Climate Change

Policy

The Paris Agreement, which aims to keep the increase in global average temperature well below 2°C compared to pre-industrial levels and to strive to limit the increase to 1.5°C, entered the implementation phase in 2020. Expectations toward achieving this goal are growing not only for nations and governments, but also for companies, and it has become necessary for companies to act on climate change through their business activities.
The Toyota Tsusho Group has identified the effort to "Contribute to the transition to a decarbonized society by reducing CO2 emissions from automobiles and factories/plants through the use of clean energy and innovative technologies" as one of its key sustainability issues (Materiality) and has positioned its renewable energy strategy as one of the seven priority domains in its growth strategy.
Another essential climate change countermeasure is the shift to a circular economy. The Toyota Tsusho Group also recognizes the effort to "Contribute to the development of a recycling-based society by transforming waste into resources for manufacturing" as one of its key sustainability issues (Materiality). It also includes "Circular Economy" in its seven priority domains.
Our Environmental Policy states that we will "Contribute to the transition to a decarbonized society, reduce greenhouse gas emissions through our business activities and aim for carbon neutrality by reducing CO2 emissions from automobiles, factories, and plants through the use of clean energy and innovative technologies."
The Toyota Tsusho Group supports the Paris Agreement, and in July 2021, we formulated a group-wide target to reduce greenhouse gas emissions by 50% by 2030 compared to 2019 and to become carbon neutral by 2050 as a concrete policy toward contributing to the transition to a decarbonized society. For the mitigation of the impact of climate change as well as the minimization (adaptation) of ongoing and potential future damages, Toyota Tsusho is promoting carbon neutrality and a circular economy around the world through company-wide climate change countermeasures that incorporate various aspects and can only be implemented by Toyota Tsusho.
Our group has long been developing businesses that lead to the realization of carbon neutrality and the circular economy. We will continue to further expand businesses that contribute to the transition to a decarbonized society, such as the end-of-life vehicle (ELV) recycling business that we started in the 1970s and the renewable energy business that we have been focusing on since the 1980s.
The Toyota Tsusho Group’s strength is its ability to accelerate and promote businesses that contribute to the reduction of greenhouse gases (GHG) throughout the industrial life cycle on a company-wide level. All our employees will work together to contribute to the solution of these social issues by playing a leading role in realizing a carbon neutral and circular economy society.

Toyota Tsusho Group Carbon Neutrality Declaration
  1. *1Direct greenhouse gas emissions from Toyota Tsusho's use of fuel (coal, gas, etc.)
  2. *2Indirect greenhouse gas emissions from Toyota Tsusho's use of purchased electric power and heat
  3. *3Covers Scope 1 and Scope 2 emissions from the Toyota Tsusho Group; calculated using the Greenhouse Gas Protocol

Carbon Neutrality Promotion Meeting

The Toyota Tsusho Group holds the Carbon Neutrality Promotion meeting, chaired by the president & CEO, once a month to determine the strategies to achieve carbon neutrality for the group and the world.

The Carbon Neutrality Promotion meeting confirms the connection between the group's greenhouse gas emissions reduction measures and the policies and proposals of countries around the world toward the realization of carbon neutrality, and discusses and decides on growth strategies through five working groups.

Carbon Neutrality Promotion Meeting Structure
Chairperson President & CEO
Representative officer Executive vice president (CTO*)
Secretariat Carbon Neutrality Promotion Department
Meeting Members CSO*
CFO*
CHRO*
Sales Division CEO*
CEO of each region
Leaders of five working groups (appointed by executive officers)
Assistant to CSO (responsible for Corporate Planning Department)
Assistant to CSO (responsible for External Affairs Department)
  1. *CEO : Chief Executive Officer CSO : Chief Strategy Officer
    CFO : Chief Financial Officer CTO : Chief Technology Officer
    CHRO : Chief Human Resources Officer

Carbon Neutrality Promotion Structure

Our group established the Carbon Neutrality Promotion Department with the mission of promoting carbon neutrality throughout the company to further accelerate our initiatives toward decarbonization both within and outside the group. In addition to designing systems and managing emissions to achieve the Toyota Tsusho Group Carbon Neutrality Declaration, five working groups have been established under the initiative of the Carbon Neutrality Promotion Department. These working groups were organized based on the growth strategies of business areas linked to carbon neutrality and the circular economy, in which our group has strengths, to achieve both business expansion and a decarbonized society along both vertical and horizontal axes. We have formulated the Carbon Neutrality Roadmap 2030 for these five working groups and are monitoring their progress.

Mission: Passing on a better global environment to the children of the future
Vision: The world's leading circular economy provider

Toyota Tsusho Group Carbon Neutrality Promotion Structure
  1. *1Carbon Neutrality
  2. *2Green Management
  3. *3Next Mobility Development Department

Five Working Groups to Promote Carbon Neutrality

We have formed working groups (WG) in five areas in which we are particularly strong to aggressively promote these initiatives that will lead to carbon neutrality.

We are engaged in businesses that support a circular economy at each stage of the industrial life cycle, which consists of energy creation, energy collection and coordination, manufacture of goods, transport of goods, use of goods, waste processing, and reuse and recycling.

Disclosure Based on TCFD Recommendations

The Financial Stability Board established the Task Force on Climate-related Financial Disclosures (TCFD) to examine how climaterelated information should be disclosed and how financial institutions should respond. The TCFD published its final report in June 2017, in which it recommends that corporations and organizations disclose to stakeholders their climate-related risks and opportunities in four areas: governance, strategy, risk management, and metrics and targets.

Toyota Tsusho believes climate change to be a key management issue and, in May 2019, we expressed our support for the TCFD recommendations. Based on the recommendations, we intend to disclose more information related to the impact that climate change has on our business activities.

1. Governance

We identified climate change as one of the material issues that matter most to our business. The content of Materiality initiatives is verified by the Sustainability Management Committee (held annually),*1 which is chaired by the president & CEO, and incorporated into our business strategies via the sales division CEOs who make up the committee. Since 2020, the committee has been tasked with setting key performance indicators (KPIs) for material issues, monitoring their progress, and reporting on the particulars of deliberations to the Board of Directors meeting. Members of the Board have a wealth of competence and experience concerning ESG issues, including climate change, and have put in place a system to ensure that appropriate oversight is carried out.

To address climate change, the Carbon Neutrality Promotion Meeting (held monthly),*2 which is chaired by the president & CEO, discusses strategies for transitioning to a decarbonized society. The meeting also manages progress in reducing our greenhouse gas emissions. The Carbon Neutrality Promotion Department, which was established in April 2022, serves as the secretariat for the committee and is responsible for further accelerating our decarbonization efforts as a specialized organization.

The status of achievement of energy-saving targets, as well as responses to climate change-related revisions to laws and regulations and new requirements, are deliberated at our Safety and Environment Conference*3 once in a year. Our progress is also confirmed at theconference. The representatives of the sales divisions and group companies who make up the members of the conference incorporate the details of these deliberations into our business activities.

We have introduced an internal carbon pricing system to promote greenhouse gas emissions reductions. Under this system, the progress of each sales division's efforts to reduce greenhouse gas emissions is reflected in the performance and compensation of the CEO who is responsible for that division.

*1

Sustainability Management Committee Decisions on policies and important issues related to Materialities, including climate change
Chairperson Ichiro Kashitani (President & CEO)
Representative officer in charge Hiroshi Tominaga (Member of the Board, CSO*4)
Secretariat Sustainability Management Group, Corporate Planning Department

*2

Carbon Neutrality Promotion Meeting Decisions on strategies toward the achievement of carbon neutrality
Chairperson Ichiro Kashitani (President & CEO)
Representative officer in charge Toshimitsu Imai (Executive Vice President, CTO*5)
Secretariat Carbon Neutrality Promotion Department

*3

Safety and Environment Conference Progress management of responses to climate change-related laws and regulations, etc.
Chairperson Akihiro Sago (Executive Vice President)
Representative officer in charge Akinori Saito (CSKO*6)
Secretariat Global Safety & Environmental Promotion Department
  1. *4CSO : Chief Strategy Officer
  2. *5CTO : Chief Technology Officer
  3. *6CSKO : Chief Safety & KAIZEN Officer

2. Strategy

(1) Climate-related Risks and Opportunities

Category Anticipated Impact
Risks Transition*1 Policy and Regulation Increase in business costs due to introduction of carbon tax, etc.
Technology Change in demand for existing products/services due to introduction of low carbon/decarbonization technologies
Markets Changes in demand for existing products/services due to changes in market conditions
Reputation Reputation damage due to delays in climate change action or poor disclosure
Physical*2 Acute Business damage due to more frequent and increasingly severe wind and flood damage
Chronic Impact on business due to rising temperatures and sea levels
Opportunities Resource Efficiency Increased demand for our recycling business due to growing awareness of resource recycling
Energy Sources Growing demand for our renewable energy business due to increasing need for renewable energy
Products and Services Growing demand for products and services that contribute to decarbonization and reducing carbon
Markets Growing business opportunities in emerging markets as they grow and mature
  1. *1Transition risks: Risks posed by changes in policy and regulation, technology, market environment, etc., associated with the transition to carbon neutrality
  2. *2Physical risks: Risks posed by increasingly severe natural disasters and changes in temperature and precipitation

In response to the risks and opportunities described, we are actively working to not only reduce Scope 1 and Scope 2 emissions but also to reduce Scope 3 emissions and contribute to the greenhouse gas emissions reduction efforts of society.

(2) Scenario Analysis

We conduct scenario analysis, following the TCFD recommendations, of selected businesses that are significantly impacted by climate change.

As for the impact on business, we selected factors that are significantly affected, and conducted a scenario analysis. In terms of risks, we considered transition risks (policy and regulation, technology, markets, and reputation) and physical risks (acute and chronic) while taking into account resource efficiency, energy sources, products and services, and markets in terms of opportunities.

Furthermore, we aim to reduce our greenhouse gas emissions by 50% compared to the 2019 level by 2030, and we used the year 2030 as the time frame for this scenario analysis as well.

Reference Scenarios

We referred to the following scenarios from the International Energy Agency (IEA), Intergovernmental Panel on Climate Change (IPCC), and other sources to assess new business opportunities and business resilience and to analyze the impact on our business in the event of significant changes in our business environment as a result of climate change.

Category Scenario overview Main reference scenarios
Below 1.5°C/2°C
scenario
Under this scenario, policies and regulations are implemented to achieve a decarbonized society and the global temperature increase from the pre-industrial level remains below 1.5°C/2°C. Although the transition risk is higher than under the 4°C scenario, the physical risk is lower.
  • IEA Net Zero Emissions by 2050 Scenario (NZE)
  • IEA Sustainable Development Scenario (SDS)
  • IPCC RCP2.6
4°C scenario Under this scenario, no new policies or regulations are introduced and greenhouse gas emissions continue to increase. The transition risk is lower than under the below 1.5°C/2°C scenario, but the physical risk is higher.
  • IEA Stated Policies Scenario (STEPS)
  • IPCC RCP8.5
Selection of Subject Businesses

Among Toyota Tsusho’s businesses, those that are significantly affected by climate change (from perspectives A–D below) were selected as the subject businesses, and the analysis was conducted for the lithium business, molten aluminum supply business, renewable energy business, and automotive sales business. Going forward, we plan to expand the scope of subject businesses.

The scenarios and understanding of the business environment in this scenario analysis are based on major scenarios presented by international organizations and others and do not represent the medium- to long-term outlook.

(3) Results of Scenario Analysis for Each Business
Lithium business

Toyota Tsusho's production of lithium carbonate began in 2014 at Salar de Olaroz, Argentina, to supply raw materials used in automotive lithium-ion batteries (LiBs), which are essential for electrified vehicles. We constructed a lithium hydroxide manufacturing plant in Naraha-machi, Fukushima Prefecture, and production started in 2022.

Climate-related Risks and Opportunities
Category Details
Risks Reduction in volume of lithium carbonate production in Argentina caused by natural disasters, extreme weather conditions, etc.
Opportunities Increase in demand for lithium products due to vehicle electrification, etc.
Impact on Businesses in Each Scenario
Below 1.5°C/2°C
scenario
In a comparison between the below 1.5°C/2°C scenario and the 4°C scenario, a larger increase in demand for electrified vehicles and storage batteries is expected in the below 1.5°C/2°C scenario, resulting in greater opportunities for this business overall.
4°C scenario Regarding the risk of reduced lithium production efficiency at the lithium carbonate production site in Argentina due to changes in rainfall, any impact on lithium production is expected to be minor as the level of precipitation is expected to remain relatively constant, judging from the results for 2022 and the years leading up to it.

In both scenarios, demand for electrified vehicles and storage facilities that use lithium batteries is expected to increase.

Our Measures

We will aim to build a long-term stable supply structure by enhancing our existing capacity to meet the increasing demand for lithium that will accompany the full-scale popularization of electrified vehicles. In addition, we will expand our business domain and build a structure for the stable supply of lithium hydroxide in preparation for the expected increase in demand due to increasing battery capacity in the future.

Molten aluminum supply business

We supply recycled aluminum to customers in molten form, which reduces CO2 emissions, and the volume of recycled aluminum we supply is one of the highest in the world. Aluminum parts required for weight reduction will also be increasingly in demand as the popularization of electrified vehicles accelerates. In addition, demand for recycled aluminum is also expected to increase due to the recycling of aluminum scrap for environmental considerations.

Climate-related Risks and Opportunities
Category Details
Risks Impact on business due to changes in the sales mix of gasoline and electrified vehicles
Impact on business due to introduction of a carbon tax, etc.
Opportunities Increase in demand for aluminum due to vehicle electrification
Increase in demand due to the replacement of virgin aluminum with recycled aluminum
Impact on Businesses in Each Scenario
Below 1.5°C/2°C
scenario
In the below 1.5°C/2°C scenario, the share of gasoline vehicles in total sales volume is expected to decrease due to stricter fuel efficiency regulations and other factors. On the other hand, demand for weight reduction is expected to increase as the sales ratio of electrified vehicles grows, and demand for recycled materials is expected to increase globally, expanding opportunities for this business as a whole.
4°C scenario In the 4°C scenario, it is assumed that fuel efficiency regulations will not be tightened as in the below 1.5°C/2°C scenario, and the impact on this business overall is expected to be limited.
Our Measures

This business is positioned as one of the circular economy businesses of our priority domains, and we will globally undertake the enhancement of functions from upstream to downstream in the aluminum recycling value chain. In response to cost increases due to the introduction of a carbon tax and other factors, we will strive to reduce greenhouse gas emissions through the use of new technologies and other measures.

Renewable energy business

We are expanding wind, solar, hydroelectric, geothermal, biomass, and other power generation businesses globally. As well, we are focusing on promoting development in Africa and emerging countries and the development of offshore wind power generation.

Climate-related Risks and Opportunities
Category Details
Risks Impact on business due to revision of renewable energy-related policies (feed-in tariffs, subsidies, tax breaks, etc.)
Opportunities Increase in demand for renewable energy
Impact on Businesses in Each Scenario
Below 1.5°C/2°C
scenario
In the below 1.5°C/2°C scenario, although the discontinuation of feed-in tariffs as a result of the revision of renewable energy policies could have an impact, it is expected that worldwide development of policies and a significant increase in demand for renewable energy will lead to progress of related technological innovations and renewable energy becoming a core energy source. Accordingly, the opportunities for this business as a whole are expected to expand as development progresses in response to the demand for renewable energy.
4°C scenario In the 4°C scenario, demand for renewable energy is expected to increase to a certain level, although not to the same degree as under the below 1.5°C/2°C scenario. While there is a possibility that the business could be affected by policy revisions, the impact on the business as a whole is limited.
Our Measures

As this business is positioned as one of our priority domains, we plan to expand our business, including diversifying our portfolio of power sources and conducting energy management, while accelerating global development by reinforcing our existing businesses. We will contribute to the creation of a better global environment through the stable supply of renewable energy with a competitive advantage.

Automotive sales business

We export passenger cars, commercial vehicles including trucks and buses, industrial vehicles, and spare parts produced by automobile and transport equipment manufacturing makers, primarily in the Toyota Group in Japan and overseas, to countries around the world. As well, we conduct business as sole import distributors and dealers through our global network that spans 150 countries around the world.

Climate-related Risks and Opportunities
Category Details
Risks Impact on business due to changes in the sales mix of gasoline and electrified vehicles
Opportunities Increase in demand for electrified vehicles
Impact on Businesses in Each Scenario
Below 1.5°C/2°C
scenario
In the below 1.5°C/2°C scenario, the share of gasoline vehicles in total sales volume is expected to decrease due to stricter fuel efficiency regulations, though the share of electrified vehicles is expected to increase, expanding opportunities for this business as a whole.
4°C scenario In the 4°C scenario, fuel efficiency regulations will not be tightened to the same degree as under the below 1.5°C/2°C scenario, and the impact on the sales ratio of gasoline and electrified vehicles will be small, so the impact on the overall business is expected to be limited.

In both scenarios, the total sales volume of new vehicles is expected to increase globally, especially in emerging countries, thus the risk to the overall business is expected to be minor.

Our Measures

Given that the new vehicle market is expected to continue to expand, especially in emerging countries, we will strengthen our sales structures worldwide. We will also promote the popularization of electrified vehicles by securing resources for battery materials, which are key components of electrified vehicles, and by expanding the vehicle battery 3R (Rebuild, Reuse, Recycle) business domain along with expanding our lineup of electrified vehicles.

3. Risk Management

We manage environmental risks and opportunities, including climate change, to a high standard. Businesses and risks/opportunities related to climate change are deliberated by the Carbon Neutrality Promotion Meeting, the Safety and Environment Conference, and the Sustainability Management Committee, and their members incorporate the details of these deliberations into our business strategies and activities. In particular, the Carbon Neutrality Promotion Meeting, chaired by the president & CEO, meets monthly to identify climate change risks and opportunities in light of the external environment and assess their impact on us, as well as to verify the progress of climate change-related businesses.

The Integrated Risk Management Committee defines the 10 most important risk items, including the environment, to focus on to review our global risk management status. The committee also manages climate change risk in the company-wide risk management process.

We have acquired certification under ISO 14001, an international standard related to environmental management systems, to monitor our risk management processes. Toyota Tsusho conducts internal environmental audits of domestic and overseas consolidated subsidiaries once every three years.

Investments and Loans

At Toyota Tsusho, our officers participate in various meetings to see the impacts that our investment activities have on ESG: The executive vice president, CSO, and CFO take part in the Investment and Loan Committee; the deputy CSO and deputy CFO in the Investment and Loan Meeting; and the president & CEO, executive vice president, CSO, CFO, and general manager of the Corporate Planning Department in the Investment Strategy Meeting. Projects that meet or exceed certain requirements and are approved by the Investment and Loan Committee or the Investment and Loan Meeting are required to undergo a preliminary carbon neutrality assessment. This assessment determines the Scope 1*1 and Scope 2*2 emissions that will increase as a result of the investment, how they can be reduced, and how the investment will contribute to Scope 3*3 reductions as well as to greenhouse gas emissions reductions in society.

  1. *1Direct greenhouse gas emissions from Toyota Tsusho’s use of fuel (coal, gas, etc.)
  2. *2Indirect greenhouse gas emissions from Toyota Tsusho’s use of purchased electric power and heat
  3. *3Greenhouse gas emissions, encompassing production processes through raw material procurement, manufacturing, sales, consumption and waste

4. Metrics and Targets

* Covers Scope 1 and Scope 2 emissions from the Toyota Tsusho Group; calculated using the Greenhouse Gas Protocol

Greenhouse Gas Emissions Reduction Targets and Future Initiatives

The carbon neutrality of our greenhouse gas emissions, as well as our contribution to a decarbonized society, is essential. Therefore, in support of the Paris Agreement and as a concrete policy toward contributing to the transition into a decarbonized society, we established a target of reducing greenhouse gas emissions (Scope 1 and Scope 2) by 50% compared to 2019 levels by 2030 and achieving carbon neutrality by 2050.

We are promoting comprehensive energy conservation and renewable energy measures (installing LED lighting and solar power generation facilities, etc.). We also aim to achieve this goal by reducing greenhouse gas emissions from production processes and logistics operations through fuel conversion, efficient consumption, and technological innovation.

The capability to accelerate and promote businesses that contribute to the reduction of greenhouse gases (GHG) throughout the entire industrial life cycle is one of our strengths. All of our employees will unite and exert themselves to contribute to the solution of these social issues.

Internal Carbon Pricing System

We introduced an internal carbon pricing system to encourage efforts to reduce greenhouse gas emissions in our internal management performance evaluation, and have set the price per ton at 30,000 yen.

Climate Change Initiatives

Carbon Neutrality Roadmap

Toyota Tsusho has formulated the Carbon Neutrality Roadmap 2030, the growth strategy for the Toyota Tsusho Group toward 2030.

Toyota Tsusho Group CO2 Emissions Reduction

Our group has been not only engaged in its own emission reduction (Scope 1 and Scope 2), the reduction endeavors along with the supply chains (Scope 3), but in contribution to the reduction of emission of society (avoided emissions) and to the carbon neutrality in many ways unique to Toyota Tsusho.

Going forward, our group will set goals for certification from SBT.*

  1. *SBT(Science Based Targets) GHG reduction target companies set in line with the Paris Agreement.
Scope 1 and Scope 2 Emission Trends

Scope 1 and Scope 2

Comparing the results for 2022 and the base year (2019), while emissions themselves have increased due to business growth, the decrease has exceeded this increase, resulting in a net reduction in emissions.

Major initiatives toward carbon neutrality include promoting the use of energy-saving (such as LED lighting in offices and factories) and renewable energy sources (such as installation of solar power generation equipment in owned buildings).

We will continue our initiatives to date and implement measures such as electrification of facilities and equipment in production and logistics processes, fuel conversion and more efficient energy consumption, and investment in technologies such as CCUS to achieve our 2030 target.

Major Initiatives toward Reduction

Scope 3

Our group is working to reduce greenhouse gas emissions in the supply chain with our distinctive initiatives. We work with customers and suppliers to reduce greenhouse gas emissions in the supply chain, which cannot be achieved independently.

In addition to manufacturing and logistics efficiency kaizen (continuous improvement) and the treatment and recycling of waste from ELVs and production processes, which have long been one of our strengths, in recent years we have focused on emissions reduction through our EV battery manufacturing business, lithium resource development, and parts and materials supply. Further, we aim to achieve carbon neutrality for Scope 3 by reducing the Scope 1 and Scope 2 emissions of our customers and suppliers through the supply of renewable energy and low-carbon energy.

We will update Scope 3 emissions on our website as soon as a third-party certification process is completed.

Avoided Emissions

Our group focuses not only on reducing GHG emissions in its supply chains, but also on contributing to reductions of emissions in the world (avoided emissions).

We engage in a wide variety of initiatives, including by increase of renewable energy supply and replacement of the current products with bio-derived/recycled products.

An Example of Avoided Emissions
Renewable energy power generation 2.69 million ton-CO2

In the case of our group, which is involved in various parts of the supply chain and undertakes a variety of initiatives, the degree of involvement differs for each business, making it difficult to express the overall contribution using the same standard. The above is an example of the avoided emissions of the operational phase of a renewable energy power generation project, for which calculation methods are relatively standardized around the world.

※Calculation methods: Power Generation capacity (MW/year) x 24 hours x 365 days x facility utilization ratio x emission factor (tCO2/MWh) x our equity ratio

Compliance with Laws and Regulations

Toyota Tsusho endorses the Paris Agreement and fully supports laws, regulations, and policies that help mitigate climate change, such as the Act on Rationalizing Energy Use and the Act on Promotion of Global Warming Countermeasures. We submit an annual report to the government on energy consumption, progress toward energy conservation targets, and greenhouse gas emissions.
Under the business classification evaluation system in the Act on Rationalizing Energy Use, we received an "S class" rating which indicates that we are a business with excellent energy conservation. Through these efforts, we are playing a role in achieving the greenhouse gas reduction target.

BCPs in Anticipation of Climate Disaster Risks (Adapting to Climate Change)

Toyota Tsusho is formulating measures for adapting to climate change with the objectives of responding to the effects of climate change and preventing or mitigating damage. The risks of weather disasters from events such as torrential rain and extreme heat are rising. The entire Group is taking action with an awareness that the formulation, management, and operation of business continuity plans (BCPs) that anticipate these risks is crucial.

Case Study: Business Continued at an Alternate Site During Flooding in Thailand

Toyota Tsusho formulated BCPs that anticipate the inability to use key management resources as a result of physical risks of climate change and is taking various responsive measures.

In 2011, when the northern and central regions of Thailand experienced widespread flooding, damage occurred in Bangkok and seven industrial parks, and some 450 Japanese-affiliated companies were affected. Two years later, when massive flooding again occurred in October 2013, the Amata Nakhon Industrial Estate, one of Thailand's largest, was flooded and extensive damage again occurred. Despite this, TTK Asia Transport (Thailand) Co., Ltd., a Toyota Tsusho Group transportation company with a site in the industrial park, had a BCP in place, enabling it to relocate all personnel and trucks to an alternate site and maintain operations without interruption.

Investment Strategy

By 2030, Toyota Tsusho will invest 1.6 trillion yen scale for the achievement of decarbonized society. Toyota Tsusho identified five priority areas that promote the circular economy in each stage of the industrial lifecycle; "energy creation," "energy collection and coordination," "manufacture of goods," "transport of goods," "use of goods," "waste processing," and "reuse and recycling."

Focus Area
  • Renewable energy and energy management: Scale of investment 700 billion yen
  • Batteries: Scale of investment 400 billion yen
  • Hydrogen and alternative fuel: Scale of investment 200 billion yen
  • Resource circulation and the 3 Rs (rebuild, reuse, recycle): Scale of investment 200 billion yen
  • Economy Of Life (Fields relating to medicine, clothing, food and housing): Scale of investment 100 billion yen

Internal Systems to Promote Reductions

Companies of our group unite to conduct initiatives for reducing greenhouse gas emissions. At the same time, we drive these initiatives with performance evaluation in terms of management. Specifically, we have introduced a mechanism for evaluation after removing impacts—such as depreciation and interests payable related to investments for greenhouse gas emissions reductions—from profits (subsidy system for investments in infrastructure for decarbonization), as well as a mechanism that adds or deducts from the profits of the respective sales divisions according to increases and decreases in greenhouse gas emissions (internal carbon pricing system).

Essentially Achieving 100% Renewable Energy Use for Electricity Used at All Offices in Japan

The company has been CO2 free at all 18 offices in 11 prefectures in Japan through the use of non-fossil certificates with tracking for electric power used in the fiscal year 2022, essentially achieving 100% renewable energy use.

Internal and External Collaboration

Our group strives for corporate value enhancement by proactively disclosing information on carbon neutrality to internal and external stakeholders. Internally, we released the Carbon Neutrality Internal PR Video and Carbon Neutrality App to foster a culture in which all employees view carbon neutrality as their own business and promote it. Externally, we issued 41 carbon neutrality-related press releases and published the Carbon Neutral Product and Service Catalog to widely publicize our carbon neutrality projects.

Internal Awareness

Carbon Neutrality Internal PR Video

This internal PR video was created to make carbon neutrality a personal matter for employees and to foster a sense of unity company-wide. Videos featuring young employees and division CEOs from each division are linked together in a relay format into a single video.

Carbon Neutrality App

This is a behavior modification app that can be used as a sales tool to deepen understanding of carbon neutrality among all employees. It enables employees to make carbon neutrality their own business using various content. It also provides one-stop access to our carbon neutralityrelated information, enabling prompt proposal of solutions during business meetings with customers. In addition, points earned through the use of the app can be donated to a sapling fostering project.

Carbon Neutrality Strategy and Activities Session with Mr. Jacques Attali

In April, 2023, we hosted a special session on carbon neutrality with worldrenowned economist and thinker, Mr. Jacques Attali.

During this session, a wide range of topics related to our overall carbon neutrality strategy and respective strategies and trajectories our crossfunctional organization, the five working groups, should pursue were discussed. Throughout the session, while Mr. Attali emphasized the importance of innovation and environmental technology as well as the important concept of "Economy of Life," he pointed out the importance of a longterm perspective, including education and awareness-raising, through which he reaffirmed the challenges and possibilities of our carbon neutrality strategy. Further, he also emphasized the importance of having more female employees in decision-making positions. This allowed us to gain inspiration for new visions and goals. In addition, we were able to foster a sense of unity among our employees toward carbon neutrality. Based on Mr. Attali's suggestions, we will continue to actively pursue our efforts to achieve a decarbonized society.

External Collaboration

Carbon Neutral Product and Service Catalog

This catalog covers our corporate group's carbon neutrality-related solutions, which are linked to each of Scope 1, Scope 2, and Scope 3. We will contribute to the transition to a decarbonized society by helping our customers reduce greenhouse gas emissions through the various solutions that our group has accumulated over the years.

“zeroboard” cloud service for greenhouse gas emissions calculation and visualization
Strengthening Collaboration with Zeroboard, a Provider of Greenhouse Gas Emissions Calculation and Visualization Services

Our group has been strengthening collaboration with Zeroboard Inc., a company that provides "zeroboard," a service for calculating and visualizing greenhouse gas emissions. In addition to the use of the service at Toyota Tsusho, we will work with Zeroboard to promote the visualization of greenhouse gas emissions and reduction of carbon footprints for customers and suppliers in Japan and overseas, particularly in the automotive industry, and provide greenhouse gas emission reduction solutions such as renewable energy and recycling businesses. By serving as a one-stop provider of these solutions, we will contribute to the realization of carbon neutrality throughout the value chain.

External Collaboration

Japan Foreign Trade Council

Japan Foreign Trade Council (JFTC) supports the Paris Agreement and endorses the efforts of the government and Keidanren to establish a decarbonized society (Plan for Global Warming Countermeasures and Keidanren Carbon Neutrality Action Plan), and it is promoting these efforts in cooperation with other industries and organizations. JFTC has also formulated its own "Voluntary Action Plan on the Environment" and is working on this as an issue for the trading industry toward building a decarbonized society.
We regard the consideration and implementation of climate change mitigation and adaptation measures to be key issues and actively strive to create new businesses and solutions. In support of the primary objective of JFTC, we are participating as one of the vice chairman companies of the council. In the fiscal year 2023, as the chair of the Global Environment Committee, one of the various committees of the JFTC, we are playing a central role in the "Voluntary Action Plan on the Environment." By doing so, we are contributing to activities aimed at achieving the Paris Agreement's long-term goal of carbon neutrality by the year 2050.
As an example, the Act on Rationalizing Energy Use requires specified consignor companies to cooperate with transportation companies to promote energy conservation under the specified consignor system. However, the current Act makes it difficult to achieve the required indicators and targets and slows down the progress of energy conservation. The JFTC raised this issue at a meeting to exchange opinions between member companies subject to the specified consignor system and government authorities (the Ministry of Economy, Trade and Industry (METI) and the Agency for Natural Resources and Energy (ANRE)). This led to our participation as an observer in the METI/ANRE Working Group on Classification Standards for Consignors through the JFTC.
Furthermore, since 2021, at the same working group's industry interviews on "Consignor Energy Conservation Issues and Directions for Consideration," the manager and those in charge of our Global Safety & Environmental Promotion Department have participated as observers through the JTFC and raised the issues mentioned above. We are also continuing our efforts and proposals to create an environment that facilitates the promotion of energy conservation activities with transporters in the revision of the Act on Rationalizing Energy Use.

<2030 reduction target for domestic business activities (trade industry)>

JFTC has set a target of reducing electricity consumption intensity (electricity consumption per floor space in the entire company) by 15.7% in 2030 compared to the fiscal year 2013. This is based on the effort target required by the Act on Rationalizing Energy Use (to reduce electricity consumption by an average of 1% or more per year over the medium to long term) and is set on the premise of a 1% reduction per year as the maximum target that can be achieved through continued efforts.
As a member of JFTC and chairman of its Global Environment Committee, we are also playing a part in this activity, promoting energy-saving activities and implementing initiatives to develop a decarbonized society.

Battery Association for Supply Chain

The Battery Association for Supply Chain (BASC) was established in April 2021 to contribute to the global battery industry by developing the battery supply chain in a sustainable manner toward the realization of a decarbonized society.

Toyota Tsusho, Toyotsu Lithium, Toyota Tsusho Materials, and Toyotsu TEC are members of this association. Our Executive Officer Katayama (COO, Metals Division) serves as the vice president of the association, and Toyota Tsusho represents the association as one of the 10 managing companies in its policy advocacy efforts.

Hydrogen Council

Since hydrogen does not emit CO2 when used, can be produced using biomass or renewable energy, and can be stored, we recognize that it is a strong option toward the achievement of a low-carbon society. Since 2017, we have been a Supporting Member of the Hydrogen Council, a global initiative of leading companies in the energy and transport equipment industries with a united and long-term vision for hydrogen as a contributor to the energy transition. By becoming a member of this global council that has many companies that are trying to use hydrogen for decarbonization as members, we can exchange information and opinions widely with other companies that have the big target of decarbonization. Additionally, by collecting information related to hydrogen from around the world, it is our goal to promote our hydrogen business and contribute to the achievement of a hydrogen society.

In order to create a basic model for the achievement of a hydrogen society, we are currently building a usage model, from hydrogen production and supply through to the introduction of FC (fuel cell) mobility, in areas such as ports, public transportation and logistics. We are also supporting external FC sales and the development of FC-equipped equipment manufacturers. With continuously changing market trends and tightening regulations, we make proposals at the annual priority activity plan formulation meeting for items that the Hydrogen Council should work on to ensure the expansion of hydrogen utilization and the achievement of a hydrogen society in each country, including areas where we can contribute. These items include the creation of incentives and mechanisms that will motivate users to use hydrogen and FCs and the creation of an international unified standard for hydrogen, such as GHG calculation methods.

Japan Hydrogen Association

In Japan, the public and private sectors have long collaborated on research, development, and demonstration experiments related to hydrogen, but the infrastructure for social implementation is not yet sufficient, and the supply cost is high compared to existing fuels, so the market is still immature.

The Japan Hydrogen Association aims to establish a hydrogen society at an early stage by overlooking the entire supply chain and realizing social implementation projects as a cross-industry and open organization.

We have been a member of the association since its establishment in December 2020 and are actively collaborating in the commercialization/regulation working group to create demand for hydrogen and advocate for the easing of regulations and other policy proposals. At the seminar for the association's members in November 2022, we gave a presentation on initiatives for hydrogen energy in Japan and abroad. Through the association, we are contributing to promotional activities to increase the social acceptance of hydrogen and striving toward the realization of a carbon-neutral society.

Liaison Council for Collection of Waste Cooking Oil and Utilization of Biofuel for Domestic Vessels

As a cooperating party, we have joined the "Liaison Council for Collection of Waste Cooking Oil and Utilization of Biofuel for Domestic Vessels" launched by Japan Federation of Coastal Shipping Associations, Japan Passengerboat Association, UCO Japan and Japan Railway Construction, Transport and Technology Agency (JRTT) for the purpose of "promoting carbon neutrality in the domestic maritime sector by promoting the collection of waste cooking oil and expanding the use of biofuels."

In the government’s Plan for Global Warming Countermeasures, revised in October 2021, the reduction target was revised to reduce CO2 emissions for domestic shipping by 17% in the fiscal year 2030 compared to the fiscal year 2013. As a result, the possibility of biofuel utilization as one of the energy-saving and CO2 reduction efforts in existing vessels is gaining interest, although currently most of the waste cooking oil from domestic vessels is being disposed.

Together with the Maritime Bureau of the Ministry of Land, Infrastructure, Transport and Tourism, which is participating as an observer, and Daiseki Eco. Solution Co., Ltd., which is participating as a collaborator, we will conduct a survey of the actual conditions of domestic vessels through this liaison council and promote efforts such as the formulation of guidelines for operators for the collection of waste cooking oil.

Carbon Accounting Adviser Institute

On July 1, 2022, Toyota Tsusho established the "Carbon Accounting Adviser Institute," which aims to promote the correct approach to climate change financial information with four companies: Wastebox, Inc., Chubu Electric Power Miraiz Co., Inc., Nippon Life Insurance Company, and Aioi Nissay Dowa Insurance Co., Ltd. of the MS&AD Insurance Group. We have dispatched one director to this institute.

The Carbon Accounting Adviser Institute has established a new "Carbon Accounting Advisor Qualification System" as a private qualification, focusing on the method of measurement, which is not currently standardized, and with the aim of becoming a standard for measurement metrics. This "Carbon Accounting Advisor Qualification Tier 3" is recognized as "Decarbonization Advisor Basic" under the Ministry of the Environment's certification program.

Promoting the Carbon Accounting Advisor Qualification System will help companies address climate change, and through our activities in this association, we will contribute to the realization of carbon neutrality not only for Toyota Tsusho but also for society as a whole.

GX League, Ministry of Economy, Trade and Industry

Toyota Tsusho expressed support for the "GX League Basic Concept" formulated by the Ministry of Economy, Trade and Industry in 2022, and joined in April 2023.

The GX League is a forum where companies that are taking on the challenge of green transformation (GX) and aiming to achieve sustainable growth in current and future society collaborate with other companies that are making similar efforts, together with government and academia, with a view to achieving carbon neutrality and social change by 2050.

In order to "leave a better global environment to the children of the future," we will actively participate in the GX League and work toward achieving carbon neutrality for society as a whole.

Related Links
Environmental Partnership Organizing Club (EPOC)

Toyota Tsusho participates in various initiatives as a member of the Environmental Partnership Organizing Club (EPOC), which was formed by industry, government, and academia in the Chubu region.

Through EPOC, we disseminate information on environmental responses from the Chubu region and seek to create a safe and comfortable circular society while establishing a world-class environmentally-advanced region.

COOL CHOICE

Toyota Tsusho supports the "COOL CHOICE" initiative, which encourages "smart choices" that contribute to global warming countermeasures such as switching to energy-saving and carbon-free products and reviewing lifestyles. We also adopted the new "Be Yourself," work attire guidelines, which allow all Toyota Tsusho employees to make their own decisions about what to wear at work and are compatible with the year-round Cool Biz/Warm Biz campaign.

CDP
CDP

CDP is an international NGO founded in London in 2000 and a project that requires companies to disclose their climate change strategies and specific greenhouse gas emissions.
On behalf of institutional investors with assets under management totaling US$130 trillion, CDP sends questionnaires in three areas (climate change, water security, and forests) to companies, analyzes their responses, and publishes the results of its evaluation.
Scores are rated on eight levels: A, A-, B, B-, C, C-, D, and D-. Toyota Tsusho began responding to questionnaires regarding climate change, water security, and forests in 2017.

CDP Evaluation Results for CDP2023

Climate change Water security Forests
Timber Palm oil Soy
A A- A B B

CDP (Climate Change)
As indicated above, we received an "A" evaluation for climate change as a result of the responses to the CDP questionnaire conducted in 2023.

ISO 50001

Toyota Tsusho acquired ISO 50001:2018 (energy management systems) certification in 2020. The scope of the certification covers business sites in Japan (18 sites in 11 prefectures) subject to notification requirements as specified businesses under the Enegy Conservation Act as well as employee benefit facilities. We created energy management standards for each site and periodically confirm their implementation status by conducting energy-saving audits to encourage energy-saving measures.

関連リンク
Review of Member Organizations
We regularly review the policies of the industry associations and initiatives we participate in to ensure they do not diverge from our own policies. If we find any discrepancies, we will approach the associations through constructive dialogue to encourage them to review their stance.

Performance Data

Greenhouse Gas Emissions(Scope 1 and Scope 2, Domestic)
Greenhouse Gas Emissions(Scope 1 and Scope 2, Domestic)
Tabulation scope: Toyota Tsusho Corporation (head offices, branches, sales offices, field offices) and domestic consolidated subsidiaries
<CO2 emission factors from electricity>
(2022) Adjusted emission factors from "Emission Factors by Electric Utility Operator" published by Ministry of the Environment and Ministry of Economy, Trade and Industry (published January 2023)
(Until 2021) Basic emission factors in "Emission Factors by Electric Utility Operator" published in the corresponding year
<CO2 emission factors from non-electricity sources>
"Greenhouse Gas Emissions Accounting and Reporting Manual" Ver.4 published by Ministry of the Environment and Ministry of Economy, Trade and Industry
Greenhouse Gas Emissions(Scope 1 and Scope 2, Overseas)
Greenhouse Gas Emissions(Scope 1 and Scope 2, Overseas)
Tabulation scope: Overseas consolidated subsidiaries
Conversion coefficient: (Electricity) IEA Emission factors 2019(Non-electricity sources) IPCC 2006 Guidelines for National Greenhouse Gas Inventories
Breakdown of Greenhouse Gas Emissions(Scope 1)
Unit ton-CO2
FY2019 FY2020 FY2021 FY2022
CO2 485,607 399,786 472,268 471,720
CH4/N2O/HFCs/PFCs/SF6/NF3 Others 0 0 0 0
Total 485,607 399,786 472,268 471,720
Tabulation scope: Toyota Tsusho Corporation (head offices, branches, sales offices, field offices) and domestic consolidated subsidiaries,overseas consolidated subsidiaries Applies to emissions exceeding 3,000 t-CO2e per year based on the greenhouse gas emissions accounting, reporting and publication system.
Greenhouse Gas Emissions (Scope 3)
Unit ton-CO2
FY2019 FY2020 FY2021 FY2022
Category 2 (Capital goods) 362,345 382,179 463,802 475,206
Category 3 (Fuel- and energy-related activities not included in scope 1) 14,410 17,505 17,854 125,321
Category 4 (Upstream transportation and distribution) 21,127 17,167 20,093 16,833
Category 5 (Waste generated in operations) 3,109 4,395 7,864 5,136
Category 6 (Business travel) 1,589 1,727 1,714 1,702
Category 7 (Employee commuting) 3,755 4,218 4,212 4,205
Category 8 (Leased assets) 0 0 0 0
Category 14 (Franchises) 0 0 0 0
Total 406,335 427,191 515,539 628,403
Tabulation scope: Toyota Tsusho Corporation (head offices, branches, sales offices, field offices) and domestic consolidated subsidiaries
* Category2-Toyota Tsusho and domestic and overseas consolidated subsidiaries
  Category4-Toyota Tsusho Corporation, Toyota Steel Center Co., Ltd. and Toyotsu Energy Corporation Conversion coefficient
Calculation standards: Based on "Emissions Per Unit of Activity for Calculating Greenhouse Gas Emissions, etc. of Organizations Throughout the Supply Chain (Ver.3.1)",calculated using the factors in "Database of Emissions Per Unit of Activity for Calculating Greenhouse Gas Emissions, etc. of Organizations Throughout the Supply Chain (Ver.3.1)"(hereinafter the "DB")
Category 2 : Calculated by multiplying the amount of tangible fixed assets acquired on a consolidated basis in the reporting year by[Emissions intensity per capital goods prices]
Category 3 : Calculated by multiplying the fuel, electricity and heat consumption in the reporting year by [Emissions intensity per unit of electricity and heat consumption and emissions intensity during fuel procurement] in the DB Fuel is calculated by reference to the factors in IDEA v2.3 included as a reference in the DB
Category 4 : Aggregation of items related to domestic transportation in shipping of Toyota Tsusho Corporation and Toyota Steel Center and Toyotsu Energy respectively, based on the Ministry of the Environment and Ministry of Economy, Trade and Industry "Greenhouse Gas Accounting and Reporting Manual" However, calculated by calendar year (not fiscal year) period
Category 5 : Calculated by multiplying the [Intensity by waste type and methods of processing] in the DB classified by business-related general waste and industrial waste by type and processing method(valuable materials are excluded from the calculation)
Category 6 : Calculated by multiplying [Emissions intensity per employee] in the DB by the number of employees at each business site
Category 7 : Calculated by multiplying [Emissions intensity per number of employees by city classification by type of work and number of working days] in the DB by the number of employees at each business site
Category 8 : There are no CO2 emissions from use of leased equipment as they are reported in Scope 1 & Scope 2
Category 14 : There are no CO2 emissions as there are no matters falling under Franchises Business
Biomass fuel consumption
Biomass fuel consumption (ton) 238,960
Biomass fuel consumption (kL) 78
Tabulation scope: Toyota Tsusho Corporation (head offices, branches, sales offices, field offices) and domestic consolidated subsidiaries
GHG emissions from biomass fuel use
t-CO2e
GHG emissions from biomass fuel use 275,015
Tabulation scope: Toyota Tsusho Corporation (head offices, branches, sales offices, field offices) and domestic consolidated subsidiaries
Third Party Certification

Third-party certification has been obtained from LRQA Group Limited for a portion of the performance data above.