Recognizing that responding to climate change is one of the most important issues that must be addressed on a global scale, Idemitsu Group works to solve this issue through both "mitigation" and "adaptation" by making maximum use of our resources.
Assuming multiple scenarios of future possible business environments through scenario analysis, we identify risks and opportunities and reflect the results in its strategies and initiatives.
With regard to risks and opportunities associated with climate change, we used scenario analysis to explore possible energy transition pathways, resulting from decarbonization, development of environmental technologies, and social change, and to examine their impacts on our company.
Scenario analysis identifies energy demand and the effects of climate change in the Asia-Pacific region and the management environment in 2050 is assumed. Four scenarios were prepared, including a scenario in which the increase in energy demand exceeds the trend toward low-carbon emissions due to the high growth of the Asian economy, and a scenario in which the targets of the Paris Agreement are achieved. (Figure below) We are examining specific priority topics with a strong awareness of the "Prism" scenario, in which the company is expected to take stronger environmental measures.
On the basis of scenario analysis, we examined the risks and opportunities we face. As for risks, we recognize a decline in demand for petroleum products due to the spread of electric vehicles (EVs) as well as changes in consumer awareness, and a decline in the reputation of the fossil fuel business. On the other hand, with an increasing demand for renewable energy and environmentally friendly products, we are aware of opportunities to contribute to the realization of a low-carbon society and to expand our businesses.
We aim to reform its business portfolio in order for the Group to become a group of resilient companies by responding to these risks and strengthening its business initiatives to capture opportunities.
Classification | Matters to be evaluated | Response and initiatives |
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Transition risk | Decline in demand for petroleum products due to the spread of EVs and changes in consumer awareness |
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Decline in energy prices due to technological advances |
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Possibility of divestment of the coal mining |
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Decline in the reputation of the oil and coal business |
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Physical risk | Suspension of equipment operation and damage to bases due to abnormal rainfall and others |
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Impact of sea-level rise on manufacturing and distribution bases |
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Opportunity | Expanding demand for renewable energy |
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Strengthening of IMO (International Maritime Organization) regulations |
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Increasing demand for environmentally friendly products with low environmental impact |
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Increasing demand for energy-saving materials |
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Development of distributed energy resource systems |
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Development of the circular economy |
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Advent of the MaaS (Mobility as a Service)society |
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Development of natural gas resources |
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Climate-related risks are also identified and assessed by the Safety & Environmental Protection Headquarters. In addition, receiving advice from outside experts, the Safety & Security Advisory Committee conducts risk management from objective viewpoints. We are also developing a comprehensive risk management system that incorporates ESG elements into our internal control system.