Initiatives to prevent
global warming
Since its establishment in 1952, the ARE Holdings Group has developed its business activities to protect the global environment with the purpose of being "Totally Committed to Protecting the Natural Environment and Preserving Resources," and with the aim to be a leader in creating a circular economy that connects society to the environment.We are achieving both business growth and the solutions to social issues.
Climate change is a common challenge for humankind, and we believe it is one of our business materiality themes. In order to achieve a sustainable society, we will contribute through business activities and reduce our own CO2 emissions.
Disclosures Based on Recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD)
Expressed to Endorse the TCFD and Strengthening the Governance System
In December 2021, we expressed our endorsement for the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) and established a cross-company team for TCFD consisting of Business Unit, Technical Unit, and Administration Unit in order to identify risks and opportunities related to climate change and understand the medium- to long-term impact of climate change on our business, and have considered the countermeasures.
Furthermore, to strengthen the sustainability promotion system, the previous SDGs Promotion Committee has been expanded and will be supervised by the representative director, Representative Director, President & CEO president, changing to a Sustainability Committee consisting of directors in charge of the Business Unit, Technical Unit, and Administration Unit (April, 2022). The Sustainability Committee deliberates on sustainability strategies, plans, policies, risk management, and monitoring on a quarterly basis. Important matters will also be reported at the Group Executive Committee. Climate change-related issues have been addressed in the SDGs Promotion Team, but will be addressed in the Climate Change Working Group.
The Board of Directors shall be informed of the matters discussed by the Sustainability Committee, and important matters shall be resolvedby the Board of Directors to ensure effective governance.
The risks and opportunities identified in the TCFD actions will be reported to the Board of Directors and the Sustainability Committee at least once every year.
Strategy
Extraction of Risks and Opportunities
We extracted risks and opportunities relevant to climate change that will affect our precious metals business (domestic and North American businesses) and environmental preservation business in 2030. We qualitatively assessed them on three levels: "Large", "Medium", and "Small". At that time, we also considered the further impact of climate change from 2030 toward 2050. As a result, "Policy and Legal," "Market," "Technology," etc. were identified.
Summary of Scenario
In the next place, we conducted a scenario analysis to investigate the impact on the business. We adopted two scenarios. One is that the global average temperature is expected to increase by around 4°C by 2100, and the other is that the global average temperature is expected to increase by 1.5°C by 2100, compared to that before the industrial revolution. The analysis was based on the World Energy Outlook 2021 by the International Energy Agency (IEA), the reports by the Intergovernmental Panel on Climate Change (IPCC), and other materials published by the Japanese government.
Results of Scenario Analysis
The 4°C scenario is a world where the current situation continues on, and we found that there would be little impact as of 2030. On the other hand, as we move toward 2050, we anticipate an increase in physical risk: the intensification of natural disasters such as cyclones or floods caused by abnormal weather.
In addition to formulating business continuity management (BCM), we are also taking actions such as selecting a location that is strong against disasters when a plant is moved.
In the 1.5°C scenario, strong policy measures are expected to be taken to achieve carbon neutrality in the mid-century. One of these risks is the introduction of carbon pricing including carbon tax. Being affected by cost increases will become a risk. On the other hand, in the precious metals business, it is likely that the evaluation of recycled metals with relatively low CO2 emissions and their cost superiority will increase. This is an opportunity for the company, which has strengths in the production and traceability of recycled precious metals. In the environmental preservation business, it will be an opportunity for our company which provide systems that help reduce environmental impact.
While reducing risk, we will focus on expanding opportunities.
Risk Management
The Climate Change Working Group will compile the status of responses to risks and opportunities related to climate change and CO2 emissions. The Sustainability Committee will monitor and evaluate them each year. The Board of Directors will also be informed of the contents for supervision and direction. Also, by reporting it to the Group Risk Management Department, it will be reflected in the overall group risk management.
Metrics and Targets
One of our business materiality themes is to reduce CO2 emissions. Accordingly, we have set the following targets:
● Reduce CO2 emissions by 63% (compared to FY2015) by FY2030 (targets are Scope 1 and Scope 2)
In order to achieve the target, we are moving forward with switching to CO2 free electricity, reducing fuel usage, and making our business offices ZEBs (Zero Energy Buildings). We have also declared that we will aim to become carbon neutral in FY2050 (targets are Scope 1 and Scope 2).
CO2 Emission Trends and Emission Reduction Targets
In FY2023, the Group's total CO2 emissions were decreased approximately 31% from FY2015. This does not include the emissions attributed to two outside Japan that joined the Group after the base year. In Japan, they were reduced due to review of each site's electricity contract plans and vehicle replacement and fuel changes resulting from plant transfers, etc. The result was an overall reduction of approximately 60%. Outside Japan, the reduction was due mainly to a decrease in city gas consumption and lower CO2 emissions per unit of production, resulting in a decrease of approximately 7%.
＜Scope of data＞
ARE holdings, Consolidated subsidiaries* (calculation period: April to March)
*The data pertains to consolidated subsidiaries as of March 31, 2024. Data for deconsolidated subsidiaries has been subtracted retroactively, while data for subsidiaries that were previously non-consolidated has been added retroactively, going back to the fiscal year when the subsidiary became consolidated for CO2 Emission Trends.
