In April 2020, the Toyota Boshoku group endorsed the final recommendations of the Task Force on Climate related Financial Disclosures (TCFD*) in order to clearly demonstrate that we are incorporating climate change into our management strategy for sustainable growth. We will continue making efforts to disclose information in line with the TCFD’s recommended disclosure items.
Task Force on Climate related Financial Disclosures
The graph below shows the contents of disclosures recommended by the TCFD, as well as the location of publication.
a. Describe the organization’s governance around climate-related risks and opportunities.
b. Describe management’s role in assessing and managing climate-related risks and opportunities.
Decision-making at the Board of Directors, and business execution at the Corporate Strategy Meeting, Corporate Planning Meeting, Corporate Management Meeting, etc.
Based on decisions made by the Board of Directors and instructions given by the Corporate Strategy Meeting, Corporate Planning Meeting, Corporate Management Meeting, etc., the Carbon Neutral Environmental Promotion Meeting and the Environmental Committee in each region examine and implement practical environmental measures.
Materiality is formulated as the approach we adopt to identifying and resolving issues including climate change, and this is finalized by the Board of Directors.
The Toyota Boshoku group checks KPIs every month based on the 2050 Environmental Vision and the 2025 Environmental Action Plan, implements target management and monitoring for each milestone at the Carbon Neutral Environmental Promotion Meeting, and reports and discusses the content thereof at meetings of the Board of Directors.
The Risk Management Promotion Meeting, CSV Promotion Meeting, and Corporate Management Meeting confirm the status, and the details of this are reported and discussed at meetings of the Board of Directors to review the Company’s goals and strategies.
In terms of the identification, assessment and management of the Toyota Boshoku group’s climate-related risks (typhoons, floods, etc.), ultimately reports are made to and approvals are given by the Risk Management Promotion Meeting, which in turn reports the details to the Board of Directors.
Climate-related opportunities are reviewed by the Carbon Neutral Environmental Promotion Meeting, after which the Corporate Planning Meeting determines the response policy (decides on investment in opportunities).
a. Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.
b. Describe the impact of climate-related risks and opportunities on the organization’s businesses, strategy, and financial planning.
c. Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.
Short term: Each year, Toyota Boshoku group companies formulate and implement annual CO2 emission reduction targets.
We analyzed scenarios to gain a broad understanding of risks and opportunities posed by climate change to our business. We identified risks and opportunities based on the 1.5 to 2℃ scenario where transition impacts surface and the 4℃ scenario where physical impacts surface. These scenarios were created by the International Energy Agency (IEA), the Intergovernmental Panel on Climate Change (IPCC), and other organizations.
Transition risks and opportunities (1.5 to 2℃)
Enhancement of climate change policies, including carbon pricing
Increase in operating costs due to increase in energy prices
Increase in investment costs due to investment in energy saving and renewable energy
Decrease in in-house operating costs by increasing production and logistic efficiency to reduce carbon emissions
Enhancement of competitiveness by improving energy saving technology and the renewable energy rate
Optimization of plant energy supply and logistics
Introduction of highly efficient equipment and renewable energy to promote further energy saving
Enhancement of efforts to promote vehicle electrification
Decrease in sales of products for gasoline vehicles
Expansion of business for electrified products
Further planning and development of electrified products
Change in evaluation by customers and the consumer value standard (raised environmental awareness, etc.)
Decrease in sales due to decrease in demand for products with poor low-carbon technology
Increase in sales by planning and developing low-carbon products
Expansion of demand for plant-based products
Expansion of demand for products that contribute to weight saving
Enhancement of competitiveness by developing technique and technology to improve recyclability
Planning and development of products to further reduce carbon emissions
Planning and development of plant-based products
Planning and development of products that contribute to weight saving
Improvement of recyclability and promotion of simple disassembly design
Change in evaluation by investors
Decline in corporate value due to insufficient environmental efforts and disclosure
Improvement of corporate value by working on environmental efforts and disclosure
Enhancement of environmental efforts and proactive disclosure of information
Physical risks and opportunities (4℃)
Worsening of extreme weather, including heavy rain and subsequent flooding
Decrease in production volume due to river flooding, flood damage to plants, etc.
Early recovery by enhancing BCP actions (securing resilience) and improvement of reliability
Enhancement of the BCP system
a. Describe the organization’s processes for identifying and assessing climate-related risks.
b. Describe the organization’s processes for managing climate-related risks.
c. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.
Identification and assessment of climate-related risks is determined by the Carbon Neutral Environmental Promotion Meeting, and approved and implemented by the Risk Management Promotion Meeting. In addition, climate-related opportunities are reviewed by the Carbon Neutral Environmental Promotion Meeting, after which the Corporate Planning Meeting determines the response policy (decides on investment in opportunities). A risk management promotion system is constructed, an inventory of significant risks is made, and risks are evaluated using the following methods. This includes climate-related risks.
Metrics and Targets
a. Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.
b. Disclose Scope 1, Scope 2 and, if appropriate, Scope 3 greenhouse gas (GHG) emissions and the related risks.
c. Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.