We support the TCFD recommendations to realize a decarbonized society.

Joined the TCFD Consortium

Daiwabo Holdings Co., Ltd. supports the TCFD (Task Force on Climate-related Financial Disclosures) recommendations*1 and is a member of the TCFD Consortium*2, which is a forum for discussions among supporting companies and financial institutions.

Recognizing global warming and climate change as important management issues, our Group’s basic environmental philosophy calls for protecting the global environment, which is essential for healthy and cultured living, through "Friendly to People and the Environment" corporate activities.By announcing our support for the TCFD recommendations and joining the TCFD Consortium, the Group will actively disclose information based on the TCFD recommendations, and promote its business activities to contribute to sustainable development by reducing the burden on the global environment.

 

Daiwabo Holdings Sustainability Site “Environmental Activities”
https://www.daiwabo-holdings.com/en/sustainability/environment.html

 

  • 1: The Financial Stability Board (FSB) was established in 2015 at the request of the Group of 20 countries and regions (G20). It assesses the financial impact of the risks and opportunities posed by climate change, and recommends information disclosure on “governance,” “strategy,” “risk management,” and “indicators and targets.”

（TCFD website：https://www.fsb-tcfd.org/）

 

  • 2： The TCFD Consortium was established in 2019 as a forum to discuss effective corporate information disclosure and initiatives to translate the disclosed information into appropriate investment decisions by financial institutions, etc.

（The TCFD Consortium website：https://tcfd-consortium.jp/en）

 

 

Governance

In April 2020, our group established the ESG Promotion Committee, chaired by the Representative Director, who is also responsible for overseeing environmental management including climate change risk, as an advisory body to the Board of Directors to deliberate on environmental, social, and governance issues. The ESG Promotion Meeting has been established as a subordinate organization of the ESG Promotion Committee for practical discussions about and the promotion of activities. Matters deliberated at the ESG Promotion Committee are reported to the Board of Directors with its opinions attached. The Board of Directors resolves matters reported and commented by the ESG Promotion Committee, and gives relevant instructions and supervision.
Regarding important matters related to climate change, centered on disclosed items based on TCFD recommendations in particular, comments and reports are sent to the Board of Directors once or more a year through deliberation at the ESG Promotion Committee as one of the materialities of the Daiwabo Group. Accordingly, an intensive effort is made to push forward with such matters.
If necessary, we report the impact of climate change as a company-wide risk to the Risk Management Committee, and make recommendations.

Strategy

Our group recognizes climate change as a medium- to long-term challenge. Therefore, we make analysis using multiple future scenarios based on the 1.5–2°C and 4°C scenarios, to account for risks and opportunities under a variety of circumstances.

In a world of +1.5–2°C, regulations to reduce greenhouse gas emissions will be tightened, and the risk of transition will increase due to the progress of low and decarbonization. 
On the other hand, in a world of +4°C, physical risks, such as abnormal weather, are expected to increase, although the impact of transition risks, such as regulations, are small.
The scenario for FY2030 is based on “RCP-2.6” and “RCP-8.5” from the IPCC, and “NZE2050, SDS” and “STEPS” from World Energy Outlook.

Assumptions for Scenario Analysis

Scenario

1.5°C–2°C scenario, 4°C scenario

Target business

IT infrastructure distribution business, Industrial machinery business (Japan)

Target year

Impact as of FY2030

 

 

DIS : Daiwabo Information System Co., Ltd. (consolidated)

Excluding Alphatec Solutions Co., Ltd.

OM : O-M Ltd. (consolidated, domestic)                                

▼Transition risk (assumed to be most evident in the 1.5–2°C scenario)
Key Risks Impact on Our Company Time Frame
*1		 Financial Impact
*2		 Significantly
high-impact item		 Key Expected Initiatives
DIS OM
Risk of policies and laws and regulations Increased costs of regulatory compliance, such as carbon prices Our company is working to reduce CO2 emissions throughout the entire Group, but the introduction of carbon pricing is expected in the below 2°C scenario. If there is no progress in converting procured electricity to low-carbon energy, costs such as carbon pricing may increase. Long term Small 〇 Thorough efficiency improvement and transition to low-carbon energy to achieve FY2030 CO2 emission targets
Technical risk Increased investment and R&D costs for environmentally conscious technologies In addition to increased R&D costs for environmentally friendly technologies, there is a possibility that the cost of introducing equipment that supports decarbonization and energy conservation will increase. Long term Small 〇 Development and early commercialization of energy-saving, hydraulic-free, and automated products
Market risk Rising commodity prices due to tightening of supply-demand relations for renewable energy If commodity prices and raw material costs rise, it is expected that the impact will be small as we will be able to pass on the higher costs or propose alternative products at the time of sale. That said, sales may decrease due to customers’ reluctance to purchase as a result of increased prices. Medium to long term Small 〇 Securing inventory by having large warehouses and proposing alternative products utilizing multi-vendor functions
Rising raw material costs for products with low environmental impact 〇 Review sales strategies as appropriate, including passing of higher costs on to product prices
Reputational risk Loss of corporate brand due to delayed response Insufficient compliance with environmental information disclosure practices may impact stock prices, cause a decline in evaluations from stakeholders, decrease sales, etc. Short to long term Minimal to extreme 〇 〇 Thorough implementation of proactive environmental activities, active IR and SR activities, and timely disclosure of information via websites, etc.
▼Physical risk (assumed to be most evident in the 4°C scenario, etc.)
Key Risks Impact on Our Company Time Frame
*1		 Financial Impact
*2		 Significantly
high-impact item		 Key Expected Initiatives
DIS OM
Acute risk Stagnation of operations at business sites due to disasters If natural disasters such as heavy rain and flooding increase due to climate change, there is a possibility that the operation of distribution bases will be suspended or the arrival of handled goods will be delayed. While continuing to implement BCP measures, we will also continue to minimize impacts through risk hedging with insurance, diversifying the location of our distribution bases, etc. Long term Medium 〇 Continuation of business through teleworking and correspondence to different locations through multi-base network, strengthening of BCP measures
〇 Strengthening of BCP measures at production sites against wind, flood, and other disasters
Stagnation of supply chain operations due to the regions affected by disaster In the event of supply chain operations stagnating, it is expected that the impact will be small as we will be able to propose alternative products. Long term Small 〇 Leveraging the strengths of multi-vendors to secure multiple purchasing routes, and securing inventory thanks to having large warehouses
〇 Strengthening BCP measures at production bases
Spread of infectious disease Business activities may be restricted due to the unexpected spread of infectious diseases (pandemics, etc.). Medium to long term Small 〇 〇 Timely use of teleworking
Chronic risk Deterioration of the working environment due to rising temperatures Rising average temperatures and an increase in the number of extremely hot days may increase the cost of working environment measures needed to be taken at factories and distribution bases. Medium to long term Small 〇 〇 Development of a comfortable work environment at logistics centers and factories
Unstable upstream supply chain If there is instability in the upstream supply chain, it is expected that the impact will be small as we will be able to propose alternative products. Medium to long term Small 〇 Leveraging the strengths of multi-vendors to secure multiple purchasing routes, and securing inventory thanks to having large warehouses
Increased air conditioning costs due to rising temperatures According to the International Energy Agency (IEA), electricity prices are not expected to increase in the 4°C scenario, so we assume there is no risk to our company. Medium to long term - 〇 Consideration of investment in automation of logistics centers and utilization of robots under adverse conditions
▼Opportunity
Key Risks Impact on Our Company Time Frame
*1		 Financial Impact
*2		 Significantly
high-impact item		 Key Expected Initiatives
DIS OM
Resource efficiency Reduction of energy costs by improving production and transportation efficiency Improving energy efficiency through bulk shipping and streamlining logistics may lead to reduced distribution costs, and a reduction in energy consumption associated with production may lead to reduced fuel costs. Long term Small 〇 More efficiency in transportation and delivery by extending current conditions and utilizing nearest, bulk, and charter shipments
〇 Reducing operation costs by introducing energy-saving equipment
Products and Services Growth of earnings by providing products and services that contribute to climate change mitigation and adaptation Demand for IT products (such as virtualization), cloud platforms, and socially and environmentally conscious products that enhance energy-saving performance is likely to grow as demand with regard to environmental impact and resource conservation increases. Long term Medium 〇 Drawing up purchase plans in anticipation of future demand
〇 Development of energy-saving, hydraulic-free, and automated products
Increase in demand for materials, parts, and solutions required for environmentally conscious equipment (renewable energy, batteries, fuel cells, etc.) Long term 〇 Expanding sales opportunities to industries that produce environmentally conscious equipment such as for wind power generation, gas turbines, and nuclear power generation
Market Better corporate image by promoting disclosure of climate-related information This may lead to increased stock prices and improved stakeholder evaluations, and have an impact on sales. Short to long term Minimal to extreme 〇 〇 Thorough implementation of proactive environmental activities, active IR and SR activities, and timely disclosure of information via websites, etc.

*1 Time Frame: Short term (within 1 year), Medium term (within 3 years), Long term (within 7 years)

*2 Financial Impact: As a consolidated group, Extreme (10 billion yen or more), Large (5– less than10 billion yen), Medium (1– less than 5 billion yen), Small (100 million– less than1 billion yen), Minimal (less than 100 million yen)

Risk management

Mechanism for assessing the risks and opportunities of climate change

The ESG Promotion Meeting, which promotes issues related to climate change, assesses risks and opportunities related to the impact of climate change, in cooperation with each office of Daiwabo Holdings and Group companies, and monitors the status. Risk assessment is conducted at least once a year and as necessary, and the ESG Promotion Meeting reports and makes recommendations to the ESG Promotion Committee.

The ESG Promotion Committee deliberates on risk assessment, relevant proposed countermeasures, and related indicators and targets at least once a year, followed by reports to the Board of Directors. The Board of Directors resolves matters reported by the ESG Promotion Committee, and gives relevant instructions and supervision.
In the first fiscal year of TCFD disclosure, only risks and opportunities are disclosed. The Group will consider further disclosure of the financial impact.

Indicators and Targets

Recognizing global warming and climate change as important management issues, we have established Group-wide CO_{2} reduction targets to realize a decarbonized society.

Scope:

IT infrastructure distribution business: Daiwabo Information System Co., Ltd. (consolidated), Excluding Alphatec Solutions Co., Ltd.
Industrial Machinery Business: O-M Ltd. (consolidated in Japan) 
Daiwabo Holdings Co., Ltd. (non-consolidated)

 

Major CO_{2} emissions factors in our Group
Scope 1: Direct emissions from fuel combustion
Scope 2: Indirect emissions from the use of electricity supplied by other companies