Disclosure of Financial Information on Climate Change

The Daiei Kankyo Group recognizes that responding to climate change is one of its important management issues. We are pursuing initiatives to reduce greenhouse gas emissions in society as a whole, starting from the waste management business. Specifically, we are working to advance waste management, improve the recycling rate, and generate energy through waste incineration, biogas power generation, and other means. As a company with the power to create better environments, we will continue to pursue further measures to combat climate change while also endeavoring to disclose information based on the TCFD* recommendations.

* TCFD: The Task Force on Climate-related Financial Disclosures. It was dissolved in October 2023. The International Financial Reporting Standards (IFRS) Foundation has assumed and is fulfilling that role from 2024 onward.

Information disclosure based on the TCFD recommendations

June 27, 2023
Daiei Kankyo Co., Ltd.

Information disclosure based on the TCFD recommendations

　Since fiscal year 2022, Daiei Kankyo Co., Ltd. has been preparing information disclosure in the four areas recommended by the TCFD (governance, strategy, risk management, and metrics and targets), and announced its support for the TCFD recommendations in June 2023.

Governance

　We established the Sustainability Promotion Committee chaired by the President and Representative Director. This committee discusses various climate change-related policies as well as risks and opportunities at least twice a year, and reports the result of these discussions to the Board of Directors. The Board of Directors then makes decisions and supervises important matters based on the reports from the Committee.
　In addition, the Sustainability Promotion Department under the Corporate Strategy Planning Division, which serves as the secretariat of the committee, plans and drafts measures related to climate change, and coordinates with various departments, Group subsidiaries, and committees.

Risk management

　Overall sustainability risks and opportunities, including climate change, are identified and assessed by the Sustainability Promotion Committee (at least twice a year). Other Companywide risks are identified and assessed by the Risk Management & Compliance Committee chaired by the President and Representative Director (at least four times a year). Both committees determine materiality based on Strategy uniform judgment criteria (a risk and opportunity map) and make additional changes to risk items or revise their materiality in response to changes in the external environment such as laws and regulations. In addition, risks deemed to be of high materiality by each committee are reported or brought to the Board of Directors for discussion, thereby ensuring integrated management of risks for the entire Company.

Strategy

　To formulate a strategy for climate change, we carried out scenario analyses using both 1.5°C and 4°C climate change scenarios for the four major companies in the Daiei Kankyo Group (Daiei Kankyo Co., Ltd.; Mie Chuo Kaihatsu Co., Ltd.; DINS Kansai Co., Ltd.; and Geo-Re Japan Inc.), and discussed the analysis of risks and opportunities in waste management and recycling and soil remediation, as well as measures to address them. In the future, we plan to expand the scope of analysis to the entire Group and enhance information disclosure.

Scenario analysis assumptions

Condition	Description
Scope	The companies covered were Daiei Kankyo Co., Ltd., Mie Chuo Kaihatsu Co., Ltd., DINS Kansai Co., Ltd., and Geo-Re Japan Inc. The two businesses covered were waste management and recycling, and soil remediation, which are the main businesses of the Daiei Kankyo Group. The combined net sales of these four main companies account for 80% of the consolidated sales of the Daiei Kankyo Group as a whole. The scenario analysis does not reflect the steady-state business growth (BAU growth) expected for each company in the future.
Timeline	Medium term (to 2030), long term (to 2050)
Scenario definition	The following two scenarios were considered: The 1.5°C scenario, in which the transition to a decarbonized society progresses. The 4.0°C scenario in which no measures to combat global warming beyond the status quo are expected.
Main data sources consulted	Scenarios of the Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report. Scenarios of the International Energy Agency (IEA) World Energy Outlook 2022. Japanese Ministry of the Environment’s Draft Medium- and Long-term Scenarios toward Zero Greenhouse Gas Emissions in the Waste and Resource Recycling Sector by 2050.

Scenario analysis result

1.5°C scenario

Events		Impact on the Company	Materiality*1		Incorporation into main strategies
			Medium term	Long term
Tighter regulations on greenhouse gas emissions (implementation of decarbonization)	Risk	Decrease in earnings due to carbon tax burden	A	A	Introduce highly efficient sorting process Expand methane (biogas) and incineration power generation businesses
	Opportunity	Reduction of greenhouse gas emissions and carbon tax burden through promotion of energy conservation and increased use of renewable energy	B	B
Decrease in waste generation	Risk	Decrease in volume of waste the company receives	B	A	Introduction and expand resource recycling systems
Promotion of strategies to eliminate plastics	Risk	Intensifying competition due to the entry of major “artery” (manufacturing) companies into the industry	C	A	Explore opportunities to collaborate with major “artery” companies
	Opportunity	Increased earnings by entering MR and CR*2 businesses and gained opportunities to collaborate with major “artery” companies	B	A
Increase in DX requirements for waste generators	Risk	Loss of customers to DX-promoting companies	B	A	Build industry-standard systems
	Opportunity	Improved traceability and competitive advantage due to labor saving through DX promotion	B	A
Transition to renewable energy	Opportunity	Expansion of waste-derived power sources and increased earnings	B	B	Expand methane fermentation (biogas power generation) and incineration power generation businesses
Decarbonization of municipalities	Opportunity	Participation in PPP projects and Local Circular Ecological Sphere	A	A	Promote PPP projects

4°C scenario

Events		Impact on the Company	Materiality*1		Incorporation into main strategies
			Medium term	Long term
(Acute) Increase in the number and severity of weather-related disasters (Chronic) Increase in extremely hot days and heavy rainfall	Risk	Reduced productivity of outdoor work	C	B	Improve effectiveness of crisis management system in preparation for disasters
	Opportunity	Increased opportunities for disaster recovery assistance	C	B
	Opportunity	Gained competitive advantage through improved resilience	C	B

• *1 Materiality: The medium-term period is up to 2030, and the long-term period is up to 2050.
• *2 MR: Stands for “material recycling” CR: Stands for “chemical recycling”

Metrics and targets

　To achieve the Japanese government’s goal of carbon neutrality by 2050, we have set targets to reduce greenhouse gas emissions associated with the business activities of the Daiei Kankyo Group.　We will strive to reduce energy use and conserve energy, and work to achieve our targets by gradually transitioning to renewable energy.

Daiei Kankyo Group’s greenhouse gas emission reduction targets

【Long-term target】	Achieve carbon neutrality across the Daiei Kankyo Group by 2050
【Medium-term target】	Achieve net zero CO2 emissions from electricity use across the Daiei Kankyo Group by 2030

Actual greenhouse gas emissions of the Daiei Kankyo Group

	Covered	FY2022/3 (t-CO2)	FY2023/3 (t-CO2)
Scope 1	All Group companies*1	249,361	252,540
Scope 2	All Group companies*1	22,666	18,714
Total	All Group companies*1	272,027	271,254
(Reference) Scope 3	Four main companies*2	-	142,889

• *1 Legal entities included in the Daiei Kankyo Group during the reporting period.
• *2 The four major companies include Daiei Kankyo Co., Ltd., Mie Chuo Kaihatsu Co., Ltd., DINS Kansai Co., Ltd., and Geo-Re Japan Inc.

Initiatives to reduce greenhouse gas emissions

We are pursuing various initiatives to reduce CO₂ emissions generated in the course of our business activities.

• Energy
  conservation

  We are pursuing various initiatives to reduce greenhouse gases generated in the course of our business activities.

• Recycling

  We help to circulate resources and reduce CO₂ emissions by recycling a variety of waste materials and returning them to society.

• Electricity
  generation

  We recover energy from waste with high efficiency and use it for power generation and heat utilization.

• Company-owned forests

  Our company-owned forests cover an area of approximately 8,170 hectares throughout Japan, and absorb approximately 44,000 tons of CO₂ per year.

• Solar power generation

  We have installed a mega solar power plant on the site of a former controlled final disposal site in Izumi City, Osaka Prefecture. We are generating renewable energy by effectively utilizing this site.

Transition in energy consumption

The Act on Rationalizing Energy Use defines energy consumption per unit as an indicator for energy management, and businesses are required to reduce their energy consumption per unit by an average of 1% or more per year over the most recent five-year period. The Daiei Kankyo Group defines energy consumption per unit using the following formula, and has achieved a cumulative reduction of 20% or more over the past five years.

Definition of energy consumption intensity

• Energy consumption per unit (ℓ/t)
• Crude oil equivalent energy consumption (ℓ)/total weight of intermediate treatment (t)

(Calculated using the following conversion rates: electricity: 4 kWh = 1 ℓ of crude oil; gas: 0.86 m³ = 1 ℓ of crude oil; heavy oil: 1 ℓ = 1 ℓ of crude oil)

For the fiscal year ended March 31, 2024, energy consumption (oil equivalent) was 45,768 kL, and greenhouse gas emissions from energy consumption were 92 kt, an increase of 13 kt compared to the previous fiscal year. We believe the reasons for these increases were the increase in fuel consumption due to the test run of a new incinerator, and the increase in electricity-derived CO₂ emissions due to an increase in the emissions factors for the retail electricity suppliers with which we have contracts. Under the Act on Rationalizing Energy Use, which was revised in April 2023, non-fossil energy is now subject to calculation of energy consumption. This report was therefore updated to include non-fossil energy in energy consumption.

Energy Management Committee

The Energy Management Committee, which manages energy for the entire Group, reports on the actual energy consumption of each department, identifies energy issues, examines countermeasures, and horizontally deploys successful energy conservation case studies.
Since the committee was established in 2012, a total of 278 energy conservation case studies have been implemented by the Group, with a total energy-saving impact equivalent to an annual energy reduction of 2,836 kL, or 8 kt of greenhouse gas emission reduction per year.

Contribution to the Reduction of Greenhouse Gas (CO₂) Emissions in Society as a Whole

The Daiei Kankyo Group aims to reduce greenhouse gas emissions in society as a whole by promoting initiatives to recycle waste into resources and energy. For the fiscal year ended March 31, 2024, our contributions to greenhouse gas emission reduction and absorption amounted to 179 kt.

Contribution to reduction by thermal recycling

Electricity is generated by recovering the heat generated during waste incineration. The electricity generated is used in our own facilities and surplus electricity is sold, thereby helping reduce greenhouse gas emissions at Daiei Kankyo Co., Ltd. and other companies.
In the fiscal year ended March 31, 2024, the total amount of electricity generated was 109,213 MWh. Of this amount, 42,240 MWh was sold, equivalent to a reduction contribution of 19 kt.

Contribution to reduction by recycling

We help reduce greenhouse gas emissions by recycling a variety of waste materials such as RPF; iron, copper, and aluminum scrap; and recycled pallets. For the fiscal year ended March 31, 2024, our outgoing volume was 49,065 tons, equivalent to a greenhouse gas emission reduction contribution of 114 kt.

• 

  RPF (Solid fuel) CO₂ reduction:
  1.88 t-CO₂ per ton of RPF

• 

  Recycled pallets CO₂ reduction:
  1.79 t-CO₂ per ton of pallets

Contribution to reduction by solar power generation

The total amount of electricity generated by the Daiei Kankyo Group’s solar power generation facilities in the fiscal year ended March 31, 2024 was 6,328 MWh. Of this amount, the DINS megasolar power plant installed on the former final disposal site sold 5,503 MWh of electricity under the feed-in tariff (FIT) system. This is equivalent to a greenhouse gas emission reduction contribution of 2 kt.

Participation in the 30by30 Alliance for Biodiversity

In October 2023, we joined the 30by30 Alliance for Biodiversity, a joint alliance consisting of the national government, the Ministry of the Environment, NPOs, companies, and other bodies, formed with the aim of achieving the 30by30 target of preserving or protecting 30% of land and sea areas by 2030. We will contribute to the achievement of the 30by30 target through the expansion of OECM^* as Nature Symbiosis Sites, and information sharing with other alliance members.

*OECM (Other Effective area-based Conservation Measures)
Areas that contribute to the conservation of biodiversity other than nature reserves, such as company-owned forests and border zones between mountain foothills and arable flat land.

30by30 Alliance for Biodiversity (Ministry of the Environment website)(JP)

Environmental Management Structure

Daiei Kankyo Co., Ltd. obtained ISO 14001 certification in 1998 for the first time. Since then, each of the Group’s business sites has successively acquired ISO 14001, Eco-Action, KES Environmental Management System Standard, and other certifications as part of their efforts to efficiently reduce environmental impact and greenhouse gas emissions through steady environmental management activities.

Certification coverage rate across the Group: 81.3%
(calculated as the ratio of the number of employees at certified sites to the total number of employees [combined ISO, EA21, and KES])　*As of April 1, 2024

Environmental Audits

In 1998, Daiei Kankyo Co., Ltd. and Mie Chuo Kaihatsu Co., Ltd. obtained ISO 14001 certification, and the Daiei Kankyo Group has since continued to expand the scope of external certification to Group companies. We are extending consistent environmental management even to new locations added through M&A in recent years, through the cross-organizational roll-out of initiatives that are characteristic of the Group.