Obayashi Corporation has clarified its intention to seek to "realize sustainability of the planet, society, and people" in the Obayashi Sustainability Vision 2050. We believe that it is necessary to conduct environmentally friendly business activities and thereby contribute to nature positivity after understanding how the Group's corporate activities are supported by, and have an impact on, the natural environment.
Regarding nature-related risks and opportunities, we have analyzed dependencies and impacts on nature in our value chains using the LEAP Approach suggested by the TNFD recommendations, and identified and evaluated them as follows:
Overview of LEAP Analysis
|
L Locate interface with nature |
E Evaluate dependencies and impacts |
A Assess risks and opportunities |
P Prepare to respond and report |
TNFD Requirements |
- Selection of buisiness areas in scope
- Selection of value chains in scope
|
- Identification and evaluation of dependencies
and impacts
|
- Identification and evaluation of risks
and opportunities
|
- Preparation for disclosure and respondind
to risks and oppotunities
|
Obayshi's Responses |
- Identification of value chains
- Selection of construction sites by construction
type and extraction sites of raw materials of procured construction materials
- Location of the interface with nature
|
- Evaluation of dependencies and impacts using
ENCORE
- IBAT-based confirmation of adjacency with
protected natural reserves and significant spacies
|
- Identification of risks and opportunities
and development of countermeasures based on the dependencies and impacts identified with ENCORE
|
- Disclosure
- Response to the risks and opportunities
|
[Locate] Selection of business areas and value chains in scope
In this analysis, we focused on Domestic Construction Business (Building Construction) and Domestic Construction Business (Civil Engineering), accounting for approximately 70% of the consolidated sales of the Obayashi Group.
First, we reviewed the phases with close contact with nature in the value chains (from Planning, Design, Procurement, Construction, Post-delivery management to Demolition) of both of the businesses, and selected three phases as the targets of the analysis: "Design," "Construction," and "Extraction of raw materials" in "Procurement" as it has a greater impact on nature in the phase. "Construction" is believed to have significant dependencies and impacts on the surrounding nature due to such factors as land alteration, water discharge, noise, and vibration. As for "Design," dependencies and impacts on nature during construction and after completion of a building are determined by detailed design, so we decided to analyze them collectively as "Design and construction." "Extraction of raw materials" in "Procurement" is considered to have dependencies and impacts on nature because of such factors as digging for soil and sand, mining for minerals, and deforestation.
Value chain |
Business activities' connection with nature |
Phase |
Detailed phase |
Description |
Degree of impact |
Planning |
Development/asset management |
There is no actual direct impact on nature at this phase, but the selection of a site determines that there will be a certain impact on the surrounding natural environment |
Low |
Design |
Consulting/engineering |
There is no actual direct impact on nature at this phase, but impacts on the surrounding natural environment in the procurement and construction phases will be determined by the design (indirect impacts) |
High |
Design |
Procurement |
Extraction of raw materials (iron, concrete, sand, gravel, timber, water, etc.) |
There are impacts on nature due to digging for soil and sand, mining for minerals, deforestation, etc (indirect impacts) |
High |
Transport |
Noise, vibration, and gas emissions have impacts on the surrounding natural environment |
Medium |
Factory processing |
Medium |
Distribution, transportation |
Medium |
Construction |
Construction |
Land alteration, water discharge, noise, and vibration have significant impacts on the surrounding natural environment (direct impacts) |
High |
Post-delivery management |
Maintenance, property management, building management |
Impacts from a building will remain. Noise, vibration, and gas emissions have impacts on the surrounding natural environment |
Medium |
Renovation |
Land alteration, water discharge, noise, vibration, and gas emissions have impacts on the surrounding natural environment |
Medium |
Demolition |
Demolition/construction waste disposal |
Land alteration, water discharge, noise, vibration, and gas emissions have impacts on the surrounding natural environment. A large amount of construction waste is generated |
Medium |
As the subjects of the analysis for "Extraction of raw materials," we have selected raw materials of main construction materials; which are steel frames, fresh concrete, and cement; namely "Iron ore," "Coal," "Sand," and "Limestone," as well as a strategically important construction material, "Timber," totaling five items. As for "Design and construction," we identified the items ranked higher in sales of Domestic Construction Business over the recent five years by use of buildings and structures based on the Current Survey of Orders Received for Construction (Ministry of Land, Infrastructure, Transport and Tourism (Available only in Japanese)), and then selected the following subjects of the analysis: "Office and government buildings," "Factories and power plants," "Houses," "Education, research, and culture," and "Warehouses and logistics" from Building Construction Business; and "Railroads," "Roads," and "Soil and river conservation" from Civil Engineering Business.
[Evaluate] Evaluation of dependencies and impacts on nature in value chains
We visualized the subjects of the analysis for "Extraction of raw materials" and "Design and construction" in a heatmap using ENCORE (*1), a tool assessing dependencies and impacts on nature.
Obayashi's Business Activities' Dependencies and Impacts on Nature
Heatmap of analysis results using ENCORE
Dependencies/impacts:
Medium: M ■ High: H ■ Very High: VH ■
[Dependencies]
Important business activities |
Dependencies (*2) |
Category |
Subcategory |
Sub-subcategory |
Provisioning services |
Regulating and maintenance services |
Cultural services |
Ground water, surface water, and water flow maintenance |
Fibers and other materials |
Flood and storm protection |
Soil erosion control |
Mitigation of sensory impacts |
Extraction of raw materials |
Steel frames |
Iron ore |
H |
|
|
|
|
Coal |
H |
|
|
|
|
Fresh concrete |
Sand |
|
|
|
|
|
Cement |
Limestone |
|
|
|
|
|
Timber |
Timber |
VH |
H |
|
|
|
Design and construction |
Building construction |
Offices and government offices |
|
|
M |
M |
M |
Factories and power plants |
|
|
M |
M |
M |
Houses |
|
|
M |
M |
M |
Education, research, and culture |
|
|
M |
M |
M |
Warehouses and logistics |
|
|
M |
M |
M |
Civil engineering |
Roads |
M |
|
M |
M |
M |
Railroads |
M |
|
M |
M |
M |
Soil and river conservation |
|
|
M |
M |
|
[Impacts]
Important business activities |
Impacts (*3) |
Category |
Subcategory |
Sub-subcategory |
Ecosystems use |
Disturbances |
Water use |
GHG emissions |
Pollutants |
Solid waste |
Use of terrestrial ecosystems |
Use of freshwater and marine ecosystems |
Extraction of raw materials |
Steel frames |
Iron ore |
VH |
H |
H |
VH |
H |
H |
H |
Coal |
VH |
H |
H |
VH |
H |
H |
H |
Fresh concrete |
Sand |
VH |
H |
H |
|
H |
H |
|
Cement |
Limestone |
VH |
H |
H |
H |
H |
H |
H |
Timber |
Timber |
H |
|
H |
|
H |
H |
|
Design and construction |
Building construction |
Offices and government offices |
H |
H |
H |
H |
H |
H |
M |
Factories and power plants |
VH |
VH |
H |
H |
H |
H |
M |
Houses |
H |
M |
M |
H |
H |
H |
H |
Education, research, and culture |
H |
H |
M |
H |
H |
H |
M |
Warehouses and logistics |
VH |
VH |
H |
H |
H |
H |
M |
Civil engineering |
Roads |
VH |
H |
H |
H |
H |
H |
H |
Railroads |
VH |
H |
H |
H |
H |
H |
H |
Soil and river conservation |
VH |
VH |
H |
H |
H |
H |
M |
This analysis shows that "Extraction of raw materials" and "Design and construction" have more impacts than dependencies on natural capital, and have significant impacts particularly through "Use of terrestrial ecosystems." Looking at sub-subcategories, we learned that "Iron ore" and "Coal" extractions have large impacts from "Water use," and the extraction of "Timber" has large dependencies on "Ground water, surface water, and water flow maintenance." Moreover, it is observed in "Design and construction" that "Factories and power plants," "Warehouses and logistics," and "Soil and river conservation" have large impacts from "Use of freshwater and marine ecosystems."
- *1 ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure)
A tool for assessing dependencies and impacts on nature. It enables companies to draw a list and table of potential dependencies and impacts on nature by choosing from options a sector, subindustry, production process, etc. that are relevant to the company's business. In this analysis, we chose production processes of "mining," "timber production," "infrastructure construction," "housing construction," and "highway, railway construction" to conduct an analysis in reference to the output dependencies and impacts
- *2 Things that depend on natural capital
This indicates what type of ecosystem services the business activity depends on. The ecosystem services represent blessings from ecosystems, which are divided into classifications such as "Provisioning services," "Regulating and maintenance services," "Cultural services," and "Infrastructure services". In the table, "Provisioning services" means services supplying food, water, raw materials, etc.; "Regulating and maintenance services" means services helping regulate the environmental, such as regulating the climate, water volume and quality, and controlling soil erosion; and "Cultural services" means the cultural services that humans can obtain through contact with nature
- *3 Things that impact natural capital
This indicates what type of impact the business activity has on nature
[Assess] Identification of risks and opportunities and development of countermeasures
Based on the dependencies and impacts obtained with ENCORE, we identified about 80 nature-related risks and opportunities. Among them, we chose risks related to "Use of ecosystems," "Greenhouse gas," and "Water resources" that have especially large impacts on nature. We chose opportunities related to "Green infrastructure" and "Timber." The risks and opportunities identified are shown in the table below.
We also analyzed the probability and timeframe, but failed to obtain an adequate basis for disclosure, so we will conduct a further analysis. Recognizing the need for a scenario analysis including financial impacts on our businesses, we will work on it while closely watching trends of nature-related disclosure.
Going forward, by incorporating countermeasures for the risks and opportunities identified into specific measures, while reinforcing functions of identifying, evaluating, and managing medium- to long-term risks and opportunities related to nature and other aspects, we aim to expand business opportunities for the Obayashi Group and further enhance our organizational resilience.
As countermeasures for the risks and opportunities identified based on the dependencies and impacts in this analysis, Obayashi Corporation has been working to mitigate impacts on nature by protecting and regenerating nature and conserving biodiversity through all of its business activities. We endeavor to conduct businesses by incorporating the concept of nature positivity that helps maximize nature and biodiversity value, in addition to our ongoing efforts to mitigate dependencies and impacts on nature.
Obayashi's Nature-related Risks and Opportunities
Category |
Sub category |
Dependencies/ impacts |
Risks and opportunities [Categories in scope] |
Countermeasures |
Probability |
Timeframe |
Relevant pages |
Transition risks |
Policy |
Use of ecosystems, Disturbance |
[Procured materials (iron ore, coal, limestone)]
Increase in procurement cost due to growing needs for after-the-extraction care in extraction sites of raw materials, such as backfilling and reforestation |
- Establish a sustainable procurement system by enhancing supply chain engagement
- Facilitate the use of materials ensuring traceability and certified materials
satisfying the requirements for resource preservation and respect for human rights
- Develop technologies for recycled materials and alternative materials contributing to resource recycling and facilitate their use
- Promote circular economy in the construction business by improving
the recycling rate of construction waste and other measures
- Establish design and construction techniques contributing to nature positivity,
such as wooden structures and interiors, and develop a supply chain
- Protect forest resources in Japan and abroad by facilitating sustainable use
in the entire supply chain and appropriate forest stewardship for domestic timber ready for logging
- Develop technologies for nature positivity and
green infrastructure and facilitate their use
|
Medium to high |
Medium- to long-term |
a, h, i, k, l |
[Procured materials (sand)] Increase in procurement cost due to the need for replacement of suppliers and the search for alternative resources caused by nature conservation and tighter regulations in extraction sites of raw materials |
High |
Short-term |
a, h, i, k, l |
[Procured materials (timber)] Replacement of suppliers and increase in procurement cost due to nature conservation and tighter regulations for timber procurement |
Medium |
Medium- to long-term |
a, e, h, i, k, l |
GHG emissions |
[Procured materials (iron ore, coal, sand, limestone)] Increase in procurement cost due to higher procurement prices of raw materials resulting from the introduction of a carbon tax |
Medium to High |
Short- to long-term |
a, h, i, k, l |
[Procured materials (timber)] Increase in procurement cost due to reduction in volume of timber distributed in the market caused by tightened preservation policy of forests as GHG sink |
Medium |
Short-term |
a, e, h, i, k, l |
Reputation |
Use of ecosystems, Disturbance |
[Procured materials (sand, timber)] Lower reputation in case of significant impact on ecosystems in extraction sites of raw materials or procurement without confirmation of legality |
Medium |
Short- to long-term |
k, l |
Market |
Use of ecosystems, Pollution, Solid waste |
[Design and construction (building construction, civil engineering)]
Increases in monitoring and environmental management costs due to further needs for environmental monitoring in areas surrounding a site under construction as a result of growing interest in nature positivity
Cost incurred for addressing the loss of the regulating function of nature because of any change in a surrounding environment caused by the construction or structure itself |
- Improve competitiveness with construction methods and management technologies
mitigating and eliminating the impact on the environment
- Facilitate the development of quantitative evaluation of biodiversity, environmental monitoring technologies,
and related technologies in each phase from planning through demolition
- Promote technological development contributing to nature positivity and green infrastructure,
and proactively distribute information to stakeholders and make technical proposals to customers
|
Medium |
Medium- to long-term |
a, b, c, d, e, f, g |
Physical risks |
Chronic |
Provisioning services/ Use of ecosystems |
[Procured materials (iron ore, sand)]
Increase in procurement cost or downscaling of business operations due to the requirement for searching for alternative resources or developing new construction methods / technologies as a result of resource depletion of main procured construction materials in the construction business |
- Develop technologies for recycled materials and alternative materials
contributing to resource recycling and facilitate their use
- Promote the development of construction methods / technologies
contributing to utilization of sustainable alternative resources or nature positive resources
|
High |
Short- to long-term |
a, h, i, k, l |
Water use |
[Design and construction (building construction, civil engineering)]
Difficulties or cost increase in the construction business arising from restricted water use caused by depletion of water resources |
- Establish construction methods / construction techniques consuming less water such as water recycling
- Manage water risks in construction by receiving a heads-up about restrictions
on use of water resources and depleted areas using a water stress map, etc.
|
Medium |
Medium- to long-term |
c, f |
Acute |
Use of ecosystems |
[Design and construction (building construction, civil engineering)]
Increased nature-related damage in construction sites due to increased frequency and severity of natural disasters |
- Develop technologies for responding disaster preparedness and recovery such as remotely operable construction machines
- Strengthen our business continuity capabilities in case of a disaster
by building a strong network working together with the supply chain
|
High |
Short-term |
j |
Opportunities |
Market |
[Design and construction (building construction, civil engineering)]
Expanded business opportunities due to growing needs for nature positivity and green infrastructure |
- Implement design and construction considering living in harmony with nature and resource recycling
- Promote circular economy in the construction business by improving a recycling rate of construction waste
- Promote the development of technologies contributing to nature positivity and green infrastructure,
and proactively distribute information to stakeholders and make technical proposals to customers
|
Medium |
Medium- to long-term |
b, c |
Reputation |
[Design and construction (building construction, civil engineering)]
Enhanced reputation due to growing awareness of construction methods and management techniques contributing to mitigation and elimination of the impact on the environment as well as technologies for green infrastructure |
Medium |
Medium- to long-term |
b, c |
Resource efficiency/ Sustainable use of natural resources |
[Design and construction (building construction, civil engineering)]
Expanded business opportunities due to growing needs for technologies to use sustainable timber |
- In utilizing timber, aim to build a circular model (Circular Timber Construction®)
including the optimized supply chain under OBASYASHI WOOD VISION, promote the development of technologies and their commercialization in the three phases of upstream (tree planting, cultivation), midstream (processing, procurement), and downstream (construction, power generation, reuse, and recycling)
|
Medium |
Medium- to long-term |
e |