Information Disclosure Based on TCFD Recommendations

As a company involved with the manufacture of automobiles that directly emit
CO₂, we recognize our response to climate change as a serious management issue. Accordingly, in August 2021 the Group endorsed the recommendations ofthe TCFD. We will analyze the risks and opportunities climate change presents tothe Group’s operations, reflect these in our management strategy and risk management, and appropriately disclose progress in order to contribute to a decarbonized society and aim for further growth.

Governance

We have established the Sustainability Committee, which deliberates on issues related to all domains of sustainability, including
our response to climate change, and manages sustainability for the Group as a whole.
p. 38

Risk Management

Risks and opportunities related to climate change and other sustainability issues are reviewed annually and deliberated uponby the Sustainability Committee. Major risks and opportunities are identified by classifying risks and opportunities arising fromclimate change as “transition risks” or “physical risks” and qualitatively assessing their fiscal impacts.
Identified major risks and opportunities that are physical risks (response to natural disasters) are addressed using targetedmeasures promoted by each functional division and region via the Global Risk Management Committee. Transition risk-related
matters directly linked to business activity will be incorporated into medium-term business plans and business strategies andpromoted in accordance with enacted policies. Items related to sustainability (long-term environmental targets, materiality
KPIs, etc.) will be promoted by each functional division and region via the Sustainability Committee.
Information
gathering
Information
gathering regarding
risks andopportunities related
to climate change led
by each functional
division and region▶

Identification of major risks
and opportunities
Evaluation and analysis based ongathered information, such as thedegree of impact on operations
and the possibility of occurrence,
to identify the Group’s major risks
and opportunities related toclimate change▶

Selection of policies
and measures
Creation of policies andmeasures for risks andopportunities that aredeliberated upon by theSustainability Committee
and presented at a Board ofDirectors’ meetings as necessary
once measures are passed atmeetings of the ExecutiveCommittee▶

Incorporation into strategies and implementation
Identified major risks and opportunities will be handled as follows:• Each functional division and region will promote measures to address natural
disaster risks via the Global Risk Management Committee• Business-related matters will be addressed through incorporation into
medium-term management plans and business strategies• Each functional division and region will promote measures to address
sustainability via the Sustainability Committee

Metrics and Targets

In March 2021, the Group identified the eight material issues (materiality) it will prioritize to help contribute to the creation ofa sustainable world, and it set KPIs and targets for 2030 for each material issue. The Group set long-term environmental targets that include a reduction in CO₂ emissions compared to fiscal 2020 by 50% in 2030 and 100% in 2050, and it is working toachieve them through means such as installing energy-conserving equipment and utilizing renewable energy at each location.
p. 45

15th Medium-Term Management Plan

Medium-term planLong-term plan

Reduction of 25%compared to FY2020

Reduction of 50%
compared to FY2020

Achieving carbon neutrality(FY2024–2026)

CO₂ emissions reduction target(Scopes 1&2)

Maininitiatives(2030)(2050)

Energy conservation
activities

Improving production and business processes, optimizing air conditioning and lighting, upgrading tohigh-efficiency equipment, and enhancing environmental management, etc.

Adoption ofrenewable energy

Installing solar power systems, purchasing renewable electricity, utilizing green electricity certificates, andutilizing power storage batteries, etc.

Raising the electrification
rate

Replacing equipment powered by gas or heavy fueloil, and replacing conventional vehicles with EVs, etc.

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Information Disclosure Based on TCFD Recommendations

StrategyMeasures to achieve carbon neutrality are essential to the realization of a sustainable society. It is expected that governments
worldwide will implement energy regulations to reduce CO₂ emissions and stronger laws, and it is also anticipated that various
regulations related to automobiles will be strengthened. While tighter regulations could be a risk to the Group, addressing
them by focusing our efforts on products and services with outstanding environmental performance, one of the Group’sstrengths, could be an opportunity to expand business operations.
We believe that moving forward, promotion of Group products and services that comply with changing regulations andlaws is not only an effective measure to help control global greenhouse emissions such as CO₂ but also an opportunity forbusiness growth, and we have incorporated this belief into our business strategies.

Analysis of risks and opportunities based on climate change scenarios

A scenario analysis was conducted using the Group’s core automobile business (seats, interior components), and business risksand opportunities were identified. Matters arising from a transition to a decarbonized society, such as tighter regulations andtechnological developments or market changes, and matters arising from the physical impact of climate change, such as acute
extreme weather and chronic temperature rises, are examples of risks and opportunities related to climate change.
The Group classified the causes for various changes in the external environment arising from climate change as “physicalrisks” or “transition risks” and qualitatively assessed the fiscal impacts using the three levels of large, medium, and small toidentify major risks and opportunities. It also assessed the potential impacts of important risks and opportunities, and performed quantitative evaluations based on the assumed financial impact amount. The analysis examined the period up to 2050,
and, in line with the Group’s long-term environmental targets, set 2030 as the medium term and 2050 as the long term.

Scenario analysis

An analysis was conducted using a “4°C scenario” where the physical impact of intensifying extreme weather caused by climatechange is apparent and a “1.5°C scenario” where the effects of a transition to carbon neutrality are evident.
Assumed scenario

Reference scenarios

Assumed state of society

4°C scenario• IEA STEPS (Stated Policies Scenario)• IPCC RCP8.5• I ncreased risk of flooding due to rising sea levels
caused by rising temperatures, stronger hurricanes
and typhoons, frequent torrential rains• I ncreased risk of water shortages due to droughts andthe spread of arid regions and desertification• Harsher work environments due to rising temperatures

1.5°C scenario• IEA NZE(Net Zero Emissions by 2050 Scenario)• IEA SDS(Sustainable Development Scenario)• IPCC RCP2.6•S tronger measures and regulations aimed atdecarbonization (implementation of a carbon tax,
energy conservation/saving measures, ZEV
regulations, policies to promote EVs, etc.)•D evelopment of decarbonization technologies and agreater range of environmentally friendly products

Risks and opportunities related to climate change and related responses

The risks and opportunities judged as having a large or medium fiscal impact on the Group’s operations using a scenario analysis are as follows.
Risk classification
Physical Risks(4°C warmingscenario)

AcuteGovernment
policies
Laws andregulations

Transition risks(1.5°C warmingscenario)

TechnologyMarket

Identified risks

Opportunities(1.5°C warmingscenario)
Products andservices

40

Potential financial impact

Mitigation

Relevant initiatives and indicators

Long[Impact: Large]
The potential decrease in revenue due to a shutdown caused by flooding isestimated to be up to 5 billion yen per affected site.

• E nhancing BCP measures• T aking disaster preparedness measures for productionmaintenance, including replacement parts production, andcoordinating within the Group to enable quick resumptionof operations

Need to adopt renewable energy and increase capital
investment due to stricter regulations

Medium

[Impact: Large]
An estimated investment of around 7 billion yen will likely be required by 2030 for
the transition to renewable energy, including the adoption of solar powertechnology.

• More efficient energy use• Investing in efficient equipment to optimize cost-effectiveness

Higher operating costs due to widespread adoption ofcarbon taxes

Medium

[Impact: Moderate]By 2030, the Group could be paying around 700 million yen in carbon taxes for itsemissions.

• Promoting CO₂ reduction measures (energy conservation, adoption of renewable energy, etc.)• Improving logistics efficiency

Higher R&D costs and greater capital investment to create
low-carbon and electrified products

Medium

[Impact: Large]
Higher R&D expenses are anticipated to make products with low environmental
impact, to improve manufacturing technology, and to develop products for EVs,
along with a corresponding increase in capital investment.

• Expanding sales by enhancing sales activities• Improving product development through co-creation with customers• Enhancing efforts to develop environmental technologies

Higher raw material procurement costs due to carbon taxes
and the need to adopt more eco-friendly materials

Medium

[Impact: Large]
By 2030, the Group could be paying carbon taxes of 40 billion yen on transactions
with suppliers.

• Enhancing supply chain management• Promoting measures to reduce Scope 3 emissions• Improving logistics efficiency• Supply chain restructuring

Medium

[Impact: Large]
The market is expected to shift to electric vehicles and the need to reduce theproduct environmental impact will increase. If the Group is unable to provide
products that meet customer needs, it could see a decline in sales of around 150
billion yen by 2030.

• Accelerating development of products for electric vehicles• Developing processing technology for eco-friendly materials• Building high-efficiency production lines compatible with new materials and technologies• A higher share of major customers’ products• Enhancing efforts to develop environmental technologies

Potential decrease in sales due to suspension of operations atGroup sites caused by extreme weather events such as
typhoons, torrential rains, and hurricanes

Potential drop in sales due to a lack of low-carbon andEV products• S ite development with disaster risk management in mind•D
 isaster risk management across the supply chain• Risk management by the Global Risk ManagementCommittee• Building high efficiency production structures• Long-term environmental goals

Identified opportunities

Medium-orlong-term

Decrease in operating costs due to more efficient production
processes

Medium[Impact: Moderate]
By 2030, energy conservation measures could yield a cost reduction effect ofapproximately 500 million yen.

• Continual promotion of energy-saving measures focused on production equipment• Automation of production processes and development of compatible product specifications• Improvement of production processes by utilizing regenerative energy and self-weight• Building high efficiency production structures• Material issues• Long-term environmental goals

Medium

[Impact: Large]
Enhancing product lines compatible for EVs will likely lead to the acquisition of new
customers and the expansion of commercial rights. By 2030, the resulting increasein annual sales could reach 70 billion yen.

• P roduct development that helps reduce electricity costs•D eveloping products made using plant-derived raw materials• A dopting recycled materials and designs that make products
easy to dismantle for recycling• Securing cabin coordination capacity• Further growth in new businesses• Enhancing efforts to develop environmental technologies

Medium

[Impact: Large]
By enabling product coordination with the entire vehicle interior, and by
developing products that meet new requirements for next-generation vehicles, wewill likely acquire new customers and expand our commercial rights. By 2030, thiscould result in an increase in annual sales of about 35 billion yen.

• C o-creation of technologies and products with companies in other industries for cabin interior coordination• E nhancing system software development

Risk classification
Resource
usage efficiency

Medium-or
long-term

Due to increased demand for low-carbon products, the Groupwill likely sell more seats for EVs and interior components madefrom eco-friendly materials

Increased revenues due to sales of new products compatible
with next-generation vehicles

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Potential financial impact

Mitigation

Relevant initiatives and indicators•D eveloping processing technology for eco-friendly materials•B uilding high-efficiency production lines compatible with newmaterials and technologies• Securing cabin coordination capacity

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