Amid a rapidly changing society and economy, the landscape surrounding sustainability again shifted significantly in 2025. In some countries and regions, related policies have been revised, and the view that sustainability initiatives are facing headwinds has emerged. In reality, however, extreme weather events such as record-breaking heatwaves and heavy rainfall are increasing, and social and environmental challenges are becoming more serious. Against the backdrop of rising electricity demand driven by the spread of AI and data centers, as well as soaring energy prices and the emergence of geopolitical risks, the importance of sustainability is further increasing, not only from an environmental perspective but also in terms of energy security and resource circulation. Under these circumstances, the management policy of the Mitsubishi Electric Group states that we place sustainability as the cornerstone of our management. By pursuing "Trade-On (mutual benefits)" that simultaneously achieve our business growth while addressing social and environmental challenges, we will advance truly substantive sustainability management.

The world's uncertainty and complexity are increasing year by year, and the business environment is undergoing dramatic changes due to shifts in the social landscape and the rapid evolution of generative AI. It is difficult for companies to predict all of these changes in advance. I believe that sustainability management, which involves thoroughly analyzing and assessing the environment surrounding the Company and is pursued with a medium- to long-term perspective, is also an essential element for sustainable corporate growth.

In fiscal 2026, the Mitsubishi Electric Group again identified materiality (important challenges) that serve as guidelines for sustainability initiatives. To do this, we analyzed and assessed the social and environmental impacts, and associated risks and opportunities, of the Mitsubishi Electric Group's businesses, and clarified the importance of sustainability issues through dialogue with internal and external stakeholders. The five new areas of materiality set out the goals to be achieved for realizing sustainability from the dual perspectives of value creation and foundation enhancement.

From the perspective of value creation, we will address social and environmental challenges through our businesses, focusing on the priority areas in our medium-term management strategy. From the perspective of foundation enhancement, we have set "Achieve carbon neutrality at factories and offices by the fiscal year ending March 31, 2031" as one of our target/initiative indicators, and will actively promote energy conservation, electrification, and the introduction of renewable energy.

The Mitsubishi Electric Group has steadily achieved results in areas such as environmental measures, human capital strategies, and the promotion of human rights initiatives, earning high praise from external organizations around the world, including the highest rating for the eighth time and third consecutive year from the CDP^*1 in 2025 in both the “Climate Change” and “Water Security” categories, and for the ninth time and sixth consecutive year in the “Supplier Engagement Assessment" category. Regarding human rights issues across the value chain, we will expand the use of RBA-SAQ^*2 for risk identification at Group sites worldwide and further advance improvement activities.

In terms of information disclosure, we view compliance with globally expanding non-financial reporting standards as an opportunity to further strengthen our management foundation. As a first step, the entire Group is working toward compliance with the sustainability disclosure standards published by the Sustainability Standards Board of Japan (SSBJ) in March 2025 and with Europe’s Corporate Sustainability Reporting Directive (CSRD), while improving the efficiency of data collection. Information disclosure plays a key role in engagement with stakeholders and leads to increased transparency and credibility in our corporate activities. We will steadily advance initiatives for disclosing information useful to our shareholders and investors, with the aim of becoming a leading company in sustainability.

One of the Mitsubishi Electric Group's initiatives is the "GIST* Project," which aims to accelerate addressing social and environmental challenges through businesses from a global and sustainability perspective. Through a backcasting approach, we continually test and refine ways to create new businesses that are unprecedented within the Group.

One of our new projects is Direct Ocean Capture (DOC), which contributes to realizing carbon neutrality by capturing and removing CO₂ from the atmosphere via seawater. We are developing this technology jointly with VTT Technical Research Centre of Finland Ltd. and have already completed the core development of the DOC system. Going forward, while considering integration into existing large-scale seawater infrastructure, such as desalination facilities and power plants, we will accelerate initiatives toward commercialization and early implementation in society.

In addition, we are working to create new businesses through cross-industry partnerships, including industry-academia collaborations to promote the social implementation of carbon dioxide capture and utilization (CCU) systems that integrate everything from CO₂ capture to utilization.

Meanwhile, we are also working to address social and environmental challenges through our existing businesses. The key to this area is innovation through Circular Digital-Engineering. By utilizing diverse data via Serendie to provide solutions that maintain continuous connections with our customers, we will contribute to addressing social and environmental challenges while driving the sustainable growth of our business. One example is the Railway Energy Management Solution, which analyzes various types of railway operational data to visualize energy flows, contributing to optimal energy use and the deployment and operation of railway assets. Furthermore, we aim to optimize energy use across entire regions by integrating railway and regional power systems. We also seek to enhance disaster resilience by securing emergency power supply facilities at key public locations such as train stations. As a solution that contributes to the realization of carbon neutrality and a safe, secure society, we have begun technical cooperation and demonstrations overseas and are steadily advancing toward capturing growth opportunities on a global scale.

Amid rapid changes in social trends and the business environment, the Mitsubishi Electric Group needs to continuously address social and environmental challenges not as "costs" or "constraints" but as "growth opportunities" that lead to new value creation and greater competitiveness. Moreover, new innovations are essential to addressing social and environmental challenges and realizing a sustainable future. Based on this thinking, we have added "Promote innovation for sustainability" as a new area of revised materiality.

I believe that the actions of each and every colleague are what drive innovation toward a sustainable future. The Mitsubishi Electric Group has a wide range of business domains that have been cultivated over many years and are supported by solid technological capabilities. To embody our purpose, "We create new possibilities for a better tomorrow, with bold vision and boundless innovation," maximize our potential, and drive innovation, it is important to break free from existing business frameworks and create new value through co-creation with diverse talent and partners. Going forward, we will continue to promote sustainability through a dual approach: value creation and foundation enhancement. Under the concept of "Trade-On (mutual benefits)," we will generate a virtuous cycle between addressing social and environmental challenges and business growth. Together with our stakeholders, we will continue to take on the challenge of creating value for the future, with the aim of building a safe, secure, and sustainable society for the next generation.

As of August 2026