We support the Paris Agreement and the TCFD recommendations, and recognize that responding to climate change is an important issue with great urgency. While striving to address the significant risks posed by climate change, we will also view it as a growth opportunity that will bring new opportunities, and will proactively promote responses to climate change across the entire group.
What is the TCFD Framework?
The TCFD Framework is a framework published by the Task Force on Climate-related Financial Disclosures (TCFD) for disclosing the financial impact of climate change on companies. This framework consists of the following four elements:
Governance:
What system do you have in place to consider climate change and how do you reflect this in your business management?
strategy:
What impact will short-, medium- and long-term climate change have on business management? And how should we respond to this?
Risk Management:
How are you identifying, assessing and seeking to mitigate the risks of climate change?
Indicators and goals:
What indicators do you use to assess risks and opportunities and to evaluate progress toward your goals?
Governance
We established the Sustainability Committee in June 2023 with the aim of integrating ESG aspects into our management strategy and practicing sustainable management with a long-term perspective. The committee meets once a quarter and is chaired by President and CEO Medius Holdings Co., Ltd. and President, who is responsible for responding to climate change, and is composed of members such as the Director in Director responsible for sustainability, executive officers, and expert chairpersons. It is responsible for identifying important sustainability issues, formulating strategies and goals, managing and evaluating the progress of measures, and overseeing their deployment throughout the group.
With regard to climate change issues in particular, we have established a specialized committee, the Social Coexistence Committee, which consolidates the details discussed in each division and reports them to the Board of Directors through the Committee.
The Board of Directors oversees the status of executive efforts regarding climate change and provides feedback to the Sustainability Committee.
Strategy
●Analysis Process
With reference to each risk and opportunity item outlined in the TCFD recommendations, we have taken the following steps to consider the risks and opportunities that climate change issues pose to our group's business.
In addition, using two scenarios, a 1.5°C scenario and a 4°C scenario, we conducted an analysis of transitions in policies and market trends (transition risks and opportunities), as well as an analysis of physical changes due to disasters, etc. (physical risks and opportunities).
Climate Change Scenarios
This scenario aims to limit the global average temperature to less than 1.5°C compared to pre-industrial times, as efforts to achieve carbon neutrality become more active in order to mitigate the effects of climate change. In the 1.5°C scenario, it is assumed that the impact of policy and regulatory risks, among other transition risks, will be greater than in the 2°C scenario.
● 1.5℃ Scenario (decarbonization scenario)
This scenario aims to limit the global average temperature to less than 1.5°C compared to pre-industrial times, as efforts to achieve carbon neutrality become more active in order to mitigate the effects of climate change. In the 1.5°C scenario, it is assumed that the impact of policy and regulatory risks, among other transition risks, will be greater than in the 2°C scenario.
● 4°C Scenario (high emissions scenario)
This scenario assumes that no progress will be made in climate change countermeasures, and that the global average temperature will rise by approximately 4°C by the end of this century compared to pre-industrial times. It is anticipated that the impacts of physical risks such as more severe extreme weather and rising sea levels will become greater.
<Changes in Global Average Temperature Compared to 1850-1900>
Evaluating the Impact of Risks and Opportunities and Selecting Countermeasures
In the 1.5°C scenario, external pressure to decarbonize will intensify, leading to a world view in which energy-saving equipment and environmentally friendly products are selected in the medical field, and we recognize that low-carbon products and our own emissions reduction activities will have an impact on improving corporate value. On the other hand, in the 4°C scenario, low-carbonization and decarbonization will not be promoted, CO2 emissions will tend to increase, abnormal weather and disaster risks will increase, and business activities may be affected by supply chain disruptions.
<Risks that May Affect Business>
Risk
Classification
Driver
Risk details
Timeline
Impact
Transition Risk
Laws and regulations/policies
Introduction of carbon pricing/Raising carbon prices
Costs are incurredfor company emissions (Scope 1-2)
Mid-term
Large
Costs for energy conservation and renewable energy introduction will be incurredin order to comply with strengthened GHG emission regulations
Short to medium term
Large
Technology
Increasingrenewable energy sources
Electricity bills will rise as the power source mix changes
Mid-term
Medium
Physical Risks
acute
Increasing severity of natural disasters
Damage to our own facilities will affect inventory andoperations will be suspended, resulting in increased expenses and reduced profits.
Short to medium term
Large
Disruption of logistics networks will increase delivery costs
Short to medium term
Large
Opportunities to Impact Business
Opportunity
Classification
Driver
Opportunity Details
Timeline
Impact
Opportunity
Market
Expansion of the digital transformation market
Demand for digital health solutions will increaseas medical institutions undergo digital transformation
Short to medium term
Large
Resilience
Strengtheningdecarbonization efforts
By promoting decarbonization efforts, externalevaluations will increase and fundraising costs will decrease.
Mid-term
Large
Resource Efficiency
Promoting the introductionof energy-saving products
Reduce operational costsby introducing energy-saving equipment at your business
Short to medium term
Medium
Energy Source
Introduction ofrenewable energy sources
The introduction and expansion of solar power generation and energy storage technologieswill reduce electricity purchasing costs.
Mid-term
Medium
*Time axis Short-term: within 3 years, Medium-term: 3-10 years, Long-term: 10-30 years
* Impact level: Large: 1 billion yen or more, Medium: 300 million to 1 billion yen, Small: Less than 300 million yen
Risk Management
Process for Identifying and Assessing Climate-Related Risks
Climate change risks are identified and evaluated by the Sustainability Committee through each business division, the Social Coexistence Committee, and the Risk Committee. The Risk Committee evaluates once every six months, and in the future will evaluate the impact on finances and urgency as priority evaluation items. Risks that are deemed to be particularly important as a result of the evaluation will be reported to the Board of Directors through the Sustainability Committee as necessary.
Process for Managing Climate-Related Risks
The identified and evaluated risks are coordinated with the Risk Committee, which is responsible for risk management for the entire company, to build a company-wide integrated risk management system. The countermeasures considered by the Risk Committee are reported to the Board of Directors via the Sustainability Committee, after which they are discussed and considered by the Board of Directors and notified to the relevant group companies.
●Integration Process for Company-Wide Risk Management
Our Group has established the Risk Committee as one of the specialized committees of the Sustainability Committee. The Risk Committee meets once a quarter to manage risk across the entire Group. The Risk Committee collects and examines important risks that have been evaluated, analyzed, and reported by the Compliance Committee, the Group-wide committees (Information Systems Committee, Human Resources and General Affairs Committee, etc.), and the specialist committees of the Sustainability Committee (Social Coexistence Committee, Human Capital Committee, etc.), and reports to the Board of Directors in cooperation with the Sustainability Committee. Climate-related risks are also managed as a company-wide integrated risk through cooperation between the subcommittees of the Social Coexistence Committee and the Risk Committee.
Indicators and Goals
In order to evaluate and manage the impact of climate-related issues on our business, we calculated our greenhouse gas emissions (Scope 1-3) for fiscal year 2022 (July 2022 to June 2023) based on the standards of the GHG Protocol. The greenhouse gas emissions reduction target for our group is set at a level of reducing Scope 1 and 2 emissions by 42% from the baseline emissions for fiscal year 2022 in fiscal year 2030. Going forward, we will also set reduction targets for Scope 3 and work to reduce greenhouse gas emissions throughout our entire supply chain.
<Greenhouse gas Emissions in Fiscal 2022 (Scope 1-3)>
Scope
Scope 3Category
Emissions(t-CO2)
Scope 1+2total
9,001
Scope 1
6,471
Scope 2
2,530
Scope 3
1 Purchase
995,132
2. Capital goods
3,032
3. Other fuels
1,730
4. Transportation (upstream)
1,387
5. Waste
190
6. Employee Business Travel
405
7 Employee commuting
982
11 Use of the Product
1,193,354
12 Product Disposal
1,087
Scope 3 total
2,197,298
total
2,206,300
*Scope 3: 8 Leased assets (upstream), 9 Transportation (downstream), 10 Product processing, 13 Leased assets (downstream), 14 Franchises, and 15 Investments are not included in the calculation as they are not related to our business.
