Disclosure based on the TCFD Recommendations
Governance
Supervisory structure
The Board of Directors considers climate change countermeasures to be one of the sustainability issues and monitors the progress of initiatives every quarter. Astellas Sustainability submits annual reports to the Board of Directors each fiscal year to ensure that the progress of initiatives, including climate change counter measures can be monitored. The Board of Directors oversees the efficiency of management through this monitoring process.
Executive structure
Sustainability issues are identified as priority issues for Astellas and KPIs are set and tracked. For climate change, progress is evaluated by setting greenhouse gas emission reduction targets / KPIs, which are set to be achieved by 2030. The uptake of renewable energy is also a key metric to measure progress against. The Environmental Action Plan is managed by the Sustainability Committee, chaired by the Sustainability Department Head, who reports to the CStO. The Sustainability Committee reviews Astellas’ Environmental Action Plan every five years to ensure its relevance and propose improvements as deemed necessary. The Sustainability Committee also reviews long-term plans for greenhouse gas reduction initiatives and the content of the Company’s TCFD disclosure.
Please refer to the Integrated Report for the information on incorporating sustainability performance into performance evaluation indicators for Executive compensation.
Integrated Report
Strategy
To identify and prioritize the issues that are most important to society and our business, Astellas carries out a materiality assessment and uses it to guide our sustainability efforts. Under the Astellas Materiality Matrix, reviewed in the fiscal year ended March 2022, climate change and energy are recognized as “very important” in their significance for both society and Astellas.
Astellas’ Environmental Action Plan sets out short-term and medium-term targets for our activities regarding the key points of the company’s Environment, Health & Safety Guidelines. Astellas renews action plans on a rolling basis, by reviewing progress and conditions during the previous year and incorporating findings into the action plan for the following year. The plans will outline efforts put in place to reduce the environmental burden and ensure the Company acts with integrity in reducing potential risks in order to protect enterprise value.
An in-house cross-functional team for disclosures was established to conduct a scenario analysis. The team analyzed Astellas' business and climate-related risks and opportunities, on the assumption that transition risks would materialize under a 1.5°C scenario for climate change and physical risks would materialize under a 4°C scenario. A qualitative risk/opportunity analysis was conducted in the FY2021 review. In FY2022, the team conducted a quantitative analysis on some items. As the GHG emission reduction action plan changed from a 2°C target to a 1.5°C target in terms of temperature increase the transition risk scenario was also changed to a scenario that assumes global temperatures rise by 1.5°C. In FY2023, we also conducted risk analysis by department. The results of the analysis were reviewed by the Sustainability Committee.
Analysis of risk and opportunities
| Climate-Related Risks | Potential Impacts | Financial Impacts | Affected Period | Astellas’ Resilience |
| Transition Risks (risk materializing at 1.5 ℃ increase) | ||||
| Policy and Legal | ||||
| Increased pricing of GHG emissions (costs if paying a carbon tax) | Business sites that have not introduced renewable energies may have to add payment of a carbon tax to their costs. | 1 billion yen in FY2030 assuming a carbon tax of $100 per ton | Medium to long-term | Some of the electricity consumed at the business site is generated internally by using renewable energy sources such as wind power and solar power. Switch to purchasing energy derived from renewable sources at business sites (part of manufacturing and research sites and sales offices in Europe and the United States. Some manufacturing and research sites in Japan started purchasing electricity derived from hydroelectric power in fiscal year 2020.) Promote the purchase of renewable energy-derived electricity at other business sites in the future. Purchase credits (CO2 emission rights) to reduce Scope 1 emissions and measures to control costs associated with the purchase will be issues for consideration. |
| Purchased goods and services (Scope 3 Category 1) may be subject to carbon tax, which increases the burden when added to the procurement price. | 500 million – 2.3 billion yen in FY2030 assuming a carbon tax of $100 per ton | Medium to long-term | Scope 3 Category 1: We will work on optimizing the use of raw materials. By formulating a supply chain sustainability roadmap, CO2 emission data of purchased products will be analyzed and emission reduction will be promoted. Scope 3 Category 3: We expect consumption to decrease due to proper use of energy and uptake of energy efficient equipment. Scope 3 Category 6: The reduction of business travel, company-wide, as a measure against COVID-19, contributed to the reduction of Scope 3 in 2020 and 2021. We will continue this effort. | |
| Obsolescence and impairment loss on existing facilities accompanying GHG emission regulations | Possibility of being asked to discard facilities due to strengthening of environmental regulations. Refrigeration equipment using freon gas. Vehicles that use fossil fuel may no longer be available in some countries after 2035. | No significant impact | Medium to long-term | There are no existing facilities that we are required to dispose of at this moment. Regarding freon gas, we will take appropriate measures that comply with laws and regulations. From 2030 onwards, we need to respond to a required change in automotive vehicles (shift from internal combustion engines to electric motors and fuel cells). Shift to EVs for sales fleets and trucks and modal shift of transportation will have an impact on business operations. |
| Technology | ||||
| Costs to transition to lower emissions technology | Costs arise when investing in low emission equipment. | 600 million yen Based on past climate-change investment plan | Near to long-term | Select and invest in efficient investment projects to reduce the carbon tax burden. Consider non-investment options such as energy supply contracts for relatively large-scale investments such as solar panel installation. |
| Market | ||||
| Increased cost of energy and raw materials | Rising energy and raw material prices lead to higher costs exacerbated by inflation. | An increase of 10 yen per 1 kWh of electricity charges will increase the cost burden by 2.2 billion yen. | Near to long-term | Increase of electricity and energy costs consumed at business sites due to regulatory changes would be an issue in the future. However, we do not envisage a significant increase in the cost of raw materials for drug production due to climate change. Reduce the impact of rising fossil fuel prices through the use of renewable energy-derived power. |
| Physical Risks (risk materializing at 4 ℃ increase) | ||||
| Acute | ||||
| Increased severity of extreme weather events such as floods | Operations halt at our business sites due to floods or other factors.Raw material and product supply is delayed due to damage in the supply chain caused by floods or other factors. | 500 million yen Referred to the flood countermeasures of the Toyama Technical Center. | Near to long-term | The following investment was planned for the Toyama Technical Center flood response and the investment amount was estimated at 500 million yen. - Install a 3m waterproof wall around the power receiving building - Construction of substation equipment with a structure of 3m or more - Purchase of generators If similar measures are required, a similar amount of investment will be considered. |
| Chronic | ||||
Changes in precipitation patterns Rising mean temperatures | Droughts will affect the operations of our plants and supply chain, resulting in delays in product shipments. Rising average temperatures will have an impact on energy costs accompanying operation of air conditioners at business sites. | No significant impact | Near to long-term | According to IPCC AR6 SPM SSP3-7.0 scenario, global sea level change in 2050 relative to 1900 is less than 0.5m. This level of change has no significant business impact. Changes in precipitation patterns do not have a material impact on Astellas operations. |
| Climate-related opportunities | Potential Financial Impacts | Affected period | Astellas’ response | |
| Resource efficiency | Use of more efficient production and distribution processes Use of recycling | Reduced operating costs | Near to long-term | In order to maintain a stable supply of pharmaceuticals even during pandemic of infectious disease or natural disasters such as earthquakes, storms, and flooding, three logistics centers are operated in Japan. In European countries and the United States, warehouses shared by multiple pharmaceutical manufacturers are being used to streamline the distribution process. We collect exhaust heat from air conditioning units at Japanese manufacturing plants and research sites and use it to pre-heat the air supply to improve heat efficiency. |
| Energy source | Use of lower-emission sources of energy | Reduced exposure to GHG emissions and therefore less sensitivity to changes in cost of carbon | Near to long-term | Shifted boiler fuel from liquid fuel to gaseous fuels. We are moving ahead on introducing hybrid and electric vehicles in our sales fleet. We are working on using wind power generation and biomass boiler system at Kerry Plant in Ireland. |
| Products and markets | Development and/or expansion of low emission goods new products and services Access to new markets | Increased revenues through access to new and emerging markets | Near to long-term | For the spread of infectious disease in endemic areas due to temperature change and the need for new drugs for infectious disease treatment assumed by the problem of antimicrobial resistance, collaboration with the phage biologics researches Course at a university to create engineered bacteriophages, could be viable solution. Climate change can change the geography of the morbidity associated with and severity of epidemics. Heart disease, respiratory disease, etc. may also increase. |
Risk Management
Processes for identifying and assessing climate-related risks
Risks within divisions, such as transition risk, physical risk, and reputational/legal risk related to climate change, are analyzed by Sustainability Committee (until March 2024, EHS Committee), which is comprised of members from Commercial, Technology & Manufacturing, Research, HR, and Sustainability. Risks are regularly monitored once a year. Once risks have been identified, their impact and probability of occurrence are analyzed.
Risks that affect the entire company, such as emerging regulatory risks, are analyzed by the TCFD cross-functional team, which is comprised of members from Finance, Technology & Manufacturing, Research, Procurement, Supply Chain Management, Internal Audit, and Sustainability. The cross-functional team conducts climate-change scenario analyses by utilizing scenarios provided by institutions such as the IPCC. The impacts of the transition to a low-carbon society, such as burden of carbon taxes are also analyzed.
As an internal expert of EHS, Sustainability regularly conducts EHS assessments of manufacturing sites and research facilities. The EHS assessment evaluates the environment, health and safety in general, and if risks are found, a plan for corrective and preventive action (CAPA) is requested. EHS assessments are also conducted for major suppliers as well as internal department.
Third Party Lifecycle Management (TPLM) is the risk mitigation framework covering all stages of the business partner relationship, which includes planning, due diligence, contracting, ongoing maintenance and transition. A global approach was established by Legal, Ethics & Compliance and Procurement to proactively address and mitigate supplier risk for multiple domains such as: EHS, which verifies that the practical aspects of environmental protection and safety have been implemented in the work environment.
Processes for managing climate-related risks
Regarding physical risks, typhoons, hurricanes, etc. may affect operations at business sites. The effects of past typhoons and hurricanes have been minor, and there have been no instances of any disruption to the product supply chain. In the manufacturing department, sufficient product stock is maintained to ensure product supply is not affected.
Regarding transition risks, although there is no need to dispose of any equipment due to climate change countermeasures, promoting energy efficiency improvements during future equipment upgrades may be a factor in increasing costs. The amount invested in climate change countermeasures is aggregated and published on the corporate website.
Climate Change Measures
Reputational risk may arise if targets for reducing greenhouse gas emissions as a measure against climate change are not achieved. Sustainability monitors Astellas’ performance in reducing greenhouse gas emissions.
If a risk is detected during an EHS assessment, Sustainability presents proposals of improvement and requests the development of a corrective plan. Sustainability follows up on the status of the corrective plan.
Integration into the overall risk management
Dysfunction of supply chain management is recognized as one of the most important risks in enterprise risk management and is managed by the Global Risk & Resilience Committee. Please refer to the corporate website.
Risk Management
The reputational risk of not achieving ESG goals is also monitored by the Enterprise Risk Management team.
Promotion of Environmental Sustainability Risk Management and Governance
Metrics and Targets
Metrics to assess climate-related risks and opportunities
We use GHG emissions (Scope 1, 2, 3), water resource productivity, waste generation amounts to measure the potential financial impact of climate-related risks and opportunities. GHG emissions are positioned as an important indicator because they are related to transition risks and failure to achieve GHG emission reduction targets will lead to increased carbon tax burdens and worsening reputational risks. On the other hand, reducing GHG emissions due to improvements in energy efficiency can be seen as an opportunity. Increasing water resource productivity is a countermeasure to increasing water stress due to climate change and is related to physical risks. Promoting waste management is also a measure against reputational risk.
Scope 1, 2, 3 emissions performance data
In fiscal 2023, GHG emissions (Scope1+2) associated with Astellas’ business activities amounted to 122 kilotons globally, Scope3 is under calculation. Please refer to the corporate website for Environment, Sustainability (“Environment Initiatives”).
Environment Initiatives
Targets to manage climate-related risks
GHG emissions (Scope 1+2, Scope 3)
|
Astellas' GHG emission reduction action plan was approved by SBTi in 2018 based on the 2°C targets of the Paris Agreement. The SBT target, which is required to re-calculate every five years, was updated one year ahead of schedule and the new reduction targets were set to achieve the Paris Agreement's 1.5°C target (Scope 1+2) and well-below 2°C target (Scope 3). The new target was approved by the SBT initiative as a science-based target. In February 2023, we announced a new policy aiming to reduce greenhouse gas emissions through our business to achieve net zero by 2050.
Water resource productivity, waste generated per unit of revenue
We calculate and publish our water resource productivity and waste generated per unit of revenue every year and publish an analysis of our progress towards our goals. For both indicators, trends are shown for the Base Year and the past three years. Please refer to the corporate website for Environment, Sustainability (“Environmental Action Plan and Compliance”).
Environmental Action Plan and Compliance
[Note]
1.5℃ scenario: Refer to IPCC 6th Assessment Report (AR6) Summary for Policymakers, “Global Warming of 1.5℃” (IPCC special report), “Net Zero by 2050” (IEA). To achieve significant reduction of greenhouse gas emissions, implementation of several measures such as carbon prices and the spread of EVs are assumed.
4 ℃ Scenario: Refer to SSP3-7.0 of IPCC 6th Assessment Report, Working Group I, Summary for Policymakers (SPM), released in August 2021. As extreme weather, we assumed an increase in the frequency of high temperatures, heavy rains, and droughts.