Environment

Under the leadership of President and Group CEO Morikawa, the IR Office of the AVANT Group and the CRM Committee will be responsible for gathering information on climate change, its impact and measures to address it. The opportunities and risks associated with climate change will be discussed in the CRM Committee‘s regular reports to the Board of Directors and in the Group Management Committee, and future policies will be formulated and progress will be over seen.

[Response to transition risk]

The AVANT Group's electricity and gas purchase costs for the year ended 30 June 2022 were approximately 20 million yen, which is equivalent to 0.13% of sales. If we are forced to purchase alternative energy sources as a result of stricter regulations on greenhouse gas emissions, this may have a minor impact on our business performance due to higher unit prices for electricity and gas. We aim to reduce our greenhouse gas emissions by 50% from the level of the year ended 30 June 2017 by using carbon offsets, etc. In the year ended 30 June 2022, we offset 0.03% of our net sales, and we plan to continue to build up our offset quota below this level. Offset credits are finite, and if a large number of companies adopt the same method, we may not be able to secure offset credits at the expected unit price and volume.

[Physical Risk Response]

According to the Ministry of the Environment's "Assessment of the Impacts of Climate Change on the Severity of Disasters (Interim Report)" based on the IPCC's Fifth Report, the main factors are that rising sea surface temperatures will make it easier for the ocean to supply water vapor to typhoons, and that rising temperatures will increase the amount of water vapor that the atmosphere can store. Typhoons are more likely to approach Japan with greater strength than at present, bringing more rainfall to the Kanto and Tohoku regions. Scenarios have been developed for a 2% or 4% increase in rainfall and tide levels due to global warming, but typhoons such as 2019's Typhoon No. 15, which exceeded these scenarios and the assumed once-in-50-year risk, passed over the Kanto region and damaged the power transmission system. However, the reality is that typhoons of a magnitude that exceeds these scenarios and the once-in-50-years risk, such as typhoon No. 15 in 2019, have already passed through the Kanto region and damaged the power transmission system. Rather than taking measures in line with such a scenario, the AVANT Group has decided to adopt a response that assumes the occurrence of the largest possible disaster.

We believe that the greatest risks to the AVANT group are (1) the difficulty in maintaining a safe living and working environment for employees due to a catastrophic disaster, and (2) the loss of continuity in the provision of services to customers. In particular, the continuity of services provided by the AVANT Group is a very important issue because the services provided by the AVANT Group contribute extensively to the preparation of financial information for customers and the generation and disclosure of information that contributes to management decisions, information that is critical to the survival of a company. The CRM Committee will consider the appropriate BCP for dealing with these risks and report to the Board of Directors on its progress.

[Responding to opportunities]

On the other hand, in order for our customers to respond to climate change, it is important for them to be able to visualise the economic activities that lead to the generation of greenhouse gases within their organisation, to take action and to provide an environment for better communication with their stakeholders. It is also an opportunity for the AVANT Group to grow further. These opportunities will be discussed and promoted by the Group Management Board, the Group CEO and each Group representative.

[Risk management system]

AVANT Group's IR Office and the CRM Committee will collect information and discuss the response. Important information is reported to the Board of Directors through the CRM Committee and discussed as appropriate.

[Formulation of BCP assuming the greatest risk]

As risks associated with the intensification of natural disasters such as short-term torrential rains and super typhoons due to the risk of climate change, we have formulated a BCP for three possible maximum disasters: the Tokyo Arakawa River Flood, the Tokyo Bay Storm Surge, and the Osaka Bay Storm Surge. The CRM Committee formulates a BCP to ensure the safety of employees before and after the disaster, to support their daily lives and work during the recovery period, and to ensure the continuity of services for customers, and reports this to the Board of Directors.

As for greenhouse gas emissions by the Core Group Companies, direct emissions from the use of fuel (Scope 1) were 0, and indirect emissions from the use of electricity, steam, and heat (Scope 2) were 516.138t-CO₂ in the fiscal year ended June 2022. On the other hand, indirect emissions (Scope 3) from procurement of raw materials, travel of employees, outsourcing of waste treatment, etc. amounted to 7,446.076t-CO₂ in the fiscal year ended June 2022. In the medium to long term, we aim to reduce excess power consumption by encouraging appropriate working hours and telecommuting, and to reduce total greenhouse gas emissions (Scope 1-3) by 50% compared to the fiscal year ending June 2030 (approximately 5,000t-CO₂) by the fiscal year ending June 2017 through carbon offsets, under the circum - stances in which an increase in emissions associated with business expansion is unavoidable. Since July 1, 2021, we have purchased a green power certification that corresponds to Scope 2 emissions and achieved carbon offset. We are also aiming to reduce emissions with Scope 3 by combining various means.