Climate change issues are becoming increasingly serious year by year and have a major impact on people's lives on a global scale. In Japan as well, in fiscal 2019, damages of Typhoon No. 15 and No. 19 and heavy rain disasters in Chiba Prefecture affected the lives of citizens and caused serious damage to economic activities. The Seven & i Group recognizes that climate change will undermine the stable society that is essential to the sustainable development of companies, and intends to contribute to the achievement of the Paris Agreement's greenhouse gas reduction targets. GREEN CHALLENGE 2050, formulated in May 2019, identifies the reduction of CO2 emissions as one of the priorities and the Seven & i Group is examining and implementing measures to reduce CO2 emissions. As climate change worsens, the Financial Stability Board established the Task Force on Climate-related Financial Disclosures (TCFD), recognizing that climate change risks could undermine the stability of the financial system. The June 2017 TCFD Final Report encourages companies to disclose climate-related information, particularly financial information, so that investors can make appropriate investment decisions. In August 2019, the Seven & i Group announced its support for TCFD recommendations based on the belief that enhancing information disclosure is essential to building trusting relations with stakeholders. In addition, we participate in TCFD Consortium, which was established to promote joint efforts by Japanese companies and financial institutions that support TCFD recommendations, and are promoting better information disclosure and discussions with stakeholders.
Going forward, we will make use of TCFD recommendations to actively communicate our initiatives, ensure that we are trusted with our stakeholders, and strive to increase our corporate value.
The Seven & i Group considers climate change issues to be one of the key issues that should be addressed across Group companies, and manages these initiatives at the CSR Management Committee chaired by the President of Seven & i Holdings. The CSR Management Committee meets twice a year, attended by CSR managers from Group companies and managers from related divisions at Seven & i Holdings. Under the CSR Management Committee, the Environment Subcommittee has been established as a subordinate organization to deal with climate change issues. The Environment Subcommittee consists of managers from the environmental departments of Group companies. In addition, when we announced the GREEN CHALLENGE 2050 in May 2019, we established CO2 Emissions Reduction Team to create innovations across the Group to reduce CO2 emissions. This team is headed by executive officers or higher from the divisions in charge of the main Group companies.
The CSR Management Committee receives reports on trends in indicators related to climate change issues, such as CO2 emissions, and on initiatives mainly for mitigation measures. The Committee approves measures implemented by the subcommittees and each company, and provides necessary advice. The progress of such sustainability-related initiatives, including those related to climate change, is reported to the Board of Directors of Seven & i Holdings at least once a year, and policies and initiatives are reviewed as necessary.
Seven & i Holdings has established, developed and operates a comprehensive risk management system centered on the Risk Management Committee, based on the Basic Risk Management Rules, in order to analyze, evaluate and respond properly to the risks of Seven & i Holdings and our Group companies. The risks related to climate change are also managed under this comprehensive risk management system.
Each group company identifies its own risks twice a year based on the group's common risk classification. In addition to quantifying risk assessments that take into account the impact and potential of risks, measures to deal with each risk are compiled into the Risk Survey Form and submitted to the Risk Management Department (Risk Management Committee Secretariat). The Risk Survey Form includes not only quantitative but also qualitative risks, such as CO2 emission regulations, business continuity risks caused by natural disaters such as recent large typhoons, and changes in production areas and fishing grounds.
The Risk Management Committee, which meets twice a year, comprehensively identifies the Group's risk situation based on the risk assessments and countermeasures submitted by each company, and monitors each company's risk management and improvement efforts from the perspective of materiality and urgency.
In principle, the status of risk management is reported once a year to the Board of Directors of Seven & i Holdings.
The Seven & i Group is undertaking scenario analysis to clarify risks and opportunities created by future climate change and develop strategies to reduce the risks and to expand the opportunities. In October 2019, at the beginning of scinerio analysis, we participated in the "Project to Support Climate Risk/Opportunity Scenario Analysis in Accordance with TCFD" of the Ministry of the Environment.
We recognize that scenario analysis should cover the entire Group, including the supply chain. However, in this analysis, we have limited scenarios and scope and conducted trial analysis. The 2℃ and 4℃ scenarios were adopted as the scenarios. The analysis covered the store management of Seven-Eleven Japan, which accounts for about 60% of the Group's operating profit.
The following is an examination of the environment surrounding Seven-Eleven Japan's store operations in the 2℃ and 4℃ scenarios as of 2030. Significant differences between the two in 2030 are seen mainly in the risk of transition due to their differences in climate change measures. In the world of + 2℃, regulations for greenhouse gas reduction will be strengthened, and the transition risk will increase due to the progress of low and decarbonization. On the other hand, in a world of + 4°C, while the impact of regulatory and other transitional risks is small, physical risks such as extreme weather are expected to increase.
In evaluating the business impact, we first identified the risks and opportunities that are closely related to the operation of Seven-Eleven stores. We then identified five of the most significant risks and opportunities that could have an impact: carbon prices, carbon emissions targets and policies in each country, changes in consumer reputation, extreme weather, and changes in precipitation and weather patterns.
As this is the first analysis, in the impact assessment, we selected the specific examples related to the above five significant risks and opportunities for which objective forecast data can be obtained as much as possible, and evaluated them from both quantitative and qualitative perspectives. The results were as follows.
In May 2019, the Seven & i Group announced its GREEN CHALLENGE 2050. In GREEN CHALLENGE 2050, we have set four specific goals: Reduction of CO2 emissions, Measures against plastic, Measures against food loss and for food recycling, and Sustainable procurement. The goals are to achieve a decarbonizing society, Circular Economy and society in harmony with nature. Our specific numerical targets for reducing CO2 emissions are to reduce CO2 emissions from store operations by 50% by 2030 compared to 2013, and to net-zero by 2050.
Since this business impact assessment was limited to some specific examples, it is not possible to comprehensively determine the impact of climate change. However, we believe that promoting the ongoing disaster response and GREEN CHALLENGE 2050 initiatives will reduce the risks and expand the opportunities.
For example, to cope with the risk of rising carbon prices and electricity costs, one possible response is to expand the use of energy conservation and renewable energy, which leads to reduced CO2 emissions. Regarding to the risk of procuring raw materials, we believed that promoting the sharing of information on producing areas and the joint development of producing areas within the Group will lead to a reduction in the risk of procuring as we are promoting our measures of GREEN CHALLENGE 2050 for sustainable procurement.
Furthermore, in response to the increase in disasters such as extreme weather conditions, we will expand our role as an infrastructure for disasters through ongoing collaboration with local governments.
In line with TCFD recommendations, we have begun to analyze scenarios and disclose information. However, the scope of scenario analysis is limited and only a few risks/opportunities are quantified. In the future, we will need to quantify risks and opportunities throughout the supply chain and gather information on changes in consumer reputation. Society's concerns and expectations regarding corporate measures against climate change are expected to increase as disasters due to extreme weather conditions increasing and become more severe. We will improve the accuracy of our scenario analysis in order to be a company that can sustainably develop even under the influence of climate change, including the 2℃ and 4℃ scenarios. First, by expanding and quantifying the scope of our analysis, we will strive to grasp the more accurate financial impact and plan strategic countermeasures. We will also meet the concerns and expectations of our stakeholders by disclosing the results.