TCFD and TNFD Index

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Climate and nature-related risk management and responses to TCFD and TNFD

The Bridgestone Group supports the Task Force on Climate-related Financial Disclosures (TCFD). The Group has been participating in the Taskforce on Nature-related Financial Disclosures (TNFD) Forum since March 2022.

As the world becomes increasingly concerned about climate change and the loss of natural capital, there is a growing movement towards a decarbonized society, as exemplified by the Paris Agreement. Additionally, efforts to achieve a nature positive* world, as outlined in the Kunming-Montreal Global Biodiversity Framework, are gaining momentum. Within this context, the Group is working to comprehensively assess and manage its dependency and impact on the climate and natural capital, as well as the risks and opportunities associated with climate change and the loss of natural capital, reflecting these in business strategy.

Based on recognition of these risks and opportunities, the Group is striving to build the foundation for sustainable value creation by enhancing its unique sustainability business model. The business model integrates the Group's efforts to realize carbon neutrality and a circular economy across the entire value chain from "produce and sell" and "use" of products to "renew" to raw materials. Also, the Group aims to evolve this model towards a more circular and regenerative approach in order to contribute to the realization of a nature-positive world.

* Nature positive: The term "nature positive" refers to action for stopping or reversing losses to biodiversity and natural capital with the goal of spurring the recovery of the natural environment. It is used to highlight transitions to social and economic activities aimed at reducing the impact of businesses on biodiversity and natural capital, preserving and restoring natural bounties, and using natural capital in a sustainable manner.

Status of adoption of TCFD and TNFD recommended disclosures

The Bridgestone Group has become an Early Adopter of the TNFD and started disclosing in line with the TNFD Recommendations in October 2023.

The Group’s response status in accordance with recommended disclosures on final recommendations of the Task Force on Climate-related Financial Disclosure (TCFD) and the Taskforce on Nature-related Financial Disclosure (TNFD) version 1.0, is as follows. The index is also covered on the Group’s Annual Securities Report (105th Fiscal Period).

Governance

Recommended disclosures Status of the Group’s response Link
TCFD TNFD
Board of Directors’ oversight of dependencies, impacts, risks and opportunities
  • The Board of Directors receive and review regular reports on the status of sustainability initiatives, including achieving carbon neutrality, contributing to a circular economy and progress toward being in harmony with nature.
Management’s role in assessing and managing dependencies, impacts, risks and opportunities
  • The Global Executive Committee (Global EXCO), the highest level of corporate management, approves and manages the progress of mid-long term strategies, targets and action plans, including achieving carbon neutrality, contributing to a circular economy and progress toward being in harmony with nature.
Human rights policies and engagement activities, and oversight by the Board of Directors and management, with respect to indigenous peoples, local communities and affected stakeholders

(TNFD recommended disclosure)
  • The Global Human Rights Policy and the Global Sustainable Procurement Policy articulate the Group’s strong commitment to respect and support internationally recognized human rights principles such as the UN Guiding Principles for Business and Human Rights. The Global Sustainable Procurement Policy contains minimum requirements for suppliers to acquire or use land only by legal means in accordance with UN Declaration on the Rights of Indigenous Peoples, and to follow Free, Prior, and Informed Consent (FPIC) principles when acquiring land and assessing any forest development or creating forest management plans. The Group promotes the implementation of these policies within the Group, with suppliers, and across the supply chain.
  • The Group collaborates with the World Wildlife Fund (WWF) to study and develop a due diligence process for ensuring the company’s supply chain is in compliance with the Global Sustainable Procurement Policy. On-site ESG audits are conducted for suppliers, including natural rubber smallholders, using a self-assessment questionnaire developed in conjunction with WWF, and risks are evaluated. This questionnaire includes inquires on the FPIC.
  • The Group establishes a grievance mechanism for the natural rubber supply chain and publicly discloses the standard operating procedure and status of each grievance. We use the grievance mechanism, among others, to monitor any potential/actual issues related to indigenous peoples and local communities’ rights in our supply chain.
  • The Global EXCO approves and manages action plans and progress for sustainability, including respect for human rights, which are reviewed by the Board of Directors.

Strategy

Recommended disclosures Status of the Group’s response Link
TCFD TNFD
Dependencies, impacts, risks and opportunities over the short-, medium-, and long-term

The Group comprehensively assesses and manages its dependency and impact on the climate and natural capital, as well as the risks and opportunities associated with climate change and the loss of natural capital. Dependencies, impacts, risks and opportunities have been identified as follows.

Dependencies on climate and natural capital*

  • Dependency on nature’s provision of water and biomass in the raw material procurement stage as well as climate and healthy soil maintenance and regulating services provided by ecosystems.
  • Dependency on nature’s provision of water in the tire production stage.

Impacts on climate and natural capital*

  • Impact of land use in the raw material procurement stage.
  • Impact of water resource usage and waste generation in the tire production stage.
  • Impact of greenhouse gas emissions, water resource usage, emissions to air, water and soil and waste generation throughout the value chain.

Physical risks and opportunities related to climate change and loss of natural capital

  • Risks of stronger typhoons and increased frequency of flooding and drought, which pose the risk of interrupting business activities.
  • Risks related to the procurement of raw materials as a result of changing rainfall patterns leading to poor harvesting of natural rubber.
  • Risk of lower demand for winter tires due to reduced snowfalls.
  • Opportunities to commercialize natural rubber derived from guayule, which grows in arid regions. Risks due to poor harvesting of natural rubber derived from Para rubber trees, which are found predominantly in tropical regions.

Risks and opportunities related to the transition to a decarbonized society and a society in harmony with nature

  • Risk of adverse effects on operating results and financial position, such as limitations on business activities and increased costs, if R&D expenses required to meet the rapidly changing needs of society and customers do not produce sufficient results when systems and regulations to combat climate change and loss of natural capital are introduced (for example, carbon taxes, CO2 emission reduction obligations and emissions trading systems, and systems and regulations related to low-fuel consumption performance of tires, recycling used tires, water withdrawal and sustainable natural rubber, etc.).
  • Opportunities associated with changes in competitive factors due to changes in mobility needs (for example, increased demand for tires for electric vehicles, increased demand for tires and solutions that help customers reduce CO2 emissions).
  • Opportunities to commercialize the recycling business resulting from increased regulation around the recycling of used tires.

    • * This refers to the main areas of dependency and impact throughout the value chain of the tire business that were evaluated as either “very high” or “high” in importance by the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC) and industrial groups using ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure).
Impact on business model, value chain, strategy, and financial planning
Resilience of the organization’s strategy, taking into consideration different scenarios
  • The Group assesses risks and opportunities based on multiple climate- and nature-related scenarios. It has already begun to address those important risks and opportunities identified and will continue to do so on a regular basis.
Locations applicable to direct operations, upstream and downstream
  • Locations with high integrity ecosystems and/or areas of decline in integrity
  • Areas where biodiversity is of high importance
  • Water stress areas
  • Areas where the organization is likely to have significant potential dependencies and/or impacts

(TNFD recommended disclosure)
  • Expand CO2 absorption and fixation through afforestation of degraded land
  • The Group regularly evaluates production sites located in water stress areas with a risk of declining water resources in terms of quantity and quality. As of the end of 2023, seven sites in India, Indonesia, China and other countries were located in river basins assessed as having “extremely high water risk.” A water stewardship plan has been formulated and is being implemented at all these sites based on the water situation in each location.

Management of risks and opportunities

Recommended disclosures Status of the Group’s response Link
TCFD TNFD
Processes for identifying, assessing, and prioritizing dependencies, impacts, risks and opportunities in direct operations and upstream and downstream value chain
  • The Group strives to comprehensively and appropriately identify and address risks and opportunities across its operation while considering the business scale and characteristics of each Group company. The Group identifies risks and opportunities associated with climate and natural capital by considering dependency and impact throughout the value chain based on evaluations from ENCORE by UNEP-WCMC and others and the Business & Biodiversity Interrelationship Map® released by Japan Business Initiative for Biodiversity (JBIB).
  • The Group is currently assessing ways to improve its management of business strategy risks and opportunities directly related to the execution of the Mid-Long Term Business Strategy by setting up a dedicated annual risk management process under the direct leadership of the Global EXCO, while operational risks related to day-to-day operations are overseen by the Chief Risk Officer (CRO), who is responsible for overall risk management and formulating risk response plans.
  • Identifying potential risks faced by each region and the Group as a whole on an annual basis; clarifying ownership for those risks not only for the Group as a whole, but also for each business, SBU and division; and implementing risk management in an autonomous and continuous manner.
Management process
Integration into and informing the organization’s overall risk management

Metrics and Targets

Recommended disclosures Status of the Group’s response Link
TCFD TNFD
Metrics used in the assessment and management of risks and opportunities
  • Establishing targets and regularly monitoring CO2 emissions (CO2 emissions reduction in Scope 1, 2, and 3, and the reduction contribution of CO2 emissions throughout the lifecycle and value chain of the Group’s products and services) as one of the metrics for assessing and managing climate-related risks and opportunities.
  • The Group evaluates the cost of CO2 emission (US$100/tCO2) and the effect of reductions based on internal carbon pricing in order to assess the risks and opportunities associated with an investment.
  • The Group sets water withdrawal in water stress area, environmental footprint (amount of hazardous/non-hazardous waste and landfill, VOC emissions, SOx/NOx emissions), and size of habitat management area as metrics in the assessment and management of nature-related risks, opportunities and impacts and regularly monitors status.
Metrics used in the assessment and management of dependencies and impacts
Targets and performance in metrics used in the management of dependencies, impacts, risks and opportunities
  • Setting long term environmental vision (2050 and beyond) and mid-term target (2030) to achieve carbon neutrality, contribute to a circular economy and achieve being in harmony with nature; evaluating and disclosing performance every year.
  • Setting targets toward 2030 to reduce our absolute CO2 emissions (Scope 1 and 2) by 50% compared with 2011 levels, contribute to global CO2 emissions reductions across the lifecycles and value chain (Scope 3) of the Group’s products and services exceeding five times our operation’s CO2 emissions (Scope 1 and 2) compared with 2020 levels, increase ratio of recycled and renewable material to 40%, and promote water stewardship plans to reduce water risks at production bases in water-stressed areas.
  • The main results for targets toward 2030 are as follows.
Priority items to be addressed Metrics 2022
results		 2023
results		 2030
targets
Establishment and evolution of the Sustainability Business Model Develop readiness toward carbon neutrality Reduce absolute CO2 emissions (Scope 1 and 2) compared with 2011 levels 31% 57% 50%
Expand circular economy business activities Ratio of recycled and renewable material * 38.4% 39.6% 40%

* Within total material weight for tire productions including tire casing for retreading

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