Disclosure in line with TCFD recommendations

Disclosure in line with TCFD recommendations

Governance

In response to the overall sustainability issues, a system has been established whereby the Board of Directors approves the Basic Sustainability Policy and material issues (Materiality) and receives regular reports on the status of these initiatives while supervising them. Regarding initiatives to address major issues including climate change, the Sustainability Promotion Committee consisting of all executive officers including the CEO checks and discusses plans and progress of theme subcommittees, thus ensuring both accurate instructions to each executive division and regular reports to the Board of Directors.

Strategy

Assuming the following two contrasting scenarios using multiple scenarios in reports issued by the Intergovernmental Panel on Climate Change (IPCC), the International Energy Agency (IEA), and other organizations, we identified risks and opportunities for climate change to our business, and assessed the time to occurrence and financial impact of these risks and opportunities.

1.5℃ scenario: Assumption of the most advanced decarbonization efforts globally, based on the Paris Agreement.

  • There is a possibility that “transition risk” will increase as regulations and obligations increase in the process of drastic changes in industrial structures and energy policies.
  • Although our business is not easily affected by changes in industrial structure and activity regulations, there is a possibility that carbon pricing, such as carbon taxes and emissions trading for companies in general, may affect our costs.

4℃ scenario: Assumption that global climate change measures do not progress sufficiently and economic activities continue with the current structure.

  • There is a possibility that “physical risk” will increase as natural environmental changes and disasters increase due to the progression of climate change.
  • Although our business uses few natural resources (water and solid wood) and is not affected by them, there is a possibility that operations of our business may be affected by sudden natural disasters. However, we do not anticipate chronic impacts.
‹Assessment of identified climate change risks/opportunities›
Classification Identified risks/
opportunities		 Time to
occurrence
*1		 Financial
impact
*2		 Assumption and countermeasures
Transition risk (1.5℃ Scenario) Increased response costs due to the introduction of carbon pricing Long-term Small [Assumption]
Regulations such as carbon taxes and emissions trading are imposed mainly on our main office in Japan, but the impact will be small in proportion to our company's CO2 emissions when direct emissions (Scope 1) and indirect emissions (Scope 2) are targeted.

[Countermeasures]
In addition to promoting energy saving in our businesses, we will implement measures to offset CO2 emissions.
Increased prices of raw materials due to tighter regulations Long-term Medium [Assumption]
If the regulatory costs such as carbon pricing imposed on other companies are passed on to the prices of materials such as steel, which have a wide range of usage, and other materials that are difficult to substitute, the impact of the purchasing cost increasing will be significant.

[Countermeasures]
Through strengthening relationships with business partners, we will stabilize costs by collaborating to reduce GHG emissions. At the same time, we will take preventive measures such as early start of substitution by closely monitoring industry trends through collaboration between the product design division and procurement division.
Physical risk (4℃ Scenario) Suspension of business operations due to sudden natural disasters Mid-term Medium [Assumption]
If heavy rains and floods occur in Malaysia, our main production base, and production and shipments are stagnated for more than a month due to flooding of business sites, disruption of parts supply routes, restrictions on workers' moving, etc., profit loss will be significant.

[Countermeasures]
We will develop a business continuity plan that assumes flexible relocation of production lines and rearrangement of production plans at factories, and will try to absorb the impact by maintaining safe inventory according to the characteristics of products and parts.
Opportunities Changes in consumer lifestyles and consumption trends Long-term Medium [Assumption]
As temperature rises, outdoor activities of consumers are restricted and their leisure time indoors increases, demands for our products, which provide enjoyment of performing and creating music and video, will also increase.

[Countermeasures]
We will enhance products and services that new customers can enjoy carefree and easily and expand our fan base by continuously adding new value.

*1: “Short-term” is less than one year, “Mid-term” is less than five years, and “Long-term” is more than five years.

*2: The profit and loss impact of 500 million yen +/- 200 million yen in a single fiscal year is defined as “Medium”; higher and lower amounts are respectively defined as “Large” and “Small”.

Risk management

In order to properly manage and practice against various risks surrounding our business, we regularly gather information on potential risks from the entire our group including subsidiaries and provide the information to the Risk Management Committee chaired by the CEO as the responsible person of risk management whereby significance of the impact and response policy are assessed. The risks assessed by the committee are regularly reported to the Board of Directors.
As the transition risks and physical risks arising from climate change have many similarities with already-known business risks in terms of events and countermeasures, we have started to integrate them into the above entire risk management process.

Metrics and Targets

Calculation of CO2 emissions was started in fiscal year 2021 and the calculation results have been posted on our corporate website.

ESG Data

While our company's mainstay electronic musical instrument products are generally power-saving, we are making ongoing efforts to further reduce their power consumption, with our eyes set on responding to customers' requests and contributing to the environment. In addition, our manufacturing lines within factories in Japan, Malaysia, and China are mainly for assembly, something that does not require much electric power, and we have significantly reduced their Scope 2 CO2 emissions by using the non-fossil value. From the perspective of the entire supply chain, we will steadily proceed with the reduction of CO2 emissions and utilization of renewable energy not only by our company but also by our business partners.

We will improve the accuracy of CO2 emission calculation and analyze the factors, and set reduction targets as follows in line with SBT's regulation, so as to responsibly implement the above initiatives.

‹CO2 emission reduction targets›
  • Scope 1 and Scope 2: CO2 emissions will be reduced by 42% in FY2030 from FY2022
  • Scope 3: Categories 1, 4, 11, and 12, which account for more than 90% of total CO2 emissions, will be reduced by 25% in FY2030 from FY2022

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Sustainability

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