Climate-Related Information Disclosure Based on TCFD Recommendations
Our group, in line with the principles of our corporate philosophy – “Innovative Technology,” “Caring for the Earth,” and “Compassionate Action” – aims to grow our business and contribute to society by creating a company culture where employees will find fulfillment and contributing to the global environment through technological advancements. Through these goals, we strive to sustainably improve our corporate value.
SINFONIA TECHNOLOGY has been actively engaged in "ECOing" activities, including environmentally conscious product development, energy consumption and waste reduction, and contributions to environmental conservation in local communities. In response to climate change, we will disclose information on an ongoing basis in line with the TCFD* recommendations.
*TCFD: Task Force on Climate-related Financial Disclosures.
This body was established in December 2015 by the Financial Stability Board (FSB), an international organization that aims to stabilize the financial system.
In June 2017, the TCFD published recommendations aimed at helping companies to disclose information about climate-related risks and opportunities and ensure the smooth transition to a low-carbon society in order to stabilize financial markets.
Existing climate-related initiatives
・June 2022: Disclosure of Governance and Risk Management
・June 2023: Disclosure of Strategy and Metrics ＆ Targets
Governance
As part of our efforts towards sustainability, we are working on building a governance structure through our newly established Sustainability Committee.
Our President serves as the chairman of the Sustainability Committee, determining fundamental policies for addressing key sustainability issues and formulating action plans for their achievement.
One of the committee's key responsibilities is the discussion and implementation of environmental initiatives, including for climate change adaptation.
Policies set and progress made are reported to and reviewed by the Management Committee and the Board of Directors.
Overview of Climate-Related Meetings
| Meetings | Frequency | Results (Meeting Dates and Contents) |
|---|---|---|
| Sustainability Committee | Twice a year |
May 2022: TCFD disclosure, greenhouse gas emission reduction status December 2022: Greenhouse gas emission reduction status May 2023: TCFD disclosure, greenhouse gas emission reduction status |
|
Management Committee* |
Twice a year |
June 2022: TCFD disclosure, greenhouse gas emission reduction status December 2022: Greenhouse gas emission reduction status June 2023: TCFD disclosure, greenhouse gas emission reduction status |
| Board of Directors | Twice a year |
June 2022: TCFD disclosure, greenhouse gas emission reduction status December 2022: Greenhouse gas emission reduction status June 2023: TCFD disclosure, greenhouse gas emission reduction status |
*Acts as an advisory body to our President for deliberation and reporting on important management topics.
Strategy
We conduct scenario analysis to understand the risks, opportunities, and financial impacts that climate change may have on our future operations.
Based on the results, we consider measures to improve the resilience of our business activities. Our scenario analysis is based on the two scenarios published by international organizations: the 4°C scenario (projecting a rise of 4°C in the global average temperature by around 2100 temperatures during the Industrial Revolution) and the 2°C or lower (1.5°C) scenario (anticipating temperature increases to being limited to between approximately 1.5°C and 2°C due to efforts towards carbon neutrality). We have examined the potential impacts on our business as of 2030 under each scenario.
Assessment of Scenarios and Risks and Opportunities for Our Business
4°C scenario: This scenario anticipates various physical impacts of climate change, such as intensified extreme weather events. Risks include potential damage to business sites and supply chains, leading to increased costs for facility repairs and procurement.
Opportunities may occur in connection with increased demand for air conditioning due to rising average temperatures, potentially boosting sales of refrigeration-related products.
2°C or lower (1.5°C) scenario: This scenario foresees impacts related to the transition to a decarbonized society, including the introduction of carbon taxes and advancements in policies and technologies for renewable energy and energy efficiency.
Risks include increased expenses incurred in upgrading equipment and fixtures to high-efficiency models following more stringent emission reduction regulations, as well as an heightening demand for products without greenhouse gas emissions as required by greenhouse gases emission regulations.
As a result, we expect an increase in sales of products in our ammonia- and hydrogen-related portfolio, and more demand for products from our semiconductor and power supply-related ranges due to the shift toward electric.
|
Impacts of Climate-Related Issues (Risks / Opportunities) |
Projected Events |
Impacts on Our Business as of 2030 |
|||
|---|---|---|---|---|---|
| The 4°C Scenario | The 2°C or Lower Scenario | ||||
| Impact of the transition to a decarbonized economy | Risks | Introduction of carbon taxes and
emissions trading |
Increase in business costs | － | Large |
| Response to GHG emission regulations |
Increased expenses to upgrade to high-efficiency equipment and fixtures Decrease in sales of industrial vehicle-related products due to reduced demand for GHG-emitting products |
Small | Large | ||
| Recycling regulations |
Increased costs to develop and manufacture recyclable products |
Small | Medium | ||
| Renewable energy policies |
Increase in business costs due to renewable energy prices |
Small | Large | ||
| Changes in raw material costs |
Increased procurement costs due to rising prices of plastics and metals |
Small | Medium | ||
| Changes in evaluations by customers |
Decrease in revenue due to contract cancellations or losing market share to competitors if environmental compliance is not achieved |
Small | Large | ||
| Opportunities | Response to GHG emission regulations |
Increased demand for products without GHG emissions |
Medium | Large | |
| Recycling regulations |
Increased revenue from products used for scrap recycling following increased demand for metal recycling |
Medium | Large | ||
| Renewable energy policies |
Increased revenue from energy management-related products due to increased demand for renewable energy facilities |
Medium | Large | ||
| Advancement in low-carbon technologies |
Increased revenue from semiconductor equipment-related and controller products due to the expansion of demand for semiconductors and electronic components with the shift toward electric and autonomous driving in various fields Increased revenue from new energy-related products associated with clean energy |
Medium | Large | ||
| Physical effects of climate change | Risks | Escalation of extreme weather
events |
Operational shutdowns, disruption of logistics functions, increased response costs Delayed delivery of procurement materials and increased procurement (transportation) costs |
Large | Medium |
| Rise in average temperatures |
Increase in energy costs due to increased use of air conditioning |
Medium | Small | ||
| Deterioration of labor and construction conditions |
Incurrence of costs for measures to prevent heat stroke due to its increased likelihood |
Medium | Small | ||
| Opportunities | Rise in average temperatures |
Increase in sales of refrigeration-related products due to increased use of air conditioning |
Large | Medium | |
Response to These Risks and Opportunities
Moving forward, we will consider and take measures to address those areas where our scenario analyses suggest a potentially significant impact on our company.
Within our decarbonization strategy in particular, we will consider ways to achieve set goals at a company-wide level.
To mitigate risks, we will promote the introduction of environmentally friendly equipment in our production activities, such as energy-saving and high-efficiency air conditioning, as well as renewable energy sources such as solar power. In terms of opportunities, we will focus on developing products that contribute to decarbonization.
Risk Management
We recognize climate change risk as one of the significant challenges facing our company.
Our Sustainability Committee gathers information on climate change-related risks and opportunities, identifies and evaluates them, and undertakes initiatives to mitigate risks.
We also ensure information sharing and appropriate responses when risks do materialize.
Moving forward, we plan to identify material issues that we should address, based on their importance to our company and stakeholders.
Metrics ＆ Targets
To evaluate and manage the impact of climate change on our business, we have established greenhouse gas emissions (Scopes 1 and 2) as an indicator and have set a goal of reducing them by 30% before FY2030 (using FY2018 as a benchmark).