Information Disclosure Based on the TCFD Recommendations

The Fujibo Group recognizes that climate change mitigation measures to realize a decarbonized society are an important management issue. Accordingly, in November 2021, the Group announced its support for the Task Force on Climate-related Financial Disclosures (TCFD)* recommendations, which provide guidelines for the disclosure of climate change-related information. The Group is moving forward on disclosure of information on its response to climate change-related risks and opportunities in line with TCFD recommendations, and is assuming and managing the financial impact on future business. The Group discloses the following important information related to climate change in accordance with the TCFD recommendations.

*TCFD: A task force established by the Financial Stability Board (FSB), which is an international organization consisting of central banks and financial authorities of major countries and regions in the world. The TCFD published its final report in June 2017, recommending that companies disclose their "governance," "strategy," "risk management" and "metrics and targets" (11 items in total) related to risks and opportunities arising from climate change.

1. Governance

The ESG Committee chaired by the president decides on important environment-related targets and initiatives. The ESG Committee, which meets twice annually, identifies climate change-related risks and opportunities, and the Environment Subcommittee, one of the ESG Committee’s subcommittees, addresses these. Management is conducted under a system where the ESG Committee, Management Committee or the Board of Directors is consulted, depending on the level of importance.

The Board of Directors receives reports from the ESG Committee and other committees on important overall management policies and measures related to climate change issues, makes final decisions and manages and supervises their progress.

2. Risk Management

The Fujibo Group is committed to establishing and maintaining a Group-wide system to identify and manage information about risks, including climate change-related risks. Under the risk management system, a Risk Management Committee has been established to collect and analyze risk information and take countermeasures if those risks materialize.

The ESG Committee also identifies climate change-related risks and opportunities from the standpoint of their likelihood of occurrence and monetary importance and takes countermeasures if those risks materialize. For specific efforts to address risks, the Environment Subcommittee collaborates with each operating company to examine and implement countermeasures.

Depending on the degree of importance, the Risk Management Committee and ESG Committee report to the Board of Directors and Management Committee to engage in risk management related to climate change.

■ Fujibo Group Climate Change Response System Chart (Governance and Risk Management)

3. Strategy

(1) Identify Climate Change-related Risks and Opportunities

The Fujibo Group recognizes that climate change-related risks and opportunities have the possibility of an impact on business activities over the medium- to long-term. To consider risks and opportunities under various circumstances and changes in the external environment, the Group conceived multiple future scenarios based on an increase in temperature of 1.5°C to less than 2°C scenario and 4℃ scenario and the impact they could have on the Group’s three main businesses as of 2050. The Group identified risks and opportunities that could have a potentially material impact on financial affairs.

Going forward, the Group will continue to review important risks and opportunities as appropriate in response to the changes in the external environment, and reflect these in strategies.

(2) Assumptions for Scenario Analysis

Applicable businesses	Polishing Pad Business, Industrial Chemicals Business, Lifestyle Apparel Business
Scenarios	1.5°C to less than 2°C scenario, 4℃ scenario
Analysis timing	Material financial impact assumed in 2050

- In a world where there is a temperature increase of 1.5°C to less than 2°C, there are likely to be tighter regulations to reduce greenhouse gas emissions, and the Group believes there is an increasing likelihood of an impact on business and transition risks associated with the shift to low-carbon and decarbonization.

- In a world where there is a temperature increase of 4°C, the Group believes that there is an increasing likelihood of an impact of physical risks such as extreme weather events, although the impact of transition risks such as regulations may be small.

The Fujibo Group scenario analysis uses the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) as reference.

(3) Impact of Risks and Opportunities on Business, Strategy and Financial Planning

The Fujibo Group has stipulated five materialities based on the concept of “double materiality” in accordance with the 2021 Corporate Sustainability Reporting Directive (CSRD). The Group has identiﬁed “Adaptation to Climate Change” as one of the materiality issues, and work to reduce the environmental loads of its business activities to achieve a decarbonized society and respond appropriately to the potential impact on companies of climate change that may arise in the future.

Under the assumptions of a 1.5°C to less than 2°C scenario and a 4℃scenario, the Group analyzed risks and opportunities that could have a material impact on the financial affairs of the Group’s main businesses, and examined countermeasures to reduce risks and utilize opportunities.

(4) Strategies (Transition Plan) for Risks and Opportunities, and Resilience

The Fujibo Group will continue to disclose a 1.5°C to less than 2°C scenario for transition risks and a 4°C scenario for physical risks, using the framework of the TCFD recommendations as a reference, so that transition plans, etc. can be reflected in business strategies from a medium- to long-term perspective.

(5) Main Risks and Opportunities and Their Countermeasures

The Fujibo Group has organized the degree of impact and countermeasures for the main risks and opportunities related to climate change as follows. Timing of the onset of impact has been set as short-term, medium-term and long-term. The degree of impact is expressed in the three levels of large, medium and small, depending on the degree of impact on profits.

Timing of onset: Short-term—Up to 1 year. Medium-term—1-5 years. Long-term—5 years or more.

Degree of impact: Large—500 million yen or more. Medium—100 million yen to 500 million yen. Small—Up to 100 million yen.

<Risks>

Transition risk (Assumed to be most apparent in the 1.5°C to less than 2°C scenario)

Physical risk (Assumed to be most apparent in the 4°C scenario)

4. Metrics and Targets

Greenhouse gases emitted as a result of our business activities consist solely of CO₂ with no emissions of CH₄ (methane) or N₂O (nitrous oxide). Whereas we are likely to consume more energy moving ahead amid our ongoing expansion of production, we are striving to reduce our greenhouse gas emissions by promoting a transition to renewable energy. Going forward, we will strive to increase our corporate value and contribute to achieving a decarbonized, low-carbon society by persisting with business activities that place even greater emphasis on environmental concerns.