Environment

Climate Change

Information Disclosure Based on the TCFD Recommendations

The Aisan Group ranks climate change among its most important management issues and will strengthen its efforts to address climate change while promoting information disclosure in accordance with the TCFD recommendations.

Governance

The Sustainability Committee, which is chaired by CRO, verifies the direction and its appropriateness related to all issues concerning sustainability, including climate change. In addition, the TCFD Committee (meetings held at least once every three months), which is a subcommittee of the Sustainability Committee, formulates, executes, and manages plans related to the climate change issue.

Image of the relationship between the Sustainability Committee and the TCFD Committee

Risk Management

The Sustainability Committee of the Aisan Group comprehensively manages risks, including climate change risks that may have a major impact on management as reported by the TCFD Committee, as well as other risks that also may have a major impact on management reported by other individual committees^*. Risks reported by each committee are extracted, analyzed, and evaluated in consideration of their likelihood of occurrence and impact, then priority risks are selected and various measures for risk reduction are implemented by the department in charge.
The individual committees check the progress of various measures and the latest status of risks and report important matters to the Sustainability Committee. The Sustainability Committee provides direction and supervision regarding risk management based on these reports.
The Governance Committee conducts company-wide risk assessments, including for climate change, and identifies ‘priority risks.

Individual committees: Carbon Neutrality Committee, Health and Safety Committee, Work Style Reform Committee, BCP Committee, and Governance Committee

Metrics and Targets

In FY2024, international climate change response entered a new phase: at COP29, the need for countries to raise their reduction targets to achieve the Paris Agreement 1.5°C goal was widely required. Japan's 7th Strategic Energy Plan also outlined future policy issues and course of action for achieving carbon neutrality by 2040 or later, emphasizing the necessity of simultaneously ensuring stable energy supply, economic growth, and decarbonization.
Reflecting these external factors, our Medium-term Management Plan (2025–2030) includes a transition plan to address climate change risks, promotes GHG emissions reduction, and incorporates CN (carbon neutral) investments utilizing internal carbon pricing (ICP). We also aim to contribute to solving social issues not only in all evolving energy and mobility fields but also in domains beyond the mobility sector, laying the foundation for new future products.

Main target values for 2030 to become carbon neutral

Category	Item	Target
Reduction of CO₂ emissions (Compared to FY2019)	(1) Scope 1 & 2	60％ reduction
Reduction of CO₂ emissions (Compared to FY2019)	(2) Scope 3	28％ reduction
Clean energy technology utilization	Renewable energy	55%
Clean energy technology utilization	Energy creation	5％
Resource recycling (Compared to FY2019)	Waste Zero emission	5% reduction (Basic unit)
Co-existence with nature (Compared to FY2019)	Water Usage	5% reduction (Basic unit)

For more information on the target values for the entire value chain.

Strategy

Based on the social vision under multiple (1.5°C/2°C/4°C) scenarios^*, risks and opportunities are arranged for fiscal 2050 in addition to fiscal 2030, to assess the financial impact in fiscal 2030, and measures to reduce risks and create opportunities are being taken.

1.5°C/2°C: NZE (Scenario to achieve global net zero emissions by 2050), APS (Scenario that reflects aspirations declared by ambitious countries)
4°C scenario: SSP 5–8.5 (Maximum emissions scenario without implementation of climate policy, under fossil fuel dependent development)

Risks/opportunities and response to climate change

Category		Content		Time Horizon	Degree of Impact	Countermeasures
Transition Risks	Policies and Regulations	GHG Emission Regulations	Increase in manufacturing costs due to strengthened energy policies and use of renewable energy	Medium Term and Beyond Long Term	Medium	Rigorous elimination of inefficiencies Global deployment of domestic improvement measures
		Introduction of carbon tax	Increase in production costs due to carbon tax introduction	Medium Term and Beyond Long Term	Medium	High efficiency in energy use Implementation of renewable energy Creation of clean energy (e.g. ammonia/hydrogen generation)
		Introduction of carbon tax	Increase in procurement costs through carbon tax price transfer	Medium Term and Beyond Long Term	Large	Use of low CO₂ materials Reduction and recycling of waste CO₂ reduction initiatives with suppliers
	Technology	Expanding demand for low- and decarbonized products	Delayed recovery of investment costs due to slow transition to new areas	Medium Term and Beyond Long Term	Medium	Business planning and focused resource allocation for future products, considering environmental changes
	Market	Changes in customer values	Decreased sales of engine parts due to increased BEV adoption^*1	Medium Term and Beyond Long Term	Large	Development of new decarbonizationrelated business leveraging technological strengths
	Reputation	Insufficient environmental initiatives or disclosure	Decreased corporate value Decrease in customer trust	Medium Term and Beyond Long Term	Medium	Improvement of evaluation scores (CDP, etc.) through CO₂ reduction initiatives
Physical Risks	Acute	Increased frequency and severity of natural disasters Longer duration	Temporary production suspension due to supply chain disruption	Medium Term and Beyond Long Term	Medium	Further strengthening of BCP framework Improved accuracy of inventory management Continued supply chain BCP measures
Opportunities	Technology	Acceleration of electrification and industry restructuring	Increased market share of key products	Short to Medium Term	Large	Establishing competitive advantage Switching to next-generation leading products Enhancing manufacturing (multiassembly)
	Market	Expansion and development of lowcarbon products	Increased revenue from hydrogen supply units as hydrogen energy use expands	Medium to Long Term	Medium	Promotion of product development for next-generation FCVs/hydrogen engines
			Increased opportunities for entry into electrified product markets due to more BEVs/PHEVs/FCVs^*1	Medium to Long Term	Large	Provision of lightweight, high-efficiency, and low-cost systems/components Product development leveraging proprietary technology Construction of new production plants for future products Development of products for compact mobility applications
			Expansion of business opportunities in new carbon neutral fields	Medium to Long Term	Small	Research and development of new technologies/fields Ammonia supply system components Small fuel cell modules
			Increased demand for products contributing to emission reductions	Medium to Long Term	Medium	Development of automotive products applying existing technologies (FFV^*2 technology) Products compatible with synthetic and biofuels

[Timescale] Short-term: through 2025; Medium-term: through 2030; Long-term: through 2050
[Impact level] Impact on single-year operating profit: Large, 2.0 billion yen or more; Medium, 0.1 billion yen to less than 2.0 billion yen; Small, less than 0.1 billion yen
[Aisan Group’s response] We have incorporated initiatives for mitigating risks and creating opportunities related to climate change in the Medium-term Management Plan announced in November 2022 and are promoting activities accordingly.

Number of units based on 2°C scenario assumptions
FFV: Flexible-Fuel Vehicle

For more information on Aisan Group’s response.

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