Information Disclosure Based on the TNFD framework

Kumagai Gumi position the initiatives toward addressing environmental issues as a significant management priority in its “Mid-term Management Plan (FY 2024-2026)” and “ESG Initiatives”. We have announced its commitment to environmentally conscious initiatives, specifically those that consider biodiversity, under the name of the “Commitment of Eco-First.

At COP15, the "Kunming-Montreal Biodiversity Framework" was adopted, and the 2030 mission and 2050 vision were established.

As recognition of the importance of preventing and restoring nature loss is increasing internationally,We revised the materiality of its ESG Initiatives in May 2024, and added 'Accomplishment of Nature Positive' to its Specific issue.
We have been conducting assessments on biodiversity at all of our worksites before construction and have been considering the conservation and sustainable use of biodiversity.

Furthermore, in order to understand our the dependence and impact, risks, and opportunities related to natural capital in our business, we made up to disclose information in line with the Taskforce on Nature-related Financial Disclosures (TNFD).

In this disclosure, we have referred to TNFD v1.0 and implemented the LEAP approach, which is the framework of TNFD.

General Requirements

１．The application of materiality.

We analyzed and evaluated 'impact of nature on business' and 'impact of businesson nature', using the double materiality approach.

２．The scope of disclosures.

We will implement the LEAP approach targeting our five sites in our domestic civil engineering and building construction businesses, and will disclose the results.
We will consider the number of locations and regions, as well as the whole　of the value chain, as subjects for future analysis.

３．The location of nature-related issues.

In order to identify regions with nature-related issues, we selected and analyzed five locations within Japan that are considered to have no regional bias and differ in the surrounding natural environment.

４．Integration with other sustainability-related disclosures.

This information is disclosed in the integrated report along with sustainability-related information such as climate change (TCFD, Eco-First commitment, etc.).

５．The time horizons considered.

We have not set a target period for this analysis and evaluation. In the future, similar to TCFD, three time axes will be set: short-term (approximately within 3 years), medium-term (approximately over 3 years to within 10 years), and long-term (approximately over 10 years).

６．The engagement of Indigenous Peoples, Local Communities and affected stakeholders in the identification and assessment of the organisation’s nature-related issues.

In order to gain understanding of our business, we are conducting dialogue with stakeholders such as customers, local residents, employees, shareholders and investors.

Governance

Our Board of Directors deliberates important management issues such as nature related issues, human rights policies for indigenous peoples, etc., and engagement of stakeholders.
Regarding TNFD's governance, we are implementing the following initiatives.
See below for details.

Strategy　Locate

We evaluated domestic civil engineering and building construction business using the LEAP approach. During the Locate phase, we selected five geographically unbiased directly operated sites and used IBAT and Aqueduct, to understand the nature related and water stress around each location.

Result of analysis of IBAT and Aqueduct

• We grasped at number of IUCN red list within 50km radius and the number of PAs and KBA within 2km radius, by IBAT. At the results, we confirmed the PAs within 50km radius, at the site1(in Tokyo) and the site 4(in Kyoto).　On the other hand, in the 5 target sites, We didn't confirm the KBAs within 50km radius.
• At the result of water risk assessment by AQUEDUCT, it was [Low-medium] at the site3(in Hokkaido), the site3(in Aichi), the site4(in Kyoto). We did not confirm the site of high risk. We could not get the data of the site5(in Okinawa). We will consider measures such as collecting local information.
• In the future, we will conduct surveys using IBAT and Aqueduct at other directly operated sites and utilize them for knowledge and risk management when conducting business activities.

Strategy　Evaluate

We assessed dependence and impact for nature at main business value chain process using ENCORE in the Evaluate phase.

Value chain process　and dependence and impact for ecosystem services
As result by ENCORE

• Direct operation processes

• ： ecosystem services
• ： impact factor
• ： Direct operation

• As a result, It was confirmed that in the building construction business, the upstream timber extraction process is highly dependent.
• It was confirmed that in both building construction and civil engineering projects, the direct operation process has a large impact for nature.

Strategy　Assess

In the Assess phase of LEAP, we grasped biodiversity and water-related risks surrounding each of the five sites analyzed in the Locate phase using TNFD recommended WWF risk filter.
We qualitatively examined risks based on the results of the "WWF Risk Filter", the points of contact with nature identified through "Locate", and the dependence/impact identified through "Evaluate".

Identified risks, opportunities and measures

• Bold:Direct operation

Management of risks and impacts

We believe accurately assessing and reducing risks as well as striving to maximize opportunities associated with business activities will lead to enhanced corporate value.

Regarding important matters, we identify and assess risks and opportunities for each case. Final decisions are made by the Management Committee and the Board of Directors.

Each business division identifies and assesses risks and opportunities in business processes, and considers necessary countermeasures and incorporates them into our fiscal plans. The status of these initiatives is monitored and reported quarterly to the management committees.

Environmental risks and opportunities, including climate change, are reported to and discussed by the Sustainability Promotion Committee. They are also reported to and discussed by the Management Committee and the Board of Directors, as necessary.

Metrics and Targets

Our “Commitment of Eco-First" clarifies our efforts to coexist with nature. We support the Keidanren Biodiversity Initiative and are actively working to coexist with nature. In addition, we have created an ESG/SDGs Matrix that links our business to the SDGs. We disclose indicators, targets, and results for various distinct issues.

Specific issues「Accomplishment of Nature positive」

Business initiative：

1. Businesses related to recovery ecosystem
2. Quality and environment management system operation and improvement

Indicators:

1. Decarbonization fuel development and sales business sites
2. Serious environmental accidents during construction

Targets：

1. ≧2 during the Medium-term Management Plan (FY2024 - FY2026)
2. 0 during the Medium-term Management Plan (FY2024 - FY2026)