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 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

The Brother Group has identified the reduction of CO₂ emissions as one of the materialities (priority social issues to be solved) in order to contribute to society and protect the earth, and has set sustainability targets. 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. We will expand the scope of businesses subject to analysis 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")
• TCFD Recommendations: Strategy (scenario analysis)
• TCFD Recommendations: Metrics and Targets

The Brother Group has established the Sustainability Committee, chaired by the Representative Director & President, to promote materiality initiatives globally, and the Environment & Climate Change Subcommittee, which specializes in addressing the materialities related to the future of the Earth, particularly climate change, under the Sustainability Committee.
The Sustainability Committee is strengthening company-wide management with a focus on sustainability by having the President (or a person assigned by the President), who chairs the committee, report on activity plans and results of activities, including climate change measures, three or more times a year at committee meetings and one or more times a year at the Board of Directors' meetings. Furthermore, to ensure that the efforts are effective, executive remuneration is linked to the progress of major climate change-related targets.
As for the Environment & Climate Change Subcommittee, it is chaired by the officer in charge of environmental affairs and aims to manage the progress of sustainability goals and promote activities related to the environment, particularly climate change, and regularly reports on the status of these activities to the Sustainability Committee.
When formulating and revising important matters such as environmental risks and environmental issues, they are reviewed by the Sustainability Committee or the Environment & Climate Change Subcommittee, then deliberated at the Strategy Meeting, finalized by the Board of Directors, and directed and supervised by the management.
The Environment & Climate Change Subcommittee held three meetings in FY2022. The Sustainability Committee held seven meetings, and reported the results of the discussions made by the Environment & Climate Change Subcommittee at four of those seven meetings.

• Promotion of Management with an Emphasis on Sustainability

Brother Industries, Ltd. Governance Structure (as of June 22, 2023)

• 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 a business risk and opportunity for the Brother Group and are striving to resolve it on a long-term and continuous basis.
In FY2020, the Brother Group identified seven key risks and opportunities based on the "1.5°C scenario"^*1 and the "4.0°C scenario"^*2 for its major businesses and evaluated their impact on its own operations and finances^*3. As a result of this analysis, it was determined that efforts toward carbon neutrality^*4, especially in addressing the circular economy, is important for the Brother Group in terms of both risks and opportunities. In order to incorporate this into its business strategies and activities, the Brother Group has included "undertake environmental efforts toward carbon neutrality" in the "management foundation transformation for a sustainable future" section of its medium-term business strategy "CS B2024," has set sustainability goals related to CO₂ emission reduction and resource circulation, and is carrying out activities to achieve these goals as priority management issues.

1. Scenario in which global warming countermeasures are implemented and a decarbonized society is closer to being realized.
2. Scenario in which global warming countermeasures are not taken beyond the current level and temperatures continue to rise further.
3. Based on IEA (International Energy Agency) SDS (Sustainable Development Scenarios), IPCC (Intergovernmental Panel on Climate Change) RCP8.5 scenario, Aqueduct (water risk assessment tool), etc.
4. Achieve overall zero CO₂ emissions from the Brother Group

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

Physical risks (Acute)

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

Opportunities (Products and services)

1. Efforts to Reduce CO₂ Emissions in Offices
2. Efforts to Reduce CO₂ Emissions in Products
3. Initiatives for the shift from internal combustion engines to electric vehicles (EVs)
4. Resource Circulation and Waste Reduction Initiatives

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.

In FY2022, the Brother Group established a Sustainability Committee chaired by the president to promote sustainability and risk management, including climate change response, to identify and assess priority climate change risks and opportunities and provide appropriate response instructions. The Committee identifies and assesses climate change risks identified as materialities and provides appropriate instructions for countermeasures. The Environment & Climate Change Subcommittee, established under the Sustainability Committee, identifies key issues such as climate change, determines and implements appropriate countermeasures. In addition, the subcommittee sets ambitious targets for climate change response and monitors progress on a regular basis.

• Risk Management

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 regarding the reduction of CO₂ emissions has been certified as "1.5°C target" by the "Science Based Targets initiative (SBTi)," an international initiative.
Similarly, the resource circulation section of the Brother Group Environmental Vision 2050 states that the Brother Group aims to maximize resource circulation to achieve sustainable use of resources and minimize the environmental impact caused by waste toward the year 2050.
The medium-term target for FY2030, the milestone for this vision, sets a goal of reducing the ratio of virgin materials used in products to less than 65% by FY2030 through the expansion of cyclical business and the recycling of resources.
Furthermore, short-term targets for 2024 are set in CS B2024 and the Brother Group Environmental Action Plan 2024 as milestones toward achieving the medium-term target for FY2030. They are then broken down into targets for each fiscal year, and the progress and results are reported to the Environment & Climate Change Subcommittee and the Sustainability Committee.

• Total amount of CO₂ emissions reduced by the environmental measures for products newly implemented by FY2024 in comparison with the operations in FY2021. Examples: smaller and lighter products, increased use of recycled materials, reduced standby power consumption, etc.

Progress in CO₂ emission reduction

• 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.