Biodiversity

Our Group's business operations are promoted and executed by seven business divisions, which are also responsible for identifying and evaluating the nature-related risks and opportunities along the value chain in their respective business areas.

Our Company's Sustainability Management Committee is made up of mainly chief officers (executive officers) of our business divisions, which are executive organizations, who are well versed in their respective businesses, and the Chief Officer of Corporate Planning (executive officer) who oversees our Group's basic management policy and strategy and the distribution of management resources and who also serves as the committee chair. The Sustainability Management Committee discusses and manages the nature-related dependencies, impacts, risks and opportunities that are identified and evaluated by the sales divisions.

The Board of Directors receives regular reports from the Sustainability Management Committee and monitors and supervises the comprehensive management of nature-related risks in our Group.

Sustainability Management Committee agendas for FY2023 (nature-related)
Support for the initiative of the TNFD and participation in the TNFD Forum
Identification of businesses to be evaluated for disclosure based on the TNFD framework

Note on Board of Directors for FY2023
Officer training session titled “Trends in Biodiversity and Natural Capital” in the Board of Directors meeting, conducted by outside experts

We recognize that nature capital and biodiversity is deeply connected to the human rights and livelihoods of Indigenous Peoples and local communities. We have established “the Kanematsu Group’s Human Rights Policy” and “the Action policy for building a sustainable supply chain“ and are promoting initiatives aimed at respecting the human rights of all stakeholders, including Indigenous Peoples and local communities. With regard to the rights of Indigenous Peoples, which is a material human rights issue, we respect the Declaration on the Rights of Indigenous Peoples, Indigenous and Tribal Peoples Convention (ILO C-169), and Free, Prior, and Informed Consent (FPIC), and other international norms and standards concerning the rights of Indigenous Peoples, and are committed to giving due consideration to the human rights and cultures of Indigenous Peoples. In accordance with this policy, the Sustainability Management Committee conducts human rights due diligence on suppliers to confirm whether our existing business operations have any adverse impacts on Indigenous Peoples, local communities, and their surrounding environment and natural capital, and to control any impacts if they are confirmed. The results are reported to the Board of Directors.

Links:

Kanematsu Group’s Human Rights Policy

The action policy for building a sustainable supply chain

We recognize that our global businesses are dependent, and at the same time impact on nature, and as such regard the conservation and recovery of these environmental assets and ecosystem services as an urgent challenge. We consider “Decarbonization Initiatives,” “Building a Sustainable Supply Chain,” and “Mutual Development with Local Communities” as key issues (Materiality). Accordingly, we are committed to addressing nature-related issues not just in the businesses we conduct in the supply chain, but across the entire value chain of our suppliers, customers, and business partners by strengthening our efforts in supply chain decarbonization, creation of a circular economy, etc.

We implemented the LEAP approach (*), which TNFD had developed for the identification and assessment of nature-related issues.

（*）The integrated approach which TNFD had developed to help evaluate the nature-related issues such as the interface with nature and nature-related dependencies, impacts, risks, and opportunities by following the steps of Locate, Evaluate, Assess and Prepare.

(1)We organized our 14 business segments into various levels along the value chain and associated them with ENCORE’s (*) business categories.
Next, we calculated the nature-related dependencies and impacts of each business category, and then created a dual-axis graph showing the extent of nature-related dependencies (x-axis) and nature-related impacts (y-axis). By utilizing data from ENCORE and quantifying the magnitude of the dependencies and impacts, we were able to understand interface of our business operations with nature.

＊an online tool jointly developed by the Natural Capital Finance Alliance (NCFA), a global network of financial institutions, and the United Nations Environment Programme World Conservation Monitoring Centre (UNEP-WCSC), etc., to assess the nature-related impacts and dependencies.

(2)This allowed us to confirm that nature-related dependencies were particularly high in the grain, oilseeds, and feedstuff business, foods business, and meat products business and that nature-related impacts were greatest in the energy business.

(3)Within the three businesses (grain, oilseeds, and feedstuff business, foods business, and meat products business) with particularly high dependencies in areas with higher-than-average dependencies and impacts, we selected the beef business and coffee business for the analysis. This is because these are listed as commodities (raw materials) with significant nature-related impacts by the Science Based Targets Network (SBTN), their production sites are concentrated, and the useful information is available for the LEAP approach.

(4)In order to identify sensitive locations with nature-related dependencies and impacts in relation to the two businesses selected for the evaluation, we confirmed and analyzed the biomes and ecosystems that are connected with business operations at approximately 80 sites in total––approximately 60 feedlots, meat production sites, and meat processing sites in North and South America and Australia for the beef business, and approximately 20 farms and suppliers in Latin America, Africa, and Southeast Asia for the coffee business.

(5)In identifying sensitive locations with nature-related dependencies and impacts, we adopted the following five criteria to determine “Sensitive locations” in accordance with TNFD framework ver1.0: “areas important for biodiversity, including species,” “areas of high ecosystem integrity,” “areas of rapid decline in ecosystem integrity,” “areas of high physical water risks,” and “areas of importance for ecosystem service provision, including benefits to Indigenous Peoples, local communities, and stakeholders.” Using databases* to apply each criterion, we evaluated the level of importance of each site on a five-point scale. Sites considered as locations with the highest level of importance on the basis of even one of the criteria were identified as “Sensitive locations.” As a result, we identified 33 sites in total––25 sites for the beef business and eight sites for the coffee business––as important locations that should be prioritized for analysis.

（*）WWF Biodiversity Risk Filter（Protected/Conserved Areas、Key Biodiversity Areas）, Biodiversity Intactness Index, Ecoregion Intactness Index, WWF Water Risk Filter（Water Scarcity、Flooding、Water Quality）, Critical Natural Asset Layers

(1)On the basis of business processes and activities, we evaluated the nature-related dependencies (ecosystem services) and impacts (impact drivers) associated with three processes in the beef business (feedstuff cultivation, meat production, processing) and two processes in the coffee business (raw material cultivation, processing) on a five-point scale by utilizing the results of ENCORE and relevant literature review. Then, we identified the major environmental assets on which the processes are dependent or have an impact on each category and impact driver/ecosystem service in the two businesses. As a result, the following four assets were identified as relevant: “Terrestrial (land based) ecosystems,” “Cultivated biological resources,” “Atmospheric systems,” and “Water resources.” Additionally, as it was found that of the dependencies and impacts associated with the processing process of the coffee business, the dependencies exhibited a low level of geographical importance in terms of connection with nature, we excluded the process from the next step of identifying the connection between business operations and environmental assets.

Evaluation of dependencies and impacts on nature (5-point scale: excerpted items rated “Very High” or “High”) and related environmental assets

Beef business (feedstuff cultivation, meat production, processing）

Coffee business（Raw materials cultivation and processing)

（2）Using the TNFD’s impact and dependency pathways’ charts, we organized the connections between the dependencies and impacts associated with the four important environmental assets identified in the previous step. By creating a flowchart showing what kind of negative impact the impact drivers and external drivers which brought by the respective business operations of the beef business and coffee business have on to the four important environmental assets, how, as a consequence, the ecosystem services provided by the environmental assets change, and what impacts the environmental assets have on the organization, society, and nature, etc., we identified the connections with our business operations.