Climate Change

Related New Medium-Term Management Strategy Initiatives

Initiatives Related to Climate Change in the New Medium-Term Management Strategy (Progression towards Net-Zero)

Reduction of greenhouse gas emissions for Scope 1, 2

^※2GHG Protocol: for Scope 1 and 2

^※3Estimated Introduction of Renewable Energy (including actual renewable energy through Non-Fossil Fuel Certificates) FY2020: 1.0 billion kWh; FY2030 to FY2040: approx. 7.0 billion kWh The introduction of renewable energy will have the optimal types of energy determined on the basis of each country's energy composition and other factors. Approximately half of the domestic renewable energy usage is anticipated to be from energy sources owned by NTT (FY2030).

^※4Estimated reduction of energy consumption through the introduction of IOWN (comparison to outcome) → FY2030 target: Reduce by 2.0 billion kWh (15% reduction) FY2040 target: Reduce by 7.0 billion kWh (45% reduction) Percentage of introduction of IOWN (photonics-electronics convergence technologies, etc.) out of total energy volume → FY2030: 15%; FY2040, 45%

^※5Estimated Introduction of Renewable Energy (including actual renewable energy through Non-Fossil Fuel Certificates) FY2020: 1.0 billion kWh; FY2030 to FY2040: approx. 7.0 billion kWh The introduction of renewable energy will have the optimal types of energy determined on the basis of each country's energy composition and other factors. Approximately half of the domestic renewable energy usage is anticipated to be from energy sources owned by NTT (FY2030).

Expansion of Renewable Energy Generation Business

Acquisition of Green Power Investment Corporation and Other Renewable Energy Operators

On August 3, 2023, NTT Anode Energy and JERA Co., Inc. (JERA) completed the acquisition of shares in Green Power Investment Corporation (GPI), owned by U.S. renewable energy operator Pattern Energy Group LP, based on the stock purchase agreement concluded on May 18, 2023.

Moving forward, NTT Anode Energy, JERA, and GPI will synergize their respective expertise, insights, and strengths in renewable energy operations, with the goal of contributing to Japan's goal of becoming carbon neutral by 2050 through further initiatives, thereby promoting the adoption of renewable energy within Japan.

Initiatives Related to Climate Change in the New Medium-Term Management Strategy (Develop Sustainability Solutions for Customers)

Examples of Business Opportunities Resulting from Climate Change

Contributions to Reducing Society's Environmental Impact (1):
~NTT DATA Japan's Greenhouse Gas Emission Visualization Platform C-Turtle®~

NTT DATA Japan provides the greenhouse gas emissions visualization platform C-Turtle® to aid in the achievement of carbon neutrality for society as a whole. Recently, there has been a growing demand for companies to make their greenhouse gas emissions transparent. However, there are numerous options for calculation methods, making it challenging to select the most appropriate one. Typically, a company's emissions are calculated using the formula "Activity Level (purchased amount/number of procured products)" x "Emission Coefficient (a fixed emission level determined for each product, based on industry averages)." One problem with using industry averages is that it does not reflect any emission reductions made by individual suppliers in the company's indirect emissions (Scope 3 Categories 1 and 2). An alternative is the "Total Emissions Allocation Method," which uses the formula "Activity Level (amount of transactions per supplier)" x "Emission Coefficient per Supplier (emissions per unit revenue for each supplier)" instead of industry averages. A unique feature of C-Turtle® is its adoption of the "Total Emission Allocation Method," which not only calculates emissions but also incorporates actions taken by suppliers to reduce emissions, enabling collaborative efforts.

In August 2022, we became the first Japanese company to sign a usage license agreement for greenhouse gas emissions data and other data on global companies held by the international NGO CDP*1. This allows C-Turtle® to combine data collected by NTT DATA Japan with data held by CDP, enabling accurate emission calculations consistent with each company's actual emissions.

^※1CDP is an NGO run by a British charitable organization that operates a global information disclosure system that allows investors, companies, nations, regions, and cities to manage their environmental impacts.

https://www.cdp.net/en

Helping Reduce Society's Environmental Impact (2):
~Introducing N.mobi, an EV Adoption and Operational Support Solution for Municipalities and Corporations~

NTT Business Solutions Corporation (NTT Business Solutions) has teamed up with NTT Anode Energy Group to launch N.mobi, a comprehensive solution to assist municipalities and corporate clients in adopting EVs and optimizing electricity use through both EVs and EV batteries.

Amid a growing call for carbon neutrality initiatives, there is an increasing demand for using EVs as commercial vehicles. However, the higher vehicle costs of EVs compared to gasoline cars, as well as issues such as the rise in electricity bills due to increased peak demand from EV charging and limitations on driving range due to a lack of charging infrastructure, pose significant challenges for municipalities and corporations looking to adopt EVs. Against this backdrop, we offer visibility into the use of commercial vehicles by municipalities and corporations in an effort to optimize fleet sizes. We also assist in devising plans for a cost-effective transition to EVs. In addition to offering a charge control platform to manage electricity costs during EV operation and address the inconveniences related to mid-journey charging, we provide a one-stop solution for introducing EV vehicles, charging/discharging equipment, and the design and construction of solar power generation facilities for PPA*1. This allows us to offer ongoing support for our customers' transition to EVs for their commercial fleets.

Going forward, NTT Business Solutions and NTT Anode Energy Group aim to further enhance the utility of EVs by developing new features such as EV sharing between municipalities and corporations, and VPP*2 services that utilize numerous EVs within a community as virtual batteries. Together with municipalities and corporations, we will contribute to the creation of prosperous and sustainable local communities through optimal EV utilization.

^※1Power Purchase Agreement

^※2Virtual Power Plant

TCFD

Governance

The NTT Group regards the promotion of sustainability as an important management issue, and items of particular importance, such as creating environmental targets for the entire Group, are decided based on discussions held with directors.

Under the governance structure overseen by the Directors, we have established a Sustainability Committee (chaired by the President and Chief Executive Officer) directly reporting to the Board. This committee is responsible for managing the policy direction and progress of sustainability initiatives across the entire Group. Policies related to sustainability (the Charter and creating and abolishing accompanying policies, particularly deciding critical indicators) will be decided by the Board of Directors via the Sustainability Committee.

In FY2021, for the processes selected as key issues and activities to be addressed from among the sustainability-related issues, we used evaluation organizations like third party institutions, ISO 26000 and GRI Standards, global trends, internal workshops, and materiality at other companies as a guide to identify material issues through comprehensive review of new problems related to sustainability, in order to discuss and select issues that the NTT Group should address on a global scale. In addition, NTT assessed the priorities to be addressed based on their impact on two aspects, "Growth as a company" and "Solving social issues." To achieve management that simultaneously helps resolve social issues and achieve business growth, NTT assesses priorities by incorporating the opinions of outside experts.

The validity of the specific issues we have identified and their level of priority is subject to an annual review by the Board of Directors, following discussions within the Sustainability Committee. During the Board of Directors held on April 20, 2023, we determined four key categories for sustainability in fiscal 2023 based on the reviewed priorities: 1) Climate Change, 2) Human Capital, 3) New Value Creation, and 4) Resilience.

In relation to climate change, we are managing progress on greenhouse gas emissions and other factors through the Green Innovation Committee, a subcommittee under the Sustainability Committee, and the Group Green Innovation Committee, which includes all companies within the NTT Group.

Risk Management

The NTT Group discusses risks and opportunities related to key sustainability issues at Sustainability Committee meetings and reports these to the Board of Directors.

Additionally, as part of the NTT Group's risk management process, the Business Risk Management Promotion Committee--headed by the senior executive vice president-- along with the Group Business Risk Management Promotion Committee are central to establishing and operating a PDCA cycle for risk management, with the aim of anticipating and preventing the occurrence of the potential risks close at hand and minimizing losses in the event that risks do materialize. The processes concerning the identification, evaluation, and management of sustainability-related risks are integrated into the NTT Group's overall risk management framework.

Climate change is treated as one of the business environment and strategy-related risks within the Business Risk Management Promotion Committee.

Strategy

The NTT Group formulated its Environment and Energy Vision "NTT Green Innovation toward 2040" and is advancing initiatives to reduce its environmental impact to achieve carbon neutrality by 2040. Besides promoting renewable energy usage as part of its own efforts to promote green power, the company is also working to enhance its environmental energy initiatives and information disclosure by promoting IOWN research and development aimed at achieving extremely low power consumption, introducing an internal carbon pricing system, and utilizing green bonds.

With regard to opportunities, we are focusing on expanding renewable energy options at data centers, aiding in the development of processes for visualizing greenhouse gas emissions, and broadening the sale of green energy to both corporate and individual clients.

Also, in alignment with our new medium-term management strategy announced in May 2023, the NTT Group is committed to achieving a Circular Economy Society. This includes promoting green solutions through the combination of Green Energy and ICT, expanding our renewable energy generation business, optimizing and efficiently securing a stable supply of locally produced, locally consumed electricity, recycling resources among various industries, and further accelerating regional development, all with the aim of creating a sustainable society. At the same time, we aim to extend the scope of "NTT Green Innovation toward 2040" to include Scope 3, as part of our efforts to achieve net-zero emissions.

^※1Degree of impact with 1.5°C scenario and 4°C scenario in FY2030

^※2Timeframes refer to Short-term (less than 3 years), Medium-Term (3 to less than 6 years), Long-term (6 years or more). Degree of impact expressed in 3 levels (▲, Low; ▲▲, Medium; ▲▲▲, High)

^※Estimated impact on annual profits:

1) If carbon pricing introduced (approx. -¥17 billion)

2) Increased cost of renewable energy charges and implementation of renewable energy (approx. -¥10 billion yen)

3) Repairs for damage caused by heavy rainfall and typhoons (FY2020: approx. -¥5 billion, FY2021: approx. -¥0.2 billion, FY2022: approx. -¥3 billion)

4) Higher air conditioning costs as temperatures rise (-¥0.6 billion if outdoor temperatures rise 1 degree)

[Assumptions and basis for calculations]

1) Carbon pricing ($140 USD/t-CO₂) x fiscal 2030 emission goals (Aim for 80% reduction by fiscal 2030 with a baseline of 4.65 million tons of Scope 1 + 2 emissions from fiscal 2013) <Carbon pricing: Estimated unit price for FY2030 on IEA World Energy Outlook 2022, Advanced economies: 140USD>

2) Renewable energy charges in FY2030: ¥4.1/kWh, FY2022: ¥3.45/kWh Estimate assumes certificates cost ¥1.0/kWh

3) Estimated impact from repairs to damage caused by heavy rainfall and typhoons from FY2020 to FY2022

4) Estimated air conditioning costs increase based on domestic electricity consumption in FY2022

Indicators and Targets

^(Notes)1. The scope of the greenhouse gas emission calculations includes our company and its consolidated subsidiaries. 2. Scope 1 and 2 are in line with the Plan for Global Warming Countermeasures, which is outlined by the Japanese government, using fiscal 2013 as the base year. For Scope 3, the base is fiscal 2018, the year calculations began under the same calculation scope currently being used, including our overseas Group companies.

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