Climate-related Disclosures : IFRS S2

Basic Approach to Climate-Related Information Disclosure

December 1, 2025

Towards the realization of a carbon neutral society, in August 2021, the KOKUSAI ELECTRIC Group endorsed the TCFD (Task Force on Climate Related Financial Disclosures) recommendations, and in April 2023, set a goal of reducing CO2 emissions in line with current pledges under the Paris Agreement to limit global warming to 1.5˚C. 
We have reviewed the climate change related information disclosed in Octber 2024 in accordance with IFRS S2.

Governance

The KOKUSAI ELECTRIC Group's activities to address climate change are deliberated and decided by the Sustainability Committee, which meets regularly, chaired by the President and CEO, and then reported to the Board of Directors. The Board of Directors has the necessary knowledge, experience and capabilities to oversee climate change and oversees the Sustainability Committee to ensure the adequacy of the process.

The Climate Change Subcommittee identifies risks and opportunities related to climate change and reports them to the Sustainability Committee. The Sustainability Committee then deliberates on these risks and opportunities, along with other environmental issues, taking into account their impact on business continuity.

Based on the results of these deliberations, the Sustainability Committee makes decisions on CO2 emission reduction targets, renewable energy adoption targets, and participation in climate change initiatives such as the SEMI Semiconductor Climate Consortium and SBT certification.

Going forward, the Committee plans to deliberate on the introduction of an internal carbon pricing system, plans for achieving net zero emission. The matters deliberated by the Sustainability Committee are reported to the Board of Directors, which oversees the content of environmental targets related to risks and opportunities and monitors the progress of those activities.

Diagram of the governance system for climate change response (See Corporate Report for overall corporate governance) 

Diagram of the governance system for climate change response

Governance structure and roles

Organization name

Roles

Members

Frequency of events

Board of Directors

Receives and supervises the results of the Sustainability Committee's deliberations and monitoring reports.

Representative Director, Directors

Once a month
(Sustainability and ESG reports are reported quarterly)

Management Meeting

Deliberate on important sustainability and ESG topics.

President and CEO, Executive Officers

Twice a month
(Discuss sustainability and ESG issues as needed)

Sustainability Committee

The following topics will be deliberated and monitored:

  • Basic Sustainability Policy and Philosophy

  • Materiality and Priority Themes

  • Sustainability Action Plan and Activity Status

  • Internal and External Disclosure Policy and Basic Plan for Sustainability Information

President and CEO, Executive Officers, Division Chiefs, and Managers of Departments appointed by the President and CEO

Twice a year

Environment Committee

Report on the degree of achievement of environmental objectives and targets, as well as the results of external and internal audits, and confirm the appropriateness, validity, and effectiveness of the management system.

Report on the status of risks and opportunities, such as compliance, environmental education, and the status of GHG emissions reduction activities, to the Environmental Chief Manager and obtain approval for future activity plans.

Environmental Chief Manager,
Environmental Management Officer,
Environment Promotion Department, Departments with a high environmental impact

Twice a year

Subcommittee on Climate Change Response

Based on the policies decided by the Sustainability Committee and the Environmental Committee, departments selected by the subcommittee will report on their GHG emissions reduction action plans and results.

Executive Officer in Charge of the Environment,
Environment Promotion Department,
Climate-Related High-Impact Departments

Twice a year

Climate-related investments

The KOKUSAI ELECTRIC Group strives to protect the environment and mitigate climate change by actively investing in activities to reduce the environmental impact caused directly and indirectly by its business activities, as well as in research and development to promote the reduction of the environmental impact of its own products. Past climate-related investment status is disclosed on our website.

Linking climate change response to executive compensation

The KOKUSAI ELECTRIC Group is building a system in which management takes the lead in addressing climate change by incorporating the degree of target achievement for ESG items into the individual performance evaluation of executive compensation.

Strategy

Risks and opportunities expected in the future due to climate change have been identified by analyzing the following scenarios according to the TCFD recommendations. 

Reference scenarios 

SSP1-1.9 and SSP5-8.5 of Intergovernmental Panel on Climate Change (IPCC) Sixth Assessment Report; WEO2020 and NZE 2050 of International Energy Agency (IEA)

Temperature scenarios

1.5℃ scenario and 4℃ scenario

Scope of analysis

KOKUSAI ELECTRIC Group and its entire value chain including both upstream and downstream activities

Time axis

Short term: up to 2030  Medium term: up to 2040  Long term: up to 2050

Risk/opportunity 

Expected future environment and impact on Group business

1.5℃ scenario

  • We assumed that carbon tax will be introduced and that policies, laws, and regulations will be enhanced to address climate change.

  • Acute or chronic physical impact of climate change will affect some parts of our business activities but not so severely.

  • Assuming that semiconductor manufacturers will drive the reduction of carbon emissions from their manufacturing processes, there will be increased demand for energy-efficient manufacturing equipment, leading to expanded opportunities for business growth.

4℃ scenario 

  • We assumed that there will not be significant change from current policies, laws, and regulations to tackle climate change.

  • We also assumed that there will be acute and chronic physical impacts of climate change including intensifying abnormal weather events.

  • The need for labor saving solutions to cope with frequent infection outbreaks and other consequences of global warming will accelerate demand for automation, and thereby demand for semiconductor memory is projected to increase.

Process for Identifying Risks and Opportunities Arising from Climate Change

In preparing to respond to impacts of climate change, we analyzed two different climate change scenarios and identified climate-related risks and opportunities. From a total of 189 risk and opportunity items extracted by relevant departments, 11 items with a particularly significant impact have been identified based on assessment of degree of interdependence and severity of impact. 
The 11 items were assessed on a scale of small, medium, and large in terms of response measures and financial impact. 

Main Climate-related Risks and Response Measures

Profit/cost: ↑ (profit)　↓ (cost) 

Impact degree: ↑ (small)　↑↑ (medium)　↑↑↑ (large)

Scenario Risk/
opportunity 		Category Risk to
the Group 		Timing of
manifestation 		Value
chain in which risk manifests 		Impact on
the Group 		Degree
of
financial
impact 		Response
measures
●:In progress　▲:Scheduled
1.5℃ Transition risks Laws and
regulations
(1)

Introduction
of carbon
tax

 Short to medium term Upstream
Direct operation		 Deterioration
of profit due to
carbon tax		 ↓↓ ● Promote introduction of renewable energy
▲ Promote reduction of CO₂ emissions by introducing internal carbon pricing
▲ Request supply chain members to replace the energy they use in manufacture and transport with renewables
(2)

Law amendment to place a cap on Scope 1, 2, and 3 emissions, and other tightening of regulations

 Medium term Direct operation

  • Slow down
    of business
    activities
    due to
    limit on
    energy use

  • Increased
    cost for
    responding to
    tightening of
    regulations

↓↓ ● Scope 1 and 2: Introduce renewable energy
● Scope 3: Develop energy-efficient products
Market
(3)

Price increase of materials and components

 Short to long term Direct operation Deterioration of profit due to increase of development and manufacturing costs ↓↓ ▲ Facilitate evaluation and certification for application of alternative materials
▲ Expand application of alternative materials when developing new equipment
(4)

Increase of electricity and fuel prices

 Medium to long term Direct operation Deterioration of profit due to increase of development and manufacturing costs ↓↓ ● Update existing equipment to improve energy efficiency
● Reduce equipment operating time by improving operational efficiency
Evaluation
(5)

Evaluation by customer

 Short to medium term Downstream Decline in evaluation by customers due to delay in response to environmental issues requested from the value chain ↓ ● Appeal the Group's environmental initiatives both internally and externally by actively participating in international consortiums
● Invest resource in ESG management (environmental measures) and expand information disclosure to customers and stakeholders
(6)

Intensified
competition
in the
development
of low
carbon
products
and
energy-
efficient
equipment

 Short to medium term Direct operation
Downstream

  • Deterioration
    of profit
    due to
    cost
    increase
    caused by
    applying
    energy
    efficient
    technologies
    in products

  • Reduction
    in sales if
    environmental
    performance
    is lower than
    competitor
    products

↓↓↓ ● Develop energy efficient technologies by strengthening collaboration with business partners
● Promote systems for environmental performance certification of own products
1.5℃ Physical risks Chronic
(7)

Increased energy consumption for air conditioning of offices and clean rooms due to increase in average temperature

 Medium to long term Direct operation Increase in power consumption leading to increased development and manufacturing costs and profit decrease ↓ ● Promote replacement to energy-efficient air conditioners
● Increase purchase of renewable energy and installment of PV generation systems
4℃ Acute
(8)

Natural disasters such as floods, typhoons, massive snowfall, and landslides causing disruption of transportation and damage to offices

 Short to long term Any part of the value chain Operation of production sites may stop as a result of damage to buildings, affected employees, employees being unable to commute, and disruption of component supply caused by natural disasters ↓↓↓ ▲ Extract measures to ensure business continuity in case of abnormal weather events (decentralization of production sites, diversification of raw material suppliers, etc.)
▲ Quickly develop business continuity plans and measures in case of a disaster (formulate action guidelines for floods and massive snowfall, formulate a procurement strategy to minimize procurement risks, etc.)

Main Climate-related Opportunities and Response Measures

Profit/cost: ↑ (profit)　↓ (cost) 

Impact degree: ↑ (small)　↑↑ (medium)　↑↑↑ (large)

Scenario Risk/
opportunity 		Category Opportunities
for
the Group 		Timing of
manifestation 		Value chain
in which
opportunity
manifests 		Impact on
the Group 		Degree
of
financial
impact 		Response
measures
●:In progress　▲:Scheduled
1.5℃ Opportunities Market
(9)

More new players entering the sector of low carbon products and energy-efficient equipment development

 Medium to long term Upstream Improvement in the level of environmental technologies of business partners ↑ ▲ Incorporate new technologies by strengthening collaboration by forming alliances with newcomers or through M&A
Product/
service
(10)

Heightened
demand
from
customers
for low
carbon
performance
and
recycled
materials

 Short to long term Downstream Development
of products
leveraging
energy
efficient
technologies
will be
facilitated,
leading to
increase in
sales		 ↑↑↑ ● Promote research and development of environmentally friendly products with good energy efficiency performance and high use rate of recycled materials
● Expand sales by developing high value-added products with superior energy efficiency compared to competitor products
4℃ Resilience
(11)

Heightened demand for labor saving and automation solutions due to increased floods, typhoons, massive snowfall, landslides, and infection outbreaks

 Short to long term Downstream Heightened demand from customers for semiconductor manufacturing equipment with high automation capability to respond to business continuity challenges ↑↑↑ ● Develop semiconductor manufacturing equipment with high automation capability so that customer processes can be operated by a small number of people even during disasters

Climate-related risk and opportunity analysis

Risk analysis and resilience assessment

In a decarbonized society where climate change countermeasures are strengthened, we believe that transition risks include the introduction of a carbon tax, CO₂ emission restrictions due to legal reforms, rising metal material costs due to rising energy costs, and increased requests for information disclosure from customers.

Of these, in response to the carbon tax and CO₂ emission regulations, we are working to reduce our greenhouse gas emissions by promoting the introduction of renewable energy, reviewing our parts procurement and product transportation methods, and continuously improving the energy-saving performance of our products.

Furthermore, in response to increasing customer requests for information disclosure, we are actively participating in international environmental consortia and constantly updating our environment-related disclosure information in accordance with the latest guidelines. Because we are promoting these measures in a planned manner, we believe we have a certain level of resilience.

On the other hand, in terms of physical risks, we anticipate abnormal weather and natural disasters, and as countermeasures we are promoting measures such as upgrading to energy-efficient air conditioning equipment, updating water recycling systems, decentralizing production bases, diversifying raw material suppliers, and formulating guidelines for action in the event of a disaster. As a result, we believe we have secured a certain level of resilience.

Opportunity Analysis and Outlook

In a decarbonized future society with enhanced climate control measures in place, it is assumed that more new players will enter the sector of low carbon product and energy-efficient equipment development, increasing chances to strengthen collaboration through alliances and M&A. It is also expected that there will be increased demand from customers for low carbon products and recycled materials. To meet such needs, we will promote development and sales of environmentally friendly products with added environmental value.

Physical risks associated with climate change may include the need to move production sites due to rising sea levels and frequent infection outbreaks making it difficult to secure sufficient manpower across the entire manufacturing industry. These factors accelerating demand for labor saving solutions and automation, together with increased demand for AI in various fields including climate change prediction and monitoring of the natural environment, are projected to result in increased demand for semiconductor devices.

To meet these needs, we will strengthen our capacity to provide the market with semiconductor manufacturing equipment with high energy efficiency and automation capability. 

Risk Control

The KOKUSAI ELECTRIC Group has extracted and is considering responses to risk factors that will have significant impact on its business operations. 
Based on analysis and assessment of both urgent climate-related risks and potential risk factors that may manifest in the future, we have devised measures to mitigate such risks and incorporated them in our business plan. 
For those risks that have been identified as particularly important, relevant departments have set up a project team to ensure early response. 

Metrics and Targets

In addition to promoting energy saving and the introduction of renewable energy, the KOKUSAI ELECTRIC Group operates a system that certifies products that excel in reducing environmental impact as environmentally friendly products. We endeavor to achieve the following targets in order to contribute to the reduction of greenhouse gas (GHG) emissions in society.

We received SBTi certification*2 by the Science Based Targets initiative (SBTi)*1 in March 2024, confirming that our GHG emissions targets are based on scientific grounds. 

In April 2025, we joined RE100*3, aiming to convert the electricity used in our business activities to 100% renewable energy.

Metrics

Targets

①

Reduction of GHG emissions as a result of own energy use (Scopes 1 and 2) 

Target 50% reduction of GHG emissions by fiscal 2030 (compared with fiscal 2021)

②

Reduction of GHG emissions through products sold (Scope 3 Category 11) 

Target 52% reduction of GHG emissions per wafer by fiscal 2030 (compared with fiscal 2021)

③

Increasing the proportion of renewable energy used by the company (Scope 2)

Convert all electricity used at our sites to 100% renewable energy by fiscal 2030.
*1

International initiative that supports companies to set science based targets for reduction of GHG emissions

*2

Five to ten year targets for GHG emission reduction set by companies in line with the level agreed in the Paris Agreement

*3

An international initiative that aims to convert the electricity used in business activities to 100% renewable energy.

The amount of GHG emissions and the progress towards achieving targets are disclosed on our website.

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