Responses to the TCFD Recommendations

Responses to the TCFD Recommendations

TCFD

KDDI announced our support for the Task Force on Climate-related Financial Disclosure (TCFD) in April 2021. We will strive to proactively disclose information based on the disclosure framework of governance, strategy, risk management and metrics and targets in accordance with the TCFD recommendations. We will also take concrete measures to address climate change and put them into actions.

Governance

KDDI has the Sustainability Committee, chaired by the President and consisting of key members of the Board of Directors etc., to deliberate on issues related to sustainability such as the resolution of social issues through businesses (SDGs), social contributions, and measures against climate change. The Committee is responsible for following up on and discussing important issues and initiatives related to climate change at KDDI, monitoring risks and opportunities, and approving reports and other matters.

Monitoring process related to climate issues

Sustainability Committee chaired by the President monitors the progress of the targets to contribute to realize decarbonized society. Specifically, the Carbon Neutral Subcommittee, under the supervision of Sustainability Committee, will monitor semi-annually the risk factors for not meeting the annual target and the opportunity factors in case the annual target is achieved. The results of the Carbon Neutral Subcommittee's monitoring are reported to the Sustainability Committee as climate-related risks and opportunities, and an assessment of materiality is made. The results of the monitoring and assessment of targets and measures related to climate-related issues will also be reported. The Sustainability Committee held semi-annually. In the first half of the year, the committee will "confirm the achievement of the previous year's targets" and "analyze factors and confirm countermeasures if targets were not achieved"; in the second half, the committee will "confirm the progress of the current year's targets" and "set targets for the next year". In addition, the Board of Directors receives quarterly reports from the Sustainability Committee on Climate Change and oversees and directs the implementation of measures to address important issues and initiatives.

Strategy

KDDI carried out two types of analyses: (1) the 1.5°C scenario in which a decarbonized society will be rapidly realized (limiting the increase in global average temperature to 1.5°C above pre-industrial levels) in response to the Paris Agreement adopted at COP21, and (2) the 4°C scenario in which physical impact will become apparent due to lack of measures against climate change (the increase in the global average temperature is held at 4°C above pre-industrial levels).
On May 9, 2024, KDDI drew up the "KDDI GREEN PLAN," a medium- to long-term environmental conservation plan to contribute to the preservation of natural capital. KDDI has been working to enhance its environmental value under the "KDDI GREEN PLAN 2030," which focuses on "realizing a decarbonized society," "creating a circular economy," and "preserving biodiversity. This time, in order to enhance corporate value over the medium to long term, we have established new targets for risk reduction and the creation of business opportunities, and renamed the plan the "KDDI GREEN PLAN" to promote more vigorous activities aimed at further enhancing environmental value.

Scenario Analysis Results

  • The 1.5°C scenario in which a carbon-free society will be rapidly realized (a future in which the goal to limit the increase in global average temperature to 1.5°C above pre-industrial levels is achieved)

Reference: IEA (International Energy Agency) "World Energy Outlook 2021" Net Zero Emissions by 2050 Scenario (NZE Scenario)

Analysis of Transition Risks KDDI's Risks KDDI's Responses
Policy and Legal Carbon Tax Carbon taxation risk [1] Planning to switch from fossil fuel power to renewable energy power
Tokyo Metropolitan Ordinance/Emission Regulations Risk of increased costs of buying credits (allowances) for unachieved CO2 emission reductions Purchase of emission credits for the second plan period to compensate for the expected unachieved emission reduction in the third plan period (approx. 50,000 t-CO2)
Introduction of New Technologies to Reduce Power Consumption and CO2 Emissions Risk of increased costs for AI technology at base stations, development of new energy-saving technologies for various facilities, CCUS [2] development, etc. Investment in the development of various technologies
Market and Reputation Risk of losing corporate reputation and subscribers due to unmet targets and delays in renewable energy initiatives Planning to switch from fossil fuel power to renewable energy power
  1. [1]Since the estimated CO2 emissions in FY2030 are approximately 500,000 tons-CO2, in the case of carbon tax of 7,700 yen/t-CO2, it is assumed that an annual tax of about 3.85 billion Yen will be levied.
  2. [2]Carbon dioxide Capture, Utilization and Storage
  • The 4°C scenario in which physical impact will become apparent due to lack of measures against climate change (the increase in the global average temperature is held at 4°C above pre-industrial levels)

Reference: IPCC (Intergovernmental Panel on Climate Change) Fifth Assessment Report

Analysis of Physical Risks KDDI's Risks KDDI's Responses
Acute Risk Increase in severity and frequency of disasters caused by extreme weather (typhoons, floods, etc.) Risk of increased costs such as personnel expenses for emergency recovery in order to respond quickly to the restoration of the communication network Preparation for efficient recovery operations by reviewing the BCP [3] and conducting disaster recovery drills
Chronic Risk Increase in average temperature Risk of increased air-conditioning power usage in data centers to cool servers entrusted to us by our customers Installation of highefficiency air conditioning systems and replacement with renewable energy power
  1. [3]Business Continuity Plan

Risk Management

The KDDI Group recognizes that risks and opportunities in dealing with climate-related issues on its business operations are an important part of its business strategy, and manages them through a company-wide risk management process. Specifically, the KDDI Group evaluates climate change risks and opportunities that could have a significant financial and strategic impact on the KDDI Group from all business activities, including those upstream and downstream in the KDDI Group's supply chain, from the perspective of what management and the Sustainability Management Division consider to be important issues and what each business division considers to be important issues.
The Corporate Sustainability Management Division, which is responsible for KDDI Group risk management, assesses climate change risks and opportunities that could have a significant impact on the KDDI Group's finances and business strategies, and the management and Sustainability Management Division assesses the risks and opportunities for all business units. The Division identifies risks for all business units twice a year on a semiannual basis. Among the identified risks, risks related to climate change are managed through an environmental management system (EMS) approach, utilizing the Environmental ISO framework. For each risk to be managed, quantitative annual targets for risk reduction are established in each relevant lead department, and progress is evaluated on a quarterly basis. Improvements identified in the progress evaluation are reported to the Carbon Neutral Subcommittee, under the control of Sustainability Committee, and risks and opportunities related to the entire company and all divisions are discussed and approved by the Sustainability Committee.

Metrics and Targets

In order to accelerate the realization of a decarbonized society, KDDI has established four environmental targets, including a goal for the KDDI Group [4] to achieve net zero emissions by the end of FY2040.

Environmental Targets [5] Target year
(Fiscal year)
Content
1 KDDI Group to achieve net-zero 2040 Aiming to achieve "net zero" CO2 emissions from KDDI's business activities (Scopes 1 [6] and 2 [7]) and from KDDI's entire supply chains including Scope 3 [8].
2 KDDI Group to achieve carbon neutrality 2030 KDDI Group to bring the year of achieving carbon neutrality carrying it forward by 20 years. (Scope 1 and 2)
3 KDDI to turn to renewable energy with additionality [9] by more than 50% 2030 KDDI to aim for sourcing over 50% of the electricity it consumes from renewable sources with additionality.
4 Telehouse datacenters to switch 100% of the electricity it uses to electricity from renewable sources 2025 The electricity used by the datacenters ran by the KDDI Group under the Telehouse brand will be switched to 100% from renewable sources. KDDI bring the year of achieving this target carrying it forward by one year from the previous target.
  1. [4]Targeting KDDI and KDDI's consolidated subsidiaries
  2. [5]To see the definitions of the targets, visit our Website.
  3. [6]Direct greenhouse gas emissions by the business itself
  4. [7]Indirect emissions from the use of electricity, heat, and steam supplied by others
  5. [8]Indirect emissions other than Scope 2 (emissions by others related to the activities of the business)
  6. [9]The introduction of new photovoltaic power generation equipment by the company itself should have the effect of increasing the amount of renewable energy introduced into society as a whole.

KDDI has been calculating KDDI's non-consolidated greenhouse gas emissions since FY2012 and the KDDI Group's greenhouse gas emissions since FY2021 to quantitatively understand our environmental impact and manage the risks and opportunities that climate change poses to our company.

CO2 emissions FY2022 (result, group)
Scope 1 (Direct greenhouse gas emissions by the business itself) 91,683t-CO2
Scope 2 (Total of Indirect emissions from the use of electricity, heat, and steam supplied by others) 1,319,693t-CO2

For the latest information, please refer to the description of greenhouse gas Scope 1+2 emissions (actual results) in the Sustainability Integrated Report 2024 to be released in September or later. KDDI has set a goal of reducing its Scope 3 emissions, which are indirect emissions other than Scope 2, by the end of FY2040, and the actual amount of Scope 3 emissions in FY2022 was 5,252,273 t-CO2 on a non-consolidated basis. Category 1 and Category 2 emissions accounted for 92% of the total Scope 3 emissions, and KDDI will continue to promote activities to reduce GHG emissions.
In addition, in order to understand the status of the KDDI Group's supply chain as a whole, we conduct surveys of our major suppliers to raise awareness and support their understanding of the importance of environmental initiatives in sustainable procurement, and ask them to share the status of issues and initiatives. The results of the survey and other matters related to the promotion of sustainable procurement are regularly reported to and supervised by the director in charge of sustainability (General Manager of Corporate Division). In fiscal 2023, the three companies (Nippon Telegraph and Telephone Corporation, KDDI Corporation, and SoftBank Corporation) introduced a common SAQ (Self-Assessment Questionnaire) to further strengthen engagement with suppliers.

Environment