In recent years, climate change has become a source of significant socioeconomic risk and opportunity, and the movement toward decarbonization is spreading around the world.
The Purchase and Resale Business, the Group's core business, is an environmentally friendly business model that promotes the revitalization and distribution of existing real estate and makes effective use of existing resources.
At the same time, we recognize that we may be affected by various impacts of climate change, such as flooding, and that addressing climate change is essential to the sustainability of our business.
As part of our commitment to environmentally friendly business activities to realize a sustainable society, the Group have agreed to the TCFD (Task Force on Climate-related Financial Disclosure) recommendations and will identify risks and opportunities for our business activities arising from climate change and disclose appropriate information.

The TCFD recommendations include a recommendation for conducting a scenario analysis. It is an assessment of climate-derived impacts on businesses on the basis of multiple climate scenarios. For developing and studying strategies to deal with future uncertainties, we conducted a scenario analysis mentioned below.

For this scenario analysis for the first year, we conducted qualitative and quantitative studies to estimate the situation in 2050 according to two scenarios. One is the 4°C scenario, in which extreme weather will be intensified after no climate actions that surpass the current ones are taken. The other is the 1.5°C scenario, in which ambitious climate actions are implemented with a view towards decarbonization.

The studies estimate that climate change has a principal risk of causing floods and high tides that will bring about physical damage to properties owned in both scenarios. In the future, we will take enhanced disaster control measures, including toughening the criteria for the selection of real estate locations in consideration of hazard maps, in order to increase business resilience.

On the other hand, there are opportunities anticipated in the 1.5°C scenario. They include an increase in demand for renovation into zero emission buildings (ZEBs) and houses (ZEHs) for energy conservation and the use of renewable energy amid the transition to a carbon-free society and an increase in opportunities for business revenue linked to the rising environmental value of used real estate. We will continue business activities with environmental considerations to help build a carbon-free society and control climate change.

List of climate-related risks and opportunities estimated in the Group

The Group adopts its Scope 1 and 2 greenhouse gas emissions from its business activities as an indicator to operate its business with environmental considerations.
We have set a medium-term target of reducing emissions per unit of net sales by 46% from the FY2021 level in FY2030. We are also striving to meet a long-term target of achieving carbon neutrality in FY2050 with reference to the targets under the Paris Agreement.

It is anticipated that business growth and the launch of new businesses will increase greenhouse gas emissions in the future. We will consider introducing renewable energy and using non-fossil certificates to accelerate the decarbonization of operations to fulfill the long-term target.
We understand that it is a significant issue to reduce Scope 3 emissions, which refer to indirect emissions from other companies. We will swiftly understand the Group’s actual emissions, study reduction approaches and set a reduction target.

Our Scope 1 emissions in FY2022 increased slightly from the previous fiscal year. With respect to Scope 2 emissions, we shifted to procuring electric power derived from renewable energy for part of our fixed assets. Meanwhile, emissions grew from the FY2021 level following the opening of six sales offices in September 2021 and later and an increase in fixed assets. As a result, Scope 1 and 2 emissions stand at 236.4 tons-CO2, up 43.7 tons-CO2 from FY2021.
Scope 1 emissions per unit of net sales in FY2022 surged 12.3% from the previous fiscal year due to net sales shrinkage. Scope 2 emissions per unit of net sales rose 36.6%. Scope 1 and 2 emissions per unit of net sales increased 33.4%.
We will consider ways of reducing emissions in FY2023 and endeavor to attain the sales target in a bid to lower emissions per unit of net sales.

The Mugen Estate Group has recently agreed to the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations as part of its efforts to realize a sustainable society with environmental considerations. In addition, we will understand the risks and opportunities of businesses, etc. arising from climate change and make appropriate information disclosures.