Strategy to Enhance Non-financial Capital
Efforts toward sustainability̶among them, protecting the global environment, respecting
human rights, developing human resources, and embracing diversity̶are essential
responsibilities to society that corporations should fulfill.
As demonstrated in its value creation process, through its business activities, theMitsubishi HC Capital Group works to strengthen and accumulate non-financial capital, suchas human capital including human resources, natural capital including the global environment,
and social and relation capital including human rights, and by extension, to expand its financialcapital. We believe this approach is important to enhancing corporate value.
The section highlights the efforts of the Group to enhance non-financial capital to help
shape a prosperous and sustainable future society together with stakeholders, and continue toachieve long-term growth.

Environmental Initiatives

Message from thePresident & CEO

Value Creation Story Business Strategies

Strategy to EnhanceNon-financial Capital

Governance

Data Section

Information Disclosure According to Four Disclosure Items Suggested by TCFD Recommendations
1. Governance
The Group will promote efforts to identify andmanage the impact of climate change on business andreinforce its governance.

The Sustainability Committee was established in April
2021 with the launch of the Group to better contribute to
the realization of a sustainable and prosperous future.
This Committee is considered one of the advisory bodies
to the Executive Committee and meets to discuss theclimate change issue and other key challenges related tosustainability. The results of the deliberations are reported
to the Executive Committee and the Board of Directors.

The Mitsubishi HC Capital Groupʼs Sustainability Promotion Framework
Board of DirectorsCommittees

Instruction/Supervision

Environmental Policy

ute to the creation of a society that can conserve the global environment and achieve sustainable development.

Environmental Action Guidelines

1. We will provide innovative solutions to society and promote collaboration with stakeholders to solve environmental
issues. Additionally, we will comply with relevant laws and regulations to conduct responsible corporate activities thatCompliance Committee

ReportingExecutiveCommittee
President & CEO

Basic Philosophy

Risk Management Committee

Proposals/Reporting

Mitsubishi HC Capital shall conduct business activities in harmony with the environment and society in order to contrib●

Financial Strategy

Supervision of the Board of Directors and the Roles of Top Management

The Mitsubishi HC Capital Group has declared its goal to “contribute to a prosperous and sustainable future by creatingsocial value through maximizing the potential of assets.” To achieve this goal, we have established an Environmental
Policy and pursue initiatives to tackle environmental issues.

●Introduction

ALM Committee
Disclosure Committee

Consultation
Instruction/Supervision

Sustainability Committee

Proposals/Reporting

Sustainability Committee Administrative Office
Corporate & Strategic Planning Division(Corporate & Strategic Planning Department)

consider people and the global environment.

IT Committee

Reporting

Units and Business Divisions
Customer Solutions Unit

Cooperate

2. We will pursue services and solutions that contribute to the reduction of environmental impact and the development ofsociety, properly recognize the effects and impacts of these services and solutions on the environment and society,and endeavor to utilize environmentally friendly goods and services.

Corporate Center
Risk Management Division
Other corporate center functions

Global Business Unit
Cooperate

Business Divisions* Related subsidiaries are also involved as appropriate

3. With the aim of becoming a society that is decarbonized and highly recycling-oriented as well as one that is in harmony
with nature and contributes to the conservation of biodiversity, we will endeavor to reduce CO2 emissions through thevalue chain, improve the efficiency of the use of water, resources, and energy, and minimize the impact on natural capital.
4. In order to build a relationship of trust with the local communities in Japan and overseas where we conduct business,

Organizational Entities and Roles in the Sustainability Promotion Framework
Organizational Entities

we will work together with society to solve problems and create a society that can balance conservation of the globalenvironment and sustainable development. If an issue should arise in our business activities, we will make it public in a

Board of Directors

The Board of Directors oversees measures that relate to Company-wide management, including response policies, action plans,and progress on the Groupʼs Materiality and environmental issues in response to reports on the matters deliberated over andresolved by the Executive Committee and reflects those details when determining important matters such as Company strategy.

Executive Committee

The Executive Committee engages in specific deliberations and resolutions concerning measures that relate toCompany-wide management, including response policies, action plans, and progress on the Groupʼs Materiality andenvironmental issues. Important matters are reported to the Board of Directors.

Risk ManagementCommittee

The Risk Management Committee is chaired by the Head of the Risk Management Division, and its members comprise thePresident & CEO, Deputy Presidents, Head of the Corporate & Strategic Planning Division, Head of the Treasury &Accounting Division, Head of the Credit Division, Head of the IT & Operations Division, and directors in charge of auditing.
The committee manages risks related to overall management in comprehensive and systematic ways. The overall impactof climate change risks, human rights risks, etc. on other major risks is reported to the Executive Committee.
In principle, the committee meets quarterly.

Sustainability
Committee

The Sustainability Committee is chaired by the Head of the Corporate & Strategic Planning Division, and its members
comprise the President & CEO, Deputy Presidents, Head of the Treasury & Accounting Division, Head of the HumanResources Division, Head of the Risk Management Division, Head of the Credit Division, and Head of the IT & Operations
Division. The committee formulates long-term plans related to the Groupʼs sustainability promotion, including Materiality
and environmental issues, as well as goals and plans concerning non-financial KPIs. The committee also monitors theprogress of each business division and reports important matters to the Executive Committee.
In principle, the committee meets twice a year.

SustainabilityCommittee Office(Corporate & Strategic
Planning Department,
Corporate & Strategic
Planning Division)

The Administrative Office is responsible for drafting and driving the implementation of plans for Company-wide strategy
based on the Groupʼs Basic Sustainability Policy. It gathers knowledge from Japan and overseas in the Groupʼs areas ofsustainability and reports to the Sustainability Committee and other bodies along with policies and strategies.

timely and appropriate manner and promptly take measures to prevent recurrence.
5. As a good corporate citizen, we will raise awareness of environmental and social issues and promote environmental
conservation activities as well as community/social contribution activities.
Established: April 1, 2021 Revised: May 13, 2022Efforts to Solve Materiality

Promote a Decarbonized Society

In December 2021, Mitsubishi HC Capital identified
Materiality (Material Issues) as priority key challenges
which must be addressed to achieve sustainable development of the Mitsubishi HC Capital Group.

Climate change is a major challenge that needs to beresolved in order for a sustainable society to become areality. The Group believes that for any company tosurvive moving forward, it must work to solve this problem through its business activities. Furthermore, theGroup is aware of the importance of earning the trust ofstakeholders through proper disclosure of informationand supports the recommendations of the Task Force on
Climate-Related Financial Disclosures (TCFD).

Please refer to page 6 for details.

As materiality related to the environment, we have established “Promote a decarbonized society” and “Realize theCircular Economy.” We aim to reduce our environmental impact
across the entire supply chain and work with stakeholders tosolve environmental issues through corporate activities.

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Roles

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

54Introduction

2. Risk Management
Regulatory changes, technological innovation, shifts in businessmodels in line with the transition to a decarbonized society orextreme weather, etc. stemming from global warming may
affect our operating results and financial condition in the form ofbusiness failure of business partners due to earnings deterioration and other factors, decline in value of assets owned by theGroup, and others. The Group recognizes climate change risk
as one of the critical risks in company-wide risk management
and will promote efforts to properly identify and manage it.
Risk Management System Overview
The Group uses the “integrated risk management” framework
to comprehensively manage risks that could have a substantial
impact on investorsʼ decisions.
The important risks managed within the integrated risk
management framework include, but are not limited to, credit
risks, asset risks, investment risks, market risks, liquidity risks,and operational risks.
To manage envisaged risk factors, the departments overseeing specific risks monitor issues arising from developmentsin the external environment or other changes, regularly consider
measures to address such risks, and then report and deliberatethem at meetings of each committee including the Risk
Management Committee. In addition, we operate a risk management system in which important matters are reported to anddiscussed by the Executive Committee and Board of Directors.
Please refer to page 85 for details on theRisk Management section.

Classification and Examples of Impacts of Climate
Change Risks
Climate change risks consist of transition risks associated withclimate-related regulation tightening and technological innovation, etc. and physical risks associated with extreme weather andchanges in climates. The TCFD recommendations classify theserisks into the subcategories of policy and legal/technology/market/reputation, and acute/ chronic. The Company recognizes thatimpacts of climate change risks occur in various time framessuch as short, medium and long term through broad transmission
routes including existing risks like credit risks, asset risks andinvestment risks. Furthermore, in addition to direct impacts on
the Companyʼs business activities, the onset of indirect impacts
through the Companyʼs customers is also possible.
Based on such risk characteristics and details of the TCFD
recommendations, the Company sorts out examples of impactsof climate change risks for each of its major risks, also taking into
account its risk management framework. Under the integrated
risk management system, the Company is also advancing theestablishment of a system to identify/ assess and manage
climate change risks in light of relations with other major risks.
Going forward, the Company will review the risk classification and examples of impacts according to changes in theexternal environment, and deepen analysis and assessment ofclimate change risks.
Status of Integration into Overall Risk Management
Comprehensive impacts of climate change risks on other majorrisks are reported to and discussed by the Risk Management
Committee. We will advance reflection of such risks, including
risks identified through scenario analysis, in overall risk management by establishing a monitoring system and othermeans. In addition, the development of targets and plans
related to climate change and details of monitoring arereported to and discussed by the Sustainability Committee.
Details of discussions of both committees are reflected in theCompanyʼs management strategies under the system ofmonitoring by the Board of Directors so that we can appropriately address the risks from both the perspectives of overallrisk management and individual risks.

3. Strategy for Action on Climate Change
The Company identifies risks and opportunities brought by
future climate change to the Group, and conducts scenario
analysis on “transition risks” and “physical risks” for the
purpose of appropriately disclosing information and considering future measures.
The scenario analysis is carried out based on limited
information and data available at present. We will strive toreflect the analysis in appropriate disclosure by carefullyinterpreting the results of this analysis, obtaining more information and relevant data through dialogues with stakeholders,and promoting refinement of analysis methods and expansionof businesses to be analyzed.

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MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

Results of the Scenario Analysis
We have discussed the impacts on our business and confirmed
consistency between the results of the scenario analysis andthe existing strategic policy.
The Group endeavors to minimize risks and maximize
opportunities by taking short- and long-term measures as for risks
and opportunities related to climate change. As a result of thetransition risk analysis, we recognize the need to appropriately
handle risks and opportunities associated with the expansion ofrenewable energy (Environment & Energy), shift to low mileageaircraft/engines and low-carbon fuels such as SAF and hydrogen(Aviation), growing demand for low-carbon buildings (Real Estate),

Message from thePresident & CEO

Value Creation Story Business Strategies

etc. Furthermore, as a result of the physical risk analysis, weanticipate risks including damage caused by disasters to power
stations and deterioration of power generating facilities such assolar panels (Environment & Energy), loss in value of real estate
due to intensification of natural disasters and increases in construction/operation expenses and renovation costs (Real Estate),
damage caused by disasters to the Groupʼs offices, and increases
in operating expenses and insurance costs.

Financial Strategy

Strategy to EnhanceNon-financial Capital

Governance

Data Section

While appropriate countermeasures for climate changerisks have been developed, the acquisition of business opportunities has been incorporated into strategies for opportunities
brought by climate change. Going forward, we will reflect KPIs
related to climate change in the process of implementing theMedium-term Management Plan, and establish a system toregularly monitor relevant trends in Japan and abroad, and thestatus of initiatives of the Group.

4. Metrics and Targets
Based on the recognition that efforts to realize a decarbonizedsociety are an urgent issue, we will set the Groupʼs greenhousegas reduction targets pursuant to the Paris Agreement, and wesee the transition to a decarbonized society as an “opportunity”
and actively promote the transition. In the case where greenhousegas emissions increase significantly in the future due to efforts for

new businesses, or where numerical value changes while calculation of greenhouse gas emissions of the entire Group including
supply chains are sophisticated, and other cases, the establishedtargets may be reviewed appropriately, but we plan to set thetargets so that any targets are in line with the level of the ParisAgreement, just like the targets established this time.

The Groupʼs Targets for Reduction of Greenhouse Gas Emissions
Scope 1 and Scope 2Short Term (Every Year)

Medium Term (to Fiscal 2030)

Long Term (to Fiscal 2050)

Energy usage in Japan: (1)%compared to the prior fiscal year(55)% compared to fiscal 2019

Net zero

Future Efforts
For Category 11 (Use of sold products), Category 13(Downstream leased assets) and Category 15 (Investments) ofScope 3, which are expected to comprise a majority of theGroupʼs greenhouse gas emissions, we also consider the measurement method and conduct discussions toward disclosure.

Going forward, we will consider the reduction of greenhousegas emissions of the entire Group including supply chains,through visualization of the status of greenhouse gas emissions
related to business transactions, formulation of the policy for
sectors with high greenhouse gas emissions and the transaction
plan, and other means.

Realize the Circular Economy
Leveraging an extensive track record cultivated in the usedmarket over many years, the Group buys and sells a variety of
pre-owned machinery and equipment for semiconductor
manufacturing, and pharmaceuticals and medical devices. We
also provide services to accurately determine the value of idle
equipment and propose its effective utilization and to effectively utilize office equipment (purchase, data erasure, re-sale).
The used market has also benefited from technologicaladvances that facilitate the distribution of good quality equipment and facilities, and a growing number of customers arelooking to adopt used equipment from a cost-cutting perspective. However, with the speed of new product development
accelerating, the production side is facing issues with cachingsurplus equipment and reducing the costs of installing new
equipment, and, at the same time, companies are facing
growing demands to reduce waste generation.
The Mitsubishi HC Capital Group uses its nationwide
information network to propose the effective utilization ofused equipment and facilities in ways that properly reflectmarket value, contributing to the reduction of waste andworking to realize a circular economy that fully utilizes thenew value of assets.
We are also working on the circulation of plastic
resources to comply with the Act on Promotion of Resources
Circulation for Plastics, which went into effect in April 2022.
Meanwhile, we are working to reduce food loss and CO2
emissions in Japan by providing sales support, financing for
installation, and operational support for unattended vendingmachines known as “Fuubo Food Loss Reduction Boxes”
provided by ZERO Co., Ltd.

U-MACHINEʼs Resource Center helps make a circular economy
a reality by servicing end-of-lease properties.

MITSUBISHI HC CAPITAL INTEGRATED REPORT 2023

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