KONICA MINOLTA

About Konica Minolta

Giving Shape to Ideas

Policy & System

Response to New Framework for Climate-related Financial Information Disclosure

Disclosure on four themes based on TCFD recommendations

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. In light of this, Konica Minolta agreed to support the final report, “Recommendations of the Task Force on Climate-related Financial Disclosures,” of the Task Force on Climate-related Financial Disclosures (TCFD), established by the G20 Financial Stability Board (FSB). The Group will disclose its climate change initiatives using the TCFD framework.

Corporate Governance

In 2008, Konica Minolta set the goal of reducing CO2 emissions across the entire lifecycle of its products by 80% compared to fiscal 2005. This target was approved by the Board of Directors. In 2017, the company added a Carbon Minus target as part of its commitment to contributing, along with partner companies, to a carbon-neutral society. In addition, in 2020 the Board of Directors approved the inclusion of “addressing climate change” as one of the five material issues that Konica Minolta would address in its long-term management vision and the decision to move the Carbon Minus target date forward to 2030 as its goal for addressing climate change.

At Konica Minolta, the president has the ultimate responsibility for and authority over climate change issues and is responsible for the effectiveness of environmental management, including climate change. The officers assigned by the president (Group sustainability officers) pursue environmental management and prepare medium-term plans, while also reporting every month to the president, chairman of the Board of Directors and the Audit Committee set up by the president on issues including progress made with environmental management and climate change issues. The Audit Committee routinely monitors and reviews the status of the overall implementation of environmental management led by the president.

Strategy

As climate change predictions materialize and the global environment continues to substantially change, this will likely cause turmoil in the economic and financial sectors. 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.

By actively introducing cutting-edge technology and combining it with Konica Minolta's strengths in imaging IoT technology and digital input and output, the Group is transforming itself into a digital company with insight into implicit challenges. In the long-term management vision formulated in fiscal 2020, “addressing climate change” was designated as one of the material issues and achieving Carbon Minus status by 2030 was set as a target. As Konica Minolta’s offerings to clients shift from products to services, it aims to reduce CO2 from services as well as CO2 emissions from its products and turn this into business growth. By backcasting from this target and linking the medium-targets and annual plans on climate change measures to medium-term business plans for product planning, development, production, procurement and plans, Konica Minolta aims to achieve its Carbon Minus target while continuing to develop its business.
Please refer to "Konica Minolta's Climate-Related Risks and Opportunities" for more details on this issue.

Risk Management

Konica Minolta carries out risk management so as to maximize returns while minimizing negative impacts and evaluates risks from a medium- and long-term perspective. In the short and medium term, environmental risks, including climate change, are viewed as management risks for the Group overall, and are managed by the Risk Management Committee. The Committee assesses and manages the impact and uncertainty of climate change risks from a medium- to long-term perspective in two scenarios: one in which a shift to a low-carbon society has taken place and one in which the impacts of climate change have materialized. The Group Sustainability Promotion Committee discusses plans and measures on the response to climate change at its quarterly meetings and also reassesses the extent of changes to risks twice a year. The Group Sustainability Officers report to the president on progress made with the plan every month. Important environmental issues are also reported by the Group Sustainability Officer to the core meetings and Risk Management Committee meetings, among others. The Board of Directors receives regular reports on the progress of the management plan for addressing climate change at their meetings, and they monitor the plan’s execution.
Please refer to “Evaluation and Identification Process for Material Issues” for more details on the relevance of material issues, which are the targets of risk management.

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. The company aims to reduce CO2 emissions across the product lifecycle by 80% by 2050 compared to fiscal 2005 levels.
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 53% by 2022, all compared to fiscal 2005 levels. Konica Minolta reduced emissions by about 820,000 tons in fiscal 2020, achieving a 60% reduction.
(Please see the medium-term environmental strategy and sustainability targets and results for details.)

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The Carbon Minus target that Konica Minolta has set is a commitment to reduce CO2 emissions beyond Scopes 1, 2 and 3 by helping customers and business partners solve environmental issues and to cut CO2 emissions by levels exceeding the CO2 emissions from Konica Minolta products throughout their lifecycle. Konica Minolta aims to achieve “Carbon Minus” status by 2030.
As there is a limit to how much a single company can do to achieve a carbon-neutral society, Konica Minolta is expanding its activities to include suppliers and customers in order to reduce CO2 emissions ore broadly. The company is working to increase its contribution to environmental conservation throughout the supply chain while linking these efforts to cost reductions and increased sales.

Moreover, given projections that the use of fossil fuels will no longer be possible in the future, Konica Minolta has set targets to adapt to climate-related risks, specifically using 100% renewable energy sources for the energy used in its business activities and bringing renewable energy use* up to 30% by 2030 and 100% by 2050. The medium-term sustainability plan, which ends in fiscal 2022, set an ambitious target of a renewable energy use rate exceeding 10%. This rate reached 6.5% in fiscal 2020. Please refer to “Membership in RE100” for more details.

Renewable energy use rate

*
Ratio of renewable energy-derived power to the Konica Minolta Group’s overall energy use (not including co-generated power) in fiscal 2016-2019)
*
Ratio of renewable energy-derived power to the Konica Minolta Group’s overall energy use beginning in fiscal 2020

Konica Minolta’s Climate-Related Risks and Opportunities

The Paris Agreement is a framework for addressing climate change that seeks to move the world more quickly and ambitiously to a low-carbon model. 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 global 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, Konica Minolta expects to face growing demands from stakeholders for the procurement of renewable energy, and if the company is unable to comply, investments and loans as well as sales opportunities could be lost, and the corporate brand could also be damaged. Customers’ interests are also changing as they look to curb the impact of climate change, and 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 have a negative impact on the Konica Minolta Group’s earnings.
Konica Minolta is striving for more efficient production processes, developing and improving its production technologies, and promoting Sustainable 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 digitalizing 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 minimizes the use of data centers. 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 to one that restrains wasteful production, connected workplaces that do not rely on paper output and support diverse workstyles, and material processing innovation solutions that curb energy and resource usage. It could also involve technology for 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 and technologies using renewable plastic and bio materials to avoid new resource extraction.
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, more frequent abnormal climate events and forest fires around the world, stricter restrictions designed to protect forest resources, and heightened social demands could destabilize the procurement of paper materials and result in the loss of business opportunities. 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. This could have a negative impact on the utilization rate of factories. Moreover, major natural disasters such as large-scale typhoons, floods, or forest fires could occur due to climate change, and these could damage the Konica Minolta Group’s facilities and make it difficult for employees to perform their jobs. As a result, operations of the Group and its suppliers might be temporarily halted, and production and shipping could be delayed.
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 depend on paper printing in the office. The Group is expanding sales of a new product, Digital Workplace. 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. 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. From a worldwide perspective that encompasses the entire supply chain, systems are set up for each business division and subsidiary, including the mainstay information equipment business and the medical equipment business, which will be in great demand in the event of a disaster. In addition, an initial response system has been set up, and this system will collect information on the extent of damage and other aspects immediately after a disaster and determine whether the BCP should be activated.

On the other hand, the physical impacts of climate change could also create business opportunities.
In the medium and long term, expectations for increased safety and security in the face of natural disasters could lead to new demand from society for imaging IoT and sensing solutions as preparation for abnormal climate events. In addition, unexpected diseases (including infectious diseases) are expected to occur more frequently due to the impact of climate change on ecosystems. In healthcare solutions, imaging diagnosis using the Konica Minolta Group's edge IoT technology can reduce the workload of medical practitioners, which could lead to significant business growth opportunities as a result.

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