Disclosure of information based on TCFD Recommendations
In April 2022, the FEED ONE Group expressed its support for the recommendations of the TCFD (Task Force on Climate-related Financial Disclosure) and has been actively promoting disclosure using the framework recommended by the TCFD in order to realize the decarbonized society (a society that strives to limit the global average temperature increase to 1.5°C, well below the 2°C level before the industrial revolution) that the Paris Agreement aims for.
Governance, Strategy, Risk Management, and Indicators and Targets, as recommended for disclosure in the TCFD Recommendations, The results of the scenario-based analysis are disclosed in the TCFD report.
We will continue to enhance information disclosure and further accelerate the Group's sustainable growth and climate change initiatives.
Governance
The FEED ONE Group has established an ESG Committee to promote sustainability initiatives. the ESG Committee examines and discusses the Group's issues and measures related to sustainability, including climate-related risks and opportunities, human capital, and human rights. The committee also establishes “One's Actions” linked to the mid-term management plan and business plan, provides support and advice on initiatives, and manages progress. The committee is chaired by the President and Representative Director, and its members are appointed from business divisions, administrative divisions, and divisions directly under the President and Representative Director, respectively, creating a cross-functional structure. The Board of Directors receives reports from the ESG Committee on sustainability issues, including climate-related risks and opportunities, human capital, and human rights, on a regular basis (approximately four times a year), and supervises and advises the Committee on its initiatives.
Strategy
The FEED ONE Group considers addressing climate changes as the management’s top priority, and analyzed the scenario in 2030 to understand the financial impact of climate changes.
In the scenario analysis, we made reference to several scenarios issued by the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC).
●The FEED ONE Group’s climate-related scenarios
| Classification | Outline of scenarios | Main referenced scenarios |
|---|---|---|
| 1.5°C and well-below 2°C scenario |
A scenario in which policies and regulations are implemented toward achieving a decarbonized society, and the global temperature will be controlled at around 1.5°C to well-below 2°C above the pre-industrial levels | ・IEA WEO2023 NZE ・ IEA WEO2023 APS ・ IPCC SSP 1-2.6 ・ IPCC RCP 2.6 |
| 4°C scenario | A scenario in which no new policies and regulations are introduced to address climate changes, and the global temperature will rise about 4°C above the pre-industrial levels | ・IEA WEO2023「STEPS」 ・ IPCC SSP 5-8.5 ・ IPCC RCP 8.5 |
●Results of scenario analysis and relevant measures
| Magnitude of financial impact | High: Impact on profit and loss is over 500 million yen or a material impact on business operation Moderate: Impact on profit and loss is over 100 million yen but 500 million yen or less or a somewhat significant impact on business operation Low : Impact on earnings is 100 million yen or less |
|---|---|
| Timeframe | Short : Within 5 years Medium: Over 5 years but within 10 years Long : Over 10 years |
| Classificatio | Risks/opportunities | Magnitude of financial impact | Timeframe | Measures for risks and opportunities | ||
|---|---|---|---|---|---|---|
| Beyond 1.5/2°C | 4℃ | |||||
| Transition risks | Policy and regulation | Rising cost by a carbon tax implementation |
High | High | Medium | ■Initiatives to reduce CO2 emissions (Scopes 1 and 2) ・Install more energy-saving equipment to factories ・Renovate aging factory facilities Reduce energy consumption by improving productivity by leveraging IoT technology ・Install solar photovoltaic equipment to factories and offices ■Initiatives to reduce carbon tax cost in the supply chain Animal feed: Increase bulk-loading of formula feed, and reduce disassembling of used flexible container bags at factories Aquatic feed: Consider use of a plastic feed bag which contains recycled plastic materials Food business: Continue using pulp mold for commercial egg products, and reduce the consumption of plastic packaging materials used in meat processing Other：Generation of credits from feed rice methane reduction projects |
| Reputation | Declining profit due to a shift in demand toward sustainability-conscious,plant-based meat, etc. | Low | Low | Long | ■R&D of feed with reduced environmental impact ■Branding of environmentally friendly livestock products by promoting sale of livestock products fed with feed with lower environmental impact |
|
| Physical risks | Acute | Physical damage to livestock farmers and farms due to natural disaster, and a decrease in feed sales volume from a disruption of distribution network |
Low | Low | Short | ■Measures for producers Animal feed: Minimize damage by developing disaster response measures at production sites Aquatic feed:Gathering information on wave-tolerant aquaculture facilities and developing feed for these facilities ■Measures to prevent disruption of distribution network Establish a system to have alternate supply routes based on the business continuity plan |
| Suspended factory operation due to a natural disaster |
Low | Low | Short | Minimize damage by developing business continuity plans and conducting drills | ||
| Chronic | Impact on livestock and farmed fish by a rise in temperature and sea water temperature, and a decline in feed sales volume due to a change in optimal production location in Japan |
Low | Moderate | Long | Animal Feed : Collection and dissemination of information on equipment and husbandry management techniques that are undergoing technological innovation Aquatic Feed: Development of products for circulating land-based aquaculture where demand is expected to increase |
|
| Declining profit due to the impact on raw material production/cost caused by climate changes |
High | High | Long | ■Active use of raw materials with price and quality advantages (advantageous raw materials) Animal Feed : To diversify the risk of material procurement and price fluctuation for animal feed, we will import from various countries, and actively use domestic raw materials as alternatives to imported materials, such as feed rice whose production is increasing in recent years Aquatic Feed: We will conduct R&D on low fish meal and fish meal-free feeds to promote switching of materials. We will also build a system to respond flexibly by enhancing collaboration with fish meal producers in and outside Japan, while monitoring the supply condition of producers ■Appropriate price revision Animal Feed : Continue quarterly revision of the sales prices to an appropriate level Aquatic Feed: Sales prices will be revised to reflect changes in raw material cost, though not regularly |
||
| Opportunities | Efficiency Resource |
Reduce energy consumption by efficient production based on IoT technology |
Low | Low | Medium | ■Major Initiatives Visualization of energy consumption through management of electricity and steam by process ■Policy for Future Responses Considering the spread of IoT technology to all plants to further improve energy efficiency |
| Products and services | An increase in feed sales volume by development and sales of sustainable feed and use of sustainable raw materials |
Moderate | Moderate | Short | ■Major Initiatives Animal Feed : Development of feeds that reduce fecal matter and cattle methane gas, and improvement of feed requirement ratio Aquatic Feed: Development and sales of low and no fishmeal feed ■Policy for Future Responses Animal Feed ：Developing environmentally friendly feeds ahead of competitors Aquatic Feed:Make use of insect-derived ingredients,algae,and methanotroph and take steps to commercialize them ahead of other companies, thereby increasing the sales volume of feed |
|
| An increase in feed sales volume due to advanced technology to prevent heat stress of livestock | Moderate | Moderate | Short | ■Major Initiatives Improving livestock productivity through the development and marketing of heat-responsive feed and supplements ■Policy for Future Responses Further research and development and collection of information on equipment and husbandry techniques |
||
| Market | Increase in feed sales volume due to expansion of circulating land-based aquaculture, which is not affected by rising sea water temperatures | Low | Low | Short | Development of new feed performance technology that can cope with water quality control and reduction of excretion, which are not problems in conventional sea surface fishponds and pouring-type aquaculture | |
●Impact of a Carbon Tax Introduction
We have considered the following two types of the Scopes 1 and 2 emissions, covering the Company and consolidated subsidiaries (feed mills and food and farm subsidiaries).
In the 1.5°C scenario, if the Group does not address the reduction in CO2 emissions and such emission increases in line with growing business activities, the carbon tax amount in FY2030 will amount to approximately 1,200 million yen.
Meanwhile, if the Group could reduce CO2 emissions by 50% in FY2030 (vs. FY2020 levels) as planned, carbon tax amount will decrease by approximately 700 million yen to approximately 500 million yen.
Cost related to CO2 emissions reduction is not included.
b. If the Group reduced CO2 emissions by 50% in FY2030 (vs. FY2020)
| Type | 1.5℃ scenario | 4℃scenario | Calculation method |
|---|---|---|---|
| a | 1,206 | 1,034 | Calculate by multiplying a carbon tax* rate to FY2030 CO2 emissions which was adjusted with a business growth rate |
| b | 490 | 420 | Calculate by multiplying a carbon tax* rate to the CO2 emissions in FY2030 when the emissions are reduced by 50%,and after adjusting with a business growth rate |
- *Carbon tax: 1.5°C scenario $140/t-CO2 (Refer to IEA World Energy Outlook 2023 “NZE” for advanced economies)
4°C scenario $120/t-CO2 (Refer to IEA World Energy Outlook 2023 “STEPS” for EU)
Calculated at 150 yen to the US dollar
Risk Management
- 1Process to identify and assess climate-related risks
The TCFD Task Force, established within the ESG Committee, will identify climate-related risks and opportunities for the Group in light of internal and external factors through deliberations with relevant divisions within the Group. The identified climate-related risks and opportunities are analyzed and evaluated quantitatively and qualitatively for their impact on the Group, using the systems and mechanisms (processes and indicators) adopted in the ERM Regulations, and countermeasures are formulated.
- 2Process to manage climate-related risks
The ESG Committee monitors the implementation status of measures to address climate-related risks and opportunities, and improves the measures to address such risks and opportunities by confirming the appropriateness of the measures. The Board of Directors is responsible for overseeing and advising on measures to address climate-related risks and opportunities reported by the ESG Committee.
(Figure 1) Process to identify, assess, and manage climate-related risks and opportunities
- 3 Integration of the process to identify, assess, and manage climate-related risks into overall risk management
With regard to climate-related risks, the TCFD Task Force and the company-wide RM Conference work together to minimize group-wide risks through comprehensive risk management.
Climate-related risks identified by the TCFD Task Force are linked to company-wide RM meetings to deepen the process of identifying, analyzing, and evaluating climate-related risks in self-checks.
In the process of identifying, assessing, and managing climate-related risks, we utilize the systems and mechanisms adopted in the ERM Regulations.
The Company-wide RM Conference identifies, analyzes, and evaluates risks, including climate-related risks, through self-checks at each division, and formulates specific measures for climate-related risks in cooperation with the ESG Committee as necessary.(Figure 2) Collaboration between the ESG Committee and company-wide RM meetings
Metrics and Targets
The Group has set CO2 emissions as key metrics to minimize risks and maximize opportunities related to climate change, and set the medium-term to long-term targets for FY2030 and FY2050.
We have started various initiatives to achieve the reduction targets, and firstly set three reduction measures to
achieve the medium-term targets: (1) energy-saving and energy-generating activities, (2) switch to renewable energy electricity, and (3) carbon offsets with avoided emissions. We then prepared a decarbonization roadmap by taking account of increased emissions due to business growth until the target fiscal year of 2030.
Medium-term targets (FY2030) : Scopes 1 and 2 CO2 emissions 50% reduction vs. FY2020 levels
Long-term targets (FY2050) : Achieve carbon neutrality in entire supply chains
< CO2 Emission Results >
Unit：t-CO2
| Categories | Scope | FY2020 | FY2021 | FY2022 | FY2023 |
|---|---|---|---|---|---|
| Scopes 1 ・ 2 | Total （YoY） |
46,626 | 46,267 （0.8％） |
49,546 （＋7.1％） |
48,412 （2.3％） |
| Scope1 | Simple substance | 6,226 | 7,727 | 11,221 | 10,039 |
| Consolidated* | 10,167 | 9,626 | 9,462 | 9,007 | |
| subtotal | 16,393 | 17,353 | 20,684 | 19,046 | |
| Scope 2 | Simple substance | 14,910 | 14,938 | 14,964 | 14,333 |
| Consolidated* | 15,323 | 13,975 | 13,898 | 15,033 | |
| Simple substance | 30,233 | 28,913 | 28,862 | 29,366 |
- *Food and farm subsidiaries (6 companies) were added to the scope of consolidated subsidiaries (feed manufacturing plants and food and farm subsidiaries) calculation.
- *Totals may not add up due to decimal points
Unit：t-CO2
| Categories | Scope | FY2020 | FY2021 | FY2022 | FY2023 |
|---|---|---|---|---|---|
| Scope3 | Total （YoY） |
1,433,714 | 1,634,175 （＋14.0％） |
1,730,980 （＋5.9％） |
1,737,428 （＋0.4％） |
| Category 1 [Purchased goods and services] |
Simple substance/ Consolidated* | 1,391,146 | 1,611,030 | 1,712,159 | 1,717,291 |
| Category 2 [Capital goods] |
Simple substance/ Consolidated* | 29,172 | 10,375 | 7,581 | 9,918 |
| Category 3 [Fuel-and-energy-related activities not included in Scope 1 or 2] |
Simple substance/ Consolidated* | 6,625 | 6,363 | 4,602 | 4,728 |
| Category 5 [Waste generated in operations] |
Simple substance(Factories and Laboratories)/ Consolidated* | 953 | 1,047 | 950 | 944 |
| Category 6 [Business travel] |
Simple substance（main office） | 71 | 78 | 104 | 162 |
| Category 7 [Employee commuting] |
Simple substance | 336 | 359 | 346 | 346 |
| Category 8 [Upstream leased assets] |
－ | Not applicable | Not applicable | Not applicable | Not applicable |
| Category 10 [Processing of sold products] |
－ | Not applicable | Not applicable | Not applicable | Not applicable |
| Category 11 [Use of sold products] |
－ | Not applicable | Not applicable | Not applicable | Not applicable |
| Category 12 [End-of-life treatment of sold products] |
Simple substance | 854 | 842 | 862 | 897 |
| Category 13 [Downstream leased assets] |
Simple substance | 4,558 | 4,081 | 4,375 | 3,142 |
| Category 14 [Franchises] |
－ | Not applicable | Not applicable | Not applicable | Not applicable |
| Category 15 [Investments] |
－ | Not applicable | Not applicable | Not applicable | Not applicable |
- * Food and farm subsidiaries (6 companies) were added to the scope of consolidated subsidiaries (feed manufacturing plants and food and farm subsidiaries) calculation.
- *Totals may not add up due to decimal points
- *Category 1 is only for raw material procurement (purchase of feed ingredients and livestock products)
< decarbonization roadmap >
< CO2Emission Reduction Efforts >
- Installation location
Chita Plant
- Purpose and Outline
To reduce heat dissipation loss in outdoor steam piping, steam pressure is controlled during times of low steam demand to lower steam temperature, contributing to a reduction in heat dissipation loss.
- Installation location
Shibushi Feed Co.
- Purpose and Outline
Aiming to reduce fuel consumption for steam boilers, the thermal energy of conventionally unused low-temperature wastewater is utilized to efficiently heat hot water and reduce fuel consumption for boilers and other heating sources.