Sustainability 1

E

S

Core subjects of
ISO 26000

G

Materiality group<Why?>V

Creation ofa workplace wherea diverse array ofhuman resources
can be active andrespecting humanrightsHuman rights

Concept and promotion structure for sustainability management

Labor practices
S
G

Fair operating
practicesE

Organizational
governanceG

Community involvementand development

E

I

E

Fair operating
practicesII

Achievement of
a comfortable andsustainablecommunity life andlivingPromotion of
circular economy
anddecarbonization
through products
and stores

Environment

III
S

Consumer issues

IV

34

Deepening ofrelationships withcustomers withwhom we create
new value

Support of strong
community
resilience against
disasters

DCM Holdings Co., Ltd. Integrated Report 2023

Materialities <What will we do?>1

Creation of lifestyle support home improvement
retailers loved by people and communities

2

Evolution of lifestyle support and convenientservices for all types of people

3

Introduction of new businesses in line with theneeds of communities

4

Creation of hardware-specialized stores tosupport professionals and DIY

5Development and sale of products that contribution toa fulfilling life, resource recycling and decarbonization

6

Reduction in product packaging and containers

7

Promotion of collection and reduction of wastematerial, reuse, and recycling at stores

8

Promotion of energy conservation at stores andexpansion of renewable energy use

9

Pursuit of product quality and improvementsthat reflect customer opinions

10

Evolution of business and services throughdigital transformation

11

DIY education and information transmission at
stores12

Establishment as community disaster prevention
base

13

Development and sale of disaster prevention
supplies

Main relevant SDGs

Promotion of CSR procurement

18

Promotion of CO2 emission reduction andeffective utilization of resources in logistics

19

Stronger corporate governance and responsible
dialogue with stakeholders

20

Compliance and prevention of corruption

21

Risk management

22

Contributions to environmental conservation and community
formation through cooperation with communities

are materiality numbers
Promotion of collection andreduction of waste material,
reuse, and recycling at stores

Extremely high

No.

17

8

Promotion of energy conservation at stores andexpansion of renewable energy utilization

Respect for human rights, promotion ofdiversity and women in the workplace

Human resources development and creation of
workplaces that are easy to work in

DIY education and informationtransmission at stores

11

7 6

1

5

Development and sale of4
Establishment as
products that contribution to acommunity disaster
fulﬁlling life, resource recycling
19 and decarbonization
prevention baseCreation of hardware-specialized
Stronger corporate governancestores to support professionals
and responsible dialogue withand DIY
stakeholders

12

14

15

20

Compliance and preventionof corruption
Promotion of CSR procurement

17

18

Evolution of lifestyle support10
and convenient services for all
types of people
Evolution of business andservices through digitaltransformation
Introduction of new businesses inline with the needs of communities

2

Promotion of CO₂ emission
reduction and effective utilization 3of resources in logistics

Pursuit of product quality and improvementsthat reﬂect customer opinions
Contributions to environmental
conservation and community
formation through cooperation
with communities

Creation of lifestyle support
home improvement retailers
Reduction in productloved by people and communities
packaging and containers

22

9

21
Development and sale of 13
disaster prevention supplies

Risk management

16

Financial Highlights

Environment

Materiality group<Why?>

Allocation of human resources to high-added
value tasks through digital transformation

Allocation of human resources
to high-added value tasks
through digital transformation

High

Consumer issues

No.

16

Materiality importance map

Importance from stakeholder’s perspective

Core subjects of
ISO 26000

Regional and community
development

Human resources development and creation of
workplaces that are easy to work in

Risk Management and Compliance

S

G

VIII

15

Corporate Governance

S

Stronger corporate
governance

Respect for human rights, promotion of diversity
and women in the workplace

Sustainability

E

VII

S

Numbers in

Overview of eight priority issue groups and 22 materiality issues

VIConstruction of
supply chain thatgives consideration
to the environmentand society

14

Main relevant SDGs

Medium-Term Management Plan

To address such these needs, we have been focusing onsustainability management since fiscal 2022. Its aim is totransform into an integrated company that makes people’s
lives more comfortable, transitioning from a company thatsells goods to one that comprehensively provides affluent
lifestyles, as well as continuously and stably increasing
corporate value. We have identified eight priority issue
groups and 22 materialities for promoting the SDGs to
identify the threats and opportunities for the Company posedby social issues from a medium- to long-term perspective,
looking ahead to 2030, and to achieve both a sustainable
society and increased corporate value.
Initiatives to address the 22 priority issues areincorporated into the “36-Month Project,” a cross-Company
organization that is the driver of the medium-term
management plan. We will continue to work toward theachievement of the 22 priority issues in the third mediumterm management plan, and will steadily give shape to its
various initiatives.

Materialities <What will we do?>Message from the President

Home centers are stores that support DIY, in other words,
repairing the things we own by ourselves and using themcarefully for a long time. In this sense, they have always had
a strong connection with sustainability. In recent years, withthe depopulation of regional areas and the aging of the
population combined with declining birthrates, the role ofproviding products and services that help the elderly as wellas supporting the livelihood of rural areas has been added to
the roles these stores play. Home centers are also providing
disaster prevention expertise and supplies in times ofdisaster in an environment where natural disasters are
becoming more frequent.
In the pandemic, these outlets supported daily life
and work, and also contributed to helping people lead more
comfortable lives in transition to the new lifestyles.
In addition, products and lifestyle-related knowledge that
address recent environmental issues and rising energy prices
are also of high interest to customers. Thus, home centers are
increasingly expected to function as the infrastructure for
local lifestyles.

No.

Business Model

No.

ValuesPromotion of Sustainability Management

High

Extremely highImportance from management perspective
Proactive materiality groups
Materiality group I:

Achievement of a comfortable and sustainablecommunity life and living
Materiality group II: Promotion of circular economy and decarbonization
through products and stores
Materiality group III: Deepening of relationships with customers with whom
we create new value
Materiality group IV: Support of strong community resilience against
disasters

Protective materiality groups
Creation of a workplace where a diverse array of humanresources can be active and human rights are respected
Materiality group VI: Construction of supply chain that gives considerationto
the environment and society
Materiality group VII: Stronger corporate governanceMateriality group V:

Materiality group VIII: Regional and community development

35

Sustainability 2

DCM Holdings education structure

Executives

Employees

management of human resources information, and startingin fiscal 2022, revamped our training system. In addition tosystematized training for the development of humanresources from a medium- to long-term perspective,
we reassign select human resources for training purposes
and proactively appoint them to projects and internal tasks
in an effort to develop human resources that will serve asa foundation for growth.

Centralized management of human resources information
selection for placements in new positions, we aim to
maximize performance. Further, future management
personnel candidates are grouped by generation for use in
selective training, policy-based assignments, and promotion
to various project leadership positions.

Systematized training for the development of human resources from a medium- to long-term perspective
We emphasize the importance of employees who arecapable of autonomous self-development, and in support ofthis ideal, we have created an environment in which all
employees can learn on their own. In terms of specific efforts,
we introduced tools enabling employees to view educational
videos created in house, and facilitate an environment inwhich learning can take place anytime, anyplace, and asoften as necessary. Additionally, by subsidizing a portion of
the course fees for a video service providing educational
content centered on business skills, employees can learn
both operational skills as well as a wide range of otherbusiness-related skills.
Regarding the development of future management
personnel for the realization of our long-term businessconcept, in addition to providing standard level-based
training for candidates grouped by generation, we havecandidates participate in training for next-generation

36

DCM Holdings Co., Ltd. Integrated Report 2023

executives focused on exchanges with other companies
and liberal arts studies, creating a system that is able tocontinuously produce human resources with broad
perspectives and high degrees of insight.
To ensure human resources possess expert knowledge
and diverse skills, we also provide specialized educationand training aimed at acquiring qualifications. We view the
securing of IT personnel as a particularly important issue,
and our system subsidiaries have established a structure inwhich mid-career hires and professional human resources
who can be immediately effective are able to learn from one
another.
Training is conducted with the specific aim of developing
professional human resources who are able to manage
projects after three years on the job through bothprofessional education and OJT led by mid-career hires, aswell as video learning and the acquisition of IT qualifications.

GLOBIS Unlimited Learning

Online video learning tools

Newly appointed store manager training

Mid-career training
Design thinking training
Diversity training
Female employee
exchange meetings

Assistant store manager and floor staff training (update training)
Newly appointed assistant store manager and floor staff training

Select senior management
training
Select high-mid level training(liberal arts studies)
Select mid-level training

Newly appointed chief and foreman training
Third year training

Select junior training

Second year training
Product knowledge workshops
New employee training  
2 Supporting the acquisition of qualifications
The DCM long-term business concept is aimed at becominga group that not only sells products, but transforms into an
integrated group of businesses that help people live more
comfortably as an “integrated business that comprehensively
makes people’s lives more comfortable,” and we view theacquisition of qualifications as one means of realizing ourlong-term business concept. Home centers have many highly
specialized product areas, and meeting the diverse needs ofcustomers requires high levels of expertise and skill.
To provide customers with lifestyle propositions rather thansimply selling products, we must improve our level ofcustomer service and skills.
We believe it is necessary to both acquire specialized
knowledge through work experience, as well as to acquire
high levels of expertise and skills through the acquisition ofqualifications. DCM views the acquisition of qualifications as
one aspect of human resources development, and aims tofoster an awareness of self-directed learning, create a culturethat encourages active self-development, and develop
employees who can serve customers with confidence.
To this end, the "DCM Qualification Acquisition System"
was established to actively encourage employees to acquirevarious qualifications. We established an environment thatfacilitates the acquisition of qualifications by increasing
company subsidies for examination fees, expanding the scopeof eligible employees, and adding supplementary
qualifications. We remain particularly active in DIY, which isone of our strengths, and possess the largest number of Japan

DIY•HC Association-certified DIY advisors in the industry,
which differentiates us from our competitors.
To enhance our expertise, we are also expanding support
for the acquisition of qualifications in gardening, bicycles, pets,
social welfare, remodeling, and other areas. As an example,
we are proactively engaged in the acquisition of second-classelectrician certifications with the aim of ensuring employees
not only sell products, but are also professionals that
customers can rely on, possessing highly specialized
knowledge and skills and an ability to provide comprehensive
assistance, from customer-centric proposals, to advice andinstallation. Further, while streamlining and promoting DX in
business systems, we encourage employees to strategicallyacquire qualifications, including efforts to systematicallypromote the proactive acquisition of IT passports, to obtain
the basic IT knowledge required to work in an IT society.

DCM qualifications acquisition system Recommended qualifications
1. Qualifications leveraging home center strengths• DIY advisor• Green advisor

2. Qualifications necessary for enhancing specializations• Bicycle safety mechanic• Counselor specializing in welfare
equipment• Operations chief of asbestos• Pet care adviser• Registered seller• Petroleum equipment technicalmanager

3. Qualifications to be strategically acquired for the realization of
long-term business plans• IT passport

Financial Highlights

We introduced a talent management system to centrally
manage human resources information. By centrally managing
basic employee information as well as training history, skills,
and career goals, then utilizing this information forrecruitment, job assignments, skills development, and rapid

Store manager training (update training)

Risk Management and Compliance

We view the development of human resources who will leadthe next generation as an important issue in terms ofenhancing corporate value over the medium to long term.
Accordingly, we are developing human resources in tandemwith management in order to realize our medium-term
management plan through 2025 and our long-term businessconcept for 2030. To ascertain gaps between current humanresources and the ideal we are aiming for, we centralized theIT
Buying techniques
Product development
Marketing
Legal affairs
Quality and intellectual
property
Logistics
Finance
Etc.

Executive training
Senior management training

Corporate Governance  
1 Human resources development

Other

Sustainability

CompanyNew
employees

Professional training

Medium-Term Management Plan

Realizing Wellbeing
Increase employee engagement
Foster awareness of corporate valueenhancement

Regularemployees

Next-generation management
candidate training

Message from the President

Based on our Company Philosophy ”Do Create Mystyle,” we aim to transform into an “integrated business that comprehensively
makes people’s lives more comfortable.” We are working to increase customer convenience through the creation of “newgeneration home centers” with clearly defined store strategies, the development of products that enrich people’s lives, and theformation of new purchase patterns combining the convenience of physical stores with e-commerce websites.
We believe the driving force behind the realization of this goal is the diversity and creativity of our human resources andtheir desire for self-growth. In creating an environment where a diverse array of human resources respect individual values andplay active roles, and by proactively supporting human resources development and autonomous learning, we are promoting thecreation of an organization that is able to maximize the capabilities of each individual employee. We aim to achieve sustainablegrowth and enhance corporate value by increasing engagement through support aimed at realizing employee wellbeing, andfostering an awareness among employees of the need to enhance corporate value.

Managers

Level-based training

Business Model

Video learning andself-development

Linking Business and Human Resources Strategies

ValuesHuman Capital Management• Second-class electrician

Utilizing the DCM advisor in-house qualification and certification system
In addition to the DCM Qualification Acquisition System,
we established DCM Advisor, an in-house qualification andcertification system unique to DCM, to measure the degree ofunderstanding with respect to basic product knowledge.
DCM Advisor aims to provide all employees with
opportunities to improve their product knowledge andcultivate continuous self-learning. We strive to develop bothbasic product knowledge as well as personnel who can
respond appropriately to customer requests.
To this end, we have prepared an educational
environment using books and videos to improve productknowledge in support of DCM Advisor certificationacquisition. Additionally, product knowledge workshops, inwhich participants learn by using actual products, aim to help

employees acquire knowledge and skills through classroom
lectures as well as hands-on experiences.
The DCM Advisor was introduced as an annual internal
certification system in fiscal 2021, with all employees,
including partner employees (part-time employees), subject
to this examination. Anyone can easily take this examination
using DCM’s in-house system.
As certification enables employees to respond to
customers with confidence, partner employees areproactively taking on the challenge, with approximately
1,500 employees in total certified in fiscal 2022. DCM willcontinue to expand and advance this program as part of its
efforts to create an organization where employees cancontinue learning on their own.

37

Sustainability 3  4 Promoting diverse workstyles

We pursue diversity and inclusion through three approaches
promoting (1) the active participation of women, (2) the active
participation of seniors, and (3) internal appointments.

Promoting the active participation of women

Company
expectations

Motivation ofindividuals

Human resource
strategy
Necessity in humanresource strategy

MatchExpansion of the role of seniors

For example, a male employee promoted from partner tofull-time employee in 2008 who gained experience in stores
and at the head office is now working as a store manager.
Similarly, a female partner promoted to full-time employee in2011 also gained experience in stores and advanced to store
manager in 2023, taking charge on the front lines.
In fiscal 2022, a total of 40 employees passed theinternal appointment exam. DCM will continue to promoteinternal appointments as part of our career development
efforts to increase the diversity of our human resources.

  
5 Health management initiatives
In order to realize our Company Philosophy, “Do Create
Mystyle,” and create affluent lifestyles together withcustomers, we believe it is essential for employees
themselves to be healthy. To this end, we are making efforts
to reduce long working hours and ensure that employees at
all stores receive health checks by managing health checks
and schedules on a 100% health check basis. We also
proactively recommend specific health guidance for theprevention of lifestyle-related diseases as an opportunity toraise awareness of health promotion, creating anenvironment that makes it easy for employees to receive
health checks with efforts that include scheduling healthchecks during working hours and online health checks in theworkplace. As a result, 53.3% of employees received specifichealth guidance in fiscal 2022.
Stress checks were previously conducted only at
workplaces with 50 or more employees, but since fiscal
2022, we have conducted stress checks at all workplaces for

Financial Highlights

Motivation of individuals
Physical and mental
strength of individuals

Experience andknow-how
Human nature andhuman skills

and nursing care leave utilization rate has increased
substantially over the past several years to 60.5%.
Recognition of the importance of a work–life balance has
expanded in recent years, and we will continue to consider
initiatives and systems that can further encourage individual
employee self-realization while respecting diverse values.

Risk Management and Compliance

DCM Holdings Co., Ltd. Integrated Report 2023

Corporate Governance38

Sustainability

Our childcare and nursing care support system exceeds all
statutory mandates, and we are working to create anenvironment facilitating easy use of this system so that all
employees can give birth, raise children, and care for family
members with peace of mind. In fiscal 2022, 26 male
employees took childcare leave, and along with employees
utilizing DCM’s maternity leave system, the male childcare

Promoting internal appointments
DCM has introduced an internal appointment systemallowing partner employees to take on the challenge of
becoming full-time employees with the aim of enabling
employees who wish to advance their careers to full-timestatus to engage in rewarding work and achieve selfactualization.
The internal appointment system is also intended to
expand opportunities for capable and motivated employees
to play active roles, thereby uncovering promising future
store managers and head office specialists.

10Childcare and nursing care support system

Promoting the active participation of seniors
DCM has established a system facilitating the self-reportingof “work preferences” and “areas of expertise” so that
employees who have reached the age limit for their role orretirement age can continue to work with vigor utilizing theirindividual strengths in a second career. This includes
positions such as in-house instructors who leverage pastexperience and knowledge, specialized teams responsible forstore renovations, and advisors who respond to consultations
from stores. Recently, many employees have expressedinterest in working for Hodaka, which is expanding store
openings.
As Japan's working-age population is expected to
decline, we intend to further strengthen this system toenable experienced senior personnel to play active roles.

3

Medium-Term Management Planmutual awareness and empathy, and provide opportunities
for future system and corporate culture reforms.
In addition to exchange meetings held internally, we also
conduct exchange meetings with female employees fromother companies. These are opportunities to gain insights
and motivation leading to individual career development thatinternal meetings alone cannot provide.
Along with the creation of this environment, we conduct
training for all managers on diversity and inclusion andchildcare support systems to promote an understanding ofthese issues among employees through their managers.
In this way, we are working on two fronts, creating anenvironment that promotes the success of female employees
and encouraging understanding among all employees.
Through these efforts, we are working to create anenvironment facilitating the active participation of female
employees, with the goal of achieving a ratio of 7% or more
female employees in management positions by fiscal 2030
(3.2% as of March 2023).

We have introduced an employee classification system
Blocks and areas coverage
enabling all employees to apply for a range of possible
transfers according to their personal values, lifestyle, andfamily situation, allowing each employee to choose their own
workstyle. There are three employee classifications: “Block,”blocksin which employees choose to work in East, Central, or WestJapan; “Area,” in which employees can limit the scope of their
areas
work location; and “Region,” in which employees are notrequired to relocate. The system allows employees to apply
for an employee classification once a year, so that they can
East Japan blockchange workstyles if their personal circumstances change.
There is also a national employee
classification enabling employees to work
Central Japan block
anywhere in Japan. This system exposes
employees to various regional cultures andlifestyles and broadens the range of theirexperience, which is expected to lead toWest Japan block
personal growth.
Further, we have introduced a “temporary
work location restriction system” enabling
employees to temporarily change theirworkplace to a desired location when theyencounter difficulty relocating due to special
reasons (nursing care, childcare, and other life
events). Employees can utilize this systemwith peace of mind during the approved
period, as the treatment they received prior to approval
is maintained.

Message from the President

In promoting diversity and inclusion, DCM believes that theemployment and active participation of women in particular
is essential for responding to increasingly diverse market
needs. Currently, the percentage of female employees among
full-time employees is 14.3%, growing approximately 3% inrecent years. Over the past several years, nearly half of all
new hires have been women, and with the ratio of female
employees expected to increase going forward, we believe it
is imperative to create an environment in which women canplay active roles. We are striving to create an environment
in which women can develop their careers so they remain
active long after marriage, childbirth, raising children, andother life events.
In order to proactively create an environment in which
women can work comfortably, we conducted a survey amongfemale employees aimed at gathering opinions and gaging
awareness regarding current female employee workstyles
and ascertaining actual working conditions. Based on thesurvey results, we identified issues that need to beaddressed in order for DCM Holdings to promote the active
participation of women.
As one of the measures to achieve this goal, we holdfemale employee exchange meetings internally. The purposeof these meetings is to create a new community amongfemale employees, alleviate concerns regarding careerdevelopment, work-life balance, and other issues, foster

Employee classification system

Business Model

We promote diversity and inclusion so that all employees
recognize and respect each individual so every employee canmaximize their abilities while making the most of diversity.

Values  
3 Promoting the active participation of diverse human resources

the purpose of ascertaining and improving conditions in eachlocation.
In fiscal 2022, 12.6% of employees were identified ashaving high stress, and our goal is to reduce this to less than
10% by fiscal 2025.
DCM will continue to proactively promote healthmanagement initiatives to ensure that each and every
employee is healthy in mind and body and motivated to work.

On March 28, 2023, we were certified as a “2023 Health & Productivity
Management Outstanding Organization.”

39

Sustainability 4

Sustainability – TCFD Compliance

Chronic
physical risks

Costs incurred from unavoidable relocation of coastal area stores due torising sea levels

Increase in air conditioning
equipment

Rising investment, maintenance, and management costs for air
conditioning equipment due to increasing average temperatures

Impact on wood, wooden
products, and gardening products

Procurement costs for wood, wooden products, seeds, and other suchthings will increase due to shifting of areas suitable for agriculture due
to climate change

Increase in illness due to risingtemperatures

If restrictions on movement, shortened business hours, and suspensionof business become unavoidable due to a range of illnesses, this will
result in a loss of sales opportunities➡

Store relocation due to rising sea
levels12: Establishment as community disaster prevention
base➡

Damage insurance premiums increase due to increasing frequency andseverity of natural disasters

Corresponding DCM SDGs Materialities

8: Promotion of energy conservation at stores andexpansion of renewable energy use—

21: Risk management

Some impact on administration and financial affairs

No impact on administration and financial affairs (no change)

Carbon tax introduction (DCM)

4°C
increase

Introduction of carbon tax results in increased procurement costs forfossil fuels used by vehicles and at stores

Corresponding DCM SDGs Materialities

Carbon tax introduction (in supply
chain)

Introduction of carbon tax will result in increased procurement costs forplastic products such as containers and packaging materials

Stricter regulations on raw
materials for products, etc.

Tighter regulations on fossil fuel-based raw materials will lead toincreased costs due to the switch to reused and recycled materials

Tighter regulations on industrial
waste disposal

Restrictions on fossil fuel-based raw materials are strengthened, andcosts will be incurred for things such as reconsidering plastic films andpackaging

Tighter building standard
regulations

Costs for building new stores and renovations increase due to tightened
regulations based on energy saving laws and construction standards
laws, etc.

Stricter regulations on cargotransport vehicles

Costs incurred due to electrification of cargo transport vehicles at storesand logistics hubs and establishment of charging stations

18: Promotion od CO2 emission reduction andeffective utilization of resources in logistics

Increased scope of information
disclosure

Increased costs due to increased scope of mandatory information
disclosure concerning CO2 emissions

19: Stronger corporate governance and responsible
dialogue with stakeholders

Changes in consumer
environmental awareness andlifestyle

Sales opportunities lost if response to increased consumer
environmental awareness and changes in their lifestyle is delayed

Impact of switch to reusable raw
materials

Decline in sales if switch to reusable raw materials from fossil
resource-based raw materials in products is delayed or if an increase insales price is unavoidable

1: Support home improvement retailers loved bypeople and communities
5: Development and sale of products that contributeto a fulfilling life, resource recycling, anddecarbonization

Structural changes in local
conditions due to climate change

Sales opportunities for agriculture-related products lost if response toshifts in areas suited to agriculture caused by climate change is delayed

Changes in consumer preference,
criticism of the industry, increase in
stakeholder concerns, etc.

Without a suitable response to social and consumer trends that reflect
climate changes, support from stakeholders will decline

Major impact on administration and financial affairs➡

Resilience－

6: Reduction in product packaging and containers
7: Promotion of collection, reduction, reuse, andrecycling of waste at stores

➡

—

－

➡

—

Some impact on administration and financial affairs－

9: Pursuit of product quality and improvements thatreflect consumer opinions
19: Stronger corporate governance and responsible
dialogue with stakeholders

No impact on administration and financial affairs (no change)

Expanded demand for products todeal with heat

Increase in sales opportunities for products to deal with heat resulting
from increase temperatures

Expanded demand for disasterprevention products

Increase in sales of disaster prevention products in relation to increasing
frequency and intensity of natural disasters

Growth of DIY market

Growing consumer awareness of the need to create things on the basisof their own ingenuity and to repair and use these things over the longterm will grow the DIY/reform market and increase sales opportunities
for related products

Policy incentives

Increase in sales opportunities through incentives for purchasing ofsustainable products

1: Creation of lifestyle support home improvement
retailers loved by people and communities
5: Development and sale of products that contribute to afulfilling life, resource recycling, and decarbonization
11: DIY education and information transmission at stores

Provision of emergency supplies
in disasters

Establishment of a business continuity system in areas impacted bydisasters, and improvement of quality in infrastructure for daily life
through stocking of emergency supplies, etc.

12: E stablishment as community disaster prevention base
13: D evelopment and sale of disaster prevention supplies

Major impact on administration and financial affairs

1: Creation of lifestyle support home improvement
retailers loved by people and communities
5: Development and sale of products that contribute to afulfilling life, resource recycling, and decarbonization
9: Pursuit of product quality and improvements thatreflect customer opinions
13: Development and sale of disaster prevention supplies

Some impact on administration and financial affairs－

1: Creation of lifestyle support home improvement
retailers loved by people and communities
4: Creation of hardware-specialized stores to support
professionals and DIY
11: DIY education and information transmission at stores

No impact on administration and financial affairs (no change)

Risk management
The Internal Control Committee comprehensively manages Group-wide risks based on risk management regulations, andengages in awareness, guidance, education, and other efforts aimed at preventing and minimizing risks and damage. Climatechange risk is also managed under this risk management system.

Metrics and targets
Greenhouse gas emissions from the DCM Group in fiscal 2020 (March 2020 to February 2021) are as follows. For Scope 1 and 2,
we aim to reduce GHG emissions by 4.2% annually in accordance with Science Based Targets (SBT), which are GHG emission
reduction targets consistent with levels required by the Paris Agreement. For Scope 3, we will work to increase calculation
accuracy and look into reductions in collaboration with our business partners.
• The DCM Group’s GHG emissions for FY2020
Scope
1+2 (total)

DCM Holdings Co., Ltd. Integrated Report 2023

Growth in sales centering on DIY and environment-related products
due to lifestyle changes and heightened awareness concerning theenvironment among consumers

Financial Highlights

Introduction of renewable energy

Corresponding DCM SDGs Materialities

Heightened consumer
environment awareness andchanges in lifestyleMarkets

8: Promotion of energy conservation at stores andexpansion of renewable energy use

The cost of procuring electricity will increase due to switching fromelectricity derived from fossil fuels to electricity derived from renewableenergy4°C
increase➡

2°C increase (or1.5°C increase)

Opportunities

Business impact

2°C increase (or1.5°C increase)

Business impact

Risk Management and Compliance

Risks for DCM

Products andservices

DCM opportunities

Corporate GovernanceFor transition risks, a range of policies and legal regulations have been introduced for the 1.5°C target, with the DCM Group focusing on the
decarbonization scenario (1.5°C to 2°C temperature increase) in which market and reputation changes occur.

Transition risk

Impact on damage insurance

4°C
increase

With regard to opportunities, in the 1.5°C to 2°C temperature rise scenario, there will be growth in demand for products that deal with heatand prevent disasters due to a growing environmental awareness among consumers and their increased resonance with the approach of
repairing things and using resources carefully, and we assume growth in the sales of DIY and environment-related products, as well as
growth in the DIY and renovation market itself, which is at the heart of the home center business.

Transition risks

40

Damage caused by increasing
frequency and intensification ofabnormal weather

Damage to stores, disruption of lifelines, lost sales opportunities due todisruption of factories and logistic networks impacted by disasters, andrecovery costs incurred due to increasing frequency and intensity ofnatural disasters and abnormal weather

Major impact on administration and financial affairs

Risks/opportunities

Reputation
changes

1.5°C increase)

Sustainability

We clarify the long-term risks and opportunities presented by climate change and performs scenario analyses to create businessstrategy proposals aimed at minimizing risks and maximizing opportunities. Specifically, we conduct analysis conforming to the
1.5°C target, which has become the leading global initiative aimed at limiting the increase in global average temperature since
the Industrial Revolution to 1.5°C, as specified in the COP26 outcome document.

Marketchanges

2°C increase (orBusiness impact

Opportunities

Strategy

Policies/legal
regulations

Risks for DCM

Medium-Term Management Plan

We consider the issue of climate change to be of great importance for sustainability, and have put in place a governance structure
centered on Board of Directors oversight and the Sustainability Committee. The Board of Directors receives reports from theSustainability Committee at least once a year regarding climate change issues and sustainability initiatives, including SDGs
materiality, reviews policies and initiatives as appropriate, and monitors and evaluates progress. The Sustainability Committee,
which meets two or more times annually and is chaired by the President and CEO, examines and studies the latest sustainability
trends, including climate change issues, confirms progress and deliberates policies related to sustainability initiatives, andsubmits reports and proposals to the Board of Directors.

Acutephysical risks

Physical risks

Governance

Risks/opportunities

Message from the President

The DCM Group positions its response to climate change as a material issue within its business strategy, and in April 2023,
the Company announced its endorsement of the Task Force on Climate-related Financial Disclosures (TCFD). We disclose
information in accordance with the framework promoted by the TCFD (governance, strategy, risk management, metrics andtargets), and will contribute to the achievement of a decarbonized society through efforts to address climate change.

Business Model

For physical risks, we consider the impact of extreme weather events such as heavy rains caused by continued warming that create disasters
based on the decarbonization scenario (1.5°C to 2°C temperature increase). In the continued warming scenario (2.7°C to 4°C temperature
increase), we considered the impact on store locations and facilities due to rising temperatures, the impact on the DCM Group from damaged
forests, agriculture, and other natural areas, and the impact of a range of infectious diseases on business, among other risks.

Endorsement of TCFD

Risks/opportunities

ValuesPhysical risks

Reference year

Target year

Targets

FY203042% reduction in emissions

to FY2050

Carbon neutral (net zero)

FY2020

Scope 1 (direct emissions)

12,057 t

Scope 2 (indirect emissions)96,752 t

Scope 1 + 2 (total)

108,809 t

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