Along with measures to combat climate change, coexistence with the natural environment is becoming increasingly important to establish a sustainable society, and the creation of a framework for international information disclosure is in full swing.
The Denka Group has set forth “Reduction of environmental burden and the preservation of biodiversity” in our ESG Basic Policy. Based on this policy, we have commenced measures in accordance with the beta guidelines issued by the TNFD^(*), a biodiversity information disclosure framework, with the aim of understanding the environmental impact of our business activities and maintaining and improving them.

• *TNFD: Taskforce on Nature-related Financial Disclosures
  The official guidelines for biodiversity-related disclosure are scheduled to be released in the fall of 2023.

Initiatives to conserve biodiversity

We expect that it will take some time to collect, organize, review, and make decisions on natural environmental information. Using the LEAP approach^* recommended in the TNFD guidelines, Denka began taking action in September 2022 with a view to finding contact points between our business activities and biodiversity and identifying priority issues.
More specifically, after conducting a surveys of the natural environment surrounding seven business sites in Japan using public data and literature, we have begun extracting and assessing points of contact with nature, focusing first on our Omi Plant (Itoigawa, Niigata), which has 17 hydroelectric power plants in the nearby mountains and has the greatest contact with the natural environment. Based on these surveys, we will analyze the risks and opportunities that face us in relation to the natural environment and take concrete measures to conserve biodiversity. In the near future, we will gradually expand the scope of our activities to other business sites and continue the cycle of the above activities with the aim of maintaining and improving the natural environment from a long-term perspective.

• *The process of systematic, evidence-based assessment advocated by TNFD for companies to disclose nature-related risks and opportunities. It consists of four phases (Locate, Evaluate, Assess and Prepare).

Understanding priority issues through preliminary biodiversity surveys at Omi Plant

A preliminary survey was conducted at Omi Plant from September to November 2022. We evaluated biodiversity at each point of contact while confirming the relationship between our business activities and nature in terms of whether they are dependent on or have an impact on nature. In the future, we will continue to expand the number of target sites and conduct surveys and formulate countermeasures where necessary.

1. Ecosystem integrity: assessment of the number of species, extinction risk, and ecological natural capital of the natural environment (region)
2. Biodiversity Importance: Assessment of the importance of an area as a legal or internationally protected area, endemic ecology or endangered species habitat, etc.
3. Water stress: evaluation of the amount of water (fresh water) used in relation to the amount of water (fresh water) supplied by the natural environment (region)