Conducting Scenario Analysis in Line with the TCFD Recommendations in the Ajinomoto Group
Ajinomoto Co., Inc.
| Publication date | February 9, 2021 (Posted on January 26, 2023) |
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Company Overview
The Ajinomoto Group, unlocking the power of amino acids, aims to resolve food and health issues associated with dietary habits and aging, and contribute to greater wellness for people worldwide.
Based on the corporate message “Eat Well, Live Well.”, we have been scientifically pursuing the possibilities of amino acids to aim for future growth by creating new value through sustainable and innovative solutions for communities and society.
The Ajinomoto Group has offices in 35 countries and regions, and sells products in more than 130 countries and regions. In fiscal 2019, sales were 1.1000 trillion yen (10.1 billion U.S. dollars).
Climate Change Impacts
A massive flood occurred in Thailand between October and November 2011, which was estimated at a scale that occurs once in 70 years, and damaged five local manufacturing sites owned by the Ajinomoto Group, which resulted in the suspension of in-house production.
Adaptation Initiatives
In May 2019, we endorsed the recommendations of the Task Force on Climate-related Financial Information Disclosures (TCFD) established by the Financial Stability Board after responding to the questionnaires from CDP, which is engaged in corporate disclosure of environmental information. We also announced our participation in the TCFD consortium to discuss effective disclosure of corporate information, and efforts to link disclosed information to appropriate investment decisions by financial institutions and other entities. In doing so, the role of the team within the company that had been studying water risk countermeasures was changed to studying measures against climate change risks in the TCFD.
We are assessing the climate change risks and opportunities that impact our business based on TCFD recommendations and proactively disclosing related information. The scenario analysis identified the following risks related to our business: damage to plant facilities and distribution suspension due to flooding, suspension of plant operations due to drought, failure to procure raw materials due to drought, damage to plant facilities due to typhoons, and lack of operators due to spread of infectious diseases. Using AJI-NO-MOTO® umami seasoning, one of our core products, as a model, scenario analysis was conducted for physical risk, transition risk, and opportunity, based on Southeast Asia for FY2018 and all global production sites of the entire Group in 2019 (Fig. 1).
Effects / Expected Benefits
Scenario analysis conducted in 2019 identified that a 2°C increase in the average temperature in 2100 would have a relatively small impact on the main raw materials we procure and changes in demand, with no significant impact on profits. On the other hand, there was a financial risk of about ¥8 billion to ¥10 billion due to an increase in the unit price of energy and carbon tax associated with the progression of a lower carbon society (Fig. 2).
Currently, we are conducting scenario analysis for other businesses from a global perspective to identify risks and opportunities. By using these countermeasures, we will work to strengthen the resilience of the entire Ajinomoto Group's businesses.
Fig. 1 Scenario analysis components for AJI-NO-MOTO®, our signature seasoning product
Fig.2 Scenario analysis results based on AJI-NO-MOTO®, our signature seasoning product
