(a) Process by which the Board of Directors receives reports on environment-related issues, frequency with which these issues are placed on the agenda, and monitoring of progress

To promote sustainability management across the Group in an integrated manner, we incorporate responses to environmental issues that are highly relevant to our business, including climate and nature-related risks and opportunities (hereinafter collectively referred to as “environment-related issues”), as well as initiatives aimed at addressing these issues, into our business strategy. Such matters are deliberated and approved by the Group Management Meeting, which serves as the highest decision-making body for business execution.
In addition, the Sustainability Committee, which meets at least twice a year, has been established as an advisory body to the President and Representative Executive Officer. The Committee discusses strategies that contribute to the sustainable growth of our business, as well as matters requiring corporate action toward the realization of a sustainable society. It also monitors the progress of sustainability initiatives across the Group.
Based on these discussions, important matters such as specific sustainability policies and action plans are deliberated and approved by the Group Management Meeting. Matters approved by the Group Management Meeting are subsequently communicated to all Group operating companies through meetings attended by the presidents of the operating companies.
Meanwhile, the Board of Directors, which meets monthly, receives reports on matters deliberated and approved by the Group Management Meeting, as well as matters discussed by the Sustainability Committee. The Board oversees the setting of targets, response strategies, and implementation plans related to sustainability initiatives.

JFR Group’s sustainability management system

Board of Directors Skill Matrix

In selecting candidates for the Board of Directors, the Company uses a skills matrix to clarify the expertise and experience expected of directors. One of these skill categories is “Environment.” By appointing directors capable of providing appropriate supervision of specific action plans and regular reviews, and monitoring the status of initiatives for continual improvement of environmental plans including the setting of medium- to long-term targets, we are enhancing the effectiveness of our efforts to address environmental issues.

* Skill Matrix

(b) Management’s responsibility for environment-related issues, process for receiving reports, and monitoring methods

The President and Representative Executive Officer chairs the Group Management Meeting as well as the Risk Management Committee and the Sustainability Committee, which are both advisory panels under his direct control. The President thus bears final responsibility for management decisions related to environmental issues and risks. Matters deliberated and approved by the Group Management Meeting and the Sustainability Committee are ultimately reported to the Board of Directors.

Non-financial metrics incorporated into the officer remuneration system

Since FY2021, “reduction of Scope 1 and 2 emissions” have been set as non-financial metrics for determining performance-linked remuneration under the officer remuneration system. These are linked to the KPIs in the Medium-term Business Plan to clarify the responsibility of executive officers for achieving the targets for climate-related issues and to function as an incentive for realizing and promoting sustainability management.

* Executive Remuneration System

JFR Group: Governance Structures, Responsible Entities, and Roles in Sustainability Management

Main agenda items of the Sustainability Committee

* Sustainability Committee

(a) Details of the process for identifying and assessing climate and nature related risks and opportunities

The Group positions risk management as the starting point of its strategy and defines risk in general as “uncertainty that affects the achievement of corporate management objectives and has both positive and negative aspects.” The Group believes that, when appropriately addressed by a company, such risks can contribute to sustainable growth.
Based on this same understanding, the Group identifies and assesses environmental related risks and opportunities from both positive and negative perspectives.

(b) Details of the process for managing climate- and nature-related risks and opportunities

The Company conducts more detailed studies of environmental risks and opportunities within the Sustainability Committee and shares the outcomes with each operating company. Each operating company incorporates environmental initiatives into its action plan and monitors their progress through discussions at meetings chaired by the president of each operating company. These matters are further monitored by the Group Management Meeting, the Risk Management Committee, and the Sustainability Committee, and are ultimately reported to the Board of Directors. There have been no changes to the management processes since the previous fiscal year.

(c) Status of integration into the company-wide risk management framework

Recognizing that risk management is critically important to corporate management, we have established a Risk Management Committee (meets at least twice a year) to manage all risks, including environmental risks, in an integrated company-wide manner. The committee deliberates on important matters such as identification and evaluation of risks and the determination of which risks will be reflected in strategy. Because we position risk as the starting point of strategy, we strive to link risk management to the enhancement of corporate value by aligning our strategy with risk.
Risks that are extremely important to the Group’s management over the medium term are positioned as “critical risks” and serve as the starting point for our Medium-term Business Plan. We also review environmental risks and opportunities annually, confirming whether any changes have been made to our processes. As part of the FY2025 review, the previously identified material risks of “Growing importance of environmental issues” and “Growing importance of human rights” were integrated into a single risk category, “Increasing complexity of sustainability issues.” This revision reflects the recognition that challenges related to nature, climate, and human rights are becoming increasingly interconnected and require an integrated approach.
The deliberations of the Risk Management Committee are shared with the Sustainability Committee.
Additionally, the contents of discussions in these bodies, as well as matters approved by the Group Management Meeting, are reported to the Board of Directors (meets monthly). Under this supervisory structure, we reflect risk-related matters in the Group’s strategy and implement appropriate measures.

Group-wide Risk Management Process (PDCA)

(a) Dependencies and impacts on nature

The Group’s business is dependent on a wide range of nature's benefits (ecosystem services), including agricultural products, livestock, marine products, timber, and water in addition to soil, forests, and seasonal weather. That said, our business activities also impact the natural environment in various ways, such as GHG emissions, waste emissions, and wastewater. We recognize the importance of understanding and assessing the relationship between our business activities and the natural environment from the dual perspectives of “dependencies” and “impacts,” as illustrated in the figure below, and to respond promptly to material issues that are identified.

(b) Evaluating nature-related issues based on the LEAP^* approach

The LEAP approach is a TNFD recommended, integrated process for identifying and assessing nature-related issues, including contact points with nature, dependencies and impacts, and nature-related risk and opportunities.
In FY2023, Daimaru Matsuzakaya Department Stores Co., Ltd.—the Group’s main operating company—used the LEAP approach to identify and assess nature-related issues (dependencies/impacts, risks/opportunities) at its 15 department stores throughout Japan.

* LEAP stands for the four phases of Locate, Evaluate, Assess, Prepare

① Outward appearance of dependencies and impacts <Locate>

We created a heatmap based on “ENCORE” (a TNFD recommended tool for identifying nature-related dependencies and impacts) to understand the overall dependence and impact across the entire value chain of the department store business on nature and their magnitude. We then confirmed the degree of dependence and impact on natural capital in direct operations (store operations and store development) and upstream in the value chain (procurement).
The heatmap analysis revealed high levels of dependency on water resources (provisioning services) in the upstream value chains of apparel and agricultural, livestock, and marine products, as well as on flood control and land stabilization (regulating services). In addition, areas with high impact were identified as water resource usage and usage of terrestrial and freshwater ecosystems.

② Identification of stores to assess for risks and opportunities <Locate>

We used several tools, including the Risk Filter Suite (a WWF^*1 tool for analyzing risk in ecosystems and water) and Aqueduct (a WRI^*2 water risk analysis tool), to assess the state of ecosystems surrounding our stores. Additionally, we conducted a materiality evaluation using our own standards such as ownership of land and buildings, and scale of sales. As a result, we identified the Daimaru Shinsaibashi store as of particularly importance for biodiversity preservation.

*1 WWF (World Wide Fund for Nature):
An environmental conservation organization active in more than 100 countries, that works to restore the vanishing richness of biodiversity and to prevent global warming.

*2 WRI (World Resources Institute):
An independent organization that conducts policy research and provides technical assistance on global environmental and development issues.

③ Sorting out factors behind dependencies and impacts on nature <Evaluate>

We sorted out factors related to the business activities of the Daimaru Shinsaibashi store, focusing on store development,clothing and food products, and packaging materials, which involve major dependencies and impacts on ecosystem services in the value chain.

Store development	Dependencies	●Procurement of raw materials for construction ●Water usage ●Fuel usage ●Electricity usage	●Fuel usage	●Fuel usage ●Electricity usage ●Water usage
	Impacts	●Land conversion and development ●Mineral resource extraction ●Energy usage ●GHG emissions ●Air pollution ●Waste emissions	●Air pollution ●Energy usage ●GHG emissions ●Waste emissions	●Air pollution ●Water pollution ●GHG emissions ●Waste emissions	●Fuel usage ●GHG emissions ●Waste emissions
Clothing and food	Dependencies	●Use of soil, forests, and pastures for procurement of raw materials such as cotton and lumber and for livestock feed ●Use of marine areas and extraction of natural fisheries resources ●Pollination by insects ●Water usage ●Fuel usage ●Electricity usage	●Fuel usage	●Fuel usage ●Electricity usage ●Water usage ●Paper usage	●Water usage ●Fuel usage ●Electricity usage
	Impacts	●Soil pollution, deforestation, reduction of pastureland, land degradation, desertification due to such factors as excessive wood consumption and use of pesticides ●Depletion of water resources, destruction of marine ecosystems (e.g. overfishing of juvenile fish) ●Wastewater and water pollution in food processing processes ●Energy usage ●GHG emissions ●Air pollution ●Waste emissions	●Air pollution ●Energy usage ●GHG emissions ●Waste emissions	●Air pollution ●Water pollution ●GHG emissions ●Waste emissions	●Microplastic runoff during laundering, water pollution ●Waste emissions
Packaging materials	Dependencies	●Procurement of raw materials for paper packaging ●Water usage ●Fuel usage ●Electricity usage	●Fuel usage	●Fuel usage ●Electricity usage
	Impacts	●Deforestation due to excessive logging ●Energy usage ●GHG emissions ●Air pollution ●Waste emissions	●Air pollution ●Energy usage ●GHG emissions ●Waste emissions	●Waste emissions	●Fuel usage ●GHG emissions during recycling ●Waste emissions

④ Assessment of risks and opportunities, preparation of countermeasures <Assess><Prepare>

Please refer to “(e) Risks/opportunities, and financial impacts based on relevant scenarios and strategies/resilience against them.”

(c) Details of Short-, Medium-, and Long-Term Risks and Opportunities

The Company considers it important to examine environmental risks and opportunities at the appropriate milestones, as they may have long-term impacts on its business activities. Accordingly, the Company defines the period up to fiscal year 2026, which corresponds to the implementation period of its medium-term business plan, as the short term; the period up to fiscal year 2030, the target year for the near-term goals under the Science Based Targets (SBT), as the medium term; and the period up to fiscal year 2050, the target year for achieving net zero under the SBT framework, as the long term.
In response to environmental risks and opportunities, the Group formulates and implements strategies based on a back-casting approach, looking ahead to the achievement of net zero by 2050.

(d) Nature and extent of impact of risks/opportunities on business, strategy, and financial planning

The Company recognizes that its core retail and developer businesses are particularly vulnerable to the impacts of ecosystem degradation and climate change, especially in the procurement and quality of products and raw materials, store operations, and energy procurement costs, which are essential for business activities. Accordingly, the Company conducts annual scenario analyses to identify the risks and opportunities posed by ecosystem degradation and climate change and their impacts on the Group, to verify and enhance the resilience of its strategies based on a FY2030 outlook scenario, and to examine the need for additional measures.

Implementation status of scenario analysis

In our analysis, we referenced multiple existing scenarios published by the International Energy Agency (IEA) and the Intergovernmental Panel on Climate Change (IPCC), then envisioned two possible futures as shown in the table below. For each scenario, we examine the risks and opportunities for our business.

<Existing scenarios referenced>

*1 Transition: “Net Zero Emissions by 2050 Scenario (NZE)” (IEA, 2025)
Physical: “Representative Concentration Pathways (RCP2.6)” (IPCC, 2014)

*2 Transition: “Stated Policies Scenario (STEPS)” (IEA, 2025)
Physical: “Representative Concentration Pathways (RCP8.5)” (IPCC, 2014)

Based on these two scenarios, the Group, which is mainly engaged in retail operations such as department stores and shopping centers, has identified environmental risks and opportunities for each activity in its value chain process, in accordance with TCFD and TNFD recommendations. Accordingly, we identified transition risks (policy regulations, technology, market, and reputation) and physical risks (acute and chronic) arising from climate change. We also identified opportunities arising from appropriate responses to environmental issues, including those related to resource efficiency, energy sources, products and services, markets, and resilience.

(e) Risks, opportunities, and financial impacts based on relevant scenarios and strategies and resilience against them

The Company identified environmental risks and opportunities and assessed their importance based on two criteria, the “importance to the Company (impact x urgency)” and the “importance to stakeholders.” For items that were assessed as having particularly high materiality, the Company has conducted both quantitative and qualitative analyses of the financial impacts in FY2030 under two scenarios—the below 1.5℃/2℃ scenario and the 4℃ scenario—and formulated measures for each scenario.
When the data necessary for a quantitative evaluation of the financial impact is difficult to obtain, we conduct qualitative assessments, and the results are presented in a three-level scale indicted by the slope of arrows.

Definition of the periods for considering climate-related risks and opportunities in the JFR Group

Climate change and nature risks of particular importance to the JFR Group and their financial impact

Impact on JFR Group's business and finances expected to be very large

Impact on JFR Group's business and finances expected to be somewhat large

Impact on JFR Group's business and finances expected to be negligible

Climate change and nature risks of particular importance to the JFR Group and their financial impact

Impact on JFR Group's business and finances expected to be very large

Impact on JFR Group's business and finances expected to be somewhat large

Impact on JFR Group's business and finances expected to be negligible

Estimated financial impact for 2030

<Basis for calculation of quantitative financial impacts in FY2030>

*1 Estimated by multiplying the JFR Group’s Scope 1 and Scope 2 emissions as of FY2030 by the carbon price per t-CO₂.

*2 Estimated by multiplying the JFR Group’s electricity consumption as of FY2030 by the price premium per kWh for renewable energy-derived electricity compared with standard electricity rates.

*3 Estimated by multiplying historical revenue losses due to store closures caused by natural disasters by the projected future frequency of flooding events.

*4 Estimated by multiplying the JFR Group’s projected energy savings as of FY2030 by energy procurement costs.

*5 Estimated by multiplying the JFR Group’s real estate revenue as of FY2030 by the projected rate of change in new contract conclusion fees for buildings with environmental certification.

Major parameters

*6 The 2030 figures are estimated based on the IEA’s World Energy Outlook 2025 (WEO2025).

Summary of Resilience

Based on the above scenarios, the Group analyzed the impact of climate change and ecosystem degradation and examined our countermeasures, confirming that the measures that we have already implemented and planned are effective and flexible enough to reduce risks and contribute to the realization of opportunities under all scenarios.
Regarding increased costs due to the introduction of carbon taxes and the impact of natural disasters on revenues, we will systematically and steadily implement measures to mitigate the associated financial risks, including expanding the adoption of renewable energy through the use of sustainability bonds and similar instruments. Additionally, we will leverage our unique strengths in sharing, upcycling, and reuse businesses to promote circular economy initiatives that contribute to the growth of our group and the realization of a decarbonized society.
By promoting initiatives that address both the risks and opportunities associated with environmental issues, the Company will enhance management resilience.

JFR Group 2050 Net Zero and Nature Positive Transition Plan

Recognizing the need to take a medium- to long-term perspective in achieving net zero emissions and a nature positive outcome by 2050, the Company has formulated a transition plan extending through 2050. Based on the results of our analysis of environmental risks and opportunities, as well as their financial implications, we will implement specific initiatives from short-, medium-, and longterm perspectives. This includes taking appropriate measures to address risks and actively responding to changing customer needs to capture new growth opportunities. By clearly outlining our investment and funding plans, as well as the results of our initiatives and financial impacts for the current fiscal year within this transition plan, we will clarify the relationships between these elements and further enhance the plan’s effectiveness. Furthermore, we implemented our environmental investments for fiscal year 2025 as planned.

* As of May 2026: this plan is subject to revision based on future business strategies.

(a) Metrics used to manage climate- and nature-related risks and opportunities

The Group recognizes that biodiversity loss and climate change are inseparable issues and is committed to addressing them comprehensively. To this end, we have established and pursue metrics and targets aligned with the global 1.5℃ goal, as well as metrics and targets for the efficient circulation of resources and will continue to advance our initiatives accordingly.

Indicators and Targets Used by the JFR Group to Manage Climate and Nature-Related Risks and Opportunities

*1 Obtained SBT certification in FY2022 for Net Zero targets

*2 Obtained SBT certification in FY2021 for the “1.5℃ target” (60% reduction vs. FY2017 before the target was revised)

*3 Obtained SBT certification in FY2021 for “1.5℃ target”

*4 Joined RE100 in 2020

To clarify the accountability of executive officers with respect to climate-related issues, we have established a target for the reduction rate of Scope 1 and 2 emissions as one of the non-financial performance indicators used to determine performancelinked stock compensation under the executive remuneration system.

* Officer Remuneration System

Use of internal carbon pricing (ICP)

In February 2024, we established Internal Carbon Pricing (ICP) for visualizing GHG emissions as a cost by converting them into monetary values. The goal is to foster awareness inside the Company of the need for decarbonization and promote decision-making aligned with decarbonization investments. (Internal carbon price: 10,000 yen/t-CO₂).

(b) GHG emissions (Scope 1, 2, and 3) and Renewable energy

The Company has been calculating its total emissions since fiscal 2017. Our Scope 1 and 2 emissions in FY2025 were 59,241 t-CO₂ (69.5% reduction vs. FY2017) and Scope 3 emissions were 2,230,492 t-CO₂ (23.8% reduction vs. FY2017). In addition, the ratio of renewable energy was 75.2%.
Third-party assurance has been obtained for Scope 1, 2, and 3 emissions and renewable electricity consumption.

JFR Group’s Scope 1, 2, and 3 GHG emission results and outlook (consolidated) (Unit: t-CO₂)

*1 Obtained third-party assurance from LRQA Limited.

*2 Scope 2 emissions used in the total are calculated with market-based data.

*3 Calculated based on the “Basic Guidelines on Accounting for Greenhouse Gas Emissions Throughout the Supply Chain Ver. 2.8 (Ministry of the Environment and Ministry of Economy, Trade and Industry, March 2026),” the “Emission Factor Database for Calculating Greenhouse Gas Emissions of Organizations Throughout the Supply Chain Ver. 3.5 (March 2025),” and IDEA v3.5 Scope 3 emissions category 8 is excluded from the calculation because it is already accounted for in Scope 1 and 2 emissions Scope 3 emissions categories 10, 14, and 15 are excluded from the calculation because they do not apply to our Group’s business processes

* The Group’s Scope 1, 2, and 3 emissions are calculated using the above Japanese guidelines and in accordance with the framework of the GHG Protocol, the international standard for supply chain emissions.

FY2025 Results and Future Targets