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TRANSCRIPT
Guidance on Climate‐related
Financial Disclosures
‐ TCFD Guidance ‐
Ministry of Trade, Economy and Industry
of Japan
December 2018
Contents
Chapter I. Introduction ............................................................................................... 1
A. Background ............................................................................................... 1
B. Purpose of Developing the Guidance ....................................................... 2
C. Location of the Guidance .......................................................................... 5
1. Overall Picture of the TCFD Recommendations and Supplemental
Documents ................................................................................................ 5
2. Relationship between the Guidance and the TCFD Recommendations
and Supplemental Documents .................................................................. 6
Chapter II Commentaries on Disclosures in Accordance with the TCFD
Recommendations ............................................................................. 12
A. Introduction ............................................................................................ 12
B. Medium of Disclosure ............................................................................. 13
C. Governance ............................................................................................. 20
D. Strategy ................................................................................................... 24
1. Description of recommended disclosure a) ............................................ 27
2. Description of recommended disclosure b) (how to disclose efforts in
research and development) .................................................................... 29
3. Description of recommended disclosure c) ............................................ 33
E. Risk Management ................................................................................... 61
F. Metrics and Targets ................................................................................ 64
G. Disclosure Methods for Companies with Different Business Models .... 68
H. Steps for Implementing the TCFD Recommendations at Mid‐cap and
Small‐ and Medium‐sized Companies ..................................................... 68
Chapter III Sector‐Specific Recommended Disclosures .............................................. 70
A. Objectives of Sector‐Specific Disclosure Guidance ................................. 70
B. Sector‐Specific Recommended Disclosures ............................................ 75
1. Automobiles ............................................................................................ 75
2. Iron and Steel .......................................................................................... 81
3. Chemicals ................................................................................................ 85
4. Electrical and Electronic .......................................................................... 90
5. Energy ..................................................................................................... 93
Chapter IV Conclusion ............................................................................................ 100
A. Significance of the Guidance ................................................................. 100
B. First try disclosures ............................................................................... 100
C. For better disclosure ............................................................................. 101
D. Future direction .................................................................................... 101
1
Chapter I. Introduction
A. Background
In response to the Paris Agreement adopted in December 2015, organizations have been
increasingly working on climate change mitigation and adaption. Financial industry has also
been increasingly focusing on assessing potential impacts of climate change on their assets
worrying that climate change can have substantial impacts on corporate activities of
companies to which they provide financial solutions. In particular, institutional investors
making long‐term investments, such as pension funds and insurance companies, have been
more conscious of environment, social and governance (ESG) factors, including climate‐
related risks and opportunities for their financial decisions. The world’s ESG investments have
increased 1.7 times in the previous four years.1
On the other hand, the level of requirements to corporates’ disclosure related to potential
impacts of climate change had not been adequate. Accordingly, financial institutions had not
been able to grasp climate‐related risks and opportunities (hereinafter referred to as
“climate‐related issues”) in relation to strategy and financial planning of companies. As a
result, financial institutions had not been able to make investment, lending and insurance
underwriting decisions adequately, and thus there were concerns about the risk of financial
instability caused by a significant volatility in the asset value in future. In response to this, G20
Finance Ministers and Central Bank Governors asked the Financial Stability Board (FSB) to
review how the financial sector can take account of climate‐related issues. At the review
meeting held in September 2015, the FSB identified a clear need for better information on
climate‐related risks from companies for financial institutions to properly assess the financial
impacts of climate‐related issues on companies.
Following this, the FSB established the industry‐led Task Force on Climate‐related Financial
Disclosures (TCFD) in December 2015. The TCFD is composed of 32 members who are from
financial services companies and groups, such as banks, insurance companies and pension
funds, and non‐financial companies, such as energy, transportation and materials companies.
It published the Final TCFD Recommendations Report (hereinafter referred to as the “TCFD
recommendations”) in June 2017 following a review period of about a year and a half. The
TCFD recommendations present a framework for voluntary disclosure of climate‐related risks
1 Global Sustainable Investment Alliance (GSIA) “Global Sustainable Investment Review 2016.” http://www.gsi‐alliance.org/members‐resources/trends‐report‐2016/
2
and opportunities for companies, and 563 organizations have expressed support for the
recommendations as of December 25, 2018.
According to the Status Report2 released by the TCFD in September 2018, the majority of
1,750 companies reviewed discloses some information on climate change (hereinafter
referred to as “climate‐related information”) aligned with the TCFD recommendations. On
the other hand, the Status Report also shows that companies’ areas of focus in terms of
climate‐related financial disclosures vary significantly among different industries and regions,
and that few companies disclose information on their strategy resilience under different
climate‐related scenarios, though it is a key area of focus for the Task Force. The review results
in the report indicate that climate‐related financial disclosures are still in the early stages.3
B. Purpose of Developing the Guidance
In order to achieve the goals4 under the Paris Agreement, a drastic change in society
through major innovation is being called for. To that end, it is necessary to establish a
“virtuous cycle between the environment and economic growth” such as the one shown
below.
Companies properly visualize their efforts for creating innovation to investors and other
stakeholders (referring to investors, lenders, insurance companies and other users of climate‐
related financial disclosure; hereinafter the same shall apply in the Guidance) and investors
and other stakeholders properly provide funds to such companies. This allows companies to
realize innovation and growth; the profits generated will be distributed to investors and other
stakeholders; and such investment returns will be invested in further innovation.
In the meantime, discussions related to climate‐related financial disclosure have been
conducted mainly by the financial authorities and financial industry players against the
backdrop of changes in the financial market, such as those aforementioned in 1, and efforts
for financial disclosure by non‐financial companies have not necessarily progressed
adequately. Considering the actual situation that many non‐financial companies are affected
by climate change, it is important to recognize how climate change affects their business
activities and what its potential financial impacts are, to communicate such information to
investors and other stakeholders, and to get them understand such impacts, in case that
climate change is deemed to have significant impacts on their business models. At the same
2 Task Force on Climate‐related Financial Disclosures: Status Report 3 TCFD, 2018 Status Report: Executive Summary, accessed 20 January 2019. https://www.fsb‐tcfd.org/publications/tcfd‐2018‐status‐report/# 4 In December 2015, nearly 200 governments agreed under the Paris Agreement to step up the global response to the threat of climate change by “seeking to hold the increase in the global average temperature to less than 2 degrees above pre‐Industrial Revolution levels and pursuing efforts to limit the increase to 1.5 degrees.”
3
time, by explaining how their production activities and the products and services they provide
contribute to resolving climate change issues and how such contribution leads to their growth,
companies can show that they can expand sustainably regardless of the impacts of climate
change.
In order to realize the aforementioned “virtuous cycle between the environment and
economic growth”, it is necessary for companies not just to meet the requirements of
investors and other stakeholders but also to actively communicate their strengths to and hold
constructive dialogue repeatedly with investors and other stakeholders to deepen mutual
understanding.
The TCFD recommendations are deemed to be useful as a tool for dialogue between
companies and investors and other stakeholders. This is because the TCFD recommendations
are an international framework commissioned by G20 and a movement has already been
growing for integrating the TCFD recommendations into global frameworks of corporate
evaluation and national and regional systems. On the other hand, from within the non‐
financial companies, there are calls for closer examination for many points in the TCFD
recommendations, such as principles for deciding medium of disclosure, scenario analysis and
methods for reflecting the characteristics of each business, which consequently make it
difficult to promote disclosures in accordance with the TCFD recommendations.
For this reason, the Ministry of Economy, Trade and Industry decided to develop a guidance
designed to provide commentaries and introduce reference case examples for implementing
the TCFD recommendations and provide “sector‐specific perspectives” to be disclosed by
non‐financial companies and considered by investors and other stakeholders, and established
the “Study Group on Implementing the TCFD Recommendations for Mobilizing Green Finance
through Proactive Corporate Disclosures” (hereinafter referred to as the TCFD Study Group;
for the list of members of the study group, see the Appendixes 1 and 2) in August 2018.
Considering that the content of disclosure required by investors and other stakeholders is
related to management decisions of companies, the TCFD Study Group invited board
members in charge of the finance and the corporate planning of each company, and discussed
ways of disclosure in accordance with the TCFD recommendations through “dialogue”
between managers of companies and domestic and foreign investors and other stakeholders,
and then developed the Guidance.
Implementation of the TCFD recommendations only recently globally. As the TCFD
recommendations provide that “the Task Force expects that reporting of climate‐related risks
and opportunities will evolve over time as organizations, investors, and others contribute to
the quality and consistency of the information disclosed,” it is assumed that accumulating
companies’ disclosures and giving investors’ feedback on such information will lead to finding
ways for better disclosure.
4
The Guidance was developed to present the first step to promote implementation of the
TCFD recommendations and provides commentaries on the TCFD recommendations based
on issues extracted through discussions in the TCFD Study Group and the Working Group
established under the Study Group. The Guidance assumes that reviews of Guidance and
enhancement of commentaries will be conducted where appropriate in accordance with the
progress of disclosure practices.
5
C. Location of the Guidance
1. Overall Picture of the TCFD Recommendations and Supplemental Documents
The TCFD developed the “TCFD recommendations” and “Implementing the
Recommendations of the Task Force on Climate‐related Financial Disclosures,” a
supplemental document for implementing the TCFD recommendations, and “The Use of
Scenario Analysis in Disclosure of Climate‐Related Risks and Opportunities,” commentaries
designed to support scenario analysis.
The TCFD recommendations, as described in Figure 1, present general recommendations,
as well as recommended disclosures and commentaries structured around four thematic
areas of Governance, Strategy, Risk Management, and Metrics and Targets.
The supplemental document contains commentaries for implementing the TCFD
recommendations, and sector‐specific commentaries have been developed for the
aforementioned four thematic areas as shown in Figure 2.
Figure 1 Core Elements of Recommended Climate‐related Financial Disclosures
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 5.
6
Figure 2 Supplemental Guidance for Financial Sector and Non‐Financial Groups
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 15.
2. Relationship between the Guidance and the TCFD Recommendations and
Supplemental Documents
The Guidance is comprised of three chapters. Chapter I describes the background which
led to the launch of TCFD’s activities, the purpose of developing the Guidance, and the
relationship between the Guidance and the TCFD recommendations and the supplemental
documents.
In Chapter II, questions on the TCFD recommendations and the supplemental documents
are sorted out and explanations on questions raised are provided. When developing the
Guidance, questions were extracted through a questionnaire survey of all members, and
explanations were prepared by referring to comments from members who belong to financial
institutions and a member who was involved in developing the TCFD recommendations, as
well as domestic and overseas case examples. Such explanations should be revised in the
process of accumulating best practices as a result of promoting disclosure by many companies
going forward. It is expected that further efforts will be made to collect case examples to
enhance the content of the Guidance.
In Chapter III, sector‐specific recommended disclosures structured around the thematic
areas of Strategy and Metrics and Targets in the non‐financial group are presented. This is
because different industries face different climate‐related risks and opportunities, and the
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method of presenting a desirable strategy for companies to implement disclosure and metrics
and targets based on such strategy are different from industry to industry. It is expected that
facilitating dialogue between companies and investors and other stakeholders based on such
sector‐specific disclosure will lead to a more effective “virtuous cycle between the
environment and economic growth”.
The TCFD recommendations provide that “the Task Force encourages further research and
analysis by sector and industry experts to increase organizations’ understanding of climate‐
related risks and opportunities,”5 and thus it is considered that the importance of such
sector‐specific analysis has been recognized.
In addition, similar efforts are being underway for sector‐specific analysis in the private
sector. SASB6 has presented sustainability metrics for each of 79 industries, while WBCSD7
has developed a guidance to respond to the TCFD recommendations for the oil and gas
industry and is developing for the chemical industry. In this way, movements are spreading
on a global level to promote financial disclosure consistent with the TCFD recommendations
based on the characteristics of each industry. (See Column 3.)
In the meantime, such various efforts should be evolved into comprehensive activities
through the sharing of expertise and best practices accumulated in the process of carrying
out each effort. The Guidance has been developed to contribute to this discussion. For a start,
in this Guidance we selected five industrial sectors, namely, the automobile, iron and steel,
chemical, electrical and electronics, and energy industries as major industries with high GHG
emissions in the use phase or the manufacturing phase, and we presented key points for
disclosure according to the characteristics of each industry. Therefore, as is the case with
Chapter II, we expect that the content of Chapter III will be revised in the process of many
companies working on disclosure and that the content will be enhanced in the future,
including the addition of other industries covered by the Guidance.
5 “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 35‐36.
6 Sustainability Accounting Standards Board 7 World Business Council for Sustainable Development
8
Column 1 Japan’s Corporate Governance Code
General Principle 3 (basic policy) of the Japan’s Corporate Governance Code
provides that the board should be actively involved in disclosure and provision of
non‐financial information that describes ESG factors, etc. to ensure that such
information will be as useful for users as possible. It is important for companies to
respond to the TCFD recommendations also from this perspective.
General Principle 3
Companies should appropriately make information disclosure in
compliance with the relevant laws and regulations, but should also
strive to actively provide information beyond that required by law.
This includes both financial information, such as financial standing and
operating results, and non‐financial information, such as business
strategies and business issues, risk and governance. The board should
recognize that disclosed information will serve as the basis for
constructive dialogue with shareholders, and therefore ensure that
such information, particularly non‐financial information, is accurate,
clear and useful.
Basic policy (excerpts)
It has been noted that while the quantitative part of financial
statements of Japanese companies conform to a standard format and
therefore excel with respect to comparability, non‐financial
information, such as financial standing, business strategies, risks and
ESG (environmental, social, and governance) matters, is often boiler‐
plate and lacking in detail, therefore less valuable. The board should
actively commit to ensure that disclosed information, including non‐
financial information, is as valuable and useful as possible.
Source: Tokyo Stock Exchange inc., “Japan’s Corporate Governance Code”, June 1, 2018, page 13.
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Column 2 Relationship with “Guidance for Integrated Corporate Disclosure
and Company‐Investor Dialogue for Collaborative Value Creation”
The Ministry of Economy, Trade and Industry compiled “Guidance for Integrated
Corporate Disclosure and Company‐Investor Dialogue for Collaborative Value
Creation: ESG Integration, Non‐Financial Information Disclosure, and Intangible
Assets into Investment” (hereinafter referred to as “Guidance for Collaborative
Value Creation”) in May 2017. The aim was to contribute to deepening mutual
understanding between companies and investors through information disclosure
and dialogue and to encourage companies and investors to take action toward
sustainable value creation. The Guidance for Collaborative Value Creation is
expected to play a role as guidelines for business owners/managers to sort out
ways of managing their companies so that they create corporate value and convey
such information to investors. It should also be guidelines for investors to grasp
the information necessary to make investment decisions, etc. to assess companies
from a medium‐ to long‐term perspective, and to be referenced when having
dialogue with companies. The Guidance is positioned as an itemized discussion of
the Guidance for Collaborative Value Creation focused on climate change.
Figure 3 Overview of the Guidance for Integrated Corporate Disclosure and
Company‐Investor Dialogue for Collaborative Value Creation
10
Column 3 Efforts for Responding to the TCFD Recommendations with Other
Frameworks.
1) CDP
CDP is an international NGO whose predecessor is the Carbon Disclosure Project
established in 2000. CDP sends a questionnaire to companies outlining corporate
efforts related to three environmental issues of climate change, water and forests,
and conducts evaluation and analysis of companies based on the responses
obtained.
CDP revised the questionnaire items to respond to the TCFD recommendations
from 2018.
2) GRI (Global Reporting Initiative)
GRI aims to increase the understanding of the impacts of sustainability issues
globally and help disseminate opinions about such impacts. The GRI Guidelines,
published in 2000, are widely known as guidelines for sustainability reporting.
3) IIRC (International Integrated Reporting Council)
IIRC was established in 2010 with the aim of improving the quality of information
to providers of financial capital and establishing an approach for efficient
information dissemination. The International Integrated Reporting Framework
that presents an approach to preparing integrated reports was published in 2013.
Following this, companies in Japan as well as globally have been shifting from
annual reports to integrated reports.
4) SASB (Sustainability Accounting Standards Board)
SASB presents metrics that can measure the long‐term value creation capacity
of companies for all the 79 sectors. In addition to environmental metrics, SASB
presents other sustainability‐related metrics, including social and human capital
metrics, and works toward the voluntary adoption of the standards in statutory
disclosure materials by companies listed on U.S. markets.
In November 2018, SASB published new standards compliant with the TCFD
recommendations, with a revision of industry‐specific sustainability factors and
addition of results of scenario analysis.
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5) WBCSD (World Business Council for Sustainable Development)
WBCSD is a CEO‐led organization of approx. 200 companies working toward
sustainable development, and its participating companies share efforts for
resolving issues related to sustainable development and their experience in
cooperation with governments and NGOs.
WBCSD has started to review sector‐specific disclosure practices to respond to
the TCFD recommendations, and has already published reporting guidance for the
oil and gas industries. WBCSD also plans to publish guidance for the chemical and
electric utilities industries.
12
Chapter II Commentaries on Disclosures in
Accordance with the TCFD Recommendations
The Working Group of the TCFD Study Group carried out a questionnaire survey of all
members regarding points to be confirmed in implementing disclosure in accordance with the
TCFD recommendations, and received many questions.
In Chapter II, to address such questions raised, commentaries based on discussions at the
time of formulating the TCFD recommendations, information and opinions required by
financial institutions, and case examples to draw upon for reference for implementing
disclosure are provided and commentaries are developed.
A. Introduction
Questions raised are broadly classified into those related to i) medium of disclosure, ii) four
themes (Governance, Strategy, Risk Management, Metrics and Targets) presented in the TCFD
recommendations, iii) the method of financial disclosure of companies with different business
models, and iv) steps for implementing the TCFD recommendations by mid‐cap and small‐
and medium‐sized companies.
Commentaries are provided on questions on the following topics in the order described in
the TCFD recommendations.
i) Medium of financial disclosure. (See B.)
ii) Four themes. (See C – F.)
iii) Method of financial disclosure for companies with different business models. (See G.)
iv) Steps for implementing the TCFD recommendations by mid‐cap and small‐ and
medium‐sized companies. (See H.)
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B. Medium of Disclosure
The TCFD recommendations recommend companies to implement climate‐related
financial disclosure in the “(publicly available) general annual financial filings8.”
As described in the next page, the TCFD recommendations provide that it is desirable for
all companies to implement disclosures related to the Governance and Risk Management in
the four thematic areas in their financial filings. The reason why the recommendations require
disclosure by all companies is that many investors believe almost all industries are potentially
exposed to impacts of climate change. The reason why the recommendations require
disclosure be included in financial filings is that financial filings are most frequently referenced
by investors and other stakeholders.
For disclosures related to the Strategy and Metrics and Targets, the TCFD
recommendations provide that companies should provide such information in financial filings
when the information is deemed material. For companies which do not see such information
as material in the present situation, large companies—those9 in the non‐financial group that
have more than one billion U.S. dollar equivalent (USDE) in annual revenue—for which such
information may become material in future should consider disclosing such information in
other reports.
Figure 4 Recommended disclosure medium in the TCFD recommendations
8 Financial filings refer to the annual reporting packages in which organizations are required to deliver their audited financial results under the corporate, compliance, or securities laws of the jurisdictions in which they operate. (Excerpts from Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures,” June 2017; translated by Green Pacific Co., Ltd.).
9 The TCFD recommendations selected one billion U.S. dollar equivalent in annual sales as the threshold because it captures organizations responsible for over 90 percent of Scope 1 and 2 GHG emissions in the industries represented by the four non‐financial groups (approx. 2,250 organizations out of approx. 15,000 organizations).
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2. Implementing the Recommendations
b. Location of Disclosures and Materiality
The Task Force recommends that organizations provide climate‐related financial disclosures in their mainstream (i.e., public) annual financial filings.35 In most G20 jurisdictions, public companies have a legal obligation to disclose material information in their financial filings — including material climate‐related information; and the Task Force’s recommendations are intended to help organizations meet existing disclosure obligations more effectively. The Task Force’s recommendations were developed to apply broadly across sectors and jurisdictions and should not be seen as superseding national disclosure requirements. Importantly, organizations should make financial disclosures in accordance with their national disclosure requirements. If certain elements of the recommendations are incompatible with national disclosure requirements for financial filings, the Task Force encourages organizations to disclose those elements in other official company reports that are issued at least annually, widely distributed and available to investors and others, and subject to internal governance processes that are the same or substantially similar to those used for financial reporting.
The Task Force recognizes that most information included in financial filings is subject to a materiality assessment. However, because climate‐related risk is a non‐diversifiable risk that affects nearly all industries, many investors believe it requires special attention. For example, in assessing organizations’ financial and operating results, many investors want insight into the governance and risk management context in which such results are achieved. The Task Force believes disclosures related to its Governance and Risk Management recommendations directly address this need for context and should be included in annual financial filings.
For disclosures related to the Strategy and Metrics and Targets recommendations, the Task Force believes organizations should provide such information in annual financial filings when the information is deemed material. Certain organizations—those in the four non‐financial groups that have more than one billion U.S. dollar equivalent (USDE) in annual revenue—should consider disclosing such information in other reports when the information is not deemed material and not included in financial filings.37 Because these organizations are more likely than others to be financially impacted over time, investors are interested in monitoring how these organizations’ strategies evolve.
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 17.
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On the other hand, “The Task Force’s recommendations were developed to apply broadly
across sectors and jurisdictions and should not be seen as superseding national disclosure
requirement. Importantly, organizations should make financial disclosures in accordance with
their national disclosures. If certain elements of the recommendations are incompatible with
national disclosure requirements for financial filings, the Task Force encourages organizations
to disclose those elements in other official company reports that are issued at least annually10.”
The above is an explanation of the medium of financial disclosure in the TCFD
recommendations. On the other hand, as for scenario analysis, which is described in c) under
Strategy in the TCFD recommendations (page 25), “scenarios are hypothetical constructs and
not designed to deliver precise outcomes or forecasts,” and a major issue is whether such
information based on an uncertain and long‐term outlook should be included in financial
filings.
On this point, disclosure in accordance with the TCFD recommendations has just started,
and it is expected that disclosure practices for effective information provision to investors and
other stakeholders will be refined with the accumulation of case examples. In the process of
accumulating case examples, a further review of the medium of climate‐related financial
disclosure, including scenario analysis, is expected to progress further.
The following are examples of the combination of major companies that conduct climate‐
related scenario analysis and their disclosure medium as of December 2018. It is expected
that case examples will be accumulated further by making reference to such case examples
for the time being.
10 Excerpts from page 17 of “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures”
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Case example 1: Companies conducting scenario analysis and the medium
they disclose the relevant information
Company
name
Financial filings Other reports
BHP Billiton In its annual report, the
company mentions that it
conducts scenario analysis
and asks readers to refer to
the individual report
(Portfolio Analysis) for
details.
The details of scenario
analysis are provided in the
individual report (Portfolio
Analysis).
Shell In its annual report, the
company mentions that it
conducts scenario analysis
and asks readers to refer to
the sustainability report for
the details of responses to
the TCFD recommendations.
In the sustainability report,
the company mentions that it
conducts scenario analysis.
The details of scenario
analysis are included in the
individual report (Shell
Energy Transition Report)
and the company’s website.
Eni In its annual report, the
company mentions that it
conducts scenario analysis. In
addition, the company
partially describes the
difference between the IEA
SDS scenario and its scenario.
Only the outline of scenario
analysis is included in the
sustainability report.
Source: Prepared based on information from the disclosed information in each medium and website of each company.
As shown above, there are various disclosure mediums besides financial filings, such as
integrated report and sustainability report. Therefore, it is important to make effective
information provision to investors and other stakeholders by appropriately combining such
other reports. Examples of disclosure mediums other than financial filings are as described
below.
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1. Integrated report, annual report11
Reports that compile both financial information and non‐financial information including
sustainability‐related information of companies. Guidelines for integrated reports available
include Guidance for Collaborative Value Creation, developed by the Ministry of Economy,
Trade and Industry, and the international Integrated reporting Framework, formulated by the
International Integrated Reporting Council (IIRC). Preparation of an integrated report and
annual report is voluntary.
2. Environmental report, sustainability report, CSR report, etc.
Voluntary disclosure mediums for non‐financial information, including efforts for realizing
sustainable society. As sustainability reporting guidelines, GRI Standards, developed by GRI,
are available. Preparation of an environmental report, sustainability report, CSR report, etc.
is also voluntary.
The TCFD recommendations do not present a specific format for climate‐related disclosure.
Therefore, the point at issue when implementing disclosure in financial filings, integrated
report, and sustainability report and others of each company is how to demonstrate the
connection between disclosed information in these reports and the recommended structure
of disclosures presented by the TCFD recommendations.
How to deal with this issue is left to the inventiveness of each company. Meanwhile, some
helpful case examples include the method of following the structure of the TCFD
recommendations (case example (2)) and the method of adding a mapping table showing the
connection between the relevant content of disclosure and each element of the TCFD
recommendations (An example).
11 In Japan, “annual report” is a name for material attached to a voluntary disclosure report. In the meantime, this term sometimes indicates statutory disclosure documents overseas, such as Annual Report and Accounts in the U.K.
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Case example 2: Disclosure following the structure of the TCFD
recommendations
Mitsubishi Corporation provides an executive summary of its response to the
TCFD recommendations in its integrated report. In addition, the company has
described the status of its response to the TCFD recommendations for each of the
four thematic areas (governance, strategy, risk management, metrics and targets)
in the ESG DATA BOOK 2018.
Source: Mitsubishi Corporation, “ESG DATA BOOK 2018”, page 27‐.
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An example: A mapping table showing the content of disclosures in
accordance with the TCFD recommendations and location of disclosures in the
report is provided.
Outline of the TCFD
recommendations
The content of the
company’s disclosure
Location of
disclosures
Governance
The supervisory system of the
board for climate‐related risks
and opportunities is explained.
The content of the
committee’s discussion on
climate‐related issues is
reported to the board.
P. 5
Strategy
Short‐, medium‐ and long‐term
risks and opportunities
identified by the organization
are explained.
Explanation of medium‐ and
long‐term risks and
opportunities.
P. 15
20
C. Governance
The TCFD recommendations recommend the following disclosures under Governance.
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 19.
保存期
間 平成○○年○○月○○日まで保存
(セット後保存期間〇年) 性質/日
付 機密性○、平成○○年○○月○○
日 備考 未定稿:個人文書
Governance: Disclose the organization’s governance around climate‐related risks
and opportunities.
Recommended
Disclosure a)
Describe the
board’s
oversight of
climate related
risks and
opportunities.
Guidance for All Sectors
In describing the board’s oversight of climate‐related issues,
organizations should consider including a discussion of the
following:
- processes and frequency by which the board and/ or board committees (e.g. audit, risk, or other committees) are informed about climate‐related issues .
- whether the board and / or committees consider climate‐ related issues when reviewing and guiding strategy, major plans of action, risk management policies, annual budgets, and business plans as well as setting the organization’s performance objectives, monitoring implementation and performance , and overseeing major capital expenditures, acquisitions, and divestitures
- how the board monitors and oversees progress against goals and targets for addressing climate‐related issues
Recommended
Disclosure b)
Describe
management’s
role in assessing
and managing
climate‐related
risks and
opportunities
Guidance for All Sectors
In describing management’s role related to the assessment
and management of climate‐related issues, organizations
should consider including the following information:
- whether the organization has assigned climate‐related responsibilities to management‐level positions or committees ; and, if so, whether such management positions or committees report to the board or a committee of the board and whether those responsibilities include assessing and / or managing climate‐related issues
- a description of the associated organizational structure(s)
- processes by which management is informed about climate‐related issues
- how management (through specific positions and / or management committees) monitors climate‐related issues
21
Commentaries
The board generally has the authority to supervise the execution of duties of individual
directors. The TCFD recommendations require the board to also supervise climate‐related
issues and disclose the supervisory system for climate‐related issues.
In recommended disclosure b), there is a mention of the term “management‐level
positions,” but the term in this context does not refer to personnel with positions responsible
for managing the workplace in labor laws, etc. but is understood to refer to executive‐level
personnel practically given the responsibility of conducting assessment and management of
climate‐related issues by companies.
The following are representative examples of governance disclosures related to climate‐
related issues.
22
Case example 3: Establishing committees and promoting CSR activities including
climate change
The JXTG Group holds the CSR Council meeting, chaired by the President, biannually,
and the content of discussion at the meeting is reported to the board and the Executive
Council, which oversee and supervise the Group’s activities related to climate change.
The CSR Council meeting discussed and decided the priority fields of JXTG Group and
received the reports of activities from The Environment & Safety Committee. In the
environmental area, “the formation of a low‐carbon society” and “the establishment of
a circular economy” are the priority fields.
Source: JXTG Group. “JXTG REPORT for a Sustainable Future 2017,” page 27.
23
Case example 4: Establishing committees and promoting activities related to
climate change
Kao Corporation established the Sustainability Committee, chaired by the President
and CEO. The Board of Directors supervises whether the committee activities are
running appropriately.
The Sustainability Committee met four times in 2017, in January, April, July and
November. Besides three Representative Directors, Executive Officers in charge of a
total of eight divisions participated in the meeting as committee members, and
conducted deliberations about the Kao Group’s sustainability policy, strategy and
efforts.
Source: Kao, “Kao Sustainability Data Book 2018,” page 12.
24
D. Strategy
The TCFD recommendations recommend the following disclosures under Strategy.
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.
Recommended
Disclosure a)
Describe the
climate‐related
risks and
opportunities the
organization has
identified over the
short, medium,
and long term.
Guidance for All Sectors
Organizations should provide the following information:
- a description of what they consider to be the relevant short‐,
medium‐, and long‐ term time horizons, taking into consideration
the useful life of the organization’s assets of infrastructure and
the fact climate‐relate issues often manifest themselves over the
medium and longer terms.
- a description of the specific climate‐related issues for each time
horizon (short, medium, and long term) that could have a
material financial impact on the organization
- a description of the process(es) used to determine which risks
and opportunities could have a material financial impact on the
organization.
Organizations should consider providing a description of their risks
and opportunities by sector and/or geography, as appropriate.
Recommended
Disclosure b)
Describe the
impact of climate‐
related risks and
opportunities on
the organization’s
businesses,
strategy, and
financial planning.
Guidance for All Sectors
Building on recommended disclosure (a), organizations should
discuss how identified climate‐related issues have affected their
businesses, strategy, and financial planning.
Organizations should consider including the impact on their
businesses and strategy in the following areas:
- Products and services
- Supply chain and/or value chain
- Adaptation and mitigation activities
- Investment in research and development
- Operations (including types of operations and location of
facilities)
25
Organizations should describe how climate‐related issues serve as an
input to their financial planning process, the time period(s) used,
and how these risks and opportunities are prioritized. Organizations’
disclosures should reflect a holistic picture of the interdependencies
among the factors that affect their ability to create value over time.
Organizations should also consider including in their disclosures the
impact on financial planning in the following areas:
- Operating costs and revenues
- Capital expenditures and capital allocation
- Acquisitions or divestments
- Access to capital
If climate‐related scenarios were used to inform the organization’s
strategy and financial planning, such scenarios should be described
Recommended
Disclosure c)
Describe the
resilience of the
organization’s
strategy, taking
into consideration
different climate‐
related scenarios,
including a 2 °C or
lower scenario.
Guidance for All Sectors
Organizations should describe how resilient their strategies are to
climate related risks and opportunities, taking into consideration a
transition to a lower‐carbon economy consistent with a 2 °C or lower
scenario and, where relevant to the organization, scenarios
consistent with increased physical climate‐related risks.
Organizations should consider discussing :
- Where they believe their strategies may be affected by climate‐
related risks and opportunities
- How their strategies might change to address such potential risks
and opportunities
- the climate‐related scenarios and associated time horizon(s)
considered
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 20‐21.
Commentaries
The relationship between the three categories of recommended disclosures a), b), and c)
in the above guidance is understood as follows.
26
Firstly, the relationship between recommended disclosures a) and b) is: recommended
disclosure a) requires organizations to identify short‐, medium‐ and long‐term risks and
opportunities (regardless of whether scenario analysis is conducted or not), while
recommended disclosure b) requires organizations to explain the impacts of climate‐related
issues on businesses, strategies and financial planning based on such risks and opportunities.
Secondly, as for recommended disclosure c), scenario analysis mentioned herein also
includes elements of recommended disclosures a) and b). Accordingly, it follows that
organizations implementing recommended disclosure c) also satisfy recommended
disclosures a) and b).
Important points at issue for recommended disclosures a), b), and c) are explained
individually below.
27
1. Description of recommended disclosure a)
The TCFD’s recommended disclosure a) under Strategy requires organizations to explain
specific climate‐related issues that would have material financial impacts in short‐, medium‐,
and long‐term time frames.
Recommended
Disclosure a)
Describe the
climate‐related
risks and
opportunities
the
organization
has identified
over the short,
medium, and
long term.
Guidance for All Sectors
Organizations should provide the following information:
- a description of what they consider to be the relevant short‐,
medium‐, and long‐ term time horizons, taking into consideration
the useful life of the organization’s assets of infrastructure and the
fact climate‐relate issues often manifest themselves over the
medium and longer terms.
- a description of the specific climate‐related issues for each time
horizon (short, medium, and long term) that could have a material
financial impact on the organization
- a description of the process(es) used to determine which risks and
opportunities could have a material financial impact on the
organization.
Organizations should consider providing a description of their risks and
opportunities by sector and/or geography, as appropriate.
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017), ” page 20.
For specific context for short‐, medium‐ and long‐term time frames, descriptions in “8.
Timeframes for short, medium, and long term” in “E. Key Issues Considered and Areas for
Future Work” in the TCFD recommendations serve as a useful reference.
28
8. Time Frames for Short, Medium, and Long Term
As part of the Task Force’s second public consultation, some organizations asked
the Task Force to define specific ranges for short, medium, and long term. Because
the timing of climate‐related impacts on organizations will vary, the Task Force
believes specifying time frames across sectors for short, medium, and long term
could hinder organizations’ consideration of climate‐related risks and opportunities
specific to their businesses. The Task Force is, therefore, not defining time frames
and encourages preparers to decide how to define their own time frames according
to the life of their assets, the profile of the climate‐related risks they face, and the
sectors and geographies in which they operate.
In assessing climate‐related issues, organizations should be sensitive to the time
frames used to conduct their assessments. While many organizations conduct
operational and financial planning over a 1‐2 year time frame and strategic and
capital planning over a 2‐5 year time frame, climate‐related risks may have
implications for an organization over a longer period. It is, therefore, important for
organizations to consider the appropriate time frames when assessing climate‐
related risks. Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 38.
The second paragraph states that climate‐related risks “may have implications for an
organization over a longer period” and “it is, therefore, important for organizations to
consider the appropriate time frames when assessing climate‐related risks.” In assessing
climate‐related risks in the long‐term time frame, which are deemed particularly difficult to
assess, one possibility is to use existing reports, as a reference. For example, information on
scenarios of the International Energy Agency (IEA), (see Reference 1) can be used as a
reference when assessing transition risk, and information from reports, of international
organizations, that examine implications by sector and region (see Reference 2) can be used
as a reference when assessing physical risk.
A more specific explanation is provided in “(3) Method for Considering Strategy Based on
Scenarios.”
29
Reference 1: Information of scenarios usable when assessing transition risk
・WEO (World Energy Outlook)
- e.g. Trend of worldwide sales of electric vehicles
・ETP (Energy Technology Perspectives)
- e.g. Ratio of electricity production from renewable energy to the total
worldwide annual electricity generating capacity
Reference 2: Information of scenarios usable when assessing physical risk
・Advancing TCFD Guidance on Physical Climate Risks and Opportunities
- Physical risk, such as storms, floods, and sea level rise, is assessed on a three‐
point scale
2. Description of recommended disclosure b) (how to disclose efforts in research
and development)
The TCFD’s recommended disclosure b) under Strategy requires organizations to explain
implications of climate‐related issues for their businesses, strategy, and financial planning.
Recommended
Disclosure b)
Describe the
impact of
climate related
risks and
opportunities
on the
organization’s
businesses,
strategy, and
financial
planning.
Guidance for All Sectors
Building on recommended disclosure (a), organizations should discuss
how identified climate‐related issues have affected their businesses,
strategy, and financial planning.
Organizations should consider including the impact on their businesses
and strategy in the following areas:
- Products and services
- Supply chain and/or value chain
- Adaptation and mitigation activities
- Investment in research and development
- Operations (including types of operations and location of facilities)
Organizations should describe how climate‐related issues serve as an
input to their financial planning process, the time period(s) used, and
30
how these risks and opportunities are prioritized. Organizations’
disclosures should reflect a holistic picture of the interdependencies
among the factors that affect their ability to create value over time.
Organizations should also consider including in their disclosures the
impact on financial planning in the following areas:
- Operating costs and revenues
- Capital expenditures and capital allocation
- Acquisitions or divestments
- Access to capital
If climate‐related scenarios were used to inform the organization’s
strategy and financial planning, such scenarios should be described
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 20.
As shown above, the TCFD recommendations list “products and services,” “supply chain
and/or value chain,” “adaptation and mitigation activities,” “investment in research and
development,” and “operations (including types of operations and location of facilities)” as
areas in which the businesses and strategies of organizations are affected by climate‐related
risks and opportunities.
Commentaries on the method for describing “investment in research and development,”
for which many questions were received through the Study Group, are provided below.
When discussing investment in research and development, companies should describe why
such research and development activities are necessary in relation to future risks and
opportunities they have identified. In particular, companies should actively describe their
efforts when investing in research and development activities that contribute significantly to
reducing GHG emissions, such as efforts for energy‐efficiency technologies and effective
utilization of the CO2. From the perspective of preparing for physical risks, it is also important
to conduct research and development activities that contribute to business continuity in
times of extreme weather events (e.g. maintaining supply chains, ensuring stable supply of
energy), stable procurement of water, stable supply of food and so on.
When discussing specific research and development activities, companies should describe
the total spending on research and development activities, as well as budget allocation by
theme, outcomes achieved by commercialization of such technologies (e.g. contribution to
31
revenues, reduction of CO2 emissions) and the relationship between research and
development of such outcomes.
As for basic research and development efforts, it is deemed that organizations can clarify
the significance by describing the awareness of issues behind such efforts and areas of
technology on which such research and development would have impacts in the future.
Case example 5: Clarifying the breakdown of research and development
expenditures and the roadmap to commercialization of technologies
Sumitomo Chemical Co., Ltd. discloses the total expenditures on research and
development, capital investment, and investment and loans and allocation of spending by
theme for the past three years.
The company also describes future opportunities related to cathode material, the main
component of lithium‐ion batteries, in relation to the company’s development schedule,
and clarifies the timeline for developing next‐generation products and timing of market
launch in response to the future demand estimates.
32
Source: Sumitomo Chemical Co., Ltd., “Investor’s Handbook 2018,” page 5, 32.
33
3. Description of recommended disclosure c)
The TCFD’s recommended disclosure c) under Strategy requires organizations to describe
the resilience of their strategy, taking into consideration different climate‐related scenarios,
including a 2 °C or lower scenario.
Recommended
Disclosure c)
Describe the
resilience of
the
organization’s
strategy,
taking into
consideration
different
climate‐related
scenarios,
including a 2 °C
or lower
scenario.
Guidance for All Sectors
Organizations should describe how resilient their strategies are to
climate related risks and opportunities, taking into consideration a
transition to a lower‐carbon economy consistent with a 2 °C or
lower scenario and, where relevant to the organization, scenarios
consistent with increased physical climate‐related risks.
Organizations should consider discussing :
- Where they believe their strategies may be affected by climate‐
related risks and opportunities
- How their strategies might change to address such potential
risks and opportunities
- the climate‐related scenarios and associated time horizon(s)
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 21.
Descriptions of scenario analysis are provided below in accordance with specific
procedures from a) to d).
a) Considering strategy based on scenarios
i) Setting scenarios
The TCFD recommendations require organizations to develop two or more plausible risk
scenarios, assess the potential impacts of each scenario on their businesses, and clarify
countermeasures to such scenario. However, many companies have no experience
conducting scenario analysis, and often do not know how to develop risk scenarios and which
method to use for analysis.
Methods of scenario analysis are broadly categorized into two types: (1) a method to create
the organization’s own scenarios and (2) a method to use existing scenarios (e.g. those
provided by industry groups or international organizations) as a reference. The TCFD
recommendations provide that either of the two methods is suitable.
34
D. Scenario Analysis and Climate‐Related Issues
4. Applying Scenario Analysis
While the Task Force recognizes the complexities of scenario analysis and the
potential resources needed to conduct it, organizations are encouraged to use
scenario analysis to assess climate‐related risks and opportunities. For
organizations just beginning to use scenario analysis, a qualitative approach that
progresses and deepens over time may be appropriate. Greater rigor and
sophistication in the use of data and quantitative models and analysis may be
warranted for organizations with more extensive experience in conducting
scenario analysis. Organizations may decide to use existing external scenarios and
models (e.g., those provided by third‐party vendors) or develop their own, in‐
house modeling capabilities. The choice of approach will depend on an
organization’s needs, resources, and capabilities.
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 29.
It is important to assume two or more scenarios, not a single one, when conducting
scenario analysis regardless of which of the two methods is used, considering the uncertainty
of the future to which corporate resilience is to be described using these scenarios.
When interpreting the results of scenario analysis, the important thing is to implement
disclosure not only on the results but also with scenario narratives or storylines with a logical
explanation that allows investors and other stakeholders to be convinced about the
consideration process leading up to such results, in order to deepen their understanding.
ii) Conducting scenario analysis using existing scenarios
Examples of scenario analysis using existing scenarios include the following.
a) Example in which an organization used a demand forecast for a product in the
existing scenario to analyze its efforts and explain its resilience (case example 6)
b) Example in which an organization used the rate of GHG emissions reduction in the
existing scenario to explain its efforts (case example 7)
35
Case example 6: Example of using demand forecast for a product in the
existing scenario
Toyota Motor Corporation displayed that the ratio of electric vehicles in the 2030
Milestone exceeds the levels both in IEA’s 2 °C and Beyond 2 °C climate scenarios. The
company also showed that the ratio of zero emission vehicles (ZEV) surpasses that in
the 2 °C scenario but does not reach the level of Beyond 2 °C scenario. However, the
company can make flexible changes to its line‐ups owing to the accumulation of
technological capabilities.
Source: Toyota Motor Corporation, “Environmental Report 2018,” page 9.
36
Case example 7: Example of using the ratio of GHG emissions reduction in the
existing scenario
The Japan Iron and Steel Federation, in its long‐term vision for climate change
mitigation, made reference to the GHG emissions reduction rate required of the
industrial sector (30% emission reduction by 2060) under the 2 °C scenario of the IEA
Energy Technology Perspectives (ETP). The federation concluded that the iron and steel
sector can achieve roughly the same level of GHG emissions reduction as that required
by ETP through the implementation of BAT and innovative technologies, on top of the
effects of zero emissions achieved in the electric utilities sector.
Note: The TCFD recommendations require strategy disclosure of individual
companies. Therefore, each company is required to disclose its strategy by building on
industry level efforts.
37
Source: Japan Iron and Steel Federation, “JISF Long‐term vision for climate change mitigation –A challenge towards Zero‐carbon STEEL”.
38
iii) Referring existing scenarios
As described in (A) above, companies are allowed to use existing external scenarios in
scenario analysis. This section provides representative existing scenarios for transition risks
and tools and reports related to physical risks.
Representative scenarios used to assess the impacts of transition risk include IEA’s World
Energy Outlook (WEO) scenario and Energy Technology Perspectives (ETP) scenario, as well
as NDC12 scenarios of partnership countries. Data related to transition risks in these scenarios
(type of data, time frame, region) excluding NDC scenarios are shown in Table 1. The data
include information on market changes associated with climate change, including the trends
in worldwide sales of electric vehicles and the ratio of renewable energy in annual electric
generating capacity, and can be used as a reference for identifying the organization’s
transition risks and considering related impacts.
For assessing impacts of physical risks, various organizations have published reports
assessing impacts by industry and region, as well as tools. Out of such reports and tools,
twelve introduced in the TCFD recommendations and two that largely cover different types
of physical risks (“ADVANCING TCFD GUIDANCE ON PHYSICAL CLIMATE RISKS AND
OPPORTUNITIES” covering global impacts of climate changes and “Synthesis Report on
Observations, Projections and Impact Assessments of Climate Change, 2018” covering
impacts of climate changes in Japan) are explained in Table 2.
12 NDC (Nationally Determined Contribution) is a term for a nationally determined GHG emissions reduction target which all countries that ratified the Paris Agreement under the United Nations Framework Convention on Climate Change (UNFCCC) have committed to achieve.
39
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities”
Category IEA datasets Source13 Timeframe
Country/region
Unit Corresponding
page Global
Several areas
Japan
Carbon price
What assumptions are made about how carbon price(s) would develop over time (within tax and/or emissions trading frameworks), geographic scope of implementation, whether the carbon price would apply only at the margin or as a base cost, whether it is applied to specific economic sectors or across the whole economy and in what regions?
Is a common carbon price used (at multiple points in time?) or differentiated prices? Assumptions about scope and modality of a CO2 price via tax or trading scheme?
CO2 price CO2 price in selected regions by
scenario WEO 2017 2020/30/40 〇
$2016 per
tonne
p.48 Table 1.1
Energy demand
What would be the resulting total energy demand and energy mix across different sources of primary energy e.g. coal/ oil/ gas/ nuclear/renewables (sub-categories)?
How does this develop over time assuming supply/end-use efficiency improvements?
What factors are used for energy conversion efficiencies of each source category and for end-use efficiency in each category over time?
General
Final electricity demand by sector and region, 2014‐60
ETP 2017 2014-60 〇
TWh p.279-280,
Figure 6.2,
6.3,6.4
Primary energy
Total final industrial energy consumptions by region
World primary energy demand by fuel and scenario
ETP 2017 2014-60 〇 EJ p.77, Figure
2.18
WEO 2017 2025/40 〇 Mtoe p.79 Table2.2
Final energy Energy consumption by sector and
fuel ETP 2017 2025 〇 〇 EJ p.77, Figure
2.20
Final energy Average annual change in final energy
consumption in selected regions WEO 2017 2016-40 〇 〇 Mtoe p.286 Figure7.3
Final energy Avoided final energy demand in 2040
due to energy efficiency policies by fuel, sector and region
WEO 2017 2040 〇 Mtoe p.289 Figure7.5
Fossil‐fuel Fossil‐fuel demand
WEO 2017 2025/30/35/40 〇 〇 〇 Mtoe p.145
Figure3.18
13 International Energy Agency (IEA) “World Energy Outlook 2017”, “Energy Technology Perspective 2017 –Catalysing Energy Technology Transformation”
Table 1 Data related to transition risks in IEA’s scenarios
40
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities”
Category IEA datasets Source13 Timeframe
Country/region
Unit Corresponding
page Global
Several areas
Japan
Fossil‐fuel Change in global oil product demand
for petrochemical feedstock WEO 2017 2025/40 〇 mb/d p.170 Figure4.7
Fossil‐fuel Difference in oil demand by sector in
the Low Oil Price Case relative to the New Policies Scenario
WEO 2017 2020/25/30/35/40 〇 mb/d p.159 Figure4.1
Coal
Gas
Share of coal consumption by technology in electricity WEO 2017 2040 〇 〇 〇
% p.262
Figure6.16
Renewable energy
World renewable energy consumption WEO 2017 2025/40 〇
Mtoe, TWh,
mboe/d
p.299 Table7.3
Renewable energy
Renewable energy use by sector from a consumer perspective and by region
WEO 2017 2040 Mtoe p.301 Figure7.8
Renewable energy
Bioenergy in final energy consumption by end use ETP 2017 2016 〇
% p.319, Figure
7.2
Heat
Growth in global industrial heat demand by temperature level, Change in global industrial heat supply mix by temperature level
WEO 2017 2040 〇 〇 Mtoe
p.319
Figure7.16, p.320
Figure7.17
Electricity Electricity demand by region WEO 2017 2025/30/35/40 〇 〇 〇 TWh p.238 Table6.1
Power supply Fuel input electricity and heat
generation
ETP 2017 2025/30/35/40/45/50/55/6
0 〇 PJ
ETP2017_scen
ario_summary
41
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities”
Category IEA datasets Source13 Timeframe
Country/region
Unit Corresponding
page Global
Several areas
Japan
Energy mix
What would be the resulting total energydemand and energy mix across differentsources of primary energy e.g. coal/ oil/ gas/nuclear/renewables (sub-categories)?
How does this develop over time assumingsupply/end-use efficiency improvements?
What factors are used for energy conversionefficiencies of each source category and forend-use efficiency in each category over time?
Renewable energy Final energy demand in the RTS and
2DS, 2014‐60
(Biomass and waste, Natural gas,
Electricity, Commercial heat, Oil, Coal,
Other, Renewable share, Low‐carbon
share)
ETP 2017 2014-2060 〇
% p.30,Figure 1.5
Renewable energy Bioenergy use and CO2 capture in the
RTS, 2DS and B2DS
(Power, Fuel Transformation,
Agriculture, Buildings, Industry,
Transport, %BECCS)
ETP 2017 2060 〇
EJ p.38,Figure
1.13
Renewable energy
Tracking by technology and region
(Solar PV, Hydropower, Bioenergy, CSP,
Onshore wind, Offshore wind,
Geothermal, Ocean)
ETP 2017 2000-2020/2025 〇
TWh p.67, Figure 2.4
Nuclear power Top‐five regions by installed capacity
of nuclear power plants WEO 2017 2025/30/35/40 〇 〇 〇 GW p.250 Figure6.9
Nuclear power Nuclear electricity generation ETP 2017 2020/25 〇 TWh p.69, Figure 2.5
42
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities”
Category IEA datasets Source13 Timeframe
Country/region
Unit Corresponding
page Global
Several areas
Japan
Power supply
"Coal capacity development
(Subcritical, Supercritical, Ultra-supercritical)"
ETP 2017 2020/25 〇 GW p.73, Figure
2.11
Power supply Electricity generation(Total generation, Coal, Oil, Gas, Nuclear, Renewables)
WEO 2017 2025/30/35/40 〇 〇 〇 TWh p.651 Annex
Power supply Offshore electricity generation WEO 2017 2040 〇 〇 〇
TWh p.104
Figure2.21
Power supply "Power generation fuel mix by scenario, 2014 and 2060
(Fossil w/o CCS, Fossil with CCS, Nuclear, Bioenergy with CCS, Renewables)"
ETP 2017 2060 〇
Electricity mix p.37,Figure
1.12
Power plant Electrical capacity(Total capacity,
Coal, Oil, Gas, Nuclear, Renewables) WEO 2017 2025/30/35/40 〇 〇 〇 GW p.651 Annex
Power plant Electricity generation by existing
and new power plants by type WEO 2017 2017-25/2026-40 〇 〇 〇
TWh p.259
Figure6.13
CCS Power generation by source and
installed capacity WEO 2017 2040 〇 TWh p.146
Figure3.19
Investment Cumulative global energy investment
by scenario WEO 2017 2040 〇 Trillion dollars
(2016)
p.100
Figure2.20
Investment Average annual offshore energy
investment WEO 2017 2017-25/2026-40 〇 Billion dollars
(2016)
p.105
Figure2.22
Investment Cumulative investment needs by
sector in the New Policies and WEO 2017 2040 〇 Trillion dollars
(2016)
p.147
Figure3.20
43
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities”
Category IEA datasets Source13 Timeframe
Country/region
Unit Corresponding
page Global
Several areas
Japan
Sustainable Development Scenarios, 2017‐2040
Investment needs by scenario, 2017‐60
ETP 2017 2060 〇
Trillion USD
(2015 USD PPP)
p.263, Figure
5.16
Price of key commodities/products
What conclusions does the organization draw,based on the input parameters/ assumptions,about the development over time of marketprices for key inputs, energy (e.g. coal, oil, gas,electricity)?
Renewable energy
Solar PV LCOE and contract prices ETP 2017 2011-2021 〇 〇 USD/kWh p.65, Figure 2.3
Fossil‐fuel
Fossil fuel prices by scenario
ETP 2017 2020/30/40/50/60 〇 〇 〇
Oil :2015
USD/bbl
Coal: 2015 USD/t
Gas: 2015 USD/
MtBu
p.408, Table
A.3
Coal
Average FOB cash costs for global seaborne steam coal trade and Richard’s Bay FOB coal price WEO 2017 2000-40 〇
Dollars per
tonne(adjusted to
6 000 kcal/kg)
p.217 Figure5.5
Macro-economic Variables
What GDP rate, employment rate, and othereconomic variables are used?
GDP Real GDP growth projections in ETP
2017 (assumed identical across scenarios)
ETP 2017 2000-60 〇 CAAGR (%) p.408, Table
A.1
Demographic variables
What assumptions are made about populationgrowth and/or migration?
General Population projections used in ETP
2017 (millions) ETP 2017 2014-60 〇 millions p.408, Table
A.2
Efficiency To what extent are positive aspects of efficiency
gains/clean energy transition/physical changesincorporated into scenarios and businessplanning?
Efficiency Natural gas‐fired power technology
intensity ETP 2017 2000-25 〇 gCO2/kWh p.71, Figure 2.8
Efficiency Global fleet average and new‐build plants emissions
ETP 2017 1990-2060 〇 gCO2/kWh p.53,Figure 2.2
Efficiency Cost components in battery storage in the scenarios ETP 2017 2040 〇 %
p.298, Figure
6.19
Efficiency Battery scale‐up in the 2DS and B2DS ETP 2017 2030/45/60 〇
GWh,
USD/kWh
p.299, Figure
6.20
44
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities”
Category IEA datasets Source13 Timeframe
Country/region
Unit Corresponding
page Global
Several areas
Japan
Efficiency Global energy intensity reduction WEO 2017 2016-25/25-40 〇 % p.285 Figure7.2
Efficiency Evolution of global average cost for utility‐scale solar PV and EV battery
WEO 2017 2010-40 〇
Dollars per
MWh, kWh
(2016)
p.60 Figure1.8
Efficiency Powertrain cost comparison of conventional and electric cars WEO 2017 2025 〇
Thousand
dollars (2016) p.96 Figure2.18
Efficiency Potential additional impact of material efficiency improvements on oil demand for plastics production
WEO 2017 2040 〇 mb/d p.172 Figure4.8
Efficiency Historical and projected levelised costs of electricity by selected technology
WEO 2017 2010-40 〇 Dollars per
MWh (2016)
p.269
Figure6.21
Technology
Does the organization make assumptions aboutthe development of performance/cost andresulting levels of deployment over time ofvarious key supply and demand-side technologies (e.g. solar PV/CSP, wind, energystorage, biofuels, CCS/CCUS, nuclear,unconventional gas, electric vehicles, andefficiency technologies in other key sectorsincluding industrial and infrastructure)?
CCS Share of CCS in power generation and
capacity ‐ B2DS ETP 2017 2030/45/60 〇 % p.366, Figure
8.3
CCS Globally installed electricity storage
(GW) ETP 2017 2020/25 〇 GW p.103, Figure
2.58
CCS
Global CO2 captured and stored in the chemicals and petrochemicals subsector
ETP 2017 2020/25/30/35/40/45/50/5
5/60 〇 MtCO2/year
p.179, Figure
4.10、p.189,
Figure 4.20、
p.194, Figure
4.23
CCS Share of CCS in industrial production
ETP 2017 2015-60 〇 % p.371, Figure
8,7
CCS CO2 captured
ETP 2017 2025/30/35/40/45/50/55/6
0 〇 〇 Mt CO2
ETP2017_scen
ario_summary
45
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities”
Category IEA datasets Source13 Timeframe
Country/region
Unit Corresponding
page Global
Several areas
Japan
Fossil‐fuel Deepwater and ultra‐deepwater
production by region in the New Policies Scenario
WEO 2017 2020/25/30/35/40 〇 mb/d p.185
Figure4.14
Gas Average costs of resources developed
in the New Policies Scenario by year and average Henry Hub price
WEO 2017 2016-20/-25/-30/-35/-40 〇 Dollars per
MBtu (2016)
p.373 Figure9.3
Gas Estimated average time to procure an
extra 10% of LNG import volumes by selected importer
WEO 2017 2030/40 〇 〇 Days p.391
Figure9.14
Renewable energy
Average annual global energy efficiency and renewable investments WEO 2017 2017-20/-25/-30/-35/-40 〇
Billion dollars
(2016)
p.308
Figure7.12
Investment Cumulative oil and gas supply
investment by region WEO 2017 2040 〇 $2016 billion p.201
Table4.10
Policy
What are assumptions about strength of different policy signals and their development over time (e.g. national headline carbon emissions targets; energy efficiency or technology standards and policies in key sectors; subsidies for fossil fuels; subsidies or support for renewable energy sources and for CCS/CCUS)
Policy Cross‐cutting policy assumptions by
scenario for selected regions WEO 2017 2016 以降 〇 〇 〇 - p.728-729
TableB.1
Subsidies Estimated value of global fossil‐fuel
consumption subsidies WEO 2017 2009-2016 〇 Billion dollars
(2016)
p.84 Figure2.12
Renewable energy
Share of supported wind and solar PV generation by mechanism type WEO 2017 2010-2030 〇
% p.275
Figure6.24
CO2 emissions
Gas Average CO2 emissions intensity of
electricity generation in selected regions WEO 2017 2025/40 〇 gCO2/kWh p.454
Figure11.13
Power supply Average CO2 emissions intensity of
electricity generation in selected regions WEO 2017 2025/40 〇 gCO2/kWh p.444
Figure11.5
Coal World coal demand, production and
trade WEO 2017 2025/40 〇 Mtce p.207 Table5.1
46
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks and Opportunities”
Category IEA datasets Source13 Timeframe
Country/region
Unit Corresponding
page Global
Several areas
Japan
Predictions on production and sales
Fossil‐fuel Changes in oil production by region WEO 2017 2016-25/-40 〇 mb/d p.160 Figure4.2
Power plant Offshore oil and gas production
WEO 2017 2040 〇 mboe/d p.104
Figure2.21
47
Sector Parameters
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks
and Opportunities”
IEA datasets Source Timeframe
Country/region
Unit Corresponding
page Global Several areas
Japan
Energy
Energy demand
What would be the resulting total energy demand and energy mix across different sources of primary energy e.g. coal/ oil/ gas/ nuclear/renewables (sub-categories)?
How does this develop over time assuming supply/end-use efficiency improvements?
What factors are used for energy conversion efficiencies of each source category and for end-use efficiency in each category over time?
Residential LED stock and lighting electricity demand in the New Policies Scenario
WEO 2017 2040 〇 TWh p.294
Figure7.7
Final energy demand (Oil, Coal, Natural gas, Electricity, Heat, Biomass and waste, Hydrogen)
ETP 2017 2025/30/35/40/45/50/55/60 〇 〇 PJ ETP2017_sce
nario_summary
Residential - Total final energy consumption by end-use
ETP 2017 2025/30/35/40/45/50/55/60 〇 PJ
ETP2017_buil
dings_summary.
xlsx
Cement - final energy consumption
ETP 2017 2025/30/35/40/45/50/55/60 〇 PJ
ETP2017_ind
ustry_summary.
xlsx
Energy mix
Investment needs by scenario, 2017-60
ETP 2017 2015-60 〇
Trillion USD
(2015 USD
PPP)
p.263, Figure
5.16
Role of transport biofuels - final energy demand in the 2DS ETP 2017 2015-60 〇 EJ
p.325, Figure
7.7
Technology
Does the organization make assumptions about the development of performance/cost and resulting levels of deployment over time of various key supply and demand‐side technologies (e.g. solar PV/CSP, wind, energy storage, biofuels, CCS/CCUS, nuclear, unconventional gas, electric vehicles, and efficiency technologies in other key sectors including industrial and infrastructure)?
Deployment rates for renwables-based power technologies in the B2DS
ETP 2017 2014-60 〇 GW / year p.290, Figure
6.14
48
Sector Parameters
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks
and Opportunities”
IEA datasets Source Timeframe
Country/region
Unit Corresponding
page Global Several areas
Japan
Policy
What are assumptions about strength of different policy signals and their development over time (e.g. national headline carbon emissions targets; energy efficiency or technology standards and policies in key sectors; subsidies for fossil fuels; subsidies or support for renewable energy sources and for CCS/CCUS)
Recent developments in regional power sector policies included in the New Policies Scenario
WEO 2017 2016-17 〇 - p.241
Table6.2
CO2 emissions Final energy use and CO2
emissions in industry in the RTS ETP 2017 2030/60 〇 GtCO2 p.164, Figure
4.1
Predictions on production and sales
Average CO2 intensity of electricity production and primary aluminum production
ETP 2017 2060 〇 〇
production:
Aluminium(Mt)
CO2
intensity :
gCO2/kWh
p.200, Figure
4.26
Deployment levels of solar PV WEO 2017 2040 〇 GW
p.150
Figure3.22
Transportation
Energy demand
What would be the resulting total energy demand and energy mix across different sources of primary energy e.g. coal/ oil/ gas/ nuclear/renewables (sub-categories)?
How does this develop over time assuming supply/end-use efficiency improvements?
What factors are used for energy conversion efficiencies of each
Global road freight fuel demand by vehicle category WEO 2017 2040 〇 mb/d
p.167
Figure4.5
Total final energy consumption
ETP 2017 2025/30/35/40/45/50/55/60 〇 〇 PJ
ETP2017_tr
ansport_sum
mary.xlsx
"Energy intensity development under current regulation and 2DS
(Energy intensity in 2DS, Energy intensity with EEDI)"
ETP 2017 2020/25/30 MJ/tonne-
kilometre
p.89, Figure
2.39
49
Sector Parameters
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks
and Opportunities”
IEA datasets Source Timeframe
Country/region
Unit Corresponding
page Global Several areas
Japan
source category and for end-use efficiency in each category over time?
"Bus and rail activity by scenario and passenger transport activity by mode, 2015-60
( Share of activity for passenger transport modes)"
ETP 2017 2060 〇 % p.237,
Figure 5.7
Energy intensity improvements in global aviation by scenario ETP 2017 2000-60 〇 MJ/pkm
p.253,
Figure 5.11
Passenger transport final energy consumption
ETP 2017 2025/30/35/40/45/50/55/60 〇 〇 PJ
ETP2017_tr
ansport_sum
mary.xlsx
Energy mix Role of transport biofuels - final
energy demand in the 2DS ETP 2017 2015-60 〇 EJ p.325,
Figure 7.7
Technology
Does the organization make assumptions about the development of performance/cost and resulting levels of deployment over time of various key supply and demand‐side technologies (e.g. solar PV/CSP, wind, energy storage, biofuels, CCS/CCUS, nuclear, unconventional gas, electric vehicles, and efficiency technologies in other key sectors including industrial and infrastructure)?
Global technology penetrations in LDV stock by scenario, 2015-60 ETP 2017 2025/30/35/40/45/50/55/60 〇
Million
vehicles
p.223, Figure
5.3
Comparative cost of PLDV technologies by country/region in the RTS and B2DS, 2015 and 2060
ETP 2017 2060 〇 〇 USD p.228, Figure
5.5
Model shift from aviation to HSR, RTS and B2DS
ETP 2017 2010-60 〇 Passenger
km (trillions)
p.256, Figure
5.13
50
Sector Parameters
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks
and Opportunities”
IEA datasets Source Timeframe
Country/region
Unit Corresponding
page Global Several areas
Japan
Policy
What are assumptions about strength of different policy signals and their development over time (e.g. national headline carbon emissions targets; energy efficiency or technology standards and policies in key sectors; subsidies for fossil fuels; subsidies or support for renewable energy sources and for CCS/CCUS)
Selected recent initiatives for electric mobility
WEO 2017 2016 〇 - p.165
Table4.3
CO2 emissions
International well-to-wake shipping CO2-eq emissions trajectories ETP 2017 2020/25 〇
Mt of CO2
equivalent
p.89, Figure
2.37
Well-to-wheel emissions by mode
ETP 2017 2025/30/35/40/45/50/55/60 〇 PJ
ETP2017_tran
sport_summary.
xlsx
Direct CO2 emissions
ETP 2017 2025/30/35/40/45/50/55/60 〇 EJ
ETP2017_sce
nario_summary.
xlsx
Predictions on production and sales
Vehicle sales and technology shares in 2015 and 2060 in the RTS and B2DS , Light-duty vehicles (Gasoline internal combustion engine, Diesel combustion engine, Compressed natural gas/ Liquefied petroleum gas, Hybrids, Electric & fuel cell vehicles)
ETP 2017 2060 〇 Million
vehicles
p.36, Figure
1.11
"Share of 2-wheelers in major Asian regions and the OECD average in the B2DS, 2015-60"
ETP 2017 2030/60 〇 % p.234, Figure
5.6
Passenger kilometres
ETP 2017 2025/30/35/40/45/50/55/60 〇 〇 billion
ETP2017_tran
sport_summary.
xlsx
51
Sector Parameters
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks
and Opportunities”
IEA datasets Source Timeframe
Country/region
Unit Corresponding
page Global Several areas
Japan
Freight tonne kilometres
ETP 2017 2025/30/35/40/45/50/55/60 〇 〇 billion
ETP2017_tran
sport_summary.
xlsx
Deployment levels of electric cars WEO 2017 2040 〇
Million
vehicles
p.150
Figure3.22
Materials and Buildings
Energy demand
What would be the resulting total energy demand and energy mix across different sources of primary energy e.g. coal/ oil/ gas/ nuclear/renewables (sub-categories)?
How does this develop over time assuming supply/end-use efficiency improvements?
What factors are used for energy conversion efficiencies of each source category and for end-use efficiency in each category over time?
Cement production energy use ETP 2017 2025 〇 EJ
p.79, Figure
2.22
Energy intensity and direct CO2 emissions intensity of global cement production by scenario
ETP 2017 2030/60 〇 Gt/t cement p.192,Figure4.
21
Sector-wide energy consumption and CO2 emissions
ETP 2017 2025 〇
Energy
consumption;
EJ
Direct CO2
emissions :
MtCO2
p.81,
Figure2.27
Final energy use by fuel and per person ETP 2017 2020/25 〇
MWh/perso
n
p.95, Figure
2.48
Global direct CO2 emissions and process energy intensities of primary chemicals by scenario
ETP 2017 2030/60 〇 Gt/ t
production
p.177, Figure
4.8
Global energy intensity and direct CO2 emissions of crude steel production by scenario
ETP 2017 2030/60 〇 Gt/t crude
steel
p.186,Figure4.
16
Floor area additions to 2060 and share of additions built by 2035 for selected regions (Non-residential, Residential)
ETP 2017 2060 〇 Billion m2 p.126, Figure
3.4
52
Sector Parameters
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks
and Opportunities”
IEA datasets Source Timeframe
Country/region
Unit Corresponding
page Global Several areas
Japan
Residential - Total final energy consumption
ETP 2017 2030/45/60 〇 PJ
ETP2017_buil
dings_summary.
xlsx
Cumulative energy savings by end use relative to the RTS ETP 2017 2020/30/40/50/60 〇 EJ
p.130, Figure
3.6
Residential - Total final energy consumption by end-use
ETP 2017 2025/30/35/40/45/50/55/60 〇 PJ
ETP2017_buil
dings_summary.
xlsx
Residential - Total final energy consumption
ETP 2017 2025/30/35/40/45/50/55/60 〇 PJ
ETP2017_buil
dings_summary.
xlsx
Cement - final energy consumption
ETP 2017 2025/30/35/40/45/50/55/60 〇 PJ
ETP2017_ind
ustry_summary.
xlsx
CO2 emissions
Global direct CO2 emissions and process energy intensities of primary chemicals by scenario ETP 2017 2030/60 〇
t direct
CO2/t
production
p.177, Figure
4.8
Energy intensity and direct CO2 emissions intensity of global cement production by scenario ETP 2017 2030/60 〇
tCO2/t
cement
p.192, Figure
4.21、p.186,
Figure 4.16
Direct CO2 emissions
ETP 2017 2025/30/35/40/45/50/55/60 〇 GtCO2
ETP2017_sce
nario_summary.
xlsx
Buildings - Total emissions by end-use ETP 2017 2025/30/35/40/45/50/55/60 〇 MtCO2
p.192, Figure
4.21
53
Sector Parameters
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks
and Opportunities”
IEA datasets Source Timeframe
Country/region
Unit Corresponding
page Global Several areas
Japan
Predictions on production and sales
Global material production projections in the RTS and B2DS ETP 2017 2025/30/35/40/45/50/55/60 〇 Mt
p.169, Figure
4.5
Crude steel production by process route ETP 2017 2025 〇
Mt crude
steel
p.79,
Figure2.23
HVC production by process route, scenario and region ETP 2017 2060 〇 Mt/year
p.181, Figure
4.12
Production and energy intensity for primary chemicals
ETP 2017 2030/60 〇
Annual
production: Mt
Energy
intensity : GJ/t
chemical
p.81,
Figure2.26
Global HVC production by process technology in the B2DS ETP 2017 2025/30/35/40/45/50/55/60 〇 HVC(Mt)
p.180, Figure
4.11
Hot metal production in the iron and steel subsector by process route and region
ETP 2017 2025/30/35/40/45/50/55/60 〇 Mt hot
metal/year
p.189, Figure
4.19
Global hot metal production in the iron and steel subsector by process technology in the B2DS
ETP 2017 2060 〇 Mt/year p.188, Figure
4.18
54
Sector Parameters
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks
and Opportunities”
IEA datasets Source Timeframe
Country/region
Unit Corresponding
page Global Several areas
Japan
Agriculture, Food, and Forest Products
Energy demand
What would be the resulting total energy demand and energy mix across different sources of primary energy e.g. coal/ oil/ gas/ nuclear/renewables (sub‐categories)?
How does this develop over time assuming supply/end‐use efficiency improvements?
What factors are used for energy conversion efficiencies of each source category and for end‐use efficiency in each category over time?
Pulp and paper - final energy consumption
ETP 2017 2025/30/35/40/45/50/55/60 〇 PJ
ETP2017_ind
ustry_summary.
xlsx
CO2 emission
Direct CO2 emissions
ETP 2017 2025/30/35/40/45/50/55/60 〇 GtCO2
ETP2017_sce
nario_summary.
xlsx
Predictions on production and sales
Production of pulp, paper and paperboard ETP 2017 2025 〇
Mt pulp, Mt
paper
p.83,
Figure2.29
Product mix of pulp production by region and scenario
ETP 2017 2060 〇 Mt pulp/year Figure 4.28
55
Sector Parameters
Explanation in TCFD Technical Supplement
“The Use of Scenario Analysis in Disclosure of Climate-Related Risks
and Opportunities”
IEA datasets Source Timeframe
Country/region
Unit Corresponding
page Global Several areas
Japan
Energy mix of pulp and paper production and CO2 intensity
ETP 2017 2030/60 〇
energy
mix: %
CO2
intensity :
tCO2/t paper
and
paperboard
p.203, Figure
4.29
56
Name Type Outline
Reference in the
TCFD
recommendations
Region Content
1 IPCC Special Report: The Physical
Scenario Basis Data
The fifth assessment report (IPCC AR5), which describes best‐estimate projections for future GHG emissions and climate impacts resulting from GHG concentration levels in the air based on four RCP pathways (RCP2.6, 4.5, 6.0, 8.5)
○ Global Overall
2 International Institute for Applied
Systems Analysis (IIASA) Tool
Compiled by International Institute for Applied Systems Analysis (IIASA) to provide online database of various information related to land use, energy, transition, and water, such as energy and GHG reduction strategy and climate policy compliant with the online database of various information related to land use, energy, transition, and water, such as energy and GHG reduction strategy and climate policy compliant with the 2 °C and IPCC scenarios
○ Global GHG
emissions
3 CLIPC Tool
Compiled by Climate Information Portal for Copernicus (CLIPC) to provide climate‐related information to a wide range of users, such as consultants, policy makers, scientists, as well as general citizens. CLIPC information includes data from satellite and in‐situ observations, climate models, data re‐analyses, and transformed data products enabling impact assessments and assessment of climate change
○ Global Overall
4 The Global Calculator Tool (UK
DECC, IEA, etc.) Tool
Provide a tool that allows users to visualize change of energy and mobility and physical risks (changes in temperature and precipitation) at a global level
TCFD
Knowledge Hub Global Overall
5 WRI Aqueduct Atlas (WRI) Tool A risk mapping tool useful for companies, investors, governments, and
other users to understand where and how water‐related risks and opportunities are occurring in the world
○ Global Water risks
6 WBCSD Water Tool (WBCSD) Tool
A multifunctional resource for identifying corporate water risks and opportunities that include a workbook, mapping function, and a Google Earth interface, allowing comparison of water availability, sanitation, population and biodiversity
○ Global Water risks
Table 2 Representative reports, etc. assessing impacts of physical risks
57
7 Water Risk Filter (WWF) Tool Provide a tool for assessing water risks TCFD
Knowledge Hub Global Water risks
8 MOSAICC (FAO) Tool A modeling system for agricultural impacts of climate change provided
by Food and Agriculture Organization of the United Nations ○ Global
Agricultural
resources
9 Global Agro‐Ecological Zones
(FAO) Tool
A system based on the GAEZ approach for evaluating agricultural resources and potential, allowing users to forecast change in crop and agricultural production due to climate change
○ Global Agricultural
resources
10 Climate Impact Programme (UK) Tool A database of climate‐related historical data and future projections of
climate change, which includes low, medium and high emission scenarios and is available for viewing through an online user interface and reports.
○ Global Overall
11 Assess your physical risks with
CRIS (Carbone 4) Report/Tool Provide an assessment tool for physical risks for investors
TCFD
Knowledge Hub Global Overall
12 ADVANCING TCFD GUIDANCE ON
PHYSICAL CLIMATE RISKS AND OPPORTUNITIES(EBRD)
Report Provide a qualitative assessment of impacts of physical risks by sector By
sector Overall
13
Synthesis Report on Observations, Projections and Impact Assessments of Climate Change, 2018 (The Ministry of the Environment, the Ministry of Education, Culture, Sports, Science and Technology, and the Japan Meteorological Agency, etc.)
Report
Published jointly by the Ministry of the Environment, the Ministry of Education, Culture, Sports, Science and Technology, the Japan Meteorological Agency, etc. to provide information, such as the current status and future forecast of climate change and its impacts on temperature, precipitation, and sea surface level
Japan Overall
14 Climate Strategy Assessments for
the U.S. Electric Power Industry (Ceres)
Report Describe physical risks in the energy industry TCFD
Knowledge Hub
Energy
industry Overall
58
b) Quantitative or qualitative in scenario analysis
The TCFD recommendations explain the level of quantitative disclosure in general
scenario analysis.
The Task Force believes that all organizations exposed to climate‐related risks should
consider (1) using scenario analysis to help inform their strategic and financial planning
processes and (2) disclosing how resilient their strategies are to a range of plausible
climate‐related scenarios. The Task Force recognizes that, for many organizations,
scenario analysis is or would be a largely qualitative exercise. However, organizations
with more significant exposure to transition risk and/or physical risk should undertake
more rigorous qualitative and, if relevant, quantitative scenario analysis with respect to
key drivers and trends that affect their operations.
(…)
For an organization in the initial stages of implementing scenario analysis or with
limited exposure to climate‐related issues, the Task Force recommends disclosing how
resilient, qualitatively or directionally, the organization’s strategy and financial plans
may be to a range of relevant climate change scenarios. This information helps
investors, lenders, insurance underwriters, and other stakeholders understand the
robustness of an organization’s forward‐looking strategy and financial plans across a
range of possible future states.
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 27‐28.
Feedback obtained from financial institutions says that “we do not require an
elaborate scenario analysis but use it to check how organizations see climate change
risks and opportunities and manage their businesses.”
When conducting qualitative scenario analysis, a possible way is to describe the
impacts of climate change not in absolute values but on a relative scale, such as large,
medium, and small.
59
Case example 8: Example of a company conducting qualitative scenario
analysis
Mitsubishi Corporation presents its awareness of the business environment and
related policies, and initiatives based on its global demand forecast – the trajectory
forecast for demand change, expressed in five levels, from the present until 2030
– under different climate scenarios including those in the IEA’s World Energy
Outlook (WEO) and Energy Technology Perspectives (ETP).
Source: Mitsubishi Corporation, “ESG DATABOOK 2018,” page 30‐31.
60
c) Describing resilience
The TCFD recommendations require the following disclosures to describe the
organization’s resilience.
D. Scenario Analysis and Climate‐Related Issues
4. Applying Scenario Analysis
(abbreviated)
Figure 8 Disclosure Considerations for Non‐Financial Organizations
Organizations with more significant exposure to climate‐related issues
should consider disclosing key aspects of their scenario analysis, such as
those described below.
(abbreviated)
4. Information about the resiliency of the organization’s strategy,
including strategic performance implications under the various
scenarios considered, potential qualitative or directional implications
for the organization’s value chain, capital allocation decisions,
research and development focus, and potential material financial
implications for the organization’s operating results and/or financial
position
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 28.
Resilience disclosures describe the organization’s business continuity in different
future scenarios presented in scenario analysis.
Examples of resilience disclosures include identifying medium‐ and long‐term risks
(transition risks and physical risks) and opportunities and describing the status of
management and efforts to respond to such risks and opportunities.
61
E. Risk Management
The TCFD recommendations recommend the following disclosures under Risk
Management.
Risk Management: Disclose how the organization identifies, assesses, and manages
climate‐related risks.
Recommended
Disclosure a)
Describe the
organization’s
processes for
identifying and
assessing climate‐
related risks
Guidance for All Sectors
Organizations should describe their risk management processes
for identifying and assessing climate‐related risks. An important
aspect of this description is how organizations determine the
relative significance of climate‐related risks in relation to other
risks.
Organizations should describe whether they consider existing
and emerging regulatory requirements related to climate
change (e.g. limits on emissions) as well as other relevant
factors considered.
Organizations should also consider the following :
- processes for assessing the potential size and scope of
identified climate‐related risks
- definitions of risk terminology used or references to existing
risk classification frameworks used
Recommended
Disclosure b)
Describe the
organization’s
processes for
managing climate‐
related risks
Guidance for All Sectors
Organizations should describe their processes for managing
climate‐related risks, including how they make decisions to
mitigate, transfer, accept, or control those risks. In addition,
organizations should describe their processes for prioritizing
climate‐related risks, including how materiality determinations
are made within their organizations.
Recommended
Disclosure c)
Guidance for All Sectors
62
Describe how
processes for
identifying,
assessing, and
managing climate‐
related risks are
integrated into the
organization’s
overall risk
management.
Organizations should describe how their processes for
identifying, assessing, and managing climate‐related risks are
integrated into their overall risk management.
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 21‐22.
As for methods for grasping the relative materiality of climate‐related risks and their
prioritization, companies can conduct materiality assessment using a materiality
matrix14.
It is also effective to concretely present the organization’s management processes for
climate‐related risks using figures and written narratives (see Case example).
Case example 8: Describing management processes and systems for
climate‐related risks
Mitsubishi Corporation describes its processes and management systems for
assessing and identifying climate‐related risks using flow charts. The company has
also specified that the results of considerations are utilized in formulating
strategies and screening investment and loan proposals of individual businesses.
14 A method of comparing the relative materiality of climate‐related risks based on a two‐axis graph plotting out various sustainability issues, with one axis charting a scale of the importance of issues to stakeholders, and the other of significance to the organization.
63
Source: Mitsubishi Corporation, “ESG DATA BOOK 2018,” page 38.
64
F. Metrics and Targets
The TCFD recommendations recommend the following disclosures under Metrics and
Targets.
Metrics and Targets: Disclose the metrics and targets used to assess and manage
relevant climate‐related risks and opportunities where such information is material.
Recommended
Disclosure a)
Disclose the
metrics used by
the organization to
assess climate‐
related risks and
opportunities in
line with its
strategy and risk
management
process
Guidance for All Sectors
Organizations should consider including metrics on climate‐
related risks associated with water, energy, land use, and
waste management where relevant and applicable.
Where climate‐related issues are material, organizations
should consider describing whether and how related
performance metrics are incorporated into remuneration
policies
Where relevant, organizations should provide their internal
carbon prices as well as climate‐related opportunity metrics
such as revenue from products and services designed for a
lower‐carbon economy.
Metrics should be provided for historical periods to allow for
trend analysis. In addition, where not apparent, organizations
should provide a description of the methodologies used to
calculate or estimate climate‐related metrics.
Recommended
Disclosure b)
Disclose Scope 1,
Scope 2, and, if
appropriate, Scope
3 greenhouse gas
(GHG) emissions,
Guidance for All Sectors
Organizations should provide their Scope 1 and Scope 2 GHG
emissions and, if appropriate, Scope 3 GHG emissions and the
related risks.
GHG emissions should be calculated in line with the GHG
Protocol methodology to allow for aggregation and
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and the related
risks.
comparability across organizations and jurisdictions. As
appropriate, organizations should consider providing related,
generally accepted industry‐specific GHG efficiency ratios.
GHG emissions and associated metrics should be provided for
historical periods to allow for trend analysis. In addition, where
not apparent, organizations should provide a description of
the methodologies used to calculate or estimate the metrics
Recommended
Disclosure c)
Describe the
targets used by the
organization to
manage climate‐
related risks and
opportunities and
performance
against targets.
Guidance for All Sectors
Organizations should describe their key climate‐related targets
such as those related to GHG emissions, water usage, energy
usage, etc., in line with anticipated regulatory requirements or
market constraints or other goals. Other goals may include
efficiency or financial goals, financial loss tolerances, avoided
GHG emissions through the entire product life cycle, or net
revenue goals for products and services designed for a lower‐
carbon economy. In describing their targets, organizations
should consider including the following:
- whether the target is absolute or intensity based
- time frames over which the target applies
- base year from which progress is measured, and
- key performance indicators used to assess progress against
targets.
Where not apparent, organizations should provide a
description of the methodologies used to calculate targets and
measures
Source: “Final Report: Recommendations of the Task Force on Climate‐related Financial Disclosures (June 2017),” page 22‐23.
As for Metrics and Targets disclosures, the TCFD recommendations require
organizations not just to implement recommended disclosures but to use narratives for
disclosures to allow investors and other stakeholders to understand how such metrics
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and targets are linked to the organization’s value creation and that such metrics are
suited to the organization’s strategy.
A company implementing disclosure can deliver information more effectively to
investors and other stakeholders by clarifying the premises used in working out metrics
and setting targets.
We need to take note that while the TCFD recommendations require organizations to
disclose Scope 1, Scope 2, and Scope 3 GHG emissions, strictly speaking, each company
has different boundaries of assessment when calculating Scope 3 GHG emissions, and
therefore we cannot compare companies only by amounts of emissions15.
15 “Corporate Value Chain (Scope3) Accounting and Reporting Standard” includes the following information.
1.5 Scope of the standard (…) Use of this standard is intended to enable comparisons of a company’s GHG emissions over time. It is not designed to support comparisons between companies based on their scope3 emissions. Differences in reported emissions may be a result of differences in inventory methodology of differences in company size or structure. Additional measures are necessary to enable valid comparisons across companies. Such measures include consistency in methodology and data used to calculate the inventory, and reporting additional information such as intensity ratios or performance metrics.
(Source) GREENHOUSE GAS PROTOCOL “Corporate Value Chain (Scope3) Accounting and Reporting Standard”
67
Column 4 Method for assessing and disclosing GHG emissions reduction
contribution through the global value chain
The metrics of the TCFD recommendations include “avoided GHG emissions
through the entire product life cycle”. Disclosing GHG emission reductions in the
use phase of products and services, not GHG emissions of a single company, allows
the company to demonstrate how much it contributes to reducing GHG emissions
globally through its products and services.
For methods of quantifying contribution to the GHG emission reductions
(avoided emissions), the following materials will be useful as references.
1) Guidelines for Quantifying GHG emission reductions of goods or services
through Global Value Chain (Ministry of Economy, Trade and Industry)
The guidelines designed to present fundamental principles and framework for
organizations for quantifying the reduction of GHG emissions in each phase of
the life cycle of products and services (i.e. from the raw materials procurement
phase to the manufacturing phase, use phase, and disposal phase).
The guidelines provide descriptions of the definitions of avoided emissions,
steps for quantifying them, and methods for reporting the results of calculation
and others.
2) “Contributing to Avoided Emissions through the Global Value Chain — A
new approach to climate change measures by private sectors (GVC Concept
Book)” (KEIDANREN (Japan Business Federation))
The book presents the idea and significance of contributing to GHG emissions
reductions through the Global Value Chain (GVC) with case examples of
“visualizing” such contributions by various industries and companies.
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G. Disclosure Methods for Companies with Different
Business Models
Companies with multiple different business models have multiple business domains
with different characteristics. For such companies, the materiality of climate change and
the business strategy are different from business to business. Accordingly, the point at
issue when implementing company‐wide disclosure is for which business and to what
extent they should describe a strategy.
Such companies can start by identifying climate‐related risks and opportunities for
individual business models and subsequently examine the potential impacts on the
company as a whole based on the current or future revenues and the magnitude of the
materiality of climate change.
In addition, if companies expect future expansion of business scale in a field which is
currently a small business, companies should implement disclosure with their future
business portfolios in mind by focusing their explanation on such business.
H. Steps for Implementing the TCFD Recommendations at
Mid‐cap and Small‐ and Medium‐sized Companies
The TCFD recommendations recommend all companies, regardless of size, to
implement disclosure related to Governance and Risk Management in their financial
filings. For disclosures related to the Strategy and Metrics and Targets, the Task Force
recommends non‐financial companies that have more than one billion U.S. dollar
equivalent (USDE) in annual revenue to consider disclosing such information in other
reports when the information is not deemed material and not included in financial filings.
In the meantime, implementing disclosure in accordance with the TCFD
recommendations is a large burden for mid‐cap and small‐ and medium‐sized
companies, and it is difficult to require them to implement disclosure on all
recommended disclosure items immediately. Therefore, it is desired that mid‐cap and
small‐ and medium‐sized companies, in particular, start disclosing information that is
manageable first and expand the coverage of disclosure in stages.
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There are cases in which mid‐cap and small‐ and medium‐sized companies are
required to disclose their GHG emissions as part of efforts their large company
customers for reducing GHG emissions throughout the supply chain. Considering this,
mid‐cap and small‐ and medium‐sized companies can draw attention from large
companies that seek to reduce GHG emissions throughout the supply chain by disclosing
the organization’s efforts for reducing GHG emissions and increase their business
opportunities.
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Chapter III Sector‐Specific Recommended
Disclosures
A. Objectives of Sector‐Specific Disclosure Guidance
Chapter II explains common matters for all industrial sectors concerning four thematic
areas that the Task Force recommends to disclose: Governance, Strategy, Risk
Management, and Metrics and Targets. In the case of disclosure of Strategy or Metrics
and Targets, however, different sectors have different climate‐related risks and
opportunities, which may also lead to difference in how strategies should be presented
and what metrics and targets should be used to measure them.
The TCFD recommendations include sector‐specific supplemental guidance for
Strategy and Metrics and Targets. For the Strategy, there is a guidance covering the two
categories: the financial sector and non‐financial groups. For the Metrics and Targets,
the non‐financial groups are further categorized into four sectors: Energy,
Transportation, Materials and Buildings, and Agriculture, Food, and Forest Products.
In addition, the TCFD recommendations mention “Key Issues considered and Areas
for Further Work” by saying that “the Task Force encourages further research and
analysis by sector and industry experts to increase organizations’ understanding of
climate‐related risks and opportunities.” This positions the guidance for the sector‐
specific disclosure as a remaining issue.
Investors and other stakeholders require information on companies’ ability to
respond to change in their business environments caused by climate change. This means
that companies should specify how companies respond to those changes and how each
company’s business activity affects climate change. In particular, it is important to clarify
specific contributions leading to resolution of domestic and overseas issues and
demonstrate that a company is sustainable even in a changing business environment.
Therefore, this chapter focuses on effective disclosure in each industrial sector for
demonstrating a company’s contribution to climate change issues.
When implementing disclosure in accordance with the recommended disclosures
proposed in this chapter, companies should clarify financial impacts of their efforts for
reducing GHG emissions – e.g. reduction of energy costs, increase in revenues from the
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sale of goods and services that can contribute to resolving climate‐related issues – as
the TCFD recommendations require.
Recommended disclosures explained below are not presented as “tick‐boxes.” Each
disclosure item presented is an example of recommended disclosure for companies if
climate change could have significant impacts on their business models. On the other
hand, such disclosures by companies will facilitate dialogue with investors and other
stakeholders, deepening their understanding of industrial efforts and contributions to
climate change issues.
The recommended disclosures include the following eight efforts, which are divided
into the manufacturing and use phases of products and others. Figure 4 shows the
relationship between the value chain of corporate activities and the recommended
disclosures. Among these, the Guidance explains particularly about efforts regarded as
important for each sector.
The recommended disclosures
Figure 5 shows the relationship between the recommended disclosure item and
covered sectors.
Note: Industries shown in brackets are provided with sector‐specific guidance. The
energy industry has a value chain structure different from that of other manufacturing
industries, which makes it important for energy industry to work to reduce GHG
emissions through the entire value chain from the materials procurement phase to the
supply and use phases of energy. Therefore, the recommended disclosures for the
energy industry are presented separately from the following recommended disclosures
for other manufacturing industries.
72
16 Contribution to GHG emissions reduction through the value chain means the effect of replacing products or services with other products or services in their use phase in reducing GHG emissions.
(1) Efforts for reducing GHG emissions in the manufacturing phase
a) Efforts for reducing GHG emissions in the manufacturing process
b) Efforts for reducing GHG emissions in procurement
c) Efforts for development and dissemination of pioneering technologies to
reduce GHG emissions in the manufacturing phase
d) Efforts for reducing GHG emissions through recycling and resource
circulation
(2) Efforts for reducing GHG emissions in the use phase
a) Efforts for reducing GHG emissions from the use of products
b) Efforts for contributing to GHG emissions reduction through the value
chain16
c) Efforts for development and dissemination of pioneering technologies to
reduce GHG emissions in the use phase
(3) Other efforts
a) Efforts for contributing to GHG emissions reduction through provision of
technologies
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Figure 5 Relation between value chain of corporate activities and the
recommended disclosures
Figure 6 The relationship between the recommended disclosure item and
covered sector
Procurement
Manufacturing
Use
Disposal
(Note) Sales phase of products and transportation phase is omitted in the figure.
Recycling
Value chain of corporate activities
Use of other products/services
Companies in other country/region
Avoided GHG emissionby provision of technologies
Avoided GHG emission by substitution of other products/services
R&D for manufacturing
phase(1)a
(1)b
R&D for use phase
(1)c
(1)d
(3)a
(2)a
(2)b
(2)c
AutosIron and Steel
Chemicals EnergyElectrical
and Electronics
(1) GHG emissionreductions in manufacturing phase
a) Manufacturing process ■ ■ ■
*explained independently
■
b) Procurement ■ ■
c) Pioneering technologies ■ ■
d) Recycling and resource circulation ■
(2) GHG emissionreductions in use phase
a) The use of products ■ ■
b) Through valuechain ■ ■ ■ ■
c) Pioneering technologies ■ ■ ■
(3) Other effortsa) Through provision of technologies ■
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Note that disclosure based on the TCFD recommendations is still at the early stage
around the world, and it is expected that disclosed contents will be improved as case
examples are accumulated. Under such circumstances, this guidance has been
developed as the first step to respond to the TCFD recommendations and assumes that
the contents will be revised or sectors will be added based on a review of the contents
and the sectors as disclosure practice makes progress in the future.
For the selection of industries with sector‐specific guidance, the Guidance covers
major sectors with the high GHG emissions in the manufacturing or use phase.
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B. Sector‐Specific Recommended Disclosures
1. Automobiles
The TCFD recommendations describe climate‐related risks and opportunities for
the Transportation group, including the automobile industry, as below. This section
provides supplemental guidance focusing on the automobile industry.
Description of Transportation group in the TCFD recommendations
2. Transportation Group
Transportation is critical to the
economy and drives a significant portion of
emissions and demand for energy through
the production and, more important, the
use phase. The industry is under increasing
policy and regulatory pressure to achieve
emission targets for the use phase.
Increasing constraints on emissions fuel
efficiency will continue to impact costs in
this group, particularly around investments
in innovation (new technologies and
efficiencies)17.
The Transportation Group,
therefore, will likely face financial challenges from two major drivers. First,
policymakers are setting stricter targets for emissions and fuel efficiency from
transportation carriers. Second, new technology around low‐emission/fuel‐efficient
carriers (e.g., electric cars) is creating a shift in the competitive and investment
landscape. New technological innovations and new market entrants can weaken
companies’ market position, resulting in lower revenues, higher costs, and narrower
margins. The effects of these two drivers may be compounded by the length of
product cycles for transportation products, such as cars and trucks, and especially for
17 Moody’s Global Credit Research, “Moody’s: Auto sector faces rising credit risks due to carbon transition.” September 20, 2016.
Figure11 Transportation
76
air and rail and marine equipment. As with the Energy Group, investments in long‐lived
assets (e.g., manufacturing facilities, airplanes, ships) and longer planning horizons are
relevant factors that must be taken into account when considering the climate‐related
risks and opportunities.
Consequently, disclosures should focus on qualitative and quantitative assessments
and potential impacts of the following:
・ financial risks around current plant and equipment, such as potential early write‐
offs of equipment and R&D investments or early phasing out of current products
due to policy constraints or shifts or the emergence of new technology;
・ investments in research and development of new technologies and potential
shifts in demand for various types of transportation carriers; and
・ opportunities to use new technologies to address lower‐emissions standards and
increased fuel‐efficiency requirements, including transport vehicles (cars, ships,
planes, rail) that run on a range of traditional and alternative fuels.
Source: “Implementing the Recommendations of the Task Force on Climate‐related
Financial Disclosures” (June 2017) P.56
In the automobile industry, the number of vehicles sold is expected to continue to
increase primarily in emerging countries. On the other hand, the improvement of
environmental performance of vehicles is required around the world more than ever
through severer regulations on fuel consumption. In recent years, the industry has also
faced the wave of technological innovation called CASE18, which requires innovation that
would significantly change the existing business models.
In particular, one of the new possibilities expected of automobiles is to actively
contribute to global efforts to combat climate change.
From the perspective of climate change, because use phase of vehicles emits the
largest amount of GHG in the automobile lifecycle, it is possible to demonstrate
contribution to climate change measures effectively by describing efforts for developing
next‐generation vehicles (HV, EV, FCV, etc.) or efforts for reducing emissions through
“Well‐to‐Wheel” as a strategy to reduce emissions.
18 Connectivity, Autonomous, Shared and Electric
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(1) Efforts for reducing GHG emissions in the manufacturing phase
Efforts for reducing GHG emissions in the manufacturing process
In the case of developing automobiles with high environmental performance like EV,
more GHG may be emitted from the manufacturing of vehicles than in the case of
conventional vehicles. Therefore, it is important to reduce GHG emissions in the
manufacturing phase as well as in the use phase.
(Example disclosures)
Targets and results of GHG emissions per vehicle manufactured
In addition, it is important to assess environmental impacts through the entire
automobile lifecycle from the design stage of vehicles and reflect the results in design
planning as it leads to reducing GHG emissions through the entire lifecycle, including the
manufacturing phase as well as the use and disposal phases.
Efforts for reducing GHG emissions in procurement
Efforts for reducing GHG emissions from suppliers are important in reducing GHG
emissions in procurement phase because the automobile industry consists of a large
number of suppliers.
(Example disclosures)
Establishment of a green procurement guideline
Implementation of a system to manage GHG emissions from suppliers
(2) Efforts for reducing GHG emissions in the use phase
Efforts for reducing GHG emissions from the use of products
Given the policy trend of national governments (fuel consumption regulations, etc.)
and the increasing consumer awareness of environmental issues, efforts for reducing
emissions from use phase, which accounts for the major part of GHG emissions in the
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automobile lifecycle, are most important in presenting strategy to reduce GHG
emissions in the automobile industry.
(Example disclosures)
Medium‐ and long‐term targets and results related to GHG emissions (or fuel
consumption) from average new vehicle
In order to show the company’s technological level compared with the world or
industry average, it is effective to refer benchmark values. It is also important to provide
a comparison with benchmark values for each major market because consumer needs
differ from market to market.
(Reference) An example of comparison of average fuel consumption of companies in
Europe
ICCT (the International Council on Clean Energy Transportation) calculates the
average fuel consumption of passenger vehicles sold in a given year by automaker using
data compiled by the European Environment Agency. The average fuel consumption
depends on not only fuel economy performance of each vehicle model but also the sales
mix of vehicles, and the average fuel consumption of vehicles of each automaker is
compared by average vehicle weight class.
79
Source: ICCT (the International Council on Clean energy Transportation), “CO2
emissions from new passenger cars in the EU: Car manufacturers’ performance in
2017”
Efforts for contributing to GHG emissions reduction through the value chain
It is also important to present the amount of avoided GHG emissions by those vehicle
models because the introduction of energy‐efficient vehicles is expected to contribute
to GHG emissions reduction by replacing conventional vehicles.
In addition, efforts are underway to contribute to reducing GHG emissions by efficient
energy management through the use of EVs.
It is important to demonstrate the amount of avoided GHG emissions achieved
through those efforts.
(Example disclosures)
Amount of avoided GHG emissions through the improvement of vehicle
energy efficiency, etc.
80
Efforts for development and dissemination of emerging technologies to reduce GHG
emissions in the use phase
In order to present strategy to reduce GHG emissions in the use phase, it is also
effective to present efforts for the development and dissemination of emerging
technologies particularly related to vehicle models that contribute to reducing GHG
emissions among the company’s products. Since there are various vehicle models that
contribute to reducing GHG emissions, including hybrid vehicles, electric vehicles (EV),
and fuel cell vehicles (FCV), it is necessary to present what vehicle models will be
developed to contribute to reducing GHG emissions in addition to each company’s
competition strategy.
(Example disclosures)
Definition of vehicle models that contribute to reducing GHG emissions
Specific efforts for technological development and future goals (the number
of vehicles sold or share)
In the case of zero‐emission vehicles (ZEV) including EV and FCV, GHG is not emitted
from use phase but emitted in the phases of mining, manufacturing, and supply of fuel.
Therefore, in order to present ZEV’s contribution to GHG emission reduction in its
lifecycle, it is effective to compare GHG emissions from the perspective of “Well‐to‐
Wheel.”
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2. Iron and Steel
The TCFD recommendations describe climate‐related risks and opportunities for
the Materials and Buildings group including the iron & steel industry as below. This
section provides supplemental guidance focusing on the iron & steel industry.
Description of Materials and Buildings group in the TCFD recommendations
3. Materials and Buildings Group
The Materials and Buildings Group
includes, but is not limited to, industries listed
in Figure 12.
Materials and Buildings Group
organizations are typically capital intensive,
require high investments in plants, equipment,
and buildings that are (relatively) fixed in terms
of location, and dependent on sources of raw
and refined materials. This may reduce the
flexibility of organizations in this group to
adapt to risks of climate change.
Many of this group’s activities result in
financial exposures around high GHG emissions and high energy consumption.
Furthermore, a number of industries in this group are dependent on water availability
and/or vulnerable to the effects of acute or chronic physical risks from weather events.
Since the group is capital intensive and the plants and facilities have a long life span,
accelerated R&DDD (research, development, demonstration, and deployment) is
critically important. Thus, disclosures relating to R&DDD plans and progress are
valuable to see the current and future situation and risks of organizations in the group.
Consequently, disclosures should focus on qualitative and quantitative
assessments and potential impacts of the following:
Stricter constraints on emissions and/or pricing carbon emissions and
related impact on costs.
Figure 12 Materials and Buildings
82
The construction materials and real estate sectors should assess risks
related to the increasing frequency and severity of acute weather events or
increasing water scarcity that impact their operating environment.
Opportunities for products (or services) that improve efficiency, reduce
energy use, and support closed‐loop product solutions.
Source: “Implementing the Recommendations of the Task Force on Climate‐related
Financial Disclosures” (June 2017) P.59
In the iron & steel industry, because the largest amount of GHG is emitted in the
manufacturing phase, efforts have been promoted to reduce GHG emissions through
the improvement of efficiency in the manufacturing phase. Steel manufacturing
technologies can be categorized into blast furnaces and electric furnaces. Since raw
materials for electric furnaces are scrap steel that was manufactured by the blast
furnace process and used as products, the World Steel Association (worldsteel)
developed and defined as ISO 20915 the idea of GHG emissions that regards the blast
furnace method and the electric furnace method as a single steel material recycling
system.
For blast furnaces, hydrogen reduction iron manufacturing and other innovative
technologies are being developed as fundamental technologies to reduce GHG
emissions. It is also important to disclose climate change measures through such efforts.
(1) Efforts for reducing GHG emissions in the manufacturing phase
Efforts for reducing GHG emissions in the manufacturing process
In the iron & steel lifecycle, the manufacturing process emits the largest amount of
GHG. As iron & steel is expected to be demanded continuously worldwide, a strategy
that companies in the iron & steel industry can take is to improve efficiency of the iron
& steel manufacturing process. Since the effect of improved operation techniques and
improvement from capital investment at each company is reflected in intensity (GHG
emissions per unit of output), it is preferable to disclose information on an intensity
basis.
83
In understanding the numerical value quantified on an intensity basis, it is necessary
to take into account the setting of boundaries, ratio of blast furnaces/electric furnaces,
etc. of each company.
(Example disclosures)
Efforts for improving efficiency in the manufacturing process (energy
intensity)
In order to show the company’s technological level compared with the world or
industry average, it is also effective to refer benchmark values.
Efforts for development and dissemination of emerging technologies to reduce GHG
emissions in the manufacturing phase
In order to present a strategy related to future climate change measures, it is useful
to present efforts for developing emerging technologies.
(Example disclosures)
Progress in or prospect for efforts for dramatically reducing GHG emissions in
the manufacturing phase (e.g., development of hydrogen reduction iron
manufacturing technologies)
(Reference) COURSE50 technology
A project designed to develop technologies to reduce CO2 emissions by approx. 30%
by reducing CO2 emissions through hydrogen reduction in blast furnaces and by
separating and collecting CO2 through a separation system. The project aims to establish
technologies by around 2030 and practically utilize and diffuse such technologies by
2050.
Efforts for resource circulation through recycling
In the iron & steel industry, efforts have been promoted for resource circulation
through recycling used products and byproducts generated from manufacturing process
as well as utilizing waste plastics, contributing to indirectly reducing GHG emissions. It is
84
important, therefore, to demonstrate contributions to reducing GHG emissions through
those recycling efforts.
(Example disclosures)
Material flow of manufacturing processes
Recycling rate of byproducts generated from manufacturing process
Efforts for substituting coke through the use of waste plastic and utilizing
waste plastic as a fuel and chemical feedstock
(2) Efforts for reducing GHG emissions in the use phase
Efforts for contributing to GHG emissions reduction through the value chain
In addition to the reduction of GHG emissions at manufacturing phase, it is also
important to present a strategy for development and dissemination of products which
contribute to lighter weight or longer life of final products as well as improved energy
efficiency.
(Example disclosures)
Introduction of products which contribute to reducing GHG emissions
Avoided emissions by each product
(3) Other efforts
Efforts for contribution to reducing GHG emissions through provision of technologies
Based on the recognition that transfer of energy‐efficiency technologies to overseas
is effective in reducing GHG emissions at a global level, the iron and steel industry has
been actively disseminating excellent energy‐efficiency technologies to developing
countries in various ways. Therefore, it is important to disclose such efforts.
(Example disclosures)
Amount of contribution to reducing GHG emissions through provision of
technologies
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3. Chemicals
The TCFD recommendations describe risks and opportunities for the Materials and
Buildings Group including the chemical industry as below. This section provides
supplemental guidance focusing on the chemical industry.
Description of Materials and Buildings Group in TCFD recommendations (Reprint)
3. Materials and Buildings Group
The Materials and Buildings Group
includes, but is not limited to, industries listed
in Figure 12.
Materials and Buildings Group
organizations are typically capital intensive,
require high investments in plants, equipment,
and buildings that are (relatively) fixed in terms
of location, and dependent on sources of raw
and refined materials. This may reduce the
flexibility of organizations in this group to
adapt to risks of climate change.
Many of this group’s activities result in financial exposures around high GHG
emissions and high energy consumption. Furthermore, a number of industries in this
group are dependent on water availability and/or vulnerable to the effects of acute or
chronic physical risks from weather events.
Since the group is capital intensive and the plants and facilities have a long life span,
accelerated R&DDD (research, development, demonstration, and deployment) is
critically important. Thus, disclosures relating to R&DDD plans and progress are
valuable to see the current and future situation and risks of organizations in the group.
Consequently, disclosures should focus on qualitative and quantitative
assessments and potential impacts of the following:
Stricter constraints on emissions and/or pricing carbon emissions and
related impact on costs.
Figure 12 Materials and Buildings
86
The construction materials and real estate sectors should assess risks
related to the increasing frequency and severity of acute weather events or
increasing water scarcity that impact their operating environment.
Opportunities for products (or services) that improve efficiency, reduce
energy use, and support closed‐loop product solutions.
Source: “Implementing the Recommendations of the Task Force on Climate‐related
Financial Disclosures” (June 2017) P.59
In the chemical industry, companies conduct a wide range of business activities, and
the industry has a very complicated structure. Manufacturing processes in the chemical
industry can be divided into those of manufacturing basic chemicals including ethylene
and propylene by using naphtha, etc. as raw materials; those of manufacturing
intermediate chemicals including plastics by using basic chemicals as raw materials; and
those of manufacturing end chemicals such as plastic molding from intermediate
chemicals. The processes of manufacturing basic chemicals generate a large amount of
GHG emissions in cracking naphtha, etc., and generally emit more GHG emissions than
the processes of manufacturing intermediate chemicals and end chemicals.
Since the chemical industry emits a large amount of GHG emissions in the
manufacturing phase as described above, efforts for reducing GHG emissions in the
manufacturing processes are important in the industry. In addition, chemical products
are made mainly from fossil resources. Therefore, the industry has prospects for
achieving a GHG emissions reduction by working on the diversification of raw materials
by using biomass, etc. as raw materials as a medium‐ and long‐term issue.
Many chemical products are intermediate materials and can contribute to
reducing GHG emissions through use phase of the final products, such as automobiles
and home electronics. In the chemical industry, a wide range of products are
produced and used for diverse applications in the use phase, contributing to reducing
GHG emissions. Accordingly, it is important to describe business opportunities by
identifying such products and demonstrating their applications, the mechanism of
GHG emissions reduction (on what principles they lead to a reduction in emissions),
and the amount of avoided GHG emissions.
87
(1) Efforts for reducing GHG emissions in the manufacturing phase
Efforts for reducing GHG emissions in the manufacturing process
The chemical industry emits a large amount of GHG in the manufacturing phase.
Therefore, a strategy that a company can take to reduce GHG emissions includes
improving the efficiency of manufacturing processes and shifting to high value‐added
products with low GHG emissions. The chemical industry handles a wide variety of
products, and it is difficult to assess such efforts using a single type of metrics.
Meanwhile, an example of possible metrics related to energy intensity is energy
consumption per total production, revenues, and profit. Another example is the use of
total GHG emissions.
However, such metrics are affected by changes in product mix and production volume.
Therefore, it is important that the disclosures include descriptions of the reasons for
such changes.
(Example disclosures)
Efforts for improving energy intensity and reducing total GHG emissions (e.g.
efforts for energy‐saving through conversion of production system,
utilization of waste heat, fuel transition for private power generation)
Efforts for reducing GHG emissions in procurement
Some types of chemical products may emit more GHG emissions in the procurement
phase than in the manufacturing phase. In such a case, it is important to disclose efforts
for reducing GHG emissions in procurement.
(Example disclosures)
Targets of reducing energy intensity in the logistics
Efforts for supply chain management (establishment of green procurement
policy, etc.)
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Efforts for development and dissemination of emerging technologies to reduce GHG
emissions in the manufacturing phase
On a medium‐ to long‐term basis, it is important to develop new manufacturing
methods using innovative technologies that will replace conventional manufacturing
methods. When a company is working on the development of advanced technologies
for reducing GHG emissions in the chemical product life cycle, it is important to describe
such efforts and GHG emissions reduction potential.
(Example disclosures)
Efforts for development of emerging technologies (e.g., development of
membrane separation process, conversion of CO2 to raw materials (CCU19),
use of biomass as raw materials, use of natural gas, use of methane hydrate
as resources)
Expected effect of technology development in GHG reduction
(2) Efforts for reducing GHG emissions in the use phase
Efforts for contribution to GHG reduction through the value chain
Many of chemical products are intermediate materials, and a wide variety of products
are manufactured in this industry. Therefore, a strategy that a company can take
includes supplying products that contribute to the resolution of climate change issues in
the use phase.
(Example disclosures)
Setting method of environmentally conscious products and their contribution
to sales
Amount of avoided GHG emissions through environmentally conscious
products
19 Carbon Capture and Utilization
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Efforts for development and dissemination of emerging technologies to reduce GHG
emissions in the use phase
When a company develops environmentally conscious products (e.g. high thermal
insulation materials and high‐strength lightweight materials), it is important to describe
their research and development specifically. In addition, in order for investors to
understand environmentally conscious products better, it is useful to explain how those
products reduce GHG emissions (on what principles they lead to a reduction in
emissions).
(Example disclosures)
Efforts for and the amount of investment in research and development of
environmentally conscious products
Mechanism of reducing GHG emissions through environmentally conscious
products
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4. Electrical and Electronic
Companies in the electrical and electronic industry can be roughly categorized into
device companies and assembly companies. Device companies are those that
primarily manufacture semiconductors and electronic components that are built into
electronic devices but are not used on independently. Therefore, it is important for
device companies to reduce GHG emissions in the manufacturing phase. Assembly
companies are companies that manufacture final products based on various parts,
and because many of their products emit a large amount of GHG emissions from
energy consumption in the use phase, it is important to demonstrate a contribution
to climate change measures through reducing emissions in the use phase. Since some
types of products consume a relatively small amount of energy in the use phase (e.g.,
cameras, audio devices), the reduction in GHG emissions is more important in the
manufacturing phase in such a case.
In addition, because there are a wider range of products in the electrical and
electronic industry, both device and assembly companies recommend to identify
products or technologies that contribute to reducing GHG emissions in the use phase
and describe their usage and how they contribute to reducing emissions.
(1) Efforts for reducing GHG emissions in the manufacturing phase
Efforts for reducing GHG emissions in the manufacturing process
In the case of device companies or assembly companies that primarily manufacture
products with lower energy consumption in the use phase, their products do not emit
GHG emissions in the use phase (or emit a smaller amount of GHG emissions than in the
manufacturing phase). Therefore, it is important to describe efforts for reducing
emissions in the manufacturing phase.
(Example disclosures)
Efforts for improving manufacturing process efficiency (energy intensity)
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(2) Efforts for reducing GHG emissions in the use phase
Efforts for reducing GHG emissions from the use of products
In the case of assembly companies that primarily manufacture products with larger
energy consumption in the use phase, it is important to disclose specific efforts for
reducing GHG emissions in the use phase.
In addition, because electrical and electronic products are improving their
performance year after year, it is important to demonstrate that such products are
offering greater performance as well as greater energy efficiencies.
(Example disclosures)
Efforts for improving energy efficiencies of primary products
(e.g. improvement of energy efficiencies during the use of products)
Efforts for contributing to GHG reduction through the value chain
Since the electrical and electronic industry produces a wide range of products and can
contribute to reducing GHG emissions through various products, it is important to
identify products or technologies that contribute to reducing GHG emissions and
disclose the amount of their contribution to reduction. In particular, in the case of
renewable energy facilities or other products which does not emit GHG, it is effective to
disclose the avoided GHG emissions.
In addition, if each company defines environmentally conscious products, it is
effective to describe those definitions and disclose the sales amounts of
environmentally conscious products (in total or per product).
(Example disclosures)
Introduction of products and services that contribute to reducing GHG
emissions
Amount of avoided GHG emissions through products and services
Efforts for development and dissemination of emerging technologies to reduce GHG
emissions in the use phase
It is also important to describe efforts for technological development for reducing
GHG emissions in the product use phase. Specific efforts may include technological
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development of energy management using IoT solutions as well as technological
development related to energy efficiency for each product.
(Example disclosures)
Technological development for improving energy efficiency of products
Technological development of IoT solution leading to reduction in GHG
emissions (energy management, etc)
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5. Energy
The TCFD recommendations describe risks and opportunities for the Energy Group as
below. This section provides supplemental guidance focusing on the Energy Group.
Description of the Energy Group in TCFD recommendations
1. Energy Group
Energy is a critical element in the
economy, serving as a primary or necessary input
in most economic activities. This group comprises
organizations extracting, processing, producing,
and distributing fossil fuels or electric energy to
other sectors of the economy. It includes, but is not limited to, industries listed in
Figure 10.
While many climate‐related issues impact the Energy Group, organizations in
this group should consider providing disclosures related to financial implications of
potential physical impacts (e.g., reliance on water in areas of high water stress, severe
storm/flood mitigations) and transition impacts (e.g., policy requirements, carbon
prices, new technology, changes in market demand) of climate‐related risks and
opportunities.
As fossil fuel and electricity providers, the organizations in this group generally
have significant financial exposure around transition issues related to GHG emissions
and, in many cases, are dependent on the availability of water. For example, a majority
of the current electricity supply comes from non‐renewable fossil fuel resources,
resulting in a significant exposure to transitions around global GHG emissions—either
directly through utility companies’ own energy use for production or indirectly through
combustion of fossil fuels20. Electric utilities, therefore, face significant transition risk
20 According to data compiled by the IEA, CO2 emissions from fuel combustion in the energy sector and its activities amounted to 32.2 Gt in 2015, which accounted for 60% of the total human‐induced GHG emissions. CO2 emissions from the electric utilities sector were 13.6Gt, which accounted for 42% of the total energy‐induced CO2 emissions and 25% of the total human‐induced GHG emissions. After taking these into consideration, the next important industry sector is the transportation sector, whose CO2 emissions amounted to 7.4Gt (23% of the total energy‐induced CO2 emissions and 14% of the total human‐induced GHG emissions). IEA, CO2 Emissions from Fuel Combustion: Highlights. 2015
Figure10 Energy Group
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(i.e., the financial risk arising from the changes in asset valuations caused by the
structural shift toward a low‐carbon energy system). This is because the utility sector’s
asset valuations are at risk from the disruptive impact of the policy, technology, and
portfolio changes that will occur over the next two to three decades as policies,
technology, and markets shift to a low‐carbon energy system.
In addition to GHG emissions, both hydroelectric power generation and
cooling for nuclear and nonnuclear power generation use large quantities of water21.
Physical risks affecting water supplies creates a potentially important exposure for this
industry.
Oil, gas, and coal extraction face similar transition risks as key suppliers to
electric utilities. These industries also rely on water to a significant degree22,23,24.
These characteristics make the Energy Group particularly sensitive to physical,
policy, or technological changes affecting fossil fuel demand, energy production and
usage, emission constraints, and water availability. The regulatory and competitive
landscape that surrounds electric utilities also differs significantly between
jurisdictions, thus making assessment of climate‐related risks very challenging.
As a result, both the transition risks and physical risks associated with climate
change may impact the operating costs and asset valuation of organizations engaged
in energy activities. In particular, organizations within the Energy Group are generally
capital intensive, require major financial investments in fixed assets and supply chain
management, and have longer business strategy/capital allocation planning horizons
relative to many other sectors—horizons that may be particularly affected by climate‐
related risks and opportunities. This requires careful assessment of climate‐related
risks and opportunities to inform decisions about future sustainability and profitability.
Transparent and decision‐useful climate‐related disclosures are crucial to fully
understand the impact of climate change on business strategy and financial plans in
energy activities. Consequently, disclosures should focus on qualitative and
quantitative assessments and potential impacts of the following:
21 Michelle T.H., van Vliet, et al. “Power‐generation system vulnerability and adaptation to changes in climate and water resources.” Nature Climate Change 6 (2016): 375‐380.
22 IPIECA, Water Resource Management in the Petroleum Industry. 2005.. 23 International Council on Mining and Metals (ICCM), In Brief: Water stewardship framework. London: International Council on Mining and Metals, 2014.
24 World Resources Institute (WRI), Water‐Energy Nexus: Business Risks and Rewards, Washington, DC: 2016.
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・ changes in compliance and operating costs, risks, or opportunities (e.g., older,
less‐efficient facilities or un‐exploitable fossil fuel reserves in the ground);
・ exposure to regulatory changes or changing consumer and investor
expectations (e.g., expansion of renewable energy in the mix of energy supply);
and
・ changes in investment strategies (e.g., opportunities for increased investment
in renewable energy, carbon‐capture technologies, and more efficient water
usage).
Source: “Implementing the Recommendations of the Task Force on Climate‐related
Financial Disclosures” (June 2017) P.52‐53
<Premises> National energy policy
Energy companies play a role in stable supply of energy for a country. In addition, the energy industry is exposed to geopolitical risks associated with the procurement of
resources, and the business activities of each company are integrated with national
energy policy. Therefore, it is preferable that the disclosures of energy companies
include descriptions of the strategy of each company based on the energy policy of each
country.
[Principle of energy policy in Japan]
Energy is infrastructure that supports every human activity, and a precondition for
the further development of Japan is to create an energy supply and demand structure
that can achieve a stable energy supply with a lower social burden. Based on this
principle, the cabinet approved the fifth strategic energy plan under the Basic Act on
Energy Policy in July 2018. The plan presents the basic direction of Japan’s energy
policy of making maximum efforts to achieve a low‐cost energy supply through the
improvement of economic efficiency on the premise of safety and with energy
security as the nation’s top priority, at the same time as promoting environmental
sustainability (3E plus S).
Japan is dependent on imports for the stable procurement of most of its energy
sources overseas. As a result, the country has a fundamental vulnerability that it has
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difficulty in securing resources sustainably. Since such vulnerability cannot be
eliminated simply by curbing energy consumption, Japan has made efforts to
diversify risks through developing alternative energy sources and securing domestic
energy sources.
Japan is prone to frequent natural disasters including large earthquakes, such as
the Great East Japan Earthquake, and frequent typhoons, and thus it is vital that the
country should establish a robust energy supply and demand structure that can
ensure a stable energy supply even at a time of crisis.
Each energy source has its own strengths and weaknesses in the supply chain and
no single energy source can support a stable and efficient energy supply and demand
structure. Therefore, it is necessary not to concentrate too much on a certain energy
source but to diversify energy sources. Japan needs to adopt its own energy policy
suited to the environment surrounding Japan, and it is important that the country
establish a stable energy supply and demand structure based on the basic principle
of achieving 3E plus S.
<The recommended disclosures>
Medium‐ and long‐term target setting and efforts for reducing GHG emissions
Energy companies are working to set medium‐ and long‐term targets appropriate for
their businesses, such as the electric power business, gas business, and petroleum
refinery business, while addressing climate change issues. They are doing this with the
aim of establishing a supply structure that can achieve a stable, low‐cost, and
environmentally friendly energy supply in a well‐balanced manner with security as a
major premise.
Electric utilities companies are actively contributing to environmental measures, such
as reduction of CO2 emissions intensity based on the 3E plus S principle, as well as
working on disclosure of information, such as composition of power sources. It is
important for them to continue to disclose their efforts for reducing GHG emissions on
the demand side through the promotion of introduction of renewable energy, etc.
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(Example disclosures)
Efforts for increasing the ratio of non‐fossil energy sources
Efforts for reducing CO2 emissions through the shift to high‐efficiency thermal
power generation
Oil companies are making efforts, such as advanced and effective utilization of oil and
introduction of renewable energy. It is important for them to disclose their efforts
related to the life cycle that includes the product consumption phase, such as measures
for reducing CO2 emissions in their manufacturing processes.
(Example disclosures)
Emissions and efforts in each process of or through the entire supply chain,
such as energy‐saving related to the manufacturing processes (oil refineries)
Efforts for introducing biomass fuels by giving consideration to sustainability
Gas companies are contributing to environmental measures through the promotion
of diffusion of natural gas that has superior environmental performance. It is important
for them to disclose efforts for reducing CO2 emissions through the value chain, from
manufacturing to use and consumption of city gas.
(Example disclosures)
Efforts for reducing CO2 emissions intensity and energy intensity in the
process of manufacturing city gas, etc.
Efforts for contributing to energy‐saving and reducing GHG emissions through
the promotion of diffusion and utilization of cogeneration systems and fuel
cells, etc.
Efforts for research and development
In many countries, most GHG emissions are related to energy use. Considering this, it
is vital to promote efforts for reducing GHG emissions related to energy use, regardless
of whether on the demand or supply side of energy.
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Accordingly, it is important for electric utilities companies, which are on the energy
supply side, to disclose efforts for research and development in the energy
manufacturing phase as well as efforts in various phases, such as transmission systems
and consumers.
(Example disclosures)
Principles and efforts related to the development of technologies that
contribute to lower carbon emissions, such as thermal‐power technology for
reducing environmental impacts, responses to the introduction of a large
quantity of renewable energy, and development of technologies for effective
energy utilization.
For oil and gas companies, it is important to disclose efforts related to research and
development on the following items.
(Example disclosures)
Principle and efforts related to research and development of improving the
efficiency of production facilities and products with superior fuel‐saving
performance, as well as the effect of improving efficiency through such
technologies [oil companies]
Principle and efforts related to the development of technologies for further
improving efficiency and low carbonization related to gas usage, such as
combustion technology and cogeneration [gas companies]
Efforts for research and development, such as hydrogen and methanation
technology for significant CO2 reduction [gas companies]
Efforts for encouraging actions to save energy and GHG emissions by customers
In order to rationalize the energy supply and demand structure of a country, it is
necessary to create an environment that can present diverse options to customers to
allow them to contribute to curbing GHG emissions based on rational decisions, in
addition to making supply‐side efforts. Accordingly, it is important for energy companies
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to disclose information on services designed to encourage customers to take actions to
save energy and GHG emissions under their own initiative.
(Example disclosures)
Efforts for reducing GHG emissions on the demand side by promoting
diffusion of high‐efficiency electrical equipment, etc. [electric utilities
companies]
Efforts related to products and services that contribute to energy‐saving in
the use phase of oil [oil companies]
Efforts related to smart energy networks and energy management systems
[gas companies]
Efforts for resource circulation and recycling
From the perspective of reducing environmental impacts, it is important to disclose
efforts for resource recycling, waste reduction, and water consumption reduction, etc.
Efforts for contributing to reducing GHG emissions through overseas business
Energy companies are actively engaged in overseas business by leveraging
technologies and know‐how cultivated through domestic businesses. Therefore, it is
important for them to disclose their efforts for contributing to reducing GHG emissions
overseas through their overseas energy supply business and consulting business on
energy‐efficiency technologies, etc.
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Chapter IV Conclusion
A. Significance of the Guidance
The Task Force’s discussions have previously been led mainly by the financial
authorities and financial industry players. However, it is necessary for non‐financial
companies not only to meet requirements of the financial authorities but also to actively
communicate their strengths to investors and other stakeholders, and for non‐financial
companies and investors and other stakeholders to have constructive dialogue to
deepen mutual understanding, in order to realize the virtuous cycle between the
environment and economic growth.
The TCFD recommendations are useful as a tool for dialogue between non‐financial
companies and investors and other stakeholders. Therefore, the guidance presents
commentaries on the TCFD recommendations and supplemental documents and sector‐
specific recommended disclosures to allow non‐financial companies to make effective
climate‐related financial disclosures in accordance with the TCFD recommendations.
It is expected that many companies will support the TCFD recommendations and
make better disclosures in accordance with this Guidance.
B. First try disclosures
On the other hand, disclosure in accordance with the TCFD recommendations
involves many points, especially scenario analysis, that require companies to make
careful examination in providing information [before starting disclosure]. As a result,
there may be cases where companies become too hesitant to make disclosures and to
support the TCFD recommendations. However, the TCFD has presented a illustrative
roadmap encouraging companies to start implementing disclosure on types of
information that are manageable, such as Governance and Risk Management, and
gradually move on to disclosures related to Strategy and Metrics and Targets over the
course of three years. As seen above, disclosure in accordance with the TCFD
recommendations should not necessarily be thorough from the start; rather, it is
important to start implementing disclosure and improve disclosures on a step‐by‐step
basis.
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C. For better disclosure
By having many companies start working on disclosure, the expertise of preparers and
best practices of disclosure will be accumulated. As a result, there will be more
“questions” that need to be explained in Chapter 2 of the Guidance and case examples
of disclosures that clarify such questions.
If more non‐financial companies disclose, it will be possible to improve the sector‐
specific recommended disclosures presented in Chapter 3 and to consider expanding
the industrial sectors. On a global level, the Sustainability Accounting Standards Board
(SASB) has presented sector‐specific sustainability metrics, while the World Business
Council for Sustainable Development (WBCSD) has started activities for sector‐specific
disclosures. As seen above, there have already been moves to work on sector‐specific
disclosure globally, and Japan is ready for actively contribute to such moves.
D. Future direction
It is expected that by providing settings for dialogue between the industry sector and
investors and other stakeholders to deepen discussions on better disclosures while
companies accumulate best practices of disclosure in accordance with the Guidance, it
will be possible to demonstrate quality case examples of disclosure that helps investors
and other stakeholders make better investment and loan decisions.
We will continue to discuss how to enhance case examples and best practices of
disclosure, improve sector‐specific guidance and enrich commentaries on the
“questions” presented in Chapter 2 toward further developing the Guidance in the
future.