Disclosure Based on TCFD Recommendations
We believe that assessing climate-related risks and opportunities in our business activities and proactively disclosing and enhancing information in line with the framework of “Governance, Strategy, Risk management, and Indicators and targets” recommended by the TCFD to companies is important for the sustainable growth of companies and is an important part of our responsibility to help realize a decarbonized society.
What is TCFD ?
With the growing risk of climate change due to global warming, there is a broad trend to assess the financial impact of climate change on a company's business. The TCFD (Task Force on Climate-related Financial Disclosures) is an international initiative established by the Financial Stability Board (FSB) in 2015 to encourage companies to disclose information on the financial implications of the risks and opportunities that climate change presents to their businesses.
|Recommendation||Recommended disclosure content||Links|
|Governance||Disclose the organization's governance around climate-related risks and opportunities.||a) Describe the board's oversight of climate-related risks and opportunities.||Boards's oversight|
|b) Describe management's role in assessing and managing climate-related risks and opportunities.||Role of management|
|Strategy||Disclose the actual and potential impacts of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning where such information is material.||a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.||Climate change-related risks and opportunities|
|b) Describe the impact of climate-related risks and opportunities on the organization's businesses, strategy, and financial planning.||Impact on business strategies and financial plannings|
|c) Describe the resilience of the organization's strategy, taking into consideration different climate-related scenarios, including a 2℃ or lower scenario.||Resilience of strategy|
|Risk management||Disclose how the organization identifies, assesses, and manages climate-related risks.||a) Describe the organization's processes for identifying and assessing climate-related risks.||Process for identifying and assessing climate change risks|
|b) Describe the organization's processes for managing climate-related risks.||Climate change risk management process|
|c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization's overall risk management.||Integration into the company-wide risk management process|
|Indicators and targets||Disclose the Indicators and targets used to assess and manage relevant climate-related risks and opportunities where such information is material.||a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.||Metrics used to assess risks and opportunities|
|b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.||Greenhouse gas emissions|
|c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.||Targets and performance|
We regard the contribution to the achievement of the Sustainable Development Goals (SDGs) set by the United Nations as an important management issue, and have identified materialities to be addressed, one of which is Contributing to the global environment with the power of technology.
The ESG Committee was established in March 2020 as an advisory body to the Board of Directors to promote measures related to this materiality. The President and Representative Director assumes the position of Chief ESG Officer and, under the supervision of the Board of Directors, is ultimately responsible for overall sustainability activities, including strategies related to climate change-related risks and opportunities.
Role of management
The ESG Committee, chaired by the President, meets four times a year to discuss important issues, including the Carbon Neutral 2030 Declaration, which calls for reducing greenhouse gas emissions from electricity and other sources used in business operations to virtually zero by fiscal 2030. The rate of introduction of renewable energy and other measures to achieve carbon neutrality are partially linked to executive compensation. In addition, an Environment Committee has been established under the oversight of the Executive Officer in Charge of ESG as an organization to manage climate-related risks, promote internal initiatives, and carry out business operations.
The Environment Committee is chaired by the General Manager of the CSR Division and consists of environmental managers from each of our business units and major Group companies, and promotes specific measures to achieve carbon neutrality 2030.
Climate change-related risks and opportunities
We conducted a scenario analysis to consider strategies for adapting to future events projected due to climate change, and identified risks that are expected to occur by 2050 with particularly large financial impacts on our business, including upstream and downstream in the value chain.
We are a major service provider in the domestic telecommunications business, and more than half of the 2,117,259 MWh of electricity (93% of consolidated sales) in FY2021 is used by approximately 300,000 base stations nationwide The number of base stations and amount of electricity is expected to increase due to capital investment associated with the expansion of 5G. In addition, 68% of Japan's land area is forested, and the country is mountainous with a steep mountain range running through the center of its long, north-south axis, making rivers short and swift, and the ground is often fragile. Based on the above, the scenario analysis identified that while reputational and technological risks are limited in the 1.5℃ to 2℃ scenario, there are potential regulatory risks such as carbon taxes associated with increased electricity use.
In the 4℃ scenario, while the risks from sea level rise and temperature rise are limited, the risk of damage to base stations increasing in frequency due to power outages, transmission line interference due to heavy rainfall disasters is assumed. In terms, as a risk countermeasure and opportunity, we have decided on Carbon Neutral 2030, in which all electricity and other energy used in our business activities will be renewable energy by 2030, and have set a plan to promote renewable energy for base station electricity and to promote the provision of electricity from real renewable energy sources as KPIs for materiality. As an interim goal of the Carbon Neutral 2030 declaration, the plan is to complete the conversion of at least 70% of base station electricity to real renewable energy by FY2023, and to move toward achieving carbon neutrality in FY2030.
Impact on business strategies and financial plannings
We analyzed the impact of climate change risks on our business strategies and financial plannings. Under the 1.5℃ scenario, we assumed that there would be no acute or chronic physical risks from climate change at a level that would affect our business, but that policies and laws and regulations to combat climate change would be strengthened, and we estimated the impact of a carbon tax of about 16,000 yen per ton of CO2 equivalent starting in 2025.
In the 4℃ scenario, we assumed that the strengthening of policies and laws and regulations, including the strengthening of climate change countermeasures, and transition risks in technology, markets, and reputation would not materialize, while the physical impacts of climate change, such as more severe extreme weather events, would occur, and we assumed that the most severe damage to our company caused by the heavy rainfall special warning that has occurred in recent years would occur in 2019 Based on the restoration cost of 770 million yen in FY2019, we have estimated the potential financial impact that is expected to occur in the future.
We have approximately 300,000 cell phone base stations in operation nationwide, and based on our analysis of the financial impact of disaster recovery costs, we have secured a budget and are prepared to respond quickly.
Resilience of strategy
To reduce the risk of damage from torrential rain disasters, we have continued to invest in the installation of long-lasting batteries in base stations, deployment of disaster drones, and enhancement of disaster countermeasure inspections, and no incidents leading to serious area disruptions occurred in FY2021.
In addition, we are promoting efforts to commercialize the High Altitude Platform Station (HAPS) service, a stratospheric communications system that provides a communications network from the stratosphere, approximately 20 kilometers above the ground. HAPS will enable the construction of a stable Internet connection environment in places and regions where communication networks are not in place, such as mountainous areas, remote islands, and developing countries. In FY2021, we issued our first sustainability bond (HAPS bond) for capital investment, research and development, and business operations of HAPS.
See the table below for risks and opportunities identified and measures taken to address them.
Identified risks and opportunities
Risk type : Transition Risk
|Classification||Identified risks||Scenario||External scenario||Financial
measures / Opportunities
|Policy and legal||Increased tax burden due to introduction of carbon tax||1.5℃
|Technology||Impact on business promotion due to delay in introduction of energy-saving||Small||Small||Small||
|Market||Impact on sales due to delays in providing decarbonization services||Small||Small||Small||
|Reputation||Damage to brand image and impact on stock price if deemed insufficient for decarbonization efforts||Small||Small||Small||
Risk type : Physical risk
measures / Opportunities
|Acute||Increased restorationcosts due to increasedbase station damage||1.5℃
|Chronic||Increased air conditioning costs due to rising temperatures||1.5℃
- *1Financial risk: Impact is described in three levels (large, medium, and small).
- *2Time horizon: short-term (-2025), medium-term (-2035), long-term (-2050)
Process for identifying and assessing climate change risks
Climate change-related risks are selected and reviewed at least once a year by the Environment Committee, which is chaired by the General Manager of the CSR Division and consists of environment committee members from each of our business units and major Group companies, under the oversight of the Executive Officer in Charge of ESG. The identified risks are analyzed by a dedicated environmental team in the CSR Promotion Department of the CSR Division, taking into consideration various external factors, and evaluated by the Executive Officer in Charge of ESG.
As a result of the implementation of scenario analysis in FY2021, it was confirmed that there are no significant risks related to changes in strategy.
Climate change risk management process
The identified risks, including regulatory, reputational, market, technological, and physical risks, are monitored and progress managed by the Environment Committee, which confirms the formulation and implementation of countermeasures.
Integration into the company-wide risk management process
In order to identify and prevent the manifestation of company-wide risks, we have established a management system that analyzes risks from various angles within the company. The Risk Management Office periodically identifies company-wide and comprehensive risks and checks the status of countermeasures, and reports the results to the Risk Management Committee, whose members include the president, vice presidents, and CFO, as well as corporate auditors and the heads of related divisions. The Risk Management Committee determines the level of importance of risks and the person responsible for dealing with them (risk owner), issues instructions on countermeasures, and reports the status to the Board of Directors. The Internal Audit Office confirms these overall risk management systems and conditions from an independent standpoint.
Climate change risks managed by the Environment Committee are integrated with company-wide risk management, and through regular risk management cycles, we are working to reduce and prevent risks.
Indicators and targets
Metrics used to assess risks and opportunities
To manage the risks and opportunities that climate change poses to our company, we manage environmental impact data, including greenhouse gas emissions (Scope 1, 2, and 3).
Greenhouse gas emissions
Greenhouse gas emissions (Scope 1 and 2) for FY2021 were 708,534 t-co2 and 8,685,602 t-co2 for Scope 3. For detailed figures, please refer to the data book at the end of this report, which is basically 93% of the Group's consolidated sales ratio for FY2021. Any differences will be noted in the table.
Targets and performance
As our main goal, we have set a carbon neutral goal to reduce greenhouse gas emissions from electricity used in our business activities to virtually zero by 2030, the year we aim to achieve the SDGs. In addition, we will promote the reduction of greenhouse gas emissions from all of our facilities and equipment other than base stations to achieve zero greenhouse gas emissions from FY2030 onward.
The carbon neutrality target covers Scope 1 (direct greenhouse gas emissions by the company itself and Scope 2 (indirect emissions from the use of electricity, heat, and steam supplied by other companies) and is set by SoftBank Corp. and its major subsidiaries (93% of consolidated sales).
Our greenhouse gas emission reduction targets, including emissions of other companies related to our business activities (Scope 3), have been certified by the international climate change initiative SBTi (Science Based Targets initiative) as scientifically based “SBT (Science Based For more information on SBT targets, please click here.
The Scope 3 reduction target is a 14.8% reduction by FY2030. (compared to FY 2019)
Cautionary Statement Regarding Forward-Looking Statements Plans, forecasts, strategies, and other statements in this report contain forward-looking statements that are based on our judgment in light of the information available to us at the time of preparation. Please be aware that such matters could differ materially from those discussed in the forward-looking statements. Risks and uncertainties that may affect our operating results include, but are not limited to, the natural environment in which we operate, economic conditions, market competition, exchange rates, taxes, or other systems.