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TCFD - work to understand and disclose the impact

The azbil Group considers climate change to be a key issue to be tackled over the long term (materiality) to contribute “in series” to a sustainable society. The azbil Group endorsed the recommendations by the Task Force on Climate-related Financial Disclosures (TCFD) to accurately understand and properly disclose the impact of climate change on its business activities. We will continue to disclose information in line with TCFD recommendations.

Governance

The azbil Group recognizes climate change as one of the materialities in management in accordance with the azbil Group philosophy. The matter is deliberated in the Management Meetings from the perspective of business impact and financial impact disclosure, and the Board of Directors appropriately supervises the deliberations.

Strategy

Based on information from the Intergovernmental Panel on Climate Change (IPCC), the International Energy Agency (IEA) and other organizations, we have identified the long-term business risks and opportunities for the azbil Group until 2030 according to a 1.5/2℃ scenario^*1and a 4℃ scenario.^*2 We understand the 1.5°C scenario to have the same opportunity and risk trends as the 2°C scenario, but with a greater degree of impact.
We considered both the opportunities and risks in each of our businesses based on these rising temperature scenarios and have concluded that the opportunities for our businesses to contribute to CO2 reduction significantly outweigh the risks.
We have developed and published a decarbonization transition plan aimed at achieving carbon neutrality by 2050.

*1 This scenario assumes that temperature rise is contained within a sustainable range due to the implementation of stricter regulations and the introduction of technological innovations aimed at a decarbonized society.

*2 This scenario assumes that no effective measures to reduce GHG emissions are implemented, temperature continues to rise, and extreme weather and natural disasters increase.

Details of strategy (opportunities and risks)

We considered both the opportunities and risks in each of our businesses based on rising temperature scenarios and concluded that the opportunities for our businesses to contribute to CO2 emissions significantly outweighs CO2 reduction significantly outweigh the risks.
We divided risks into physical and migration risks and analyzed their financial impact. Although physical risks were estimated based on several assumptions, we believe that their impact on business will be limited due to the countermeasures we have in place, such as decentralizing our production network and formulating business continuity plans. For migration risks, we established the 2030 GHG Emission Reduction Targets based on SBTs to gradually reduce our GHG emissions, and we are putting systematic risk reduction measures in place. Emissions from the azbil Group’s business activities (scopes 1+2) were approximately 0.016 million metric tons. Even if carbon prices rose by ¥5,000 to 10,000 per ton, the total financial burden would be limited to around ¥100–200 million. However, after quantitative evaluations of the impact on the azbil Group’s business in 2030 in the hypothetical 1.5°C/2°C scenarios, we expect it will lead to an effective reduction of CO2 at customers’ sites and the expansion of new energy markets. We therefore estimate this will contribute to an increase in sales of at least ¥12 billion per year.

Building Automation business: approx. 7 billion yen

With the growing adoption of renewable energy sources and rising electricity rates, we anticipate heightened demand for our existing energy conservation services, including our total energy management service (TEMS), driven by the increased installation of related and high-efficiency equipment. We also expect an expansion in business opportunities for one-stop services that combine energy procurement and emissions trading (such as from renewable energy sources) with an energy management system (EMS) that centrally manages everything from the visualization of CO2 emissions to carbon offsets. Our estimates are based on scenarios with certain assumptions, historical installation data, and customer needs in the hospital and hotel markets, where energy use is high.

Advanced Automation business: approx. 5 billion yen

We anticipate an increase in business opportunities in markets that contribute to carbon neutrality (hydrogen, CO2-free ammonia, carbon recycling / CCUS^*). Our estimates are based on a scenario with certain assumptions arising from current trends, past installations in the target market, and the target market’s growth rate according to third-party research organizations.

※ Carbon dioxide Capture, Utilization and Storage

Disclosure of opportunities and risks

Risk Management

Based on our risk management systems, we comprehensively manage risks that could have a significant impact on operations, including those connected to climate change.

Metrics and targets

We promote efforts to combat climate change to realize net zero for CO2 emissions by 2050 through our business activities, which contribute “in series” to the achievement of a sustainable society, by establishing metrics and targets that consider all azbil Group customers, the azbil Group itself, and our entire supply chain.

Click here for more information about Our Long-Term Vision for Combatting Global Warming.