Climate Change Information Disclosure
Based on the TCFD Recommendation
The Toyo Ink Group understands that the response to climate change is a material management issue with a huge impact on business activities. We expressed support for the Task Force on Climate-related Financial Disclosures (TCFD)* in November 2020. We are currently engaged in a number of activities to address climate change, such as working to reduce CO2 emissions with the aim of achieving carbon neutrality by FY2050.
* The TCFD is an organization established by the Financial Stability Board (FSB) in 2015, to analyze the impact of climate change on the financial affairs of companies and it recommends the disclosure of information about strategies and other initiatives to address climate change.
Governance / Risk Management
The Sustainability Committee—which oversees the sustainability activities of the entire Toyo Ink Group—is chaired by the Chief Sustainability Officer and is supervised by the Board of Directors via the President and Representative Director, Group CEO. The status of sustainability activities is reported to senior management via the Group Management Committee and other means. The missions of the ESG Promotion Committee—a subordinate organization under the Sustainability Committee—include driving sustainability activities throughout the Group based on the Sustainability Vision “TSV2050/2030,” along with practical operations, promotion and disclosure of information on addressing the issue of climate change. The committee is comprised of three teams (Environmental Technologies, Manufacturing and Corporate Foundation), which engage in specific activities in coordination with the various Group companies and divisions.
They also coordinate with the Risk Management Committee to identify, assess and study climate change risks in the same way as other risks, and identify and address material risks. The state of CO2 emissions is evaluated by the Environment & SCM Promotion Department under the Production-Logistics Division.
System for addressing climate change (FY2022)
Agenda items of meeting bodies and status of meetings held, etc. (FY2022)
| Committees | Agenda, status of meetings held and reporting, etc. |
|---|---|
Sustainability Committee |
• Sustainability Conference (Group-wide, held in September) • Reports to management: two times (proposal for disclosure of climate change-related information and report on results) |
ESG Promotion Committee |
• Review of the product portfolio • Consideration of low-carbon raw materials • Consideration of energy-saving measures and introduction of renewable energy, etc. • Consideration of the content for disclosures of climate change information • Meeting status: regular meetings held once a month, and as necessary for each theme |
Strategy
Basic policies and strategies
The Toyo Ink Group recognizes that the policies and measures taken by national and local governments in response to global climate change have a significant impact on market conditions, the procurement of raw materials and consumer preferences and may have a strong impact on business continuity and business performance in the future. We analyze these risks and opportunities, reflect them in our management policies and business plans, and engage in appropriate activities to address climate change.
Basic policy on activities to address climate change
The Toyo Ink Group recognizes that climate change is a serious business risk, and actively engages responses to global demands. At the same time, we will endeavor to contribute to the improvement of social sustainability through comprehensive sustainability activities, including addressing climate change.
1. Tracking and reducing greenhouse gas (GHG) emissions in all business activities
2. Provision of products and services that contribute to helping customers and consumers address climate change
3. Building a business foundation that facilitates proactive activities to address climate change
4. Appropriate disclosure of information on the Group’s activities to address climate change
Process for identifying risks / opportunities and disclosing information
In disclosing information based on the TCFD recommendations, we identified risks / opportunities while involving the entire Group to confirm the appropriateness of them. Going forward, we will continue to implement and enhance these initiatives, and seek to further refine the content of our disclosures.
Risks / opportunities organized and summarized in the process of identifying risks / opportunities (partial list)
Transition Risks |
Policy and Legal |
• Cost increases due to introduction of carbon taxes and soaring emissions trading prices • Toughening and/or changing of environmental regulations on GHG emissions, etc., and their impact on production facilities |
|---|---|---|
Technology |
• Decline in the value of existing technologies accompanying the transition to a decarbonized society • Increasing costs of investment in energy-saving equipment, human resources development and R&D accompanying the transition to low-emission products |
|
Market |
• Decline in demand for packaging materials and printing-related items, etc., accompanying the transition to a circular economy and decarbonization • Rise in raw material and energy prices due to the use of non-fossil and recycled raw materials and compliance with regulations |
|
Reputation |
• Decrease in rate of being chosen by customers, due to demands from customers, etc., to reduce GHG emissions |
|
Physical Risks |
Acute |
• Failure to fulfill supply responsibilities or loss of business opportunities due to supply chain disruptions as a result of climate-related disasters • Damage to equipment and facilities caused by climate-related disasters, increased recovery costs and loss of business opportunities due to infrastructure stoppages |
Chronic |
• Increase in measures and relocation costs for bases located in flood and drought risk areas |
|
Opportunity |
• Increase in sales due to growing customer demand for low-emission products and products that lead to energy conservation, reduction of GHG emissions and recycling of resources • Capture of business opportunities due to market growth for new climate-related businesses (carbon negative materials and products for combating infectious diseases) |
|
Scenario analysis
TCFD recommends using multiple climate scenarios—including the 2°C or less scenario—to perform analyses when disclosing strategies. In performing its analyses, the Toyo Ink Group refers to a 1.5°C scenario, which envisages a world in which various measures are taken to limit the average temperature rise to 1.5°C in comparison with pre-industrial levels, and a 4°C scenario, which envisages a world in which the impact of physical risks due to climate change increases.
* For our 1.5°C scenario, we refer to the IEA World Energy Outlook: Net Zero Emission by 2050 Scenario and IPCC: SSP1-1.9 scenario. For our 4°C scenario, we refer to IEA World Energy Outlook: Stated Policy Scenario and IPCC: SSP5-8.5 scenario.
Financial impact: 3=financial impact of several billion JPY or higher; 2=financial impact of around one billion JPY; 1=financial impact of less than one billion JPY
Expressivity: 3=already occurring at the present time, or almost certain to occur in the future; 2=relatively high likelihood of occurrence; 1=low likelihood of occurrence
| Risks / Opportunities | Events / Factors | Impact | Countermeasures / actions | ||
| 1.5℃ | 4℃ | ||||
| Risks | Rising raw material and energy prices |
• Increasing demand for non-fossil and recycled raw materials • Increase in cost of measures for suppliers due to toughening of GHG emission regulations • Increased raw material costs due to a decrease in naphtha production volume |
Financial Impact 3 | Financial Impact 2 |
• Reduction of high-cost raw materials by reviewing formulations and changing product lineups • Stable procurement of raw materials through review of contracts with suppliers • Reduction of energy consumption by shortening transportation distances, by promoting local production for local consumption |
| Expressivity 3 | Expressivity 3 | ||||
| Decline in demand for packaging materials and printing-related items |
• Circular economy-oriented market growth • Progress in the transition to a decarbonized society • Developments in the packaging industry to eliminate plastics |
Financial Impact 3 | Financial Impact 2 |
• Review of the business portfolio • Enhancing superiority by increasing environmental performance and low-emission characteristics of products • Appealing to customers regarding value-added products through CFP labeling • Rollout of products that support use of low-carbon packaging materials |
|
| Expressivity 3 | Expressivity 2 | ||||
| Increased impact of carbon prices on costs |
• Introduction of a carbon tax • Carbon taxes on fossil-fuel derived electricity and an increase in carbon tax prices on raw materials • Stimulation of the emissions trading market leading to growing scarcity of emissions credits |
Financial Impact 3 | Financial Impact 2 |
• Transferring increases in raw material prices due to carbon taxes to product prices • Reduction and elimination of high-carbon raw materials through product formulation reforms • Active shift toward electricity derived from renewable energy • Avoiding the purchase of emissions credits by rigorous reduction of direct emissions |
|
| Expressivity 3 | Expressivity 3 | ||||
| Loss of business opportunities due to the intensification of climate-related disasters |
• Disruption of supply chains due to climate-related disasters (suspension of operations at production bases, obstructions to the transport of raw materials and products) • Delay or suspension of supply of biomass raw materials due to adverse effects on farmland due to climate-related disasters |
Financial Impact 2 | Financial Impact 3 |
• Enhancing disaster readiness through BCM • Construction of a complementary domestic and overseas production network that includes other companies in the same industry • Diversification of sources of raw materials and modes of transport |
|
| Expressivity 2 | Expressivity 3 | ||||
| Opportunities | Increased sales of low-emission products |
• Increase in demand for raw materials (including CO2-derived raw materials) and products with low emissions during production • Increase in demand for products that lead to energy conservation, low emissions and recycling of resources by customers • Growing consumer expectations for carbon-negative materials |
Financial Impact 3 | Financial Impact 2 |
• Prioritizing selection and securing supplies of low-emission raw materials • Reducing CO2 emissions from production activities • Expanding lineup of products that consider low emissions from a life cycle assessment (LCA) perspective (e.g., heating/pretreatment at the time of use not necessary, easy to recycle) • Pursuing R&D and commercialization of carbon-negative materials |
| Expressivity 3 | Expressivity 3 | ||||
| Acquisition of business opportunities such as materials for combating extreme heat and infectious diseases |
• Increase in demand for temperature measures in the living environment due to chronic temperature rises • Frequent emergence of newly emerging infectious diseases due to the impact of climate change • Growing demand for products with a low risk of temperature-related accidents during storage and/or use |
Financial Impact 2 | Financial Impact 3 |
• Pursuing R&D and commercialization of materials to combat deterioration of living conditions (hot weather) due to climate change • Pursuing R&D and commercialization of medical-related materials (e.g., drug discovery, medication, medical devices and prevention of infections) |
|
| Expressivity 3 | Expressivity 3 | ||||
Amount of impact from carbon tax
The impact of carbon taxes on CO2 emissions (estimated for Scope 1 and 2) in FY2030 was calculated at around 1.74–3.51 billion JPY. On the other hand, if the targets for TSV2030 are met, this impact will be reduced by approximately 38%.
* For a carbon tax per ton of emissions, we referred to the IEA World Energy Outlook 2021. The 1.5°C scenario quotes the carbon tax price for developed countries given by the Net Zero Emission by 2050 Scenario, while the 4°C scenario quotes the EU carbon tax price given by the Stated Policy Scenario.
| Scenario | Carbon tax per ton of emissions* (2030) | FY2030BAU | When TSV2030 targets are achieved | Difference | ||
|---|---|---|---|---|---|---|
| CO2 emissions | Impact from carbon tax | CO2 emissions | Impact from carbon tax | |||
| 1.5℃ | 14,950 JPY/t-CO2 |
Japan: 88,400t-CO2 Overseas: 146,000t-CO2 |
3.51 billion JPY |
Japan: 50,000t-CO2 Overseas: 95,000t-CO2 |
2.17 billion JPY |
-1.34 billion JPY |
| 4℃ | 7,475 JPY/t-CO2 |
1.74 |
1.08 billion JPY |
-0.66 billion JPY |
||
Metrics and Targets
1. CO2 emissions
Since launching the “CO2 Reduction Project” in FY2010, the Toyo Ink Group has been striving to reduce CO2 emissions from its production bases in Japan and overseas. Under the current SIC-II medium-term management plan, we declared that “we would achieve carbon neutrality by FY2050” and set this as the central target of TSV2050/2030.
In TSV2030, we set the targets of reducing CO2 emissions in Japan by 35% from the FY2020 level, to 50,000 t-CO2; and overseas CO2 emissions by 35% from the FY2030 BAU level, to 95,000 t-CO2. Our measures to achieve these targets can be classified into three aspects: reducing energy consumption, shifting to low-carbon energy, and shifting to low-carbon power.
Changes in CO2 emissions and targets (Japan)
Changes in CO2 emissions and targets (overseas)
Major reduction measures and assumed reduction amount (Japan)
| Direction of measures | Major reduction measures |
|---|---|
| Reduction of energy consumption |
• Energy conservation (eliminating energy loss in processes) • Production process reform from an energy-saving perspective |
| Shift to low-carbon energy |
• Electrification of production equipment (reducing direct emissions) • Preparation and research for the use of LNG alternative fuels |
| Shift to low-carbon power |
• Introducing low-carbon power • Introducing renewable energy equipment |
2. The percentage of sales from sustainability-enhancing products
The Toyo Ink Group began our efforts to improve the environmental friendliness of our products in the early days of the Group. In the 1990s we started releasing environmentally friendly products. In recent years, our product development has been focused on “environmental value” and also the comfort in people’s lives, their health and welfare, and safety and reliability. These efforts have enabled us to launch a diverse array of products that are able to contribute to the enhancement of the sustainability of society, thus providing lifestyle value.
Under TSV2050/2030, we added criteria for products with “lifestyle value” to our existing criteria for environmentally friendly products and redefined them as “Toyo Ink Group Sustainability- Enhancing Products.” The Group has set a target of increasing the ratio of the sales of these sustainability-enhancing products to the net sales of the entire Group to at least 80% globally by 2030.
Sales ratio of environmentally friendly products and targets
Environmental value and lifestyle value defined for sustainability-enhancing products, their direction, and examples
| Value provided | Direction | Keywords / Examples of initiatives |
|---|---|---|
| Environmental Value | Container / package area |
Reduce: Reduction and replacement of fossil-derived raw materials |
Replace: Simplification of product mix, replacement with paper |
||
Recycle: Rollout of materials and systems that support the recycling of plastics |
||
Mobility / energy area |
Shift to EV transportation: Proposal and advance development of materials and technologies that contribute to the acceleration of the shift to EVs |
|
Clean energy / new energy: Developing environmentally friendly new power generation systems and proposing materials for these systems |
||
Carbon recycling |
Developing Carbon Capture, Usage and Storage (CCUS) technologies, utilizing CO2-derived raw materials |
|
| Lifestyle Value |
Medical and healthcare area (prevention and diagnosis, medical treatment, safety and security) Communications, electronics and digital area (high-speed, high-capacity communications, advanced sensing, Big Data) |
|