Governance and Risk Management Structure for Climate Change and Nature Capital

HEPCO Group views changes in our business environment accompanying climate change as growth opportunities, and we will proactively expand our business accordingly. In line with the TCFD-recommended framework, we hold discussions and update our disclosures approximately once annually with a focus on identifying climate-related risks and opportunities, assessing any accompanying impact, and taking measures to address these. We will continue to enhance our disclosures and promote dialogue with stakeholders. Furthermore, our policy is to identify and disclose information about risks and opportunities related to natural capital based on the TNFD recommendations published in September 2023, taking into account our business's dependence and impact on nature. Going forward, we will strive to further enhance our disclosures and actively promote dialogue with our stakeholders.

Governance

The Environmental Committee, chaired by the President, has established a framework for deliberating key environmental policies and measures applicable throughout HEPCO Group. The Management and Operations Committee takes into consideration the Environmental Committee's deliberations in its discussions concerning HEPCO Group management policies and key environmental measures. Particularly important matters are submitted to the Board of Directors as necessary.

Risk Management

Under a group-wide integrated risk management system, we systematically identify risks, including those associated with environmental changes accompanying climate change and the depletion of natural capital. We also plan and execute measures to counter these changes, and confirm the progress of our responses. For risks that pose a potential material impact on our business, the Integrated Risk Management Committee, which is chaired by the President, confirms response strategies and progress and offers guidance. We are striving to prevent and mitigate risks through our business management cycle by incorporating the committee's insights into annual group management policies and submitting these to the Board of Directors for deliberation.