SG Holdings Group

TCFD
Issued March 2023

CONTENTS
1：Background of Initiatives ……………………… 01
2：Details of TCFD Responses …………………… 01
3：Summary of Results of FY2022 Analysis … 03
4：Governance and Risk Management ………… 04
5：Strategy (Risks) ………………………………… 05
6：Strategy (Business Opportunities) ………… 11
7：Metrics and Targets …………………………… 12
8：Sources and Notes ……………………………… 13

SGH TCFD REPORT 2023

1. Background of Initiatives
As the global transition to a carbon-free society progresses, the realization of sustainable management
is becoming increasingly important for companies. The SG Holdings Group recognized its responsibility
as a group of logistics companies handling social infrastructure, and expressed support for the Task
Force on Climate-Related Financial Disclosures (TCFD) in 2019. Seeing climate change to be a serious
issue for the Group, the Group began scenario analysis based on TCFD recommendations in July 2021.
The Group established a “Decarbonization Vision” in 2022, has set CO2 emission reduction targets, andmanages progress as metrics/targets for addressing climate change. The purpose of the analysis is toascertain the risks and opportunities related to climate in business continuity, and to take measures basedon the assumption of a variety of situations. In future, such efforts will continue in line with changes insocial conditions and advancements in technology, and be merged with business strategy, included inrisk management processes and utilized to engage in deeper internal and external communication.
Reference sites

Official TCFD site （ https://www.fsb-tcfd.org/ ）TCFD Consortium（ https://tcfd-consortium.jp/en ）2. Details of TCFD Responses
In the initial scenario analysis in 2021, basic analysis using information from international research
institutions such as IEA*1, and exhaustively identified important climate-related risks. The 2022 analysis
dug deeper by setting sub-scenarios taking into account the conditions in Japan and the uniquecharacteristics of the Group. We will engage in the realization of sustainable growth by anticipating avariety of risks and flexibly taking steps to address them facing a highly uncertain future.
See the TCFD Report (Issued in March 2022) for analysis in 2021.

FY2019FY2021

FY2022Endorsement of TCFD
Recommendations

General analysis in line withrecommendations

Analysis taking into accountdomestic conditions and theuniqueness of the Group

Action• Announcement of• Basic scenario analysis• Participation in TCFD

• Use of information andendorsement

according to recommendations

Consortium

data of international
research institutions• Analysis based on

domestic power mix andweather anomalies(heavy snowfall and intense heat)• Use of the companyʼsenergy simulations

Disclosure―• TCFD Report 2022

• TCFD Report 2023

• Integrated Report 2022, etc.

• Assumed Integrated Report 2023, etc.

1

SGH TCFD REPORT 2023

■ Initiatives to Address the Four TCFD Recommendations

FY2021

FY2022

TCFD Report issued in March 2022

TCFD Report issued in March 2023

• The CSR Committee chaired by the Chairperson, CEO and• The Sustainability Committee (name changed from CSR

Reference

President of SG Holdings creates management systems
and promotes activities related to sustainability.
(Held three times)• I m p o r t a n t m a tt e r s r e l a t e d t o c l i m a t e ch a n g e a r e

Governanceconsidered, reported to the Board of Directors andmanaged / supervised by the CSR Committee.

<Content of reports to the Board of Directors>
・TCFD scenario analysis results
・Progress of reduction of CO2 emissions for

decarbonization targets, etc.

Committee) chaired by the Chairperson, CEO and Presidentof SG Holdings creates management systems andpromotes activities related to sustainability.
(Held four times)• Important matters related to climate change are considered,reported to the Board of Directors and managed/supervisedby the Sustainability Committee.

<Content of reports to the Board of Directors>
・Group measures related to climate changes
・TCFD scenario analysis results
・Progress of reduction of CO2 emissions for

decarbonization targets, etc.

• Exhaustive identification and evaluation of risks<Transition risks>- Business cost due to carbon-free transition<Physical risks>
Strategy- Cost of damage caused by storms and floods- Air conditioning costs• The Mid-Term Management Plan establishes “Promotion ofservices aimed at solving social and environmental issues
such as decarbonization” as a key strategy*2• Digging deeper into analysis taking into account domestic

conditions<Transition risks>- Financial impact of energy changes<Physical risks>- Cost of damage caused by heavy snowfall- Risk of heatstroke and cost of measures

Risk management• Valuation using the Groupʼs risk management evaluation• Valuation using the Groupʼs risk management evaluation• Management of climate change risk through Group Risk

• Management of climate change risk through Group Risk

Establish and manage emission reduction targets throughthe Groupʼs “Decarbonization Vision.”

Establish and manage emission reduction targets throughthe Groupʼs “Decarbonization Vision.”<Emission reduction targets><Emission reduction targets>

・Scope 1 and 2

・Scope 1 and 2

・Scope 3

・Scope 3

criteria in the same way as other business risks

Management Meetings

2030 : 46% reduction in CO2 emissions(* compared to FY2013)
2050 : Aim to become carbon neutral

Metrics andTargets

Engage in reduction of emissions throughout the entire
supply chain

criteria in the same way as other business risks

Management Meetings

2030 : 46% reduction in CO2 emissions(* compared to FY2013)
2050 : Aim to become carbon neutral

Engage in reduction of emissions throughout the entire
supply chain<Transition plan (Sagawa Express)>
Percentage of implementation of environmentally friendly
vehicles including EVs
FY2021 results : 59%
FY2030 target : 98%
Percentage of renewable energy in electricity used
FY2021 results : 14%
FY2030 target : 40%

2

SGH TCFD REPORT 2023

3. Summary of Results of FY2022 Analysis
The Group has set the goal of reducing GHG emissions in line with the 1.5°
C target, and is engaged indecarbonization. However, it is anticipated that business activities will be significantly affected by futurechanges in energy sources, price fluctuations and carbon taxes based on legal regulations, etc. due tomuch of the energy used in transportation being derived from fossil fuels. In the transition risk analysis
for the current fiscal year, we estimated the financial impact taking into account risk elements such aschanges in the power mix and carbon taxes in the companyʼs own energy strategy simulations aimed atachieving the reduction target.
As a result, additional costs totaling around 5.4 to 9.4 billion yen including carbon tax of around 3.3 billion
yen will arise in 2030, and the risk is medium to large. After that, additional costs will decrease as
decarbonization progresses toward 2050, and in the long term, the risk assessment shifted to small to
medium. Carbon tax that is a factor in increased cost is a trade-off that can be offset through the progressof decarbonization measures. For this reason, we believe it is necessary to consider measures with ahigher cost effectiveness while considering the impact on social conditions.
The analyses on the financial impact contained in this report are simulations and not assurances of therealization the scenarios. Furthermore, it may vary in the event the assumed data is revised or modified.
Major risks and opportunities

ImpactTransition risks

Mediumto large
Increased costs and carbon
tax caused by change inpurchased energy

Increased frequency of
localized heavy snowfall

Small
to
mediumSmall

Response strategy• 2030• Investment in measures to reduce

5.4 to 9.4 billion yen• 2050▶

0.8 to 2 billion yen(Refer to Climate Scenarios
on page 5)• Expected loss value: -7.5

million yen
C Scenario, 2050)(4°▶

Physical risks• 2.32X the number of people

Risk of heatstroke andadditional cost caused byintense heat

Mediumtaken to hospital due toheatstroke
C Scenario, 2050)(4°• Additional cost for increase in▶

Business opportunities

Expansion of services withdecarbonization as an added
valueContribution to local disasterprevention through disaster
relief services• Promotion of environmentally friendly

through provision of transportation
service curbing CO2 emissions• Strengthening of competitivenessthrough disaster logistics consulting, etc.

improvement• Ensuring safety of employees

heat such as fan vests and neckcoolers• Strengthening responses such as• Expansion of Hikyaku JR

containers▶

• Continuation of education on▶

Implementation of decarbonizedlogistics services through GOAL®, ateam specializing in the resolution oflogistics issues▶

Expansion of “Town Support” service
supporting the resolution of issues in
the local community.

safe driving
Cost reduction:1 billion yen / year

• Increased competitiveness and revenues• Ongoing BCP creation andsaving labor and improvement of
productivity• Modal shift

Reduction of CO2 emissions:-127,000t-CO2 / year

decarbonization as an addedvalue• Complex measures to address

break times: 3.1 billion yen
C Scenario)(4°

Reduction of costs and GHG
emissions throughimprovement oftransportation efficiency

CO2 emissions• Deployment of services withenvironmentally friendly safe
driving

Evaluation of the impact is measured according to the Groupʼs risk management evaluation criteria*3.

3

SGH TCFD REPORT 2023

4. Governance and Risk Management
The SG Holdings Group has established a Sustainability Committee for the purpose of creating
management systems for the entire Group concerning sustainability, and the promotion of ongoing
improvement activities. The committee is chaired by the Chairperson, CEO and President of SG Holdings,
and meetings are held four times a year in principle. A specialized subcommittee (TCFD Working Group:
TCFD-WG) analyzes and considers climate-related risks and opportunities, and reports and submits its
findings to the Sustainability Committee. The results considered in the committee are reported to theBoard of Directors in a system for performing management and oversight. Furthermore, these climaterelated risks are evaluated and managed in the same manner as other business risks by sharing
information with Group Risk Management Meetings that serves as the Groupʼ s risk management
organization.** See the SG Holdings Group corporate site for details.
https://www.sg-hldgs.co.jp/en/csr/mission/responsibility/risk/■ Organizational Chart of Governance Related to Climate< Content of reports to the Board of Directors >① Board of Directors

・Group measures related to climate changes
・TCFD scenario analysis results
・Progress of reduction of CO2 emissions for decarbonization

Discussion of matters to be resolved

targets (at least once per year)

Important Group meetings② Management
Strategy Meetings③ BudgetCommittee④ Investment

Committee⑤ Sustainability

Committee

・Sharing of risks and opportunities identified
・Sharing of action plans

Corporate

Information sharing

Reporting andsubmission ofcontent
considered⑥ Group Risk

Management Committee

Group Administration
Department
Managers Meetings

・Sharing of risks and opportunities

identified

・Sharing of action plans

Information sharing⑦ Specialized subcommittee TCFD-WG■ Meeting Bodies in Climate-Related Governance Systems
Meeting body

Composition

Role

Meeting frequency①Board of

Directors and Audit & Supervisory Board
Members of SG Holdings

Decision-making on execution of business ingeneralOnce per month②Management

Directors and Executive Officers of SG Holdings,
personnel responsible for each department andPresidents of Group companies

Discussion of Group management strategy

Once per month③BudgetDirectors and Executive Officers of SG Holdings
and personnel responsible for each department

Reviewing and reporting important mattersrelated to the Groupʼs management plans

Once per month④Investment

Directors and Executive Officers of SG Holdings
and personnel responsible for each department

Reviewing and verifying the execution of theGroupʼs proposed investment plans

Once per month

Reviewing the Groupʼs sustainability measures
including responses to climate change, andpromoting the creation of management systems
and ongoing improvement activities.

Four times per
year

Directors and Executive Officers of SG Holdings,
personnel responsible for each department andPresidents of Group companies

Reviewing and verifying the Groupʼs risk
management including responses to climatechangeOnce per month

Person in charge : General Manager, ESG
Promotion Department, SG
Holdings
Members : Personnel in charge in
relevant departments

Analyzing and reporting on the Groupʼs climaterelated risks and opportunities as anorganization under the Sustainability Committee

Twice per year
(FY2022)

Directors
Strategy
Meetings

Committee
Committee⑤Sustainability

Committee⑥Group Risk

Management
Meetings⑦Specialized

subcommittee
TCFD Working
Group

Chairman : Chairperson, CEO andPresident of SG Holdings
Members : Directors and Executive
Officers of SG Holdings andpersonnel responsible foreach department

4

SGH TCFD REPORT 2023

5. Strategy (Risks)
Transition Risks
Changes in Procured Energy Based on Domestic Conditions and the Financial Impact
ThereofDue to operating a comprehensive logistics business, it is anticipated that the Group will be significantly
affected by future changes in energy sources, price fluctuations and carbon taxes based on legal
regulations, etc. due to much of the energy used in transportation being derived from fossil fuels. In thisanalysis, we estimated the financial impact considering risk elements such as changes in the power mix
and carbon taxes in the companyʼs own energy strategy simulations aimed at achieving the reduction
targets.
■ Preconditions
Item

Condition

RemarksScope

SG Holdings Group (Japan)

Vehicle-related data only covers Sagawa Express.

Climate scenario

The Company aims to be carbon neutral in 2050, but
assumed a sub-scenario of society not proceeding at the
C level.
1.5°―

The time scale was matched to the greenhouse gas
emission reduction targets of the Group and Japan.
Time scale

Medium term : 2030 Long term : 2050

For convenience, 2020 is used as the present. The nearest
year available was referred to in cases where reference
data could not be obtained.

■ Reference Data

（ 1）Power Mix Assumed for Electricity Cost▲

As a risk scenario, additional consideration was given to the power mix in the event the utilization ofrenewable energy or nuclear energy is delayed.
Renewable energy

Hydrogen and ammonia

Nuclear power

LNG

Coal

Oil, etc.

Sixth Strategic
Energy Plan

36 to 38％1％

20 to 22％

20％

19％

2％

Risk scenario

30％

1％

15％

27％

25％

2％

* The projections of Takeo Kikkawa, Vice President and Professor, Graduate School of International Management, International University of Japan were applied.
* IEA WEO2022*4 APS*5 was applied for insufficient data.

（ 2 ）Fuel Cost
Fluctuation of fuel cost was estimated using IEA WEO2022 incorporating the effect of the invasion of Ukraine.
▲

Prices rising compared to 2020
Unit

2020

2030

2050

Gasoline unit priceyen / L150

164.8 ⬆

162.7

Diesel unit priceyen / L125

139.8 ⬆

137.7

CNG unit priceyen / m3

120

125.3 ⬆

117.8

（ 3 ）Carbon Tax
The exchange rate is converted at 109.75 yen / USD according to the IEA WEO2022 definition.
Per t-CO2

2020

2030

2050

―

14,816 yen (135 USD)

21,950 yen (200 USD)

5

SGH TCFD REPORT 2023

■ Financial Impact Analysis

An “Energy Strategy Simulation” (three following strategies) created for the Group to achieve emission reduction
targets was used to estimate the financial impact by applying parameters considering risk elements.
* The conditions as of November 2022 were used for the following scenarios.
* All CO2 emissions are set to be reduced by approximately 46% in 2030 and approximately carbon neutral in 2050.

ScenarioA

Conditions
A scenario based on the power mix, technological advances,energy prices and vehicle mix satisfying SBT criteria assumed by
the government

Government plan scenario
Renewable energy
rate : 45%

Fuel consumption
improvements :15%

Risk scenario
Renewable energy
rate : 45%

Fuel consumption
improvements :10%

WEO2022

Light vehicle EVs :100%
Light-duty electrictrucks : 15%

IEA
WEO2022

Light vehicle EVs :100%
Light-duty electrictrucks : 30%

A scenario that increases the percentage of introduction ofelectricity from renewable energy as much as possible, which is arealistic means as a measure to reduce GHG emissions

Active introduction of renewableenergy scenario

Renewable energy
rate : 100%

Fuel consumption
improvements :15%

Electricity Carbon tax

IEA

A scenario with the same preconditions as A, while assuming therisk that energy prices, emission factor and rate of improvementof vehicle fuel consumption will not reach the planned levels

B

C

Fuel

IEA
WEO2022

Light vehicle EVs :
65%

Sixth
Strategic
EnergyPlan

IEA
WEO2022

Expertopinion

WEO2022

IEA

Expertopinion

WEO2022

IEA

Financial Impact in 2030 (Compared to 2020)
The additional cost is approximately 5.4 billion yen to 9.4 billion yen
Percentage in relation to the planned operating income (considering business growth) : Approximately 3% to 6%
Risk management evaluation : Medium to large• Carbon taxes will be incurred• Vehicle expenses, renewable energy procurement expenses, etc. will increase• The active introduction of renewable energy scenario can limit costs the most
0

5

10

15

20

25

30

35

40

(billion yen)

0.01
12.1

2020

2.3

10.1

4.9

1.3

0.9

2020
(Baseline)

Increase from carbon tax

0.01
A : Government plan

14.5

1.0

9.5

0.7 1.5

3.5

3.1 1.0

3.3+6.6 billion yen

0.01
16.5

B : Risk

C : Renewable energy

13.5

2.1

0.4 0.8

8.7

11.4

0.7 2.2

0.5

6.6

3.4

3.0

0.5

3.4

1.3

3.2

+9.4 billion yen+5.4 billion yen

Initial vehicles

Initial infrastructure

Gasoline

DieselBiodiesel

Synthetic fuel

CNG

HydrogenEV electricity using renewable

Facilities using normal electricity (excluding carbon tax)

Facility electricity using renewable energy

Infrastructure maintenance

Carbon tax Scope 1+2 (facilities and EVs)

6

SGH TCFD REPORT 2023

Financial Impact in 2050 (Compared to 2020)
The additional cost is approximately 800 million yen to 2.0 billion yen
Percentage in relation to the planned operating income (considering business growth): Approximately 0.4% to 1%
Risk management evaluation : Small to medium• It is assumed that there will almost be no carbon tax due to being carbon neutral
0

5

10

15

20

25

30

35

40

(billion yen)

0.01
2020

12.1

A : Government plan

12.2

2.3

10.1

1.3

4.9

2020
(Baseline)

0.9

0.01
8.4

2.1

9.1

1.0 0.1+1.2 billion yen

1.3 0.1+0.8 billion yen

0.01
11.3

B : Risk

7.6

3.0

13.0

0.1

Initial vehicles

Initial infrastructure

Gasoline

DieselBiodiesel

Synthetic fuel

CNG

HydrogenEV electricity using renewable

Facilities using normal electricity (excluding carbon tax)

C : Renewable energy

Facility electricity using renewable energy

9.5

9.1

Infrastructure maintenance

1.1

9.1

0.8 0.1+2.0 billion yen

Carbon tax Scope 1+2 (facilities and EVs)

Additional costs including approximately 3.3 billion yen in carbon taxes will be approximately 5.4 to 9.4
billion yen in 2030, but it is estimated that additional costs will subsequently decrease as decarbonization
progresses toward 2050.
In the reduction of emissions in transportation, which account for a large percentage in the Company,
there are currently issues to be considered such as the cost aspect of promoting the introduction ofelectric trucks, and alternative energy (hydrogen, synthetic fuel) remains in research and development,
and it is recognized that time will be required for practical implementation. In such conditions, the “active
introduction of renewable energy scenario” is believed to be the most realistic and effective measure for
the Group from a medium-term perspective until 2030.

7

SGH TCFD REPORT 2023

Physical Risks
Financial Impact of Increased Frequency of Localized Heavy Snowfall
According to research by the Japan Meteorological Agency, although overall snowfall in Japan will
decrease if temperatures rise by 4°
C, it is forecast that there will be an increase in once-in-a-decade
heavy snowfall in the Hokuriku region. With the recognition that understanding the impact on the relevant
regions is essential for the Group operating a nationwide transportation network, this analysis estimatedthe financial impact by multiplying the rate of increase in frequency of once-in-a-decade heavy snowfall
by the past amount of damage during heavy snowfall at Sagawa Express sites in Hokuriku.
■ Preconditions
Item

Sagawa Express Hokuriku Branch (13 sales offices)

Increase

Scope
Climate scenario

Changes in Once-in-a-Decade
Heavy Snowfall

Condition

4°
C Scenario
Long term : 2050, end of 21st century

Time scale* End of 21st century refers to 2080 to 2099
* For convenience, 2020 is used as the present. The nearest year
available was referred to in cases where reference data could not be
obtained.

■ Reference Data

Meteorological Research Institute, Japan Meteorological Agency(Hiroaki Kawase)“Kawase H. et al., Climatic Change, 139, 2016, 265-278”
・“ NGFS* 6 Climate Impact Explorer ” was referred to for futurechanges in temperature.
・- Based on the impact of heavy snowfall that occurred in in relevant
Sagawa Express sites in January 2021.

Decrease

・Paper by Department of Applied Meteorology Research,

Source : Hiroaki Kawase (Department of Applied Meteorology
Research, Meteorological Research Institute, Japan
Meteorological Agency)“Snow of Japan Changing Due to Global Warming”■ Changes in the Frequency of Occurrence of Heavy Snowfall

Based on the above paper, it was assumed that “ snowfall of 60 cm or more ” is once-in-a-decade heavy
snowfall. The changes in the frequency of occurrence are as follows.
2020

2050

End of 21st century

Changes in thefrequency ofoccurrence ofheavy snowfall

１

1.5 X

2.5 X

Change in temperature*

C increase
1.2°

2.3°
C increase

4.4°
C increase* If based on average temperatures from 1986 to 2006

■ Impact of Heavy Snowfall on Operating Revenues (Expected Loss*)

Expected loss

2020

2050

End of 21st century-4.8 million yen-7.5 million yen-12.4 million yen* Expected loss: Average annual expected loss.
This takes into account the last-minute demand before the heavy snowfall period and the rebound after the heavy snowfall period.

■ Future Action

The impact on the relevant sites is small, and was evaluated to be immaterial as a financial risk.
In addition to continuing to endeavor toward business continuity in the event of anomalous weather infuture, we will strengthen systems for preventing vehicles getting stuck in snow and employees having
difficulty returning home, while giving the highest priority to ensuring the safety of employees.

8SGH TCFD REPORT 2023

Risk of Heatstroke Caused by Intense Heat
Changes in temperature are believed to have a significant impact on employees working outdoors. Thisis perceived to be an important matter related to business continuity for the Group whose business ischaracterized by being labor intensive, and this analysis estimated the rate of increase in the occurrenceof heatstroke caused by intense heat, the financial impact and the additional costs required if preventative
measures are taken.

（ 1）Rate of Increase in the Number of People with Heatstroke and the Financial Impact
The wages paid for days of absence from work due to heatstroke were estimated as the “additional costfor supplementing operations.”■ Preconditions
Item
Scope
Climate scenario
Time scale

Condition

Remarks

Sagawa Express―

4°
C Scenario―

The short term was aligned with the year of execution of
the Groupʼs Mid-Term Management Plan

Short term : 2024 Medium term : 2030 Long term : 2050

■ Reference Data

・Index of persons taken to a hospital due toRelative value (multiple)

heatstroke in Ministry of the Environment
Strategic Research and Development Domain S-8“Comprehensive Study on Impact Assessment
and Adaptation for Climate Change” (2016)
・ The average number of days of absence from2018 to 2022 was used as the 2020 baseline.

Relative Value of the Number of People Taken to
Hospital Due to Heatstroke in Each Scenario

1981-2000
Baseline period

2031-2050

2081-2100

Source : Climate Change Adaptation Information Platform portal site
https://adaptation-platform.nies.go.jp/map/national/index.html■ Additional Cost for Supplementing Operations During the Period of Absence from

Work
2024

2030

2050

Rate of increase inheatstroke*1

1.16

1.4

2.32

Additional cost*2

180,000 yen

450,000 yen

1,500,000 yen*1 Rate of increase if 2020 is 1
*2 Average wages based on actual 2020 figures x increase in the number of days of absence due to heatstroke■ Action

Although the financial impact is small, matters related to peopleʼs health and safety are evaluated to havea medium to large impact in the Groupʼs risk management evaluation criteria. In this analysis, it was foundthat it is necessary to prepare for and take appropriate action against the risk of the rate of occurrence ofheatstroke increasing in future. In (2) on the next page, the financial impact in the event of implementing
work restrictions is estimated as a recommended preventative measure.

9SGH TCFD REPORT 2023

（2）Financial Impact in the Event of Implementing Work Restrictions as a Preventative Measure
The Ministry of Health, Labour and Welfare recommends additional break time if the WBGT*7 reference
value is exceeded. The necessary break time assuming intense heat was estimated, and a simulation
was performed using the wages to be paid for that time as “additional cost for supplementing operations”■ Preconditions
Item
Scope
Climate scenario
Time scale

Condition
Sagawa Express * Sales personnel (including drivers) working outdoors
4°
C Scenario
Medium term to long term

■ Reference Data

・Ministry of Health, Labour and Welfare “Manual on

Preventative Measures Against Heatstroke in the
Workplace”
・Temperature data for the four months of summer(June to September) in the Ministry of the

Guideline for Break Times
Excess over WBGT
reference value

Break time per hourC
Around 1 °15 minutes or moreC
Around 2 °30 minutes or more

■ Additional Cost for Supplementing

C
Around 3 °45 minutes or more

Operations During the Period ofAbsence from WorkMore

Stop work

Environmentʼs database

Prepared by referring to the Ministry of the Environment“ Heatstroke Environmental Health Manual 2022 ”

Extremely hot year (increase of approx. 2°
C)Financial impact*

3.1 billion yen* Extremely hot years and normal years were calculated using the following method, andthe difference was used as the additional cost.
Additional break time (days) x average daily wage x number of relevant people x
percentage of time spent working outdoors■ Action

It is possible that there will be a financial impact that cannot be ignored if work restrictions are implemented.
However, it is believed that the financial risk can be reduced by adopting effective action at lower cost.
In addition to strengthening responses such as labor saving and increasing productivity, we will promote
combined measures to address heat such as the fan vests and neck coolers that we are currently introducing.

10

SGH TCFD REPORT 2023

6. Strategy (Business Opportunities)<Category>

Resource
Goods

Background… Improvement of resource efficiency… Goods and services… MarketResponse strategy

・Modal shift

Improvement of transportation efficiency

Increase in GHG
emissions from truck
transportation

MarketEnergyResilience

・Operation of large aggregation

facilities

・Establishment of Service

Centers

・Optimization of delivery routes
・Smaller vehicles… Resilience

EffectCategory・Reduction of GHG emissions : -127,000 t-CO2 / year

Resource

・Strengthening of competitiveness ofdecarbonization services

・Joint delivery… Energy sources

Goods

・Reduction of number of vehicles, shortening oftravel distance, reduction of fuel costs throughimprovement of fuel efficiency, reduction of GHG
emissions

Resource

・Reduction of GHG emissions through collectionGoodsand delivery using bicycles and carts

・Strengthening of competitiveness ofdecarbonization services<Idling stop>・Promotion of environmentallyfriendly safe driving

・Fuel cost reduction : -1 billion yen/year
・Reduction of GHG emissions : -24,000 t-CO2 / year

Resource<Utilization of fuel efficiency improvement tools>
・Fuel cost reduction : -100 million yen / year

Social demands for 3Rs
Response to Energy
Saving Act

Rising prices offossil fuels

Tightening of energy
supply and demandSocial demands for
decarbonization

Customersʼ
increased interest in
decarbonization

Promotion of
decarbonization
investment by thegovernment

・Recycling of packaging material(stretch film)・Introduction of LED lighting(384 sales offices nationwide)・Introduction of next-generation fuels
・Use of subsidies
・Energy supply to partner companies

・Solar power generation in company ʼsown logistics facilities

・Creation and internal utilization of forest

credits through forests owned by theGroup・Visualization of CO2 related totransportation of customersʼ packages
・Development and provision oftransportation services, etc.
curbing CO2 emissions

Utilization of public sector incentives(green bonds, etc.)

・Disaster logistics consulting

Heightened interest
in disasterprevention

・Conclusion of agreements with local

governments, creation of relief supply
system for regional disasters caused bystorms and flooding

・Reduction of waste disposal costs
・Reduction of GHG emissions
・Electricity cost reduction : -50 million yen / year
・Reduction of GHG emissions : -1,800 t-CO2 / year

Resource

Resource

・Preparation for future increases in fossil fuel prices
・Reduction of GHG emissions
・Procurement of funds when introducing EVs

Energy・Scope 3 reductions
・Strengthening of resilience

・Reduction of GHG emissions
・Stimulation of forestry business・Strengthening of competitiveness・Increase of revenues

EnergyResilience

EnergyGoods

・Diversification of funding methods

Market・Contribution to regional disaster prevention

Goods

・Strengthening of competitiveness・Increase of revenues

Resilience11

SGH TCFD REPORT 2023

7. Metrics and Targets
The transportation sector including private vehicles accounts for approximately 20% of Japan ʼs CO2
emissions. As the transition to a carbon-free society accelerates, the SG Holdings Group has announced
a “Group Decarbonization Vision” as a statement of intent to engage in decarbonization. It explicitly
outlines medium- to long-term emission reduction targets in line with Japanʼs targets, and the direction ofemission reduction measures, and we will implement measures as a logistics group handling social
infrastructure.
Scope
Scope 1 and 2
Scope 3

Targets2030 : 46% reduction in CO 2 emissions (*compared to FY2013)
2050 : Aim to become carbon neutral
Engage in reduction of emissions throughout the entire supply chain■ Transition Plan (Sagawa Express)
2021 results

2030 targets

Percentage of implementationof environmentally friendly
vehicles including EVs

59％

98％

Percentage of renewableenergy in electricity used

14％

40％

*Reduction level and prerequisites- Reduction level: In line with Japanʼs emission reduction targets Including offsets using carbon credits, etc.
- Prerequisites: Realization of the 2030 power generation mix* in the Sixth Strategic Energy Plan (* 59% non-fossil: 36-38% renewable energy, 20-22% nuclear power, 1% hydrogenand ammonia) If there are changes in the reduction level of prerequisites due to social conditions, the emission reduction target may be reviewed.

Reference sites

Decarbonization Vision( https://www.sg-hldgs.co.jp/en/csr/mission/environment/climate/ )Please refer to ESG BOOK for details of greenhouse gas emissions data
( https://www.sg-hldgs.co.jp/en/ir/library/esg-book/ )12SGH TCFD REPORT 2023

8. Sources and Notes*1 IEA : International Energy Agency*2 SG Holdings Group ʼ s Mid-Term Management Plan “ SGH Story 2024 ”
https://www.sg-hldgs.co.jp/en/ir/management/plan/*3 SG Holdings Group risk management evaluation criteria
Evaluation Guideline
Quantitative
Evaluation

Qualitative Evaluation
ImpactPeopleʼs Health &Safety9LargeMedium・Level affecting

human life

Civil, Criminal and
Administrative
Disposition
・Level of suspending activities at all

business sites

・Level of suspending

8

activities of a sales office7

・Severe injury level

6・Minor injury level

5

・Level leading tofeeling unwellSocial Criticism

Percentage ofLosses vs.
Operating
Income Plan

・Level reported nationwide

by major media outlets suchas newspapers and television

・Level subject to boycottingby consumer groups, etc.

5% or more・Level reported locallyby some media outlets

・Level not reaching suspension ofactivities(improvement order/fine level)

・Level of receiving many

complaints and inquiries atcall centers

1% or more andless than 5%

4・Level not covered by the media

3

Small

2

・No injury level

・Level of warning or guidance・Level not noticed by societyLess than 1%

1* Basic evaluation is Large = 8, Medium = 5 and Small = 2, each of which can be adjusted by ±1.
* Quantitative evaluation is implemented voluntarily when the anticipated size of the loss can be converted into a monetary amount.

*4 WEO2022 (World Energy Outlook 2022) : A representative report by the IEA indicating the outlook on energy
supply and demand, technological development, etc.
*5 APS (Announced Pledges Scenario) : A scenario assuming all climate-related commitments announced by
C). By advocating net zero in 2050, in
national governments are achieved by the deadlines (equivalent to 1.7°
Japan it can be viewed as almost equivalent to NZE (2050 net zero scenario). However, looking worldwide, as
there are countries that have not committed to net zero, fossil fuel demand remains, and the fossil fuel priceis higher than for NZE. In this analysis, it is used as a “more realistic scenario.”*6 NGFS (Network for Greening the Financial System) : A network of central banks and financial supervisory
authorities established in December 2017 to consider monetary supervision responses to climate changerisks.
*7 WBGT (wet-bulb globe temperature) : A metrics proposed in the United States in 1954 for the purpose of
preventing heatstroke. It is a metrics that takes into account three aspects that have a significant impact on
the heat intake and output of the human body ((1) humidity, (2) surrounding thermal environment such as
insolation and radiation, and (3) temperature).
[Revision history]

1st Edition : 31/03/2023
2nd Edition : 17/11 /2023 Updated “Reference Data (3) Carbon Tax”

(Page 5)13