Introduction

Strategies for Value Creation

Foundation for Value Creation

Material issues (I)Financial/Corporate Data

Our initiatives

Promotion of decarbonizedsociety and circular economy▶Response to climate change▶Reinforcement and creation of services

for a circular economy

Basic policy

business activities themselves are linked to activities toaddress climate change issues.
We responded to the Carbon Disclosure Project (CDP)
Climate Change 2022 Questionnaire, and scored a B,
indicating the Company is showing evidence of managing
our environmental impact.
● Conceptual diagram of environmental

benefit and environmental burden▲

Reducing
environmental burden

Plus

Admirable activities

ZeroMinus▼

In 1999, we were certified under the ISO 14001
international environmental management standard, aheadof other companies in the leasing industry in Japan, andhave since been promoting environmental management.
Our business activities have a smaller environmental
burden than manufacturing or other types of business. We
thus place emphasis on increasing environmental benefits(values) for customers and society. Based on the conceptsof “Realizing a low-carbon society through Eco-Leasing/Eco-Financing” and “Recycling resources through leasing,”
we have been actively developing business that helps solve
environmental issues to positively impact all of society.
We announced our support for the Task Force on
Climate-related Financial Disclosures (TCFD) in September
2022, and have since been disclosing information inaccordance with the TCFD recommendations.
Based on our new Group vision, which aims to realizea next-generation circular economy, we are working on
highly effective actions to promote a decarbonized society
and circular economy by building a system in which our[CS, CSR (social contribution)]▶

Increasing
environmental benefit

Activity time

Good faith activities

Efficient management
to reduce theenvironmental loadfrom customers
and society

Reduce office paper,garbage and industrial
waste and conserve
energy[Eliminate theenvironmental burden
imposed by the Company]

For more information, please visit:https://www.necap.co.jp/csv/environment/index.html(available in Japanese only)

Environmental Policy

We have established our Environmental Policy as an action guideline for environmental management. With an eye torealizing the Group vision 2030, we have reviewed the Policy.
Environmental Policy●●●●In order to contribute to the creation of a carbon-neutral, next-generation circular economy, we will engage in business thatsolves social issues and create economic value together with the value chain.
We will work to improve our operational quality that contributes to sustainable business activities, as well as improve theefficiency of these operations.

We will actively promote the creation of a society and environment that can recycle resources to enable our co-existence with nature.
We will comply with environmental laws and regulations and other requirements to which we agree.

● Non-financial indicators in the Medium-term Plan 2025

Objective

CO2 reductions to achieve carbon neutrality

Description

Scope 1+2: Reduction rate compared to FY2023/3

Promotion of cyclical use following expansion Total number of disposals of products whoseof ICT businesslease has ended over three year period

Promotion of response to climate change

Carbon Neutrality Commitment

Renewable energy power generation capacity(power generators owned)

FY2023/3

FY2026/3 (Target)

200,000
units

700,000
units157t-CO243MW

20% reduction
100MW

See Non-financial (non-consolidated) on ▶P.43-44 for our CO2 emission figures

Aim for a carbon neutrality by the fiscal year ending March 31, 2041 (bring Scope 1 + 2 on a consolidated basis
effectively to zero)

We have set the goal of reducing the CO2 emissions (Scope 1 + 2, the Company and RISA Partners) generated from ourbusiness activities by 20% in the fiscal year ending March 31, 2026 compared to the fiscal year ended March 31, 2023.
We aim to achieve net zero CO2 emissions (Scope 1 + 2) on a consolidated basis including our overseas subsidiaries by thefiscal year ending March 31, 2041.

NEC Capital Solutions Limited Integrated Report 2023 22

Promotion of decarbonized society and circular economy

Introduction

Response to climate change (information disclosure based on the TCFD recommendations)

Governanceimpact the Group’s business. They are subject to control
by each management meeting body and the Management
Conference.

We established the Sustainability Committee, chaired by
the president, to be an organization discussing climatechange and other sustainability issues.

See Risk Management on▶P.38 for information on company-wide risk management

See Sustainability on▶P.21 for sustainability implementation system

Strategy

We conducted a scenario analysis to consider the impactof climate change on our business, in order to formulate
and examine strategies for the Group. In this scenario
analysis, we examined risks and opportunities from both
qualitative and quantitative perspectives, referring to the“4°C scenario,” which assumes no further action against
climate change is taken, causing the intensity of extreme
weather events to increase, and the “1.5°C scenario,” whichassumes more ambitious measures to tackle climate change
are taken in a bid to achieve decarbonization. A detailed
analysis of risks and opportunities is posted on our website.
The scenario analysis found that, although a certain
level of risk is expected in either scenario, the impact on
our business is limited. In fact, we concluded that climatechange is likely to increase our business opportunities, suchas increased demand for Information and Communication
Technology and leasing, new services and the expansion of
new investment opportunities.
In response to the ever-changing global situation, we willreview risks and opportunities as needed while consultingwith the relevant internal divisions and management teams,
and revise them to develop more effective countermeasures.

Risk management

We classify risks that may adversely impact our businessactivities into two types: ERM risks*1 and other risks.

ERM risks are subject to control by the Risk Management
Committee. Other risks are risks that may significantly

We believe climate-related risks are key management
risks that fall into both categories. From the perspectiveof overall risk management, the Sustainability Committee
chaired by the president manages these risks in anintegrated manner.
When it is expected that climate-related risks will
significantly impact*2 the Group, we will swiftly discussa response policy. The situation will be assessed by
the Management Conference and a resolution will besubmitted to the Board of Directors. Decisions will beincorporated into business plans as appropriate.

*1 ERM risks comprise (1) credit risks, (2) market risks and (3) operationalrisks (such as administrative risks and system risks) in enterprise risk
management (ERM).
*2 Significant impact refers to an impact that reaches the level of thetimely disclosure standards of the Tokyo Stock Exchange (estimatedamount of impact on profit, etc.)

Metrics and Targets

In April 2023, we announced the Medium-term Plan 2025
and set new medium- to long-term environmental targets,
aiming to reduce the CO2 emissions (Scope1 + 2) generated

from our business activities as below.
FY2023/3

CO2emissions(t-CO2)157

FY2026/3(Target)

FY2041/3(Target)Achieve net zero
Down 20%
on a consolidated
comparedbasis including ourwith FY2023/3
overseas subsidiariesFor more information, please visit:https://www.necap.co.jp/csv/environment/climatechange.html(available in Japanese only)

Climate change risks associated with credit costs

Based on the TCFD scenario analysis for the banking
sector released by the Ministry of the Environmentof Japan, we created a scenario in which borrowers’
ability to repay their loans deteriorated due to theoccurrence of physical and transition risks. Then,
taking into account the Company’s characteristics, wecalculated the increase in credit costs based on credit
balance for the fiscal year ended March 31, 2023.
The impact on gain and losses from a rise in credit
costs due to physical risk for the periods being
analyzed was negligible.
We did not observe any additional credit costs as aresult of transition risk.

23● Overview of our analysis scenarios (millions of Yen)
Physical risk

Transition risk
Policy changes, changes in theRisk incident
Floodssupply-demand balance◆4°C scenario
IEA Stated Policies Scenario/RCP8.5
Applied◆1.5°C scenario
scenarios
IEA Net Zero Emissions by 2050/RCP2.6
Sustainable Development Scenario
Energy, electric vehicles,
Analysis
Corporations
steel sectors (excludingscope
renewable energy)
RegionGlobalAnalysis period
2050
Scenario
1.5℃
4℃
Scenario
1.5℃4℃
Increase inSingle fiscal year
Single fiscal year
3751
ーー
credit costs
Total through 2050 1,011 1,379 Total through 2050
ーー

Strategies for Value Creation

Foundation for Value Creation

Financial/Corporate Data

Our efforts towards reinforcement and creation of services for a circular economy■ “PIT Managed Services”

ICT equipment is one of the most important infrastructuresin a company. At the same time, we need to provide
support tailored to the life cycle, such as procurement andintroduction support, security management, contract andasset management, and operation management. With ourtrack record of handling a large number of ICT equipment,
we have been providing such services from an early stage,
including the operation of ICT equipment. We analyze thecurrent situation to define the ideal state, and provide
services that enable outsourcing from the introduction ofICT equipment to operation management after installation.
This allows us to provide powerful support for clientcompanies’ IT system divisions. In the Medium-term Plan
2025, one of our business strategies is to expand scale ofbusiness through high added value for ICT related services,
based on lease and rental services.

ColumnOperation
management

Procurement
and introduction
supportSecurity
management

Contract and asset
management“Waku-waku” (exciting) Children’s Pond Project

Since 2007, we have been working in cooperation
with the Asaza Fund, a nonprofit organization, on the“Waku-waku” (exciting) Children’s Pond Project, asocial contribution activity that provides environmental
education programs through biotope construction. As ofthe end of March 2023, a total of 50 elementary schools
have participated in this project.
Based on the recognition that leasing, our mainstay
business, is an industry conducive to recycling thatcan make effective use of resources, we started thisproject with the goal of providing children with a place
to learn about the importance of nature’s cycles. The
basic program consists of five sessions. Not only do
we construct biotopes, but we also place value on theprocesses before and after construction. The curriculum
consists of learning about living creatures’ homes andlifestyles, observing the surroundings of the school,designing and constructing biotopes, and observing
them afterwards. We hope this series of experiences
helps children to learn about the mechanisms forprotecting biodiversity and gain a higher awareness ofco-existing with nature. During the COVID-19 pandemic,
we enhanced our activities further by introducing online
classes using Zoom.
The natural environment has been gaining attention
in recent years as natural capital, an important capitalthat supports the lives of citizens and the managementfoundations of companies. Against this backdrop, we
have included the number of activities of the “Wakuwaku” (exciting) Children’s Pond Project into thenon-financial indicators of our Medium-term Plan 2025.
By continuing to promote these activities, we will
strive to provide better environmental education to
the children who will lead the next generation, thereby
contributing to the creation of a sustainable society.

(Top) Killifish being released into thecompleted biotope(Right) Setting up a bird house to
attract birds to the constructedbiotope● Non-financial indicators in the Medium-term Plan 2025Objective

Description

Promotion
School biotopeof activities
education: The
contributing tototal number ofsociety with natural schools in thecapital in mind
three-year period

FY2023/3

FY2026/3(Target)310

For more information, please visit:https://www.necap.co.jp/company/biotop/index.html(available in Japanese only)

NEC Capital Solutions Limited Integrated Report 2023 24