Information Disclosure Based on TCFD Recommendations

Climate-related Board of Directors and Committee Meetings Held

As a general rule, material matters, including those related to climate change, are addressed by the Sustainability Committee twice a year, and their conclusions are reported to the Board of Directors at least once a year. The Seiko Group established the Sustainability Committee in September 2021, and since then, it has been actively discussing issues, making resolutions, and reporting those resolutions to the Board. The main climate-related matters decided are as follows:

Performance-Linked Executive Compensation

Executive director and executive officer compensation consists of fixed compensation (basic remuneration), stock-based remuneration, and performance-linked bonuses, while compensation for outside directors and other non-executive directors consists only of basic remuneration. Performance-linked compensation is based on both financial indicators, such as consolidated operating income, consolidated gross profit margin, and consolidated ROIC, and two non-financial indicators: individual evaluation and ESG evaluation (based on CO₂ emissions reductions, etc.). The compensation for each position is determined by the Board of Directors after deliberation by the Corporate Governance Committee to ensure that the level of compensation provides appropriate incentive.
The approximate amount for each type of compensation is as stated below. (This assumes a performance-based payment rate and qualitative evaluation of 100%)

Performance-linked Compensation Metrics

Scenario analysis process

We evaluate the financial and business impacts of climate-related risks and opportunities on the Group under different scenarios, and conduct scenario analysis with the aim of enhancing the Group’s resilience. The main scenario has been revised from a projection of less than 2℃ total global temperature rise to a scenario of a 1.5℃ rise.

Scope

This applies to all Group businesses and the entire value chain, including upstream and downstream, both in Japan and overseas

Reference Scenario

Scenario Analysis Steps

1. STEP 1 Identification of significant climate-related risks/
   opportunities and establishment of parameters
   • Identify climate-related risks and opportunities
   • Assess high significance risks/opportunities
   • Set parameters related to highly significant risks/opportunities
2. STEP 2 Setting climate-related scenarios
   • Based on the information in STEP 1, etc., identify scenarios that are closely related to the existing scenarios
   • Establish climate-related scenarios (social vision)
3. STEP 3 Assessment of financial
   impact for each scenario
   • Analyze the financial impact of each scenario based on the scenarios established in STEP 2 and the key climate-related risks/opportunities and related parameters identified in STEP 1
4. STEP 4 Assessment of the resilience of the strategy to climate-related risks and opportunities and further measures to address them
   • Assess the resilience of our strategy to climate-related risks and opportunities
   • Consider further response measures

Business impact associated with climate-related risks and opportunities and the Group's response

We have conducted scenario analysis covering all Group businesses, and assessed key risks and opportunities. Based on this review, we are formulating and implementing measures to address these risks.

Climate-related risk

Climate-related opportunities

※1 Large business impact: Extremely significant impact on business, such as an impact on profits of ¥1 billion or more, withdrawal from a business, or an interruption of business for several months or more.
Medium business impact: Significant impact on business, such as a profit impact of between 100 million yen and ¥1 billion, negative impact on business plans, downsizing of a business, or a business interruption of one week to one month.
Small business impact: Minor or negligible impact on business, such as a profit impact of less than 100 million yen, little or no impact on business plans, or little or no interruption of business.

※2 GHG emissions for 2030 (Scope 1 and 2) are calculated based on current growth projections and GHG reduction plans, and are multiplied by the IEA carbon price for both the 1.5℃ and 4℃ scenarios. (Exchange rate 1$=150JPY)

Resilience Assessment

By doing this scenario analysis, we were able to foresee the Group's resilience during the transition to a decarbonized society.
We will continue to promote strenuous efforts to cope with and mitigate climate change.
We will also keep promoting strategic initiatives to further enhance our resilience to the impact of the business transition that we must carry out.

Long-Term Targets for Greenhouse Gas Emissions Reduction

Greenhouse gas emissions reduction target

Fiscal Year 2030
　Scope1, 2　　42% reduction compared to the FY2022 level.
　Scope3　　　25% reduction compared to the FY2022 level, targeting categories 1 and 11.

Fiscal year 2050
　Aiming for net zero.

Decarbonization Transition Plan (Scope 1, 2)

In November 2023, the Seiko Group revised its decarbonization roadmap to align it with our updated long-term targets for reducing greenhouse gas emissions. The Group continues to make progress in energy efficiency by updating existing facilities with energy-efficient equipment, enhancing productivity, and by investigating, developing, and implementing energy-efficient manufacturing methods and devices.
As a result, we finished converting all of our domestic bases to renewable energy during FY2024. We plan to achieve 100% renewable energy at all our overseas bases as well by the end of fiscal 2040. The Group aims to switch from fossil fuels to decarbonized or low-carbon alternative fuels. The residual emissions will be offset through the introduction of removal credits, with the aim of achieving net-zero emissions by fiscal year 2050.

Scope 1 and 2 Greenhouse Gas (GHG) Emissions Results (FY2022-FY2025)

Our total Scope 1 and 2 greenhouse gas (GHG) emissions in FY2025 were 50,087 t-CO₂, representing a 48.1% reduction compared with FY2022. By maintaining virtually 100% renewable electricity at our domestic sites, continuing energy-saving measures at all sites, and expanding the use of renewable energy at specific locations, we remain well ahead of the timetable for achieving our FY2030 emissions reduction targets. Renewable electricity accounted for 53.0% of the Group's total electricity consumption, demonstrating steady improvement from the previous fiscal year.

Scope1: Direct emissions by the reporting company (e.g., fuel combustion)
Scope2: Indirect emissions from the generation of purchased electricity and other energy

■Scope of Data Aggregation:
These two Scopes include Seiko Group Corporation and all its Group companies, both domestic and international, including tenants, retail stores, warehouses, and other facilities.

●Scope1: Includes greenhouse gas emissions other than CO₂. There are no emissions classified as biogenic.
・For both Japan and overseas, emissions from fuel are calculated using the calorific values and emission factors of each fuel, and those of non-CO₂ greenhouse gases are calculated using the global warming potential (GWP) of each gas type.
Those values and factors are listed in the “Calculation, Reporting, and Publication System” under Japan’s Act on Promotion of Global Warming Countermeasures.
・Scope 1 includes fuel usage by company vehicles, but does not include energy usage by subcontractors.
●Scope2: Market-based approach
・For electricity related emissions: For operations in Japan, adjusted emission factors are applied in accordance with the aforementioned Act on Promotion of Global Warming Countermeasures, using the published factors for each electric utility.
・For operations outside Japan, where utility-specific emission factors are not available, country-level factors published by the International Energy Agency (IEA) are applied.
・For locations such as retail outlets or warehouses where electricity usage cannot be directly identified, consumption is estimated based on floor area and emission intensity per unit of area.
・The impact of renewable energy certificates and other environmental value instruments is also reflected in the calculations.
●For overseas sites prior to FY2022, only energy-related CO₂ emissions are included.
●Scope 1 and Scope 2 data from FY2022 onward have undergone third-party verification by an external verification body.
As a result, previously published figures may be revised.

Note: Due to rounding, totals may not match the sum of individual components.

Scope 3 Greenhouse Gas (GHG) Emissions Performance

Scope 3 GHG emissions in FY2025 totaled 562,963 t-CO₂. The primary sources were Category 1 (Purchased Goods and Services) and Category 11 (Use of Sold Products), which together accounted for approximately 80% of total Scope 3 emissions. Accordingly, the Group has designated Categories 1 and 11 as priority management areas and is working to reduce emissions in pursuit of our FY2030 targets.
Beginning in FY2025, we started using primary data obtained from specific suppliers for a portion of Category 1 emissions calculations, enabling more accurate calculations that reflect suppliers' actual GHG emissions performance.

Emissions in fiscal year 2025

Scope 3: Indirect emissions generated throughout the value chain, including raw material procurement, logistics, product use, and disposal.

■Scope of Data Aggregation
Seiko Group Corporation and all domestic and overseas operating companies.

●For both Japan and overseas operations, emission factors are based on the Emission Factor Database for Calculating Greenhouse Gas Emissions Throughout the Supply Chain (Ver. 3.5) and AIST-IDEA (Ver. 3.5.1 Standard Edition). For the calculation of FY2025 results, we used references such as the Ministry of the Environment's Guidelines for Supply Chain Emissions Calculation Using Primary Data (Ver. 1.0). For part of Category 1 emissions, we used primary data obtained from suppliers that have undergone third-party verification. The supplier-specific emission factors were calculated by dividing the total of Scope 1, Scope 2, and upstream Scope 3 emissions by sales revenue.

●Scope 3 data (Categories 1, 4, and 11) from FY2022 onward have undergone third-party verification by an external verification body. As a result, previously published figures may be subject to revision.

●Rounding
Due to rounding, total values may not match the sum of individual components.

Emissions from Categories 1 and 11

For Category 1 (Purchased Goods and Services), we originally calculated emissions using industry-average data. However, beginning with FY2025, we used primary data from specific suppliers, thus reflecting actual supplier emissions data. As a result, some suppliers' actual GHG emissions data were used in the calculations, which showed a significant reduction in emissions.
For Category 11 (Use of Sold Products), despite our ongoing efforts to improve the environmental performance of products, emissions increased due to higher product sales volumes resulting from the growth of our business.
In total, combined emissions from Categories 1 and 11 decreased by approximately 3.3% compared with FY2022, which serves as the base year for the FY2030 emissions reduction target.
As noted previously, the Group has identified Categories 1 and 11 as its principal sources of emissions, and will make them the main focus of ongoing efforts to achieve or surpass our FY2030 emissions target.

●Rounding
Due to rounding, total values may not match the sum of individual components.