Disclosure in line with TCFD recommendations - PARAMOUNT BED HOLDINGS CO., LTD.

1. Governance

We have established a “Sustainability Committee” to manage and drive sustainability-related initiatives, including the management of climate change risks. The committee deliberates on fundamental strategies regarding sustainability—such as climate change—as well as the status of initiatives and information disclosure, and submits proposals and reports to the Board of Directors as appropriate.
The Board of Directors receives reports from the Sustainability Committee and provides supervision and direction as necessary.
The Chairperson of this Committee shall be appointed by the President and Representative Director, and the Committee members shall be those appointed by the Chairperson; the Committee shall convene heads of business divisions and group companies as appropriate to the subject matter and conduct cross-organizational deliberations and discussions.

2. Strategy

Recognizing climate change as a medium- to long-term risk, and in order to examine our strategy and organizational resilience in light of associated risks and opportunities, we conducted a scenario analysis. This involved referencing climate change scenarios (specifically the below 2°C and 4°C scenarios) from the IEA (International Energy Agency) and the IPCC (Intergovernmental Panel on Climate Change) to assess the long-term impact on our company through 2050.
We identify risks and opportunities based on two axes—the magnitude of their impact on the company and the likelihood of their occurrence—and evaluate the business impact (categorized into three levels) to narrow down priority areas and outline countermeasures. Moving forward, we will continue to enhance our strategic resilience and align our efforts with business plans to contribute to the realization of a decarbonized society.

*Below 2°C scenario: A scenario in which measures are taken, such as strengthening regulations in order to minimize the increase in temperature and changing markets
4°C scenario: A scenario in which physical effects such as weather anomalies occur as a result of rising temperatures

3. Risk Management

We established a working group on climate change risks and conducted scenario analysis. The Sustainability Committee will continue to review and update the guidelines.
As part of our climate change risk management process, we conduct analysis, formulate and implement countermeasures, and manage progress regarding climate change risks through the Sustainability Committee.
In prioritizing climate change risks, we will focus our efforts on high-importance items, evaluating them based on frequency and impact.
Sustainability-related issues, such as climate change, are addressed by the “Sustainability Committee,” while other company-wide issues are handled by the Management Committee in accordance with the Basic Rules on Risk Management; both bodies analyze issues, formulate and implement countermeasures, and manage progress, with the Board of Directors providing unified oversight.
Through this, we have established a company-wide risk management framework based on the “Basic Rules on Risk Management.”

4. Indicators and Targets

The indicators used are GHG (CO₂) emissions falling under Scope 1 and Scope 2, and the scope of calculation covers Paramount Bed Holdings Co., Ltd. and Paramount Bed Co., Ltd.
Aiming to achieve carbon neutrality by 2050, we are working toward a target of reducing Scope 1 and Scope 2 GHG emissions from the aforementioned companies by 30% by 2030 (compared to 2013 levels).

	2014/3 (base fiscal year)	Target	Period	2023/3	2024/3	2025/3	2026/3
Paramount Bed Holdings Co., Ltd. and Paramount Bed Co., Ltd.	6,813t-CO2	30% reduction (vs. 2014/3)	2031/3	6,550t-CO2	3,855t-CO2	4,110t-CO2	3,821t-CO2

Key Risks, Opportunities, and Responses Related to Climate Change

▲: Risk ●: Opportunity

Scenario	Risk and opportunity	Business impact	Influence on the Company	Company measure
Below 2°C scenario	Introduction of a carbon tax ▲Increased costs for procurement, logistics, and operations due to carbon tax and emission permit transactions	★★★	Increased procurement costs for steel and other materials, increased company operation costs at factories, and increased logistics costs due to the introduction of the carbon tax are predicted, and are expected to have significant impact on the Company’s businesses.	Switch to low-carbon materials Reduce shipping volume by making shipping between locations more efficient, etc. Formulate a policy for reducing the Company’s CO₂ emissions (Scope 1 / Scope 2)
	Strengthened decarbonization measures ▲Increased renewable energy procurement costs ●Increased demand for environmentally-friendly technologies and services	★★	The strengthening of decarbonization measures requires switching all electricity to renewable energy sources, which will incur additional costs, but the impact on the Company is expected to be small. On the other hand, an increase in demand for the Company’s environmentally-friendly technologies and services is predicted.	Formulate a policy for reducing the Company’s CO₂ emissions (Scope 1 / Scope 2) Quickly grasp changes in customers’ environmental consciousness and develop and provide environmentally-friendly products required by those customers at those times
	Changing stakeholder awareness ▲Insufficient response to climate change and lowered reputation ●Increased demand for rental and after-sales services due to customers’ increasing environmental awareness	★★★	If we do not disclose information related to environmental measures appropriately or do not set targets for reducing GHG emissions, the risk of reputational damage from stakeholders may occur. However, due to continuing to have a policy of working toward appropriate disclosure in the future, we expect a certain level of impact. On the other hand, we expect significant impact on the Company’s businesses, as customers will be more inclined to reduce disposal costs, leading to rising demand for rental services and after-sales services such as component replacement.	Maintain and improve our reputation as a company that operates with consideration to the environment through appropriate disclosure of information related to climate change such as the TCFD. Maintain and improve our reputation as a company that takes environmental responsibility by supplying environmentally-friendly products as well as setting and achieving targets for reducing GHG emissions. Accelerate the expansion of our recurring revenue businesses as well as develop new recurring revenue business offerings utilizing sensing technology, AI, IoT, etc.
4°C scenario	Acute risk (intensification of wind and flood damage) ▲Risk of a disaster severely damaging a raw material supplier, causing suspension of operations ▲Risk of a disaster at a production site, causing suspension of operations ▲Logistics interruption due to localized torrential rain ●Increased demand for disaster prevention products and services ●Securing trust with quick and stable supply when wind and flood damage occurs	★★★	Suspension of operations and the resulting loss of profit may occur when suppliers with large transaction amounts, production sites, and logistics networks are damaged due to storms or floods. On the other hand, demand for disaster prevention products and services will grow due to intensified and frequent wind and flood damage. Also, it is thought that handling supply in a speedy and stable manner when a disaster occurs could be an opportunity for the Company to secure trust, and we expect significant impact on the Company’s businesses.	Promote multiple suppliers, multiple inventory locations, and adoption of general-purpose items Secure safe inventory in order to ensure stable supply of products even during a disaster, as well as speedily respond to production by cooperating with other production sites Establish a system for emergency shipping from other regions as an alternative to disaster-stricken logistics routes Develop products and services that are effective during times of natural disaster, improve and expand the supply system, disseminate information externally, and conduct promotion activities
4°C scenario	Chronic risk (increased temperatures, warming) ▲Increased costs to handle higher temperatures ●Increased demand for products and services to address reduced sleep quality from higher temperatures ●Increased demand for products and services to make medical care, clinical nursing, and nursing care work more efficient as temperatures increase	★★★	If temperatures rise, costs may occur due to responses to the increased temperatures, such as air-conditioning costs to maintain employee health. On the other hand, we expect significant impact on the Company’s businesses as the demand is predicted for measures to mitigate decreased sleep quality from increased temperatures as well as for the Company’s products (sleep tech products, the Smart Bed System, etc.) due to expanded demand for supporting medical care, clinical nursing, and nursing care work.	Reduce air-conditioning costs by introducing high-efficiency air conditioning units, etc. Develop and sell sleep tech products and the Smart Bed System, disseminate information externally, and conduct promotion activities