Endorsement of the TCFD recommendations
The UNISOL Group expressed its support for the TCFD recommendations in November 2022. We consider action on climate change to be a critical determinant of any business’ continued viability and growth. On this basis, we are expanding the range of climate change-related information we disclose, in line with the TCFD framework. We carried out our first disclosures in FY2023, and expanded the Group companies covered by our disclosures in FY2024. Our disclosures have included information on our process for identifying material risks and opportunities and our reduction targets.
Our latest disclosures (FY2025) include new information on the functioning of our Sustainability Committee and the expected time frames for the emergence of material risks and opportunities.
Governance
The UNISOL Group has established a Sustainability Committee, which debates and decides upon action on climate change and other sustainability-related issues. This Committee is chaired by our President and Representative Director and its membership includes Directors, Executive Officers, and Directors of our operating companies judged suitable for membership and nominated to the position of member by the chairperson. Meetings of the Committee are scheduled twice a year at minimum. The Board of Directors has oversight on key measures relating to climate change action discussed by the Committee and receives a report on these measures at least once a year, as stipulated by our Sustainability Committee Regulations. In addition, in the aim of providing support for the operation of this Committee, we have established a Sustainability Committee Secretariat. The Secretariat discusses and examines the formulation of guidelines, measures, and other policy, as well as strategic alignment across all of our operating companies and departments, presenting its conclusions on these matters to the Committee.
In the aim of equipping the Sustainability Committee and our Board of Directors with the relevant skills and competencies required to debate, decide on, and supervise climate change- and other sustainability-related matters, we invite guest lecturers to conduct workshops on relevant subjects.
Climate change-related governance structure
Record of Sustainability Committee meetings discussing climate change (FY2024)
| Month held | Agenda |
|---|---|
| January |
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| August |
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| November |
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Strategy
I. Risk and opportunity identification and evaluation process
The UNISOL Group has identified and evaluated risks and opportunities tied to climate change through the following process.
(1) Creating a short-list of risks and opportunities
We have investigated and pinpointed risks and opportunities associated with climate change that are relevant to the Company
(2) Identifying risks and opportunities
We have made a qualitative assessment of the importance of each of the risks and opportunities pinpointed in step (1), evaluating them across multiple axes (magnitude of impact, duration of impact, scope of business affected). We have used this to identify the risks and opportunities likely to be of greater importance to our business
(3) Assessing impact on our business
We have conducted scenario analysis to estimate the financial impacts the identified risks and opportunities may be having on our business by 2030 and assess the magnitude of their impact on our operating profit in the same year
II. Scenario analysis
As outlined in step I. (3) above, we have conducted scenario analysis to estimate the financial impacts the identified risks and opportunities may be having on our business as of 2030.
| Scenarios used | Scenarios for transition risk ･The NZE Scenario, APS, and STEPS, taken from the IEA’s World Energy Outlook 2023 Scenarios for physical risk ･The SSP1-1.9 (1.5°C warming scenario), SSP1-2.6 (2°C warming scenario), and SSP5-8.5 (4°C warming scenario), taken from the IPCC’s Sixth Assessment Report Note: We also use reports and other materials published by various Japanese ministries and agencies |
|---|---|
| Global projections used | Global temperatures rising by 1.5°C, 2°C, or 4°C by 2100 |
| Scope of analysis | Maruka Furusato Corporation and its consolidated subsidiaries in Japan |
III. Identified risks and opportunities
Steps I and II of our process have identified the following 10 risks and 4 opportunities.
| Risks and opportunities | Scenario | Type | Cause | Potential situation | Time frame (term) *1 | Financial impacts in 2030 *2 |
|---|---|---|---|---|---|---|
| Transition risks | 1.5°C/2°C | Policy and regulatory | Progression of greenhouse gas emissions pricing systems | Carbon taxes and other greenhouse gas emissions pricing schemes advance, causing increases to purchasing costs and the costs of electricity and other energies | Medium to long | Major |
| Expansion of information disclosure obligations | Expansion of the scope of information that must be disclosed entails creation of internal management structures and development of data infrastructure, thereby increasing costs | Short to medium | Minor | |||
| Technology | Replacement of existing products and services with low-carbon options | We are outstripped by other companies in terms of the environmental performance of our products and our proprietary technologies related to this field, causing us to be less competitive and sales to decrease | Medium to long | Minor | ||
| Market | Changes in consumer behavior | Decrease in sales of products and services that lag in terms of environmental performance | Medium to long | Major | ||
| The ongoing switch to EVs results in reduced demand for mechanical components for internal combustion engines and thereby reduced sales of machine tools for their production | Medium to long | Minor | ||||
| Our corporate response on environmental issues is judged inadequate and we are screened on this basis by potential customers, leading sales to decrease across the business | Medium to long | Major | ||||
| Reputational | Criticism of the sector Increased stakeholder concerns |
Delays in taking action on climate change and information asymmetry between us and our investors on environmental action result in a decrease in corporate value | Medium to long | Major | ||
| Physical risks | 4°C | Acute | Increase in severity and frequency of abnormal weather events such as typhoons and floods | Typhoons, floods, and other events cause increased damage to the Company and its suppliers, resulting in increased recovery costs and decreased sales due to lost opportunities | Short to long | Medium |
| Chronic | Increase in average temperatures | Electricity usage for air conditioning increases, leading to rising energy costs | Short to long | Minor | ||
| Employees, particularly those engaged in manufacturing in the summer, are at higher risk of heatstroke and other health risks, increasing capital expenditure to counteract these risks and reducing productivity | Short to long | Minor | ||||
| Opportunities | 1.5°C/2°C | Product and service | Stronger demand for low-carbon products and services Changes in consumer preferences |
The move toward low-carbon or carbon-free alternatives and a growing demand for low-cost options at the point of energy use mean an increase in demand for environmentally friendly products and services and an increase in sales | Short to long | Medium |
| The ongoing switch to EVs prompts growth in related markets and increased sales | Short to long | Minor | ||||
| 4°C | Product and service | Changing rainfall patterns, extreme fluctuations in weather patterns, and increasing severity and frequency of abnormal weather events | Increased sales of products related to disaster prevention, mitigation, recovery, and reconstruction, which contribute to improved resilience against the increase and intensification of natural disasters | Short to long | Medium | |
| Increased sales of labor-saving products that contribute to stable operations under severe conditions such as rising average temperatures | Short to long | Medium |
Notes: 1. “Time frame (term)” is defined with reference to our future vision. In 2022, the UNISOL Group set out its ideal vision for the Group of 2032, 10 years in the future, and is now promoting a Medium-Term Management Plan (2022–2026) covering the first half of this decade. We have aligned our assessment of the time frames within which risks and opportunities may emerge with the time frame of this management strategy. In more concrete terms, we have defined “long-term” as 10 years, and designated “short-term” and “medium-term” to coincide with our fiscal period and the period covered by our Medium-Term Management Plan, respectively.
Short-term: 1 year. Set on the basis of our fiscal reporting period.
Medium-term: 2–5 years. Set on the basis of the period covered by our current Medium-Term Management Plan.
Long-term: 6–10 years. Set on the basis of the 10-year vision for the Company that is the aim of our Medium-Term Management Plan.
2. The UNISOL Group has set operating profit as an indicator of financial impact and evaluates magnitude of potential impact on our operating profit at three levels: major (5+%), medium (1–4.99%), and minor (0–0.99%).
IV. Maintaining and increasing climate resilience
As described in strategy III above, the UNISOL Group has hypothesized various impacts on our business activities of the climate change-related risks and opportunities we have identified. We have determined the measures listed below in the aim of maintaining and increasing our “climate resilience”—our ability to deal with these climate-related changes, developments, and uncertainties—in order to minimize the financial impacts of the risks we have identified and maximize those of our opportunities.
| Resilience maintained and increased | Category | Measures | Specifics |
|---|---|---|---|
| Resilience in the transition (strengthening of regulations, shift in stakeholder attitudes, etc.) to a low-carbon economy | Maximizing opportunities | Decarbonize our products and packaging materials through collaboration across the supply chain | ･Develop, explore, and provide products and services with outstanding environmental performance that meet customer demand for energy conservation, etc. ･Develop, explore, and provide products that support the popularization of EVs |
| Minimizing risk | Advance decarbonization of our business activities | ･Reduce energy consumption at our major offices and factories (introduction of energy-saving equipment, paperless offices, switching to green vehicles for company cars, etc.) ･Promote the use of renewable energy |
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| Strengthen appropriate information disclosure and communication with stakeholders | ･Make appropriate TCFD disclosures and disclosures of annual environmental data and the implementation status of the above measures, etc. | ||
| Resilience to physical weather events (heavy rain, increasing temperatures, etc.) | Maximizing opportunities | Provide automation and labor-saving options, allowing our customers to increase their capacity to deal with physical risks | ･Strengthen our product offering in the automation and labor-saving fields ･Explore possible disaster prevention and mitigation products ･Develop systems to swiftly provide disaster recovery and reconstruction products |
| Minimizing risk | Address physical risks to our business activities | ･Reduce physical and employee health risks tied to climate change by strengthening our business continuity plans (BCP) |
Risk management
The Sustainability Committee plays a central role in the formulation of guidelines and drafting of measures for the avoidance, reduction, and control of climate change-related risks identified by the Company, as well as for prompt engagement with climate change-related opportunities. It conducts Company-wide risk management, reporting to and supervised by the Board of Directors, and also monitors the implementation status and outcomes of related measures.
To address the totality of the risks facing the UNISOL Group, we have established a Risk Control Committee (scheduled to meet twice a year), which considers potential impacts on our management and finances, identifies and assesses risks, and designates and reviews material risks. Material climate change-related risks are reported to the Risk Control Committee at least once a year and aligned with other risks facing the Company as a whole.
Metrics and targets
Since 2022, the UNISOL Group has been working to ascertain the CO2 emissions of our business activities (“Scopes 1 and 2”) and the CO2 emissions of our supply chain, including the procurement of raw materials and the use of the products we sell (“Scope 3”). Our past emissions and targets for Scopes 1 and 2 are shown below.*1,2,3 Our targets using 2022 as a baseline and 2030 as the goal year have been set with reference to reduction levels set out by the SBTi (Science Based Targets initiative).
Greenhouse gas emissions (Scope 1 and 2)
(Unit: tCO2e)
| FY | 2022 (Baseline) | 2023 | 2024 | 2026 (Target) | 2030 (Target) | 2050 (Target) |
|---|---|---|---|---|---|---|
| Scope 1 | 5,241 | 5,169 | 4,996 | – | – | – |
| Scope 2 | 3,460 | 3,295 | 2,650 | – | – | – |
| Total | 8,701 | 8,464 | 7,646 | 6,856 (Reduction of 21.2% as compared to baseline) |
5,012 (Reduction of 42.4% as compared to baseline) |
Net zero |
*1Figures cover Maruka Furusato Corporation and its consolidated subsidiaries in Japan and overseas (as of December 2024).
*2We have revised figures for our past emissions and targets from the perspective of connectivity with our financial reporting (e.g., aligning our fiscal reporting period and the period over which GHG emissions are calculated). This means that figures for emissions in 2022 and 2023 have gone down by 47 tCO2e and 90 tCO2e, respectively, from figures listed in previous disclosures. In conjunction with this, we have also reduced our targets. We may make further adjustments to these figures as appropriate, in line with future refinements to our calculation methods, changes to the scope of consolidation, or other factors.
Greenhouse gas emissions (Scope 3)
(Unit: tCO2e)
| 2023 | 2024 | |
|---|---|---|
| Scope 3 Category 1 (Purchased Goods and Services) | 590,227 | 558,504 |
Notes: The data covers Maruka Furusato Corporation and its four direct subsidiaries: Furusato Industries, Ltd., Maruka Corporation, G-net Corporation, and Security Design Inc (as of December, 2024). Emissions are calculated by multiplying the amount (excluding tax) spent on purchased products and services by the emission factor based on the industry input-output table (“GLIO: 2005 Table”) published in the “Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain ver 3.4,”, and then adding 5% consumption tax from 2005. Future changes to references and calculation methodologies due to revised laws and regulations may affect our reported greenhouse gas emissions.
Example initiatives
The UNISOL Group is moving forward with a variety of initiatives aimed at achieving our greenhouse gas emissions reduction targets. For example, our Osaka Head Office building switched to renewable energy (energy produced from renewable sources, including offsetting) for its power needs on June 1, 2024. This energy is supplied through The Kansai Electric Power Co., Inc.’s Renewable Energy ECO Plan and uses non-fossil certificates that come with tracking information,*1 thereby meeting RE100*2 standards. In addition to our Head Office building, we are moving forward with progressive shifts to renewable energy and switches to renewable energy utilizing non-fossil certificates for offsetting, in line with our energy contracts, at Group company sites. As of December 31, 2024, we are on track to achieve approximately 60% of our reduction target (for fiscal year ending December 2026).*3
*1A non-fossil fuel certificate with tracking represents the environmental value of electricity generated from non-fossil sources, converted to certificate form and with attached tracking information, including on the energy source and the location in which it was generated.
*2An international initiative for companies aiming to cover the power they use in their own business with 100% renewable energy.
*3According to rough calculations as of December 31, 2024.