We recognize that climate change is one of the most important issues facing society, and are implementing group-wide initiatives to achieve virtually zero CO2 emissions in 2050.
We recognize that climate change is one of the most important issues facing society, and we have declared that we will be carbon neutrality by 2050, reduce CO2 emissions by 50% by 2030 (compared to FY2019, Scope 1 or 2), and are implementing group-wide initiatives to reduce CO2 emissions. We also endorsed the TCFD in May 2021, and are working strategically to understand the risks and opportunities of climate change.
Disclosure Based on TCFD
Governance
Our Group has identified 15 material issues that are important for sustainability management, including “Mitigation of and adaptation to climate change,” and categorized them into four pillars. Materiality related initiatives are pursued by defining the ideal state and the KPIs.
Important issues are discussed at individual weekly Corporate Strategy Committee meetings as required, and particularly important issues are discussed by the Board of Directors. Recognizing that mitigation of and adaptation to climate change is the top priority issue in materiality, we report, deliberate, and make decisions at the quarterly Sustainability Promotion Committee meetings (attended by internal directors, including the president). Important issues are discussed individually at the weekly Corporate Strategy Committee meetings. In addition, the Board of Directors deliberates on the status of sustainability activity reports and initiatives regarding risks and opportunities related to climate change matters.
Important issues are discussed at individual weekly Corporate Strategy Committee meetings as required, and particularly important issues are discussed by the Board of Directors. Recognizing that mitigation of and adaptation to climate change is the top priority issue in materiality, we report, deliberate, and make decisions at the quarterly Sustainability Promotion Committee meetings (attended by internal directors, including the president). Important issues are discussed individually at the weekly Corporate Strategy Committee meetings. In addition, the Board of Directors deliberates on the status of sustainability activity reports and initiatives regarding risks and opportunities related to climate change matters.
Strategy
We have updated our Group’s previous recognition of risks and opportunities related to climate change, which were based on the 1.5 degree and 4 degree scenarios. Strategies related to such risks and opportunities are developed mainly as “transition plans,” “adaptation measures,” and “development of environment-conscious products.”
Risks and Opportunities / Scenario Analysis
| Significant risks and opportunities | Impact in a 1.5°C or less than 4°C scenario | Countermeasure | ||
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| Risks | Transition risks |
Carbon pricing and energy price increases
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With the spread of carbon pricing mainly in developed countries, carbon taxes, emission trading, carbon adjustment measures based on borders, etc., would have an impact of about 1.6 billion yen/year in 2030 and about 3.7 billion yen/year in 2050 in the 1.5°C scenario. Energy prices are also expected to soar when carbon prices are factored in, with energy payments expected to increase by about 1.1 billion yen/year in 2030 and 3 billion yen/year in 2050. (electricity, crude oil, natural gas)
Term:Med-to long-termImpact level:High |
Through PACIFIC Environmental Challenge 2050, we will:
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| Surge in raw material prices (iron, aluminum, resin, etc.) | With the impact of decarbonization and intensifying competition for resources, raw material prices are expected to soar, with an impact of approximately 4.8 billion yen in 2030 under the less than 4°C scenario and 19 billion yen under the 1.5°C scenario. In 2050, raw material prices are expected to fall by about 2.4 billion yen/year under less than 4°C scenario, while prices are expected to soar by about 9.9 billion yen/year under the 1.5°C scenario. Term:Short-to med-term Impact level:High |
Through PACIFIC Environmental Challenge 2050, we will:
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| Decrease in orders for parts due to shift to BEVs and FCEVs | Because of the worldwide shift to electrification by automakers and the decrease in the number of engine vehicles, sales of products for engine vehicle transmissions and die-casting products for compressors are expected to decrease, causing a sales decrease of approximately 4.5 billion yen by FY2030. (from FY2019) Term:Medium- and long term Impact level:High |
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| Exclusion from investment targets due to worsening sustainability assessment by institutional investors and sustainability research companies | If a company’s sustainability rating is inferior to that of any of its peers in an investment, its stock sales or purchases may decrease. Assuming that 1% of the company's market capitalization is affected, this would result in a decrease in market capitalization of 1% of 87.6 billion yen (August 30, 2024) = 876 million yen. Term:Mid-to long-term Impact:Moderate to high |
Strengthen sustainability management and actively disclose information. (New MSCI NIHONKABU ESG SELECT LEADERS in 2024) |
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| Physical risks | Operations shut down due to floods and storms caused by extreme weather conditions | The development of extreme weather conditions due to climate change has exposed some bases to storms and floods caused by heavy rainfall. For example, domestically,Nishi-Ogaki, Higashi-Ogaki, Yoro, Mino, and Kyushu, and overseas TPA, PTC, and PIT, are at risk of flooding and are expected to incur cumulative damages of approximately 3 to 9 billion yen through 2050 under the 1.5°C scenario and 6 to 18 billion yen through 2050 under the 4°C scenario. Term:Med-to long-term Impact level:High |
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| Increase in heatstroke | Health issues among employees due to heat stroke are expected, along with decreased productivity and increased costs for heat stroke prevention. Term:Short-,med-to long-term Impact level:High |
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| Up-stream risks | Suppliers’ operations shut down due to flooding (or drought) caused by extreme weather | Suppliers in low elevation areas, mainly in the Ogaki region, and around Tianjin and Changshu in China, and Chachoengsao province in Thailand, are considered to be at high risk of flooding. In addition,because water stress is high in Virginia in the U.S. and the vicinity of Tianjin in China, water shortages and other such factors may affect the operation of suppliers. Term:Med-to long-term Impact level:Medium to High |
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| Down-stream risks | Order quantities impacted by customer shutdowns or inability to respond to customer requests | Major customers have requested CDP evaluations, reductions in CO2 emissions, and the like, and failure to respond to these requests could result in a loss of order opportunities in the worst-case scenario. Also, production activities may be disrupted if customers shut down operations due to windstorms or water stress. Term:Med-to long-term Impact level:High |
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| Opportunities | Products/ Service | Increase in sales of stamping products to help reduce weight,and increase in sales of TPMS products to help improve fuel efficiency Term:Short- to med-term Impact level:High |
Our businesses have many more products for which demand is expected to increase than those for which orders will decrease as a result of the shift to BEVs. Sales associated with the electrification of vehicles (BEVs, HEVs,PHEVs, FCEVs) are expected to increase by about 28.7 billion yen/year by FY2030,including mainstay products such as UHTSS parts, battery cases, plastic molding products such as compressor covers and aerodynamic wheel caps, and electrified vehicle products such as control valves for heat pump car air conditioners. (compared to FY2019) |
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| Increased orders for products for batteries, motors, plastic molding product, thermal management, and hydrogen piping due to the shift to BEVs and FCEVs Term:Med-to long-term Impact level:High |
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| Market | Energy-saving car legislation will increase need for weight reduction and increase sales of UHTSS products Term:Short- to med-term Impact level:High |
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| Resilience | High supply chain resilience to water risks | Our globally distributed production system makes it possible to supply products even if some production bases are shut down due to disaster etc. Our main production base is located in the Ogaki area, which has abundant water resources and is less susceptible to drought risk, even as drought risk is advancing worldwide. Term:Med-to long-term Impact level:High |
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* Short-term 1 to 5 years, Medium-term 6 to 10 years, Long-term 11 years and more
* 1% annual growth rate until 2030 (For raw materials only, annual growth rate will be 3% until 2030 and remain flat after 2031)
* For transition risks, the IEA's World Energy Outlook's Net Zero Scenario (NZE) 2023 and STEPS scenario are used, and for physical risks, the parameters of the IPCC’s RCP2.6 and RCP8.5 scenarios are used
* Assuming an exchange rate of 1 dollar = 145 yen
Strategy1 Transition Measures
Our Group recognizes that the impacts of the climate change transition will be extremely significant,including carbon pricing and customer requests to reduce CO emissions. In 2020, we formulated the PACIFIC Environmental Challenge 2050, which aims for carbon neutrality in 2050, and we are promoting CO reduction throughout the group. In 2021, we raised our 2030 target to 50% of the FY2019 level (scopes 1 and 2), and are accelerating initiatives such as energy conservation, energy conversion,introduction of ICP, and introduction of renewable energy.
To achieve carbon neutrality (virtually zero CO2 emissions) in 2050 as set forth in PACIFIC Environmental Challenge 2050, we have revised our mid-term target for 2030 to a 50% reduction (compared to FY2019), and we will strengthen our efforts to achieve carbon neutrality throughout the entire life cycle of products.
Strategy2 Adaptation Measures
Our Group has production bases and supply chains around the world, and some regions may be affected by wind and flood damage, lightning strikes, heat stroke, and other adverse factors due to the effects of increasingly extreme weather and high temperatures in the future.
To address this, we are promoting measures such as the decentralization of production bases, multi-company procurement, measures against wind, flood, and lightning damage prevention, BCP integration, supplier training, and heat stroke prevention.
Starting in FY2023, we have prioritized flood prevention measures for our Yoro Plant and Kyushu Plant,which are at high risk of flooding. In FY2024, we have applied heat-shielding paint to parts of the Nishi-Ogaki Plant to block heat from direct sunlight and reduce temperature rises inside the plant, and we plan to expand this measure to other plants in the future. We have also installed surge killers at our plants in Japan, where lightning strikes are common, to protect equipment from the effects of lightning.
To address this, we are promoting measures such as the decentralization of production bases, multi-company procurement, measures against wind, flood, and lightning damage prevention, BCP integration, supplier training, and heat stroke prevention.
Starting in FY2023, we have prioritized flood prevention measures for our Yoro Plant and Kyushu Plant,which are at high risk of flooding. In FY2024, we have applied heat-shielding paint to parts of the Nishi-Ogaki Plant to block heat from direct sunlight and reduce temperature rises inside the plant, and we plan to expand this measure to other plants in the future. We have also installed surge killers at our plants in Japan, where lightning strikes are common, to protect equipment from the effects of lightning.
Strategy3 Development of Environment-Conscious Products
Our Group recognizes two major impacts of climate change as business opportunities.
One is the reduction of CO2 emissions throughout the product life cycle. UHTSS stamping products,which are our mainstay products, lower CO2 emissions during automobile use by reducing weight.Furthermore, the cold stamping method, which is our specialty, reduces CO2 emissions during production to about one eighth of that of the hot stamping method. In addition to this, we are promoting the use of recycled materials and the manufacture of recyclable products.
Another impact is the development of products for electrified vehicles, which is advancing globally. Our analysis shows that the profits are greater than the losses associated with the transition to electrified vehicles. We have already started production of control valve products for the thermal management system of BEV air conditioners and of soundproof covers for electric compressors. We recognize that these and other products for electrified vehicles have great potential, and we will continue our efforts to develop and expand sales.
One is the reduction of CO2 emissions throughout the product life cycle. UHTSS stamping products,which are our mainstay products, lower CO2 emissions during automobile use by reducing weight.Furthermore, the cold stamping method, which is our specialty, reduces CO2 emissions during production to about one eighth of that of the hot stamping method. In addition to this, we are promoting the use of recycled materials and the manufacture of recyclable products.
Another impact is the development of products for electrified vehicles, which is advancing globally. Our analysis shows that the profits are greater than the losses associated with the transition to electrified vehicles. We have already started production of control valve products for the thermal management system of BEV air conditioners and of soundproof covers for electric compressors. We recognize that these and other products for electrified vehicles have great potential, and we will continue our efforts to develop and expand sales.
Risk Management
We identify sustainability related material topics and use them to identify risks. Of these, company-wide management-level risk is addressed by the Risk Management Committee, which selects risk items and discusses and deliberates on countermeasures. The Risk Management Committee assesses and manages significant risks across the organization, including things related to sustainability such as climate change and social issues. In the event that such risks materialize, the committee takes prompt and appropriate measures to mitigate the impact.
Climate-related risks and opportunities are identified and assessed by the sustainability working team, and the results are presented to the Corporate Strategy Committee. Issues such as carbon neutrality and electrification, which are especially recognized as having a significant impact, are discussed by the Corporate Strategy Committee and Board of Directors as required, incorporated into strategy, and countermeasures are planned and implemented.
Climate-related risks and opportunities are identified and assessed by the sustainability working team, and the results are presented to the Corporate Strategy Committee. Issues such as carbon neutrality and electrification, which are especially recognized as having a significant impact, are discussed by the Corporate Strategy Committee and Board of Directors as required, incorporated into strategy, and countermeasures are planned and implemented.
Metrics and Targets
Transition Plan
• Reduce CO2 emissions by 30% by FY2026 (management target of our mid-to-long-term business plan Beyond the OCEAN)
• Reduce CO2 emissions by 50% by FY2030 (management targets of our mid-to-long-term business plan Beyond the OCEAN)
• Reduce CO2 emissions to net zero by FY2050. (PACIFIC Environmental Challenge 2050) * Scope 1+2, compared to FY2019
• Reduce CO2 emissions by 50% by FY2030 (management targets of our mid-to-long-term business plan Beyond the OCEAN)
• Reduce CO2 emissions to net zero by FY2050. (PACIFIC Environmental Challenge 2050) * Scope 1+2, compared to FY2019
Adaptation
• Enhance our own disaster countermeasures and brush up our BCP
• Promote the following initiatives related to material topic “Climate change adaptation measures”
• Support BCP formulation for business partners
• Promote cooperation with local communities in the event of a disaster
• Heat stroke prevention
• Promote the following initiatives related to material topic “Climate change adaptation measures”
• Support BCP formulation for business partners
• Promote cooperation with local communities in the event of a disaster
• Heat stroke prevention
Opportunities
• Set the following materiality KPIs
• Ratio of UHTSS versus all stamping products (FY2024 25%)
• Percentage of sales for electrified vehicles (FY2026 50%, FY2030 70%, management targets of our mid-to-long-term business plan Beyond the OCEAN)
• Ratio of UHTSS versus all stamping products (FY2024 25%)
• Percentage of sales for electrified vehicles (FY2026 50%, FY2030 70%, management targets of our mid-to-long-term business plan Beyond the OCEAN)
Reduction of CO2 Emissions
CO2 emissions from the transportation sector, including automobiles, account for approximately 20% of total emissions. Reducing CO2 emissions is an extremely big issue for the automobile industry. The company is making environmental improvements such as reducing energy consumption and reviewing energy sources, advancing the introduction of renewable energy, developing environmentally friendly construction methods, and promoting the size and weight reduction of vehicles to improve their fuel efficiency.
The company responded as a supply chain to a survey conducted by CDP, an international NGO that evaluates corporate initiatives on environmental issues and the quality of information disclosure, and received an “A-” evaluation and a “Supplier Engagement Leader Board” certification in 2024 for leadership on climate change.
Example Initiatives
Review of Energy Sources
Solar power generation equipment was added to the Higashi Ogaki Plant No. 4 in Japan, and TPA in China, was the first overseas facility to install solar power generation equipment.
When combined, these two facilities will reduce annual CO2 emissions by approximately 3,170 tons. Through solar power generation and purchasing renewable energy certificates,approximately 23% of our total electricity consumption in FY2023 will come from renewable sources.
Energy Conservation Activities
The company is engaged in daily energy conservation activities.
- Use of LED lighting at plants that have reduced use of heavy oil A by switching to special high-voltage power (planned shutdown of internal power generation)
- Power saving by adjusting load balance of air compressors
- Energy conservation by introducing heat pumps for hot water washers
- Reduction of CO2 emissions by converting boiler fuel