TCFD Consortium Comment on the Exposure Draft of IFRS Sustainability Disclosure Standards
S2 Climate-related Disclosures

The TCFD Consortium (hereinafter the Consortium) currently has approximately 650 members, representing
nearly 1/5 of TCFD member organizations worldwide. The purpose of the Consortium is to promote efficientand effective disclosure based on the TCFD recommendations through dialogue between non-financial
companies and financial institutions, and to contribute to a "virtuous cycle of environment and growth" inwhich such information is appropriately evaluated and funding is encouraged.

The Consortium welcomes the publication of the exposure draft by IFRS, building upon the framework of theTCFD Recommendations, and appreciates the opportunity to submit comments in the public consultation
process. The Consortium believes that, based on the globally accepted framework of the TCFD
Recommendations, it is possible to disclose as well as use the disclosed information in a way that effectively
utilizes the accumulated knowledge to date. The Consortium also agrees with IFRS that disclosure ofsustainability-related information is important in assessing enterprise value.

In addition, the Consortium welcomes that the exposure draft largely eliminates the inclusion of regionspecific criteria in the “Industry-based Disclosure Requirements” which was identified as one of the major
areas of concern since the “Prototype” documents were released in November 2021. It should be noted,
however, that there are still some requirements in which region-specific standards are found, and furtherrefinement is desirable. Furthermore, the Consortium welcomes the inclusion of alternative methods
including qualitative analysis for scenario analysis which can be difficult for disclosing companies, from theviewpoint of enhancing ease of use for disclosing companies and further promoting disclosure.

The Consortium thanks the opportunity to provide comments on the exposure draft of IFRS Sustainability
Disclosure Standard S2 "Climate-related Disclosures" as well as its Appendix B (Industry-based disclosurerequirements) published in March 2022.

1.

Transition Plans and Carbon Offsets (Question 5)

With regard to Question (a), the Consortium appreciates that the disclosure of the transition plan is inalignment with the TCFD Guidance on Metrics, Targets, and Transition Plans, and that the informationpertaining to carbon offsets are included, reflecting the variety of offsets. However, it should be noted thatthe significance of carbon offsets varies from industry to industry and cannot be determined unambiguously
based on the type or quantity of offsets.

2.

Cross-industry metric categories and greenhouse gas emissions (Question 9)

The Consortium welcomes that the cross-industry metric categories and greenhouse gas emissions reflect1

the seven categories described in the TCFD Guidance on Metrics, Targets and Transition Plans, while notexceeding them. Below are the comments associated with this item.
(a) It is understood from the description in the General Requirements that the disclosure of the sevencross-industry metric categories depends on their materiality. In particular, the need for disclosure ofinternal carbon prices and remuneration varies widely because the materiality differs greatly fromcompany to company. Therefore, it is requested to emphasize again that disclosure decisions are madeaccording to the materiality of the disclosing entity.

(e) In some cases, there could be hundreds of associates and subsidiaries, and it may be difficult toconsolidate scope 1 and scope 2 emissions from these companies. In particular, requesting noncontrolling associated companies and non-consolidated subsidiaries to submit emissions data maylead to abuse of superior positions. Furthermore, it can be expected that obtaining such informationfrom affiliated companies (including those overseas) with insufficient data acquisition infrastructure
could be problematic. The scope of disclosure should be determined in consideration of both materiality
and availability of data.

(f) The Consortium agrees to the idea of requesting disclosure of Scope 3 emissions subject tomateriality. However, since the methodology to calculate Scope 3 emissions is not harmonized amongentities, it should also be clearly stated that there are issues remaining with respect to simply comparing
such information. While TCFD emphasizes the importance of disclosing Scope 3 emissions, it also
notes that there are several challenges including data availability. In this sense, it would be difficult inpractice to treat disclosure of scope 3 emissions in the same manner as Scope 1 and Scope 2emissions as suggested under question item (d). Further, paragraph 60 of General Requirementssuggests that the necessity of disclosure for all items, not just emissions, depends on materiality. Thisshould be emphasized. The Consortium also suggests considering adding a statement to ensure thatcompanies that select disclosure items based on materiality are not treated unfavorably. For companies
for which it is difficult to disclose Scope 3 emissions, the Consortium is of the view that disclosure ofalternative information such as a roadmap for calculating and disclosing emissions or explaining theefforts and opportunities of companies by disclosing the reduction contribution should be considered
as a means to enhance disclosure of Scope 3 emissions.

Therefore, we believe that considering the phased introduction of disclosure of Scope 3 emissions
would increase the practicability, taking into account current disparity of efforts among jurisdictions andcompanies.

3.

Industry-based requirements (Question 11)

The Consortium welcomes the effort to improve the international applicability of industry specificrequirements while building upon SASB standards. However, the following problems can be raised.
(a) Although companies are in different situations depending on location, regulatory system, customer
needs, etc., excessive harmonization entails a risk that their sustainability-related efforts may be judged2

by simple comparison of the disclosed figures. It may be possible to consider an approach in which themetrics to be disclosed are described in broader terms, with a certain degree of flexibility, and therequirement for metrics are examined according to each jurisdiction.
For some industries, there seem to exist metrics whose intention to include them as part of sustainability
disclosure is not clear. Examples are "area of manufacturing plants". Some terminology, such as“products designed for use-phase resource efficiency” are not clearly defined. It is requested that thedefinition and intent of disclosure be clarified or that the discretion expected of the disclosing party be
stated so that the disclosing entity does not have difficulty in providing information.

With regard to (d) - (i), as stated by the TCFD, challenges remain with respect to quantifying Scope 3
emissions such as data availability and calculation methodology. Therefore, the Consortium is of theview that it is important to consider practical feasibility. For example, the Consortium believes thatconsideration of regional characteristics or corporate size such as differentiation according to asset
valuation can help increase disclosure.

There remain other challenges to disclosure. For example, revenue is a metric common to manyindustries, but there are jurisdictions where the disclosure of revenue is not required. The Consortium
believes that changing these items to an index such as a percentage of total revenues, rather thanactual value, would be more appropriate for the purpose of comparing companies. In light of the above,it may be possible to consider making the use of metrics optional for the disclosing entity, according totheir materiality.

4.

Costs, benefits and likely effects (Question 12)(c) As mentioned above, aggregating emissions from a wide range of affiliated companies could incur
substantial cost, especially for smaller companies, and there may be problems related to confidentiality ofinformation, superior positions, etc.. Therefore, the Consortium believes that measures such as
differentiating disclosure requirements according to corporate size, as well as allowing alternative methods
such as simplified calculation methods or qualitative analysis, in a way similar to scenario analysis, orgradually increasing the sophistication of disclosure requirements should be included.

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