Asahi : ESG Initiatives

ENVIRONMENT

ESG Initiatives: Environment

Priority SDG-Related Goal

Expand Precious Metals

Recycling

We will expand our precious metals recycling globally to promote more effective use of limited resources.

Amount216of precious metals

recycled in FY2021

Raw materials for recycling

Recycling

OUT-

Precious metal bullion COME

Recycling

Products

Priority SDG-Related Goal

Expand Proper Industrial

Waste Disposal

We will strive to ensure proper treatment of waste as a waste disposal expert and work to help build a recycling-oriented society.

Amounts of properly disposed industrial

waste FY2021 results

t

Priority SDG-Related Goal

Supply Precious Metals in Ways That Are Friendly to People, Society, and the Environment

The precious metals we supply are certified to meet international standards and address the concerns of people, society, and the environment. Going forward, we will continue our business activities and initiatives with even greater consideration for ethical, social, and environmental issues, and fulfill our responsibilities by supplying precious metals.

Industrial waste

Asahi

INPUT Gro

Plants

Fermented compost, metal raw materials, fuels and raw materials for cement, fire-proof brick and paving materials, and wood chips

Liquid waste

85,000

t/year

Sludge89,000

t/year

Waste oil

21,000

t/year

Priority SDG-Related Goal

Glass and ceramic waste

15,000

t/year

Other(waste98,000reagents, waste plastic, etc.)

t/year

Total

308,000

t/year

ENVIRONMENT EnvironmentInitiatives:ESG

Energy Sources

Energy

Reduce CO2 Emissions

By FY2030, we aim to reduce energy-derived CO

emissions[ by 50% compared to FY2015. 2 ]

235,615m3

OUT-

102,957CO2t PUT

Rate of reduction for

energy-derived CO2 emissions

FY2021 results

27%

reduction

compared to FY2015

1. NVIRONMENT

Environmental Management

ESG Initiatives: Environment

ISO 14001 Certification

In August 2018, we obtained ISO 14001 certification for our sites in Japan, including those at subsidiaries. As of March 31, 2022, we have achieved certification for 31 sites at 4 companies. Going forward, we will continue to focus on maintenance and improvement activities with an emphasis on extending certification to all sites.

ISO 14001 certificate

Environmental Management Structure

Management

General Internal

Auditors

Chief Environment

Control Manager

General Environment

Committee

ISO Office

Internal Auditors

Environment Preservation

Administrator

Environment

Committee

Departments

Climate change is a challenge shared by all humankind and is considered one of our business priorities. To make a sustainable society a reality, we will continue to make contributions through our business activities and reduce our own CO2 emissions.

CO2 Emission Trends

In FY2021, the Group's total CO2 emissions were up approximately 4% from FY2015. This does not include the emissions attributed to one site in Japan and one outside Japan that joined the Group after the base year. Energy-derived CO2 emissions remained at about the same level overseas, but in Japan, they were reduced due to consumption of high-efficiency self-

EnvironmentInitiatives:ESG

Environmental Management Promotion System

Every year we develop company-wide Environmental Goals based on our Environmental Policy, which sets out our environmental preservation philosophy. According to the above-established purposes and goals, each ISO 14001-certified site in Japan develops its own Annual Environmental Goals and implements environmental preservation activities closely related to their business tasks. In addition, the Environment Committee of each site deliberates on such matters as compliance with environmental laws and regulations, revisions of plans and environmental education, and provides reports to management. While the ISO Office controls the environmental management system (EMS), an environmental preservation administrator is also assigned for each site in order to ensure thorough implementation of environmental initiatives.

Promoting Green Purchasing

The Group strives to solve serious environmental problems. This includes climate change, which is caused by emissions from mass production, mass consumption, and mass disposal. To help build a sustainable society and protect the global environment, we have established guidelines for green purchasing that comply with Japan's Act on Promotion of Procurement of Eco-Friendly Goods and Services by the State and Other Entities (Green Purchasing Law), which encourages the use of products and services that help reduce environmental impact.

Recommended products

(1)Products contributing to forest protection approved by the Programme for the Endorsement of Forest Certification (PEFC)

(2)Products that are certified by the Japan Environmental Association for their low environmental impact and usefulness for environmental conservation

(3)Products that meet the criteria for specific procured products under the Green Purchasing Law

(4)Products listed as eco-friendly by the Green Purchasing Network

Going forward, the Group will continue to actively pursue green purchasing.

generated power using waste to energy facility as well as a review of each site's electricity contract plans. The result was an overall reduction of 27%. On the other hand, non-energy-derived CO2 emissions generated through industrial waste incineration were up approximately 29% from FY2015, but the lifespan of final disposal sites was extended by incinerating waste plastic and drastically reducing its volume.

If we look at the CO2 emissions above by Scope, Scope 1 emissions account for 89,600 tons of CO2, and Scope 2 emissions account for 13,400 tons of CO2. Scope 3 emissions account for 137,200 tons of CO2.

Scope of data

Headquarters, sites, sales offices and plants in Japan, as well as Group companies* and overseas subsidiaries* (calculation period: April to March)

*The data pertains to consolidated subsidiaries as of March 31, 2022. Data for deconsolidated subsidiaries has been subtracted retroactively, while data for subsidiaries that were previously non-consolidated has been added retroactively, going back to the fiscal year when the subsidiary became consolidated.

Calculation method

Energy-derived emissions: Calculated based on the amounts of electricity and fuel consumed at each site (emissions in Japan calculated based on the Act on Promotion of Global Warming Countermeasures and the Act on the Rational Use of Energy)

Non-energy-derived emissions: Calculated based on the amount of industrial waste incineration.

CO2 Emissions Reduction from Precious Metals Recycling

Effect of reducing emissions by precious metal recycling 438,000 t-CO2 >emissions

by the Asahi Holdings Group 103,000 t-CO2 (Scope1, Scope 2)

Precious metals recycling is considered to have a lower environmental impact than producing new precious metals from virgin mining. For example, in terms of CO2 emissions, it is said to produce about one-tenth the emissions in the case of gold. If this were applied to our precious metals recycling volume, this would result in an indirect reduction of 438,000 t-CO2, more than four times our Group's emissions. In addition to continuing its own efforts to reduce emissions, the Group will continue to help reduce CO2 through precious metals recycling. (The CO2 emissions reduction figure does not indicate the level of emissions directly reduced by the Group.)

ENVIRONMENT

We will carefully conserve limited resources and reduce waste generation, thereby helping to build a recycling-oriented economic system.

*PEFC: Programme for the Endorsement of Forest Certification

Contributing to Biodiversity

The Group recognizes that biodiversity is essential for a sustainable society. We contribute to the preservation of ecosystems, aquatic environments and oceans by providing recycled precious metals and proper treatment of industrial waste, which includes the detoxification of waste liquids.

Environmental benefit of precious metals recycling

When CO2 savings are expressed as the amount of greenhouse gases absorbed by forests, it is equal to

18,411

(an area one-third the size of Lake Biwa)

Note: Calculation was based on the assumption that one cedar tree absorbs 14 kg of CO2 annually (Source: Forestry Agency of Japan), and 1,700 cedar trees are planted in an area of one ha

Emissions reduction benefit

438

thousand tons-CO2

1. NVIRONMENT

Response to Recommendations by the Task Force on Climate-related Financial Disclosures (TCFD)

Expressed Endorsement of the TCFD and Strengthening the Governance System

In December 2021, we expressed our endorsement for the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and established a cross-company team for TCFD consisting of the Business Unit, Technical Unit, and Administration Unit in order to identify risks and opportunities related to climate change and understand the medium- to long- term impact of climate change on our business, and have considered relevant countermeasures. We have also strengthened our Sustainability Promotion System. Details on P23

The risks and opportunities identified in the TCFD actions will be reported to the Board of Directors and the Sustainability Committee at least once every year.

Strategy

Extraction of Risks and Opportunities

We extracted risks and opportunities relevant to climate change that will affect our Precious Metals Business (domestic and North American businesses) and Environmental Preservation Business in 2030. We qualitatively assessed them on three levels: "Large," "Medium," and "Small." At that time, we also considered the further impact of climate change from 2030 to 2050. As a result, "Poli- cy and Legal," "Market," "Technology," etc. were identified.

ESG Initiatives: Environment

Risk Management

The Climate Change Working Group will compile the status of responses to risks and opportunities related to climate change and CO2 emissions. The Sustainability Committee will monitor and evaluate them each year. The Board of Directors will also be informed of the contents for supervision and direction. Also, by reporting it to the Group Risk Management Department, it will be reflected in the overall group risk management.

Metrics and Targets

One of our business materiality themes is to reduce CO2 emissions. Accordingly, we have set the following targets:

• Reduce energy-derived CO2 emissions, such as electricity and gasoline, by 50% (compared to FY2015) by FY2030

In order to achieve this target, we are moving forward with switching to CO2 free electricity, reducing fuel usage, and making our business offices ZEBs (Zero Energy Buildings).

Item

Summary of Scenarios

In the next place, we conducted a scenario analysis to investigate the impact on the business. We adopted two scenarios. One is that the global average temperature is expected to increase by around 4°C by 2100, and the other is that the global average temperature is expected to increase by 1.5°C by 2100, compared to that before the industrial revolution. The analysis was based on the World Energy Outlook 2021 by the International Energy Agency (IEA), the reports by the Intergovernmental Panel on Climate Change (IPCC), and other materials published by the Japanese government.

Results of Scenario Analysis

The 4°C scenario is a world where the current situation continues on, and we found that there would be little impact as of 2030. On the other hand, as we move toward 2050, we anticipate an increase in physical risk: the intensification of natural disasters such as cyclones or floods caused by abnormal weather. In addition to formulating business continuity management (BCM), we are also taking actions such as selecting a location that is strong against disasters when a plant is moved.

In the 1.5°C scenario, strong policy measures are expected to be taken to achieve carbon neutrality in the mid-century. One of these risks is the introduction of carbon pricing including carbon tax. Being affected by cost increases will become a risk, especially in the environmental preservation business. On the other hand, in the precious metals business, it is likely that the evaluation of recycled metals with relatively low CO2 emissions and their cost superiority will increase. This is an opportunity for the company, which has strengths in the production and traceability of recycled precious metals. In the environmental preservation business, the shift from simple incineration to thermal recycling during the transition to decarbonization will be an opportunity for our company which has already been addressed. The expansion of recycling demand, including the expansion of the target product, will provide an opportunity to take advantage of our strength in consulting sales (proposal-based sales).

While reducing risk, we will focus on expanding opportunities.

42 INTEGRATED REPORT 2022

Initiatives for a Hydrogen Society

Asahi Pretec has been working with FC Development Co., Ltd., X-Scientia Co., Ltd., and Sumitomo Mitsui Trust Bank, Limited since September 2021 on the development of a system for building a green hydrogen supply chain through effective use of by-products

as part of the "FY2021 Cross-RegionalCross-Sector Carbon Neutrality Technology Research, Development and Demonstration Program" implemented by Japan's Ministry of the Environment.

This program involves utilizing unused electricity from waste to energy plants owned by Asahi Pretec to develop a hydrogen production system that can significantly reduce hydrogen production costs via the co-production of hydrogen and by-products. After the completion of the program, we will contribute to the spread and expansion of hydrogen by manufacturing inexpensive hydrogen and selling it externally, thus helping to reduce greenhouse gas emissions.

Regional Co-creative/Cross-sector Carbon Neutrality Technology

Development and Demonstration Project (Guided Technology

Development and Demonstration Project for Improving CO2

Emission Reduction Measures)

1. OCIETY

Initiatives for Responsible Precious Metals Management

The Asahi Holdings Group is engaged in global procurement of the materials from which it recovers precious metals, which are essential for manufacturing products such as electronics, auto parts, and jewelry. We have established a management system that complies with guidance issued by relevant international organizations. As a member of the precious metals supply chain, we promote Responsible Precious Metals Management. This is an important part of fulfilling our social responsibilities for compliance with laws, respect for international norms, human and labor rights, health and safety, environmental preservation, fair trade, and ethics.

What is Responsible Precious Metals Management?

Responsible Sourcing of Minerals

The Dodd-Frank Act was enacted in the United States in 2010 out of concern that mineral resources were being used as sources of funds for armed groups causing conflict and human rights abuses. The act regulates the use of conflict minerals from the

ESG Initiatives: Society

Utilizing its sales network that covers all of Japan as well as other sites in Asia, Asahi Pretec collects and recycles recyclable materials containing precious metals from sources such as e-scrap, plating treatment, precision cleaning, catalysts, dentistry, and jewelry. By recycling gold, silver, platinum, palladium, and other precious metals that are essential for modern manufacturing, Asahi Pretec is contributing to the effective use of resources and the development of the industry.

The Asahi Pretec brand is recognized worldwide for its gold, silver, platinum, and palladium products. In addition to LBMA and LPPM Good Delivery accreditation, its products have also been accredited as a deliverable brand by futures exchanges such as the Osaka Exchange (OSE) in Japan, as well as the Commodity Exchange (COMEX) and the New York Mercantile Exchange (NYMEX) in the United States.

In July 2019, Asahi Pretec became the first Japanese refiner to obtain the Code of Practices (COP) certification from the Responsible Jewellery Council (RJC)*. In July 2021, the company also obtained

Chain of Custody (COC) certification. Asahi Pretec's operations meet the RJC's strict standard for code of practices on ethics, human rights, society, and the environment, as well as COC for due diligence and traceability, and the company will continue to fulfill its responsibilities as a member of the precious metals supply chain.

Democratic Republic of the Congo and nine surrounding countries. Companies that are publicly listed in the U.S. and which procure tin, tantalum, tungsten, and gold (3TG) are required to carry out due diligence, survey country of origin, and report on the use of any conflict minerals.

The Organization for Economic Co-operation and Development (OECD) has issued Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas. This OECD Guidance sets out a five-step framework for companies:

1. establish strong company management systems; (2) identify and assess risks in the supply chain; (3) design and implement a strategy to respond to identified risks; (4) carry out independent third-party audits; and (5) report annually on supply chain due diligence.
   The Conflict Minerals Regulation also came into effect in the European Union in January 2021. It applies to importers of materials containing 3TG into the EU from conflict and high-risk areas, and they are now required to carry out due diligence in their supply chain. As a result, responsible sourcing of minerals is expanding globally.

Responsible Precious Metals Management

Refiners who meet criteria in areas such as quality of products, assaying capability, and responsible sourcing, and which have passed testing procedures, are accredited by the London Bullion Market Association (LBMA) for gold and silver or the London Platinum and Palladium Market (LPPM) for platinum and palladium as Good Delivery refiners. Asahi Pretec has received Good Delivery accreditation for gold, silver, platinum, and palladium, while Asahi Refining (USA and Canada) has received the same for gold and silver. These accreditations ensure the companies are trusted by customers in the global market.

To maintain Good Delivery status, in addition to regular quality and technical testing procedures, Good Delivery refiners are required to be audited annually by a third-party for the LBMA Responsible Gold and Silver Guidance (hereafter LBMA Guidance), and the LPPM Responsible Platinum and Palladium Guidance (hereafter LPPM Guidance) in compliance with OECD Guidance.

In addition to avoiding conflict minerals, human rights abuses, money laundering, terrorist financing, and fraudulent transactions, the LBMA Guidance also now requires refiners to fulfill their social responsibilities related to the environment and sustainability. Asahi Pretec and Asahi Refining (USA and Canada) are also accredited by the Responsible Minerals Initiative (RMI) as conflict-free gold refiners that comply with the Responsible Minerals Assurance Process (RMAP).

Asahi Holdings Group's Action

• RJC: A non-profit organization that promotes transaction transparency and responsible corporate behavior in the jewelry industry. This includes businesses that handle precious metals and diamonds, from mines to retailers.

Responsible Precious Metals Management System

Based on our Responsible Precious Metals (RPM) Management Policy, we have established the Responsible Precious Metals Management Committee (RPM Committee) to oversee our RPM management across the company. The President of Asahi Pretec has ultimate responsibility for our RPM management, and we have appointed a Compliance Officer, who is chairman of the RPM Committee, to manage our RPM. The RPM Committee, chaired by the Compliance Officer, adopts and revises policy, decides

on important measures, implements the management system, monitors the operation status, provides training to employees, and reports to senior management.

We consider any transactions that adversely impact our precious metals supply chain to be high-risk. Any transactions considered to be risky are deliberated by the RPM Committee, and additional due diligence is carried out as necessary to enhance the management system.

In FY2021, while there was one supplier that fell into the high- risk category, we continued to do business with the supplier once the risks were mitigated.

SOCIETYSocietyInitiatives:ESG

Based on the Group's corporate philosophy and code of conduct, the "Asahi Way," we have set out a Responsible Precious Metals Management Policy at Asahi Pretec, and a Precious Metals Procurement Policy at Asahi Refining. We conduct due diligence for suppliers and materials of precious metals in accordance with the LBMA and LPPM Guidances, and we practice responsible precious metals procurement.

The compliance status is audited annually by a third party, and then reported to the LBMA and LPPM. These reports are disclosed on our website along with the assurance reports issued by the auditing organizations.

To fulfill one of our Priority SDG-Related Goals, "supply precious metals in ways that are friendly to people, society, and the environment," we work to maintain the Asahi brand as a trusted presence that reassures customers all over the world that we practice highly transparent procurement and traceability of raw materials as certified by third parties, and that our precious metal products are made with consideration for human rights and the environment.

Asahi Pretec's Responsible Precious Metals Management Policy ➡ https://www.asahipretec.com/responsible-sourcing/

Supply Chain Management

Our due diligence process is carried out using a risk-based approach addressing the risks in the precious metals supply chain, such as conflict, compliance with laws, human rights, labor rights, health and safety, and the environment. By communicating with suppliers and conducting know-your-customer questionnaires, we understand the transaction and origin of materials, and we assess risks of suppliers and materials. We send a consent form to all of our suppliers requiring them to confirm that they consent to our RPM Management Policy, and we ask them for their understanding and cooperation in responsible precious metals sourcing. We establish relationships of trust with our suppliers and conduct continuous due diligence to mitigate supply chain risk.

1. Implementation of due diligence for suppliers (risk assessment based on information such as nature of business, location of business, type of materials, county of origin)
2. Communicating our Responsible Precious Metals Management Policy to suppliers
3. Recording transactions and managing traceability
4. Providing training to employees on Responsible Precious Metals Management and due diligence
5. Monitoring implementation status and reviewing by management
6. Conducting annual independent third-party audits