Roadmap toward a decarbonized society

The Seven & i Group expressed our agreement with the TCFD recommendation in August 2019 and also joined the TCFD Consortium, established so that companies, financial institutions, and others can work together to promote initiatives. In FY2019–21 we implemented a scenario analysis targeting domestic convenience store operations (Seven-Eleven Japan) and disclosed the analysis results, enabling us to gain certain suggestions regarding risks peculiar to the convenience store operations. In the fiscal year ended February 28, 2023, as a domestic operation with the same geographical conditions, we implemented a scenario analysis of the superstore operations (Ito-Yokado, York-Benimaru, York) and disclosed the results. In the fiscal year ended February 29, 2024, 7-Eleven, Inc. conducted scenario analysis in the overseas convenience store (overseas CVS) business.

Through the analysis, we identified three major risks with significant financial impacts: carbon tax imposition, damage from natural disasters, and rising raw material costs. We recognize that these climate change risks are interrelated with nature. Climate change can lead to the degradation of nature, which in turn can exacerbate natural disasters and make it more difficult to procure raw materials. Additionally, the conservation of nature, such as forest preservation, can serve as a mitigation measure for climate change by maintaining CO2 absorption sources.

With this understanding, and considering the release of the Taskforce on Nature-related Financial Disclosures (TNFD) Framework V1.0 in September 2023, we will integrate our responses to climate change and nature. Moving forward, we will analyze and develop countermeasures from both perspectives.

Below we explain the four disclosure categories recommended by the TCFD in the order of metrics and targets, strategy, governance, and risk management.

In May 2019, the Group formulated its environmental declaration “GREEN CHALLENGE 2050.” In “GREEN CHALLENGE 2050,” we have set the following specific themes: reduction of CO₂ emissions, measures against plastic, measures against food loss/waste and for organic waste recycling, and sustainable procurement. The goals are to achieve decarbonization, circular economy, and society in harmony with nature.
Toward the Paris Agreement’s goal for the world of limiting global warming to 1.5°C compared with pre-industrial levels, we have set the numerical targets of reducing CO₂ emissions stemming from the Group's store operations to 50% compared with the FY2013 level in 2030 and to achieve net zero emissions in 2050. We have also set detailed numerical targets for other themes, and we are promoting initiatives for achieving them and monitoring their progress.
In the scenario analysis for each business entity, the substantial scale of damage due to natural disasters has become clear. Already in Japan as well, abnormal weather conditions are occurring, such as increases in localized torrential rain and typhoon damage, and many local governments have issued climate emergency declarations. In order to curb the risk of natural disasters caused by climate change, once again we renew our determination to collaborate with local communities and other stakeholders to make efforts to limit global warming to 1.5 degrees Celsius compared with pre-industrial levels by achieving the targets of “GREEN CHALLENGE 2050.”

Scenario analyses based on the TCFD recommendations are implemented at the business entities of our Group.

＜Analysis assumptions＞

<Target business entities>

・Domestic CVS operations: Seven-Eleven Japan

・SST operations: Ito-Yokado and York-Benimaru

・Overseas CVS operations: 7-Eleven, Inc.

Scenario analyses at each business entity set two scenarios, a “decarbonization scenario (1.5°C–2.0°C)” and a “warming scenario (2.7°C–4.0°C),” with reference to reports on future forecasts and other materials issued by governments and international organizations, including STEPS*1, APS*2, and NZE2050*3, indicated in the World Energy Outlook of the International Energy Agency (IEA). We analyzed the impact of climate change taking account also of predicted business growth rates as of 2030.

*1 STEPS: Stated Policies Scenario. It is one of the scenarios shown in the IEA’s World Energy Outlook 2019 and reflects decarbonization policies and targets that had been publicized so far.

*2 APS: Announced Pledges Scenario. This scenario assumes that all climate-related commitments made by governments announcing long-term targets of net zero emissions are fulfilled in full and on time.

*3 NZE2050：Net Zero Emissions by 2050. It is one of the scenarios shown in the IEA’s World Energy Outlook 2020. Surpassing the Paris Agreement target, this scenario aims for net zero CO₂ emissions before 2050 toward achievement of the1.5°C goal.

【Decarbonization scenario】

This scenario assumes a world in which various laws and regulations have been introduced toward the achievement of the 1.5°C target, whereby the cost of compliance with these laws and regulations increases store operations costs and requires a diversification of our portfolio. Under this scenario, consumer interest in sustainable products and services and electric vehicles is expected to increase, and sales of products that cater to this interest are expected to lead to business growth.

【Warming scenario】

This scenario assumes an increase in the occurrence or severity of natural disasters and the emergence of a marked change in weather patterns, with the potential to result in damage to stores and other facilities, impact on raw material procurement, and increase air-conditioning costs in stores due to higher temperatures.

■ Recognized climate-related risks and opportunities

We recognize climate change-related risks, opportunities, and countermeasures as common and partly specific to the Seven & i Group.

【Significant transition risk: The carbon tax impact】

Transition risks were considered based on the decarbonization scenario in which various regulations and other measures are introduced to achieve the 1.5°C target. Of these, for each business entity we analyzed the impact of the carbon tax through the introduction of carbon pricing, which is projected to have the biggest impact. The following is an explanation of the expected impact on the domestic convenience store operations and superstore operations.

● Carbon tax impact (2030)

Assumption:

Carbon tax: $135/ton-CO2 (Maximum amount given in the IEA’s World Energy Outlook 2022)

Foreign exchange rate: ￥131.62/$ (Rate used in financial statements for the term ended February 2023)

For our estimate, with reference to the IEA’s World Energy Outlook 2022, we calculated the impact of carbon tax at the maximum amount of $135/ton-CO2 as of 2030. By putting our shoulders to the wheel to promote initiatives based on the targets outlined in our “GREEN CHALLENGE 2050” environmental declaration, we can substantially reduce the carbon tax burden in 2030. Furthermore, by achieving our 2050 target of net zero CO2 emissions, we expect that eventually the carbon tax burden will be eliminated altogether.

【Main countermeasures for a decarbonization scenario】

As approximately 90% of the Group’s CO2 emissions are attributable to electricity use from store operations, the three initiatives of energy savings, energy generation, and procurement of renewable energy are being pursued to reduce emissions. We also aim to reduce emissions throughout the supply chain, including Scope 3 emissions.

　(1) Energy savings

Reduction of electricity use through employees’ efforts to save energy and the adoption of energy-saving equipment

　(2) Energy generation

Onsite solar panels have been installed, with the electricity thus generated also consumed in-house. Solar panels have been installed at more than 9,000 Group stores and will be installed in 11,000 Group stores by 2030.

Rooftop solar panels (Ario Ichihara store)

After reducing CO2 emissions at stores as much as possible through energy savings and energy generation, we will use procurement of renewable energy from offsite sources to further reduce emissions.

 (3) Procurement of renewable energy

We are expanding cooperation with various electric power companies, including an offsite power purchase agreement (PPA) with the Hokuriku Electric Power Group.

Offsite PPA with the Hokuriku Electric Power Group

In addition, we have established the business scheme of a “Circular Model Project for Retail Supply Chain Decarbonization in the Use of Renewable Energy*” in collaboration with food product manufacturers, logistics companies, and others, and have commenced demonstration experiments, as an initiative to reduce CO2 emissions.

*Selected for the “Technology Development Support Project for the Promotion of New Energy,” implemented by the Tokyo Metropolitan Government and the Tokyo Environmental Public Service Corporation, this project will demonstrate energy management using “renewable energy,” including EV trucks, solar power, and biogas power generation, based at Seven & i Group stores in Tokyo as well as at food-processing factories and logistics centers of business partners.

【Website and other information related to countermeasures】

【Significant physical risks: Damage from natural disasters】

In terms of physical risks, natural disasters caused by extreme weather pose the greatest risk. It is difficult to predict when and where natural disasters will occur, and once they do, they can cause extensive damage. We are basing countermeasures for each business on the premise that weather phenomena such as heavy rainfall and flood will occur with greater frequency and intensity and cause increasingly worse natural disasters such as flooding, so we estimate the impact of losses due to store and merchandise damage, loss of sales due to store closures, restoration costs, etc., to inform those countermeasures.

Impact on Seven-Eleven Japan stores (domestic convenience store operations)

Assumption: The amount of damage is estimated for flood damage to stores in the Tokyo metropolitan area (assuming flooding of the Arakawa River) as of 2030

　* Estimated based on past flood damage

　* To ascertain the extent of damage, estimates are made without considering insurance coverage

Impact on Ito-Yokado and York-Benimaru (superstore operations)

Assumption: The amount of damage as of 2030 is estimated assuming a disaster of similar scale to 2019 (Typhoon No. 19). 

　* Estimates are based on actual damage from the 2019 disaster and forecasts of an increased frequency of disasters and floods

　* To ascertain the extent of damage, estimates are made without considering insurance coverage

【Main countermeasures to damage from natural disasters】

Seven & i Holdings will strive to quickly reopen its stores and establishments in the event of a natural disaster as part of enhanced disaster response to continue serving as regional relief bases for local customers offering infrastructure, evacuation locations, etc. The following measures are being taken to address the increasing risk of natural disasters.

・Establish early recovery systems (such as 7VIEW)

・Continue operations in the event of a disaster with “Phase Free (a concept of securing an adequate quality of life, regardless of phases such as daily life and emergencies)” facilities, including improved performance of storage batteries and preparation of fuel reserves for emergency supply delivery

・Create a strategy and stores that anticipates flooding (preventing flood damage by expanding the installation of watertight panels and guard pipes)

・Establish disaster-resilient logistics bases and supply networks

・Develop disaster bases utilizing store infrastructure through disaster management agreements, etc.

7VIEW (system for sharing information in the event of a disaster)

Number of comprehensive alliance agreements with local governments (by operating company)

【Website and other information related to countermeasures】

【Main countermeasures to increase in raw material costs due to changes in weather patterns】

Under our environmental declaration “GREEN CHALLENGE 2050,” we set sustainable procurement as a specific theme—ensuring that food ingredients used in our original products are guaranteed sustainable, and we are taking the following measures with our suppliers to work toward a society that is in harmony with nature.

・Expand the lineup of eco-certified marine products (MSC, ASC, MEL, etc.) and eco-certified agricultural products (GAP, etc.)

・Disperse and consolidate production sites of raw materials

・Utilize digital technology and AI

・Ensure stable procurement through the expansion of raw material procurement from weather-resistant sources, such as vegetable factories, land-based aquaculture, etc.

Indoor vegetable factory exclusively for Seven-Eleven Sagamihara Vegetable Plant by Prime Delica Co., Ltd.

【Website and other information related to countermeasures】

【Website and other information related to countermeasures】

【Business opportunities for the warming scenario】

In this scenario, we see changes in customer preferences and consumer behavior due to rising temperatures as business opportunities in the following ways.

・Consumers’ heightened awareness of disaster mitigation will increase demand for disaster preparedness products

・Increased sales of products that people wish to have in hot weather (cooling products)

・The frequency of outings will decrease caused in hot weather, so e-commerce services such as delivery business will flourish

●Meetings and roles related to climate change