Mitsubishi Materials : ３. Responding to Climate Change (29-56page) (819KB)

Responding to Climate Change

Climate Change Strategy

Climate Change Strategy

Basic Approach

Currently, there can be no doubt regarding global warming caused by anthropogenic greenhouse gas emissions. The amount and scale of damage caused by storms, foods, droughts and other abnormal weather is increasing, as is the sense of crisis due to the risk these present to the global economy.

The Group has set up the Sustainable Development Department within the Corporate Strategy Department to plan and promote strategic initiatives for risks and opportunities related to global warming in connection with group-wide management strategies. Furthermore, our "Climate Change and Energy Panel", a specialized subcommittee of the "Sustainable Management Ofce", promotes the examination of scenario analysis based on TCFD*1 recommendations, as well as discussion and sharing of information on measures to achieve GHG*2 reduction targets and other climate change measures.

To monitor the panel, its activities are reported to the Executive Ofcers' Meeting and Board of Directors' Meeting quarterly after being reported and deliberated by the "Sustainable Management Ofce."

Through appropriate evaluation and management of our risk and opportunity related to climate change, we are looking

into refecting these in our medium- to long-term management strategies and risk management. We will continue to improve our response to climate change and actively disclose information based on TCFD recommendations.

*1 TCFD:Task Force on Climate-related Financial Disclosures

The TCFD was established in 2016 by the Financial Stability Board, an international organization that seeks to stabilize fnancial systems.

*2 GHG: Greenhouse gas

Information Disclosure

In March 2020, the Group decided to endorse the recommendations of the TCFD and participate in the TCFD Consortium, which consists of companies, fnancial institutions and other organizations which support those recommendations. In March 2021, we established and analyzed scenarios based on the recommendations in order to ascertain the impact of climate change on the Group's business operations (risks and opportunities) and consider measures for reducing risks and securing opportunities. Going forward, we will continue to actively disclose information based on the recommendations.

The Group answers questionnaires for the CDP (a non-proft organization, formerly the Carbon Disclosure Project) on a yearly basis. In fscal 2021, the Group scored "B" for CDP Climate Change and "A⁻" for CDP Water (on an 8-step scoring scale from A to D-) in its assessment.

For details, please see the following link.

CDP Score Report Climate Change 2020

CDP Score Report Water Security 2020

Governance

In April 2019, we established the Sustainable Development Department within the Corporate Strategy Department to plan and promote strategic initiatives for risks and opportunities related to global warming in connection with company-wide management strategies. Furthermore, the Climate Change and Energy Panel (a specialized subcommittee of the Sustainable Management Ofce that was established in April 2020) promotes the examination of scenario analysis based on

TCFD recommendations, as well as discussion and sharing of information on measures to achieve GHG reduction targets and other climate change measures. To monitor the panel, its activities are reported to the Executive Ofcers' Meeting and Board of Directors' Meeting quarterly after being reported and deliberated by the "Sustainable Management Ofce." (Matters for deliberation by and reporting to the Executive Ofcers' Meeting and Board of Directors)

Greenhouse gas emission reduction target setting and reduction plans

Climate change-related information for disclosure

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Assessment of climate change-related risks and opportunities for each business

Target

In March 2021, the Group set the medium and long-term targets of reducing its overall greenhouse gas emissions by at least 17% by fscal 2031 (in comparison with fscal 2014), and achieving carbon neutrality by fscal 2051.

In particular, in our product-type businesses (Advanced Products Business and Metalworking Solutions Business) we will work actively to reduce greenhouse gas emissions, with the goal of reducing emissions by at least 30%by fscal 2031. As one of our reduction measures, we have set the goal of switching to the use of renewable energy to supply at least 20% of the electric power used in the Group's businesses by fscal 2031.

In terms of plans for executing initiatives aimed at achieving our targets for the reduction of greenhouse gas emissions, in addition to energy-saving and utilization of existing technologies, we are also advancing considerations and discussions- primarily through our Climate Change and Energy Panel-including those regarding R&D and capital expenditure for driving new innovation.

Going forward, we will continue to keep track of the Group's greenhouse gas emissions*-including Scope3 emissions (indirect emissions in the supply chain), which account for around 50% of all of the Group's emissions-and advance considerations and discussions aimed at reducing them.

* The Group's greenhouse gas emissions: Scope1+Scope2+Scope3

Greenhouse Gas (GHG) Emissions Reduction Target

Reduce GHG emissions of the MMC Group by 17% or more by FY2031 (compared to FY2014)

Reduce emissions by 30% or more in the Advanced Products and the Metalworking Solutions Business, whose energy emissions are the most signifcant

Use renewable energy sources for over 20% of the Group's total electricity consumption by FY2031.

Aim to become carbon-neutral company by the end of FY2051

*1 Scope1＋Scope2

*2 Transition to a production process that utilizes hydrogen/electric energy

*3 Cement business: Does not include impact of April 2022 business integration.

• Scope 1: Direct GHG emissions by business operators
• Scope 2: Indirect emissions resulting from the use of electricity, heat, and steam supplied by other companies

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Reduction Plans for the FY2031 Target (MMC Group)

・Scope 1: Direct GHG emissions by business operators

・Scope 2: Indirect emissions resulting from the use of electricity, heat, and steam supplied by other companies

Reduction plan for achieving fscal 2031 targets (excluding cement business)

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Responding to Climate Change

Risks and Opportunities Related to Climate Change

Risks and Opportunities Related to Climate Change

As for the fnancial impact on the Group, additional costs will be incurred based on GHG emissions, such as when policies and regulations on climate change are strengthened and carbon pricing systems are introduced or enhanced. Furthermore, if we fail to keep pace with the global shift to decarbonized societies, this could invite a decline in our corporate value due to lost sales opportunities, etc. The world is rapidly moving to achieve carbon neutrality under the Paris Agreement. We also intend to rapidly respond to these changes in the social environment and continue to provide new value.

Specifcally, we have defned GHG reduction targets. We will steadily reduce the amount of GHG emitted from Group business activities by introducing energy-saving equipment and increasing our use of renewable energy. Furthermore, in order to improve the market competitiveness of Group products, we will actively enhance our production processes, develop environmentallyfriendly products, and develop technologies such as CCUS* for reducing our environmental impact.

* CCUS: Carbon dioxide Capture, Utilization and Storage

In our company-wide risk management activities, we manage physical water risks, including damage caused by acute and chronic risks such as torrential rains, foods, storm surges, and droughts, which are considered to be related to climate change. Concerning transition risks, we expect an increase in demand for technologies, products, and services that contribute to

energy	saving and GHG emissions reductions due to the tightening of government policies regarding climate change. We
envision	this as providing more signifcant business opportunities. The	Group takes initiatives such as the development of
materials, products, and technologies that contribute to decarbonization,	the development and promotion of the use of

renewable energy such as geothermal power, participation in projects pushing forward demonstration experiments or studies into suitable locations related to CO2 capture and storage, and conservation activities for the forest land we own. Through these initiatives, we aim to create both economic and social value.

• Scenario analysis

In March 2021, the Group established and analyzed scenarios to ascertain the impact of climate change on the Group's business operations (risks and opportunities) and consider measures for reducing risks and securing opportunities.

Energy Panel will continue to consider strategic measures to address risks and opportunities for the Group due to climate change, which identifed from the scenario analysis, in incorporating them into our medium and long-term management strategies and risk management.

Process for identifying risks, opportunities and response measures

• Establish scenarios where climate change is progressing, analyze business impact and consider measures to reduce risk and secure opportunities

Identify risks and

opportunities

Identify key risk and opportunity factors

Analyze impact on business operations

Identify transition risks and opportunities and physical risks as climate change risks and opportunities relating to business operations

Consider measures, indicators and targets Identify transition risks and opportunities and physical risks as climate change risks and opportunities relating to business operations

Identify risks and opportunities with a high degree of importance

Analyze the degree of impact of key risks and opportunities on business operations In analysis and evaluations, we refer to scenario data for temperature increases of 2℃ and 4℃

[Reference scenarios] International Energy Agency (IEA) Sustainable Development Scenario (SDS) ２℃ Scenario (2DS)Intergovernmental Panel on Climate Change (IPCC): Shared Socioeconomic Pathways (SSP), Representative Concentration Pathways (RCP), etc.

	Consider measures to reduce risks and secure opportunities
Consider measures,
indicators and targets	Set greenhouse gas emission reduction targets as monitoring targets

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Scenario analysis - World as envisaged in 2030-2050

■ World as envisioned in analysis

2℃ Scenario (sustainable society)	４℃ Scenario (society in which things are allowed to take their
course)
Average temperature increase is limited to below 2℃ until the	Although countries implement political policies aimed at
end of the century, and ambitious political policies and	achieving targets in line with the Paris Agreement, the level of
environmental technology innovations are implemented to	international cooperation between countries, development of
achieve sustainable development.	environmental technologies and shift in energy sources is
	insufcient, and the average temperature increases by around
	4℃ until the end of the century.
In terms of social changes accompanying the transition to	This scenario envisages the world as follows, where measures to
decarbonization that will impact business operations, we	mitigate climate change are unsuccessful, and global warming is
envisage the world as follows.	allowed to progress and take its course.

[World as envisaged]	[World as envisaged]
Carbon price setting and price rises globally	Dependency on fossil fuels, increase in energy costs
Advancement of the transition from fossil fuels to renewable	Remarkable economic growth of emerging and developing
energy	countries
Advancement of modal shift and EV shift	Slowdown in shift to modes of mobility with low CO2 emissions
Increase in demand for use of public transportation and vehicle	Intensifcation of wind and water-related disasters and increase
sharing	in disaster-related waste
Preferential selection of decarbonized products by users	Increasing severity of water stress and heat stress
Transition to a recycling-oriented society and an increase in
waste recycling rates
CO2Establishment and practical application of technologies for
the recovery, storage, and efective use of CO2

Scenario analysis - Analysis themes

	Analysis theme	Description of analysis	Businesses covered by analysis
1.	Change in direct burden of carbon	Ascertain costs relating to implementing initiatives	Common to all businesses
	taxes	to reduce greenhouse gas emissions toward a
		global temperature increase of less than 2℃
		Consider capital expenditure toward reduction
		based on cost diferences, etc., according to
		propriety of targets for reducing greenhouse gas
		emissions
2.	Change in water-related disaster	Ascertain fnancial impact of food risks due to river	Common to all businesses
	risks at business locations	fooding and tidal surges at Company business
		locations
3.	Change in demand for Company	Consider change in demand for the Company's	Advanced Products Business
	products due to EV shift	electronic materials toward a global temperature
		increase of less than 2℃
4.	Change in demand for Company	Ascertain demand and market growth potential for	Metalworking Solutions Business
	products relating to modal shift, EV	products relating to the Metalworking Solutions
	shift and reducing weight of	Business based on forecasts for the transportation
	transportation devices	sector shifting to low carbon, and use of modes of
		transportation in the 2℃ and 4℃ scenarios, etc.
5.	Change in demand for E-Scrap	Ascertain demand and market growth potential for	Metals Business
	recycling due to the transition to a	E-Scrap recycling based on forecasts for the
	recycling-oriented society	amount of E-Scrap that will be generated, etc.
6.	Change in costs caused by carbon	Ascertain the extent of indirect impact on the	Cement Business
	pricing policies	Company's business costs, etc., from the burden of
		carbon taxes at upstream business enterprises

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