As issues on “Developing business activities that consider climate change,” risk-related material issues, are closely related to management strategy risks of Furukawa Electric Group, they are handled in collaboration with Sustainability Committee, Risk Management Committee, and its special committee, Furukawa Electric Group Environmental Committee (hereinafter, “Environmental Committee”) and Central Disaster Prevention and BCM Promotion Committee.

In considering climate-related risks such as those posed by climate change and natural disasters as the priority issue for environmental risk, we regularly discuss preliminary strategies for climate-related risks mainly at Environmental Committee and business continuity measures after the occurrence of risks are discussed mainly at Central Disaster Prevention and BCM Promotion Committee.

Environmental Committee, chaired by the General Manager of Risk Management Division and composed of top management including general managers of each business division and corporate division, meets every three months to discuss issues related to climate change among others, and submits proposals and reports to Management Committee and the Board of Directors.

Central Disaster Prevention and BCM Promotion Committee, chaired by the General Manager of Risk Management Division and composed of general managers of each business division, divisional representatives, etc., meets every three months to establish Business Continuity Management (BCM), identify business continuity risks, including natural disasters, and promote and manage the identification process.

Furthermore, the status of business execution on climate change is reported to and shared with the Board of Directors on a quarterly basis.

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In order to show our “resilience of an organization’s strategy, taking into consideration of different climate-related scenarios, including a 2℃ or lower scenario” provided by TCFD recommendation, Furukawa Electric Group has identified climate-related risks (transition risks and physical risks) and opportunities and conducted scenario analysis related to different climates, including a “2℃ or lower scenario,” setting Medium-Term Management Plan as a baseline since FY2019.

Identification of climate-related risks and opportunities is conducted through a process of Step 1 through Step 3. First, in Step 1, we create a list of climate-related risks and opportunities, including not only in our Group but also in the upstream and downstream operations of supply chain by referring to “external information” and “internal information.” In Step 2, the identified items are evaluated with scores in terms of “impact on Furukawa Electric Group” and prioritized. In Step 3, high-priority items are identified as climate-related risks and opportunities. For the identified climate-related risks and opportunities, assessment of impact on business in FY2030 is conducted with impact parameters in a 1.5℃ scenario and a 4℃ scenario.

We identify climate-related opportunities and risks and work to achieve carbon neutrality by both capturing revenue opportunities and mitigating risks. Based on the “Guidance on Metrics, Targets, and Transition Plans” published by TCFD in October 2021, we started formulating a climate transition plan which is a series of targets and actions to support the transition to a low-carbon economy in FY2023.

As for the measures to deal with risks, we revised the Environmental Vision 2050 in November 2024, setting a target of achieving GHG emissions across throughout the value chain. In addition, under our Environmental Targets 2030—established as a milestone toward 2050—we have set GHG reduction targets covering Scope 1, 2, and 3 emissions. Among these, the Scope 1 and 2 targets have been positioned as sustainability indicators under the risk-related material issue “developing business activities that consider climate change” in the 2025 Medium-term Plan, with specific goals set for FY2025.

As part of our climate transition plan to achieve the Environmental Vision 2050 and the Environmental Target 2030, we have established a roadmap to achieve zero GHG emissions (Scope1,2) by 2050 and are promoting efforts to achieve these goals. In order to achieve our Scope 1&2 targets, it is essential not only to promote energy savings and fuel conversion at plants, but also to actively utilize renewable energy. Therefore, we have set the “Ratio of renewable energy use to total electricity consumption” as a sustainability indicator to work toward improving the ratio of renewable energy use (usage of hydroelectric power, installation of solar power system, and introduction of electricity derived from renewable energy.)

In an effort to reduce emissions across the entire value chain, we are working to calculate and understand our value chain emissions (Scope 3). For Scope 3 calculations, we follow the Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain (ver. 2.6)” issued by the Ministry of the Environment and Ministry of Economy, Trade and Industry. Emission factor is referenced from the Emission Factor Database for Calculating Greenhouse Gas Emissions of Organizations Through the Supply Chain (ver. 3.3) and AIST-IDEA v3.3 (Japanese version).

Within our Group’s Scope 3 emissions, the highest contributing categories are Category 1: Purchased Goods and Services, and Category 11: Use of Sold Products. For Category 1 in particular, we are promoting the use of recycled materials such as copper, aluminum, and plastic, and are encouraging suppliers to calculate and reduce their GHG emissions. We are also working to understand emissions associated with purchased products through a dedicated questionnaire conducted alongside the Self-Assessment Questionnaire (SAQ) based on our CSR Procurement Guidelines.

We have set “GHG emissions reduction rate (Scopes 1&2)”, “Ratio of renewable energy use to total electricity consumption” and “Sales ratio of environment-friendly products” as sustainability indicators that measure the progress of addressing material issues of “Developing business activities that consider climate change” and “Creating environment-friendly businesses.” Sustainability Committee follows up the progress of these indicators semiannually. We have also set the GHG emissions targets for each business division in accordance with the Targets 2030 since FY2020, and GHG emissions per unit of sales targets for each business division since FY2022. Management Committee follows up the progress of “GHG emissions” and “GHG emissions per unit of sales” quarterly.

As for internal carbon pricing (using a shadow price), setting GHG emissions of each business division calculated using carbon prices (applying 20,000 yen/t-CO₂e in FY2024) since FY2019, we encourage each business division to be prepared to avoid climate change risks for decarbonization based on the quarterly evaluation and posting effects at the Environmental Committee. In addition, formulating of a renewable energy introduction plan is being promoted for any division that does not meet the target, having established a rule that each business division will bear the increase in procurement costs of renewable energy if the targets are not met since FY2023.

In addition to financial factors, we utilize ESG factors, “GHG emissions” and “GHG emissions per unit of sales (carbon efficiency),” in the process of business portfolio optimization and calculating the cost of capital in FVA for each business. In risk management of the entire Group, we identify “Climate Change (Carbon Neutral)” as a material risk from management perspectives and address it accordingly.

Environmental Vision 2050 embraces the contribution to the realization of a sustainable society throughout the value chain through the provision of environment-friendly products and services and recycling-based production activities. As part of our contribution to the realization of a carbon-free society, we aim to achieve net-zero GHGs emissions across our entire value chain.

We have set the Environmental Targets 2030, a milestone toward the realization of the Environmental Vision 2050. To contribute to the realization of a carbon-free society, we identify our 2030 target as follows.

In FY2024, we further promoted the introduction of renewable energy which we have been actively promoting since FY2022. At the Mie No. 1 Plant, which manufactures AT products, we switched 100% of our electricity consumption to renewable energy as of April 2023. In addition, at the newly established Mie No. 2 Plant in May 2024, we installed solar power generation facilities on the rooftop using an on-site PPA model. By covering part of the electricity used with solar power, we expect to contribute to reducing GHG emissions during the manufacturing of AT products. We also promote to install solar power systems and switch to procuring renewable energy in other business sites of our company and production sites in Japan and overseas. As a result, we expect to achieve the FY2024 targets, “GHG emissions reduction rate (Scopes 1&2)” and “Ratio of renewable energy use to total electricity consumption.