaks, and measures to shade external air-conditioning units Installation of energy-saving air-conditioning equipment, etc.
	Distribution costs	Distribution costs rise due to shift to electric vehicles (EVs) for large vehicles.	Medium	Medium	With regard to the joint transportation being implemented in some businesses, we will consolidate production bases and expand initiatives (OEMs) transportation in some businesses to streamline interfactory transportation Examine expanding distribution by multidrop (milk run) shipments of goods to suppliers in the region, etc.

Physical risk

Risk		Details of risks	Degree of impact		Countermeasures
Main Category	Middle Category	Details of risks	1.5℃	4℃	Countermeasures
Physical cost	Restoration/operating costs	Increasing costs from expenses for restoring equipment following the effects of abnormal weather, etc.	Small	Large	Implementation of risk reduction through multiple purchasing Advance arrangements, appropriate inventory management, and thorough operation in line with business content so that a certain level of production activity can be carried out even if supply is interrupted, etc.

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