In order to show our “resilience of an organization’s strategy, taking into consideration of different climate-related scenarios, including a 2℃ or lower scenario” provided by TCFD recommendation, Furukawa Electric Group has identified climate-related risks (transition risks and physical risks) and opportunities and conducted scenario analysis related to different climates, including a “2℃ or lower scenario,” setting Medium-Term Management Plan as a baseline since FY2019. In FY2019, we participated in the Scenario Analysis Support Project for Climate-related risks and opportunities in line with the TCFD, conducted by the Ministry of the Environment. We conducted scenario analysis for the Infrastructure business (optical fiber and cable products of the Communications Solutions business and power cables of the Energy Infrastructure business). We then conducted a scenario analysis for the Automotive Products business in FY2020 and for the AT & Functional Plastics business and the Copper & High-performance Material Products business in FY2021, for the Fiber Cable business and the Electric Power business in FY2022, and the Copper Foil business, the Battery business, and FITEL Products in FY2023. We continue to expand the target business in each business field step-by-step.

Identification of climate-related risks and opportunities is conducted through a process of Step 1 through Step 3. First, in Step 1, we create a list of climate-related risks and opportunities, including not only in our Group but also in the upstream and downstream operations of supply chain by referring to “external information” and “internal information.” In Step 2, the identified items are evaluated with scores in terms of “impact on Furukawa Electric Group” and prioritized. In Step 3, high-priority items are identified as climate-related risks and opportunities. For the identified climate-related risks and opportunities, assessment of impact on business in FY2030 is conducted with impact parameters in a 1.5°C scenario and a 4°C scenario.

Through FY2021, in examining the “different climate-related scenarios, including a 2℃ or lower scenario” recommended by the TCFD, we examined a “2℃ or lower scenario” and a “4℃ scenario” step-by-step for each business field by referring to several existing scenarios published by the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC). In FY2022, to accelerate our efforts toward achieving carbon neutrality by 2050, we revised the Environmental Targets 2030 and applied for an SBT (1.5℃ Targets) initiative certification. Accordingly, the scenarios for the business fields, for which we had been conducting scenario analysis, were revised to the “1.5°C scenario” and the “4°C scenario.”

We identify climate-related opportunities and risks and work to achieve carbon neutrality by both capturing revenue opportunities and mitigating risks. Based on the “Guidance on Metrics, Targets, and Transition Plans” published by TCFD in October 2021, we started formulating a climate-related transition plan which is a series of targets and actions to support the transition to a low-carbon economy in FY2023.

As for the measures to deal with risks, we have established the Environmental Vision 2050 as our super-long-term goal, with the challenge target of reducing GHG emissions (Scopes 1&2) in our business activities to zero by 2050, as well as another target of reducing GHG emissions throughout the value chain. Backcasting from these targets, we have set targets for reducing GHG emissions in the Environmental Targets 2030 and the sustainability targets in the 2025 Medium-term Plan to work toward achieving these reductions.

As part of our climate-related transition plan to achieve the Environmental Vision 2050 and the Environmental Target 2030, we have established a roadmap to achieve zero GHG emissions (Scope1,2) by 2050 and are promoting efforts to achieve these goals. In order to achieve our Scope 1&2 targets, it is essential not only to promote energy savings and fuel conversion at plants, but also to actively utilize renewable energy. Therefore, we have set the “Ratio of renewable energy use to total consumption” as a sustainability indicator to work toward improving the ratio of renewable energy use (usage of hydroelectric power, installation of solar power system, and introduction of electricity derived from renewable energy.)

As for the measures to deal with revenue opportunities, we will continue to stabilize revenue from existing businesses and develop a foundation for new business creation during the period of the 2025 Medium-term Plan. We will solve social issues in each business field and contribute to achieving carbon neutrality by 2030. For example, for accelerating development of 5G/B5G along with the surge of communications traffic, we will create new photonics products with strengths of development and proposal capabilities in the communications field and contribute to the simultaneous realization of a high-capacity information communications and a high-efficiency energy society. For technology development to contribute to realizing carbon neutrality through supply and installation of submarine and underground cables indispensable toward expanding the use of renewable energy such as offshore wind power, and expanding the introduction of next-generation energy, we are working to achieve carbon neutrality, contribute to building a social infrastructure that enables “Succession of local resources and local culture for the future”^(*1) through the use of green LP gas^(*2), and promote nuclear fusion energy, which is expected to be a next energy source to take the place of fossil fuels, by developing high-temperature superconducting materials.

We have set “GHG emissions reduction rate (Scopes 1&2)”, “Ratio of renewable energy use to total consumption” and “Sales ratio of environment-friendly products” as sustainability indicators that measure the progress of addressing material issues of “Developing business activities that consider climate change” and “Creating environment-friendly businesses.” Sustainability Committee follows up the progress of these indicators semiannually.
We have also set the GHG emissions targets for each business division in accordance with the Targets 2030 since FY2020, and GHG emissions per unit of sales targets for each business division since FY2022. Management Committee follows up the progress of “GHG emissions” and “GHG emissions per unit of sales” quarterly. As for Internal carbon pricing (using a shadow price), setting GHG emissions of each business division calculated using carbon prices (applying 20,000 yen/t-CO₂e in FY2023) since FY2019, we encourage each business division to be prepared to avoid climate change risks for decarbonization based on the quarterly evaluation and posting effects at the Environmental Committee. In addition, formulating of a renewable energy introduction plan is being promoted for any division that does not meet the target, having established a rule that each business division will bear the increase in procurement costs of renewable energy if the targets are not met since FY2023.

In order to strengthen and create businesses that solve social issues, we have established the Business Portfolio Review Committee since FY2022 with the aim of promoting business portfolio transformation with an emphasis on capital efficiency. The Business Portfolio Review Committee, composed of the General Manager of the Strategy Division as chair, the General Manager of the Finance & Accounting Division as vice chair and the General Manager of Global Marketing Sales Division, deliberates on important matters related to business portfolio transformation, such as the positioning of each business in the Medium-term Management Plan, makes proposals and reports to the Management Committee. The General Manager of the Corporate Planning Department is in charge of the secretariat, and it is held three times a year in principle. In FY2023, we started examining our desired business portfolio to achieve the Vision 2030, and we continue to work to materialize the Vision 2030.
In order to promote management that emphasizes capital efficiency, we have introduced return on invested capital (ROIC) and Furukawa Value Added (FVA)^(*1) as management indicators to evaluate each business. Toward optimizing the business portfolio, taking into account our current position made visible from the viewpoint of growth (average sales growth rate) and profitability (ROIC spread), our potential for future growth, our competitive status among competitors, and our carbon efficiency (GHG^(*2) emissions per unit of sales), we will swiftly take necessary actions, such as exploring growth opportunities (including M&A) and determining whether or not to withdraw from certain businesses. Furthermore, to calculate the cost of capital in FVA for each business, we have also incorporated ESG factors such as “Climate change” ^(*3) and “Labor practice” in addition to financial factors. FVA of each business are reflected and reviewed every year and reported to the Management Committee, where it is utilized for business portfolio optimization and allocation of management resources.

The committee is structured to supervise and promote risk management, internal control and compliance. The Committee conducts regular risk assessment to determine what risks exist, and define important risks that require a companywide response. We recognize “climate change,” “human resources and organizations” and “human rights and labor practices” related to material issues of risks as key risks from the management perspective and counter these risks.
For details, please refer to "Business-Related Risks" on our website.

Environmental Vision 2050 embraces the contribution to the realization of a sustainable society throughout the value chain through the provision of environment-friendly products and services and recycling-based production activities. As part of our contribution to the realization of a carbon-free society, we aim to reduce GHG emissions throughout the value chain, and have set the challenge target of zero GHG emissions from our business activities (Scopes 1&2) by 2050.

We have set the Environmental Targets 2030, a milestone toward the realization of the Environmental Vision 2050. To contribute to the realization of a carbon-free society, we identify our 2030 target as follows.

(1) Greenhouse gas emissions from business activities (Scopes 1&2): Reduce by at least 42% compared to FY2021

(2) Greenhouse gas emissions in the value chain (Scope 3): Reduce by at least 25% compared to FY2021
Scope 1: Direct emissions from own factories and offices
Scope 2: Indirect emissions from the use of electricity, heat, etc. purchased by the company
Scope 3: Indirect emissions other than Scopes 1 and 2 (emissions by other companies related to the activities of the business operator)

Furukawa Electric Group’s GHG reduction targets of 2030 obtained SBT (Science Based Targets) below 1.5℃ certification in July 2023. This certifies that our Group’s targets are based on scientific evidence in achieving the “efforts to limit the temperature increase to 1.5℃ above re-industrial level” aimed in the Paris Agreement. 

In FY2023, we further promoted the introduction of renewable energy which we have been actively promoting since FY2022. The annual reduction of GHG emissions (Scope 2) from the use of electricity derived from substantial renewable energy introduced in our optical fiber and cable factory at the Mie Works was over 20,000 CO₂e. We also promoted to install solar power systems and switch to procuring renewable energy in other business sites of our company and production sites in Japan and overseas. As a result, we achieved the FY2023 targets, “GHG emissions reduction rate (Scopes 1&2)” and “Ratio of renewable energy use to total consumption. We also achieved the FY2023 target for the “GHG emissions reduction rate (Scope 3)”. The reason includes the following: the temporary decrease in production volume due to the impact of market conditions; the promotion of the use of recycled materials as raw materials for production; and the promotion of saving energy when using products.