Climate-related Disclosures​ (TCFD Recommendations)

The global environment is the foundation for all human beings, living creatures and ecosystems on this earth. Recognizing that climate change is a grave challenge faced by the world, the EBARA Group added its signature in endorsement of the TCFD in 2019. Through dialogue with our stakeholders, we will continue to improve our engagement with climate change and disclosure.​ As the IFRS® took over the monitoring of companies’ climate-related disclosures from the TCFD, we updated part of the information as of June 2025 based on IFRS® Sustainability Disclosure Standard S2 Climate-related Disclosures (hereinafter referred to as IFRS® S2).​

The Board of Directors recognizes that the important business challenge that the EBARA Group faces is the improvement of social and environmental values by practicing advanced sustainability management in light of ESG and sustainably contributing to solving the social challenges of the SDGs through our businesses and economic value by practicing ROIC-based management and portfolio management. The Board of Directors develops the basic management policy taking into consideration the long-term business environment so that the EBARA Group can sustainably generate capital for growth by practicing the above and then create greater value as it oversees continued implementation of the policy. We have specified and disclosed this approach in the Basic Policy on Corporate Governance and established the Sustainability Committee to make sure to implement this approach. The Board of Directors has included deliberations on matters related to sustainability that it should discuss, such as climate, nature, human rights, and human capital, on its annual agenda and secures time to discuss them from various angles on a regular basis. The Board of Directors has a system in which it holds discussion to specify how to execute the above and promote execution and gives feedback on the results to the Sustainability Committee. The Board of Directors has a system in which it holds discussion to specify how to execute the above and promote execution and gives feedback on the results to the Sustainability Committee. In addition, our company has adopted climate change as an evaluation item in the ESG evaluation indicators to support the achievement of non-financial goals, and has introduced a system linked to executive compensation.
For details on sustainability governance, please see here.

The Sustainability Committee is established as a body to deliberate policies, strategies, goals, and KPIs for activities that contribute to society, the environment, and the sustainability of our group, and to confirm and review the results as part of the business execution. The Sustainability Committee is chaired by the president and representative executive officer and has all the executive officers as its members and external sustainability experts as advisors. The course of action, strategies, risk management, and metrics/targets related to climate are discussed by the Sustainability Committee. We share among all management that our initiatives against climate change are one of the material issues in the Group's long-term vision, E-Vision 2030. The analysis of climate-related scenarios in each market that include the identification of risks and opportunities related to climate-related strategies is conducted under the responsibility of the presidents of the companies and the results are reflected in each company’s strategies. The results of climate-related initiatives are reflected in executive compensation.
We strive to reflect advice from the directors attending the meetings of the Sustainability Committee in our activities.​

We have established a Risk Management Panel (hereinafter referred to as "RMP") to oversee the Group's risk management activities, deliberating and providing guidance and support for improvements. The RMP is chaired by the President, Representative Executive Officers, and made up of all Executive Officers. Based on the regular risk assessments in the RPM, we have identified climate-related risks as a group-wide material risk due to their high potential for occurrence and significant impact. Responses to acute physical risks such as meteorological disasters are discussed in the RMP.

When climate-related risks and opportunities are related to asset disposal, investment, and financing, they are submitted to the management meeting.
The financial challenges and nonfinancial challenges including climate change are monitored by the Monitoring Council that manages the progress of the action plan for management challenges to achieve the midterm management plan. ​
The Monitoring Council on the Action Plan for Nonfinancial Management Challenges is chaired by the president, representative executive officer, and CEO. Its meetings are held four times a year and the presidents of each company report the progress of the measures implemented to achieve the nonfinancial targets for the businesses of which they are in charge. The progress of the activities related to nonfinancial matters conducted in all the businesses is reported, and those activities are reviewed at the meetings of the Sustainability Committee held in March and September. The results of the reporting and review at the meetings of the Sustainability Committee are reported to the Board of Directors.​

Our group is aiming for a carbon-neutral world by 2050 as outlined in the Paris Agreement, and we are examining the impact of climate change on our business through the following processes for each face-to-face market. For the climate-related strategies for the construction and industrial equipment market, energy market, water infrastructure market, solid waste treatment market, and semiconductor manufacturing market, we will review them every three years in the same cycle as the formulation of the medium-term management plan under the responsibility of the company president and incorporate them into the business strategy.
The results of the analysis conducted by each company and measures to implement are summarized by the executive officer in charge of management strategies and disclosed after they are reported to the Sustainability Committee and confirmed by the Board of Directors.

To formulate climate-related strategies in the next medium-term management plan from 2026 to 2028, we conducted a review of climate-related scenario analysis from October 2024 to the end of April 2025. In the review, we referred to IFRS® S2 climate-related disclosures. The results of the review will be considered in the medium-term management plan starting in 2026.

Regarding the process for identifying climate-related risks and opportunities, we conducted a review in 2024 based on IFRS® S2. We review climate-related risks and opportunities that may impact our group's outlook every three years in line with the formulation of the medium-term management plan. With the aim of incorporating climate-related strategies into the medium-term management plan starting in 2026, we reviewed climate-related risks and opportunities for each major Target market. The markets and businesses targeted for analysis are the building and industrial system market, energy market, water infrastructure market, solid waste treatment market, and semiconductor manufacturing equipment market.

In the previous analysis, we set the oil and gas market as a major face-to-face market, but based on the results of scenario analysis, we analyzed that the oil and gas market will shift to the next-generation energy market, so we changed the business for the oil and gas market to the energy market.

(Updated information for 2025)

For risk and opportunity items, we extracted elements that may impact our group's business activities for each face-to-face market, referring to the ISSB's industry-specific guidance, and evaluated each on two axes: 'Likelihood (including time frame)' and 'Magnitude of potential impact of risks and opportunities' as large, medium, or small. We reviewed the evaluation criteria and established certain standards for assessing the magnitude of impact on our group's business.

We extracted elements that have a significant impact on our business activities based on the following considerations.

• Likelihood: We captured risks and opportunities that may occur over time.
　　• Short-term: Next medium-term period (now to 2028)
　　• Medium-term: Including the target year of our long-term vision, 2040
　　• Long-term: Target year of the Paris Agreement, 2050

• Magnitude of impact of risks and opportunities:
　　　We set quantitative or qualitative criteria for evaluation.
　　　As a criterion for quantitative evaluation, we assessed the impact on assumed operating profit.
　　　Qualitative evaluation was based on the degree of impact on business continuity and expansion.

For the risks and opportunities identified in the importance assessment, we predicted how the 1.5°C and 4°C scenarios would impact the business model and value chain.

How will we, our customers, policies/regulations, and suppliers change in a changing business environment? In addition, we created a scenario on the likelihood of new entrants and alternatives appearing.

We assessed the financial impact of significant risks and opportunities.

We prioritized sources of information based on the reliability, versatility, and accessibility of our group's financial information, utilizing data from international organizations (IEA, IPCC, etc.), governments, industry associations, and research companies to estimate the financial impacts of climate-related transition risks and physical risks for each face-to-face market. With the aim of incorporating climate-related strategies into the next medium-term management plan starting in 2026, we reviewed the financial impacts on current business under the 1.5°C and 4°C scenarios in the short, medium, and long term.

Based on the results of the financial impact assessment, we considered measures for climate-related risks and opportunities up to the year 2050.​

The figure shows the gap between the 'current business' and 'after countermeasures' when climate-related risks and opportunities based on scenario analysis are taken into account, compared to the assumed operating profit for 2050 for each business (=100) that does not take into account climate-related opportunities and risks based on scenario analysis.（Updated information for 2025）

Current business: Financial impact when considering the impact of climate-related risks and opportunities on current products, services, and production systems.

After countermeasures: Financial impact after implementing countermeasures.

Integration of climate-related risks into overall risk management

Important climate-related risks and opportunities identified for each target market are managed by the Non-Financial Management Issues Action Plan and the Management Issues Action Plan. During the period of E-Plan 2025, we will monitor the financial impact of climate-related risks and opportunities as a Non-financial KPI.
We monitor social and environmental metrics in the Non-Financial Management Issues Action Plan and financial metrics in the Management Issue Action Plan is an action plan for managing economic indicators. The President, Representative Officer, CEO/COO chairs the monitoring meetings and reviews reports received from the in-house company presidents. In addition, the Sustainability Committee confirms the progress of the Group as a whole toward the metrics and targets related to Environmental (E), Social (S), and Governance (G) activities, and establishes action policies for increasing non-financial value.
Climate-related metrics are included in the Non-Financial Management Issue Action Plan. During the period of E-Plan 2025, we will monitor the financial impact of climate-related risks and opportunities, such as contributing to CO2 emission reduction through the provision of energy efficient products and setting goals to develop new products that further contribute to decarbonization. The Management Issue Action Plan monitors the progress of financial indicators.
The results of the climate-related scenario analysis reviewed in 2025 will be considered in the formulation of the next medium-term management plan (2026-2028).

We define “non-financial metrics” as metrics that affect social and environmental value, such as the Group’s CO2 emissions and contributions to reductions through products and services. We define “non-financial metrics” as metrics that affect social and environmental value, such as the Group’s CO2 emissions and contributions to reductions through products and services.
We have set non-financial metrics and targets in our medium-term management E-Plan2025, which began in 2023, and are monitoring progress. The Non-Financial Management Issues Action Plan for the period from 2023 to 2025 sets targets for each fiscal year until 2025 by backcasting from performance targets for 2030 and includes metrics and targets for climate-related risks and opportunities for each target market identified by climate-related scenario analysis. Climate-related metrics are included in the Non-Financial Management Issue Action Plan. Furthermore, we are aiming to commercialize new businesses, through developing hydrogen-related products, inland aquaculture systems, and cultured meat production systems, to resolve various social issues, including climate-related risks and opportunities.
We discussed the policy for activities towards carbon neutrality and the progress of activities at all four sustainability committee meetings held in 2024. We discussed the overall efforts of our Group towards achieving carbon neutrality, including the reduction forecasts for Scope 1 and 2 by each company, Scope 3 targets, obtaining SBT certification, expanding the scope of ICP, and setting contribution targets and action policies for reducing customer GHG emissions, and reported to the Board of Directors.

Materiality 1: Review of the definition and calculation logic of "Reduction of 100 million tons of CO2 emissions through delivered products" (as of June 2025)

It was set as one of the achievement targets in the long-term vision E-Vision 2030 announced in 2020.

As a climate-related indicator and target, we reviewed our Group's GHG emission reduction targets in 2024. We set target values under the two policies, "Aiming for carbon neutrality in the value chain by 2050" and "Supporting customers' GHG reductions through our products and contributing to the realization of a carbon-neutral society."
We received SBTi certification for our short-term targets for Scope 1, 2, and 3 in May 2025.

The results of the review were explained at the ESG Meeting in November 2024. Details are published on the carbon neutrality site of the EBARA Group.

Materiality: Materiality in our long-term vision, E-Vision 2030. We have set five materialities. Three of these issues relate directly to risks and opportunities arising from climate change. ​
We have set KPIs and targets up until the year 2030 based on the comprehensive risk assessment and climate-related scenario analyses we have conducted.​
(as of June 2025)