Disclosures Based on
the TCFD Recommendations

June 2022

Disclosures Based on the TCFD Recommendations
Introduction: LIXIL’ s Corporate Responsibility and Environmental Strategies
At LIXIL, our business operations are not only supporting our corporate growth and sustainable value creation, but alsoenhancing the positive impact that we have on the environment and society. This goes beyond meeting our ESG obligations, byensuring we are truly living our purpose to make better homes a reality for everyone, everywhere. Transforming how we approach
environmental issues is a critical part of how we are transforming for impact. Our environmental strategy consists of three pillars:"Climate Change Mitigation and Adaptation," "Water Sustainability," and "Circular Economy." The transition to a net-zero economy
is the critical challenge of our times. Like all companies, we are working to reduce the environmental burden from our operations.
At the same time, however, our strategy is to reduce CO2 emissions for society as a whole, not only for LIXIL. We are making
progress across the pillars of our environmental strategy to conserve water, energy, and other natural resources utilized in and by
LIXIL products and services across the value chain from procurement through production, distribution, end use, and productdisposal.
We have identified "Water Conservation and Environmental Sustainability" as one of our strategic pillars of our Corporate
Responsibility (CR) Strategy and have positioned the following five issues as priorities.

(1) Climate change mitigation and adaptation(2) Water sustainability(3) Circular economy(4) Environmental impact of product lifecycle(5) Environmental management
LIXIL Environmental Vision 2050, announced in FYE2020, calls for "Zero Carbon and Circular Living" and defines (1), (2),and (3) above as focus areas for achieving the vision. As a foundation for promoting these focus areas, we are also working to
reduce environmental impact throughout product lifecycles (4) and to strengthen our company-wide environmental management(5). By 2050, we aim to achieve net-zero carbon emissions and preserve water and natural resources for future generations
through operations and our housing and lifestyle solutions to become a leading company in environmental sustainability.

CLIMATE CHANGE MITIGATION AND ADAPTATION
Achieve Net-Zero GHG Emissions through Our Business Operations, Products and Services

WATER SUSTAINABILITY
Enhance the Environmental Value of Water Resources by Saving, Circulating and Purifying Water

CIRCULAR ECONOMY
Help Transition to a Circular Economy and Preserve Natural Resources for Future Generations

For more information: Water Conservation and Environmental Sustainability* "2030" and "2050" in this document refers to our fiscal year, starting in 2030 or 2050.
Disclosures Based on the TCFD Recommendations ｜ 01

Disclosures Based on the TCFD Recommendations
In March 2019, LIXIL announced our endorsement of the Task Force on Climate-related Financial Disclosures (TCFD) in
connection with our focus area "climate change mitigation and adaptation. "Based on the TCFD recommendations, LIXIL is
working to identify and assess the risks and opportunities posed by climate change, and reflecting them in our environmental
strategy after reporting to and approval by the Board of Executive Officers and Board of Directors.

1. Governancea. Board’ s OversightAt LIXIL, we are transforming our business operations. This transformation is not only to secure corporate growth andsustainable value creation, but also to enhance the positive impact that we have on society and the environment. It is importantthat we also have the right governance structure in place to track progress and monitor risks, targets, and metrics for ourtransformation for impact. We have established the Environmental Strategy Committee (ESC) chaired by the Chief Technology
Officer（CTO）in charge, designated by the Board of Executives, as well as a sustainability governance framework with overall
oversight by the Board of Directors. The ESC meets at least once a quarter to develop and implement environmental strategies.
This includes formulating rules and policies related to environmental governance, deliberating and making decisions on measures
to address climate risks and opportunities and other environmental issues, and managing and monitoring environmental targets
for the group as a whole. The results of ESC discussions and deliberations are reported to the Corporate Responsibility (CR)Committee. Decisions on matters of significance or special importance are elevated to the Board of Executive Officers fordiscussions and approval, followed by the elevation to the Board of Directors for discussions and oversights.
The CR Committee meets quarterly to identify and review key sustainability issues, including environmental issues, for theentire group, formulate CR Strategy targets and measures, and monitor and support the implementation of priority initiatives andspecific activities.
The execution of sustainability initiatives is reported and reviewed with the Board of Directors twice annually. In addition,
when decisions on matters of significance or special importance are made by the Board of Executives, updates may be reported
as necessary as part of regular reporting to the Board of Directors by Executive Officers.

b. Roles and Responsibilities of Directors and Executive Ofﬁcers
Currently, the Board of Executive Officers appoints a chairperson to each committee as follows.

Committee

Chairperson

Environmental Strategy Committee

Chief Technology Officer (CTO)

Corporate Responsibility Committee

Director, Executive Officer, Executive Vice President, Human Resources and General Affairs,
Public Affairs, Investor Relations, External Affairs, and Corporate Responsibility,
and Chief People Officer (CPO)

Disclosures Based on the TCFD Recommendations ｜ 02

Each chairperson is responsible for implementing the decisions made in their committee and managing progress. Morespecific business plans are then implemented and monitored by the executive officers in charge of individual businessorganizations. The representative executive officer, President, and Chief Executive Officer (CEO) is ultimately responsible formanagement decisions related to environmental issues, including risks and opportunities arising from climate change, throughdiscussions and resolutions of the Board of Executive Officers and their oversight by the Board of Directors.
For more information: Environmental Management System

Corporate Governance Structure

2. Strategy
a. Identifying Climate-related Risks and Opportunities
LIXIL has conducted scenario analyses to identify the risks and opportunities posed by climate change that could significantly
impact our business over the short, medium, and long terms as shown below. Risks and opportunities were categorized intotransition risks (e.g., policy and legal, and market) and physical risks (e.g., extreme weather events) that could affect our value
chain.

Classification

PeriodBackgroundLong-term

10 - 30 years

Period ending with the 2050 goal to realize LIXIL Environmental Vision 2050

Medium-term

3 - 10 years

Period ending in 2030, a target year of the Science Based Targets initiative and the SDGs.
A critical milestone for realizing LIXIL Environmental Vision 2050

Short-term

0 - 3 years

Period ending in 2025, when environmental initiatives will be promoted in alignment withbusiness plans

Our scenario analysis is based on the following two scenarios, selected from several scenarios published by the International
Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC).

Scenario Name

Scenario Overview

SourceScenario with signiﬁcant policy transition impacts that aligns with the Paris Agreement's
goal of limiting temperature rise to 1.5ºC above pre-industrial levels
1.5 ºC
scenario*1

Environmental regulations will be tightened and the introduction of carbon taxes and othertaxes will cause energy and raw material prices to rise. Energy regulations and expanded
subsidy programs will increase the share of Net-Zero Energy Houses (ZEH) among new
houses in Japan and will also stimulate remodeling to improve existing housing
performance. The impact of this will be an increased demand for products and services that

RCP2.6IEA SDSIEA NZE
RCP4.5
NDCs

provide high thermal insulation and energy efficiency and generation.

Scenario where environmental regulations are not tightened and physical impacts are large
Environmental regulations will not be tightened, energy efficiency-related subsidies will not
4 ºC

be expanded, and the percentage of ZEH will not significantly increase. Physical risks such

scenarioas damage to manufacturing facilities caused by typhoons, floods, and other extreme

RCP8.5weather events will increase. Demand for products and services related to disaster
preparation, response, and recovery will increase.

*1 Parameters based on the 2 ºC scenario were used when parameters based on the 1.5 ºC scenario were not available.

Disclosures Based on the TCFD Recommendations ｜ 03

b. Impact of Risks and Opportunities Identiﬁed in the Scenario Analysis
The following table outlines the risks and opportunities identified in the two scenarios described above that we expect will
significantly impact our business. We quantified the financial impact of these risks and opportunities to our business in 2030 to
the greatest extent possible.

Risk / opportunity category

1

RISKS

Impacted stage

categoryof value chain

Increased operating costs due

Policy and Legal,

to introduction of carbon taxes

Technology

Increased raw material and

OPPORTUNITIESRisk / opportunity

Direct operations

Estimated financial impact
Time horizon
1.5ºC scenario

Medium to long

Direct operations,Technology, Market

Upstream

3

Loss of revenue opportunities
due to damage to the company's
plants caused by typhoons,floods, etc.

Physical (acute)

Direct operations

Short to long

4

Increased demand for energysaving products and services
for new ZEH construction andenergy-efficiency remodelingServices, Market,

Downstream

Medium to long

Increased demand for productsthat use low-carbon,
eco-conscious materials
or resources

Services, Markets,

Downstream

Medium to long

component procurement costs
due to market changes

5

6

Products and1.5 billion yen＊2

20 billion yen＊3

Products andMaintaincurrent trends

Financial impact not calculated

Resource Efficiency

Services, Markets,

response, and recovery

necessary for quantification

Energy Source

related to disaster preparation,

tax burden

due to lack of parameters

Medium to long

Products andIncreased demand for products

No additional

Financial impact not calculated

Policy and Legal,

2

10 billion yen＊1

4ºC scenario

due to lack of parameters
necessary for quantification

Downstream

Resilience

Short to long

Financial impact not calculated
due to lack of parameters
necessary for quantification*1 Financial impact calculation is based on the assumption that a carbon tax (using IEA’s estimates of carbon prices considered necessary to achieve the 1.5 ºC target)
is imposed on Scope 1 and 2 carbon emissions.
*2 Average loss is calculated based on the following steps: (1) identified any production sites with flood risks (based solely on production site location; risk mitigation
measures set forth in our business continuity plans (BCP) are not incorporated), using the World Resources Institute’ s (WRI) Aqueduct Floods tool and hazard maps
provided by Japanese municipalities; and (2) multiplied two factors: the number of days of stalled operations for sites in each inundation height zone indicated inJapan’s Ministry of Land, Infrastructure, Transport and Tourism (MLIT) Manual for Economic Evaluation of Flood Control Investment; and the daily production volumeof each site.
*3 Profit is calculated based on the share, price, and profit margin of key products. This calculation assumes an increased ZEH percentage of new and existing housing
in 2030 to achieve the Japanese government's 66% reduction target for the residential sector by 2030.

c. Strategic Response to Risks and Opportunities
By integrating our responses to risks and opportunities identified by the scenario analysis into our environmental strategy, we
are working to mitigate risks, achieve sustainable growth, and enhance our resilience as an enterprise.
More specifically, we have set out to improve the profitability of our Japanese business, which is one of our strategic initiatives
in the LIXIL Playbook, and help decarbonize housing through performance enhancements. To do this, we are reorganizing our
production systems to reduce fixed costs and switch to platform-based products, adjusting sales prices to increase productivity
and profitability of our Japanese business, and rapidly launching new products, such as a revamped window lineup. Moreover, weare seeking to achieve sustainable growth by continually working on structural reforms and transforming into a more agileorganization that responds flexibly to external changes, and by expanding our renovation business. In the fiscal year ended March
2022, we completed the transition to platform-based products for the housing technology business and finished revamping all
window-series products.

Disclosures Based on the TCFD Recommendations ｜ 04

Key risks and opportunities

Strategic response

To reduce CO2 emissions from our business sites (especially manufacturing sites), we are working to improve
production efficiency, defect rates, and combustion efficiency and upgrade to equipment that meets Japan’s Top
Runner energy efficiency standards. We are also installing solar photovoltaic systems and increasing procurement of
Increased operating1

renewable energy when financially feasible.

costs due toIn the future, we will optimize renewable energy procurement methods based on trends such as carbon pricing

introduction ofand green electricity certificate prices, examine the introduction of more effective internal carbon pricing to pursue

carbon taxes

strategic energy conservation investments over the medium- to long-term, and develop manufacturing technologies
and product materials to promote the development and introduction of decarbonization technologies in the long term.
For more information:
Climate Change Mitigation and Adaptation > Business Operations: Promoting Energy Generation and Saving

To reduce CO2 emissions from procurement of raw materials and components, we are switching to low-carbon raw
materials and components such as aluminum scraps collected from outside our manufacturing process, making
products thinner, and reducing the number of components per product.
Increased raw material2and component
procurement costs
due to market changes

Going forward, in addition to working with suppliers to ensure a stable and responsible supply of products, we will
strengthen our collaboration with them to reduce CO2 emissions.
For more information:
Circular Economy > Business Operations: Circulating Resources, Working with Stakeholders to Eliminate Industrial Landfill Waste
Responsible Supply Chain Management > Conducting and Following Up on Responsible Procurement Survey

Anticipating major natural disasters as a risk to our business, we are carrying out business continuity planning(BCP) activities to minimize disaster risks at each factory based on estimated damages in all areas where our3

Loss of revenue
opportunities due todamage to thecompany's plants
caused by typhoons,floods, etc.

headquarters, offices, and factories are located. For example, TOSTEM THAI plant experienced heavy damage fromflooding in 2011. As part of the BCP process for improving the disaster preparedness, the plant has built floodwalls
on its perimeter and installed water pumps and other equipment to protect production facilities and shorten recovery
time. We are carrying out systematic facility investments and upgrades at other factories as well.
As measures related to product supply, we are optimizing supplier selection, ensuring optimal inventory levels,and developing backup production systems, for example. We are also enrolled in insurance programs that cover fixed
assets owned, used, or managed by LIXIL and its consolidated subsidiaries in Japan in the event of an unexpected
and sudden disaster caused by fire, wind, or water.

The energy consumed from building products sector accounts for about 30% of final energy consumption
worldwide. In Japan, heating, cooling, and hot water account for about 60% of the energy consumed by the averagehome. Housing performance in Japan lags behind that of other regions such as Europe, with around 90% of existinghomes in Japan failing to meet current national energy-efficiency standards. High-insulation windows have an
important role to play in driving improvements that mitigate global warming.
As a company that supplies products and services that contribute to reductions in carbon emissions through their

4

Increased demand forenergy-saving products
and services for new
ZEH construction andenergy-efficiency
remodelinghigh thermal and water efficiency or energy generation capabilities, LIXIL recognizes it has a major responsibility to
reduce carbon emissions from homes and buildings. High-performance renovation of existing homes is particularly
important due to the shrinking market size for new houses in Japan. LIXIL will help stimulate home renovation
through high-performance construction methods for reinsulating entire homes; easy-to-install, highly-insulating
windows and doors; and energy and water-saving faucets, water-saving showers, toilets, and other products. And as aleader in window solutions, in fiscal year ending March 2023, we will revamp all window lineup in our effort to reacha 100% sales ratio of high-performance windows for newly constructed homes by fiscal year ending March 2026.
For more information:
Climate Change Mitigation and Adaptation > Products & Services: Conserving Energy and Reducing Greenhouse Gas Emissions
High Efficiency Housing for a Decarbonized World

Disclosures Based on the TCFD Recommendations ｜ 05

Key risks and opportunities

Strategic response

We are responding to rising prices for raw materials and components that generate a large amount of carbon
emissions during procurement and production stages, stronger regulations on fossil-derived plastics, changing
consumer preferences arising from the emergence of circular economy, and other market changes, we are using
recycled materials as much as possible and designing products that take a longer product lifespan and recyclability

5

Increased demand for
products that use lowcarbon, eco-conscious
materials or resources

into account.
We are developing and marketing products and services that provide new options and broaden consumer choices
for sustainable living, from resin window frames that have roughly three times the recycled content as conventional
products, to artificial wood deck that uses recycled plastic and recycled wood dust, to Cradle to Cradle Certified®
GROHE brand faucets, to kitchen faucets that can be upgraded after purchase by simply replacing the spout with one
that has a built-in water filter.
For more information:
Circular Economy > Products and Services: Saving and Recycling Resources
Plastics Action Statement

LIXIL is developing and marketing products that contribute to climate adaptation to address the increasing frequencyof natural disasters such as typhoons and torrential rains and higher rates of heatstroke from rising temperatures.
Such products include easy-to-install storm shutters that protect windows from high winds and flying debris during atyphoon, Style Shade sun blinds that block strong sunlight on window exteriors, and Resilience Toilet, a public toilet
Increased demand

6

whose water consumption can be switched from five liters to one liter per flush during water supply disruptions.

for products related to

We are also promoting initiatives such as THINK HEAT, in which together with stakeholders, we explore thedisaster preparation,

importance of indoor temperature, which can cause heatstroke or heat shock, and the efficient use of heaters and air

response, and recovery

conditioners; and a disaster mitigation project to build homes that protect families from disasters.
For more information:
Climate Change Mitigation and Adaptation > Products & Services: Conserving Energy and Reducing Greenhouse Gas Emissions
Stakeholder Engagement > THINK HEAT
Disaster Mitigation Project: Build Homes That Protect Families (Japanese only)

3. Risk Managementa. Processes for Identifying and Assessing Climate-related Risks
LIXIL identifies significant climate-related risks and opportunities and assesses their impact by conducting scenario analyses
based on the TCFD recommendations under the direction of the Environmental Strategy Committee (ESC). In this process,climate-related transition risks and physical risks are linked to business risk categories (strategic risks and operational risks) andprioritized based on group-wide risk assessment criteria (degree of impact on business planning and possibility of occurrence),
taking into account the differences in the size of group businesses, changes in their external conditions, and inter-relationships
among risks from business management perspectives.

b. Processes for Managing Climate-related Risks
LIXIL makes continuous improvements to our management of business risks by evaluating the relative importance of each risk
and planning, implementing and monitoring measures to address such risks at every level of our organization. For climate-relatedtransition risks and opportunities in particular, we are developing processes to integrate such risks and opportunities into ourenvironmental strategy, cascade them down to environmental targets and action plans, implement and promote measures toimprove environmental performance and manage risks, and monitor and review progress.

c. Integrating These Processes into Overall Risk Management
We are integrating these processes into overall risk management of the entire group by linking climate-related transition risks

Disclosures Based on the TCFD Recommendations ｜ 06

and physical risks to the strategic risk and operational risk categories of our business risks. We regularly monitor strategic andoperational risks and implement risk mitigation measures at every level of the business. Moreover, members of the Audit
Committee monitor whether effective measures are being taken to address high-priority risks through their participation inmeetings of the Board of Directors and various other committees.
For more information: Management Strategy & Structure > Business Risks

Corporate Governance > Risk Management

4. Metrics and Targets
a. Metrics and Targets Used to Assess Climate-related Risks and Opportunities
The LIXIL Environmental Vision "Zero Carbon and Circular Living" expresses our commitment to achieve net-zero carbon
emissions from our operations, products and services by 2050. We are upgrading our 2030 emissions reduction targets, our
medium-term targets in the Environmental Vision, to be consistent with the Science Based Targets initiative’ s (SBTi) new
ambition level of 1.5 ºC*. We are committed to reducing our CO2 emissions to -50% in absolute CO2 emissions in Scope 1+2 andScope 3 emissions by 30% by 2030 from FYE2019, and plan to renew SBT validation for these targets.
* Updated Scope 3 target is based on well-below 2 ºC level.

Meanwhile, decarbonization will require a rapid shift toward high-performance, energy-efficient homes, and this need presents
a business opportunity. We have set the sales ratio of high-performance windows and water-saving faucets and toilets, which are
not included in our SBTi validation, as metrics for assessing climate-related opportunities. Set for our Japanese business as apriority, these targets will allow us to expand our lineup of eco-conscious products that help reduce energy and water use inhomes and buildings, thereby future-proofing the growth of our business.

Metrics used to assess climate-related risk and opportunities

Scope 1 and 2 carbon emissions

Risks

Scope 3* carbon emissions

Scope 1, 2, and 3 carbon emissions
Ratio of number of high-performance windows

Targets

Reduce by 50% by fiscal year ending March 2031
(vs. FYE2019)

Reduce by 30% by fiscal year ending March 2031
(vs. FYE2019)

Net zero by fiscal year ending March 2051

100% by fiscal year ending March 2026

sold for detached houses (Japan)
Opportunities
Ratio of number of energy and water-saving

100% by fiscal year ending March 2031

faucets and water-saving toilets sold (Japan)* Excluding use-phase emissions from products that indirectly consume energy such as hot water supply during use
For more information: CR Report > Highlights in the Environment chapter

b. Scope 1, 2, and 3 carbon emissions
c. Results of metrics used to assess climate-related risks and opportunities
We have obtained third-party verification of our Scope 1, Scope 2, and material Scope 3 emissions. We also disclose ourtargets and results for each metric.
For more information: ESG Databook

Disclosures Based on the TCFD Recommendations ｜ 07