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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.

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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 Global Environmental Protection Promotion Committee is chaired by the NTT executive vice president, who is the head of NTT's Environmental Protection Office (Head of Research and Development Planning), with membership comprising the heads of the environmental departments at major Group companies. This committee met 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 and resolve issues.

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.

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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.

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  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)

Strategy

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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 coexisting of nature and humanity."

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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)

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.

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  1. We have excluded Category 8 (upstream leased assets) from the calculation because the fuel and electricity used by leased assets is included in Scope 1 and 2 calculations.
  2. We have excluded Category 9 (downstream transportation and distribution) from the calculation because these emissions are almost entirely from our own transportation and use in our own facilities (included in Scope 1 and 2) or from outsourced transportation (included in Category 4).
  3. We have excluded Category 10 (processing of sold products) from the calculation because our main businesses involve no processing of intermediate products.

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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.

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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 oninternational environmental issues.

  1. The telecommunications businesses subject to the calculation for power efficiency are the domestic businesses of the five telecommunications business segment appearing in our Annual Report (NTT East, NTT West, NTT Communications, NTT DOCOMO, and NTT DATA).
  2. An international initiative comprising companies pledging to double the energy efficiency of their operations (improve energy efficiency by 50%) as participants.

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Environmental Performance Data (Realizing a Low Carbon Future)

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nvironmental Performance Data (Implementing Closed Loop Recycling)

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Material Balance of the NTT Group (Fiscal 2020)

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.

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Environmental Accounting

The NTT Group introduced environmental accounting in fiscal 2000 to boost the efficiency and effectiveness of its environmental conservation ef for ts 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.

  • Scope of data
    The companies subject to consolidated environment accounting are NTT, NTT East, NTT West, NTT Communications, NTT DATA, NTT DOCOMO and their group companies.
  • Applicable period
    Data for fiscal 2019 is from April 1, 2019 to March 31, 2020.
    Data for fiscal 2020 is from April 1, 2020 to March 31, 2021.
  • Accounting method
    Accounting is based on the NTT Group Environmental Accounting Guidelines. These guidelines comply fully with the Environmental Accounting Guidelines 2005 issued by the Ministry of the Environment.
    Environmental conservation costs are tabulated separately as environmental investments and environmental costs. Personnel costs and depreciation costs are also included in environmental costs.
    Reductions in CO2 emissions through energy conservation measures are calculated by subtracting actual emissions from projected emissions in the event that no such measures were taken.

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Main Initiatives

Environmental Guidelines

NTT Group operations have the following four key attributes: (1) procurement of a great many products; (2) possession of many buildings; (3) high electricity consumption by telecommunications equipment; (4) inhouse R&D facilities. To promote the effective reduction of our environmental impacts, we have drafted the following green guidelines that address each of these four key attributes:

  • "Guidelines for Green Procurement"
  • "Green Design Guideline for Buildings"
  • "Energy Efficiency Guidelines"
  • "Green R&D Guidelines"

In particular, the development and procurement of ICT devices with outstanding energy efficiency is essential for the effective reduction of greenhouse gas emissions of the NTT Group.

To address this issue, we have been applying the NTT Group Energy Efficiency Guidelines since May 1, 2010. These guidelines give concrete form to the ICT device-related energy-saving stipulations of our Guidelines for Green Procurement and Green R&D Guidelines, and define our basic philosophy and device-specific targets with respect to the development and procurement of routers, servers, and other ICT devices used in the NTT Group. Under the Energy Efficiency Guidelines, the NTT Group develops and procures ICT devices with consideration for energy-efficient performance in addition to function, performance, and cost. We are endeavoring to apply these initiatives to the reduction of electricity consumption and concomitant greenhouse gas emissions related to customer communications.

The "Guidelines for Green Procurement" were revised in April 2021, and now ask suppliers to include initiatives for reducing their environmental impact.

Disseminating Environmental Activities Policies and Measures among Employees

NTT Group conducts environmental education to disseminate NTT Group policies and measures among employees and develop a shared understanding of Group-wide activities for promoting environmental protection. In fiscal 2020, we also provided training related to the Group's environmental activities for all employees, such as group training and e-learning.

The NTT Environmental Protection Office organizes environmental education for staff in charge of environmental issues at each Group company and has been holding study sessions every year since fiscal 2001. Along with lectures for disseminating our environmental policies and sharing outstanding issues, we invite outside lecturers to speak on recent topics. These study sessions are intended for the NTT Group throughout Japan and are therefore offered via a teleconferencing system so that staff in remote areas can attend and ask questions through two-way connections. This paperless approach is also another way the NTT Group is helping to reduce greenhouse gas emissions resulting from holding meetings.

In fiscal 2020, we invited experts on environmental management and CSR to explain the SDGs and ESG and to speak about environmental management. Furthermore, related staff in Group companies introduced their environmental initiatives with the aim of promoting environmental activities at each Group company.

Compliance with Environmental Laws and Regulations

The NTT Group complies with laws and regulations related to the environment and works to reduce its impacts on the environment. We have established a mechanism that can deal with cases of legal violations on a Group-wide basis by reporting to the Global Environmental Protection Promotion Committee. There were no legal violations nor payments of penalties in fiscal 2020, following the same result for fiscal 2019.

As part of its environmental management measures, the Group also tracks the number of complaints related to the environment for each fiscal year. In fiscal 2020, no complaints related to environmental impact were submitted, handled or resolved through our systems for dealing with complaints.

Going forward, we will maintain compliance with existing laws and regulations as well as set up a working group on environmental laws and regulations to help step up our preparations for complying with laws and regulations under review or scheduled to take effect.