Environment

Environmental Policy

The ALCONIX Group handles non-ferrous metals and other global resources. Accordingly, we view environmental issues as being among our most important managerial challenges. Over the medium to long term, we aim to become a provider of comprehensive solutions for the non-ferrous metals industry. To facilitate our achievement of this vision, we will contribute the realization of a circular economy by expanding our metal recycling business, which has been a core priority since our founding, and by establishing systems that enable the recovery, production, and wholesale of resources within our corporate group.

ALCONIX positions global environmental issues as one of its key management mandates, and reflects this awareness in all of its activities. It strongly endeavors to contribute to the conservation and improvement of the global environment to pass a healthy and rich Earth on to future generations. The following are the key principles that define its environmental policy:

ALCONIX's Environmental Policy

  • Reduction of our burden on the environment

    We contribute to the resolution of environmental issues such as global warming, ozone layer depletion, air pollution, water pollution, soil contamination, noise pollution, vibration, and noxious odors.

  • Promotion of business models focused on recycling and low energy consumption

    ALCONIX helps solve environmental issues by reusing and recycling resources currently threatened by depletion and by promoting the use of materials and products that contribute to the reduction of energy use.

  • Compliance with all environmental laws and regulations

    ALCONIX complies with all applicable environmental laws, regulations, and ordinances. In addition, we fulfill all environmental commitments resulting from any agreements or arrangements we have previously chosen to accept.

  • Enhancement of environment management processes and procedures

    We remain committed to establishing and maintaining environmental management processes and procedures while also striving to continuously improve our environmental management systems. Meanwhile, we will conduct educational and awareness-raising activities to ensure that all employees are deeply aware of global environmental issues before proceeding with corporate activities. Through efforts such as these, we will further enhance the impact of our global environmental preservation activities.

Initiatives Related to Climate Change

Efforts to Reduce Greenhouse Gas Emissions

After conducting an analysis of the Group’s greenhouse gas emissions, we found that electricity use comprises approximately 80% of the ALCONIX Group’s total emissions within Japan.
In light of these results, the ALCONIX Group is moving forward with efforts that will help create a carbon-neutral society. These efforts include switching to renewable energy sources for all offices and factories, cutting back on fossil fuel use by improving efficiency of production, and using carbon offsets to balance out residual emissions.

Greenhouse Gas Emissions

  • Figures are for FY2022.
  • “Tons of CO2” is based on energy use converted to a CO2 emission equivalent (greenhouse gas emissions from energy use converted to CO2 emissions).
  • CO2 emissions are for ALCONIX’s Head Office, branch offices, and domestic Group companies (15 companies in total), excluding overseas bases and factories. (The sum of energy use at all companies is based on information submitted by Group companies to ALCONIX.)
SUSTAINABLE DEVELOPMENT GOALS

Please refer to our corporate website for examples of business activities aimed at achieving the Sustainable Development Goals (SDGs).

Developmental Initiatives in Line with TCFD Recommendations

In recognition of the strong impact climate change bears upon the ALCONIX Group’s business, we have positioned climate change as a priority issue for management, analyzed its potential risks and opportunities, and developed countermeasures accordingly.
In line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), we performed a scenario analysis in fiscal 2021 and fully endorsed the recommendations in fiscal 2023. Although our initial scenario analysis focused on the dealings of the Head Office, we will broaden the scope of this analysis and gain a better understanding of our environmental impact going forward. To this end, we will newly include relevant departments in our discussion and analysis to ensure greater measurement accuracy and to elicit the appropriate countermeasures.

Greenhouse Gases and TCFD Working Group

Targets of Investigation

Business Scope:
The Group’s three key sectors, with the intentionof gradually expanding to all of theGroup’s businesses, which include ALCONIXCORPORATION, overseas businesses, andsubsidiaries

Information Disclosure and Issues:
Disclosure is organized into 11 items in fourcategories, in line with TCFD recommendations.Under this framework, we will refine ourfinancial impact assessments andcountermeasures.

Disclosure in Line with TCFD Recommendations

In recognition of the strong potential impact of climate change upon the ALCONIX Group, a group with global operations, we have positioned climate change as a priority issue under sustainability management. In today’s international society, conditions are becoming increasingly diverse and complex, and this includes escalating social and environmental issues, one of which is climate change. We believe that giving these issues the attention they deserve and conducting proactive corporate activities as a resolute response will not only help resolve these issues but also prompt the Group’s growth.
Accordingly, in 2003, we defined our Environmental Policy as our basic philosophy underpinning environmental conservation efforts, and in May 2022, we formulated our Basic Policy for Sustainability and identified our material issues (materiality), providing a foundation for improving medium- to long-term corporate value befitting a company listed on the Prime Market segment of the Tokyo Stock Exchange. In regard to TCFD recommendations, we conducted a scenario analysis in fiscal 2021 and fully endorsed the recommendations in fiscal 2023. We are currently disclosing information in line with the recommendations, and we will continue to provide details regarding the financial impact of climate change and our response going forward.

Governance

a) Framework for Monitoring Climate-Related Risks and Opportunities

The Sustainability Promotion Office reports to the Sustainability Committee regarding specific ESG-related plans and proposed measures, which are then reported to the Management Committee. The Board of Directors then receives reports from the Management Committee regarding any activities the committee has considered or deliberated. The Board of Directors weighs the pros and cons of these activities and monitors their progress.

b) Management’s Role in Assessing and Managing Climate-Related Risks and Opportunities

The Board of Directors has placed the Sustainability Committee, chaired by the CSO, in charge of climaterelated issues. The committee works with the Sustainability Promotion Office and the GHG/TCFD Working Group to assess climate-related issues and compile a list of possible countermeasures, which are then reported to the Management Committee and the Board of Directors.
The Board of Directors accepts reports from these committees regarding climate-related issues as well as updates on climate-related targets and engages in a full range of decision-making (which includes formulating business strategies, among other efforts), instruction, and supervision. The Board of Directors also ensures proper implementation of the Company’s PDCA cycle for handling climate-related issues, with full awareness of Supplementary Principle 2.3.1 of Japan’s Corporate Governance Code.

Risk Management

a) Process by Which Organizations Identify and Assess Risks

Climate-related risks collectively refer to risks related to current and new regulations that target the Group’s business activities, products and services, technology risks, legal risks, market risks, and a variety of physical risks as they pertain to climate. The ALCONIX Group’s business primarily involves the accumulation of a wide variety of smaller transactions, which makes it difficult to narrow down the scope of businesses in which we verify these risks. After repeated investigations, however, we have settled on risk-related verification concerning transactions in our three key sectors of automobiles, semiconductors, and electronic materials and parts. As we work to expand the scope of risk-related verification from transactions made through the Head Office to transactions made throughout the Group, the Sustainability Promotion Office and the GHG/TCFD Working Group will identify potential risks and opportunities and assess their financial impact. Regarding the latest climate change regulations, the Sustainability Promotion Office and the GHG/TCFD Working Group collect and confirm relevant information, such as international treaties, related laws, ordinances, corporate governance codes, and disclosure rules.

b) Process by Which Organizations Manage Climate-Related Risks

As a general rule, the Sustainability Promotion Office and the GHG/TCFD Working Group are in charge of formulating climate change risk response plans. The Sustainability Committee reports risk identification, assessment, and countermeasures to the Board of Directors for approval.

c) Position of Climate Change-Related Risks

The Company’s overall risk management is handled by the Risk Management Committee, with the Risk Management Department serving as its secretariat. With regard to risk identification and assessment, any risk considered to have a major potential impact on business is considered to be a serious risk. This designation is assigned based on the results of risk assessments conducted by ALCONIX CORPORATION, branch offices, and Group companies, taking into account social conditions and related physical risks such as disasters. Currently, the Risk Management Committee does not hold discussions regarding climate-related risks; however, in the future, it will work with the Sustainability Committee to conduct comprehensive investigations and discussions of climate-related risks, treating them as serious risks.

Strategy

a) Process for Identifying Short-, Medium-, and Long-Term Climate-Related Risks and Opportunities

Investigation Status of Short-, Medium-, and Long-Term Risks and Opportunities

The Sustainability Promotion Office, the GHG/TCFD Working Group, related departments, and affiliated companies will discuss risks and opportunities pertaining to climate-related issues to remain consistent with the timeline of Medium-Term Management Plan 2023, announced in May 2023.

Road Map

Process for Identifying Risks and Opportunities with a Significant Financial Impact on the Organization

When conducting a scenario analysis, the Sustainability Promotion Office and the GHG/TCFD Working Group, with the support of relevant departments within the Head Office, identify serious climate change-related risks and opportunities, assess their impact, and investigate possible countermeasures.
In the future, we will expand the scope of our scenario analysis beyond the three key sectors that comprise the majority of our business while also increasing accuracy.

b) Impact of Climate-Related Risks and Opportunities on Business, Strategic, and Financial Plans

c) Resilience of Strategies after Considering Multiple Climate-Related Scenarios

Representatives from the aforementioned relevant departments took part when considering business opportunities in fiscal 2022. Our scenario analysis, which focused on transactions within our three key sectors, confirmed the growth potential and resilience of our business and did not reveal any climate-related issues that would bear significant financial impact.

Indicators and Targets

a) Indicators Used to Assess Climate-Related Risks and Opportunities

Our management strategy is heavily weighted toward M&As, and as such, this approach could potentially lead to erratic increases in greenhouse gas emissions produced by the Group.
Therefore, the possibility of additional relevant KPIs that will aid us in increasing our corporate value and reducing effective greenhouse gas emissions are currently under consideration, such as the introduction rate of renewable energy, the investment amount for energy-saving equipment, and net sales for businesses that contribute to decarbonization.

b) Scope 1, 2, and 3 Greenhouse Gas Emissions

c) Targets Used to Manage Climate-Related Risks and Opportunities, and Performance in Meeting Targets

Basic ESG data is collected based on version 1.1 of the self-check table of environmental impacts provided in the Ministry of the Environment’s 2017 version of the Eco- Action 21 Guidelines. This data is then used to help solidify Group policies for climate change countermeasures and to perform self-checks on the Group’s environmental impact. Currently, the scope of this data includes ALCONIX’s Head Office, branch offices, and domestic Group companies (15 companies in total), excluding overseas bases and factories. Moreover, Scope 3 emissions have not yet been calculated. However, we are working to expand data collection beyond the three key sectors that comprise the majority of our business, which involves collecting overseas data, to begin calculations of Scope 3 emissions, and to improve the accuracy of our scenario analysis.

Breakdown of Efforts Toward Achieving Carbon Neutrality (100 = 18,284 t-CO2)

The TCFD framework

Climate change is an unclear phenomenon that is difficult to predict, so to identify the opportunities and risks related to climate change and how they are relevant to the Group, we conducted a scenario analysis based on the TCFD framework for automobile-related transactions, which is a key domain. Going forward, we will also conduct scenario analysis in other key domains and confirm risks and opportunities for the Group.

Analysis of effects of climate change

Scenario analysis of automotive transactions in the key automobile sector based on the TCFD framework For both scenarios, this analysis demonstrated that the increasing use of EVs will probably almost double the volume of automotive business at the ALCONIX Group between 2020 and 2030

Scenario analysis

Automotive transactions at ALCONIX (40%+ of non-consolidated business volume) Analysis of transactions involving electric vehicles (EVs) and internal combustion engine vehicles (ICE)

Scenarios used

IEA “Net Zero by 2050 Scenario” and “Stated Policies Scenario”

The Net Zero by 2050 Scenario assumes that net greenhouse gas emissions will fall to zero in 2050 (avg. temperature increases only 1.5℃)
The Stated Policies Scenario assumes that current environmental policies of countries worldwide will remain unchanged (avg. temperature increases 2.7℃)

Results of analysis

1.5℃ Scenario

  • ICE Vehicles transaction volume down 90% by 2050
  • EVs transaction volume up by five times
Transaction Volume Forecast (2020 = 1)

2.7℃ Scenario

  • ICE Vehicles transaction volume up 40% by 2050
  • EVs transaction volume up by four times
Transaction Volume Forecast (2020 = 1)

Both scenarios forecast a higher volume of business at ALCONIX and demonstrate the ALCONIX Group’s resilience to
the effects of climate change

Details Regarding the TCFD Scenario Analysis

The next steps

  • Increase the scenario analysis to cover the entire ALCONIX Group
  • Implement strategies for risks and opportunities identified by the scenario analysis
  • Consider analysis of scenarios for markets other than EVs

Participation in Initiatives

In 2022, we responded to the survey conducted by the CDP,* an international NGO that deals with environmental disclosure. In fiscal 2023, We responded to the climate change questionnaire and received scores.

An NGO that requires participating companies to disclose environmental information on behalf of institutional investors and purchasing companies worldwide. The CDP’s disclosure system is the international standard for environmental disclosure

Our Response to CDP Climate Change 2023 Questionnaire
(in Japanese)

CDP Climate Change 2023 Score

Contribution to the Achievement of a Recycling-Oriented Society

Our main products, aluminum and copper, are both familiar and indispensable components of people's daily lives. In recent years, they have also become increasingly important as lightweight materials essential for improving the fuel efficiency of automobiles and facilitating the shift toward electric vehicles. As a designer that anticipates the emergence of new industries while remaining committed to developing new businesses and establishing a strong presence, ALCONIX recognizes the vital importance of providing stable supplies of both aluminum and copper. At the same time, we view reducing the environmental impact of our refining processes as one of our core responsibilities and as an effective means of contributing to society.

ALCONIX’s Commitment to Aluminum and Copper Recycling

We have a certain responsibility as a group that handles aluminum and copper, two valuable natural resources. To fulfill this responsibility, we are actively involved in activities to recycle and make more efficient use of these resources. Aluminum and copper are both crucial for reducing automobile weight, which helps reduce their environmental impact, and are also necessary for producing semiconductors and electronic material parts and products, which are growing in demand.
Aluminum in particular will be an important material for a variety of purposes owing to its strong and lightweight nature. On the other hand, Japan, which largely depends on the import of these materials from abroad, is experiencing a problem securing a stable supply of aluminum and copper to meet its demand, due to environmental and resource protection efforts that have resulted in a drop in the volume of aluminum and copper mined with each passing year, as well as a decline in the quality of ore. The solution to this problem, which is turning heads, is the reuse of aluminum and copper scrap.

Contributing to Society through Recycling

Melting and recycling metal scrap produces approximately 1/30 of the CO2 emissions compared to the process of extracting and refining new metals from mineral bauxite, thus greatly reducing environmental load. We also sell the fuel used in the recycling process as recycled heavy oil, which contributes to the sustain able use of resources both in terms of reducing CO2 emissions and reducing waste. Another development in recent years has been the use of recycled materials in delivery boxes. We recognize that this will reduce transportation costs and CO2 emissions generated by redelivery, and will be a very significant and indispensable initiative for the coming era.

ALCONIX’s Vision for the Future

The need to recycle non-ferrous metals, a depletable resource, is expected to grow as decarbonization and the implementation of IoT-based technologies become more prevalent. This need will be especially important in Japan, which imports a large portion of its resources. Accordingly, as it aims to jointly generate both social and economic value, ALCONIX has resolved to establish a sustainable supply of non-ferrous metals by leveraging the knowledge and experience it has accumulated through non-ferrous metal recycling operations it has undertaken and developed since its founding. Specifically, the ALCONIX Group will aim to achieve a "closed recycling system" through which resources are recycled internally. To build this system, we will establish an integrated process that spans from the production of non-ferrous metal materials and components to their wholesale and eventual recovery through recycling operations. As we aim to construct this system, we will step up "complementary investment," through which we expand relevant capabilities by conducting M&A and capital investment, and incorporate new technologies via the application of our CVC fund. By further expanding the scope of our resource recycling operations, we will facilitate the construction of a recycling-oriented economy that benefits society at large.

Achieving Our Vision with a Sustainable and Comprehensive Resource Supply Network for the Group

Our Vision for Manufacturing the EV Business