Measures to Fight Climate Change -Information Disclosure Based on TCFD Recommendations-

Japanese

The Financial Stability Board's Task Force on Climate-Related Financial Disclosures (TCFD) asks all companies to assess climate-related risks and opportunities using climate change scenarios and disclose them in their business strategies and risk management. The Kyocera Group endorses the TCFD recommendations and has established a governance system that implements risk management and business strategies and sets metrics and targets as part of efforts to promote these initiatives.

Governance

Climate change ranks among the Kyocera Group's key management priorities. Our Sustainability Committee meets semiannually with top management to determine climate change countermeasures and goals. Sustainability progress is reported to the Board of Directors and shared during semiannual International Management Meetings attended by the leaders of our global operations. In addition, we have established a Long-Term Environmental Targets Task Force under the auspices of the Sustainability Committee to oversee tactical implementation.

Risk Management

The Kyocera Group regularly conducts scenario analysis on climate change to ascertain, assess, and manage risks and opportunities.

Risk Management Process

Our risk management efforts include identifying climate-related risks and opportunities within each value chain and evaluating them from two perspectives: 1) awareness level1, and 2) impact level 2. We then categorize each risk by priority: high, moderate, or low.

●Evaluated based on survey results of external trends from answers given by other companies to corporate assessments of climate change, policies addressing climate change, and other factors.

●Evaluated by external institutions based on the probability of an event occurring and its impact upon occurrence.

Category			Items	Priority level	Summary of risks (●) and opportunities ( )	Greatly impacted value chains
Transition risks	Policy	A	Carbon prices	Major	Increased manufacturing and procurement costs if a carbon tax is introduced. The introduction of a carbon tax will increase demand for renewable energy, leading to expansion in the renewable energy, storage battery, and fuel-cell businesses.	Manufacturing / Development
		B	Each country's carbon emission target	Major	Increased costs in introducing renewable energy facilities and green power purchasing in response to these targets. Increased demand in the renewable energy, storage battery, and fuel-cell business, leading to business expansion.	Manufacturing / Development Sales / Use
		C	Energy-saving measures	Medium	Increased cost to invest in new facilities. Promoting energy-saving measures will lead to improved energy efficiency and cost cutting.	Manufacturing / Development
		D	Subsidy policies for renewable energy and other initiatives	Major	Reduced costs for introducing renewable energy facilities through the use of renewable energy subsidies. The introduction of renewable energy for residential energy will lead to expansion in the renewable energy, storage battery, and fuel-cell businesses.	Manufacturing / Development Sales / Use
		E	Regulations on recycling	Medium	The introduction of product recycling regulations will increase costs in response. Leading the way in the development of recycling technologies will lead to increased sales.	Manufacturing / Development Sales / Use
	Technology	F	Increased adoption of next-generation electronic components and semiconductors	Major	Increased capital investment to support increased production. There is a risk that delays in adapting to next-generation technology will lead to reduced sales. The expansion of digital technologies such as AI, IoT, and Smart Cities will lead to increased demand. Increased demand for storage batteries with the introduction of renewable energy and the increased adoption of EVs. Next-generation technology development will lead to business opportunities.	Manufacturing / Development Sales / Use
	Technology	G	Increased adoption of next-generation technologies in energy-related business fields	Major	There is a concern that research and development expenses will increase due to intensifying competition in the development of energy-related technologies. Increased demand for renewable energy, and the development of power management and hydrogen technology driven by a push toward decarbonization in society will lead to business expansion.	Manufacturing / Development Sales / Use
	Market/reputational changes	H	Changes in priority products/product pricing	Medium	There is a concern that the promotion of electrification and use of renewable energy on a broader scale will increase demand for copper, lithium, and other resources, and drive up prices as a result.	Procurement of raw materials
		I	Shift in consumer opinion in electronic components and semiconductors	Major	There is a concern that failing to address avenues for reducing the environmental impact of products and the circular economy may lead to reduced sales. Shifts in consumer awareness will increase demand for low carbon products. Using renewable raw materials and extending product life cycles may act as a competitive advantage.	Manufacturing / Development
		J	Shift in consumer opinion in the energy business	Major	Long-term operation of photovoltaic power generation equipment will become the norm, and reliability based on long product life has been reaffirmed, leading to increased demand. Demand for integrated solutions for energy consumption may increase in the ICT market.	Manufacturing / Development
		K	Changes in investor/consumer opinion	Major	There is a concern that insufficient disclosures may result in a loss of trust among investors, causing the Kyocera Group to face a drop in share price and a decline in enterprise value. There is a concern that a failure to meet decarbonization targets may result in a loss of trust among customers, causing a decline in sales as consumers look elsewhere.	All
Physical risks	Acute	L	Changes in precipitation patterns and rises in average temperature.	Medium	There is a concern that costs such as those resulting from suspension of operations, reduced production, and equipment restoration will be incurred due to natural disasters. Increased costs from natural disaster mitigation measures and insurance premiums. Promoting natural disaster mitigation measures will lead to increased trust from customers.	Manufacturing / Development
Physical risks	Chronic	M	Intensifying extreme weather patterns	Major	There is a concern that our manufacturing capacity will decrease due to water shortages, etc.	Manufacturing / Development

Strategy

The Kyocera Group analyzes risks and opportunities posed by climate change to the Kyocera Group in consideration of the impact of climate change on the Company's business, and changes in customer industries for FY2031 using an 1.5°C scenario^*1 and a 2.6°C scenario^*2 based on information provided by the IPCC (Intergovernmental Panel on Climate Change). In particular, due to the importance that trends toward decarbonization plays in Kyocera's renewable energy business, energy adoption patterns and other considerations set under the 1.5°C scenario were applied, and the financial impact of risks and opportunities for each pattern were evaluated and analyzed. Based on these analysis results, we aim to achieve our greenhouse gas emission reduction targets for by FY2031, and achieve carbon neutrality by FY2051.

Scenario where temperatures rise between 1.0 and 1.8°C in 2100 compared to average global temperatures compared to pre-industrial levels (IPCC Sixth Assessment Report: SSP1-1.9)
Scenario where temperatures rise between 2.1 and 3.5°C in 2100 compared to average global temperatures compared to pre-industrial levels (IPCC Sixth Assessment Report: SSP2-4.5)

Scenario

Scenario	Overview
1.5℃	A rise of +1.0 to 1.8°C in 2100 compared to the pre-industrial levels We also conducted analyses of unique scenarios looking at changes in energy resources and energy infrastructure by 2030.
2.6℃	A rise of 2.1 to 3.5°C in 2100 compared to the pre-industrial levels

Main references:
RCP8.5, RCP4.5, RCP2.6, IEA ETP 2DS, IEA ETP B2DS, IEA450, IEA NPS, IEA ETP 2017, IEA NZE2050, IEA Sustainable Development Scenario, IEA WEO2022 Scenario, WRI Aqueduct Water Risk Atlas, Practical Guidelines on Flood Mitigation Planning in Consideration of Climate Change, etc.

Assessment of Business Impact

Items of major importance were assessed for their impact on the business. Although the business was forecast to suffer major impacts from flooding damage under the 2.6°C scenario, while under the 1.5°C scenario, the business was expected to be deeply impacted by carbon prices, and Kyocera sees this as a major opportunity for its renewable energy and hydrogen-related business. The main business impact assessments results are depicted below. The business impact shown below is based on the increase/decrease from that of FY2024.

Category	Risks/opportunities	Change in operating profit		Reference materials and calculation methods
Category	Risks/opportunities	2.6°C scenario	1.5°C scenario	Reference materials and calculation methods
Manufacturing/Services	Increase in Carbon Pricing	▲10 billion yen	▲12 billion yen	Assuming achievement of the 2030 reduction target using the IEA's World Energy Outlook 2023 as a reference. Calculation method: Future company greenhouse-gas emissions × Future carbon price
	Increase in Energy Costs	▲15 billion yen	▲15 billion yen	Assuming achievement of the renewable energy target for 2030 using the IEA's World Energy Outlook 2023 as a reference. Calculation method: Future co-operative energy use×Renewable energy ratio (%)×2030 electric power unit price
	Damage from Natural Disasters	▲3 billion yen	▲2 billion yen	Assuming that all domestic and overseas bases at high risk for potential flooding will be affected at some point by 2030 using the WWF Water Risk Filter, Aqueduct Flood, and Global Flood Depth-damage Functions as reference. Calculation method: Amount of damage to bases by region and industry × Site area × Flood depth-damage coefficient
Sales and consumption	Expansion of Energy Business	0 billion yen	6.5 - 8.5 billion yen (Results of Company-specific scenarios)	Estimated using the IEA's EV Outlook 2022, the Renewable Energy Institute's Proposal for 2030 Energy Mix in Japan (First Edition), the WWF's Net Zero Emissions by 2050 Scenario, and METI's Strategic Energy Plan and Outlook for Energy Supply and Demand in FY2031 as reference. Calculation method: Sales Revenue by Related Businesses × Operating Profit Ratio×Market Expansion Ratio

Reduction of Scope 1 and 2 Emissions

Measures Addressing Rising Carbon and Energy Prices

To enhance its GHG reduction measures, Kyocera has divided the timeframe from FY2020 to FY2031 into four periods, with phased targets for power conservation and renewable energy adoption.

	Stage 1 FY2020 to FY2022	Stage 2 FY2023 to FY2025	Stage 4 FY2029 to FY2031
Implement renewable energy solutions	[On-site] Install solar power generation facilities at domestic/overseas affiliate companies
	[Off-site] Install solar power generation facilities in Japan
		[Off-site] Install solar power generation facilities in Japan (PPA)
Energy Conservation/Savings	Install exhaust heat recovery systems
	Install superior energy-saving equipment
		Application of Energy-Saving Design and Optimal Operation of Clean Rooms
		Visual energy monitoring for production equipment
	Shift away from petroleum (to natural gas and others) and steam (electrification/humidification)		Review hydrogen/ ammonia use

New Renewable Energy Options

Since FY2021, the Kyocera Group expanded the use of renewable energy with the implementation of independent power generation and a wheeling system^*1 using offsite solar power generation equipment. The Group also concluded a power purchase agreement (PPA)^*2 involving renewable energy supply and demand (solar power, wind power, and biomass power generation). In addition, the Group has installed solar power generation systems on buildings and in parking lots at plants and offices both in Japan and overseas.

Self-consignment allows power generated by a system owner to be supplied to other off-site users over the utility power grid.
A power purchase agreement (PPA) allows users to benefit from renewable energy without having to own power-generating equipment

[On-site] Solar Power Installation

[Off-site] Expanding the installation and use of renewable energy

(1) Renewable energy power supply based on PPA

(2) Renewable energy power supply through an independent power generation and wheeling system

Promotion of Saving Energy

CO₂ Emissions Reduction Cases Presented

We regularly hold presentations to disseminate the energy-saving measures that are being planned or implemented by each manufacturing division.

Replacement of deodorizers with hybrid catalysts

The Kyocera Group installed new waste gas treatment equipment at certain plants to mitigate the effects of waste gas and odor generated from the manufacturing process. Existing waste gas treatment equipment filtered heated waste gas using a platinum catalyst to oxidize and decompose the waste through chemical reactions into harmless ingredients. However, replacement of the system with a hybrid catalyst, a combination of a low-temperature and platinum catalysts, made it possible to reduce the combustion temperature, which helps reduce the need for city gas by about 60% compared with that of FY2023. The Group will discuss the implementation of this hybrid catalyst inside Kyocera Group plants and offices.

　CO₂ emissions reduction (estimated): 385 (t-CO₂e/year)

image: Appearance of the Deodorizer — Appearance of the Deodorizer

Improvement of GHG emission efficiency through visualization of the compressor

The Kyocera Group is moving forward to visualize GHG emissions from individual pieces of manufacturing equipment at plants. The Group will check target values against actual results in a timely manner to reduce GHG emissions and strive to conserve the power of compressors, an important piece of utility equipment, while aiming to prevent defects through efficiency monitoring.

　CO₂ emissions reduction (estimated): 2,460(t-CO₂e/year)

image: Visualization of Compressors — Visualization of Compressors

Reduction of Scope 3 Emissions

Scope 3 emissions account for approximately 83% of the total GHG emissions by the Kyocera Group.
Emissions from Category 1 (Purchased Goods and Services) in particular account for a large portion. To address this, the Kyocera Group works on reduction through close cooperation with its suppliers.

Category 10, 13, and 14 are not calculated because they are not subjects of the assessment.

ESG Data Sheets：Greenhouse gas emissions, CO₂ emissions associated with freight transport, Energy

Initiative toward CO₂ Reduction During Transportation of Products

The Kyocera Group participates in the SAF (Sustainable Aviation Fuel) Flight Initiative promoted by All Nippon Airways Co., Ltd. (ANA) to contribute to CO₂ reduction during product transportation and to promote the future popularization of SAF.

SAF stands for sustainable aviation fuel, a type of biofuel produced from biomass and waste oil. Compared with conventional fossil fuels, it can cut aviation emissions by up to 80%.

Carbon Footprint Calculation

A carbon footprint is the amount of CO₂ emitted throughout the lifecycle a product. To comply with regulations in Europe and meet customer requirements, the Kyocera Group strives to establish and implement accurate methods of calculating our carbon footprint.

Natural Disaster Countermeasures

As part of our risk management efforts, the Kyocera Group assesses geographic variables in planning countermeasures to potential natural disasters. These include installing water barriers at facilities in flood-prone regions and assessing flood stage data during facility planning or expansion.

image: Power receiving, transforming, and distributing facility (Kawasaki Plant) — Power receiving, transforming, and distributing facility
(Kawasaki Plant)

Expansion of Smart Energy Businesses

Kyocera is aggressively expanding its use of renewable energy resources internally. In addition, we are branching out externally with our Smart Energy businesses. This includes purchasing surplus power generated by homes, other businesses, and large-scale solar power plants, applying analytics to balance energy supply with demand, and selling the surplus renewable power to other users.

Metrics and Targets

The long-term targets set for the Kyocera Group are as follows. Greenhouse gas emission targets are certified SBT (Science Based Targets).

Scope 1, 2^*1, GHG emissions (1.5℃ level) : Reduce 46% by FY2031 compared to FY2020 levels
Scope 1, 2^*1, 3^*2 GHG emissions (1.5℃ level) : Reduce 46% by FY2031 compared to FY2020 levels
Renewable energy adoption: Increase 20x by FY2031 from FY2014 levels
Carbon Neutrality: Achieve by FY2051

*1　Scope 1:	Direct emissions associated with fuel consumption and production processes
Scope 2:	Indirect emissions associated with consumption of power or heat purchased from outside
*2　Scope 3:	Indirect emissions other than Scope 1 or 2 (Including procurement of raw materials, transport, use and disposal of products, as well as employee commuting and business trips)