Information Disclosure Based on the TCFD Recommendations
In its Medium-Term Management Plan, the Okabe Group focuses on addressing the Sustainable
Development Goals (SDGs) through management, including decarbonization initiatives, based on its visionof becoming “a global manufacturer that will contribute to resolving global issues by providing
comprehensive solutions.” The Group will proactively pursue initiatives to reduce the environmental impact
of its business activities, aiming to become carbon neutral in the future through actions such as contributing
to zero emissions from construction sites and increasing the absorption of CO2 in the marine business, inaddition to reducing GHG emissions.
Going forward, the Group will continue stepping up such initiatives to help solve the global issues
addressed in the SDGs. It will also make information disclosures in accordance with the TCFD
recommendations and strive for further decarbonization in its business activities.

GovernanceAt the Okabe Group, the Decarbonization Promotion Department under the direct control of the Presidentof the Company evaluates and manages climate-related risks and opportunities. The Company has
established the Risk Management Committee chaired by the Representative Director, President and Chief
Executive Officer. The committee consists mainly of members of management and formulates overall
policies and plans for managing the Group’s risks, including climate-related risks, and promotes risk
management. The Risk Management Committee assesses climate-related risks and other business risks.
The committee primarily assesses risks qualitatively and also assesses them quantitatively. The committeechooses major risks based on its assessment and reports the status of risks quarterly. The committee also
determines strategies necessary from a company-wide perspective and gives instructions about initiatives.
The Risk Management Committee refers and reports its discussions to the Board of Directors. The Boardof Directors functions as a supervisory authority.
When the Board of Directors formulates business strategies and makes management decisions, it holds
comprehensive discussions and makes decisions, considering climate change issues as important factors.
The Board of Directors holds one or more meetings monthly and supervises the Directors’ execution ofoperations. Two Directors of the Board of Directors are conversant with climate-related issues. One of thetwo Directors is an Outside Director who can, from an objective perspective, give advice about andsupervise the formulation of SDGs strategies, particularly strategies on climate-related issues, which will
enhance the Group’s corporate value and the Group’s business strategies and plans to enhance corporate
value in the medium to long term.
Governance flow for handling climate-related issues of the Group
Board of Directors

Supervision of climate-related
matters

Supervision
ReportingAppointment /Dismissal

Risk Management Committee

Advisory body on climaterelated matters

Chairperson: Representative Director,
President and Chief Executive Officer

Chief executive in charge ofclimate-related matters

Reporting

Decarbonization
Promotion Department
Assessment and management ofclimate-related risks andopportunities
Assessment andmanagement

Instruct /Supervise

ReportingOperating Officer↓
Divisions and Group companies-1-Risk Management
The Group has established the Risk Management Committee. The committee reports the status of risk
management quarterly and determines strategies necessary from a company-wide perspective and gives
instructions about initiatives.
To accurately identify risks that could have significant effects on the achievement of business objectives
and business continuity and take appropriate action, the Group has established a risk management system.
In risk assessment, the Group assesses business risks, including climate-related risks, based on “impact”
and “incidence” and then also factors in qualitative assessment and assesses risk importance. In this way,
the Group manages risk. The Group positions risks caused particularly by internal factors, such as risks
caused by new strategies or initiatives, and risks caused by external factors, including large-scale natural
disasters and climate change as major risks and takes steps to mitigate reduce these risks.

Strategy(1) Identification of risks and opportunities
The Group has identified climate-related risks/opportunities that affect the Group’s business. The Groupextracted transition risks/opportunities and physical risks/opportunities in business and assessed theirfinancial impact. The impact was rated on a scale of three levels: large, medium, and minor. Risks andopportunities whose impact is large or medium are as described below.
Risks and
Opportunities

DomainFactors

Impact on Business Operations

Cost increases due to rises in carbon
prices, which will result in rises in raw
materials prices and upstream costs, which
will in turn be passed on to costs
Cost increases due to rises in carbon prices
at the Group’s own buildings and its plants
Increases in renewable energy
Tightening of energy- procurement costs
Regulations saving laws andIncreases in related costs, including costs
regulations
for equipment replacement and investment
Changes in the prices Rises in steel prices due to increases inof fossil resourcesenergy prices and raw materials prices
Increases in transport and storage costs
Marketdue to rises in fuel costs
Changes in logistics
Increases in logistics costs due to rises in
costs
transport service prices resulting fromdecarbonization
Decline in demand for the Group’s products
Availability ofTechnology
due to launches of new low carbon
alternative products
products
Increasing demand
Increasing business opportunities andfor Net Zero Energy
increasing opportunities to sell labor-saving
MarketBuildings and net
methods/products and products related tozero carbon
wooden buildings
emissions buildings
Stronger GHG
Increasing demand for decarbonizedemissions restrictions products and low-carbon products
Regulations
Introduction of carbon Increasing opportunities to sell marine
pricing
products
Introduction of carbon
pricing, tightening ofRegulations
GHG emissions
regulations

Transition
risks

Transition
opportunities-2-

Financial
impact*
Large

Large
MediumMediumLarge
Mediumto large
Large

Large

Large

Large
Large

Chronic

Temperature rise

Acute

Increase in extreme
weather

Physical risks

Chronic

Strengthening of thenational resilience
policyTemperature rise

Physicalopportunities

Acute

Changes inprecipitation patterns
Increase in extreme
weather
Relocation fromdisaster risk areas

Decline in work efficiency in production
processes and an increase in cost for
taking measures
Decline in earnings due to shutdowns offacilities of the Group because of extreme
weather and due to facilities repair costs
Supply chain disruptions
Increasing demand for strengthening
facilities and infrastructures in anticipationof intensifying disasters, increasing demandfor civil engineering work (slope
reinforcement work)
Increasing opportunities to sellmethods/products that will contribute tolabor-saving
Increasing demand for civil engineering
work (slope reinforcement work)
Increase in sales of products, etc. used forpreventing landslide disasters
Emergence of demand for relocation fromlow-lying areas

Mediumto large
Large
Large

Large

Large
Large
Large
Large

* Impact Large: 100 million yen or more; medium: 10 million yen or more and less than 100 million yen;minor (small): less than 10 million yen(2) Setting themes for scenario analyses
For climate-change related risks and opportunities that we identified and organized, we conductedscenario analysis on the following themes which were assessed as having a “high degree of importancefor the Group,” taking into consideration factors such as impact on business, connection with businessstrategies, and level of stakeholder interest.
Transition risks
Business subject to analysis, analysis theme
Analysis theme● Impact of changes in carbon prices related to the Group
Physical risks
Business subject to analysis, analysis theme
Analysis theme● Selection of business sites that will receive priority in examination of the impact of increase in frequencyof meteorological disasters caused by climate change-3-(3) Results of scenario analysis
Transition risks: Impact of changes in carbon prices related to the GroupTo project the impact of changes in carbon prices on future operating cost, the Groupprojected future changes in the Group’s GHG emissions (Scope1 and Scope 2*) under
Description scenarios where the temperature rise is less than 2ºC and other scenarios and analyzedof analysis financial impacts of carbon prices assumed under each scenario.
* Emissions at the Company and its consolidated subsidiaries are calculated (excluding US-based OCM
Manufacturing LLC, which became a consolidated subsidiary in October 2021).

In the analysis, the Group has determined the amounts of activities (GHG emissions, thevolume of renewable energy procured) at the Group in 2030 and 2050 based on the Group’sbusiness plans. The Group has estimated the impact of carbon prices, assuming that the
carbon price per ton of GHG emissions is 18,340 yen in 2030 and 32,750 yen in 2050 inadvanced countries and is 11,790 yen in 2030 and 26,200 yen in 2050 in emerging
economies and developing countries that have declared net zero emissions (declared thatemissions of CO2 and other greenhouse gases will become zero). To evaluate the strengthof the strategy, the Group has also examined to what extent it can reduce the financial impact
by procuring renewable energy power compared with the case where the Group will not takesteps to reduce GHG emissions and energy use.
The Group has determined carbon prices and the emission factor for electricity by reference
to the IEA’s World Energy Outlook 2022 (Net Zero Emissions by 2050 Scenario, Stated
Policies Scenario).
Assumptions External information that is referred to in the analysis:in analysis
1.5ºC scenario
2.6ºC scenario
Key reference
IEA WEO 2022 NZE
IEA WEO 2022 STEPS
scenarios*
Worldview⚫ The world where emissions will
⚫ The world where the rise in global
be reduced in stages for the riseaverage temperature from thein global average temperature
pre-industrial level will be aroundfrom the pre-industrial level to be
2.6ºC in 2100 based on the
1.5ºC or less.
emission pathways according toplans announced by countries.
* IEA: International Energy Agency
WEO: World Energy Outlook
NZE: Net Zero Emissions by 2050 Scenario
STEPS: Stated Policies Scenario
The Group has estimated the financial impact of the introduction of carbon prices on
operating costs.
The Group has found that if GHG emissions are not reduced as of 2030, the financial impact
will be 84 million yen larger under the 1.5ºC scenario than under the 2.6ºC scenario.
Analysis
However, the Group will be able to reduce the financial impact by 46 million yen by reducing
results
GHG emissions chiefly with the use of renewable energy. In this case, the impact of carbon
prices will be limited.
The Group has found that if GHG emissions are not reduced as of 2050, the financial impact
will be 113 million yen larger under the 1.5ºC scenario than under the 2.6ºC scenario.

-4-Impact of carbon prices in 2030

Impact of carbon prices in 2050

160
113
75

1.5ºC scenario
1.5℃シナリオ(Renewableenergyintroduced)（再エネ導入）Strategy

1.5ºC scenario

1.5℃シナリオ

2.6ºC scenario

2.6℃シナリオ

Effects (million yen)

Effects (million yen)

159

47

1.5ºC scenario

1.5℃シナリオ

2.6ºC scenario

2.6℃シナリオ(Note) Under the 1.5ºC scenario, the Group assumes that the emission factor for electricity
procured at the business sites of the Company will be zero (or less) as of 2050 and
the introduction of renewable energy will have no GHG emissions reduction effect.
The Group has set a GHG emissions target of “reducing GHG emissions (Scopes 1 and 2
market-based emissions) 50% from the 2022 level by 2030*” and is actively taking steps toreduce emissions, for instance by promoting the introduction of renewable energy. The
Group assumes that in the 1.5ºC scenario, the cost for introducing renewable energy will beless than carbon prices for GHG emissions to be reduced due to the introduction ofrenewable energy. The Group thus expects that if renewable energy is introduced as planned
as of 2030, the financial impact will be less than that in the case that renewable energy is
not introduced.
* In the Medium-Term Management Plan, NEXT 100 - PHASE2.1, the Group set a target of
reducing GHG emissions (Scopes 1 and 2 market-based emissions) 50% from the 2020 levelby 2030. The target has been changed in 2023, after US-based OCM Manufacturing LLC
became a consolidated subsidiary in October 2021.

-5-

Physical risks: Selection of business sites that will receive priority in an examination of the impact ofincreasing meteorological disasters caused by climate change
To project the impact that increasing meteorological disasters caused by climate change will
Description have on the Group’s business, the Group has examined the possibility of being affected atof analysis its 12 business sites (7 sites in Japan and 5 sites overseas) to select business sites that it
will give priority to in examination of the impact of physical risks.
In the analysis, the Group assessed inundation hazards caused by river flooding and storm
Assumption surges and drought hazards under the RCP 2.6 and RCP 8.5 climate change scenarios bys in analysis reference to public documents and documents provided by experts, etc. and assigned grades
for the period leading up to the middle of the 21st century.
With regard to flooding risk, of domestic business sites, four sites are graded as requiring
monitoring (Grade B or above). Of the four sites, one site is graded as having a large hazard(Grade A). There are no changes in grade due to climate change in the period leading up to
the middle of the 21st century. As for storm surge risk and drought risk, no business sites are
graded as requiring monitoring (Grade B or above).
Of overseas business sites, there are no sites graded as flooding risk requiring monitoring(Grade B or above), and there are no changes in grade due to climate change in the future.
As for storm surge risk, all business sites are graded as having a very low inundation hazard
potential due to storm surges (Grade E). There are no changes in grade due to climatechange in the future. With regard to drought risk, of five business sites, two sites were gradedas risk requiring monitoring (Grade B or above) as of 2015. No business sites were gradedas having a large hazard (Grade A). At Water Gremlin Aquila Company S.p.A in Italy, theGroup has identified a trend toward drought in the future under the RCP 8.5 scenario.
Results of physical risk assessments (12 domestic and overseas business sites)
Grade B or above: Risk requires monitoring. It is desirable to conduct a more detailed risk
assessment.
Number of business sites that are graded as risk
requiring monitoring (Grade B or above)
Flood risk
Present
Middle of 21st century
RCP2.6
RCP8.5
Analysis
Domestic business sites
4
4
4
results(Of 7 sites)
Overseas business sites000(Of 5 sites)

Storm surge risk
Domestic business sites(Of 7 sites)
Overseas business sites(Of 5 sites)

Drought risk
Domestic business sites(Of 7 sites)
Overseas business sites(Of 5 sites)

Number of business sites that are graded as risk
requiring monitoring (Grade B or above)
Present
Middle of 21st century
RCP2.6
RCP8.5
0

0

0

0

0

0

Number of business sites that are graded as risk
requiring monitoring (Grade B or above)
Present
Middle of 21st century
RCP2.6
RCP8.5
0

0

0

2

2

2

-6-

Strategy

The Group is planning to conduct risk assessments at the business sites graded as flooding
risk requiring monitoring at the scenario analysis and will take inundation countermeasuresand develop BCPs according to the results of risk assessments. The Group will monitor
drought risk at Water Gremlin Aquila Company S.p.A in Italy and consider taking appropriate
action.

Metrics and Targets■ GHG emissions targets
The Group has set a GHG emissions target of “reducing GHG emissions (Scopes 1 and 2 market-based
emissions) 50% from the 2022 level by 2030*.” The Group is committed to achieving a GHG emissions
reduction target (SBT) that is scientifically consistent with the target set out in the Paris Agreement—
limiting the global temperature increase to 1.5ºC above pre-industrial levels—and will take steps to reduce
also Scope 3 emissions.
Actual GHG emissions in 2022 are as stated below. The Group will take steps steadily to reduce GHG
emissions and achieve the target chiefly by promoting use of renewable energy.
* In the Medium-Term Management Plan, NEXT 100 - PHASE2.1, the Group set a target of reducing GHG
emissions (Scopes 1 and 2 market-based emissions) 50% from the 2020 level by 2030. The target has
been changed in 2023, after US-based OCM Manufacturing LLC became a consolidated subsidiary in
October 2021.

MetricGHG emissions*

GHG emissions results and targets
2022 results(Total scopes 1 and 2
market-based emissions)

20,204
Scope 1:
6,661
Scope 2: 13,543

2030 target

50% reduction
compared to 2022

* Emissions at the Company and its consolidated subsidiaries are calculated.

-7-

■ Actual GHG emissions (in detail)GHG emissions

Result [t-CO2e]

Scope 1 (2022)
Scope 1 emissions

6,661

Scope 2 (2022)
Scope 2 location-based emissions

13,280

Scope 2 market-based emissions

13,543

Scope 3 (2021) (Note) Emissions in 2022 are being calculated.
Category 1: Purchased products and services

255,215

Category 2: Capital goods

6,210

Category 3: Energy-related activities

2,804

Category 4: Transportation and distribution (upstream)

20,949Category 5: Waste generated in operation

658

Category 6: Employee business trips

322

Category 7: Employee commuting

504

Category 8: Leased assets (upstream)―

Category 9: Transportation and distribution (downstream)

3,362

Category 10: Processing of sold products―

Category 11: Use of sold products

13

Category 12: End-of-life treatment of sold products

10,336

Category 13: Leased assets (downstream)―

Category 14: Franchises―

Category 15: Investments―-8-

* Emissions are calculated based on GHG Protocol, international calculation and disclosure standards.
* Emissions at the Company and its consolidated subsidiaries are calculated. (Scope 3 emissions do notinclude emissions at US-based OCM Manufacturing LLC, which become a consolidated subsidiary in
October 2021.)* Scope 1 emissions are calculated using emission factors of the list of calculation methods and emission
factors in the GHG calculation, reporting, disclosure systems under the Enforcement Order of the Act
on Promotion of Global Warming Countermeasures, US EPA, “Emission Factors for Greenhouse Gas
Inventories (Last Modified: 1 April 2022),” and The Greenhouse Gas Protocol Initiative, “GHG emissions
from stationary combustion Ver.4.1.”* Scope 2 location-based emissions at domestic business sites are calculated using the “Alternative value”
of “Emission factor by electric utility operator (for Calculating Greenhouse Gas Emissions of Specified
Emitters)” in the Mandatory Greenhouse Gas Accounting and Reporting System based on the Act on
Promotion of Global Warming Countermeasures. Scope 2 location-based emissions at business sites
in the US are calculated using emission factors in subregions in “US EPA, eGRID2021 (created Jan2023)” and those at the other overseas sites are calculated based on figures of each country in“International Energy Agency, “Emission Factors 2022” (Sep 2022)”.
* Scope 2 market-based emissions at domestic business sites are calculated using adjusted emission
factors of individual electric utilities, and Scope 2 market-based emissions at overseas business sites
are calculated using data of electric power companies supplying electricity to the business sites, if they
are available, and location-based data if data from electric power companies are not available.
* Scope 3 emissions are calculated using published databases, including the Database of Emissions Unit
Values for Accounting of Greenhouse Gas Emissions, etc. by Organizations Throughout the Supply
Chain (Ver. 3.2) of the Ministry of the Environment, the IDEA database v2 of the National Institute ofAdvanced Industrial Science and Technology, and the emission factors of individual electric utilities (forcalculation of GHG emissions of specified emitters) under the Enforcement Order of the Act on
Promotion of Global Warming Countermeasures.
* Scope 3 categories 8, 10, 13, 14, and 15 are not included because the Group does not conduct any
applicable activities.

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