TCFD

TCFD Strategy

Recognizing climate change as a material issue, the THK Group analyzes scenarios in accordance with TCFD (Task Force on Climate-Related Financial Disclosures) recommendations. As part of our strategy, one of the four core elements of these recommendations, we have been analyzing scenarios primarily with regard to our Japanese industrial machinery and automotive and transportation businesses in consideration of our long-term impact up to 2050 based on the 1.5°C and 4°C climate change scenarios proposed by the IEA (International Energy Agency) and IPCC (International Panel on Climate Change).

Primary Climate Change Risks/Opportunities and Responses

Scenario	Cause	Change	Risk/Opportunity	Level	Impact on THK	THK’s Response
1.5℃	Introduction of carbon taxes	Increased procurement costs	Risk	Major	The introduction of carbon taxes will cause raw material price increases to be passed on to THK, and procurement costs will rise.	Reduce raw material input Switch to raw materials with low carbon taxes
	Introduction of carbon taxes	Increased operating costs	Risk	Major	The introduction of carbon taxes will cause carbon tax payments to increase based on Japanese Scope 1 and Scope 2 emissions.	Develop energy-saving production technology Transition to low-carbon, non-fossil fuel energy
	Change to renewable energy	Increased energy procurement costs	Risk	Minor	The change to renewable energy will increase energy procurement costs.	Procure renewable energy internally by installing solar power generation systems
	Increased need for energy savings	Increased demand for environmentally friendly technology solutions	Opportunity	Major	There will be more equipment designs, fabrications, modifications, and product demand for automation and efficiency improvements for the purpose of boosting energy efficiency	Strengthen provision of THK products that contribute to energy savings (LM Guide, electric actuators, unit products, etc.)
		Increased business opportunities in semiconductors	Opportunity	Major	Business opportunities will increase for the manufacture of semiconductor manufacturing equipment components, particularly involving power semiconductors, which form the core of energy savings.	Establish a development, production, and sales structure that can respond promptly and flexibly
		Increased demand for failure diagnosis/ predictive failure detection service	Opportunity	Minor	Demand will increase for a failure diagnosis/predictive failure detection service that utilizes the IoT and helps boost productivity and reduces energy loss.	Expand IoT services that boost productivity and strengthen sales activities and solutions that utilize such services
	Advancement of electric vehicles	Increased demand for electric vehicle components	Opportunity	Major	As more vehicles become electric, new types of products become required, and demand for THK products will increase.	Establish a development, production, and sales structure that can respond promptly and flexibly Plan new business
	Expansion of environmental business	Increased ESG investment	Opportunity	Minor	Expanding THK’s business in environmental fields will capture the attention of investors and make them evaluate THK more favorably, and ESG investment will increase.	Establish a development, production, and sales structure that can respond promptly and flexibly Actively disclose information and strengthen communication with stakeholders
4℃	Serious damage from weather-related disasters	Supply chain interruptions	Risk	Minor	Supply of raw materials will be interrupted if the supplier suffers a disaster.	Decentralize raw material suppliers Secure alternative suppliers
4℃	Serious damage from weather-related disasters	Increased costs from global warming	Risk	Minor	Rising temperatures will cause air conditioning costs to increase for factories, distribution centers, and offices.	Improve heat insulation performance of buildings