Taskforce on Nature-related Financial Disclosures-related Initiatives

At INPEX, we are enhancing our biodiversity and nature-related initiatives in line with global trends.

We have participated in the Taskforce on Nature-related Financial Disclosures (TNFD) Forum since FY2022, and gathered information related to the TNFD framework¹ as well as conducting internal assessment on a trial basis.

With the final recommendations of the TNFD published in September 2023, there is increasing global interest in the organization’s nature-related measures and disclosure requirements. The TNFD disclosure recommendations include required assessment and actions factoring in nature-related materiality, regional characteristics of businesses, and value chains. While considering the best way to meet these disclosure requirements, we are preparing for ongoing assessment, improvement, and disclosures. This includes identifying the required data and developing assessment processes.

¹ TNFD framework: A framework established by the Taskforce on Nature-related Financial Disclosures (TNFD) to assess nature-related risks and opportunities, and to disclose that information. The LEAP approach is one process proposed in the framework for systematically assessing nature-related risk and opportunities. The LEAP approach involves four phases: (1) Locate the interfaces with nature; (2) Evaluate dependencies and impacts on nature; (3) Assess nature-related risks and opportunities to your organization; and (4) Prepare to respond to nature-related risks and opportunities, including reporting on material nature-related issues to the primary users of financial reports and other stakeholders.

Approach to Nature-related Materiality

As detailed under the heading Sustainability Management, we have identified biodiversity conservation and water risk management as key sustainability tasks to prioritize.

To enhance our biodiversity conservation and water risk management efforts, in FY2022, we updated our HSE Policy and established and published our policies and commitments on biodiversity conservation, water management, and waste management. As part of these commitments, we have identified risks and opportunities concerning biodiversity. When establishing and updating these commitments, we referenced international frameworks and guidelines, including the Kunming-Montreal Global Biodiversity Framework, International Finance Corporation (IFC) Performance Standard 6, the TNFD framework, and guidance from International Association of Oil & Gas Producers (IOGP) and Ipieca, while also considering the business activities and local characteristics of our projects.

Nature-related Governance

Governance Structure

As detailed under the headings Sustainability Management and Environmental Management Promotion and Governance, our Board of Directors and Executive Committee supervise issues relating to the environment and nature.

Engagement with Stakeholders

As part of our business activities, we strive to build and maintain strong and trusting relationships with all stakeholders, including local communities and indigenous peoples.

As detailed under the heading Compliance, we support international norms such as the United Nations Guiding Principles on Business and Human Rights, and the human rights principles of the United Nations Global Compact. We also established and published the INPEX Group Human Rights Policy in FY2017, and implement measures to address the human rights of all stakeholders in each region where we operate, including stakeholders in our supply chains.

As detailed under the heading Local Communities, we identify, map, and actively communicate with stakeholders surrounding our project sites from the initial stages of a project. In our environmental and social impact assessments, in particular, we deal and maintain dialogue with local communities and indigenous peoples in accordance with the IFC Performance Standards, which are global environmental and social guidelines.

Identification and Assessment of Nature-related Dependencies, Impacts, Risks, and Opportunities

In FY2023, we conducted a trial identification and assessment of our nature-related dependencies, impacts, risks, and opportunities according to the LEAP approach of the TNFD framework. This trial focused on our operator projects in Japan.

The Locate and Evaluate processes of our FY2023 trial, following the LEAP approach of the TNFD framework beta release, are explained below.

Locate (Locate Your Interface with Nature)

In the Locate phase, we followed the three steps below to understand the ecosystems around the trial facilities. Despite not operating within legally designated protection zones, some of the facilities are located within close proximity of important areas from the perspective of biodiversity according to international initiatives. Therefore, we plan to update our assessment criteria for priority areas in line with the final version of the TNFD framework.

Steps in the Trial’s Locate Phase

Evaluate (Evaluate Your Dependencies and Impacts on Nature)

In the Evaluate phase, we used ENCORE² to screen and organize our business activity-related dependencies and impacts. The oil and gas development sector has a range of impacts on land, freshwater, and marine ecosystems, as well as atmospheric and marine environments, where operations are conducted. The sector is also dependent on a range of ecosystem services delivered by nature. ENCORE assessments generate a typical result for the sector, so we updated the results with consideration to the locations of our domestic project sites and business activities.

Steps in the Trial’s Evaluate Phase

² ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure): A tool for assessing nature-related dependencies and impacts of each business sector and production process. It was developed mainly by the United Nations Environment Programme Finance Initiative (UNEP FI) and United Nations Environment Programme World Conservation Monitoring Centre (UNEP-WCMC).

Specific Nature-related Initiatives

Based on the mitigation hierarchy, we implement initiatives to avoid and reduce negative impacts on biodiversity, and to regenerate and restore nature. We also actively collaborate with other companies and industry bodies, such as providing and receiving nature-related information through IOGP and Ipieca, and exchanging opinions with domestic and overseas energy companies.

Further information on our specific biodiversity and nature-related initiatives can be found under the heading Environment Management in HSE section.

Future Initiatives

In the first quarter of FY2024, we commenced the evaluation of all operator projects after reviewing, and updating as necessary, the knowledge obtained and methodology developed through the FY2023 trial assessment.

Going forward, we will continue to assess our nature-related risks and opportunities in light of these results. We will establish targets and indicators for managing our nature-related dependencies, impacts, risks, and opportunities. Additionally, we will also investigate expanding the scope of assessment to cover the entire value chain associated with our business activities.