Sustainability

Creating a sustainable future with fashion entertainment

Information Disclosure
Based on TCFD Recommendations

2022/10/12

Introduction
・Toward the Realization of Carbon Neutrality
GovernanceContentsAgenda

・Establishment of the Sustainability Committee

23

Risk Management
・Risk Scenario Analysis
・Risk Identification

45

Strategy
・Business Transformation and Innovation Domains
・Strategy toward Carbon Neutrality

67

Indicator and Goal
・Visualization of CO2 Emissions in the Entire Value Chain and Reduction Goals8

1Introduction
Introduction

Toward the Realization of Carbon
Neutrality
TSI’s Materialities

Governance

It is said that the amount of CO2 emissions in the apparel industry

Environment

account for 4 to 10 % of all industries combined, and theGlobal Environment

reduction of CO2 emissions is the most important issue to be❶Climate changetackled.

❷Raw materials

Risk Management

Under such circumstances, this April, we identified materialities toThe apparel industry causes environmental
burdens in various aspects. To bring about achange in the industry, we first visualize❸Wasteenvironmental burdens, and then build a❹Water resources

sustainable business model.

realize carbon neutrality by 2050. We will, this time, complete thevisualization of Scope 1, 2, and 3, and accelerate theStrategy

GlobalEnvironment

implementation of initiatives for climate change.

We voluntarily promote information disclosure according to theIndicator and GoalFashion
EntertainmentTCFD Recommendations while setting and achieving goals forthe reduction of CO2 emissions. We will submit a commitment
letter to acquire SBT certification going forward so that we canachieve the goals based on scientific evidence.

PeoplePeoplePeopleSocietySocialSociety❺Diversity❼Employee wellbeing❻Health & safety❽Fair labor conditions❾Local community2GovernanceIntroduction

Establishment of the Sustainability
Committee
Sustainability Committee System

We established the “sustainability committee” to strengthen theGovernancegovernance of the sustainability strategy that combines climatechange measures and the management policy/medium-term
management plan.

Decision on, andsupervision ofpolicies andimportant matters

Board of Directors
Supervision

Submission of agenda items

Representative Director and President

Risk Management

Inquiry

We will expand our business toward a sustainable future throughthe management of policies and greenhouse gas emissions,and our supply chain management.
Strategy

Implementation

Participants
exceptcommittee
members・Intellectuals・Professors,etc.

We promote sustainability initiatives on a company-wide basis

Indicator and Goal

as an advisory organization to the Representative Director andPresident under the supervision of the board of directors.

AdviceSustainability Committee

establishment of greenhouse gas reduction goals, human rights,

working with the sustainability committee which was established

ReportInstruction

OutsideDirectors

Chair: Representative Director and President
Vice Chair: Executive Officer Responsible for Sustainability

Member: Internal Directors
Executive Officers
Those appointed by the President

Making decisions
on implementationplans, andsubmitting policies
and important
issues to the boardof directors fordeliberation

ReportSDGs Promotion Office(Secretariat)

Each Division (Each Business Unit)

Creating andimplementing
plans*Decision-making rights for business execution will betransferred to the Executive Officer if possible in order topromote agile decision making and efficient management.

3

Risk Management
Introduction

Risk Scenario Analysis
In cooperation with experts, we conducted a risk analysis ofGovernanceimportant factors impacting the growth of sustainable business atthe sustainability committee.

Scientific Scenario of Temperature Rise
Used for Analysis
Change in Average Global Temperature Rise
(Difference from average in 1986 to 2005)

We referred to the existing scenarios developed in line with theRisk Management

Paris Agreement’s target global temperature rises - 4 degrees
Celsius and 1.5 degrees Celsius - disclosed by the IPCC and IEA.

2.6 to 4.8 degrees Celsius above theaverage in the period of the Industrial
Revolution without more strictmeasures implemented

We will flexibly review the analysis in accordance with climate
Strategychange, and the market changes caused by it as well as ourmanagement strategies and medium-term management plan.

Indicator and Goal

[Official Scenarios for Reference]
・4 degrees Celsius Scenario: AR5 RCP (Representative Concentration Pathways) 2.6, 4.5, 6.0, and 8.5
as well as AR6 SSP5-8.5 reported by IPCC (Intergovernmental Panel on Climate Change)
・1.5 degrees Celsius Scenario: SDS (Sustainable Development scenario) reported by IEA (InternationalEnergy Agency), and AR6 SSP1-1.9 by IPCC
*SSP1-1.9: Holding global warming to approximately 1.5 degrees Celsius above the average between
1850 and 1900 in 2100 “after slight overshoot,” to realize net-zero CO2 emissions around the middle of thecentury.
*SSP5-8.5: A very high greenhouse gas emissions scenario without the implementation of any additional
climate change measures. This scenario can be realized only if going for the fossil-fueled social andeconomic development as shown in SSP5.

The measures taken
between 2020 and 2030
make a watershed

0.3 to 1.7 degrees Celsius above
the average in the period of theIndustrial Revolution with morestrict measures implemented*Source: IPCC AR5 WGI Figure SPM.7

We referred to the forecast of changes in the average global temperature by
the end of the century in IPCC AR5 RCP. We need to implement specificmeasures by 2030.
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Risk Management
Introduction

Risk Identification
ImpactCategoryClassification

DriverGovernance〇A decrease in the opportunities for consumers to go out due to a temperature rise, or an epidemic that accompanies it〇〇

A decrease in the sales of sports or outdoor gear and accessories due to a decrease in the opportunities for consumers to indulge insports, or outdoor activities◎〇

A weak cotton crop caused by droughts, etc., and a hike in raw material prices attributable to water stress◎〇A decrease in sales caused by store closures due to the increase in the intensity and frequency of large-scale natural disasters◎〇

A decrease in sales due to the supply chain disruptions caused by natural disasters◎〇

Social Reputation

Diminished customer engagement due to the fixed corporate image as unfriendly to the environment〇◎

Temperature Rise

An increase in the costs including the risk evaluation of major business hubs and travel expenses

◎〇

〇

〇

A cost increase resulting from switching to environment-friendly materials or manufacturing methods-◎

An increase in the demand for the recyclable raw materials and reusable products that contribute to the realization of the “Recyclingbased Society”-◎

A hike in production/logistics costs due to skyrocketing fossil fuel and alternative resources costs〇◎

Skyrocketing electricity prices and rising production costs due to changes in the energy mix as well as an increase in the electric power
production ratios of power generation facilities with low CO2 emission factors (renewal energy/new energy/next-generation energy)

〇◎〇

◎-◎

Risk Management

Acute

MarketStrategy
Impact byShiftIndicator and Goal◎

Temperature RiseReputation

Technology4 degrees 1.5 degrees
CCA decrease in the sales of heavy clothing such as jackets and coats due to the shortened autumn and winter seasons

Chronic
PhysicalImpact

Impact on BusinessChange in Customers’ A decrease in sales due to slow response to changes occurring in customer needs along with an increasing awareness about theSense of Valueenvironment such as an increasing demand for sustainable productsTechnology ofEnvironment Friendly
Products

EnergyPolicyInformation Disclosure An increase in operational costs caused by the strengthened information disclosure of environmental issues

Carbon Pricing

An increase in operational costs caused by the introduction of policies to curb greenhouse gas emissions such as a carbon tax, theEuropean Union Emission Trading Scheme, and carbon pricing

5StrategyIntroduction

はじめにGovernance

ガバ
ナン
ス

Risk Managementリス
ク
マ
ネ
ジメン
ト戦略StrategyIndicator and Goal

指標と目標Business Transformation and Innovation
Domains
We established three innovation domains in order toThe Three Innovation Domains

create more opportunities while taking risks intoconsideration.

With an aim to transform the entire value chain, we
decided to call raw materials “material innovation,” andEngagement
Innovation

the system to review the manufacturing and logistics[Customer Engagement– Sales Method]

processes for resource circulation “SCM Platform
Innovation.” On top of that, we will build new
relationships with customers through “Engagement
Innovation.”

Material
Innovation[Raw Materials]We will create more opportunities and values bySCM
Platform
Innovation[Manufacturing – Logistics– Resource Circulation]

developing these domains.
6Strategy
Introduction

Strategy toward Carbon Neutrality
Innovation Domains

GovernanceBusinessDomains

Street & Culture

Strategy

Fashion Capital

Indicator and Goal

DigitalGeneration

SCM Platform
Innovation
Manufacturing – Logistics – ResourceCirculation
Introduction ofrenewable energy
to production
processes

Switching toenvironmentfriendly materials Optimization ofproduction
volume(Production
New material
processdevelopment
innovation)

Development ofhighly efficient Development
andof circularenvironmenteconomyfriendly logistics
systemNew platform
development

Existing Project/ SCM Domain
Business Transformation aimed at responding to climate change risks
Decarbonization as a basic action item of the existing projects

Engagement Innovation
Customer Engagement – Sales Method

Sales of environment-friendly products

Risk Management

Wellness &Lifestyle

Material
Innovation
Raw Materials

As of October 1, 2022
“Wellness & Lifestyle”“Street & Culture”“Fashion Capital”“Digital Generation”
Under the above four business domains, we implemented
an organizational change. Toward the realization of thesustainability statement: “Creating sustainable future withfashion entertainment” at a project or division level, wewill create new values while reducing environmental
burdens.

New Opportunity: Engagement
The creation of opportunities to become a business entity which can
flexibly lead to transformation in the age of uncertainty

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Metrics and Targets
Introduction

Visualization of CO2 Emissions in theEntire Value Chain and Reduction Goals

Governance

CO2 Emissions and Reduction Goals

Risk Management
Opportunity
Strategy

Scopes 1 – 3(total)

Scopes 1and 2

Scope 3CO2 emissions
in February,
2020

305K tons

9K tons

295K tons

CO2 emissionsreduction goals
Feb 2030-35%(-108K tons)-48%(-4K tons)-35%(-103K tons)―

1.5 degrees C(Target)
4.2% reduction
every year

WB2 degrees C(Target)
2.5% reduction
every year

Toward the realization of carbon neutrality by 2050,
we visualized the CO2 emissions of the entire value
chain to reduce the environmental burdens producedby our business as a whole.

As the medium-term milestone for the reduction of
CO2 emissions, we decided to reduce the total CO2emissions by 48% for Scope 1 and 2, and by 35% for
Scope 3 by 2030, compared with February, 2020.

CO2emissions
reduction
goals in linewith SBT

Indicator and Goal

We will contribute to the preservation of the global
environment by achieving the reduction goals for
Scope 1, 2, and 3.

*The reduction goal for Scope 1 and 2 coincides with the
1.5 degrees C target. The reduction goal for Scope 3
coincides with the 2050 carbon neutrality target.
As for CO2 emissions, all numbers smaller than 1,000
are rounded down to the nearest 1,000 in the above list.

8