Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• CO2 emissions suppressed with LED lighting equipment 1,300 tons (FY2017)
• Achieved 100% eco-friendly vehicle ownership ratio at the end of FY2016 (except for some special vehicles).

Social Achievements

• Received “Logistics Environmental Impact Mitigation Technology Development Award” of “The 18th Logistics Environment Awards”,
• Received “Appropriate Packaging Award” of “Japan Packaging Contest 2017”,
• Employees won awards in “The 32nd National Forklift Diving Contest”,
• Received the Award for Excellent Business Entities of “2017 Excellent Business Entities Working on Modal Shift”

Governance Achievements

• Established three committees overseeing nomination, auditing, and compensation
• Established an internal whistle-blowing system

Climate Goals & Targets

Environmental Challenges

• Intensifying competitions across industries caused by labor shortage and expansion of EC market in Japan.
• Concerns over a shift to protectionism/block economies and geopolitical risks.

Mitigation Strategies

• Positioned FY2018 as the period to prepare for the next Mid-term Management Plan and started with a new business concept of “LOGISTEED”.
• Working on establishing digital platform and optimizing SCM, operating platform center for EC, and building Smart Logistics center directly connected to a factory.
• Promoting the development of vehicle solution systems for driving management aiming at realization of zero-accident society.

Supply Chain Management

Responsible Procurement

• HTS Group Procurement Policy

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI, UN Global Compact, SDGs

Certifications: Privacy Mark, ISMS (ISO/IEC 27001), Green Management Certification

UN Sustainable Development Goals

• Goal 1
• Goal 3
• Goal 4
• Goal 7
• Goal 8
• Goal 9
• Goal 11
• Goal 13

The HTS Group is fully aware of the importance of achieving the SDGs, the universal goals for the international community. Among 17 goals of SDGs, the following eight goals are especially relevant to our CSR objectives developed in FY2017.

Awards & Recognition

• Diversity Management Selection 100
• Semi-Nadeshiko Brand

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced CO2 emission intensity by 4% compared to FY2014
• Reduced total waste emissions to 30,527 tons in FY2018
• Achieved 100% eco-friendly vehicle ownership ratio
• CO2 emissions suppressed with LED lighting fixtures: 2,730 tons (FY2018)
• Reduced CO2 emission by modal shift (various examples with quantified reductions)

Social Achievements

• Received “Eruboshi (L Star) Certification (Stage 2)” for promoting women's active participation
• Improved workplace accident frequency and severity rates to 0.0
• Increased community investment to 18 million yen in FY2018
• Implemented various initiatives to improve work-life balance (maternity, childcare, nursing care leave)

Governance Achievements

• Established three committees overseeing nomination, auditing, and compensation
• Implemented a Company with a Nominating Committee, etc. System
• Established HTS Group Code of Conduct and compliance reference card

Climate Goals & Targets

Environmental Challenges

• Intensifying competition in the logistics industry due to labor shortage and expansion of EC market
• Significant changes in supply chain structure due to technological advancement and social changes
• Securing labor force has been increasingly difficult

Mitigation Strategies

• Strengthening core logistics function and carrying out collaborative innovation strategies
• Accelerating development and on-site implementation of new Smart Logistics technology
• Promoting digitalization and building open platforms
• Promoting automation and labor saving in logistics centers
• Improving work environment in logistics centers (e.g., installing air conditioners)

Supply Chain Management

Responsible Procurement

• HTS Group Procurement Policy; procurement CSR initiatives; continuing procurement compliance education

Climate-Related Risks & Opportunities

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 9 (Industry, innovation and infrastructure)
• Goal 11 (Sustainable cities and communities)
• Goal 12 (Responsible consumption and production)
• Goal 13 (Climate action)
• Goal 8 (Decent work and economic growth)
• Goal 5 (Gender equality)
• Goal 17 (Partnerships for the goals)

The HTS Group is working to do its part in achieving these SDGs as it moves into high gear to reach its CSR objectives.

Awards & Recognition

• Award for Excellent Business Entities (Effective use category)
• Large-sized Equipment Packaging Award
• Logistics Environmental Impact Mitigation Technology Development Award

Environmental Metrics

ESG Focus Areas

• Contribute to decarbonized/recycling-oriented society
• Build and evolve resilient, sustainable logistics services
• Create new values through collaborative innovation

Environmental Achievements

• Reduced CO2 emissions (Scope 1 & 2 in Japan) by 24.8% from FY2013
• Achieved a 7,000-ton CO2 reduction compared to FY2022 through energy saving, renewable energy, and fuel cell trucks
• 99% recycling rate maintained
• Partnered with recycling businesses to commence full-scale operations in the Greater Tokyo Area for recycling plastic waste

Social Achievements

• Installed automated/labor-saving equipment, saving 100 FTE per year compared to FY2022
• Zero violations of labor standards regarding drivers
• Implemented an educational program aimed at strengthening GDP quality control and operational capabilities
• Conducted human rights training for executives of group companies (182 participants)
• Implemented a dialog-based education program with executive management to promote the internal dissemination of LOGISTEED WAY
• Flyjac Logistics won Platinum and Silver awards at the 6th KAIZEN Competition

Governance Achievements

• Transitioned from a Company with Audit & Supervisory Board Members to a Company with Audit & Supervisory Committee
• Incorporated CO2 emission reduction achievements into the annual bonuses for executive officers for FY2023
• Zero information security incidents
• 100% attendance rate for Code of Conduct and information security training courses

Climate Goals & Targets

Environmental Challenges

• Rising costs from various factors (raw materials, labor, truck freight rates)
• 2024 issue in logistics (driver shortage, business succession)
• Maintaining and expanding the business base
• Achieving relisting as a global logistics company
• Declining freight rates in the freight forwarding business
• Shortage of drivers, many transport providers being small to medium-sized enterprises
• Intensified competition across industry boundaries
• Climate change
• Human resource shortage due to failure to promptly respond to digitalization and labor saving
• Obsolescence of existing technologies due to failure to promptly deal with digitalization and introduce new technologies
• Obsolescence of existing services and business models due to rapid development of digital technologies
• Impact on operations and loss of social trust due to workplace accidents
• Loss of employee motivation, decline in labor productivity, and loss of human resources due to long working hours
• Reputational damage, lawsuits and penalties resulting from infringement of human rights, and loss of human resources
• Decrease in competitiveness due to deterioration of quality and productivity in the supply chain
• Loss of social trust due to violation of various laws and regulations and deviation from social norms
• Business disruption, loss of social trust, and unexpected losses due to dysfunctional governance and internal control
• Impact on operations and loss of human resources and social trust due to accidents
• Business suspension/discontinuation due to inadequate/dysfunctional risk management
• Suspension of operations, interruption of logistics networks and damage to employees, as well as damage to the Group assets (e.g. buildings and facilities) and customer products, and loss of customer trust due to insufficient measures
• Damage to related parties, compensation to victims, and lawsuits by victims
• Loss or leakage of data such as customer information due to an information security incident, cyberattack or large-scale system failure
• Damage to employees, impact on business (Disruption of logistics network), damage to the Group's assets (e.g. buildings and facilities) and customers'products
• Increase in procurement costs (fuel, car allocation expenses, labor costs, warehouse rent, and utility costs, etc.)
• Exchange loss, negative impact of translation of business results of overseas subsidiaries into Japanese yen
• Impact on realization of sustainable society, rise in greenhouse gas emissions price, impact of extreme weather and natural disasters, increase in the average temperature
• Damage to employees, disruption of logistics network, damage to the Group's assets (e.g. buildings and facilities) and customers'products
• Occurrence of industrial accident, vehicle or product accidents, and fire
• Violation of overtime regulations, etc., disagreement with the authority on the interpretation of equal pay for equal work, violations of laws and regulations such as bribery and competition law, deviation from social norms, information leakage, infringement on human rights including harassments, child labor, and low wage labor, infringement on intellectual property rights
• Loss of customer trust, deterioration in service quality and delays in delivery, etc.
• Significant delay in work or suspension of operations due to power outage or system/equipment failure caused by natural disasters, significant delay in work or suspension of operations due to system failure at external service providers, delay in operations due to deterioration of system/equipment response, occurrence of failures caused by system aging
• Loss of human resources due to a mismatch between the personnel measures and employees'desire, decline in labor productivity and increase in turnover rate due to health concerns and problems, loss of human resources due to delayed response to diversified working-style, and difficulty in securing human resources, increase in turnover due to the mobilization of human resources, interruption in transfer of skills and expertise due to an increase in turnover. Delay in development of new services/business models
• Responding to changes in policies and regulations (such as limits on overtime work, environmental assessments, permits and approvals, SDGs, etc.)

Mitigation Strategies

• Increasing transportation capacity (intermodal transport, truck loading dock booking management system, SSCV)
• Asset-light strategy (transferring logistics centers)
• Strengthening cash management
• Proactive allocation of cash to M&As, equipment, DX, and human resources
• Organic growth (topline expansion, M&As)
• DX strategy (WMS, SSCV, SCDOS, RCS)
• Implementing a global core system
• Strengthening minimum cash operations
• Implementing an asset-light strategy
• Improving asset efficiency
• Improving ROIC and ROE
• Expanding into fields and regions not yet adequately addressed
• Implementing a job-based personnel system
• Providing ample educational opportunities
• Ensuring diversity of talent pool
• Revamping management and execution systems
• Strengthening the supervisory function of the Board of Directors
• Appointing a foreign national as CIBO
• Promoting VC activities
• Implementing a global human resources DB
• Conducting a dialog-based education program
• Providing education for logistics data scientists
• Introducing the SCM MicroMasters and dispatching an employee to MIT
• Conducting various educational programs to improve digital literacy
• Opening the Akita R&D Center
• Dedicating time to education aimed at developing talent expected to lead global business
• Implementing a direct dialogue-based education program
• Accelerating efforts from both physical and digital perspectives to improve transportation efficiency
• Continuously expanding the functions of SSCV and truck loading dock booking management system
• Promoting the elimination of risk of exceeding maximum working hours and the reduction of waiting and loading/unloading times
• Actively promoting measures to control waste emissions and reduce the amount of landfill disposal
• Collaborating with recycling businesses and plastic product manufacturers
• Promoting green purchasing of office supplies and purchase of products with environment certificates
• Developing and establishing a company-wide digital platform
• Introducing redundant system, preparing alternative means in case of failure, strengthening backup measures for system recovery and conducting on-site training, implementing measures for each service used and BCP, enhancing risk management with cybersecurity insurance, regular system updates and upgrades
• Appointing human resources and providing career education based on a succession plan, promoting visualization of employee engagement and mental health countermeasures using the employee engagement survey and stress check, improving moral/motivation through periodic interviews at workplace, supporting active participation of female, elderly, or disabled employees in the workplace, conducting employee surveys and strengthening employee engagement, securing excellent human resources by implementing group common in-house training programs, further promoting teleworking, offering opportunities and occasions for growth (talent management and education), introducing a job-oriented compensation system that reflects “roles/responsibilities” and “achievements”
• Strengthening efforts to set and achieve CO2 emission reduction targets in medium- to-long-term environmental targets, understanding information and establishing/implementing specific measures for compliance with environmental regulations and systems, obtaining external certifications and ensuring rigorous management through third-party assessments in businesses and departments closely related to environmental issues, practicing ESG management, addressing the 2024 issue in logistics (reviewing transport conditions and fees, reducing waiting and handling times)
• Strengthening due diligence before M&A or alliance, developing and implementing a PMI plan by the head office and relevant business divisions, creating synergies through collaboration with existing businesses and integration with existing entities
• Promoting streamlining of relay transport and joint delivery in addition to building close relationships with partner companies, optimizing fees and contract form based on the movements of peer companies, efficient management by promoting digitalization, in-house manufacturing, and joint procurement, reducing impact on business continuity by monitoring management of major partner companies, curbing procurement costs by changing and consolidating suppliers, canceling unnecessary contracts, reviewing contract periods, and taking other measures, and appropriately passing on costs to customers
• Concentrate exchange risks (centralize transactions such as forward exchange contracts and currency options in the head office), enter into hedge transactions including forward exchange contracts with financial institutions, maintain a balance of foreign currencies and continue investment in time deposits
• Establishing an environmental management system and promoting relevant activities, strengthening alliance with collaborative innovation partners to achieve the medium- to-long-term environmental targets (procurement of renewable energy, introduction of advanced eco-friendly vehicles, energy-saving buildings and facilities, and recycling), developing decarbonizing solutions (visualization of CO2 emissions) and promoting green logistics, enhancing risk management by purchasing appropriate insurance, promoting BCP measures (business continuity, quick recovery), confirmation of environmental burden reduction initiatives at phase gates, confirmation of the status of BCP measures, and improvement in the workplace environment such as with the introduction of air conditioning
• Assessing business interruption risk in each region, developing business continuity plan (BCP) for early business recovery (including prior consultation with customers and business partners), establishing rules for information collection and work regulations as a global organization in case of pandemic, carrying out business continuity management (BCM), promoting automation/labor-saving, execution of operations remotely using online tools
• Strengthening the information asset management through internal audit and in-house trainings, etc., establishing and disseminating information security rules, building a system to deal with cyberattacks and regularly update the technology, increase frequency of monitoring including audit
• Conducting routine situation analyses and monitoring, accelerating decision-making in case of emergency, developing BCP
• Enhancing disaster prevention/mitigation capabilities by providing education and trainings and installing equipment and systems, maintaining proper insurance for assets in custody (inventory), strengthening communications with employees, establishing safety workplaces through the proactive use of technology (such as safety cockpits, SSCV, and security robots), developing and implementing a facility maintenance plan, establishing an initial response and reporting system in case of an accident, and conducting drills, sharing lessons, insights, and good examples within the Company, implementing safety activities such as remote/VR education in domestic and overseas
• Establishing the LOGISTEED Group Code of Conduct and educating all employees, conducting regular internal audits, introducing a whistle-blowing system, conducting investigation and education by legal divisions in each region, establishing a structure to manage an attendance management system, clarifying wage calculation method, establishing a specialized IP division and educating all employees
• Managing KPIs by quality control divisions, quality control through process management, conducting monitoring based on the internal control system, perform audit, and enhance support, implementing quality monitoring by holding regular meetings with customers, following-up on customer requirements as well as logistics service quality, continuous improvement proposals, cultivating a quality mindset through education

Supply Chain Management

Supplier Audits: Completed SAQ for 27 high-risk companies

Responsible Procurement

• Green purchasing
• Purchase of products with environment certificates

Climate-Related Risks & Opportunities

Physical Risks

• Facility damage from intensified wind and flood damage
• Increased energy costs due to rising temperatures
• Increased cost of work environment measures due to rising average temperatures

Transition Risks

• Increase costs due to stricter regulations on greenhouse gas emissions and pollutants related to transportation
• Reputation damage due to insufficient response to pollution and other environmental issues
• Decrease corporate evaluation and reputation due to a lack of consideration for ecosystems in facility development
• Decrease corporate evaluation and reputation due to insufficient consideration for ecosystems in noise, vibration, and lighting impacts

Opportunities

• Opportunity to reduce energy consumption by vehicles and CO2 emissions with advanced decarbonization technology
• Cost reduction by introducing efficient logistics operations such as Smart Logistics and collaborative logistics services
• Mitigation of procurement risk through the use of renewable and low-carbon energy
• Increase in demand due to our unique low-carbon services in response to climate change

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, Guidance for Collaborative Value Creation 2.0, TCFD, UNGC, TNFD

Certifications: Privacy Mark, ISO/IEC 27001, Eco Stage II

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 9 (Industry, innovation, and infrastructure)
• Goal 12 (Responsible consumption and production)
• Goal 13 (Climate action)

Initiatives contribute to these goals through decarbonization, recycling, sustainable logistics, and responsible supply chains

Sustainable Products & Innovation

• SSCV
• SCDOS
• EcoLogiPortal
• RCS

Awards & Recognition

• GOOD DESIGN AWARD 2023 (SSCV-Safety)
• Special award at the 24th Logistics Environment Awards (EcoLogiPortal)
• Platinum Award and Silver Award at the 6th KAIZEN Competition (Flyjac Logistics)
• Japan Packaging Contest 2023 Double Award Winner (Technical Packaging Award and Large and Heavy Item Packaging Category Award)