Our Strategy and Approach
The TOMY Group has defined Responding to climate change and Promoting eco-conscious package/product designs as one of our materiality, and is taking action to enhance our understanding of climate change and measures against it, such as reducing the environmental impact of our business activities, designing and developing Eco Toys and other environmentally friendly products, and using these to help educate the next generation about buying sustainably.
We recognize that the major societal shift toward decarbonization in particular not only impacts our Group business, but also stands as an essential theme in realizing our sustainability vision.
We disclose information on our governance, strategy (risks and opportunities), risk management, and metrics and targets based on recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD).
Guiding Policy
We base our initiatives on the TOMY Group Environmental Policy.
Climate Change-related
Corporate Governance
In July 2024, the TOMY Group established the Sustainability Committee as an advisory body to the president to carry out initiatives for sustainability issues with the intent of more actively promoting sustainability management.
The Sustainability Committee comprehensively grasps the Group’s sustainability initiatives and deliberates on the course of action for issues and endeavors based on diverse and wide-ranging viewpoints.
For themes within the mid-term sustainability targets and KPIs in particular need of cross-departmental initiatives, theme-based task forces headed by executive officers and comprised of diverse members from across the Group are established under the supervision of the Sustainability Committee. These task forces are responsible for executing, promoting, and newly proposing initiatives.
The progress of the theme-based task forces is reported on at the Sustainability Committee meetings held twice a year, and initiatives are strengthened through direction and monitoring by the Sustainability Committee.
The contents of discussions held during the Sustainability Committee meetings are reported on and viewpoints presented as necessary during board and managing directors’ meetings.
Climate change-related issues are discussed and addressed by the Environment Task Force.
Corporate Governance System
Risk Management
Related to Climate Change
The TOMY Group examines risks related to climate change and other environmental issues through the Sustainability Promotion Division’s cross-departmental Environment Task Force* to establish strategies and share them with business divisions and Group companies.
*See task forces in the Corporate Governance System diagram.The TOMY Group has been striving to prevent and minimize risks in the event of an emergency with measures such as engaging in environmental initiatives through our business and establishing a Business Continuity Plan.
For details, see the following related links.
The process for identifying and evaluating climate change-related risks and opportunities (as of March 2022)
Recognizing that rapid climate change will have an impact on our business, the TOMY Group has identified medium- to long-term risks and opportunities arising from it and evaluated their materiality. Moving forward, the risks and opportunities that have been identified will be put through scenario and financial impact analyses, and periodically reviewed according to changes in external and internal environmental conditions.
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External and internal environmental analysis
Identify climate change-related risks and opportunities for each activity in the value chain process
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Creation of scenarios
and societal modelsModel the world in 2030 and 2050 in scenarios with temperature increase limited to 1.5℃ above pre-industrial levels, and with a 4℃ increase by 2100
Officer study session
Promote understanding of
and investigate climate change
Clarify risks and opportunities
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Climate change workshop
With a cross-departmental group from business and corporate staff divisions, raise awareness of climate change, work together to clarify risks and opportunities, and preliminarily evaluate materiality
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Materiality evaluation
Evaluate the materiality of identified climate change-related risks and opportunities on the basis of the following three factors.
1. Impact on TOMY Group business
2. Potential for occurrence
3. Positive impact on corporate mission of fulfilling the dreams of children (healthy growth, smiles)
Risks and opportunities
Our Group has identified the following risks and opportunities arising from climate change and its various collateral effects. Moving forward, the cross-departmental Environment Task Force within the Sustainability Promotion Division will take the lead in discussing the impacts on our business and planning strategies from a medium- to long-term perspective.
Transition risks:
There may be potential cost increases from switching raw materials to meet the rising demand from customers, distributors, retailers and licensers for products with low environmental impact. There are also other potential risks, such as a decline in competitive edge if it is not possible to maintain our Group product quality standards to ensure children’s safety using alternative materials, or a decline in the popularity of toys primarily made of plastic. There are also regulatory risks, such as the introduction of carbon taxes or emissions trading scheme causing increased energy prices, and stronger regulations on plastics and recycling necessitating changes in product design, manufacturing processes and supply chains as well as increases in disposal-related costs.
Physical risks:
As natural disasters intensify, there are various risks, such as damage to production bases, partners or retail stores; cessation of production and business activities; disruption of our distribution network that results in a loss of sales opportunities; and increased cost of alternative distribution methods. If temperatures continue to rise, it may necessitate switches to raw materials suitable for use in toys or cost more for climate control to maintain product quality. An increase of extremely hot days (those when the Japanese Ministry of the Environment issues a Heat Stroke Alert) may make more people choose to stay at home, potentially resulting in lower numbers of children and other customers visiting physical stores and participating in events like TOMICA and PLARAIL Expos. It may also be necessary to change the locations of our bases and supply chains due to rising sea levels.
Opportunities:
Success in replacing petroleum-based plastics with raw materials that have low environmental impact will help us meet the expectations of customers, distributors, retailers and licensers, which may give us a competitive advantage. In moving toward a decarbonized society, it is also hoped that growing customer awareness of sustainability will create further support and affinity for our Eco Toys and educational activities for future generations (environmental education). Furthermore, as an increase of extremely hot days may cause more people to choose to stay at home, this could also increase sales through our online shop and create opportunities to gain new customer segments by holding more digital events. Improving business continuity management for times of disaster at our offices, production bases and retail stores should also enable us to avoid physical risk, operate our business by leveraging hybrid remote and on-site working styles, and provide a stable supply of products.
Taking these steps to reduce our environmental impact should lead to a reduction of CO2 and other greenhouse gas emissions.
Factors that may potentially impact the TOMY Group (as of March 2022)
Transition risks
- ・Transition from plastic to alternative materials as the primary raw material for toys
- ・Skyrocketing energy and distribution prices
- ・Adjustments to the supply chain (product design, manufacturing processes)
- ・Decreased popularity of toys primarily made of plastic
Physical risks
- ・Ceased operation of Group bases or partners due to natural disasters
- ・Disrupted distribution networks due to natural disasters (loss of sales opportunities, increased cost of alternative distribution methods)
- ・Reduced child and other customer footfall at stores and events due to increase of extremely hot days
- ・Change of suppliers or company bases due to rising sea levels
Opportunities
- ・Competitive advantage from success in converting to alternative materials with low environmental impact
- ・Greater support and affinity for Eco Toys and education for future generations due to increased customer awareness of sustainability
- ・Increased sales via our online store and greater opportunities to acquire new customers through more digital events
- ・Success in addressing environmental issues through environmental management; improved corporate value through greater disclosure
- ・Avoidance of physical risk through improved adaptability to natural disasters
Financial impact assessment based on scenario analyses
The TOMY Group performs scenario analyses to investigate risks and opportunities with high materiality and the potential impacts these may have, as well as to assess Group business and strategy resilience in 2030.
In our scenario analyses, we referenced multiple scenarios published by the Intergovernmental Panel on Climate Change (IPCC), International Energy Agency (IEA) and other organizations, and analyzed the potential impact on the Group in 2030 if global warming is limited to 1.5℃ above pre-industrial levels by 2100 (the 1.5℃ scenario), and with 4℃ of global warming by 2100 (the 4℃ scenario).
Primary reference scenarios
| Scenarios | References |
|---|---|
| 1.5℃ scenario | SSP1-1.9 (IPCC, 2021) Net Zero Emissions by 2050 Scenario (IEA, 2021) |
| 4℃ scenario | SSP5-8.5（IPCC,2021） Stated Policies Scenario (IEA, 2021) |
Results of risk and opportunity financial impact assessment
| Transitional risks | Overview of potential impacts | Impact on business | Example current or potential initiatives | |
|---|---|---|---|---|
| 1.5℃ scenario | 4℃ scenario | |||
| Transition from plastic to alternative materials as the primary raw material for toys | Stronger regulations on plastic and recycling; stronger demand for information disclosure; financial penalties for insufficient regulatory compliance; transition to alternatives to plastic, the primary raw material for toys | Medium | Medium |
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| Skyrocketing energy and distribution prices | Introduction of carbon taxes or emissions trading schemes; steep rises in prices of petroleum-based plastics and other raw materials, energy or distribution | Low | High |
|
| Adjustments to the supply chain (product design, manufacturing processes) | Supply chain changes (product design, manufacturing processes) that become necessary in the course of decarbonization or the transition away from petroleum-based plastics; loss of potential opportunities for new product sales due to channel shift (expansion of used goods markets) | High | High |
|
| Decreased popularity of toys primarily made of plastic | Loss of opportunities if we do not meet rising demands from licensers or distributors; poorer reputation with consumers from utilizing plastic as a raw material; less interest in TOMY from investors or financial institutions who support decarbonization and transitioning away from petroleum-based plastics | High | Low |
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| Physical risks | Overview of potential impacts | Impact on business | Example current or potential initiatives | |
|---|---|---|---|---|
| 1.5℃ scenario | 4℃ scenario | |||
| Ceased operation of Group bases or partners due to natural disasters | Damage to our bases caused by natural disasters; impact on our contractors caused by natural disasters | Medium | High |
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| Disrupted distribution networks due to natural disasters (loss of sales opportunities, increased cost of alternative distribution methods) | Disruption to distribution networks (loss of sales opportunities, increased costs of alternative distribution methods) caused by natural disasters; loss of sales opportunities due to ceased operations caused by natural disasters | Medium | Medium |
|
| Reduced child and other customer footfall at stores and events due to increase of extremely hot days | Increased costs to maintain product quality as temperatures rise; decreased child and other customer footfall at stores and events due to increase of extremely hot days; impact of extreme heat on employees | Medium | Medium |
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| Reconsideration of suppliers or company bases due to rising sea levels | Reconsideration of suppliers or company bases | Low | Low |
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| Opportunities | Overview of potential impacts | Impact on business | Example current or potential initiatives | |
|---|---|---|---|---|
| 1.5℃ scenario | 4℃ scenario | |||
| Competitive advantage from success in converting to alternative materials with low environmental impact | Comprehensive energy conservation; conversion to renewable energy sources; improved competitive advantage by establishing ourselves as an environmentally-conscious brand | High | Low |
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| Greater support and affinity for Eco Toys and education for future generations due to increased customer awareness of sustainability | Expansion of markets for new products and services with the shift toward environmentally-conscious lifestyles; increased sales of products that are adapted to climate change; expansion of education-related markets | High | Medium |
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| Increased sales via our online store and greater opportunities to acquire new customers through more digital events | Improved cost structure and decreased environmental impact by changing our business model | Medium | Medium |
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| Success in addressing environmental issues through environmental management; improved corporate value through greater disclosure | Success in addressing environmental issues through environmental management; improved corporate value through greater disclosure; decreased costs through operating our business by leveraging hybrid working styles; improved productivity | High | Medium |
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| Avoidance of physical risk through improved adaptability to natural disasters | Avoidance of physical risk through improved adaptability to natural disasters | High | Medium |
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Impact levels
Low: May potentially have a small impact on Group operations or finances
Medium: May potentially have a somewhat larger impact on Group operations or finances
High: May potentially have a large impact on Group operations or finances
Metrics and Targets
The TOMY Group calculates and manages Scope 1,2 and 3 emissions.
Toward to help realize a decarbonized society, the TOMY Group has set long-term goals to reduce CO2 emissions (Scope 1 & 2) by 50% by 2030 compared to fiscal 2022 levels, and to achieve virtually zero CO2 emissions by 2050.
We have also set a goal of having 40% of our purchased electricity come from renewable energy sources by 2030, and will continue to promote efforts to reduce CO2 emissions.
Participating in
Climate Change-related
Initiatives
United Nations Global Compact
The TOMY Group has endorsed the United Nations Global Compact, the international framework for achieving sustainable growth worldwide, and participates in the local Global Compact Network Japan. We are promoting initiatives to achieve the Global Compact’s Ten Principles to address human rights, labour, the environment and anti-corruption throughout the supply chain.
