Climate Change (Information Disclosure Based on TCFD Recommendations)
In May 2019, ITOCHU announced our support for the TCFD* recommendations in recognition of the importance of climate-related financial disclosures. Since then, we continue working to provide information disclosure based on TCFD recommendations.
- TCFD: The Task Force on Climate-related Financial Disclosures established by the Financial Stability Board (FSB).
Policy and Basic Concept Concerning Climate Change
ITOCHU recognizes that climate change is one of the most urgent global environmental issues, therefore ITOCHU Group, which operates globally, considers climate change and other global environmental issues as one of the most important management issues. We support international policies and standards, including the Paris Agreement, the contribution determined by the Japanese government (NDC), climate change-related laws and regulations (such as the Act on Rationalizing Energy Use and the Act on Promotion of Global Warming Countermeasures) and various governmental policies, and we will view adaptation to changes in the business environment due to climate change as an opportunity for further growth and incorporate these into our policies and specific initiatives.
We define our initiatives related to climate change in the ITOCHU Group Environmental Activities Policies “2. Response to Climate Change: We shall reduce greenhouse gas (GHG) emissions and increase the efficiency of energy use within our own operations, as well as externally provide products and services that contribute to the mitigation and adaptation to climate change.” In March 2021, our Board of Directors approved the inclusion of GHG emissions reduction targets for 2030, 2040, and by 2050 as core targets for our medium-term management plan, Brand-new Deal 2023. These targets are in line with Japan NDC, which we aim to achieve by reducing avoidable emissions and actively promoting businesses that contribute to reductions. Under our corporate philosophy of the Sampo-yoshi approach, we will respond to climate change risks and opportunities in collaboration with the stakeholders to increase our corporate value.
Governance
ITOCHU views responding to climate change and other sustainability issues as an important management issue. Our Board of Directors gives due consideration to response policies for climate change-related risks and opportunities and GHG reduction targets and initiatives, and incorporates these policies into deliberations and decisions on annual budgets, business plans, and other core matters.
The ITOCHU Sustainability Committee is the body delegated with general management responsibilities concerning the proposal and implementation of the various policies that will enable us to respond to climate change and other sustainability matters. This Committee ascertains, manages, and evaluates climate-related targets, the implementation status of transition plans, and current environmental and social risks and opportunities. ITOCHU’s Chief Administrative Officer (CAO) is the director responsible for climate-related issues and is also a member of the Headquarters Management Committee (HMC). The CAO also serves as chair of the Sustainability Committee. The CAO provides a report to the Board of Directors approximately twice per year on matters deliberated and decided by the Sustainability Committee in addition to a report on the status of major sustainability promotion activities. This creates an organization that allows the Board of Directors to appropriately supervise business and financial strategies (including reviewing strategy and making divestment and asset replacement decisions) for responding to environmental and social risks and opportunities while giving proper consideration to matters deliberated and decided by the Sustainability Committee. As the executive level, management from each Company and administrative division also serving as ESG Officers participate in Sustainability Committee meetings as core members. The Sustainability Committee receives reports on climate-related matters from the Sustainability Management Division and ESG Managers from each Company and administrative division. We use these reports towards progress management and monitoring for each policy and various initiatives.
In 2021, our Board of Directors approved the inclusion of growth strategy and GHG emissions reduction targets in our medium-term management plan, Brand-new Deal 2023. This decision reflects our commitment to the climate-related issues impacting our Company and we believe this will enable us to lead the industry in realizing a decarbonized society in enhancing our contribution to and engagement with the SDGs through business activities. Based on this decision by the Board of Directors, the Sustainability Committee deliberates specific policies and targets related to decarbonized initiatives. Each business division works continuously to implement these policies and initiatives approved by the CAO, the director in charge, and progress is reviewed by the Sustainability Committee. Our Board of Directors has further resolved to continuously respond to social demand by aiming to balance both sustaining the basic policies outlined in the previous medium-term management plan and to promote businesses that contribute to emissions reduction and reflected it in the Management Policy “The Brand-new Deal” formulated in 2024.
The chair of the Sustainability Committee and management from each Company and administrative division (ESG Officers) meet with external experts (a Sustainability Advisory Board) once a year to engage in dialogue towards making continuous improvements to our climate change response. Through this dialogue, we promote climate change countermeasures based on an understanding of society’s expectations and demands on ITOCHU.
Governance System Concerning Climate Change (As of June 18, 2025)
- CEO: Chief Executive Officer
COO: Chief Operating Officer
CAO: Chief Administrative Officer
HMC: Headquarters Management Committee
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| Climate-related Meetings Held by the Board of Directors and Committees | Frequency of Meetings and Reports | Main Items Deliberated or Reported on (FYE 2019 to FYE 2025) |
| The Board of Directors |
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| Sustainability Committee |
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Strategy
ITOCHU applies the Policy and Basic Concept Concerning Climate Change to analyze scenarios based on TCFD recommendations (analysis of transition and physical risks and opportunities associated with climate change). We use the results of these analyses to realign our business strategy and portfolio.
Climate-related Risks and Opportunities
ITOCHU is engaged in various businesses in locations around the world. Each business is impacted by various short-, medium-, and long-term climate change transition risks and physical risks. As such, ITOCHU globally identifies, evaluates, and manages risks and opportunities with the possibility to have a material financial impact on our business, supply chain, and strategy. We conduct such analysis and evaluation throughout each business proposal management process and in our environmental and social risk management processes, which includes climate change.
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| Climate-Related Risks and Opportunities | Impact of Climate-related Risks and Opportunities on the Organization’s Business, Strategy, and Financial Planning | Impact Timeline* | Impacted Value Chains | Related Businesses | |
| Transition Risks and Opportunities | Policy and Legal Systems |
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Medium-term Long-term |
Upstream, ITOCHU Group | Power generation business, Fossil fuel business, Iron ore business, Automobile business, Chemicals business |
| Technical Innovation | Business opportunities that contribute to mitigation to climate change are expected to increase (e.g., renewable energy, energy storage systems, low-carbon fuels, low-carbon emission steelmaking raw materials, etc.) | Short-term Medium-term Long-term |
ITOCHU Group | Renewable energy, energy storage system businesses, Low-carbon fuel business, New material business, Iron ore business | |
| Changes in Market Conditions | Demand for certain products and services may decrease due to market risks related to public policy, laws and regulations, or technological advancements (e.g. clean technology) | Short-term Medium-term Long-term |
Upstream, ITOCHU Group | Fossil fuel business, Chemicals business, Automobile business, Renewable energy, energy storage systems businesses, New material business, CCUS/emissions credit-related businesses | |
| Physical Risks and Opportunities | Acute Physical Risks and Opportunities | Operations may be impacted or damaged by increased occurrences of abnormal weather patterns (e.g., droughts, floods, typhoons, hurricanes, etc.) | Short-term Medium-term Long-term |
Upstream, ITOCHU Group, downstream | Food business, Forestry-related businesses, Mining business |
| We may be able to strengthen customer retention and/or attraction by strengthening our supply chain resilient to extreme weather patterns and promoting stable supply as a value proposition | Short-term Medium-term Long-term |
Upstream, ITOCHU Group, downstream | Food business, Forestry-related businesses | ||
| Chronic Physical Risks and Opportunities | Our capability to maintain and increase the quantity of agricultural and forestry-related harvests, as well as products manufactured using these yields, may be impacted by climate-related changes such as increasing temperatures and likelihood of droughts. | Medium-term Long-term |
Upstream, ITOCHU Group, downstream | Food business, Forestry-related businesses | |
- Short-term: less than one year, medium-term, up to three years, long-term: four or more years
Scenario Analysis
Scenario Selection
ITOCHU categorized our businesses with climate impact, such as GHG emissions volume on the vertical axis and climate-related financial impact on the horizontal axis and analyzed our businesses with priority given to those mapped in a zone where both dimensions are high. Based on this, we designated the following businesses as targets for scenario analysis: “Power Generation,” “Energy,” “Coal-related,” “Iron Ore,” “Automotive,” and “Chemicals” as businesses with significant transition risk impacts, including policy and legal risks, and “Dole,” “Feed and Grain Trade,” and “Pulp” as businesses with significant physical risk impacts from climate change. The above nine businesses are included in the four non-financial sectors (energy, transportation, materials and buildings, and agriculture, food, and forest products) designated by the TCFD as potentially highly affected by climate change.
Definition of Scenario Groups
When considering ITOCHU scenario analysis, we referenced materials published by the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC). These materials are highly recognized internationally for the credibility, are referenced in TCFD recommendations, and cover a broad range of business domains. As a result, we set the following three scenarios.
As the reduction targets of various countries, international guidelines, and investor demands are mainstreaming the goal of limiting the increase to 1.5℃ above pre-industrial levels, we will continuously review the risks, opportunities, and mitigation measures based on the parameters and business environment approximately every 1 to 2 years.
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| Scenario | 4℃ | 1.5℃ | |
| Image of society | The policies of countries, such as the Intended Nationally Determined Contributions (INDC) established in accordance with the Paris Agreement, are implemented. Nevertheless, the average temperature at the end of this century rises by 4℃. This is a society in which there is a high likelihood climate change (e.g., a rise in temperature) will impact business. |
Bold policies and technological innovations will be promoted to limit the average temperature increase to 1.5℃ until the end of the century and achieve sustainable development. This is a society in which social changes due to the transition to a de-carbonized society are highly likely to impact business. |
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| Reference scenarios | Transition aspects |
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| Physical aspects |
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| Risks and opportunities | Risks and opportunities in terms of physical aspects will be more likely to surface |
Risks and opportunities in terms of transition aspects will be more likely to surface |
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- IEA WEO2024 “Net Zero Emissions by 2050 Scenario” is a scenario that shows a possible path for the global energy sector to achieve net zero GHG emissions by 2050 and limit temperature rise to 1.5℃ above pre-industrial levels.
Important Input Parameters and Prerequisites for the Climate-related Scenarios
Important input parameters and prerequisites for the climate-related scenarios we used include the following types of parameters.
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| Parameters Used to the Power Generation Business in the US | Timeframe: By 2040 | |
| 4℃ Scenario | 1.5℃ Scenario | |
| Carbon price |
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| Thermal power generation |
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| Renewable energy generation |
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| Low-carbon thermal power generation |
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Scenario Analysis and Results
For the scenario analysis, ITOCHU did not limit the timeline range to the short-term. We also added medium- and long-term axes for 2030 and beyond when organizing and evaluating the factors of latent risks and opportunities that could have a significant qualitative or quantitative financial impact for each business. We identified risk and opportunity factors from the perspective of procurement, business operations, and markets’ demand for the subject business, and then organized and evaluated factors of high importance. For particularly important factors, our scenario analysis was based on finance models that reflect defined parameters. We defined these parameters by identifying variables that significantly impact transition and physical risks and opportunities. For the analysis of financial impact level, we measured the latent impact level of climate change and analyzed the financial impact level, including the effect of risk and opportunity measures.
The quantitative information used in our scenario analysis reflects judgments made by ITOCHU based on scenarios prepared by sources such as the IEA. While we worked to increase analysis precision, the analysis does include numerous uncertainties.
1. Businesses for Which Transition Risks Are the Main Issues
The main issues for following six business are transition risks in the 1.5℃ scenario.
- Power Generation
Business - Automobile
Business - Iron Ore
Business - Coal-related
Business - Energy
Business - Chemicals
Business
| Timeframe | By 2040 | |
| Temperature Band Scenario | 1.5℃ Scenario | |
| Main risks and opportunities | Transition |
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| Business environment under the scenario Business impact assessment |
Earnings may decrease due to an increase in carbon dioxide emission costs and a decline in demand for thermal power generation in the transition scenario. On the other hand, earnings are expected to increase overall due to an expansion in new energies including renewable energy power generation, hydrogen/ammonia co-firing power generation and CCUS. Analysis according to the EBITDA indicator (%)* 
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| Financial information |
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| Timeframe | By 2030 | |
| Temperature Band Scenario | 1.5℃ Scenario | |
| Main risks and opportunities | Transition |
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| Physical |
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| Business environment under the scenario Business impact assessment |
The automobile industry is shifting from internal combustion engine vehicles to electric vehicles. Our customers are found all over the world. That means we can expect automobile demand to remain firm despite the expectation there will be a gradual shift in the vehicles we handle from internal combustion engine vehicles to electric vehicles in line with the regulations of each country. Analysis according to the Gross trading profit indicator (%)  |
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| Financial information |
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| Timeframe | By 2050 | |
| Temperature Band Scenario | 1.5℃ Scenario | |
| Main risks and opportunities | Transition |
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| Physical |
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| Business environment under the scenario Business impact assessment |
Carbon related regulations are expected to increase cost such as the purchase of emission credits rights according to GHG emissions. Nevertheless, the impact on earnings will be limited due to optimization of sales prices in iron ore supply chain and improvement of operational efficiencies including policy to reduce GHG emissions and promotion of digital transformation, etc. Further growth is expected by strengthening the production of high-grade ore, for which demand is expected to increase due to the acceleration of the shift to decarbonization, and steadily seizing business opportunities in iron ore and related fields, such as creation of businesses related to low-carbon emission steelmaking raw materials. Analysis according to the profit after tax (%)  |
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| Timeframe | By 2040 | |
| Temperature Band Scenario | 1.5℃ Scenario | |
| Main risks and opportunities | Transition |
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| Physical |
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| Business environment under the scenario Business impact assessment |
Under 1.5℃ Scenario overall demand for coking coal is expected to decrease due to the advancement of electric furnaces and the spread of direct reduced iron. On the other hand, the number of coal mines capable of supplying high-quality high-grade coking coal will become more limited than before, and such coal is needed not only for the conventional blast furnace method but also for the blast furnace hydrogen reduction process, so it is expected to become relatively scarce. Carbon related regulations are expected to increase cost such as the purchase of emission credits rights according to GHG emissions. Nevertheless, the impact on earnings will be mitigated due to optimization of sales prices in coal supply chain and improvement of operational efficiencies including policy to reduce GHG emissions and promotion of digital transformation, etc. Analysis according to the profit after tax (%)  |
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| Timeframe | By 2040 | |
| Temperature Band Scenario | 1.5℃ Scenario | |
| Main risks and opportunities | Transition |
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| Physical |
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| Business environment under the scenario Business impact assessment |
Under the 1.5℃ scenario, we expect global demand for oil to diminish and demand for natural gas and LNG to contract after 2030, but we aim to maintain and increase earnings by capturing opportunities to trade alternative fuels and develop new environmental businesses, such as CCUS. Although production facilities could be damaged due to natural disasters (abnormal weather), the impact of damage is expected to be limited due to disaster countermeasures taken in cooperation with partner companies. Analysis according to the profit after tax (%)  |
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| Timeframe | By 2030 | |
| Temperature Band Scenario | 1.5℃ Scenario | |
| Main risks and opportunities | Transition |
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| Physical |
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| Business environment under the scenario Business impact assessment |
Under the transition scenario, while the introduction and increase in carbon tax will increase costs and lower demand for virgin plastics will result in lower sales and profits, our chemical business will be able to increase earnings by capturing opportunities in environmental businesses such as recycled plastics, bioplastics, clean ammonia and methanol, where demand is expected to increase. Analysis according to the profit after tax (%)  |
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2. Businesses for Which Physical Risks Are the Main Issues
The main issues for agriculture- and forestry-related businesses are physical risks in the 4℃ scenario.
| Timeframe | By 2030 | |
| Temperature Band Scenario | 4℃ Scenario | |
| Main risks and opportunities | Transition |
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| Physical |
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| Business environment under the scenario Business impact assessment |
The decrease in the amount of crops harvested due to weather disasters and rising temperatures may lead to supply instability and increases in prices. However, we can maintain a supply structure by diversifying the countries from where we import crops and then provide further opportunities for low-carbon-related products. Analysis according to the Gross trading profit indicator (%)  |
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| Timeframe | By 2030 | |
| Temperature Band Scenario | 4℃ Scenario | |
| Main risks and opportunities | Transition |
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| Physical |
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| Business environment under the scenario Business impact assessment |
The decrease in harvest volumes attributable to extreme weather events can be mitigated by improving the unit yield through the development of resistant varieties and production methods (cultivation and irrigation etc.). We will diversify production areas and procurement sources (Sierra Leone and Vietnam etc.) for preparation against weather risks, and expand our portfolio of high value-added products. The above initiatives will make it possible to maintain earnings. Analysis according to the EBITDA indicator (%)* 
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| Timeframe | By 2030 | |
| Temperature Band Scenario | 4℃ Scenario | |
| Main risks and opportunities | Transition |
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| Physical |
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| Business environment under the scenario Business impact assessment |
The amount produced is expected to decrease in some areas due to the rise in the global average temperature. Nevertheless, we can continue to improve earnings by increasing the amount of pulp we produce with the augmentation of facilities in afforestation regions where the amount produced is expected to increase. Analysis according to the EBITDA indicator (%)* 
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Impact on Existing Strategies and Business Transition Plans
During ITOCHU’s scenario analysis, we ascertained high-impact negative financial risks associated with not implementing climate change measures such as shifting current business strategy or business regions. As a result, we have been steadily promoting specific business transition plans and financial plans (including divestment and asset replacement) in line with our Management Policy “The Brand-new Deal” based on the basic policy of enhancing our contribution to and engagement with the SDGs through business activities.
Transition Plans for Main Businesses Subject to Transition Risks
In 2021, together with ITOCHU’s GHG emissions reduction targets, we announced our management plan to actively promote clean-tech business and other businesses that contribute to GHG emissions reduction as a way to enhancing contribution and engagement with the SDGs. This basic policy is carried over to the Management Policy “The Brand-new Deal” formulated in 2024. Through our own businesses, we aim to achieve a situation where the amount of our avoided emissions exceeds our GHG emissions by 2040.
Many innovative businesses leveraging cutting-edge technologies for decarbonization require time for fully social implementation. We are promoting businesses that contribute to emission reductions from a medium- to long-term perspective to achieve this goal.
| Business | Summary |
| Environmentally Friendly Fibers |
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| Water and Waste Treatment |
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| Renewable Energy |
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| Recycling of Metal Scrap, etc. |
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| Low-carbon Iron |
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| CCUS (Carbon Capture, Utilization and Storage) |
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| Energy Storage Systems/Renewable Energy |
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| Sustainable Aviation Fuel/Renewable Diesel Fuel |
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| Hydrogen and Ammonia |
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| Plastic Recycling |
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| Sustainable Coffee Beans and Vegetable Oil |
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| Production and Processing of Fruits and Vegetables/Waste Reduction |
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| Sustainable Natural Rubber |
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| Secondhand Mobile Phone Distribution |
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| CVS Business (FamilyMart) |
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Transition Plans for Main Businesses Subject to Physical Risks
In agriculture and forestry businesses, we aim to expand sustainable operations by adopting cutting-edge technologies from a medium- to long-term perspective and promoting the following initiatives.
- Increase per-unit harvest volume by selecting breeds that are viable in high-temperature climates and improvements to production methods.
- Expand business into other regions projected to see growth in production volume.
Financial Strategy
The Division Company Management Committee (DMC) conducts annual reviews of business risks and opportunities, including those related to climate change. Each DMC examines business transition plans, and then drafts annual financial plans. The annual financial plans for each Company are presented for approval to the HMC, the executive body, and the Board of Directors, the supervisory body, before final approval by the Board of Directors. This final approval is subject to a comprehensive analysis and deliberations from an ESG perspective, including matters related to climate change. In order to facilitate a financial strategy based on ITOCHU’s transition plan, we have developed a financing plan that limits the use of funds to projects that contribute to the SDGs.
- SDGs Bond
In March 2021, ITOCHU issued SDGs Bond (Sustainability Bond totaling US$500 million), which was allocated towards capital expenditures, manufacturing, R&D-related investments and procurement costs in climate-related subjects as well as R&D-related investments in procurement of certified food ingredients and costs of utilization of food residuals related to sustainable food systems like those indicated below:
- Efforts to reduce GHG emissions: Renewable Energy (generation and storage)
- Efforts to reduce GHG emissions in FamilyMart
- Sustainable Food System: Expanding procurement of certified food ingredients and utilization of food residuals
- Green Loan
In September 2023, ITOCHU entered into the green loan agreement with Sumitomo Mitsui Trust Bank, Limited, and in December 2024, with The Bank of Fukuoka, Ltd. The green loan will be used for our qualified projects (renewable energy power generation projects, energy from waste projects, and projects for the circular economy).
Refer to: Sustainable Finance
We confirmed that implementing these types of transition plans and financial strategy will enable us to maintain resilient business operations, even in over the medium- and long-term, for ITOCHU Group businesses, products, and services. Beyond the scope of applicability to this scenario analysis, ITOCHU is engaged in diverse business activities in various regions. Those business activities are also impacted by climate change. However, at this point of time, we have determined that the impact on Group overall earnings caused by risks associated with each individual business activity would be limited.
To confirm the impact of climate change on overall Group business, we will continue to conduct analyses of both transition and physical risks. We will further identify and organize fields susceptible to significant impact and evaluate response policies based on an order of priority given to areas requiring a response.
Risk Management
As a group engaged in global business operations, ITOCHU constantly monitors climate change policies in each country, the status of abnormal weather around the world, and the business risks associated with changes in average temperatures. In the analysis of risks for our entire ITOCHU Group, we manage climate change risks identified based on an analysis of information concerning climate change measures, including regulatory information and abnormal weather information, as one of the major risks (environmental and social risks) facing our company. Identified climate change risks are also examined and evaluated during our investment decision process. Each department in charge of risk management has established an organization for risk identification, evaluation, information management, and monitoring for the consolidated Group.
Identification and Evaluation of Climate Change Risks
ITOCHU considers those that may have a significant impact on the financial position and results of operations of ITOCHU Group in the future as significant risks. We recognize risk management as an important management issue. Referencing the COSO-ERM framework, we outline our basic policy on risk management for ITOCHU and prepare the organizations and methods necessary for risk management.
Each Company and the Sustainability Management Division cooperate regularly to gather information to assess risk importance. This information includes trends in climate change policy and regulations, which mainly consists of existing and new regulations related to climate change in the countries in which we operate, climate-related technology, and clean-tech business. We also gather information on global abnormal weather and average temperature increases. Importance is identified and assessed using specific indicators and from the perspective of ascertaining the substantive financial or strategic impact that climate risk may have on the Company. For example, for non-consolidated businesses, we identify an important risk as a risk that would cause a 10% change compared to previous fiscal year revenues, a 20% change in average net income for the most recent past five years, or a 30% change in net assets from the end of the previous year. For consolidated businesses, we would use a change of 10% from previous fiscal year revenues or a 3% change in total capital from the end of the previous year.
ITOCHU organizes the information we gather on climate change risks and opportunities into our Material Climate-related Risks and Opportunities (risk criteria), with analysis for both transition and physical risks. We use risk criteria to identify and assess climate change risks in the risk management process for each phase of business, including the start of a new business, existing businesses, handled products, supply chains, Group company business management, and business strategy reviews.
Climate change risks gathered during the risk assessment process are deliberated by the Sustainability Committee and other relevant committees to ensure we continuously review risk criteria and the risk identification process. During these deliberations, the relevant committees incorporate opinions received form the Sustainability Advisory Board, which promotes dialogue concerning sustainability between ITOCHU management and external stakeholders.
Integrating Climate Risk Management into the ITOCHU Group Risk Management System
Due to the nature of ITOCHU’s broad-based operations, we are subject to various risks, including market risks, credit risks, and investment risks. In addition to establishing various internal committees and designated responsible departments, we have created a risk management organizational structure and management methods necessary to address these risks. This organizational structure includes outlining management regulations, investment standards, risk limits, and transaction limits, as well as establishing structures for reporting and monitoring to enable integrated Group risk management.
Climate change risks are one of the major environmental and social risks subject to Group risk management. We incorporate this risk management into the assessment methods for each business phase shown in the table below, which can broadly cover our business activities as a general trading company including management of investment, trading products, logistics, Group companies, supply chain, business strategy, and portfolio, etc.
Climate-related Risk Management Procedures and Evaluation Methods for Each Business Phase
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| Business Phase | Evaluation Method |
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| Business management |
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| Review business strategy | Consider business strategy, asset replacement |
If risks and opportunities are identified via the evaluation methods at each business phase, we use the tool shown below in Risk Assessment & Management Activities to assess the impact of risks and opportunities on business. Risk Assessment & Management Activities include quantitative evaluations such as scenario analyses and stress tests, and qualitative evaluations such as assessments of compliance with investment policy and GHG reduction targets. Quantitative information for risks and opportunities not related to climate change is added to climate change risk and opportunity information that has been quantitatively assessed. This information is then used to analyze the level of contributions to earnings.
Risk Assessment and Management Activities
The TCFD scenario analysis identified the following risk and opportunity factors, as well as assessment and management activities.
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| Managed Factor | Risk and Opportunity Factors (example) | Evaluation and Management Activities (example) |
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Refer to: Our risk management, including climate change, related to Company operations
Climate Change Risk Management Organization
Business Start Phase
ITOCHU has established a multilayered decision-making process that seeks to realize swift decision-making by delegating discretionary power to each internal Company, while pursuing investment returns and controlling investment risks. Depending on the size and terms of a project, a review is conducted at the internal Company level or by the Investment Consultative Committee and the HMC (Headquarters Management Committee).
As a member of the HMC and the Investment Consultative Committee, the CAO, who chairs the Sustainability Committee, participates in the screening of projects that exceed the authority of the Division Company President. This system reflects the content of deliberations at the specific stage of climate change risk and at the assessment stage of climate change risk for company-wide risk management.
Refer to: Our business investment management
Business Management Phase
ITOCHU evaluates and manages risks such as climate change, natural disasters, and ESG investment identified in the business start stage and the business management stage through collaboration between responsible committees such as the Sustainability Committee and Internal Control Committee and a system of periodic monitoring and review of ITOCHU Group companies. Environmental and social risks, including climate change, are summarized as one of the major risks subject to centralized management. Each year, the Sustainability Management Division serves as the executive unit in charge of organizing this information and issuing reports to the Internal Control Committee along with information on the other major risks to integrate the risk information into company-wide risk management system. The Sustainability Committee also deliberates on policies and measures related to climate change risk and how to promote the risk management system, etc. The director serving as chair of the Sustainability Committee reports on the content of deliberations to the Board of Directors approximately twice per year.
As part of our specific climate-related risk management procedures, we compile the results of Scope1/2/3 for each of 8 Division Companies every year. The results are compiled in a form that allows for an assessment over time, and are reported to the Sustainability Committee and the Board of Directors after being approved by each Division Company. This process enables the Board of Directors to oversee progress toward achieving GHG emissions reduction targets from a medium- to long-term perspective, and is also used to review new business strategies.
In order to achieve our GHG emissions reduction targets, we promote climate change initiatives through dialogue with suppliers, sales clients, contractors, and business partners in its value chain.
Review Business Strategy
Reviews of business strategy related to climate change are conducted by the Division Company Management Committee (DMC), and then by the HMC via the Investment Consultative Committee on which the CAO, who serves as the chair of the Sustainability Committee, also participates as a key member. Final decisions are made following deliberation by the Board of Directors. Scenario analysis based on TCFD recommendations is also used as a tool when considering business strategies and asset replacement. In ITOCHU’s analysis, we analyze short-term, medium-term, and long-term climate-related risks and opportunities once a year for their impact on organization business, strategy, and financial planning.
Metrics and Targets and Action Plan
ITOCHU has set the following targets for GHG emissions, electricity usage, and clean-tech business as part of our response to climate change risks and opportunities. When setting these metrics and targets, we reference, among others, the Paris Agreement, Japan NDC and IEA materials, which are highly recognized internationally and can cover a wide range of business areas.
GHG Emissions Reduction Targets
- Metrics (aggregation range): Scope 1/2/3 (ITOCHU and subsidiaries), fossil fuel business and interests (ITOCHU, subsidiaries, equity and general investments)
- Targets:
- Achieve net zero GHG emissions by 2050.
- Achieve 75% reduction from 2018 levels by 2040, aim for “offset zero”* through aggressive promotion of businesses with avoided emissions.
- Offset zero: When avoided emissions exceed company GHG emissions
- Achieve 40% reduction from 2018 levels by 2030.
Refer to: Trends in our GHG emissions
Scope1/2 Short-term Reduction Targets
ITOCHU has set a short-term target of reducing Scope1/2 emissions at our Japanese Bases. We have registered such target with the GX League, a group of companies challenging the green transformation led by Japan’s Ministry of Economy, Trade and Industry in collaboration with the Japanese government and academia. We also participate in the Carbon Credit Market of Tokyo Stock Exchange, which will be used in the GX League, and contribute to the decarbonization of our own and other companies.
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(Unit: t-CO2e)
| FYE 2022 (Base Year) |
FYE 2024-2026 Total (Target) |
FYE 2026 (Target) |
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| Scope1 | 77 |
223 |
74 |
| Scope2 | 5,946 |
17,308 |
5,711 |
| Scope1+2 Total | 6,022 |
17,531 |
5,785 |
- The scope of calculation is based on the “the Rules for Phase 1 in the GX-ETS” and does not match Scope1/2 for Japanese Bases of ITOCHU as a whole.
Clean-tech Business Metrics and Targets (Action Plans)
We set the following metrics and targets (Action Plans) in ITOCHU Clean-tech Business as one of the main metrics (benchmarks) for climate-related risks and opportunities.
- In the power generation business, increase project development towards the goal of increasing our rate of renewable energy (equity interest basis) to over 20% by FYE 2031.
- Build a next-generation fuel value chain based on hydrogen and ammonia.
- Create distributed power supply platform using AI storage batteries boasting the No. 1 sales in Japan.
(Aim for scope exceeding cumulative power storage of 2 GWh by FYE 2031.)
Refer to: Our clean-tech business
Action Plan
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| Materiality | SDGs Targets | Impact Classification | Issues to Address | Business Area | Commitment | Specific Approach | Performance Indicators | Degree of Progress |
| Machinery Company | ||||||||
| Address Climate Change (Contribute to a Decarbonized Society) |   |
Climate Change Opportunities | Taking countermeasures against climate change | Overall power generation business | We will develop power plants with a good balance between renewable energy power generation and conventional power generation, thereby contributing to the development of countries and regions in a sustainable manner that is optimized for each. | Pursue opportunities to invest aggressively in renewable energy power generation through analyses of countries and regions. | FYE 2031: Target to achieve a renewable energy ratio more than 20% (equity interest basis) and reflect this to the future strategy. |
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Ships/Shipping field | We will contribute to decarbonization in the shipping and maritime sectors through the promotion of an integrated project encompassing the development, ownership and operation of ammonia-fueled ships, the development of fuel supply chains, and fuel procurement. | In addition to the joint development of ammonia-fueled vessels with the Japanese consortium and the ownership and operation of these vessels, ITOCHU will take the lead in the development of supply chain of an ammonia bunkering and fuel procurement, aiming for early materialization of the pilot project. | After 2027, promote the spread of ammonia-fueled vessels and the establishment of a supply chains to contribute to the decarbonization of the maritime industry. |
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Sales of passenger cars and commercial vehicles | We will achieve the eco-friendly mobility society by strengthening businesses of electric vehicles (EVs), hybrid vehicles (HVs), vehicles with a reduced environmental impact, and those related. | Contribute to spread of eco-friendly vehicles by increasing business of eco-friendly and high-efficiency products, such as EVs, HVs, vehicles with a reduced environmental impact, and related parts. | Expand sales of eco-friendly products in response to the expanded lineup of EVs, HVs, vehicles with a reduced environmental impact, and similar vehicles from automakers as our business partners. |
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| Address Climate Change (Contribute to a Decarbonized Society) |   |
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Improving water and sanitation infrastructures | Water and environmental projects | We will contribute to improve the sanitary conditions, the development of economic activities, and the protection of the global environment through the appropriate treatment and effective use of water and waste. | Expand water and environment projects to promote the appropriate use and treatment of water and the effective utilization of resources, and reduce the burden on the environment. | Expand the investment portfolio in the water and environment field which contribute to social demands for the environment and the promotion of a circular economy. |
Water Field
Environmental Field
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| Address Climate Change (Contribute to a Decarbonized Society) | |
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Aerospace business | To achieve decarbonization in the aviation industry through the adoption of hydrogen fuel cell engines | To commercialize hydrogen fuel cell engines, we aim to enhance public acceptance by collaborating with hydrogen-related companies, including the development of hydrogen infrastructure | Targeting the commercialization of the ZA600 engine, which can be installed on small aircraft, from 2026 onward. Following that, the ZA2000 engine — suitable for larger turboprop aircraft — is planned for development and commercialization. | Newly added from FYE 2026. |
| Metals & Minerals Company | ||||||||
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| Energy & Chemicals Company | ||||||||
| Address Climate Change (Contribute to a Decarbonized Society) | |
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Stably supplying energy taking into account climate change and the environment | Oil/gas interests and liquefied natural gas (LNG) projects | We will produce resources (transition fuels) taking into account a reduction in greenhouse gases. We will provide a stable supply of energy to contribute to the development of industry and the construction of infrastructure. | Work on resource development projects in collaboration with superior partners who have advanced technical capabilities and abundant experience. | Pursue opportunities to participate in gas projects with a relatively low environmental burden in fossil fuels and as raw material source of the low-carbon fuel while keeping in mind the stable supply of energy in the transition phase toward the realization of a sustainable society. | Pursue opportunities to participate in gas projects with a relatively low environmental burden in fossil fuels and as raw material source of the low-carbon fuel while keeping in mind the stable supply of energy in the transition phase toward the realization of a sustainable society. |
| Address Climate Change (Contribute to a Decarbonized Society) | |
Climate Change Opportunities | Energy use that takes into consideration local communities and the environment | District heating and cooling | We will promote initiatives toward environmentally friendly regional energy use. | Communicate appropriately with neighboring stakeholders in the Jingu Gaien district. | Maintain the stable operations of district heating and cooling in the Jingu Gaien district and promote the district heating and cooling to neighboring areas. | We are continuing discussions with the relevant stakeholders to spread and promote district heating and cooling to neighboring areas. |
| Address Climate Change (Contribute to a Decarbonized Society) | |
Climate Change Opportunities | Efforts to optimally and continuously supply renewable energy |
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We will continue to stably supply the Energy Storage System that are the key to the efficient and optimal utilization of renewable energy. |
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Number of storage batteries sold. (Sales and installation performance of storage batteries) |
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Working on new fuel initiatives toward the realization of a carbon-neutral society / recycling-orientated low-carbon society |
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We will aim to build a production and supply structure for new fuels to contribute to the reduction of greenhouse gases on a life cycle assessment basis toward the realization of a sustainable society and to improve energy efficiency. | Work on hydrogen and ammonia which are expected to serve as next-generation energies and fuels that do not emit carbon dioxide when burned. Also work on renewable fuels (derived from waste oils) to contribute to the reduction of greenhouses gases emitted from aircraft and large vehicles that are difficult to convert from internal combustion engines. | Build a new fuel value chain to be able to realize production, efficient transportation and supply by utilizing collaboration with superior partners and our track record in development and trading. |
Hydrogen and Ammonia
Renewable Diesel (RD) and Sustainable Aviation Fuel (SAF)
New Energy
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| Address Climate Change (Contribute to a Decarbonized Society) | |
Capital Introduction | Working on initiatives in carbon dioxide capture and storage (CCS) business toward the realization of a carbon-neutral society and inclusive and sustainable economic growth | Building of CO2 capture chains using CCS | We will aim to build CO2 capture chains to contribute to the reduction of greenhouse gases toward the realization of a sustainable society. | Refine CO2 storage technologies - an application of petroleum development technologies - and enhance access to CO2 capture chains (e.g., collection and transportation) to link them to CO2 storage technologies. | Build a CO2 transportation and storage business model by uncovering CO2 capture needs at places where CO2 is emitted in client industries across our companies. |
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| Address Climate Change (Contribute to a Decarbonized Society) | |
Climate Change Opportunities | Initiatives to optimize to supply renewable energy sustainably. | Renewable power business / Renewable energy-related materials procurement |
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By further stabilizing the operation of the existing renewable power plants, and by expanding the renewable energy portfolio with new and continuous development. | Renewable energy asset volume |
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| Food Company | ||||||||
| Address Climate Change (Contribute to a Decarbonized Society) | |
GHG Emissions | Taking countermeasures against climate change | Fresh food field | We will examine and promote measures that contribute to tackling climate change. | Dole will utilize green energy in our processed food business. |
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Result in FYE 2025
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| General Products & Realty Company | ||||||||
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Forest | Using sustainable forest resources |
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We deal in sustainable forest resources to reduce the impact on the environment and prevent the increase of greenhouse gases. | We handle certified or high-level management confirmed materials. | Ensure a 100% handling ratio of certified or high-level management confirmed materials. | In FYE 2025, 100% of our Pulp, Woodchips and Wood Products & Materials transactions were handled as certified material or were intensively managed. |
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Taking countermeasures against climate change | Cement substitute material such as slag | We plan to expand the use of sustainable byproducts (slag) as a substitute material for the cement which is vital for construction and civil engineering. | Establish continuous, stable business between Steelworks as the supplier of slag and users. | Consider investment, participation, etc. in the slag business and focus initiatives on creating demand, especially in developing countries, with the aim of establishing continuous, stable business. |
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Reflecting Climate Change Issues in the Remuneration System
To enhance the link between management strategy and executive compensation structure, ITOCHU has incorporated climate change and ESG/SDGs response into the evaluation of each executive since FYE 2021. Director remuneration is determined according to factors that include degree of contribution to ITOCHU, including addressing climate change, ESG and SDGs, based on a standard amount for each position. In addition, Group ESG Officers and Group ESG Managers in each organization set individual annual goals for business creation and operational improvement related to contribution to the SDGs and ESG promotion, and their achievements are also evaluated as individual performance.
Refer to: Corporate Officer Remuneration System
Initiatives
Efforts to Withdraw from Interests in Thermal Coal
In the future coal related businesses will likely be subject to carbon tax. Also, countries will introduce energy diversification policies, which will lead to the promotion of renewable energy and energy saving technology. The changing and more competitive prices of renewable energy risks decreased profits from coal-related businesses, causing these assets to become impaired or fixed.
Based on this risk analysis, in 2019 ITOCHU announced that we will not develop a new coal-fired power plants nor acquire thermal coal mine businesses. In 2019, we sold all interests in the Rolleston thermal coal mine. In 2021, we declared through our medium-term management plan that we will lead the industry in realizing a decarbonized society. As part of this initiative, we sold off interests in Drummond and Ravensworth North projects.
We continue to focus on expanding our business to contribute to the reduction of GHG emissions while responding to the societal demands for stable energy supply to domestic and overseas consumers.
Reducing the Environmental Burden of Logistics Operations
Basic Concept
ITOCHU aims to be carbon-neutral by 2050, and will promote the adoption of logistics methods and initiatives that have a low environmental burden with respect to outsourced logistics. By collecting basic data on logistics, we will investigate, analyze, and verify businesses with low transportation efficiency, and shift to initiatives with the lower environmental burden to the extent possible. We will also work on the development and diffusion of transportation modes powered by clean energy as a business, and contribute to the reduction of logistics-related GHG emissions.
Plan for Energy Saving in Logistics
As a specified consigner under the “Act on Rationalizing Energy Use,” we annually submit a “medium- to long-term plan” to the government, which includes the following company-wide plan for the rationalizing energy use.
Qualitative Target
- We conduct status surveys focusing on mode of transportation with low efficiency that have room for improvement, and select appropriate mode of transportation and appropriate transportation routes, etc, for improving loading efficiency and promoting reduction of specific energy consumption (SEC).
- In order to achieve the above target, we strengthen cooperation with freight forwarders.
Quantitative Target
GHG emissions generated by outsourced logistics for which ITOCHU is the consignor are as follows. Through ITOCHU’s efforts to reduce the environmental loads, we aim to reduce the average SEC by 1% or more per year over a five-year period, which is a non-binding target under Act on Rationalizing Energy Use.
| 1,000t-CO2 | FYE 2021 | FYE 2022 | FYE 2023 | FYE 2024 | FYE 2025 | 5-year average rate of change in SEC |
| Logistics-related GHG emissions (1,000t-CO2e) |
12 | 10 | 12 | 10 | Under Calculation | |
| SEC (crude oil equivalent kl/1,000t-kｍ) | 0.021 | 0.020 | 0.019 | 0.020 | Under Calculation | |
| year-on-year | 107.0% | 93.0% | 94.0% | 107.2% | Under Calculation | Under Calculation |
Specific Initiatives
- Promoting efficient transportation route setting and improved loading methods in cooperation with logistics providers and suppliers to optimize logistics at the time of order receipt and delivery.
- Improvement of loading rate by devising product shape and packaging.
- Selecting appropriate types of vehicles according to transportation volume (use of large vehicles and mixed loading shipment whenever possible).
- Conversion of long-distance truck transportation to rail transportation.
- Planning and promoting of joint delivery business in local areas.
- Providing EV truck users with charging solutions and leasing services that take into account battery degradation forecasts.
- Promoting of ammonia fueled ships development project.
Full Switchover to Real CO2-free Electricity at Tokyo Headquarters
ITOCHU is sourcing its real CO2-free electricity, together with a Non-Fossil Fuel Energy Certificate showing the environmental value of not emitting CO2, to the Tokyo Headquarters since January 2020. The Non-Fossil Fuel Energy Certificate includes the tracking information (information about type of energy sources and power plant location) of power plants. This initiative can also be used to prove compliance with “RE100,” a global initiative of businesses committed to 100% renewable electricity, in response to the global trend towards decarbonization.
Initiatives for the Tokyo Metropolitan Government Program to Prevent Global Warming
ITOCHU submitted a plan to the Tokyo Metropolitan Government to reduce the CO2 emissions in our Tokyo Headquarters by 25% from the reference value (average value from FYE 2003 to FYE 2005) over five years from FYE 2021 to FYE 2025 based on the Ordinance on Environmental Preservation. Our energy consumption CO2 emission in FYE 2024 was 5,944t-CO2. This is an approximately 44% reduction compared to the reference value.
The document we have submitted to the Tokyo Metropolitan Government is as follows.
- In addition to the Tokyo Headquarters, the adjacent commercial facility of Itochu Garden is also subject to the GHG Emission Reduction Plans submitted to the Tokyo Metropolitan Government.
Collaboration with Outside Initiatives
Activities Through Business and Industry Groups
ITOCHU is participating in the Global Environment Subcommittee of the Committee on Environment and Safety — an environment and energy related committee of the Japan Business Federation (Keidanren). We are working to realize an environmental policy compatible with the economy (e.g., through promotion of voluntary action plans, and measures for global warming, waste and recycling and environmental risks). We are also participating as a committee member in the Environment Working Group under the Sustainability Promotion Committee of the Japan Foreign Trade Council (JFTC), a nation-wide association of Japanese trading firms. We are striving to build a low-carbon society, construct a recycling-orientated society, and to support environmental related laws and regulations. We continue to support the JFTC’s FYE 2031 Reduction Targets for Domestic Business Activities and Long-term Vision for Climate Change Measures, which are consistent with our policies and goals.
When the industry and trade associations in which we participate decide on the new directions of climate change, etc., we will express our opinions in line with the ITOCHU Group Sustainability Policy in the decision-making processes. We participate in meetings of our industry associations to discuss their policies, and make proposals from the drafting stage, taking into account not only our own thinking but also the thinking of investors, customers, and the international community. In the event that the policies of such organizations become significantly weaker than or contradict from our policies, we will strive to align them with our policies. We will report any new policies of various industry associations to the head of our relevant industry-related departments or functional departments and obtain their approval. Furthermore, if those new policies may have gap between our company-wide policies, we report to the CAO, who chairs our Sustainability Committee, and the Sustainability Committee and other committees decide to review our company policies in line with new policies of industry associations.
FYE 2031 Reduction Targets for Domestic Business Activities (Trading Industry)
- In FYE 2031, we will strive to reduce unit CO2 Emissions (CO2 Emissions per floor area for the entire company) by 60% from FYE 2014 level. (Reestablished April 2024)
Long-term Vision for Climate Change Measures of the Japan Foreign Trade Council
To create a carbon-neutral society, the JFTC aims to effectively utilize its links with other industries and organizations, cooperate in implementing their long-term visions, and contribute to achieving the long-term goals for 2050 set out in the Paris Agreement. Based on this vision, JFTC member companies will position the investigation and implementation of measures to mitigate and adapt to climate change as key business issues and strive to generate new businesses and solutions.
ITOCHU have flexibly evolved our businesses according to changing times and diverse needs. Shosha (trading firms), which operate worldwide and conduct business in cooperation with various players in a wide range of industries, are able to fully exercise their capabilities in contributing to solutions for the global challenge of climate change.
Participation in TCFD Consortium
Refer to: Participation in Initiatives
Participation in CDP (Climate Change)
Refer to: Participation in Initiatives
Participation in the GX League
Refer to: Participation in Initiatives
Participation in Japan Climate Initiative (JCI)
Refer to: Participation in Initiatives