JSR Group sees the problem of climate change currently facing society as one of the most important issues for the company, and we are therefore actively working to reduce greenhouse gas emissions both internally and externally. It is in this context that we, as a corporate group, expressed our support for the TCFD^* Recommendations in October 2020. We believe that these recommendations will contribute to the development of a low carbon economy-oriented sustainable society. As a chemical company which is earnestly confronting climate change, we seek to deepen our understanding of the opportunities and risks that our Group’s business activities affect, taking action accordingly and striving to proactively and publicly disclose our initiatives.

*TCFD:
The Task Force on Climate-related Financial Disclosures established by the Financial Stability Board. In June of 2017, the TFCD recommended that the impacts of climate change be disclosed in the financial reports of financial institutions, companies, governments, etc. More than 2,000 organizations around the world have endorsed the recommendations (as of May 2021; from data published by the TCFD).

The TCFD Recommendations call for disclosure of information pertaining to climate change-related governance, strategy, risk management and metrics and targets. JSR Group is taking the following action in line with these recommendations.

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1. Governance Structure Relating to Climate Change Risks and Opportunities

JSR utilizes a supervisory structure, overseen by the Board of Directors, to examine appropriate responses and decide upon what courses of action to take with regard to the potential business risks posed by climate change and other issues. Last year the position of Chief Sustainability Officer (CSO) was established, contributing to more robust supervision by the Board of Directors.
With regard to sustainability advancement activities, the Sustainability Committee headed up by the CSO is studying and pursuing activity-focused initiatives which align with our Basic Approach to Social Contribution.

In particular, this committee is pursuing discussion on how to accommodate the TCFD Recommendations in the context of our climate change response. The resolutions of this committee are reported to and discussed by the Sustainability Promotion Committee chaired by the president, and any priority matters are further reported to the Board of Directors. The recent expression of support for the TCFD Recommendations was decided through this process.

• JSR Group Sustainability Advancement Structure

2. Climate Change-Related Strategy, Risk Management and Metrics and Targets

In order to formulate climate change-related strategy, risk management and metrics and targets, JSR began by analyzing scenarios in line with the TCFD Recommendations. Assessment of Digital Solutions Business, Life Sciences Business, Elastomers Business and Plastics Business as JSR Group's core business domains began in fiscal 2019. Since then, business restructuring and major variables have been introduced; nevertheless, we have been working our way through the following and, as of 2020, have completed our qualitative scenario assessment (number (2) below). After examination and discussion by the Sustainability Committee and Sustainability Promotion Committee, the results have been reported to the Board of Directors. We are now moving forward with quantitative assessment preparations.

• (1) Climate Change Significance Assessment
  Socio-economic scenario assumptions
  Formulation of business impact scenarios and determination of degree of impact
• (2) Climate Change Scenario Analysis (Qualitative Determination)
  Investigation of risk and opportunity impact stemming from changes in JSR's business environment (scenarios) as a result of climate change
• (3) Climate Change Scenario Analysis (Quantitative Determination)
  Quantification of impact that JSR scenarios will have on future business strategy and financial affairs, and strategic incorporation of results
• (4) Identification of Potential Implementation Measures
  Determination of climate change strategy implementation measures and selection of management metrics

(1) Climate-Related Risk Significance Assessment

Climate change impact assessment was performed with regard to those social environments associated with JSR Group business.
*External information utilized includes IPCC_RCP2.6, RCP8.5, and IEA_B2DS

(2) Climate Change Scenario Analysis (Qualitative Determination)

A climate change impact-related scenario analysis for JSR business was performed based on the gravity of the climate-related risks.

1) Assessment Targets

Digital Solutions Business, Life Sciences Business, Elastomers Business and Plastics Business were chosen as JSR Group's core business domains.

2) Assessment Method

1. Based on the socio-economic scenario assumptions, relevant business impact scenarios were formulated and the degree of business-specific impact determined.

2. Based on the potential for, and impact on business (human loss, financial impact, etc.), of the above, particularly significant risks and opportunities were identified. In the course of this, factors such as trends in international discussion, development regions and other company’s practices were considered.

3) Assessment Results

1. Impact Scenarios and Degree of Business-Specific Impact

       Small ← Size of Impact → Large

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2. Significant Risks and Opportunities

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Moving forward, (3) Climate Change Scenario Analysis (Quantitative Determination) and (4) Identification of Potential Implementation Measures are being carried out, with the results being regularly revised each year and reported to and discussed by the Board of Directors within the context of an ongoing PDCA cycle.