Climate Change Initiatives
INDEX
- Concept of Climate Change
- Disclosure to TCFD Recommendations
- Governance Structure for TCFD
- ESG Management and Promotion Structure/Sustainability Committee Structure Sustainability Committee
- Strategy
- Risk Management
- Indicators and targets
- Trends in Scope1 CO2 Emissions and Per Unit of Net Sales
- Trends in Scope2 CO2 Emissions and Per Unit of Net Sales
- Disclosing actual figures on the Sanken Group's Scope3
- Third-party Verification
- Sanken Group's Efforts to Reduce GHG Emissions
- Initiatives to comply with the Energy Conservation Act and the Act on Promotion of Global Warming Countermeasures
- Utilization of Renewable Energy: Reduction of GHG (Greenhouse Gas) Emissions
- Installation of on-site solar power generation systems and introduction of on-site PPA
- Utilization of a Virtually Renewable Energy Plan at Fukushima Sanken
- Wind Power Procurement – Dalian Sanken Electric Co., Ltd.
- Sanken Electric Semiconductor Reliability Evaluation Center
- Sanken Electric Manufacturing Development Center
- Efficient Use of Electricity and Energy Initiatives
Concept of Climate Change
The Sanken Group has been working to reduce CO2 at Group companies by implementing activities to reduce environmental impact. Climate change due to global warming is a risk that threatens the health of us all and the global environment, and it also affects our business, customers, and supply chain. We believe we must play a role in tackling the various problems caused by climate change.
In recent years, as a responsibility to the next generation, we have been carrying out business activities that further accelerate conventional moves to realize carbon neutrality. Currently, we will contribute from two perspectives: to provide eco-friendly, energy-efficient products, and to reduce the amount of CO2 emitted from our business activities.
While climate change poses risks, we also recognize that it is an opportunity to increase the corporate value of the Sanken Group.
Disclosure to TCFD Recommendations
One of the Sanken Group's basic CSR policies is to "contribute to the development of the global community by developing, producing, and selling power electronics and related products that use highly reliable and state-of-the-art technologies in order to realize a sustainable social environment." In order to realize a sustainable social environment, we recognize that responding to climate change is a key issue, and we are advancing initiatives and disclosing information in line with the recommendations of the Climate-Related Financial Information Disclosure Task Force (TCFD).
Governance Structure for TCFD
The Governance section of the TCFD (Task Force on Climate-related Financial Disclosures) recommendations requires the establishment and disclosure of a governance structure that responds to climate-related risks and opportunities. In our company, the Sustainability Committee, which deliberates on ESG management across organizations, plays a role. Katsumi Kawashima, Director in Charge of ESG, is appointed chairman of the committee, and the committee consists of members at the general manager level or higher in each division. The Committee conducts climate-related scenario analysis, identifies and assesses risks and opportunities related to climate change, and discusses and deliberates on measures to address risks and opportunities and reviews progress. As an advisory body to the President and Representative Director, the Committee reports to the Board of Directors at least twice a year the proposals submitted to and discussed by the Management Committee, and discloses information as appropriate. Sanken Electric discloses information on environmental activities related to climate change through CDP in response to requests from institutional investors, purchasing companies, and initiatives around the world.
Regarding climate-related issues, the following topics will be discussed.
- Climate-related scenario analysis
- Identification and severity assessment of short-, medium- and long-term climate-related risks and opportunities
- Strategic approach to identified significant climate-related risks and opportunities
- Consideration of specific responses to climate-related risks and opportunities
- Progress management of adopted responses to climate-related risks and opportunities
ESG Management and Promotion Structure/Sustainability Committee Structure Sustainability Committee
Strategy
The Sanken Group is engaged in the design, development, manufacturing, and sales of semiconductor and electronics products, and is expected to be affected by climate change in many ways. To this end, we conduct climate-related impact assessments through scenario analysis in order to identify risks and opportunities of climate change from a medium- to long-term perspective, to understand their impact on our group's business, and to incorporate appropriate responses into management plans.
In addition to the conventional 4°C scenario, we conducted an analysis using the 1.5°C scenario in a low-carbon economy, and found that there are transition risks due to the introduction of a carbon tax and financial risks due to high electricity prices.
In order to respond to the medium- to long-term (2030 and 2050) social and business environment changes associated with climate change, our company Sustainability Committee deliberates on the impact that social responses to climate-related issues and challenges can have on our company products and the entire supply chain, and identifies climate-related risks and opportunities. Because climate change risks and opportunities are risks and opportunities of our business activities themselves, we incorporate them into our management plans along with other risks.
| Worldview | Scenarios used in the analysis |
|---|---|
| 1.5℃, 2℃ | Sustainable Development Scenario (SDS), IEA, 2020, 2021 |
| Announced Pledges Scenario (APS), IEA, 2021 | |
| Representative Concentration Pathways (RCP2.6), IPCC, 2014 | |
| 4℃ | Stated Policy Scenario (STEPS), IEA, 2020, 2021 |
| Representative Concentration Pathways (RCP6.0, 8.5), IPCC, 2014 |
How to identify risks and opportunities
Climate change-related risks and opportunities for products and their entire supply chain were identified in each STEP.
| STEP1 | List of possible risks and opportunities |
|---|---|
| STEP2 | The following five criteria and three levels of importance were analyzed by the head of each division at the head office and plant. ● Magnitude of the impact if the risk materializes(Financial and Strategic) ●Affected period(How long the effects last) ● Frequency of occurrence(How often are risks affected when they materialize?) ● Potential to materialize(How likely is the risk to materialize?) ● Time of manifestation(How far in the future will the risk materialize?) |
| STEP3 | Summarize results and similar items.(Also consider the weight of items and the frequency of high importance) Identify five risks and three opportunities. The weight is evaluated and classified into 'large', 'medium' and 'small'. |
Risk
As a result of scenario analysis, our results could be significantly affected by increases in energy costs and other factors due to the introduction of policy measures to promote climate change measures, such as the introduction of a carbon tax, and the strengthening of regulations.
| Type | Major Risks | Policies | Level of importance | |
|---|---|---|---|---|
| Transition risk | Policies and Regulations | Rising fossil fuel prices increase electricity costs and operating costs | Reducing CO2 emissions ・Energy-saving activities ・Replacement of electricity with renewable energy ・Efficiency during production ・Optimization of transport ・Optimization of transport |
High |
| The introduction of a carbon tax raises operating costs | High | |||
| Decrease in sales due to decrease in demand for existing products due to new regulations on climate change | Expansion of sales through development of new energy-saving and highly efficient products under the medium-term business plan | Medium | ||
| Reputation | Delays in climate change measures reduce stakeholder confidence and market reputation | Formulate and implement plans to realize carbon neutrality | Medium | |
| Physical risk | Acute | Sales decline due to impact on production due to natural disasters, etc., suspension of suppliers' operations, and damage to logistics functions | Strengthening Risk Management by Enhancing the Crisis Management System | Low |
Opportunities
Scenario analysis results in the efficient use of energy resources and the provision of products that meet the low carbon needs of society and customers, which could have a significant impact on our results of operations.
| Type | Overview | Policies | Level of importance |
|---|---|---|---|
| Products and services | Increased sales due to the expansion of the market for products aimed at a low-carbon society (in-car, white goods home appliances, etc.) | ・Development of products for inverters ・Developing IPM ・Development of high-efficiency power supply devices ・Development of next-generation semiconductors |
High |
| Resource efficiency | Energy and resource conservation on production lines and in-house infrastructure | Introduction of DX and Smart Factories | High |
| Reputation | Improving Stakeholders' Trust by Promoting Low Carbon in Production | Formulate and implement plans to realize carbon neutral | Medium |
Risk Management
- The Sustainability Committee deliberates on climate change-related risks, and the contents of the deliberations are disseminated by the Management Committee and reported to the Board of Directors.
- IUnder the Sustainability Committee, we have established subcommittees dedicated to environmental (E), social (S), and governance (G) issues, and under the Social (S) Committee, we have established the Crisis Management Committee to deal with natural disasters and information management risks.
In addition, the Internal Control Promotion Committee has been established under the Governance (G) Subcommittee to support the inspection of operations at our company and Group companies, and to review and evaluate the effectiveness of control activities at the company-wide level and the business process level. The contents of these risk controls are reported to the Sustainability Committee, which comprehensively manages all business risks, including those related to climate change.
Indicators and targets
Based on the decision of the Paris Agreement in 2015, we conducted scenario analysis and found that in the scenario where the average temperature rises by 4°C due to climate change, the financial risk due to an increase in disaster risk such as flooding of bases as a physical risk, and in the scenario where the average temperature shifts to a low-carbon economy by 1.5°C, the transition risk due to the introduction of a carbon tax and the financial risk due to an increase in electricity prices are significant.
On the other hand, in the 1.5°C scenario, we also found that the development of EVs in automobiles creates sales opportunities for semiconductor devices for xEVs manufactured by our group. Of these climate-related risks and opportunities, the financial impact of the carbon tax was found to be the greatest, and it was found to be a climate-related issue that should be addressed with the highest priority.
CO2 Emission Reduction Targets of the Sanken Group
Goal
- The Sanken Group is targeting a 33% reduction in Scope 1 (energy-related CO2) and 2 for fiscal 2030, with 2020 as the base year for domestic and overseas (Dalian). (Scenario to limit the post-industrial temperature rise to less than 2°C)
- Going forward, we will accelerate our reduction activities toward 2030 and further develop measures to reduce the risk of climate change, while working toward carbon neutrality by 2050.
Specific measures
- Promotion of energy conservation activities in Japan and overseas
- Introduction of solar power generation
- Conversion to renewable electricity
About Scope3
- Scope3 emissions in the Sanken Group were 388kt-CO2 (FY 2024).
- We will continue to improve the accuracy of Scope 3 emissions calculations and establish reduction targets moving forward.
Trends in Scope 1 Emissions and Per Unit of Net Sales
Trends in Scope2 CO2 Emissions and Per Unit of Net Sales
Reduction Rate of Energy-derived CO2 Emissions (Compared to FY2020)
| Target | Actual | ||||
|---|---|---|---|---|---|
| 2021 F.Y | 2022 F.Y | 2023 F.Y | 2024 F.Y | ||
| Scope 1 Reduction rate | ー | 8.7％ | 3.4% | 4.9% | 3.2% |
| Scope2 Reduction rate | ー | 6.2％ | 13.0％ | 23.2％ | 26.1% |
| Total reduction rate | Compared to FY2020 33%Reduction | 6.3％ | 12.3% | 21.8% | 24.4% |
Disclosing actual figures on the Sanken Group's Scope3
Of the Sanken Group's GHG emissions, 80% are from products and services purchased in Category 1 (No. 1 Fundri, No. 2 Wafer, 30kt-CO2). In other areas, the ratio of transportation and delivery (upstream and downstream) energy-related activities is relatively large, and we will formulate new reduction targets for Scope3 based on the results of calculations in the future.
| NO. | Category | FY2020 (t-CO2) | FY2022 (t-CO2) | FY2023 (t-CO2) | FY2024 (t-CO2) |
|---|---|---|---|---|---|
| ① | Purchased goods and services | 204,823 | 230,458 | 244,216 | 306,712 |
| ② | Capital goods | 9,437 | 17,259 | 18,087 | 11,733 |
| ③ | Fuels and energy-related activities not included in Scope1 and 2 | 11,651 | 9,999 | 40,956 | 38,176 |
| ④ | Transportation and Delivery (Upstream) | 3,933 | 11,486 | 8,926 | 10,451 |
| ⑤ | Waste generated in operations | 288 | 3,667 | 2,654 | 2,590 |
| ⑥ | Business Trip | 463 | 365 | 340 | 329 |
| ⑦ | Employer's commutation | 1,072 | 1,250 | 4,144 | 3,808 |
| ⑧ | Upstream leased assets | Not eligible | Not eligible | Not eligible | Not eligible |
| ⑨ | Downstream transportation and distribution | 9,632 | Not eligible | Not eligible | Not eligible |
| ⑩ | Processing of sold products Not eligible | Not eligible | Not eligible | Not eligible | Not eligible |
| ⑪ | Use of sold products | Not eligible | Not eligible | Not eligible | Not eligible |
| ⑫ | End of life treatment of sold products | 1,538 | 11,452 | 9,890 | 14,157 |
| ⑬ | Downstream leased assets | Not eligible | Not eligible | Not eligible | Not eligible |
| ⑭ | Franchise | Not eligible | Not eligible | Not eligible | Not eligible |
| ⑮ | Investment | Not eligible | Not eligible | Not eligible | Not eligible |
| Total | 242,837 | 285,935 | 329,213 | 387,957 |
Third-party Verification
The Sanken Group undergoes third-party verification by specialized organizations to ensure the reliability and transparency of greenhouse gas (GHG) emissions data.
Sanken Group's Efforts to Reduce GHG Emissions
We are actively engaged in energy-saving activities at each business site, making capital investments that consider CO2 reduction effects in facility renewal, promoting the proactive introduction of photovoltaic power generation at each site, and advancing the use of renewable and natural energy.
Initiatives to comply with the Energy Conservation Act and the Act on Promotion of Global Warming Countermeasures
In accordance with the Energy Conservation Act and the Act on Promotion of Global Warming Countermeasures, all business sites subject to reporting requirements have appointed certified energy managers and submit mid- to long-term plans and periodic reports to the competent authorities.
We will continue to strive for proper energy management and effective utilization in compliance with applicable laws and regulations.
Utilization of Renewable Energy: Reduction of GHG (Greenhouse Gas) Emissions
The Sanken Group is actively promoting the use of renewable energy to reduce GHG emissions. We are expanding the use of electricity generated from solar, hydroelectric, and wind power sources.
- In 2022, the Sanken Group established CO2 emission reduction targets.
- In 2022, Fukushima Sanken began procuring 100% renewable electricity.
- In 2023, Ishikawa Sanken introduced on-site PPA at the Horimatsu and Noto Plants.
- In 2023, Fukushima Sanken introduced on-site PPA.
- In 2023, Dalian Sanken Electric introduced on-site PPA and switched part of its purchased electricity to wind power.
- In 2024, Dalian Sanken Electric is expanding the proportion of electricity procured from wind power.
- In 2026, Fukushima Sanken will change its electricity procurement plan to a virtually renewable energy plan.
- A scheme in which a power producer (PPA provider) installs power generation equipment on the customer’s site and provides electricity generated by those facilities.
Installation of on-site solar power generation systems and introduction of on-site PPA
At four plants operated by three Sanken Group companies (Ishikawa Sanken’s Horimatsu and Noto Plants, Fukushima Sanken, and Dalian Sanken Electric), on-site PPA schemes are utilized to install solar power generation equipment on unused grounds within factory premises and on facility rooftops.
Through this initiative, the electricity generated is directly consumed at our own facilities, contributing to the reduction of greenhouse gas emissions associated with electricity use, while also promoting the effective utilization of idle assets.
Utilization of a Virtually Renewable Energy Plan at Fukushima Sanken
Fukushima Sanken utilizes a virtually renewable energy plan provided by Tohoku Electric Power.
This plan uses non-fossil value certificates to enable the use of electricity that is effectively considered to be derived from renewable energy, thereby contributing to the reduction of CO2 emissions at manufacturing sites.
Wind Power Procurement – Dalian Sanken Electric Co., Ltd.
Since January 2024, Dalian Sanken Electric has begun procuring electricity derived from wind power.
The share of wind power–derived electricity accounted for 4.9% of total electricity consumption in FY2023 and has expanded to 30.6% in FY2024.
Sanken Electric Semiconductor Reliability Evaluation Center
In April 2019, the Semiconductor Reliability Evaluation Center started operation at the Ishikawa Sanken Head Office site. By consolidating the product evaluations that had previously been dispersed among the several locations of the head office and Ishikawa Sanken into one location, we were able to improve the evaluation speed of product development.
In terms of the environment as well, we were able to reduce electric power charges by 22 million yen per year by improving air conditioning efficiency through the consolidation of floor design and evaluation equipment that takes waste heat into account.
Sanken Electric Manufacturing Development Center
In April 2021, we constructed a Monozukuri Development Center on the premises of our head office to serve as a base for platform development technology that integrates development and production, and are working to improve the efficiency of new product development.
In terms of the environment, we have also adopted light shelves and top lights for indoor lighting. CASBEE rating A has been achieved through the use of natural energy by incorporating daylight.
Efficient Use of Electricity and Energy Initiatives
The Sanken Group is not only promoting the procurement of renewable energy but also implementing initiatives to enhance efficient energy use.
As a group, we are advancing energy-saving activities with a target of achieving a year-on-year reduction of 1.5% in energy intensity per unit of sales.
Examples of Activities
By adjusting the inverter frequency of four air conditioning unit fans, we reduced electricity consumption by approximately 3,492 kWh per month while maintaining positive pressure in the cleanroom.
Example: Adjustment of Inverter Frequency for Air Conditioning Units
Adjusting the frequency using an inverter controls the rotational speed of air conditioning unit motors, with the aim of improving energy efficiency and extending equipment lifespan.
In this case, the frequency was reduced from 43 Hz to 39 Hz, resulting in a reduction in electricity consumption.
Benefits of Implementation
- Improvement of Energy Efficiency
- Reducing Operating Costs
- Prolonging Equipment Lifespan