Disclosure based on TCFD｜Alps Logistics

Response to Climate Change
(Disclosure Based on TCFD Recommendations)

At the Alps Logistics Group, we believe that addressing future uncertainties such as climate change is essential to ensuring the continuous improvement of our corporate value and to achieving a sustainable society, and are therefore engaged in Groupwide environmental initiatives. In September 2023, we declared our support for the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. In addition to further enhancing environmental initiatives, we promote information disclosure in line with TCFD recommendations.

Governance

The Alps Logistics Group, the director in charge of quality and environment manages and oversees the TCFD and other climate change-related actions. In addition, we have established the Sustainability Promotion Committee under the direct control of the Board of Directors. The committee is responsible for making decisions on sustainability action plans, as well as discussing and reviewing major ESG issues, including those related to climate change. The vice president in charge of ESG serves as the chair of the Sustainability Promotion Committee, and meetings are held four times a year. Currently, the committee is made up of three working groups (environment, social and governance), but this composition will be revised, as appropriate, in line with internal and external environmental changes. The major ESG issues discussed and reviewed by the committee, as well as the results of its activities, are reported to the Board twice a year.

Strategy

Identifying climate change risks and opportunities

We understand that climate change risks and opportunities can have an impact on our medium- to long-term business activities. To identify the risks and opportunities that have the potential to significantly impact the Group’s financial position, we have put together two future scenarios—the below 1.5˚C to 2˚C scenario and the 4˚C scenario—to assess the factors that could significantly impact our financial position amid changes in the external environment and under various conditions. We have assessed the climate change risks and opportunities for each business segment (electronic components logistics, material sales and consumer products logistics). In line with changes in the Group’s external environment, we will continue to revise our assessments of major risks and opportunities as necessary and reflect our findings into new strategies.

Scenario analysis assumptions

In our scenario analyses, we referred to multiple existing scenarios (1.5˚C–2˚C scenario and 4˚C scenario) published by the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC).

In a world in which temperatures have risen 1.5˚C to 2˚C compared with pre-industrial levels, we anticipate the implementation of stronger regulations to reduce GHG emissions, that the shift to decarbonization will have an impact on our business, and that there will be greater transition risks.
In a world in which temperatures have risen 4˚C compared with pre-industrial levels, we anticipate that physical risks, the level of which will far exceed regulatory and other transition risks, will grow significantly in line with abnormal weather events.

Impact of risks and opportunities on our businesses, strategies and financial plans

Assuming the 1.5˚C to 2˚C and 4˚C scenarios, we have analyzed the risks and opportunities that could have a significant financial impact on our main businesses, and examined measures to reduce risks and seize opportunities.

Strategies for risks and opportunities (transition plans) and resilience

We have identified the climate change risks and opportunities that could impact the Group’s businesses through scenario analyses and will implement appropriate measures in response. In the future, we will reflect our findings into medium- to long-term management strategies to enhance the Group’s resilience.

Risks and Opportunities

Risk/ Opportunity	Category	Type of Risk/Opportunity	Emergence	Level of Impact	Measures to Reduce Risk/Seize Opportunity
Risk	Transition	(Policy/legal risk) Introduction of carbon tax	Medium term	Major	Introduction of EVs in line with EV development Transition to renewable energy Improvement in vehicle efficiency through greater loading efficiency Collection of information on developments related to EVs
		(Technology risk) Increase in costs due to shift to low-emission technologies	Long term	Moderate
		(Reputation risk) Decline in reputation caused by insufficient climate change countermeasures and information disclosure Increase in costs to raise funds caused by decline in reputation	Medium term	Minor
	Physical (acute risks)	Intensification of abnormal weather including typhoons, torrential rain and lightning (river floods, landslides, etc.)	Medium term	Moderate	Preparation of a system for establishing a crisis management headquarters Preparation of detailed process for crisis management Preparation of sandbags, adjustment of land elevation, and use of raised flooring (1 meter above ground), and installation of rooftop cubicles as warehouse disaster countermeasures Readying of detour routes to respond to disasters as necessary
	Physical (chronic risks)	Sea level rises (increase in costs related to countermeasures and insurance at bases in coastal areas)	Long term	Moderate	Ascertainment of sea level rise risks at bases in coastal areas Improvement of access to power sources (through similar measures as those for acute risks), and consideration of introduction of sustainable renewable energy Readying of alternative transport routes
	Physical (chronic risks)	Difficulty in acquiring personnel due to worsening working environments caused by rising temperatures	Long term	Minor	Provision of adequate working environments through installation of air conditioning equipment
Opportunities	Capital efficiency	Logistics optimization	Short to medium term	Major	Consideration of promotion of modal shift in Japan (predominantly overseas to date) Development of efficient transport network and improvement of loading efficiency (e.g., transport using pallets) Collaboration with other companies through shared warehousing and consolidated collection/delivery, etc.
		Reuse and recycle	Short to medium term	Moderate	Reduction in waste through effective use of resources and recycling
		Operational process reforms and optimization (DX, etc.)	Short to medium term	Major	More efficient warehouse management and delivery through expansion of shared warehousing and consolidated collection/delivery through electronic components logistics platforms Improvement in loading efficiency through package design changes Introduction of labor- and energy-saving material handling equipment Reduction of travel distance and improvement in fuel efficiency through AI-based optimization of delivery routes
		Reduction in electricity consumption and costs through introduction of high-efficiency equipment	Medium term	Moderate	Promotion of installation of solar power generation equipment on warehouse roofs Shift to LEDs
	Energy sources	Use of even lower emission energy sources	Medium term	Moderate	Introduction of renewable energy through installation of solar power generation equipment, etc.
		Use of new technologies	Short to medium term	Moderate	Use of large motorized racks Introduction of EVs in line with EV development
		Entry into carbon market	Short to medium term	Moderate	Improvement in reputation among investors due to carbon offsetting schemes and other overall CO2 reductions
	Products and services	Profit opportunities ahead of a low-carbon society	Short to medium term	Major	Shared warehousing and consolidated collection/delivery Improvement in loading efficiency Labor and energy-saving material handling equipment Consideration of modal shift in mainly long-distance, high-frequency domestic chartering services Modal shift in import/export operations
	Resilience	Stabilization of businesses through enhanced disaster preparedness measures	Medium term	Moderate	Disaster preparedness measures including the preparation of sandbags, adjustment of land elevation, use of raised flooring, installation of rooftop cubicles, etc. Readying of detour routes and diversification of transport and delivery methods Planned suspension of services (with prior notice) for forecastable natural disasters (typhoons, heavy snow), and implementation of BCPs at each base
		Reduction of fuel costs through energy-efficient measures	Medium term	Moderate	Setting of optimal transport routes Improvement of loading efficiency per truck
		Reduction of power procurement costs through use of alternative fuel sources and fuel diversification	Medium term	Moderate	Introduction of renewable energy through installation of solar power generation equipment, etc.

Short term: Within 3 years; Medium term: 3–10 years; Long term: 10–30 years
Minor: Less than ¥100 million; Moderate: ¥100–¥500 million; Major: More than ¥500 million

Risk Management

The Corporate Planning Department and Human Resources and General Affairs Department are leading efforts to ascertain Groupwide risks and to build and operate a robust risk management system.

The Sustainability Promotion Committee, the Corporate Planning Department, and the Quality and Environment Assurance Department are responsible for identifying climate change risks and opportunities, and work with each business site and department to review and implement countermeasures to reduce said risks. In addition to managing the progress of these countermeasures, the three organizations provide reports and make suggestions to management.

Moreover, depending on the severity of the risk, the Sustainability Promotion Committee reports on the status of risk management to the Board of Directors. Through this system, the Board of Directors supervises the effectiveness of the risk management process to ensure Groupwide management of climate change risks.

Indicators and Targets

The Alps Logistics Group calculates and manages Scope 1 and 2*1 of the GHG Protocol and Scope 3 based on FY2023 results with the aim of reducing emissions. Scope 2, however, achieved an 8.1% reduction through increased use of LED lighting, renewable energy, and other power-saving measures, resulting in a 3.5% reduction in total emissions intensity, a key indicator for us.

Scope 3 Emissions

We began Scope 3 calculations for categories 1 through 7 (excluding 4)* in FY2023, and the results for FY2023 were 237,944 (t-CO2) for domestic operations and 140,135 (t-CO2) for overseas operations, for a total of 378,079 (same as FY2021) (domestic operations were calculated retroactively). We will continue to improve our environment so that we can continuously monitor changes from the next fiscal year onward, and we will practice our materiality, “Initiative to reduce environmental impact through business operations,” throughout our entire supply chain.

*Categories subject to calculation are as follows. Category 1: Purchased products and services; Category 2: Capital goods; Category 3: Fuel and energy activities not included in Scope 1 and 2; Category 5: Waste from operations; Category 6: Business travel; Category 7: Employer commuting