Climate Change
Socionext Group believes that it can facilitate the transition to a sustainable society by using the SoCs we supply to help our customers achieve ongoing reductions in their GHG emissions. By collaborating on development with major customers who are leaders in their global markets and through the development of high-performance custom SoCs that leverage our proprietary multicore design techniques and AI engines and accelerators with lowpower consumption, we will achieve further miniaturization, higher levels of integration and lower power consumption of customer products and contribute to our customers' innovation. In the fiscal year ended March 31, 2024, we identified the following climate change “risks” and “opportunities” in our group business activities and calculated their financial and business impacts by scenario analysis.
Main Climate Change Risks and Opportunities
| Category | Impact of climate change on the Group | The Group's action | ||
|---|---|---|---|---|
| Risks | Transition risk | Government policy and regulation | Increased costs due to action on improving energy efficiency and reducing GHG emissions. (Higher energy costs due to carbon pricing, etc.) |
Identify in a timely way global trends and regulatory changes along with systematic investigation, implementation, and evaluation of actions. Determine GHG emissions in the supply chain and continue working with partners to reduce the emissions. |
| Technology | Higher R&D spending to maintain and improve competitiveness in the market Higher production costs to maintain and improve competitiveness in the market. |
Develop and distribute energy-saving and space-saving eco-friendly devices and solutions in partnership with customers and partners, while streamlining the development process for such devices and solutions. | ||
| Market and Reputation | Sales decrease and reputation risk due to inability to offer environmentally friendly devices. Regulation-driven increases in cost of materials, electricity, and other inputs. |
Develop and provide products and services that contribute to reducing GHG emissions. Review choice of parts and materials. Reduce GHG emissions by investigating adoption of renewable energy. |
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| Physical risks | Acute | Disruptions at contract manufacturers and data centers due to growing severity of abnormal weather. | Regularly revise business continuity plans allowing for shutdowns or other disruptions at contract manufacturers and data centers, including decentralization of such sites. Study of potential cost savings through more efficient use of electric power at workplaces and data centers. |
|
| Chronic | Disruptions to outsourced production due to water shortages Higher power costs at data centers and other facilities due to rising air temperatures. | |||
| Opportunities | Efficient resource | Lower costs through more efficient use of resources (energy and water) at data centers and other workplaces | Lower costs through more efficient SoC development (use of proprietary multicore design techniques and AI engines and accelerators with low power consumption) | |
| Products and services |
Higher demand, especially for products with low power consumption that help customers reduce GHG emissions and use energy more efficiently | Development and distribution of energy-saving and space-saving eco-friendly devices and solutions | ||
| Market | Acquire new customers by leveraging low-power-consumption technologies. | Leverage low power consumption and miniaturization to acquire new customers, especially SoCs for ADAS/AD and data centers. | ||
Scenario Analysis
| Category | Scenario/Reference information |
|---|---|
| Periods |
Short term: -2025 Medium term: 2026-2030 Long term: 2031-2050 |
| Impact |
Small: 1 billion yen or less Medium: Over 1 billion yen but up to 5 billion yen Large: Over 5 billion yen *Impact on a fiscal year basis |
| Scenarios | 1.5℃/2.0℃ scenario: SDS/NZE of the International Energy Agency (IEA), RCP/SSP1 of the Intergovernmental Panel on Climate Change (IPCC) |
| Scenario analysis process | The Group analyzed risks and opportunities under a scenario in which the global average temperature rise is limited to less than 2.0℃ (partly within 1.5℃) as agreed in the Paris Agreement, as announced by IEA, IPCC, and others. |
[Impact on the Group under the 1.5℃/2.0℃ scenario]
| Category | Impact of climate change on the Group | Financial impact on business activities | ||||||
|---|---|---|---|---|---|---|---|---|
| Materiality*1 | Periods | Impact on | Degree of impact*2 | |||||
| Small | Medium | Large | ||||||
| Transition risks | Government policy and Regulation | Increased costs due to action on improving energy efficiency and reducing GHG emissions (higher energy costs due to carbon pricing, etc.) | Medium | Medium to long term | Cost |
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| Technology | Higher R&D spending to maintain and improve competitiveness in the market Higher production costs to maintain and improve competitiveness in the market |
High | Short to medium term | Cost |
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| Market and Reputation | Sales decrease due to changes in customer demand Reputation risk due to inability to offer environmentally friendly devices |
Medium | Medium to long term | Net Sales | - | |||
| Regulation-driven increases in cost of materials, electricity, and other inputs | Medium | Medium to long term | Cost | - | ||||
| Physical risks | Acute | Disruptions at contract manufacturers and data centers due to growing severity of abnormal weather | Low | Medium to long term | Net Sales | - | ||
| Chronic | Disruptions to outsourced production due to water shortages | Low | Medium to long term | Net Sales | - | |||
| Higher power costs at data centers and other facilities due to rising air temperatures | Medium | Medium to long term | Cost |
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| Opportunities | Efficient resource use | Lower costs through more efficient use of resources (energy and water) at data centers and other workplaces | Medium | Medium to long term | Cost |
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| Products and Services | Higher demand, especially for products with low-power consumption that help customers reduce GHG emissions and use energy more efficiently | Medium | Medium to long term | Net Sales | - | |||
| Market | Acquire new customers by leveraging low-power-consumption technologies | Medium | Medium to long term | Net Sales | - | |||
*1:The degree of materiality, i.e., “high,” “medium,” or “low” is evaluated by considering the “likelihood of occurrence” and “degree of impact” of climate-related risks and opportunities.
*2:The degree of impact for risks and opportunities that are difficult to estimate is presented as “-,” keeping the qualitative evaluation in each item.
Specific actions regarding Risks and Opportunities
In recent years, with the development of self-driving technology and the beginning of the use of generative AI in the market, the computing power required is expected to increase exponentially, making it a social issue to reduce power consumption and GHG emissions. To maintain and improve market competitiveness and counter rising energy costs, the Group is working to reduce power consumption from the development stage.
(1) Efforts to reduce LSI power consumption of LSIs
[Reduced power consumption by miniaturization]
In order to meet customers' demands for lower power consumption of LSIs, the Group is pursuing advances in process nodes (miniaturization and lower voltages) to achieve lower power consumption. Comparing the power consumption of advanced and existing processes, the most advanced 2nm/3nm process consumes approximately 1/10 or less per transistor compared with the 28nm process.
[Visualization of reduced power consumption by miniaturization and lower voltage]
[Design technology to achieve low-power consumption]
he SoC design of the Group is taking a variety of approaches to meet customers' demands for low-power consumption. To realize low-power LSIs, it is effective to combine various technologies, not only using individual technologies (see figure below). “Reference design flow,” the Group's design environment, can respond to various low-power technologies and reduce power consumption of LSI's both during operation and standby. In particular, we are systematizing and developing methods to reduce power consumption by controlling the power supply.
In addition, by adopting UPF/CPF*, the Group facilitates low-power consumption design while minimizing changes to the customer’s design assets. The adoption of UPF/CPF enables highly reliable designs for lowpower technologies, which have been extremely difficult to verify in the past.
*:UPF (Unified Power Format) is a standard specification that defines the Low power design guidelines standardized as IEEE Std. 1801 CPF (Common Power Format) is a standard specification that defines the Low power design guidelines standardized as Si2
[Low-power-consumption technology]
[Design/development processes and packaging technologies that enable low power consumption]
In order to achieve low power consumption in our customers' products, we have established and operate our own development flow (“Design Review” mechanism). Specifically, we contribute to the reduction of GHG emissions at various stages from product manufacturing to putting in use by listening to customers' requirements for low power and determining specifications, proposing technology selection (including process node selection) to realize the requirements, and selecting foundries and OSATs that are proactive in measures to reduce environmental impact including GHG emission reduction, among other initiatives. In the development stage, we are working on logic/physical design and package design (2.5D, 3D, chiplet strategy, etc.) oriented toward low power consumption and miniaturization, and contributing to the reduction of GHG emissions through SoC products.
As described above, the Group contributes to the reduction of power consumption at our customers' end by developing and providing advanced technology products and products incorporating diverse low-powerconsumption technologies. In terms of sales trends by process node, both product sales and NRE revenue are shifting toward advanced technology products (3nm to 7nm). NRE revenue (for the fiscal year ended March 31, 2024), a leading indicator of future product sales, show that advanced technology products account for 71% of total sales.
[Breakdown of sales by process node]
(2)Efforts to reduce size and space
The Group contributes to the reduction of materials used (mineral and fossil resources) by miniaturizing LSIs and to the reduction of energy consumption in the manufacturing process, from raw materials to finished products. Miniaturization of LSIs leads to smaller size and space-saving in customers' end products, and also leads to easier countermeasures against heat generation during equipment operation. We believe that, in addition to reducing the material used and energy consumed in manufacturing process by our customers, it leads to the realization of a sustainable society by reducing energy when using finished products (for example, improved cruising distance of electric vehicles, reduced burden on air conditioners in data centers, etc.). In recent years, chiplets represented by 2.5D and 3D integration technologies have entered the practical stage and are expected to be a breakthrough against the limits of LSI miniaturization. By actively promoting the adoption of this technology, the Group is promoting further miniaturization, space-saving designs, and low power consumption.
(3)Efforts to Reduce Power Consumption at Data Centers
The shift in development to advanced technology products (2nm to 7nm) has led to an increase in the volume of data processing in data centers, and power consumption now accounts for about half of the Group's GHG emissions (the sum of Scope 1 and 2). As the scale of our business expands in the future, power consumption is expected to increase further. As a measure to reduce power consumption in data centers, the Group is sequentially introducing and replacing its equipment with low-power-consumption devices, primarily CPUs and servers. In addition, we are working to reduce power consumption by curbing CPU/server operating time through streamlining operations by improving development processes, methods, etc. Other efforts to reduce power consumption include consolidating data centers and shifting to water cooling for the installed equipment.
Indicators and Targets for Climate Change Response
GHG emissions (Scope1*1 and Scope2*2) by the Group for the fiscal year ended March 31, 2024, were approximately 8,198 t-CO2. Compared with the previous year, this represents a reduction of 336 t-CO2. GHG emissions per net sales were 3.71 t-CO2, a reduction of 0.72 t-CO2 compared with the previous year. We have set a goal for the group of becoming carbon neutral by 2050 in terms of both Scope1 and Scope2 emissions, and we are continuing to investigate and implement reduction measures that will help us achieve this goal.
[GHG Emissions]
| FY ended March 31, 2022 (t-CO2) |
FY ended March 31, 2023 (t-CO2) |
FY ended March 31, 2024 (t-CO2) |
Year on Year (t-CO2) |
Target | |
|---|---|---|---|---|---|
| Scope1 | 318 | 235 | 262 | 27 (111%) | Achieve carbon neutrality by 2050 |
| Scope2 | 6,971 | 8,299 | 7,936 | (363) (96%) | |
| Total | 7,289 | 8,534 | 8,198 | (336) (96%) |
[GHG Emissions per 100 million yen unit of net sales]
| FY ended March 31, 2022 (t-CO2) |
FY ended March 31, 2023 (t-CO2) |
FY ended March 31, 2024 (t-CO2) |
Year on Year (t-CO2) |
|
|---|---|---|---|---|
| Scope1、2 | 6.23 | 4.43 | 3.71 | (0.72) |
[GHG Emissions Breakdown]
| Greenhouse gas (GHG) emissions | Global results (t-CO2) | |||
|---|---|---|---|---|
| FY ended March 31, 2022 |
FY ended March 31, 2023 |
FY ended March 31, 2024 |
||
| Scope1 | 318 | 235 | 262 | |
| Scope2 | Market-based | 6,971 | 8,299 | 7,936 |
| Scope3 | 246,765 | 536,424 | 376,810 | |
| Total | 254,054 | 544,958 | 385,008 | |
| Scope3 details | ||||
| Cat.1 | Purchased goods and services | 216,169 | 500,316 | 339,024 |
| Cat.2 | Capital goods | 27,715 | 32,053 | 32,164 |
| Cat.3 | Fuel and energy-related activities not included in Scope 1 and 2 | 1,269 | 1,416 | 1,370 |
| Cat.4 | Upstream transportation and distribution | 895 | 1,150 | 1,136 |
| Cat.5 | Waste generated in operations | 50 | 26 | 25 |
| Cat.6 | Business travel | 200 | 953 | 2,267 |
| Cat.7 | Employee commuting | 467 | 510 | 824 |
| Cat.8 | Upstream leased assets | Not applicable | ||
| Cat.9 | Downstream transportation and distribution | Not applicable due to calculation by Cat.4 | ||
| Cat.10 | Processing of sold products | Not applicable | ||
| Cat.11 | Use of sold products | Not applicable | ||
| Cat.12 | Disposal of sold products | Not applicable | ||
| Cat.13 | Downstream leased assets | Not applicable | ||
| Cat.14 | Franchises | Not applicable | ||
| Cat.15 | Investments | Not applicable | ||
[IFRS S2 Disclosure Requirements]
| Disclosure items | Indicator | Actual results | SASB Comparison Table (code) |
||
|---|---|---|---|---|---|
| FY ended March 31, 2022 |
FY ended March 31, 2023 |
FY ended March 31, 2024 |
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| Greenhouse gas emissions | (1)Gross global Scope 1 emissions | 318 t-CO2eq |
235 t-CO2eq |
262 t-CO2eq |
TC-SC-110a.1 |
| (2)Amount of total emissions from perfluorinated compounds | Since the Group's products do not contain such substances, there are no greenhouse gas emissions. | TC-SC-110a.1 | |||
| Discussion of long- and short-term strategy or plan to manage Scope 1emissions, emissions reduction targets and an analysis of performance against those targets | We aim to achieve carbon neutrality in GHG emissions (Scope 1 and 2) by 2050. | TC-SC-110a.2 | |||
| Energy Management In Manufacturing |
(1)Total energy consumed | 176,530 GJ | 197,892 GJ | 165,944 GJ | TC-SC-130a.1 |
| (2)Percentage grid electricity | 95.3% | 96.4% | 95.2% | ||
| (3)Percentage renewable | 0% | 0% | 0% | ||
| Water management | (1)Total water withdrawn *For the fiscal year ending March 2022, only domestic results |
3,440m3* | 4,798m3 | 4,145m3 | TC-SC-140a.1 |
| (2)Total water consumed; percentage of each in regions with High or Extremely High Baseline Water Stress | Percentage of use in areas with “extremely high” and “high” water stress is 0%. | ||||
| Product Lifecycle Management |
Percentage of products by revenue that contain IEC 62474 declarable substances | Percentage of sales generated from products containing substances subject to IEC 62474 declaration is 0%. There is no use of IEC 62474 reportable substances in our Group's products that exceeds the threshold value, nor is there any use of reportable applications or substances. |
TC-SC-410a.1 | ||
| Processor energy efficiency at a system-level for: (1) servers,(2) desktops and (3) laptops | Not applicable. | TC-SC-410a.2 | |||
| Total production (Disclosure of Total Production by Manufacturing Equipment Owned by the Company and Manufacturing Equipment with a Manufacturing Contract) | 151,026 thousand units |
159,068 thousand units |
123,770 thousand units |
TC-SC-000.A | |
| Percentage of production from own facilities | 0% | 0% | 0% | TC-SC-000.B | |
| The Group outsources its manufacturing processes and does not produce at its own facilities. | |||||