Responding to Climate Change

Climate Change Initiatives and Information Disclosure Based on the TCFD Recommendations

The IDEC Group has been conscious of eco-friendliness since its foundation in 1945 through its “Save all” and “Pursuit of saving” bywords. We have formulated “The IDEC Way” in 2019 and have since been maintained a management focus on environmental issues and reduction of environmental impact through the realization of safety, ANSHIN, and well-being. Responding to climate change is a major societal challenge globally. We identify it as one of our priority issues. Having set the Vision for 2030 in the Materiality, we are promoting various initiatives aimed at achieving a sustainable society.
Based on that background, we expressed our support for the Task Force on Climate-related Financial Disclosures (TCFD) and participated in the TCFD Consortium in May 2021. With regard to the four requirements (governance, strategy, risk management, and metrics and targets) based on the TCFD recommendations, we made preparations according to the steps of the scenario analysis advocated by Japan’s Ministry of the Environment, and disclosed climate change initiatives and relevant information that align with the TCFD guidance for the first time in FY2023. By enhancing information disclosure, we aim at achieving the management that is even more eco-friendly and realizing a sustainable society.

【Governance】

The Environment Management Committee, which is a specialist committee of the CSR Committee chaired by the CEO, plays a key role in the effort to disclose climate-related financial information.
The Environment Management Committee meets monthly under direction by the Senior Executive Officer in Charge of the Environment. Also, the Environment Promotion Department was established in October 2021 to strengthen environmental efforts and is involved in the Committee’s activities. Decisions made by the Committee are submitted to the Top Management Meeting, where the policy is decided, and then reported to the Board of Directors.

【Strategy: Scenario Selection】

In order to evaluate the impact of climate - related risks and opportunities, we selected two authorized scenarios for each of transition risks and physical risks. The baseline scenarios, assuming society in 2030, are one in which the increase in average temperature is kept below 2°C compared to the level at the time of the pre-Industrial Revolution, and the second wherein the measures against global warming remain conventional and the temperature continues to rise.

【Strategy: Risks and Opportunities】

Based on the assumed scenar ios, the Environment Management Committee examined the risks and opportunities that may be caused by climate change. We identified transition risks, physical risks, and transition opportunities by category, and conducted analysis of their
business impact and time period, evaluation of major items, and mapping of the analysis results.
Although risks are not expected to have significant business impact in the current situation and in the short term, we will continue to systematically implement measures to address medium- to long-term risks, aiming to become a more resilient company and incorporate the
transition opportunities in our business strategy.

【Risk Management】

The identified results of risks and opportunities related to climate change, and the risk items that have been assessed as important in our mapping, are managed by referring to an integrated risk map of the IDEC Group. They are also reflected in the environment-related risks and opportunities associated of the Materiality.
Important items of risk and opportunity are evaluated by the Environment Management Committee, taking into account both the likelihood and extent of impact. The Environment Promotion Department describes environmental risk management items on a risk management table annually, specifies performance indicators, and reports the progress of the achievement to the Risk Monitoring Subcommittee.

【Transition Plan】

IDEC considers the climate strategy as an important part of its business strategy and is promoting the reflection of its environmental response to its annual policy and medium- to long-term business strategy.
In the future, we will make more accurate quantification of risks and opportunities, continue to monitor qualitative information, and estimate the financial impact of quantitative items over the medium- to long-term, in particular to improve the transition plan and its disclosure method.

【Metrics and Targets】

Our medium-term management plan sets the targets to reduce Scope1 and Scope2 CO2 emissions by 24% by FY2025 and by 50% by FY2031 (compared to the levels in FY2020). With regard to Scope3, we began calculating upstream (Categories 1-7) emissions in Japan in FY2021. We will expand the range of calculation to the Scope3 downstream (Categories 8-15) and make preparation for its disclosure. The expansion of global-based disclosure is also proceeding at the same time.
As for the reduction of industrial waste, we have set a target of 24% reduction by FY2025 (compared to the level in FY2020).
Going forward we plan to set targets and work on other metrics, which include the results of shifting to renewable energy, the ratio of eco-friendly products to total new products, as well as ISO 14001 compliance at all global bases, establishing of internal carbon prices, and the study of international disclosure standards.