Disclosures based on TCFD recommendations

The Company considers the issue of climate change as a management issue that affects its business and is committed to climate change measures. Since June 2022, the Company has been disclosing climate change-related information in line with the recommendations of TCFD*.

*TCFD: The Task Force on Climate-related Financial Disclosures, chaired by Michael Bloomberg, was established by the Financial Stability Board (FSB) at the request of the G20 to consider how to disclose climate-related information and how to respond to financial institutions

Governance

• The Company has established the ESG Committee as a voluntary advisory committee independent from the Board of Directors, as the implementation of ESG management is a key policy of the Company.
• The ESG Committee is chaired by the Senior Managing Member of the Board of Directors, the Representative Director, and consists of directors of subsidiaries, the Chairperson of the ESG Promotion Meeting, Corporate Planning Department Director, and other persons appointed by the Chairperson of the ESG Committee.
• The ESG Committee sets out ESG strategies, including risks and opportunities related to climate change, and conducts risk management by responding/reporting regularly (at least twice a year) to the Board of Directors.
• The details of the ESG promotion system are as follows.
  

  ESG promotion system

  
  
  • It consists of three meeting bodies: the ESG Committee, ESG Promotion Meeting, and Committee of Managers for ESG Promotion.
  • The ESG Committee deliberates on matters proposed by the ESG Promotion Meeting and promptly responds/reports to the Board of Directors as soon as a decision is made.
  • The flow of promotion of ESG activities by the three meeting bodies is as follows:
    

    1.The Committee of Managers for ESG Promotion, consisting of representatives of each division and department, identifies issues and proposes them to the ESG Promotion Committee.

    2.The ESG Promotion Committee aggregates issues from each division and department from a company-wide perspective and proposes a materiality proposal to the ESG Committee.

    3.The ESG Committee identifies company-wide material issues (materiality) and determines ESG strategies.

    4.Under the ESG Promotion Meeting, the Committee of Managers for ESG Promotion formulates divisional goals and plans and promotes ESG activities.

    5.The ESG Promotion Meeting summarizes the ESG activities promoted by each division on a quarterly basis and reports them to the ESG Committee.

    6.The ESG Committee evaluates the content of activities.

Strategies

The Company's business risks and opportunities in climate change are as follows:

Risks

Opportunities

• The company carefully considers countermeasures in close collaboration with the industry, although any significant climate-related risks at this time that would require large-scale investments over the long term have not been identified
• We always look for new opportunities for our pipeline to contribute to the human health impacts of any climate change. However, any items in our pipeline at this time that would have a significant impact on business opportunities have not been identified, although there may be business opportunities such as in the form of epidemics of certain diseases due to rising temperatures.
• We will formulate countermeasures to improve our business resilience to climate change by conducting a scenario analysis based on the TCFD recommendations and by identifying risks and opportunities.

Risk Management

• The process of identification, evaluation, and management of risks is as follows:

1. The Committee of Managers for ESG Promotion reports quarterly to the ESG Promotion Meeting on the timing, probability, and scope of impact of risks and opportunities for management.
2. The ESG Promotion Meeting aggregates the reported information into company-wide risks and opportunities and reports them to the ESG Committee.
3. The ESG Committee evaluates the impact of company-wide risks and opportunities and reviews them on a case-by-case basis, and the ESG Promotion Meeting responds/reports them to the Board of Directors.
4. The responded/reported information is reflected in the next quarterly KPI, and the relevant departments respond to and manage risks based on the KPI.

• The Board of Directors integrates climate change-related risks into the Company's comprehensive risk management process by considering the impact of climate change on the Company and society when making corporate decisions based on the responses/reports from the ESG Promotion Meeting

Indicators and Targets

• We monitor environmental performance indicators related to CO₂ emissions, water pollution load, chemical substance management, and amount of waste emissions. The production division undergoes annual verification by a third-party organization on issues to be improved in relation to these indicators.

Scope 1, 2 emissions（t-CO₂）

	FY2020	FY2021	FY2022
Scope １	7,443	7,209	6,687
Scope 2	5,771	5,042	4,093

Scope 1 emissions are calculated directly by the Company and include CO₂ emissions from the use of gasoline, kerosene, diesel oil, heavy oil, LPG, city gas, and cold/heated water.

• For Scope 1 and 2 emissions, we use the target set by the Federation of Pharmaceutical Manufacturers' Associations of JAPAN (FPMAJ) to reduce CO₂ emissions by 46% by FY2030 from the FY2013 level (research center, factory, offices, and sales vehicles) as our benchmark for our reduction targets.
• With regard to energy conservation efforts, we aim to improve energy consumption per unit of production by 1% or more each year (The average rate of change in energy consumption per unit of production over the previous five years is 1% or more.) as an indicator of energy consumption. In FY2020, the average rate of change in energy consumption per unit of production over the previous five years was a 3.7% reduction.