︱

Third-Party Opinion ︱Third-Party Opinion

Yoshinao Kozuma
Professor Emeritus, Sophia University

1. The Path to Achieving Carbon Neutrality by 2050
Achieving carbon neutrality by 2050 has become a common
goal for our industrial society, and in February 2022 the SankiEngineering Group expressed its commitment to that objective
by announcing its Carbon-Neutral Declaration and launching afull-scale initiative for realizing a decarbonized society by 2050.
In reviewing the actual results more than a year after thisdeclaration, Sanki Engineering has achieved a 34% reduction inits Scope 1 and 2 emissions from levels in fiscal 2020, ahead of
the target year of 2030, and is now on course to fully meet its
interim target of a 40% reduction by fiscal 2025. The Group has
also achieved a 36% reduction in Scope 3 emissions, exceeding
its interim target of a 10% reduction by fiscal 2025 toward thefinal deadline of fiscal 2050. Scope 3 emissions account for asmuch as 99.9% of the Sanki Engineering ’Group’s total emissions,and it is no exaggeration to say that the path to CN depends on
its strategy for reducing Scope 3 emissions. Moreover, since 91%of these emissions fall under Category 11, reducing use-phaseemissions of facilities and plants constructed by the Group isessential for transitioning to a decarbonized society. Through theSANKI YOU Eco Contribution Points program, the Group links its
contributions to customer CO2 reductions with financial support
for afforestation projects. The Carbon-Neutral Declaration for2050 reminds us of how helpful this program has been for theGroup’s carbon risk management.
Sanki Engineering’s achievements for this fiscal year also
included being recognized as an A-list company by the CDP and
updating its TCFD scenario analysis to a 1.5°C scenario. Both ofthese are major achievements that deserve recognition.
Meanwhile, investors are increasingly demanding thatcompanies announcing their declarations for achieving carbon
neutrality by 2050 concretely explain the process of attaining
the goal with a transition plan, so Sanki Engineering should
formulate and publicly disclose its own plan as soon as possible.

2. Response to Human Rights Risk
Along with the formulation of its human rights policy in April
2022, Sanki Engineering also expressed its plans to implementhuman rights due diligence. This year, the Group clearly statedthat its entire supply chain will be subject to due diligence andthat the corporate ethics hotline and other contact points will
also receive reports of violations from the supply chain.
Considering the growing number of orders received outside
Japan, Sanki Engineering’s management stance of pursuinghigh standards in fulfilling its duty of care across the supply
chain is highly commendable. I expect the Group to concretely
implement human rights due diligence to further strengthen
its response to risks associated with business activities in theyears to come. It will also need to provide information on thecontact points for reporting from the supply chain on its English
language website.
3. Enhanced Quality of Information DisclosureThis fiscal year, the Group has continued to disclose important
new information. For example, it has explained its management
resources in greater detail in the diagram of its value creation
process, providing a more solid picture of the management
resources that constitute the Sanki Engineering Group’s businessmodel. In addition, while governance information tends to belimited to an explanation of facts, this year’s report includes adialogue between the president and an external director, which
vividly conveys the state of the governance system from thelatter’s perspective. These are all beneficial efforts in terms ofenhancing the quality of information disclosure.
4. Future Considerations
As for information on the gender wage gap, which became
a statutory disclosure requirement under the revised Act ofPromotion of Women’s Participation and Advancement in theWorkplace, the gap disclosed by the Group seems somewhat
large compared to the average in Japan, according to the OECD.
This might require disclosing additional information, including
the Group’s measures for closing the gap. With regard to thepending issue of improving the employment rate of persons
with disabilities, it is desirable to strengthen measures not
only on a non-consolidated basis but also and especially on aconsolidated basis, given that the statutory employment rate will
be raised in stages starting in 2024.

Response to Third-Party Opinion
We are deeply grateful for your valuable insights on the SANKI REPORT 2023.
This was the 12th year since we began publishing an integrated report, and we appreciate your evaluation of issues, such as ourpolicies and initiatives for achieving carbon neutrality and the enhanced quality of our information disclosure. Going forward, we will
endeavor to disclose concrete information, including our transition plan for achieving the 2050 carbon neutrality goal, while steadily
promoting the sustainability management of the Sanki Engineering Group.
We will work to make improvements in the areas you pointed out, including closing the wage gap between men and women andraising the employment rate of disabled persons. We are resolved to make the best use of the SANKI REPORT to further advance ourbusiness activities and help realize a sustainable society.
Takeshi Terazaki Executive Officer and General Manager, Management Planning Office102

SANKI REPORT 2023