The Board of Directors’ system for monitoring climate-related risks and opportunities and management’s role in assessing and managing such risks and opportunities

The Company’s response to climate change and other environmental issues is reported twice a year at Board of Directors’ meetings and discussions are held based on the details of these reports. Ultimately, it is the responsibility of the Board of Directors to assess, respond to, and disclose details of the Company’s risks and opportunities related to climate change.
With the general manager of the Corporate Planning Division, who also serves as a director, in charge and the Corporate Management Department as the responsible division, the Company manages and promotes organization-wide measures against climate change, including the TCFD recommendations, and other environmental issues as well as compiling important Companywide policies and measures, which are reported and proposed to the Board of Directors for discussion at Board meetings. With regard to business-specific strategies, etc., on climate change and other environmental issues, the general managers of the respective sales departments, in cooperation with the general manager of the Corporate Planning Division and the Corporate Management Department, report summaries of such strategies, etc., to the Board of Directors, which are then assessed and discussed at Board meetings.

Moreover, please refer to our medium-term management plan Chori Innovation Plan 2025 which was disclosed on April 28, 2023, for information on our overall sustainability strategy and initiatives, including the Task Force on Climate-related Financial Disclosures (TCFD).

Short-, medium-, and long-term climate-related risks and opportunities identified by the organization and the impact thereof on the organization’s business, strategies, and financial plan

Chori conducts scenario analyses to assess the transition risks and physical risks of climate change. In fiscal 2021, we analyzed the 2℃ and 4℃ scenarios, and in fiscal 2022, we reanalyzed and examined the 1.5℃ and 4℃ scenarios. Under the 1.5℃ scenario, similar to the 2℃ scenario, the increase in physical risks is expected to be moderate, and we expect an increasing number of opportunities to develop and expand sales of environment-friendly products. Meanwhile, under the 4℃ scenario, physical risks, such as unseasonable weather, will likely increase due to the lack of progress in climate change measures.

Based on the above assumptions and background, we conducted a scenario analysis for the period up to 2030. On the basis of these results, we identified the following risks and opportunities related to climate change and determined their impact on our business and the measures we will take in response.

The process for identifying, assessing, and managing climate-related risks and the approach to integrating this process into the organization’s overall risk management

Indicators used to assess climate-related risks and opportunities in accordance with the organization’s strategies and risk management processes, targets used by the organization to manage these risks and opportunities, and progress toward the achievement of these targets

The Group has been compiling data on the actual amount of GHG emissions produced by its business activities since fiscal 2020 and is aiming to reduce GHG emissions (Scope 1 and Scope 2) and achieve carbon neutrality by 2050. We will also look to reduce Scope 3 emissions in order to reduce GHG emissions throughout our entire supply chain.

In regard to our GHG emissions reduction targets, we are considering material issues in the Sustainability Promotion Preparatory Committee. This body was established in July 2023 as a preparatory committee, with a view to establishing a specialized committee to promote sustainability in the future.