Possible climate change impacts to business activities include rules and regulations on CO2 emissions in accordance with the international framework for reducing greenhouse gas emissions, physical effects such as a rise in average temperature, occurrences of drought and floods, changes in disease structure, and health impacts. Having defined one of the Fourth Medium-term Environmental Management Policy as “managing external risks that may affect business operations, such as climate change and water risks,” the Daiichi Sankyo Group strives to maintain an understanding of climate change and water risks and implement measures for addressing these risks.

Climate Change Risks

The Daiichi Sankyo Group recognizes environmental issues such as global warming or extreme weather with great importance which have impacts on our work and life. Under the Daiichi Sankyo Group Corporate Conduct Charter and the Daiichi Sankyo Group EHS Policy, we are promoting environmental management and practicing responsible corporate activities to meet climate change or other environmental challenges. In April 2019, we expressed our support for the recommendations of the TCFD*1 and performed a scenario analysis.

  • *1The Task Force on Climate-Related Financial Disclosures (TCFD): A task force set up in December 2015 by the Financial Stability Board (FSB), an international organization joined by central banks and financial regulators of major countries.

Information disclosure based on the recommendations of the TCFD

Governance

The Daiichi Sankyo Group has established the EHS Management Committee formed of members including group companies in an effort to protect the environment and ensure the health and safety of employees and contribute to the development of a sustainable society while achieving the uniform management and promotion of environment, health, and safety management for which there is a high likelihood of risks occurring. We hold discussions on policies, target setting, and activities related to global EHS management at this committee twice a year.

In fiscal 2019, the committee met in July and February to discuss measures for combating climate change, optimizing the environmental management system, and disclosing information in response to the recommendations of the TCFD, among other agenda items.

〈 Read more here 〉

Corporate Governance

Environmental Management Promotion System

Strategy

As the impact of various environmental factors increases, we will need to realize a sustainable society if we are to continue our corporate activities. Particularly for pharmaceuticals, which are life-related products, disruption of the supply chain due to worsening meteorological disasters and a decline in the supply capacity of pharmaceuticals are major risks, both from business and social perspectives. On the other hand, CO2 emissions are characterized by low direct emissions from business activities (Scope 1 and Scope 2) and high indirect emissions from the supply chain (Scope 3). Thus, we consider transition risks are relatively low. Based on this understanding of the environment, the Daiichi Sankyo Group conducted a scenario analysis and risk assessment in accordance with the recommendations of the TCFD in order to clarify the resilience of our businesses towards climate change.

Ratio of CO2 Emissions by Scope (FY2018, Group companies in Japan)

Risk management

As regards climate change risks, a cross-departmental task team was established in fiscal 2019, and workshops on the outline of scenario analysis and the IEA/IPCC were held for employees from relevant departments. In this way, we enhanced our understanding of what happens to the world when transition risks increase (1.5°C scenario, 2°C scenario, etc.) or when physical risks increase (4.0°C scenario, etc.). In addition, business risks and opportunities through to fiscal 2030 were examined.

Ratio of CO2 Emissions by Scope (FY2018, Group companies in Japan)

An enlargeable image opens in a separate window

Results of scenario analysis

For each business, the potential impact and resilience were clarified, and a comprehensive evaluation was performed, taking into account financial impacts as well as investor perspectives.

Results of scenario analysis

An enlargeable image opens in a separate window

Indicator

As indicators and targets for assessing and managing climate-related risks and opportunities, the numerical targets specified in the Medium-Term Environmental Management Policy are used. Progress has been made as planned. Based on the results of this scenario analysis, we will include more aggressive indicators and targets in the next Medium-Term Environmental Management Policy.

Indicator

An enlargeable image opens in a separate window

〈 Read more here 〉

Promoting Environmental Management

Based on the results, the Daiichi Sankyo Group has begun to implement countermeasures to deal with worsening climate disasters in order to strengthen the resilience of the Group.
In addition, the Group is examining the possibility of introducing an internal carbon pricing*2 scheme in light of the possible introduction of a carbon tax. In fiscal 2017, we began evaluating and verifying the potential scheme in relation to certain capital expenditures.

  • *2Act of companies voluntarily setting provisional carbon prices based on potential carbon taxes or emissions exchange systems. Furthermore, we are taking active actions against climate change such as by participating in the “Japan Climate Initiative,” which was established in July 2018.

Water Risks

The Daiichi Sankyo Group considers the ability to utilize a sufficient amount of quality freshwater at all operating sites and throughout the value chain to be extremely important for promoting and continuing our business.
Water risks include physical, regulatory, reputation and other risks, which are an increasing concern throughout the world. At the Group, we ascertain the status of risks with the potential to impact our business at plants and research facilities.
Specifically, we carry out comprehensive risk evaluations based on the results of analyses of local water risks using the WWF-DEG Water Risk Filter and the survey results on water risks emanating from plants and research facilities.

These evaluations indicate that operating sites with the highest water risks among our Group are two plants in China and one in Brazil. (Table 1) Water withdrawal restrictions and other strengthened regulations are considered to be major risk factors. At present, these plants account for less than 5% of Group revenue. We are paying attention to regulatory trends and making an effort to further optimize water usage. Specific measures include using recycled water for sprinklers at the two plants in China and using rainwater for sanitary water and other daily usage at the plant in Brazil.

In Japan, surveys are conducted in an effort to understand impacts on business where physical, regulatory and reputational risks are a factor, such as the deterioration of water quality, water shortages, regulation of wastewater quality/volume and the efficient use of water, with analyses and evaluations conducted on the basis of these results. (Table 2) At plants in Japan, we are implementing measures that include reducing the utilization of industrial water. In addition, we work on countermeasures to deal with the increasing severity of climate disasters in recent years, including measures against storms and an action protocol in the event of facilities being flooded.

Furthermore, our water usage and wastewater drainage are assured by a third party.

Status of Operating Sites in Areas with High Water Risks (Table 1)

Location River basin Withdrawals
(1,000 m3)
Discharged
(1,000 m3)
Consumption
(1,000 m3)
Beijing Plant Yongding River
(Yongding River)
114.7 86.7 28.0
Shanghai Plant Yangtze River
(Yangtze River)
36.7 33.0 3.7
Brazil Plant Paraná River
(Paraná River)
8.3 8.3 0
Total 159.7 128.0 31.7

Water Risk Factors and Main Impacts (Table 2)

Risk Factors Main Impacts
Water shortages Reduction in research and production activities when water supply is stopped or restricted
Water quality deterioration Impact on manufacturing water (increases in water purification costs, etc.)
Floods/storm surges/heavy rain
Mandating water efficiency, recycling, etc. Increased cost of equipment installation, etc., due to mandatory use of reclaimed water
Wastewater quality/volume enhanced regulations Cost increases due to rising sewerage fees and stricter wastewater quality regulations result in higher equipment installation costs
Drought Damage of agricultural products used as raw materials
Changes in water supply season/passage of time Impact on operational stability due to changes
Increased water prices Increased operating costs due to rising water prices
Local communities Respond to land subsidence due to pumping groundwater

Appropriate Use of Water Resources

Water is an important resource which is essential for the production of pharmaceuticals, and we recognize that it is one of ecosystem services that should be used sustainably. In addition to understanding the risks and challenges associated with water usage and the status of water resources in countries and regions where our operation sites are located, we also implement measures including using water reasonably and efficiently, promoting reuse with purification equipment, and reducing the amount of water used.

The total volume of water used by domestic Group companies in fiscal 2019 was 8.894 million m3 (down 21.7% from fiscal 2015); while the total volume of water used by the entire Group in fiscal 2019 was 9.356 million m3 (down 21.5% from fiscal 2015).
Although we have already achieved a 5% reduction compared to fiscal 2015, which is the target for fiscal 2020, the final year of the 5-Year Business Plan, the Group will continue to strive to use water resources properly.
Water use per basic unit of net sales for the entire Group was 9.5 (1,000 m3/billion yen), which was a 23.4% improvement compared to fiscal 2015.

Furthermore, water intake by the Group did not have significant impact on water sources.

An enlargeable image opens in a separate window

An enlargeable image opens in a separate window