Climate Action

Initiatives to combat climate change (information disclosure based on TCFD recommendations)

The OYO Group (hereinafter "our Group") recognizes that addressing environmental issues, including climate change and the exacerbation of natural disasters due to climate change, as one of the most important management challenges.
Our Group expressed its support for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) of the Financial Stability Board (FSB) in December 2019. We will disclose significant financial information related to climate change in line with the TCFD recommendations.

Governance (System)

Our sustainability management system is as follows:
The "Sustainability Management Committee" discusses policies and measures related to sustainability efforts, including actions against climate change (including TCFD compliance), deliberates on things such as risk management in relation to ESG management, and reports to the Board of Directors at least twice a year.
In 2022, to address TCFD compliance, we organized two sub-committees under the Sustainability Management Committee: the "Sustainability Consideration Subcommittee 2022" and the "Subcommittee for Consideration of Materiality-Related Commercialization" to examine climate-related risks and opportunities. Table 1 summarizes the main roles of each organization and their achievements in 2022.

Table-1 The role of the Sustainability Management System and its achievements in 2022

Name	Main Roles	Achievements in 2022
Sustainability Management Committee	Discusses policies and measures related to sustainability efforts, including actions against climate change (including TCFD compliance) and deliberates on things such as the risk management in relation to ESG management and reports to the Board of Directors at least twice a year.	Committee Chairman: Executive in Charge of Sustainability (Chief of Corporate planning headquarters) Committee Member: 12 in attendance including Business Managers and General Managers Number of times held: 6 Discussion topics: Environmental policy, Carbon Neutral Declaration Recommendations made by the Sustainability Consideration Subcommittee 2022 and the Subcommittee for Consideration of Materiality-Related Commercialization
Sustainability Consideration Subcommittee 2022	Examined climate change-related risks and made recommendations to the Sustainability Management Committee	Committee Chairman:Business Manager class (Manager of the Domestic Group Office from Corporate Planning Headquarters) Committee Member: 8 in attendance including General managers and Section managers Number of times held: 9 Discussion topics: Examined the scenarios of 1.5℃, 2℃, 4℃ for years 2030 and 2050 The environment our Group would be in including: Risks and responses Financial impacts Indicators / Targets (KPI / KGI)
Subcommittee for Consideration of Materiality-Related Commercialization	Examined specific initiatives (climate change-related opportunities) regarding Materiality below and made recommendations to the Sustainability Management Committee 1)Development of smart social infrastructure 2)Mitigation of natural disaster damage and development of resilient community 3)Creation of a decarbonized society and a sustainable recycling-oriented society 4)Realization of a society in harmony with nature	Committee Chairman: Executive Officer (Division Manager) Committee Member: Business managers from the Domestic Group Number of times held: 8 Discussion topics: As below The identification of opportunities for each Materiality The vision, what our group aims to be by 2030 Commitment Indicators / Targets (KPI / KGI)
The Sustainability Management Committee	Sustainability-related policy formulation, promotion, and disclosure of information Coordination between departments on monitoring indicators, gathering / organization of information. Sharing best practices of SDGs with the Group and ensuring its continuity Improving employee awareness of SDGs and implementing educational training	Examining risks and opportunities related to climate change Proposing ideas and running the "Sustainability Management Committee" "Sustainability Consideration Subcommittee 2022," and "Subcommittee for Consideration of Materiality-Related Commercialization" Organizing the "Sustainable Awards" Soliciting and disseminating excellent sustainability initiatives with the Group

Strategy (philosophy)

Our Group has simulated and considered the risks and opportunities related to climate change in three different scenarios outlined in Table 2 for 2030 and 2050, as well as the impact it could cause on our Group. We have determined that for both risks and opportunities, the most significant effects will occur in 2030 for "Transition Risks" with the 1.5°C scenario and in 2050 for "Physical Risks" with the 4°C scenario.

Table-2 Examined Scenarios

Scenarios	Overview
1.5℃ Scenario	This scenario has been made under the assumption of a world where strong policies and regulations have been put in place to achieve a decarbonized society, represented by the IPCC's RCP1.9 scenario, leading to carbon neutrality by 2050.
2℃ Scenario	This scenario has been made under the assumption of a world where policies and regulations have been implemented to achieve a decarbonized society, as represented by the IPCC's RCP2.6 scenario, resulting in carbon neutrality by the late 21st century.
4℃ Scenario	This scenario has been made under the assumption of a world where regulations for addressing climate change do not progress significantly, as represented by the IPCC's RCP8.5 scenario, leading to frequent climate-related disasters.

Defining the period and impact levels when considering climate change-related risks and opportunities

The timing and degree of financial impact are as shown in Tables 3 and 4 when considering these climate change-related risks and opportunities.

Table-3 Period of time that would be affected

Short term	Less than 3 years
Mid term	3 to 10 years (including 2030)
Long term	Over 10 years (including 2050)

Table-4 The extent of financial impact

Extent of influence	Definition	Sum
Extremely Significant	Enough impact to stop / downsize / expand business operations	More than 1 billion yen
Fairly Significant	Impact an area of business operations	100 million yen to 1 billion yen
Relatively Insignificant	Almost no impact	Less than 100 million yen

Risks and responses to business activities based on climate change-related scenarios

We examined and summarized the results for climate change-related risks assumed under the 1.5°C and 4°C scenarios, including risks and primary responses as shown in Table 5. As a result, we have determined that there will most likely be no "significant and unmanageable risks." For the potential financial impact also indicated in Table 5, however, we have judged it will be "Extremely significant." For the "Changes in business style for GHG (greenhouse gas) reduction," we assume that it could be addressed through the adoption of environmentally friendly equipment and technologies.

Opportunities and responses for business activities based on climate change-related scenarios

Our business activities are deeply involved in sustainability and will be contributing to the mitigation of climate change-related risks. Based on climate change-related scenarios, we have conducted assessments of business opportunities and services (initiatives) as shown in Table 6.

Table-5 Risks related to climate change and the potential of financial impacts and their responses

Type		Expected Events	Risks	Potential Financial Impact	Period of Impact / Influence	Key Responses
1.5Scenario:Transition risks	Policy and Legal	Introduction of carbon tax (carbon pricing)	Increased energy procurement costs due to the internalization of carbon pricing, etc. Increased costs from carbon taxation and carbon credit procurement.	Fairly Significant	Short to Long	Promoting the use of energy derived from non-fossil fuels, such as renewable energy procurement
	Technology	Changes in business style for GHG (greenhouse gas) reduction	Limitations on conventional operations that use fossil fuels (such as borehole surveys).	Extremely Significant	Short to Long	Introduction of facilities and technologies with low environmental impact Transition of vehicles to electric (EV) and the installation of charging stations Replacement of home appliances with energy-efficient alternatives Electrification of drilling machines Replacement of fossil fuels with synthetic fuels Carbon footprint management Support for renewable energy projects, activities to promote and achieve carbon neutrality
	Market and Reputation	Growth in demand for renewable energy	Delays in structural reforms in transitioning to decarbonization. Declining business performance due to decreased societal demand. Increased costs in procuring renewable energy.	Fairly Significant	Medium to Long
4℃ Scenario:Physical risks	Acute	Increase in floods and landslide disasters due to abnormal weather	Business continuity disruptions, telecommunication system failures, opportunity losses from office function disruption and staff casualties resulting from disasters. Increased costs for recovery and disaster management.	Relatively Insignificant	Short to Long	Evaluation of relocation options for offices / branches to address disasters such as floods Strengthening of Business Continuity Planning (BCP)
	Chronic	Environmental changes due to mean temperature increase and the occurrence of heat waves	Increased electricity and water usage due to rising temperatures. Increased costs due to resource price hikes, such as water and energy.	Relatively Insignificant	Short to Long	Promoting the use of energy derived from non-fossil fuels

Table-6 Climate change related opportunities, potential financial impacts (contribution to the growth of revenue) and key services (initiatives)

Type		Expected Events	Opportunities and key services (initiatives)	Potential Financial Impact (contribution to the growth of revenue)	Period of time that would be affected
1.5℃ Scenario:Transition risks	Policy and Legal	Introduction of the carbon tax and carbon pricing	Increased demand for non-destructive surveys and maintenance services using low carbon emission geophysical exploration Automation and decarbonization of geological survey techniques	Extremely Significant	Medium to Long
	Technology	Changes in business style for GHG (greenhouse gas) reduction	Expansion of GHG (Greenhouse Gas) storage projects, forest management, GHG absorption by forest preservation and tree planting, and Carbon Offset Business	Extremely Significant	Medium to Long
	Services / Market	Growth in demand for renewable energy	Increased support for the transition to renewable energy as the primary power source Increased support for decentralized renewable energy initiatives, including site selection and provision of solutions for other energy sources such as wind, hydropower, geothermal developments Increased support for the establishment of regional circular symbiotic communities	Extremely Significant	Medium to Long
4℃ Scenario:Physical risks	Acute	Increase in floods and landslide disasters due to abnormal weather	Expansion of operational support for infrastructure maintenance and inspection services Expansion of measures to reduce damage from natural disasters and increased aid for disaster prevention / mitigation utilizing ecosystems Increased support to create a sustainable and resilient (resource circulating) society Increased support for companies' responses to natural disaster risks	Extremely Significant	Medium to Long
	Chronic	Environmental changes due to mean temperature increase and the occurrence of heat waves	Increased demand for environmental impact assessments due to the conservation and restoration of natural ecosystems and the ever changing environmental conditions Expansion of support for the coexistence of human activities and nature Increase in measures to combat specified alien species, chemical pollution and pest control Expansion of measures for the early detection of soil and groundwater contamination to prevent damages to health, and land utililization	Fairly Significant	Medium to Long

Risk management (system)

In 2022, we conducted impact assessments for climate change-related risks and opportunities specifically for the OYO Corporation. We plan to continue these impact assessments for both domestic and overseas Group companies in 2023 and 2024.
The assessment results will be consolidated by the Sustainability Management Department, and if there are risks and opportunities that are particularly important for the entire Group, they will be discussed and decided upon by the Sustainability Management Committee and, if necessary, presented to the Board of Directors for deliberation.

Indicators and Targets

Our Group plans to establish long-term environmental goals by considering medium and long-term indicators and targets. On top of this, short-term (approximately 3-year) indicators and goals will be specified and managed in a "(tentative) Environmental Action Plan".
Indicators related to climate change mitigation and adaptation will include the total amount of GHG emissions. We are also considering the specification and management of the indicators for GHG reduction contributions that will contribute to achieving a decarbonized society.

Initiatives to reduce GHGs

Medium to long-term GHG reduction goals

We have set a goal to achieve net-zero Scope 1 and 2 emissions by 2030 and carbon neutrality for Scope 1, 2, and 3 including the emissions from all suppliers involved in the Group's business by 2050 to keep global warming within 1.5°C ("Carbon Neutrality Declaration"). For more details, please refer to the Carbon Neutrality Declaration page.

Carbon Neutral Declaration

Tables 7 and 8 show the recent GHG emissions of OYO Corporation and its domestic Group companies.

Table-7 GHG Emissions (OYO Corporation alone) (unit: t-CO₂)

Type	2020	2021	2022
Scope1	513	486	451
Scope2	1,458	1,368	1,293
Scope3	6,533	6,182	12,482
Total	8,504	8,037	14,226

Table-8 GHG Emissions (Domestic Group companies) (unit: t-CO₂)

Type	2022
Scope1	959
Scope2	1,126
Scope3	11,986
Total	14,071

*Scope 3 for 2022: An increase due to business expansion, such as offshore wind power projects support services.

Third-Party Verification of GHG Emissions

Our Group recognizes the necessity of disclosing highly reliable data regarding GHG emissions (Scope 1, 2, 3) and is actively preparing for third-party verification to ensure its credibility.

CDP Climate Change Assessment Results

The international non-profit organization CDP assesses corporate efforts related to climate change and water on a global scale. The assessment is conducted on an eight-level scale that consists of A, A-, B, B-, C, C-, D, and D-. OYO Corporation received a rating of B- in the CDP Climate Change 2022 assessment.