Mitsubishi Chemical HoldingsKAITEKI Value for Tomorrow

Report in Line with the Recommendations of the TCFD*

In October 2018, Mitsubishi Chemical Holdings Corporation announced its support for the final recommendations prepared by the Task Force on Climate related Financial Disclosures (TCFD). The Mitsubishi Chemical Holdings (MCHC) Group has been working to enhance its climate change-related measures, such as reducing GHG emissions, promoting energy-saving activities, and expanding product groups that contribute to the reduction of GHG emissions, while progressively expanding its disclosure of related information as it strives to increase corporate value.

* In June 2017, TCFD announced the final recommendations concerning disclosure of information to encourage companies to voluntarily disclose to investors the impacts of climate change-related risks and business opportunities on corporate finances.

Governance

Mitsubishi Chemical Holdings identified climate change as a material management issue by conducting the materiality assessment under the medium-term management plan APTSIS 20, and has conducted appropriate measures. Management issues based on materiality assessments are then associated with management indicators to evaluate the progress of measures taken (see “Metrics and targets” below). Mitsubishi Chemical Holdings monitors the progress against the target set for each operating company under the KAITEKI Initiative Structure centering on the KAITEKI Promotion Committee, an advisory body to the president of Mitsubishi Chemical Holdings.

Structure Rolls Report on FY2019 Recommended Disclosures of TCFD
Board of Directors
  • Formulation of the basic management policy
  • Supervision of overall management
  • Supervision through the execution reports of executive officers
Governance
a)Describe the board’s oversight of climate-related risks and opportunities.
b)Describe management’s role in assessing and managing climate-related risks and opportunities.
    Outside Director Liaison Committee
  • Provision to outside directors of important information on management
  • Frank exchange of views on management issues
KAITEKI Promotion Committee
[Structure]
  • ・President, MCHC
  • ・Corporate Executive Officers, MCHC
  • ・CSO* of each operating company
  • ・Members of the Audit Committee, etc. MCHC
  • Deliberations on basic policy, etc. concerning the KAITEKI initiatives
  • Monitoring through the activity reports of operating companies
  • Monitoring based on the management indices (MOS Indices) (July and February)
Operating Companies
  • Overseeing the progress of KAITEKI initiatives by the CSO of each company
  • Reporting the progress of KAITEKI initiatives and MOS Indices, etc.
  • Reporting the progress of MOS indices, etc. at the KAITEKI Promotion Committee (July and February)

* Chief Sustainability Officer

Strategy and risk management

Business opportunities and risks from perceived social issues

Report on FY2019 Recommended Disclosures of TCFD
Under APTSIS 20, response to climate change has been identified as a material issue through materiality assessment, and the risks and opportunities that are recognized as well as core measures have been reported. Moreover, in formulating our medium- to long-term management basic strategy KAITEKI Vision 30 (KV30) for 2030, we identified opportunities and risks related to the social issues that the MCHC Group will face over the period to 2030. Business opportunities, including the following opportunities related to climate change, have been identified as growth businesses for the MCHC Group that contribute to solutions to social issues. The Group will expand its scale and strengthen its profitability through the implementation of the next medium-term management plan.

  • Use energy more efficiently: Lighter mobility, electrification solutions, and chemical processes with low environmental impacts
  • Expand renewable energy: Decentralized energy management
  • Capture and use GHGs: CO2 capture and utilization
  • Use natural resources: Bio-based polymers
  • Recycle resources: Chemical and materials recycling

We quantitatively assess the risk of leaving social issues unmanaged. We recognize the increased carbon tax burden and reduced profitability due to lower demand for our products as risks that have a particularly large impact in relation to climate change. We aim to achieve a safe and secure society by minimizing damage and ensuring business continuity in the event of a large-scale natural disaster while providing solutions that contribute to disaster prevention and mitigation.
Strategy
a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.

Impact on business scale and risks from perceived social issues

Report on FY2019 Recommended Disclosures of TCFD
  • We aim to increase the percentage of revenue and profit from growth businesses, including the GHG reduction area, to over 70% and approximately ¥4 trillion or more by 2030.
  • We estimate that the risks associated with social issues and structural changes, including climate change, could be as large as ¥1 trillion in 2030.
strategy
b)Describe the impact of climate related risks and opportunities on the organization’s businesses, strategy, and financial planning.

Risk management

Report on FY2019 Recommended Disclosures of TCFD
  • We will strive to avoid the occurrence of major risks and minimize losses when they occur under our risk management system.
  • We view climate change as a risk that is expected to grow further over the medium- to long-term, and we plan to incorporate it into KV30 and the next medium-term management plan, and consider how to manage this risk.
Risk management
a)Describe the organization’s processes for identifying and assessing climate-related risks.
b)Describe the organization’s processes for managing climate-related risks.
c)Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.

Related pages in KAITEKI Report

For the Future

Plan for the future Recommended Disclosures of TCFD
We will strive to minimize risk through a risk management system, and based on the next medium-term management plan currently being formulated, we will promote portfolio transformation with making social issues such as GHG reduction business opportunities, thereby aiming to maintain sustainable growth.

In addition, our insights and corporate approach for the year 2050, which was envisioned when formulating KAITEKI Vision 30, envisions a future image in which society and policies have advanced positively toward climate change. We recognize that its perspectives meet climate-related scenarios, including a 2℃. In the future, we plan to proceed with analysis so that sustainable growth can be achieved through business portfolio reform under the business environment such as the 2℃ or lower scenario.
Strategy
c)Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2℃ or lower scenario.

Metrics and targets

Metrics and targets to assess risks and opportunities

Report on FY2019 Recommended Disclosures of TCFD
Among the management indices that assess the improvement of sustainability (MOS Indices), we have set the reduction of burdens on the atmospheric environment such as in terms of greenhouse gases (per-unit impact on the environment) and the degree of contribution to the reduction of GHGs by providing products and services that contribute to reducing GHG emissions. Based on these, we set targets for the final year of the medium-term management plan (fiscal 2020), and assess the degree of achievement every year.

In addition, we have established new medium- to long-term targets to be achieved by fiscal 2030 under KV30. We are now in the process of formulating specific action plans to reduce GHG emissions by 26% compared to the fiscal 2013 level in Japan.
Metrics and Targets
a)Disclose the metrics used by the organization to assess climate related risks and opportunities in line with its strategy and risk management process.
c)Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.

Scope 1 to 3 GHG emissions

Report on FY2019 Recommended Disclosures of TCFD
Please see GHG emissions in “Non-Financial Highlights” for the performance in fiscal 2019. We have received independent assurance for GHG emissions, and are working to disclose highly reliable information. Metrics and Targets
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.

Corporate executive remuneration

Report on FY2019 Recommended Disclosures of TCFD
The performance-based evaluation of the remuneration of corporate executive officers and executive officers is determined based on the degree of achievement of the targets for each fiscal year. The evaluation is determined by using indices including those associated with the improvement of sustainability in addition to economic and capital efficiencies, such as indices associated with climate change through the promotion of energy-saving activities. For details, please refer to the Securities Report. Metrics and Targets
a)Disclose the metrics used by the organization to assess climate related risks and opportunities in line with its strategy and risk management process.

Related pages in KAITEKI Report