Sustainability

Disclosure based on TCFD recommendations

We endorse the TCFD* recommendations and shall disclose information based on them. We will continue to analyze information and strive to expand the content of our information disclosure.

TCFD

  • * The TCFD (Task Force on Climate-related Financial Disclosures) is an international organization that recommends specific disclosures for companies pertaining to their activities with regard to climate change.

Governance

Board Oversight and Management’s Role in Assessing and Managing Climate-Related Risks and Opportunities

Achilles Corporation considers sustainability issues, which include climate-related issues, to be among our most important management issues and are therefore overseen by the Board of Directors. The Sustainability Committee issues reports to the Board on sustainability issues at least twice a year, which include climate-related information. The Board reviews the status of ongoing initiatives, provides direction, and makes important decisions.

The Sustainability Committee is chaired by the Representative Director; its members consist of individuals appointed by the committee chair along with directors, excluding those who provide advice as observers (the Director and Chairman, external directors, and directors who are also serving as audit and supervisory committee members). Discussions may also be held with outside experts as necessary. The Sustainability Committee deliberates on many issues related to the Group’s sustainability—the formulation of policies, targets, and measures, as well as the identification of material issues, management of progress toward targets, and methods of information disclosure. It also reviews the status of initiatives and issues reports to the Board of Directors.
The Sustainability Promotion Committee is comprised of a managing executive officer and individuals appointed by the managing executive officer, and is led by the divisional managers in charge of sales, procurement, human resources, compliance, production management, and quality assurance.

The Sustainability Promotion Committee is responsible for analyzing and assessing risk and opportunity with regard to sustainability issues, including climate-related issues. It identifies issues that need to be addressed and opportunities to be pursued. Each divisional manager is responsible for handling the identified items within their own division.
The Sustainability Promotion Committee presents its reports to the Sustainability Committee covering the results of their risk/opportunity analyses and assessments, as well as measures taken and progress made.

Sustainability Promotion System

Sustainability Promotion System

Risk Management

The Risk Identification and Assessment Process

The Sustainability Promotion Committee analyzes and assesses risks and opportunities with regard to sustainability issues, including climate-related issues, in line with the policies outlined by the Sustainability Committee.
It conducts qualitative and quantitative analyses and assessments using widely disclosed scenarios to evaluate the risks and opportunities of climate-related events that may affect our business. It identifies the most financially consequential events, reporting them to the Sustainability Committee, where they are discussed and a report is created for the Board of Directors.

Risk management processes and their integration into organization-wide risk management

The Sustainability Promotion Committee summarizes the progress in measures to address identified risks and opportunities that have been reported to the Board of Directors, and reports the summary to the Sustainability Committee, which then discusses the contents, provides guidance or advice as necessary, and reports its findings to the Board of Directors.
The Group manages risks related to sustainability issues in the same way as other business risks, with oversight provided by the Board of Directors, thereby ensuring a group-wide integrated approach to risk management. The magnitude of the impact and likelihood of occurrence of the identified risks determine their priority, based on which systematic countermeasures are then taken.

Indicators and Targets

The bulk of the Group’s greenhouse gas emissions derives from energy use (fuel, electricity, etc.), with part attending to product manufacturing. The total amount of GHG emissions (Scope 1+2) is set as an indicator; the actual emissions in FY2022 were 38,341t-CO2.
We have set a reduction target of a 30% reduction of GHG emissions in Scope 1+2 by the end of FY2030 as compared to 2018.
We are also strengthening our measures toward GHG emissions to align with the Japanese government’s pledge to reach complete carbon neutrality by 2050.

Strategy

We consider climate change to be a medium- to long-term risk and perform scenario analyses to evaluate the resilience of our strategy with regard to climate-related risks and opportunities. We consider the impact of climate change scenarios (from under 2.0 °C to 4 °C) forecast by the International Energy Agency (IEA) and Intergovernmental Panel on Climate Change (IPCC) in light of long-term impact on the company up to the year 2050, based on which countermeasures are formulated.

Note:
Scenarios used in the scenario analysis—Less than 2 °C scenarios: IEA/WEO2022 APS (Announced Pledges Scenario);
4 °C scenarios: IPCC/AR5 RCP8.5
Scenario Primary factor Change Category Assessment Impact on Achilles Countermeasures
Less than 2℃ Introduction of carbon pricing Increased procurement costs Risk High
  • The introduction of carbon pricing will increase our procurement costs and squeeze profits when prices are passed on to plastic and resin raw materials
  • Fortify alliances with suppliers to reduce GHG emissions throughout the entire supply chain
  • Revise selling prices and develop high-value-added products
Increased operational costs Risk High
  • The introduction of carbon pricing will increase the cost burden based on GHG emission volumes and will squeeze profits
  • Continuously pursue energy savings
  • Reduce carbon pricing burden by switching energy plans and purchasing certificates
  • Reduce emissions by installing a cogeneration system at the production site (Shiga Factory No. 2)
  • Further pursue power generation
Increased transportation costs Risk Medium
  • The introduction of carbon pricing will squeeze profits as the burden on logistics companies will be passed on to our transportation prices
  • Additional price pass-through of costs is also a concern if logistics companies introduce EVs and FCVs
  • Give priority to logistics companies that are aligned with decarbonization
  • Continue to pursue a modal shift
  • Further improve transportation efficiency
Increased stakeholder interest and concern about climate change Reputational impact of failure to respond Risk High*
  • Failure to achieve GHG emissions reduction targets, continued high dependence on fossil fuel-derived raw materials, and inadequate information disclosure could harm the business due to a loss of reputation among stakeholders and could negatively impact employee recruitment
  • Respond appropriately to ESG issues, which include climate change, and enhance information disclosure
    • Continue to expand TCFD disclosures
    • Disclose GHG emissions, reduction targets and reduction measures
    • Implement carbon footprint and Biomass mark initiatives
Growing need for ethical products Opportunity Medium*
  • As consumers become more environmentally aware and their values shift in regard to products, responding to these needs will enhance our brand image and allow us to offer more products of greater value
  • Develop and promote products that employ materials and manufacturing methods with low environmental impact
  • Promote the longevity of our products
  • Reduce packing materials, etc.
Progress in decarbonization Decline in demand for existing plastics Risk High
  • The decline in demand for existing plastics will be a concern as decarbonization progresses and there is a loss of markets due to decarbonization becoming a condition of trade
  • Develop new products using bioplastics and recycled materials
  • Revise the material composition of existing products to decarbonize them
  • Further develop the semiconductor packing material reuse business
Shift to EVs and progress in DX Growing need for EV-related products and semiconductor-related products Opportunity Medium
  • We can expect to harness customer demand by actively developing product lines such as vehicle interior materials for EVs and semiconductor-related materials
  • Increase production capacity for materials used in the semiconductor field
  • Get more orders for covering materials for EVs and strengthen our overseas production system
  • Develop semiconductor packing materials and attract overseas demand
ZEB/ZEH policy advancement Growing need for high-insulation products in the residential/building sector Opportunity Medium
  • We can expect to harness customer demand by actively developing product lines that contribute to GHG emissions reductions, such as insulation materials for homes and buildings
  • Expand sales of insulation materials for homes and buildings
  • Expand supply capacity to meet demand
4℃ Intensifying weather disasters Heightened exposure to in the disaster in the supply chain Risk Medium
  • In the event of flood damage, primarily at coastal suppliers, the stoppage of raw material supply and the impact that would have on our production activities is a concern
  • Sort out the disaster exposure of suppliers and firmly request countermeasures
  • Take countermeasures for raw materials at high risk of supply interruption
    • Seriously pursue purchasing from multiple companies
    • Review inventory levels
    • Establish a system for sharing raw materials among our plants
Heightened exposure to disaster at our business sites Risk High
  • Flood damage to our production sites and production stoppages are concerns if a severe, once-in-1,000-year flood (envisioned by local governments) were to occur
  • Implement business continuity and recovery plans for exposed sites
  • Establish a disaster-resilient production system that includes other production sites (develop a system of alternate production)
Growing need for disaster mitigation and recovery measures Opportunity Medium
  • We can contribute to efforts that address social issues arising from increasingly severe disasters by proactively responding to demands for establishing disaster agreements with local governments, making products for disaster mitigation, and reinforcing tunnels in preparation for severe disasters
  • Expand sales channels for disaster mitigation-related products and develop new products
  • Promote tunnel reinforcement methods that can reduce environmental impact and costs and seek real results
More hot days over 30℃ Increased cooling costs and costs to contend with high temperatures Risk Low
  • Rising costs for cooling are a concern
  • Halting summer production due to the difficulty of manufacturing some products in extremely hot weather is a concern
  • Make changes in operating hours to avoid daytime work
  • Reinforce building insulation (improve air conditioning efficiency)
  • Improve cooling capabilities for the entire production line (for products that are difficult to manufacture under extremely hot conditions)
Growing demand for medical products to address heat stroke and viral infection risks Opportunity Medium
  • We can contribute to efforts that address social issues stemming from incidences of heat stroke and viral infection by establishing a supply system for materials for the medical field
  • Reinforce production and sales systems for materials for the medical field in Japan and overseas
Note:
Risks and opportunities that have been qualitatively evaluated for their impact on our business are marked with an asterisk (*) in the “Assessment” column.

June 29, 2023

Products

Products