Environment

LEAP approach Review Flow

In FY2025, we freshly evaluated the upstream and downstream segments of the value chain. Against a backdrop of advancing electrification of the automotive industry, we initially selected eAxle and rocker energy-absorption (EA) materials as representative products. We then selected aluminum as the primary raw material, as it is a key input for these products and is anticipated to impose a significant environmental impact. Moreover, in our effort to establish evaluation methodologies spanning upstream and downstream value chain segments, we set the scope for evaluation and analysis to include primary suppliers (for which precise location information is available) in the upstream segment and automotive manufacturers in the downstream portion.

Locate: Discovering interfaces with nature

Businesses interface with nature where they operate, and site assessment is therefore crucial to identifying, evaluating, avoiding, mitigating, and managing environmental risks. The “Locate” phase of this process covers the evaluation of an organization's worksites for ecosystem integrity, biodiversity impact, water stress, and other factors identified as priority areas.

Priority area selection policy

Results of priority region selection

Evaluate: Dependencies and Impacts Assessment

Dependencies and impacts at business locations are critical prerequisites for understanding risks and opportunities. In the “Evaluate” phase, we identify and analyze dependencies and impacts at the interface of business and nature within priority regions identified in the Locate phase. Using ENCORE, we assessed two operational facets: ecosystem services the organization depends on to function, and the impact factors where operations alter the natural environment. Dependencies encompass three categories: provisioning services, regulating and maintenance services, and cultural services. There are five categories of impact driver: categories: land/freshwater/seabed area modification, resource use/replenishment,” climate change, pollution/pollution removal, and invasive alien species invasion/removal. These impact factors are similarly defined in the Science-Based Targets for Nature Technical Guidance for Step 1 and Step 2.

Response to ENCORE Updates (Dependency and Impact Assessment Policy)

A major ENCORE update occurred in July 2024, and the new version was adopted for our FY2025 assessment of upstream and downstream value chain impacts. Note that the previously disclosed assessment results for direct operations were thoroughly reviewed against actual conditions and are currently judged to show no significant deviation from actual conditions.

Sector-Level Dependencies and Impact Relationships

Assess: Evaluation of Significant Risks and Opportunities

Based on our findings from the “Locate” and “Evaluate” phases, this year we conducted a materiality assessment of risks and opportunities in upstream and downstream stages of the value chain in addition to previously disclosed direct operations.

Direct operations: Four future global-state scenarios

Scenario I: Regulations are somewhat inadequate, and ecosystem services continue to deteriorate

Scenario II: Ecosystem service degradation is controlled through tightened regulations, etc.

Scenario III: Ecosystem service degradation progresses as products with high environmental impact are prioritized

Scenario IV: Ecosystem service degradation does not progress despite limited regulatory enhancement

PEST+E Analysis results under each scenario

Risk severity assessment results based on direct operations scenario analysis

Opportunity Importance Assessment Results Based on Direct Operations Scenario Analysis

Upstream and downstream value chain assessment for nature-related risk materiality

We have established definitions and occurrence conditions by which we assess nature-related risks within the value chain. “Definition” refers to existential threats to the organization itself in regard to dependencies and impact on nature of organizations and communities upstream and downstream in the value chain. These threats are broadly placed into two classifications: physical risks and transition risks. “Occurrence conditions” are defined as activities occurring upstream or downstream in the value chain that depend on natural ecosystem services or exert an impact on nature. The materiality assessment measures risk along two axes: likelihood of occurrence and magnitude of Impact and determines the priority of each risk.

Upstream and downstream value chain – Risk materiality assessment results (excerpt)

Upstream/downstream value chain – Materiality assessment of nature-related opportunities

We have established definitions and occurrence conditions for assessing nature-related opportunities in the value chain. “Definition” refers to activities by an organization that produce positive outcomes for the organization and the natural environment by either positively impacting nature (restoration) or mitigating negative impacts on nature (avoidance/reduction) along the upstream–downstream value chain. “Occurrence conditions” are defined as: (1) when an organization and upstream/downstream organizations avoid, mitigate, alleviate, or manage nature-related risks associated with ecosystem service degradation, and (2) when an organization strategically transforms its business model, products, services, markets, or investments to curb nature loss associated with upstream and downstream activities, implement nature-centric solutions, or provide support through financing or insurance. Materiality is assessed using two axes: likelihood of occurrence and magnitude of impact, and opportunities are prioritized accordingly.

Upstream/downstream value/chain – Assessment of material nature-related opportunities (excerpt)

Prepare: readying responses and reporting

Water Usage Reduction Activities

Aisin's business activities rely on significant natural capital, making environmental impact reduction essential. Aisin has established the “Six Water Reduction Principles” and is committed to reducing water usage. Focusing particularly on “Stop,” “Reduce,” “Replace,” and “Recycle,” we implement measures such as thorough shutdowns during non-operation, reducing water pressure and flow rates, switching to non-water methods, recycling wastewater, and utilizing rainwater and drain water. From the “Save” perspective, at the Nishio Die Casting Plant, water was previously used for cooling when applying release agents to high-temperature molds. However, by adopting 3D cooling molds, efficient internal cooling became possible, eliminating the need for water altogether. Additionally, mist-form release agents were previously recovered and treated using water. By employing special filters for processing, recovery is now possible without water usage. We are promoting the expansion of such improvement examples across our factories and working to reduce water consumption.

Examples of Nature-Harmonious Activities

Aisin promotes nature-harmonized activities classified into three thematic pillars: watershed conservation, collaboration with local stakeholders, and contribution to ecosystem network development. In FY2025, we expanded these activities globally beyond the factory cleanup initiatives conducted at our various sites. New activities include tree planting, protecting rare species and eradicating invasive species, and cleaning up rivers and coastlines. Furthermore, under the Green & Blue Project, which aims to plant 800,000 trees by FY2031, we succeeded in planting a cumulative total of 359,000 trees planted by FY2025.
We define sites that meet all three pillars above as Aisin Group factories that harmonize with nature. In FY2025, we certified one new site, bringing the total to five on the way to a targeted 10 certified sites by FY2031. Furthermore, we have launched an education platform for all employees, including management, to ensure everyone working at Aisin learns about nature-positivity and understands its connection to our business.

Status of global nature harmonization efforts

Circle size indicates number of activities