KOMEDA’s approach to climate change
Guided by our mission statement, “Provide Deeper KUTSUROGI,” the KOMEDA Holdings Group (“the Group”) is committed to protecting the global environment and addressing social issues. In March 2020, we identified our Materiality, which includes “Response to Climate Change.”
Response to TCFD Recommendations
In line with the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures), we disclose our “Governance,” “Strategy,” “Risk Management,” and “Metrics and Targets” as follows.
Governance
The Group regards measures to address climate change as a material issue that requires the entire Group’s commitment. The Sustainability Committee, chaired by the Company’s President and Representative Director, CEO, with the Sustainability Promotion Department serving as its secretariat, collaborates with each Group company to set goals, monitor progress, and evaluate the achievement of sustainability initiatives, including measures to address climate change. Through this process, the Group continuously implements a variety of initiatives.
In addition to directors, outside directors (Audit and Supervisory Committee members) also participate as committee members, providing advice from both internal and external perspectives.
In addition, starting in fiscal 2023, the Group introduced CO2 reduction evaluation indicators as part of the performance-based stock compensation for directors. By strengthening the link between these indicators and the performance of eligible directors, we will further advance our sustainability initiatives.
Strategy
Based on the recommendations in the TCFD Guidance (to describe the resilience and flexibility 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.
A sub- 2°C world
It is anticipated that, as society works toward achieving net zero by 2050, companies making progress on decarbonization will be valued, while those with insufficient efforts will be valued less favorably by the market. As the number of companies aiming for net zero across their entire supply chains increases, driven by the introduction of carbon taxes and stricter emissions regulations, we anticipate growing demand for SDG-aligned raw materials, particularly coffee, a key raw ingredient, due to the transparency surrounding producers and production histories. Consequently, we expect demand for sustainable product development and expanded product lineups through sustainable procurement to increase. The Group aims to achieve sustainable business growth not only by diversifying coffee bean procurement and introducing alternative coffees, but also by developing environmentally friendly, sustainable products and services beyond coffee that align with customer preferences and meet health-related needs.
A 4°C world
A world in which dependence on fossil fuels continues and mass consumption and waste persist.
Due to rising temperatures, if the “2050 Coffee Problem,” in which areas suitable for cultivating Arabica coffee are expected to decrease by 50% by 2050, becomes a reality, coffee production in South America, Africa, and Asia could decline, causing global production to fall to less than 30% of current levels and prices to rise sharply. Furthermore, due to increased demand associated with global population growth and the impact of abnormal weather conditions on crops, procurement costs for raw materials such as wheat and dairy products are expected to continue facing upward pressure. We will regard the development of new growing regions adapted to climate change, the introduction of alternative coffees, and the development of non-coffee products as revenue opportunities as we consider new products and services. As the intensification and increasing frequency of natural disasters are expected, we will mitigate various risks, including flooding and operational shutdowns at our domestic stores and factories, by building resilient and flexible supply chains and promoting sustainable store 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 | 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.
Response to risks and opportunities
The effects of global warming and climate change, including fluctuations in coffee bean yields, a decline in regions suitable for cultivation, and a decrease in the number of coffee bean producers, are having a serious impact on production activities.
Starting in fiscal 2024, managers and employees have visited one plantation in Brazil that supplies KOMEDA with coffee beans to verify on-site that no human rights violations are occurring, for example, the use of child labor or forced labor, and that plantations are being managed with due consideration for the environment.
KOMEDA Co., Ltd. uses only coffee beans from farmers who meet our sustainable procurement standards. In addition, to provide ongoing support to coffee bean producers, we continue to run a project that assists women who run plantations in Brazil. The project also provides participants with opportunities to learn about sustainable agriculture, helping them to expand the future pool of people who run plantations and contribute to the viability of farm management and the sustainability of coffee-growing environments.
*Please see the following for related information.
https://komeda-holdings.co.jp/responsible-procurement/
Risk management
The Group conducts a scenario analysis to assess the impacts of climate change and identify climate change risks and opportunities.
For climate change measures, at the beginning of each fiscal year, each Group company and its business divisions establish targets, and progress report meetings are held monthly. The Sustainability Promotion Department, which serves as the secretariat, evaluates and manages these initiatives and, depending on the matter, reports to and makes recommendations to the Board of Directors through the Sustainability Committee at least once each quarter.
In addition, we view climate change risks as risks affecting the entire Group, and the Risk Management Committee carries out risk management.
Within the Group, regarding various risks that could affect our business operations, the Risk Management Committee, established in accordance with the Group’s internal rules related to risks and compliance, identifies and assesses risks that could potentially have a significant impact on the Group’s operations every year. It deliberates on measures to address those risks. The committee verifies the progress of the measures every quarter of the fiscal year. The Risk Management Committee is an organization under the direction of the President and Representative Director, CEO, who serves as its chairperson. The committee consists of members appointed by the chairperson. With the General Affairs Department serving as its secretariat, the committee works to identify, assess, and prevent risks across the entire Group, as well as to respond to incidents and prevent their recurrence.
Metrics and Targets
As part of our efforts to address climate change, the Group has set targets to reduce CO2 emissions (Scopes 1, 2, and 3 combined) by 50% by fiscal 2030 (the fiscal year ending February 28, 2031) compared with fiscal 2015 and to achieve net zero by fiscal 2050. To advance our efforts to achieve these goals, the Group calculates its CO2 emissions (Scopes 1, 2, and 3).
CO2 emissions (t-CO2) for fiscal 2025
The figures in parentheses indicate the percentage change from fiscal 2015.
| Item | Emission volume (tCO2) | Target scope |
|---|---|---|
| Scope 1 | 3,197 (43.8%) |
Gas for directly managed stores, factories, and offices; gasoline for sales vehicles; dry ice used in logistics; CFC gas for air conditioning and refrigerants |
| Scope 2 | 5,248 (135.7%) |
Electricity for directly managed stores, factories, and offices |
| Scope 3 | 178,648 (75.2%) |
Emissions related to supply chain including franchise stores |
| Total | 187,093
（75.8%） |
※Including directly managed overseas shops
Total CO2 emissions and emissions intensity per net sales
Initiatives to reduce CO2 emissions
Introduction of renewable energy
The Group is promoting the introduction of renewable energy to mitigate climate change. In fiscal 2025, we introduced renewable energy at five directly managed stores, bringing the total number of locations across the Group where renewable energy has been introduced to 27. As a result, renewable energy now accounts for 40.8% of the electricity used under the Group’s Scope 2 emissions.
Installation of solar panels
In addition to introducing renewable energy, we are also promoting the installation of solar panels.
In addition to installing solar panels at 32 locations, primarily factories and stores (including franchise stores), the Group is pursuing onsite power purchase agreements, and is providing store and parking lot rooftops for the installation of solar panels to cut both CO2 emissions and store electricity costs.
In fiscal 2025, we installed solar panels at our Kyushu coffee factory and introduced the Group’s first battery storage system. We expect an annual reduction in CO2 emissions of 57.6 tons.
Initiatives for resource circulation and waste reduction
KOMEDA Co., Ltd. is working to reduce its environmental impact through the promotion of resource circulation and waste reduction. In Aichi Prefecture, a “food recycling loop” has been built in which bread scraps generated by a factory are reused as chicken feed, and the eggs laid by chickens raised on that feed are served on the breakfast menu at local stores. In fact, 97.2% of the used coffee grounds from the KOMEDA Blend generated at our coffee factories are reused as dyes for merchandise or as compost and bedding material. Furthermore, by donating the jute bags used to import coffee beans to local zoos, where they are repurposed as bedding and play equipment for the animals, our resource circulation initiatives have led to a waste reduction of approximately 2,100 tons.
Initiatives toward energy conservation
We are gradually transitioning to LED lighting, which has a long lifespan, contains no mercury, and helps reduce CO2 emissions.
By adopting LED lighting in more than 570 stores to date, we have reduced CO2 emissions by more than 2,200 tons.
Alongside reducing our environmental impact, we adjust the lighting levels inside our stores to enhance comfort for our customers. We also create KUTSUROGI by adopting designs tailored to each business format.
Reuse of waste oil
To promote resource circulation and reduce CO2 emissions, we have launched an initiative to recycle waste oil generated at our stores into SAF* and other biofuels. In fiscal 2025, we collected 20,210 liters of waste oil from 26 directly managed stores, contributing to the production of 16,168 liters of SAF and other biofuels, as well as a CO2 reduction equivalent to approximately 44.1 tons. By recycling waste oil into low-CO2 emissions fuels, we are helping reduce waste and promote a decarbonized society. We also collect waste oil from customers and reuse it as biofuel. We will continue to expand these activities as part of our efforts to promote resource circulation in collaboration with local communities.
* A type of fuel for aircraft that is made from city garbage, waste cooking oil, sugarcane, corn oil, and other raw materials.
Plastic reduction initiatives
We are working to reduce plastic use in order to prevent marine pollution caused by improperly disposed plastic waste and reduce CO2 emissions generated during production and incineration.
We are replacing takeout containers, straws, food packaging, and merchandise packaging with biomass-based plastics while also reducing their size. This resulted in a reduction of 6.7 tons for fiscal 2025.
KOMEDA no Mori conservation activities
We are not only reducing CO2 emissions, but are also focusing our efforts on conservation activities to protect forests that absorb CO2. As the Group that makes extensive use of wood both inside and outside our stores, we believe it is our responsibility to protect and nurture our forests. Since 2017, we have participated in corporate forest activities in Komono, Mie Prefecture, and have carried out KOMEDA no Mori conservation activities. In recent years, customers and franchise stores have also visited the KOMEDA no Mori to join our employees in thinning and planting trees, and approximately 12 hectares have been maintained through these activities.
Through these activities, the forest absorbs approximately 91 tons of CO2 annually, and we continue our steady efforts toward a decarbonized society.
