1. HOME
  2. Sustainability
  3. Environment
  4. Information Disclosure Based on TCFD Recommendations

Information Disclosure Based on TCFD Recommendations

Information Disclosure Based on TCFD Recommendations 2024

TCFD Logo

The TOKAI Group has been actively working towards solving various challenges faced by society. In December 2021, the TOKAI Group formulated the "Sustainability Declaration" and set goals to address identified material issues by 2030. Among them, achieving carbon neutrality by 2050 and addressing climate change are important themes closely related to the energy provided by our group, which are social issues that require global efforts.

The TOKAI Group believes that identifying and implementing measures to address climate change risks and opportunities using the TCFD framework and integrating them into our business strategy contribute to the sustainable growth and enhancement of corporate value.

In the fiscal year 2022, we disclosed information in accordance with the TCFD guidelines for the first time. Moving forward, we will enhance the resilience of the TOKAI Group to climate change issues through scenario analysis, review the content annually, and strive to improve information disclosure, contributing to the realization of a sustainable society.

1.Governance

The TOKAI Group aims to actively engage in social issues, including climate change, and contribute to the realization of a sustainable society. To promote management with a sustainability perspective, the "Sustainability Promotion Committee" serves as one of the advisory bodies to the Board of Directors. The "Sustainability Promotion Committee" is chaired by the President and CEO and consists of responsible officers from departments such as management and risk management, presidents of group companies, and external directors who provide advice from an objective standpoint.

The committee meets twice a year, to take stock of material issues and action assignments and to assess the status of initiatives for the achievement of targets. Climate-related initiatives and issues discussed at the Sustainability Promotion Committee are reported to the Board of Directors, and under the appropriate management and supervision of TOKAI Group's top management, they are instructed to the Group companies through the GX Promotion Committee which is comprised of Group companies.

2.Strategy

(1) Assumptions and Coverage of Scenario Analysis

Time Axes

As time axes, given that 2050 is when we aim to achieve carbon neutrality, we defined the period to the end of 2025 (TOKAI Group Medium-Term Management Plan 2025) as the short term, the period to 2030 as medium-term (milestone on the path to 2050), and the period to 2050 as long-term. In addition, we assessed the financial impact as of 2030.

Short term The end of 2025 (TOKAI Group Medium-Term Management Plan 2025)
Medium-Term 2030 as medium-term (milestone on the path to 2050)
Long-term 2050

Target Business

The coverage of the analysis was the Group's five businesses that are of particular importance as well as its operating companies, which together account for 98% of Group net sales (fiscal 2022). In particular, the Group's core energy business is a business domain in which major changes in the business environment are likely as part of the planned transition to decarbonization and we recognize the importance of assessing the scale of the impact in advance.

Energy business TOKAI CORPORATION, TOKAI GAS CORPORATION
Information and Communications business TOKAI Communications Corporation
CATV business TOKAI Cable Network Corporation and 10 subsidiaries
ICHIHARA CABLE TELEVISION CORPORATION, ATSUGI ISEHARA CABLE NETWORK CORPORATION, LCV CORPORATION, KURASHIKI CABLE TELEVISION Inc, Toco Channel Shizuoka Corporation, Net Technology Shizuoka Co.,Ltd., Tokyo Bay Network Co.,Ltd., Cable Television Tsuyama Co., Ltd., SENDAI CATV Co., Ltd., Okinawa Cable Network Inc.,
Construction, Equipment, and Real Estate business TOKAI CORPORATION, TOKAI GAS CORPORATION
Aqua business TOKAI CORPORATION

Scenario

To analyze the risks and opportunities, and financial impact of climate change, the Group conducted analyses for two scenarios: the 1.5℃ scenario and the 4℃ scenario, and we considered measures to be taken for both scenarios.

1.5℃ scenario 4℃ scenario
Worldview

Goal proposed in the 2015 Paris Agreement.
Scenario which assume that policies and regulations will be tightened and advances in technology will be made to limit warming to 1.5℃ by 2100 through decarbonization

Reference scenarios

IPCC: SSP1-1.9, SSP1-2.6
WEO: NZE

Scenario which assumes inadequate progress on climate action and continually growing GHG emissions, causing average global temperatures to rise as much as 4℃ above pre-industrial levels by 2100, and leading to more widespread and severe physical damage, including typhoons and flooding

Reference scenarios

IPCC: SSP5-8.5, SSP3-7.0
WEO: STEPS/CPS
Carbon tax 140$/t-CO2 (IEA: World Energy Outlook2023) 42$/t-CO2 (IEA: World Energy Outlook2023)

Based on our analysis conducted for the two scenarios described above, the main risks and opportunities, the impact on the Group, and measures to be taken to address them are as follows.

(2) Results of Scenario Analysis

We conducted scenario analysis to understand the impact on the Group's businesses, taking into consideration external scenarios and our own unique circumstances. We verified the degree of importance of transition risks, physical risks and opportunities in terms of "likelihood*1" (on a scale of 1 to 3) and "magnitude of impact*2" (on a scale of 1 to 3) and classified them into three levels (minor, moderate and major) based on the matrix shown on the right.

  1. *1Likelihood of occurrence is classified on a scale of 1 to 3, where 1 is low, 2 is medium and 3 is high.
  2. *2Where the financial impact can be quantitatively assessed, the impact on ordinary profit is estimated and classified on a scale of 1 to 3, where 3 is an impact exceeding ±5 billion yen, 2 is an impact exceeding ±1 billion yen, and 1 is an impact of ±1 billion or less.
  • 1.5℃ scenario

    The introduction and strengthening of carbon taxation is likely to result in taxation on our own GHG (Scopes 1 and 2) emissions and higher procurement costs on the LP gas business and city gas business. There is also the possibility that demand for gas will fall in response to the regulation of GHG emissions, changes in the energy mix and other developments.
    Meanwhile, more widespread use of energy-saving equipment will likely have an impact both in terms of the risk of decline in gas usage and greater opportunities to sell energy efficiency equipment, etc. More opportunities to sell thermal insulation, ZEH, etc. amid growing awareness of the thermal insulation performance of houses are also expected.

  • 4℃ scenario

    More severe natural disaster including higher seas levels as a result of extreme weather events and typhoons will likely affect our facilities (energy supply facilities, data centers , communication equipment, etc.), supply chains and customers, bringing business activities to a halt.
    However, we expect to see high demand for the Aqua home-delivery service amid rising average temperatures and heat waves, and growing demand for IT services including managing risk in the cloud to avoid the loss of data stored on-premises due to flooding, etc.
    Demand for CATV, which offers community channels as a means of communicating local information about increasingly frequent natural disasters, is also likely to increase.

Risk/
Opportunity		 Category Factor Target
Business		 Impact on TOKAI group Time axes Financial impact
in 2030		 TOKAI group's countermeasure
1.5℃ 4℃
Risks Transition Policies/
Legal Regulations		 Introduction
of carbon
tax		 Company-wide
  • Taxation of our own GHG emissions
    (Scopes 1 and 2)
 Medium to long term moderate minor
  • Reduction of GHG emissions through switch to green power at own facilities, improvement of LP gas delivery efficiency, etc.
Energy sector
  • Higher procurement costs in the LP gas business and city gas business
 Medium to long term major moderate
  • GHG reduction throughout supply chains
  • Promotion of switch to LP gas or city gas as cleaner source of energy during the transition phase
  • Expansion of sales of environmental products such as energy saving equipment, renewable energy and co-generation systems, etc. to customers (increase in profit from equipment)
Changes in energy policy
  • Fall in demand for gas in response to the regulation of GHG emissions, changes in the energy mix and other developments
 Medium to long term major minor
Technologies Expansion of energy-saving equipment
  • Decline in gas sales volume due to widespread use of energy efficient boilers
 Short term to long term moderate minor
Reputation Increasing low-carbon and decarbonization orientation Company-wide
  • Difficulty securing human capital due to society's emphasis on low-carbon and decarbonizing business
 Medium to long term major minor
  • Improvement in environmental literacy as a result of provision of environmental training to Group employees
Phisical Acute Increase in natural disasters
  • Damage to our facilities from increasingly severe natural disasters including rising sea levels
 Short term to long term moderate moderate
  • Improvement of resilience through stronger measures against wind and water damage, thoroughgoing BCP, development of the disaster management structure, etc.
Chronic Changes in the global environment and social structure, etc. Energy Sector
  • Decline in gas sales volume due to rising temperatures, decrease in size of households, improvement in thermal insulation performance of houses and other factors
 Short term to long term moderate moderate
  • Increased sales of thermal insulation, ZEH, etc. (increase in profit from construction work)
Opportunities Policies Policy to promote the spread of energy-saving equipment
  • Increased equipment sales due to government policies promoting high efficiency equipment, renewable energy, co-generation, etc.
 Short term to long term major minor
  • Expansion of sales of environmental products such as energy saving equipment, renewable energy and co-generation systems, etc. to customers
Market Increase in natural disasters Telecommunica-tions sector
  • Growing demand for cloud services to avoid the risk of losing data stored on-premises loss due to flooding, etc.
 Short term to long term minor moderate
  • Expansion of sales of cloud systems to corporations
CATV Sector
  • Increasing demand for community channels that communicate community-based disaster prevention information and disaster news
 Short term to long term minor moderate
  • Promotion of subscription to CATV services and strengthening of community-based program production function
Chronic temperature rise Aqua Sector
  • High demand for Aqua home delivery service amid rising average temperatures, heatwaves, etc.
 Short term to long term minor moderate
  • Strengthening of production structure and expansion of sales for Aqua home delivery service
Reputation Growing Scoal interest in ESG investing Company-wide
  • Enhancement of financing capability and corporate value through improvement of reputation among investors
 Short term to long term moderate minor
  • Active disclosure of climate change-related information include TCFD disclosures

(3) The TOKAI Group's GX Promotion Measures

Based on the above analysis results, the TOKAI Group is working to reduce its own GHG emissions (Scopes 1 and 2) by installing solar panels at its own facilities, saving electricity at business sites, etc. and switching to renewable energy. We are also working to encourage customers to use energy-saving equipment and renewable energy and seeking to maintain and expand energy demand. In addition, we are endeavoring to increase our resilience by strengthening measures against wind and flood damage at our own facilities and for customers, thoroughly implementing BCP, and developing the disaster management structure.

The TOKAI Group's GX strategy for addressing climate change issues is to forge ahead with low carbon and decarbonization initiatives, striving to reduce risk while seizing opportunities for growth and translating them into business expansion.

GX Strategy set out in Medium-Term Management Plan 2025

Measures to reduce GHG emissions (Scopes 1 and 2) from our business activities
  • Improvement of delivery efficiency and shift to automated meter readings in the LP gas business through DX
  • Installation of our own solar power generation facilities
  • Switch to renewable energy-derived electricity at all business sites
Promotion of GX in customers’ energy use (Scope 3 and contribution to reduction of customers' emissions)
  • Encouraging the use of energy-saving devices

    (Home use) Encouraging the widespread use of high efficiency boilers, hybrid boilers and ENEFARM (home fuel cell cogeneration system)
    (Industrial use) Encouraging the widespread adoption of cogeneration

  • Encouraging the adoption of renewable energy

    Promoting solar power generation (including PPA) and widespread use of storage batteries

  • Working with local communities to promote low carbon and decarbonization

    Promoting public sector energy conservation and decarbonization
    Promoting local production of energy for local consumption

  • Action for the decarbonization of raw materials

    (～2030) Supply of carbon neutral gas*
    (～2050) Supply of carbon-free fuel

  • *Carbon-neutral LPG/LNG with the carbon emissions from the supply chain offset through the purchase of carbon credits

(4) TOKAI Group GX Initiatives

The TOKAI Group has set "Strengthening the foundation for sustainable growth" as one of the key strategies in its "New Medium-Term Management Plan 2025," and is working as a unified group to reduce and decarbonize. As part of its GX strategy, the Group is promoting the two pillars of "Promoting GX in our own business activities" and "Promoting GX in customers' energy usage."

For more information, please visit this website.

3.Risk Management

We carry out an assessment and management of climate change risks and opportunities based on a yearly cycle, in principle. The GX Promotion Office of TOKAI Holdings is in charge of addressing companywide climate change risk management. The GX Promotion Office convenes the GX Promotion Committee, which is made up of Group company presidents and relevant officers, and the committee identifies, assesses and reviews climate change risks.
Group companies are instructed via the GX Promotion Committee to consider the order of priority of the climate change issues discussed at the Sustainability Committee and to take measures to address them, the progress of action taken is monitored and progress is fed back to the Sustainability Promotion Committee.

4.Metrics and Targets

The Medium-Term Management Plan 2025, announced by the Group in May 2023, positions low carbon and decarbonization initiatives as a strategy for strengthening the foundations for sustainable growth, and states that the Group will work with local communities, customers and suppliers to help reduce GHG emissions and achieve carbon neutrality by 2050.

Our metrics and targets are as follows.

Indicater Targets
FY2030 FY2050
Scope1+2　GHG emissions
(Compared to fiscal 2021)		 At least -50%
(At least -16000 tons)		 Carbon neutrality
Scope3 GHG emissions
from supply chains		 Cooperation with supply chains
Scope1,2,3 result
(thousand tons-CO2)
Base Year
FY2021		 FY2022 FY2023 Compared to the base year % compared to the base year
Scope1 GHG emissions emitted directly by the company 9.6★ 9.7 9.4★ ▲0.2 ▲1.8％
Scope2 Indirect GHG emissions from purchased electricity, heat, etc. 22.8★ 23.2 21.5★ ▲1.3 ▲5.7％
Scope1+2 total 32.4★ 32.9 31.0★ ▲1.5 ▲4.5％
Scope3 Category1 Purchased goods and services 643.6★ 638.8 640.5★ ▲3.0 ▲0.5％
Category2 Capital goods 60.2 58.1 66.1 +5.9 +9.8％
Category3 Fuel-and-energy-related activities
(not included in Scope 1 or 2)		 5.2 5.2 5.1 ▲0.1 ▲2.3％
Category4 Upstream transportation and distribution 3.9 3.7 3.7 ▲0.2 ▲6.4％
Category5 Waste generated in operations 1.3 1.4 1.4 +0.1 +4.3％
Category6 Business travel 1.1 1.5 1.4 +0.4 +33.1％
Category7 Employee commuting 1.1 1.2 1.1 ▲0.1 ▲6.9％
Category8 Upstream leased assets - - - - -
Category9 Downstream transportation and distribution - - - - -
Category10 Processing of sold products - - - - -
Category11 Use of sold products 1,468.1★ 1,409.0 1,426.4★ ▲41.7 ▲2.8％
Category12 End of life treatment of sold products 11.6 11.4 10.5 ▲1.1 ▲9.2％
Category13 Downstream leased assets 103.7 105.6 104.6 +0.9 +0.9％
Category14 Franchises - - - - -
Category15 Investments - - - - -
Scope3 total 2,299.8 2,235.9 2,260.7 ▲39.1 ▲1.7％
Scope1+2+3 grand total 2,332.2 2,268.8 2,291.7 ▲40.5 ▲1.7％
  • ※The GHG emissions marked with a ★ have obtained third-party assurance in accordance with the ISAE 3410 standard by the Japan Quality Assurance Organization (JQA).
  • ※Boundary (Scope of Calculation): TOKAI Holdings and 22 affiliated companies, totaling 23 companies and 156 locations.
  • ※Scope 2 emissions are calculated based on the Market-Based Method.

Third-party Verification

To improve the reliability of its greenhouse gas (GHG) emissions data, TOKAI Holdings has received third-party verification at the ISAE 3410 standards from Japan Quality Assurance Organization for its Scope 1, 2, and 3 actual GHG emissions figures marked with an ★ for fiscal year 2023 and the base year of fiscal year 2021.

【Verification Coverage】

■Target period and scopes

　GHG emissions for FY2023 and FY2021 (base year)
　(Scope 1, Scope 2, Scope 3 Category 1, 11)

■Boundary (calculation scope)

TOKAI Holdings Corporation, TOKAI CORPORATION, TOKAI Communications Corporation, TOKAI Cable Network Corporation and its 10 subsidiaries, TOKAI GAS CORPORATION, TOKAI Venture Capital & Incubation Corporation, TOKAI Management Service Corporation, TOKAI City Service Corporation, TOKAI LIFE PLUS CORPORATION, Tokaizosen-unyu Corporation, Energy Line Corporation, NIKAHO GAS CORPORATION, TOKAI Kids Touch Corporation

Total of 23 companies, 156 locations

Related Links