Addressing the TCFD recommendations

Updated June 2024

Introduction

The EXEO Group considers environmental problems such as climate change to be important issues for management to address.
Based on this awareness, we defined practicing ESG management as one of the challenges in our 2030 Vision announced in May
2021, and set environment, social, and governance KPIs respectively as well as specific targets in Medium-Term Management Plan
(2021- 2025), which we are working systematically and continuously to achieve.
We will engage in ecofriendly business practices, which include reducing greenhouse gas emissions, while also working actively tocontribute toward solutions for climate-related social issues through businesses such as renewable energy.
Additionally, in December 2021 we declared our support for the recommendations of the TCFD (Task Force on Climate-related
Financial Disclosures) and also joined the TCFD Consortium. The Group will be making information disclosures according to the
TCFD Framework going forward.

TCFD published its final report in June 2017 and recommended that companies disclose the following
information pertaining to their governance, strategies (risks and opportunities, financial and other impacts,
handling), and other initiatives.
Governance

Strategy

Risk management

Monitoring systems and the role ofthe management team pertaining
to climate-related risks andopportunities

Identifying climate-related risks
and opportunities and their impacts
on the organization’s businesses,
strategy, and financial planning

The processes used by theorganization to identify, assess,and manage climate-related risks©2024 Exeo Group Corporation All Rights Reserved.

Metrics and goals
The metrics and goals used toassess and manage relevant
climate-related risks andopportunities

1The organization’s governance around climate-related risks and opportunities•

The EXEO Group has established the Sustainability Committee chaired by the President and CEO and has established theSustainability Promotion Office in the General Affairs Department as a dedicated organization for sustainability, primarily for taking
measures against climate change. The aims of these actions are to help achieve a sustainable society, and to bolster efforts
toward the continued growth of the EXEO Group.

•

The Sustainability Committee was established as an advisory body to the Management Council. It discusses the direction ofsustainability, material issues, target setting and other subjects. It monitors the status of activities and reports the details of its
deliberations to the Management Council and the Board of Directors.

•

The Sustainability Promotion Office within the General Affairs Department operates as the administrative office of the Sustainability
Committee. It also plays a role in setting the EXEO Group's targets and managing the progress of various sustainability measures
mainly addressing climate change, human rights and natural capital in cooperation with Group companies.
Meeting Body

Board ofDirectors(Management
Council)

FY

Details

2022

Greenhouse gas emissions reduction targets and compliance with the TCFD
recommendations

Board of Directors
Deliberate, Report

Annual efforts to improve sustainability (of the environment)
Formulation of the Human Rights Policy and the Procurement Policy

Management Council

2023
Annual efforts to improve sustainability (of the environment)

Deliberate, Report

Greenhouse gas emissions reduction targets and compliance with the TCFD
recommendations
2022
Actual greenhouse gas emissions, future actions and the construction of an
implementation structure

Sustainability
Committee

Formulation of the Human Rights Policy and the Procurement Policy
2023

Actual GHG emissions in FY2022, training for employees and actions toprotect biodiversity©2024 Exeo Group Corporation All Rights Reserved.

Sustainability Committee
Chair:
Office:President & CEO
Sustainability Promotion Office in
the General Affairs Department
Meeting frequency: Twice a year in principle

2Strategy: Scenario Analysis•

The EXEO Group conducts scenario analyses based on hypotheses about what the world will be like in 2030 and in 2050 tounderstand the impact of climate change on its businesses. The diagram below describes the steps of these scenario analyses.

•

We will continue to examine these steps from the perspective of resilience.

1. Identifying
risks andopportunities

3. Creating aview of theworld

2. Selecting a
scenario• Study the TCFD
recommendations andother reference
documents.
• Study past examples aswell as examples
impacting competitors.
• Make a list of risks andopportunities.

• Study scenarios createdby sources outside theGroup.
• Choose a scenario that
includes identified
transition risks andphysical risks.

• Obtain information about
the future related to risks
and opportunities.
• Create a view of the worldthat considers
stakeholders.

4. Evaluating
business
impact• Qualitatively andquantitatively evaluate theimpact of climate changeon the organization's
strategies and financial
position in the defined
scenario.

5. Considering
response
measures• Study measures toaddress risks and to
capture opportunities.

Scenario Analysis
A method of examining the potential direct impact of climate change (physical risks) and changes in business environment arising from long-term policy
trends related to climate change (transition risks) that have been forecast on the company's business and management
Scenarios

Details

Sources of information used in scenario analysis

Transition risks(1.5-degree scenario)

A scenario in which necessary measures are taken to limit the temperaturerise to 1.5°C above the pre-industrial level”Net Zero Emissions by 2050 Scenario (NZE)" (IEA
World Energy Outlook 2023)

Physical risks(4-degree scenario)

A scenario in which inadequate measures against climate change are takenallowing the temperature to rise to about 4°C above the pre-industrial level

SSP5-8.5 (in the IPCC's Sixth Assessment Report)©2024 Exeo Group Corporation All Rights Reserved.

3

Strategy: Key Hypotheses
No.

Key hypotheses used in scenario analysis

2030

2050

Source1(1) Introduction of the
carbon tax

Carbon tax value

140 USD/t-CO2

250 USD/t-CO2

IEA WEO2023 (figures of developed countries in the NZE scenario)

2(2) Emissions controls

Carbon tax value

140 USD/t-CO2

250 USD/t-CO2

IEA WEO2023 (figures of developed countries in the NZE scenario)

3(2) Emissions controls

Penalties under the EU
Emissions Trading System (EUETS)

100 EUR/t-CO2

100 EUR/t-CO2

EU ETS Handbook

4(2) Emissions controls

EU-ETS trading price76.45 EUR/t-CO2

76.45 EUR/t-CO2

Average trading price under the EU-ETS in the last twelve months

5(3) Shifting to renewableenergy (renewableenergy measures)

Renewable energy certificate
purchase price1.1 yen/kWh

1.1 yen/kWh

6(3) Shifting to renewableenergy (renewableenergy measures)

Ratio to the FY2022 level (1,008.2
billion kWh)(Total power generation forecast)

92.6%(934 billion kWh)7(6) Progress in energy
saving and renewableenergy technologies

Working-age population

70.67 million people 55.29 million people8(9) Intensification of
extreme weather

Frequency of flooding

9(10) Temperature riseWork loss rate

10

Offshore wind power generation(11) Products and services
market size

11(13) Market expansion

Market size of ZEB©2024 Exeo Group Corporation All Rights Reserved.

Estimated by the Company based on materials published by the Agency
for Natural Resources and Energy's System Consideration Working Group

Agency for Natural Resources and Energy (Feb. 2022): Japan's Energy
135.1%
Ministry of Economy, Trade and Industry (May 2021): Scenario Analysis for(1,362 billion kWh)
Carbon Neutrality in 2050 (interim report) (title tentatively translated)
National Institute of Population and Social Security Research: Population
Projections for Japan

1.5 times higher

2.33 times higher

Estimated by the Company based on materials published by the Ministry ofLand, Infrastructure, Transport and Tourism's study meeting ontechnologies for flood control plans in view of climate change

2.71%

3.23%

Estimated by the Company based on data published by the International
Labour Organization (ILO) (on lost working hours due to heat stress)

2.2 times larger

5.0 times larger

Agency for Natural Resources and Energy: FY2030 energy supply anddemand forecast (title tentatively translated)
Ministry of Economy, Trade and Industry: Japan’s power generation
amount (2050) (title tentatively translated)¥5,020.0 billion¥6,820.0 billion

Ministry of the Environment: Estimation of market size and employment in
the environmental industry (title tentatively translated)

4Strategy: Evaluation of Business Impact (Risk)
Strategy:
Evaluationof Business
Impact (Risk)Impact on the GroupScenarioType
Climate change
factor(1) Introduction of the
carbon tax(2) Emissions controls

Increase in taxation such as instituting a carbon tax (taxed according to CO2emissions from business activities)
Increase in cost to buy credits for CO2 emissions (emissions quotas) that fail toreduce enough volume

Policies and (3) Shifting to renewable
Soaring renewable energy procurement prices due to the insufficient supply of
legalenergy (renewable
renewable energy or other reasons
restrictions
energy measures)(4) Obligation to
Increase in costs to comply with expanded obligations to disclose information related
disclose information to greenhouse gas emissions
1.5°C(5) Surging raw(Transition
Increased cost of stocking materials made from natural resourcesmaterials prices
risks)(6) Progress in energy
Markets andDecline in earnings due to restrictions on the reception of orders because of ansaving and renewable
technologies
engineer shortage
energy technologies
Preferences shift toward companies that have done more for the environment, and(7) Changing customer
declining sales for those who miss this trend due to business relationships being
preferences
severed or losing market share to other companies
Reputation
Business value (stock price) falls due to negative assessments of measures against(8) Stakeholder
climate change (insufficient information disclosures, failure to reach CO2 emissions
assessments
targets, etc.), making it harder to raise funds and secure human resources• Emerging risk of flood damage to residential and other buildings as well as thecommensurate increase in damage insurance premiums, worsening work(9) Intensification ofAcuteenvironments
extreme weather• Supply chain disruptions due to intensified weather, interruptions to procurement and
4°C
deliveries, lost chances to make proposals to customers or receive orders from them
(Physical
risks)• Worsening labor shortages in construction due to increased health risks (heatstroke,etc.) and worsening work environments at outdoor construction sites
Chronic(10) Temperature rise
• Lower work efficiency, delayed completion of construction, and increased cost ofprovisions due to heat stress

Timeline Level of impact*2
Source ofof impact
information, etc.
2030
2050
*1
Medium /
Long

▼▼
10

-

Key hypothesis no. 1

Medium /
Long

-

▼
2

Key hypotheses nos. 2 to 4

Short / Long

▼
0.3

▼
0.4

Key hypotheses nos. 5 and
6Short / Long

▼
1

▼
1

Increase in labor and otherexpenses due to theincrease in staff size

Short / Long--

Not calculated

Short / Long▼▼▼▼

Short / Long--

Not calculated

Short / Long--

Not calculated

Key hypothesis no. 7

Medium /
Long

▼
7

▼▼
19

Key hypothesis no. 8
The estimated impact is
calculated based on thebook value of buildings
excluding the amounts
covered by flood insurance
at bases in Japan

Medium /
Long

▼
8

▼▼
11

Key hypothesis no. 9*1 Timeline of impact: Short time line: 3 years or less, Medium time line: Over 3 and up to 10 years, Long time line: Over 10 years*2 Level of impact: Financial impact (profit) on business activities of the Group in fiscal 2030 and in fiscal 2050 is calculated assuming certain conditions and expressed in billions of yen.
Anticipating the relative magnitudes, risks are expressed as "▼▼▼ (large)," "▼▼ (medium)" and "▼ (small)" and opportunities as “▲▲▲ (large)," "▲▲ (medium)" and "▲ (small).“
Impact scale in financial terms is (large): ¥10.0 billion or more, (medium): From ¥1.0 billion to less than ¥10.0 billion, and (small): Less than ¥1.0 billion.
©2024 Exeo Group Corporation All Rights Reserved.

5Strategy: Evaluation of Business Impact (Opportunities)
ScenarioType

Climate change factor

Impact on the Group

Timeline Level of impact*2of impact
2030
2050
*1

Source ofinformation, etc.

• Expansion of business due to increased demand for renewable energy such as
offshore wind power generation• Expansion of smart grid business due to changes in power distribution systems(11) Construction work
(ability to newly enter the power distribution business)
Short / Long
related to• Expansion of energy storage plant construction and maintenance business due torenewable energy
increasing needs for storage batteries• Expansion of solar sharing business to use land at sites where solar power plants are
installed as agricultural land▲▲▲▲

• Markets for renovation construction and cloud services due to increased demand fordisaster response and mitigation• Markets for solutions to address climate change created using information andcommunication technologies (ICT)
Short / Long
• Markets for the development of infrastructure such as networks as urban digitalization
advances• Markets for the refurbishment of equipment in the scenario where measures toestablish a circular economy are accelerated.

▲

▲

▲

▲

Key hypothesis no. 11

Business
opportunities(12) Market expansion
1.5°C(13) Services to
Expansion of the urban infrastructure business due to the underground installation of
mitigate and adapt utility lines and the construction of net zero emission buildings (ZEBs) to mitigate
to climate change climate change

Short / Long

Key hypothesis no. 10
Based on a hypotheticalassumption that the expansionof the urban infrastructurebusiness will be greater than
expected in the Medium-Term
Management Plan and the2030 Vision* The (positive) impact isexpressed on a relative scale
given the variance is large
depending on inquiries, work
periods and other factors.

Resilience(14) Adaptation toclimate change

Stronger resilience by switching to telecommuting and other flexible work styles notdependent on location, in response to climate change

Short / Long▲▲

Difficult to calculate Earnings
from construction sites and theeffect on back office operations
is limited. The impact istherefore expressed on arelative scale.

Reputation(15) Stakeholder
assessments

Decarbonization efforts lead to higher business value, more opportunities to raise
funds from financial institutions and the business growth that entails, create
opportunities to receive orders from new clients, and create opportunities to securetalented human resources

Short / Long--

Not calculated*1 Timeline of impact: Short time line: 3 years or less, Medium time line: Over 3 and up to 10 years, Long time line: Over 10 years*2 Level of impact: Financial impact (profit) on business activities of the Group in fiscal 2030 and in fiscal 2050 is calculated assuming certain conditions and expressed in billions of yen.
Anticipating the relative magnitudes, risks are expressed as "▼▼▼ (large)," "▼▼ (medium)" and "▼ (small)" and opportunities as “▲▲▲ (large)," "▲▲ (medium)" and "▲ (small).“
Impact scale in financial terms is (large): ¥10.0 billion or more, (medium): From ¥1.0 billion to less than ¥10.0 billion, and (small): Less than ¥1.0 billion.
©2024 Exeo Group Corporation All Rights Reserved.

6Strategy: Key Response Measures to Address Risks and Opportunities
We will be bolstering our high strategic resilience from a medium to long-term perspective under both of these scenarios. While we formulate the appropriate measures
to avoid the risks, we will also seek to capture new growth opportunities including active efforts toward business in renewable energy.
ScenarioType

Climate change factor(1) Introduction of the carbon tax

1.5°C(Transition
risks)

Policies andlegal
restrictions (2) Emissions controls(3) Renewable energy measures(5) Surging raw materials prices

Key response measures• Shift to the use of renewable energy for the electric power used in business activities (Switching to the renewableenergy menu, purchasing renewable energy certificates, PPA, etc.), switching to eco-friendly cars
• Efforts to save energy in business activities (switching to LED lights, setting proper temperatures for air conditioners,
promoting eco-driving, use of accelerants, etc.)• Achieve reduction targets by implementing the CO2 emissions reduction measures shown above (1)• Strive to mitigate risk of cost increases by passing them on prices for construction work(4) Obligation to disclose information • Avoid increased costs to handle emissions calculations by implementing DX in the calculation operations
Markets and (6) Progress in energy saving andtechnologies
renewable energy technologies
Reputation

4°C(Physical
risks)(7) Changing customer preferences(8) Stakeholder assessments• Mutually complementing resources acquired through M&A activities, business alliances and the like to address a
decline in earnings due to restrictions on the reception of orders due to an engineer shortage.
• Increase our business value with activities to decarbonize our Group from within and with social contributions throughour business (improve our assessments from environmental ratings agencies)

Acute(9) Intensification of extreme weather • Better BCP preparedness in the event of a disaster, regular hazard risk assessments for properties owned

Chronic(10) Temperature rise

• Ensure and improve operating efficiency of worksites by taking thorough measures against heatstroke (utilizing ICT insafety management for work sites) and advancing digital transformation (DX) of work sites• Secure sufficient construction periods(11) Construction work related torenewable energy• Actively pursue business in renewable energies such as solar power, offshore wind power generation and biomass,and expand orders for EPC projects (mutually complementary resources through business partnerships, expand
construction domains through capital contributions, etc.)

Business
opportunities
1.5°C(Opportunities)(12) Market expansion(13) Services to mitigate and adapt to • Expand our urban infrastructure and refurbishments businesses
climate change

Resilience(14) Adaptation to climate change• Make further efforts toward flexible work styles

Reputation(15) Stakeholder assessments• Increase our business value with in-house decarbonization activities and with social contributions through our business(improve our assessments from environmental ratings agencies)• Raise funds through means such as Sustainability-Linked Loans©2024 Exeo Group Corporation All Rights Reserved.

7

Risk management: The processes used to identify, assess, and manage climate-related risks•

For our Group’s risk management system, we have formulated the Risk Management Rules that specify the basic points
involved in risk management and have established risk categories in addition to the Risk Management Division that handles
them. We have also established the Business Risk Management Committee as the Group-wide risk manager, as we build andoperate systems to identify and evaluate risks on a Group-wide level.

•

Risks associated with climate change are chiefly identified and assessed by the Sustainability Committee. Information is also
shared and coordinated in deliberations on individual matters in the Business Risk Management Committee, which includes
verifying climate-related risks.

•

Based on the Risk Management Rules, these are also integrated into Group-wide processes and matched against risks thathave been assessed and identified in environmental management systems based on the ISO14001 international standard,
and occupational health and safety management systems based on the ISO45001 international standard.

©2024 Exeo Group Corporation All Rights Reserved.

8

Metrics and goals: The metrics and goals used for assessment and management (1)(Unit: thousand t-CO2)-7.8%
Scope 2

Scope 1

26.2

-11.2%

18.2

60.4

14.2

-42%

We plan to
publish in the
Integrated
Report 2024

62.7

61.7

Scope
1&2
Carbonneutrality

～
～

～
～

Scope 1 & 2

FY2020 actual

FY2021 actual

FY2022 actual(86.6)(79.9)(76.9)FY2023 actual(

Targets for FY2030)

Targets for FY2050(50.2)(Unit: thousand t-CO2)
TargetScope 1 & 2

Scope 3Emissions in
the base year

Annual emissions target(vs. 2020)

FY2020

FY2030FY205086.6

50.2(-42%)

Carbonneutrality

1,728.6©2024 Exeo Group Corporation All Rights Reserved.

1,296.4(-25%)-

Sub-metrics

FY2020

FY2021

FY2022

FY2023

Targets for
FY2025

Scope of data

Switch toelectricity fromrenewable energy
sources

ー

33.6%

73.2%

77.8%

100%

Companymanaged sites of
Exeo Group, Inc.

Adoption of EVs
and other lowemission vehicles

91.4%

95.5%

96.1%

96.7%

100%

Passenger
vehicles of ExeoGroup, Inc.

9

Metrics and goals: The metrics and goals used for assessment and management (2)■GHG emissions by ScopeClassification

Details(Unit: thousand t-CO2)
FY2020(1) (Base year)

FY2021(2)

FY2022 (3)Difference(4)((3)-(1))% change(5)((4)/(1))

Scope 1

Direct emissions

60.4

61.7

62.7

1.3

3.8%

Scope 2

Indirect emissions

26.2

18.2

14.2

-12

-45.9%

86.6

79.9

76.9

-9.7

-11.2%

1,728.6

1,648.8

1,594.3-134.3-7.8%

Total (Scopes 1 & 2)
Scope 3

Supply chain

Category 1

Purchased products

275.9

224.1

195.6

-80.3

-29.1%

Category 2

Capital goods

41.5

70.5

51.7

10.3

24.7%

Category 3

Fuel- and energyrelated activities

12.7

13.7

14

1.3

10.3%

Category 5

Waste generated inoperations

2.4

7.9

5.3

2.9

117.3%

Category 6

Business travel

1.9

2.1

2.2

0.3

16.6%

Category 7

Commuting

3.4

3.8

4

0.6

16.7%

Category 11

Use of sold products

1,389.9

1,325.9

1,320.8

-69.1

-5.0%

Category 13

Downstream leased
assets

0.9

0.8

0.8

-0.1

-14.1%FY2023(6)

Difference(7)((6)-(1))% change(8)((7)/(1))

We plan to publish in the
Integrated Report 2024

* The greenhouse gas emitted by the Group is carbon dioxide (CO2).
* The emissions of EXEO Group companies subject to consolidated accounting are calculated.
* Numerical values for the base year could be subject to change if applicable scope or calculation methods change as we make these calculations more sophisticatedgoing forward, or if an event that exceeds the course of our business growth occurs.
©2024 Exeo Group Corporation All Rights Reserved.

10

(Reference) Assurance report©2024 Exeo Group Corporation All Rights Reserved.

11