The issue of climate change is becoming more and more severe each year, and it has the potential to cause serious impacts across a wide range of fields, including people's lives and economic activities. Addressing the issue of climate change is a key management issue, and the JVCKENWOOD Group is advancing initiatives to avoid or reduce the impact of climate change on the Group throughout its entire value chain, including procurement, product development, manufacturing, and product and service provision. At the same time, we aim to contribute to the response to climate change, which is a pressing issue for international society.

To this end, initiatives to contribute to the mitigation of and adaptation to climate change are important. The JVCKENWOOD Group will endeavor to reduce CO2 emissions in the Scope 1+2 and Scope 3 categories and to reduce energy use through reduction of production man-hours and installation of energy-saving equipment.

We have set targets for CO2 emissions in the Scope 1+2 and Scope 3 categories which are consistent with the 1.5ºC limit of the Paris Agreement*. We are making steady progress toward our targets, and will continue to focus on climate change-related initiatives.
In the JVCKENWOOD Group, the Sustainability Management Office takes the lead in ongoingly deepening discussions around setting targets and collecting related information, including that about science-based targets (SBT). Looking ahead, by continuing to advance initiatives as appropriate - starting from feasible measures - through actions such as setting appropriate targets, management, and information disclosure, we will revise strategies and targets to suit changes in environmental conditions and the introduction of new technology.

The JVC Kenwood Group has set a short-term mid- to long-term global carbon reduction target as follows.

■Reduction of CO₂ emissions generated from business activities

Responses to climate change: Achieve carbon neutrality by 2050
Scopes 1 + 2 Target：46.2% reduction from FY2019 levels by FY2030 (total, global)

In promoting our initiatives, we set the following KPI (Key Performance Indicators) and manage their progress.

■Reduction of CO₂ emissions through the use of purchased, transported, and sold products

Scope 3 target: 13.5% reduction from FY2019 levels by FY2030 (Categories 1, 4, 11*, global)

In promoting our initiatives, we set the following KPI (Key Performance Indicators) and manage their progress.

In April 2023, the Group expressed its endorsement of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) established by the Financial Stability Board (FSB).
For details, see the website of Task Force on Climate-related Financial Disclosures

■Governance
The JVCKENWOOD Group recognizes that addressing climate change is one of the important issues in its sustainability promotion strategy. The Company appointed a director in charge of sustainability under the supervision of the Board of Directors, and established the Sustainability Management Office in April 2018 to establish a system for quickly implementing sustainability promotion strategies including those related to climate change.
The Sustainability Management Office is responsible for coordinating the implementation of company-wide climate change initiatives and progress management. It works with relevant divisions to periodically review material issues and key performance indicators (KPI), study and collect information about the potential effects of climate change on our operations, and enhance the disclosure of sustainability-related information.
In addition, the Sustainability Management Office actively communicates with relevant departments and sections and takes the lead in efforts to make sustainability part of our business operations, all with an eye to fostering awareness and understanding of climate change issues within the Group.
In addition, as a governance structure to address climate change, the Sustainability Committee was established that reports directly to the CEO in FY2023 as the primary organization to promote overall sustainability, including addressing climate change. It will formulate strategies and study measures for decarbonization.
Augmenting regular meetings twice a year, the Committee holds ad hoc meetings as necessary, and reports its discussions to the Executive Committee and the Board of Directors.
In addition, as a sub-organization of the Sustainability Committee, we have established a specialized subcommittee with the executive officer in charge of each theme (Regarding climate change, the Environment Subcommittee) to discuss and promote the identification of issues, goals, implementation plans, and specific responses for each theme.
These initiatives are overseen by the Board of Directors. Based on its regulations, the Board receives reports from the Sustainability Committee as required, and also manages the progress of these initiatives. It does so through means such as drawing up and approving environment-related business strategies and annual budget plans, as well as making approvals related to information disclosure and drawing up climate transition plans concerning dependency, impacts/risks, and opportunities.
JVCKENWOOD is working to build a Board structure which enables highly-effective oversight of initiatives regarding ESG issues. As well as having members with executive-level experience concerning ESG issues, we are working to increase Board members' capability levels through methods such as regularly holding training about environmental issues and external frameworks (such as TCFD) and lectures and panel discussions by external specialists (the Sustainability Symposium).

As specific activities for FY2023, the Environment Subcommittee discussed the setting of targets under our basic environmental policy "JK Green 2030" - which mainly focuses on response to climate change, effective use of resources, environmental conservation and management, and conservation of biodiversity - and these were approved by a resolution of the Board of Directors.
Activities for FY2024 included reports made at the Environment Subcommittee about third-party evaluation results and CO2 emissions inventory revisions.
In addition, at the Supplier Subcommittee held at the same time, reports and discussions were held regarding efforts to improve the accuracy of emissions calculations and to reduce emissions, especially for Category 1: emissions associated with raw materials, parts, and purchased products, and Category 4: emissions associated with transportation of raw materials and products under Scope 3.
Additionally, in the FY2025 compensation review, ESG targets (engagement, CO2 emissions reduction, and external assessment) were added to the short-term incentive (STI) KPI performance evaluations for Directors (including Representative Directors of the Board) who are not members of the Audit and Supervisory Committee.
Please see Corporate Governance for details.

■Strategies
Since FY2023, JVCKENWOOD Group has regularly conducted scenario analyses in a form consistent with the TCFD final recommendations. By doing so, we have broadly identified the impacts on our business model of risks and opportunities (as well as dependency on and impacts from nature), and we are taking initiatives to further increase the accuracy of our analysis. Additionally, regarding the financial impact from our climate transition plans, we are working to evaluate the targets and outcomes of the cost effectiveness of greater energy efficiency etc. derived from, in particular, the consolidation and closure of production bases.
The risks and opportunities identified in the scenario analyses had an impact on the following upstream and downstream aspects of the value chain in particular: 1. raw material procurement, 2. the production process, and 3. transport and logistics. In our strategies, we identified that impacts were possible on the likes of 1. product development and design, 2. laws and regulations as well as compliance with them, and 3. changes in customer and consumer behavior.
In addition to working on creating more products which contribute to decarbonization as well as countermeasures such as cost savings through energy and resource savings, we have also been working on opportunities to contribute to further growth.

Identification of risks and opportunities in the JVCKENWOOD Group and impact on the business

As a countermeasure to the risks and opportunities identified, we will develop and introduce environmentally friendly products and products for disaster prevention and mitigation, and work to develop new markets.

In addition, in conjunction with the new medium-term management plan VISION2025, we will return to domestic production in products for the Japanese domestic market, optimize the layout of production bases in consideration of total production volume, develop products with reduced environmental impact, study alternatives to natural resource facilities, and plan investments in measures such as the use of renewable electricity. Furthermore, through initiatives such as the usage of Sustainability-Linked Loans, we will respond to various risks and increase our resilience to climate change by reducing energy consumption and CO2 emissions as well as improving the efficiency of processes in manufacturing, transportation, and other corporate activities.

Initiatives toward the optimization of manufacturing via the Production Grand Design - which includes a return to domestic production - are making progress. These include the closure and integration of production bases and business centers and the consequent increased production volume at JVCKENWOOD Nagano, which have led to reduced CO2 emissions.

Regarding resource management, as part of our work on measures against climate change, analysis of recycling, resource depletion, and supply shortages has enabled us to strengthen measures regarding risks and opportunities such as formulating strategies for sustainable resource management.

Scenario analysis takes into account many aspects of the external environmental, such as technological, economic, and social factors. These include development and uptake speed of new technology, international cooperation structures, feasibility of policies, global economic growth rates, and changes in energy demand. However, the data used is current at the time the scenario analysis is carried out, and while care is given to improving accuracy of the analysis, the impact on our business of the identified risks and opportunities inevitably contains elements of uncertainty.

■Risk Management

We implement the risk surveillance process at all its business sites around the world every year. The purpose is to ensure the risk management activities are conducted through collaboration between its business sites and management. As the risk items for the risk surveillance process include natural disasters, we also identify, assess and manage climate change risks. For details of the risk surveillance process, see Enterprise Risk Management.

In terms of risk surveillance, we have added risk management (transition and physical risks and their classification items) in line with TCFD recommendations among the risk categories to be considered. This allows us to clearly manage the risks stemming from climate change, while also managing the progress of our response measures in a holistic manner in tandem with other general risks.

In addition, we take into account the quantitative thresholds from past occurrence frequency, climate scenarios, and used in risk surveillance after identifying the types of impacts on our business activities and supply chain, when evaluating the impact, likelihood of manifestation, and scale of risks.

■KPI and Targets

The JVCKENWOOD Group has formulated and is promoting JK Green 2030. To address the risks of climate change, our short- to medium-term goals for Scope 1+2 are to reduce emissions by 46.2% from 2019 levels by 2030 and by 13.5% for Scope 3 over the same time span. We have set a long-term goal of achieving carbon neutrality by 2050.

For more information, see the website of Reduction of CO₂ emissions

Cross-industry indicators

Reduction of CO₂ emissions