Environment Actions for a Decarbonized Society

Estimated FY2019 emissions for publication and disclosure of environmental data and the like are the basis for the long-term targets for FY2025 and FY2030.

Classification/Category		What is calculated	Sources	Emissions (t-CO2)
				2019 (Base)	2020	2021 (Percentages compared to 2019)
Scope 1	Direct emissions	Direct emissions from the Company’s use of fuels (e.g. oil) and industrial processes	Gas, oil, gasoline	2,754	2,037	2,176
2	Indirect emissions from energy sources	Indirect emissions from the consumption of electricity and heat purchased by the Group	Electricity, water, and the like consumed at Group business locations	3,110	2,442	1,864
Scope 1 & 2 total				5,864	4,479	4,040 -31.1%
3	Other indirect emissions (other than Scope 1 & 2) Design, construction, etc.			4,963,127	4,000,944	4,648,164 -6.3%
Category 1	Purchased goods and services	Emissions from activities leading to the manufacture of raw materials and other materials	Ducts, pipes, frames	173,731	104,307	119,213
			Major components of air conditioning system (chillers, air conditioners, all-in-one air conditioning systems, fan coil units, blowers)
2	Capital goods	Expansion of production facilities	Capital investment	39,557	13,190	7,336
3	Energy-related activities	Minerals for generating electricity purchased by the Company	Electricity consumption	459	606	715
4	Transport (upstream)	Emissions from transporting goods from suppliers to work sites	Number of trucks for transport	3,678	5,269	5,662
5	Waste generated in operation	Emissions from transporting and disposing of general and industrial waste generated by the Company	General waste from buildings and offices	9,614	7,168	5,676
			Amount of industrial waste disposed of onsite
6	Employee business travel	Business travel	Domestic and overseas business travel	2,474	822	919
7	Employee commuting	Commuting	Commuting	547	632	609
11	Use of sold products	Emissions from the use of products by users (consumers and businesses)	Equipment for delivery to customers	4,650,967	3,835,589	4,499,860
12	Disposal of sold products	Emissions from disposing of products	Disposal of purchased products	82,100	33,359	8,089
Scope 1 & 2 & 3 total				4,968,991	4,005,423	4,652,204

• Independent third-party assurance was obtained from Sustainability Accounting Co., Ltd.

We view climate change as one of the highest priority issues and promote and incorporate climate change measures into our management strategy.

Governance

The ESG Promotion Committee deliberates over important matters involving climate-related issues before bringing and reporting them to the Board of Directors, which supervises and directs them to ensure that proper action is taken on the matters.
In FY2022, the committee met a total of six times to check the quarterly progress of Group ESG activities in addition to determining what TCFD disclosures to make and sharing information about decarbonization initiatives toward achieving the 1.5℃ target.
The president has the ultimate responsibility for climate-related issues, and manages and promotes initiatives to address climate change, including TCFD recommendations.
We also recognize climate-related risks as one of the many risks in our business activities, and share information with the Risk Management Committee, which oversees all business risks.

Promotion System Chart

Strategies

We use the following four-step process to develop strategies, which we verify in terms of resilience. We constantly use the results of this analysis in initiatives for improvement.

Presumed climate-related risks

We examined countermeasures for the risks and opportunities identified and assessed, focusing on those with major financial/business impact. We will continue to assess resilience and deepen our countermeasures.

Broad category	Medium category	Item	Impact on business operations	Financial impact		Response measures
				1.5℃	4℃
Transition risks	Policies and regulations	Carbon pricing	Increase in operating costs (facility electricity, GHG emissions during delivery) due to the introduction of a carbon tax	Low	-	Use of renewable electricity (including corporate PPA) Use of low-carbon vehicles Installation of renewable energy generation equipment and rechargeable batteries, etc.
			The introduction of a carbon tax would increase operating costs for upstream suppliers and increase their own procurement costs	Medium	-	Use of low-carbon materials and equipment through collaboration and cooperation with suppliers
		Circular economy	Increase in procurement of recycled materials and waste disposal costs	Low to medium	-	Reduction of waste through collaboration and cooperation with suppliers Construction of a recycling system on an equipment and material basis Establishment of a plastic recycling cycle toward the elimination of plastic waste Trial run at T-Base®
		Plastic regulations	Increase in material costs due to higher plastic prices	Low	-
	Market	Crude oil price	Increase in transportation and equipment costs due to higher gasoline prices	Medium	Medium	Selection of materials and equipment with consideration of transportation costs Expansion of the use of T-Base® to build efficient transportation logistics
	Technology	New technology	Market share decline due to inadequate response to customer needs (including ZEB) caused by delays or failures in the development of new technologies (including energy-saving design and construction technologies) that contribute to the reduction of greenhouse gas emissions	Medium	Low	Understand market needs through increased customer contact Promotion of following strategies at our Innovation Center (IC) ZEB demonstration and energy-saving technologies Promotion of development of CO2 reduction technologies in new fields e.g., Advancement of water electrolysis hydrogen generation technology
	Reputation	Changes in reputation among investors	Reputation damage and increased investment-related risks resulting from inadequate responses to climaterelated issues and inadequate information disclosure	High	Medium	In addition to TCFD, active participation in climate change initiatives such as SBT and CDP Active participation in environmental activities such as forest preservation
Physical risks	Acute physical risks	Extreme weather events	Increase in procurement of recycled materials and waste disposal costs due to circular economy regulations	Medium	Medium to high	Reduction of waste through collaboration and cooperation with suppliers Consideration of the construction of a recycling system on an equipment and material basis
		Spread of viruses due to extreme weather events	Loss of sales opportunities due to fewer orders received as a result of the spread of viruses and the like due to extreme weather events	High	High	Promotion of controlled activities based on the BCP (countermeasures against infectious diseases)
	Chronic physical risks	Rise in temperature	Worsening labor shortage due to reduced employees with work environments becoming tougher, resulting in a decrease in construction capacity and therefore a decrease in completed construction	High	High	Strengthening of health and productivity management, including measures against heat stroke Consideration of labor environment improvement, remote operations, the IoT, etc. Enhancement of engagement (investment in human capital) Promotion of diversity
			Reduced work efficiency resulting from worsening work environments and increases in costs and process delays for labor measures and securing human resources	Low to medium	High	Strengthening of health and productivity management Measures to improve efficiency, such as manpower saving through off-site management and the use of AI, etc. (expansion of the use of T-Base®) Research for BIM utilization
			Increase in air-conditioning equipment usage at business sites due to rising temperatures	Low	Low to medium	Operation in power-saving mode Strengthening of health and productivity management
		Floods	Loss of sales opportunities due to suspension of business activities caused by flooding	Medium	Medium	Formulation of a more detailed BCP (for each office)
Opportunities	Resource efficiency	Productivity	Reduction of operating costs and increase in productivity by transforming the construction process	High	High	Promotion of T-Base® for off-site management, unitization of components, and standardization of construction methods Productivity improvement through use of BIM
		Energy mix	Change of the price of electricity and reduction of operating costs by increasing the share of renewable energy in the energy mix	Low	Low	Introduction of renewable electricity from a long-term perspective (including corporate PPA)
	Products / services	Promotion of energy-saving efforts	Reduction of costs through the use of policy incentives as a result of further promotion of energy-saving efforts	High	Medium	Demonstration of energy-saving effects and outreach to local governments
		Increased demand	Increased revenue opportunities due to increased infrastructure resiliency needs and accelerated equipment replacement periods (e.g., equipment and product services for disasters and hot weather)	High	Medium	Identification of customer needs for products and services adapted to climate change, and establishment of a sales structure Open innovation such as industry-academia collaboration Strengthening of collaboration with equipment manufacturers and other suppliers
		Products with reduced environmental impact	Increase in sales of products that contribute to reducing environmental impact (e.g., energy-saving products)	High	Medium
	Market	New business	Increased opportunities to receive orders for newly developed technologies (e.g., energy-saving technologies, ZEB-related technologies, water electrolysis hydrogen production technologies, and renewable energy-related technologies)	High	Medium	Promotion of further development of energy-saving technologies Promotion of ZEB demonstration and related technology development (e.g., energy grids and heat-related technologies) at our Innovation Center (IC) Promotion of water electrolysis hydrogen production technology and renewable energy-related technologies
		Green bonds	Evolution and creation of the Group's environment improvement technologies and further activation of open innovation through the issuance of green bonds	High	High	Execution of a systematic financing plan
	Resource efficiency	Decarbonization	Reduction of carbon emissions by achieving SBT targets	Low	Low	Systematic greenhouse gas reduction efforts
		Productivity improvement	Reduction of material costs by establishing a recycling flow for waste products and materials	Low	Low	Reduction of waste through collaboration and cooperation with suppliers Construction of a recycling system on an equipment and material basis Establishment of a plastic recycling cycle toward the elimination of plastic waste Trial run at T-Base®