Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• 15.8% reduction in total CO2 emissions (Scope 1+2) compared to 2014
• Installation of solar panels at various warehouse facilities
• Achieved A rank in CASBEE evaluation for four logistics facilities

Social Achievements

• Launched SustainaLink, a service to help customers achieve supply chain sustainability
• Improved employee engagement
• Achieved 93.33% male childcare leave acquisition rate
• Increased ratio of female managers to 9.26%

Governance Achievements

• Established Sustainability Committee chaired by the President
• Implemented human rights due diligence across domestic and international Group companies
• Established a Group Compliance Hotline

Climate Goals & Targets

Environmental Challenges

• Reducing Scope 3 CO2 emissions throughout the supply chain
• Managing risks associated with climate change (physical and transition risks)
• Maintaining zero occupational accidents

Mitigation Strategies

• Implementing measures to reduce emissions in collaboration with customers and partners
• Conducting scenario analysis of climate change impacts
• Developing BCP and BCM measures
• Promoting safety initiatives and sharing best practices across the Group

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• MITSUI-SOKO Group Policy on Sustainable and Responsible Procurement

Climate-Related Risks & Opportunities

Physical Risks

• More severe storm and flood damage
• Sea level rise
• Rise in temperature

Transition Risks

• Increased cost burden due to carbon pricing
• Refrigerant regulation
• Other regulations
• Energy transition by transportation subcontractors

Opportunities

• Expansion of environmentally conscious response
• Changes in characteristics of products handled by our customers

Reporting Standards

Frameworks Used: GRI, SASB

Certifications: Green Management Certification, CEIV Pharma Certification, Eruboshi Certification, Kurumin Certification

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• SustainaLink

Awards & Recognition

• Logistics Environment Award
• Advanced Technology Award of the Japan Association for Logistics and Transport
• Excellent Business Entities Working on Modal Shift Awards

Environmental Metrics

ESG Focus Areas

• Climate change
• Resource circulation
• Human capital management
• Safety and quality
• Human rights
• Corporate governance
• Supply chain optimization and resilience
• Co-creation

Environmental Achievements

• Reduced CO2 emissions (Scope 1 + 2) by 23% compared to 2014/3
• Reduced waste emissions by 542 tons
• Increased renewable energy usage to 11,041 MWh

Social Achievements

• Improved employee engagement score by one point
• Zero occupational accidents
• Increased ratio of paid leave taken to 66.82%
• Launched mentor and sponsorship programs for female employees

Governance Achievements

• Revised materiality framework using backcasting from 2050
• Established Sustainability Committee and other oversight bodies
• Improved Board of Directors effectiveness through regular evaluations and open discussions

Climate Goals & Targets

Environmental Challenges

• Stagnant cargo movement due to inventory adjustments
• Decline in marine freight rates and airfares
• Logistics personnel shortages (2024 problem)
• Increasing severity and frequency of natural disasters
• Geopolitical risks
• Supply chain disruptions

Mitigation Strategies

• Implementing operational efficiency improvements and optimizing collection fees
• Investing in DX (¥20 billion over 5 years) to improve efficiency and create new services
• Expanding sustainability-oriented business (SustainaLink)
• Building disaster-resilient logistics systems
• Promoting co-creation with partners to develop new technologies and solutions
• Strengthening human capital management

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Formulation and disclosure of basic policy on sustainable and responsible procurement

Climate-Related Risks & Opportunities

Physical Risks

• Intensification of wind and flood damage
• Sea level rise
• Temperature increase

Transition Risks

• Increased costs due to carbon pricing
• Stricter regulations on refrigerants
• Increased transportation costs from switching to low-carbon fuels
• Changes in products handled for customers

Opportunities

• Development and promotion of logistics solution services addressing climate-related needs
• Emergence of new sustainable products

Reporting Standards

Frameworks Used: Integrated Reporting Framework (IFRS Foundation), Guidance for Collaborative Value Creation (METI), GRI, SASB, TCFD, UNGC (implicitly)

Certifications: ISO 14083:2023 (for CO2 emissions calculation), CEIV Pharma

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Goal 7 (Affordable and clean energy)
• Goal 9 (Industry, innovation, and infrastructure)
• Goal 12 (Responsible consumption and production)
• Goal 13 (Climate action)
• Goal 8 (Decent work and economic growth)

The report highlights how various initiatives contribute to these SDGs through sustainable logistics, resource efficiency, and responsible business practices.

Sustainable Products & Innovation

• SustainaLink service
• Recyclable logistics packages
• Cold-storage packaging materials

Awards & Recognition

• Special Award at the FY2023 Excellent Green Logistics Commendation Program
• Certified Health & Productivity Management Outstanding Organization

Environmental Metrics

ESG Focus Areas

• Sustainability
• DX promotion
• CO2 emission reduction
• Supply chain optimization
• Employee wellbeing

Environmental Achievements

• Visualizing CO2 emissions of individual automobile parts in international logistics on a per-part basis
• Real logistics proposals driven by CO2 emission calculations using SustainaLink
• Implementing energy-saving measures through planned upgrades to LED lighting and climate control equipment, and performing energy-saving diagnostics
• Evaluating installing solar power generation equipment at Group companies
• Reduce CO2 emissions throughout the supply chain by promoting LED lighting, introducing environment-friendly packing materials, and joint delivery
• Considering the installation of solar panels at the Company’s warehouses

Social Achievements

• Implementing various engagement policies starting with training to promote male employees taking childcare leave
• Reducing the waiting and work time of our drivers and employees by acquiring results in loading and unloading cargo and automatically measuring work time by introducing systems through co-creation with our customers
• Increase employee engagement through ongoing work-style reforms
• Improving working quality through the standardization of services via DX promotion and the development of human resources who are capable of improving KPI management and frontline services
• Ensuring safe transportation management systems, including our response to the 2024 problem (reducing total hours spent working) and collaborating with the Safety Subcommittee of the Sustainability Committee

Governance Achievements

• Strengthening our business revenue platform with an awareness of tenant mix by promoting the transition to multi-tenant buildings in our owned real estate
• Promote leasing at the MSH Nihonbashi Hakozaki Building, aiming for full occupancy by the final year of the Medium-term Management Plan
• Consolidate the offices of our Group companies at the MSH Nihonbashi Hakozaki Building

Climate Goals & Targets

Environmental Challenges

• Strengthening of revenue base in port warehousing
• Responding to the industrialization of logistics equipment due to technological advances, such as AI and robotics
• Cargo portfolio “biased toward raw materials, resources, etc.”
• Provision of logistics services limited to individual functions, such as storage and transportation
• Relative decline of Japanese ports due to expansion of port capacity in neighboring countries such as China
• Worsening shortage of domestic dockworkers
• Strengthening of facility and equipment management
• Streamlining of container terminal operation methods
• Impact on the global supply chain due to uncertainties in world affairs
• Changes in each country’s national policies, regulations, and logistics conditions
• Impact on global supply chain caused by uncertainties in world affairs
• Intensification of competition, normalization of price competition in the air cargo market
• Changes in market conditions in automotive and electronic component industries
• Response to changes in airline market
• Response to changes in automotive industry
• High degree of dependence on home appliance logistics
• Further strengthening of human resources in response to increased demand
• Changes in business customs and logistics characteristics due to e-commerce expansion
• New entrants from different industries due to the progression of equipment industrialization
• Impact from the uncertainty of the international situation on global supply chains
• Growing need for outsourcing of logistics by environment change acceleration in each industry
• Changes in market conditions and the environment of the electronics industry
• Ability to respond to market changes in the electronics industry
• Tighter regulations stemming from 2024 problem and environmental concerns
• Soaring fuel costs and increased labor costs due to shortage of drivers
• Growing need for combined deliveries/joint logistics
• Responding to labor shortages
• Contributing to ESG management

Mitigation Strategies

• Securing of stable revenues by leveraging warehouse assets
• Creation of growth opportunities by developing highly functional services that start from warehouses
• Realization of overwhelming field capabilities
• Rebuild each base’s network while providing logistics network services worldwide
• Strengthen revenue base by expanding distribution services for existing customers
• Realization of SCM logistics focusing on automotive and electronic components
• Rebuilding of IT systems base
• Strengthening our business revenue platform with an awareness of tenant mix by promoting the transition to multi-tenant buildings in our owned real estate
• Promotion of corporate real estate measures
• Management and support of the Group’s logistics real estate
• Address labor shortages and the improvement of working environments by optimizing the days of operation at centers and frequency of deliveries
• Robust promotion of mechanization, systemization, and DX to help address labor shortages, improve the quality of work, and reduce workloads associated with cargo handling
• Operational reforms through redefinition and standardization of operations
• Actively adopt new technologies and new systems that are always evolving, such as the introduction of AGVs, packing machines, and sorting machines
• Persistent improvement and enhancement of our service quality by thoroughly implementing quality improvement activities and PDCA cycle management methods
• Continuously implementing various engagement policies starting with training to promote male employees taking childcare leave
• Reducing the waiting and work time of our drivers and employees by acquiring results in loading and unloading cargo and automatically measuring work time by introducing systems through co-creation with our customers
• Focusing on products destined for drugstores, build a transportation network across western Japan by enhancing and extending the joint delivery network, which is a strength of this business, in the Chugoku and Kyushu areas
• In joint delivery operations, where it is difficult to ascertain the actual costs for each customer due to the mixed loading of products from multiple customers, improve income and expenditure by promoting the visualization of services carried out for each customer and thoroughly managing income and expenditure
• Improve working quality through the standardization of services via DX promotion and the development of human resources who are capable of improving KPI management and frontline services
• Increase employee engagement through ongoing work-style reforms
• Strengthen transportation safety management system by leading Group-wide initiatives, including the unification of transportation safety standards

Supply Chain Management

Climate-Related Risks & Opportunities