SUSTANABILITYResponse to Climate Change (Initiatives Based on TCFD Recommendations)

Response to Climate Change (Initiatives Based on TCFD Recommendations)

TCFD-based disclosures

The Yamabiko Group recognizes climate change-focused initiatives as a major management issue and has announced its endorsement of the TCFD (Task Force on Climate-related Financial Disclosures).
Going forward, we will actively disclose information based on the framework of the TCFD recommendations and contribute to the creation of a sustainable society through business development.

1.Governance

The Board of Directors of the Yamabiko Group takes key decisions about the Group's management policies and management strategies and about the management guidance and supervision of Group companies.
Furthermore, we ensure that the Board of Directors engages in appropriate decision-making through the Management Strategy Council, chaired by the President, which deliberates matters thoroughly before referring them to the Board of Directors.

We have a supervision structure whereby the TCFD Committee, which generally meets every three months, acts as the main supervisor and coordinates across departments regarding the risks and opportunities posed by climate change, which are discussed by the Management Strategy Council and referred and reported to the Board of Directors.
The risks and opportunities deliberated are also reflected in the relevant business plans.

Climate change-related governance structure
The Yamabiko Group's Climate Change Governance Structure Diagram

2.Strategy

The Group has conducted a scenario analysis, based on the TCFD recommendations, in order to comprehend climate-related risks and opportunities.
In conducting the scenario analysis, we referenced international findings such as those from the Intergovernmental Panel on Climate Change (IPCC) of the United Nations, and adopted the following two scenarios.

(1) 1.5°C scenario: Assumes a scenario where the temperature rise is kept within 1.5°C compared to pre-industrial levels
(2) 4.0°C scenario: Assumes a scenario where no additional warming countermeasures are implemented

Based on these scenarios, we organized the timing of occurrence for the identified risks and opportunities across short-term, medium-term, and long-term timeframes, while also assessing the significance of their impact on business.

Through this scenario analysis and ongoing future reviews, the Group will endeavor to formulate a resilient business strategy that does not only identify risks, but also anticipates the formulation of future business opportunities.

Based on these analytical findings, the Group is holding more in-depth internal discussions while continuously monitoring changes in the external environment, thereby striving to enhance the accuracy of future forecasts and hypotheses.
Furthermore, we are taking the insights we have gained and progressively incorporating them into our management strategy, while also working to build trust with our stakeholders through timely and appropriate disclosure of information.

Scenario Premises and Assumed Impacts Overview Table
*1 IEA : International Energy Agency
*2 IPCC : Intergovernmental Panel on Climate Change

Identifying and Assessing Risks and Opportunities

To appropriately identify the risks and opportunities related to climate change and reflect them in our business strategy, the Company conducted a thorough Group-wide examination of transition risks, physical risks, and opportunities related to climate change.
We conducted qualitative assessments of the impact of each risk and opportunity on Yamabiko’s business based on its potential effect on sales, categorized into three levels: “High,” “Medium,” and “Low.” Items assessed as “Medium” or “High” are disclosed.

[Definition of impact]

  • • High: Expected to have an extremely large impact on business and finances.
  • • Medium: Expected to have a moderately large impact on business and finances.
  • • Low: Expected to have a mild impact on business and finances.

The risks and opportunities have been categorized according to the nature of the impact of climate change.

• Climate change-related risks

  • (1) Transition risks: Policy and regulatory frameworks, technological innovations, market shifts, and energy transformations accompanying the transition to a low-carbon society
  • (2) Physical risks: Natural disasters caused by climate change (acute risks) and chronic changes in temperature and precipitation patterns (chronic risks), among others

• Climate change-related opportunities

  • Development of environmentally-responsible products and services, utilization of energy-saving technologies, enhancement of brand value, cost reduction, etc.

In addition, we have defined the time of occurrence and the products affected by each risk and opportunity as follows.

[Definition of the time of occurrence]

  • • Short-term: 5 years or fewer
  • • Medium-term: 5 years to fewer than 10 years
  • • Long-term: 10 years or more

[About affected products]

  • • OPE: chainsaws, trimmers and brushcutters, power blowers, etc.
  • • Agricultural machinery: Speed sprayers, mounted equipment, ridge mowers, etc.
  • • Industrial machinery: generators, welding machines, light projectors, etc.

Risk and Opportunity Overview

We identified climate change-related risks and opportunities with high importance based on their impact.

Climate Change Risk Table

Climate Change-Related Opportunities Table

3.Risk management

In the Yamabiko Group, the Management Strategy Council considers and manages risks related to management decision-making, including those risks accompanying climate change.
Under our climate-related risk management process, the TCFD Committee, categorizes and identifies risks according to the severity of their financial and other effects and prioritizes them according to their assumed frequency of occurrence and impact, then instructs the relevant supervisory division to propose countermeasures.
After these efforts have been compiled, they are deliberated on by the Management Strategy Council and then referred and reported to the Board of Directors. The relevant departments in charge execute countermeasures for each risk.

4.Indicators and targets

(1) Indicators

To manage our climate-related risks and opportunities, we regularly calculate our greenhouse gas (GHG) emissions, including those in the supply chain, to serve as indicators.

Our Scope 1 and Scope 2 emissions for 2024 increased compared to 2023 due to higher production activity, including increased production of engines for outdoor power equipment.
Meanwhile, for 2025, Scope 1 and 2 emissions are projected to decrease to a level comparable to that of 2023, due to factors such as the launch of solar power generation facilities at the Hiroshima Plant, although these are provisional figures.
Going forward, we will continue to promote initiatives for reducing GHG emissions, including the expansion of efforts to use renewable energy.

Our GHG emissions are as follows.
GHG Emissions Performance Table through 2024
● GHG emissions cover those from Yamabiko Corporation itself as well as its domestic subsidiaries.
*However Category 11, which has the highest emissions, includes the company’s products sold overseas. We will endeavor to broaden the scope of our calculations going forward.
● For Scope 3 (Category 1 and Category 2), we revised the aggregation method to integrate with our core system, thereby refining the calculation process.
To ensure comparability following the change in calculation method, we have also recalculated prior years' figures using the same method.
● Category 8 is calculated including emissions from the use of company-owned vehicles, including leased vehicles.
● Category 11 is calculated based on the lifetime fuel consumption of each product as assumed by the company (including assumed future emissions).
● Calculations for emissions related to transportation and delivery are aggregated in Category 4.
● Since all the numbers are rounded off, there may be discrepancies between the figure obtained from adding up the numbers and the total figure given.

(2) Targets

Yamabiko Corporation aims to be carbon neutral by 2050.
As a medium-term target, we have set a goal of reducing our Scope 1 and 2 GHG emissions by 50% by 2030 (compared to FY2020). The whole company will engage in efforts to reduce GHG emissions by means such as introducing renewable energy and environmentally-friendly production facilities.
Additionally, for Scope 3 Category 11 (use of products sold), which compromises about 82% of the company's GHG emissions, we will determine a pathway for each segment and work to reduce GHG emissions.

GHG emissions reduction target
Target year/Base year Target value
2030 (medium-term)/FY2020 Reduce Scope 1 and 2 by 50%.*
2050 (long-term)/FY2020 Make GHG emissions net-zero across the entire supply chain.

*Decreased by approximately 15% as of 2024

Initiatives to achieve carbon neutrality in each segment are as follows.

Outdoor power equipment (OPE)

We will keep striving to enhance our lineup of engine and battery products which have the high durability and work efficiency required to satisfy market needs while also conforming to environmental regulations. At the same time, as the manufacturer with the largest market share in chainsaws in Japan, we will speedily introduce products to the market in response to growing social demands for forest maintenance as a climate change countermeasure.
To achieve carbon neutrality with engine products as well, we will work to conduct verification tests of carbon-neutral fuels, including bioethanol.

Agricultural machinery

In agreement with the Green Food System Strategy formulated by the Ministry of Agriculture, Forestry and Fisheries, we are engaged in product development such as promoting electrification and enhancing our lineup of hybrid machines in order to both increase productivity and achieve sustainability through innovation in agriculture.
We are striving to increase the development speed of products that are highly safe and incorporate labor and personnel-saving technology as well as environmental technology.

Industrial power equipment

In addition to pursuing the electrification and hybridization of our products, as well as the development of products equipped with hydrogen engines,we will work to reduce our GHG emissions through efforts such as promoting sales of our Multi-Hybrid power generation system that we introduced to the market in 2025 (an environmentally-friendly system that incorporates renewable energy).
Moreover, for generators and welding machines equipped with diesel engines supplied by engine manufacturers in Japan, we will encourage the use of fuels such as renewable diesel (paraffin fuel refined from waste cooking oil and animal or plant oils; RD), a biofuel.