Nisshin OilliO "Natural Power of Plants"

Disclosures based on the TNFD Recommendations

Disclosures based on the TNFD Recommendations

(1) Approach to natural capital

  • Plants, animals, soil, water, air, and other forms of natural capital supported by biodiversity are essential to us as the foundation of our social and economic activities. Despite this, we are now losing natural capital faster than ever, and this loss is negatively impacting the global environment. Under these circumstances, we view the loss of natural capital along with climate change as an important social issue for the sustainable future of humanity. We also believe that recognizing and taking measures to address companies’ dependencies on ecosystem services—the benefits they receive from natural capital—and impact on natural capital through their business activities will serve as a driving force for change toward sustainable growth and lead to the healthy development of society and the economy.
  • The Nisshin OilliO Group’s business activities are based on plant resources; therefore, the very sustainability of our business relies on conserving the global environment and natural capital. We import our main raw materials—soybean, rapeseed, palm oil, cacao, olive oil, and sesame—from all over the world, and thus depend on certain natural capital and specific production areas. We also recognize that our business activities impact natural capital in the value chain. Therefore, in accordance with The Nisshin OilliO Group Biodiversity Policy, we will earnestly work toward solutions for conserving natural capital through our business activities in an effort to create shared value with society and achieve the sustainable growth of the Group and the sustainable advancement of society.
    The Nisshin OilliO Group Biodiversity Policy
  • Recognizing that natural capital has a substantial bearing on the sustainability of our business, we began analyzing nature-related risks and opportunities in fiscal 2023 in reference to the framework published by the TNFD*1. We will also continue to enhance our disclosures.
  • *1 The Task Force on Nature-related Financial Disclosures (TNFD) is an international organization that has established a framework for private companies and financial institutions to properly assess and disclose nature-related risks and opportunities.

(2) Governance

(2-1) Supervision and execution system

  • Important management issues are deliberated and decided by the Board of Directors. Basic policies, strategies, and measures regarding nature-related issues and other sustainability issues are approved by the Board of Directors after deliberation by the Management Sustainability Committee established by the Board of Directors.
  • The Board of Directors is responsible for resolving nature-related issues and supervising progress toward goals. The Board of Directors also collaborates with the Management Sustainability Committee to proactively resolve issues, obtaining sufficient insight from outside experts when necessary.
  • The Management Sustainability Committee formulates basic policies to achieve sustainability—the sustainable growth of the Group and the sustainable advancement of society—and deliberates on important issues for realizing our long-term vision. (As part of the fiscal 2023 revision of our committee and meeting structure, we abolished the previous Sustainability Committee and established the Management Sustainability Committee.)
  • The Management Sustainability Committee met five times in fiscal 2023. That year, the committee deliberated on The Nisshin OilliO Group Biodiversity Policy and The Nisshin OilliO Group Water Policy, which were established and published that December, and discussed the formulation and announcement of action plans for sustainable procurement of soybean and cacao. The committee also reviews nature-related goals and other CSV goals and our priorities, and discusses the establishment of targets for fiscal 2030 on an ongoing basis.

▼ Figure 1: Sustainability promotion structure (from the corporate governance structure chart)

  • 1. The Management Sustainability Committee comprises seven Directors and one Senior Managing Officer, and is chaired by the Representative Director and President.
  • 2. The full-time Audit & Supervisory Board Members attend Management Sustainability Committee, Risk Management Committee, Internal Control Committee, and Business Strategy Meetings as observers.
  • 3. Aside from the above, a meeting body has been organized to secure the effectiveness of auditing, through activities such as regular information exchange and sharing between full-time Audit & Supervisory Board Members and corporate staff divisions.

▼ Table 1: Management Sustainability Committee meetings in fiscal 2023

Number of committee meetings 5
Main topics of discussion
  • Review of CSV goals, establishment of new targets for FY2030 (discussed multiple times)
  • Prioritization of risks and opportunities (e.g., identifying new risks and opportunities, reconfirming social issues, verifying priority areas)
  • Response to TCFD recommendations
  • Establishment of Biodiversity Policy and Water Policy
  • Formulation of action plans for sustainable procurement of soybean and cacao

(2-2) Stakeholder relations

  • Using natural capital involves not only its impact on biodiversity, but also the risk of human rights violations. The Group’s governance must take into consideration stakeholders with connections to natural capital. We recognize that our business may directly or indirectly impact human rights in our supply chain. We have established The Nisshin OilliO Group Human Rights Policy to respect the human rights of all people involved in our business, and are promoting Groupwide efforts to respect human rights in line with the United Nations Guiding Principles on Business and Human Rights. We respect human rights as defined in the International Bill on Human Rights, the OECD Guidelines for Multinational Enterprises, and the ILO Declaration on Fundamental Principles and Rights at Work. Where there is conflict between internationally recognized human rights and local laws, we will seek ways to maximize respect for the principles of international human rights.
    The Nisshin OilliO Group Human Rights Policy
  • As key human rights efforts, we are establishing a human rights due diligence system for our supply chain and strengthening traceability therein. Additionally, recognizing the importance of efforts throughout our supply chain, we have established The Nisshin OilliO Group Basic Procurement Policy and The Nisshin OilliO Group Supplier Guidelines, and aim to realize and advance a sustainable society through our business activities.
  • As protecting the natural environment and ecosystems in palm oil production areas and respecting the human rights of indigenous people and plantation workers have become social issues, we are also committed to protecting the environment and human rights where our raw materials are produced. Given that each main raw material involves different environmental and social issues, we have established a Palm Oil Procurement Policy, a Soybean Procurement Policy, and a Cacao Procurement Policy to ensure that we realize our Basic Procurement Policy, and will expand and promote sustainable procurement initiatives under action plans to resolve the issues.
    The Nisshin OilliO Group Basic Procurement Policy
    The Nisshin OilliO Group Supplier Guidelines
  • We analyze human rights risks in our supply chain with advice from outside experts. In fiscal 2023, we administered SAQ (Self-Assessment Questionnaire) to roughly 40 high-priority manufacturing contractors in terms of impact on our business, marketability and regional characteristics, the existence or absence of legal regulations, and the like. We visited two of these contractors to explain and discuss The Nisshin OilliO Group Human Rights Policy and engage in other forms of dialogue. We will continue to implement these initiatives.

▼ Table 2: Details of SAQ for suppliers

Survey period March 2024
Overview
  • Self-monitored, questionnaire-based written survey
  • Questions about corporate governance, human rights, labor, environment, fair business practices, quality and safety, information security, supply chain, coexisting with local communities, etc.
Results
  • As of the end of April 2024, roughly 90% of suppliers had responded.

▼ Table 3: Details of dialogue with suppliers

Survey period March 2024
Overview Plant visits for in-person surveys

(1) Explained the Group’s environmental and human rights efforts
(2) Examined manufacturing contractors’ environmental and human rights efforts
(3) Plant inspections (in terms of occupational safety and health)

Results
  • At both companies, we found no violations of The Nisshin OilliO Group Supplier Guidelines, which we require our suppliers to comply with.
  • Through dialogue, we sought to ensure that all parties were aware of our policies and requirements.

(3) Strategies

  • In fiscal 2023, we began identifying and assessing nature-related issues (dependencies, impacts, risks, and opportunities) as required for TNFD disclosures. As for specific methodology, we refer to the LEAP (Locate, Evaluate, Assess, and Prepare) approach advocated by the TNFD. The LEAP approach is a process developed by the TNFD as an integrated approach to assessing interface with nature, dependencies and impacts on nature, nature-related risks and opportunities, and more.
  • In fiscal 2023, we identified major dependencies and impacts of the Group’s business on nature, identified risks and opportunities, and listed relevant existing measures. We will continue to use the LEAP approach to identify priority areas, assess risks and opportunities, consider specific measures, and define indicators.

▼ Figure 2: LEAP approach and overview of FY2023 implementation

(3-1) Dependencies and impacts of the Group on nature (Locate, Evaluate)

  • In fiscal 2023, we identified dependencies and impacts on nature from direct operations as well as upstream and downstream value chains of the Group’s Oil and Fat Business and Processed Food and Materials Business. Our upstream value chain includes the production of crops as raw materials and processes such as oilseed processing for palm oil and some other raw materials; this analysis covered the production and processing of our main raw materials: soybean, rapeseed, palm oil, cacao, olive oil, and sesame. As for our direct operations, we manufacture and process the raw materials we procure. In our downstream value chain, our customers manufacture and process the processed products we supply into finished products, which they distribute and retail to end users.
  • The figure below shows interface with nature in the Group’s value chain, and we have identified dependencies and impacts based on these areas.

▼ Figure 3: Interface with nature

* Circles in the figure indicate the locations of main raw material production areas and manufacturing plants

  • To identify dependencies and impacts on nature, we used the ENCORE*3 database recommended by the TNFD to screen for particularly major dependencies and impacts. We listed the main processes and identified the general dependencies and impacts of each in direct operations and upstream and downstream value chains (Tables 4 and 5). We referred to the Global Industry Classification Standard (GICS)*4 to sort out the main processes.
  • *3 Exploring Natural Capital Opportunities, Risks and Exposure (ENCORE) is a tool developed jointly by the United Nations Environment Programme World Conservation Monitoring Centre (UNEP-WCMC) and other organizations under the initiative of the Natural Capital Finance Alliance (NCFA), an international financial industry association for the natural capital sector. ENCORE was introduced in version 1.0 of the TNFD framework as a useful tool for the Locate and Evaluate steps of the LEAP approach.
  • *4 The GICS is a standard jointly developed by US rating agency S&P and Morgan Stanley Capital International (MSCI), a provider of indexes and analytical tools for institutional investors, that classifies the world’s industries into 11 sectors, 24 industry groups, 69 industries, and 158 sub-industries.

▼ Table 4: Dependencies on nature

Value chain Essential ecosystem services (major dependencies)
Supply services Coordination services
Water supply Biomass Genetic resources Other Insect & wind pollination Pest & disease control Soil erosion control Natural disaster damage mitigation Consistent rainfall Indoor air circulation through planting, etc. Consistent climate Waste decomposition Soil fertility Air & water purification
Upstream Soy production
Rapeseed production
Olive production
Sesame production
Palm production
Cacao production
Oilseed processing
(olive oil, sesame oil, palm oil)
Direct operations Manufacturing & processing
Downstream Manufacturing & processing
Transport
Sales
  • In the upstream value chain, the production processes for soybean, rapeseed, olives, sesame, palm, and cacao—the raw materials for edible oils and fats—are highly dependent on ecosystem services that support crop production, namely pollination by insects, drought control, and maintaining soil fertility. The functions of mitigating damage from floods, storms, and other natural disasters and controlling soil erosion in farmland are also essential services provided by natural capital.
  • In terms of individual raw materials, cacao production was identified as more dependent on pollinators and more susceptible to changes in natural conditions.
  • Additionally, dependency on water resources was identified in the manufacturing and processing processes of direct operations as well as those of customers in our downstream value chain.

▼ Table 5: Impacts on nature

Value chain Impact factors
Climate change Changes in land, freshwater & ocean use Pollution & decontamination Resource use & replenishment
GHG emissions Terrestrial ecosystems Freshwater ecosystems Marine ecosystems Soil contaminants Water contaminants Solid waste Noise & other disturbances Non-GHG air pollutants Water Other resources
Upstream Soy production
Rapeseed production
Olive production
Sesame production
Palm production
Cacao production
Oilseed processing
(olive oil, sesame oil, palm oil)
Direct operations Manufacturing & processing
Downstream Manufacturing & processing
Transport
Sales
  • In raw material production processes in the upstream value chain, terrestrial ecosystem use and water and soil contamination were identified as impact factors. From the explanations in ENCORE, the documentary records, and other sources of information, we recognize that deforestation for the purpose of developing raw material production areas and excessive use of fertilizers and pesticides in cultivation have a negative impact on nature in terms of the use of terrestrial ecosystems and water and soil contamination.
  • In terms of individual raw materials, palm oil was identified as having an impact on nature due to the GHG emissions, waste, and water use associated with processing.
  • Direct operations have a high potential for impact on nature due to GHG emissions, waste, and wastewater from manufacturing plants during the manufacturing and processing processes. We also identified a high potential for impact on nature in the downstream value chain due to GHG emissions, waste, and wastewater from our customers during their manufacturing, processing, distribution, and sales processes.
  • Important issues in the entire food product manufacturing industry include the food waste from manufacturing and processing processes and products, and the use and disposal of plastic in containers and packaging. Plastics are especially concerning due to GHG emissions from their disposal and incineration, as well as the impact of plastics (microplastics) released into the ocean on marine ecosystems. The Group also recognizes these as important issues.

(3-2) Risks and opportunities (Assess, Prepare)

  • We have identified risks and opportunities associated with particularly large dependencies and impacts of our business on nature. We have also listed our current efforts to address these risks and opportunities.

▼ Table 6: Risks and opportunities arising from dependencies on nature, and existing measures

Natural capital Essential ecosystem services (major dependencies) Value chain Risks Opportunities Relevant Group environmental target themes Response (existing measures) AR3T
Upstream Direct
operations		 Downstream
Plants & animals Insect & wind pollination ●
  • Decrease in pollinators
    Capital investment needed for artificial pollination, etc.
  • Procure sustainable raw materials through afforestation and other types of forest conservation
 Plant resources/nature conservation
  • Promote sustainability of cacao flavors in Ecuador to boost disease resistance and productivity
 Reduce
Restore & Regenerate
Pest & disease control ●
  • Pests and diseases
  • Promote natural conservation activities by planting mangrove trees in Malaysia, etc.
 Restore & Regenerate
Natural disaster (e.g., floods, storms) damage mitigation ●
  • Increasingly severe floods, storms, and other disasters in raw material production areas
  • Decline in operational capacity due to floods, storms, and other disasters at manufacturing plants
Water Water supply ● ●
  • Reduced water supply at manufacturing plants
  • Reduce drought risk and costs through efficient water use during production
 Plant resources/nature conservation
Establishing resource recycling
  • Reduce our water consumption intensity at four manufacturing plants in Japan
 Reduce
Consistent rainfall ●
  • Droughts and localized heavy rain
  • Stabilize yields by popularizing dry-/heat-resistant crops
Soil Soil erosion control on farmland ●
  • Decreased productivity of raw materials due to soil erosion
  • Increase revenues from offering certified sustainable products
  • Improve market valuation by practicing environmentally regenerative farming
  • Acquire new oil and meal resources and functional materials that do not depend on soil
 Plant resources/nature conservation
  • Promote procurement of sustainable raw materials (certified palm, certified soybeans)
 Avoid
Soil fertility ●
  • Land deterioration due to raw material production
  • Participate in research group for producing useful substances (e.g., edible oils and fats) obtained from microalgae, and development of food applications and evaluation of their functionality
 Transform
Air Consistent climate ●
  • Increased challenges in ensuring dependable transport
  • Establish a supply chain capable of maintaining product supply in emergencies
 Preventing global warming
  • Strengthen BCP to maintain product supply system in emergencies
  • Diversify transport routes for raw materials and products
 Reduce

▼ Table 7: Risks and opportunities arising from impacts on nature, and existing measures

Impact factors Value chain Risks Opportunities Relevant Group environmental target themes Response (existing measures) AR3T
Upstream Direct
operations		 Downstream
Climate change GHG emissions ● ● ●
  • Tighter regulations for GHG emissions reduction
  • Increased demand for fossil fuel alternatives
  • Reduce transport costs by promoting optimization of logistics for emissions reduction
  • Capture new sales opportunities from demand for fossil fuel alternatives
  • Improve resilience on GHG issues by acquiring new oil and meal resources and functional materials and reducing emissions
 Preventing global warming
  • Reduce GHG emissions in the supply chain<
  • Promote the use of renewable energy in our manufacturing processes
 Reduce
  • Adopt new technologies (e.g., hydrogen energy) that contribute to decarbonization in our manufacturing processes
 Avoid
Changes in land,
freshwater &
ocean use		 Terrestrial ecosystems ●
  • Tighter regulations on farmland development and deforestation
  • Increased demand for environmentally friendly raw materials due to tighter regulations
  • Changing consumer preferences
  • Achieve 100% traceability of palm oil to plantations to improve raw material transparency and expand sales opportunities
  • Increase market share and sales by expanding sales of products made from certified raw materials
  • Expand sales opportunities on the strength of increased demand for plant-based foods
 Plant resources/nature conservation
  • Promote procurement of sustainable raw materials (certified palm, certified soybeans)
 Avoid
  • Promote certification support for small-scale palm farmers
 Avoid
  • Promote natural conservation activities by planting mangrove trees in Malaysia, etc.
 Restore & Regenerate
Pollution &
decontamination		 Soil & water contaminants ●
  • Tighter regulations on pesticide and chemical fertilizer use in raw material production
  • Increase revenues from offering certified sustainable products
  • Improve market valuation by practicing environmentally regenerative farming
 Plant resources/nature conservation
  • Promote procurement of sustainable raw materials (certified palm, certified soybeans)
 Avoid
  • Promote sustainability of cacao flavors in Ecuador to boost disease resistance and productivity
 Reduce
Solid waste ● ● ●
  • Tighter regulations on plastic use and disposal
  • Necessity of developing new technologies to reduce waste generated from manufacturing processes and products
  • Changing consumer preferences
  • Reduce plastic use by introducing recycled and plant-derived materials in food packaging
  • Reduce plastic use by establishing a system for recycling used plastic bottles that contained oil
  • Reduce food loss by extending the shelf life of household cooking oil
  • Create new business by effectively utilizing oil cakes, spent bleaching clay, and other by-products
 Establishing resource recycling

Promoting environmentally friendly development
  • Reduce plastic containers/packaging and promote resource recycling
 Reduce
  • Promote recycling in our manufacturing processes
 Reduce
Non-GHG air pollutants ●
  • Tighter regulations on emissions
  • Increased impact of acid rain caused by air pollutants
  • Reduce air pollutant emissions by introducing low-emission vehicles
  • Reduce transport costs by promoting optimization of logistics for air pollutant reduction
 Preventing global warming
  • Introduce low-emission vehicles for transporting products
 Avoid
  • Conduct environmental assessments and provide feedback to delivery companies
 Avoid
  • Jointly deliver products, promote modal shift
 Reduce
Resource use &
replenishment		 Water ● ● ●
  • Conflicts with local communities involving water rights
  • Depletion of water resources
  • Reduce drought risk and costs through efficient water use during production
 Establishing resource recycling
  • Reduce our water consumption intensity at four manufacturing plants in Japan
 Reduce
  • Dependencies and impacts on natural capital (plants, animals, air, soil, and water) and the risks and opportunities arising from them are closely related to the theme of the Group’s environmental targets; therefore, we are already disclosing indicators, setting targets, and taking action to achieve these targets in due order. In the future, we will further incorporate the issues identified through this approach and enhance our response to steadily progress toward achieving our environmental targets. We will also identify priority areas, assess the significance of risks and opportunities, and take other steps to consider and expand necessary measures, including areas that are not currently being addressed.
  • Additionally, when we respond to risks and opportunities, we are required to take action based on the AR3T Action Framework*5. We will consider additional initiatives based on this framework.
  • *5 A framework proposed by the Science Based Targets Network (SBTN) that prioritizes and organizes corporate actions to minimize negative impacts on nature, reduce nature-related risks, clarify positive impacts on nature, and identify new business opportunities. The AR3T Action Framework requires companies to take action to Avoid, Reduce, Restore & Regenerate, and Transform, in that order.

■ Preventing global warming

  • Because our business operations are based on plant resources, and because climate change has a significant impact on plant growth, responding to climate change is an important management theme. If global warming progresses, increasingly severe meteorological disasters will pose risks to the supply chain, which could cause a decline in production volume and quality of raw materials, threatening their stable supply over the medium and long term.
  • We are streamlining production processes, promoting the use of renewable energy, and taking other steps to reduce Scope 1 and 2 CO2 emissions, and also working to reduce CO2 emissions in our upstream and downstream supply chains. (Relevant indicators: GHG emissions, air pollutant emissions)

▼ Figure 4: Strategic roadmap to promote decarbonization

Sustainability: Our priorities (Global environment)

■ Establishing resource recycling and promoting environmentally friendly development

Measures for plastics

  • We recognize that the use and disposal of plastic in containers and packaging and food loss from manufacturing and processing processes and products are major issues in the food product manufacturing industry. Laws and regulations for conserving natural capital are expected to be strengthened, which may impose additional costs of compliance on the Group’s business as well as the risk of litigation due to inability to comply.
  • We are working to promote resource recycling by reducing plastic use, promoting the use of recycled and plant-derived materials, and developing a recycling system. We are also making efforts to reduce food loss by recycling oil cakes, spent bleaching clay, and other by-products from the manufacturing process within our own manufacturing processes and by extending the shelf lives of our products. (Relevant indicators: volume of waste, volume of containers and packaging)

▼ Figure 5: The Group’s reduction of plastic containers and packaging and promotion of resource recycling

Efforts to reduce and recycle plastics

Measures for water

  • Water is one of the most important forms of natural capital for the Group in the production of raw materials and the manufacturing and processing processes. When a supply chain includes areas of high water stress, there is a high risk of reduced water supply and depletion of water resources, which may increase water procurement costs.
  • We have confirmed that no raw materials for soybean or palm oil are sourced from areas of high water stress, and that none of our main direct operation manufacturing plants take water from areas of high water stress. We will continue to check other raw materials and locations to determine if they are in areas of high water stress, and prepare for risks accordingly. We have also established The Nisshin OilliO Group Water Policy, which promotes the efficient use of water resources in our manufacturing and processing processes and water risk management in our supply chain to conserve water resources. (Relevant indicator: water usage)

    The Nisshin OilliO Group Water Policy

■ Plant resources/nature conservation

  • Our business is based on plant resources; therefore, the very sustainability of our business relies on protecting plant resources and conserving natural capital, and we see these efforts as themes of the utmost priority. Loss of natural capital—the basis for ecosystem services—causes a decrease in pollinators that support crop production, an increase in pest presence, and progressive soil erosion, which in turn lead to the risk of lower crop yields. There is also a risk of increasingly severe damage to the supply chain by floods and storms if coastal forests and other areas are lost. However, given that laws and regulations concerning deforestation and the use of pesticides and chemical fertilizers are expected to be strengthened in the future to reduce negative impacts on nature, our business is also at risk of increased costs associated with compliance, penalties for failure to comply, and a tarnished brand image due to delays in compliance.
  • Regarding soybeans, in line with our Soybean Procurement Policy, we are making efforts to resolve issues throughout the supply chain, including environmental considerations in soybean production areas and continuous monitoring to gain an understanding of actual conditions. We are also a member of the Round Table on Responsible Soy Association (RTRS) and will promote specific efforts, including utilizing certification systems.

    Soybean Action Plan

  • Regarding cacao, we are working on sustainability of cacao flavors, and our subsidiary Daito Cacao Co., Ltd. is engaged in conservation activities for the Arriba variety (a distinctively flavored endemic variety in Ecuador) and is also improving cultivation methods to boost disease resistance and productivity.

    Cacao Action Plan

  • Regarding palm oil, we are planting mangrove trees in Malaysia, a major producer of palm oil. Mangroves make up coastal forests and serve to protect plants, animals, and soil; therefore, conserving them should reduce risks in palm oil production areas. We also engage in sustainable raw material procurement, including obtaining certification from the Roundtable on Sustainable Palm Oil (RSPO). (Relevant indicator: percentage of sustainable raw material procurement)
  • Palm oil has been specifically identified as a source of deforestation, peatland development, violation of indigenous people’s rights, and labor problems in production areas. We recognize the paramount importance of ensuring traceability to plantations for protecting the environment and human rights in palm oil raw material production areas, and are moving forward with action plans to achieve this and resolve the issues. We also believe it is important to identify priority areas for risk countermeasures to further enhance our risk assessment and countermeasures in the future. The following column (“Moving Toward Sustainable Procurement of Palm Oil”) presents the current status of our efforts.
Column: Moving Toward Sustainable Procurement of Palm Oil

Palm oil is obtained from a plant known as “oil palm,” which grows in hot and humid tropical regions. Presently, more than 80% of the world’s palm oil is produced in Malaysia and Indonesia. Thanks to high productivity and other benefits, palm oil is an essential raw material for oils and fats in our daily lives, and global production is expanding every year. In the past several years, demand for palm oil has increased not only for food, but also as fuel for biomass power generation.
However, palm oil production has been identified as a source of deforestation, peatland development, and other land modification that negatively impacts nature, violations of indigenous people’s rights, labor problems, and other issues. Failure to address these issues will result in the loss of forests, destroying abundant ecosystems and threatening the livelihoods of indigenous people living near the forests.
Therefore, to satisfy demand for sustainable palm oil procurement, we must gain an accurate understanding of our supply chain and strengthen management by establishing traceability to plantations.

Efforts to identify priority areas

  • The Group has two main palm oil procurement routes: procurement originating from our palm oil refining and processing company in Malaysia (Route A), and procurement through trading companies (Route B). On Route A, we conduct business directly. In contrast, on Route B, trading companies submit to us lists of the palm oil refining and processing companies and oil mills from which they procure palm oil.

▼ Figure 6: The Group’s palm oil procurement routes

  • We also use Global Forest Watch, Google Earth, and other satellite mapping tools to monitor deforestation on a regular basis, which helps us understand problems.

▼ Figure 7: Deforestation in palm oil producing countries identified by satellite mapping tools

  • By overlaying these deforestation areas with the locations of the oil mills we know about, we can identify areas where problems may involve oil mills with which we are associated. This type of analysis will help us identify priority areas within the Group, and we will continue to investigate deforestation and consider responses to major risks.

The Group’s approach and business strategy for palm oil sustainability

  • Palm oil is one of the most important raw materials for the Group, and its use is on the rise. The Group views the rapidly mounting calls for respect for the environment and human rights in the context of palm oil procurement and production as an opportunity for growth. We aim to enhance three types of quality—quality of physical properties (functional aspects), quality of safety and security, and social quality—and make the products and services that combine these qualities the driving force behind the growth of our palm oil business to propel us into a global top provider of oils and fats solutions.

Goals and action plans for sustainable palm oil procurement

  • To resolve environmental and human rights issues in the palm oil supply chain, we engage in dialogue with our plantations, customers, NGOs, and other stakeholders and promote specific initiatives in accordance with the following action plan.

▼ Figure 8: Palm Oil Action Plan

Improving traceability

  • To ensure transparency in the palm oil supply chain, which is exposed to potential risks involving deforestation and labor practices, we are committed to procuring oil certified by the Roundtable on Sustainable Palm Oil (RSPO)*6. The RSPO has four grades of certification; currently, 50% of the palm oil we procure is SG-certified*7. We aim to achieve 100% certification and ensure more than 50% SG certification by 2030. We will also achieve 100% traceability ratio to plantations by 2030, which will serve as the foundation of our action plan.
  • *6 An international organization established in 2004 to transform the market so that sustainable palm oil becomes the standard.
  • *7 SG (Segregated) certification: One of the RSPO certification grades, in which certified oil from multiple certified plantations is passed to the final product manufacturer in a segregated manner from other types of palm oil. SG certification guarantees that 100% of the product is certified.

For more information on these initiatives for palm oil, click the following link to read our March 2024 Sustainable Procurement Report for Palm Oil.
March 2024 Sustainable Procurement Report for Palm Oil

(4) Risk management

(4-1) Risk management approach

  • We define risk as any uncertainty that could have a negative impact on our business and the realization of Vision 2030 and Value Up+ (our medium-term management plan), and we implement risk control accordingly. We aim to fulfill our social responsibility through proactive risk management efforts, achieve stable earnings, and further enhance our corporate value.

(4-2) Risk management system

  • The Risk Management Committee—which was established by the Board of Directors—holistically manages Companywide risks. The committee has identified substantial financial and strategic risks to our business and positioned environmental, human rights, and other sustainability issues as major risks for the Group, which it manages together with other key risks.

(4-3) Methods of identifying and managing risks

  • The Risk Management Committee inventories risks, creates maps based on the degree of impact and likelihood of occurrence, evaluates and prioritizes the impact of risks when they materialize, and identifies major risks.
  • In fiscal 2023, the committee identified 14 major risks. Departments in charge took the lead in devising measures and are using the PDCA cycle to manage them. We also have an emergency system for responding to crises when risks materialize.
  • The Risk Management Committee reports their assessment of Groupwide risks, policy and status of response, and other matters to the Board of Directors.

(4-4) Major risks for the Group

  • The following figure shows the 14 major risks of the Group identified by the Risk Management Committee.

▼ Figure 9: Major risks of The Nisshin OilliO Group

(5) Indicators and goals

  • The nature-related indicators we publish in our Sustainability Data Book include GHG emissions, air pollutant and chemical emissions, water consumption, volume of waste, volume of containers and packaging (including plastics), and percentage of sustainable raw material procurement. These indicators are also included in the core global indicators recommended by the TNFD for disclosure.
    The Nisshin OilliO Group Sustainability Data Book
  • Our nature-related goals include CSV goals, with “supply chain connected by trust” and “global environment” as priorities for 2030. We are committed to improving the environment, human rights, and sustainability, and will build a stable supply chain for the future in addition to conserving resources and protecting the global environment in order to pass them on to the next generation.
  • We have established Environmental Targets for 2030 in order to realize our CSV goals. Some of these align with the targets of the Kunming-Montreal Biodiversity Framework; for example, our goals for preventing global warming and establishing resource recycling are consistent with the target for preventing and reducing pollution (Target 7). Additionally, our goals for sustainable raw material procurement under “Plant resources/nature conservation” are consistent with the target for managing wild species’ sustainably (Target 9). We have set quantitative targets for these goals, and will continue to set more for other targets in the future.

▼ Table 8: Environmental Targets for 2030

Theme Target  
FY2021 actual FY2022 actual FY2023 actual Revised target for FY2030
Preventing global warming 　Reduce greenhouse gas emissions in the supply chain
  • • Reduce Scope 1 and 2 CO2 emissions
 -7.3%
compared with FY2016		 -8.6%
compared with FY2016		 -18.6% (preliminary)
compared with FY2016		 -50%
compared with FY2016
  • • Reduce Scope 3 CO2 emissions
  • • Set action targets for emissions reduction
  • • Expanded scope of calculation to include The Nisshin OilliO Group, Ltd., Intercontinental Specialty Fats Sdn. Bhd.
 • Obtained third-party verification of CO2 emissions
  • • Set quantitative targets for FY2030
  • • Began detailed discussions with US and Canadian industry groups via the Japan Oilseed Processors Association (JOPA) on methods of calculating CO2 emissions from main raw materials (soybean, rapeseed) (September)
  • • Obtained third-party verification of CO2 emissions
 -25%
(starting with Categories 1 and 4)
compared with FY2020
  • • Implement environmental education and promote the reduction of CO2 emissions through business operations by each and every employee
　Promote the use of renewable energy
  • • Promote the use of renewable energy at the Sakai Plant
  • • Decided to install a solar power generation system at the Sakai Plant
  • • Installed a solar power generation system at the Sakai Plant
  • • Reduced CO2 emissions by 179 t-CO2 through solar power generation at the Sakai Plant
 100%
  • • Expand efforts led by the Sakai Plant to other plants and Group companies
  • • Decided to install solar power generation systems at the Yokohama Isogo Plant and the Nagoya Plant
  • • Installed solar power generation systems at the Yokohama Isogo Plant and the Nagoya Plant
  • • Reduced CO2 emissions by 245 t-CO2 through solar power generation at the Yokohama Isogo Plant and the Nagoya Plant
 –
Establishing resource recycling 　Promote recycling in production processes
  • • Recycling rate in production processes
 99.8% 99.8% 99.9% At least 99%
  • • Effectively use by-products from edible oil production
  • • Formulated a plan to install a biomass boiler at the Sakai Plant
  • • Installed a biomass boiler at the Sakai Plant
  • • Reduced CO2 emissions by 351 t-CO2 through biomass boiler operation at the Sakai Plant
 –
　Efficiently use water resources for production
  • • Reduce our water consumption intensity in production activities
 -13.1%
compared with FY2016		 -15.4%
compared with FY2016		 -10.8%
compared with FY2016		 -16%
compared with FY2016
Plant resources/nature conservation 　Promote sustainable raw material procurement
• Promote sustainable palm oil procurement
• Increase the percentage of certified palm oil 54.9％ (Jan–Dec 2021) 59.6％ (Jan–Dec 2022) 66.9％ (Jan–Dec 2023) 100%
• Increase the SG ratio of RSPO certified oil 49.6％ (Jan–Dec 2021) 51.1％ (Jan–Dec 2022) 56.3％ (Jan–Dec 2023) 50%
• Establish a system to ensure traceability to plantations, aiming for 100% traceability Palm oil: 68.5%
Palm kernel oil: 30.5%		 Palm oil: 90.9% Palm oil: 92.7% Palm oil: 100%
• Promote efforts to increase soybean sustainability
  • • Conducted a fact-finding survey on Brazilian soybean, considered joining the Roundtable on Responsible Soy Association (RTRS), etc.
  • • Established Soybean Procurement Policy
  • • Formulated an action plan based on traceability, Scope 3 emissions reduction, etc.
  • • Began engaging in dialogue with suppliers and producer organizations (in collaboration with JOPA and others, preparing to join RTRS)
 Sustainable soybean procurement predicated on stable supply
• Promote sustainable cacao procurement
  • • Conducted a survey on the conditions of production areas and customer needs
  • • Established Cacao Action Plan
  • • Formulated an action plan based on cacao procurement traceable to plantations, release of products made from certified cacao, conservation of rare beans, etc.
 Sustainable cacao procurement predicated on stable supply
　Promote natural conservation activities
  • • Promote afforestation, etc.
  • • Planted mangrove trees (roughly 0.14 ha, 365 trees) in Malaysia
  • • Planned to expand scale in 2022 and onward
  • • Planted mangrove trees (2 ha) in Malaysia
  • • Planted mangrove trees (1.5 ha, 3,000 trees) in Malaysia
 –
Promoting environmentally friendly development Reduce plastic containers/packaging and promote resource recycling
  • • Develop product designs and new containers that reduce plastic use
  • • Discussed the course of action in response to the problems of plastic
  • • Strengthened production system for environmentally friendly containers
  • • Released three paper container products (Canola Oil, Canola Oil Halfuse, and Healthy Sesame Fragrant Oil)
  • • Introduced new containers with 30% recycled PET plastic and 39% less plastic than conventional bottles, released eight new products
  • • Development and realization of systems for containers, technologies, and services conducive to resource recycling
  • • Reduction of emissions per new plastic containers (bottle/cap) made from petroleum: 15% (compared with FY2022)
  • • Develop easily recyclable containers and technologies to facilitate recycling, and establish a recycling system
  • • Decided to invest in an environmentally friendly container filling line at the Sakai Plant
  • • Collaborated with the City of Kawasaki on an experiment to collect used plastic containers for edible oil and seasonings from households
  • • Promote the use of recycled materials and plant-derived materials as alternatives to facilitate recycling
  • • Planned to introduce biopolyethylene in products in the household-use category (1,000-g polyethylene bottles)
  • • Introduced biopolyethylene in products in the household-use category (1,000-g polyethylene bottles)
　Develop products/services that use plant resources and have a positive environmental impact
  • • Develop products and applications that have a positive impact on the environment in the food and industrial domains
  • • Developed 10 products that have a positive environmental impact
  • • Developed new approaches and proposals for industrial applications (e.g., lubricants, inks, adhesives)
  • • Developed 15 products that have a positive environmental impact
  • • Cumulative: 41 products
  • • Developed and released long-lasting oils, plant-based industrial oils and fats, etc. for reducing food loss
 Products/services that have a positive environmental impact become the core driving force of growth

▼ Table 9: CSV goals for our priorities

Priority CSV goals FY2023 actual FY2024 target FY2030 target
Good health for all Underpinning the era of 100-year lifespans by contributing to mental and physical health Increase in growth rate of health science products*1 that generate health and energy at different life stages (compared with FY2019) 133% 150% 200%
Develop products to improve health issues by utilizing our lipid nutrition knowledge*2
  • Acquired six pieces of evidence involving fat burning and preventing undernutrition and frailty (MCT)
  • Released nine products, including small-quantity, high-energy products
 Acquire evidence and release products involving preventing frailty and improving on metabolic syndrome (more than 20 products in total since 2022) Acquire evidence and develop products for resolving personal health issues (improving and controlling physical condition)
Expanded number of people provided with health information to promote optimal lipid intake (cumulative total since FY2021)*3 Cumulative: 89.41 million Cumulative: 130 million Cumulative: 400 million
Quality of life Contributing to the realization of a higher quality of life, through the pursuit of “good flavor” and “beauty” Brand refinement to offer a higher quality of life through good flavor for foods Spring 2024: Released Nisshin Healthy Clear made with our patented ultra oxidation barrier manufacturing method that thoroughly inhibits oil oxidation Release and develop products that embody values we can share with customers Corporate brand awareness: 90%
Creation of products that pursue “good flavor” and “beauty” Expanded awareness by introducing new seasoned oil products and developing promotions (awareness: 25%) Contribute to the enrichment of home dining by popularizing edible oils that make food taste better simply by pouring them on (expand touch points with customers, cultivate the seasoned oil market) Further contribute to food enrichment by creating new categories based on edible oils
Increase in growth rate of beauty-enhancing products*4 (compared with FY2019) 126.6% 150% 200%
Global environment Tackling challenges to pass on the global environment to the next generation Reduction of Scope 1 and 2 CO2 emissions (compared with FY2016) 18.6% (preliminary) 20% 50%
Reduction of Scope 3 CO2 emissions (compared with FY2020, starting with Categories 1 and 4)
  • Set quantitative targets for FY2030
  • Began detailed discussions with US and Canadian industry groups via the Japan Oilseed Processors Association on methods of calculating CO2 emissions from main raw materials (soybean, rapeseed) (September)
 By 2026, acquire science-based reduction targets and commitments to them from suppliers covering 70% of emissions from purchased products and services and transport (upstream) 25% reduction of Scope 3 CO2 emissions
Reduce plastic containers/packaging and promote resource recycling
  • Released three paper container products (Canola Oil, Canola Oil Halfuse, and Healthy Sesame Fragrant Oil)
  • Introduced new containers with 30% recycled PET plastic and 39% less plastic than conventional bottles, released eight new products
 70% introduction rate of environmentally friendly materials in products in the household-use category (Target: edible oils and gifts)
  • Development and realization of systems for containers, technologies, and services conducive to resource recycling
  • Reduction of emissions per new plastic containers (bottle/cap) made from petroleum: 15% (compared with FY2022)
Develop products/services that use plant resources and the Company’s technology and have a positive environmental impact (cumulative from FY2021) Cumulative: 41 products
(Developed and released long-lasting oils, plant-based industrial oils and fats, etc. for reducing food loss)		 Cumulative: 80 products Products/services that have a positive environmental impact become the core driving force of growth
Contribution to the food value chain Working with our customers to refine our technologies, products, and services for enhanced value Stable supply of food energy in Japan
(percentage of total domestic energy)		 7.3% 6% or more
Provide solutions by demonstrating user support functions
Increase in the number of user support cases (compared with FY2019)		 127% 130% 150%
- Began participating in industry-academia-government collaboration projects to acquire new oil and meal resources and functional materials (development of alternative algae-based lipids) -
Supply chain connected by trust Building a strong and flexible supply chain based on integrity Advance and fortify business operations based on respect for human rights Established Supplier Guidelines, began providing guidance to high-priority suppliers, administered the Self Assessment Questionnaire (SAQ) and made site visits to manufacturing contractors Launch full-scale due diligence on human rights in the supply chain Lay the groundwork and establish mechanisms to prevent human rights violations from occurring in the supply chain
Improve the traceability ratio to plantations Palm oil: 92.7%
(Jan–Dec)		 Palm oil: Develop effective initiatives to achieve and maintain a 100% traceability ratio Palm oil
100%
Promote sustainable soybean procurement
  • Formulated an action plan based on traceability, Scope 3 emissions reduction, etc.
  • Began engaging in dialogue with suppliers and producer organizations
 Sustainable soybean procurement predicated on stable supply
Promote sustainable cacao procurement Formulated an action plan based on cacao procurement traceable to plantations, release of products made from certified cacao, conservation of rare beans, etc. Sustainable cacao procurement predicated on stable supply
Establish a sustainable, competitive logistics system Increase the F-LINE co-distribution rate to make transport and loading more efficient 14% 20% 30%
Reduce the truck driver time spent at Company plants Average: 88 minutes (as of March 2024) Average: 60 minutes Average: 30 minutes
Human resource management Enhancing fulfillment among diverse human resources to improve organizational capacity and drive innovation Resonance with the Group’s philosophy and vision Increase in the empathy index for the Group’s Corporate Philosophy and Vision 2030 The aim is for everyone in the Group to take action proactively while resonating with and having pride in the Group’s philosophy, vision, and corporate value. (Proper targets will be set after surveys in FY2024)
Establish robust human resource capacity Maintain and expand annual training and education expenditure per full-time employee as a proactive investment in human resource development 78,631 yen 78,000 yen or more 95,000 yen or more
Active participation by diverse human resources Expansion of employees’ pursuit and sense of growth through work The aim is for employees to be motivated to grow and feel growth through their work. (Proper targets will be set after surveys in FY2024)
Increase in the ratio of women occupying management positions*5 7.3% 8% 20%
Evolution into organizational culture that creates innovation Increase in percentage of employees who feel fulfilled at work The aim is to foster a pioneering organizational culture in which employees who feel fulfilled at work engage in innovative communication and co-creation inside and outside the Company. (Proper targets will be set after surveys in FY2024)
Reference: Non-consolidated Company 65.5% 70% 80%
  • *1 MCT oil and processed foods, healthy oils, supplement-type oils, wellness foods, and other products that can contribute to measures against lifestyle diseases, frailty, and other maladies.
  • *2 Products that can contribute to resolving undernutrition, overnutrition, and personal health issues.
  • *3 Health information about lipids refers to information that helps resolve personal health issues (e.g., undernutrition and overnutrition, bodybuilding) and leads to correct understanding and increased value of oils and fats.
  • *4 Cosmetic raw materials (including products of IQL and NOST), health and sanitation management business of Settsu Inc.
  • *5 Non-consolidated Company, as of April 1 of the following fiscal year

CSV goal revisions for FY2023

Global environment We formulated a strategic roadmap for decarbonization in fiscal 2021, and are steadily building on our efforts to introduce equipment to reduce waste and loss in production processes and increase our rate of non-fossil energy use. In FY2023, we raised the CO2 emission reduction target to 50% for Scope 1 and 2 emissions and set a new quantitative target (25% reduction) for Scope 3 emissions. We will continue to accelerate our efforts to achieve carbon neutrality by 2050.
Human resource management This year, we established a vision for 2030—to be an energetic, outstanding group that continues to create new value of good flavor, health, and beauty on a global stage—and identified human resource-related materiality and completely revised our CSV targets for realizing the vision. Regarding the FY2023 targets of establishing a foundation for DX promotion and cultivating global human resources, everyone in the entire company participated in digital literacy training, and training programs were conducted for globally registered human resources. Many of those people were assigned to global operations.