PHC Group’s global sustainability strategy addresses environmental, social, and governance (ESG) issues. When it comes to the environment, we are focused on three materiality topics—Climate Change, Circularity, and Preservation of Natural Resources—and we address these topics on a Group-wide basis.
Governance
PHC Group’s climate change governance structures are described in the “Sustainability Management Structure” section of this report.
The Board of Directors manages and monitors the status of climate change-related initiatives including greenhouse gas (GHG) emissions performance and the progress of Science Based Targets (SBT)* based on reports from the Sustainability Committee, which are submitted at least twice annually. In the fiscal year that ended March 2026, the Board approved our 2050 net-zero GHG emissions target by resolution. The Sustainability Committee, which meets quarterly, deliberates progress management for climate change-related initiatives and assesses climate-related risks and opportunities. In addition, the Environmental Subcommittee, established in fiscal year 2026, performs detailed monitoring and promotion of GHG emission reduction measures and reports the results to the Sustainability Committee. Implementation of these measures is led by sustainability departments or sustainability teams within each business unit.
- * Our near-term targets have been validated by the Science Based Targets initiative (SBTi). Our other targets, including the 2040 carbon neutral target and the 2050 net-zero target, represent our own commitments and have not been validated by the SBTi.
Risk Management
Risks and opportunities related to climate change are identified and assessed by the sustainability departments of each business unit under the guidance of the Sustainability Committee through scenario analyses conducted every three years and annual inventories of risks and opportunities. Any climate-related risks deemed significant on a company-wide basis are reported to the Sustainability Committee and the Risk Management Committee and are then integrated into the Group-wide risk map. In light of the review of materiality topics that PHC Group will undertake beginning in fiscal year 2026, we intend to further integrate climate change risks into Group-wide risk management and strengthen alignment with our management strategies. Progress against KPIs associated with major climate-related risks is monitored quarterly and reviewed by the Environmental Subcommittee, and countermeasures are revised as necessary.
Strategy
PHC Group conducts scenario analysis based on the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) to better understand the impact of climate change on its business activities, support business sustainability, and contribute to a sustainable society. The most recent analysis was conducted in fiscal year 2025, and, in principle, the analysis is reviewed every three years. In the scenario analysis, we used multiple scenarios that assume different degrees of progression of climate change. The analysis covered the Group’s entire value chain and used 2030 (medium term) and 2050 (long term) as the assessment horizons. PHC Group conducted the analysis based on the following two scenarios.
| 1.5°C Scenario |
This scenario assumes a world in which strict decarbonization policies and technological innovation progress to limit the temperature increase to no more than 1.5°C.
- SSP1-1.9: In this scenario, climate measures are introduced to limit the temperature rise from the pre-industrial era to 2100 to within 1.5°C and achieve carbon neutrality by 2050 on a foundation of sustainable development.
- NZE (Net Zero Emissions by 2050): This scenario seeks to achieve energy-related sustainable development goals while keeping the temperature rise to within 1.5°C.
|
| 4°C Scenario |
This scenario assumes that climate change measures are insufficient and the temperature rise reaches 4°C.
- SSP5-8.5: In this scenario, fossil fuel-dependent economic development continues, no climate measures are introduced, and the temperature rises at least 4°C by 2100.
- STEPS (Stated Policies Scenario): A scenario based on policy commitments announced by countries through 2021 in which emissions from energy sources decline somewhat, while industrial emissions increase and overall emissions remain at roughly current levels.
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Definitions of Timing of Occurrence
- Short-term: 1–2 years (annual business plan cycle)
- Medium-term: 3–5 years (period covered by the Value Creation Plan; roughly corresponds to SBTi near-term targets)
- Long-term: 6 years or more (for the 2040 carbon neutrality goal and 2050 net-zero goal)
Definitions of Financial Impact
- Impact – Large: A level potentially requiring significant additional investment
- Impact – Medium: A level manageable within the scope of existing responses but requiring continued monitoring
- Impact – Small: A level with limited impact on business
| Transition risks |
Timing of occurrence |
1.5°C |
4°C |
Response measures |
Policies &
regulations |
Higher manufacturing costs due to carbon taxes |
Medium-term |
Large |
Small |
Implementation of roadmap to achieve SBTi targets (promote Scope 1 & 2 reduction measures, introduce renewable energy, prioritize energy-saving investment, and ascertain emissions and cost impacts for each site) |
| Higher capital investment costs due to initiatives to address decarbonization measures (such as developing energy-saving products) |
Medium-term |
Large |
Small |
| Technology |
Higher R&D and capital investment costs to introduce new technologies |
Medium to long term |
Medium |
Small |
Determine LCA (CFP) and GHG data for individual products and develop energy-saving products |
| Markets |
Reduced sales of the Group’s products if decarbonization transition is delayed |
Short to medium term |
Medium |
Small |
Establish structures to respond to customer requests for GHG, human rights, and environmental data and strengthen collaboration with sales departments |
| Reputation |
Harm to reputation among customers and investors due to inadequate climate change initiatives |
Short to medium term |
Large |
Small |
Advance information disclosures, manage progress after acquisition of SBTi certification, continue improvement actions based on external evaluation results |
| Physical risks |
Timing of occurrence |
1.5°C |
4°C |
Response measures |
| Chronic |
Reduced productivity in conjunction with deterioration of working environments due to more high-temperature days |
Short to medium term |
Small |
Large |
Implement occupational health and safety measures, improve air conditioning and working environments, reinforce BCP |
| Acute |
Changes in raw material procurement sources and higher costs in conjunction with suspension of production at plants and supply chain disruptions due to natural disasters |
Medium to long term |
Medium |
Large |
Strengthen supply chain management, reinforce BCP |
| Suspension of raw material supplies from affected locations and suspension of operations at the Group’s plants due to heightened risks of infectious disease outbreaks caused by high temperatures |
Medium to long term |
Small |
Large |
Reinforce BCP including pandemic responses, establish structures for business continuity including at-home and remote work |
| Opportunities |
Timing of occurrence |
1.5°C |
4°C |
Response measures |
Products &
Services |
Increased sales due to higher demand for the Group’s environmentally-conscious products |
Medium to long term |
Medium |
Small |
Organize energy-saving performance and reduced environmental impact as product value, reflect this in explanatory materials for customers, prepare environmental data for individual products, acquire external certification |
| Markets |
Increased opportunities for our products to be selected by customers, mainly in Europe and the U.S., as our environmental responses are recognized |
Short to medium term |
Medium |
Small |
Continuously improve ESG evaluations and disclosures, strengthen ability to respond to customer environmental requirements, and highlight environmental value through collaboration with sales departments |
Resource
efficiency |
Reduced costs due to energy-saving, waste reduction, and improved resource efficiency |
Short to medium term |
Medium |
Small |
Promote energy-saving measures at each site, advance energy management, promote measures to reduce waste |
| Resiliency |
Maintain and increase sales volumes through reinforced resiliency |
Medium to long term |
Medium |
Medium |
Reinforce BCP, evaluate and respond to risks at key sites and in supply chains |
Reputation
and capital markets |
Increased trust from investors and customers due to climate change responses and high-level ESG disclosures |
Short to medium term |
Medium |
Medium |
Continuously disclose SBT progress, strengthen responses to ESG evaluation organizations, enhance investor engagement |
Through our businesses in the Healthcare Solutions and Diagnostics & Life Sciences Domains, PHC Group recognizes that opportunities associated with climate change may contribute to business growth from the following perspectives:
- Strengthened competitiveness of environmentally-conscious products: Highly energy-efficient medical devices and analytical instruments are becoming increasingly important selection criteria for customers, particularly in European markets where environmental regulations are stringent, and are serving as a source of product differentiation.
- Improved operational efficiency: Investment in energy savings and advancement of energy management contribute not only to GHG reductions but also to bolstering cost competitiveness.
PHC Group seeks to appropriately manage risks and opportunities related to climate change and ensure the sustainability of our businesses over the medium to long term. We also promote initiatives toward the realization of a sustainable society. Based on a materiality review that has been underway since fiscal year 2026, we will refine the assumptions used in scenario analysis and financial impact assessments, integrate climate change risks into our Group-wide risk management framework, and strengthen alignment with management strategies. We will also work to monitor climate-related measures and improve the effectiveness of countermeasures through the Environmental Subcommittee, which we established in fiscal year 2026.
Metrics and Targets
PHC Group sets medium- and long-term targets as responses to climate change and is working to reduce GHG emissions.
| Target Year |
Details |
| 2030 |
Reduce Scope 1 & 2 emissions by 42% and Scope 3 emissions by 25%, compared to fiscal year 2023 |
| 2040 |
Achieve carbon neutrality for Scope 1 & 2 |
| 2050 |
Maintain carbon neutrality for Scope 1 & 2 and achieve net-zero emissions for Scope 3 |
In June 2025, our 2030 targets were certified by the Science Based Targets initiative (SBTi) as Near-Term science-based targets aligned with the 1.5°C pathway. We also acquired third-party assurance for Scope 1, 2, and 3 emissions performance data in the base year (fiscal year 2023) and fiscal year 2024.
Actual GHG emissions and progress toward the targets are presented in the “Materiality KPIs, Targets & Progress” section (page 67). It should be noted that Scope 3 emissions in fiscal year 2024 increased by 1.4% compared to the base year, primarily due to an increase in emissions related to purchased goods and services (Category 1). We will seek to improve calculation accuracy and supplier engagement in stages, with a focus on those categories with the highest emissions. Please refer to our website for detailed data, including a breakdown of Scope 3 emissions by category and the third-party assurance statement.