Climate Change

Analysis Process

We identify climate change as one of our material issues and, in accordance with our Environmental Policy, we are working to reduce our environmental impact across the entire supply chain, from raw material procurement and production to logistics, stores, and waste disposal. Toward the realization of a decarbonized society, we are accelerating efforts to reduce energy consumption and introduce renewable energy across our domestic operations. We are also working to halve the intensity of our plastic resource use and promote resource circulation. Through these initiatives, we aim to contribute to a sustainable society while enhancing our corporate value over the medium to long term.

Our Group has assessed the potential impact of climate change on our business with reference to the categories of risks and opportunities identified in the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). We conducted analyses under two scenarios – the 1.5℃ scenario and the 4℃ scenario – covering changes in policies and market trends (transition risks and opportunities) as well as physical changes resulting from natural disasters and other factors (physical risks and opportunities). Based on these analyses, we identified risks and opportunities, assessed their potential impact on our business, and developed response measures.

Climate Change Scenarios

In conducting our scenario analysis, we established two scenarios with reference to reports published by the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC). Going forward, we will continue to periodically review our identified risks and opportunities and our response measures, taking into account changes in climate-related parameters and the business environment.

Decarbonization Transition Scenario
(1.5℃ Scenario)		 High-Emissions Scenario
(4℃ Scenario)
Assumed Society A society in which ambitious policies and technological innovations are implemented to support the transition to a decarbonized society, with the aim of limiting the increase in global average temperature to 1.5℃ above pre-industrial levels by the end of this century. Stricter regulations, the introduction of carbon taxes, and changes in consumer environmental awareness have a significant impact across the entire supply chain. A society in which climate change mitigation efforts make little further progress from current levels, resulting in an increase of approximately 4℃ in global average temperature by around the end of this century. Extreme weather events, including severe heatwaves and heavy rainfall, become more intense and frequent, significantly increasing the risks of reduced agricultural yields and damage to business sites caused by large-scale flooding.
Reference Scenarios IEA  ：NZE 2050
IPCC：SSP1-1.9
(equivalent to RCP1.9) 		IPCC：SSP5-8.5
(equivalent to RCP8.5)

Change in Global Average Temperature Relative to the 1850–1900 Baseline

Source: Figure SPM.8 reproduced from the Summary for Policymakers of the Working Group I contribution to the IPCC Sixth Assessment Report, based on the provisional Japanese translation by the Ministry of Education, Culture, Sports, Science and Technology and the Japan Meteorological Agency.

Our Key Climate-Related Risks and Opportunities

Based on the TCFD recommendations, our Group analyzed the potential impact of climate change on our business under two scenarios: the 1.5℃ scenario, representing a transition to a decarbonized society, and the 4℃ scenario, representing a high-emissions society.

Risk Driver Time
Horizon		 Impact on Our Business Impact Risk Response Measures
Transition
Risks		 Policy
and
Regulation		 GHG emission prices Medium
to
long term		 Increase in energy-related costs resulting from carbon taxes imposed on our Scope 1 and Scope 2 emissions Medium
  • Introduce high-efficiency equipment at stores, factories, and other facilities
  • Install solar power generation systems on factory rooftops
  • Switch to renewable energy
  • Strengthen relationships with supply chain partners
  • Implement appropriate cost pass-through
Stronger emissions reporting requirements Short
to
medium
term		 Increase in outsourcing costs and costs associated with maintaining management systems as a result of measuring and disclosing emissions across the entire supply chain, including Scope 3 emissions Low
  • Streamline data collection and emissions calculation processes through collaboration with suppliers
  • Introduce a GHG emissions management system and bring its operation in-house
Mandates and regulations affecting existing products and services Medium
to
long term		 Shift to alternative materials in response to stricter plastic regulations, along with increased packaging material costs Medium
  • Procure environmentally preferable materials
  • Reduce packaging weight and material use through improved container design
  • Promote the reduction of specific plastic materials
  • Introduce bioplastics and other alternative materials
Markets Rising raw material costs Short
to
long term		 Higher procurement costs for key raw materials due to rising market prices High
  • Strengthen communication with suppliers
  • Ensure a stable supply through the diversification and optimization of procurement channels
  • Optimize production efficiency through the adoption of agri-tech
  • Develop new business formats and menus using alternative raw materials
Changes in customer behavior Medium
to
long term		 Decline in customer traffic and sales at existing business formats due to higher prices resulting from future carbon taxes and similar measures, as well as changes in consumer environmental awareness High
  • Develop adaptable business formats and menus in response to changing customer needs
  • Expand low-emission, high-value-added menu offerings
  • Implement and disclose environmentally conscious initiatives
  • Enhance brand value by making environmental information more visible
Reputation Growing stakeholder concerns or negative stakeholder feedback Short
to
long term		 Damage to our employer brand resulting from delays in addressing environmental issues, as well as increased recruitment costs to secure talent Low
  • Build trust with stakeholders through dialogue
  • Proactively disclose information on our response to climate change
  • Strengthen brand recognition and competitiveness in talent acquisition through sustainability communications
Physical
Risks		 Chronic Rising average temperatures Medium
to
long term		 Significant declines in store traffic and sales as record-breaking summer heat discourages customers from going out Medium
  • Maximize off-premise consumption by strengthening prepared-food and external sales businesses
  • Develop menus and promotional activities tailored to demand during extreme heat
Sea-level rise Long term Potential relocation costs if logistics facilities or stores need to be relocated due to future sea-level rise Low
  • Consider facility locations based on hazard maps
Acute Increasing severity of extreme weather events, including cyclones and flooding Short
to
long term		 Supply disruptions and product shortages resulting from damage to facilities caused by large-scale flooding, as well as reduced sales due to lost business opportunities High
  • Diversify logistics facilities and establish mutual backup arrangements
  • Strengthen rapid response capabilities based on disaster response timelines
Opportunity Resource Efficiency Use of more efficient production and distribution processes Short
to
long term		 Reducing food loss at stores and factories, and lowering raw material and disposal costs through AI-driven demand forecasting Low
  • Minimize waste by deploying AI-driven demand forecasting across all stores
  • Optimize inventory through real-time integration of supply and demand data
Increased use of recycling Medium
to
long term		 Generating revenue from by-products and reducing disposal costs by developing systems to convert used cooking oil into sustainable aviation fuel (SAF) and fertilizer Low
  • Create revenue opportunities through the collection and recycling of used cooking oil
  • Establish circular procurement through food recycling loops
Development and introduction of high-efficiency equipment Short
to
long term		 Improving energy efficiency and continuously reducing utility costs by upgrading to energy-saving equipment across all stores Low
  • Reduce utility costs through the comprehensive replacement of equipment with high-efficiency alternatives
  • Optimize operations through an energy management system (EMS)
Reduction in water use and consumption Short
to
long term		 Mitigating utility cost increases amid potential future increases in water prices by introducing water-efficient cooking and washing equipment Low
  • Reduce utility costs through the introduction of high-efficiency, water-saving equipment.
  • Standardize and monitor water-saving operations.
Energy Sources Adoption of new technologies Medium
to
long term		 Lowering store and facility operating costs by optimizing energy management using IoT and AI Low
  • Automatically optimize air conditioning and lighting through AI-based controls
  • Use IoT to detect signs of equipment failure and support preventive maintenance
Products and Services Development and expansion of low-emission products and services Short
to
long term		 Enhancing brand loyalty and maintaining and expanding sales as a brand of choice through the adoption of environmentally preferable materials Low
  • Transition to environmentally preferable materials and capture demand for ethical consumption
  • Differentiate the business by building a sustainable brand
Responding to changes in consumer preferences Medium
to
long term		 Attracting new environmentally conscious customer segments and creating new revenue categories by expanding alternative meat menu offerings Medium
  • Develop high-quality alternative meat menu offerings using our proprietary technologies
  • Establish new product categories with added environmental value
Medium
to
long term		 Establishing a stable source of revenue through expanded e-commerce and frozen packaged product sales to offset declines in store traffic caused by adverse weather Medium
  • Capture at-home demand through a multi-channel sales strategy
  • Stabilize revenue through subscription-based purchasing models
Market Leveraging public-sector incentives Short
to
long term		 Building trust in our stores as part of local infrastructure by developing them as disaster preparedness hubs, thereby enhancing corporate value and intangible assets Low
  • Strengthen the role of stores as local infrastructure through disaster-resilient store initiatives
  • Enhance brand value by strengthening collaboration with local communities.
Resilience Resource substitution and diversification Medium
to
long term		 Stabilizing raw material quality under extreme weather conditions and mitigating procurement cost volatility through technical support for producers Low
  • Develop climate-resilient production technologies and stabilize procurement
  • Strengthen supply chain resilience and establish a competitive advantage through support for producer
Strengthening supply chain resilience Medium
to
long term		 Minimizing future extraordinary losses and repair costs resulting from physical damage by optimizing the allocation of business sites based on risk data Medium
  • Optimize the allocation of business sites with disaster preparedness and high-efficiency capabilities

Time Horizons

  • Short term: 2026–2027
  • Medium term: 2028–2029
  • Long term: 2030–2050

Impact Levels

  • Low: May result in minor economic losses, but the impact on business operations is expected to be limited
  • Medium: May result in economic losses of a certain magnitude and may affect business operations
  • High: May result in significant economic losses and seriously affect business continuity

Risks and Opportunities Identified as Particularly Significant

We assess the potential impact of each identified risk and opportunity. For those considered particularly significant, we conduct more detailed analyses and consider appropriate response measures to minimize risks and maximize opportunities.

Risk/
Opportunity		 Impact on Our Business Financial
Impact
(FY2029)		 Calculation Methodology and Key Assumptions
Transition Risk Increase in energy-related costs resulting from carbon taxes imposed on our Scope 1 and Scope 2 emissions ¥2,658 million Estimated carbon tax liability based on projected GHG emissions upon achievement of our reduction targets
  • Calculated based on projected FY2029 emissions, assuming achievement of our GHG reduction target of a 4.2% annual reduction in emissions intensity
  • Carbon price: USD 140/t-CO2
  • Reference: IEA, World Energy Outlook 2024, NZE Scenario
Physical Risk Reduced sales resulting from supply disruptions and product shortages caused by damage to business sites due to large-scale flooding, as well as lost business opportunities ¥824 million Estimated the incremental expected loss attributable to climate change
  • Assessed the difference in annual average expected losses between the current frequency of flooding and a frequency twice as high under a 4℃ warming scenario
  • References: Ministry of Land, Infrastructure, Transport and Tourism, Assessment of Future Increases in Specific Damage and Other Impacts, and site-specific assessments based on publicly available hazard maps
Opportunity Establishment of a stable revenue source through expanded e-commerce and frozen packaged product sales to offset declines in store traffic caused by adverse weather conditions and extreme heat ¥1,376 million Estimated the incremental revenue contribution from strengthening our external sales business
  • Calculated the difference in sales between the existing scale of the external sales business and the level of sales expected following the implementation of climate change response measures
  • Reference: Fuji Keizai, Current Status and Future Outlook of the Mail-Order and E-Commerce Business, 2025