TOKUYAMA will analyze climate-related risks and opportunities that are expected to have an impact on the business of the Tokuyama Group ("the Group"). At the same time, the Group will promote CSR-oriented management with the aim of improving corporate value by continuing to engage in sustainable activities. TOKUYAMA operates a CSR Promotion Council that is chaired by the president and comprises all executive officer in Japan to facilitate the Company's CSR-oriented management. Matters of an important nature are reported to the Board of Directors. While the Company operates committees focused on specialized areas to enhance the effectiveness of the CSR Promotion Council, steps will also be taken to newly establish the Sustainability Committee to deliberate on such matters as climate change, human rights, and CSR procurement in fiscal 2022. In this manner, TOKUYAMA will build a mechanism to proactively evaluate risks and opportunities.

In view of the impact of climate-related risks and opportunities, TOKUYAMA has assumed different climate-related scenarios (2°C or lower and 4°C). Given the large proportion of its businesses that is energy-intensive, the Company foresees risks associated with the introduction of carbon taxes and emissions trading. There are also concerns that companies implementing green procurement may request TOKUYAMA to respond to such requirements. Over and above the aforementioned, TOKUYAMA is wary that financial institutions may tighten the terms and conditions of loans to fossil fuel-related businesses, which in turn could cause funding costs to rise. On the other hand, business opportunities including the growth of heat dissipation materials for power semiconductor application attributable to advancements in electro-mobility and water electrolysis systems that support the widespread use of hydrogen fuels are also expected to become a reality. In addition, TOKUYAMA will look to become more actively involved in material recycling-related products as well as the promotion of R&D and implementation of environmentally friendly products, including carbon dioxide capture, utilization, and storage. Furthermore, the Tokuyama Group will endeavor to realize business opportunities while reducing climate-related risks by promoting the transformation of its business portfolio from an energy-intensive to a value-creative company.

The Tokuyama Group will continue to evaluate the impact on its business and reputation attributable to changes in the climate as well as market together with policy and regulatory requirements in line with the processes recommended by the TCFD. In addition, the Company has outlined its goal of reducing the CO₂ emitted during its manufacturing process in its Medium-Term Management Plan 2025. In specific terms, TOKUYAMA is targeting a total reduction of 30% by fiscal 2030, compared with levels emitted in fiscal 2019, and the achievement of carbon neutrality by 2050. From a supply chain greenhouse gas (GHG) emissions management perspective, TOKUYAMA accounts for supply chain emissions for Category 1 through 7 and Category 9 under Scope 3, based on the Scope 3 Standard of the GHG Protocol. In this regard, the Company has obtained certification from an external organization. (Please refer to the following URL for details of fiscal 2020 emissions:
https://www.tokuyama.co.jp/eng/csr/global_warming.html)