Dialogue with ESG Investors

Main Opinions from Experts (World Benchmarking Alliance)

Expanding Scope of Human Rights

• The view that environmental impacts are part of human rights due diligence will become even stronger in the future. The EU, where human rights due diligence is being legislated, is taking a hard look at the environmental impact of companies on local communities.
• Since human rights due diligence also has a strong impact on the living environment of rights holders, it is necessary to link just transitions with human rights issues and to pay attention to the negative impacts of climate change on people and the earth. It is necessary to conduct human rights due diligence from two angles, the environment and human rights, to achieve a "leave no one behind" society. To this end, companies should first conduct human rights due diligence in faithful compliance with the UNGPs and incorporate environmental themes into the due diligence.
• Stakeholders have differing opinions on how and to what extent environmental issues should be addressed in human rights due diligence. It is better to further the engagement and have dialogue with stakeholders.

Identifying Issues to be Addressed

• Through an impact assessment, first identify the impact of the company and significant human rights issues, and then confirm the environment surrounding the rights holders. It is important to prioritize the issues identified through dialogue with rights holders.
• In assessing the impact of climate change on people, it is necessary to consider the direct impacts* and the indirect impacts* separately. It is also important to disclose the processes for resolving issues.
  • Direct impacts: Impacts directly caused by the corporate activities of the company. It is possible to independently take actions to resolve problems.
    Indirect impacts: Impacts that involve suppliers or that are difficult for one company to resolve alone, as exemplified by climate change. The entire supply chain needs to take initiatives together through platforms or across the whole industry.

Information Disclosure Based on TCFD

• It is good that the ANA Group assesses risks and opportunities in accordance with the TCFD recommendations and analyzes multiple scenarios involving increases of 1.5 and 4 degrees. An important point in the assessment is how information is disclosed transparently based on climate change indicators.
• From the viewpoint of accountability, it is necessary to disclose specific plans such as business and management systems and CO2 reduction. In addition, since the disclosed information is the key for stakeholders to better understand and be engaged with corporate activities, information disclosure is very important from the perspective of enabling more effective communication with stakeholders.
• In order to achieve the transition to a low-carbon economy, it is important to quantitatively and qualitatively scrutinize the effectiveness and feasibility of what can be done and to what extent, including things such as changes to aircraft, and to come closer to successfully realizing the 1.5-degree scenario. In addition, rather than aiming for perfect disclosure from the beginning, it is important to have a process that starts with what you are capable of doing, such as disclosing progress.

Main Opinions from Experts (Hermes EOS)

Carbon Neutrality

• In the aviation industry, it will be difficult to achieve targets until the practical application of SAF becomes possible, but the first precondition is to clearly establish realistic and feasible targets, and then hope to set higher targets from there.
• It is great that the ANA Group is switching to higher emission reduction targets and cooperating with other industries to develop SAF in order to work towards carbon neutrality. Even if investment is difficult at present, it is effective to participate in R&D to increase the total supply.

Diversity

• With regard to diversity, it is important to increase the proportion of women in voting positions such as directors. On the other hand, it is also a problem to focus only on the proportion of female directors while the proportion of female executive officers and management-level employees is low. It is also important to increase the number of women at the executive vice president level, and it is hoped that improvements will be made toward the current goal.

Governance

• There is concern that the presence of stable shareholders generated by cross-shareholdings will prevent governance from functioning. If global standards are to be followed, it is necessary to consider reducing cross-shareholdings as much as possible.

TCFD

• In regard to TCFD, there are still few companies that have been able to make disclosure at the required level. It is required to disclose the financial impact of climate change based on scenario analysis and to make quantitative disclosure of what will be done based thereon. It is also important to encourage the government to make it easier for the ANA Group to implement climate change countermeasures. In the EU, the disclosure of lobbying activities has progressed, and clear information disclosure is expected.

Due Diligence on Human Rights Including Biodiversity

• It is important to disclose information on small problems and cases through reports, etc.
• For example, deforestation relates not only to environmental impacts, but also to the living environment of local residents, and human rights, local communities, and living environments are all linked. Biodiversity is also centered around climate change and must be addressed as an important theme.