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In Response to Climate Change

Information disclosure based on the TCFD recommendations

The impacts of climate change are becoming more serious every year, public interest in this issue is rising, and society is demanding that companies step up with big actions. The Task Force on Climate-related Financial Disclosures (TCFD), which was established by the Financial Stability Board, published its final report in 2017 that urged companies to disclose information on their climate-related risks and opportunities. We have expressed our support for the TCFD recommendations and are a member of the TCFD consortium, which aims to promote actions by organizations in Japan in support of the TCFD recommendations. We will actively disclose information on climate change in the four areas (Governance, Strategy, Risk Management, and Metrics and Targets) specified by the TCFD.

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Governance

We have a system in place by which the board of directors appropriately monitors our efforts to address climate change and other important environmental issues. In particular, the Corporate Environmental Officer brings up important issues related to management risks and opportunities to the President at Management Committee meetings or executive officers' meetings. These issues are also reported about twice a year to all directors, including outside directors, at board of directors meetings. What is discussed and decided upon at board of directors meetings is reflected in our group's management strategy.
Prior to board of directors meetings, the policies, strategies, and measures related to the environment, including climate change, are discussed at the Corporate Environmental Management Committee, which is chaired by the Corporate Environmental Officer. This semiannual meeting is attended by the environmental promotion managers of key group companies, corporate staff division managers, and Corporate Environment Management Office personnel.

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Strategy

We have identified three important issues (material issues), one of which is environmental management. Environmental management consists of specific tasks, namely "climate change mitigation and adaptation," "sustainable resource use," and "prevention of pollution." We proceed with our environmental efforts based on an understanding that climate change in particular creates risks and opportunities that significantly impact business management.

Significance of Environment-related Items in Toshiba Group's High Priority Responsibilities

[Image] Significance of Environment-related Items in Toshiba Group's High Priority Responsibilities

For more details on Toshiba Group's material issues, visit our Sustainability Website.

During the development stage of our medium-term management plan, the Toshiba Next Plan, we considered a wide variety of mega-trends. At this time, we also considered the risks and opportunities presented by climate change and reflected our decisions in our business strategy. For example, in response to the trend toward decarbonization in society, we decided to expand our renewable energy business, and to suspend new orders for coal-fired thermal power plant construction work.

We are attempting to predict the future, specifically 2030 and 2050, by analyzing climate change-focused scenarios such as the 2°C (and beyond 2°C) scenario by the International Energy Agency (IEA) and the 4°C scenario by the Intergovernmental Panel on Climate Change (IPCC). The 2°C (and beyond 2°C) scenario predicts risks (e.g., stricter energy efficiency regulations and the introduction of a carbon tax) as well as opportunities (e.g., increased demand for energy-saving products and energy technologies to realize decarbonization). The 4°C scenario predicts higher physical risks due to disasters such as flooding and typhoons. Based on these predictions, each group company analyzes risks and opportunities in each business field and shares the analysis results at Corporate Environmental Management Committee meetings. We will estimate the medium-to long-term risks and opportunities for market expansion/creation for each business based on the TCFD recommendations, and we will reflect these estimates in our future business strategies.

The table below shows the currently assumed risks and opportunities for Toshiba Group.

Transition risks
Area Assumed risks Toshiba Group's response
Policy and regulations Increased costs due to the tightening of energy efficiency regulations and the introduction of a carbon tax; missing out on sales opportunities in the case of a failure to adapt to these changes
Technology and markets Delayed response to market demand for energy-saving products and services as well as energy technologies to realize decarbonization; missing out on sales opportunities due to delayed adaption to country-/region-specific energy mixes
Reputation Lower corporate evaluations and reputation due to delayed response to climate change; the impact of such delays on the stock price and sales
  • Acquire approval of the Science Based Targets (SBT) initiative for our FY2030 GHG emission targets
  • Improve reporting based on external requirements
Physical risks
Assumed risks Toshiba Group's response
Damage to production equipment due to disasters (e.g., flooding and typhoons); suspended procurement of raw materials and parts; suspended operations of production sites due to disrupted logistics and sales capabilities
Opportunities (products and services)
Assumed opportunities Toshiba Group's response
Increased demand for products related to electric vehicles (EV) due to expansion of the EV market
  • Focus on the SCiB™ rechargeable battery business and increase investments in this area by projecting sales growth for automotive and industrial use
  • Strengthen production capacity by building a new SCiB™ plant
Growth in the renewable energy business and increased demand for energy technologies to realize decarbonization
  • Suspend new orders for coal-fired thermal power plant construction work
  • Invest in the growth of the renewable energy business
  • Promote CO2 separation and capture technology
Increased demand for high energy-efficiency building equipment in response to promotion of ZEBs by the Japanese government
  • Promote smart BEMS and the ZEB-related business, including highly energy saving air conditioners, lighting, elevators, and substation systems
  • Implement integrated management of the building solution business (air conditioners, lighting, and elevators)
Increased market demand for climate change adaption solutions as the impact of climate change becomes more visible
  • Promote the climate change adaption solutions business, such as weather radars and rainwater drainage systems

"Response to climate change" is one of the priority actions in the newly created "Environmental Future Vision 2050." Considering this "response" to be to both risks and opportunities for Toshiba Group's sustainable growth, we will aim to significantly reduce greenhouse gas emissions throughout the value chain and to create more products and services that contribute to the reduction of greenhouse gas emissions in society.

We also understand the importance of taking into consideration the characteristics of our Group's businesses; while most greenhouse gas emissions occur during product and service use throughout our value chain, in some business areas, such as electronic devices and storage, greenhouse gas emissions during the manufacturing stage account for much of the total emissions. We will appropriately deal with both. For the former, we will enhance product and service energy efficiency and expand our energy business to realize decarbonization; for the latter, we will promote emissions reduction measures at production sites.

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Risk management

At the business risk meeting, we assess risks of matters, including climate change-related risks, that have a significant impact on management. Matters that are especially important due to their business risks are discussed at the Management Committee meeting. Note that matters related to environmental risks including climate change are also reported to the Risk Compliance Committee, directly under the president's control, and their countermeasures and preventive measures are considered.
Moreover, climate change-related risks and opportunities that have been assessed and identified are shared by the Corporate Environmental Officer, group companies, and corporate staff divisions at Environmental Management Committee meetings, and these are managed through the aforementioned organizational structure for promoting environmental management.

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Metrics and targets

Under the "Environmental Future Vision 2050," we aim to contribute to realizing a net zero emissions society by 2050 by reducing greenhouse gas emissions by 50% compared to the FY2019 level by FY2030 throughout Toshiba Group's entire value chain (Scopes 1–3).
With regard to our own target for the amount of GHG emissions throughout the value chain, we aim to reduce emissions by 80% by FY2050 compared to the FY2019 level.
We set out the following breakdown of greenhouse gas (GHG) reduction targets for FY2030 and are promoting initiatives to achieve such targets. In 2020, we also acquired approval of the Science Based Targets (SBT) initiative regarding our FY2030 target.

(For all items below, the base year is FY2019.)

  • Reduce the total of Scope 1*1 and Scope 2*2 (GHG emissions generated from Toshiba Group's own business activities) by 28% by FY2030.
  • Reduce use-phase GHG emissions of "products and services associated with power supply"*3 sold in Scope 3*4 by 50% by FY2030.
  • Reduce use-phase GHG emissions of "products and services associated with power consumption"*5 sold in Scope 3 by 14% by FY2030.
*1:
Amount of direct emissions through fuel use at Toshiba Group
*2:
Amount of indirect emissions through use of electricity and heat purchased by Toshiba Group
*3:
Power generation plants, etc.
*4:
Amount of indirect emissions generated by Toshiba's value chain (raw materials procurement, distribution, sales, disposal, etc.) outside Scopes 1 and 2
*5:
Social infrastructure products, building-related products (air conditioners, lighting equipment, elevators and escalators), retail and printing equipment, power devices, etc.

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Greenhouse gas emissions across the value chain

As climate change becomes an increasingly serious issue, companies must manage not only their own greenhouse gas (GHG)*1 emissions but also emissions generated across their entire value chain. Based on the GHG Protocol*2, which provides international standards for calculating GHG emissions, and the Ministry of the Environment's Basic Guidelines for Calculating GHG Emissions throughout the Supply Chain, Toshiba Group calculates indirect GHG emissions generated outside the scope of its own business activities (Scope 3) in addition to its own emissions (Scopes 1 and 2). Toshiba Group will continue working effectively throughout product lifecycles by quantitatively analyzing emissions per category as described above.
Starting in FY2019, we decided to expand the range of Category 11 "Use of sold products" to include products and services associated with power supply.*2 GHG emissions through the use of sold products account for a high percentage of emissions across the value chain. We will therefore continue to promote the development of energy technologies to realize decarbonization and to improve the energy efficiency of products.

*1
The Greenhouse Gas Protocol (GHG Protocol): Guidelines for calculating and reporting GHG emissions formulated by companies, NGOs, and government organizations under the leadership of the World Resources Institute (WRI) and the World Business Council for Sustainable Development (WBCSD)
*2
For example, power plants

(FY2019)
Making GHG emissions in the supply chain visible for all categories

Category   Categories covered by calculations FY2018
calculation results (10,000 t-CO2)
FY2019
calculation results (10,000 t-CO2)
Considerations
Total 6,463 62,367 In FY2019, we began to include products and services associated with power supply under Category 11 "Use of sold products." This made the FY2019 figure significantly higher than the FY2018 total.
Upstream emissions 1 Purchased goods and services 1,753 1,571  
2 Capital goods 43 40  
3 Fuel- and energy-related activities not included in Scope 1 or 2 6 6  
4 Transportation and distribution (upstream) 3 3  
5 Waste generated in operations 2 1  
6 Business travel 3 2  
7 Employee commuting 4 4  
8 Leased assets (upstream) 0.3 As a result of reviewing the boundary, we began to calculate this category from the FY2019 results.
Toshiba Group Direct emissions (Scope 1) 34 32  
Indirect emissions associated with energy use (Scope 2) 90 82  
Downstream emissions 9 Transportation and distribution (downstream) 22 22  
10 Processing of sold products Toshiba primarily sells final products and parts that do not need processing.
11 Use of sold products Products and services associated with power supply*1 53,763 As a result of reviewing the range, we began to calculate this category from the FY2019 results.
Products and services associated with power consumption*2 4,501 6,839 The figure increased after reviewing the range, which led to the addition of product groups.
12 End-of-life treatment of sold products 2 2  
13 Leased assets (downstream) This category does not apply to Toshiba's business.
14 Franchises This category does not apply to Toshiba's business.
15 Investments This category does not apply to Toshiba's business.
*1
For example, power plants
*2
Social infrastructure products, building-related products (air conditioners, lighting equipment, elevators and escalators), retail and printing equipment, power devices, etc.

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