Ryohin Keikaku Co., Ltd.
Information Disclosure Based on TCFD Recommendations
December 2023
■ Corporate Purpose and ESG Management
Ryohin Keikaku does business in accordance with its corporate purpose: to contribute to the creation of a truthfuland sustainable life for all through our products, services, stores and business activities; believing human societyrich in heart, with balanced relationship between human, nature and artifacts.”
We aim to build a sustainable society while achieving circularity and coexisting with nature through our productdevelopment, services and actions.
Through our core value of “contributing to society and people” our employees and associates will proactively
respond to issues facing society and the Earth and make efforts to reduce our environmental burden and respectindividual human rights throughout the entire lifecycle of our products, services and actions in all business areas.
Ryohin Keikaku has been committed to ESG management since its establishment in 1980. We will further refine
this commitment through 2030 by encouraging people to take part in sustainability activities and by creating a
positive social impact. We are working to achieve our goals in the relevant focus areas we have identified.
ESG in Products

We will encourage participation in sustainability activities worldwide by adopting
circular design for all products and offering them at affordable prices.

ESG in BusinessWe will collaborate with stakeholders to reduce social costs and environmental

Activities

burden. At the same time, we will contribute directly to solving social issues throughour business activities.

ESG in Communities

We will make a positive impact on society by leading the revitalization of local areas
through activities with local communities.

We have determined four evaluation indices for the above and will regularly disclose results and progress.
1. Build a sustainable society while achieving circularity, and coexisting with natureReduce combustion of fossil fuels and use of their derivatives



Guarantee ethical production processes

Encourage participation in sustainability activities

2. Revitalize communities and resolve their issues through localization activities


Resolve issues arising from an aging society and declining population

Open stores and revitalize industry and the economy in local communities

Preserve local communities, the environment and traditional culture
1 / 103. Promote high employee engagement and acquisition of problem-solving skills


Maintain a corporate culture of acting proactively and independentlyBe highly sensitive to social issues and finding solutions

Demonstrate commitment to diversityCreate of workplaces where anyone can fit in and succeed

4. Achieve “public interest and people-centered management”


Encourage co-owned management

Earn strong shareholder supportEarn strong support from residents, customers, local communities and business partners■ Climate Change Initiatives and Information Disclosure
Ryohin Keikaku recognizes that climate change is seriously impacting society, and aims to achieve theinternational goals set in the Paris Agreement by working with a wide range of stakeholders, including suppliers,
in initiatives to create a sustainable society. In addition, we recognize the importance of disclosing climaterelated financial information. We will continue to identify the impact of climate-related risks and opportunities on
our business, formulate and implement strategies and enhance information disclosure in line with the TCFD
(Task Force on Climate-related Financial Disclosures) framework.

2 / 101.

Governance

Addressing climate change is one of the most important management issues for Ryohin Keikaku, and we haveestablished a governance system centered on oversight by the Board of Directors and the ESG Management
Committee.
The Board of Directors receives reports on ESG management-related initiatives as necessary, including those that
address climate change, at least twice a year from the Business Management Division, which is the secretariat of
the ESG Management Committee. The Board also supervises progress and achievement of targets, and discusses
and provides guidance on policies and initiatives. In addition, from FY2022 we have introduced a restricted stockcompensation system for directors (other than outside directors), and have added the achievement level ofimportant ESG indices from a long-term perspective to the evaluation index.
The chairman & representative director chairs the ESG Management Committee, which addresses medium- andlong-term Company-wide ESG issues. Inside directors, executive officers, and managers of related businessdivisions participate in the committee’s monthly meeting. Committed to improving ESG management in its corebusiness while remaining flexible, Ryohin Keikaku complements the ESG Management Committee with weekly
meetings attended by representative directors, other inside directors and executive officers. We are working toenhance effectiveness by engaging in relevant discussions.
◆ Board of Directors and Committee Meetings Related to Climate Change
Board of11/2022 ・ Reporting information disclosure based on TCFD recommendations
Directors
4/2023・ Interim progress reports on ESG-PJs* including matters related to climate change
8/2023・ Annual progress reports on ESG-PJs* including matters related to climate change
Executive
Advisory
Committee

9/2022
10/2022・・

Status reports on ESG evaluation indicators including CDP
Reports on climate change risk analysis

・ Reported on Scope 1, 2 and 3 emissions
・ Simulated increase in Scope 1 and 2 emissions and policy for reducing them・ Report on joining the CDP Supply Chain program
3/2023・ Progress report on Scope 3 emission reduction (environmental impact of logistics)*ESG-PJs refers to the company wide projects related to ESG issues implemented during FY2023.
ESG
Management
Committee

10/2022
2/2023

Discussions at ESG Management Committee meetings and weekly meetings attended by representative directors,
other inside directors and executive officers are reported to the Board of Directors for deliberation, resolution andincorporation into business strategies and management policies based on risks and opportunities.
Details of our ESG management structure are available at the following link:
https://www.ryohin-keikaku.jp/eng/sustainability/muji-sustainability/goals/

3 / 102.

Strategy(1)

Risk and opportunity assessment and action plans

We identify climate change-related risks and opportunities that will affect our business, and then implement
relevant action plans after qualitatively and quantitatively evaluating risks and opportunities based on theirimportance to business strategy, financial impact in terms of revenue and costs, and the relevant time frame. We
organized the outcomes as follows, with emphasis on TCFD reporting recommendations. We plan to accelerate
our growth strategy by responding to various risks, mitigating or eliminating their effects, and contributing to
global environmental conservation by supplying products that take into account their environmental impact,
thereby meeting the growing environmental orientation and expectations of our customers.
Assessment of Key Risk and Opportunity Impacts and Action Plans
ImpactType

Specific Potential ImpactsMorestringentGHG
emission
regulations,incl. carbon
taxes

Risk

 Introduction of carbon
taxes on GHG emissions
 Introduction of carbon
taxes, etc., on procured
goods, or increase inoperating and procurement
costs due to GHG
reduction measures Increase in transportationand storage costs due tointroduction of carbon
taxes, etc., for distribution
centers, offices anddelivery vehicles

Cost

Risk

 Increase in procurement
costs due to increased useof recycled plastics andbiomass plastics

Cost

Regulatory

Key Risks and Opportunities

Transition Risks and Opportunities

More
stringent
regulation ofplastics

Fossilresource
pricefluctuations

Risk

MarketLong-term
product use

Risk

ImpactIntensity

Mediumto Large

Large

Time
Frame

Action Plans

Mediumterm

 Reduce GHG emissions inaccordance with MediumTerm Business Plan
 Visualize GHG emissions
throughout the supply chain
and implement reduction
initiatives

Mediumterm

 Minimize cost increases by
eliminating plastics, reducing
thickness and weight, andswitching to alternative
materials for merchandiseand packaging

Mediumterm

 Promote energy conservationinternally and amongsuppliers Eliminate plastics, reduce
thickness and weight, andswitch to alternative
materials for merchandiseand packaging

 Increase in operating andprocurement costs due torising prices for energy
consumed by Ryohin
Keikaku and suppliers Increase in procurement
costs due to rising prices ofraw materials derived fromfossil resources

Cost Rising prices for energy
consumed by warehouses
and delivery companies

Cost

Large

Mediumterm

 Decrease in replacement
frequency and sales due tolong-term product use
 Decrease in sales due torelative decline in demand
for new clothing

Revenue

Mediumto Large

Mediumterm

4 / 10Mediumto Large

 Implement energy-saving
initiatives at distribution
warehouses
 Reduce energy use in ways
such as cooperating withlogistics companies toimprove transport efficiency
and sharing transportation
 Promote reuse and recycling Promote productdevelopment using recycled
raw materials
 Develop products for longterm use
 Structure sustainablesystems; e.g., commercialize
secondary distribution

Opportunity Increase sales by attracting
new customers who focus
on sustainability

Revenue

MediumMediumterm

Risk

 Loss of customers anddecrease in sales due to a
decline in competitive
advantage resulting fromdelays in addressing
sustainability issues

Revenue

MediumLong
term

 Sales growth resulting
from increased demand forenvironmentally
responsible products

Revenue

Mediumto Large

Mediumterm

Revenue

Mediumto Large

Long
term

 Expand lineup of productsthat use pests, and soy meat Develop products that use
low-carbon ingredients

Short
term

 Assess the physical risks ofstores and distribution
centers
 Mitigate flooding at sites
with high hazard risk, andengage in business continuity
planning

Brandsknown forbeing
sustainable

Reputation
Growingdemand for
products
that usesustainablerawmaterials

Opportunity

 Sales growth resulting
from increased demand for
low-carbon protein foods

Acute
Chronic

Physical Risks and Opportunities

Risk Increase in loss on disposalof products, etc., resulting
from increased damage tostores, distribution centersand other facilities due toextreme weather events
including flooding andtyphoons

Cost

Rising sea
level

Risk

 Relocation costs resulting
from increased risk offlooding where stores anddistribution centers arelocated

Cost

MediumLong
term

Increase inaveragetemperature

Risk Increase in store cooling
costs

Cost

MediumMediumterm

Risk

 Increase in procurement
costs due to higher prices
for materials such as cottonand linen resulting fromincreased floods anddroughts
 Increase in timber
procurement costs due toreduced timber supply
resulting from ecosystemchanges

Cost

Mediumto Large

Long
term

Increase in
extremeweather

Changes inprecipitation
and weather
patterns, andrisingaveragetemperatures

Impact assessment: Raise awareness of Ryohin
Keikaku’s commitment tosustainability and ESG byenhancing worldwide
communication of corporate
purpose, ESG commitment
since founding,manufacturing perspectives,
new initiatives to resolve
social issues, etc.
 Improve ESG management inaccordance with theMedium-Term Business planand enhance information
disclosure andcommunication
 Draw on external ESG
evaluations to accurately
identify and appropriately
address priority issues
 Cultivate and use
environmentally responsible
materials such as kapok andhemp Switch to environmentally
responsible materials anddevelop products with themMedium Mitigate flooding at storesand distribution centersexposed to high flood risk
 Thoroughly assess climatechange risk before opening
stores Install solar energy
equipment Install energy-saving
equipment Continuously monitor priceconditions by country Diversify raw material
production areas

Revenue: Large = ¥10 billion or more; Medium = ¥1 billion to less than ¥10 billion; Small = less than ¥1 billion
Cost: Large = ¥1 billion or more; Medium = ¥100 million to less than ¥1 billion; Small = less than ¥100 million
Impact time frame: Short term = within 2 years; Medium term = Over 2 years to 10 years; Long term = Over 10 years

5 / 10(2) Scenario analysis
Ryohin Keikaku believes that mitigating risks and expanding opportunities is essential to sustainably improving
its corporate value and social value. We have therefore conducted a scenario analysis of the risks andopportunities posed by climate change.
We referenced several scenarios, as follows:Stated Policies Scenario (STEPS): A scenario presented by the International Energy Agency (IEA) in its
World Energy Outlook 2022 based on public policies. It posits a global average temperature rise of
approximately 2.6°C by around 2100 compared with pre-industrial levels, based on policies countries
have announced to date.



Sustainable Development Scenario (SDS): A scenario in which emissions are gradually reduced in orderto keep the increase in global average temperature below 1.5°C compared with pre-industrial levels.

Intergovernmental Panel on Climate Change, IPCC RCP 8.5: A scenario that essentially posits thehighest level of greenhouse gas emissions.

OECD, Global Ambition policy scenario presented in Global Plastics Outlook Policy Scenarios to2060: A scenario that posits successful international cooperation in reducing plastic leakage into theenvironment to almost zero by 2060.

The 1.5°C scenario and the 4°C scenario: The former posits ongoing decarbonization and the latter
posits ongoing global warming, with analysis of impact intensity over the medium and long term.

We have qualified financial impact as follows:

Large: ¥10 billion ≤ revenue; ¥1 billion ≤ costMedium: ¥1 billion ≤ revenue < ¥10 billion; ¥100 million ≤ cost < ¥1 billion



Small: revenue < ¥1 billion; cost < ¥100 million■ Transition Risks and Opportunities: 1.5°C Scenario (with Ongoing Decarbonization)
We examined transition risks and opportunities based on the 1.5°C scenario, which posits the introduction ofvarious regulations for decarbonization. Among the significant risks and opportunities identified above, theimpact of carbon taxes, changes in fossil resource prices, and more stringent regulations on plastics and changes
in the market are significant, so we performed scenario analysis as follows.
Carbon Taxes
Large financial impact from carbon tax liability as of 2030
We quantified carbon taxes and their impact with reference to the IEA’s World Energy Outlook 2022, andquantified the impact.



If the Ryohin Keikaku Group does not work to reduce GHG emissions through 2030 and fails to achieve theemission reduction targets* based on its medium-term business plan, the Group’s GHG emissions in Japanand overseas will increase by 2.7 times compared with FY2021 (baseline year). In this case, we expect the
6 / 10financial impact of carbon tax liabilities will be large.
On the other hand, we expect that achieving a 50% reduction in Scope 1 and 2 emissions through 2030 basedon the medium-term business plan will significantly reduce carbon tax liabilities. We will continue to
implement initiatives to reduce emissions, including the use of renewable energy and the installation offacilities to generate solar power for internal use. We will also implement initiatives at our global businesssites to reduce GHG emissions in consideration of local conditions.
* GHG emissions reduction target: 50% reduction in Scope 1 and 2 for the entire Group as of 2030
(compared with FY2021)

Fossil Resource Price Fluctuations
Large financial impact from rising energy costs as of 2030
We quantified the future price of electricity and its impact with reference to the IEA’s World Energy Outlook
2019, and quantified the impact.

We estimate that our electricity consumption in Japan will increase by 5.3 times through 2030 as ourbusiness grows if we do not implement initiatives to reduce it, and expect the cost of electricity to have alarge financial impact under this scenario.



In contrast, we expect to reduce energy costs by reducing the amount of electricity we use and increasing theamount of solar power we produce for internal use.

Medium financial impact from rising plastic raw material prices as of 2030
We quantified the impact on raw material procurement costs for plastic products in our furniture department
with reference to global regulations and trends in plastics markets. We wanted to quantify the impact ofclimate change in and of itself, so we did not include the impact of business growth in our calculations.



Our scenario set the unit price of plastic raw materials as of 2030 at 1.3 times the price for FY2021 withreference to crude oil price trends presented by the IEA’s World Energy Outlook 2021. In addition, we set theratio of recycled materials to total plastic materials we procure as of 2030 at 60% with reference to the
Global Ambition policy scenario that the OECD presented in Global Plastics Outlook Policy Scenarios to
2060.



We used the above assumptions for preliminary calculations based on the amount of plastic raw materials
procured by our furniture department as of 2021 to forecast the medium financial impact from increased
procurement costs in 2030.

More Stringent Regulation of Plastics and Market Fluctuations
Large financial impact from decrease in sales of products made with plastics from fossil resources as of2030
Large financial impact from increased sales of products made with recycled plastics as of 2030
We quantified the impact on revenue from plastic products in our furniture department with reference toglobal regulations and trends in plastics markets. We wanted to quantify the impact of climate change in and7 / 10of itself, so we did not include the impact of business growth in our calculations.


Our scenario as of 2030 assumed (1) a 20% reduction in products made with plastics from fossil resources,and (2) a 60% ratio of recycled materials to total plastic materials we procure, with reference to the Global
Ambition policy scenario that the OECD presented in Global Plastics Outlook Policy Scenarios to 2060.



As a result, we forecast a large financial impact from a decrease in sales due to regulations and extended
product life for plastic products made from fossil resources. At the same time, we also forecast a large
financial impact from an increase in sales from an expanded lineup of plastic products made with recycled
raw materials. We therefore forecast that we must pivot significantly from raw materials made with fossil
resources to recycled raw materials.

■ Physical Risks and Opportunities: 4°C Scenario (with Ongoing Global Warming)Physical risks and opportunities include the serious likely short-term risk of an increase in extreme weather
due to ongoing global warming. We therefore qualitatively analyzed the impact of extreme weather eventson our main business sites in Japan and overseas based on a 4°C scenario in which this trend will further
intensify.

Damage Caused by Natural Disasters
Number of main business sites expected to experience damage from flooding or storm surge as of 2050: 2
in Japan, 11 overseas


We assessed expected damage from natural disasters with reference to the hazard maps of the Ministry ofLand, Infrastructure, Transport and Tourism for sites in Japan, and hazard information from the World
Resources Institute (WRI) and the Joint Research Centre (JRC) of the European Commission for sites
overseas.



We selected sites exposed to significant impact from among stores, distribution centers and supplierproduction sites in the countries and regions where we operate, based on metrics including revenue,
inventory value and procurement volume. We assessed site damage from flooding or storm surge under the
4°C scenario as of 2050.



As a result, we forecast that buildings at two locations in Japan and eleven locations overseas are exposed to
first-floor inundation of 3.0 meters or more due to flooding or storm surge.

3.

Risk Management

Ryohin Keikaku assesses the likelihood of exposure to significant risks using criteria including the intensity andimpact time frame. We then take action to minimize the occurrence of risks and the impact if they materialize.
For transition risks and opportunities, we will reduce our carbon tax liability by achieving GHG emission
reduction targets in accordance with our Medium-Term Business Plan, and by visualizing and reducing GHG
emissions throughout the supply chain. In addition, we will address more stringent regulations on plastics andfossil resource price fluctuations by offsetting cost increases through the use of plastic-free products and8 / 10

packaging materials, reducing weight and switching to alternative materials. Furthermore, we will consistently
communicate our corporate purpose, commitment to ESG since our founding, and our three manufacturing
perspectives while expanding opportunities by promoting the use of environmentally responsible materials andproduct development, and responding to growing demand for sustainable products and services.
We will also address physical risks and opportunities with measures to counter flooding at stores, distribution
centers and supplier production sites exposed to high hazard risk in order to mitigate natural disaster risk. In
addition to these disaster countermeasures, we will fulfill our responsibilities and contribute to local communities
by quickly resuming operations at stores in affected areas and delivering necessary supplies.
Ryohin Keikaku sees climate change risk as one of the most significant risks to which the Group is exposed. Ourrisk assessment process involves the Compliance and Risk Management Committee, which oversees Group-widerisks. The committee assesses probable exposure to risks at least once a year based on their significance andlikelihood of occurrence.

4.

Metrics and Objectives

One objective of Ryohin Keikaku’s Medium-Term Business Plan is to design all products from an ESG
perspective. A key program for achieving our objectives involves launching environmentally responsible
businesses and products that can be reused and recycled as the starting point for creating a positive social impact.
This program is inspired by our vision for a future in which society widely reuses and recycles so that existingproducts become energy-efficient raw materials to be used by future generations, thus helping society byeliminating the need to extract new resources from the Earth. Plastics are a priority issue, and we have launchedinitiatives to minimize the use of new raw materials derived from fossil resources. In the near future, we will (1)reuse and recycle all products, (2) eliminate plastic waste, (3) shift to alternative materials with low
environmental impact, and (4) use only plastic products made from recycled raw materials.
Details about plastic products made from recycled plastic are available at the following link:
https://www.ryohin-keikaku.jp/news/2023_0213.html (Japanese only)
In addition, we are directly mitigating the impact of climate change with initiatives to visualize and reduce GHG
emissions in all our business activities. Specifically, we will use renewable energy and install solar panels.
Committed to achieving our goals, we have formulated the following targets and performance indicators for2030, and will disclose the results.
Index

TargetStatus as of FY2022

GHG emissions (Scope 1 and 2;

50% reduction through 2030

65,180 t-CO2e, 10.1% increase comparedGroup-wide)(compared with FY2021)

with FY2021

Use renewable energy at stores,
distribution bases and elsewhere1

In use at select stores

100% in 2030

In use at the Hatoyama Distribution Center2
9 / 10Install solar panels at independent
store buildings, distribution bases and100% in 2030

eleswhere3

Installed at the Hatoyama Distribution Center(installation completed in 2014)
Apparel: 74.8%

Eliminate plastic packaging materials

100% in 2030

Household goods: 47.0%
Food products: Sold by weight at some stores

Design products for re-use andrecycling

100% in 2030

Household goods: 36.0%
Volume of post-consumer plastic bottles

Reuse post-consumer plastic products
we collect

100% in 2030

collected: 1,130 kg
Volume of post-consumer plastic bottles
reused: 1,130 kg

1.

Stores, distribution bases and other facilities for which Ryohin Keikaku manages electric power contracts.

2.

A distribution center that Ryohin Keikaku manages.

3.

Installation at stores when feasible, given location, equipment, store operating contracts and other conditions.

Scope 1, 2 and 3 GHG emission data is available on our website:
https://www.ryohin-keikaku.jp/eng/sustainability/environment/climate-change/
https://www.ryohin-keikaku.jp/eng/sustainability/muji-sustainability/number/■ Future Responses to TCFD Recommendations
The analyses presented here confirm the resilience of our business under either the scenario in which theinternational community cooperates to limit temperature rise to less than 1.5°C, or the scenario in which climatechange is not addressed and the temperature rise is 2.6°C to 4°C. We will also minimize risk and make the most ofopportunities with the goal of increasing corporate value through initiatives that include using renewable energy,
reducing the use of raw materials derived from fossil, using environmentally responsible materials and recycling
products.
Ryohin Keikaku will continue to disclose appropriate information on climate change, promote dialogue withstakeholders and address external indicators.

10 / 10