DESTINATION OF ONE YAMATODESTINATION OF ONE YAMATO

Part 2

Environmental Strategy
We are promoting environmentally-conscious management, based on our Environmental Vision, to achieve both sustainable businessgrowth and the development of a sustainable society. To realize our long-term target of achieving virtually zero GHG emissions (in-houseemissions) by 2050 and medium-term target of a 48% reduction in GHG emissions by 2030 (compared with the fiscal year ended March
31, 2021), we will promote measures to reduce such emissions, such as the introduction of EVs and solar power generation equipment
in conjunction with facility strategies in the structural reform of network operations based on climate change-related risks and opportunities. At the same time, we will expand the corporate business domain by supporting the creation of supply chains with a low environmental burden and visualizing GHG emissions in relation to customer needs, such as reducing GHG emissions related to logistics.

Overview
ACTIVITYOUTPUT/OUTCOME

Basic initiative

Reduction of GHG Emissions by Promoting Green
Innovation

Environmental Vision

Long-Term Environmental Targets“Connect. Deliver the future via
green logistics”

Introduction of EVs, solar power generation equipment, and LEDs,
and promotion of measures including the reduced use of dry ice,
linked to facilities strategy for structural reform of network operations, together with utilization of electricity generated from renewable energy sources, thereby steadily reducing GHG emissions

GHG emissions
 edium-term target (2031/3):
M–48%*2
Short-term target (2024/3): –10%*2

20,000 EVs
810 units of solar power generation equipment
Zero use of dry ice evelopment of emissions visualization tools based on ISO
D
14083:2023, an international standard for calculating GHG emissions in the logistics domain

Value Creation

 edium-term target (2031/3): 70%
Mof total
Short-term target (2024/3): 40% of
total*3*3 W
 e added 10% to our original targetof 30% to achieve our overall targets
for reducing GHG emissions

Visualization of Customer GHG Emissions HG Emissions/Percentage of Electricity Generated via
G
Renewable Energy Sources(Thousand tCO2e)(%)
1,000

Enhancement of Value Provided to
Customers

Baseline (2)%

(7)%

(10)%

80

70%

(Support for Creation of Supply Chains with Low

921

902

In promoting each measure aimed at reducing GHG
emissions, creating a balance between EV operation andcharging is an issue in the logistics industry. Since EV
operation and solar power generation both occur during
daylight hours, it is vital to create a mechanism for balance
between operation and charging. Additionally, there areconcerns over issues including supply shortages due to asudden increase in demand for electricity generated via
renewable energy sources and insufficient capacity in thenecessary systematic power transmission. As acountermeasure, Yamato Transport is engaging in establishingenergy management responsible for battery detachment,
Demonstration period/Area

860

500

22%

Contribute to reducing GHG emissions by optimizing logistics
and inventory through transformation of each customer’s entire

As one key measure for reducing GHG emissions, the Yamato Group is promoting the introductionof EVs. Our demonstration tests to date have been able to confirm effects including the reductionof GHG emissions, efficiency in pickup and delivery operations, and reducing operational burden.
We have introduced 540 Hino Dutro Z BEV, ultra-low-floor walkthrough, small-sized commercial-use
EVs, mainly in urban areas (as of August 2023). We will continue toengage in introducing EVs with environmental functions and practicality together with car manufacturers.
We are also promoting measures such as installation of solar
power generation equipment at our bases, use of electricity generated via renewable energy sources, switching to LEDs at bases, andSmall-sized commercial-use EV, Hino
utilization of transportation materials that do not use dry ice.

40%

40

(48)%

11%

250

supply chain

20

0%
0

2021/302022/32023/32024/3
Target2031/3
Target2051/3
TargetGHG emissions (left)
Percentage of electricity generated via renewable energy sources (right)(Units)
40,00030,00036,902
31,29220,00010,0000

2019/32020/32021/32022/32023/3

Electric vehicles (EVs)
New long-term compliance vehicles
Hybrid vehicles
Compressed natural gas (CNG) vehicles
Liquefied petroleum gas (LPG) vehicles

0

replacement, and transportation using cartridge batteries.
As a concrete initiative, we are promoting demonstration
projects in Gunma Prefecture, which have been subsidized by
the New Energy and Industrial Technology Development
Organization (NEDO), a national research and development
agency in Japan. These demonstration projects will include
introducing EVs and solar power generation equipment, as
well as a demonstration of power transmission throughbattery transportation. Additionally, to commercialize
cartridge batteries, we are considering standardization with
the Commercial Japan Partnership Technologies Corporation.

Fiscal Year Ending March 31, 2023, to Fiscal Year Ending March 31, 2031 (Scheduled)/Gunma Prefecture
200 EVs by fiscal year ending March 31, 2024 (introduced 50 EVs as of March 2023)

60

750

Environmental Burden)

Green Innovation

Issues and Countermeasures in the Logistics Industry—Initiatives Aimed at Establishing
Energy Management

Percentage of Electricity
Generated via Renewable
Energy Sources*2 C ompared to fiscal year ending
March 31, 2021

 Reduction in GHG Emissions Through Promotion ofTOPIC*1 In-house emissions of consolidated
companies in Japan and Swan Co.,
Ltd. (Scope 1 and Scope 2)<Fiscal Year Ended March 31, 2022, to Fiscal Year Ending March 31, 2031>

 he Number ofT
Environment-Friendly
Vehicles Owned(Consolidated Group
Companies in Japan)

Dutro Z BEV

Achieve virtually zero*1 GHG emissions by 2050

Part 2

Conversion of all vehicles into EVs and reduction of 5,000 tons of CO2 emissions* generated by vehicles by fiscal
year ending March 31, 2027

KPIs

Conversion of all vehicles into EVs with cartridge batteries and reduction of 7,500 tons of CO2 emissions* generated by vehicles by fiscal year ending March 31, 2031
* Within the demonstration project area, compared to the fiscal year ended March 31, 2021
Note: The prerequisite coefficient for CO2 emissions is 0.000447tCO2/kWh (Ministry of Environment, the emission coefficients of individual power companies, etc.; TEPCO baseCO2 emission coefficient for the fiscal year ended March 31, 2021).
Reference: https://ghg-santeikohyo.env.go.jp/files/calc/r04_coefficient_rev4.pdf (Japanese only)
https://ghg-santeikohyo.env.go.jp/files/calc/r04_coefficient_rev4.pdf

Our Vision for an Energy Ecosystem That Coordinates Electric Vehicles (EVs), Photovoltaic (PV) Systems, and Batteries
Cartridge batteries

Plan for Reducing GHG Emissions to Achieve Medium-Term Targets (2030)
Key Measures
Introduction of 20,000 EVs
Introduction of 810 units of solar power­generation equipment
Introduction of LEDs
70% utilization rate for electricity generated via
renewable energy sources

34

Plan for Reducing GHG emissions

1,000

Baseline

(225)

800

Environmental
investment

600

400

200

Increase in transportation efficiency

09212021/3· EV introduction: (100)· Solar power generationequipment introduction:(110)· LED introduction: (15)Balance between
vehicle operationand charging Cartridge batteries

Systemic
powertransmissions

(442)

Local
communities
Response tonaturaldisasters

On-site PV systems(145)

At the same time, we will take measures to enhance transportation efficiency to cope with the increase inemissions due to businessexpansion

Recipients

Battery transportation(72)
Use ofrenewable Eliminationenergy, etc. of dry ice

Off-site PV systems

Areas hit by
natural disasters

Stationary
batteries
Batterytransportation• Expansion of EV introduction• Expansion of supply capacity for electricity generated via renewableenergy sources both on-site and off-site• Balance vehicle operation and charging by separating the chassis
and battery through EVs that utilize cartridge batteries

Shared battery
infrastructure
Transportationindustry479

2031/3
TargetCreation ofregional
infrastructure

Delivery

Stationary
batteries

Environmental investment​(Thousand tCO2e)

Elimination of dry ice

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

On-site PV systems• Duplication of electricity transmission network by transporting batteries and utilizing systemic power transmissions• Creation of regional infrastructure for transporting batteries andresponding to natural disasters• Creation of a shared battery infrastructure for the transportationindustry

Reduce CO2 emissions
Reduce burden on electricity
system
Support local communities andprovide disaster relief
Stabilize transportation industry

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

35

DESTINATION OF ONE YAMATODESTINATION OF ONE YAMATO

Part 2

Part 2

Environmental Strategy

Visualization of GHG Emissions—Value Provision to Customers

GovernanceContribution to Reducing GHG Emissions by Transforming Customer Supply Chains
Climate change response has become a key issue at each company and Yamato Group customers have expectations, such as the
reduction of logistics-related GHG emissions. To meet these expectations, the Yamato Group is supporting the reduction of customer
GHG emissions by transforming their entire supply chain, including reviewing the purpose of logistics and inventory holding methods,
and by visualizing GHG emissions.

Examples of Initiatives with Customers
Kubarahonke Co., Ltd. (Food Manufacturer)

Adastria Co., Ltd. (Clothing Seller and Manufacturer)

Yoshinoya Co., Ltd. (Restaurant Chain)

By integrating supply chains that had been individually optimized for each sales channel and product and creating an optimal supply chain from the manufacturing base to the rest of
the country, Kubarahonke and the Yamato Group are conducting environmentally-conscious, sustainable operations andreducing GHG emissions from product delivery.

Adastria and the Yamato Group aim to reduce GHG emissions
by reviewing the purpose of logistics and inventory holding
methods in supply chains that span both Japan and overseas,from raw materials procurement to product production andomni-channel approaches to sales, creating even more effective logistics in terms of management.

Yoshinoya and the Yamato Group are
reducing GHG emissions and surplus
food and material loss by integrating andoptimizing supply chains for direct sales
and wholesalers.

Nihon Michelin Tire Co., Ltd. (Tire Manufacturer)

Colowide Co., Ltd. (Restaurant Chain)

By consolidating approximately 20 warehouses into 5 and visualizing and optimizing
inventory control at each warehouse, we are working to eliminate uneven distribution of
inventory and reduce transportation between facilities, while utilizing networks for corporate clients and other resources to stabilize lead times for delivery of products andreducing GHG emissions. We are also minimizing waste due to expiry (reducing impact
on the environment) through managing overall tire inventory by production year andshipping tires that are closer to the expiration date before others using a management
system that minimizes waste by tracking the production year of all tires in the inventory.

We are working on building a sustainable supply chain with an even lower
environmental burden, eliminating muri
(unreasonableness), mura (inconsistency), and muda (waste), by visualizing
and optimizing the entire supply chain,
which was previously divided by company and difficult to view as a whole.

The Yamato Group deliberates and seeks to resolve environmental
issues, including climate change, based on its system for environmental management, with the Environment Committee as a decision-making body, and the Board of Directors supervising the statusof execution. The president serves as chairperson of the YamatoGroup Environment Committee and is the supervisor responsible forenvironmental management. Further, important matters, such as
basic policies related to environmental issues, which include climatechange discussions by the Yamato Group Environment Committee,
are debated and decided on at Management Committee meetings,

which operates above the Environment Committee, and Board of
Directors or management meetings. Executive officers in charge ofthe environmental field, regional directors, and presidents of Group
companies are responsible for environmental issues, in addition to
being responsible for the reliable implementation, maintenance, andsupervision of environmental management, including preparing necessary management resources. As a general rule, all managers andheads of frontline organizational structures are also responsible formanaging environmental risks and opportunities, including climatechange, as environmental managers.

Strategy
STEP 1

Assessment of Risk Importance

The Yamato Group will look ahead to the period between the fiscal year ended March 31, 2022, and the fiscal year ending March 31, 2024–which is the period of the
Sustainable Medium-Term Plans 2023 [Environmental], set as the fiscal year for medium-term targets, and 2050, which has been set as the fiscal year for long-term targets,with reference to the targets formulated by the Japanese government for reducing GHG emissions. We will consider transition risks, such as the introduction of policies andregulations by the Japanese government and changes to market needs, and physical risks, such as abnormal weather brought about by climate change, and will respond torisks and opportunities by reflecting them in the Group’s strategies.
We evaluated physical risks, such as the suspension of operations due to the increasing severity and frequency of abnormal weather and expanding repair costs owing
to damage to and loss of facilities and equipment caused by abnormal weather, as short-term risks. Furthermore, we evaluated the transition risk of increasing costs due tothe introduction of a carbon tax as a result of revised policies and laws as a medium- to long-term risk. Meanwhile, regarding opportunities, we also identified significant
potential for future financial benefits, such as falling costs due to energy conversion and increased efficiency, in line with the low-carbon transition, and increasing revenues
supported by customers with a heightened awareness of our proactive, environmental response to climate change mitigation and adaptation. Going forward, we will continue to assess the impact of the risks and opportunities that may arise.

Development of GHG Visualization Tools Based on International Standards
Yamato Transport is advancing the development of GHG emissions visualization
tools based on ISO 14083:2023, an international standard for calculating GHG
emissions made by transportation that was issued on March 20, 2023. This
international standard calculates GHG emissions from not only trucks for transportation but also from various methods such as air and marine transportation,
as well as from terminals. Through such visualization tools, we will make evenmore realistic calculations for GHG emissions from transportation by Yamato
Transport, which correspond to Scope 3* emissions for corporate clients. We
aim to use these visualization tools globally.
* GHG emissions in the supply chain made by companies indirectly

PICK UP

Conventional
Calculation of emissions using
coefficients based on monetaryamount or physical volume

After creation ofvisualization tools
Calculation of emissions byaggregating each process inactual transportation operation
Measures for reducing
emissionsIntroduction of EVs and solar
power generation equipment, etc.

Physical
GHG
volume emissions

Physical
GHG
volume emissions

Cannot visualize
reduction efforts

Can visualize
reduction efforts

Increasing Need for International Standards

Climate change response is an urgent issue for the entire international society. As a result, many companies have adopted a target ofvirtually zero GHG emissions and are advancing various initiatives. Additionally, businesses are now required to respond on not only an
individual company basis but throughout the entire supply chain, such as by making the reporting of GHG emissions related to products a condition of business transactions with suppliers. Each company and country have adopted various standards for calculating
GHG emissions in the logistics industry. However, with the advancing globalization of the supply chain, the need for international standards has increased. When global calculation standards did not yet exist, the Yamato Group signed a basic agreement with the largest
European home delivery company, the DPDGroup, aimed at environmental-based cooperation. We are actively engaging in measures
such as participating in the formulation of ISO14083:2023, an international standard related to methods of calculating and reporting
GHG emissions from transportation, leading to the development of emissions visualization tools based on international standards.

Initiatives Based on the Recommendations of the TCFD
The Yamato Group understands that revealing the risks and opportunities faced by and presented to society and the Company by climate change issues, evaluating the impacts thereof, and formulating countermeasures are essential for the sustainability of the business. We have carried out scenario analyses of Yamato Transport in the fiscal year ended March 31, 2022, based on therecommendations of the Task Force on Climate-related Financial Disclosures (TCFD). While enhancing the sustainability of the Groupby clarifying the business impacts of climate change and engaging in countermeasures focused on issues that have a significant
impact, we will enhance corporate value by holding dialogues with stakeholders.

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YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

STEP 2

Definition of Scenario Categories

Under scenario analysis conducted in the fiscal year ended March 31, 2022, we predicted
two scenarios for Yamato Transport, based on information*1 from the Intergovernmental
Panel on Climate Change (IPCC) and the International Energy Agency (IEA).
*1 Includes the RCP8.5 global warming scenario created by the IPCC as well as the Net Zero
Emissions by 2050 Scenario, Sustainable Development Scenario, and Stated Policies Scenario
created by the IEA*2 Referencing the 2ºC scenario when no scenario exists for 1.5ºC

STEP 3

Evaluation of Business Impact for Yamato Transport

Evaluation of financial impact
due to introduction of acarbon tax

Calculation of business impact in 2030 and 2050
related to settlement[s] following the full-scale
introduction of a carbon tax
By 2030: ¥13.3 billion
By 2050: ¥25.6 billion
Note: Estimated using carbon tax prices of $130 per
ton (2030) and $250 per ton (2050)

Financial impact assessment
regarding decreasing revenues
and increasing repair costs forfacilities and equipment due
to abnormal weather anddisasters

Trial calculation of business impact of decreased
revenue due to abnormal weather, such as heavy rain
resulting from increasingly severe typhoons and linear
rainbands, and repair costs for damaged facilities andequipment
By 2030: ¥1.9 billion
By 2050: ¥3.8 billion
Note: Calculated by referencing past disasters

We determine the business impact by referencing energy-related indexes, such as the
carbon pricing published in the World Energy Outlook by the IEA. Furthermore, to understand changes in trends, we reference data, including the frequency of flooding, publishedby the Japanese Ministry of Land, Infrastructure, Transport and Tourism; the Ministry of
Education, Culture, Sports, Science and Technology; and the Japan Meteorological Agency
in light of climate change.

1.5ºC
Scenario*2

The incurrence of costs associated with reducing GHG emissions
will become necessary and we must enforce stricter regulations
and higher fuel and electricity costs; however, sustainability is the
key to creating and offering competitive products.

4ºC
Scenario

While we will continue to practice our current style of management, incurring costs to address damages from natural disasters
in each area of operation will become necessary.

STEP 4

Direction of Countermeasures• Implementation of measures to achieve targets for reducing GHG emissions by 2030
(48% reduction compared with the fiscal year ended March 31, 2021)
Introduction of 20,000 low-carbon vehicles (mainly EVs), installation of 810 units ofsolar power generation equipment, etc.
Expected result: Reduction of business impact due to introduction of a carbon tax
by 2030 (¥6.1 billion decrease)• Implementation of measures to achieve targets for climate neutrality by 2050
Introduction of low-carbon vehicles, including EVs with cartridge batteries, further
installation of solar power generation equipment, improvement of usage rate for electricity generated via renewable energy sources, reinforcement of other measures, etc.
Expected result: Elimination of business impact due to introduction of a carbon tax
by 2050• Examination of introducing internal carbon pricing with the aim of proactive capital
expenditures in low-carbon transition• Opening of stores by utilizing hazard maps and periodic reviews of our business continuity planning manual• Examination of disclosing information on efforts to adapt to climate change internallyand to our business partners• Testing for use of renewable energy and EVs with cartridge batteries that enhance
resilience• Reevaluation of business impact going forward while adding extra prerequisites, suchas enhancing predictions for location and scale of occurrences of incidents, and continuous examination of countermeasures

Risk Management

Indicators and Targets

Yamato Holdings has created a dedicated department responsible
for promoting the Groupwide response to climate change.
Additionally, we are promoting said response by deploying an environmental officer (president and representative director) and an
environmental promotion representative to each Group company.

We will implement measures for achieving GHG emissions reduction
targets (see page 34) and create green logistics in collaboration withour business partners to reduce GHG emissions across the entire
value chain (Scope 3). At the same time, we will consider the feasibility of acquiring certification for achieving the 1.5ºC target of the
Science Based Targets* initiative.
* Targets for reducing GHG emissions set by companies for the next five to ten years, inline with the levels required by the Paris Accords

For details on initiatives based on TCFD recommendations, please refer to our corporate website.
https://www.yamato-hd.co.jp/english/csr/environment/tcfd.html

YAMATO HOLDINGS CO., LTD.
Integrated Report 2023

37