Disclosure in Line with TCFD Recommendations

Disclosure in Line with TCFD Recommendations

The Menicon Group considers climate change to be an important issue. Since 2021, we have conducted the Scenarios Analysis to improve our resilience against climate change over a mid-to-long term period. In April 2022, we established an organization to discuss and review sustainability issues, including climate change, in greater depth, and in July we announced our support to the TCFD Recommendations. In the future, we will expand our initiatives in line with TCFD framework, continue to strengthen our resilience, and enhance disclosure of climate-related financial information.

Governance

The Menicon Group discusses issues related to climate change at the Sustainability Committee and determines the basic action policies. The Sustainability Committee is led by our CEO, and consists of all our executive officers, internal directors, and heads of related departments. They are scheduled to meet more than four times a year. We have also set up a subcommittee on climate change issues which collects information from each department and review the contents to be discussed by the Sustainability Committee, such as evaluating risks and opportunities related to climate change and initiatives to address issues, as necessary. Among the content discussed in the Sustainability Committee, measures and policies that will have impacts on management will be approved by the Executive Committee and Board of Directors. Other matters which were discussed are also regularly reported to the Board of Directors. Sustainability management is promoted under the supervision of the Board of Directors.

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Strategy

Evaluating Risks and Opportunities

Regarding the impact of climate change on business and strategy, the Menicon Group has identified key risks and opportunities by referring to IPCC scenarios RCP2.6 (2°C scenario), RCP8.5 (4°C scenario), and the IEA sustainable development scenario (less than 2°C scenario). The time line is classified into short-term (present to 2025), medium-term (2026 to 2030), and long-term (2031 onwards).

Risks that may have impacts on finance and business strategy

Risk type Risk factor Indicator Timeline Measures to be adopted
Transition Policy and Legal Rising carbon tax
  • Increase in costs due to higher  raw material prices, and electricity charges for manufacturing and sales
 Expense Medium
  • Introduce renewable energy by installing solar panels
  • Make the factories and offices energy efficient
  • Promote the development of product specifications and manufacturing processes that enable reduction of resource use
Tightening regulations to reduce CO2 emissions
  • Increase in costs due to the purchase of renewable electricity
  • Investment to introduce renewable energy power generation equipment and highly efficient production equipment
 Expense Medium
Tightening regulations on the use of recycled plastics
  • The ratio of recycled plastic in packaging materials is set, and the sales of non-conforming products is restricted
 Revenue Short
  • Promote the development of product specifications and manufacturing processes to encourage the use of recycled plastics
Market Changes in consumer behavior
  • Consumers adopt an environmentally friendly consumption behavior
 Revenue Short
  • Implement business activities that consider the environmental burden (from raw material procurement to consumption and disposal)
Physical Acute Occurrence of huge natural disaster
  • Damage to the factory causing disruption of operation and logistics network make providing products and services difficult, which lead to decrease in sales
 Revenue Long
  • Regularly review the Business Continuity Plan (BCP) and use it appropriately
  • Diversify raw material suppliers and decentralize production facilities
Chronic Water shortage caused by drought
  • Production does not go as planned and sales decrease due to water shortages in the area of the production base
 Revenue Medium
  • Introduce equipment that is capable of saving water
  • Promote the development of product specifications and manufacturing processes that lead to using less water resources
Deterioration of water quality due to increased rainfall
  • Increase in water usage costs
 Expense Long
Increase in average temperature
  • Increase in costs required for temperature control in production, storage, and transportation
 Expense Medium
  • Devising ways to improve the thermal efficiency of our buildings
  • Establishment of an operation system that allows business to continue even when the temperature rises

Opportunities that may have a significant impact on finance and business strategy

Opportunity type Opportunity factor Indicator Timeline Measures to be adopted
Resource efficiency Efficient use of resources
  • Reduce costs by implementing product specifications and manufacturing processes that enable the reduction of resources used
 Expense Medium
  • Promote the development of  environmentally friendly product specifications and manufacturing processes
Energy source Install renewable energy power generation equipment
  • Less affected by the increase in cost charges and power shortages
 Expense Medium
  • Promote the consideration of introducing renewable energy power generation equipment

Products and services

 Increase in the number of people who have myopia due to increased indoor activities (4°C scenario)
  • Increased demand for contact lenses
 Revenue Medium
  • Implement sales promotion activities
  • Appropriately predict demand and build a manufacturing system accordingly
Shift to environmentally friendly products
  • By providing environment-friendly products and services, we can expand our sales to include customers who are highly environmentally conscious and bring in new customers
 Revenue Short
  • Promote the  development of  environmentally friendly product specifications and manufacturing processes and provide information to customers
Popularity of products and businesses that reduce the environmental impacts
  • Increase in sales due to the spread and expansion of products and businesses that reduce the environmental impacts
 Revenue Short
  • Promote activities to popularize products and services that reduce the environmental impacts

Decrease in crop production efficiency due to rising average temperature (4°C scenario)
  • Increased demand for products and services that improve crop productivity
 Revenue Medium
  • Promote the development of products and services that contribute to improving productivity
Resilience Climate change risk evaluation and measures
  • Avoid risks beforehand and enable stable business continuity
 Revenue/ Expense Short
  • Improved risk evaluation accuracy

Risk Management

Regarding risk management, the Menicon Group has established a risk management system and procedures to avoid or reduce losses, protect company assets, ensure security for stakeholders, and strive for business continuity. Climate-related risks will also be managed and monitored in the overall risk management process.

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  1. Risk identification
    The Sustainability Department collects information on the company’s response to internal and external environmental changes from each department more than once a year. The department then sorts out the identified risks, and the committee chairman determines the important risks after deliberation by the Sustainability Committee.
  2. Risk response plan
    The Risk Response Department drafts a action plan.
  3. Progress report
    The Risk Response Department regularly reports on the progress of the plan at the Sustainability Committee meeting or other meeting.
  4. Review
    The Sustainability Committee instructs the plan to be reviewed as necessary depending on the progress of the response plan.
  5. Risk monitoring
    Each department monitors the identified risks and reports any changes to the Sustainability Department.

Indicators and Targets

As an indicator, the Menicon Group has started calculating its Scope1+2 Greenhouse Gas (GHG) emissions since FY2020, and is currently in the process of calculating emissions for the upstream and downstream parts of the supply chain (Scope3). We plan to discuss our GHG emissions reduction targets based on the calculation result of Scope 3.

GHG Emissions

    FY2021 Results FY2022 Results FY2023 Results
Scope 1+2 20.99 22.27 25.24
  Scope 1 3.34 3.92 3.93
  Scope 2 17.65 18.35 21.31

*The units for the figures in this table are t-CO2

*Limited to Menicon Co., Ltd. and group companies

    FY2021 Results FY2022 Results FY2023 Results
Scope 3 - indirect emissions other than Scope 1 and 2 - 178.75 192.22
  Category 1 - Purchased goods and services - 116.70 130.15
  Category 2 - Capital goods - 35.34 28.74
  Category 3 - Fuel- and energy-related activities not included in Scope 1 or 2 - 4.02 4.30
  Category 4 - Upstream transportation and distribution - 7.52 10.49
  Category 5 - Waste generated in operations - 0.41 0.48
  Category 6 - Business travel - 1.86 4.11
  Category 7 - Employee commuting - 1.10 1.14
  Category 8 - Leased assets (upstream) N/A
  Category 9 - Downstream transportation and delivery N/A
  Category 10 - Processing of sold products N/A
  Category 11 - Use of sold products - 1.46 1.37
  Category 12 - Disposal of sold products - 10.34 11.44
  Category 13 - Downstream leased assets N/A
  Category 14 - Francises N/A
  Category 15 - Investments N/A

*The units for the figures in this table are t-CO2

*The figures in this table are totals for the following companies: Menicon Co., Ltd., Menicon Nect Co., Ltd., W.I. System Co., Ltd., Menicon Singapore Pte. Ltd., Itabashi Trading Co., Ltd., Itabashi Medical (Dalian)Co., Ltd.

*The emissions in Category 1 were changed due to a close examination of the data tallying method in June 2025.

GHG emission reduction target

  FY2023
Scope 1+2 More than 43% reduction (reference year: FY2023)

 

Other Indicators and Targets

Menicon Co., Ltd. has a target to reduce the average energy intensity by 1% or more each year over five fiscal years. (Energy intensity: Production quantity or total floor area)