Climate Change Initiatives

INDEX

Concept of Climate Change
Disclosure to TCFD Recommendations
Governance Structure for TCFD
ESG Management and Promotion Structure/Sustainability Committee Structure Sustainability Committee
Strategy
Risk Management
Indicators and targets
Trends in Scope1 CO₂ Emissions and Per Unit of Net Sales
Trends in Scope2 CO₂ Emissions and Per Unit of Net Sales
Disclosing actual figures on the Sanken Group's Scope3
Third-party Verification
Sanken Group's Efforts to Reduce GHG Emissions
Initiatives to comply with the Energy Conservation Act and the Act on Promotion of Global Warming Countermeasures
Utilization of Renewable Energy: Reduction of GHG (Greenhouse Gas) Emissions
Installation of on-site solar power generation systems and introduction of on-site PPA
Utilization of a Virtually Renewable Energy Plan at Fukushima Sanken
Wind Power Procurement – Dalian Sanken Electric Co., Ltd.
Sanken Electric Semiconductor Reliability Evaluation Center
Sanken Electric Manufacturing Development Center
Efficient Use of Electricity and Energy Initiatives

Concept of Climate Change

The Sanken Group has been working to reduce CO2 at Group companies by implementing activities to reduce environmental impact. Climate change due to global warming is a risk that threatens the health of us all and the global environment, and it also affects our business, customers, and supply chain. We believe we must play a role in tackling the various problems caused by climate change.
In recent years, as a responsibility to the next generation, we have been carrying out business activities that further accelerate conventional moves to realize carbon neutrality. Currently, we will contribute from two perspectives: to provide eco-friendly, energy-efficient products, and to reduce the amount of CO2 emitted from our business activities.
While climate change poses risks, we also recognize that it is an opportunity to increase the corporate value of the Sanken Group.

Disclosure to TCFD Recommendations

One of the Sanken Group's basic CSR policies is to "contribute to the development of the global community by developing, producing, and selling power electronics and related products that use highly reliable and state-of-the-art technologies in order to realize a sustainable social environment." In order to realize a sustainable social environment, we recognize that responding to climate change is a key issue, and we are advancing initiatives and disclosing information in line with the recommendations of the Climate-Related Financial Information Disclosure Task Force (TCFD).

Governance Structure for TCFD

The Governance section of the TCFD (Task Force on Climate-related Financial Disclosures) recommendations requires the establishment and disclosure of a governance structure that responds to climate-related risks and opportunities. In our company, the Sustainability Committee, which deliberates on ESG management across organizations, plays a role. Katsumi Kawashima, Director in Charge of ESG, is appointed chairman of the committee, and the committee consists of members at the general manager level or higher in each division. The Committee conducts climate-related scenario analysis, identifies and assesses risks and opportunities related to climate change, and discusses and deliberates on measures to address risks and opportunities and reviews progress. As an advisory body to the President and Representative Director, the Committee reports to the Board of Directors at least twice a year the proposals submitted to and discussed by the Management Committee, and discloses information as appropriate. Sanken Electric discloses information on environmental activities related to climate change through CDP in response to requests from institutional investors, purchasing companies, and initiatives around the world.

Regarding climate-related issues, the following topics will be discussed.

Climate-related scenario analysis
Identification and severity assessment of short-, medium- and long-term climate-related risks and opportunities
Strategic approach to identified significant climate-related risks and opportunities
Consideration of specific responses to climate-related risks and opportunities
Progress management of adopted responses to climate-related risks and opportunities

ESG Management and Promotion Structure/Sustainability Committee Structure Sustainability Committee

Strategy

The Sanken Group recognizes climate change as one of its key management issues and conducts scenario analyses with a view toward 2030 and 2050.
The analyses utilize the International Energy Agency's Net Zero Emissions by 2050 Scenario (IEA NZE 2050) to assess transition-related risks and opportunities, while SSP1-2.6 (RCP2.6) and SSP5-8.5 (RCP8.5) are applied to evaluate physical risks.
Under the transition scenario, the Group assessed business risks associated with the transition to a decarbonized society, including the introduction of carbon pricing, fluctuations in energy prices, stricter regulations, and increasingly sophisticated customer requirements. At the same time, business opportunities arising from the expansion of electrification, the adoption of renewable energy, growing demand for energy efficiency, and the need for more energy-efficient data centers were evaluated. As a result, while increases in energy costs for manufacturing processes and capital investment requirements are anticipated, growing demand for high-efficiency power ICs, power semiconductors, and power control technologies has been identified as a significant business opportunity.
Under the physical risk scenarios, the Group evaluated potential impacts on manufacturing sites, disruptions to logistics networks, and effects on raw material procurement resulting from the increasing frequency and severity of extreme weather events, including floods, typhoons, heavy rainfall, and heatwaves.
The results of these analyses are reviewed by the Sustainability Committee and are reflected in the Group's Business Continuity Plan (BCP), capital investment strategies, and medium- to long-term management plans. Through these initiatives, the Sanken Group seeks to enhance its resilience to climate change and achieve sustainable growth in corporate value.

Category	Scenario	Description	Temperature Range
Transition Scenario	IEA NZE2050	A scenario presented in the IEA World Energy Outlook 2022 that limits global average temperature rise to 1.5°C. Clean energy policies and investments expand rapidly, enabling the world to achieve net-zero greenhouse gas emissions by 2050.	1.5℃
Physical Scenario	SSP1-2.6（RCP2.6）	A scenario based on the IPCC Sixth Assessment Report in which climate change mitigation measures progress steadily, limiting global temperature rise to well below 2°C by the end of the 21st century. Net-zero CO₂ emissions are expected to be achieved in the latter half of the century.	0.3-1.7℃
Physical Scenario	SSP5-8.5（RCP8.5）	A very high greenhouse gas emissions scenario based on the IPCC Sixth Assessment Report, assuming continued dependence on fossil fuels and no effective climate policies. It projects substantial temperature increases and the emergence of severe physical climate risks.	2.6-4.8℃

How to identify risks and opportunities

Climate change-related risks and opportunities for products and their entire supply chain were identified in each STEP.

STEP1	List of possible risks and opportunities
STEP2	The following five criteria and three levels of importance were analyzed by the head of each division at the head office and plant. ● Magnitude of the impact if the risk materializes(Financial and Strategic) ●Affected period(How long the effects last) ● Frequency of occurrence(How often are risks affected when they materialize?) ● Potential to materialize(How likely is the risk to materialize?) ● Time of manifestation(How far in the future will the risk materialize?)
STEP3	Summarize results and similar items.(Also consider the weight of items and the frequency of high importance) Identify five risks and three opportunities. The weight is evaluated and classified into 'large', 'medium' and 'small'.

Risk

As a result of scenario analysis, our results could be significantly affected by increases in energy costs and other factors due to the introduction of policy measures to promote climate change measures, such as the introduction of a carbon tax, and the strengthening of regulations.

Type		Major Risks	Policies	Level of importance
Transition risk	Policies and Regulations	Rising fossil fuel prices increase electricity costs and operating costs	Reducing CO₂ emissions ・Energy-saving activities ・Replacement of electricity with renewable energy ・Efficiency during production ・Optimization of transport ・Optimization of transport	High
		The introduction of a carbon tax raises operating costs		High
		Decrease in sales due to decrease in demand for existing products due to new regulations on climate change	Expansion of sales through development of new energy-saving and highly efficient products under the medium-term business plan	Medium
	Reputation	Delays in climate change measures reduce stakeholder confidence and market reputation	Formulate and implement plans to realize carbon neutrality	Medium
Physical risk	Acute	Sales decline due to impact on production due to natural disasters, etc., suspension of suppliers' operations, and damage to logistics functions	Strengthening Risk Management by Enhancing the Crisis Management System	Low

Opportunities

Scenario analysis results in the efficient use of energy resources and the provision of products that meet the low carbon needs of society and customers, which could have a significant impact on our results of operations.

Type	Overview	Policies	Level of importance
Products and services	Increased sales due to the expansion of the market for products aimed at a low-carbon society (in-car, white goods home appliances, etc.)	・Development of products for inverters ・Developing IPM ・Development of high-efficiency power supply devices ・Development of next-generation semiconductors	High
Resource efficiency	Energy and resource conservation on production lines and in-house infrastructure	Introduction of DX and Smart Factories	High
Reputation	Improving Stakeholders' Trust by Promoting Low Carbon in Production	Formulate and implement plans to realize carbon neutral	Medium

Risk Management

The Sustainability Committee deliberates on climate change-related risks, and the contents of the deliberations are disseminated by the Management Committee and reported to the Board of Directors.
IUnder the Sustainability Committee, we have established subcommittees dedicated to environmental (E), social (S), and governance (G) issues, and under the Social (S) Committee, we have established the Crisis Management Committee to deal with natural disasters and information management risks.
In addition, the Internal Control Promotion Committee has been established under the Governance (G) Subcommittee to support the inspection of operations at our company and Group companies, and to review and evaluate the effectiveness of control activities at the company-wide level and the business process level. The contents of these risk controls are reported to the Sustainability Committee, which comprehensively manages all business risks, including those related to climate change.

Indicators and targets

The Company conducted an analysis of climate-related risks and opportunities using the IEA Net Zero Emissions by 2050 Scenario (IEA NZE 2050) as the transition scenario and the IPCC Shared Socioeconomic Pathways (SSP) scenarios as the physical risk scenarios.
Under the transition scenario, risks such as increased costs resulting from the introduction of carbon pricing and tighter regulations were identified. At the same time, the advancement of electrification and energy efficiency is expected to create business opportunities through growing demand for power semiconductors.
Under the physical risk scenarios, risks were identified including impacts on manufacturing sites caused by increasingly severe natural disasters, supply chain disruptions, and constraints on water resources. Meanwhile, opportunities were recognized in enhanced competitiveness through growing demand for environmentally friendly products and the strengthening of stable supply capabilities.
Based on the results of this analysis, the Company has identified key priorities including improving energy efficiency throughout its supply chain and operational sites, reducing greenhouse gas emissions, and capturing business opportunities through the development of more energy-efficient semiconductor products.

CO₂ Emission Reduction Targets of the Sanken Group

Goal

The Sanken Group is targeting a 33% reduction in Scope 1 (energy-related CO₂) and 2 for fiscal 2030, with 2020 as the base year for domestic and overseas (Dalian). (Scenario to limit the post-industrial temperature rise to less than 2°C)
Going forward, we will accelerate our reduction activities toward 2030 and further develop measures to reduce the risk of climate change, while working toward carbon neutrality by 2050.

Specific measures

Promotion of energy conservation activities in Japan and overseas
Introduction of solar power generation
Conversion to renewable electricity

About Scope3

Scope3 emissions in the Sanken Group were 388kt-CO₂ (FY 2024).
We will continue to improve the accuracy of Scope 3 emissions calculations and establish reduction targets moving forward.

Trends in Scope 1 Emissions and Per Unit of Net Sales

Trends in Scope2 CO₂ Emissions and Per Unit of Net Sales

Trends in Scope 2 Emissions and Per Unit of Net Sales

Reduction Rate of Energy-derived CO₂ Emissions (Compared to FY2020)

	Target	Actual
	Target	2021 F.Y	2022 F.Y	2023 F.Y	2024 F.Y	2025 F.Y
Scope 1 Reduction rate	ー	8.7％	3.4%	4.9%	3.2%	11.6%
Scope2 Reduction rate	ー	6.2％	13.0％	23.2％	26.1%	38.1%
Total reduction rate	Compared to FY2020　33%Reduction	6.3％	12.3%	21.8%	24.4%	36.1%

Disclosing actual figures on the Sanken Group's Scope3

Of the Sanken Group's GHG emissions, 80% are from products and services purchased in Category 1 (No. 1 Fundri, No. 2 Wafer, 30kt-CO2). In other areas, the ratio of transportation and delivery (upstream and downstream) energy-related activities is relatively large, and we will formulate new reduction targets for Scope3 based on the results of calculations in the future.

NO.	Category	FY2020 (t-CO₂)	FY2022 (t-CO₂)	FY2023 (t-CO₂)	FY2024 (t-CO₂)	FY2025 (t-CO₂)
①	Purchased goods and services	204,823	230,458	244,216	306,712	348,743
②	Capital goods	9,437	17,259	18,087	11,733	10,553
③	Fuels and energy-related activities not included in Scope1 and 2	11,651	9,999	40,956	38,176	12,116
④	Transportation and Delivery (Upstream)	3,933	11,486	8,926	10,451	10,398
⑤	Waste generated in operations	288	3,667	2,654	2,590	3,060
⑥	Business Trip	463	365	340	329	321
⑦	Employer's commutation	1,072	1,250	4,144	3,808	2,521
⑧	Upstream leased assets	Not eligible	Not eligible	Not eligible	Not eligible	Not eligible
⑨	Downstream transportation and distribution	9,632	Not eligible	Not eligible	Not eligible	Not eligible
⑩	Processing of sold products Not eligible	Not eligible	Not eligible	Not eligible	Not eligible	Not eligible
⑪	Use of sold products	Not eligible	Not eligible	Not eligible	Not eligible	Not eligible
⑫	End of life treatment of sold products	1,538	11,452	9,890	14,157	9,209
⑬	Downstream leased assets	Not eligible	Not eligible	Not eligible	Not eligible	Not eligible
⑭	Franchise	Not eligible	Not eligible	Not eligible	Not eligible	Not eligible
⑮	Investment	Not eligible	Not eligible	Not eligible	Not eligible	Not eligible
Total		242,837	285,935	329,213	387,957	396,921

Third-party Verification

The Sanken Group undergoes third-party verification by specialized organizations to ensure the reliability and transparency of greenhouse gas (GHG) emissions data.

The link to the verification opinion report is here.

Sanken Group's Efforts to Reduce GHG Emissions

We are actively engaged in energy-saving activities at each business site, making capital investments that consider CO₂ reduction effects in facility renewal, promoting the proactive introduction of photovoltaic power generation at each site, and advancing the use of renewable and natural energy.

Initiatives to comply with the Energy Conservation Act and the Act on Promotion of Global Warming Countermeasures

In accordance with the Energy Conservation Act and the Act on Promotion of Global Warming Countermeasures, all business sites subject to reporting requirements have appointed certified energy managers and submit mid- to long-term plans and periodic reports to the competent authorities.
We will continue to strive for proper energy management and effective utilization in compliance with applicable laws and regulations.

Utilization of Renewable Energy: Reduction of GHG (Greenhouse Gas) Emissions

The Sanken Group is actively promoting the use of renewable energy to reduce GHG emissions. We are expanding the use of electricity generated from solar, hydroelectric, and wind power sources.

In 2022, the Sanken Group established CO₂ emission reduction targets.
In 2022, Fukushima Sanken began procuring 100% renewable electricity.
In 2023, Ishikawa Sanken introduced on-site PPA at the Horimatsu and Noto Plants.
In 2023, Fukushima Sanken introduced on-site PPA.
In 2023, Dalian Sanken Electric introduced on-site PPA and switched part of its purchased electricity to wind power.
In 2024, Dalian Sanken Electric is expanding the proportion of electricity procured from wind power.
In 2026, Fukushima Sanken will change its electricity procurement plan to a virtually renewable energy plan.

*A scheme in which a power producer (PPA provider) installs power generation equipment on the customer’s site and provides electricity generated by those facilities.

Installation of on-site solar power generation systems and introduction of on-site PPA

At four plants operated by three Sanken Group companies (Ishikawa Sanken’s Horimatsu and Noto Plants, Fukushima Sanken, and Dalian Sanken Electric), on-site PPA schemes are utilized to install solar power generation equipment on unused grounds within factory premises and on facility rooftops.
Through this initiative, the electricity generated is directly consumed at our own facilities, contributing to the reduction of greenhouse gas emissions associated with electricity use, while also promoting the effective utilization of idle assets.

Utilization of a Virtually Renewable Energy Plan at Fukushima Sanken

Fukushima Sanken utilizes a virtually renewable energy plan provided by Tohoku Electric Power.
This plan uses non-fossil value certificates to enable the use of electricity that is effectively considered to be derived from renewable energy, thereby contributing to the reduction of CO₂ emissions at manufacturing sites.

Wind Power Procurement – Dalian Sanken Electric Co., Ltd.

Since January 2024, Dalian Sanken Electric has begun procuring electricity derived from wind power.
The share of wind power–derived electricity accounted for 4.9% of total electricity consumption in FY2023 and has expanded to 30.6% in FY2024.

Certificate

Certificate

Sanken Electric Semiconductor Reliability Evaluation Center

In April 2019, the Semiconductor Reliability Evaluation Center started operation at the Ishikawa Sanken Head Office site. By consolidating the product evaluations that had previously been dispersed among the several locations of the head office and Ishikawa Sanken into one location, we were able to improve the evaluation speed of product development.
In terms of the environment as well, we were able to reduce electric power charges by 22 million yen per year by improving air conditioning efficiency through the consolidation of floor design and evaluation equipment that takes waste heat into account.

Sanken Electric Manufacturing Development Center

In April 2021, we constructed a Monozukuri Development Center on the premises of our head office to serve as a base for platform development technology that integrates development and production, and are working to improve the efficiency of new product development.
In terms of the environment, we have also adopted light shelves and top lights for indoor lighting. CASBEE rating A has been achieved through the use of natural energy by incorporating daylight.

本社「ものづくり開発センター」 — Manufacturing Development Center

Climate Change Initiatives