NTT Group Disclosures in Line with TCFD Recommendations

In May 2020, the NTT Group declared its support for Task Force on Climate-Related Financial Disclosures (TCFD) established by the Financial Stability Board (FSB), and in its sustainability report of the same year, began disclosing information related to eleven items recommended in the TCFD declaration.The results of scenario analysis conducted on the impact that climate change will have on the NTT Group in the future revealed various risks, particularly those related to policies, regulations and social demand aimed at transitioning toward a decarbonized society.

To address these risks, the NTT Group established the new environment and energy vision "NTT Green Innovation toward 2040" with the aim of reducing emissions by 80% by 2030 and becoming carbon neutral by the year 2040, by increasing development and use of renewable energy sources and rolling out IOWN to significantly reduce power consumption and alleviate the impact of these risks. The NTT Group will be focusing on resilience linked to growing its own businesses, while also helping to resolve social issues caused by climate change and develop a sustainable society by providing services that contribute to carbon neutrality.

Environmental Management

The NTT Group recognizes that environmental issues are one of the most important challenges for management, and items of particular importance are decided based on discussions held with directors. An example that highlights this is the new environment and energy vision "Green Innovation toward 2040" announced in September 2021--this was established following a decision made by the Board of Directors involving discussions with all directors, including outside directors, held three times throughout the fiscal year.

In addition to incorporating greenhouse gas emissions into the business plans of each group company, attainment levels will be reflected in the compensation of directors as critical indicators.

The supervision system for directors also consists of the Sustainability Committee (chaired by the President) established in November 2021 directly under the Board of Directors, with the Green Innovation Committee established as an internal unit under the Sustainability Committee. The Global Environmental Protection Promotion Committee had previously managed and implemented environmental activities policies and their progress across the entire group, but these functions will be transferred to the Green Innovation Committee moving forward. Under this system, 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, and other matters deemed important will be decided by the Executive Officers Meeting. The role of the senior executives is to identify environmental issues and risks, and promoting businesses while taking into consideration these situations.

The NTT Group's Green Innovation Committee covers initiatives aimed at addressing environmental problems across various Group companies, and is chaired by the Head of Research and Development Planning, with membership comprising the heads of the environmental departments at major Group companies. The Committee meets more than twice a year to raise suggestions for the basic policy related to environmental conservation such as developing the Environment and Energy Vision, as well as manage targets, monitor progress and promote further efforts. A decision was made at the Committee's March 2022 meeting to set greenhouse gas reduction targets that have a direct impact on NTT Group executives' performance evaluations.

As electricity usage accounts for more than 90% of the NTT Group's greenhouse gas emissions, the committee also coordinates efforts with the Advanced Energy Usage Promotion Committee (chairperson: Vice President), responsible for managing the NTT Group's energy conservation activities (Total Power Revolution [TPR] campaign), to develop plans for reducing electricity consumption as well as managing implementation and progress.

Scenario Analysis

The NTT Group formulated the medium-term management plan "Your Value Partner 2025" to resolve social issues by advancing digital transformation through the Group's business activities. Under the keywords "Your Value Partner," we are working to achieve this plan by utilizing the Group's management resources and capabilities, such as R&D, ICT infrastructure, and personnel as well as collaborating with partners. In accordance with TCFD recommendations, we used two scenarios to identify risks and opportunities involved in the Group's operations based on climate change: the first scenario limiting the increase in average temperatures at below 2°C from before the industrial revolution (2°C Scenario); and the second scenario where temperatures will increase by almost 4°C with measures to combat global warming maintained at existing levels (4°C Scenario).

Applying NTT Group's selection process for identifying key issues to the 2°C scenario revealed transition risks associated with policies, regulations, and social demand aimed at transitioning to a decarbonized society. The 4°C scenario is also likely to bring about physical risks including those required for responding to frequent or more intense heavy rain and flooding, as well as increasing electricity costs due to severe temperature increases. In contrast, increased demand for cutting greenhouse gas emissions and switching to renewable energy sources as society as a whole moves toward decarbonization is thought to present an opportunity for the NTT Group as it will be able to provide a range of ICT services that help achieve carbon neutrality. Details of each risk and the degree of impact they may have, as well as the results of analysis and assessment of the growth opportunities arising from addressing each of these risks are outlined below.

^※1 Degree of impact with 2°C scenario and 4°C scenario in FY2030 *2 Timeframes refer to Short-term (less than 3 years), Medium-term (3-6 years), Long-term (6 years or more). Degree of impact expressed in 3 levels (▲, Low; ▲▲, Medium; ▲▲▲, High)

Estimated impact on annual profits:

⁽¹⁾ ▲¥16 billion if carbon pricing introduced

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

⁽³⁾ Disasters caused by heavy rain and typhoons (FY2019: approx. ▲¥8 billion, FY2020: approx. ▲¥5 billion, FY2021: approx.▲¥0.2 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 ($130/t-CO2) x FY2030 target emissions (reduction of 80% in FY2030 based on actual Scope 1 + 2 emissions of 4.65 million tons in FY2013)
<Carbon pricing: Estimated unit price for FY2030 on IEA World Energy Outlook 2021, Advanced economics: USD 130>

⁽²⁾ Renewable energy charges in FY2030: ¥4.1/kWh, FY2021: ¥3.36/kWh, estimate assumes certificates cost ¥1.0/kWh

⁽³⁾ Estimated impact from repairs to damage caused by heavy rainfall and typhoons from FY2019 to FY2021

⁽⁴⁾ Estimated air conditioning costs increase based on domestic electricity consumption in FY2021

Strategy

Metrics and Targets

In accordance with the NTT Group's selection process for identifying key issues, key performance indicators (KPIs) have been established for verifying the practicality and effectiveness, and monitoring progress of initiatives covered by the three challenges of "Ensuring the positive coexistence of nature and humanity."

Disclosure Boundary
Boundary [C]: Greenhouse gas (No. 1), Amount of contribution to the reduction of greenhouse gas emissions of all society (No. 4)
Boundary [B]: Ratio of EV adoption in Japan (No. 2), Resource recycling rate (No. 5)
The telecommunications businesses subject to the calculation for power efficiency per data transmission of telecommunications services are the six domestic businesses of the telecommunications business segment appearing in our Annual Report (NTT East, NTT West, NTT Communications, NTT DOCOMO, and NTT DATA)

^※1 GHG Protocol: for Scope 1 and 2

Greenhouse Gas Emissions

The NTT Group's emissions across its entire supply chain in fiscal 2020 was 26.21 million tons, a reduction of 1.89 million tons (7%) compared to the previous year. More than 1.2 billion kWh of renewable energy (approx. 11% of purchased electricity) was made available during fiscal 2020, resulting in Scope 1 + 2 emissions of 3.99 million tons, a reduction of 6.2 million tons (13%) compared to the previous year. Scope 3 emissions for fiscal 2020 were 22.23 million tons, a reduction of 5% compared to the previous year (estimated based on the Ministry of the Environment's "Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain").

Due to the very nature of the NTT Group's businesses, greenhouse gas emissions arising from the supply chain (Scope 3) are much higher than direct emissions from the group's own activities (Scope 1+2), and measures will be implemented to reduce such emissions from across the entire supply chain. The NTT Group will revise its own Guidelines for Green Procurement to achieve more effective reductions through fiscal 2021.

Change in calculation method
Calculations for Category 1 and Category 2 in FY2019 used emission intensity defined by the Ministry of the Environment, but for FY2020 emission intensity of each company is used for some supplier (calculated from figures released by each company), to factor in reduction efforts by each supplier.

Reduction of Greenhouse Gas Emissions across Society and Power Efficiency of the Telecommunications Business

Reduction of Greenhouse Gas Emissions across Society

The NTT Group has established a target for fiscal 2030 calling for it to contribute to reducing greenhouse gas emissions of society as a whole by at least 10 times more than the NTT Group's own emissions through its services and technologies. This target is intended to contribute to the reduction of greenhouse gas emissions across society by providing ICT services and technologies while curbing greenhouse gas emission amounts from our own business activities. The use of information communication, which is expanding each year through the spread of smartphones and high-speed and large-capacity networks, requires energy. On the other hand, by improving efficiency and reduction of goods through digitalization, the use of information also contributes to the reduction of greenhouse gas emissions across society by reducing environmental load more than the energy consumption it requires.

The reduction of greenhouse gas emissions across society quantifies the energy savings effects obtained through ICT services using greenhouse gas volume. The energy saving effect is quantified with references to the Telecommunication Technology Committee (TTC) Standard "Methodology for the assessment of the environmental impact of information and communication technology goods, networks and services (JT-L1410)" and the calculation method specified by the "LCA of Information and Communication Technology (ICT) business organizations" research group of the Life Cycle Assessment Society of Japan.

The effects of energy savings obtained through the introduction of ICT services include, for example, reduced electricity usage by homes, companies and factories from energy management, alleviation of traffic congestion using analysis of congestion and operation information, and reduced electricity usage from the streamlining and optimization of transportation schedules.

The amount of greenhouse gas emissions for the NTT Group includes the emissions from facilities necessary for other telecommunication carriers and data centers to provide their services.

Power Efficiency of the Telecommunications Business

The NTT Group has established the target for fiscal 2030 to improve the power efficiency per data transmission in our telecommunications business to at least 10 times higher*1 than in fiscal 2013*1. Electricity is essential to the continuity of the telecommunications business and it also accounts for more than 90% of the NTT Group's greenhouse gas emissions. We set this target because improving the efficiency of using electricity both reduces the risk of business disruptions and helps mitigate climate change. We are introducing highly energy efficient equipment and improving the efficiency of network structures based on our Energy Efficiency Guidelines.

In October 2018, NTT became the first telecommunications carrier in Japan to join the EP100*2 international initiative on energy efficiency led by The Climate Group. By participating in such an international initiative, we intend to publicly declare the NTT Group's commitment to the environment and express our stance on international environmental issues.

Environmental Performance Data (Moving toward a decarbonized society)

Disclosure Boundary: Boundary [B]

Environmental Performance Data (Implementing Closed Loop)

Material Balance of the NTT Group (Fiscal 2021)

Relevant GRI standards: 301-1/302-1/303-3,4/305-1,2,3/306-1,2

To minimize the environmental impacts of our business activities, the NTT Group endeavors to gather and analyze information on the resources and energy that it consumes and the resulting environmental impacts.

Environmental Accounting

Relevant GRI standards: 102-18/103-2/307-1

The NTT Group introduced environmental accounting in fiscal 2000 to boost the efficiency and effectiveness of its environmental conservation efforts by quantitatively determining the costs of environmental conservation programs undertaken as part of its business activities as well as their effects (economic and material benefits). Moving forward, we aim to implement even more efficient and effective environmental management by continuously carrying out quantitative monitoring and analysis to understand the effects of our environmental activities, clarifying outstanding issues, and sharing information.

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  NTT DOCOMO

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  NTT Communications

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  NTT EAST

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  NTT WEST

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  NTT DATA

Group Companies