Responding to Climate Change

Response to the TCFD Recommendations

TCFD refers to the Task Force on Climate-related Financial Disclosures, which was established by the Financial Stability Board (FSB) at the request of the G20 to examine how to disclose climate-related information and how financial institutions should respond.
In addition, the TCFD recommendations encourage companies and other organizations to understand the "risks" and "opportunities" of climate change that affect their business activities, and disclose information on the categories of "governance," "strategies," "risk management," and "indicators and targets."

The Group is considering the risks and opportunities posed by climate change to its business, based on the TCFD recommendations, taking various measures to address them, and continuously disclosing information about them.

Governance

We recognize that the climate change issue is an important management issue for the Group. We believe that developing and operating buildings that do not burden the environment is not only a social mission of the company, but also leads to higher corporate value and increased profits. Meanwhile, there is an increasing risk that the impacts of more extreme weather conditions, natural disasters and stricter environmental regulations on business are becoming more visible.
In order to address climate change, the entire group will work together to establish a group-wide environmental promotion system.

Scenario Analysis

Scenario analysis is a method used to predict the effects of global warming and climate change, as well as changes in the business environment due to long-term policy trends related to climate change, and used to examine how such changes could potentially impact a company's business and management. In an uncertain world, it is used to consider the business impact of situations where the assumptions underlying previous business practices may undergo significant changes.
With the recognition that risks and opportunities associated with climate change can greatly impact our business strategy, we have identified the risks and opportunities related to climate change through the following process, analyzed them using the 1.5°C and 4°C Scenarios, and evaluated their importance.

Process of Identifying Risks and Opportunities Associated with Climate Change

Process 1:: Comprehensively extracted the risks and opportunities associated with climate change.
Process 2:: Sorted out the extracted risks and opportunities in terms of their relevance to our business and on a short-, medium-, and long-term time frame.
Process 3:: For the above risks and opportunities sorted out, performed a 5-point evaluation of the impact on the Company and the likelihood of occurrence, and as a comprehensive evaluation, extracted items with high impact on the Company and high likelihood of occurrence to identify important risks and opportunities.

Selection of Climate Change Scenarios

We analyzed and evaluated the risks and opportunities based on the 1.5°C Scenario which moves toward a decarbonized society, and the 4°C Scenario in which global warming continues to progress. We used SSP1-1.9^*1*2 for the 1.5°C Scenario and SSP5-8.5^*3 for the 4°C Scenario.

	Scenario	Anticipated social environment
1.5°C Scenario	A Scenario where the world will accelerate towards net zero emissions (regulations will be widely introduced and successful in limiting temperature rise, but with high transition risks)	The entire society will move towards decarbonization, successfully controlling temperature rise through carbon taxes, strengthened regulations related to fossil fuels, and expanding ethical consumption.
4°C Scenario	Scenario where greenhouse gas emission regulations will not be strengthened and global warming will be accelerated (due to limited regulations, global warming will progress, and physical risks will increase)	Limited regulations will result in frequent natural disasters caused by global warming, leading to a high risk of business interruption.

*1 SSP (Shared Socioeconomic Pathways): Scenarios assuming future socioeconomic development trends.
*2 SSP1-1.9: Scenario to keep the temperature rise below 1.5°C under sustainable development.
*3 SSP5-8.5: Scenario in which no additional climate policies will be implemented.

Scenario Analysis Results

< Risk >

Risk classifi-cation	Risk types	Drivers	Period of Occurrence			Overall impact
Risk classifi-cation	Risk types	Drivers	Short-term (~2025)	Mid-term (~2030)	Long-term (2031~)	1.5°C Scenario	4°C Scenario
Transition risks	Policy and regulations	Strengthening of regulations on GHG emissions and energy conservation, etc. Increased building and operation costs due to the introduction of a carbon pricing system Increased new construction and renovation costs due to the strengthening of the Energy Conservation Act, etc.		●		Large	Small
	Market	Growing environmental awareness Costs of introducing renewable energy	●			Medium	Small
		Changes in needs of customers (tenants and home buyers, etc.)		●		Medium	Small
		Increased costs related to development, etc.		●		Small	Medium
	Reputation	Impact on fundraising due to lack of recognition of the Group's initiatives and businesses		●		Large	Small
Physical risks	Acute	Increasing occurrence of natural disasters (typhoons, floods, torrential rains, etc.)	●			Large	Large
		Damage or functional interruption of owned buildings due to disasters	●			Medium	Large
		Interruption or delay of construction due to disasters	●			Small	Large
	Chronic	Extreme and severe weather events such as windstorms and floods	●			Medium	Large
		Impact on real estate appraisals due to the manifestation of natural disasters		●		Small	Large
		Health effects on employees and business partners, etc. due to the increased number of midsummer days Decreased revenue and increased costs due to negative impacts on labor force Effect on rents due to increasing needs of tenants for BCP (Business Continuity Planning) of their facilities Intensified regional selection and competition among products due to increasing needs of homebuyers for Life Continuity Planning (LCP)		●		Small	Medium

< Opportunity >

Opportunity types	Drivers	Period of Occurrence			Overall impact
Opportunity types	Drivers	Short-term (~2025)	Mid-term (~2030)	Long-term (2031~)	1.5°C Scenario	4°C Scenario
Energy and resource efficiency	Advances in renewable and clean energy supply technologies		●		Medium	Small
Energy and resource efficiency	Decreased costs through demand for products with lower GHG emissions	●			Medium	Small
Products and services	Increased demand for products and services that address disaster prevention and energy conservation (increase in asset values)		●		Large	Small
Products and services	Growing customer appreciation of ZEH^1 and ZEB^2			●	Large	Small
Market	Creation of new markets that contribute to solving climate change (diversification of business activities) Increased opportunities for collaborative projects with the government, local governments, private organizations, and others toward a decarbonized society		●		Medium	Small

*1 ZEH (Net Zero Energy House): General residence aiming for zero energy balance and energy conservation as well as energy generation
*2 ZEB (Net Zero Energy Building): Buildings such as offices, factories, and schools that aim for zero energy balance in the energy consumed within the building

Strategies

The Samty Group will strengthen its environmental management system to comply with environmental regulations that will be tightened in the future.
Under the environmental management system, we will formulate action plans for decarbonization, establish CO₂ emission reduction targets, and acquire environmental certifications for our buildings.
We will promote sustainability management by actively carrying out facility updates on our owned properties.

Risk Management

We have sorted out climate-related risks and opportunities on a short-, medium-, and long-term time frame.
Climate-related risks will be reflected in the Group's strategies and addressed as one of our Group's key risks.

Indicators and Targets

Our company has set a target to reduce CO₂ emissions (Scope 1 and 2) by 20.0% by the fiscal year ending November 30, 2030, compared to the levels in the fiscal year ending November 30, 2022, in our pursuit of achieving carbon neutrality by 2050.
We will proceed to expand the boundary of our data aggregation and calculation for Scope 3 emissions

* Scope1: Direct greenhouse gas (GHG) emissions by the business operator itself (fuel combustion, industrial processes)
* Scope2: Indirect GHG emissions from the use of electricity, heat and steam supplied by other companies
* Scope3: Indirect emissions other than Scope 1 and Scope 2 (emissions by other companies related to the activities of the business operator)

DFF Inc.

Greenhouse Gas Emissions of the Samty Group

Unit: t-CO₂
	FY2021/11	FY2022/11
Scope 1	1,200	1,427
Scope 2	2,397	2,797
Scope 1+2	3,597	4,224

DFF Inc.

Introduction of Hydrogen Vehicles as Company Cars

In order to realize a decarbonized society, the Group has introduced Toyota Motor Corporation’s “MIRAI” fuel cell vehicle.
The vehicle runs on the power of electricity generated by hydrogen and emits no exhaust gas, a cause of global warming, and thus contributes to the decarbonization of company cars with long driving distances.

DFF Inc.