Information disclosure based on the Taskforce on Nature-related Financial Disclosures (TNFD)
Based on its EHS policy, the Olympus Group actively promotes management of water utilization and wastewater as well as maintenance of green spaces at each of its business sites, in addition to cleanup, forest conservation, and tree planting activities in the vicinity of sites, as part of its biodiversity conservation activities.
In recent years, it has been pointed out that the deterioration of natural capital, including the land, sea, freshwater environments, and atmosphere that encompass biodiversity, has potentially grave impacts on the environment, society, and economic activities, with the importance of promoting the conservation of natural capital becoming even greater. Moreover, methods for confirmation of dependencies and impacts on natural capital as well as methods for assessment of the risks and opportunities in business have become established. These methods include the Locate, Evaluate, Assess, and Prepare (LEAP*1) approach as outlined in the Taskforce on Nature-related Financial Disclosures (TNFD*2) disclosure framework, and have enabled more scientific assessments and measures to be implemented.
Against this background, the Olympus Group conducted assessments in line with the TNFD recommendations to facilitate the promotion of more appropriate measures for natural capital in our business activities.
*1 TNFD developed this analytical framework to organize impacts and dependencies of business activities on nature and to assess and respond to risks and opportunities. It is comprised of four parts: Locate, Evaluate, Assess, and Prepare.
*2 An international organization that develops frameworks for appropriately assessing and disclosing risks and opportunities relating to natural capital and biodiversity in corporate activities. (Source: Ministry of the Environment)
Governance
Sustainability activities of the Olympus Group are overseen by the ESG Committee, which deliberates on important measures and monitors their progress.
The ESG Officer oversees the Committee, whose members include the heads of each Business Unit and Functional Division. Details of matters confirmed by the ESG Committee are reported to the Group Executive Committee and the Board of Directors, both of which provide advice and guidance to the ESG Committee to ensure the effectiveness of the process.
Under this framework, responses to natural capital and waste across the Olympus Group are overseen by the Chief Human Resources Officer (CHRO), who has authority over environment, health, and safety (EHS) functions, under the CEO, who is ultimately responsible for environmental activities. Under the Environmental Health and Safety Policy, which is applied to the entire Olympus Group, the EHS governance function formulates an EHS Action Plan for the Olympus Group as a whole in accordance with the ESG targets set out in the medium- to long-term business plan, and monitors the progress of the plan while promoting continuous improvement.
Environmental Health and Safety Policy
Strategy
Using the LEAP approach, we analyzed nature-related risks and opportunities associated with our business activities at our major manufacturing and development sites.
Evaluation of Dependencies and Impacts (Evaluate)
Our business activities are supported by a diverse range of benefits derived from natural capital, such as water resources, soil, and air.
Understanding our dependencies and impacts on natural capital is essential for identifying nature-related risks and opportunities.
We identified the dependencies and impacts of our business activities on natural capital using ENCORE (Exploring Natural Capital Opportunities, Risks, and Exposure)*, an analytical tool that helps visualize the relationship between economic activity and natural capital. Results are shown in the table below. No dependencies or impacts were identified as Very High (VH), while a High (H) impact was identified for "water quality and soil contamination."
* A tool developed by the UN Environment Programme World Conservation Monitoring Centre (UNEP-WCMC), the Natural Capital Finance Alliance (NCFA), and other organizations to systematically visualize companies' dependencies and impacts on natural capital
Table 1: Results of the Evaluation of Dependencies and Impacts
| VH | H | M | |
|---|---|---|---|
| Dependencies | ― | ― | Water resource use and disaster risk reduction |
| Impacts | ― | Water quality and soil contamination | Noise |
Identification of Priority Locations (Locate)
Business activities have direct and indirect relationships with natural capital, such as water resources, soil, and the ecosystems present in the regions and sites where operations are conducted. For this reason, it is vital to accurately identify the interfaces between business activities and natural capital, and clarify priority areas to facilitate the sustainable utilization and conservation of natural capital.
We identified that our business activities have dependencies on “water resource use” and “disaster risk reduction,” as well as impacts on “water quality and soil contamination” and “noise.” The tools shown in the following tables were used to assess whether major production and development sites qualify as “sensitive locations,” defined as priority areas by TNFD.
Table 2: Evaluation Tools
Can be swiped left or right
| Category | Evaluation tools | Perspective | |
|---|---|---|---|
| Impacts | Water quality and soil contamination | WWF Biodiversity Risk Filter*1 | Impacts on ecosystems and biodiversity resulting from the effects of emissions and leaks on waterways and soil |
| Noise | Impacts of noise generated by business activities on the local environment (including impacts on wildlife and local residents) | ||
| Dependencies | Water resource use | Aqueduct*2 | Supply risk associated with use of water resource required for business activities, water shortages, and water stress |
| Disaster risk reduction | Dependence on ecosystem services that contribute to disaster risk reduction, such as flood mitigation and erosion control provided by forests and soil (e.g., flood mitigation and erosion control) | ||
*1 Developed by WWF, this tool is designed to assess biodiversity risks in the value chain.
*2 This global tool for water risk assessment, developed by the World Resources Institute, is used to assess water risk, including water quantity, quality, regulations, and reputation, in areas where our facilities are located.
Evaluation results
Assessment results are as shown below.
Table 3: Results of the Identification of Priority Areas
Identification of Risks and Opportunities (Assess)
We identified dependencies and impacts on natural capital as well as priority areas in our business sectors and areas of operation. Based on these findings, we applied the TNFD-recommended framework and envisioned two cases: Scenario 1, in which measures to address nature-related issues were significantly advanced, and Scenario 3, in which natural capital significantly deteriorated. We assessed their significance in terms of the degree of impact and likelihood of occurrence.
Table 4: Scenarios used
As a result, based on the current assessment, no material nature-related risks or opportunities have been identified. Meanwhile, stricter regulations on water resources and wastewater, as well as acute physical risks such as natural disasters, have been recognized as areas with a certain degree of potential impact. Although opportunities such as improved resource efficiency are expected, their impact has been assessed as limited.
Table 5: List of Risks and Opportunities
Can be swiped left or right
| Category | Key dependencies | Key impacts | Key risks and opportunities | Response measures |
|---|---|---|---|---|
| Transition risks | Water supply | Water depletion, water and soil pollution, ecosystem degradation | Increased compliance costs due to strengthened regulations related to the protection of water, soil, ecosystems, and other aspects of natural capital |
|
| ― | Water, soil and air pollution, and waste generation | Risk of loss of corporate value, reduced earnings, and increased response costs resulting from reputational damage among stakeholders and litigation arising from the deterioration of the surrounding natural environment caused by wastewater, air emissions, and waste from manufacturing processes | ||
| Physical risks | Water supply | Water depletion, water and soil pollution | Risk of reduced earnings resulting from increased operating costs due to production process changes and operational disruptions, both arising from water scarcity and declining intake water quality. |
|
| Climate regulation, soil and sediment retention, GHG emissions, ecosystem use | ― | Plant shutdowns, disruptions to logistics networks, reduced productivity, and increased recovery costs resulting from floods and landslides associated with more frequent extreme rainfall due to climate change |
Metrics and Targets
Response Measures (Prepare)
Through an analysis of our interactions with nature across our business activities, we determined that, while no material risks or opportunities have been identified at this time, certain nature-related issues require ongoing monitoring and management. These include increased costs for managing water quantity and quality due to stricter regulations, as well as increased costs for water management and disaster preparedness measures resulting from nature degradation.
Based on these findings, we will advance our initiatives under the following management indicators and targets.
| Management Metrics | Targets |
|---|---|
| Compliance with environmental laws and regulations | Implementing wastewater management beyond local regulatory requirements |
| Water use efficiency | Improving water use efficiency at water-intensive sites (above the FY2026 actual level) |
| Nature conservation activities (e.g., tree planting and river cleanups) | Continuously implementing activities at operating sites |