LIXIL announced the endorsement of the Task Force on Climate-related Financial Disclosures (TCFD) in March 2019. Later, in January 2024, we announced our registration*¹ as a TNFD Early Adopter and our adoption of the Task Force on Nature-related Financial Disclosures (TNFD) recommended framework in our disclosures.

LIXIL Environmental Vision 2050 established Climate Change Mitigation and Adaptation, Water Sustainability, and Circular Economy as focus areas and material issues to realize our vision. LIXIL also prioritizes the Conservation of Biodiversity as a material issue, which serves as a common foundation for the three aforementioned focus areas.

We identify and assess the relationships between LIXIL's business activities and climate change, natural capital, and biodiversity, including dependencies and impacts, as well as the associated risks and opportunities, in connection with other material issues. The Board of Executive Officers discusses and approves targets and implementation plans related to LIXIL’s material issues, including environmental priorities, and the Board of Directors facilitates discussions for effective implementation and oversight.

*1 Registered in December 2023

Executive Summary:

1.Governance

LIXIL’s Board of Directors engages in discussions and oversight by receiving semi-annual reports from the Board of Executive Officers on the progress against targets and action plans related to material issues, including environmental priorities. Measures concerning risks and opportunities closely associated with climate change, natural capital, and biodiversity are deliberated by the Environmental Strategy Council, referred to by the Impact Strategy Committee, and the Executive Committee discusses and approves targets and action plans.

Reference: Governance>
Reference: Corporate Governance>

Recognizing the link between human rights and environmental issues, including natural capital and biodiversity loss, the LIXIL Human Rights Principles asserts our commitment to conducting business activities with a fundamental respect for human rights.
Furthermore, we actively engage in dialogue with stakeholders on human rights issues related to business activities, including employees, customers, procurement partners, shareholders, investors, and communities where our business sites are located.

Reference: Human Rights＞
LIXIL Human Rights Principles (A new page will open) PDF: 612KB＞
Reference: Stakeholder Engagement＞

2．Strategy

We conducted scenario analysis to identify the risks and opportunities related to climate change across our value chain, which could have particular significance to our business and society. We identified transition risks stemming from policy and regulatory changes and market shifts, as well as physical risks associated with extreme weather events, and assessed their financial impacts for both 1.5°C and 4°C scenarios. We understand the effects of climate change and other environmental issues associated with water, resource circularity, and biodiversity, and we are actively working to address these issues.

Assessment of Natural Capital and Biodiversity based on the LEAP Approach

We conducted an assessment based on the LEAP approach recommended by TNFD to identify dependencies, impacts, risks, and opportunities related to natural capital and biodiversity within our value chain.

Strategic Response

Key risks and opportunities identified through the TCFD scenario analysis and the LEAP approach recommended by TNFD, along with our strategies to respond to these challenges, are shown in the tables below: Strategies for Mitigating Significant Risks and Strategies for Leveraging Key Opportunities
For details:

Reference: Climate Change＞
Reference: Water Sustainability＞
Reference: Circular Economy＞

3．Processes for Managing Risks and Opportunities

We identified significant climate-, natural capital-, and biodiversity-related risks and opportunities, and assessed their impact on our business. We evaluate the significance of each risk and develop, implement, and monitor countermeasures at all levels of the organization to continuously improve and mitigate these risks.

Reference: Business Risks＞
Reference: Risk Management＞

4．Metrics and Targets

We set targets and manage metrics to evaluate and manage climate-related and nature-related dependencies, impacts, risks, and opportunities. Additionally, we have set mid-term targets to achieve the LIXIL Environmental Vision 2050, with metrics for climate- and nature-related risks and opportunities. We disclose our progress towards such metrics and targets.

Reference: Our Targets and Progress＞
Reference: ESG Data＞

Strategies for Mitigating Significant Risks

*1 Financial impact calculation is based on the assumption that a carbon tax (using IEA’s estimates of carbon prices considered necessary to achieve the 1.5ºC target) is imposed on Scope 1 and Scope 2 carbon emissions.
*2 Average loss is calculated based on the following steps: (1) identified production sites with flood risks (based solely on production site location; risk mitigation measures set forth in our business continuity plans (BCP) are not incorporated), using the World Resources Institute’s (WRI) Aqueduct Floods tool and hazard maps provided by Japanese municipalities; and (2) multiplied two factors: the number of days of stalled operations for sites in each inundation height zone indicated in Japan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) Manual for Economic Evaluation of Flood Control Investment; and the daily production volume of each site.
*3 Excluding end-user-phase emissions from indirect energy consumption of products, such as hot water supply during use.

Strategies for Leveraging Key Opportunities