Disclosure on TCFD Recommendation

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Disclosure on TCFD Recommendation

Endorsing the TCFD Recommendations

Endorsing the TCFD Recommendations

Task Force on Climate-related Financial Disclosures

With the recognition that addressing climate change is one of the most important management issues, the Group announced its endorsement of the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) in June 2022. We aim to engage in sustainable business activities and improve our corporate value over the medium to long term by promoting initiatives to realize a decarbonized society.

Governance

Our Sustainability Committee—which is chaired by the President and comprises internal Directors and Corporate Executives as members—formulates policies, targets, and action plans for combating climate change and realizing other aspects of sustainability for the Group; manages and evaluates our progress toward the targets; discusses individual measures in depth; and reports and advises the Board of Directors on a regular basis. The Sustainability Committee has two regular meetings each year (in May and November) and holds extraordinary meetings as needed.

Strategies

We have exhaustively identified risks and opportunities presented by the impact of climate change on each of the Group's businesses under two scenarios—a global average temperature increase of 2°C or lower, and an increase of 4°C—and are taking relevant measures to reduce risks and seize opportunities. We plan to analyze the scenarios to gain an understanding of the impacts on our business, and will formulate strategies accordingly.

Category		Event	Risk or opportunity	Description	Relevant initiatives
Transition risks	Policies/legal regulations	Increase in carbon pricing	Risk	Costs increase when new carbon-related taxes are introduced	Ongoing information gathering
	Policies/legal regulations	Tighter regulations	Risk	Costs increase amid the shift to electric/energy-saving equipment and systems at production locations Costs increase when fuels and power sources for large and heavy machinery are changed	Promoting the installation of equipment that helps reduce GHG emissions
	Technology	Development of new technologies	Risk	Demand for limestone decreases when alternative materials and technologies are developed	Promoting limestone exporting
		Development of new technologies	Opportunity	Profits increase when we develop products that help lower GHG emissions	Promoting research and development that helps reduce GHG emissions
		Spread of renewable energy/energy-saving technologies	Risk	Energy procurement costs increase when we purchase renewable energy	Installing renewable power generation facilities for internal consumption to reduce purchased electricity Directly procuring FIT Non-Fossil Certificates to reduce the cost of shifting to renewable energy power sources
		Spread of renewable energy/energy-saving technologies	Opportunity	Greater possibilities for new development in geothermal power generation, solar power generation, and other areas	Promoting geothermal development in Shiramizugoe
	Market	Fluctuation of product/material prices	Risk	Raw material procurement costs increase as decarbonization progresses Investment costs increase as competition for mining development projects intensifies Regulations become stricter and tax burdens grow as resource nationalism emerges	Identifying projects in the context of internal exploration Joining projects from the early stages of development
	Market	Fluctuation of product/material prices	Opportunity	Demand for copper increases amid growing demand for electrification Economically mineable ores increase as the profitability of copper mines increases	Launching development work on the Arqueros Copper Mine and promoting the identification of other projects
	Reputation	Changes in customer behavior	Risk	Costs increase when we respond to demand for products with lower GHG emissions	Installing renewable power generation facilities for internal consumption to reduce purchased electricity Directly procuring FIT Non-Fossil Certificates to reduce the cost of shifting to renewable energy power sources
	Reputation	Changes in customer behavior	Opportunity	Customers demand more products that help reduce GHG emissions	Reinforcing our supply system for Polytetsu
Physical risks	Acute	Intensification of meteorological disasters (e.g. typhoons, floods)	Risk	Costs increase as we undertake disaster control measures and disaster recovery at production locations Sales decrease due to supply chain interruptions	Sustaining our stable supply system through decentralization of limestone mines
	Acute		Opportunity	Demand for limestone increases as disaster risk reduction infrastructure is developed We retain the ability to produce and deliver during disasters by leveraging the strengths of our dispersed locations	Sustaining our stable supply system through decentralization of limestone mines
	Chronic	Increase in mean temperatures	Risk	Risk of flood damage at coastal locations due to sea level rise Operations impacted by the increased risk of drought Productivity declines due to negative impacts on worker health	Promoting and continuing to use recycled water
	Chronic	Increase in mean temperatures	Opportunity	Demand for wastewater treatment agents increases as water quality declines (nutritive salts, red tides) and reclaimed water use increases Productivity increases when we revise working environments	Reinforcing our supply system for Polytetsu

Risk Management

After identifying climate-related risks and opportunities, the Sustainability Committee evaluates and reconsiders them through its consideration of responses and subsequent monitoring, and regularly reports significant risks to the Board of Directors. Additionally, in terms of efforts to achieve carbon neutrality, the committee discusses plans for reducing CO₂ emissions, manages the progress of plan implementation, and takes necessary measures.

Indicators and Targets

The Group is making efforts to reduce CO₂ emissions by steadily transitioning to implementing measures to combat climate change, including reducing fuel and electricity consumption by streamlining and switching to energy-saving facilities and introducing renewable energy-based power generation facilities and switching to renewable electricity for internal consumption. Specifically, we aim for a 38% or higher reduction ^*1 of energy-derived CO₂ emissions from domestic Group companies' consumption of fossil fuels and electricity out of their total CO₂ emissions—the sum of their direct (Scope 1) emissions and indirect (Scope 2) emissions from their use of electricity and other energy purchased from other companies—from the FY2013 level by FY2030, identical to the Japanese government's target for the corresponding CO₂ emissions category.^*2 Notably, we intend to further reduce non-energy-derived CO₂ emissions from limestone calcination by working on carbon offsets through CO₂ absorption in company-owned forests and introducing new technology for CCUS and the like once it is ready for real-world implementation.
We also plan to introduce new technologies and use carbon offsets and other means of achieving carbon neutrality to meet the long-term goal of reducing direct and indirect (Scope 1 and Scope 2) emissions of the Group's non-energy-derived CO₂ by FY2050.

*1 38% or higher reduction from the FY2013 level:
The target rate of reduction for CO₂ emissions derived from fuel and electricity consumed at plants and business locations under the Industrial category of the Japanese government's CO₂ emissions categories
*2 The Japanese government's FY2030 target for the corresponding CO₂ emissions category:
The rate of reduction for the corresponding CO₂ emissions category set out in the Comprehensive Plan of the Government under the Act on Promotion of Global Warming Countermeasures (approved by the Cabinet on October 22, 2021)