TCFDREPORT

2024
Task Force on Climate-related
Financial Disclosures ReportInitiatives in Line with TCFD Recommendations
The Nippon Fine Chemical Group manufactures a wide variety

will strengthen the resilience of our strategies by recognizingof products, and uses raw materials derived from fossils andthe signiﬁcance of such risks and opportunities and reﬂecting

fossil fuels in the manufacture of our products. Based on oursuch signiﬁcant in our management measures. We are also

recognition that climate change risks and opportunities arepromoting the reduction of greenhouse gas emissions, with thei m p o r t a n t m a n a g e m e n t i s s u e s , i n D e c e m b e r 2 021, w egoal of reducing our carbon dioxide emissions by 38% in

expressed our support for the recommendations of the Task

FY2030 compared to FY2013. By publicizing our eﬀorts andForce on Climate-related Financial Disclosures (TCFD). We use

increasing corporate transparency, we will work to strengthen

scenario analysis to assess the risks and opportunities of therelationships of trust with our stakeholders.

impact of climate change on our business. Going forward, weGovernanceNip p o n Fine Chemical has est ablished the Sust ainabilit y

Sustainability Organizations

Promotion Committee, chaired by our Representative Director,
President and composed of members selec ted from each

Board of Directors

division and our Group companies.
The Sustainabilit y Promotion Commit tee assesses theRepresentative Director,
President

signiﬁcance of risks and opportunities identiﬁed based on
scenario analysis of issues related to climate change. The

Approves sustainability
promotion action plans
and supervises
promotional activities

Committee also formulates promotion action plans for issues
and manages their progress.

Sustainable Management
Committee

The Sust ainabilit y Promotion Commit tee pu t s together ap ro m o t i o n a c t i o n p l a n o n c e a ye a r, w h i c h t h e B o a rd o f

Sustainability Promotion Committee

Directors approves following deliberation by the Management(Membership: Committees of Sales, Purchasing, Production,
Research, Administration Divisions and Group companies)

Meeting.
The progress of ac tivities is checked by the Sustainabilit y
Promotion Committee each quarter, in principle, and the results

Sustainability Promotion Committee Secretariatof such checks are reported to the Management Meeting and

Administration Divisions

the Board of Directors. The Board of Directors is responsible foroverseeing such activities.

Sustainability Oﬃce

(Note) Reﬂects updated organization from FY2024.

Nippon Fine Chemical has joined the TCFD Consortium andshares details of external trends and information on climatechange obtained therefrom with the Sustainability Promotion

strengthening our corporate governance system, we establishedC o m m i t te e , t h e M a n a ge m e n t M e e t i n g a n d t h e B o a rd o f

a new Sustainable Management Committee to oversee andDirectors.

guide four of our commit tees, including the Sustainabilit y

To promote the reduction of greenhouse gas emissions, thePro m otio n Co m m it te e a n d t h e R isk M a na ge m e nt Sys te m

Board of Directors approves and announces targets such as a

Promotion Committee, in order to promote our response to

3 8 % re d u c t i o n i n c a r b o n d i o x i d e e m i s s i o n s b y F Y2 03 0

increasingly important sustainability issues. The Sustainabilityc o m p a r e d t o F Y 2 013 l e v e l s . I n a d d i t i o n , t h e s t a t e o f

Promotion Committee, which was previously chaired by theachievement of materialities, including the reduction of carbon

Representative Director, President, is now chaired by the Seniord i o x i d e e m i s s i o n s , i s r e ﬂ e c t e d i n p e r f o r m a n c e - l i n ke d

Corporate Oﬃcer and Senior General Manager Administration

remuneration paid to directors and corporate oﬃcers.

Division. In addition, in FY2024, we transferred the role of theManagement Meeting in sustainability promotion activities to

I n F Y2024 , i n a d d i t i o n to c l a ri f y i n g t h e ro le s o f e x i s t i n g

the Sustainable Management Committee, which is chaired bycommittees to enhance their business execution functions andthe Representative Director, President.

●Sustainability Promotion Committee Agenda for FY2023
Timing of Meeting

Main Matters Discussed

April

2023

Conﬁrmation of the progress of the plan to achieve numerical materiality goals for FY2022

May

2023

Conﬁrmation of numerical materiality goals for FY2023

July

2023

Development of a plan to achieve numerical materiality goals for FY2023

October

2023

Conﬁrmation of TCFD risk importance evaluations and deﬁnition of scenario groups

October

2023

Conﬁrmation of the progress of the plan to achieve numerical materiality goals for FY2023

November 2023

Identiﬁcation of TCFD business impact estimate updates

December 2023

Discussions on TCFD business impact evaluations and countermeasure estimates

January2024

Discussions on TCFD countermeasures, indicators and targets

January2024

Conﬁrmation of the progress of the plan to achieve numerical materiality goals for FY2023

February

2024

Discussions on proposed TCFD disclosures

March

2024

Final conﬁrmation of proposed TCFD disclosures

1

Risk Management
The Company-wide Risk Management System Commit tee,materiality. The Committee formulates measures and creates

chaired by Nippon Fine Chemical s Representative Director,

promotion action plans for items that are assessed as having a

President and composed of managers, is the highest

signiﬁcant impact on risks and opportunities. The Committee

decision-making body in our risk management system (RMS).

a l s o m a n a ge s t h e p ro g re s s o f t h e fo r m u l a te d p l a n s a n d

The commit tee discusses basic risk management policies,

ac tiv ities an d re p o r t s su c h p rog ress to th e M anage m e nt

plans, implementation, RMS improvements, and other general

Meeting. The Management Meeting deliberates management

RMS-related matters, with ﬁnal decisions on such matters beingplans and business strategies based on the state of current

made by the chairman based on the outcome of suchinitiatives and other factors, and such plans and strategies are

discussions. The Company-wide R M S Commit tee identiﬁesthen approved by the Board of Directors.

critical risks using a risk map based on the impact on businessactivities and frequency of occurrence evaluation axes. Risk

I n F Y2024 , we c h a n ge d f ro m a s y s te m i n w h i c h t h emanagement for sustainability-related matters is referred to theCompany-wide RMS Committee holds discussions and makes

Sustainabilit y Promotion Commit tee, which identiﬁes

decisions on risk management, to a system in which the RMS

materialities

importance toPromotion Committee holds discussions and the Sustainable

stakeholders and the degree of importance to our group .

Management Committee, chaired by Nippon Fine Chemical s

T h e S u s t a i n a b i l i t y P ro m o t i o n C o m m i t t e e h a s i d e n t i ﬁ e dRepresentative Director, President, deliberates and the Board ofclimate-related risks as one of the environmental materialities,

Directors approves decisions on risk management. In addition,and identiﬁes and evaluates risks and opportunities based on

in FY2024, the role of the Management Meeting in sustainabilityt h e f o l l o w i n g e v a l u a t i o n a xe s t o d e t e r m i n e t h e l e v e l o f

p ro m o t i o n a c t i v i t i e s w a s t ra n s f e r re d to t h e Su s t a i n a b lebased on the degree ofManagement Committee.

●Assessment Axis for Climate-Related Risks and Opportunities
１ Identify risks and opportunities related to climate change that may aﬀect the Group with reference to the TCFD Final Report2
3

Evaluate identiﬁed risks and opportunities from the perspective of their impact on the Group's business activities,
customers, suppliers, etc., and the likelihood of their occurrence
Evaluate the impact of each item from both a qualitative and a quantitative perspective using scenario analysis todetermine relative importance

Strategies
With regard to the impact of climate change on Nippon Fine

derived raw materials, while there will also be opportunities to

Ch e m i c al a n d A R B O S , a G ro u p co m p a ny inv o l ve d i n t h esell materials for perovskite solar cells, as in the 1.5°
C scenario.

environmental hygiene product business, we set 2030 and 2050

Although the scenario analysis results for FY2023 show that theas the time frame for our considerations, and analyzed scenarios

risk of the impact of crude oil price hikes on raw material prices

for risks and opportunities associated with the transition to a

has reduced in size, we will continue to consider the impact on

low-carbon economy and risks and opportunities associatedour business and closely monitor the trend.

with the physical impact of climate change in a 1.5°
C world in

Nippon Fine Chemical and ARBOS have reduced Scope 2 bywhich climate change measures have progressed and the Paris

switching all purchased electricity to renewable energy in 2022

Agreement targets have been realized and in a 4°
C world inand April 2023, respectively. In the future, we will promote

w h i c h n o n e w c l i m a t e c h a n g e m e a s u re s a r e t a ke n a n d

Scope 2 reductions by expanding and continuing this switch atgreenhouse gases have increased.

other Group companies. The Nippon Fine Chemical Group will

We found that under the 1.5°
C scenario, there will be signiﬁcantalso consider Scope 1 reductions by switching to fuels withbusiness risks due to policies and regulations aimed at emission

lower CO2 emission coeﬃcients, upgrading aging facilities to save

reduc tions, such as carbon ta xes and concerns about theenerg y, replacing company vehicles with EVs, and reviewing

procurement of naturally derived raw materials, while there will

manufacturing processes.

also be opportunities to sell materials for perovskite solar cells.
We found that under the 4°
C scenario, there will be signiﬁcantbusiness risk concerns regarding the procurement of naturally●Main Scenarios Referenced
1.5°
C Scenario

4°
C Scenario

Transition-related Risks
and Opportunities

International Energy Agency (IEA)
IEA NZE2050

Physical impact-related
Risks and Opportunities

Intergovernmental Panel on Climate Change (IPCC) Intergovernmental Panel on Climate Change (IPCC)
SSP1-1.9
SSP5-8.5*Substitute due to there being no 4°
C scenario

2International Energy Agency (IEA)
IEA STEPS＊

Results of 1.5°
C and 4°
C Scenario Analysis (aﬀected items)
Risk/Opportunity Category

1.5°
C World

4°
C World

Carbon taxes will be introduced toachieve the 1.5°
C target, carbon prices
Carbon price and carbon tax

will rise, and global emission credits andother initiatives will expand.
Procurement, manufacturing, sales, andEﬀorts related to carbon pricing will nothave progressed and remain largely
unchanged from the current situation.

transportation costs will increase as a

Policies / Regulations

result.
- Global trend of imposing tax on virginplastics will continue. As a result, theuse of additional recycled materials will
be necessary and research anddevelopment costs, procurement, andTransition Risks and Opportunities

Carbon emission targets/policies in each country(Introduction of plastics regulations)(Palm oil production volume and price)

manufacturing costs will increase. The
development of resource-saving
containers, the use of bioplastics as analternative raw material, and recycling
eﬀorts will also increase.
- Global regulations on palm plantation- Plastic taxation is not introduced and theutilization rate of recycled plastic does
not increase.
- Palm oil supplies from newly developing
countries will grow and supply anddemand is stable.

development will be strengthened,palm oil supplies will be restricted,
supply-demand balance will be tighten,
and procurement price will rise.
While oil demand will increase mainly in
Fluctuations in the price ofraw materials(Petrochemical raw materials)

Oil prices will decline in both 2030 and
2050 as a result of a signiﬁcant drop in
demand due to low-carbon technology
innovation and policies to reduce carbon

Industry / Market

dioxide emissions.

the petrochemical, aviation, and shipping
sectors due to the lack of restrictions on
fossil fuels, overall the demand for oil will
peak before 2030 and gradually decline
thereafter, largely due to the fall indemand in the road transportation sector
following the shift to electric vehicles.

Development of new products
and services through R&D andinnovation(Expansion of earnings throughdevelopment of solar cells andother raw materials)

Globally, solar power generation facility

Globally, solar power generation facility

capacity is expected to be 5.8 times thecapacity is expected to be 3.9 times thecurrent level in 2030 and 25.4 times incurrent level in 2030 and 15.5 times in

2050, which will increase the demand for2050, which will increase the demand for

raw materials.

raw materials.

Reduced demand for wool as a result of
rising average temperatures. The

Chronic

Physical Risks and Opportunities

Reduced demand for wool and raw wool

production of raw wool will fall due to

production as a result of rising averagefactors such as feed shortages and higher

temperatures. As a result, the amount offeed prices caused by frequent andwool grease available for purchase will

prolonged droughts, and lower sheep birth

decrease and procurement prices willrates due to the heat. As a result, theincrease.

amount of wool grease available for

Increase in average temperature/purchase will decrease signiﬁcantly andchanges in precipitation andprocurement prices will increase.

temperature patterns(Wool grease production volume and price)(Rapeseed oil production and price)
There will be no change in the supply of

There will be a decrease in rapeseed oil

rapeseed oil due to higher average

production and lower labor productivity

temperatures, and procurement prices

due to higher average temperature andwill remain virtually unchanged.

procurement prices will increase.

3

Addressing Climate Change Risks and Opportunities
Financial impact
Small

Medium

Large

Risks

Opportunities

PeriodMedium-term Until FY2030

Less than 100 million yen
100 million yen toLong-termless than 500 million yen
500 million yen or more

TargetScenario Risk/Opportunity Business

Carbon tax andcarbon price

E/F

Until FY2050

Financial
impactImpact on Business

The introduction of a carbon tax may increasecarbon and electricity prices, expand emission
credits and other initiatives globally, and increase
response costs in terms of procurement,
manufacturing, sales, and transportation.

Carbon emission
targets/policies
in each country

E

Taxes on virgin plastics may activate the use ofrecycled plastics, bioplastics, and resource-saving
containers, and recycling eﬀorts and increase
research and development, procurement andmanufacturing costs.

Development of
new products andservices throughR&D and innovation

F

Demand for raw materials may increase following
an increase in global solar power generation facility
capacity.

Increase in averagetemperature/changes inprecipitationand temperaturepatterns

4.0℃

Measure in line with the FY2030
38% reduction target for
carbon dioxide emissions.
Measure in line with FY2050
carbon neutrality goal.

F: Functional Products Business
E: Environmental Hygiene Products Business

Large

1.5℃

1.5℃
4.0℃

Reason for Adoption

F

Reduced demand for wool as a result of rising
average temperatures. The production of raw wool
will fall due to factors such as feed shortages andhigher feed prices caused by frequent and prolonged
droughts, and lower sheep birth rates due to theheat. As a result, the amount of wool grease available
for purchase will decrease and procurement prices
may increase.

F

A decrease in production and labor productivity
could result in higher rapeseed oil prices.

Small

Large

Large

MediumCountermeasures

Period- Nippon Fine Chemical in 2022 and ARBOS in
April 2023 reduced their carbon dioxide
emissions by switching all purchased electricity
to renewable energy.
- Reduce carbon dioxide emissions by switchingboiler fuel from heavy oil to city gas.
- Systematically replace lights with LED lighting.

Already
implemented- Promote the switch to renewable energy sources
for purchased electricity at Group companies.
- Use a carbon neutral natural gas or e-methane
heat source.
- Introduce heat source equipment that uses
energy that does not emit carbon dioxide.
- Promote energy conservation by upgrading
aging facilities.
- Introduce carbon dioxide capture andseparation technology.
- Improve product production, existing productproduction processes and develop new products
by introducing ﬂow reactors and using enzymes.
- Reduce carbon dioxide emissions by
consolidating suppliers and sales destinations.
- Reduce carbon dioxide emissions by replacing
company vehicles with EVs, etc.

Longterm- Concentrate products to reduce the number ofcontainers.
- Transition from reduced size bottles topouches.
- Introduce bioplastic containers.
- Reduce the quantity of virgin plastics purchased
and promote the purchase of recycled plastics.

Longterm- Develop materials for perovskite solar cells andestablish production and sales expansion
systems.

Mediumterm- Consider using algae-derived oils and fats andunused biomass.
- Expand recycling of by-products of products.
- Reduce the amount of wool grease that needs
to be purchased by reducing the quantity of
product sold.

Longterm- Consider using algae-derived oils and fats andunused biomass.
- Multiple supply sources.

Longterm●Develop materials for perovskite solar cells
The ﬁlms for perovskite solar cells, which are expected to form the next generation of solar cells and which are currently being
developed, can be manufactured at low cost. In addition, their lightweight and ﬂexible nature enables them to be installed in places
where conventional solar cells cannot. Moreover, since power can be generated not only outdoors but also using indoor light, they
are expected to be used in a wide variety of applications.
Nippon Fine Chemical is working on the development and practical use of Spirokite™-NS and other materials used as novel organic
hole transport materials that oﬀer high performance for perovskite solar cells, the most promising new renewable energy source.

4

Indicators and Targets
The greenhouse gas emit ted by the Nippon Fine Chemical

switching all purchased electricity to renewable energy in 2022

Group is mostly energ y- derived carbon dioxide. In Octoberand 2023, respectively. In the future, we will consider switching2021, the Japanese government published a global warming

to renewable energy sources at other Group companies as well.

countermeasures plan which called for a 46% reduction in

For Scope 1, we also reduced carbon dioxide emissions by

Japan's overall GHG emissions by FY2030 compared to FY2013

switching boiler fuel from heavy oil to city gas.

levels. Within this overall goal, the industrial sector s target is a

In addition, in FY2023 we began Scope 3* calculations in order

38% reduction in energy-derived carbon dioxide. Nippon Fine

to reduce carbon dioxide emissions throughout our supply

Chemical has therefore set a target with regard to Scope 1 andchain. Scope 3 (categories 1 to 8) emissions at Nippon Fine

2*of reducing our carbon dioxide emissions by 38% in FY2030

Chemical and ARBOS totaled 93 thousand tons, with category 1

compared to FY2013 level by FY2030. We will also work to

accounting for the majority (85%) of Scope 3 emissions.

achieve carbon neutrality by 2050. In addition, the state ofachievement of materialities, including the reduction of carbon
d i o x i d e e m i s s i o n s , i s r e ﬂ e c t e d i n p e r f o r m a n c e - l i n ke dremuneration paid to directors and corporate oﬃcers.
Despite including Group company ARBOS (environmental
hygiene products business) in our carbon dioxide emission
calculations from FY2021, we have not changed our carbon
dioxide emissions reduction target for FY2030.
Nippon Fine Chemical and ARBOS have reduced Scope 2 by

Changes in Carbon Dioxide Emissions

Unit: tons
25,000

Nippon Fine Chemical
Nippon Fine Chemical

Scope 1(
Scope 2(

ARBOS )ARBOS )

109

20,0005,374
15,000

5,890

5,071

5,402

5,866
335

164
431

329

10,00013,514

15,972

14,104

5,000

0

2013

2014

12,505

13,351

2020

2021

2019

Japanese standards

11,998

2022

59
25

311

10,4622023

FY

GHG protocol standards(Note) - Japanese standards: calculated based on Act on the Rational Use of Energy and Act on Promotion of
Global Warming Countermeasures- GHG emissions from FY2021 are calculated based on GHG protocol standards*Scope 1: Direct GHG emissions from an operator s own fuel combustion
Scope 2: Indirect GHG emissions from the use of electricity and heat supplied by other companies
Scope 3: Indirect emissions not included in Scope 1 and Scope 2(emissions by other companies related to the company s activities)

5●Scope 3 emissions in FY2023
Category

1

2

Purchased goods
and services

Construction andbuilding of capital goods

Energy and3energy-related activities
not includedin Scope 1 and 2*Emissions are the total for both Nippon Fine Chemical and ARBOS.
Deﬁnition

Emissions from activities leading up to the
production of raw materials, parts, containers
and packaging, etc.

Emissions from the construction andmanufacture of our own capital goods

Emissions (t-CO2e)*Emission
percentage (%)

78,548

85

8,087

9

2,083

2

2,485

3

653

<1

270

<1

688

<1

-

-

Emissions associated with upstream processes offuel procured (mining, reﬁning, etc.)
Emissions associated with upstream processes ofelectricity procured (mining, reﬁning, etc. of fuels
used in power generation)(1) Emissions associated with logistics(transportation, loading, and storage) fromsuppliers of goods and services purchased in

4

Transportation,
distribution (upstream)

the reporting year to the company(2) Emissions associated with logistics services
other than (1) purchased in the reporting year
(transportation, loading, and storage)(emissions associated with logistics that thecompany pays for)5

Waste generated

6

Business travel

7

Employees commuting

8

Leased assets (upstream)in operations

Emissions associated with transportation andtreatment of waste generated by the company

Emissions associated with employees businesstravelEmissions associated with employee travel toand from work

Emissions associated with the operation ofleased assets leased by the company (excluded
due to being calculated in Scope 1 and 2)

Total

92,814【Calculation method】
Calculated based on the GHG Protocol and the Ministry of the Environment and Ministry of Economy, Tradeand Industry's Emission Intensity Database for Calculating Greenhouse Gas Emissions of Organization in theirSupply Chains (Ver 3.3).

6