Details

Conduct scenario analyses for domestic convenience store operations (domestic CVS operations) and overseas convenience store operations (overseas CVS operations), including the direct physical impacts on stores, costs incurred for store operations, merchandise supply chains (raw materials, factories that manufacture merchandise, merchandise shipping, etc.) that significantly affect store operations, and customer behavior, and disclose climate change risks, opportunities, and countermeasures that are identified.

Two scenarios, a decarbonization scenario (1.5°C to 2.0°C) and a warming scenario (2.7°C to 4.0°C), have been set with reference to future forecast reports issued by governments and international organizations, including STEPS, APS, and NZE2050, indicated in the World Energy Outlook of the International Energy Agency (IEA). Business growth rate as of 2030 to be taken into account.

●Decarbonization scenario (1.5℃ to 2.0℃)

A world assumed in which various laws and regulations have been introduced toward 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.

●Warming scenario (2.7℃ to 4.0℃)

A world assumed in which the frequency and severity of natural disasters rise and weather patterns change significantly, with potential to result in damage to stores and other facilities, impact procurement of raw materials, and increase air-conditioning costs in stores due to higher temperatures.

Climate

Nature

・Increased costs of complying with nature-related or/and environment regulations, fines and penalties due to insufficient compliance

Business performance

Warming scenario

Market

Reputational

Climate

Nature

Market

Reputational

Resource efficiency

Decarbonization scenario

Warming scenario

Sustainability performance

Resource efficiency

Use, preservation, restoration and regeneration of natural resources

Warming scenario

Support for farmers in adopting regenerative agriculture and other practices to conserve biodiversity so as to improve ecosystem services as well as improve and stabilize the yield and quality of raw materials

¥27.7 billion

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

・Foreign exchange rate: ¥150/$ (approximate exchange rate as of February 28, 2025)

   * Breakdown of ¥27.7 billion: domestic CVS operations ¥14.4 billion, overseas CVS operations ¥13.3 billion

¥11.19 billion

・Estimate of flood damage to SEJ stores in the Tokyo metropolitan area (assuming flooding of the Arakawa River)

・Estimated based on past flooding damage. To determine the scale of the damage, the estimated amount was calculated without taking into account the application of insurance.

¥5.7 billion

・Estimation of rise in costs due solely to lower yields resulting from climate change

・The covered resources (rice, laver, and livestock products (beef, pork, chicken, and eggs)) were selected based on the SEJ’s procurement amount composition

   * Breakdown of ¥5.7 billion: Rice ¥2.23 billion, laver ¥1.93 billion, livestock products (beef, pork, chicken, and eggs) ¥1.54 billion

Countermeasures (examples)

Examples of concrete initiatives

・Promote measures to reduce CO₂ emissions in accordance with the GREEN CHALLENGE 2050 environmental declaration (aiming for a 50% reduction in 2030 from the FY2013 level and net-zero emissions in 2050)

・Promote initiatives and investments to save energy and improve energy efficiency in store

・Aggressively increase the percentage of renewable energy use in stores

・Increase sustainable products and services (low-carbon products, environmentally friendly containers and packaging, PET bottle collection and recycling, certified products, etc.)

・Promote measures to reduce the amount of food waste generated (reduce the amount of food to be incinerated) in accordance with measures against food loss and for food recycling set in the GREEN CHALLENGE 2050 environmental declaration

・Promote various measures against product packaging in accordance with measures against plastic set in the GREEN CHALLENGE 2050 environmental declaration

・Expand EV charging services at stores (Overseas CVS operations: Plan to increase EV fast-charging ports for the 7Charge EV fast-charging network throughout the United States and Canada in the future)

Energy conservation

Six key points for energy conservation measures (SEJ)

Generation of renewable energy

Installation of solar panels

Procurement of renewable energy

Procurement through off-site PPA*

Establishment of retail electricity supplier

Seven & i Energy Management Co., Ltd. was established in August 2024.

Introduction of EV charging stations

As of the end of December 2024, a total of 180 charging stations has been installed at 53 stores in eight states and two Canadian provinces (SEI).

・Develop a contingency plan to be followed during severe weather events such as floods and storms

・Establish a system for information gathering and early recovery in the event of a disaster (such as 7VIEW)

・Ensure stable procurement by expanding procurement sources, such as vegetable plants and land-based fish farms

・Promote energy saving and install energy-saving equipment in stores

・Expand delivery and e-commerce services

7VIEW

Visualization of store status and logistics on Google Map

Procurement of factory-grown vegetables

Increasing purchase of climate-resistant raw materials

We evaluated and organized countries from which SEJ, SEI, and SEVEN PREMIUM source coffee beans along two axes: ecological sensitivity and business materiality. Of these, we have identified three countries—Brazil, Colombia, and Guatemala—as sourcing regions that meet both of these criteria and should be given particular priority for analysis.

■Map of priority analysis sourcing regions for coffee beans

We used data from SEJ, which has the highest sourcing volume, to investigate the dependence on and impact on nature of the top five countries with the highest sourcing ratios by country (Brazil, Colombia, Tanzania, Guatemala, and Ethiopia). Items to be investigated were determined by referencing results of ENCORE and information compiled by TNFD and SBTN, and include an evaluation of general dependencies and impacts of coffee, as well as sorting through the ecological and business characteristics of each sourcing region.

●Assess (assess risks and opportunities)

Based on knowledge acquired from business partners, we organized the risks and opportunities relating to dependence and impact on nature. We also conducted analyses on the agricultural cooperative and farm levels concerning decreasing coffee bean yields, which is believed to have the greatest impact.

■The external environment surrounding coffee beans

After analyzing the risks and opportunities for coffee beans based on the organization described above, we found that there is a particularly high risk of reduced yields due to shrinkage and changes in areas suitable for cultivation caused by rising temperatures and changes in rainfall patterns. Other risks identified include a decline in quality and yield due to outbreaks of pests and diseases, the cost of complying with environmental regulations, and reputational damage due to procuring coffee that is produced using methods that involve environmental destruction or infringing on IPLCs land rights.

Therefore, using climate suitability, which indicates the degree to which climatic conditions are suitable for coffee bean production, we analyzed the five countries with high sourcing rates for SEJ, tracing back to the agricultural cooperative and farm levels. Results of the analysis show that across the five target countries, area suitable for growing coffee beans is expected to decrease by roughly 30% between now and 2050. Furthermore, an analysis at the state level where sourcing regions are located revealed that suitable area could potentially decrease by about as much as 40% in some states.

Based on the risks identified by tracing back to the agricultural cooperative and farm levels, we will consider and carry out specific measures that include providing support to our suppliers.

■ Simulation of climate suitability in Minas Gerais in 2050

■ List of nature-related risks for coffee beans

Furthermore, we estimated the impact of such yield reduction risks on SEJ under two external environmental scenarios: 1) Coffee bean prices rise, but we are able to continue sourcing the quality and quantity we require from our current sourcing regions; and 2) Coffee beans of the quality and quantity we require can no longer be sourced from our current sourcing regions. This is an estimate based on currently available data on climate change, and accuracy of the estimate must be further improved. However, we believe that an estimate of the monetary impact will prove to be useful information in considering countermeasures within the Company.

As opportunities, we identified increasing consumer brand loyalty through sourcing coffee beans with lower environmental impact, and improving resilience through the implementation of natural disaster countermeasures. We hope to take advantage of these opportunities in the context of countermeasures.

■ List of nature-related opportunities for coffee beans

●Prepare (prepare for response and reporting)

Based on the risks and opportunities identified in the Assess phase, we determined the direction for measures.

To ensure sustainable sourcing and increase business resilience, we recognize the need to consider direction for measures and prioritize measures based on future scenarios and characteristics of risks in each region. Alongside offering meticulous support to current production areas in addressing challenges they face, we believe it is necessary to take on a long-term approach, such as developing new suppliers, keeping in mind that climate change may turn areas unsuitable for cultivation and make it impossible to continue cultivation there. In addition, we will further strengthen collaboration with stakeholders going forward and advance initiatives that contribute to sustainability of coffee bean sourcing as well as that of the global environment and communities.

■Direction for measures

We analyzed the rice sourcing regions of SEJ, which has the highest sourcing volume, at the prefectural level and evaluated them based on two axes: ecological sensitivity and business materiality.

■Map of priority analysis sourcing regions for rice

●Evaluate (evaluate dependencies and impacts)

Next, based on the ENCORE score, TNFDʼs sector-specific guidance (food and agriculture sector, beverages sector), and SBTN’s High Impact Commodity List*, we extracted the influencing factors and ecosystem services that should be focused on for rice, and looked for the dependencies and impacts on nature of producing areas on a prefectural basis.

* High Impact Commodity List: A list provided by SBTs for Nature of raw materials that are considered to have significant environmental impacts

Using dependencies and impacts on nature evaluated in the Evaluate phase and conducting a simple external environmental analysis of rice production, we determined paths leading from dependencies and impacts on nature to risks and opportunities.

■The external environment surrounding rice

* Source: Ishigooka, Y. "Revision of estimates of climate change impacts on rice yield and quality in Japan by considering the combined effects of temperature and CO2 concentration"

As a result of analyzing the risks and opportunities for rice based on the above, we recognized that rising temperatures and changes in rainfall patterns will lead to a decline in the ratio of first-grade rice, and that outbreaks of pests and diseases will pose a risk of decline in rice quality. Of the risks, we have determined that the most significant risk for rice, from the perspective of sustainability of the Groupʼs business, is the decline in rice quality (ratio of first-grade rice).

■ List of nature-related risks for rice

Also, using future projections for the ratio of first-grade rice as reference, we estimated the financial impact that a decline in the ratio of first-grade rice would have on SEJ, using the upper limit (a large decrease) and lower limit (a small decrease) of the future decline that can be expected in the ratio of first-grade rice. As this estimate focuses only on factors related to quality decline, it does not take into account fluctuations in the volume of rice production volume itself, which is likely to be affected by government policy, or temporary declines in quality due to extreme weather. Thus, accuracy of our estimates will need to be improved, but we now have a quantitative grasp on the importance of risks associated with rice sourcing as material to be used for internal discussion.

Regarding opportunities, we were able to identify opportunities by collaborating with and supporting producers and through the introduction of new technologies, product development, and other means.

■Nature-related opportunities surrounding rice

Based on the risks and opportunities identified in the Assess phase, we determined the direction for measures. To ensure a stable supply of rice well into the future, we believe it is important to assist producers incorporate new farming methods and improve rice varieties, which take time for results to show. Further, we view the export and import of rice and various social backgrounds as factors that should be taken into account when considering measures. We will continue holding dialogue with producers and business partners as we proceed in considering measures.

■Direction for measures