Sustainability

Information Disclosure in Line with TCFD and TNFD Recommendations

Strategy of Climate Change (Update：July 2024)

TCFD Recommendations require companies to conduct a scenario analysis to understand how the risks and opportunities arising from climate change affect their finances. Scenario analysis is a method to project the degradation of the natural environment, such as climate change, water scarcity, as well as changes or shifting of the business environment due to long-term policy trends regarding climate change and to examine how those changes may influence the corporate’s business and operation.

In 2020, we developed the 2°C scenario in which the transition to a decarbonized society would be realized (the transition risks would be evident) and the 4°C scenarios in which climate change would progress (the physical risks would be evident). Based on those scenarios, we identified business risks and opportunities, examined their importance, and mapped out their effects on the Company and our strategies. However, at the Conference of the Parties to the United Nations Framework Convention on Climate Change (COP26) held in 2021, it was agreed to pursue efforts to limit the rise in average temperature to 1.5°C; accordingly, we revised our scenario analysis in July 2023.

Referenced Scenarios

1.5°C Scenario*1	4°C Scenario*2
・IEA-WEO*3, ETP*4 Net Zero Scenario (NZE) ・IPCC SSP*5　1-1.9, 1-2.6	・IEA-WEO Stated Policies Scenario (STEPS) ・IPCC SSP5-8.5

• *1The scenario where necessary measures are implemented to keep the increase in global average temperature below 1.5°C above pre-industrial levels.
• *2The scenario where the global average temperature increases by 4°C above the pre-industrial levels at the end of the 21st century.
• *3International Energy Agency “World Energy Outlook” (2022)
• *4International Energy Agency “Energy Technology Perspectives” (2023)
• *5Intergovernmental Panel on Climate Change (IPCC) “Shared Socio-economic Pathway”

Scope and Period of Analysis

• ●Scope of Analysis：
  Chemicals business, Performance Materials business, Agricultural Chemicals business, Healthcare Business, Planning and Development Division
• ●Period of Analysis：2030 and 2050

Process of Risks and Opportunities Identification

Step1	Clarify the value chain (VC) and stakeholders and sort out factors influencing our business.
Step2	Identify risks and opportunities based on the above scenarios and other external information.
Step3	Select particularly important risks and opportunities from Step 2, considering the probability of occurrence and the impact on our business (human loss, financial impact, etc.)

Climate Change Risks and Opportunities, and Main Measures

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Major Financial Impacts

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Summary of Scenario Analysis

As a result of scenario analysis and quantifying the financial impact using the 1.5°C scenario, we identified important risks, such as increased operating costs with the introduction of carbon pricing and decreased sales from an inability to provide low-carbon products. In response to the introduction of carbon pricing and decrease in demand for products with high life-cycle carbon emissions, we will work to reduce the risks by not only further promoting the use of renewable energy and conversion of fuel and feedstock at our plants, something which we have been working on thus far, but also by further promoting decarbonization investments that take into account reducing GHG emissions through the use of internal carbon pricing.

And in response to market changes due to increasing demand for environmental considerations, we assume that demand for environmentally friendly biological agrochemicals and low-carbon products, such as materials for secondary battery, will increase. In terms of biological agrochemicals, we established the Biological Group within Agricultural Chemicals Research & Development Department, Biological Research Laboratories in April 2022 and conduct R&D toward commercialization. Additionally, in the Environment & Energy field, we aim to commercialize the secondary battery materials, the energy harvesting materials, and CCS/CCUS materials, by accelerating the development of them.

Meanwhile, regarding the risk of flood damage, which we recognize as a risk in the 4°C scenario, we have identified the possibility of flooding at our major production and distribution bases as a material risk. To address this risk, we will continue to formulate and revise the BCPs for our plants and major products from time to time, raise the floors and foundations of our plant equipment, secure product inventory, and purchase multiple sourcing of key raw materials.

And in response to market changes owing to rising temperatures and abnormal weather, we assume that demand for agricultural chemicals and disinfectants for drinking water will increase due to the increase in pests and weeds, as well as water shortages and spread of infectious diseases. Based on the prospect of market growth, we aim to expand our opportunities. Furthermore, by building a business portfolio that is less susceptible to the effects of climate change, we will increase the resilience of our business activities and strive to minimize risks and maximize opportunities.

Metrics and Targets of Climate Change (Update：July 2024)

Positioning climate change mitigation as one of the Materiality elements, we recognize that reducing the Company’s emissions, which account for approximately 95% of the Group-wide GHG (Scope 1 and 2) emissions, is crucial for diminishing our climate change-related risks. For this reason, we set “achieving carbon neutrality by 2050” in the long-term and “reducing GHG emissions by at least 30% from FY2018 level by FY2027” in the mid-term to cut down the Company’s GHG emissions (Scope 1 + 2). Those targets are included in the Group’s non-financial targets in the long-term business plan “Atelier2050,” and the mid-term “Vista2027,” and the progress of those initiatives is being checked and managed. In addition, the degree of attainment of those reduction targets is reflected in the ESG-linked portion of our officers’ performance-related remuneration.

Mid-term and Long-term Targets

Since FY 2018, we have been steadily reducing GHG emissions by terminating melamine production, converting boiler fuel at the Onoda Plant, and saving energy by upgrading aging facilities.
In FY2023, emissions decreased from FY2022 due to the normalization of nitric acid plant troubles that occurred in 2022 and the suspension of operations at the Toyama Plant due to the Noto Peninsula earthquake.

The Company’s GHG emissions and energy consumption have been subject to third-party verification since FY2018. We will continue to advance our approaches to reduce emissions and environmental impact and strive to disclose highly reliable information.

• 1　Amount of emissions (t-CO2e) / Non-consolidated sales (million yen)
• 2　Data of each category: https://www.nissanchem.co.jp/eng/csr_info/index/esg_data.html
• 3　Energy consumption / non-consolidated sales
• 4　FY2013 as a base of 100
• 5　Nissan Chemical Corporation and consolidated subsidiaries with manufacturing facilities. (Nihon Hiryo Co., Ltd., Nissan Chemical America Corporation, NCK Corporation)
• 6　Due to rounding off figures, some of the above scope1 and scope2 sums do not match

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