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- Address Climate Change
Address Climate Change
Disclosure Based on TCFD Recommendations
Regarding climate change, we determine and oversee business risks and opportunities under an appropriate system. In raising our ability to respond to issues, we aim, for example, at stable economic development and securing the foundations for people’s livelihoods, and we see this as a vital initiative in advancing the transition to a low-carbon economy and, by extension, a decarbonized society. Based on this idea, we have expressed support for the recommendations published by the Task Force on Climate-related Financial Disclosures (TCFD) and make disclosures based on this framework as follows.
1. Governance
We discuss and make decisions on various policies and important matters that contribute to realizing sustainability at Board of Directors’ meetings. We have identified addressing climate change as one of the material issues that we should proactively address. Under the supervision of the representative director in charge, we have set up a Climate Change Response Project—consisting of corporate departments, such as the IR Team, Office Strategy Department, and the Finance & Accounting Department to study the issue. Under this project, matters that include various metrics relating to climate change, as well as business risks and opportunities, are examined, tabulated, and specified. These matters are received and supervised in annual reports by the Board of Directors. Business strategies and plans are then decided upon after duly considering the important matters.
2. Strategy
To strengthen our ability to respond and adapt to the changes in the business environment caused by climate change, we mainly use scenarios including the Intergovernmental Panel on Climate Change (IPCC)’s Shared Socioeconomic Pathways to analyze business environments in which temperature increases are limited to 1.5°C (SSP1-1.9) or below 2°C (SSP1-2.6), as well as those in which 4°C increases (SSP5-8.5). After analyzing the scenarios, we identify the business risks, opportunities and countermeasures as shown in the table below.
The analysis covers all businesses of the Group, with short-term analysis covering from the present to 2025, medium-term analysis covering until 2030, and long-term analysis covering until 2050. Profit impact is shown as small for cases with an annual impact of less than 1 billion yen, medium for cases with an impact between 1 billion yen and less than 3 billion yen, and large for cases with an impact of 3 billion yen or more.
(1) Business Risk Identification
| Type | Physical risk | |
|---|---|---|
| Acute | ||
| Scenario Analysis | Natural disasters such as torrential rains and floods that cause extensive damage are becoming more severe and more frequent. | |
| Business Risks | Flooding our servers and digitalization centers responsible for tasks such as digitizing paper invoices, leading to service disruptions, as well as the damage to the stored documents of service user companies, resulting in a decline in our service value. | |
| Time Frame | Medium to long term | |
| Profit Impact (Annual) |
1.5℃/ Below 2℃ Scenario |
Small to medium |
| 4℃ Scenario |
Small to large | |
| Countermeasures | As part of the business continuity plan (BCP), ensure service continuity during natural disasters by using multiple servers for system redundancy, decentralizing important service operation sites, and preparing manuals for emergencies. | |
| Type | Transitional risk | |||
|---|---|---|---|---|
| Law and regulation | Market | |||
| Scenario Analysis | Many countries and regions will tighten regulations on GHG emissions, and new carbon taxes and higher tax rates will be introduced as carbon pricing. | Social demand and requirement for the use of clean energy will increase, and various energy prices are soaring. Additionally, the increased global warming is resulting in an increased cooling load for information and communication equipment. | Increasing environmental awareness across society, the use of various paper-based business tools is gradually declining, while the utilization of digital information is expanding. | |
| Business Risks | The expenses associated with tax burdens, as well as the cost of purchasing non-fossil fuel certificates and credits for carbon offsetting, may increase. | Increases in server prices and various energy prices such as electricity, which are essential for our business centered on a SaaS-type business model, will lead to higher operating expenses. | The frequency and importance of utilization of some functions of our service that digitizes paper business cards, invoices, contracts, and other documents to improve productivity may decrease. | |
| Time Frame | Medium to long term | Medium to long term | Short to medium term | |
| Profit Impact (Annual) |
1.5℃/Below 2℃ Scenario |
Small | Small to medium | Small |
| 4℃ Scenario |
Small | Small | Small | |
| Countermeasures | Reduce tax burdens and carbon offset costs by increasing the use of renewable energy and improving energy efficiency through the implementation of energy saving. | Reduce tax burdens and carbon offset costs by increasing the use of renewable energy and improving energy efficiency through the implementation of energy saving. | Provide added value equal to or greater than the value of digitizing analog information by expanding highly convenient functions centered on the use of digital information and enhancing its value as a platform. | |
(2) Business Opportunity Identification
| Type | Products and services | |
|---|---|---|
| Scenario Analysis | Growing environmental awareness across society will increase demand for services that help reduce paper use. Additionary, the increased risk of infectious diseases associated with rising temperatures has led to a rise in non-face-to-face and non-contact business activities, increasing the importance of using digital information. | |
| Business Risks | The demand for our various DX services, which are equipped with functions to curb the use of paper while improving the efficiency of various workflows through the use of digital information, may expand. | |
| Time Frame | Medium to long term | |
| Profit Impact (Annual) |
1.5℃/Below 2℃ Scenario |
Small to medium |
| 4℃ Scenario |
Small | |
| Countermeasures | Enhance the value provided to users by expanding highly convenient functions centered on the use of digital information, and stimulate further demand by strengthening the sales and marketing activities. | |
3. Risk Management
In consultation with the directors in charge of each field and the Climate Change Response Project, we conduct scenario analyses to identify climate-related business risks and opportunities, assess their importance, calculate their financial impact, and review countermeasures. These matters are next reported annually to the Board of Directors, which decides on business strategies and plans after considering important matters including the risks and countermeasures. Important climate change-related risks are also integrated and managed with the results of company-wide risk analyses conducted through internal audits etc.
4. Metrics and Targets
We have selected GHG emissions as a climate change-related assessment metric. The table below shows actual GHG emissions over the last three years.
In FY2023, we have newly set a carbon neutrality target by 2030 as part of our reduction goals for Scope 1 and Scope 2 emissions. In addition to embarking on various initiatives to achieve these targets, we will continue to comprehensively consider the establishment of Scope 3 reduction targets, taking into account a variety of internal and external factors.
| Item | Unit | FY2020 | FY2021 | FY2022 |
|---|---|---|---|---|
| Scope 1 | t-CO2 | 0 | 0 | 0 |
| Scope 2 (location-based) |
t-CO2 | 477 | 639 | 840 |
| Scope 2 (market-based) |
t-CO2 | 525 | 668 | 851 |
| Scope 1 and 2 (market-based) |
t-CO2 | 525 | 668 | 851 |
| Scope 3 | t-CO2 | - | 15,679 | 18,638 |
| Scope 1, 2 and 3 (market-based) |
t-CO2 | - | 16,347 | 19,489 |
| Scope 1, 2 and 3 emissions intensity (per net sales) |
t-CO2/hundered million yen | - | 81.7 | 78.2 |
*This figure is based on the non-consolidated results of Sansan, Inc. and covers 97.7% (percentage of non-consolidated net sales to consolidated net sales) of our business scope as of FY2022.
*Scope 1 is calculated by aggregating direct GHG emissions from our own offices and facilities. Scope 2 is calculated by aggregating by indirect GHG emissions from the use of purchased electricity and thermal energy in each office. Scope 3 is calculated by aggregating the GHG emissions of the entire value chain (Categories 1 through 15), excluding Scope 1 and Scope 2.
*Due to the refinement of the aggregation method, the results prior to FY2021 have been recalculated.