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Climate Change(TCFD)

Basic Philosophy

Addressing Climate Change (TCFD)

The effects of climate change are becoming increasingly serious and climate change is considered to be a contributing factor in the frequent abnormal weather patterns and natural disasters that we see currently. The Nichirei Group’s business benefits from nature. Therefore, in addition to its importance as a social challenge, we see climate change as a potential threat to business continuity.
In June 2020, the Nichirei Group expressed its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and announced its participation in the TCFD Consortium. The Group has positioned climate change initiatives as one of the material matters it identified for achieving its vision for 2030. As such, we are actively promoting initiatives to help resolve social issues related to climate change.
In addition to appropriately responding to risks posed by shifts in the external environment caused by climate change, we will consider several scenarios in which climate change could give rise to business opportunities, and conduct timely disclosure.

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Management System

In April 2022, the Nichirei Group established the Group Sustainability Committee, which formulates sustainability strategies, including initiatives related to climate change, and manages the progress of those strategies. Chaired by the representative director and president of the holding company, the committee comprises the director and executive officer responsible for implementing climate change strategies, all other officers, including outside directors and outside Audit & Supervisory Board members, as well as relevant personnel from the strategic planning and sustainability divisions of each operating company. Climate change-related strategies and targets deliberated and reviewed by the committee are reported to the Board of Directors of the Nichirei Group by the director and executive officer responsible for climate change initiatives. Strategies, targets and plans are reviewed as appropriate.
Furthermore, in April 2022, to respond to a wider range of sustainability issues, including climate change, we established the Sustainability Management Division within the holding company.
The Group Sustainability Committee also deliberates the details of various scenario analyses that have been conducted since 2019. The latest disclosure includes content deliberated at a committee meeting held on July 25, 2023.

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Initiatives

Strategy

Identification of Material Risks and Opportunities

Worldwide, the Nichirei Group is developing a range of food-centered businesses that it expects will be impacted by climate change in various ways. We are conducting scenario analyses of how climate change might affect our business activities. We hope to better quantify the risks and opportunities identified in order to incorporate appropriate responses in our management strategy. In this way, we aim to become a sustainable corporate group.

We assessed the material risks and opportunities of the Nichirei Group based on two climate change scenarios, and identified general low-carbon policies (CO₂ emission reduction) as the most significant area of Group-wide risks and opportunities. We established long-term CO₂ reduction goals and launched initiatives.

Climate Change Scenarios in Relation to Water-Related Risks Arising from Abnormal Weather

Climate Change Scenarios for Rice and Chicken Procurement

Climate Change Scenarios for Shrimp Procurement
Business Risks
Foods Business Chicken Baseline scenario General abnormal weather
  • Reduction of agricultural and dairy production, and steep rise in purchase prices due to deterioration in quality
  • Difficulty in obtaining raw materials and production delays due to logistic network disruptions
Rice
Shrimp Flooding, rising sea levels
  • Reductions in production efficiency and volume and submerged aquafarms
Vegetables, marine products, and meat and poultry products
  • Submerged agriculture farms, aquafarms and processing factories
  • Difficulty in obtaining raw materials and production delays due to supply chain disruptions
Common 1.5℃ scenario Low-carbon policies
  • Increased cost for measures for converting to renewable energy and equipment electrification, elimination of emissions
Environmental countermeasures within the supply chain
  • Curtailment of transactions; higher cost of measures such as the maintenance of global certifications
Logistics Baseline scenario General abnormal weather
  • Damage to refrigerated warehouses and logistics centers
  • Difficulty securing human resources in disaster risk areas
1.5℃ scenario Low-carbon policies
  • Opportunity loss caused by the slow increase of investment in natural refrigerants and the slow adoption of technological platforms such as electrical and low-carbon vehicles
Business Opportunity
Foods Business Baseline scenario Changes in weather patterns
  • Increased demand for frozen and processed foods
1.5℃ scenario Strengthening of environmental countermeasures within our supply chain
  • Increase demand for ethical products that are compliant with the SEDEX platform and are created using globally certified raw materials
  • Increase demand for the curtailment of food loss within the supply chain through the development of eco-friendly products and technological development
Increased environmental awareness
  • Develop and expand demand for products created using sustainable raw materials
Logistics Baseline scenario General abnormal weather
  • Increase in sales thanks to customer base expansion achieved through strengthened disaster countermeasures and resilience
1.5℃ scenario Modal shift
  • Cost reduction achieved through a modal shift that improves transportation efficiency
Increased environmental awareness
  • Increase in number of business partners due to higher evaluations as a company that actively discloses information related to environmental countermeasures
  • Note:The bioscience business is characteristically resistant to impact from climate change-related events. Accordingly, we have not currently identified any material factors in our bioscience business based on the FY2021 Group climate change scenarios.
Risk and Opportunity Analysis for Shrimp Procurement

Items Assessed

Survival rate* and body length (= weight) of adult shrimp in the main production areas (11 locations in total) in the top three countries from which Nichirei Fresh procures shrimp (Indonesia, Vietnam and Thailand).

  • Areas Assessed

    2022
  • Measurement Parameters

    2022

Assessment Outcomes (Climate Change Scenario RCP 8.5)

  Risks Opportunities
Impact of physical changes
(Current scenario)
Survival rate of late stage larvae (juvenile shrimp) decreases by up to 30% compared with 2020 Shrimp body length increases by up to 30% compared with 2020
Impact in transition scenario Increase in production and procurement costs due to carbon price transfers Response to changes in consumer demand from a longterm perspective, procurement of certified sustainable raw materials, and support for producers

Production Area Assessment (Climate Scenario RCP 8.5)

  Effect of the increased body length of adult shrimp
Extra large Large Medium Small
Impact of decreasing survival rate Large   ① Indonesia Tarakan
③ Indonesia East Java
④ Indonesia South Sulawesi
⑪ Thailand Samut Songkhram Province ⑨ Thailand Chanthaburi Province
Medium ② Indonesia Lampung   ⑥ Vietnam Can Tho ⑤ Vietnam Soc Trang
⑩ Thailand Rayong Province
Small ⑦ Vietnam Da Nang ⑧ Vietnam Hue    

The effect of increasing body length is higher at the main four production areas in Indonesia than in other areas.
Although the impact of the decreasing survival rate is significant for late larval stage, the impact is considered to be limited because breeding is at indoor hatcheries with air-conditioning controls and other features.

  • Survival Rates by Shrimp Growth Stage

    Whiteleg shrimp growth stages and the impact of climate change

    • Note: Final survival rate is obtained by calculating
      (hatching rate at oviparity stage) x (late larval stage survival rate) x (adult stage survival rate)
  • Adult Shrimp Body Length Prediction Map

    2090 Whiteleg shrimp body length in RCP 8.5 (4.0°C rise in temperatures)
    Prediction (Excerpt)
    (Index: FY2021 = 100)

    • Note: Despite some differences among areas, body length tends to remain the same or increase.
Financial Impact

We expect the financial impact on the shrimp business to include higher purchasing costs resulting from higher supplier costs, and various issues arising from market distribution of higher-priced products. Over the medium to long term, we expect that we will be able to effectively deliver social value by maintaining stable distribution of protein-rich shrimp.

Risk Management

Nichirei ensures that appropriate divisions manage the impact that a variety of risks (including climate change-related risks) have on business management from a comprehensive standpoint employing both rational and optimal methods. The risks are also deliberated and reviewed by the Group Risk Management Committee, which is chaired by the representative director and president. The committee has been managing our responses to major risks related to business operations. However, due to the need to respond more quickly and accurately to various ESG-related issues, we established the Group Sustainability Committee in FY2023 as a separate entity to deal with ESG-specific risks and opportunities, including climate change.
The Group Sustainability Committee works with the strategic planning and sustainability divisions of each operating company to identify important ESG-related issues and risks. The most important themes are then deliberated by the committee. Specifically, the risk associated with climate change is positioned as a major risk for the Group. The committee deliberates and manages business risks and opportunities arising from scenario analyses.

Indicators and Targets

Nichirei Group Material Matters (Materiality)
Realizing sustainable food procurement and a circular economy

Group Targets
(KPIs)
Procurement ratio of sustainable marine products complying with the Nichirei Group Sustainable Marine Product Procurement Guidelines in marine products business 100%
(FY2025 target, FY2031 target)
Ratio of marine products in the above from fisheries with MSC, ASC or other global certification 32% (FY2025 target)
50% (FY2031 target)
Nicihrei Corporation, Strategic Planning, Nichirei Corporation, Quality Assurance Division, Nichirei Corporation, Technology Management, Nichirei Corporation, Corporate Internal Audit, Nichirei Corporation, Corporate Supervise, Nichirei Corporation, Legal Affairs, Nichirei Corporation, Human Resources Strategy & General Affairs, Nichirei Corporation, Finance & Investor Relations, Nichirei Corporation, Accounting & Tax, Nichirei Corporation, Group Communication, Nichirei Foods Inc., Nichirei Fresh Inc., Nichirei Logistics Group Inc., Nichirei Biosciences Inc., Hitachi Foods & Logistics Systems,Inc., NIchirei Bisiness Partners .inc