The Group has been accelerating its ESG management efforts since FY2018, expanding discussions related to climate change as shown below at the Board of Directors, Management Committee, and Sustainability Committee meetings. The Board of Directors also reports and shares quarterly progress related to climate change.

• Key Discussions on Sustainability within Furukawa Electric Group
  • Board of Directors

    Feb. 2021	Formulated Furukawa Electric Group Environmental Vision 2050.
    May 2022	Formulated sustainability indicators and targets
    March 2023	Partially revised sustainability targets for FY2025 (GHG emissions reduction rate (Scope 1, 2) and ratio of renewable energy use to total consumption ).

  • Management Committee

    Jan. 2019	Formulated the Environmental Targets 2030 and applied for SBT (2°C) certification.
    Jan. 2020	Endorsed the TCFD’s recommendations and signed the UN Global Compact.
    Dec. 2020 – Feb. 2021	Formulated Furukawa Electric Group Environmental Vision 2050.
    Nov. 2021 – Feb. 2022	Revised Environmental Targets 2030 and applied for SBT (WB2°C) certification
    Dec. 2022	Revised Environmental Targets 2030 and applied for SBT (1.5°C) certification.

  • Sustainability Committee

    March 2022	Formulated sustainability indicators and targets
    March 2023	Partially revised sustainability targets for FY2025 (GHG emissions reduction rate (Scope 1, 2) and ratio of renewable energy use to total consumption).

• Furukawa Electric Group’s definition of the period to consider climate-related risks (transition and physical risks) and opportunities

  Medium-term	Up to FY 2025	Period up to achieving the 2025 Mid-term Plan and sustainability targets
  Long-term	Up to FY 2030	Period up to achieving the Vision 2030 and the Environmental Targets 2030
  Super-long-term	Up to FY 2050	Period up to achieving the Environmental Vision 2050

• Scenario Analysis
  • In FY 2019, we participated in the Scenario Analysis Support Project for Climate-related risks and opportunities in line with the TCFD, conducted by the Ministry of the Environment. We identified climate-related risks (transition and physical risks) and opportunities and conducted scenario analysis for the infrastructure businesses (optical fiber and cable products of the Communications Solutions Business and power cables of the Energy Infrastructure Business). We then identified climate-related risks and opportunities and conducted a scenario analysis for the automotive products business in FY 2020 and for the AT & functional plastics business and the copper & high-performance material products business in FY 2021.
  • Until FY2021, in examining the “different climate-related scenarios, including a 2°C or lower scenario” recommended by the TCFD, we had examined a “2°C or lower scenario” and a “4°C scenarios” step-by-step for each business field by referring to several existing scenarios published by the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC). 
  •  In FY2022, to accelerate our efforts toward achieving carbon neutrality by 2050, we revised the Environmental Targets 2030 and applied for an SBT (1.5℃ Targets) initiative certification. Accordingly, the scenarios for the business fields, for which we had been conducting scenario analysis, were revised to the “1.5°C scenario” and the “4°C scenario.”
• Assessment of impact on business in 2030

  Category			Identified climate related risks and opportunities	Business impact
  				1.5℃	4℃
  Risks	Transition risks	Policies and regulations	・Carbon tax on GHG emissions	Major	Minor
  		Markets	・Increase in renewable energy procurement costs ・Increase in procurement costs of materials (copper, aluminum, plastics) due to carbon tax	Major	Minor
  	Physical risks	Acute	・Damage to buildings due to large-scale disasters (large typhoons, heavy rains, heavy snow, lightning strikes) caused by abnormal weather ・Supply chain disruption of customers or suppliers caused by weather disaster	Minor	Minor
  			・Shut down of coastal factories caused by flooding and drought	Medium	Major
  		Chronic	・Increase in air conditioning costs due to a rise in average temperature	Medium	Major
  Opportunities	Markets		・Increase in revenue and profit from accelerating development of 5G/B5G (Beyond 5G) along with the construction of smart cities and the surge of communications traffic ・Increase in revenue and profit from demand growth for products related to telecommunications, semiconductor memory, 5G and smartphones ・Increase in revenue and profit from demand growth for submarine cables and the enhanced core transmission network along with the increase in renewable energy generation ・Increase in revenue and profit from demand growth for products along with automotive electrification and weight reduction	Major	Medium
  	Products and services		・Increase in sales from demand growth for low-carbon and carbon-free products and recycled products in response to requests for carbon neutrality and circular economy	Major	Medium

• Efforts toward Achieving Carbon Neutrality 

  By conducting scenario analysis, we identify climate-related opportunities and risks and work to achieve carbon neutrality by both capturing revenue opportunities and mitigating risks.

  As for revenue opportunities, during the period of the 2025 Medium-term Plan, we will continue to stabilize revenue from existing businesses and develop a foundation for the creation of new businesses; and we will contribute to achieving carbon neutrality by 2030 by solving social issues in each business field. For example, to strengthen our existing businesses, we are working to expand the use of renewable energy in our power cable business; to create new businesses, we are working to realize a B5G society in the communications field; and to build a social infrastructure that enables “Succession of local resources and local culture for the future”* through the use of green LP gas.

  As for risks, we have established the Environmental Vision 2050 as our super-long-term goal, with the challenge target of reducing GHG emissions (Scopes 1 and 2) in our business activities to zero by 2050, as well as another target of reducing GHG emissions throughout the value chain. Backcasting from these targets, we have set targets for reducing GHG emissions in the Environmental Targets 2030 and the sustainability targets in the 2025 Medium-term Plan to work toward achieving these reductions.

  *Succession of local resources and local culture for the future: This expresses passing on regional resources and cultures to the next generation in addition to local production for local consumption.

• The Group’s overall risk management
  • The Group has established the Risk Management Committee, which comprises management as members, with the President as chair and the General Manager of the Risk Management Division as vice chair. The committee is structured to supervise and promote risk management, internal control and compliance. The committee conducts high-level assessment of risks from management and operational perspectives to define material risks that require a company-wide response, and prioritize measures to counter these risks.
  • We recognize “climate change” as a key risk from the management perspective that has a large impact and a high likelihood of occurrence. 

    Classification	Risk Item	Description of Risks	Major Initiatives	Magnitude of impact	Likelihood of occurrence
    Management perspective　risk	Climate change (Carbon neutrality)	As a transition risk, higher raw material procurement costs and manufacturing costs due to carbon taxes enacted based on government policies or GHG emissions targets in each country  Exclusion from supply chains, products, services, and labor markets due to an insufficient response to climate change   Suspension of operations due to an unforeseen risk of flooding or drought linked to climate change	Establish the Environmental Vision 2050, set a challenge target of eliminating GHG emissions and raise or reset the Environmental Target 2030 Endorsed the Task Force on Climate-related Financial Disclosures (TCFD) recommendations and conducted scenario analysis In addition to using hydroelectric power in the Nikko area, installed solar power and switched to procuring renewable energy in Japan and overseas Grasped the risk of flooding and drought linked to climate change, and formulated responses	High	High
    	Impact of disasters, infectious diseases, etc.	Plant shutdowns due to building damage or flooding caused by large typhoons linked to abnormal weather Disruption of a customer’s or supplier’s supply chain due to a large earthquake, tsunami, fire or infectious disease	Promoted Business Continuity Management (BCM) with ISO 22301 Developed and improved business continuity plan and ensured employee safety through safety confirmation system Established data centers in facilities that are earthquake resistant and provide a stable communications environment Add redundancy to the supply chain	High	Medium

    For details, please refer to "Business-Related Risks" on our website.

    • Through specialized committee activities in segment-specific areas— occupational health and safety, quality control, the environment, and disaster prevention and business continuity management—we are enhancing our system to manage risks related to our business activities. In addition to this system, important decision making is conducted by the Board of Directors and the Management Committee or through the approval processing system, after the expected risks based on each case have been clearly presented and acknowledged.
  • In considering climate-related risks such as climate change and natural disasters as the priority issue for environmental risk, we regularly discuss preliminary strategies for climate-related risks mainly at the Furukawa Electric Group Environmental Committee (hereinafter, the “Environmental Committee”) and business continuity measures after the occurrence of risks are discussed mainly at the Central Disaster Prevention and BCM Promotion Committee.
    
  • The Environmental Committee
    • The Environmental Committee, chaired by the General Manager of the 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 the Management Committee and the Board of Directors.
    • In FY2022, to accelerate our efforts toward achieving carbon neutrality by 2050, the committee discussed the revision of the Environmental Targets 2030 and the application for an SBT (1.5℃ Targets) initiative certification, and submitted proposals and reports to the Management Committee.
  • The Central Disaster Prevention and BCM Promotion Committee
    The Central Disaster Prevention and BCM Promotion Committee, chaired by the General Manager of the 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.
  • Internal carbon pricing (using a shadow price) has been calculated since FY 2019. By visualizing the amount of CO₂ emissions for each division using carbon prices, we encourage preparation to avoid climate change risks toward decarbonization. For example, a division that cannot meet its reduction target will have a negative shadow price and will incur a hypothetical loss. Conversely, a division that meets the target will have a positive shadow price and will bring hypothetical profit. Based on the quarterly evaluation and posting effects, a renewable energy introduction plan is promoted for any division that does not meet the target.
    In addition, we have set GHG emissions targets for each business division since FY2023, and have established a rule that each business division will bear the increase in procurement costs of renewable energy if the targets are not met.
  • The Group take appropriate management and preventive measures against physical risks related to climate change (heavy rain, heavy snowfall, etc.). In addition, each of our works take air conditioning measures to cope with rising temperatures. The following are examples of measures taken at Hiratsuka and Nikko Works.

  	Works	Risk	Main measures against risks
  Furukawa Electric	Hiratsuka	heavy rain	Installed of rainwater reservoirs Regularly cleaned drainage system and installed bypass pipes to increase drainage capacity Implemented waterproofing work on the factory roof to prevent flooding in the factory
  	Nikko	heavy snowfall	Planned reinforcement work to prevent damage to factory buildings Installed snow-melting equipment such as electric heaters to prevent snow accumulation on factory roofs

1. a) Disclose the metrics used by the organization to assess climate-related risks and opportunities in line with its strategy and risk management process.
2. b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.
3. c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.

• Furukawa Electric Group Environmental Vision 2050 (Formulated in March, 2021)
  Environmental Vision 2050 embraces the contribution to the realization of a sustainable society throughout the value chain through the provision of environmentally 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 reduce GHG emissions throughout the value chain, and have set the challenge target of zero GHG emissions from our business activities (Scopes 1 and 2) by 2050.
 
• Environmental Targets 2030 (Revised in November 2022)
  We have revised 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 have updated our 2030 target as follows.
  (1) Greenhouse gas emissions from business activities (Scope 1 & Scope 2): Reduce by at least 42% compared to FY2021
  (2) Greenhouse gas emissions in the value chain (Scope 3): Reduce by at least 25% compared to FY2021
  Scope 1: Direct emissions from own factories and offices
  Scope 2: Indirect emissions from the use of electricity, heat, etc. purchased by the company
  Scope 3: Indirect emissions other than Scopes 1 and 2 (emissions by other companies related to the activities of the business operator)
  The Group’s GHG reduction targets of 2030 obtained SBT(a clearly-defined pathway for companies to reduce GHG emissions) 1,5℃ certification in July 2023. 
  
• Sustainability Indicators for FY2025
  We aim to achieve the sustainability target for FY2025 setting 2025 Medium-term Plan of “Sales ratio of environmentally friendly products,” “GHG emissions reduction rate (Scopes1, 2)” and “Ratio of renewable energy use to total consumption” as sustainability indicators that measure the progress of addressing material issues of “Creating environment-friendly businesses” and “Developing business activities that consider climate change.” In accordance with the revision of the Environmental Target 2030 for FY2022, we raised the FY2025 targets for "greenhouse gas emission reduction rate (Scope 1 and 2)" and "ratio of renewable energy to total electricity consumption.
  Sustainability indicator
• Metrics and Results

  Metrics	Unit	Result
  		FY2017	FY2018	FY2019	FY2020	FY2021	FY2022
  ★Sales ratio of environmentally friendly products	%	32.6	40.5	56.2	58.2	61.9	65.0
  ★GHG emissions (Scope 1 and 2)	1000t-CO2e	903	843	742	648	640	571
  ★Ratio of renewable energy to electricity consumption	%	7.9	8.9	11.0	10.2	10.9	20.2
  GHG emissions (Scope 3)	1000t-CO2e	1,636	1,689	4,735	4,161	4,680	4,458

• Metrics and Targets

  Metrics	base year	Target			Environmental target	Challenge goal
  		FY2022	FY2023	FY2025	FY2030	FY2050
  ★Sales ratio of environmentally friendly products	-	64％	66％	70％	-	-
  ★Reduction rate for GHG emissions (Scope 1 and 2)	FY2017	-17.7%	-21.2％	(-42%)*1	(-59%)*1	Zero emission
  	FY2021	-	-	-18.7％*2	-42％*2
  ★Ratio of renewable energy to electricity consumption	-	11.5%	12.0％	30%*3	-	-
  Reduction rate for GHG emissions (Scope 3)	FY2019	-4%	-6％	-	-	-
  	FY2021	-	-	-11％*2	-25％*2	-

   

  *1Base year was updated to FY2021 upon the revision of Environmental Targets 2030; the reduction target value when applied to the former base year of FY2017 is also shown for reference. 

  *2Target value for FY2025 was updated upon the revision of Environmental Targets 2030 in FY2022. 

  *3The FY2025 target value for the ratio of renewable energy was raised upon the revision of Environmental Targets 2030.

  
  

• Disclosure of environmental information and improvement of external evaluation
  • We have responded to the CDP questionnaire regarding CDP climate change since FY 2008 and CDP water security since FY 2013. We received A- rating in CDP climate change and B rating in CDP water security in FY 2022.
  • In cooperation with customers who utilize the CDP Supply Chain Program, we will participate in explanatory meetings and seminars, and in order to maintain and improve the CDP score, we will continue to expand the scope of disclosure of environmental information and increase reliability. We successfully received an A rating in the CDP Supplier Engagement Assessment for FY 2022 for the fourth consecutive year, thanks to collaboration with interested parties.
  • With regard to Scope 3, we began disclosing GHG emissions by category in FY 2020.

  Our Group Scope 1 ,2 ,3 Greenhouse Gas Emissions Results（1000t-CO_2e）

  						FY2017	FY2018	FY2019	FY2020	FY2021	FY2022
  			CO2			148	148	139	115	121	116
  			SF6			90	49	32	28	7	37
  		Scope 1				238	197	172	143	128	153
  		Scope 2				665	646	570	504	512	418
  	Scope 1+2					903	843	742	648	640	571
  			Upstream	Category 1＊	Purchased goods and services	-	-	2,493	1,656	1,829	1,855
  				Category 2	Capital goods	-	-	187	158	134	154
  				Category 3	Fuel- and energy-related activities (not included in Scope 1 or Scope 2)	-	-	112	94	123	110
  				Category 4*	Upstream transportation and distribution	-	-	73	126	207	323
  				Category 5	Waste generated in operations	-	-	22	21	22	18
  				Category 6＊	Business travel	-	-	7	6	57	12
  				Category 7	Employee commuting	-	-	23	23	24	24
  				Category 8	Upstream leased assets	-	-	7	6	7	9
  			Downstream	Category 9*	Downstream transportation and distribution	-	-	11	9	141	9
  				Category 10	Processing of sold products	-	-	-	-	17	16
  				Category 11*	Use of sold products	-	-	1,720	1,980	1,575	1,587
  				Category 12*	End-of-life treatment of sold products	-	-	50	51	57	63
  				Category 13	Downstream leased assets	-	-	2	3	4	4
  				Category 14	Franchises	-	-	-	-	-	-
  				Category 15*	Investments	-	-	28	28	283	274
  	Scope 3*					1,636	1,689	4,735	4,161	4,480	4,458
  Scope 1+2+3						2,539	2,532	5,477	4,808	5,120	5,029

  ＊ The calculation method was reviewed in FY2023 and recalculated retroactively for FY2021