Response to Natural Capital (Disclosure Based on the TNFD Recommendations)

In July 2025, MGC endorsed the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD)^*1 and registered as a "TNFD Adopter"^*2.

In December 2022, at the 15th Conference of the Parties to the United Nations Convention on Biological Diversity (CBD COP15), the Kunming-Montreal Global Biodiversity Framework was adopted, setting the goal to “take urgent action to halt and reverse biodiversity loss to put nature on a path to recovery” (i.e., Nature Positive) as the mission up to 2030. Furthermore, in September 2023, the TNFD published its final recommendations with the aim of supporting nature-positive outcomes.

MGC recognizes that our business activities depend on various benefits derived from natural capital and biodiversity, and that they also have an impact on them. For example, while water and natural gas are essential resources for our business activities, excessive use of these resources may have a negative impact on the natural capital that is their source. Therefore, we believe that reducing negative impacts on natural capital and biodiversity, and promoting positive impacts, are important for our business activities and the sustainable development of society.
Against this backdrop, since fiscal year 2024, MGC has been managing and disclosing nature-related issues (dependencies, impacts, risks, and opportunities) in line with the TNFD recommendations, with the aim of realizing a nature-positive society. We have evaluated nature-related issues in product manufacturing in the Specialty Chemicals Business Sector and Green Energy & Chemicals Business Sector, looking at direct operations.

• *1 An international initiative established to develop a framework for nature-related risk management and information disclosure by companies and organizations.
• *2 A company or organization that has expressed the intention to disclose information in accordance with the TNFD recommendations.

1. Governance

MGC deliberates and makes decisions on addressing nature-related risks and other key sustainability issues in the Sustainability Promotion Council, chaired by the President and composed of members of the Board of Directors and executive officers at the level of Senior Managing Executive Officer or higher. Important matters deliberated upon in the Sustainability Promotion Council are decided by the Board of Directors.
The participation of corporate sector heads in the Sustainability Promotion Committee, an advisory body to the Sustainability Promotion Council, ensures key sustainability issues are adequately deliberated, and escalated to the Sustainability Promotion Council.

In October 2023, MGC established the "Mitsubishi Gas Chemical Group Human Rights Principle" to fulfill its responsibility to respect the human rights of various individuals impacted by MGC’s business activities. If nature-related human rights risks are identified within MGC’s value chain, the company will take appropriate actions to respect human rights. Furthermore, MGC aims to be a company trusted and supported by society by creating opportunities for communication with various stakeholders and fulfilling its responsibilities toward them.

2. Strategy

Dependencies and Impacts

MGC has compiled information on the dependencies and impacts of its business activities on nature based on the results of ENCORE*3 and the characteristics of its business operations. Our findings are presented in a heatmap below, which shows that all of our business sectors have significant impacts on nature, including land-use change, water use, natural resource use, and soil pollution. We also observed a high level of dependency on ecosystem services for the supply of resources such as water and natural gas.
Water resources are of particular importance, as we use fresh water in our chemical manufacturing processes and access to an adequate quantity of high-quality fresh water is essential for our business operations.

• *3 Exploring Natural Capital Opportunities, Risks and Exposure: A tool for assessing the extent to which economic activities are dependent on and impact nature.

Analysis of Priority Locations

MGC has identified regions that have significant dependencies and impacts on nature and require prioritized analysis and responses as Priority Locations. After evaluating 102 locations, including consolidated subsidiaries, based on the two perspectives of Material Locations^*4 and Sensitive Locations^*5, we have identified five locations within the Group as Priority Locations: the Niigata Plant of Mitsubishi Gas Chemical Company, Inc. (Japan), the Arizona Plant and Texas Plant of MGC Pure Chemicals America, Inc. (U.S.A.), PT Peroksida Indonesia Pratama (Indonesia), and Mitsubishi Gas Chemical Engineering-Plastics (Shanghai) Co., Ltd. (China).

• *4  Locations identified that have nature-related issues material to the company. They are identified by considering the presence of business activities that could have a significant dependency or impact on nature and their impact on management, taking into account the heatmap created using ENCORE.
• *5 Locations where business activities are in contact with areas where nature is important. They are identified based on the following five perspectives, taking into account the materials published by the TNFD.

At MGC’s Niigata Plant, products are manufactured using natural gas. We manage the operation appropriately, fully aware of the impact on the natural environment from improper use of natural gas, as well as the attendant business risks. In addition, as a member of the Umibenomori Association, we have conducted coastal forest conservation activities in the area around the Niigata Plant since 2013. Through these activities, we aim to help maintain and improve ecosystem services, including the retention of soil and sediment in coastal areas.

Coastal forest conservation activities

PT Peroksida Indonesia Pratama and Mitsubishi Gas Chemical Engineering-Plastics (Shanghai) Co., Ltd. are located in industrial parks. Their wastewater is appropriately treated and released through sewage treatment facilities; however, further improvement of the water quality at the respective points of release is also considered an important issue. Both locations participate in water resource conservation and water quality improvement initiatives with the industrial parks and municipalities, helping to reduce environmental impact and protect the environment of the overall area.

Risks and Opportunities

MGC has identified and assessed its nature-related risks and opportunities based on the classification published by the TNFD, taking into consideration the results of its assessment of its dependencies and impacts on nature. In conducting this assessment, we compiled the risks and opportunities identified in accordance with TNFD guidance, and assessed their financial impact.

MGC’s material nature-related risks and opportunities are presented in the table below. We conduct activities to reduce negative impacts and bring positive impacts to the natural environment, including Sharebeing, which involves the development of valuable businesses and products that contribute to reducing the environmental impact of society, and activities at each location. We will continue to promote these activities, which not only reduce risk, but also lead to opportunities.

• *6 Perfluoroalkyl and polyfluoroalkyl substances

3. Risk and Impact Management

MGC analyzes and assesses nature-related issues using the LEAP approach^*7. Specifically, we complied information on our dependencies and impacts on nature using ENCORE results and considering the characteristics of our business operations. Using the compiled results and publicly available information, we identify regions with high priority for analysis and response as Priority Locations. For the identified Priority Locations, we assess dependencies and impacts using publicly available information and site-specific information, and review and consider appropriate response measures. Based on the results of this assessment, we identify risks and opportunities, qualitatively assess the magnitude of potential financial impacts, and review and consider appropriate response strategies.

Additionally, MGC manages dependencies and impacts on nature, such as wastewater and waste management, at each plant, as identified and evaluated above. The Sustainability Promotion Department within its CSR & IR Division identifies and assesses nature-related risks and opportunities and formulates response strategies. The results of these evaluations and considerations are deliberated by the Sustainability Promotion Committee and then submitted to the Sustainability Promotion Council for further discussion. The important issues discussed by the council are resolved by the Board of Directors, and managed throughout the Company.

• *7 An integrated approach for evaluating nature-related issues, including identifying points of connection with nature, diagnosing dependencies and impacts on nature, and assessing risks and opportunities.
  （LEAP：Locate, Evaluate, Assess, Prepare）

4. Metrics and Targets

MGC measures intake volumes, discharge volumes, water consumption, and recycled water volumes to track its water usage and promote efficient utilization. In addition, we compile environmental data annually, including the volume of industrial waste generated, final disposal amounts, emissions of non-GHG air pollutants such as SOx and NOx, and the release of water pollutants such as BOD and COD. We also compile annual data on the amounts we invest in biodiversity conservation, as well as environment-related accidents and violations of environmental laws and regulations. These environmental impact data are published each year in the Sustainability Data Book.

MGC has set long-term targets for water resources and waste in its medium-term management plan and Responsible Care Medium-term Plan. Going forward, we will look at setting metrics and targets in line with the disclosure indicators recommended under the TNFD framework as we work to reduce our environmental impact.

• *8 Amount of final disposal ÷ Total amount of waste generated×100