Environmental Initiatives

Climate-related financial information disclosure based on TCFD recommendations

The Sodick Group discloses important information related to the issue of climate change based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

Governance

Sodick’s basic philosophy is to provide the highest value to its customers and contribute to the sustainable development of society as a company that creates the future based on its motto of “Create,” “Implement,” and “Overcome Difficulties.” We established a Sustainability Committee chaired by the President and Representative Director to promote management based on the standpoint of sustainability, including “contributing to evolving manufacturing”, “addressing environmental management”, “promoting diversification of human resources”, and “strengthening governance”.
The committee meets four times per year to discuss climate change action as one of its important agenda items. It coordinates with each department to implement a PDCA cycle and promote long-term, systematic sustainability activities. Decisions are reported to the Board of Directors at least once a year. The details are then discussed as necessary and reflected in the management of the Group as a whole.

Figure 1: System for promoting sustainability

System diagram

Strategy

We conducted scenario analysis to understand the impact of risks and opportunities arising from climate change.

Scenario Analysis Method

We conducted an analysis using the 1.5°C and 4°C scenarios to understand the impact of climate change on the business environment in 2030. We used the RCP scenario reported by the Intergovernmental Panel on Climate Change (IPCC) and the scenario reported by the International Energy Agency (IEA). The RCP scenario was used to analyze the physical risks arising from climate change, while the IEA scenario was used to analyze the risks associated with the transition to a decarbonized economy (Table 1).
The risks and opportunities identified were qualitatively assessed on a three-point scale of high, medium, and low in terms of probability of occurrence and impact. We also consider quantitative assessment, and when we have the data and future information required for calculation, we calculate the amount of financial impact.

Table 1: Referenced climate change scenarios

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Scenario Analysis Results (Table 2)

＜1.5°C scenario＞

Under the 1.5°C scenario, we expect an impact from changes in society associated with the transition to a decarbonized society, including the promotion of policies and regulations related to renewable energy and energy conservation and the introduction of a carbon tax. Our business risks include increased operating costs associated with the introduction of carbon pricing (such as a carbon tax) through government policy and the switch to renewable energy, as well as increased procurement costs due to higher metal prices. To address these risks, we will expand our on-premises solar power generation equipment and actively promote the use of renewable energy. In addition, amid our efforts to maintain and strengthen our ISO 14001 management operations, we have established a Group-wide policy of striving to develop products that contribute to the reduction of greenhouse gas emissions and an environmentally friendly society at each stage of the product life cycle to further increase the competitive advantage of our products, which offer superior energy savings.

As for opportunities, on the other hand, our linear motor-driven machine tools have received high marks as important production goods that we developed ahead of our competitors in the industry. Linear motors are non-contact, so they maintain their initial performance in a stable, semi-permanent manner without mechanical wear and do not require a supply of grease to maintain lubricity, which makes for an environmentally friendly drive system. In addition, the parts do not need to be replaced due to age-related wear, so they have come to be trusted for their reduced environmental impact and resilient performance.

Moreover, sales of products contributing to energy conservation (injection molding machines, metal 3D printers, and rapid cooling equipment for granule powder) as well as of proprietary injection molding machines in conjunction with the spread of biodegradable plastic products have increased. Furthermore, we provide products in fields related to electric vehicles and new energy, and demand is expected to increase as we move towards a decarbonized society.

＜4°C scenario＞

Under the 4°C scenario, we expect an increase in physical impacts such as intensification of abnormal weather as climate change progresses.
Because we have factories and other business bases, damage or suspension of operations arising from disasters at these bases could be risks to our business. For that reason, we have established a business continuity plan (BCP) and are working to minimize the impact of disasters. Moreover, in order to ascertain disaster-related risks throughout the supply chain, we conduct surveys of the status of business continuity planning at our suppliers.

Table 2-1：Scenario analysis results　＜Impact associated with transition to decarbonized society＞

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Table 2-2：Scenario analysis results　＜Physical impacts of climate change＞

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Review the impact through comprehensive risk management（December 2023）

Risk Management

We have established a Risk Management Committee to manage risks related to the business. Climate change-related risk is integrated into Group-wide risk management, which is supervised by the Risk Management Committee. Subsidiaries and business divisions report risk information quarterly, and the risks identified are evaluated in terms of probability of occurrence and impact. For particularly significant risks, we consider policies and countermeasures, report them to the Board of Directors, deliberate them, and reflect them in our management strategies.

Metrics and Targets

We set greenhouse gas emissions (Scopes 1 and 2) as metrics for evaluating and managing climate change risk and promotion of our environmental management. The target is to reduce emissions by 46% compared to 2013 by 2030. Furthermore, going forward, we will promote initiatives to reduce overall greenhouse gas emissions, including Scope 3, aiming to achieve carbon neutrality by 2050. In order to achieve our targets, we will actively promote the introduction of renewable energy, such as by expanding the installation of solar power generation equipment at our facilities, and engage in technical development to improve the environmental impact reduction performance of our products in the aim of society-wide decarbonization.

Table 3: Greenhouse gas emissions [t-CO2]

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