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TCFD - work to understand and disclose the impact

In November 2019, the azbil Group declared to support the TCFD*1recommendations on gaining an accurate understanding of the impact of climate change on business operations, and disclosing that impact in an appropriate manner, in order to combat climate change, which is one of the 17 SDGs and is thought to have a major effect on achieving a sustainable society. After making that announcement, we began organizing tasks within the Group, and summarized azbil Group governance, opportunities and risks connected to climate change. Going forward, we will continue to disclose the impact of climate change on our Group operations in line with the recommendations of TCFD.

TCFD

Governance

The azbil Group recognizes that climate change is a major issue in the practical application of the azbil Group philosophy, and it will be discussed at Azbil’s Management Meeting and supervised by the Board of Directors.

Strategy

The azbil Group promotes reducing the environmental impact of our own business activities, and harnessing the technologies and know-how accumulated through those initiatives. We contribute to the environmentazbil through our core businesses by utilizing our measurement and control technologies to help customers solve their environmental issues, which will lead to the realization of a sustainable society.

If temperature rise is controlled*2

  Building Automation(BA) Advanced Automation(AA) Life Automation(LA)
Opportunity Expanding demand for energy-savings solutions and services that meet global needs Increased demand for solutions, and for sensors and other measurement instruments designed for new industries Increased SMaaS business for gas meters using IoT technologies and other such products
Risk (Shared by all core businesses)
  • Increased development costs for products and services to meet new regulations
  • Increased production and procurement costs due to rising energy prices
  • Reduced customer investment from increased burden due to introduction of carbon taxes and other costs

If temperature rise continues*3

  Building Automation(BA) Advanced Automation(AA) Life Automation(LA)
Opportunity Increased demand for products, services, and solutions that enable buildings to adapt to climate-related disaster Increased demand for products, services, and solutions that offer anomaly prediction function Increased demand for products, services and solutions adapted to handle climate-related disasters
Risk (Shared by all core businesses)
  • Operational stoppages due to abnormal weather events, inability to provide products, services, and solutions
  • Large reduction in customer investment due to business instability caused by abnormal weather

Risk Management

The azbil Group comprehensively works to identify risks that may have a significant impact on operations, including those connected to climate change. (1) After issues are extracted and analyzed by the Comprehensive Risk Subcommittee (consisting of department managers, etc.), those issues are sent to the (2) Comprehensive Risk Committee (headed by the Risk Management Officer), where those issues deemed to be major risks to the azbil Group are sent to the Board of Directors for discussion and deliberation. The Management Meeting then plans out and implements countermeasures and reports the results to the Board. In this way, the Group is able to manage such issues in order to reduce risk.

Indicators and Goals

We promote efforts to combat climate change through our business activities directly linked to the goal of achieving a sustainable society, by considering indicators and goals that take into account all azbil Group customers, the Group itself, and its entire supply chain.

  • Further reduction in GHG(i.e.CO2)emissions at customers’ sites
  • Implementation of the 2050 Long-term Vision for Reducing Greenhouse Gas Emissions, which lays out our goal to achieve zero emissions by 2050 by reducing greenhouse gas emissions (Scope 1+2) within our own companies
  • Formulation of (SBT certified) emission reduction targets for 2030 to reduce greenhouse gas emissions throughout the supply chain and help achieve the Long-Term Vision

*1 TCFD(Task Force on Climate-related Financial Disclosure):The task force and corresponding framework designed to promote disclosure of the impact of climate change, comprised of central banks and financial institutions from the world’s leading countries. It requires the disclosure of potential impact of climate change on business operations in the context of at least two potential scenarios.

*2 If temperature rise is controlled (the scenario assuming a rise of approximately 2 degrees Celsius):This scenario assumes that temperature rise is contained within a sustainable range due to the implementation of stricter regulations and introduction of technological innovations that lead towards a decarbonized society.

*3 If temperature rise continues (the scenario assuming a rise of approximately 4 degrees Celsius):This scenario assumes that no effective measures to reduce CO2emissions are implemented, resulting in continued temperature rise and an increase in abnormal weather and natural disasters.