Risk Management
ESG Risk Management
Policies and Basic Approach
Our business activities spreading widely across the globe are subject to a range of risks. Both our business opportunities and business risks are growing and becoming more diverse with the globalization of economies, the development of networked societies, and the high level of awareness of corporate social responsibility. In addition, the speed of change in the environment surrounding management and business is increasing. As uncertainty rises, we regularly review our risk management policies to increase our sensitivity to risk and our ability to respond quickly.
Sustainability Governance and Oversight
Process of Managing Environmental and Societal Risks
Responding to Environmental and Societal Risks (as of April 2024)
To respond appropriately to changes in social conditions and business models, and manage risks comprehensively from both quantitative and qualitative perspectives, we have an effective risk management system in which risks related to the environment, society, and governance are important factors that are examined in decisions to promote any business.
For Mitsui & Co., which operates in countries and regions around the world, the policies of each country and region related to climate change have a significant impact on the profitability and sustainability of each of our businesses. We use the climate-change scenarios published by the International Energy Agency (IEA) and other organizations when we analyze scenarios involving businesses that have significant impacts. We also incorporate these climate-change scenarios into our in-house carbon-pricing system. In this way, we are gaining an understanding of business impacts both in terms of risk and opportunity. When considering investment projects, M&A, and other business decisions, we take these scenarios into account.
In conducting business, we have put in place a system to ensure that utmost consideration is given to the environment and society in projects at all stages, including at the launch of a new business, during operations, and even at the point of withdrawal from the business. Our Sustainability Committee discusses response policies and measures regarding environmental and social risks (including climate-change risk), then reports to the Executive Committee and the Board of Directors, which then applies them following approval. Furthermore, the Sustainability Committee has established the Sustainability Advisory Board, which is made up of external experts on environmental and social themes. We receive advice on how to reduce ESG risk from our Sustainability Advisory Board as necessary.
ESG Due Diligence Checklists
When planning new business, regardless of the business domain or investment amount, each Business Unit uses an ESG due diligence checklist to assess the ESG impact of environmental and social aspects. Environmental aspects include climate change, pollution prevention, ecosystems, and water stress. Social aspects include human rights, working environments, and occupational health and safety. Depending on whether certain quantitative and qualitative standards are met or not, the Board of Directors, the Executive Committee, and the Representative Director, who supervise ESG risks, decide whether or not to proceed with the business. Our ESG due diligence checklist is based on the World Bank Group's IFC Performance Standards that is an international standard for taking environmental and social factors into account. The checklists include more than 150 items and are created to thoroughly screen environmental and social risks in business. When expanding or withdrawing from existing business, we also use ESG due diligence checklist and external consultants as necessary to assess ESG impact and decide whether or not to proceed with the transaction.
We manage our existing non-consolidated businesses based on international ISO14001 standards so that we can properly identify and manage environmental and social risks. We are encouraging our subsidiaries that have a large impact on the environment to establish their own environmental management systems based on ISO14001 or other international guidelines that cover environmental and social factors, to enhance their environmental management. We have a system in place for the rapid reporting of any environmental accidents or violations of environmental laws, regulations, and ordinances. In addition, as part of our response to our stakeholders, we hold dialogue with NPOs, NGOs, interdisciplinary organizations, and government agencies to better understand business risks and opportunities and to consider necessary measures to take.
Furthermore, we have established rules on ODA (Official Development Assistance) Business Management for promoting ODA business, which has a high public profile, and therefore requires highly transparent operational processes. Under this system, Mitsui's ODA Projects Evaluation Committee reviews these projects as necessary and ensures appropriate risk management. In particular, we make a comprehensive assessment of risks related to bribery and corruption considering the significance of those issues. With regard to projects that directly or indirectly receive subsidies from governmental and administrative agencies, or other such entities, both within and outside of Japan, we ensure appropriate risk management depending on the subsidy amount and conditions.
