TCFD

TCFD Information Disclosure

The THK Group has identified climate change as a material issue (significant challenge), and as of February 2023, it has become a supporter of the TCFD (Task Force on Climate-Related Financial Disclosures) recommendations. The TCFD recommendations are structured around the four core elements of governance, strategy, risk management, and metrics and targets. In accordance with the TCFD recommendations, THK has analyzed the impact of climate change on its business.

Governance

THK has established a Sustainability Committee, headed by the CEO, that investigates and discusses risks, opportunities, and responses related to climate change and acts as an advisor to the Board of Directors.
As an organization beneath the Sustainability Committee, the Sustainability Promotion Subcommittee is made up of representatives of each business division, and they analyze scenarios related to climate change risks and opportunities in accordance with the TCFD recommendations.
The Sustainability Committee confers on the results of the analysis performed by the Sustainability Promotion Subcommittee, determines measures to respond to climate change, and monitors the progress.
Based on the items discussed and resolutions determined by the Sustainability Committee, the Board of Directors receives and discusses reports and proposals as appropriate and provides general supervision for the climate change efforts of each division.

Strategy

Based on 1.5°C and 4°C climate change scenarios proposed by the IEA (International Energy Agency) and IPCC (International Panel on Climate Change), the THK Group has been analyzing scenarios primarily with regard to its Japanese industrial machinery business and automotive and transportation business in consideration of their long-term impact up to 2050 in order to investigate strategies and the resilience of those strategies with reference to climate change risks and opportunities.

* 1.5°C scenario: Scenario in which regulations for minimizing global warming are strengthened and market changes are enacted (IEA NZE, IPCC AR6 (Sixth Assessment Report) SSP1-1.9, etc.)
* 4°C scenario: Scenario in which physical impacts such as extreme weather events result from global warming (IPCC AR5 (Fifth Assessment Report) RCP8.5, etc.)

Primary Climate Change Risks/Opportunities and Responses

Scenario	Cause	Change	Risk/Opportunity	Level	Impact on THK	THK's Response
1.5°C	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°C	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°C	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

Risk Management

In terms of overall risk management, the Risk Management Committee, which serves as an advisor to the Board of Directors, comprehensively and exhaustively identifies and assesses risks in accordance with risk management regulations, evaluates their severity, and determines the priority for addressing them.
For risks related to climate change, the Sustainability Committee and the Sustainability Promotion Subcommittee, which is under the Sustainability Committee, conduct an analysis of scenarios specific to climate change, identifies risks, and evaluates them in order to determine countermeasures.
Based on the risks and measures identified by the Risk Management Committee and the Sustainability Committee, the Board of Directors coordinates the impact of climate change on the business.

Metrics and Targets

In August 2021, the THK Group formulated the following medium-term and long-term targets for reducing greenhouse gas emissions in order to combat global warming.

Medium-Term Target

By 2030, reduce CO₂ emissions to 50% of 2018 levels.
Scope: THK Japan and Group companies in Japan
2018 emissions: 106,514 tons
2030 target emissions: 53,257 tons

Long-Term Target

By 2050, achieve net-zero CO₂ emissions. ^*
Scope: Entire THK Group

* Net-zero CO₂ emissions: Achieving a balance between man-made CO₂ and greenhouse gas emissions with their removal by carbon sinks such as forests.

Based on these targets, the THK Group will develop products that further contribute to energy and labor savings, continue conducting its business with environmental considerations in mind, and work to achieve a sustainable and affluent society.