Policy on climate change adaptation, including greenhouse gas (GHG) emissions

In recent years, greenhouse gases emitted as a result of human economic activities have caused global warming, which is bringing about major changes in nature and the human living environment, such as drought, flooding, high temperatures, and other extreme weather events, climate change, rising sea level rise, and ecosystem changes. Mindful of these global issues, the Orion Group is stepping up efforts to reduce its GHG emissions to net zero by 2050.

The Orion Group considers “coexistence with nature in Okinawa” to be one of its most important materiality themes and is pursuing initiatives based on the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). 
Orion Breweries, Ltd. operates the alcoholic beverage and soft drink business, which is the core business of the Orion Group. In 2023, centering on Orion Breweries, the Orion Group strengthened the governance and risk management systems, conducted scenario analysis of business impacts related to climate change risks and opportunities, and set metrics and targets.

1. Governance

The Orion Group (the “Group”), with Orion Breweries, Ltd. (the “Company”) at its core, is a group of companies founded in Okinawa, an archipelago in the subtropical zone, with a rich history, culture, and natural environment. The Group has achieved growth, positioning the attractiveness of Okinawa as a key element of its corporate philosophy and business. 
Consequently, we view the increasingly pressing social and environmental issues worldwide, particularly climate change that threatens to undermine Okinawa’s attractiveness, as the most important management issue directly affecting the enduring prosperity of the Group’s business. 

In September 2023, the Group established the Orion Sustainability Committee (the “Committee”) to promote sustainability management across the Group in order to tackle this most important issue. 
The Committee is chaired by the CEO of the Company and consists of all executive officers of the Company and representative directors of the four Group companies. Under the supervision of the Management Committee, the Company’s decision-making body, the Committee is responsible for planning and promoting measures that contribute to enhancement of the Group’s sustainability and that of Okinawa and its communities. 
The Company’s Board of Directors manages and supervises (or approves, depending on the matter) these initiatives of the Committee based on reports of the discussions and decisions submitted to the Board of Directors by the Management Committee and the Committee.
The Committee reports to the Management Committee quarterly, and the Committee Secretariat reports to the Board of Directors semiannually (or as needed, depending on the matter) on the policies, issues, etc. as well as the progress, results, etc. of each measure. In addition, the Committee takes action, such as disseminating information to stakeholders, as necessary.

The Committee is responsible for planning and formulating important policies and guidelines for sustainability management, such as the Basic Sustainability Policy and materiality (hereinafter referred to as “Policy, etc.”), planning and formulating various measures (including setting of KPIs), and incorporating the plans into each business strategy, as well as for progress review, evaluation, information disclosure, and related budgeting.
To ensure that sustainability management is aligned with global trends, in addition to participating in international initiatives and responding to external evaluation organizations, the Committee is also responsible for formulating guidelines and codes of conduct with which the Group would like the various stakeholders in the Group’s value chain to comply. 

2. Strategy

In 2023, recognizing that accelerating global climate change would have a significant impact on business strategy, the Orion Group conducted scenario analysis to identify business risks and opportunities associated with climate change. Going forward, we will formulate and examine countermeasures to address each risk and other issues in parallel with financial planning. 

In order to identify risks and opportunities that could have a significant impact on the Orion Group’s principal businesses, namely, the “alcoholic beverages and soft drinks business” and the “tourism and hotels business,” we assessed the frequency and business impact of each item in the short (0-2 years), medium (3-10 years) and long term (10-30 years). The results of this assessment are shown in the table below. 

3. Risk management

At the Orion Group, which is based in Okinawa, a region of Japan with unique climatic conditions, the Orion Sustainability Committee (the “Committee”) is responsible for dealing with climate change impacts. Regarding planning and promotion of climate change-related projects and other activities, the Committee Secretariat, at the behest of the Committee, identifies risks and opportunities and grasps the situation, in cooperation with Group companies and related departments, and reports and makes recommendations at the Committee meetings that, in principle, are held quarterly. 

Having deliberated on the reported climate change impacts and recommended responses, the Committee conducts assessment. Regarding risk assessment and related matters, results are reported to the Board of Directors at least once a year and as necessary. 

The Board of Directors receives reports from the Committee on matters related to climate change, including the status of risk management and responses, and oversees initiatives for resolving issues and achieving the targets set. 

Mechanisms for managing climate change risks
The Committee Secretariat, at the behest of the Committee, plans and manages climate change-related projects and other activities, including processes for identifying and assessing climate change impacts, mechanisms for managing the impacts identified, and mechanisms for integrating climate change risks into risk management throughout the organization. The Committee Secretariat reports and makes recommendations to the Committee as needed and promotes a company-wide response to climate change under the supervision of the Committee. 

It also plays a role in integrating climate change impacts into company-wide risks by sharing information and making recommendations to the Risk Management and Compliance Committee on identified climate change impacts, as necessary. 
Furthermore, the Committee formulates policies and strategies to minimize the identified risks; reflects them in plans, budgets, and targets; and deliberates and coordinates concerning adaptation. The risk management status and actions discussed and coordinated by the Committee, along with other matters discussed, are reported to the Board of Directors at least once a year, and as necessary.

The Risk Management and Compliance Committee, which meets as necessary, evaluates reports and recommendations from Group companies and departments in charge of the relevant risk management, and deliberates on the identification of company-wide risks and appropriate responses. The contents and results of deliberations are reported to the Management Committee and the Board of Directors as necessary. Similarly, when reports or recommendations are received regarding the impact of climate change, appropriate actions will be decided from the perspective of company-wide risk management. 

The Board of Directors receives and reports from the Sustainability Committee and the Risk Management and Compliance Committee on the status of and response to climate change-related risk management and oversees them. 

4. Metrics and targets

The Orion Group aims to achieve a 50% reduction (compared to 2019) in Scope 1 and 2 by 2030 and “net zero” by 2050, with respect to GHG emissions, which are considered to have a notable impact on global warming. 

Orion Group’s GHG emissions

(Unit＝t)