Climate Change (Information Disclosure Based on TCFD Recommendations)

Method of disclosure of emissions calculation

Environmental initiatives began in FY2000 with activities to obtain and maintain ISO certification. However, in addition to energy saving activities in the Company as a measure to address increasingly severe global warming, we have made the transition to decarbonization activities throughout the entire value chain, and changed course toward activities in accordance with the Greenhouse Gas Protocol in support of TCFD since FY2022.

Due to the nature of being a trading company, the Company’s Scope 1 and 2 emissions could be considered to be relatively low for the size of the business. We recognize that it is our social responsibility to utilize our characteristics as a distribution trading company to promote decarbonization of the entire supply chain involving suppliers and buyers.

We have introduce a SaaS-type decarbonization calculation application as a “GBP App” for ascertaining the Company’s Scope 1, Scope 2 and Scope 3 emissions by category.

This is a partially customized version of the cloud service provided by Zeroboard, Inc., and enables determination of the total volume by having key locations and group companies worldwide input data, and the visualization of progress of decarbonization using monthly and yearly comparisons.

Along with this, we also aim to strengthen activities through collaboration by providing it to the Company’s supply chain for a charge or at no charge.

Environmental Management System

The chief operating officer responsible for climate change issues is the CEO, with the Sustainability Management Meeting as the managing body. The body was established in April 2023 and confirms policies, action plans and progress at least once per year. In addition, practical measures are carried out by the Environment Committee, which is made up of members from various departments, and meets four times per year to discuss policies and identify issues. The roles and composition of each body are shown in the diagram on the right.

Recognition of Risks and Opportunities

Climate change risks

*The table below can be scrolled left or right.

Type of Risk Main Climate-Related Risks Potential Impact on Business Timeframe Response
Transition
Risk
New
regulations
and policies
Carbon tax (feed-in tariff)
  • Increased energy procurement and logistics costs
  • Increased costs due to introduction of carbon pricing
    (feed-in tariff)
Medium term
Long term
  • Aiming to reduce total GHG emissions by 50% by fiscal 2030
    and achieve carbon neutrality by fiscal 2050 through the
    introduction of renewable energy and energy-efficient
    equipment upgrades
  • Reduction in travel distance through optimization of delivery
    routes and reduce number of delivery vehicles through modal
    shift (rail, RoRo ships, etc.)
Laws related to global warming
  • Increased costs associated with introduction of new
    policies aimed at reducing greenhouse gas emissions
    and strengthening of laws and regulations
Medium term
Long term
Technologies Replace existing products and
services with low-emission
versions
  • Reduced sales of machining equipment due to fewer
    automobile parts
  • Increased costs when switching sales and delivery
    vehicles (replacement) to EVs
  • Increased development cost of environmentally
    friendly products
Medium term
  • Collaboration with suppliers and new product development
  • Gradual replacement of current vehicles with EVs
Transition to low-emissions
technology
  • Decrease in sales due to delayed adoption of
    low-carbon, energy-efficient equipment, and
    inadequate response
Medium term
Long term
  • Enhanced awareness of technological trends and acquisition
    of knowledge of installed equipment
Markets Changing customer behavior
  • Decreased sales from loss of customers due to delay
    in addressing decarbonization
  • Decreased sales of certain products due to customer
    avoidance of products derived from fossil fuels
Long term
  • Steady implementation of decarbonization and energy-saving
    initiative
  • Expansion of environmentally friendly products
Reputation
  • Increase in stakeholder concerns
    or negative feedback from
    stakeholders
  • Decline in consumer trust
  • Decline in corporate value and loss of business
    opportunities due to insufficient information
    disclosure
  • Social criticism and loss of trust among long-term
    investors due to delays in decarbonization efforts
  • Criticism of products with large environmental impact
Medium term
Long term
  • Steady implementation of decarbonization and energy-saving
    initiatives
  • Appropriate disclosure of our initiatives in accordance with
    the TCFD recommendations
  • Expansion of environmentally friendly products
Physical
Risk
Acute
physical risks
Increased severity of weather
events (storm and flood damage)
  • Sales decline and cost increase due to disruptions
    and stoppages in social, information, and
    transportation infrastructure
  • Damage to or loss of Company assets, including
    employees, buildings, facilities and equipment
  • Interruption of domestic and international supply
    chains (product delivery)
Short term
Medium term
Long term
  • Ensuring business continuity based on a business continuity
    plan (BCP)
  • Diversification of risks by establishing multiple sales bases,
    suppliers and distribution bases
  • Risk transfer through insurance coverage
  • BCP assessments and strengthening of response measures
    with supplier manufacturers
Chronic
physical
Risks
Changing temperatures
(atmospheric, freshwater and
ocean)
  • Increased energy consumption for air conditioning
    due to rising temperatures
  • Increased costs for measures to address work
    environments
  • Increase in energy costs
  • Decline in winter product sales, disposal of products
    and logistics materials
Medium term
Long term
  • Introduction of renewable energy facilities such as
    high-efficiency air conditioners for Company facilities
  • Introduction of renewable energy equipment
  • Development and enhanced sales of environmentally friendly
    products
  • Reduction of product disposal rate and use of circular materials

Short term: 1–3 years; Medium term: 3–10 years; Long term: 10–30 years

Climate change opportunities

*The table below can be scrolled left or right.

Opportunity Type Main Climate-related Opportunity Factors Potential Impact on Business Timeframe Response
Opportunities Resource
efficiency
  • Use of more efficient production
    and distribution processes
  • Cost reduction through increased transport efficiency
  • Improved earnings through operational improvement
    of air-conditioning systems and high-efficiency
    lighting equipment
Short term
Medium term
Long term
  • Achievement of optimal transport by calculating cost and
    distance between demand areas and logistics bases
  • Reduction of number of delivery vehicles through modal
    shifts (rail, RoRo ships, etc.)
  • Strengthening of development and sales of energy-saving
    products and technologies
Energy
sources
  • Use of supportive policy
    incentives
  • Use of lower-emission sources of
    energy
  • Use of policy incentives such as energy-saving subsidies
  • Reduced energy costs due to introduction of
    renewable energy
Short term
Medium term
  • Consulting about policy incentives such as energy-saving
    subsidies and selling energy-saving products
  • Promotion of corporate PPA business (DayZpower)
Products and
services
Development or expansion of
low-emission goods and services
  • Increased revenue through expansion of sales br>opportunities for goods with low environmental
    impact
  • Increased sales of low-power consumption
    appliances and other environmentally friendly
    products due to rising demand for energy-saving
    household appliances
  • Increased sales of summer products (air-conditioning,
    electric fans, etc.)
Short term
Medium term
  • Holding exhibitions such as the Doterai Ichi and
    Decarbonization Exhibitions
  • Expansion of products covered in the Carbon Neutral
    Purchasing Guidebook
  • Strengthening of product offerings and solutions in response
    to decarbonizing industries
  • Strengthening of development capabilities and sales of private
    brand products for addressing environmental issues
  • New product development in collaboration with domestic and
    international suppliers
  • Development and sale of home appliances with low power
    consumption
Development of climate
adaptation, resilience and
insurance risk solutions
  • Increased revenues due to sales expansion of
    disaster response and recovery-related products
Short term
Medium term
  • Public relations activities with sales partners and users and
    participation in trade shows
  • Providing disaster prevention-related products and services,
    such as the one-stop BCP-related service BCP.ERS
Markets Access to new markets
  • Increased revenues through use of new technologies
    and expansion of product demand related to
    transition to a decarbonized economy
  • Increased sales of heat stress prevention products
    and products for helping to improve the environment
    such materials for air-conditioning
Short term
Medium term
  • Supply of heat stress prevention products and products for
    helping to improve the environment according to demand
  • Strengthening of product offerings and solutions in response
    to decarbonizing industries
  • Expansion of the Green Ball Project and promotion of the
    corporate PPA business
  • Development of sales channels for new markets utilizing the
    manufacturing site problem-solving platform Genbato
  • Launch of an information sharing platform
Resilience Increased severity of weather
events (storm and flood damage)
  • Increased revenues due to sales expansion of
    disaster response and recovery-related products
Short term
Medium term
Long term
  • Provision of disaster prevention-related products and services
    such as BCP.ERS and expansion of a product supply network
    that can quickly respond to recovery demand

Short term: 1–3 years; Medium term: 3–10 years; Long term: 10–30 years

Carbon Neutral Roadmap

Due to resources, FY2020 is used as the base year for determining the Company’s emissions. The figures include some currently being aggregated, but we aim to reduce the total amount by 50% by FY2030 and be effectively carbon neutral by FY2050.

Much of the Company’s Scope 1 is accounted for by gasoline consumption such as sales vehicles. We will sequentially replace existing hybrid vehicles with EVs. Furthermore, much of Scope 2 is accounted for by electricity consumption in offices and logistics facilities, and we aim to significantly reduce CO2 emissions in the medium- to long-term by switching to electricity from renewable energy and introducing energy-saving air-conditioning and lighting. Due to a lack of resources, Scope 3 is currently being aggregated, but we aim to halve these emissions by FY2030 and reduce them to net zero by FY2050.

Emissions

*The table below can be scrolled left or right.

Item Unit FY2020 FY2021 FY2022 FY2023
Power consumption kWh 11,349,175 11,779,372 13,705,056 13,004,572
CO2 emissions (Scope 1) t-CO2 2,819 2,411 4,862 5,291
CO2 emissions (Scope 2) Location-based t-CO2 5,182 5,181 5,433 5,198
CO2 emissions (Scope 2) Market-based t-CO2 5,273 5,493 4,960 4,646
CO2 emissions (Scope 3) Category 1
Purchased goods
t-CO2 122,709 129,704 144,393 148,502
CO2 emissions (Scope 3) Category 4
Upstream transportation and distribution
t-CO2 14,100 15,907 9,616 10,582
CO2 emissions (Scope 3) Category 5
Waste generated in operations
t-CO2 14 63 56 55
CO2 emissions (Scope 3) Category 11
Use of sold products t
t-CO2 1,422,220 1,423,349 1,006,777 1,381,162
Vehicle fuel consumption 1,112,485 952,166 1,885,630 2,074,198
Amount of waste produced t 171 197 184 178

Avoided Emissions

*The table below can be scrolled left or right.

Item Unit FY2020 FY2021 FY2022 FY2023
Number of Green Ball Project
participants/tons of emissions reduced
Projects 689 682 655 639
t-CO2 34,319 40,701 40,947 37,709

Initiatives

Major domestic sites gradually switching to electricity from renewable energy Plans for nationwide rollout starting with sites under control of Osaka Corporate H.Q.

In order to reduce the Company’s Scope 2 emissions (indirect emissions from energy), we switched the power of Buildings 1 2 and 3 of the Osaka Corporate H.Q. to “D-Green RE100” electricity from renewable energy from Osaka Gas Co., Ltd. in July 1, 2022, and did the same in the Logis Osaka (Daito-shi) on November 4.

This is expected to reduce annual emissions by 595t-CO2.This electricity satisfies the requirements of “RE100” because the electricity from renewable energy is supplied with non-fossil certification with tracking information. In this way, the Company is proceeding to switch the major sites it owns (Nagoya, Kyushu, Hiroshima, etc.) to electricity from renewable energy.

Unique Engagement (Collaboration) Initiatives in Environmental Activities – YAMAZEN’s WAY

It is assumed that Category 11: Use of sold products in Scope 3 accounts for much of the Company’s emissions. In order to reduce emissions in this category, which are difficult to identify and aggregate, we believe it is our responsibility as a distribution trading company to sell and promote energy-saving equipment with low environmental impact. We began the aforementioned Green Ball Project in 2008, and have endeavored to spread environmentally friendly products with supporting manufacturers, participating business partners and users. The “GBP App” mentioned above is being provided from FY2022 to companies participating in the project, and we will support determination of the total amount of emissions using the Greenhouse Gas Protocol and visualization of the contribution to reduction using the GBP Protocol.

We provide the Green Ball Project Application (GBP App), the Company’s dedicated app for visualization of internal emissions and progress management of reductions, to companies participating in the Green Ball Project at no charge, supporting the visualization of emissions and the visualization of reduction effects in the downstream supply chain. While it is a matter of course to curb and reduce emissions within the Company, in addition, we aim to produce further effects by vigorously focusing on the sale of environmentally friendly products to curb emissions in Scope 3 “Category 11: Use of sold products,” that are the greatest source of emissions as a distribution trading company.