World Energy Outlook 2017 (WEO2017) issued by the International Energy Agency (IEA) presents the New Policies Scenario (NPS=4 degree scenario), a set of policies to realize the targets set by various countries in the Paris Agreement, and the Sustainable Development Scenario (SDS=2 degree scenario) that could “hold the increase in the global average temperature to well below 2°C above pre-industrial levels” if executed.
Towards realization of Environment Vision 2050, we analyzed the impact of climate change on our business based on the said scenarios, discussed the countermeasures, and verified the resilience of our strategy.
Respective SDS and NPS were created on the assumption that the average temperature would rise 2°C or 4°C by 2100. Assuming that we continue the current business activities, we analyzed the impact of climate change on our business as of 2030.
SDS, the 2°C rise scenario, forecasts rapid changes in society to restrain greenhouse gas emissions by 2030. For example, the scenario estimates that an emission restriction measure possibly charging more than 100 dollars per one ton of CO2 emissions, may be adopted. Using this 2°C rise scenario as a reference, we analyzed the impact from regulation changes on our business by 2030, assuming that there will be no major impact to the business from physical risks from climate change, such as water shortages and more frequent abnormal weather conditions.
At the same time, using NPS, the 4°C rise scenario, we analyzed the impact from physical changes due to climate change to our business by 2030, assuming that such impact from physical changes would be greater than that from regulation changes.
Results of the analyses based on the 2°C increase scenario suggest that the burden of CO2 emissions would increase as carbon pricing is adopted by the major countries. However, effects of the burden are minor, as we have worked on reducing CO2 emissions with our products through increase in their energy-efficiency and creating and selling energycreating products, as well as reduction of CO2 emission in manufacturing through roll-out of zero CO2 model factories, to realize the Panasonic Environmental Vision 2050.
When we identify issues that need to be addressed, we gather latest information on relevant environmental regulations, using the data base on environmental regulations, and shared the information to relevant departments. In the case that taking some measures is necessary, we share the information and situation with Companies and Business Divisions, and relevant parties necessary take actions in due time. This ensures that those issues have minor effects on our businesses.
When referring to the 4°C rise scenario, we need to take account of the impact from the predicted increase in abnormal weather conditions, such as flooding and tropical storms, on the supply chain, and reduced economic activity in society. For example, we experienced large scale flooding in Thailand in 2011 and we suffered massive losses. Although we established a range of countermeasures in case of a recurrence, if some disaster hinders our business operations—or those of any party in the supply chain—sales will be affected and we would still need to direct significant funds to recover damaged facilities. To prepare for such situations, we create Business Continuity Plans (BCP) based on past experience of damage from abnormal weather conditions. At the beginning of 2012, we established the Business Continuity Management (BCM) Guidelines that focus on minimizing various risks related to factories and operations in accordance with the BCM System. As a means to reinforce disaster and accident countermeasures, we have established the Disaster/Accident Countermeasure Committee under the Global and Group Risk Management Committee, which is chaired by the Chief Risk Management Officer (CRMO), comprising directors of the Professional Business Support Sector (PBSS) under the head office. The Disaster/Accident Countermeasure Committee is now establishing a readiness against a range of serious risks from natural disasters, such as earthquake and flooding, to large scale accidents, including fire and explosion. We have also established working groups dedicated to different types of risk under the Disaster/Accident Countermeasure Committee to create concrete measures against risks through liaison between related departments. In procurement, we are securing suppliers for alternative materials and maintaining emergency stocks by evaluating the criticality and replaceability of the procured materials and parts in advance. With such activities, the effects on our business is expected to be minimum.
We plan to undertake further analyses on impacts from climate change on the supply chain and on markets and production areas that may be sensitive to climate conditions. Changes in social movements and the underlying scenarios will be monitored by environment departments, and promotion of investment and collaboration will be monitored by respective Companies.
* Note that these scenarios presented by the IEA are merely potential prospects with a high degree of uncertainty. The analysis results obtained based on these scenarios are our forecasts developed from those scenarios and our own medium- to long-term future prospects may be different in actuality.