Actions for Climate Change: Recognition of and Action on Risks and Opportunities

Aspects Determined as Materiality
  • Emissions

    305-5

Principle and Outline

Tackling climate change is seen as one of the Sustainable Development Goals (SDGs) adopted by the United Nations. Since the Paris Agreement came into force in November 2016, initiatives to tackle climate change are being undertaken around the world. In Japan, tackling climate change is becoming increasingly important. In his Policy Speech of October 26, 2020, Prime Minister Suga declared Japan’s aim to realize a carbon neutral society by the year 2050.
For the Daigas Group, which is engaged primarily in the energy business, climate change represents an important management challenge, and initiatives to reduce CO2 emissions are a crucial mission. In January 2021, the Daigas Group established and announced the Daigas Group Carbon Neutral Vision, indicating its vision of how it strives to become carbon neutral by 2050.

The recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) announced in June 2017 (the “TCFD recommendations”) encourage companies to disclose climate change-related financial information to promote appropriate investment decisions by investors.
Osaka Gas supports the TCFD recommendations, and utilizes them as indicators to validate its climate change response.
We also participate in the TCFD Consortium,* where discussions take place on efforts toward information disclosure on responses to climate change based on the TCFD recommendations.

  • * TCFD Consortium
    A consortium established on May 27, 2019, whose members discuss how companies can effectively disclose information on tackling climate change and how financial institutions can use the disclosed information to make appropriate investment decisions. From the government, the Financial Services Agency and the Ministry of the Environment also participate as observers in the consortium.

Climate Change Governance

The Daigas Group regards climate change response as a key management issue. The Board of Directors, which decides on and supervises the important business activities of the Group as a whole, is responsible for the decision-making and supervision of projects involving climate change issues. At the ESG Council (Executive Board), which meets three times per year, executives deliberate on plans and reports of activities concerning ESG challenges, including climate change issues, under the supervision of the President.
In addition, the Daigas Group has also established the ESG Committee, chaired by the Head of ESG Promotion (Representative Director and Executive Vice President), the officer overseeing Daigas Group CSR activities, and composed of the heads of related business units. The ESG Committee is held four times per year to formulate and advance plans for business activities concerning climate change response, and engage in Group-wide deliberation, coordination and supervision of issues such as the achievement of targets, risk management and response. Of these, the ESG Committee proposes or reports important issues to the Board of Directors, such as performance against ESG management targets, and business plans that are anticipated to be significantly affected financially by climate change.

  • ■Climate Change Governance Organization Chart
    Climate Change Governance Organization Chart
    • ・Board of Directors
      9 Directors (6 internal Directors and 3 Outside Directors)
    • ・Executive Board (ESG Council)
      1 Executive President, 3 Executive Vice Presidents and 5 Senior Executive Officers
      *In principle, it is held three times per year as “ESG Council.”
    • ・ESG Committee
      Executive Vice President (Head of ESG Promotion) and heads of related business units, etc.

Strategy

The major risks and opportunities associated with climate change, their business and financial impact, and the Daigas Group's response to this impact, are shown below.

Scenario Analysis

The Daigas Group has been working on climate change scenario analysis that is intended to be utilized as reference material in the evaluation and preparation of countermeasures, and to understand the impact of climate change on the Group’s business on a medium- and long-term basis.
Using this analysis method based on scenarios established by an external authority (IEA), we assessed our energy businesses (gas, electricity and related businesses in Japan and overseas) which are expected to experience the greatest impact from climate change among the Group’s businesses, for the purpose of acquiring suggestions related to relevant factors and measures for mitigating/tapping into the impact. We assumed a multi-track scenario that takes into account the progress of energy conservation and changes in the composition of power sources, etc., as follows.

We will steadily implement initiatives to increase the resilience of the Daigas Group’s businesses, while applying the suggestions gained from scenario analysis to our evaluation of medium- and long-term business strategies. Moreover, as the global response to climate change continues to progress, the scenario’s preconditions may also change in the future. We will continue to deepen our scenario analysis, renewing our assumptions in line with the latest conditions as necessary, taking into account scenarios established by external authorities.

■Japan’s Final Energy Consumption of Gas, Electricity, etc. Under Each Scenario
Japan’s Final Energy Consumption of Gas, Electricity, etc. Under Each Scenario

Recognition of Risks and Opportunities

Using a multi-track scenario analysis, we pinpointed anticipated risks and opportunities based on the environment surrounding the Daigas Group’s energy businesses in Japan and abroad, evaluated these risks and opportunities and examined countermeasures, in terms of both the short and medium terms, until 2030, and the long term, to 2050.
The Group is engaged in gas and electricity businesses, primarily in the Kansai area, which use natural gas as their main raw material and fuel. The external environment is undergoing various changes due to climate change. We have classified the major factors associated with these changes into “transition risks” and “physical risks,” and identified the major risks and opportunities. Significant risks for the Group related to climate change include the possibility that rising sea levels and natural disasters such as typhoons and torrential rains due to localized abnormal weather events, etc. may cause damage to our manufacturing equipment. In addition, it is possible that our businesses may be affected by significant increases in the carbon tax rate in Japan, or an increased desire among our customers to switch to non-fossil fuels. However, promotion of the development and spread of renewable energy and decarbonization technologies also represents a significant opportunity for the Group.

■Evaluation of Risks and Opportunities and the Daigas Group’s Responses
Evaluation of Risks and Opportunities and the Daigas Group’s Responses
■Initiatives to Reduce Greenhouse Gas Emissions

Initiatives to reduce greenhouse gas emissions are a crucial mission for the Daigas Group. We focus on reducing CO2 emissions, not only from our own business activities, but also from customers who use the energy we provide. Please see below for details on the specific initiatives by the Daigas Group to reduce greenhouse gas emissions.

Under the Daigas Group Carbon Neutral Vision, we have established the goal of contributing 10 million tons per year of CO2 emissions reductions by FY 2031.3 as a management target, in order to further advance these business activities. This indicator will enable us to contribute to reductions throughout society, and we therefore use it as a management target linked to the Group’s business initiatives.

■Initiatives Ensuring Resiliency for a Decarbonized Society

Securing a stable supply of energy, a core social infrastructure, is one of the major climate change-driven challenges facing society as a whole. By continuing to provide a range of services, including multiple sources of clean energy such as gas and electricity utilizing decarbonization technologies, disaster response equipment, and the widespread and advanced use of energy, the Daigas Group will strive to contribute to society in terms of stable supply and resilience for a decarbonized society. In response to the growing global trend towards decarbonization, we will engage in activities to contribute to reducing CO2 emissions across society, promote the advanced use of gas, and advance initiatives to develop decarbonization technologies, aiming to balance business growth with the stability of the core social infrastructure.

Risk Management

Risk Management

When deciding on the Daigas Group’s business plan and investment plan, the internal organizations responsible for the gas, electricity and other businesses analyze the risk factors and their impact on each business, distill and identify risks, and submit these together with other business risks, etc. to the Executive Board for deliberation. Climate change risks in the formulated plans are managed through a PDCA cycle, and are reported and followed up at the Environment Subcommittee, ESG Committee, and ESG Council (Executive Board). The PDCA (plan-do-check-act) cycle is used to manage such actions.
Decisions on climate-related risk and sustainability, including investment decisions, are made by the Board of Directors and the Executive Board. Matters related to climate change that were proposed or reported by March 31, 2021, included the following.

  • ・Decision on the Medium-term Management Plan, incorporating the Carbon Neutral Vision
  • ・Recognition and disclosure of risks, opportunities and countermeasures related to climate change, based on scenario analysis
  • ・Monitoring of the results for indicators used to manage climate change response, etc.
■Climate-related Risk Management Structure
Climate-related Risk Management Structure

Indicators and Targets

The Daigas Group will proceed to contribute to radically reducing CO2 emissions and realizing a decarbonized society, through initiatives such as energy conservation, the advanced use of natural gas, and the widespread use of renewable energies.

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