Governance
Shiseido is promoting sustainability initiatives through our brands and regional businesses. In 2022, the Shiseido Sustainability Committee was held regularly to ensure prompt decision-making in sustainability-related operations and company-wide implementation. The committee makes decisions on group-wide sustainability strategies and policies, manages the progress of medium- and long-term targets, and implements such activities as the TCFD and human rights actions. Attendees consist of representative directors and executive officers of corporate strategy, R&D, supply network, public relations, brand holders, who actively discuss issues from the perspective of their respective areas of expertise. For decisions regarding business execution, issues are also discussed by the Global Strategy Committee and the Board of Directors.
Strategy (Scenario Analysis)
We conducted our scenario analysis for both the transitional and the physical risks/opportunities in terms of the 1.5/2°C and 4°C scenarios, respectively, based on the Representative Concentration Pathways (RCPs) and Shared Socioeconomic Pathways (SSPs) provided by the IPCC.
Regarding transitional risk, the elements associated with the transition to a decarbonized society — such as policy, regulation, technology, market, and consumer perceptions — were considered. Physical risks related to the acute or chronic phenomena caused by the rise in temperature — such as floods and water shortages — were also considered. Based on these considerations, the financial impacts of the 1.5/2°C and 4°C scenarios were then analyzed. The influence of carbon tax was identified as the transition risk, with projections pointing toward approximately JPY 0.05-0.87 billion in 2030, depending on the number of countries and regions where carbon tax would be introduced. For Physical risks, JPY 0.89 billion of floods and JPY 3.5 billion of water shortage were forecasted potentially.
As for opportunities, in the 1.5/2°C scenario, high awareness by consumers means there is a market for sustainable brands and products. Similarly, the 4°C scenario identifies sales opportunities for products that can help people to live with high temperatures. At Shiseido, we aim to leverage these findings — by mitigating risks and making the most of opportunities to provide sustainable products to consumers and promote our beauty innovations.
Risks and Opportunities
(seen mainly in the 1.5/2°C scenario)
• Develop more ethical products (e.g. clean beauty)
(seen mainly in the 4°C scenario)
• Develop climate-adaptive solutions
Risk Management
We assessed and identified the impactful risks holistically from a mid-to-long-term perspective. “Environment and Climate Change” and “Natural and Human-made Disasters” are listed as the categories related to sustainability.
Climate-related risks are analyzed based on scientific and socioeconomic evidence and integrated into the enterprise risk management system as one of the elements related to climate change or natural disasters. Based on the significance of the evidence, the Shiseido Group’s risk assessment and countermeasures are reviewed by the Global Risk Management & Compliance Committee, the Global Strategy Committee, and the Board of Directors.
Metrics and Targets
In order to mitigate the climate-related risks, we set the reduction of CO₂ emissions as our target. We aim to achieve carbon-neutrality by 2026, and to reduce by 46.2 % by 2030 compared to emissions in 2019 for Scope1 and Scope2 emissions. For the target of Scope 3 emissions, 55 % reduction in economic intensity by 2030 was set. These were accredited by SBTi as a scientific target along the 1.5°C trajectory. In addition, we have set appropriate metrics and targets related to climate issues, such as "Water consumption at our sites" and "Rate of switching to RSPO-certified raw materials," and aim to build a resilient business.
