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

Governance

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
  • Comprised of Obayashi Directors
  • Meets about 15 times a year
  • Supervises climate-related risks and opportunities
CSR Committee
  • Chairperson: Representative Director and President
  • Members: Executive officers, including general managers of divisions
  • Secretariat: ESG & SDGs Department of Corporate Strategy Division
  • Meets once a year
  • Sets basic policy, draws up measures, and evaluates progress to promote CSR initiatives including those related to climate problems
Environmental Management Expert Committee
  • Established within CSR Committee
  • Chairperson: Executive officer responsible for the environment
  • Members: Supervisors for environmental management in each Head Office department
  • Meets twice a year
  • As an organization subordinate to the CSR Committee, it reviews, revises, and promotes policies and action plans based on collected environmental data, sets targets, and monitors and reviews progress and results in accordance with the Obayashi environmental management system
Environment departments
  • Head Office, main offices, and branch offices (environment departments)
  • Group companies (environment departments)
  • Head Office, main offices, branch offices, and Group companies promote specific initiatives based on action plans and targets set by the Environmental Management Expert Committee

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Strategy

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.

Scenario Analysis

  • 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
Overview 4°C
scenario
2°C
scenario
T R Introduction of carbon taxes
  • Taxes could be levied on CO2 emitted by construction and other business activities, causing cost increases.
  • Price of construction materials, which consume much energy, could rise, causing procurement cost increases.
Minor Major
  • Promote energy conservation at construction stage (less fuel consumption, less electric power usage)
  • Promote zero emissions, increase construction waste recycling rate, use recycled and low-carbon materials
  • Establish mid-rise and high-rise wood building design and construction technologies and build supply chains
  • Work with supply chains to decarbonize construction machinery
O Increasing need for energy conservation/ renewable energy technology
  • Our energy conservation technology and ZEB(*1) designed to meet society's needs are increasingly superior.
  • Renewable energy continues to replace conventional forms of energy.
  • There is growing demand for offices with green building certification.
Medium Major
  • Promote development and practical application of ZEB technology that provides comfort and is business-feasible
  • Strengthen marketing of value-enhancing and energy-conserving renovation services for existing facilities
  • Promote the renewable energy business
  • Supply office buildings that have high added value and outstanding environmental performance
P R Higher summer temperatures
  • Risks to construction site worker health, including heat stroke risk, are rising.
  • Poorer work conditions at construction sites could make worker shortage worse.
Major Major
  • Further increase productivity and construction safety using labor-saving technology and ICT
  • Develop innovative technologies to improve work conditions at construction sites
More severe natural disasters (typhoon, heavy rain, flooding, etc.)
  • Increasing impact from natural disasters could damage buildings and infrastructure during construction or could interrupt construction. There is also increasing risk of needing to respond to damage at suppliers of construction equipment and materials.
  • Value of real estate we own in areas with high flood risk could decline.
Medium Medium
  • Strengthen ability to make BCP response during disaster by building strong networks with suppliers
  • Promote redevelopment projects to enhance environmental, disaster prevention, and business continuity performance
O National resilience initiatives
  • There is rising demand for infrastructure construction, maintenance, and repair to prevent and mitigate disasters and build national resilience.
Major Major
  • Promote development and practical application of technologies to prevent and mitigate disasters and build national resilience
  • Strengthen marketing of infrastructure construction, maintenance, and repair
  • Promote one-stop business including everything from surveys and inspections using ICT to evaluations, diagnoses, repair, and reinforcement
  • *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.

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Risk Management

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.

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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%
2050 -85%
Indirect contribution of CO2 emissions reduction rate(*2) 2013 2030 -25%
2050 -45%
  • *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

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