Disclosure Aligned with IFRS Sustainability Disclosure Standard S2
Basic Concept
The IDEC Group has been conscious of eco-friendliness since its foundation in 1945 through its “Save all” and “Pursuit of saving” philosophy. We formulated “The IDEC Way” in 2019 and have since maintained a management focus on environmental issues and reduction of environmental impact through the realization of safety, ANSHIN, and well-being. Responding to climate change is a major societal challenge globally.
We identify responding to climate change as one of our priority issues. Having set the Vision for 2030 in the Materiality, we are promoting various initiatives aimed at achieving a sustainable society.
The IDEC Group has disclosed climate-related information based on the TCFD (Task Force on Climate-related Financial Disclosures) since FY2022. In FY2025, we disclose climate-related information based on the IFRS (International Financial Reporting Standards) S2 that succeeds the TCFD recommendations.
Governance
The Environmental Strategy Committee, a specialist committee of the Sustainability Committee chaired by the CEO, plays a key role in our efforts to disclose climate-related financial information.
The Environmental Strategy Committee is composed of employees from various departments and meets every other month under the direction of the Senior Executive Officer in charge of the Environment. Decisions made by the Environmental Strategy Committee are discussed by the Sustainability Committee, reported to the Top Management Meeting for approval, then reported to the Board of Directors for final approval. Progress on the goals set in the medium-term management plan that started in FY2026 are reviewed at the meetings every other month, and response measures are discussed if things are not progressing as planned.
As part of our global governance structure, in FY2025 we established and launched a Global Environment Management System Steering Committee. The committee consists of members from IDEC head office, domestic group companies, and sites in USA, Suzhou, Taiwan, and Thailand, and each APEM site (France, UK and Tunisia) and holds quarterly Steering Committee meetings. The committee checks progress on environmental issues, shares information on topics such as waste, eco-friendly materials, and the introduction of recycled plastics, and discusses environmental issues.
Framework on the environmental governance
Departments responding to climate change and each role
| Name | Function | Number of Meeting |
| Board of Directors | Supervision of important matters related to climate change | 7 times per year* |
| Top Management Meeting | Decision making of important matters related to climate change | 8 times per year* |
| Sustainability Committee | Review of important items relating to climate change, and submission of those to the Top Management Meeting | Twice a year |
| Environmental Strategy Committee | Management of climate-related opportunities | 6 times per year |
| Risk Management Committee | Management of climate-related risks | Twice a year |
| Executive Officer in charge | Senior Executive Officer in charge of the environment | – |
| Responsible Department | Strategic Planning, Environmental Promotion, Sustainability Promotion, Accounting, HR&GA | – |
*Items submitted by the Sustainability Committee are decided on and supervised twice a year.
Climate Resilience
Although the Announced Pledges Scenario (APS) was removed from the key scenarios of the World Energy Outlook 2025 (WEO 2025) and the Current Policies Scenario (CPS) was reinstated—indicating a degree of stagnation in global climate change mitigation efforts—the IDEC Group’s selected scenarios for FY2027 remain the same as in the previous year. For transition risks, we adopted the WEO 2025 Stated Policies Scenario (STEPS, 2.6°C scenario) and the Net Zero Emissions Scenario (NZE, 1.5°C scenario). For physical risks, we adopted RCP2.6 (2°C scenario) and RCP8.5 (4°C scenario). These scenarios were used as references in formulating the IDEC Group’s world view.
Strategy
The IDEC Group regards environmental strategy as an integral part of its business strategy, and has incorporated eco-friendly products into its transition plan starting in FY2026 by introducing sales targets for eco-friendly products as KPIs. This will enable us to systematically improve the level of environmental contribution of our business activities.
We are also accelerating the development of our value chain with suppliers by setting the supply chain engagement ratio as a KPI and revising CSR procurement and green procurement guidelines. In addition, we are continuously engaged in various environmental initiatives, including reducing CO2 emissions to achieve carbon neutrality, reducing industrial waste, and increasing recycling rates.
These transition plan-related activities align with the IDEC Group's purpose of contributing to the realization of safety, ANSHIN, and well-being for people worldwide, as a harmonized approach to environmental considerations. In addition, ESG-related information, including disclosures aligned with IFRS S2, has been included in our Securities Report since FY2024. For details of our transition plan, please click here.
Strategy： Climate change risks and opportunities
Centered on the Environmental Strategy Committee, we identified climate-related risks and opportunities that are reasonably expected to affect the IDEC Group’s outlook, with reference to the climate-related risk and opportunity items in the CDP questionnaire, one of the global standards for environmental disclosure.
In doing so, we referenced and considered the applicability of the "Industry-based Guidance on implementing Climate-related Disclosures" (Electrical & Electronic Equipment) defined under the application guidance for IFRS-S2 Climate-related Disclosure Standards. Through this process, we identified transition risks and physical risks, assessed the impacts of climate-related risks and opportunities that are reasonably expected to occur over the short, medium, or long term, identified their potential financial impacts, and defined the relevant time horizons.
| Category | Item | |
|
Transition risks |
Market | ❶ Increase in raw material costs |
| ❷ Growing environmental awareness among customers and investors | ||
| Technology | ❸ Delay in relative to competitors in the transition of existing and new products to low-emission/low-carbon technologies | |
| Regulations | ❹Changes in regulations affecting existing products and services | |
|
Physical risks |
Urgent / chronic |
❺ Natural disasters (heavy rain, hail, snow/ice, cyclones, hurricanes, typhoons, floods, inundation, earthquakes) and temperature rise |
| Category | Item |
|
Resource efficiency |
❶ Demand for low-emission products and a diverse variety of new products and services through R&D and technological innovation |
| ❷ Shift to alternative materials / diversification / new technologies | |
|
Products and services |
❸ Transition to distributed energy generation and the creation of new markets |
Risk management
For each of the climate-related risks and opportunities identified by the Environmental Strategy Committee, we considered the likelihood of occurrence, degree of impact, and amount of potential financial impact, and compiled them into a risk and opportunity map. Previously, climate-related risks and opportunities were identified annually. Going forward, we plan to identify climate-related and nature-related risks and opportunities on an alternating biennial basis.
The identified results and risk items that have been assessed as important in our mapping are managed by referring to an integrated risk map for the IDEC Group. They are also reflected in the risks and opportunities associated with natural capital, one of our materialities.
The Environment Promotion Department lists environmental risk management items on an annual risk management table, specifies performance indicators, and reports the state of achievement to the Risk Monitoring Subcommittee.
Major Risk List
| Category | No. | Item | Potential Financial Impact / Timeframe | Anticipated Risks | IDEC Group's Responses | |
|
Tran- sition Risk |
Market | ❶ | Increase in raw material costs | B/E Short-term |
・Supply constraints and rising logistics costs caused by climate-related disasters and other events ・Increased procurement costs associated with switching to environmentally friendly materials ・Rising prices of parts and materials due to stricter regulations on materials with high environmental impact, suppliers' introduction of renewable energy, and investments in CO2 emission reduction ・Costs associated with switching to suppliers that meet ESG standards |
・Continuously deepen mutual understanding with suppliers and customers, consider and secure alternative suppliers, diversify logistics networks, and review business locations ・Reduce manufacturing costs in anticipation of medium- to long-term increases in raw material prices, systematically renew products, and reduce costs through the introduction of parts and materials ・Evaluate and consider alternative materials and implement multiple sourcing ・Consolidate components based on product consolidation ・Monitor regulations, prequalify alternative materials, and plan design changes ・Strengthen engagement with key suppliers and diversify sources of procurement by considering alternative suppliers ・Conduct GHG emissions surveys and risk assessments of suppliers |
| ❷ | Growing environmental awareness among customers and investors | C Medium-term |
・Declining demand and damage to corporate value due to growing criticism of products and initiatives with high environmental impact ・Increasing importance of services as a factor in purchasing decisions ・Rapid changes in trends within the industrial products sector ・Delays in recovering development investments due to uncertainty in demand forecasts ・Declining trust from stakeholders ・Increased workload arising from customer and investor demands concerning environmental initiatives and information disclosure ・Increasing customer requests for the submission of GHG emissions and carbon footprint data |
・Position environmental strategy as one of the priority areas in the medium- to long-term plan, establish environmentally related materiality KPIs, such as increasing the cumulative ratio of enhanced environmentally friendly products among new products, and monitor progress ・Continuously promote technological development related to the consideration and introduction of environmentally friendly packaging materials and components, and engage in regular dialogue with investors ・Conduct surveys of customer needs and review roadmaps and product portfolios based on the survey results ・Ensure transparency by enhancing integrated reports and web content and providing appropriate information disclosure through frameworks such as TCFD and CDP ・Promote operational efficiency, including the digital transformation of related operations ・Establish systems for conducting life cycle assessments and calculating carbon footprints |
||
| Technology | ❸ | Delay relative to competitors in transitioning existing and new products to low-emission and low-carbon technologies | C Long-term |
・Rapid emergence of new products that generate added value through environmental initiatives in the industrial products sector, and increasing customer demand for such products ・Enactment of new regulations on GHG emissions ・Increased risk of industrial equipment failure due to climate change ・Loss of sales opportunities and increased development costs associated with expanding operating temperature ranges |
・Systematically incorporate technologies that IDEC does not possess and integrate them with IDEC's core technologies through long-term collaboration with other companies ・Obtain information at an early stage through regular monitoring of regulatory developments and establish systems to reflect this information in business strategies and product development ・Enhance the durability of facilities and equipment to adapt to extreme weather and global warming caused by climate change ・Develop new designs and testing and certification plans to accommodate expanded operating temperature ranges |
|
| Regulation | ❹ | Changes in regulations affecting existing products and services | B/E Short-term |
・Accelerated growth in global momentum for climate change measures and CO2 emission reductions, including the introduction of carbon taxes by governments around the world ・Introduction of carbon pricing in Japan from 2028, with carbon taxes added to energy prices, resulting in increased manufacturing costs for raw materials ・Delays in responding to waste disposal requirements and raw material regulations ・Declining profitability due to stricter regulations and mandatory achievement of energy conservation targets ・Expansion of the scope of the EU Carbon Border Adjustment Mechanism (CBAM) |
・Plan and implement systematic upgrades to energy-saving equipment ・Reduce indirect costs through the procurement of low-carbon materials, collaboration with suppliers, energy conservation at factories, and efforts to improve capacity utilization ・Promote decarbonization initiatives through the introduction of internal carbon pricing (ICP) ・Invest in technologies necessary to reduce emissions and introduce systems for regularly managing emission reduction targets |
|
|
Physical Risk |
Acute / Chronic |
❺ | Natural disasters, including heavy rainfall, sleet, hail, snow and ice, cyclones, hurricanes, typhoons, floods, inundation, and earthquakes, as well as rising temperatures | D/E Short-term |
・Damage to buildings and equipment and suspension of operations due to localized heavy rainfall, cyclones, hurricanes, typhoons, and other events resulting from global warming ・Decline in production activities, including power supply shortages, equipment damage, and employees being unable to report to work, as well as supply chain disruptions due to the increasing frequency of disasters caused by extreme weather events around the world ・Spread of new viruses and other infectious diseases due to climate change ・Increased cooling costs and decreased productivity due to rising temperatures, and disruption of transportation networks due to prolonged cold waves ・Suspension of operations or decreased productivity due to restrictions on working environments caused by extreme heat, inundation, power outages, and other events |
・Enhance BCP measures to improve the company's resilience ・Repair vulnerable areas identified through hazard assessments, and implement facility measures such as waterproofing, drainage systems, and emergency power supplies ・Assess and review supply chain risks ・Prepare hazard maps for production sites, identify potential risks, and formulate disaster prevention plans tailored to the relevant regions ・Formulate recovery plans for each site and develop manuals for employee work procedures ・Diversify production bases for mainstay products ・Repair affected areas and install additional environmentally friendly equipment |
Major Opportunity List
| Category | No. | Item | Potential Financial Impact / Timeframe | Anticipated Opportunities | IDEC Group's Responses |
| Resource Efficiency |
❶ | Demand for low-emission products and a diverse variety of new products and services through R&D and technological innovation | B/A Medium-term |
・Increased demand for products that utilize recycled materials and facilitate recycling ・Increased demand for products with low emissions throughout the product life cycle ・Reduced development investment burden through the use of GX bonds and subsidies ・Increased orders resulting from the selection of environmentally friendly products by customers in their procurement activities ・Increased demand for energy-saving, remote monitoring, and automation solutions driven by customers' expanding decarbonization investments and climate change |
・Accelerate technological innovation taking environmental aspects of main product lines into account ・Research applications of easily recyclable materials to products, promote energy-saving design and the use of low-carbon materials, and formulate product roadmaps incorporating longer product life and ease of recycling ・Secure a first-mover advantage by accelerating investment in development ・Prioritize development investment in selected projects ・Introduce Life Cycle Assessments (LCA) to visualize the environmental impact of products, promote the development of environmentally friendly products, consider third-party assurance, and utilize the results in sales proposals ・Strengthen energy-saving, remote monitoring, and automation solutions by combining HMI, safety, automation, and sensing products |
| ❷ | Shift to alternative materials / diversification / new technologies | B Short- and Medium-term |
・Increased demand for new technological innovations to address various changes in working environments caused by climate change ・Diversification of working environments and development of unmanned and remote technologies due to the decline of the working-age population ・Popularization of robots in harsh and dangerous working environments ・Increased demand for automation systems driven by labor-saving needs |
・Shift away from extrapolations of existing technologies and focus on high-value-added products ・Engage in M&A and business alliances, and strengthen software and system-related technologies through recruitment and development of human resources ・Promote the incorporation of new technologies through partnerships and collaborations with other companies and academic institutions in order to respond to diverse needs ・Develop products utilizing HMI and sensing technologies and expand added value through solutions |
|
| Products and Services |
❸ | Transition to distributed energy generation and entry into associated new markets | A Long-term |
・Progress in transition measures in response to global climate change ・Increased demand arising from the launch of labor-saving technologies, energy-saving products, and energy conservation projects ・Opportunities for new products to enter the market and enhanced competitiveness through compliance with new international standards in the energy market |
・Enter new markets, engage in technological innovation, and secure competitive advantages ・Develop products utilizing HMI and sensing technologies and propose problem-solving solutions based on the needs of new markets ・Implement localization strategies that provide products and services tailored to regional characteristics ・Develop components for use in new businesses, including compliance with international standards and the development of proprietary technologies through measures such as obtaining patents |
| ❹ | Shifts in consumer preferences | A/B Medium-term |
・Increased customer demand for products with enhanced environmental performance and safety |
・Promote energy-saving, resource-saving, long-life and easily recyclable designs, as well as enhanced safety functions ・Improve the accuracy of market demand forecasts |
| Category | Anticipated Risks |
| Transition Risks | Significant increases in carbon taxes (carbon prices) and associated penalties |
| Stricter restrictions on energy use and increased costs associated with switching to renewable energy | |
| Introduction of environmental and forest taxes | |
| Increased raw material costs due to the transition to environmentally friendly materials | |
| Transition Opportunities | Development of carbon sequestration technologies on land and in the ocean |
| Expansion of carbon credit trading | |
| Expansion of product and solution businesses that contribute to the realization of a low-carbon society | |
| Expansion of energy-saving and recycling businesses | |
| Physical Risks | Increased frequency and severity of disasters |
| Increased precipitation |
| Category | Anticipated Risks |
| Transition Risks | Increased travel restrictions and regional disparities in regulations |
| Tighter electricity supply and demand due to extreme heat, and increased costs | |
| Transition Opportunities | Development and wider use of protective clothing for harsh environmental conditions, and changes in working styles |
| Increased automation using robots and growth of monitoring businesses, including temperature control, remote operation, and sensing | |
| Relaxation of carbon taxes and regulations | |
| Increased availability of energy options | |
| Growth of alternative food production businesses, including genetically modified foods | |
| Physical Risks | Supply chain disruptions caused by natural disasters |
| Significant increases in the frequency and severity of disasters | |
| Significant increases in precipitation and sea levels | |
| Water shortages and food crises caused by expanding desertification | |
| Reduced work efficiency, increased health risks, and inability to perform warehouse and outdoor work due to rising temperatures |
Metrics and targets
The IDEC Group aims to achieve carbon neutrality by 2050. To reduce CO2 emissions, in our sustainability KPIs we have set the targets of reducing Scope 1 and Scope 2 CO2 emissions by 35% by FY2028 and 50% by FY2031 (both compared to FY2020).
Regarding the internal carbon price (ICP), which was introduced in FY2023, we set the price at ¥14,000 per ton, unchanged from FY2026. While the impact of ICP on environmental investment decision-making is not yet sufficient, the Environmental Strategy Committee is working to raise awareness within the Group by introducing model cases of ICP utilization on the intranet.
Our return on carbon (ROC) profit ratio, which indicates how much CO2 was reduced and how efficiently profits were earned, has continued to decline in line with the decrease in operating profit since FY2024. However, in FY2026, ROC improved significantly, reflecting the increase in operating profit.
With the Performance Share Units (PSUs) introduced into the executive compensation system in FY2024, approximately 10% of compensation may be allocated to directors and executive officers in the form of common stock, with non-financial indicators being used in the calculation of PSUs. Non-financial indicators used in the calculation of PSUs include CO2 reduction ratio.
As for CO2 emissions in FY2026, Scope2 increased, reflecting the recovery in sales. CO2 emission intensity, Scope1 and Scope3 decreased compared with FY2025.
As for the initiatives in FY2026, the on-site solar power generation equipment introduced at Tatsuno Distribution Center has begun operation and contributed to reducing CO2 emissions. Going forward, we will continue our efforts to achieve our new sustainability KPIs and reduce CO₂ emissions by considering the global installation of solar power generation facilities, switching to electricity with lower emission factors, and achieving improved operating rates at each factory.
ROC ratio (unit: million yen/1000t-CO2）
FY2020:394/FY2021:328/FY2022:742/FY2023:1,244/FY2024:654/FY2025:427/FY2026:727
| Fiscal Year | Scope 1 | Scope 2 |
Scope 3 Upstream |
Scope 3 Downstream |
| FY2019 | 1,152 | 10,791 | - | - |
| FY2020 | 948 | 11,390 | - | - |
| FY2021 | 897 | 12,146 | - | - |
| FY2022 | 925 | 10,373 | 214,009 | 870,694 |
| FY2023 | 624 | 8,966 | 184,687 | 634,324 |
| FY2024 | 634 | 7,921 | 173,512 | 579,758 |
| FY2025 | 486 | 7,934 | 171,093 | 557,396 |
