Environment : Response to TCFD

Panasonic Group system to promote group-wide environmental sustainability management is headed by board of directors, so that information on group-wide environmental sustainability management from all of the operating companies are reported to the board of directors.

Also, the progress and results of activities for the key environmental targets we promised to society to achieve under the GREEN IMPACT PLAN 2024 (GIP2024) are examined and determined on the directions, issues, and particularly key measures in the Group Management Meeting where Group CEO, presidents of operating companies, and senior managers participate. Matters of special importance are deliberated on by the Board of Directors Meeting.

Our long-term environmental vision "Panasonic GREEN IMPACT (PGI)", was put through this process and was released in April 2022. In promoting our environmental sustainability management, we have built a system with which all operating companies and business sites members effectively collaborate and promote group-wide activities through determination by the Sustainability Management Committee (established in December 2021) led by the Group CEO. For activities organized by theme, there are specific committees for disseminating our environmental policy and targets to all members in the Group, for deliberating on how to respond to issues, and for managing the chemical substances used in our products.

We analyzed impacts on certain items of Panasonic Group Businesses that are likely to affect climate change, based on our assessment of the risks and opportunities in Panasonic Group business operations. The results were used to develop a social scenario for the year 2030, focusing on matters with the greatest impact. We then used the scenario as the basis for examining strategies, and verified the business resilience in our strategy.

Panasonic GREEN IMPACT (PGI) is our transition plan to low-carbon economy as a Panasonic group. To support this transition, we have set up short-term targets in our Green Impact Plan (GIP) 2024. We have also set out following medium-term targets.

• Make our total CO₂ emissions (Scope 1 and Scope 2) net-zero by 2030.
• Reduce CO₂ emissions from use of our products that Panasonic Group sold by 30% compared with the 2019 level by the year 2030.

We would like to introduce specific examples as our contribution to energy reduction and energy transformation in society.

The first is an example of our energy reduction activities for product use in Scope 3; that is, action on lighting equipment that emit large volumes of CO₂. In addition to the conventional lighting that is designed to "light up a plane" such as a floor or desktop, by using an index for 'feeling of brightness in space' and knowhows of "optical control technology" and "spatial presentation with proper lighting at a right place" that are developed based on our accumulated research results on comfortability, we will achieve energy reductions of up to 30% without compromising comfort.

The next is an example of our contribution to energy transformation in society through electrification. To speed up energy transformation in society, the demand side must itself push for electrification by replacing fossil fuel-fired equipment with electric devices. For instance, the heat pump water heater is capable of warming up water by using a heat pump to collect heat from the air efficiently, minimizing the electric power consumption. The heat pump can

be used not only in new houses, but also in existing houses that use oil or gas-fired boilers without replacing the pipework. Electrification increases opportunities to make effective use of electric power derived from renewable energy sources. In addition to that frequency of utilizing opportunity to use energy derived from renewable energy sources increases thanks to the electrification, storing unstable supply of renewable energy as the warm water enables energy time shift and mitigates the load on the power grid, thus contributing to wider use of renewable energy resources.

As a tool to continuously reduce environmental risks, Panasonic Group is working to establish operating company-specific Environmental Risk Management Systems, in accordance with the basic risk management policy for all Group companies. The management policy includes identification of environmental risks and group-wide risk management each year, and ensuring quick responses to reported environmental risks. In addition, The Panasonic Group is promoting risk management based on the same process at Panasonic Holdings Co., Ltd. (PHD) and operating company. The PHD Enterprise Risk Management Committee conducts deliberations from the perspective of the Group's management and business strategies and social responsibilities, and decides the Group's significant risks. In fiscal 2024, strategic risks in Panasonic Group’s significant risks such as climate change, environmental regulations and development of circular economy, and operational risks such as natural disasters and supply chain management have been addressed.

The Panasonic Group has set its medium- to long-term targets for reducing greenhouse gas emissions which were accredited SBT*² 2.0°C in October 2017. Furthermore, in May 2023, our new greenhouse gas emissions reduction target was accredited as SBT 1.5°C. In addition, we had set long-term targets, and received an accreditation of the net-zero emissions targets.

*2 SBT: an abbreviation of Science Based Target. It is a target to reduce GHG emissions in consistent with scientific knowledge toward the goals to limit the increase of global temperature to less than 2.0°C, or less than 1.5°C if possible, above pre-industrial levels.

*3 Progress rate not calculated due to increase in emissions because of expansion of products subject to calculation

Moreover, regarding indices related to climate change, we are discussing to set targets for following each item.

In response to a rise in the awareness of environmental issues, we are particularly focusing on the risks associated with the introduction and expansion of environmental regulations and policies in the international community. The rise in energy procurement costs, forced purchase of emission credits, increase in manufacturing costs because of switching to use materials with lower environmental impact, and commoditization of low-carbon products, resulting from the introduction of carbon pricing, such as a carbon tax and the Emission Trading System, are all may adversely affect our Group's business operations and performance. In addition, any delay in taking action to take measures against these environmental issues may lead to a loss of business opportunities to expand in the European and other markets as well as a loss of business opportunities as a result of trade halts. Furthermore, our drive to use tax deductions, subsidies and other methods to gain business opportunities under regulatory systems for energy security assurance and climate change measures in these countries may adversely affect our Group's business since we will not be able to receive fruitful results as we expected.

Each operating company assesses and monitors natural disaster risks, as well as their emergency responses to those risks. Each operating company also established financial assessment standards on the scale of the impact of the potential risks, rating the risk as high when the impact is more than 10 billion yen and as medium or low according to the impact risk.

As the target set under our PGI announced in April 2022, we will strive to reduce CO₂ emissions, with a aim of by 2050, achieving reduction impact of more than 300 million tons that is 'approx. 1%' of the total CO₂ emissions discharged all over the world as of now, through group business activities.

In addition to our business operations in automotive battery business for environmentally friendly vehicles, aiming to reduce huge amount of CO₂ emissions and activities to reduce CO₂ emissions by the air quality and air conditioning business in Europe, in 2022 we started up an experimental facility under 'our RE100 solution' that had been designed to supply 100% of the power needed for a fuel cell manufacturing plant with renewable energy from hydrogen and photovoltaic power generation,^*4, aiming at locally producing energy and consuming the energy locally.

Panasonic Group plans to invest 600 billion yen for the three years from 2022 to 2024 under our medium- and long-term business strategies, mainly in automotive battery business that is in our priority investment areas. Following the investment in automotive battery business, we have air quality and air conditioning business and supply chain management software business that we invest in our priority investment areas.

Our automotive battery business will play a central role for PGI by developing a supply chain with lower environmental impact and increasing avoided emission by such business growth As for our air quality and air conditioning business, we plan to expand the business in the European market where measures against climate change have been implemented, by focusing on air-to-water systems that will contribute to reducing CO₂ emissions. As for our supply chain management software business, we will contribute to reducing the environmental impact by eliminating waste and delays in the supply chain.

Panasonic Group introduced internal carbon pricing (ICP) in March 2022 for capital investment, with a setting the price of CO₂ emissions at 6,000 yen/t-CO₂.^*5 We plan to increase the installation of energy-saving facilities and renewable energy-fueled equipment, including photovoltaic power generation, while maintaining economic rationality that is consistent in the future, by considering the impact of future carbon taxation and the like. As for further expansion in the scope of our activities and price setting, we will determine in line with our business decisions.

In order to accelerate our competitiveness in businesses contributing to ‘carbon neutrality (decarbonization)’ and ‘circular economy’, Panasonic Corporation, one of our Panasonic Group companies, introduced the ICP scheme where CO₂ emissions reduction in Scope 3 in our entire value chain and avoided CO₂ emissions contribute to society are used as criteria for investment decision, to its divisional company Living Appliances and Solutions Company on a trial base in fiscal 2024. Under the ICP scheme, respective Operating Company or Business Division introduces the scheme on its own to be suited to own individual business characteristics, in addition to taking into account capital investment decision in Scopes 1 and 2 common to Panasonic group, setting the CO₂ price at 20,000 yen/t-CO₂ with priority to longterm investments. We plan to gradually roll out the ICP scheme, expanding to all Panasonic Corporation from fiscal 2025.*⁶

Since April 2022, we have adopted a new performance evaluation system for executive remuneration of directors and executive officers of the holding company and of the presidents of the operating companies. The evaluation items for performance-based remuneration include those related to sustainability viewpoint such as environmental contributions. One of the examples of the contribution to our environmental performance index is reduction of CO₂ emissions in our own value chain.

*4 See https://news.panasonic.com/global/press/en220427-1

*5 Subject to change because of market conditions

*6 https://news.panasonic.com/jp/press/jn230602-2