Information Disclosure Based on TCFD
Recommendations
Atrae, Inc.

Our Policy on Climate Change
We are committed to promoting ESG initiatives to create a society where people feel fulfilled in theirwork.
In addition, our mission is to create businesses that broaden people’s potential through technology,
and since the beginning, we have achieved a business portfolio with a low environmental impact.
Our environmental policy includes the promotion of climate change initiatives, and we are working
toward measuring and disclosing greenhouse gas emissions and improving energy efficiency.
In July 2022, we announced our support for the recommendations of the TCFD *1 (Task Force on
Climate Related Financial Disclosures) and joined the TCFD Consortium *2 consisting of companies
and financial institutions that support the TCFD Recommendations. We are also working on better
disclosure of climate-related information based on the TCFD Recommendations.
*1 TCFD: A task force established by the Financial Stability Board (FSB), which includes representatives of central
banks and financial supervisory authorities from major countries and regions around the world. An international
initiative aimed at stabilizing financial markets by providing support to companies disclosing information on climatechange and facilitating a smooth transition to a low-carbon society.
*2 TCFD Consortium: An organization established in Japan in 2019 to discuss effective corporate disclosure andefforts to link disclosed information to appropriate investment decisions by financial institutions. Companies andfinancial institutions that support the TCFD Recommendations are promoting the initiative.

Core Elements of Recommended Disclosures under TCFD
Recommendations
The TCFD recommends that companies disclose information on climate-related risks andopportunities in the areas of 1. Governance, 2. Strategy, 3. Risk management, and 4. Metrics andtargets.
This document will disclose climate-related information for the four core elements of disclosure set
out under the TCFD Recommendations.

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11．Governance

The organization’s governance around climate-related risks andopportunities

2．Strategy

The actual and potential impact of climate-related risks and opportunities
on the organization’s businesses, strategy, and financial planning3．Risk

The processes used by the organization to identify, assess, and manage

management

climate-related risks

4．Metrics andThe metrics and targets used to assess and manage relevant climate-targets

related risks and opportunities

1．GovernanceWe discuss and examine social issues, including those related to climate change, mainly through theSustainability Promotion Project, and the Board of Directors determines policies for addressingthese issues.
We also monitor ESG initiatives, including responses to climate change, under the direction andadvice of the Board of Directors.
Board of DirectorsReportInstruct/advise

Sustainability Promotion Project
Cooperate

Relevant Projects

2．Strategy
We conducted an analysis of the impact of climate change on our People Tech business, based on
the framework proposed by the TCFD, using a scenario analysis approach to project changes in theexternal environment as of 2030.

(1) Subject of Analysis
We conducted the analysis on the People Tech business, our Group’s main segment.

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2(2) Identifying Risks/Opportunities
We identified potential risks and opportunities for our People Tech business due to climate change.
Among these, we identified items that we believe are especially relevant to our business.
Category

Item
Increase in GHG emission
Policy/legal

Impact on our company⚫

pricesregulations Strengthening of emissions

introduction of a carbon tax⚫

decarbonization⚫

risk

Decrease in sales due to increased

Changes in customer

customer awareness of environmental

behavior

considerations and a shift to moreenvironmentally friendly services

Market⚫

Risks

Increased labor and outsourcing costs tocomply with stricter regulations onreporting requirements

TransitionIncreased operating costs due to theRise in raw material costs

Increased costs due to rising electricity
prices and associated increases in server
usage fees

Increased stakeholder
Reputation

Physicaldelays in climate change initiatives andstakeholder feedback

disclosures

extreme weather events

Chronic

Rise in averagenatural disasters

unities

preferences

trendsCopyright © Atrae, Inc. All Rights Reserved.

⚫

temperatures
Changes in consumer

Lost opportunities if data center servers
shut down due to extreme weather orsuch as typhoons andOpport Products/ Consumerservices⚫

floodsriskDecrease in investor evaluation due toconcern or negative

Increased severity ofAcute⚫

Increased office air conditioning costs due
to higher average temperatures⚫

Increased demand for matching personnel
with environmental skills and expertise as
the environment-related market expands3(3) Selecting Scenarios
We selected the 1.5°C scenario and the 4°C scenario, and examined the societal changes and theirimpact on our People Tech business, while referring to the scenarios published by variousorganizations.
(We adopted the 1.5°C scenario instead of the 2°C scenario because the world is aiming for net-zero
CO2 emissions in 2050, and therefore policies and regulations are expected to be stricter.)

Scenario

Summary⚫

To limit the rise in global average temperatures to lessthan 1.5°C above pre-industrial revolution levels,

1.5°C
Scenario

References⚫

IEA World Energy Outlook 2021.

policies and regulations in each country will be

Sustainable Development

strengthened beyond the 2°C scenario, such as aiming

Scenario / Net Zero Emissions

for net-zero CO2 emissions by 2050, and socialby 2050 Scenario

awareness of the environment and climate change will⚫

IPCC SSP1-1.9⚫

IEA World Energy Outlook 2021.

increase significantly compared to now.
⚫

The announced policies will be implemented in addition
to those already in place. Policies and regulations are4°C
Scenario

weaker than in the 1.5°C and 2°C scenarios; CO2emissions are likely to increase for the time being, andsocial awareness of the environment and climate

Stated policies Scenario⚫

IPCC SSP5-8.5

change will remain an extension of the current level.

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4

(4) Study of Social Changes and Countermeasure Plans(4-1) 1.5℃ Scenario
This is a scenario in which the entire world aims for carbon neutrality in 2050, regulations andpolicies are strengthened (introduction of carbon taxes and electricity price increases,
restrictions on greenhouse gas emissions, etc.), progress is made in addressing climatechange, and temperature rise is limited to 1.5°C from pre-industrial revolution levels.
Electricity prices are expected to rise as a result of switching away from fossil fuels and risingdemand for renewable energy. At the same time, usage fees for cloud servers, which consume
a lot of electricity, are also expected to increase, leading to higher operation costs, which inturn will reduce operating income. Furthermore, there is a risk of increased costs due tocompliance with stricter regulations on environmental information disclosure.
Under such circumstances, we will implement measures to address transition risks throughenergy-saving activities and paperless initiatives to reduce CO2 emissions, which we have beenpromoting for some time, and switching to electricity derived from renewable energy sources.
In addition, we assume that there will be opportunities to increase sales due to the growing
demand for human resources with skills and expertise in decarbonization in the corporate
sector.
By taking these measures, we aim to mitigate the impact of transition risks on business andcapture new opportunities.

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5Category

Item
Increase inPolicy/legalregulations

Impact on theLevel of Countermeasurecompany

impact⚫

Increased operating

GHG

costs due to theemission

introduction of aprices

carbon tax

Strengthenin⚫

plans⚫

SmallContinue andstrengthen energy
conservation efforts

Increased labor and⚫

Strengthen internal

g ofoutsourcing costs toemissions

comply with stricter

reportingregulations on

calculation services,requirements

decarbonization

etc.

⚫

systems
Small⚫

Use CO2 emission

Decrease in sales due
to increased
customer awarenessChanges inof environmental

customerRisksconsiderations and abehavior

Transition⚫

environmental

Small

responses andshift to morerisk

Strengthen

disclosuresenvironmentallyfriendly services

Market⚫
⚫

Increased costs due

Continue andstrengthen energy

Rise in raw

to rising electricity

material

prices and associated Medium

conservation efforts

costs

increases in server

derived fromusage fees

renewable energy⚫

Switch to electricity

sources
Increasedstakeholder
Reputation⚫

concern ordelays in climate

negative

unities services

trendsCopyright © Atrae, Inc. All Rights Reserved.

Changes inconsumer
preferences

Small

⚫

responses anddisclosures⚫

disclosures

Increased demandfor personnel withskills in theenvironmental field

Strengthen
environmental

change initiatives andfeedback

Strengthen internal
systems

evaluation due tostakeholder

Opport Products/ Consumer⚫

Decrease in investor⚫

MediumProviding services forpersonnel with skills in
the environmental field6

(4-2) 4℃ Scenario
This is a scenario in which the entire world aims for carbon neutrality in 2050, regulations andpolicies are strengthened (introduction of carbon taxes and electricity price increases,
restrictions on greenhouse gas emissions, etc.), progress is made in addressing climatechange, and temperature rise is limited to 1.5°C from pre-industrial revolution levels.
Electricity prices are expected to rise as a result of switching away from fossil fuels and risingdemand for renewable energy. At the same time, usage fees for cloud servers, which consume
a lot of electricity, are also expected to increase, leading to higher operation costs, which inturn will reduce operating income. Furthermore, there is a risk of increased costs due tocompliance with stricter regulations on environmental information disclosure.
Under such circumstances, we will implement measures to address transition risks throughenergy-saving activities and paperless initiatives to reduce CO2 emissions, which we have beenpromoting for some time, and switching to electricity derived from renewable energy sources.
In addition, we assume that there will be opportunities to increase sales due to the growing
demand for human resources with skills and expertise in decarbonization in the corporate
sector.

Category

AcuteRisks

Level of Countermeasurecompany

impactplans

Increased⚫ Lost opportunities ifLarge⚫

severity ofdata center servers

extremeshut down due toweather

extreme weather or

events suchnatural disasters

Use of alternative
servers⚫

Establish BCP system⚫

Continue andas typhoons

Physicalrisk

Impact on theItemand floods
ChronicRise in⚫ Increased office air

Smallaverage

conditioning costs due

strengthen energy

temperatures

to higher averageconservation efforts

temperatures⚫

Renew airconditioning
equipment

Opportu Products/ Consumer

Changes in⚫ Increased demand fornities

consumer

personnel with skills inpersonnel with skills

preferences

the environmental fieldin the environmental

services

trendsMedium⚫

Providing services forfield

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7

3. Risk Management
The project leader of each project identifies, evaluates, and monitors risks associated with business
operations in accordance with the risk management rules established within the company.
Particularly important risks are reported to the Board of Directors, which discusses them andinstructs the members of relevant projects to take specific measures if necessary.
Risks related to climate change, including responses to legal amendments, are identified, evaluated,and monitored by the Sustainability Promotion Project. Particularly important risks are reported tothe Board of Directors by the Sustainability Promotion Project in the same manner as otherimportant risks, and the Board of Directors discusses them and instructs the members of relevant
projects to take specific measures as necessary through the Sustainability Promotion Project.

4. Metrics and Targets
In response to climate change, we measure and disclose greenhouse gas emissions, and are aiming
to improve energy efficiency.
We promote the reduction of greenhouse gas emissions by encouraging employees to live close to
the office, promoting paperless initiatives, and other activities in the workplace for energy-saving.
CO2 emission
FY2020

FY2022

FY2023SCOPE1 (kg-CO2)000

SCOPE2 (kg-CO2)

109,414125,751

143,010SCOPE1,2 total

109,414125,751

143,010

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8