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Response to the TCFD

We have supported the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). In addition, we are preparing for information disclosure with the disclosure framework (governance, strategy, risk management, indicators, and goals for climate-related risks and opportunities) recommended by TCFD.

TCFD

Governance

　We will set up a TCFD response project in order to support the Sustainability Promotion Committee. The project analyzes climate change response scenarios, risks, and opportunities, and then executes response measures. The results will be reported to the Sustainability Promotion Committee.
　Matters discussed by the committee will be reported to the Board of Directors for approval and instructions.
　The sustainability agenda reported to, approved by, or ordered by the Board of Directors will be communicated to relevant departments and group companies by the Sustainability Promotion Committee. Then, the departments and group companies will reflect the agenda in their management plans and operations. In addition, we will request that our suppliers cooperate with us, depending on the items included in the agenda.

Structure of Sustainability Promotion Committee

Structure of Sustainability Promotion Committee

Strategy

We have analyzed and assessed the impacts of climate change on our company by 2040, in line with the guidelines recommended by TCFD, utilizing a business environment scenario analysis method.

1）Overview of scenario analysis
Scope Companies subject to group consolidation
Planned period Present-2040 (For CO₂ reduction, 2050)
Scenarios 1. 1.5°C scenario
The global average temperature rise is kept below 1.5°C above pre-industrial levels

References:
IEA WEO2020 SDS scenario
SSP1-1.9,2.6, WG I report in the IPCC 6th Assessment Report
Other

2. 4°C scenario
The global average temperature rises about 4°C above pre-industrial levels

References:
IEA WEO2020 STEPS scenario
SSP2-4.5, SSP3-7.9, and SSP5-8.5, WG I report in the IPCC 6th Assessment Report
A-PLAT S8 Climate RCP8.5
Other

WEO: IEA's World Energy Outlook 2020
IPCC: Intergovernmental Panel on Climate Change
A-PLAT: Climate Change Adaptation Information Platform

2）Major risks and opportunities concerning climate change response

　To identify climate change risks and opportunities in a more specific manner, we have forecast changes in our business environments under the 1.5°C and 4°C scenarios and then identified possible risks and opportunities.
Of those, shown in the table below are the ones that can have major impacts on our management.

　Our scenario analysis indicated that some part of our operations can be affected by social and market changes associated with climate change, while there are also considerable business opportunities, such as expansion of renewable energy product markets.
　To achieve sustainable management and to grow, we need to act promptly, forecasting accurately how our business environments will change. We are currently studying possible measures.

Principal risks Emergence
timeframe		 Degree of
Financial
Impact
Policies and regulations Stringent greenhouse gas emission reduction standards will be put in place, necessitating investments and technological improvements in order to reduce emissions. Short to
long term		 -
Changes in
markets/
customers		 Demand for engine-related products will shrink due to the electrification of automobiles Medium and
long term		 Small
Widening adoption of next-generation solar panels will cause demand for products to shrink. Long term Small
Changes in the industry, for
example in other companies
in the same
industry		 Competition with competitors will intensify due to a review of the production system in consideration of the changing environment of the industry. Medium and
long term		 Medium
Procurement Disruption in the balance between supply and demand for raw materials (coke and pitch) may cause prices to rise substantially. Short to
long term		 Medium
The prices of procured products that comply with the introduction of a carbon tax and other environmental requirements may rise substantially. Short to
long term		 Small
Manufacturing Costs may increase due to factors such as stoppages in facility operations due to intensifying natural disasters. Medium and
long term		 Small
The cost of manufacturing process improvements required in order to comply with environmental requirements will rise. Medium and
long term		 Medium
Principal opportunities Emergence timeframe Degree of Financial Impact
Policies and
regulations		 Demand for environmentrelated products such as renewable energy may rise. Medium and
long term		 -
Changes in
markets/
customers		 Demand for graphite parts and materials, for example products related to power semiconductors, will rise as a result of the electrification of automobiles. Medium and
long term		 Large
Demand for power supply and earthing brushes increases due to an increase in demand for wind power generation. Medium and
long term		 Small
Demand for graphite for use in nuclear power applications may rise as CO₂ emissions are reduced. Medium and
long term		 Small

[Financial Impact] Small: Less than 1 billion yen ; Medium: More than 1 billion yen to less than 10 billion yen ; Large: More than 10 billion yen

Risk management

　Our group has the Risk & Compliance Committee (RC Committee) in place as the governing body for compliance with laws and regulations, our articles of incorporation, and corporate ethics, and to establish a risk management system. The committee discusses matters important in terms of risk and compliance, and then determines policies. Individual risks are controlled and addressed by responsible departments under the RC Committee's supervision.

　Climate risk items are managed by the Sustainability Promotion Committee and are assessed and reviewed by the RC Committee as part of company-wide risk management. The results are reported to the Board of Directors.

Risk Management

Metrics and targets

1）Metrics and targets for reducing greenhouse gas emissions

  Toyo Tanso is accelerating its programs for the reduction of greenhouse gas emissions, aiming to become carbon neutral by 2050.
  The greenhouse gas emissions in the past years in Scope1, Scope2 and Scope3 were calculated in accordance with the GHG protocols.

FY2030 Targets
Greenhouse gas emissions per unit of sales (Scope1, Scope2 ) 30% reduction compared to FY2019 (Non-consolidated)

Greenhouse gas (GHG) emissions chart (Scope1 + Scope2 : Non-consolidated)

Greenhouse gas (GHG) emissions chart (Scope1 + Scope2 : Non-consolidated)

Third party verification of greenhouse gas emissions.

We received third-party verification of greenhouse gas emissions covering operations and activities of the company to further improve transparency in method of calculation and scope in data collection for key sustainability indicators.

Report on greenhouse gas emissions
[GHG emissions data]
period:1 January 2022 to 31 December 2022
[GHG emissions]
Scope1(Consolidated)：33,846 t-CO2e
Scope2(Consolidated) ：location-based 83,136 t-CO2e,
market-based 87,853 t-CO2e
Scope3(Non-consolidated)：79,529 t-CO2e
Breakdown（t-CO2e）
  • Category1： 45,995
  • Category2: 8,258
  • Category3: 15,599
  • Category4: 8,253
  • Category5: 703
  • Category6: 132
  • Category7: 398
  • Category13: 112
  • Category15: 80
Independent Assurance Report
(Scope1,2)(Consolidated)
Independent Assurance Report
(Scope3)(Non-consolidated)
2）Metrics and targets necessary for risk and opportunity management

We will set metrics and targets for risk and business opportunity management after adopting response measures for each risk and opportunity.

Commitment for environment

Commitment for environment

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