Governance system

The Company recognizes our response to climate change as an important management issue. For key issues related to sustainability including our response to climate change, the Sustainability Committee chaired by an Executive Officer prepares guidelines and plans and promotes initiatives to achieve our targets.


We have created an appropriate oversight structure through the Board of Directors in which the details evaluated at the Sustainability Committee are deliberated and reported as necessary at Board of Directors meetings.


In the Construction Supply Division that is the covered business, we have a system in which those responsible for promoting and those in charge of sustainability (including climate change) are placed at covered units and we reflect climate change-related points in business strategy and business promotion.

Governance system for climate change-related response

Meeting bodies and other systems

Roles and responsibilities

Board of Directors

Oversight of climate change response

Sustainability Committee

Preparing guidelines and plans related to sustainability including climate change response, deciding important items, and promoting initiatives for key issues

Strategy

Impact of climate change on the Company’s business

The world is experiencing constant damage from abnormal weather, and if sufficient measures are not taken, that damage will further intensify, and there is the risk of damage on a global scale. Given these conditions, the Paris Agreement that took effect in 2016 established long-term targets to limit the average rise in global temperature to well below 2°C compared to pre-industrial levels and to make every effort to limit it to 1.5°C. As the world begins to take action to realize the scenario of a less than 2°C increase in global temperature, the Company sees this move as both a risk and as an opportunity, and the Sustainability Committee is evaluating and preparing indicators to act as concrete behavioral guidelines and targets.


To realize a sustainable society, the Company has identified key issues that are highly important to the Company, its stakeholders, and society to pursue both sustainable growth and enhancement of our corporate value. While confirming the state of progress for our targets to respond to these key issues, we are working to create solutions through our business activities.

 

We perform sequential scenario analysis and impact evaluation of business fields judged to have a strong impact on our business.
We use the results of this scenario analysis to formulate both response plans and behavioral guidelines.

The Company’s strategy under our envisioned scenarios (scenario analysis)

1.Selection of the covered business

Our main business, the construction supply business in Japan (made up 59.2% of sales in FY2020 results)

Percentage of sales of each business division (%)

Composition of the covered business

Segment

Field

Main products and services

Housing

Energy solutions

Solar energy systems, storage batteries

Insulation materials

Insulation materials

Housing materials

Cladding, housing and facility equipment, interior materials

Non-housing

Construction materials

Cladding, foundation pillars, foundation improvement construction methods, fire-resistant coverings

2. Definition of the scenario groups (world view of the 2°C and 4°C scenarios)

To predict an uncertain future, it is necessary to select and set multiple temperature band scenarios including the less than 2°C scenario.


To do so, the Company has referenced information from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) and has selected two scenarios, the 2°C scenario (RCP 2.6: Scenario 1) and the 4°C scenario (RCP 8.5: Scenario 2).

Source: Environmental Innovation Center 
(IPCC 5th Assessment Report partially modified)
拡大
Source: Environmental Innovation Center
(IPCC 5th Assessment Report partially modified)

2°C scenario

(RCP 2.6: Scenario 1)

  • Advancing bold policies and technological innovation including conversion to renewable energy, strengthening energy-saving regulations, and introducing carbon tax
  • A society in which changes accompanying the shift to a decarbonized society have a high possibility of impacting business (transition risk)
  • Expanded demand for related products with expanded demand for energy-saving products and decarbonization energy technologies, etc.

4°C scenario

(RCP 8.5: Scenario 2)

  • As abnormal weather caused by climate change intensifies, the risks of greater-than-expected damage caused by wind and floods, depletion of raw materials, and infections increase
  • A society in which the physical damage caused by climate change has a high possibility of impacting business (physical risk)

Based on the above predictions, at the Sustainability Committee, risk and opportunity analysis for each of the covered units in the construction supply business in Japan is performed, shared, and used in medium- to long-term forecasting and in future business strategy.

3. Results of scenario analysis

2°C scenario

(RCP 2.6: Scenario 1)

Changes in markets

  • Suppliers passing on cost increases caused by stronger regulations and the introduction of carbon tax greatly reduces cost competitiveness
  • Changes in demand trends and preferences of end users even in the construction market and increased obsolescence of existing products accompanying the shift to a decarbonized society
  • Changes in markets and increased procurement costs create pressure to restructure the construction supply business in Japan (portfolio shifts)

4°C scenario
(RCP 8.5: Scenario 2)
Increasing factors of uncertainty

  • As the move toward stronger regulations and the introduction of carbon tax is slow, it is difficult to expect changes in demand trends and preferences to the extent assumed in Scenario 1
  • However, as factors of uncertainty caused by climate change are chronic, both procurement and sales are impacted by unforeseen trouble (extreme weather, depletion of raw materials, infections, etc.)
  • Also in terms of installation, inclement weather and rising temperatures could easily reduce product quality
  • If we cannot fulfill our supply responsibility demanded of our customers, sales could decrease

Risks and opportunities caused by climate change

In the scenarios defined in the scenario groups (world view of the 2°C and 4°C scenarios), the specific risks and opportunities envisioned are as follows.

Evaluation targets and expected time period of occurrence of climate change-related risks in FY2022

Risk category

Evaluation targets of risks

Expected time period of occurrence

Impact

Transition risk

Policy and regulatory risk

Increased costs from the introduction and strengthening of systems related to regulations on GHG emission reduction

Medium term

Large

Risk of slower growth in market scale due to reduced prices of feed-in tariffs for electricity and subsidies

Medium term

Medium

Technological risk

Reduced competitiveness of existing products with the popularization of low-carbon technology with stronger regulations

Long term

Medium

Market risk

Lower margins from price pass-through by suppliers

Long term

Large

Reputation risk

Risk that investors and financial institutions will judge that information disclosure is insufficient, causing negative effects on financing

Medium term

Large

Physical risk

Acute risk

Supply cutoffs from disasters at suppliers caused by the normalization of abnormal weather

Medium term

Large

Chronic risk

Deteriorating work environments and productivity and delays in construction completion at construction sites caused by rising temperatures

Long term

Medium

Evaluation targets and expected time period of realization of climate change-related opportunities in FY2023

Opportunity category

Evaluation targets of opportunities

Expected time period of occurrence

Impact

Opportunities related to resource efficiency

Increasing needs for lighter, alternative materials as steel prices rise

Medium term

Large

Opportunities related to energy sources

Expansion of the renewable energy market by setting long-term CO_{2} reduction targets

Medium term

Medium

Opportunities related to products and services

Providing new solutions by developing and partnering with new business partners (installation and processing)

Medium term

Small

New business development through development and partnerships with new suppliers

Medium term

Medium

Creation of new businesses with expanded products and services that contribute to an appropriate response to climate change

Long term

Large

Market-related opportunities

Expanded business through portfolio shifts

Medium term

Large

Increased demand for highly sustainable products and services

Medium term

Large

Strategies in response to risks and opportunities

The Company aims to expand our solutions and contribute to building a sustainable society in the three fields of “energy saving,” “weight saving,” and “labor saving” identified as focus fields in our “DANTOTSU Strategy [Becoming our customers’ best of the best]” put forth in the “Sustainability X (Cross)” section of our medium-term management plan announced in 2020.

Energy saving

Expanding solutions that pursue effective energy use in buildings, starting with the insulation filed and energy solutions field

Labor saving

Providing optimal solutions in terms of quality, ease of installation, and work environments

Risk management

The Takashima Group is addressing the risk of climate change, which it regards as one of its key risks.  To address risks and opportunities associated with climate change, the Takashima Group has established a working group, which enlists the involvement of Sustainability Committee members. The working group has been performing scenario analysis based on the TCFD recommendations, identifying key risks and opportunities, and evaluating the degree of impact of such risks and opportunities. Going forward, the Sustainability Committee will persist with initiatives that involve analyzing risks, formulating countermeasures, and conducting progress management.  Currently, the Company is building an environment-related risk management framework as part of its Company-wide risk management structure. We will proceed in addressing climate change risks by coordinating efforts of the Environmental Management Committee, Sustainability Committee, and Risk Management Committee, while also having the Company implement and enhance the effectiveness of comprehensive risk management. Going forward, we will continue to enhance our systems for evaluating and addressing climate change risks.

Metrics and targets

The Company started calculating Scope 1 and 2 greenhouse gas (GHG) emissions in FY2021. The scope of these calculations will be progressively expanded to take into account resources and other factors.
With respect to Scope 3 emissions, the Company builds overall systems associated with the supply chain and accordingly recognizes that its social responsibility entails promoting carbon neutrality throughout the supply chain in serving as a value-adding trading company that provides necessary functions and solutions.
This time, as part of the sustainability road map for which the groundwork has been made, we have set a target for the rate of reduction of GHG emissions (Scope 1 and 2) of 35% reduction vs FY2022 for 2030. To achieve targets, we will engage the entire efforts of the Group to continue various measures for reduction.

GHG emissions of the Takashima Group (FY2023)*1

Scopes 1 and 2

Scope 3

Takashima (non-consolidated)

198.28 tons

Group companies in Japan*2

3,065.72 tons

Overseas Group companies

*1: The above figures are market-based figures.
*2: Total for seven domestic subsidiaries (Hi-Land Inc., iTak International (Japan) Co., Ltd., TAKCEL Co., Ltd., CLS Corporation, Rest Corporation, New Energy Distribution System Inc., and Takashima Robot Marketing Co., Ltd.)