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Responding to Climate Change Risks and Opportunities

As mitigation measures for climate change, one of the most severe of the global environmental risks, the CITIZEN Group is implementing a wide range of initiatives Group-wide to reduce greenhouse gas emissions.

Climate Change Risks and Opportunities

  1. Governance
    The CITIZEN Group has established a Group environmental management structure to promote efficient environmental management. The Group Environmental Committee has been established as a subcommittee of the Sustainability Committee chaired by the President & CEO of CITIZEN WATCH. The Group Environmental Committee, chaired by a director appointed by the President (the director responsible for environmental affairs), deliberates on matters related to climate change and reports periodically (twice a year) on the content of its deliberations to members of the Board of Directors in the Management Committee, where they are subject to approval by the Representative Director. The Board of Directors contributes to decision-making on responses to environmental risks and environmental investment based on reports from the Group Environmental Committee.
  2. Strategy
    In accordance with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), we are advancing assessment and identification of risks and opportunities that could have major impacts on Group businesses and finances through scenario analyses.
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  4. Risk management
    Climate change risks are identified and assessed through a risk-assessment process along with other business risks and designated as important topics. The Sustainability Committee, chaired by the president & CEO of CITIZEN WATCH, also reviews topics, including matters related to climate change risks, considering subjects, such as related measures and financial impact. Decisions on specific measures are made by the Management Committee with the participation of members of the Board of Directors, and then initiatives are implemented in related sections under the management of the director responsible for environmental affairs. A system compliant with ISO 14001 has been established, and a compliance environmental-management system is utilized to deploy an efficient plan-do-check-act (PDCA) cycle regarding themes common across the Group.
    Identified risks of climate change are reviewed periodically once a year.
  5. Metrics and Target
    Under the CITIZEN Environmental Vision 2050 and the CITIZEN Group Environmental Goals 2030, the CITIZEN Group has identified as targets for assessment and the management of risks and opportunities related to climate change the reduction of greenhouse-gas emissions (Scopes 1, 2, and 3) and an increase in the rate of use of renewable energy in Japan.
Indicator Target
Greenhouse-gas emissions (Scopes 1 and 2) 30% reduction (vs. 2018)
Greenhouse-gas emissions (Scope 3) 15% reduction (vs. 2018)
Rate of use of renewable energy (Japan) 30%

As a result of efforts conducted in FY 2020 based on the CITIZEN Environmental Vision 2050 and the CITIZEN Group Environmental Goals 2030, we reduced domestic CO2 emissions (Scope 1 and 2 emissions) by 3.2% compared to FY 2018 to approximately 104,000 t. The percentages of Scope 1 and 2 emissions in FY 2020 were 16% and 84%, respectively. FY 2020 CO2 emissions (Scope 1 and 2 emissions) from overseas facilities decreased by 11.2% compared to FY 2019 to approximately 55,000 t. Domestic emissions accounted for 65% and overseas emissions for 35% of our total emissions. Scope 1 emissions refer to direct emissions from the use of fuel by our manufacturing sites, business facilities, vehicles, etc., while Scope 2 emissions are indirect emissions from the Company's use of electricity and other energy sources.
The rate of use of renewable energy in Japan was 〇% in FY 2020. Main related initiatives during FY 2020 included adoption of equipment toward implementation of the use of renewable energy at the Tokyo site planned for FY 2022 as we continue to make progress toward achievement of our target rate for the use of renewable energy.

Responding to Climate Change

As mitigation measures for climate change, the most severe of the global environmental risks, the CITIZEN Group is implementing a wide range of initiatives Group-wide to reduce greenhouse gas emissions. In addition, we also establish business continuity plans (BCPs) for disasters with adaptation measures to lessen the damage from large-scale disasters caused by climate change. As an expression of our approach to the mitigation of climate change, we participate in the Japan Climate Initiative (JCI) and support its statement calling for participation from Japan on the frontlines of global efforts toward a carbon-free society. We also endorsed and signed the TCFD's recommendations in FY 2020.

Reducing Greenhouse Gas Emissions

In response to identified risks, we are advancing efforts to reduce the greenhouse gas emissions said to cause global warming and aim to realize a 2°C scenario. As part of such efforts, in addition to energy conservation activities and the adoption of LED lighting and other energy-saving equipment at Group business facilities, we are also making progress on preparations for eco-friendly capital investment to establish a sustainable factory. In addition, to reduce emissions throughout the entire supply chain, we calculated the Scope 3 emissions for the entire CITIZEN Group. As to an opportunity, we envision future growth in ethical consumption, which aims to contribute to solutions to environmental and social issues. In the Watches business, we are advancing efforts to create new sustainable products, such as Eco-Drive. As a result of efforts conducted in FY 2019 based on the CITIZEN Environmental Vision 2050 and the CITIZEN Group Environmental Goals 2030, we reduced domestic CO2 emissions (Scope 1 and 2 emissions) by 3.2% compare to FY 2018 to approximately 104,000 t. The percentages of Scope 1 and 2 emissions in FY 2019 was 16% and 84% respectively. FY 2019 CO2 emissions (Scope 1 and 2 emissions) from overseas facilities decreased by 11.2% compare to FY 2018 to approximately 55,000 t. Domestic emissions accounted for 65% and overseas emissions for 35% of our total emissions. Scope 1 emissions refer to direct emissions from the use of fuel by our manufacturing sites, business facilities, vehicles, etc., while Scope 2 emissions are indirect emissions from the Company use of electricity and other energy sources.

Trends in the CITIZEN Group's Scope 1 and 2 CO2 emissions (t-CO2)

Scope 1 and 2 CO2 emissions (t-CO2) FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
Scope1 Japan 19,507 19,861 18,215 17,145 14,631
Outside Japan 3,006 2,875 3,221 2,217 1,740
Total 22,513 22,737 21,436 19,362 16,371
Scope2 Japan 91,581 91,592 89,543 87,264 74,499
Outside Japan 57,500 56,413 59,131 53,136 45,356
Total 149,081 148,005 148,675 140,400 119,854
Scope1 + 2 Japan 111,088 111,453 107,758 104,409 89,130
Outside Japan 60,506 59,288 62,352 55,352 47,095
Total 171,594 170,741 170,110 159,762 136,225
Scope2
(When the purchase of electricity from renewable energy sources is set to zero)
Japan 91,581 91,592 89,543 87,264 68,653
Outside Japan 57,500 56,413 59,131 53,136 45,356
Total 149,081 148,005 148,675 140,400 114,009
Scope1 + 2
(When the purchase of electricity from renewable energy sources is set to zero)
Japan 111,088 111,453 107,758 104,409 83,284
Outside Japan 60,506 59,288 62,352 55,352 47,095
Total 171,594 170,741 170,110 159,762 130,380

Trends in the CITIZEN Group's GHG emissions (CO2 equivalent)

Direct emissions of greenhouse gases other than CO2, nitrogen trifluoride, sulfur hexafluoride, perfluorocarbon, hydrofluorocarbons, nitrous oxide, and methane, totaled 255 tons (CO2 equivalent) in FY 2019. These accounted for a very small share of just 1.5% of total Scope 1 emissions.

FY 2016 FY 2017 FY 2018 FY 2019 FY 2020
Methane 127 126 131 158  147
Nitrous Oxide 46 51 45 43  31 
Hydrofluorocarbons(HFC) 248 50 88 22  84
Perfluorocarbons(PFC) 0 0 0
Sulfur hexafluoride(SF6) 5 30 29 33  10
Nitrogen trifluoride(NF3) 0 0 0
Total 426 256 293 255 271

Calculation of Scope 3 Greenhouse Gas Emissions

Amid global efforts to reduce the greenhouse gas emissions that cause global warming, the CITIZEN Group, too, is advancing related initiatives proactively. To advance further measures in this area, it is important that the we ascertain indirect greenhouse gas emissions throughout the supply chain (Scope 3), in addition to those from its own manufacturing processes.

Calculation Results

In FY 2020, the Watches business, an important business in the Group, calculated greenhouse gas emissions throughout the supply chain. The results of this calculation showed that the CITIZEN Group's indirect greenhouse gas emissions throughout the supply chain (Scope 3) stood at approximately 89,000 t. Of these, purchased products and services (Category 1) accounted for the largest share at approximately 59%, followed by capital goods (Category 2) at approximately 13%, Fuel and energy related activities (Category 3) at approximately 8% and shipping and delivery (upstream) (Category 4) at approximately 6%. These four categories together accounted for approximately 86% of the total. The calculation methods were revised to enable their use in businesses other than Watches, as well and to improve their precision, and we established the standardized Group Scope 3 Calculation Rules for the CITIZEN Group. The FY 2019 emissions data for all CITIZEN Group’s businesses were subject to third-party verification by an external organization.

Calculation of Scope 3 Greenhouse Gas Emissions

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A case: Royal Time Citi

Operation of Solar Power System

Royal Time Citi began operating a solar power system on August 26, 2020, to reduce CO2 emissions and raise employee awareness regarding the environment. The solar power system has a rated generating capacity of 552 kW and is expected to generate considerable results in light of Thailand's long daylight hours. Over the period of roughly nine months from the time the system came online through the end of May 2021, it generated 495.81 MWh of electricity, reducing CO2 emissions by 248 tons. Solar power accounts for about 15% of the company's total power consumption.
This system has proven highly cost-effective, thanks in part to income tax refunds of 50% of the amount invested under Thailand's energy conservation policies.
As part of our steady efforts to realize an eco-friendly factory, we already have switched entirely to LED lighting and adopted an air-conditioning management system and energy-saving air conditioning. We will continue employing thorough environmental awareness in plant management in the future as well.

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Solar power system