Strategy

Setting the general framework (worldview) for scenario analysis

The scenario analysis was conducted within the scope, scenarios, and procedures below. In the "1.5°C scenario," which limits global warming to 1.5°C by the end of the 21st century compared to pre-industrial revolution (1760s to 1830s), "transition risks" will intensify, resulting from increased costs for electricity and energy-saving technologies, and the strengthening of policies and regulations aimed at limiting global warming, such as carbon taxes. In addition, important "opportunities" are assumed to include cost reductions due to the development of energy-saving technologies, an increase in public transportation users due to increased environmental awareness, and an increase in the desire to move into environmentally friendly properties. In the "4°C scenario," "physical risks" will intensify, resulting in an increase in renovation costs due to inundation of facilities due to intensified disasters, an outflow of customers, and a decrease in users due to new infectious diseases. In the subsequent examination and identification of risks and opportunities and the importance assessment, we divided them into "transition risks," "physical risks," and "opportunities." We have already responded to physical risks to a considerable extent, so please refer to "Responses in Business" along with the direction of future efforts, including the results of this analysis.

Business response

Scope and implementation method of scenario analysis

Businesses analyzed (performed separately for each business)

Transportation business, real estate business, Life Service Business, hotel and resort business

Selected scenario: Temperature increase by the end of this century

1.5°C scenario (strengthened regulations and measures scenario)

• Implementing policies and strengthening regulations to mitigate climate change
• Greenhouse gas emissions will decline and reach net zero by 2050
• Rising temperatures will cause sea levels to rise and weather patterns to change, but the changes will be less than in other scenarios.

4°C scenario (current scenario)

• No new policies or regulatory measures will be introduced beyond those currently envisaged
• In some areas, greenhouse gas emissions are increasing as the economy grows.
• As temperatures rise, natural disasters such as extremely hot days and heavy rains will become more severe.

How to conduct a scenario analysis

Analysis of important risks

The importance of risks was assessed based on the "degree of impact on each business" and the "degree of occurrence" of the event. The "degree of impact on each business" was analyzed by analyzing the scale of the impact on target businesses that are expected to be affected by climate-related events, and the "degree of occurrence" was assessed with reference to the Fifth Assessment Report (AR5) and Sixth Assessment Report (AR6) of the Intergovernmental Panel on Climate Change (IPCC^)* for physical risks such as natural disasters, while transition risks were estimated and analyzed based on trends in future policy goals and implementation plans, such as environmental laws and the introduction of carbon taxes, as well as the current implementation of policies.
The financial impact of the transition risk under the 1.5°C scenario was calculated mainly based on electricity consumption and partial introduction plans for solar power generation, while the physical risk under the 4°C scenario was estimated mainly based on the maximum depth of flooding due to river flooding and the impact of COVID-19. The impact on the consolidated financial statements is estimated with a range, as the estimated impact amount may change depending on the manifestation situation.

Important transition risks, physical risks and their impact

*1 Target period: Short term: up to 2 years, Medium term: 3 to 5 years, Long term: 6 years or more

*2 Impact level: Large: 5 billion yen or more, Medium: Less than 5 billion yen, Small: 1 billion yen or less

*IPCC (Intergovernmental Panel on Climate Change)

Key Opportunity Analysis

Considering the 1.5°C scenario as the main opportunity, we expect cost reductions from the development of energy-saving technologies, an increase in public transport users due to increased environmental awareness, and an increased preference for eco-friendly properties. In addition, we expect business growth in each segment due to an increase in customers and customer lifetime value, mainly in areas served by Tokyu’s railway lines, through the realization of "towns in harmony with the environment" as stated in Environmental Vision 2030.
The financial impacts estimated include the replacement of trains with new ones, reduced electricity costs through solar power generation, a shift to railway use, and increased rents for environmentally friendly properties. In addition, the realization of a "city in harmony with the environment" is expected to lead to an increase in the number of users areas served by Tokyu’s railway lines and promotion of ethical consumption.

Key Opportunities and Impact

*1 Target period: Short term: up to 2 years, Medium term: 3 to 5 years, Long term: 6 years or more

*2 Impact level: Large: 5 billion yen or more, Medium: Less than 5 billion yen, Small: 1 billion yen or less

*3 All Tokyu lines are now powered by 100% renewable energy sources.

Risk management

Regarding climate-related risks and opportunities, the ESG Promotion Group Corporate Affairs Division serves as the project leader, and with the knowledge of experts, works with Corporate Planning Division and each business division to analyze risks and consider countermeasures, and brings the issue up at the Management Meeting and the Board of Directors every year. In addition, company-wide risks, including climate-related risks, are considered, evaluated, and managed when each business and company conducts its own risk analysis every year, including climate-related risks.

Risk Management Process

Metrics and Targets

In order to mitigate climate change and prepare for transition risks, we are considering and promoting the decarbonization of business activities. As part of our efforts to address the global environmental challenges we face, we formulated Environmental Vision 2030 in March 2022, and aim to limit the rise in temperature to 1.5°C in order to realize a decarbonized society. By working in partnership with all stakeholders and providing services that encourage environmentally friendly behavioral changes, we hope to make environmental contributions more accessible to many people and promote sustainable Urban and community development in harmony with the environment together with everyone. Regarding the setting and progress of decarbonization goals, as described in "Status of achievement of environmental goals," we have set the goal of realizing a decarbonized society by 2050, and will continue to review and discuss the goal based on the results of scenario analysis.
In response to physical risks, we set investment priorities within the overall safety management, which takes into account not only climate change risks but also earthquake disasters and terrorism countermeasures. In addition, as part of our responsibility as a company responsible for the city's infrastructure, we have established safety indicators and are working towards safe railway operations and disaster-resilient Urban and community development through our daily operations.

Environmental Vision 2030

Status of progress towards environmental targets

Business response

To address transition risks, we will promote initiatives aimed at introducing in-house power generation, conserving energy, and procuring renewable energy. As for physical risks, we are already working on various risk countermeasures, as detailed below. Furthermore, in response to the intensification of disasters in recent years, in order to increase resilience to climate change, we will promote risk avoidance and mitigation measures by upgrading disaster countermeasures in each business and through collaboration between businesses, and will continue to work on regular crisis management response training.

Existing measures of Tokyu Railways

Tokyu Railways is systematically promoting various measures to prevent the impact on train operations in the event of flooding caused by heavy rain or landslides along railway lines.

[Flood prevention measures]
Tokyu Railways Corporation has been taking measures against flooding caused by heavy rain since fiscal 2018. In response to Typhoon Hagibis in October 2019, which caused major damage in eastern Japan, the company began measuring and investigating the condition of railway facilities in flooded areas based on local government hazard maps, and is systematically promoting the following countermeasures from both the hardware and software perspectives.

• (1) Establishment of information gathering methods for each local government and decision-making and instruction flow from evacuation orders to lifting them
• (2) Responses when evacuation orders are lifted in stages
• (3) Developing and verifying storage plans (including vehicle evacuation plans)
• (4) Flood prevention measures for facility entrances, etc.

(4) As countermeasures against flooding at entrances and exits of facilities, etc., we are taking measures such as raising the level of facilities and installing waterstops to prevent water from entering through ventilation openings and station entrances in underground sections, and installing waterproof doors in each equipment room.

Raising the ventilation opening

Water stop

Waterproofing entrance doors

[Landslide disaster prevention measures]
As a measure against landslides beside railway, we are systematically promoting slope reinforcement work to prevent soil and sand from flowing onto the tracks and disrupting train operations.

Slope after countermeasures were implemented (Ikegami Line, between Senzokuike Station and Ishikawadai Station)

Existing measures for real estate business

(1) Installation of rainwater storage facility at the east exit of Shibuya Station

The area around Shibuya Station has a bowl-shaped topography, which means that rainwater tends to accumulate during rainfall. In preparation for the recent increase in torrential rains, our company and the Urban Renaissance Agency, as joint developers of the Shibuya Station Block Land Readjustment Project, have been working on the construction of the Shibuya Station East Exit Rainwater Storage Facility, aiming to "realize a Safety & Security Urban and community development that is resistant to flooding." The facility was completed and put into service in August 2020 (managed by the Tokyo Metropolitan Government Sewerage Bureau). The facility is a large-scale structure measuring approximately 45m north to south and 22m east to west, located approximately 25m underground in the Shibuya Station East Exit Plaza, and can temporarily store approximately 4,000m3 of rainwater. When heavy rainfall of more than 50mm per hour occurs, the water is taken in, and when the weather improves, it is pumped out to the existing sewer main line, preventing flooding damage to the underground shopping mall around Shibuya Station. Additionally, in 2006, the Tokyo Metropolitan Government's Sewerage Bureau installed a storm water storage pipe of the same capacity on the west side of Shibuya Station (approximately 25 meters underground on Jingu-dori Street in Shibuya Ward).

Shibuya Station East Exit Rainwater Storage Facility

(2) Various flood prevention measures for large-scale complexes and owned properties

At our properties, including large-scale complexes such as Futako Tamagawa Rise, Shibuya Stream, and Shibuya Scramble Square we strive to prevent and mitigate flood damage by installing a variety of cutting-edge equipment during new construction based on flood risk forecasts set out in hazard maps compiled by local governments.

• ① Installation of waterproof panels at ground level entrances, elevators, and flood protection panels in underground parking lots
• ② Placement of electrical equipment rooms, disaster prevention centers, etc. on upper floors (excluding some buildings)
• 3) Installation of waterproof doors to the underground core equipment room
• ④ Installation of rainwater storage tanks (approximately 4,300 m3 in total in the basement of each building of Futako Tamagawa Rise)

Shibuya Scramble Square (Shibuya Station B6 Exit) Waterproof board (standing ceremony)

Futako Tamagawa Rise Waterproof Board (Installation)

Futako Tamagawa Rise (waterproof door)

(3) "Urban River Monitoring System" for the Shibuya River at Shibuya Stream

Because Shibuya Stream is located adjacent to the Shibuya River, the facility has implemented an urban river monitoring system that was jointly developed by Tokyu Construction and Chuo University in 2017 and tested at the Shibuya redevelopment construction site in order to provide rapid evacuation guidance for facility users and prevent flooding before flooding occurs.
This system uses the "High Resolution Precipitation Nowcast" data released by the Japan Meteorological Agency every 5 minutes to predict the water level of the Shibuya River that runs alongside the facility (hereafter, "predicted water level"). If the predicted water level exceeds a preset threshold, an alert is sent to a pre-registered email address to encourage caution and vigilance. The web screen also displays rain cloud radar from two hours ago up to one hour ahead, weather forecast information up to one hour ahead, wind speed forecasts around the facility, and the status of special warnings, alerts, and advisories for Shibuya Ward announced by the Japan Meteorological Agency (limited to heavy rain, strong winds, floods, and lightning). In addition, the system is linked to live cameras of the Shibuya River and weather forecast information provided by private weather companies.

(4) Initiatives by the Tokyo Metropolitan Government Underground Shopping Mall Flood Prevention Council (Shibuya District Section)

The Tokyo Metropolitan Government has established the Tokyo Underground Mall Flood Prevention Council, which is made up of operators of underground shopping malls, operators of adjacent buildings, railway operators, local wards, etc., for a total of 12 districts with large underground spaces around terminal stations, including Shibuya Station. All parties involved are working together to prevent flooding in underground shopping malls and other facilities.
In the Shibuya area, the Shibuya District Underground Mall Flood Prevention Plan has been formulated to ensure that facility managers will work together to gather and transmit information, conduct alert activities, and guide evacuations in the event of a heavy rain disaster. This plan has the primary goal of protecting the lives of people in underground malls, etc., and also aims to implement effective flood prevention measures to reduce damage within the facilities and quickly resume operations after the impact of flooding has subsided. Participants in this council include our company, Tokyu Corporation, Tokyu Railways Co., Ltd., Tokyu Department Store Co., Ltd., Ltd., Shibuya Mark City Co., Ltd., Shibuya Scramble Square, Ltd., SHIBUYA109 Entertainment Co., Ltd., Tokyu Land Corporation Co., Ltd., and others.

(5) Formulation of an "Evacuation and Flood Prevention Plan" (Futako Tamagawa Rise)

At Futako Tamagawa Rise, we have formulated an "Evacuation and Flood Prevention Plan" based on the Flood Control Act, and we conduct tabletop and field training every year. In the tabletop training, we confirm the inflow route of floodwaters and clarify the division of roles and response methods in the event of flooding, and in the field training, we implement flood prevention measures and evacuation guidance on-site based on the tabletop training to take smooth and swift action in the event of flooding.

Decarbonization Transition Plan

We are taking advantage of our business characteristics to achieve our carbon neutrality goal for 2030. As Tokyu Lines operate on 100% renewable energy, we are making progress in reducing Scope 1 and 2 CO2 emissions, but we will continue to invest in more efficient energy use and stable and additional procurement. As for Scope 3, we will work with our business partners and customers to concretely advance our efforts. In addition, we will not stop at Scope 1, 2, and 3, but will develop services to decarbonize the town while promoting energy creation, utilization of storage batteries, and introduction of new technologies, aiming for sustainable growth by realizing a town in harmony with the global environment.

* _CO2 emission reduction targets are set as SPTs (Sustainability Performance Targets)