Here we outline our four businesses, through which we contribute widely to the lives of people around the world.
Machine tools
Citizen began production of machine tools in 1936, utilizing the technologies and know-how developed through the manufacture of watch parts. Our products contribute to the development of manufacturing industries all over the world.
About Us
More than a century since it was founded in 1918 with the desire to produce Japanese-made watches, the CITIZEN Group has evolved into a corporate entity engaged in a wide range of businesses.
CITIZEN's corporate philosophy, "Loved by citizens, working for citizens" is to
deeply contribute to the lives of people around the world through the manufacturing of products that are loved and trusted by citizens.
Message From President & CEO
Crafting a new tomorrow Towards sustainable value creation
As a measure to mitigate climate change, one of the most serious global environmental risks, The CITIZEN Group is making Group-wide efforts to reduce GHG emissions through energy-saving activities at its plants and offices and the introduction of electricity derived from renewable energy sources.
As an expression of our commitment to climate change mitigation, we have joined the “Climate Change Initiative” and endorsed the TCFD recommendations in 2020. In 2022, we have revised the Group's CO2 emission reduction targets (Scope 1, Scope 2, and Scope 3) and obtained SBT certification for the revised targets. In addition, measures to respond to large-scale disasters due to climate change are stipulated in our disaster BCP (Business Continuity Plan).
Climate Change Risks and Opportunities
Governance
The CITIZEN Group has established an environmental management system to efficiently promote environmental management. Under the umbrella of the Sustainability Committee chaired by the chairman of CITIZEN WATCH, we have put in place the Group Environmental Committee chaired by a director (in charge of environmental affairs) who has been appointed by the chairman of the company.
Climate change issues are discussed by the Group Environmental Committee, followed by discussions by the Sustainability Committee, and are then deliberated and approved by the Management Meeting. The content approved by the Management Meeting is reported to the Board of Directors on a regular basis (twice a year) and is used for decision-making on environmental risks and environmental investments.
Scenario Analysis
Recognizing that the risks and opportunities associated with climate change will have a significant impact on its business strategy, The CITIZEN Group has identified the risks and opportunities associated with climate change through the following process, and the Sustainability Committee Secretariat took the lead in analyzing and assessing the significance of the 1.5°C and 4°C scenarios.
Process for identifying the risks and opportunities associated with climate change
Process 1
We comprehensively identified the risks and opportunities associated with climate change.
Process 2
We organized the identified risks and opportunities in relation to the four business segments of Watches and Clocks, Machine Tools, Devices, and Electronic Devices and Others, as well as in 3 time frames: short, medium, and long term.
Process 3
For each risk and opportunity identified, we used a 5-point scale to evaluate its "impact on the company" and "likelihood of occurrence". As an overall evaluation, items with a high "impact on the company" and "likelihood of occurrence" were extracted, and important risks and opportunities were identified.
Selected Climate Change Scenarios
We analyzed and evaluated the 1.5°C scenario, which is a scenario of moving toward a decarbonized society, and the 4°C scenario, which is a scenario of increasing warming.
SSP1-1.9 was used for the 1.5°C scenario, and SSP5-8.5 for the 4°C scenario.
* SSP1-1.9: Assumes that warming is controlled to about 1.5°C above 1850-1900 levels by 2100 "after a slight overshoot" and that CO2 is reduced to net zero around the middle of this century.
* SSP5-8.5: High-level reference scenario without implementation of additional climate policies.
Scenario Analysis Results
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Classification
Significant Risk / Opportunity
Impact on CITIZEN
Time Horizon
1.5℃
4℃
-2024
2025
-
2030
2031-
Transition Risk
Policy and Regulations
Large
Small
Cost increase due to the introduction and strengthening of new regulations (carbon pricing system)
●
●
Technology and Markets
Small
Large
Increase in the cost of raw materials, etc., supply shortages and supply disruptions
●
●
Reputation
Medium
Small
Decline in reputation due to a delayed response to climate change, etc., and the consequent decline in stock price and sales
●
●
●
Physical Risk
Acute Risk
Small
Large
Increasing severity and frequency of natural disasters
●
●
Chronic Risk
Medium
Large
Increased business spending on addressing extreme weather effects and countermeasures
●
●
Small
Medium
Stagnation of production activities due to supply chain disruptions
●
●
Opportunity
Energy and Resource Efficiency
Large
Small
Cost reduction through the promotion of energy conservation
●
●
Medium
Medium
Cost reduction through resource conservation, 3Rs, zero waste emissions, and the conservation of water resources
●
●
●
Medium
Small
Differentiation and competitiveness through product development with alternative materials
Realization of life cycle decarbonization through substance substitution and weight reduction
●
●
Products, Services & Markets
Medium
Small
Revenue growth due to increased demand for environmentally friendly products/services
●
●
●
Resilience
Medium
Medium
Increased customer trust through the promotion of natural disaster preparedness
●
●
●
Medium
Large
Minimized the risk of physical damage through the systematic implementation of countermeasures
●
●
●
* The results of the risk assessment for both the 1.5°C and 4°C scenarios for which the significance level was determined to be "minor" are not listed.
Financial Impact Analysis
Based on the results of the scenario analysis, we have identified financial impacts for the following two items that could significantly affect The CITIZEN Group’s finance.
Transition Risk
Cost increase due to the introduction and strengthening of new regulations
Transition Risk
Increase in the cost of raw materials, etc., supply shortages and supply disruptions
Impact of introducing the carbon tax on Scopes 1, 2, and 3
The financial impact of the carbon tax was estimated based on the following calculation criteria.
We compared the IEA's carbon price projections for each scenario with the financial impact if The CITIZEN Group's CO2 emissions reduction targets were achieved or not achieved. The cost of the carbon tax was calculated based on The CITIZEN Group's current CO2 emitting countries (Japan, Thailand, China, the Philippines, and Vietnam), as the amount varies from country to country.
Scopes 1 and 2
We calculated the business impact for production in 2030, 2040, and 2050 when the carbon tax is introduced.
The CITIZEN Group aims to achieve carbon neutrality by 2050 and has established a roadmap for reducing CO2 emissions (The CITIZEN Group Environmental Goal 2030). Taking these as a standard, we set the CO2 emissions for each year and calculated the financial impact.
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(JPY Million)
2030
2040
2050
If the CO2 emission reduction targets are achieved
1,096
905
0
If the CO2 emission reduction targets are not achieved
1,398
2,310
2,877
Scope 3
We calculated the financial impact from the CO2 emissions for Category 1 of Scope 3 and material purchase costs, assuming that all impacts of carbon tax were reflected in the purchase price.
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(JPY Million)
2030
2040
2050
813
1,897
2,981
Strategy (Measures and Policies of the Company)
We have formulated the "The CITIZEN Group Environmental Vision 2050" to achieve carbon neutrality in 2050. The CITIZEN Group aims to achieve virtually zero CO2 emissions from its factories and offices by 2050. We are also working to understand the risks related to climate change throughout our supply chain.
The Group sees the transition to a low-carbon economy as an opportunity to invest in renewable energy and energy-saving equipment, and it is also working to improve product competitiveness through the development and production of environmentally friendly products.
Under the 1.5°C scenario,
we anticipate increased costs due to stricter regulations, including the introduction of a carbon tax, and the risk of higher prices for raw materials and other resources. In addition to promoting decarbonization initiatives to achieve The CITIZEN Group Environmental Target 2030 and The CITIZEN Group Environmental Vision 2050, the Group is considering the introduction of an internal carbon price system to promote investment in GHG emissions reduction.
Under the 4°C scenario,
in order to stably secure raw materials, we will promote diversified procurement sources and appropriate parts and materials procurement management. In addition, we are promoting BCP measures including weather-related disasters and investment related to disaster countermeasures.
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Classification
Significant Risk / Opportunity
Impact on CITIZEN
Measures
Time Horizon
1.5℃
4℃
-2024
2025
-
2030
2031-
Transition Risk
Policy and Regulation
Large
Small
Cost increase due to the introduction and strengthening of new regulations (carbon pricing system)
Promotion of decarbonization efforts (achievement of The CITIZEN Group Environmental Goal 2030)
Introduction of an internal carbon price system to promote investment in GHG emissions reduction
●
●
Technology and Market
Small
Large
Increase in cost of raw materials, etc., supply shortages and supply disruptions
Secure diversified procurement sources
Reinforcement of stockpiling function
●
●
Reputation
Medium
Small
Decline in reputation due to a delayed response to climate change, etc., and the consequent decline in stock price and sales
Enhance corporate value by promoting ESG
●
●
●
Physical Risk
Acute Risk
Small
Large
Increased severity and frequency of natural disasters
Establishment of specific action guidelines in the event of a disaster
●
●
Chronic Risk
Medium
Large
Increased business spending on addressing extreme weather effects and countermeasures
Risk assessment of the entire supply chain
BCP measures, including weather-related disasters (e.g. disaster countermeasures at production sites, development of BCP plans for procurement/logistics systems, etc.)
Promotion of investment related to disaster preparedness
●
●
Small
Medium
Stagnation of production activities due to supply chain disruptions
Risk assessment of the entire supply chain
BCP measures, including weather-related disasters (e.g. disaster countermeasures at production sites, development of BCP plans for procurement/logistics systems, etc.)
Reinforcement of stockpiling functions
●
●
Opportunity
Energy and Resource Efficiency
Large
Small
Cost reduction through the promotion of energy conservation
Conversion to energy-efficient equipment and the more efficient use of electricity through the use of AI and IoT
●
●
Medium
Medium
Cost reduction through resource conservation, 3Rs, zero waste emissions, and the conservation of water resources
Capturing business opportunities through the expansion of circular economy businesses
Utilization of recycled resources
●
●
●
Medium
Small
Differentiation and competitiveness through product development with alternative materials
Realization of life cycle decarbonization through substance substitution and weight reduction
Product development with alternative materials
Weight reduction and the diversification of raw materials
●
●
Products, Services & Markets
Medium
Small
Revenue growth due to increased demand for environmentally friendly products/services
Provision of products and services that contribute to climate change mitigation (eco-driving, LED lighting)
●
●
●
Resilience
Medium
Medium
Increased customer trust through the promotion of natural disaster preparedness
Risk assessment of the entire supply chain
BCP measures, including weather-related disasters (e.g. disaster countermeasures at production sites, development of BCP plans for procurement/logistics systems, etc.)
Reinforcement of stockpiling functions
●
●
●
Medium
Large
Minimized the risk of physical damage through the systematic implementation of countermeasures
Risk assessment of the entire supply chain
BCP measures, including weather-related disasters (e.g. disaster countermeasures at production sites, development of BCP plans for procurement/logistics systems, etc.)
Reinforcement of stockpiling functions
●
●
●
Risk management
In accordance with ISO 14001, the risks and opportunities related to climate are identified once a year by the environmental manager and the secretariat on a short to long-term timeline, based on the environmental aspects, laws, and regulations to be complied with, issues in the external and internal environment, and needs and expectations of stakeholders.
Climate-related risks are reflected in the Group's strategy as one of the Group's key risks and are addressed under the supervision of the Board of Directors.
Specific measures to eliminate risks and opportunities are decided at the management meeting attended by directors, after which each measure is implemented by relevant departments under the control of the director in charge of environmental affairs. For cross-group themes, we utilize the established ISO14001 system and the environmental management system that conforms to it, so that we can develop an efficient PDCA cycle.
Indicator and Goal
The CITIZEN Group has set the following targets regarding climate change.
Greenhouse Gas Emissions
Indicator
Goal
Scopes 1 and 2
50.4% reduction for 1.5°C level target by FY2030 (compared to FY2018)
Scope 3
30% reduction in category 1 + category 11 by FY2030 (compared to FY2018)
The CITIZEN Group has also set cost reductions through the promotion of energy conservation as an indicator for "climate-related opportunities" and the amount of capital investment in energy conservation and renewable energy as an indicator for "capital allocation," and will continue to monitor these indicators.
Reduction of Greenhouse Gas Emissions
To achieve the 1.5°C scenario, we are promoting the reduction of GHGs, which are the cause of global warming. In addition, we are preparing for the implementation of energy-saving activities at each of the Group's business sites, the introduction of energy-saving equipment and facilities such as LEDs, and capital investment to establish "sustainable factories" using manufacturing processes that are environmentally friendly. In January 2022, the solar power generation system at the CITIZEN FINEDEVICE headquarters and Kawaguchiko Plant started operation, and it is expected to reduce CO2 emissions by 7.7 tons per year. In addition, we plan to increase energy self-sufficiency by installing photovoltaic power generation systems at all newly constructed plants, starting with CITIZEN MACHINERY’s Karuizawa Plant in Nagano Prefecture, which was constructed in April 2022.
We also calculated Scope 3 emissions for The entire CITIZEN Group in order to reduce GHG emissions throughout the supply chain. As an opportunity, we are working to create new environmentally friendly products, such as watches incorporating the Eco-Drive, in anticipation of the expansion of ethical consumption, which will contribute to solving environmental and social problems.
Scopes 1 and 2 GHG emissions
Trends in The CITIZEN Group's GHG Emissions from Non-Energy Sources (CO2 equivalent)
In FY2022, direct emissions of GHGs other than CO2 from energy sources (i.e., nitrogen trifluoride, sulfur hexafluoride, perfluorocarbon, hydrofluorocarbons, nitrous oxide, methane, and CO2 from non-energy sources) totaled 1,390 tons (CO2 equivalent). These accounted for 7% of the total Scope 1 emissions. The value is higher than in previous years due to the addition of overseas sites to the scope of calculation and a review of the calculation method.
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(t-CO2)
FY2018
FY2019
FY2020
FY2021
FY2022
Methane
Japan
131.0
158.2
146.6
129.7
98.3
Overseas
-
-
-
-
150.5
Total
131.0
158.2
146.6
129.7
248.9
Nitrous oxide
Japan
44.9
42.4
30.7
41.9
35.6
Overseas
-
-
-
-
62.6
Total
44.9
42.4
30.7
41.9
98.2
Hydrofluorocarbons (HFC)
Japan
87.9
21.6
84.0
283.9
633.8
Overseas
-
-
-
-
375.6
Total
87.9
21.6
84.0
283.9
1009.4
Perfluorocarbons (PFC)
Japan
0.0
0.0
0.0
43.2
30.3
Overseas
-
-
-
-
27.2
Total
0.0
0.0
0.0
43.2
57.5
Sulfur hexafluoride (SF6)
Japan
28.9
32.9
10.1
36.8
27.0
Overseas
-
-
-
-
0.0
Total
28.9
32.9
10.1
36.8
27.0
Nitrogen trifluoride (NF3)
Japan
0.0
0.0
0.0
0.0
0.0
Overseas
-
-
-
-
0.0
Total
0.0
0.0
0.0
0.0
0.0
Carbon dioxide (CO2) from non-energy sources
Japan
-
-
-
-
0.1
Overseas
-
-
-
-
0.7
Total
-
-
-
-
0.8
Total
Japan
292.6
255.2
271.4
535.5
825.1
Overseas
-
-
-
-
616.6
Total
292.6
255.2
271.4
535.5
1441.7
* The above GHG emissions figures are based on domestic data only until FY2021.
* Emissions in Japan are higher than in previous years due to a revision of the calculation method from FY2022.
Calculation of Scope 3 GHG Emissions
In reducing GHG emissions, it is important to understand the GHG emissions (Scope 3) not only at the company's own manufacturing stage, but also throughout the entire supply chain where GHGs are indirectly emitted. Therefore, we calculated the GHG emissions of all The CITIZEN Group operations in FY2022. Based on these calculations, the total indirect GHG emissions of the entire supply chain amounted to approximately 1,651,000 tons. Of these, "products and services purchased" (Category 1) accounted for the largest share, at 57% of the total, followed by "use of products sold" (Category 11) at 35%, which together accounted for about 92% of the total.
In our company, we calculate Scope 1 emissions based on the procurement amount. In FY2022, emissions in Category 1 increased due to the inflationary pressures that led to higher costs for purchased products (materials and consumables) as well as service expenses. Consequently, the emissions in Category 1 contributed to an overall increase in Scope 3 emissions. Going forward in the upcoming fiscal years, we are committed to implementing measures to reduce emissions. Additionally, we plan to undergo third-party verification by an external audit agency for the emissions data of FY2022, covering all business operations within The CITIZEN Group.
[Case Study] Solar Power Generation System in Operation
Royal Time Citi (Thailand)
Royal Time Citi installed a photovoltaic power generation system to reduce CO2 emissions and raise employees' environmental awareness and put it into operation on August 26, 2020. With a power generation capacity of 552 kW, it is expected to be highly effective in Thailand, which has many sunshine hours. Since its operation, the system has generated 951.421 MWh of electricity in the 19 months to the end of February 2022, eliminating 769 tons of CO2 that would otherwise have been emitted.
The power generated by this system is used to power the press section of the case plant in the same building, and approximately 10% of the company's power consumption can be covered by solar power generation.
Aiming to make its factory more environmentally friendly, the company has been gradually doing what it can, such as switching to LED lighting, introducing air conditioning management systems, and installing energy-efficient air conditioners.
In the future, we will continue to make efforts to improve the recycling rate, which has been lagging behind, and create factories with a solid awareness of the environment.
[Case Study] Solar Power Generation System in Operation
CITIZEN T.I.C.
A solar power generation system was installed at the CITIZEN T.I.C. head office and plant in Koganei, Tokyo, and it has been in operation since October 2020. The system was introduced to improve CO2 reduction efforts to address global warming. 100% of the electricity used at the company’s manufacturing sites comes from renewable energy produced by the solar power generation system. In addition, surplus electricity generated on holidays is supplied to Tokyo Electric Power Company so that the generated electricity is not wasted.
In addition to the installation of the solar power generation system, we have been steadily working to reduce CO2 by switching to LED lighting and energy-efficient air conditioners and conducting daily power reduction activities. We will continue our efforts to achieve The CITIZEN Group's environmental goals.