EXEO EXEO Group,Inc Sustainability Website

Engagement with the TCFD Recommendations

Basic approach

The Group considers environmental problems such as climate change to be important issues for management to address. Based on this awareness, we defined practicing ESG management as one of the challenges in our 2030 Vision announced in May 2021, and set environmental, social, and governance KPIs respectively as well as specific targets in Medium-Term Management Plan (2021-2025), which we are working systematically and continuously to achieve.

We will actively engage in eco-friendly business practices, which include reducing greenhouse gas emissions, while also working actively to contribute toward solutions for climate-related social issues through businesses such as renewable energy.

Additionally, in December 2021 we declared our support for the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures) and also joined the TCFD Consortium. The Group is making information disclosures according to the TCFD Framework.

Addressing the TCFD recommendations

(Update June 2024) (446KB)

*Previous files are at the bottom of the page.

TCFD published its final report in June 2017 and recommended that companies disclose the following information pertaining to their governance, strategies (risks and opportunities, financial and other impacts, handling), and other initiatives.

TCFD
Governance Strategy Risk management Metrics and goals
Monitoring systems and the role of the management team pertaining to climate-related risks and opportunities Identifying climate-related risks and opportunities and their impacts on the organization’s businesses, strategy, and financial planning The processes used by the organization to identify, assess, and manage climate-related risks The metrics and goals used to assess and manage relevant climate-related risks and opportunities

Governance

Meeting Body FY Details
Board of Directors (Management Council) 2022
  • Greenhouse gas emissions reduction targets and compliance with the TCFD recommendations
  • Annual efforts to improve sustainability (of the environment)
2023
  • Formulation of the Human Rights Policy and the Procurement Policy
  • Annual efforts to improve sustainability (of the environment)
Sustainability Committee 2022
  • Greenhouse gas emissions reduction targets and compliance with the TCFD recommendations
  • Actual greenhouse gas emissions, future actions and the construction of an implementation structure
2023
  • Formulation of the Human Rights Policy and the Procurement Policy
  • Actual GHG emissions in FY2022, training for employees and actions to protect biodiversity
Governance

Strategy

We use scenario analyses to anticipate what the world will be like in 2030 to ascertain the impact that climate change will have on our Group’s business. The primary information sources for our analyses were the 1.5℃ scenario by the International Energy Agency (IEA), and the 4℃ scenario by the Intergovernmental Panel on Climate Change (IPCC).

Scenario analysis steps

Scenario analysis steps

Scenario analysis results

1.5℃ scenario (scenario in which the necessary measures were taken to keep temperature rises to 1.5℃ compared to pre-industrial levels)

Type Climate change factor Impact on the Group Time line of impact*1 Level of impact*2 Key response measures
2030 2050
Risks Introduction of carbon tax
  • Increase in taxation such as instituting a carbon tax (taxed according to CO2 emissions from business activities)
Medium / Long ▼▼10 -
  • Shift to the use of renewable energy for the electric power used in business activities (switching to the renewable energy menu, purchasing renewable energy certificates, PPA, etc.), switching to eco-friendly cars
  • Efforts to save energy in business activities (switching to LED lights, setting proper temperatures for air conditioners, promoting eco-driving, use of accelerants, etc.)
Emissions controls
  • Increase in cost to buy credits for CO2 emissions (emissions quotas) that fail to reduce enough volume
Medium / Long - ▼2
  • Achieve reduction targets by implementing the CO2 emissions reduction measures shown above
Shifting to renewable energy (renewable energy measures)
  • Soaring renewable energy procurement prices if renewable energy is not supplied in sufficient volume
Short / Medium / Long ▼0.3 ▼0.4
  • Strive to mitigate risk of cost increases by passing them on in prices for construction work
Surging raw materials prices
  • Increased cost of stocking materials made from natural resources
Short / Medium / Long - -
Obligation to disclose information
  • Increase in costs to comply with expanded obligations to disclose information related to greenhouse gas emissions
Short / Medium / Long ▼1 ▼1
  • Avoid increased costs to handle emissions calculations by implementing DX in the calculation operations
Advancements in energy-saving and renewable energy
  • Declining profit due to limited capacity to accept orders attributable to shortage of engineers
Short / Medium / Long ▼▼ ▼▼
  • Mutually complement resources through M&A and business partnerships as a measure against declining profit due to limited capacity to accept orders attributable to shortage of engineers
Changing customer preferences
  • Preferences shift toward companies that have done more for the environment, and declining sales for those who miss this trend due to business relationships being severed or losing market share to other companies
Short / Medium / Long - -
  • Increase our business value with activities to decarbonize our Group from within and with social contributions through our business (improve our assessments from environmental ratings agencies)
Stakeholder assessments
  • Business value (stock price) falls due to negative assessments of measures against climate change (insufficient information disclosures, failure to reach CO2 emissions targets, etc.), making it harder to raise funds and secure human resources
Short / Medium / Long - -
Opportunities Renewable energy-related construction
  • Expansion of business due to increased demand for renewable energy such as offshore wind power generation
  • Expansion of smart grid business due to changes in power distribution systems (ability to newly enter the power distribution business)
  • Expansion of energy storage plant construction and maintenance business due to increasing needs for storage batteries
  • Expansion of solar sharing business to use land at sites where solar power plants are installed as agricultural land
Short / Medium / Long ▲▲ ▲▲
  • Actively pursue business in renewable energies such as solar power, offshore wind power generation and biomass, and expand orders for EPC projects (mutually complementary resources through business partnerships, expand construction domains through capital contributions, etc.)
Market expansion
  • Markets for renovation construction and cloud services due to increased demand for disaster response and mitigation
  • Solutions market for decarbonization efforts generated by usage of ICT
  • Markets for the development of infrastructure such as networks as urban digitalization advances
  • Market for refurbishments geared toward creating circular economies
Short / Medium / Long
  • Expand our urban infrastructure and refurbishments businesses
Services for mitigating and addressing climate change
  • Expansion of our urban infrastructure business from advancements in pole-free and shifts to net-zero energy buildings (ZEB) to mitigate climate change
Short / Medium / Long
Adaptation to climate change
  • Stronger resilience by switching to telecommuting and other flexible work styles not dependent on location, in response to climate change
Short / Medium / Long
  • Make further efforts toward flexible work styles
Stakeholder assessments
  • Decarbonization efforts lead to higher business value, more opportunities to raise funds from financial institutions and the business growth that entails, creates opportunities to receive orders from new clients, and creates opportunities to secure talented human resources
Short / Medium / Long - -
  • Increase our business value with in-house decarbonization activities and with social contributions through our business (improve our assessments from environmental ratings agencies)
  • Raise funds through means such as Sustainability-Linked Loans

4℃ scenario (scenario in which measures to counter climate change are insufficient, and temperatures rise by approximately 4℃ compared to pre-industrial levels)

Type Climate change factor Impact on the Group Time line of impact*1 Level of impact*2 Key response measures
2030 2050
Risks (Acute) Intensifying weather
  • Emerging risk of flood damage to residential and other buildings as well as the commensurate increase in damage insurance premiums, worsening work environments
  • Supply chain disruptions due to intensified weather, interruptions to procurement and deliveries, lost chances to make proposals to customers or receive orders from them
Medium / Long ▼7 ▼▼19
  • Better BCP preparedness in the event of a disaster, regular hazard risk assessments for properties owned
(Chronic) Higher temperatures
  • Worsening labor shortages in construction due to increased health risks (heatstroke, etc.) and worsening work environments at outdoor construction sites
  • Lower work efficiency, delayed completion of construction, and increased cost of provisions due to heat stress
Medium / Long ▼8 ▼▼11
  • Ensure and improve operating efficiency of worksites by taking thorough measures against heatstroke (utilizing ICT in safety management for work sites) and advancing digital transformation (DX) of work sites
  • Secure sufficient construction periods

*1 Short time line: 3 years or less, Medium time line: Over 3 and up to 10 years, Long time line: Over 10 years

*2 Financial impact (profit) on business activities of the Group in fiscal 2030 is calculated under the assumption of certain conditions. Anticipating the relative magnitudes, risks are expressed as “▼▼▼ (large),” “▼▼ (medium),” and “▼ (small),” and opportunities as “▲▲▲ (large),” “▲▲ (medium),” and “▲ (small).” Impact scale in financial terms is (large): ¥10.0 billion or more, (medium): From ¥1.0 billion to less than ¥10.0 billion, and (small): Less than ¥1.0 billion

Risk management

We build and operate an organizational structure for risk management in the Group to be able to identify and evaluate risks on a Group-wide level. We have formulated the Risk Management Rules that specify the basic points involved in risk management and have established risk categories in addition to the Risk Management Division that handles them. We have also established the Business Risk Management Committee as the Group-wide risk manager.

We identify and evaluate risks related to climate change primarily in the Sustainability Committee. Information is also shared and coordinated in deliberations on individual matters in the Business Risk Management Committee, which includes verifying climate related risks.

Based on the Risk Management Rules, these are also integrated into Group-wide processes and matched against risks that have been assessed and identified in environmental management systems based on the ISO14001 international standard, and occupational health and safety management systems based on the ISO45001 international standard.

Metrics and goals

The Group has defined and is monitoring the following metrics and goals for managing climate-related risks and opportunities.

Targets

Base year (FY2020) Target year Scope of data
FY2030 (vs. base year) FY2050
Scope1・2 86,583 50,218(-42%) Carbon neutrality Consolidated
Scope3 1,728,553 1,296,414(-25%) - Consolidated

Submetrics

FY2020 FY2021 FY2022 FY2025 (Target) Scope of data
Switch to electricity from renewable energy sources - 33.6% 73.2% 100% Company-managed sites of Exeo Group, Inc.
Adoption of EVs and other low-emission vehicles 91.4% 95.5% 96.1% 100% Passenger vehicles of Exeo Group, Inc.

Schematic of GHG emissions (Scope 1 & 2) reduction

Schematic of GHG emissions (Scope 1 & 2) reduction(t-CO2)

GHG emissions by Scope (units: t-CO2, scope of data: consolidated)

Base year (FY2020) FY2022 Difference % change
Scope 1 & 2 (our own) 86,583 76,877 -9,706 -11.2%
Scope 1 (direct emissions) 60,400 62,725 2,325 3.8%
Scope 2 (indirect emissions) 26,183 14,152 -12,031 -45.9%
Scope 3 (supply chain) 1,728,553 1,594,294 -134,259 -7.8%
Category 1 (purchased goods and services) 275,913 195,614 -80,299 -29.1%
Category 2 (capital goods) 41,490 51,742 10,252 24.7%
Category 3 (fuel- and energy-related activities) 12,652 13,958 1,306 10.3%
Category 5 (waste generated in operations) 2,429 5,279 2,850 117.3%
Category 6 (business travel) 1,869 2,180 311 16.6%
Category 7 (commuting) 3,398 3,965 567 16.7%
Category 11 (use of sold products) 1,389,872 1,320,757 -69,115 -5.0%
Category 13 (downstream leased assets) 930 799 -131 -14.1%

* Greenhouse gas emitted by the Group is CO2 (carbon dioxide).

* Numerical values for the base year could be subject to change if applicable scope or calculation methods change as we make these calculations more sophisticated going forward, or if an event that exceeds the course of our business growth occurs.

Assurance report from a third party

Assurance report from a third party

Archive

Addressing the TCFD recommendations (Update Nov 2022) (783KB)