Environment

Action on Climate Change

Strategy for Addressing Climate Change

Our analysis of the risks and opportunities from climate change to the pharmaceutical wholesale business—the VITAL KSK Group’s core business—was conducted using two scenarios (the 1.5°C and 4°C scenarios) published by the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA). As a Group whose business is based on logistics, we consider climate change to be one of our major sources of risk. For this reason, we have included climate change in our management strategy and are incorporating this into our risk management system.

Climate change-related risks and opportunities for pharmaceuticals wholesaling

Notes:

1. Definition of timescales: short term = up to 3 years; medium term = 4 to 10 years; and long term = 11 to 30 years

2. Definition of impacts: large = significant reduction or less expansion of business; medium = partial impact on business; small = little or no impact

   Item Scenario outline Risks and
opportunities
Time span1 Degree of impact2 Addressing risks and
opportunities
Impact of the transition to a decarbonized economy Risks Introduction of policies related to carbon taxes and GHG emissions
  • Operating and transportation costs associated with fossil fuels at business sites will increase as a result of carbon taxes being introduced.
  • Costs associated with switching to/introducing non-fluorocarbon (CFC-free) equipment will be incurred at business sites as a result of tougher GHG emission regulations.
  • Costs associated with switching to EVs, FCVs, and freezers with cold accumulators will be incurred as a result of tougher GHG emission regulations.
Short term to long term Large
  • Shift toward renewable energy, such as installing solar panels, switching to and subscribing to renewable energy power plans
  • Introducing HVs and EVs (hydrogen and electric vehicles)
  • Promoting studies of GHG emission reduction targets and emission reduction plans
  • Introducing energy-saving equipment (LEDs, renewable energy high-efficiency air conditioners, sensor-type lighting)
Renewable energy and energy-saving policy - Costs associated with switching to EVs, FCVs, and freezers with cold accumulators will be incurred as a result of tougher GHG emission regulations. Medium term to long term Large
Opportunities Reputation among customers and investors If emission reduction actions are required for shipping and other business operations, and if those actions are highly evaluated, then the number of customers and transactions will increase and the Group’s reputation among investors will improve. This will make it possible to raise funds and the Group’s stock price will rise. Medium term to long term Medium to large Proactive disclosure of details on climate change initiatives, including TCFD
Physical effects of climate change Risks Increasingly serious extreme weather
  • Damage to logistics centers, logistics bases, and branches could cause delivery delays and suspended business operations, resulting in a decrease in sales.
  • Damage to suppliers and disruptions in the supply chain could lead to delayed product shipments and lower sales.
  • Costs will be incurred for responding to disasters or damage to business sites.
  • Employees could be prevented from going to work, hindering business and leading to a decline in sales.
Short term to long term Large
  • Formulating business continuity plans (BCPs) that enable a stable supply of products, even in the event of a disaster
  • Introducing logistics centers with disaster countermeasures
  • Building a capillary distribution network for logistics
  • Introducing minimal operations
Opportunities Higher incidence of infectious diseases Increasing sales by responding quickly to a surge in demand for vaccines and medicines Medium term to long term Medium Formulating BCPs for a consistent supply of products, even with an increase in demand for medical supplies

Results of Scenario Analyses

1.5°C scenario

One of the risks identified for the wholesale pharmaceutical industry is that companies will be required to comply with carbon pricing systems, GHG emission regulations, as well as renewable energy and energy conservation policies. For this reason, we are working to use electric power from renewable energy sources and to introduce HVs, EVs, and energy-saving equipment.

At the same time, new opportunities include improving the Group’s reputation among customers and investors as a result of climate change initiatives and securing new revenue streams by expanding the GHG emissions trading system. To capitalize on these opportunities, in addition to Group-wide climate change initiatives and information disclosure, we are working on low-carbon forms of transportation and are considering promoting reduced GHG emissions as added value.

4°C scenario

Adverse weather conditions are expected in the future. Aware of this risk to the wholesale pharmaceutical industry, we are working to formulate BCPs and to develop disaster response programs for logistics centers, as we anticipate that facilities owned by the Group and our suppliers will be affected by wind and flood damage, resulting in delivery delays and suspended operations.

On the other hand, new opportunities include leveraging the strengths of the Group’s logistics system to enable the rapid, widespread supply of medical supplies when there is increased demand due to an outbreak of infectious diseases caused by climate change. To be ready, we will use the network we have developed to build a logistics system that is prepared for this type of emergency.

Indicators and Targets

At the same time, we intend to conform to the long-term goals set out in the Paris Agreement: holding the increase in the global average temperature to below 2°C above pre-industrial levels and working to limit the temperature increase to 1.5°C above pre-industrial levels. We will also do our best to meet the Japanese government’s goal of reducing GHG emissions to net zero, or realizing carbon neutrality, by 2050. So, we have set the target of achieving a 30% reduction in GHG emissions (compared with the FY2021 level) by FY2030, in a bid to achieve sustainability. Looking ahead, we are considering calculating Scope 3 emissions to track emissions for our entire supply chain.

The results of Scopes 1 and 2 GHG emissions at all Group business sites:

GHG emission reduction targets

2030年度目標として2021年度比30%削減、2050年度目標としてカーボンニュートラル(GHG排出ゼロ)を掲げる

Initiatives Contributing to the Reduction of Environmental Impact

Reducing GHG emissions from the Group’s operations

Among our initiatives that help reduce our environmental impact, we are working to reduce GHG emissions from shipping by optimizing our transportation network and logistics centers, while gradually replacing facilities and equipment with environmentally friendly alternatives.

  • Installing power consumption monitoring systems
  • Introducing LED lighting
  • Adding motion detectors and daylight sensors
  • Deploying HVs and EVs
  • Installing solar panels (at the Miyagi and Hyogo Logistics Centers)
  • Digitalizing for paperless operations
  • Using FSC-certified and recycled papers
  • Introducing high-efficiency air conditioning equipment
Recently introduced EV company vehicle
Solar panels on the roof of the Hyogo Logistics Center

Initiatives to reduce environmental impact at Group companies