Climate Change

Basic Approach

The Daifuku Group has formulated the Daifuku Environmental Vision 2050 and strives to make prosocial contributions through manufacturing while advancing environmental management towards the decarbonization of society and the achievement of the SDGs. One of the critical issue areas is accelerating climate change and energy responses, and we are working to contribute to a reduction in CO2 emissions through our products and services, a reduction of CO2 emissions throughout our supply chain, and the adoption of renewable energy. We will continue to endeavor to improve our business activities, products and services through dialogue with our stakeholders, contribute to the development of society, and take on the challenge of increasing our corporate value.

Daifuku Environmental Vision 2050

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.

  • *Established by the Financial Stability Board (FSB), the TCFD is an international organization comprising representatives from central banks, financial supervisory authorities and finance ministries of major countries and regions, and helps companies understand what financial markets want from disclosure and encourages them to align their disclosures.

Governance

We have set up a Sustainability Committee (chaired by the CEO), which is responsible for submitting, reporting, and providing information as appropriate about deliberation items related to sustainable management, including those related to climate change, with the Global Business Heads of each business unit and related executive officers serving as members. The Board of Directors receives reports from the Sustainability Committee and makes decisions on any necessary measures.

The Sustainability Committee, an advisory body to the Board of Directors, formulates and promotes sustainability management strategies that support the sustainable growth of the Group. Concerning climate change, we will determine policies related to energy conservation, the adoption of renewable energy, and environmentally friendly products across the entire Group in Japan and overseas, and we will respond to related laws, regulations, and information disclosure.

Strategy

Scenario analysis

To assess the resilience of business strategies to climate change risks, we analyzed climate change risks and opportunities based on two scenarios: 1) a temperature increase of 4°C during the 21st century (the world continues to emit greenhouse gases at the current level), and 2) a temperature increase of less than 1.5°C (regulations on greenhouse gas emissions are rapidly strengthened). As a result, although the impact of typhoons and floods in scenario 1 and increased business costs due to carbon taxation and other factors are envisioned in scenario 2, 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.

Process of scenario analysis
  • We set up the secretariat of the Sustainability Committee and a working group consisting of external experts and relevant units.
  • We assumed a physical risk scenario and a transition risk scenario in climate change.
  • In each scenario, we identified events that may occur in the future and their impact on the value chain (procurement, direct operations, demand for products and services) in terms of risks and opportunities.
  • For each impact that has been identified, we clarified the current initiatives as Daifuku’s preparations and future prospects.
Selected climate scenarios
Physical Scenario: IPCC AR5 RCP8.5 scenario (equivalent to a rise in temperature of 4 degrees Celsius in the 21st century)
  • Serious impacts concerning flooding and temperature rise
  • At the end of the 21st century, the total amount of rainfall in Japan will increase by approx. 25.5%, and the number of sweltering 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)
  • Reducing net CO2 emissions to zero by around 2050
  • In developed countries, a carbon tax of approx. 6,300 yen/t-CO2 will be imposed in 2025 and approx. 14,000 yen/t-CO2 in 2040.

Climate change risks and opportunities

Scenario 2050 Event Impact Daifuku’s preparations
Physical scenario
(rising by 4 degrees Celsius)
Risk Acute Increase in heavy rains (flooding) Damages to incoming and outgoing goods and equipment, shutdown of our factories, etc.
  • Ensuring purchases from two companies
  • Continuous review of business continuity plan
Chronic Rise of annual average temperature Risk of employees experiencing heat stroke in factories and other facilities, associated with high temperatures in summer
  • Improvement in work environment, development of infrastructure
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
  • Developing a production framework in Southeast Asia in response to rising demand
Transition scenario
(rising by 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)
  • Helping customers reduce their CO2 emissions with Daifuku Eco-Products
Risk Policies, legal restraints Tightened regulations related CO2 emissions Increase in procurement and operating costs due to carbon tax, etc.
➡Global CO2 emissions (FY2018) were approx. 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.
  • Promoting reduction of our CO2 emissions
    • Global energy management
    • Introduction of renewable energy equipment
    • Replacement of energy conservation equipment

Transition risk measures

While CO2 emissions from in-house production activities are about 1% of the total, CO2 emissions from customers’ energy use is overwhelmingly high at about 76%, and customers need to reduce the environmental load in logistics and production. We will focus on the development and sales of environmentally friendly products (77 products as of May 2022), responding to further increases in these customer needs for mitigating carbon dioxide. In addition, to promote decarbonization in business operations, we are conducting surveys on the potential for introducing renewable energy at major global production sites and formulating plans for introducing the renewable energy.

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 the business continuity plan including the supply chain, we have analyzed the degree of business impact and reviewed the system table 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 taking 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

We have built a Groupwide risk management framework based on our risk management rules. We position major natural disasters, including climate change, as a significant risk, and the Sustainability Committee manages that risk in a centralized manner. Concerning climate change risks, we apply the views of external experts and report them to the Board of Directors as necessary.

Metrics and targetsKPI

The Group has identified the acceleration of climate change and energy responses as one of the crucial issue areas in the Daifuku Environmental Vision 2050 and has set the following goals.

FY2030 target FY2021 target FY2021 results
Sales ratio of projects that include environmentally friendly products*1 70% or higher 43% 63%
Avoided CO2 emissions through products/services*2 300,000 t-CO2 or more 30,000 t-CO2 69,694 t-CO2
Daifuku's total CO2 emission reduction rate (over FY2018) 25% or more 2.5% 13.8%
Participation rate in CO2 emission reduction programs*3 throughout the supply chain 50% or more 32% 36%
  • *1Projects that have contributed to customers in terms of environmental consideration through cerfilied Daifuku Eco-Products, etc.
  • *2CO2 emissions produced from our products/services provided to our customers are subtracted from the CO2 emissions produced from our products/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 (Global)
CO2 emissions (Global: Scope 1 + 2)
CO2 emissions (Japan*: Scope 3)

Breakdown in CO2 emissions of the entire supply chain (Japan*)

FY2021

Breakdown in Scope 3 (Japan*)

FY2021

  • * Includes CO2 emissions from the operations of products shipped from Japan to overseas

Major Initiatives

Accelerating climate change and energy responses

The material handling system we provide is constantly in operation at our customers’ logistics facilities and factories around the world. As a result, the largest proportion of our CO2 emissions is associated with energy use during product operation. Therefore, we will promote energy-saving measures through product design based on environmental considerations and overall system operation optimization.

In business operations, we will work to further promote energy conservation measures at our production bases in Japan and overseas and to adopt renewable energy. The Group has a high percentage of sales outside of Japan, and energy consumption at overseas production sites tends to be higher than that at Japanese sites. We collect monthly data on the Group’s energy use, and in fiscal 2020 we conducted a study to procure renewable energy at the top locations with the highest electricity use. Procurement of renewable energy has been started successively from the sites that are ready, and as of the end of fiscal 2021, the percentage of electricity derived from renewable energy to total electricity consumption was 9.9%.

In terms of product production, we mainly assemble parts procured from our suppliers, and our suppliers located upstream in the supply chain, such as parts manufacturers, tend to account for a relatively large amount of CO2 emissions. Therefore, we have been advancing initiatives in cooperation with our suppliers, such as our CO2 emission reduction program through the supply chain, in which we request our major suppliers with the top 80% of procurement value to set CO2 emission reduction targets. The participation rate in this program in fiscal 2021 was 36%, achieving the single fiscal year target.

Status and schedule of renewable energy procurement

FY2021
  • Introduction of roof-top solar panels at the Changshu Plant of Daifuku (China) Automation Co., Ltd.
  • Daifuku Logan Ltd. completes green power switchover at Hull operations
FY2022 (tentative)
  • Daifuku (Thailand) Limited purchases renewable energy certificates for its Pinthong and Chonburi plants
  • Purchase of renewable energy certificates at Contec Americas Inc.’s Melbourne office
  • Daifuku Co., Ltd. to buy back the environmental value of electricity generated by the Daifuku Mega Solar at Shiga Works

A photovoltaic system installed at Hini Arata Kan demo center

Solar modules installed on the rooftop
Solar modules installed on the rooftop

In March 2010, Daifuku installed solar panels at the Hini Arata Kan material handling and logistics exhibition center located in the Shiga Works site. In fiscal 2021, the system generated about 240,000 kWh of power, which reduced CO2 emissions by 85 tons.

Daifuku Mega Solar

52,000 square meters of solar panels
52,000 square meters of solar panels

In November 2013, we installed the photovoltaic system, Daifuku Mega Solar, at the Shiga Works. Comprising 17,752 panels, the system has a maximum power generation capacity of 4,438 kW (largest in Shiga Prefecture) and an annual output (power sold to electric power providers) of approx. 4,300,000 kWh (equivalent to the annual power consumption of 1,000 general households).

Sharing transportation resources

One truck picks up and delivers to suppliers in a given region (milk run method)
One truck picks up and delivers 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. Although suppliers had transported cargo with their own trucks, we are currently making rounds with one truck per region through concentrated management and throughput control, and are striving to 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 of 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 2021, we were able to cut CO2 emissions by 344 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 fewer CO2 emissions and less impact on the environment.

Local production for local consumption at cafeterias

Since August 2014, a menu using local ingredients is provided every week at the three cafeterias in the Shiga Works. Plenty of variety is provided, such as the renowned locally produced Hinona turnips and highly nutritious and richly flavored eggs from Eigen-ji. This initiative will continue on as an activity in reducing food mileage, to reduce the amount of CO2 emissions that comes from transport.

Membership Status of Climate-Related Organizations

Daifuku Group is a member of organizations aiming to solve climate change issues in order to achieve the "Daifuku Environmental Vision 2050" formulated in February 2021, and is involved in information sharing and policy proposals.

Membership in initiative

  • Japan Climate Initiative
  • Japan Climate Leader's Partnership(supporting member)
  • TCFD Consortium