Information Disclosure Following the TCFD Recommendations

The Morinaga Group recognizes that climate change is an important issue that affects the continuity of its operations and sustainable growth. In April 2022, we endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), which was established by the Financial Stability Board (FSB). Since then, we have been addressing the TCFD recommendations, including conducting climate change scenario analysis.

Area Details

The Morinaga Group’s analysis, target setting and progress monitoring of risks and opportunities concerning sustainability initiatives are deliberated on by the ESG Committee, which is chaired by the Representative Director, President. The Board of Directors receives reports from the committee and monitors the status of activities.
In FY2023/3, the ESG Committee convened eight times. The deliberations of the ESG Committee are considered in various aspects of decision making concerning management.
For the examination of climate change matters, we established the TCFD Subcommittee*1 under the ESG Committee in FY2022/3. This subcommittee is responsible for analyzing the Morinaga Group’s risks and opportunities and reviewing responses following the TCFD recommendations.
The TCFD Subcommittee is led by the Director and Managing Executive Officer in charge of the Sustainable Management Division. It convened two times in FY2023/3. The results of this review process are reviewed by the ESG Committee and then reported to the Board of Directors, which supervises the status of activities.

Strategy In the process of identifying the risks and opportunities of climate change, Morinaga established the 4℃, 2℃,and 1.5℃ scenarios for its domestic food manufacturing business. Based on the information released by the Intergovernmental Panel on Climate Change (IPCC) and International Energy Agency (IEA), we use these scenarios to analyze the impacts in Japan in 2030 and 2050. As a result, the 4℃ scenario identified the risks of a reduction in quality of agricultural produce, changes in yield caused by changes in weather patterns, and increasing frequency of extreme weather events. The 2℃ and 1.5℃ scenarios found that rising costs due to stricter energy conservation policy and carbon taxes will have a larger impact on business operations. In response to these risks, we will strive to reduce our own CO₂ emissions and address the risks and opportunities that are important.
Risk Management The Morinaga Group established the Total Risk Management Committee, which is led by the President and Representative Director. This committee identifies the risks, evaluates the severity, and implements countermeasures against these risks, which manage and address them appropriately. Climate change risks are managed and addressed appropriately as management risks by the same committee. The TCFD Subcommittee under the ESG Committee conducts reviews on climate change following the TCFD recommendations, with the results discussed by the ESG Committee. The details of discussions held by both committees are reported to the Board of Directors, which oversees the progress of risk management.
Indicators and targets

To mitigate climate change risks, the Morinaga Group has established targets to reduce CO₂ emissions (Scope 1 and 2) by 30% from FY2019/3 in Japan by 2030 and to achieve net-zero GHG emissions by 2050. We are actively improving energy efficiency at our production sites (preventing air leaks, adding insulation, etc.), by upgrading our infrastructure and utilizing new and efficient equipment, thus highlighting our shift away from fossil fuel. At the same time, we are considering the introduction of renewable energy and implementing measures to achieve these targets.

  • *1The TCFD Subcommittee was renamed the TCFD/TNFD Subcommittee in FY2023/3.

Scenario Analysis

We established the 4℃, 2℃ and 1.5℃ scenarios for Morinaga & Co., Ltd.’s domestic food manufacturing business to analyze the impacts in 2030 and 2050.
We referenced scenarios of government institutions and research institutes for the identification and evaluations of climate change risks and opportunities and for the analysis of the impact on the Morinaga Group’s business, strategies and financial standing caused by these risks and opportunities.

*Referenced scenarios, etc.
4℃ Stated Policy Scenario (STEPS)(IEA、2020年)
Representative Concentration Pathways (RCP6.0, 8.5)(IPCC、2014年)
2℃ Sustainable Development Scenario (SDS)(IEA、2020年)
Representative Concentration Pathways (RCP2.6)(IPCC、2014年)
1.5℃ Net Zero Emission by 2050 case (NZE2050)(IEA、2021年)
Representative Concentration Pathways (RCP1.9)(IPCC、2021年)

Morinaga Group’s Important Risks

Category Sub-category Risk factors Impact on operations Importance Response
Transition risks Policy and regulation Spread of GHG emissions pricing and stricter GHG emissions reporting obligations Rising energy costs and logistical costs caused by the introduction of carbon taxes Medium
  • Consider and implement ways to reduce CO₂ emissions by 30%*1 by 2030 and to achieve net-zero GHG emissions by 2050*2
  • Promote visualization of CO₂ emissions at factories, implement energy conservation measures, and establish highly efficient production system through reorganization
  • Consider use of renewable energy
  • Establish more efficient logistics system/transport and deliveries with fewer environmental impacts
    (improve loading rate using modal shift and joint deliveries with other companies, design product specifications for high loading rates, and introduce demand forecasting using AI for optimal inventory allocation and upgrade supply operations, etc.)
Stricter energy conservation policy Rising cost of capital investment for manufacturing facilities due to the company’s response to energy conservation driven by stricter energy conservation policy Large
Decarbonization-related mandates and regulations on existing products and services Rising packaging costs due to regulations on the use of plastics derived from petroleum Large
  • Promote raw materials procurement in consideration of the environment in line with Procurement Policy and Supplier Guidelines
  • Promote initiatives aimed at a 25% reduction in plastics usage for in Jelly products by 2030*3
  • Expand the use of biomass plastics
  • Promote initiatives aimed at 100% sustainable procurement of cacao beans, palm oil and paper by 2030*4
Markets Changes in consumer behavior Increased environmental awareness among consumers leads to a decline in sales due to consumer defection from products that have been slow to respond to the environment and a decrease in the adoption of such products by retailers Large
Physical risks Acute Rising severity and frequency of extreme weather, such as cyclones and flooding Loss of opportunities and decrease in sales due to the suspension of procurement, production, logistics, and sales activities caused by damage to factories, warehouses, and employees due to extreme weather, disruption of logistics, etc. Medium
  • Continuously review BCP for natural disasters and promote BCM
  • Design buildings and electrical equipment at the time of manufacturing base relocation or new establishment based on hazard map
  • Decentralize manufacturing bases of mainstay products
  • Purchase raw materials from multiple suppliers (or multiple sites)
Chronic Changes in rainfall patterns and extreme changes in weather patterns Rising raw material and development costs due to poor crop quality and reduced yield caused by changes in weather patterns and frequent occurrences of extreme weather Large
  • Promote raw materials procurement in consideration of the environment in line with Procurement Policy and Supplier Guidelines
  • Promote initiatives aimed at 100% sustainable procurement of cacao beans, palm oil and paper by 2030*4
  • Purchase raw materials from multiple suppliers (or multiple sites)
  • Strengthen collaboration with suppliers and increase communication aimed at risk response
  • Consider shifting milk ingredients to plant-based materials
  • *1Scope 1 and 2 (domestic Group consolidated basis; compared to FY2019/3)
  • *2Group consolidated basis
  • *3Target: usage of plastics in packaging materials (intensity, compared to FY2020/3, including shift to biomass plastics)
  • *4Group consolidated basis; paper covers product packaging

Morinaga Group’s Important Opportunities

Category Opportunity factors Impact on operations Importance Response
Resource efficiency Development and use of efficient production and distribution processes Declining manufacturing and transport costs due to development of efficient manufacturing and distribution processes Large
  • Promote efficient production activities by rebuilding the production system and creating smart factories*5
  • Promote initiatives aimed at 70% reduction in food loss and waste by 2030*6
  • Establish more efficient logistics system/transport and deliveries with fewer environmental impacts
Products and services Changes in consumer preferences Rising demand for eco-friendly products amid increasing environmental awareness among consumers including Generation Z Large
  • Implement “One Chocolate for One Smile” campaign*7
  • Develop eco-friendly products
Adaptation to climate Rising demand for in Jelly and frozen desserts due to global warming Medium
  • Increase sales of in Jelly and frozen desserts
Resilience Substitution/
Diversification of resources
Increasing capacity of operations under various conditions from review of substitution/diversification of raw materials Large
  • Consider substitution and diversification of raw materials based on climate change risks
Increased trust in supply chain and fewer opportunity loss due to formulation of resilience plan (BCP) Large
  • Continuously review BCP for natural disasters and promote BCM
  • *5Smart factory: Using IoT and AI technologies to upgrading technologies with utilizing digital data of production equipment to ensure stable operations and increase production efficiency.
  • *6Scope: Food loss and waste occurring from receipt of raw materials to delivery (distribution) (domestic consolidated basis; intensity; compared to FY2020/3). Food loss and waste is defined as food waste that is disposed of thorough incineration or landfill, excluding food waste recycled into fertilizer or feed, etc.
  • *7“One Chocolate for One Smile” campaign: Donates one yen for every purchase of applicable products during the campaign period to support children in cacao-producing countries.

Going forward, we will also consider deepening our response and expanding the scope of our scenario analysis.