Sustainability

Sustainability Top

Climate change information disclosure based on TCFD recommendations

Our group recognizes that responding to climate change is an important management issue that can have a significant impact on corporate activities, and in November 2020, we announced our support for the TCFD (Task Force on Climate-related Financial Disclosures). Furthermore, in March 2023, we announced our participation in Japan's JCI (Climate Change Initiative). Currently, based on the sustainability vision "ASV2050/2030," which is the core of the group's sustainability strategy, we are promoting activities to address climate change, including efforts to reduce CO 2 emissions with the aim of achieving carbon neutrality in 2050.

Governance

The Sustainability Committee, which oversees company-wide sustainability activities, including climate change, and promotes them across the organization, Board of Directors through President and Representative DirectorIt is under the supervision of. Important issues are discussed and resolved by the Group Management Committee, and the Board of Directorsand will be approved by the

President and Representative Director is the Group's Chief Officer for Addressing Climate Change Sustainability Committeeand is ultimately responsible for management decisions related to climate change, and at the same time, we have appointed a sustainability officer (Sustainability Committee Chairperson) as the executive officer responsible for activities.

The ESG Promotion Subcommittee, a subordinate organization of the Committee, is responsible for collecting information on climate change responses, identifying, analyzing, and evaluating risks and opportunities, formulating internal rules, and disclosing information. In order to enhance the effectiveness of these activities for management, the ESG Promotion Office was newly established in July 2023. In cooperation with the Sustainability Committee, management, Corporate Planning Division, Strengthen the incorporation of climate change responses into management plans in collaboration with the Finance & Accounting Department, and promote the realization of climate-related targets in various activities and budgeting in collaboration with the management departments of each business company. We will strengthen cooperation in the system.

Contents of reports regarding climate change to management (Board of Directors, Group Management Committee)
contents of report
May 2022 Process for identifying risks/opportunities with high importance, identification results, and suggestions regarding countermeasures
July 2022 Content report on climate change information disclosure (first stage) based on TCFD recommendations (published in Integrated Report 2022)

Climate change response system (after July 2023)

Sustainability promotion system (after July 2023)
Meeting body/organization Roles and activities in response to climate change
Board of Directors Supervises all climate change response initiatives that have been resolved and approved by Group Management Committee.
Group Management Committee Discuss and make resolutions on important issues related to climate change response, and report to Board of Directors.
Sustainability Committee Plan and formulate specific policies, plans, and measures related to climate change response, and promote activities in collaboration with each company.
ESG Promotion Subcommittee Implement and promote specific activities related to company-wide sustainability activities, including climate change response. In addition to holding regular meetings every month, meetings are also held from time to time for each theme.
Manufacturing team: Support implementation of GHG emission reduction measures at each production site, information aggregation and sharing, promotion of horizontal planning
Visualization team: Formulation of rules, system construction, and structure construction regarding CFP visualization
Capital investment team: Formulation of rules for climate-related investment, construction of mechanisms, consideration of ICP introduction
Raw materials team: Building a sustainable supply chain and promoting low-carbon raw materials to reduce Scope 3 emissions
Corporate Infrastructure Team: Strategy formulation and disclosure practices for climate change information disclosure based on TCFD recommendations
Risk Management Committee Promote company-wide risk management activities. In collaboration with ESG Promotion Subcommittee, identify, analyze, and evaluate climate-related risks in the same way as other corporate risks. Held twice a year.
ESG Promotion Office
(Started in July 2023)
The practical center of company-wide sustainability activities. In collaboration with the management and finance departments, promote the incorporation of climate change responses into business plans, the development and budgeting of climate-related targets for various activities.

Risk management

Risk/opportunity management process

Our group has built a company-wide risk management system centered on Risk Management Committee which is a subordinate organization of Sustainability Committee. Climate-related risks, like other corporate risks, are factors that affect a company's sustainable growth, and by taking appropriate strategic responses, it is possible to prevent risks from materializing and reduce the impact when they materialize. We recognize that this will not only lead to opportunities such as increased business profits and improved market evaluation. Climate-related risks/opportunities are managed by ESG Promotion Subcommittee in collaboration with Risk Management Committee, applying the same management process as for corporate risks in general.

ESG Promotion Subcommittee identifies and evaluates climate-related risks, makes proposals and reports to Group Management Committee and Board of Directors, and shares information and awareness within the Group through the annual Sustainability Meeting. Management and group companies incorporate countermeasures and action plans based on these risks/opportunities into medium-term management plans and business plans, and reflect them in specific measures.

Risk/opportunity identification/assessment process

ESG Promotion Subcommittee uses the risk/opportunity classifications defined by the TCFD recommendations (transition risks: policy and law, technology, market, reputation; physical risks: acute and chronic; opportunities: resource efficiency, energy sources, products and services, We comprehensively extracted risks/opportunities associated with climate change using a matrix of market/resilience) and our group's value chain processes (procurement, production, logistics, sales, development, management, use, and disposal). Furthermore, we confirmed the validity of these extracted results through a workshop (February 2022, 34 participants) for department managers from each group company. Afterwards, these approximately 300 extracted risks/opportunities were organized and aggregated into 41 items, and analyzed based on two axes of financial impact and probability of occurrence in accordance with two different climate change scenarios (1.5℃ and 4℃). We conducted an impact evaluation. In this way, we identified four risks and two opportunities that are considered important to our group based on the evaluation results.

Climate-related risks/opportunities identification and assessment process

Risk/opportunity items organized and aggregated in the risk/opportunity identification process (partial)

transfer

law

・Increase in costs due to introduction of carbon tax and rise in emissions trading prices

・Strengthening and changes in environmental regulations such as GHG emissions and their impact on production facilities

technology

・Decrease in the value of existing technologies due to the transition to a decarbonized society

・Increase in investment in energy-saving equipment, human resources training, and research and development costs due to the shift to low-emission products

market

・Decrease in demand for packaging and printing related products due to the transition to circular economy and decarbonization

・Increase in raw material and energy prices due to the use of non-fossil-derived and recycled raw materials and compliance with regulations

reputation

・Decrease in preference due to requests from customers to reduce GHG emissions

Physics

acute

・Failure to fulfill supply responsibilities and loss of business opportunities due to supply chain disruption due to weather disasters

・Increased recovery costs and loss of business opportunities due to equipment/facility damage and infrastructure outages caused by weather disasters

chronic

・Increase in countermeasures and relocation costs for company bases located in flood risk/drought risk areas

opportunity

・Increase in sales due to increased demand for products and low-emission products that help customers save energy, reduce GHG emissions, and recycle resources

・Obtain business opportunities by expanding the market for new climate-related businesses (carbon negative materials and infectious disease prevention products)

strategy

The Group recognizes that global climate change and the policies and measures taken by each country and local government can greatly influence the market environment, raw material procurement, and consumer preferences, and have a strong impact on business continuity and business results. doing. These risks/opportunities

The artience Group (hereinafter referred to as the “Group”) recognizes that climate change caused by global warming due to the worldwide increase in greenhouse gas (GHG) emissions is one of the most important social issues facing global society, and that responding to climate change is an important management issue that can have a significant impact on the Group’s business activities. Based on this recognition, the Group will respond actively to global demands relating to climate change and work to contribute to the improvement of social sustainability through climate change response activities.

  1. Creating a system to address climate change
    The Group has established a system under the direct control of management to oversee Group-wide activities to address climate change, and will work to implement measures to address climate change as a Group and introduce them into its management and business strategies.
  2. Grasping and reducing GHG emissions
    The Group has set the goal of achieving carbon neutrality by 2050, and will work to identify and reduce GHG emissions from its business activities as a whole. In particular, with regard to the reduction of GHG emissions, we will implement effective reduction measures throughout the Group, including our supply chain.
  3. Provision of products and services that contribute to helping address climate change
    The Group provides environmental value to society by developing and providing products and services that not only produce lower CO2 emissions during manufacturing, but also contribute to the efforts of customers and consumers to address climate change, such as by suppressing CO2 emissions during use and supporting adaptation to environmental changes as temperatures rise.
  4. Addressing climate change risks and strengthening the resilience of businesses and business sites
    The Group works to improve the resilience of its businesses and business sites by assessing and continuously monitoring risks posed to the Group’s business activities and sites by climate change, and taking appropriate measures to reduce or avoid such risks.
  5. Appropriate disclosure of information on the activities to address climate change
    The Group endorses and participates in the Task Force on Climate-related Financial Disclosures (TCFD) and other major initiatives to address climate change, and actively and appropriately discloses information on such activities.
  6. Enlightenment and education on climate change
    The Group will provide appropriate awareness-raising and educational activities for its officers, corporate advisors, and employees, in order to raise awareness and knowledge of climate change and activities to address it within the Group, and to promote the introduction of measures to address climate change into all business activities.

Established April 25, 2022
Revised on January 1, 2024 (Resolved at Board of Directors on December 8, 2023)

Scenario analysis

The purpose of scenario analysis is to understand what risks/opportunities envisaged climate change will create, what impact it will have on our group, and to improve the resilience of our group's sustainable growth strategy in the envisaged future. The objective is to confirm this and consider the need for further measures. For the four risks and two opportunities that our group has identified, we have qualitatively shown the degree of financial impact and likelihood of materialization in three stages up to fiscal 2030, the period covered by the analysis.

The analysis included a 1.5°C scenario, which assumes a world in which various measures are taken to limit average temperature rise to 1.5°C compared to pre-industrial levels, and a 1.5°C scenario, which assumes a world in which a variety of measures are taken to limit the rise in average temperature to 1.5°C compared to pre-industrial levels, and a 1.5°C scenario, which assumes a world in which existing policies and systems remain in operation and the physical effects of climate change are reduced. We referred to the 4°C scenario, which assumes a world where the impact of risks increases.

Financial impact: 3 = Impact is several billion yen 2 = Impact is around 1 billion yen 1 = Impact is less than 1 billion yen
Probability of manifestation: 3 = Already manifested or will almost certainly develop in the future 2 = Relatively likely to occur 1 = Low possibility of manifestation
Period of increased impact: Short-term = around 1 year (period of annual plan) Medium-term = around 3 years (period of medium-term management plan) Long-term = around 10 years (mid-term target year of ASV2050/2030 = period until FY2030)
1.5℃ scenario: See IEA World Energy Outlook: Net Zero Emission by 2050 Scenario and IPCC: SSP1-1.9
4°C scenario: see IEA World Energy Outlook: Stated Policy Scenario and IPCC: SSP5-8.5
Scope of analysis: Existing businesses of the entire group and new businesses currently envisioned

Risk/Opportunity Event/factor impact Countermeasures/actions Period of increased impact
1.5℃ 4℃

risk

Rising raw material costs and energy prices

・Increasing demand for non-fossil derived/recycled raw materials

・Increase in countermeasure costs for suppliers due to stricter GHG (greenhouse gas) emission regulations

・Increase in raw material costs due to decrease in naphtha production

Financial impact level 3 Financial impact level 2

・Reducing high-cost raw materials by reviewing formulations and changing product lineups

・Stable procurement of raw materials by reviewing contracts with suppliers

・Reducing energy by shortening transportation distance by promoting local production for local consumption

middle period
Possibility of manifestation 3 Possibility of manifestation 3
Decrease in packaging and printing-related demand

・Growth of circular economy orientation in the market

・Progress in transition to a decarbonized society

・Progress in moving away from plastics in the packaging industry

Financial impact level 3 Financial impact level 2

・Review of business portfolio

・Strengthening superiority by improving product environmental performance and low emissions

・Appeal added value by displaying CFP on products

・Product development compatible with low-carbon packaging materials

short term
Possibility of manifestation 3 Possibility of manifestation 2
Increasing cost impact of carbon pricing

・Introduction of carbon tax

- Imposition of carbon tax on fossil-derived electricity, addition of carbon tax price on raw materials

・Activation of emissions trading market, scarcity of emissions credits

Financial impact level 3 Financial impact level 2

・Promotion of passing on increases in raw material prices due to carbon tax to product prices

・Reducing and eliminating high-carbon raw materials through product formulation reform

・Active conversion to electricity derived from renewable energy

・Avoid purchasing emissions credits by thoroughly reducing direct emissions

short term
Possibility of manifestation 3 Possibility of manifestation 3
Loss of business opportunities due to increasingly severe weather disasters

・Supply chain disruption due to weather disasters (shutdown of production bases, disruption of transportation of raw materials and products)

・Delays and suspension of supply of biomass raw materials due to adverse effects on farmland due to weather disasters

Financial impact level 2 Financial impact level 3

・Strengthening disaster countermeasures through BCM

・Building a complementary network of domestic and overseas production including other companies in the same industry

・Multiple raw material sources and transportation methods

long term
Possibility of manifestation 2 Possibility of manifestation 3

opportunity

Increased sales of low-emission products

・Increasing demand for raw materials (including CO2-derived raw materials) and products with low emissions during production

・Increasing demand for products that help customers save energy, reduce emissions, and recycle resources

・Consumer expectations for carbon negative materials

Financial impact level 3 Financial impact level 2

・Priority selection and securing of low-emission raw materials

・Reducing CO2 emissions in production activities

・Expand product lineup that takes into account low emissions from an LCA perspective (no need for heating or pre-treatment during use, easy recyclability)

・Promote research and development and commercialization of carbon negative materials

short term
Possibility of manifestation 3 Possibility of manifestation 3
Capturing business opportunities such as heat countermeasures and infectious disease countermeasure materials

・Increasing demand for temperature countermeasures in living environments due to chronic temperature rise

・Frequent occurrence of emerging infectious diseases due to the effects of climate change

・Increasing demand for products with low risk of temperature-related accidents during storage and use

Financial impact level 2 Financial impact level 3

・Promote research and development and commercialization of materials that counter the deterioration of the living environment (heat) due to climate change

・Promote research and development and commercialization of medical-related materials (drug discovery, medication, medical devices, infection prevention, etc.)

long term
Possibility of manifestation 3 Possibility of manifestation 3

定量分析

  1. Impact of carbon tax
  2. Amount of loss in the event of a flood in areas with high water risk
  3. Reducing CO2 emissions through the use of “environmental value” products that contribute to sustainability

Metrics and goals

1. CO2 emissions

Since launching the "CO 2 Reduction Project" in fiscal 2010, artience group has been working to reduce CO 2 emissions at its domestic and overseas production sites. In the current medium-term management plan "SIC-II", we have declared "achieving carbon neutrality in 2050" and have set it as a central goal of ASV2050/2030.

ASV2030 aims to reduce domestic CO 2 emissions by 35% compared to FY2020 to 50,000t-CO2, and overseas emissions to 95,000t-CO2, a 35% reduction compared to BAU in FY2030. In order to achieve these goals, we will take various measures in three areas: reducing energy consumption, reducing carbon emissions from energy, and reducing carbon emissions from electricity.

Main reduction measures and estimated reduction amount (domestic)

Figure: FY2020 76,843t-CO <sub>2 <sub>/ Change in activity amount +15% / Reduction in energy usage -20% / Low carbon energy -5% / Low carbon electricity -25% / FY2030 (target) 50,000 t-<sub>CO2</sub>

Direction and main examples of measures to reduce CO 2 emissions

Direction of measures Main measures
Reduce energy usage

・Energy saving (elimination of energy loss during the process)

・Production process reform from an energy-saving perspective

Low carbon energy

・Electrification of production equipment (reduction of direct emissions)

・Preparation and investigation for the use of LNG alternative fuel

Low-carbon electricity

・Introduction of low carbon electricity

・Introduction of renewable energy equipment

2. Sales ratio of products that contribute to sustainability

artience group has been working to improve the environmental friendliness of its products from an early stage, and has been releasing a variety of environmentally-friendly products since the 1990s. In recent years, product development has focused not only on such "environmental value," but also on aspects such as the comfort of people's lives, health and welfare, and safety and security. We are launching a diverse group of products that can contribute to improving possibilities (life value).

ASV2050/2030 adds the standard for "products with daily life value" to the conventional standards for environmentally-friendly products, and redefines them as "products that contribute to sustainability." By 2030, our group has set a goal of increasing the sales composition ratio of these sustainability-contributing products to 80% or more of the group's total sales, both domestically and overseas.

Trends and targets for environmentally-friendly product sales ratio
Environmental value/living value defined by sustainability-contributing products, their direction, and examples
Value provided Direction Keywords/Initiative examples
environmental value

Containers and packaging area

Reduce/Reduce/replace petrochemical raw material ratio

Replacement/simplification of product configuration, replacement with paper

Development of materials and systems that support recycling/plastic circulation

Mobility/Energy field

Proposals and advanced development of materials and technologies that contribute to the shift to EV/EV acceleration in transportation

Clean energy/new energy/development of new power generation systems and material proposals that are friendly to the global environment

carbon recycling

Challenge to CCUS (CO 2 capture, effective utilization and storage) technology, utilization of CO 2 derived raw materials

life value

Medical/Healthcare field (prevention/diagnosis, treatment, safety/security)

Communication/electronics/digital domain (high-speed/large-capacity communication, advanced sensing, big data)