The Morinaga Group recognizes that climate change is an important issue that affects the continuity of its operations and sustainable growth. In April 2022, we endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which was established by the Financial Stability Board (FSB). Since then, we have been addressing the TCFD recommendations, including conducting climate change scenario analysis.
| Area | Details |
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| Governance |
The Morinaga Group’s analysis, target setting and progress monitoring of risks and opportunities concerning sustainability initiatives are deliberated on by the ESG Committee, which is chaired by the Representative Director, President. The Board of Directors receives reports from the committee and monitors the status of activities.
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| Strategy | In the process of identifying the risks and opportunities of climate change, Morinaga established the 4℃, 2℃,and 1.5℃ scenarios for its domestic food manufacturing business. Based on the information released by the Intergovernmental Panel on Climate Change (IPCC) and International Energy Agency (IEA), we use these scenarios to analyze the impacts in Japan in 2030 and 2050. As a result, the 4℃ scenario identified the risks of a reduction in quality of agricultural produce, changes in yield caused by changes in weather patterns, and increasing frequency of extreme weather events. The 2℃ and 1.5℃ scenarios found that rising costs due to stricter energy conservation policy and carbon taxes will have a larger impact on business operations. In response to these risks, we will strive to reduce our own CO₂ emissions and address the risks and opportunities that are important. |
| Risk Management | The Morinaga Group established the Total Risk Management Committee, which is led by the President and Representative Director. This committee identifies the risks, evaluates the severity, and implements countermeasures against these risks, which manage and address them appropriately. Climate change risks are managed and addressed appropriately as management risks by the same committee. The TCFD Subcommittee under the ESG Committee conducts reviews on climate change following the TCFD recommendations, with the results discussed by the ESG Committee. The details of discussions held by both committees are reported to the Board of Directors, which oversees the progress of risk management. |
| Indicators and targets |
To mitigate climate change risks, the Morinaga Group has established targets to reduce CO₂ emissions (Scope 1 and 2) by 30% from FY2019/3 in Japan by 2030 and to achieve net-zero GHG emissions by 2050. We are actively improving energy efficiency at our production sites (preventing air leaks, adding insulation, etc.), by upgrading our infrastructure and utilizing new and efficient equipment, thus highlighting our shift away from fossil fuel. At the same time, we are considering the introduction of renewable energy and implementing measures to achieve these targets.
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We established the 4℃, 2℃ and 1.5℃ scenarios for Morinaga & Co., Ltd.’s domestic food manufacturing business to analyze the impacts in 2030 and 2050.
We referenced scenarios of government institutions and research institutes for the identification and evaluations of climate change risks and opportunities and for the analysis of the impact on the Morinaga Group’s business, strategies and financial standing caused by these risks and opportunities.
| 4℃ | Stated Policy Scenario (STEPS)（IEA、2020） Representative Concentration Pathways (RCP6.0, 8.5)（IPCC、2014） |
|---|---|
| 2℃ | Sustainable Development Scenario (SDS)（IEA、2020） Representative Concentration Pathways (RCP2.6)（IPCC、2014） |
| 1.5℃ | Net Zero Emission by 2050 case (NZE2050)（IEA、2021） Representative Concentration Pathways (RCP1.9)（IPCC、2021） |
| Category | Sub-category | Risk factors | Impact on operations | Importance | Response |
|---|---|---|---|---|---|
| Transition risks | Policy and regulation | Spread of GHG emissions pricing and stricter GHG emissions reporting obligations | Rising energy costs and logistical costs caused by the introduction of carbon taxes | Medium |
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| Stricter energy conservation policy | Rising cost of capital investment for manufacturing facilities due to the company’s response to energy conservation driven by stricter energy conservation policy | Large | |||
| Decarbonization-related mandates and regulations on existing products and services | Rising packaging costs due to regulations on the use of plastics derived from petroleum | Large |
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| Markets | Changes in consumer behavior | Increased environmental awareness among consumers leads to a decline in sales due to consumer defection from products that have been slow to respond to the environment and a decrease in the adoption of such products by retailers | Large | ||
| Physical risks | Acute | Rising severity and frequency of extreme weather, such as cyclones and flooding | Loss of opportunities and decrease in sales due to the suspension of procurement, production, logistics, and sales activities caused by damage to factories, warehouses, and employees due to extreme weather, disruption of logistics, etc. | Medium |
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| Chronic | Changes in rainfall patterns and extreme changes in weather patterns | Rising raw material and development costs due to poor crop quality and reduced yield caused by changes in weather patterns and frequent occurrences of extreme weather | Large |
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| Category | Opportunity factors | Impact on operations | Importance | Response |
|---|---|---|---|---|
| Resource efficiency | Development and use of efficient production and distribution processes | Declining manufacturing and transport costs due to development of efficient manufacturing and distribution processes | Large |
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| Products and services | Changes in consumer preferences | Rising demand for eco-friendly products amid increasing environmental awareness among consumers including Generation Z | Large |
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| Adaptation to climate | Rising demand for in Jelly and frozen desserts due to global warming | Medium |
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| Resilience | Substitution/ Diversification of resources |
Increasing capacity of operations under various conditions from review of substitution/diversification of raw materials | Large |
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| Increased trust in supply chain and fewer opportunity loss due to formulation of resilience plan (BCP) | Large |
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Going forward, we will also consider deepening our response and expanding the scope of our scenario analysis.
