Climate Change (Disclosure Based on TCFD Recommendations)
Disclosure Based on the Task Force on Climate-Related Financial Disclosures (TCFD)
For SHIP HEALTHCARE Group, climate change is a critical issue that impacts sustainable management. Leveraging the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), we aim to drive initiatives within the following framework:
Governance
The Group positions climate change countermeasures as a significant management challenge. Key policies and measures addressing climate change risks and opportunities are discussed by the Sustainability Promotion Team, which reports its deliberations to the Management Committee and the Board of Directors.
The Board of Directors is responsible for overseeing risks and opportunities related to sustainability. Based on reports from the Management Committee and the Sustainability Promotion Team, the Board evaluates and monitors the Group's policies and action plans regarding sustainability risks and opportunities.
Strategy
The impacts of climate change on SHIP HEALTHCARE Group can be broadly categorized into: Transition Risks: Arising from social changes towards carbon neutrality, such as regulatory updates, technological innovations, and shifts in market demand. Physical Risks: Resulting from global warming, including more frequent extreme weather events, natural disasters, and rising average temperatures.
To address climate change, we conducted business segment-specific interviews and identified risks and opportunities based on the following two scenarios aligned with TCFD classifications:
Overview of Assumed Scenarios
| Scenario | Impact |
|---|---|
| 1.5℃Scenario |
Assuming that global social changes towards decarbonization, aimed at limiting the average temperature rise to below 1.5-2°C, will lead to the development of laws, regulations, and technological innovations, impacting our business.
*Referenced external scenarios: IEA (International Energy Agency) Net Zero by 2050 scenario / SSP1-2.6 scenario, RCP2.6 scenario |
| 4℃Scenario |
A lack of decarbonization efforts leading to intensified extreme weather and heightened physical risks impacting our operations.
*Referenced External Scenarios: IPCC AR6 SSP Scenario |
Key Risks, Opportunities, and Their Impacts Under Assumed Scenarios
The Group is conducting mid-to-long-term future projections focused on climate-related scenarios such as the IEA’s 1.5°C Scenario (Net Zero by 2050) and the IPCC’s 4°C Scenario (AR6 SSP).
・1.5°C Scenario: Anticipated transition risks include the introduction of carbon taxes, emissions trading systems, and rising energy costs.
・4°C Scenario: Significant physical risks such as supply chain disruptions due to flooding and typhoons, and the inundation of facilities, are expected. However, the spread of emerging infectious diseases under this scenario may also create opportunities for the Group to contribute to strengthening medical systems despite constraints on healthcare facility visits.
| TCFD Framework | Event | Key Risks, Opportunities | Timing | impact | response | |
|---|---|---|---|---|---|---|
| Transition risks | Policy Regulations | Introduction of Carbon Tax |
・Taxation on carbon emissions from own company ・Cost increase due to price pass-through from manufacturers and delivery companies |
Medium to long term | Medium | ・Monitoring trends and forecasts of carbon pricing systems and energy-saving regulations |
| Market | Changes in Energy Prices | ・Increase in energy costs at various company locations (logistics centers, factories, elderly care facilities, pharmacies, etc.) | Short to medium term | Large |
・Monitoring energy price fluctuations at each location and understanding their impact ・Considering phased implementation of measures such as LED lighting within locations |
|
| Reputation | Changes in Customer Behavior | ・Loss of service provision opportunities due to unmet customer demands | Short to medium term | Medium | ・Selection of low environmental impact parts and delivery methods | |
| Changes in Investor Evaluation Points | ・Decline in trust due to delays in addressing climate change | Medium to long term | Large | ・Improving evaluation through enhanced disclosure of information in line with the TCFD framework | ||
| Physical risks | Chronic | Increase in Average Temperature | ・Increase in temperature management and air conditioning costs at logistics centers, factories, elderly care facilities, pharmacies, etc. | Medium to long term | Medium | ・Reflecting cost increases due to rising external temperatures in management plans, based on past cost records |
| Acute | Natural Disasters/Extreme Weather | ・Disruption in the supply chain causing difficulties in procuring raw materials from suppliers and supplying customers | Short to medium term | Large |
・Implementing optimal risk diversification considering the entire supply chain ・Considering logistics networks through collaboration with other companies |
|
| Flooding of Locations | ・Damage at logistics centers, factories, elderly care facilities, pharmacies, etc. | Short to medium term | Large | ・Formulating, maintaining, and managing a BCP (Business Continuity Plan) assuming extreme weather | ||
| Opportunities | Resource efficiency | Opportunities through Transportation Efficiency | ・Contributing to the reduction of energy consumption and CO2 emissions through joint logistics within and outside the group | Medium to long term | Medium | ・Focusing on trends in cutting-edge technology and working on transportation efficiency |
| Chronic | Spread of Emerging Infectious Diseases | ・Strengthening disaster and emergency medical service systems | Long term | Medium |
・Responding to sudden demands from medical institutions with the group's production capabilities ・Assuming emergency responses by utilizing web tools during normal times |
|
*Risks are qualitatively evaluated based on the possibility and timing of their manifestation, and their importance if they materialize, and are classified into large, medium, and small. The medium term is assumed to be about 10 years, and the long term about 30 years.
Risk Management
The SHIP HEALTHCARE Group's comprehensive risk management is overseen by the Internal Control and Compliance Committee. For sustainability-related risks, the Sustainability Promotion Team identifies and prioritizes risks for focused action, considering factors such as: Financial Impact: On the Group, Environmental and Social Impact: Of the Group’s activities, Likelihood of Occurrence: Based on thorough analysis.
Major risks are integrated into strategies and plans after deliberation in the Management Committee, with subsequent reporting and supervision by the Board of Directors.
Monitoring of sustainability-related risks and opportunities is conducted by the Sustainability Promotion Team, and outcomes are reported to the Board. Opportunities deemed critical are similarly reviewed by the Management Committee and incorporated into strategies and plans for Board oversight.
By understanding how climate change affects the Group, we identify specific risks and opportunities. These are deliberated by the Management Committee, with reports and recommendations provided to the Board of Directors as needed.
Metrics and targets
The Group will make effort to contribute to reduce CO2 by “reducing the usage of gas and light oil” and “reducing the usage of electricity” under the understating of the impact which the Group gives to the environment and the risk of the climate change.
While specific metrics and targets have not yet been established, the Group is working on collecting and analyzing the necessary data to enhance the comprehensiveness of its disclosures.
