Nichirei : Addressing Climate Change (TCFD) (320KB/4 pages)PDF

At least once a year

Controlling committee

Reports to Board of Directors

Group Communication

Group Environmental Protection Committee (meets twice annually)

Department in charge

Departments participating in the project

Technology Management

Project leader

General Manager, Technology Management

Project head

Director, Executive Officer

Project name

Project for the Analysis of Climate Change Scenarios

FY2021-2022Project Organization

Initiatives for Achieving a Sustainable Society

Environment

Social

Governance

Addressing Climate Change (TCFD)

Climate Change Scenario Establishment and Information Disclosure

The effects of climate change are becoming increasingly serious and climate change is considered to be a contributing factor in the frequent abnormal weather patterns and natural disasters currently occurring. Together, these events are impacting the supply chain for food, which is the foundation of the value provided by the Nichirei Group. We recognize the importance of appropriately responding to risks posed by shifts in the external environment caused by climate change. At the same time, we are considering and preparing multiple scenarios in which climate change could give rise to business opportunities. To this end, we are assessing climate change scenarios with respect to the four aspects of the recommended framework put forward by the Task Force on Climate-related Financial Disclosures (TCFD): governance, strategy, risk management, and metrics and targets. By conducting appropriate disclosures of relevant information, we hope to continue building a constructive dialogue with our stakeholders. It is in line with these ideas and because we support its recommendations that, in June 2020, we announced our participation in the TCFD Consortium. The Group has positioned climate change initiatives as one of the material matters

for achieving its vision for long-term management goals toward 2030. As such, we are actively promoting initiatives to help resolve social issues related to climate change.

1 Governance

In October 2019, we began analyzing climate change scenarios as an interdepartmental Group project, headed by the president, and are reviewing the scenarios across the Nichirei Group. Following discussion and review by the Group Environmental Protection Committee in May 2020, the Board of Directors approved low-carbon policies as a long-term environmental goal in June and disclosed them in August of the same year.

• In October 2020, the director, executive officer responsible for implementing climate change strategies was appointed as project head. The project reviewed and analyzed climate change scenarios in relation to water-related risks arising

from abnormal weather, which, out of the risks identified in FY2020, would have a particularly significant financial impact on the Group. Following discussion and review by the Group Environmental Protection Committee in May 2021, the Board of Directors approved goals (measures and KPIs) for water-related risks as one of the Nichirei Group material measures in June and disclosed those measures and KPIs in August of the same year.   The director, executive officer in charge reports at least once a year on the progress of the initiatives at Board of Directors meetings. Relevant strategies, goals and plans are revised as appropriate on the basis of these reports.

2 Strategy

Identification of Material Risks and Opportunities

Worldwide, the Nichirei Group is developing a range of food-centered businesses that it expects will be impacted by climate change in various ways. We are conducting scenario analyses of how climate change might affect our business activities. We hope to better quantify the risks and opportunities identified in order to incorporate appropriate responses in our management strategy. In this way, we aim to become a sustainable corporate group.

58 Nichirei Group Integrated Report 2021

FY2021	We assessed the material risks and opportunities of the Nichirei Group based on two climate change
	scenarios, and identified general low-carbon policies (CO2 emission reduction) as the most significant area of
	Group-wide risks and opportunities. We established long-term CO2 reduction goals and launched initiatives.

Management

Climate-related events

Regions

Businesses

Risks/opportunities (course of occurrence)

• Indirect
  (outside the Company)
• Direct
  (the Company)

Financial impact

Initiatives to Reduce Environmental Impact▼Pages 62-63

				General Low-	We have identified general low-carbon
				carbon Policies	(CO2 emission reduction) policies as the
				most significant area of Group-wide
Matrix of Material Risks and Opportunities	(CO2 emission reduction)	risks and opportunities.
impact
	●		●				●
	Rising sea levels (Thailand)	General low-carbon				General abnormal weather
of		Business continuity risk due to	policies				(Increased purchase prices
Degree		flooding of major cities and		(Japan and Thailand)			●	for rice and chicken)
	roads, etc.)
			(Increased capital		General abnormal weather
		●		expenditures in the reduction and		(Decrease in sales and profit due to
			elimination of CO2 emissions)
Large		Rising sea levels (Japan)					damage to factories and storage
					warehouses and disruptions to our
	(Business continuity risk due to factory flooding
						logistic network)
		and higher groundwater salinity)		●			●
		●
			Strengthening of environmental	Electrification of technologies,
		Increased environmental	countermeasures		conversion to renewable energy
		awareness		within the supply chain	(Increase in raw material procurement
		(Increased reputational risk		(Curtailment or suspension of transactions	prices due to changes in power sources)
			due to insufficient environmental response)
		for cold storage)
Medium		●		●			●
	Information disclosure
		Rise in temperature		Electrification of technologies
(Increased costs associated with the
	(Increase in cost of electricity required		(Rise in factory production costs due
	mandatory disclosure of information
		related to eco-friendly products)	to maintain freezing temperatures)			to changes in power sources)
					●
Small		● Physical events (baseline scenario)			Rise in temperature
		(Japan, North America and China)
		● Transitional events (1.5°C scenario)		(Increase in food poisoning risks and decrease
				in opportunities for in-store purchasing)

Story Creation Value Strategy

Financial

LowMediumHigh Probability of occurrence

FY2022	Selection of water-related risks arising from abnormal weather, which is a risk common to both

the foods and logistics businesses.

Material Risks and Opportunities by Business and Scenario

Strategy

Business

both the Foods and businesses	Foods Business
common to Logistics
Risks

Business

Chicken

Rice

Shrimp

Vegetables, marine products, and meat and poultry products

Common

Logistics Business

Risks

		• Reduction of agricultural and dairy production,
	General	and steep rise in purchase prices due to
	deterioration in quality
	abnormal
	• Difficulty in obtaining raw materials and
scenario	weather
production delays due to logistic network
	disruptions
Baseline		and submerged aquafarms
		• Reductions in production efficiency and volume
	Flooding,
	rising sea
	• Submerged agriculture farms, aquafarms and
	levels
		processing factories
		• Difficulty in obtaining raw materials and production
		delays due to supply chain disruptions
scenario	Low-carbon	• Increased cost for measures for converting to
renewable energy and equipment electrification,
policies
elimination of emissions
1.5˚C	Environmental	• Curtailment of transactions; higher cost of
countermeasures
measures such as the maintenance of global
within the supply
	certifications
	chain
scenario		• Damage to refrigerated warehouses and
	General	logistics centers
Baseline	abnormal	risk areas
weather
	• Difficulty securing human resources in disaster
1.5˚C scenario		• Opportunity loss caused by the slow increase
Low-carbon	of investment in natural refrigerants and the
	policies	slow adoption of technological platforms such
		as electrical and low-carbon vehicles

Business			Opportunities
	Baseline scenario	Changes in	• Increased demand for frozen and processed
	weather patterns	foods
Foods Business			• Increased demand for ethical products that are
	Strengthening of	compliant with the Sedex platform and are
	environmental	created using globally certified raw materials
1.5˚C scenario	countermeasures
within the	• Increased demand for the curtailment of food
supply chain	loss within the supply chain through the
	development of eco-friendly products and
	technological development
	Increased	• Development and expansion of demand for
		environmental	products created using sustainable raw
		awareness	materials
	Baseline scenario	General	• Increase in sales resulting from customer base
	expansion achieved through strengthened
	abnormal
	disaster countermeasures and greater
	weather
	resilience
LogisticsBusiness	1.5˚Cscenario	Modal shift	• Cost reduction achieved through a modal shift
that improves transportation efficiency
Increased	• Increase in number of business partners due to
higher evaluations as a company that actively
environmental
		awareness	discloses information related to environmental
		countermeasures

Achieving for Initiatives Strategy Society Sustainable a

Data

Note: The bioscience business is characteristically resistant to impact from climate change-related events. Accordingly, we have not currently identified any material factors in our bioscience business based on the FY2021 Group climate change scenarios.

Nichirei Group Integrated Report 2021 59

Addressing Climate Change (TCFD)

FY2022

Climate Change Scenarios in Relation to Water-Related Risks Arising from Abnormal Weather

(1) Risk of Future River Flooding

DescriptionResults

(2) Risk of Future Rising Sea Levels (Tidal Flooding)

DescriptionResults

Facility selection criteria Facilities to Assessment criteria be assessed

The location criterion is the scale of rainfall assumed to result in flooding according to the hazard maps of municipalities in the region where the facility is located. The assessment is conducted based on predicted rainfall amounts.

21 facilities in Japan

(8 plants and 13 refrigerated warehouses)

• Facilities located in regions where hazard maps have been prepared
• Food factories with large production volume
• Refrigerated warehouses (distribution centers) in areas with high base flood elevation according to current hazard maps
• Selected to avoid overrepresentation of certain regions

When creating hazard maps for regions where the facilities are located, three facilities in Japanwere found in locations where the number of rainfall events exceeding the anticipated maximum rainfall amount was expected to be around the same as the current number of rainfall events or potentially higher in the future.

For facilities in areas with either no risk or unknown risk of flooding according to the municipal hazard map of the region where they are located, an assessment was conducted of the risk of flooding assuming the occurrence of a typhoon on the scale of the Ise Bay Typhoon, one of the most destructive typhoons in Japanese history, and future rising sea levels (set at 1 meter by the Japan Meteorological Agency in Climate Change in Japan 2020).

145 facilities in Japan

1 facility overseas

• All facilities in Japan, and facilities where significant financial risk and distance from the coast were considered (Thailand: Chicken production facility)

39 of the 145 facilitieswere in flood areas according to municipal hazard maps.

• No facilities overseas
• Based on an Ise Bay Typhoon-scale typhoon and rising sea levels, a simple calculation was performed for the facilities outside of flood areas according to municipal hazard maps or in areas for which hazard maps had not been prepared (106 facilities). As a result, 27 facilitieswere found to be in flood areas when rising sea levels were not considered, and 32when rising sea levels associated with climate change were considered.

3 Risk Management

Nichirei is a global operator of food-related businesses. Accordingly, we ensure that appropriate divisions manage the impact of a variety of risks (including climate change-related risks encountered through business activities) on business management from a holistic perspective, employing both rational and optimal methods. The risks are also discussed and reviewed by the Group Risk Management Committee, which is chaired by the president.

• We believe that risks associated with climate change scenarios are major and could impact the entire Group. Thus, the Group Environmental Protection Committee, chaired by the president, reviews both physical and transition risks twice a year, based on information gleaned from relevant reports and experts' advice. In addition, at least once a year the director, executive officer supervising environmental management reports to the Board of Directors.
• We hope to better quantify the risks and opportunities identified in order to incorporate appropriate responses in our management strategy. In this way, we aim to become a sustainable corporate group.

60 Nichirei Group Integrated Report 2021

(3) Risk of Future Shortages of Water Resources

DescriptionResults

Financial Impact

• We regularly review the financial impact of water-related risks arising from abnormal weather and with respect to

Management

Based on actual rainfall amounts during past droughts, an assessment was conducted based on predicted rainfall amounts using annual rainfall of 700 millimeters as the criteria.

21 facilities in Japan

3 facilities overseas

• The 30 facilities in Japan with the largest water intake quantity and the facilities overseas with the highest financial risk were selected (Thailand: Chicken production facility)

Three facilitieswere found to be in areas where the number of rainfall events below an annual rainfall amount of 700 millimeters was expected to be the same as the current number or potentially higher in the future.

Note: This review is a simple assessment based on expected rainfall amounts and does not include the impact of social conditions (such as water intake). It also does not take into account transfers of water between watersheds. Such factors are important in water resource assessments, and therefore must be included when conducting a detailed assessment.

our business continuity plan. (BCP).

• The 2018 Japan floods caused some flooding and damage from storm surges at refrigerated warehouses in western Japan.
• In the future, we will work on climate change scenarios for each raw material.

Story Creation Value Strategy

Strategy Financial

4 Indicators and Targets	Nichirei Group Materiality ▼Pages 12-13

We have set forth climate change initiatives as one of our material matters and have established the indicators and targets below for our key initiatives.

Group Measures: Promote reduction of CO2 emissions per unit of production and utilization of renewable energy at food factories and logistics centers, and disclose information based on the TCFD recommendations.

Group KPI: 50% reduction in CO2 emissions (compared with FY2016; Scope 1 and 2 in Japan)

Achieving for Initiatives Strategy Business Society Sustainable a

Data

Nichirei Group Integrated Report 2021 61