Response to climate change

Disclosures based on the TCFD recommendations

Recent years are seeing increasingly serious impacts from climate change, including weather-related disasters. Under these circumstances, there are growing expectations for IT as a tool for overcoming serious global environmental crises. In this respect, we believe that the CTC Group has significant roles and responsibilities to fulfill. We have identified "Contribute to addressing climate change" as one of the items of materiality (material issues) that were renewed in April 2021. Moreover, in April 2022, we expressed support for the Task Force on Climate-related Financial Disclosures (TCFD). We will work to realize a decarbonized society with our technologies and skills and ensure appropriate disclosures in accordance with the TCFD recommendations, aiming to build a sustainable society rich in dreams.

Governance

To address climate change, we have created a structure for promoting sustainability, headed by the President & CEO. Important matters are discussed by the Sustainability Committee, which is chaired by a managing executive officer, before decisions are made by the Management Committee and approval is given by the Board of Directors. We have also established a structure under which activities related to climate change are reported regularly to the Management Committee and the Board of Directors and are supervised by them.

Major important matters

Matters related to climate change risks and opportunities, important guidelines and measures related to climate change, progress in medium- and long-term environmental targets including CO₂ reduction, and others

Role and frequency of each meeting body

Category	Roles	Frequency of meetings
Board of Directors	Supervising climate change countermeasures	About twice a year
President & CEO (Management Committee)	Determining important matters associated with climate change countermeasures	About twice a year
Sustainability Committee	Deliberating on important matters on climate change countermeasures	About twice a year

CTC Group's structure for promoting sustainability

We promote action against climate change under the following structure.

Strategies

Using scenarios^* disclosed by an international institution and other entities, we studied how climate change affects our businesses. We identified the direct impacts of climate change on our businesses, including our supply chain (domestic businesses), as well as changes in policy trends and other impacts on our business activities, income, and other aspects. We then analyzed the financial impacts of the identified opportunities and risks expected in 2030 and 2050, both qualitatively and quantitatively by using the 4℃ and 1.5℃ scenarios, and summarized our policies for countermeasures. An outline of the results is as follows.
We position climate change countermeasures as opportunities for medium- to long-term growth and we are proactively expanding the green transformation (GX) business toward a decarbonized society, as a means to address social issues and achieve sustainable growth.

*Reference: Intergovernmental Panel on Climate Change (IPCC) RCP8.5 / RCP2.6, International Energy Agency (IEA) STEPS/NZE2050

Opportunities related to climate change			Magnitude of impact^*2				Action policies
Category	Details	Length of time required before actualization^*1	4℃ scenario		1.5℃ scenario
Category	Details	Length of time required before actualization^*1	2030	2050	2030	2050
Products and services	Increase in demand reflecting the use of IT for efficient energy use and energy conservation Increase in demand for products and services that contribute to the development of renewable energy	Short term	Small	Small	Medium	Medium	Expanding businesses that help solve issues, including those related to efficient energy use and those related to energy conservation Expanding businesses that contribute to the development of renewable energy
Market	Market expansion driven by simulation technologies and services that contribute to the development of new technologies (related to low carbon, hydrogen, and others) Improving social trust with climate change countermeasures	Short term	Large	Large	Large	Large	R&D and expansion of technologies and services that support the use of new energy as a means of achieving decarbonization Expanding businesses which contribute to decarbonization and making information about them available

Climate change risks			Magnitude of impact^*2				Action policies
Category	Details	Length of time required before actualization^*1	4℃ scenario		1.5℃ scenario
Category	Details	Length of time required before actualization^*1	2030	2050	2030	2050
Policies and legal restrictions	Increase in costs for responding to the tightening of regulations related to CO₂ emissions and new political measures and regulations (including carbon tax and emissions trading scheme)	Medium term	Small	Small	Medium	Medium	Continuously reduce CO₂ emissions from our businesses by driving energy conservation further and introducing renewable energy
Reputation	Damage to social trust and decline in employee motivation resulting from delays in taking climate change countermeasures	Short term	Small	Small	Large	Large	Expanding businesses which contribute to decarbonization and making information about them available Joining in initiatives related to climate change
Physical	Negative impacts on business continuity of damage to facilities and supply chain disruption caused by weather disasters	Short term	Medium	Medium	Small	Medium	Continuing to take disaster prevention and mitigation measures related to our business continuity plan (BCP) Effective teleworking

*1Length of time required before actualization
Short term: Up to 5 years from now, Medium term: Within 6 to 10 years, Long term: 11 or more years later
*2Magnitude of impact | Small: less than 300 million yen, Medium: from 300 million to less than 2 billion yen, Large: 2 billion yen and more

Initiatives to address opportunities and risks

Examples of initiatives to address opportunities and risks are given below.

Initiatives to address opportunities related to climate change

Offering a Digital Twin Solution for the GX of the Manufacturing Industry (press release dated September 1, 2023)
We offer a service to reduce GHG emissions and power consumption during production by reproducing the factory environment on the computer to simulate it, and another service that optimizes delivery routes for transportation businesses to reduce GHG emissions from logistics.
https://www.ctc-g.co.jp/company/release/20230901-01619.html
As a GX Solution, CTC Begins Offering Leases with Carbon Credits (press release dated October 10, 2023)
The service involves purchasing carbon credits when concluding a lease agreement for an IT device to offset the GHG emissions from the use of the IT device.
https://www.ctc-g.co.jp/company/release/20231010-01639.html
Strengthening Collaboration with US Company QuesTek to Expand the Materials Informatics Business (press release dated September 21, 2023)
We expand the materials informatics business of exploring new materials using IT. It leads to reduction of costs and environmental impact.
https://www.ctc-g.co.jp/company/release/20230921-01628.html
Launch of Collaboration with LIFULL Agri Loop to Realize a Recycling-oriented Society (press release dated March 26, 2024)
The collaboration started with the goal of creating new business models in the field of agriculture and livestock farming and to realize a recycling-oriented society.
Examples include the validation of the effects of Poop Loop, a catalyst for the conversion of manure into fertilizer, and analysis and verification for carbon credit trading.
https://www.ctc-g.co.jp/company/release/20240326-01713.html
Offering StateEco, a Resource Recycling Platform to Visualize Waste Disposal (press release dated June 27, 2024)
We offer a resource recycling platform to facilitate the recycling of waste into raw materials for products.
https://www.ctc-g.co.jp/company/release/20240627-01761.html

Initiatives to address risks related to climate change

Support for the Task Force on Climate-related Financial Disclosures (TCFD) and information disclosures
Revising the 2050 CTC Group Environmental Declaration (greenhouse gas reduction targets)
Obtaining the Science Based Targets initiative (SBTi)'s certification of short-term targets and net zero targets
Participation in the GX League
Continuing to take disaster prevention and mitigation measures related to our business continuity plan (BCP)
Mitigating risks through the continued utilization of telework

Risk management

We clarify, identify, and assess climate change risks (assess the level of their impacts by using various parameters based on multiple future forecast scenarios). We formulate measures for them under our sustainability promotion structure and in accordance with company-wide risk control methods and TCFD framework.
Further, the Board of Directors supervises this risk control together with other material company-wide risks.

Metrics and targets

Greenhouse gas emissions by volume are the indicator. Our targets are set out in the 2050 CTC Group Environmental Declaration revised in April 2024. The details are shared below.

2050 CTC Group Environmental Declaration