​EnvironmentEnvironment

Recognizing that climate change is a threat to sustainable development throughout the world,
Including disclosure in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD),
We will actively work to combat climate change.

ｇovernance

In order to properly manage important sustainability-related issues, our group has established a Sustainability Committee, headed by our President and CEO. The committee will determine target indicators, develop a promotion system, formulate action plans, and monitor progress. The results of these activities will be reported to the Board of Directors and Management Committee, etc., and will be managed and supervised appropriately.

strategy

We refer to the reports of the Intergovernmental Panel on Climate Change (IPCC), the World Energy Outlook of the International Energy Agency (IEA), and other related information to identify the impacts of climate change risks and opportunities on our organization's business, strategy, and financial plans under the 1.5°C scenario (IEA's NZE2050) and 4°C scenario (IPCC's RCP8.5). In addition, we conduct scenario analysis by broadly classifying risks into transition risks and physical risks. The 1.5°C scenario covers transition risks and opportunities, while the 4°C scenario covers only physical risks, and we use two scenarios to cover the three items of transition risks, opportunities, and physical risks.
In identifying climate-related risks and opportunities, we broadly categorize risks into transition risks and physical risks as described above, and then further categorize transition risks into current regulations, new regulations, legal regulations, technology risks, market risks, and reputation risks, and physical risks into acute risks and chronic risks. Opportunities are categorized into markets, resilience, resource efficiency, energy sources, and products and services. For each of these categories, we qualitatively assess and analyze the magnitude of the financial impact on our Group's procurement and sales over the short-term (0-1 year), medium-term (1-3 years), and long-term (3-10 years) time scales to understand the impact of risks and opportunities on the organization.
As described below, in the 1.5°C scenario, the impacts of the introduction of new policies and technologies, fluctuations in market prices, and rising raw material prices will occur over the medium to long term, and we recognize that these will result in financial risks through increased procurement costs and a decline in customer purchasing power. In particular, short-term risks are also increasing as the full-scale introduction of GX-ETS and carbon taxes approaches. On the other hand, as companies are required to develop low-carbon services and products, new technologies and energy development that adapt to climate change will progress, and we recognize that in that respect, there will be a positive impact on our finances in the medium to long term through improved opportunities. In the 4°C scenario, the impacts of natural disasters and rising temperatures will be long-term, and we recognize that long-term risks will be high, especially in the commerce and manufacturing industries, which have a high proportion of sales performance, as the impact on manufacturing and sales bases may lead to increased procurement costs and longer product and product delivery times.

Scenario analysis results (Transition risks and opportunities: 1.5℃ scenario,
Physical risks: 4°C scenario)

Risks and Opportunities		index	supply chain	Impact (short term)	Impact (Medium term)	Impact (Long-term)
transfer risk	Current Regulations	・Carbon pricing mechanism - Strengthening of emissions reporting requirements - Mandatory reporting and regulations on emissions from products and services	Procurement	Low	During ~	During ~
			Earnings	During ~	During ~	High
	New regulations	・Carbon pricing mechanism - Strengthening of emissions reporting requirements - Mandatory reporting and regulations on emissions from products and services	Procurement	During ~	During ~	High
			Earnings	During ~	During ~	High
	Laws and regulations	Litigation issues	Procurement	Low	During ~	During ~
			Earnings	Low	During ~	During ~
	Technology Risk	- Transition to low-emission products and services ・Failure to invest in new technologies - Transition to low-emission technologies	Procurement	Low	During ~	High
			Earnings	Low	During ~	High
	Market Risk	・Changes in customer behavior ・Uncertainty of demand	Procurement	Low	During ~	High
			Earnings	Low	During ~	High
		- Rising raw material prices	Procurement	During ~	Low	Low
			Earnings	During ~	During ~	Low
	Reputation risk	- Changing consumer preferences ・Criticism of business sectors - Heightened stakeholder concerns or negative stakeholder feedback	Procurement	Low	During ~	During ~
			Earnings	Low	During ~	During ~
Physical risk	Acute risks	・Typhoons and heavy rains ·flood ·heat wave ·Forest fire	Procurement	Low	Low	Low
			Earnings	Low	Low	During ~
	Chronic Risk	・Temperature changes (air, fresh water, sea water) - Changes in precipitation patterns and types (rain, hail, snow) - Coastal erosion	Procurement	Low	Low	Low
			Earnings	Low	Low	Low
opportunity	market	・Entering new markets ・Introducing incentives Entering new assets and locations	Procurement	Low	Low	During ~
			Earnings	Low	During ~	During ~
	Resilience	・Participate in renewable energy programs and implement energy-saving measures ・Resource substitution and diversification	Procurement	Low	During ~	During ~
			Earnings	Low	During ~	During ~
	Resource Efficiency	- Use of efficient transportation methods ・Improved efficiency of production and distribution processes ・Use of recycling ・Relocation to more efficient buildings ・Reduce water usage and consumption	Procurement	Low	During ~	High
			Earnings	Low	During ~	During ~
	Energy source	・Use of low-emission energy sources Use of supportive policy incentives ・Utilizing new technologies ・Participation in the carbon market	Procurement	Low	During ~	During ~
			Earnings	Low	During ~	During ~
	Products & Services	・Development and expansion of low-emission products and services ・Developing solutions for climate adaptation, resilience and insurance risks ・Development of new products and services through R&D and technological innovation - Diversification of business activities - Changing consumer preferences	Procurement	Low	Low	High
			Earnings	Low	During ~	High

Risk management

Our Group will conduct detailed studies of the risks and opportunities associated with climate change at the Sustainability Committee based on the results of analyses of the 1.5°C and 4°C scenarios. We will report to the Board of Directors any significant climate change-related risks and opportunities for our Group.

Indicators and goals

GHG emissions and related risks by scope

Our Group calculates GHG emissions by scope based on the GHG Protocol. For the fiscal year ending March 2024, we calculated all items for Scope 1, 2, and 3 for a total of six companies, including our five major companies (TANABE CONSULTING GROUP CO.,LTD., TANABE CONSULTING CO.,LTD. Co., Ltd., Growin' Partners Inc. Leading Solutions Co.,Ltd. Co., Ltd., Growin' Partners Co., Ltd., Jaythree, Inc. Co., Ltd.), as well as Kartz Media Works,Inc., with which we concluded a capital and business alliance agreement at the end of February 2023. The actual GHG emissions are as follows:
Regarding the calculation results for each scope, the proportion of Scope 3 is very high. Furthermore, within Scope 3, emissions from Category 1 (purchased products and services), Category 2 (capital goods), and Category 6 (business trips) are particularly high, accounting for 82.7%, 3.8%, and 7.6% of Scope 3 emissions, respectively.
Category 1 accounts for the majority of our Group's emissions, and we believe that it will become a major financial risk for the organization when a carbon tax is introduced in the future. In addition, since Category 1 is related to raw material procurement and is directly linked to procurement costs, we recognize that the strengthening of GHG emission regulations will be linked to price fluctuations in the market and may manifest as a financial risk for our Group.

Goals and performance in managing climate-related risks and opportunities

Our group is working to manage climate-related risks and opportunities by using indicators clarified in scenario analysis to reduce climate-related risks and maximize opportunities. In addition, with regard to our GHG emissions, we aim to reduce Scope 1 and 2 GHG emissions by 100% by 2030 from the base year of 2021, taking into consideration the 1.5°C level. To achieve this goal, we will reduce Scope 2 emissions by further promoting the LED lighting in buildings and the reduction of paper and multifunction printers through digital transformation. In addition, we will reduce Scope 2 emissions by increasing the proportion of electricity derived from renewable energy among the electricity used in our offices. After that, we will offset any emissions that cannot be reduced by purchasing non-fossil fuel certificates and renewable energy credits.
As for Scope 3, we will work to reduce emissions by encouraging our suppliers, etc., and aim to achieve carbon neutrality. In doing so, because GHG emissions automatically increase as the scale of business expands with the GHG calculation method that uses price-based emission units, we will also strive to improve our calculation method, such as by conducting an objective analysis based on the trend of GHG emissions as a percentage of sales, with reference to the concept of carbon intensity.