Climate Change (Information Disclosure Based on TCFD Recommendations) | Environment

Method of disclosure of emissions calculation

Environmental initiatives began in FY2000 with activities to obtain and maintain ISO certification. However, in addition to energy saving activities in the Company as a measure to address increasingly severe global warming, we have made the transition to decarbonization activities throughout the entire value chain, and changed course toward activities in accordance with the Greenhouse Gas Protocol in support of TCFD since FY2022.

Due to the nature of being a trading company, the Company’s Scope 1 and 2 emissions could be considered to be relatively low for the size of the business. We recognize that it is our social responsibility to utilize our characteristics as a distribution trading company to promote decarbonization of the entire supply chain involving suppliers and buyers.

We have introduce a SaaS-type decarbonization calculation application as a “GBP App” for ascertaining the Company’s Scope 1, Scope 2 and Scope 3 emissions by category.

This is a partially customized version of the cloud service provided by Zeroboard, Inc., and enables determination of the total volume by having key locations and group companies worldwide input data, and the visualization of progress of decarbonization using monthly and yearly comparisons.

Along with this, we also aim to strengthen activities through collaboration by providing it to the Company’s supply chain for a charge or at no charge.

Environmental Management System

The chief operating officer responsible for climate change issues is the CEO, with the Sustainability Management Meeting as the managing body. The body was established in April 2023 and confirms policies, action plans and progress at least once per year. In addition, practical measures are carried out by the Environment Committee, which is made up of members from various departments, and meets four times per year to discuss policies and identify issues. The roles and composition of each body are shown in the diagram on the right.

Recognition of Risks and Opportunities

Climate change risks

*The table below can be scrolled left or right.

Type of Risk		Main Climate-Related Risks	Potential Impact on Business	Timeframe	Response
Transition	New regulations and policies	Carbon tax (carbon tax or emissions trading) and laws related to global warming	Increased costs due to introduction of carbon pricing (carbon tax or emissions trading) Increased costs associated with introduction of new policies aimed at reducing greenhouse gas emissions and strengthening of laws and regulations	Medium term Long term	Aiming to reduce total GHG emissions by 50% by fiscal 2030 and achieve carbon neutrality by fiscal 2050 through the introduction of energy-efficient equipment and upgrades Reduction in travel distance through optimization of delivery routes and reduce number of delivery vehicles through modal shift Passing on product prices
	Technologies	Transition to low GHG emissions technology	Reduced sales of machining equipment due to fewer automobile parts Decrease in sales due to insufficient proposals for decarbonization and energy-efficient products Increased development cost of environmentally friendly products	Medium term Long term	Enhanced awareness of technological trends and acquisition of knowledge of installed equipment Collaboration with supplier manufacturers and new product development
	Markets	Changes in customer consumption behavior	Decreased sales from loss of customers due to delay in addressing decarbonization Decreased sales of certain products due to customer avoidance of products derived from fossil fuels	Long term	Steady implementation of decarbonization and energy-saving initiatives Enhanced sales of environmentally friendly products
	Reputation	Decline in stakeholder trust due to inappropriate response	Reputational damage or loss of trust leading to reduced suppliers, lower sales, and stock price decline	Short term Medium term Long term	Steady implementation of decarbonization and energy-saving initiatives Timely and appropriate information disclosure in line with TCFD and other frameworks
Physical	Acute physical risks	Increased severity of weather events (storm and flood damage)	Sales decline and cost increase due to disruptions in social, information, and transportation infrastructure Damage to or loss of Company assets, including employees, buildings, facilities and equipment Sales reduction due to interruption of domestic and international supply chains	Short term Medium term Long term	Ensuring business continuity based on a business continuity plan (BCP) BCP assessments and strengthening of response measures with supplier manufacturers Diversification of risks by establishing multiple sales bases, suppliers and distribution bases Risk hedging through insurance and cost pass-through
Physical	Chronic physical Risks	Changing temperatures (atmospheric, freshwater and ocean)	Increase in energy costs and increased costs for measures to address work environments Decline in winter product sales Disposal of products and logistics materials	Medium term Long term	Introduction of renewable energy facilities such as high-efficiency air conditioners for the Company’s facilities Offering high value-added products and services, and passing on costs Reduction of product disposal rate and use of circular materials

Short term: 1–3 years; Medium term: 3–10 years; Long term: 10–30 years

Climate change opportunities

*The table below can be scrolled left or right.

Opportunity Type		Main Climate-related Opportunity Factors	Potential Impact on Business	Timeframe	Response
Opportunities	Resource efficiency	Use of more efficient production and distribution processes	Cost reduction through increased transport efficiency	Short term Medium term Long term	Achievement of optimal transport by calculating cost and distance between demand areas and logistics bases Reduction of number of delivery vehicles through modal shifts
	Energy sources	Use of supportive policy incentives and use of lower-emission sources of energy	Use of policy incentives such as energy-saving subsidies Green business expansion due to introduction of renewable energy	Short term Medium term Long term	Consulting about policy incentives such as energy-saving subsidies and selling energy-saving products Promotion of corporate PPA business
	Products and services	Development/expansion of low-emission goods and services	Increased revenue through expansion of sales opportunities for goods with low environmental impact Increased sales of summer products	Short term Medium term	Holding exhibitions such as the Doterai Ichi and Decarbonization Exhibitions Expansion of products covered in the Carbon Neutral Purchasing Guidebook New product development in collaboration with supplier manufacturers, reinforcement of PB product development Strengthening product sales through proposals addressing environmental issues
	Products and services	Development of climate adaptation, resilience and insurance risk solutions	Increased revenues due to sales expansion of disaster response and recovery-related products	Short term Medium term	Public relations activities with sales partners and users, and organization of theme-based exhibitions Providing disaster prevention-related products and services, such as the one-stop BCP-related service BCP.ERS
	Markets	Access to new markets	Increased revenues through use of new technologies and expansion of product demand related to transition to a decarbonized economy, including legal revisions	Short term Medium term	Expansion of product offerings related to decarbonization, heatstroke prevention, and environmental improvement, and strengthening of solution proposals Expansion of the Green Ball Project and promotion of the PPA model business Development of sales channels for new markets utilizing the manufacturing site problem-solving platform Genbato
Physical	Resilience	Increased severity of weather events (storm and flood damage)	Increased revenues due to sales expansion of disaster response and recovery-related products	Short term Medium term Long term	Providing ZEH-related equipment and disaster prevention products and services Expanding product supply networks capable of responding promptly to disaster recovery demand

Short term: 1–3 years; Medium term: 3–10 years; Long term: 10–30 years
Emissions records are listed in Non-Financial Highlights on pages 74 to 75.

Carbon Neutral Roadmap

Due to resources, FY2020 is used as the base year for determining the Company’s emissions. The figures include some currently being aggregated, but we aim to reduce the total amount by 50% by FY2030 and be effectively carbon neutral by FY2050.

Much of the Company’s Scope 1 is accounted for by gasoline consumption such as sales vehicles. We will sequentially replace existing hybrid vehicles with EVs. Furthermore, much of Scope 2 is accounted for by electricity consumption in offices and logistics facilities, and we aim to significantly reduce CO2 emissions in the medium- to long-term by switching to electricity from renewable energy and introducing energy-saving air-conditioning and lighting. Due to a lack of resources, Scope 3 is currently being aggregated, but we aim to halve these emissions by FY2030 and reduce them to net zero by FY2050.

Emissions

*The table below can be scrolled left or right.

Item	Unit	FY2021	FY2022	FY2023	FY2024
Power consumption	kWh	11,779,372	13,705,056	13,004,572	13,428,691
CO2 emissions (Scope 1)	t-CO2	2,411	4,862	6,548	6,635
CO2 emissions (Scope 2) Location-based method	t-CO2	5,181	5,433	5,198	5,331
CO2 emissions (Scope 2) Market-based method	t-CO2	5,493	4,960	4,640	4,674
CO2 emissions (Scope 3) Category 1 Purchased goods	t-CO2	129,704	144,393	148,502	146,284
CO2 emissions (Scope 3) Category 4 Upstream transportation and distribution	t-CO2	15,907	9,616	10,582	11,593
CO2 emissions (Scope 3) Category 5 Waste generated in operations	t-CO2	63	56	55	54
CO2 emissions (Scope 3) Category 11 Use of sold product	t-CO2	1,423,349	1,006,777	1,381,162	1,315,877
Vehicle fuel consumption	ℓ	952,166	1,885,630	2,503,866	2,555,952
Amount of waste produced	t	197	184	178	181

• Calculation method:

Calculated in accordance with the GHG Protocol (Scope 3 Categories 1 and 11 are calculated based on our private brand home appliance products).
• Calculation scope:

Targeted bases include YAMAZEN CORPORATION and its Group companies, totaling 24 entities based on the management control standard. Countries and regions covered are Japan, China, South Korea, Taiwan, Thailand, Vietnam, the Philippines, Singapore, Malaysia, Indonesia, USA, Mexico, Germany and Czech Republic.

Avoided Emissions

*The table below can be scrolled left or right.

Item	Unit	FY2021	FY2022	FY2023	FY2024
Number of Green Ball Project participants/Tons of emissions reduced	Companies	682	655	639	680
	t-CO2	40,701	40,947	37,709	40,231

Initiatives

Major domestic sites gradually switching to electricity from renewable energy Plans for nationwide rollout starting with sites under control of Osaka Corporate H.Q.

In order to reduce the Company’s Scope 2 emissions (indirect emissions from energy), we switched the power of Buildings 1 2 and 3 of the Osaka Corporate H.Q. to “D-Green RE100” electricity from renewable energy from Osaka Gas Co., Ltd. in July 1, 2022, and did the same in the Logis Osaka (Daito-shi) on November 4.

This is expected to reduce annual emissions by 595t-CO2.This electricity satisfies the requirements of “RE100” because the electricity from renewable energy is supplied with non-fossil certification with tracking information. In this way, the Company is proceeding to switch the major sites it owns (Nagoya, Kyushu, Hiroshima, etc.) to electricity from renewable energy.

Unique Engagement (Collaboration) Initiatives in Environmental Activities – YAMAZEN’s WAY

It is assumed that Category 11: Use of sold products in Scope 3 accounts for much of the Company’s emissions. In order to reduce emissions in this category, which are difficult to identify and aggregate, we believe it is our responsibility as a distribution trading company to sell and promote energy-saving equipment with low environmental impact. We began the aforementioned Green Ball Project in 2008, and have endeavored to spread environmentally friendly products with supporting manufacturers, participating business partners and users. The “GBP App” mentioned above is being provided from FY2022 to companies participating in the project, and we will support determination of the total amount of emissions using the Greenhouse Gas Protocol and visualization of the contribution to reduction using the GBP Protocol.

We provide the Green Ball Project Application (GBP App), the Company’s dedicated app for visualization of internal emissions and progress management of reductions, to companies participating in the Green Ball Project at no charge, supporting the visualization of emissions and the visualization of reduction effects in the downstream supply chain. While it is a matter of course to curb and reduce emissions within the Company, in addition, we aim to produce further effects by vigorously focusing on the sale of environmentally friendly products to curb emissions in Scope 3 “Category 11: Use of sold products,” that are the greatest source of emissions as a distribution trading company.