Information Disclosure Based on TCFD Recommendations

Climate change is one of the most pressing issues facing global society. It is a highly urgent issue that
seriously impacts people’s lives and the natural environment as seen in the unprecedented extreme
weather events that are already occurring with greater frequency and intensity around the world. The
Paris Agreement, an international treaty on climate change measures, aims to hold the increase in the
global average temperature to well below 2°C above pre-industrial levels and pursue efforts to limit
the temperature increase to 1.5°C above pre-industrial levels, and states that this requires achieving abalance between anthropogenic greenhouse gas (GHG) emissions and removals by the second half of
this century.
The Inabata Group fully recognizes the effects of climate change and the need for countermeasures,and has made it clear that the Group strives to conserve the global environment through businessactivities in its Sustainability Basic Policy, Sustainability Code of Conduct, and Declaration ofCompliance. When we announced materiality in June 2022, we highlighted “contributing to a
decarbonized and circular society” and identified global environmental problems, including climatechange, as one of the key issues for management.
We consider climate change a risk to the Group, but one that also presents business opportunities.
Therefore, as well as taking steps to reduce GHG emissions, we seek to provide products and solutions
that contribute to a decarbonized society.
Having endorsed the recommendations issued in June 2017 by the Financial Stability Board’s (FSB)
Task Force on Climate-related Financial Disclosures (TCFD),* we work to develop appropriate
understanding of the impact of climate change on our business activities and disclose the details ofsuch impact.
* The TCFD was launched in 2015 at the request of the Group of Twenty (G20). Recognizing the significant impact that climate change
will have on financial markets, the Final Report (Recommendations of the TCFD) released in 2017 called on companies and otherentities to disclose information on the risks and opportunities presented by climate change.

■ TCFD’s core elements of recommended climate-related financial disclosures and a summary of
responses by the Inabata GroupCore
elements

Description

Inabata Group response
Sustainability issues, including climate change, are deliberated and examined atDisclose theorganization’s
Governancethe Sustainability Committee, which is chaired by the president.
The Regulations of the Board of Directors require the director in charge ofgovernance aroundsustainability to report to the Board of Directors on the status of initiatives toclimate-related risks

address sustainability issues. The content of deliberations and examinations at theand opportunities.

Sustainability Committee is also reported and escalated appropriately to the Boardof Directors as part of the abovementioned process.
Regarding the 4ºC scenario, whereas the Group’s bases in Japan and overseas are
assumed to suffer damage due to intensifying extreme weather events, the risk is
not estimated to be so great as to significantly impact business operations. In
terms of opportunities, demand for products adapted to rising temperatures andDisclose thechanging weather patterns is expected to increase. Accordingly, it is concluded

impacts of climate-that the Group will be able to maintain its resilience.

related risks andRegarding the 1.5ºC scenario, we identify the increase in operating costs due

opportunities on theto carbon pricing introduction and steep rises in the electricity price as a risk.

organization’s

However, the risk is projected to be more than offset by gaining revenue

businesses, strategy,

opportunities from future growth in technologies and products that contribute to

and financial

low-carbon economy and reduced environmental impact. We recognize onceplanning.

again the great relevance of expanding sales of products that reduce

Strategy

environmental load—which is part of our multi-faceted approach to markets withpotential for future growth and steady monetization efforts, a key initiative under
the New Challenge 2023 medium-term business plan—to our growth in the
decarbonized society of the future.
At the Group, the Sustainability Committee manages climate-related risks. The

Risk

Disclose how thecommittee deliberates risks identified and examined from both qualitative andorganization

quantitative perspectives based on scenario analysis, and reports to the Board ofidentifies, assesses,

Directors as necessary.

Management and manages

The Board of Directors oversees Group-wide risks of high importance in an

climate-related

integrated manner, taking into account reports from the Sustainability Committee

risks.

as well as other risks reported by the Risk Management Office, the Financial
Management Office, the Compliance Committee, and other units.

To commit to achieving the global goal of limiting the increase in temperatures
Disclose the metrics
to 1.5ºC as stated in the Paris Agreement, the Inabata Group has set the long-term
and targets used togoal of carbon neutrality by FY2050 (covering Scopes 1 and 2 emissions of theMetrics andassess and manage

Targets

relevant climate-consolidated Group). Since FY03/2022, we have calculated Scope 3 emissions inorder to understand emissions for our entire supply chain. In the future, we will
related risks andexpand the scope of calculations and consider medium-term targets to achieve theopportunities.
long-term goal.

GovernanceIn October 2021, the Inabata Group set up the Sustainability Committee, chaired by the president, topromote Group-wide initiatives further that address sustainability issues including climate change.
The committee members are the senior managing executive officer in charge of sustainability whoserves as the vice-chair, two directors and one executive officer in charge of the four business segments,and six selected heads of administrative offices. In addition, seven outside directors, one non-executive
director, and one audit and supervisory officer also participate as observers to verify fair and effective
discussions and make recommendations as necessary.
Convened at least once a year (plus extraordinary meetings as needed) in principle, the committee
formulates, authorizes, and monitors the Group’s sustainability policies and measures.
The Regulations of the Board of Directors require the director in charge of sustainability to reportto the Board of Directors at least once a year on the status of initiatives to address sustainability issues(such as considerations for climate change and other global environmental issues, respect for humanrights, considerations for employee health and working environment, fair and reasonable treatment of
employees, fair and reasonable transactions with business partners, and crisis management for natural
disasters). In addition, the status of these initiatives is reported to the Board of Directors through thequarterly reports on business execution. The content of deliberations and examinations at the
Sustainability Committee is also reported and escalated to the Board of Directors as part of theabovementioned process.
Since the Inabata Group recognizes that addressing sustainability is an important management issue,
it has set environmental, social, and governance (ESG) scores by multiple external evaluation
organizations (FTSE Russell and MSCI) as the indicators for performance-linked remuneration* fordirectors to enhance the effectiveness of the Board’s approach to sustainability issues.To promotesustainability activities across the Group, matters resolved by the Board of Directors and theSustainability Committee are implemented and managed through collaboration between the dedicatedSustainability Promotion Department and the Sustainability Committee Secretariat that comprises
members appointed from selected administrative offices.

To support meaningful discussions at the Sustainability Committee, the Sustainability Promotion
Department collates and provides Group-wide sustainability information, working together with
Sustainability Promotion Members appointed from the sales divisions and selected administrative
offices.
* With the fixed remuneration for each position as the basis, we calculate performance-linked remuneration by applying
a coefficient according to net income before taxes and other adjustments (excluding proceeds from sales of somecross-shareholdings), profitability in relation to capital (ROIC, ROE), stock price, and each level of ESG scores frommultiple external evaluation organizations (FTSE Russell and MSCI).

■ Sustainability promotion system■ Main climate-related matters reported to the Board of Directors in the past
FY03/2022

Establishment of Sustainability Basic Policy and Code of Conduct

FY03/2023

Participation in the United Nations Global Compact
Carbon Neutrality Declaration 2050
Identification of materiality
Information disclosure in accordance with TCFD recommendations
Status of evaluations by FTSE Russell and MSCI
Progress on calculation of GHG emissions (Scopes 1, 2, and 3) and
TCFD-compliant scenario analysis

Strategy
The Inabata Group strives to understand the business risks and opportunities arising from the transition
risks and physical risks of climate change, and to reflect this in the formulation of climate change
countermeasures and business strategies.
In addition to 2030, which is the year for achieving our long-term vision IK Vision 2030, thescenario analysis below assumes 2050, which is the year for achieving our carbon neutrality target.
We consider both qualitative and quantitative aspects with reference to the 4ºC scenario, whichassumes no implementation of more ambitious climate change measures and intensifying extreme
weather events, and the 1.5ºC scenario (partly combined with the 2ºC scenario), which assumes
implementation of more ambitious climate change measures aimed at decarbonization.
■ Future forecasts based on climate-related scenarios➢ The world envisioned in the 1.5ºC scenario➢ The world envisioned in the 4ºC scenarioReference scenarios
4ºC scenario: Stated Policies Scenario, International Energy Agency (IEA); and Representative Concentration Pathway(RCP) 8.5 scenario, Intergovernmental Panel on Climate Change (IPCC).
2ºC scenario: Sustainable Development Scenario, IEA; and RCP2.6 scenario, IPCC.
1.5℃ scenario: Net Zero Emissions by 2050 Scenario, IEA.

The Inabata Group operates in a wide range of businesses, with trading at the core. There are sharedrisks and opportunities, as well as different risks and opportunities, for each of the four businesssegments: Information & Electronics, Chemicals, Life Industry, and Plastics. Therefore, we haveexamined the relevance of climate-related issues to each business segment. The findings are
summarized in the table below.

■ Results of scenario analysis and key responses for each business segment (qualitative)➢

1.5ºC scenario➢

4ºC scenario■ Financial impact estimates
We have estimated the financial impact based on predicted values for the future.
Note that these financial impact estimates were obtained by narrowing down the scope of theanalysis and establishing hypothetical situations based on the limited information and data available
at this point in time.
Reference: Formula for the estimates Carbon tax
Estimates based on GHG emissions by the Inabata Group and future CO2 prices.*1(*1. Refer to values under the Net Zero Emissions by 2050 Scenario in the IEA’s World Energy Outlook 2021)
 Electricity prices
Estimates based on power consumption by the Inabata Group and future electricity prices.*2(*2. Refer to values under the Stated Policies and Sustainable Development Scenarios in the IEA’s World Energy Outlook2019) Diffusion of renewable energy and energy-saving products
Estimates based on projections of the Group’s related product sales as well as of future electrical capacity and market sizefor clean energy technologies.*3(*3. Refer to Stated Policies, Sustainable Development, and Net Zero Emissions by 2050 Scenarios in the IEA’s World
Energy Outlook 2021)
 Physical damage from flooding and high tides
Estimates of amounts of disaster damage at each Group base by reference to Manual for Economic Evaluation of FloodControl Investment by the Ministry of Land, Infrastructure, Transport, and Tourism. Damage information (rates of damage
and number of days of business stoppage) for each base specified using the hazards map.

➢

1.5℃ scenario➢

4℃ scenario■ Scenario analysis results
Regarding the 4ºC scenario, whereas the Group’s bases in Japan and overseas are assumed to suffer
damage due to intensifying extreme weather events, the risk is not estimated to be so great as tosignificantly impact business operations. In terms of opportunities, demand for products adapted torising temperatures and changing weather patterns is expected to increase. This has made us recognize
anew the potential to contribute to society by helping society as a whole adapt to global warming while
maintaining the Group’s resilience.
Regarding the 1.5ºC scenario, we identify the increase in operating costs due to carbon pricing
introduction and steep rises in electricity prices as a risk. However, the risk is projected to be morethan offset by gaining revenue opportunities from future growth in technologies and products that
contribute to low-carbon economy and reduced environmental impact. We recognize once again thegreat relevance of expanding sales of products that reduce environmental load—which is part of ourmulti-faceted approach to markets with potential for future growth and steady monetization efforts, a
key initiative under the New Challenge 2023 medium-term business plan—to our growth in the
decarbonized society of the future.

Reference: Fields of products the Group sells that reduce environmental load and net sales for FY2021
Field

Energy & Power
Resources & Environment

Materials & Chemicals
Agriculture & Food
Transportation &Logistics

Main items

Net sales

FY03/2022

FY03/2023¥13.5 billion¥17.5billion¥4.2 billion¥7.5billion¥0.7 billion¥1.5billion

Food waste reduction and soil improvement00

EV charging and green logistics

00¥0.3 billion¥0.3 billion¥18.7 billion¥26.9billion

Renewable energy- and battery-related items
Sustainable raw materials, recycling, and waterrelated items
Low-carbon materials and environmental
pollutant reduction

Certifications by the Forest Stewardship
Environmental
certification

Council, the Programme for the Endorsement ofForest Certification, the Marine StewardshipCouncil, and the Aquaculture StewardshipCouncil

Total (simple sum)
Notes:• Scope: Inabata Group (domestic and overseas consolidated companies).
• No sales for the Agriculture & Food and Transportation & Logistics fields in FY2021.

• In FY2023, we revised and partly reclassified items for each field, and recalculated net sales for FY03/2022 accordingly. As aresult, the field-based values that had already been published on our corporate website and in our integrated reports changed, but
the total figures remain unchanged.

Risk Management
At the Inabata Group, climate-related risks are managed by the Sustainability Committee as we believethat traditional risk management methods alone are insufficient to manage long-term impacts that
include elements of uncertainty. The committee discusses risks identified and examined from both
qualitative and quantitative aspects based on scenario analysis, monitors the progress, and reports to
the Board of Directors as required.
Regarding Group-wide risk management, the Risk Management Office, the Financial Management
Office, the Compliance Committee, and other units implement risk management by applying theirindividual expertise to analyze and evaluate risks related to partners, products, import and export,
financial management, compliance, and so forth. Important matters are reported to the Board of
Directors as needed.
The Board of Directors oversees Group-wide risks of high importance in an integrated manner,
taking into account reports from the Sustainability Committee as well as other risks reported byabovementioned expert units.
In addition, each risk is assessed from the dual perspectives of assumed impact on performance andprobability, as part of the annual Board of Directors effectiveness evaluation.

■ Main risks as assessed in the FY03/2023 Board of Directors effectiveness evaluation

In June 2022, we identified materiality (key issues) for sustainable growth at the Inabata Group.
Contributing to a decarbonized and circular society was once again identified as important materiality.
When identifying materiality, it is essential to identify the items that are important for the Group’s
growth by narrowing down wide-ranging, comprehensive content from multiple internal and external
perspectives. To do so, we followed the process outlined below.
■The Process of Identifying Materiality
Step 1: List social issues
Refer to international guidelines (e.g., Global Reporting Initiative standards, Sustainability
Accounting Standards Board standards, United Nations Sustainable Development Goals, ISO 26000,
and United Nations Global Compact’s Ten Principles).
Refer to external evaluations and requests (e.g., environmental, social, and governance surveys by
FTSE Russel and MSCI, and investor requests).
Step 2: Extract issues and evaluate importance
Narrow down issues and evaluate their importance through discussion by the Sustainability
Committee Secretariat and the Sustainability Promotion Members.
Deliberate on tentatively identified materiality issues at a Sustainability Committee meeting.
Step 3: Verify validity from an external perspective
Hold stakeholder dialogues with external experts.
Step 4: Decide at the management level
Discuss candidate issues selected based on external opinions and make the final decision at a
Sustainability Committee meeting.
■Inabata Group Materiality

Metrics and Targets
In June 2022, the Inabata Group set the long-term goal of carbon neutrality by FY2050* in order tocommit to achieving the global goal of limiting the increase in temperatures to 1.5ºC as stated in the
Paris Agreement.
Climate change is one of most pressing issues facing global society. There are calls for climate
action worldwide, and moves towards decarbonization are accelerating in Japan and abroad. The
Inabata Group’s Carbon Neutrality Declaration 2050 responds to global calls for climate action anddeclares that the Group will further accelerate climate change measures.
While we have already established an environmental management system compliant with ISO
14001 and have been implementing energy management and other initiatives, we will further
strengthen decarbonization initiatives going forward to achieve carbon neutrality. We are also focusing
our business activities on providing various products and solutions that contribute to a decarbonizedsociety.
Since FY2021, we have calculated Scope 3 emissions in order to understand emissions for our entire
supply chain. In the future, we will expand the scope of calculations and consider medium-term targets
to achieve the long-term goal.
* Covers GHG emissions from the business activities of the consolidated Group (Scopes 1 and 2).

■ Inabata supply chain emissions (FY03/2022)

Scope of calculations
Scopes 1 and 2: Inabata & Co., Ltd., seven domestic consolidated subsidiaries, and seven overses resin compound manufacturimg
business bases.
Scope 3: Inabata & Co., Ltd.
*1. Scope 1: Direct GHG emissions from Inabata’s own sources (burning fuel and manufacturing processes).
*2. Scope 2: Indirect emissions from the use of electricity, heat, and steam provided by other companies, calculated based on market
standards.
*3. Scope 3: Indirect emissions other than Scopes 1 and 2 (emissions at other companies related to Inabata’s business activities).

Please consult this page for past performance data.