Response to TCFD Recommendations

The Lacto Japan Group's business is based on dairy farming and livestock farming, which are primary industries, and we recognize that the impact of climate change is the most important issue affecting the very foundation of our business. To coexist with primary industries and contribute to a sustainable society, the Group is committed to addressing climate change in order to realize a decarbonized society.

In the Group, the basic policy and important matters related to environmental issues, including climate-related issues, are discussed by the Executive Committee and decided and supervised by the Board of Directors.

The Group has established the cross-divisional Sustainability Promotion Task Team to grasp changes in the business environment due to climate change, identify medium- and long-term climate-related risks and opportunities, and study Group-wide responses. While sharing information with each division and department, the task team submits climate-related issues it has examined and proposals such as measures to be taken to the Executive Committee.

In addition, the Sustainability Promotion Task Team sets targets and manages progress in addressing climate-related issues, and considers additional measures as needed. These measures are deliberated by the Executive Committee and reported to and supervised by the Board of Directors.

Considering the possibility that climate-related issues may also materialize in the medium to long term, the Group identifies climate-related risks and opportunities that could have a significant impact on the organization's finances in the short, medium, and long term. Moreover, we discuss the potential impact of these identified risks and opportunities on the business and financial plans and utilize them in the consideration and formulation of the Group's strategy.

Climate-related risks and opportunities are identified based on medium-term (2030) and long-term (2050) world scenarios, assuming a 1.5°C scenario consistent with the Paris Agreement target and a 4°C scenario in which no measures to reduce global warming are taken beyond the status quo. In our scenario analysis, we refer to the following scenarios published by external organizations.
The Group has bases and is operating businesses in ten countries worldwide, as well as Japan. Furthermore, the products handled by the Group and their ingredients are produced in a wide range of countries and regions, including Europe, Oceania, the United States, and Asia, and we conduct scenario analysis that takes regional characteristics into account.
 

In the Group, the Sustainability Promotion Task Team, a cross-divisional organization, identifies and assesses climate-related risks based on scenario analysis. Identified climate-related risks are reported to the Risk Management Committee, chaired by the President, and integrated into company-wide risk management. In addition, the identified major risks and opportunities are reported by the Sustainability Promotion Task Team to the Executive Committee for approval.

Measures to address risks are reviewed by the relevant business divisions, and plans are formulated and implemented. The formulated measures and plans are reported by the Sustainability Promotion Task Team to the Executive Committee for approval. The progress of the plans is also reported to the Risk Management Committee and subsequently to the Board of Directors.

Going forward, we will monitor the status of responses by our suppliers that have an influence on climate change and collaborate with them to realize a decarbonized society. We will also initiate quantitative analysis of factors such as the medium- to long-term financial impact and promote disclosure in accordance with the TCFD's recommended disclosure practices.

To manage climate-related risks and opportunities, the Group calculates and continuously discloses its Scope 1, 2, and 3 emissions in accordance with the GHG Protocol and the Act on Promotion of Global Warming Countermeasure.

We will also study and set medium- and long-term Scope 1, 2, and 3 emissions reduction targets, and announce them publicly.