Support for TCFD Recommendations - IINO KAIUN KAISHA, LTD.

Support for the Task Force on Climate-related Financial Disclosures Recommendations

In line with its promotion of sustainability initiatives, The Group made the decision to declare its support for the Task Force on Climate-related Financial Disclosures Recommendations (hereinafter TCFD Recommendations*) in July 2021 to bolster its analysis of and response to the business risks and opportunities presented by climate change and to expand its disclosure of relevant information.

* The Task Force on Climate-related Financial Disclosures (TCFD) was established by the Financial Stability Board at the request of G20 finance ministers and central bank governors. The task force has published recommendations to encourage companies to ascertain and disclose information about the business risks and opportunities presented by climate change.

Conducting Scenario Analysis

Based on the TCFD Recommendations, the IINO Group has identified important risks and opportunities in the shipping industry based on the respective future global scenarios assumed in the Decarbonization Scenario and BAU (Business as usual) Scenario.

Scenario Analysis in the Shipping Business

With the transition to a decarbonized society expected to reduce demand for marine transportation of fossil fuels, one of the IINO Group's core cargo categories, the Group will formulate strategies to proactively engage in efforts including transporting clean energy sources that help to reduce environmental impact and investing in ships powered by next-generation fuels.

Two Global Scenarios (the Decarbonization Scenario and BAU (Business as usual) Scenario) and the Main Risks and Opportunities for the IINO Group's Shipping Business

	Decarbonization ScenarioScenario in which societal changes caused by transition to carbon-free society impact business	BAU(Business as usual) ScenarioScenario in which climate change mitigation measures prove unsuccessful, and continued global warming impacts business
Scenarios developed by external bodies	IEA, World Energy Outlook 2023 Net Zero Emissions by 2050 Scenario(NZE) Announced Pledges Scenario(APS), etc.	IEA, World Energy Outlook 2020 Stated Policies Scenario, etc.
Assumed global scenarios	Promotion of ambitious policies and environment-related technological innovations to realize sustainable development while holding rise in average temperatures to less than 1.5°C until the end of this century. [Policies/Regulations] Policies balancing economic growth and climate change countermeasures Global carbon pricing & rising carbon prices IMO further strengthens its environmental regulations [Economies/Markets] Advance of modal shift Advance of shift from fossil fuels to renewable energy Customers show preference for carbon-free services [Technologies] Widespread use of next-generation ships and fuels	Countries implement policies aimed at achieving their targets in accordance with the Paris Agreement, but insufficient cooperation, inadequate environmental technology development and energy conversion, etc., result in Earth's average temperature rising about 2.5°C by the end of this century. [Policies/Regulations] Prioritization by each country of their own economic growth [Economies/Markets] Strong global economic growth Dependence on fossil fuels, flat trend in fossil fuel prices [Environments] Intensification of storm & flooding disasters and extreme meteorological phenomena Acceleration of chronic changes, such as rising sea levels and air and water temperatures
Main risks arising in each scenario	Lower sales due to reduced demand for fossil fuels Higher operating costs due to carbon pricing Higher ship construction costs due to tighter fuel consumption regulations Higher introducing new technologies and fuel costs resulting from compliance with fuel consumption regulations (use of next-generation fuels)	Increase in fuel costs due to geopolitical tensions and increased demand for fossil fuels resulting from supply chain instability. Higher ship operating costs owing to need to alter shipping routes and increased cost of hull and equipment repairs due to damage caused by stormy weather. Increase in ship repair costs due to rising air and sea temperatures Lower sales due to decline in agricultural produce yields
Main opportunities arising in each scenario	Higher sales thanks to increased demand for clean energy sources (hydrogen, ammonia, biofuels, etc.) New business generated by need to transport materials related to offshore wind-power generation, and transport CO₂ in connection with CO₂ capture, storage and effective utilization (CCUS) activities, etc. Lower ship operating costs through shifting to low-carbon operations and decline of next-generation fuels in the medium- to long-term price.	Higher sales driven by increased demand for fossil fuels with lower GHG emission factors (LNG, etc.). Increase in sales due to higher demand for LNG to stabilize energy procurement. Sales increases related to demand for transport of materials for construction of coastal disaster prevention infrastructure necessitated by rising sea levels.

Conducting Scenario Analysis in the Real Estate Business

IINO's Real Estate Business is endeavoring to reduce greenhouse gas emissions by purchasing electric power for Company-owned buildings certified to be from non-fossil sources, converting to LED lighting, installing solar panels, and operating energy-saving equipment.

During the transition to a decarbonized society, the IINO Group will consider further energy conservation in office buildings.

Two Global Scenarios (the Decarbonization Scenario and BAU (Business as usual) Scenario) and the Main Risks and Opportunities for the IINO Group's Real Estate Business

	Decarbonization ScenarioScenario in which societal changes caused by transition to carbon-free society impact business	BAU(Business as usual) ScenarioScenario in which climate change mitigation measures prove unsuccessful, and continued global warming impacts business
Scenarios developed by external bodies	IEA, World Energy Outlook 2021 Sustainable Development Scenario (SDS) Net-Zero Emissions by 2050. Scenario (NZE), etc.	IEA, World Energy Outlook 2021 Stated Policies Scenario(STEPS), etc.
Assumed global scenarios	Promotion of ambitious policies and environment-related technological innovations to realize sustainable development while holding rise in average temperatures to less than 1.5°C until the end of this century. [Policies/Regulations] Strengthening regulations on building energy performance Expansion of disclosure requirements for companies Global carbon pricing and increase in carbon prices [Economies/Markets] Preference for environmentally certified buildings by companies that value the environment, health, and comfort Decrease in emission factor of grid-connected power and electricity cost due to change in power source composition (shift to renewable energy electricity) [Technologies] Progress in environmental technologies related to energy conservation in buildings	Countries implement policies aimed at achieving their targets in accordance with the Paris Agreement, but insufficient cooperation, inadequate environmental technology development and energy conversion, etc., result in Earth's average temperature rising about 3°C~4°C by the end of this century. [Policies/Regulations] Formalized regulations on building energy performance [Economies/Markets] Dependence on fossil fuels and rising fossil fuel prices [Technologies] Stagnant growth in R&D investment in environmental technologies [Environments] Increase in severity of weather-related disasters, weather extremes Acceleration of chronic changes in air and water temperature rise, etc.
Main risks arising in each scenario	Increase in construction and renovation costs related to energy conservation in buildings Decline in rents, occupancy rates, and asset prices if the environmental performance etc. of owned buildings is inferior to adjacent buildings environmental performance in the area where they are located	Increased capital investment and operating costs and decreased earnings due to severity of weather-related disasters
Main opportunities arising in each scenario	Increase in rental income from buildings with environmental certifications Decrease in utility costs through energy conservation and energy creation in owned buildings Decrease in construction costs for energy conservation and energy creation due to advances in environmental technology	Improving resilience through systematic building repair and reinforcement Increase in rental income due to increased demand for disaster-resistant properties