In response to the risks and opportunities described, we are actively working to not only reduce Scope 1 and Scope 2 emissions but also to reduce Scope 3 emissions and contribute to the greenhouse gas emissions reduction efforts of society.

We conduct scenario analysis, following the TCFD recommendations, of selected businesses that are significantly impacted by climate change.

As for the impact on business, we selected factors that are significantly affected, and conducted a scenario analysis. In terms of risks, we considered transition risks (policy and regulation, technology, markets, and reputation) and physical risks (acute and chronic) while taking into account resource efficiency, energy sources, products and services, and markets in terms of opportunities.

Furthermore, we aim to reduce our greenhouse gas emissions by 50% compared to the 2019 level by 2030, and we used the year 2030 as the time frame for this scenario analysis as well.

We referred to the following scenarios from the International Energy Agency (IEA), Intergovernmental Panel on Climate Change (IPCC), and other sources to assess new business opportunities and business resilience and to analyze the impact on our business in the event of significant changes in our business environment as a result of climate change.

Selection of Subject Businesses

Selecting businesses with large climate change impacts (from perspectives A to D below) among all our group's businesses, we performed scenario analyses with the lithium, resource recycling, renewable energy, automotive sales, and automotive parts logistics businesses. The molten aluminum business, selected until the fiscal year ended March 31, 2024, is included in the resource recycling business from the fiscal year ending March 31,2025 from the perspective of expanding the scope of GHG emissions and scenario analyses. For the same purpose, we added the automotive parts logistics business into the scope of scenario analysis.

The scenarios and understanding of the business environment in this scenario analysis are based on major scenarios presented by international organizations and others and do not represent the medium- to long-term outlook.

Below 1.5°C/2°C scenario	In a comparison between the below 1.5°C/2°C scenario and the 4°C scenario, a larger increase in demand for electrified vehicles and storage batteries is expected in the below 1.5°C/2°C scenario, resulting in greater opportunities for this business overall.
4°C scenario	Regarding the risk of reduced lithium production efficiency at the lithium carbonate production site in Argentina due to changes in rainfall, any impact on lithium production is expected to be minor as the level of precipitation is expected to remain relatively constant, judging from the results for 2022 and the years leading up to it.

In both scenarios, demand for electrified vehicles and storage facilities that use lithium batteries is expected to increase.

We will aim to build a long-term stable supply structure by enhancing our existing capacity to meet the increasing demand for lithium that will accompany the full-scale popularization of electrified vehicles. In addition, we will expand our business domain and build a structure for the stable supply of lithium hydroxide in preparation for the expected increase in demand due to increasing battery capacity in the future.

This business is positioned as our main circular economy business, which is one of our priority domains, and we will reinforce the recycling value chain from upstream to downstream to establish a closed-loop system.

As this business is positioned as one of our priority domains, we plan to expand our business, including diversifying our portfolio of power sources and conducting energy management, while accelerating global development by reinforcing our existing businesses. We will contribute to the creation of a better global environment through the stable supply of renewable energy with a competitive advantage.

Below 1.5°C/2°C scenario	In the below 1.5°C/2°C scenario, the share of gasoline vehicles in total sales volume is expected to decrease due to stricter fuel efficiency regulations, though the share of electrified vehicles is expected to increase, expanding opportunities for this business as a whole.
4°C scenario	In the 4°C scenario, fuel efficiency regulations will not be tightened to the same degree as under the below 1.5°C/2°C scenario, and the impact on the sales ratio of gasoline and electrified vehicles will be small, so the impact on the overall business is expected to be limited.

In both scenarios, the total sales volume of new vehicles is expected to increase globally, especially in emerging countries, thus the risk to the overall business is expected to be minor.

Given that the new vehicle market is expected to continue to expand, especially in emerging countries, we will strengthen our sales structures worldwide. We will also promote the popularization of electrified vehicles by securing resources for battery materials, which are key components of electrified vehicles, and by expanding the vehicle battery 3R (Rebuild, Reuse, Recycle) business domain along with expanding our lineup of electrified vehicles.

As the volume of automotive production worldwide increases, the automotive parts market is estimated to expand going forward. Our group will contribute to the sustained growth of the automotive parts supply chain by reinforcing relationships with new parts partners for electrification and promoting green logistics.

Toyota Tsusho's officers participate in various meetings to confirm the impacts that our investment activities have on ESG: The executive vice presidents, CSO, and CFO^*1 take part in the Investment and Loan Committee; the deputy CSO and deputy CFO in the Investment and Loan Meeting; and the president & CEO, executive vice presidents, CSO, CFO, and general manager of the Corporate Planning Department in the Investment Strategy Meeting. Projects that meet or exceed certain requirements and are approved by the Investment and Loan Committee or the Investment and Loan Meeting are required to undergo a preliminary carbon neutrality assessment. This assessment determines the Scope 1 and Scope 2 emissions that will increase as a result of the investment, how they can be reduced, and how the investment will contribute to Scope 3 reductions as well as to GHG emissions reductions in society.

The carbon neutrality of our GHG emissions, as well as our contribution to a decarbonized society, is essential. Therefore, in support of the Paris Agreement and as a concrete policy toward contributing to the transition into a decarbonized society, we established a target of reducing GHG emissions (Scope 1 and Scope 2) by 50% compared to 2019 levels by 2030 and achieving carbon neutrality by 2050.

We are promoting comprehensive energy conservation and renewable energy measures (installing LED lighting and solar power generation facilities, etc.). We also aim to achieve this goal by reducing greenhouse gas emissions from production processes and logistics operations through fuel conversion, efficient consumption, and technological innovation.

In order to further strengthen our initiatives aimed at reducing greenhouse gas (GHG) emissions, beginning in fiscal year 2025, we have incorporated the degree of contribution to CN initiatives into the performance evaluation criteria for line managers. This measure is intended to enhance awareness of carbon neutrality among managerial staff and to foster the implementation of concrete actions at the operational level.

The capability to accelerate and promote businesses that contribute to the reduction of greenhouse gases (GHG) throughout the entire industrial life cycle is one of our strengths. All of our employees will unite and exert themselves to contribute to the solution of these social issues.

Comparing the results of 2023 to the base year (2019), emissions increased in line with our business expansion, including the establishment of a PET bottle recycling plant and a lithium plant that can also be used for supply to electrified vehicles.Nevertheless, we attained a reduction of 62,000 t-CO₂, which exceeded the volume of the increase.

Shift of Emission Volume in CO₂ equivalents^*2

We have introduced a mechanism for subsiding burdens such as depreciation and interest payable related to GHG emissions reduction investments as company-wide expenses (Subsidy Program for Investments in Infrastructure for Decarbonization) as well as that for adjusting divisional performance appraisal according to the level of increase/decrease in GHG emissions by each division (Internal Carbon Pricing Program / unit price: ¥30,000/t-CO₂) to create a virtuous cycle for encouraging GHG emissions reduction initiatives.

Our company has formulated the "Green Finance Framework" to issue green bonds and procure green loans.This framework is based on the Green Bond Principles 2021 as administered by the International Capital Market Association (ICMA) and the Green Loan Principles 2021 by the Loan Market Association (LMA), the Asia Pacific Loan Market Association (APLMA), and the Loan Syndications and Trading Association (LSTA).

In 2021, the Toyota Tsusho Group established the "Carbon Neutrality Declaration," committing to achieve carbon neutrality by 2050 for its own emissions-Scope 1 and 2. To fulfill our Mission of "passing on a better Earth to the children of the future," we have now evolved this into the "Net Zero Declaration," which includes Scope 3 emissions-those generated throughout the entire value chain.
Aiming to become a trading company driving decarbonization, we will not only reduce our own emissions, but also work in collaboration with stakeholders to reduce emissions across the entire value chain.

Our corporate group reduces Scope 1, 2, and 3 emissions through Toyota Tsusho's distinctive initiatives, and we provide approaches to those such to our customers to contribute to society's efforts to achieve avoided emissions and to create new business opportunities.

Toyota Tsusho's Distinctive Initiatives

For 2024, our corporate group recorded approximately 113million t-CO₂ of Scope 3 emissions in total. Characteristics of emissions from our business activities are as follows.

We will implement the major initiatives described on Scope 3 Emissions Reduction Initiatives throughout the automotive supply chain to reduce Category 1 and Category 11 emissions, which are high

Turning Value Chain-Wide Emissions Reductions and Avoided Emissions into Business Opportunities

The Toyota Tsusho Group views GHG emissions reduction as a business opportunity and offers various "Toyota Tsusho-uniqueness" initiatives to customers.

Going forward, we will continue to expand our business by contributing to emissions reduction across the entire value chain and in society, with a focus on the five working groups specializing in CN and CE-areas of strength for the group.

To track business expansion, we quantify various reduction activities and disclose them under two categories: "direct contribution^*2," referring to reductions from products and services manufactured or provided by the company; and "indirect contribution^*2," referring to reductions the group indirectly contributes to through products of other companies. (2024 results: direct contribution of approx. 8 million t-CO₂, indirect contribution of approx. 37 million t-CO₂)

Turning Value Chain-Wide Emissions Reductions and Avoided Emissions into Business Opportunities

1. *2
   Direct Contribution /

   Indirect Contribution
   Direct contribution:

   Emissions avoided by our final products and services that have an emissions reduction effect or those avoided through our manufacturing processes
   (Others: Although we have yet to calculate the volume of avoided emissions, we are taking the lead in multiple initiatives that contribute to society's GHG emissions reduction, such as nonferrous metal scrap recovery and processing and energy-efficient data center operation.)
   Indirect contribution:

   Emissions avoided by our company's conducting a part of the manufacturing processes of final products and services that have an emissions reduction effect or by our sales of final products and services that have an emissions reduction effect

Calculation method: We refer to guidelines published by METI, the Institute of Life Cycle Assessment, Japan, and the World Business Council for Sustainable Development (WBCSD), among others, in calculating avoided emissions. As there are no universal rules for calculating avoided emissions at present, we will appropriately review our calculation methods and information to disclose based on international discussions and trends in society.
(Emissions from existing products, services, and manufacturing processes-emissions from new products, services, and manufacturing processes) x volume of diffusion

1. *3For accumulation methods, refer to Section 5.5 "Avoided Emissions Accumulation Methods" of the Guideline for Avoided GHG Emissions Quantification issued by Japan's Ministry of Economy, Trade and Industry (METI).

Calculation example
Recycled aluminum: Avoided emissions are calculated based on the difference between emissions from the use of recycled aluminum and the use of virgin metal, both being supplied by our company.
Electric vehicles: (Internal combustion engine vehicle LCA^*5 emissions^*4-electric vehicle LCA emissions^*4) x number of electric vehicles sold for which our company is involved in a part of their supply chain

1. *4Internal combustion engine vehicle and electric vehicle LCA emissions were calculated while referring to the IEA's Global EV Outlook 2024
2. *5LCA: Life cycle assessment; a method to quantitatively assess the environmental burden of a product throughout its life cycle

Toyota Tsusho endorses the Paris Agreement and fully supports laws, regulations, and policies that help mitigate climate change, such as the Act on Rationalizing Energy Use and the Act on Promotion of Global Warming Countermeasures. We submit an annual report to the government on energy consumption, progress toward energy conservation targets, and greenhouse gas emissions.
Under the business classification evaluation system in the Act on Rationalizing Energy Use, we received an "S class" rating which indicates that we are a business with excellent energy conservation. Through these efforts, we are playing a role in achieving the greenhouse gas reduction target.

Toyota Tsusho is formulating measures for adapting to climate change with the objectives of responding to the effects of climate change and preventing or mitigating damage. The risks of weather disasters from events such as torrential rain and extreme heat are rising. The entire Group is taking action with an awareness that the formulation, management, and operation of business continuity plans (BCPs) that anticipate these risks is crucial.

By 2030, Toyota Tsusho will invest 2 trillion yen scale for the achievement of decarbonized society. Toyota Tsusho identified five priority areas that promote the circular economy in each stage of the industrial lifecycle; "energy creation," "energy collection and coordination," "manufacture of goods," "transport of goods," "use of goods," "waste processing," and "reuse and recycling."

We actively enter various external contests to widely promote recognition of our initiatives.
JARA Co., Ltd., a Group company that operates a sales system for reused auto parts, together with its business network, the JARA Group, received the "Director-General's Award for Promotion of the Transition to a Decarbonized Economic Structure" at the FY2024 Awards for Resource Circulation Technologies and Systems.
Furthermore, North Hokkaido Wind Energy Transmission Corporation, established with investment from Group company Eurus Energy Holdings Corporation and others, received the "Minister of the Environment Award for Climate Action" in FY2024.

Going forward, the Toyota Tsusho Group will continue to contribute to the realization of a sustainable society through CN/CE businesses, with the aim of "passing on a better Earth to the children of the future."

The Japan Foreign Trade Council (JFTC) supports the Paris Agreement and endorses the efforts of the Japanese government and Keidanren to establish a decarbonized society (Plan for Global Warming Countermeasures, and Keidanren Carbon Neutrality Action Plan), and promotes these efforts in cooperation with other industries and organizations. The JFTC has also formulated its own Voluntary Action Plan on the Environment and is working on this as an issue for the trading industry toward building a decarbonized society.

We regard the consideration and implementation of climate change mitigation and adaptation measures to be key issues and actively strive to create new businesses and solutions. In support of the primary objective of the JFTC, we are participating as one of the vice chairman companies of the council. Previously, as the chair of the Global Environment Committee (now the Environment Working Group of the Sustainability Promotion Committee), we played a central role in the Voluntary Action Plan on the Environment.

Regarding the specified consignor system established under the Act on Rationalizing Energy Use, we raised an important issue at a meeting for exchange of opinions between member companies subject to that system and government authorities (the Ministry of Economy, Trade and Industry (METI) and the Agency for Natural Resources and Energy (ANRE)). We currently participate as an observer in the METI/ANRE Working Group on Classification Standards for Consignors, where we have continued making efforts and proposals to create an environment that facilitates the promotion of energy conservation activities with transporters in the revision of the Act on Rationalizing Energy Use.

JFTC has set a target of reducing electricity consumption intensity (electricity consumption per floor space in the entire company) by 15.7% in 2030 compared to the fiscal year 2013. This is based on the effort target required by the Act on Rationalizing Energy Use (to reduce electricity consumption by an average of 1% or more per year over the medium to long term) and is premised on a 1% reduction per year as the maximum target that can be achieved through continued efforts.

As a member of the trade industry group JFTC and its Sustainability Promotion Committee's Environment Working Group, we offer recommendations on the development of a decarbonized society, the realization of a circular economy, and compliance with environmental laws and regulations, and carry out actions toward those goals. In our former position as the chair of the Working Group's predecessor, the Global Environment Committee, we took the leading role in the formulation of the committee's policies.

We are a member of the Battery Association for Supply Chain (BASC), taking part in its efforts to ensure resource sustainability and further grow the industry. Our COO of the Circular Economy Division, executive officer Masaharu Katayama, currently serves as vice president of BASC. In addition to our company, group companies Toyotsu Lithium, Toyota Tsusho Materials, and Toyotsu TEC are also BASC members. Our company represents this association as one its ten managing companies, a role that includes engaging in policy lobbying. In fiscal year 2024, we submitted a set of BASC policy recommendations to the Director-General of the Commerce and Information Policy Bureau of METI.

With the support of METI, the governments of Japan and Canada signed a memorandum of cooperation concerning mineral resources, and a Japanese company signed a memorandum of understanding with a Canadian business aimed at ensuring stable supply of nickel resources. These agreements are expected to strengthen the international resource network.

As an industry association, BASC is contributing to the sustainable growth of the global market by actively making recommendations regarding US Department of Energy policies based on the United States' Inflation Reduction Act and regulatory trends in Europe, among other matters.

In an effort to create a data collaboration platform for the battery industry, BASC joined with 14 Japanese automakers, the Japan Automobile Manufacturers Association, and the Japan Auto Parts Industries Association to establish the Automotive and Battery Traceability Center (ABtC). The ABtC has been certified as a public interest digital platform operator by METI and the Information-technology Promotion Agency, Japan, and plays a vital role in the promotion of digital transformation and streamlining initiatives for the industry as a whole.

The ABtC also actively strives to advance international standardization in order to support the Japanese battery industry's growth and strengthen its competitiveness. It seeks to make the industry sustainable by using the formulation of technical standards as a vehicle for enhancing transparency in the supply chain and boosting Japan's market competitiveness.

Since 2017, we have been a Supporting Member of the Hydrogen Council, a global initiative comprising leading companies in the energy, transport equipment, and financial and investment sectors that share a united, long-term vision for hydrogen as a contributor to the energy transition.

Since hydrogen does not emit CO₂ when used, can be produced using biomass or renewable energy, and can be stored, we recognize that it is a strong option toward the achievement of a low-carbon society. As a member of this global council that has many companies that are trying to use hydrogen for decarbonization as members, we can exchange information and opinions widely with other companies that share the ambitious target of decarbonization. Additionally, we collect information related to hydrogen from around the world, with the aim of promoting our hydrogen business and contributing to the achievement of a hydrogen society.

In a landscape where market trends constantly shift and regulations become tighter, we are taking action to help expand hydrogen use around the world and bring forth a hydrogen society. Specifically, we are building a hydrogen utilization model that spans from hydrogen production/supply to the introduction of fuel cell mobility and that will serve domains such as ports, public transportation, and logistics. We are also supporting external sales of fuel cells and the development projects of fuel cell-equipped equipment. Leveraging the insights gained from these activities, we collaborate with the Council's efforts to develop incentives and mechanisms promoting the use of hydrogen and fuel cells, and to formulate unified international standards on hydrogen use, including methods for calculating greenhouse gas emissions.

In Japan, the public and private sectors have long collaborated on hydrogen technology research, development, and demonstration experiments, but the infrastructure for real-world deployment of those technologies remains inadequate and the supply cost is high compared to existing fuels. Consequently, the hydrogen market is still immature.

The Japan Hydrogen Association (JH2A) is an open, cross-industry organization that takes an all-encompassing view of the hydrogen supply chain and works to realize projects for implementing hydrogen technologies in the real world. In doing so, the JH2A aspires toward the early creation of a hydrogen society.

We have been part of this association since its launch in December 2020, and are serving on its Commercialization Committee, Regulatory Committee, and CO₂ Free H₂ Committee. As one of the leaders, we spearhead the study of various hydrogen supply themes with respect to the feasibility and commercial viability of their concepts.

We also started serving on the Executive Board this fiscal year, and will thus play an in-depth role in the association's operation.

The Japan Wind Power Association (JWPA) is a key organization for advancing the spread and development of wind power in Japan. Along with the growing importance of renewable energy in recent years, the JWPA has stepped up its commitment toward the realization of a sustainable society, taking action in the form of policy recommendations, support for technological development, and other initiatives. Past actions include sharing concrete opinions with the Agency of Natural Resources and Energy regarding the 7th Strategic Energy Plan.

Masaru Akiyoshi, Representative Director, Executive Vice President of our group's Eurus Energy Holdings, serves as the JWPA's President, playing the leading role in the association's operation.

Guided by the philosophy of "Helping to preserve the global environment by disseminating and expanding clean energy technologies," Eurus Energy Holdings is working to expand the use of renewable energy. It has a power generation capacity of more than 2 GW in Japan, and roughly 5 GW across 16 other countries. The company is also cultivating the talent needed to spread the adoption of wind power, including through skills development for maintenance technicians and the introduction of international safety training programs.

We are cooperating party of the Liaison Council for Collection of Waste Cooking Oil and Its Utilization as Biofuel for Coastal Vessels, which was launched by the Japan Federation of Coastal Shipping Associations, the Japan Passengerboat Association, UCO Japan, and the Japan Railway Construction, Transport and Technology Agency (JRTT) to advance the decarbonization of the coastal shipping industry by promoting the collection of waste cooking oil and expanding the use of biofuel. This initiative represents a pivotal step toward the sustainable growth of the coastal shipping industry.

The government, in its October 2021 revision of the Plan for Global Warming Countermeasures, set a target of reducing the coastal shipping sector's CO₂ emissions by 17% in fiscal year 2030 compared to fiscal year 2013. This has sparked interest in the potential of biofuel as one approach for lowering the energy consumption and CO₂ emissions of existing vessels. However, currently most of the waste cooking oil of coastal vessels is disposed of, with little progress being made in the utilization of this oil as a biofuel resource.

Working through the liaison council, we are surveying the state of waste cooking oil collection on coastal vessels, in collaboration of the Maritime Bureau of the Ministry of Land, Infrastructure, Transport and Tourism, which participates as an observer, and Daiseki Eco. Solution Co., Ltd., which is a fellow cooperating party. We are using our findings to develop guidelines for operators that collect the waste cooking oil, and to construct a collection system. Our aim is to increase the recovery rate of coastal vessels' waste cooking oil and promote the use of biofuel manufactured from this oil.

We hope that the recovery of waste cooking oil and its use as biofuel will become standard operation procedure for the coastal shipping industry, and thus contribute to the achievement of carbon neutrality for the industry as a whole.

Circular Core is a general incorporated association comprising ten Toyota Group companies, of which five function as the core members: Toyota Motor, Toyota Tsusho, Aisin, Denso, and Toyota Central R&D Labs. It plans to promote the development of a circular economy through three main activities: 1) identification of issues lying between so-called "arterial industries" and "venous industries," 2) exploration and practical development of circular economy-related technologies, and 3) conducting of feasibility studies based on demonstration testing. It is also looking to make advances in the mobility sector in Japan, and, in the medium to long term, partner with other industries and expand the scope of its activities.

Our company, as a key driver of the Toyota Group's circular economy initiatives, has been deeply involved in Circular Core since its launch and is leading the transition to a sustainable society. The current president of Circular Core is one of our executive officers, Masaharu Katayama (COO for Circular Economy Division), who is using his leadership to strengthen the organization's efforts.

Our promotion of circular economy initiatives is aimed at creating value over the long term. Going forward, we will step up our collaboration with Circular Core as we strive to reduce our environmental footprint and to make the most of resources.

We are a member of the Textile Exchange, an international nonprofit that was founded to have a positive impact on climate change in the fashion and textile industry. This organization pursues a mission of guiding "a growing global community of brands, manufacturers, and growers towards more purposeful production from the very start of the textile supply chain."

It has a set a goal for the textile industry to achieve a 45% reduction in the greenhouse gas emissions of fiber and raw material production by 2030. To reach that target, Textile Exchange is promoting the adoption of holistic, interrelated approaches for improving water quality, soil health, biodiversity.

We teamed up with Wastebox, Chubu Electric Power Miraiz, Nippon Life Insurance, and the MS&AD Insurance Group's Aioi Nissay Dowa Insurance to establish the Carbon Accounting Adviser Institute (CAAI) on July 1, 2022 as an organization tasked with promoting correct understanding of climate change-related financial information. We have assigned one of our directors to CAAI and are actively involved in its rulemaking efforts for bringing standardized practices to carbon accounting, which currently lacks a universal set of measurement standards.

The CAAI runs a Carbon Accounting Advisor Qualification System in which Tier 3 and Tier 2 advisors qualify as, respectively, "Decarbonization Advisor Basic" and "Decarbonization Advisor Advanced" under the Ministry of the Environment's Decarbonization Advisor certification program. The system has gained a broad reputation as a very reliable scheme for training carbon accounting talent.

The CAAI is also an Accredited Solutions Provider under the CDP, the global gold standard for climate change disclosures. In this role it helps clients to implement highly sophisticated decarbonization management practices, ranging from visualization of emission levels to formulation of strategies. The CAAI's development of measurement standards and a qualification system for carbon accounting is creating the social infrastructure needed to support decarbonization management by businesses.

We will continue promoting the dissemination of effective accounting rules as part of our sincere commitment to climate change action, with the goal of helping to decarbonize society as a whole.

We participate in various initiatives as a member of the Environmental Partnership Organizing Club (EPOC), a collaborative organization formed by industry, government, and academia in the Chubu region.

This group works to embed and foster environmental action in society, disseminates information on environmental action, and engages in international exchanges. Through EPOC, we disseminate information on environmental action from Chubu and seek to create a safe and comfortable circular society while establishing a world-class environmentally-advanced region.

We acquired ISO50001:2018 (energy management systems) certification in 2020. This covers our business sites in Japan that are subject to notification requirements as specified businesses under the Energy Conservation Act (18 sites in 11 prefectures) and to our employee benefit facilities. We created energy management standards for each site and periodically check their compliance through energy conservation audits, with the aim of encouraging energy-saving practices.