Information disclosure based on TCFD Proposal

The Company has been providing a consistent supply of products and services to meet the needs of the times as an electronics technology trading company dealing in electronics and electrical equipment and electronics components that use cutting-edge technologies and as a chemicals manufacturer producing environmentally friendly industrial chemicals. With an awareness that climate change and other sustainability issues are priority issues that the Company should increase its efforts to address through its corporate activities, the Company expressed its support for the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations.*1 The Company will continue to promote the disclosure of climate change-related information and contribute to creating a sustainable society.

*1The TCFD was established by the Financial Stability Board in 2015 in response to a request from the G20. The TCFD recommends businesses to evaluate the financial impact that climate-related risks and opportunities have on their management and disclose matters on governance, strategy, risk management, metrics and targets. (TCFD website : https://www.fsb-tcfd.org/)

1. Governance

The Company will form a Climate Change Subcommittee under the Risk Management Committee*2. The subcommittee will analyze and identify risks and opportunities related to climate change issues. The subcommittee will also develop initiatives, set metrics and targets, and manage progress in implementing the initiatives.
The Climate Change Subcommittee will monitor and manage plans and progress in their implementation at all departments and Hakuto Group companies, among other entities, which take concrete measures. The subcommittee will report to the Risk Management Committee, which is chaired by the Director responsible for risk. The committee will hold four meetings annually.
The Board of Directors will monitor and supervise overall initiatives and provide instructions based on the reports from the Risk Management Committee.

*2The committee responsible for overseeing risk management within the Group

2. Strategy

The Company has performed a series of scenario analyses for the short term (up to 2025), medium term (up to 2030), and long term (up to 2050) to assess the impact of climate change risks and opportunities on its major business operations in Japan.
During the scenario analyses, the Company has referred to socio-economic scenarios, particularly those assuming a 1.5℃ and a 4℃ increase in average temperature. The analyses considered changes resulting from the transition to a low-carbon economy*3 and physical changes caused by climate change*4. Based on the analyses, the Company has identified potential risks and opportunities and examined the countermeasures that it can take.
In the analysis process, the Company interviewed personnel in each department and qualitatively assessed risks and opportunities in about 60 socio-economic scenarios. The risks and opportunities were categorized into minor, medium, and major.
The Company assessed transition risks and opportunities based on the 1.5℃ scenario and assessed physical risks and opportunities on the 4℃ scenario. The main risks and opportunities that may have a medium or major impact on the Company’s management and business in the medium to long term (up to 2030 and 2050, respectively) are as described below.

*3Changes in policies, laws and regulations, and requests to markets and companies for a transition to a low-carbon economy
*4Acute natural phenomena (droughts, increasing storms and floods, etc.) and chronic phenomena (average temperature increases, sea level rises, etc.) caused by climate change

Key references

Transition	1.5℃ scenario：IEA "Net Zero Emissions by 2050 Scenario(NZE)" *If no scenarios equivalent to the 1.5℃ scenario are available, less-than-2℃ scenarios (scenarios similar to the 1.5℃ scenario such as the IEA’s Sustainable Development Scenario (SDS)) are used.
Physical	4℃ scenario: IPCC "RCP8.5"

Socioeconomic Scenario			Risks and Opportunities	Proposed Solution
Transition	Policy, law	Application of carbon tax	[Risk] The application of carbon tax to the Group's operations	Quantification and reduction of Scopes 1, 2, and 3 emissions Monitoring business partners' climate change responses Monitoring related regulations and technologies
		Application of carbon tax	[Risk] Increasing costs at business partners (which will be passed on to purchase, procurement, and delivery costs at the Group) Responses to import and export regulations and the application of carbon tax
		Reduction in GHG emissions from facilities and equipment	[Opportunities] Rising demand for products and services that will contribute to increasing ZEB buildings Increasing demand for products related to natural and “green” refrigerant equipment due to the installation of more of these types of equipment	Quantification and reduction of Scopes 1, 2, and 3 emissions Monitoring related regulations and technologies
		Requests for reducing carbon emissions, power-saving, and space-saving	[Opportunities] Growing demand for products and equipment for corporate use and household use Expanding demand for products and equipment that will help reduce carbon emissions and improve efficiency in the manufacturing process	Monitoring related technologies and products
	Technology	Popularization of EVs and FCVs	[Opportunities] Increasing demand for related products and equipment and manufacturing equipment	Monitoring related technologies and products
	Market	Reduction in existing transactions related to petroleum refineries	[Risk] Declining demand for related products [Opportunities] Rising demand for biofuels and products related to waste plastic recycling technology	Monitoring related technologies and products
	Reputation	Mitigation of climate change	[Risk] Decrease and suspension of transactions in the event of inadequate responses to requests for reducing carbon emissions Decrease in corporate value and difficulty in recruiting new employees, particularly young employees, due to insufficient disclosure [Opportunities] Enhancing corporate value by disclosing information appropriately Consistent recruitment of human resources in the medium to long term	Taking specific measures, controlling progress Disclosing information in a timely and appropriate manner
Physical	Acute	Droughts	[Risk] Rising prices of raw materials and products and difficulty in procuring them due to restrictions on water consumption at suppliers	Determining water risks in the entire supply chain
Physical	Acute	Increasing frequency and severity of storms and floods	[Risk] Disasters affecting the Group’s business sites, solar power generation facilities, suppliers, and logistics centers [Opportunities] Helping customers maintain their business continuity by replacing and repairing their products and equipment	Determining storm and flood risks in the entire supply chain

3. Risk Management

The Climate Change Subcommittee will analyze and identify risks and opportunities associated with climate change and will then report its findings to the Risk Management Committee.
The Risk Management Committee will review the reports to determine the order of priority and integrate the identified risks and opportunities into the risk management plan*5. Additionally, the committee will report the status of risk management to the Board of Directors and make recommendations.

*5A plan for handling and monitoring major risk events that management should manage

4. Metrics and Targets

The Company considers climate change to be the most significant environmental concern. The Company will set quantitative greenhouse gas (CO₂) emissions reduction goals aligned with the 1.5℃ Paris Agreement target and take action to reduce emissions.
The Company’s actual GHG emissions are as shown below.

(Reference) Actual GHG emissions

Items	FY2021	FY2022 (tentative)
Scope1	580.65 t-CO₂	555.6 t-CO₂
Scope2	612.68 t-CO₂	554.5 t-CO₂
Scope3	―	―

Non-consolidated figures