Sustainability

E: Environment Initiatives to Reduce Environmental Impact

S: Social Strengthen Ties with Stakeholders

G: Governance Corporate Value Improvement through Stronger Governance

Disclosure of information based on the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures)

Status of CSR Promotion

Disclosure based on TCFD recommendations

Disclosure of information based on the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures)
Governance
Strategy (Scenario analysis)
Assessing opportunities and risks

Addressing climate-related issues
Risk Management
Metrics and Targets

Disclosure of information based on the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures)

Akebono Brake Group has positioned climate change as an important management issue, and based on the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures), we have been examining risks and opportunities related to climate change, analyzing multi-scenario models, considering countermeasures based on our analysis results, and building governance and a risk management system.
The results of this analysis will be reflected in our business strategies, to contribute to the realization of a carbon-neutral society and to promote initiatives to achieve sustainable corporate growth.

Governance

At Akebono Brake Group, we consider environmental issues, including climate change, to be an important theme for promoting sustainability management.
The Sustainability Committee deliberates initiative policies and measures related to climate change.
This committee meets four times a year to identify risks and opportunities related to climate change and to consider countermeasures. The committee observes matters judged to have a significant impact on business, proposing to the Board of Directors after deliberation by the Management Meeting.
In addition, the Global Environment Working Group, a subordinate body to the Sustainability Committee, is responsible for the implementation of climate change initiatives. The head of the working group is the director in charge of environment affairs.

●Sustainability Committee Structure

Chairman:	Executive Officer in charge of Sustainability Implementation
Members:	Each working group (WG) leader and secretariat *Each WG member is appointed from the relevant department
Secretariat:	Sustainability Implementation Office

●Sustainability Committee Discussion Items

Matters related to environmental issues and opportunities
Matters related to social issues and opportunities
Matters related to governance (observation and execution by the Board of Directors)

The Sustainability Committee meets quarterly and proposes contents for review to the Management Conference for decision.
The Board of Directors receives semiannual reports or proposals for review and observes the progress and direction of the Committee's activities.

Strategy (Scenario analysis)

We identified climate-related risks and opportunities affecting our Group's business and assessed their impact on the Group's business and finances in the following scenarios, including a temperature rise of 2°C or lower based on TCFD recommendations.

The setting scenarios are as follows:

Assumed period	2030	Image of society
Setting scenario	Below 2°C scenario	Under sustainable development, strict policies are adopted and technological innovation is accelerated. The temperature rise by the end of the 21st century is less than 2°C. Reference scenarios: Transition - SDS (IEA WEO 2021), Physical - RCP 2.6 (IPCC AR5)
Setting scenario	4°C scenario	No tougher policies than the current ones will be taken. Climate change will have an impact. The temperature rise by the end of the 21st century greatly exceeds 2°C. Reference scenarios: Transition - STEPS (IEA WEO 2021), Physical - RCP 8.5 (IPCC AR5)

Assessing opportunities and risks

Category	Risks/Opportunities			Financial impact
Category	Risks/Opportunities			Below 2℃ scenario	4℃ scenario
Decarbonization	Risk	Introduction of carbon pricing	Energy cost increase due to introduction of carbon pricing
	Risk	Target setting and regulation tightening in each country	Tightening new standards, targets, and regulations, and increasing cost of compliance
	Opportunities	Cost reduction through energy conservation	Reducing energy costs through energy-saving measures
	Opportunities	Products with low CO₂ emissions	Expanding business opportunities with products that emit low CO₂ in manufacturing process
Raw material costs	Risk	Rise in raw material costs	Soaring raw material prices due to environmental measures
Changes in brake market	Risk	Fewer pad replacements due to spread of regenerative braking	Lower demand for repair pads due to spread of regenerative braking.
Changes in brake market	Opportunities	Introduction of brakes for CASE	Expanding demand through product development for CASE (change in mobility)
Response to severe weather	Risk	Typhoons, floods, tornadoes, rising temperatures	Suspended operations when factories are affected by typhoons, tornadoes, floods, etc., restoration investment, and falling productivity and accidents due to worsening living conditions
New markets	Opportunities	Business opportunities resulting from decarbonization	Capturing new demand through aggressive efforts in new markets

Addressing climate-related issues

We have considered measures to minimize risks and maximize opportunities related to climate change, as shown in the table below.

We will incorporate the following into our mid- to long-term management strategy.

Category	Risks/Opportunities		Countermeasures
Decarbonization	Risk	Introduction of carbon pricing	Set and reach mid- to long-term CO₂ emissions targets Promote energy conservation investment and activities Actively utilize renewable energy Systematically introduce and develop mass-production facilities that are economical and environmentally friendly Actively invest management resources in developing innovative technologies (environment-friendly product development, response to EV shift, etc.)
	Risk	Target setting and regulation tightening in each country
	Opportunities	Cost reduction through energy conservation
	Opportunities	Products with low CO₂ emissions
Raw material costs	Risk	Rise in raw material costs	Develop and select global suppliers Develop environmentally friendly products (lower weight, new materials, new technologies) Replace with cheaper and alternative materials Set fair prices
Changes in brake market	Risk	Fewer pad replacements due to spread of regenerative braking	Accelerate response to EV shift and introduce brakes for CASE (change in mobility) Check brake trends for CASE by gathering market trends, and revise technology roadmap Strengthen technological and product development based on technology roadmap Reduce development lead times through enhanced use of simulations Secure revenue by expanding into new overseas markets Establish and expand sales of value-added products
Changes in brake market	Opportunities	Introduction of brakes for CASE
Response to severe weather	Risk	Typhoons, floods, tornadoes, rising temperatures	Build a global production system Develop labor-saving technology Strengthen efforts to improve working environment
New markets	Opportunities	Business opportunities resulting from decarbonization	Actively develop new business and its sales channels

Risk Management

At Akebono Brake Group, climate-related risks are managed by the Sustainability Committee and reported to the Management Conference as appropriate.

Particularly important risks are reported to the Risk Management Committee, which is a company-wide risk management body (and subordinate body to the Internal Control Committee), and it decides on policies of measures to be taken, etc. The activities of the Risk Management Committee are regularly reported to the Board of Directors via the Internal Control Committee.

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