The TNFD-recommended ENCORE tool was used to evaluate the dependencies/impacts that the Mitsubishi Electric Group’s business has on nature. In practice, we categorized the Mitsubishi Electric Group’s business segments into the Class-level economic activities defined by the International Standard Industrial Classification (ISIC), evaluated them with ENCORE’s five-level rating system (VL, L, M, H, VH), adjusted the results based on the situation specific to the Group, and compiled the results into a heat map.

• Water resources are used in the manufacturing of all products. Water intake is particularly high for the A/C system & home products and the semiconductor & device segments, suggesting their potential dependency on water resources (water supply).

• The A/C system & home products and the semiconductor & device segments can have a significant impact on water usage due to their high water intake.
• The manufacturing of all products can have an impact on greenhouse gas emissions. This impact can be particularly high in the energy systems, automotive equipment, A/C system & home products, and semiconductor & device segments.
• The semiconductor & device segment can have a significant impact on the emissions of toxic pollutants.

• In the Mitsubishi Electric Group's manufacturing processes, we recognize that water intake activities can have impacts on the state of nature and that deterioration of the status of local nature will highly likely make ecosystem services, including water supply, unavailable.

Priority locations were identified from among the 166 consolidated production sites (as of 2023) of the Mitsubishi Electric Group, based on the location information.
Evaluation items used for the locations of operations were the dependency-related items of ecosystem integrity (general dependency) and water stress (water supply) and the impact-related items of biodiversity importance (general impact), water stress (water usage), and water pollution (emissions of toxic pollutants to water and soil). Evaluation targets varied by business segments and were limited to those related to dependencies and impacts that had been determined to be material in the Evaluate phase. Next, priority locations were identified based on the evaluation results for the locations of operations. With respect to water usage, we followed the methodology of Science-Based Targets (SBTs) for Nature and considered the level of our own pressure on nature (water intake).
The results were evaluated for each evaluation metric with the five-level rating system (VH, H, M, L, VL), while taking into account the situation specific to the Group. The locations rated “H” or “VH” were determined to have the likelihood of creating material environmental risks and thus identified as priority locations.

The results indicate that water supply may become unavailable at a plurality of the locations where the Mitsubishi Electric Group operates and that these sites will likely have impacts on water resources and greenhouse gas emissions. Another finding from the results is that the Group may have impacts on the emissions of toxic pollutants in Japan and China. Although these evaluation results suggest the need for attention in some of the locations where the Mitsubishi Electric Group operates, the Group implements measures and initiatives to address environmental risks to reduce or avoid impacts on nature.
Based on the current evaluation, which covered the Mitsubishi Electric Group’s production sites, we intend to gradually extend the scope of evaluation to the overall value chain, including non-production sites, and analyze the results in detail through local investigations and other activities.

During the Assess phase, while considering the findings in the Evaluate and Locate phases, we listed nature-related risks and opportunities along with the qualitative assessment of their materiality, and summarized activities that can contribute to reducing material risks or creating material opportunities. Risks and opportunities were categorized and sorted in accordance with the TNFD’s framework (v1.0), while the same time horizons as used for the TCFD disclosures apply.

The physical risks we have identified are those related to material dependencies as such risks arise from the degradation of ecosystem services on which the Mitsubishi Electric Group’s business segments depend. The transition risks we have identified are those related to material impacts as such risks arise from social changes intended to avoid or reduce the impacts of the Mitsubishi Electric Group’s business segments on nature.

We have identified opportunities related to material dependencies and impacts arising from the avoidance, reduction, or management of risks relative to the degradation of nature and ecosystem services on which the Mitsubishi Electric Group and society depend. The opportunities we have identified as being created through the strategic transformation of products, services, etc., addressing nature-related issues are those irrespective of material dependencies and impacts as such opportunities arise from activities such as restricting the loss of nature and implementing nature-based solutions.

The Group’s nature-related risks and opportunities resulting from its business activities were identified and summarized for every dependency/impact rated as “H” or “VH” in the Evaluate phase. We also summarized risks and opportunities arising from initiatives related to business activities that are irrelevant to dependencies/impacts but influence or contribute to nature and/or biodiversity.
This list has been created with reference to the TNFD nature-related risk and opportunity registers (December 2024 version^*) published by the TNFD.

^* Guidance on the identification and assessment of nature-related issues: the LEAP approach

The TNFD’s framework recommends a scenario analysis approach that uses four quadrants for which two critical uncertainties—ecosystem services degradation and the alignment of market and non-market forces—serve as the two axes. Our materiality assessment is based on this approach.
In this scenario category, the horizontal axis represents ecosystem service degradation—the further to the right, the more severe the situation, and the further to the left, the more moderate/restored the situation. The vertical axis represents alignment of market and non-market forces—the higher the position, the stricter the regulations and the higher the awareness among consumers and investors, and the lower the position, the weaker the regulations and the lower the interest among consumers and investors. Each scenario was defined with a PEST analysis, which is commonly used for analyzing the external environment for a company or business, with the E (Environment) factor added to the parameters to be considered.
The figure shows the details of each scenario.

^* Taskforce on Nature-related Financial Disclosures (TNFD) Recommendations

For each scenario, materiality of nature-related risks and opportunities was assessed based on their likelihood and the magnitude of the effects of the risks. For risk assessment, risks were categorized into two types: (1) risks originating from the locations of operations and (2) risks resulting from global social trends. Likelihood and the magnitude of effects were determined for each of them. For opportunity assessment, opportunities were categorized into two types: (1) opportunities created through risk avoidance, reduction, or management and (2) opportunities created through the strategic transformation of products, services, etc., that addressing nature-related issues. Based on the likelihood and the magnitude of effects determined as a result of these assessments, material risks and opportunities were identified through the comprehensive assessment of materiality.
The results show that although the Mitsubishi Electric Group’s businesses are exposed to various nature-related risks, environmental management initiatives, such as biodiversity preservation activities around the Group’s sites, as well as the development of businesses for solving nature-related issues, help the Group acquire opportunities in nature-positive areas. The table shows material risks and opportunities that were identified by factoring in dependencies/impacts and the scenario analysis. The potential risks and opportunities indicated by the scenario analysis results are used as inputs for considering the Mitsubishi Electric Group’s materiality, its next environmental plan and other programs. To address the identified material risks and opportunities, the Mitsubishi Electric Group implements a diverse range of measures at the dependency/impact level.
Please refer to the pages of each measure for details.

The Mitsubishi Electric Group aims to contribute to the sustainable development of society by recognizing/managing negative impacts and risks that can arise from its business activities through evaluation and analysis based on the LEAP approach and existing sustainability management methods and avoiding/reducing these impacts and risks while creating opportunities that can bring positive impacts.
Please refer to the pages of each measure for details.

The table below shows the Mitsubishi Electric Group’s metrics aligned with the TNFD core global disclosure metrics.