Disclosures Pursuant to the TCFD

In February 2020, we became a supporter of the Task Force on Climate-related Financial Disclosures (TCFD). In the Vision for 2030, which was formulated and released in March 2020, we declared the SMM is “a company that actively undertakes climate change countermeasures, by reducing emissions and stably supplying products contributing to a low-carbon society, a future with zero greenhouse gases (GHGs)” and listed climate change as a material issue, and we are reinforcing disclosure of climate change-related information in accordance with the TCFD.

Governance

The Group’s material issues related to sustainability, including climate change, are identified along with KPIs through discussion by senior management members and confirmed through a resolution of the Board of Directors. Climate risks, opportunities, and strategy pertaining to the Group are also reflected in 3-Year Business Plans, annual budgets, KPI targets, and other areas, and are confirmed through a resolution of the Board of Directors. The Carbon Neutrality Committee meets regularly to deliberate on and manage climate change-related matters pertaining to the Group. Initiatives and performance in regard to KPI targets are then reviewed by the Sustainability Committee and an overview is reported to the Board of Directors.

Strategy

Short-, medium-, and long-term climate change risks and opportunities that could have a major impact on the Group’s business, strategy, or finances based on analysis of climate change scenarios that anticipate various changes in the external environment, including regulatory changes, technological progress, market changes, and natural disasters are identified. We then consider the impact of each of these on business and strategy in each area, such as products and services, R&D investment, operations, and GHG emission reduction and response measures. Based on the results of this analysis, we formulate Group strategies for each climate change risk and opportunity, and these are reflected in 3-Year Business Plans. These strategies are also discussed by the Carbon Neutrality Committee and reviewed by the Sustainability Committee.

Climate Change Scenario Analysis

The SMM Group has been analyzing the 1.5˚C and 4˚C scenarios for identifying the medium-to long-term impacts of climate change on the Group’s business and investigating and preparing countermeasures since FY2021. In FY2023, we updated these scenario analyses based on the formulation of our next 3-Year Business Plan and changes in social conditions so that they can be used in the formulation of our roadmap for achieving carbon neutrality by 2050.

Reference scenarios

• IEA, World Energy Outlook 2022
• IEA, Global EV Outlook 2022
• IPCC, special report “Global Warming of 1.5˚C” (2018)
• Ministry of Economy, Trade and Industry, Sixth Strategic Energy Plan (2021)
• Cabinet Secretariat and others, Green Growth Strategy Through Achieving Carbon Neutrality in 2050, etc.

Reference scenarios

• IPCC,
  Synthesis Report of the Sixth Assessment Report (2023)
• IPCC,
  Working Group II contribution to the Sixth Assessment Report (2022)

Climate Change Scenario Analysis (PDF:2.4MB)

Risk Management

The climate change risks identified through scenario analysis are monitored and measured by the Carbon Neutrality Committee, which also takes corrective measures and revises strategies when necessary, and are reviewed by the Sustainability Committee. Climate change risk is also controlled by the Group’s risk management system and Risk Management Working Group, based on consideration of the impact on other individual risks such as occupational accidents, environmental pollution, quality failures, and legal violations.

Metrics and Targets

To achieve carbon neutrality by 2050 we formulated interim targets for 2030 and announced a roadmap. We have also set and are pursuing targets for contribution to reducing GHG emissions at a society-wide level through the supply of secondary battery cathode materials for use in automobiles and near-infrared absorbing materials produced by the Group.