Message from the Executive Officer in Charge of Sustainability

The Cosmo Energy Group’s sustainable management efforts were officially launched under the Sixth Consolidated Medium-Term Management Plan (hereafter, "the Sixth MTMP"), and with that, we have made strides toward sustainable management in our corporate structure through various initiatives, including establishing the Sustainability Initiative Department and setting up the Sustainability Strategy Committee, a non-financial decision-making body. This committee, chaired by the CEO, convened five times in FY2022 and discussed a range of topics regarding ESG (Environmental, Social, and Governance). One such topic is the improvement of our corporate philosophy system. Since more than 20 years ago, sustainability has been at the core of our business operations, as stated in the Cosmo Energy Group Management Vision, and we have consistently placed great importance on environmentally focused management. The pursuit of sustainable value enhancement and development based on this management vision is none other than the cornerstone of sustainability at the Cosmo Energy Group. In our Sustainability Strategy Committee meetings, we steadily moved forward with the reevaluation of our internal control system, including the reworking of our corporate philosophy system grounded in our Group Management Vision.

In the Sixth MTMP, for the material issues (high-priority issues) identified in the medium term, we backcasted from our vision of how we want the Group to be, set KPIs, and implemented the PDCA cycle for our initiatives. Looking at our achievements for FY2022, we further evolved sustainable management in terms of operations as well, such as linking the assessment of these results with executive remuneration. Regarding the Seventh Consolidated Medium-Term Management Plan (hereafter, "the Seventh MTMP"), given that there is a gap between what we presently recognize as issues and the material issues we have addressed for the past two years, we carried out a reevaluation of our material issues in April 2023 in order to promote more effective initiatives. In this reevaluation, we identified the following sustainability related priority issues: three material issues for creating sustainable value and five material issues that will form the foundation of our business continuity. As for each of the non-financial KPIs set for every material issue, in addition to thoroughly evaluating our level of target achievement, we will also analyze our progress based on environmental changes, as well as discuss the validity of our goals at Sustainability Strategy Committee meetings.

With the growing sense of crisis regarding climate change and the acceleration of decarbonization across the globe, the Cosmo Energy Group announced its 2050 Carbon Net Zero Declaration which aims to bring greenhouse gases emitted in our business operations to net zero by 2050. At the same time, we have identified climate change countermeasures as a critically important material issue. We have established KPIs as this is a high-priority issue that our entire group must work for. When we announced the Seventh MTMP, we declared that we would expand our carbon net zero efforts to our supply chains and aim for net zero carbon emissions, including Scope 3. In order to realize this goal, the transformation of management itself is crucial. Therefore, in the Seventh MTMP, in addition to listing Green Transformation (GX) as one of our strategies, we also describe our contribution to decarbonization in our business strategy. Under the Seventh MTMP, the Cosmo Energy Group will work as one to take on the challenges that lie ahead on the road to carbon net zero.