Response to TCFD recommendations
※ TCFD stands for the Task Force on Climate-related Financial Disclosures. The TCFD was established by the Financial Stability Board at the request of the G20 to discuss how climate-related information disclosures and financial institutions’ responses should be.
Governance and risk management
Responding to climate-related risks and opportunities is one of the key ESG issues we should tackle with
concerted group-wide efforts. Based on this recognition, we have established a Sustainability Committee
(which meets at least twice a year) as an advisory body to the Representative Director & President for the
purpose of promoting sustainability management, including the deliberation and determination of basic
policies and necessary matters relating to such responses.
The Sustainability Committee holds meetings attended by directors in charge of the main divisions and
conducts the planning of measures to address climate-related issues,management of progress toward targets,
materiality assessment of risks, priority setting, and the determination of response measures to be taken
before making reports and recommendations to the Representative Director & President. We have also
established a Risk Committee within the Sustainability Committee as a body to manage relevant risks and
execute tasks in accordance with the instructions of the Sustainability Committee.
The Sustainability Committee is supervised by the Board of Directors, which receives reports and issues
instructions as necessary on important matters deliberated by the Committee to ensure that its decisions
are free from errors.
Strategy
Scenario analysis
We have assessed risks and opportunities that may have an impact on the SUGI Pharmacy Group in reference to, among others, the 1.5°C and 4°C scenarios identified in the IPCC’s Fifth Assessment Report, the IEA WEO NZE scenario, etc., after collecting various parameters based on future forecasts.
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CO2 emissions (t-CO2) under the assumption of no positive action and when targets are met
Item 2030 CO2 emissions under the assumption of no positive action 225,689 Emissions when 50% reduction in CO2 emissions per store from FY 2014 has been achieved 141,890 *An emission factor of 0.000433 (t-CO2/kWh; national average factor for FY 2022) was used.
*A net increase of 100 per year in the number of stores is assumed.
*Electric power consumption at most recently opened stores was used. (Electric power consumption is higher at these stores.)
*Calculated based on the results of FY 2023. -
Scope of analysis
Business: Drugstore business in Japan
Scope: Stores, procurement, logistics, and consumer behavior
Period: Present through 2030Adopted scenarios
- IEA WEO2022 NZE（1.5℃）
- ■ IPCC 5th Assessment Report, etc.
Assessment results
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1.5°C scenario
We expect that various transition risks will increase. In this scenario, we expect that countermeasures against climate-related issues will be strengthened and decarbonization will progress. As a result, we expect increases in expenditure due to the introduction and higher rates of carbon taxes and the widespread use of renewable energy.
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4°C scenario
We expect that physical risks, such as extreme weather, will increase. We expect damage to store operations due to the frequency and intensification of natural disasters caused by climate change. As a result, we expect increases in expenditure for repairs and decreases in sales due to temporary store closures.
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Common scenario (1.5°C and 4°C)
We expect that changes in consumer preferences and behavior will be influenced by temperature rises. If we are unable to develop and display products that meet customer needs or effectively market services that meet customer needs, opportunity losses may arise. On the other hand, we could take advantage of increases in opportunities if we can capture such needs.
Assessment of risks and opportunities
| Category | Assessment | |||
|---|---|---|---|---|
| Assessment in the world of +1.5°C | Assessment in the world of +4°C | |||
| Transition risks and opportunities | Policies and regulations | Carbon pricing |
Risk: Expenditure will increase following the introduction of carbon pricing. |
Risk: The impact of carbon pricing will be limited. |
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Risk: Expenditure will increase due to increases in production and procurement costs of products and services throughout the supply chain. |
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| Control of CFCs |
Risk: Expenditure will increase due to the introduction of CFC-free equipment at stores. |
ー | ||
| Technology | Logistics efficiency | Opportunity: Expenditure will decrease as a result of more efficient logistics. | ||
| Market | Electricity prices | Risk: Expenditure will increase due to rises in electricity prices. | ||
| Reputation | Customer preferences | Risk: Sales will decrease due to a delay in the provision of eco-friendly products and services. Opportunity: Sales will increase as we develop private brand products that meet the needs for sustainable consumption. | Opportunity: Sales will increase as we develop private brand products that meet the needs for sustainable consumption. | |
| EV charging | Opportunity: The frequency of visits to stores will increase as we enhance the charging environment. | ー | ||
| Physical risks and opportunities | Acute | Drastic increases in extreme weather | Risk: Sales will decrease to a limited extent due to temporary store closures and lower customer traffic. | Risk: Sales will decrease significantly due to increases in temporary store closures and lower customer traffic caused by physical damage to stores. |
| ー | Risk: Expenditure will increase as insurance premiums increase in response to increases in natural disasters. | |||
| Opportunity: Sales of disaster prevention and stockpiling-related products will increase. |
Opportunity: Sales of disaster prevention and stockpiling-related products will increase. Risk: Repair expenses will increase due to physical damage to stores. |
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| Chronic | Average temperature | Risk: AC-related expenditure will increase as the temperature rises. | Risk: AC-related expenditure will increase as the temperature rises. | |
| Production and procurement | ー | Risk: Expenditure will increase as purchase costs increase due to lower production of raw materials. | ||
Excerpt from business impact assessment based on scenario analysis Trial calculation of expenditure arising from transition risk (carbon taxes)
Trial calculation of the impact when 50% reduction in CO2 emission from FY 2014 is achieved in 2030. The amount of carbon taxes in 2030 is expected to be approximately 2.7 billion yen.
| Item | Business impact |
|---|---|
| Amount of carbon taxes in 2030 | Approx. 2.7billion yen |
※ In reference to IEA WEO2022 NZE (1.5°C) P465 Table B.2, the amount of carbon taxes in 2030 was set
at 140 dollars/t-CO2.
※ The trial calculation is based on the USD/JPY exchange rate as of March 1, 2023.
Future initiatives
The SUGI Pharmacy Group will implement the following measures to be able to create a sustainable society not only for society but also for the Group itself.
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Response measures toward the realization of a decarbonized society
Energy saving measures
- Daily operational improvements and awareness of the need for power saving
- Introduction and replacement of energy saving equipment
- Introduction of energy management systems
Energy creation measures
- Installation of solar power generation panels owned by the Company
- Installation of on-site and off-site solar panels on a PPA basis
Other measures to reduce CO2 emissions
- Purchase of non-fossil certificates and green power certificates
- Purchase of CO2-free menu services from electric power companies
- Use of EVs as company cars
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Response measures toward the realization of a recycling-based society
- Repair and reuse of foldable containers and transportation and delivery equipment
- Reuse of furniture, fixtures and equipment following store renovation or closure
- Monitoring of any abnormal quantity of supplies or inventories at each store and providing guidance
- Development of private brand products with eco-friendly packaging
- Promotion of the “temaedori” (taking from the one in front) campaign to prevent food waste
- Reducing waste by sharing information with our business partners
- Charging for plastic bags
Metrics and targets
| CO2 emission per store reduction targets | |
|---|---|
| FY 2030 | 50% reduction from FY 2014 |
| FY 2050 | Net zero |
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CO2 emissions Scope 1・2・3
■GHG Emissions Performance and Reduction Targets (Unit: t-CO2e)
Scope 1+2 (Market-Based) Base Year Actual Targets FY2014 FY2023 FY2024 FY2025 FY2026 FY2030 FY2050 Scope 1+2 (Market-Based) 104,299 158,057 179,137 135,448 Average Emissions per Store (t-CO2e) 110.1 92.0 98.7 66.4 60.0 54.8 0.0 Change in Emissions per Store vs. FY2014 (Base Year) -16.4% -10.4% -39.7% -45.5% -50% -100% ■GHG Emissions (t-CO2e)
FY2021 FY2022 FY2023 FY2024 FY2025 Scope 1 (Direct Emissions) 1,832 2,025 1,531 4,224 1,778 Scope 2 Indirect Emissions (Market-Based) 148,101 122,992 156,526 174,913 133,670 Scope 2 Indirect Emissions (Location-Based) 133,316 136,391 151,260 164,164 178,644 Subtotal: Scope 1+2 (Market-Based) 149,933 125,017 158,057 179,137 135,448 1 Purchased goods and services 1,562,062 1,601,452 2,215,043 2,419,880 2,739,500 2 Capital goods 70,418 61,758 104,682 80,092 78,382 3 Fuel- and energy-related activities not included in Scope 1 or 2 21,480 21,966 23,926 26,841 28,557 4 Upstream transportation and distribution 32,642 15,897 16,676 17,165 16,984 5 Waste generated in operations 1,660 1,252 4,340 5,159 4,945 6 Business travel 2,887 1,581 1,307 2,889 3,509 7 Employee commuting 9,208 10,904 10,421 11,401 12,834 8 Upstream leased assets 65 65 - - - 9 Downstream transportation and distribution - - - - - 10 Processing of sold products - - - - - 11 Use of sold products - - - - - 12 End-of-life treatment of sold products - 521 - - - 13 Downstream leased assets - - - - - 14 Franchises - - - - - 15 Investments - - - - - Subtotal: Scope 3 1,700,421 1,715,396 2,376,396 2,563,427 2,884,711 [Boundary] Sugi Holdings Co., Ltd. and those of its major consolidated subsidiaries for which the activity data required to calculate GHG emissions is available.
[Reporting Period] FY2025 (March 1, 2025 – February 28, 2026)
[Calculation Methodology]
*1 Scope 1: Calculated based on the Ministry of the Environment's GHG Accounting and Reporting System (2023), multiplying fuel consumption by factors defined under the Global Warming Countermeasures Act and Energy Conservation Act.
Fluorocarbon leakage is calculated using the global warming potentials (GWPs) set out in METI/MOE Joint Notification No. 3 of 2023.
For FY2025 Scope 1 accounting, we reviewed our calculation methodology and data for fluorocarbon emissions. Due to methodology-related variance in the FY2024 figures, we updated our standard calculation practices in FY2025 to accurately reflect actual leakages and refrigerant top-ups.
*2 Scope 2 (Location-Based): National average emission factors are used for domestic operations.
*3 Scope 2 (Market-Based): Uses basic emission factors by supplier/menu from the "List of Emission Factors by Electricity Retailer (as of August 1, 2025)" published by the Ministry of the Environment are used for domestic operations.
*4 Scope 3: Calculated using the "Emission Intensity Database for Calculating Greenhouse Gas Emissions of Organizations Throughout the Supply Chain," Ver. 3.4 or Ver. 3.5.
Category 1: Calculated by multiplying purchase amounts (raw materials, components, and associated services) by emission intensity values.
Category 2: Calculated by multiplying capital expenditures (CAPEX) by capital goods emission intensity.
Category 3: Calculated by multiplying fuel and electricity consumption by the emission factors for the energy production stage, by energy type.
Category 4: Calculated using the ton-kilometer method (multiplying weight, distance, intensity, and emission factors for inbound and outbound logistics).
Category 5: Calculated by multiplying industrial and general waste amounts by emission intensity by waste type and disposal method.
Category 6: Calculated by multiplying business travel expenses by emission intensity by transport mode.
Category 7: Calculated by multiplying commuting expenses by emission intensity by transport mode.
*5 Emissions per store: Calculated by dividing each fiscal year's Scope 1 and Scope 2 emissions by the applicable number of stores in the calculation scope.
Stores of companies that joined the Group during the fiscal year are included in the calculation scope starting from the fiscal year in which the activity data required for calculating GHG emissions becomes available. -
Third-party assurance
Since fiscal year 2023, the Sugi Pharmacy Group has been receiving third-party assurance of CO2 emissions from store operations and business activities, in order to accurately assess and verify greenhouse gas emission calculations.
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Metrics to measure progress toward the realization of a decarbonized society
- Ratio of reduction in CO2 emissions (Scope 1 and 2) per store
- Ratio of reduction in CO2 emissions from our supply chain (Scope 3)
- Percentage of renewable energy
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Metrics to measure progress toward the realization of a recycling-based society
- Ratio of eco-friendly private brand products
- Food-loss-and-waste ratio
- Volume of plastic bags used