Disclosure in Line with TCFD Recommendations | CREDIT SAISON Investor Relations

Worldwide, the severity of climate change and other global environment issues is increasing. Japan is no exception. Weather abnormalities have caused many large natural disasters and have greatly impacted Japan. Companies cannot overlook the impact of climate change. Against this backdrop, we believe that climate change is an important issue we should address in our sustainability-oriented management, and that the risks and opportunities accompanying climate change will greatly impact our business strategies.
The Company expressed its support for the Task Force on Climate-related Financial Disclosures (TCFD) recommendations in 2022 and is involved in the TCFD consortium, a discussion forum for the companies and financial institutes supporting the recommendations.
Based on the TCFD recommendations, we will continue to disclose information about governance, strategies, risk management, metrics and targets regarding our actions to address climate change in pursuit of a sustainable society.

Recommended disclosure items based on TCFD recommendations

Governance
Strategy
Risk management
Metrics and targets

Governance

The Sustainability Promotion Committee was established in August 2021 and promotes activities related to climate change.

Being a "leading-edge service company" as stated in our management philosophy, we have a basic aim of helping establish a society that is more convenient, enriched and sustainable than it is now by leveraging our unique expertise, management resources and the experience of our employees and by contributing to the development of society and the resolution of problems in a way that only Credit Saison can through its usual business operations.

Taking action to address sustainability-related issues such as the consideration of climate change and other global environmental issues, respect for human rights, the health and working environment of employees, the fair and appropriate treatment of employees, fair and appropriate trade with suppliers and crisis management to handle natural disasters and other events is very important in our management of our business. These actions help mitigate risks and create revenue opportunities. Based on this understanding, the Sustainability Promotion Committee was established in August 2021 as an organization for discussing the direction of our activities to achieve our sustainability-related strategies and to respond to inquiries from the representative director. The Committee is chaired by the Representative, Executive President and COO.

The Committee pursues the establishment of a sustainable society by taking action to address climate change and promoting diversity, equity and inclusion, including the empowerment of women and other initiatives.

Being an advisory body to the Representative Directors regarding sustainability activities, our entire Group is strengthening its efforts to solve social and environmental issues through our business to realize a sustainable society. With the Representative, Executive President and COO serving as its chair, the Committee comprises globally minded male and female members who hail from within and outside the Company and are thus able to promote the exchange of various opinions.
The Committee has three working groups: the Climate Change Strategy Promotion WG,(*1) the DE&I (Diversity, Equity & Inclusion) Promotion WG and the Social Impact WG. Reporting to and receiving instructions from the Committee, the working groups periodically respond to questions from the Representative Director regarding the sustainability strategies and initiatives introduced throughout the Credit Saison Group, and report on these matters to the Board of Directors when necessary.(*2) Since September 2021, the Committee, the Climate Change Strategy Promotion WG and the DE&I Promotion WG have, in principle, met every month(*3) for discussion. The Social Impact WG was established in February 2023 and it engages in discussion as the other WGs do.

*1 Working Group
*2 Number of reports to the Board of Directors: 1 in FY2021 and 1 in FY2022
*3 Number of committee meetings and WG meetings held
　　Sustainability Promotion Committee: 7 in FY2021 and 9 in FY2022
　　Climate Change Strategy Promotion WG: 11 in FY2021 and 10 in FY2022
　　DE&I promotion WG: 9 in FY2021 and 9 in FY2022

＜Sustainability Promotion Committee organization chart＞

＜Sustainability Promotion Committee Members＞

Chairperson	Katsumi Mizuno, Representative, Executive President and COO
Vice Chairperson	Yoshiyuki Kimura, Executive Officer
Members	Nana Otsuki, Outside Director
	Kosuke Mori, Director, Senior Managing Executive Officer
	Kazue Yasumori, Managing Executive Officer
	Yuichi Kawahara, Executive Officer
	Hironao Wakamei, Executive Officer
	Satoko Takeda, Head of Advertising Manegement Office, Branding Strategy Dept.

Criteria for selection of members of the Sustainability Promotion Committee

・The chairperson shall be the Representative, Executive President and COO.
・Members shall be an executive officer in charge of a division such as the Corporate Planning Dept., Corporate Risk Management Dept., Treasury & Accounting Dept., Human Resources Dept., a sales development division or a global division or of an equivalent or higher level.
・The male-female ratio shall be generally fifty-fifty.
・The Committee will also include outside directors to hear opinions from objective and neutral perspectives.
・ Third-party organizations shall also be involved in Committee activities to obtain advice and recommendations in the area of their expertise.

Strategy

We predicted changes in the external environment and analyzed the impact of climate change on our operations in the future, in accordance with the TCFD framework and using a scenario analysis method.

It is important for us to pursue sustainable growth by mitigating climate change and adapting to it through our business activities. Based on this understanding, we believe that actions to address climate change are important in the management of our business. We identify and assess its impact on us by forecasting changes in the external environment and our operating environment accompanying the manifestation of climate-related risks and by identifying risk events. In the scenario analysis, we referenced multiple existing scenarios published by organizations such as the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC).

・Specifying the businesses to be analyzed

Scenario analysis is performed on a non-consolidated basis.

・Specifying risk items and opportunity items

The TCFD recommendations divide the risks of climate into two categories, transition risks and physical risks. Based on these classifications, we examined risk items to identify the major risk items and opportunity items that are closely related to our businesses.

・Process of assessment and management

The Climate Change Strategy WG takes the lead in the examination of risks, assessing their impact and discussing measures. The Sustainability Promotion Committee monitors policies for the handling of risks and the seizing of opportunities and the formulation of strategies and related efforts, and the Board of Directors supervises and receives reports from the Sustainability Promotion Committee as necessary. (The Sustainability Promotion Committee and the Climate Change Strategy WG meet every month)
*The Climate Change Strategy WG includes the Corporate Planning Dept., Treasury & Accounting Dept., General Affairs Dept., Corporate Risk Management Dept. and Public Relations Office.

・Definition of timeline (short, medium and long term)

A characteristic of climate change is that it usually takes a longer time for its impact to manifest. We take this into consideration along with the target years specified by the Paris Agreement and the Japanese government to define the short-, medium- and long-term timelines as follows.
*Short-term (currently - 2025)/medium-term (2030) / long-term (2050)

・Definition of degree of importance (large, medium and small)

In assessing the impact of climate change on our financial affairs, we referred to the important matters of the timely disclosure standards of the financial instruments exchange that concern the correction of performance forecasts for the purpose of classifying the matters impacting operating income and ordinary profit. A 10% increase/decrease in the operating income forecast and a 30％ increase/decrease in the ordinary profit forecast were classified as having a large impact as the scenario analysis would be performed on a non-consolidated basis.

Classification of impact	Ratio to revenue	Amount	Ratio to profit	Amount
Large	10% or more	25.2 billion yen or more	30% or more	9.1 billion yen or more
Medium	5% or more and less than 10%	12.6 billion to 25.1 billion yen	15% or more and less than 30%	4.5 billion to 9.0 billion yen
Small	Less than 5%	12.5 billion yen or less	Less than 15%	4.4 billion yen or less

*Calculated based on FY2021 results

Types of risks and opportunities		Risks and opportunities	Business impacts	Indicators of impact on business operations	Financial impact	Extent of impact	Time span
Risks	Transition risks	Policies and legal restrictions	Increased anti-global warming taxes, etc.	Impact on SG&A expenses	Approx. 0.07 billion yen	Low	Short term to long term
	Transition risks	Market	Rising energy prices	Impact on SG&A expenses	Approx. 0.3 billion yen	Low	Short term to long term
	Physical risks	Acute physical risks	Damage to buildings due to the intensification of wind and flood damage	Impact on head office, sales divisions, data centers, etc.	Approx. 0.1 billion yen	Low	Short term to long term
		Chronic physical risks	Worsening of the macro economy due to the impact of rising temperatures on agriculture, water resources, health, etc.	Impact on doubtful account costs	Approx. 4.3 billion yen	Low	Short term to long term
		Chronic physical risks	Frequent occurrence of heatstroke due to a rise in the average temperature and an increase in electric power costs due to the use of air-conditioners	Impact on SG&A expenses	Approx. 0.03 billion yen	Low	Short term to long term
Opportunities	Energy sources	Zero GHG emissions	Exemption from a carbon tax through the achievement of zero GHG emissions	Impact on SG&A expenses	Approx. 0.07 billion yen	Low	Short term to long term
Opportunities	Market	Impact of an increase of sustainability-oriented subscribers on our sales indicators	In pursuit of Japan’s 2050 carbon neutrality target and the achievement of decarbonized society through co-creation with enterprises and individuals, we started issuing Saison Card Digital for becoz, a credit card with a carbon neutrality perspective, the first of its kind in Japan. The CO2 emissions of the cardholder are visualized by category using the cardholder’s card payment data within becoz (which means be CO2 zero), a DATAFLUCT inc. application platform. This motivates the subscriber to change his/her behavior to achieve decarbonization. The issuance of the credit card encourages sustainability-conscious future generations to connect with the credit card's initiatives for the decarbonization of society, increases the number of cardholders using our credit card and changes their behaviors. This is expected to increase the reduction of CO2 emissions and to contribute to our revenue long-term through the use of credit cards. The calculation of the impact on our business operations depends on the outcome of the initiative (customer attributes and trend of credit card use). No profit assessment is performed at this point.			Low	Short term Issuance begins in June 2022

*Calculated based on non-consolidated results

Risk management

The Risk Management Committee and Corporate Risk Management Dept. lead the efforts to mitigate risk and minimize the impact of risks should they occur. To this end, our employees regularly receive in-house training and endeavor to maintain our risk management system in accordance with the Risk Management Regulations, Regulations on Management of Risks of Losses and Crisis Management Regulations. Regarding the issues underlying the Credit Saison Group or governance-related matters accompanied by serious risks, the Group Strategic Management Department leads the supervision of the companies of the Credit Saison Group's execution of business and shares information with the supervisory divisions of the Credit Saison Group companies.

For climate change risks, the Sustainability Promotion Committee leads the formulation of policies and strategies for minimizing risks and seizing opportunities and structurally monitors related efforts.
The Comprehensive Planning Office of the Corporate Planning Dept., the Public Relations Office and the Corporate Risk Management Dept., which collectively are the administrative body supporting the Sustainability Promotion Committee, lead the regular review of risks and opportunities relating to climate change.

The Climate Change Strategy WG met more than ten times to deepen its discussions in FY2022 while in September 2021 the Sustainability Promotion Committee began to meet once a month to advance the discussion of climate change (a report was submitted to the Board of Directors in December 2021 and June 2022).

Metrics and targets

								Unit: Tons CO2
		Result			Target		Target
		FY2020	FY2021	FY2022	FY2025	Compared to FY2020 21% reduction	FY2030	Compared to FY2020 42% reduction
Scope1	Direct greenhouse gas emissions from the business operator itself	1,023	388	341	808		593
Scope 2 (market standard)	Indirect greenhouse gas emissions from the use of electricity, heat, and steam, which are supplied from other companies	17,540	17,847	17,854	13,857		10,173
Scope 2 (location standard)		17,856	17,947	17,658	14,106		10,356
Scope 1 + Scope 2 (market standard) subtotal		18,563	18,235	18,195	14,665		10,767
Scope 1 + Scope 2 (location standard) subtotal		18,879	18,334	17,999	14,914		10,950
Category 1	Purchased products and services	81,712	65,355	74,710	71,498	Compared to FY2020 12.5% reduction	61,284	Compared to FY2020 25% reduction
Category 2	Capital goods	323,542	332,878	402,507	283,099		242,657
Category 3	Fuel and energy-related activities that do not fall under Scopes 1 and 2	3,071	2,999	2,952	2,687		2,303
Category 4	Transportation and distribution (upstream)	-	-	-	-		-
Category 5	Waste generated by operations	132	277	380	116		99
Category 6	Business travel	781	1,133	1,046	684		586
Category 7	Employee commute	1,587	2,295	2,173	1,388		1,190
Category 8	Leased assets (upstream)	-	-	-	-		-
Category 9	Transportation and distribution (downstream)	-	-	-	-		-
Category 10	Fabrication of sold products	-	-	-	-		-
Category 11	Use of sold products	47,510	60,347	63,392	41,571		35,633
Category 12	End-of-life treatment of sold products	9,355	7,553	2,808	8,185		7,016
Category 13	Leased assets (downstream)	262,955	251,332	252,721	230,085		197,216
Category 14	Franchises	-	-	-	-		-
Category 15	Investment	-	-	-	-		-
Scope3	Indirect greenhouse gas emissions, which does not fall under Scopes 1 and 2 (emission from other companies associated with the activities of the reporting company)	730,645	724,168	802,691	639,314		547,984

Scope 1,2,3 Total (supply chain emissions)		749,207	742,403	820,886	653,979		558,750

【FY2022】Factors for Scope 3 increase
Emissions increased from the previous year due to business expansion in the lease and real estate-related businesses.

*C4: Relevant activities have been included in other categories
*C8: Relevant activities have been included in Scopes 1 and 2
*C9,10,14: No relevant activity
*C15: We will consider calculating it in the future
*Targets set by referring to SBT (Science Based Targets)
*The initiatives based on the calculation of Scopes 1, 2 and 3 emissions and the TCFD disclosure framework have gained the cooperation of WasteBox Co., Ltd.