Climate-related Financial Information Disclosure（TCFD）
Strategy
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Impact on the Organization's Business, Strategy, and Finances of Climate-related Risks and Opportunities
Implementation and Results of Climate Change Scenario Analysis
Konica Minolta has identified business risks that could adversely affect the performance of the Group in 2030, and business opportunities that can be created by proactively addressing the challenges of climate change, assuming the following two scenarios: one in which the temperature increase is kept below 2°C (equivalent to 1.5°C) and a low-carbon global society is achieved, and one in which the temperature increase exceeds 2°C and the predicted physical effects of climate change materialize.
Konica Minolta utilizes as a framework described below to conduct scenario analysis, employing a process that involves identifying target business areas, This process includes identifying major climate-related risks and opportunities, reviewing existing scientific scenarios for climate change, reviewing and clearly defining risks and opportunities for those scenarios as well as their financial impacts, and reviewing the direction, policies, and strategies for future responses. The climate financial impacts identified by the scenario analysis are reported and discussed at the Environment Promotion Committee, which includes representatives of the divisions of the Konica Minolta Group, and then approved by the officer in charge of environment, who indicates and formulates the direction, policies, strategies and measures for future responses.
If the average global temperature increase is kept below 2°C (equivalent to 1.5℃) and a low-carbon global society is achieved:
If the world as a whole moves toward becoming low-carbon, regulations relating the environment can be stricter, the Group may face additional obligations and costs related to legal compliance. With growing demands from stakeholders for the procurement of renewable energy, it is possible that investments, loans and sales opportunities could be lost, and the corporate brand value could also be damaged. Also the decline in the use of paper in offices and higher costs for manufacturing and procurement as fossil fuels and fossil resources are replaced with alternatives could also affect the Konica Minolta Group’s earnings.
Konica Minolta is taking the following measures to address these risks based on its long-term vision for net zero emissions by 2050.
The Company is striving for more efficient production processes, developing and improving its production technologies, and promoting Green Factory activities that reduce both CO2 emissions and costs. It is also a member of the RE100 international leadership initiative with the aim of operating its business on 100% renewable energy.
The Group is gradually reviewing its electricity purchase contracts of its production and sales bases in Europe, North America and China, and switching to renewable energy-derived electricity.
In addition, the Group is promoting Carbon Neutral Pertner activities, in which it digitizes the technologies and know-how of its energy conservation and provides them to it suppliers, so that they can work together with the Group to reduce energy consumption. Through these activities, the Group aims to maximize energy cost reductions and CO2 emission reductions throughout its supply chain. Over an activity period of three years, the Group will reduce CO2 emissions by 6% through energy conservation, and then support its suppliers to convert to 100% renewable energy-derived electricity.
These efforts can not only address transition risk, but also improve its sales competitiveness based on a strong supply chain and create new business opportunities.
On the other hand, the Company believes that helping to solve its customers' climate change-related issues will lead to business opportunities. Combining Konica Minolta's accumulated imaging and IT technologies, it expects to increase sales by providing services and solutions that help society and customers to achieve their transition plans. As a means for maximizing opportunities, the Company is maximizing its contribution to solving climate change issues at the business planning and product planning stages through activities to create green products. It is pursuing this initiative with the mid- to long-term vision of achieving carbon minus by 2025.
In the short to medium term, the Company will provide digital solutions that transform the supply chain of the printing and apparel industries, functional materials with lower product carbon footprints, hyperspectral imaging that helps improve sortability and recycling rates of used plastics, and transform the production process through inkjet technology. Konica Minolta aims to create new business opportunities through collaboration with suppliers and business partners from an environmental and energy perspective.
Addressing the "Risks" of Climate Change
| Impact on Konica Minolta | Target Segment | Classification | Financial Impact | Timeline | Handling | |
|---|---|---|---|---|---|---|
| procurement and manufacturing costs | Stakeholder demand for renewable energy procurement | Industry business, digital workplace business | Market evaluation | Medium | Short-term | Introduce renewable-energy-derived electricity at production, R&D, and sales sites |
| Replacing fossil resources and fuels in production | Industry business | Policies/Laws | Medium | Medium to long-term | Examine the introduction of CO2-free fuels, examine the introduction of ICP, and optimize the procurement strategy | |
| Response to new emissions regulations and laws | Industry business, digital workplace business, professional printing business, healthcare business | Policies/Laws | Strong | Short to medium term | Develop energy-saving production technology | |
| Increase in product development costs | Response to the market and new regulations on product energy efficiency | Digital workplace business, professional printing business | Policies/Laws Market | Medium | Short-term | Product energy-saving design in keeping with new environmental labeling standards, compliant with public procurement and bidding requirements |
| Decrease in sales due to changes in demand for products and services | Decrease in office demand due to acceleration toward a paperless society | Digital workplace business | Market | Strong | Short to medium term | Convert business to paperless operation |
The "Opportunities" of Climate Change
| Impact on Konica Minolta | Target Segment | Classification | Financial Impact | Timeline | |
|---|---|---|---|---|---|
| Higher sales due to change in demand for products and services | Digital solutions that transform the printing industry supply chain | Professional printing business | Products/Services | Strong | Short- to medium -term |
| Functional materials with lower product carbon footprints | Industry business | Products/Services | Medium | Short- to medium -term | |
| Digital solutions that transform the apparel industry supply chain | Professional printing business | Products/Services | Minimal | Short- to medium -term | |
| Hyperspectral imaging that helps improve the separability and recycling rate of used plastics | Industry business | Products/Services | Minimal | Medium -term | |
| Transformation of the production process with inkjet technology | Industry business | Products/Services | Minimal | Short- to medium -term | |
If the average global temperature increase exceeds 2°C and the predicted physical effects of climate change materialize:
If physical risks due to climate change materialize around the world, unstable procurement of paper materials could result in the loss of business opportunities due to damage of forest resources caused by climate disasters. Also, if chronic climate change effects were to continue, such as altered weather patterns, and the supply of raw materials could be reduced or halted. As a result, operations of the Group and its suppliers might be temporarily halted, and production and shipping could be delayed.
As a measure to adapt, the Company now trace raw material supply routes back to the crude raw materials and work to secure multiple suppliers and examine alternative materials for raw materials that face high risk when it comes to securing stable supply.
In the professional printing and office printing businesses, the Company has multiple production bases in Japan, Europe, and North America that produce and fill printing toner and produce parts for consumables. The Company is working to establish highly resilient supply chain systems that can supply products in the regions where they are needed.
In the mainstay office printing business, the Company will shift to a business model that does not depend on paper output and reduce its dependence on forest resources by expanding its service package fee structures.
At Konica Minolta’s production sites and those of its major suppliers, the Company analyzes water risk using Aqueduct, an assessment tool developed and provided by the World Resources Institute (WRI). Sites with high water risk systematically take countermeasures.Moreover, Konica Minolta has prepared a Business Continuity Plan (BCP), a specific action plan for ongoing operations in the event that large-scale natural disasters occur. In addition to systems set up for each business division and subsidiary, it has also set up an initial response system, that collects information on the extent of damage immediately after a disaster and determines whether the BCP should be activated. On the other hand, even if the impacts of climate change materialize, that could create business opportunities.
In the medium term, it can tap into societal demand for imaging IoT and sensing solutions to prevent the effects of abnormal weather and natural disasters and ensure preventive maintenance of infrastructure, as well as healthcare solutions, which can be used at disaster medical care sites.
Addressing the "Risks" of Climate Change
| Impact on Konica Minolta | Target Segment | Classification | Financial impact | timeline | Handling | |
|---|---|---|---|---|---|---|
| Lower revenue due to a reduction in production capacity | Insufficient or interrupted supply of natural resources due to changes in climate patterns | Industry business | Chronic physical | Strong | Long-term | Product design and development not dependent on particular natural resources |
| Supply chain interruptions following large-scale natural disasters | Digital workplace business, professional printing business | Acute physical | Strong | Medium-term | Establish business continuity management (BCM), decentralize production and supply of consumables by region | |
| Depletion of water resources and restrictions on water intake | Digital workplace business, professional printing business and industry business | Chronic physical | Minimal | Long-term | Water risk assessment and reduction of water consumption at production and procurement sites | |
| Decrease in sales due to changes in demand for products and services | Limited access to forest resources due to abnormal climate and forest fires | Digital workplace business, professional printing business | Chronic physical | Strong | Long-term | Turn the shift to paperless into business opportunity |
The "Opportunities" of Climate Change
| Impact on Konica Minolta | Target Segment | Classification | Financial impact | Timeline | |
|---|---|---|---|---|---|
| Increase in sales due to changes in demand for products and services | Image IoT and sensing solutions that contribute to disaster prevention and the mitigation of abnormal climate and natural disasters | Industry business | Products/Services | Minimal | Medium-term |
| Healthcare solutions utilizing diagnostic imaging at disaster medical sites | Healthcare business | Products/Services | Minimal | Medium-term | |
Climate-related risks and opportunities for Konica Minolta
<Assumptions for scenario analysis>
- Scientific scenarios used: IPCC RCP2.6, RCP8.5 IEA NZE 2050, CPS
- Classification of risks and opportunities: Transition risks (policies and laws, technologies, markets, reputation), physical risks (acute physical, chronic physical), opportunities (resource efficiency, energy, products/services, markets, resilience)
- Definition and evaluation criteria for "financial impact": "Large" : additional cost or profit decrease of 1 billion yen or more, "Medium": additional cost or profit decrease of 100 million to 1 billion yen, “Minimal”: additional cost or profit decrease of less than 100 million yen
- Definition and evaluation criteria for "financial effect": "Large": Profit of 10 billion yen or more, "Medium": Profit of 1 to 10 billion yen, "Minimal": Profit of less than 1 billion yen
- Definition and evaluation criteria for "timeline": "Long term": 10 years or more, "Medium term": 3 to 10 years, "Short term": 1 to 3 years
Adapting to Climate Change
Based on the results of scenario analysis in case the physical impacts of climate change materialize, the Company has established initiatives to adapt to climate change upstream (suppliers), in operations (production and R&D), and downstream (customers). It identifies the characteristics and features of each country and region that will have an impact, establish countermeasures to be taken, and implement them throughout the entire supply chain.
