Information Disclosure Based on
the Recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD) (Update)Issue: March 18, 2022
Update: March 17, 2023

PIOLAX, INC.

Table of Contents

Major updates
Introduction
Section1

Governance

Section2

Strategy

Section3

Risk Management

Section4

Indicators and Targets (KPI)

Section5

Statement of Support for the TCFD Recommendations

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Major Updates

1. Analysis of risks and opportunities based on the TCFD in our bases in North
America and China
・・・P12 to 14
Subject bases
U.S.: PIOLAX CORPORATION (Sales and Design Office, Michigan) (Head Office and Plant, Georgia)
Mexico: PIOLAX MEXICANA S.A. de C.V. (Nuevo Leon)
China: PIOLAX (CHINA) CO., LTD. (Shanghai) , DONGGUAN PIOLAX CO., LTD. (Dongguan),WUHAN PIOLAX CO., LTD. (Wuhan)

2. Initiatives for CASE response・・・P15
3. Introduction of renewable energy (Japan)・・・P20

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Introduction
Piolax discloses information on climate change-related risks andopportunities based on the recommendations of the Task Force on
Climate-related Financial Disclosures (TCFD), as the information can beincorporated into the management strategies for sustainable growth andmedium- to long-term development and also be effectively utilized instakeholder engagement.

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TCFD Requirements
Requirements of TCFD Recommendations
GovernanceIndicators and Targets(KPI)

Strategy

Risk Management

Board’s oversight

Risks and opportunities
identified overshort/medium/longterms

Corporate processes
for identification andassessment

Criteria used forevaluation

Management’s role inassessment andmanagement

Impact on business,strategy and financial
planning

Explanation of risk
management

GHG Protocol Scope1
to 3 emissions andrelated risks

Resilience oforganization’s strategy
under different climatechange scenarios,
including 1.5ºC
scenario

Integration of climaterelated risk
management into
overall risk
management

Management targets
and performance• Source: Final Report, Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)• GHG Protocol: Greenhouse gas accounting standards

5Section 1

Governance[Recommended disclosures]• Board’s oversight• Management’s role in assessment and management

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Governance
Governance on Climate Change
In December 2021, we established Sustainability Committee to deliberate sustainability issues including
climate change measures. The committee is chaired by the representative director and consists ofdirectors and other members, and meets four times a year.
To respond to risks and opportunities posed by climate change, company-wide policies and targets andspecific measures are deliberated at Sustainability Committee, then discussed at the Management
Meeting about the relationship and consistency with management strategies, and finally determined by the
Board of Directors. The representative director participates in discussions at the Management Meetingand executes measures determined by the Board of Directors across the group.
Governance Related to Climate Change

Overview of Sustainability Committee

Shareholders

Committee Chairperson: Representative Director
members Members: Elected from among directors andappointed by the chairperson

Appoint/Dismiss

Appoint/Dismiss

Board of Directors
Directors
Audit Committee /(Business execution)
Its members

Secretariat Corporate Planning Group, Management andPlanning Dept.

Audit/Supervise

EntrustManagement Meeting
Representative Director(Executive Officers)

ReportFrequency Meeting: Four times/year (whenever necessary)
Report to the Board of Directors: Twice a year

Sustainability Committee

Instruct

SBU* depts / Non-SBU depts

Main
agendaRespond to TCFD. Identify all company-widerisks and opportunities through committee andproject activities. Review materiality and portfolio.
Discuss sustainable management targets.

Other

Subcommittees are established for individual
themes.

Group companies* SBU: Strategic Business Unit

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Section 2

Strategy[Recommended disclosures]• Risks and opportunities identified over short, medium and long terms• Impact on business, strategy and financial planning• Resilience of the organization’s strategy under different climate change
scenarios, including 1.5ºC scenario
81. Progress in Strategy Implementation / Business Environment
Progress in Strategy Implementation
To deal with CASE (Connected, Autonomous, Shared, Electric), once-in-a-hundred-years
transformation of the automotive industry, and global warming by climate change, we haveidentified risks and opportunities for our mainstay automobile-related business with a time frame up
to 2050 focusing on the domestic business. At the same time, we announce our targets in thedomestic business areas to achieve carbon neutrality by 2050. In FY2022, we began analysis atour bases in North American (U.S. and Mexico) and China. We will promote group-wide initiatives
including analysis of other overseas bases and non-automotive businesses.

Business Environment
1.5ºC
scenario

Efforts for carbon neutrality and resource circulation are requested by stakeholders
including customers, and carbon tax and regulations on fuel efficiency and exhaustemissions are tightened. In the automobile-related business, the transition to CASE,
notably electrification, is accelerated and response to it becomes urgent.

4ºC
scenario

Since disasters (wind and flood damage) occur frequently due to extreme weather
posed by temperature rise and coasts erode with the rising sea level, implementing abusiness continuity plan including the supply chain becomes urgently necessary while
actions for carbon neutrality, resource circulation and automobile structural reform aretaken in a limited manner.
91. Progress in Strategy Implementation / Business Environment
Scenario Settings and Time Frame
Climate change-related analysis (Fig. 1) is based on RCP2.6 and RCP8.5 scenarios*2 in the “Fifth
Assessment Report” of IPCC*1 as well as impacts of 1.5ºC and 2ºC shown in the IPCC “Special Report on
Global Warming of 1.5ºC” with reference to the IEA WEO 2021 Report.
The trend of electrification, a typical example of CASE, is surveyed. (Fig. 2 on the next page)
Time frame: The time when impacts of risks and opportunities come to the surface is defined in three stages.
• Short term: 2024 [Three years from 2022]• Medium term: 2030 [Achievement of SDGs (Sustainable Development Goals)]• Long term: 2050 [Goal of limiting global average temperature rise to 1.5ºC](Fig. 1)

Change in global average surface temperature
2081–2100(Difference from 1986–2005 average)

Change in annual average surface temperature(Difference between 1986–2005 and 2081–2100 averages)

average

Source: IPCC AR5 WGⅠ SPM Fig. SPM.7(a)SPM Fig. SPM.8(a)*1 IPCC： Intergovernmental Panel on Climate Change*2 RCP2.6 scenario: Global average temperature rise at the end of 21st century is suppressed to less than 2ºC compared to before

Industrial Revolution
RCP8.5 scenario: Rise of around 4ºC compared to before the Industrial Revolution
RCP: Representative Concentration Pathways
101. Progress in Strategy Implementation / Business Environment
Prediction of Automobile Electrification
The proportion of production volume by powertrain type was calculated on a medium- to long-termbasis and used to identify risks and opportunities for the transition of our automobile-related
business unit (fasteners, powertrain parts, fuel system parts, opening and closing mechanism parts).
Fig. 2(1 million units)

Global sales forecasting of light vehicles
by powertrain type

FCEV: Fuel cell electric vehicle
FHEV: Hybrid-Full
MHEV: Hybrid-Mild
PHEV: Plug-in hybrid electric vehicle
BEV: Battery electric vehicle
ICE: Internal combustion engine

Footnote #1: This graph is based on the update of March 2022, IHS Markit Global Engine Forecast.
Footnote #2: PHEV data is created by Piolax, based on IHS Markit data.
Footnote #3: Numbers from 2033 onwards is created by Piolax, based on IHS Markit data.
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2. Risks and Opportunities (Transition Risks and Opportunities -1)【Transition risks】

Large

Medium to long

• Reduced market size andorders due to restrictions by
new pandemic, etc.

Medium tolong• Drop in sales with reduced
new car sales due todomestic
population
decrease and spread of
MaaS

Large
（China: medium)

1.5℃• Riseinnewproduct
developmentcost/capital
investmenttoaddress
CASE

MediumMediumto long
Short tomedium• Delayed response to increasedtransport process disruptions• Drop in orders for existingproducts with increased
electrification

4℃

Short to medium

Medium to large

1.5℃• Rise
in
costs
of
waste
water/waste treatment with stricter
environment-related regulations•(U.S., China) Increased response
costs due to strengthened orchangedgovernment
environmental policies

Impact/Time frame• Review
ofproduct
development and sales
strategies in response to
rapid electrification• Rise in capital investment andimprovement cost related to
manufacturing
process
decarbonization・Rise in energy cost with review ofheat sources for manufacturing
process decarbonization and useof green electricity

Development and Sales

Degree of impact
Large: A failure to respond has a great impact on the survival and growth of the company and its businesses.
Medium: A failure to respond poses a limited impact and does not affect the survival and growth of the company and its businesses.
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Medium to long
(China: short to medium)

Impact/Time frame

Large• Drop in demand formaterials for existingproducts with increased
electrification, rise inmaterialcost
anddifficultyinprocurement

Large• Loss of market due tonon-eco raw materials

1.5℃• Higher raw materials
and transport prices
with carbon tax andenergy transition at
suppliers

Manufacturing and Logistics

4℃
Medium(U.S.: large)

Impact/Time frame

Medium to long term (China: short to medium)

Procurement

Measure

Opportunity

2. Risks and Opportunities (Transition Risks and Opportunities -2)【Opportunities and Measures】

Procurement

Manufacturing and Logistics

Development and Sales• Review raw materials (conversion to ecofriendly or recycled ones), suppliers,
product designs, etc. to promote actions for
decarbonization and resource recirculation,and differentiate us from competitors.

• Accelerate
efforts
toimproveproductivity
throughfactory
automation and decarbonize domestic
facilities.

• Promote and accelerate co-creation
activities with customers to increase
sales of products for CASE.
(U.S., China)• Strengthen sales expansion to nonJapanese OEMs and increase market
share focusing on fastener parts, etc.,
which
are
less
affectedbyelectrification(U.S., China)• Increase local procurement of raw
materials to strengthen competitiveness.
(Realize cost reduction and stableprocurement.)• Resin material: Use of bioplastics• Metal material: Replacement with low-CO2
materials• Cost reduction through procurement oflocally produced goods• Reduction of energy used for transport• Purchase of decarbonized energy sources• Moka Plant renewal to improve
productivity• Thorough energy conservation• Reduction of energy consumption byreplacing utility system• Improvement of thermal efficiency of
injection molding machine•Gas replacement in heat treatment
furnace (LPG
LNG)

• Development and sales of new
products for CASE
•Increase of existing market share
mainly in fuel and drive systemcomponents (Short-term response to
demand for ICE vehicles)[Reference]• P16: Moka Plant renewal plan
•P20: Roadmap for carbon neutrality by
2050[Reference]• P15: Actions for CASE

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2. Risks and Opportunities (Physical Risks and Opportunities -1)【Risks and Measures】

Measure• Infrastructure development to strengthen plant and warehouseresilience• Improvement of work and material storage environment
through thermal management (room temperature andhumidity)• Introduction of water circulation system through water
management• Review of risk assessment with BCP database including
supply chain
14• Shutdown of plant and warehouse due toabnormal weather and increase in repair cost
• Destabilization ofabnormal weather

energysupplydue

toMedium(U.S.: large)
MediumShort to medium
Medium to long

• Increased procurement/logistics costs due toincreased natural disasters

Medium to large

Long (Mexico: short)• Suspension of operations due to decrease inavailable water resources caused by rapid
drop (or depletion) of groundwater level• Decrease in orders due to delay in responding
to changes in performance requirements fromautomakers as a result of rising temperatures• Delay in reviewing procured materials in
response to performance requirements fromautomakers due to rising temperatures

４℃

Physical risk

• Shutdown of operations and vessels due toinundation of coastal sites by rising sea levels

４℃• Degradation of raw material and productquality with temperature and humidity rise

• Impact on plant operations due to supply chain
disruptions caused by increased natural
disastersLong

Medium(China: medium to large)• Rise in air conditioning cost with temperaturerise and health hazards to employees

Impact/Time frame

Acute Risk

Medium tolarge(China: large)

Impact/Time frame

Medium (Mexico: large)

Chronic Risk

• Reduction of inventory cost through increased use of locally
produced goods• Stable procurement through supply chain diversification and raw
material standardization• Infrastructure development to strengthen plant and warehouseresilience(U.S., China)• Promote local production and consumption, and enhancecooperation with business partners in view of geopolitical risks.

3. Measures to address risks and opportunities
Initiatives for CASE Response: Strengthen Co-creation Activities with Customers
We foresee a risk of decline or loss of orders forexisting products as the electrification of vehicles
advances and the need for internal combustion
engines decreases.
On the other hand, this major change also
provides new business opportunities, so we setup
e-Products
Development
Department
dedicated to developing and expanding sales of
CASE products in April 2022. Products that weare focusing on are as follows.
Battery-related products for electrification
ADAS-related sensor/camera peripherals forautonomous driving
Products related to e-Axle (EV drive motor
system) which accelerates EV shift
Vibration control products to secure
quietness inside vehicles

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3. Measures to address risks and opportunities
Construction of new Moka Plant
・Moka Plant (Moka City, Tochigi Prefecture), our core plant in Japan, will be renewed by FY2025.
It aims to improve productivity and enhance resilience through the introduction of factory automation(addressing physical risks).
・Promote infrastructure development toward carbon neutrality by 2050 (response to transition risks).
(See P20.)

Schedule■Phase I
Dec. 2022 Start of construction
FY2023 Operation■Phase II
FY2024 Start of construction
FY2025 Operation

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Section 3

Risk Management[Recommended disclosures]• Corporate processes for identification and assessment• Explanation of risk management• Integration of climate-related risk management into overall risk
management
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Risk Management

Identification, Assessment and Management of Risks
Sustainability Committee will handle company-wide integrated management ofvarious risks and opportunities, including climate change. We will identify risks
and opportunities that could affect our group’s business activities, develop an
action plan based on the assessment of their importance, and monitor the
progress.
The risks and opportunities related to climate change are considered to have aparticularly large impact on our group’s business activities. Therefore, we willconsider a medium- to long-term action plan, also continuously review it basedon external evaluations, and strive to manage it appropriately. In FY2022,
subcommittees were set up under Sustainability Committee to work on
individual themes. We will enhance our organizational response tosustainability-related risks, including climate change risks.

18Section 4

Indicators and Targets[Recommended disclosures]• Indicators used for assessment• GHG Protocol Scope 1 to 3 emissions and related risks: citing datafrom the Sustainability Report• Management targets and performance
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Roadmap for Carbon Neutrality by 2050
Efforts to Achieve Carbon Neutrality
To achieve carbon neutrality in our business areas of Scope 1 and Scope 2 based on the GHG
Protocol, Piolax and its group companies in Japan set the amount in 2019 as the benchmark andaim to achieve a 46% reduction by 2030 and a 100% reduction by 2050.
Regarding Scope 3 of the domestic supply chain area, we will continue to consider efforts for
reduction.
Roadmap for Carbon Neutrality(t-CO2e)Innovative technology
introduction (Methanation) 10%

B.M.:16,578
15,00080%▲20%
10,000100%

Renewable energy
generation+purchase 70%

60%

▲46%
40%

5,000

▲70%
Energy conservation
20%

0
2019

2020

2025

2030

2040

2045

Innovative technology introduction
Renewable energy generation/purchase

20%

▲85%

0%
2050

Carbon neutrality in Scope 1 andScope 2 of our business areas willbeachievedthroughthecombination of energy conservation,
renewable energy and innovativetechnologies.
[Measures to achieve targets]・ For Scope 2 of our domestic
business areas, switch to renewableenergy (60% of total).
・To calculate the effect of capital
investment for necessary resources,internal carbon pricing is used tojudge the effect with consideration
to CO2 reduction effect.

* For carbon neutrality in the overseas group companies, we will continue analysis and group-wide discussions.
20Section 5

Statement of Support for the TCFD Recommendations
Our declaration that we will disclose information on our response to
climate change in accordance with the guidelines of the TCFD
recommendations.

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Statement of Support for the TCFD Recommendations
Support for the Recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD)PIOLAX, INC. supports the recommendations of the Task Force on Climate-related
Financial Disclosures (TCFD) established by the Financial Stability Board (FSB) at therequest of the G20.
We believe that the analysis of risks and opportunities posed by climate change and theachievement of set goals will be effective in solving issues on the ongoing global
warming, and thus express our support for the recommendations of the TCFD.
We will reduce greenhouse gas emissions in our own business areas as well as in the
supply chain area to contribute to the realization of sustainable society. Based on the
TCFD declaration, we will continue to analyze and address risks and opportunities thatclimate change poses to our business, and strive to improve information disclosure.
March 18, 2022
Yukihiko Shimazu
President
PIOLAX, INC.
22

The future outlook described in this document is based on the information currently available.
Due to various factors, actual results may be different from the expectations.

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