Climate Change

The group recognizes that responding to climate change is an urgent issue. In June 2021, we announced our endorsement of the Task Force on Climate-related Financial Disclosures (TCFD) recommendations, and joined the TCFD Consortium. Since then, we have conducted scenario analyses of the risks and opportunities that climate change poses to the group’s businesses, including the Paper and Paperboard Wholesaling, Paper Manufacturing & Processing, Raw Materials & Environment, and Real Estate Leasing segments.* We disclose information on governance, strategy, risk management, and metrics and targets as recommended by the TCFD.
Based on our Sustainability Policy, we will work harder to address climate change and reduce greenhouse gas emissions, and will promptly disclose relevant information.

We established the Executive Sustainability Committee with the aim of promoting sustainable business management in a more proactive way. Under the supervision of the Board of Directors, the Executive Sustainability Committee is responsible for formulating policy and planning strategy on all climate change-related matters for the entire group, as well as overseeing the process of finding solutions to ESG issues and meeting our ESG goals. The Executive Sustainability Committee is chaired by the representative director, president, who has ultimate responsibility for management decisions related to climate change. The progress of matters reviewed and discussed by the committee is regularly reported to the Board of Directors, and important matters are resolved by the Board. Matters resolved by the Board of Directors are then directed to the OVOL Sustainability Promotion Meetings and the OVOL Environment & Safety Meetings for implementation at each group site.

The group has identified risks and opportunities associated with climate change in four business segments: the Paper and Paperboard Wholesaling business, Paper Manufacturing & Processing, Raw Materials & Environment, and Real Estate Leasing, using two scenarios developed by the IPCC, IEA, and other specialist organizations: one in which the increase in average temperature is limited to 1.5°C (2.0°C in some scenarios) and another in which the average temperature increase exceeds 4°C. Risks and opportunities posed by climate change are categorized into transition risks associated with the transition to a low-carbon society and the physical impacts of climate change. In order to incorporate these risks and opportunities into our business strategy, we conducted an assessment of the associated financial impacts in the short-term, medium-term, and long-term.

Based on the financial impact scenario analysis, we expect that the introduction of a carbon tax would have a significant impact, particularly on the group’s paper manufacturing business. On the other hand, we believe that we can lower that impact by promoting the reduction of greenhouse gas emissions.
In terms of physical risks, we estimate that damage to the main bases of the group in Japan due to abnormal weather events such as floods and typhoons would be in the range of JPY200 million to JPY600 million in the 1.5°C (2°C) and 4°C scenarios. In the event of severe damage to a business partner, there is a possibility that factories in the supply chain would not be able to operate and that the transportation of products, raw materials, and fuel would be disrupted, resulting in damage beyond our estimate.

The Executive Sustainability Committee identifies risks and opportunities related to climate change for the group as a whole, formulates response plans, instructs corresponding organizations led by the Corporate Sustainability Division, manages progress of measures, and reports to the Board of Directors. The Board of Directors approves the content of reports or gives instructions on improvements, and monitors results to ensure that appropriate risk management is being implemented. Risk matters related to climate change deliberated by the Executive Sustainability Committee are directed to the Risk Management Meetings, the OVOL Environment & Safety Meetings, and the OVOL Sustainability Promotion Meetings, and reflected in the group’s overall risk management.

In response to climate change, we have set “Japan Pulp & Paper Group Medium- and Long-term Reduction Targets for Greenhouse Gas Emissions.” As part of these efforts, we are implementing various measures to reduce Scope 1 and 2 emissions throughout the group, including switching to biomass boilers and renewable energy, and fundamentally reforming production efficiency through the use of a distributed control system (DCS). As a result, in fiscal 2023 we achieved approximately a 34% reduction in Scope 1 and 2 emissions compared with fiscal 2019 levels.
Regarding Scope 3 emissions, since fiscal 2022 we have expanded the scope of calculation from Japan Pulp & Paper to include consolidated subsidiaries. We plan to actively promote reduction initiatives for Scope 3 emissions going forward.

Energy Consumption

Electricity Consumption

Greenhouse Gas Emissions (3,4,5,6)

Scope 3 Breakdown (Consolidated)

(Unit: 10,000 t-CO2)

	Item	Fiscal year ended March 31, 2022
Category 1	Purchased goods and services	448.8
Category 2	Capital goods	1.0
Category 3	Fuel- and energy-related activities	4.7
Category 4	Upstream transportation and distribution	89.0
Category 5	Waste generated in operations	0.1
Category 6	Business travel	0.0
Category 7	Employee commuting	0.2
Category 8	Upstream leased assets	-
Category 9	Downstream transportation and distribution	1.3
Category 10	Processing of sold products	72.6
Category 11	Use of sold products	0.7
Category 12	End-of-life treatment of sold products	94.6
Category 13	Downstream leased assets	2.5
Category 14	Franchises	-
Category 15	Investments	-
Scope 3 Total		715.6

• Calculation standard: Ministry of the Environment’s “Corporate Value Chain (Scope 3)
  Accounting and Reporting Standard” and “GHG protocol: Technical Guidance for Calculating Scope 3 Emissions”
• Excluded categories: There are no relevant activities for categories 8, 14, and 15

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