Third-party written opinion

  • Naoko Hase

Naoko Hase
Manager, The Center for the Strategy of Emergence: ESG Research Center
The Japan Research Institute, Ltd.

I hereby submit a third-party opinion on the Shindengen Group’s activities and its information disclosure practices. This opinion letter is prepared based on my findings from the Shindengen Group CSR Report 2022.

Reading this year’s report left me with the impression that the Company is taking sincere action to clarify the organization’s policies and vision and to set and manage key performance indicators (KPIs) to enhance the effectiveness of its ESG management. Here, I would like to go over the three main points of my evaluation.

The first point is that Shindengen has clarified its long-term vision for protecting the global environment. In the Environmental Vision 2050, the Company set out the major themes of contributing to decarbonization, contributing to a circular economy, and contributing to a society in harmony with nature. I think clarifying the state of the organization from a long-term perspective will help customers and investors better understand the Company’s desire to solve environmental problems.
In particular, regarding contributing to decarbonization, the Company declared it will be carbon neutral in 2050 in line with the goal of Japan’s government. To realize this, Shindengen reorganized Decarbonization and Energy Conservation Committee in April 2022, upgrading to a highly effective cross-organizational structure in part by adding representatives from each operating division and Group company as well as the management planning division as members. In addition, I would like to praise Shindengen’s work in line with the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) on analyzing and disclosing the risks and opportunities that climate change will bring to corporate management.

The second point is that Shindengen set medium-term targets for 2030 as a midway milestone for its Environmental Vision 2050. In terms of the environment, the Company set a dual target of reducing CO2 emissions from business activities and expanding its products’ contribution to CO2 emission reduction. Because the Shindengen Group handles many products that contribute to decarbonization, it is important for the Group to assess the impact of those products on the environment and society and then, based on the assessment results, connect that to continual improvement. The Group has set KPIs for measuring the impact, so, moving ahead, I look forward to the Group confirming its progress and steadily making improvements.
Regarding contributions made through the provision of products, the Group set a quantitative target of a contribution to CO2 reduction of 600,000 t-CO2 or more by fiscal 2024. Because CO2 emissions from product use are related to the Scope 3 category, I would therefore propose that the Group clarify quantitative targets for 2030 regarding Scope 3 CO2 emission reduction going forward.

The third point is that Shindengen enhanced the dissemination of its non-financial information, such as by organizing its environmental (E), social (S), and governance (G) data by item and disclosing a summary at the end of report. By offering detailed information in tables and enhancing quantitative data, the Company has made it easier for investors and other users of disclosed information to make comparisons. It is also easy to understand the scope of each data section because they are clearly labeled as either consolidated or nonconsolidated. Social data is often assessed on a nonconsolidated basis, but, in recent years, calls are growing for the boundary of assessments to be expanded not only for environmental burden data but also social data. Going forward, I expect the Group to continue considering data assessments that include Group companies to the extent possible.

Finally, regarding medium-term targets, the Group is setting environmental KPIs in particular, and going forward, I look forward to the Group increasingly setting social and governance KPIs. Recently, due to increasing demand for disclosures related to human capital, I think that the Group could, for example, set quantitative targets from the perspective of enhancing employee engagement, promoting diversity, and encouraging health management.

Commentary on the Third-Party Written Opinion

We thank Naoko Hase, an ESG Analyst from the Japan Research Institute, Ltd., for her valuable comments on, and suggestions for, our Group’s CSR activities.
The Shindengen Group is committed to co-creating a new future with its stakeholders by expressing and implementing SDG materiality in line with ESG initiatives and its corporate mission.
In addition, we aim to solve various issues toward decarbonization by innovating our core technologies and creating advanced technologies for the future. And we will also work to solve challenges of social and governance.

CSR Promotion Office(CSR Committee Secretariat)
Shindengen Electric Manufacturing Co., Ltd.

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