Attachment

Establishment of Greenhouse Gas Emissions Reduction Target
and Scenario Analysis of Climate-Related Risks and Opportunities

Mitsubishi Materials Corporation

Mitsubishi Materials Corporation (the Company) has set reduction targets
to achieve carbon neutrality and reduce the Group's greenhouse gas(GHG) emissions to virtually zero by FY2051. Along with this, based on

the recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD), we conducted scenario analyses of the impact ofclimate-related risks and opportunities on our business and financial
performance.
GHG emissions reduction target and the scenario analysis results aredescribed in the following pages.

1｜Greenhouse Gas Emissions Reduction Target

2｜

Greenhouse Gas (GHG) Emissions Reduction Target◼
◼
◼
◼

Reduce GHG emissions of the MMC Group by 17% by FY2031 (compared to FY2014)
Reduce emissions by 30% or more in the Advanced Products and the Metalworking Solutions Business,
whose energy emissions are the most significant
Use renewable energy sources for over 20% of the Group's total electricity consumption by FY2031.
Aim to become carbon-neutral company by the end of FY2051

BAU

17% reduction *1
Reduction Targets forin-house companies (FY2031):

(FY)

2014

2021

Advanced
Products

32%

Metalworking
Solutions
Business

33%

MetalsBusiness

21%

CementBusiness

15%

Others20%2031 Target※1 Scope1＋Scope2※2 Transition to a production process that utilizes hydrogen/electric energy
3｜・Technologicalimprovements
・Energy saving
・Renewable electricity

・Low-carbon
production
technologicaldevelopment*2
・CCUS, etc.

2051 Goal

Achieve carbon neutrality

・Scope1：Direct GHG emissions by business operators
・Scope2：Indirect emissions resulting from the use of electricity, heat, and steam supplied by other companies

Reduction Plans for the FY2031 Target(MMC Group)（CO2e, thousands ton）

Scope1

Scope2

12,000GHG emissions

increase

11,000340

1,800

・Technologicalimprovements
・Energy saving
・RenewableenergyReductionmeasures

1,400

10,0001,600
・Technologicalimprovements
・Energy saving
・Renewableelectricity
・Development of lowcarbon production
technologies
・CCUS, etc.

1,200

9,000
10,000
9,300

8,000

(FY)

2014

2020

8,700

2051

2031

Achieve carbon
neutrality

・Scope1：Direct GHG emissions by business operators
・Scope2：Indirect emissions resulting from the use of electricity, heat, and steam supplied by othercompanies
4｜

Reduction Plans for the FY2031 Target(excl. Cement Business)
Scope1（CO2e, thousands ton）

Increase
280 Reduction

2,500
GHG Emissions

Measures

2,000
1,500

710
1,400

1,300
950

1,000
1,100
1,000

500

（FY）

2014

2020

930

2031

Scope2・Technologicalimprovements
・Energy saving
・Renewableenergy・Technologicalimprovements
・Energy saving
・Renewableelectricity
・Development of lowcarbon production
technologies
・CCUS, etc.

2051

Achieve carbon
neutrality
5｜Scenario Analysis of Climate-Related
Risks and Opportunities

6｜

Identification Process for Risks, Opportunities, andCountermeasures◼ Identify climate-related scenarios, analyze their impacts on the businesses,
and discuss measures to reduce risks and increase opportunities.
Identify risks andopportunities

Identify business-related climate change risks andopportunities, including transition risks and opportunities andphysical risks.

Identify key risk andopportunity factors

Among the identified risk and opportunity factors, those of higher
importance are selected by considering their impacts on business,
their relevance to business strategies, and the degree of interest
from stakeholders.

Analyze their impacts on
businesses

Analyze the magnitude of the impacts of such risks and opportunities
on businesses
Analysis and evaluation are based on two scenarios, one in which
the temperature rises by 2℃, and the other by 4℃【References】
International Energy Agency (IEA), Sustainable Development Scenario (SDS), ２℃ Scenario (2DS）
Intergovernmental Panel on Climate Change (IPCC): Shared Socioeconomic Pathways (SSP)
Representative Concentration Pathways (RCP), etc.

Considercountermeasures,
benchmarks, and targets
7｜

Discuss countermeasures to reduce risks and obtain opportunities
Establish a GHG emission reduction target as a monitoring benchmark

Scenario Analysis - Assumed Global Situation in 2030-2050◼ Assumed global situation in the analysis
2°C scenario (sustainable society)4°C scenario (no measures taken)⚫ Develop ambitious policies and environmental
technology innovations to limit the averagetemperature increase to less than 2°C by the endof the century and realize sustainable
development⚫ Although each country implements policies toachieve its own goals under the Paris Agreement,
the average temperature rises by 4°C by the endof this century due to insufficient cooperation ofeach country, environmental technology
development, and energy shift.

⚫ Envision the following global social changes
affecting business in a transition to a
decarbonized society

8｜⚫ Assume the world described below where
measures to mitigate climate change areunsuccessful and global warming worsens【Assumed global situation】
・Global carbon pricing and price increases
・Progress in the transition from fossil fuel to【Assumed global situation】
renewables
・Increase independence on fossil fuel and energy
・Progress in modal shift and EV shiftcost rise
・Increase in demand for a use of public transportation ・Remarkable economic growth in emerging andand car sharing
developing countries
・User’s preference for carbon-free products
・Slower shift to low emission mobility
・Shift to a recycling-oriented society and・More severe wind and water disasters and an
improvement of waste recycling rateincrease in disaster waste
・Establishment and commercialization of・Aggravated water stress and heat stresstechnologies for CO2 capture, storage, and effective
utilization

Scenario Analysis - Themes of Analysis
Issues to be analyzed

Target ofanalysis1. Changes in direct burden of carbon tax• Assessing the costs required to promote GHG reduction efforts towards below 2°C
scenario• Evaluate the capital expenditure for reduction based on a cost difference between
cases where GHG reduction targets are achieving and those where they are not

All businesses

2. Changes in water disaster risks at businesslocations• Assessing the financial impact of risk of flood caused by river flooding or storm
surge at the Company’s business locations

All businesses

3. Changes in demand for the Company’s
products due to shift to Evs• Assessing change in demand for the Company’s electronic materials corresponding
to change in demand for EVs toward below 2°C scenario

Advanced
Products

4. Changes in demand for the Company’s
products related to modal shift, EV shift andlightweight transport machinery• Assessing demand and market growth potential of products related to the
Metalworking Solutions Business based on the forecast for decarbonization oftransport sector and use of traffic and transportation in the 2°C scenario and 4°C
scenario

Metalworking
Solutions
Business

5. Changes in demand for E-Scrap recycling
associated with shift to a recycling-oriented
society• Assessing the potential of demand and market growth of the E-Scrap recycling
based on forecast of the quantity of E-Scrap generated

MetalsBusiness

6. Changes in cost resulted from carbon pricing
policies• Assessing indirect impact of carbon tax burden on upstream companies affecting

CementBusiness

7. Changes in demand for acceptance anddisposal of disaster waste• Assessing changes in demand for acceptance and disposal based on the changes
in the amount of disaster waste generation due to climate change

CementBusiness

8. Change in demand relating to home appliancerecycling• Assessing demand and market growth potential of home appliance recycling
business under the 2°C scenario associated with wider use of CFC substitutes andtemperature rise

Environment andEnergy Business9. Change in demand for use of renewableenergy• Assessing demand and market growth potential of the renewable energy businessunder the 2°C scenario due to high impact changes in external environment

Environment andEnergy Business

Theme of analysis

9｜

the Company’s operating cost

Scenario Analysis – Summary of Results

Analysis results in detail are in the following pages.

Risk factors

Opportunity factors

Advanced
Products

2℃ Scenario

Increase in
EV unit sales(Opportunity:
Large)

Metalworking
Solutions
Business

Sudden change inthe metalworking
products market
due to modal shift,etc.
(Risk: Medium)(Descriptions in parentheses and the arrows indicate the assessed impact for each business)

Metals Business

Cement Business

Environment &Energy Business

Increase in demand
for the E-scrap
recycling

Introduction andenforcement of the
carbon tax(Procurement, Sales)

Further penetration ofand demand forrenewable energy(Opportunity:
Medium)(Risk: Medium)(Opportunity: Large)
Demand forenergy-saving
home appliancereplacements(Opportunity: Large)【All businesses】
Introduction and enforcement of the carbon taxation (operating costs) (Risk: Medium)

4℃ Scenario
10｜

Increase in demand
for flood disaster
waste disposal(Opportunity:
Small)（機会：軽微）【All businesses】
Increase in water-related risks, such as floods, tidal waves, and droughts (Risk: Large)

1. Change in Direct Burden of Carbon Tax (All Businesses)◼ Risk factor：Introduction and strengthening of carbon price taxation(Operating costs)
Expected
globalsituation andits impactsonbusinesses

Production cost increase due to the introduction and strengthening of the carbon
price system• Increased energy cost due to the strengthening of taxation on GHG emissions and rising
electric power price• Increased costs associated with the procurement of renewable energy certificates as wellas trading of emission rights• Compared with FY2020, the total energy cost will increase 1.59 fold in FY2031 and 1.63
fold in FY2051.
Evaluation of

ImpactAnalysis

Futurestrategies
andmeasures11｜

The carbon price will be a factor of the Company’s cost
increase. Whereas the carbon price will impact on society as awhole, if it can not reflect in the Company's product prices, itwill represent a risk that will in lower earnings

business impact

Risk:
Medium• Discuss introducing low-temperature burning technology in cement production andtechnology for capturing CO2 emitted from plants. And closely monitor the feasibility andcost aspects of innovative technology such as CCUS.
• Promote energy-saving and advance discussion on the possibility of transitioning toelectrification and the fuel conversion in plants• 17% reduction (vs. FY2014) of GHG emission volume by FY2031• Promote the introduction of renewable energy to reduce electricity-derived emission

2. Change in Water Disaster Risks at Business Locations(All Businesses)◼ Risk factor: Higher water-related risks such as flood, storm
surge and drought
Expected
globalsituation andits impactsonbusinesses

ImpactAnalysis

Futurestrategies
andmeasures12｜

Increase in losses due to more frequent disasters globally• Increased losses such as property damage or loss from closure due to more frequentdisasters• Property damage at locations with a high risk of river flooding will increase approx. 1.1
fold in FY2051 and 4 fold in FY2086 domestically, and 2.8 fold in FY2051 and 25 fold in
FY2086 globally (Thailand), each compared with the current figures

Increased damage due to disasters could drive up theCompany’s cost. If the global temperature keeps rising and theworld moves toward the 4°C scenario, there could be aserious risk to operation and supply chain depending on thelocation.

Evaluation ofbusiness impact

Risk: Large• Assess short-term risks using Aqueduct, which is a water risk assessment tool developedby the World Resources Institute (WRI), identify specific water risk situations of eachbusiness office through regular hearing, and continuously address locations with high risk
• Obtain updated prediction information from IPCC or other sources regarding mid to longterm risks and promote proper measures assessing water disaster risks to the Company
and its supply chain.

3.Changes in demand for the Company’s products
due to shift to EVs (Advanced Products)◼ Opportunity factors：Increasing EV unit sales
Expected
globalsituation andits impactsonbusinesses
Business

ImpactAnalysis

Futurestrategies
andmeasures13｜

Rapidly increasing demand in EV-related products due to decarbonization• Overall unit sales of automobiles would increase toward FY2031. The demand forterminals and connectors for automobiles in FY2031 would increase about 1.6 foldcompared with FY2020, and expand to about 2.1 fold in FY2051.
• The sales figure for EV units in FY2031 to be approximately 22 fold the figure fromFY2020.
EV-unit sales are expected to increase dramatically, and thedemand for the Company’s Copper & copper alloy andElectronic materials & component products are expected toincrease significantly. Using this opportunity expand sales by
capturing demand by strengthening the production system for
related products.

Evaluation ofbusiness impact

Opportunity: Large• Aim to increase sales volume of copper materials for new HVs and EVs 1.3 fold or more
by FY2031 relative to FY2020, and to increase sales of next-generation automobiles andeco-friendly products 3 fold or more compared to FY2020• Contribute to the transition to a decarbonized society by investing in facilities anddeveloping products to build a supply system that can meet the rapidly growing demandfor EV products

4. Changes in demand for the Company’s products related to Modal
Shift, EV Shift and Lightweight Transport Machinery(Metalworking Solutions Business)◼ Risk factor: Sudden changes of processed product market associated withmodal shift or other factors
Expected
globalsituation andits impactsonbusinesses

ImpactAnalysis

Futurestrategies
andmeasures14｜

Decreased demand for cutting tools for engine due to growth of EV share• Significant increase in EV unit sales and increased use of lightweight materials• Declining sales of cutting tools for engine and transmission due to an expected decline inproduction of engine vehicles (76%-96% in FY2031 vs. FY2020)

This could be an opportunity to boost sales by reviewing
product mix and meeting growing demand as the demand forhard-cutting tools is expected to grow along with expansion ofmarkets related to electrification and weight reduction. Meanwhile,
there is a risk of a decline in sales of cutting tools for enginepowered vehicles, which is the current core product.

Evaluation ofbusiness impact

Risk:
Medium• Develop and provide products that meet the demands of the 2°C scenario, such as EV
battery-related products and tools for hard-cutting materials, and contribute to the shift toa decarbonized society• Monitor the trend of EV shift as the trend in demand in automotive product markets mayvary depending on a power source of vehicles. Also develop new markets that will
replace the automotive industry

5. Change in Demand for E-Scrap Recycling associated with Shift to
Recycling-Oriented Society(Metals Business)◼ Opportunity: Growing demand for E-Scrap recycling
Expected
globalsituation andits impactsonbusinesses

Growing demand for recycling of wasted electronic devices as a result of global
economic growth• E-Scrap derived from end-of-life vehicles will increase due to factors such as an increaseof global vehicle sales (1.1 times of the FY2020 level in FY2031), an increase in the ratioof EVs in autobobiles, and the growth in GDP.
• Demand for base metals and precious metals will likely inclrease further as demand forelectronic devices increases due to the progress of digitalization.
Evaluation of

ImpactAnalysis

Futurestrategies
andmeasures

15｜

The quantity Global E-Scrap generated in FY2030 is expected
to increase 142% of FY2020 level. This will likely be an
opportunity to boost our profits as the Company enhances
its recycling capabilities to process more E-Scrap.

business impact

Opportunity: Medium• We will consider the expansion of the processing capacity of E-Scrap and the upgradingof technology for the pretreatment, and will focus on the E-Scrap recycling to contribute to
the construction of a recycling-oriented society.
• As PGM※ content in electronic board is expected to decline and EV sales in Japan are
expected to increase in the future, we will closely monitor the business environment forbase metals and precious metals.

※PGM：Platinum group metals

6. Change in Cost resulting from Carbon Pricing Policies(Cement Business)◼ Risk factor: Introduction and strengthening of carbon price tax system(procurement and sales)
Expected
globalsituation andits impactsonbusinesses

ImpactAnalysis

Futurestrategies
andmeasures16｜

Increase in procurement cost of raw materials and cement transport cost as a resultof introduction and strengthening of carbon pricing system• Rise in our expenses as upstream suppliers pass on the carbon price to our Company• Rise in transport cost of cementitious raw materials due to changes in energy cost, andother factors• Our competitive position weakened by imports from countries with low carbon
prices(until adjustment measures are taken)

Introduction and strengthening of carbon price will drive up
our Company’s cost. Meanwhile, since this affects the entire
industry, our Company should steadily work on measures toachieve GHG reduction target and reduce carbon price costs inorder to maintain competitiveness in our products.

Evaluation ofbusiness impact

Risk:
Medium• Comprehensively consider measures to reduce risks in procuring raw materials, such as
saving energy or converting thermal energy in manufacturing processes• Work on reducing CO2 emissions from a freight owner’s standpoint, by reviewing
transportation processes (including means of transportation and channels for
procurement)• Pay attention to policy trends in both inbound and overseas regarding the Carbon Border
Adjustment Mechanism and respond as an industry

7. Change in Demand for Acceptance and Disposal ofDisaster Waste (Cement Business)◼ Opportunity: Increased demand for disposal of disaster waste due to water
disasters
Expected
globalsituation andits impactsonbusinesses

ImpactAnalysis

Futurestrategies
andmeasures

17｜

More water disasters associated with climate change such as flood, landslide orstorm surge.

• Increased rainfall and flood levels will cause the broadening of areas prone to water
disaster, and deeper flood depths.
• Frequency of floods in Japan will approximately be quadrupled in the 4°C scenario anddoubled in the 2°C scenario.
• As water disasters occur more frequently, the amount of disaster waste also increases.

Impact on business is minor given the regionality of water
disasters, the amount of disaster waste, and how inconsistentwaste is produced. Meanwhile, as the threat of water disasters is
expected to rise, the cement industry’s significance andopportunities for contributing to society will increase, as the
cement industry accepts and disposes of disaster waste.

Evaluation ofbusiness impact

Opportunity: Small• Continue to play a social role in response to requests for disaster waste disposal• Work on development of dechlorination technology to expand our ability to dispose ofhigh-chlorine waste※• Contribute to reduction of CO2 emissions by expanding our range of reusable kinds ofwaste, as well as continuously reusing more substitutes for thermal energy waste• Maintain and continue stable supply of products that meet the needs for public projects
regarding disaster prevention and disaster mitigation based on the government policy(resilience enhancement)※ High chlorine creates problems in the manufacturing process, such as
blockages in the preheater of raw cement materials, and also affects the quality.

8. Change in Demand related to Home Appliance Recycling(Environment & Energy Business)◼ Opportunity: Growing demand for home appliance recycling
Expected
globalsituation andits impactsonbusinesses

ImpactAnalysis

Futurestrategies
andmeasures

18｜

More frequent replacement to energy-saving home appliances due to global warmingand higher energy cost
• Fast deterioration of air conditioners due to heavy use and increased number of air
conditioners per household• More frequent replacement due to low carbon regulations and higher energy cost (morewasted home appliances)• Rise in collection rate of home appliances due to stricter recycling regulations
Expect home appliances waste to increase due to temperaturerise, change in households, stricter carbon and recycling
regulations. This will increase the number of home appliancesthat the Company handles, resulting in an opportunity toboost its sales.
(209% increase in FY2051 vs. FY2020)

Evaluation ofbusiness impact

Opportunity: Large• Work on automation of facilities to handle more home appliance recycling andimprovement of process to increase value of collected items, and seek to expand
business• Pay attention to market trends taking into account the market, such as the growing size ofthe air conditioner and flat panel TV markets, where the amount of processing is expected
to increase significantly• Pay attention to overseas markets while creating new recycling businesses such as alithium-ion battery or solar panel recycling9. Changes in Demand for Use of Renewable Energy(Environment & Energy Business)◼ Opportunity: Wider use of and growing demand for renewables
Expected
globalsituation andits impactsonbusinesses

Mid- to long- term expansion of the renewable energy market towards Net Zero
Carbon Society• Environmental value varies from 1.3 yen to 4.0 yen /kWh depending on the degree of
renewable energy penetration and demand/supply balance.
• With lower costs resulting from technological development, the preferential system forpurchasing renewable energies is expected to be scaled back and the unit price ofelectricity sold is expected to decline. But sales will likely increase due to the massive
spread of renewable energies.

Impact
影響分析
Analysis

While the unit price of electricity sales and the price of non-fossil
certificates will fluctuate due to the progress of environmental
policies and technologies, the demand for renewable energy
itself will expand, providing an opportunity for the Company toexpand its renewable energy business.
(286% increase in electricity output volume in FY2051 vs.
FY2020)Futurestrategies
今後の
and
戦略と対応
measures19｜

Evaluation ofbusiness impact

Opportunity: Large• Focus on researching and developing new geothermal and hydroelectric power sources,
including overseas development, as well as increasing output from existing power plants,
in order to increase the total renewable energy production volume to 533GWh by FY2031• Closely monitor the trends in solar and wind power generation, including technologicaldevelopment, adoption rate, and the unit price of electricity sold, and work on reducing
power generation costRenewable Energy Business◼ Develop geothermal, hydroelectric, and solar power plants throughout
Japan
Aim to be a leading company in Japan by expanding business through stable operation and new
developments of geothermal power plants, etc.
Wasabizawa Geothermal
Power Plant

Irigama Solar Power
Plant(Akita Prefecture)
Operating body: Yuzawa
Geothermal Power Corporation
Started operations in May 2019
Output: 46,199kW(Miyagi Prefecture)
Operating body: LM
Sun Power Co., Ltd.
Started operations inJanuary 2015
Output: 6,930kW

Appi Geothermal Power
Plant(Iwate Prefecture,
construction in progress)
Operating body: Appi
Geothermal Energy
Corporation
Start of operations expected
for April 2024
Output: 14,900kW
20｜Komatagawa newhydroelectric power
plant(Akita Prefecture,
construction in progress)
Operating body: Mitsubishi
Materials Corporation
Completion of construction
for December 2022
Output: 10,326kW

Renewable Energy Generation Targets and Results（GWh）(Million yen)

FY2031 target
533GWh1,400

24,0001,200

20,000600

12,000

400

8,000

200

4,000

FY2014FY2020

Geothermal (steam supply)

FY2031

Geothermal power

Hydropower

FY2051
Solar power*Steam supply to geothermal power plants (steam sales converted by electric energy volume)
21｜

Net sales

Net sales

Retained electric generation
capacity(FY2020 Actual: 437GWh)

Technology development: Recovery and utilization of CO2
emitted from our plants◼ Get started experimental study on the recovery and utilization (heat utilization)of CO2 emitted from our plants••

Separate and recover CO2 at our cement plants and utilize it as carbon-neutral thermal energy
Generate more carbon-neutral thermal energy and aim for net-zero emissions in combination withenergy saving and offset

Exhaust gas

Applications
excepting heatutilization

Hydrogen

CO2
Separate andrecover

Methane, etc.
Synthesize

Carbon-neutral
thermal energy

CO2

Chimney

Cement manufacturing
process

Thermal energy (e.g.,coal) generated fromfossil fuels

Aim for net-zero emissions in combination
with energy saving and offset

Conceptual design of carbon recycle from our plants
22｜Primary Initiatives and Perspectives for Climate Change
Target setting/establishment of governance systems
Promotion of technical development/initiatives
Participation in various initiatives and related activities
Disclosure of information

Achieve carbon neutrality
Achieve FY2031 GHG emissions reduction target

Accelerate the develop technological innovations forachieving carbon neutrality
Promoted renewable energy sources within the Group (2021~)
CCU (Methane, etc. Synthesize) Technology development
experimental study (2021~)
Implemented scenario analysis (2021)
Set targets for renewable energy generation (2021)
Set targets for GHG emissions reduction (2021)
Expressed our support for TCFD and participated in
the TCFD Consortium (2020)
Participated in Keidanren’s “Challenge Zero” (2020)
Joined Carbon Recycling Fund Institute (2019)
Participated in the Ministry of the Environment Practical Application of Bioplastic
Materials in Algae project（2017-2019）
Participated in the Ministry of the Environment CCS demonstration project (2016~2020)

Set targets for efforts to combat global warming for the period leading up to 2020 (2010)
Established the Global Environment Project Committee (2008)

2010

2020

2030

TCFD: Task Force on Climate-related Financial Disclosures GHG: Greenhouse Gas
23｜ CCS: Carbon dioxide Capture and Storage CCUS: Carbon dioxide Capture Utilization and Storage

2050

For people, Society and the Earth

We contribute to build a decarbonized society by ensuring toconsider the reduction of environmental impact in manufacturing