Responding to Climate Change

Climate change is a very significant issue facing us today. We took environmental load reduction as our significant issue in the Medium-term Management Plan 2023, and set our goals for the immediate future in the Medium-term Environmental Plan by considering response to climate change as one of seven social issues to be resolved. We will organize risks and opportunities to facilitate disclosure.

Response to Recommendations of the Task Force on Climate-related Financial Disclosures

TCFD TASK FORCE ON CLIMATE-RELATED FINANCIAL DISCLOSURES

In October 2021, we supported the recommendations of the Task Force on Climate-related Financial Disclosure (TCFD (*1)).
In May 2022, we set a goal to achieve carbon neutrality (i.e., achieve net zero CO2 emissions) throughout the entire SHI Group by 2050 and a reduction target of CO2 emissions by 2030, and we are promoting responses to climate change.

  1. *1TCFD (Task Force on Climate-related Financial Disclosures)

    TCFD is a special private-sector-led organization formed at the request of the G20 and composed of members from a wide range of economic sectors and financial markets around the world, including major corporations and credit rating agencies. It recommends that companies evaluate the financial impact of climate change risks and opportunities on their operations and disclose their governance, strategy, risk management, metrics and targets.

Governance

We have identified "reduction of environmental impact," one of the Sustainability Material Issues resolved by the Board of Directors in March 2020, as our most important issue, and have set "response to climate change" as one of the seven social issues to be resolved in the "Midterm Corporate Strategy 2023".
Response to climate change is positioned as a priority risk issue by the Risk Management Committee, and is handled by the Sustainability Department of the Corporate Planning Group. Measures for specific risks discussed by the Sustainability Committee are submitted to the Board of Directors.

  • Risk Management Committee (twice a year)

    The Risk Management Committee, chaired by the President, identifies high-impact risks of the SHI Group and takes actions to reduce those risks.

  • Sustainability Committee (twice a year)

    The Sustainability Committee, chaired by the President, deliberates measures against identified risks and reports to the Board of Directors.

Framework for Responding to Climate Change

Strategy

The Paris Agreement, which came into effect in November 2016 as a response to global climate change, calls for efforts to keep the global average temperature rise to well below 2℃, preferably 1.5℃, compared to pre-industrial levels. We are currently developing a long-term plan in line with the Paris Agreement.
With regard to the impact of climate change on the Group's business, we are conducting analyses based on the following two scenarios of society in 2030.

  1. 14℃ scenario: A scenario in which effective measures are not implemented and temperatures rise around 4℃
  2. 22℃ scenario: Scenario in which measures are implemented and temperature rise is limited to less than 2℃

The 4℃ scenario anticipates increases in physical risks associated with intensifying extreme weather. In response, we aim to strengthen our business continuity plan (BCP) not only at our manufacturing sites, but also across our entire supply chain. On the other hand, the 2℃ scenario assumes the impact of stricter regulations on business activities to reduce CO2 emissions, and transition risks such as an increase in the burden of business costs represented by the carbon tax. Under the 2℃ scenario, a key challenge would be the planning and implementation of measures to reduce CO2 emissions in the manufacture and use of products.

We are now working under the Medium-Term Management Plan 2023 and the 6th Medium-Term Environmental Plan, but since our group offers a diverse range of product lines, various impacts are possible in many areas. Therefore, we have decided to evaluate risks and opportunities by dividing them into business segments that are likely to be significantly affected by climate change and other segments. We will continue to disclose information as we aim to expand our business by reducing the evaluated risks and taking advantage of the opportunities.

References:

Risk Management

The Risk Management Committee identifies risks that have a significant impact on the Group and takes measures to mitigate them. Among these, climate change risk is positioned as the most important issue, and measures to address it are being discussed. For risks identified by the Risk Management Committee, measures to address them and their progress are reported to the Board of Directors at least twice per year, following which they are incorporated into the Group's business operations.

Metrics and Targets

In May 2022, we resolved at a Board of Director's meeting to achieve carbon neutrality for the entire SHI Group by 2050. To achieve this goal, we have set CO2 reduction targets for 2030.

  • Aim to achieve carbon neutrality (i.e., achieve net zero CO2 emissions) throughout the entire SHI Group by 2050
  • CO2 emissions during product manufacturing (Scopes 1 and 2): 50% reduction by 2030 (compared to FY2019)
  • CO2 emissions during product use (Scope 3, Category 11(*2)): 30% reduction by 2030 (compared to FY2019)
  1. *2Indirect GHG emissions not included in Scope 1 or Scope 2 that come from the use of products sold.

The business foundation of the SHI Group is primarily to provide industrial machinery that supports the production activities of our customers. We consider that contributing to the acceleration of the realization of a decarbonized society through such products and services will create value for our Group's products and furthermore lead to the sustainable growth of our Group.
In addition, we have set targets for the latest three years in our Medium-Term Environmental Plan, which is determined every three years, and are engaged in activities to reduce our environmental impact.In the 6th Medium-Term Environmental Plan, which began in 2020, we have set a target of reducing CO2 emissions (Scope 1 and Scope 2) from our Group's manufacturing sites by 1% per year compared to FY2019.

Climate Change-related Reduction Targets (Extract from the 6th Medium-Term Environmental Plan)
Items 6th Medium-Term Environmental Plan (FY2020-2022)
Target value Base year Achievement year
(1) Reduction of CO2 emissions (total) (Japan) ・3% reduction in FY2022 compared to FY2019 2019 2022
・Discontinuance of use of fuel oil (fuel conversion)
・Expansion of investments in energy-saving projects
・Consideration of introduction of renewable energy facilities
(new buildings)
(2) Reduction of CO2 emissions (total) (global) ・(global) 3% reduction compared to FY2019 2019 2022
(3) Reduce CO2 emissions of products ・Establishment of emissions targets when products are used 2008 2022
・Expansion of environmentally conscious products 2009 2022
For results of our activities, also please refer to the following: