Summary of Identification and Evaluation of Nature-related Issues
August 7th, 2024
Following the publication of the TNFD's recommendations in September 2023, Oji Holdings conducted anidentification and assessment of the Oji Group's nature-related issues utilizing the LEAP approach formulatedby the TNFD.
● Identification of Priority Locations
Oji Holdings analyzed its value chain related to forests—the core of its business—and assessed its
dependencies and impacts on nature, using ENCORE, a tool recommended by the TNFD. The findings
indicated a notably high dependency and impact on nature by forestry business (Table 1).
Consequently, Oji Holdings evaluated the proximity of its forestry operations (Figure 1) to areas important forbiodiversity, and also evaluated the biodiversity importance, biodiversity integrity, forest cover change andwater risk of the adjacent areas (Table 2).
Considering these results and the size of each operation*, CENIBRA (located in Brazil) was identified as alocation with high potential for significant nature-related issues.
* More than 30% of the wood products procured by the Oji Group come from forests managed by CENIBRA.
Table 1: Assessment using ENCORE
Dependencies on ecosystem services

M

Impact drivers

HH

Non-GHGairpollut
ants

H

H

Wateruse

VH

Production of forest and wood-based products

Soilpollut
ants

GHGemissi
ons

Waterpollut
ants

Terr
estr
i
alecosyst
em useLarge-scale forestry

Sectors

H

H

Production of paper products

H

H

VH

M

Paper packaging production

H

H

VH

M

H

H

H

H

Biomass energy production

HH

VH Very High1HHighM

MediumLLow

VL

Very Low

PestcontrolM

Massstabili
sati
onanderosi
oncontrol

M

Floodandst
orm prot
ection

L
VH

VH

H

VH

VH

HM

LM

L

VL

Paper packaging production
Biomass energy production

Diseasecont
rol

M

VL

Cli
mat
eregul
ation

VH

M

Buf
f
er
i
ngandatt
enuati
onofmassf
lows

VH

H

Medi
ati
onofsensoryimpacts

M

Fi
ltr
ati
on

VH

Di
lut
i
onbyatmosphereandecosyst
ems

VH

H

Bio-remedi
ation

VH

Waterqual
ity

H

Waterflow maintenanceSoilqualityH

VentilationPollinationMMaintainnur
seryhabitats

Production of paper products

Surf
acewater

VH

Production of forest and wood-based products

Groundwat
er

VL

Geneti
cmat
er
i
als

Fi
bresandot
hermaterialsLarge-scale forestryAnimal-basedenergySectors

LVL

L
VL

VL

@OpenStreetMap

Figure 1: Forestry operations
Table 2: Evaluation of state of nature
Operations

Evaluation of state of nature
Forestcov
erdeclineWaterrisk

250

HighHigh

High

Low

Low

Indonesia

82 Medium

Low

High

High

Low

APFL

Australia

5HighLow

HighMedium

Low

GPFL

Australia

3 Medium

Low

HighLow

MediumPanPac, OjiFSNew Zealand

48 Medium Medium

HighMedium

Low

SPFL

New Zealand

13Medium

High

Low

Low

QPFL

Vietnam

10 Medium

Low

High-Japan

188

HighHigh

High

Bi
odiv
er
sit
yi
nt
egri
t
yi
mport
antf
orbi
odi
v
er
sit
y

Brazil

KTH

Low

Pr
oxi
mit
yt
oar
eas

Bi
odiv
er
sit
yi
mport
ance

Area(thousandsofha)Country

Company
CENIBRAMedium Medium
Low

Medium

● Dependencies and Impacts
Oji Holdings analyzed its priority locations, the CENIBRA's forestry operations, for dependencies and impacts
on nature.
Dependencies on ecosystem services and their pathways were identified as shown in Table 3. The intensity ofdependencies was quantified based on three factors: loss of inputs, financial loss and impact on society
resulting from the loss of ecosystem services. Biomass provisioning and water supply, crucial ecosystemservices for forestry, directly influence operational availability. Regulation of climate, soil and water flow also
constitutes important ecosystem services.
The impact drivers of forestry activities and their impacts on nature, society and operations are identified inTable 4. Impacts were evaluated using metrics with three factors: spatial extent, duration and magnitude.
Within the range of impact drivers of forestry, land use holds particular importance. CENIBRA owns andmanages a large area of land, and the way it is managed is directly related to the state of nature. The impact
intensity was determined to be positive.

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Table 3: Identification and evaluations of dependencies
Ecosystem services

Dependency pathway

Loss ofFinancial

Impact oninputs

loss

society

Biomass provisioning

Forestry is directly dependent on tree growth.

HighHigh

Low

Water supply

In addition to seedling production and dust control, tree growth depends on water.

High

MediumMediumMediumMediumLow

Soil and sediment

Soil stability prevents erosion, which can topple trees and weaken roots.

retention
Flood mitigation

Located in topographical conditions that are not prone to extreme flooding, which can affect productivity.

Climate regulationTemperature, rainfall and wind speed effect tree growth.

Pollination

Plantation trees do not depend on pollination, but are linked to the health of the surrounding ecosystem.

Soil quality regulation

Soil fertility and soil structure affect nutrient supply and water holding capacity, which in turn affect tree growth.
Maintaining water flows and cycles affects the stability of water availability and is necessary for to maintain

Water flow regulation

forests.
Spread of pathogens can affect health and well-being of people in the surrounding area, but there have been noDisease controldisease outbreaks.

Pest control

Pest control function reduces the use of pesticides and herbicides.
It breaks down, reduces and detoxifies contaminants, contributing to the purification and restoration of the

Bioremediation

environment.
Low

Impact on society

Low
High

Low

Low

MediumMediumHigh

MediumMediumHighHigh

Low

Low

MediumMediumMediumMedium

Low

Low

Low

MediumHigh

modifications (e.g. slower production or use ofmodifications

Financial loss

Low
High

Operation can continue only with important

Operation can continue as is or with minor

Loss of inputs

Low
MediumDisruption prevents operation

substitutes)

Disruption does not have potential to materially

Disruption has potential to materially affect

There is a reasonable possibility that disruption

affect profits

profits

could affect financial viability

Potential impacts may significantly constrain

Reasonable possibility that societal access/use

access to ecosystem servicesof ecosystem services is prevented

Impacts are temporary and minor

Table 4: Identification and Evaluation of impacts
Impact drivers

Impacts

impacts

The balance between GHG emissions from theGHG emissions from the use ofuse of forestry and other machinery and theforestry and other machinery

absorption and stock of GHG by trees has anGHG emissions impact on global climate change. As climate
and absorption

Direction ofMetrics

Measured value－62,014 tCO2/yr

GHG absorption by trees＋

1,519,520 tCO2/yr

Carbon stock in forests＋

44,913,879 tCO2change progresses, there is a possibility thattimber production will slow, water intake will berestricted, and the severity of disaster damage will

SpatialDuration

Magnitude

HighHigh

Low

MediumHighHigh

Low

Medium

Low

Low

Low

Low

extentincrease.

Land use

Land use has a direct impact on biodiversity andArea of own forest

various ecosystem services. If deforestation

Acquisition of forest

occurs, there is a possibility of soil degradation,certification

changes in water flow, and increased disasterArea of conservation forest

damage. On the other hand, proper land
management can improve the multifaceted
function of forests.
Excessive use of pesticides and fertilizers can－/＋

254,010 ha＋98%＋

106,505 ha＋

359 ha/yr

Use of pesticides－/＋

124 t/yr

Use of fertilizer－/＋

38,467 t/yr－

216,410 m3/yr

Area of restoration andrecovery activities

cause eutrophication in soil and rivers, leading toPollution

ecosystem degradation. On the other hand, whenused in appropriate amounts, they can improvesoil health.
Excessive water intake lowers river levels andWaste use

leads to aquatic ecosystem degradation. It can

Water intake for seedlingalso reduce the availability of water in surrounding

production, dust control, etc.

areas.
Low
Spatial extent
Duration
Magnitude

MediumHigh

Occurs in a small area on a specific aspect ofOccurs in a moderate area on a specific aspect ofOccurs in a large area on a specific aspect of

biodiversity

biodiversity

biodiversity

Impact is limited, recovers in 1‒2 years

Impact continues for 2‒10 years

Impact continues for more than 10 years

Magnitude of impact driver is small compared toMagnitude of impact driver is moderate compared

Magnitude of impact driver is large compared tobiodiversity sensitivity

to biodiversity sensitivity

biodiversity sensitivity

3

● Risks and Opportunities
Oji Holdings identified nature-related risks and opportunities arising from dependencies and impacts (Tables
5 and 6).
Nature-related risks include instability of forest resource supply and rising costs due to climate change, reduced
availability of ecosystem services and increased regulation due to ecosystem degradation, and disruption ofbusiness activities and loss of assets due to natural disasters. Nature-related opportunities include enhanced
reputation and competitiveness through conservation and restoration of natural capital, and increased demand
for renewable resources and nature-based products.
Table 5: Identification of Risks
CategoryRisks

Financial effects
lower wood productivityIncreased costs and decreased sales due to

Decreased precipitation and longer droughts

lower wood productivity
Restricted operations due to submerged

Increased frequency of flooding

Physicalrisk

trees and soil runoff
Increased reforestation and fire prevention

Worsening fire weather and increased frequency of forest fires

costs

Accidental water pollution from external factors such as tailings dam

Restricted operations due to water intake

failuresand drainage restrictions
Increased costs and decreased sales due to

Decreased soil quality due to soil compaction by forestry machinery andlower wood productivity; increased fertilizer

absorption of soil nutrients by plantation trees

and pesticide costs

Significant loss of biodiversity due to inappropriate land management

risk

Install reservoirs, plow soils
Mitigate climate change; prevent fire
Monitor water quality
Select appropriate fertilizers; plowsoils
Avoid deforestation; establish
conservation forests; protect water

biodiversity loss

sources
Obtain certifications, comply withnew regulations, develop monitoring
technologies

Restriction of logging, waiter intake andother operations

Increased negative perceptions of deforestation and misperceptions dueto simplified forest assessment tools (e.g., confusion between permanent

Install reservoirs; plow soils

to ecosystem degradation; liability fordelays in response

Stricter laws on rights, permits, and allocations for natural capital

Mitigate climate change

Reduced access to ecosystem services due

Increased monitoring costs; fines due to

Stricter reporting requirements on nature-related risks and impacts
Transition

Measures

Increased costs and decreased sales due toIncreased temperatures and hotter days

Reduced demand due to loss of reputation

deforestation and properly-managed forestry)

Reduce water intake
Publish report of satellite analysis
for forest

Table 6: Identification of Opportunities
Opportunities

Financial effects
Reduced costs; improved resilience to resource

Improved efficiency in the use of wood and water

scarcity; reduced negative impacts of land andresource use

Measures
Development of wood applications; resource
recycling

Improved resilience to resource scarcity; avoided
Utilization of degraded land

negative impacts of land use; improved soil health;

Reforestation

improved quality of ecosystem services
Conservation and restoration of ecosystems

Improved quality of ecosystem services andreputation
Reduced risk of potential water scarcity; improved

supplyreputation

Increased demand for renewable resources, including alternative

biodiversity credits

Protection of water sources
Product development, acquisition of certifications,Improved sales

compliance with new regulations

products due to preference for nature-based products
Access to green funds and trading of forest carbon andreforestation; establishment of ecologicalcorridors; reintroduction of endangered species

Protection of water sources; management of water quality anduses for non-renewable resources; increased demand for certified

Establishment of conservation forests;

Improved access to funding and financing

Enhanced reputation through participation in initiatives,

Improved reputation; increased opportunities forSocial contribution; communication with local

collaboration with stakeholders and community involvement

collaboration

communities

4● TargetsOji Holdings maintains and promotes measures to address identified risks and opportunities. In particular,
targets have been set for reforestation, planting of native trees, and establishment of ecological corridors (Table7). Oji Holdings decided to incorporate these targets into its KPIs for sustainability issues.
Table 7: Metrics and Targets
MetricsTargets

Area of natural forest restored by CENIBRA on its land

At least 3,000 ha between 2024-2033

Number of native tree species planted by CENIBRA on its land

At least 500,000 seedlings between 2024-2033

Area of ecological corridors formed by CENIBRA outside its land* At least 3,500 ha between 2024-2033* The area fenced and protected to promote revegetation of degraded areas and movement of wildlife between fragmented natural forests. Ecological corridors are also referred
to as “wildlife corridors” or “green corridors”.

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