Environmental Measures

Response to the Recommendations of TCFD

Climate change is an important issue that humanity must resolve if we are to realize a sustainable society. We consider action against climate change to be a prerequisite for business continuity for any company.
Dexerials declared its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in September 2021 and will contribute to the realization of a sustainable society through the appropriate and timely disclosure of information about management risks and opportunities associated with climate change.
In addition, by providing new value through our own products and technologies, we will promote initiatives to leave a rich environment to future generations, with the aim of harmonious co-existence with our stakeholders.

Disclosure in accordance with the TCFD recommendations

Governance

Dexerials has positioned climate change as an important management issue and is pursuing activities aimed at realizing a sustainable society. We periodically convene the Sustainability Working Groups, led by the executive officer of the CSR promotion division, to hold crossfunctional discussions about the progress being made toward the targets set under its important challenges. The Working Groups report on material issues to the Board of Executive Officers and the Board of Directors and receive instructions from them.

CSR Management Structure

Strategy

Dexerials has identified risks and opportunities associated with climate change on a long-term time axis up to 2050. It has also performed scenario analyses taking the 1.5-2°C and 4°C scenarios into account, referring to the sixth evaluation report of the Intergovernmental Panel on Climate Change (IPCC) and the World Energy Outlook (WEO) of the International Energy Agency (IEA), etc.
In fiscal 2022, we are expanding the scope of products subject to scenario analyses, newly defining the groups of scenarios, assessing impacts on its business, and discussing countermeasures.
Dexerials will continue to further enhance its companywide strategies by expanding the scope of products for scenario analyses to other products.

World of each scenario

1.5-2°C scenario

As a result of our carbon-neutral efforts, the average temperature rises by less than 2°C by the end of this century compared to the temperature before the Industrial Revolution.

Reference: Sustainable Development Scenario (SDS), Net Zero Emissions by 2050 (NZE2050)

4°C scenario

With only limited progress in carbon-neutral efforts, the average temperature rises by 4°C or more by the end of this century compared to the temperature before the Industrial Revolution.

Reference: Stated Policies Scenario (STEPS)

World of the 1.5-2°C scenario	World of the 4°C scenario
・Moves toward the creation of a decarbonized and recycling-based society accelerate. ・The percentage of renewable energies such as solar and wind power in the electric power mix increases drastically. ・The carbon tax rate against CO₂ emissions is increased significantly. ・Because of the transition to a recycling-based society, the shift to bio and recycled materials accelerates. ・Society is more streamlined and shifts to an ultra-smart society. ・In the automobile market, the electrification of automobiles and shift to autonomous driving make progress, which changes the space in a vehicle to a living space.	・Risks of a rise in sea level, high tide water, floods, heavy rains, etc. emerge, which affects our and our suppliers' operations and increases the costs of responding to them. ・Demands for fossil fuels increase, which increases the costs of fossil fuels. ・Along with the rise in temperature, an increase in the frequency of disasters, and spread of infectious diseases, etc., lifestyles change; e.g., Stay-home time is extended.

World of the 1.5-2°C scenario

World of the 4°C scenario

・Moves toward the creation of a decarbonized and recycling-based society accelerate.

・The percentage of renewable energies such as solar and wind power in the electric power mix increases drastically.

・The carbon tax rate against CO₂ emissions is increased significantly.

・Because of the transition to a recycling-based society, the shift to bio and recycled materials accelerates.

・Society is more streamlined and shifts to an ultra-smart society.

・In the automobile market, the electrification of automobiles and shift to autonomous driving make progress, which changes the space in a vehicle to a living space.

・Risks of a rise in sea level, high tide water, floods, heavy rains, etc. emerge, which affects our and our suppliers' operations and increases the costs of responding to them.

・Demands for fossil fuels increase, which increases the costs of fossil fuels.

・Along with the rise in temperature, an increase in the frequency of disasters, and spread of infectious diseases, etc., lifestyles change; e.g., Stay-home time is extended.

Climate-related risks and opportunities and major initiatives for them

We identified climate-related risks and opportunities regarding anti-reflection films, anisotropic conductive films (ACF), optical elastic resins (SVR), and surface mounted type fuses. Among them, we extracted significant risks and opportunities that potentially have material impact on our business, and then assessed possible initiatives to address them.

TCFD scenario analyses

Assessment of business impact (assessment of financial impact)

Expected financial impacts of climate change on our anti-reflection films and anisotropic conductive films (ACF) in 2030 are shown below for illustrative purposes.

In the 1.5–2°C scenario, we anticipate a sustainable sales growth of anti-reflection films and anisotropic conductive films (ACF) used for digital devices. This is because, while costs such as carbon taxes, energy costs and procurement costs of raw materials for these products will increase with the implementation of more rigorous GHG emissions regulations and the introduction of carbon taxes, sales opportunities are expected to increase backed by the expansion of digitalization with a transition to a smart society.
Meanwhile, in the 4°C scenario, we expect sales growth to decelerate as the continued dependence on fuel fossils, increased costs due to growing demand for fossil fuels, and physical risks associated with rises in the average temperature and climate disasters such as heavy rains and floods may lead to a loss of sales opportunities.
Going forward, we will also assess impacts on optical elastic resins (SVR) and surface mounted type fuses.

Expected financial impacts

Risk Management

The Group has established the Risk Management Committee and has worked to manage risks of the entire Group in accordance with the rules and regulations on risk management.
In addition, positioning climate change as one of risks for our management base, we are working to address these risks.
The Risk Management Committee is chaired by the Risk Manager, who is the Executive Officer in charge of the Corporate Planning & Control Division, and consists of subcommittees for each specialized field. The Committee meets periodically or as needed. Identified key risk items are periodically reported to the Board of Executive Officers. In particular, substantial management and business risks are reported to the Board of Directors.

Risk Management

Metrics and Targets

Dexerials has set CO₂ emissions as a climate-related evaluation metrics and is aiming to achieve zero CO₂ emissions from consuming electricity for business by 2030.
Additionally, based on the scenario analyses, we will consider long-term climate change metrics and targets such as the reduction of GHG emissions in business activities.

Setting Environmental Targets