Protecting and Conserving the Environment

Risks and Opportunities

Affluent consumer lifestyles contrast with the varied environmental problems that the planet now faces, including climate change, resource depletion, pollution and loss of biodiversity. Many countries are instituting policies to reduce CO₂ emissions to address global warming, and there is a growing debate about the need for a circular economy to make effective use of resources. Recognizing these global developments and the business impact of environmental issues, companies believe it is vital to contribute to efforts to address these issues in partnership with national and local governments, experts and other stakeholders.

Along with continual analysis of related global trends based on information from specialist institutions and government agencies, Canon designates business risks and opportunities by field, based on various estimates about the social impacts of rising temperatures.

In tackling climate change, we believe the critical approach to reduce risk while expanding opportunities involves mitigation by cumulative reduction of CO₂ emissions across product lifecycles alongside adaptation to physical risks.

Major Risks and Opportunities in Four Areas of Materiality, Impact on Business Activities

	Risks	Opportunities
Climate change	Transition risks: Stricter energy-efficiency regulation and associated compliance costs (products/sites) Increase in business costs from economic measures to reduce emissions (e.g., carbon tax) Physical risks: Negative impacts on operations caused by increasingly severe extreme weather events such as typhoons and floods Reputational risks: Worsening external evaluation due to insufficient information disclosure	Expanded opportunities for sale of energy-efficient products (low lifecycle emissions) Contribution to society-wide CO₂ emissions reductions through IT solutions and sales of energy-efficient industrial products Reduced energy costs through increased efficiency in production and transportation Expanded opportunities for use of renewable energy through lower associated costs Enhanced corporate image through proactive disclosure of activity results
Circular economy	Transition risks: Increased procurement costs of raw material due to resource constraints Stricter resource-efficiency regulation and associated compliance costs (products/services) Increased costs for collection and recycling of used products in various regions Physical risks: Impairment of stable water supply and negative impacts of operation due to extreme weather events Reputational risks: Damage to corporate image from slow transition to circular economy	Business cost reduction through improved resource efficiency Enhanced competitiveness through 3R design and development of advanced recycling technology Increased demand for remanufacturing products Enhanced corporate image through showcasing of our advanced approach to resource recycling
Hazardous substances	Increased chemical substance management costs due to strengthened and expanded regulations Suspension of production or disruption to parts supply chain due to serious noncompliance by suppliers Damage to corporate image due to poor regulatory compliance	Supplying safe products and maintaining competitiveness through more advanced chemical substance management Cost reduction by introducing more efficient management process across the supply chain Enhanced corporate image through contribution to international standardization, etc.
Biodiversity	Decreasing supply and price increase of printing paper due to dwindling forestry resources Restraints on business activities due to disturbed balance of local ecosystems	Applicable usage of our products and technologies to conservation of ecosystem Enhanced corporate image through contribution to local communities

Approach

In 2008, we formulated Action for Green as our environmental vision, expressing a goal to balance lifestyle enrichment with the need to exist in harmony with the environment. We have designated related material areas as “contributing to a low-carbon society,” “contributing to a circular economy,” “eliminating hazardous substances and preventing pollution” and “contributing to a society in harmony with nature.” We try to improve the lifecycle performance of Canon products as part of our business activities.

Contributing to a Low-Carbon Society

We take various initiatives, such as the improvement of energy efficiency and reduced CO₂ emissions across the whole product lifecycle, utilization of renewable energy sources in line with regional characteristics, and activities to support customers and society to reduce their environmental impact.
Contributing to a Circular Economy

Targeting a more advanced resource regeneration process, we are promoting more compact and lightweight products, remanufacturing, and the re-use or recycling of consumables. We are also striving to use water more efficiently and to promote recycling of wastes.
Eliminating Hazardous Substances and Preventing Pollution

We manage chemical substances by getting our suppliers to follow Canon’s green procurement standard. Also, we proactively establish frameworks to manage chemical substance information more effectively in the supply chain. Moreover, we reduce chemical substances used in our own production process and control related emissions.
Contributing to a Society in Harmony with Nature

Based on our Biodiversity Policy, we take initiatives to conserve ecosystems globally. A typical initiative is the Canon Bird Branch Project, which highlights the Cycle of Life through various activities focusing on wild birds. Moreover, based on our Basic Policy of the Procurement of Timber Products, we procure timber products from a sustainable supply chain.

KPI

Canon has adopted lifecycle CO₂ emissions as an integrated indicator to measure the progress achieved across environmental activities aimed at saving energy, conserving resources, and promoting recycling.

Overall target	An average improvement of 3% per year in the lifecycle CO₂ emissions improvement index per product
Achievement	Avg. improvement: 4.7% p.a. (2008–2019) (Cumulative improvement 40.0%)

Integrated Management Framework

Canon believes it is vital that environmental activities such as measures for climate change are integrated into the management of the business. For instance, the time frames for achieving environmental targets are consistent with those in business plans. In line with the Excellent Global Corporation Plan defining the company’s direction in five-year phases, Canon uses rolling three-year technology and product plans that are revised annually. This annual review includes considering the need to modify environmental targets. To tie business and environmental activities and provide a suitable indicator of progress, Canon has tracked the improvement in lifecycle CO₂ emissions per product using a standardized approach since 2008.

Link with Business Plans

The results of environmental activities by each part of the Canon Group (including each business, production subsidiary and sales company) are evaluated using a consolidated performance evaluation system. The system uses financial results as well as indicators for non-financial aspects such as environmental and CSR activities, so the latter are managed as one aspect of the business. The system has been operating since 2001. Indicators have been revised in line with broader changes.
By utilizing this basic framework to ensure environmental activities are systematically integrated into business management, we are achieving results by focusing on boosting the effectiveness of our measures aimed at achieving environmental targets.

Consolidated Performance Scoring (image)

TCFD-Recommended Disclosures

In line with disclosure recommendations by the Task Force on Climate-related Financial Disclosures (TCFD), the information on our activities, related to climate change, is provided in the following pages from “Sustainability Report 2020.”

Governance	P17、P42、P44～45
Risk Management	P16～17、P42～45、P102

Strategy	P16～17、P38～39、P43～44
Metrics and Targets	P17、P19～20、P39～40

Sustainability Report

Relationship with SDGs

Canon’s environmental initiatives in the four material areas of “contributing to a low-carbon society,” “contributing to a circular economy,” “eliminating hazardous substances and preventing pollution” and “contributing to a society in harmony with nature” contribute to achievement of SDGs as outlined below.