TCFD and TNFD Comparison Table

・Response to TCFD Recommendations

・Annual Securities Report 2 [Approach to Sustainability and Initiatives] (Japanese text only)

・TNFD Report

• We have formulated the Group Human Rights Policy and Procurement Policy based on respect for human rights as set forth in the United Nations Guiding Principles on Business and Human Rights and other international standards. We also endorse the United Nations Global Compact and have expressed our commitment to it.
• When selecting suppliers, we not only consider financial reliability and quality stability, but also employee management (e.g., ensuring occupational health and safety), human rights considerations (e.g., child labor, forced labor, discrimination, harassment, freedom of association, collective bargaining, long working hours), environmental considerations (e.g., energy, climate change, pollution prevention, waste management, water resources, biodiversity, other environmental issues, food loss, resource use), ethical compliance (e.g., anti-corruption, conflict of interest, anti-competitive behavior), and other anti-social behavior. By incorporating ESG criteria, we give priority to suppliers that fulfill their social responsibilities. Rather than making judgments based on the laws, customs, and current conditions of each region, we make judgments based on whether there is a significant deviation from the applicable Japanese laws, and we strive to procure responsibly by implementing a strict policy of not initiating transactions if there is a problem.
• Implementation plans and progress of sustainability-related initiatives, including respect for human rights, are approved and managed by the Group Sustainability Committee and reported to the Board of Directors.
• In order to ensure FPIC (free, prior, and informed consent) of indigenous peoples as one of the requirements when selecting suppliers, and to strengthen the effectiveness of “responsible procurement,” one of our group's materiality, the whistle-blowing service is also open to suppliers to prevent violations and promote activities to disseminate the information throughout the supply chain.

• Dependence on services to supply water and foodstuffs at the raw material procurement stage
• Dependence on services to supply water during the processing stage of raw materials in factories
• Dependence on services to supply water during the processing and cooking stages in stores
• Dependence on various raw materials (agricultural, livestock, and marine products) supplied by nature

• Impact of land use on raw material procurement stage
• Impacts from the use of water resources and waste emissions during the processing stages of raw materials in stores and factories
• Impacts from greenhouse gas emissions, water use, waste, and other emissions throughout the value chain

• Risk of increased procurement costs due to supply chain disruptions caused by more frequent and severe extreme weather and weather disasters
• Risk of higher average temperatures leading to increased precipitation and drought adversely affecting the yield and quality of agricultural, livestock, and fisheries products and causing raw material prices to skyrocket.
• Risk of increased beef procurement costs due to switch to alternative meats and livestock products with lower CO₂ emissions as a result of focus on forest conservation, animal welfare, and other initiatives and carbon pricing.
• Risk of opportunity loss due to shutdown of factories, facilities, and stores or transportation disruptions caused by floods and storm surges
• Opportunities to gain empathy and high evaluation from customers and stakeholders as we actively promote sustainability
• Opportunities for extreme heat summers and extremely cold winters due to extreme weather conditions, which will allow cold and warm products to sell well to customers.

• Risk that the introduction of a carbon tax will increase raw material prices, packaging material prices, and logistics prices, resulting in a larger carbon tax burden.
• Risk of higher procurement costs and capital investment costs associated with higher electricity prices and a shift to the use of renewable energy sources
• Risk of reduced crop yields due to a decrease in the number of farmers
• Risk of reduced yields of major raw material crops due to global warming and drought
• Risk of stricter legal regulations and increased demands for measures such as supplier audits, driven by heightened environmental awareness across society
• Risk of our brand value declining due to the operation of the facility during a drought or the release of contaminants into the wastewater from the facility
• Opportunities to increase sales by developing services for decarbonization and plastics-free products as consumer behavior and preferences change
• Opportunities to increase sales by developing menus that contribute to climate change and biodiversity protection
• Opportunity to reduce procurement and waste disposal costs by promoting the reduction of food waste

• Our sites located in water risk areas where there is a risk of decline in the quantity or quality of water resources were surveyed using WRI Aqueduct's Water Risk Atlas, and no sites were located in “very high water risk” or “high water risk” basins at the end of 2024. Regarding water-stressed areas, one site was located in Japan and one outside of Japan in a “highly water-stressed” watershed.
• As a result of analyzing and evaluating "areas sensitive to the impacts of business activities" using external tools recommended by the TNFD, we have identified "Higashi-Matsuyama MDC" for our direct operations, and "Uruguay" and "Australia" for our upstream value chain as priority areas.

1. Identification of business activities with high-materiality dependence and impacts on natural capital
   Using "ENCORE," we confirmed the materiality of our business activities (upstream and direct operations) in terms of dependence and impact on natural capital, and identified business activities with particularly high materiality.
2. Identification of locations with high financial impact on our company
   ➡【Upstream Value Chain】
   Utilizing SBTN's "HICL," we identified raw materials with high nature-related risks. "Beef," which accounts for the largest purchase amount, was identified
   ➡【Direct Operations】
   We identified our Merchandising Centers (MDCs), which serve as central kitchens for our stores 
3. Identification of locations with high biodiversity risk
   Utilizing tools such as IBAT, Global Forest Watch, and WRI Aqueduct, we identified locations with high biodiversity risk from the sites identified in step 2 as "priority areas."
   　Upstream Value Chain：Beef production areas "Australia" and "Uruguay"
   　Direct Operations："Higashimatsuyama MDC" (Higashi-Matsuyama City, Saitama Prefecture)
4. Identification of risks and opportunities and examination of countermeasures in priority areas
   We evaluate the degree of impact of risks and opportunities using multiple scenarios advocated by the TNFD

• Risks related to climate change, water resources, and biodiversity are overseen by the Group Sustainability Committee, while risks not included in the above are overseen by the Group Risk & Compliance Committee. Both committees work in collaboration, designating a department responsible for each risk to ensure appropriate preventive and responsive measures are taken. The deliberations of both committees are shared with Outside Directors to ensure the transparency of the risk management system. Additionally, Outside Directors serve as advisors to both committees, allowing us to receive input and advice from an external perspective. The Board of Directors receives regular reports from the Group Sustainability Committee and oversees the status and management of these risks.

• We identify "Business Risks" that could significantly impact investors' decisions and conduct ongoing risk management. These business risks are reviewed once a year, and we also establish "Emerging Risks" to enhance our company's sustainability.

• Greenhouse gas emissions (Scope 1, 2, and 3) are established and monitored as indicators for assessing and managing climate-related risks and opportunities.

• As indicators for evaluating and managing nature-related risks and opportunities, we have set the following targets: water withdrawal reduction, environmental impact reduction (waste discharge, disposable plastic discharge), biodiversity conservation (switching to JGAP certification for domestic vegetables, RSPO certification for palm oil, FSC/PEFC certification for paper products, etc.), and zero deforestation, and we are monitoring the results.
• Regarding the TNFD's core global metrics, we have already disclosed some indicators such as GHG emissions, water withdrawal, and waste volume. On the other hand, we do not currently have sufficient data on metrics such as land use change, wastewater constituents, non-GHG pollutants, invasive alien species, and the state of ecosystems. We have positioned these as future challenges for data collection and evaluation and will work to expand our disclosures.