Initiatives on the Environment
Environment
Climate change・Environment
Information Disclosure Based on the Recommendations of TCFD (Task Force on Climate-related Financial Disclosures)
Our Group, with its Purpose of “Designing ‘New Context’ for a sustainable society with technology,” views climate change not merely as a risk, but as a significant opportunity to create innovative solutions. As part of these initiatives, we endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in May 2022, and have been promoting disclosure of “Governance,” “Strategy,” “Risk Management,” and “Metrics and Targets” based on the TCFD framework, enhancing management transparency and dialogue with stakeholders.
1. Governance
1.1 Governance Structure
Our Group positions sustainability issues including climate change as material management matters and has established a governance structure to promote these initiatives. Based on these reports, the Board of Directors oversees the Group’s overall sustainability activities, including responses to climate change.
*For details on the governance structure, please refer to the sustainability promotion framework. Under this structure, the status of sustainability initiatives is regularly reported to the Board of Directors through the Management Committee.
1.2 Sustainability Committee and Risk Management Committee
■ Sustainability Committee
- Formulates policies and strategies for addressing environmental and social issues, including climate change.
- Monitors the implementation status of various initiatives and KPIs through the Sustainability Management Office as its secretariat and reports to the Management Committee and Board of Directors.
■ Risk Management Committee
- Oversees overall corporate risks and identifies new risks including climate change risks and evaluates their significance.
- Formulates climate-related risk management policies and emergency response measures through the Risk Management Office as its secretariat and reports to the Management Committee and Board of Directors.
1-3. Sustainability Management Office and Risk Management Office
■ Sustainability Management Office
- Serves as the secretariat for the Sustainability Committee, responsible for internal and external information gathering on climate change, issue analysis, and policy formulation and implementation.
- Promotes cross-organizational collaboration while formulating greenhouse gas emission reduction plans and advancing stakeholder communication.
■ Risk Management Office
- Serves as the secretariat for the Risk Management Committee, overseeing company-wide risks including climate change risks and developing and operating risk assessment methodologies.
- Regularly monitors climate-related risks in natural disasters, supply chains, legal regulations, and other areas, and provides information and directives for countermeasures to each department.
2. Strategy: Scenario Analysis and Impact of Climate-related Risks and Opportunities on Business, Strategy, and Financial Planning
2.1 Scenario Analysis Process, Assumptions, and Reference Scenarios
Our Group conducted scenario analysis recommended by TCFD using the 1.5°C scenario (SSP1-1.9) and 4°C scenario (SSP5-8.5) presented in the IPCC Sixth Assessment Report to understand the long-term impacts of climate change and utilize them in medium- to long-term strategic planning.
■ 1.5°C Scenario
- A case where international greenhouse gas reduction efforts advance and rapid, large-scale decarbonization progresses.
- The introduction of carbon pricing (such as carbon taxes) and transition to renewable energy make transformation of business costs, supply chains, and business models themselves inevitable.
■ 4°C Scenario
- A case where there are virtually no climate policies, and continued use of fossil fuels leads to temperature rise.
- A case where extreme weather events occur frequently, and physical impacts and water shortages become severe, expanding social and economic impacts.
| Item | SSP1-1.9 (1.5°C Scenario) | SSP5-8.5 (4°C Scenario) |
|---|---|---|
| Greenhouse Gas Emissions | Rapid reduction. Achieve carbon neutrality around 2050. | Continuous rapid increase, with emissions maximized by the end of the 21st century. |
| Average Temperature Rise (2100) | +1.4°C (range of 1.0-1.8°C) | +4.4°C (range of 3.3-5.7°C) |
| Climate Change Measures | Extremely ambitious emission reduction measures and large-scale transformation toward decarbonization. | Virtually no climate change measures are implemented, with continued use of fossil fuels. |
| Sea Level Rise (2100) | Approximately 0.3-0.6m rise by 2100. | Approximately 0.8-1.0m rise by 2100. |
| Extreme Weather | Heat waves and heavy rainfall increase, but impacts remain limited. | Significant increase in frequency and intensity of extreme weather events. |
| Agriculture and Food | Productivity is generally maintained, though some risks remain. | Significant decrease in crop yields and increased risk of food crisis. |
| Water Resources | Risk of water shortage remains in some regions. | Water shortage becomes severe across wide areas. |
| Impact on Ecosystems | Risks are reduced, but vulnerable ecosystems are affected. | Many ecosystems suffer catastrophic damage. |
| Human Health | Risks such as heat waves remain, but impacts are limited. | Health risks from extreme temperatures become severe. |
| Society and Economy | Sustainable development is achievable. | Economic losses increase significantly, and social instability expands. |
Source: IPCC AR6 Working Group I Report, Summary for Policymakers “(a) Changes in global surface temperature relative to 1850-1900”
2.2 Impact of Climate-related Risks and Opportunities on Business, Strategy, and Financial Planning
■ Climate Change Risks
| Risk Type | Category | Risk Summary | Impact under 1.5°C Scenario | Impact under 4°C Scenario |
|---|---|---|---|---|
| Physical Risks | Acute | Disruption of payment infrastructure and data centers due to extreme weather events (typhoons, heavy rainfall, floods), damage to office buildings, and communication failures. Short-term business interruptions caused by disasters impact customers and society. | Low | Low |
| Chronic | Permanent increase in data center cooling costs due to rising average temperatures, decreased employee productivity and increased health risks due to chronic extreme heat. | Low | Low | |
| Transition Risks | Policy and Legal/Regulatory | Increased operational costs due to carbon pricing implementation, increased compliance costs due to strengthened ESG disclosure requirements, service modification costs accompanying environmental regulation strengthening, and stricter environmental due diligence requirements for investee companies. | Medium | Low |
| Reputation | Customer attrition due to insufficient environmental response, intensified demands from ESG-focused partners, decreased investor evaluation, and difficulty in recruiting talented personnel. Environmental response becomes a major criterion for corporate evaluation, particularly under the 1.5°C scenario. | Medium | Low | |
| Market and Technology | Decreased payment demand in specific industries (tourism, agriculture, manufacturing, etc.) due to climate change, reduced competitiveness due to delayed technological transition to environmentally conscious payment and e-commerce platforms, stranded asset risks in investment portfolios, and delayed response to energy-saving technologies. | Low | Low |
■ Climate Change Opportunities
| Category | Opportunity Summary | Examples of Specific Opportunities | Impact under 1.5°C Scenario | Impact under 4°C Scenario |
|---|---|---|---|---|
| Building Sustainable and Resilient Business Infrastructure | Opportunity to evolve the company’s business infrastructure into more efficient and disaster-resilient forms in response to the physical impacts of climate change and social demands. Impacts cost reduction and business continuity improvement. | Cost reduction through technology development of low-energy consumption payment systems (technology opportunity) Provision of terminal-less solutions and solutions that can operate offline to continue business even during disasters (Payment Business -Adaptation Opportunity, DX Support/SaaS Business -Adaptation Opportunity) | Medium | Low |
| Provision of Solutions for Decarbonization and Circular Economy | Opportunity to capture the growing environmental awareness of customers and consumers, develop and provide services that lead to decarbonization and environmental consideration, and acquire new markets | Expanding demand for environmentally conscious payment services such as payment businesses with lower GHG emissions than cash payments (Payment Business -Market Opportunity) DX and commerce support capturing the growth of the e-commerce market for eco-friendly products (DX Support/SaaS/Commerce Support Business -Market Opportunity, Adaptation Opportunity) | Medium | Low |
| Investment and Business Co-creation in Climate Tech and Other Fields | Opportunity to achieve high financial returns and create synergies with our business by investing in environmental sector startups such as climate tech fields expected to grow | Acquiring high returns through startup investments in climate tech and other fields (Investment Business -Market Opportunity) Corporate value enhancement and business synergy creation through ESG management support to investees (Investment Business -ESG Investment Opportunity) Portfolio risk diversification through investment in climate change-related businesses (Investment Business -Risk Diversification Opportunity) | Medium | Low |
| Establishing Competitive Advantage through Enhanced Reliability | This is an opportunity to gain trust from stakeholders such as customers, investors, and governments by demonstrating progressive attitudes toward climate change, including rapid response to environmental regulations and proactive information disclosure, thereby enhancing overall competitiveness. | Securing competitive advantage and gaining trust through rapid response to environmental regulations (All Business -Regulatory Adaptation Opportunity) Enhancement of corporate brand value by demonstrating commitment to climate change measures (All Business -Brand Value Enhancement) | Low | Low |
Impact level evaluated as “High,” “Medium,” or “Low” based on strategic and financial impacts
We conduct scenario analysis annually, update it, and reflect it in our management plans to enhance our medium- to long-term competitiveness.
3. Risk Management: Climate-related Risk Management Framework
3.1 Integration into Company-wide Risk Management Process
Under a company-wide risk management framework centered on the Risk Management Committee, we systematically identify, evaluate, and manage various risks including climate-related risks in collaboration with the Sustainability Committee.
■ Risk Identification
- Identify climate-related risks utilizing diverse information sources such as domestic and international regulations, extreme weather, and industry trends.
- Implement risk identification aligned with business activities through collaboration with each business division and Group companies.
■ Risk Assessment
- Evaluate climate-related risks by indexing their impact (effects on business continuity and management decisions) and vulnerability (probability of risk materialization and maturity of management systems).
- Set priorities for each risk utilizing risk matrices and scenario analysis results.
■ Risk Management and Response
- Based on evaluation results, consider risk reduction and avoidance measures and coordinate with relevant departments.
- Implement regular PDCA cycles to verify response measures and continuous improvement.
■ Integrated Risk Management
- Integrate climate-related risks into company-wide risk management processes in the same manner as financial and business risks.
- Support management monitoring and decision-making through regular reports to the Board of Directors and Management Committee.
4. Metrics and Targets: Indicators and Targets for Evaluating and Managing Climate-related Risks and Opportunities
4.1 Greenhouse Gas (GHG) Emissions
■ Scope 1, 2, and 3 Emissions
- We monitor greenhouse gas emissions from our business activities and publish them annually on our sustainability website. As part of our efforts to reduce environmental impact, our Group strives to accurately monitor and manage greenhouse gas (GHG) emissions.
* For details on greenhouse gas (GHG) emissions and other data for our Group, please refer to our Sustainability Data.
4.2 Greenhouse Gas (GHG) Emission Reduction Targets
Our Group promotes initiatives for greenhouse gas (GHG) emission reduction and has set two-stage targets: short-term/medium-term and long-term.
First, we aim to reduce GHG emissions from direct emissions and indirect emissions from purchased electricity in our business activities (Scope 1 and 2) by 50% by fiscal year 2030, compared to fiscal year 2021 (ending March 2022).
Furthermore, we have set a long-term target to achieve carbon neutrality across the entire value chain by fiscal year 2050.
To achieve these targets, we will continue to promote energy-saving initiatives and the adoption of renewable energy, aiming to further reduce our GHG emissions.
■ Targets for Fiscal Years 2030 and 2050
| Target Year | Target | Specific Description |
|---|---|---|
| Fiscal Year 2030 | 50% reduction in Scope 1 and 2 GHG emissions compared to fiscal year 2021 | Significant reduction of direct emissions within business sites and emissions from purchased electricity through energy-saving measures and introduction of renewable energy |
| Fiscal Year 2050 | Achieve carbon neutrality across the entire value chain | Achieve net-zero greenhouse gas emissions across business operations and supply chain, realizing business activities with no environmental impact |
Initiatives taken by the Group
Incubate startups which promote decarbonization by utilizing investments through our Earthshot Fund.
The Group established the Open Network Lab & ESG I “Earthshot Fund” for startups in the Sustainability field in 2021. The Fund has a mission to accelerate a social implementation of “New Context” for a sustainable society through building ecosystems with seed and early-stage startups for the next generation that Open Network Lab, a seed accelerator program, has supported. This Fund has been investing in startups taking Sustainability initiatives such as promotion of decarbonization as well as strengthening Environmental Social and Governance initiatives in the organization of the investees.
