Information Disclosure Based on TCFD Recommendations

These days, abnormal weather phenomena, their associated natural disasters, and the like are occurring more frequently and on a larger scale than before, and threatening the safety and comfort of our lives. These changes significantly affect the policies of countries including Japan, resulting in a big trend of decarbonization from the Kyoto Protocol to the Paris Agreement and the adoption of SDGs, and increase the expectations for the roles that companies play.
At the Taisei Group, we view the impact of climate change on our business as an important management issue. In fiscal 2018, we reviewed the 2050 Environmental Targets “TAISEI Green Target 2050” established in 2013. We also agreed on the TCFD recommendations in July 2020.
Furthermore, based on the government’s carbon neutral declaration announced in October 2020, we will review TAISEI Green Target 2050 again in 2021 and aim to have “virtually zero” CO₂ emissions from business activities by 2050. In addition to our reduction efforts, we will work on the value chain, and contribute to the realization of a decarbonized society. We will continue to promote information disclosure in line with the TCFD recommendations, and aim to realize a sustainable society and improve corporate value by carefully watching and responding to government measures and social trends related to the impact of climate change and CO₂ emission reduction.

Governance

  • The CSR Committee and the Environment Committee have been established as meeting bodies to discuss climate change-related agenda. After discussion by the committees, the Board meeting deliberates and decides on the agenda.
  • The important policies and measures for ESG in general are discussed by the CSR Committee, which is one of the committees of the Board, and the formulation of basic policies and medium- and long-term goals for environmental management is deliberated by an advisory body of the Management Committees, the Environment Committee.
  • The agenda deliberated and determined by the Board meeting are passed on to each business unit and group company, and are reflected in their management plan and business operations. In addition, the content will be incorporated into the specific actions of construction worksites. We will also request the cooperation of our suppliers.

Chart of Climate-Related Governance System

Chart of Climate-Related Governance System

Strategies

  • We recognize various medium- to long-term risks including the major ones listed below. We conducted scenario analysis on one of them, climate change risk.
  • Climate change risk includes risk caused by transitions such as the reinforcement of regulations to minimize temperature increases and changes in the market, and risk that arises with physical changes such as acute abnormal weather that occurs due to higher temperatures.
  • To establish business strategies that flexibly respond to climate change, we use multiple scenarios to evaluate the impact on our business. For the scenario analysis, we refer to the Sustainable Development Scenario (SDS) by the International Energy Agency (IEA) for the scenario where transitions will progress, and the Representative Concentration Pathways (RCP) scenario by the Intergovernmental Panel on Climate Change (IPCC), etc. for cases where physical changes will progress. In this way, we verify the validity of our business strategy.
Climate change

Major risks and opportunities concerning climate change

Classification Risk/Opportunity Description Impact
level
Shift Market shrinkage and increase
in construction cost due to the
introduction of carbon pricing
and tightened CO2 emission
regulations
Risk
  • Decrease in private construction investment and equipment investment due to the introduction of carbon pricing and the reinforcement of CO2 emission regulations
  • Increase in construction costs due to a hike in the prices of building materials and electricity
Medium
  • Increase in costs due to the application of carbon pricing to the CO2 that is generated by our business activities
Low
Increase in demand for renewal Opportunity
  • Increase in demand for renewal to improve energy efficiency of existing facilities
Medium
Increase in demand related to
energy-saving and renewable
energy
Opportunity
  • Increase in demand related to ZEB and smart cities
  • Expansion of demand for renewable energy-related works such as offshore wind power
Medium
Physical Increase in average
temperature during summer
Risk
  • Decline in productivity due to an increase in damage to the health (heat stroke, etc.) of skilled construction workers and the avoidance of extremely hot hours
  • Accelerated worker shortage due to the decline in the number of new workers in the construction industry because of the degraded working environment
Medium
Increase in severity and
frequency of natural disasters
Risk
  • Work suspension, process delay, and increase in labor and temporary work costs due to damage to construction worksites, etc.
Medium
Increase in severity and frequency of natural disasters Risk
  • Increase in procurement costs and process delays due to damage to suppliers
High
Opportunity
  • Increase in demand to improve the resilience of equipment and infrastructure against intensified disasters
High
Opportunity
  • Increase in new construction and relocation works due to growing demand for relocation from disaster hazard areas
High
Rise in sea level Opportunity
  • Increase in the capital investment for improved resilience in areas with a flood risk and demand for relocation from areas with a flood risk
High

Note: Possible works are classified by the significance of impact as “High,” “Medium” and “Low.”

Countermeasures for Climate Change

Countermeasures required for the risks and opportunities identified with scenario analysis are reflected in the Medium-Term Business Plan (2021–2023). They are also incorporated into the business operations of each division. Accordingly, we will reduce the risks associated with climate change and expand opportunities.

Response to the market shrinkage and construction cost increase due to the introduction of carbon pricing and the tightening of laws and regulations
  • Owning renewable energy power sources for the purpose of covering the power consumption of the Group
  • Consideration and introduction of fuel improvement measures (biodiesel fuel/fuel additives) for construction worksites
  • Enhancement of green procurement such as the development and utilization of carbon-recycle concrete
Response to the increase in demand related to renewal, energy-saving and renewable energy
  • Establishment of an organization dedicated to renewal, and expansion of the organization that handles work related to wind power generation
  • Development and commercialization of next-generation high-performance ZEB and the development of energy support services
  • Technological development that contributes to the industries that are expected to grow through a virtuous cycle of the economy and the environment
Response to the reduced productivity of construction worksites due to abnormal weather
  • Reduction of health damage through the nationwide promotion of wellness worksites and the improvement of working environment during extremely hot hours
  • Consolidate some of the operations of worksites into specialized organizations such as digital product centers
  • Reform the production process at worksites by developing and deploying unmanned construction technology, robot construction technology, etc.
Response to abnormal weather, increase in the severity and frequency of disasters and sea level rises
  • Advancement of infrastructure development technology for national resilience and the improvement of the proposing skills
  • Development of real-time flood risk prediction/simulation for heavy rain, etc.
  • Securing a business continuity system by building a BCP system with clients and suppliers and conducting regular training

Risk Management

  • As for climate change risk, we established a company-wide TCFD Working Group (TCFD WG) to identify the climate change risk related to each department’s business and analyze the degree of impact on the business. We also conduct evaluations relative to risks other than climate change risk, and confirm that the necessary measures are being taken. The risks analyzed by the TCFD WG are deliberated by the CSR Committee and reported to the Board meeting.
  • In addition, it is consistent with the risks evaluated and identified with the environmental management system (EMS) based on the international standard ISO 14001.

Indicators and Targets

  • In the environmental targets for fiscal 2050 "TAISEI Green Target 2050," we set the goal of “virtually zero” CO₂ emissions from business activities. Moreover, we set out “Realization of a Sustainable and Environmentally Friendly Society” as one of the materiality (our important issues), and set KPIs for fiscal 2023 using the CO2 emission reduction rate as an index.
  • We are trying to reduce CO₂ emissions by implementing key measures of the Medium-Term Business Plan (2021–2023).
CO2 emission reduction target for each
fiscal year (compared with 1990)
FY2021 FY2023* FY2030* FY2050
Environmental
Targets
KPI TAISEI Green Target 2050
At construction stage: Reduction rate of CO2 emissions per construction cost 36% 41% 56% We will aim for “virtually zero” CO2 emissions from business activities.
At construction stage: Reduction rate of total CO2 emissions 52% 50% 62%
At building operation stage: Reduction rate of estimated CO2 emissions 41% 43% 55% In addition to our reduction efforts, we will work on the value chain, and contribute to the realization of a decarbonized society.

* To be reviewed during fiscal 2021

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