KOMEDA’s Approach to Climate Change
To continue to provide our customers with “an ideal space and service for KUTSUROGI,” KOMEDA is committed to taking care of the global environment and solving societal issues. In March 2020, we identified 13 materialities (priority issues), including addressing climate change.
Response to TCFD Recommendations
In line with the recommendations of the TCFD (Task Force on Climate Change-related Financial Disclosure), we disclose our “Governance,” “Strategy,” “Risk Management,” and “Metrics and Targets” as follows.
Governance
In addition to Directors, Outside Directors (Audit & Supervisory Committee Members) also participate in the committee as members, and advice from both internal and external perspectives is received.
From the fiscal year ending February 2024, we introduced a performance indicator for CO2 reduction as a component of the performance-linked stock compensation paid to Directors.
By increasing the link between the business performance of eligible Directors and sustainability, we will further promote sustainability initiatives.
Strategy
Based on the recommendations in the TCFD Guidance (to describe the resilience and resilience of organizational strategies by considering different climate-related scenarios, including scenarios below 2°C), we formulated a worldview for 2050 with reference to multiple scenarios published by the International Energy Agency (IEA) and other international organizations, as well as government publications.
Sub- 2°C worldview
This worldview assumes a society in which companies that are committed to decarbonization will be recognized and those that are not sufficiently committed will be selected out to achieve “net zero” by 2050. More companies are aiming to achieve net zero emissions throughout their supply chains owing to the introduction of carbon taxation and tighter regulations on emissions. Against this backdrop, we anticipate that more companies will be required to develop sustainable products and expand their product lineups through sustainable procurement. This is especially the case with coffee, a key food material, as producers and production traceability become more visible and the need for raw materials that meet the SDGs increases. As a brand that provides the value of “an ideal space and service for KUTSUROGI,” we aim to achieve sustainable business growth not only by diversified sourcing of coffee beans and introduction of alternative coffees, but also by developing environmentally friendly, sustainable products that meet customer tastes and preferences, and products and services that meet the requirements of health-conscious consumers.
4°C worldview
This is a world where continued dependence on fossil fuels and continued mass consumption and mass disposal is envisioned. If the so-called “year 2050 problem” for coffee becomes a reality, in which the size of regions suitable for Arabica bean cultivation decreases by 50% by 2050 due to rising temperatures, coffee production in South America, Africa, and Asia will decline. Global production will be less than 30% of the current level, leading to an increase in prices. The cost of procuring food materials such as wheat and dairy products is also projected to rise due to increased demand from a growing global population. To address this, we will consider new products and services based on the development of new production areas in response to climate change, the introduction of alternative coffee products, and the development of non-coffee products as profit-making opportunities. Furthermore, with natural disasters expected to become more severe and more frequent, we will mitigate various anticipated risks, such as flooding or the shutdown of domestic shops and factories, through the creation of a robust and resilient supply chain and sustainable shop development.
Risks and opportunities from climate change
Based on the 2°C and 4°C scenarios, risks and opportunities were identified, and quantitative assessments were conducted to the extent possible for items with particularly large impacts on our business. Meanwhile, qualitative information was used to estimate the financial impact of items for which quantitative assessment was challenging. Based on the results of these estimations, we will continuously study and implement countermeasures and strive to gain a more precise quantitative and qualitative understanding of the risks and opportunities facing KOMEDA.
As for the scenarios used in our analysis of financial impacts, we assessed potential risks and opportunities and carried out qualitative and quantitative assessments of the level of impact on business based on the following scenarios.
<Assumed worldview> | <Scenarios used in analysis> |
---|---|
Sub- 2°C worldview/td> | IEA (International Energy Agency) NZE 2050 IPCC (Intergovernmental Panel on Climate Change) RCP2.6 |
4°C worldview | IEA (International Energy Agency) WEO 2022 IPCC (Intergovernmental Panel on Climate Change) RCP8.5 |
Category | Risk category | Risk item | Timing | Impact |
---|---|---|---|---|
Transition Risks | Policy and legal | Sharp increase in energy costs (utilities costs) | Medium-term Long-term |
Large Large |
Transition Risks | Policy and legal | Sharp increase in energy costs (logistics costs) | Medium-term Long-term |
Medium Large |
Transition Risks | Policy and legal | Introduction of carbon taxation | Medium-term Long-term |
Medium Medium |
Transition Risks | Policy and legal | Response to elimination of plastics | Medium-term Long-term |
Small Small |
Transition Risks | Markets | Lack of adaptation to growing environmental awareness | Medium-term Long-term |
Small Small |
Physical Risks | Chronic | Sharp increase in raw materials sourcing costs (coffee beans) | Medium-term Long-term |
Small Large |
Physical Risks | Chronic | Sharp increase in raw materials sourcing costs (wheat, etc.) | Medium-term Long-term |
Small Medium |
Physical Risks | Acute | Damage from typhoons and torrential rains, etc. | Medium-term Long-term |
Small Small |
Category | Opportunity category | Opportunity item (Major category) |
Timing | Impact |
---|---|---|---|---|
Opportunities | Products and services | Provision of relaxation not limited to coffee | Medium-term Long-term |
Medium Medium |
Opportunities | Markets | Adapting to growing environmental awareness | Medium-term Long-term |
Small Medium |
Opportunities | Resilience | Diversification of coffee bean sourcing methods | Medium-term Long-term |
Small Medium |
Opportunities | Resilience | Promotion of environmentally friendly shops | Medium-term Long-term |
Small Medium |
Opportunities | Resilience | High value-added food products offered in shops | Medium-term Long-term |
Small Medium |
Notes
For the scenarios used as assumptions for assessing financial impacts, the 1.5°C scenario (IEA NZE 2050) was mainly considered for the transition scenarios, while the 2°C (RCP 2.6) and 4°C (RCP 8.5) scenarios of the IPCC were referred to for the climate change scenarios. Based on each scenario, we identified potential risks and opportunities, and conducted quantitative and qualitative assessments of the impact on our business.
Risk Management
We conduct scenario analysis to understand and assess the impacts of climate change and identifies climate change risks and opportunities. As for measures to address climate change, targets are set for each business unit at the beginning of the year and a briefing session is held once a month. The Sustainability Committee, which serves as the Secretariat, evaluates and manages the initiatives, and reports and makes proposals to the Board of Directors once a quarter, depending on the particular case. Furthermore, any risks that materialize are reported to the Chair of the Risk Management Committee and the Secretariat for consideration of countermeasures in accordance with the Risk and Compliance Policy.
Furthermore, climate change risks are viewed as group-wide risks and managed by the Risk Management Committee.
Our Risk Management Committee is an organization under the direct control of the President that is chaired by the President & CEO and composed of members elected by the Chair in accordance with the Risk and Compliance Regulations. With the General Affairs Department of the Administration Headquarters serving as Secretariat, the Risk Management Committee strives to understand, assess and prevent group-wide risks, to take action in the event of materialization of a risk, and prevent a recurrence.
Metrics and Targets
As measures to address climate change, we have set the goal of reducing CO2 emissions (total of Scope 1, 2, and 3) by 50% from the fiscal 2015 level by fiscal 2030 (fiscal year ending February 2031) and to net zero by fiscal 2050. We calculated CO2 emissions (Scope 1, 2, and 3) for the base year, fiscal 2015, and for fiscal 2023 to promote initiatives to achieve the targets.
Fiscal 2023 CO2 Emissions
Figures in parentheses are compared to the base year of fiscal 2015.
Item | Emission volume (tCO2) | Target scope |
---|---|---|
Scope 1 | 2,995 (134.7%) |
Gas for directly managed shops, factories, and offices; gasoline for sales vehicles; dry ice used in logistics; CFC gas for air conditioning and refrigerants |
Scope 2 | 3,168 (142.3%) |
Electricity for directly managed shops, factories, and offices |
Scope 3 | 142,466 (139.7%) |
Emissions related to supply chain including franchise shops |
※Including directly managed overseas shops
CO2 emissions from directly managed shops in Japan
Initiatives to reduce CO2 emissions
Introduction of renewable energy
As of February 29, 2024, we had introduced renewable energy at 18 locations, aiming for the realization of a decarbonized society.
As a result, renewable energy accounted for 47% of our scope 2 electricity consumption.
Installation of solar panels
We installed solar panels at our Chiba Factory and Kanto Coffee Factory in October 2023.
This reduced our CO2 emissions by 46 tonnes.
Through the introduction of renewable energy in addition to solar power generation, both factories realized the transition to 100% renewable electricity.
“KOMEDA no Mori” Forest conservation activities
In addition to reducing CO2 emissions, we are also putting effort into activities to conserve the forests that absorb CO2.
As a group that uses wood for both the interiors and exteriors of our stores, we feel the need to protect and nurture forests.
Since 2017, we have been taking part in forest conservation in the town of Komono in Mie Prefecture, and Group employees have been involved in forest conservation activities as part of the “KOMEDA no Mori” initiative.
In recent years, customers and franchisees have also visited “KOMEDA no Mori” and joined employees thinning and planting trees.
The amount of CO2 absorbed in 2023 as a result of these activities was around 55 tonnes.
Initiatives to reduce use of plastics
We are promoting reduction in the use of plastics, to prevent marine pollution caused by incorrectly discarded plastic straws and to reduce CO2 emissions produced from plastic production and incineration.
In the fiscal year ended February 2024, we reduced our use of plastic by around 47 tonnes by switching to biomass plastic for takeaway containers, straws, and food and product packaging and by reducing the size of plastic parts.
Introduction of ice packs
We put dry ice into containers used to transport frozen food products in order to maintain product quality.
To reduce the amount of such dry ice used, we have been using special ice packs instead, in a bid to reduce CO2.
The ice packs are a reusable, sustainable alternative.
In the fiscal year ended February 2024, we introduced ice packs at a number of our logistics centers.
As a result of this initiative, we reduced CO2 emissions by around 108 tonnes compared with the level a year earlier (fiscal year ended February 2023).