Disclosure based on the TCFD Recommendations

The Task Force on Climate-related Financial Disclosures (TCFD) set up by the Financial Stability Board (FSB) released a report in June 2017 on recommendations for disclosing climate change information that could have an impact on financial affairs. More companies are endorsing TCFD every year and many institutional investors use the information being released based on the TCFD recommendations as a reference. We announced our support of the TCFD recommendations in December 2020.

Governance

Please refer to the following for an overview of the overall corporate governance structure. 


Corporate Governance 


Fundamental policies and action plans relating to Environment, Health & Safety (EHS) matters are positioned as an important issue in sustainability in which Astellas is engaged. Measures for implementing these decisions in specific form are examined by the EHS Committee. Please refer to “EHS Risk Management and Governance” under EHS Management for the structure related to climate change. 


EHS Risk Management and Governance

 

Strategy

Astellas identifies and prioritizes material issues in sustainability and uses these as guidelines for implementing sustainability measures. Under the Astellas Materiality Matrix, reviewed in the fiscal year ended March 2022, climate change and energy are recognized as “very important” from two perspectives of significance for society and Astellas. Astellas' sustainability has two values: value creation and value protection. Value creation creates value for both society and Astellas by solving social issues through activities such as delivering innovative medicines and medical solutions to unmet medical needs. In value protection, efforts to reduce the environmental burden and ensure compliance contribute to reducing potential risks and improving Astellas' corporate brand, leading to protecting enterprise value. Dealing with climate change has elements of both value creation and value protection and we believe there are various risks and opportunities. 

An in-house cross-functional team for disclosure was established and the team conducted a scenario analysis. The team analyzed Astellas' business and climate-related risks and opportunities, on the assumption that transition risks would materialize under a 2 ℃ scenario for climate change and physical risks would materialize under a 4 ℃ scenario. In fiscal year 2021, the team undertook a qualitative scenario analysis, and the content of the analysis was discussed including EHS Committee.

 

Analysis of risk and opportunities

Climate-Related Risks Potential Financial Impacts Astellas’ Resilience
Transition Risks (risk materializing at 2 ℃ 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.

Using renewable energies such as wind and solar power to generate electricity for some power used at business sites.

Switched 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 cost associate with the purchase will be issues for consideration.

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.

There are no existing facilities we are forced to dispose. Regarding freon gas, we will take appropriate measures that comply with laws and regulations.

From 2030 onward we need to respond to a change of automobile (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 impacts on business operation.

Technology
Costs to transition to lower emissions technology Costs arise when investing in low emission equipment. We are already moving forward on shifting to using gaseous and biomass fuels for boilers.
Market
Increased cost of energy and raw materials Rising energy and raw material prices lead to higher costs. Increase of electricity and energy costs consumed at business sites due to regulatory change 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.
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.

[Toyama Technology Center]: For flood risk assessment, we asked a consultant to create a hazard map and designed the building based on the analysis.

[Yaizu Facilities]: The Yaizu Facilities tsunami hazard map envisages damage being minor.

We are analyzing the supply chain for each business site. We are implementing measures such as inventory control with a margin for continuous stable supply. Environmental risk assessment of supply chain is conducted by using in-house system called “Risk Assessment on Third Party Lifecycle Management”.

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.

We analyze water resource risks of manufacturing sites by referring to tools such as the World Resources Institute’s Aqueduct. We also confirm risks for each business site in such ways as through close collaboration with local governments.

No risk has materialized at this point in time, but we will continue to conduct analyses. 

The cost of air conditioning will only account for an insignificant portion of the product cost, so impact is minimal. 

Climate-related opportunities Potential Financial Impacts Astellas’ response
Resource efficiency

Use of more efficient production and distribution processes

Use of recycling

Reduced operating costs

Together with other companies in the same industry we established and operate a joint logistics center in Hokkaido. This leads to progress in making the logistics process more efficient. 

Started operating the Kyushu Logistics Center in Fukuoka Prefecture. As the joint distribution center in Hokkaido achieved an efficient supply of pharmaceuticals and reduction of CO2 emissions, the same effect is expected for the Kyushu Logistics Center.

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

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 geothermal energy at US headquarters.

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

For the spread of infectious disease endemic areas due to temperature change and the needs for new drugs for infectious disease treatment assumed by the problem of antimicrobial resistance, collaboration with the Phage Biologics Research Course at a university to create engineered bacteriophages, which could be an option for solving them.

Climate change can change the area of disease epidemic, morbidity, and severity. Heart disease, respiratory disease, etc. may also increase.

We plan to continue with further examination to enhance the content of analysis.

 

Risk Management

A specialist department monitors risk management related to EHS and periodically reports to CAO/CECO who issues instructions as necessary. Please refer to “EHS Risk Management and Governance” under EHS Management for risk management related to climate change.
EHS Risk Management and Governance

 

Metrics and Targets

Astellas has adopted the method for setting reduction targets recommended by the Science Based Targets (SBT) Initiative. This method is designed to achieve the 2°C target of the Paris Agreement, which entered force in 2016. In November 2018, the SBT Initiative certified the targets laid out in Astellas’ Environmental Action Plan. Please refer to “Climate Change Measures” for Astellas’ metrics and targets related to climate change.
Climate Change Measures

[Note]
2 ℃ scenario: Refer to the IEA 2-Degree Scenario (2DS). Astellas' greenhouse gas emission reduction target has been approved by the Science Based Target initiative as a science-based target to achieve the "2 ℃ target" in the "Paris Agreement", and IEA 2DS is referenced in the approval process. 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.