Promoting Environmental Management

ESPEC Environmental Basic Policies

Our Environmental Management Policy

"ESPEC will never harm the precious environment of the Earth.
Our responsibility is not be limited to the provision of superior services without imposing a burden on the environment. The ESPEC way is to seek opportunities to help the environment."
In keeping with the above Environmental Declaration, ESPEC strives to protect, conserve, and improve the environment. We adopted the ESPEC Environmental Management Policy in April 1996 and have continually improved upon it in order to accommodate global trends, the requests of stakeholders, and our own achievements and performance.

Environmental Declaration

ESPEC will never harm the precious environment of the Earth.
Our responsibility is not be limited to the provision of superior services without imposing a burden on the environment. The ESPEC way is to seek opportunities to help the environment.

Basic Principles

ESPEC recognizes that environmental conservation, preservation, and improvement are important themes for corporate management. Based on the following policies, we will strive to adopt countermeasures for climate change, promote recycling of resources, preserve biodiversity, and prevent pollution of the environment while we conduct environmental management activities and continually improve our products and services. In addition, we contribute to the realization of a sustainable society by supporting customers who are developing low-carbon technologies through the manufacturing, sales, and maintenance of environmental test systems, electronic device test systems, and energy device test systems, as well as through commissioned testing services. We will also strive to help realize a society with abundant biodiversity through our business that supplies in plants.

Basic Policies

  1. ESPEC aims to contribute to a sustainable society by developing technologies, products and services and providing them to customers.
  2. ESPEC shall adopt countermeasures for climate change by reducing the impact on the environment caused by design, manufacture, sales, maintenance, and clerical work.
  3. As part of our corporate activities, we shall contribute to the realization of a recycling-oriented society by striving to apply 3R (reduce, reuse, and recycle) practices to our emissions and products.
  4. We shall strive to prevent pollution of the environment through green procurement and controlling toxic substances generated by our business activities, products and services.
  5. In order to realize a sustainable society, we shall provide products and services to customers who are committed to preserving biodiversity as well as strive to foster environmentally minded and engaged human resources.
  6. The company shall strive to realize robust environmental risk management by establishing voluntary standards as needed, along with strictly observing environmental laws/regulations and other requirements to which the organization has agreed.

We will put these policies into practice by setting environmental targets and goals that are technically and economically feasible, and by regularly reviewing our environmental management systems.

These basic environmental policies will be disseminated to all members of the organization as well as being made available to the general public.

April 1, 2020

Environmental Governance

Environmental Management System

The Company-Wide Environmental Management Committee was established in 1996. The committee is chaired by the director in charge of the Environmental Management Department, and is vice-chaired by the Environmental Management Supervisor. The responsibilities of this committee include managing the company’s common environmental goals, holding discussions on various relevant matters, and other activities. The decisions made by this Committee are then applied in each company, business office and division where the environmental management activities are carried out. Important actions and policies that were discussed by the Company-Wide Environmental Management Committee are reported each quarter to the Board of Directors.

Acquisition of ISO 14001 Certification

After adopting environmental management in 1996 as a part of our business, we engaged in environmental management activities on a per-office basis and acquired ISO 14001 certification in an effort to continue strengthening our environmental governance. ESPEC underwent a general certification review in fiscal 2017, including for the three domestic companies ESPEC Test System Corp., ESPEC Kyushu Corp., and ESPEC MIC Corp.

ISO14001

Current Environmental Management System Certification
Company Date of acquisition
Domestic Group Companies
(ESPEC CORP.)
January 26, 2018
(December 26,1996)
ESPEC ENVIRONMENTAL EQUIPMENT (SHANGHAI) CO., LTD. September 8, 2004
ESPEC TEST EQUIPMENT (GUANG DONG)CO., LTD. October 13, 2016

Mid-term Plan on the Environment

Identifying Materiality (Important Issues) for Environmental Preservation

ESPEC aims for “environmental management that contributes to the achievement of a sustainable society through business activities,” and is working to identify materiality (important issues) based on this idea. First, environmental impact assessments are conducted to evaluate, identify, and extract issues regarding the degree of environmental impacts resulting from our business activities and the stage at which they occur. We also analyze external and internal issues, and organize the needs and expectations of stakeholders including the regions (governments) and local communities where our primary business sites are located, customers, suppliers, employees, and investors. We then work to ensure consistency between the resulting identified issues and our long-term vision, ESPEC Vision 2025, and incorporate the issues that are most important for environmental preservation into the Mid-Term Plan on the Environment.

The 7th Mid-Term Plan on the Environment (planned implementation period: FY2018-FY2021)

In order to contribute to the realization of a sustainable society through our business activities, we have formulated the 7th Mid-Term Plan on the Environment (planned implementation period: FY2018-FY2021).
This plan establishes objectives for 5 themes: Providing Products and Services that Contribute to a Sustainable Society, Combatting Climate Change, Recycling, Control of Chemical Substances, and Preserving Biodiversity and Training Environmental Human Resources. We will work to further advance our environmental management through various means, including providing products and services to the low-carbon technology development field, developing and marketing environmentally friendly products, and reducing CO2 emissions from our business activities.

■History of the Mid-Term Plan on the Environment

Primary Objectives

  • Change to low GWP refrigerants in all products.
  • Reduce total CO2 emissions at domestic business sites by 10% (compared to FY 2018 levels).
  • Reduce the increase in emissions resulting from expansion of manufacturing and global procurement.
    4% reduction (compared to FY 2017 levels)
  • Provide products that are compliant with RoHS Regulations to global markets.
    15 models in 2020
  • Identify opportunities to improve biodiversity preservation and promote the preservation of biodiversity through the environmental preservation business.
    Orders for work on corporate office grounds or forests: 20

Training Environmental Human Resources

Reorganizing the Environmental Training System

The environmental training system is being reorganized in stages starting from FY 2019, aiming to improve the understanding of the Mid-Term Plan on the Environment and train personnel who individually think about and act for the environment. We are creating a training system for each department, job type, and duty, aiming to develop personnel who can adapt to changes in environmental regulations and society.

Incentives for Employees

●Environmental Awards

Organizations and individuals (including suppliers) who make particular contributions to environmental management or product environmental performance are recognized at an annual company-wide awards ceremony.

●Certification Test for Environmental Specialists (Eco Test)

Employees are encouraged to acquire the Eco Test certification in order to develop individuals who possess a wide range of knowledge and will address environmental problems. This certification has been acquired by 100% of management and 85% of employees. (As of March 31, 2020.) From FY 2019, we are registered as an Eco Unit.

Risks and Opportunities

Identifying Risks and Opportunities Related to Climate Change

The ESPEC Environmental Test Business and ESPEC MIC environmental preservation business are affected by climate change in a variety of ways. With reference to the recommendations of the TCFD*, we are identifying risks and opportunities related to climate change.

* Task Force on Climate-related Financial Disclosures, established by the Financial Stability Board (FSB) in 2016

Risks

1.Risks involved with the change to a low-carbon economy
Tightening regulations
and changing customer needs
Risk that tightening of regulations including product energy efficiency standards and regulations on amounts of HFCs used and emitted may result in products being rejected by the market if they do not satisfy standards
Risk of losing market share and being unable to recover R&D expenses if products do not precisely match customer needs and are rejected by the market, or if product development fails
Risk that the introduction of carbon pricing may raise the costs of product and laboratory testing services
2.Risks related to physical changes resulting from climate change
Global warming Risk of effects on parts procurement, manufacturing, and service provision resulting from an increase in extreme climate events
Risk of immense expenses required for business rebuilding and recovery in addition to losses resulting from interruption of business in the event of major damage caused by extreme climate events
Conditions of
product use
Risk of increasing costs for air conditioning at customers' sites and laboratory testing service sites in order to maintain appropriate conditions for product use
Plant production Risk of damage to field equipment and plant products
Risk of effects on the supply of plant products resulting from plant germination characteristics or from disease and insects
Risk of the current environmental preservation business not being selected due to prioritizing of environmental adaptation measures under conditions of frequent natural disasters

Opportunities

1.Energy sources
Further energy
conservation
Optimization of factory energy usage through the introduction of Factory Energy Management Systems (FEMS)
Steadily changing lighting equipment in all offices to LEDs
Renewable
energy
Reduction of fossil fuel energy risk by promoting energy creation and the use of renewable energy
Use of solar power generation at 2 offices in Japan
Searching for new renewable energy possibilities, such as development of hydrogen production systems utilizing biomass
Operation and expansion of laboratory testing service sites using 100% green energy
2.Products and services
Products Contributing by providing products and services to customers who are developing environmentally friendly technologies
Faster introduction of low-GWP products to the market
Services Provision of laboratory testing services which conform to the latest international standards and regulations, and to the testing standards of each country
Provision of services for changing to low-GWP refrigerants and HFC recovery in chambers owned by the customers
Environmental
preservation
business
Expanding needs for the environmental preservation business resulting from the development of cultivation technologies adapted to the environment
Growth in the environmental preservation business resulting from the development of cultivation technologies adapted to the environment

Scenario Analysis

Environmental Strategies for the 2°C Scenario

We are performing scenario analysis to analyze the effects of climate change on our business and finances. As shown below, assuming a rise of 2°C average temperature by 2100 compared to before the industrial revolution (the 2°C scenario), we have analyzed the effects on our company’s business and verified the effectiveness and resilience of the environmental strategy that we will enact in response.
This scenario analysis is reported to and approved by the Company-Wide Environmental Management Committee and the Board of Directors.

1.Tightening of product energy efficiency standards

Our products require large amounts of operating energy during the production stage, use by the customers, and laboratory testing services. Working for long-term product energy savings is expected to make a large contribution to reducing supply chain emissions.

2.Tightening of regulations on the amounts of HFC use and emissions

There is the risk of losing customers if we are slow to meet the regulations. Our development of low-GWP products leads the industry and is already ahead of regulations. We consider this to be a strength and an opportunity for our company.

3.Changing customer needs

More advanced and diverse customer needs are expected. From the perspective of product life cycles, we believe we can meet customer needs by rapidly reducing environmental impacts, and by providing technical development, products, and services.

4.Introduction of carbon pricing

Calculating as of FY 2018 based on the carbon pricing expected for the 2°C scenario, virtual costs of more than 70 million yen are expected to occur in manufacturing and laboratory testing services. Our company recognizes that these virtual costs are not small, and is working to develop energy-saving products and services in order to reduce CO2 emissions by 40% in 2030.

Based on the above analysis results, we have confirmed that the intended direction of the 7th Mid-Term Plan on the Environment is appropriate, and that some level of resilience has been achieved at the present time. The effects of climate change on our business activities are changing on a daily basis. We will continue studies regarding potential currently unknown effects on finances, as well as setting of indexes and targets.