Guidance on Climate-related
Financial Disclosures 2.0(TCFD Guidance 2.0)

July 2020 (revised March 2022)

＜Revision history＞


March 2022: Newly added a section on international shipping in section 10 of Chapter 3: SectorSpecific Recommended Disclosures.

<References to the TCFD recommendations cited in this document>
Final report: Recommendations of the Task Force on Climate-related Financial Disclosures(June 2017)https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINAL-2017-TCFD-Report11052018.pdf
Annex: Implementing the Recommendations of the Task Force on Climate-related Financial
Disclosures (June 2017)
Technical Supplement: The Use of Scenario Analysis in Disclosure of Climate-Related Risks
and Opportunities (June 2017)Foreword

Foreword
Kunio Ito
Chair of the TCFD Consortium, Director of Hitotsubashi CFO Education andResearch Center
In Japan, there has been an increase in the momentum to respond to the
TCFD recommendations following the formulation of the TCFD Guidance by
the Ministry of Economy, Trade and Industry (METI) in 2018. The TCFD
Consortium was established under the initiative of the private sector in May
2019 with the cooperation of the government. Currently, Japan has the largest
number of TCFD supporters with 290 institutions, about 20% of the world’s
total.
In the TCFD Consortium, companies and investors engaged in information disclosure and its
utilization activities based on the TCFD recommendations have been undergoing discussions. To date,
the TCFD Consortium has promoted various initiatives such as the formulation of the "Green
Investment Guidance" and co-hosting the TCFD Summit hosted by METI.
As a result, the awareness of TCFD in Japan has increased, and this has led to a surge in corporate
disclosure and constructive engagement based on the information disclosed. To further enhance thismomentum, the Consortium has revised the TCFD Guidance, and announced it as "TCFD Guidance 2.0"
with the aim of enhancing corporate value and revitalizing financial and capital markets through thefurther utilization of the TCFD recommendations.
In the TCFD Guidance 2.0, we have expanded our sector-specific guidance in the financial sectors
and food industry. We have also expanded our commentary on TCFD disclosure and included a wide
range of examples of disclosure in our case studies. As more attention is drawn to TCFD due to recent
extreme weather and other consequences of climate change, the Consortium as the world's largest
TCFD supporter organization hopes to cooperate with the world and provide strong support on thepractical aspects of implementation of the TCFD recommendations.

Mary L. Schapiro
Vice Chair for Public Policy, Special Advisor to the Founder and Chairman,
Bloomberg LP, and Secretariat of TCFD
The TCFD recommendations continue to receive worldwide support fromcompanies, investors, stock exchanges, governments, and regulators alike.
Japan has been at the forefront of recognizing the importance of the TCFD
recommendations, and the large number of Japanese supporters - nearly 300
to date - is evidence of its leadership in both the public and private sectors.
Now, TCFD champions in Japan are demonstrating the next steps required
to transition from support to implementation. Formed last year with the support of METI, JFSA and
MOE, the TCFD Consortium provides a valuable platform for companies and investors to facilitate aconstructive dialogue on TCFD implementation.
I would like to congratulate the TCFD Consortium for their efforts and commitment to promoting
greater transparency on climate and informed decision-making to build a more resilient global
economy. The publication of the TCFD Guidance 2.0 in Japan embodies Prime Minister Abe's vision topromote information disclosure in line with the TCFD recommendations for accelerating a virtuous
cycle of environment and growth.

Table of Contents
Chapter 1 Introduction ...................................................................................1
A. Background ...................................................................................................... 1
B. Purpose of Developing this Guidance .............................................................. 7
C. Purpose of the Revision to this Guidance ........................................................ 9
D. Where this Guidance Stands .......................................................................... 11(1) Overall Picture of the TCFD Recommendations and Supplemental
Documents ............................................................................................... 11(2) Relationship between this Guidance and the TCFD Recommendations
and Supplemental Documents ................................................................ 12

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD
Recommendations ....................................................................... 19
A. Introduction ................................................................................................... 19
B. Medium of Disclosure .................................................................................... 20
C. Governance .................................................................................................... 29
D. Strategy .......................................................................................................... 32(1) Description of recommended disclosure a)............................................. 34(2) Description of recommended disclosure b) (how to disclose efforts inresearch and development) ..................................................................... 37(3) Description of recommended disclosure c) ............................................. 44
E. Risk Management .......................................................................................... 54
F. Metrics and Targets ........................................................................................ 58
G. Disclosure Methods for Companies with Diverse Business Models .............. 61
H. Steps for Implementing the TCFD Recommendations at Mid-cap and Smalland Medium-sized Companies....................................................................... 63

Chapter 3 Sector-Specific Recommended Disclosures ................................... 65
A. Objectives of Sector-Specific Disclosure Guidance ........................................ 65
B. Sector-Specific Recommended Disclosures ................................................... 68(1) Automobiles............................................................................................. 68(2) Iron and Steel ........................................................................................... 73(3) Chemicals ................................................................................................. 77(4) Electrical and electronics ......................................................................... 81(5) Energy ...................................................................................................... 83(6) Food ......................................................................................................... 89(7) Banking .................................................................................................... 95(8) Life insurance ......................................................................................... 101(9) Non-life insurance .................................................................................. 105

(10) International Shipping ........................................................................... 109

Chapter 4 Conclusion ................................................................................. 114
Significance of this Guidance ....................................................................... 114
First-try Disclosures ...................................................................................... 114
Refining for Better Disclosure ...................................................................... 114
Increasing Corporate Value through TCFD Disclosure ................................. 115

Appendix..................................................................................................... 116
Appendix 1： Members of the TCFD Consortium Steering Committee, List of GIG Supporters,
and Number of TCFD Consortium Members ................................................. 116
Appendix 2： List of Key Relevant Literatures Reviewed During the TCFD Guidance Revision........................................................................................................................ 119

Chapter 1 Introduction

A. BackgroundIn response to the Paris Agreement adopted in December 2015, there has been an increase
in climate change mitigation and adaption activities worldwide. The financial industry has also
been stepping up efforts to assess the potential impacts of climate change on its assets, given
the substantial impacts climate change may have on the activities of the companies to which
they provide financial solutions. Institutional investors that make long-term investments, suchas pension funds and insurance companies, have become more conscious of environment,social and governance (ESG) elements, including climate change, as factors affecting thecorporate risks and opportunities to be considered in their financial decisions. The world’s ESG
investments increased 1.7 times in the four years between 2014 and 20181. The impact of
COVID-19 in 2020 has shed light on social issues affecting employees, other stakeholders, etc.,
and thus has revealed the growing importance of ESG as a factor in investment decisions. The
focus on an environment-friendly recovery has increased considerably and addressing climatechange is regarded as a central issue.
The degree of corporate disclosure related to the potential impacts of climate change, on
the other hand, has been inadequate. Financial institutions were unable to understandclimate-related risks and opportunities (hereinafter referred to as“climate-related issues”) in
relation to the strategies and financial planning of companies. As a result, financial institutions
were unable to make adequate decisions on investment, lending, and insurance underwriting,and thus were concerned about the risk of financial instability caused by significant volatilityof asset values in the future. In response to this, the G20 Finance Ministers and Central Bank
Governors asked the Financial Stability Board (FSB) to review how the financial sector could
take account of climate-related issues. At the review meeting held in September 2015, the FSB
identified a clear need for better information on climate-related risks from companies toenable financial institutions to properly assess the financial impacts of climate-related issues
on companies.
Following this, the FSB established the private sector-led Task Force on Climate-related
Financial Disclosures (TCFD) in December 2015. The TCFD is composed of 32 members fromfinancial services companies and organizations such as banks, insurance companies, andpension funds, as well as non-financial companies working in areas such as energy,transportation, and materials. In June 2017, following a consultation period of about eighteenmonths, TCFD published its Final Report: Recommendations of the Task Force on Climaterelated Financial Disclosures (hereinafter referred to as the “TCFD recommendations”). The
1

Global Sustainable Investment Alliance (GSIA) "Global Sustainable Investment Review 2016" (http://www.gsialliance.org/members-resources/trends-report-2016/) and “Global Sustainable Investment Review 2018” (http://www.gsialliance.org/trends-report-2018/)

1

Chapter 1 Introduction

Chapter 1
Chapter 2

TCFD recommendations provide a framework for the voluntary disclosure of climate-relatedrisks.
The situation surrounding the disclosure and use of climate-related information has evolved
significantly since the publication of the TCFD recommendations. As of July 2020, more than
1,350 organizations have expressed their support for the TCFD recommendations, up from 102
organizations at the time of the publication of the TCFD recommendations. According to the
TCFD Status Report released by TCFD in June 2019, 91% of the companies surveyed intended
to implement the TCFD recommendations in full or in part. A TCFD survey of corporate annual
reports, on the other hand, indicated that the average number recommended disclosures
published in public corporate reports, out of the 11 disclosures recommended, increased from

Chapter 3

2.8 in 2016 to 3.6 in 2018, with further disclosure remaining as an issue to be tackled in the
future (Figure 1)2.

Chapter 4
Appendix

Figure 1

Progress in the number of items disclosed by companies

Source: Task Force on Climate-related Financial Disclosures: 2019 Status Report (actual figures denote average
number of recommended disclosures included in various corporate reports)

Under these circumstances, the response to TCFD is rapidly progressing in Japan. When the
TCFD recommendations were first published, the United States and United Kingdom wereahead in the number of organizations supporting TCFD. Since then, however, momentum inthe number of company responses to the TCFD recommendations has gradually increased inJapan, leading to the establishment of the TCFD Consortium in May 2019. The number oforganizations in Japan supporting the TCFD recommendations reached 164 when the
consortium was established, putting Japan at the forefront in TCFD support. The number of2

Based on a survey conducted by TCFD on 3,000 companies which signed up for updates on the TCFD website (of the 485
respondents, 198 were preparer companies, 180 of which responded intentions to implement TCFD recommendations).
regarding their intention to respond to recommendations from TCFD. The current status of corporate information disclosureis based on an analysis of 1,126 major companies whose annual reports were published in English between 2016 and 2018.

2

Chapter 1 Introduction

Chapter 2
Chapter 3
Chapter 4

Summit included the need to transition “from divestment to engagement” and “theimportance of assessing not only of risks associated with climate change, but also
opportunities.”
Japan has also seen significant progress in information disclosure through TCFD-related
efforts. The number of Japanese companies responding to the CDP (See Column 5) has
continued to increase, reaching a record high of 316 in 2019. The number of Japanesecompanies listed on the CDP A list, an index of the most advanced companies in environmental
information disclosure and performance, reached 38, the highest in the world. The trend
confirms that information disclosure has improved in terms of substance (Figure 2).

Chapter 1

Japanese supporters has steadily increased since. As of July 27, there are 290 Japanesesupporters of TCFD recommendations, making up more than 20% of the total number of
supporting organizations worldwide. In October 2019, the world’s first “TCFD Summit” (SeeColumn 1) was held in Tokyo, which was organized by the Ministry of Economy, Trade andIndustry of Japan (METI) and co-hosted with World Business Council for Sustainable
Development (WBCSD) and the TCFD Consortium, and discussed the future direction of TCFD.
The TCFD Consortium publicly introduced its “Guidance for Utilizing Climate-relatedInformation to Promote Green Investment (Green Investment Guidance)” (hereinafterreferred to as the “Green Investment Guidance”: See Column 2) at the TCFD Summit, andsubsequently garnered substantial support for the same. Key takeaways from the TCFD

Appendix

Figure 2

CDP 2019 A List of Companies by Country (Top 10 Countries)

Source: TCFD Consortium, based on data by CDP3

The organizations that have become TCFD supporters are also playing a major role in
reducing national greenhouse gas (GHG) emissions. Under Japan’s Act on Promotion of Global
3

https://www.cdp.net/en/companies/companies-scores

3

Chapter 1 Introduction

Chapter 1
Chapter 2

Warming Countermeasures, companies whose GHG emissions are above a certain level are
required to report the emissions through a Mandatory Greenhouse Gas Accounting andReporting System (hereinafter referred to as the “SHK system” which is an acronym of its
Japanese name: See Column 3). While only 3% of the approximately 12,000 companies
reporting to the SHK system have become TCFD supporters, their emissions account for morethan 40% of the emissions by all of the reporting companies. The trend of GHG emission
reductions by TCFD-supporting companies in Japan are more pronounced compared to thosein other companies, demonstrating that TCFD-supporting companies are clearly contributing
to the reduction of GHG emissions for the whole country (See Figure 3).

Chapter 3
Chapter 4
Appendix
Figure 3

Relationship between SHK respondents and TCFD supporters(Upper left: by no. of institutions, upper right: by annual GHG emissions, bottom: average GHG reduction rate)
Source: From METI, based on SHK data and TCFD supporters.
Note: No. of SHK respondents and annual GHG emissions are data from FY 2016, and TCFD supporters as ofApril 2020. Companies whose parent company supports TCFD are included as TCFD supporters.

4

Chapter 1 Introduction

Chapter 1
Chapter 2

Column 1 The Inaugural TCFD Summit4 ··········································································The inaugural TCFD Summit held on October 8, 2019 was organized by METI and cohosted by WBCSD and the TCFD Consortium. The purpose of the Summit was to bring
together leaders from the business and financial sectors who are making advanced efforts
in the world in pursuit of a “virtuous cycle of environment and growth”. Summit
participants discussed TCFD issues and TCFD’s future direction with a view to putting the
TCFD recommendations into practice.

Chapter 3

Scene at the TCFD Summit (left) and Professor Ito, Chair of the TCFD Consortium (right)

support a smooth transition towards a low-carbon society. Summit participants learnedof the important role TCFD is playing in promoting private sector investment toward a lowcarbon economy. They agreed that a continued efforts to bring together a wide range ofstakeholders from industry, the financial community, governments, regulators, andinternational organizations would need to focus on efforts to implement the TCFD
recommendations.

4

https://tcfd-summit.org/indexEn.html

5

Appendixand Secretariat of TCFD, and Mr. Charles O. Holliday, Chairman of Royal Dutch Shell, took
part in discussions on the future directions of TCFD. Professor Ito, Chair of the TCFD
Consortium announced the “Guidance for Utilizing Climate-related Information to
Promote Green Investment (Green Investment Guidance)”, a document published by the
TCFD Consortium as a guidance for investors to evaluate the disclosure information ofcompanies.
In closing remarks, Mr. Peter Bakker, President and CEO of WBCSD, delivered a message
that divestment has its limitations, rather constructive engagement is a more powerfultool to generate a positive flow of finance for energy transition, and that it is important toadopt a pragmatic approach in Asia to promote sustainable economic development andChapter 4

Approximately 350 participants from around the world attended the inaugural TCFD
Summit. Notable participants related to TCFD, such as Mr. Mark Carney, then Governor of
the Bank of England, Mr. Peter Bakker, President and CEO of WBCSD, Ms. Mary L. Schapiro,
Vice Chair for Public Policy, Special Advisor to the Founder and Chairman, Bloomberg LP,

Chapter 1 Introduction

Chapter 1

Column 2

Chapter 2

Guidance for Utilizing Climate-related Information to Promote Green
Investment (Green Investment Guidance)5····················································The “Guidance for Utilizing Climate-related Information to Promote Green Investment(Green Investment Guidance)”, released by the TCFD Consortium in October 2019provides a set of guidance to investors and other users of information. Practically speaking,it can be regarded as a counterpart to this guidance. The Green Investment Guidance lists
three elements necessary to realize a “virtuous cycle of environment and growth”:
promote constructive dialogue (engagement) to enhance corporate value; identify andassess the risks and opportunities posed by climate change; promote innovation for
decarbonization and create mechanisms for the appropriate flow of funds. In line with the

Chapter 3

TCFD recommendations, investors and other stakeholders should understand thefollowing perspectives.
Governance

Chapter 4

Strategy andBusiness
Model

Appendix

Risks andopportunities

Performanceand Key
Performance
Indicators (KPI)

5

 It is important for investors and other stakeholders to consider acompany’s organizational structure in terms of governance toaddress climate change, and also whether it is actually functionaland effective to that end.
 It is more important for investors and other stakeholders to checkand assess the alignment between the decision-making processes
that led to a company’s strategies and the scenarios used as well as
their appropriateness within the industry and the company ’ s
responses to the strategies it has developed, than the accuracy of
scenario data and analytical results provided by the company.
 It is important for investors and other stakeholders to have abalanced evaluation of a company’s risks and opportunities, byunderstanding a company’s efforts to address risks, while also
actively evaluating the potential opportunities of climate actions.
 It is important for investors and other stakeholders to recognize theimportance of a company’s efforts toward innovation as a climate
action, and to positively evaluate the relationship between
innovation and the company’s long-term strategies, as well asorganizational structure to promote innovation.
 It is important for investors and other stakeholders to understanda company’s rationale for establishing the specific KPIs that it
manages and discloses, and confirm their alignment with thecompany’s strategies.
 In comparative evaluation of KPIs, it is important for investors andother stakeholders to consider the relevant industry characteristics.
 Investors and other stakeholders are encouraged to evaluate
companies by considering not only their GHG emissions throughthe entire value chain but also their contributions to emission
reduction at the usage of their products and service.

https://tcfd-consortium.jp/en/news_detail/19100802

6Chapter 1 Introduction

6

In December 2015, nearly 200 governments agreed under the Paris Agreement to step up the global response to thethreat of climate change by “Holding the increase in the global average temperature to well below 2°C above pre-industrial
levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels.”

7

Appendix

movement to integrate them into global frameworks for corporate evaluation and nationaland regional systems. From the viewpoint of non-financial companies, meanwhile, some of
the TCFD recommendations require further examination on many points, such as theprinciples for deciding the medium of disclosure, the scenario analysis, and the methods forincorporating the characteristics of each business. Hence, some non-financial companies have

Chapter 4

have material impacts on their business models. At the same time, by explaining how theirproduction activities, products and services contribute to the resolution of climate change
issues, and how that contribution drives their growth, companies can show investors that theycan expand sustainably even while incurring climate change impacts.
In order to realize the “virtuous cycle of environment and growth,” companies must interact
with their investors and other stakeholders not just by responding to their requests, but by
actively communicating their strengths to them and repeatedly holding constructive dialogues
with them to deepen their mutual understanding.
The TCFD recommendations are deemed to be a useful set of tools for dialogue between
companies and investors and other stakeholders. The utility of the recommendations lies intheir scope as an international framework commissioned by the G20, and there is a current

Chapter 3

companies to realize innovation and growth; the profits generated are distributed to investors
and other stakeholders; the investment returns are re-invested in further innovation.
In the meantime, discussions related to climate-related financial disclosure have been
conducted mainly by the financial authorities and entities within the financial industry against
the backdrop of changes in the financial market, such as those mentioned in section A, andefforts for financial disclosure by non-financial companies have not made adequate progress.
Considering that many non-financial companies are currently affected by climate change,
companies must recognize how climate change affects their business activities and will
potentially impact them financially, and communicate the relevant information to investors
and other stakeholders to get them to understand the impacts, if climate change is deemed to

Chapter 2

In order to achieve the goals under the Paris Agreement6, drastic changes in society throughmajor innovation will be essential. To that end, it will be necessary to establish a“virtuous cycleof environment and growth” through the processes shown below.
Companies appropriately visualize their efforts to create innovation, in order to make themclear to their investors and other stakeholders (“investors and other stakeholders” refer toinvestors, lenders, insurance companies, and other users of climate-related financial
disclosures, here and hereinafter in this Guidance), while investors and other stakeholders
appropriately provide finances to such companies. This mutual exchange of support allows

Chapter 1

B. Purpose of Developing this GuidanceChapter 1 Introduction

Chapter 1
Chapter 2

found it difficult to promote disclosures in accordance with the TCFD recommendations.
For this reason, METI decided to develop a guidance designed to provide commentaries andintroduce reference case examples for implementing the TCFD recommendations, and toprovide “sector-specific perspectives” to be disclosed by non-financial companies andconsidered by investors and other stakeholders. Toward this end, METI established the “Study
Group on Implementing the TCFD Recommendations for Mobilizing Green Finance throughProactive Corporate Disclosures” (hereinafter referred to as the “TCFD Study Group”) in
August 2018. Considering that the content of the disclosures required by investors and otherstakeholders concerns the management decisions of companies, the TCFD Study Group invitedboard members in charge of the finance and corporate planning of companies to discuss

Chapter 3
Chapter 4

methods of disclosure in accordance with the TCFD recommendations. This “dialogue”
between the managers of companies, domestic and foreign investors, and other stakeholders
led to the development of this Guidance.
The global implementation of the TCFD recommendations has only recently begun. The
TCFD recommendations mention that “the Task Force expects that reporting of climate-relatedrisks and opportunities will evolve over time as organizations, investors, and others contributeto the quality and consistency of the information disclosed.” From this perspective, the accrualof company disclosures and investor feedback in response is expected to shed light on theways forward to better disclosure.
This Guidance was developed to present the first steps for the promotion of the

Appendix

implementation of the TCFD recommendations and to provide commentaries on the TCFD
recommendations based on issues identified through discussions in the TCFD Study Group andthe Working Group established under the Study Group. Further reviews of this Guidance andenhancements in commentaries are expected, where appropriate, in accordance with theprogress of disclosure practices.

8

Chapter 1 Introduction

examples will serve as useful references for companies that are starting information disclosure.
9

Appendixthese industries have different value chain structures and different expected risks andopportunities, and the recommended disclosure items vary between sectors, disclosure
recommendations based on the characteristics of each industry are described.
Third, collected case examples of disclosure have been expanded, in view of the recent
quantitative and qualitative improvements in the disclosure of climate-related information
both in Japan and abroad. In particular, there has recently been an increase in disclosure casesthat show better alignment with the TCFD recommendations, and recent updates and case

Chapter 4

Consortium in October 2019. In Chapter 2 "Commentaries on Disclosures in Accordance with
the TCFD Recommendations,” the commentaries are expanded based on the knowledge anddata gained from these guidance documents.
Second, recommended disclosures for the food, banking, life insurance, non-life insurance
and international shipping sectors are newly included in Chapter 3 “Sector-Specific
Recommended Disclosures”. Behind this is the growing momentum in the food industry toenhance information disclosure both in Japan and abroad, as evidenced by the publication ofa guidance document by the WBCSD in April 2020. Financial sectors such as banking, life
insurance, and non-life insurance have also seen progress in disclosure practices, in light of theaccumulation of disclosure cases by financial institutions in recent years and the publicationof guidance documents, as well as the need for further disclosure in the future. Given that

Chapter 3

information on their efforts, which in turn will enhance appropriate evaluations and dialogues
by and with investors both in Japan and abroad. The TCFD Consortium, an entity establishedin May 2019 which builds upon the activities of the TCFD Study Group, has become a hub foraccumulating knowledge through discussions between companies and investors and otherstakeholders. It was therefore decided to revise the TCFD Guidance under the initiative of the
TCFD Consortium. The main points of the revision are as follows.
First, the latest findings have been reflected in the revised Guidance. As described in section
A, public and private organizations in many countries are releasing guidance documents on
TCFD as the disclosure and use of climate-related information gathers pace around the world(See Appendix 2). One example is the Green Investment Guidance announced by the TCFD

Chapter 2

As mentioned in section B, the TCFD Guidance was developed through discussions within
the TCFD Study Group established by METI, under the assumption that it will be reviewed andexpanded as the disclosure of climate-related information progresses.
More than a year has passed since the publication of the TCFD Guidance. Over this time,
there has been a significant increase in the number TCFD supporters and a significant
improvement in the substance of the information disclosed. Under these circumstances, it isanticipated that by incorporating the latest knowledge on TCFD and promoting TCFD disclosurein a broader range of industries, companies will be able to internationally disseminate

Chapter 1

C. Purpose of the Revision to this GuidanceChapter 1 Introduction

Chapter 1

In addition, the scope was expanded to include industries newly added to the sector-specificrecommended disclosure, in Chapter 3.
On the basis of the three points mentioned above, this Guidance was revised byincorporating the opinions of the Steering Committee members (see Appendix 1) as well asother members of the Consortium.

Chapter 2
Chapter 3
Chapter 4
Appendix10Chapter 1 Introduction(1) Overall Picture of the TCFD Recommendations and Supplemental
Documents

Chapter 3

well as recommended disclosures and commentaries structured around the four thematic
areas of Governance, Strategy, Risk Management, and Metrics and Targets.
The supplemental documents contain commentaries for implementing the TCFD
recommendations, and sector-specific commentaries have been developed for the
aforementioned four thematic areas, as shown in Figure 5.

Chapter 2

In addition to the “TCFD Recommendations,” TCFD prepared “Implementing the
Recommendations of the Task Force on Climate-related Financial Disclosures”, a supplemental
document for implementing the TCFD recommendations, and “The Use of Scenario Analysis in
Disclosure of Climate-Related Risks and Opportunities”, a set of commentaries designed tosupport scenario analysis.
The TCFD recommendations, as described in Figure 4 present general recommendations, as

Chapter 1

D. Where this Guidance Stands

Chapter 4
Appendix

Figure 4

Core Elements of Recommended Climate-related Financial Disclosures

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures” (June2017), P. v.

11

Chapter 1 Introduction

Chapter 1
Chapter 2
Chapter 3
Figure 5

Supplemental Guidance for Financial Sector and Non-Financial Groups

Chapter 4

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures” (June2017), P.15.

(2) Relationship between this Guidance and the TCFD Recommendations andSupplemental Documents

Appendix

This Guidance consists of three chapters. Chapter 1 describes the background leading up to
the launch of TCFD’s activities, the purpose of developing this Guidance, and the relationships
between this Guidance and the TCFD recommendations and supplemental documents.
Chapter 2 sorts out questions on the TCFD recommendations and supplemental documents,
and provides explanations on questions raised. When developing this Guidance, aquestionnaire survey was sent out to all members to extract questions. Explanations wereprepared by referring to comments from assorted members working in financial institutions
and a member involved in the development of the TCFD recommendations, along with caseexamples from domestic and overseas entities. The explanations were drafted in the
expectation that they would be revised in the future as best practices are accumulated throughthe ongoing promotion of disclosure by many companies. With this revision, the latest findings
and further case examples were collected to enhance the content of the Guidance.
In Chapter 3, sector-specific recommended disclosures are demonstrated for nine sectors(seven from the non-financial groups and three from the financial group). Recommended
disclosures were presented for the non-financial groups in the thematic areas of Strategy andMetrics and Targets. This was done because different industries face different climate-relatedrisks and opportunities, and the method for presenting a desirable strategy for companies toimplement disclosure and metrics and targets based on such strategy differ from industry to
12Chapter 1 Introduction

13

Appendix“Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures” (June 2017), P.36.
Sustainability Accounting Standards Board
9 World Business Council for Sustainable Development
8

Chapter 4

7

Chapter 3

automobiles, iron and steel, chemicals, electrical and electronics, and energy. The Guidance
also covers the food sector, with its significant physical risk, and financial institutions (banking,life insurance, non-life insurance sectors) as well as international shipping, and presents key
points for disclosure according to the specific characteristics of each industry. The content of
Chapter 3, like that of Chapter 2, is therefore expected to be revised and enhanced as morecompanies work on disclosure and the scope of industries covered by Guidance expands.

Chapter 2

Similar efforts on sector-specific analysis are underway in the private sector. SASB 8 haspresented sustainability metrics for each of 77 industries, while WBCSD 9 has developed aseries of guidance documents to respond to the TCFD recommendations for sectors such as oil
and gas and chemicals. These movements to promote financial disclosure consistent with the
TCFD recommendations based on the characteristics of each industry are spreading on a global
level (See Column 5).
In the meantime, the various efforts underway should evolve into a comprehensive activity
through the sharing of accumulated expertise and best practices. This Guidance has beendeveloped to contribute to this discussion. Five industrial sectors with significant GHG
emission in the use phase or manufacturing phase have been selected for this Guidance:

Chapter 1

industry. Descriptions of disclosures on governance and risk management are included for thefinancial group, as the methods for disclosing their investment and lending activities differ
among sectors.
Facilitated dialogue between companies and investors and other stakeholders based onsuch sector-specific disclosure is expected to lead to a more effective “virtuous cycle ofenvironment and growth.”
The TCFD recommendations provide that “the Task Force encourages further research andanalysis by sector and industry experts to increase organizations’ understanding of climaterelated risks and opportunities”7. The importance of such sector-specific analysis is therefore
thought to be recognized.

Chapter 1 Introduction

Chapter 1
Chapter 2

Column 3 Japan’s Corporate Governance Code10···························································The Corporate Governance Code promulgated by the Tokyo Stock Exchange in 2015
establishes fundamental principles for effective corporate governance.
One of the general principles is “Ensuring appropriate information disclosure andtransparency.” The Corporate Governance Code was revised in 2018 to include thedisclosure of corporate ESG elements.
General Principle 3 (basic policy) of Japan’s Corporate Governance Code provides thatthe board should be actively involved in the disclosure and provision of non-financial
information that describes ESG factors, etc., to ensure that such information will be as
useful as possible for users. It will be important for companies to respond to the TCFD
recommendations from this perspective, as well.

Chapter 3
Chapter 4

 General Principle 3 [Ensuring appropriate information disclosure andtransparency]
Companies should appropriately make information disclosure in compliancewith the relevant laws and regulations but should also strive to actively provide
information beyond that required by law. This includes both financial information,such as financial standing and operating results, and non-financial information,such as business strategies and business issues, risk and governance.
The board should recognize that disclosed information will serve as the basis
for constructive dialogue with shareholders, and therefore ensure that suchinformation, particularly non-financial information, is accurate, clear and useful.

Appendix Basic policy (excerpt)
It has been noted that while the quantitative part of financial statements ofJapanese companies conform to a standard format and therefore excel withrespect to comparability, non-financial information, such as financial standing,business strategies, risks and ESG (environmental, social, and governance)
matters, is often boiler-plate and lacking in detail, therefore less valuable. The
board should actively commit to ensure that disclosed information, including nonfinancial information, is as valuable and useful as possible.

10

https://www.jpx.co.jp/english/news/1020/b5b4pj000000jvxr-att/20180602_en.pdf

14Chapter 1 Introduction

Japan has several institutional systems for disclosing climate-related information otherthan the Corporate Governance Code.
Legislation (year of
establishment)

Summary
Since the 2005 revision of this Act, companies that
emit above a certain amount of GHG are required to
calculate their own GHG emissions and report them to

An institutional framework has been established topromote the publication of environmental reports inorder to promote the voluntary environmental effortsof business operators. In addition, major companies
are obliged to make efforts to publish environmental
reports.

Cabinet Office Ordinanceon Disclosure of Corporate
Affairs, etc. (2019)

Revisions of descriptions in securities reports toenhance financial and descriptive information. The
revised descriptions include the impact of a risk on thebusiness, the nature of the risk, the measures to betaken, the likelihood of materialization, and the extent
and timing.

15

Appendix

Environmental Information,
and Other Measures.
(2004)

Chapter 4

Law Concerning thePromotion of Business
Activities withEnvironmental
Consideration by Specified
Corporations, etc., by
Facilitating Access to

Chapter 3

the government. The Act on the Rational Use ofEnergy (Energy Conservation Law of 1979) also
requires certain business operators to submit reports
on energy consumption.

Chapter 2

Act on Promotion of Global
Warming Countermeasures(1998)

Chapter 1<Reference: Key institutional basis for the disclosure of climate-related information>

Chapter 1 Introduction

Chapter 1

Column 4

Chapter 2

Relationship with the “Guidance for Integrated Corporate Disclosure andCompany-Investor Dialogue for Collaborative Value Creation” ·····················METI published its “Guidance for Integrated Corporate Disclosure and CompanyInvestor Dialogue for Collaborative Value Creation: ESG Integration, Non-Financial
Information Disclosure, and Intangible Assets into Investment” (hereinafter referred to as
the “Guidance for Collaborative Value Creation”) in May 2017. The aims were to help
deepen mutual understanding between companies and investors through information
disclosure and dialogue and to encourage companies and investors to take action towardsustainable value creation. The Guidance for Collaborative Value Creation is expected toserve as a set of guidelines for business owners/managers seeking to manage their

Chapter 3

companies in ways that create corporate value, and to convey that information toinvestors. It is also designed as a guidance for investors that will enable them to grasp theinformation necessary to make investment decisions, etc. and assess companies from a
medium- to long-term perspective, and to serve as reference for dialogue between
investors and companies (Figure 6). The TCFD Guidance is positioned as an itemized
discussion of the Guidance for Collaborative Value Creation focused on climate change.

Chapter 4
Appendix
Figure 6 Overview of the Guidance for Integrated Corporate Disclosure and Company-Investor
Dialogue for Collaborative Value Creation
Source: Guidance for Integrated Corporate Disclosure and Company-Investor Dialogue for Collaborative
Value Creation 11

11

https://www.meti.go.jp/english/press/2017/0529_004.html

16Chapter 1 Introduction

Efforts to respond to the TCFD recommendations within otherframeworks, standards, etc. ···········································································(4) International Integrated Reporting Council (IIRC)
IIRC was established in 2010 with the aims of improving the quality of the information
received by providers of financial capital and establishing an approach for efficient
information dissemination. The International Integrated Reporting Framework was
published in 2013 to present an approach to preparing integrated reports. Since its
publication, companies in Japan and elsewhere in the world have been transforming theirannual reports into integrated reports.
Working in cooperation with organizations such as CDP, GRI, SASB, and CDSB, IIRC hasestablished a project (Better Alignment Project) to improve consistency among the various
frameworks used for corporate reporting. The project’s initial goal was to align these12

CDSB, CDP, 2020, The building blocks: Connecting CDP data with the CDSB Framework to successfully fulfil the TCFD
recommendations (https://www.cdsb.net/buildingblocks)

17

Appendix(3) Global Reporting Initiative (GRI)
An organization established to promote a wider understanding of the impacts ofsustainability issues globally, and to help disseminate opinions about those impacts. The
GRI Guidelines, published in 2000, are widely acknowledged as guidelines forsustainability reporting.

Chapter 4

An organization that promotes the disclosure of environmental, including climatechange information in financial reports through the development of the CDSB Framework
for reporting environmental and climate change information, which aims to standardize
corporate environmental and climate change information disclosure. In April 2018, arevised version of the CDSB Framework was released to improve consistency with TCFD
recommendations. In 2020, a guidance document was published on how to respond to
the TCFD recommendations by utilizing CDP data and the CDSB Framework12.

Chapter 3(2) Climate Disclosure Standards Board (CDSB )Chapter 2(1) CDPCDP is an international NGO carrying on the work of its predecessor, the Carbon
Disclosure Project, an initiative established in 2000. CDP sends questionnaires tocompanies to collect information outlining their corporate efforts related to the threeenvironmental issues of climate change, water, and forests, and evaluates and analyzes
the companies based on the responses obtained.
In 2018, CDP revised the questionnaire items to align them with the TCFD
recommendations.

Chapter 1

Column 5

Chapter 1 Introduction

Chapter 1

frameworks with the TCFD recommendations. As a result, the existing frameworks andstandards were found to be generally aligned with the TCFD recommendations. Whileacknowledging that the development of a single reporting framework is difficult, theproject has reported that there is room for improvement in comparability andconsistency13.

Chapter 2(5) Sustainability Accounting Standards Board (SASB)SASB presents metrics that can measure the long-term value creation capacity ofcompanies in a total of 77 sectors. In addition to environmental metrics, SASB presents
other sustainability-related metrics, including social and human capital metrics, and works

Chapter 3

toward the voluntary adoption of the standards in statutory disclosure materials bycompanies listed on U.S. markets.
In November 2018, SASB published new standards consistent with the TCFD
recommendations which include industry-specific metrics and targets that can provide
actionable information on climate risks.
SASB, in collaboration with the abovementioned CDSB, published a "TCFD
Implementation Guide”14 providing commentary on TCFD, and the "TCFD Good PracticeHandbook," a compilation of notable case examples of disclosure with explanatory
commentary15.

Chapter 4
Appendix(6) World Business Council for Sustainable Development (WBCSD)
WBCSD is a CEO-led organization of approximately 200 companies working towardsustainable development. Participating companies discuss their efforts to resolve issues
related to sustainable development and share their experiences in cooperating withgovernments and NGOs.
WBCSD has established sector-specific “Preparer Forums” to explore ways to respondto the TCFD recommendations. Reporting guidance has already been published for the oiland gas, chemical, electric utilities, food, agriculture and forest products and construction
and building materials sectors. Work on the automobile sector is underway.

13

Corporate Reporting Dialogue: Driving Alignment in Climate-related Reporting: Year One of the Better Alignment Project(https://corporatereportingdialogue.com/publication/driving-alignment-in-climate-related-reporting/)
14 Available for download from the CDSB website (https://www.cdsb.net/sites/default/files/sasb_cdsb-tcfdimplementation-guide-a4-size-cdsb.pdf ) and from the SASB website (https://www.sasb.org/knowledge-hub/tcfdimplementation-guide/)
15 Available for download from the CDSB website (https://www.cdsb.net/tcfd-good-practice-handbook) and from the SASB
website (https://www.sasb.org/knowledge-hub/tcfd-good-practice-handbook/).

18

Chapter 2 Commentaries on Disclosures in
Accordance with the TCFD
Recommendations
In formulating the TCFD Guidance, the working group established under the TCFD Study
Group carried out a questionnaire survey of all of its members to enumerate the points theywanted to confirm in disclosing in line with the TCFD recommendations and identified therelevant issues. Later, in revising this Guidance, the TCFD Consortium identified issues related
to information disclosure through further questionnaire surveys to consortium members anddiscussions in working groups.
Chapter 2 provides explanations of the above issues based on the discussions when the
TCFD recommendations were formulated, information and opinions sought by financial
institutions, and case examples that can be used as references for disclosure.

A. Introduction
The questions raised are broadly classified into those related to i) the medium of disclosure,ii) the four themes presented in the TCFD recommendations (Governance, Strategy, Risk
Management, Metrics and Targets), iii) methods of financial disclosure for companies withdiverse business models, and iv) steps for implementing the TCFD recommendations by midcap and small- and medium-sized companies.
Commentaries are provided on questions on the following topics in the order described in
the TCFD recommendations:i) Medium of disclosure (See Section B.)ii) Four themes (See Sections C to F.)iii) Methods of financial disclosure for companies with diverse business models (See
Section G.)iv) Steps for implementing the TCFD recommendations by mid-cap and small- andmedium-sized companies (See Section H.)

19

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1

B. Medium of Disclosure
The TCFD recommends that “preparers of climate-related financial disclosures provide suchdisclosures in their mainstream (i.e., public) annual financial filings16.”

Chapter 2

2. Implementing the Recommendations
b. Location of Disclosures and Materiality
The Task Force recommends that organizations provide climate-related financial
disclosures in their mainstream (i.e., public) annual financial filings. In most G20
jurisdictions, public companies have a legal obligation to disclose material information in

Chapter 3

their financial filings — including material climate-related information; and the Task
Force’s recommendations are intended to help organizations meet existing disclosure
obligations more effectively. The Task Force’s recommendations were developed to apply
broadly across sectors and jurisdictions and should not be seen as superseding national
disclosure requirements. Importantly, organizations should make financial disclosures inaccordance with their national disclosure requirements. If certain elements of therecommendations are incompatible with national disclosure requirements for financial
filings, the Task Force encourages organizations to disclose those elements in otherofficial company reports that are issued at least annually, widely distributed and available
to investors and others, and subject to internal governance processes that are the same

Chapter 4
Appendixor substantially similar to those used for financial reporting.
The Task Force recognizes that most information included in financial filings is subject
to a materiality assessment. However, because climate-related risk is a non-diversifiablerisk that affects nearly all industries, many investors believe it requires special attention.
For example, in assessing organizations’ financial and operating results, many investors
want insight into the governance and risk management context in which such results areachieved. The Task Force believes disclosures related to its Governance and Risk
Management recommendations directly address this need for context and should be
included in annual financial filings.
For disclosures related to the Strategy and Metrics and Targets recommendations, theTask Force believes organizations should provide such information in annual financial
filings when the information is deemed material. Certain organizations—those in thefour non-financial groups that have more than one billion U.S. dollar equivalent (USDE)
in annual revenue—should consider disclosing such information in other reports when
the information is not deemed material and not included in financial filings.37 Because

16

Financial filings refer to the annual reporting packages in which organizations are required to deliver their audited
financial results under the corporate, compliance, or securities laws of the jurisdictions in which they operate. (Excerpts
from Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures , June 2017).

20

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.17.

Chapter 3

financial filings are the information resource most frequently referenced by investors andother stakeholders.

Chapter 2

Among the four thematic areas, the TCFD recommendations stipulate that it is desirable forall companies to make disclosures related to Governance and Risk Management in theirfinancial filings, as described above. Disclosure is recommended by all companies because
many investors believe that almost all industries are potentially exposed to the impacts ofclimate change. TCFD recommends the disclosure to be included in financial filings because

Chapter 1

these organizations are more likely than others to be financially impacted over time,
investors are interested in monitoring how these organizations’ strategies evolve.

Chapter 4
Appendix

Figure 7

Recommended disclosure medium in the TCFD recommendations

For disclosures related to the Strategy and Metrics and Targets, the TCFD recommendations
stipulate that companies should provide the information in financial filings when theinformation is deemed to be material. Among companies that currently see such information
as largely immaterial, large companies (i.e., those17 in the non-financial group with annual
revenue exceeding a one billion U.S. dollar equivalent (USDE)) should consider disclosing theinformation in other reports, since for these organizations the information may becomematerial in the future.
17

The threshold value selected for the TCFD recommendation was $1 billion in annual sales, as the organizations reachingthat threshold accounted for more than 90% of GHG emissions in Scope 1 and Scope 2 for four non-financial groups(approximately 2,250 issues out of approximately 15,000).

21

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2

The TCFD recommendations, on the other hand, state that “The Task Force’s
recommendations were developed to apply broadly across sectors and jurisdictions andshould not be seen as superseding national disclosure requirement. Importantly, organizations
should make financial disclosures in accordance with their national disclosures. If certain
elements of the recommendations are incompatible with national disclosure requirements forfinancial filings, the Task Force encourages organizations to disclose those elements in otherofficial company reports that are issued at least annually18.”
The above is an explanation of the medium of financial disclosure in the TCFD
recommendations. Note that the “scenarios,” as described in c) under Strategy in the TCFD
recommendations (P.25), are “hypothetical constructs and not designed to deliver precise

Chapter 3
Chapter 4

outcomes or forecasts.” A major issue yet to be determined is whether such information basedon an uncertain and long-term outlook should be included in financial filings.
Disclosure in accordance with the TCFD recommendations is being developed on this point.
Disclosure practices for effective information provision to investors and other stakeholders is
expected be refined with the accumulation of case examples. In the process of accumulatingcase examples, a review of the medium of climate-related financial disclosure, including the
scenario analysis, is expected to progress further.
The following are examples of combinations of disclosure media by major companies that
conduct climate-related scenario analysis, as of July 2020. For the foreseeable future,disclosures drawing upon earlier examples such as those shown below are expected toaccumulate.

Appendix
18

Excerpts from P.17 of “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures”

22Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

CompanyName
BHP Billiton

SekisuiHouse, Ltd.

In its annual report, the company
mentions that a scenario analysis
is conducted, cites the results of
its proprietary Sky Scenario, andinvites readers to refer to thesustainability report for details on
the company’s responses to the
TCFD recommendations.
In its annual report, the company
mentions that a scenario analysis
is conducted. It also partiallydescribes the difference between
the IEA SDS scenario and its own
scenario.
In its annual report, the company
mentions that a scenario analysis
is conducted and invites readers
to refer to the Climate Change
Report on its responses to the
TCFD recommendations.
The company’s annual securities
report describes the measurestaken in line with each item of
the TCFD recommendations.
Regarding the “Co-Creation
Sustainability Management” of
the Group, the securities reportrefers to the company’s “CoCreation Management Report”
and “VISION BOOK 2050”.
In its annual securities report, thecompany states that a “TCFD
Report 2019” has been issued.

In its sustainability report, thecompany mentions that it conductsa scenario analysis. The details of
scenario analysis are included in theindividual report (Shell Energy
Transition Report) and thecompany’s website.
Only an outline of the scenario
analysis is included in thesustainability report. The details of
the scenario analysis are describedin another report (Path toDecarbonization)
The details of the scenario analysis
are described in the company’s
Climate Change Report (OurApproach to Climate Change) .

The details of the scenario analysis
and estimations of financial impacts
are described in the "Co-Creation
Management Report.”

The company’s “TCFD Report 2019”
describes its response to the TCFD
recommendations and the detailed
results of a scenario analysis.

Source: Prepared from the disclosure media and websites of the respective companies

23

Appendix

Marui
Group, Inc.

In its annual report, the company The details of the scenario analysis
mentions that a scenario analysis are provided in the individual report
is conducted and invites readers (Portfolio Analysis).
to refer to the individual report(Portfolio Analysis) for details.

Chapter 4

Rio Tinto

Other reports

Chapter 3

Eni

Financial report

Chapter 2

Shell

Combinations of disclosure media for scenario analysis

Chapter 1

Case example 1

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1

As shown above, the companies use various disclosure mediums besides financial filings,
such as integrated reports and sustainability reports. For this reason, companies will need toappropriately combine such reports in order to effectively provide information to investors
and other stakeholders. Several examples of disclosure mediums other than financial filings
are described below.

Chapter 2

1. Integrated report, annual report19
These are reports that compile both corporate financial information and non-financial
information, including sustainability-related information. The available guidelines for
integrated reports include the “Guidance for Collaborative Value Creation” developed by METI,

Chapter 3

and the “International Integrated Reporting Framework” formulated by IIRC. The preparationof an integrated report and annual report is voluntary.

Chapter 4

2. Environmental report, sustainability report, CSR report, etc.
These are voluntary disclosure mediums for the disclosure of non-financial information,
including details on an entity’s efforts towards realizing a sustainable society. As sustainability
reporting guidelines, a set of GRI Standards developed by GRI are available. The preparationof an environmental report, sustainability report, CSR report, etc. is also voluntary.
According to the TCFD Consortium's questionnaire survey of member companies, financial
institutions obtain information from multiple media, such as corporate websites,
environmental reports, and sustainability reports, in addition to integrated reports (Figure 8).

Appendix
19 In Japan, the term “annual report” describes a voluntary disclosure report. Overseas, however, this term sometimes
describes statutory disclosure documents, as in the case of the “Annual Report and Accounts” in the U.K.

24

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1

Financial Institutions(No. of respondents: 49 institutions)

Chapter 2
Chapter 3

Figure 8

Media Used by Financial Institutions Use to Obtain Information on investee companies

Source: TCFD Consortium

Chapter 4

From the viewpoint of preparers, it was also found that companies also disclose climate
information in multiple media, such as in integrated reports, environmental and sustainability
reports, and corporate websites (Figure 9).

Figure 9

The medium in which the information according to TCFD recommendations are disclosed

Source: TCFD Consortium

The TCFD recommendations do not present a specific format for climate-related disclosure.
25

Appendix

Financial Institutions(No. of respondents: 22 institutions)Non-financial Institutions(No. of respondents: 64 institutions)Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2

When a company discloses information in financial filings, integrated reports, sustainability
report, or the like, a key step is to demonstrate the relationship between the information
disclosed in these reports and the recommended structure of disclosures presented by the
TCFD recommendations.
How this relationship is to be demonstrated is left to the inventiveness of each company. In
one helpful case example, a company adds a mapping table to show the connections between
the relevant content of the disclosure and each element of the TCFD recommendations (caseexample (2)). In another, a company describes the method used to follow the structure of the
TCFD recommendations (case example (3)).
Case example 2

A mapping table of the content of TCFD-related disclosures and theirlocation in the report.

Chapter 3

Nippon Steel uses a mapping table to show where all the 11 items recommended fordisclosure in the TCFD recommendations can be found in its Sustainability Report.

Chapter 4
Appendix
Source: Nippon Steel Co., Ltd. "Sustainability Report 2019" P. 25

26

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Disclosure following the structure of the TCFD recommendations

Mitsubishi Corporation provides an executive summary of its response to the TCFD
recommendations in its integrated report. In addition, the company describes the statusof its response to the TCFD recommendations for each of the four thematic areas(governance, strategy, risk management, metrics and targets) in its ESG DATA BOOK 2019.

Chapter 1

Case example 3

Chapter 2
Chapter 3
Chapter 4
Appendix

Source: Mitsubishi Corporation "Integrated Report 2019" P.44

27

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2
Chapter 3
Appendix

Source: Mitsubishi Corporation "ESG DATA BOOK 2019" PP. 30 - 31

Chapter 428

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

The TCFD recommendations recommend the following disclosures under Governance.

Chapter 1

C. Governance

Governance: Disclose the organization’s governance around climate-related risks andopportunities.

Describe the board’s

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.19.

29

Appendix

Describemanagement’s role inassessing andmanaging climaterelated risks andopportunities

Guidance for All Sectors
In describing management’s role related to the assessmentand management of climate-related issues, organizations
should consider including the following information:
 whether the organization has assigned climate-related
responsibilities to management-level positions orcommittees; and, if so, whether such management
positions or committees report to the board or acommittee of the board and whether those responsibilities
include assessing and / or managing climate-related issues
 a description of the associated organizational structure(s) processes by which management is informed aboutclimate-related issues
 how management (through specific positions and / ormanagement committees) monitors climate-related issues

Chapter 4

Recommended
Disclosure b)

Chapter 3

oversight of climate
related risks andopportunities.

Guidance for All Sectors
In describing the board’s oversight of climate-related issues,organizations should consider including a discussion of thefollowing: processes and frequency by which the board and/ or board
committees (e.g. audit, risk, or other committees) are
informed about climate-related issues.
 whether the board and / or committees consider climaterelated issues when reviewing and guiding strategy, majorplans of action, risk management policies, annual budgets,and business plans as well as setting the organization’s
performance objectives, monitoring implementation andperformance, and overseeing major capital expenditures,acquisitions, and divestitures how the board monitors and oversees progress against
goals and targets for addressing climate-related issues

Chapter 2

Recommended
Disclosure a)Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2

Commentaries
Generally speaking, the board has the authority to supervise the execution of duties ofindividual directors. The TCFD recommends the board to supervise climate-related issues anddisclose the supervisory structure for the same.
In recommended disclosure b), the TCFD recommendations mention the term“management-level positions.” The term in this context, however, refers not to the personnel
with positions responsible for managing the workplace according to labor laws, etc., but to the
executive-level personnel given the practical responsibility of assessing and managing climaterelated issues by companies.
As issues of interest to investors, the TCFD recommendations mention the role of the board

Chapter 3
Chapter 4

in providing oversight on the response to climate change, and the role of management inassessing and managing the risks and opportunities of climate change. An important step, in
responding to the interests of investors, is to show the effectiveness of the organizational
structure by demonstrating, for example, how discussions on climate change are conducted
and whether such discussions are reflected in management. This is to be done by disclosing
not only the organizational structure, including the positioning and roles of the Environmental
Committee and the Sustainability Committee headed by the Board of Directors and the top
management, but also the specific roles of the constituent organizations and managers, andthe process by which the discussions are reflected in management.
The following is a representative case example of governance disclosures related to climaterelated issues.

Appendix30

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Establishing committees and promoting activities related to climatechangeChapter 2

Kao Corporation has established an ESG Committee under its Board of Directors to
discuss and determine the direction of activities related to its ESG strategy. The ESG
Committee is responsible for managing opportunities related to climate change issues,
while the Internal Control Committee is responsible for risk management under thesupervision of the Board of Directors. The company reports that the ESG Committee
meets four times a year and the Internal Control Committee meets at least once a year.

Chapter 1

Case example 4

Chapter 3
Chapter 4
Appendix

Source: Kao Corporation “Kao Sustainability Data Book 2020” P. 86

31

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1

D. Strategy
The TCFD recommendations recommend the following disclosures under Strategy.

Chapter 2
Chapter 3
Chapter 4

Strategy: Disclose the actual and potential impacts of climate-related risks andopportunities on the organization’s businesses, strategy, and financial planning wheresuch information is material.
Recommended
Guidance for All Sectors
Disclosure a)
Organizations should provide the following information:
 a description of what they consider to be the relevant short-,
Describe themedium-, and long- term time horizons, taking into consideration
climate-related
the useful life of the organization’s assets of infrastructure andrisks andthe fact climate-relate issues often manifest themselves over theopportunities
medium and longer terms.
the organization  a description of the specific climate-related issues for each time
has identified
horizon (short, medium, and long term) that could have aover the short,material financial impact on the organization
medium, and a description of the process(es) used to determine which risks
long term.
and opportunities could have a material financial impact on theorganization.

Appendix

Recommended
Disclosure b)
Describe theimpact ofclimate-relatedrisks andopportunities ontheorganization’s
businesses,
strategy, andfinancialplanning.

Organizations should consider providing a description of their risks
and opportunities by sector and/or geography, as appropriate.
Guidance for All Sectors
Building on recommended disclosure (a), organizations should
discuss how identified climate-related issues have affected theirbusinesses, strategy, and financial planning.
Organizations should consider including the impact on theirbusinesses and strategy in the following areas: Products and services
 Supply chain and/or value chain Adaptation and mitigation activities
 Investment in research and development
 Operations (including types of operations and location offacilities)
Organizations should describe how climate-related issues serve as
an input to their financial planning process, the time period(s) used,and how these risks and opportunities are prioritized.
Organizations’ disclosures should reflect a holistic picture of theinterdependencies among the factors that affect their ability to32

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Organizations should consider discussing: where they believe their strategies may be affected by climaterelated risks and opportunities
 how their strategies might change to address such potential risks
and opportunities
 the climate-related scenarios and associated time horizon(s)considered

33

Appendix

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), PP. 20-21.

Chapter 4

Describe theresilience of theorganization’s
strategy, taking
intoconsiderationdifferent
climate-related
scenarios,
including a 2 °C
or lower
scenario.

Chapter 3

Recommended
Disclosure c)

If climate-related scenarios were used to inform the organization’s
strategy and financial planning, such scenarios should be described.
Guidance for All Sectors
Organizations should describe how resilient their strategies are toclimate related risks and opportunities, taking into consideration atransition to a lower-carbon economy consistent with a 2 °C or lower
scenario and, where relevant to the organization, scenarios
consistent with increased physical climate-related risks.

Chapter 2

Organizations should also consider including in their disclosures theimpact on financial planning in the following areas: Operating costs and revenues Capital expenditures and capital allocation
 Acquisitions or divestments Access to capital

Chapter 1

create value over time.

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2

Commentaries
The relationship between the three categories of a), b), and c) in the above guidance can becharacterized follows.
First, with regard to the relationship between recommended disclosures a) and b),
recommended disclosure a) requires organizations to identify short-, medium-, and long-termrisks and opportunities (regardless of whether or not a scenario analysis is conducted), while
recommended disclosure b) requires organizations to explain the impacts of climate-related
issues on businesses, strategies, and financial planning based on such risks and opportunities.
Second, with regard to recommended disclosure c), the scenario analysis mentioned herein
also includes elements of recommended disclosures a) and b). Therefore, organizations

Chapter 3

implementing recommended disclosure c) also satisfy recommended disclosures a) and b).
Important points at issue for recommended disclosures a), b), and c) are respectively
explained below.

(1) Description of recommended disclosure a)

Chapter 4

The TCFD’s recommended disclosure a) under Strategy encourages organizations to explain
specific climate-related issues that would have material financial impacts in short-, medium-,and long-term time frames.
Recommended
Disclosure a)

Appendix

Describe theclimate-relatedrisks andopportunities
the organization
has identified
over the short,medium, andlong term.

Guidance for All Sectors
Organizations should provide the following information:
 a description of what they consider to be the relevant short-,
medium-, and long- term time horizons, taking into consideration
the useful life of the organization’s assets of infrastructure andthe fact climate-relate issues often manifest themselves over the
medium and longer terms.
 a description of the specific climate-related issues for each time
horizon (short, medium, and long term) that could have amaterial financial impact on the organization
 a description of the process(es) used to determine which risks
and opportunities could have a material financial impact on theorganization.
Organizations should consider providing a description of their risks
and opportunities by sector and/or geography, as appropriate.

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.20.

34

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 3
Chapter 4

Task Force is, therefore, not defining time frames and encourages preparers to decide
how to define their own time frames according to the life of their assets, the profile ofthe climate-related risks they face, and the sectors and geographies in which they
operate.
In assessing climate-related issues, organizations should be sensitive to the timeframes used to conduct their assessments. While many organizations conduct
operational and financial planning over a 1-2-year time frame and strategic and capitalplanning over a 2-5-year time frame, climate-related risks may have implications for an
organization over a longer period. It is, therefore, important for organizations to consider
the appropriate time frames when assessing climate-related risks.

Chapter 2

8. Time Frames for Short, Medium, and Long Term
As part of the Task Force’s second public consultation, some organizations asked theTask Force to define specific ranges for short, medium, and long term. Because the timingof climate-related impacts on organizations will vary, the Task Force believes specifying
time frames across sectors for short, medium, and long term could hinder organizations’consideration of climate-related risks and opportunities specific to their businesses. The

Chapter 1

For specific context on short-, medium- and long-term time frames, the descriptions in “8.
Timeframes for the short, medium, and long term” in “E. Key Issues Considered and Areas for
Future Work” in the TCFD recommendations serve as a useful reference.

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.38.

strategic and capital plans. Furthermore, the year 2050 is attracting attention as a milestone
for climate change measures: the IPCC reports envisage substantial reductions by 2050, andmany countries set 2050 as a target year in their long-term climate strategies. Existingmaterials to read in establishing such a long-term time frame may include, for example, reports
on scenarios such as the International Energy Agency (IEA) for transition risks (See Reference1), or information on physical risks such as reports by international organizations that consider
the impacts by industry and region (See Reference 2).

35

Appendix

The second paragraph states that climate-related risks “may have implications for an
organization over a longer period” and “it is, therefore, important for organizations to consider
the appropriate time frames when assessing climate-related risks.” What can be interpreted
as an appropriate time frame depends on the climate-related risks and opportunities that are
expected to have impact. The physical risks posed by climate change and the innovations on
low-carbon technologies, however, encompass issues that will take much longer to address
than is allowed within the time frames envisaged in the operating and financial plans orChapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2

Reference 1: Overview of available IEA scenarios that can be used when assessing transition
risk
IEA World Energy Outlook (WEO): The World Energy Outlook is IEA's annual long-term
energy-related forecast and flagship report. WEO 2019, the most recent issue as of the
publication of this Guidance, forecasts energy consumption by region, sector, and energy
source through 2040. There are three scenarios: Current Policies Scenario, Stated Policies
Scenario, and Sustainable Development Scenario. The Sustainable Development Scenario
incorporates emissions reductions consistent with the Paris Agreement, as well as theachievement of other objectives related to universal energy access and cleaner air by 2030.
IEA Energy Technology Perspectives (ETP): Energy Technology Perspectives provides future

Chapter 3

projections focusing on energy technologies by IEA. These IEA perspectives project energy
consumption by region, sector, and energy source over longer periods than are covered under
the WEO projections (up to 2060). According to IEA, a series of three ETP scenarios wereprepared to complement those explored in the WEO: Reference Technology Scenario (RTS), 2
Degrees Scenario (2DS), and Beyond 2 Degrees Scenario (B2DS). The most recent version of
the ETP as of the publication of this Guidance was published in 2017, though a new ETP withimproved consistency with the WEO is scheduled to be published in September 2020.

Chapter 4

Reference 2: Information on scenarios that can be used when assessing physical risk
“Advancing TCFD Guidance on Physical Climate Risks and Opportunities,” published by the

Appendix

European Bank for Reconstruction and Development (EBRD) in 2018, examines indicators
related to physical risks and resilience (opportunities) and assesses physical risks such as
extreme rainfall, floods, and sea level rises at three levels according to industries.

36

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Recommended
Disclosure b)

If climate-related scenarios were used to inform the organization’s
strategy and financial planning, such scenarios should be
described.
Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017) P.20.

37

Appendix

Organizations should describe how climate-related issues serve as
an input to their financial planning process, the time period(s)used, and how these risks and opportunities are prioritized.
Organizations’ disclosures should reflect a holistic picture of theinterdependencies among the factors that affect their ability tocreate value over time. Organizations should also consider
including in their disclosures the impact on financial planning in thefollowing areas: Operating costs and revenues Capital expenditures and capital allocation
 Acquisitions or divestments Access to capital

Chapter 4

Organizations should consider including the impact on theirbusinesses and strategy in the following areas: Products and services
 Supply chain and/or value chain Adaptation and mitigation activities
 Investment in research and development
 Operations (including types of operations and location offacilities)

Chapter 3

Describe theimpact of climate
related risks andopportunities on
the organization’s
businesses,
strategy, andfinancial planning.

Guidance for All Sectors
Building on recommended disclosure (a), organizations should
discuss how identified climate-related issues have affected theirbusinesses, strategy, and financial planning.

Chapter 2

The TCFD’s recommended disclosure b) under Strategy encourages organizations to explain
the implications of climate-related issues for their businesses, strategies, and financial
planning.

Chapter 1(2) Description of recommended disclosure b) (how to disclose efforts inresearch and development)Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2

As shown above, the TCFD recommendations list the following as areas in which climaterelated risks and opportunities affect the businesses and strategies of organizations: “products
and services,” “supply chain and/or value chain,” “adaptation and mitigation activities,”“investment in research and development,” and “operations (including types of operations andthe locations of facilities).”Among the items mentioned above, “investment in research and development” was themost frequent topic of questions posed through the TCFD Study Group. Furthermore, recent
guidance documents indicate that opportunities, as well as risks, are important for climaterelated information2021. The “Green Investment Guidance” states that innovation, including
research and development, makes up an important part of company efforts to take advantage

Chapter 3
Chapter 4of climate-related opportunities, and describes the importance of understanding andevaluation of innovation by investors and other stakeholders. For these reasons, "investment
in research and development" is explained below.
When discussing investment in research and development, companies should describe whysuch research and development activities are necessary in relation to the future risks andopportunities they have identified. In particular, companies should actively describe theirefforts when investing in research and development activities that contribute significantly to
GHG emission reductions, such as efforts for energy-efficiency and the effective utilization of
CO2 emitted. There is a growing international discussion on finance for initiatives that
contribute to a transition towards the realization of the goals of the Paris Agreement. The

Appendix

International Capital Markets Association (ICMA) has established a working group on transition
finance to discuss the issue (See Column 6). Since it is important, with respect to transition
finance, that companies explain their strategies etc. on transition, active information
disclosure is useful from the perspective of obtaining such finance.
Another important step, from the perspective of addressing physical risks, is to conduct
research and development focused on issues such as business continuity in times of extreme
weather events (e.g., maintaining supply chains, ensuring stable supply of energy), stableprocurement of water, stable supply of food, and so on.
When disclosing specific research and development activities, companies should describe
the total spending on research and development activities, the budget allocations by theme,
the outcomes achieved through the commercialization of such technologies (e.g., contribution
to revenues, reduction of CO2 emissions), and the relationships between research anddevelopment activities and the outcomes. Disclosing such information will help clarify thesignificance of research and development in companies, and as a result, investors will be able
to understand the long-term strategy of companies and the direction of innovation initiatives.
20"Whilst many investors are considering climate-related issues predominantly through a risk lens, they also want tounderstand opportunities." (FRC, 2019, Climate-related corporate reporting – Where to next? P.13)
21 "Companies that invest in reducing their carbon emissions and in capitalizing on opposites presented by the transition
will strengthen their position." (WBCSD TCFD Chemical Sector Preparation Forum, 2019, Climate-related financial disclosureby chemical sector companies: Implementing the TCFD recommendations, P.9)

38

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Clarifying the breakdown of research and development expenditures
and the roadmap to the commercialization of technologies

Sumitomo Chemical Co., Ltd. discloses its total expenditures on research andChapter 2

Case example 5

Chapter 1

The significance of basic research and development efforts, meanwhile, can be to somedegree clarified by describing the awareness of issues behind such efforts, as well as areas oftechnology that will be potentially impacted by the research and development in the future.
Another effective way companies can show their active engagement in innovation related
to climate change is to participate in innovation-related initiatives by the government andindustry associations, and to actively disseminate information on the same. (See Column 7 )development, capital investment, and investments and loans, along with its allocations ofspending by theme, for the past three years.

Chapter 3
Chapter 4
Appendix

Source: Sumitomo Chemical Co., Ltd. "Investor's Handbook 2019" P.9

The company also describes future opportunities related to cathode material, the main
component of lithium-ion batteries, in relation to future market trends and the company’s
development schedule, and clarifies its timeline for developing next-generation products
and the timing of market launches in response to future demand estimates.

39

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2
Chapter 3
Chapter 4
Appendix
Source: Sumitomo Chemical Co., Ltd. "Investor's Handbook 2019" P. 36

40

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 2

International discussions on transition toward the realization of theobjectives of the Paris Agreement ·································································In recent years, attention has been focused on encouraging a transition toward therealization of the goals of the Paris Agreement, mainly through efforts towards low carbon
emission in industries that emit greenhouse gases. Discussions are underwayinternationally for the establishment of finance cases, standards, and guidance for such
efforts.
In particular, the International Capital Markets Association (ICMA) established a“Climate Transition Finance Working Group” in June 2019 and is discussing the concept oftransition finance with a view to issuing future guidance.

Chapter 1

Column 6[Major Discussions on Transition Finance]
Discussion on transition financeInitiative (CFLI) report “Financingthe Low-carbon Future” published(September 2019)
This report refers to theestablishment of a transition index
as aleverage to expand
opportunitiesforlow-carbon
investment.
(3) FTSE “TPI Climate Transition Index (3) “Final Report of the Expert Panel on
Series” established (January 2020)
Sustainable Finance - Mobilizing
 FTSE created a transition index that
Finance for Sustainable Growth”
evaluates the following parameters
published by Canada (June 2019)by issuer: (i) fossil fuel reserves, (ii)  In its recommendation 9, this final
carbon emissions, (iii) green
report states that “Canada will
revenues, (iv) management quality,
expand its green bond market andand (v) carbon performance.
establish an international standard
for transition-oriented finance”
Source: METI, “Study Group on Financing for Environmental Innovation Finance (1st Meeting)”

41

Appendix(September 2019)
This is a bond with a maturity of five
years: if the established KPI (raise
the proportion of renewable energy from 46% to 55%) is not achieved
after 2 years, the interest rate of thebond will increase by 25 basis
points.

Chapter 4(1) AXA “Guidelines for Transition (1) International
CapitalMarkets
Bond” announced (June 2019)
Association(ICMA)“Climate With a view to promoting a lowTransition Finance Working Group”
carbon society, this guideline aims
established (June 2019)to provide finance to issuers that  ICMA is discussing a concept ofcurrently have the goal of moving totransition finance with a view togreen in the future, even if theirissuing future guidance at the WG.
current status is brown.
(2) ENEL “SDG Linked Bond” issued (2) Climate
Finance
Leadership

Chapter 3

Specific actions by private companies

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1

In response to these international movements, METI has established a “Study Group on
Environmental Innovation Finance” to conduct discussions. In March 2020, METI
formulated and internationally announced a “Concept Paper on Climate Transition
Finance Principles.”[Summary of the Concept Paper on Climate Transition Finance Principles]

Chapter 2<Basic Approach>In addition to promoting financing for an already de/low-carbonized activity, forinstance in the area of renewable energies, it is important to promote financing fortransition actions towards the de/low-carbonization of GHG emitting industries andChapter 3

sectors as well, as a part of climate finance contributing to the mitigation of climatechange.
In developing the concept of “financing for a transition,” two points are significant:(1) international principles should adopt an inclusive and flexible approach that can beapplied to various circumstances of countries and regions without excluding specificsectors/industries or technologies from its scope, and (2) further details should beconsidered by each country or region based on its respective circumstances.

Chapter 4<Proposal for international principles on transition finance>(Standards for alignment with the Paris Agreement)
It should be finance for a transition towards achieving the Paris Agreement goals andAppendix

the reduction target of each country based on the Paris Agreement.
(Standards for business entities)
It should be finance for a business entity that is proactively pursuing a transition,
including for example by providing a mid- to long-term vision or an action plan.
(Standards for projects)
It should be finance for a project in a GHG emitting industry or sector that achieves
or implements the level of best performance of low GHG emissions in line with areputable global or regional standard for such a sector or industry.
Source: TCFD Consortium, based on the “Concept Paper on Climate Transition Finance Principles”
published by METI22

In transition finance, the entity implementing the project must explain its strategy fortransition, etc. The information disclosed according to the TCFD recommendations canthus be used for this purpose. Disclosure according to TCFD recommendations has been
increasingly utilized, especially among those involved in the stock market. Considering theneed for transition and the importance of disclosure of related initiatives, however, the
TCFD recommendations is expected to be further used in corporate evaluations of bonds
and loans.
22

https://www.meti.go.jp/english/press/2020/0331_004.html

42Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

43

Appendix

https://www.kantei.go.jp/jp/singi/tougou-innovation/pdf/kankyousenryaku2020.pdf
https://www.meti.go.jp/english/press/2020/0707_004.html
25 https://www.challenge-zero.jp/
24

Chapter 4

23

Chapter 3

support for Challenge Zero, and more than 300 examples of such challenges which seek
to develop, actively implement, disseminate and finance Net-zero Emission Technology(including transition technologies) are announced.

Chapter 2announced a “Zero Emission Challenge 24 ” which aims to support corporate actions toachieve a decarbonized society through innovation. Under this initiative, METI
coordinates with Keidanren (Japan Business Federation) and New Energy and Industrial
Technology Development Organization (NEDO) and lists companies that take actions withan aim to achieve a decarbonized society through innovation (List of Companies Taking on
the Zero-Emission Challenge), and provides information that are useful to investors (nameof company, areas of action, stage of R&D). The initial list of companies is expected to beannounced around October 2020.
In June 2020, Keidanren launched the “Challenge Zero (Challenge Net Zero Carbon
Innovation)” as an initiative to support efforts by companies and organizations to realize
a decarbonized society25. More than 130 companies and organizations expressed their

Chapter 1

Column 7 Initiatives on climate change-related innovation ···········································The government of Japan issued a “Progressive Environment Innovation Strategy” inJanuary 2020 23 . The Strategy classifies innovative technologies that enable carbon
neutrality into 5 areas, with a further division into 16 issues and 39 themes, and indicatesan "Acceleration Plan" to realize early and society-wide implementation of thetechnologies. In order to promote private sector investment in the 5 innovativetechnology areas, the Plan encourages the disclosure of good practices by companies
based on the TCFD recommendations.
In July 2020, based on the strategy mentioned above, the government of Japan alsoChapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1(3) Description of recommended disclosure c)
The TCFD’s recommended disclosure c) under Strategy encourages organizations to describe
the resilience of their strategies under different climate-related scenarios, including a 2°C or
lower scenario.

Chapter 2

Recommended
Disclosure c)
Describe theresilience of the

Guidance for All Sectors
Organizations should describe how resilient their strategies are toclimate related risks and opportunities, taking into consideration atransition to a lower-carbon economy consistent with a 2°C or
lower scenario and, where relevant to the organization, scenarios

Chapter 3
Chapter 4organization’s
strategy, taking
into considerationconsistent with increased physical climate-related risks.

different climaterelated scenarios,
including a 2°C or
lower scenario.

 where they believe their strategies may be affected by climaterelated risks and opportunities
 how their strategies might change to address such potential
risks and opportunities
 the climate-related scenarios and associated time horizon(s)Organizations should consider discussing:

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017) P.21.

Appendix

Descriptions of the scenario analysis are provided below in accordance with the specificprocedures described in a) to c).
I. Considering strategy based on scenariosi) Setting the scenarios
The TCFD recommends organizations to develop two or more plausible scenarios, assess thepotential impacts of each scenario on their businesses, and clarify countermeasures. Manycompanies, however, have little experience conducting scenario analysis. Often, they have noidea of how to develop scenarios or find suitable methods to use for analysis. Many investors,
meanwhile, are of the view that scenario analysis is useful even if the results cannot be
quantified with a high degree of certainty 26 . Scenario analysis and related dialogue also

26

“Given the uncertainty involved to climate change, scenario analysis is considered important and is one of the key
elements of the TCFD. Whilst implementation is developing, investors are supportive of companies evolving their approach.”(FRC, 2019, Climate-related corporate reporting – Where to next? P.19)
Investors, however, are of the firm belief that a disclosure may still be helpful and assuring even if the results cannot be
quantified with high certainty. (Id. P. 20)

44

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 3
Chapter 4

While the Task Force recognizes the complexities of scenario analysis and thepotential resources needed to conduct it, organizations are encouraged to use scenario
analysis to assess climate-related risks and opportunities. For organizations justbeginning to use scenario analysis, a qualitative approach that progresses and deepens
over time may be appropriate. Greater rigor and sophistication in the use of data andquantitative models and analysis may be warranted for organizations with more
extensive experience in conducting scenario analysis. Organizations may decide to use
existing external scenarios and models (e.g., those provided by third-party vendors) ordevelop their own, in-house modeling capabilities. The choice of approach will dependon an organization’s needs, resources, and capabilities.

Chapter 2

D. Scenario Analysis and Climate-Related Issues
4. Applying Scenario Analysis

Chapter 1

provide an opportunity for companies to identify their own risks and opportunities, and toreview their strategies and business models27. It is therefore desirable not only for investors,
but also for companies themselves, to engage in scenario analysis.
The methods of scenario analysis are broadly categorized into two types: (1) creating theorganization’s own scenarios and (2) using existing scenarios (e.g., those provided by industry
groups or international organizations) as a reference. The TCFD recommendations state thateither of the two methods is suitable.

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.29.

27

TCFD Consortium, 2019, Guidance on Utilizing Climate Information to Promote Green Investment (Green Investment
Guidance), P.8

45

Appendix

Regardless of the method an organization uses for scenario analysis, the analysis should
assume two or more scenarios rather than just one, to better demonstrate corporate resiliencein the face of future uncertainties.
When interpreting the results of a scenario analysis, an organization should disclose not
only the conclusions, but also the consideration process leading up to the conclusions, offeringboth scenario narratives (or storylines) and logical explanations, in order to deepen theunderstanding of investors and other stakeholders.

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1ii) Conducting a scenario analysis using existing scenariosa.) Example in which an organization used a demand forecast for a product in anexisting scenario to analyze its efforts and explain its resilience (case example 6)b.) Example in which an organization used the rate of GHG emissions reduction in anexisting scenario to explain its efforts (case example 7)

Chapter 2

Case example 6

Using the demand forecast for a product in an existing scenario

Based on the IEA 2°C and Beyond 2°C scenarios, Toyota Motor Corporation has
established a vision of the future society and has studied its impact on its strategy andfinances. While the proportion of ZEV (vehicles that does not emit GHGs while driving) in

Chapter 3

the 2030 milestone stays below that in the Beyond 2°C scenario (even though it exceedsthat in the IEA 2°C scenario), the company maintains that it can respond flexibly bychanging its lineup of power trains or elevating its sales target for electric vehicles.

Chapter 4
Appendix
Source: Toyota Motor Corporation “Sustainability Data Book 2019” P. 54

46

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Using the rate of GHG emissions reduction in an existing scenario

Note: The TCFD recommends the disclosure of strategy by individual companies.

Chapter 3

Therefore, it is recommended that each company discloses its strategy by building on
industry-wide efforts, as shown here.

Chapter 2

In its long-term vision for climate change mitigation, the Japan Iron and SteelFederation draws upon the rate of GHG emissions reduction required for the industrial
sector (30% emission reduction by 2060) under the 2°C scenario of the IEA Energy
Technology Perspectives (ETP). The federation concluded that the iron & steel sector canachieve roughly the same level of GHG emissions reduction as that envisaged by ETP
through the implementation of BAT and innovative technologies, in addition to the effectsof zero emissions achieved in the electric utilities sector.

Chapter 1

Case example 7

Chapter 4
Appendix

Source: Japan Iron and Steel Federation, “JISF Long-term vision for climate change mitigation –A challenge
towards Zero-carbon STEEL.” P.13

47

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2iii) Existing scenarios that can be referenced
As described in i), existing external scenarios can be used in a scenario analysis.
The outline and usage of these scenarios are described in detail in the “Practical guide for
Scenario Analysis in line with the TCFD recommendations: 2nd edition” (See Column 8)
published by the Ministry of the Environment (MOE) in March 2020. The guide provides adetailed explanation of the scenario analyses of companies and lists the following scenarios asapplicable.
Table 1 Examples of Applicable Scenarios

TargetApplicable scenarios
 IEA WEO SDS / ETP 2DS / IEA WEO STEPS / IEA WEO NPS (Scenarios
in which the 2°C target is achieved and is not achieved) Deep Decarbonization Pathways Project (2°C target achieved)
 IRENA REmap (Double the renewable energy ratio by 2030)
 Greenpeace Advanced Energy [R] evolution (2°C target achieved)

Physical risk

 IPCC RCP (representative concentration pathway) scenarios: RCP 8.5,
RCP 6.0, RCP 4.5, and RCP 2.6

Chapter 3

Transition risk

Chapter 4

Source: MOE, Practical guide for Scenario Analysis in line with the TCFD recommendations: 2nd edition

Parameters related to transition risk and physical risk are also listed in the Appendices of
the guide mentioned above.

Appendix48

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendationsof points for advancing scenario analysis, (2) provides 12 examples of companies that werechosen in the program in 2019, and (3) provides sources of external data and a collectionof tools for reference.

Chapter 3

second edition of the practical guide was published in March 2020 (hereinafter referred
to as the “practical guide”). The revised practical guide (1) adds a step-by-step description

Chapter 2

Practical guide for Scenario Analysis in line with the TCFD
recommendations: 2nd edition ······································································
Although the TCFD recommendations encourage companies to conduct scenario
analyses when disclosing their strategies, the scenario analysis process has rarely been
disclosed in an easy-to-understand manner. In March 2019, MOE released the “Practicalguide for Scenario Analysis in line with TCFD recommendations”, based on a support
program to help companies analyze their own climate-related risks and opportunities inline with the TCFD recommendations. The program was conducted mainly in industries
considered to be vulnerable to climate change, for the purpose of enabling companies tosmoothly carry out scenario analyses in line with the TCFD recommendations. A revised

Chapter 1

Column 8

Chapter 4
Appendix

Source: MOE, 2020, Practical guide for Scenario Analysis in line with TCFD recommendations 2 nd edition28

28

http://www.env.go.jp/policy/policy/tcfd/TCFDguide_2nd_EN.pdf

49

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2

Chapter 1 of the practical guide explains the positioning of scenario analysis in the TCFD
recommendations, and Chapter 2 explains the steps of a scenario analysis in detail. The
scenario development process is divided into six steps: (1) ensure that governance is inplace, (2) assess the materiality of climate-related risks, (3) identify and define a range of
scenarios, (4) evaluate business impacts, (5) identify potential responses, and (6)document and disclose. A series of To-Do’s are illustrated for each step.
Chapter 3 provides examples of scenario analyses by a total of 18 manufacturers andnon-manufacturers. As shown above, examples of analysis are provided for Steps 2
through 5: assessing the materiality of climate-related risks (Step 2), identifying anddefining a range of scenarios (Step 3), evaluating business impacts (Step 4), and identifying

Chapter 3

potential responses (Step 5). These examples are helpful for the institutions engaging in
scenario analysis.
In addition to the above, this guide includes appendices with information to identify
transition risk and physical risk parameters from key scenario tools, as a reference for
institutions conducting scenario analysis.

Chapter 4
Appendix

Transition
Risk

 IEA World Energy Outlook (WEO) 2019
 IEA Energy Technology Perspectives (ETP) 2017
 PRI The Inevitable Policy Response (IPR)
 SSP (Shared Socioeconomic Pathways) Public Database Ver 2.0

PhysicalRisk

 AQUEDUCT Water Tool (WRI) Climate Change Knowledge Portal (World Bank)
 Climate Impact Viewer (AP-PLAT) Web GIS (A-PLAT: Japan only)

Source: MOE, 2020, A Practical guide for Scenario Analysis in line with TCFD recommendations 2 nd edition

50

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 4

For an organization in the initial stages of implementing scenario analysis or withlimited exposure to climate-related issues, the Task Force recommends disclosing how
resilient, qualitatively or directionally, the organization’s strategy and financial plans may
be to a range of relevant climate change scenarios. This information helps investors,
lenders, insurance underwriters, and other stakeholders understand the robustness of anorganization’s forward-looking strategy and financial plans across a range of possible
future states.

Chapter 3

rigorous qualitative and, if relevant, quantitative scenario analysis with respect to key
drivers and trends that affect their operations (…).

Chapter 2

The Task Force believes that all organizations exposed to climate-related risks should
consider (1) using scenario analysis to help inform their strategic and financial planning
processes and (2) disclosing how resilient their strategies are to a range of plausible
climate-related scenarios. The Task Force recognizes that, for many organizations,scenario analysis is or would be a largely qualitative exercise. However, organizations withmore significant exposure to transition risk and/or physical risk should undertake more

Chapter 1

II. Quantitative Aspects for Scenario Analysis
The TCFD recommendations explain the level of quantitative disclosure in a general scenario
analysis:

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures” (June2017), PP.27 - 28.

large, medium, and small.

51

Appendix

Feedback obtained from financial institutions views such as “We do not require an elaborate
scenario analysis but use the analysis to check how organizations see risks and opportunities
of climate change and manage their businesses accordingly.” In disclosing a scenario analysis,an organization should therefore explain the underlying assumptions, as well as the reasonsfor the scenario selection.
When conducting a qualitative scenario analysis, one possible way is to describe the impactsof climate change not in absolute values but on a relative scale, applying designations such as

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1

Case example 8

A company conducting a qualitative scenario analysis

Mitsubishi Corporation presents its recognition of the business environment andsummarizes its related policies and initiatives based on a global demand forecast – a
trajectory forecast for demand change expressed in seven levels, from the present until
2040 - 2050 – under several different climate scenarios, including those in the IEA’s World
Energy Outlook (WEO) and Energy Technology Perspectives (ETP).

Chapter 2
Chapter 3
Chapter 4
Appendix
Source: Mitsubishi Corporation “ESG DATA BOOK 2019” P. 34

52

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures” (June2017), P.28.

Chapter 4

Resilience disclosures describe the ability of an organization to continue its business in a setof diverse future scenarios presented in the scenario analysis.
Examples of resilience disclosures include identifying medium- and long-term risks

Chapter 3

performance implications under the various scenarios considered, potential qualitative
or directional implications for the organization’s value chain, capital allocation decisions,research and development focus, and potential material financial implications for theorganization’s operating results and/or financial position

Chapter 2

D. Scenario Analysis and Climate-Related Issues
4. Applying Scenario Analysis(abbreviated)
Organizations with more significant exposure to climate-related issues should consider
disclosing key aspects of their scenario analysis, such as those described below.
(abbreviated)
4. Information about the resiliency of the organization’s strategy, including strategic

Chapter 1

III. Describing resilience
The TCFD recommends the following disclosures describing an organization’s resilience.

(transition risks and physical risks) and opportunities, and the status of management andmanagement’s efforts to respond to such risks and opportunities.

Appendix53

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1

E. Risk Management
The TCFD recommends the following disclosures under Risk Management.

Chapter 2
Chapter 3

Risk Management: Disclose how the organization identifies, assesses, and manages
climate-related risks.
Recommended
Guidance for All Sectors
Disclosure a)
Organizations should describe their risk management
processes for identifying and assessing climate-related risks. An
Describe theimportant aspect of this description is how organizationsorganization’s
determine the relative significance of climate-related risks inprocesses for
relation to other risks.
identifying andassessing climaterelated risks
Organizations should describe whether they consider existingand emerging regulatory requirements related to climatechange (e.g. limits on emissions) as well as other relevant
factors considered.

Chapter 4

Organizations should also consider the following: processes for assessing the potential size and scope ofidentified climate-related risks
 definitions of risk terminology used or references to existingrisk classification frameworks used

Appendix

Recommended
Disclosure b)
Describe theorganization’s
processes for
managing climaterelated risks
Recommended
Disclosure c)
Describe how
processes for
identifying, assessing,and managing climaterelated risks areintegrated into theorganization’s overallrisk management.

Guidance for All Sectors
Organizations should describe their processes for managing
climate-related risks, including how they make decisions to
mitigate, transfer, accept, or control those risks. In addition,organizations should describe their processes for prioritizing
climate-related risks, including how materiality determinations
are made within their organizations.
Guidance for All Sectors
Organizations should describe how their processes for
identifying, assessing, and managing climate-related risks areintegrated into their overall risk management.

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures” (June2017), PP. 21-22.

54

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2

A “Risk Management” disclosure in the TCFD recommendations is interpreted as adisclosure of processes for identifying, assessing and managing climate-related risks. The
financial impact of risks identified as a result of “Risk Management” is classified into the items
disclosed in “Strategy,” and the organizational structure of the supervision/implementation ofrisk management in the management of the entire organization is classified into the items
disclosed in “Governance.”
As for the methods used to identify and prioritize the relative materiality of climate-relatedrisks, companies can conduct materiality assessments using a materiality matrix29 (see Case
example 9).
Another effective approach is to concretely present the organization’s management
processes for climate-related risks using figures and written narratives (see Case example 10).

Chapter 3
Chapter 4
Appendix

29

A method of comparing the relative materiality of climate-related risks based on a two-axis graph plotting out various
sustainability issues, with one axis plotting the importance of the issues to stakeholders and the other plotting thesignificance of the issues to the organization.

55

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1

Case example 9

Describing climate-related risk management processes and systems

Mitsubishi Corporation uses flow charts to describe its processes and management
systems for assessing and identifying climate-related risks. The company also states thatthe results of its considerations on climate-related risk management are used to formulate
strategies and screen the investment and loan proposals of individual businesses.

Chapter 2
Chapter 3
Chapter 4
Appendix
Source: Mitsubishi Corporation “ESG DATA BOOK 2019” P. 43

56

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Use of a materiality matrix

Kao Corporation discloses a materiality matrix, mapping the priority for the
stakeholders and the priority for the company.

Chapter 1

Case example 10

Chapter 2
Chapter 3
Chapter 4
Appendix

Source: Kao Corporation “Sustainability Data Book 2020” P.13

57

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1

F. Metrics and Targets
The TCFD recommends the following disclosures under Metrics and Targets.
Metrics and Targets: Disclose the metrics and targets used to assess and manage
relevant climate-related risks and opportunities, where such information is material.

Chapter 2

Recommended
Disclosure a)
Disclose the metrics

Chapter 3
Chapter 4

used by theorganization toassess climaterelated risks andopportunities in linewith its strategy andrisk management
process

Guidance for All Sectors
Organizations should consider including metrics on climaterelated risks associated with water, energy, land use, and waste
management where relevant and applicable.
Where climate-related issues are material, organizations should
consider describing whether and how related performance
metrics are incorporated into remuneration policies
Where relevant, organizations should provide their internalcarbon prices as well as climate-related opportunity metrics
such as revenue from products and services designed for alower-carbon economy.
Metrics should be provided for historical periods to allow for

Appendix

trend analysis. In addition, where not apparent, organizations
should provide a description of the methodologies used to
calculate or estimate climate-related metrics.
Recommended
Disclosure b)
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope 3
greenhouse gas

Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG
emissions and, if appropriate, Scope 3 GHG emissions and therelated risks.
GHG emissions should be calculated in line with the GHG
Protocol methodology to allow for aggregation andcomparability across organizations and jurisdictions. As(GHG) emissions,and the related risks. appropriate, organizations should consider providing related,
generally accepted industry-specific GHG efficiency ratios.
GHG emissions and associated metrics should be provided forhistorical periods to allow for trend analysis. In addition, where
not apparent, organizations should provide a description of themethodologies used to calculate or estimate the metrics
58

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

targets.

Source: “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017) , PP.22-23

with respect to assessment when calculating Scope 3 GHG emissions are not identical. Hence,a simple comparison between companies is not possible31.
30“An approach is to ... explain changes in calculations, changes from the previous year and scope and boundary” (FRC,
2019, Climate-related corporate reporting – Where to next? P.23)
31 “Corporate Value Chain (Scope3) Accounting and Reporting Standard” includes the following information.
1.5 Scope of the standard(…)“Use of this standard is intended to enable comparisons of a company’s GHG emissions over time. It is not designed tosupport comparisons between companies based on their scope 3 emissions. Differences in reported emissions may be a

59

Appendix

For disclosures of Metrics and Targets, the TCFD recommends organizations not to limit
disclosures to items recommended for disclosure, but to use narratives to help investors andother stakeholders understand how such metrics and targets are linked to the organization’svalue creation, and how such metrics are aligned to the organization’s strategy.
A company making a disclosure can deliver information more effectively to investors andother stakeholders by clarifying the preconditions used in establishing the metrics and setting
the targets. The disclosure of any changes to a method for calculating indicators is also
recommended30.
It should also be noted that while the TCFD recommends organizations to disclose Scope 1,
Scope 2, and if appropriate Scope 3 GHG emissions, the boundaries defined by each company

Chapter 4

Where not apparent, organizations should provide a descriptionof the methodologies used to calculate targets and measures

Chapter 3

 whether the target is absolute or intensity based
 time frames over which the target applies
 base year from which progress is measured, and key performance indicators used to assess progress against
targets.

Chapter 2

Describe the targets
used by theorganization to
manage climaterelated risks andopportunities andperformance against

Guidance for All Sectors
Organizations should describe their key climate-related targets
such as those related to GHG emissions, water usage, energy
usage, etc., in line with anticipated regulatory requirements ormarket constraints or other goals. Other goals may include
efficiency or financial goals, financial loss tolerances, avoided
GHG emissions through the entire product life cycle, or net
revenue goals for products and services designed for a lowercarbon economy. In describing their targets, organizations
should consider including the following:

Chapter 1

Recommended
Disclosure c)Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2

One of the metrics included in the TCFD recommendations as an illustrative example is“avoided GHG emissions through the entire product life cycle.” Disclosing GHG emission
reductions in the use phase of products and services, not GHG emissions as a single company,
allows a company to demonstrate the degree to which it contributes to GHG emission
reductions globally through its products and services. Several guidance documents have beendeveloped on the assessment and disclosure of reduction contributions across the value chain(See Column 9). The Green Investment Guidance, meanwhile, cites examples of the viewpoints
of investors and other stakeholders. One investor, for example, requires companies not only
to provide GHG emissions during production but also to explain how the products contributeto GHG emission reductions downstream, while another investor considers that information

Chapter 3

on GHG emission reductions in society as a whole is useful for duly evaluating a company thatis making an effort to reduce GHG emission., even if the company’s business expansion would
increase emissions.

Column 9

Method for assessing and disclosing GHG emission reduction contributions
through the global value chain ·······································································

Chapter 41) Guidelines for Quantifying GHG emission reductions of goods or services throughthe Global Value Chain 32 (METI)
These guidelines are designed to present a framework and fundamental principles forAppendixorganizations for the quantification of the GHG emission reductions in each phase of thelife cycles of products and services (i.e., from the raw materials procurement phase to the
manufacturing phase, use phase, and disposal phase).
The guidelines provide descriptions of the definitions of avoided emissions, steps forquantifying them, and methods for reporting the calculation results, etc.
2) “Contributing to Avoided Emissions through the Global Value Chain - A new
approach to climate change measures by private sectors (GVC Concept Book)” 33(Keidanren)
The book presents the concept and significance of contributing to GHG emission
reductions through the Global Value Chain (GVC), with case examples of “visualizing” suchcontributions by various industries and companies.

result of differences in inventory methodology of differences in company size or structure. Additional measures arenecessary to enable valid comparisons across companies. Such measures include consistency in methodology and data used
to calculate the inventory, and reporting additional information such as intensity ratios or performance metrics.”(Source) GREENHOUSE GAS PROTOCOL “Corporate Value Chain (Scope 3) Accounting and Reporting Standard”
32 https://www.meti.go.jp/press/2017/03/20180330002/20180330002-1.pdf
33 https://www.keidanren.or.jp/policy/vape/gvc2018.pdf

60

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Disclosure of multiple business areas

In its integrated report, the Hitachi Group identifies businesses with a relatively highSource: Hitachi Group "Hitachi Integrated Report 2019" P. 77

34“Investors acknowledged that disclosure is evolving, and that they want to understand the effects on the specificbusiness model and strategy, including on an asset-by-asset basis.” (FRC, 2019, Climate-related corporate reporting – Whereto next?) P.23)

61

Appendix

likelihood of being affected by climate change from its own business portfolio, andprovides an overview of business risks and opportunities based on climate-related
scenarios and their responses. The details, meanwhile, are provided in the Groups’s
sustainability report. The disclosure in the sustainability report considers factors otherthan the environment, in addition to temperature scenarios (2 °C, 4°C), for each business,with the impact for each business, including financial information, fully described.

Chapter 4

Case example 11

Chapter 3

on the current or future revenues and the magnitude of the materiality of climate change.
When companies disclose such information, however, investors and other stakeholders will
require them to disclose the risks and opportunities of individual business models34. If deemedmaterial, therefore, such a disclosure should ideally be considered.
In addition, if companies expect the future expansion of a business in an area that iscurrently small, they should ideally arrange the disclosure according to their expected futurebusiness portfolios by focusing their explanation on that business.

Chapter 2

A company with diverse business models has multiple business domains with different
characteristics. In such a company, the materiality of climate change and business strategies
differ from business to business. The point at issue, when implementing company-wide
disclosure, is therefore to determine the business subjected to the strategy disclosure, as wellas the extent of description.
One approach is to start by identifying climate-related risks and opportunities for individual
business models, and then to examine the potential impacts on the company as a whole based

Chapter 1

G. Disclosure Methods for Companies with Diverse Business
ModelsChapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2
Chapter 3
Chapter 4
Source: Hitachi Group "Hitachi Sustainability Report 2019" P. 53

Appendix62

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Appendix

63

Chapter 4

throughout their supply chains by requiring mid-cap and small- and medium-sized companies
to disclose their GHG emissions. By disclosing their own efforts towards reducing GHG
emissions, mid-cap and small- and medium-sized companies can draw attention from large
companies that seek to reduce GHG emissions throughout their supply chains, and thereby
increase their business opportunities.

Chapter 3

burden for mid-cap and small- and medium-sized companies. Requiring them to implement
disclosure on all recommended disclosure items immediately would be unreasonable. The
preferable option, therefore, is to have small- and medium-sized companies begin bydisclosing information that is manageable, and then to expand the coverage of disclosure instages. In Japan, for example, the Japan Chamber of Commerce and Industry is promoting a“Global Warming Action Declaration” in which small- and medium-sized enterprises declare
and announce their own global warming countermeasures. These efforts are expected to befurther developed to gradually advance companies’ responses to the TCFD recommendations(See Column 10).
There are cases in which large corporate customers seek to reduce GHG emissions

Chapter 2

The TCFD recommendations suggest that all companies, regardless of size, implement
disclosure related to Governance and Risk Management in their financial filings. For
disclosures related to the Strategy as well as Metrics and Targets, the Task Force recommends
that non-financial companies with more than one billion U.S. dollar equivalent (USDE) inannual revenue consider disclosing such information in reports other than financial filings
when the information is not deemed material.
Implementing disclosure in accordance with the TCFD recommendations, however, is a large

Chapter 1

H. Steps for Implementing the TCFD Recommendations at
Mid-cap and Small- and Medium-sized Companies

Chapter 2 Commentaries on Disclosures in Accordance with the TCFD Recommendations

Chapter 1
Chapter 2

Column 10 Initiatives by the Japan Chamber of Commerce and Industry for “Global
Warming Action Declaration” ········································································The Japan Chamber of Commerce and Industry (JCCI) invites companies to submit
declarations on their efforts to address 18 issues related to global warming
countermeasures and announces their declarations on its website. The following is a listof the issues.
1. Working toward
energy conservation:
reducing CO2 emissions

2. Working to improveknowledge and motivation
for global warming

3. Continuing toaddress global
warming

countermeasures

Chapter 3
Chapter 4
Appendix(1) Measure the amountof energy used by the(16) Declare our own
global warming(8) Encourage employees tocompany (All companies
or business sites).
(2) Create a long-term
action plan for energy
conservation.
(3) Reduce energy
consumption byreviewing and updatingtake energy conservation
measures and thoroughly
implement the 3Rs (Reduce,
Reuse, Recycle) in theworkplace.
(9) Encourage employees
and their families to takeenergy-saving measures atcountermeasures,
evaluate the results,
and make continuous
improvements.

the operation ofequipment and facilities.
(4) Review work styles
and business practices,and strive to conserve
energy.
(5) Call on customers,
business partners andother stakeholders toconserve energy.

home and to promote the3Rs.
(10) Work to improve theenvironmental knowledgeof our employees.
(11) Participate in local
environmental activities.
(12) Carry out Cool Biz andWarm Biz activities.
(13) Actively implement(17) Publish the rate of
CO2 emission
reductions(18) Publish the rate of
reduction in energy
consumption(6) Promote the use ofrenewable energy.
(7) Practiceenvironmentally friendly
driving.

green purchasing.
(14) Thoroughly separate
waste.
(15) Promote simple
packaging.

4. Publish of results of
in-house activities

Source: “What is the Global Warming Action Declaration, JCCI Navigation of Energy and Environment”35

35

https://eco.jcci.or.jp/aboutdeclaration (in Japanese)64Chapter 3 Sector-Specific Recommended
Disclosures
A. Objectives of Sector-Specific Disclosure Guidance
Chapter 2 explained topics common to all industrial sectors in the four thematic areas inwhich the Task Force recommends disclosure: Governance, Strategy, Risk Management, andMetrics and Targets. In the case of disclosure on Strategy or Metrics and Targets, however,different sectors have different climate-related risks and opportunities, which may lead tovariance in the methods for presenting strategies an in the metrics and targets used tomeasure them.
The TCFD recommendations include sector-specific supplemental guidance36. This provides
recommendations for disclosure to the financial sector (Banks, Insurance Companies, Asset
Owners, and Asset Managers) and non-financial groups (Energy, Transportation, Materials andBuildings, and Agriculture, Food and Forest Products Groups), for groups of sectors or forindividual sector. For those belong to the financial sector, specific guidance are provided on
Strategy, Risk Management and Metrics and Targets. For the non-financial groups, guidancecommon to the non-financial group is provided for Strategy, whereas sector-specific guidanceon Metrics and Targets is provided.
With reference to “Key Issues considered and Areas for Further Work,” the TCFD
recommendations also state that “the Task Force encourages further research and analysis bysector and industry experts to increase organizations’ understanding of climate-related risks
and opportunities.” This leaves the guidance for the sector-specific disclosure as a remaining
issue.
Investors and other stakeholders want information on the ability of companies to respondto the changes in the business environment caused by climate change. Companies should
therefore specify how they respond to those changes, and how their business activities
contribute to climate change mitigation. In particular, a company must clarify how its specificcontributions help to resolve issues both domestically and globally, and demonstrate its own
sustainability in changing business environments.
Therefore, this chapter focuses on effective disclosure in each industrial sector for the
purpose of demonstrating a company’s contribution to climate change issues. When
implementing disclosure in accordance with the recommended disclosures proposed in thischapter, companies should clarify the financial impacts of their efforts to reduce GHG
emissions – e.g., reduced energy costs, increased revenues from the sale of goods and services
that help to mitigate climate-related issues – according to the TCFD recommendations calling
for the disclosure of the financial impacts of climate-related risks and opportunities.
The recommended disclosures explained below are not presented as “tick-boxes.” Each36

https://www.fsb-tcfd.org/publications/final-implementing-tcfd-recommendations/65

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2

disclosure item presented in this Guidance is an example of a recommended disclosure for acompany if climate change is deemed to have material impacts on its business model. In
addition, such disclosures by companies can be expected to facilitate dialogue with investors
and other stakeholders, and to thereby deepen their understanding of industry-wide efforts
and contributions to climate change issues.
The following is a list of recommended disclosure items that have been established inconsideration of the characteristics of each industry.
The recommended disclosures
Eight items were envisaged for three phases of activities (manufacturing phase, use phase,

Chapter 3other) in the four sectors (automobiles, steel, chemicals, and electrical and electronics). Figure
10 shows the alignment between the value chain of corporate activities and the items
recommended for disclosure. The items considered to be important in each sector are
explained.
Each item in parentheses indicates the sector for which a specific guidance is provided.

Chapter 4(1) Efforts to reduce GHG emissions in the manufacturing phasea)Efforts to reduce GHG emissions in the manufacturing processb)
Efforts to reduce GHG emissions in procurementc)
Efforts to develop and disseminate pioneering technologies to reduce GHG
emissions in the manufacturing phase

Appendixd)Efforts to reduce GHG emissions through recycling and resource circulation(2) Efforts to reduce GHG emissions in the use phasea)Efforts to reduce GHG emissions from the use of productsb)Efforts to contribute to GHG emissions reduction through the value chain37c)
Efforts to develop and disseminate pioneering technologies to reduce GHG
emissions in the use phase(3) Other effortsa)Efforts to contribute to GHG emissions reduction through the provision oftechnologies

37

A contribution to GHG emissions reduction through the value chain is an emissions reduction effect obtained byreplacing products or services with other products or services in their use phase.

66

Chapter 3 Sector-Specific Recommended Disclosures

Value chain of corporate activities

Chapter 1

(1)b

(1)c

Procurement

R&D formanufacturing
phase

(1)a

(2)b
(2)a
Use

Avoided GHG emission by substitutionof other products/services

Recycling(1)dDisposal(2)c(3)a
Avoided GHG
emissionby provision oftechnologies

Companies
in othercountry/
regionChapter 3

R&D foruse phase

Use of otherproducts/
services

Chapter 2

Manufacturing(Note) Sales phase of products and transportation phase is omitted in the figure.

The relationship between the recommended disclosure item and the covered sectors

The structure of the value chain in the energy sector differs from that of othermanufacturing industries. Therefore, it becomes important in this sector to address the entire

makes progress in the future.

67

Appendix

value chain from the procurement of resources to the supply and use of energy. In the food,banking, life insurance, non-life insurance sectors, and international shipping, the value chain
structure of corporate activities and the assumed risks and opportunities differ from one
sector to another. The recommended disclosure Items have therefore been developed
according to the characteristics of the respective sectors.
Note that disclosure based on the TCFD recommendations is still evolving worldwide. The
disclosed contents are expected to be improved as case examples accumulate. Under thesecircumstances, this Guidance has been developed as a first step to respond to the TCFD
recommendations. Revisions to the content are assumed to be forthcoming, and sectors are
expected to be added based on reviews of the contents and sectors as the disclosure practice

Chapter 4

Figure 10

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1

B. Sector-Specific Recommended Disclosures(1) Automobiles
The TCFD recommendations describe climate-related risks and opportunities for theTransportation group, including the automobile industry, as shown below. This section
provides supplemental guidance focusing on the automobile industry.

Chapter 2

Description of the Transportation group in the TCFD recommendations
2. Transportation Group
Transportation is critical to the economy

Figure11 Transportation

Chapter 3

and drives a significant portion of emissions
and demand for energy through the
production and, more important, the usephase. The industry is under increasing
policy and regulatory pressure to achieve
emission targets for the use phase.
Increasing constraints on emissions fuelefficiency will continue to impact costs in thisgroup, particularly around investments ininnovation(new
technologies
andChapter 4
Appendixefficiencies)38.
The Transportation Group, therefore, will
likely face financial challenges from two
major drivers. First, policymakers are setting stricter targets for emissions and fuelefficiency from transportation carriers. Second, new technology around lowemission/fuel-efficient carriers (e.g., electric cars) is creating a shift in the competitiveand investment landscape. New technological innovations and new market entrants canweaken companies’ market position, resulting in lower revenues, higher costs, andnarrower margins. The effects of these two drivers may be compounded by the length of
product cycles for transportation products, such as cars and trucks, and especially for air
and rail and marine equipment. As with the Energy Group, investments in long-lived
assets (e.g., manufacturing facilities, airplanes, ships) and longer planning horizons are
relevant factors that must be taken into account when considering the climate-relatedrisks and opportunities.
Consequently, disclosures should focus on qualitative and quantitative assessments
and potential impacts of the following:

38

Moody’s Global Credit Research, “Moody’s: Auto sector faces rising credit risks due to carbon transition.” September 20,
2016.

68

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 3
Chapter 4

The number of vehicles sold in the automobile industry is expected to continue growing,particularly in emerging countries. On the other hand, vehicles with improved environmental
performance are required around the world more than ever with tightening regulations onfuel consumption. The industry has also faced a wave of technological innovation called CASE39
in recent years, which requires innovations to significantly change the existing business models.
One of the new possibilities expected of automobiles is an active contribution to global
efforts to combat climate change.
From a climate change perspective, the use phase of vehicles emits the largest amount of
GHG in the automobile lifecycle. Contributions to climate change measures can thus be well

Chapter 2

Source: “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017)”, P.56

Chapter 1

financial risks around current plant and equipment, such as potential early write-offs
of equipment and R&D investments or early phasing out of current products due to policy
constraints or shifts or the emergence of new technology;
investments in research and development of new technologies and potential shifts indemand for various types of transportation carriers; andopportunities to use new technologies to address lower-emissions standards andincreased fuel-efficiency requirements, including transport vehicles (cars, ships, planes,rail) that run on a range of traditional and alternative fuels.

demonstrated by describing efforts to develop next-generation vehicles (HV, EV, FCV, etc.) or
to reduces emissions through “Well-to-Wheel” as an emissions reduction strategy.

(Disclosure example)⚫ Targets and results of GHG emissions per vehicle manufactured
Another important point is to assess environmental impacts through the entire automobile
lifecycle from the design stage of vehicles, and to reflect the results in the design planning.
Doing so will lead to GHG emission reductions through the entire lifecycle encompassing the39

Connectivity, Autonomous, Shared and Electric

69

Appendix

I. Efforts to reduce GHG emissions in the manufacturing phase
Efforts to reduce GHG emissions in the manufacturing process
Automobiles with high environmental performance like EVs may actually emit more GHG in
the vehicle manufacturing phase than conventional vehicles. An important point, therefore, isto reduce GHG emissions in the manufacturing phase as well as the use phase.

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1

manufacturing phase as well as use and disposal phases.
Efforts to reduce GHG emissions in procurement
Efforts to reduce the GHG emissions from suppliers are important for the overall reductionof GHG emissions in the procurement phase, as the automobile industry consists of a large
number of suppliers.

Chapter 2(Disclosure examples)⚫ Establishment of Green Procurement Guidelines⚫ Introduction of mechanisms to manage supplier GHG emissions

Chapter 3
Chapter 4

II. Efforts to reduce GHG emissions at the usage stage
Efforts to reduce GHG emissions from the use of products
Given the policy trend of national governments (fuel consumption regulations, etc.) and theincreasing consumer awareness of environmental issues, efforts to reduce emissions from theuse phase, the phase that accounts for the major part of GHG emissions in the automobile
lifecycle, are a crucial point to present in disclosures on GHG emissions in the automobile
industry.

Appendix(Disclosure example)⚫ Medium- and long-term targets and results related to GHG emissions (or fuelconsumption) from an average new vehicle
An effective way to show a company’s technological level compared with the world orindustry average is to refer to benchmark values. A comparison with benchmark values foreach major market is also important to include, as consumer needs differ from market tomarket.
Reference example: A comparison of the average fuel consumption of companies in Europe
The International Council on Clean energy Transportation (ICCT) calculates the average fuelconsumption of passenger vehicles sold in a given year by automaker using data compiled by
the European Environment Agency. The average fuel consumption depends not only on thefuel economy performance of each vehicle model, but also the sales mix of vehicles. The
average fuel consumption of vehicles produced by each automaker is compared by the averagevehicle weight class.

70

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2
Chapter 3

Source: ICCT (International Council on Clean Transportation), “CO2 emissions from new passenger cars in the
EU: Car manufacturers’ performance in 2018”(Disclosure example)⚫ Amount of avoided GHG emissions through the improvement of vehicle energy
efficiency, etc.

71

Appendix

vehicle models, as the introduction of energy-efficient vehicles is expected to contribute to
reduced GHG emissions by replacing conventional vehicles. Efforts are also underway tocontribute to reduced GHG emissions by efficient energy management through the use of EVs.

Chapter 4

Efforts to contribute to GHG emissions reduction through the value chain
Another important point to present is the amount of avoided GHG emissions by thoseChapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2

Efforts to develop and disseminate emerging technologies that reduce GHG emissions in theuse phase
Another effective approach to presenting a company’s strategy to reduce GHG emissions in
the use phase is to present the efforts taken to develop and disseminate emerging
technologies, particularly those related to vehicle models that contribute to reduced GHG
emissions among the company’s products. Given the variety of the vehicle models that
contribute to reduced GHG emissions, such as hybrid vehicles, electric vehicles (EV), and fuelcell vehicles (FCV), a company needs to present its competition strategy in addition to thetypes of vehicle models it is to develop to contribute to reduced GHG emissions.

Chapter 3(Disclosure examples)⚫ Definition of vehicle models that contribute to reduced GHG emissions⚫ Specific technological development efforts and future goals (the number of vehicles
sold or the market share)

Chapter 4

Zero-emission vehicles (ZEVs) such as EVs and FCVs emit GHGs not from the use phase, butduring the phases of extraction, manufacturing, and supply of fuel. An effective way to present
the contribution of a ZEV to GHG emission reduction in its lifecycle is to compare the GHG
emissions from a “Well-to-Wheel” perspective.

Appendix72

Chapter 3 Sector-Specific Recommended Disclosures

The TCFD recommendations describe climate-related risks and opportunities for the
Materials and Buildings group, including the iron & steel industry, as shown below. This section
provides supplemental guidance focusing on the iron & steel industry.

Chapter 1(2) Iron and Steel

Description of the Materials and Buildings group in the TCFD recommendations
Figure 12 Materials and Buildings

Source: “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.59

73

Appendix➢ The construction materials and real estate sectors should assess risks related tothe increasing frequency and severity of acute weather events or increasing water
scarcity that impact their operating environment.
➢ Opportunities for products (or services) that improve efficiency, reduce energyuse, and support closed-loop product solutions.

Chapter 4

Furthermore, a number of industries in this group are dependent on water availability
and/or vulnerable to the effects of acute or chronic physical risks from weather events.
Since the group is capital intensive and the plants and facilities have a long life span,
accelerated R&DDD (research, development, demonstration, and deployment) is
critically important. Thus, disclosures relating to R&DDD plans and progress are valuable
to see the current and future situation and risks of organizations in the group.
Consequently, disclosures should focus on qualitative and quantitative assessments
and potential impacts of the following:➢ Stricter constraints on emissions and/or pricing carbon emissions and related
impact on costs.

Chapter 3

Materials
andBuildings
Grouporganizations are typically capital intensive,
require high investments in plants,
equipment, and buildings that are (relatively)
fixed in terms of location, and dependent onsources of raw and refined materials. This
may reduce the flexibility of organizations inthis group to adapt to risks of climate change.
Many of this group’s activities result in
financial exposures around high GHG emissions and high energy consumption.

Chapter 2

3. Materials and Buildings Group
The Materials and Buildings Group
includes, but is not limited to, industries
listed in Figure12.

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2

The largest amount of GHG emissions from the iron & steel industry occurs in the
manufacturing phase. A company in this industry can therefore demonstrate its contributions
to solving climate change by indicating the efforts taken to reduce GHG emissions throughefficiency improvements in the manufacturing phase. Steel manufacturing technologies canbe categorized into blast furnaces and electric furnaces. Since raw materials for electric
furnaces are scrap steel manufactured by the blast furnace process and used as products, theWorld Steel Association (worldsteel) developed and defined ISO 20915, the idea of GHG
emissions that regards the blast furnace method and the electric furnace method as a single
steel material recycling system.
For blast furnaces, hydrogen reduction iron manufacturing and other innovative

Chapter 3

technologies are being developed as fundamental technologies to reduce GHG emissions. It isalso important to disclose climate change measures through such efforts.

Chapter 4

I. Efforts to reduce GHG emissions in the manufacturing phase
Efforts to reduce GHG emissions in manufacturing processes
In the iron & steel lifecycle, the manufacturing process emits the largest amount of GHG. As
the demand for iron & steel is expected to endure worldwide, companies in the iron & steel
industry can adopt the strategy of improving the efficiency of the iron & steel manufacturing
process. Given that improved operation techniques and improvements from capital
investment at a company are reflected in intensity (GHG emissions per unit of output),

Appendix

information is preferably disclosed on an intensity basis.
In understanding the numerical value quantified on an intensity basis, each company shouldtake into account the setting of boundaries, the ratio of blast furnaces to electric furnaces, etc.
(Disclosure example)⚫ Efforts to improve efficiency in the manufacturing process (energy intensity)
Furthermore, in order to show the company’s technological level compared with the worldor industry average, it is effective to refer benchmark values.

74Chapter 3 Sector-Specific Recommended Disclosures

Efforts to develop and disseminate emerging technologies that reduce GHG emissions in the
manufacturing phase
An important approach, in presenting a strategy related to future climate change measures,is to present efforts to develop emerging technologies.

Chapter 1(Disclosure example)⚫ Progress in or prospects for efforts to dramatically reduce GHG emissions in the
manufacturing phase (e.g., development of hydrogen-reduction iron manufacturing
technologies)

Chapter 2

Reference: COURSE50 technology
A project designed to develop technologies to reduce CO2 emissions by approx. 30% by
reducing the emissions through the adoption of hydrogen reduction processes in blast
furnaces and the separation and collection of CO2 using a separation system. The project aims
to establish technologies by around 2030 and to practically utilize and diffuse them by 2050.

Chapter 3

Efforts for resource circulation through recycling
The iron & steel industry has been promoting efforts focused on resource circulation
through the recycling of used products and byproducts generated from the manufacturingphase, as well as through the utilization of waste plastics, in order to indirectly contribute to

Chapter 4

reduced GHG emissions. Demonstrating the contributions of those recycling efforts to reduced
GHG emissions is important.

II. Efforts to reduce GHG emissions in the use phase
Efforts to contribute to GHG emissions reduction through the value chain
In addition to presenting the GHG emission reductions in the manufacturing phase, it is also
important to present a strategy for the development and dissemination of products that
contribute to the realization of final products with lighter weights, longer lives, and improved
energy efficiency.

75

Appendix(Disclosure examples)⚫ Material flow of manufacturing processes⚫ Recycling rate of byproducts generated from the manufacturing process⚫ Efforts to substitute coke through the use of waste plastic as a fuel and chemical
feedstockChapter 3 Sector-Specific Recommended Disclosures

Chapter 1(Disclosure examples)⚫ Introduction of products that contribute to reduced GHG emissions⚫ Avoided emissions by each product

Chapter 2

III. Other efforts
Efforts to contribute to GHG emissions reduction through the provision of technologies
Based on the recognition that the transfer of energy-efficiency technologies overseas is
effective in reducing GHG emissions at a global level, the iron & steel industry has been actively
disseminating advanced energy-efficiency technologies to developing countries in various
ways. It is therefore important to disclose such efforts.

Chapter 3(Disclosure example)⚫ Amount of a contribution to reduced GHG emissions through the provision oftechnologies

Chapter 4
Appendix76

Chapter 3 Sector-Specific Recommended Disclosures

The TCFD recommendations describe risks and opportunities for the Materials and BuildingsGroup, including the chemical sector, as shown below. This section provides supplemental
guidance focusing on the chemical sector.

Chapter 1(3) Chemicals

Description of the Materials and Buildings Group in the TCFD recommendations (reprint)

Chapter 4
Appendix

77

Chapter 3

Source: “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.59

Chapter 2

3. Materials and Buildings Group
The Materials and Buildings Group
Figure 12 Materials and Buildings
includes, but is not limited to, industries
listed in Figure 12.
Materials
andBuildings
Grouporganizations are typically capital intensive,
require high investments in plants,
equipment, and buildings that are(relatively) fixed in terms of location, anddependent on sources of raw and refinedmaterials. This may reduce the flexibility oforganizations in this group to adapt to risksof climate change.
Many of this group’s activities result in
financial exposures around high GHG emissions and high energy consumption.
Furthermore, a number of industries in this group are dependent on water availability
and/or vulnerable to the effects of acute or chronic physical risks from weather events.
Since the group is capital intensive and the plants and facilities have a long life span,
accelerated R&DDD (research, development, demonstration, and deployment) is
critically important. Thus, disclosures relating to R&DDD plans and progress are valuable
to see the current and future situation and risks of organizations in the group.
Consequently, disclosures should focus on qualitative and quantitative assessments
and potential impacts of the following: Stricter constraints on emissions and/or pricing carbon emissions and related
impact on costs.
 The construction materials and real estate sectors should assess risks related tothe increasing frequency and severity of acute weather events or increasing water
scarcity that impact their operating environment.
 Opportunities for products (or services) that improve efficiency, reduce energyuse, and support closed-loop product solutions.

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2

Companies in the chemical sector conduct a wide range of business activities, and theindustry has a very complex structure overall. Manufacturing processes in the chemicalindustry can be divided into the following categories: basic chemicals such as ethylene andpropylene produced using naphtha, etc. as raw materials; intermediate chemicals, including
plastics, produced using basic chemicals as raw materials; and final chemical products, such as
molded plastics, produced from intermediate chemicals. The processes of manufacturing basic
chemicals generate a large amount of GHG emissions in cracking naphtha, etc., and generally
emit more GHG emissions than the processes of manufacturing intermediate chemicals andfinal chemical products.
Given that the chemical industry emits a large amount of GHG in the manufacturing phase,

Chapter 3
Chapter 4

as described above, efforts to reduce GHG emissions in the manufacturing processes in theindustry are important. Chemical products are made mainly from fossil resources at present.
Over the medium- to long-term, the industry has prospects for achieving reduced GHG
emissions by working on the diversification of raw materials using biomass, etc. as raw
materials.
Many chemical products are intermediate materials that can contribute to reduced GHG
emissions through the use phase of final products in sectors such as automobiles and homeelectronics. A wide range of products in the chemical industry are produced and used fordiverse applications in the use phase, contributing to reduced GHG emissions. An important
step in disclosure, therefore, is to describe business opportunities by identifying those

Appendix

products and demonstrating their applications, the mechanisms of GHG emissions reduction(the mechanisms by which they lead to reduced emissions), and the amounts of avoided GHG
emission.

I. Efforts to reduce GHG emissions at the manufacturing stage
Efforts to reduce GHG emissions from manufacturing processes
The chemical industry emits a large amount of GHG in the manufacturing phase. Companies
can thus adopt the GHG emission reduction strategy of improving the efficiency of
manufacturing processes and shifting to high value-added products with low GHG emissions.
The sheer variety of products handled in the chemical industry makes it difficult to assess such
efforts using a single type of metric. One possible metric related to energy intensity is energy
consumption per total production, revenues, and profit. Another is the use of total GHG
emissions.
These metrics, however, are affected by changes in the product mix and production volume.
Any disclosure, therefore, should describe the reasons for such changes.

78

Chapter 3 Sector-Specific Recommended Disclosures(Disclosure examples)⚫ Efforts to improve energy intensity and reduce total GHG emissions (e.g., efforts tosave energy through the conversion of the production system, use of waste heat in acascaded manner, fuel switch in captive power generation)

Chapter 1

Efforts to reduce GHG emissions in procurement
Some types of chemical products may emit more GHG emissions in the procurement phasethan in the manufacturing phase. In such a case, a company should disclose its efforts to
reduce GHG emissions in procurement.

Chapter 2⚫ Efforts for supply chain management (establishment of a green procurement policy,
etc.)

Chapter 3

Efforts to develop and disseminate emerging technologies that reduce GHG emissions in the
manufacturing phase
On a medium- to long-term basis, it is important to develop new manufacturing methods
using innovative technologies that will replace conventional manufacturing methods. When a

Chapter 4(Disclosure examples)⚫ Targets for reduced energy intensity in logistics(Disclosure examples)⚫ Efforts to develop emerging technologies (e.g., development of a membrane
separation process, conversion of CO2 to raw materials (CCU40), use of biomass as araw material, use of natural gas, use of methane hydrate as a resource)⚫ Expected effect of technology development in GHG reduction

II. Efforts to reduce GHG emissions in the use phase
Efforts to contribute to GHG emissions reduction through the value chain
The chemical industry manufactures a wide variety of chemical products, many of which areintermediate materials. In planning out its strategy, therefore, a company can choose to supply
products that contribute to the resolution of climate change issues in the use phase.

40

Carbon Capture and Utilization

79

Appendix

company is working on the development of advanced technologies to reduce GHG emissions
in a chemical product life cycle, it should describe such efforts and the GHG emissions
reduction potential in its disclosure.

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1(Disclosure examples)⚫ Definition of environmentally beneficial products and their contribution to sales⚫ Amount of avoided GHG emissions through environmentally beneficial products

Chapter 2

Efforts to develop and disseminate emerging technologies that reduce GHG emissions in theuse phase
A key step, for a company developing environmentally beneficial products (e.g., highthermal insulation materials and high-strength lightweight materials), is to provide a detailed
description of its research and development. Explanations on how environmentally beneficial
products reduce GHG emissions (i.e., how they bring about reduced emissions) are also useful,as they help investors better understand the products and their benefits overall.

Chapter 3(Disclosure examples)⚫ Efforts and the amount of investment in research and development ofenvironmentally beneficial products⚫ Mechanism for reducing GHG emissions through environmentally beneficial products

Chapter 4
Appendix80

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 2

Companies in the electrical and electronics industry can be roughly categorized into devicecompanies and assembly companies. Device companies are those that primarily manufacture
semiconductors and other electronic components that are built into electronic devices but not
used on their own. Therefore, it is important for device companies to reduce GHG emissions
in the manufacturing phase. Assembly companies, meanwhile, manufacture final products
from various parts. As many of their products emit a large amount of GHG from energy
consumption in the use phase as opposed to the manufacturing phase, it is important for themto demonstrate their contributions to climate change reduction by reducing emissions in
product use. Some types of products consume relatively little energy in the use phase (e.g.,

Chapter 1(4) Electrical and electronics

cameras, audio devices), For these products, the reduction in GHG emissions is more
important in the manufacturing phase.
Given the wider range of products produced in the electrical and electronics industry, bothdevice and assembly companies should ideally identify the products or technologies that
contribute to reduced GHG emissions in the use phase, describe their usage, and explain how
they contribute to reduced emissions.

Chapter 3

I. Efforts to reduce GHG emissions at the manufacturing stage
Efforts to reduce GHG emissions in manufacturing processes
If a device company, or an assembly company which primarily manufactures products with

Chapter 4(Disclosure example)⚫ Efforts to improve manufacturing process efficiency (energy intensity)

II. Efforts to reduce GHG emissions in the use phase
Efforts to reduce GHG emissions from the use of products
In the case of assembly companies that primarily manufacture products with larger energy
consumption in the use phase, it is important to disclose specific efforts for reducing GHG
emissions in the use phase.
In view of the ongoing improvements in electrical and electronics products year after year,
it is also important to demonstrate the superior performance offered by such products, alongwith the progress in energy efficiency.

81

Appendix

lower energy consumption in the use phase, its products emit no GHG emissions in the usephase (or emit a smaller amount of GHG emissions than in the manufacturing phase). This
type of company should therefore describe its efforts to reduce emissions in the
manufacturing phase.

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1(Disclosure example)⚫ Efforts to improve the energy efficiencies of primary products(e.g., improvement of energy efficiencies during the use of products)

Chapter 2

Efforts to contribute to GHG emissions reduction through the value chain
The electrical and electronics industry produces a wide range of products, many of which
can contribute to reduction in GHG emissions. An important step in disclosure, therefore, is to
identify products or technologies that contribute to reduced GHG emissions, and disclose theircontribution to reduction. In the particular case of renewable energy facilities or otherproducts which do not emit GHG, it is important to disclose the avoided GHG emissions.

Chapter 3

Furthermore, that if a company gives definitions for its environmentally beneficial products,
it is important to describe those definitions and to disclose the sales of the products so defined(in total or per product).

Chapter 4(Disclosure examples)⚫ Introduction of products and services that contribute to reduced GHG emissions⚫ Amount of avoided GHG emissions through products and services
Efforts to develop and disseminate emerging technologies that reduce GHG emissions in the

Appendix

use phase
Another important step is to describe efforts for technological development to reduce GHG
emissions in the product use phase. Specific efforts may include technological development ofenergy management using IoT solutions, in addition to technological development related tothe energy efficiency of each product.
(Disclosure examples)⚫ Technological development to improve the energy efficiency of products⚫ Technological development of IoT solutions leading to reduced GHG emissions (energy
management, etc.)82Chapter 3 Sector-Specific Recommended Disclosures

The TCFD recommendations describe risks and opportunities for the Energy Group, asshown below. This section provides supplemental guidance focused on the Energy Group.

Chapter 1(5) Energy

Description of the Energy Group in the TCFD recommendations
Figure 10 Energy Groupy Group41

According to data compiled by the IEA, CO2 emissions from fuel combustion in the energy sector and its activities
amounted to 32.2 Gt in 2015, or 60% of the total human-induced GHG emissions in that year. CO2 emissions from theelectric utilities sector were 13.6Gt, accounting for 42% of the total energy-induced CO2 emissions and 25% of the total
human-induced GHG emissions. The transport sector follows the industry sector as the next most important emissions
source. CO2 emissions by the transport sector amounted to 7.4Gt in 2015 (23% of the total energy-induced CO2 emissions
and 14% of the total human-induced GHG emissions). IEA, CO2 Emissions from Fuel Combustion: Highlights. 201542 Michelle T.H., van Vliet, et al. “Power-generation system vulnerability and adaptation to changes in climate and water
resources.” Nature Climate Change 6 (2016): 375-380.

83

Appendix

In addition to GHG emissions, both hydroelectric power generation and cooling for
nuclear and nonnuclear power generation use large quantities of water42. Physical risks
affecting water supplies creates a potentially important exposure for this industry.

Chapter 4

many cases, are dependent on the availability of water. For example, a majority of thecurrent electricity supply comes from non-renewable fossil fuel resources, resulting in asignificant exposure to transitions around global GHG emissions—either directly throughutility companies’ own energy use for production or indirectly through combustion offossil fuels41. Electric utilities, therefore, face significant transition risk (i.e., the financial
risk arising from the changes in asset valuations caused by the structural shift toward a
low-carbon energy system). This is because the utility sector’s asset valuations are at risk
from the disruptive impact of the policy, technology, and portfolio changes that will occur
over the next two to three decades as policies, technology, and markets shift to a lowcarbon energy system.

Chapter 3

and distributing fossil fuels or electric energy toother sectors of the economy. It includes, but is
not limited to, industries listed in Figure 10.
While many climate-related issues impact the Energy Group, organizations in thisgroup should consider providing disclosures related to financial implications of potential
physical impacts (e.g., reliance on water in areas of high water stress, severe storm/flood
mitigations) and transition impacts (e.g., policy requirements, carbon prices, newtechnology, changes in market demand) of climate-related risks and opportunities.
As fossil fuel and electricity providers, the organizations in this group generally havesignificant financial exposure around transition issues related to GHG emissions and, in

Chapter 2

1. Energy Group
Energy is a critical element in the economy,
serving as a primary or necessary input in mosteconomic activities. This group comprisesorganizations extracting, processing, producing,Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1

Oil, gas, and coal extraction face similar transition risks as key suppliers to electricutilities. These industries also rely on water to a significant degree43,44,45.
These characteristics make the Energy Group particularly sensitive to physical, policy,
or technological changes affecting fossil fuel demand, energy production and usage,
emission constraints, and water availability. The regulatory and competitive landscapethat surrounds electric utilities also differs significantly between jurisdictions, thus
making assessment of climate-related risks very challenging.
As a result, both the transition risks and physical risks associated with climate change
may impact the operating costs and asset valuation of organizations engaged in energy
activities. In particular, organizations within the Energy Group are generally capital

Chapter 2
Chapter 3

intensive, require major financial investments in fixed assets and supply chain
management, and have longer business strategy/capital allocation planning horizons
relative to many other sectors—horizons that may be particularly affected by climaterelated risks and opportunities. This requires careful assessment of climate-related risks
and opportunities to inform decisions about future sustainability and profitability.
Transparent and decision-useful climate-related disclosures are crucial to fully
understand the impact of climate change on business strategy and financial plans inenergy activities. Consequently, disclosures should focus on qualitative and quantitative
assessments and potential impacts of the following:

Chapter 4

Source: “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), PP.52-53

Appendix

Premises: National energy policy
Energy companies play a role in the stable supply of energy for a country. The energy
industry is exposed to geopolitical risks associated with the procurement of resources, and thebusiness activities of each company are integrated with national energy policy. The disclosureof an energy company, therefore, should ideally describe its strategy based on the relevant
national energy policy.
[Principle of energy policy in Japan]
Energy is an infrastructure that supports every human activity. A precondition for thefurther development of Japan is the creation of an energy supply and demand structurethat can achieve a stable energy supply with a lower social burden. Based on thisprinciple, the Cabinet approved the fifth strategic energy plan under the Basic Act on
Energy Policy in July 2018. The plan presents the basic direction of Japan’s energy policy
43

IPIECA, Water Resource Management in the Petroleum Industry. 2005.
International Council on Mining and Metals (ICCM), In Brief: Water stewardship framework. London: International
Council on Mining and Metals, 2014.
45 World Resources Institute (WRI), Water-Energy Nexus: Business Risks and Rewards, Washington, DC: 2016.
44

84

Chapter 3 Sector-Specific Recommended Disclosures

85

Appendix

continue to disclose their efforts for reducing GHG emissions on the demand side through thepromotion of introduction of renewable energy, etc.

Chapter 4

Electric utility companies are actively contributing to environmental measures, such as
reduction of CO2 emission intensity based on the 3E plus S principle, as well as working on
disclosure of information such as composition of power sources. It is important for them toChapter 3

The recommended disclosures
Medium- and long-term target setting and efforts to reduce GHG emissions
Energy companies in sectors such as electric power, gas, and petroleum refinery are working
to set medium- and long-term targets appropriate for their businesses in addressing climatechange issues. Their aim, in doing so, is to establish a supply structure that can achieve a stable,
low-cost, environmentally friendly energy supply in a well-balanced manner with security as a
top priority.

Chapter 2

As a country prone to natural disasters such as large-scale earthquakes (e.g., the Great
East Japan Earthquake) and frequent typhoons, Japan must establish a robust supply anddemand structure that ensures a stable energy supply even at a time of crisis.
Each energy source has its own strengths and weaknesses in the supply chain. No
single source can support a stable and efficient energy supply and demand structure. As
such, Japan needs to diversify its energy sources rather than concentrating intensively
on any one source. Japan’s energy policy must be suited to the environment surrounding
the country. Establishing a stable energy supply and demand structure based on thebasic principle of achieving 3E plus S is essential.

Chapter 1

as making maximum efforts to achieve a low-cost energy supply through the
improvement of economic efficiency on the premise of safety and with energy security
as the nation’s top priority, while at the same time promoting environmental
sustainability (3E plus S).
Japan is dependent on imports from overseas for most of its energy sources. As aconsequence, the country has difficulty securing resources by itself when a problem withthe energy supply arises overseas. This is a fundamental vulnerability that cannot be
eliminated simply by curbing energy consumption. Japan has thus made efforts todiversify risks by developing alternative energy sources and securing domestic energy
sources.

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1(Disclosure examples)⚫ Efforts to increase the proportion of non-fossil energy sources⚫ Efforts to reduce CO2 emissions through the efficiency improvement of thermal power
generation

Chapter 2

Oil companies are making efforts, such as advanced and effective utilization of oil andintroduction of sustainable renewable energy. It is important for them to disclose their efforts
related to the life cycle that includes the product consumption phase, such as measures for
reducing CO2 emissions in their manufacturing processes.

Chapter 3(Disclosure examples)⚫ Emissions and efforts in each process of, or through, the entire supply chain, such asenergy conservation related to their manufacturing processes (oil refineries)⚫ Efforts to introduce biomass fuels by considering sustainability

Chapter 4

Gas companies are contributing to environmental measures by promoting the diffusion ofnatural gas, a fuel with superior environmental performance. It is important for them todisclose their efforts to reduce CO2 emissions through the value chain, from the manufacturing
to the use and consumption of city gas.

Appendix(Disclosure examples)⚫ Efforts to reduce CO2 emissions intensity and energy intensity in the process ofmanufacturing city gas, etc.
⚫ Efforts to contribute to energy conservation and reduce GHG emissions by promoting
the diffusion and use of cogeneration systems, fuel cells, etc.

Efforts in research and development
In many countries, GHG emissions are chiefly related to energy use. It becomes vital, undersuch circumstances, to promote efforts to reduce GHG emissions related to energy use, bothon the energy demand side and energy supply side.
An electric utility company, on the energy supply side, must therefore disclose its researchand development efforts in the energy manufacturing phase, along with its efforts in various
other phases such as its transmission systems and consumers.

86

Chapter 3 Sector-Specific Recommended Disclosures(Disclosure examples)⚫ Efforts to reduce GHG emissions on the demand side by promoting the diffusion ofhigh-efficiency electrical equipment, etc. [electric utility companies]⚫ Efforts related to products and services that contribute to energy-saving in the usephase of oil [oil companies]⚫ Efforts related to smart energy networks and energy management systems [gascompanies]

87

Appendix

Efforts to encourage actions to save energy and GHG emissions by customers
In addition to making supply-side efforts, a country seeking to rationalize its energy supply
and demand structure needs to create an environment where customers have diverse options
that allow them to work towards curbed GHG emissions based on rational decisions. It thus
becomes important for energy companies to disclose information on services designed toencourage customers to take actions to save energy and GHG emissions at their own initiative.

Chapter 4

performance, as well as the efficiency-improvement effects achieved through suchtechnologies [oil companies]⚫ Principle and efforts related to the development of technologies for further efficiency
improvements and low carbonization related to gas usage, such as combustion
technology and cogeneration [gas companies]⚫ Research and development efforts focused on technologies such as hydrogen andmethanation technology for significant CO2 reduction [gas companies]

Chapter 3(Disclosure examples)⚫ Principle and efforts related to research and development on efficiency improvements
in production facilities and the development of products with superior fuel-saving

Chapter 2

For oil and gas companies, the disclosure should focus on efforts related to research anddevelopment on the following items.

Chapter 1(Disclosure example)⚫ Principles and efforts related to the development of technologies that contribute tolower carbon emissions, such as thermal power technology for reducing
environmental impacts, addressing the introduction of a large quantity of renewableenergy, and development of technologies for efficient energy utilization.

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1

Efforts for resource circulation and recycling
From the perspective of reducing environmental impacts, it is important to disclose efforts
for resource recycling, waste reduction, and water consumption reduction, etc.

Chapter 2

Efforts to contribute to reduced GHG emissions through overseas business
Energy companies are actively engaged in overseas business by leveraging technologies andknow-how cultivated through domestic businesses. Therefore, it is important for them todisclose their efforts to contribute to reducing GHG emissions overseas through their overseas
energy supply business and consulting business on energy conservation, etc.

Chapter 3
Chapter 4
Appendix88Chapter 3 Sector-Specific Recommended Disclosures

The TCFD recommendations describe risks and opportunities for the Agriculture, Food, andForest Products Group, including the food sector, as shown below. This section provides
supplemental guidance focusing on the food sector.

4. Agriculture, Food and Forest Products GroupThe Agriculture, Food and Forestry
Figure 13 Agriculture, Food and Forest
Products Group
Products Group includes, but is not limited

According to the IPCC, agriculture and forestry, “GHG emissions from agriculture, primarily deforestation and livestock,soil and nutrient (manure) management, account for less than 1/4 of anthropogenic GHG emissions. Human-induced
deforestation and biomass burning (forest fires and slash-and-burn fields) are also important sources of emissions." (IPCC"Agriculture, Forestry and Other Land Use (AFOLU)," In: Climate Change 2014: Mitigation of Climate Change, 2014. The
Contribution of Working Group III to the Fifth Assessment Report of the IPCC). Agriculture also makes extensive use of water
resources, mainly through irrigation.
47 For more information, see the definition of "Land use change and indirect land use change" in IPCC's Climate Change
2014: Mitigation of Climate Change page 1,265.
46

89

Appendix

producers. Beverage production and paper production, for example, depend on access tosignificant water resources and, in the case of beverage production, high-quality water

Chapter 4

Producers, such as agriculture and forestry enterprises, will likely be impacted
financially to a somewhat greater degree by GHG and water risks (including extreme
weather events and shifts in precipitation patterns) than processors. Agriculture andforest producers generate significant non-point GHG emissions, primarily through landuse practices and changes to them (e.g., grazing, soil tillage practices, conservation
practices, feedlot practices, deforestation, or afforestation)47.
Processors, such as food, beverage, and fiber processors (e.g., paper), will likely be
impacted relatively less by direct GHG emissions (Scope 1), but more by indirect GHG
emissions (Scope 3) arising from their supply and distribution chains. Processors will also
have a similar emphasis on water and waste risks and opportunities as compared with

Chapter 3

to, the industries listed in Figure 13
Climate-related risks and opportunities inthis group largely emanate from GHG
emissions
and
water
and
waste
management driven by land use, production
practices, and changing land-use patterns46.
The absolute and relative impacts ofclimate-related transition and physical risks
will vary between producers and processorsof food and fiber.

Chapter 2

Description of the Agriculture, Food, and Forest Products Group in the TCFD
recommendations

Chapter 1(6) FoodChapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2

resources. Risks and opportunities around waste include residual materials such as paper
and wood waste, wastewater, and post-processing animal by-products.
Assessing the impacts of climate-related risks and opportunities for the Agriculture,
Food, and Forest Products Group involves a number of interactions and trade-offs among
the climate-related aspects of land use, water, waste, carbon sequestration, biodiversity,and conservation, complicated by short-run competing goals around food security (e.g.,maintaining production sufficient to meet the rising demand for food, fiber, fodder, andbiofuels).
Policies and regulations around land use and conservation requirements, for example,
may constrain or preclude certain uses of land and water resources (e.g., deforestation,

Chapter 3
Chapter 4

riparian rights, tillable land). Such policies may lead to significant asset impairment if
forest or agricultural lands cannot be used to produce food or fiber.
Opportunities in the Agriculture, Food, and Forest Products Group largely fall into three
categories: Increasing efficiency by lowering the level of carbon and water intensity per unit ofoutput (e.g., through drought-resistant hybrids, nutrient-efficient geneticallymodified organisms (GMOs), feed and feed practices that reduce livestock methane
emissions).
 Reducing inputs and residual waste for a given level of output (e.g., nutrient
management practices, tillage practices, conservation practices, biofuels, foodAppendix

waste reduction).
 Developing new products and services with lower carbon and water intensity (e.g.,
bioplastics).
Disclosures, therefore, should focus on qualitative and quantitative information related
to both the group’s policy and market risks in the areas of GHG emissions and water, andits opportunities around carbon sequestration, increasing food and fiber production, andreducing waste, including: Efforts to reduce GHG emissions and water intensity, including such non-point GHG
sources as crop nutrient processes, livestock management processes, erosion,tillage practices, watershed practices, and forest management.
 Efforts to improve sustainability through better recycling of outputs and residual

waste (e.g., wood products, food waste, and animal byproducts).
Climate-related impacts on food and fiber production (e.g., extreme weather orwater events).
Opportunities that capture shifts in business and consumer trends toward food andfiber products, processes and services that produce lower emissions and are lesswater-/waste intensive while maintaining adequate food security (e.g., bioplastics,
GMOs, new uses for wood/animal byproducts)., and forestry/livestock by-products)
90

Chapter 3 Sector-Specific Recommended Disclosures

Efforts to stabilize raw material procurement
In the food sector, it is important to identify and assess risks such as increased procurement
costs due to the impact of climate change on raw material production, or insufficient
procurement, an issue that may entail problems with quality. The identification and91

Appendixdevelopment of products to meet increased demand stemming from changes in consumer
preferences linked to extreme temperatures, and increased purchasing activities that takeenvironmental impact into account.

Chapter 4

chain (including packaging, transportation, and delivery) should also be considered. Several
other sources of GHG emissions should also be noted, such as the conversion of forests tofarmland and grassland, and emissions from production of agro-livestock products such as therumination of livestock and composting.
In addition, efforts to reduce energy consumption, water conservation and food loss areimportant because they not only reduce GHG emissions but also reduce energy costs.
GHG emission reduction through reductions in food loss and the use of byproducts as feed
and fertilizer is an issue unique to the food industry. A food producer can effectively
demonstrate its contribution to climate change by describing efforts to address these issues.
The business opportunities created by climate change in the food industry include theChapter 3

to pest and disease outbreaks, increased procurement costs associated with investment in
adaptation, and shifts in production areas.
Attention should also be paid to instability in the supply of water necessary for foodproduction linked to weather disasters such as droughts or floods, worsened water quality due
to changes in precipitation patterns, decreased glacier melt water, the excessive use of fossil
water, or regulatory trends such as restrictions of water intake. In addition, weather disasters
linked to climate change, such as heavy rains, floods, or droughts, may also increase the riskof interruptions in the supply of goods due to disruptions in plant operations or distribution.
While efforts are being made to reduce GHG emissions at the manufacturing of foodproducts, the GHG generated in raw material production, or emissions throughout the supply

Chapter 2

It should be noted that the food sector offers a wide range of products, and the risks andopportunities for changing demand and procuring raw materials due to climate change are notuniform across products.
Physical risks are the primary subject of disclosure for agricultural, livestock, and fisheryproducts used as raw materials for food. Climate change has various potential impacts on raw
material procurement through changes in plant and animal growth associated with risingtemperatures, reduced or increased production, changes in the quality of raw materials due

Chapter 1

Source: “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), PP.62-63

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1

assessment of these risks forms the basis of disclosure on measures to stabilize raw material
procurement.

Chapter 2(Disclosure examples)⚫ Assessment of the impact of procurement risks (reduction of raw material yields andquality, increase in procurement costs, etc.) on business operations, and the status ofcountermeasures considered⚫ Efforts to reduce risks through the diversification and change of procurement areas⚫ Procurement of raw materials with third party certification in sustainable production
and distribution, such as RSPO48, the Rainforest Alliance49, FSC50 or raw materials that

Chapter 3

have undergone in-house assessment in accordance with equivalent standards⚫ Initiatives to support producers in sustainable agriculture and livestock industries(Examples: dissemination of sustainable production methods, support for producers'
management, etc.)

Chapter 4

Addressing Water Risks
Ideally, a company should describe an impact assessment on business operations and themeasures to be taken to address water-related risks.
As water is essential for both raw materials and cleaning in food production, a company
should appropriately assess and address the risks pertaining to water supply and wastewater

Appendix

associated with climate change.
Physical risks include meteorological disasters (typhoons, heavy rains, floods, droughts, etc.)
on production and distribution51. Mitigation measures should therefore be considered.

48

Roundtable on Sustainable Palm Oil: A non-profit organization that develops and operates certification schemes forsustainable palm oil (website: https://rspo.org/). In the case of palm oil, the rapid expansion of oil palm plantations andinappropriate plantation management lead to massive emissions due to the deforestation of tropical rainforests orgreenhouse gas emissions from waste oil in extraction facilities. Procurement of RSPO-certified raw materials can reduce or
avoid these climate change risks.
49 Rainforest Alliance: A non-profit organization that certifies farms that are working to solve climate problems in theterrestrial environment by improving land management methods such as more sustainable agriculture, as well as conserving
and restoring forests (website: https://www.rainforest-alliance.org).
50 Forest Stewardship Council: An independent non-profit organization that aims to promote responsible forest management
throughout the world and operates an international forest certification system (website: https://fsc.org/en).
51 For example of the impacts of floods on businesses, finances, and finance pathways, see below:
WBCSD Food, Agriculture and Forest Products TCFD Preparer Forum,“Disclosure in a time of system transformation: Climaterelated financial disclosure for food, agriculture and forest products companies“, April 2020, P 47 (Figure 20)(https://docs.wbcsd.org/2020/04/WBCSD-TCFD-Food-Agriculture-and-Forest-Products%C2%AC-Preparer-Fourm-report.pdf)

92Chapter 3 Sector-Specific Recommended Disclosures(Disclosure examples)⚫ Development of alternative materials and products (Example: reducing GHG emissions
from livestock feeding through the use of plant-based meat substitutes and culturedmeat)⚫ Efforts to reduce GHG emissions during manufacturing (Examples: reduction of energy
consumption and introduction of renewable energy by expanding the installation ofenergy-saving equipment)⚫ Reducing the weight and thickness of containers and packaging, and switching toalternative materials (Examples: 3R initiatives, switch to sustainable paper containers
and packaging, such as recycled or biomass-based materials or FSC-certified materials)
93

Appendix

must make multifaceted efforts towards cooperation with related business operators andreview the use of containers and packaging.
Efforts to reduce food loss and to make use of by-products and animal and plant residues as
feed and fertilizer are unique to the food industry. As such, food producers must appropriately
make their efforts better understood by disclosing the GHG emission reduction mechanisms
they seek to promote. Through this approach, the sector can take advantage of the trend
towards ethical consumption as a business opportunity.

Chapter 4

Efforts to reduce GHG emissions
It is important for the food industry to reduce GHG emissions throughout the supply chain,from the procurement of raw materials to the production, transportation and delivery of
products. To effectively reduce emissions from the production of agricultural, livestock andfishery products, and improve the efficiency of transportation and delivery, food producers

Chapter 3

such as power outages and water outages.)

Chapter 2⚫ Evaluation of the impact of meteorological disasters (storm and flood damage risks)on projects and consideration of countermeasures (Examples: disaster response, plant
relocation, reviews of distribution routes and distribution centers, and BCP measures

Chapter 1(Disclosure examples)⚫ Assessment of the impact of water risk on business operations and the status ofcountermeasures considered⚫ Support for dissemination of sustainable agriculture and livestock farming (Examples:water-saving agriculture, etc.)⚫ Water resource conservation activities (Examples: forest conservation, the flooding of
paddy fields, etc.)⚫ Efforts to reduce water withdrawal and consumption (Examples: reduction of water
use per unit of production, recycling of water, etc.)⚫ Utilization of methane gas generated in wastewater treatment for power generation

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2⚫ Reducing GHG emissions during transportation and distribution (Examples: joint
distribution, modal shift, and efforts to optimize lead times for placing and receiving
orders.)⚫ Efforts to reduce food loss (Examples: reducing food loss in the manufacturing process,extending expiration dates by improving containers and packaging, reducing food loss
throughout the supply chain by indicating the year and month on labels, refining
demand forecasts using AI, etc.)⚫ Efforts to utilize byproducts and animal and plant residues as feed, fertilizer, etc.
(Example: reduction of petroleum-derived fertilizers, etc.)

Chapter 3
Chapter 4

Description of business opportunities
The development of products expected to be in higher demand with the progress of climatechange, especially rising temperatures, may lead to new business opportunities in the foodindustry in the future.
The development of environment-friendly products will also contribute to reduced GHG
emissions and open up opportunities for market expansion through the spread of ethicalconsumption and other purchasing behaviors guided by considerations of environmental
impact.
It is important to disclose such efforts to create opportunities linked to climate change.

Appendix(Disclosure examples)⚫ Efforts to develop products that match the needs arising from climate change(Examples: development of products to relieve thirst in response to extremely hot
weather and products to help prevent heat stroke and infectious diseases, etc.)⚫ Promotion of ethical consumption through environment-friendly products (Examples:
procurement of certified raw materials or materials that have undergone in-houseassessments based on equivalent standards, support for producers, and procurementof materials selected in consideration of sustainability in containers and packaging.)

94

Chapter 3 Sector-Specific Recommended Disclosures

The TCFD recommendations describe risks and opportunities in the banking sector, as
shown below. This section provides a supplemental guidance focused on banking.

Chapter 1(7) Banking

Description of Banks in the TCFD recommendations

Chapter 3
Chapter 4

the securities of companies with direct exposure to climate-related risks (e.g., fossil fuelproducers, intensive fossil fuel consumers, real property owners, or agricultural/foodcompanies) may accumulate climate-related risks via their credit and equity holdings. In
particular, asset-specific credit or equity exposure to large fossil fuel producers or users
could present risks that merit disclosure or discussion in a bank's financial filings. In
addition, as the markets for lower-carbon and energy-efficient alternatives grow, banks
may assume material exposures in their lending and investment businesses. Banks could
also become subject to litigation related to their financing activities or via parties seeking
damages or other legal recourse. Investors, lenders, insurance underwriters, and otherstakeholders need to be able to distinguish among banks’ exposures and risk profiles so

Chapter 2

1. Banks
Banks are exposed to climate-related risks and opportunities through their lending andother financial intermediary activities as well as through their own operations. As
financial intermediaries, banks may assume exposure to material climate-related risks
through their borrowers, customers, or counterparties. Banks that provide loans or tradethat they can make informed financial decisions.

In the banking sector, the aim of TCFD is the stabilization of the financial system in the eventof the emergence of climate change risks. As financial supervisors and central banks move to
integrate climate change into prudential regulation and monitoring, it is useful to enhance
disclosure, particularly in terms of risk.
An important point, in this case, is to specify quantified risk of climate change together withframework for controlling risk. Based on the scenario analysis, it is desirable to clarify
measures to enhance resilience against climate change by disclosing not only concrete figures
such as the amount of future assumed physical risks and transition risks and the degree ofconcentration of carbon-related assets, but also internal governance and risk management
systems related to climate change risks and policies for dealing with specific sectors.
On the other hand, with regard to opportunities, it is important to specify a medium- andlong-term strategy for environmental consideration using financial functions and disclose how
they support the efforts taken by their customers toward a low-carbon society.
In disclosing both risks and opportunities, it is important to share the concept of TCFD
95

Appendix

Source: “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.23

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1

recommendations through engagement with customers and to clearly explain the actions thatcan be taken in the future, in order to demonstrate a stance of advancing climate change
responses with customers.

Chapter 2

Scenario analysis
It is desirable to share the future amount of risk with stakeholders by estimating anddisclosing the expected increase in credit costs under climate change scenarios. Though somestudies on scenario analysis are given as examples 52 , there is no international or uniform
method for analysis as of this writing. In performing an analysis, a bank must begin by deciding“in what manner”, “with which scenarios”, and “for which assets”. These assumptions that go
into the analysis must be specified when the analysis is disclosed.

Chapter 3(Disclosure examples)

Chapter 4⚫ Estimation and disclosure of total credit costs based on the probability of flooding foreach climate change scenario (IPCC “RCP 2.6, RCP 8.5”, etc.)⚫ Estimation and disclosure of total credit costs based on changes in sales and costs inborrower sectors under the transition risk scenario (IEA “sustainable development
scenario”, etc.)

Appendix
52

Examples of studies on scenario analysis in the banking sector include the following:
Bank of England, 2019, Discussion Paper: The 2021 biennial exploratory scenario on the financial risks from climatechange (https://www.bankofengland.co.uk/paper/2019/biennial-exploratory-scenario-climate-change-discussionpaper)
Network for Greening the Financial System, 2020, Guide to climate scenario analysis for central banks and supervisors(https://www.ngfs.net/sites/default/files/medias/documents/ngfs_guide_scenario_analysis_final.pdf)
96Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1

Reference: SMBC’s Scenario Analysis Process and Estimated Credit Costs<physical risk>

Chapter 2
Chapter 3
Chapter 4⚫ Risk events are identified as water disasters (floods), and the amount of loss expected tooccur in the future due to water disasters is analyzed for each climate change scenario.
⚫ Estimation of the current estimated credit costs based on (1) the amount of collateral
damage in the event of a flood and (2) the financial impact on business partners (decline
in sales), after identifying collateral and business partners of banks located on the water
disaster hazard map prepared by the Ministry of Land, Infrastructure, Transport andTourism⚫ Calculate potential future losses by multiplying the probability of flooding in eachclimate change scenario (IPCC “RCP scenarios”)⚫ The total cumulative credit cost is expected to increase by approximately 30 to 40 billion
yen through 2050.

97

Appendix

Source: Sumitomo Mitsui Financial Group, Inc. “Sustainability Report 2019” P. 55

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1<transition risk>

Chapter 2
Chapter 3

Source: Sumitomo Mitsui Financial Group, Inc. “Sustainability Report 2019” P. 56

Chapter 4⚫ The effects of expected changes in oil and gas prices and demand are estimated,
together with power generation costs under the IEA scenarios on credit risks in theenergy and power sectors.
⚫ The estimated credit cost under the 2°C scenario is expected to increase byapproximately 2 to 10 billion yen per year up to 2050, compared to the 4°C scenario(Stated Policies Scenario).

Appendix

Concentration of carbon-related asset exposures
The TCFD recommends that banks disclose “concentrations of credit exposure to carbonrelated assets” that are likely to be vulnerable to climate change impacts53.
While carbon-related assets are defined to a degree in the TCFD recommendations, eachbank has different interpretations of detailed estimation methods, such as whether theconcentration of carbon-related assets is a loan-based ratio or credit-based ratio, and how to
deduct renewable-energy- and nuclear-power-related exposures of electric power companies.
It should be noted that comparability cannot be warranted at present.
(Disclosure example)⚫ Ratio of carbon-related assets to loans (or credit amounts)

53"Energy" "Utilities" in GICS (Global Industrial Classification Standard). However, water utilities, independent power
producers, and renewable energy producers are excluded.

98

Chapter 3 Sector-Specific Recommended Disclosuresscenario analysis and consider countermeasures at the management level

customers to address ESG and SDGs.
It should be noted that the definition of finance (whether to specialize in the environmental
and climate change fields, including social fields, etc.), the types of financial services subjectedto the target, and the timeline to achieve the target are left to each bank in setting its targets.

99

Appendix

opportunities.
As regards scenario analysis disclosed under “Strategy”, it is encouraged that the banking
sector to consider not only how to strengthen risk management, but also how to capture
opportunities by utilizing its outcome to better understand customer needs and issues, as wellas to engage with customers.
It would be useful, in this regard, to make the medium- and long-term targets clear tocustomers and other stakeholders, along with the roadmap for achieving those targets, and to
disclose the actual progress of financing through the issuance of green bonds (providing
finance for green sectors), financing for renewable energy projects, and financing for projects
that contribute to climate change countermeasures such as loan products that encourage

Chapter 4

Capturing opportunities
It is important, in the theme “Strategy” to disclose the positive impact of capturing
opportunities in addition to minimizing the negative impact of climate change, and to disclose
the impact on medium- and long-term projects and strategies in order to contribute to thetransition to a low-carbon society from the perspectives of risk management and capturing

Chapter 3

management committee, and periodically report to the board of directors⚫ Report on climate change risk in a “risk committee”⚫ Recognize climate change as a top-priority risk and implement measures to strengthen

Chapter 2(Disclosure examples)⚫ Reflect climate change initiatives in business strategies based on discussions at the

Chapter 1

Governance and risk management systems
In order to control the future risks identified through scenario analysis and exposure tocarbon-related assets, it is necessary to integrate the elements of climate change into the
bank's internal governance and risk management systems, and to operate them strategically.
In doing so, it is important for a bank to clarify the involvement of its management andboard of directors in climate change-related issues, and incorporate climate change risks into
its risk appetite framework in the future.

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1(Disclosure examples)⚫ Issuance of green bonds (providing funds for green sectors)⚫ Provision of project finance for renewable energy businesses⚫ Provision of loan products related to ESG and SDGs
⚫ Medium- and long-term targets for sustainable finance

Chapter 2
Chapter 3
Chapter 4
Appendix100

Chapter 3 Sector-Specific Recommended Disclosures

The TCFD recommendations describe risks and opportunities in the insurance sector, as
shown below. This section provides a supplemental guidance focusing on life insurancecompanies.

Chapter 1(8) Life insurance

Description of insurance companies and asset owners in the TCFD recommendations.

Chapter 4Users of climate-related financial disclosures are specifically interested in how
insurance companies are evaluating and managing climate-related risks andopportunities in their underwriting and investment activities. Such disclosure will support
users in understanding how insurance companies are incorporating climate-related risks
into their strategy, risk management, underwriting processes, and investment decisions.
This guidance applies to the liability (underwriting) side of insurance activities. For
insurance companies’ investment activities, refer to the supplemental guidance for asset

Chapter 3

significant effect on weather-related natural catastrophes and will account for an
increasingly large share of natural catastrophe losses55.

Chapter 2

2. Insurance companies54
For insurance companies, climate-related risks and opportunities constitute a key topic
affecting the industry’s core business (e.g., weather-related risk transfer business). The
scientific consensus is that a continued rise in average global temperatures will have aowners.

3. Asset Owners
Asset owners are a diverse group that include public- and private-sector pension plans,
re-/insurance companies, endowments, and foundations and invest assets on their own
behalf or on behalf of their beneficiaries. Asset owners invest according to a mandate orinvestment strategy set out by their oversight body or their beneficiaries. Asset owners
have various investment horizons that influence their risk tolerance and investment
strategies. Many asset owners have broadly diversified investment portfolios acrossinvestment strategies, asset classes, and regions and portfolios with thousands ofunderlying individual company and government exposures. Asset owners may hire asset
managers to invest on their behalf56.

54 Insurance companies include both insurers and re-insurers.
55

Intergovernmental Panel on Climate Change, Fifth Assessment Report (AR5), Cambridge University Press, 2014.
In this role, asset managers also act as fiduciaries. Asset managers invest within the guidelines specified by the asset
owner for a given mandate set out in the investment management agreement or the product specification.
56

101

Appendix

Source: “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.28

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1

Whether asset owners invest directly or through asset managers, asset owners bear
the potential transition and physical risks to which their investments are exposed.
Similarly, asset owners can benefit from the potential returns on the investment
opportunities associated with climate change.

Chapter 2

Asset owners sit at the top of the investment chain and, therefore, have an importantrole to play in influencing the organizations in which they invest to provide better climaterelated financial disclosures. Disclosure of climate-related risks and opportunities byasset owners allows beneficiaries and other audiences to assess the asset owner’s
investment considerations and approach to climate change. This may include an

Chapter 3
Chapter 4

assessment of the asset owner’s integration of appropriate climate-related financial
information into its investment activities in various ways, for example, in setting
investment strategy, making new investment decisions, and managing its existing
portfolio. By encouraging climate-related financial disclosures by asset owners,
beneficiaries and other stakeholders will be in a position to better understand exposures
to climate-related risks and opportunities. Further, climate-related financial disclosuresby asset owners may encourage better disclosures across the investment chain—fromasset owners to asset managers to underlying companies—thus enabling all organizations
and individuals to make better-informed investment decisions.
Source: “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.33

Appendix

Life insurance companies have two positions: as underwriters of life insurance and as
institutional investors. It thus becomes necessary, in addressing TCFD recommendations, to
pay attention to what is recommended for each position.
In the life insurance business, the impact of climate change on human life and health will beassessed, and the impact of climate change on business will be examined. While the impact
on the life insurance business is not deemed to be substantial at present, the research being
done on the relationships of climate change with health damage and mortality is still in its
early stages. Life insurance companies thus need to consider how information is to be collected
and incorporated into their business.
As institutional investors, insurance companies need to consider the impact of climatechange on the companies they invest in, as well as their own information disclosure. These
companies are required to better disclose the physical and transition risks and opportunities
they experience in their engagement activities and to have an adequate understanding of theinformation disclosed.

102

Chapter 3 Sector-Specific Recommended Disclosures(Disclosure examples)⚫ Efforts to analyze the impact of short-term impacts on insurance payments due toInvestment and loans focusing on the risks and opportunities of climate change
As institutional investors, life insurance companies need to view the transition to a lowcarbon society as an opportunity for providing investments and loans, and to continuously
monitor the status of the sustainable growth of its investment and loan recipients throughengagement activities, etc. It thus becomes important to show how a company perceives therisks and opportunities of climate change in its investment and financing strategy, and how
those perceptions are considered and reflected in its investment and financing. Ideally, acompany should disclose items such as those shown in the following examples.

103

Appendix

factors such as changes in the frequency or scale of abnormal weather or natural
disasters⚫ Efforts to identify risks such as increased morbidity and mortality due to medium- tolong-term effects such as average temperature increases

Chapter 4

The impact of climate change on human life and health may affect insurance payments. It
thus becomes important for life insurance companies to show how they understand the risks
to human health caused by climate change, and how those findings are reflected in theirbusiness. In this way, life insurance companies are expected to demonstrate how they takeaccount of climate change risks in their business strategies.

Chapter 3

Addressing Climate Change Risks in the Life Insurance Business

Chapter 2(Disclosure examples)⚫ Status of policy formulation for dealing with the environment and climate change⚫ Development of ESG investment and loan policy

Chapter 1

Policies for addressing climate change and ESG investments and loans
Life insurance companies need to make continuous efforts to address climate change ascompanies. It thus becomes important to indicate how a company perceives the impacts ofclimate change, how this perception is reflected in its business activities, and what basic
policies it has adopted. In this way, the communication of the company's basic position can bepromoted to the company's investment and loan recipients as well as to the fund providers.

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2(Disclosure examples)⚫ Examples of investments and loans to companies, technologies, and projects that
contribute to low carbon emissions (Green Finance), as well as its cumulative
investments and loans, etc.
⚫ Items to be emphasized in making decisions on investments and loans, points of view,etc.
⚫ Engagement activities for investment and loan recipients (implementation of climatechange-related dialogue)
Climate-related risk management process

Chapter 3

As long-term institutional investors, it is important for life insurance companies to indicate
how the portfolios are positioned with respect to transition risks and physical risks, and how
they are managed. In other words, it is important to indicate how a company as an institutional
investor evaluates and analyzes the information disclosed by investment and loan recipients.
It thus becomes desirable to disclose specific matters such as those shown in the following
examples.

Chapter 4(Disclosure examples)⚫ Status of preparation of investment and loan standards⚫ Analysis of climate change-related impacts on investments and loans (risks of loss invalue of investments and loans associated with the transition to a low-carbon society,along with the responses to such risks)

Appendix[References]
For more on how life insurers are responding to climate change, see The Life Insurance
Association of Japan, 2019, “Climate Change Starter's Guide: Impacts and Key Considerations
for the Life Insurance Industry”(downloadable from:https://www.seiho.or.jp/activity/sdgs/climate/pdf/handbook(en).pdf)

104

Chapter 3 Sector-Specific Recommended Disclosures

The TCFD recommendations describe risks and opportunities in the insurance sector, as
shown below. This section provides a supplemental guidance focusing on non-life insurancecompanies.

Chapter 1(9) Non-life insurance

Description of insurance companies in the TCFD recommendations

Chapter 4Users of climate-related financial disclosures are specifically interested in how
insurance companies are evaluating and managing climate-related risks andopportunities in their underwriting and investment activities. Such disclosure will support
users in understanding how insurance companies are incorporating climate-related risks
into their strategy, risk management, underwriting processes, and investment decisions.
This guidance applies to the liability (underwriting) side of insurance activities. For
insurance companies’ investment activities, refer to the supplemental guidance for asset

Chapter 3

significant effect on weather-related natural catastrophes and will account for an
increasingly large share of natural catastrophe losses58.

Chapter 2

2. Insurance companies57
For insurance companies, climate-related risks and opportunities constitute a key topic
affecting the industry’s core business (e.g., weather-related risk transfer business). The
scientific consensus is that a continued rise in average global temperatures will have aowners.

As noted in the TCFD recommendations, the continuing rise in the global averagetemperature is said to have a significant impact on large-scale natural disasters. In Japan, therecent increases in heat waves and torrential rains, as well as the frequent occurrence of
typhoons and other natural disasters, have raised concerns about the frequency of further
large-scale natural disasters due to climate change.
The insurance to compensate for damage caused by natural disasters is a social
infrastructure that plays a part in climate change countermeasures. The non-life insurance
sector provides compensation to reduce the economic burden on companies and individuals
that suffer damage, and is expected to continue playing that important social role. At the sametime, the growing severity of natural disasters has increased concerns about the impacts ofclimate change on the sustainability of the non-life insurance sector.
Climate-related risks include not only physical risks, such as increased natural disasters due
57 Insurance companies include both insurers and re-insurers.
58

Intergovernmental Panel on Climate Change, Fifth Assessment Report (AR5), Cambridge University Press, 2014.

105

Appendix

Source: “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.28

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2

to climate change, but also transition risks that affect businesses via the environmental
changes brought by the transition to a decarbonized society.
For the stable provision of insurance, the non-life insurance sector has implemented
comprehensive risk management (ERM, etc.) to appropriately manage its own risks, including
measures against large-scale disasters. Based on the TCFD recommendations, it is important
to show how non-life insurance companies including their management, view, manage, andrespond to these climate-related risks.
The non-life insurance sector also provides various services to support disaster prevention
and mitigation, along with insurance products (products for Green Infrastructure, etc.) that
contribute to climate change responses. These measures are taken to increase society's

Chapter 3

resilience to climate change and drive partner companies’ innovation toward a decarbonizedsociety, and are focused on areas where the non-life insurance sector can actively contribute.
A company can effectively demonstrate the contribution of the non-life insurance sector toclimate change responses by explaining how such measures are addressed.
Based on these considerations, the following disclosures may be considered.

Chapter 4

Potential impacts of climate change (risk identification and assessment)
The following examples show disclosures that are expected, under the TCFD
recommendations, to indicate the climate-related physical risks and transition risks that may
affect the insurance business, related services, and financial conditions in the future, as well
as how the impacts are perceived. If quantitative disclosure is difficult, the information may
be disclosed in a qualitative form.

Appendix(Disclosure examples)⚫ Impacts under the assumption that the frequency and magnitude of natural disasters
changed (increased insurance claim payments, impact on underwriting profit, etc.)⚫ Impact of environmental changes accompanying the transition to a decarbonizedsociety (impact on insurance premiums from the changes in the industrial structure
resulting from strengthened laws and regulations and the development of newtechnologies)

Management of strategies and risks related to climate change
Based on the risks identified above, it is recommended to indicate the strategies and policies
in place and the internal systems established to address climate-related issues and manage
risks.
There may be ways to develop strategies and policies specific to climate-related issues, aswell as to include climate-related elements in strategies and policies for integrated risk
management. Each company may explain its own strategies and policies based on its situation.
106

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2

In addition, given that the TCFD recommendations encourage companies to explain their
responses to climate-related issues, including the roles of their boards of directors andmanagements, and to indicate their approaches to managing climate-related risk, it is a good
way to indicate how climate change is integrated, in the case where climate change is included
in integrated risk management, as well as the internal review system including the structureof the board of directors and committees and the role of management. In addition, efforts
such as stress testing and scenario analysis conducted as part of climate-related risk
management, and utilization of reinsurance may be presented.
(Disclosure examples)management, etc.)⚫ Climate risk management Initiatives (initiatives in integrated risk management, etc.)⚫ Stress testing / scenario analysis as part of climate-related risk management, use ofreinsurance, etc.

(Disclosure examples)⚫ Initiatives to enhance risk assessment and stress testing / scenario analysis related toclimate change (research projects and participation in international initiatives, etc.)⚫ Disaster prevention and mitigation initiatives (research projects and enlightenment
activities, etc.)

107

Appendix

may be improved through in-house research and studies, and through participation in external
initiatives. Efforts such as these can increase a company's resilience to climate change byenhancing risk management and risk reduction.
Non-life insurance companies have also traditionally provided risk consulting to customers
through insurance contracts, carried out activities to raise stakeholder and community
awareness of disaster prevention and mitigation, and engaged in various research activities incooperation with external organizations. By disclosing efforts that help to improve theresilience of society as a whole to climate change, companies can effectively demonstrate theircontributions to society.

Chapter 4

Enhancing risk management and reducing risks
As risks related to climate change are changing, methods and analysis for risk assessment

Chapter 3⚫ Strategies and policies on climate-related issues (indicate if they are implemented aspart of an integrated risk management system)⚫ Internal review system (structure of the board of directors / committees, roles of theChapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2

Opportunities brought by climate change
The TCFD recommendations call for disclosure of information not only on the risks causedby climate change, but also on the opportunities brought by climate change. Climate change
may change the needs of customers for insurance, other products, and insurance-related
services. Responding to these new needs also represents a new business opportunity for nonlife insurance companies.
Meanwhile, new technologies with lower environmental impact are emerging toward thetransition to a low-carbon society, and their emergence generates a demand for new products
and services for their adoption. Furthermore, the compensation provided for new
technologies is expected to make it easier for business partners to develop and promote such

Chapter 3

technologies. Compensation will thus help to spread and promote new technologies toward
the transition to a low-carbon society, and will also encourage innovation by business partners.
If a company has taken measures to provide products and services that respond to these
new risks and technologies, or has developed completely new products and services, orrevised its existing products and services, in response to changes in the environment andcustomer needs, it may also present such measures in its disclosure.

Chapter 4(Disclosure examples)⚫ Provision of new products and services to respond to natural disaster risks⚫ Provision of products (insurance products for green infrastructure) that aim toAppendix

promote climate change countermeasures⚫ Provision of various services to support disaster prevention and mitigation (provisionof consulting services on climate-related risks to corporations, etc.)108Chapter 3 Sector-Specific Recommended Disclosures

International Shipping

The TCFD Recommendations describe climate-related risks and opportunities for theTransportation group, including the shipping industry, as shown below. This section provides
supplemental guidance focusing on the international shipping industry.

Chapter 1(10)

Description of the Transportation group in the TCFD recommendations

59

Moody’s Global Credit Research, “Moody’s: Auto sector faces rising credit risks due to carbon transition.” September 20,
2016.

109

Appendixconsidering the climate-related risks and opportunities.
Consequently, disclosures should focus on qualitative and quantitative assessments
and potential impacts of the following: Financial risks around current plant and equipment, such as potential early writeoffs of equipment and R&D investments or early phasing out of current products
due to policy constraints or shifts or the emergence of new technology.

Chapter 4

major drivers. First, policymakers are setting
stricter targets for emissions and fuel efficiency from transportation carriers. Second, newtechnology around low-emission/fuel-efficient carriers (e.g., electric cars) is creating ashift in the competitive and investment landscape. New technological innovations andnew market entrants can weaken companies’ market position, resulting in lower
revenues, higher costs, and narrower margins. The effects of these two drivers may becompounded by the length of product cycles for transportation products, such as cars
and trucks, and especially for air and rail and marine equipment. As with the Energy
Group, investments in long-lived assets (e.g., manufacturing facilities, airplanes, ships)
and longer planning horizons are relevant factors that must be taken into account when

Chapter 3

production and, more important, the usephase. The industry is under increasing policy
and regulatory pressure to achieve emission
targets for the use phase. Increasing
constraints on emissions fuel efficiency willcontinue to impact costs in this group,particularly around investments in innovation(new technologies and efficiencies)59 .
The Transportation Group, therefore, will
likely face financial challenges from two

Chapter 2

2. Transportation Group
Transportation is critical to the economy
and drives a significant portion of emissions
and demand for energy through theChapter 3 Sector-Specific Recommended Disclosures

Chapter 1Investments in research and development of new technologies and potential shifts
in demand for various types of transportation carriers.
Opportunities to use new technologies to address lower-emissions standards andincreased fuel-efficiency requirements, including transport vehicles (cars, ships,
planes, rail) that run on a range of traditional and alternative fuels.

Chapter 2

Source: “Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures”(June 2017), P.56

International shipping accounts for the majority of international trade in terms of weightand supports global logistics. While the CO2 intensity per ton-kilometer (specific CO2

Chapter 3
Chapter 4

emissions) of international shipping is lower than most transport modes, CO2 emissions frominternational shipping account for about 2% of global CO2 emissions, and emissions reductions
are being required. The International Maritime Organization (IMO), an United Nations
specialized agency for maritime affairs, is promoting GHG reduction in international shipping.
One of the characteristics of the shipping industry is that ships generally have a long service
life of about 20 to 30 years, and it takes several years from ordering to completion. For thisreason, it is important to consider CO2 reduction measures from a medium- to long-term
perspective. Other notable characteristics are a) vessels are basically custom-made, making it
difficult to retrofit standard equipment, and b) the shipping industry needs to be cautious
about introducing new technologies since breakdowns on the high seas must be avoided at all
costs.

Appendix

Shipping companies use vessels chartered by ship owners, along with vessels owned by thecompanies themselves. Therefore, it is necessary for the entire charter chain (owners andusers) to make efforts when installing energy-saving equipment that requires additional costs.
Initiatives for medium- to long-term transition
Two major changes are expected in international shipping along the decarbonization
pathway: change in ship fuel and change in the transported freight. Regarding the former, inthe long term, it is necessary to implement vessels which consume fuels that are not currently
used. In addition to the introduction of LNG-fueled ships, which is considered as a mediumterm measure, many options such as hydrogen, ammonia are under discussion, and shipping
companies are required to adapt flexibly. LNG-fueled vessels are also effective as a measureagainst air pollution, and there are some pioneering cases of introducing LNG-fueled ships byusing transition finance.60
In addition, freight to be transported may change significantly due to changes in demand
stemming from global reduction of fossil fuel consumption, increase of alternative fuels such
60

A financial instrument designed to support GHG reduction efforts in accordance with a long-term strategy for
decarbonization. Including funding to achieve steady low carbon emissions even when decarbonization technologies are nottechnically and economically feasible at present.

110Chapter 3 Sector-Specific Recommended Disclosures

Customers are requesting that CO2 emissions be reduced throughout the supply chain, andthese measures will reduce the transition risk to the shipping industry. In addition, reducing
the CO2 emissions and intensity of commercial vessels operated by the company can reduce
61

Carbon dioxide capture and storage. CO2 capture and storage technology, in which CO2 emitted from power plants andchemical plants is separated from other gases, collected, stored and injected deep into the earth.
62 Energy Efficiency Design Index (EEDI) is an index and requirement to keep CO emissions related to fuel efficiency of new
2
vessels below a certain level.
63 Energy Efficiency Existing Ship Index (EEXI) regulation requires to keep an index similar to EEDI below a certain level withan objective to impose equivalent fuel efficiency standard for existing ships as newly-built ships.
64 Carbon Intensity Indicator (CII) rating is a system that evaluates annual average fuel economy performance on a 5-point
scale of A-E.

111

Appendix

As a short-term measure in the GHG emission reduction strategy, two systems of regulation
will be imposed: EEXI regulation 63 for technical regulation and CII rating 64 for operational
performance (Adopted in June 2021, effective from 2023). In particular, the EEXI regulation
will establish a standard on CO2 emission factor, and imposes restrictions on engine power
output when the index is not attained. The CII rating on the other hand will have a five-level
rating based on actual performance of fuel consumption.
In addition, one method of GHG emissions reduction which is characteristic of shipping isslow steaming. Slow steaming without facility renewal is effective, but slow steaming involving
changing the ship shape to suit reduced speed as well as retrofitting of engines, etc. are being
carried out. Cooperation with shippers and ports is important in implementing slow steaming.

Chapter 4

Initiatives to reduce short-term GHG emissions
In order to reduce GHGs, an international treaty (MARPOL Convention) provides for the
improvement of energy intensity (EEDI62) for new ships (applying to ships above a certain size,
to be reduced by 30% from the baseline from 2025 with more stringent targets for container
ships). In addition to reducing GHG emissions, ships are also required to significantly reduce
the sulfur content of their fuels from 2020. For this reason, introduction of LNG-fueled vessels
is being promoted as described above.

Chapter 3along the pathway to carbon neutrality.
⚫ How transition risk are analyzed and reflected in governance.

Chapter 2(Disclosure examples)⚫ Efforts to utilize ships applying new technologies such as energy efficient vessels andalternative fuel vessels in merchant fleets.
⚫ Efforts to cooperate with shipbuilders and shipowners on the conversion to ships
applying new technologies such as energy efficient vessels and alternative fuel vessels.
⚫ Changes in freight movement (i.e. changes in freight and their countries of origin)

Chapter 1

as hydrogen and ammonia, transportation of CO2 for CCS61, and increase in renewable energy
devices and rare metals. It is desirable that efforts to address such changing demands aredisclosed.

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1business risks and create opportunities.

Chapter 2(Disclosure examples)⚫ CO2 emission intensity of vessels used by the company (applicable standards andperformance. AER65, EEOI66, CII ratings, etc.)⚫ Improvements in operation (cooperation with shippers and ports to realize thesegoals) such as slow steaming, reduced offshore waiting, weather routing, andimproved maintenance, and technical improvements such as retrofitting energysaving equipment.

Chapter 3

Initiatives to Reduce Physical Risk
The industry may be impacted by both acute and chronic risk such as the increase infrequency and severity of natural disasters, changes in ocean currents, and the effects ofreduced sea ice. Impacts of ports and docks due to sea level rise are also expected.

Chapter 4(Disclosure examples)⚫ Establishment of guidelines and efforts for physical risk reduction such as hullstrengthening.
⚫ A system to identify physical risks and reflect them in governance.

AppendixBusiness Opportunities
Social change towards decarbonization also provides a new business opportunity for the
shipping industry. If shipping companies adopts the use vessels using new technologies suchas high-efficiency vessels, alternative fuel vessels, owns vessels with lower CO2 emissions thanconventional vessels, or if their fleet actively take measures to improve operational efficiency
such as slow steaming, such measures will lead to a reduction in CO2 emissions through thevalue chain of freight, and disclosure of such measures may be competitively advantageous.
In order to transport hydrogen and ammonia, specialized ships will be needed. In addition,
demand for copper and rare metals is expected to increase as a result of electrification. It is
important to accurately grasp these new changes in demand and freight movements, and todemonstrate flexibility in responding to them.

65

Annual Efficiency Ratio (AER) is an index of operational carbon intensity calculated using the designed deadweight of thevessel.
66 Energy Efficiency Operational Indicator (EEOI) is the operational CO2 emissions factor, based on amount of freighttransported.

112

Chapter 3 Sector-Specific Recommended Disclosures

Chapter 1
Chapter 2(Disclosure examples)⚫ Policies and outcomes for handling new freight movements such as transport ofhydrogen, ammonia, and CO2 toward carbon neutrality⚫ Initiatives to introduce high-efficiency vessels, alternative fuel vessels, and othervessels that use new technologies, and to work on novel method of navigation⚫ Organizational structure to identify risks and opportunities related to the above andreflect them in corporate governance.

Chapter 3
Chapter 4
Appendix113

Chapter 4 Conclusion

Significance of this Guidance
Discussions related to TCFD have previously been led mainly by the financial authorities andfinancial industry players. Moving forward, not only are financial companies be expected tomeet requirements of the financial authorities, but non-financial companies also need toactively communicate their strengths to investors and other stakeholders. Non-financial
companies and investors and other stakeholders will thus need to have constructive dialogue
to deepen their mutual understanding, in order to realize the virtuous cycle of environmentand growth.
The TCFD recommendations are a useful tool for dialogue between non-financial companies
and investors and other stakeholders. This Guidance, therefore, presents commentaries on the
TCFD recommendations and supplemental documents and sector-specific recommended
disclosures to allow non-financial companies to make effective climate-related financial
disclosures in accordance with the TCFD recommendations.
It is anticipated that many companies support the TCFD recommendations and to makebetter disclosures in accordance with this Guidance.

First-try Disclosures
On the other hand, disclosure in accordance with the TCFD recommendations requires
careful consideration of many points, including in particular scenario analysis, before acompany can begin to provide the information when it starts the disclosure. As such, there
may be cases where a company hesitates to make disclosures or to support the TCFD
recommendations. In view of this, the TCFD has presented an illustrative roadmap to
encourage companies to initially make disclosures on the types of information they canmanage, such as their Governance and Risk Management, and then to gradually move on todisclosures related to Strategy and Metrics and Targets over a time frame of three years. As
seen above, disclosure in accordance with the TCFD recommendations should not necessarilybe thorough from the start. The important point for a company is to begin the disclosure
process and improve and expand its disclosures step by step.

Refining for Better Disclosure
As many companies begin to work on disclosure, the expertise of the disclosure preparers
and best practices of disclosure will accumulate. As a result, there will be more “questions”
that need to be explained in Chapter 2 of this Guidance, and more case examples of disclosures
to clarify those questions.
If more non-financial companies disclose, it will be possible to improve the sector-specific114

Chapter 4 Conclusion

Investors and other stakeholders have emphasized the effectiveness of engagement as ameasure to combat climate change in recent years 67 . The Green Investment Guidance"Engagement takes time and effort, but might be the most effective way to accelerate the transit to a low-carbon
economy while avoiding the situation of stranded workers and communities.” (Investor Leadership Network, 2019, TCFD
Implementation: Practical Insights and Perspectives from Behind the Scenes for Institutional Investors, p. 18),
68 “Towards a More Decision-Useful TCFD Disclosure”(https://tcfd-consortium.jp/en/news_detail/20081201)

115

Appendix

67

Chapter 4

is a concern that excessive standardization of disclosure content can have a negative impact
on the decision-making of investors and other stakeholders. The TCFD Consortium has calledon policymakers and other stakeholders in Japan and abroad on the above points 68.
The TCFD Consortium intends to continue its efforts to further enhance the content of this
Guidance by refining the commentaries pertaining to TCFD disclosure, expanding sectorspecific disclosure recommendations, and adding disclosure case examples, in order toenhance corporate value through TCFD disclosure.

Chapter 3

published by the TCFD Consortium in October 2019 states, “As a practice of investors and otherstakeholders, it is more important to be engaged in dialogue with companies to facilitate theirclimate actions than to simply divest based on superficial criteria; engagement can lead to theenhancement of corporate value through improved efforts, thus increasing opportunities forinvestment.”
As these engagement efforts become more active, it will be important for companies toactively engage in TCFD disclosure and deepen their engagement with investors and otherstakeholders through disclosure in order to enhance their future corporate value. In order tofoster such relationship between companies and investors and other stakeholders, it isdesirable that information disclosure be conducted in a voluntary and flexible manner. There

Chapter 2

Increasing Corporate Value through TCFD Disclosure

Chapter 1

recommended disclosures presented in Chapter 3 and to consider expanding the industrial
sectors. On a global level, the SASB has presented sector-specific sustainability metrics, while
WBCSD is undertaking activities for sector-specific disclosures. As seen above, there havealready been moves to work on sector-specific disclosure globally, and Japan is ready toactively contribute to such moves. This revision of the TCFD Guidance is based on such
recognition.

Appendix
Appendix 1：
Members of the TCFD Consortium Steering Committee, List of GIG Supporters, and Numberof TCFD Consortium Members(1) Members of the TCFD Consortium Steering Committee*In alphabetical order[Chair]Kunio Ito

Director of Hitotsubashi CFO Education and Research Center[Steering Committee member]
Takao Aiba
Takehiro Fujimura

Yasunori Iwanaga
Masaaki Izumiyama
Masaaki Nagamura

Manabu Shibata
Kazunori Takahashi
Keisuke Takegahara

Toru Terasawa
Hiroyuki Tezuka

Masaharu Tounai

Akira Watanabe
Tomoya Yamamoto

Project General Manager, Environmental Affairs Div., Advanced R&D
and Engineering Company, Toyota Motor Corporation
Member, Task Force on Climate-related Financial Disclosures (TCFD)(General Manager Corporate Sustainability and CSR Department,
Mitsubishi Corporation)
Chief Responsible Investment Officer, Amundi Japan Ltd.
General Manager, Environment Division, Nippon Steel Corporation
Fellow, General Manager, International Initiatives, Corporate
Planning Department, Tokio Marine & Nichido Fire Insurance Co.,Ltd.
Director, ESG Promotion, Kao Corporation
Deputy General Manager, Sustainability Promotion Division, Hitachi
Ltd.
Executive Officer, Deputy Chief Research Officer, Chief Manager of
Sustainability Management Office, Corporate Planning &Coordination Department, Development Bank of Japan Inc.
[Chair of the Information Utilization Working Group]
Head of Responsible Investment Group Investment Division, AssetManagement One Co., Ltd.
Fellow & General Manager, Climate Change Policy Group,Technology Planning Department., JFE Steel Corporation[Chair of the Information Disclosure Working Group]
Environment General Manager, ESG Office, Corporate Management& Planning Unit, Tokyo Electric Power Company Holdings
Corporation
Managing Director, Head of Sustainability Office, Corporate Planning
Division, MUFG Bank Limited
Deputy General Manager, Government Relations Department,
116

Appendix

Nippon Life Insurance Company
General Manager, Corporate
Sumitomo Chemical Co., Ltd.

(Note) Affiliation and position as of July 27, 2020.

Communications

Department,

Chapter 1

Toshihiro Yamauchi

Chapter 2
Chapter 3
Chapter 4
Appendix117Appendix(2) List of GIG Supporters

Chapter 1

GIG Supporters are investors and other stakeholders that utilize or plan to utilize the Green
Investment Guidance. Case studies of climate information disclosures that should be referred
to in Japan and abroad were recommended in the preparation of this TCFD Guidance 2.0.

Chapter 2

1.
2.
3.
4.
5.
6.

BNP Paribas Asset Management Co., Ltd.
Amundi Japan Ltd.
Manulife Investment Management Co., Ltd.
Nomura Asset Management Co., Ltd.
Nikko Asset Management Co., Ltd.
Nippon Life Insurance Company

Chapter 3
Chapter 4

7. T & D Life Group8. Mitsubishi UFJ Trust and Banking Corporation
9. Asset Management One Co., Ltd.
10. Resona Asset Management Co., Ltd.
11. Sumitomo Mitsui Trust Asset Management Co., Ltd.
12. BlackRock Japan Co., Ltd.
13. Sompo Asset Management Co., Ltd.
14. Tokio Marine Asset Management Co., Ltd.
(Fourteen companies in total, in random order, as of July 27, 2020)

Appendix(3) Number of TCFD Consortium Members
Total of 271 organizations (as of July 27, 2020)

118

Appendix

Appendix 2：

#

Name

Summary
A projection by IEA focusing on energy
technologies. Provides a forecast thatis further into the future than WEO.
A long-term forecast on energy-related
issue, published annually by IEA.

1IEA Energy Technology Perspectives

2017

2

IEA World Energy Outlook

2019

3

WBCSD: TCFD Preparer Forums

2018
and
onwards

CDSB / SASB: TCFD Good PracticeHandbook

2019

8

Investor Leadership Network (ILN): TCFD
Implementation Practical Insights andPerspectives from Behind the Scenes for
Institutional Investors
Financial Reporting Council (FRC): Climaterelated reporting: Where to next?

2019

Network for Greening the Financial System(NGFS): A Sustainable and Responsible
Investment Guide for Central Banks ’Portfolio Management
BCS Consulting: Task Force on Climaterelated Financial Disclosures (TCFD)
Recommendations: Global Progress
Report for the Banking Sector
TCFD Consortium: Guidance for Utilizing
Climate Information to Promote Green
Investment(GreenInvestment
Guidance)

2019

6

9

10

11

12

2019

2019

2019

119

Provides an overview of investors’
expectations and preparer
perspectives on responding to TCFD
recommendations.
Provides guidance on responsible
investment by central banks

2019

Provides an overview of disclosure byfinancial institutions.

2019

Guidance for investors to better
understand the information disclosed
based on TCFD recommendations.

Appendix

75

Chapter 4

2019

Chapter 3

Climate Disclosure Standards Board (CDSB)
and Sustainability Accounting Standards
Board (SASB): TCFD Implementation Guide
International Institute of Finance (IIF):
Climate-related Financial Disclosures:
Examples of Leading Practices in TCFD
Reporting Financial Firm
IIRC ： Corporate Reporting Dialogue,
Driving Alignment in Climate related
Reporting4

Formulates TCFD implementation
guidance for industrial sectors, withthe cooperation of key companies. To
date, guidance for the oil and gas
sector, chemical sector, electric utilities
sector, food, agriculture and forest
products sector, and construction andbuilding materials sector are published
Describes the alignment of CDSB
Framework and the SASB standards
with TCFD recommendations.
Provides an overview of
implementation of TCFD
recommendations by financial
institutions.
Report on initiative to improve theconsistency of the framework andstandards related to corporate
reporting, and to contribute to its
disclosure and use.
Compilation of good examples of
TCFD-based disclosure, withdescriptions on them.
Summary of issues to be noted byinstitutional investors in implementing
TCFD recommendations

Chapter 2

Year

Chapter 1

List of Key Relevant Literatures Reviewed During the TCFD Guidance RevisionAppendix

Chapter 1
Chapter 2

#

Name

Year

Summary

13

Life Insurance Association of Japan:
Climate Change Starter's Guide

2019

14

Global Sustainable Investment Alliance(GSIA): Sustainable Investors Poll on
TCFD Implementation
Bank of England: The 2021 biennial
exploratory scenario on the financial
risks from climate changeInternational Association of Credit
Portfolio Managers (IACPM)/Oliver
Wyman: Climate Change: Managing a
New Financial Risk
European Financial Reporting Advisory
Group (EFRAG): How to improve ClimateRelated Reporting
MinistryoftheEnvironment:
RecommendationsforPlanning
Management Strategies Using TCFD - A
Practical Guide for Scenario Analysis
Incorporating Climate-Related Risks andOpportunities ver 2.0
CDSB: TCFD to do list How do I know I've
met the TCFD recommendations?

2019

Provides guidance for life insurancecompanies in charge of dealing withclimate change explaining the basics
of responding to climate change.
Survey on the implementation of
TCFD recommendations by financial
institutions.
A proposal on climate risk scenario
analysis to be conducted by the Bankof England in 2021.
Survey and recommendations for
IACPM member companies
consisting of financial institutions.

CDSB/CDP:
The
building
blocksConnecting CDP data with the CDSB
Framework to successfully fulfill the
TCFD Recommendations
Network for Greening the Financial
System (NGFS): Guide to climate scenario
analysis for central banks and supervisors

2020

15

16

17

Chapter 3

18

Chapter 4

19

20

Appendix

21

2019

2019

2020

2020

2020

2020

120

Guidance prepared for the purposeof improving corporate reporting andsharing good practices.
A practical guide to help companies
implement scenario analysis in linewith TCFD recommendations.

A checklist of nine steps to ensuredisclosure consistent with the TCFD
recommendations.
A guidance to effective disclosure
based on TCFD recommendations
using data for prepared for CDP and
the CDSB framework.
A guidance to conduct scenario
analysis to evaluate climate risk forcentral banks and supervisors.