The Environment

Basic Concept in Responding to Climate Change

Conservation of the "Global Environment" is an indispensable material issue for Konami Group aiming to be an enterprise that "keep stakeholders always looking forward with anticipation as we create and provide our current and future customers with products and services that offer "Valuable Time" by contributing to achieving a sustainable society through our business."

As an effort to reduce CO₂ emission, we have engaged in office energy conservation and promoted "modal shift." In addition, our fitness club facilities have introduced cogeneration systems and hybrid hot water systems to convert heat sources. We have strengthened our forest management initiatives as well.

Konami Group expressed its support for the TCFD recommendations in May 2022 and has continued to disclose information in line with the recommendations. Taking into account the impacts of the external environment changes, we have updated our scenario analysis. Contents including the company's environmental information is also posted on our website.

Governance

Initiatives regarding climate change are decided at the "Sustainability Committee (Chair: Representative Director, President)" which is held four times a year. Decisions made by the Sustainability Committee are periodically reported to the Board of Director for review. In addition, a Corporate Officer in charge of climate change has been appointed. Climate-related issues are taken into consideration when reviewing various plans, including medium and long-term plans, and when making decisions including investments.

Initiatives are implemented by each business segment and group company while the Sustainability Committee Secretariat monitors the progress.

Strategy (Scenario Analysis 1)

A scenario analysis was conducted as an annual implementation continuing from the previous year.

Konami Group adapted 1.5℃ scenario based on International Energy Agency (IEA)'s Net Zero Emission Scenario and 4℃ scenario based on IEA's STEPS (Stated Policies Scenario) and Intergovernmental Panel on Climate Change (IPCC)'s Representative Concentration Pathways Scenario, all three enhanced scenarios are science-based and adapted globally, to evaluate the Mid to Long Term (2030 and 2050) changes in the business environment and the risks and opportunities that arise from climate change. In all the scenarios analyzed, we have confirmed that it is possible to be resilient in all four business segments.

Under the 1.5℃ scenario where major policy changes for decarbonization are expected to be implemented, business model will need to shift to a more decarbonized one that can cope with the introduction of a carbon tax and higher raw material prices. The impact of physical risks further increases under the 4℃ scenario, where responses to risks such as factory closure and supply chain disruptions will be required.

Strategy (Scenario Analysis 2)

Strategy (Scenario Analysis 3)

Based on the risks and opportunities exemplified in the TCFD recommendations, external reports from international organizations and industry associations, as well as taking into account our own business characteristics, we identified risks and opportunities in each future scenario for our respective principal business segments; Digital Entertainment, Amusement, Gaming & Systems, and Sports. Furthermore, for the risks and opportunities that were identified significant, we updated the parameters for each scenario and re-conducted a Quantitative Business Impact Evaluation.

Scenario analysis has revealed hike in raw materials and carbon prices in the 1.5℃ case, whereas significant impact due to the spread of infectious diseases has been revealed in the 4.0℃ case. This said, we were able to recognize that there are significant business opportunities prompt by the shift to environmentally friendly products/services.

＜Business Impact Evaluation＞

Category		Description	Business Impact
			1.5℃	4.0℃
Risks	Carbon Price	Manufacturing cost will increase due to global introduction of carbon tax, emissions trading, and Carbon Border Adjustment Mechanism (CBAM).	High	Low
	Raw Material Cost	Raw material cost for mineral resources will increase due to higher carbon price. Plastic procurement cost will increase due to adoption of recycled materials. Paper procurement cost will increase due to depletion of forest resources.	Low	Low
	Energy Cost	Renewable energy procurement cost and energy-saving measure cost will increase. Air conditioning cost will increase with temperatures rise.	Low	Low
	Physical Risks	Sales loss will occur in case of factory closure and other effects due to extreme weather.	Low	Low
	Regulations for Environmentally Conscious Products	Sales loss will occur if our customers, such as platformers and property operators, pose energy conservation restrictions on existing products.	High	Low
Opportunities	Products to Boost Decarbonization	Demand for products efficient in decarbonization will increase.	High	Low
	Environmental Education	Demand for environmental education will increase as consumers become more environmentally conscious.	Low	Low
	Health Awareness	Demand for health maintenance will increase in line with increased environmental awareness.	Low	Medium
	Infectious Diseases	Demand for online services will increase due to the spread of infectious diseases while the number of facility visitors decrease.	Low	Medium

Based on these results, we will prepare for the rising price of carbon and raw materials by implementing renewable energy and energy-preservation measures/equipment throughout the company.

We will further refine measures to address the identified risks and opportunities arising from climate change to tackle our own risks, as well as to promote the greening of our entire supply chain and create a positive impact on the society. This will also be incorporated into our medium and long-term management strategies to further improve the resilience of Konami Group's business.

Risk Management

Sustainability Committee Secretariat identifies, evaluates, and manages the risks. It identifies risks by extracting relevant parameters for scenario analysis and conducts periodic assessments. It also manages risks by quantitatively assessing the financial impact of each risk. The results of the risk assessments are reported to the Board of Directors through the Sustainability Committee, as climate change criteria is established for linkage to Konami Group-wide risk management.

＜Climate Change Risk Management Process＞

Identification / Evaluation Sustainability Committee Secretariat identifies and evaluates the Risks. It extracts relevant parameters, including new regulatory requirements, and conducts periodic assessments.

Management Sustainability Committee Secretariat manages the Risks. It evaluates and prioritizes the quantitative financial impact of each risk in the scenario analysis.

Reporting / Coordination Sustainability Committee Secretariat includes and discloses the Risks as a risk management item. It reports risk assessment results to the Board of Directors and coordinate with risk management.

Metrics & Targets

Prevention of global warming by mitigating CO₂ emissions is essential for realizing a sustainable society. To fulfill this responsibility, Konami Group monitors CO₂ emissions in its business operations and conducts specific reduction measures.

As a target for mitigating the environmental impact of our business operations, we aim to reach operational carbon neutrality in accordance with the Japanese government's declaration for 2050.