Euglena GroupFY2023 TCFD Report
Towards a world of net zero greenhouse gas emissions by 2050

With the Euglena Philosophy of "Sustainability First," we believe that we have a responsibility to leave
the earth rich in nature to the next generation through our business activities to reduce environmental
impact. Since our founding in 2005, we have continued to work on the creation of innovativetechnologies and businesses that provide solutions to various social issues such as global environmental
problems, and have contributed to the development of a sustainable society. Toward achieving a worldof net zero greenhouse gas emissions by 2050, we will further promote the reduction of environmental
impact through the Euglena Group's business, and contribute to the reduction of CO2 emissions insociety as a whole through the spread of biofuels.



Development and production of biofuels

As a concrete measure against climate change, Euglena manufactures and sells "SUSTEO", a biofuel
made from cooking oil and the microalgae Euglena. When "SUSTEO" is used, it is expected to contributeto the realization of carbon neutrality, in which the amount of carbon dioxide emissions is lower
comparing to fuels derived from fossil fuels. Next-generation biodiesel fuel was completed in March
2020, and biojet fuel was completed in March 2021, and the introduction of biofuel has been gradually
expanded in all areas of "land, sea, and air." In December 2022, Euglena, Petroliam Nasional Berhad(PETRONAS) and Eni S.p.A (Eni) announced their joint study on the possibility of developing and1

operating a biorefinery in the Pengerang Integrated Complex (PIC) in Malaysia and the plant to becompleted in near future.

Related links
Energy / environment business introduction
Euglena Co., Ltd. ｜Euglena 's business introduction (euglena.jp)

Euglena culture demonstration for biofuels
vol.14 Cultivate Euglena with Japanese original technology. | Sustainable Times by euglena |Sustainable Times by euglena

Supporting Climate Initiatives

We have endorsed domestic and international industry initiatives that will lead efforts towards a world
with net zero greenhouse gas emissions by 2050. As a participating company, we will strengthen ourefforts to achieve carbon neutrality, while regularly confirming the consistency of each initiative's climatechange policy and our climate policy and make policy recommendations as necessary.

ExampleSupport to TCFDIn May 2019, Euglena agreed with the proposal by the Task Force on Climate-related Financial
Disclosures (TCFD * 1: Task Force on Climate-related Financial Disclosures) for the disclosure of climaterelated financial information, and aims to promote the proposal. I joined the TCFD Consortium *2 established in Japan. Based on the recommendations of TCFD, we are strengthening information

disclosure regarding climate-related risks, business opportunities, and governance systems.

* 1 TCFD: A task force established by the Financial Stability Board, an international organization that aims to stabilize thefinancial system. The purpose is to stabilize financial markets by supporting companies that disclose information on
climate change and by smoothly transitioning to a low-carbon society.
* 2 TCFD Consortium: Established in Japan in May 2019 to discuss effective information disclosure by companies and2

efforts to connect the disclosed information to appropriate investment decisions by financial institutions. Any company or
institution that supports TCFD can join.

ExampleSupporting Japan’s “GX League (GX: Green Transformation)*3” establishedby the Ministry of Economy, Trade and Industry

We have expressed our support for the "GX League Basic Concept" launched by the Ministry of
Economy, Trade and Industry in February 2022 to promote social change toward carbon neutrality andthe creation of new markets. We are participating in discussions toward the operation of the GX League
as a supporting company.
*3 A forum for cooperation between a group of companies and the government, universities, and academic institutions inorder to meet greenhouse gas reduction targets and increase industrial competitiveness by using Japan’s goal of carbon
neutrality by 2050 as an opportunity for economic growth. Supporting companies from various industries that endorse the
GX League are working together to develop a vision of the future society, make rules for market creation, and prepare acarbon credit exchange scheme.

Initiatives and Disclosure based on TCFD Recommendations

Governance on climate change issues
In February 2023, the Group established a Sustainability Committee directly that the company’s Board of
Directors decided and established a Sustainability Committee to discuss various sustainability policies,
goals, strategies and countermeasures for promoting company-wide sustainability activities and ESG
management in order to further realize our corporate philosophy of “Sustainability First.”
Sustainability Committee functions as an advisory body to the Board of Directors, placed directly underthe Board of Directors, and promotes sustainability initiatives throughout the Group. In addition, in orderto promote overall sustainability activities throughout the entire Group including climate risks andopportunities, as well as our response to climate change. We have also established theme-specificworking groups consisting of persons in charge from our company and Group companies’ businessdivisions. These working groups identify issues, discuss countermeasures and propose actions to theCommittee.

3With the establishment of the Sustainability Committee, we will further accelerate the sustainable
management of the entire group, actively promote the disclosure of information on sustainability to all
stakeholders, including shareholders, investors and customers, and continuously grow in a sustainable
society.

Scenario analysis of climate change impact
In this scenario analysis, we have looked at the scenario to achieve the Paris Agreement goal of"keeping the world average temperature rise well below 2°C compared to before the Industrial
Revolution and pursuing efforts to keep it at 1.5°C" and realizing a carbon-free society. In addition to the
1.5°C scenario, we considered the 4°C scenario, assuming that climate change countermeasures will not
progress sufficiently worldwide. In addition, we targeted 2030 in the analysis as a timeframe where theprobability of our business can be foreseen. We have set the healthcare business, as well as, biofuelbusiness of Euglena Co., Ltd. as the target businesses of the analysis, and identified the impact ofclimate change on the Group. In the scenario analysis, we referred to IEA SDS, IPCC RCP2.6 / SR1.5,
WRI Aqueduct Optimistic, etc. in the 1.5°C scenario analysis, and IEA STEPS, IPCC RCP8.5, WRI
Aqueduct BaU, etc. in the 4°C scenario analysis.

Analysis of key opportunities and risks related to climate change
Based on the world assumed in each scenario, as the first step, we have comprehensively listed
possible risks and opportunities for the target projects selected during the preparatory stage. As thesecond step, we qualitatively evaluated the importance of risks based on the magnitude of the possibility
that risks and/or opportunities could occur, as well as, the magnitude of the business impact if the risks
and/or opportunities become reality (Figure 1). At the final stage, based on discussions with Executive
Officers and persons in charge from relevant departments, the degree of impact and occurrence of risks
and opportunities on the business were evaluated qualitatively and quantitatively, and classified into
three stages: small, medium, and high. did.

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Assessment results on importance of risks and opportunities (healthcare business)

As a result, we organized potential climate risks and opportunities expected for each business as shownin the chart below, and identified important risks and opportunities.

Key climate risks and opportunities in the Healthcare business



Risks

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Key climate risks identified:

Damage to production bases and distribution functions due to the increased frequency of extreme
weather events under the 4°C scenario.



Increasing cost associated with capital investment and raw material procurement due to theintroduction of carbon pricing under the 1.5°C scenario.

We identified the above as a risk factor that should be considered in particular and conducted aquantitative evaluation on their impact on our business. We will carry out more detailed risk analysis andstrive for more comprehensive risk management.

Risk case

Suspension of production and distribution bases due to floods and storm
surgesWe assessed the impact of extreme weather such as floods and storm surges on the Group's production
and distribution bases by using hazard maps and inundation forecast maps issued by local governments.
For each distribution base, we calculated the loss of sales due to the suspension of business based on
the expected number of days of business suspension and business stagnation, referring to the "Manualfor Economic Evaluation of Flood Control Investment (draft)" by the Ministry of Land, Infrastructure,
Transport and Tourism, Japan. As a result, as of 2030, the decrease in sales due to the inability tosupply products due to the inundation of distribution bases was limited, and it was evaluated as amanageable risk. We will further take measures such as formulating a BCP in the event of a flood andpredicting inundation and strive to mitigate and eliminate such risks identified. For each production base,6

we confirmed by the hazard map issued by the local governments that the risk of flooding is low and thatthe possibility of significant delays in production due to flooding is also low.

Risk case

Impact of temperature rise and water shortage on Ishigaki Island Euglena
production

Since the culture of Ishigakijima Euglena and Yaeyama Chlorella must be carried out within the proper
temperature range, the temperature control cost of the culture may increase if the temperature rise
expected in the 4°C scenario occurs. In addition, although the degree of occurrence is relatively small,the impact on Euglena / Chlorella production is expected to some extent if there is a risk of water
shortage due to drought, etc. and it becomes difficult to secure the water required for cultivation. We willtake measures to avoid or reduce risks, such as capital investment for temperature control.



Opportunities

Under the 1.5°C scenario, where climate change is being dealt with, we assumed the world where
consumers are becoming more environmentally conscious, and that our health care products with low
environmental impact will be accepted more in the future. We will continue to seize such opportunities forbusiness development along with other opportunities.

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Key climate risks and opportunities in the Biofuel business
Similarly, in the biofuel business, we qualitatively and quantitatively evaluated the degree of impact andoccurrence of risks and opportunities on the business. On the other hand, since this business is in the
pre-commercial phase and it was difficult to make an appropriate evaluation, we disclosed the results ofqualitative analysis of risks and opportunities in FY2021. We will disclose the corresponding action
areas. We are proceeding with the analysis of risks and opportunities, including the following.

Opportunity case

Increased sales due to tightening of laws and regulations to promote theuse of biofuels

Demand for biofuels is expected to expand globally toward the realization of carbon neutrality, and it ispredicted that further tightening of laws and regulations such as the quota system and carbon tax will
improve price competitiveness for petroleum fuels and dramatically expand the market. Demand is
expected to grow in all "land, sea, and air" industries, with biofuels expected to be introduced in 41% ofroad transport, 45% of aircraft, and 21% of ships by 2050. Due to the expected shortage, we expect
sales to increase as production increases. Regarding biojet fuel (SAF), the Ministry of Land,
Infrastructure, Transport and Tourism, Japan, has set a goal of replacing 10% of the fuel used by
Japanese airlines with SAF by 2030, and thus it is expected that the introduction and spread of SAF will
be promoted. In February 2023, the Japanese government decided on a “basic policy for the realizationof GX” at a cabinet meeting, and has set out to expand GX investment in carbon-recycled fuels
including SAF. Private sector investment in large-scale demonstrations and capital investment is also
expected to increase.

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Group strategy and initiatives on climate change issues
Biofuel business that contributes to mitigation of climate change

The biofuel "SUSTEO" manufactured and sold by our company has gained the support of many
companies and organizations, and the total number of biofuel supply destinations is more than 93 (as ofthe end of fiscal 2023). We will continue our research, manufacturing, and sales efforts related tobiofuels in order to further expand the circle of support. Currently, in the assumption of business
opportunities under the 1.5°C scenario, we are in collaboration with domestic and overseas partners. In
December 2022, Euglena, Petroliam Nasional Berhad (PETRONAS) and Eni S.p.A (Eni) announced
their joint study on the possibility of developing and operating a biorefinery in the Pengerang Integrated
Complex (PIC) in Malaysia. For post-commercialization, we continue engaging in biofuel trial
transactions to build a supply chain and R&D activities at our laboratory in Malaysia. By starting full-scale
supply of next-generation biodiesel fuel and bio-jet fuel and introducing them widely to automobiles,
ships, airplanes, and other mobile vehicles, we will contribute to the realization of the 1.5℃ scenario andcarbon neutrality in 2050.

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Initiatives through the healthcare business

The Group regards sustainable reduction of environmental impact in its business activities as one of theimportant management issues, and is particularly focusing on "control of climate change." Established by
the first CFO (Chief Future Officer) and summit members, "We aim to build a system that allows
customers to take environmentally conscious actions regardless of their height or low awareness of theenvironment." Based on this policy, we have been striving to reduce greenhouse gas emissions in thehealthcare business by significantly reducing the number of petroleum-derived plastics used in products
and packaging and using renewable energy, and will strengthen further efforts in the future.

Euglena for Healthcare: Green Smoothie Lactobacillus

Example of initiatives

Switching to tube type skin care product containers

Since September 2021, the 6 all-in-one cream containers of the skin care brand "one" have been
gradually switched from the conventional jar type container to the tube type container containing sugar
cane-derived resin in the main body, and the official EC site. It is sold at "Euglena Online shop". Bychanging the container, we have achieved a reduction of up to 90% in petroleum-derived plastic
compared to conventional products. In addition, when delivered by mail, the transportation volume issmall and redelivery is not required, so we have realized a sustainable product design from the viewpointof reducing CO2 emissions associated with delivery.

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Example of initiatives

Use of sustainable packaging

In the bio-natural skin care brand "NEcCO" launched in January 2023, the weight of the packaging bottle
was reduced by up to 50% by compressing the effect by making each drop of the prescription in thecontents highly concentrated. *4 (compared to our conventional products), reducing the environmental
impact during delivery. In addition, the package container contains up to 30% of plant-derived biomass
plastic*5, which considers CO2 emissions, the material of the cosmetic box is 100% used paper pulp,
and the printing uses vegetable oil ink. We use materials that contribute to reducing environmental
impact.
※4 Compared to our conventional products※5 Excluding the inner stopper and cap of the container

Example of initiatives

Initiatives by the group company Q’SAIQ'SAI's Fukuoka Konominato Factory introduced a solar power generation system in 2014 as part of its
environmental conservation activities. 868 power generation panels were installed on the roof of thefactory, and the annual power generation will be 181,467kwh kWh (January to December 2023).
In addition, Q'sai's healthcare products use plant-derived materials in part of the product packaging to
reduce plastic waste. In addition, they are promoting efforts to reduce environmental impact, such as
implementing environment-friendly agriculture and recycling resource waste.

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Risk management
Euglena Group has established a company-wide risk management system that identifies important risks
company-wide and manages risks through the PDCA cycle. Regarding risk information within the group,
we report to the Board of Directors through the department in charge and receive feedback. Climatechange risk is also regarded as one of the important risks for the entire company, and it is managed by
the company-wide risk management system, and the details of examinations and responses are also
discussed in the Sustainability Committee, which are reported to the Board of Directors at least once a
year.

Indicators and goals
Based on the results of scenario analysis of climate risks and opportunities, we have calculated our
Scope 1 and 2, as well as key categories of Scope 3CO2 emissions since fiscal 2022 and disclosed its
emissions data. We will continue to formulate our CO2 emissions reduction goals in our own operations
and improving accuracy of Scope 3 emissions data.

CO2 emissions data (FY2023: January – December 2023)*¹：

Unit: tons

Scope

Items

Fiscal 2022

Fiscal 2023

Scope 1 *2

Gas

Scope 2 *2

Scope 3 *5

1,674

1,572

Market-based*3

3,750

3,318

Location-based*4

3,248

2,975

Total (Scope 1 and Scope 2 Market-based)

5,424

4,890

Category 1（Purchased goods and services）

66,056

TBD

Category 4（Upstream transportation and distribution）

5,458

TBD

Category 6（Business travel）

663

TBD

Category 7（Employee commuting）

233

TBD

Electricity*¹ Boundary：Euglena headquarters, Q'sai Group, Yaeyama Shokusan, LIGUNA, Epauler, Tsurumi Demonstration Plant, R&D ResearchInstitute, and Daikyo Fertilizer*² Since the fiscal year ending December 31, 2022, we acquire a third-party verification for Scope 1 and 2 emissions data by SGS Japan.
*3 Market-based（A method of calculation using the GHG emission coefficient for each electric company）*4 Location-based（A method of calculation using the average GHG emission coefficient of the region's electricity grid）*5 Scope 3 calculations are based on the value-based emissions intensity (purchaser price-based) of the Ministry of the Environment's"Emissions Intensity Database ver. 3.2 for Calculating Greenhouse Gas Emissions of Organizations through Supply Chains."

12Moreover, we will formulate countermeasures in collaboration with the business and promote theirincorporation into management and business plans. We will set various indicators for mitigating physicalrisks due to climate change and utilizing opportunities in the future, and aim to carry out regularmonitoring.

Related links
Responding to climate change

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