Sustainability

Information Disclosure Based on TCFD Recommendations

The LINTEC Group recognizes that climate change has impacts on its business activities and positions it as an important management issue. We will strengthen our risk management system and responses to risks and find new business opportunities to make contributions for our sustainable growth and the development of a sustainable society. Moreover, we will proactively disclose information on our responses to climate change according to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and further improve our corporate value through engagement with stakeholders.

Governance

The Sustainability Committee (meeting four times a year, in principle) discusses policies and implementation plans and supervises their progress regarding specific measures related to sustainability, including responses to climate change-related issues. The committee is chaired by the president and comprised of all directors and officers in charge of promoting committees under the Sustainability Committee. The outcomes of discussions are reported to the Board of Directors.
Climate change-related issues are assessed firstly by the Environmental Committee, via the TCFD Subcommittee, and finally by the Sustainability Committee. Measures to respond to issues are implemented and managed at each site. The status of responses is put together by the Environmental Committee and reported to all directors and officers in charge at the Sustainability Committee.

Strategy

Considering risks and opportunities associated with climate change as an important matter in developing its business strategies, the LINTEC Group set out the following two scenarios and conducted scenario analysis for its domestic business up to 2030(medium-term) and 2050 (long-term). Consequently, we identified risks and opportunities, as shown in the following table.
We will integrate measures to respond to these climate change-related risks and opportunities into initiatives we take under our long-term vision, LSV 2030, and will carry out analysis, covering our business outside Japan, from a longer-term perspective.

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    +4°C scenario +2°C or below 1.5°C scenario
Reference Scenario Transition Risks Transition scenario, International Energy Agency (IEA)
Stated Policies Scenario (STEPS)★1 Sustainable Development Scenario (SDS)
Net Zero Emissions by 2050 (NZE)★1
Physical Risks Climate change scenario, Intergovernmental Panel on Climate Change (IPCC)
RCP 8.5★2 RCP 2.6★2
  Technology Roadmap for Transition Finance formulated by the Ministry of Economy, Trade and Industry
Image of society that LINTEC envisions

[Society where policies continue as they are and climate change progresses]

  • Climate change countermeasures are an extension of current measures.
  • Precipitation patterns change due to rising temperatures. Sudden extreme weather events occur more frequently, and the extent of the damage increases
  • Carbon tax is not implemented.

[Society where active measures are taken toward realizing a carbon-free world]

  • Active measures for carbon-free, such as introduction of carbon pricing, promotion of renewable energy, and promotion of ZEB・ZEH*3, are taken.
  • Renewable energy technologies, energy conservation technologies, and new technologies for carbon-free are actively developed.
  • The environment for raw material procurement will change as a result of conversion to non-petrochemical raw materials.
  • Plastic-free and 3R are further promoted, and a circular economy is considered as a premise for society.
  • Floods and droughts will increase due to temperature rise, but the damage will be smaller than in a +4°C world.
  • Demand for environmentally friendly products will increase due to a shift in consumer attitudes.
  • ★1Source: IEA. World Energy Outlook 2021, World Energy Outlook 2022
  • ★2Source: IPCC. Fifth Assessment Report
  • ★3ZEB (Net Zero Energy Building) and ZEH (Net Zero Energy House) refer to buildings and houses with an annual energy consumption that is effectively zero or less, which is achieved by installing equipment such as high-insulation, highly airtight, highly efficient equipment and solar power systems.

Scope

The scope of this scenario analysis only includes our business in Japan. We will consider expanding the scope to include our overseas business in scenario analyses to be conducted in the future.

Timeline

“Medium-term” refers to the period up to 2030, which is the final year of the LINTEC Group’s long-term vision and SDGs. “Long-term” refers to the period up to 2050, which is the Group’s target year for achieving carbon neutrality. For future financial impact, the analysis was conducted by focusing on 2030.

World of +2°C or Less

Transition Risks

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Category Major risks Timeline Proposed responses
Policy and legal Carbon pricing Decline in price competitiveness due to the increased cost needed to respond to tougher laws and regulations on GHG emissions and energy usage (such as introduction of a carbon tax), as well as higher manufacturing cost and price pass-through Medium- to long-term
  • Reduce CO2 emissions while keeping down/reducing total cost by converting fuels, adopting highly-efficient equipment, and using renewable energy
Tightened regulation of CO2 emissions Investment unrecovered due to increased capital investment for saving energy and reducing CO2 emissions Medium- to long-term
  • Make planned capital investment based on simulations of mid- to long-term CO2 emissions
Increased burden in order to respond to more sophisticated disclosure of information on GHG emissions and the obligation to disclose such information Medium- to long-term
  • Consider adding verification of GHG emissions by a third party (overseas), obtain operational support from a third party, and consider in-house calculation methods (such as scope 3)
Tightened regulations on VOC emissions Decline in sales of solvent products and changes in specifications Medium- to long-term
  • Reinforce the development of solvent-free products and expand the sales of such products
Technology Development of new technologies Loss of business opportunities if development of products that address climate change is delayed, or if existing products cannot meet environmental needs. Medium- to long-term
  • Investigate market needs for products that address climate change, prioritize initiatives for a circular society, and promote the development of such products
Decline in competitiveness due to delays in research and development of new technologies, securing intellectual property rights, or joint development efforts, etc. Medium- to long-term
  • Enhance energy conservation activities and promote utilization of renewable energy equipment
Market Changing energy costs Increased manufacturing costs and utility costs due to rising prices of crude oil- and petroleum-based energy Medium-term
  • Enhance energy conservation activities and promote utilization of renewable energy equipment
Changing important products Decrease in orders received for our core products as customer needs shift toward environmentally friendly products Medium- to long-term
  • Develop and expand environmentally friendly products according to customer needs and expand the sales of such products
Changing raw material procurement Unstable product supply due to increased dependence on suppliers as a result of accelerated conversion to non-petrochemical raw materials Medium- to long-term
  • Diversify suppliers by adopting more sophisticated supply chain management
Increase in the cost of raw materials due to measures taken by suppliers to reduce CO2 emissions Medium- to long-term
  • Diversify suppliers by adopting more sophisticated supply chain management
Reputation Changing reputation among customers Decline in customer ratings and decrease in sales due to delays in establishing systems to tackle climate change and in deploying and enhancing products that address climate change Medium- to long-term
  • Foster more active stakeholder engagement
  • Develop and expand environmentally friendly products, and expand the sales of such products

Opportunities

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Category Major risks Timeline Proposed responses
Resource efficiency Reduction in cost for water supply and effluent through recycling water Medium- to long-term
  • Consider switching to a circulating water method for water cooling equipment
Effective capital investments in new equipment through adoption of internal carbon pricing Medium-term
  • Adopt criteria for internal investment decisions to bring transparency to internal carbon pricing and cost
Energy sources Promotion of cost reduction in energy procurement Medium- to long-term
  • Introduce energy-saving equipment and promote renewable energy use
  • Adopt cogeneration systems, exhaust heat boilers, solar power generation systems for captive consumption, etc.
  • Reduce cost by purchasing green energy and renewable energy
Monetization of emissions trading by keeping CO2 emissions within emissions allowances Medium- to long-term
  • Further reduce CO2 emissions
Adoption of alternative energy for carbon-free Long-term
  • Consider adopting hydrogen as an alternative source of energy
Increase in opportunities to procure materials that are manufactured with energy sources and/or raw materials made available through innovation by suppliers, which contribute toward achieving carbon neutrality Medium- to long-term
  • Promote procurement of raw materials that contribute toward the realization of carbon neutrality by cooperating and collaborating with suppliers
Products and services Increase in demand for electronics-related products due to acceleration of digitalization and popularization of EV Medium- to long-term
  • Enhance the production system for electronics-related business by actively making capital investments
Increase in needs for products and initiatives that contribute to the realization of a circular society Medium- to long-term
  • Develop and expand environmentally-friendly products (such as plastic-free, biomass, biodegradable products and FSC certified paper)
  • Promote the development of resource-recycling products and the establishment of resource collection systems by working with supply chains and external organizations
Increase in business opportunities owing to popularization and expansion of renewable energy Medium- to long-term
  • Develop and expand products that contribute to the generation of renewable energy
Increase in opportunities to sell energy-efficient products Medium- to long-term
  • Develop and expand products that help promote energy conservation (such as highly-functional window films and light control films)
Increase in opportunities to sell solvent-free products Medium- to long-term
  • Develop and expand solvent-free products according to customer needs
Acquisition of new business opportunities owing to the increased environmental awareness of employees Medium- to long-term
  • Acquisition of more business opportunities by raising the environmental awareness of employees through cross-organizational committee activities and training sessions to provide the market with competitive products
Market Gaining support of stakeholders by enhancing initiatives for realizing a carbon-free world and a circular society Medium- to long-term
  • Enhance internal initiatives, and promote initiatives that are being undertaken in cooperation with supply chains and the industry as a whole
Resilience Stabilizing supply chains by reviewing suppliers Medium- to long-term
  • Sophisticate supply chain management

World of +4°C

Physical risks

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Category Major risks Timeline Proposed responses
Acute Exacerbation of natural disasters Delay in supplying products due to a supply chain disruption and/or shutdown of a plant due to torrential rain, resulting in a drop in sales Medium- to long-term
  • Take response measures through BCP and periodically identify risks
  • Sophisticate supply chain management and create a disaster response manual
Increase in repair cost and accident and disaster insurance cost Medium- to long-term
  • Periodically identify risks at each site
  • Monitor items related to instructions provided in management reviews and reflect them in updated equipment specifications
Chronic Rise in temperatures Increase in air conditioning cost during the summer Medium- to long-term
  • Consider improving insulation performance by using multi-layering window glass and/or attaching heat shield films at each office
Instability in securing water Shortage of industrial water due to a decrease in groundwater Medium- to long-term
  • Consider switching to a circulating water method for water cooling equipment
  • BCP: BCP stands for a Business Continuity Plan. It is a plan developed in advance to enable the minimization of damage and the continuation or early resumption of business in the event that a company encounters an emergency situation such as an accident or disaster.

Financial Impact of Risks and Opportunities Related to Climate Change

Financial impact of transition risks

  • Increase in cost due to carbon pricing
    We aim to reduce CO2 emissions by 50% or more by 2030 compared to fiscal 2013 levels, and achieve net zero by 2050. If a carbon tax is introduced, the estimated carbon tax burden incurred by the company will be approximately 2 billion yen if the company achieves the goal in 2030. This is approximately 1.1 billion yen less than the cost that would be incurred if the company does not work on reducing CO2 emissions.
  • Capital investments to reduce CO2 emissions
    We plan to invest approximately 14.7 billion yen in total to reduce CO2 emissions in Japan during the period of our long-term vision, “LSV 2030,” by adopting solar power generation systems for captive consumption and gas turbine cogeneration systems.
  • Changes in the raw material procurement environment
    Some of our products use fossil fuels and raw materials derived from pulp. Consequently, we recognize that our business faces high long-term risk derived from changes in the raw material procurement environment. We will continue to analyze the degree of impact and consider countermeasures, such as switching raw materials and adopting new technologies.

Financial impact of physical risks

  • Torrential rain and floods
    We will minimize the impact and ensure a stable supply of products by purchasing raw materials from multiple suppliers, maintaining an adequate level of inventory at each site, and establishing back-up systems through BCP.
    • BCP: BCP stands for a Business Continuity Plan. It is a plan developed in advance to enable the minimization of damage and the continuation or early resumption of business in the event that a company encounters an emergency situation such as an accident or disaster.
  • Droughts
    We will minimize the impact by making continuous efforts to develop multiple industrial water systems and reduce industrial water usage at each site.

Financial impact of opportunities

  • Increase in demand for various types of environmentally friendly products
    As companies promote countermeasures against global warming and consumer attitudes shift toward environment-conscious and sustainable living, demand for our environmentally friendly products is expected to increase. We are currently calculating the amount of financial impact.
  • Increase in demand for energy-efficient products
    With growing needs for energy conservation and disaster prevention as well as the advancement of industrialization and urbanization in emerging countries, demand for our energy-efficient products is expected to increase. We are currently calculating the amount of financial impact.

Results of Our Scenario Analysis

As a result of our scenario analysis, we confirmed that both scenarios we examined will have a certain degree of impact on our business in 2030 and 2050, such as the impact of increased raw materials costs, and the impact on demand for energy-efficient products related to our initiatives under the long-term vision of “LSV 2030” as well as various types of environmentally friendly products. Consequently, we reconfirmed the need for actively working on managing risks and capturing opportunities. We will continue to take necessary measures as a group-wide effort, and actively work on reducing CO2 emissions by 50% or more by 2030 compared to fiscal 2013 levels and achieving net zero by 2050.

Risk Management

In April 2018, the LINTEC Group established a Corporate Risk Management Committee comprised of executive general managers and general managers from offices under the direct control of the president with the aim of enhancing its risk management systems, and the committee periodically holds meetings.
In April 2021, the system for promoting sustainability activities was renewed and strengthened, and the purpose of this Committee was redefined as “identifying risks and opportunities in business operation; formulating policies to manage them; and planning and verifying worksite-level measures.” The committee assesses and analyzes various risks, including those related to natural disasters, based on the issues recognized by committee members and the results of the annual risk identification process for managers. The results are reported to the Sustainability Committee every quarter, who then gives instructions on response measures.
In addition, information related to climate-related risks is gathered and identified/assessed by the Environmental Committee, and the results are reported to the Sustainability Committee. The Sustainability Committee considers whether any response measures need to be implemented, and then provides instructions to officers in charge of promotion through subcommittees as needed. Officers who receive instructions then implement measures through departments for which they are responsible. The Environmental Committee monitors subsequent changes in circumstances on an ongoing basis, and periodically checks whether initial indicators/ goals have been achieved.
These committees will continue to work together to strengthen our risk management capabilities and enhance our risk management systems to contribute to the sustainable growth of the LINTEC Group.

Metrics and Targets

The LINTEC Group recognizes that reduction of greenhouse gas (GHG) emissions is crucial in addressing climate change and accordingly promotes various measures in R&D, manufacturing, sales, and logistics. As a manufacturer, LINTEC views these initiatives for carbon-free as its mission and as leading to new climate-related opportunities. In its long-term vision toward 2030, “LSV 2030,” the LINTEC Group has set the following numerical target.

Target

Reduce CO2 emissions by 50% or more by 2030 compared to fiscal 2013 levels, and achieve net zero by 2050.

Results

Amount of CO2 emissions
Organizations covered: LINTEC CORPORATION’s Head Office, 10 production sites, the Research Center, sales offices, the Osaka Distribution Center, TOKYO LINTEC KAKO, INC., and SHONAN LINTEC KAKO, INC. (the scope for which regular reporting under the Energy Conservation Act is required)

Amount of CO2 emissions
  • 10 production sites: Agatsuma, Kumagaya, Ina, Chiba, Tatsuno, Shingu, Komatsushima, Mishima, Doi, and Niihama

Goals and indicators are also listed in the below: