Our Approach

Toward the realization of carbon neutrality by 2050, NEC is expected to fulfill an increasingly large number of roles and responsibilities. In response, NEC has positioned climate change (decarbonization) as a core response to environmental issues and one of the Company's priority management themes from an ESG perspective—materiality. Based on the NEC Environmental Policy and the Course of Action for Climate Change Toward 2050, our climate change countermeasures are providing value both in terms of mitigation and adaptation. In 2021, NEC drafted NEC Environmental Targets 2030 and declared an objective to achieve net zero emissions of CO₂ (Scope 1, Scope 2, and Scope 3) in its supply chain by 2050. In 2022, NEC formulated a climate transition plan and expanded its strategic activities through business and initiatives to reduce its environmental burden by setting more targets toward a decarbonized society.

NEC also reports on its CO₂ emission reduction activities based on Japan's Act on the Rational Use of Energy and Act on Promotion of Global Warming Countermeasures.

Disclosure in Line with the TCFD*

In 2018, NEC announced its endorsement of the TCFD. Pursuant with the TCFD's recommendations, we are disclosing climate-related risks and opportunities while projecting and managing their financial effect on our businesses going forward.

Outline of Initiatives Based on TCFD Recommendations

Environment-related Reports for Main Committees

Since climate change is an important materiality, committees attended by managers deliberate, supervise and report on initiatives and risks related to the environment, including climate change. In fiscal 2022, in addition to engaging in dialogue with stakeholders, NEC set up the Sustainability Advisory Committee to broaden discussions between management and outside experts.

Key Discussions, Audits, and Reports

Scenario Analysis

NEC's Vision for 2030/2050: Our Future Lifestyles and Local Governments

NEC believes that a company cannot continue to exist and grow without analyzing scenarios for climate change. Among recent global risks, climate change risks are numerous and could have an extremely large impact on not only corporate business activities and earnings but also our livelihoods. No matter what future is in store for us, based on multiple scenarios, NEC will examine steps that should be taken to realize a safe and secure society while surviving and growing itself. In 2019, we conducted a Companywide scenario analysis, and in two different scenarios, we analyzed potential changes in risks and opportunities for NEC.

Our Future Lifestyles and Local Governments—A focal point in 2021

The NEC Group engages in a variety of businesses globally, from the floor of the ocean to the far reaches of outer space. The risks and opportunities related to climate change differ by business field, so talking about future risks and opportunities related to climate change for NEC as a whole is not necessarily the best approach. In fiscal 2022, NEC conducted a scenario analysis to shine the light on how our lifestyles and local governments will change in the future, as they pertain to the businesses of NEC and the state of measures to combat climate change in Japan and around the world.

In light of the Paris Agreement, governments around the world have drawn up policies that target the 1.5℃ scenario. Japan has declared a goal of reducing GHG emissions by 46% by 2030 compared with the level in fiscal 2014, on the path to becoming carbon neutrality by 2050, and this has encouraged the national and local governments to move more quickly toward decarbonization. For a long time, NEC has been involved in many projects to build core systems for government agencies and government services, and NEC can lend its strengths in digital technologies in this field because it also has experience in smart city projects. Under the NEC 2030VISION, we described a future society in terms of the environment, local communities and livelihoods, all of which are close to people's lifestyles. In fiscal 2022, our scenario analysis focused on the state of regions, including the private sector, while concentrating our analysis on local governments.

Results of Scenario Analysis (2030): World Envisioned by NEC in 2030 and 2050
Our Future Lifestyles and Local Governments

NEC created scenarios for 2030 and 2050 to envision the impact of climate change on the future of regions and local governments (core cities and small-scale cities). We evaluated four scenarios, with the 1.5℃ and 4℃ scenarios in the transition to a carbon-free society on the vertical axis, and the relationship of citizens with their governments and the state of government systems, separated by enforced actions and voluntary actions, on the horizontal axis. In each scenario, we used some items related to climate change and decarbonization, with assumptions for 2050 in the following scenarios.

Referenced Published Scenarios

Scenario：Our Future Lifestyles and Local Governments

Risks and Opportunities Based on Scenario Analysis

Risks and Opportunities for All of NEC

NEC identifies and classifies impacts arising from climate change as short-term, medium-term, and long-term risks and opportunities. Under the examination process, NEC evaluates the future impact of climate change based on scenarios after existing businesses are reorganized from a climate change perspective. At the same time, we confirm assets for addressing risks and taking advantage of opportunities. Major risks and opportunities are reflected in mid-term management plans.

Introduction of Internal Carbon Pricing

With the aim of improving energy efficiency and promoting the introduction of low-carbon facilities and equipment, we have set an internal carbon price. This price allows us to convert the CO₂ emission reductions that would result from a given capital investment into a monetary value, which we can then use as a reference when making investment decisions.

Furthermore, the aforementioned carbon pricing mechanism will drive our decarbonization activities going forward and reduce the risk associated with potential increases in carbon taxes and emissions trading in a carbon-free society of the future.

Helping with Mitigation

Our ICT solutions reduce the overall CO₂ emissions of customers by enabling their operations to become paperless and by improving the efficiency of work, the movement of people, and the movement and storage of goods. As customers and society move forward with measures to lower CO₂ emissions, the opportunities for NEC's ICT solutions to make a contribution will increase.

Helping with Mitigation

Helping Companies Achieve Net Zero through the Resource Aggregation Business
With the aim of achieving carbon neutrality, efforts to make renewable energy humanity's mainstay source of electricity are proceeding on a global scale. In Japan, with the increased introduction of solar power and wind power, which have large fluctuations in power output, maintaining a balance between demand and supply in power grids is becoming more challenging. To address this problem, in April 2021 a reserve capacity market was established, which facilitates reserve capacity trading and thereby helps maintain a balance between supply and demand through absorption and augmentation in response to fluctuations in the supply of power from renewable energy. In the past, reserve capacity was supplied by aging thermal power plants with low operating rates. Since the opening of the market, however, storage batteries, private power generators, and other distributed power sources that can respond to fluctuations with a high degree of flexibility have also been able to supply their reserve capacity. As the reserve capacity supplied by distributed power sources can replace the reserve capacity supplied by aging thermal power plants, distributed power sources will play a major role in establishing renewable energy as society's mainstay power source.
By using new energy management technology that enables the integration and remote control of such distributed power sources as the power generation facilities and storage batteries of companies, NEC realizes virtual power plants that are an aggregation of all distributed power sources and function just as if they were actual power plants. In this way, we are helping to stabilize the power grid and make renewable energy the mainstay power source. Since 2019, NEC has been offering the NEC Energy Resource Aggregation Cloud Service, which is enabled by NEC's IoT technology. This service uses ICT to forecast demand and control and optimize multiple energy facilities, such as solar power generation installations, storage batteries, and electric vehicles (EVs). By remotely controlling consumers' storage batteries and energy management systems in light of the supply–demand balance and using demand response^*2 to curb demand, the service helps stabilize the power grid. As these types of control also eliminate the unevenness and waste in solar power generation, they pave the way to zero emissions for individual companies. With its sights set on decarbonizing society as a whole, NEC will use the aforementioned technologies to become a resource aggregator that controls distributed power sources within the Group and at customers' sites and participates in the power trading market.

Helping with Adaptation

The social infrastructure business, on which NEC is focusing its efforts, an help society adapt to the range of impacts stemming from climate change, including disasters, water shortages, food shortages, and health hazards.

Helping with Adaptation

IoT-based River Water Level Monitoring System
According to the United Nations IPCC, climate change is expected to increase the risk of flood damage in large cities and the risk of infrastructure shutdowns due to extreme weather events. In Japan, damage caused by the flooding of small rivers during typhoons and torrential rain is becoming a problem. Consequently, there is a need to monitor river levels in real time and provide information to residents.
In response to this risk, NEC is developing the IoT-based River Water Level Monitoring System, which can help keep communities safe by using low-power wide-area (LPWA) technology to collect real-time data on changes in the water level of rivers and by making the collected data visible via the internet. The system's dirt-proof, non-contact remote sensors do not require separate power supplies and are easy to install. The sensors update data on river water levels hourly in normal times and every 10 minutes during heavy rain. This data is sent to a cloud server using LPWA technology and made available to the public through a website. Municipal authorities can use the information to establish local disaster prevention plans and emergency responses. In addition, residents can access information on rivers in real time, enabling them to prepare early and heightening their awareness of disaster prevention. As of March 2021, we have already begun conducting proving tests of the system in the regions of more than five municipal authorities in Japan.

Greenhouse Gas Emissions: Targets and Results

Emissions in fiscal 2022 were as follows. All figures have been certified by third parties.

Coverage: NEC Group

Unit: Kilotons

Emissions

Breakdown of Scope 1, 2, and 3 Greenhouse Gas Emissions