Shikoku Electric Power Incorporated : Annual Report - (annual e 03e)

‌Shikoku Electric Power Group Value Creation,

Lighting Up the Region and the Future

Becoming a Force that Lights Up the Region Value Creation through

Business Activities

Becoming a Force that Lights Up the Future Business Management that

Increases Sustainability

Financial/Corporate Information

Response to Environmental Issues

For the sake of the earth and communities and their future, our Group is taking initiatives against climate change and initiatives for environmental conservation to reduce environmental burdens.

Initiatives Against Climate Change

In order to increase the effectiveness of our efforts to create our sustainable corporate value, we are striving to identify changes in social needs and risk factors from an ESG perspective and reflecting those we identified in our business operations. As part of it, in September 2019, we expressed our support for the TCFD* recommendations to sufficiently disclose information on climate change and fulfill our accountability to our stakeholders.

*Abbreviation for the "Task Force on Climate-related Financial Disclosures." The TCFD was established in December 2015 by the Financial Stability Board (FSB), which is composed of financial authorities of major countries, in response to a request from the G20 Finance Ministers and Central Bank Governors. In June 2017, the TCFD published recommendations on the disclosure of information concerning climate-related risks and opportunities.

Governance

Governance and promotion framework for measures against climate change

We have positioned our response to climate change as an important challenge in our business management, and we are actively taking initiatives against climate change under the leadership of our committee to promote sustainability (chaired by the President), committee for environmental management (chaired

by the General Manager of the General Planning Division), and committee to promote carbon neutrality (chaired by the President).

Enhancement of information disclosures

Shikoku Electric Power Group INTEGRATED REPORT and Yonden Group Environmental Data Book (in Japanese only)

Any issues that are deemed important in deliberation by the committees are submitted to the Board of Directors and other higher-level committees, and issues determined as important are described in the annual management plans and business plans to solve the issues.

Divisions, Branch Offices,

Power Stations, etc.

Implementation (D)

Collaboration

Important issues

Matters related to policies on initiatives aimed at carbon neutrality

Indicators / targets and information disclosure related to measures against climate change

Corporate Planning Department

Companywide plan dissemination

Inspection (C) / Revision (A)

Concentration of activities

Shikoku Electric Power Transmission & Distribution Co., Inc.

Shikoku Electric Power

Higher-ranking committees such as the Board of Directors Items positioned as particularly important

Performance-linked remuneration system in consideration of climate change measures

We introduced a performance-linked remuneration system (see page 67) for our directors and other officers to reflect our

achievements for climate change in their remuneration in order to advance our efforts for low-carbon implementation and decarbonization.

Shikoku Electric Power Group INTEGRATED REPORT 2025 47

Becoming a Force that Lights Up the Future Business Management that Increases Sustainability

Shikoku Electric Power Group Value Creation,

Lighting Up the Region and the Future

Becoming a Force that Lights Up the Region Value Creation through

Business Activities

Becoming a Force that Lights Up the Future Business Management that

Increases Sustainability

Financial/Corporate Information

Response to Environmental Issues

Risk management

We recognize the importance of managing climate change-related risks, and every year we consider the likelihood of the risks occurring and their impact on income and expenditures (increase in costs) to identify climate change-related risks that could have a significant impact on our business. The identified

Strategy

We will continually assess how climate change-related risks and opportunities will affect our business with conceivable scenarios, and based on the results of the assessment, we will develop and implement necessary measures and

risks are checked by management, and confirmed risks are mentioned in our business plans for the next year to let our employees prevent the risks from occurring.

* The management system for climate change-related risks is integrated into the companywide risk management system (see page 71).

Changes in global average temperature, using 1850 to 1900 as a baseline

(°C)

5

Risks and opportunities

We have identified climate change-related risks and opportunities for the 1.5°C and 4°C scenarios. We evaluated and confirmed the major impacts on our business's income and expenditures under each scenario, and found that while there is a possibility of increased costs mainly due to stricter regulations on thermal power sources and introduction of carbon pricing, we can also expect improved income and

Key risks, opportunities and measures extracted from each scenario

expenditures from increased value of non-fossil power sources and progress in electrification/expanding demand for low-carbon and decarbonized power.

Also, we considered measures to minimize the risks and maximize the opportunities. The measures have already been described in our Group's Medium-Term Management Plan, and we will do our business according to the plan to help realize a sustainable society.

countermeasures.

Scenario selection

To curb temperature rise, we selected a scenario in which no additional countermeasures are taken (4°C scenario*1), and a scenario in which currently announced policies are fully achieved and additional countermeasures are taken (1.5°C scenario*2), and envisioned outlooks for the electricity industry under the scenarios.

*1 Reference: Stated Policies Scenario (STEPS) by the International Energy Agency (IEA), SSP5-

8.5 in the Sixth Assessment Report by IPCC

*2 Reference: Net Zero Scenario (NZE) by the International Energy Agency (IEA) and SSP1-1.9 in the Sixth Assessment Report by IPCC

Future image of the electric power business

4 SSP3-7.0

3 SSP2-4.5

2

SSP1-2.6

1

0

-1

1950 2000 2015 2050 2100 (Year)

Source: IPCC AR6 WG I

*1 Short term: up to 3 years, Medium term: up to 10 years, Long term: over 10 years

*2 Carbon price refers to the 2024 EU-ETS standard value of about 10,000 yen/t-CO2

*3 Estimated from fiscal 2024 sales revenue (retail + wholesale): approx. 700 billion yen

*4 Estimated from fiscal 2024 fundraising results of approx. 57 billion yen

*5 Estimated from fiscal 2024 electric power generation by non-fossil power sources (nuclear, renewables): approx. 8 billion kWh

Becoming a Force that Lights Up the Future Business Management that Increases Sustainability

Shikoku Electric Power Group Value Creation,

Lighting Up the Region and the Future

Becoming a Force that Lights Up the Region Value Creation through

Business Activities

Becoming a Force that Lights Up the Future Business Management that

Increases Sustainability

Financial/Corporate Information

Response to Environmental Issues

Transition plan: Carbon Neutral Challenge 2050

Our Group has touted our goal to become carbon neutral in 2050 as a long-term priority within our Medium-Term Management Plan.

For the challenge, based on the measures for addressing climate change-related risks and opportunities incorporated in

Indicators and targets

We have set targets for various climate-related indicators, including CO2 emissions from our retail sector and power generation sector. We are promoting initiatives that are aimed at achieving the goals to minimize climate change-related risks and maximize opportunities.

Targets for reduction of greenhouse gas emissions for fiscal 2030 and 2035

Our Company has set targets to reduce greenhouse gas emissions (direct emissions from our electric power generation fuel use, etc.) and CO2 emissions from the retail sector by 50% in fiscal 2030 and 60% in fiscal 2035 compared to fiscal 2013.

Going forward, we aim to achieve these targets by maximizing the use of nuclear electric power generation through continued safe and stable operation, developing new renewable energy sources, constructing high-efficiency LNG thermal power with a view to hydrogen co-firing, considering the introduction of ammonia fuel for decarbonization of power sources, and further promoting the use of electric energy through electrification, including in the industrial and transportation sectors.

Green bonds

From the viewpoint of diversifying our financing, we have been issuing green bonds to get funding only for environmental conservation projects to achieve our carbon neutrality by 2050. For our green bonds, DNV BUSINESS ASSURANCE JAPAN K.K. a third-party evaluation organization, has confirmed that the bonds conform to the principles of green finance.

our Medium-Term Management Plan, we have formulated a roadmap (pages 28 and 29) for both the low-carbon and decarbonized power sources and more application of electric energy with a view to fiscal 2030, fiscal 2035 and even further ahead to fiscal 2050. We promote these initiatives while taking environmental conservation into consideration.

Indicators and targets

Fiscal 2024 emissions results for our electric power generation and retail sector

Emissions volume [thousand tons-CO2]

Criteria FY2013

Result FY2024

7,160 (-41%)

11,010 (-44%)

Emissions throughout the supply chain in FY2023*1

*1 Calculated for Shikoku Electric Power and consolidated subsidiaries (excluding companies with negligible emissions) with reference to the "Basic Guidelines for Calculating Greenhouse Gas Emissions through the Supply Chain (ver. 2.6)" (Ministry of the Environment

/ Ministry of Economy, Trade and Industry) and other relevant documents

*2 Direct emissions from our electric power generation and that of consolidated subsidiaries

*3 Indirect emissions associated with the use of electricity purchased from other companies at our workplaces and offices

*4 Indirect emissions contained in electricity procured from other companies, etc.

Overview of green bonds (as of March 31, 2025)

Becoming a Force that Lights Up the Future Business Management that Increases Sustainability

Shikoku Electric Power Group Value Creation,

Lighting Up the Region and the Future

Becoming a Force that Lights Up the Region Value Creation through

Business Activities

Becoming a Force that Lights Up the Future Business Management that

Increases Sustainability

Financial/Corporate Information

Response to Environmental Issues Promoting Environmental Preservation Activities

Our Group continuously works to reduce the environmental impact generated by business activities and to engage in environmental conservation activities together with local communities.

Analysis of dependencies and impacts STEP 1: Screening using ENCORE

For the analysis of dependencies and impacts on natural capital in the power generation business and the transmission and

distribution business, we used the TNFD-recommended tool "ENCORE"* to classify the degree of dependency and impact on natural capital for each business activity into three levels.

* A tool for assessing dependencies and impacts on natural capital in business processes based on global data.

Disclosure based on TNFD recommendations

In December 2022, the "Kunming-Montreal Global Biodiversity Framework"*1 set the achievement of nature positive*2 as a goal, and in Japan, the "Nature Positive Economic Transition Strategy" was announced as a national strategy in March 2024, highlighting the growing importance of biodiversity both domestically and internationally.

ausing soil and water pollution

Amid these developments, we recognize that in order to preserve the Shikoku region-a nature-rich area with diverse ecosystems-for the future, it is necessary to approach this issue through the business activities of our Group, which are deeply connected to nature. Since April 2011, our Group has incorporated biodiversity conservation into the "Environmental Action Guidelines" based on the "Shikoku Electric Power Group

Environmental Policy," and has been implementing activities aimed at reducing impacts on biodiversity and ensuring the sustainable use of the benefits derived from its diversity.

As part of these efforts, we have begun analysis in line with the TNFD*3 recommendations framework announced in September 2023 to identify dependencies, impacts, risks, and opportunities related to natural capital including biodiversity in our business activities, and will continue to enhance our disclosures going forward.

*1 An international goal adopted at COP15 (15th Conference of the Parties to the Convention on Biological Diversity) to promote the conservation and sustainable use of biodiversity.

*2 A goal to halt loss of biodiversity by 2030 and fully restore nature by 2050.

*3 Abbreviation for "Taskforce on Nature-related Financial Disclosures". It was established in June 2021 and, it has been developing a framework for assessing and disclosing nature-related risks and opportunities, and published TNFD Recommendations v1.0 in September 2023.

Very High High Medium or below

Governance and promotion system for biodiversity Formulation of policies and strategies regarding dependencies, impacts, risks, and opportunities related to nature, including biodiversity, as well as planning and supervision of various initiatives such as environmental conservation activities in collaboration with local communities, are coordinated and

Risk management

For natural risks judged to have a particularly significant impact on business management during deliberations by the Environmental Management Committee and the Sustainability Promotion Council, the matter is submitted to higher-level

Strategy

Scope and methods of analysis

L (Locate)

Discovering points of contact with nature

E (Evaluate)

Assessing dependencies and impacts

A (Assess)

Assessing key risks and opportunities

P (Prepare)

Preparating for response and reporting

The scope of analysis covers the power generation business and the transmission and distribution business in the Shikoku region, operated by our Company and Shikoku Electric Power Transmission & Distribution Co., Inc. These business domains that form the foundation of our Group and have many points

deliberated by the Environmental Management Committee (Chair: General Planning Office Director) under the governing of the Sustainability Promotion Council (Chair: President), which comprehensively oversees ESG. ( See P.25)

bodies including the Board of Directors, and efforts are made to improve and enhance initiatives. Going forward, the Sustainability Promotion Council will play a central role in deepening the LEAP approach (described later).

of contact with natural capital.

For the analysis, we applied the LEAP approach recommended by TNFD. This analysis focused mainly on "L" and "E" as a model case, and we will continue to pursue "L" and further analyze "A" and "P" going forward.

STEP 2: Analysis of dependencies and impacts based on our Group's background

In addition to the above ENCORE evaluation, in consideration of the facilities and operational status of our Group, we analyze the dependencies and impacts on natural capital in the power generation business and the transmission and distribution business in the Shikoku region as follows.

• In thermal and nuclear power generation, since the water used is mainly seawater, we believe that the dependency on river water (freshwater) is low. In addition, most of the steam (freshwater) used to drive turbines is recirculated after cooling, thereby reducing dependency.

• In thermal power generation, we operate in compliance with environmental laws and agreements with local governments by installing

  Analysis of points of contact with nature

  To understand points of contact with nature other than GHG emissions, which have already been analyzed, we evaluated regions with physical water risks using the TNFD-recommended tool WRI Aqueduct Water Risk Atlas* from the perspective of physical risks. As a result, we confirmed that water stress (the ratio of water supply to water demand) is "Low - Medium" at all sites and there are no sites with high water stress.

  Going forward, as the next process in analyzing points of contact with nature by evaluating dependencies and impacts on natural capital, we plan to identify and assess "areas of concern" from an ecological perspective at business activity sites.

• After determining the scope of analysis, identify the regions where our Company operates and specify areas of concern from the perspectives of natural capital and water risk.

• Identify the dependencies and impacts on natural capital in business activities, and evaluate their magnitude and scale.

  • Evaluate short-, medium-, and long-term risks and opportunities.

  • Consider countermeasures and other actions based on the evaluation results.

• Based on the evaluation of risks and opportunities, consider strategies and target setting.

• Disclose information in accordance with TNFD Recommendations.

flue gas desulfurization and denitrification equipment, electrostatic precipitators, and wastewater treatment facilities, and we believe that the impact on the atmosphere and other environments is low.

For initiatives regarding the impact of GHG emissions, see "Initiatives Against Climate Change" (P.47).

* A tool provided by the World Resources Institute (WRI), an international environmental NGO, that can assess water risk by region.

Becoming a Force that Lights Up the Future Business Management that Increases Sustainability

Shikoku Electric Power Group Value Creation,

Lighting Up the Region and the Future

Becoming a Force that Lights Up the Region Value Creation through

Business Activities

Becoming a Force that Lights Up the Future Business Management that

Increases Sustainability

Financial/Corporate Information

Response to Environmental Issues

Indicators and targets

Our Group sets environmental management targets for environmental conservation activities and aims for continuous reduction of environmental impact.

Among these, for the TNFD-recommended disclosure indicators of "air pollutants other than GHGs" and "waste generation and treatment," we are taking the following initiatives.

Prevention of air pollution

Achievement in FY2024

SOx emission intensity

Target: 0.3 g/kWh

Result: 0.1 g/kWh

power generated by oil, and we replaced the aging coal-fired power plant facilities in the Saijo Power Plant Unit 1 with the latest flue gas desulfurization and denitrification equipment, thereby successfully keeping the intensity of our SOx and NOx emissions at low levels in recent years.

Achievement in FY2024

Effective utilization rate of waste

Target: Approx. 99%

Result:

98.5%

Effective utilization rate of coal ash

Target: More than 99%

Result: 99.2%

Effective use of waste

Our environmental conservation activities

Our Group conducts environmental conservation activities with the aim of achieving targets for natural capital and contributing to regional society. The main initiatives are as follows.

Initiatives at our electric power stations

To minimize impacts on rivers and to comply with laws and regulations concerning water, at our hydroelectric power plants, we are determined to perform the following activities.

• Install equipment able to take in water with low turbidity and return it downstream after use for power generation

• Discharge water for keeping river function from dams to

  maintain the environments downstream

  discharge in accordance with agreements with local governments.

  
  
  

  Also, with respect to the construction of a power plant, we conduct environmental assessments to predict and evaluate in advance the impact of the construction work and the operation of the power plant on the

  surrounding air and water environment, flora and fauna, and ecosystems, and we apply the outcomes of the assessments to our

  environmental

  Achievement in FY2024

  NOx emission intensity

  Target: 0.5 g/kWh

  Result: 0.2 g/kWh

  
  
  
  
  
  

  Almost all of coal ash generated at our coal-fired power plants is recycled as a raw material for cement and as a concrete

  • Remove driftwood and dust from reservoirs to use them as biomass fuel or other uses and conduct other positive initiatives.

conservation measures.

Fish conservation activities

Flora and fauna surveys in the marine area

surrounding the Saijo Power Station

In order to reduce emissions of sulfur oxides (SOx) and nitrogen oxides (NOx) from our thermal power plants into the atmosphere, we are using fuels with low sulfur content, installing flue gas desulfurization and denitrification equipment, and implementing proper control of combustion.

And, we systematically have renewed our aging oil-fired thermal power facilities at the Sakaide Power Station to implement the LNG combined cycle and curb the amount of

Intensity of SOx and NOx emissions from thermal power plants

admixture in various applications, such as bridges, roads, and the exterior walls of buildings.

Recent example of recycling of coal ash

The coal ash is used as a spraying material in the construction of the Goshikidai Tunnel

(Sakaide side section) in Kagawa Prefecture.

Client: Kagawa Prefecture, Contractor: Hazama Ando and Manabegumi JV

Driftwood that gathers at a dam is collected, pulled up, and then used as building materials for houses and furniture (Kominono Dam)

River fish swim both upstream and downstream during their lives. At some intake weirs of hydroelectric power plants, we have installed fishways to allow fish to swim upstream, thereby working to conserve the ecosystem.

(g/kWh)

0.6

SOx NOx

Recycling of remains of demolished structures

At our thermal and nuclear power plants, we are working to

reduce the amount of water required for power generation

0.5

0.4

0.3

0.2

0.1

Average intensity of NOx emissions in major countries*

All of our old and replaced copper and aluminum wires are recycled as new wires and other materials.

Average intensity of SOx emissions in major countries*

All of our removed concrete columns are pulverized, separated from the reinforcing bars, and then reused as construction aggregate (roadbed material for road paving).

and are strictly complying with laws, regulations and other standards concerning water discharge. With respect to the seawater used to cool steam, we are controlling the temperature differences between the water intake and

Example of fishway installation: Saga Intake Weir (Saga Power Station)

0.0

2020

2021

2022

2023

COLUMN Environmental conservation activities together with local communities

We are working throughout the year with local communities around

Shikoku on environmental conservation activities (such as cleanups and forest preservation activities) mainly through Environment Month, which is sponsored by the Ministry of the Environment.

Activities in Shimanto Yonden Forest

At our Kochi Branch Office, employees are participating in Kochi Prefecture's Forest Development Project in Collaboration with Environmentally Advanced Companies.

In a forest (in Shimanto Town) named Shimanto Yonden-no-mori, they are planting trees and weeding to preserve the forest together with the local communities.

Forest conservation activities at Shimanto Yonden-no-mori

2024 (FY)

* Derived from 2022 data of four major countries (Germany, United Kingdom, USA, and France)

Intensity of SOx and NOx emissions in major countries (thermal power plants)

How wires and poles are recycled

Shikoku Electric Power (FY2024)

Germany

(2022)

United Kingdom (2022)

USA

(2022)

France

(2022)

(g/kWh)

0.1

0.2

• SOx

• NOx

0.4

0.1

0.8

0.5

0.3

0.3

0.2

0.4

0.0 0.2 0.4 0.6 0.8

Power lines before recycling

Recycled power lines

* Compiled based on the website of the Federation of Electric Power Companies of Japan

("Energy and the Environment")

Concrete poles before recycling

Recycled construction aggregates

WEB WEB

Environmental Management Targets (in Japanese only)

https://www.yonden.co.jp/energy/environment/policy/index.html

Environmental conservation activities of the Shikoku Electric Power Group (in Japanese only)

WEB

Shikoku Electric Power Group Environmental Data Collection (in Japanese only)

https://www.yonden.co.jp/energy/environment/data/index.html

https://www.yonden.co.jp/energy/environment/preservation_activity/index.html