We identified climate change as one of the Materialities that matter most to our business. Actions relating to Materialities are verified by the Sustainability Management Committee, which meets annually, and are then reported to the Board of Directors as appropriate. The particulars of these deliberations are incorporated into our business strategies via division CEOs who make up the committee. Since 2020, the committee has also been tasked with setting key performance indicators (KPIs) and has been reviewing progress.

The status of achievement of energy-saving targets, as well as climate change-related revisions to laws and regulations and responses to new requirements, are deliberated at our annual Safety and Environment Conference. The plan-do-check-action (PDCA) improvement cycle is also confirmed at the conference. The details of these deliberations are incorporated into our business activities via the representatives of the sales divisions and group companies who make up the participants in the conference.

Furthermore, we established the Task Force for Promoting Carbon Neutrality as a cross-company organization in April 2021, which meets monthly to discuss strategies for the transition to a decarbonized society. This is where we also manage the progress of greenhouse gas emissions reductions by our corporate group.

We view the issue of climate change as one of the most important challenges the world faces, and 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.	Net Zero Emissions by 2050 Scenario (NZE), IEA World Energy Outlook 2021. Sustainable Development Scenario (SDS), IEA World Energy Outlook 2021. IPCC RCP2.6
4°C scenario	Under this scenario, no new policies or regulations are introduced and CO2 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.	Stated Policies Scenario (STEPS), IEA World Energy Outlook 2021. 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 for scenario analysis, and the analysis was conducted for the lithium business, molten aluminum production business, renewable energy business, and automotive sales business. Going forward, we will 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.

We manage environmental risks—which include climate change—to a high standard. Business opportunities and risks related to climate change are deliberated by 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.

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 addition, as both a regular member and vice chairman of the Japan Foreign Trade Council, Inc. (JFTC), we aim to contribute to the achievement of the Paris Agreement’s long-term goal of carbon neutrality by 2050, in cooperation with other industries and organizations.
As an example, the Act on Rationalizing Energy Use (Energy Conservation Act) 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.
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 Energy Conservation Act.

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.

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.

In addition, Toyota Tsusho participates in various programs as a member of EPOC, an environmental partnership group formed by industry, government, and academia in the Chubu region. EPOC promotes the expansion of environmental behavior to society and the development of a culture for such behavior, dissemination of information on environmental behavior, and international exchange activities.

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.

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