SUSTAINABILITY
Sustainability

Environmental Initiatives

Reduction in Scope 1 and 2 emissions
by use of renewable energy

Recently escalating global warming causes large-scale climate change and human beings including ourselves in the current generation
as well as the future generation are put at risk. In this situation, the Group recognizes that the risks and opportunities associated withclimate change will exert a huge influence on its business strategy. With the “realization of decarbonized society” and the “promotionof circular economy” identified as our materialities, we strive to reduce environmental risk and capture new business opportunities.

Transition to net zero* by fiscal 2050
1

The Intergovernmental Panel on Climate Change (IPCC)
provided a scientific indicator in its “1.5℃ special report” in
2018, which stated that it is necessary to reach net zero
emissions by around 2050 in order to achieve the 1.5°
C target.
Meanwhile, in 2021 the Science Based Targets initiative (SBTi)*2
announced a new Corporate Net-Zero Standard based on
scientific knowledge. Thus, companies are unable to overlook
the need to reach net zero.
In 2021, the Group lifted its target for reducing Scope 1 and 2
GHG emissions from the previous 40% reduction to a 60%

reduction (compared with the SBT base year, fiscal 2017) and it
was approved again as the “1.5℃ target” that is the newstandard set by the SBTi.
Furthermore, based on the Corporate Net-Zero Standard set
by the SBTi, we formulated the JFR Group FY2050 Net Zero
Transition Plan to achieve FY2050 Net Zero within the range of
Scope 1, 2, and 3 GHG emissions. From short-, medium- andlong-term perspectives, in our business strategy, we will formulate
appropriate strategies to avoid negative risks, while for positive
opportunities, we will aim to capture new growth opportunities by
responding proactively to market changes and other means.

*1	Deducting the amount of carbon absorbed by tree planting and forest management, etc., and the amount removed by GHG recovery and sequestration under ground from GHG emissions so thatthe total is virtually zero.
*2	Global initiative established for the purpose of promoting the achievement of science-based GHG emissions reduction targets to limit the temperature increase to below 2˚C compared topre-industrial levels.

400

Scope 1 & 2

Aim for
Scope 1 & 2

Scope 360% reduction

GHG emissions(10,000 t-CO2)

Scope 340% reduction

300

FY2050

Scope 1, 2
and 3

200

Net zero

1000FY2017 (base fiscal year)

Phase
Results forecasts
and reduction targets
for GHG emissions(compared to FY2017)

FY2021Results (FY2017 to FY2020)

FY2023

FY2030

Short term (to FY2023)

Medium term (to FY2030)

FY2021 the Group Scope 1 and 2 emissions targets and results
FY2021

vs. FY2020

vs. FY2017(vs. SBT base year)

Emissions(t-CO2)

Change (%)

Change (%)

TargetTotal
Scope 1 and 2

126,822

-4.0

-34.7

Results

Total
Scope 1 and 2

122,812*

-7.0

-36.7

*Received third-party assurance from LRQA Limited

Reduction in Scope 3 emissions
in collaboration with suppliers

FY2030JFR Group FY2050 Net Zero Transition Plan

The Group is working to switch to renewable energy and LED
lighting and electrify corporate fleet in stores and head offices toreduce Scope 1 and 2 emissions. Particularly, we believe a switch
to renewable energy in stores will result in not only emission
reduction but also the improvement of the store’s environmental
value, which will attract environment-conscious customers andsuppliers.
Thanks to our effort to switch to renewable energy,
renewable energy rate is 20.3% at the end of February 2022.
Going forward, we will consider energy creation measures suchas the onsite consumption of renewable energy and strive tostrengthen resilience by diversifying energy sources.

FY2040FY2050Long term (to FY2050)

Scope 1 & 2
FY2017
194,154 t-CO2

Scope 1 & 2
FY2021
36.7% reduction

Scope 1 & 2
FY203060% reduction

Scope 1 & 2
FY2050Net zero

Scope 3
FY20172,927,320 t-CO2

Scope 3
FY2021
17.3% reduction

Scope 3
FY2030
Aim for 40% reduction

Scope 3
FY2050Net zero

Scope 1, 2 and 3 reduction by continuing and strengthening energy-saving measures
Scope 1, 2 and 3 (Category 3) reduction by expanding the switching to LED lighting in stores and introducing energy-saving, highly efficient equipment
Scope 1 & 2 reduction by shifting to electric vehicles for company use

The Group’s Scope 3 emissions represent approximately 95% of
the emissions from the entire supply chain. Given thecharacteristics of the Group with retail at its core, we think it isimportant to work to reduce Scope 3 emissions not by the Groupalone but in collaboration with our suppliers.
Daimaru Matsuzakaya Department Stores that emits
approximately 86% of the Group’s total Scope 3 emissions held
an explanatory meeting in April 2022 (attended by 300 people
from 253 companies). We showed the Group’s determination by
sharing Daimaru Matsuzakaya Department Stores’ initiatives torealize a decarbonized society and explained that it is essential
to collaborate with suppliers and that visualizing emissions ineach company will be the first step.
Going forward, we will contribute to realizing a decarbonizedsociety by the entire supply chain by considering andimplementing concrete measures to reduce Scope 3 emissions incollaboration with suppliers to achieve net zero by fiscal 2050.
FY2021 the Group Scope 3 emissions results

Results

Total Scope 3

FY2021

vs. FY2020

vs. FY2017(vs. SBT base year)

Emissions(t-CO2)

Change (%)

Change (%)

2,420,492*

+19.1

-17.3

*Received third-party assurance from LRQA Limited

Resources recycling and the development ofcircular business models

In the current situation in which the mass production andmass disposal of products pose a serious social problem,
there is an increasing importance of a circular economy, which
maximizes the efficiency of use of natural resources andproducts and minimizes waste generation and the Group is
evolving its initiatives.
Daimaru Matsuzakaya Department Stores has
implemented 3 Rs* such as ECOFF, an initiative of collecting
disused clothing, shoes and bags from customers and recycling
and reusing them as new materials or products and has gained
support from stakeholders. In addition, it launched asubscription-based fashion rental service AnotherADdress in
2021 as a sustainable initiative.
Going forward, we will evolve and expand 3 Rs centering on“resources recycling initiatives” and the “development of circularbusiness models” to reduce environmental burdens and capture
new business opportunities at the same time.
*The 3 Rs stand for Reduce, Reuse and Recycle.

Diagram of the circular economy the Group aims for

Reduction

Production

Recycling

Scope 2 reduction by expanding renewable energy
Scope 2 reduction by expanding the switching of stores and offices to renewable energy

Priority measures

Scope 3 reduction through cooperation with our suppliers and by promoting a circular economy
Scope 3 (Categories 1, 4, 5 and 9) reduction through the advancement of the existing 3 Rs in cooperation
with our suppliers and customers
Scope 3 (Category 1) reduction through cooperation with our suppliers
Scope 3 (Category 5) reduction by reducing amount of waste disposal of and improving recycling rate

Expansionof ECOFF

Recycling

Scope 2 reduction by introducing an energy creation system
Scope 2 reduction through renewable energy capital investments, etc. in our own facilities
Scope 2 reduction by establishing corporate power purchase agreements (PPAs)
Utilization of latest technologies, etc. and offsets
Use of electricity from new non-carbon energy sources,
such as hydrogen and ammonia
Utilization of CCUS (CO2 capture, utilization and storage)
・Offsets through tree planting activities to absorb CO2

Reductionof plastic
waste

Reductionof foodwaste

Development of
a new business
model

Expansion ofAnotherADdress
Business

Consumption

Sharing
Disposal

Reuse*The plan is current as of the end of May 2022, and may be revised depending on business strategies going forward.

58

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SUSTAINABILITY
Sustainability

Response to Climate Change and Information
Disclosure in Line with TCFD Recommendations

Type of climate-related risk
and opportunity

The Group, positioning risk as a starting point for strategy,
defines it as “uncertainty that affects the achievement ofbusiness management goals and has both a positive side and anegative side.” We believe that a company will grow in asustainable way by properly addressing risk.
The Risk Management Committee, which is an advisory body

Interview withmanagement

Identification/assessment/narrowing down of risks

INTEGRATED REPORT 2022

Response to risks
Monitoring/report

Sustainability Committee(environmental risks)

Risk Management Committee(overall risk)

60

Possible world

External environment analysis
Internal environment
analysis

The Group considers it important to examine climate-related risks
and opportunities at the appropriate milestone occasions becauseof their potential impact on its business activities over the longterm. Accordingly, the Group has positioned the implementation
term of the Medium-term Business Plan up to FY2023 as theshort term, the period up to FY2030, by which we aim to achieve
SBTs, as the medium term, and the period to FY2050, by which
we aim to achieve SBTi net zero targets, as the long term.
The Group conducts scenario analysis in order to understandthe risks and opportunities provided by climate change to theGroup and their impacts on the Group and to examine theresilience of the Group’s strategies envisaging the world in fiscal
2030, and the necessity of further measures.
In the scenario analysis, we referenced multiple existing
scenarios announced by the International Energy Agency (IEA)
and the Intergovernmental Panel on Climate Change (IPCC),
then considered two world scenarios: the below 1.5˚C/2˚C
scenario that envisages the goal of the Paris Agreement to limit
the increase in the global average temperature to well below 2˚Cand pursue efforts to limit it to 1.5℃ compared to pre-industrial
levels; and the 4˚C scenario that envisages the GHG emissions
on the present basis.
As for climate-related risks and opportunities, the Group
formulates its strategies and responds to them by back castingthem with an eye to fiscal 2050, by which we will realize net zero.
Existing scenarios referred to

Risk management process

PhysicalriskStrategyBelow
1.5˚C/2˚Cscenario

4˚C
scenario

Existing scenarios“Net-Zero Emissions by 2050 Scenario (NZE)”(IEA, 2021)“Sustainable Development Scenario (SDS)”(IEA, 2021)“Representative Concentration Pathways (RCP2.6)”(IPCC, 2014)“Stated Policy Scenario (STEPS)”(IEA, 2021)“Representative Concentration Pathways (RCP6.0, 8.5)”(IPCC, 2014)

AcuteEnergy source

Opportunity

Risk management

Transition
PolicyShort andrisk
regulation medium term

Risk

In order to promote sustainability management in all the Group
companies in a cross-sectional manner, the Group Management
Meeting, which is the highest decision-making body in businessexecution, discusses and decides regarding specific initiatives andmeasures associated with environmental issues. At a semiannual
meeting of the Sustainability Committee, we share policies andother matters on our response to environmental issues discussed
and decided by the Group Management Meeting, and draw up
execution plans concerning the Group’s environmental issues aswell as monitoring progress in their implementation.
Meanwhile, the Board of Directors discusses and supervises
the Group’s policies on response to environmental issues, policy
execution plans and the like, acting on reports over discussions
and decisions at the Group Management Meeting and theSustainability Committee.
The President and Representative Executive Officer chairs
the Group Management Meeting as well as the Risk
Management Committee and the Sustainability Committee, bothadvisory panels under his direct control. He thus bears final
responsibility for management judgments associated withenvironmental issues. Details of matters discussed and decided
by the Group Management Meeting and the Sustainability
Committee are eventually reported to the Board of Directors.

directly under the President and Representative Executive
Officer, identifies and assesses risks based on external
environment analysis and narrows them down to the risks thatneed to be preferentially addressed. The Group shares risk
recognition and reflects it in the Group’s strategies.

Time ofemergence

Products andservices

MarketShort andmedium term

Short andlong term

Short andmedium term

Short andlong term

Financial impact

Climate-related risk and opportunity ofparticular importance to the Group
Increase in energy costs associated with theintroduction of policies to control GHG
emissions, such as carbon taxes and thestrengthening of regulations

The Group expressed support for the TCFD recommendations in fiscal 2019. We use the TCFD recommendations as guidelines forverifying the appropriateness of the Group’s response to climate change. We disclose information effectively in accordance withthe four recommended items of “governance,” “risk management,” “strategy,” and “metrics and targets.”

Governance over environmental issues：The impact on the Group’s business and finance is expected to be very large.
：The impact on the Group’s business and finance is expected to be slightly large.
：The impact on the Group’s business and finance is expected to be negligible.

Climate change risks and opportunities ofparticular importance to the Group and their financial impacts

Below 1.5˚C/
2˚C scenario

4˚C scenario

Cost increaseof approximately¥1.1 billion*1

Cost increaseof approximately¥0.6 billion*1

Increase in cost of reducing GHG emissions
by purchasing green electricity certificatesand so forth

Measures

Reduction in Scope 1 and 2 GHG emissions
due to switching to energy-saving andrenewable energy at stores and business sites
Reduction in energy usage due to introductionof latest high energy-efficiency equipment atstores and business sites

Increase in renewable energy procurement
cost due to increase in use of renewableenergy-sourced electricity

Cost increaseof approximately¥0.7 billion*2

Cost increaseof approximately¥0.2 billion*2

Onsite generation and consumption ofrenewable energy through introduction ofenergy creation system, such as capital
investment in renewable energy at in-housefacilities

Reduction in revenue due to damage tostores and business sites and suspension ofoperations because of natural disasters
caused by climate change

Sales decreaseof approximately¥5.2 billion*3

Sales decreaseof approximately¥10.3 billion*3

Increased resilience of stores and businesssites through BCP preparation

Loss of sales opportunities in stores due toincreased risk of infectious diseases(COVID-19, etc.) caused by climate change

Diversification of sales channels throughpromotion of Real×Digital Strategy formulated
in the Medium-term Business Plan.

Decrease in energy procurement cost due tointroduction of latest high energy-efficiency
equipment

Reduction in energy usage due to introductionof latest high energy-efficiency equipment atstores and business sites

Expansion of earnings due to response to anincrease in demand for sharing and upcycled
products in collaboration with suppliers

Conversion to a circular business model,
including sharing and upcycling throughcollaboration with suppliers

Expansion of earnings due to response to anincrease in customer demand forenvironmental products and services, suchas reused products and recycled products

Increase in the level of 3 Rs throughcollaboration with customers and suppliersand expansion in handling of environmental
products and services

Expansion of revenue due to opening ofenvironmentally conscious tenants following
conversion to stores and business sites withhigh environmental value

Sales increaseof approximately¥1.0 billion*4

Capture of new growth opportunities by
response to increased risk of infectious
diseases (COVID-19, etc.) caused by climatechange—Acquisition of environmental certification for
stores and business sites by energy saving andswitching to renewable energy
Diversification of sales channels throughpromotion of Real×Digital Strategy formulated
in the Medium-term Business Plan.

(Grounds for estimation of quantitative financial impacts expected in FY2030)*1 Estimated by multiplying the Group’s Scope 1 and 2 GHG emissions in FY2030 by the carbon tax price per tonne of CO2*2 Estimated by multiplying the Group’s electricity usage in FY2030 by the additional price of renewable energy-sourced electricity per kWh compared to ordinary electricity charges*3 Estimated by multiplying the amount of sales losses due to suspension of operations during past natural disasters by the frequency of floods*4 Estimated by multiplying the Group’s real estate revenue and profits in FY2030 by percentage changes in new actual rent of buildings with environmental certification

For the FY2050 Net Zero Transition Plan, see page 58.

Metrics and targets

The Group has established two metrics for
managing climate-related risks andopportunities: Scope 1, 2 and 3 GHG
emissions and the renewable energy rate intotal electricity used in business activities.
Furthermore, in the Officer Remuneration
Policy revised in April 2021, Scope 1 and 2
GHG emissions reduction targets were set as
indicators for determining performancelinked remuneration, to clarify executive
officers’ responsibility with regard to theissue of climate change.

The targets used by the Group to manage climate-related risks and opportunities
Metrics

Target year
2050

GHG emissions

Renewable energy rate
in total electricity usedin business activities

2030

Details of targets
Net zero emissions of Scope 1, 2, and 3 emissions
60% reduction of Scope 1 and 2 emissions (vs. FY2017)*1
40% reduction of Scope 3 emissions (vs. FY2017)*1

2050

Renewable energy rate in total electricity used in businessactivities: 100%*2

2030

Renewable energy rate in total electricity used in businessactivities: 60%*1 Approved by SBTi
*2 Joined RE100 in 2020

For Scope 1, 2, and 3 emissions results in fiscal 2021, see page 59.

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