Environment
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Disclosure Based on TCFD Recommendations

Canon regards "protection and conservation of the global environment," including response to climate change, as one of the most important management issues (materiality). In order to solve issues, not only in our own business activities such as development, production and sales, but also in manufacturing raw materials and parts at suppliers, transportation to dealers, customer use, disposal, and recycling of products, we are working on reducing our environmental impact at each stage of the life cycle.

Canon has been working to reduce CO2 emissions throughout the entire product lifecycle with the aim of achieving net zero emission by 2050. This improvement is attributable to our having undertaken various environmental activities that include developing smaller and lighter products, streamlining logistics operations and engaging in energy-saving initiative at production sites, developing products that are energy-efficient and recycling products. We will steadily reduce CO2 emissions by steadily achieving the "Canon Group Medium-Term Environmental Target", "Improvement index per life cycle CO2 product, with an average annual improvement of 3%."

Moreover, we endorse the recommendations of the Task Force on Climate Related Financial Information (TCFD), established by the Financial Stability Board, and we will continue to disclose recommended information through sustainability reports and websites.

Governance

Environmental targets, including climate change responses, are approved by the Chairman & CEO. Medium-term and long-term plans are formulated by the Sustainability Headquarters, and approved by the CEO after discussions among and other executives. The Sustainability Headquarters plays a central role in the group-wide efforts to achievethese targets, board directors.

Our company has also established a Risk Management Committee based on a resolution of the Board of Directors. Serious risks related to environmental laws and regulations and natural disasters are considered by the Risk Management Committee.

Strategy

Based on information from specialized institutions and government agencies, Canon conducts numerical simulations of lifecycle CO2 reductions using the climate change scenarios of the Intergovernmental Panel on Climate Change (IPCC), identifies business risks and opportunities, and formulates medium-term to long-term strategies. * See page 30 for details of risks and opportunities identified.

In order to reduce risks and expand opportunities, we recognize the importance of both mitigating CO2 emissions and adapting to physical risks from the perspective of entire product lifecycles, and we have formulated and implemented action plans accordingly. We are also working to reduce CO2 emissions through efforts to realize a circular economy. For example, remanufacturing of printers can reduce CO2 emissions from the procurement of new raw materials and parts processing. In the closed-loop recycling of ink and toner cartridges, plastic is pelletized from collected cartridges and reused as raw material, thus reducing CO2 emissions from procurement and transportation of new raw materials.

Major Climate-related Risks and Opportunities

Risks and opportunities Financial impact Action
Risks Transition risks: Stricter energy-efficiency regulation and associated compliance costs (products/sites) High
  • Achievement of environmental targets based on the reduction of environmental impact throughout the product lifecycle
  • Collection, analysis and adaptation of information on environmental regulations
Increased business costs from economic measures to reduce emissions (e.g., carbon tax) Medium
  • Achieve energy consumption targets at operational sites
  • Promotion of energy conservation activities at each operational site through cooperation among development, production, facility, and environmental departments
Physical risks Negative impacts on operations caused by increasingly severe extreme weather events such as typhoons and floods Medium
  • Formulation of BCPs and relocation of high-risk operational sites to higher ground
Reputational risks Negative external evaluation due to insufficient information disclosure Low
  • Disclosure of the approach and the status of efforts in response to climate change
Opportunities Products and services Expanded opportunities for sales of energyefficient products with low lifecycle CO2 emissions High
  • Achievement of environmental targets based on the reduction of environmental impact throughout product lifecycles
  • Development, manufacture, and sales of products that realize a beneficial balance between energy conservation and enrichment of people’s lives
Contribution to CO2 emissions reduction at societal level through sales of various innovative products and solutions (hardware/software) High
  • Achievement of environmental targets based on the reduction of environmental impact throughout product lifecycles
Energy efficiency Reduction of energy costs by improving production and transportation efficiency Medium
  • Achieve energy consumption targets at operational sites
  • Replacement and introduction of high-efficiency facilities and transportation methods
Energy sources Expanded opportunities for use of renewable energy through lower associated costs Medium
  • Switch to renewable energy sources
Others Enhanced corporate image due to proactive climate-related disclosures Low
  • Disclosure of the approach and the status of efforts in response to climate change

Risk Management

The identified climate change risks and opportunities are managed in accordance with the ISO 14001 PDCA cycle. Our company has established a Group-wide environmental management system, based on ISO 14001, at all of its business sites around the world as a mechanism to continuously improve its environmental assurance activities. In order to promote (DO) environmental assurance activities in conjunction with the activities of each division (Product Group, business sites, and Group companies), the Environmental Management System determines (PLAN) medium-term and annual environmental targets, and formulates priority measures and implementation plans to achieve them, which are reflected in business activities. In addition, we conduct environmental audits to check the status of initiatives and issues in each division, and conduct environmental performance evaluations that incorporate environmental aspects into performance evaluations (CHECK), leading to continuous improvement and reinforcement of environmental assurance activities (ACT).

These Responses to risks and opportunities are reflected in company-wide environmental targets and priority measures. Our company considers the environment as part of its management evaluation. The achievement of environmental targets and the results of environmental activities by each division are evaluated and scored twice a year in the environmental performance evaluation conducted as an indicator of the consolidated performance evaluation system, which evaluates the performance of the entire Group. The evaluation results are reported to the CEO and other senior management.

Metrics and Targets

In order to comprehensively identify and manage the results of all environmental activities, such as energy conservation, resource conservation, and recycling, through a single index that covers the entire product lifecycle, we have set the Canon Group Medium-term Environmental Targets to be “3%-per-year average in lifecycle CO2 emissions improvement index per product.” By continuing to meet this target, we expect an improvement of approximately 50% in 2030 compared to 2008 levels. As of 2021, this was a 42% improvement from 2008 levels, which exceeded the target. The total life cycle CO2 was 7,616,000 t-CO2 (Scope 1, 2 and 3). These GHG emissions data are covered by a third-party guarantee every year, and were covered in 2021. Our company is working with the public to achieve net-zero CO2 emissions by 2050 through initiatives across product lifecycles.