Complying with TNFD

Sojitz Group Stakeholders

Sojitz Group is engaged in a wide range of businesses globally. We have the opportunity to connect with many stakeholders through our business activities in different countries and regions around the world.
At Sojitz Group, we conduct business activities based on valued feedback from our stakeholders and place great importance on building relationships based on trust.

■ Human Rights Policy

Acting in accordance with the Sojitz Group Human Rights Policy, we are committed to respecting human rights as set out in the International Bill of Human Rights and the International Labour Organization’s (ILO) Declaration on Fundamental Principles and Rights at Work, and Sojitz conducts activities in accordance with the UN Guiding Principles on Business and Human Rights. The Sustainability Committee deliberates on policies and measures to address environmental and social risks, including human‑rights‑related risks, and implements decisions across the organization after reporting to the Management Committee and the Board of Directors. Through stakeholder dialogue, Sojitz Group carries out a process encompassing (i) policy formulation and communication, (ii) risk assessment, (iii) improvement and remedy, and (iv) disclosure of outcomes. We take prompt corrective action when risk assessments or grievance mechanisms reveal areas for improvement.

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■ Identification and Assessment of Nature‑related Issues

We assess risk and impacts related to natural capital (biodiversity and water) at Sojitz Corporation, Group company sites, and across the supply chain from upstream to downstream. Based on TNFD guidance, we used the ENCORE tool to identify businesses with high dependencies and impacts on natural capital　within our portfolio. We then applied the LEAP approach (Locate, Evaluate, Assess, Prepare) to conduct analysis of our marine products value chain, which is one of Sojitz’s key focus areas. In addition, we use the World Resources Institute’s Aqueduct tool for analyzing water-related risks to assets, such as floods and droughts.

■ Management Processes for Nature‑related Issues

The Sustainability Committee deliberates on policies to address environmental issues such as biodiversity, which are advanced under the supervision of the Board of Directors following reports to the Management Committee and the Board. We analyze and evaluate environmental and social risks, including biodiversity impacts in investment and loan deliberations, in order to confirm the strategic rationale of projects from a sustainability perspective and to resolve proposals on investment execution. The Investor Relations & Corporate Sustainability Department leads day‑to‑day implementation, executing directives from the Sustainability Committee and conducting sustainability reviews (covering biodiversity) of investment and loan proposals.

■ Integration into Enterprise Risk Management

Under our enterprise risk management (ERM) framework, the Internal Control Committee—with the president and CFO serving as members—coordinates with relevant internal committees to discuss and establish ERM policies, maintains a comprehensive view of risk, monitors risk management executed by business execution organizations (the first and second lines of risk management), and issues guidance to relevant parties. As the third line of defense, the Internal Audit Department independently verifies the risk management practices of the first and second lines. Enterprise‑level risks encompass environmental and social risks, which include natural capital. The Internal Control Committee regularly reports the status of these risks to the Management Committee, the Board of Directors, and the Audit and Supervisory Committee.

In accordance with TNFD guidance, we have confirmed Sojitz’s nature-related dependencies and impacts following the steps outlined in the diagram below.

Identifying Businesses with High Nature related Dependencies and Impacts as Targets for Analysis

In line with TNFD guidance, we used the analytics tool ENCORE* to first confirm the dependencies and possible impacts of the average business on natural capital. As a result of this ENCORE analysis, we identified 25 businesses with high dependencies and impacts in our portfolio. For both impacts and dependencies, the company showed high overall scores in the water category out of the various ecosystem components. TNFD’s LEAP approach (Locate, Evaluate, Assess, and Prepare) was used for analysis of Sojitz’s marine products value chain, which is one of the company’s key focus areas that includes businesses such as Sojitz Tuna Farm Takashima and marine product processer TRY Inc.

• ENCORE (Exploring Natural Capital Opportunities, Risk and Exposure):
  An analysis tool to help private enterprises understand the magnitude of their nature-related dependencies and impacts, which was jointly developed by the UN Environment Programme (UNEP) and The Natural Capital Finance Alliance (NCFA).

LEAP Analysis of Our Marine Products Value Chain

Locate: Identify the organization’s interface with nature
We identified priority areas with a significant risk of diminishing biodiversity or ecosystem service quality and the regional characteristics of these targets including Sojitz Tuna Farm Takashima’s in-house aquaculture, upstream feeding, and fry procurement, as well as TRY Inc. and Marine Foods’ domestic processing practices.

Evaluate: Assess dependencies and impacts on nature
We identified risk factors and points for analysis in priority regions identified through the Locate step. Nature-related conditions and regulations were investigated at Sojitz Tuna Farm Takashima, and meetings with each company were held to gain a better understanding based on identified risk factors and analysis.

Assess: Determine nature-related risks and opportunities
We identified risks and opportunities based on the findings of earlier LEAP steps in accordance with TNFD’s sector-specific guidelines. The high-priority risks and opportunities for Sojitz Group’s initiatives are compiled below.

Environmental Protection and Social Contribution Initiatives in Mine Development and Operating Businesses

In the development and operation of upstream resources such as mines, Sojitz Group utilizes proper environmental and social impact assessments to accurately evaluate potential damage to natural capital and impacts to ecosystems. We formulate business plans with mine management and monitoring plans, including plans for mine closures. Sojitz is committed to ensuring its business activities are in compliance with national and local laws and regulations and that the company obtains all necessary permits and licenses to give due consideration to environmental protection.

In the mine development stage, we seek to minimize impacts to biodiversity in designated regions by taking steps to reduce our environmental impact during the process. After transitioning to the operational stage, we conduct river relocation work to maintain waterflow to the mining area, conduct regular environmental impact monitoring, and implement preventative measures to mitigate risks in the event of an emergency. We carry out the necessary rehabilitation activities and other maintenance measures for all mines, both while in operation and during the mine closure process, to prevent the occurrence or expansion of damage-related risks to natural capital, reduce environmental impact, and promote environmental conservation.

At Sojitz’s open-cut coal mines in Australia such as Gregory Crinum and Meteor Downs South, we keep the topsoil that is removed for mining and use it after mining is completed to cover up the mined area. We then work to restore the land to its original condition by planting new native vegetation as part of the reclamation process. In addition, Sojitz secures habitats both on-site and in part of the surrounding area for rare flora and fauna such as squatter pigeons that could potentially be affected by mining activities. Sojitz conducts all conservation activities in accordance with related laws and regulations and in line with approved conservation plans.

Wood Procurement Policy Initiatives

Sojitz Group conducts business with approximately 1,500 wood-related suppliers. We select and conduct targeted wood surveys for over 80% of our total purchased wood supply using criteria that includes the supplier’s country risk level, the amount of wood purchased in terms of monetary value, and suppliers’ compliance with Sojitz Group policies. Surveys are conducted to access wood traceability and environmental and social considerations, and we also spread awareness of the Group’s policies among our business partners.

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Sojitz and applicable Sojitz Group companies have acquired certification from the Forest Stewardship Council (FSC), an NGO that certifies sustainable forest management, and we are committed to sustainable forest resource procurement practices.

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