Climate Change
- Basic Approach
- Disclosure Based on TCFD Recommendations
- Major Initiatives
- Membership Status of Climate-Related Organizations
Basic Approach
The Daifuku Group supports the Paris Agreement, the Act on Promotion of Global Warming Countermeasures, the Act on Rationalizing Energy Use, and other laws and regulations related to climate change, and we are advancing environmental management to help create a decarbonized society and realize SDGs. We are actively working to reduce our energy consumption and contribute to the environment through manufacturing, and we file annual reports to the government on energy consumption, CO2 emissions, and other data.
The Daifuku Environmental Vision 2050 (revised in May 2023) establishes addressing climate change as one of our critical issue areas, and we are focused on reducing CO2 emissions through our products and services, reducing CO2 emissions throughout our entire supply chain, and introducing renewable energy.
We will continue to endeavor to improve our business activities as well as our products and services through dialogue with our stakeholders, contribute to the development of society, and increase our corporate value.
Disclosure Based on TCFD Recommendations
In May 2019, Daifuku expressed its support for the TCFD (Task Force on Climate-related Financial Disclosures) recommendations. Information is disclosed in line with the core elements of the TCFD recommendations for climate-related financial disclosure: Governance, strategy, risk management, as well as metrics and targets. In fiscal 2023, we plan to conduct another scenario analysis and financial impact assessment, and we will continue to revise our disclosures as needed.
Governance
We have set up a Sustainability Committee which is responsible for submitting, reporting, and providing information about items related to sustainable management, including those related to climate change. The committee is chaired by the CEO and the heads of each global business unit, as well as other executive officers, serve as members.
The Sustainability Committee formulates and promotes sustainability management strategies that support the sustainable growth of the Group. The committee will determine policies for the entire Daifuku Group related to sustainability and climate change, including energy conservation, adoption of renewable energy, and environmentally friendly products. The committee will respond to environment and sustainability related laws and regulations, and produce information disclosures.
Strategy
Scenario analysis
To assess the resilience of our business strategies to climate change risks, we performed an analysis based on two scenarios: 1) a temperature increase of 4°C during the 21st century (a predicted result if the world continues to emit greenhouse gases at the current level), and 2) a temperature increase of less than 1.5°C (if regulations on greenhouse gas emissions are rapidly strengthened). The results were that although typhoons and floods in scenario 1 and carbon taxation and other factors in scenario 2 would have an impact on business costs, in both scenarios, demand for products and services is envisioned to grow faster than costs due to increased investment in automation and a growing need for environmentally friendly products.
Scenario analysis process
- We set up a working group consisting of external experts and the Sustainability Committee administration office.
- We assumed a physical risk scenario and a transition risk scenario related to climate change.
- In each scenario, we analyzed the possibility of various events and their impact on our value chain, which includes procurement, direct operations, and demand for products and services.
- For each possible impact that was identified, we clarified our current initiatives and future outlook.
Selected climate scenarios
- Physical scenario: IPCC AR5 RCP8.5 scenario (equivalent to a rise in temperature of 4 degrees Celsius in the 21st century)
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- Serious impacts concerning flooding and temperature rise
- At the end of the 21st century, the total amount of rainfall in Japan will increase by approximately 25.5%, and the number of extremely hot days (days when the highest temperature is 30 degrees Celsius or higher) in the country will increase by 52.8 days, respectively, compared to the annual averages for 1986 to 2005.
- Transition scenario: IPCC SR1.5 (keeping the rise in temperature below 1.5 degrees Celsius until the end of the 21st century), IEA SDS (conforming to the 2-degree Celsius target)
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- Reducing net CO2 emissions to zero by around 2050
- In developed countries, a carbon tax of approximately 6,300 yen/t-CO2 will be imposed in 2025 and approximately 14,000 yen/t-CO2 in 2040.
Climate change risks and opportunities
| Scenario 2050 | Event | Impact | Daifuku’s preparations | ||
|---|---|---|---|---|---|
| Physical scenario (increase of 4 degrees Celsius) |
Risk | Acute | Increase in heavy rains (flooding) | Damages to incoming and outgoing goods and equipment, shutdown of our factories, etc. |
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| Chronic | Rise of annual average temperature | Risk of employees experiencing heat stroke in factories and other facilities, associated with high temperatures in summer |
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| Opportunity | Physical | Growing demand for cold chain, e-commerce, and labor conservation from customers, reflecting rising temperatures | Growing demand for our products and services for cold chain, e-commerce, and labor conservation |
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| Transition scenario (increase of 1.5 degrees Celsius) |
Transition | Growing demand for efficiency improvement (energy conservation) from customers, reflecting tighter regulations on CO2 emissions | We will be able to respond to changes in customer demand. (growing demand for products and services that help customers reduce CO2 emissions) |
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| Risk | Policies, legal restraints | Tightened regulations related to CO2 emissions | Increase in procurement and operating costs
due to carbon tax, etc. ➡Global CO2 emissions (FY2018) were approximately 40,000 tons. If the carbon price is 14,000 yen/t-CO2 (in 2040), the total amount will be 560 million yen per year. |
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Transition risk measures
While CO2 emissions from in-house production activities are about 1.4% of the total, CO2 emissions from customers’ use of Daifuku’s products are about 33%. In order to respond to further increases in customers’ needs for carbon dioxide mitigation, we will focus on the development and sales of environmentally friendly products (83 products as of May 2023). Additionally, to promote decarbonization in business operations, we are conducting surveys and formulating plans for the introduction of renewable energy at our major global production sites.
Physical risk measures
In the risk assessment conducted by the entire Group, we have identified natural disasters including typhoons and floods as severe risks that have a significant impact. To improve the effectiveness of our business continuity plan including the supply chain, we have analyzed the degree of business impact and reviewed the organizational structure of each business unit. We have also made efforts to mitigate the risk of suspended supply by diversifying production sites, purchasing key components from two or more suppliers, and other measures. Moreover, at production, installation, and service sites, we are striving to continuously improve the work environment to protect against higher temperatures and ensure thorough safety and health management.
Risk Management
The Group considers climate change to be a significant risk, and the Sustainability Committee manages this risk comprehensively. We also apply the views of external experts and report to the Board of Directors as necessary.
Metrics and TargetsKPI
The Group has identified addressing climate change as one of the crucial issue areas in the Daifuku Environmental Vision 2050 and has set the following targets. From fiscal 2023 onward, the results will be disclosed based on these KPIs.*
- *In working toward reaching the goals of the Paris Agreement, we have submitted our targets to the Science Based Targets initiative (SBTi), which requires companies to set science-based greenhouse gas emission reduction goals. We aim to receive approval from the SBTi by the end of fiscal 2023.
| KPIs | FY2030 targets | FY2023 targets |
|---|---|---|
| Daifuku CO2 emissions (Scopes 1 + 2) | 50.4% reduction (compared to FY2018) | 21.0% reduction (compared to FY2018) |
| CO2 emissions from purchased goods and services (Scope 3 Category 1) | 30% reduction*1 (compared to FY2018) | Begin operations of CO2 emission reduction programs*2 throughout the supply chain |
| CO2 emissions from the use of sold products (Scope 3 Category 11) | 12.5% reduction (compared to FY2018) |
- *1Scope 3 Category 1 and Category 11 combined target
- *2Daifuku's own framework on efforts (sharing of goals and supporting measures to reduce emissions, etc.) to reduce CO2 emissions at suppliers
Please see below for the climate-related indicators and targets in the Daifuku Environmental Vision 2050 prior to revision. The results for fiscal 2022 are also shown below.
| KPIs | FY2030 targets | FY2022 targets | FY2022 results |
|---|---|---|---|
| Daifuku's total CO2 emissions reduction rate (compared to FY2018) |
25% or more | 5% | 34% |
| Sales ratio of environmentally friendly properties*1 | 70% or higher | 46% | 72% |
| Avoided CO2 emissions*2 | 300,000 t-CO2 or more | 60,000 t-CO2 | 121,356 t-CO2 |
| Participation rate in CO2 emissions reduction programs*3 throughout the supply chain | 50% or more | 34% | Target was achieved in fiscal 2021 (36%); began considerations for a review of the system |
- *1Projects that have contributed to customers in terms of environmental consideration through certified Daifuku Eco-Products, etc.
- *2CO2 emissions produced from our products and services provided to our customers are subtracted from the CO2 emissions produced from our products and services in FY2011, the base year for environmental performance
- *3Daifuku's own framework on efforts (sharing of goals and supporting measures to reduce emissions, etc.) to reduce CO2 emissions at suppliers
Environmentally Friendly Products and Services
Data on CO2 emissions
CO2 emissions by region
CO2 emissions (Scopes 1 + 2)
CO2 emissions (Scope 3)
Breakdown of Scope 3 emissions
(t-CO2)
| Category | FY2018 (base year) |
FY2019 | FY2020 | FY2021 | FY2022 |
|---|---|---|---|---|---|
| 1. Purchased goods and services | 839,593 | 892,100 | 871,370 | 1,021,516 | 1,235,138 |
| 2. Capital goods | 10,653 | 36,502 | 10,013 | 15,923 | 17,316 |
| 3. Fuel- and energy-related activities | 1,232 | 2,163 | 2,098 | 2,298 | 2,328 |
| 4. Upstream transportation and distribution | 3,205 | 4,257 | 3,968 | 4,663 | 6,829 |
| 5. Waste generated in operations | 532 | 517 | 526 | 565 | 604 |
| 6. Business travel | 542 | 568 | 576 | 588 | 601 |
| 7. Employee commuting | 1,484 | 1,546 | 1,585 | 1,615 | 1,638 |
| 8. Upstream leased assets | － | － | － | － | － |
| 9. Downstream transportation and distribution | － | － | － | － | － |
| 10. Processing of sold products | － | － | － | － | － |
| 11. Use of sold products | 898,915 | 539,173 | 528,598 | 519,120 | 650,602 |
| 12. End-of-life treatment of sold products | 801 | 5,757 | 5,637 | 5,977 | 6,505 |
| 13. Downstream leased assets | － | － | － | － | － |
| 14. Franchises | － | － | － | － | － |
| 15. Investments | － | － | － | － | － |
| Total | 1,756,957 | 1,482,583 | 1,424,371 | 1,572,265 | 1,921,561 |
- *The scope and method of calculation for Scope 3 is as follows.
| Category | Scope | Method of calculation |
|---|---|---|
| 1. Purchased goods and services | Global | Domestic data is calculated by multiplying the amount of products and materials purchased by the CO2 emissions factor. Data from outside of Japan is calculated in proportion to domestic data based on actual production. |
| 2. Capital goods | Daifuku Co., Ltd. | Calculated by multiplying Daifuku’s increase in properties, plants, and equipment in the current period (excluding leased assets in the Annual Securities Report) by the CO2 emissions factor. |
| 3. Fuel- and energy-related activities | Domestic Group | Calculated by multiplying the Group’s domestic energy consumption (Scopes 1 + 2) by the CO2 emissions factor. |
| 4. Upstream transportation and distribution | Daifuku Co., Ltd. | Calculated based on CO2 emissions from Daifuku’s sales activities as well as transportation distance and weight of raw materials (steel and aluminum) from primary suppliers (new ton-kilometer method). |
| 5. Waste generated in operations | Domestic Group | Calculated by multiplying the Group’s domestic waste emissions by the CO2 emissions factor for each type. |
| 6. Business travel | Domestic Group | Calculated by multiplying the number of domestic Group employees by the CO2 emissions factor. |
| 7. Employee commuting | Domestic Group | Calculated by multiplying the number of domestic Group employees in each district (city classification) by the CO2 emissions factor. |
| 8. Upstream leased assets | Not calculated due to lack of relevance to the Group’s business operations. | |
| 9. Downstream transportation and distribution | Although related to the Group’s business operations, emissions from transportation are accounted for in Category 4 as the Group is a consignor. Data from outside of Japan is not calculated due to the unavailability of logistics data. | |
| 10. Processing of sold products | Not calculated due to lack of relevance to the Group’s business operations. | |
| 11. Use of sold products | Domestic Group | Calculated by multiplying the amount of energy used in the operation of products ordered from the domestic Group by the annual sales and product life. Emissions factors for each country to which the products are shipped are also taken into account. |
| 12. End-of-life treatment of sold products | Daifuku Co., Ltd. | Calculated by multiplying the weight by the CO2 emissions factor based on the presupposition that all products sold by Daifuku are recycled. |
| 13. Downstream leased assets | Not calculated due to lack of relevance to the Group’s business operations. | |
| 14. Franchises | Not calculated due to lack of relevance to the Group’s business operations. | |
| 15. Investments | Not calculated due to lack of relevance to the Group’s business operations. | |
Major Initiatives
Addressing climate change
The material handling systems we provide are constantly in operation at our customers’ logistics facilities and factories around the world. As a result, a large proportion of our CO2 emissions is associated with energy use during product operation. We will therefore promote energy-saving product designs based on environmental considerations and the optimization of overall system operation. Additionally, most of our production activities are assembly operations, and the CO2 emissions from suppliers located upstream in the supply chain, such as component manufacturers, tend to be relatively high. Therefore, as part of our Supply Chain CO2 Reduction Program, we have asked our major suppliers to assess their current CO2 emissions and set reduction targets. In order to realize the Daifuku Environmental Vision 2050, we recognize that it is essential to strengthen the ties with our customers and suppliers, and we will continue to deepen our efforts.
In our business operations, we are working to further promote energy conservation measures at our production sites both within and outside of Japan as well as adopt renewable energy sources. In fiscal 2022, each business unit established energy conservation plans from design and development to production and implemented measures for these plans in their respective workplaces. At Shiga Works, each building is promoting specific initiatives to further energy conservation after receiving third-party assessments and consulting on energy usage. At our overseas sites, we are upgrading air conditioning equipment to higher efficiency models and switching to electric forklifts. Additionally, as of November 2022, all electricity used at Shiga Works has been converted to renewable energy sources. From fiscal 2023 to fiscal 2024, we plan to install photovoltaic systems in China, South Korea, Thailand, Taiwan, and the United States, and we will continue to accelerate the adoption of renewable energy. As of the end of fiscal 2022, 29.1% of total energy consumed was derived from renewable sources, a significant increase from 9.8% at the end of fiscal 2021.
Status and schedule of renewable energy procurement
FY2022
- All electricity used at Daifuku’s Shiga Works was converted to renewable energy sources
- Daifuku (Thailand) Limited purchased renewable energy certificates for its Pinthong and Chonburi plants
- Contec Americas Inc.’s Melbourne office purchased a renewable energy certificate
FY2023 (planned)
- Install a photovoltaic system at the Tainan Headquarters of Taiwan Daifuku Co., Ltd.
- Install a photovoltaic system at Clean Factomation Inc.'s Asan Plant
- Install a photovoltaic system at the head office of Daifuku (Suzhou) Cleanroom Automation Co., Ltd.
- Switch to a renewable energy electricity plan at the headquarters of Jervis B. Webb Company
FY2024 (planned)
- Install a photovoltaic system at Hallim Machinery Co., Ltd.
- Install a photovoltaic system at Daifuku (Thailand) Limited
A photovoltaic system installed at Hini Arata Kan
In March 2010, Daifuku installed solar panels at the Hini Arata Kan material handling and logistics demo center located at Shiga Works. In fiscal 2022, the system generated about 180,000 kWh of power, which reduced CO2 emissions by 53 tons.
Daifuku Mega Solar
In November 2013, Daifuku installed a photovoltaic system, Daifuku Mega Solar, at Shiga Works. Comprising 17,752 panels, the system has a maximum power generation capacity of 4,438 kW and an annual output of approximately 4,300,000 kWh (equivalent to the annual power consumption of 1,000 general households).
Sharing transportation resources
to suppliers in a given region
(milk run method*).
We are now building a partnership with suppliers for parts and materials and set up a pickup and delivery service in order to reduce costs and properly control delivery dates. While suppliers had previously transported cargo with their own trucks, by centrally managing cargo collection and quantity information, we are now able to make rounds with a single truck in each region, and we are striving to further consolidate and streamline trips to logistics sites. We are contributing to the prevention of global warming by reducing CO2 emissions throughout the entire supply chain as well as reducing each supplier's logistics costs.
- *One truck makes the rounds to each supplier and picks up cargo that had previously been delivered by separate trucks. This method improves load efficiency and reduces fuel consumption and CO2 emissions.
Modal shift*
Daifuku typically uses trucks to transport products to customer sites, but we are in the process of shifting to more environmentally friendly methods such as railway and marine transportation. Our aim is to improve the quality of logistics operations by coordinating delivery schedules and managing costs, thereby reducing CO2 emissions as much as possible. In fiscal 2022, we were able to cut CO2 emissions by 398 tons through the modal shift of transportation methods.
- *Choosing modes of transportation with lower environmental impact, such as railroads and ships, to transport cargo. By switching from trucks to ships and trains, it is possible to transport cargo with reduced CO2 emissions and less impact on the environment.
Membership Status in Climate-Related Organizations
To fully realize the Daifuku Environmental Vision 2050, the Daifuku Group has joined multiple organizations aiming to solve climate change issues, and is involved in information sharing and policy proposals.
Organizations
- Japan Climate Initiative
- Japan Climate Leader's Partnership (supporting member）
- TCFD Consortium