Disclosure Based on TCFD Recommendations

Based on our Group Growth Strategy launched in 2014, the Takenaka Group has been working toward the realization of a sustainable society. In 2019, we identified its major objectives (materiality). Subsequent reviews in 2022 and 2024, resulted in consolidation into five groups of major objectives. Among these, the one directly related to climate change is "Harmonization with the environment.“ We are specifically working to provide environmentally friendly buildings and services, reduce our environmental impact, and outline measures to comprehensively promote decarbonization, resource circulation, and coexistence with nature.
Regarding climate change response, we began analyzing business impacts, risks, and opportunities related to climate change, and reflecting these in our strategy in 2019. In January 2021, we endorsed the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and began disclosing information in line with these recommendations, which we have continued to update.

In recent years, Japan has experienced large typhoons and heavy rainfall almost every year due to abnormal weather patterns caused by climate change. The Takenaka Group is involved in the construction of many high-rise buildings and civil engineering structures that are highly susceptible to typhoon, as well as large buildings with basements that are vulnerable to flooding from torrential rain. We therefore recognize the significant risk of climate change impact on these projects. Rising temperatures and intensifying natural disasters are expected to increase health risks such as heatstroke at construction sites and lead to schedule delays due to disruptions to transportation networks.

At the same time, reducing CO2 emissions in residential and commercial sectors is an urgent issue in Japan. Amendments to the Building Energy Efficiency Act have expanded the scope of mandatory compliance and called for further improvements in the energy-saving performance of buildings. A building's energy-saving performance has a significant impact on the customer's greenhouse gas emissions during its operation and throughout its service life. We also recognize that primary materials procured in building construction, such as steel and concrete, emit large amounts of greenhouse gases during their manufacturing process, and that this has a significant impact on a customer's business in terms of greenhouse gas emissions throughout the entire life cycle of a building. In our own business, furthermore, fuel for heavy machinery used at construction sites and electricity used in the business as a whole are major sources of greenhouse gas emissions, so we must reduce these emissions.

Our efforts toward "harmonization with the environment" are proceeding under a governance organization for responding to climate change as shown in the following figure. Our Board of Directors deliberates on proposals submitted by the Sustainability Exective Committee concerning global environmental issues, makes decisions on important matters related to the management plan, and delegates their execution to our president.

The Sustainability Exective Committee, which is chaired by our president, meets four times a year. This committee deliberates and approves reports and proposals submitted by the Global Environment Committee concerning matters related to sustainability in general, including the global environment. Based on these, we formulate strategies for the entire group, reflect them in group policies and business strategies, and in response to global environmental issues, submit important matters related to our management plan to our Board of Directors. Items to be included in the management plan are submitted to the Board of Directors after deliberation by the Management Plan Exective Committee.

The Global Environment Committee, which is chaired by the executive officer in charge of sustainability, meets four times a year. This committee deliberates reports and proposals submitted by subsidiary company-wide and cross-group working groups (WGs), identifies climate-related risks and opportunities, approves strategies and countemeasures, and monitors implementation status. These matters are then reported to the Sustainability Executive Committee.

To comprehensively consider all aspects of sustainability, we have established company-wide and cross-group working groups (WGs) organized by field under the Global Environment Committee.

In 2019, the Takenaka Group conducted a cross-departmental review within its Global Environmental Promotion Working Group to examine the risks and opportunities of climate change affecting our business. Scenario analysis was performed while drawing on the opinions of external experts. We are also considering the relationship with the 2015 Paris Agreement and the SDGs (Sustainable Development Goals). In 2024, members of our Global Environment Promotion Working Group took changes in the business environment into account to reexamine the environmental impacts, risks, and opportunities of our group's businesses.

In analyzing business transition risks and opportunities, two senarios of 1.5℃ Scenario (reference scenario: IEA(International Energy Agency) NZE) and 4℃ Scenario (reference scenario: IPCC (International Panel on Climate Change) SSP5-8.5) were set up. We defined a three-year period from 2024, which is the business planning cycle, as the short term, and the period from 2027 to 2030 as the medium term, from 2031 to 2050 as the long-term time frame.

As a result of scenario analysis, seven risks and five opportunities were idensified. We analyzed their financial impact from the perspectives of timing and level, and we examined countermeasures. The following table lists the identified risks and opportunity items, their financial impacts (timing and level), and countermeasures currently being implemented (some are being planned).

In 2023, we formulated Environmental Strategy 2050 by using the target values and specific measures for the climate change. We have since revised these in light of societal trends. The Sustainability Exective Committee deliberates on this strategy, and then the Board of Directors makes decisions through deliberations by the Management Plan Exective Committee. Once decided on, measures and targets that are deployed in the three-year plans for each division, and the progress of these efforts is monitored and evaluated by the Global Environment Committee through the activities of its subsidiary company-wide and cross-group working groups.

For companywide risk management, a Risk Control Committee has been established under the Corporate Ethics Exective Committee as shown in Figure 8. Regular meetings are held twice a year, with additional meetings convened as needed, such as when significant risks arise. The executive officer in charge of sustainability participates in this process. This committee deliberates focusing on understanding risks related to quality, safety and other aspects of business, including those related to climate change, before being reported to the Board of Directors for decision-making. Decisions are communicated to relevant office/division managers, department heads, etc.

The Takenaka Group uses greenhouse gas emission reduction rates for Scopes 1, 2, and 3 as metricss with 2019 as the base year. The long-term CO2 reduction targets set the reduction rates for two items in Scopes 1 and 2 as well as Scope 3 (the base year for all being 2019). Setting a long-term CO2 reduction target set in December 2019, and raising it in March 2021, we expanded coverage to the entire Takenaka Group in December 2022. Further, our 2030 targets for Scopes 1 and 2 were certified by SBTi in March 2024.
The Takenaka Group‘s greenhouse gas emissions performance in 2024 is shown in the Table below.

Note: Scope 2 emissions are calculated on a location-based method. Going forward, we plan to calculate them on a market-based method.