Climate Change (Information Disclosure Based on TCFD Recommendations)

Basic Policy

In recent years, our social environment has continued to change on a global scale, and addressing social issues, such as initiatives based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD), has become an important item on the management agenda. We regard addressing climate change as a material issue and have made carbon neutrality a pillar of our business activities in our new Medium-Term Business Plan (FY2023–FY2025). We will continue to strategically prioritize markets linked to carbon neutrality, such as electric vehicle (EV), fuel cell vehicle (FCV), automated driving, and semiconductor-related markets, and will focus on recruitment, education, and sales for these markets. Moreover, by having our engineers participate in carbon neutrality-related technology development projects such as these, we will advance the development of these technologies and support their widespread use in the market, thereby contributing to the realization of carbon neutrality.
In July 2022, we announced our support for the recommendations from the TCFD. We will disclose information in a manner consistent with the recommendations published by the TCFD, with the aim of achieving a sustainable society.

Governance

As we have rated climate change as a high-priority issue, we have established the Sustainability Committee as a special committee for discussing sustainability-related issues including climate change. This Committee is established directly under the Board of Directors, and reports and submits the topics it discusses to the Board, which then deliberates and makes decisions on them. The content of such discussions will be disclosed externally and reflected in the Company’s management policies and various initiatives.

The Committee, chaired by the President and CEO, is composed mainly of Directors who are not members of the Audit and Supervisory Committee, Directors who are members of the Audit and Supervisory Committee, and division heads and managers, and is held four times a year. The Committee promotes and manages the status of sustainability issues and initiatives, including those related to climate change.

The topics deliberated in the Committee are reported to the Board of Directors. The Board then deliberates and adopts the resolutions on important risks and opportunities related to climate change, gives instructions on how to deal with them, and supervises the progress of such initiatives.

Strategy

As our social environment continues to change on a global scale, we believe that dealing with social issues, such as initiatives based on the recommendations from TCFD, is an important managerial agenda.
We will strive to build an internal system of recruitment, training, and sales with carbon neutrality as a main pillar of our business activities.
In April 2022, our Sustainability Committee conducted a climate change scenario analysis based on the recommendations from the TCFD. For this analysis, we identified key risks and opportunities related to climate change and conducted a qualitative evaluation of their impact. Our first scenario analysis, which covered our main business area of engineer dispatching, used two scenarios (a 4°C scenario and a combined 1.5°C and 2°C scenarios) to examine the impact of climate change in the year 2030.We extracted risks and opportunities, and the degree of impact on our business activities was evaluated on a three-point scale of large, medium, and small.
Regarding the financial impact of climate change on our business, we consider the risk of climate change to be low, as we are primarily engaged in engineer dispatching services in Japan and do not need to own production facilities or other equipment.

Summary of scenario analysis results (risks and opportunities)
<Timeframe> Short-term: Impact is apparent in less than 3 years;
Medium-term: Impact is apparent in 3 years to less than 10 years (up to around 2030);
Long-term: Impact is apparent in 10 years or later

<Evaluation> Based on financial impact –
Large: Impact is clearly large;
Medium: Degree of impact is unknown;
Small: Impact is clearly small;
Gray: Assumed to have no impact

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Risk item Business impact Response
Large category Medium category Small category Timeframe Indicator Consideration: risks Consideration: opportunities Evaluation
(risks)
Evaluation
(opportunities)
Ongoing efforts Examples
of our response to risks
Examples
of our activities to achieve opportunities
Transition
(1.5°C and
2°C
scenarios)
Policies
and
regulations
Carbon price
(carbon tax)
Short- to long-term Increased payment The Company’s main business is the dispatching of engineers, and it has offices and training facilities to meet the needs of client companies. Therefore, if a carbon tax is introduced, there is a risk that overhead costs will increase with the use of electricity. Medium Calculate greenhouse gas (GHG) emissions (Scope 1 and Scope 2) and set reduction targets Set GHG emission reduction targets Switch the rent-a-cars that we use to EVs and other low-carbon vehicles
Renewable energy policy Short- to long-term Increased payment There is a risk that expenditures will increase if the price of renewable energy rises due to the promotion of renewable energy policies resulting in an increased demand for renewable energy. Medium Reduce electricity costs through energy conservation initiatives at our offices
Energy-saving policy Short- to long-term Increased payment The Company uses leased office space for its business and training facilities. There is a risk that the conversion of normal office buildings into net-zero energy buildings (ZEBs) will lead to an increase in expenditures because the cost of developing ZEBs will be added to the rent or the tenant fee. Medium
Technology Advances in low-carbon technologies Short- to long-term Increased earnings
Increased payment
Our main customers are in the automotive industry, which requires us to provide engineers who can develop products related to low-carbon technologies. If we are slower than our competitors to respond to these technologies, our engineers’ skills may be considered obsolete and the demand for the dispatch of engineers may shrink, resulting in decreased sales. If new technologies need to be incorporated, costs for information gathering and training may increase. A low-carbon society may be promoted, which will lead to an increase in the demand for products using low-carbon technologies. In such a case, our sales may increase due to an increased demand for the dispatch of engineers to our existing clients and new clients. Large Large Disclosed in Medium-Term Business Plan

Participate in the automotive industry, etc., our main customers
Capture demand for the development of low-carbon products such as EVs and other low-carbon vehicles, as well as energy-saving and renewable energy equipment, etc.
Market Change in demand for important products Short- to long-term Increased earnings
Increased payment
Our main customers are in the automotive industry, which requires us to provide engineers who can develop products related to low-carbon technologies. If we are slower than our competitors to respond to these technologies, our engineers’ skills may be considered obsolete and the demand for the dispatch of engineers may shrink, resulting in decreased sales. If new technologies need to be incorporated, costs for information gathering and training may increase. Since the Company’s main customers belong to the automotive industry, actively attracting engineers who can deal with the design and development processes that support the shift to zero-emission vehicles (ZEVs) may lead to increased demand for the dispatch of engineers, which could result in higher sales. The advancement of low-carbon technologies has accelerated the speed of development of the low-carbon business. Enhancing our recruitment and training systems as well as our services to meet the increasing number of requests from clients could lead to increased sales. If extreme weather conditions increase, along with a rising demand for seasonal products such as air conditioning products that can deal with higher/lower outdoor temperatures, this may lead to the manufacturers’ increased demand for the development of HVAC equipment, resulting in growing demands for the dispatching of engineers and increased sales. Medium Large Disclosed in Medium-Term Business Plan

Participate in the automotive industry, etc., our main customers
Contribute to the development of customers’ low-carbon products by dispatching engineers with low-carbon skills Acquire new clients by strengthening the low-carbon skillsets of our engineers
Reputation Change in reputation from customers Short- to long-term Increased earnings
Increased payment
The momentum for decarbonization is growing throughout the supply chain. Clients may require their suppliers to reduce emissions and disclose relevant information. In particular, the automotive industry, which accounts for a major part of our customer base, is making much progress in this area than other industries. If our efforts are deemed insufficient, there is a risk that our reputation will be damaged, leading to a decrease in sales. In addition, significant costs may be required to address these issues. As the entire supply chain of the automotive industry is making an effort to reduce emissions, if we become recognized as a leader in addressing climate change issues, this could lead to increased sales. Large Large Disclosed in Medium-Term Business Plan

Participate in the automotive industry, etc., our main customers
Contribute to the development of customers’ low-carbon products by dispatching engineers with low-carbon skills

Acquire new clients by strengthening the low-carbon skillsets of our engineers
Change in reputation of our employees If the Company’s environmental initiatives and the track record for dispatching engineers who have low-carbon skills are highly regarded by job seekers, the Company’s image may improve, which could serve as an advantage over other companies in recruiting talents. Large Disclosed in Medium-Term Business Plan

Participate in the automotive industry, etc., our main customers
Provide a proven track record in the low-carbon business area
Change in reputation from investors Short- to long-term Increased earnings
Increased payment
The trend toward decarbonization may require investors to consider factors such as the decarbonization efforts and GHG emissions of companies that they invest in before making decisions, which may incur additional costs. If factors such as environmental initiatives and GHG emissions become more important in making investment decisions, and if investors see that the Company’s environmental efforts are advanced, this may lead to a rise in the stock price and an inflow of investment capital. Medium Medium Contribute to the development of customers’ low-carbon products by dispatching engineers with low-carbon skills

Acquire new clients by strengthening the low-carbon skillsets of our engineers
Physical impact
(4°C
scenario)
Acute Intensifying extreme weather events (typhoons, torrential rains, landslides, storm surges, etc.) Long-term Increased payment If our clients are adversely affected by increased natural disasters causing operation downtime, etc., our sales may decrease due to reduced demand for engineers as a result of R&D budget cutbacks. Also, in the event that our offices and training facilities are affected by such disasters, costs for recovery and relocation may be incurred. Large Disaster Prevention Manual Formulate a BCP in preparation for the potential occurrence of natural disasters
Chronic Increased average temperature Long-term Increased payment Rising average temperatures will increase the use of air conditioning, which may increase costs at all our business and training facilities. If rising outdoor temperatures increase the need for safer and more comfortable indoor temperatures, the manufacturers’ demand for developing HVAC equipment will increase, which may result in an increased demand for the dispatching of our engineers and increased sales. Small Medium Disclosed in Medium-Term Business Plan

Participate in the automotive industry, etc., our main customers
Respond to the growing demand for the development of air conditioning products

Risk Management

At the Compliance and Risk Management Meeting, we identify risks that need to be addressed among various risks such as climate change, set priorities for responding to such risks, and manage progress on an ongoing basis. The topics discussed in the Meeting are reported and submitted to the Board of Directors, which then deliberates and makes decisions on such topics.

Indicators and Targets

Greenhouse gas (GHG) emissions (Scope 1 and Scope 2)

We calculate our greenhouse gas (GHG) emissions as shown below.
Our goal for FY2051 is to achieve net zero GHG emissions.
(Reduce CO2 emissions by 22.6t by FY2025 , compared with FY2021 levels)

Unit: tCO2

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Description Target Result
FY2051 FY2025 FY2024 FY2023 FY2022 FY2021
Scope1 Use of fuel for rental cars Net zero 86.0 7.5 11.4 18.0 26.1
Scope2 Use of electricity at our locations 91.2 79.9 79.3 82.5
Total 98.7 91.3 97.3 108.6

*Fiscal year ended January 31

Greenhouse gas (GHG) emissions (Scope 3)

Unit: tCO2

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Description Target Result
FY2051 FY2025 FY2024 FY2023 FY2022 FY2021
scope3 Purchased goods and services; employee commuting, business travel, etc. Net zero 1,147.7
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