Environment

Creating Environmentally Friendly Products

(1) Promotion of product development and business activities that lead to reduction of environmental impact
Our goal is to achieve the Commercialization Forecast (product release) set for each individual development theme for environmentally friendly products (grain-derived raw material substitution, nickel-free, cyanide-free).

(2) Reduction of energy consumption in the plating process
The goals are to "reduce GHG emissions: achieve carbon neutrality with respect to Scope 1 and 2 by 2030" and "reduce energy consumption: reduce FY2030 energy consumption by 20% compared to FY2022 (167t-CO²)" through various energy conservation efforts such as shielding the building from heat and updating air conditioning equipment. The goal is to achieve a 20% reduction in energy consumption in FY2030 compared to FY2022 (167t-CO2). Since we cannot achieve carbon neutrality through the above energy consumption reduction measures alone, we Forecast to achieve carbon neutrality through the use of J-credits and other means.

(3) Contribution to the energy field through application of core technologies cultivated in plating
We aim to reach an agreement on joint development with battery material and electrolyte manufacturers by FY 2027, and to start production and sales by FY 2030.

Recognition of External Environment

As climate change accelerates, various impacts and damages are beginning to appear on the natural environment, people's lives, and corporate activities in various regions of the world. With the adoption of the Paris Agreement to address climate change, countries are working toward a net zero emissions goal, and the Japanese government has announced that it will raise its NDC target (greenhouse gas (GHG) reduction target for FY 2030) from 26% to 46% (compared to FY 2013). Against this backdrop, companies are expected to contribute to a decarbonized society through their business activities.
As a company, we aim to achieve sustainable growth while mitigating and adapting to climate change through our own operations. In addition, we recognize the importance of information disclosure, as there are increasing demands for companies to disclose information on climate-related issues.

Policy

We recognize that climate change is both a risk and an important management issue that will lead to new revenue opportunities for our company. We believe that actively and proactively addressing climate change will enhance our corporate value over the medium to long term, and we will work appropriately with our stakeholders to bring Profit not only to our company but also to society as a whole. Through these efforts, we aim to contribute to the achievement of the goals set forth in the SDGs and the Paris Agreement.
We recognize the importance of climate-related financial disclosures and are committed to disclosing information in accordance with the TCFD recommendations.

Sustainability Committee

The Sustainability Committee will develop and update the Transition Forecast and report the goals and indicators in climate-related matters to the Executive Committee^*1 . After deliberation by the Executive Committee, the Sustainability Committee will submit the Transition Forecast and climate-related goals to the Board of Directors. The Board of Directors will review and approve the adequacy of the Transition Plan and climate-related goals in light of its own strategy and Forecast. This Forecast and related climate-related goals were approved by the Board of Directors in March 2024.
The Sustainability Committee will meet regularly (four times a year in principle) to review the progress of each goal related to the Forecast, using indicators as the basis. The Sustainability Committee also reports regularly (twice a year in principle) to the Executive Committee on important climate-related matters, including the progress of the Transition Forecast and adaptation measures, and the Executive Committee reports to the Board of Directors. The Board of Directors shall oversee the Transition Forecast by, for example, checking the degree of achievement of goals related to the Transition Forecast and considering whether or not the Transition Forecast needs to be revised, while paying attention to its consistency with the company's strategy, business plan, risk management policies, etc.

*1 Management Committee
In accordance with the "Regulations of the Management Committee," the meeting is convened by the President, who chairs the meeting, and is regularly held once or twice a month by the full-time directors, full-time corporate auditors, and other members who are added at the direction of the President.

Role of Management

The President and CEO is responsible for his/her company's management in climate-related matters. This responsibility includes the assessment of climate-related issues and the management of the implementation of the Transition Forecast. Specifically, the President & CEO is the organizer and chairperson of the Executive Committee and the Sustainability Committee, and has sufficient authority and access to information to ensure the effective implementation of the Forecast by, for example, receiving reports directly from participating members and discussing important issues.

TCFD Governance Structure Chart

We will report our goals and performance related to the Transition Forecast to external stakeholders in our Annual Report and on our Sustainability Site on our website regarding financial impact, performance against goals, and impact on the organization's business.
The diagram below illustrates our governance structure regarding climate change.

• In June 2023, as part of its environmental efforts, the Company made a disclosure in line with TCFD recommendations regarding its response to climate change, in which it identified transition and physical risks and opportunities, and established related indicators and targets.
• Our stated goal of "achieving carbon neutrality for Scope 1 and 2 by 2030" is consistent with the objectives of the Paris Agreement and the IPCC report on "achieving carbon neutrality in the second half of the century," as well as with the Japanese government's declaration to "achieve carbon neutrality by 2050. The goal is also consistent with the Japanese government's declaration that it aims to be carbon neutral by 2050.

The goals are to "Reduce GHG emissions: Achieve carbon neutrality with respect to Scope 1 and 2 by 2030" and "Reduce energy consumption: Reduce FY2030 energy consumption by 20% compared to FY2022 (167t-CO²) through various energy conservation efforts such as building heat shielding and upgrading air-conditioning equipment. We are also working to reduce energy consumption by 20% in FY2030 compared to FY2022 (167t-CO²).
Since we cannot achieve carbon neutrality through the above energy consumption reduction measures alone, we Forecast to achieve carbon neutrality through the use of J-Credits and other means. Although the price of J-credits is expected to rise in the future, the financial impact of purchasing J-credits is expected to be negligible because our GHG emissions are extremely small.

Transition Forecast

Based on this belief, we have formulated an Action Forecast for the following three areas: "Reduction of GHG emissions," "Promotion of development of environmentally friendly plating chemicals products," and "Application of core plating technologies.

(1) GHG emissions reduction

As shown in the table above, we have formulated a Forecast to achieve a 20% reduction in energy consumption in FY2030 compared to FY2022 (33% reduction compared to BAU in accordance with the Medium- to Long-Term Management Projections) through various energy conservation efforts.
Furthermore, since carbon neutrality cannot be achieved through these energy-saving measures alone, we are planning to achieve carbon neutrality through the use of J-credits and other methods. Although the price of J-credits is expected to rise in the future, since our GHG emissions are extremely low, we believe that the financial impact of purchasing credits will be minimal.

(2) Promote development of environmentally friendly plating chemicals products

The chemicals we have developed have excellent environmentally friendly performance, such as "reduction of environmental impact (development of alternative products to grain-derived chemicals)," "energy saving in the plating process (lower plating bath temperature, shorter plating time, etc.)," and "saving precious metals (saving limited precious metals). There are still many development themes, and the engineers in charge of each of these themes are proceeding with development through repeated trial and error between the feasibility study stage and the development stage based on the commercialization Forecast. The Sustainability Committee and the Management Committee manage the progress of each development theme, aiming to bring all target products to market (completion of the development stage) by the end of FY 2030.

(3) Application of core plating technology

Since our establishment in 1971, we have been focusing on the electronics field as the core of our business field, mainly for semiconductor package and connector applications, consistently refining our proprietary "redox control technology" and developing and manufacturing a wide variety of precious metal plating chemicals based on this technology. We have been developing and manufacturing a wide variety of precious metal plating chemicals based on this technology.
In line with the social transformation such as corona disasters and DX, we believe that there are social issues that can be solved by applying our redox technology outside of the existing market of precious metal plating. We have focused on "secondary batteries (rechargeable batteries)" as one of such issues. The charge-discharge reaction of a battery is a redox reaction. If we can apply the proprietary technologies we have cultivated to this problem and realize battery materials with overwhelmingly superior performance, we expect to make a significant contribution to the low-carbon economy and dramatically increase the added value of our company. Specifically, we plan to select a battery material and electrolyte manufacturer to partner with by the end of FY 2027 through opportunities such as exhibiting at trade shows, and begin joint development, with product sales scheduled to begin at the end of FY 2030.

Scenario Analysis

In examining the achievability of this Transition Forecast, we selected the following two scenarios to identify climate-related risks and opportunities for our business in line with the TCFD framework and to examine our resilience along two axes: progress in low-carbon product markets and progress in decarbonization policies. See the table below for details.

(1) Scenario with enhanced climate change policy: WEO NZE 2050 scenario

The WEO NZE 2050 scenario developed by the International Energy Agency (IEA) has been selected as the scenario that most clearly shows the trend of the world transitioning to a low-carbon economy. This scenario is designed to encourage countries to actively adopt and strengthen climate change policies to achieve net-zero emissions by 2050.

(2) Scenario with stagnant climate change policy: IPCC RCP8.5 scenario

The IPCC RCP8.5 scenario was selected as the opposite of the above scenario, in which the global transition to a low-carbon economy is stagnant. This scenario projects a 3.2°C to 5.4°C increase in global average temperature at the end of the 21st century compared to the pre-industrial era, and assumes that countries will not actively introduce or strengthen climate change policies and that the transition will remain stagnant.

Scenario Analysis Results

Selected Scenario

• WEO NZE 2050 scenario developed by the International Energy Agency (IEA)
• RCP8.5 scenario developed by the Intergovernmental Panel on Climate Change (IPCC)

Time axis
Short-term = 1 year (same period as Single Annual Projections), Medium-term = 3 years (same period as Medium-term Management Forecast), Long-term = 2030 (same period as Medium-term Target in Japanese NDC)

(1) In the WEO NZE 2050 scenario, the transition to a low-carbon economy is rapidly accelerating toward a net zero economy in 2050, and it is expected that companies are taking steps to reduce GHG emissions and energy use. Under these circumstances, the need for energy-saving technologies for the plating process, which we are commercializing, is expected to increase. In addition, the demand for storage batteries is expected to increase as electrification progresses, and the need for the application of our core plating technology is also expected to increase.

(2) Under the IPCC RCP8.5 scenario, the transition to a low-carbon economy has stalled, and the specific progress of each company's efforts to reduce GHG emissions and energy use is expected to slow down. Under these circumstances, although there is a need for the plating process energy saving technology that we are commercializing, it is expected to remain flat. In addition, since the progress of electrification is slowing down and demand for storage batteries is not expected to grow significantly, the need for the application of our core plating technology is likely to remain current but sluggish.

Goal attainability

(1) Since demand for the utilization and commercialization of each of our technologies is expected to increase under the WEO NZE 2050 scenario, we can foresee the possibility of technology development and commercialization at an earlier stage than Forecast, driven by such increased demand.

(2) Although we do not expect to see an increase in demand for the utilization and commercialization of each of our technologies under the IPCC RCP8.5 scenario, we plan to carry out technology and product development as Forecast in order to secure an advantage over our competitors' products and to acquire knowledge that will enable us to respond flexibly to the increasingly severe environmental problems that will arise in the future. We plan to develop technologies and products as planned.

Because our GHG emissions are very low, either scenario would not affect our response to GHG emissions reductions, and we expect to achieve our goals without any problems.

Transition Risks and Opportunities

We have identified the following risks and opportunities facing the Group as a result of the transition to a low-carbon economy.

• Transition Risks (Policy and Regulations): Stronger GHG emission regulations and carbon taxes are expected.
• Transition Risk (Reputation): Increased demands from our stakeholders to reduce GHG emissions are expected.
• Opportunities (products/services/markets): Develop products that are nickel-free processes
• Opportunity (market): Participation in the battery market

Transition Forecast Challenges and Uncertainties

Because our GHG emissions are very low, we do not anticipate any challenges or uncertainties in our transition plan for reducing GHG emissions, and we expect to achieve our goals as Forecast.
Large-scale investment is required for "promotion of development of environmentally friendly plating chemicals" and "application of core plating technologies. Since the Company is not in a situation where it has sufficient human resources, equipment, or work environment, the Company must first secure sufficient funds, assign human resources, etc. in order to proceed with these two technological developments as Forecast.

Our goals and metrics for this Transition Forecast are as follows

Target 1: Reduce GHG emissions
Target: Achieve carbon neutrality with respect to Scope 1 and 2 by 2030
Indicator: GHG emissions

Target 2: Energy consumption (energy conservation, etc.)
Target: Reduce energy consumption by 20% in FY 2030 (compared to FY 2022)
Indicator: Energy consumption