Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
ESG is constantly evolving. Over the years, he is shifted
from socially responsible investing to impact to sustainable finance. While
the terminology continues to change, what hasn't changed are the
underlying science market pressures, tangible physical and financial impacts of
the climate crisis, as well as increasing regulatory scrutiny and
(00:22):
rising consumer expectations. We aim to filter out the noise
by speaking with industry experts to identify what is really
driving value. Welcome to ESG Currents, brought to you by
Bloomberg Intelligence.
Speaker 2 (00:38):
Welcome to today's episode. I'm Mayas Takehoma, ESG analyst in
Chadju of Japan. We are honored to welcome Ms Kayatani,
head of a Sasanibti strategy at Nishinfo's holdings. As many
of you know, Nischinfus is a global pioneer in instant
kop noodles. In this episode, we'll be discussing the company's
(00:59):
approach to nature capital, disclosure and some of the concrete
to steps it was taken in this area. Nature capital
has become a central theme in ESG investing, helping companies
design strategies to boost economic growth while preserving the environment
with discussions at COP thirty helping to increase global attention. Tanisan,
(01:21):
thank you very much for joining us today.
Speaker 3 (01:24):
Hi Homazon, thank you so much for having me. I'm
so honored to be your guest today. So since launching
the world's first incidental called Chicken Environment in nineteen fifty eight,
Missing Foods has leveraged strength in innovasion to offer a
wide variety of food product globally and as a food company,
our business activities, including like raw material procurement, are heavily
(01:47):
dependent on blessing of nature such as healthy soil, surface
and groundwater, and these natural resources are sustained biodiversity and
to ensure the long term sustainability of our business is
essential to balance both biodiversity conservation and business development. So
we have positioned biodiversity and sustainable valuachin as material issues
(02:09):
and we are actively accelerating various nachatives regarding.
Speaker 2 (02:12):
This wonderful To begin with, I'd like to share that
Japan's Financial Services Agency recently highlighted the nisi's disclosure on
nature capital as a best practice. Since nature capital is
still a relatively new area for corporated disclosure in Japan,
many companies are struggling with how to collect and visualize
(02:32):
the necessary data. The FSA noted that your disclosure identified
the ingredients of your products, the regions you procure them from,
and how much the company relies on those regions. You
also explain the risks associated with that reliance. I imagine
many of our listeners come from companies that are facing
the same challenges. Could you work us through how you
(02:56):
approach to this disclosure and what starting points you would
recommend for others?
Speaker 3 (03:01):
Yes, of course. In twenty twenty three we conducted a
try or assessment of nature related risk and opportunities using
the lead approach so called and disclose the results and
based on the TENFD beta version zero point three. And
in twenty twenty four we resisted as TNFT are the
adapter and after reviewing the row materials to be assessed,
(03:24):
we did a more detailed avariation and disclosed the results
in line with the recommendation of the final version of
the NFT, which is like version one point zero. And
given that our business activities, especially road material procurement, depend
on natural resources and in impact biodiversity, we focus on
upstream all value chain of this disclosure so specifically, we
(03:48):
evaluated various biodiversity related indicators for nine key raw materials
procured by our group and selected four items, which is
palm oil, coco read a streamp for father analysis under
the LIP approach starting from the located phase and for
those three land based materials, we qualitatively assess our dependency
(04:13):
and impact on nature by combining ancor with over one
hundred and fifty types of nature related big data and
taking into account the geographical characteristic of the sourcing regions.
For the marine based material. On the other hand, due
to the limited a variable information, we use trending catch
(04:34):
volumes as a key indicator for the business continuity and
organize some concerns about dependency and impact based on the
relevant academic papers in palm oil, which showed the highest
dependency in impact on nature is also critical to our business,
was analyzed in more detail through scenario analysis and the
(04:54):
results indicated that the both Saba Malaysia and real Indonesia
up and writing temperatures, disease spreading, pump plantations and other
factors could significantly reduce eels in the future and additionally,
if pump plantation continue to expand without country measures land
use changes could lead to substantial biodiversity laws by twenty seventy.
(05:19):
So to help mitigate the nature dated risk highlighting in
the scenario analysis of the palm well, we have launched
a support initiative for the pump small farmers and through
this project we aim to improve their cultivation practices and
promote their capacity to obtain our SPIEO certification and thereby
(05:40):
like we can strengthen both environmental sustainability. And then there
are farmers resilience and live with food and so on.
And when connecting SICH analysis, it is necessarily to collect
tresability data for verraw materials, which I believe that is
a very big challenge for many companies as well, not
only for us. For us we do not have the
(06:02):
same level of traceability for all the materials. What is
important is to start with the information currently available and
conduct an initial analysis. Anyways, and for example, palm oil
is often traceable to the mid level and which allows
us to perform detailed location specific analysis. But for the
other commodities like wheat or the cocoa with less glanbular
(06:24):
traceability such as only at the state level at max
or even sometimes the country level. For those we use
satellite data and government statistics and crops production to make
more informed estimates. So in the future, of course we
aim to improve the grduality of the traceability data for
those commodities, but this requires ongoing engagement with suppliers and
(06:49):
even internal coordination including the overseas subsidiaries and so on,
and this takes so much time. So in my opinion,
rather than waiting for the perfect traceability data, I live,
it's effective to start with the commodity data is already
available and then gradually expand the scope. And when disclosing,
of course, clearly distinguishing the difference between like what has
(07:12):
been analyzed and what still needs father analysis and can
be I guess helpful for investors to understand the efforts
if the disclosure is not yet complete.
Speaker 2 (07:23):
Quite wonderful. Building on that, could you share what you
personally found most difficult during the disclosure process? What what
the biggest challenges you and your team had to overcome.
Speaker 3 (07:35):
Oh, thank you, many of the stir cales, But I
would say, rather than the analysis itself, the most challenging
part was organizing the result into the disclosure report. And
since we focus on upstream raw material portunment explaining like
location specific risks and opportunities, and this inevitably rely led
(07:57):
to disclosing more detailed sourcing region. These details could potentially
identify suppliers and it could become like sensitive corporate information.
So we had extensive discussion with the procurement department about
how much we want to disclose publicly, and ultimately we
(08:17):
disclosed information at the level that I'M accurately conveys location
specific risk and opportunities while also being accessable from the
procurement perspectivement confidentially standpoint. But it took some time for us,
of course. And additionally, and the NFT analysis involves many
technical and unfamiliar terms, and since the disclosure is published
(08:41):
on our official website which is accessible to the general
consumers as well, so it is important for us to
present the information in a very understandable way. So we
made effort to simplify the expression without altering the TNFD
structure and then the wording and added clear notation to
(09:01):
technical terms. So in the end we were able to
disclose even finer details of the analysis thanks to the
persistence of our team members who coordinated with various departments
internally and refine the language to make it more accessible wonderful.
Speaker 2 (09:18):
As a follow up question, have you received any feedback
from investors on your Nature Capital disclosure and based on
that feedback, how do you expect investors might integrate Nature
Capital into the investment decisions.
Speaker 3 (09:32):
Well, yes, many investors have reacted with surprise, like saying
like I didn't expect such an in depth and comprehensive disclosure.
And we, as the consumer gets company, we prioritize approachable
communications and marketing in general. So why the actually conducting
quite a various initiatives around nature Capital. We haven't emphasized
(09:56):
the technical aspect of our initiative until now, so this
disclosure helped investor better understand our efforts and created the
positive surprise. I would say, but through dialogue with investors,
we've recently noticed two key points they value. First is
whether initiatives and disclosure related to Natural Capital are integrated
(10:19):
in the company's growth strategy narrative. So the usually investors
focus on concrete efforts, not the quite a reactive measures.
So the assess is whether the company is taking a
long term view like twenty to thirty years ahead. And
I believe that this trend will continue sure. Second is
(10:40):
whether the disclosure relates to the business resilience in the
context of global population growth and climate change, and so
like investors recognize the securing stable programment is vital for
the food company like US, so we expect discussion around
the procurement resilience to increase and of course it became
a key factor of the investment decisions in the future.
Speaker 2 (11:02):
More and more true. Now I understand investors are king
on growth strategy and the business resilience in nature capital space. Okay,
then let's dive a bit deeper into the topic of
nature capital. It covers a wide range of resources agriculture
and aquaculture products like palm oil, wood, shrimp, and coco,
(11:22):
but also something that's essential as water. Increasingly, investors are
paying much attention to water with the roles and the
water stress faced by the companies they invest in. With
that in mind, what steps is Niching taking to address
water resources and water stress and how does the company
view water as a financially material resources.
Speaker 3 (11:45):
And of course water scars t has a significant impact
on stable food production, so of course we recognize water
as a financially material resources for US as well, and
as a part of our environmental strategy it's called our
Food Challenge tween thirty. One of our pillars of this
strategy is reducing water usage. Specifically, we aim to reduce
(12:09):
water usage at the production plans to twelve point three
kumeters or less part one millium japanese and in sales
by twenty thirty and to assess this water risk at
our domestic and international production site, we regularly conduct analysis
using the Arqueduct Water Risk Atlas, and each plant works
(12:29):
to reduce water usage in the manufacturing processes and promotes
water use. For example, we're using like a cooling water
in the manufacturing system for the equipment cleaning in the
end and at our consite plant INGREPAN which is like
relatively newer plant intrepent, we've introduced AI into water treatment
(12:51):
to reduce water usage, and previously during the operation operators
manually determine the frequency and then the duration of cleaning
the water treatment system. But now AI makes these decisions
and performs automatic cleaning for us, so we can minimize
you know, much water usage and beyond our own factories,
(13:13):
we also assss a water related risk in the production
regions of KIRA materials using ACTA again and other tools
under TNFD and for example, wheat production typically involves large
scale irrigation which causes like significant land and water resource usage,
but under the water use impact category of TNFT, regional
(13:36):
differences are quite significant. For example, like in Western Australia
identified as a major priority region in the LOCATE phase
in our tnfdleaf analysis, rain feit agriculture is still common
and which results in lower water risk, So the regional
differences matters, and still climate change could alter this condition
(13:59):
in a few so we plan to continue monitoring water
risk in the WAED production. But I wanted to emphasize
that we always need to take a look into the
regional differences, not only the commodity specific reasons.
Speaker 2 (14:12):
Great oneful not just in production. Your consumers also need
water to prepare and enjoy your products. From that perspective,
does the company consider this in shaping its sales mix
or product strategy. Yes.
Speaker 3 (14:28):
Although we're strongly associated with instant noodles, our group is
expanding its lineup of frozen and chilled meals, beverages and
snack products, so those categories like don't require water for
preparation at all. So that said, in the instant noodle category,
we recognize the need to further consider how consumers water
(14:50):
usage during the preparation and we should reflect this in
the future product strategies. But however, we regularly conduct projects
for consumers related hot water and then the wastewater. For example,
we launched the Living with hot Water project, which promotes
way to reduce COEO TO emissions while boiling water for
(15:10):
inso noodles. So we communicated the four recommended actions for
consumers and then their effects through our website. We flat
and sometimes even on the underside of the cup Noodles
leads and to raise awareness every time. And also like
cup Noodles, it can be used in the enjoyed any
time anywhere with just hot water, even like at home,
(15:33):
in the office, sometimes in an outdoor. And while this
convenience is appreciated widely, some consumers struggled with disposing of
leftover soup, especially outdoors. So to address this, we launched
the special products in twenty twenty one for cup Noodle's
fiftieth anniversary. It's called like cup Noodle Soup solifine powder,
(15:56):
so when added to leftover soup and steer it for
like about ten seconds. The soup solidified and can be
disposed as a barnable alongside with the container, so that
the cooked water willn't really directly get disposed on the
ground and disturbing nature.
Speaker 2 (16:14):
Wonderful. Thank you so much Tonnis for sharing your insights
and for joining us today.
Speaker 3 (16:18):
Well, thank you so much for having me.
Speaker 2 (16:21):
You can find more information by going to biesg go
on the Bloomberg terminal. If you have an ECG queries
of burning questions you would like to ask BI analysts,
send us an email at easy current at bloomberg dot net.
Thank you,