Initiatives for TCFD Recommendations | Response to climate change | Environment | Sustainability | English

Governance Structure

Board oversight structure

The Board of Directors recognizes that addressing sustainability issues, including climate change, is an important management issue, and established the Sustainability Committee, chaired by the President and CEO, in June 2022 to promote management based on a sustainability perspective. Going forward, the Board of Directors will strengthen its efforts to address sustainability issues by, for example, receiving reports on sustainability issues from the Sustainability Committee at least once a year, including matters related to climate change.

Roles of the management team

In addition, the Executive Committee, which is an advisory body for decision-making by the representative directors and consists of full-time directors, executive officers, general managers, and division managers, will receive reports from the Sustainability Committee on sustainability issues, including climate change-related issues, as appropriate. This will ensure that top management is unified and thoroughly informed about important policies and measures concerning sustainability issues.

Sustainability Committee

In June 2022, we established the Sustainability Committee, chaired by the President and CEO, to promote management based on a sustainability perspective. The Sustainability Committee discusses themes and directions to be addressed over the medium to long term as a company, such as important sustainability issues (materiality), including matters related to climate change, and related sustainability targets, and formulates company-wide policies and targets. The Sustainability Committee also establishes and maintains a system to put these policies and targets into practice, and monitors the status of the initiatives. Major issues discussed and decided by the Sustainability Committee are reported to the Executive Committee and the Board of Directors for supervision and direction.

Strategies

Climate change risks and opportunities and their impact on the organization's business, strategic, and financial plans

We assess the impact of climate change risks and opportunities on our business strategies and financial plans, in addition to understanding the physical and transition risks and business opportunities associated with climate change. In assessing risk, we conduct scenario analysis using two-degree and four-degree scenarios.

In the two-degree scenario, transition risks are considered based on the IEA SDS and other scenarios, and in the four-degree scenario, physical risks are considered based on the IPCC RCP8.5 and other scenarios. Opportunities include the impact on the prices of raw material from stricter government regulations, changing consumer preferences, and rising crude oil prices due to the stagnation of new oil field development. Specifically, the risks associated with stricter government regulations include higher prices for purchased energy such as electricity and gas due to the introduction of a carbon tax, as well as higher raw material prices. Also, tighter regulations for plastics and moves toward decarbonization of the food supply chain are also assumed to be a risk. In addition to the increase in wheat and beef prices and other raw material costs, we will be required to comply with plastics regulations, strengthen initiatives to reduce food waste, and visualize the carbon footprint of raw materials, all of which will increase our response costs.

On the other hand, with regard to changes in consumer preferences, our mainstay yakiniku (grilled meat) business category, which deals with beef with significant GHG emissions, could be significantly affected if consumer preferences change as we move toward a decarbonized society. Regarding the impact on raw material prices of the rise in crude oil prices due to the stagnation of new oil field development, our raw material purchase prices may also be affected through increased production and logistics costs for grains. On the other hand, in the four-degree scenario, we considered mainly physical risks and found that acute risks include the impact on our store facilities, etc. (including the impact of supply chain disruptions) due to increased typhoon intensity and flooding caused by heavy rainfall, the impact on crop prices, etc. resulting from abnormal weather, and the impact on ecosystems caused by rising temperatures. Risks identified include the impact on the price and quality of our raw materials (beef, seafood, vegetables, etc.) due to the effects of rising temperatures on ecosystems.

Resilience of organizational strategies considering different climate-related scenarios, including two-degree scenarios and those below that

We will share the risks identified in the two- and four-degree scenarios with the relevant departments within the company and take appropriate measures to ensure the resilience of our business to climate change risks, and at the same time, to secure our advantages (business opportunities) as one of our strengths. We will continue to address climate change through scenario analysis, elaboration of the financial impact, and specific reflection of risks, opportunities, and countermeasures in our management plans.

Overview of scenario analysis (transition risk and physical risk)

Scenario	Transition risk	Item	Specific impact on our group	Counter measures
Two-degree scenario	Policies and laws	Introduction of carbon tax	Increase in purchased energy prices (electricity and gasoline prices) Increase in capital investment costs to install energy-saving equipment Increase in purchase price due to higher raw material prices	Use of renewable energy power Installation of solar panels on stores, etc. Installation of energy-saving equipment Price pass-on of cost increases
		Decarbonization of food supply chain	Response to carbon visualization of food supply chain (movement toward visualization of greenhouse gas reduction through certification, labeling, etc.) Deepening efforts to reduce food waste loss Promotion of communication with consumers and other stakeholders	Implementation of raw material procurement with an awareness towards the visualization of GHG reduction Implementation of measures to reduce waste loss Proactively appeal to consumers for decarbonized food
		Strengthening of plastics regulations	Cost increase due to change of raw materials to non-plastics	Reduction in use of disposable plastic products
	Market/ reputation	Changing customer needs	Customer churn due to negative environmental perception of beef with high GHG emissions Decreased sales due to changing consumer preferences (meat → vegetables, bio-meat)	Flexible business development and menu development to meet changing customer needs Adoption of new trends such as meat substitutes, bio-meat, etc.
	Market/ reputation	Increase in production costs of various logistics and raw materials due to soaring energy costs resulting from stagnant development of new oil fields, etc.	Increase in the cost of imported raw materials such as beef due to higher overseas grain production costs Increase in cost of purchased raw materials (for noodles) due to higher wheat prices	Review of raw material procurement methods, etc. (e.g., fattening of domestic cattle using rice resources, etc., development of noodles using rice resources, etc.) Development of business categories utilizing low-priced raw materials. Menu development
Scenario	Physical risk	Item	Specific impact on our group	Counter measures
4-degree scenario	Acute risks	Increased flood risk due to increased intensity of typhoons and increased frequency of heavy rains	Decrease in revenue due to repair costs for store damage caused by typhoons, etc. and shutdown of operations during the recovery period Cost increase due to unstable procurement caused by supply chain disruption	Scrutinize and insure against the risk of flooding, etc. when developing new stores Diversification of raw material procurement routes
	Acute risks	Effects of extreme weather conditions in crop-growing areas	Cost increases due to higher raw material costs caused by crop failures	Diversification of raw material procurement routes Flexible menu development by changing raw materials
	Chronic risks	Rise in average temperature	Impact on global grain production and higher raw material prices (wheat, beef cattle) Impact on growth of livestock, affecting prices and quality Decrease in the amount of fish caught and an increase in prices due to ecosystem changes in marine resources	Review of raw material procurement methods, etc. (e.g., fattening of domestic cattle using rice resources, etc.) Development of business models that utilize low-cost raw materials. Menu development Strengthen resilience of procurement routes for marine resources, such as securing procurement through aquaculture

Risk Management

Organization's process for identifying and assessing climate-related risks

Our Sustainability Committee is mainly responsible for identifying and assessing climate change risks and other risks from a medium- to long-term perspective. With regard to risks associated with climate change that have already manifested themselves (mainly physical risks such as typhoons and torrential rainfall), the Internal Control Promotion Committee, consisting of the Compliance and Risk Management Subcommittees, plays a central role in identifying and assessing such risks.

The organization's process for managing climate-related risks

Significant risks, including climate-related risks identified and assessed by the Internal Control Committee or the Sustainability Committee, are reported to and shared with the Board of Directors and the Executive Committee as needed, and appropriate countermeasures are considered. Specifically, among climate change-related risks, risks related to management strategies are discussed at meetings of the Board of Directors and the Executive Committee as necessary, and the departments responsible for dealing with each risk consider how to avoid the occurrence of risk events and how to respond to them if they do occur, through instructions, reporting, and other means.

Integration into the organization's overall risk management

Our company has established the Risk Management Regulations and Crisis Response Manual, in accordance with which the Internal Control Promotion Committee plays a central role in identifying possible risks, including climate change risk, evaluating them and considering countermeasures, and then each responsible department takes action. The status of the situation is confirmed and requisite measures are considered, as necessary, at Executive Committee and Board of Director meetings . Climate change risks and other risks identified by the Sustainability Committee are shared with the Internal Control Promotion Committee as needed.

Indicators and Targets

Indicators used to assess climate-related risks and opportunities

We have adopted the intensity of GHG emissions (Scope 1 and 2) per net sales of our directly operated stores in Japan as an indicator to assess the risks and opportunities related to climate change. The following table shows the trends in our GHG emissions intensity and total GHG emissions. We aim to achieve a 50% reduction from the fiscal 2013 level by fiscal 2030 and carbon neutrality by 2050 through various initiatives aimed at decarbonization, including the use of renewable energy.

(Note) Scope of GHG emissions is non-consolidated (Monogatari Corporation)