Response to Climate Change(TCFD)

Response to Climate Change(TCFD)

The Group recognizes that climate-related issues are one of the important management issues and, in December 2019, we announced its support for the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and are working on climate-related information disclosure based on the TCFD framework.
In fiscal 2021, we launched a project to integrate climate-related risks and opportunities into our future business plans.
The climate change scenarios used in the analysis are the 1.5°C scenario and the stated policies scenario (equivalent to the 3°C scenario). We devised strategies based on the short-term (fiscal 2025), medium-term (fiscal 2030), and long-term (fiscal 2050) time axes.

TCFD TASK FORCE OR CLIMATE-RELATED FINANCIAL DISCLOSURES

Governance

Environmental issues (including climate change) are positioned as important management issues for the Group, and the CSR Committee, which is chaired by the director in charge of CSR, formulates and deliberates on environment-related policies, targets, and important topics. The details of deliberations are reported to the Executive Conference, which is headed by the president and has the relevant officers as members.
Topics determined in the Executive Conference to be of material significance are discussed by the Management Meeting and then approved by the Board of Directors.
In addition, the status of responses to formulated environmental policies and objectives is reported to individual bodies, which monitor and manage progress.

【Governance Structures Relating to Climate Issues】

  • Board of Directors

    <Engages in deliberation and discussion at least once every six months>

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    Approves proposed responses to environmental issues (including climate change),
    receives status reports, and monitors and oversees progress

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    Directors and auditors

  • Management Meeting

    <Engages in deliberation and discussion several times annually>

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    Discusses proposed responses to environmental issues (including climate change)

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    Directors and auditors

  • Executive Conference

    <Meets once every three months>

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    Receives reports on proposed responses to environmental issues
    (including climate change) and manages the progress of responses

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    President, director in charge of the environment , and relevant directors

  • CSR Committee

    <Meets once every two months>

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    Formulates and discusses proposed responses to environmental issues
    (including climate change) and manages the progress of responses

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    Director in charge of CSR, planning divisions of each business unit, and corporate division of Head Office

【Examples of Matters Discussed by or Reported to the Board of Directors and Management Meeting】

  • Formulation of environmental targets on the Fifth Mid-Term Management Plan,
  • endorsement of the recommendations of the TCFD
  • formulation of the Fundamental Environmental Policy
  • formulation of long-term environmental targets (GY 2030 Long-Term Greenhouse Gas Targets)

Risk Management

Risks and opportunities are identified and evaluated through the process described below.

  • 1

    Identification of risks and opportunities relating to climate pursuant to the TCFD framework;

  • 2

    Evaluation of the degree of impact of the identified risks and opportunities using companywide risk management criteria;

  • 3

    Identification of significant risks and opportunities for which the degree of impact is particularly large and investigation of responsive measures.

Identified risks and opportunities and the responses to them are managed under the governance structures including the CSR Committee.
In fiscal 2021, each business division and the Head Office Corporate Management Division established a project team to conduct companywide analysis of scenarios and formulation of strategies.

Strategy

Assumed Conditions

【Main Scenarios Used in Scenario Analysis*1

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Temperature increase Main scenarios used Overview
1.5℃ IEA*2 Net Zero Emissions by 2050 Scenario (NZE) A scenario indicating what the world (policies, technologies, markets, etc.) needs to look like in order to achieve net zero global greenhouse gas (GHG) emissions by 2050 (assumed through a backcasting method)
IPCC*3 RCP*4 2.6 Scenario and SSP*5 1-2.6 Scenario RCP2.6: A scenario that assumes future temperature rise to be limited to less than 2°C used in the IPCC Fifth Assessment Report
SSP1-2.6: A scenario for the introduction of climate policies to limit future temperature increases to less than 2°C under sustainable development used in the IPCC Sixth Assessment Report
3℃ IEA Stated Policies Scenario (STEPS) A scenario based on energy and climate policies previously implemented and individual policies that are currently being implemented by individual governments
IPCC RCP 8.5 Scenario and SSP 5-8.5 Scenario RCP8.5: A scenario with maximum GHG emissions used in the IPCC Fifth Assessment Report
SSP5-8.5: A scenario with no climate policies used in the IPCC Sixth Assessment Report
  1. Scenario analysis uses the scenarios of public agencies and may differ from actual future social conditions.
  2. International Energy Agency
  3. Intergovernmental Panel on Climate Change
  4. Representative Concentration Pathways
  5. Shared Socioeconomic Pathways

【Time Axis】

End year
Reason for adoption
Short term
2025
Periods of the Fifth (FY2019–FY2022) and the Sixth (FY2023–FY2025) Mid-Term Management Plans
Medium term
2030
Achievement period of the GY 2030 Long-Term Greenhouse Gas Targets and SDGs
Long term
2050
1.5°C target achievement period

【Social conditions under scenario】

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Social conditions under scenario

Ratio of EVs, PHEVs, and FCVs in passenger vehicles

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Ratio of EVs in two-wheeled and three-wheeled vehicles

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Ratio of EVs, PHEVs, and FCVs in passenger vehicles

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Ratio of EVs in two-wheeled and three-wheeled vehicles

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  • EV: Electric Vehicle; PHEV: Plug-in Hybrid Electric Vehicle; FCV: Fuel Cell Vehicle; HEV: Hybrid Electric Vehicle
  • Circular economy: An economic mechanism for the circulation of resources without waste. Positioned as a medium- to long-term economic growth policy, particularly in European countries.

Risks and Opportunities

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Risks and Opportunities

Under the 1.5°C scenario, targets for a major reduction of CO2 will be required and carbon taxes will be introduced to achieve carbon neutrality. Cost increases are expected due to the introduction of energy-saving equipment and renewable energy to reduce CO2 emissions in order to achieve carbon neutrality.

In conjunction with the expansion of the market for EVs, PHEVs, and other such vehicles, demand for starting batteries used in internal combustion engine vehicles is expected to decline while demand for batteries for auxiliary equipment is expected to increase. Also, a shift of a certain number of lead-acid batteries to lithium-ion batteries is expected.

Demand for batteries used in transportation and electric power related applications is expected to increase, but as technological innovation progresses, it is expected that prices for lithium-ion batteries and other such products will fall and that a certain number of lead-acid batteries will be replaced by lithium-ion batteries.

Risks such as rising resource prices and difficult securing resources are expected over the short to medium term. On the other hand, with the development of alternative technologies, it is expected that tight supply and demand situations will be alleviated over the long term. It is also expected that competition relating to sustainable procurement of raw materials will intensify in terms of the environment and society.

Due to increased storm and flooding damage, there is a risk of greater impact including property damage to facilities and machinery at the company’s plants, loss of profit from business suspension, and the inability of workers to report to work. Interruption of supply chains is also anticipated.

It is expected that demand for emergency power supplies will increase out of concern regarding intensification of natural disasters due to climate change.

It is expected that over the short to medium term, sales of HEVs and PHEVs will increase, but in the long term, as sales of EVs increase substantially and account for approximately 100% of sales in 2050, the battery market will change.

It is expected that in conjunction with the increased introduction of solar, wind, and other renewable energy generation, demand for batteries and peripheral systems and devices for electricity load leveling and the like will increase.

It is expected that the development and spread of higher added value battery technologies (all-solid-state batteries, metal-air batteries, sulfur batteries, etc.) for transportation and electric power related applications will advance. In cases where the company can lead the development of new technologies, business opportunities will arise.

  • Those items that were determined in the risk assessment to be of particular importance in the short to long term are listed.

Direction of Business Strategies

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Direction of Business Strategies

Implement measures for energy conservation and use of renewable energy

Further implement measures for energy conservation and procurement of renewable energy

Introduce differentiated products, strengthen our sales capabilities, and increase sales of high-value-added products with a focus on regions where internal combustion engine business remains such as ASEAN

Capture demand for 12 V lead-acid or lithium-ion batteries for auxiliary equipment used in electric vehicles as well (for new automobiles and for replacement)

Capture demand for lithium-ion batteries used for backup of self-driving vehicles

Production will increase, particularly for Japanese automakers, but will decline in the future

Invest development resources to enter the market for lithium-ion batteries used in EVs, which are used under demanding environments and must be highly reliably

Establish a lineup that includes both lead-acid batteries and lithium-ion batteries for industrial applications according to market needs

Strengthen operation, maintenance and inspection services, develop more price-competitive batteries, and introduce products and services aligned customer needs to capture demand for renewable energy
Capture demand for peak cutting, peak shifting, and other energy management services for business sites

Commercialize lead-acid batteries compatible with the needs of a recycling-oriented society

Promote R&D on and commercialize rare metal-free batteries such as sulfur cathode batteries

Promote R&D of all-solid-state batteries and put them into practical application, promote R&D of and commercialize Si anode batteries, Li metal anode batteries, and sulfur cathode batteries

Evaluate future risks including climate risks, implement countermeasures as necessary, and undertake BCP including supply chains

Focus on market expansion conditions and respond to needs

Metrics and Targets

【Fifth Mid-Term Management Plan (FY2019–FY2022)】

  • CO2 emissions
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    Reduce by at least 6% (compared to FY2018)

  • Water consumption
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    Reduce by at least 8% (compared to FY2018)

  • Percentage of environmentally considered products in total sales of all products
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    35.0% or more

  • Ratio of recycled lead used as lead raw materials in lead-acid batteries
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    35.0% or more

【GY 2030 Long-Term Greenhouse Gas Target】

  • CO2 emissions
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    Reduce CO2 emissions by at least 30% by 2030 (compared to FY2018)

【Internal Carbon Pricing (ICP)】

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    The price will be set at ¥8,600/t-CO2Use as reference information when making investment decisions regarding energy-saving and renewable energy measures