Responding to Climate Change (TCFD)

Among the myriad issues that society currently faces, we believe that climate change stands out as one of the most important and pressing issues in the world today. Thus, while fully abiding by the Act on Rationalization of Energy Use and Shift to Non-fossil Energy, the Act on Promotion of Global Warming Countermeasures (Global Warming Law) and other environmental laws and regulations, the Sumitomo Rubber Group is also committed to fulfilling our corporate social responsibilities in other ways, including harnessing the advanced technical capabilities that we have amassed since our founding in order to tackle the challenges of reducing greenhouse gas emissions and so forth.

The president, as the person responsible for all matters pertaining to climate change within the Sumitomo Rubber Group, participates in discussions and deliberations at meetings of our Sustainability Promotion Committee. Meanwhile, the Director in charge of sustainability, who also serves as the Chairperson of the Committee, oversees the promotion of initiatives to address climate change.
To drive sustainability management, the Sustainability Promotion Committee, comprising the executive officers in charge of each business division, meets twice a year to ensure the thorough implementation of Group-wide policies and to confirm progress with the tackling of key issues. For themes that require cross-divisional collaboration, six subcommittees have been established as working groups under the Sustainability Promotion Committee. The Carbon Neutral Subcommittee, in particular, leads efforts related to climate change. Each subcommittee consists of a lead management division and participating member divisions. Their responsibilities include planning activities, setting goals, approving action plans, and managing progress. They report to the Sustainability Promotion Committee and the management team. Matters deliberated and reported by the committee are reported to the Board of Directors, which reviews progress with implementation of the long-term sustainability policy based on these reports.
Through monitoring and reviews by management team at committee meetings, we continuously enhance our sustainability initiatives and aim to contribute to the realization of a sustainable society by establishing a robust management foundation that supports sustainable growth.
In addition, as a mechanism to support the achievement of non-financial goals, the Sumitomo Rubber Group has introduced a system that ties the remuneration of officers to their contribution to sustainable management.

With social issues such as the expansion of climate change undergoing dramatic changes, we believe a long-term policy that envisions the year 2050 is essential for the sustainable growth of both society and the Sumitomo Rubber Group. In August 2021, we formulated the “Driving Our Future Challenge 2050” and have been advancing our efforts to accomplish its goals.
Climate change risk has been identified as one of our key risks, necessitating detailed analysis. Following the TCFD declaration, we have assessed the business impacts through analysis of 4℃ and 1.5/2℃ scenarios. In 2024, we revisited and reorganized our strategies for dealing with these risks and opportunities.
The potential impacts of climate change on the business activities of the Sumitomo Rubber Group are diverse. For example, the adoption of more stringent regulations or systems to combat climate change in countries around the world may require our production bases to transition to new types of energy or make other changes that would have the effect of increasing expenses, which, in turn, may have a negative impact on our financial situation and overall business performance. Rising temperatures may lead to more frequent and more intense typhoons, flooding or other natural disasters, which could damage our production facilities or otherwise cause any number of disruptions to our operations. Climate change may also lead to lower yields of natural rubber, resulting in skyrocketing prices for this key raw material while making procurement activities in general more difficult. Decreasing snowfall may result in decreased demand for winter tires. And these are just a few of the many risks that we face from climate change.
In order to contribute to mitigating climate change, the Sumitomo Rubber Group is aiming to achieve carbon neutrality at all of our factories by the year 2050. In addition, we are committed to working harder than ever before to push ahead with various Group-wide efforts to mitigate the effects of climate change, including developing and promoting the use of environmentally friendly products (such as fuel-efficient tires) and services (such as sensor technology to prevent driving with underinflated tires) as well as reducing the life cycle environmental impact of our products through environmentally friendly procurement, logistics, and manufacturing. At the same time, we are proceeding with preparations to respond to the shifts in demand that may accompany climate change, including increased demand for next-generation tires coinciding with the rise of CASE and MaaS as well as increasing demand for fuel-efficient tires and other tires that serve to reduce the environmental impact of mobility. Finally, we will continue to monitor and assess the financial and other impacts of climate change on our business while working to mitigate and adapt to these impacts.

●4°C scenario
With limited decarbonization policies, under the 4°C scenario in which physical risks materialize, it is expected that extreme weather events, including torrential rain and typhoons, will increase due to a notable rise in average temperatures, bringing about a deterioration in working conditions resulting from higher temperatures. Moreover, there are concerns that increased water stress will lead to a shortage of water resources, which will in turn impact production activity.
As a result, we anticipate declining sales due to business interruptions caused by intensified natural disasters, higher costs owing to labor shortages, and flagging demand for winter tires and outdoor sports products, which will affect us financially.
In response to this situation, the Group has established a long-term goal to achieve a factory wastewater recycling rate of 100% by 2050, targeting high-water-risk sites. We are also focusing on developing products such as Synchro Weather that adapt to weather conditions.
To deal with these risks, we will work to reinforce our management by implementing various measures to improve the resilience of our business.

⚫️1.5/2℃ scenario
Under the 1.5/2℃ scenario, which assumes that progress will be made with decarbonization, it is anticipated that increased taxation and regulation of GHG emissions will pose transition risks, such as the need for capital investment and rising energy costs.
On the other hand, as consideration for the environmental increases, the demand for environmentally friendly products and services would be expected to increase, creating new business opportunities for related technologies and solutions.
To respond to such circumstances, we are stepping up our efforts to reduce GHG emissions by transitioning to hydrogen and renewable energy sources, taking energy-saving measures, and purchasing renewable energy certificates. We are also actively working on the development and innovation of environmentally friendly products (Synchro Weather).
Moving forward, we will continue to implement various measures to appropriately address these transition risks, take advantage of new business opportunities, and enhance the resilience of our business, thereby reinforcing the sustainability of our operations.

We have established a Risk Management Committee chaired by the President to address climate-related risks. The committee holds biannual meetings in order to supervise risk management activities and check on the effectiveness of our Risk Management System. Various business risks associated with climate change risks are analyzed based on internal risk management rules, and measures that reflect the results of this analysis are reported to and discussed by the Risk Management Committee and the Board of Directors. We also conduct annual assessments of climate change risks taking into consideration external changes, such as those related to the Paris Agreement and science-based targets.
Furthermore, the Sustainability Promotion Committee promotes environmental activities and oversees our Environmental Management System. The committee’s decisions are reported to the Board of Directors and relevant business divisions, and reflected in future goal setting and policy making.

In February 2021, the Sumitomo Rubber Group committed to achieving carbon neutrality by the year 2050. In August 2021, we unveiled our “Driving Our Future Challenge 2050” Long-Term Sustainability Policy. Based on this policy, we have set long-term targets to be attained by 2050, and one of these is carbon neutrality. In “pursuing the creation of a decarbonized society,” we declare a goal of achieving carbon neutrality, mainly through reductions in CO₂ emissions from our business activities. We had set a target to reduce Scope 1 and Scope 2 emissions by 50% by 2030 compared to 2017 levels. However, as a result of monitoring our progress toward this target, we determined that we were on track to achieve it, and have raised the target to a 55% reduction. This demonstrates that the Sumitomo Rubber Group as a whole is making steady advances in its decarbonization efforts.
To achieve these targets, we are working to reduce energy consumption while expanding cogeneration and the use of solar power. Furthermore, having completed verification testing for utilizing hydrogen, which is being hailed as a next-generation energy source of the future, we have begun using it the process of mass-producing tires. At the same time, we are advancing and expanding the technologies that we developed to create fossil resource-free tires so that we may increase the biomass and recycled content of our products as another means of contributing to the realization of carbon neutrality.