Environmental Initiatives
SMS's Mission is “to improve people's quality of life by providing information infrastructure suitable for an aging society.”
We believe that by working to solve the various social issues that arise in an aging society as the foundation of our business, and by realizing our Mission, we can contribute to the realization of a sustainable society.
By working to solve social issues through our business activities, we can achieve sustainable growth as a company that is needed by society.
Increasing our corporate value over the long term through the accumulation of sustainable growth supports the realization of our Mission more powerfully and leads to the realization of a sustainable society.
SMS Group is working to reduce the environmental impact of its business activities in order to realize a sustainable society.
In addition, in order to promote these value-creation activities, we believe it is important to address climate change as a common issue for all humankind, while understanding the needs of society. We have therefore decided to support for the Task Force on Climate-related Financial Disclosures (the “TCFD") recommendations in October 2022.
Disclosure Based on TCFD Recommendations
Governance
SMS Group has established a Sustainability Committee to examine policies and measures on sustainability issues, including responses to climate change issues, and to monitor progress. The Sustainability Committee, chaired by the CEO and composed of all Directors, meets quarterly.
The Sustainability Promotion Office serves as the secretariat of the Committee and supports the formulation and implementation of sustainability-related strategies and measures in cooperation with each business and corporate department. The Office and the department in charge of risk management integratedly conduct group-wide risk management related to sustainability issues.
The Board of Directors supervises these processes and provides direction as necessary.
Strategy
Since the impact of climate change is highly uncertain, we conducts analysis based on certain scenarios and qualitatively evaluates the impact on SMS. Two scenarios were considered: i) the 4°c scenario, in which global warming progresses without additional measures beyond the current level, and ii) the less than 2 °c scenario, in which a transition to decarbonization is assumed. For physical impacts, we mainly referred to the SSP (Shared Socioeconomic Pathways) and RCP (Representative Concentration Pathways) scenarios of the IPCC (Intergovernmental Panel on Climate Change) . For transition impacts, we mainly referred to each scenario in the WEO (World Energy Outlook) published by the IEA (International Energy Agency).
The major impacts of climate change are considered as risks for SMS. However, by taking appropriate measures, we believe we can turn them into opportunities such as increasing sales, controlling costs, acquiring customers and human capital, and reducing financing costs.
| Scenario | |
| 4°c Scenario | A scenario in which climate change policies, laws, and regulations, and the transition to a decarbonized society are not implemented beyond the current level. As a result, global warming progresses further, and the average temperature at the end of the 21st century rises by about 4°c compared to pre-industrial level. Physical risks associated with climate change will become apparent. |
| Less than 2°c Scenario | A scenario in which climate change policy, laws, and regulations are significantly strengthened, global warming is controlled, and the average temperature at the end of the 21st century rises by less than 2°c compared to pre-industrial level. The world will undergo a major shift toward decarbonization and transition risks become apparent. |
| Scenario | Risk Items | Possible Changes | Potential impacts | Degree of Impact | Countermeasures |
| 4°c Scenario | Increasing frequency and severity of natural disasters | Increase in physical damage from natural disasters | ・Decrease in sales and occurrence of losses due to natural disasters ・Increase in costs related to BCP (Business Continuity Plan) |
Small | Strive to minimize total response costs by establishing measures to ensure business continuity as much as possible even in the event of a natural disaster by formulating and reviewing the BCP from time to time. |
| Increasing average temperature | Decrease in office air conditioning efficiency due to rising temperatures | ・Increase in costs associated with power usage | Small | Prevent unnecessary use of electricity in the office, such as by controlling the air conditioning by time for each floor, and automatically turning off after the time to leave work. | |
| Spread of infectious diseases and health damage due to rising temperatures | ・Decrease in sales and occurrence of losses due to lower employee utilization and productivity | Small | Promote health and productivity management so that employees can work in good mental and physical health by establishing a Health Promotion Office under the direct supervision of the CEO. Our in-house consultation desk with resident public health nurses, in cooperation with industrial doctors and the health insurance association, supports employee health through health promotion, literacy improvement, various consultations, and mental health support. |
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| Less than 2°c Scenario | Strengthening of policies and regulations | Application of carbon pricing (carbon tax, emissions trading, etc.) | ・Increase in costs associated with power usage | Small | Reduce electricity usage fees by switching office lighting from fluorescent to LED. Request office owners to introduce renewable energy. Select office buildings with renewable energy sources when relocating offices. |
| Increasing awareness of the environment | Damage to social reputation due to delay in environmental initiatives, including climate change | ・ Decrease in sales due to loss of customers and decline in recruitment capability | Small | Prevent damage to our social reputation by disclosing necessary information in line with frameworks such as the TCFD. | |
| Changes in investors' criteria for evaluating companies | ・Decrease in stock prices and increase in funding costs due to the increased importance of environmental initiatives in investment decisions and the SMS Group's initiatives being deemed inadequate | Small | Aim to enable investors to make appropriate investment decisions and improve ESG rating results by disclosing necessary information in line with frameworks such as the TCFD. Stabilize the stock price and reduce funding costs by translating SMS's sustainable growth into long-term enhancement of corporate value in a timely and appropriate manner through building relationships with investors who have a long-term perspective. |
Risk Management
SMS Group considers uncertainty that has a significant impact on management, profits and losses to be a risk. In order to maximize returns while controlling its negative impact, we have established risk management regulations and conducts group-wide risk management.
The Sustainability Committee identifies and evaluates risks related to sustainability. Identified risks are integrated into the group-wide risk management system in cooperation with the department in charge of risk management. Management of measures against important risks, promotion of risk management, operation of the internal control system, etc. are discussed, and the details are reported to the Board of Directors as necessary.
Indicators and Targets
SMS Group uses greenhouse gas emissions as a key indicator for climate change. The results of greenhouse gas emissions (Scope1 and Scope2) are shown below. The consolidated group's emissions, including Scope 3, are currently being calculated and will be disclosed on the company's website by the end of the fiscal year ending March 31, 2025.
After calculating the greenhouse gas emissions of the entire consolidated group, we plan to set SBT (Science Based Targets), which are targets for reducing greenhouse gas emissions consistent with the levels required by the Paris Agreement, and aim to obtain SBT certification.
Greenhouse Gas Emissions
| FY2021 | FY2022 | FY2023 | Notes | |
| Scope1（t-CO2） | － | － | 220 | Calculated for the entire Group from FY2023. |
| Scope2（t-CO2） | 956 | 946 | 1,500 | Calculated for the entire Group from FY2023. (Calculated for SMS Co., Ltd. and its domestic subsidiaries until FY2022.) |
| Total (Scope1，2) | 956 | 946 | 1,720 | |
| Net sales in the boundary (million yen) | 32,536 | 37,851 | 53,973 | Domestic net sales for FY2021 and FY2022. Consolidated net sales for FY2023. |
| CO2 emissions per net sales in the boundary (t-CO2 / net sales (million yen))） |
0.029 | 0.025 | 0.032 | Domestic net sales for FY2021 and FY2022. Consolidated net sales for FY2023. |
Our Initiatives in the office
Paperless operations
We are actively using IT tools such as groupware to reduce the use of paper materials in internal meetings. We have installed monitors in conference rooms and meeting spaces to promote paperless work throughout the company.
Automated management of air conditioning
We place great importance on working efficiently and productively during work hours, and each department has its own set time for leaving work. The air conditioning in offices is time-controlled by floor and automatically turns off after the set time to leave work.
Recycling activities
We are working to reuse office supplies by installing recycling boxes in the office.