Information Disclosure
Based on the Recommendations of the Task Forceon Climate-related Financial Disclosures (TCFD) (Update)Issue: March 18, 2022
Update: March 17, 2023
Update: April 23, 2024

PIOLAX, INC.

Table of Contents

Major updates
Introduction
Section1

Governance

Section2

Strategy

Section3

Risk Management

Section4

Metrics and Targets (KPI)

Section5

Statement of Support for the TCFD Recommendations

2

Major Updates

1. Analysis of risks and opportunities based on the TCFD in our Medical Device
Business Subsidiary・・・P9, 12, 14, 16, 18

2. Piolax Group’s Roadmap for Carbon Neutrality

3

・・・P25

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.

4Requirements of TCFD Recommendations

OutlineRecommended Disclosures

Governance

Strategy

Risk Management

Metrics and Targets

Disclose theorganization’s
governance aroundclimate-related risks
and opportunities.

Disclose the actual andpotential impacts of climaterelated risks and opportunities
on the organization’s
businesses, strategy, andfinancial planning where suchinformation is material.

Disclose how the organization
identifies, assesses, andmanages climate-related risks.

Disclose the metrics and targets
used to assess and manage
relevant climate-related risks
and opportunities where suchinformation is material.

a) Describe theboard’s oversight ofclimate-related risks
and opportunities.

a) Describe the climate-relatedrisks and opportunities theorganization has identified overthe short, medium, and longterm.

a) Describe the organization’s
processes for identifying andassessing climate-related risks.

a) Disclose the metrics used by
the organization to assessclimate-related risks andopportunities in line with its
strategy and risk management
process.

b) Describe
management’s role inassessing andmanaging climaterelated risks andopportunities.

b) Describe the impact ofclimate-related risks andopportunities on theorganization’s businesses,
strategy, and financial planning.

b) Describe the organization’s
processes for managing
climate-related risks.

b) Disclose Scope 1, Scope 2,
and, if appropriate, Scope 3
greenhouse gas (GHG)
emissions, and the related risks.

c) Describe the resilience of theorganization’s strategy, taking
into consideration different
climate-related scenarios,
including a 2°C or lower
scenario.

c) Describe how processes for
identifying, assessing, andmanaging climate-related risks
are integrated into theorganization’s overall risk
management.

c) Describe the targets used by
the organization to manage
climate-related risks andopportunities and performanceagainst targets.

• Source: Final Report, Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)
5

Section 1

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

6

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, 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 a year (and as needed)
Report to the Board of Directors: Twice a year

Sustainability Committee

Instruct

SBU* depts / Non-SBU depts

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

Other

Subcommittees on sustainability have been
established.

Group companies* SBU: Strategic Business Unit

7

Section 2

Strategy[Recommended disclosures]• Risks and opportunities identified over the short, medium, and long term
• Impact on businesses, strategy, and financial planning• Resilience of the organization’s strategy under different climate-related
scenarios, including a 1.5ºC scenario
81. Progress in Strategy Implementation / Business Environment
Progress in Strategy Implementation
To deal with CASE*, once-in-a-hundred-years transformation of the automotive industry, and global warming by climatechange, we have identified risks and opportunities for our mainstay automotive parts business with a time frame up to
2050 focusing on the domestic business. We have also announced our targets for carbon neutrality by 2050.
We started analysis at our medical device subsidiary in FY2023. We are determined to contribute to society through thedevelopment of medical devices for minimally invasive treatment, while increasing efforts to reduce climate change risks
throughout the Group.

Business Environment（Automotive parts）
1.5ºC
scenario

Efforts for carbon neutrality and resource circulation are requested by stakeholders including customers, andcarbon tax and regulations on fuel efficiency and exhaust 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 by temperature riseand coasts erode with the rising sea level, implementing a business continuity plan including the supply chain
becomes urgently necessary while actions for carbon neutrality, resource circulation and automobile structuralreform are taken in a limited manner.

Business Environment（Medical devices)
Scenariocommon to
1.5ºC and4ºC

In the medical device business, where human lives are at stake, stable product supply is the most importantmission, and it is essential to be prepared for supply chain disruptions due to disasters caused by abnormal
weather. In order to deliver products directly to medical facilities, it is imperative to develop eco-friendly,
high-value-added products.

＊CASE・・・Connected, Autonomous, Shared, Electric91. Progress in Strategy Implementation / Business Environment
Scenario Settings and Time Frame
Climate change-related analysis is based on the SSP1-1.9 and SSP5-8.5*1 in the “Sixth Assessment Report” of IPCC*2(Fig. 1) with reference to the IEA WEO 2022 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: 2026 [Three years from 2024]
・Medium term: 2033 [as the 100th anniversary of the company’s founding, as well as 2030 for achieving the SDGs]
・Long term: 2050［for carbon neutrality (to limit warming to 1.5°C)]
Fig. 1*1 SSP x-y: Shared Socioeconomic Pathways*2 IPCC: Intergovernmental Panel on Climate Change

x: 5 SSPs (1: Sustainability, 2: Middle of the road, 3: Regional rivalry, 4:Inequality, 5: Fossil-fueled development
Y: Radiative forcing in around 2100 (W/㎡)
Source: IPCC AR6 Synthesis Report Cross-Section Box.2, Fig. 1

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.
111. Progress in Strategy Implementation / Business Environment
Business Domain of Medical Device

SurgicalEndovascular treatment

Gastrointestinalendoscope

Urological122. Risks and Opportunities (Transition Risks and Opportunities - 1)
[Transition Risks][Automotive parts]
Impact/Time frame

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.
13

Medium to long
(China: short to medium)
Medium to long

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

Large

• Riseinnewproduct
development cost and capital
investment to address CASE

Large
（China: medium)• Drop in orders for existingproducts
withincreased
electrification

Mediumto long• Rise in wastewater and waste
treatment costs with stricter
environment-related regulations•(U.S., China) Increased response
costs due to strengthened orchangedgovernment
environmental policies

Impact/Time frame

1.5℃

Short to medium

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

Development and Sales• Review
ofproduct
development
and
sales
strategies in response to
rapid electrification• Rise in capital investment andimprovement cost related to
manufacturing
process
decarbonization

Large• Dropindemandformaterials
forexisting
products with increased
electrification,riseinmaterial cost and difficulty
in procurement

Large• Loss of market due to noneco raw materials

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

Manufacturing and
Logistics

1.5℃

Impact/Time frame

Medium to long term (China: short to medium)

Procurement

2. Risks and Opportunities (Transition Risks and Opportunities - 2)
[Transition Risks][Medical devices]• Material cost increase andprocurement difficulties due torawmaterialchangeinresponse to resource recycling

Degree of impact (on our medical device business, not on the entire Group)
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.

Medium to long

• Review of sales strategies
to meet customer demands
forenvironmental
responsiveness• Damage to brand image
due to delays in climatechange action

14

Impact/Time frame

Large

Short to medium

Large

1.5℃

Large

• Increased cost of reforminghydrophilic treatment due to
set targets for reducing
chemical use

Development andSales• Increase in R&D andcommercialization costs fora recycling-oriented society• Increased capital investment
andimprovement
costs
related to decarbonization of
manufacturing processes

1.5℃• Increased costs associatedwith purchasing restrictions
and securing procurement
routes due to restrictions on
raw materials used

Impact/Time frame

Medium

• Soaring raw material andtransportation prices due tothe introduction of carbon
taxes and energy conversion
at suppliers

Manufacturing and
Logistics

1.5℃

Impact/Time frame

Medium to long term

Procurement

2. Risks and Opportunities (Transition Risks and Opportunities -3)[Opportunities and Measures]

MeasuresOpportunities[Automotive parts]
Procurement

Manufacturing and Logistics

Development and Sales• Review raw materials (change to ecofriendly or recycled materials), suppliers,
product designs, and others to strengthen
our response to decarbonization andresource recycling, thereby differentiating
ourselves from our 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 stable procurement.)• 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 powertrain systemcomponents (Short-term response to
demand for ICE vehicles)[Reference]• P20: Moka Plant renewal plan
•P25: Roadmap for carbon neutrality by
2050[Reference]• P19: Actions for CASE

15

2. Risks and Opportunities (Transition Risks and Opportunities -4)[Opportunities and Measures][Medical devices]
Manufacturing and
Logistics

Development and Sales• Review raw materials (change toeco-friendly or recycled materials),
suppliers, and others to strengthen
our response to decarbonization
and resource recycling, thereby
differentiating ourselves from ourcompetitors.

• Shift
operations
andmanufacturing sites to more ecofriendly practices quickly to
improve competitiveness.

• Develop and market eco-friendly products that
capture the growing environmental awareness ofcustomers, thereby improving competitiveness anddifferentiating ourselves from our competitors.

• Select and secure manufacturers
tosustainably
procurerawmaterials and supplies for ecofriendly products.

• Shift to renewable energy.
• Create synergies through cocreation activities with companies
that lead the way in environmental
responsiveness.

• Promote the development and design of packing
materials that reduce waste (smaller, thinner,
optimized shape) and new products that do not use
regulated materials.
• Develop innovative products that, for example, canshorten procedure time and reduce the burden on
patients as well as energy consumption in the
medical setting.
• Develop high value-added products that contributeto "standardize procedures," which directly relates
to the success rate of surgery.

MeasuresOpportunities

Procurement162. Risks and Opportunities (Physical Risks and Opportunities -1)[Risks and Measures][Automotive parts]

Measures• Increased procurement/logistics
increased natural disasters

costs

due

to

• Shutdown of plants and warehouses due toabnormal weather and increase in repair cost
• Destabilization of energy supply due to abnormal
weather• Infrastructure development to strengthen plant and warehouseresilience• Improvement of work and material storage environment throughthermal management (room temperature and humidity)• Introduction of water circulation system through water management• Review of risk assessment with BCP database including supply
chain

17

Medium(U.S.: large)

Short to medium
Medium to long

• Delay in reviewing procured materials in response toperformance requirements from automakers due torising temperatures

Medium to large

Medium(Mexico: large)

Suspension of operations due to decrease inavailable water resources caused by rapid drop (ordepletion) of groundwater level• Decrease in orders due to delay in responding tochanges in performance requirements fromautomakers as a result of rising temperatures• Market shrinking and decrease in orders due to new
pandemic-related behavioral restrictions

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

４℃

Physical risks• Degradation of raw material and product quality
with temperature and humidity rise

• Delays in responding to increased disruptions in thetransportation process• Impact on plant operations due to supply chain
disruptions caused by increased natural disasters
Long term (Mexico: short)• Rise in air conditioning cost with temperature riseand health hazards to employees

Impact/Time frame

Acute Risk

M to L(CHN:
L)

Impact/Time frame
Medium(China: medium to 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 enhance cooperation
with business partners in view of geopolitical risks.

2. Risks and Opportunities (Physical Risks and Opportunities -2)[Risks and Measures][Medical devices]• Increased procurement/logistics costs due toincreased natural disasters• Shutdown of plants and warehouses due toabnormal weather and increase in repair cost
• Destabilization of energy supply due to abnormal
weather

Short to medium• Market shrinking and decrease in orders due to new
pandemic-related behavioral restrictions

Impact/Time frame

Medium to longLong term

Medium４℃

Medium• Degradation of raw material and product quality
with temperature and humidity rise

• Delays in responding to increased disruptions in thetransportation process• Impact on plant operations due to supply chain
disruptions and traffic infrastructure disruptions aswell as difficulty in securing labor force, caused byincreased natural disasters• Infrastructure development to strengthen plant and warehouse• Reduction of inventory cost through increased use of locally produced

resilience• Maintenance of work environment through thermal management

goods• Stable procurement through supply chain diversification and raw
material standardization• Infrastructure maintenance and improvement to strengthen theresilience of plants and warehouses, including private power generation• Formulation, maintenance, and management of BCP (including its
training)• Strengthen logistics in product transportation (improve efficiency,
consider alternative routes in case of disaster and secure them inadvance)[Ref.]• P.20 Disaster risk preparedness

MeasuresPhysical risks• Rise in air conditioning cost with temperature riseand health hazards to employees

Acute Risk

Large

Impact/Time frame

４℃
Med
Middle to large
ium

Chronic Risk

18

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

193. Measures to Address Risks and Opportunities
Construction of New Moka Plant[Response to physical risks]
・Moka Plant (Tochigi Prefecture), our core plant in Japan, will be renewed through FY2030.
It will improve our productivity through factory automation and enhance our resilience.
【Response to transition risks】
・The plant will produce CASE products we are focusing on.
・The plant will promote infrastructure development toward carbon neutrality by 2050 (see P24).
・Phase I construction completed in December 2023

[Schedule]■Phase I
April 2024: Official operation■Phase II
FY2024: Start of construction
FY2025: Operation
Solar panels on new Moka Plant

20

3. Measures to Address Risks and Opportunities
Construction of New Global Head OfficeSustainable office to present the Piolax corporate brand to the world・ZEB Ready* certification expected.
・Fully automatic louvers on windows to reduce outside light and adjust
light level and room temperature.
・Parking space for EVs which provide power in case of emergency.
[Schedule]
Start of construction: FY2024 → Completion: FY2025

Image of new Head OfficeEfforts for Carbon Neutrality
・Moka and Fuji Plants have started to introduced CO2-free power since April 2023, so
has our medical device subsidiary since October of the same year. This will be spreadto other group companies.

U.K.

・Self-supply of renewable energy by solar panels started at our U.K. base in 2017,
followed by Thailand in 2020 and the new Moka Plant in 2024.
・Carbon offsetting through overseas green power certificates is to be considered.

*ZEB Ready: buildings that achieve a reduction in primary energy consumption of 50% or more from thestandard primary energy consumption through energy conservation
21

Thailand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
22

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.

23

Section 4

Metrics and Targets[Recommended disclosures]• Criteria used for assessment• GHG Protocol Scope 1 to 3 emissions and related risks: citing datafrom the Sustainability Report• Management targets and performance24

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, the Piolax Group sets the amount in 2019 as the benchmark and aims to achieve a 46%
reduction by 2030 and a 100% reduction by 2050.
Regarding Scope 3 of the supply chain area, we will continue to consider efforts for reduction.

Roadmap for Carbon Neutrality(t-CO2e)45,00040,000100%

Introducing innovativetechnology (methanation) 10%

BM：47,772

90%
80%

▲20％

35,000Generating and purchasing
renewable energy 70%

30,000

70%
60%

▲46%

25,00050%

20,00040%

15,000▲70%

30%

10,000

20%

▲85%

5,000

10%

Energy saving 20%

0

0%
2019
徹底した省エネ
Energy saving

2020

2025

2030

Renewable
再エネ発電・購入
energy2040

2045

Innovative
革新的技術導入
technology

25

2050
削減目標
Reduction target

Carbon neutrality in Scope 1 andScope 2 of our business areas will beachieved through the combination ofenergyconservation,
renewableenergy, and innovative technologies.
[Measures to achieve the targets]・Zero CO2 emission plan for Scope 2
2030: domestic business area
2040: overseas business area
・ To calculate the effect of capital
investment for necessary resources,internal carbon pricing is used to judge
the effect with consideration to CO2
reduction effect.

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.

26

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.
27

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.

28