Mercari Group recognizes climate change to be one of the key challenges faced by our business. Our entire Group is actively working to mitigate climate change, and we have also made these efforts part of our management strategy. In June 2021, we announced our support for TCFD (Task Force on Climate-related Financial Disclosures). The TCFD has financial disclosure recommendations for all companies structured around the four areas of governance, strategy, risk management, and metrics and targets. Mercari Group discloses climate-related information in accordance with these four areas recommended by the TCFD.

1. Governance

The Executive Committee regularly allocates sufficient time for discussion of ESG factors, such as the impact of climate change, as one of our important agenda items. it has also built a structure for incorporating the outcome of these discussions into management decision-making and work processes. The monitoring of individual material topics is executed by the Executive Committee each quarter in tandem with monitoring the progress of our business plan. The committee ultimately reports the monitoring results to the Board of Directors. We aim to promote ESG through this structure and these processes.

2. Strategy

We conducted a scenario analysis to identify the climate-change-related transition risks, physical risks, and opportunities for Mercari Group as a whole. In this analysis, we set two scenarios—a 1.5℃/2℃ scenario and 4℃ scenario—according to scientific bases provided by organizations like the Intergovernmental Panel on Climate Change (IPCC) and International Energy Agency (IEA). Looking ahead, we are examining how both Mercari Group and the society surrounding us will look in 2030 and beyond. Below are the main climate-related risks and opportunities we found based on the scenario analysis.

Category			Impact of climate change on Mercari Group	Potential period of occurrence	Business impact	Our plan of action
Risks	Physical risk	Acute	Data centers, etc., going down due to increasingly volatile natural disasters If any data centers or power companies suffer damage from increasingly volatile natural disasters, it could cause the electricity and network to be suspended as well as data centers to go down, and our users will not be able to sell and buy things online	Mid-to-long term	Medium	- Create a BCP to shorten the length of downtime - Consider disaster recovery plans
	Transition risk	Policy and Legal	Increasing item transport costs due to various regulations or increased fuel prices Increased item transport costs, increased fuel prices,the introduction of carbon pricing, clean energy and fuel-economy standards, or increased delivery labor costs could impact our users (both sellers and buyers) and also impact the demand for items sold on our marketplace	Mid-to-long term	Low	- Strengthen supplier engagement - Expand shipping methods with a low environmental impact
	Transition risk	Reputation	Damage to reputation among financial institutions/investors due to insufficient efforts to mitigate climate change下 As there are increased demands from investors and financial institutions for information disclosure and actions to mitigate climate change, if we fail to meet these demands with respect to the expansion of the cryptoasset business or crossborder transactions, it will likely impact funding	Mid-to-long term	Medium	- Ensure complete and sufficient information disclosure - Reduce 100% of Scope 1+2 emissions by 2030 - Reduce Scope 3 emissions (obtain SBT certification) - Strengthen supplier engagement with shipping carriers - Implement carbon offsets according to the scale of the cryptoasset business
	Physical risk	Chronic	Decreased demand for winter clothing due to climate change As a result of global warming, sales revenue could be impacted due to decreased demand for winter clothing sold on the marketplace	Mid-to-long term	Medium	- Strengthen demand for other categories - Expand markets through crossborder transactions and B2C transactions
Opportunities		Reputation	Competitive advantage from changes in consumer preferences due to increased environmental awareness We can increase the number of Mercari users in accordance with the spread of sustainable consumption and create new motives for people to use Mercari (such as contributing to the environment)	Short-to-mid term	High	- Promote the sustainable consumer behavior of reducing waste

Evaluation of business implications/financial impact

• • High (3 billion JPY or more): Expected to have significant impact on finances or business strategies
• • Medium (100 million JPY or more, but less than 3 billion JPY): Expected to have mid-level impact on finances or business strategies
• • Low (less than 100 million JPY): Expected to have little impact on finances or business strategies

As shown above, as it relates to Mercari Group’s business activities, we have assessed the market opportunities created from changes in the way people consume and their increased environmental awareness due to climate change to be larger than the potential impact of climate-related risks. With regard to the competitive advantage from changes in consumer preferences due to increased environmental awareness, we see this as an opportunity to increase the number of Mercari users in accordance with the spread of sustainable consumption and create new motives (contributing to the environment) for people to use Mercari.

3. Risk management

Mercari Group has conducted a scenario analysis to understand and assess the impact of climate change on our Group’s business and identify the different climate-related risks and opportunities. We are monitoring the identified risks and opportunities under our structure for promoting ESG governance. In this structure, there is also a process for reporting and making suggestions to the Board of Directors as necessary, depending on the project. The Compliance and Risk Committee is also in charge of identifying and managing the key risks for the entire company. This committee takes into account the climate-related risks that may have a significant impact on the business, considers what issues should be handled, determines the priority, and puts together a response policy.

4. Metrics and targets

In estimating the amount of GHG emissions generated through our business, we expanded our scope of calculations in FY2023.6 and beyond to include category 9 of scope 3 emissions (downstream transportation and distribution). As a result of revising the scope of calculation, some reduction targets have also changed.
Before changes Scope 1+2: Reduce emissions by a total of 100% (compared to 2021) by 2030 Scope 3: Reduce added value-related emissions (output level) by 51.6% (compared to 2021) by 2030 (targeting category 1)
After changes Scope 1+2: Reduce emissions by a total of 100% (compared to 2021) by 2030 Scope 3: Reduce added value-related emissions (output level) by 51.6% (compared to 2021) by 2030 (targeting category 9)

Actual amount of emissions in FY2024.6 (June 2023–June 2024)

In FY2024.6, Mercari Group as a whole had GHG emissions of about 29,000 tons (see below). Scope 2 is mainly emissions related to electricity usage in our offices. We introduced renewable energy and, for the emissions that we were unable to reduce, we utilized renewable energy certificates and non-fossil fuel certificates. As such, we have set our scope 2 emissions for FY2024.6 as 0. Scope 1+2 emissions were reduced by 55% (compared to FY2021.6). In addition, scope 3, category 9 emissions (output level) were reduced by 3.4% (compared to FY2023.6). We will continue to take action to achieve our 2030 targets.

Scope1	353tons
Scope2	0tons
Scope3	287,759tons
Total	288,112tons

As a result of refining and revising the calculation targets for FY2024.6, we have also corrected the following calculation results for FY2023.6.

FY2023.6

Scope2

• • Before implementing corrections: 645 tons
• • After implementing corrections: 0 tons

Scope3

• • Before implementing corrections: 41,802 tons
• • After implementing corrections: 264,523 tons