Message from the Executive Officer in Charge of Sustainability

In recent years, the environment surrounding the energy industry has changed significantly, driven by geopolitical risks such as the instability in the Middle East, growing electricity demand from AI, and other factors, and the importance of ensuring a stable energy supply has risen further. As these changes accelerate, the world is taking another close look at our stance on sustainability as a company. For more than 20 years, the Cosmo Energy Group has placed sustainable development (sustainability) — set out in our Group Management Vision —at the heart of corporate management, and has pursued environmentally focused management built upon the foundation of safe operations and stable supply. The pursuit of sustained value enhancement and development, based on this Group Management Vision, lies at the very core of the Group’s sustainability.

While our Group Management Vision itself remains unchanged, the means of fulfilling it must evolve flexibly in response to today’s rapidly changing societies and business environment. With this in mind, in fiscal 2025, we reviewed our sustainability governance structure. We discontinued the former Sustainability Strategy Committee, consolidated its functions into the Executive Officers’ Committee, and established a new Sustainability Strategy Council, thereby building a more effective framework for advancing our initiatives. Matters deliberated by the council are shared with group companies through the Sustainability Liaison Committee, ensuring that sustainability management is advanced across the entire Group.

Under the Seventh Consolidated Medium-Term Management Plan (fiscal 2023 to fiscal 2025), we worked to transform our management foundation around three themes: human resource transformation (HRX), digital transformation (DX), and green transformation (GX). Under HRX, we promoted a substantial expansion of investment in education and training, alongside reforms to the compensation system that raised employee awareness. Under DX, we built a company-wide framework for advancing DX with the participation of all employees — including the Data Campus program for developing core data-utilization talent, the DX-Hub for supporting the implementation of DX initiatives, and the DX Forum open to all employees — and Cosmo Energy Holdings was selected as a DX Stock in 2025 for the first time. Under GX, we made steady progress on reducing GHG emissions toward our goal of achieving net zero carbon emissions by 2050, and we revised our Roadmap for Achieving Net Zero Carbon by 2050 to reflect the uncertainty in the external environment surrounding decarbonization.

In addition to transforming our management foundation, we focused on strengthening Group risk management. When geopolitical risks, such as rising tensions in the Middle East, materialized, we established a Crisis Response Headquarters led by our Group CEO and swiftly implemented measures that prioritized the protection of human life above all else. While determining and communicating evacuation policies for personnel on the ground and adapting our decision-making and information-sharing to the situation, we took action to ensure the stable supply of petroleum products. We continue these stable-supply efforts today.

Building on the outcomes and challenges of the Seventh Consolidated Medium-Term Management Plan, we have identified material issues as the priority areas we should address to pursue future growth and realize our vision. In fiscal 2025, during the formulation of the Eighth Consolidated Medium-Term Management Plan, we reassessed our material issues to reflect the growing complexity of social issues and changes in the business environment, and revised them into the following six priority issues, effective starting in fiscal 2026.

Material Issue KPIs and Identification Process

For “contributing to a carbon-neutral society,” one of our material issues, we revised the Roadmap for Achieving Net Zero Carbon by 2050 in conjunction with the formulation of the Eighth Consolidated Medium-Term Management Plan. The revised roadmap envisions three social scenarios to secure strategic flexibility against uncertainty in the external environment, and features revised targets for emission reductions, carbon intensity (CI) reduction, and avoided GHG emissions. We will work as one Group toward achieving net zero carbon emissions by 2050.

We have also positioned “employee engagement and development” as one of our material issues, in order to develop the talent who will deliver on Vision 2035. As each employee maintains their physical and mental well-being, proactively takes on challenges with a sense of accomplishment and fulfillment in their work, and continues to grow, we will drive the transformation into a workforce that delivers business advancement, autonomous growth, and high productivity.

Under the Eighth Consolidated Medium-Term Management Plan, which began in fiscal 2026, we will continue to advance sustainability management under the Vision 2035 slogan: “To create energy that shapes the future, energy that sustains society, and new forms of value.”

Advancing sustainability management in this way requires dialogue with a wide range of stakeholders. The Group has held an annual ESG briefing for investors since fiscal 2021, including presentations by our outside directors, and we have actively pursued dialogue and transparent disclosure in the area of sustainability. In fiscal 2024, we also began holding small-group meetings with our outside directors to deepen this dialogue. We are also advancing collaboration with a wide range of other stakeholders — for example, sharing issues across the entire value chain through dialogue with business partners and suppliers, and pursuing initiatives to foster harmonious coexistence with local communities.

Going forward, in pursuit of sustained enhancement of enterprise value, we will continue to listen to the voices of our stakeholders and build dialogue and collaboration as we work to deliver sustainable growth for both society and the Cosmo Energy Group.