Pursue decarbonization in all corporate activities

Challenges

  • Responding to climate change
  • Reducing greenhouse gas emissions
  • Increasing use of clean energy

Relevant stakeholders

  • Direct: Local communities, the environment, customers
  • Indirect: Shareholders and investors, creditors, NGOs, industry groups

Our policy <Our approach to climate change>

Climate change has begun to cause frequent extreme weather events and natural disasters in recent years, such as heavy rainfall and flooding. We acknowledge that it is increasing the risks faced by our Group, including impacts on the growth of trees providing the natural rubber used to make tires, impacts on plant operations, and disruptions in the supply chain.
We also recognize that our Group’s efforts to reduce CO₂ and other greenhouse gas (GHG) emissions within its business are essential in working toward achieving both the Paris Agreement goal of limiting average temperature increases to below 2°C, and carbon neutrality in Japan.
As the impact of climate change intensifies, increasing social demands are being made towards mobility. We see the mobility business as the heart of our Group, and recognize that responding to climate change is the most key issue decisive to our growth. Our responsibility to both current and future generations is to reduce our greenhouse gas (GHG) emissions to help achieve the long-term targets set by the Paris Agreement, as well as expand our use of clean energy, and we are aiming to be carbon neutral by 2050.
With all this in mind, the Group has declared our support for the TCFD recommendations, and will report information covering governance, strategy, risk management, and metrics and targets in accordance with the TCFD framework in order to activate stakeholder dialogue and promote climate change-related initiatives that help work toward a more sustainable world.

Responsible Executive (as of April 2022)

Director, Corporate Officer and Vice President of Quality Assurance, Environment & Safety Headquarters

Activity promotion system <Governance> (as of April 2022)

In April 2021, we established the Sustainability Committee with the President as chairperson.
The committee meets quarterly to report on, deliberate and decide on measures and responses to climate change and other sustainability issues.
Under the jurisdiction of the Sustainability Committee, we established the Decarbonization Task Force in July 2021 to discuss project plans, targets and KPIs for reducing CO₂ emissions in our corporate activities. The Sustainability Committee regularly checks and monitors the task force’s progress.
Climate change-related issues deliberated and decided upon by the Sustainability Committee are reported to the Executive Committee for further consideration, and reflected in the establishment and review of annual and medium-term business plans. These issues are also reported to the Board of Directors in a timely and appropriate manner.

Activity promotion system

Grievance mechanism

  • Reporting hotline (whistle-blowing system): For executives, employees and suppliers
  • Customer Relations Department: For customers (consumers) and local communities
  • Online inquiry form: For customers (consumers), shareholders and investors, and NGOs

Main resources in promoting activities (2021)

Costs of climate change adaptation and mitigation in main business area: 2,914 million yen

Activities: Responding to climate change

Strategy (Climate-related risks and opportunities)

We have performed a scenario analysis of the impact climate change could potentially have on Group corporate activities.
Below is an overview of this process.

  1. Select scenarios to use and understand the outlook of each scenario
  2. Investigate risks and opportunities in each scenario
  3. Assess the significance of each risk and opportunity, and identify those of high significance

Scenario analysis process

Scenario analysis process

1. Select scenarios to use and understand the outlook of each scenario
In our analysis, we evaluated the impact of climate-related risks and opportunities in a baseline scenario (3-4°C scenario) and a transition scenario (1.5°C scenario).
In the baseline scenario we focused on physical risks, and explored transition risks in the transition scenario.

  Baseline scenario Transition scenario
Summary No additional measures are taken to limit the rise of emissions, and average temperatures rise by up to 3-4°C within the 21st century Decarbonization efforts advance in order to limit the average temperature rise to below 1.5°C during the 21st century
Scenario outlook
  • ・No new political policies or stronger regulations other than what is currently envisioned
  • ・GHG emissions increase in some areas following economic growth
  • ・Extreme heat, heavy rainfall and other natural disasters intensify as temperatures rise
  • ・New policies and stronger regulations are enacted to curb climate change
  • ・Global GHG emissions decline to net zero by 2050
  • ・Climate change causes sea level rises and changes in weather patterns, but they remain below those in the baseline scenario
Primary scenarios referenced
  • ・IEA Stated Policies Scenario (STEPS)
  • ・IPCC SSP5-8.5
  • ・IEA Sustainable Development Scenario (SDS)
  • ・IEA Net Zero Emission Scenario by 2050 case (NZE)
  • ・IPCC SSP1-2.6

2. Investigate risks and opportunities / 3. Assess significance

We identified our key climate-related risks and opportunities for each scenario based on the results of a significance assessment.
The significance of individual risks and opportunities was rated by working out the financial impact of each one on our Group business, the probability that the potential main causes of each will occur, and the level of impact—including hypothetical cost—each might have on our business.
We then selected the risks and opportunities in each scenario found to be of high significance, and identified topics that would have a large impact on our business.

Baseline Scenario: Risk (Medium-term) Significance Assessment

The red box below indicates risks designated as highly significant.

(Medium-term: around 2030)

Baseline Scenario: Risk (Medium-term) Significance Assessment

Baseline Scenario: Opportunity (Medium-term) Significance Assessment

The red box below indicates risks designated as highly significant.

(Medium-term: around 2030)

Baseline Scenario: Opportunity (Medium-term) Significance Assessment

Transition Scenario: Risk (Medium-term) Significance Assessment

The red box below indicates risks designated as highly significant.

(Medium-term: around 2030)

Transition Scenario: Risk (Medium-term) Significance Assessment

Transition Scenario: Opportunity (Medium-term) Significance Assessment

The red box below indicates risks designated as highly significant.

(Medium-term: around 2030)

Transition Scenario: Opportunity (Medium-term) Significance Assessment

Highly significant risks and opportunities

Baseline Scenario Short-term: around 2025, Medium-term: around 2030, Long-term: around 2050

Category Type Climate-related event Impact on business Main financial impact Significance
Risk Chronic Changes in climate patterns
Medium to long term
  • ・Migration of natural rubber tree crop zone, decline in quality
  • ・Energy supply system instability
  • ・Increased demand for crude oil, natural gas, etc.
  • ・Increased raw material prices (natural rubber)
  • ・Increased R&D costs (alternative raw materials)
  • ・Decreased sales, worsened profits (decreased tire production)
Medium to high
Temperature rises
Medium to long term
  • ・Deterioration of roads
  • ・Reduced areas of snowfall
  • ・Increased R&D costs (heat-resistant tires)
  • ・Decreased sales (winter tires)
Medium to high
Sea level rises
Medium to long term
  • ・Reduced natural rubber harvests
  • ・Compromised ports and warehouses
  • ・Increased raw material prices (natural rubber)
  • ・Decreased sales (reduced or suspended tire production)
  • ・Inventory/product damage (flood damage)
Medium to high
Acute Increase in extreme weather
Medium to long term
  • ・Unpredictable demand trends
  • ・Decreased sales (supply and demand mismatch)
Medium
  • ・Compromised infrastructure networks
  • ・Decreased sales and profits (overall business slowdown)
Medium to high
Frequent and severe heavy rainfall
Medium to long term
  • ・Transport network disruption, loss of commuting options
  • ・Flooding of natural rubber plantations
  • ・Decreased sales, worsened profits (revision of production plans)
  • ・Increased raw material prices (natural rubber)
Medium to high
  • ・Damage to or collapse of company facilities
  • ・Increased need for heavy rain products
  • ・Decreased sales, worsened profits (suspended operations)
  • ・Increased repair costs (damaged facilities)
  • ・Increased R&D costs, decreased sales (products for heavy rain)
Medium
Increase and intensification of tropical cyclones
Medium to long term
  • ・Marine transport delays, accidents
  • ・Increased transport costs
  • ・Inventory/product damage
Medium to high
  • ・Damage to company facilities, blackouts
  • ・Transport network disruption
  • ・Worsened profits (suspended business)
  • ・Increased repair costs (damaged facilities)
Medium
Category Type Changes in economy and society Impact on business Main financial impact Significance
Opportunity Chronic Changes in climate patterns, temperature rises
Medium to long term
Greater competitiveness (increased share) through development of differentiated products (high durability, etc.) Increased profits (increased sales volume) High
Increase in extreme weather, frequent and severe heavy rainfall
Medium to long term
Greater competitiveness (increased share) through development of differentiated products (wet-grip performance) Increased profits (increased sales volume) High

Transition Scenario Short-term: around 2025, Medium-term: around 2030, Long-term: around 2050

Category Type Climate-related event Impact on business Main financial impact Significance
Risk Policy Introduction of carbon pricing
Medium to long term
  • ・Increased service prices as costs are passed on
  • ・Increased distribution costs
High
  • ・Introduction of carbon border tax
  • ・Introduction of environmental taxes to auto-related exports
  • ・Increased trading price of carbon credits
  • ・Increased costs of R&D and equipment investment (shift to low-carbon products)
  • ・Worsened profits (tariffs)
  • ・Increased costs for purchasing carbon credits
Medium
Sales regulations for fossil fuel vehicles and HEVs
Short to long term
  • ・Increased demand for EV tires
  • ・Changes in tire performance requirements
  • ・Smaller fossil fuel/hybrid vehicle market
  • ・Increased costs of R&D and equipment investment (development of EV tires, performance improvements)
  • ・Decreased sales (decreased tire demand)
Medium
Obligatory carbon footprint labelling
Medium to long term
  • ・Demand for lower CO₂ emissions throughout the product life cycle
  • ・Elimination of products with high CO₂ emissions, reputational risk
  • ・Increased R&D costs (development of recyclable products)
  • ・Increased production costs (reconsideration of raw materials and suppliers)
  • ・Decreased sales (decreased product share)
Medium
Technology Adoption of renewable energy technology
Medium to long term
  • ・Greater supply of renewable energy
  • ・Decrease in crude oil production
  • ・Demand from automakers that suppliers switch to renewable energy
  • ・Increased production costs (increased energy prices)
  • ・Increased raw material costs (synthetic rubber and other petrochemical products)
  • ・Increased R&D costs (alternative raw materials)
  • ・Decreased sales (not responding to automaker demands)
Medium
Adoption of energy-saving technology
Short to long term
  • ・Introduction of equipment with energy-saving technology
  • ・Greater demand for products adapted to energy-saving technology in new cars
  • ・Increased costs of equipment investment and repairs
  • ・Increased R&D costs (product development)
  • ・Increased raw material prices (reconsideration of raw materials)
Medium
Adoption of low-carbon technology
Medium to long term
  • ・Introduction of equipment with low-carbon technology, switch to other fuels (hydrogen boilers, etc.)
  • ・Increased demand for products with low-carbon technology
  • ・Increased costs of equipment investment and repairs
  • ・Increased R&D costs (product development)
  • ・Increased production costs due to reconsideration of raw materials
Medium
Market/
reputation
Increased environmental awareness in customers
Medium to long term
  • ・Increased demand for products that help reduce CO₂ or a shift in customer buying behaviors, development of products that help lower environmental impact
  • ・Selection of business partners focusing on CO₂ reduction
  • ・Need for communications that convey CO₂ reduction efforts
  • ・Demand for introduction of equipment utilizing renewable energy
  • ・Increased R&D costs (product development)
  • ・Decreased sales (decreased share due to change in customer preferences)
  • ・Increased cost of raw materials (reconsideration of raw materials, selection of suppliers)
  • ・Increased advertising costs
  • ・Increased costs of equipment investment and repairs (equipment using renewable energy)
Medium
Increased raw material costs
Medium to long term
  • ・Fewer rubber plantations due to poor profitability
  • ・Increased raw material prices due to decreased natural rubber production
Medium to high
  • ・Skyrocketing prices of fossil fuel-derived raw materials, increased production costs for raw material manufacturers
  • ・Increased production costs due to increased prices of petrochemical products and other materials
Medium
Category Type Changes in economy and society Impact on business Main financial impact Significance
Opportunity Market Greater eco-conscious behavior by stakeholders
Medium to long term
  • ・Acquisition of new business partners through focus on the environment
  • ・Increased added value of eco-conscious products
  • ・Increased sales and profits (acquisition of new business partners, increased added value)
High
Expansion of low-carbon product market
Medium to long term
  • ・Greater demand for products to go low carbon
  • ・Increased sales and profits (increased added value)
High
Products/
services
Increased environmental awareness in customers
Medium to long term
  • ・Development and sales of products with low environmental impact
  • ・Increased sales and profits (increased share, increased added value)
High
Growth of EVs/next-generation vehicles
Medium to long term
  • ・Greater demand for EV tires, early-stage development and sales
  • ・Increased sales and profits (increased added value)
Medium to high
Resource
efficiency
Promotion of energy saving and efficiency
Medium to long term
  • ・Introduction of equipment enabling energy saving and efficiency
  • ・Labor-saving, improvement of employee working conditions
  • ・Improved profitability (improved production efficiency, low defect rate)
  • ・Reduced production costs (improved operational efficiency and plant utilization rate)
  • ・Decreased labor costs (decreased turnover rate)
Medium
Leveraging of recycling
Medium to long term
  • ・Development of products made using recycled materials, gain in product share
  • ・Increased sales and profits (increased share, increased added value)
Medium
Reducing water usage and consumption
Medium to long term
  • ・Introduction of equipment that reduces water usage
  • ・Improved profitability (decreased water usage)
Medium
Energy Growth of renewable energy
Medium to long term
  • ・Greater supply of renewable energy
  • ・Decreased energy costs (renewable energy)
Medium
  • ・Increased renewable energy procurement at an early stage
  • ・Increased sales and profits (increased share)
Medium
Skyrocketing coal and oil prices
Medium to long term
  • ・Expansion of EV market
  • ・Increased sales and profits (sales of EV tires)
High

Risk management

Identification and assessment of climate-related risks is carried out primarily by the Corporate Administration Division, which leads TCFD response, the Corporate Infrastructure Division’s ESG Promotion Department, which oversees the Sustainability Committee, and the Environment & Safety Division’s Environment & Health Department, which manages the Decarbonization Task Force. After assessment, they are deliberated by the Sustainability Committee to evaluate company-wide climate-related risks.
Through the Sustainability Committee’s Decarbonization Task Force, we closely monitor the regulatory requirements in each country—such as GHG emissions reduction targets (including renewable energy targets), vehicle fuel efficiency regulations, and bans on sales of new gasoline-powered vehicles—and encourage the relevant departments to address each risk and manage progress.

Metrics and targets

Climate-related metrics

Climate-related targets

  • • GHG emissions reduction targets
  •  * Set by the Sustainability Committee in November 2021 and approved by the Executive Committee in December. Announced in February 15 in 2022.
Scope1 & 2 GHG emissions: Reduce CO₂ emissions by 46% by 2030 (vs. FY2019). Be carbon neutral by 2050
Scope3 GHG emissions intensity: Aim to help reduce CO₂ emissions per tire by 20% by 2030 (vs. FY2019)

Continuing to Align with TCFD

To continue incorporating the TCFD recommendations, in the future we will further refine our scenario analysis to gain a greater understanding of the quantitative impacts of risks and opportunities, and to investigate, devise and enact strategies in response.
We will also follow the TCFD recommendations when providing our stakeholders with timely disclosures.

Activities: Reducing GHG emissions

Reducing energy consumption

To help mitigate climate change, the Toyo Tire Group is striving to reduce energy consumption through effective usage of the energy required for corporate activities both in and outside the organization. We are also developing new products and technologies that contribute to climate change mitigation and adaptation.

Energy consumption

(thousand GJ)

2019 2020 2021
Total energy consumption 7,346.1 6,777.4 6,992.9
By Region
Japan 3,991.7 3,594.3 3,842.6
US 1,810.0 1,704.2 1,753.3
Asia (excluding Japan) 1,544.4 1,478.9 1,397.0
Type of Source
Fuel consumption from non-renewable energy sources (gas, oil) 5,065.8 4,662.4 4,735.7
Fuel consumption from renewable energy sources (solar, waste tires) 2.91 0.44 0.80
Consumption of purchased electricity 1, 963.3 1,818.8 1,944.2
Reference: Percentage of renewable energy* in purchased electricity (estimate) 15.6% 15.7% 15.6%
Purchased steam 314.2 295.8 312.2
  • * Renewable energy sources can include geothermal, wind, solar thermal and photovoltaic, hydro and biomass.

Note: In 2019, the Toyo Tire Corporation Sendai plant switched its thermal energy source from waste tires to natural gas.

Reducing the energy requirements of products (fuel-efficient tires)

(Reference) Total tire production volume (new rubber)(thousand tons)
2019 2020 2021
Total tire production volume (new rubber) 245.6 212.3 245.7
By Region
Japan 130.6 108.8 127.7
US 70.1 62.2 71.9
Asia (excluding Japan) 44.9 41.4 46.0

Energy consumption (during logistics)

2019 2020 2021
Energy consumption for raw material & product transportation in Japan (thousand GJ) 127.8 109.6 118.9
  •  * Main efforts to reduce energy consumption: introduce containers and undertake modal shifts (train, and marine transport), and utilize consolidated shipments

Energy intensity

2019 2020 2021
Energy intensity within the organization (GJ/million yen) 19.5 19.7 17.8
  • Note: Energy intensity is the total amount of energy used within the organization divided by total sales.

Examples of reducing energy consumption

  • Improved energy efficiency by repairing piping and installing high-efficiency equipment
  • Reduced energy consumption through automation
  • Reduced energy consumption by improving use of air conditioning and lighting

Reducing the energy requirements of products (fuel-efficient tires)

2019 2020 2021
Reducing the energy loss
*Estimated values
169.2 253.7 338.1
Reference: Production ratio of Fuel Efficient Tires
PCR (passenger car radial tires) 20.7% 19.5% 23.1%
TBR (truck and bus radial tires) 21.0% 22.4% 35.0%

Activities: Reducing Greenhouse Gas Emissions

Reducing Greenhouse Gas Emissions

GHG emissions are the main cause of climate change. The Toyo Tire Group is working to reduce emissions by using energy effectively throughout business activities both in and outside of the organization, and in our products.
While increasing production volume does increase energy consumption, we are promoting fuel conversion and equipment renewals at manufacturing bases to address scopes 1 and 2.
For scope 3 emissions, our R&D team is working to develop fuel-efficient tires and other technologies to help reduce the CO₂ emitted by vehicles.
A calculation of GHG emissions throughout the Group’s value chain based on the Japan Automobile Tyre Manufacturers Association’s Tyre LCCO₂ Calculation Guidelines Ver. 3.0 revealed that scope 3 category 11 (product use stage) emissions account for at least 80% of overall GHG emitted. We are working to develop fuel-efficient tires which, according to the guidelines, can reduce GHG emissions during use by 95.4 kg CO₂e per tire for passenger car radial (PCR) and 879.0 kg CO₂e per tire for truck and bus radial (TBR) compared to standard tires.

GHG emissions

(thousand t-CO₂e)

2019 2020 2021
Total direct (scope 1) GHG emissions 296.3* 263.9* 268.2*
By Region
Japan 204.7 180.7 190.4
US 57.8 51.8 51.0
Asia (excluding Japan) 33.8 31.3 26.8
2019 2020 2021
Total indirect (scope 2) GHG emissions 294.6* 271.6* 284.4*
By Region
Japan 70.4 57.1 65.0
US 91.2 86.8 94.2
Asia (excluding Japan) 133.0 127.7 125.2
2019 2020 2021
Total other indirect (scope 3) GHG emissions 13,626.4 12,059.8 12,932.2
  • * Third-party verified data

Note: GHG used for calculation is CO₂.

2019 2020 2021
GHG emissions intensity (t-CO₂/million yen) 1.57 1.56 1.40
  • Note: Emissions intensity is total volume from scopes 1 & 2 divided by total sales.

Third-party assurance:

To ensure the accuracy and reliability of the data that we disclose, we have obtained the assurance of a third-party organization for our fiscal 2021 environmental data.

  • Verification scope: 24 sites* belonging to Toyo Tire Corporation and related companies, for total scope 1 energy-derived CO₂ emissions (excluding off-site mobile units), scope 2 emissions, total water intake, breakdown of water intake, total water discharge, breakdown of water discharge, and total water consumption
  • Verification criteria: ISO14064-3: 2006, related laws and regulations, and the assurance organization’s protocol
  • Third-party assurance organization: SGS Japan Inc.
  •  * Toyo Tire Corporation (Headquarters, Sendai Plant, Kuwana Plant (tire and automotive parts), Hyogo Manufacturing Complex, Corporate Technology Center, Tire Technical Center, Automotive Parts Technical Center, Miyazaki Tire Proving Ground, Saroma Tire Proving Ground); Fukushima Rubber Co., Ltd.; Toyo Soflan Co., Ltd.; Ayabe Toyo Rubber Co., Ltd.; Orient Machinery Co., Ltd. (Headquarters, Sendai branch, Rokko branch); Toyo Automotive Parts(USA), Inc.; Toyo Tire North America Manufacturing Inc.; Toyo Automotive Parts (Guangzhou) Co., Ltd.; Toyo Tire (Zhangjiagang) Co., Ltd.; Toyo Tire (Zhangjiagang) Co., Ltd.; Silverstone Berhad; Toyo Tyre Malaysia Sdn. Bhd.; Toyo Rubber Chemical Products (Thailand) Limited

Please click here to read more about verification statement.

Activities: Increasing use of clean energy

From 2022, the Toyo Tire Group is successively converting our Japanese plants to renewable energy sources.
Moving forward, we will expand our use of clean energy at our plants and business sites both in Japan and abroad in pursuit of decarbonization in all of our corporate activities.