TCFD and TNFD Alignment

Yamaha Group is committed to analyzing and disclosing risks and opportunities related to climate change and biodiversity based on the TCFD and TNFD recommendations, reflecting them in its management strategy and striving for transparency regarding their financial impact.

General Disclosure Requirements

The TCFD and TNFD frameworks require disclosure across four pillars: Governance, Strategy, Risk Management, and Metrics & Targets. This report aligns with the TCFD's approach, incorporating TNFD's content.

Materiality: For this report, 'materiality' is used in two contexts:

TNFD Materiality: The significance of nature's impact on the company and the company's impact on nature (single/double materiality).
Yamaha's Materiality: Key sustainability issues identified by Yamaha from both business and stakeholder perspectives.

1. Application of Materiality

Yamaha employs a double materiality approach, considering both financial materiality (impact of environmental/social issues on business) and impact materiality (impact of business activities on the environment/society).

2. Disclosure Scope

To assess the impact of climate change and biodiversity, Yamaha has analyzed all business operations, identifying risks and opportunities. The disclosure focuses on activities with significant impact on business, strategy, or financial planning.

Climate Change: Headquarters, domestic production sites, resort locations, upstream and downstream of the value chain.
Biodiversity: Headquarters, domestic production sites, resort locations, upstream and downstream of the value chain. (Disclosure is currently limited due to information gathering constraints.)

Yamaha plans to expand the scope of disclosure by conducting further analysis on activities not currently covered.

3. Areas with Nature-Related Issues

Priority regions have been identified using the LEAP approach.

4. Integration with Other Sustainability Disclosures

Yamaha has identified key environmental issues (materiality) including climate change response, sustainable wood use, and reduction of waste and hazardous materials. This report integrates information on these interconnected issues, following TCFD and TNFD guidelines.

For more information on Yamaha's climate change and nature-related initiatives, please refer to the company website.

5. Reporting Period

Analysis considers short-term (present to a few years), medium-term (up to 2030), and long-term (up to 2050) impacts.

6. Stakeholder Engagement

Yamaha has established a Human Rights Policy to respect the human rights of all stakeholders in its value chain.
The company actively participates in the "Otono Mori" initiative, promoting sustainable forest development in collaboration with local communities.

Governance

Yamaha's governance structure for sustainability, including climate change and biodiversity, is overseen by the Board of Directors, with the Sustainability Committee acting as an advisory body to the Representative Executive Officer and President. Subcommittees for climate change, resource circulation, and procurement discuss specific issues, reporting progress to the Sustainability Committee.

Executive compensation includes sustainability-related targets to incentivize long-term value creation.

Details: Sustainability Management

2025 Fiscal Year Sustainability Committee Activities

7 Meetings: Reviewed sustainability activities for FY2024, discussed progress on the Mid-Term Management Plan, and planned activities for the next plan.

FY2025 Environmental Subcommittee Activities

Climate Change Subcommittee: 6 meetings, discussing decarbonization, TCFD, and water risk.
Resource Circulation Subcommittee: 7 meetings, covering circular value chains and environmentally conscious design.
Procurement Subcommittee: 7 meetings, addressing wood due diligence, sustainable wood use, human rights due diligence, and conflict minerals.

Governance Structure for Environmental Issues

A diagram illustrates the governance flow from the Board of Directors down to various committees and departments.

Strategy

Yamaha analyzes climate change and biodiversity impacts based on short-, medium-, and long-term horizons, identifying key risks and opportunities through scenario analysis (Table 1). Specific focus is placed on wood sourcing, with analysis of potential changes in suitable growing areas due to climate change (Table 2).

Scenario Analysis

Scenarios considered include those from the IEA and IPCC, as well as others like APS and STEPS, to assess impacts on business and natural capital.

Climate Change Scenarios
Scenario	Description	Source
1.5-2°C Scenario	Mitigation efforts limit global temperature rise to 1.5-2°C above pre-industrial levels.	RCP2.6, SSP1-2.6
4°C Scenario	Lack of mitigation efforts leads to a 4°C rise in global temperature above pre-industrial levels.	RCP8.5, SSP5-8.5

Biodiversity

Using the TNFD-recommended ENCORE tool, Yamaha identified dependencies and impacts related to business processes. Four scenarios were defined based on the TNFD's framework, considering ecosystem service degradation and market/non-market drivers.

Figure 1: TNFD 2x2 Framework for Biodiversity Scenarios:

#1 Harmony with Nature: Low environmental degradation, societal cooperation for sustainability, balanced resource use.
#2 Coordinated Response to Environmental Crisis: Severe environmental loss prompts urgent global action, increased environmental awareness.
#4 Gradual Decline with Low Concern: Slow environmental degradation, low societal concern, delayed action.
#3 Severe Impact and Fragmentation: Environmental degradation with low societal concern and fragmentation, economic interests prioritized over environmental protection.

Table 1: Key Risks and Opportunities & Scenario Analysis
Classification	Item	Climate Change Response	Biodiversity Response	Climate Change & Biodiversity	Risk/Opportunity	Impact Type
Climate Change Response	Natural Disasters	→	-	-	R	Physical (Acute)
	Woodland Suitability Change	→	→	→	R	Physical (Chronic)
	Carbon Pricing	→	→	→	R	Transition (Policy/Legal)
	Indoor Activity Increase	→	→	→	O	Products/Services
	Wood Substitution, Effective Use	→	→	→	O	Products/Services
	Forest Degradation	→	→	→	R	Transition (Market)

Table 2: Predicted Changes in Wood Suitability Areas (%)
Target Species	Predicted Change in Suitable Area (%) Relative to Pre-industrial Global Temperature Rise (°C)
Target Species	0.6°C	1.0°C	1.5°C	2.0°C	2.5°C	3.0°C	3.5°C	4.0°C	Over 4.5°C
Broadleaf A	100	100	101	101	102	102	102	101	≤101%
Broadleaf B	100	100	98	98	99	100	102	104	≥104%
Broadleaf C	100	101	105	107	109	111	113	115	≥115%
Broadleaf D	100	101	112	127	144	166	188	216	≥216%
Broadleaf E	100	101	103	104	104	104	103	101	≤101%
Broadleaf F (Region 1)	100	102	96	86	72	55	37	14	≤14%
Broadleaf F (Region 2)	100	100	100	99	98	96	94	92	≤92%
Conifer A	100	100	99	98	96	94	92	90	≤90%
Conifer B	100	101	84	74	62	47	31	11	≤11%

Scenario Analysis Summary: Climate change poses risks such as production stoppages due to natural disasters, increased wood prices, and costs associated with carbon taxes. Conversely, increased indoor activities may create opportunities for musical instruments.

Regarding natural capital, sustainable wood products may gain market competitiveness, while forest degradation could lead to higher costs for alternative materials.

The analysis of wood suitability areas indicates that while short-term impacts may be minimal, long-term temperature increases could significantly reduce suitability for certain tree species.

Yamaha is continuously reviewing its strategies based on these identified risks and opportunities (Table 3).

Yamaha's initiatives are categorized using the TCFD's 'Mitigation' and 'Adaptation' frameworks, and the 'AR3T framework' (Avoid, Reduce, Restore & Regenerate, Transform) for nature-related issues.

Table 3: Key Risks and Opportunities & Response Strategies
Classification	Item	Potential Impact/Natural Capital Impact	Yamaha's Response Strategy	Strategy Type
Climate Change Response	Natural Disasters	Facility damage, business interruption, increased insurance premiums.	Re-evaluation of flood risk and insurance coverage for all group locations.	Adaptation
	Woodland Suitability Change	Increased wood prices, reduced quality, need for technical adaptation.	Conducted research on predicted changes in woodland suitability due to warming (Table 2). Developed new materials and wood processing technologies.	Adaptation
	Carbon Pricing	Increased production and procurement costs due to carbon taxes.	Implemented energy reduction and renewable energy use. Set internal carbon pricing (¥14,000/t-CO2) to promote low-carbon investments. Collaborated with suppliers on emissions reduction.	Mitigation
	Indoor Activity Increase	Increased demand for musical instruments due to remote work and online events.	Offering solutions for remote work and online events through integration of sound, signal processing, and communication technologies.	Adaptation
Sustainable Wood Use	Wood Substitution, Effective Use	Increased demand for sound equipment due to live streaming and hybrid events.	Developing new materials and wood processing technologies for rare wood species. Improving yield through effective use of offcuts.	Opportunity
	Forest Degradation	Difficulty in sourcing quality wood due to water scarcity, water pollution, soil degradation. Reputational damage.	Promoting sustainable wood procurement through the 'Otono Mori' initiative. Developing technologies for wood processing and alternative materials.	Mitigation
	Wood Import Regulations	Reduced availability and increased costs for wood due to regulations. Need for technical and specification changes.	Developing new materials and wood processing technologies. Improving yield through effective use of offcuts.	Mitigation
	Forestry Industry Withdrawal	Reputational damage due to ecosystem degradation. Increased costs for wood substitution.	Developing new materials and wood processing technologies. Improving yield through effective use of offcuts.	Mitigation
	Wood Import Regulations	Reduced availability and increased costs for wood due to regulations. Need for technical and specification changes.	Developing new materials and wood processing technologies. Improving yield through effective use of offcuts.	Mitigation
	Wood Import Regulations	Reduced availability and increased costs for wood due to regulations. Need for technical and specification changes.	Developing new materials and wood processing technologies. Improving yield through effective use of offcuts.	Mitigation
Hazardous Substance Reduction	Wood Substitution, Effective Use	Increased demand for sound equipment due to live streaming and hybrid events.	Developing new materials and wood processing technologies for rare wood species. Improving yield through effective use of offcuts.	Opportunity
	Forest Degradation	Difficulty in sourcing quality wood due to water scarcity, water pollution, soil degradation. Reputational damage.	Promoting sustainable wood procurement through the 'Otono Mori' initiative. Developing technologies for wood processing and alternative materials.	Mitigation
	Wood Import Regulations	Reduced availability and increased costs for wood due to regulations. Need for technical and specification changes.	Developing new materials and wood processing technologies. Improving yield through effective use of offcuts.	Mitigation
	Forestry Industry Withdrawal	Reputational damage due to ecosystem degradation. Increased costs for wood substitution.	Developing new materials and wood processing technologies. Improving yield through effective use of offcuts.	Mitigation
Water Conservation	Wood Substitution, Effective Use	Increased demand for sound equipment due to live streaming and hybrid events.	Developing new materials and wood processing technologies for rare wood species. Improving yield through effective use of offcuts.	Opportunity
	Forest Degradation	Difficulty in sourcing quality wood due to water scarcity, water pollution, soil degradation. Reputational damage.	Promoting sustainable wood procurement through the 'Otono Mori' initiative. Developing technologies for wood processing and alternative materials.	Mitigation
	Wood Import Regulations	Reduced availability and increased costs for wood due to regulations. Need for technical and specification changes.	Developing new materials and wood processing technologies. Improving yield through effective use of offcuts.	Mitigation
	Forestry Industry Withdrawal	Reputational damage due to ecosystem degradation. Increased costs for wood substitution.	Developing new materials and wood processing technologies. Improving yield through effective use of offcuts.	Mitigation
	Wood Import Regulations	Reduced availability and increased costs for wood due to regulations. Need for technical and specification changes.	Developing new materials and wood processing technologies. Improving yield through effective use of offcuts.	Mitigation
Natural Disaster Mitigation	Wood Substitution, Effective Use	Increased demand for sound equipment due to live streaming and hybrid events.	Developing new materials and wood processing technologies for rare wood species. Improving yield through effective use of offcuts.	Opportunity
	Forest Degradation	Difficulty in sourcing quality wood due to water scarcity, water pollution, soil degradation. Reputational damage.	Promoting sustainable wood procurement through the 'Otono Mori' initiative. Developing technologies for wood processing and alternative materials.	Mitigation
	Wood Import Regulations	Reduced availability and increased costs for wood due to regulations. Need for technical and specification changes.	Developing new materials and wood processing technologies. Improving yield through effective use of offcuts.	Mitigation
	Forestry Industry Withdrawal	Reputational damage due to ecosystem degradation. Increased costs for wood substitution.	Developing new materials and wood processing technologies. Improving yield through effective use of offcuts.	Mitigation

Natural Capital Analysis using LEAP Approach

The LEAP approach (Locate, Evaluate, Assess, Prepare) is used to analyze dependencies, impacts, risks, and opportunities related to nature. Yamaha has applied this framework to its natural capital assessments.

Locate

Yamaha operates globally in three business segments: musical instruments, sound equipment, and other components. The musical instrument segment, accounting for over 60% of sales, has a significant dependency and impact on natural capital, particularly wood. Sustainable wood sourcing is crucial for Yamaha's business and the preservation of musical culture.

The ENCORE tool was used to assess dependencies and impacts, confirming Yamaha's understanding with objective data. The assessment focused on upstream wood sourcing and manufacturing processes.

Wood is generally considered sustainable, but specific properties required for musical instruments make alternatives difficult, necessitating sustainable sourcing. Wood is also classified as a 'High Impact Commodity' by SBTN, indicating significant environmental impact.

Identifying Priority Regions for Wood Sourcing

Yamaha has identified priority regions for sourcing hard-to-substitute wood species by plotting their origins on a world map (Figure 2).

Evaluate/Assess

The ENCORE tool was used to evaluate dependencies and impacts in priority regions. This analysis, combined with Yamaha's internal knowledge, led to a reassessment of dependencies and impacts, categorizing key risks and opportunities under the double materiality framework (Table 4). Items with limited or no impact based on Yamaha's business reality have been omitted.

Table 4: Risks and Opportunities & Yamaha's Activities
Classification/Item	Dependency Level	Risk	Opportunity	Yamaha's Activities
Supply of Biological Resources	Wood Supply	High	Increased procurement costs or inability to procure due to depletion or regulation of wood.	Promoting sustainable forest management, developing new materials and technologies, improving yield.	Forest resource conservation, development of new materials and technologies, effective use of scarce wood.	Activities for 'Otono Mori' initiative, forest conservation, development of new materials and technologies.
	Genetic Resources	Low	Reduced forest productivity and procurement difficulties due to loss of genetic diversity leading to pest outbreaks.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Activities for 'Otono Mori' initiative, conservation of forest genetic diversity.
	Water	High	Reduced forest productivity and procurement difficulties due to loss of genetic diversity leading to pest outbreaks.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Activities for 'Otono Mori' initiative, conservation of forest genetic diversity.
Regulation Services	Climate Regulation (Global/Local)	High	Reduced forest productivity and procurement difficulties due to loss of genetic diversity leading to pest outbreaks.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Activities for 'Otono Mori' initiative, conservation of forest genetic diversity.
	Water Quality/Flow Regulation	Medium	Reduced forest productivity and procurement difficulties due to loss of genetic diversity leading to pest outbreaks.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Activities for 'Otono Mori' initiative, conservation of forest genetic diversity.
	Air Filtration/Soil Conditioning/Erosion Control/Waste Decomposition	Medium	Reduced forest productivity and procurement difficulties due to loss of genetic diversity leading to pest outbreaks.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Activities for 'Otono Mori' initiative, conservation of forest genetic diversity.
Natural Disaster Mitigation	Flood/Water Supply/Water Quality/Soil Degradation	Medium	Reduced forest productivity and procurement difficulties due to loss of genetic diversity leading to pest outbreaks.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Activities for 'Otono Mori' initiative, conservation of forest genetic diversity.
Natural Disaster Mitigation	Soil Erosion/Landslides/Forest Fires	Medium	Reduced forest productivity and procurement difficulties due to loss of genetic diversity leading to pest outbreaks.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Activities for 'Otono Mori' initiative, conservation of forest genetic diversity.
Ecosystem Preservation	Pollination/Biological Pest Control/Habitat Maintenance	Medium	Reduced forest productivity and procurement difficulties due to loss of genetic diversity leading to pest outbreaks.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Activities for 'Otono Mori' initiative, conservation of forest genetic diversity.
Ecosystem Preservation	Ecosystem Service Preservation (Pollination, Biological Pest Control, Habitat Maintenance)	Medium	Reduced forest productivity and procurement difficulties due to loss of genetic diversity leading to pest outbreaks.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Conservation of forest ecosystems, maintenance and improvement of forest genetic diversity.	Activities for 'Otono Mori' initiative, conservation of forest genetic diversity.

Goals and Targets

Yamaha has set medium-term targets for 2031, aligned with SBTi's 1.5°C pathway, to address climate change and natural capital issues.

Medium-Term Targets (as of FY2031)
Category	Indicator	Target
Climate Change Response	Scope 1+2 GHG Emissions	55% reduction (vs. FY2018)
Climate Change Response	Scope 3 GHG Emissions	30% reduction (vs. FY2018)
Sustainable Wood Use	Sustainable Wood Procurement Rate	80%
Hazardous Substance Reduction	Hazardous Waste Emissions	Target to be set
Water Conservation	Water Withdrawal	15% reduction (vs. FY2018)

Yamaha aims to contribute to a sustainable society by addressing both climate change and natural capital conservation, promoting initiatives with short-, medium-, and long-term perspectives.

Ensuring sustainable wood use requires consideration of forest conservation and wood resource availability, alongside the economic sustainability of the supply chain, including job creation and infrastructure development. Yamaha has established a wood due diligence system to verify the origin, legality, and sustainability of procured wood, with rigorous checks for high-risk materials.

In FY2024, Yamaha revised its risk assessment criteria for wood due diligence. The standard for 'sustainably sourced wood,' which includes sustainability verification, was newly established in May 2023 with guidance from Preferred by Nature. This standard allows for objective assessment of sustainability for non-certified wood, complementing the use of certified wood. On-site investigations are conducted for wood from Southeast Asia and China to assess sustainability. Yamaha will continue to enhance its assessment capabilities and training to improve the accuracy and execution of due diligence, working with suppliers to expand the use of sustainably sourced wood.

Latest data on indicators and targets can be found in the ESG Data section.

Transition to a Low-Carbon Society

Yamaha is committed to mitigating climate change and contributing to a decarbonized society by managing group-wide CO2 emissions across its supply chain, aiming for steady reductions in greenhouse gas emissions (Scope 1, 2, and 3) (Figure 3).

Figure 3: Transition Plan to a Low-Carbon Society

Scope 1+2: Prioritizing Scope 2 reduction through renewable energy and energy efficiency until FY2031. Scope 1 reduction activities will align with developments in combustion engine replacement technology from FY2031 onwards.

Target: 55% reduction (vs. FY2018) for Scope 1+2.
Target: 90% reduction for Scope 1+2, with 10% offset.
Progress: On track to achieve targets.

Scope 3: Focusing on purchased goods, logistics, and product use until FY2031. Includes supplier engagement, management level assessment, and tracking major suppliers' emissions.

Target: 30% reduction (vs. FY2018) for Scope 3.
Target: 90% reduction for Scope 3, with 10% offset.
Progress: On track to achieve targets.

Transition to Nature Positive

Yamaha aims for a nature-positive approach, considering the impact of its business activities and products on biodiversity across the value chain, minimizing negative impacts. The company prioritizes forest conservation and promotes sustainable wood utilization, including nurturing wood suitable for musical instruments (Figure 4).

Figure 4: Transition Plan to Nature Positive

Wood Utilization: Aiming for 100% sustainably sourced wood by FY2051. Developing new materials and processing technologies. Expanding forest conservation activities.
Resource Conservation, Waste & Hazardous Substance Reduction: Promoting sustainable water management, reducing water withdrawal. Accelerating emission reduction of hazardous substances through substitution and process changes. Setting global waste reduction targets.

References

For details on climate change response and TCFD/TNFD disclosures, visit: https://www.yamaha.com/ja/sustainability/environment/
For details on wood resource initiatives, visit: https://www.yamaha.com/ja/sustainability/environment/biodiversity/

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