TCFD



Basic Approach

In May 2019, Mazda declared its support for the recommendations from the Task Force on Climate-related Financial Disclosures (TCFD)*1 and joined the TCFD Consortium,*2 showing its commitment to strengthening its efforts to address climate change. In addition, in January 2021, the Company announced that it would endeavor to achieve carbon neutrality throughout the entire supply chain by 2050. Mazda’s major initiatives to address climate change in accordance with the TCFD recommendations*3 are as follows.

 

*1 The TCFD is a private-sector organization set up by the Financial Stability Board in response to a request from the G20 Finance Ministers and Central Bank Governors.

*2 The TCFD Consortium is an organization established in Japan for the purpose of holding discussions on effective corporate information disclosure related to climate change and efforts for tying disclosed information to appropriate investment decision-making by financial institutions and other entities. The Ministry of Economy, Trade and Industry, the Financial Services Agency, and the Ministry of the Environment participate in the consortium as observers.

*3 For more information, please refer to the following website. TCFD Consortium (External link)

Governance

a) Board’s oversight of climate-related risks and opportunities

b) Management’s role in assessing and managing climate-related risks and opportunities

Transition Risk

Taking on the challenge of achieving carbon neutrality by 2050, Mazda has assigned a director to oversee its decarbonization strategy and executive officers to be in charge of carbon neutrality. In 2021, Mazda formed a specialized team (hereinafter referred to as specialized team) dedicated to carbon neutrality matters. At its head is the Corporate Strategy Office working closely with the specialized team composed of members involved in products, manufacturing, purchasing, logistics, sales and recycling. Under the supervision of the officers in charge of decarbonization, the Corporate Strategy Office has been leading the team, which formulated and promoted strategies from a Life Cycle Assessment (LCA) perspective for responding to risks and opportunities selected based on Intergovernmental Panel on Climate Change (IPCC) and International Energy Agency (IEA) scenarios and trends, while also considering the investment and expenses required for such initiatives and response schedules.

In April 2023, some of the functions of Corporate Strategy Office and Product Strategy Division were integrated to newly established Corporate Strategy Division, which has a new department to promote CN strategy. Under the leadership of this department, existing specialized team will formulate strategies in respective areas of expertise of its members and implement plans based on the strategies that have been formulated so far. In addition, in order to promote the execution of plans throughout the Company, we have started a management approach that integrates CN initiatives into the existing ISO 14001 Environmental Management System (EMS). In the area of products and technologies, the newly established department in Corporate Strategy Division will promote planning consistent with company-wide strategies. The CN strategies are deliberated* over at the Executive Committee Meetings and the Board of Directors attended by the Representative Directors and President. Also, issues concerning climate change and other sustainability-related matters are reported to the Board of Directors in a timely and appropriate manner.

 

* Carbon neutrality strategies had been reported to and discussed at Board of Directors’ meetings five times as of June, 2024.

Physical Risks

Measures for responding to torrential rains, an acute physical risk associated with climate change, is managed as part of our business continuity plan (BCP) through our emergency risk management structure. In addition, in response to concerns about storm surges and water depletion, which are chronic physical risks, the Company is promoting reinforcement of seawall infrastructure and water resources conservation efforts as part of the activities of specialized departments.

<Transition Risk>

Management System to promote Carbon Neutrality

<Physical Risk>

Emergency Risk Management Structure

For incidents that fall outside the scope of existing risk management organizations and require a coordinated interdepartmental response, the executive officer in charge of risk management will consult with the president, establish an emergency response taskforce, and appoint a general manager for this taskforce.

Strategy

a) Climate-related risks and opportunities identified over the short, medium, and long term

b) Impact of climate related risks and opportunities on business, strategy, and financial planning

c) Resilience of strategy taking into consideration climate-related scenario

Based on IPCC and IEA scenarios, policy and regulatory trends, and industry trends, Mazda formulated a scenario based on its own assumptions and identified the following major opportunities and risks.

Major Risks and Opportunities

Transition Risks Policy and Legal

• Stricter regulations on fuel economy and exhaust gas emissions and carbon pricing, including introduction of carbon tax

Technology

• Increase in resources to develop electrification technologies, including electric drive system or batteries

Market

• Rise in raw material prices for electrification and weight reduction and tight procurement situation for  semiconductor components

• Energy price spikes and supply instability due to tight fossil fuel and renewable energy supplies caused by political conditions and market forces

Reputation • Implications on ESG-minded investment decisions by investors
Physical Risks Acute • Damage by torrential rain, production halts caused by supply chain disruptions, and health hazards caused by heat waves
Chronic • Increasing impact of production halts due to more severe and frequent natural disasters and higher frequency of high tide caused by rising sea levels, water resource depletion and rising prices of water necessary for operations, and spread of tropical diseases
Opportunities Resource Efficiency • Efficient use of raw materials through thorough material recycling
Energy Resource

• Stable reception of carbon-neutral electricity by promoting the expansion of demand and supply of electricity

• Diverse selection of renewable energy sources

Products, Services, and Markets

• Deployment of products that suit each region through building block concept and multi-solution approach

• Diversification of products that adapt to next-generation automobile fuels (alternative fuels such as biofuels, synthetic fuels, etc.)

• Expansion of market opportunities through deployment of products that suit each region and diversification of products

Specific Initiatives

Mazda is implementing the following initiatives as part of its efforts to seize opportunities and avoid, or minimiza the impact of, the risks it faces.

<Seizing of Opportunities Transition Risk Avoidance>

【Products】

■ Driving Development of Electrification Technology

During a period of transition to EVs up to around 2030, we see our multi-solution approach to be effective. We offer a variety of solutions, including internal combustion engines, electrification technologies and alternative fuels, so we can provide appropriate combinations that suit power generation conditions in each region. On the other hand, we expect Mazda’s EV ratio in our global sales in 2030 to be in 25 to 40%, considering each country’s electrification policies or more stringent regulations. Recently, various variable factors became apparent, such as regulatory tendencies, energy crises, and power shortages. Furthermore, it is extremely uncertain how each of these will develop in the future. As it allows us to be flexible and adaptive to coming changes, such as changes in regulations, consumer needs and acceptance levels, and infrastructure development, the following three-phase electrification approach will work for this uncertain situation. We will proceed with electrification step by step with the cooperation of our partner companies.*1

 

Phase 1 (2022–2024): Enhance technology development for the age of electrification

By fully using our technology assets of multiple electrification technology, we will launch attractive products while also meeting market regulations. We will enhance our earning power with the introduction of large products which is already launched, offering plug-in hybrids and diesel engines with a mild hybrid system that achieve both environmental and driving performance. In addition, we will develop technologies for EV in a full-fledged manner.

 

Phase 2 (2025–2027): Transition to electrification

In order to reduce CO₂ by improving fuel economy in the phase of transition to EVs, we will introduce new hybrids, further refining our multi-electrification technologies. In addition to introducing vehicles dedicated to EVs in China where electrification is advancing, we will also begin launching EVs globally. As for internal combustion engines, we will boost efficiency to the utmost in preparation of the application of technology to further improve thermal efficiency and the possibility of the future use of renewable fuels.

 

Phase 3 (2028–2030): Full-scale launch of EVs

Mazda moves forward in our efforts for the full-fledged launch of pure EV models, we will also consider the possibilities, including investing in battery production based on the extent of changes in the external environment and progress in strengthening our financial foundation.

【Manufacturing】

Mazda committed to making Mazda factories globally go carbon neutral by 2035 as a milestone, keeping an eye on our goal of making our whole supply chain carbon neutral by 2050. To realize CN, we are working on the following three pillars at Mazda’s plants and operational sites in Japan*2, which account for approximately 75% of its global total CO₂ emissions, as the first step: (1) Energy conservation, (2) Shifting to renewable energy, and (3) Introducing carbon neutral fuels. Furthermore, we will capitalize on these initiatives conducted in Japan and use them as a basis to implement the optimal approach for each facility outside Japan.

(1) Energy conservation

Mazda has long continued to implement energy conservation activities throughout the entire Mazda Group in Japan by introducing low CO₂ emission manufacturing technologies and constantly improving them on a daily basis. In addition to continue these activities, we will expand and promote such activities to achieve CN goals from a medium-to long-term perspective throughout the entire company, including not only manufacturing areas but also indirect departments. Furthermore, when introducing new facilities or renewal facilities in the manufacturing areas, we will be introducing internal carbon pricing*3 as one of our capital investment criteria. As a result, investment decisions will take the future price of carbon trading into account and prioritize investments with a major contribution to CO₂ emissions reduction.

(2) Shifting to Renewable Energy

■ Expansion of Renewable Electricity 

In November 2021, Mazda participated in as secretariat company and began activities a part of the Carbon Neutral Electricity Promotion Subcommittee, which was set up as one of the special subcommittees under the Chugoku Region Carbon Neutrality Promotion Council, established by the Chugoku Economic Federation. In cooperation with member partners, we have formulated a roadmap to expand the supply and demand since FY March 2023. From this fiscal year, related partners will collaborate and work toward the demonstration and implementation stage to realize the roadmap. As an example of the expansion of renewable electricity, in March 2023, we signed an offsite corporate power purchase agreement (PPA)*4 using solar power generation with local companies. We will continue to expand our PPA in the Chugoku region, also expand our PPA in other regions, then we promote purchasing of electricity derived from non-fossil power sources, such as renewable energy, from electric power companies.                                     

Initiatives in Chugoku region

■ Procuring CN Energy 

In order to promote the phase-out of coal-fired power generation, we participate in "Council for utilizing Namikata Terminal as a Hub for introducing Fuel Ammonia" in the adjacent Shikoku region, and will study the procurement of ammonia. In the future, we plan to use this ammonia to convert the fuel from coal to ammonia proprietary fuel at the power generation facilities that supply electricity and steam on our premises.

(3) Introducing Carbon-Neutral Fuels

■Efforts for the Spread of Next-generation Bio-liquid Fuels 

In 2018, the Hiroshima Council of Automotive Industry-Academia-Government, in which the Company participates, and Euglena Co., Ltd. jointly launched a “Your Green Fuel” project, which established an entire biofuel value chain - from material manufacture and supply to the use of next-generation biodiesel fuels - as a “local production for local consumption model” within the Hiroshima area. Since 2020, as we confirmed that the above mentioned fuel had same performance as petroleum-derived diesel fuel, we have continued demonstration tests with its part of company-owned vehicles equipped with diesel engine. Furthermore we are increasing such tests of next-generation biodiesel fuels through various activities, including participation in the Super Endurance Race, one of the motorsports in Japan, since 2021, and operation of buses to transport Sanfrecce Hiroshima players in home games since 2022. In addition, we have decided to subscribe to unsecured convertible bonds to be issued by Euglena Co., Ltd (“Euglena”). in January 2023, and we will support Euglena's biofuels business that aims to expand the use of next-generation biofuels through the subscription. With a view to procuring next-generation biofuels to be manufactured in this project, Mazda will consider using them for logistics and other utilities in Mazda’s site. In cases where generating power from alternative fuel sources proves difficult, we will make use of J-credits to promote forestry preservation and re-forestry to absorb CO₂ in the Chugoku region and other regions.

By promoting the aforementioned three pillars, we aim to reduce emissions of CO₂ and other greenhouse gases from Mazda’s domestic factories and operating sites by 69% in FY March 2031, in comparison to FY March 2014, as an interim target for achieving carbon neutrality at our own factories globally by 2035. We also plan to achieve a non-fossil fuel-sourced electricity usage rate of 75% by FY March 2031.

【Supply Chain】

■Reduction of CO₂ Emissions with Suppliers

After explaining the challenges of CN to major business partners in Japan and overseas and promoting their understanding, we began collecting data on CO₂ emissions by Tier 1 suppliers in Scope 1 & 2 including logistics for delivery to Mazda since 2021. Given the current level of CO₂ emissions and the difficulty of reducing them vary depending on the types of suppliers’ businesses, we are working with them to draw a roadmap to achieve reduction targets. In addition, we established a new award system to honor the efforts of our suppliers since 2023.

<Physical Risk Avoidance and Minimization>

■Establishment of System for Rapid Response to Torrential Rains

As part of our BCP, we are continuously improving our response in both tangible and intangible aspects in anticipation of natural disasters. On tangible aspect, we are taking a planned approach in reinforcing buildings, equipment, seawalls, etc., and on intangible aspect, promoting the introduction of a safety confirmation system, the development of an emergency contact network, and the construction of self-disaster-defense teams organization. In addition, for initial disaster response, we conduct joint drills with public fire departments and drills conducted by the in-house self-disaster-defense teams on its own.

 

In the supply chain, we have introduced the supply chain risk management system called "SCR (Supply Chain Resiliency) Keeper" in cooperation with our business partners to speed up initial response by quickly grasping on-site information in the event of a disaster. In addition, in the logistics network, we have established an emergency communication system with transportation companies and have established a system to minimize the impact on operations while coordinating with the production system based on the content of measures according to the impact ranking of typhoons and heavy rains.
 

■Future-Oriented Measures for Maintaining Seawalls

Our major plants in Japan (Hiroshima and Hofu) face the sea and rivers, therefore reinforcements and maintenance work of seawalls are carried out every year. In addition, we have completed the construction of seawalls for protection against flooding damages caused by the highest tide level and maximum tsunami height estimated by the prefecture in the event of Nankai Trough earthquake.

 

■Water Resource Conservation in Preparation for Water Resources Depletion

We promote activities to eliminate wasteful water use and circulate water resources by treating used water so that it is the same quality as it was taken from nature. In order to implement its initiative of water resource reuse and recycling at a domestic model plant*5 by 2030. We promote the further use of rainwater and recycled water as well.

*1 About cooperation of our partner companies; 

  • For the sustainable local economic growth and the successful transformation of electrification, Mazda has joined together with local companies to establish a joint venture company for the purpose of developing the high-efficiency production technology required for the manufacture of electric drive units as well as for the production and supply of those units, as a first step of the development for electrification technologies of related components and the evolution entire supply chain in the Chugoku region.
  • Regarding the core parts of an electric drive unit such as inverters containing SiC power semiconductors and motor, Mazda has also established a joint venture with several partner companies in possession of high-quality technology.
  • Regarding the batteries, we will procure them from our partner companies while promoting research and development of our advanced battery technologies adopted by the Green Innovation Fund Project at our facilities.

*2 The three pillars of initiatives will be promoted at a total of 17 sites of operation in Japan, including Mazda’s headquarters and main factory (Aki-gun and Hiroshima City, Hiroshima Prefecture), Hofu plant (Hofu City, Yamaguchi Prefecture), and Miyoshi Plant (Miyoshi City, Hiroshima Prefecture).

*3 Internal carbon pricing is a framework for promoting low-carbon investment and measures.

*4 A PPA is a long-term contract for the purchase of electric power under which a company producing electricity through solar power generation facilities agrees to provide power generated using those facilities to a designated user or users based in a location separate from the solar power generation facilities, supplying that power to them via an electric power transmission network operated by an electric power retailer.

*5 The model plant is a pilot plant where new measures are tested ahead of implementation at other facilities.

Risk Management

a) Process for identifying and assessing climate-related risks

b) Process for managing climate-related risks

c) Status of integration of climate-related risk management processes into overall risk management 

Transition Risks

Mazda has identified major risks and opportunities based on scenarios from the IPCC and the IEA, government policies, regulatory and industry trends. A specialist team is implementing a biweekly risk identification and assessment process while sharing the progress of initiatives and information on identified issues in relation to the identified major opportunities and risks. Strategies discussed during the meeting are deliberated over at the Executive Committee Meetings and the board of Directors attended by the Representative Director and President. Mazda also shares climate-related information with its suppliers periodically through a shared platform.

Physical Risks

  •  We have established a system for rapid response to torrential rain and other disasters, and have been managing them as part of our BCP in the context of an emergency risk management system. In addition to these efforts, as torrential rain disasters have become more severe and frequent in recent years, we are enhancing our ability to collect weather forecasts and making it possible to make quick disaster prevention decisions based on a predetermined time schedule. In addition, we review our response every heavy rain season to improve our response capabilities.
  • In response to concerns about storm surges and water resources depletion, we are promoting reinforcement of seawall infrastructure and water conservation efforts in the practice of specialized departments.
  • In response to the heat waves that have become more frequent in recent years, we regularly measure and evaluate the heat environment of each workplace as part of employee health management, which leads to the maintenance and management of appropriate air conditioning equipment. In addition, we use heat insulating materials and heat-insulating paints in our buildings as environmentally friendly measures. 
  • As a measure against the spread of the epidemic, we developed a working rule to assume that employees and other families living with them become infected.

Metrics and Targets

a) Metrics used to assess climate related risks and opportunities

b) Scope 1, Scope 2, and Scope 3 greenhouse gas (GHG) emissions and the related risks 

c) Targets and performance in managing climate-related risks and opportunities

Global Warming Response

To take on the challenge of achieving carbon neutrality throughout our entire supply chain, it will be essential to understand the GHG emissions of Scope 1, 2 and 3. In addition, it is possible that more stringent carbon pricing, including the introduction of carbon taxes, could impact finances. In order to run eco-friendly operations more effectively throughout the Mazda Group and its entire supply chain, we have started the management to integrate CN into the existing ISO 14001 Environmental Management System (EMS). In addition, we ask our suppliers to provide us with CO₂ emission data in Scope 1 & 2 as well as logistics at the time of delivery to us (Scope 3 Category 1 for Mazda) every year, and set targets together with them to manage the results.

In addition, we officially participated in GX League* sponsored by the Ministry of Economy, Trade and Industry, in May 2023. We will show the Mazda’s non-consolidated reduction targets, and disclose its progress on GX dashboard.

 

■ Environmental data (Greenhouse Gas Emissions of Scope 1, Scope 2, and Scope 3 for data from FY March 2024) 

 

* The GX League is an organization that aims to provide value for social structural reform toward carbon neutrality together with member companies through the four initiatives of voluntary emission trading (implementation), market rule formation (co-creation), business opportunity creation (dialogue), and “GX studios” (exchange). “GX” is an abbreviation for “green transformation.”

 

Conservation of Water Resources

Water is essential in automobile manufacturing processes such as cooling (e.g. cooling furnaces in casting), dilution (diluting the mother liquor used for cutting and cleaning in the machining process), and cleaning (e.g. cleaning of vehicle bodies in the painting process). In preparation for potential risks and concerns in future such as water resources depletion and rising water prices, Mazda aims to realize initiatives for the recycling and circulation of water resources at model plants*9 in Japan by 2030. By 2050, Mazda aims to realize this initiative in our global production processes.

 

■ Environmental data (Water Consumption for data from FY March 2024)

Major Metrics and Targets Global Warming

<Global Warming Response>

Products

Target: Achieving carbon neutrality by 2050
Medium-term metrics in 2030: EV ratio (Expecting 100% of Mazda global sales vehicles will be electrified and the EV ratio will be 25–40% in 2030)

Manufacturing

Target: Achieving carbon neutrality at Mazda’s global factories by 2035
(Interim target in FY 2030: Reduce Mazda's non-consolidated CO₂ emissions by 69% compared to 2013)
Metrics: Factory's decarbonization progress ratio
<Conservation of Water Resources>

Manufacturing

Target: Reducing water intake by entire Mazda Group companies in Japan by 38% in 2030 compared with 2013
Metrics: Water intake reduction ratio
<Scope1 & 2 Target of Mazda’s own sights (Registered as GX League)>
Fiscal year Emissions (1,000 ton) Reduction ratio (%)
2013 (base year) 854 -
2025 625 ▲27
2030 266 ▲69
<Addressing Global Warming: Product Area>

<Addressing Global Warming: Manufacturing Area>

Conservation of Water Resources

”Water withdrawal amount by Mazda Group companies in Japan”