The Board of Directors oversees a response to strategies and policies related to sustainability, including climate change. The Board of Directors receives reports as needed in accordance with the rules of the Board of Directors on strategies and policies related to sustainability discussed at the Sustainability Promotion Committee or deliberated on by the Executive Management Committee. Additionally, the Board of Directors makes resolutions on items that are core management matters and items deemed important by the Board of Directors established as resolution items in the rules of the Board of Directors.

The Group's Vision 2030 includes our basic sustainability policy, and this was decided at the Board of Directors together with the Medium-term Management Plan. In addition, thus far, the Board of Directors has determined, for example, the formulation or revision of the Environmental and Social Policy Framework and the Net Zero Carbon Declaration.In our risk appetite statement, starting in FY2021, we stipulated climate change risk, and have appropriately identified, assessed, and effectively managed climate change based on the estimated amount of losses from scenario analysis.

In FY2023, the Board of Directors decided on the Medium-term Management Plan "Passion for the Best" 2026 (including revisions of Vision 2030). In this plan, sustainability topics, including climate change, were also raised. The sustainability KPI in the Medium-term Management Plan has been confirmed at a subsequent Board of Directors meeting at the time financial results were approved and the Medium-term Management Plan was reviewed. Additionally, at FY2024 Board of Directors meetings, a total of four items were given: a report on climate-related disclosures, a resolution to revise the Environmental and Social Policy Framework, a report on the state of the promotion of sustainability, and a report for institutional investors from the sustainability meeting^*.

To strengthen executives' incentives related to sustainability initiatives, we have incorporated the sustainability KPIs in the evaluation system for performance-linked remuneration. These KPIs include the SDGs bond league table and GHG emissions. For details, please refer to "6. Metrics and Targets (4) Executive Remuneration".

• *In October 2024, a sustainability meeting was held for institutional investors and sell-side analysts, where the Head of Sustainability, Outside Director, CHO, and CFO gave presentations, sharing the Group's policies, KPI progress, and initiatives related to disclosure, governance, and human capital.

Governance Structure for Climate Change

There are Internal and Outside Directors with deep knowledge of sustainability on the Board of Directors, with a system in place to provide highly effective oversight of initiatives toward sustainability-related issues. In addition, a skills matrix has been developed based on discussions by the Nominating Committee to evaluate directors' expertise and experience. For Sustainability, relevant experience, including roles promoting the Group's sustainability strategy, is considered.

Regular discussions are held at the Sustainability Promotion Committee chaired by the President and CEO on strategies and policies related to sustainability, including climate change.

For example, the Committee has discussed the formulation or revisions of the Environmental and Social Policy Framework and the Net Zero Carbon Declaration.

The Committee is composed of the Head of Sustainability, who is responsible for promoting sustainability based on the rules for Corporate Executive Officers (Shikkoyaku) approved by the Board of Directors, several Internal Directors, and three external experts with specialized knowledge in sustainability. The details of discussion at the Committee are reported to, deliberated on and determined at the Executive Management Committee, as appropriate.

Policies and measures relating to risk management, including climate change, are discussed at the Group Risk Management Committee chaired by the President and CEO, a subcommittee of the Executive Management Committee, and attended by the Chief Risk Officer (CRO), who is responsible for risk management.

After climate scenario-based quantitative analysis results are reported to the Group Risk Management Committee each year, they are reported to the Executive Management Committee based on discussion at the Sustainability Promotion Committee.

As a Group-wide system to promote sustainability, we have appointed Sustainability Managers at each division and major Group company. Under these managers, a working group (WG) monitors sustainability KPIs and promotes sustainability-related businesses. The contents of the discussion of this WG are reported to the Sustainability Promotion Committee as appropriate.