Sega Sammy Holdings Inc. (hereinafter referred to as the Company) has set forth its group mission to be “Constantly Creating, Forever Captivating – Making Life More Colorful–“ and is promoting sustainability management. As part of this effort, we have identified five materialities (important issues) and set ‘environment’ as one of them. The Sega Sammy Group (the Group) has been working on effectively using energy, reducing the environmental load from offices and production bases, and environmentally conscious design of products/services to prevent global warming. In May 2022, we set a quantitative target for reducing greenhouse gas (GHG) emissions. In Scope 1 and 2, we aim to reduce group–wide emissions by more than 50% by 2030 based on the fiscal year ending March 2021 and achieve carbon neutrality by 2050. In Scope 3, Sega Corporation and Sammy Corporation, the Group’s principal operating companies, aim to achieve a more than 22.5% reduction that meets the SBT* level by 2030. This effort will be realized through engagement with suppliers through supplier surveys and collaboration to address climate change issues.

 

※Based on the requirements of the Paris Agreement and scientific evidence, companies set greenhouse gas emission reduction targets for 5 to 15 years in the future.

 

The Purpose of Expressing Support for TCFD and Participating in the TCFD Consortium

The Group has implemented climate-related financial disclosure in line with the TCFD framework since 2022. In June of the same year, the Group announced its endorsement of the main points of the final report (TCFD Recommendations) of the Task Force on Climate-related Financial Disclosure (TCFD), which provides a framework for climate-related information disclosure and will be used as guidelines to verify the adequacy of the Group’s climate change-related measures.

 

In addition, through participation in the TCFD Consortium, which comprises companies and financial institutions that support the TCFD, we will exchange information with other supporting companies and financial institutions to ensure more effective information disclosure.

 

Disclosure Items Recommended by TCFD Recommendations

Recommended Disclosure Items	Recommended Disclosure Content
Governance	(a) Board oversight of climate change-related risks and opportunities (b) Management’s role in assessing and managing climate change-related risks and opportunities
Strategy	(a) Describe the short-, medium- and long-term climate change-related risks and opportunities identified by the organization (b) Describe the impact of climate change-related risks and opportunities on the organization’s business, strategy, and financial planning (c) Describe the resilience of the organization’s strategy based on various climate change-related scenarios, including a 2°C or lower scenario
Risk Management	(a) Describe the process by which the organization identifies and assesses climate change-related risks (b) Describe the process by which the organization manages climate change-related risks (c) Describe how the organization’s processes for identifying, assessing, and managing climate change-related risks are integrated
Indicators and Targets	(a) Disclose the metrics used by the organization to assess climate change-related risks and opportunities in line with its strategy and risk management process (b) Disclose Scope 1, Scope 2, and, if applicable, Scope 3 greenhouse gas emissions and related risks (c) Describe the targets used by the organization to manage climate change-related risks and opportunities and performance against those targets

(Source) Task Force on Climate-related Financial Disclosures, “Final Report: Recommendations of the Task Force on Climate-related Financial Disclosures,” June 2017

 

Recommended Disclosure Item: Governance

（a） Board Oversight of Climate Change-Related Risks and Opportunities

As an organization to discuss and deliberate on the basic policies and important matters related to the Group’s climate change, we established the Group Sustainability Subcommittee within the Group Management Committee, an optional committee, in April 2022. The Group Sustainability Subcommittee is composed of the President and Group CEO of the Company, as well as directors and members of the Board Audit Committee who are consistent with sustainability in the skills matrix of the Board of Directors and also includes the CFO of the Group from the perspective of disclosure by the TCFD. The Sustainability Division of the Company handles the secretariat.

The Board of Directors receives reports on the policies and plans discussed in the Group Sustainability Subcommittee and approves them as appropriate.

＜Analysis Results＞

From a scenario analysis assuming two worlds, we identified the risks and opportunities that climate change poses to our group and examined transition risks, such as the introduction of policies and regulations by governments, technology, and market changes, as well as physical risks, such as abnormal weather caused by climate change.

 

【Scenario Analysis Results (Risks/Opportunities, Financial Impact】

 

Category	Risks/ Opportunities Item	Timing	Impact on the SEGA SAMMY Group （●・・・Risk/〇・・・Opportunity）	Impact Level
MeChanges to policies and regulatory requirements	Introduction of GHG emission regulations and carbon taxes	Medium/ Long-term	●The carbon tax burden will increase if governments adopt more brutal climate change-related regulations and apply carbon taxes to greenhouse gas emissions.	Medium
		Medium/ Long-term	●If governments adopt more brutal climate change-related regulations and apply carbon taxes to greenhouse gas emissions, manufacturers will pass on the resulting increase in the carbon tax burden, leading to higher procurement costs.	Large
		Medium/ Long-term	●〇Electric power charges could increase or decrease due to the use of electric power produced using renewable energy.	Small
Technology and Market	Introduction of new regulations	Short- to Long-term	●Manufacturing costs could rise due to transitioning to alternative materials (recycled/biomass plastics) with smaller environmental footprints in response to tougher regulations.	Large
	Relocation of highly efficient buildings	Medium/ Long-term	〇By centralizing head office functions in Sumitomo Realty & Development’s Osaki Garden Tower, which has advanced environmental systems and features, we will reduce greenhouse gas emissions and curb cost increases resulting from the future introduction of carbon taxes.	Small
	Recycling/Reuse	Short- to Long-term	〇We will reduce costs by recycling used amusement machines and reusing parts.	Small
	Reduction of parts, materials, and packaging through environment-focused changes to marketing formats	Medium/ Long-term	〇We will reduce the cost of parts, materials, packaging, etc., by shifting to environment-friendly marketing formats for online game sales and sales of amusement machines.	Large
Physical changes in the environment	Increasing seriousness of abnormal weather events	Medium/ Long-term	●Sales could decline due to damage and shutdowns affecting manufacturing facilities and offices.。	Small

Short term: within 2 years, Medium term: over 2 years to within 10 years, Long term: over 10 years

 

 

[Carbon Pricing]

For carbon pricing, which can be quantitatively evaluated based on the third-party assurance of greenhouse gas emissions, we have calculated based on the following calculation. In the future, we will continue to consider disclosing quantitative evaluations for items other than carbon pricing.

Greenhouse gas emissions (Scope 1 and 2) were calculated by multiplying the emission unit by the activity volume and multiplying it by the assumed carbon tax price for each 1.5°C scenario and 4°C scenario to calculate the impact of carbon pricing. In 2030, it was found that the burden of the carbon tax would be 530 million yen in the 1.5°C scenario and 160 million yen in the 4°C scenario, and in 2050 it would be 950 million yen in the 1.5°C scenario and 340 million yen in the 4°C scenario. We will continue to work towards reducing greenhouse gas emissions by about 50% by 2030 and achieving carbon neutrality by 2050 as a group-wide goal.

 

Scenario	2030	2050
1.5℃ scenario	▲530 million yen	▲950 million yen
4℃ scenario	▲160 million yen	▲340 million yen

Assumed carbon tax price: (1.5°C scenario) US$140/t-CO2 in 2030, US$250/t-CO2 in 2050, (4°C scenario) US$42/t-CO2 in 2030, US$89/t-CO2 in 2050 (quoted from IEA (World Energy Outlook 2022)), assuming an exchange rate of US $1=135 yen (adopting the AR at the time of our third quarter results for the fiscal year ending March 2023)

*Assuming that Scope 1 and 2 are targeted, greenhouse gas emissions are the same as in the fiscal year ending March 2022.

 

 

（c）Resilience of the Organization’s Strategy Based on Various Climate Change-Related Scenarios, including Scenarios below 2°C

Based on our calculation of the impact on our business and finances in two scenarios assuming 2030-2050, the Group assumed that the following three items would have a significant impact:

　・If regulations related to climate change are strengthened and a carbon tax is introduced for greenhouse gas emissions, the carbon tax will be passed on to procurement prices, and procurement costs will increase.

　・Changing alternative materials with less environmental impact (recycled plastic/biomass plastic) due to regulatory strengthening will increase manufacturing costs

　・By changing the sales of games and game machines to environmentally friendly forms such as online sales, we can reduce costs by reducing parts and packaging materials.

In order to ensure the resilience of our strategy, we will develop and implement countermeasures.

 

【Countermeasures】             

 

Impact on the Group (Risk ● / Opportunity 〇)	Impact	Countermeasure
● If regulations related to climate change are strengthened, and a carbon tax is introduced for greenhouse gas emissions, the carbon tax will be passed on to procurement prices, increasing procurement costs.	Large	Consider selection criteria for trading partners / Continue to strengthen supplier engagement.
●The change to alternative materials with less environmental impact (recycled plastic/biomass plastic) due to regulatory strengthening will increase manufacturing costs.	Large	Review product materials while considering manufacturing cost control.
〇 By transforming the sales of online games and game machines into environmentally conscious sales forms will decrease costs, such as reducing parts and packaging materials.	Large	Build partnerships with platformers which are working on environmental measures and work to reduce environmental impact / Reduce environmental impact by standardizing game machine parts and minimizing replacement parts.

 

 

 

Recommended Disclosure Items: Risk Management

（a） The Process by Which the Organization Identifies and Assesses Climate Change-Related Risks

The Company has identified climate change-related risks that are expected to have a significant impact on the group as follows:

　・Risks related to the “transition” to a low-carbon economy

      Climate change policies, regulations, technological development, market trends, and evaluations.

　・Risks related to “physical” changes caused by climate change

      Acute or chronic damage caused by disasters brought about by climate change

In addition, for climate change-related risks that are expected to have a significant impact, we evaluate their importance based on the impact assessment criteria using internal indicators.

 

（b） The Process by which the Organization Manages Climate Change-Related Risks

The process for managing climate change-related risks in our group involves monitoring and discussing progress on countermeasures within the Group Sustainability Subcommittee and reporting and obtaining approval from our Board of Directors. In addition, the management content is shared with sustainability officers from each business company at the Group Sustainability Promotion Meeting under the Group Sustainability Subcommittee.

 

（c） Integration of the Organization’s Process for Identifying, Assessing, and Managing Climate Change-Related Risks

The Group established a Group Risk & Compliance Subcommittee under the Group Management Committee in April 2022 as a forum for discussing, verifying, and sharing measures and information related to risk management. The Group Risk & Compliance Subcommittee comprises directors and audit & supervisory board members who match risk management and compliance in the skill matrix of the Board of Directors.

For climate change-related risks, progress on countermeasures is monitored in the Group Sustainability Subcommittee and shared with the Group Risk & Compliance Subcommittee to be integrated into potential risks within the group. After verifying and evaluating major risks, the results of discussions and verification of countermeasures are reported to the Board of Directors.

In addition, when deciding on business portfolios or making decisions on large-scale investments and financing, we check from a sustainability perspective, including climate change-related risks as one of the criteria.