Information Disclosure based on TNFD
The Taskforce on Nature-related Financial Disclosures (TNFD) is an initiative with the ultimate goal of shifting global financial flows from outcomes that harm nature to those that benefit it. Its aim is to develop a framework that enables private companies and financial institutions to assess and disclose risks and opportunities related to natural capital and biodiversity.
The TNFD calls for information disclosure based on four core pillars: Governance, Strategy, Risk Management, and Metrics and Targets.
Governance
Our sustainability management framework involves identifying key trends and discussing sustainability issues through the Corporate Sustainability Committee. The Board of Directors determines the priority issues and sets the direction for addressing them. These priorities and directions are then communicated to the executive side via the Management Committee and other, where specific initiatives and plans are discussed. The finalized plans are formulated through the Board of Directors, which also monitors and supervises their implementation.
The Corporate Sustainability Committee consists of the Chief Corporate Sustainability Officer (Chair), directors, Audit & Supervisory Board members, Corporate Sustainability Promotion Officer, division manager of the Corporate Planning SBU, and department manager of the Corporate Planning Department.
Our policy on natural capital and biodiversity is being considered as one of the key sustainability issues under our Corporate Sustainability Management Framework .
We are consolidating efforts to address the Group's overall environmental issues and are promoting initiatives related to natural capital and biodiversity under the same governance structure that we use to implement climate change measures.
Strategy
① Analysis for natural associations (TNFD scenario analysis)
The TIS INTEC Group is analyzing the relationship between itself and natural capital and biodiversity - specifically, how we depend on and impact them - by following the LEAP (Locate, Evaluate, Assess, Prepare) approach outlined in the TNFD disclosure framework.
In the Locate and Evaluate processes, we analyzed our points of interaction with nature, as well as dependencies and impacts, focusing on the business activities of our data centers and offices, which are part of the Group's direct operations. We also utilized the WWF's*1 Biodiversity Risk Filter (BRF*2) to identify and assess the ecosystem dependencies and the environmental impacts of the Group's business activities.
In the Assess process, based on the findings from the Locate and Evaluate stages, we held discussions, including with related departments, to examine what potential impacts might arise for the Group in the future, and we assessed associated risks. For the location and facility requirements of data centers, we conducted evaluations using regional hazard maps published by government agencies and the tier standards of the "Data Center Facility Standards."
*1 WWF (World Wildlife Fund): An international NGO and the world's largest conservation organization
*2 BRF (Biodiversity Risk Filter): Tool for screening risks related to natural capital and biodiversity
② Nature-related correlations
Based on the analysis of nature-related items in ① above, we identified the points of contact between the TIS INTEC Group's main businesses and nature, and visualized the correlation as shown in the figure below.
For items related to climate change (specifically, "atmosphere" and "landslides, fires, heatwaves, and tropical cyclones"), we disclose the financial impacts under "Disclosure Based on the TCFD Recommendations."
③ Nature-related risks and financial impacts
Based on the correlation between the TIS INTEC Group and natural capital shown in ② above, we identified nature-related risks and assessed their potential financial impact in fiscal 2031, ending March 31, 2031.
*1 Maximum annual financial impact of the cost of countermeasures or damage expected if the risk materializes
Negligible: Up to ¥10 million; Minor: ¥10 - 100 million; Moderate: ¥100 million - ¥1 billion; Major: ¥1 - 10 billion; Extreme: ¥10 billion or higher
As a result of our analysis, we found that out of the six identified risks, five were assessed as having a "negligible" or "low" impact, indicating that the Group's relationship with natural capital is relatively limited.
On the other hand, one risk was assessed as having a "medium" impact - specifically, the potential for environmental impact caused by heavy oil A leaks or waste from data centers.
To mitigate this risk, we are implementing the countermeasures listed in the table below. We will continue these measures while monitoring any changes in the risk over time.
Risk Management
Regarding the risk management process, in order to enable efficient risk analysis and review, we will, in principle, adopt the same cycle as that used for our climate change responses. This approach aims to integrate our efforts toward environmental issues as a whole.
In the data center business, which has a correlation with natural capital and biodiversity, the process of calculating the financial impact of the business starts with the responsible department conducting a simulation of the business scale looking ahead to fiscal 2031. Based on that information, the financial impact of each risk item will be deliberated within the TIS Energy Conservation Promotion Conference.
We will continuously manage risks by regularly reviewing the risk items and their financial impact.
Metrics and Targets
For the risks categorized as "extreme" or "large" in the table of "Nature-related Risks and Financial Impact," we intend to manage them by setting relevant metrics and targets. However, there are currently no applicable risks identified. Therefore, we will not set any specific nature-related targets or goals at this time but will consider doing so as necessary in the future.
Meanwhile, for risks assessed as having a "moderate" impact, we will continue implementing current countermeasures as outlined in the aforementioned table, while monitoring any changes in those risks.
Risks with a "minor" or "negligible" impact are considered unlikely to materialize. Nevertheless, we will continue examining changes in risk, including whether or not to conduct monitoring in the future.