Disclosure Based on TCFD Recommendations

3-4℃ scenario

While policies and regulations such as the strengthening of climate change measures, as well as transition risks related to technology, market, and reputation, are considered limited, we assume that acute risks from intensified extreme weather and chronic risks from rising temperatures and expanding water stress areas may arise. Referring to the recovery cost of 770 million yen incurred in FY2019 due to the heaviest rain with emergency warning in the past decade, we estimated the potential financial impacts that could occur in the future.

• Physical risk (acute)

  Due to the decline in forest disaster prevention functions caused by loss of biodiversity, we recognize potential risks such as increased costs for disaster preparedness and recovery of communication facilities like base stations due to the frequent and severe natural disasters exacerbated by global warming. This includes impacts on procurement due to disruptions in the value chain, business opportunity losses, and potential neighborhood damage caused by affected facilities. We used past incurred costs within the Company as benchmarks to evaluate the potential financial impacts anticipated in the future.
  As a result, although recovery costs, including labor, are relatively contained, we recognize that given the nationwide deployment and substantial asset base of our telecommunications infrastructure, particularly base stations, the financial impact of disasters is expected to be significant. Also, we have found that it is difficult to completely eliminate the risk of increasingly frequent and severe climate disasters, even if we implement measures to strengthen telecommunications infrastructure, primarily targeting high-risk infrastructure. We anticipate this as a long-term risk with a high likelihood of occurrence, and if large-scale events occur, it could lead to disruptions in communication services and social responsibilities.

  To address this, we utilized flood inundation data provided by the Ministry of Land, Infrastructure, Transport and Tourism (MLIT) and conducted a physical risk assessment for all outdoor base stations (excluding rooftop installations). As a result, we have confirmed that the risk is particularly high in coastal and riverine areas in the Kanto and Chugoku-Shikoku regions. For example, when Typhoon No.19 hit in October 2019, record-breaking rainfall caused rivers to overflow and landslides over a wide area, including the Kanto region, leaving more than 100 people dead or missing, and many of our base stations were flooded or suffered power outages and other extensive damage, resulting in areas where communication was not possible.
  As a measure to adapt to the increasing frequency of flood damage due to the rise in typhoon and linear precipitation occurrences, we invested approximately 1.9 billion yen in FY2024 to mitigate equipment damage risks and ensure stable service continuity during widespread power outages, primarily by implementing the following measures. As a result, restoration costs for disasters in FY2024 amounted to 300 million yen, and no incidents leading to major area outages occurred. We have been enhancing redundancy in our core network to secure reliable communication service environments during disasters.

  • Deployment of mobile base stations
  • Deployment of portable base stations
  • Battery replacement and maintenance
  • Deployment of portable generators

• Physical risk (Chronic)

  We have considered several factors, including increased costs linked to higher air conditioning usage, revenue losses from shop closures in response to rising flood risks associated with sea level rise and weather-related disasters, potential procurement impacts from semiconductor supply delays caused by floods, droughts, and other water stress linked to climate change and biodiversity loss, and impact on securing water for cooling servers in data centers. We anticipate increased power demand at our data centers driven by the spread of generative AI (artificial intelligence). Based on cost estimates derived from correlating our facility power-use records with temperature data, we expect a material impact. To address this, we will transition to energy-efficient equipment, leverage AI and IoT to optimize power consumption, and expand our online-shop offerings.

1.5℃ scenario

While acute or chronic physical risks from climate change that would impact our business are not expected to arise, we examined the potential impacts of strengthened policies and regulations, including enhanced climate change measures, as well as transition risks related to technology, market, and reputation.

• Transition Risk (Market / Reputation)

  As the demands for ambitious goals for companies increase year by year to meet the targets of the Paris Agreement, we have examined the potential impacts on our sales, stock prices, and brand image if our efforts are deemed insufficient, as well as the business impacts associated with the depletion of natural capital and economic effects resulting from social instability.
  As a result, we recognize that actively disclosing information based on the TCFD recommendations, promoting activities that contribute to achieving carbon neutrality, clarifying our commitment to low-carbon management through external disclosures, contributing to society-wide CO2 reductions, and initiatives such as encouraging behavioral change via online fundraising are priority matters for enhancing corporate value. Accordingly, we endorsed the TCFD in April 2020 and established “Contributing to the global environment with the power of technology” as one of our materiality focus areas.
  In the long term, we anticipate rising costs of raw materials due to resource depletion and increased market demand. To effectively utilize resources, the Company has set KPIs under our material issues to monitor and achieve goals related to the reuse/recycling of used mobile phones, the recycling rate of decommissioned base station communication equipment, and the recycling rate of industrial waste.
  Furthermore, the expansion of low-carbon and decarbonization markets, along with shifts in customer behavior and preferences, is expected to increase investment costs for providing decarbonization services, such as procuring renewable energy. However, these changes also present opportunities for the Company.

• Transition Risk (Policy and legal)

  Assuming that policies and regulations related to climate change mitigation (such as taxes for global warming countermeasures and laws promoting global warming countermeasures) are strengthened, we estimated the impact if a carbon tax of approximately 20,000 yen per ton of CO2 equivalent were imposed in FY2030. At present, we believe the likelihood of such developments occurring in Japan is low, but if they do occur, they could have a certain level of financial impact. We will keep a close eye on the future development of the carbon levy as a domestic regulation.We are committed to sourcing 100% of our electricity used in business operations^*1 from renewable energy^*2 by FY2030. In addition, we aim to procure more than 50% of that energy from renewable sources^*3 to reduce greenhouse gas emissions. In June 2023, we announced our commitment to achieve net-zero greenhouse gas emissions, including Scope 1, 2, and 3 on a consolidated basis by FY2050.

  [Notes]

  1. *1
     SoftBank Corp. and Wireless City Planning, Inc.
  2. *2
     Including the use of non-fossil certificates designated for renewable energy.
  3. *3
     Power generated from renewable energy sources such as wind and solar.

• Transition Risk (Technology)

  We are currently assessing the financial impacts on business operations due to a lack of technical capabilities to comply with regulations. If a disparity in service levels arises compared to other companies, there is a risk of diminished competitiveness. As a countermeasure, it is necessary to establish strategic alliances and co-development partners.

Risk response measures, opportunities

Actions taken to reduce business risk can also be significant business opportunities. It is said that by utilizing cutting-edge technologies such as AI, IoT, and Big Data, and by analyzing vast amounts of environmental data through AI's learning function, it is possible to predict the impact on the global environment. The use of cutting-edge technology in environmental issues is attracting attention around the world because it enables us to take various countermeasures based on such predictions. We are striving to maximally utilize cutting-edge technologies such as AI and IoT, and synergies between group companies to achieve power efficiency in our facilities and equipment and implement measures to contribute to the conservation of biodiversity. Please note that some of our climate-action businesses, such as mobile handset reuse and disaster-resilient water-circulation system sales, are classified as sustainable economic activities under the EU Taxonomy. Supported by growing societal demand, these businesses generated approximately 70 billion yen in revenue in FY2024 and represent growth opportunities that enhance our medium- and long-term corporate value. We will continue to pursue these strategically.
Examples of our initiatives are provided below.

• Zero CO2 emissions “Shizen Denki”

  The Company offers a household electricity plan called “Shizen Denki,” which achieves a 100% renewable energy ratio and zero CO2 emissions by combining designated non-fossil fuel certificates for renewable energy. In FY2023, through the provision of “Shizen Denki,” we achieved an annual reduction of approximately 31,000 tons of CO2 emissions.

• Japan's largest household electricity-saving service, “Eco Denki App”

  We provide the “Eco Denki App” free of charge to customers who subscribe to our electricity service. The “Eco Denki App” is a service that encourages customers to save electricity through a smartphone application, utilizing patented technology, including proprietary AI from EnCored Japan Corporation. In addition to checking and forecasting electricity bills from the application, users can also check the status of electricity savings and CO2 reductions. If you succeed in saving electricity, you will receive PayPay points the next day. This service not only allows you to save money by conserving electricity but also contributes to decarbonization by encouraging behavioral change.

• “Cloud Carbon Management” to support decarbonization management

  This is a cloud service that calculates and visualizes GHG emissions and is based on Zeroboard, a cloud service that calculates and visualizes GHG (greenhouse gas) emissions developed and provided by Zeroboard, Inc. and optimized with the aim of integrating with corporate solutions provided by the Company. By leveraging the knowledge and expertise that Zeroboard possesses in decarbonization, we aim to contribute to our corporate clients' decarbonization efforts and the realization of a sustainable society. At the same time, we will actively utilize “Cloud Carbon Management” within the Company to enhance the accuracy of GHG emission calculations, reduce labor efforts, and strengthen the group's overall initiatives towards carbon neutrality.

• “HELLO CYCLING,” an IoT-based bicycle sharing system

  Our Group company, OpenStreet Corp. provides an environmentally friendly shared mobility service that allows people to use mobility as a means of transportation without owning mobility vehicles. Through the bike-sharing platform “HELLO CYCLING” and the multi-mobility sharing service “HELLO MOBILITY,” we are developing “Multi-Mobility Stations” that allow for the rental of bicycles, scooters, and micro-EVs from a single location. We are collaborating with local governments and partner companies to expand this initiative. This initiative not only improves the convenience of urban transportation but also contributes to achieving a low-carbon society by supplying part of the electricity used for each vehicle with renewable energy. Moving forward, we aim to promote the use of electric mobility powered by renewable energy and continue working towards a society that coexists with the global environment.

• “HAPS,” a stratospheric communication system unaffected by natural disasters

  We are advancing efforts to commercialize the stratospheric communication system “HAPS (High Altitude Platform Station)”, which provides communication networks from the stratosphere, approximately 20 kilometers above the ground. This system will enable the establishment of stable internet connectivity in areas and regions where communication networks are not well-developed, such as mountainous regions, remote islands, and developing countries. Additionally, because it is unaffected by ground-based disturbances, it can provide a stable communication network, which is expected to contribute significantly to rescue and recovery efforts during large-scale natural disasters. In January 2022, we issued ESG bonds (HAPS Bonds) with funds specifically allocated for the HAPS project, raising 30 billion yen.

• Building a distributed AI data center

  We believe a next-generation society—where AI coexists and collaborates autonomously—depends on infrastructure that can generate and process massive data volumes. With today's data centers concentrated in urban areas, growing data loads increase the risk of power outages. To address this, we plan to deploy large-scale “Brain Data Centers” nationwide. In 2024, construction began on the Tomakomai AI Data Center in Hokkaido, featuring high-performance computing infrastructure and set to commence operations in FY2026.

• Optoelectronic coupling networks

  With an eye on Beyond 5G/6G, we aim to meet the growing demand for data communications while achieving carbon neutrality. We have completed the nationwide rollout of an All optical communication network using Fujitsu's next-generation optical transmission equipment as of October 2023. The all-optical network that we have completed nationwide utilizes optical technology across all areas of the communication network. By connecting with all-optical technology-compatible equipment and applying water-cooling transponder technology, we have reduced power consumption by up to 90% compared to conventional systems^*. In addition, even when connected to conventional facilities, the latest photoelectric conversion technology has achieved a power consumption reduction of approximately 50%^* compared to conventional systems^*, making this an environmentally friendly network that can demonstrate high power efficiency in any connection environment. The new system also improves communication performance, using a pair of optical fibers to achieve high-capacity, high-speed transmission of up to 48.8 Tbps, approximately twice the speed of conventional systems^*.

  [Note]

  1. *
     Comparison with conventional systems: Comparison with equipment conventionally used by SoftBank

• Implementation of an internal carbon pricing (ICP) scheme

  To drive our climate-change initiatives, we expanded our ICP framework in FY2024 to cover Scope 1 and 2 emissions. We set an implicit carbon price of 18,000 yen per ton of CO2 for select capital investments that can deliver measurable emission reductions, thereby encouraging further decarbonizing investments.

• Statement of our stance on carbon-credit utilization

  Our Group supports the Paris Agreement and aims to achieve net-zero greenhouse gas emissions across our entire value chain by 2050. Guided by SBTi recommendations, we prioritize maximizing reductions in Scope 1-3 emissions. For residual emissions, we are exploring offset measures through insetting and the use of carbon credits. Regarding carbon credits, we emphasize high-quality procurement and generation, and have established a usage stance that takes into account impacts and co-benefits for biodiversity, local communities, and human rights.

Scope 1 and 2 emissions reduction

• Energy-saving measures using the latest technology

  • Promote energy efficiency in telecommunications facilities
  • Smart building of offices using AI and IoT
  • Nationwide development of optoelectronic coupling networks using next-generation optical transmission equipment
  • Improving energy consumption efficiency through the construction of ultra-distributed computing infrastructure (xIPF)
  • Introduction of eco-friendly vehicles

• Transition to renewable energy

  • Convert electricity used in business operations^*1 to 100% renewable energy^*2
  • Sourcing energy from renewable sources^*3
  • Promote distributed AI data centers
  • Realization of local production for local consumption of energy

Scope 3 emissions reduction

• Collaboration with stakeholders

  • Implementing emissions reduction guidelines for business partners
  • Collaborative emissions reduction with business partners (Category 1 and 2)
  • Provision of energy-saving products and services
  • Implementation of measures to reduce product redeliveries

Others

• Utilization of cutting-edge technologies and offsets

  • Realization of low-environmental-impact communication infrastructure “HAPS”
  • Considering the use of neutralization credits and CCUS (Carbon Capture, Utilization, and Storage) as measures for residual emissions

Obtained SBT net-zero certification

Our greenhouse gas emission reduction targets, including Scope 3, have been certified by the international climate change initiative SBTi (Science Based Targets initiative) as scientifically based “SBT (Science Based Targets)”.
For more information on SBT targets, please click here