(1) Overall Sustainability

Based on Celsys’s values (three values that drive passion), what we want to become, and an analysis of risks and opportunities involved in realizing them, we have identified materiality as key themes that the entire Celsys must prioritize for action. The materiality was approved at the Sustainability Committee meeting held in January 2024.
The “three values that drive passion” are as follows:

(2) Policies on Human Resource Development, Including Ensuring Diversity, and Internal Environment Development

Celsys recognizes the importance of human resource development, including ensuring diversity, and internal environment development as stated in the materiality related to support for employee success, “supporting ease of work and growth in a flat organization.”

●Organizational Climate Reform
Celsys believes that philosophy-based management forms the foundation for creating a culture that evolves the organization. As part of our efforts toward organizational climate reform, in 2023, we redefined our philosophy system, which consists of our mission, vision, and values. Building upon this, we formulated a management policy aimed at implementing philosophy-based management.

●Recruitment and Development of Inventive Engineers
Celsys believes that the most important aspect of recruitment is hiring individuals who resonate with our philosophy and possess a deep understanding and respect for creative culture. To support the development of technical skills and growth, we have held internal technical study sessions and institutionalized a quarterly evaluation system to provide swift feedback on performance. Additionally, Celsys places emphasis on nurturing the next generation of talent, beyond just recruitment activities. Our industry-academia collaboration initiatives with universities have contributed to the recruitment of engineers.

●Promoting Diverse Talent and Supporting Various Workstyles
We prioritize designing organizations that thoughtfully combine individuals to generate new positive synergies. In terms of living places and workstyles, we operate flexible systems, and in April 2024, we introduced a new flextime system.

The Sustainability Committee manages risks related to promoting sustainability. Each division, in coordination with the Risk and Compliance Committee as necessary, drives the identification of individual risks and the formulation of response policies, which are then reported to the Sustainability Committee. The Sustainability Committee, in turn, reports these risks to the Board of Directors when necessary.

(1) Overall Sustainability

We consider the following to be the monitoring indicators related to the materiality described in the strategy. For monitoring indicators that require targets to advance our initiatives, we will consider setting these targets in the future.

(2) Policy on Human Resource Development, Including Ensuring Diversity, and Internal Environment Development

Regarding ensuring the diversity of human capital, we continue proactive recruitment activities that do not depend on gender, nationality, or age. This includes actively promoting exceptional talent, including mid-career employees, to management positions. While believing that a certain number of female and foreign managers has been secured, we consider it important to increase their ratio through the planned development and promotion of core personnel. Furthermore, we are working to create an environment where all employees, with their diverse personalities and values, can find fulfillment in their work and have workstyles that align with their personal lifestyles and life stages, regardless of gender or age. Specifically, we have implemented initiatives such as the introduction of remote work, the adoption of a flextime system, and the introduction and promotion of various leave systems, including childcare leave.

Basic Information on Diversity

Basic Information on Childcare Leave and Paid Leave

(1) Approach to Climate Change

Celsys recognizes that contributing to the realization of a sustainable society and enhancing corporate value over the medium-to-long term are important management issues. In line with our basic sustainability policy, we are actively and proactively addressing these issues. In particular, regarding sustainability challenges related to climate change, we are organizing our approach and advancing initiatives in accordance with each theme of TCFD information disclosure.

(2) Governance

To promote sustainability initiatives, including those related to climate change, Celsys has established the Sustainability Committee. Under the supervision of the President, who serves as the committee chair, this committee examines action policies related to sustainability, including climate change, and reports progress to the Board of Directors as necessary. The Board of Directors deliberates on the reported content accordingly.

(3) Strategy

Celsys has identified “accelerating positive environmental impact through digital support for creative activities” as the materiality related to reduction of environmental impact through business. We consider addressing environmental challenges, including climate change, important. Accordingly, Celsys has been conducting scenario analyses in line with TCFD recommendations to understand the impact of climate change-related transition risks and physical risks on our business activities and to consider and formulate a business strategy that can respond to uncertain future conditions.

In the scenario analysis conducted this time, we considered two scenarios: a 4°C scenario, where the global temperature rises by 4°C compared to pre-industrial levels, and a 1.5°C scenario, where efforts are made to keep the temperature rise below 2°C, centering around 1.5°C. We qualitatively examined and analyzed risks and opportunities related to climate change as of 2030 under these scenarios. Going forward, we plan to conduct quantitative analyses to further visualize the impact on our business.

●4°C Scenario Analysis
In the analysis under the 4°C scenario, we have identified the potential for an increased risk of damage to our bases due to the intensification and increased frequency of extreme weather events. If a base is damaged, losses are expected to occur due to business shutdowns and damage to assets. Therefore, we plan to explore quantitative analysis moving forward.

●1.5°C Scenario Analysis
In the analysis under the 1.5°C scenario, we have identified substantial potential impacts on our operations due to the transition to a decarbonized society, including the imposition of carbon taxes, rising electricity prices driven by increased demand for renewable energy, and various policies and regulations related to renewable energy and energy conservation. We plan to conduct a quantitative analysis of how these risks may affect the Company in the future.

On the other hand, we anticipate that efforts toward a decarbonized society may lead to increased demand for energy-saving and resource-efficient products. Providing products that meet such demand has been identified as an opportunity for the Company. Going forward, we will promote initiatives aimed at reducing environmental impact through our business to “accelerate positive environmental impact.”

Definition of time of materialization: “Short term” means 0-3 years; “Medium term” means 4-10 years; and “Long term” means 11-30 years.
Definition of financial impact: “Large” means significant impact on the business; “Medium” means impact on part of the business; “Small” means minimal impact on the business; and “―” means no impact.

(4) Risk Management

Celsys identifies and assesses climate-related risks through the Sustainability Committee. Each division involved with the identified risks and opportunities implements and promotes measures to address them. The Sustainability Committee monitors the progress of these initiatives and manages climate-related risks. Matters concerning these risks are reported to the Board of Directors by the Sustainability Committee as necessary.
Additionally, climate-related risks identified and assessed by the Sustainability Committee are integrated with other risks in coordination with the Risk and Compliance Committee.

(5) Indicators and Targets

Celsys has calculated the GHG emissions resulting from our business activities, with the results as follows:

*1: Scope 1 + Scope 2 (Market-based)

Moving forward, we will consider setting reduction targets for Scope 1 and 2 emissions, as well as calculating and setting reduction targets for Scope 3, in order to contribute to the realization of a sustainable society.