Sustainability
Approach to Disclosing Climate-related Information In Accordance with TCFD Recommendations

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Since endorsing the Task Force on Climate-related Financial Disclosure (TCFD) in June 2020, we have updated our disclosures in line with TCFD recommendations. In June 2024, we updated the “risks, opportunities, adaptation measures, and financial impact” for the 1.5˚C Scenario based on our FY2026 Medium-Term Management Plan. We see the growing volume of greenhouse gas emissions resulting from increased production as a risk; as such, we are currently assessing the increase in environmental investments and expenses required to control these emissions.

We are now applying our measures to combat the “risks of flooding due to extreme weather” in the 4˚C Scenario not only to production sites at risk of a maximum inundation depth of 0.5 meters or more, but also to production sites at risk of a maximum inundation depth of less than 0.5 meters. In addition to implementing physical measures such as flood protection panels, we are focused on reviewing where our inventory is located, and on creating individual timelines for each of our business sites.

Items recommended for disclosure by the TCFD
Governance The organization’s governance in relation to climate-related risks and opportunities
Strategy The impact of climate-related risks and opportunities on the organization’s businesses, strategy and financial planning
Risk management The processes used by the organization to identify, assess and manage climate-related risks
Metrics and targets The metrics and targets used to assess and manage climate-related risks and opportunities

(Summarized by Fuji Electric based on the Recommendations of the Task Force on Climate-related Financial Disclosures (Final Report))

Timeline for Climate-related Financial Disclosures

  • June 2020: Endorsement of TCFD recommendations. In addition, disclosure on “Governance” in the disclosure requirements.

  • June 2021: Disclosure on “Risks and Opportunities” (2°C/4°C target base) in the “Strategy” disclosure requirements.

  • March 2022: Disclosure on same “Risks and Opportunities” (1.5°C/4°C target) and “Adaptation Measures.”

  • June 2023: Specific identification of significant “Risks” and disclosure of countermeasures and financial impact

  • June 2024: Disclosure of updated “risks, opportunities, adaptation measures, and financial impact” for the 1.5˚C Scenario

Governance

Disclosed in June 2020
Updated in August 2024

  • Fuji Electric positions global environmental protection initiatives as a priority issue for management.

  • We established the SDGs Promotion Committee, a company-wide committee composed of managers (Executive Officers) from our various business, sales and corporate departments, to discuss issues and evaluate measures concerning the promotion of the SDGs, including those related to climate. (April 2020)
    The results of deliberations and evaluations by the Committee are reported to the Executive Committee* and the Board of Directors and discussed as necessary.

  • Through the promotion of Environmental Vision 2050, we will analyze the risks and opportunities that climate change poses for our business and value chains together with the financial impacts of these risks and opportunities, and we will incorporate them into our management strategy and proactively disclose the information.

  • In 2023, we held the SDGs Promotion Committee twice and reported on the deliberation results to the Executive Committee and the Board of Directors.
    [Key Environment-related Topics of Discussion for the SDGs Promotion Committee]
    - Measures to achieve decarbonization goals (FY2030) and a greenhouse gas emission reduction plan
    - Communicating the need to realize a recycling-oriented society, and updating Fiscal 2030 Goals
    - TCFD “Impact of climate change risks on corporate activities”
    Each of these topics is being discussed against the backdrop of the new Medium-Term Management Plan

*

Executive Committee: Deliberates and reports on important management issues as an advisory body to the President.

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Strategy

Disclosed in June 2020
Updated in June 2024

Among the “Risks and Opportunities” under the “4°C scenario” and “1.5°C scenario,” we specifically identified the significant risks in both scenarios and discussed the measures to be taken and the financial impact.

Scenario Analysis
Outline Adopted Scenario
1.5°C scenario Scenario in which stringent measures are taken to limit the global average temperature rise as of 2100 to1.5°C above the pre-industrial average IEA World Energy Outlook 2020
IPCC 1.5 degree C Special Report
4°C scenario Scenario in which a global temperature rise of around 4°C above the Industrial Revolution period is assumed unless measures exceeding the current level are taken. IPCC Fifth Assessment Report

IEA: International Energy Agency          
IPCC: Intergovernmental Panel on Climate Change

The “Risks and Opportunities," which we recognize and the "Countermeasures,”which we should approach, are shown as below." （Updated in June 2024）

Risks indicated in bold are those we recognize as having a particularly significant impact on business.

Risks Opportunities Adaptive countermeasures
1.5°C Suppliers
  • Deterioration in profit due to procurement difficulties and cost increases
  • Expanded use of recycled materials in products
  • Promote multi-sourcing, and standardization and sharing of parts
  • Support for decarbonization of key suppliers
Development and design
  • Delays in technology development to meet decarbonization requirements
  • Increased demand for technologies needed to promote decarbonization
  • Strengthen R&D of new decarbonization technologies, swiftly bring them to the market, and reduce costs
  • Promote platforms for shared product specifications
Manufacturing
  • Cost increases associated with decarbonization of production facilities (capital investment, etc., purchase of renewable electricity)
  • Strengthen reduction of greenhouse gas emission at production facilities
    - Install solar power generation facilities at Fuji Electric factories
    - Update facilities, including production facilities, air-conditioning, and lighting
    - Utilize renewable energy and purchase renewable energy certificates
  • The total environmental investments and expenses associated with the reduction of greenhouse gas emissions in production activities
    Total for FY2023–2030: approx. 23 billion yen

    Note
    1. Environmental investments and expenses required to achieve our Fiscal 2030 Goal of more than 46% reduction in greenhouse gas emissions from production activities compared to FY2019 levels

    2. The above environmental investments include facility updates that result in energy savings

    3. Financial impacts must be reviewed when business plans have been updated, and if they are affected by sudden environmental changes
Logistics
  • Increase in logistics expenses, and increase in logistics load due to introduction of carbon border taxes
  • Promotion of “local production for local consumption”
Customers and markets
  • Decrease in demand for thermal power generation
  • Shift resources to renewable energy business [Power generation]
  • Loss of opportunities due to lack of 100% usage of renewable energy during production
  • Offer products manufactured using renewable energy
  • Ensure carbon footprints are calculated
  • Increased demand for renewable energy and energy-saving products
  • Decarbonization of electrical power sector
  • Shift to cleaner fuels in the mobility sector
  • Develop new technologies and products that contribute to decarbonization and shift to cleaner fuels
4°C
  • Delays in procurement of parts
  • Cost increases due to wind and flood damage countermeasures in response to frequent extreme weather events
  • Delays in outdoor construction and service work
  • Delays in product delivery due to the disruption of logistics network and influence to production
  • Increased demand resulting from active investment in BCP measures by customers
  • Promote multi-sourcing of parts (Identify parts with high procurement risk due to the disasters, and diversify risks)
  • Reinforce wind and flood protection measures for domestic factory buildings located mainly in bay areas and areas covered by hazard maps

    [Identifying Sites at Risk of Flooding]

    Sites assessed: A total of 44 production sites worldwide

    Results: A total of 6 sites—3 in Japan and 3 overseas—are deemed at risk of flooding
  • At production sites at risk of flooding, we are promoting anti-flood measures aimed at minimizing damage
  • Even at sites assessed as being at low risk of flooding, we are promoting anti-flood measures where necessary
  • We intend to identify flood risks in the supply chain, establish a supply system with multiple sources of supply, and so ensure a stable supply of parts even in times of emergency

Note

Flood risk assessments were carried out by Tokio Marine DR Co., Ltd., and subsequently subjected to in-house reviews
Sites were assessed as “at risk of flooding” in the following cases:
a) They are located in areas which publicly available hazard information states are at risk of a maximum inundation height of 0.5 meters or more
b) They are located in areas where there is no publicly available hazard information, and which are deemed due to topographical and other factors to be at high risk of flooding

TOPICS

Strengthening measures against wind and flood damage during extreme weather events

Fuji Electric is enhancing its measures against wind and flood damage associated with the increasing frequency of extreme weather events. At the Mie Factory, the main production facility of our Food and Beverage Distribution Business Group, we installed and began operating flood barriers in March 2024. Although the maximum expected flood level at the Mie Factory during emergencies is less than 0.5 meters, there is a risk of water inflow in certain areas. Therefore, we have installed a flood barrier at one of the three gates (the south gate) where the risk is present. In addition to these physical measures, we are also advancing software-based countermeasures. As part of this effort, we have developed a "Flood Response Action Timeline." We are preparing to ensure that necessary disaster prevention actions can be taken according to procedure when the need arises.

Risk Management

Disclosed in March 2022

We recognize “risks related to climate change” as one of the “risks that may affect management” in the “Fuji Electric Risk Management Rules.” The year-round “risk management processes” set forth in the Rules are as follows.

Metrics and Targets

Disclosed in March 2022

Fuji Electric has formulated the Environmental Vision 2050 and has positioned its interim action goals, referred to as the Fiscal 2030 Goals, as “metrics and targets” that correspond to TCFD recommendations.
In March 2022, we revised our Fiscal 2030 Goals to establish new metrics for greenhouse gas emissions throughout the supply chain (Scope 1+2+3). Together with the existing metrics for GHG emissions in production activities (Scope 1+2), we have established the “metrics and targets” for Scope 1+2 and Scope 3 GHG emissions, which are items required for disclosure under TCFD recommendations. In the same year, our Scope1,2 and Scope3(1-8,11) targets were approved as 1.5˚C targets by the SBTi (Science Based Targets initiative).

Environmental Vision 2050

We aim to contribute to the achievement of a decarbonized society, a recycling-oriented society, and a society that is in harmony with nature by expanding the use of Fuji Electric's innovative clean energy technologies and energy-saving products.

Achieve a Decarbonized Society: Target carbon neutrality across the supply chain

Fiscal 2030 Goals
Metrics Targets
Greenhouse gas emissions in production Reduction of over 46%
(compared to FY2019)
Greenhouse gas emissions throughout the supply chain Reduction of over 46%
(compared to FY2019)
Contribution to CO2 reduction in a society Over 59 million tons/year
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