Disclosure Based on
TCFD Recommendations

July 11, 2024
Cosel, Co. Ltd.

Information Disclosure Following the Recommendations by Task Force on
Climate-Related Financial Disclosures (TCFD)
Overview of TCFD
TCFD is a task force established by the Financial Stability Board in December 2015 at the request of the G20. TCFD recommended in
its final report in June 2017 that information around the four core elements of the TCFD recommendations to be disclosed.
Declaration of Our Support for TCFD Recommendation
Climate change poses great risk in our corporate activities and financial plannings as it increases sea surface temperatures andintensified rainstorms, causing adverse effects on our ecosystem.
Our main product line is “Switching Power Supplies," which is used in various electronic equipment such as information devices,
medical equipment, and factory automation. At Cosel, we believe we can contribute in the "realization of sustainable society" throughthe development and the distribution of products with improved power dissipation and significant energy efficiency, while promoting
corporate activities to reduce environmental impact from our business operations. It is our mission and responsibility to pass on thisirreplaceable earth to the next generation in a healthy state.
In November 2019, we endorsed the TCFD Recommendations on the climate change related disclosure, and have launched a project
to conduct Scenario Analysis to address this important issue.

Recommended Disclosure from TCFD and Status of the Measures Taken
Governance
Recommended Disclosurea) Board oversight of climate-related risks and opportunities.
b) Management’s role in assessing and managing climate-relatedrisks and opportunities.

Status of the Measures Taken
We established "Environmental Committee", a team dedicated forclimate change related matters. Under the Board of Directors, thecommittee develops strategies against climate change, and updated
them annually.
The committee also oversees and evaluates the performance of ouractivities.

Strategy
Recommended Disclosure

Status of the Measures Takena) Short, mid, and long-term climate-related risks and opportunities
identified by the organization.

Scenario analysis has been conducted for our domestic businessdivision of unit power supplies, on-board power supplies, and noise
filters.
As a result, climate-related risks and opportunities that have been
determined to have significant financial impact are being addressed
and implemented.
In the future, we plan to proceed with scenario analysis for the entire
Cosel Group worldwide.

b) Impact of climate-related risks and opportunities on theorganization's business, strategies, and financial planning.
c) Resilience of the organization's strategies based on various
climate-related scenarios, including the “Under 2℃” scenario.
Risk Management
Recommended Disclosure

Status of Measures Takena) Processes for the organization to identify and assess climaterelated risks.

Our RC (Risk Management and Compliance) Committee takes the leadin identifying company-wide risks and implementing measures in
consultation with each department assigned to each risk.
The identified risks are classified according to their frequency, impact
on human resources and business operations, and recovery levels.
They are then addressed as a part of the corporate policy so that we
continue to implement the measures.
Environmental Committee plays a central role in addressing climatechange-related risks. They work closely with each related department
to formulate policies and strategies to reduce environmental impacts
and monitor their implementation.

b) Processes for the organization to manage climate-related risks.

c) How are organization's processes for identifying, assessing, andmanaging climate-related risks integrated into their overall risk
management.

Indicators and Targets
Recommended Disclosure

Status of Measures Takena) Indicators used by the organization to assess climate-relatedrisks and opportunities for their strategies and risk management
processes.

Target for 2030
-Carbon Neutral Scope 1, 2b) GHG emissions and related risks for Scope 1, Scope 2, and Scope
3 where applicable.

c) Targets used by the organization to manage the climate-relatedrisks and opportunities, and the result against the targets.

Progress against target-2023 result
Reduction of 48% from 2020
Monitoring Indicators-Scope 1 (direct), Scope 2 (indirect) CO2 emissions and energy
consumption*We use CO2 emissions as an indicator as it is the only GHG emissions
at Cosel.

1GovernanceThrough the discussions at the Board of Directors and Policy Development Committee meetings, Cosel has always positioned
the climate change measures as an important business issues. In the wake of our endorsement for TCFD Recommendations, wehave established a project team to reinforce our organizational structure for more effective management.
Our President, who also serves as the chief executive of the Board of Directors, is in charge of climate change measures, andthe Environmental Committee, which directly reports to the President, discusses and formulates the strategies for climate-related
issues. The issues examined and discussed by the Environmental Committee are reported to the Board of Directors as
appropriate, and critical issues are discussed in the Board of Director's meetings. Once the Board of Directors decides that anaction needs to be taken, they order the Environmental Committee to implement measures. The Board of Directors receives
feedbacks and results of the measures and monitors the progress of the activities.
Thus far, the Board of Directors had discussed the targets for reducing greenhouse gas emissions and installing photovoltaic
power generators to utilize renewable energy sources, and the President called the final decision to execute the initiatives. They
have also made decisions to identify risks and opportunities associated with climate change, and is working to strengthen our
strategies to deal with climate change.
The following topics were also on the Board's agenda for discussion:-Discussion and decision making on capital investment for decarbonization-Progress report on our efforts toward carbon neutral-Progress report on climate-related financial planning and information disclosure initiatives based on TCFD Recommendations.
Going forward, we will enhance governance by reporting to the Board of Directors on a semi-annual basis.

Cosel Group Environment Related Governance Structure
Board of Directors
ReportPresident / CEO

Executive
Committee

Director ofEnvironmental
Management

Appoint / Supervise

Supervise
Environment
Committee

RC Committee
Collaborate

Collaborate

Various committees-Beautification andRecycling Committee-Health and Safety
Committee

ReportEnvironment
AuditorRC Committee

Chairperson: Manager of General Affairs
1. Promote the risk management organization, provide training and raiseawareness.
2. Examine and implement measures to ensure Cosel Group's compliance toregulations.

Environmental
Committee

Chairperson: Director of Environmental Management
Deliberates on the environment related manuals and targets, identifies issues andchallenges, and creates plans for improvement.

Beautification andRecycling
Committee

Chairperson: Team leaders and Section Managers
Promote internal and external beautification activities and recycling of wastematerials.

Health and Safety
Committee

Chairperson: Site Leadership (e.g. plant managers) or the equivalent (appointed
by the President)
Establish safety and health management system and methodologies, solve
problems or improve the level of safety and health by preventing accidents,
correcting issues, improving workplace environment and sanitation.

2

Strategies
In order to identify risks and opportunities related to uncertain future events caused by climate change, and to understand how
they will affect us so that we can determine appropriate responses, we conducted a Scenario Analysis in line with the TCFD
recommendations.

Prerequisites for Scenario Analysis■ Scope
The target businesses are unit power supplies, onboard power supplies, and noise filters, which account for approximately 80%
of our sales by product category. PRBX products, whose production sites and target markets differ from these, will be covered in
the next fiscal year.
As for the target regions, we decided to focus on Japan first since 60% of our sales by region is in Japan. We plan to include
worldwide regions in the next fiscal year.
■ Duration (analysis timeline)
Given the nature of our business, we suspect significant risks and opportunities that will impact our supply chain.
In considering the impact on supply chain, we selected the year 2030 to analyze the risks from transitional period as there isrelatively more information on policies and market forecasts available for this year, while 2050 was selected to analyze thephysical impact as we assumed that is around the time such impact may become more apparent.
■ Scenarios
We referred to the following scenarios, various reports by the Ministry of the Environment and the Japan Meteorological Agency,
and hazard maps by local governments for this analysis.
Temperature ranges

Scenarios

4℃(2℃ or higher)

IEA*１ STEPS（Stated Policies Scenario）（2.6℃）
IPCC*２ RCP8.5

2℃

IEA SDS（Sustainable Development Scenario）
IPCC RCP2.6

1.5℃

IEA NZE（Net Zero emissions by 2050 Scenario）*1：IEA…International Energy Agency*2：IPCC…Intergovernmental Panel on Climate Change
The outlook of the world we hypothesized for each scenario are as follows.
Scenarios
4℃ increase

Under 2℃ increase

1.5℃ increase

Hypothesis based on the Scenarios

Expected Impact-Current environmental effort would continue,
and the impact of climate change on
business activities would increase.

-Increased severity and frequency of weatherrelated disasters.

-More stringent climate change measureswould be introduced, new policies andtechnological innovations would advance,
and the use of environmentally harmful
resources would be restricted.

-Incurred or increased cost associated with
the introduction of new carbon taxes andhigher tax rates.

-Policies and investment for clean energy
would rapidly increase, and the developed
nations would achieve Net Zero state aheadof others.
-Major SDGs energy related requirements are
met by 2030.
-Globally achieve the 2050 carbon neutral goal.

3-Rising average temperature and sea level.

-Increased costs associated with increased
renewable energy procurement andequipment renewal to achieve GHG
emission reduction target.
-Increased fuel and raw material costs.
-Changes in customers' needs for low-carbon
products.
-Increased development costs for low-carbon
products.
-Opportunity loss due to delay in responding
to climate change.

Identification of Risks and Opportunities, Impact Assessment,
and Countermeasure Study
A cross-functional project team led by the Environmental Committee identified and screened various
risks and opportunities our business could face due to the climate change.

【Definition of Timeframes】

First, we identified possible climate-related risks and opportunities for the businesses and regions in
scope. The timeframes impacted by these risks and opportunities were determined respectively in short,medium, and long term, and all stages of supply chain including upstream, downstream, and direct
operations, were also included in the scope of the study.
Next, the identified risks and opportunities were sorted by the significance and individually scored for ①
the likelihood of impact, and ② magnitude of the impact on a scale of 1 to 3. If the total points from ①×②
equals to 6 or higher, they are categorized as climate related risks / opportunities that should bequantitatively evaluated.
【Possibility of being affected by the risk】
Scale

Pts

Judgement criteria

3

High

・ 80+% / Every year

2

Medium・ Once every 5 years

1

Low

・ 20% or less / rarely affected

Timeframe

Our definition

Short-term

0 to 3 years

Mid-term

3 to 10 years

Long-term

10+ years【Significance of the impact】
Scale

Pts

Judgement criteria

3

Large

-Affects entire company, bankruptcy risk must
be taken into account in financial planning2

Medium-Affects multiple functions, the impact needs tobe considered in financial planning

1

Small

-Affects only one function, limited impact

We calculated the financial impact of each risks/opportunities identified above, and considered measures to address those issues that were
determined to have significant financial impact. The results are as follows:【Scenario Analysis Result (Financial impact from climate-related risks/opportunities and measures)】
Risks

Descriptions
Policy /regulation
risks

Transitional Risks

Cost increase from the introduction of new
carbon tax

Manifest
timingScenario

Financial
impact

Mid
term

1.5℃

MediumHigher raw material procurement cost due
to higher fuel and electricity prices
Marketrisks

Acute
Physical
Risks

Chronic

Measures-Procurement of renewable energy①Installation of solar power generators②Off-site PPA implementation-Promoting VACD activities①Reducing parts/material price orswitching②Switching to parts / raw materials with low
carbon tax③Reducing the number of parts④Promoting centralized purchasing-Reflecting in appropriate product prices

Mid
term

4℃
2℃

High

Suspended or reduced operations due todisaster damage to suppliers, production
and logistics (decreased sales fromreduced production capacity)

Mid
Long
term

4℃

High

Additional cost of fixed asset losses fromthe damage to suppliers, production, andlogistics

Mid
Long
term

4℃

High

Loss of inventory due to the damage tosuppliers, production, and logistics

Mid
Long
term

4℃

High

Difficulty obtaining materials due todisruption of logistics or damage tosuppliers (additional handling cost)

Mid
Long
term

4℃

High

Difficulty obtaining materials due todisruption of logistics or damage tosuppliers (decreased sales)

Mid
Long
term

4℃

High

Suspended operations due to flooded
production and logistics bases in coastal
areas

Long
term

4℃

Manifest
timingScenario

Financial
impact

Mid

1.5℃
2℃

―
(Qualitative -Expanding low-carbon product lines (ecoevaluation friendly models) to increase their sales
only)

Cost increase from the changes in supplydemand (shortage) of certain procured
goods as a result of transition to a lowcarbon society

Opportunities

Descriptions

Product / service

Increased demand for low-carbon productand increased sales of the products thatmeet such demand―(Qualitativeevaluation
only)-Taking disaster damage risks to our partnercompanies into consideration①Parallel production②Reviewing outsourced products③Selecting new partner companies-Reviewing safety stock standard for hard-tosubstitute parts-Adoption of parts that can be produced in
multiple locations-Purchasing from multiple suppliers(securing alternative suppliers)―

Measures【Definition of [High] financial impact】
More than 100 million yen for expenditure / More than 1 billion yen for sales

4

Risk Management
At Cosel, we have established “RC (Risk Management andCompliance) Committee,” an organization that oversees our risk
management, chaired by the Director of the General Affairs andparticipated by each department as its members. The risk
management is classified into the following two risk factors.

ＲＣ (Risk Management /Compliance) Committee
Identifying ordinary
times risks

・Ordinary times risk management
・Crisis management
Ordinary times risk management refers to the risks related toadministrative issues found in business operation. Risks andcountermeasures are decided with the approval of the President, andthe policy implementation and the follow-ups are conducted as a partof policy management activities.

Environmental
Committee

Identifying risks and opportunities
associated with unforeseen events

Analysis / Evaluation

Selection anddeliberation

Developing crisis
management
plan

Creating
environmental
policy and action
plan

Crisis management refers to the risks related to the crisis
situations. In order to take appropriate actions, control the risks, andminimize damages, we plan a crisis management plan that draws out
the responses and preventive measures in advance, which arereviewed annually.
Climate change-related activities are led by the "Environmental Committee.” In cooperation with other departments, they drawout various policies and strategies to reduce environmental impact and monitors the activities.

Climate Change-Related Indicators and Targets
We believe that reducing CO2 emissions and helping to decarbonize the society through our business activities will reduceclimate-related risks and increase our opportunities.
We have selected GHG emissions as our performance indicator against the climate change. We also disclose the resulted GHG
emissions from Scope 1 and Scope 2. Our climate change indicator is CO2 emissions reduction, and the target and actual results
are as shown below.
Changes in Emissions from Scope1 and 2

Breakdown of Scope 3 emissions in 2023

Target: Achieving Carbon
Neutral by FY2030(FY)

Categories

Scope1
Scope2

Scope3

TargetAchieving Carbon
Neutral by FY2030

Activities / Policies-Aggressively promoting energy conversion and replacing air conditioner from GHP to
EHP.
-We also promote the conversion to carbon neutral fuels.
Continuously promoting energy conservation and switching to renewable energy
sources such as solar power generation.

-For Cat.1, which has the highest emissions, we will promote collaboration with the suppliers and work together tofurther reduce emissions-For Cat.11, we will promote the spread of high conversion efficiency products with low CO2 emissions during
operation in the market and further reduce the CO2 emissions.
5Activity Examples
Solar Power Generation
In order to reduce the environmental impact of our business activities, we introduced a 60kW solar power generation system at
our headquarters plant and a 150kW solar power generation system at our Tateyama Plant between FY2002 and FY2011. In
addition, our headquarters plant has been replaced and its solar power generation system brought the total company-wide
capacity to 249kW in FY2023.The systems are capable of providing approximately 4% of the total electricity used at the plants,
which in turn reduces CO2 emissions from electricity consumption by approximately 4%.
Changes in Electric Power Ratio (excluding energy saving)

CO2-Free Electricity
Since FY2021, we introduced electricity
derived from renewable energy sources as
CO2-free electricity, and we haveintroduced 100% CO2-free electricity at the
Head Office Plant, Tateyama Plant, and R&D
Center in FY2023. In addition, from FY2024,
we will increase the ratio of electricity
generated by solar power by introducing offsite PPA and expanding our own solar power
generation facilities.

Traditional electricity
is less than 2%(FY)

Development and Distribution of Environmentally-Friendly Products
For the purpose of the development of environmentally-friendly products and proactively providing customers withenvironment related information on our products, we evaluate the following three categories.
1. Environmental impact arisen while operating our products at customers
2. Environmental impact arisen during production at our plants
3. Environmental impact arisen when purchased raw materials and parts are produced
We certify and register productsthat meet our own evaluation
standards and are highly effective in
reducing environmental impact as“Eco-Models".
We will continuously expand andpromote these "Eco Models" so that
we can achieve the low-carbon,
recycle-based society with less
impact to the environment, and keep
evolving as a company, together withour customers,（model）
500

400

Number of Eco-Models (cumulative) / Eco-Model Shipment Ratio

Number of models
Percentage of units shipped
CO2 emissions transition (estimated) index
during operation of shipped products
78.7
75.0
74.8 77.0
71.1
70.5
65.7
62.9
1.00

300

200

180

190

211

225

234

252

265

285

82.9

（%）
100
83.6
80
0.92

297

308

40

100
We created a symbol to promote
our environmentally-friendly
models to our customers.

20

0
2014

2015

2016

2017

2018

2019

2020

2021

2022

0
2023 （FY）

Path Forward
Our effort started in FY2021, in response to the TCFD recommendations for FY2023, by organizing each of our processes andconducting quantitative analysis of the financial impact. We have identified the following as our future tasks, and we plan tocontinue our study and activities going forward.
•
•
•
•
•

60

Clarifying the details of and budgeting the measures we have considered in this phase.
Quantitative analysis of climate-related opportunities (especially those related to low-carbon products).
Expanding the scope of Scenario Analysis (business: PRBX products, organization: overseas subsidiaries).
Further advancing with Scope 3 data collection and analysis, and study how we will reduce.
Establishing a roadmap (transition plan) toward achieving carbon neutrality (Scope 1, 2, 3) by 2050.
6