Disclosures Based on TCFD Recommendations
Response to the TCFD recommendations
The F&LC Group embraces the vision of “Discovering new tastiness, Sharing moments of joy.” To continue to provide customers with safe and delicious food, sustainable initiatives that anticipate the future are essential in our business activities. In particular, since the F&LC Group uses a wide variety of marine and agricultural produce as raw ingredients, it sees climate change as one of the key management risks it faces, and is committed to disclosing climate-related information in accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
Governance
The F&LC Group Board of Directors recognizes the problem of climate change as one of its key management issues and fulfils a related supervisory role. Specifically, the Board of Directors engages in deliberations that take into account the risks and opportunities associated with climate change issues when formulating management strategy, management plans and other key policies, and fulfills a supervisory role as needed in response to reports from various Group companies and divisions.
The F&LC Group has clearly positioned sustainability as a Groupwide management issue, and has established the Sustainability Promotion Committee, chaired by the President & CEO, to drive the implementation of sustainability initiatives. The Sustainability Promotion Committee reports as needed to the Corporate Management Committee on the status of sustainability efforts including action on climate change, and receives instructions and advice. In addition, as needed the President & CEO reports on these conditions to the Board of Directors as appropriate.
Strategy
Based on the framework advocated in the TCFD recommendations, the F&LC Group identified the risks and opportunities that climate change poses to the Group, and conducted analyses using different climate-related scenarios. Going forward, the F&LC Group will seek to minimize the risks and maximize the opportunities on the way to achieving a decarbonized society by pursuing risk and opportunity-related analyses in greater depth.
When conducting the scenario analyses, we identified the risks posed to the F&LC Group in relation to climate change, and conducted scenario analysis on those risks expected to have a particularly significant impact on the Group. In response to the scenario analysis results, we have organized the response measures needed to minimize the risks and maximize the opportunities. In particular, a detailed analysis was conducted based on factors such as fish species and production regions with regard to the impact of climate change on the procurement of raw ingredients, which is expected to be the most critical business continuity issue for the F&LC Group.
Assumptions of the scenario analysis
In addition to understanding physical risks, transition risks and business opportunities related to climate change, the F&LC Group assesses the impact that this climate change risks and opportunities will have on its business strategies and financial plans. When conducting the scenario analyses, the F&LC Group’s core business of Akindo Sushiro Co., Ltd. (domestic) was targeted. In terms of time scales, 2030 was selected for transition risks, and 2050 was selected for physical risks. In addition, scenario analyses were conducted according to the under 2ºC scenario and 4ºC scenario, based on the Sustainable Development Scenarios published by the International Energy Agency (IEA), Shared Socioeconomic Pathways 5-8.5 from the Intergovernmental Panel on Climate Change (IPCC), and other sources.
Results of the scenario analysis
The main risks and opportunities to the F&LC Group in the under 2ºC scenario are the strengthening of regulations and government policy for a decarbonized society, changing consumer preferences, and the transition to a circular economy. Specifically, rising store operation and procurement costs due to hikes in energy procurement costs from the introduction of carbon pricing, and rising costs through stricter regulations on plastics and measures to prevent food loss are expected. The F&LC Group will actively pursue the introduction of renewable energy, the shift to clean energy, the decarbonization of energy through the introduction of energy saving equipment and other initiatives, and the switch from plastic containers to ones made from paper or other materials. At the same time, we will phase out plastics by considering the introduction of recycled materials, and promote contributions to the circular economy by considering the reuse of leftover food and other food waste as livestock feed, biomass fuel or other resources. In doing so, we aim to minimize our risks while expanding business opportunities through differentiation.
Additionally, under the 4ºC scenario we expect that as temperatures continue to advance, natural disasters will increase in severity, and that physical risks such as rising mean temperatures and changing weather patterns will materialize. Specifically, increasingly severe natural disasters could impact the store operations and supply chain of the F&LC Group, while rising mean temperatures and changing weather patterns could impact ecosystems and imperil the F&LC Group’s ability to procure raw ingredients. The F&LC Group will minimize risks by considering responses to the physical risks posed during store development and operation, and ensure resilience in its supply chain through initiatives to diversify its procurement network and other initiatives.
Note that the risks and opportunities identified in each scenario have been shared with the Sustainability Promotion Committee and Internal Controls Committee, with the aim of taking appropriate action and ensuring resilience against climate change risks in the F&LC Group while maximizing the opportunities. We will continue to conduct scenario analyses and refine our understanding of the financial impacts, and hope to advance our response to climate change by concretely reflecting the risks, opportunities and response measures in our management plans.
Financial impact and response measures
Financial impact and response measures
We investigated and analyzed the impact of climate change on the main raw ingredients thought to pose a significant impact to the F&LC Group based on reports and academic papers from various research institutions. The following table gives results of assessments conducted on the procurement environment and resource volume outlook for rice and for the most extensively used sushi toppings, namely tuna, yellowtail, seabream, shrimp and salmon.
For varieties of fish that make up the main ingredients, we classified each variety by its main procurement region and whether it is wild or farm-raised, and then studied the literature for each. Despite slight differences in production regions, since the difference in temperature increase will become greater from 2050 onwards, we predict common trends for both the 2ºC and 4ºC scenarios up to the year 2050, but for 2050 and beyond, we predicted a divergent in trends between both scenarios. As a result, up to 2050 we concluded that for each type of fish and for rice, there is a low risk of catch volume and production volume rapidly declining.
However, for 2050 onwards, we concluded that for each variety of fish, under the assumptions of the 4ºC scenario it would be difficult to deny that rising sea temperatures would have adverse effects, albeit to differing degrees.
For rice, there are concerns that under both the 2ºC and 4ºC scenarios, deteriorating quality due to rising temperatures could lead to procurement risks for high-quality rice.
Based on the assessments described above, we considered the direction of response measures to ensure the stability of procurement. For all raw ingredients, we will pursue the development and utilization of advanced aquaculture and cultivation techniques adapted for climate change (see “Initiative 2” below for examples), consider overseas aquaculture businesses for tuna, yellowtail and sea bream in addition to existing domestic sources, and pursue the development of new procurement countries and creation of new aquaculture techniques regarding shrimp and salmon. For rice, we will select production regions and varieties in response to climate change, and provide support for projects to improve varieties with the aim of ensuring quality.
Specific initiatives to deal with climate change risks
Initiative 1: Installing solar power generating equipment at stores
F&LC is making progress with the installation of solar power generating equipment at its roadside stores utilizing solar PPAs. As of September 2024, solar power generating equipment has been installed at over 100 of these stores, and additional installations will be progressively rolled out going forward. In addition, we are also considering additional installation at existing stores and the installation of equipment when opening new stores.
Initiative 2: Strengthening support for aquaculture businesses and diversifying and stabilizing procurement through the utilization of food tech
F&LC has been strengthening its support for aquaculture businesses, anticipating the risk of unstable fish procurement materializing due to climate change. Specifically, in conjunction with OWASEBUSSAN Co., Ltd., in which we are a capital participant, we have been working to develop and establish aquaculture techniques and conducting research into feeding methods.
We are also working on improvements to varieties of fish utilizing advanced food tech such as biotechnology and genome editing technologies. In addition, in April 2022 we established Marineverse Ltd. on a joint basis with Takuyo Co., Ltd. with the aim of the stable production and utilization of marine resources, and have been conducting in R&D into varieties and feed for farmed fish.
Initiative 3: Contributing to climate change measures through the effective utilization of resources
Cooking oil used at Sushiro and Sugidama is supplied as the raw material for domestically produced sustainable aviation fuel (SAF).
By recycling waste cooking oil into domestically produced SAF, we aim to realize a recycling-oriented society that contributes to climate change measures through the effective utilization of resources.
Risk Management
In the F&LC Group, the Sustainability Promotion Committee plays a central role in ascertaining, analyzing and assessing climate-related risks. The Sustainability Promotion Committee is chaired by the President & CEO. With regard to the climate change-related risks that have been identified, analyzed and assessed, the committee asks Group companies and divisions, etc. to formulate response measures and give reports in an appropriate manner as needed.
The F&LC Group has also prescribed Risk Management Regulations and established an Internal Controls Committee to monitor all manner of risks that threaten continuous corporate development and put a risk management structure in place. We have put in place an appropriate crisis management structure where the Internal Controls Committee identifies, analyzes and assesses key Group management risks and formulates improvement measures. Regarding climate change-related risks, the Sustainability Promotion Committee and Internal Controls Committee coordinate with one another to respond.
Metrics and Targets
To tackle reductions to CO₂ emissions generated at sushi stores in Japan, its core business, the F&LC Group has set the following CO₂ emissions targets for Akindo Sushiro Co., Ltd.
| The goal | FY2030 | Reduce CO₂ emissions (Scope 1 + 2) per unit by more than 50% compared to fiscal 2013 |
| FY2050 | Carbon neutrality | |
| Base year | FY2013 | CO₂ emissions (Scope 1 + 2): 63,311 t-CO₂ |
| CO₂ emissions (Scope 1 + 2) per unit: 0.51 t-CO₂ / 1,000,000 yen |
| Results | FY2025* | Scope 1 + 2 52,058 t-CO₂ |
| Scope 1 + 2 per unit: 0.21 t-CO₂ / 1,000,000 yen | ||
| Scope 1 + 2 per unit reduction rate: 58.82% |
* Akindo Sushiro Co., Ltd. (non-consolidated) April 2024 – March 2025
In addition to reducing CO₂ emissions due to business activities, the F&LC Group also believes that the development of technologies and promotion of businesses that help reduce CO₂ emissions throughout society are important parts of climate change action and tackles such initiatives on a Groupwide basis.