Governance and Risk Management

In May 2021, Daio Paper’s Board of Directors formulated the Daio Group Sustainability Vision, the Group’s sustainability strategy. In conjunction with that, the Sustainability Committee meets once every quarter to assess climateand nature-related risks and opportunities, set targets, policies, and strategies, and monitor the progress of the Group’s relevant initiatives.
The Sustainability Committee (chaired by the President and Representative Director) makes relevant decisions, which are reported once a quarter to the Board of Directors so that the Board oversees the implementation and progress of the Group’s climate- and nature-related initiatives and makes important decisions. Under the Sustainability Committee is the ESG Subcommittee, which comprises eight working groups (WGs).
The Group’s specific initiatives to address nature-related risks and opportunities are devised and promoted by the Forests & Biodiversity Response WG and monitored by the ESG Subcommittee. In addition, the Daio Group has formulated the Daio Group Human Rights Policy in accordance with the United Nations’ Guiding Principles on Business and Human Rights and respects the human rights of all its stakeholders, including indigenous peoples and local communities.
With respect for human rights and coexistence with local communities identified as material issues, we are working to identify, prevent, and mitigate any negative impacts on human rights, while engaging actively with local communities.
At the Daio Group, the Sustainability Committee takes charge of the comprehensive management of all sustainability-related issues, including those related to climate change and nature. The ESG Subcommittee, a subordinate body of the committee, assesses climate- and nature-related risks and opportunities identified by five of its working groups (WGs): the Global Warming Countermeasures WG, the TCFD Response WG, the Logistics GHG Emissions Reduction WG, the Forests & Biodiversity Response WG, and the Value Co-Creation WG. The Sustainability Committee then deliberates on matters related to those risks and opportunities. The outcomes of the deliberations are reported to the Board of Directors once a quarter to be integrated into the management of the Group. The Risk and Compliance Committee deliberates on matters regarding the identification and assessment of risks with likely significant impacts on the Group’s management, including those of compliance violations and misconduct, and the deliberation results are reported regularly to the Board of Directors and integrated into the management of the Group. The identified risk and opportunities, including information on the comprehensive assessment and planned responses, are also shared among their secretariats, namely the Sustainability Promotion Department and the General Affairs Department, and managed holistically.

Strategy

We analyzed the direct operations of the Paper and Paperboard Business and H&PC Business, our core businesses, using the LEAP approach*1 and identified nature-related risks and opportunities based on the results of our assessment of dependencies and impacts on nature. We started formulating our nature-related strategies by analyzing the relationship that our business has with ecosystem services and natural capital from the perspective of potential dependencies and impacts. In that process, we used ENCORE, an analytical tool recommended by the TNFD. Afterward, according to their importance in our business, we selected our two main mills in Japan (Mishima and Kani Mills) and 212 pieces of forest land owned by Forestal Anchile in Chile to examine whether they constituted any of the two kinds of priority locations: sensitive locations (areas deemed to be ecologically sensitive in terms of natural capital and biodiversity) and material locations (areas where we have identified material nature-related dependencies, impacts, risks and opportunities). The examination showed that the two domestic mills and some parts of the Chilean forest land were located in or near Key Biodiversity Areas (KBAs), nature reserves, etc. and therefore constituted sensitive locations. In addition, in consideration of the results of our analysis of dependencies and impacts, as well as the resulting risks and opportunities, we determined that all parts of forest land owned by the Chilean Daio Group company constituted material locations. Based on the results of the assessment of our dependencies and impacts on nature, we have identified naturerelated risks and opportunities that the Daio Group needs to address and defined our action for nature in line with the AR3T Framework,*2 a framework for organizational action for nature.

Analysis using the TNFD LEAP approach: Nature-related risks and opportunities

Forest conservation and maintenance of biodiversity

The Daio Group is committed to conserving forests and maintaining biodiversity based on the Daio Global Environmental Charter.

Environmental conservation activities of Forestal Anchile

Metrics and targets

In line with TNFD Recommendations Version 1.0, the Daio Group discloses its values for core global metrics on its website.
We will continue our efforts to expand the range of metrics in our disclosures and reduce the impact of our operations on nature. We have also set nature-related targets as shown on the right. We will consider setting many more targets with a view to contributing to naturepositive outcomes.

Nature-related targets