Information Disclosure Based on TCFD Recommendations
Our primary area of business is the provision of system development and cloud services, and we recognize that it is a business model with low environmental impact. However, we regard environmental issues, such as climate change, as challenges that should be addressed by all organizations and also as a valuable opportunity. As a result, we are promoting initiatives to contribute to the realization of a sustainable society with a low environmental impact and to build a stable business foundation. In addition, we support the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and will disclose the results of our analysis and related information based on the four disclosure items.
Governance
Governance
We established the Sustainability Committee in April 2021. The Sustainability Committee consists of the Chief Executive Officer and Representative Director as the Chairperson, Executive Directors and Executive Officers, and acts under the guidance and supervision of the Board of Directors. The Committee establishes policies on sustainability issues, including climate change issues, and acts as a core body to ensure the continuity of company-wide activities.
The Committee meets once a quarter to discuss the identification, evaluation and progress of actions in response to risks and opportunities related to sustainability issues, including climate change issues, and reports the results to the Board of Directors. Among matters reported by the Sustainability Committee, important decision-making matters are further discussed by the Board of Directors for deliberation and resolution.
Strategy
Strategy
In order to identify and assess risks and opportunities arising from climate change, we conducted scenario analysis based on two patterns of assumptions, a decarbonized world and a world in which global-warming is progressing, and have identified impacts, confirmed levels of resilience, and examined countermeasures.
In our scenario analysis, we used the below 2°C scenario, which assumes that we will transition to decarbonization, and the 4°C scenario, where the current state of global warming will continue. We analyzed the impact on our business activities from both qualitative and quantitative perspectives for 2030 and 2050, and identified risks and opportunities as shown in the following table.
Assumed world view
| Below 2°C scenario | 4°C scenario | |
| World overview | Promotion of a transition to decarbonization resulting in significant changes in policies, regulations, and markets associated with such transition. It is based on the world view that the temperature increase from before the Industrial Revolution to 2100 will be less than 2°C. |
Only current policies and regulations are being considered, and global warming is expected to slowly become worse. It is based on the world view that the temperature increase from before the Industrial Revolution to 2100 will be Approx. 4°C. |
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Risks and opportunities where the impact will be significant |
Transition risks/opportunities | Physical risks/opportunities |
| Specific scenario |
・RCP2.6 (IPCC AR5) Scenario in which radiative forcing is maintained at 2.6 W/m2 in 2100 by limiting GHG emissions ・Net Zero Emissions by 2050 Scenario (IEA WEO 2022) Scenario based on the assumption that entire global emissions will reach net zero by 2050 ・Sustainable Development Scenario (IEA WEO 2019) Scenario based on the assumption that emissions in developed countries, China, and other countries will reach net zero by 2050, around 2060, and by 2070 at the latest respectively |
・RCP8.5 (IPCC AR5) Scenario where radiative forcing reaches 8.5 W/m2 in 2100 due to high greenhouse gas (GHG) emissions ・Stated Polices Scenario (IEA WEO 2022) Scenario that takes into consideration only the policies and regulations currently applied in each country |
List of identified and assessed risks and opportunities
| Definition of time periods |
Short-term: 0-3 years Medium-term: Up to 10 years (around 2030) Long-term: Anything longer than medium-term |
| Business impact assessment | Large: 50 million yen or more Medium: From 10 million yen to less than 50 million yen Small: Less than 10 million yen 〇: Areas considered to be affected based on qualitative analysis Δ: Areas considered to be only marginally affected based on qualitative analysis |
| Risk/Opportunity areas | Time period | Matters for consideration | 4°C | Below 2°C | Response measures | ||
| Transition risk | Policy regulation | Carbon price (carbon tax) |
Medium- to long-term | Increase in operating costs based on CO2 emissions from business activities | Small | Medium | ・LED lighting has already been installed at the head office and the Hakodate office. ・Hybrid cars have been adopted as company vehicles. ・We are promoting the use of data centers and public cloud services that take into consideration energy conservation and a reduction in environmental impact. |
| Energy conservation and renewable energy policies | Medium- to long-term | ・Increase in expenses for introduction of and switching to energy saving/renewable energy facilities ・Increase in office rent, etc. due to the promotion of ZEB ・Decrease in revenue in business areas requiring equipment and facilities (hardware) due to a shift to cloud services, etc. (software) |
Δ | 〇 | |||
| Technology | Advances in next-generation technologies | Medium- to long-term | ・Decrease in revenue resulting from a decrease in transactions with customers when artificial intelligence products and services, such as ChatGPT, become widespread due to the promotion of measures to reduce the labor force to reduce CO2 emissions ・Increase in capital investment when high-performance hardware, etc. that contributes to energy savings is developed to replace existing equipment ・Increase in costs to switch to energy-saving data centers, etc. |
Δ | 〇 | ・Promotion of data centers and public cloud services that conserve energy and reduce environmental impact. | |
| Market | Changes in energy costs | Medium- to long-term | *Increase in data center and office electricity costs due to increased use of renewable energy | Small | Small | ・Promotion of data centers and public cloud services that conserve energy and reduce environmental impact. | |
| Changes in customer behavior | Medium- to long-term | Decrease in revenue due to loss of customers resulting from failure to provide environmentally conscious services | Δ | 〇 | ・With the aim to contribute to the shift to cashless payments, we are promoting our payment services. ・By going paperless in the office, we will achieve a reduction of Approx. 80% in the 3 years from 2019. |
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| Physical risk | Acute | Intensification of extreme weather events | Short-term to long-term | Losses resulting from damage to business sites due to the intensification of extreme weather events, disruptions in the supply chain and the suspension of business | Medium to large | Medium | ・Creation of an environment where all employees can telework. |
| Transition opportunity | Market | Changes in customer behavior |
Medium- to long-term |
・Increase in demand for and sales of DX services and IT strategy support, which contribute to operational efficiency (energy saving) ・Increase in demand for and sales of payment services through further promotion of switching from paper to cashless payments ・Expansion of business related to control/management systems due to increase in demand for switching to in-house facilities and services leading to decarbonization |
Δ | 〇 | We are promoting our payments services with the am to contribute to the shift to cashless payments. |
| Physical opportunity | Acute | Intensification of extreme weather events | Short-term to long-term | Increase in demand for and sales of cloud backup services and associated security services | 〇 | Δ | Measures to expand opportunities are being considered |
| Chronic | Increase of infectious diseases | Long-term | A boost in sales due to a rise in demand for cashless services resulting from an increased awareness of contactless transactions | 〇 | Δ | We are promoting our payments services with the am to contribute to the shift to cashless paymentsTransition risk | |
Working Toward Risk Mitigation
Major risks include an increase in operating costs due to the introduction of a carbon tax (transition risk) and a decrease in revenue resulting from the suspension of business due to the intensification of extreme weather events (physical risk).
To reduce risks associated with the introduction of a carbon tax, we have established reduction targets for Scope 1 and 2 emissions and electricity consumption. To achieve these targets, we are promoting the use of LEDs in our offices and the use of highly energy efficient public cloud services. We are also promoting the same measures for our data centers, placing emphasis on energy-saving performance.
At the same time, in order to reduce the risk of extreme weather events, we are working to create a working environment that enables teleworking. We believe that by creating an environment where all employees can work from home, we can reduce the number of days where operations are affected due to the intensification of extreme weather events.
Expanding Opportunities
Main opportunities include an increase in demand for and sales of products and services that contribute to decarbonization and energy conservation (transition opportunity) and an increase in demand for and sales of security services in preparation for damage to business sites and data loss due to the intensification of extreme weather events (physical opportunity).
In order to expand opportunities for decarbonization, we are focusing on our payment services to further contribute to the promotion of cashless transactions.
Cashless payments can lead to the reduction of GHG emissions in society as a whole by reducing GHG emissions associated with the minting of coins and the issuance of bank notes, etc. Although we have already developed a variety of cashless payment services, we will continue to channel our energy into the transition to a cashless society.
Risk management
Risk Management
Risks related to climate change are identified and evaluated by the Sustainability Committee. Risks deemed significant are reported to the Board of Directors where they are integrated with other company-wide risks excluding climate change, and reassessed to determination a final course of action. The Sustainability Committee plays a leading role in dealing with identified climate change issues and also manages risks by regularly monitoring the progress of responses to these issues. The Sustainability Committee works closely with the Risk Management Committee, sharing information to identify, assess and respond to risks.
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Indicators and Targets
We have established GHG emissions as an indicator for managing climate-related risks and opportunities. Our goal is to reduce GHG emissions by 25% from the fiscal 2023 level by fiscal 2030 and to net zero by fiscal 2050. In 2024, Scope 1 emissions were 32.3 (t-CO2), and Scope 2 emissions 680.4 (t-CO2).
To achieve our GHG emission reduction targets, we are promoting the use of LEDs in our offices and the use of highly energy efficient public cloud services. We will strive to further increase our reduction activities in the future.