Information Disclosure Based on TCFD Recommendations

Information Disclosure Based on TCFD Recommendations 2026

The TOKAI Group has been actively working to address the challenges facing society through various business activities that relate to people’s lives and society. In December 2021, the TOKAI Group announced the "Sustainability Declaration" and identified the materiality (key issues). Subsequently, in May 2026, in light of changes in the external environment, we reviewed and updated those materiality issues.Among them, achieving carbon neutrality by 2050 and addressing climate change are important themes closely related to the energy provided by our group, which are social issues that require global efforts.

The TOKAI Group believes that identifying and implementing measures to address climate change risks and opportunities using the TCFD framework and integrating them into our business strategy contribute to the sustainable growth and enhancement of corporate value.

【Update】
In May 2026, Following the "review of materiality" and the launch of the "Medium‑Term Management Plan 2028", we have updated the strategies and other elements of this disclosure.

In the FY2022, we disclosed information in accordance with the TCFD guidelines for the first time. Moving forward, we will enhance the resilience of the TOKAI Group to climate change issues through scenario analysis, review the content annually, and strive to improve information disclosure, contributing to the realization of a sustainable society.

1.Governance
2.Strategy
3.Risk Management
4.Metrics and Targets

1.Governance

The TOKAI Group aims to actively engage in social issues, including climate change, and contribute to the realization of a sustainable society. To promote management with a sustainability perspective, the "Sustainability Promotion Committee" serves as one of the advisory bodies to the Board of Directors. The "Sustainability Promotion Committee" is chaired by the President and CEO and consists of responsible officers from departments such as management and risk management, presidents of group companies, and external directors who provide advice from an objective standpoint.

The committee usually meets twice a year and whenever necessary, to take stock of material issues and action assignments and to assess the status of initiatives for the achievement of targets. Climate-related initiatives and issues discussed at the Sustainability Promotion Committee are reported to the Board of Directors, and under the appropriate management and supervision of President of the Group's core operating companies, they are instructed to the Group companies through the GX Promotion Committee which is comprised of Group companies.

Beginning in FY2026, we will incorporate ESG evaluations into the bonus assessments of Group executives. We will set two ESG evaluation indicators—(1) achievement of the annual target for employee engagement (year‑on‑year increase) and (2) achievement of the annual target for the GHG emissions reduction rate—and the number of indicators achieved will be uniformly reflected in the bonus payout rate for all executives.

2.Strategy

(1) Assumptions and Coverage of Scenario Analysis

Time Axes

As time axes, given that 2050 is when we aim to achieve carbon neutrality, we defined the period to the end of 2028 (TOKAI Group Medium-Term Management Plan 2028) as the short term, the period to 2030 as medium-term, and the period to 2050 as long-term. In addition, we assessed the financial impact as of 2030.

Short term	The end of 2028 (TOKAI Group Medium-Term Management Plan 2028)
Medium-Term	2030 as medium-term
Long-term	2050

Target Business

The coverage of the analysis covers all businesses of the TOKAI Group (all 42 consolidated subsidiaries).In particular, the Group's core energy business is a business domain in which major changes in the business environment are likely as part of the planned transition to decarbonization and we recognize the importance of assessing the scale of the impact in advance.

※In May 2026, we expanded the scope of the applicable businesses.

Scenario

To analyze the risks and opportunities, and financial impact of climate change, the Group conducted analyses for two scenarios: the 1.5℃ scenario and the 4℃ scenario, and we considered measures to be taken for both scenarios.

	1.5℃ scenario	4℃ scenario
Worldview	Goal proposed in the 2015 Paris Agreement. Scenario which assume that policies and regulations will be tightened and advances in technology will be made to limit warming to 1.5℃ by 2100 through decarbonization Reference scenarios IPCC: SSP1-1.9, SSP1-2.6 WEO: NZE	Scenario which assumes inadequate progress on climate action and continually growing GHG emissions, causing average global temperatures to rise as much as 4℃ above pre-industrial levels by 2100, and leading to more widespread and severe physical damage, including typhoons and flooding Reference scenarios IPCC: SSP5-8.5, SSP3-7.0 WEO: STEPS/CPS
Carbon tax	140$/t-CO₂ (IEA: World Energy Outlook2023)	42$/t-CO₂ (IEA: World Energy Outlook2023)

Based on our analysis conducted for the two scenarios described above, the main risks and opportunities, the impact on the Group, and measures to be taken to address them are as follows.

(2) Results of Scenario Analysis

We conducted scenario analysis to understand the impact on the Group's businesses, taking into consideration external scenarios and our own unique circumstances. We verified the degree of importance of transition risks, physical risks and opportunities in terms of "likelihood" (on a scale of 1 to 3) and "magnitude of impact" (on a scale of 1 to 3) and classified them into three levels (minor, moderate and major) based on the matrix shown on the right.
In addition, likelihood of occurrence is classified on a scale of 1 to 3, where 1 is low, 2 is medium and 3 is high. Furthermore, where the financial impact can be quantitatively assessed, the impact on ordinary profit is estimated and classified on a scale of 1 to 3, where 3 is an impact exceeding ±5 billion yen, 2 is an impact exceeding ±1 billion yen, and 1 is an impact of ±1 billion or less.

※In May 2026, figures were recalculated based on the situation in FY2025.

1.5℃ scenario

The introduction and strengthening of carbon taxation is likely to result in taxation on our own GHG (Scopes 1 and 2) emissions and higher procurement costs on the LP gas business and city gas business. There is also the possibility that demand for gas will fall in response to the regulation of GHG emissions, changes in the energy mix and other developments.
Meanwhile, more widespread use of energy-saving equipment will likely have an impact both in terms of the risk of decline in gas usage and greater opportunities to sell energy efficiency equipment, etc. More opportunities to sell thermal insulation, ZEH, etc. amid growing awareness of the thermal insulation performance of houses are also expected.
4℃ scenario

More severe natural disaster including higher seas levels as a result of extreme weather events and typhoons will likely affect our facilities (energy supply facilities, data centers , communication equipment, etc.), supply chains and customers, bringing business activities to a halt.
However, we expect to see high demand for the Aqua home-delivery service amid rising average temperatures and heat waves, and growing demand for IT services including managing risk in the cloud to avoid the loss of data stored on-premises due to flooding, etc.
Demand for CATV, which offers community channels as a means of communicating local information about increasingly frequent natural disasters, is also likely to increase.

Risk/ Opportunity		Category	Factor	Target Business	Impact on TOKAI group	Time axes	Financial impact in 2030		TOKAI group's countermeasure
Risk/ Opportunity		Category	Factor	Target Business	Impact on TOKAI group	Time axes	1.5℃	4℃	TOKAI group's countermeasure
Risks	Transition	Policies/ Legal Regulations	Introduction of carbon tax	Company-wide	Taxation of our own GHG emissions (Scopes 1 and 2)	Medium to long term	moderate	minor	Reduction of GHG emissions through switch to green power at own facilities, improvement of LP gas delivery efficiency, etc.
			Introduction of carbon tax	Energy sector	Higher procurement costs in the LP gas business and city gas business	Medium to long term	major	moderate	GHG reduction throughout supply chains Promotion of switch to LP gas or city gas as cleaner source of energy during the transition phase Expansion of sales of environmental products such as energy saving equipment, renewable energy and co-generation systems, etc. to customers (increase in profit from equipment)
			Changes in energy policy		Fall in demand for gas in response to the regulation of GHG emissions, changes in the energy mix and other developments	Medium to long term	major	minor
		Technologies	Expansion of energy-saving equipment		Decline in gas sales volume due to widespread use of energy efficient boilers	Short term to long term	moderate	minor
		Reputation	Increasing low-carbon and decarbonization orientation	Company-wide	Difficulty securing human capital due to society's emphasis on low-carbon and decarbonizing business	Medium to long term	major	minor	Improvement in environmental literacy as a result of provision of environmental training to Group employees
	Phisical	Acute	Increase in natural disasters	Company-wide	Damage to our facilities from increasingly severe natural disasters including rising sea levels	Short term to long term	moderate	moderate	Improvement of resilience through stronger measures against wind and water damage, thoroughgoing BCP, development of the disaster management structure, etc.
	Phisical	Chronic	Changes in the global environment and social structure, etc.	Energy Sector	Decline in gas sales volume due to rising temperatures, decrease in size of households, improvement in thermal insulation performance of houses and other factors	Short term to long term	moderate	moderate	Increased sales of thermal insulation, ZEH, etc. (increase in profit from construction work)
Opportunities		Policies	Policy to promote the spread of energy-saving equipment	Energy Sector	Increased equipment sales due to government policies promoting high efficiency equipment, renewable energy, co-generation, etc.	Short term to long term	major	minor	Expansion of sales of environmental products such as energy saving equipment, renewable energy and co-generation systems, etc. to customers
		Market	Increase in natural disasters	Telecommunica-tions sector	Growing demand for cloud services to avoid the risk of losing data stored on-premises loss due to flooding, etc.	Short term to long term	minor	moderate	Expansion of sales of cloud systems to corporations
			Increase in natural disasters	CATV Sector	Increasing demand for community channels that communicate community-based disaster prevention information and disaster news	Short term to long term	minor	moderate	Promotion of subscription to CATV services and strengthening of community-based program production function
			Chronic temperature rise	Aqua Sector	High demand for Aqua home delivery service amid rising average temperatures, heatwaves, etc.	Short term to long term	minor	moderate	Strengthening of production structure and expansion of sales for Aqua home delivery service
		Reputation	Growing Scoal interest in ESG investing	Company-wide	Enhancement of financing capability and corporate value through improvement of reputation among investors	Short term to long term	moderate	minor	Active disclosure of climate change-related information include TCFD disclosures

(3) The TOKAI Group's GX Promotion Measures

Based on the above analysis results, the TOKAI Group will endeavor to mitigate identified risks, leverage opportunities to drive business expansion and growth, and, as a united group, promote initiatives for a low‑carbon transition and decarbonization. First, in our own business activities we will work to reduce our GHG emissions (Scopes 1 and 2) by promoting the installation of solar power at our facilities and equipment, procuring non‑fossil certificates, and advancing energy‑saving measures.
In addition, for our customers and local communities, we will promote the adoption of energy‑efficient equipment and renewable energy, and advance the generation and utilization of carbon credits, thereby contributing to reductions in GHG emissions by our customers and the communities we serve. Furthermore, we will collaborate with suppliers, startups and others to promote the development of decarbonized raw materials and products, thereby contributing to emissions reductions across the entire supply chain. These strategies are reflected in the "Medium‑Term Management Plan 2028," and we aim to achieve both the “environmental value creation” across the entire supply chain and our company’s "business growth". In addition, we are endeavoring to increase our resilience by strengthening measures against wind and flood damage at our own facilities and for customers, thoroughly implementing BCP, and developing the disaster management structure.

GX Strategy set out in Medium-Term Management Plan 2028

(4) TOKAI Group GX Initiatives

As an energy provider and as a corporate group that comprehensively supports daily life and society, the TOKAI Group is proactively addressing climate change. Aiming to create a society where future generations of children can live with peace of mind, we are actively advancing a variety of environmental measures based on the GX promotion measures outlined in (3).

For more information, please visit this website.

3.Risk Management

We carry out an assessment and management of climate change risks and opportunities based on a yearly cycle, in principle. The Sustainability Promotion Office of TOKAI Holdings is in charge of addressing companywide climate change risk management. The Sustainability Promotion Office convenes the GX Promotion Committee, which is made up of Group company presidents and relevant officers, and the committee identifies, assesses and reviews climate change risks.
Group companies are instructed via the GX Promotion Committee to consider the order of priority of the climate change issues discussed at the Sustainability Committee and to take measures to address them, the progress of action taken is monitored and progress is fed back to the Sustainability Promotion Committee.

4.Metrics and Targets

The TOKAI Group has identified “Promotion of eco-friendly business activities” as one of its material issues and regards addressing climate change as an important priority. As our vision for 2030, we aim to be taking a leading role and actively engaging in climate‑change measures across the entire supply chain, with the goal of achieving carbon neutrality by 2050. To realize this, the "Medium‑Term Management Plan 2028" sets forth a commitment to contribute to the “environmental value creation” across the entire supply chain, and the Group is promoting it as a united effort. We aim to reduce Scope 1 and 2 GHG emissions by 50% by FY2030, compared with FY2021. In addition, with respect to GHG emissions including Scope 3, we aim to achieve carbon neutrality by 2050. Through these initiatives, we will contribute to the realization of a sustainable society and endeavor to enhance corporate value.

Our metrics and targets are as follows.

Indicater	Targets
Indicater	FY2030	FY2050
Scope1+2　GHG emissions (Compared to fiscal 2021)	At least -50% (At least -16000 tons)	Carbon neutrality
Scope3 GHG emissions from supply chains	Cooperation with supply chains	Carbon neutrality

Scope1,2,3 result

(thousand tons-CO₂)
			Base Year FY2021	FY2022	FY2023	FY2024	Compared to the base year	% compared to the base year
Scope1	GHG emissions emitted directly by the company		10.9	10.9	10.6	10.6	-0.4	-3.3％
Scope2	Indirect GHG emissions from purchased electricity, heat, etc.		23.3	23.7	22.0	20.7	-2.5	-10.9％
Scope1+2 total			34.2	34.6	32.6	31.3	-2.9	-8.5％
Scope3	Category1	Purchased goods and services	673.9	666.7	668.3	679.2	+5.3	+0.8％
	Category2	Capital goods	60.9	59.1	66.9	65.6	+4.7	+7.8％
	Category3	Fuel-and-energy-related activities (not included in Scope 1 or 2)	5.5	5.5	5.4	5.6	+0.1	+1.6％
	Category4	Upstream transportation and distribution	3.9	3.7	3.7	3.0	-0.9	-22.8％
	Category5	Waste generated in operations	1.3	1.4	1.4	1.6	+0.2	+18.9％
	Category6	Business travel	1.2	1.7	1.5	2.2	+1.0	+84.5％
	Category7	Employee commuting	1.4	1.5	1.3	1.5	+0.2	+12.0％
	Category8	Upstream leased assets	-	-	-	-	-	-
	Category9	Downstream transportation and distribution	-	-	-	-	-	-
	Category10	Processing of sold products	-	-	-	-	-	-
	Category11	Use of sold products	1,481.1	1,421.9	1,439.4	1,428.7	-52.4	-3.5％
	Category12	End of life treatment of sold products	11.6	11.4	10.5	11.8	+0.2	+1.8％
	Category13	Downstream leased assets	103.7	105.6	104.6	109.4	+5.7	+5.5％
	Category14	Franchises	-	-	-	-	-	-
	Category15	Investments	-	-	-	-	-	-
Scope3 total			2,344.4	2,278.4	2,303.0	2,308.6	-35.8	-1.5％
Scope1+2+3 grand total			2,378.6	2,313.1	2,335.6	2,339.9	-38.7	-1.6％

※We have obtained third-party assurance in accordance with the ISAE 3410 standard by the Japan Quality Assurance Organization (JQA) for 2024 GHG emissions.
In addition, due to the expansion of the boundary from fiscal year 2024, calculations for previous years are based on the same standards as fiscal year 2024.
※Scope 2 emissions are calculated based on the Market-Based Method.

Third-party Verification

To improve the reliability of its greenhouse gas (GHG) emissions data, TOKAI Holdings has received third-party verification at the ISAE 3410 standards from Japan Quality Assurance Organization for its Scope 1, 2, and 3 actual GHG emissions.

FY2024 GHG Third-paty Verification Report[PDF:161KB]

【Verification Coverage】

■Target period and scopes

　GHG emissions for FY2024
　(Scope 1, Scope 2, Scope 3 Category 1, 11)

■Boundary

TOKAI Holdings Corporation and its affiliated companies, 183 locations.