Possible climate change impacts to business activities include rules and regulations on carbon dioxide(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 goals of the EHS Management Policy (FY2021-FY2025) as “Realize a sustainable society by taking a leading role in addressing environmental issues such as climate change, resource recycling, water risk and biodiversity.” the Daiichi Sankyo Group will actively take measures to mitigate and adapt to climate change, address water risks, and tackle other issues.
Climate Change Risks
The Daiichi Sankyo Group recognizes environmental issues such as global warming or extreme weather 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 mitigate climate change and 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
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.
Environmental Management Promotion System
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.
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.
||Introduction of carbon taxes, increased costs for introducing renewable energy facilities, and reputational risk attributable to insufficient disclosure
||Supply chain disruption, temporary suspension of operations at company sites, increased air conditioning costs due to rising temperatures, and difficulty in operation due to water withdrawal risk, and reduced productivity of products derived from natural compounds
||Measures to achieve Science Based Targets (SBTs)
||Contribution to diseases that will increase with climate change
〈 Source 〉 2°C Scenario, IEA WEO 2018 SDS; 4°C Scenario, IPCC RCP8.5
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.
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In terms of indicators and targets for assessing and managing climate-related risks and opportunities, activities were carried out in accordance with the numerical targets of the Fourth Medium-Term Environmental Management Policy, and progress went according to plan in FY2020, the final year of the Policy. Based on the results of this scenario analysis, we have established the EHS Management Policy (FY2021-FY2025) and set environmental management targets.
EHS Management Policy (FY2021-FY2025) and Environmental Management Targets (Numerical Targets and Main Activities)
Promoting Environmental Management Materiality and KPIs
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 FY2017, we began evaluating and verifying the potential scheme in relation to certain capital expenditures.
- *2 Act 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.
Listed on CDP’s Climate Change A List 2020
In December 2020, we were certified by the international environmental non-governmental organization(NGO) CDP* as a leading company in corporate sustainability and placed on their A List, the highest rating in its survey on climate change measures. Our efforts to reduce emissions, mitigate climate risks, build a decarbonized economy, and more were recognized based on our responses to the FY2020 CDP climate change questionnaire.
Daiichi Sankyo engages in a range of measures to fight global warming, including actively investing in highly efficient energy-saving equipment, implementing energy-saving measures, and installing large-scale photovoltaic systems to utilize renewable energy. Furthermore, we carry out environmental management that leads the way in international trends. For example, we disclose governance, strategies, risk management, indicators, and targets in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and set Science Based Targets (SBT), the international initiative that encourages companies to set and achieve mid- to long-term targets to reduce CO2 in order to attain the goals of the Paris Agreement. For two years consecutive, Daiichi Sankyo has been listed on the CDP’s Supplier Engagement Leaderboard, the highest rating in its Supplier Engagement Rating.
* NGO whose main activities consist of asking companies and local governments to disclose information on initiatives to address environmental problems such as climate change measures, water security, and forest conservation in accordance with requests from institutional investors and major purchasing organizations worldwide that have a high interest in environmental issues, and thereby incentivizing environmental action.
Joining the RE100
In July 2021 we joined the international initiative RE100*, which aims to achieve 100% renewable energy for power consumed in business activities. In line with our mission “to contribute to the enrichment of quality of life around the world through the creation of innovative pharmaceuticals and provision of pharmaceuticals addressing diverse medical needs,” Daiichi Sankyo continuously offers value to society and stakeholders through business activities and strives to grow and develop the Group. In our 5-Year Business Plan we have defined one of the materiality areas related to the foundation of our business as “Promoting Environmental Management,” and will take on a wide range of challenges to reduce the environmental impact across the entire value chain in order to achieve the plan’s goals of realizing a decarbonized society, circular economy, and society in harmony with nature.
We have set carbon neutrality as our long-term target for 2050 to achieve a decarbonized society. The Daiichi Sankyo Group aims to reduce CO2 emissions by 25% compared to FY2015 by FY2025 and 37.5% by FY2030 — targets certified by the SBTi to limit global warming to well below 2˚C. To achieve this goal, we aim to use 30% renewable energy by FY2025, 70% by FY2030, and 100% by FY2050 at the latest. Furthermore, we will contribute to the realization of a decarbonized society by actively utilizing implementable decarbonization technology such as hydrogen-powered equipment, zero energy buildings (ZEB), electric vehicles, and next-gen storage batteries.
* International initiative that brings together companies committed to 100% renewable energy. It is run by The Climate Group, an international environmental NGO, and CDP, an NPO that supports companies in disclosing their climate change measures.
The Daiichi Sankyo Group considers the ability to utilize adequate 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 World Wide Found for Nature(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 optimizing 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 have implemented countermeasures to deal with the increasing severity of climate disasters in recent years. Specifically in 2020 we developed a flood risk assessment and countermeasures manual and formulated a plan to mitigate flooding of facilities at Tatebayashi site. Next we will implement flood risk countermeasures in all research facilities and plants in Japan.
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)
Water Risk Factors and Main Impacts (Table 2)
||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
||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
||Respond to land subsidence due to pumping groundwater
Appropriate Use of Water Resources
Water is an important resource which is essential for pharmaceutical production, and we recognize that it is one ecosystem service 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 FY2020 was 7,926 million m3 (down 23% from FY2015); while the total volume of water used by the entire Group in FY2020 was 8,395 million m3 (down 22.6% from FY2015).
We have already achieved a 5% reduction in water use compared to FY2015, which is the target for FY2020, the goal of the previous 5-Year Business Plan.
Water use per basic unit of net sales for the entire Group was 8.7 (1,000 m3/billion yen), which was a 30.0% improvement compared to FY2015.
Furthermore, water intake by the Group did not have significant impact on water sources.
Water Usage (Withdrawal) and Wastewater Discharge (Entire Group)
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Water Usage (Withdrawal) and Wastewater Discharge (Group in Japan)
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