Climate Change Measures
Disclosure Based on the TCFD Framework
Toward the realization of a decarbonized society, ROHM endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (hereinafter referred to as TCFD) in September 2021.In order to achieve the goals of the ROHM Group Environmental Vision 2050 established in April 2021, ROHM will promote efforts to reduce its environmental impact and, based on the TCFD recommendations, will focus on more transparent information disclosure, including the resilience of its strategies based on climate-related scenario analysis.
In April 2021, we established the ROHM Group Environmental Vision 2050, which outlines the ideal state of ROHM Group in 2050, with the aim of realizing a sustainable society. The vision identifies climate change as an important issue affecting business sustainability, and sets a goal of reducing greenhouse gas emissions from business activities to virtually "zero" by the year 2050. In addition, the medium-term management plan "Moving Forward to 2025" announced in May 2021 also sets non-financial targets, including environmental themes, and identifies "addressing climate change" as one of the 10 materialities that ROHM should address in its priority sustainability issues. ROHM has also identified "addressing climate change" as one of the 10 materialities to be addressed.ROHM has established a system in which the President and Representative Director has the highest responsibility and authority for climate change issues, and the EHSS Management Committee*, chaired by the director in charge of sustainability appointed by the President and Representative Director, deliberates and makes decisions. Under the EHSS, eight management systems have been established, one of which is the Environmental Protection Committee, which is in charge of environmental management systems. The committee formulates our 2030 mid-term environmental targets and deliberates on the progress of environmental management toward achieving these targets, as well as issues related to measures to address climate change, including the introduction of renewable energy.Directors who are members of the Audit Committee attend the EHSS Generalization Committee and the monthly meetings of the Environmental Conservation Measures Committee to continuously monitor and verify the execution status of the overall environmental management led by the President and CEO.In addition, in order to further promote value sharing with our shareholders, we have adopted "greenhouse gas (GHG) emissions" as one of the performance indicators in our performance-linked restricted stock compensation program for directors.
- *EHSS(Environment, Health and Safety, Sustainability)General Committee：A committee composed of executive officers in charge of eight subordinate management systems (environment, health and safety, labor, ethics, information, supply chain, quality, and risk management BCM) and responsible for ensuring that the PDCA cycle for each system is properly implemented.
Climate change is one of the most important social challenges facing global society. The Paris Agreement calls for efforts to keep the global average temperature increase well below 2°C above pre-industrial levels and to limit it to 1.5°C. At the same time, it is also an important theme for companies to achieve a balance between greenhouse gas (GHG) emissions and absorption in the second half of this century to realize a decarbonized society. In light of these circumstances, ROHM is accelerating climate change countermeasures, such as improving the efficiency of semiconductor products and building an environmentally conscious business structure, based on its "Environment Vision 2050," by referring to scenarios published by the International Energy Agency (IEA) and the UN Intergovernmental Panel on Climate Change (IPCC), among others. The study analyzed the impact of climate change on business activities in all sectors, including automotive, industry, and consumer goods. Specifically, we analyzed the impact of climate change in 2050 on ROHM Group's stakeholders (governments, financial institutions, investors, suppliers, and consumers) under the "1.5°C/2°C scenario," in which society as a whole succeeds in changing toward decarbonization and reducing temperature rise, and the "4°C scenario," in which economic development takes priority and global temperature rise and its effects continue to worsen. We examined how climate change in 2050 would affect ROHM Group's stakeholders (governments, financial institutions, investors, suppliers, customers, and new technologies) and the value chain (corporate, R&D, procurement, manufacturing, and sales) related to its business activities.
|1.5℃/2℃ scenario||Sustainable Development Scenario（SDS）*1
Net Zero Emissions by 2050 Scenario（NZE）*1
|4℃ scenario||Stated Policies Scenario（STEPS）*1|
|Physical Risk||1.5℃/2℃/4℃ scenario||Representative Concentration Pathways(RCP）*2
Shared Socioeconomic Pathways(SSP1/5）*2
- *1.Source：IEA "World Energy Outlook(WEO)2021"
- *2.Source： IPCC "Fifth Assessment Report"
Based on the analysis of climate change impacts under the above scenarios, transition risks identified include increased costs due to carbon tax payments and increased procurement costs of electricity and raw materials, as well as reputational risks if ROHM's response to climate change is assessed as inadequate.
Physical risks identified include the risk of shutdowns due to severe wind and flood damage to the company or its suppliers, as well as increased air conditioning management costs due to higher average temperatures and increased costs to strengthen resilience to natural disasters.
Opportunities, on the other hand, were identified as increased sales of products that contribute to decarbonization, such as components for electric vehicles (EVs), and improved reputation through enhanced resilience, as well as increased sales of products for air conditioning due to higher average temperatures.
After calculating the impact of the identified risks and opportunities on ROHM Group's business activities, it was concluded that under both the "1.5°C/2°C scenario" and the "4°C scenario," the opportunities are expected to outweigh the risks and lead to increased operating income.
ROHM will take various measures to strengthen its management in light of the identified risks and opportunities and their impacts. Specifically, ROHM will continue its efforts to reduce greenhouse gas (GHG) emissions throughout the entire value chain, including suppliers, to mitigate risks, and will also strengthen its business continuity plan (BCP) measures. In addition, in order to maximize the opportunities identified, we will strengthen R&D and sales of products that contribute to decarbonization, such as components for electric vehicles (EVs), and products for air conditioning.
■Detailed Scenario Analysis Results■
＜ROHM’s 1.5°C/2°C Scenario for 2050＞
As we move toward carbon neutrality, we expect to see an acceleration of decarbonization efforts across stakeholders and an increase in sales as new technologies are developed.
Impact through "Stakeholders"
The introduction of a carbon tax will increase manufacturing costs, which will accelerate energy conservation in the manufacturing process. In addition, subsidies and tax incentives for the introduction of renewable energy equipment will be developed, and the introduction of renewable energy in their own facilities will also increase. This will reduce their own greenhouse gas (GHG) emissions and allow them to earn profits from the sale of carbon credits in the carbon market, which has become more active under the emissions trading system.
- Financial Institutions and Investors
In the financial market, investors and financial institutions are decarbonizing their investment and loan portfolios and evaluating their environmental initiatives based on non-financial information of the portfolio companies. As a result, if a company's efforts are judged to be insufficient, its reputation will be damaged, leading to higher financing costs. Conversely, if the company is judged to be doing enough, ESG investments and loans can be used, reducing financing costs.
In some regions, power supply and demand will be temporarily tight and power costs will increase. In addition, the surge in demand for decarbonization-related products will increase the cost of procuring raw materials due to the high market prices of some minerals, such as copper, while semiconductor production equipment will be difficult to procure due to shortages of materials at equipment manufacturers.
Under the circumstances where efforts to decarbonize the entire value chain are accelerating, companies are required to demand reductions in GHG emissions from their suppliers because failure to meet customers' GHG emission reduction demands will result in lower sales due to lower transaction volumes. Therefore, companies are required to demand reductions in GHG emissions from their suppliers. In addition, sales of consumer and automotive products will decline due to the development of a non-consumption-oriented society (recycling-oriented society and longer product life cycles), while sales will increase through the development and supply of products that contribute to electrification, higher functionality, and further de-carbonization.
- New Technology
As competition for product performance (higher efficiency and smaller size) intensifies, and technological requirements for semiconductor power devices and other devices used in EVs, renewable energy, and storage batteries increase, the need to respond to new technologies, such as carbon capture, will also increase R&D costs.
＜ROHM’s 4°C Scenario for 2050＞
Efforts to strengthen resilience against wind and flood damage are expected to accelerate, and new technologies will develop as temperatures rise.
Impact through "Stakeholders"
The weakening trend toward decarbonization will lead to only partial implementation of carbon taxes. On the other hand, changing climate patterns will lead governments to increase budgets for disaster preparedness and tighten disaster preparedness standards for companies, increasing the cost of relocating and decentralizing their own manufacturing sites and enhancing disaster preparedness.
- Financial Institutions and Investors
Financial institutions and investors tend to emphasize BCP measures in order to evaluate the resilience of their portfolio companies against natural disasters. On the other hand, climate change initiatives are positioned as a secondary evaluation item, and economic rationality in corporate activities is prioritized.
When suppliers are affected by windstorms and floods, or when transportation routes are disrupted, the supply of raw materials stagnates and the company's own production is disrupted. Therefore, as an initiative to strengthen resilience, the implementation of multiple purchasing of raw materials will increase procurement costs without the benefit of quantity advantages. On the other hand, suppliers will also strengthen their efforts to ensure stable supply, reducing the risk of supply chain fragmentation and contributing to their own procurement stability.
Rising average temperatures and increasingly frequent windstorms and floods will increase demand for products for HVAC, which in turn will increase sales of these products. In addition, a series of BCP measures will reduce repair costs and lost sales opportunities due to production cutbacks or production stoppages, resulting in new inquiries from customers who value resilience against natural disasters and stable supply, which will boost sales. In the 4°C scenario, sales of semiconductor power devices and other products for each business sector will also increase due to the spread of technologies for electric vehicles (EVs), renewable energy, and storage batteries, but sales will increase only slightly compared to the 1.5/2°C scenario.
- New Technologies
The increasing frequency of natural disasters will place greater demands on the development of technologies related to sensors and monitoring for disaster prevention and mitigation, as well as technologies related to insulation and refrigeration that can withstand higher average temperatures, and will increase R&D costs for this purpose.
- Natural Environment
In the semiconductor manufacturing process, where room temperature must be maintained at a constant level, rising average temperatures increase the amount of electricity used for air conditioning, resulting in higher power costs. Furthermore, if manufacturing facilities are damaged due to the risk of flooding caused by wind and water damage from heavy rains, etc., costs will be incurred to repair the damage and production will be reduced or suspended.
＜Financial Impact by Risk and Opportunity＞
The items of climate-related risks and opportunities identified based on the above two scenario analyses, their significance, probability, and financial impact on ROHM Group's business activities are evaluated as follows.
- *1.Severity: The degree of "high," "medium," or "low" is evaluated by considering the "likelihood of occurrence" and "degree of impact" of climate-related risks and opportunities.
- *2.Occurrence: "Short-term" is expected to occur between 2022 and 2025, "Medium-term" between 2026 and 2030, and "Long-term" between 2031 and 2050.
- *3.Impact: "1 arrow (small)" indicates a financial impact of 1 billion yen or less, "2 arrows (medium)" indicates a financial impact of more than 1 billion yen but less than 10 billion yen, and "3 arrows (large)" indicates a financial impact of more than 10 billion yen. The impact of risks and opportunities that are difficult to estimate are shown as "▲", as they are only qualitatively evaluated in the item.
■Image of the Impact of Climate Change on Operating Income■
Based on the scenario analysis of 1.5°C/2.0°C and 4.0°C, the impact on operating income is estimated and imaged for transition risk, physical risk, and opportunity
ROHM's response to each of the identified climate-related risks and opportunities is also described below. Based on the risks and opportunities identified as a result of the scenario analysis and their impact on our business, ROHM will focus on the following responses.
ROHM oversees and manages all significant risks related to business continuity in the Risk Management and BCM Management System under the umbrella of the EHSS Generalization Committee, which is chaired by the director in charge of Sustainability. In addition, the environmental management system identifies and identifies all risks related to the environment, including those with a long-term perspective.
Among these risks, "climate change" was identified as a significant risk, and in FY2021, we launched a project involving the entire company and group to identify and analyze risks in multiple scenarios in accordance with the TCFD framework. The Risk Management/BCM Committee, in which all company divisions, including business units, participate across the board, is in charge of the risk management and BCM management system for physical risks, and the Environmental Conservation Measures Committee, in charge of the environmental management system, is in charge of transition risks. The Risk Management and BCM Committee, which is a cross-divisional committee of the entire company, including business divisions that control the BCM management system, identifies critical risks by considering their impact and likelihood of occurrence.
In addition, the Risk Management/BCM Committee and the Environmental Conservation Committee oversee the risk management system and report to the EHSS Management Committee, which is composed of those responsible for each management system.
[Indicators and Targets]
ROHM is promoting environmental management in Japan and overseas based on the "Environmental Vision 2050" formulated in April 2021, aiming to achieve "virtually zero greenhouse gas emissions" and "zero emissions" by 2050 to reduce its environmental impact. As one of the specific measures, we announced a plan in our medium-term management plan "Moving Forward to 2025" announced in May of the same year, which calls for "100% of electricity used in all business activities in Japan and overseas to be derived from renewable energy sources (hydroelectric, geothermal, solar power, etc.) by FY2050. In the plan, we have announced that 100% of the electricity used in all of our business activities in Japan and overseas will be derived from renewable energy sources (hydroelectric, geothermal, solar, etc.) by 2050.
Based on this medium-term management plan, we are now gradually increasing the amount of renewable energy we use, and by FY2021, we plan to use 100% renewable energy for our main domestic offices (Kyoto Station Building and Shin-Yokohama Station Building) and for our main SiC wafer manufacturing processes (Germany Plant and new SiC building at Chikugo Plant in Fukuoka, Japan). In addition, from FY2022, we will be using 100% renewable energy sources outside of Japan. In addition, from FY2022, the Thailand Plant, our main production site outside of Japan, will also be 100% powered by renewable energy.
Environmental targets for 2030 have been established for each of the three priority issues of "Climate Change," "Resource Recycling," and "Coexistence with Nature," as stated in the "ROHM Group Environmental Vision 2050.
For climate change, we have set targets for "reducing greenhouse gas emissions from business activities (Scope 1 and 2) by at least 50.5% in FY2030 compared to FY18," "reducing greenhouse gas emissions per unit of production (Scope 1 and 2) by at least 45%," and "reducing emissions from the use of products sold (Scope 3: Category 11) by at least 100% in FY2030 compared to FY18. ) from the use of products sold (Scope 3: Category 11) by at least 15% in FY2030 compared to FY18.
These targets were recognized as having a scientific basis (1.5°C level) for achieving the 2°C target of the Paris Agreement, and in February 2022, ROHM received certification from the Science Based Targets initiative (SBTi).
In addition, ROHM Group's renewable energy introduction plan aims to achieve a renewable energy introduction ratio of 65% in 2030 and 100% in 2050 for the electricity used in its business activities. In April 2022, we joined RE100 (100% Renewable Electricity), an international corporate initiative that aims for 100% renewable energy for electricity used in business operations.
In addition to climate change, we are also working to improve our water recovery rate and promote resource recycling by setting targets related to waste emissions intensity.
Reduction of GHG emissions
ROHM Group is working to reduce CO₂ and greenhouse gas emissions from its business activities in order to address climate change, one of the themes of its efforts to achieve its 2030 environmental targets.
[Targets and Achievements]
[Policy for Achieving Environmental Vision]
We regard climate change measures as an important indicator of the effectiveness of sustainability, and aim to achieve virtually "zero" CO₂ emissions from our business activities in 2050.
|Target for 2021||2021 Actual|
|(1) Reduce greenhouse gas (GHG) emissions by at least 1.0% below the forecast based on FY2021 production volume.||GHG emissions reduced by 2% from the forecast based on FY2021 production volume (6.2% reduction from FY18 results)|
|(2)Reduce greenhouse gas (GHG) emissions per unit of production by at least 5.0% from FY2020 levels.||GHG emissions per unit of production reduced by 17.6% from FY2020 results (17.2% reduction from FY18 results)|
|(3)Maintain 100% development ratio of environmentally friendly products.||Maintain 100%|
|Target for FY2022|
・CO₂ Emissions in Scope 1 and Scope 2
・CO₂ Emissions in Scope 3
|Category of Scope Protocol||CO₂Emissions (t-CO₂)
in FY 2021
|Outline of Calculation|
|SCOPE1 (Direct emissions)||164,180||Direct emissions from facilities in our Company's own business locations|
|SCOPE2 (Indirect emissions from energy sources)||780,811||Emissions associated with the production of energy purchased by our Company's business locations|
|SCOPE3 (Emissions from any sources other than Scope1 and Scope2, such as company's supply chains)||Classification||Category||CO₂Emissions (t-CO₂)
in FY 2021
|Outline of Calculation|
|Upstream||1||Purchased product/service||807,848||Emissions associated with activities until the products (materials, parts, etc.) purchased by our Company and Group are manufactured.|
|Upstream||2||Capital goods||224,969||Emissions associated with the construction and manufacture of capital goods (equipment) invested by our Company and the group|
|Upstream||3||Fuel-and energy-related activities not included Scope1 and Scope2||113,881||Emissions from capital goods (equipment) invested by our Company and Group|
|Upstream||4||Transportation and Delivery (Upstream)||44,696||Emissions associated with the distribution of product sold by our Company and Group from the Plant → Logistics base → Consumer|
|Upstream||5||Waste emitted from business operations||9,451||Emissions associated with the transportation, disposal and recycle treatment of waste generated in our Company and Group's business location|
|Upstream||6||Business trip||1,000||Emissions associated with the business trips of employees of our Company and Group|
|Upstream||7||Employers' commute to work||10,687||Emissions associated with the movement of employees of our Company and Group when they commute to company to work|
|Upstream||8||Lease assets (Upstream)||7||Emissions associated with the operation of leasing cars lent by our Company|
|Downstream||9||Transportation and Delivery (Downstream)||-||Not covered|
|Downstream||10||Processing of product sold||-||Not covered|
|Downstream||11||Use of products sold||7,148,616||Emissions associated with use of sold products by our Company and Group|
|Downstream||12||Disposal of product sold||739||Emissions associated with transportation, disposal and recycling of waste generated by our Company and Group|
|Downstream||13||Lease assets (Downstream)||-||Not covered|
[Greenhouse Gas Emissions other than Energy-derived CO₂]
PFC gas is an essential material for the microfabrication of semiconductors, especially LSIs. When released into the atmosphere, PFC gas becomes a greenhouse gas more than 6,500 times more potent than CO₂. The semiconductor industry has set a reduction target for PFC gas emissions,and is working on the installation of equipment to decompose PFC gas and eliminate its greenhouse effect.
In FY2021, the amount of PFC gas emissions increased due to the increase in production volume, but we are working to reduce these emissions by sequentially installing exempting equipment.
[Initiatives to Reduce GHG Emissions]
・Renewal of Outside Air Conditioner
LAPIS Semiconductor Miyazaki Plant has changed the air volume adjustment method for blowers from a damper system to an inverter system.
As a result, the plant reduced electricity consumption and annual CO₂ emissions by 96 t-CO₂/year.
・Renewal of Turbo Chiller
LAPIS Semiconductor Miyagi Plant upgraded its facilities to high-efficiency, non-CFC type turbo chillers.
As a result, annual CO₂ emissions were reduced by 180 t-CO₂/year.
Achievements and Future Plans for Renewable Energy Installations
ROHM is promoting environmental management in Japan and overseas in unison based on the "Environmental Vision 2050" formulated in April 2021, and is striving to reduce its environmental impact with the aim of achieving "virtually zero greenhouse gas emissions" by 2050.As one of the specific measures, in May of the same year, ROHM announced a plan under its medium-term management plan "Moving Forward to 2025" to achieve 100% power consumption from renewable energy sources (hydroelectric, geothermal, solar, etc.) in 2050 for all business activities in Japan and overseas.
Currently, based on this medium-term management plan, we are gradually increasing the amount of renewable energy we introduce, and by FY2021, we are aiming to achieve 100% renewable energy use at our main domestic business sites (Kyoto Station Building and Shin-Yokohama Station Building) as well as our main production processes for SiC wafer manufacturing (Germany Plant and new SiC building at Chikugo Plant in Fukuoka, Japan). In addition, from FY2022, we will be using 100% renewable energy sources outside of Japan.
In addition, from FY2022, the Thai plant, our main production base outside of Japan, is also scheduled to be 100% powered by renewable energy.
|Introduction Results||Implementation Plan|
||Plans to sequentially introduce the system at the Thailand plant and other major overseas production bases.||Scheduled to be introduced gradually at the remaining overseas and domestic production bases.|
＜Approach to 100% Renewable Energy＞
Reduction of Energy Consumption
[Efforts to Reduce Energy Consumption]
・Change of Degassing Method
LAPIS Semiconductor Miyazaki Plant has changed the degassing method in the vacuum degassing tower of the primary water purification system to a degassing membrane method that does not use steam.
As a result, the plant was able to reduce electricity and heavy oil consumption as follows
Consumption Reduction Results
- Electricity Reduction：104,542kWh/Year
- Fuel Oil Reduction：16,604L/Year
- Reduction of CO₂ Emissions：305t-CO₂
・Reduce Usage through Energy Conversion
ROHM Hamamatsu has eliminated steam boilers and absorption chillers and installed heat pump chillers, and in addition, added turbo chillers. As a result of these energy conversion measures, ROHM Hamamatsu has become an all-electric plant.
Development of Eco-Friendly Products
ROHM Group has created an Environmental Contribution Evaluation Sheet to objectively evaluate how much a new product contributes to the environment at the development stage compared to past products, using specific numerical values.
[Targets and Achievements]
[Policies for Achieving Environmental Vision]
We reg]d climate change measures as an important indicator of the effectiveness of sustainability, and aim to achieve virtually "zero" CO₂ emissions in 2050 from our business activities.
|Target for FY2030|
|Maintain 100% development ratio of environmentally friendly products|
|Target for FY2021||FY2021 Actual|
|Maintain 100% development ratio of environmentally friendly products||Maintain 100%|
|Target for FY2022|
|Maintain 100% development ratio of environmentally friendly products|
[Concepts and Criteria for Environmentally Conscious Products]
ROHM Group defines environmentally friendly products as those with a performance and environmental contribution index K≥2 or higher, and develops products with the goal of maintaining a development ratio of 100%.
The performance-environmental contribution index is an index of the following factors (performance factor and environmental factor), and this index is used to objectively compare and evaluate our products with conventional products.
We also calculate CO₂ reduction performance based on these factors, and are working with the development division to introduce a mechanism to improve the development ratio of environmentally friendly products.
|Performance Factor||Environmental Factor|
During the evaluation, we use the Environmental Contribution Evaluation Form to assess the environmental contribution of products in the development stage, and evaluate and confirm whether they meet the index targets and standards.
＜Environmental Contribution Evaluation Form＞