May 23, 2023
AISAN INDUSTRY CO., LTD.

Information Disclosure Based on the TCFD Recommendations
Information Disclosure Based on the TCFD Recommendations
Recognizing that climate change is one of the material issues facing management, the Aisan Group endorsed therecommendations of the Task Force on Climate-related Financial Disclosures (TCFD) in May 2022 and made disclosuresaccordingly.
We conducted a scenario analysis based on the TCFD concept, expanding the coverage of the analysis of the risks andopportunities that will have an impact on management, business, and financial performance from Aisan Industry (nonconsolidated) to the entire consolidated Aisan Group. We also assessed the impact on finance.
In line with this action, we are promoting initiatives for the mitigation of risks and the creation of opportunities related toclimate change based on the Medium-term Management Plan. We will also strive to enhance disclosures to stakeholders, suchas by extending the timeframe covered by the analysis.

Governance
The Sustainability Committee, which is chaired by the President, verifies the directions and appropriateness of all issues
concerning sustainability, including climate change. The TCFD Committee, a subcommittee of the Sustainability Committee,
meets at least once every three months to formulate, execute and manage plans related to climate change issues.
The Sustainability Committee convenes meetings twice a year to receive reports from the TCFD Committee and the othercommittees and deliberate on their contents. Key outcomes of these deliberations are then reported to the Board of Directors
and the Management Advisory Council/Management Council.

Board of Directors
Report*Other committees

Supervise

Management Advisory
Council/Management Council

Carbon NeutralityCommittee
Health and SafetyCommittee
Work Style ReformCommitteeReport / Instruct

Sustainability Committee(Chair: President)
Individual divisions andsubsidiaries

Review

Review

ReportTCFD Committee

ReportOther Committees*

BCP Committee
Governance Committee

Strategy
Assumptions of scenario analysis
To identify the financial impacts of climate change, the Aisan Group conducted a scenario analysis of its impacts on businessas of 2030, a potential milestone year in the popularization of vehicle electrification. This analysis covered the consolidated
Aisan Group. We adopted several scenarios for the analysis, assuming temperature rises of 1.5°C/2°C and 4°C, with the aim ofenhancing sustainable competitiveness by appropriately addressing an uncertain future. For these two scenarios, we mainlyreferred to the World Energy Outlook 2022, produced by the International Energy Agency (IEA), in the analysis of transition risks,
and the Sixth Assessment Report (AR6) of the Intergovernmental Panel on Climate Change (IPCC) in the analysis of physicalrisks.
4°C scenario

1.5°C/2°C scenario

Increase in physical risks• Expansion of damage due to extreme weather• Unless measures exceeding the current ones in place
are taken, 3.3°C to 5.7°C warming above pre-industrial
levels by 2100 can be expected

Increase in transition risks• Increase in risks due to policy and market changes• If stringent measures are taken, 1.0°C to 2.4°C
warming above pre-industrial levels by 2100 can beexpectedTransition risks

STEPS(Stated Policies Scenario)
Scenario that reflects energy policies announced byindividual countries

NZE(Net Zero Emissions by 2050 Scenario)
Scenario to achieve global net zero emissions by 2050APS(Announced Pledges Scenario)
Scenario that reflects aspirations declared by ambitiouscountries

Physicalrisks

SSP* 5-8.5
Maximum emissions scenario without implementation ofclimate policy, under fossil fuel-dependent development

SSP* 1-1.9
Scenario to curb the temperature rise to no more than
1.5°C under sustainable development

Assumed world

Representative scenario*SSP: Shared Socio-economic Pathways

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Society envisaged in the scenarios
In the 1.5°C/2°C scenario, we anticipate the implementation of more sophisticated policies and legal systems aimed at thedecarbonization of society, including the introduction of carbon taxes and tougher greenhouse gas emissions restrictions. In ourown automotive industry, we expect to see stronger calls for the reduction of CO2 emissions throughout the product life cycle,
which spans the raw materials stage through vehicle operation and on to end-of-life disposal, in addition to emissions during themanufacturing process. Consequently, the market shares of battery electric vehicles (BEVs), plug-in hybrid electric vehicles(PHEVs), and fuel cell vehicles (FCVs) are expected to rise.
Meanwhile, in the 4°C scenario, we assumed that, as global warming progresses, natural disasters will become more
frequent and severe, resulting in supply chain disruptions, temporary halts of production, and other impacts.
Anticipated risks and opportunities associated with climate change
We have compiled the risks and opportunities for the Aisan Group given their importance to our stakeholders and to the Aisan
Group based on our vision for society under the scenarios. In fiscal 2023, we conducted interviews with Aisan Group companies,
including our overseas subsidiaries, to identify the risks and opportunities based on the situation in each country and region andthe nature of their respective businesses. We have assessed the respective financial impact in fiscal 2030 of those identified
risks and opportunities that we deemed to be of particular importance, and we are now working on the mitigation of risks and thecreation of opportunities.
■ Climate change risks, opportunities, and responses
Category

Details
Greenhouse gas
emissions regulations

Strengthened energy policies andincreased manufacturing costs due tothe use of renewable energy

Increased production costs due to theimplementation of carbon tax

Policy/Regulation

Impact level

Aisan Group’s response

Medium• Thorough elimination of wastefulness• Global roll-out of improvements made in Japan

MediumTransition risks

Introduction of carbontax• Improvement of energy efficiency• Introduction of renewable energy• Generation of clean energy by ammonia/hydrogen
power generation, etc.

Increased procurement costs due topassing on of carbon tax to prices

Medium• Adoption of low-carbon materials• Waste reduction and recycling• CO2 improvement activities with suppliers

Technology

Increased demand forlow-carbon products

Delay in recovering investment costs
due to delay in transition in new areas

Large• Business planning for future products andintensive input of resources considering
environmental changes

MarketShift in customers’values

Decreased sales of engine parts due tothe prevalence of battery electricvehicles (BEVs)*1

Large• Business development in new areas that
contribute to decarbonization leveraging
technologies and strengths

Decline in corporate value
Decline in customer trust

Medium

• Improvement of the score by rating agency
through CO2 reduction initiatives (CDP, etc.)

Temporary production halts caused bysupply chain disruptions

Medium• Further strengthening of BCP structure Improvement of inventory management
precision
 Continuation of supply chain BCP

Increase in share of core products

Large• Establish advantages over competitors
 Switch to next-generation elite products
 Strengthening of manufacturing

Increased revenue from hydrogen
supply units following expanded
utilization of hydrogen energy

Medium• Promotion of the development of products fornext-generation FCVs/hydrogen engines

Increase in opportunities to enter
markets for electrified products due toincrease in electric vehicles(BEV/PHEV/FCV)*1

Medium• Provision of lightweight, high-efficiency, and lowcost systems/components• Product development leveraging proprietarytechnologies• Product development for compact mobility

Expanding business opportunities in
new areas of carbon neutrality

Medium• Research and development of new technologies
and new areas
 Components for ammonia supply system
 Compact FC module

Small• Development of products for vehicles applying
existing technologies (FFV*2 technology)
 Products compatible with synthetic
fuels/biofuels

Insufficient

Reputation environmental initiatives
and disclosures

Physicalrisks

AcuteTechnology

Opportunities

MarketMore frequent andsevere natural disasters

Acceleration ofelectrification andindustry restructuring

Expansion anddevelopment of lowcarbon products

Growing demand for products that
contribute to lower emissions[Impact level] Impact on single-year operating profit: Large, ¥2.0 billion or more; Medium, ¥0.1 billion to less than ¥ 2.0billion; Small, less than ¥0.1 billion[Aisan Group’s response] We have incorporated initiatives for mitigating risks and creating opportunities related toclimate change in the Medium-term Management Plan announced in November 2022 and are promoting activities
accordingly. For details, see the following website: https://www.aisan-ind.co.jp/en/ir/221129_en.pdf*1*2

Assumption of the number of units
is calculated based on the 2°C
scenario
FFV: Flexible-Fuel Vehicle

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Risk Management
In the Aisan Group, the Sustainability Committee comprehensively manages risks, including climate change risks that may
have a major impact on management as reported by the TCFD Committee, as well as other risks that also may have a major
impact on management reported by other individual committees.* Risks requiring a priority response are identified based on
the extraction, analysis, and assessment of risks reported by the individual committees, after which the departments in charge
take the lead in implementing risk reduction measures.
The individual committees check the progress of various measures and the latest status of risks and report their findings tothe Sustainability Committee. The Sustainability Committee provides direction and supervision regarding risk management
based on these reports.
* Individual committees: Carbon Neutrality Committee, Health and Safety Committee, Work Style Reform Committee, BCP
Committee, and Governance Committee

Metrics and Targets
In developing the Medium-term Management Plan, the Aisan Group revised the targets significantly to strengthen its
environmental management, which balances the reduction of greenhouse gases with corporate growth, and to fulfill its
corporate social responsibilities aimed at achieving carbon neutrality in 2050 and building a sustainable, recycling-orientedsociety.
Specifically, we changed the benchmark year from fiscal 2013 to fiscal 2019 and added Scope 3 to the targets.
This means that our target for reducing CO2 emissions (Scope 1, 2, and 3) in fiscal 2030 is a 50% reduction compared withfiscal 2019. In addition, initiatives for CO2 reduction have been extended to the supply chain and accelerated from theperspective of life cycle assessment (LCA), in which environmental footprint is assessed across the entire product life cycle.
Major carbon neutralitytTargets for 2030

(2) Scope 3: Aisan Industry (non-consolidated) emissions
TargetCategory

Description

FY2021(1) Scope 1 & 2

50% reduction*1

1

Purchased goods and services

146,138 t(2) Scope 3

50% reduction*2

2

Capital goods

13,386 t

Renewable energy

20% usage

36,241 t

Energy creation

5％*3

Fuel- and energy-related
activities (not included in scope
1 or scope 2)

4

Upstream transportation anddistribution

326 t

5

Waste generated in operations

763 t

6

Business travel

414 t

7

Employee commuting

8

Upstream leased assets

-50％

9

Downstream transportationand distribution

52

10

Processing of sold products

11

Use of sold products

12End-of-life treatment of soldproducts

13

Downstream leased assets

14

Franchise

15

Investments

Category

Item

CO2 emissions
reduction(vs. 2019)
Clean energy*1 Excluding portion of FPM business integration*2 Categories and scope are under consideration*3 Self-sufficiency of energy other than renewable energy(1) Scope 1&2* Aisan Group global emissions

千Thousand tons

120

*Scope 2 is based on market standard

104

100
80

89

9388

Scope 260
4020
Scope 102019
Benchmarkyear

2020

2021

2022

2030
Targetyear

1,466 tNot covered

Note: FY2022 data is still being calculated

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