Initiatives for Achieving a Sustainable Society | Environment | Social | Governance |
Addressing Climate Change (TCFD)
Climate Change Scenario Establishment and Information Disclosure
The effects of climate change are becoming increasingly serious and climate change is considered to be a contributing factor in the frequent abnormal weather patterns and natural disasters currently occurring. Together, these events are impacting the supply chain for food, which is the foundation of the value provided by the Nichirei Group. We recognize the importance of appropriately responding to risks posed by shifts in the external environment caused by climate change. At the same time, we are considering and preparing multiple scenarios in which climate change could give rise to business opportunities. To this end, we are assessing climate change scenarios with respect to the four aspects of the recommended framework put forward by the Task Force on Climate-related Financial Disclosures (TCFD): governance, strategy, risk management, and metrics and targets. By conducting appropriate disclosures of relevant information, we hope to continue building a constructive dialogue with our stakeholders. It is in line with these ideas and because we support its recommendations that, in June 2020, we announced our participation in the TCFD Consortium. The Group has positioned climate change initiatives as one of the material matters
for achieving its vision for long-term management goals toward 2030. As such, we are actively promoting initiatives to help resolve social issues related to climate change.
1 Governance
In October 2019, we began analyzing climate change scenarios as an interdepartmental Group project, headed by the president, and are reviewing the scenarios across the Nichirei Group. Following discussion and review by the Group Environmental Protection Committee in May 2020, the Board of Directors approved low-carbon policies as a long-term environmental goal in June and disclosed them in August of the same year.
- In October 2020, the director, executive officer responsible for implementing climate change strategies was appointed as project head. The project reviewed and analyzed climate change scenarios in relation to water-related risks arising
from abnormal weather, which, out of the risks identified in FY2020, would have a particularly significant financial impact on the Group. Following discussion and review by the Group Environmental Protection Committee in May 2021, the Board of Directors approved goals (measures and KPIs) for water-related risks as one of the Nichirei Group material measures in June and disclosed those measures and KPIs in August of the same year. The director, executive officer in charge reports at least once a year on the progress of the initiatives at Board of Directors meetings. Relevant strategies, goals and plans are revised as appropriate on the basis of these reports.
2 Strategy
Identification of Material Risks and Opportunities
Worldwide, the Nichirei Group is developing a range of food-centered businesses that it expects will be impacted by climate change in various ways. We are conducting scenario analyses of how climate change might affect our business activities. We hope to better quantify the risks and opportunities identified in order to incorporate appropriate responses in our management strategy. In this way, we aim to become a sustainable corporate group.
58 Nichirei Group Integrated Report 2021
FY2021 | We assessed the material risks and opportunities of the Nichirei Group based on two climate change |
scenarios, and identified general low-carbon policies (CO2 emission reduction) as the most significant area of | |
Group-wide risks and opportunities. We established long-term CO2 reduction goals and launched initiatives. |
Management
Climate-related events
Regions
Businesses
Risks/opportunities (course of occurrence)
-
Indirect
(outside the Company) - Direct
(the Company)
Financial impact
Initiatives to Reduce Environmental Impact▼Pages 62-63
General Low- | We have identified general low-carbon | |||||||||
carbon Policies | (CO2 emission reduction) policies as the | |||||||||
most significant area of Group-wide | ||||||||||
Matrix of Material Risks and Opportunities | (CO2 emission reduction) | risks and opportunities. | ||||||||
impact | ||||||||||
● | ● | ● | ||||||||
Rising sea levels (Thailand) | General low-carbon | General abnormal weather | ||||||||
of | Business continuity risk due to | policies | (Increased purchase prices | |||||||
Degree | flooding of major cities and | (Japan and Thailand) | ● | for rice and chicken) | ||||||
roads, etc.) | ||||||||||
(Increased capital | General abnormal weather | |||||||||
● | expenditures in the reduction and | (Decrease in sales and profit due to | ||||||||
elimination of CO2 emissions) | ||||||||||
Large | Rising sea levels (Japan) | damage to factories and storage | ||||||||
warehouses and disruptions to our | ||||||||||
(Business continuity risk due to factory flooding | ||||||||||
logistic network) | ||||||||||
and higher groundwater salinity) | ● | ● | ||||||||
● | ||||||||||
Strengthening of environmental | Electrification of technologies, | |||||||||
Increased environmental | countermeasures | conversion to renewable energy | ||||||||
awareness | within the supply chain | (Increase in raw material procurement | ||||||||
(Increased reputational risk | (Curtailment or suspension of transactions | prices due to changes in power sources) | ||||||||
due to insufficient environmental response) | ||||||||||
for cold storage) | ||||||||||
Medium | ● | ● | ● | |||||||
Information disclosure | ||||||||||
Rise in temperature | Electrification of technologies | |||||||||
(Increased costs associated with the | ||||||||||
(Increase in cost of electricity required | (Rise in factory production costs due | |||||||||
mandatory disclosure of information | ||||||||||
related to eco-friendly products) | to maintain freezing temperatures) | to changes in power sources) | ||||||||
● | ||||||||||
Small | ● Physical events (baseline scenario) | Rise in temperature | ||||||||
(Japan, North America and China) | ||||||||||
● Transitional events (1.5°C scenario) | (Increase in food poisoning risks and decrease | |||||||||
in opportunities for in-store purchasing) | ||||||||||
Story Creation Value Strategy
Financial
LowMediumHigh Probability of occurrence
FY2022 | Selection of water-related risks arising from abnormal weather, which is a risk common to both |
the foods and logistics businesses.
Material Risks and Opportunities by Business and Scenario
Strategy
Business
both the Foods and businesses | Foods Business | |
common to Logistics | ||
Risks | ||
Business
Chicken
Rice
Shrimp
Vegetables, marine products, and meat and poultry products
Common
Logistics Business
Risks
• Reduction of agricultural and dairy production, | ||
General | and steep rise in purchase prices due to | |
deterioration in quality | ||
abnormal | ||
• Difficulty in obtaining raw materials and | ||
scenario | weather | |
production delays due to logistic network | ||
disruptions | ||
Baseline | and submerged aquafarms | |
• Reductions in production efficiency and volume | ||
Flooding, | ||
rising sea | ||
• Submerged agriculture farms, aquafarms and | ||
levels | ||
processing factories | ||
• Difficulty in obtaining raw materials and production | ||
delays due to supply chain disruptions | ||
scenario | Low-carbon | • Increased cost for measures for converting to |
renewable energy and equipment electrification, | ||
policies | ||
elimination of emissions | ||
1.5˚C | Environmental | • Curtailment of transactions; higher cost of |
countermeasures | ||
measures such as the maintenance of global | ||
within the supply | ||
certifications | ||
chain | ||
scenario | • Damage to refrigerated warehouses and | |
General | logistics centers | |
Baseline | abnormal | risk areas |
weather | ||
• Difficulty securing human resources in disaster | ||
1.5˚C scenario | • Opportunity loss caused by the slow increase | |
Low-carbon | of investment in natural refrigerants and the | |
policies | slow adoption of technological platforms such | |
as electrical and low-carbon vehicles | ||
Business | Opportunities | ||
Baseline scenario | Changes in | • Increased demand for frozen and processed | |
weather patterns | foods | ||
Foods Business | • Increased demand for ethical products that are | ||
Strengthening of | compliant with the Sedex platform and are | ||
environmental | created using globally certified raw materials | ||
1.5˚C scenario | countermeasures | ||
within the | • Increased demand for the curtailment of food | ||
supply chain | loss within the supply chain through the | ||
development of eco-friendly products and | |||
technological development | |||
Increased | • Development and expansion of demand for | ||
environmental | products created using sustainable raw | ||
awareness | materials | ||
Baseline scenario | General | • Increase in sales resulting from customer base | |
expansion achieved through strengthened | |||
abnormal | |||
disaster countermeasures and greater | |||
weather | |||
resilience | |||
LogisticsBusiness | 1.5˚Cscenario | Modal shift | • Cost reduction achieved through a modal shift |
that improves transportation efficiency | |||
Increased | • Increase in number of business partners due to | ||
higher evaluations as a company that actively | |||
environmental | |||
awareness | discloses information related to environmental | ||
countermeasures | |||
Achieving for Initiatives Strategy Society Sustainable a
Data
Note: The bioscience business is characteristically resistant to impact from climate change-related events. Accordingly, we have not currently identified any material factors in our bioscience business based on the FY2021 Group climate change scenarios.
Nichirei Group Integrated Report 2021 59
Addressing Climate Change (TCFD)
FY2022
Climate Change Scenarios in Relation to Water-Related Risks Arising from Abnormal Weather
(1) Risk of Future River Flooding
DescriptionResults
(2) Risk of Future Rising Sea Levels (Tidal Flooding)
DescriptionResults
Facility selection criteria Facilities to Assessment criteria be assessed
The location criterion is the scale of rainfall assumed to result in flooding according to the hazard maps of municipalities in the region where the facility is located. The assessment is conducted based on predicted rainfall amounts.
21 facilities in Japan
(8 plants and 13 refrigerated warehouses)
- Facilities located in regions where hazard maps have been prepared
- Food factories with large production volume
- Refrigerated warehouses (distribution centers) in areas with high base flood elevation according to current hazard maps
- Selected to avoid overrepresentation of certain regions
When creating hazard maps for regions where the facilities are located, three facilities in Japanwere found in locations where the number of rainfall events exceeding the anticipated maximum rainfall amount was expected to be around the same as the current number of rainfall events or potentially higher in the future.
For facilities in areas with either no risk or unknown risk of flooding according to the municipal hazard map of the region where they are located, an assessment was conducted of the risk of flooding assuming the occurrence of a typhoon on the scale of the Ise Bay Typhoon, one of the most destructive typhoons in Japanese history, and future rising sea levels (set at 1 meter by the Japan Meteorological Agency in Climate Change in Japan 2020).
145 facilities in Japan
1 facility overseas
- All facilities in Japan, and facilities where significant financial risk and distance from the coast were considered (Thailand: Chicken production facility)
39 of the 145 facilitieswere in flood areas according to municipal hazard maps.
- No facilities overseas
- Based on an Ise Bay Typhoon-scale typhoon and rising sea levels, a simple calculation was performed for the facilities outside of flood areas according to municipal hazard maps or in areas for which hazard maps had not been prepared (106 facilities). As a result, 27 facilitieswere found to be in flood areas when rising sea levels were not considered, and 32when rising sea levels associated with climate change were considered.
3 Risk Management
Nichirei is a global operator of food-related businesses. Accordingly, we ensure that appropriate divisions manage the impact of a variety of risks (including climate change-related risks encountered through business activities) on business management from a holistic perspective, employing both rational and optimal methods. The risks are also discussed and reviewed by the Group Risk Management Committee, which is chaired by the president.
- We believe that risks associated with climate change scenarios are major and could impact the entire Group. Thus, the Group Environmental Protection Committee, chaired by the president, reviews both physical and transition risks twice a year, based on information gleaned from relevant reports and experts' advice. In addition, at least once a year the director, executive officer supervising environmental management reports to the Board of Directors.
- We hope to better quantify the risks and opportunities identified in order to incorporate appropriate responses in our management strategy. In this way, we aim to become a sustainable corporate group.
60 Nichirei Group Integrated Report 2021
(3) Risk of Future Shortages of Water Resources
DescriptionResults
Financial Impact
• We regularly review the financial impact of water-related risks arising from abnormal weather and with respect to
Management
Based on actual rainfall amounts during past droughts, an assessment was conducted based on predicted rainfall amounts using annual rainfall of 700 millimeters as the criteria.
21 facilities in Japan
3 facilities overseas
- The 30 facilities in Japan with the largest water intake quantity and the facilities overseas with the highest financial risk were selected (Thailand: Chicken production facility)
Three facilitieswere found to be in areas where the number of rainfall events below an annual rainfall amount of 700 millimeters was expected to be the same as the current number or potentially higher in the future.
Note: This review is a simple assessment based on expected rainfall amounts and does not include the impact of social conditions (such as water intake). It also does not take into account transfers of water between watersheds. Such factors are important in water resource assessments, and therefore must be included when conducting a detailed assessment.
our business continuity plan. (BCP).
- The 2018 Japan floods caused some flooding and damage from storm surges at refrigerated warehouses in western Japan.
- In the future, we will work on climate change scenarios for each raw material.
Story Creation Value Strategy
Strategy Financial
4 Indicators and Targets | Nichirei Group Materiality ▼Pages 12-13 |
We have set forth climate change initiatives as one of our material matters and have established the indicators and targets below for our key initiatives.
Group Measures: Promote reduction of CO2 emissions per unit of production and utilization of renewable energy at food factories and logistics centers, and disclose information based on the TCFD recommendations.
Group KPI: 50% reduction in CO2 emissions (compared with FY2016; Scope 1 and 2 in Japan)
Achieving for Initiatives Strategy Business Society Sustainable a
Data
Nichirei Group Integrated Report 2021 61
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Nichirei Corporation published this content on 26 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 26 November 2021 07:19:06 UTC.