Climate Change Action (Commitment to TCFD* Recommendations)

SHIKOKU KASEI Group’s Climate Change Action (Commitment to TCFD* Recommendations)

SHIKOKU KASEI Group recognizes the long-term impacts (risks and opportunities) of climate change on our business activities. The international frameworks, the Paris Agreement and the Sustainable Development Goals (SDGs) also necessitate stronger action on climate change. As such, we expressed our support for the TCFD recommendations in March 2023. Our group aims to contribute to the realization of a sustainable society by working in harmony with the global environment in all aspects of business activities.

*TCFD: Task Force on Climate-related Financial Disclosures. Individual companies are required to disclose the impact of climate change on their financial reporting.

Governance

Our group’s sustainability activities are overseen by the Board of Directors and reflected in management. To strengthen the group’s overall sustainability activities, the president is positioned as the Chief Responsible Care* Officer. Additionally, an RC Promotion Committee, consisting of officers, has been established under this position.
RC Promotion Committee meetings (held twice a year) check the progress of targets and set agendas for continuous improvement under the leadership of the committee chair, who is responsible for promoting specific activities. The results were reported and supervised by the Board of Directors.

Strategy

The company has identified the following as material, physical and transition risks and opportunities related to climate change.
Based on scenario analysis, we will continue efforts to increase resilience to climate change.

Type of Risks / Opportunities

Transition Risk	Policy / Legal / Regulatory Risk	2℃		Strengthening legal regulations
	Policy / Legal / Regulatory Risk	2℃		Expansion of information disclosure obligations
	Technology Risk	2℃		Delayed response to environment-friendly technologies
	Technology Risk	2℃		Increased investment and R&D costs for environment-friendly technologies
	Market Risk	2℃	4℃	Decreased demand for products with high environmental impact
	Market Risk	2℃		Longer product life cycle
	Reputation Risk	2℃		Decline in appreciation by stakeholders
Physical Risk	Acute Risk	2℃	4℃	Incidence of abnormal weather
Physical Risk	Chronic Risk		4℃	Increased abnormal weather
Opportunities	Improvement of Resource Efficiency	2℃		Improved resource conservation and recycling
	Energy Sources	2℃		Shifting energy sources to create business opportunities
	Products and Services	2℃	4℃	Increased opportunities to capture markets through the development of environment-friendly products and goods
	Stock Market	2℃	4℃	Enhance corporate image by promoting environment-friendly products and information disclosure
	Resilience	2℃		Improved ability to adapt quickly to market changes associated with climate change

To identify and assess risks, we referred to the Guidebook for Promoting Decarbonization Management published by the Ministry of the Environment and other sources.
Most material risks and opportunities were identified by assessing the risks and opportunities faced by the company in relation to climate change using the criteria in the table below, based on the timing of manifestation and the degree of impact on the company’s business.

Time of Risk Manifestation		Business Impact
Likelihood of Incidence	Timing	Magnitude of Impact	Impact
10-30 years	Long term	Significant impact	Large
3-10 years	Medium term	Temporary impact	Medium
0-3 years	Short term	Minor impact	Small

Risk Management

The identification of company-wide risks and the policies for responding to the material risks are reviewed annually, following consultation with the RC Promotion Committee and risk management divisions. The results of the risk assessment are then reported by the RC Promotion Committee to the Board of Directors, which is responsible for corporate risks, and further climate change risks are incorporated into the corporate risks.

Indicators and Targets

The GHG emissions were selected as indicators of climate change. In addition, we disclose the following indicators for Scope 1 and 2 as GHG emissions.

Item		Scope	Target	Policy
1	Reduction in greenhouse gas (GHG) emissions (CO₂ equivalent)	SHIKOKU KASEI Group (Scope 1, 2)	FY2029 : ▲38% from FY2013 FY2025 : ▲30% from FY2013 (Total emission)	*Priority goals are set based on the national policy seeking carbon neutrality, and periodic reviews are implemented to continuously improve these. [ Plant facilities ] ・Promote improvement activities to increase production efficiency, reduce waste, and improve equipment performance ・Optimization of operating conditions for facilities that use heating, air conditioning equipment, freezers, and refrigerators ・Consideration of renewable energy use [ Office ] ・Implementing Cool Biz and Warm Biz ・Strictly obeying the rule to set the temperature at energy-saving ranges ・Updating to highly efficient equipment (LED luminaire) [ Transportation ] ・Improving the efficiency in transportation of products (efficient use of transportation routes, rational transportation of freight, consolidated shipping, etc.) ・Cooperation in the promotion of eco-drive
2	Reduction in energy consumption (Crude oil equivalent)	SHIKOKU KASEI Group (Scope 1, 2)	・Reduction by 1% compared to the previous year (Unit consumption of energy )
		SHIKOKU KASEI (Scope 1, 2)	・Reduction by 1% of the 5-year average (Unit consumption of energy)
		SHIKOKU KASEI (Transportation)	・Reduction by 1% compared to the previous year (Unit consumption of energy )

・Scope 1: Direct GHG emissions from the business itself (fuel combustion and industrial processes)
・Scope 2: Indirect emissions from electricity, heat, and steam supplied by other companies
・SHIKOKU KASEI: SHIKOKU KASEI HOLDINGS, SHIKOKU CHEMICALS, SHIKOKU KASEI KENZAI, SHIKOKU KASEI CORPORATE SERVICE

(Excerpts from the Priority Goals of Environmental Protection in FY2023)

Items to be considered for Disclosure in the Future

We will continue to consider ways to expand our disclosure of the scenario analysis and the financial impact of each risk and opportunity.