Information Disclosure Based on the TCFD Recommendations

Information Disclosure Based on the TCFD Recommendations

TCFD stands for the Task Force on Climate-related Financial Disclosures. The TCFD recommends that companies grasp and disclose information on what kinds of impacts (risks and opportunities) climate change will have on their financial performance and condition.

TechMatrix recognizes that preserving and conserving the global environment is the foundation of the sustainable development and growth of the Group’s management. Based on this awareness, we have positioned measures to address climate change as one of our important management issues. For this reason, we are analyzing the impacts of climate change on the Company’s business in line with the TCFD recommendations, identifying risks and opportunities, and implementing response measures. Concurrently, we are disclosing relevant information based on the following framework:

Governance

Board of Directors’ Oversight System for Response to Climate Change

Roles of Top Management

TechMatrix has appointed the President and CEO as the Officer responsible for climate-related problems in the Board of Directors. The President and CEO also serves as the Chair of the Sustainability Committee.
The President and CEO bears ultimate responsibility for assessing and managing climate-related risks and opportunities, developing strategies, and implementing specific measures.

Strategy

Basic policy on climate change

Climate change is a global issue that will cause significant changes to the global environment, which is the foundation for corporate business activities.
TechMatrix believes that fulfilling a company’s roles and responsibilities regarding climate change is an important management issue. Based on this belief, we have developed management strategies to implement our Medium-Term Management Plan “BEYOND THE NEW NORMAL,”* as well as plans for climate change responses that are linked to specific business activities. Concurrently, we are advancing various measures to address the expected risks and opportunities.

Time Horizons for Climate Change-Related Risks and Opportunities (Short Term, Medium Term and Long Term)

Impacts of Climate-related Risks and Opportunities on the Organization’s Businesses, Strategy, and Financial Planning

Identification Process for Climate-Related Risks and Opportunities

* Please see “Identification and Assessment Processes for Climate-Related Risks” under “Risk Management.”

Risks and Opportunities Identified (Summary)

Risks and Opportunities Identified (Details)

1. Physical risks

【Acute】

(1) Risks associated with product (hardware) procurement（Information Infrastructure Business）

Purchasing from overseas manufacturers, including Palo Alto Networks, Inc. (U.S.A.), accounts for around 60% of the purchasing amount for products carried by the Group. If manufacturing is halted or transportation networks are disrupted due to factors such as natural disasters caused by climate change, purchasing of these core products may be hindered. (There is a similar risk associated with manufacturers in Japan.)

In addition, if carbon pricing is introduced, the Group’s procurement costs may rise due to rising raw material costs. If this procurement risk materializes, it could have a material impact on the Group’s business, financial performance and financial condition.

(2) Risks associated with data centers （Information Infrastructure Business, Application Service Business）

The systems and cloud services provided by the Group play critical roles in the operations of customers. If a major disruption occurs at a data center due to abnormal weather caused by climate change, the Group may be subject to compensation claims for losses.

(3) Risks associated with the movement of employees（Information Infrastructure Business, Application Service Business）

The Group permanently assigns many employees to customers’ sites, particularly at subsidiaries. In addition, it sometimes performs work after visiting customers and business partners across the Group. For this reason, if employee movement becomes difficult due to the suspension of public transportation service as abnormal weather becomes more frequent, fewer work days may lead to a decrease in net sales. Moreover, due to customer movement difficulties, the number of work days may decrease as a result of changes in plans, project requirements and other factors, leading to a decrease in net sales. However, because remote work has become so common among customers and business partners, we believe that even if movement is restricted, the impact on our actual work will be limited.

Risk Management

Identification and Assessment Processes for Climate-Related Risks

The Group conducts identification and assessment of climate-related risks that have a crucial impact on financial performance and strategy under the leadership of the Internal Control Office, which leads the Company’s risk management, and the Corporate Planning Dept., which conducts environmental data aggregation, planning, and external disclosure. Following approval by the Group’s Chief Officer (President and CEO), this risk information is shared with various departments and companies.
Specifically, risks are broadly classified as transition risks (policy and legal, technology, market, reputation), which require adaptation to climate change, and physical risks (acute, chronic), which require responses to the physical effects of climate change. For these items, the Group considers identification, assessment and related tasks using the same methodology as the processes described above.
Furthermore, during the risk identification and assessment process, risks determined to have a material impact based on the Company’s unique risk management methodology are identified as material risks.

Risk Management Process

At the Company, the Chief Officer consults with the Executive Committee (consisting of Executive Officers and Division Managers) on the assessment of climate risks, and the Executive Committee reports its assessment of material risks and risk prevention measures. The Corporate Planning Dept., which serves as the Executive Committee’s secretariat, works with the Internal Control Office to identify and assess climate-related risks in collaboration with each division, headquarters, department, branch and sales office, and places those matters before the Executive Committee. The Executive Committee discusses the climate-related risks placed before it, and material risks are assessed and monitored.

The Chief Officer reports on climate-related risks that could have a material impact on financial performance or strategy and risk prevention measures, as important issues that should be placed on the Board of Directors’ agenda.
The Executive Committee shares the identified risks with various departments and companies, and each department and company considers specific individual response measures. The Executive Committee collects and monitors data on progress with these specific measures and, after verification (at least once a year), reflects progress in risk management activities for the following fiscal year.

Metrics and Targets

Targets Used to Manage Climate-Related Risks and Opportunities and Results Versus Targets

Greenhouse Gas Emissions Target

Net Zero Target

●Target for electricity from renewable energy sources
The Company has set a target of switching 50% of its electricity consumption at business sites (Head Office, branch and sales offices) to electricity generated from renewable energy sources by FY2030. We are working to transition to carbon-free energy.

●Details on plans for emission reduction activities
The Company is conducting CO2 emissions reduction activities at its business sites, such as upgrading to high-efficiency air conditioning systems, adjusting air conditioning temperature settings to support business-casual attire associated with the Cool Biz and Warm Biz campaigns, and curtailing energy consumption by improving operating efficiency.

●Establishing ways to facilitate emissions reduction activities
Greenhouse gas emissions from the Company’s business activities are attributable to electricity and gas used at business sites. For this reason, we will switch electricity used at business sites to renewable energy and set aside the funds necessary to purchase J-Credits, Green Energy Certificates and Non-Fossil Certificates, as well as engage in steady and continuous activities to achieve carbon neutrality.

●Products and services that can help to reduce third-party emissions (Information Infrastructure Business, Application Service Business)
In the security field, the introduction of the Group’s cloud-based security will eliminate the need for third parties to own and administer server devices and facilities, thereby reducing their electricity consumption and minimizing greenhouse gas emissions. In the CRM field, similar benefits can be expected from the introduction of the Company’s cloud-based CRM system. Furthermore, by introducing the Group’s cloud services, third parties in the healthcare field can significantly improve their operational efficiency by utilizing a variety of services. These services include medical imaging management, medical institution support, and AI-powered diagnostic assistance. Reduced operating hours as a result of streamlined operations will result in lower energy consumption and greenhouse gas emissions from the use of facilities.
The Group strives to make the amount of its contribution transparent by considering how it can assist third parties, including customers, in reducing their greenhouse gas emissions through the use of the aforementioned products and services. The Group is working to increase its business opportunities through these efforts. *1 The scope of calculation for the figures above is TechMatrix Corporation on a standalone basis.
*2 Scope 2 emissions are calculated based on office activities.
*3 For Scope 3 accounting methodologies, the Company has referred to the Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain.
*4 Some data items for which data collection is difficult are estimated based on prior performance and other criteria. For this reason, future calculations may be revised, including changes to previously aggregated results.
*5 Currently, data items for which a reasonable computation method cannot be defined are excluded from calculations.
*6 The Company will continually review how to appropriately manage and disclose emissions in each category, taking into account factors such as international discussions.