JAPANESE

Climate Change

Initiatives to Address Climate Change

We position our response to environmental issues, including climate change, as one of our key management priorities.
From June 2022, we disclose the following information based on the recommendations of the TCFD (Task Force on Climate-related Financial Disclosures).

Governance

To address sustainability-related matters, we have established a Sustainability Committee as the promoting body within the executive function. The Sustainability Committee comprises all internal directors, including the Representative Director and President, and all executive officers, with one outside director who serves as an Audit and Supervisory Committee member participating as an observer. In principle, it meets twice a year to deliberate and decide on materiality, responses to climate change-related risks and opportunities, and other sustainability matters, and reports the outcomes to the Board of Directors.
We have also established working groups under the Sustainability Committee to conduct cross-organizational activities according to their objectives, and to report their activities to the Sustainability Committee. The working groups currently in place are the Product Information Working Group, which develops carbon footprint and eco-information, and the Sustainable Procurement Working Group, which works to reduce supply-chain risks such as CO2 reduction and human rights issues.
Our sustainability-related governance structure is as follows.

Strategy

To assess the materiality of climate-related risks and opportunities, the Sustainability Promotion Office identifies items with business impact from company-wide risks by classifying them into "transition risks," "physical risks," and "opportunities," and conducts scenario identification and assessment. The main risks and opportunities are as follows.

Scenarios used
With reference to the IPCC (Intergovernmental Panel on Climate Change) Sixth Assessment Report, we use SSP5-8.5 as a scenario, which assumes the highest dependence on fossil fuels and no implementation of climate policies.
In addition, various analyses based on the scenarios refer to IEA (International Energy Agency) scenarios.

Scenario analysis

Category		Drivers	Impacts on business	Scenario	Finance Impact	Timing of occurrence	Priority	Response measures
Transition risk	Policy and legal/ regulatory	Tightening of GHG emissions regulations(carbon tax, emissions trading, circular economy, plastics regulations) Expansion of disclosure obligations	Higher energy costs (electricity/gasoline) Higher purchase prices Higher delivery costs Bearing the cost burden of EV adoption for delivery companies Mandatory use of recycled plastics Increased costs to measure GHG emissions (Scope 3)	1.5℃	High	Medium term	High	Monitoring policy and legal/regulatory trends Developing an efficient delivery network Systematizing GHG emissions calculations
	Technology	Introduction of low-carbon technologies for private-brand (PB) products	Reduced competitiveness of existing PB products Higher product development costs	1.5℃	Low	Medium term	Medium	Promoting joint development initiatives with manufacturers
	Market	Changes in user behavior Rising raw material costs Difficulty procuring renewable energy	Increasing penetration of ethical purchasing Higher purchase prices driven by rising raw material costs Higher energy costs (renewables)	1.5℃	Medium	Medium term	Medium	Organizing and disclosing ethical information on products Continuous upgrades to the e-commerce system Formulating and executing a medium- to long-term transition plan
	Reputation	Changes in consumer preferences Rising expectations/requirements for information disclosure	A trend toward avoiding single-use products Damage to the corporate brand Reduced attractiveness as an investment	1.5℃	Low	Medium term	Low	Initiatives toward resource circularity Proactive ESG disclosure
Physical risk	Acute	Increasing severity of natural disasters such as typhoons and storm surges	Damage to material-handling equipment and inventory at logistics centers due to disasters, and suspension of operations until recovery Supply chain disruption due to disasters affecting suppliers and delivery companies	4℃	High	Medium term	High	Developing a BCP Creating a supply chain risk map
Physical risk	Chronic	Changes in rainfall and weather patterns Sea level rise Drought	Deterioration of working conditions at logistics centers due to rising temperatures Impact on operations at the Wakayama CIC due to drought	4℃	Low	Medium term	Low	Introducing air-conditioning systems and spot coolers Investing to reduce labor in warehouse operations

Category		Drivers	Impacts on business	Scenario	Finance Impact	Timing of occurrence	Priority	Response measures
Opportunities	Resource efficiency	More efficient transportation methods Improved efficiency in manufacturing and distribution processes	Cost reductions through building an efficient transportation and delivery network Reduced logistics material costs through wider adoption of simplified packaging Promoting recycling using existing delivery networks Expanding commercial distribution by leveraging joint logistics (reagents, high-value equipment, etc.)	1.5℃	High	Long term	Medium	Using systems to optimize delivery methods and inventory allocation Implementing joint logistics such as milk runs
	Energy	Use of low-carbon energy sources	Preparing for future spikes in fossil fuel prices Improving reputation (or preventing deterioration)	1.5℃	Medium	Long term	Low	Use of renewable energy Securing low-carbon energy over the medium to long term
	Market	Access to new markets	Expansion of the reuse and rental market for research equipment Increasing wallet share through wider adoption of procurement systems	1.5℃	High	Medium term	High	Establishing a new rental & calibration center Continuous upgrades to the e-commerce system
	Market	Access to new markets	Entering business for the public sector such as central/local governments Disaster prevention/disaster preparedness markets	4℃	Medium	Medium term	Medium	Concluding various agreements with local governments (e.g., disaster prevention)
	Products and services	Increased sales of low-carbon products/services	Disaster prevention/disaster preparedness products and environmentally friendly products Enhancing product databases, including GHG emissions by product	1.5℃	Low	Medium term	High	Proactive promotion Considering the use of a system for GHG calculations
	Products and services	Development of products/services to address high temperatures Demand for infectious-disease prevention	Increased sales of heat-stress countermeasure products Increased sales of infection prevention products	4℃	Low	Medium term	Medium	Timely product planning
	Resilience	Building a diversified supply chain	Expanding transactions by ensuring supply-chain resilience	4℃	Medium	Long term	Medium	Diversifying product procurement routes

Risk Management

ased on the "Risk Management Regulations," our Group engages in risk management by identifying, assessing, and responding at the company-wide level to risks that could impede business execution. Sustainability-related risks are managed by the Sustainability Committee at least once a year as part of deliberations on the status of responses to materiality, and the details are reported to the Board of Directors.
Potential risks, including sustainability-related risks, are comprehensively identified from within the Group, integrated as company-wide risks, and then deliberated by the Executive Officers' Meeting in terms of identification, assessment, and responses.

The basic approach to risk management

Indicators and targets

We have set the following reduction targets for Scope 1 and 2 emissions from our own operations. In calculating Scope 2, from this reporting year we include all six Group companies.

Metric	Base year FY03/2021	Actual results FY03/2026	Interim target FY03/2031	Final target FY03/2051
Scope 1 and 2Reduction rate vs. base year	ー	63％	42％	100％

For Scope 3, Category 1 emissions related to the purchase of the more than 14 million items we handle account for the majority; therefore, we are currently considering response measures, including collaboration with the supply chain.

In addition, to reduce Scope 2 emissions, our Group supports the "RE Action" initiative under the "Renewable Energy 100 Declaration," which aims to switch 100% of electricity used to renewable energy by 2050. In adopting renewable energy as well, we have set reduction targets similar to those for Scope 1 and 2 and are increasing the usage rate.

We set *2020 as the reference year.

CDP

We respond to CDP, an NGO that encourages companies and local governments to disclose environmental information.