The Asahi Group understands that evaluating the impact of climate change-related risks and opportunities on its businesses and drafting appropriate response measures are important matters in terms of realizing a sustainable society and ensuring business continuity. To that end, the Group endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in May 2019. We have held repeated discussions at meetings of the Corporate Strategy Board and Board of Directors that focused on our beer businesses, which are impacted the most by climate change. By doing so, we quantitatively evaluated the impact of climate change-related risks and opportunities on these businesses using scenario analysis methods.
Going forward, we will further deepen our exanimations of risk response measures. At the same time, we will expand the scope of our scenario analysis to include not only our beer businesses but also our other alcohol beverage businesses as well as our soft drink and food businesses. We will also work to enhance the accuracy of this analysis.
Viewing climate change as an important issue pertaining to sustainability, the Asahi Group's Global Sustainability Committee, chaired by the CEO, formulates climate change strategies. At the same time, the Committee makes reports to the Board of Directors and works to strengthen a PDCA cycle under the Board's supervision.
We implemented scenario analysis using the following steps with the aim of examining the impact of climate change-related risks and opportunities on our beer businesses (in terms of beer ingredients and the beer product value chain).
*These scenarios make reference to the IPCC RCP2.6 (2°C) and RCP8.5 (4°C) scenarios and IEA scenarios.
Source: created by the Asahi Group based on the IPCC's Fifth Assessment Report Summary for Policymakers (Figure SPM.7)
Among the various risks and opportunities stemming from climate change, including transition risks and physical risks, the risks that we believe to be of particular importance to our beer businesses have been identified as follows.
|Risk category||Business risks and opportunities||Reasons for selection as an important risk/opportunity|
|Political and Legal||Carbon Tax and Carbon Pricing||Risks||Under Asahi Group Environmental Vision 2050, we are taking steps to achieve Asahi Carbon Zero, an initiative that aims for zero CO2 emissions within our value chain. However, while circumstances vary by country and region, we anticipate a significant financial impact from the introduction of a carbon tax.|
|Regulations on Water Use||Risks||Water is indispensable to our raw material production and factory operation. Therefore, we anticipate that [the introduction of additional] regulations on water use will have a significant impact on our business continuity and financial position.|
|Market changes and technology changes||Changes in customer behaviors||OpportunitiesRisks||Risks and opportunities stemming from the heightened environmental awareness of consumers have the potential to become a new factor that impacts net sales.|
|Physical risks||Rising Price of Raw Materials||Risks||In the event that the price of raw materials were to rise due to a decline in the harvest of important agricultural materials, or that such a decline would make it necessary for us to switch to different materials, we believe there would be a significant impact on our financial position and business continuity.|
|Rise in [Global] Average Temperature||Opportunities||Temperature increases are expected to have a major impact on beer consumption during the summer.|
|Changes in Precipitation Patterns||Risks||If our agricultural land and production bases were impacted by severe water shortages, it could potentially become difficult to continue our business operations.|
|Intensification of Abnormal Weather||Risks||In the event that damage from heavy rains and typhoons, which are occurring more frequently in recent years, were to become more severe, our value chain may suffer significant harm, making it difficult to continue our business operations.|
We have determined the following targets for our business impact evaluations focusing on the level of importance to the Group's businesses.
*Figures are based on 2018 results.
*Total value does not equal 100 as figures are rounded up.
Among the important risks identified in STEP 1, we recognize rising raw material prices due to a decline in the harvest of agricultural materials and increased costs owing to the introduction of a carbon tax, which have a particularly high impact on our businesses. We therefore evaluated this business impact as follows.
Referencing various published documents, we have made estimations concerning the changes in harvest yields of important raw materials under both the 2°C scenario and 4°C scenario. As a result, we have discovered that declines in the harvest yields for barley and corn were significantly higher under the 4°C scenario than the 2°C scenario. These estimations have issues with accuracy as they are based on trial calculations using limited information, and we will therefore continue to gather information to improve the accuracy of our estimations going forward.
*Estimated values for 2050 using supply volume in 2018 as 100
For the 2°C scenario, we conducted a trial calculation on the impact of a carbon tax based on our CO2 emissions in our beer businesses. As a result, we have discovered that by implementing the Asahi Carbon Zero* initiative, which aims for a 30% reduction in CO2 emissions by 2030 and zero emissions by 2050, we can completely eliminate the impact of ¥7.0 billion from a carbon tax by 2050 and reduce this amount by ¥1.4 billion by 2030 compared with a scenario in which we did not implement Asahi Carbon Zero. In light of these results, we believe that the current strategies we are pursuing have a strong resilience to cost increases due to climate change and are therefore appropriate based on that perspective. However, the values for the carbon tax impact can change by country as some countries may not introduce such a tax at all or introduce a tax under a different time frame. We will continue to gather information to improve the accuracy of our estimations going forward.
*The target value for Asahi Carbon Zero is the value at the time of the scenario analysis in 2019.
We will continue to accelerate our existing response measures to important risks. At the same time, as a crucial management task, we will adopt the following direction for our risk response measures going forward. In addition, we will also examine measures to respond to opportunities.
|Risk||Existing Measures||Direction of Response Measures Going Forward|
|Rising Price of Raw Materials||
|Carbon Tax and Carbon Pricing||
|Regulations on Water Use||
|Changes in Customer Behavior||
|Intensification of Abnormal Weather||
In the Asahi Group Risk Appetite Statement, which was formulated in 2020, the Asahi Group has announced its policy of promoting efforts to reduce risks that impact the natural environment. Accordingly, climate change has been adopted as a main risk within our enterprise risk management (ERM) system, and we are working to set in motion a PDCA cycle under this management system. Furthermore, through collaboration between our sustainability management system, renewed in 2020, and ERM system, we will pursue risk management on a Groupwide basis.
We are pursuing efforts through the Asahi Carbon Zero framework with the aim of achieving our goal of zero CO2 emissions, adopted under Asahi Group Environmental Vision 2050. In addition, as an important theme for addressing climate change, we have set specific targets for containers, packaging, and water within the goal for achieving 100% use of sustainable materials, which is also adopted under Asahi Group Environmental Vision 2050, and are stepping up efforts on a Groupwide basis toward reaching these targets.