TCFD Initiative

Climate Change Disclosure (TCFD Disclosure Guidelines)

Kanamoto recognizes its response to environmental issues, including climate change, as one priority management challenge.
In July 2021, Kanamoto signed and expressed its support of the Task Force on Climate-Related Financial Disclosure (TCFD)*1 and joined the TCFD Consortium*2.
Even as companies pursue low and no carbon efforts and markets flourish, the impact of climate change becomes even more severe from unusual weather to flooding. The social mission of the construction machine rental business aims to prevent and mitigate disasters as well as help recovery after disaster strikes. The rental industry also leverages the unique characteristics of a sharing economy, which aim to maximize the efficient use of construction machinery. Kanamoto will develop this business in a form that will contribute to social initiatives to combat climate change.

Governance

Our Sustainability Committee led by the President as chair with members made up of management and employees deliberates and makes decisions about matters on organizational governance related to climate risks and opportunities. The Committee also reports to the Board of Directors. On particularly important policies, the Committee also involves the Board of Directors in the discussion and approval process. Each division also incorporates the policies and measures approved by the Committee into their business plans. The Committee then reviews these business plans and regularly reports to the Board of Directors. Each branch also reports to the Sustainability Committee, which identifies and monitors the energy consumption connected to carbon dioxide emissions, through an established reporting system.

strategies

Climate risks and opportunities have a real and potential impact on businesses, strategies, and financial plans of the organization. To identify the medium- to long-term impact climate change issues have on our businesses, Kanamoto has analyzed scenarios anticipating Construction Equipment Rental Business in Japan after 2030. This analysis adopted a scenario assuming a 4°C average temperature rise as well as a 1.5°C to 2°C temperature rise worldwide by 2100 compared to that before the industrial revolution. Each of these scenarios analyzed shifts in government policy and market trends (transition risks and opportunities) and the physical changes (physical risks and opportunities). The main scenarios used for the transition risk and opportunity analysis adopted the International Energy Agency (IEA) State Policy Scenario (STEPs; scenario assuming the current environmental policies announced by each country are reached but do not meet the long-term goals of the COP21 Paris Agreement*3 resulting in a roughly 4°C temperature rise by 2100 due to climate change compared to the temperature before the industrial revolution), the IEA Sustainable Development Scenario (SDS; scenario assuming international cooperation to achieve the long-term goals of the COP21 Paris Agreement sustain a low temperature rise of less than 2°C by 2100 due to climate change compared to the temperature before the industrial revolution), and the IEA Net Zero by 2050 (NZE2050) analysis. The main scenarios used for the physical risk and opportunity analysis adopted the Intergovernmental Panel on Climate Change (IPCC) RCP 8.5 (scenario assuming measures to regulate greenhouse gas emissions are not taken resulting in a 2.6°C to 4.8°C temperature rise compared to the temperature before the industrial revolution), the IPPC RCP 2.6 (scenario assuming mitigation of greenhouse gas emissions suppresses the temperature rise to 0.3°C to 1.7°C compared to the temperature before the industrial revolution), and SR1.5 (Global Warming of 1.5°C).

※1 The Task Force on Climate-Related Financial Disclosures (TCFD) was established based on the request of G20 in 2015 as a task force by the Financial Stability Board (FSB; agency for conducting auditory functions related to international finance composed of members from financial authorities and central banks of each country). To reduce the risk of unstable financial markets, the TCFD advocates companies disclose various information such as the financial impact of climate change risks and opportunities on business activities as well as specific countermeasure and strategies.
※2 The TCFD Consortium is a group launched by investors and companies that support TCFD disclosure for the purpose of collaborative development and sharing of scenario analyses and techniques to quantify data in each industry.
※3 2015 United Nations Climate Change Conference (COP21) held in Paris, France in December 2015 adopted the Paris Agreement as a new international framework to reduce greenhouse gas emissions from 2020 in addition to other environmental initiatives.

The primary risks, opportunities, and countermeasures are outlined in the table below.

Item			Impact on businesses			Countermeasures
Item			Overview	4°C Scenario	2°C/1.5°C Scenario	Countermeasures
Transition	Risk	Adoption of carbon tax	Adoption of carbon tax	Small	Medium	Transition to eco-friendly equipment promoting energy savings
	Risk	Strengthening of various regulations toward a decarbonized society	Increasing costs and lower demand due to regulations	Small	Large	Transition to eco-friendly equipment promoting energy savings
	Opportunity	Expansion of needs for energy savings and renewable energies	Expansion of environment-related markets (energy savings, ZEB, etc.)	Medium	Large	Proactive support of projects for energy savings and renewable energy
Physical	Risk	Rising temperatures	Increasing costs to respond to environment changes on construction sites, etc.	Large	Large	Stronger solutions utilizing ICT and other technologies
	Risk	Greater severity of natural disasters	Potential of damage as well as rising insurance premiums, freight costs, and other expenditures due to disasters	Medium	Medium	Stronger Business Continuity Plans (BCP) coordinating with suppliers, insurance companies, and other stakeholders
	Opportunity	National resilience initiatives	Growth in demand for national resilience	Large	Large	Stronger sales and marketing of projects building infrastructure
	Opportunity	Shifts in markets due to climate change	New demand generated by climate change measures	Medium	Medium	Stronger sales and market conforming to market trends

Risk Management

Our Sustainability Committee led by the President as chair with members made up of management and employees deliberates and makes decisions about methods for the organization to identify, assess, and manage climate risks. The Committee also reports to the Board of Directors. On particularly important policies, the Committee also involves the Board of Directors in the discussion and approval process. Each division also incorporates the policies and measures approved by the Committee into business plans. The Committee then reviews these business plans and regularly reports to the Board of Directors. As one aspect of risk management, the Committee has not only set targets to reduce carbon dioxide emissions, which are one cause of climate change, but has also established a reporting system to identify and review energy consumption connected to carbon dioxide emissions.
Kanamoto not only has a Sustainability Committee but also an Internal Control Committee, Compliance Committee, and Legal Office, which creates the foundation that supports its internal control systems to address climate change and all other business risks.

Index and Targets

anamoto has set short- to long-term CO₂ reduction targets (total/per unit emissions) up to 2050 and promotes initiatives to reduce CO₂ emissions from its business activities.
Scope1
Emissions from the use of purchased electricity, heat, etc. 50% reduction by 2030 compared to 2013
Scope2
Emissions from emissions from purchased or acquired electricity, steam, heat, and cooling 50% reduction by 2030 compared to 2013