Approach to integrating TCFD and TNFD

Approach to integrating TCFD and TNFD

As climate and nature are closely related, increases in temperature have increased the risk of consequential effects such as water shortages and ecological change. As business operators, we also predict that intensified disasters and increased burdens on nature as a result of climate change will lead to greater physical risks. In the case that there is a greater global trend toward demanding the preservation of nature, operating companies must actively respond to such a situation and avoid transition risks such as regulations. The NTT Group has conceived various responses to tackle these challenges. Information about the current state of these responses are disclosed according to the TCFD/TNFD frameworks.

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.

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.

Transition Risk Scenario: IEA NZE and IEA STEPS
Physical Risk Scenario: RCP 2.6 and RCP 8.5

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, resource recycling, and biodiversity are treated as business environment and strategy-related risks within the Business Risk Management Promotion Committee.

Indicators and Targets