Climate Change Initiatives
Basic Concept
In alignment with the Moriroku Group Sustainability Policy, the Moriroku Group aspires to become a “400-year company,” a trusted and valued entity that is widely recognized as a leader in sustainable business practices. We are committed to engaging in business activities that prioritize the interests of all stakeholders and contribute to addressing social challenges, with the aim of fostering a sustainable society.
We have identified climate change as a critical sustainability issue. In October 2022, the Moriroku Group expressed its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). In alignment with these recommendations, we are enhancing our disclosure practices across four key areas: governance, strategy, risk management, and metrics and targets. Through these efforts, we aim to reduce our environmental impact and enhance our corporate value.
Disclosure based on TCFD recommendations
Governance Structure for Environmental Issues
In the Board of Directors’ meeting, the Moriroku Group deliberates and makes decisions on basic policy, important issues, and important target setting related to sustainability management, including climate change issues. In addition, KPIs related to environmental issues are incorporated into the Mid-Term Management Plan, and we are taking forward our initiatives as a group.
Sustainability Committee
To actively promote sustainability management across the Moriroku Group, the Sustainability Committee, chaired by the President and vice-chaired by the director responsible for sustainability, meets three times a year. The committee is responsible for formulating Group policies, identifying key sustainability issues, discussing sustainability strategies, and monitoring progress on initiatives addressing these issues. The committee’s decisions are reported to the Board of Directors twice a year and are incorporated into the Group’s overall management plan under the supervision and advice of outside directors.The Sustainability Promotion Office provides secretariat support to the committee.
Linkage between Climate Change Response and Executive Compensation
In FY2022, we introduced a system for reflecting the level of achievement of GHG emission reduction rate in part of our directors’ compensation. We are striving to achieve a 45% reduction in GHG emissions by the end of FY2027 with the goal of a 50% reduction by FY2030, and we incorporate the status of the initiatives in each mid-term management plan into the evaluation of the directors while working to
tackle the issue of climate change on the basis of their commitment.
Strategy
Scenario Selection
In analyzing potential scenarios, the Moriroku Group assumed a "1.5-2°C scenario," which represents a scenario in which decarbonization policies are pursued, and a "4°C scenario," which represents a scenario in which decarbonization policies are implemented to a limited extent. The Group then analyzed the impact of these scenarios on the business.
|
Scenario
|
Reference Scenario Example
|
Image of the world
(Forecast based on scenario) |
|---|---|---|
|
1.5 to 2°C
|
IEA:NZE/SDS
IPCC:RCP2.6 |
・Government takes an active role in combating climate change for a sustainable society.
・Carbon price and other CO2 emission costs will increase
・Electricity will be increasingly generated by solar power and other renewable energy sources |
|
4°C
|
IEA:STEPS
IPCC:RCP6.0 |
・Governments not stepping up climate action
・Expenditures such as carbon prices are expected to have little impact, while costs will increase due to more severe extreme weather events
・Electricity generation methods will continue to rely on fossil fuels
|
Scenario-based analysis of main risks/opportunities and discussion of countermeasures
The Sustainability Committee identified key risks and opportunities related to climate change, and discussed measures to address them. The table below lists the main climate change-related risks and opportunities that were gleaned from these discussions with regards to the Group’s businesses.
The time frames listed in the table were assumed to be as follows: by 2025 for short-term, by 2030 for mid-term, and by 2050 for long-term.
Moriroku Group - Analysis of risks/opportunities related to climate change (as of November 2022)
Time frames: 4-10 years (by 2030) for medium-term, 11-25 years (by 2050)
Summary of Transition Risks (Based on 1.5–2°C Scenario)
The time base for all items in the following analysis is set from the medium to long term.
|
Risk factor
|
Business impact
|
Financial impact
|
|||
|---|---|---|---|---|---|
|
|
Risk
|
Business impact
|
Risk
|
Opportunity
|
|
|
Policy
and Regs
|
Plastic
regulation
|
-Reduced product demand and profits due to plastic regulations
-Cost increased due to switch to biomass plastic
|
-Improved competitiveness from development of new products
using plastic alternatives
-Production process streamlining with plastic recycling
-Increased sales through expanded sales of bioplastic and other
new materials
|
Major
|
Major
|
|
Renewable
Energy
Policy
|
-Increased investment costs due to introduction of renewable energy
-Destabilization of energy prices due to structural changes in energy market
|
-Improved competitiveness resulting from energy cost decreases
-Improved market competitiveness thanks to consideration for the
environment and better energy efficiency
-Building of relationship of trust with stakeholders through fulfilling
corporate responsibility and improved company sustainability
|
Moderate
|
Moderate
|
|
|
Technology
|
Development
of low-carbon
technologies
|
-Reduced demand for existing products due to migration to low-carbon products
-Additional costs from the introduction of low-carbon technology
|
-Increased demand for environmentally friendly products and materials through the development of environmentally friendly materials based on collaboration between production and trading
businesses
-Expanding business opportunities with the shift to EVs. -Improving energy efficiency and reducing costs by introducing low-carbon facilities |
Major
|
Major
|
|
Market
|
Products/
Services
|
-Lost opportunities due to delays in development of
materials from recycled resources
-Restrictions on use of plastic products due to regulations and environmental changes
-Supply difficulties due to impact on raw material procurement and logistics
|
Business expansion and diversification through development of new markets and customers
-Construction of a procurement network through initiatives to reduce environmental impact throughout the entire supply chain
-Increase profits by responding to changes in consumer needs
|
Moderate
|
Moderate
|
Summary of Physical Risks (Based on 4°C Scenario)
The time base for all items in the following analysis is set from the medium to long term.
|
Risk factor
|
Business impact
|
Financial impact
|
|||
|---|---|---|---|---|---|
|
Risk
|
Opportunity
|
Risk
|
Opportunity
|
||
|
Acute
|
Increase in severity of abnormal weather (e.g., typhoons, heavy rains, landslides)
|
-Production stoppage and supply chain interruption due to abnormal weather.
|
- Procurement risk avoidance leveraging provision capabilities with multiple sites globally.
|
Major
|
Major
|
|
Chronic
|
Increase in average temperature
|
Cost increase from increased air-conditioning use.
|
Growth in demand for environmentally friendly products.
|
Moderate
|
-
|
Risk Management
Process for determining and monitoring key risks
The Moriroku Group has established the materiality of sustainability issues that should be taken on by the Group as a whole, according to its understanding and analysis of the current status of each operating company, and a close examination of risks common to the Group overall. We then identify high-priority risks by analyzing these key issues comprehensively, in terms of their impact and importance to the Group, from the perspective of Group-wide management.
Risks and decision-making processes with regards to the issue of climate change are established through discussions within the Board of Directors meetings. The Group also works to review these risks and opportunities as needed, in response to changes in the business environment and the progress of business strategies. These are discussed first within the Sustainability Committee, then presented as proposals to the Board of Directors.
Metrics and goals
Medium-Term Targets
The Moriroku Group has set a goal to reduce GHG emissions in Scope 1 and 2 by 50% by the end of FY2030 (base fiscal year: 2019). We will work to steadily reduce emissions in Scope 1 and 2, through the implementation of measures such as renewable energy, while also working with suppliers to gain an understanding of and reduce emissions in Scope 3, in order to achieve our KPIs.
-
Reference: Key KPIs for the promotion of sustainability
GHG Emissions (Scope 1 and 2): Actual Results and Targets
|
Scope
|
Actual Results
|
Targets
|
||||
|---|---|---|---|---|---|---|
|
FY2020
(Base year)
|
FY2023
|
FY2024
|
FY2025
|
FY2028
|
FY2031
|
|
|
Scope1
|
22,654.94
|
20,901.93
|
18,946.36
|
17,754.00
|
—
|
—
|
|
Scope2
(Market-based）
|
88,943.18
|
60,066.82
|
51,036.39
|
50,170.98
|
—
|
—
|
|
Total
|
111,598.12
|
80,968.75
|
69,982.75
|
67,924.98
|
61,378.97
|
55,799.06
|
［Notes］
Unit: t-CO₂e
- FY2020 refers to the fiscal year beginning in April 2019 and ending in March 2020.
- Organizational boundary: Moriroku Group (Moriroku Holdings, Moriroku Technology, and Moriroku Chemicals)
Scope 3 GHG Emissions: Actual Results
|
Category
|
FY2022
|
FY2023
|
FY2024
|
FY2025
|
|
|---|---|---|---|---|---|
|
Category 1
|
Purchased goods and services
|
424,023.97
|
389,758.31
|
407,521.48
|
417,382.46
|
|
Category 2
|
Capital goods
|
4,713.38
|
1,856.06
|
5,690.63
|
6,083.06
|
|
Category 3
|
Fuel- and energy-related activities not included in Scope 1 or 2
|
2,322.67
|
2,003.75
|
2,387.84
|
2,220.35
|
|
Category 4
|
Upstream transportation and distribution）
|
12,544.48
|
12,726.91
|
10,742.61
|
4,131.56
|
|
Category 5
|
Waste generated in operations
|
855.37
|
935.12
|
907.08
|
39.71
|
|
Category 6
|
Business travel
|
689.09
|
1,434.16
|
1,635.35
|
1,859.48
|
|
Category 7
|
Employee commuting
|
337.76
|
334.20
|
438.83
|
435.67
|
|
Total
|
445,486.71
|
409,048.51
|
429,323.83
|
432,152.29
|
|
[Notes］
Unit: t-CO₂e
- FY2020 refers to the fiscal year beginning in April 2019 and ending in March 2020.
- Categories 8–15 are excluded from the calculation
- Scope of calculation: Moriroku Holdings, Moriroku Technology, and Moriroku Chemicals
Reduction of GHG Emissions
The Moriroku Group undertakes information disclosure on the basis of the TCFD recommendations, while also working to reduce emissions of greenhouse gases (GHG). We are engaged in ongoing efforts to reduce Scope 1 and Scope 2 emissions, including energy saving and facility reviews, in line with the status of each individual site. With regards to Scope 3, we work to calculate emissions in order to clarify and understand the actual state of affairs and disclose the results of this on our website. Going forward, we will enhance the accuracy of our emission management to enable more effective action
Energy Consumption (Basis for Scope 1 and 2 Emissions Calculation)
[Notes]
-FY2020 refers to the fiscal year from April 2019 to March 2020.
-Renewable energy excludes self-generated energy.
-Organizational boundary: Moriroku Group.
-Unit: MWh
Introduction of Renewable Energy
We are expanding the use of renewable energy across the Group, and it has been introduced at 17 of the 38 sites targeted for introduction as of FY2024. Solar panels have been installed at the Production Division’s Technical Research Center and at the India site, and these are now generating electricity. In addition to switching to CO2-free electricity at the Shikoku office and Group company Moriroku Aguri, the Chemicals Division has also introduced solar power at the Nishiyama First Plant of the Group company Shikoku Kakoh under a Power Purchase Agreement (PPA). We will continue to help reduce environmental impact and promote a sustainable society by increasing the share of renewable energy in our operations.
Commitment to a Low-Carbon Society
-
Promote the design and development of lightweight automotive parts that contribute to improved fuel economy.
Use thin-wall technology to make molded parts thinner and lighter to improve fuel efficiency. Use multi-layer molding technology that achieves both weight reduction and high design expression. -
Develop parts for next-generation automobiles.
Prevent air pollution through the development of environmentally friendly decorative technologies that reduce emissions of volatile organic compounds (VOCs). -
Promote the development and sales of low-carbon, environmentally friendly chemical products.
-
Introduce energy-saving production equipment.
-
Through high-cycle production and global deployment, thoroughly reduce electricity consumption and CO2 emissions.
-
Reduce CO2 emissions by improving transportation efficiency.
-
Implement energy-saving activities in our daily operations.
Participation in Initiatives (Activities through Industry Associations)
The Production Business Division is a member of the Japan Auto Parts Industries Association (JAPIA) and participates in industry initiatives aimed at achieving carbon neutrality. As necessary, we also place importance on collaboration with external stakeholders, including expressing our views based on the Company’s basic policies.
ESG Ratings by External Evaluation Organizations
The Moriroku Group strives to enhance the objectivity and transparency of its environmental, social, and governance (ESG) initiatives through ESG assessments conducted by external evaluation organizations and inclusion in ESG indices based on these evaluation results.
CDP: Disclosure and evaluation related to climate change and other environmental issues
S&P Global: ESG assessment
S&P/JPX Carbon Efficient Index: Inclusion in an ESG index based on external evaluations
Steady score improvement for both climate change and water security in CDP assessment
In its FY2024 CDP assessment, the Moriroku Group achieved a score of B for climate change and B for water security thanks to enhancement of its
initiatives and information disclosure regarding climate change and water security. In the category of climate change, we achieved an increase of two ranks in our score from C to B in FY2023, a rank that we maintained in FY2024. In terms of water security, we achieved a score of B, representing a two-rank increase over the previous year’s C. We see this improvement in our assessment as reflecting the result of our decreasing Scope 1 and Scope 2 emissions, the enhancement of
our system for monitoring and managing our water usage, and initiatives including environmental data visualization and target setting in addition to putting in place a governance and risk management system based on the TCFD recommendations.
S&P/JPX Carbon Efficient Index
This index is jointly developed by S&P Dow Jones Indices and the Tokyo Stock Exchange. The weighting of constituent companies is determined based on the level of carbon efficiency and the status of environmental information disclosure. Moriroku is also included as a constituent of this index.