Risks associated with climate change and decarbonization regulations

「During the fiscal year, we invested ¥1.9 billion in natural-disaster measures for base stations and network centers to reduce the risk of equipment damage and ensure the stable continuation of services during widespread power outages, as an adaptation measure for flood damage, the likelihood of which is trending upward as typhoons and linear rain bands become more frequent. Specifically, the investment included mobile and portable base stations, battery replacement and maintenance, and the deployment of portable generators. In addition, ¥300 million was recorded as disaster recovery costs.」

「Under the 1.5°C scenario, we assumed that no acute or chronic physical risks from climate change would arise at a level affecting the business, while climate-change policies and regulations would be strengthened. We estimated the impact assuming a carbon tax of approximately ¥16,000 per tonne of CO2 equivalent would be imposed from 2025.」

「Under the 1.5°C scenario, we identified regulatory risks, including carbon taxes, arising from increased electricity consumption. Under the 4°C scenario, we identified the risk that power outages caused by torrential rain disasters would increase the frequency of base-station shutdowns. For example, in the torrential rain disaster of July 2020, approximately ¥330 million was spent on restoration costs.」

「However, despite these measures, our group's business development, financial condition and results of operations could be affected if climate change progresses and causes severe damage from natural disasters, or if new laws and regulations aimed at achieving a decarbonized society are introduced or strengthened, resulting in increased costs associated with the telecommunications networks and information-system equipment owned by our group.」