Disclosure Based on TCFD Recommendations

Role of management

The ESG Committee, chaired by the President, meets four times a year to discuss important issues, including the Carbon Neutral 2030 Declaration, which calls for reducing greenhouse gas emissions from electricity and other sources used in business operations to zero by fiscal 2030. The rate of introduction of renewable energy and other measures to achieve carbon neutrality are partially linked to executive compensation. In addition, an Environment Committee has been established under the oversight of the Executive Officer in Charge of ESG as an organization to manage climate-related risks, promote internal initiatives, and carry out business operations.

The Environment Committee is chaired by the General Manager of the CSR Division and consists of environmental managers from each of our business units and major Group companies, and promotes specific measures to achieve carbon neutrality 2030.

Impact on business strategies and financial plannings

We analyzed the impact of climate change risks on our business strategies and financial plannings. In the 1.5℃ scenario, we assumed that there would be no acute or chronic physical risks from climate change at a level that would affect our business, but that policies and laws and regulations (Tax for Climate Change Mitigation, Act on Promotion of Global Warming Countermeasures, etc.) to combat climate change would be strengthened, and we estimated the impact of a carbon tax of about 16,000 yen per ton of CO2 equivalent starting in 2025.
Furthermore, we will closely monitor the future trends of carbon pricing as a domestic regulatory measure.

In the 4℃ scenario, we assumed that there would be no materialization of strengthened policies, laws, regulations, including climate change countermeasures, and the transition risk in technology, market, and reputation. However, we considered that the physical impacts of climate change, such as more severe extreme weather events, would occur. Based on the restoration cost of 770 million yen in FY2019, which was the most severe damage to our company due to heavy rainfall with emergency warning in recent years, we have estimated the potential financial impact that is expected to occur in the future.

Taking into account the specific circumstances of each region as part of the adaptation measures to manage physical risks, we implemented reinforcement measures with a budget of 1.85 billion yen in the fiscal year 2022. For the fiscal year 2023, we are primarily planning the following measures

• To address the increasing occurrence of typhoons and linear rainbands, which have led to a rising probability of flood damage, we are implementing elevation measures in some of the base stations located in coastal and river areas.
• In order to maintain more stable service during large-scale power outages, we are implementing power reinforcement measures through additional deployment of power generators, long-lasting batteries, and other backup power sources.
• Implementing regular inspections to reduce the risk of equipment damage during disasters.

Resilience of strategy

To reduce the risk of damage from weather disasters, we have continued to invest in the installation of long-lasting batteries in base stations, deployment of disaster drones, and enhancement of disaster countermeasure inspections, and no incidents leading to serious area disruptions occurred in FY2022.

In addition, we are promoting efforts to commercialize the High Altitude Platform Station (HAPS) service, a stratospheric communications system that provides a communications network from the stratosphere, approximately 20 kilometers above the ground. HAPS will enable the construction of a stable Internet connection environment in places and regions where communication networks are not in place, such as mountainous areas, remote islands, and developing countries. In FY2021, we issued our first sustainability bond (HAPS bond) for capital investment, research and development, and business operations of HAPS.
See the table below for risks and opportunities identified and measures taken to address them.

Climate change risk management process

The identified risks, including regulatory, reputational, market, technological, and physical risks, are monitored and progress managed by the Environment Committee, which confirms the formulation and implementation of countermeasures.

Integration into the company-wide risk management process

In order to identify and prevent the manifestation of company-wide risks, we have established a management system that analyzes risks from various angles within the company. The Risk Management Office periodically identifies company-wide and comprehensive risks and checks the status of countermeasures, and reports the results to the Risk Management Committee, whose members include the president, vice presidents, and CFO, as well as corporate auditors and the heads of related divisions. The Risk Management Committee determines the level of importance of risks and the person responsible for dealing with them (risk owner), issues instructions on countermeasures, and reports the status to the Board of Directors. The Internal Audit Office confirms these overall risk management systems and conditions from an independent standpoint.
Climate change risks managed by the Environment Committee are integrated with company-wide risk management, and through regular risk management cycles, we are working to reduce and prevent risks.

Greenhouse gas emissions

Greenhouse gas emissions (Scope 1 and 2) for FY2022 were 579,919 t-co2 and 9,368,649 t-co2 for Scope 3. For detailed figures, please refer to the data book at the end of this report, which is basically 99% of the Group's consolidated sales ratio for FY2022. Any differences will be noted in the table.

Targets and performance

As part of our Scope 1 and 2 goals, we have set a carbon neutral goal to reduce greenhouse gas emissions from electricity used in our business activities to zero by 2030. In the fiscal year 2020, we achieved a 30% transition to renewable energy for base station electricity, and in the fiscal year 2021, we reached 50% transition to renewable energy. We plan to progressively achieve a transition of 70% to renewable energy by the fiscal year 2022 and set a target of 80% for the fiscal year 2023. Additionally, we will promote greenhouse gas reduction for electricity usage in all of our facilities and equipment, not just base stations.

Furthermore, we will enter into long-term contracts for renewable energy procurement and aim to switch 50% of the electricity we use to additional renewable energy sources by the fiscal year 2030, with the ultimate goal of achieving a 100% transition by 2050.

In June 2023, our company announced its commitment to achieve “net-zero” greenhouse gas emissions (including supply chain emissions) by the fiscal year 2050, encompassing Scope 1, 2, and 3 emissions associated with business activities.
In order to establish a roadmap for reducing emissions across the entire supply chain, we participated in the Ministry of the Environment's “FY2022 Model Project for Promoting Decarbonization of the Entire Supply Chain of Large Corporations”. We have been deploying guidelines to our business partners regarding emissions reduction and requesting the establishment of emission reduction targets in line with the Paris Agreement, as well as the disclosure of progress updates.
Other ongoing initiatives include the following plans.

• Power efficiency and energy-saving measures utilizing technologies such as Artificial Intelligence (AI) and the Internet of Things (IoT)
• Reduction of environmental load through the development of next-generation batteries
• Improvement of energy consumption efficiency through the establishment of a highly decentralized computing infrastructure (xIPF)
• Construction of decentralized AI data centers utilizing green energy sources
• Reduction of greenhouse gas emissions associated with human mobility through the promotion of telework

Our greenhouse gas emission reduction targets, including Scope 3, have been certified by the international climate change initiative SBTi (Science Based Targets initiative) as scientifically based “SBT (Science Based Targets)”.
For more information on SBT targets, please click here

The Scope 3 reduction target certified by SBT is a 14.8% reduction by FY2030 compared to the base year (compared to FY 2019). Additionally, in June 2023, we also committed to SBT Net-Zero and are currently in the process of applying for Net-Zero targets and updating SBT short-term targets.

Transition Plan Towards Net-Zero by 2050

We have developed a transition plan towards achieving the goal of achieving carbon neutrality by 2030, which includes reducing Scope 1 and 2 emissions to zero, as well as achieving net-zero supply chain emissions, including Scope 3, by 2050.

[Notes]

1. *
   The SBT Net-Zero target application and the SBT short-term target renewal application are in process, and the base year emissions and reduction targets are described in the application details.
2. *
   The plan is as of February 2024 and is subject to revision depending on future business strategies.

The transition plan disclosed here is a plan for indicators and targets, especially focusing on Scope 1, 2, and 3 reduction targets. We will continue to strive for proactive disclosure, referring to various guidance and initiatives in the future.