As countries around the world intensify their efforts to address climate change in accordance with the Paris Agreement, the Japanese government announced in October 2020 its policy goal of reducing emissions of greenhouse gases, as typified by carbon dioxide (CO₂), to virtually zero by 2050. In February 2025, Japan submitted its new nationally determined contributions (NDCs) for fiscal years 2035 and 2040 to the United Nations Framework Convention on Climate Change secretariat. Companies are expected to be more proactive than ever in their efforts to transition to a decarbonized society.

The Group considers the impact of climate change on its business as one of the most important management issues, and we believe that enhanced disclosure of climate-changerelated information is essential to building a relationship of trust with our stakeholders. Accordingly, in June 2021, we registered our support of the TCFD^* Recommendations, and in accordance with the TCFD Recommendations, the Group will continue to enhance our disclosure of information on the impact of climate change on our business activities. Going forward, we will also continue to respond to the disclosure standards of the International Sustainability Standards Board (ISSB) and the Sustainability Standards Board of Japan (SSBJ).

In April 2010, the Proterial Group established the Group Basic Policy on Environmental Preservation to clarify the Group’s unified approach to environmental management. In June 2021, we registered our support for the TCFD Recommendations, and in August of that year, following a report to the Board of Directors, we established a new environmental policy named “Aiming for Green Growth While Taking Risk as Opportunity.”

Within our Environmental Promotion Structure, which includes climate change countermeasures, we have formed the Group Environmental Committee, which is chaired by the Environment Executive Officer, and whose executive office is the Environmental Strategy Department, Manufacturing & Engineering Division. Activities are promoted in collaboration with the environmental managers of each business division and the environmental managers at business sites and group companies. The Group Environmental Committee is responsible for developing environment-related regulations, setting targets for reducing environmental impact, and confirming that activities are appropriate and effective.

The Group Environmental Committee sets policies and targets for environmental activities in each fiscal year, and deliberates and decides on the Environmental Action Plan. Regarding climate change countermeasures, we have set CO₂ emission reduction targets within the Group and are promoting energy conservation activities and the use of renewable energy at each manufacturing site based on our Environmental Action Plan. We also monitor the status of CO₂ emission reductions by regularly compiling energy activity data. The Group Environmental Committee meets once a year to share the results of the previous fiscal year’s environmental activities, the status of numerical targets for the current fiscal year, and major initiatives to promote continuous improvement of activities.

In addition, the status of efforts toward environmental issues, including climate change countermeasures, is reported twice a year to both the Executive Committee and the Board of Directors, where important issues related to climate change are also deliberated and decided.

Environmental Promotion Structure

Roles in the Promotion Structure

■ Environment Executive Officer
The executive in charge of manufacturing and technology is in charge as an Environment Executive Officer who is well acquainted with environment-related issues and exercises overall control through the Group Environmental Committee.

■ Proterial Group Environmental Committee
Deliberates and determines policies, targets, etc. related to environmental management activities within the Group.

■ Chief Environmental Management Officer
Oversees environmental management activities within the business unit.

■ Environment Committee
Deliberates and determines policies, targets, etc. related to environmental management activities at each business site.

■ Environmental Managers
Take responsibility for and promote environmental management activities of each business site.

A scenario analysis was conducted by the Group to clarify the risks and opportunities of the various projected environmental changes that future climate change will bring, and to formulate a business strategy to reduce the risks and expand opportunities. Scenario analysis—consisting of the four scenario analysis steps—aims to assess (i) financial and business impacts under multiple scenarios and (ii) resilience of the Group strategy in regard to climate-related risks and opportunities. In order to address risks and opportunities, we have set a goal of reducing CO₂ emissions by 38% by fiscal year 2030 compared to the base year of fiscal year 2015 and achieving net-zero emissions by 2050, and are promoting the implementation of measures to achieve this goal. Specifically, we are expanding capital investment in energy conservation, fuel conversion, the introduction of renewable energy, and other areas; improving manufacturing processes, increasing the use of scrap in order to emit less CO₂ through raw materials; and developing new suppliers. We are also working to develop and expand sales of various materials and products that contribute to the electrification of automobiles, energy conservation, fuel efficiency, and longer lifespans. We are also striving to improve our production systems to account for abnormal weather conditions, while enhancing the BCP system and refining our action manual for emergencies.

■ Scenario-analysis steps

Definition of business/financial impact assessment
Large: Cost or effect is equal to or greater than 5% of sales of target businesses.
Medium: Cost or effect is equal to at least 1% but less than 5% of sales of target businesses.
Small: Cost or effect is less than 1% of sales of target businesses.

After examining the financial impact assessment regarding risks and opportunities and the responses thereto for each business as described above, we have determined that our environmental strategy is resilient. We believe we can minimize the risks associated with climate change, increase corporate value related to contributing to a low-carbon society, and generate growth opportunities by making group-wide efforts to achieve our 2030 CO₂ reduction targets and strategically developing environmentally friendly products in each business field.

The Group has established Enterprise Risk Management (ERM), under which, in addition to a bottom-up approach, management (management executives and executive officers) takes a top-down approach to identify and control crosssectional and medium- to long-term risks from a management perspective. The ERM Committee (ERMC), chaired by the Chief Risk Control Officer (CRCO), implements ERM processes such as risk identification, assessment, and prioritization, and promotes ERM throughout the Group. Risks are classed and defined as strategic risks, operational risks, and companywide risks, and the extracted risks are evaluated on a fourlevel scale based on their impact and likelihood of occurrence. A risk map is created based on the assessment results, and priority risks are selected primarily from the risks positioned in the “high” zone, taking into account their importance and urgency, and are managed by implementing countermeasures and monitoring through the ERMC. Risks related to climate change and nature identified by the Group Environmental Committee, corporate departments, and business divisions are considered risks related to environmental regulations, etc., and the ERMC monitors them as target risks for ERM, along with other risks. The ERMC shares the status of risk responses and related monitoring results, and reports to management.

Risk management structure