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 the Rational Use of Energy and the Shift, etc., to Non-Fossil Energy (Energy Saving Law), 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 of Sumitomo Rubber Industries, Ltd. is responsible for all matters pertaining to the issue of climate change within the Sumitomo Rubber Group. As such, the president actively participates in discussions and deliberations concerning climate change at meetings of our Sustainability Promotion Committee, which sets policy for our entire group. Meanwhile, the Vice President of Sumitomo Rubber Industries, who also serves as the Chairperson of the Sustainability Promotion Committee, oversees the promotion of efforts to combat climate change.

The Sustainability Promotion Committee holds biannual meetings, which provide opportunities for following up on and sharing information about activities related to climate change and other environmental issues as well as other sustainability efforts. At these meetings, the committee also discusses obstacles to the achievement of our long-term policies and deliberates on measures to overcome these. So that the Board of Directors may oversee and supervise sustainability activities, information concerning climate change, etc. is also included in reporting at Board Meetings.

Environmental Management System

Chaired by the President of Sumitomo Rubber Industries, Ltd., our Risk Management Committee holds biannual meetings in order to oversee and supervise risk management activities and check on the overall effectiveness of our Risk Management System. The Sumitomo Rubber Group has established internal risk management rules for analyzing various business risks that coincide with climate change risks and assessing measures to address these risks. The results of risk analysis and countermeasure proposals are reported to the Risk Management Committee and the Board of Directors for discussion and deliberation. We also conduct annual assessments of climate change risks in order to account for external changes, such as updates to targets established under the Paris Agreement and the results of new scientific research.

Meanwhile, the Sustainability Promotion Committee is responsible for promoting environmental efforts and overseeing our Environmental Management System. The committee’s policy decisions are reported to the Board of Directors and concerned business divisions, after which the committee manages and follows up on targets, etc.

Risk Management

The potential impacts of climate change on the business activities of the Sumitomo Rubber Group are numerous. 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 the fight against climate change, the Sumitomo Rubber Group is aiming to achieve full 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 groupwide 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 green procurement, green logistics and improving the energy efficiency of manufacturing processes. 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. Having done so, 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.

Initiatives to Achieve Carbon Neutrality

Natural Capital

●2°C scenario
Under the 2°C scenario, we have identified growing demand for fuel-efficient and other tires that serve to reduce the environmental impact of mobility and the expansion of tire-related solution businesses (including those utilizing sensing technologies) as main positive impacts. On the other hand, we anticipate growth in operational costs due to the introduction of carbon pricing as well as a drastic rise in the cost of investing in facility replacement aimed at transitioning to hydrogen and other renewable energy in response to tightening regulations on CO₂ emissions.

●4°C scenario
Under the 4°C scenario, we have identified growing demand for tires capable of adapting to severe environments subject to high or low temperatures, heavy rainfalls or snowfalls, etc., as a main positive impact. Simultaneously, we estimate such negative impacts as a decline in sales of studless tires in step with fewer snowfalls and growth in investment costs associated with the R&D necessary to enhance tire performance.

In addition, we forecast that the increasing severity of climate disasters could result in the stoppage of factory operations due to flooding, while the instability of natural rubber supply may cause raw material prices to grow ever higher.

*We adopted RCP2.6 issued by the Intergovernmental Panel on Climate Change (IPCC) as part of the IPCC Fifth Assessment Report.

Scenarios adopted by the Sumitomo Rubber Group
RCP2.6 assumes that the global temperature rise will highly likely span 0.3°C to 1.7°C

In February 2021, the Sumitomo Rubber Group committed to achieving carbon neutrality by the year 2050. That August, we unveiled our “Driving Our Future Challenge 2050” Long-Term Sustainability Policy, which sets forth various long-term targets with respect to carbon neutrality and beyond. These targets include reducing total CO₂ emissions from all of our global factories by 55% compared with 2017 levels by the year 2030 before achieving full carbon neutrality by the year 2050.

In order to achieve these targets, we are not only working to reduce energy consumption while expanding cogeneration and the use of solar power but are pursuing a proof of concept project toward utilizing hydrogen, which is already being hailed as a next-generation energy source of the future. 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.

Long-Term Sustainability Policy: Carbon Neutral (Scopes 1 & 2)

Long-Term Sustainability Policy: Increasing Usage Rate of the Sustainable Raw Material