The Tomoku Group expressed its support for the TCFD in May 2022 and has disclosed information in line with the TCFD recommendations since then. We recognize climate change as one of the most urgent global environmental issues and understand that it will have a significant impact on the global economy and society.

The Tomoku Group regards climate change as one of its most important management issues and is promoting the reduction of greenhouse gas emissions and the efficient use of energy. We will continue to actively disclose the Group’s strategies and responses and enhance both the quality and quantity of our disclosures.

1. Governance

The President and Representative Director is responsible for the Group’s overall sustainability strategy, including its response to climate change.

The Sustainability Committee is chaired by the President and composed of the directors who head Safety Promotion & Quality Assurance, Sales, Corporate Administration, and Production. As a rule, the Committee meets twice a year to formulate sustainability policies, discuss initiatives, set targets, manage progress, and report to the Board of Directors. The Board receives reports from the Sustainability Committee and monitors and oversees the Group’s responses to key issues and the progress toward its targets (Figure 1).

Under the Sustainability Committee, there are three bodies: the Sustainability Project Team (“Sustainability PT”) led by the head of Corporate Administration; the TCFD Disclosure Project Team (“TCFD Disclosure PT”), led by the President; and the Group Sustainability Liaison Meeting, led by the head of Corporate Administration.

The Sustainability PT is supported by the President’s Office and the ESG Promotion Office and is composed of the heads of the Production, Sales, Corporate Administration, and Quality Assurance divisions. The team discusses a broad range of sustainability-related measures and initiatives.

The TCFD Disclosure PT is supported by the ESG Promotion Office, the President’s Office, and the Quality Assurance Department, and is composed of the heads of the Corrugated Container and Display Carton Business (the “Packaging” Business), Housing Business, and Transportation and Logistics Business. The team discusses climate-related risks and opportunities, as well as response measures, from the perspectives of the different businesses.

The Group Sustainability Liaison Meeting is supported by the President’s Office and the ESG Promotion Office and is composed of executives from the core companies in the Housing Business and Transportation and Logistics Business. In coordination with both Project Teams, the Meeting discusses Group-wide sustainability issues and responses to climate change, aligns the overall direction of the Group, and provides guidance and advice to Group companies.

Both Project Teams and the Group Sustainability Liaison Meeting work together to submit proposals to the Sustainability Committee, which reviews and deliberates on them.

2. Strategy

2-1 Material Issues

The Tomoku Group has identified the key issues it will prioritize based on their impact on all stakeholders and on the Group (Figure 2). Responding to climate change has been identified as one of the most important issues, and we are advancing initiatives to address it.

2-2 Scope of the Analysis

The scope of the scenario analysis covers the domestic operations of the Group’s three core businesses—the Packaging Business, Housing Business, and Transportation and Logistics Business—as well as its overseas consolidated subsidiaries. Net sales and operating profit by business for FY2024 are shown in Figure 3.

Business in Scope	Packaging Business (Tomoku non-consolidated and 7 consolidated subsidiaries) Housing Business (5 consolidated subsidiaries) Transportation and Logistics Business (4 consolidated subsidiaries) Overseas (3 consolidated Subsidiaries)

2-3 Climate-related Scenarios

In our scenario analysis, we referred to materials published by the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC) and established the two future scenarios shown in Table 1: a 1.5°C Scenario^*and a 4°C Scenario.

We will continue to use the latest data, improve the accuracy of our analysis, and conduct scenario analysis on an ongoing basis. We will reflect the results in our management strategy and enhance our resilience in the face of an uncertain future.

Note: If data are unavailable for the 1.5°C scenario, the 2°C scenario is used.

Table 1. Scenario Definitions

• Scenarios from the IEA World Energy Outlook (WEO) are generally used to assess transition risks and opportunities.
• The SDS is based on the IEA WEO 2019, while the other IEA scenarios are based on WEO 2024.
• Scenarios from the IPCC AR5 (Fifth Assessment Report) are used to assess physical risks.

2-4 Risks, Opportunities, and Strategies

We identified potential risks and opportunities and qualitatively assessed the magnitude of their impact as high, medium, or low.

Transition risks and opportunities were assessed based on the 1.5°C scenario, which is expected to have a significant impact, while physical risks and opportunities were assessed based on the 4°C scenario. Our strategies for these risks and opportunities, together with the expected timing of their emergence, are summarized in Tables 2 and 3.

Table 2. Transition Risks, Opportunities, and Strategies (Primarily Based on the 1.5°C Scenario)

Table 3. Physical Risks, Opportunities, and Strategies (Primarily Based on the 4°C Scenario)

Notes:

• Assessment criteria for impact
  Qualitative assessment:
  High: The business may be suspended or experience a significant contraction or expansion.
  Medium: Part of the business may be affected.
  Low: The impact is minor and has little effect on the business.
• Time Horizon
  Short term: Up to approximately three years from now
  Medium term: Through FY2030 (the target year for greenhouse gas emission reduction)
  Long term: Through FY2050
• Business Classification
  All: Common to Three Businesses
  Pkg: Corrugated Container and Display Carton Business ("Packaging" Business)
  T&L: Transportation and Logistics Business
  Hsg: Housing Business

2-5 Business Impact Assessment

We evaluated the extent to which climate change-related business risks could increase or decrease the Tomoku Group’s FY2024 operating profit.

For transition risks, we evaluated quantifiable items such as carbon taxes, fossil fuel prices, and electricity prices. For physical risks, we evaluated flood damage, storm surge damage, and business interruption.

Other factors, including fluctuations in raw material prices, increased sales opportunities, and environmental investments, are also expected. However, they are excluded from this assessment because they are difficult to estimate.

The reference materials and estimation methods used in the assessment are shown in Table 4, and the parameters used in the estimates are shown in Table 5.

Table 4. Reference Materials and Estimation Methods for Transition and Physical Risks

Table 5. Parameters Used to Estimate Transition Risks and Physical Risks

Business Impact Analysis by Scenario

Using FY2024 actual results, including operating profit and fossil fuel and electricity consumption, we applied the 2030 and 2050 scenarios to estimate the financial impact as a risk.

GHG Emissions Reduction Targets Assumed in the Analysis

Figure 4. Business Impact Assessment for the Three Businesses Combined (1.5°C Scenario)

Under the 1.5°C scenario, the impact of government-imposed carbon taxes is expected to be particularly significant. The financial impact is estimated at approximately ¥1.45 billion in 2030 and ¥2.60 billion in 2050. This impact is expected to be especially large in the Packaging Business and the Transportation and Logistics Business, both of which use substantial amounts of fossil fuels.

Figure 5. Business Impact Assessment for the Three Businesses Combined (4°C Scenario)

Under the 4°C scenario, the impact of flood damage, storm surge damage, and the resulting business interruption is expected to be significant. The total financial impact is estimated at approximately ¥570 million in 2030 and ¥860 million in 2050. Compared with last year’s report, which used FY2022 actual results and estimated the impact at approximately ¥320 million and ¥470 million, respectively, the estimated damage has increased due to greater inundation depths shown on hazard maps and higher asset values.

The sites covered by this assessment were selected to provide near-complete coverage of the Group’s operations and include 38 domestic and 2 overseas sites in the Packaging Business, 78 domestic sites in the Transportation and Logistics Business, and 104 domestic sites and 1 overseas site in the Housing Business. Among these, the number of production sites, warehouses, and distribution centers expected to experience inundation depths of 3 meters or more—equivalent to the floor level of the second story of a typical house—was 5 in the domestic Packaging Business, 12 in the domestic Transportation and Logistics Business, and 1 in the domestic Housing Business. These 18 sites have been designated as priority monitoring sites, and we will strengthen risk management for them going forward.

2-6 Strategy Summary

Transition Risks and Opportunities

Risks

Under the 1.5℃ scenario, the introduction of carbon tax policies in both 2030 and 2050 poses a risk of higher costs for the Packaging Business, which uses fossil fuels as boiler fuel, and for the Transportation and Logistics Business, which uses fossil fuels as truck fuel.

One key response is to reduce greenhouse gas (GHG) emissions generated through business activities. In the short term, we will continue shifting electricity derived from renewable energy sources while implementing measures that can be taken immediately, such as electrifying on-site work lifts and improving truck fuel efficiency and vehicle utilization rates, to reduce risk. In the medium to long term, we will respond by planning new investments in initiatives such as switching boiler fuel from heavy oil to city gas, which generates lower GHG emissions during combustion, using biofuels, and adopting next-generation decarbonization technologies and infrastructure, including boilers and trucks powered by green hydrogen, as such technologies and infrastructure are developed and become more widely available. In addition, for GHG emissions that are difficult to reduce, we will also consider the potential use of carbon offsets through credits.

Opportunities

In the Packaging Business, tighter plastic regulations are expected to create opportunities for increased demand for recyclable and environmentally friendly corrugated board and paper packaging as alternative materials. In the Housing Business, opportunities are expected to arise from the expansion of the market for homes with high insulation and airtightness, which reduce energy consumption. In each business, we will seek to capture these opportunities by promoting design and technological innovation.

Physical Risks and Opportunities

Risks

Under the 4°C scenario for 2050, the intensification of extreme weather events is expected to increase the frequency of natural disasters. This poses risks across all businesses, including damage to production and construction sites, disruptions to supply chains and lifelines, and employee exposure to disasters, which may lead to temporary suspensions of production and business activities and delays in deliveries and construction schedules.

In addition, the chronic rise in average temperatures raises concerns about worsening working conditions and declining productivity. To reduce these risks, we will establish and strengthen business continuity frameworks by reinforcing production and logistics backup systems, diversifying our supply chains, ensuring employee safety, improving working environments, and enhancing systems for confirming employee safety.

Opportunities

In the Packaging Business and the Transportation and Logistics Business, demand is expected to increase for delivery services, beverages, and disaster-related products. In the Housing Business, even if temperatures continue to rise, the market is expected to expand for homes with high insulation and airtightness that contribute to lower energy consumption. We will seek to capture these business opportunities across each of our businesses.

3. Risk Management

Regarding climate change-related risks, the TCFD Disclosure PT, with reference to consultants’ advice, identifies risks across the Group, evaluates the financial impact, and considers necessary countermeasures.

Critical climate change-related risks that are of high priority for the Group or expected to have a significant impact are reported to the Sustainability Committee through collaboration between the TCFD Disclosure PT and the Sustainability PT. The Sustainability Committee deliberates on the appropriate response and reports to the Board of Directors.

The President and Representative Director is responsible for overall risk management across the Group. Important decisions on, and reviews of, risk management policies are deliberated and resolved by the Board of Directors.

Risks related to sustainability as a whole, including climate change, that are assessed by Sustainability PT and the TCFD Disclosure PT are communicated to Group companies through the Sustainability PT and the Group Sustainability Liaison Meeting, and each company formulates and implements the necessary measures. The Sustainability Committee receives reports from the Sustainability PT and confirms and manages the progress (Figure 6).

4. Metrics and Targets

The Tomoku Group uses greenhouse gas emissions (Scope 1 and 2), which contribute to climate change—one of its key management issues—as a metric and sets targets to reduce them.

In light of Japan’s new Nationally Determined Contribution (NDC), submitted to the United Nations in February 2025, the Group will proceed with formulating long-term targets. As a short-term response, we will continue measures such as introducing electricity from renewable energy sources, fuel conversion, improving fuel efficiency, and installing energy-efficient equipment. Our near-term roadmap is shown in Table 6.

Table 6. Roadmap to FY2030 for the Three Domestic Businesses

For overseas operations, we will consider introducing electricity from renewable energy in Vietnam, excluding Sweden, where renewable energy is already widely used.

FY2024 Results

Greenhouse gas emissions (Scope 1 and 2) in FY2024 were approximately 20% lower than in FY2013 (Figure 7).

This reduction was driven primarily by Tomoku’s non-consolidated switch to electricity derived from renewable energy sources for Scope 2 emissions. Going forward, we will work to reduce fossil fuel-derived Scope 1 emissions while also expanding the use of electricity derived from renewable energy across group companies.

Figure 7. Tomoku Group Greenhouse Gas Emissions (Scope 1 and 2)

At this stage, the widespread adoption of advanced decarbonization technologies remains limited, making substantial near-term reductions difficult. However, we will continue to promote initiatives that make the most of existing resources and technologies, including further improvements in equipment and operation efficiency, greater awareness of resource conservation in day-to-day operations, and stronger preventive maintenance of facilities and equipment. We will also continue to monitor technological advances and newly available solutions and respond flexibly as circumstances evolve.

The Tomoku Group’s greenhouse gas emissions include not only consolidated companies, but also non-consolidated entities equivalent to those covered under the GHG Protocol control approach. In addition, emissions for prior fiscal years may fluctuate due to business acquisitions and other factors

Total supply chain emissions (Scope 1, 2, and 3) for FY2024 amounted to approximately 1,067 thousand tons (Figure 8¹). Scope 3 accounts for approximately 92% of total emissions, with Category 1 (Purchased goods and services) representing about 70% and Category 11 (Use of sold products) about 17%. Category 1 consists mainly of containerboard used as raw material in the Packaging Business, while Category 11 consists largely of emissions from the use of homes sold in the Housing Business. Scope 3 emissions have been trending downward, mainly due to decline in Category 1 (Figure 9¹).

For containerboard, IDEA Ver. 2² was used in FY2021, data published by the Japan Paper Association³ in FY2022, and from FY2023 onward, a combination of primary data for containerboard purchased by Tomoku non-consolidated and data published by the Japan Paper Association has been used. This approach continued in FY2024.

Going forward, we will work to gain understanding for expanding the use of primary data so that emissions can be calculated more accurately.

The high proportion of Category 11 (Use of sold products) is attributable to the characteristics of Sweden House, the flagship brand of the Group’s Housing Business. Although its primary energy consumption is well below the energy efficiency standard, it offers exceptional durability, with a service life of 90 years, far exceeding that of ordinary homes.

We will continue to promote the design of homes with low BEI (Building Energy Index) values (0.58 in FY2024), and strive to reduce emissions from home use.

Notes:

1. The Tomoku Group’s greenhouse gas emissions include not only consolidated companies, but also non-consolidated entities equivalent to those covered under the GHG Protocol control approach. In addition, emissions for prior fiscal years may fluctuate due to business acquisitions and other factors
2. Sustainable Management Promotion Organization
3. Japan Paper Association, “CO2 Emissions over the Life Cycle of Containerboard,” February 20, 2023