Disclosure of Information Based on TCFD and TNFD Recommendations

DNP positions "environmental initiatives" as one of its important management issues and is promoting integrated efforts toward the three societies outlined in its environmental vision—Decarbonized Society, Circular Society, Nature-Positive Society—in order to realize the nature-positive value chain that it has set forth in its materiality.

Sustainability Committee, chairman by the President and Director, is responsible for managing medium- to long-term risks related to sustainability, including the environment, identifying business opportunities, and reflecting them in management strategies. This committee meets at least four times a year to discuss and resolve on environmental initiatives, including progress toward medium-term goals and future measures and investments in line with the transition plan. Board of Directors receives reports and recommendations on matters discussed and resolved by this committee and deliberates and supervises policies and implementation plans for responding to sustainability risks and opportunities. Strategies and policies for environmental issues decided upon are addressed in cooperation with the Environmental Committees of each business units and group companies, and are implemented as a unified DNP Group (see diagram below).

In the past, policies and standards such as environmental policies, environmental visions, and sustainable procurement guidelines were discussed and approved by Sustainability Committee (including its former organization), and major issues were submitted to Board of Directors for formulation and revision.

In its business activities, DNP relies on a wide range of ecosystem services and impacts natural systems. We have organized these dependencies and impacts within the context of DNP and Nature, identifying where in the value chain they occur and how they affect the natural environment.

DNP relies on ecosystem-based supply services for the raw materials and auxiliary materials it uses in its operations. For example, the paper used in magazines and books is made from forest resources, while mineral and fossil resources are used for battery pouches for lithium-ion batteries and optical films (see table below).

In particular, water resources are directly used in processes such as cooling and washing during the manufacturing process. Considering the expected increase in water usage due to future business expansion, we have identified 10 locations (see table below) that are highly dependent on water resources and are promoting focused management of these locations.

Furthermore, maintaining our manufacturing sites relies on ecosystem adjustment and maintenance services. In particular, we have identified four DNP manufacturing sites (see table below) that are located near areas with high water risk, and we are strengthening our response to physical risks.

We believe that our manufacturing process generates emissions into the atmosphere, into water bodies, and into unnecessary objects including plastics, which have a negative impact on the environment.

We will promote activities aimed at minimizing such environmental impact, and contribute to the transition to a nature-positive economy through the cultivation of green spaces, the recycling of plastics and paper, water reuse, and the provision of environmentally friendly products and services.

• Indicators independently verified by a third party are marked with a checkmark.

To more concretely define the impact of environmental risks and opportunities on business sustainability, DNP developed and analyzed its own scenarios. In setting these scenarios, based on business strategies and the process of identifying risks and opportunities, we identified "natural conditions" and "policies and markets" as factors influencing the uncertainty of business continuity. For the four quadrants composed of these two axes, we utilized the four publicly available scenarios we had previously referenced and TNFD's "Scenario Analysis Guidance" to concretize each worldview.

DNP's proprietary scenarios highlight the key elements characterizing the worldview of each quadrant and the main impacts on DNP. In the risk and opportunity scenario analysis, DNP's proprietary scenarios were used to analyze the impact on stakeholders and the business in terms of magnitude, duration, and likelihood of occurrence.

DNP has identified the environment as one of the variable factors that have a diverse impact on its business, and has identified risks and opportunities. In the table below, environmental risks and opportunities are organized from the perspectives of "physical risks," "transition risks," and "opportunities," and their impact on DNP's business is evaluated on a time axis of short-term: 0-5 years, medium-term: 5-15 years, and long-term: 15 years or more, the degree of financial impact is evaluated on a scale of large: 10 billion yen, medium: 1 billion yen or more, and small: less than 1 billion yen, and the probability of such impacts occurring is evaluated on a scale of large > medium > small. In addition, the environmental impact of DNP's business on the environment, the DNP-specific scenario used in the evaluation, and the elements of dependence on nature and impact related to nature are organized from the perspectives of "ecosystem services" ^*1 and "impact factors" ^*2, respectively. By comprehensively managing these elements, risks, and opportunities, DNP will effectively promote measures that balance minimizing adverse imapact with creating business opportunities.

We recognize that the increasingly frequent and severe damage due to torrential rains, forest fires and other natural disasters and the degradation of ecosystem provisioning services may cause the suspension of operations or the realization of supply chain risks. We conduct region-level assessments of the water risks faced by our domestic and overseas manufacturing sites using published tools such as Aqueduct provided by the World Resources Institute (WRI) to identify priority regions.

To respond to these risks, we are investing in disaster preparedness infrastructure, such as emergency power systems and water control barriers. We have also been working to further enhance our supply chain management by building production systems at multiple plants and diversifying suppliers.

As policies addressing environmental challenges become stricter, it is expected that new measures will become necessary, including mandatory environmental due diligence and the regulation of plastics, in addition to decarbonization-related regulations. This shift will increase stakeholdersʼ awareness of the environment, and companies that fail to respond adequately risk exiting the market or suffering reputational damage.

To address transition risks, DNP is transforming its business portfolio to reduce its negative environmental impacts and increase added value. In addition, DNP is focusing on managing environmental risks using self-imposed criteria that are stricter than laws and regulations, promoting the recycling of plastics with a low recycling rate and strengthening its supplier engagement based on the DNP Group Sustainable Procurement Guidelines.

DNP believes that society and the economy are increasingly oriented toward integrated actions to realize nature positivity, and this will increase the demand for eco-friendly products and services. This is a significant business opportunity for the Company.

 Guided by its Medium-term Management Plan, DNP is planning to invest 260 billion yen over the five years through fiscal 2027, focusing on priority business areas including eco-friendly products and services, such as battery pouches for lithium-ion batteries. Our goal is to positively impact the natural environment while creating a virtuous cycle of new earnings growth and enhanced corporate value.

In the medium-term management plan launched in fiscal year 2026, we set "GHG emissions," "resource recycling rate," "water usage per unit," and "ratio of total sales of environmentally friendly products and services (' Super Eco-Products')" as KPIs to measure the effectiveness of our environmental strategy. To achieve these four KPIs, we identified the main measures that DNP will undertake and the expected environmental synergies and trade-offs that these measures will have. Furthermore, by redefining the environmental data that DNP has managed to date as "related indicators" to measure synergies and "guardrail indicators" to measure trade-offs, we have organized "indicators and targets" as an integrated management structure toward realizing a "Decarbonized Society," a "Circular Society," and a "Nature-Positive Society" (see diagram below). By comprehensively managing these KPIs and indicators, we aim to achieve nature positivity throughout the entire value chain.