Footnote
(Note 1) The ultimate goal for "mitigating and adapting to climate change" is set at 2050.
Assessing Main Risks and Opportunities Based on Financial Impact
Daiwa House Industry Co., Ltd.
Industry: Construction
| Publication date | February 28, 2022 (Posted on June 1, 2022) |
|---|---|
| Sector | Industrial and economic activities |
Company Overview
Since its establishment in 1955, Daiwa House Industry Co., Ltd. has been constructing buildings as “a group that co-creates value for individuals, communities and people’s lifestyles.” We have been constructing a wide range of buildings including detached houses, rental housing, condominiums, commercial facilities, distribution facilities, medical and nursing care facilities, and corporate facilities, while also operating hotels, home centers, and sports clubs. Looking ahead to the company's 100th anniversary in 2055, we have formulated our long-term environmental vision, "Challenge ZERO 2055" (Note 1), and we are aiming to achieve zero environmental impact. We are also accelerating our environmental efforts by joining RE100, EP100, and SBT, as the first company in the world from the construction and housing industries.
Climate Change Impacts
The safety and security of our homes and lifestyles, which are the foundation of the value we provide, are being threatened by the frequent occurrence of extreme weather and natural disasters for which climate change is believed to be one cause. Meanwhile, since the adoption of the Paris Agreement, countries and governments around the world have made a major shift toward "decarbonization," and the expected role for the private sector have also changed significantly.
Adaptation Initiatives
We announced our support for the TCFD recommendations in September 2018, believing that changes in the external environment accompanying climate change are highly uncertain and that it is important to take actions to recognize business opportunities while appropriately responding to the risks under different scenarios. We have disclosed information associated with the four contents in line with the final recommendations -Governance, Strategy, Risk Management, Metrics and Targets- in our documents including our Sustainability Report.
For the strategy framework, we classified the factors for the various changes in the external environment associated with climate change into "transition" and "physical change". For each factor, the financial impact was assessed at three levels (large, medium, small) based on the estimated period of the impact (present, short-term, medium-term, long-term), to identify the significant risks and opportunities (Fig. 1).
In order to develop business strategies that can flexibly respond to future changes in the external environment based on these risks and opportunities, we verified the rationality of our business strategies by referring to the Nationally Determined Contribution (NDC) as a scenario for "transition", and RCP 8.5 (high-emissions scenario) as a scenario for extreme "physical change" (Fig. 2).
Effects / Expected Benefits
In both scenarios, demand for net-zero energy houses and buildings, as well as in the environmental energy business, were expected to expand and we confirmed that the increase in revenues is likely to outweigh the negative financial impact. This reaffirmed the adequacy of our risk responses and the importance of proactively recognizing business opportunities.
However, the simplified analysis was limited to significant risks and opportunities in our core businesses of residential housing, commercial and business facilities, and environmental energy. We will work to further expand the range of businesses covered, improve the comprehensiveness of the risks and opportunities, and refine the scenario analysis. We will also continue to proactively disclose information in line with the TCFD recommendations and engage in constructive dialogue with our investors and other stakeholders.
Fig. 1 Main risks and opportunities related to climate change
Fig. 2 Summary of scenario analysis results
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