Endorsement of the Recommendations of the Task Force on Climate-related Financial Disclosures (TCFD Recommendations)
(Climate-related disclosure based on TCFD Recommendations)
We hereby agree with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD Recommendations) and declare our intention to promote measures to address climate change issues.
We established the "Company-wide Environmental Management Policy in 2026" as follows, under which we are carrying out environmental initiatives.
Company-wide environmental management policy in 2026
As part of our company-wide Environmental Management Policy for 2026, we aim to realize a sustainable society by promoting environmentally friendly business activities and by preserving and protecting the environment.
- We commit ourselves to environmental conservation.
- We work to reduce CO2 emissions.
- We will continue and extend the work we do on recycling and saving resources.
Since the Japanese government declared its aim to achieve carbon neutrality in 2020, decarbonization has become a crucial prerequisite for corporate management. In 2023, against the backdrop of revisions to the Corporate Governance Code [1] and a review of disclosure systems, companies were required to disclose information in their securities reports in accordance with the TCFD recommendations. Since November 2024, our company has been disclosing climate-related information based on the TCFD recommendations. As part of our ongoing efforts to improve the disclosure of climate-related information, we have recently reviewed the wording of our disclosures and restructured the presentation of our risks and opportunities. The principles of the TCFD recommendations are currently being integrated into international sustainability disclosure standards (IFRS S2 [2] ). Similarly in Japan, the Sustainability Standards Board of Japan (SSBJ [3] ) established its inaugural Sustainability Disclosure Standards in 2025. Going forward, we will continue to disclose information appropriately in line with these regulatory trends.
Core Elements recommended for Disclosure in the TCFD Recommendations
- 1.^A summary of the main principles of corporate governance (a system for companies to make transparent, fair, prompt, and purposeful decisions based on the perspectives of shareholders, customers, employees, local communities, and other stakeholders) as set forth by the Tokyo Stock Exchange.
- 2.^Climate-related disclosure standards issued by the International Sustainability Standards Board (ISSB) in a manner consistent with TCFD Recommendations for disclosure.
- 3.^Sustainability Standards Board of Japan. Responsible for coordinating with the development of international sustainability disclosure standards and developing domestic sustainability disclosure standards such as ISSB.
Governance
We have designated climate change as a priority area. In order to assess and manage climate-related risks and opportunities [4] , and to reflect them in our management strategy and business activities, we have established a governance system for climate change [5] .
■System for assessing and managing climate-related risks and opportunities.
We have established a CO2 Reduction Committee, chaired by a Managing Executive Officer and comprising various Executive Officers, to assess and manage climate-related risks and opportunities and to deliberate on relevant proposals. The CO2 Reduction Committee (Secretariat: Manager of the Environmental Business Department and Manager of the Construction & Production Business Planning Office) compiles and discusses reports on basic policies and important matters related to climate change submitted by each division. After deliberation within the Committee, these matters are submitted to the Executive Committee and to the President and Representative Director at least once a year for discussion and reporting. Furthermore, important matters are submitted and reported to the Board of Directors, which oversees such important matters as well as climate-related targets and progress.
■The role of management in relation to climate-related risks and opportunities
In managing climate-related risks and opportunities, important matters that have been discussed are reported to the Board of Directors by the President and Representative Director, while the Board of Directors oversees important decisions and policies related to business operations.
Governance system for climate change
- 4.^Refers to transition risks and opportunities that arise as a result of transitioning to a low carbon economy when climate measures are carried out proactively, and physical risks and opportunities brought about by an increase in the frequency and severity of floods, severe storms, and other disasters when climate measures are inadequate. See Strategy for details.
- 5.^A management system for addressing climate change company-wide, and that positions climate change-related initiatives as important issues.
Strategy
While we are already taking action to address climate change under our 2026 Company-wide Environmental Management Policy, we are also working to identify risks and opportunities that may impact our business activities to prepare for situations that may occur in the future. Moving forward, we will assess the financial risks and opportunities presented by climate change scenarios that are expected in the future to be reflected in our company's management.
■Expected Scenarios
Since climate change is a phenomenon that will unfold over the medium to long term, it is necessary to identify and assess risks and opportunities as well as to take countermeasures, considering both scenarios: one in which efforts to reduce CO2 emissions progress alongside tighter regulations, and another in which no additional regulations are taken. This analysis used a scenario under which temperatures rise by 1.5°C by 2100 over temperatures at the start of the industrial revolution after the implementation of a variety of climate mitigation measures, and another scenario under which the current use of fossil fuels continues, and temperatures rise by 4°C. Each scenario was designed based on public documents released by the IPCC [6] and IEA [7]. This analysis assesses the impact of climate change on our core businesses: road surfacing and civil engineering, construction and development, and the manufacturing and sales of asphalt mixtures.
| Expected Scenarios | Worldview | Key Reference Materials |
|---|---|---|
| 1.5°C Scenarios | A world in which the introduction of carbon taxes and significant tightening of emission regulations—aimed at achieving net-zero global CO2 emissions by 2050—makes decarbonization a common practice for businesses. | ・IPCC[6] SSP1-1.9 ・IEA[7] Net Zero Emissions by 2050 Scenario（NZE） ・IEA Announced Pledges Scenario（APS） |
| 4°C Scenarios | A world in which the current reliance on fossil fuels continues, carbon taxes and emission regulations are not implemented, and direct damage from weather-related disasters becomes the biggest factor determining the survival of businesses. | ・IPCC SSP5-8.5 ・IEA Stated Policies Scenario（STEPS） ・IEA Current Policies Scenario (CPS) |
- 6.^Intergovernmental Panel on Climate Change. An intergovernmental organization established to provide a scientific basis for the climate change policies of the national governments of each country.
- 7.^International Energy Agency. An organization established for oil consuming countries to cooperate on energy security.
Summary of Key Reference Materials
- IPCC SSP1-1.9
A scenario in which climate mitigation measures are adopted to keep the rise in temperature to 1.5°C or less under sustainable development, to achieve a net zero in CO2 emissions by 2050. SSP1-1.9 envisions rapid and large-scale GHG reduction and a major societal transformation. For this reason, it incorporates many uncertainties, such as technological advancements toward decarbonization, the level of societal efforts, and the responsiveness to climate change. - IPCC SSP5-8.5
A scenario in which no climate mitigation measures are adopted under fossil fuel-dependent development. - IEA Net Zero Emissions by 2050 Scenario（NZE）
A net-zero emissions scenario that meets the primary elements of the United Nations sustainable development targets on energy - IEA Current Policies Scenario (CPS)
A scenario that illustrates what would happen if countries around the world continued down their current path without changing any of their policies. - IEA Stated Policies Scenario（STEPS）
An existing policy scenario that reflects current policies and assumes no additional policies are implemented
Projected temperature rises under each scenario
■Risks and Opportunities
Climate-related risks are generally categorized into transition risks that arise as a result of transitioning to a low carbon economy when climate measures are carried out proactively, and physical risks brought about by an increase in the frequency and severity of floods, severe storms, and other disasters when climate measures are inadequate. In addition to these two types of risks, we are also identifying and analyzing climate-related opportunities, and conducting analysis and assessments focusing on NIPPO. With regard to the assessment of financial impacts, we have assessed the impact for FY2030 given that there is abundant accessible data, such as public future forecast models, and because it is easy to compare with internal business plans. “Time of onset” refers to the timing at which the impact of risks and opportunities emerge. We have defined and categorized these as follows: "Short term: Within 3 years;" "Medium term: By 2030 (SDGs 2030 targets, SBT reduction targets);" and "Long term: By 2050 (CO2 reduction target period)."
Transition risks (that arise as a result of transitioning to a low carbon economy)
Financial impact: * indicates impact on profit; ** indicates impact on sales
| Category | Item | Description | Scenario | Time of onset | Financial impact [assumption] (billion yen) |
Calculation method | Measures |
|---|---|---|---|---|---|---|---|
| Policies and regulations | Carbon price |
|
1.5°C | Mid term | Medium 1.44* |
Asphalt CO2 emissions × Carbon price × Exchange rate |
|
|
1.5°C | Mid term | Large 4.18* |
Scope 1, 2 emissions × Carbon price × Exchange rate | |||
| Compliance with GHG emission regulations |
|
1.5°C | Mid term | Large 14.8* |
・Introduction of renewable energy Amount of renewable energy introduced × Unit price of renewable energy - Unit price of current energy ・Capital investment Amount of renewable energy introduced × Installed capacity × Capital expenditure |
||
| Technology | Spread of renewable energy and energy-saving technologies |
|
1.5°C | Mid term | Small 5.72** |
Sales x Rate of decrease in orders |
|
| Market | Energy demand trends |
|
1.5°C | Mid term | Small 0.30* |
Volume of asphalt mixture manufactured × Utilization rate of new/alternative raw materials × [Price of new/alternative raw materials - Price of current materials] |
|
| Price fluctuation of important products and commodities |
|
1.5℃ | Mid term | Medium 0.85* |
Carbon offset cost per unit × CO2 emissions of materials | ||
|
1.5°C | Mid term | Medium 15.2** |
Construction business sales × Percentage of new construction projects × Rate of lost orders due to non-compliance with ZEB/ZEH standards × Achievement rate | |||
| Reputation | - |
|
1.5°C | Mid term | Medium 14.6** |
Sales ÷ Number of employees × Annual decrease in personnel numbers |
|
Physical risks (brought about by increased frequency and severity of floods, storms, etc.)
Financial impact: * indicates impact on profit; ** indicates impact on sales
| Category | Item | Description | Scenario | Time of onset | Financial impact [assumption] (billion yen) |
Calculation method | Measures |
|---|---|---|---|---|---|---|---|
| Chronic risks | Average temperature increase |
|
4°C | Mid term | Medium 11.1** |
Sales × Productivity decline rate |
|
|
4°C | Short to medium term | Large 8.02* |
Labor costs × Wage increase rate | |||
|
4°C | Medium to long term | Large 5.9* |
Volume of asphalt mixture manufactured × Price increase rate due to countermeasures | |||
| Changes in precipitation and weather patterns |
|
4°C | Medium to long term | Small 0.15* |
Research funding per theme × Number of themes covered |
|
|
| Acute risks | Intensification of extreme weather |
|
4°C | Medium to long term | Medium 1.98* |
Sales × Percentage of construction projects affected by disaster × Rate of increase in construction costs |
|
|
4°C | Mid term | Small 0.62* |
Appraised value of assets owned × Percentage of damage × Damage ratio for each asset |
Opportunities
Financial impact: * indicates impact on profit; ** indicates impact on sales
| Category | Item | Description | Scenario | Time of onset | Financial impact [assumption] (billion yen) |
Calculation method | Measures |
|---|---|---|---|---|---|---|---|
| Resource efficiency | Optimization of production/logistics processes |
|
1.5°C 4℃ |
Mid term | Medium 2.4* |
Cost per factory × Number of factories to be reduced |
|
| Energy | Use of new technologies |
|
1.5°C | Medium to long term | Medium 22.0** |
Sales x Percentage of high value-added surfacing projects |
|
| Products/Services | Development, expansion of low carbon products/services |
|
1.5°C | Mid term | Small 0.05* |
ECO-foamed asphalt shipment volume × Fuel consumption × Fuel consumption reduction rate × Unit price of fuel |
|
|
1.5°C | Short to medium term | Small 1.34** |
Scale of renewable energy-related construction × Growth rate of renewable energy facilities | |||
|
1.5°C 4℃ |
Medium to long term | Medium 33.6** |
Repair work revenue × Repair cycle increase rate - Repair work revenue | |||
| New product/service development through R&D and innovation |
|
1.5°C | Mid term | Small 6.0** |
Special construction method revenue × Projected rate of increase |
■Current initiatives
Based on the results of the scenario analysis, we have been advancing measures to address three issues that we considered particularly impactful. These measures aim to mitigate risks while also leading to new orders and the expansion of our products and services, such as environmentally friendly surfacing and energy-saving construction projects. Here, we will introduce the measures that we are already implementing.
(1) Reducing CO2 emissions during asphalt mixture manufacturing (risk: taxes on CO2 emissions from business activities will increase, causing business expenses to rise)
NIPPO has already shifted to CO2-free electricity sources to reduce CO2 emissions.
We are also proactively installing energy-conserving facilities and equipment, with energy-conserving high-efficiency burners adopted at a total of 116 asphalt mixture manufacturing plants as of December 2025.
Furthermore, we have introduced ECO-foamed Warm Mix Asphalt technology that lowers the temperature at which asphalt mixtures are produced by using mechanical foamed asphalt equipment, thereby reducing fossil fuel consumption during the production of those mixtures, which further reduces CO2 emissions.
(2) Fuel transition (risk: adoption of renewable energy and new energy sources—such as biofuels, e-methane, hydrogen, and ammonia—required due to tighter emissions caps, causing a rise in manufacturing expenses.)
We are moving forward with the transition from fuel oils to city gas for use as fuel at asphalt mixture plants.
(3) Development of surfacing technology capable of withstanding extreme weather conditions (risk: Difficult to secure product quality able to withstand severe climate conditions)
In addition to the development of PERFECT COOL, a solar heat blocking pavement that reduces road surface temperature, and COOL POLYSEAL, a water retaining pavement, both technologies reduce CO2 emissions by preventing surface deformation from rising temperatures and increasing pavement durability, we also have technologies that increase the durability of the paving itself, such as POLYSEAL LC, PET REPET PAVE, and HARDASCON.
Solar heat blocking pavement (PERFECT COOL)
Asphalt pavement reaches temperatures in excess of 60°C during the summer when hit by strong sunlight. PERFECT COOL is highly reflective against the infrared rays in sunlight, limiting the rise in road surface temperature, and increasing the durability of the pavement. This technology won the Global Road Achievement Award from the International Road Federation (IRF) in 2009 and the Best Innovation Award from the World Road Association (PIARC) in 2011.
Right: Example installation of a Perfect Cool coat (road: Kochi City, Kochi Prefecture)
High durability pavement (Hard AsCon)
Hard AsCon is a surfacing technology that adds epoxy resin to the asphalt mixture to increase the mixture’s durability. It achieves longer road lifespan in high temperature environments.
We are moving forward with the development of new technologies and construction methods in anticipation of harsher natural environments in the future.
■Assessment of climate resilience[8]
NIPPO conducts climate resilience assessments for each reporting period based on the results of climate-related scenario analysis. To address the identified risks and opportunities, we are proceeding with equipment and facility upgrades, fuel transition, and the development of new technologies. As significant investment is required to advance these initiatives and make adjustments to our business models, we are incorporating them into our management strategy and striving to build a system to address climate-related risks and opportunities. While the pace and scale of climate change countermeasures in the market remain uncertain, we are considering specific countermeasures based on multiple scenarios to ensure we can respond flexibly to environmental changes.
Based on the results of the climate resilience assessment, we believe that we have adequately considered countermeasures for climate-related risks and opportunities, and possess the ability to adjust our business strategies and business models in response to climate change over the short to long term.
- 8.^Climate resilience: A company's ability to respond to climate-related changes, developments, or uncertainties.
Risk Management
At NIPPO, we comprehensively evaluate and analyze various risks that are considered to have a significant impact on our business activities, using a risk assessment process (financial impact assessment) that takes into account the degree of impact that these risks may have on our business and finances. Based on the results, we believe that climate-related risks have a significant impact on our management strategy and business activities, and we are integrating climate-related risks into our organization-wide risk management system.
■Process by which the organization identifies, assesses, and manages climate-related risks
Regarding climate-related risks, the CO2 Reduction Committee identifies climate-related risks related to the business of each department, assesses their impact on those businesses, and manages them accordingly.
■Integration of identification, assessment, and management processes into overall risk management
Particularly important risks are reported to the Board of Directors via the President and Representative Director and the Management Committee, and they are managed comprehensively along with other risks that can have a significant impact on this company’s business. The board discusses measures to avoid risks and to minimize the impact when they emerge, and makes decisions.
Metrics and Targets
We monitor and manage CO2 emissions as an indicator and target for responding to climate-related risks and opportunities.
We are working to reduce emissions, with targets including a 49.8% reduction over 2020 levels by 2030 under Scope 1 and 2, and a 25% reduction over 2020 levels by 2030 under Scope 3. These targets have been recognized by the SBTi as being consistent with the level required for achieving the goals of the Paris Agreement. We plan to review and consider these policies at least once every five years.
We believe that we must tackle Scope 1 and 2 first because these represent our own CO2 emissions, for which we have an important responsibility, and reduction measures can greatly contribute to reducing emissions. In order to achieve Scope 2 reductions, we are currently transitioning the power sources used in our offices to CO2 free electricity in all of our offices for which transition is possible. We are also planning and implementing a transition from fuel oil to city gas as part of our activities to achieve Scope 1 reductions. We will continue to move forward with measures to reduce CO2 emissions toward our 2030 target.
[Calculation of GHG emissions]
(1) Calculation criteria: GHG Protocol
(2) Gases included in the calculationCarbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), sulfur hexafluoride (SF6), nitrogen trifluoride (NF3)
(3) Calculation method：Calculated using the emissions unit value database
- Ministry of the Environment, "Emissions Unit Values for Calculating Greenhouse Gas Emissions, etc., of Organizations Across Supply Chains (Ver. 3.4)"
- National Institute of Advanced Industrial Science and Technology (AIST), "AIST-IDEA (Ver.3.4)"
(4) Activity boundary applied：The organizational boundary for calculating GHG emissions is determined by applying the "Financial Control" approach.
- To align with the scope of the consolidated financial statements, enabling understanding of the Group's overall performance regarding climate-related risks and opportunities in an integrated manner alongside its financial position.
(Target)
NIPPO (Head Office, branches, regional headquarters, sales offices, and asphalt mixture plants), DAI NIPPON CONSTRUCTION Co., Ltd., HASEGAWA SPORTS FACILITIES Co., Ltd., NIPPO KENSETSU Co., Ltd., MECX Co., Ltd., and regional affiliated companies (192 companies)
(5) Target setting：Reduction targets based on a sector-specific decarbonization approach have not been set.
- Targets are set based on reduction in total emissions compared to the base year (total emission reduction method).
Actual CO2 emissions (Scope 1, 2, and 3)
Scopes and categories marked with "〇" have undergone third-party verification.
Third-party verification statement (FY2024)
Emissions [thousand t-CO2e]
Revision 2: June 10, 2026 – Updated information on governance, assumed scenarios, and risks and opportunities as part of the annual review.
CO2 emissions for FY2024 have been added to the reduction achievements and targets.
Revision 1: May 19, 2025：Updated CO2 emissions, reduction achievements, and targets following the acquisition of SBT certification.
First version: November 1, 2024