Information Disclosure Based on TCFD Recommendations Sustainability
Under our long-term vision PLAY EARTH 2030, we are implementing business restructuring, aiming to achieve sustainability in terms of both the environment and our business.
As part of these efforts, in FY 2022, we declared our support for the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and reorganized our Group initiatives to address climate change.
In FY 2024, we worked on enhancing our scenario analysis as part of our external environment analysis aimed at realizing our long-term vision PLAY EARTH 2030.
I. Framework and Governance
Our sustainability management framework is comprised of the Sustainability Advisory Committee, which collaborates with the Board of Directors, and the Sustainability Committee, which monitors the progress of sustainability management and considers action policy. The Sustainability Advisory Committee is composed of our Board Members and Auditors as well as advisory members invited externally. They confirm social developments on sustainability promotion and the external environment, and discuss our sustainability strategy. The matters decided by the Sustainability Advisory Committee are executed by the Sustainability Committee as specific tasks. Both the Sustainability Advisory Committee and Sustainability Committee meet every quarter.
Based on the basic policy for climate change and priority matters, the Board of Directors creates the business strategy and comprehensively reviews and makes decisions on investment and lending projects.
To advance Group-wide environmental initiatives, we have also established the Goldwin Environment Management Committee as a body for implementing improvements to address climate change and other global environmental problems.
Ⅱ. Risk Management
We continue our efforts to enhance risk management and corporate governance by establishing various internal committees, such as the Sustainability Committee and Governance Committee, to address risks intrinsic to management issues.
Some of the risks and opportunities associated with climate change are anticipated to arise in the transition to a decarbonized society, and others from the physical impacts of climate change. We classified changes in the external environment associated with climate change, assessed impacts on the apparel industry, and then specified material risks and opportunities for our Group in light of the degree of impact on our Group’s business activities. In addition, we conduct scenario analysis based on the 1.5℃ and 4℃ scenarios and assess risks and opportunities once a year. The assessed risks and opportunities are reported to the Sustainability Committee, which sets the action policy, activities, and targets as well as reviews the risks and opportunities. Its review is reported to the Board of Directors, which conducts oversight and makes final decisions.
For risks relating to management determinations, including decision-making on management strategy, we consult with law offices and other external experts as necessary, and related departments conduct analysis and investigation.
Ⅲ. Strategy
In FY 2022, we conducted scenario analysis based on the 1.5℃ and 4℃ scenarios to assess the future impact of climate change. We also worked on enhancing our scenario analysis in FY 2024. These analyses confirm that our business strategy and environmental initiatives will lead to reducing risks and capitalizing on opportunities.
We referenced several internationally recognized climate change scenarios in the analysis of climate-related risks and opportunities. Specifically, we referenced, among others, the Net Zero Emissions by 2050 Scenario (NZE) released by the International Energy Agency (IEA) and Representative Concentration Pathways (RCP 8.5), a greenhouse gas concentration trajectory adopted in the Fifth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), in identifying the risks and opportunities that climate change poses to our Group and examining our long-term strategy.
| Anticipated society | Scenarios mainly referenced | Anticipated changes | Impacts on the apparel industry |
|---|---|---|---|
| 1.5℃ scenario: Society progressing toward decarbonization where transition risks and opportunities are mainly manifesting | IEA : Net Zero Emissions by 2050 Scenario（NZE2050） IPCC : Representative Concentration Pathways (RCP2.6) |
・Environmental policies and regulations are strengthened, and companies’ greenhouse gas emissions are strictly regulated. ・At the same time, use of renewable energy increases due to enhanced policies to increase its use. ・Consumers are increasingly interested in sustainability, and low-carbon, circular products and services are expanded. ・Disclosure of non-financial information becomes a requirement, and ESG investing becomes established. ・Abnormal weather (frequent typhoons, localized torrential rains, drought, heavy snows, etc.) occurs at about the same frequency as in FY 2024 (current). |
・Use of recycled materials and new materials to reduce environmental impacts increases. ・Sustainable fashion is established as new brand value. ・Consumers prefer and select low-carbon and circular products. ・Sustainable fashion influencers appear on the scene. |
| 4℃ scenario: Society where physical risks and opportunities are mainly manifesting with progressing climate change | IPCC : Representative Concentration Pathways (RCP8.5) | ・Strict environmental policies and regulations are deferred, and greenhouse gas emissions continue to increase at the current (FY 2024) rate. ・Some companies introduce renewable energy, but demand for traditional energy sources remains strong. ・ESG investing continues to grow, but use of non-financial information is limited to only some investors. ・The frequency of abnormal weather (frequent typhoons, localized torrential rains, drought, heavy snows, etc.) and extreme weather events increases. |
・The supply chain suffers damage from abnormal weather, and production delays are frequent. ・Demand for performance apparel increases as a result of frequent record-breaking extreme weather events, including excessive heat in summer and heavy snows in winter. |
We then identified transition and physical risks and opportunities based on the two climate change scenarios of temperature increases of 1.5℃ and 4℃ to inform our examination of business strategy feasibility and our 2030 growth strategy. Specifically, we organized our value chain and stakeholders and identified risks and opportunities again, taking into consideration the previously identified transition risks and opportunities and physical risks and opportunities of climate change.
In scenario analysis, we qualitatively and quantitatively assessed the financial impacts of risks and opportunities associated with climate change on our Group. The severity of the impacts was assessed on a five-level scale of Rank 1 to Rank 5. The risks and opportunities assessed as having a severity of Rank 3 or higher were defined as material risks and opportunities that may have a certain financial impact.
The material risks and opportunities are as shown below.
| Category | Transition | Physical | Risk | Opportunity | Material risk and opportunity | Details | Severity of impact | Occurrence time | Action | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Year 2030 | Year 2050 | Short-term | Medium-term | Long-term | ||||||||
| Policies | ● | ● | Higher running costs from introduction of a carbon tax | Higher costs for internal operations, supply chain, logistics, etc. due to introduction and tightening of carbon taxation | 3 | 4 | ● | ● | Initiatives for carbon neutrality across the entire supply chain | |||
| Technology | ● | ● | Increased production costs from switch to materials with reduced environmental impact and recycled materials | Higher costs associated with switch to new materials aimed at reducing environmental impact, such as structural protein materials and recycled materials | 2 | 3 | ● | ● | R&D of next-generation and recycled materials | |||
| Markets | ● | ● | Deteriorated brand image due to delays in adapting to changes in customers’ consumption behavior and awareness | Lost customer loyalty due to lower brand power resulting from delays in offering products contributing to decarbonization as well as environment-related scandals | 3 | 4 | ● | ● | ● | ・Proactive use of materials with reduced environmental impact ・Launching CVC to discover next-generation materials ・Consideration for the environment and society in the production process |
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| Markets | ● | ● | Obtaining a competitive advantage by leading transition to sustainable fashion | Expanded share in the sustainable fashion market and sales increase resulting from transitioning to sustainable fashion earlier than other companies | 2 | 3 | ● | ● | ● | |||
| Acute | ● | ● | Supply chain damage from typhoons, floods and other natural disasters | Sales decline due to suspension of operations caused by damage to stores and production factories from typhoons and floods, etc. | 4 | 4 | ● | ● | ● | ・Strengthened supply chain management | ||
| Acute | ● | ● | Impact on sports events, etc. from increase in extreme weather events | Increase in extreme weather events, such as excessive heat in summer and lack of snow, makes it difficult to hold outdoor sports events and do sports, while demand for winter clothing decreases due to higher temperatures | 2 | 3 | ● | ● | ● | ・Closely monitor trends in the population of participants in outdoor activities and reflect the trends in production plans and product development | ||
Ⅳ. Indicators and Targets
1. Indicators and Targets for Assessing Climate-related Risks and Opportunities
In order to adapt to increasingly uncertain environmental changes, and to realize sustainable growth, our Group formulated the long-term vision PLAY EARTH 2030, aimed at the coexistence of sustainability in the two dimensions of business and the environment, leveraging our strengths while ascertaining risks and opportunities. Even within this, we established targets with 2030 and 2050 in view, considering initiatives for tackling environmental issues as one of our most important challenges.
We have set medium-term and long-term targets accordingly and are conducting specific activities to achieve environmental improvements, promoting “green design,” ” realization of a carbon-free society,” and “realization of a circular society” as key environmental issues for improving the global environment. As part of our promotion of green design, specifically, we aim to use of materials with reduced environmental impact in 100% of our products by FY 2050 through development of Brewed Protein™, switching to use of recycled materials and auxiliary materials with reduced environmental impact. Regarding realization of a carbon-free society, we are converting to use of renewable energy and aim to achieve carbon neutrality including in the supply chain in FY 2050 through enhanced supply chain management. Our plan for realizing a circular society targets zero fashion loss and includes driving total volume control through strengthened order flow and greater industry cooperation for zero fashion loss, and aims to achieve zero waste, including in the supply chain, by FY 2050.
2. Greenhouse Gas Emission Reduction Targets and Results
(1) Reduction targets
We are striving to reach targets of carbon neutrality at all offices in Japan by 2025, and at all offices and directly managed stores by 2030, with the aim of being carbon neutral throughout our supply chain by 2050.
(2) Results
Please click on the link below for the latest information on our greenhouse gas emission reductions.