Information disclosure based on the TCFD recommendations

Fuyo Lease Group is committed to the mitigation of climate change by reducing the GHG emissions of its business operations. At the same time, the Group’s business activities are based on the consideration of the risks and opportunities that climate change brings to the Group’s business environment. Aware of the importance of correctly communicating to our stakeholders the impact of climate change on us, we expressed support for the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD^*1) in May 2019.

^*1Task Force on Climate-Related Financial Disclosures (TCFD)

Established in December 2015 by the Financial Stability Board at the behest of the G20 Finance Ministers and Central Bank Governors Meeting.

In June 2017, it released recommendations outlining a framework for disclosing information on the finance-related risks and opportunities created by climate change.

Fuyo General Lease Group has formulated the Basic Policy on Systems to Support Sustainable Value Creation as our fundamental thoughts on climate change problems and set up the CSV Promotion Committee to move ahead on efforts in this area. The committee is chaired by the executive officer who is head of management departments, and has members made up of the heads of major departments in the corporate division and heads of departments responsible for each business domain. The committee formulates, promotes, and monitors strategies, indicators, and targets related to important issues concerning climate change. The content of discussions and reports of the committee are submitted to the Executive Committee for deliberation, and the reported at least once a year to the Board of Directors.

We believe that climate change risks are a category of managerial risks that should be managed, and we are managing these risks using an integrated risk management system. More specifically, the Corporate Planning Division is the risk management department that directs the Creating Shared Value Promotion Office, which is the department in charge of risks, regarding risk management whenever appropriate. The Creating Shared Value Promotion Office monitors major risks related to climate change that may affect the Fuyo Lease Group and reports any risks that have occurred immediately to the risk management department, receives guidance, and takes appropriate action.

As countries work to reduce greenhouse gases amid worsening climate change, business environments are rapidly transforming toward decarbonization through society as a whole. The Fuyo Lease Group identified risks and opportunities through a scenario analysis and is moving forward on a dual wheel decarbonization strategy of decarbonization of the Group as a form of risk reduction and decarbonization of customers and society as a business opportunity.
See Climate Change Response details on the Fuyo Lease Group’s decarbonization strategy and initiatives.

The Group uses scenario analysis methods to forecast and analyze changes in the external environment as of 2030 in accordance with the framework proposed by the TCFD^*1 to understand the risks and opportunities and financial impact of climate change on business activities in the future. To ensure that the analysis is based on a variety of climate change-related scenarios, the Group conducted its assessment based on two climate change scenarios: the 1.5°C scenario, which is sufficiently lower than the 2°C target of the Paris Agreement, and the 4°C scenario.

Source: Created by Fuyo Lease based on IPCC Fifth Assessment Report WG1

In regard to impact over the entire Group, we identified an increase in costs for the achievement of RE100 and carbon neutrality due to the introduction of a carbon tax as a risk. However, as a result of calculating the monetary amount of this impact based on the Group’s CO₂ emissions, we recognize that the financial impact of this risk is minor.

Additionally, the risks in each domain identified as being particularly susceptible to the impact of climate change are as follows.

We have positioned the creation of social value through solutions to climate change issues as an important business opportunity and in our Medium-Term Management Plan Fuyo Shared Value 2026, we have formulated strategies that incorporate the global aim of keeping temperature rises under 1.5°C. Within this, we are disclosing the items that the Group is being particularly active in engaging as opportunities.

Our analysis shows that for both the 1.5°C and 4°C scenarios, the impact of climate change risks on the Group’s business will be limited, while the opportunities will be great. It also revealed that although both scenarios are expected to result in an increase in consolidated gross profit, there is more potential for an increase in profit in the 1.5°C scenario.

The Group recognizes that climate change-related risks and opportunities will have a significant impact on the Group’s business activities and is proactively responding from both aspects of promoting decarbonization of the Group and decarbonization of customers and society through business.
From the perspective of the Group’s promotion of decarbonization, in 2018 we became the first general lease company in Japan to participate in RE100, starting initiatives to convert to renewable energies for electricity consumption and in 2021 declared an intention to achieve carbon neutrality by 2030.
Moreover, as a Group with a wide-ranging business domain and customer base, we made achievement of decarbonization a Materiality KPI as we believe contribution to decarbonization of customers and society through business is an important issue, and set contribution to CO₂ reduction as a non-financial target to be achieved through the installation and replacement of renewable energy and energy-saving equipment and devices for its customers. We will promote decarbonization of customers and society in such ways as expanding use of renewable energies in the power generation business and strengthening financing of EV and FCV, while at the same time capture profits.
We have determined indicators and targets for both decarbonization of the Group to reduce risk and decarbonization of customers and society as a business opportunity.

Non-financial goals (excerpt of climate change-related targets)

The Group’s CO₂ emissions volumes and other important environmental data for the past 10 years are as follows.