Environmental Initiatives

Disclosure based on TCFD framework

We communicate our initiatives on climate change in line with the TCFD framework. In March 2023, we pledged support for the TCFD recommendations.

Governance

We have established addressing a decarbonized society and CO2 emissions reduction as an essential task. The Nomination and Remuneration, Environmental, etc., Committee (NR&E Committee, etc.), which is an advisory committee of the Board of Directors and comprises a majority of outside directors, discusses from an objective perspective the assessment of risks and opportunities related to climate change, sets targets, and reviews progress. These discussions are reported and proposed to the Board of Directors at least once a year, where they are debated and policy decisions are made.

Strategies

We will evolve our business into Energy Solutions that provide optimal energy use to our customers, and share our LPG operations, that halve CO2 emissions compared to other companies’ conventional operations, with other companies. Through these initiatives, we aim to reduce the emissions in the whole industry, enhance corporate value in the medium- to long-term, and strive for net zero CO2 emissions by 2050.

<Roadmap towards net zero CO2 emissions by 2050>

Risk management

Scenario analysis

We identified risks and opportunities related to climate change, assuming business environments for each scenario, through the NR&E Committee, etc. and then specified them at a meeting of the Board of Directors.

Financial impact

Risks

• Increasing procurement costs due to the introduction of carbon taxes, etc. (transition risk): Gross profit (500) million yen

If regulations become strict, such as a carbon tax, increase gas and electricity procurement costs, reducing profit margins by ¥1/kg for gas and ¥0.1/kWh for electricity, this would lead to a gross profit decrease of approx. 500 million yen. We are advancing non-fossil energy procurement through the use of environmental certificates.

• Impact on business due to increasing natural disasters (physical risk): Gross profit (500) million yen

If we were unable to supply gas to all households for 3 days, the sales volume would decrease by approx. 5,000 to 6,000 tons, leading to a gross profit decrease of approx. 500 million yen. While we consider the likelihood of a simultaneous gas supply stoppage to all households to be nearly nil, we are thoroughly training its employees and preparing for emergencies.

• Decrease in gas demand due to rising temperature (physical risk): Gross Profit 2.7 billion to 3.3 billion yen reduction per 1℃ increase

If the average annual temperature increases by 1°C, demand for gas appliances such as water heaters will decline, reducing household gas sales by approx. 5%, leading to an annual gross profit decrease of approx. 2.7 billion to 3.3 billion yen. In response to the decline in gas sales, we expand Energy Solution services that contribute to strengthening resilience and optimal energy use. Moreover, this will lead to building a stable revenue base.

Opportunities

• Expansion of solution equipment sales driven by growing decarbonization needs: Gross profit +700 million yen

We recognized a gross profit of approx. 700 million yen from the Energy Solution business in FYE 03/27 as a growth opportunity, which includes a sales plan of 8 thousand hybrid water heaters, a designated priority product.

• Increasing demand for the Platform business driven by accelerated market consolidation: Gross profit 1.7 billion yen

Declining earnings and labor shortages are accelerating the need for system utilization and outsourcing. We recognize approx. 1.7 billion yen in gross profit from the Platform business in FYE 03/27 as a growth opportunity.

KPI & Target

NICIGAS Group has set the following CO2 emissions as a Key Performance Indicator (KPI) and sets reduction targets with a target year of 2030.

CO2 emissions (Unit: thousand t-CO2)

CO2 emissions per household (Unit: t-CO2)

CO2 Emissions Independent Assurance Report 

CO2 emissions reduction targets and initiatives to be achieved by 2030