Our Actions in Response to TCFD Recommendations

Under our mission to “contribute towards a better and more sustainable world,” we have set a 2030 vision for us to pursue Perfect and Unique Tagging and realize a future where everything has its own ID and connects seamlessly. Essentially, this is about collecting data on the movement, attributes and status of things through auto-ID technologies so that it can be converted into big data to improve food safety, health care, use of resources and more for a circular, sustainable society.

In FY 2025, we updated our materiality assessment to better focus resources on areas that are relevant to our business and 2030 vision. At the heart of this vision is Perfect and Unique Tagging, which is our concept of assigning unique identifiers to anything and everything to function as the infrastructure that helps businesses and society run smoothly, especially in fields that require high levels of safety, authenticity, transparency and traceability.

By implementing Perfect and Unique Tagging, we can, for example, track products throughout their entire lifecycle — from raw materials and manufacturing to distribution, use, collection, recycling and final disposal — to enable accurate and efficient recycling in a way that maximizes the use of resources. We aim to deliver such solutions to customers across diverse industries to contribute to a circular economy.

We aspire to play an essential role in society by delivering solutions that create value and address customer pain points on an ever-wider scale to continuously meet the needs of the times. Looking toward this 2030 vision, we unveiled our current medium-term management plan in FY 2024. One focus of the plan is to reinforce business fundamentals, which requires increasingly sustainable business practices such as strengthening corporate governance and human capital management, reducing emissions, and protecting and restoring natural capital.

The Sustainability Promotion Committee, which reports directly to our Executive Officers Meeting, works on driving climate and environment action, green procurement and other sustainability priorities across the SATO Group. Chaired by our Group CEO (executive in charge of sustainability and climate action) and overseen by our board of directors, the committee comprises members from corporate planning and key business divisions to ensure we infuse sustainability into business plans. It also includes working groups that have been established to study and advance initiatives related to material environmental topics.

The Sustainability Promotion Committee will refer those matters that may significantly impact business strategies and management plans to the Executive Officers Meeting, providing reports and discussion outcomes to facilitate top-level decision-making at the meeting. It also regularly reports on the progress of its activities to our board of directors via the said meeting, which is chaired by our Group CEO.

We conduct climate scenario analyses to identify climate-related risks and opportunities that may affect our AIDC (automatic identification and data capture) industry over medium- to long-term horizons (2030, 2050). We assess potential business impacts, determine strategic responses and incorporate the insights into our disclosures. Starting FY 2025, we enhanced the specificity and transparency of our disclosures by explicitly linking risks and opportunities to our material environmental topics.

Given the rapid advancement of technologies such as AI and their potential to fundamentally reshape our industry, we recognize the need to reassess our outlook toward 2030 and 2050. We plan to update these perspectives, together with our medium- to long-term business strategies, in next year’s climate-related reporting.

We evaluate how climate change may influence social, market and regulatory trends in 2030 and 2050. Based on these forecasts, we identify risks (that could materially impact business) and opportunities (that could enhance growth) over the medium and long term. Risks are categorized into transition risks and physical risks according to the TCFD framework.

We take a consistent approach to assess how policies, market dynamics, emerging technologies and other projected factors in a warmer future may affect our business and value chain. Through continuous discussions with each business division, we identify both risks and opportunities in a 1.5°C world. We also evaluate the potential physical impacts of a 4°C temperature rise on our production and logistics sites and on our key suppliers.

In doing so, we consider how climate change may impact our diverse customers and their industries over the medium to long term.

We reference reports from the Intergovernmental Panel on Climate Change (ICPP) to establish two contrasting climate scenarios for the AIDC industry: a 1.5°C scenario (RCP1-1.9) and a 4°C scenario (RCP4-7.3). These scenarios enable us to plan for a range of "what-if" futures and strengthen our resilience against unforeseen events.

As we are committed to limiting global temperature rise to 1.5°C and achieving carbon neutrality by 2050, we also use the International Energy Agency (IEA) Net Zero Emissions scenario as a benchmark when defining our assumptions.

Since the gap between the 1.5°C and 4°C scenarios widens significantly after 2030, our analysis emphasizes the long-term outlook, focusing on how our industry and customers could be affected under each scenario in 2050.

We assess the qualitative and quantitative impacts of climate-related risks and opportunities on our business from a risk management perspective. This includes reviewing the formulas and parameters used in the previous year and updating them as necessary based on the latest available information.

From FY 2026, we will assess business impact based on the potential financial gains or losses associated with each risk and opportunity. Rather than using a fixed scale, we will apply flexible monetary ranges. We also classify risks and opportunities by urgency, according to how soon their impacts are expected to materialize.

The 1.5°C scenario presents substantial risks associated with rising production costs. At the same time, this scenario also presents significant opportunities as demand increases for eco-friendly products, sustainable solutions and traceability systems that underpin the circular economy. These trends align closely with our core competencies and vision to pursue Perfect and Unique Tagging, offering opportunities for business expansion and innovation.

In contrast, the 4.0°C scenario poses physical and business continuity risks, which would lead to sharp increases in our operating costs. Even today, rising mean temperatures and climate-related hazards are already huge problems for society. It is of urgency that we work to strengthen supply chain resilience, with a focus on our production and logistics networks.

In both scenarios, our consumables business, which accounts for a key part of our revenue, will face risks if forest resources become scarce and paper costs increase. We need to explore ways to work with paper manufacturers in areas such as forest conservation to make our consumables business more sustainable over the long term.

As part of our mission to contribute toward a better and more sustainable world, we will pursue measures that are consistent with the 1.5°C scenario while also planning for the 4°C scenario from a risk management perspective. Our priority is to address high-impact and urgent climate-related risks and opportunities in line with action plans we developed for the material environmental topics identified in our materiality assessment.

Actions we can take to mitigate risks include reducing our greenhouse gas emissions and building a socially responsible procurement framework. Possible actions for capturing related opportunities, on the other hand, center on delivering value to customers and society through, for example, developing and offering more products and solutions that help reduce waste and expanding business for data collection or utilization.

For Scope 1 and 2 emissions, we will build on the progress made with adopting renewable energy in Japan to raise employee awareness about energy conservation and continue to reduce emissions. Outside Japan, we will study the emissions data and situation at each business site and work with local teams to cut emissions systematically, starting with the highest-emitting sites.

For Scope 3 emissions, we will measure carbon footprint at product level for all our mechatronics and consumables products and track emissions by category so that we can start more targeted efforts to lower emissions.

(See "4. Metrics and targets" for how we track our progress in reducing emissions.)

For printer products, we are expanding the collection of used printers while reviewing product design to increase the use of recycled materials and make disassembled components easier to recycle. By offering printers designed around the 4Rs — refurbish, reuse, recycle and reduce — we aim to advance resource circulation and help reduce greenhouse gas emissions associated with waste disposal, both for our customers and across the SATO Group.

For consumables products, we are promoting the collection and recycling of used ink ribbons and discarded label liners and paper cores.

We will also minimize product packaging and invest in returnable transport items to cut packaging waste.

Our auto-ID solutions play a big role in visualizing everything that moves through supply chains. Businesses can use our solutions, for example, to collect information on inventory items (what, how many, where), so they do not over-order and carry too much excess inventory. On top of reducing waste and unnecessary stock transfers, our solutions are also key to realizing the circular economy.

We will develop more products/solutions that contribute to the environment, using sensors and other newer forms of auto-ID technology.

As part of our green procurement efforts to prioritize materials and components with lower environmental impact, we have obtained Forest Stewardship Council (FSC®) chain-of-custody certification for our labels and stickers, ensuring we use FSC®-certified paper in production. The FSC is a worldwide recognized system that certifies forest products have been harvested in an environmentally sustainable and socially responsible manner, free from risks such as deforestation and illegal logging.

We have maintained our own environmental management standard since 2005 to keep toxic substances out of our products and packaging. This standard prohibits the use of toxic substances subject to regulations in various countries while identifying substances that need to be controlled by their use and amount contained and setting forth how we control them.

Stickers and labels, one of SATO’s principal product categories, rely heavily on paper, primarily made from wood. To help conserve biodiversity and restore the environment, we have placed particular emphasis on initiatives that protect forests and the wider natural environment. Since March 2014, we have been participating in the Forest of Companies project as part of the Pollenless Forestation campaign which is administered by the Tokyo Development Foundation for Agriculture, Forestry, and Fisheries. We sponsored forest areas in Ome City in 2014 and Akiruno City in 2019, naming them “Forests of Ceaseless Creativity.” Since then, we have supported forest maintenance and organized weed removal activities with our employees. Through these efforts, we contribute not only to reducing pollen and increasing carbon dioxide absorption, but also to conserving forest ecosystems and maintaining forests’ water-source conservation functions. We have been certified as a contributor to the Tokyo forestation program three times, in 2016 and 2020 and most recently in 2026.

Around the world, our employees also participate in tree-planting and other forest conservation activities. We will continue to do our part to protect and conserve the natural environment.

Given that climate change can cause heavy rain and snowfall leading to floods and traffic isolation, we have started using Aqueduct floods hazard maps to assess water risks across our 140 manufacturing sites (120 in Japan and 20 internationally), taking into account their respective production capacities. Results show that our factory in Kitakami, Japan, along with our logistics centers in eastern and western Japan are not at risk of extensive water damage even during severe storms and floods.

Some of our partner factories producing consumables are, however, in at-risk locations, and we will be working with them to develop the necessary flood protection strategies. We will also take measures to flood-proof high-risk sales offices in Japan and keep our Kitakami factory operational and safe from potential snow hazards.

In July 2025, we began operations at our newly rebuilt factory in Thailand. From the planning phase, we worked with external experts to assess site conditions and evaluate risks associated with earthquakes, wind and flood hazards, and power outages, from a business continuity perspective. We will continue to enhance our preparedness and ability to recover from unforeseen disruptions through regular drills and training, together with periodic reviews of our business continuity plans and manuals.

As the world around us grows increasingly complex and diverse, we must make efforts at the group level to manage a broad range of internal and external risks to execute our business strategies and achieve our financial goals. 

Through ongoing climate scenario analyses, we regularly update the parameters and assumptions — such as those concerning policy changes — that underpin our risk assessments to evaluate the quantitative impacts of climate- and nature-related risks on our future business and financial position. 

Findings are reported to not only the Executive Officers Meeting but also the board of directors, ensuring that processes for managing environmental risks are integrated into our risk management framework. Our Risk Management Committee is also involved in managing physical risks and drawing up crisis countermeasures as needed. 

The Sustainability Promotion Committee will continue to enhance the accuracy of climate scenario analyses to further embed the findings into our strategic planning processes. 

Reducing greenhouse gas emissions is essential to tackling global warming and making our society sustainable. We understand that we are responsible for the environment, and work to monitor and cut greenhouse gas emissions from our business operations (Scope 1 and 2).

While taking into account the emission reduction target announced by the Japanese government in April 2021, we are aiming higher with the medium/long-term goal of halving group-wide Scope 1 and 2 emissions from FY 2019 levels by FY 2030. In addition, we have pledged to achieve carbon neutrality (net zero) by FY 2050 through plans to expand use of renewable energy and promote energy efficiency and conservation.

As part of our FY 2030 goal, we also aim to cut emissions from our supply chain (Scope 3) — primarily those associated with purchased goods and services (Category 1), use of sold products (Category 11) and end-of-life treatment of sold products (Category 12) — by 30 percent from FY 2019 levels via various actions such as engaging and collaborating with suppliers for green procurement, using refurbished components, making/selling printers that consume less energy, and promoting recycling.

As the products and solutions we provide customers help reduce greenhouse gas emissions at their worksites, we aim to add these avoided emissions (which we are working to quantify) and Scope 3 emissions to our carbon neutrality plan so that we become carbon negative over the long term. We will also look into disclosing important metrics that we identify from the climate scenario analysis as well as materiality KPIs that we set, together with their progress updates.

Last updated: Jul 31, 2026