We believe that climate change issues may lead to risks and opportunities for the Company as well, and are working to enhance the quality and volume of information disclosure while improving governance and risk management systems.

Governance

In September 2022, we established the Sustainability Committee, an advisory body to the President, as a platform for enhancing the effectiveness of sustainability transformation in terms of management supervision and business execution.
The Sustainability Committee is chaired by the Sustainability Promotion Administrator (Managing Executive Officer) appointed by the President. With the participation of the President, Director Managing Executive Officers and Executive Officers, the Committee discusses and determines policies, materiality, strategies, risk management, etc. related to sustainability issues including climate change based on proposals and reports from the Secretariat established within the Corporate Planning Division, and promotes cross-functional activities and initiatives.
Regarding the issue of climate change, the Climate Change Working Group, established under the Committee, monitors GHG emissions, analyzes risks and opportunities, and considers countermeasures, and reports its activities to the Sustainability Promotion Administrator.
The Sustainability Promotion Administrator reports the results of the activities of the Sustainability Committee and the Working Group to the President, and also reports on deliberation items.
Activities of the Sustainability Committee are reported to the Board of Directors through the President, and the Board of Directors supervises the initiatives. The first meeting of the Sustainability Committee was held in FY2022. Going forward, Committee meetings will be held at least twice annually.

Strategy

We identify risks and opportunities related to climate change using the 1.5°C and 4°C scenarios for all businesses. Our analysis indicates that in the 1.5°C scenario, the impact of risks associated with changes in laws and regulations is relatively large, whereas in the 4°C scenario, the impact of physical risks such as natural disasters is relatively large, and from the perspective of opportunities, the 1.5°C scenario will have a relatively large impact on the sales of products and services. In FY2023, we will continue to examine the specific details of the risks and opportunities related to climate change, and calculate their financial impact. Risks and opportunities identified through scenario analysis, as well as our response to them, will be addressed as part of our material sustainability issues (materiality) and reflected in our mid- to long-term business strategy and our next medium-term business plan, which will start in FY2024, to improve the resilience of the Company and its strategies.

Risk Management

The Company's risk management system promotes risk management under the leadership of the President who has ultimate responsibility for risk management and the Managing Executive Officer serving as the Risk Management Administrator, together with the persons in charge at each department and BU as risk owners. The Risk Management Secretariat, established within the Corporate Planning Division, summarizes the status of management activities related to all risks, including strategic risks, reports to the Risk Management Administrator, and promotes on-site guidance and awareness-raising activities. The Risk Management Administrator regularly reports and makes proposals to the Board of Directors and the President regarding the status of risk management.
Regarding risks related to sustainability issues, including climate change, the Sustainability Committee Secretariat, established within the Corporate Planning Division, will analyze and examine the impact on management and business. The Sustainability Committee will then discuss and decide on material issues and policies to deal with them. These results will be disseminated to related departments and BUs and managed under their respective risk management activities. The Risk Management Secretariat also established within the Corporate Planning Division will comprehensively manage and monitor these efforts across divisions. The Sustainability Committee Secretariat and the Risk Management Secretariat will work in close cooperation to create a system for integrated risk management and monitoring from the perspective of ERM (Enterprise Risk Management).

Metrics and Targets

In order to assess and manage the impact of climate change on our business, we have set a goal of reducing Scope 1 and 2 greenhouse gas emissions by 38% by FY2030 compared to FY2021 (annual reduction of 4.2%), which is consistent with the 1.5°C target.
For Scope 1 and 2 reductions, we set the ratio of renewable energy power in our group as a metric and are promoting replacement. In FY2022, we introduced CO2-free electricity in the Hamamatsu area (headquarters, Miyakoda Plant).
Regarding the transition plan for achieving the Scope 1 and 2 reduction goals, and the metric/target setting and transition plan for Scope 3 reduction, we will clarify the mid- to long-term initiatives for materiality and proceed with considerations in the process of formulating the next medium-term business plan.
We calculated our greenhouse gas emissions for the first time in FY2022. Scope 1, 2, and 3 greenhouse gas emissions results for FY2021 are as follows.

Scope 3

Sustainability Index