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 such as backdrop, MGC is promoting 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. In fiscal year 2024, MGC evaluated nature-related issues for direct operations, including product manufacturing in the Specialty Chemicals Business Sector and Green Energy & Chemicals Business Sector and for major businesses in which we are involved.

• *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 made up of directors. 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 organized the dependencies and impacts of its business activities on nature, based on the results of ENCORE^*3 and its operational characteristics. The heatmap visualizing the findings is as follows.
Based on the heatmap, it was considered that all business sectors have significant impacts on nature, including land-use change, water use, natural resource use, and soil pollution. Additionally, MGC's dependency on ecosystem services for the supply of resources such as water and natural gas was evaluated as significant.
Water resources are essential as MGC uses freshwater in its chemical manufacturing processes, and access to an adequate quantity of high-quality freshwater is considered essential for our business operations.

• *3 A tool for assessing the extent to which business activities are dependent on and impacting nature.

Analysis of Priority Locations

MGC has identified regions (Priority Locations) that have significant dependencies and impacts on nature and require prioritized analysis and responses. This identification was conducted for 102 locations, including consolidated subsidiaries, based on two perspectives: Material Locations^*4 and Sensitive Locations^*5.
Material Locations were identified based on the previously mentioned heatmap, considering the presence or absence of business activities with significant dependencies and impacts on nature, as well as their impact on management.
Sensitive Locations were identified based on TNFD’s published materials, using five perspectives: "Areas of high ecosystem integrity," "Areas of rapid decline in ecosystem integrity," "Areas important for biodiversity," " Areas of high physical water risks," and " Areas of importance for ecosystem service provision."

As a result, in fiscal year 2024, three priority areas were identified: the "Niigata Plant of Mitsubishi Gas Chemical Co., Inc. (Japan)", the "Arizona Plant of MGC Pure Chemicals America, Inc. (USA)", and "PT Peroksida Indonesia Pratama (Indonesia)". Moving forward, we plan to investigate the current state of environmental impact and the condition of nature in these priority areas. We also plan to disclose the evaluation results related to dependencies and impacts.

• *4 Locations identified that have nature-related issues material to the company.
• *5 Locations where business activities are in contact with areas where nature is important.

3. Risk and Impact Management

MGC is conducting analysis and evaluation of nature-related issues based on the LEAP approach^*6. Specifically, MGC organizes the dependencies and impacts related to nature by utilizing ENCORE results and considering the characteristics of our business operations. Based on the organized results and publicly available information, we identify regions with high priority for analysis and response (Priority Locations).
Moving forward, MGC plans to evaluate dependencies and impacts at the identified Priority Locations based on site-specific information, and to organize and evaluate countermeasures. Furthermore, using the organized results of dependencies and impacts along with diagnostic findings for Priority Locations, MGC will identify risks and opportunities, conduct a qualitative assessment of their financial impacts, and evaluate response strategies.

Additionally, MGC manages dependencies and impacts on nature, such as wastewater and waste management, at each plant, as identified and evaluated above. Nature-related risks and opportunities are identified, assessed, and response strategies are formulated by the Sustainability Promotion Department within its CSR & IR Division. 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.

• *6 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 monitors and measures water usage by tracking intake volumes, discharge volumes, water consumption, and recycled water volumes to gain a comprehensive understanding of its water usage practices and promote efficient utilization. In addition, MGC compiles 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. These environmental impact data are published each year in the Sustainability Data Book.

MGC has established targets in its medium-term management plan to reduce the Zero Waste Emission Rate (amount of final disposal/total industrial waste generated) to 1.2% by fiscal year 2026 and further to 1.0% by fiscal year 2030. These targets apply to MGC's non-consolidated operations and domestic consolidated subsidiaries.
In fiscal year 2024, MGC achieved a zero-emission waste disposal rate of 1.1%. Additionally, under the Responsible Care Medium-Term Plan, MGC aims to reduce plastic waste emissions by 10% compared to fiscal year 2023 by fiscal year 2026 and to achieve a water reuse rate of over 95% (non-consolidated). In fiscal year 2024, MGC successfully reduced plastic waste emissions by 10.6% compared to fiscal year 2023 and achieved a water reuse rate of 94%. Looking ahead, MGC will consider establishing indicators and targets aligned with TNFD disclosure metrics.