TNFD-related Initiatives

INPEX is enhancing its biodiversity and nature-related initiatives in line with global trends.

We have participated in the TNFD Forum since FY2022, and have started gathering information related to the TNFD framework¹ and 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 will undertake ongoing assessment, improvement, and disclosures. This includes identifying the required data and developing assessment processes.

¹TNFD framework is 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 a process proposed in the framework for systematically assessing nature-related risks 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; 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.

Nature-related Governance

Governance Structure

INPEX’s governance structure for environmental management, including biodiversity conservation, is detailed under the heading of Governance in Sustainability Structure.

Stakeholder Engagement

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 of Respect for Human Rights, 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 engage in our business activities, including stakeholders in our supply chains.

As detailed under the heading of Human Rights Due Diligence, we identify, map, and actively communicate with stakeholders around our project sites from the initial stage 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 Performance Standards established by the International Finance Corporation (IFC), which are global environmental and social guidelines.

Strategy regarding Nature

Biodiversity loss is, together with the need to address climate change, a social issue at the global level. Internationally, discussions are ongoing at the Conference of the Parties to the Convention on Biological Diversity (CBD-COP) and there is increasing importance placed on the expectations and roles of companies regarding biodiversity conservation. There is a growing possibility that such changes in the business environment may link the risk of biodiversity loss directly to our risks that include those related to trust, financing, laws and regulations, and markets.

To enhance our biodiversity conservation 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, IFC’s Performance Standard 6, the TNFD Framework, and guidance from IOGP and Ipieca, while also considering the business activities and local characteristics of our projects.

We also established measurable targets for achieving our environmental commitments and stated them in INPEX Vision 2035, which was published in February 2025. We will deepen our efforts to deal with nature-related issues at the Group-wide level.

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

In FY2023, we conducted a trial assessment on our operator projects in Japan (14 sites) based on the LEAP approach of the TNFD Framework beta release (v0.4).

The final recommendations for the TNFD framework (v1.0) were officially published in September 2023, and the guidance on the LEAP approach (v1.1) was updated in October 2023. We therefore updated our trial assessment method. In FY2024, we also expanded the scope of our operator projects for the trial assessment to 24 sites in Japan and 6 sites overseas.

The Locate and Evaluate processes of our FY2024 trial, following the LEAP approach of the TNFD framework (v1.0), are explained below.

Locate (Locate Your Interface with Nature)

In the Locate phase, based on the TNFD guidance, we identified priority locations, taking into consideration the impacts of our operations’ business activities on nature as well as the impacts of changes in the natural environment on our operations. We identified priority locations using the three steps below to understand their materiality to the Company and the ecosystems around the assessed sites.

Steps in the Assessment’s Locate Phase

Overview of internal database of ecosystem-related data

Priority locations in INPEX’s operator projects identified in FY2024’s assessment

Evaluate (Evaluate Your Dependencies and Impacts on Nature)

In the Evaluate phase, based on the screening results from ENCORE² and such, we identified our business activity-related dependencies and impacts at our priority locations. Our activities, which are categorised in the oil and gas development sector, have impacts on a range of terrestrial, freshwater and marine ecosystems, as well as the atmosphere and aquatic environments around our areas of operations. We also depend on a range of ecosystem services for our operations. ENCORE assessments generate a typical result for the sector, therefore we conduct our in-house assessment, including adding weights to the assessment items, with consideration to the locations and business activities of our project sites in Japan and overseas.

² ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) is 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).

Steps in the Assessment’s Evaluate Phase

Dependencies and Impacts at INPEX’s Operator Projects

The results of this assessment showed that our business activities have an especially high level of dependencies on the following four natural capital services. These ecosystem services are essential for stable operations and environmental risk management. It is necessary to carefully assess the impacts of changes in natural capital on business.

1. Water supply service necessary for business activities
   A large amount of water is needed in the oil and gas production process. A stable supply of water is essential in the cooling process, and operation risks increase in high water stress areas. Please refer to the Water Resource Management for details of our efforts for water resource management.
2. Dilution service for pollutants emitted by business activities
   To limit atmospheric pollution and impacts on water quality arising from our business activities, we carry out appropriate measures to prevent air pollution and wastewater treatment in line with the laws and regulations of countries in which we operate, and international good practice. Furthermore, we depend on the ventilation and dilution functions of the natural environment (atmosphere, rivers, and oceans), and it is important these functions are maintained properly. If the quantity or quality of water in a watershed deteriorates, its dilution capability will drop, placing a greater burden on the environment. At the same time, there may also be impacts on continuity of operations. We will continue to comply with environmental regulations, strengthen air quality and water resource management, and study measures to maintain sustainable operations.
3. Climate regulation service for stable operations
   Our business activities may be affected by climate conditions such as atmospheric temperature, rainfall, and wind speed. An increase in extreme weather phenomena (such as hurricanes, drought, and rising sea levels) may lead to impacts on our business activities, including changes to equipment operation conditions and suspension of operations. Please refer to the Climate Change for details.
4. Soil and sediment retention service for stable operations (Nagaoka Field Office)
   Solid ground is essential for the stable equipment operation. The topography around the Nagaoka Field Office comprises flat grasslands and hilly and mountainous areas, with a mix of residential areas, farms, forests, and industrial facilities. Therefore, it is thought that there are high dependencies on the soil and sediment retention service provided by the surrounding vegetation. The occurrence of floods and storms around the Nagaoka Field Office may lead to land erosion, ground sinking, and such, and to impacts on our business activities. We clearly state risks related to heavy rain and floods in our risk register, develop manuals for proper management, and take other measures to achieve quick responses and minimize damage. We also established a structure for staying on alert using a disaster monitoring system and hazard maps, adopting measures for ensuring safety.

The assessment results identified two main factors impacting the natural environment due to our business activities. These factors are directly linked to business sustainability and regulatory compliance, necessitating careful management and the implementation of appropriate measures.

1. Changes in terrestrial and marine ecosystem use in business activities
   Changes in terrestrial and marine ecosystem use arise from our business activities. On land, deforestation and site preparation for facility construction may have impacts on the ecosystem and may lead to land erosion and loss of biodiversity. At LNG terminals located in coastal areas, land reclamation and dredging may lead to marine environmental changes or impacts to the ecosystem. We develop and implement management plans to minimize the impacts from changes in terrestrial and marine ecosystem use.
2. GHG emissions from business activities
   GHG emissions from business activities form a material impact driver for the loss of biodiversity arising from climate change. In our business activities, GHG is emitted from various phases such as drilling, production, and transportation. Please refer to the Climate Change for details on our specific measures for GHG emission reduction.

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 collecting nature-related information through IOGP, Ipieca, and Society of Petroleum Engineers (SPE) conferences, and exchanging knowledges with energy companies in Japan and overseas.

Please refer to the Biodiversity Conservation under the Biodiversity Conservation and Environmental Pollution Measures for details on our specific efforts for biodiversity and nature.

Future Initiatives

In the LEAP assessments conducted in FY2023 and FY2024, we assessed the relationships between our operator projects and the natural environment. Based on the results and knowledge obtained, we will continuously improve our in-house assessment method and update the assessment results. In FY2025, we plan to expand the assessment scope while considering the state of our projects and assess our nature-related material risks and opportunities.