Information Disclosure Based on Recommendationsof the Task Force on Climate-related Financial
Disclosures (TCFD)

March 18, 2022
PIOLAX, INC.

Table of Contents
Introduction
Section 1

Governance

Section 2

Strategy

Section 3

Risk Management

Section 4

Metrics and Targets (KPI)

Section 5

Statement of Support for TCFD Recommendations

1

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

2

TCFD Requirements
What is TCFD?
The TCFD (Task Force on Climate-related Financial Disclosures) is a private-sector-led task force
established in December 2015 by the Financial Stability Board (FSB) at the request of the G20.
Publishing its final report in June 2017, the TCFD encourages individual companies to identify both negative(risk) and positive (opportunity) impacts of climate change and to disclose them as financial reporting on acomprehensive and voluntary basis.

Requirements of TCFD Recommendations: 4 elements and 11 items on climate-relatedrisks and opportunities
Governance

Strategy

Risk Management

Metrics and Targets (KPI)

Board’s oversight

Risks and opportunities
identified overshort/medium/long terms

Corporate processes for
identification andassessment

Metrics used forassessment

Management’s role inassessment andmanagement

Impact on business,strategy and financial
planning

Explanation of risk
management

GHG Protocol Scope 1 to 3
emissions and related risks

Resilience of organization’s
strategy under different
climate change scenarios,
including 1.5ºC scenario

Integration of climaterelated risk management
into overall risk
management

Performance against
targets to be managed• Source: Final Report, Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)• GHG Protocol: Greenhouse gas accounting standards
3Section 1

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

4

Governance
Governance on Climate Change
In December 2021, we established a sustainability committee to deliberate sustainability issues, including
climate change measures. The committee is chaired by the representative director with members consistingof mainly directors and is held four times a year.
To respond to risks and opportunities posed by climate change, company-wide policies and targets andspecific measures are deliberated by the sustainability committee, then discussed at the management
meeting about the relationship and consistency with management strategies, and finally determined by theboard of directors. The representative director participates in discussions at the management meeting andexecutes measures determined by the board of directors across the group.
Governance Related to Climate Change

Overview of Sustainability Committee

Shareholders
Appoint/Dismiss

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

Appoint/Dismiss

Board of directors

Secretariat Corporate Planning Group, Management and Planning
Dept.

Directors (Business execution)
Audit committee / Its members
Audit/Supervise
EntrustManagement meeting
Representative director(Executive officers)

Frequency Meeting: Four times/year (whenever necessary)
Report at board of directors: Twice a year

Sustainability committee
ReportInstruct
SBU* depts / Non-SBU depts

Main
agendaResponse to TCFD, extraction of all company-widerisks and opportunities we may face from committee
and project activities, review of materiality andportfolio, and deliberation of sustainable management
objectives

Other

Subcommittee on climate change to be established (inApril 2022)

Group companies* SBU: Strategic Business Unit

5

Section 2

Strategy[Recommended disclosures]• Risks and opportunities identified over short, medium and long terms• Impact on business, strategy and financial planning• Resilience of organization’s strategy under different climate change
scenarios, including 1.5ºC scenario
61. Progress in Strategy Implementation / Business Environment
Progress in Strategy Implementation
To deal with CASE (Connected, Autonomous, Shared, Electric), once-in-a-hundred-years transformationof the automotive industry, and global warming by climate change, we have identified risks andopportunities for our mainstay automobile-related business with a time frame up to 2050 and a focus on
the domestic business. At the same time, we announce our targets in the domestic business areas toachieve carbon neutrality by 2050. In future, we will analyze our overseas business and non-automobilerelated businesses for further group-wide discussion.

Business Environment
1.5ºC
scenario

Not only actions for carbon neutrality and resource circulation are requested bystakeholders including customers but also carbon tax and regulations of fuel efficiency andexhaust emissions 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 bytemperature rise and coasts erode with the rising sea level, implementing a business
continuity plan including the supply chain becomes urgently necessary while actions forcarbon neutrality, resource circulation and automobile structural reform are taken in a limited
manner.
7

1. Progress in Strategy Implementation / Business Environment
Scenario Settings and Time Frames
The climate change-related analysis (Fig. 1) is based on RCP2.6 and RCP8.5 scenarios*2 in the “Fifth
Assessment Report” of IPCC*1, impacts of 1.5ºC and 2ºC shown in the “Special Report on Global
Warming of 1.5ºC” of IPCC with reference to the IEA WEO 2021 Report.
Survey on the trend in electrification, the typical example of CASE (Fig. 2 on the next page)
Time frames: Defined in three phases where risks and opportunities manifest themselves• Short term: 2024 [Three years from 2021]• 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(Difference from 1986–2005 average)

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

Year

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
8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.

92. Risks and Opportunities (Transition Risks and Opportunities)

Opportunity

MeasureLarge
MediumMedium/long term

1.5ºC

• Delayed response to increasedtransport process disruptions

Impact/Time frame

4ºC• Delay in addressing plant operations
affected by supply chain disruption
with increased natural disasters• Drop in orders for existing productswith increased electrification• Rise in new product developmentcost/capital investment to address
CASE
Short/medium term

• Rise in costs of waste water/waste
treatment with stricter environmentrelated regulations

Medium to large• Rise in energy cost with review ofheat sources for manufacturing
process decarbonization and use ofgreen electricity

Impact/Time frame

1.5ºC

Large

• Rise in capital investment andimprovement cost related to
manufacturing process
decarbonization

Development and Sales

Medium• Delay in reviewing procurement
materials to respond to
performance change requested
by automakers with temperature
rise

4ºC

• Higher procurement cost fromsupply chain with increased
natural disasters

Medium/long term

Transition
risk• Drop in demand for materials forexisting products with increased
electrification, rise in material costand difficulty in procurement

Medium to large• Loss of market due to non-eco
raw materials

Impact/Time frame

1.5ºC• Higher raw materials andtransport prices with carbon tax
and energy transition at suppliers

Manufacturing and Logistics

4ºC

Procurement• Drop in sales with reduced new car
sales due to domestic population
decrease and spread of MaaS.
• Reduced market size and orders
due to domestic population decline
and movement restrictions with new
pandemic• Drop in orders due to delay inresponding to performance change
requested by automakers withtemperature rise

★ Review raw materials (conversion to eco-friendly
or recycled ones), suppliers, product designs, etc. topromote actions for decarbonization and resource
recirculation, and differentiate us from competitors.

★ Accelerate efforts to improve productivity throughfactory automation and decarbonize domestic facilities.

★ Promote and accelerate co-creation activities withcustomers to increase sales of products for CASE

• Resin material: Use of bioplastics• Metal material: Replacement with low-CO2
materials• Cost reduction through procurement of locally
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 by replacing 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
• BEV parts (EV battery, e-Axle, etc.)• Parts responding to changes in vehicles with spreadof automation, sharing, etc.
• Increase of existing market share mainly in fuel anddrive system components(Short-term response to demand for ICE vehicles)[Reference]• P13: Moka Plant renewal plan
• P17: Roadmap for carbon neutrality by 2050

[Reference]• P12: Actions for CASE

10

2. Risks and Opportunities (Physical Risks and Opportunities)

Measure• Increase of inventory cost in anticipation ofabnormal weather

Impact/Time frame• Infrastructure development to strengthen plant and warehouseresilience• Improvement of work environment and material storage environment
through thermal management (room temperature and humidity)• Introduction of water circulation system through water management• Review of risk assessment with BCP database including supply chain• 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[Reference]• P13: Moka Plant renewal plan

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.
11

Medium to large• Disruption of supply chain due to abnormal weather(wind and flood damage)• Destabilization of energy supply due to abnormal
weather• Shutdown of plant and warehouse due to abnormal
weather and increase in repair cost

4ºC

Long term

MediumMedium

Impact/Time frame

4ºC

Physicalrisk• Rise in air conditioning cost with temperature rise andhealth hazards to employees• Degradation of raw material and product quality withtemperature and humidity rise
• Suspension of operations due to decrease in available
water resources caused by rapid drop (or depletion) ofgroundwater level• Shutdown due to inundation of coastal bases resulting
from sea level rise

Acute Risk

Medium/long term

Chronic Risk

3. Measures to Address Risks and Opportunities
Actions for CASE: Promoting co-creation activities with customers
TargetCAS

Examples of developed productsE
e-AxleSprings

EV

Batteryrelated
parts

HEV

Motor
modulebus rings

ADAS

Sensorrelated
parts

12

Battery vent tubes

3. Measures to Address Risks and Opportunities
Moka Plant renewal plan
• Piolax Moka Plant (Moka City, Tochigi), the core plant in Japan, will be renewed over the next five
years to improve productivity and strengthen resilience through the introduction of factory
automation. (Response to physical risks)• To achieve carbon neutrality by 2050 (see P17) and others, we will promote infrastructuredevelopment. (Response to transition risks)

13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
14

Risk Management
Identification, Assessment and Management of Risks
The newly established sustainability committee will handle company-wide integrated
management of various 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 will consider
a medium- to long-term action plan, also continuously review it based on external
evaluations, and strive to manage it appropriately. In fiscal year 2022, a new
subcommittee dedicated to climate change will be established under the sustainability
committee to strengthen the organizational action to climate change risks.

15Section 4

Metrics and Targets[Recommended disclosures]• Metrics used for assessment• GHG Protocol Scope 1 to 3 emissions and related risks: citation from
CSR Report data
• Performance against targets to be managed
16

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 the 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 the reduction
efforts.
Roadmap for Carbon Neutrality(t-CO2e)
16,000Innovative technology introduction(Methanation) 10%

B.M.:16,578

14,000

100%
90%
80%

▲20%

Renewable energy
generation+purchase 70%

12,00010,000

70%
60%

▲46%

8,000

50%
40%

6,000

30%

▲70%

4,000
2,000

Energyconservation 20%

0
2019

2020

2025

Thorough energy conservation
Innovative technology introduction

2030

2040

20%

▲85%

10%
0%

2045

2050

Renewable energy generation/purchase
Reduction targets

Carbon neutrality in Scope 1
and Scope 2 of our businessareas will be achieved throughcombination of energy
conservation, renewableenergy and innovativetechnologies.
[Measures to achieve targets]
To calculate the effect of capital
investment for necessary
resources, internal carbon
pricing is used to judge theeffect with consideration to
CO2 reduction effect.

* For carbon neutrality in overseas group companies, we will continue further group-wide discussions.
17Section 5

Statement of Support for TCFD
Our action to climate change
We declare information disclosure in accordance with the guidelines of
the TCFD recommendations

18

About Statement of Support for TCFD
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.
19

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.