Introduction

The environmental management of
the IDEC Group

Climate change
Major sustainability KPIs (FY2023-2025)

(Cumulative total since FY2020)

Resource-saving(materials)

Reduction of materials used
Reduction of packaging materials,
paperless and label-lessSpace-saving,weight reduction

Miniaturization and weight reduction
compared to existing products

Reduction of
man-hours

Improvement of production efficiency

PLC
3.7W

+

Operator interface
5.0W

8.7 W

“FT2J series”

5.0 W

Space saving

Adoption of recyclable materials

Adoption of eco-friendly Application to components, packaging
materials (parts)
materials, and transportation materials
Ease of productdismantling

Design with no adhesive,screw reduction

Longer service life

Adoption of long-life parts, ease ofmaintenance

Depth:

approx.

1/3

Operator interface + PLC + DIN
rails
24.4mm
75.7mmApprox. 104 mm“FT2J series”

35.3 mm

Data andCompany Overview

55 IDEC Report 2024

40%
reduction

Energy-saving product design

Resource-saving(packages, packaging
materials, etc.)

Recycling

Reduced power consumption

Foundation for
Value Creation

 enewable energy utilization ratio 18%
RReduction ratio of CO2 emissions 24% (vs. FY2020)
Reduction ratio of industrial wastes 24% (vs. FY2020)
Cumulative ratio of enhanced eco-friendly products
60% or higher
to total new products

Improvement ofenergy saving(high efficiency)

Eco-friendly points

Business Strategy

Related material issue

Evaluation items for eco-friendly products (excerpt)

The “FT2J series” integrate a programmable logic controller(PLC) and a operator interface to create a rational automation
system. To provide value to customers in terms of environmental
consideration, we consider reducing power consumption
through integration, space-saving, and reducing the numberof man-hours required for wiring by adopting push-in terminals.

Initiatives for
Realization of Vision

As a company that aims to create an optimum environment
for humans and machines, and to achieve the safety, ANSHIN,
and well-being for people around the world, the IDEC Group’s
Environmental Policy is to make the conservation of the global
environment a top priority in all aspects of its business activities,
and to pass on a sustainable society to future generations.

Controller with operator interface “FT2J series”

Value Creation Story

Realize a sustainable society

Since the founding in 1945, the IDEC Group has been developing
its business with consideration for the environment, under the“Save all” policy introduced in 1982, based on the concept ofsaving and reducing. We revised the Procedure Manual for theDevelopment of Eco-Friendly Products in FY2023 and are working
to develop products with a focus on environmental considerations
from the first stage of the product development process.
The procedure manual evaluates the degree of environmental
consideration based on IDEC’s own criteria, such as resource
conservation, energy saving improvement, and longevity. Basedon these criteria, we develop products with the aim of achieving
decarbonization. Products evaluated as having a high degreeof contribution are certified as eco-friendly products anddisclosed in catalogs and other media by affixing IDEC’s own
original eco mark, in accordance with ISO/JIS Q 14021 (Type II).
One of our targets for FY2025 is to achieve a cumulative
ratio of 60% or higher of enhanced eco-friendly products
among new products launched in FY2020 or later. The
cumulative achievement rate up to FY2024 was 73.5%.

Examples of enhanced eco-friendly products

Message

Environmental
Initiatives

In addition to a vision envisaging the achievement of carbon
neutrality by 2050, in April 2024, the IDEC Group renewed
its Environmental Policy, which summarizes its corporate
philosophy and action guidelines for environmental issues.
As the impact of climate change on the global environment
increases, not only is there an increase in the level of interest in
climate change from various stakeholders, such as investors,
shareholders, customers, and local residents, but also an
increase in social demands and expectations of companies
with regard to environmental issues. In view of this, we aim toachieve sustainable growth while confronting societal issues
such as global warming and response to climate change as a
global company, based on the vision, philosophy, and action
policy of our Environmental Policy.
Specifically, we have set sustainability KPIs, with
implementing initiatives to reduce environmental impact as
one of our basic strategies and are implementing an action
plan that reflects our migration opportunities to achievethese targets.
At the same time, the IDEC Group has set milestones of
reducing CO2 emissions of Scope 1 and 2 by 24% by FY2025
and 50% by FY2031 (compared to FY2020), which are on
the path to achieving carbon neutrality by 2050. Through theefforts of the entire Group, we are pushing forward steadily,
beginning with what we can do.

Development of eco-friendly products

Introduction

Environmental Initiatives

IDEC Environmental Policy
Climate change initiatives

Environmental Management and1 Environmental Management System

2 Realization of a Circular Society

56 IDEC Report 2024

3 Compliance with Laws and Regulations
We will comply with environmental laws, ordinances, agreements
related to our business activities, and international environmental
standards and CSR rules, fulfilling our social responsibilities.

5 Reduction of Greenhouse Gas Emissions
We will aim to reduce greenhouse gas emissions throughout thevalue chain in addition to promoting energy-saving, introducing
renewable and next-generation energy sources, utilizing low-carbon
technologies, and achieve carbon neutrality by 2050.

6 Communication and Information Disclosure
We will value dialogues with diverse stakeholders, including
employees, customers, investors, business partners, and the
local community related to our business activities, and will engage
in active information disclosure in accordance with international
disclosure standards.

7 Coexistence with Nature
For achieving a society that coexists with nature, we will evaluate
dependencies and impacts on biodiversity in our businessactivities, consider the local ecosystems, and reduce negative
impacts throughout the value chain.

2023

14,565

2020

2021

2024

(FY)

Communication and information disclosure
Environmental training

4 Provision of Eco-friendly Products and Services
We will strive to reduce environmental impact from the design anddevelopment stages of products, to manufacturing processes,
logistics, and packaging materials to provide more eco-friendly
products and services to society throughout the lifecycle fromprocurement of raw materials to product use and disposal.

2022

23,066Further information is available here.

https://us.idec.com/csr/environment/
inhousesolarpower

Environmental energy business
Since 2012, a Group company—IDEC SYSTEMS & CONTROLSCORPORATION—has been developing a renewable energy
business that provides a one-stop service, from theconstruction of solar power plants to after-sales support. In
particular, the design, construction, and equipment sales
business for self-consumption solar power generationequipment using the roofs of buildings such as factories,
warehouses, stores, and facilities—introduced increasingly
over the past few years—will contribute to the businessenvironment by reducing CO 2 emissions with the use ofgreen energy.
In addition, through provision to surrounding areas as an
emergency power source in the event of disasters, we canachieve an unseen contribution to local communities in theform of safety and ANSHIN. In this way, we aim to create abetter society through our business activities.

In addition to an explanation of biodiversity and living creaturesin line with the four areas (air, freshwater, sea, and land) definedby the Task Force on Nature-Related Financial Disclosures(TNFD) utilizing the Group’s intranet, environmental education
conducted internally in FY2024 featured IDEC’s enhanced
eco-friendly products, as well as practical examples for
estimating environmental investments using internal carbon
pricing (ICP). Original contents created by the Environmental
Strategy Committee are available internally in both Japaneseand English. The number of departments engaged in e-Learning
as an environmental goal under ISO 14001 is increasing, andthe number of participants is increasing every year, with somedepartments having all members participate in e-Learning.
As for environmental events, during Sustainability Month—which is held globally every
October—IDEC held a photo
contest in FY2024 under
the theme of measures tocombat global warming andreceived entries from IDECGroup employees aroundthe world.
Environment e-Learningon the intranet

Data andCompany Overview

We will promote following initiatives to realize a circular society.

 e will prevent emissions of substances that deplete ozone
Wlayers into the atmosphere.

24,211

Foundation for
Value Creation

We will operate an environmental management system andpractice environmental management under the commitmentof top management.
In those practices, we will aim to raise environmental awarenessof our employees through environmental education and work to
resolve environmental issues with our suppliers and customers.

 e will conduct a proper management of chemicalW
substances to prevent environmental pollution.

We are working to reduce environmental impact by replacing
conventional electricity with electricity derived from renewableenergy, by accelerating the introduction of self-consumption solar
power generation equipment at offices and factories in Japanand overseas. In addition to existing power generation facilities,
IDEC (non-consolidated) has started constructing power at one
new facility in FY2024 and plans to add two in FY2025.
In Japan, equipment installed in two locations at IDECFACTORY SOLUTIONS CORPORATION factory and head office
are in operation. Globally, self-consumption solar power generation
is in operation at our USA office and factory, and our UK factory.

23,21519,092Business Strategy

Action Guidelines

We will reduce and recycle wastes.

Initiatives for
Realization of Vision

As a company pursuing to create the optimum environment
for humans and machines and to achieve safety, ANSHIN,
and well-being for people around the world, the IDEC Group
recognizes the conservation of the global environment as a toppriority in all aspects of our business activities while committing
to connecting a sustainable society to future generations.

We will optimize water resources utilization.

(Units: 1,000 kWh)

Expanded adoption of self-consumption
solar power generation

Value Creation Story

Philosophy

 e will reduce energy and raw materials usage and utilizeWrenewable resources.

Message

The IDEC Group renewed its Environmental Policy
in 2024. The new Environmental Policy reflects newsocietal issues that have been gaining attention inrecent years, such as responding to climate change by
reducing greenhouse gas emissions and developing
eco-friendly products, building a recycling-oriented
society, disclosing environmental information basedon international disclosure standards such as IFRS,
and addressing biodiversity.
With this Environmental Policy as a guideline forfulfilling corporate social responsibilities and societal
demands from diverse stakeholders, the IDEC Groupwill continue working to improve environmental issues
more than ever before.

The amount of solar power generation in
the environmental energy business (Japan)

Introduction

Environmental Initiatives

External
environmental evaluations

Information disclosure in the EU (APEM, France)

Biodiversity Initiatives

Initiatives to reduce plastic wastes
The Group is working to reduce the amount of plastic waste
and make effective use of resources. We started to reuse
regrinding plastic materials generated in the molding process
at the beginning of our manufacturing process by crushing /grinding and granulating them at two additional factories inJapan following overseas sites in FY2024. Moreover, we tested
and evaluated reground products and increased the number ofmaterials and items, which resulted in approximately 3.6 tonsof reusing resin materials at two factories in Japan in FY2024.

Framework of the environmental governance
Board of Directors
General Management Committee
Environmental Activities
Working GroupTop Management Meeting

Sustainability Committee
Chairperson: CEO

Global Environmental
Management System (GEMS)Management Committee

Green ProductsWorking Group
APEM Working Group

Further information is available here.

https://us.idec.com/csr/environment/circulation

Environmental Strategy
Committee
Chairperson: Senior Executive Officer
in charge of Environment

EMS-certified
organizations

Organizations
complied with
GEMS regulations

Global Environmental
Management System(GEMS)

Data andCompany Overview

57 IDEC Report 2024

Creation of a circular society

For each of the climate-related risks and opportunities identified
by the Environmental Strategy Committee, we considered
the likelihood of occurring, degree of impact, and amount ofpotential financial impact, and compiled them into a risk andopportunity map.
The identified results and risk items that have beenassessed as important in our mapping are managed byreferring to an integrated risk map for the IDEC Group. They
are also reflected in the risks and opportunities associatedwith natural capital, one of our material issues.
The Environment Promotion Department lists environmental
risk management items on an annual risk management table,
specifies performance indicators, and reports the state ofachievement to the Risk Monitoring Subcommittee.

Foundation for
Value Creation

We analyzed and assessed the IDEC Group’s biodiversity
risks to define indicators that can be used as a reference formonitoring biodiversity performance and the impact of the
IDEC Group’s business activities on biodiversity in FY2024.
The Biodiversity Risk Filter—developed by the World Wide
Fund for Nature (WWF)—was used as a risk assessment tool
to quantify biodiversity risks by country where major IDEC
business sites are located. We also identified the top ten
biodiversity risk indicators for the Group as a whole.

https://us.idec.com/csr/environment/nature

Risk management

Business Strategy

Nature initiatives

Further information is available here.

The Environmental Strategy Committee, a specialist
committee of the Sustainability Committee chaired by theCEO, plays a key role in our efforts to disclose climate-related
financial information.
The Environmental Strategy Committee is composed of
employees from various departments and meets monthly
under direction by the Senior Executive Officer in charge of theEnvironment. Decisions made by the Environmental Strategy
Committee are discussed by the Sustainability Committee,
reported to the Top Management Meeting for approval, thenreported to the Board of Directors for final approval.
Progress on the goals set in the medium-term management
plan started in 2022 are reviewed at bimonthly meetings, andresponse measures are discussed if things are not progressing
as planned. In FY2024, we also introduced a Performance
Share Unit (PSU) system, as a medium-term incentive, underwhich restricted common shares equivalent to up to 10% ofcompensation are allocated to directors and executive officers.
Non-financial indicators used in the calculation of PSUs include
CO2 reduction ratio.

Initiatives for
Realization of Vision

APEM—which operates mainly in EMEA as the IDEC Group—
has established a team to work on the requirements of the
Corporate Sustainability Reporting Directive (CSRD) and ispreparing for the disclosure in 2026. APEM has responded
to EcoVadis, which the IDEC Group has addressed since
FY2023, as a non-consolidated Group company in Europe,and is taking various measures to establish double materialitythat will be required in the future.

GovernanceValue Creation Story

We have installed a rainwater storage tank in the basement of
our head office building. Stored water is used effectively for
purposes such as watering to the head office courtyard and as
sprinkling water to cool surfaces down when the temperaturerises. The courtyard of our head office has been certified as“Excellent Stage 2” in the Social and Environmental Green
Evaluation System (SEGES) OMA category.
By installing a purification system that uses ozone in thewastewater system of the head office cafeteria, and treating
the oil contained in the wastewater, we also expect to reduce
the environmental impact of domestic wastewater (sewage).

Information disclosure based on the IFRS Sustainability Disclosure Standards
Message

IDEC was rated a “B” score at the Climate
Change Report 2023, disclosed by CDP
in February 2024. IDEC’s “B” score for the Climate Change
in 2023 is at the management level in CDP’s classification,
which means that “the company understands its environmental
risks and impacts and takes actions on climate issues.” IDEC
expressed our support for TCFD in 2021 and started to disclose
climate-related financial information in 2022. We are addressing
initiatives for achieving carbon neutrality in 2050.

Initiatives to conserve water resources

Risks List
Category

Risks and opportunities

C/D osition environmental strategy as one of the priority items in the medium to long-term plan, set materiality KPIs relating to thePenvironment, such as increasing the cumulative ratio of enhanced eco-friendly products among new products, and check progress.
Promote to develop technology on a continuing basis relating to consideration and introduction of eco-friendly packing
materials and components.
Engage in regular dialogues with investors and disclose appropriate information through IFRS and CDP, etc.

Transitionrisk

3

Delay relative to competitors in
the transition of existing and new
products to low-emission/
low-carbon technologiesC ystematically incorporate technologies that we do not have and integrate them with our core technologies through long-term
Scollaboration with other companies.
Obtain and respond to regulatory information appropriately.
E xpand operating temperature products with a range of temperatures that can be used in warm and cold regions.

4

Tendency of carbon pricing

B/E educe the impact of rising energy purchase prices through the planned introduction of self-consuming renewable energy.
RPlan and implement planned upgrades to energy-saving equipment.
Reduce indirect costs through efforts to save energy and improve the operating rate of factories.
Drive decarbonization activities through the introduction of ICP.

5 atural disasters (heavy rain, hail,Nsnow/ice, cyclones, hurricanes,
typhoons, floods, inundation,
earthquakes) and temperature riseD nhance BCP measures to enforce the company’s resilience.
E
Assess and review supply chain risks.
Prepare hazard maps of manufacturing sites and find potential risks.
Formulate recovery plans for each site and develop manuals for employee work procedures.
Change manufacturing sites to be multi-skilled for flagship products.
Ensure that employees affected by disasters are fully aware of how to confirm their safety as soon as possible.

Technology

Current
regulations

Urgent /chronic

Virtually certain

More likely
than notVery unlikely

Opportunities List
Category

Item1

Magnitude of impact

3

Potential
financial impact
Moderate

2
4

10–30
million yen
100–300
million yen

B2 hift to alternative materials /S
diversification / new technologies

3Transition to distributed energy
generation and new market entryA evelop environment-related businesses such as solar power generation for new markets.
DInnovate our environmental business, using the response as an opportunity.
Enter into new markets using our new business as a door opener.
Develop products utilizing HMI and sensing technology, enhance product line-up, and propose problem-solving solutions
based on the needs of new markets.
Adapt IDEC products to the power specific specifications by new energy sources.

1.0–3.0
billion yen

Likelihood

Detailed Risks List / Detailed Opportunities List

58 IDEC Report 2024

Products andservices

Participate in the renewableenergy program and adapt toenergy-saving measures.

A: Increased sales through entry into new and developing markets B: Increased sales as a result of increased demand for products and services C: Reduction of indirect costs (operating expenses)

Data andCompany Overview

B reakaway from prolongation of our conventional technologies.
BEnhance software and systems-related technologies by promoting M&A and business collaborations, etc. as well as adoption
and development of human resources.
P romote the incorporation of new technologies to respond to diverse needs through partnerships and collaborations
with other companies.
Foster a corporate culture of well-being.
Develop products utilizing HMI and sensing technologies and propose solutions through systematization and packaging.
Develop new products to meet the demands for market well-being and promote proposals for solutions.
Promote safety, ANSHIN, and well-being to the world.
Enhance line-up of environmental tolerance products.

Foundation for
Value Creation

Extremely
low

Shifting consumer preferences
Resource
efficiency

0.3–1.0
billion yen
5

A/B

Responses

 ccelerate technology innovation of flagship products based on environmental aspects as well.
AApplied research of easy recyclable materials for products.
Develop products based on the assumption of recycling.
Make unconstrained efforts to reduce packaging wastes.
E xpand environment-related services business.
Secure a first-hand advantage by accelerating investment in development.
Provide low-emission products and services throughout the life cycle, based on the concept of developing eco-friendly
product we have currently addressed.

Business Strategy

1

Potential financial impact

 emand for low-emission products
Dand a diverse variety of new
products and services throughR&D and technological innovation

Initiatives for
Realization of Vision

 rowing environmental awarenessGamong customers and investors

Value Creation Story

2

Opportunities2 ransfer costs in response to price increases by continuously mutual understanding with suppliers and customers.
TReduce manufacturing costs in anticipation of medium to long- term increases in the cost of raw materials and reduce costs
through planned product redesign and introduction of alternative parts and materials.

Increase in material costs

A: Increase in direct costs B: Increase in direct and indirect costs C: Reduced sales due to decreased demand for products and services D: Reduced sales due to decreased production capacity E: Increase in capital expenditure

Extremely
high

3

B/E

1

Mapping of climate-related risks and opportunities

1

Responses

MarketPhysical
risk

Risks

Potential financial impact

Message

In an effort led primarily by the Environmental Strategy
Committee, we have identified risks and opportunities that
could reasonably be expected to affect the outlook of the
IDEC Group in reference to the risks and opportunities itemsof the CDP Climate Change Questionnaires, one of the global
standards for environmental information disclosure. Referring
to and considering the applicability of the industry-specificdisclosure topic (Electrical & Electronic Equipment industry) as
defined in the IFRS S2 Industry-based disclosure requirements,
we identified transition risks and physical risks, impacts ofclimate-related risks and opportunities that can reasonably be
expected to occur over any short to long-term period, potential
financial impacts, and defined timeframes.

Item

Introduction

Environmental Initiatives

Introduction

Environmental Initiatives

According to the International Energy Agency’s World Energy
Outlook 2023 (WEO2023), while the global energy situation
has remained unstable since 2020, investment in clean
energy has risen by 40% since 2020, and the share of electricvehicles in total global vehicle sales has increased five times
in three years, from one in 25 vehicles sold in 2020 to one
in 5 vehicles in 2023.
WEO2023 also describes that the transition to asustainable energy system is progressing, although thepath to a 1.5°C scenario will be difficult. It is recognizedthat the emergence of new clean energy sources, led by PVsolar power generation and electric vehicles, will be key toachieving 1.5°C.
Based on these conditions, the IDEC Group’s selection
scenarios for FY2024 are the same as in FY2023, and thetransition risk scenarios are the WEO2023 STEPS (2.6°C
scenario) and NZE (1.5°C scenario). For our physical risk
scenarios, we adopted RCP2.6 (2°C scenario) and RCP8.5(4°C scenario) of the IPCC Fifth Assessment Report.

In terms of CO 2 emission reductions, in our medium-term
management plan we have set the targets of reducing CO 2
emissions by 24% in Scope 1 and 2 by FY2025 and 50% by
FY2031 (compared to FY2020. Internal Carbon Pricing (ICP)
was introduced in FY2023 and is priced at 10,000 yen/ton
in FY2025. At present, the impact of ICP on environmental
investment decision-making is not yet large enough, but

Energy-related CO2 emissions in each WEO scenario(2010 – 2050)

CO 2 emissions

IDEC (consolidated)(Emission unit: t-CO2)

Scope1

Scope2

Scope 3
upstream

Scope 3downstream

FY20201,152

10,791--

FY2021

948

11,390--

FY2022897

12,146--FY2023916

10,373

213,913870,694

FY2024

609

8,966

184,599

634,324(Gt CO 2)

CO2 emissions (Scope 1 and 2)

40
STEPS

30

20
APS

Return On Carbon (ROC)IDEC (consolidated)

Emission intensity (kg-CO2/million yen)
Scope 1: Emission unit (t-CO2)
Scope 2: Emission unit (t-CO2)

11,943

12,338IDEC (consolidated)(million yen/1,000 t-CO 2)

1,245

13,043
11,289

10

0
2010

2020

2030

2040

205

Foundation for
Value Creation

9,575
NZE

Business Strategy

The IDEC Group considers environmental strategy to be an
important part of its business strategy, and its transfer plan isreflected in the medium-term management plan. Specifically,
we have set metrics and targets for reducing the amount of
CO2 emissions to achieve carbon neutrality, and establishedsustainability KPIs under the medium-term management plan,
together with other environmental targets.
As part of our value chain responses, we have established
CSR Procurement Guidelines and Green Procurement
Guidelines, and we continue to request the cooperation of
suppliers in reducing our environmental impact every year.
In terms of our business, we are working systematicallyto improve the business contribution of environment-related
business activities, such as the development of eco-friendly
products, and the environmental energy business. We therefore
consider the analysis of risks and opportunities to be an
important process in incorporating environmental strategies
into our business strategies. In considering the climate-relatedrisks and opportunities, the Environmental Strategy Committee
identifies items that could reasonably be expected to impact
the company’s prospects, based on factors that could betransition opportunities for the company.
Next, we consider and compile a list of the current
and predicted future impacts of each specified item on the
IDEC Group’s business model, along with future responses.
Moreover, we calculate the potential impact on our business,the cost of responding to risks, and the costs of realizing
opportunities. The contents of these considerations will bereflected in our medium to long-term management plansin stages and incorporated into more specific action plans.
As for the development of eco-friendly products, oneof our core environment-related business activities, we willfurther spread the necessity and importance of such products
in relation to business contribution, as well as using transition
opportunities to create business opportunities for eachdepartment more than ever.

the Environmental Strategy Committee is working to raiseawareness within the Group by introducing model cases of
ICP utilization.
As for the CO2 emissions of FY2024, the total of Scope1
and 2 decreased from that of FY2023, and we have been able
to reduce it continuously since FY2023 compared to FY2020.
The decrease in sales of FY2024 compared to the previous
year has had a significant impact on the electricity consumptionof factories. However, in addition to the effect of the introductionof CO2-free electricity, the continuous promotion of improving
operating ratios at each factory has had a positive effect on
CO2 reduction. As a result, regardless of the impact on sales,
the electricity consumption per unit of sales is slightly lower
than previous year. However, Return on Carbon (ROC), which
is an indicator of how efficiently profits are earned with fewer
amount of CO2 emissions, decreased from the previous year
due to the decrease in operating profit.
As for the Scope 3, the main items that account for the
majority of it are Categories 1 and 11, which remained the sameas the previous year, but the amount decreased compared tothe previous year, mainly due to the decrease in sales.

Initiatives for
Realization of Vision

Metrics and targets

Value Creation Story

Climate resilience

Message

Strategy

229
184
135

2050

132

(Source: WEO 2023 issued by IEA)

742

394

655

328
2020

2022

2023

2024

(FY)

2020

2021

2022

2023

2024

(FY)

Data andCompany Overview

59 IDEC Report 2024

2021