Information disclosure based on the TCFD recommendations

The impact of climate change is intensifying every year, and society’s interest in this issue is on the rise, triggering demands that companies step up their actions. The Task Force on Climate-related Financial Disclosures (TCFD), which was established by the Financial Stability Board, published its final report in 2017 that urged companies to disclose information on their climate-related risks and opportunities. Toshiba Tec Group aims to proactively disclose information on climate change in the four areas (Governance, Strategy, Risk Management, and Metrics and Targets) specified by the TCFD.
Toshiba Group has endorsed the TCFD recommendations and is a member of the TCFD Consortium, which aims to promote actions by organizations in Japan in support of the TCFD recommendations.

Governance

At Toshiba Tec Group, for important sustainability issues including climate change, especially key challenges concerning risks and opportunities that affect corporate management of Toshiba Tec Group, policies and action plans to address them are discussed and resolved by the Management Committee meetings and then reported to the Board of Directors. The Board of Directors has the responsibility and authority to supervise risks and opportunities related to overall sustainability. After receiving reports on matters discussed and resolved by the Management Committee meetings, the Board of Directors discusses and supervises the Group’s policies and action plans to address sustainability risks and opportunities. In addition, policies and action plans discussed by the Board of Directors are reflected in the Group’s management strategy, and its progress is managed by the Management Committee and reported to the Board of Directors on a regular basis.
Detailed policies and action plans to address environment-related issues including climate change are discussed at the Management Committee meetings or the Corporate Environmental Conference headed by the President. The conference takes place semiannually, with the participation of each business division’s Environmental Management Officer, the Environmental Promotion Officer, the Corporate Staff Group-related Manager, and the Sustainability and Environmental Affairs Division.

Strategy

Setting Scenarios

In scenario analysis, we set up the following two scenarios:

1.5°C scenario:

For mainly transition risks and opportunities, we use the NZE2050 scenarios created by the International Energy Agency (IEA), assuming a world where the temperature increases by 1.5°C. This scenario predicts increase in costs due to carbon tax, energy-saving related regulations, the introduction of renewable energy, etc., as well as increase in business opportunities due to the growing demand for energy technologies to realize decarbonization and energy-saving products and services.

4°C scenario

For mainly physical risks and opportunities, we use the RCP8.5 scenario by the Intergovernmental Panel on Climate Change (IPCC), assuming a world where the temperature increases by 4°C. Although this scenario does not predict a greater impact of regulations and technology than the 1.5°C scenario, the impact of physical damage such as greater risk of natural disasters like typhoons and flooding caused by unusual weather may increase.

Analysis method

Scope:

We perform scenario analysis for both our Retail Solutions Business Groups and Workplace Solutions Business Groups in order to identify the risks and opportunities specific to each business. Not stopping at the initiatives of our own company, the analysis covers the entire value chain including the upstream (suppliers) and downstream (customers, users).

Time frames:

Three time frames are set (short-, medium-, and long-terms). Short-term covers 0 to 3 years later, medium-term covers 4 to 1 0 years later (up to FY2030), and long-term covers 11 to 30 years later (up to FY2050)

Analysis steps:

We conduct scenario analysis in line with the steps, “Risk importance assessment,” “Definition of scenario groups,” “Business impact assessment,” and “Definition of countermeasures” based on the TCFD recommendations. In the latest scenario analysis, we will conduct analysis in the business areas listed in the “Scope” above, evaluate the level of importance, and proceed to consider countermeasures for those of high importance and priority.

Analysis results

The main results of the latest scenario analysis of our risks and opportunities are as follows.

Risks common to Retail and Workplace

Type			Risks or opportunities	Time frames	Response
Risks	Transition Risks	Policy and Legal	Increase in company energy costs due to the introduction of the carbon tax and the emissions trading system. Increase in costs due to the introduction of renewable energy at our sites and introduction/changeover of energy-saving equipment.	Short-to medium-term	Planned introduction of renewable energy at our sites. Planned introduction and renewal of energy-saving equipment at our sites. Investigating trends in policies and laws (carbon taxes, emissions trading schemes, etc.) in each country and reviewing investment plans for renewable energy and energy conservation to reduce energy cost increases in the company.
			Additional conditions for introducing renewable energy at the time of selecting suppliers and partner collaboration.	Medium-term	Consideration of the criteria for introducing renewable energy at the time of selecting suppliers and partner collaboration.
			Increase in product-related costs associated with achieving the efficiency standards of the European Ecodesign Directive (ErP Directive) and other countries’ stricter energ y-saving performance regulations. Increase in product-related costs due to compliance with stricter environmental regulations in various countries, including the adoption of EU taxonomy.	Medium-term	Survey of trends in energy-saving technologies in products, development of elemental technologies, and human resource development. Trend survey and adoption study of key units and components with high energy-saving performance. Establishment of product recycling/reuse systems. Establishment of systems for collecting empty toner cartridges. Improvement of efficiency of product-related process and cost reduction measures. Research on product-related policy and legal trends in target countries and review of plans for products.
			Increase in costs to comply with tighter disclosure requirements such as the EU Corporate Sustainability Reporting Directive (CSRD).	Short-to medium-term	Consideration of adequate disclosure content, budgetary measures, and appropriate disclosure.
		Technology	Lost sales opportunities due to the slow development of energysaving technologies in response to a rapidly growing demand for decarbonization-related products and services.	Medium-term	Survey of trends in energy-saving technologies in products, development of elemental technologies, and human resource development. Trend survey and adoption study of key units and components with high energy-saving performance. Review of product development and sales plans suitable for energysaving technology trends.
			Loss of sales opportunities due to lack of energy-saving and renewable energy benefits to customers from solutions to the rapidly growing demand for decarbonization-related products and services.	Medium-term	Study and proposal of energy-saving by solutions. Feasibility study of renewable energy by solutions.
			Decrease in revenue due to delayed response to advances in maintenance technologies for products that do not require service engineer’s visits.	Short- to medium-term	Establishment of ser vice technologies not requiring ser vice engineer’s visits (further permeation of remote service tools, selfmaintenance by customers themselves through a shift to CRU).
		Market	Loss of sales opportunities while standards for products and solutions required by the market and customers are not met.	Medium-term	Survey of market trends and customer requirements for energysaving in products. Review of product development plans and sales plans suitable for market trends and customer requests. Consideration of effective energy conservation advocacy.
		Market	Increase in costs due to price shift to procurement goods and logistics costs as a result of accelerated decarbonization efforts by procurement/logistics suppliers.	Medium-term	Procurement/logistics suppliers survey and request for cooperation to reduce increased energy costs. Finding new suppliers for multiple procurement / logistics transactions.
		Reputation	Increased business risk due to loss of market and customer confidence as a result of delays in addressing climate change. Increased business risk due to lower evaluation as a result of lack of disclosure of information on climate change response.	Medium-term	Planned implementation of climate change measures in light of external requirements. Consideration of adequate disclosure content, budgetary measures, and appropriate disclosure.
	Physical Risks	Acute	Impact of the severity and increase in extreme weather events (cyclones, floods, etc.) on our own sites. Suspension of operations due to buildings and equipment damage, increased costs for countermeasures. Delays in operations due to difficulties in getting employees to and from work. Increased expenses due to damage incurred to employees and their houses.	Long-term	Formulation of BCP measures in regions and at each site where there is assumed to be a risk of large-scale extreme weather events. Confirmation of BCP measures in assessments at the time of construction of new sites.
		Acute	Impact of the severity and increase in extreme weather events (cyclones, floods, etc.) on suppliers and logistics providers. Delays in production and sales caused by unavailability of parts due to damage to suppliers. Damage to logistics providers and delays in production and sales due to logistics stoppages. Loss of trust due to maintenance and service outages and delays to customers.	Long-term	Survey of location/BCP measures of suppliers and logistics providers, as well as consideration of cooperation requests. Arrangements for the availability of multiple suppliers and logistics providers.
		Chronic	Impacts on our own sites due to the severity and increase in heavy rainfall and precipitation, rising average temperatures, rising sea levels, etc. Increase in building repair costs for stronger leakproof measures, etc. Increase in energy costs for air-conditioning. Suspension of operations due to submergence or flooding, increased costs for countermeasures. Increase in costs for health management of employees.	Long-term	Prediction of heavy rainfall and precipitation at the locations of our sites and formulation of countermeasures. Prediction of temperature rise at the locations of our sites and formulation of countermeasures. Prediction of sea level rise at the locations of our sites and formulation of countermeasures.

Opportunities in the Retail Solutions Business

Type		Risks or opportunities	Time frames	Response
Opportunities	Products & Services, Market	Increased demand for energy-saving products in the Retail Solutions Business. Increase in revenues from expanded sales of energysaving POS products to new markets.	Medium-term	Sur vey of trends in energy-saving technologies in POS products, development of elemental technologies, and human resource development. Trend survey and adoption study of key units and components with high energy-saving performance. Consideration of sales strategy for energy-saving POS products.
		Increase in demand for services in the Retail Solutions Business that contribute to customers’ activities to reduce environmental burden. Increase in retail media (ad serving service) revenue due to expansion of Smart Receipt®. Increase in data service revenues such as data sales revenues due to more data collected via ID-POS in line with the expansion of Smart Receipt®.		Consideration of a sales strategy for securing more Smart Receipt® orders. Data service platform enhancements.
		Higher demand for products and ser vices that contribute to preventing an increase in food waste due to shortened food consumption periods. Increase in profit of POS panel data business to restaurants. Contribution to the prevention of waste loss and increased revenue thereof through restaurant visit forecasting and menu trend analysis. Increased revenue through contribution to the prevention of increased food waste loss at mass retailers.		Development of products and services and consideration of partner collaboration for expansion of business. Data service platform enhancements.

Opportunities in the Workplace Solutions Business

Type		Risks or opportunities	Time frames	Response
Opportunities	Products & Services, Market	Increased demand for energy-saving products in the Workplace Solutions Business. Increase in profit due to sales expansion of liner-less label (mount-less label) printers, etc. Increase in profit due to expanded sales of refurbished (used) MFP products.	Short- to medium-term	Survey of trends in energy-saving technologies, development of elemental technologies, and human resource development in MFP/Auto-ID products. Trend survey and adoption study of key units and components with high energy-saving performance. Consideration of sales strategy of energy-saving MFP/Auto-ID products. Consideration of product design for MFP/Auto-ID products that are easy to reuse, and the construction of reusable sites/lines.
		Increase in demand for services in the Workplace Solutions Business that contribute to customers’ activities to reduce environmental burden. Increase in revenue due to expanded sales of MPS/ MDS (customer printing system optimization) solutions.	Medium-term	Consideration of the development and effects of new eco solutions/services.

Response Measures

The measures to address the risks and opportunities identified and evaluated in the above scenario analysis will be incorporated as part of future medium-term business plans in each business area, and progress will be managed on a regular basis.
Response to climate change has also been set as a priority item in our Toshiba Group’s Environmental Future Vision 2050. In addition, since most of the GHG emissions in the entire value chain of Toshiba Tec Group are generated during the use of our products and services, we will take appropriate measures such as improving the energy-saving performance of our products and services and expanding businesses that are compatible with a decarbonized society. We will continue to incorporate the results of scenario analysis into Toshiba Tec Group’s business strategies to ensure sustainable corporate management while appropriately responding to the risks and opportunities of climate change.

Risk Management

Toshiba Tec Group’s risk management related to climate change is integrated into the company-wide risk management process. For each matter that could majorly impact the Group’s management, including climate change-related risk, the Business Risk Review Committee conducts risk assessment, and then those considered to be of particularly high concern from the perspective of business risk are discussed at Management Committee meetings. Moreover, all risks and opportunities evaluated and identified as relating to climate change are shared through the Corporate Environmental Conference and managed under the above-mentioned promotion system.

Indicators and Targets

Toshiba Tec Group is aiming to achieve carbon neutrality by FY2050 throughout the value chain. Also, as milestones, we have set the below targets and are striving to achieve them by FY2030.

Reduce the total of Scope 1^※1 and Scope 2^※2 (GHG emissions generated from Toshiba Tec Group business activities) by 100% by FY2030.

*Purchasing of carbon credits is incorporated into the carbon neutrality process. The target is set at 97% reduction if the purchasing of carbon credits is excluded.

Reduce GHG emissions for use of sold “products and services associated with power consumption”^*3 sold in Scope 3^*4 by 28% by FY2030.

*1 Direct GHG emissions via the use of fuel at Toshiba Tec Group

*2 Indirect GHG emissions via the use of power and heat purchased by Toshiba Tec Group

*3 Retail and printing products, etc.

*4 Indirect GHG emissions other than Scopes 1 & 2 that arise from Toshiba Tec Group's value chain (raw material procurement, logistics, sale, disposal, etc.)