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Disclosure Regarding Recommendations of the TCFD

We announced our support for the recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD) in June 2019 and have been performing scenario analysis since then. Following the Glasgow Agreement at COP26 in November 2021, we have conducted scenario analysis using 1.5°C and 4°C as the CO2 reduction scenarios applicable to us.

* Task Force on Climate-related Financial Disclosures: Established in 2015 by the Financial Stability Board (FSB) to promote the disclosure of climate-related financial information. In 2017, for the appropriate investment decisions of investors, the TCFD published recommendations to promote disclosure of information on the financial impacts of climate-related risks and opportunities.

Setting Scenarios

 We focused our scenarios, evaluation and analysis on the business risks and opportunities that climate change will pose to the Group by the year 2050. We identified events that will materially impact climate-related risks and opportunities, based on climate-related, long-term scenarios founded on science, such as the World Energy Outlook (WEO) and Energy Technology Perspectives (ETP) published by the IEA and The Fifth Assessment Report (AR5) published by the IPCC. Then we created two climate-related scenarios, 1.5°C and 4°C, that will have impact on the business operations of the Group, along with appropriate carbon price assumptions for the 2030s using the IEA World Energy Outlook 2021 as a reference.
 To follow up, we analyzed the business impacts in every scenario by size and time horizon (short, medium and long).

Process of Selecting Material Climate-related Risks and Opportunities and Scenarios

Conduct a benchmark survey to identify climate-related risks and opportunities for the cement industry and identify relevant drivers
Determine the causal relationships between climate-related drivers, interim outcomes and implications. Then identify key drivers
Create climate-related scenarios for each key driver, referring to the published climate-related long-term scenarios that were developed based on scientific grounds
Evaluate the anticipated business impacts in each scenario
Review responses to the business impacts, which are, in our view, positively or negatively significant in our evaluation
  1.5°C scenario (consistent with the Paris Agreement) 4°C scenario (ineffective response to climate change)
Reference Scenarios IEA net-zero Emissions Scenario (NZE)
Carbon Emissions Pathway: RCP 2.6
IEA Stated Policies Scenario (STEPS)
Carbon Emissions Pathway: RCP 8.5
Assumed Carbon Price US$130 (approx. 17,550 yen)/tonne-CO2 US$30 (approx. 4,050 yen)/tonne-CO2

Scenario Overview

Business Impact

  1.5°C Scenario 4°C Scenario
Scenario Overview Government and industry are working together toward carbon neutrality. Development consistent with the industry’s transition to carbon neutrality (CO2 capture, utilization and storage technologies) is progressing. The effects of climate change are being addressed to a certain extent through national resilience policies and other measures. There is a mismatch between our efforts towards carbon neutrality and the regulations applicable to the cement industry, which would put us at a competitive disadvantage. Profits from the development of the innovative technologies that we promote are limited. In addition, the effects of climate change are becoming more severe, such as frequent extreme climatic events.
Business Impact
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