NEC Networks & System Integration Corporation

Disclosures Based on TCFD Recommendations

 In December 2021, NESIC announced its endorsement of the Task Force on Climate-related Financial Disclosures (TCFD). To promote sustainability management and realize an inclusive and sustainable society, NESIC discloses information in line with TCFD recommendations, engages in efforts to mitigate climate change-related risks, and creates and captures opportunities.

 As part of the NEC Group, we committed to formulating Science Based Targets (SBT) in December 2017, obtained SBT certification the following year, and are promoting initiatives aimed at carbon neutrality with 1.5℃ certification from the SBT initiative for its current targets.
 As greenhouse gas (GHG) emissions from the supply chain (Scope 3) are overwhelmingly greater than GHG emissions from NESIC (Scope 1, 2), we are pursuing reductions throughout the supply chain.
 We completed approximate calculations for the applicable Scope 3 categories for the fiscal year ended March 31, 2023 and received third-party verification in February 2023. We will continue to lower Scope 1 and 2 emissions, promoting thorough visualization and refinement of Scope 3 and promote emissions reductions throughout the supply chain.

 In addition to endorsing the TCFD, we have also joined the TCFD Consortium to exchange information with other companies and financial institutions that endorse its recommendations. Additionally, we will contribute to carbon neutrality with the aim of realizing a sustainable society by participating in the GX League Basic Concept organized by the Ministry of Economy, Trade and Industry of Japan, which aims to promote the commercialization and popularization of decarbonization technology
and other measures, as well as participating in the Carbon to X(C2X) open innovation business platform and promoting the creation of climate change-responsive businesses.
 From the fiscal year ending March 31, 2024, we are accelerating Groupwide business development by launching our Carbon Neutral Business Promotion Project.

Outline of TCFD at NESIC



 NESIC views climate change and other environmental issues as critical for promoting sustainability management and realizing our vision of an inclusive and sustainable society created through communications.

 Outside director and others with a deep connection with sustainability attend Sustainability Management Committee meetings as observers. They report the results of deliberations to the Board of Directors. In this way, a system is in place for the Board of Directors to oversee NESIC’s climate change measures to ensure that they are properly promoted.
 Since adapting to sustainability management and climate change are key issues for management decision-making in business activities, we are formulating environmental policies based on the responsibilities of the President and Chief Executive Officer. Based on these policies, we are engaged in reducing our impact on the environment and risks and expanding contributions through business activities.
 The Central Environmental Management Committee, which handles themes within the Sustainability Management Committee, is chaired by the Executive Officer in Charge of the Environment and conducts discussions related to key items, such as medium- to long-term target formulation and investment related to energy conservation, for promotion under environmental management.
 The Sustainability Management Committee discusses proposals that are judged to have a significant impact on business (including vision, medium-term management strategies, and major investments) and reports to the Board of Directors.

 Furthermore, we are formulating targets for reducing CO2 emissions and promoting action through our business activities to achieve NEC Environmental Targets 2030 (NEC Group targets for environmental management), based on our Course of Action for Climate Change Toward 2050 as a member of the NEC Group.
 In April 2022, NESIC established the Carbon Neutral Promotion Division, directly controlled by the President, to further strengthen and promote carbon neutral strategies and management.
 The Carbon Neutral Promotion Division will formulate Companywide carbon neutral strategies, policies, milestones, targets, and other structures, working with related divisions to create competitive advantages, uncover new business opportunities, co-create with customers and partners, and develop green transformation (GX) strategies necessary for achieving carbon neutrality.

Companywide Promotion and Governance Structure for Climate Change


Scenario Analysis

 NESIC recognizes that assessing the business impact of climate change-related risks and opportunities, as well as formulating countermeasures, are essential for both realizing our vision of an inclusive and sustainable society created through communications, and ensuring business sustainability.

 To understand the impact of climate change on our business and identify climate-related opportunities and risks, we implemented the following analysis for various scenarios, referred to NEC Group assumptions regarding decarbonization scenarios in Japan, compared them with business environment assumptions in NESIC’s long-term strategies, and analyzed the differences.

 We conduct scenario analyses through Companywide discussions in collaboration with the environmental, planning, and public relations departments, and business divisions.

 In particular, discussions resulted in the prediction that bold measures and technology innovations will be promoted under the 1.5℃–2℃ scenario in the transition to a decarbonized society.
 Regarding transition risks, we analyzed that issues including the rising cost of energy, increasing raw material prices, and difficulties in procuring materials would become apparent.
 Under the 4℃ scenario, basic risks and opportunities would be the same but physical risks, such as the occurrence and increased severity of heavy rains and flooding, recovery measures for customer facilities, and increasing frequency of damage, will be relatively higher.
 Meanwhile, we recognize increasing needs across society for GHG emission reductions and renewable energy in its move toward decarbonization as an opportunity for NESIC to provide various ICT services that contribute to carbon neutrality.

 We are reporting the results of carrying out analysis and evaluation regarding the details and amount of impact for each risk, our response to risks, and subsequent opportunities for growth as follows.

Main Climate Change-Related Risks



Main Climate Change-Related Opportunities



Transition Plans

Approach to Transition Plans
 Approach to Transition Plans NESIC’s approach to transition plans encompasses TCFD-related scenario analysis, risks and opportunities, financial impact, and disclosure of indicators and targets and interrelated items.
 This will result in changes to risks, opportunities, and financial analysis through continuous improvement of scenario analysis, changes to established targets of transition plans, and changes to indicators and targets.
 Transition plans will be used as a milestone for implementing TCFD strategy targets and will be utilized in our overall business strategies to continue enhancing corporate value going forward.

Transition Plans
• NESIC is formulating transition plans to achieve targets for reducing greenhouse gas emissions by 2030 based on financial
 impact and scenario analysis of TCFD risks and opportunities.
• We will implement measures for achieving net zero in 2050 based on action plans and financial plans in 2030, while and
 reducing risks and increasing opportunities.

Risk Management

 In addition to torrential rainstorms, flooding, and other natural disaster risks, the range of threats that companies must consider, such as the Russian invasion of Ukraine, is expanding.
 NESIC continuously identifies risk diversification in this highly changeable business environment, managing risks from the perspectives of minimizing damage and ensuring business continuity.
 Critical risks, including those posed by climate change, are identified and managed through a risk management system led by the Management Quality Improvement Committee.
 Additionally, the Sustainability Management Committee, which discusses management strategies and policies for measures based on those strategies, implements measures through deliberations, and in accordance with the Corporate Governance Code, reports to the Board of Directors while providing ongoing disclosure to stakeholders outside NESIC.

Indicators and Targets

 Since formulating its Environmental Policy in 1996, NESIC has continued to reduce impacts from its business activities on the environment.
 In providing customers with environmentally friendly products and services, we contribute to lowering environmental burdens throughout society and maintain efforts to realize a sustainable society.

 As a member of the NEC Group, we have set major KPI targets for reducing greenhouse gas emissions in the fiscal year ended March 31, 2023, in line with NEC Environmental Targets 2030 (NEC Group targets for environmental management).
 However, we are bringing forward our targets for reducing Scope 1 and 2 CO2 emissions to fulfill our responsibility and further accelerate our contribution to responding to climate change.
 For Scope 3, we will continue refining data on CO2 emissions by engaging with the supply chain and set targets for reducing emissions in the fiscal year ending March 31, 2024.

<Major KPI Targets and Status of Achievement>

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Management strategies that incorporate the medium-term management plan Shift up 2024
*Sustainable Symphonic Society

Greenhouse Gas (GHG) Emissions and Our Actions for and Purpose of Their Reduction