In October 2019, we announced our support for the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. In line with these recommendations, we will assess and manage risks and opportunities related to climate change, and disclose relevant information appropriately.
We recognize the preservation of the global environment as one of our key management issues (materiality). In response to this, and in order to achieve the medium- to long-term environmental targets based on our Medium- to Long-Term Environment Vision, ECO VISION 2050, ONO’s Representative Director, President ＆ COO has been appointed as the Chief Environmental Management Officer, and the Representative Director, Executive Vice President has been appointed as the Executive Director in Charge of the Environment.
| Organization/Conference Body | Role in Protecting the Global Environment |
|---|---|
| Board of Directors | Receives quarterly reports from the Environment Management Committee on risks and opportunities related to global environmental preservation and the progress of initiatives, and oversees how operations are being executed. |
| Management Meeting | The Management Meeting is chaired by the Representative Director, President & COO and consists of the Representative Director & Chairman, the Corporate Officers responsible for individual departments, and responsible personnel of related departments appointed by the Chair. The Full-time Audit & Supervisory Board Members observe the Meeting. At the Management Meetings, the important issues to be discussed by the Board of Directors, including initiatives for global environmental conservation, are examined, important management issues are discussed, and decision-making in regard to corporate management policies/strategies and other important information is shared. |
| Sustainability Strategy Committee | The Director in charge of the environment chairs the committee, which is attended by the President & COO, Executive Directors, Corporate Auditors and Senior Directors of the head office determined by the chair, to discuss important matters concerning the sustainability strategy, including global environmental preservation initiatives. This committee convenes twice a year. |
| Environment Management Committee |
This committee meets two times a year to manage and promote efforts to address environmental issues at each site, including research institutes and manufacturing plants. The Environmental Committee reports its findings to the Sustainability Strategy Committee and to the Board of Directors. |
| TCFD Working Group (WG) | The Sustainability Promotion Department serves as a secretariat, with the heads of relevant internal departments as its members, that analyzes and identifies risks and opportunities that present themselves due to climate change, and manages the progress of response measures in cooperation with the Risk Management Committee. |
| Risk Management Committee | Develops and establishes a risk management system for all corporate activities and promotes company-wide risk management activities based on the Risk Management Global Policy. |
The Board of Directors receives reports on progress toward ONO’s environmental targets, as well as details on risks and opportunities identified in the TCFD and TNFD, among other things, and oversees overall efforts concerning the conservation of the global environment.
In FY2019, we began identifying risks and opportunities that presented themselves due to climate change based on the TCFD recommendations, evaluating their financial impact, and considering how we will respond to them. Since then, we have conducted annual reviews on the status of our response and the financial impact that resulted from those actions. In FY2023, we conducted reassessments such as risk and opportunity analyses to reflect our sustainable management policy and revised medium- and long-term environmental targets. In FY 2024, after confirming that there were no changes to the risks and opportunities identified in FY 2023, we reviewed the financial impact and the progress of the measures taken.
The 1.5℃ scenario (RCP2.6, IEA NZE 2050 and IEA SDS) toward realizing a low-carbon society and the 4℃ scenario (RCP8.5) that predicts further global warming were selected for analysis and evaluation. IEA STEPS scenarios, etc., were also referred to when information was lacking.
| 1.5℃ Scenario | 4℃ Scenario |
|---|---|
| Strict laws and regulations regarding climate change countermeasures are enforced and carbon taxes are introduced around the world. At the same time, technological innovations related to energy-conservation promotion and renewable energy also progress. Companies invest more resources in regulatory compliance and climate change countermeasures, and global greenhouse gas emissions are curbed to a certain degree. The impact global warming has on our health will be minimal, as rises in temperature are controlled, and the number of natural disasters will not increase significantly from current levels. Investors and other stakeholders place importance on climate change countermeasures and global environmental protection. |
Temperatures continue to rise as climate change laws and regulations remain the same as they are now. Although the impact experienced by companies from responding to laws and regulations is minimal, it will become more difficult to use inexpensive, high-quality natural capital. Natural disasters such as torrential rains, typhoons, floods, and water shortages will become more frequent and severe as a result of global warming. In addition, health hazards such as infectious diseases, respiratory diseases, and heat stroke will also become more prevalent. |
This scope of analysis covers all stages of our core pharmaceutical business, including research, development, procurement, production, distribution, sales, use, and disposal, and includes our company’s factories, contract manufacturers and suppliers in Japan and overseas, as well as a wide range of stakeholders such as investors, customers, and employees (including recruited human resources).
The analysis was divided into three periods: short term (up to 3 years), medium term (3-10 years), and long term (10-30 years).
The impact on business is evaluated comprehensively on a scale of Large, Medium, and Small, taking into account the amount and probability of occurrence (Large: Impacts the sustainability of business activities; Medium: Impacts some business activities; Small: Virtually no impact).
A list was created based on physical risks (acute and chronic), transitional risks (regulations and laws, market, technology, reputation) and opportunities (resource efficiency, energy, products and services, market, resilience) that apply to pharmaceutical companies, as well as the results of internal interviews. From this list, we narrowed down items that were highly relevant to our company through qualitative assessments and proceeded to conduct risk and opportunity analyses.
The financial impact was calculated based on the assumption that the company's manufacturing volume and energy consumption will increase in line with business growth by FY2035, the target year for achieving zero greenhouse gas emissions under our new medium- to long-term environmental goals.
The risks related to climate change, their impact on our business, and our response to them are as follows:
| TCFD Risk Categories | Duration | Impact on Business | Main Countermeasures | ||
|---|---|---|---|---|---|
| 1.5℃ | 4℃ | ||||
| Policy, Law & Regulation | Increased tax burden due to introduction of carbon tax | Medium and long term | Small (around 800 million yen) |
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| Restrictions on the use of vehicles used by sales staff due to emission regulations | Medium term | Small (around 400 million yen) |
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| Climate change countermeasure costs are carried over to procurement costs | Medium and long term | Small (around 200 million yen impact of carbon tax) |
- |
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| Lost opportunities due to delays in complying with national and regional laws and emission regulations | Medium and long term | Moderate | - |
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| Technology | Increased investment costs to fight climate change | Short, medium, and long term | Small (around 900 million yen) |
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| Market | Difficulty in procuring renewable energy due to intensifying competition for demand | Medium term | Moderate | - |
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| Reputation | Decrease in corporate value due to failure to meet environmental targets | Short, medium, and long term | Moderate | - |
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| Physical Risks (Acute) | Temporary suspension of operations due to natural disasters (torrential rains, floods, typhoons, etc.) | Medium and long term | - | Large (up to 10 billion yen) |
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| Physical Risks (Chronic) | Impact on production due to water shortage Since the company does not have its own factories or API manufacturing contractors for its main products in areas with a high risk of water shortages, it is unlikely that there will be any disruption in the company’s operations at this time. |
Medium and long term | - | Small |
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| Increase in operating costs for air conditioning equipment, etc., due to rising temperatures | Medium and long term | - | Small |
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We did not identify any climate-related risks from the results of these scenario analyses that would require us to overhaul our business and investments. However, we recognize the importance of continuing to analyze risks such as the impact natural disasters have on our manufacturing sites and procured products, as well as laws and regulations in each country and region. In particular, we view the physical risk of the 4℃ scenario, "natural disasters (torrential rains, typhoons, floods)," as a potential risk that could affect the stable supply of high-quality pharmaceutical products. Moving forward, we will continue to promote BCP measures, including securing sufficient inventories and providing support to multiple production and procurement hubs.
We conducted a risk assessment of our plants and research institutes using the "Multi-layered Hazard Map" provided by the Ministry of Land, Infrastructure, Transport and Tourism, as well as the Aqueduct Water Risk ATLAS. As a result, we have confirmed that the flood risk and water shortage risk are low at all locations.
For the logistics centers we contract with, we conducted a risk assessment using the "Multi-layered Hazard Map" provided by the Ministry of Land, Infrastructure, Transport and Tourism. In past analyses, a flood risk was identified at one of the logistics centers, but we have since moved the storage location of our products to a higher area (above the anticipated flood depth), and we currently consider the risk to be low.
The opportunities related to climate change, their impact on our business, and our response to them are as follows:
| TCFD Opportunity Categories | Duration | Impact on Business | Main Countermeasures | ||
|---|---|---|---|---|---|
| 1.5℃ | 4℃ | ||||
| Resource Efficiency | Cost savings through efficient use of electricity | Medium and long term | Small | Small |
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| Market | Utilization of subsidies for energy conservation and renewable energy | Short, medium, and long term | Small (up to 500 million yen) |
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| Our Business | Development of new products and services for new health hazards | Long term | - | Large |
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| Reputation | Enhancing corporate value through advanced measures against climate change (Differentiation from other companies, hiring and retention of employees) |
Short, medium, and long term | Moderate | - |
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Climate change has increased concerns over health hazards such as infectious diseases, respiratory diseases, and heat stroke. We are committed to contributing to society through the creation of ethical drugs (innovative new drugs), and we will take full advantage of the opportunities presented to us by the discovery of treatments for such diseases. By providing innovative new drugs, we will not only contribute to patients and their families, but also work toward realizing a circular carbon society so that people can live healthy and sound lives.
The identified risks and opportunities, as well as their corresponding countermeasures and the progress of measures to promote those opportunities are all managed by the TCFD-WG, which is headed by the Director in charge of environmental affairs and includes members responsible for each function within the company, and by the cross-functional Environmental Committee, which manages and promotes environmental issues at each factory, laboratory, etc. The Board of Directors supervises the status of management through the environmental management system described in the Governance section above. In addition, climate change-related risks are shared with the Risk Management Committee, and risks that may affect business continuity are managed as company-wide risks based on ONO’s Risk Management Global Policy.
（For risk management system, please click here.）
The progress of countermeasures and changes in financial impact caused by such progress will be reviewed annually by the TCFD-WG and the Environmental Committee, and a review of risk/opportunity analysis and assessment will be conducted once every few years in conjunction with the formulation of medium-term management plans and revisions to environment-related policies and targets.
In an effort to enhance and accelerate our efforts to address various global environmental issues, we are promoting activities based on the revised targets from 2023.
Please click here to learn more about our plans and progress.
| Greenhouse Gas Emissions (Scope 1+2） |
Achieve carbon neutrality by FY2025 (virtually zero greenhouse gas emissions by offsetting with voluntary carbon credits) Achieve zero greenhouse gas emissions by FY2035 |
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| Greenhouse Gas Emissions (Scope 3) |
Reduce by 30% by FY2030 Reduce by 60% by FY2050
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| Renewable energy rate in purchased electricity | Achieve 100% by FY2025
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In addition, we have positioned "preservation of the global environment" as one of our materiality and are promoting it throughout the company. We have introduced "materiality initiatives" and "adoption status in ESG indices" as performance evaluation indicators for performance-linked stock renumeration for Members of the Board of Directors (excluding outside directors) and executive officers to promote sustainability management, including environmental management.
In order to encourage the appropriate disclosure of information based on the TCFD recommendations and to help promote measures against climate change in society as a whole, we make a point of collaborating with industry associations and the government, and of holding discussions with stakeholders. As part of this effort, we participate in the TCFD Consortium, which is a forum for companies and financial institutions that support the TCFD recommendations to discuss effective corporate information disclosure and appropriate initiatives.
We also participate in industry associations and various initiatives that promote global environmental conservation efforts. Membership in and withdrawal from initiatives and other groups, as well as policy recommendations made through initiatives, are discussed by the Environmental Committee to determine whether they are in line with our policies, and are then overseen by the Board of Directors through the system described under “Governance,” above. In the RE100, of which we are a member, we also participate in discussions for policy recommendations and in research concerning the promotion of renewable energy in Japan and Taiwan. (For more information on environment-related initiatives and industry association activities, please click here.)