Climate-Related Information Disclosure (Disclosure Based on TCFD Recommendations)
Having established the long-term vision "Obayashi Sustainability Vision 2050" and having set decarbonization as one of our targets for the years 2040 to 2050, Obayashi Corporation is working throughout our Group and supply chains to realize a sustainable society. Currently, we aim to realize this vision by conducting business activities designed to prevent global warming. These include setting "Establish an Environmentally Responsible Society," which includes reducing CO2 emissions, as one of our ESG Materialities.
In July 2020 we declared our support for the Task Force on Climate-related Financial Disclosures (TCFD). Since then, we have conducted scenario analysis on our four major businesses in Japan(*1) in order to identify and assess climate-related risks and opportunities and understand the medium- to long-term impacts climate problems may have on our business. At this time, we are disclosing climate-related information based on the TCFD recommendations in light of our analysis results.
- *1 The four major businesses in Japan covered by this analysis were the Building Construction Business, Civil Engineering Business, Real Estate Development Business, and New Businesses.
Core Elements of TCFD Recommended Climate-Related Financial Disclosures
|Governance||Strategy||Risk Management||Metrics & Targets|
|The organization's governance around climate-related risks and opportunities||The actual and potential impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning||The processes used by the organization to identify, assess, and manage climate-related risks||The metrics and targets used to assess and manage relevant climate-related risks and opportunities|
Obayashi's CSR Committee was put in place to promote business activities based on the Obayashi Basic Principles and Group-wide CSR activities with an ESG perspective. It is headed up by the Representative Director and President and has a membership consisting of General Managers of divisions and other executive officers. Meeting once a year, the CSR Committee sets basic CSR policies that include initiatives on climate problems, drafts policies and specific action plans, and reviews achievements of initiatives. The ESG & SDGs Department of the Corporate Strategy Division serves as secretariat for the CSR Committee. It drafts, promotes, and monitors the progress of measures to promote ESG management and SDG achievement, disseminates information, instills relevant practices within the Group, and promotes Group-wide initiatives.
Governance System Concerning Climate Change
|Organization||Overview of organization||Overview of activities|
|Board of Directors||
|Environmental Management Expert Committee||
Identification of Risks and Opportunities
When examining our business, strategy, and financial planning, Obayashi also considers the impact of climate change. This consideration takes place as part of a series of processes that seek to determine the short-term, medium-term, and long-term impacts of climate-related risks and opportunities.
Short-term risks and opportunities:
Meeting every half-year, the Environmental Management Expert Committee reviews and revises our key environmental protection measures and amends our standards in respect to gradually emerging risks and opportunities.
Medium-term risks and opportunities:
We conduct appropriate, detailed analysis when setting our Medium-Term Business Plan and rolling plans.
Long-term risks and opportunities:
We review and revise our long-term vision "Obayashi Sustainability Vision 2050" as necessary. Moreover, during scenario analysis, we identified risks and opportunities that we anticipate could happen by 2030. Details may be found under the heading "Scenario analysis" below.
- Obayashi conducted a scenario analysis based on our four major businesses in Japan(*1) as of the year 2030. The purpose was to identify and assess risks and opportunities and understand the medium- to long-term impacts climate problems may have on our business, as based on TCFD recommendations.
Our analysis used two scenarios: one in which the average global temperature in the year 2100 would be about 4°C above pre-industrial levels (the 4°C scenario), and one in which it would be about 2°C higher (the 2°C scenario). We analyzed transitions in policy and market trends (transition risks and opportunities) as well as analyzing physical changes resulting from such events as disasters (physical risks and opportunities) under each scenario. Typical scenarios that we used are as follows.
[Major scenarios used to analyze transition risks and opportunities]
- 4°C scenario: IEA(*2) Stated Policy Scenario (STEPS)(*3)
- 2°C scenario: IEA Sustainable Development Scenario (SDS)(*4)
[Major scenarios used to analyze physical risks and opportunities]
- 4°C scenario: IPCC(*5) RCP8.5(*6)
- 2°C scenario: IPCC RCP2.6(*7)
- In the analysis process, we identified climate change-related transition risks and physical risks under each scenario. We then quantitatively and qualitatively verified the degree of impact each of about 30 risks could have on our business, ranking them as major, medium, or minor. The risks that we determined could have a major impact on our business were "introduction of carbon taxes," "higher summer temperatures," and "more severe natural disasters." We also identified certain opportunities that could have a major impact on our business: "increasing need for energy conservation/renewable energy technology" and "national resilience initiatives."
- Going forward, we will incorporate responses to the identified risks and opportunities into our Medium-Term Business Plan. We will strengthen our functions of identifying, assessing, and managing climate change and other medium- to long-term risks and opportunities. We will aim to expand business opportunities for the Obayashi Group and further reinforce our organizational resilience.
- *1 The four businesses in Japan covered by this analysis are the Building Construction Business, Civil Engineering Business, Real Estate Development Business, and New Businesses.
- *2 The International Energy Agency. The international organization aims to ensure energy security, economic development, environmental protection, and worldwide engagement. It is concerned with energy policy in general.
- *3 This scenario assumes that each nation's currently announced environmental policies will be realized, but the long-term targets of the Paris Agreement as agreed at the 21st Conference of the Parties (COP21) of the United Nations Framework Convention on Climate Change (UNFCCC) will not be achieved, and that climate change will cause global temperature to be about 4°C higher in the year 2100 than pre-industrial levels.
- *4 This scenario assumes that international cooperation to meet the long-term targets of the Paris Agreement will limit global temperature rise by the year 2100 to just 2°C above pre-industrial levels.
- *5 An abbreviation of "Intergovernmental Panel on Climate Change." The organization, founded in 1988 by the World Meteorological Organization (WMO) and United Nations Environment Programme (UNEP), seeks to provide comprehensive evaluations of human-induced climate change, its impacts, and measures for adaptation and mitigation from scientific, technical, and socio-economic points of view.
- *6 A scenario that assumes no measures will be taken to contain greenhouse gas emissions and that temperatures will rise 2.6°C to 4.8°C above pre-industrial levels.
- *7 A scenario that assumes greenhouse gas emissions will be contained and that temperatures will rise just 0.3°C to 1.7°C above pre-industrial levels.
[Summary of Scenario Analysis Results]
- T=Transition, P=Physical, R=Risks, O=Opportunities
|Item||Impact in 2030||Measures|
|T||R||Introduction of carbon taxes||
|O||Increasing need for energy conservation/ renewable energy technology||
|P||R||Higher summer temperatures||
|More severe natural disasters (typhoon, heavy rain, flooding, etc.)||
|O||National resilience initiatives||
- *1 The An abbreviation of "Net Zero Energy Building," it refers to a building that consumes zero net primary energy in a year while still providing a comfortable indoor environment.
Obayashi is committed to accurately assessing the risks associated with our business activities, preventing those risks from materializing, and minimizing the impact if they do. These efforts are key to enhancing our corporate value and fulfilling our social responsibility to stakeholders. As such, we have built a risk management system covering the entire Group.
Important decisions are referred to the Board of Directors and Management Meeting for discussion. These bodies determine and evaluate the risks of each agenda item. They discuss whether we have found a response that would be appropriate in case a risk is manifested, and then a decision is made on the item. Climate-related risks are discussed by the CSR Committee and reported to the Board of Directors.
Moreover, each department assesses the risks inherent to its business processes. It builds the necessary avoidance and mitigation measures into those processes before performing them. Meanwhile, the Business Administration Department, which is Obayashi's internal audit arm, audits each department's risk management efforts.
We will continue to enhance risk management and strengthen our risk management system.
Metrics & Targets
Obayashi has set CO2 reduction targets (measured in both gross volume and emissions intensity), including long-term targets for around 2050.
We are pursuing initiatives to reduce CO2 emissions in our business activities in order to meet these targets.
Going forward, we plan to further review and revise our long-term CO2 reduction targets to achieve decarbonization and will work to earn SBT(*1) certification to ensure we meet our reduction targets.
- *1 An abbreviation of "Science Based Targets." These are greenhouse gas emissions reduction targets that businesses set based on scientific grounds with the aim of achieving COP21's Paris Agreement long-term target of limiting climate change-induced warming to less than 2°C.
CO2 Reduction Targets
|Metric||Base year||Target year||Target|
|Direct contribution of CO2 emissions reduction rate(*1)||2013||2030||-85%|
|Indirect contribution of CO2 emissions reduction rate(*2)||2013||2030||-25%|
*1 Direct contribution = A + B - C
A Use of fuel at construction sites and offices, and purchases of electric power (Scope 1 + Scope 2)
B Construction/waste material transportation and employee/worker commuting (Categories 4, 7, and 9 of Scope 3)
C Emissions volume corresponding to amount of electricity generated by renewable energy business
*2 Indirect contribution = a + b - c
a Annual emissions during use of buildings designed and constructed by Obayashi Corporation,
assuming they are offered for use for 35 years after completion
b Production of construction materials (Category 1 of Scope 3)
c Reduction resulting from adoption of energy-conserving renovation or low-carbon materials