DTS's Commitment to Climate-Change
Addressing climate change is one of the critical issues that require global efforts. If global warming continues at its current pace, it could potentially have significant impacts on various areas, including people's lives and economic activities.At DTS Group, we are committed to promoting decarbonized management by setting greenhouse gas emission reduction targets in line with the Paris Agreement. We also aim to realize a sustainable society through our response to international initiatives such as TCFD and SBT.
Disclosure in Line with the TCFD Recommendations
The DTS Group positions action on climate change problems as an important management issue and implements various measures accordingly. In September 2022, we endorsed the Task Force on Climate-related Financial Disclosures (TCFD). Accordingly, we are expanding disclosure of climate change-related business risks and opportunities.
Governance
Board of Directors
The Company’s Board of Directors oversees the setting and implementation of targets and plans related to climate change risks and opportunities. The Board of Directors also monitors progress toward environmental impact reduction targets on a quarterly basis.
Major climate change-related strategies and annual budgets are discussed and enacted by the Management Council and Sustainability Committee, and their progress is reported as needed to the Board of Directors.
Risk Management Committee and Sustainability Committee
DTS maintains the Risk Management Committee and Sustainability Committee, both of which are chaired by the president.
The committees regularly evaluate risks and assess problems as well as formulate action plans. In addition, they regularly monitor whether or not new risks have emerged.
Strategies
We analyze actual and potential impacts of climate-related risks and opportunities on the Group’s business, strategies, and financial plans and then disclose these, including the severity of impact and time frames (period of impact).
In addition, with an eye to the highly uncertain future that is accompanying the shift to a low-carbon society, we have conducted the scenario analyses recommended by the TCFD for 1.5°C and 4°C rises in global temperature in order to determine the kind of business issues that might emerge. We found that, whether in the sustainable 1.5°C world enabled by decarbonization or the 4°C world where greater economic development is expected, enabled by reliance on fossil fuels, there will be customer needs in a wide range of industries for new AI technologies, IoT, and DX action using the Company’s information technologies, as well as for energy-saving technologies related to customers’ efforts to shorten working hours. Thus, there will be climate change-related opportunities for business expansion. In particular, our quantitative analysis results indicated that in the 1.5°C world, we will see steady expansion in sales of maintenance and operation services, which are the Company’s core businesses. This finding reaffirms the great importance of achieving the Company’s 2030 net zero CO2 emissions goal. Accordingly, this enhanced our recognition that climate-related problems and the transition to a low-carbon society are strongly connected to the Company’s development.
Risk management
The DTS Group positions climate-related risks and opportunities as a strategy and connects to sustainable growth by companies taking appropriate action.
- 1. We identify climate-related risks and opportunities and evaluate them using three metrics: probability and, if they become prominent, quantitative impact and qualitative impact.
- 2. Regarding climate-related risks and opportunities that have a significant impact on the Group’s strategies, we formulate measures to address risks and seize opportunities while the Sustainability Committee monitors progress.
- 3. To minimize losses and achieve sustainable growth throughout the Group, we designate the Risk Management Committee to appropriately manage crises and risks related to the Group’s businesses. The Sustainability Committee uses ERM to integrate climate-related risks, which are reflected in the Group’s strategies and dealt with as company-wide risks via the supervisory structure of the Board of Directors.
| Categories | Risks and opportunities | Indicators | Degree of financial impact |
Period of impact |
Relevant scenarios |
||
|---|---|---|---|---|---|---|---|
| Risks | Transitory | Policy and legal |
Risk of increased procurement costs due to the introduction of carbon taxes and those costs being shifted to the operation contracting costs of partner companies | Increased costs |
Large | Medium term | 1.5℃ |
| Risk of increased carbon taxes according to electric power used by the Company | Increased costs |
Small | Long term | 1.5℃ | |||
| Risk of increased offset costs due to difficulty of reducing Scope 2 emissions amid delays in introducing renewable energy in buildings occupied by tenants | Increased costs |
Small | Medium to long term |
1.5℃ | |||
| Reputation | Risks of lost orders and other effects of declining market value due to inability to meet disclosure requests from investors aiming for a low-carbon society (quantitative evaluation only) | Decreased sales |
Small | Medium term | 1.5℃ | ||
| Risk of decreased sales due to customers switching to other companies due to delay in implementing energy-saving measures | Decreased sales |
Small | Medium term | 1.5℃ | |||
| Technologies | Risk of increased costs related to securing and training human resources in order to keep pace with accelerating DX | Increased costs |
Medium | Long term | 1.5℃/4℃ | ||
| Physical | Acute | Risk of decreased sales due to an increase in extreme disasters and being forced to suspend business activities | Decreased sales |
Small | Short term | 1.5℃/4℃ | |
| Chronic | Increased operational costs, such as for air conditioning, as average temperatures rise | Increased costs |
Small | Long term | 4℃ | ||
| Opportunities | Products and services |
Opportunities to expand business to support decarbonization, such as using IoT and AI on the front lines of manufacturing | Increased sales |
Small | Medium term | 1.5℃/4℃ | |
| Opportunities to expand business in line with increasing needs for the development of car-embedded technologies that are already provided as CASE progresses | Increased sales |
Small | Medium term | 1.5℃/4℃ | |||
| Opportunities to expand the residential solutions business related to environmental problems and energy saving as a function to enhance the overall living environment | Increased sales |
Small | Medium term | 1.5℃/4℃ | |||
| Opportunities to expand demand for our proprietary services amid the accelerating digitalization of customer operations (going paperless) | Increased sales |
Small | Medium term | 1.5℃/4℃ | |||
| Opportunities to expand business in infrastructure and operation-related services to keep up with the increasing use of cloud services as countermeasures for increasingly extreme disasters | Increased sales |
Small | Medium term | 1.5℃/4℃ | |||
| Opportunities to expand business related to energy-saving services as customers’ work hours shorten | Increased sales |
Large | Medium to long term |
1.5℃/4℃ | |||
| Opportunities to expand business in healthcare and medical-related services due to growing health concerns as temperatures rise | Increased sales |
Small | Medium to long term |
4℃ | |||
| Market | Opportunities to expand sales related to existing maintenance and operation services due to being increasingly chosen by customers thanks to achieving our net zero goal | Increased sales |
Large | Medium to long term |
1.5℃ | ||
* Degree of financial impact is determined as follows: Large: ¥2.0 billion or more; medium: ¥0.5 billion or more; small: below ¥0.5 billion or evaluated qualitatively only
Indicators and goals
The Group has established goals to reduce long-term greenhouse gas (GHG) emissions to achieve the goal of a less than 1.5°C rise in average global temperatures. In fiscal year ending in March 2024,We have obtained the SBT (Science Based Targets) certification, an international initiative, for our emission reduction targets for Scope 1, 2, and 3.
In line with the long-term Vision2030, the Group aims to achieve net zero CO2 emissions in 2030 for Scopes 1 and 2 and has set ambitious targets for Scope 3, aiming to realize carbon neutrality.
Greenhouse gas emissions targets
(Scopes 1, 2, 3)
| Item | Target | CO2 emission reduction rate target |
|---|---|---|
| Scope1,2 | FY2030 | Net zero |
| FY2050 | Net zero (maintain) | |
| Scope3 | FY2030 | 50% reduction (compared to FY2021) |
| FY2050 | Net zero |
External Recognition
CDP is an international non-profit organization that evaluates and discloses environmental initiatives of corporations and municipalities, and assesses them on a global scale based on the disclosed information. The evaluation criteria consist of eight levels: Leadership level (A, A-), Management level (B, B-), Awareness level (C, C-), and Disclosure level (D, D-). The DTS Group has achieved an "A-" rating, positioning it at the Leadership level, in its 2023 climate change report.