Panasonic Group endorsed the TCFD recommendations*1 in May 2019. As Panasonic Group recognizes risks and opportunities concerning climate change as a critical management issue, we identify our business risks and opportunities and verify business resilience and strategy by thoroughly analyzing the scenarios, considering the TCFD's recommendation. We also disclose information on thematic areas recommended by TCFD, i.e. 'governance', 'strategy', 'risk management', and 'indices and targets', assuming future engagement with investors, etc.

*1 TCFD: an abbreviation of Task Force on Climate-related Financial Disclosures. The task force was set up by the Financial Stability Board (FSB) in response to a request by the G20 Finance Ministers and Central Bank Governors. TCFD published its recommendations in 2017.

Governance

Panasonic Group system to promote group-wide environmental sustainability management is headed by board of directors, so that information on group-wide environmental sustainability management from all of the operating companies are reported to the board of directors. Also, the progress and results of activities for the key environmental targets we promised to society to achieve under the Green Plan 2021 are examined and determined on the directions, issues, and particularly key measures in the Group Management Meeting where Group CEO, presidents of operating companies, and senior managers participate. Matters of special importance are deliberated on by the Board of Directors Meeting.

"Panasonic GREEN IMPACT", our new long-term environmental vision, was put through this process and was released in April 2022. In promoting our environmental sustainability management, we have built a system with which all operating companies and business sites members effectively collaborate and promote group-wide activities through determination by the Sustainability Management Committee (established in December 2021) led by the Group CEO. For activities organized by theme, there are specific committees for disseminating our environmental policy and targets to all members in the Group, for deliberating on how to respond to issues, and for managing the chemical substances used in our products.

Strategy

We analyzed impacts on certain items of Panasonic Group Businesses that are likely to affect climate change, based on our assessment of the risks and opportunities in Panasonic Group business operations. The results were used to develop a social scenario for the year 2030, focusing on matters with the greatest impact. We then used the scenario as the basis for examining strategies, and verified the business resilience in our strategy.

We set up following targets in our Group's drive to support the social transition to a low-carbon economy.

  • Make our total CO2 emissions (Scope 1 and Scope 2) net-zero by 2030.
  • Reduce CO2 emissions from use of our products that Panasonic Group sold by 30% compared with the 2019 level by the year 2030.

We would like to introduce specific examples as our contribution to energy reduction and energy transformation in society.

The first is an example of our energy reduction activities for product use in Scope 3; that is, action on lighting equipment that emit large volumes of CO2. In addition to the conventional lighting that is designed to "light up a plane" such as a floor or desktop, by using an index for 'feeling of brightness in space' and knowhows of "optical control technology" and "spatial presentation with proper lighting at a right place" that are developed based on our accumulated research results on comfortability, we will achieve energy reductions of up to 30%  without compromising comfort.

The next is an example of our contribution to energy transformation in society through electrification. To speed up energy transformation in society, the demand side must itself push for electrification by replacing fossil fuel-fired equipment with electric devices. For instance, the heat pump water heater is capable of warming up water by using a heat pump to collect heat from the air efficiently, minimizing the electric power consumption. The heat pump can

be used not only in new houses, but also in existing houses that use oil or gas-fired boilers without replacing the pipework. Electrification increases opportunities to make effective use of electric power derived from renewable energy sources. In addition to that frequency of utilizing opportunity to use energy derived from renewable energy sources increases thanks to the electrification, storing unstable supply of renewable energy as the warm water enables energy time shift and mitigates the load on the power grid, thus contributing to wider use of renewable energy resources.

Risk Management

As a tool to continuously reduce environmental risks, Panasonic Group is working to establish operating company-specific Environmental Risk Management Systems, in accordance with the basic risk management policy for all Group companies. The management policy includes (1) identification of environmental risks and group-wide risk management each year, and (2) ensuring quick responses to reported environmental risks. In addition, Panasonic Group is promoting risk management in 3 levels, i.e., Panasonic Holdings Corporation (PHD), Operating Company (OC), and Business site (BS). Significant risks determined by each OC are reported to PHD Enterprise Risk Management Committee; Panasonic Group's significant risks are ultimately determined judging from the assessment results by PHD functions and OCs in a comprehensive manner. As strategic risks in Panasonic Group's significant risks in response to climate change in FY2022, damages caused by earthquakes, tsunami, flood and landslides have been addressed.

Metrics and Targets

Panasonic Group announced the Environment Vision 2050, placing "energy" on the axis, and set up the Green Plan 2021 towards realizing Environment Vision 2050 with short-term targets based on the amount of energy as metrics. In addition to these energy indices, we also set the medium- and long-term targets for the reduction of Green House Gas (GHG) emissions.
These targets were accredited as Science Based Targets (SBTs)*2 in October 2017.

*2 SBT: an abbreviation of Science Based Target. It is a target to reduce GHG emissions in consistent with scientific knowledge toward the goals to limit the increase of global temperature to less than 2°C above pre-industrial levels.

GHG emissions reduction targets (SBT accreditation)

Targets

Progress rate

Emissions from Panasonic Group business activities (Scope 1 and 2)

Reduce by 30%
(compared to FY2014)

137%

Zero by 2050

41%

Emissions from use of Panasonic Group products (Scope 3)

Reduce by 30%
(compared to FY2014)

27%

In addition, in May 2021, we announced a target to make our total GHG emission (Scope 1 and 2) of all operating companies and business divisions of Panasonic Group net-zero by 2030 as a milestone toward making the Environmental Vision 2050 real.

Moreover, regarding indices related to climate change, we are discussing to set targets for following each item.

Transition risk

Although impact of the introduction of carbon pricing near future on our businesses is expected, we have endorsed the GX League*3 Basic Concept published by the Ministry of Economy, Trade and Industry and have been participating in the development of a voluntary emissions trading scheme.

*3 GX League has been set up as a platform where group of companies that are actively engaged in GX (Green Transformation) can work with players in the government, academia, and financial sectors to tackle challenges in GX, for deliberations on transformation of the whole economic and social system and for creation of new markets.

Physical risk

Each operating company assesses and monitors natural disaster risks, as well as their emergency responses to those risks. Each operating company also established financial assessment standards on the scale of the impact of the potential risks, rating the risk as high when the impact is more than 10 billion yen and as medium or low according to the impact risk.

Climate-related business opportunities

The third impact of reducing CO2 emissions in our GREEN IMPACT published in April 2022, refers to the creation of new technologies, such as in the area of hydrogen energy, to cut down emissions by 100 million tons and impact on energy transformation, which is roughly equivalent to our total sales through our future business activities.

In April, 2022, we have also started operation of "H2 KIBOU FIELD", a demonstration facility for the "RE100 solution" initiative located at our Kusatsu Factory in Shiga Prefecture, aimed at using renewable energy generated independently through a combination of pure hydrogen fuel cells and photovoltaic cells to supply 100% of the energy consumed by our business activities. This step has been taken as part of our plan to build an RE100 solutions business.*4

Capital allocation

Panasonic Group will invest 400 billion yen in growth areas and 200 billion yen in our technological infrastructure as part of our medium- and long-term business strategies for 3 years from 2022 to 2024. Growth areas, for example, include automotive battery, supply chain software, and air quality and air conditioning businesses. In the automotive battery business, we will be able to contribute to building a decarbonized society that does not depend on fossil fuels by achieving cost and safety levels for electric vehicles exceeding those for gasolineengine vehicles. In supply chain software business, we will be able to contribute to mitigate environmental impact by avoiding all kinds of waste and materials and components on hold in the supply chain by the use of autonomous operations solutions. In the area of air quality and air conditioning business, significant contributions are possible in reducing the large amounts of electric power consumed by air conditioners that are large energy consumers in the world.
Environmental technologies are one target for investment in the technological infrastructure. Our activities for hydrogen energy is one of examples of the environmental technologies. We plan to expand hydrogen production and its use and thus contribute to transformation to clean energy in societies.

Internal carbon pricing

Panasonic Group introduced internal carbon pricing in March 2022 for capital investment, with a setting the price of CO2 emissions at 6000 yen per ton.*5 We plan to increase the installation of energy-saving facilities and renewable energy-fueled equipment, including photovoltaic power generation, while maintaining economic rationality that is consistent in the future, by considering the impact of future carbon taxation and the like. As for further expansion in the scope of our activities and price setting, we will determine in line with our business decisions.

*5 Subject to change because of market conditions

Remuneration

Since April 2022, we have adopted a new performance evaluation system that was introduced for executive remuneration for directors and executive officers of the holding company and for presidents of our operating companies. The performance-linked remuneration system includes evaluation items related to sustainable view such as environmental contributions.