In October 2021, the Group established the Sustainability Committee, which is chaired by the Group CEO and includes executive directors and representative directors of the five core operating companies or persons in equivalent positions appointed by the President, for the purpose of strengthening the Group's sustainability promotion system. The Sustainability Committee, under the supervision of the Board of Directors, formulates sustainability-related policies and manages their implementation; identifies, analyzes, and evaluates risks and opportunities related to climate change; monitors the impact of climate change on the Group's business; and discusses countermeasures. For other initiatives and detailed discussions related to climate change and environment, the Environmental Subcommittee, a cross-group sub-organization of the Sustainability Committee, examines and manages the implementation of specific initiatives and management indicators. The director in charge reports on the progress and makes recommendations to the Sustainability Committee. Investments necessary to address climate change are discussed and approved individually by the Management Council, the Board of Directors, and other decision-making bodies in accordance with internal regulations.

We have conducted a scenario analysis of the impact of climate change on our Group's business, using several climate scenarios (1.5C scenario and 4C scenario). Based on assumptions about the impact of climate change on the value chain, we identify risks and opportunities, analyze and evaluate them, and consider countermeasures, which will be reflected in our short-, medium-, and long-term business strategies to make the promotion of measures more effective.

We have made the following assumptions for each scenario and analyzed the financial impact assumed as of 2030.

Policies and regulations will be strengthened, and carbon taxes will be introduced to achieve carbon neutrality in 2050. In addition, consumers will demand more decarbonization from companies, and B-to-B firms will be under even greater pressure to respond to climate change, including reducing CO2 emissions.

Based on the scenarios assumed, we examined the impact of climate change on the value chain for consumers, customers, our Group, and contractors who are suppliers to our Group individually. Then, we estimated the time when risks and opportunities emerge and their quantitative and qualitative impacts.

In our quantitative calculations, carbon pricing (introduction of a carbon tax) under the 1.5C scenario has the greatest impact on our Group. In general, however, the financial impact of climate change on our Group is small, and we consider ourselves resilient to climate change. For countermeasures against the emerging impact of carbon pricing (introduction of the carbon tax), since measures to reduce emissions in cooperation with our customers and partners are effective, we will promote these measures in addition to our own measures. In addition to the quantitative analysis items, we will also update and monitor information on qualitative analysis items to verify their impact on our business.

In order to realize our Materiality: Promoting climate change actions and resource circulation, the Group has established environmental KPIs, including climate change, and manages their progress. With regard to greenhouse gas (GHG) emissions, we aim to reduce CO2 emissions generated from our Group's business activities (Scopes 1 and 2).

Please refer to the following link (ESG data) for emissions data over time and other environment-related KPIs.