Strategy
（TCFD）

Strategy

Based mainly on the International Energy Agency (IEA) Stated Policies Scenario (STEPS) and Sustainable Development Scenario (SDS) and the UN Intergovernmental Panel on Climate Change (IPCC) RCP 2.6 (2°C scenario) and RCP 8.5 (4°C scenario), we analyzed and assessed the risks and opportunities, as well as the financial impacts, of our business operations for the years 2030 and 2050, and examined the following measures to address climate change.

【Risks and opportunities arising from climate change】

：Financial impact is expected to significant 　　　 ：Financial impact is expected to be extremely significant

Possible risks Impact on business Degree
of
impact
Climate change response measures

Transition Risks

Policies / Regulations
  • ■ Introduction or increase of carbon taxes
  • ■ Tighter regulations on greenhouse gas emission control
    		•
  • ◆ Increased procurement costs and longer delivery time for our products due to difficulties in procuring chemical products impacting climate change
    		•
  • ● Advance arrangement and securing appropriate inventory for important components
  • ● Consolidation of main components through standardization
  • ● Establishing a more flexible basic configuration of pure water systems
    		•
  • ■ Requests and reinforcement of energy conservation measures against companies
    		•
  • ◆ Increase in manufacturing costs due to the use of highly energy-efficient components in our products
  • ◆ Increased procurement costs for energy-saving components and longer delivery time for our products
    		•
  • ● Cost control through competitive procurement
  • ● Diversification of procurement sources
  • ● Setting appropriate selling prices from the perspective of economic rationality
    		•

    Technologies / Markets
  • ■ Replacement of existing products/services with low-carbon alternatives
  • ■ Changes in consumption behavior associated with an increase in environmentally conscious companies
    		•
  • ◆ Decline in the sales of conventional products due to replacement with low-carbon products
    		•
  • ● Actively investing in the development of low-carbon products
  • ● Promoting the development of technologies contributing to low-carbon emissions
  • 　　- Development of heat/water recovery technologies
  • 　　- Efforts for energy conservation / reduction of chemical use
  • 　　- Development of technologies using environmental policies of major customers as leading indicators
  • ● Reexamination of existing technologies
  • ● Promotion of product design and development from the 4R perspective (improved durability, resource conservation, more efficient use of raw materials, etc.)
  • ● Capital investment in plant and equipment for recycling used parts and materials (promotion of component reuse)
    		•

    Physical Risks

    Acute
  • ■ Increased frequency and severity of natural disasters e.g., cyclones and floods due to climate change
    		•
  • ◆ Physical damage to the Company’s assets resulting in business shutdowns, lower sales, and higher costs
  • ◆ Lost business opportunities due to supply chain disruptions
    		•
  • ● Elaboration of business continuity plans and strengthening of business continuity systems in preparation for natural disasters
  • ● Diversification of risks arising from natural disasters
  • ● Ensuring a more resilient supply chain
    		•

    Opportunities

    Products / Risks
  • ■ Developing low-carbon products/services through R&D and innovation, and thus expanding sales
    		•
  • ◆ Increase in the sales of existing environmentally friendly products
  • ◆ Further expansion of sales opportunities by developing new low-carbon/high-efficiency products
    		•
  • ● Proactively proposing and promoting sales of ultrafiltration equipment
  • ● Enhancing competitiveness by improving the energy efficiency of non-chemical ultrapure water systems
  • ● Actively investing in the development of low-carbon products
  • ● Promoting the development of technologies contributing to low-carbon emissions
    		•

    In our scenario analyses, we assessed that the financial impact of a decline in the sales of conventional products (risks) due to “replacement of existing products/services with low-carbon alternatives” and “changes in consumption behavior associated with an increase in environmentally conscious companies” would be extremely significant. As a result, we recognized that our most important issue is to help realize a carbon neutral society by controlling greenhouse gas emissions through the water treatment equipment that we manufacture. We also believe that taking appropriate action on this critical issue will lead to the opportunity of “developing low-carbon products/services through R&D and innovation, and thus expanding sales,” and we have incorporated some of the response measures into the sales strategy in our company’s Medium-term Management Plan (HiPES – 2023).

    In scenario analyses, we conduct materiality assessments and financial impact analyses by referring to scenarios disclosed by government agencies and research institutes as shown in the table below.

    • ■ IEA, “World Energy Outlook 2020” (2020)
    • • Stated Policies Scenario (STEPS) / • Sustainable Development Scenario (SDS)
    • ■ IPCC, “AR5”
    • • RCP 2.6 (2°C scenario) / • RCP 8.5 (4°C scenario)
    • ■ Ministry of Health, Labour and Welfare, “Statistics on Pharmaceutical and Medical Device Industry” (2019)
    • ■ Semiconductor Equipment Association of Japan, “Market Forecast Report – Semiconductor and FPD Manufacturing Equipment” (2021)
    • ■ The Small and Medium Enterprise Agency, “White Paper on Small and Medium Enterprises in Japan” (2019 edition)
    Sustainability Promotion System
    （Governance）
    Risk Management
    （TCFD）
    Metrics and Targets
    （TCFD）