Biodiversity
Ⅰ. Our Approach to Biodiversity
The Ajinomoto Group sells products in more than 130 countries and regions, and our entire business activities, from procurement of raw materials to manufacturing and sales, are heavily dependent on the various bounties of nature, otherwise known as ecosystem services. These services include agricultural, livestock, and fishery resources, genetic resources, water and soil, and pollinators such as insects. These natural bounties come from healthy biodiversity shaped by the diversity of living organisms and their connections.
However, biodiversity is currently being lost at an unprecedented rate, making biodiversity conservation a pressing issue worldwide. The Ajinomoto Group recognizes the importance of reducing its impact on biodiversity and protecting the global environment while sustaining its business. Since issues related to biodiversity are also closely related to environmental boundaries and social issues such as climate change, water and soil, waste, and human rights, we will work to resolve these issues so as to create mutual benefit. In conserving biodiversity, we believe it is necessary to establish a system of action to halt and reverse the loss of biodiversity through our business. Accordingly, we will support the Kunming-Montreal Global Biodiversity Framework*1 adopted at the 15th Conference of the Parties to the Convention on Biological Diversity (COP 15) in 2022 and contribute to its achievement.
*1 This Framework is adopted in December 2022 and sets out the global vision of a world living in harmony with nature by 2050, 4 goals for 2050 and 23 targets for 2030.
https://www.cbd.int/doc/decisions/cop-15/cop-15-dec-04-en.pdf
Ⅱ. Governance
(1) Framework
In the Ajinomoto Group, we honestly comply with the Ajinomoto Group Policies (AGP) that shows the ideal way of thinking and action that the Group companies and their officers and employees should comply with, continue to develop and properly operate our internal control system, strengthen our system that considers sustainability as an active risk-taking system, and continuously enhance our corporate value.
*2 The AGP were enacted by the Board of Directors of Ajinomoto Co., Inc. on May 30, 2018 and have been revised as necessary since then.
The Board of Directors
The Board of Directors has established the Sustainability Advisory Council, creating a system for making recommendations on the Group’s approach to sustainability and ESG. The board determines materiality items related to sustainability that serve as guidelines for ASV management and supervises the execution of initiatives related to sustainability including biodiversity.
The Executive Committee
The Executive Committee has established the Sustainability Committee as a subordinate body, which selects and extracts risks and opportunities based on materiality and assesses the degree of impact, formulates strategies to combat these, and manages their progress.
Sustainability Advisory Council
Beginning April 2023, the Second Term Sustainability Advisory Council will continue its work to enhance the Ajinomoto Group’s corporate value from the viewpoint of sustainability. The Second Term Sustainability Advisory Council consists of four external experts, primarily investors and financial market specialists, and is chaired by an external expert. After receiving consultation from the Board of Directors, the council will investigate the implementation of materiality, disclosure and dialogue on its progress, and building relationships with stakeholders through these activities, in the interest of stronger monitoring of the Board of Directors, and issue a report in response to the Board of Directors. The Second Term Sustainability Advisory Council meets at least once a year and report the results of its deliberations to the Board of Directors.
Sustainability Committee
In order to promote medium-term ASV initiatives in accordance with materiality, the Sustainability Committee formulates sustainability measures, proposes them to the Executive Committee, and manages their progress. In addition, the Sustainability Committee formulates risk countermeasures for Companywide management issues and manages their progress. It also formulates the entire Ajinomoto Group’s sustainability strategy, promotes action themes (nutrition and environment, which includes biodiversity) based on this strategy, makes proposals and provides support for business plans from a sustainability viewpoint, and compiles internal information on ESG.
Biodiversity initiatives comprise a critical issue for the Ajinomoto Group. We believe that sustainable raw material procurement, climate change adaptation and mitigation, waste reduction, and human rights, which we are already working on, are all activities closely related to biodiversity. Recognizing the interrelationships among these environmental and social initiatives, we will advance them in a way that is effective.
Risk Management Committee
The Risk Management Committee works with the Sustainability Committee to select and identify risks calling for particular initiative by management (pandemics, geopolitical risks, information security risks, etc.) based on materiality as well as assess their impact on the Ajinomoto Group, making proposals to the Executive Committee. The committee also formulates risk management measures and manages their progress in order to realize a strong corporate structure capable of responding promptly and appropriately to risks and crises.
(2) Guidelines
The AGP states that we work with the community and customers to contribute to harmonious coexistence with the Earth, in order to realize a sustainable “Recycling-Oriented Society.” Based on this “Group Shared Policy on Environment,” in July 2023, the Ajinomoto Group established and announced the Ajinomoto Group Biodiversity Guidelines to recognize issues related to biodiversity, as well as its approach, action guidelines, and targets.
We also see biodiversity as deeply related to environmental and social issues such as deforestation and other land modification in the production of raw materials, pesticide use and waste, child labor, and forced labor in our sustainable procurement efforts. In addition to our existing procurement guidelines on palm oil and paper procurement guidelines, we restructured our coffee and soybean procurement guidelines in July 2023. In addition, our Policy Guidelines for Suppliers require suppliers to comply with laws and regulations, and to give consideration to and endorse the Ajinomoto Group's policies on human rights and the environment.
- Ajinomoto Group Biodiversity Guidelines
- Ajinomoto Group Paper Procurement Guidelines
- Ajinomoto Group Palm Oil Procurement Guidelines
- Ajinomoto Group Soy Procurement Guidelines
- Ajinomoto Group Coffee Procurement Guidelines
- Group Shared Policy for Suppliers Guidelines
Ⅲ. Strategy
The Ajinomoto Group has a wide range of product areas in the food business, from seasonings and foods to frozen foods, and is also expanding its business into fields such as healthcare. As a result, our business is significantly dependent on various natural bounties, or ecosystem services, such as agricultural, livestock, and fisheries resources, genetic resources, water and soil, and pollination from insects and other organisms. We are able to enjoy these natural bounties thanks to a healthy biodiversity shaped by the diversity of organisms and their connections.
However, biodiversity is disappearing at an unprecedented rate, making biodiversity conservation a pressing issue worldwide. The Ajinomoto Group recognizes the importance of reducing our impact on biodiversity and protecting the global environment as we continue to conduct our business, and in July 2023, we created the Ajinomoto Group Biodiversity Guidelines. Issues related to biodiversity are also closely related to the environment and society, including human rights, climate change, water and soil, and waste, and we therefore strive to solve these issues in ways that create effective synergies.
(1) The LEAP approach
In FY2023, we conducted risk and opportunity assessments based on an analysis of dependencies and impacts for selected raw materials for procurement in some areas of the Ajinomoto Group, including seasonings and foods, frozen foods, and healthcare, in line with the Task Force on Nature-Related Financial Disclosures (TNFD) beta framework. The LEAP approach is guidance proposed by the TNFD that provides a process for the systematic, science-based assessment of nature-related risks and opportunities within corporations and financial institutions.
1) Selection of target raw materials
We selected 12 raw materials that fall under the High Impact Commodity List (HICL) created by the Science Based Targets Network and have a large procurement volume for raw materials, providing 80% coverage of net sales. For this analysis, we selected sugarcane, cassava, corn, raw milk, soybeans, rapeseed, rice, cattle, coffee, palm, copper, and crude oil. Note that paper, which falls under HICL but is a packaging material, was excluded.
2) Analysis results
The first three steps, Locate, Evaluate, and Assess (LEA), were used to analyze the four processes of raw materials, production, sales, and consumption.
| Locate | Evaluate | Assess | |
|---|---|---|---|
| Analysis overview | For the target businesses, we identified areas in the supply chain of our Group's business that are at high risk of biodiversity loss. | In addition, we identified factors for dependence and impact on nature in the supply chain of our Group's businesses. Indicators and thresholds for each factor were set to quantitatively diagnose the future state of dependence and impact (2050). | Risks were identified in the scenarios with respect to the factors of dependence and impact that will cause degradation in a future state. For these results, we estimated the financial impact based on the Group's response status and assessed the magnitude of risk and opportunity. |
| Tools | The tools below were used in various combinations at each step of the analysis. (ENCORE, SBT’s High Impact Commodity List, SBTN Materiality Screening Tool, Geographic Information System, World Database Protected Area, IUCN Red List, GLOBIO, Aqueduct, Aqueduct Water Atlas, Nature Map Explore, Aqueduct Global Maps, Past and future trends in grey water footprints of anthropogenic nitrogen and phosphorus inputs to major world rivers, International Institute for Applied Systems Analysis, What a Waste) |
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| Results | For the target raw materials, we identified and evaluated the points of contact with nature in the supply chain of our Group's business in 25km to 50km grid units, and identified the grids that should be subject to detailed analysis based on natural degradation. In the Locate step, of the total of 24,000 grids, we identified 20,000 grids as falling into at least one of the following categories: areas of importance for biodiversity, areas of rapid degradation, areas of potential degradation, areas of high water stress, and areas inhabited by indigenous peoples. | In the 20,000 grids identified in Locate, we identified the factors of dependence and impact on nature at each stage of the supply chain (raw materials, production, consumption, etc.) of our Group's business, assuming the state of natural degradation in 2050. Indicators and thresholds for each factor were set and the degrees of dependence and impact were analyzed. We confirmed that the rate of degradation differs for each natural environment, with forests and the atmosphere degrading worldwide, but water and soil degradation being concentrated in specific regions. In particular, in countries where we procure sugar cane, corn, and rapeseed, we confirmed that there is a possibility that the soil quality in these production areas will deteriorate. | In the Evaluate step, assuming the state of natural degradation in 2050, we forecast what risks could occur in two scenarios: one in which nature conservation and economic development can coexist (SSP1*), and one in which nature degrades and the economy stagnates (SSP3*). We identified a number of risks that could arise due to the degradation of nature, but in particular, we confirmed that the financial impact would be significant, and that the price of raw materials would rise due to chronic physical risks. The main raw materials with significantly rising procurement costs were corn and sugar cane. For sugar cane production, this was caused by degradation of soil in Thailand, while for corn, this was caused by degradation of soil in the United States. |
* Shared Socioeconomic Pathways (SSP) are a set of scenarios developed by the Integrated Assessment Modeling Consortium, a community established in response to a call by the IPCC Chair to create new scenarios. SSP1: A scenario in which nature conservation and economic development can coexist. SSP3: A scenario in which nature degrades and the economy stagnates.
(2) Reflecting analysis results in strategy
1) Reflection in business strategy
In fiscal 2024, we will improve the accuracy of our analysis by narrowing down the analysis of raw materials to a specific region, rather than focusing on the country of origin. Issues related to biodiversity based on this are also closely related to the environment and society, including human rights, climate change, water and soil, and waste, and we therefore strive to solve these issues in ways that create effective synergies. We will also work on formulating new business strategies to achieve ASV, where sustainability initiatives lead to greater added value for our products.
2) Reflection on financing strategy
Actions regarding the necessary funds for our various initiatives are as described in “Our approach to climate change, (ii) Reflection on financing strategy.”
Ⅳ. Risk management
In order to realize the Purpose-Driven Management by Medium-Term ASV Initiatives2030 Roadmap, including the aforementioned two outcomes, it is extremely important to accurately identify risks and respond to them promptly and appropriately. The Sustainability Committee and the Risk Management Committee work closely to ensure that no risk is left unaddressed by the two committees, selecting and identifying risks and opportunities based on material matters for the Ajinomoto Group (materiality) and making proposals to the Executive Committee. The Sustainability Committee then formulates measures and regularly manages their progress for matters related to sustainability, including social, environmental such as biodiversity, and nutritional issues, while the Risk Management Committee handles the same processes for risks that management should take the initiative to address pandemics, geopolitical risks, information security risks, etc.). At each business site in Japan and overseas, we implement a risk process cycle identifying risks and formulating countermeasures, taking into account individual business strategies and local political, economic, and social conditions. The Risk Management Committee continuously improves this risk process cycle, compiles the risks identified by each site, and responds to those calling for initiative by management. In addition, each business and corporation has formulated a business continuity plan (BCP) in preparation for emergencies, and the Risk Management Committee has established a system for constant verification of each BCP's effectiveness and regularly monitors and manages risk response. Full-time Audit Committee members attend the Sustainability Committee and the Risk Management Committee to monitor risk management process.
Ⅴ. Metrics and targets
For issues related to biodiversity for which we have enhanced analysis precision and the closely-related issues thereof (for the environment and society, human rights, climate change, water and soil, and waste), we have set metrics and targets to facilitate initiatives to solve these issues.