Climate Change Data

Environmental Metrics

ESG Focus Areas

• Promote a Decarbonized Society
• Realize the Circular Economy
• Establish Resilient Social Infrastructure
• Realize Healthy Lifestyles that Promote Positive Wellbeing
• Create Businesses Utilizing the Latest Technologies
• Collaborate with Partners Locally and Globally

Environmental Achievements

• Reduction of greenhouse gas emissions on Scopes 1 and 2: 1,183 t-CO2e
• Energy usage: 5,632 GJ reduction from the previous fiscal year
• Equity output in renewable energy generation business: 1.2 GW (operation already started)
• Investment in European Energy, a Danish renewable and next-generation energy company (investment completed in April 2024)
• Purchase and sale of various used machinery (industrial machine tools, physical and chemical equipment, semiconductor manufacturing equipment, medical equipment, etc.)

Social Achievements

• Launched renewable energy aggregation business
• Started providing an integrated service for corporate EV introduction
• Developed GX Assessment Lease as green finance through lease and installment transactions (provided since July 2024)
• Messages from the President & CEO to employees through a blog
• Town hall meetings by top management for employees
• Unification of the human resources systems of the two former companies
• Selected the projects that passed the final screening for the first stage of the Intra-entrepreneurship program and started full-fledged efforts to establish a business company
• Established the Innovation Investment Fund, an investment fund totaling 10 billion yen for startup companies to promote the creation of new services and the development of new businesses
• Established a new specialized organization, the Robotics Business Development Department, to accelerate the development and promotion of new businesses in the robotics field (April 1, 2024).
• Designed and began operating a human rights due diligence system under our Human Rights Project
• Various social contribution activities and volunteer activities
• Paid leave utilization rate: 74.4% (+5.7 pt)
• Monthly average overtime hours: 18.8 hours (-0.6 hours)
• Ratio of female managers: 16.0% (+2.0 pt)

Governance Achievements

• Developed a Sustainable Bond Framework and issued Sustainability Bonds
• Reviewed the scope of delegation regarding decision making in business execution, narrowing down the standards for items to be submitted to the Board of Directors to focus on the matters that should be deliberated in the board, effective from September 2023, and allocating more time for discussions on critical issues

Climate Goals & Targets

Environmental Challenges

• Lack of urgency in the evolution and layering of business models (e.g., shifting to high value-added and high ROA businesses). In particular, the creation of businesses that will significantly contribute to profitability in Customer Solutions will be a challenge going forward.
• In the Americas business in our Global Business, credit costs increased in the mainstay commercial truck sales finance business. There is an urgent need to recover profitability.
• relatively slow growth in demand for renewable energy at present and the increasing costs associated with renewable energy development due to inflation and high resource prices
• the speed of progress in the evolution and layering of business models is somewhat lacking

Mitigation Strategies

• Achieve various financial and non-financial targets and continue to increase PBR and enhance corporate value.
• Promote various measures to quickly realize the evolution and layering of business models in the Customer Solutions business and to increase earnings.
• In the Americas business in our Global Business, quickly recover and enhance profitability by reviewing the risk management system, diversifying and restructuring the business portfolio, and other measures.
• Expedite various measures related to key themes across segments and frameworks to promote transformation, and implement “sowing seeds” that will lead to the next Medium-term Management Plan.
• strengthening our power supply base by selling some of our assets in order to improve the quality of our portfolio
• expanding our efforts in new businesses, such as aggregation business initiatives to maximize the value of our assets and the building of schemes to support the introduction of decarbonization facilities in local communities

Supply Chain Management

Responsible Procurement

• Human rights due diligence

Climate-Related Risks & Opportunities

Physical Risks

• extreme weather
• flooding
• damage caused by disasters to power stations and deterioration of power generating facilities such as solar panels
• loss in value of real estate due to intensification of natural disasters and increases in construction and operations expenses and renovation costs
• damage caused by disasters to the Group’s offices, and increases in operating expenses and insurance costs

Transition Risks

• regulatory changes
• technological innovation
• decline in the value of existing assets due to the spread of new aircraft

Opportunities

• expansion of renewable energy
• shift to low mileage aircraft and aircraft engines and low-carbon fuels such as SAF and hydrogen
• growing demand for low-carbon buildings

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, Guidance for Collaborative Value Creation, TCFD

Sustainable Products & Innovation

• GX Assessment Lease

Awards & Recognition

• Certified Health & Productivity Management Outstanding Organization (large enterprise category) for the sixth consecutive year

Environmental Metrics

ESG Focus Areas

• Promote a Decarbonized Society
• Realize the Circular Economy
• Establish Resilient Social Infrastructure
• Realize Healthy Lifestyles That Promote Positive Wellbeing
• Create Businesses Utilizing the Latest Technologies
• Collaborate with Partners Locally and Globally

Environmental Achievements

• Energy usage in Japan: -1% compared to the prior fiscal year (short-term goal)
• Reduced Scope 1 and Scope 2 GHG emissions from 11,292 t-CO2e in FY2019 to 7,757 t-CO2e in FY2022

Social Achievements

• Implemented various initiatives to support employees with diverse attributes and values.
• Provided e-learning sessions (twice a year) for all employees on human rights issues.
• Conducted five human rights lectures in various training programs, with 586 employees participating.

Governance Achievements

• Established a Sustainability Committee in April 2021.
• Announced support for TCFD recommendations in October 2021.
• Implemented a whistleblowing system (Compliance Hotline System).

Climate Goals & Targets

Environmental Challenges

• Regulatory changes, technological innovation, and shifts in business models in line with the transition to a decarbonized society or extreme weather stemming from global warming may affect operating results and financial condition.
• Potential for business failure of partners due to earnings deterioration, decline in value of assets owned by the Group, and other factors.

Mitigation Strategies

• Uses integrated risk management framework to manage risks.
• Conducts scenario analysis on transition and physical risks.
• Develops short- and long-term measures to minimize risks and maximize opportunities related to climate change.

Climate-Related Risks & Opportunities

Physical Risks

• Damage to lease assets, collateral assets, etc. due to extreme weather
• Deterioration of asset usage environments and utility value due to climate change

Transition Risks

• Deterioration of customers’ business environments and increases in MHC’s credit costs due to policy and regulatory changes, technological innovations, changes to stakeholders

Opportunities

• Expansion of opportunities for low carbon building leasing, investment, and financing businesses

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 14001 (MHC Reuse Services Corporation and Mitsubishi HC Capital UK PLC)