Environment

The Tsugami Group recognizes sustainability as an important management issue. Based on our management policy of “contributing to society by constantly anticipating market needs and generating new value, underpinned by the precision technologies we have been developing since the Company was first established,” we undertake efforts with the aim of helping to resolve societal issues through our business activities and growing sustainably alongside society.

The TSUGAMI Group is acutely aware that action to address climate change and environmental issues is one of the important challenges facing management. Given the global framework set out in the Paris Agreement and the Japanese government's commitment to net zero carbon emissions by 2050, we believe that recognizing the role enterprises must play to realize a sustainable society and achieving solutions to such issues through business will lead to the TSUGAMI Group's sustainable growth.

The Sustainability Committee will coordinate the planning, management and operation of initiatives based on the environmental policy set out below.

Basic policy

• We recognize that climate change is a critical global issue and we are committed to continuously reducing the GHG emissions from our business activities based on a lifecycle perspective on products and services.
• We will endeavor to reduce the environmental impact of our products and services, taking environmental impacts at all stages of the lifecycle into consideration.
• We will comply with relevant environmental laws and regulations and other requirements, establish our own voluntary management standards, and strive to prevent environmental pollution.
• We will establish environmental goals, targets and action plans and make continuous improvements, aiming to reduce our environmental impact and conduct business activities in harmony with the environment. We will also review them where necessary.
• We will provide environmental training and conduct activities to raise environmental awareness to ensure that all employees and all those who work for us understand and are well-informed of our environmental policy.
• We will disclose environmental information. We will also seek interaction with the local community and society, actively cooperating with activities to protect the environment.

In February 2022, all the electricity used at the TSUGAMI Group’s Nagaoka Factory (Nagaoka City, Niigata Prefecture) in Japan began to be entirely sourced from 100% renewable energy.
By switching to renewable energy with non-fossil fuel energy certificates supplied by retail electricity provider ORIX Corporation, we have achieved net zero CO₂ emissions from energy consumption at our Nagaoka Factory.

*CO₂ emissions reduction at Nagaoka Factory as a result of this initiative: FY2022 2,225 t-CO₂, FY2023 2,094 t-CO₂.

We have been steadily reducing CO₂ emissions produced in our domestic business through initiatives such as switching to LED lighting inside Nagaoka Factory and installing energy-saving air-conditioning systems to reduce energy consumption, and integrating production and sales sites in Japan to build a more efficient operating structure.
Moving forward, we plan to strengthen and accelerate initiatives such as introducing or updating energy saving equipment, promoting innovation in production technologies at factories, and developing new products to further improve production efficiency, aiming to achieve carbon neutrality by 2050.

The TSUGAMI Group recognizes that ensuring safe water resources is an important environmental challenge. To fulfill our responsibilities as a company with manufacturing factories, we will focus on reducing water usage and water uptake in the course of our business activities and strive for the effective utilization of water resources.

TSUGAMI CORPORATIONʼs Nagaoka Factory (Nagaoka City, Niigata Prefecture), which is the Companyʼs only production site in Japan, has obtained the Environmental Management System certification.

The TSUGAMI Group is acutely aware that action to address climate change and environmental issues is one of the important challenges facing management. We recognize that climate change is a critical global issue and one of our basic policies is to continuously reduce the GHG emissions from our business activities based on a lifecycle perspective on products and services.
The TSUGAMI Group announced its support for the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) in June 2022, and recently disclosed climate-related information based on the TCFD recommendations.

The TSUGAMI Group recognizes that sustainability is an important management issue, and under the supervision of the Board of Directors, the Sustainability Committee plays a central role in promoting company-wide initiatives.
The Sustainability Committee has the role of proposing groupwide strategies to promote sustainability and managing their progress, and it comprehensively manages and promotes environmental, social and governance (ESG) initiatives and makes appropriate ESG information disclosures.
The committee also takes the lead on initiatives that link sustainability with business through active communication with the relevant business segments, aiming to raise awareness and facilitate understanding of sustainability issues in order to promote sustainability on a groupwide basis.
The Sustainability Committee consists of committee members chaired by the Representative Director. It deliberates on ESG-related matters which have a bearing on management decisions such as action on climate change and a framework under which deliberated matters are reported to the Board of Directors has been established.

For the manufacture and sale of precision tools, which is the TSUGAMI Group’s core business, the Company considered climate-related risks (transition risks and physical risks) and opportunities that will impact the Group’s business and identified major risks and opportunities. We then conducted a scenario analysis with respect to the identified risks and opportunities.
The Company adopted two scenarios: (i) the 1.5℃-2℃ scenario where society as a whole is on a decarbonization pathway and limits the global temperature rise and (ii) the 4℃ scenario where economic development is given priority and the global temperature rise and its impact worsen. For each of the scenarios, we assessed and considered to what extent the identified risks and opportunities would impact the TSUGAMI Group’s business and assessed the financial impact on business activities according to three levels: major, moderate and minor. By recognizing major climate-related risks and opportunities and their impact for the TSUGAMI Group through the implementation of scenario analysis and by considering action to address the recognized risks and opportunities, we aim to build a sustainable and resilient framework for mitigating climate-related risks and tapping into more opportunities.

< Explanation of Scenarios and Summary of Risks and Opportunities >

<Reference scenarios>
⑴1.5℃/2℃ scenarios
Considered with reference to the International Energy Agency (IEA) Net Zero Emissions by 2050 Scenario and the Sustainable Development Scenario, in which carbon neutrality is achieved by 2070

⑵4℃ scenario
Considered with reference to the IEA Stated Policies Scenario and the Intergovernmental Panel on Climate Change (IPCC) RCP6.0 and RCP8.5 scenarios

< Business Impacts and Countermeasures in Relation to Major Risk and Opportunity Factors >

To prevent the materialization of various business risks or minimize them, the TSUGAMI Group convenes the Risk Management Committee as appropriate, assesses and monitors groupwide risk including climate change risk, and takes appropriate measures in accordance with the Risk Management Rules and Essential Risk Management Execution Rules.
We recognize climate change risk as a material issue alongside other business risks and, under the supervision of the Board of Directors, the Sustainability Committee monitors groupwide climate change risk, proposes sustainability promotion strategies and manages their progress.
A framework for relevant divisions to report climate change risks to the Sustainability Committee has also been established.
We are also working to strengthen groupwide risk management through means such as status reports to and consultations with the Board of Directors and others as appropriate.

Given the global framework set out in the Paris Agreement and the Japanese government’s commitment to net zero carbon emissions by 2050, we believe that recognizing the role enterprises must play to realize a sustainable society and achieving solutions to such issues through business will lead to the TSUGAMI Group’s sustainable growth. To reduce greenhouse gas emissions that cause global warming, we set ourselves the goal of achieving carbon neutrality by 2050 and set new medium- and long-term targets for this goal. We are committed to further strengthening and accelerating initiatives for action on climate change.

Establishment of medium- and long-term targets for achieving carbon neutrality by 2050

As part of these initiatives, in February 2022, we switched to 100% renewable energy-derived electricity for all electricity consumption at the Nagaoka Factory, our domestic production base in the city of Nagaoka in Niigata Prefecture, achieving net zero CO₂ emissions associated with electricity consumption there.
To achieve carbon neutrality by 2050, we intend to further enhance and accelerate initiatives including introducing and updating energy-saving facilities, promoting production technology reforms at our factories, and developing new products aimed at improving production efficiency.