SECTION 4 Foundations Supporting Sustainable Growth
Environmental Initiatives
Environmental Activities Policy
As a leading company in the IT industry, we believe it is important to not only reduce the amounts of environmental resources used by ourselves, but also provide a sustainable future for our customers and society through technologies we are uniquely positioned to offer. We listen to a wide range of opinions from variety of stakeholders on the social role and responsibilities that we are expected to fulfill, and we reflect this feedback in our corporate activities.
The CTC Group aims to keep its businesses in harmony with the global environment, addresses issues including climate change, the effective use of resources and the preservation of biodiversity, and strives to improve environmental management systems in a sustained manner.
1 Solution of Environmental Issues Faced by Customers
The CTC Group seeks to offer value such as environmental load reduction and eco-efficiency improvement with the application of IT by solving the environmental issues faced by customers.
2 Reduction of Environmental Footprint in Business Processes
The CTC Group proactively promotes initiatives including those for saving energy, saving resources, reducing waste and greening procure- ment, and works to reduce its environmental footprint and prevent pollution in business processes.
3 Compliance with Relevant Laws, Regulations, Etc.
The CTC Group observes laws and regulations associated with environmental preservation and other items to which it agrees.
4 Enhancement of Environmental Awareness
The CTC Group makes its environmental policy known to all its directors and employees. At the same time, the CTC Group works to raise environmental awareness through education and informative activities.
Environmental Management Structure
The CTC Group has established an Environmental Activities Policy based on its corporate philosophy and has established an environmental management structure.
Under the Sustainability Committee Chairperson, the Environmental Managers and Eco Leaders of respective organizations play a central role in advancing environmental improvement activities across the entire Group. Domestic Group companies (excluding affiliates) have obtained ISO 14001 certification.
As an advisory body to the Management Committee, the Sustainability Committee submits proposals on climate change and other important environmental matters to the Management Committee, which deliberates on the proposals and submits them to the Board of Directors for further deliberation.
CTC President & CEO | |||||||
Sustainability | |||||||
Chief Environmental | Committee | ||||||
Internal Auditor | Chairperson* | ||||||
Chief Auditor | |||||||
Environmental | Environmental | ||||||
Planning Division | |||||||
Control Manager | |||||||
(Environment Office) | |||||||
Environmental Education
The CTC Group provides environmental education through e-Learning for all officers and employees once a year. Environmental Managers and Eco Leaders are also offered separate training sessions to promote their activities.
Environmental Improvement Activities
Under the environmental management structure, all entities of the CTC Group set annual goals to reduce the environmental impact through their business and pursue initiatives to achieve the goals. These include helping customers save energy through virtualization and Cloud technologies, as well as the provision of environmentally friendly solutions and products.
Furthermore, in June 2021, CTC and its Group companies relocated and integrated their Tokyo head office functions. The relocation helped to reduce the Group's environmental burdens by reducing total floor space by approximately 20% (compared to the total floor space of the offices that were relocated). In addition, it helped to curb office electricity consumption through the consolidation of previously dispersed servers at data centers.
CTC Business Groups
Environmental Managers
(General Managers)
Department / Team Eco
Leaders
Employees
CTC Group companies
Environmental Managers
(General Managers /
Department Managers)
Section (Under direct control of
Group company head office / secretariat) Eco Leaders
Employees
Environmental Conservation Activities
The CTC Group supports the preservation of the environment and biodiversity. Such support includes donations to initiatives whose aims the Group endorses. Examples of such initiatives are Biodiversity Conservation projects by WWF Japan; the Keidanren Nature Conservation Fund; the Morino Project, which seeks to preserve natural capital by cultivating forests
- For fiscal 2022, the managing executive officer who is the COO of the Human Resources Management & General Affairs Group and General Manager of the Corporate Planning Division will serve as the chairperson of the Sustainability Committee.
that protect people from disasters; and more trees, an initiative for preserving forests by forming connections between forests and cities. (As of July 2022)
71 ITOCHU Techno-Solutions Corporation Integrated Report 2022
Climate Change Countermeasures
The impacts of climate change have been growing ever more serious in recent years, directing increasingly more attention toward the role of IT as a tool for combating climate change, and enhancing the role and responsibility to be fulfilled by the CTC Group. In April 2021, the CTC Group updated its materiality. "Contribute to climate change countermeasures" has been defined as one of the items of materiality (material issues). Moreover, in April 2022, we expressed support for the Task
Force on Climate-related Financial Disclosures (TCFD). We will work to realize a decarbonized society with our technologies and unique skillset and ensure appropriate disclosures in accordance with the TCFD recommendations. The following is information based on four central
components of the disclosure recommendations of
the TCFD.
Governance
To address climate change, we have created a structure to promote sustainability, headed by the President & CEO. Important matters are discussed by the Sustainability Committee, which is chaired by a managing executive officer, before decisions are made by the Management Committee and approval is given by the Board of Directors. We have also established a structure under which activities related to climate change are reported regularly to the Management Committee and the Board of Directors and are supervised by them.
Major Items Deliberated
- Matters related to climate change risks and opportunities
- Important guidelines and measures related to climate change
- Progress toward CO2 reduction and other medium- and long-term environmental targets
Risk Management
Through the sustainability promotion system, we clarify, identify, and assess climate change risks (assess the level of their impacts by using various parameters based on multiple future forecast scenarios) based on Companywide risk control methodologies and the TCFD framework. The Board of Directors supervises the management of climate change and other important Companywide risks.
Metrics and Targets
The 2050 CTC Environmental Declaration, a set of medium- to long-term targets established in 2019, includes the targets of a 30% reduction in CO2 emissions from our own activities by fiscal 2030 (compared with fiscal 2015) and zero emissions by 2050.
Scenarios and Strategies
CTC has analyzed potential impacts of climate change on its business activities and revenue, covering its domestic business including the supply chain. These analyses used scenarios provided by international institutions that projected rises in average global temperatures of 1.5°C and 4°C above pre- industrial levels*. Based on these scenario analyses, the Company quantitatively and qualitatively assessed the financial impacts of the risks and opportunities identified leading up to 2030 and 2050 and formulated response measures.
The results of these initiatives are as follows.
We position climate change countermeasures as opportunities for medium- to long-term growth, and we are actively expanding our GX business to contribute to a decarbonized society as a way to address social issues and achieve sustainable growth.
- The reference scenarios included the RCP8.5 and RCP2.6 scenarios of the Intergovernmental Panel on Climate Change and the STEPS and NZE2050 scenarios of the International Energy Agency.
Opportunities Related to Climate Change | Magnitude of Impact | ||||||
(By Scenario)*2 | Response Policies | ||||||
Category | Details | Length of | 4°C scenario | 1.5°C scenario | |||
Time*1 | 2030 | 2050 | 2030 | 2050 | |||
• Increase in demand reflecting the use of IT for effi- | • Expanding businesses that help to resolve issues, | ||||||
Products | including those related to efficient energy use and | ||||||
cient energy use and energy conservation | Short | ||||||
and | Small | Small | Medium | Medium | those related to energy conservation | ||
• Increase in demand for products and services that | term | ||||||
Services | • Expanding businesses that contribute to the | ||||||
contribute to the development of renewable energy | |||||||
development | of renewable energy | ||||||
• Market expansion driven by simulation technologies | • Researching, developing, and expanding the portfolio | ||||||
and services that contribute to the development of new | Short | of technologies and services that support the use of | |||||
Market | technologies (related to low carbon, hydrogen, etc.) | Large | Large | Large | Large | new energy as a means to achieve decarbonization | |
term | |||||||
• Improving social trust through climate change | • Expanding businesses that contribute to decarbon- | ||||||
countermeasures | ization and making information about them available | ||||||
Risks Related to Climate Change | Magnitude of Impact | ||||||
(By Scenario)*2 | Response Policies | ||||||
Category | Details | Length of | 4°C scenario | 1.5°C scenario | |||
Time*1 | 2030 | 2050 | 2030 | 2050 | |||
Policies | • Increase in costs to respond to the tightening of reg- | • Continuously reducing CO2 emissions from our | |||||
and Legal | ulations related to CO2 emissions and new political | Medium | |||||
Small | Small | Medium | Medium | businesses | by promoting energy conservation and | ||
Restric | measures and regulations (including the carbon tax | term | |||||
introducing renewable energy | |||||||
tions | and emissions trading scheme) | ||||||
• Damage to trust from society and a decline in | Short | • Expanding businesses that contribute to decarbon- | |||||
Reputation | employee motivation resulting from delays in taking | Small | Small | Large | Large | ization and making information about them available | |
term | |||||||
climate change countermeasures | • Joining in initiatives related to climate change | ||||||
• Negative impacts on business continuity from | Short | • Continuing to take disaster prevention and mitigation | |||||
Physical | damage to facilities and supply chain disruption | Medium | Medium | Small | Medium | measures related to our business continuity plan (BCP) | |
term | |||||||
caused by weather disasters | • Promoting effective teleworking | ||||||
*1 | "Short term" means up to five years from now. "Medium term" means within five to 10 years. "Long term" means 10 or more years later. | |
*2 | Assessments represent financial impacts, with impacts classified as small, medium, or large. | |
For information on specific risks and opportunities, please refer to the following website. | ||
https://www.ctc-g.co.jp/en/company/sustainability/environment/climate-change.html | 72 | |
ITOCHU Techno-Solutions Corporation Integrated Report 2022 |
SECTION 4 Foundations Supporting Sustainable Growth
Risk Management
Risk Management System
In addition to individual risk management functions, we have established the Risk Management Committee to take an overall approach to risks that should be managed on a Groupwide basis. As well as comprehensively considering and identifying risks that should be managed on a Companywide level, this committee establishes management systems and rules, assesses effectiveness (conducts monitoring), and recommends corrective mea- sures. We are building a risk management structure capable of responding to future changes in the operating environment and contingency circumstances.
Risks | Summary of Risks That Could | Risk Mitigation Measures | |
Negatively Impact Earnings | |||
• Risk of fluctuation in operating results due to | Updating the internal structure to identify and share information about | ||
1 | Risks | changes in economic conditions in Japan and | changes in the macroeconomy and trends in IT investment at customers |
abroad, IT investment by customers, laws and | Providing advanced products and services, aiming to optimize group organiza- | ||
Concerning | |||
regulations, tax codes, and accounting standards | tional structures and provide high-value-added solutions | ||
Changes in | |||
• Risk of intensification of price competition due to | |||
the Business | |||
diversification of customer needs, technological | |||
Environment | |||
advances, new entrants, and competition with | |||
other companies | |||
• Risk of suspension of corporate activities, loss of | We have implemented the following measures to appropriately manage | ||
trust, or damage claims due to a leak, alteration, | information: | ||
or loss of information (including personal infor- | • Building an information management system (setting up the Information | ||
2 | Information | mation and confidential information of custom- | Security Committee, CTC Security Incident Response Team) |
Security Risk | ers), or suspension of their services caused by | • Acquiring various certifications (JIS Q 15001, ISO 27001, ISO 27017) | |
unauthorized access stemming from cyberat- | • Strengthening control of the entire Group, including domestic and overseas | ||
tacks on internal systems and customer services, | consolidated subsidiaries | ||
a computer virus, or human error | |||
Ensuring Rigorous Information Security
For the CTC Group, appropriate handling and safe management of information are important social responsibilities.
Each year, information security threats become more diverse and complex, owing to the use of new IT infrastructure such as the IoT, AI, and blockchain; society's connections between cyberspace and physical space; and new working environments arising from work-style reforms.
Against this backdrop, the CTC Group has developed an information security and personal information protection management system integrating information security management and personal information protection systems in compliance with ISO 27001 (JIS Q 27001) and Privacy Mark (JIS Q 15001), which is responsible for the following:
Creating various regulations, standards, and procedures Conducting education and awareness activities
related to information security and personal information protection
Conducting internal audits
Conducting annual surveys of outsourcing contractors
At CTC, we treat all of the information entrusted to us by our clients as confidential information; carrying out hando- ver checks and exercising strict access management.
As a countermeasure against the increase in cybersecu- rity risk in recent years, we have established the CTC-SIRT*, which conducts the following activities:
Cybersecurity drills for targeted e-mail attacks (annually)
Vulnerability diagnosis of internal and public websites (annually)
Monitoring for cyberattacks
We have obtained ISO 27017 (JIS Q 27017) certification for CUVICmc2 (Cloud service specializing in mission-critical systems) and TechnoCUVIC (virtualized hosting service), and are creating services that ensure peace of mind among clients whose information we handle.
We will continue to implement further security measures against new threats, with the safe and secure handling
of information entrusted to us by our clients as our highest priority.
- CTC-SIRT(CTC Security Incident Response Team) is an organization that copes with security incidents resulting from cyberattacks.
For more information about our information security efforts, please visit our corporate website.
https://www.ctc-g.co.jp/en/company/about/governance/security.html
73 ITOCHU Techno-Solutions Corporation Integrated Report 2022
Risks | Summary of Risks That Could | Risk Mitigation Measures | |||
Negatively Impact Earnings | |||||
• Risk of a decline in the Group's social credibility | We are implementing the following measures to ensure compliance: | ||||
Compliance | or deterioration in the Group's earnings due to a • Building a robust compliance system (setting up the Compliance Committee, etc.) | ||||
3 | serious breach of compliance or a violation of | • Compliance education and training | |||
Risk | laws or regulations in conducting business | • Operating, maintaining, and improving | |||
P.75 Compliance Initiatives | |||||
our whistleblowing system | |||||
- Risk of personnel departures or a decline in pro- With "Challenge and growth" as our personnel strategy policy, we engage in
ductivity due to failure to secure and train per- human resource management with the aims of improving employee motivation,
sonnel with high technical skills and expertise as | encouraging self-growth, and further fostering a culture of human resource | ||||
planned, loss of growth opportunities, or a dete- | development. We are implementing measures including the following: | ||||
Human | rioration in the labor environment, affecting the | • Training and developing diverse professional human resources | |||
4 | Group's earnings and business development | • Establishing a system that gives employees a sense of self-growth and enables | |||
Resources | them to realize their full potential (career development support system, leading | ||||
Risk | position certification system, etc.) | ||||
• Promoting diversity and inclusion | |||||
• Promoting work-style reforms (development of a workplace environment that | |||||
allows employees to deliver the maximum performance through teleworking, | |||||
free choice of work location, etc.) | |||||
P.59 Human Resources Strategies | |||||
• Risk of unexpected additional costs incurred if | We set up the Project Management Office as a third-party entity and | ||||
planned results and quality cannot be delivered | Companywide organization, and instituted project control departments in each | ||||
as customer needs, such as DX, have become | business group. We also implement control and support systems including the | ||||
Project | more diverse and complex. In addition, risk of | following to avoid the risk of being unable to complete a critical system integra- | |||
5 | loss of customer confidence and claims for | tion project on schedule: | |||
Management | damage due to delivery delay and poor quality | • Making preliminary examinations before submitting quotes | |||
Risk | stemming from the above causes | • Monitoring and evaluating the project status |
- Providing individualized support and offering ideas for improvement according to the project status (quality evaluations, etc.)
P.65 Technology Strategies | ||||
• Risk of a confidence decline and claims for dam- | We are implementing the following measures: | |||
ages in the event that a customer's business | • Regular operational risk assessments | |||
6 | System | activities are affected by failures due to equip- | • Stepping up IT system monitoring and third-party auditing of operational status | |
ment failure or operational errors in our opera- | • Investigating and responding quickly to product defect information, and | |||
Failure Risk | tion services, in a situation where IT systems play | conducting preventive replacement of equipment | ||
an important role as social infrastructure | • Acting to improve work quality, including preventing operational mistakes (zero | |||
human error activities, rigorous pre-work risk prediction meetings, etc.) | ||||
• Risk of a drop in recoverability, loss of part of or | We carefully consider investment returns and risks in advance and are imple- | |||
an entire investment, or a need for additional | menting measures including the following: | |||
funding due to failure to achieve the expected | • Building an investment management system (updating internal standards for | |||
returns from strategic investments in companies | investments and exit criteria, pre-screening before making investments, etc.) | |||
in Japan and elsewhere, data centers, or Cloud | • Regular monitoring (verifying the achievement status of investment objectives, | |||
7 | Investment | services for the purpose of launching new busi- | meeting the exit criteria, etc.) | |
Risk | nesses, expanding operations, or boosting com- | Major consolidated subsidiaries are implementing measures including the | ||
petitiveness caused by changes in the market | following: | |||
environment, and deterioration in revenues of | ||||
• Thoroughly raising awareness of the CTC Group Philosophy and CTC Group | ||||
investment target companies | ||||
Code of Conduct | ||||
• Dispatching managers and other staff to consolidated subsidiaries | ||||
• Ensuring governance through shareholder agreements | ||||
• Risk of a profitability decline when transactions are | Utilizing foreign exchange contracts and foreign currency deposits according | |||
conducted in foreign currencies for products and | to specific transaction types | |||
8 | Exchange | services procured from overseas markets, and cost | ||
Rate Risk | increases from a sudden change in foreign | |||
exchange rates or weakening yen over the medium | ||||
term that cannot be passed on to customers | ||||
• Risk of damage to facilities and infrastructure or | To prepare for contingency circumstances, we are implementing the following | |||
injuries due to large-scale natural disasters such | measures: | |||
Risk of | as earthquakes and terrorist attacks, as well as | • Formulating a business continuity plan (BCP) | ||
9 | infectious diseases, such as COVID-19, resulting | • Creating a safety confirmation system | ||
Large-Scale | ||||
in a threat to business continuity | • Establishing an emergency response headquarters and crisis management | |||
Disasters | ||||
headquarters, and strengthening disaster prevention drills | ||||
- Maintaining a backup system in the Kansai region in preparation for a potential disaster in the Tokyo metropolitan area
- Risk of negative impacts on the CTC Group busi- To prevent delays in deliveries and optimize supply chains, we are leveraging
ness performance due to a supply suspension of | CTC's strengths of our multi-vendor strategy and full-stack IT technologies to | |||
Product and | products and services to customers for the fol- | implement measures including the following: | ||
lowing reasons and other factors: suspension of | • Optimizing product and service sourcing based on relations of trust with major | |||
Service | ||||
10 | product or service supply due to business plan | domestic and overseas vendors | ||
Procurement | ||||
changes or business condition deterioration of | • Forming relationships with multiple vendors to prevent a dependence on | |||
and Supply | ||||
suppliers, shortages or production delays of | specific vendors | |||
Risk | ||||
semiconductors and other products due to | • Sharing accurate information with customers and proposing ideal response | |||
supply chain disruption from pandemics, wars, | measures | |||
terrorism, and other global events | 74 | |||
ITOCHU Techno-Solutions Corporation Integrated Report 2022 |
SECTION 4 Foundations Supporting Sustainable Growth
Risk Management
Compliance Initiatives
Basic Stance on Compliance
The CTC Group regards compliance as one of its most important management issues, and is well aware that thor- ough, Groupwide compliance forms the foundation for running and managing the Group. By ensuring that each and every Group employee observes all laws, regulations, and internal regulations required in the execution of corporate activities, and carries out such activities in a highly ethical
and responsible manner in accordance with social norms and morals, we aim to ensure that we are held in esteem and trusted by society as a consistently fair, highly transpar- ent, sound, and healthy corporate group as we seek to increase the corporate value of the entire CTC Group.
For more information on the CTC Group Code of Conduct, the Group's basic guidelines for implementing compliance management and fulfilling its corporate social responsibilities, please refer to: P.5 CTC Group Philosophy
Compliance Promotion Structure
To promote thorough compliance within the CTC Group, we have established the CTC Group Code of Conduct and a range of internal regulations, appointed a Chief Compliance Officer (CCO), and established a Compliance Committee that acts as an advisory body to the Management Committee. We aim to enhance the functionality of these organizational structures through the appointment of overall compliance management supervisors responsible for specific business groups and CTC subsidiaries, as well as compliance supervisors responsible for individual divisions and teams.
These compliance supervisors check the progress of their organization's compliance initiatives on a quarterly basis and report to the Compliance Committee. In addition, we seek to ensure that compliance awareness is thoroughly instilled by holding ongoing educational training sessions for corporate officers and employees.
Board of | Audit & Supervisory Board (Audit & Supervisory Board members) | |||
Directors | ||||
Reporting | Compliance Committee | |||
President & CEO | ||||
Chief Compliance Officer (CCO) | ||||
Management | Committee Members Selected from | |||
Committee | ||||
Consultation | Different Organizations | |||
Legal Compliance | Internal Reporting Systems (Helplines) | |||
Oversight Divisions | ||||
Presidents of | COO of CTC | |||
CTC Subsidiaries | Business Groups | |||
Compliance Management | Compliance Management Supervisor | |||
Supervisors of CTC Subsidiaries | of CTC Business Groups | |||
Compliance Supervisor | Attorney | |||
(Division and team heads) | ||||
CTC Subsidiary Employees | CTC Employees | |||
All CTC Group Employees |
Internal Reporting and Consultation Systems
The CTC Group has established internal reporting systems (helplines) that enable corporate officers, employees, and business partners to report and consult regarding compliance violations. We were swift to register a self-declaration of conformity for these helplines under Whistleblowing Compliance Management System*1 certification on April 26, 2019.
Reports can be made via two routes, reporting to an internal point of contact and to an external point of contact (an advisory attorney). Both routes include provisions to protect the privacy of reporters and to ensure appropriate management of reports, and we guarantee that such reporters will not suffer from any detriment or disadvantage as a result of a report through the helplines. In addi- tion, consultations for employees on a range of issues are provided through an employee consultation service. The number of internal reports and consultations for the CTC Group in the past three years is shown in the table below. Appropriate responses to all reports and consultations are pursued in cooperation with the relevant divisions as deemed necessary. No serious violations have occurred in the CTC Group.
Compliance representatives attend annual workshops arranged by a lawyer, to improve their skills and enhance their ability to address reports and consultations through the helplines.
In this way, we continue to operate and maintain the helplines and employee consultation contact points in an appropriate manner. In addition, we are working to bolster compliance management to quickly detect and remedy violations of laws or internal regulations and other acts of misconduct.
FY2019 | FY2020 | FY2021 | |
Helplines (External | 18 | 7 | 11 |
point of contact) | (3) | (2) | (4) |
Employee | 29 | 15 | 26 |
consultations*2 | |||
Total | 47 | 22 | 37 |
*1 Under this system, a company assesses its own internal reporting system and makes a self-declaration of conformity if it complies with the certification standards. Based on an application by the company, the system's content is checked by a registration organization designated by the Consumer Affairs Agency, with conforming companies being registered. The implementation of this system was suspended in February 2022 based on a
revision to the Whistleblower Protection Act.
*2 Figures represent the number of employee consultations concerning harassment and other aspects of the workplace environments.
75 ITOCHU Techno-Solutions Corporation Integrated Report 2022
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Itochu Techno-Solutions Corporation published this content on 16 September 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 September 2022 09:29:00 UTC.