Response to the TCFD recommendations

The impact of climate change has been growing more serious with each year, with significant repercussions for the economy, society and the environment. International society is accelerating its shift toward the establishment of a low-carbon/carbon-free society, and the roles that companies will play have been growing increasingly important.

As a member of the global community, we understand the importance of protecting the global environment and support the Task Force on Climate-related Financial Disclosures (TCFD).

In addition, we will contribute to driving decarbonization further and building a sustainable society, not only by developing our own environmental initiatives but also by supporting client companies. We believe these are our duties as one of the largest consulting firms in Japan.

Governance

We understand that addressing climate change risks, which has become a global issue, is one of our important tasks.

We pursue sustainability measures under the supervision of the Board of Directors, with the leading role played by the Administrative Division. We check the measures taken by each department and review our policies and initiatives as necessary.

Climate change risks are also discussed and studied by the Administrative Division, which drives initiatives such as studying measures against identified risks and opportunities and reducing CO₂ emissions.

The Board of Directors receives reports on important matters discussed by the Administrative Division. It will also discuss and supervise policies and action plans for addressing climate change problems and other initiatives.

Strategy

Outline of scenario analysis

We performed a scenario analysis based on risks and opportunities to be created by climate change, which are illustrated by examples in the TCFD recommendations.

We selected two scenarios for the analysis because it is necessary to select and set scenarios for multiple temperature ranges, including a 2°C or lower scenario. One is the 1.5°C scenario, in which the impact of the transition is realized. The other is the 4°C scenario, in which the physical impact of climate change is realized.

【1.5°C scenario *1】

In this scenario, rigorous measures are taken to address climate change and the temperature increase is limited to around 1.5°C above pre-industrial levels as of 2100.

Measures to address climate change are strengthened, and transition risks increase regarding political regulation, markets, technology, reputation, and other matters.

• *1
• As the parameters for estimating impact, the RCP2.6 scenario was used referencing information from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IAE).

【4°C scenario *2】

In this scenario, rigorous measures are not taken to address climate change, and the temperature has increased to around 4°C above pre-industrial levels as of 2100.

This leads to greater physical risks, including risks related to serious natural disasters, sea level rise, and more frequent abnormal weather.

• *2
• As the parameters for estimating impact, the RCP8.5 scenario was used, referencing information from the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IAE).

Key climate change risks and opportunities

Impact of the introduction of carbon taxes

A possible financial impact of climate change risks will be the introduction of carbon taxes, a result of governments tightening their environmental regulations. Therefore, we calculated the effect of the introduction of carbon taxes in 2030 and 2050 in the 4℃ scenario and 1.5℃ or lower scenario by assuming that our GHG emissions are equivalent to the Fiscal Year Ended February 2023 level.

In addition, we estimated values using one scenario from the International Energy Agency (IEA), one from the International Renewable Energy Agency (IRENA), and the current carbon price (carbon cap-and-trade system, carbon tax, and energy taxation).

In addition, it is expected that the impact will be alleviated at the time the carbon taxes are introduced because we plan to reduce our GHG emissions by introducing renewable energy and through other initiatives.

(Preconditions)

• ・Reference scenario: STEPS Scenario (a scenario in which measures already introduced or announced officially are implemented), IEA (2020), World Energy Outlook 2020
• ・Our greenhouse gas emissions (Fiscal Year Ended February 2023): Approx. 163 t-CO2

Risk management

Under our risk management system, we sort risks by type according to the risk management regulations established by the Board of Directors. We have set up a Compliance Promotion Committee and manage the risks on an ongoing basis. The Compliance Promotion Committee meets regularly on a quarterly basis and whenever necessary. It instructs each division to assess risks and report measures related to risk management and takes other steps as necessary in its efforts to identify risks. The Committee then selects risks to address preferentially before determining specific policies and measures to address the risks, thus managing risks appropriately.

We position climate change risks as an important group of risks and have assigned the Administrative Division to manage these risks. To identify and assess the impacts that climate change will have on us, the Administrative Division identifies climate change risks and opportunities through scenario analysis and then discusses and deliberates on them.

Moreover, judgments on risk management status and responses to material risks are reported with recommendations to the Compliance Promotion Committee and the Board of Directors and are handled organizationally and appropriately.

Metrics and targets

GHG (green house gas) emissions

In Fiscal Year Ended February 2023, our Scope 1 GHG emissions (direct emissions from business operations) were 0 ton and Scope 2 GHG emissions (indirect emissions from power consumption) were 163 tons.

We also set a goal of achieving net zero Scope 1 and Scope 2 emissions by Fiscal Year Ended February 2026.

We strive to reduce GHG emissions by conserving energy including electricity internally, introducing renewable energy that does not involve the use of fossil fuels, and proactively utilizing the J-Credit Scheme, which is a government certification scheme, with the goal of establishing a carbon-free society.

Reduction target for GHG (greenhouse gas) emissions

<Scope>

Emissions from our offices such as head office at the Toranomon Hills Mori Tower are calculated based on power consumed and by using the emission factor that is specified in the Act on Promotion of Global Warming Countermeasures.