Environment TNFD Initiatives

TNFD Initiatives and Information Disclosure

Governance

Takasago Thermal Engineering regards nature-related risks such as biodiversity loss and depletion of natural resources as material issues, and is promoting responses aligned with the Taskforce on Nature-related Financial Disclosures (TNFD) framework. Going forward, as with climate-related issues, we will discuss nature-related issues in the Sustainability Promotion Committee and establish a system to monitor and respond through the Management Council and Board of Directors. We manage these matters under a system equivalent to reporting in accordance with the TCFD recommendations.

Strategy

Following the TNFD’s recommended LEAP approach, we used ENCORE analysis to identify the dependencies and impacts of our business operations and value chain on natural capital, and created a heat map. The results revealed a high dependency on “water supply” and “climate regulation services” from upstream to downstream, as well as impacts on water and soil caused by emissions of GHGs and other harmful substances. Through this analysis, we organized our dependencies and impacts on natural capital as both risks and opportunities, reaffirming the importance of pollution control, water resource management, and the reduction of GHG and non-GHG emissions. We will incorporate these issues into our management strategies to address nature-related risks while pursuing sustainable growth.

Risk and impact management

After reviewing dependencies and impacts, we identified our risks and opportunities and organized our assessments and an outline of measures. Our risk management will expand beyond climate-related issues to include nature-related issues. The Sustainability Promotion Committee and Company-wide Risk Management Committee will identify and assess nature- and climate-related risks based on their likelihood and potential impact size, and will consider appropriate measures. We manage these matters under a system equivalent to reporting in accordance with the TCFD recommendations.

Category		Risks	Time frame^*	Summary of measures
Physical	Acute	Delays or stoppages in the supply of equipment and materials, as well as consequential higher costs and reduced revenue, due to damage caused by intensified natural disasters at business sites	Short- to long-term	Disperse bases (10 domestic bases plus additional sub-sites (field offices)) Create multiple T-Base^® facilities Implement disaster scenario analysis and countermeasures
Transition	Policies and regulations	Increase in procurement, construction, and facility operation costs due to stronger regulations on water resource use and GHG emissions	Medium- to long-term	Promote building sustainable, competitive value chains through stronger relationships with suppliers
	Technologies	Higher costs because of shifts to environmentally friendly technologies (if water sources for refrigerants in HVAC systems become scarce, technology development will be needed)	Medium- to long-term	Regulations on water resource use ⇒ R&D on recycled water Stronger GHG regulations ⇒ Development for energy-saving, green energy supply, energy management, etc. https://www.tte-net.com/solution/pdf/gat.pdf
	Market and reputational	Decline in evaluation by stakeholders and corporate value due to impacts on the natural environment and inadequate management responses	Medium- to long-term	Promote initiatives for more detailed TNFD-aligned analysis and enhanced disclosure Strengthen communication of initiatives focused on stakeholders

Category	Opportunities	Time frame^*	Summary of measures
Resource efficiency	Reduction in resource consumption and costs due to initiatives to lower environmental impact during construction	Medium- to long-term	Thoroughly implement a 10% reduction in materials/waste and promote T-Base^® use
Products	Increase in revenue due to growing demand for technologies with reduced environmental impact	Medium- to long-term	Introduce drainless flushing^® systems to sites Promote plastic-waste reduction and recycling cycles Develop new technologies such as water circulation, carbon adsorption, and the P-MAC system https://www.tte-net.com/solution/pdf/gat.pdf
Capital flow and financing	Enhanced evaluation by stakeholders and consequential diversification of financing due to biodiversity measures	Medium- to long-term	Promote initiatives for enhanced disclosure through more detailed TNFD-aligned analysis Financing through sustainability-linked loans / issue green bonds
Resilience	Improved business resilience due to review of value chains via strengthened biodiversity measures as well as diversification of procurement	Medium- to long-term	Collaborate and build relationships with suppliers

Short-term refers to one year (aligned with the annual management plan), medium-term refers to 3 to 10 years (aligned with the Medium-Term Management Plan), and long-term refers to over 10 years (aligned with the Long-Term Vision).

Technologies that reduce environmental impact

Our Group services contributing to biodiversity conservation are as follows:

Water use reduction	Drainless flushing^® system https://www.tm-es.co.jp/solutions/solution/排水レスフラッシング工法/
GHG emission reduction	TCR-SWIT^® https://www.tte-net.com/english/solution/clean_room.html Hydrogen energy use system https://www.tte-net.com/english/solution/hydrogen.html Fresh Cool^® air conditioning equipment for gyms https://www.pmac.co.jp/products/freshcool.html
Resource recycling	Adsorbent thermal storage system Mega Stock^® https://www.tte-net.com/solution/megastock.html
Reduction of chemical emissions	Closed VOC recycling system https://www.tte-net.com/solution/recovery.html