Information Disclosure Based on TCFD Recommendations

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Information disclosure based on Task force on Climate-related Financial Disclosures (TCFD) Recommendations

The impact of climate change on society is becoming increasingly serious with every passing year.
The international community is accelerating efforts to build a decarbonized society and companies are also being asked to reliably support these efforts.
The Company also sees addressing climate change as an important challenge and is committed to reducing the amount of greenhouse gas emissions it will generate in fiscal year 2030 by 23 percent over fiscal year 2020.
We define products that help solve environmental issues and products that help improve the environment throughout their life cycles as environmental contribution products and have established a policy of proactively supplying the market with these products.
In order to ensure that every one of our stakeholders understand the contents of our activities, we will continue to disclose information related to our climate change initiatives and work to increase our corporate value.

TCFD

In order to build positive relationships with various stakeholders based on our corporate philosophy and become a company that is trusted and relied upon by others, we shifted our focus from CSR (Corporate Social Responsibility) activities to sustainability activities that contribute to all stakeholders by creating value through corporate activities and established the Sustainability Promotion Committee to promote activities that reflect a sense of urgency.
Chaired by the Representative Director & President, the Sustainability Promotion Committee deliberates on the basic policy on sustainability and other matters related to sustainability.
The Sustainability Committee was stablished under the direct control of the Sustainability Promotion Committee, in this Committee we promote initiatives related to sustainability, including those that address climate change and our recycling-oriented society and one that involves the certification of environmental contribution products. The Board of Directors receives reports on and proposals concerning important matters deliberated on by the Sustainability Promotion Committee and also instruct and supervise policies on and action plans for addressing climate change-related issues.

Governance structure chart

The 1.5°C scenario*¹

In this scenario, aggressive measures will be taken to combat climate change to keep the increase in temperatures in 2100 over temperatures at the time of the Industrial Revolution to around 1.5 degrees centigrade.
In this scenario, climate change measures are strengthened and transition risks in terms of policy-driven regulations, markets, technology, and reputation are heightened.

*1: The RCP2.6 scenario, with reference made to information provided by the Inter-Governmental Panel on Climate Change (IPCC) and International Energy Agency (IEA), the parameters for estimating the impact of climate change is used to set.

The 4°C scenario*²

In this scenario, aggressive measures will not be taken to combat climate change, the temperatures in 2100 will increase by around 4 degrees over temperatures at the time of the Industrial Revolution.
This is a scenario in which physical risks will increase, such as in terms of more devastating natural disasters, rising sea levels, and more extreme weather events.

*2: The RCP8.5 scenario, with reference made to information provided by the Inter-Governmental Panel on Climate Change (IPCC) and International Energy Agency (IEA), the parameters for estimating the impact of climate change is used to set.

Transition risks and opportunities : Decarbonization scenario (1.5°C)

Transition risks and opportunities were studied based on a decarbonization scenario in which various regulations are introduced in connection with the transition to a low-carbon economy with an eye towards attaining the 1.5°C target.

In a decarbonization scenario (1.5°C), we can assume that prices will rise and expenses will increase as carbon taxes are introduced by governments intent on strengthening environmental regulations and demand for renewable energy rises, and that resource procurement costs will go up as global warming measures are taken on a global scale.
On the other hand, we believe that business opportunities will increase as research and development work is spurred on by the rise in innovation for decarbonization in our growth areas of electronic ceramic materials and such functional materials as conductive adhesives for RFID tags, by the demand increase for our environmental contribution products.
In addition, the Company regards the reduction of CO₂ emissions generated by our production processes as an important issue and is working on reducing CO₂ emissions by leveraging renewable energy sources and adopting decarbonization technologies at our production sites.
As for procurement, we aim to continue to engage in stable procurement practices and reduce CO₂ emissions tied to raw materials by communicating with our suppliers.

Physical risks and opportunities : Progressive warming scenario(4℃)

In terms of physical risks and opportunities, there is a major risk of a shutdown of business activities or disruption of supply chains as natural disasters occur due to extreme weather anomalies.

Natural disasters are difficult to forecast and if one were to occur, it is possible that we will sustain massive damage if, for example, our production sites are affected or there is a leak of chemical substances.
In order to avoid a stoppage of operations due to a damaged facility or leak of chemical substances, we will need to make capital investments informed by disaster countermeasures, which we assume will lead to increased production costs. This trend will be amplified in the progressive warming scenario (4°C).
In order to deal with climate change risks and other aspects of major disasters, we have set up a specialized committee and formulated a BCP(Business Continuity Plan) system on a company-wide basis to minimize the impact on our business activities even in an emergency.
We will continue to promote ongoing improvements to our BCP system.

◎:Large impact   ◯:Somewhat large impact  △:Negligible impact

 Items corresponding to climate change risks and opportunitiesChanges in the wider worldPossible scenarioRiskOpportunityTiming of occurrence

Climate
change
1.5℃ scerario

Transition risks and opportunities Policies, laws, and regulations Tightening of regulations governing GHG emissions and environmental considerations Incurrence of costs to comply with regulations and costs to transition to decarbonization △   Medium to long term
Introduction of carbon tax and emissions trading Incurrence of costs to introduce a carbon tax and emissions trading ◎   Medium to long term
Markets and technologies Rapidly promoting the transition to a low-carbon, decarbonized world Incurrence of costs to make capital investments and convert to renewable energy △   Short to medium term
Declarations of carbon neutrality made by industry associations and governments Promoting CO₂ reductions through the use of renewable energy   ◯ Short to medium term
Developing and promoting the spread of decarbonization-related products Increase in demand for various environmental contribution products downstream and increase in demand for and revenue from products that we provide and that are used as materials for such products   ◎ Medium to long term
Soaring resource prices Our competitiveness suffers from the rise of overseas companies operating in countries where production can be undertaken on a low-cost basis △   Long term
Increase in the costs of procuring raw materials ◯   Medium to long term
Climate change 4℃ scerario Physical risk and opportunities Reputation Stricter evaluations of companies that have not yet decarbonized and that are emitting large volumes of CO₂ CO₂ reductions are sought across the entire value chain in downstream industries and demand fluctuates due to initiatives taken by us and our production lines ◯ ◯ Medium to long term
Chronic Changes in precipitation and weather patterns (increase rainfall and rising average temperatures) Ensuring the safety of employees in the face of increased rainfall △   Long term
Risk of reduced sales and impairment losses affecting production facilities due to shutdowns or lower production △   Long term
Acute Intensification and increase in the number of extreme weather events (typhoons, wildfires, flooding, and severe storms) Disruptions in the supply of raw materials due to natural disasters ◯   Long term
Risk of the leakage of chemical substances due to damage caused to production plants ◯   Long term
Incurrence of capital investment costs related to disaster countermeasures at key locations ◯   Short to medium term

※Large impact : Impact on business and finances is expected to be exceedingly large

※Somewhat large impact : Impact on business and finances is expected to be somewhat large

※Negligible impact : Impact on business and finances is expected to be negligible

※Short to medium term : Occurrence between now and 2030 is highly probable

※Medium to long term : Occurrence between 2030 and 2050 is highly probable

※Long term : Occurrence from 2050 is highly probable

The body deliberating and making decisions on risk management matters in the Company is the Sustainability Promotion Committee.
In addition, the heads of departments and plants are tasked with addressing risks as instructed by division heads in accordance with directives issued by the Sustainability Promotion Committee.
Risks and opportunities related to climate change are also seen as an important issue and are subject to discussions and studies spearheaded by the Sustainability Committee.
The Sustainability Committee ascertains and assesses the impact of climate change, analyzes scenarios based on the TCFD framework, and identifies climate change risks and opportunities.
Reports and proposals concerning the state of the management of climate change risks and serious climate change risks that have been identified are issued to the Sustainability Promotion Committee.

The Group’s greenhouse gas emissions in FY2020 totaled 63,356 tons: 29,117 tons for Scope 1 (direct emissions from business operations) and 34,239 tons for Scope 2 (indirect emissions from the consumption of electricity).
For this reason, upon taking into account CO₂ emission reduction levels required under the Paris Agreement and with a view to realizing a decarbonized society, we set a target for Scopes 1 and 2 emissions of a 23 percent reduction by FY2030 over the 63,356 tons of emissions recorded in FY2020.
The Company will aims to reduce greenhouse gas emissions and realize a decarbonized society by utilizing renewable energy and introducing decarbonization technologies at our production sites and striving to conserve energy and electricity.

CO2_emissions

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