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 have reviewed and reevaluated climate-related risks/opportunities that may affect our business.
The results and countermeasures are as follows.

Events Impact1
Term2
Transition risks [Market]
Risks that will occur when customer demands related to climate change is not met		 Impact: Large
Short to medium term

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 and fuel costs		 Impact: Large
Medium term

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 Subcommittee under the Environmental Committee as a measure for carbon pricing. The Subcommittee engages in group-wide energy conservation and CO2 reduction.
We will also start introducing renewable energy power to achieve carbon neutrality in 2050. We are also considering further utilization.
Physical risks Acute
Increase in severity of disasters due to extreme weather		 Impact: Small
Short to long term

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

 

Measures:
Since the 2011 earthquake, we have adopted a production system to manufacture products and materials at multiple locations, and have also established a system to purchase materials from other companies. Furthermore, we quantified the annual impact of the future flood risk at domestic sites and quantified the risk at each site.
Risk responses at domestic sites were prioritized based on hazard maps.
The BCP (Business Continuity Plan) was reviewed for potentially affected domestic manufacturing sites, and measures were initiated to reduce the risk at sites that were likely to suffer a disaster on the planned flood scale (L1, once every 10 to 100 years). Measures were also sequentially planned and initiated at sites that were likely to suffer a disaster on the assumed maximum flood scale (L2, once every 1000 years) in an effort to reduce the risk.
Opportunities [Market]
Providing products/services that meet customer demand
[Technology]
Improvement of competitive advantage due to development of new technology		 Impact: Large
Short to medium term

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.
Opportunities [Resilience]
Promotion of renewable energy programs and energy-saving measures		 Impact: Small
Short to medium term

Potential events:
Potential events: In the 1.5℃ scenario, promotion of renewable energy programs and energy-saving measures is required.

 

Measures:
We aim to improve competitiveness by promoting renewable energy programs and energy-saving measures to reduce costs, etc.
  • 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.

Scenario figures of SSP8.5 are used to estimate some of the risks of manufacturing bases in Japan.

  • 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)

[Impact of flood disaster at our Group manufacturing sites]
We have identified the manufacturing sites that may be affected by the disaster and started taking measures. In fiscal 2022, we formulated countermeasures at the Takahagi Plant of Nippon Chemi-Con Corporation and the Miyagi Plant of Chemi-Con East Japan Corp., both of which have significant impacts in the event of a disaster. In 2023, we began implementing these countermeasures sequentially.

Takahagi Plant, Nippon Chemi-Con Corporation

The plant is adjacent to the Hananuki River, and the flood depth is assumed to be around 0.6m on planned flood scale (once every 50 years). There has been no damage caused by flooding in the past 30 years, but since fiscal 2022, we have been planning to install sandbags, water shutoff boards, etc., to prevent flooding on the planned flood scale, as well as installing important equipment at elevated locations at the time of equipment renewals.

Miyagi Plant, Chemi–Con East Japan Corp.

According to the Osaki City Hazard Map, the area is designated as flooded over 2m by the maximum expected rainfall (once every 1000 years). In order to cope with this situation, plans were made in fiscal 2022, and the purchase of sandbags and other items started in fiscal 2023. There has been no flood damage in the past.

Risk Management

Our Group has formulated the Basic Risk Management Policy, and is working to develop and strengthen its risk management system based on the Basic Regulations for Risk Management and related guidelines. Our Group has established the Risk Management Committee under the general manager of risk management to formulate action plans related to risk management and monitor the status of their implementation from the perspective of the entire group. In this committee, we consider climate change risks as a risk to our business, which is discussed within the committee. The committee meets twice a year and reports the status of risk management to the Board of Directors and the Executive Committee Meeting. In particular, with regard to climate change risks, the division in charge develops policies for risk reduction and opportunity acquisition to each business site and division, and monitors the status of initiatives. It also provides support to related divisions.

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.
Initiatives for carbon neutrality
Energy conservation related to electricity
Conversion of lighting to LEDs, renewal of air conditioning equipment, energy conservation of production facilities, renewal of rectifiers and transformers, etc.
Energy conservation related to heat and fuel
Replacement of boilers, fuel conversion, heat insulation, steamless production equipment, etc.
Introduction of renewable energy generation facilities
Installation and use of solar power generation facilities on production sites, etc.
Purchase of electricity from renewable sources, etc.
Purchase of electricity from renewable sources, etc. at production sites
Carbon Neutrality Roadmap Image
(Nippon Chemi-Con Group (Japan))
(Scope1+Scope2)

CN2013to2030

  • For manufacturing bases in other countries, we are working to establish targets within two years in accordance with the laws and regulations of each country where each manufacturing site is located.
    In fiscal 2022, we started hearings and investigations regarding the laws and regulations of overseas manufacturing sites, and are working to establish targets.

As metrics/targets for climate-related opportunities, under our company's 9th Medium-term Management Plan (fiscal 2020 to 2022), we focused on strengthening our product planning capabilities and speeding up the introduction of new products to markets that are expected to grow. These include new products in the automotive electronics market and the industrial equipment/energy conversion market.
During the 9th Medium-term Management Plan, we planned and worked to generate a cumulative operating profit of 3.8 billion yen combined with other products, resulting in profit of 4.1 billion yen.