Support for the TCFD recommendations

Tokyo Ohka Kogyo aims to achieve carbon neutrality by 2050 and so newly formulated medium-term targets in February 2024 to align its 1.5°C target with its growth strategy up to 2030. The company is striving to expand corporate value centered on minimizing absolute CO₂ emissions and maximizing contributions to reduction.

The society we strive for and climate change-related material issues

TOK pursues a sustainable future filled with happiness and considers carbon neutrality as the major premise for this goal. As a starting point for longterm initiatives to achieve this goal, TOK promotes initiatives for global environmental conservation in consideration of future generations and TOK MediumTerm Plan 2024 by backcasting from TOK Vision 2030.

Governance

The focus of the company is on the variety of measures intended to achieve the realization of carbon neutrality by 2050 through the unique sustainability governance structure of TOK, which involves collaboration between the Council of Directors (theme setting and discussions) and the Board of Directors ( resolutions and monitoring). At the Council of Directors, the department heads, executive officers, and directors broadly discuss ESG requirements that include countering climate change. The respective executive officers take the lead in establishing initiatives for decarbonization and other sustainability issues. These initiatives are monitored by the Board of Directors, which is the decisionmaking body, and constantly updated in consideration of immediate climate change issues and changes in risks and opportunities.

Risk management

Under the governance structure above and the risk manage ment structure centered around the Risk Management Committee, which comprises the president and the general managers, TOK will ensure the PDCA cycle of each activity countering climate change and will maintain continuous risk management with the president and chief executive officer as the chief risk management officer.

Strategies (scenario analysis)

TOK promoted a scenario analysis of the average temperature increases by the end of the 21st century by referring to the 1.5degree scenario and the 4degree scenario presented by the Intergovernmental Panel on Climate Change (IPCC) and then identified the risks and opportunities for the overall group business, including the quantitative analysis of opportunities. Both in the 1.5degree scenario and in the 4degree scenario, the TOK Group reaffirmed that it would be reasonably possible to enhance corporate value on a medium to longterm basis through the process above by taking advantage of the abundant business opportunities in the miniaturization and multilayer stacking of semiconductors and in the demand for power semiconductors, as well as by adequately responding to the anticipated physical risks and strengthening resilience.

Indicators and targets

In the above mediumterm targets, TOK aims to reduce abso lute CO2 emissions of the entire consolidated group in 2030 by 30% compared to 2019, while the factory production volume is expected to increase significantly because of the growth strategy. This aggressive target is intended to reduce more than 30% of the 2030 emissions, which are expected to increase significantly compared to 2019 if no reduction efforts are made. Additionally, TOK is also calculating the financial impacts from internal carbon pricing and emissions trading toward 2030–2050 after achieving this target, and the company plans to disclose this at the appropriate time while deepening the linkage to the progress and outlook for the growth strategies and performance targets.

Response to climate-related risks and opportunities (scenario analysis)

Risk type	Category	Risks on TOK business	Expected apparent time range*	Key initiatives (countermeasures against risks)
Transition risks Mainly assuming the 1.5-degree scenario	Policy and regulatory risks	● Increase in costs due to carbon pricing (introduction of the carbon tax and expansion of emission rights trading)	Medium term to long term	● Curb cost increases by accelerating the reduction of CO2 emissions per base unit through shifts to more energy-efficient manufacturing equipment and increased use of renewable energy ● Curb cost increases by accelerating the reduction of CO2 emissions per base unit through shifts to more energy-efficient manufacturing equipment and the increased use of renewable energy ● TOK shifted 100% of its purchased electricity to renewable energy sources at all key sites in Japan in February 2023. If a carbon tax of 10,000 yen per ton is introduced in Japan in the next few years, the payment of the tax will be reduced through this shift by 10,000 yen x 20,000 tons, equaling 200 million yen ● TOK completed the estimation of the financial impact under the assumption of the future introduction of internal carbon pricing and implementation of emissions right trading
Transition risks Mainly assuming the 1.5-degree scenario	Policy and regulatory risks	● Increase in costs in response to more stringent policies and regulations to reduce CO2 emissions in Japan and other countries where TOK has manufacturing sites	Short term to long term	● Take the necessary action without delay through the careful collection of information and negotiations with governmental agencies in each country, thereby coping with climate change as a member of local communities
Physical risks Mainly assuming the 4-degree scenario	Acute risks	● Damage to facilities due to an increase in natural disasters	Short term to long term	● Take continuous precautions for water risks that have become apparent in the inundation of the TOK Technology Innovation Center as the R&D hub by a typhoon in 2019
	Acute risks		Short term to long term	● Emphasize BCP and resilience to natural disasters in the capital investment plan under the TOK Medium-Term Plan 2024 toward TOK Vision 2030
	Chronic risks	● Increase in costs for process temperature control and product temperature control due to global warming	Short term to long term	● Develop more efficient and more cost-effective means and methods for the control of process temperatures and product temperatures
	Chronic risks	● Increase in water stress due to global warming and the difficulty in acquiring water resources	Medium term to long term	● Implement continuous measures in Japan and overseas to minimize water consumption in production activities and to maintain and improve effluent quality

Opportunities	Expected apparent time range＊	Key initiatives (how to grasp opportunities)
Further miniaturization of semiconductors Assuming both 1.5-degree scenario and 4-degree scenario	Short term to long term	● Stable supply, sales increase, development, and maintenance of the largest global market share for EUV photoresists for 7 to 2 nm processes ● Expected reduction in semiconductor power consumption by providing EUV photoresists for 7 to 2 nm processes (estimate for 2030) Contribution to reduction: ▲81 TWh (equivalent to 0.2% of estimated global power consumption in 2030)*1
Expansion of the power semiconductor market Assuming both 1.5-degree scenario and 4-degree scenario	Short term to long term	● Maintain the largest global market shares for g-/i-Line photoresists ● Stably supply and increase sales of g-Line and i-Line photoresists for power semiconductors
Realizing further low power consumption Increase in the need for the development of next-generation power semiconductors with lower power consumption Assuming both 1.5-degree scenario and 4-degree scenario	Medium term to long term	● Strengthen the advantage in g-Line and i-Line photoresists for silicon carbide (SiC) power semiconductors as the market starts to grow and further strengthen development and marketing ● Reinforce the development and marketing of g-Line and i-Line photoresists for gallium nitride (GaN) gallium oxide (Ga2O3) power semiconductors ● Expected reduction in power in solar/wind power generation, EVs, and data centers by providing g-Line and i-Line photoresists for SiC, GaN, and other next-generation power semiconductors (estimate for 2030) Contribution to reduction: ▲127 TWh (equivalent to 0.4% of estimated global power consumption in 2030)*2
Emergence of the photo-semiconductor market due to advances in photoelectric fusion technology Assuming both 1.5-degree scenario and 4-degree scenario	Medium term to long term	● Strengthen the development and sales of materials for photo-semiconductors that realize overwhelmingly low power consumption compared to conventional semiconductors