Climate Change Response (Disclosure Based on TCFD Recommendations)

Brother Group, as a global company, has placed the highest priority on efforts to prevent global warming. To reduce CO₂ emissions, we have been implementing a diverse range of eco-friendly activities and environmental technology development in all manufacturing processes, including development, procurement, production, sales and logistics. What we emphasize in carrying out those actions is the basic philosophy behind our environmental activities: "The Brother Group shall positively and continuously act to decrease the environmental impact of all aspects of our business operations so that society can achieve sustainable development." This is proclaimed in the "Brother Group Global Charter" established in 1999. This philosophy has remained in action since BROTHER INDUSTRIES LTD. (BIL) formulated the "Basic Environmental Policy" in 1993, and we as the Brother Group have set medium-term environmental goals and promoted ongoing activities to meet them. Thanks to the efforts of each Group member, we have made steady headway toward achieving these goals.

In 2018, the Brother Group formulated "the Brother Group Environmental Vision 2050," which made reducing CO₂ emissions a key item. We have also set the milestone "Medium-term Target for 2030" keeping in mind with the "Paris Agreement," which is a global framework for controlling climate change (global warming). In October 2021, we revised the CO₂ emissions reduction targets in "the Brother Group Environmental Vision 2050," and the revised medium-term target has been recognized by the "Science Based Targets initiative (SBTi)," an international initiative, as reduction targets based on scientific evidence to achieve the "1.5°C target" of the Paris Agreement. The Brother Group will continue to make various efforts to contribute to the solution of global climate change issues toward the construction of a carbon-free society.

History of our climate change countermeasures

In February 2020, the Brother Group expressed our support for the recommendations made by the Task Force on Climate-related Financial Disclosures (TCFD).

Based on these TCFD Recommendations, the risks and opportunities of climate change with regard to our Printing & Solutions Business, Personal & Home Business, Machinery Business, and new businesses were analyzed, and relevant information was disclosed in FY2021. We will expand the scope of our analysis—such as to the Domino Business—and strive to enhance our information disclosure as well as further stepping up our climate change countermeasures in order to contribute to the formation of a decarbonized society.

• To visit TCFD website (the link to the site of "TCFD")

The Brother Group is driving global environmental conservation activities throughout the group based on the Brother Group Environmental Policy. The Strategy Meeting composed mainly of representative directors and executive officers who serve concurrently as directors, discusses and makes decisions on important matters related to climate change.
In addition, the Environmental Committee (chaired by the environmental officer) held three meetings in FY2021 as an organization responsible for environmental risks, including climate change, and environmental issues of the Brother Group, and for monitoring the progress of environmental initiatives, including response to climate change, and promoting these initiatives. Serious environmental risks and issues related to climate change raised at the Environmental Committee are reported to the Risk Management Committee chaired by the Representative Director & President. Of these, particularly critical issues are reported to the Board of Directors for instructions and supervision from the management.
From FY2022, the Sustainability Committee, chaired by the Representative Director & President, will be newly established, and the Climate Change Response Subcommittee (chaired by the environmental officer), one of the subcommittees of the Sustainability Committee, will be responsible for monitoring the progress of environmental initiatives, including response to climate change, and promoting these initiatives. In addition, serious environmental risks and issues related to climate change raised at the Climate Change Response Subcommittee will be reported to the Sustainability Committee. If any of the issues are especially critical, they will be reported to the Board of Directors for instructions and supervision from the management.

Brother Industries, Ltd. Governance Structure (as of June 20, 2022)

• Environmental Management Framework
• Brother Industries, Ltd. Governance Structure

The "Brother Group Environmental Vision 2050" places the reduction of CO₂ emissions as an important matter for the Brother Group. Together with recognizing that climate change, which is becoming more serious around the globe, is an important social issue, we regard climate change as business risks and opportunities for the Brother Group and are striving to resolve it on a long-term and continuous basis.
In FY2020, based on the recommendations of TCFD, we assessed the importance of climate-related risks and opportunities that could impact our businesses between 2020 and the future. We identified seven key risks and opportunities and evaluated their impact on the Group's businesses and financial performance based on the "1.5°C scenario, in which global warming countermeasures are progressing and the realization of a decarbonized society approaches" and the "4.0°C scenario, in which countermeasures against global warming do not go beyond current measures around the world, and temperatures rise further."
Reference was made to the Sustainable Development Scenario (SDS) by the International Energy Agency (IEA), the RCP 8.5 scenario by the Intergovernmental Panel on Climate Change (IPCC), and Aqueduct (a water risk assessment tool) for the 1.5°C and 4.0°C scenarios.
The results of this analysis showed that, in both aspects of risks and opportunities, the promotion of carbon neutrality—especially the promotion of response to a circular economy—is important to the Brother Group. Going forward, the group will further strengthen initiatives such as CO₂ emission reduction activities and the expansion of recycling businesses.

Transition risks (Policy and legal risk, changes in the market)

Physical risks (Acute)

Estimated Time    Short-term: Within 10 years   Medium-term: 10-50 years   Long-term: Over 50 years
Financial Impact    Low: 1 billion yen or less   Medium: 1 to 10 billion yen   Large: Over 10 billion yen -: Consider in the future

Opportunities (Products and services)

The Brother Group regards important social issues such as climate change, resource depletion, environmental pollution, and ecosystem destruction as business risks. As such, the Brother Group Environmental Vision 2050 makes it clear that we will strive to resolve these issues on a long-term, ongoing basis.

The Risk Management Committee chaired by the Representative Director & President has been established to regularly meet to identify and evaluate company-wide risks, including environmental risks such as climate change, and to give appropriate response instructions. In addition, the Environment Committee was established as a subordinate body of the Risk Management Committee, and this committee has identified important challenges, such as climate change, and determined and implemented appropriate measures. Furthermore, the committee has also set ambitious targets for climate change countermeasures and regularly monitors progress. From FY2022, the regular identification, assessment, and appropriate response instruction for environmental risks, including climate change, will be handled by the newly established Sustainability Committee, while the identification of key issues such as climate change, determination and implementation of appropriate measures, setting of ambitious targets, and regular monitoring of progress will be handled by the Climate Change Response Subcommittee, established as a subcommittee of the Sustainability Committee.

Under the Brother Group Environmental Vision 2050, in the reduction of CO₂ emissions, the Brother Group will aim to achieve carbon neutrality^* in all business operations and minimize CO₂ emissions from the entire value chain by FY2050. In addition, the medium-term target for FY2030—which serves as a milestone—is set as achieving, by FY2030, 65% reduction in CO₂ emissions from the Brother Group from the FY2015 level for Scopes 1 and 2, and 30% reduction from the FY2015 level for the stages of product procurement, use, and disposal (categories 1, 11, and 12 of Scope 3), which emit particularly significant amounts of CO₂ in the value chain. This medium-term target for FY2030 has been certified as "1.5°C target" by the "Science Based Targets initiative (SBTi)," an international initiative.
In order to achieve the medium-term target for reducing CO₂ emissions in line with the Brother Group Environmental Vision 2050, the Brother Group is undertaking a number of efforts. These include reducing the use of solvents containing greenhouse gases used in production processes, stepping up energy-saving activities at workplaces (for example, introducing high-efficiency equipment), accelerating the use of renewable energy, and resource and energy conservation in company products, and promoting the recycling of resources.

• Achieve overall zero CO₂ emissions from the Brother Group

• The medium-term target for FY2030 has been recognized as a target based on scientific evidence by the Science Based Targets initiative (SBTi), an international initiative established to help achieve greenhouse gas emission reduction targets.