Report in Line with the Recommendations of the TCFD

We expressed its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)* in November 2019. We have already been working to reduce environmental impacts and save energy, and to expand its lineup of products that contribute to reducing GHG emissions.

However, based on the final recommendations of the TCFD, we will enhance these initiatives even further and phase in improvements to our relevant information disclosure as we work to increase the corporate value of the entire Group.

※The TCFD announced its final recommendation report in June 2017, which recommends that all companies and other organizations disclose information about governance, strategies, risk management, indicators, and targets regarding climate change-related risks and opportunities.

Governance

The Company has established a governance structure for climate change issues, and the entire Group is engaged in initiatives on climate change.

Strategy

We will identify climate change risks and opportunities related to our organization and integrate them with the organization’s strategy and financial plan to formulate the medium-term management plan.

Initiatives
• We identify major risks and opportunities through a materiality assessment.
• We identify the impact of risks and opportunities (short, medium, and long term) on the organization’s business, strategies, and financial plans, and work to promote countermeasures.

Climate-related risks and opportunities the organization has identified over the short, medium, and long term

* Excerpt from our CDP Response Form. The CDP is an international NGO working in the field of the environment, such as climate change. Risks Opportunities

Risks Opportunities
Short term • Decline in reputation as a company that emits large quantities of GHGs
• Promotion of initiatives contributing to GHG emission reduction by improving operating efficiency of ASUs using digital solution technologies
Medium term • Increase in tax burden with the introduction of carbon pricing scheme
• Gain first mover advantage from entering the market for CO2-free industrial gases ahead of other companies
Long term • Faults in ASUs due to torrential rains, lightning, hail, etc., associated with abnormal weather
• Increase in power of air compressors associated with rise in average global temperature
• Capture of hydrogen demand associated with the transition from coke-reduction to hydrogen-reduction technology in blast furnaces

Impact of climate-related risks and opportunities on the organization’s businesses, strategies, and financial planning

Risk countermeasures Promotion of opportunities
Business • Transition to a low-carbon industrial gases business
• Industrial gases business adapted to abnormal weather
• Development of products that reduce customers’ GHG emissions
• Realizing energy-saving ASUs through digital solution technologies
Strategies • Implementation of GHG emission reduction by replacing aging ASUs in stages
• Promotion of use of renewable energy and shift to purchase of electric power with low emissions factor
• Implementation of GHG emission reduction by using digital solution technologies
• Introduction of low-carbon products to market, including development of ammonia combustion technology in industrial furnaces
• Implementation of GHG emission reduction by using digital solution technologies
Financial planning • Establishment of financial plan corresponding to plans for regular replacement projects
• Comprehensive insurance for ASUs to handle abnormal weather
• Development budgeting measures for environmental products and services

Risk Management

We will construct a Groupwide risk management structure, and will identify, assess, and manage climate-related risks.

Climate change risk identification, assessment, and management process

Risk identification, assessment, and management
• Global Risk Management Committee
• Global Strategy Review Committee
• Technology Risk Liaison Committee
• Construction of risk management system in Nippon Sanso Holdings Group companies to enable early discovery of long-term risk, prevention, and rapid response in cases of risk materialization
• Risk importance determined by occurrence frequency × Financial or strategic impact
• Annual Global Strategy Review Committee meeting (Chairperson: CEO) to determine financial or strategic impact on business
• Specific countermeasures for items determined by the Global Strategy Review Committee determined at Technology Risk Liaison Committee meeting held between Nippon Sanso Holdings and operating companies, then deployed globally

Metrics (Indicators) and Targets

In the medium-term management plan, we will set out indicators and targets to be used for assessing and managing risks and opportunities, then use them to evaluate our progress.

Initiatives Disclosed details
• We disclose Scope 1, Scope 2, and Scope 3 GHG emissions • Sustainability data
• Plan to include content regarding third-party assurance report
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