Disclosures on Response to Climate Change and Environmental Issues (TCFD)

MRI Group Climate Change Response and Carbon Neutral Strategy

The MRI Group's philosophy, as set forth under its New Guiding Principles, is to continually envision a desirable future, resolve societal issues, and lead change in society to co-create a prosperous, sustainable future. Based on this philosophy, we engage in sustainability management that contributes to the improvement of our non-financial and social values.

We regard climate change as a key issue that should be addressed by society as a whole and are contributing to the improvement of social value, through efforts such as policy recommendations, strategy formulation for private-sector corporations, platform operation—such as in the operation of the TCFD Consortium—and mega solar projects as one form of real-world implementation geared toward decarbonization.

The MRI Group's Vision for a Carbon Neutral Society

Major countries and regions around the world have made declarations regarding carbon neutrality, and the shift toward decarbonization is now a global trend. In October 2020, Japan also made a declaration pledging to become carbon neutral by 2050. However, thermal power generation still accounts for over 70% of Japan's total power generation, and the ratio of energy consumption in the industrial sector is large, making it more difficult for Japan to achieve carbon neutrality than other countries. In light of this situation, in September 2021, Mitsubishi Research Institute published its Recommendations for Achieving Carbon Neutrality by 2050 and outlined three key points for achieving carbon neutrality by 2050, along with concrete measures to support transformations toward that goal.

It is important for society as a whole to regard these initiatives as investments for the future—as opposed to costs—and link them on to new industrial competitiveness. The participation of all stakeholders, including consumers, companies, national and local governments, research institutions and non-profit organizations will be essential to achieving carbon neutrality.

We are pushing ahead with policy recommendations, research activities, and consulting to provide support for the efforts of all stakeholders taking on challenges toward achieving carbon neutrality.

Three Key Points for Achieving Carbon Neutrality by 2050
Three Key Points for Achieving Carbon Neutrality by 2050


We recognize that responding to climate change issues—including achieving a carbon-neutral society—is an important field in which we can contribute not only to decarbonization of the Group, but also to the improvement of social value by utilizing our knowledge in research and consulting. In order to advance sustainability-related efforts, including those in this area, we have clarified responsibility for promoting sustainability by establishing two key sustainability-related positions: Chief Sustainability Officer (CSO), a role which is held by the President, and Sustainability Management Officer, a role which is held by the General Manager of the Corporate Administration Unit.

The Sustainable Management Office is responsible for managing the Group's environmental value policies and measures, including disclosure in compliance with TCFD. Matters for deliberation and decision making are proposed by the head of the Corporate Planning Division, before being approved by the Sustainability Management Officer, the CSO and Management Strategy Committee. Final decisions are then made by the Executive Committee.

Deliberations Relating to TCFD Disclosure
Deliberations Relating to TCFD Disclosure


(1) MRI Group climate change risks and opportunities

The Group's main opportunity is to respond accurately to changes in market needs and to expand climate-change related businesses (mitigation projects and adaptation projects*).

Main risks include the impact of carbon pricing, assuming only the direct impact of the introduction of a carbon tax on profit and loss in this case, and a decrease in orders due to economic downturn caused by the intensification of disasters resulting from climate change. The Group also owns data centers and has identified risks such as rising electric power prices due to the use of electricity at these facilities. Analysis of physical risks has taken into account the location and robustness of these facilities as insurance premium increase risks. Additionally, if our response to needs for consulting related to climate change, which have been raised as a business opportunity, is delayed, there is also a risk of failure to receive project orders.

*Mitigation projects are those that contribute to mitigating the effects of climate change. Adaptation projects are those relating to measures to adapt to climate change.

MRI Group Climate Change Risks and Opportunities
MRI Group Climate Change Risks and Opportunities

(2) Approach to climate change scenarios

We have analyzed the financial impact of climate change in 2030 based on two types of climate change scenarios—the "1.5°C scenario" in which strict measures, such as carbon tax and environmental regulations, are introduced and society as a whole works to actively tackle climate change; and the "4°C scenario" in which strict measures are not introduced and natural disasters become increasingly severe and more frequent.

For the 1.5°C scenario, in addition to our carbon neutral recommendations, please refer to the IPCC 1.5°C Special Report (SR15) and IEA WEO NZE2050, etc. For the 4°C scenario, please refer to IPCC RCP 8.5, etc.

(3) Approach to financial impact analysis

The Group's current businesses were classified into climate change-related domains and other strategic domains, and the financial impact was calculated taking into account the expansion of newly created business domains and costs for responding to factors such as carbon taxes based on the scale of each business as of 2030. In terms of business opportunities in the climate change-related domains, we incorporated business development to achieve the three key points outlined in the carbon neutral recommendations described above.
Approach to Business and Financial Impact Assessments
Approach to Business and Financial Impact Assessments

Assumed variation case

In addition to the two climate change scenarios, by setting up two business strategies (growth and standard) in climate change-related domains, we analyzed a total of four financial impacts to visualize the overall impact of our success or failure to take on these opportunities on our financial value.

For the 1.5°C scenario, we considered the economic impact of the introduction of carbon tax, rising electricity prices, and economic slowdown due to the introduction of carbon tax. For the 4°C scenario, we considered the economic impact of failure to adapt, setting assumptions including that strict measures are not implemented and that natural disasters become increasingly severe and frequent. The four factors are as shown in the following table.
Factors in Financial Impact Analysis
Factors in Financial Impact Analysis

(4) Impact of climate-related risks and opportunities on our business based on scenario analysis

The expected financial impact of climate-related risks and opportunities on the Group in 2030 is as follows.
MRI Group Financial Impact Assessment
MRI Group Financial Impact Assessment
In the 1.5°C scenario, the Group's greenhouse gas (GHG) emissions and electricity consumption are low, and therefore have minor financial impacts such as the introduction of carbon taxes and higher electric power prices. The intake of business opportunities in our growth strategy is expected to have a significant impact on our businesses.

Even in the 4°C scenario, it became clear that it was important to take in business opportunities from the perspective of mitigating the effects of the economic slowdown, due to the intensification of natural disasters. We also evaluated the risk of natural disasters as of 2030, taking into account location and building strength of data centers owned by the Group. We found the risk to be extremely small.

Based on the above, we believe that financial impact to the Group as a result of climate change will be small, and that we are robust and highly resilient to climate change. In both scenarios, the financial impact of securing opportunities was relatively large, but we have confirmed that the 1.5°C scenario has a greater positive impact than the 4°C scenario, and that the realization of a more ideal society (as in the 1.5°C scenario) as presented in the carbon neutral recommendations is a key social value that will lead to the improvement of the Group's value.

(5) Measures to be taken

It has become clear that the main climate-related opportunities for the Group are the shifting of the business environment toward carbon neutrality, and that the main risks are the impact on profit and loss from the introduction of carbon taxes.

Measures to increase opportunities

In terms of measures to respond to the shifting of the business environment toward carbon neutrality, we believe that we should expand our policy review support and consulting services to private companies, in fields relating to three key points presented in the carbon neutral recommendations: (1) early zero emissions of the power sector, (2) induction of strategic innovations, and (3) behavioral changes on the demand side).

Specifically, we will engage in policy-making and expand private consulting in various fields such as the promotion of innovation, carbon pricing, sustainable finance (integrating sustainability factors such as the environment into funding economic activities) and international collaboration—in 14 key areas of the growth strategy accompanying the Japanese government's 2050 carbon neutrality declaration. We recognize the importance of sharing the medium to long-term external environmental changes brought about by climate change throughout the Group and utilizing the Group's high-level insights, know-how, and network to create new businesses.

Measures to reduce risks

The main climate-related risk is the introduction of carbon pricing such as carbon taxes.

The Group's GHG emissions are low, at 9,686 tCO2(for the fiscal year ended September 30,2022), and the majority of these are Scope 2 emissions resulting from the use of electric power at data centers and offices. As considerations on carbon pricing such as carbon taxes progress, efforts to minimize financial impact through the reduction of GHG emissions are essential. The Group will actively promote the introduction of renewable energy, in particular by improving the percentage of power used by data centers accounted for by renewable energy, in order to reduce GHG emissions derived from electric power. In addition, based on the knowledge accumulated by contributing to the institutional design of markets trading in carbon emissions, we will work to reduce emissions with a view to utilizing carbon emission rights (credits)—which are highly effective in reducing emissions—resulting from CO2 emission reduction projects in Japan and overseas.

Metrics and Targets

In relation to the measures outlined in the preceding paragraph, we have set the following targets for the Group's renewable energy utilization ratio and GHG emissions, and are working to achieve them.
  • GHG emissions: 4,800 tCO2 by 2030 (down 57% from 2013), zero emissions by 2050
  • Renewable energy ratio: 60% by 2030, 100% by 2050
GHG Emissions and Renewable Energy Ratio Results & Targets
GHG Emissions and Renewable Energy Ratio Results & Targets

Risk Management

To manage the risks faced by the entire Group, the president—who also has ultimate authority over risk management—appoints an officer in charge of risk management. The Group has also established the Risk and Compliance Management Division as the department supervising risk management. The Risk and Compliance Management Division keeps track of risk predictors and carries out risk management in emergencies, in cooperation with the risk management departments of Group companies. This constitutes the group-wide risk management framework, abbreviated as ARMS. Risk predictors for the whole Group are detected monthly by ARMS and reported to the Executive Committee. The Internal Control and Risk Management Committee, chaired by the president, meets four times a year, and submits a summary and annual risk management policy and risk management plan to the Executive Committee at least once a year for discussion before reporting to the Board of Directors.

Risks affecting the Group's business operations at present are described in the Securities Report. For example, the report states that the increase in the number of natural disasters due to climate change is inducive of risks relating to large-scale disasters and information security. The results of climate-related risks identified in the consideration process for disclosure in accordance with the TCFD framework, and business and financial impact analyses have been reported to the Executive Committee and the Board of Directors. Climate-related risks to be noted are shared at the Internal Control and Risk Management Committee and managed by ARMS.