Responses to Climate Change

Approach to Combatting Climate Change
Information Disclosures Based on the TCFD Recommendations
Voluntary Participation in the CDP

Approach to Combatting Climate Change

Based on the action guidelines of its basic environmental policies, the UACJ Group recognizes its social responsibility as a comprehensive aluminum products manufacturer to take proactive steps to combat climate change and contribute to decarbonization. Accordingly, the Group will work to contribute to achieving the goal set by the Paris Agreement to limit the global average temperature rise to 1.5 degrees Celsius above pre-industrial levels, or at least hold this increase well below 2 degrees Celsius. Towards this end, the Group will scientifically monitor the impact of greenhouse gases (GHG) emitted from its operations on global climate change, and on that basis, carry out initiatives in line with the following action guidelines.

Action Guidelines

On Scope 1 and 2^*1, continue, broaden, and strengthen measures to reduce CO₂ and other GHG emissions from operations, achieving for a 30% reduction^*2 by FY2030 and striving to realize carbon neutrality（CN）by 2050.
On Scope3^*3, achieve a 30% reduction^*4 by FY2030 through increasing recycling and other means, minimize GHG emissions by 2050 through collaborating with various supply chain partners on initiatives to maximize recycling and reduce CO₂ and other GHG emissions throughout the entire supply chain.
Step up previously initiated measures to conserve energy, switch to fuels that result in less GHG emissions, and progressively adopt renewable energy sources
Provide products and services that contribute to reducing GHG emissions, particularly the UACJ Smart brand of environmentally friendly products, by making the most of the relevant properties of aluminum, such as its ability to reduce overall product weight on a life cycle assessment basis and be recycled many times over
Promote the development of technologies that contribute to reducing GHG emissions
Independently and proactively carry out initiatives designed to reduce GHG emissions, and actively disclose all relevant information

*1：Measurement scope:
【Japan】 UACJ Corporation (Nagoya, Fukui, Fukaya), UACJ Extrusion Nagoya Corporation (Nagoya, Anjo), UACJ Extrusion Oyama Corporation, UACJ Extrusion Gunma Corporation, UACJ Extrusion Shiga Corporation, UACJ Foil Corporation (Isesaki, Shiga, Nogi), UACJ Foundry & Forging Corporation, UACJ Aluminum Center Corporation（Utsunomiya Color Aluminum）
【Overseas】 UACJ (Thailand) Co., Ltd., UACJ Extrusion Czech s.r.o., UACJ Extrusion (Thailand) Co., Ltd., UACJ Foundry & Forging (Vietnam) Co., Ltd., UACJ Foil Malaysia Sdn. Bhd., UACJ Automotive Whitehall Industries, Inc.(Headquarters Michigan District, PADUCAH, SANMIGUEL, FLAGSTAFF)
*2：Emission intensity compared to FY2019, calculated using methods explained in the Japanese government’s Sixth Strategic Energy Plan, issued by the Ministry of Economy, Trade and Industry in 2021
*3：Measurement scope:
【Japan】 UACJ Corporation (Nagoya, Fukui, Fukaya), UACJ Extrusion Nagoya Corporation (Nagoya, Anjo), UACJ Extrusion Oyama Corporation, UACJ Extrusion Gunma Corporation, UACJ Extrusion Shiga Corporation 【Overseas】 UACJ (Thailand) Co., Ltd., UACJ Australia Pty. Ltd.
*4：Emission intensity compared to FY2019 for Category 1

Information Disclosures Based on the TCFD Recommendations

Governance

The UACJ Sustainability Basic Policy stipulates the company’s basic concepts and approaches for its climate change and sustainability activities.

The Climate Change Countermeasure Steering Committee, established on April 1, 2021 was renamed the Environmental Committee in fiscal 2024. Chaired by the president, the committee organizes working groups for specific initiatives, including carbon neutral measures, recycling, conversion to aluminum, and procurement of raw materials, and in fiscal 2024 added initiatives for circular economy, nature positive, and environmental management. The committee reports important results of the working group’s examinations and activities at management meetings and the board of directors to receive the decisions of management, which conducts direct governance of its activities.

Strategy

In our scenario analysis of climate change countermeasures, we considered risks and opportunities along the entire value chain from raw material procurement to disposal and recycling. We focused on the flat rolled products business of the Rolled Aluminum Products segment because it is a representative field of our business and is highly important in our business portfolio.

Following the recommendation of the Task Force on Climate-Related Financial Disclosures (TCFD) to analyze several climate change scenarios, including for a temperature increase of 2 degrees Celsius or less, we analyzed scenarios for increases of 4 degrees Celsius (2.6°C-4°C) and 1.5 degrees Celsius, which were based on projections by the International Energy Agency, the Intergovernmental Panel on Climate Change of the United Nations, and other organizations.

The 4 degrees Celsius scenario analysis indicated a negative impact even if additional response measures were implemented and new business opportunities appeared. The 1.5 degrees Celsius, which also included additional response measures and new business opportunities, indicated a significant positive impact for our business. Realizing this scenario will require speeding up decarbonation efforts, such as increasing renewable energy usage. We plan to do our part through various initiatives, including installing one of the world’s largest rooftop solar power generation systems at UATH and converting our heat treatment furnaces in Japan from LPG and heavy oil to LNG.

UACJ Business Portfolio (Sales)

売上高グラフ

Target Sectors (Product Lineups)

Sector 1	Sector 2	Products
Rolled Aluminum Products Business	Flat-rolled aluminum business	Beverage products (can body and lid materials) Automotive (panels, heat exchanger materials)
	Extrusion business	Automotive (frames, heat exchangers and piping) IT products
	Aluminum foil business	Pharmaceuticals, food packaging, batteries
	Casting and forging business	Automotive (compressor wheels, vehicle air conditioning parts)
Precision-machined Components and Related Businesses	Automotove parts business	Atutomotive (bumpers, sunroof guides)
Precision-machined Components and Related Businesses	Precision-machined components business	Construction, industrial machinery

Risks

Transition Risk

Strategy: Carbon pricing, regulations (for recycling, water consumption, etc.)
Market: Energy price fluctuations, sharp increases in raw material prices
Reputation: Customer behavior changes, company reputation changes among investors

Physical Risk

Persisting: Rising average temperature
Acute: Extreme weather events

Following risk severity assessments (risks and opportunities), we are analyzing two scenarios of 1.5°C and 4°C temperature increases.

Risk severity ratings

We will continue broadening our scenario analysis to cover all Group companies and deepen the analysis; disclosing and reporting information via the Company website, integrated report, and other media; and communicating with stakeholders.

Action Plans and Details

Scenario Analysis Covering All Group Companies

The current scenario analysis focused on the flat rolled products business and the operations in Japan and Thailand. The analysis methods used will be developed to cover all Group companies.
The project team will be used to lead task forces and working groups to be deployed throughout the Group and at all levels of business.

Monitoring and Execution System

The current analysis focused on two scenarios. Given the high degree of uncertainty surrounding climate change, we will regularly monitor forecasts, conduct impact assessments, and review our strategies.
A special team was formed for the project to address climate change risk. We intend to give the team an official organization role to ensure the initiative remains a permanent part of our operations.

Increasing the Depth of Analysis

We consider the current scenario analysis to have been Level 1, and we intend to incrementally deepen the analysis to Level 2 and Level 3.

Risk Management

A TCFD Response Team that has been set up within the secretariat of the Environmental Committee is tasked with identifying risks and opportunities in line with the TCFD framework, and creating scenario road maps. As UACJ has a policy of addressing climate change as a unified Group, the TCFD Response Team includes members from broad cross-section of organizations within the Group, including sales, manufacturing, legal, risk management, public relations, sustainability promotion, and the finance division.

Anticipated Impact on UACJ Group business (risks and opportunities)

Risk items	Business impact			Evaluation
Small classification	Index	Risks	Opportunities	Evaluation
Carbon price (carbon tax / carbon border adjustment mechanism)	Revenue Expenditures	Procurement costs for imported raw materials / materials increase Electricity costs increase	Sales and revenue increase due to reduced competitiveness of imported competitor products from countries/regions with insufficient GHG emissions controls	High
Carbon emissions targets / policies in each country (Emissions trading / Mandatory Carbon Footprint Reporting etc.)	Revenue Expenditures	Raw material procurement costs / manufacturing costs increase due to expenses for purchasing carbon credits Expenses increase for updates / introduction of equipment such as aluminum scrap melting furnaces and energy-saving equipment, and enabling changeover to other fuels Production management costs increase due to mandatory carbon footprint recording and reporting	Carbon tax and other costs can be reduced by reducing procurement of energy-intensive raw materials (virgin aluminum) Demand associated with switching from other materials increases due to tighter regulations There are opportunities to increase revenue by taking advantage of aluminum’s light weight, high thermal efficiency, and high recyclability	Medium
Recycling regulations/policies in each country	Revenue Expenditures	Prices increase due to increased demand for scrap metal Investment costs to introduce new equipment and innovative technologies to strengthen recycling technology and alloy development capabilities increase Market advantage over competitors / other materials declines due to delays in addressing recycling regulations Demand for aluminum castings decreases due to an expanding electric vehicle market; the current recycling framework does not function adequately	Revenue increases through sales promotion focused on superior recyclability Business base expands and revenue increases through “closed-loop recycling” targeting automobile manufacturing processes, etc.	High
Changes in energy mix	Revenue Expenditures	Energy costs (electricity, fuel, etc.) increase Investment in SCOPE1 decarbonization increases	Energy conversion in aluminum smelting countries progresses, resulting in reduced GHG emissions from aluminum smelting processes and improved competitiveness against other materials	High
Developing next-generation technologies	Expenditures	Sorting technology for recycled raw materials does not advance, resulting in lower yields and production capacity Revenue decreases due to weaker competitiveness brought on by delays in developing technologies related to GHG emissions reduction	Costs associated with the use of raw materials are mitigated and reduced by the spread of closed-loop recycling Manufacturing costs are mitigated and reduced by increased use of raw materials and improved manufacturing yields resulting from the consolidation of alloys By developing materials suitable for recycling, UACJ can increase revenue from increased demand for environmentally branded products (UACJ SMART®) UACJ can raise the level of demand by developing smelting methods with low GHG emissions	High
Changes in customer behavior	Revenue Expenditures	There is increasing environmental awareness among customers and users, and failure to comply with environmental labeling, etc., will result in declining sales from customers pulling away If decarbonization measures are not accelerated through the entire value chain, the environmental branding of UACJ and its business will be damaged and sales will decline Customers and users will pull away from products with low recycled content or that cannot use low carbon aluminum, resulting in a decrease in revenue from lower sales	The recyclability of aluminum is reevaluated, and revenue increases as orders from cutting-edge environmental companies increase Environmental responsiveness becomes a value for UACJ and its products, improving reputation with customers and creating new business opportunities UACJ can increase its revenue by expanding recognition of its high recycling rate / low carbon aluminum for beverage cans UACJ can increase its revenue by acquiring ASI certification, etc., in response to customers' requests for environmental friendliness	Medium

Physical risks, opportunities

Risk items	Business impact			Evaluation
Small classification	Index	Risks	Opportunities	Evaluation
Increase in average temperature	Revenue	Revenue decreases due to lower production capacity resulting from instability in raw material procurement from impact on mining and transportation The working environment at manufacturing sites worsens due to higher temperatures, and there is a risk of decreased revenue due to lower productivity and difficulties in hiring personnel Air conditioning equipment expenses and running costs for addressing the heat increase	Demand for beer and soft drinks increases, and sales grow for packaging materials, providing opportunities for increased revenue Demand for air conditioning equipment increases, and sales for fin materials grow, creating opportunities for increased revenue	Medium
Increasing severity of extreme weather conditions (cyclones, floods)	Revenue Expenditures	There are operation/shipments shutdowns, suspension of operations at suppliers, loss of confidence and decreased sales due to temporary halts in production caused by extreme weather conditions (flooding and heavy rain) Expenses for equipment-related countermeasures and damage repair increase due to storm surge and flooding caused by typhoons at manufacturing sites with high risk of flooding Troubles making delivery deadlines increase due to increased disruptions in the distribution network caused by extreme weather	As a result of increased demand associated with "building national resilience“ as a countermeasure against natural disasters, there is an increase in demand for disaster-prevention products and structural materials / related products that contribute to strengthening infrastructure Demand for infrastructure development increases, resulting in increased demand for sluice gates and other disaster-prevention products Demand increases for products (aluminum laminated sheets, etc.) used in evacuation centers, etc.	High

Indices and Targets

The UACJ Approach to Combatting Climate Change announced in June 2022 stated our targets to “achieve carbon neutrality in Scope 1 and 2 by 2050 and in the process reduce our emissions by 30% by FY2030^*1.”
For Scope 3, in December 2023, we have set targets of 30% reduction^*2 by FY2030 through increasing recycling and other means, and minimizing GHG emissions by 2050 through collaborating with various supply chain partners on initiatives to maximize recycling and reduce CO₂ and other GHG emissions throughout the entire supply chain.
We are advancing initiatives to reduce CO₂ and other GHG emissions to achieve our targets for FY2030 and achieve carbon neutrality in 2050.

*1：Emission intensity compared to FY2019
*2：Emission intensity compared to FY2019 for Category 1

Voluntary Participation in the CDP

By voluntarily participating in the Carbon Disclosure Project, an international climate change initiative, we are furthering our activities to fight climate change while gaining an objective way to evaluate our greenhouse gas management. As one example, we are following the Greenhouse Gas Protocol’s definitions for scope 1 (Direct GHG emissions from the burning of fuel internally), scope 2 (Indirect emissions from the generation of purchased electricity used internally), and scope 3 (Upstream and downstream emissions throughout the supply chain) in categorizing and calculating greenhouse gas emissions, and disclosing them on our website.