Information Disclosure based on TCFD Recommendations

Summary
Governance
Strategy
Risk management
Metrics and goals

Summary

In November 2020, our Group endorsed the TCFD (Task Force on Climate-related Financial Disclosures) recommendations and has been analyzing and disclosing information on the risks and opportunities that climate change presents to our business in accordance with four frameworks: "Governance," "Strategy," "Risk Management," and "Metrics and Targets." Moving forward, we will continue to deepen our analysis and promote the strengthening of our governance and business strategies regarding climate change response, while also taking into account disclosure requests both domestically and internationally.

Governance

For details on governance related to TCFD, please refer to the "Sustainability Promotion System" page.

Linking executive compensation and ESG indicators

Starting in fiscal 2022, our company has incorporated ESG indicators into the individual performance targets of executives. One of the ESG indicators we incorporate is climate change response, such as reducing CO₂ emissions. By introducing incentives that link executive compensation and ESG indicators, we will strengthen executives' initiatives of climate change countermeasures and promote ESG Management.

Strategy

Prerequisites

The Group regards climate change as a very important management risk in terms of business continuity, and is analyzing risks and opportunities for below 2°C and 4°C scenarios.* In addition to climate change, we also regard the worsening of typhoon damage due to global warming as a risk factor.

*The below 2°C and 4°C scenarios are projections of how much the average temperature will rise from before the Industrial Revolution to the end of the 21st century, as presented in the Sixth Assessment Report of the Intergovernmental Panel on Climate Change (IPCC), which provides scientific evidence for countermeasures to global warming and is influential in international negotiations. The scenario with the lowest temperature rise (SSP1-1.9 scenario) predicts a rise of approximately 1.4°C, while the scenario with the highest temperature rise (SSP5-8.5 scenario) predicts a rise of approximately 4.4°C.

●Less than 2℃ scenario
With the introduction of strict environmental regulations and high carbon taxes, the world will achieve carbon neutrality by 2050. While the agricultural sector achieves net-zero CO₂emissions, procurement costs will increase due to growing demand for biofuels and stricter environmental regulations. As consumers become more environmentally conscious, demand for plant-based foods will expand.
The temperature in Japan has risen by approximately 1.4℃ compared to the end of the 20th century. Although the frequency and intensity of natural disasters (typhoons and floods) in Japan will increase, they will not worsen to the level assumed in the 4℃ scenario.

●4℃ scenario
Although progress is being made in reducing carbon emissions, carbon neutrality in 2050 will not be achieved. Natural disasters are becoming more severe and frequent, and the frequency of flood damage at suppliers and our own production bases is increasing. Due to rising temperatures, the yield and quality of agricultural crops are becoming worse.
Temperatures in Japan are expected to rise by approximately 2.3 degrees Celsius by around 2050 compared to the end of the 20th century. Additionally, as the frequency of typhoons increases, their intensity also increases. Flood frequency will be approximately 2 to 4 times more frequent than at the end of the 20th century.

Target period	From now to 2050
Target range	All businesses of J-Oil Mills Group

Risks from climate change

Impact:
Major: Potential impact on business performance (over 10 billion yen)
Medium: Potentially a significant impact on business performance (1 billion yen to less than 10 billion yen)
Small: Small impact on business performance (less than 1 billion yen)

Urgency:
High: Within 1 year Medium: Within 5 years Low: More than 5 years

Scenario: 2℃/1.5℃ Item: Transition risk

Category	Main risks	Risk Description	Impact	Urgency	Existing initiatives	Response direction (goal)
policy	Deteriorating business performance due to stricter CO₂ emission regulations	Risk of increased emissions trading costs and carbon tax burdens due to tighter CO₂ emission regulations (if CO₂ reductions are not achieved)	2.3 billion yen/year (*1)	Medium	Reduction of energy consumption (process optimization, energy saving, introduction of high-efficiency equipment, etc.) Utilization of renewable energy (use of biomass fuel, etc.)	CO₂ emission reduction targets: 50% reduction by FY2030 (compared to FY2013), and achievement of carbon neutrality by 2050 (Scope 1 and 2). To achieve the above goals, we will: 1) Expand capital investment for CO₂reduction in the medium term, with a cumulative cost of 4.2 billion yen (2025-2030); 2) Introduce internal carbon pricing (ICP) from April 2023 and utilize it in decision-making regarding CO₂ reduction investments; 3) Further energy conservation, switching to energy-efficient equipment, and proactive use of renewable energy.
policy		Increased expenditure due to rising electricity and fuel prices accompanying progress in climate change measures and changes in the energy mix Risk of increases in production-related costs, such as capital investment in renewable energy, and logistics-related costs	Medium	Medium
market	Lack of response to changing consumer needs that emphasize sustainability	Decreasing sales due to delays in responding to consumer needs that emphasize sustainability (reducing food waste, reducing plastic usage, recycling resources, etc.) and responding to product demand	Medium	Medium	Development and sales of low-impact products such as long-lasting oil and PBF (※2) Based on the "Guidelines for Containers and Packaging," we will reduce plastic by adopting paper cartons, use biomass materials such as plant-based plastics, and strengthen our efforts in designing recyclable packaging materials. Environmentally friendly raw material procurement and improved traceability of raw materials	Regarding Scope 3 reduction, we have begun considering ways to reduce emissions from categories 1 and 4, which have high emissions, and are taking the following steps to reduce them. Continue developing low-environmental-impact products such as long-life cooking oils. Plastic waste reduction goal: Zero plastic waste by fiscal 2030 Promoting the use of renewable resources such as paper and biomass materials Cost: 700 million yen/year (cost of switching to biomass materials, etc.) Utilizing certification systems for soybean and palm oil and promoting sustainable procurement through our own channels
reputation	Damaged reputation due to poor environmental response	Risk of decline in corporate value and stock prices, stagnation in lending, and difficulty in raising funds due to insufficient disclosure of information on climate change measures	Medium	Medium	Setting targets for resource and energy conservation, reducing _CO2 emissions, eliminating plastics, and making effective use of water resources, and appropriately managing and disclosing progress Minimizing environmental impact through sustainable raw material procurement and the use of AI in the value chain	Further promotion of various initiatives and information disclosure

Scenario: 4°C Item: Physical risk

Category	Main risks	Risk Description	Impact	Urgency	Existing initiatives	Response direction (goal)
acute	Suspension of operations and disruption of logistics networks due to an increase in natural disasters	Damage caused by the suspension of operations at our own plant due to an increase in natural disasters (high tides, typhoons, flood damage, etc. caused by rising sea levels)	400 million yen/year (※4)	High	Implementing typhoon and storm surge countermeasures at production sites Reassessed domestic plant' flood risk using MLIT hazard maps and WRI's Aqueduct (※3) At high-risk locations, flood barriers will be installed on each building, and measures such as updating equipment to deal with storm surges will be implemented based on the estimated water level during storm surges.	Regularly assess the risk of flooding at major production sites Other BCP measures to strengthen resilience
acute		Decrease in sales due to suppliers suspending operations due to an increase in natural disasters (high tides, typhoons, flood damage, etc. caused by rising sea levels) Decrease in sales due to the interruption of logistics network and suspension of operations at our own plant Warehouses were damaged, causing shortages and resulting in a decrease in sales Damage to plant assets due to natural disasters, and increased restoration costs due to the loss of assets	Medium	High	BCP (※4) response Formulating a BCP for the entire supply chain as part of the Group 's risk management process Promote measures such as securing and managing appropriate inventories in preparation for delays or interruptions in the supply of raw materials, and purchasing multiple items of important raw materials In the event of a logistics network outage, the logistics company, logistics department, and sales department will work together to decide on a response policy.
Chronic	Difficulty in stably securing raw materials due to reduced yields and quality changes due to rising temperatures and abnormal weather conditions	Increased procurement costs due to a decrease in cultivated land area for major raw materials (※5) Increased costs to deal with reduced yields and lower quality of key raw materials Increase in procurement costs due to rising grain prices, etc.	High	Medium	Continuous inspection of major raw material sources Product specification optimization	Consideration of new varieties, new suppliers and supply chains Diversifying origins and introducing seeds and seedlings that are resistant to high temperatures and other climate change-related factors Conducting research into the impact of weather changes on raw material quality Development of oil extraction technology taking into account expected raw material quality

*1 IEA: International Energy Agency's forecast of emissions trading prices for developed countries in the NZE scenario (Net Zero Emissions by 2050 scenario) (2030): Calculated by multiplying 140 US$/t by the amount of emissions in fiscal 2024 and the average exchange rate for that period. The amount of risk decreased slightly from fiscal 2023 to fiscal 2024.
*2 PBF: Plant-based food
*3 Damage amounts were calculated based on risk assessments using Aqueduct, a global water risk assessment tool published by the World Resources Institute (WRI), and converted to annual damage amounts.
*4 BCP (Business Continuity Planning): Business continuity plan
*5 Main ingredients: soybean, canola

Opportunities from climate change

Scenario: 2°C/1.5°C

Category	Main Opportunities	Opportunity Description	Shadow sound Every time	Urgency	Existing initiatives	Response direction (goal)
Resource Efficiency	Reducing production and logistics costs	Reducing equipment operating costs by upgrading to energy-efficient equipment and optimizing production processes and locations Reduction of logistics costs through efficient delivery using modal shifts and new technologies	small	High	Started investigations to optimize oil extraction function Promoting modal shifts (obtaining "Ecoship Mark" certification) and reviewing long-distance "through delivery"	Optimizing our bases to ensure long-term stabilization of domestic oil extraction functions Steady preparations for the implementation of the physical internet Considerations for standardizing shipping standards and optimizing shipping routes to reduce CO₂ emissions and costs Introduction of renewable energy equipment Promoting the switch to biomass fuels and securing fuel suppliers
Energy Source	Reduce _CO2 and costs by introducing renewable energy	Reducing emissions trading costs and carbon tax burdens by promoting the introduction of renewable energy (solar panels, biomass boilers)	small	Medium	Introduction of on-site power generation at production sites Introduction of energy-saving equipment at production sites
market	Increased environmental awareness and ethical consumption (response to food crisis)	Increase sales of low-carbon products, services and solutions Sales growth due to increased demand for PBF products due to growing environmental awareness, increased ethical consumption, and the protein crisis	High	Medium	Development of long-lasting oil Sales of PBF products	Continue to develop products and services that reduce the environmental impact, such as longer-long-lasting oil and paper-packaged products PBF products contribute to the protein crisis and stable food supply Texture ingredients prevent deterioration over time and reduce food waste by maintaining texture
Resilience	Gaining trust by creating an optimal business portfolio that meets society's sustainability demands	By building an optimal business portfolio that is in line with sustainability through the promotion of energy conservation and renewable energy utilization, we will gain the trust of society, which will lead to increased sales and improved stock prices.	Medium	Medium	Transforming our business portfolio under the Sixth Medium-Term Business Plan, we will expand products and services that reduce environmental impact and solve social issues.	Further expansion of products that help solve social issues Consideration of establishing a biomass business, such as the production of SAF (※6) by securing bio-based raw materials Study on fixation of _CO2 through planting non-edible oil-producing trees and building SAF supply chains based on plantations Expanded disclosure of sustainability information
Resilience	Strengthening BCP measures	Contributing to society and improving corporate value through a stable food supply by ensuring a stable supply system in preparation for intensifying natural disasters caused by climate change.	Medium	High	BCP response Formulating a BCP for the entire supply chain as part of the Group 's risk management process Promote measures such as securing and managing appropriate inventories in preparation for delays or interruptions in the supply of raw materials, and purchasing multiple items of important raw materials	Regularly assess the risk of flooding at major production sites Other BCP measures to strengthen resilience

*6 SAF: Sustainable Aviation Fuel

Additionally, we reviewed our materiality in 2021 and identified "Mitigation and adaptation to climate change" as one of our priority issues. In 2023, we reviewed our materiality again.
Please see below for the process of identifying materiality and determining relative importance.

Materiality Progress

Risk management

The Group has established a Risk Management Committee, chaired by the President and Member of the Board, which reports twice a year to the Board of Directors and the Executive Committee. Risk Management Committee manages significant company-wide risks, including climate change, from a short- to medium-term perspective and strives to prevent and avoid them. Sustainability Committee and the TCFD Subcommittee manage the risks and opportunities posed by climate change to our business from a medium- to long-term perspective under the Sustainability Promotion Structure. Based on the results of scenario analysis, we conduct a quantitative assessment of the financial impact of identified risks and opportunities and review countermeasures annually. The TCFD Subcommittee reports the results of discussions to Board of Directors and Executive Committee quarterly. Board of Directors provides necessary instructions or advice and monitors the situation. We will continue to expand and deepen the scope of our analysis, minimize risks, maximize opportunities, and strengthen resilience.
For details on risk management related to sustainability in general, please refer to the "Risk Management" page.

Metrics and goals

We aim to reduce CO₂ emissions by 50% by FY2030 compared to FY2013 levels (Scope 1 and 2) and achieve carbon neutrality by FY2050. We also aim to reduce emissions across the entire supply chain (Scope 3) by collaborating with suppliers on CO₂ emissions related to the raw materials we purchase and the manufacturing of our products. For categories 1 and 4, which have high emissions, we will improve the accuracy of our calculations, set reduction targets, and consider reduction methods by obtaining emission information from producing country organizations regarding the production stages of our main raw materials, soybean and canola. In addition, we will utilize Internal Carbon Pricing (ICP), which was introduced in April 2023, to promote investment and investment decision-making toward CO₂ emission reduction.

Graph of CO2 emission reduction results and mid- to long-term targets

Main initiatives

Reduction of energy consumption (process optimization, energy saving, introduction of high-efficiency equipment, etc.)
Utilization of renewable energy (use of biomass fuel, etc.)