SustainabilityEnvironment

Vision/PolicyClimate Change Initiatives

Nippon Chemi-Con has declared support for the recommendations of the "Task Force on Climate-Related Financial Disclosures (TCFD)" with the recognition that climate change is a significant issue which affects the continuation of our business. Based on the TCFD framework, we will analyze risks/opportunities related to climate change that may affect our business and reflect them in our corporate strategy. At the same time, we will engage in
disclosure of financial information related to climate change.

Governance

We will conduct discussions related to climate change and evaluate/manage statuses of climate change initiatives at the Risk Management Committee.
The Risk Management Committee will report climate-related information including risks and opportunities that may affect our business to the Executive Committee Meeting and Board of Directors twice a year, and the Board of Directors will instruct/supervise.
We will also implement initiatives towards resolving issues related to climate change, environmental risks and environmental tasks at the Environmental Committee. The Environmental Committee will extend initiatives to executing divisions and manage progress of initiatives towards decarbonization and energy conservation, and report to the Executive Committee Meeting and Risk Management Committee.

Meeting/Committee Chairperson Frequency Roles/responsibilities related to climate change
Board of Directors Representative Director and President Once a month in principle
  • - Supervises climate-related targets and initiatives based on reports/recommendations made by the risk management committee and makes final decisions on engagement policies, etc.
  • - Gives instructions to the Executive Committee Meeting and Risk Management Committee based on the decided engagement policies.
Executive Committee Meeting Representative Director and President Once a week in principle
  • - Discusses policies on execution of operations based on instructions from the Board of Directors and reports/recommendations related to climate change made by the Risk Management Committee and Environmental Committee.
Risk Management Committee Chief risk management officer Twice a year
  • - Manages overall risks including climate change and makes reports/recommendations to the Board of Directors and Executive Committee Meeting.
  • - Considers measures for each risk through cooperation with the Environmental Committee and related divisions.
Environmental Committee Supervising environmental officer Twice a year
  • - Addresses overall environmental issues including decarbonization and energy conservation and extends to executing divisions.
  • - Makes reports/recommendations to the Risk Management Committee and Executive Committee Meeting on information related to climate change such as decarbonization and energy conservation.

Strategy

We identified and evaluated climate-related risks/opportunities that may affect our business. The results are as follows.

Events Impact1 Term2
Transition risks Market Risks that will occur when customer demands related to climate change is not met Large Medium
Policy/Legal Adoption of carbon pricing and increase in electricity costs Medium Medium
Physical risks Acute Increase in severity of disasters due to extreme weather Large Short to long
Opportunities Market Providing products/services that meet customer demand Large Short
Technology Improvement of competitive advantage due to development of new technology Large Medium
Products/Services Expansion of business opportunities due to an increase in electricity costs Large Medium
  • 1 Risks and opportunities that may have an effect of over 5% of net sales is evaluated as having a large impact.
  • 2 The terms assume the following periods: short=until FY2025, medium=until FY2030, long=until FY2050.

We have analyzed the following scenarios and are considering measures that need to be taken for each scenario.

  • Assumed world view in the 1.5℃ scenario (based on IPCC SSP 1-1.9 and IEA SDS): A world where a social economy aimed at the realization of a decarbonized/low carbon society evolves to achieve carbon neutrality by 2050 or later.
  • Assumed world view in the 4.0℃ scenario (based on IPCC SSP 3-7.0 and NGFS (NDCs)): A world where the need to adapt to increased severity of disasters will heighten due to the continued execution of current climate change policies without enhancement.
  • IPCC SSP: Intergovernmental Panel on Climate Change, Shared Socioeconomic Pathways
    IEA SDS: International Energy Agency, Sustainable Development Scenario
    NGFS (NDCs): Network for Greening the Financial System (Nationally Determined Contributions)

The assumed events and measures for each risk and opportunity is as follows.

Transition risks Market
Risks that will occur when customer demands related to climate change is not met
Medium term
Impact: Large

Potential events:
In the 1.5℃ scenario, technology related to climate change and other requests are assumed to increase. Our net sales could decrease if we cannot meet customer demands.

 

Measures:

  1. (1) The automotive electronics and industrial equipment/energy conversion markets which are included in our current strategically important markets greatly contribute to the mitigation of climate change through vehicle electrification, etc. We will continue developing new products for these markets while further increasing our speed to meet customer demands and respond to risks. As a metric for this measure, we will aim to achieve R&D expenses equal to 4% of net sales.
  2. (2) We ask our suppliers to implement initiatives on climate-related risks in our Green Procurement Standards. We will continue promoting efforts through the supply chain.
Transition risks Policy/Legal
Adoption of carbon pricing and increase in electricity costs
Medium term
Impact: Medium

Potential events:
In the 1.5℃ scenario, carbon pricing such as carbon taxes is assumed to be adopted as measures for climate change. This could directly/indirectly increase electricity costs, fuel costs and taxes.

 

Measures:
We have an Energy Conservation Committee under the Environmental Committee as a measure for carbon pricing. The Committee engages in group-wide energy conservation and CO2 reduction.
We will also consider adopting renewable energy electricity to achieve carbon neutrality by 2050.

Physical risks Acute
Increase in severity of disasters due to extreme weather
Short to long term
Impact: Large

Potential events:
In the 4℃ scenario, heavy rains due to currently assumed extreme weather is assumed to become frequent.

 

Measures:
We will implement measures such as revision of BCP (Business Continuity Plan) regarding increase in severity and frequency of disasters for manufacturing bases in Japan that may be affected by extreme weather.

Opportunities Market
Providing products/services that meet customer demand
Short term
Impact: Large
Technology
Improvement of competitive advantage due to development of new technology
Medium term
Impact: Large
Products/Services
Expansion of business opportunities due to increased electricity costs
Medium term
Impact: Large

Potential events:
In the 1.5℃ scenario, adoption of facilities and changes in device specifications is assumed to be promoted to suppress greenhouse gas emissions. In such a world that promotes electrification and energy conservation, utilization opportunities of our products could increase.
Moreover, we believe we will be able to provide products with reduced CO2 emissions as we have already been proactively reducing the amount of electricity consumption in our electrode foil production.

 

Measures:

  1. (1) The automotive electronics and industrial equipment/energy conversion markets which are included in our current strategically important markets greatly contribute to the mitigation of climate change through vehicle electrification, etc. We will continue developing new products for these markets while further increasing our speed to meet customer demands and expand business opportunities. As a metric for this measure, we will aim to achieve R&D expenses equal to 4% of net sales.
  2. (2) We will promote product development and production facility development/adoption with the prospect of reducing CO2 emissions in production.

Risk Management

In FY2021, the first fiscal year of responding to TCFD, we organized a TCFD team consisting of members from various divisions. The team discussed the risks/opportunities related to climate change that may affect our business from multiple points of view. More specifically, we listed events that may affect our business based on the world view of the two scenarios we selected. We then sorted them into transition risks and physical risks and extracted those along with opportunities that may have an especially significant impact after considering the size of impact and degree of priority. For measures against these risks and opportunities, the TCFD team conducted considerations from a comprehensive point of view followed by integrated considerations with other risks at the Risk Management Committee. The results then received approval from the Board of Directors.
For years beyond FY2022, as is stated in "Governance," we plan to conduct considerations integrated with other risks from a comprehensive point of view, mainly at the Risk Management Committee.

For our basic policy and processes regarding risk management, please refer to the link below.
https://www.chemi-con.co.jp/en/company/sustainability/governance/risk/management.html

Metrics and Targets

Nippon Chemi-Con uses the following metrics and targets to evaluate/manage climate-related risks.

  1. Manufacturing bases in Japan: We aim to improve energy consumption per unit by an annual average of 1% or higher towards FY2030 based on the "Carbon Neutrality Action Plan" promoted by electrical and electronics industries.
  2. Manufacturing bases in Japan: To realize carbon neutrality by 2050, we will pursue a reduction of approximately 46% for CO2 emissions caused by our production operations in FY2030 on a FY2013 basis.
  • For manufacturing bases in other countries, we will promote consideration to set goals within three years while abiding by the laws of each country.

As metrics/targets for climate-related opportunities, we have focused on enhancing product planning capabilities and accelerating introduction of new products into markets expected to grow in our 9th Medium-term Management Plan (FY2020-2022). This includes new products in automotive electronics and industrial equipment/energy conversion markets. We plan to generate a total operating income of 3.8 billion yen combined with other products during the 9th Medium-term Management Plan.