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An Outside Opinion of Our Environmental Initiatives

outside opinion

Mr. Goto and an azbil Group employee responsible for the environment

The following is an outside opinion from Mr. Toshihiko Goto, Chief Executive Officer, Sustainability Forum Japan, a non-profit organization, about the environmental initiatives of the azbil Group.

Human society opted to shift its paradigm concerning the socio-economic systems in 2015 by adopting the sustainable development goals (SDGs) of the 2030 Agenda for Sustainable Development and the Paris Agreement. In SDG 13th goal, which concerns climate change, the Agenda indicates that this goal is related to the United Nations Framework Convention on Climate Change, so the two are what we could call twin efforts.

The official name of the Agenda is “Transforming Our World: the 2030 Agenda for Sustainable Development.” Furthermore, the Agenda says, “We are determined to take the bold and transformative steps which are urgently needed to shift the world onto a sustainable and resilient path.”

The Paris Agreement aims to keep the global rise in temperature during this century to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 °C . According to a special report called “Global Warming of 1.5 °C” by the Intergovernmental Panel on Climate Change (IPCC), which was released on October 8, 2018, global warming is likely to reach 1.5 °C around 2040 and net CO2 emissions will need to reach zero around 2050 to keep global warming at 1.5 °C.

These environmental goals indicate that the policy and legal risks associated with transformation, which is one of the main risks among the transition risks, will rapidly increase around the world, and conversely such a situation could present great business opportunities for Azbil.

To be sure to take advantage of business opportunities, the two ways described below can be considered.

One is to make a declaration of intent to become carbon-free as soon as possible. For example, Azbil can consider becoming a member of RE100 [i.e., a company committed to 100% renewable energy], acquiring certification from Science Based Targets, or participating in the Japan Climate Initiative. I think Azbil should be at the forefront of such efforts in order to avoid being in the situation of the proverb, “The shoemaker's wife goes barefoot.”

The other way is for each company department to consider the risks and opportunities for its own work that are presented by the 169 SDG targets, and consider how to use the opportunities for your business, and incorporate these ideas into the medium- and long-term business plans. In particular, the purchasing department needs to look at the risks and opportunities in the supply chain (upstream), and the sales department needs to do the same downstream.

In order to take great advantage of this paradigm shift, I hope that Azbil will define its aspirations using middle-up, top-down collaboration , and announce a plan based on those aspirations. Such a plan would also serve as a proactive response to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

I was told in our meeting that Azbil is making steady efforts in various areas. Azbil is also making efforts in the IoT and artificial intelligence (AI) technology areas and in the training of engineers. My impression is that IoT and AI technology has been widely implemented starting around 2017 in Japan, so I would expect Azbil to accelerate its efforts in this area. The aforementioned things are important tools for proactive change.

In addition to environmental efforts, I would like to see Azbil make more information on diversity available to the public. Although it takes time to achieve women’s empowerment, diversity in the work force is essential for innovation, and poor diversity management will reduce productivity. There is also a research paper reporting that diversity does not result in better performance unless there are more than two female executives in the board, so this should be considered as well.

Azbil’s environmental efforts to date are remarkable, but since great business opportunities are expanding as described above, I hope that Azbil will make creative efforts so that it does not miss out on the opportunities.

I think it is good that an executive officer describes the company’s efforts concerning SDGs in his own words in the integrated annual report, but if the report is revised to include onsite workers together with their comments, it may help to increase employees’ motivation to participate in such efforts.

Releasing an integrated annual report is good, but there is a misunderstanding in Japan, I think. To write such a report, it is crucial to apply integrated thinking, which combines financial and non-financial information, and the report should provide a concise story for investors. Additionally, companies should provide in-depth information about CSR (ESG) for ESG [environmental, social and governance] investments and loans. Sufficient information should be disclosed using both a booklet and the website. I hope my advice will be helpful for the next annual report. It will be a good idea to make detailed data available on the web for reference.

Visualization system

Visualization system

Thermal control testing lab

Thermal control testing lab


Toshihiko Goto, Chief Executive Officer, Sustainability Forum Japan, a non-profit organization

Toshihiko Goto, Representative Director of Sustainability Forum Japan, a non-profit organization

Profile

  • CEO, Sustainability Forum Japan
  • Chairman, the Environmental Auditing Research Group
  • Chairman, the Sustainable Management Forum Japan
  • Founder, the Japan Sustainable Investment Forum
  • Director, Global Compact Network Japan
  • Director, the Green Finance Organisation
  • Director, Earthwatch Institute Japan
  • Director, the Environmental Partnership Council
  • Executive Director, the Japan Society for Global System and Ethics
  • Chairman, Network for Sustainability Communication
  • Director, the Association for Resilience Japan
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  • Member of the EPE Subcommittee of the Environmental Management Standards Committee
  • Chairman of the Ministry of the Environment's Working Group for the Secretariat of the Environmental Reporting Platform Development Pilot Project
  • Leader of the Tripartite Roundtable Meeting on Environmental Industry attached to the Tripartite Environment Ministers Meeting
  • Member of Environmental Communications Award Judging Committee
  • Member of the Committee for Preparing Manuals, etc., for Environmental Reporting Guidelines 2018
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  • Graduated from University of Tokyo, Faculty of Law
  • Numerous lectures in addition to his books, Kankyō kansa nyūmon (“Introduction to Environmental Audit” (co-authored), etc.