Climate Change Data

Environmental Metrics

ESG Focus Areas

• Climate Change
• Environmental Management
• Sustainability

Environmental Achievements

• Reduced Scope 1 and 2 emissions in FY2020 and FY2021 due to decreased activity from the Covid-19 pandemic.
• Established the Sustainability Committee and Environmental Working Group to promote corporate environmental management and analyze climate change-related risks and opportunities.

Social Achievements

• Not disclosed

Governance Achievements

• Established the Sustainability Committee (led by the president and representative director) and the Environmental Working Group.
• Regular reporting to the Board of Directors on climate change-related risks.

Climate Goals & Targets

Environmental Challenges

• Climate change-related risks (transition and physical risks) identified through scenario analysis (2°C and 4°C scenarios).

Mitigation Strategies

• Integration of short-term risks into corporate risk management.
• Regular monitoring of climate change-related risks by the Sustainability Committee.
• Review of business strategies to address long-term risks.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Establishment of DKK Group green procurement guidelines.

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Changes to industry structure, government policies, customer trends.

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: TCFD

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Development of environmentally friendly products

Awards & Recognition

• Not disclosed

Environmental Metrics

Governance Achievements

• Adopted a corporate auditor system with an audit structure comprised of four corporate auditors, including two outside auditors.
• Established a “DKK Group Corporate Conduct Charter” to ensure compliance with law and raise employee awareness.
• Established voluntary nomination and compensation committees with independent outside directors and auditors in the majority.

Climate Goals & Targets

Environmental Challenges

• Impact of COVID-19, rapidly changing business environment, and intensified price competition.
• Fluctuations in demand arising from capital expenditures among key customers (mobile communication-related companies, broadcasters, automakers).
• Potential for product defects, disasters/accidents at plants.
• Risk of lawsuits due to potential incidents (product defects, accidents in construction work).
• Risks related to intellectual property rights.
• Risks related to legal restraints.
• Risks from large-scale natural disasters.
• Risks related to information security.

Mitigation Strategies

• Ensured liquidity of funding by signing a 7.0 billion yen commitment line agreement with a financial institution.
• Actively engaged in activities to stimulate demand, worked to expand profit through efforts to improve efficiency and reduce costs.
• Maintained and developed existing business relationships, pursued reforms of business styles and expansion and differentiation of customer base.
• Maintained quality and safety through quality control standards (ISO9001) and damage insurance policies.
• Maintained product quality and safety and complied with laws and regulations.
• Developed a business continuity plan (BCP) and took necessary measures.
• Regularly gave training and thoroughly took information security management steps, including audits.
• Strengthened Group governance, enhanced the compliance structure, stepped up research and development, and carried out financial strategies.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Greenhouse Gas Emissions
• Waste Management
• Workforce Diversity
• Employee Well-being
• Board Diversity
• Compliance

Environmental Achievements

• Improved waste recycling rate (though specific figures fluctuate year to year)
• Reduced Scope 1 and Scope 2 GHG emissions (though specific figures fluctuate year to year)

Social Achievements

• Increased paid leave utilization rate
• Maintained high employee engagement (though specific figures fluctuate year to year)

Governance Achievements

• Maintained high attendance rates at Board and Committee meetings
• Conducted compliance and information security training

Climate Goals & Targets

Environmental Challenges

• Reducing Scope 3 emissions
• Maintaining a consistent improvement in waste recycling rate

Mitigation Strategies

• Calculating Scope 3 emissions based on Ministry of Environment guidelines and questionnaires from business partners
• Implementing various initiatives to improve waste recycling rate

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Workplace environment and work style reform
• Securing diverse human resources and promoting the active roles of women
• Contribution to social infrastructure development
• Strengthening corporate governance
• Promoting environmental management
• Creation of new businesses

Environmental Achievements

• Achieved ISO14001 certification at Denki Kogyo headquarters/domestic factories/R&D bases.
• Started initiatives towards SBT certification.
• Established the Denki Kogyo Group Green Procurement Guidelines.
• Reduced waste and promoted resource recycling.

Social Achievements

• Implemented a new human capital strategy aligned with business restructuring.
• Enhanced employee engagement initiatives.
• Improved diversity and inclusion efforts.
• Strengthened compliance and risk management.
• Improved workplace environment and work-life balance.

Governance Achievements

• Implemented a new human resources system.
• Strengthened information security measures and achieved ISO27001 certification across all departments.
• Enhanced corporate governance through effective board evaluations and improved communication with stakeholders.

Climate Goals & Targets

Environmental Challenges

• Decreased performance in FY2023 due to customer's suppressed equipment investment and rising labor and material costs.
• Need for improvement in business-related aspects of sustainability initiatives.
• Climate change risks (physical and transition risks).

Mitigation Strategies

• Developed a rolling plan for the mid-term management plan "DKK-Plan2025" focusing on business restructuring to achieve early recovery.
• Strengthened focus on key segments and resource allocation.
• Implemented human capital strategy for talent development and organizational flexibility.
• Initiated measures to mitigate climate change risks, including SBT commitment and green procurement guidelines.

Supply Chain Management

Responsible Procurement

• Denki Kogyo Group Green Procurement Guidelines

Climate-Related Risks & Opportunities

Physical Risks

• Extreme weather events
• Increased energy consumption due to rising temperatures

Transition Risks

• Carbon taxes
• Decreased demand for existing businesses due to technological innovation
• Increased raw material costs due to CO2 emission regulations

Opportunities

• Increased demand for renewable energy technologies
• Expansion of 5G, local 5G, and 6G related businesses
• Opportunities in EV-related high-frequency induction heating business
• Opportunities in decarbonization of the value chain

Reporting Standards

Frameworks Used: SDGs, SASB, TCFD

Certifications: ISO 14001, ISO 27001

Sustainable Products & Innovation

• High-frequency induction heating equipment (low CO2 emissions)
• Ultra-high-temperature superheated steam system (D-Rapid®) for waste reduction and food processing
• LED aviation obstruction lights and navigation lights for offshore wind power generation
• Fuel cell using bio-methanol

Environmental Metrics

ESG Focus Areas

• Workplace culture and work style reforms
• Contribution to social infrastructure development
• Enhancing corporate governance
• Creation of new businesses
• Promoting environmental management

Environmental Achievements

• Promoting shift from the heat-treatment method using fossil fuels to one using induction heating equipment, which has low environmental impacts.
• Mitigate climate change impacts and contribute to efforts to create a low-carbon society through business expansion using fuel cells and superheated steam.
• Promote investment projects to help realize a decarbonized society by introducing equipment to expand use of renewable energy sources for the Company’s power, including solar power equipment, and expanding use of electric vehicles for Company-use vehicles.

Social Achievements

• A working group set up in 2021 to promote “workplace culture and work style reforms”.
• Set the target of increasing female representation in managerial positions to at least 15%, work toward hiring people with disabilities totaling more than the legally required minimum, and carry out system reforms to enable employment until age 70.
• Improve productivity through using digital transformation (DX) and smartification of plants.

Governance Achievements

• In practicing sustainability management, work out a Sustainability Basic Policy and set “Enhancing corporate governance” as a key issue.
• Change of Directors’ term to one year from the current two years.
• Established Nomination Committee and Compensation Committee in each of which independent outside directors represent the majority.

Climate Goals & Targets

Environmental Challenges

• Slow acceptance of local 5G
• Slumping demand due to controlled capital spending by customers
• Spike in material prices, large fluctuations in currency market
• Aging employee demography / passing on technologies
• Order-centric industry / business structure

Mitigation Strategies

• Optimize business portfolio
• Structural reforms, including the Group
• Strengthen business foundation for profit creation
• Realize new business creation early
• Capital tie-ups and active investment in M&A
• Launch solution business toward resolving social issues
• Aggressive investment in human resources development

Supply Chain Management

Responsible Procurement

• Work out DKK Group green purchasing guidelines; promote environmental products

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 27001

UN Sustainable Development Goals

• Goal 17

Goal 17 of the SDGs (“Partnerships for the goals”) is given the utmost importance for achieving the goals. It applies to all material issues.