Initiatives Against Climate Change Risk
(Disclosure of information in line with TCFD recommendations)

We recognize that responding to environmental issues, including climate change, is one of our most important management issues. One of the basic policies of our long-term vision is to “Strengthen measures to mitigate the burden on the environment," and starting in FY5/21, the first year of our fifth medium-term management plan, we began working on achieving the Paris Agreement's 1.5°C target*1. Activities related to climate change undertaken since FY5/21 are as follows:

• April 2022:Expressed support for the TCFD*2
• April 2022:Received environmental information disclosure requests from the CDP*3 and started preparing responses
• June 2022:Committed to obtaining certification for greenhouse gas reduction targets within two years for the SBT initiative*4
• August 2022:Joined the Japan Climate Initiative (JCI*5) by supporting their declaration of “Joining the front line of the global push for decarbonization from Japan"
  >Learn more about our efforts here.
• December 2022:Obtained a “B-" score from CDP regarding climate change, in which climate change information disclosure activities conducted in 2022 are assessed
  >[CDP Evaluation Results]
• January 2023:Submitted an application for SBT certification to the SBT initiative
• April 2023:Posted the “Global Warming Action Declaration" on the website of The Japan Chamber of Commerce and Industry
  >See here for details.
• July 2023:Submitted answers to CDP questions
• August 2023:Described climate change-related efforts and results in the annual securities report

From this fiscal year onward, we will continue to disclose information in line with the TCFD recommendations shown below, improve the accuracy of said information, and strengthen our efforts to reduce CO₂ emissions.

Information disclosure items in line with TCFD recommendations

Governance	Organizational governance of climate-related risks and opportunities
Strategy	Actual and potential impacts of climate change risks and opportunities on the organization's business, strategies, and financial plans
Risk management	How the organization identifies, assesses, and manages climate-related risks
Metrics and targets	Metrics and targets used to assess and manage climate-related risks and opportunities

• *1: At the 2015 United Nations Climate Change Conference (COP21), held in Paris, France in December 2015, about 200 countries worldwide agreed to an international framework to combat global warming from 2020 onward. The international agreement is aimed at keeping the global average temperature increase well below 2°C above pre-industrial levels, pursuing efforts to limit the increase to 1.5°C.
• *2: TCFD refers to the “Task Force on Climate-related Financial Disclosures," which was established under the chairmanship of Michael Bloomberg with the goal of examining how to disclose climate-related information and how financial institutions should respond. Recommendations are made regarding the items and content of the climate change-related information to be disclosed.
• *3: A project in which institutional investors work together to request that companies disclose their climate change strategies and specifics regarding greenhouse gas emissions. When first established in 2000, the official name was the “Carbon Disclosure Project." However, the abbreviation, CDP, is now their official name, as the issues they cover are no longer limited to carbon. Since the project began, yearly questionnaires have been sent to companies in major countries with the highest market capitalization, and every year the response rate from companies has been increasing. The project has been active in Japan since 2005, and until 2021, the project only targeted the top 500 Japanese companies. However, from 2022, the target has been expanded to include all those listed on the Prime Market of the Tokyo Stock Exchange (approx. 1,840 companies).
• *4: SBTi is a joint initiative by the WWF, CDP, World Resources Institute (WRI), and the United Nations Global Compact. Companies are encouraged to set reduction targets consistent with scientific knowledge toward the goal of limiting the increase in global average temperature due to climate change to 1.5°C above pre-industrial levels.
• JCI (https://japanclimate.org/), established in July 2018, is a network committed to strengthening communication and exchange of strategies and solutions among various entities other than the national government, including companies, local governments, and NGOs that are actively engaged in climate change countermeasures.

“Governance”

In order to promote sustainability management across the entire Group, we have established a Sustainability Promotion Committee, chaired by the President, that deliberates and makes decisions regarding specific initiatives, such as setting targets for environmental issues, including climate change, and confirming the level of achievement for targets. The “Planning Headquarters," acting as a subordinate organization under the committee, then works to realize those decisions under the supervision of the Director in charge of the Planning Headquarters.
The Board of Directors receives reports on environmental issues deliberated and resolved by the Sustainability Promotion Committee, and then deliberates and supervises the E∙J Group's response policies, action plans, etc., regarding environmental issues.
In addition to chairing the Group Management Committee, the President and Representative Director also chairs the E∙J Holdings Management Committee, an advisory committee under his direct control. He bears ultimate responsibility for management decisions related to environmental issues.

Strategy

Since our company operates in a single segment, that of the comprehensive construction consultancy business (specialized technical service), we have conducted scenario analyses for all Group companies, identifying and assessing risks and opportunities and gaining an understanding of the medium- to long-term impact of climate related issues on business.

Scenario analysis

• The time axis of the analysis covers the medium- to long-term; from 2030, the final year of our long-term vision, up to 2050, the target year for carbon neutrality.
• In the analysis, the scenarios shown below were adopted to identify and qualitatively evaluate the financial impact of the risks and opportunities associated with the transition of policies and market trends, as well as the physical risks and opportunities arising from physical changes, such as those caused by rising water levels and natural disasters due to global warming. The main scenarios adopted are as follows:
  [Transition scenarios]
  Scenarios formulated by the International Energy Agency (IEA) that limit temperature increases at the end of the century to 1.5°C or less compared to pre-industrial levels (SDS and NZE)
  [Physical scenarios]
  Scenarios formulated by the Intergovernmental Panel on Climate Change (IPCC) in which the increase in temperature exceeds 4°C at the end of the century compared to pre-industrial levels
• Assumptions for each scenario were set based on future climate forecasts published by international organizations and various data provided by the Japanese government.

Evaluation on business impact

• Business impact (risk and opportunity) evaluation results based on the scenario analyses are as follows.
• The degree of impact on 2030 operating income was broadly evaluated in three stages: Small, Medium, and Large.
• Moving forward, we plan to improve the precision of examinations and expand into a quantitative financial analysis.

Transition risks for 1.5°C scenarios

*Areas shaded in gray indicate opportunities, those not shaded indicate risks

Physical risks for 4°C scenarios

*Areas shaded in gray indicate opportunities, those not shaded indicate risks

Responses to climate-related risks and opportunities

• Of the risks and opportunities identified by the evaluation on business impact, examples of currently conceivable countermeasures for those opportunities judged to have a large impact are shown below.
• We will promote such measures based on our long-term vision, making sure to seize opportunities and contribute to the development of a sustainable world that leads to the achievement of the SDGs.

“Risk Management”

We position climate-related issues as risks that have a significant impact on management. In order to identify and evaluate the impact of climate change risks, the Planning Headquarters conducts surveys and monitoring related to TCFD, and the Sustainability Promotion Committee appropriately manages identified climate change risks and countermeasures. The details of such are reported to the Group Management Committee and Board of Directors.

“Metrics and Targets”

CO₂ emission reduction targets

In order to obtain SBT certification, taking into consideration consistency with the targets required by SBTi, targets were reviewed after discussion by the Sustainability Promotion Committee and the Board of Directors in FY5/23. Regarding CO₂ emissions for FY5/22, due to the scrutiny of the SBT certification application, it was necessary to partially revise some of the actual values for scope 3. Based on the revised CO₂ emissions for FY5/22, we have set CO₂ reduction targets for 2030, which is the final year of our long-term vision “E∙J-Vision 2030," and will continue to reduce CO₂ in our business activities. The prerequisites for the setting of targets are as follows:

• Reduction targets were set with the aim of achieving the SBT level of keeping the temperature increase at the end of the 21st century to within 1.5°C.
• The reference year for achieving targets is FY5/22.
• Calculation of CO₂ emissions is based on the “Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain" (Ver. 2.4), prepared by Japan's Ministry of the Environment.

Scope 1 (direct emissions from fuel consumption) and Scope 2 (indirect emissions from energy consumption, such as electricity use)： Reduce CO2 emissions by 42% by FY2030

Scope 3 (supply chain emissions)： Category 1 (purchased goods)：Establish engagement targets with major suppliers by FY2027 (within five years after submission of CO2 reduction targets) Category 6 (business trips) and Category 7 (employee commuting)：Reduce CO2 emissions by 25% by FY2030

Presently, the reduction methods for each target are as follows:

Scope 1 (direct emissions from fuel consumption)：All gasoline vehicles owned are being replaced with HVs and EVs

Scope 2 (indirect emissions from energy consumption, such as electricity use)：All electricity contracts are being changed to renewable energy

Scope 3 (supply chain emissions)： Category 1 (purchased goods):Provide major suppliers with information on climate change and require them to set CO2 reduction targets. Category 6 (business trips) and Category 7 (employee commuting):Online meetings and telework are being taken advantage of to reduce the amount of travel

Classification*	Targets for FY2030 CO2 Emissions (Reduction Rate from Reference Value)	Metrics
		Reference Value (FY5/22)
Scope 1 (direct emissions from fuel consumption)	1,609（-42%)	2,774
Scope 2 (indirect emissions from energy consumption, such as electricity use)
Scope 3 (supply chain emissions)	(Category 1) Engagement targets with major suppliers	17,427
	(Categories 6, 7) 1,714（-25%)	2,285
	(Categories 2–5) No numerical targets	2,038
Total CO2 emissions	No numerical targets	24,524

* Scope 1: Direct CO₂ emissions from fuel consumption
  Scope 2: Indirect CO₂ emissions from energy consumption, such as electricity use
  Scope 3
    Category 1: Indirect emissions from purchased products and services (supply chain emissions)
    Category 2: Indirect emissions associated with the construction and manufacturing of the company's capital goods
    Category 3: Indirect emissions from fuel- and energy-related activities not included in scopes 1 and 2
    Category 4: Indirect emissions from transport and delivery (upstream)
    Category 5: Indirect emissions associated with the transportation and treatment of waste generated from business
    Category 6: Indirect emissions associated with employee business travel
    Category 7: Indirect emissions associated with employee commuting

Updated 9/4/2023

The following is a report of the results regarding CO₂ emissions for FY5/23.
In FY5/23, we completed replacement of our fleet of 498 vehicles, replacements have been made for 112 hybrid vehicles (HV) and 1 electric vehicle (EV). Regarding electric power, we renewed our contract for 1.9 million kwh of electricity from renewable energy sources. As a result, scope 1 and 2 CO₂ emissions have been reduced by 32% compared to the reference year.
CO₂ emissions from scope 3 categories 6 and 7 (business trips and employee commuting) increased by 47% from the reference year. This is likely due to an increase in travel (category 6) due to post-pandemic corporate activities. Category 2 CO₂ emissions doubled from the reference year, but this is due to the renovation of buildings owned by subsidiaries and is temporary.
We will continue our efforts to reduce CO₂ emissions.