Policy & System
Responding to the Task Force on Climate-related Financial Disclosures (TCFD)
The Task Force on Climate-related Financial Disclosures (TCFD), established by the G20 Financial Stability Board (FSB), released its final report, entitled “Recommendations of the Task Force on Climate-related Financial Disclosures,” in June 2017.
Konica Minolta believes that accurately assessing the risks and opportunities related to climate in its business operations and actively disclosing information to investors and a wide range of other stakeholders is essential for a company capable of sustainable growth. Being one of the supporters of the TCFD, Konica Minolta agreed to support the final report. The Group will disclose its climate change initiatives using the TCFD framework.
Konica Minolta recognizes that global warming is a serious risk for companies and, as a result, in 2008 the Board of Directors approved Eco Vision 2050, the company’s long-term environmental vision. This plan sets the ambitious target of reducing CO2 emissions throughout the product lifecycle by 80% by 2050, compared to fiscal 2005 levels. In 2017 the issue of climate change was identified as an opportunity, and the company added a commitment to achieve Carbon Minus status through its business activities and deliver a net reduction in CO2 emissions for society. In 2020, the Board of Directors revised this commitment, mandating achievement of Carbon Minus status by 2030 instead of 2050. The company will now implement business strategy and environmental (sustainability) management in a more integrated way.
At Konica Minolta, the President and CEO is tasked with the ultimate responsibility and authority for addressing climate change issues and is also responsible for the effectiveness of the company's environmental management, including climate change initiatives. The actual environmental management activities are executed by the Group Sustainability Officer appointed by the President to be responsible for sustainability, including environmental measures.
The Group Sustainability Officer formulates a medium-term plan for sustainability, which is then approved by the Board of Directors as a corporate management plan. The Group Sustainability Officer reports monthly to the President and the Audit Committee established by the Board of Directors to report progress made on environmental management and on issues including climate change.
As climate change predictions materialize and the global environment continues to substantially change, there will likely be major social, economic and financial disruptions. Konica Minolta recognizes these to be significant risks to its business. At the same time, the company believes that, by helping to solve environmental issues through business activities, opportunities can be created that will promote the sustainable growth of the Group.
Over the long term, it will be necessary to replace fossil resources and fuels in manufacturing processes, and to respond to shortages of natural resources caused by changes in climate patterns. In the short and medium terms, a variety of challenges can be expected, including rising prices for fossil resources, tightening of regulations, stronger requirements for renewable energy, disruption of supply chains due to extreme weather, and widespread adoption of paperless measures.
By doing nothing, Konica Minolta could be faced with a need for additional capital investment, cost increases, and loss of business opportunities. By actively incorporating cutting-edge technology and combining it with the company's strengths in digital input and output technology, Konica Minolta is transforming itself into a digital company with insight into implicit challenges.
Under Konica Minolta's sustainability strategy, which forms the core of its long-term management vision, addressing climate change has been identified as a material issue and achievement of Carbon Minus status has been set as the objective. Medium-term sustainability targets and annual plans have been formulated in connection with this strategy. They are linked to medium-term business plans such as those for product planning and development, production and procurement, and sales. The aim is to achieve Carbon Minus status through business activities.
For example, the environmental impact of the manufacturing industry can be reduced by eliminating unnecessary production, transportation, inventory, and disposal. Konica Minolta believes that it is helping to solve this issue by providing on-demand equipment for industrial printing of things such as packaging, labels, and textiles.
Paper consumption is an issue in offices, but by providing digital workplace solutions that improve workflow efficiency, and solutions to support work style innovation such as telework, energy and paper consumption can be reduced.
Big data analysis consumes enormous amounts of energy, but Konica Minolta believes that its edge-computing technology can reduce energy consumption for society as a whole by offering efficient on-site data processing without the need for a large data center.
Konica Minolta is supporting drug discovery and testing with its genetic analysis technology. This can help prevent infectious disease outbreaks, which are of particular concern due to the effects of climate change.
In healthcare settings, Konica Minolta can facilitate diagnosis using imaging IoT technology and DX solutions that lighten the workload of medical practitioners.
For more information on these risks and opportunities, see "Konica Minolta's Climate-Related Risks and Opportunities."
Konica Minolta sees risk as uncertainty that could affect the organization's profitability. It approaches risk not only from the negative perspective, but also from the positive one. By addressing risk as an opportunity, Konica Minolta carries out risk management in a way that can maximize returns while minimizing negative impacts.
Looking at the medium and long term, the Group identifies important material issues that need to be prioritized in order to achieve initiatives that more actively incorporate social issues into business activities. Using international guidelines, the Group has created a comprehensive list of material issues based on changes in society and the business environment.
The issues are quantitatively evaluated from two angles: materiality to stakeholders and materiality to the company’s business. In order to incorporate an objective perspective, outside experts are consulted and the validity of the material issues are verified at meetings with executive officers. Under Konica Minolta's sustainability strategy, which forms the core of its long-term management vision, addressing climate change is identified as one of the material issues.
The identified climate change risks are evaluated in terms of both uncertainty and the degree of impact for two scenarios: achievement of a low-carbon society and a world substantially altered by climate change. Risks quantitatively evaluated to be of high importance are positioned as important issues in the medium-term plan linked to the sustainability strategy, and medium-term targets and annual plans are formulated. Targets are managed on a quarterly basis by the Group Sustainability Promotion Committee, and new issues and additional measures are discussed.
Plan progress is reported monthly by the Group Sustainability Officer to the President. Ongoing review of the degree of risk change is performed twice a year at the committee meetings, and risks are repeatedly identified and evaluated. In fiscal 2019, a new climate-related environmental regulation was identified and incorporated into the sustainability medium-term plan. Plan-do-check-act (PDCA) cycles are being performed for this risk every quarter.
Environmental risks including climate change are categorized as short or medium-term management risks for the entire Group. They are handled by the Risk Management Committee, chaired by an executive officer appointed by the Board of Directors. This committee identifies relevant risks through risk assessment of corporate activities, determines overall risks, and evaluates their likelihood and potential level of impact on the business. Based on this, there is a system to ensure the formulation and execution of measures for risks deemed important, according to their priority, and to monitor and review the progress of those measures on a quarterly and monthly basis.
Risk identification through risk assessment involves risks put forward by a team of environmental law specialists, as well as new issues that are submitted by production, procurement, and development sites. The Risk Management Committee confirms the identified risks and necessary measures to minimize them. It also confirms and reviews whether the risk management system is functioning effectively. The findings of the Risk Management Committee are regularly reported to the Audit Committee, which consists of directors who are not also serving as executive officers.
Metrics and Targets
Konica Minolta has established its Eco Vision 2050, which sets the goals of reducing CO2 emissions over the product lifecycle and achieving Carbon Minus status, as its metric for managing the risks and opportunities posed by climate change. Results are reported every year.
The goal for reducing CO2 emissions across the product lifecycle includes all of Scopes 1 and 2 (CO2 emissions generated during the production stage and the sales and service stage) and the main components of Scope 3 (CO2 emissions generated during the procurement stage, transportation and distribution stage, and product use stage). In the long term, Konica Minolta aims to reduce CO2 emissions by 60% by 2030 and by 80% by 2050, and in the short term, the company aims to cut emissions by 50% by 2019, all compared to fiscal 2005 levels.
In fiscal 2019, a reduction of approximately 990,000 tons of CO2 was realized, resulting in a 52% reduction and target achievement (see the graph below for the target and actual results).
The Medium-Term Environmental Plan, which designates 2019 as the target year, sets the target for the company’s Green Factory activities of reducing CO2 emissions in the production stage by 19,000 tons and also sets cost-cutting targets. By the end of the year, the company had achieved both the cost and emissions reduction targets, with an elimination of 30,100 tons of CO2.
In its Green Products initiative, Konica Minolta has set targets of reducing CO2 emissions in the product use stage by 17,200 tons and generating 770 billion yen in sales with a sales ratio of 70% for products certified as Sustainable Green Products in fiscal 2019. By the end of fiscal 2019, CO2 emissions had been reduced by 14,800 tons, while sales of Sustainable Green Products reached 733.1 billion yen, yielding a sales ratio of 73.6%.
To minimize climate-related risks, Konica Minolta is aiming for 100% of its electricity for business activities to come from renewable energy, based on the assumption that fossil fuels will eventually become unavailable. The target renewable energy usage rates are 30% by 2030 and 100% by 2050.
Under the medium-term environmental plan for 2019, the target renewable energy usage rate was 1%. By the end of the year, a rate of 5.3% had been achieved. For more information, see "Participation in RE100." To minimize the risk of supply chain disruption, a goal of "zero incidents with serious business impact" was set in fiscal 2019. During the year however, there was a situation where operations were temporarily halted at a certain industrial park in China.
The supply of some raw materials was interrupted, and the inventory of raw materials for production was temporarily low. In order to prevent delays in product delivery to customers, Konica Minolta traced back the raw material supply route to the crude raw materials. For high-risk raw materials, the company has begun searching for suppliers outside of China, securing multiple suppliers, and investigating alternative materials.
In 2020, Konica Minolta set a new short-term target for achievement by 2022 to reduce product lifecycle CO2 emissions by 52%.
The company has also set a Carbon Minus goal, a commitment to achieve a CO2 emissions reduction effect through business activities that exceeds the CO2 emissions of the entire lifecycle of all Konica Minolta products. This would deliver a net reduction in emissions for society. If the Group can reduce lifecycle CO2 emissions by 60% before 2030, the remaining 40% will be about 830,000 tons. Therefore, the Carbon Minus goal for 2030 is to reduce society's emissions by 830,000 tons or more, which would exceed the Group's Scope 1, 2, and 3 emissions. There are limits to what a single company can do on its own to achieve Carbon Minus status, so Konica Minolta is expanding its activities to include business partners and customers, with the aim of more broadly reducing CO2 emissions. Konica Minolta expects this effort not only to boost its contributions to the environment across the entire supply chain, but also to reduce costs and increase sales.
Konica Minolta’s Climate-Related Risks and Opportunities
The Paris Agreement provides a framework for the world to move more quickly and ambitiously to build a low-carbon global society. At the same time, there are concerns that the needed changes will not happen fast enough and climate change will have a harsh impact on the world.
Konica Minolta is forecasting using both optimistic and pessimistic scenarios, as described below. It is identifying business risks that could adversely affect the performance of the Group in the future as well as business opportunities that can be created by proactively addressing the challenges of climate change.
If the average global temperature increase is kept below 2°C and a low-carbon society is achieved:
As a transitional risk, if environmental laws and regulations become even stricter in the near future, including greenhouse gas emission regulations, energy efficiency regulations, regulations relating to Europe's Circular Economy Action Plan, and new and additional tax systems such as carbon taxes, there may be additional obligations and costs for legal compliance. This might result in higher costs for the Group and loss of business opportunities. Also, if business operations that rely on fossil fuels and resources, which are the main causes of human-caused CO2 emissions, continue unchanged, they could reduce the Group's corporate value making it uncompetitive. This could lead to a decrease in sales opportunities. Konica Minolta 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. In addition, the Group aims to maximize energy cost decreases and CO2 emission reductions throughout the supply chain by promoting Green Supplier activities. These involve sharing the Group's energy-saving technologies and expertise while working together with suppliers to reduce energy consumption. In addition, Konica Minolta believes that in order to compete as a sustainable growth company it must be able to quickly embrace a renewable energy society that does not depend on fossil fuels. Accordingly, it is a member of RE100, a global leadership initiative in which companies aim to operate their businesses using renewable energy exclusively. Konica Minolta has set a goal of procuring all the electric power used for its business activities from renewable energy sources by 2050.
On the other hand, Konica Minolta believes that accelerating the transition to a low-carbon society should create new business opportunities. In the long term, there could be widespread demand for the company's proprietary edge IoT technology in the field of edge computing, which does not require large-capacity servers. Since this can significantly reduce energy consumption and greenhouse gas emissions, demand for this technology by society as a whole could increase along with opportunities for Group sales.
In the medium term, if Konica Minolta can respond to changes in customer demand and preferences, it could also increase sales. This might include digital workplaces that support the transition to a full-scale paperless society, on-demand production processes that transform the business model of mass production and disposal, and material processing innovation solutions that curb energy and resource usage. It could also involve technology for utilizing recycled plastics and biomaterials to avoid new resource extraction, imaging IoT solutions for non-destructive inspection of greenhouse gas leaks from shale gas and other pipelines, as well as an ecosystem to support the environmental (sustainability) management of companies.
In the short term, Konica Minolta believes that active promotion of ongoing energy saving activities will reduce costs at its own factories. Not only that, it will create new business opportunities through collaboration with suppliers and business partners.
If the average global temperature increase exceeds 2°C and the predicted effects of climate change materialize:
In terms of physical risks, major natural disasters such as large-scale typhoons, floods, or forest fires could occur due to climate change, and supplies of electricity and water could become restricted as a result. If such an event were to occur at a Konica Minolta site or supplier, the Group's facilities could be damaged, operations might be temporarily halted, and production and shipping could be delayed. Also, if chronic climate change effects were to continue, such as altered weather patterns and widespread drought, procurement of natural resources might become problematic, and the supply of raw materials could be reduced or halted. In the area of industrial materials, which are highly dependent on natural resources for their production, Konica Minolta is advancing the development of new functional films that do not require natural resources. The Group is expanding its product lineup with materials based on cellulose-elimination technology. In the MFP business, Konica Minolta is accelerating the development of new digital solutions that do not require paper printing in the office. The Group is expanding sales of a new product, Workplace Hub. This is an integrated IT service platform that enables remote collaboration while providing robust information security. To better respond to climate-related natural disasters, Konica Minolta is expanding its own production sites in Europe and North America as bases for producing toner refills and parts for consumables needed in the mainstay office and professional printing business areas. The Group is working to establish a highly resilient supply systems through production in consumption regions.
On the other hand, the physical impacts of climate change could also create business opportunities. In the medium and long term, the need for early testing and drug discovery for unexpected diseases (including infectious diseases) is expected to increase due to the impact of climate change on ecosystems. Consequently, there might be more opportunities for Konica Minolta to utilize its genetic technology. In the healthcare field, imaging diagnosis using the Group's edge IoT technology can reduce the workload of medical practitioners, and its healthcare solutions can support communication among medical professionals. These products could see significant business growth opportunities as a result. With its imaging IoT and sensing solutions that can be used to prepare for extreme weather, the Group might also be able to meet new social needs for increased safety and security in the face of severe natural disasters.