SMK considers climate change to be one of the factors affecting the Earth, our activities, our customers, and our supply chain, and in July 2023, we expressed our support for the Task Force on Climate-related Financial Disclosures(TCFD). SMK will continue to promote climate change measures throughout the group and strive to improve the quality of information disclosure.

Governance

SMK has established the Environmental Conservation Committee (chaired by the officer in charge of environment) as a subordinate organization of the CSR Committee (chaired by the president,CEO and COO).
Environmental Management

The Environmental Coservation Committee is composed of representatives from divisions, Works, and other related departments, and meets on a regular basis. The committee manages the status of the Group's environmental conservation activities and deliberates on activity policies and indices. The committee also receives reports from each Works and subordinate organizations, and horizontally disseminates useful information and activities. With regard to climate change countermeasures, the Carbon Neutrality Task Force and other specialized teams under the committee promote activities based on their knowledge and expertise.

Strategy (Risks/Opportunities)

The Group's risks and opportunities related to climate change are described below.
For scenario analysis, we will confirm detailed information and make estimates based on it to enhance our analysis of risks and opportunities.

●Risks

<Transition risks>
- Investment burden of high-energy efficiency equipment and renewable energy
   power plants.
- Impact on production activities of energy shortages due to the sudden change
   in direction to stop the use of fossil fuels, and increased electricity costs.
- Greater obligation to reduce greenhouse gas emissions: Increased electricity
   costs due to use of renewable energy menus.
- Changes in market/customer behavior: Decline in revenue due to inability
   to keep up with changes in market/consumer preferences.
- Decrease in credit options and increased prices due to reduction of
   greenhouse gas emission quotas in line with carbon neutrality
   progression.

<Physical risks>
- Damage to production sites: Decrease in income due to reduced production
   capacity.
- Increased costs due to impact on employees (health, safety, etc.).

●Opportunities

<Resource Efficiency / Energy Sources / Resilience>
- Reduce greenhouse gas emissions and electricity costs and strengthen
   resilience by owning renewable energy power plants.
- Reduce greenhouse gas emissions through the use of highly energy-efficient
   equipment and promotion of energy-saving activities.

<Product and service/market>
- Increase revenues by developing and offering products for low-carbon society
   and markets. (Renewable energy, telework, EVs, bicycles, etc.)

Risk management

Risk management related to climate change is handled by the Environmental Conservation Committee, which is under the Board of Directors, the Executive Committee, and the CSR Committee.

●To address the aforementioned risks, the company has implemented
   the following measures

- Promote energy conservation activities (investment in high-efficiency
   equipment, operational improvement activities).
- Promote possession of renewable energy power plants.
- Promote the development and provision of products aimed at a low-carbon
   society (environmentally-friendly products).
- Decentralization and optimization of production sites.

●Environmentally-friendly design products

In order to develop products for a low-carbon society, the Company has established its own standards for environmentally conscious design in accordance with the ministerial ordinances of the Ministry of Economy, Trade and Industry.
Specifically, they are largely divided into four categories.

1. Energy-saving and high-efficiency products:
    Reduced power consumption and standby power consumption,
    improved durability, etc.
2. Resource-saving products:
    Smaller, lighter, thinner-walled products, fewer components, etc.
3. Environmentally friendly products:
    Use of recycled materials, easier disassembly and repair, solderless,
    plating-free, etc.
4. Reduction of burden in the manufacturing process:
   Reduction of input materials, easy reuse, etc.

In addition, products used in energy management, renewable energy, energy-saving home appliances, and bicycles are also positioned as products that contribute to the environment, and we aim to contribute to these markets.

Targets and Indices

Each year, we set management indices (environmental indices) related to the environment in order to contribute to climate change countermeasures and business cycles.
The environmental indices are CO₂ emissions and waste emissions, which are indicated in terms of total emissions and emissions per unit of production value, respectively. The results are published annually on our website.
Environmental Preservation

In the future, we will work to disclose the occupancy of sales of environmentally friendly products and calculate CO₂ emissions in the supply chain.