環境（Environment）Environment

Response to climate change (information disclosure based on TCFD recommendations)

As the leading company in the payment industry, the Company promotes payment services such as cashless migration to make cash payments unnecessary, digitalization of invoices to achieve paperless payment slips, etc. In addition, initiatives are underway to reduce GHG emissions in the Company's own businesses as well as in the supply chain by implementing what is effectively renewable energy for electricity used in data centers that process the payment data and through supplier chain engagement activities. The Company aims to realize a sustainable and decarbonized society by working to reduce the environmental burden of our customers and society through business operation that are environmentally mindful.
In addition, the Company has endorsed TCFD recommendations on January 2023 and will work to expand its information disclosure regarding climate change based on TCFD recommendations.

Governance

The executive vice president, overseeing planning and operations, bears responsibility for climate change issues at the Board and to reflect/incorporate all environment related issues to the Company's management strategy and management targets. The management team including the president and executive vice president carries out deliberations on policies related to sustainability activities, reviews the progress, evaluates plans, reports the progress to the Board and compiles measures to reflect the feedback received. In addition, the Board receives periodic reports from the Risk Management Committee on its discussions, verifications and findings to help the Board monitor the responses and impact of climate related issues on the overall Company.

Strategy

Based on scenario analysis methods recommended by the Task Force on Climate Related Financial Disclosures (TCFD), the Company identifies those potential risks and opportunities arising from future climate change. By referring scenarios presented by the Intergovernmental Panel on Climate Change (IPC) and International Energy Agency (IEA), we have identified the climate change related risks and opportunities based on scenarios related to changes in natural and social environments.

Estimated scenario

1.5℃ scenario
• Rapid progress in the reduction of CO2 emissions arising from the transition to a decarbonized society
• Regulatory tightening from carbon pricing, etc.
• Changes in needs from heightened environmental awareness by stakeholders

4.0℃ Scenario
・Exacerbation of global warming caused by the lack of progress in strengthening laws and regulations on climate changes.
・Increase in abnormal weather, rise in sea levels and occurrence of catastrophic natural disasters caused by the rise in temperature.

Risks and Opportunities Associated with Climate Change

Risk Management

Recent years have seen a worsening of climate change issues, and services offered by the Company may also be impacting the climate and natural resources through CO2 emissions from electric power consumption. To combat this issue, the Risk Management Committee comprehensively undertakes an assessment of and response to natural disaster risks, including climate change.
The Company convenes the Risk Management Committee once every quarter to implement measures effectively and efficiently by incorporating climate related risks into the overall risk management. Risk incidents are classified into six categories according to the quantitative evaluation based on two metrics of monetary impact and frequency of occurrence. The foreseeable risks and general risks are evaluated and selected across the Company by employees above a certain position. Of those, risk incidents that exceed a certain threshold are designated as material risk, and each Division must consider and implement responses.
Consideration and response to the material risk is further deliberated by the relevant Division after incorporating the opinions of external experts. This is examined and debated at the Risk Management Committee and reported to the Board.

Indicators and Targets

The Company is promoting initiatives to reduce GHG emissions to contribute to realizing a sustainable society. In FY2022, the Company implemented what is effectively renewable energy for its major data centers that consume the bulk of electricity in the business. As a result, the Company achieved what is effectively zero GHG emissions from its own operations, including offices and all other data centers (Scope 1 and 2) in FY2023. The Company intends to maintain its effective zero GHG emission up to FY2030.
In order to tackle GHG emissions from the supply chain, the Company has established a target to reduce Scope 3 (Category 1 and 11) emissions for newly operating payment terminals by 55% per terminal by FY2030 against the baseline of FY2021. This target aligns with the Paris Agreement.
The Company is undertaking engagement with the supply chain to reduce GHG emissions related to the purchase and usage of payment terminals (Scope 1 and 11), which are essential to provide CP payments and account for the bulk of Scope 3 emissions, as well as GHG emissions related to software development (Category 2).
More concretely, the Company is engaging with payment terminal manufacturers to implement appropriate measurement and reduction of GHG emissions during manufacturing and electric power consumption during the usage of the terminals.
Similarly, the Company is engaging with system development companies to appropriately measure and reduce GHG emissions (Category 2) related to software development.

In May 2024, the Company's GHG emissions reduction target was certified as aligned with the 1.5 deg. Celsius scenario of SBT Initiative, the global organization that enables corporates to set targets based on climate science. This verifies that the Company's GHG emissions reduction targets are scientifically aligned to the 1.5 deg. Celsius scenario to limit the rise in global temperature to 1.5 deg. Celsius compared to pre-Industrial levels, as ratified by the new international framework of the Paris Agreement on greenhouse gas emissions reductions beyond 2020.

Targets certified by SBT Initiative
・Scope 1 + 2: To maintain an effectively zero GHG emissions continuously up to Fiscal Year ending September 2030.
・Scope 3: Reduce GHG emissions by 55% per terminal for newly operating payment terminals by Fiscal Year ending September 2030 compared^* to Fiscal Year ending September 2021.

* Refers to Category 1 (purchased goods and services) and Category 11 (use of sold products) emissions that are related to payment terminals which accounts for the bulk of Scope 3 emissions.

GHG Emissions

* Note: Compiled from electric power usage at offices and data centers of major GMO-PG consolidated companies
*1 Scope 1: Direct emissions from owned or controlled sources
*2 Scope 2: Indirect emissions from the generation of purchased electricity, heating and cooling, etc.
*3 Scope 3: All other indirect emissions that occur related to the Company's activities

Trend of GHG Emissions

Third Party Certification

In order to ensure the reliability of GHG Emission, the Company has obtained an independent third-party certification from SOCOTEC Certification Japan.

・Scope1 and 2 (FY2023)

・Scope3 (FY2023)

Energy Conservation Initiatives

Data centers
The Company is implementing various strategies to improve power consumption efficiency and optimize space usage, such as selecting energy-efficient CPUs, optimizing server architecture, virtualizing servers, positioning racks effectively, and managing airflow for cooling. Also, we improved our operations in the fiscal year ending September 2022 to accurately measure and recognize actual power consumption.

Office building
A control management system that automatically turns off the air conditioning and the lighting in the office based on the hours, and an outdoor air-cooling system that minimizes the loss of warm or cold air have been adopted, leading to the conservation of energy. In winter, with an outdoor air-cooling system, the power consumption of air-conditioning systems is controlled by bringing in outside air (not from air-conditioning systems) when the outside air temperature is higher than indoor temperature settings, conserving power and reducing environmental impact.

Contributing to Society's Decarbonization

Promoting cashless, a low environmental footprint payment

The Company will contribute not only to reducing GHG emissions from its businesses but also to reduce GHG emissions for overall society by promoting cashless migration. Cashbased payments emit CO2 at each step of the process, from the printing / minting of paper bills and coins, manufacture of ATMs, etc., to the payment, usage and disposal of cash.
The analysis disclosed by Payments Japan Association to which we belong as a member showed a calculation result that CO2 emissions for cashless payments is one-third that of cash payments, confirming that cashless usage has a smaller environmental impact. Similarly, research done in the UK and Netherlands also showed that promoting cashless migration can reduce CO2 emissions.

Cashless Roadmap 2023 released by Payments Japan Association
CO2 emission for cashless for a ¥1,000 payment is 0.34 grams

The latest Cashless Roadmap 2023 presented an estimation of CO2 emission for cash and cashless payments by utilizing various publicly available data.
Although these values may not be accurate given that the estimates were calculated without all data being available, it was possible to estimate that the CO2 emissions for a ¥1,000 payment is 1.06 grams for cash use compared to 0.34 grams in the case of cashless use. This estimation confirms that using cashless in daily life has a lower environmental impact. As a result, this confirms that cashless usage is a more environmentally friendly behavior.

Comparison of CO2 emission for cash and cashless (for ¥1,000 use)

(Source) Payment Japan Association, "Cashless Roadmap 2023."

Biodiversity

Promote paperless migration

The Company supports the merchant's migration to paperless operations by providing services to digitalize invoices.

Business operations that consider environmental impact in Card Present transaction

・Use of recycled paper for receipts (roll paper) when using each payment terminal
・Provision of electronic slip service as an alternative to receipts (rolled paper)