Response to Climate Change

• Climate Change Response Measures
• Greenhouse Gas Emission Reduction Initiatives
• Endorsement of TCFD Recommendations

Climate Change Response Measures

Rapid climate change poses a major threat to humanity and to all life-forms on earth. We recognize that helping combat this threat and contributing to the decarbonization of society are corporate responsibilities and important management issues.

Under the guidance of the Working Group for Climate Change, a working group chaired by an operating officer positioned under the Sustainability Committee, which is chaired by the president, the Yamaha Group is working to contribute to the global movement to reduce CO₂ emissions. At the same time, we are preparing for the potential impact of climate change by identifying risks, formulating mitigation measures, and incorporating these into business strategies. Endorsing the goals of Science Based Targets (SBT),^*1 the Group received certification from this initiative for its medium- to long-term reduction targets in June 2019. Later, in September 2021, the Company received certification for a new greenhouse gas emission target of achieving a reduction of 55% in Scope 1^*2 and Scope 2^*3 emissions from fiscal 2018 to be achieved by fiscal 2031, substantially higher than the prior target of a 32% reduction. The certification indicates that this new more ambitious target is viable for limiting global warming to 1.5ºC above pre-industrial levels. The move was taken in response to the carbon neutrality trends of the international community. Furthermore, the Group declared its endorsement of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)^*4 in June 2019 and commenced initiatives for analyzing the impact of climate change on its finances and disclosing related information.

Going forward, the Yamaha Group will continue to seek to achieve net zero emissions in its operations and across its value chains. At the same time, we will strive to create products, services, and business models that help mitigate climate change and promote the decarbonization of society through energy-efficient products and other means.

Moreover, we will conform our initiatives to the Keidanren Carbon Neutrality Action Plan, which was released by Keidanren, an organization to which Yamaha is a member. The Company has also joined the Japan Climate Initiative and declared its participation in the GX League.

Products that Promote the Decarbonization of Society

Yamaha Fine Technologies Co., Ltd., is engaged in the development, manufacture, and sale of leakage detection systems for the lithium-ion batteries used in hybrid electric vehicles, plug-in hybrid vehicles, and battery electric vehicles. These systems are imperative to the safe electrification of vehicles.

• *1 SBT is an international initiative that encourages companies to formulate greenhouse gas emission reduction targets in accordance with scenarios based on scientific evidence to contribute to the accomplishment of the goals of the Paris Agreement.
• *2 Scope 1 emissions are direct greenhouse gas emissions from a business operator through sources such as fuel use on company premises.
• *3 Scope 2 emissions are indirect greenhouse gas emissions from use of electricity, heat, and steam supplied by third parties.
• *4 TCFD is a task force created by the Financial Stability Board that has released recommendations aimed at facilitating appropriate investment decisions through disclosure of the potential financial impacts of climate change.

Greenhouse Gas Emission Reduction Initiatives

Yamaha Corporation and domestic production sites are advancing energy conservation and other initiatives in manufacturing processes and at offices to achieve the long-pursued target of reducing CO₂ emissions per unit of production by 1% or more each year. For example, we have been introducing renewable energy at our business sites, and were thereby able to transition to renewable energy for 100% of the power used at the Company headquarters in April 2021. We then later switched to Shizuoka Green Electricity, a service that supplies electricity produced through hydroelectric power generation in Shizuoka Prefecture offered by Chubu Electric Power Miraiz Co., Inc., in September 2021. Furthermore, an internal carbon pricing system was implemented in 2022. At overseas production sites, quantitative reduction targets are set on an individual-site basis, and proactive initiatives are being implemented toward the accomplishment of these targets.

In advancing emission reduction initiatives, we manage greenhouse gas emission volumes in accordance with the Greenhouse Gas Protocol.^*5 In addition, third-party verification has been received for Scope 1 and Scope 2 emissions and certain Scope 3 emissions since fiscal 2017.

• *5 The Greenhouse Gas Protocol is a set of standards for calculating and reporting greenhouse gas emission volumes.

Greenhouse Gas Emission Reduction Targets, Measures, and Results

Reduction Targets (SBT-Certified)

• Reduce total Scope 1 and Scope 2 greenhouse gas emissions by 55% from fiscal 2018 levels by fiscal 2031 (achieve effective carbon neutrality by fiscal 2051)
• Reduce total Scope 3^*6 greenhouse gas emissions by 30% from fiscal 2018 levels by fiscal 2031

• *6 Scope 3 emissions are indirect greenhouse gas emissions from areas of the supply chain not accounted for under Scope 1 and Scope 2.

Major Reduction Initiatives

• Energy-saving initiatives including optimization of production methods and equipment placement, installation of highly energy-efficient equipment and LED lighting, and exhaustive management of facility operation times, air-conditioning temperatures, and other energy consumption factors
• Introduction of cogeneration systems and solar power generation systems
• Transition to fuel sources with low greenhouse gas emissions
• Switch to purchasing renewable energy
• Facilitate investment in high-efficiency and renewable energy equipment through internal carbon pricing system
• Improvement of transportation efficiency and shift to low-carbon transportation methods (ships and trains) in distribution
• Development of energy-efficient products (reduction of emissions from large-volume Scope 3 emissions category (product use))

Internal Carbon Pricing

The Yamaha Group introduced an internal carbon pricing system in April 2022 based on the belief that investing in renewable energy and selecting more energy-efficient equipment will be important to mitigating climate change risks. This system entails converting CO₂ emission volumes into monetary amounts based on virtual prices and using these amounts when making investment decisions. This approach motivates the Company to invest in facilities with higher levels of energy efficiency and is expected to drive investment in solar power and other renewable energy generation equipment. For the foreseeable future, the Group will use an internal carbon price of \14,000 per every ton of CO₂.

Results

Scope 1 and Scope 2 Emissions (Yamaha Corporation and all production sites)^{*7 *8 *9}

• *7 The scope of data collection is comprised of Yamaha Corporation headquarters and major production sites and resort facilities worldwide (estimated to account for more than 95% of all Yamaha Group sites).
• *8 Figures differ from those previously released as figures were recalculated to further subdivide regional and power company coefficients by base and by fiscal year.
• *9 Figures use the combined value of indirect emissions through purchased electricity and steam, direct emissions of CO₂ through in-house power generation and heat usage, and greenhouse gas emissions from manufacturing processes.

Scope 3 Emissions (Fiscal 2023)

Initiatives at Yamaha Group Bases

Factory Initiatives

Yamaha Music Manufacturing Japan Corporation (Iida Factory)

• Use of appropriate pressure for compressors, partitioning of work booths, introduction of power usage monitors, and conservation of space by consolidating equipment inside factories and rationalizing equipment layouts
• Improvement of air-conditioning efficiency by applying thermal-barrier coating to factory roof

Yamaha Music Manufacturing Japan (Kakegawa Factory)

• Removal of unnecessary lighting, replacement of fluorescent lighting with LED lighting, replacement of prior compressors with inverter compressors, upgrading of distribution transformers and air-conditioning equipment, and improvement of air-conditioning control
• Improvement of efficiency during low-load periods by integrating compressor control, investigation and repair of air leaks, and reduction of air pressure
• Reduction of CO₂ emissions by 583 t-CO₂ and electricity usage by 1,034 MWh on an aggregate basis over nine-year period (fiscal 2015-2023)
• Utilization of cogeneration systems to cut CO₂ emissions by 2,900 t-CO₂ a year (equivalent to 420 kL of crude oil a year)

Yamaha Fine Technologies Co., Ltd.

• Efficient management of air-conditioning and sprinkling of water on factory roof to cut peak power consumption during the summer
• Introduction of summer-time system in which work start time is moved two hours ahead to 6:00 a.m. for certain automobile interior parts painting processes that require high levels of air-conditioning (effectively shifting peak power consumption point from 2:00 p.m. to 11:00 a.m. and realizing reduction in peak power consumption of approx. 310 kW in hotter part of the afternoon as well as lowering power consumption by 200,000 kWh during three-month period from July to September)
• Improvement of labor efficiency to shorten facility operating hours, review of workplace layouts to reduce air-conditioning requirements, and revision of how steam is used during winter

Hangzhou Yamaha Musical Instruments Co., Ltd.

• Appropriate operation management of dust collectors
• Shortening of water supply operation times, strategic positioning of lighting, and reduction of lighting usage times
• Installation of automatic control system for dust collectors and digital electricity meters in switchboards to enhance management of electricity consumption and reduce losses from idle power consumption by machinery at night
• Sequential shift from fluorescent lighting to LED lighting

Initiatives at Resort Facilities

• Annual electricity savings of 77 MWh through installation of LED lighting and motion sensors in restrooms
• Annual reductions in CO₂ emissions of more than eight tons achieved by switching from gasoline golf carts to electric carts (fiscal 2014)
• Annual electricity savings of 25 MWh through "green fan" initiatives (greens maintenance) and adjustment of facility air-conditioning (fiscal 2019-2020)
• Approx. 30% reduction in boiler fuel consumption (heavy oil) and one-hour reduction in boiler operation time through replacement of all large-scale, air-conditioning systems that use hot water for heating with energy-efficient air-cooling systems
• Upgrades to high-efficiency boilers
• Introduction of high-efficiency air-conditioning systems and electric vehicle charging stations that use renewable energy

Initiatives at Offices

Yamaha Corporation is advancing systematic electricity conservation measures at offices.

Major Electricity Conservation Measures

Reduction of amount of lighting (after verifying lighting levels), introduction of LED lighting, deactivation of lit advertisements, halting of elevator operation, and notification of employees of electricity consumption amounts to raise awareness

Transition to LED Lighting

• Annual electricity savings of 118 MWh at Yamaha Corporation headquarters by replacing approx. 2,500 lights with LED lighting over 10-year period (fiscal 2014-2023)
• Annual electricity savings of 130 MWh at Toyooka Factory by replacing approx. 6,300 lights with LED lighting over seven-year period (fiscal 2017-2023)
• Annual electricity savings of 228 MWh at Kakegawa Factory by replacing approx. 2,500 lights with LED lighting over nine-year period (fiscal 2015-2023)

"Cool Biz" and "Warm Biz" Initiatives

Encouragement of cooler attire, such as not wearing a necktie, during summer (May to October) and setting of air-conditioning temperature to over 28°C

Request that employees wear warmer clothes during winter (November to March) so as not to rely too heavily on heating and setting of heater temperature to under 20°C

Initiatives in Logistics

Energy Conservation and CO₂ Emission Reduction in Logistics

The Yamaha Group is working to increase energy efficiency and reduce CO₂ emissions in logistics operations together with efforts to improve transportation efficiency and shorten transportation lead times. To this end, we are incorporating CO₂ emission reduction initiatives into various activities. For example, we are working to raise truck and container loading ratios, review warehouse locations and transport routes to shorten transportation distances, examine the possibility of incorporating low-carbon transportation methods (ships and trains), revise transportation packing specifications, conduct joint transportation with other companies, and dispose of waste in the area it is produced.

In fiscal 2023, total CO₂ emissions from logistics amounted to 100,138 t-CO₂, a decrease of 17,492 t-CO₂ year on year.

Reducing CO₂ emissions from logistics requires the cooperation of transportation companies. As such, we are working with them to develop the necessary systems by requesting that the transportation companies we work with cooperate in environmental efforts and incorporating environmental matters into questionnaires.

Resource Conservation and CO₂ Emission Reduction in Piano Frame Transportation

Previously, the Yamaha Group has used disposable iron packing racks when transporting piano frames from Japan to overseas factories. However, we are gradually introducing returnable packing racks for piano frames that can be used multiple times in order to conserve resources. In addition, by shortening transportation routes and improving load efficiency, the Company has achieved a 100-ton reduction in CO₂ emissions associated with the disposal of iron packing and a 1,600-ton reduction in iron resource consumption. Going forward, we will examine the possibility of shortening transport distances and reducing disposable packing material use, including for parts aside from piano frames.

Standardization of Packaging for Shipping Components and Materials to Conserve Resources and Reduce CO₂ Emissions

The Yamaha Group is pursuing enhanced efficiency in transportation by increasing the number of products shipped per container through the use of more compact packaging that better matches the sizes of the containers used during shipping. For example, a 17.0% reduction in the size of the packaging used for Yamaha P series digital pianos resulted in a 12.5% increase in container packing rates. This change led to an annual reduction of 269 in the number of 40-foot high-cube containers used together with a 26-ton decrease in annual CO₂ emission volumes.

CO₂ Absorption through Tree Planting Activities in Indonesia

After conducting Yamaha Forest tree planting activities in Indonesia over the period from 2005 to 2016, the Company confirmed the growth status of the forest via satellite imagery and estimated the volume of CO₂ absorbed by the trees in 2017. The Company estimates that approximately 42,000 t-CO₂ had been absorbed leading up to 2017, and that 6,000 t-CO₂ have been absorbed on a consistent basis each year thereafter.

Endorsement of the TCFD Recommendations

Rapid climate change poses a major threat to humanity and to all life-forms on earth.
We recognize that helping combat this threat and contributing to the decarbonization of society are corporate responsibilities and important management issues.

In fiscal 2019, the Yamaha Group declared its endorsement of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and commenced initiatives for analyzing the risks and opportunities for its business created by climate change. This information is reflected in management strategies, and information on the financial impacts of these risks and opportunities is disclosed.

Governance

Climate change and other important sustainability issues are discussed at meetings of the Sustainability Committee, which is an advisory body to, and chaired by, the president that was established in January 2021. Matters discussed by this committee are regularly raised to the Board of Directors, which confirms the progress of and oversees measures. The Sustainability Committee met six times in fiscal 2023.

In November 2022, a discussion forum was arranged with sustainability experts as part of our efforts to heighten awareness regarding climate change and other social issues.
The Working Group for Climate Change, an organization positioned under the Sustainability Committee, leads discussions on measures for responding to climate change-related risks and opportunities, and relevant topics are also examined by the Working Group for Resource Circulation and the Working Group for Procurement. The results of these discussions are reported to the Sustainability Committee.

In fiscal 2022, Yamaha revised its sustainability priorities (materiality), the management issues with the potential to impact corporate value over the medium to long term, to include climate change among these issues. The Make Waves 2.0 medium-term management plan launched in April 2022 defines "set sustainability as a source of value" as one of its key policies, thereby positioning response to climate change as a central theme of the plan. Moreover, the Company has introduced frameworks for reflecting the degree of accomplishment of targets for CO₂ emissions reductions and other non-financial indicators into officer compensation.

Strategy

Scenario analyses have been performed to confirm the potential impacts of climate change on the Yamaha Group. A number of scenarios were used including those projecting global warming of between 1.5°C and 2°C above pre-industrial levels, which involve significant transition risks, and scenarios assuming global warming of 4°C above pre-industrial levels, which forecast substantial physical risks, as well as various other scenarios.^*1 Applied to all businesses, these assessments were used to identify short-term, medium-term, and long-term risks and opportunities.^*2 Given the potentially large impact on business activities, strategies, and financial performance from climate change, the related risks and opportunities are regularly reviewed, and strategies are revised as necessary (see table below).

• *1 NZE Scenario (net zero emissions by 2050 and global warming of 1.5°C above pre-industrial levels, 2022 World Energy Outlook, International Energy Agency (IEA)); Sustainable Development Scenario (global warming of less than 2°C above pre-industrial levels, 2022 World Energy Outlook, IEA); Representative Concentration Pathway (RCP) 2.6 (global warming of less than 2°C above pre-industrial levels); RCP 8.5 (global warming of 4°C above pre-industrial levels); Announced Pledges Scenario; Stated Policies Scenario (Business as Usual); etc.
• *2 Risks and opportunities are classified as "short-term" if their impacts will be most strongly felt over the next several years, "medium-term" if their impacts will be felt leading up to 2030, and "long-term" if the impacts will appear in 2050.

Projected Impact of Carbon Pricing in Fiscal 2031 by Scenario (Billions of yen)

• NZE Scenario^*1
• Announced Pledges Scenario^*2
• Stated Policies Scenario^*3
• *1 Scenario targeting effectively net zero emissions by 2050
• *2 Scenario assuming the implementation of adaptive climate change response measures based on current government policies and regulations and technological progress
• *3 Scenario assuming that countries will enact their stated climate change response policies and accomplish their announced targets

Potential Changes in Timber Procurement Region Environments from Base Year

Risk Management

Process of Identifying and Assessing Climate Change-Related Risks and Opportunities

Having established the guidance of the Risk Management Committee, Yamaha has implemented Companywide frameworks for assessing all of the climate change and other risks faced in its corporate activities. These frameworks are utilized to identify and assess climate change-related risks.

Risks are assessed and categorized from the perspectives of potential damages and frequency. This approach is utilized to determine the effective financial and strategic impact of said risks on the Yamaha Group’s business, and this information is used as the basis for the formulation of risk countermeasures.

Based on the results of scenario analysis, the Working Group for Climate Change, an organization positioned under the Sustainability Committee, determines and assesses the potential damages and frequency of the risks identified through scenario analyses. The working group then compiles lists of risks based on the risk categories put forth by the TCFD. The potential damages of the risks contained on these lists are assigned one of three ranks based on the portion of revenue represented by said damages, and the potential frequency is given one of four ranks. This approach is used to identify material risks. A similar approach is employed in specifying material opportunities.

Climate Change-Related Risk and Opportunity Management Process

The Working Group for Climate Change meets four times a year, and these meetings are attended by officers and division management responsible for organizations pertaining to such functions as production, procurement, logistics, the environment, finances, and corporate planning. Meetings of this working group are used to monitor and revise measures for responding to the identified material risks and opportunities.

In addition, measures are discussed as necessary by other working groups, such as the Working Group for Procurement and the Working Group for Resource Circulation, which provide advice pertaining to the identification of themes for countermeasures as well as the allocation of resources and decide upon indicators for monitoring progress.

Material risks and opportunities warranting measures that exceed the scope of responsibilities of the working groups are reported to the Board of Directors, which will then examine the potential response measures.

Relationship between Management of Climate Change-Related Risks and Comprehensive Risk Management

The Risk Management Committee is tasked with identifying material risk scenarios pertaining to all of the risks faced in the Company’s corporate activities, formulating measures to mitigate the potential impacts of risks, and managing the progress of said measures.

Based on instructions from the Risk Management Committee, the Working Group for Climate Change identifies and assesses risks and coordinates and supports the related response measures.

The Sustainability Committee, of which the Working Group for Climate Change is a part, and the Risk Management Committee are both chaired by the president of the Company to allow for organic coordination between the activities of these committees.

Metrics and Targets

Reductions to CO₂ emissions are managed in a comprehensive manner encompassing the entire Yamaha Group and its supply chains. To facilitate these efforts, the Greenhouse Gas Protocol is used as the standard for calculating total greenhouse gas emissions (Scope 1, Scope 2, and Scope 3 emissions), and third-party verification is received for these calculations.

Yamaha has set the medium-term targets of reducing total Scope 1 and Scope 2 greenhouse gas emissions by 55% (a target certified by Science Based Targets as sufficient for helping limit average global warming to below 1.5ºC) and total Scope 3 greenhouse gas emissions by 30% from fiscal 2018 levels by fiscal 2031. In addition, we have set a long-term target for Scope 1 and Scope 2 emissions of achieving carbon neutrality by fiscal 2051.

Targeting effective zero emissions of greenhouse gases across its value chain, Yamaha announced its commitment to achieving net zero emissions, as defined by Science Based Targets, in June 2023 (see diagram on next page).

As short-term milestones on our path toward this larger target, we aim to achieve a 5% improvement in energy efficiency during production and a 10% rate of renewable energy use by fiscal 2025.

Yamaha aspires to protect forest resources and biodiversity as it responds to the risks associated with companies withdrawing from timber businesses and changes to the environments of regions from which it procures timbers. To guide these efforts, we have set the target of achieving a 75% rate of sustainable timber use by fiscal 2025.

Decarbonization Plan

Reductions to CO₂ emissions are managed in a comprehensive manner encompassing the entire Yamaha Group and its supply chains. By pursuing steady reductions in greenhouse gas emissions (Scope 1, Scope 2, and Scope 3), Yamaha seeks to combat rapid climate change, which is a threat to human society as well as to all living organisms on the planet, and to contribute to the realization of a decarbonized society.