Dialogue: Nifco's Response to Climate Change

Taking a bird's-eye view of sustainability,
we will consider what kind of value Nifco can create.

Nifco has pledged to achieve carbon neutrality by 2050 and is promoting various initiatives that include reducing its environmental impact. How can such sustainability activities and information disclosure be linked to the enhancement of corporate value?　 We invited Mr. Yatsubayashi from S-pool Blue Dot Green, who spoke with Mr. Shibao, our President and CEO.

Launching a new service with a cross-border study program

Yatsubayashi: Yes, that's right. This was the first time for us to host someone from an outside company in this way. 

Shibao: That employee’s goal was to become involved in new business planning, and did not seem to have limited himself to focusing only on the environmental field. 

Yatsubayashi: It was a happy coincidence in that sense, I think. But from there, the project was set in motion and we were able to launch our new business. 

Shibao: Could you please talk about the kind of business you’re engaged in? 

Yatsubayashi: Sure, it’s an LCA (Life Cycle Assessment) support service. This is a quantitative assessment of environmental impacts such as CO2 emissions over the entire life cycle of a product. Despite the fact that the automotive industry has a large role to play in reducing environmental impact, it had not yet been able to determine the CO2 emissions of each its products. So we have created a tool to calculate emissions using Nifco as a model. Since our main business is to support the disclosure of information related to sustainability, including TNFD, this was truly a service without precedent. 

Shibao: I understand that you also collaborated with Nifco's manufacturing division and ESG Promotion Office, and visited the factory to conduct a survey. 

Shibao: What is obvious to Nifco employees who see it up close and personal may not be obvious to an outsider. Such feedback is also valuable to Nifco. Although this LCA evaluation method has not yet been fully implemented, the awareness of environmental issues that our employee has learned from S-Pool Blue Dot Green is sure to spread throughout the company in the years to come. 

View sustainability through the lens of strategies informed by competitive advantages

Yatsubayashi: Many pieces of legislation on sustainability-related information disclosure have been introduced in recent years, especially in Europe. Could this have an impact on Nifco's business as well? 

Shibao: Certainly, standards are becoming stricter every year. However, frankly speaking, there are political factors involved, and looking at the movements of European automobile manufacturers, it seems that they are not all responding to the same standards. I believe that information disclosure, as well as sustainability initiatives themselves, should be thoroughly addressed, while at the same time always considering how to link sustainability to economic value and other benefits. Activities that do not lead to an increase in corporate value over the medium to long term will not last. 

Yatsubayashi: I think you’re right. Recently in Japan, the attitude toward sustainability has been changing, as evidenced by the government's announcement of more than 150 trillion yen in public and private investments to promote GX (Green Transformation). I believe that it’s essential to consider how sustainability can be linked to a company's competitive advantage. 

Yatsubayashi: In the case of Japanese companies, it seems that many of them started their initiatives with the attitude of "we have to do it because other companies in our industry are doing it.” Recently, this attitude has been changing, and an increasing number of companies are beginning to think about how their products and services can help solve social issues, and are quantifying these issues while proactively disseminating information about them. 

Shibao: Up to now, I think our efforts have been more of a “pull” to match the trends originating in Europe. I think we need to think more proactively and change our mindset to one of strategically “pushing”. 

Yatsubayashi: I think you’re right. Until recently, there has been a tendency in Japan to view sustainability as a series of separate issues to be addressed, such as climate change and biodiversity. Instead, I think we should take a more holistic view of sustainability, think about how our company can be involved in the process, quantify it, and communicate it to society. 

Growing interest in sustainability is an opportunity

Shibao: I believe that the growing interest in sustainability, including climate change, is not a risk for Nifco, but rather an opportunity. This is because Nifco does not have any special technology or facilities that give it a great advantage, and its greatest asset is its "people." Unique technologies and facilities cannot cope with sudden changes, but "people" are always flexible. I believe that even in the face of risk, we can always turn in a positive direction. In fact, looking back on Nifco's history, we have always overcome crises with the wisdom and ideas of our employees, which has led to new growth. 

Yatsubayashi: Because your employees are equipped with the ability to learn and respond. Changing subjects, Nifco's main products are plastic parts for automobiles. Plastics are attracting a lot of attention in terms of environmental issues, but do you think that their potential will continue to expand depending on the wisdom of people? 

Shibao: That is my opinion. Plastic has only been in existence for about 200 years and has only been in practical use for about 100 years. It is a much younger material than iron. Compared to iron, plastic is lightweight, rust-free, and has many other outstanding features. That is why it plays such an active role in society and in our daily lives. Plastic still has many possibilities. For example, it is much easier to process than iron, and therefore less energy is used in the manufacturing process. However, it is also true that there are major challenges, such as the waste problem it poses. I believe that this is something that we as a company need to work on. 

Nifco's Climate Change Goals

Shibao: Nifco has pledged to achieve carbon neutrality by 2050 to ensure that its business functions properly to meet the challenge of climate change. 

Yatsubayashi: Looking at the disclosed reports, Scope 1 and 2 CO2 emissions decreased 4.20% in 2021 and 6.50% in 2022 compared to the previous year, so it seems that your efforts are going well. 

Shibao: Certainly, the latest figures suggest we are making steady progress, and I feel that an awareness of environmental issues is taking root within the company. 

Yatsubayashi: However, since these reduction rates tend to shrink as the years go by, one could say the real work begins now. 

 Yatsubayashi: Indeed, I feel that Scope 3 emissions are a common issue in Japan’s manufacturing industry. When I visited a manufacturer the other day, I learned that the company has many overseas suppliers and has created a multi-lingual educational video to first spread awareness. I think we need to think about a long-term roadmap and sit down and work on it.

Turning sustainability into opportunity

Yatsubayashi: That's a quantitative way of looking at the so-called reduction contribution. I think it’s actually quite difficult to quantify this for Scope 3 emissions, but it’s very important to express our own strengths in our own way. The LCA tool jointly developed by our company and Nifco, which was mentioned at the beginning of this conversation, may be the starting point of such a project. 

Shibao: Regarding the supply chain, we are already working on some initiatives in logistics and other areas. We have begun to devise ways to improve the packaging methods for products supplied to automobile manufacturers to supply more products in a single transport and to reduce the use of plastic and other packaging materials. 

Yatsubayashi: So this is an initiative that also involves automakers downstream in the supply chain. 

Work throughout the supply chain while refining your own strengths

Shibao: What kind of attitude do you think is important for Japanese companies to have if they want to make their presence felt in the current trend toward sustainability? 

Shibao: Thank you very much. What I felt today is that there is much more to sustainability than just what one company can do. There needs to be a coordinated effort throughout the supply chain.
For example, I mentioned earlier the environmental value of products, but at present, the automotive industry has not yet established a system to evaluate such value. Technical value and cost value are rigorously evaluated by the design department and purchasing department, respectively. If environmental value can be evaluated in the same way, I think a big change will take place. 

Yatsubayashi: Engagement in the supply chain tends to be thought of as a flow from downstream to upstream, but it can also happen in the opposite direction, such as a proposal from Nifco to an automobile manufacturer. This ability to make proposals is one of Nifco's strengths, and I have high hopes for it. In order to evaluate the environmental value of products, we need to have a system for quantifying that value and incorporating it into prices. There are many things that need to be addressed, but this is a major theme that relates not only to the plastic products handled by Nifco, but also to manufacturing as a whole. I think it is important for everyone in society to think about this issue, not just companies.