Disclosure of Environmental Issues,
Including Climate Change(In response to the TCFD recommendations)

June, 2023

Introduction: LIXIL’ s Impact and Environmental Strategies
At LIXIL, our business operations are not only supporting our corporate growth and sustainable value creation, but also aiming
to have a positive impact on the environment and society. This goes beyond meeting our ESG obligations, by ensuring 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.
We have determined Water Conservation & Environmental Sustainability as one of the strategic pillars of our Impact Strategy
and positioned the six areas detailed below as material issues.

・Climate Change Mitigation and Adaptation
・Water Sustainability
・Circular Economy
・Environmental Impact of Product Lifecycle
・Environmental Management
・Conservation of Biodiversity
The LIXIL Environmental Vision 2050 formulated in FYE2020 declared a commitment to Zero Carbon and Circular Living. We
set Climate Change Mitigation and Adaptation, Water Sustainability, and Circular Economy in the above material issues as focus
areas for realizing the vision. As a springboard for promoting these focus areas, we have been striving to reduce the environmental
burden across the product lifecycle and to strengthen our company-wide environmental management. We are also working toconserve biodiversity which is the common foundation for the three focus areas. By 2050, we aim to achieve net-zero carbon
emissions and preserve water and natural resources in operations, housing and lifestyle solutions for future generations.

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 & Environmental Sustainability

As a manufacturer of water-related products and housing materials, we believe it is important to help solve environmental
issues, such as reducing CO 2 emissions, not just for LIXIL, but for society as a whole.
It is the responsibility of all manufacturers to consider how to minimize the environmental impact associated with theirbusiness activities and the use of their products. At LIXIL, we have updated our environmental strategy because we aim to not
only fulfill our corporate responsibility but also have a positive impact on the global environment and people’ s lives as part of ourquest to promote sustainability for both the environment and society at large. We present a comprehensive approach across three
distinct phases: our operations, our value chain, and expanding our impact, in order to maximize the impact generated in eachbusiness domain.
For more information: Targets and Initiatives* "2030" and "2050" in this document refers to our fiscal year, starting in 2030 or 2050.
Disclosure of Environmental Issues, Including Climate Change (In response to the TCFD recommendations) ｜ 01

Disclosure of Environmental Issues, Including Climate Change (In Response to 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 in the LIXIL Environmental Vision 2050 of “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, andreflecting them in our environmental strategy after reporting to and approval by the Board of Executive Officers and the 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 Environmental Impact Officer,
designated by the Board of Executive Officers, 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 groupas a whole. The results of ESC discussions and resolutions are reported to the Board of Executive Officers quarterly through the
Impact Strategy Committee. The Board of Executive Officers discusses and approves targets and action plans on environmental
issues and other significant matters. The progress is elevated to the Board of Directors twice a year for discussion and oversight.
Matters related to climate change and other environmental issues are also reported to and discussed at the GovernanceCommittee. Thus, we regard responding to climate change as an important issue.
In FYE2023, the ESC discussed and determined potential strategy revisions, such as the setting of medium-term targets inthe areas of water sustainability and circular economy and establishing a comprehensive approach to help realize ourEnvironmental Vision 2050. We also expanded our material issues to include “Conservation of Biodiversity.” We consider
biodiversity to serve as the common foundation for our three focus areas in the environment domain and believe that it is vital toaddress the issue of biodiversity in order to ensure sustainable LIXIL growth.

Environmental management structure

Disclosure of Environmental Issues, Including Climate Change (In response to the TCFD recommendations) ｜ 02

Meeting period

Main ESC agenda
・Reorganized the ESC into a body that includes executive officers for the purpose of strengthening
environmental governance and building and implementing environmental strategies

FYE2022・Raised our targets for reducing CO 2 emissions in the run up to 2030
・Reported on the degree of implementation of the TCFD recommendations

・Formulated an environmental strategy designed to enhance potential social and environmental impact
・Determined water and circular economy targets for 2030
・Added the conservation of biodiversity as a new material issue

FYE2023b. 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
Impact Strategy Committee

Senior Vice President, Chief Environmental Impact Officer
Director, Representative Executive Officer, Human Resources, Communications,
External Affairs, and Impact Strategy, and Chief People Officer

Each chairperson is responsible for implementing the decisions made in their committee and managing progress. More specific business plans are then implemented and monitored by the executive officers in charge of individual business organizations.
The Chief Executive Officer is ultimately responsible for management decisions related to environmental issues, including risks
and opportunities arising from climate change, through discussions and resolutions of the Board of Executive Officers and theiroversight 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 medium-term 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

Disclosure of Environmental Issues, Including Climate Change (In response to the TCFD recommendations) ｜ 03

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

Scenario 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*

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

SourceRCP2.6IEA 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.

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

Disclosure of Environmental Issues, Including Climate Change (In response to the TCFD recommendations) ｜ 04

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. In FYE2023, we started working to establish integrated management of water and resources,
recognizing their high correlation with climate change.

Risks and opportunities
relating to climate change
and other environment issues

1

RISKS

categoryof value chain

Policy and Legal,

to introduction of carbon taxes

Technology

component procurement costs
due to market changes

Direct operations

Policy and Legal,

Direct operations,Technology, Market

Upstream

Estimated financial impact
Time horizon
1.5ºC scenario

4ºC scenario
No additional

Medium to long

10 billion yen＊1

Medium to long

due to lack of parameters necessary

tax burden

Financial impact not calculated
for quantification

3

Loss of revenue opportunities
due to damage tothe company's plants causedby typhoons, floods, etc.

Physical (acute)

Direct operations

Short to long

1.5 billion yen＊2

4

Loss of revenue opportunities
due to the suspension ofoperations at the company’ splants caused by drought, etc.

Physical (chronic)

Direct operations

Short to long

due to lack of parameters necessary

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

5

OPPORTUNITIESImpacted stage

Increased operating costs due

Increased raw material and2

Risk and opportunity

6

7

for quantification

Products andProducts andlow-carbon, eco-conscious

Services, Markets,materials or resources

Resource Efficiency

Increased demand for products

Products andrelated to disaster preparation

Services, Markets,

Increased demand for products

Downstream

Medium to long

Downstream

Medium to long

20 billion yen＊3

Energy Source

Increased demand for using

response, and recovery

8

Financial impact not calculated

Financial impact not calculated

Financial impact not calculated
Downstream

improve water quality

Resource Efficiency

due to lack of parameters

Short to longnecessary for quantification
Financial impact not calculated

Products andServices, Markets,

due to lack of parameters
necessary for quantification

Resiliencethat help conserve water orMaintaincurrent trends

Downstream

due to lack of parameters

Medium to longnecessary 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 1.5ºC 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 that illustrates our medium-term business direction, and help decarbonize housing through performanceenhancements. 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

Disclosure of Environmental Issues, Including Climate Change (In response to the TCFD recommendations) ｜ 05

products, such as a revamped window lineup. Moreover, we are seeking to achieve sustainable growth by continually working on
structural reforms and transforming into a more agile organization that responds flexibly to external changes, and by expanding
our renovation business. In FYE2022, we completed the transition to platform-based products for the housing technology
business and finished revamping all window-series products. In FYE2023, we updated the LIXIL Playbook to strategicallyprioritize the incorporation of environmental strategies into our business strategies. By doing this, we aim to improve ourcorporate value while expanding our positive impact on society and the environment.

Key risks and opportunities

Strategic response

To reduce CO 2 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 Runnerenergy efficiency standards. We are also installing solar photovoltaic systems and increasing procurement of renewableenergy when financially feasible, and we are a member of RE100, a global initiative of companies committed to sourcing 100% renewable electricity for their operations. Outside of Japan, we switched all faucet fitting plants and distribution centers (10 locations in total) at LIXIL International, which oversees all our international water-related business, to100% renewable energy, as well as three plants in Mexico in FYE2023. In Japan, we started using solar power generation equipment installed through Power Purchase Agreement (PPA) on the roofs of the Otani Plant, which manufactures
washbasins. The Onomichi Plant, which produces faucets, is also scheduled to switch to solar power in August 2023.
Going forward, we will continue to actively consider introducing PPA and other models that offer high additionality
as means for procuring renewable energy. Over 80% of our offices, including our sales bases and showrooms inJapan, have already completed the switch to renewable energy. Furthermore, as part of our drive to help realize acarbon-neutral society, we started to consider innovations that incorporate new technologies, such as the conversion
Increased1

operating costs
due to introductionof carbon taxes

to hydrogen fuel and the exploration of CCU technology to separate, capture, and effectively utilize CO 2 emissions.
We are also looking to apply new technologies that are currently in the research stage, and are starting studies with aview to putting those technologies into practical application from 2030 onward.
In addition, we are consistently verifying manufacturing technologies with a view to switching to hydrogen fuel aspart of our business innovation activities. We conducted hydrogen combustion experiments to verify the high-temperature furnaces used for aluminum-melting and firing sanitary ware and tiles, and we ascertained that hydrogen can beused in the same way as conventional natural gas without any issues. We conducted a successful demonstration
experiment for mass-produced equipment in LIXIL plants relating to the aluminum aging treatment process, whichraises concerns over the potential impact on quality, with a view toward engineering a conversion to hydrogen fuel foraluminum profile manufacturing processes other than high-temperature melting. We are also verifying a more effective internal carbon pricing system to promote more strategic energy-saving investment over the medium to long term.
For more information: Climate Change Mitigation and Adaptation > Business Operations
LIXIL Starts Verification of Manufacturing Technology with a View to Switching to Hydrogen Fuel and PursuingInnovation to Help Achieve Net-zero CO2 Emissions in its Business Activities (Japanese only)
Introduced LIXIL’ s first PPA-based solar power generation equipment in Japan at two plants (Japanese only)
Supporting the Climate Change Initiative Message Calling for an Accelerated Introduction of Renewable Energy
and an Earlier Adoption of Effective Carbon Pricing (Japanese only)

To reduce CO 2 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. In FYE2023, we started engaging with suppliers
that account for the top 80% of all procurement-related CO 2 emissions to help understand the current situation
across our entire value chain and pursue effective CO 2 reduction activities. We conducted a survey of suppliers thatare particularly significant in terms of reducing procurement-related CO 2 emissions to help grasp the current situation
regarding the aggregation of CO 2 emissions and the setting of CO 2 reduction targets. We will continue to promote

2

Increased raw material

communication with suppliers based on the survey results and strengthen our collaboration to reduce procure-and component

ment-related CO2 emissions as well as to ensure a stable supply of raw materials and responsible procurement.

procurement costs
due to market changes

At LIXIL International’ s water faucet factories, we carry out alloy smelting in in-house furnaces and, at our plants
in Japan, we promote the recycling of aluminum scraps from outside our manufacturing process to help reduce theamount of energy required for the manufacture of aluminum products, such as the refining of new ingots. In terms ofplastic resources, we promote the effective use and recycling of resin materials by, for instance, building mechanisms
to help recycle scrap materials generated in factories and introducing sorting equipment, which will ultimately enable
us to recycle resin windows into new window materials.
For more information: Circular Economy > Business Operations
Responsible Supply Chain Management > Conducting and Following Up on Responsible Procurement Survey

Disclosure of Environmental Issues, Including Climate Change (In response to the TCFD recommendations) ｜ 06

Key risks and opportunities

Strategic response
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 to damage tothe company's plants
caused by typhoons,floods, etc.

headquarters, offices, and factories are located. For example, our TOSTEM THAI plant experienced heavy damage
from flooding 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 andshorten 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.

In order to better understand local conditions and introduce appropriate measures to address the problem of
increasingly scarce global water resources, LIXIL started conducting surveys in FYE2017 to identify water risks at 77
production sites that use water in their manufacturing processes. Our risk assessment process involves first creating a4

Loss of revenue
opportunities due tothe suspension ofoperations at
the company’ s plants
caused by drought, etc.

geographical risk profile using the international WWF Water Risk Filter assessment tool. We then conduct surveys ofsites that are revealed to be high-risk.
In FYE2023, we participated in the Corporate Engagement Program run by the Science Based Targets Network(SBTN) and investigated the risk (water stress) and impact (water intake) relating to the amount of water in thecatchment basin of our production sites, with reference to methods presented by SBTN. We will regularly update thisanalysis and implement appropriate measures at each site in order to further reduce risk.
For more information:
Water Sustainability > Business Operations

The energy consumed from the 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 theirhigh thermal and water efficiency or energy generation capabilities, LIXIL recognizes it has a major responsibility to

5

Increased demand forenergy-saving products
and services for
new ZEH constructionand energy-efficiency
remodeling

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. In
FYE2023, we will revamp all window lineup in our effort to reach a 100% sales ratio of high-performance windows
for newly constructed homes by FYE2026.
For more information:
Climate Change Mitigation and Adaptation > Products and Services
High Efficiency Housing for a Decarbonized World
Money Saving Tips: Recommending Hot Water Saving Techniques to Conserve Electricity, Gas, and Water
Because Heating Water is the Second Most Common Usage of Household Energy (Japanese only)
Developed and Conducted Demonstration Experiments on a Solar Power Generation Roll Screen System that Promotes
Decarbonization in Existing Buildings and Enhances Business Continuity Planning (BCP) (Japanese only)

Disclosure of Environmental Issues, Including Climate Change (In response to the TCFD recommendations) ｜ 07

Key risks and opportunities

Strategic response

In order to respond 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 and renewable materials as much as possible and designing products that take a longer productlifespan and recyclability into account.
LIXIL’ s GROHE brand has steadily increased products with Cradle to Cradle certification over the years andreleased EPDs (Environment Product Declarations) for 18 product groups that cover 777 products. In Japan, we haveset a target to increase the ratio of recycled aluminum used in our housing business to 100% by FYE2031. If weachieve this target, it will account for approximately one third of LIXIL’ s stipulated medium-term target for a 30%
reduction in Scope 3 CO 2 emissions (compared to FYE2019). In December 2022, we launched the EcoLeaf certified
PremiAL series of low-carbon aluminum profiles, which is made of 70% recycled aluminum. We can help reduce CO 2
emissions by 55% by replacing products that use new ingots. Furthermore, we have already succeeded in developing
technologies to facilitate the use of recycled aluminum material in 100% of our raw materials, and we plan to start
releasing our PremiAL R100 low-carbon aluminum profile, which is made of 100% recycled aluminum, in fall 2023,
initially as a construction material for buildings.

6

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

In addition, we developed revia, a new recyclable material made from a combination of nearly any kinds of waste
plastic and wood, including composite plastics and marine plastics that have been difficult to recycle up until now
and consequently incinerated or placed in landfill. The effective use of waste plastic and wood is helping to reduce
CO 2 emissions by 82%. In January 2023, we launched revia pave as our first revia product. The revia pave paving
material has a wide range of applications from sidewalks to squares, parks, and building exteriors. We will strive to
reduce the amount of CO 2 emitted during the incineration process and the environmental pollution caused by landfill
by creating an ecosystem that spans procurement, production, sales, installation and collection and establishing asustainable business model that encourages the recycling of waste plastics.
We are developing and marketing products and services that provide new options and broaden consumer choices
for sustainable living, such as resin window frames that have roughly three times the recycled content as conventional
products, artificial wood deck that uses recycled plastic and recycled wood dust, and 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
Plastics Action Statement
Developed a New Recyclable Material Called “revia” Made From a Combination of Waste Plastic and Wood
Set a 100% Aluminum Recycling Rate Target for FYE2031 to Help Create a Carbon-Neutral, Circular Society. Newly Developed
our PremiAL Series of Low-carbon Aluminum Profiles that Help Greatly Reduce Scope 3 Emissions (Japanese only)

LIXIL is developing and marketing products that contribute to climate adaptation to address the increasing
frequency of natural disasters such as typhoons and torrential rains and higher rates of heatstroke from risingtemperatures. Such products include easy-to-install storm shutters that protect windows from high winds and flying
debris during a typhoon, Style Shade sun blinds that block strong sunlight on window exteriors, and Resilience Toilet,
Increased demand for7

products related todisaster preparation,
response, and recovery

a public toilet whose water consumption can be switched from five liters to one liter per flush during water supply
disruptions. We are also promoting initiatives such as Think Heat, in which together with stakeholders, we explore theimportance of indoor temperature, which can cause heatstroke or heat shock, and the efficient use of heaters and air
conditioners; and a disaster mitigation project to build homes that protect families from disasters.
For more information:
Climate Change Mitigation and Adaptation > Products and Services
Stakeholder Engagement > Think Heat
Disaster Mitigation Project: Build Homes That Protect Families (Japanese only)

Through water efficient products and solutions, LIXIL can enable consumers to use water more efficiently andresponsibly, reducing daily consumption. LIXIL’ s water saving toilet and faucet products, and smart water controllers
aim to reduce a total of 2 billion cubic meters of water per year by FYE2025, globally. Better homes also need clean

8

Increased demand forand safe water — for showering, washing hands, or drinking. LIXIL is helping to enable safer water for consumers andproducts that help

communities to tackle contamination by providing product solutions and promoting behavior change. LIXIL is also

conserve water or
improve water qualitycommitted to advocating for more effective and responsible water policies: working with partners and developing
culturally and geographically relevant solutions, joining the conversation on water issues such as scarcity, efficiency,
safety and reuse.
For more information: Water Sustainability > Products and Services

Disclosure of Environmental Issues, Including Climate Change (In response to the TCFD recommendations) ｜ 08

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
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

Disclosure of Environmental Issues, Including Climate Change (In response to the TCFD recommendations) ｜ 09

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. In FYE2023, we renewed the Science Based Targets initiative(SBTi) certification for our 2030 medium-term CO 2 reduction targets, aligning them with the SBTi’ s new ambition level of 1.5ºC.
We also added some medium-term water- and resource-related targets for 2030.

Indicators for evaluating risks and opportunities
relating to climate change and other environment issues

Risks

Targets

Scope 1 and 2 carbon emissions

Reduce by 50% by FYE2031 (vs. FYE2019)

Scope 3* carbon emissions

Reduce by 30% by FYE2031 (vs. FYE2019)

Scope 1, 2, and 3 carbon emissions

Net zero by FYE2051

Water use efficiency

Improve by 20% by FYE2031 (vs. FYE2019)

Waste recycling rates

Improve by 90% by FYE2026

Ratio of number of high-performance windows

100% by FYE2026

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

100% by FYE2031

faucets and water-saving toilets sold (Japan)
Opportunities
Total water savings from water-saving products

2 billion m3 per year by FYE2025

Ratio of used recycled aluminum

100% by FYE2031* Excluding use-phase emissions from products that indirectly consume energy such as hot water supply during use
For more information: Impact Strategy

b. Scope 1, 2, and 3 carbon emissions
c. Results of metrics used to assess climate-related risks and opportunities
We obtain third-party assurance of Scope 1, Scope 2, and particularly significant categories of Scope 3 emissions, water
consumption, and waste generation, etc., and we disclose our targets and results for each indicator.
For more information: ESG Databook

Disclosure of Environmental Issues, Including Climate Change (In response to the TCFD recommendations) ｜ 10