Addressing the TCFD recommendations

Updated November 2022(FY2021 results reflected)

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, andgovernance KPIs respectively as well as specific targets in Medium-Term Management Plan (20212025), 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 to contribute 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 andopportunities, financial and other impacts, handling), and other initiatives.
GovernanceMonitoring systems and therole of the management
team pertaining to climaterelated risks andopportunities©2022 Exeo Group Corporation All Rights Reserved.

Strategy
Identifying climate-relatedrisks and opportunities andtheir impacts on theorganization’s businesses,strategy, and financial
planning

Risk management
The processes used by theorganization to identify,
assess, and manage climaterelated risks

Metrics and goals
The metrics and goals used
to assess and manage
relevant climate-relatedrisks and opportunities

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

The EXEO Group has established the Sustainability Committee chaired by the President andCEO and has established the Sustainability Promotion Office in the General Affairs Department
as a dedicated organization for sustainability, primarily for taking measures against climatechange. The aims of these actions are to help achieve a sustainable society, and to bolster
efforts toward the continued growth of the EXEO Group.
Established as an advisory body to the Management Council, the Sustainability Committeediscusses and makes decisions on the direction of sustainability as part of the Group’s businessstrategy, while also monitoring and deliberating on the status of sustainability efforts anddeliberating and reporting on these details in the Management Council and Board of Directors.
Board of Directors

The Sustainability Promotion Office in the General Affairs
Department operates as the administrative office of theSustainability Committee, while also playing the role ofcoordinating sustainability measures with Group
companies, particularly measures against climate change,
as well as setting goals for the EXEO Group as a wholeand managing progress toward achieving them.

©2022 Exeo Group Corporation All Rights Reserved.

Deliberate, ReportManagement Council
Deliberate, Report

Sustainability Committee
Chair: President & CEO
Office: Sustainability Promotion Officein the General Affairs Department

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Strategy: Impacts of climate change risks and opportunities, and how to deal with them

The EXEO Group uses scenario analyses* anticipating what the world will be like in 2030 toascertain the impact that climate change will have on the Group’s business. Based on this, weconsider what measures to take in response and test out our Group strategies.
In the scenario analyses, we utilize a scenario in which average temperature increases are kept
under 2.0°C compared to pre-industrial levels (including a 1.5°C scenario) and a scenario in
which decarbonization does not advance (4.0°C scenario).
Scenario analysis
Scenario analysis is the process of forecasting the direct impacts of climate change and global warming themselves(physical risks) as well as what changes or issues could arise in the business environment due to long-term policy
trends related to climate change (transition risks), and examining the potential impacts of these changes on acompany’s own business and management.
Risk scenario

Main sources used for scenario analysis

Transition risks•••

Sustainable Development Scenario (SDS)Net Zero Emissions by 2050 (NZE), IEA World Energy Outlook (WEO) 2021
Ministry of Economy, Trade & Industry (METI):“Non-Fossil Fuel Value Trading Market”

Physical risks•

Stated Policies Scenario (STEPS) IEA World Energy Outlook (WEO) 2021

©2022 Exeo Group Corporation All Rights Reserved.

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Risks & opportunities with climate change / key measures(1/2)
Category

Sub-categoryRemarks

Downside risksIntroduction ofcarbon tax
Emissionscontrols
Policies, laws &regulations

2.0°C(Transitionrisks)•Increase in cost to buy credits for CO2 emissions (emissions quotas) that fail to reduce enough volume•Increase in costs to comply with stronger laws and regulations on GHG emissions and energy usage

Shifting torenewableenergy•If renewable energy is not supplied in sufficient volume, unit prices of electric power surge and renewable energy
becomes hard to procure(Renewable energy •Technology investment in renewable energy causes electric power prices to surgemeasures)Obligation to•Increase in costs to comply with expanded obligations to disclose information related to greenhouse gas emissions
disclose
information
Surgingraw•Increased cost of stocking materials made from natural resourcesmaterials prices

Changing
customerpreferences

4.0°C(Physicalrisks)•Increase in taxation such as instituting a carbon tax (taxed according to CO2 emissions from business activities)•Increase in electricity bills and procurement costs for materials and fuel due to surging carbon prices

Changing
customerpreferences•Preferences shift toward companies that have done more for the environment, and declining sales for those who
miss this trend due to business relationships being severed or losing market share to other companies

Stakeholder
assessments•Company valuation (stock price) falls due to negative assessments of measures against climate change (fallingbehind in efforts, including failure to meet target ratio of renewable energy use, insufficient information
disclosures, and failure to reach CO2 emissions goals), making it harder to raise funds and secure human resources

AcuteIntensifying
weather

ChronicHighertemperatures©2022 Exeo Group Corporation All Rights Reserved.

•Emerging risk of flood damage to residential buildings, construction sites, and company-owned power generation
facilities as well as the commensurate increase in damage insurance premiums, worsening work environments•Supply chain disruptions due to intensified weather, interruptions to procurement and deliveries, lost chances tomake proposals to customers or receive orders from them•Worsening labor shortages in construction due to increased health risks (heatstroke, etc.) and worsening work
environments at outdoor construction sites•Lower work efficiency, delayed completion of construction, and increased cost of provisions due to heat stress5

Risks & opportunities with climate change / key measures(2/2)
Sub-category
Upside risks (opportunities)
Category

Products and services

Markets

2.0°C(Transitionrisks)

Remarks•Expansion of smart grid business due to changes in power distribution systems (ability to newly enter the powerdistribution business)•Expansion of construction and maintenance business due to increasing needs for rechargeable batteries•Markets for renovation construction and cloud services due to increased demand for disaster response andmitigation•Solutions market generated by ICT for measures against climate change•Markets for the development of infrastructure such as networks as urban digitalization advances•Market for refurbishments if circular economy measures are bolsteredResilience•Stronger resilience by switching to telecommuting and other flexible work styles not dependent on location as aresult of climate change

Stakeholder assessments•Decarbonization leads to higher business value, more opportunities to raise funds from investors and the businessgrowth that entails, creates opportunities to receive orders from new clients, and creates opportunities

Key measures•Shift to the use of renewable energy for the electric power used in business activities
Transition risks•Advancements in energy saving in business activities•Stakeholder communication and information disclosures pertaining to decarbonization efforts

2℃•Actively pursue business in renewable energies such as solar power, offshore wind power generation, and biomass
Opportunities

Acute

Intensifying
weather

ChronicHigher
temperatures

4℃©2022 Exeo Group Corporation All Rights Reserved.

(mutually complementary resources through business partnerships, expand construction domains through capital
contributions, etc.)•Better BCP preparedness in the event of a disaster•Obtain pinpoint weather information, evaluate hazard risks of holdings•Ensure and improve operating efficiency of worksites by taking thorough measures against heatstroke andadvancing digital transformation (DX) of work sites•Secure sufficient construction periods

6[Strategy] Business impact based on scenario analysis, and our strategy and resilience to handle it
Among the business and financial impacts in the two scenarios anticipating circumstances in the year
2030, the EXEO Group believes that the introduction of carbon taxes and damage to buildings fromfloodwaters will be particularly important parameters. For that reason, we are quantifying the financial
impact on the Group of these two parameters in both the under-2.0℃ (including 1.5℃) and 4.0℃
scenarios.
Going forward, we will strive to improve our quantitative analysis of physical risks (damage and otherproblems with buildings and structures due to flooding and rising sea levels) and opportunities.
Financial impact on the Group anticipated in 2030
Risk
category

Key parameters

Carbon tax

Financial impact on the Group anticipated in 2030
Measurement

Under-2℃scenario

Carbon tax price (¥1,000/t-CO2)

13.6

Cost increase from carbon taxation (¥million)

685

Transition

4℃ scenario－Electricity prices derived

Increase in electricity prices derived from renewable energy (¥/kWh)

0.3

from renewable energy

Increase in procurement cost of electricity derived from renewable energy (¥million)

19(Anticipated preconditions in 2030)
・Carbon tax rate: ¥13,650/t-CO2 Reference: Net Zero Emissions by 2050 (NZE) (1.5℃) World Energy Outlook (WEO) 2021
・EXEO Group greenhouse gas emissions (Scope 1, 2): Approx. 50,200 t-CO2 (42% reduction from FY2020)
・Electricity prices derived from renewable energy: ¥0.3/kWh price increase (compared with non-renewable energy electricity prices), EXEO Group usage of electricity derived fromrenewable energy: Approx. 65,000,000 kWh

We will be bolstering our high strategic resilience from a medium to long-term perspective under both ofthese scenarios. While we formulate the appropriate measures to avoid the risks, we will also seek tocapture new growth opportunities including active efforts toward business in renewable energy.
©2022 Exeo Group Corporation All Rights Reserved.

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[Risk management] The processes used to identify, assess, and manage climate-related risks

We build and operate an organizational structure for risk management in the EXEO Group to beable to identify and evaluate risks on a Group-wide level. We have formulated the Risk
Management Rules that specify the basic points involved in risk management and haveestablished 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 riskmanager.
Risks related to climate change are identified and evaluated in the Sustainability Committee andthen deliberated and reported in the Management Council and Board of Directors. Information isalso 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 andmatched against risks that have 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.

©2022 Exeo Group Corporation All Rights Reserved.

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[Metrics and goals] The metrics and goals used for assessment and management（1）Metrics used for managing climate-related risks and opportunities
FY2020(Unit: t-CO2)

FY2021

86,58379,871

Scope 1 only

60,40061,688

Scope 2 only

26,18318,184

1,728,553

1,648,779

Greenhouse gas emissions (Scope 1 + 2)

Greenhouse gas emissions (Scope 3)(2) Goals used for managing climate-related risks and opportunities
MetricGreenhouse gas

Category
Scope 1 + 2emissions
Scope 3

FY of goal

Goal descriptionFY2030

Reduce greenhouse gas emissions by 42% (vs. FY2020)

FY2050Carbon neutrality

FY2030

Reduce greenhouse gas emissions by 25% (vs. FY2020)* Set according to the approach of Science-based Targets (SBT) standards©2022 Exeo Group Corporation All Rights Reserved.

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Reference©2022 Exeo Group Corporation All Rights Reserved.

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