TCFD Disclosure

The climate change is one of the important social issues the global society is facing. We have determined, in the TechnoPro Group Environmental Policy, the climate change as one of the environmental agendas TechnoPro Group should prioritize to address, and set medium-term targets for CO₂ emissions and the number of environment-related engineers as KPIs for materiality. Furthermore, we have been engaged in fulfilling corporate social responsibility, upon recognition of its importance, which gives impacts on both the social and environmental, as well as economic aspects in our business activities.
In June 2022, we announced our support for the recommendations by the Task Force on Climate-related Financial Disclosures (TCFD) and simultaneously joined the TCFD Consortium. We will promote information disclosure based on the TCFD framework (Governance, Strategy, Risk Management, and Metrics and Targets) so that we can communicate even better with a wide range of our stakeholders, including the shareholders and the investors.

Governance
Strategy
Risk Management
Metrics and Targets

Governance

1．Supervision by the Board of Directors

In order to promote sustainability management on group-wide basis, we have established the Sustainability Committee which deliberates and reviews the identified sustainability issues, develops action plans, and monitors their progress. The Sustainability Committee consists of the President, Representative Director and CEO (Chairman), full-time directors (including those who are the members of Audit & Supervisory Committee), and officers and employees appointed by the Chairman. This committee is held semiannually in principle.
We position the climate change as one of the risks that could affect our business, which accordingly is integrated into our Enterprise Risk Management (ERM) framework for deliberation at the ERM Committee. The ERM Committee is chaired by the President, Representative Director and CEO, and held semiannually in principle.
The President, Representative Director and CEO assumes the ultimate responsibility for environment-related issues including the climate change. We have established a system where the Sustainability Committee and the ERM Committee regularly report to the Board of Directors, which deliberates, directs, and supervises these committees as necessary, to ensure proper implementation of our initiatives related to the climate change.
（Click here to see the agendas of the Sustainability Committee.）

2．Governance Structure

Corporate Governance and Compliance System

Note:The Board of Directors is chaired by a Non-executive Director and Chairman. The Audit & Supervisory Committee is chaired by a full-time Director who is an Audit & Supervisory Committee Member. The Nomination and Compensation Committee is chaired by an Independent Outside Director. The Independent Officer Committee is chaired by the chief Independent Outside Director.

Strategy

1．Scenario Analysis

We have conducted scenario analysis with the objective of assessing the Group's resilience to significant climate change-related risks and opportunities, as well as the magnitude of financial impact; we have adopted two scenarios for the future climate change, the 4℃ scenario and the 1.5℃/2℃ scenario, analyzing the potential impact, as of 2030, on our domestic engineer staffing business.

Assumptions for scenario analysis

4℃ scenario	A scenario where no progress is made in the climate change measures and average global temperature will rise about 4°C above pre-industrial levels by 2010. While the physical risks such as severe extreme weather events and sea level rises will grow, it is assumed that restrictions on business and consumption activities will not be tightened in comparison to their current status.
2℃ scenario	This is called the sustainable development scenario where the increase in average global temperature will be kept well below 2°C compared to pre-industrial levels. This scenario analyzes what paths must be taken to fully achieve the goals set forth in the Paris Agreement, and assumes that the physical risks are expected to increase from current levels, while at the same time we will be affected by various transition risks, moving toward a low-carbon society.
1.5℃ scenario	This scenario assumes that the efforts to achieve carbon neutrality will be intensified and that the increase in average global temperature will be limited to about 1.5°C by 2100, compared to pre-industrial levels. While the increase in the physical risks will be suppressed, the impact of the transition risks in the form of taxation, laws and regulations is expected to be greater.

2．Summary of Scenario Analysis Results(Risks and Opportunities)

Large Category	Middle Category	Possible Phenomenon	Risks	Opportunities
Transition Risks	Policy Regulation	Introduction of carbon tax, strengthen the government's renewable energy and energy conservation policies	We assume that there will be an increase in expenditures due to CO₂ emission costs resulting from the introduction of carbon taxes, as well as due to changes in tenant fees resulting from the progress of converting rental offices to ZEB (ZEB：Net Zero Energy Building).	We assume that demand for engineer staffing and projects will increase with advances in new renewable energy technologies such as solar panels, clean hydrogen, geothermal power, and biomass, as well as with development for renewable energy products and energy-saving devices such as energy management system equipment. We expect that we will be able to increase revenues by nurturing engineers based on analysis of market trends in the environmental technologies in order to ensure supply and solution capabilities and capture customer demands.
	Technology	Evolution of next-generation low-carbon and decarbonization technologies, and corporate investment to develop related technologies	We assume that there are risks that the Group will not be able to correctly predict and recognize the direction of low-carbon and next-generation technologies, and that delays in skill improvement and acquisition for engineers will lead to their skills being unable to keep up with the times. This could result in a decrease in requests for engineer staffing and projects in the relevant technical fields.
	Evaluation	Changes in corporate evaluation criteria by customers and investors (capital market) and changes in reputation	We assume the following risks in the event that the Group's efforts to address the climate change are found to be inadequate. Decreased numbers of requests for engineer staffing and projects under the pressure for decarbonization throughout the supply chains of our customers Volatile stock price as a result of decrease in stable, long-term shareholders, due to their investment decision based on ESG and sustainability in capital market	We assume the following opportunities to be created by timely and appropriate communication about our efforts in the climate change, sustainable resource use, pollution prevention, and environmental conservation, as well as about the Group's resilience to the climate change. Increased revenues as a result of designation as a preferred supplier due to increased reputation among customers Acquisition of stable, long-term shareholders as a result of increased recognition by capital markets
Physical Risks	Acute	Intensification of extreme weather (Typhoons, torrential rains, storm surges, etc.)	We assume that damage to Group facilities due to an increase in natural disasters such as floods and storm surges could result in human and physical losses, suspension of operations, and other damage.	We assume that, in the event of damage to buildings and infrastructure from natural disasters or other causes, the requests for construction management engineer staffing may increase as a result of increasing construction and civil engineering projects for reconstruction and restoration of this damage.
Physical Risks	Inertia	Increase in average temperatures and associated changes and deterioration in work conditions	We assume a decrease in revenues due to higher costs resulting from increased use of cooling equipment and limitations on outdoor work, particularly construction management work.	We assume, in the event that demand for air conditioning equipment, etc. increases due to rising outdoor temperatures, an increase in revenues through new engineer staffing and projects in the promotion of development for air conditioning equipment, etc.

Note to Risks and Opportunities
Transition Risks: the changes that may occur as a result of the transition to a low-carbon economy, such as various policies‘ enforcement, changes in markets and reputations, etc.
Physical Risks: the changes to buildings and logistics caused by floods, storms, and other extreme weather events, as well as the changes to human health and other aspects

3．Impact on Operating Profit

Regarding the financial impact on business, the impact on operating profit in 2030 is estimated by each measurable item, based on the climate change scenarios.
In the 1.5°C/2°C scenario, carbon tax burden is projected to increase due to movement toward a low-carbon society, while the physical risks such as flood damage are projected to have a smaller impact compared to the 4°C scenario.
In the 4°C scenario, there is no policies’ enforcement for the transition to a low-carbon society, and carbon tax burden is lower than that in the 1.5°C/2°C scenario. However, the physical risks are estimated to have a larger quantitative impact than those in the 1.5°C/2°C scenario.
The Group is mainly engaged in the domestic engineer staffing business, including design and engineering, research and development, and data analysis for the manufacturing industry, information technology industry, pharmaceutical industry, research institutes, and government agencies, as well as construction management for construction, civil engineering, facilities, etc. for the construction industry. Thus, we do not need to possess our own premises, production facilities, etc. in our operations, differently from the high-risk sectors as defined by TCFD. As a result, we consider the climate change risks for our financials to be insignificant.

4．Resilience based on Scenario Analysis

Though the result of our scenario analysis indicates that the risks associated with the climate change are insignificant, we will continuously conduct analysis and implement initiatives, necessary to maintain and strengthen the resilience of our business. The realization of a decarbonized society is a shared global goal. We will carry out the initiatives to mitigate risks in our business activities, as well as the initiatives to take advantage of business opportunities through technology and talent in the interest of a decarbonized/low-carbon society.

Large Category	Middle Category	Possible Phenomenon	Initiatives
Transition Risks	Policy Regulation	Introduction of carbon tax, strengthen the government's renewable energy and energy conservation policies	Monitoring policy and regulatory trends and actively considering the use of decarbonized/low-carbon energy Strengthening systems for training engineers and providing solutions related to environmental technologies such as low-carbon and decarbonization, utilizing the research and analysis functions of the specialized department in charge of research and analysis of industry and technological trends, etc.
	Technology	Evolution of next-generation low-carbon and decarbonization technologies, and corporate investment to develop related technologies
	Evaluation	Changes in corporate evaluation criteria by customers and investors (capital market) and changes in reputation	Enhancing various information provision, through our website, briefings, and other methods, on KPIs, use of renewable energy, and specific efforts to promote energy conservation Updated disclosures based on TCFD recommendations
Physical Risks	Acute	Intensification of extreme weather (Typhoons, torrential rains, storm surges, etc.)	Confirming potential damage from disasters, etc. when leasing an office, etc. Upgrading equipment, software, communication environment, etc. to enable operations to be carried out even in remote locations in the event of a disaster
Physical Risks	Inertia	Increase in average temperatures and associated changes and deterioration in work conditions	Conducting rigorous work management and taking heat stroke prevention actions by distributing food and drink supplementing salt content, cooling materials, etc. for employees handling outdoor work

Risk Management

1．Process for assessing and identifying risks

The Group recognizes risks as the events that may affect the achievement of our strategies and business objectives, and has established the ERM structures and processes to appropriately manage our organization as a whole. After clarifying the type and amount of acceptable risk (risk appetite), we have comprehensively identified risks, and qualitatively and quantitatively evaluated them in terms of their severity of impact, foreseeability, and probability of occurrence. Then, countermeasures have been considered from the aspects such as avoidance, mitigation, transfer, and acceptance.
We have positioned the climate change as a risk that is difficult to foresee but could affect all aspects of our business.

2．Process for managing risk

The ERM Committee evaluates the climate change risk on a comprehensive basis alongside with all other risks surrounding the Group, including those in strategy, markets, competition, operations, and compliance, through the ERM planning and management. This committee also monitors the implementation of such plans, aligned with scenario analysis, in collaboration with the Sustainability Committee.

Metrics and Targets

The Group has set the following GHG reduction targets, with FY2020 as the base year, which is at the level equivalent to the reduction targets set by the Japanese government.

Scope1+2：32.2% reduction (compared to FY2020) by FY2030
Scope1+2+3：Real GHG emissions: zero by FY2050

Scope 1 Emissions of Greenhouse gases directly produced by ourselves
Scope 2 Indirect emissions generated by the electricity or heat purchased by ourselves
Scope 3 Amount of Greenhouse gases emitted in the process of employee travel transportation, product procurement, consumption, and disposal.

Data on Greenhouse Gas (GHG) Emissions

Data on GHG emissions resulting from our business activities are as follows. (Measured since July 2019)

(tCO₂)

	Scope 1	Scope 2	Scope1＋2	Scope3
FY2023	287	1,283	1,570	46,854
FY2022	272	1,515	1,786	–
FY2021	341	1,463	1,804	–
FY2020	430	1,688	2,118	–

Greenhouse gases covered by the scope under the GHG Emissions Accounting, Reporting, and Disclosure System, that is, energy-origin CO₂, non-energy-origin CO₂, CH₄, N₂O, HFCs, PFCs, SF₆, and NF₃
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