​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 reports from the Intergovernmental Panel on Climate Change (IPCC), the International Energy Agency's (IEA) World Energy Outlook, and other relevant information to identify the impacts of climate change risks and opportunities on our organization's business, strategy, and financial plans under a 1.5°C scenario (IEA's NZE2050) and a 4°C scenario (IPCC's RCP8.5). Furthermore, we conduct scenario analysis by broadly categorizing risks into transition risks and physical risks. The 1.5°C scenario covers both transition risks and opportunities, while the 4°C scenario covers only physical risks; two scenarios are used to cover all three categories: 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. We further classify transition risks into existing regulations, new regulations, legal regulations, technological risks, market risks, and reputational 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 evaluate and analyze the magnitude of the financial impact on our group's procurement and sales over short-term (0-1 year), medium-term (1-3 year), and long-term (3-10 year) timeframes to understand the impact of risks and opportunities on the organization.
As outlined below, under the 1.5°C scenario, we recognize that the impact of new policies and technologies, market price fluctuations, and soaring raw material prices will occur over the medium to long term, particularly in manufacturing and other sectors that are our group's main customers, resulting in financial risks through increased procurement costs and decreased customer purchasing power. In particular, since the full implementation of GX-ETS will begin in fiscal year 2026, short-term regulatory risks have also increased. On the other hand, since the prices of low-carbon products and low-carbon electricity are expected to fall in the medium to long term compared to the previous analysis, the cost of decarbonization is expected to decrease, and the impact of legal and regulatory (litigation), technological, market, and reputational risks has decreased compared to the previous year.
Regarding opportunities, since the prices of low-carbon products and the like are expected to be lower than in the previous analysis, opportunities for these manufacturers are predicted to decrease, resulting in a lower impact than in the previous analysis. On the other hand, industries that use low-carbon products and raw materials will see a decrease in development and manufacturing costs in the medium to long term, encouraging market entry and promoting the development of new technologies and energy sources adapted to climate change. In this respect, we recognize that there will be positive financial impacts 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 higher, especially for commercial and manufacturing industries, which have a high proportion of sales performance, as they may be affected by the impact on manufacturing and sales bases, potentially leading to increased procurement costs and longer product/merchandise 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/ New regulations	・Carbon pricing mechanism - Strengthening of emissions reporting requirements - Mandatory reporting and regulations on emissions from products and services	Procurement	Low	Low	During ~
			Earnings	During ~	During ~	High
	Laws and regulations	Litigation issues	Procurement	Low	Low	Low
			Earnings	Low	Low	During ~
	Technology Risk	- Transition to low-emission products and services ・Failure to invest in new technologies - Transition to low-emission technologies	Procurement	Low	Low	During ~
			Earnings	Low	During ~	High
	Market Risk	・Changes in customer behavior ・Uncertainty of demand	Procurement	Low	Low	During ~
			Earnings	Low	During ~	During ~
		- Rising raw material prices	Procurement	Low	Low	Low
			Earnings	During ~	During ~	Low
	Reputation risk	- Changing consumer preferences ・Criticism of business sectors - Growing stakeholder concerns or negative stakeholder feedback	Procurement	Low	Low	During ~
			Earnings	Low	Low	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	Low
			Earnings	Low	During ~	During ~
	Resilience	・Participate in renewable energy programs and implement energy-saving measures ・Resource substitution and diversification	Procurement	Low	Low	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	Low	During ~
			Earnings	Low	Low	During ~
	Energy source	・Use of low-emission energy sources Use of supportive policy incentives ・Utilizing new technologies ・Participation in the carbon market	Procurement	Low	Low	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	During ~
			Earnings	Low	During ~	During ~

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

Regarding GHG emissions by Scope, our group calculates emissions based on the GHG Protocol. For the fiscal year ending March 2025, we calculated all items for Scope 1, 2, and 3 for a total of seven companies, including our six main companies (TANABE CONSULTING GROUP CO.,LTD., TANABE CONSULTING CO.,LTD. Co., Ltd., Growin' Partners Inc. Leading Solutions Co.,Ltd. Jaythree, Inc. Co. Kartz Media Works,Inc.), as well as Surpass Co., Ltd., with whom we entered into a capital and business alliance agreement at the end of August 2024. The actual GHG emissions are as follows.
Regarding the calculation results for each Scope, Scope 3 accounts for a very large proportion. Within Scope 3, Category 1 (purchased products and services) and Category 6 (business travel) account for particularly large emissions, representing 72.6% and 16.1% of Scope 3 emissions, respectively. Category 1, which accounts for a large proportion of total emissions, has seen a significant decrease in emissions compared to the previous year due to revisions in emission factors in the Ministry of the Environment's "Emission Intensity Database for Calculating Greenhouse Gas Emissions of Organizations Through Supply Chains," which is used in the calculations. Although there has been a decrease in emissions from the previous year due to the revision of emission factors, Category 1 accounts for the majority of our group's emissions, and if a carbon tax is introduced and applied to Scope 3 in the future, it is considered to pose a significant financial risk to the organization. Furthermore, since Category 1 relates to raw material procurement and is directly linked to procurement costs, we recognize that stricter GHG emission regulations may be linked to market price fluctuations and materialize as a financial risk for our group.