Governance for Nature-related Issues

ITOCHU acknowledges addressing sustainability issues, including natural capital and biodiversity, as one of our key management issues. Therefore, our Board of Directors deliberates and makes decisions on important matters such as policies to address nature-related risks and opportunities, and annual budgets and business plans which take into account risks and opportunities.

We have given the Sustainability Committee the overall management responsibility for planning and implementing various measures to address sustainability-related matters including natural capital and biodiversity. Our Chief Administrative Officer (CAO) is a Director with responsibility for nature-related issues. Together with this, the CAO is a member of the Headquarters Management Committee (HMC) at the executive level. The CAO also serves as the Chair of the Sustainability Committee. The CAO reports the matters deliberated and decided on by the Sustainability Committee together with the situation of the main activities to promote sustainability to the Board of Directors about twice a year. The Board of Directors considers the matters deliberated and decided on by the Sustainability Committee according to those reports. Through these procedures, the Board of Directors appropriately oversees the promotion of business and investment strategies to address environmental and social risks and opportunities. This includes reviewing those strategies and making asset replacement decisions. Moreover, the managers in each company and Headquarters’ administrative division who also serve as ESG officers also participate as core members in the Sustainability Committee at the executive level. The Sustainability Committee receives reports about nature-related matters from the Sustainability Management Division and those in charge of promoting ESG in each company and Headquarters’ administrative division. The committee then uses those reports to manage and monitor progress on various measures and initiatives.

The Chair of the Sustainability Committee and the managers in each company (ESG Officers) hold a Sustainability Advisory Board once a year to enter into dialogue with external specialists. The Sustainability Advisory Board allows its members to grasp the expectations and demands society has in us. The members then promote its business with the consideration to those sustainability issues discussed in the Advisory Board.

Refer to: Our Sustainability-related Governance Organization

Nature-related Human Rights and Stakeholder Engagement

ITOCHU Group has established The ITOCHU Group Human Rights Policy based on the United Nations Guiding Principles on Business and Human Rights. This policy specifically expresses the ITOCHU Group’s concept of respect for human rights. We have used this policy to declare we will conduct human rights due diligence and enter into dialogue and discussions with potentially affected Groups and stakeholders.

We have also formulated “Respect for the Rights of Indigenous People” as an individual policy. This policy makes it clear we will respect and consider the rights of indigenous people as stipulated in the laws of the countries and regions where the ITOCHU Group engages in business activities and international agreements such as the “United Nations Declaration on the Rights of Indigenous Peoples” and the International Labour Organization (ILO) Convention 169. When considering a new business investment project, we strictly check in advance the impact that business will have on the rights of indigenous people. We also periodically conduct human rights due diligence even after starting that business. We conducted human rights due diligence from FYE 2020 to FYE 2024 in our food-related business (Food Company) textile-related business (Textile Company), and forest goods and materials-related business (General Products & Realty Company) with their high dependency on natural capital, and our metals-related business (Metals & Minerals Company) with its high impact on natural capital. We have also set the impact on local communities and residents as a human rights risk indicator to be investigated.

Refer to: Human Rights

Identification and Evaluation of Nature-related Risks

ITOCHU acknowledges risk management as a key management issue. Therefore, we have established a basic risk management policy for the ITOCHU Group and develop the necessary risk management systems and techniques based on the concept of the COSO-ERM framework. As stated in the ITOCHU Group Environmental Policy, we collect information on laws and regulations related to environmental conservation and then comply with them. We have also introduced an environmental management system (EMS) based on ISO14001. We recognize the impact our business activities may have on the environment and society. We also work to grasp the status in our Group companies.

For example, we grasp and evaluate water risks at manufacturing sites using the WRI Aqueduct tool developed by the World Resources Institute (WRI). We also periodically identify and evaluate other nature-related risks in line with the frameworks established by the international organizations we mention later.

Refer to: ITOCHU Group Risk Management

Integrating Nature-related Risk Management into the ITOCHU Group Risk Management System

Due to the nature of our broad-based operations, ITOCHU is subject to various risks, including market risks, credit risks and investment risks. In addition to establishing various internal committees and designated responsible departments, we have created a risk management organizational structure and management methods necessary to address these risks. This organizational structure includes outlining management regulations, investment standards, risk limits, and transaction limits, as well as establishing structures for reporting and monitoring to enable integrated Group risk management.

Nature-related risks are one of the major risks (environmental and social risks) subject to Group risk management. We incorporate this risk management into the evaluation methods for each business phase shown in the table below, which can broadly cover our business activities including management of investment, trading products, logistics, Group companies, supply chain, business strategy, portfolio, etc.

Nature-related Risk Management Systems

Initiatives in Business with a High Impact

We conducted a secondary evaluation of our business with a high impact using the LEAP approach^*1 on trial basis to confirm validity of the evaluation for impact on natural capital using ENCORE. The LEAP approach comprehensively evaluates the natural capital-related issues advocated by the TNFD.

Overview of the LEAP Approach
Organized by ITOCHU based on the Guidance on the identification and assessment of nature-related issues: The LEAP approach

We then analyzed the dependency and impact on nature capital of mining process with an especially high impact score in our metal & mineral resource business which we determined has the highest impact on natural capital in our trial primary evaluation for ITOCHU portfolio using ENCORE.

First, we identified ecologically sensitive locations in the Locate analysis. We identified these sites using the five definitions for sensitive locations in the TNFD LEAP approach guidance and the indicators in the databases which organize the criteria for those definitions^*2. We also identified relevant biome and ecosystem information using the IUCN Global Ecosystem Typology and the Global Map of Ecoregions for some of our business sites after taking into consideration the importance of this business and we performed the Evaluate analysis for the dependency and impact on natural capital. We refined the dependency and impact measurement results in this analysis by investigating the TNFD sector guidance for metals and mining and local environmental assessment reports. As a result, it was confirmed that the mining process of the project has a significant degree of impact on natural capital, as suggested in the above trial primary survey.

As validity of the survey using ENCORE has been confirmed, we will further consider evaluating the project and taking actions related to natural capital based on the knowledge gained through this trial analysis.

1. The LEAP approach is a method developed by the TNFD to clarify nature-related issues in applicable businesses. This method consists of four steps: Locate, Evaluate, Assess and Prepare.
2. Databases used: WWF Biodiversity Risk Filter, WWF Water Risk Filter, STAR, Biodiversity Intactness Index, Ecoregion Intactness Index, Critical Natural Asset layers and IBAT.

Initiatives for Businesses with a High Dependency

Our businesses with a high dependency on natural capital are the procurement, manufacturing, processing and distribution of forest commodities (food, timber, natural rubber, palm oil, etc.). We have established procurement policies for each product to improve the sustainability of these businesses. We strive to procure products certified by international third-parties which allow us to identify the procurement area through traceability.

Refer to: Sustainable Procurement: Policies and Initiatives by Product Type

We categorize and organize initiatives in businesses with a high dependency on natural capital into four: avoid, reduce, restore/regenerate and transform. We perform this categorization using the framework of the Mitigation Hierarchy^* in the AR3T Action Framework published by the Science Based Targets Network (SBTN) in the Science-Based Targets (SBTs) for Nature.

Overview of the Mitigation Hierarchy
Organized by ITOCHU based on the Science Based Targets Network website and TNFD Recommendations

• This is a tool to reduce the negative impacts from business on natural capital. It indicates the approach to predict and avoid or minimize risks to biodiversity (loss of wildlife habitats etc.) and impacts on local communities (release of pollutants which may impact health). It also shows the approach to recover as far as possible from any negative impacts which do occur.

As a result of the above analysis, we have found that we are actively taking actions relating to “avoid” and “reduce” which should be given top priority under the SBTs for Nature to reduce nature-related risks. We will continue to further promote AR3T actions in the future to realize nature positivity.

Initiatives in Business-related Areas

ITOCHU is working with stakeholders to protect endangered wildlife.

Mangrove Planting Project in Collaboration with Uken Village of Amami Oshima Island, a World Heritage Site

Since 2014, Uken village in the southwestern part of Amami Oshima Island has been involved in tree-planting activities using seedlings of Kandelia obovata^*1 grown by local elementary school students as an initiative to proudly protect and nurture the rich and irreplaceable nature of their hometown, which is home to diverse species by the children. ITOCHU agrees with the purpose of the project and has been supporting the tree-planting activities since 2021, with a view to contributing nature positive^*2 and generating blue carbon credits. In 2023, we concluded an industry-academia-government collaboration agreement with Uken Village, Sophia University, and Japan Airlines Co., Ltd. regarding environmental conservation and regional development in Uken Village, and ITOCHU is contributing through cooperation in tree planting and environmental education.

1. Kandelia obovata is a species of plant that comprises the mangrove forests found in Kagoshima and Okinawa prefectures.
2. The concept of halting and reversing biodiversity loss in order to put nature on a recovery track.

Mangrove Ex-Situ Conservation Project

In addition to the in-situ conservation of Kandelia obovata in Uken Village, Amami Oshima, ITOCHU has started ex-situ conservation in collaboration with the Tsukuba Botanical Garden of the National Museum of Nature and Science. In 2022, we donated the seedlings from viviparous seeds to all the children of the elementary school near our Tokyo head office, Minato Ward's Aoyama Elementary School.

Collaborative Conservation Project for Rare Freshwater Fish with Shiga Prefecture and Shiga Prefectural Lake Biwa Museum

ITOCHU has been undertaking a collaborative project with Shiga Prefecture and the Shiga Prefectural Lake Biwa Museum since 2022 to conserve the endangered Ayumodoki fish, with the aim of preserving the environment in the area where ITOCHU was founded. Lake Biwa is one of only approximately 20 ancient lakes in the world, and home to more than 1,700 species of flora and fauna, including over 60 endemic species. It is also an important migratory site for waterfowl and is a registered wetland under the Ramsar Convention on Wetlands.

The Lake Biwa Museum breeds generations of endangered rare freshwater fish such as Ayumodoki. Approximately 35 species of Japanese freshwater fish are being bred and preserved in captivity at the Conservation and Breeding Center and breeding facilities in the Aquatic Exhibition; some populations are potentially extinct in their natural habitat. Continuing to preserve these species will serve as ex-situ conservation of rare freshwater fish in Japan, and it is an important initiative in anticipation of their future return to the wild.

Support for a Biodiversity Conservation Program in the Amazon

ITOCHU established its office in Brazil in 1957 and has expanded business in various sectors including forestry and mineral products. Those products benefit from the abundant water and biological resources of Brazil, including the Amazon. Since FYE 2017, with the aim of conserving the environment and biodiversity, we engaged in activities to save Amazon manatees, a species in danger of extinction, through support for the “Field Museum Initiative” a biodiversity conservation program in tropical forests in the Amazon promoted by the Wildlife Research Center of Kyoto University in collaboration with the National Institute of Amazonian Research in Brazil, and the construction of a research facility “Field Station”. This project is part of the SATREPS Project, a joint project between the Japan Science and Technology Agency (JST) and the Japan International Cooperation Agency (JICA). With the support of ITOCHU, over the 3 years from FYE 2017, the project aimed to release more than 9 manatees to the wild and more than 20 manatees to the semi-wild. In fact, 27 manatees have been released to the wild and 31 manatees to the semi-wild, and more than 100 local residents have been provided with learning opportunities.

Refer to: Support of Amazon Ecosystem Conservation Program

Project for Protecting Green Turtles, an Endangered Species

With the aim of conserving biodiversity, ITOCHU supports conservation activities for the green turtle, which is listed as an endangered species in the Ministry of the Environment Red Data Book, through the certified NPO Everlasting Nature (ELNA). ELNA was established in 1999 with the aim of conserving the marine life in Asia and the surrounding marine environment, and is an organization that has received certification as an NPO from Kanagawa Prefecture. Thanks to ELNA’s 24–hour conservation activities, the number of nesting sites of green turtles on the Ogasawara Islands is gradually increasing with repeated increases and decreases. In addition, as the accommodation for volunteers staying in Chichijima Island for conservation activities was aging, we supported the construction of a new accommodation facility with improved living environment and convenience, and completed a unit house in May 2020.

Refer to: ELNA activity report (Japanese Only)

Tropical Forest Regeneration and Ecosystem Conservation Activities on Borneo

Borneo is a tropical forest region spanning three countries — Malaysia, Indonesia and Brunei. Its area is approximately double that of Japan. This makes it the third largest island in the world. Borneo, which is called a treasure trove of biodiversity, is developing. This has led to damage to the tropical forest to the extent that conservation of the ecosystem is not possible with natural regeneration alone. The WWF, a worldwide nature protection organization, is collaborating with the Forest Department in the local Sabah State to conduct an activity to regenerate a forest of approximately 2,400 hectares. This is taking place in North Ulu Segama, Sabah State in Malaysia in the northeastern part of Borneo — a forest regeneration area that has continued to be protected by the ITOCHU Group since 2009. The ITOCHU Group has supported the regeneration of 967 hectares of this land. The afforestation work was completed in 2014 and all on-site work, including maintenance and management work, was finished in January 2016. This is the largest area in which afforestation activities are supported by a regular company. This land is also home to the endangered species of the orangutan. The regeneration of this forest will also lead to the protection of many creatures living here in addition to this orangutan.

Refer to: Activities to Restore the Tropical Rainforests and Conserve Borneo’s Ecosystem

Hunting World’s Borneo Support Activity

Hunting World, a luxury brand deployed by ITOCHU, has been using a logo with the motif of a young elephant without its tusks since the foundation of the brand in 1965. While serving as a symbol of freedom and revival, it also represents the challenge of looking toward the future in terms of the protection of endangered species. It contains the founder’s love and respect for nature. Hunting World has been supporting a biodiversity conservation activity being promoted by an NPO called the Borneo Conservation Trust (BCT) since 2008 to support the realization of coexistence with nature as called for by the founder. The brand plans and sells charity goods and then provides 1% of those proceeds to the BCT. This helps with the funds to purchase land for “Green Corridor Project^*1” and the costs to protect Borneo elephants that have gone astray in plantations. The brand independently acquired the land in the “Green Corridor Project” zone with its assistance funds up to that point in the fall of 2011 to create the Hunting World Kyosei no Mori No.1 (Symbiotic Forest No.1 of Hunting World). Furthermore, the brand has continued support activities and has now acquired the Hunting World Kyosei no Mori No.4 (Symbiotic Forest No.4 of Hunting World). In 2019, the brand started supporting “Grateful Repayment Project^*2” promoted by BCT Japan, which supports BCT. These donations have also helped with the funds to establish the Borneo Elephant Sanctuary, a facility for protecting and temporarily rearing injured Borneo elephants and to pay for food to keep Borneo elephants protected alive.

1. Green Corridor Project: This is an activity to conserve biodiversity. The land between forest protection zones and forest reserves are purchased back. Divided forests are then connected to create a movement route for animals.
2. Grateful Repayment Project: This is an activity to protect and temporarily raise Borneo elephants that have lost their places of life.

Targets in Business Activities

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Theme	Target	FYE 2024 Results	SDGs
Biodiversity Conservation Reduce the impact of ITOCHU’s products and projects on biodiversity conservation across our supply chain	By 2025, conduct a follow-up ESG risk assessment for all investment projects subject to high biodiversity risk (e.g., hydropower, mines, ships), where biodiversity should be a material risk item assessed, and implement a plan for improvement if necessary.	Revised the ESG Checklist and created a scheme to understand the status of biodiversity risk in new business investment. Participated in the TNFD Forum and started investigating tools for analyzing risks and opportunities related to natural capital.
Sustainable Use of Natural Resources Implement initiatives to improve the sustainable use of natural resources in order to stably produce and supply commodities related to forestry, fishing, and agriculture in the future	Timber, Timber Products, Raw Materials for Papermaking, and Paper Products: Aim to achieve 100% coverage of our products that are either certified or confirmed to be under progressive management standards. Palm oil: Aim to switch all palm oil procured by ITOCHU to sustainable palm oil*1 by 2030. In particular, we aim to align our procurement to the NDPE principle*2. Fisheries raw materials handled by ITOCHU: Increase the MSC*3 /CoC*4 certified products to 15,000 tons per year within 5 years.	The handling ratio of certified or highly controlled materials is 100% for pulp & wood, and 100% for chips. Palm oil has 100% traceability to mill level in FYE 2024. The ratio of sustainable coffee beans in our coffee bean procurement was 29%. The volume of MSC/COC in fisheries raw materials in FYE 2024 was 10,000 tons.

1. Sustainable palm oil: palm oil supplied from supply chains compliant to RSPO and RSPO-equivalent standards.
2. NDPE (No Deforestation, No Peat, No Exploitation): zero deforestation, zero peatland development, zero exploitations.
3. MSC (The Marine Stewardship Council): an international NPO established in 1997 to work on spreading sustainable fishing. It is headquartered in London, England.
4. CoC (Chain of Custody Certificate): A certification for processors and distributors to ensure the traceability of MSC certified marine products and other products in the management of processing and distribution processes specified by MSC.

Refer to: Policies and Initiatives by Product Type

Targets in Business-related Areas

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Targets	FYE 2024 Action Plans	FYE 2024 Results	FYE 2025 Action Plans	SDGs
Implementation and follow-up on social contribution programs aimed at environmental conservation	Promoting the endangered species Ayumodoki (Parabotia curtus) in collaboration with Shiga Prefecture and the Shiga Prefectural Lake Biwa Museum. Continue promotion of the mangrove planting project in collaboration with Uken Village of Amami Oshima Island. Continue promotion of the project for protecting green turtles, an Endangered Species.	In collaboration with Shiga Prefecture and the Shiga Prefectural Lake Biwa Museum, implemented a project to conserve the endangered species Ayumodoki (Parabotia curtus). Because we were able to obtain a large number of mature individuals capable of breeding, next year, we plan to introduce females from adjacent areas in the same water system and attempt breeding. We concluded an industry-academia-government collaboration agreement with Uken Village, Sophia University, and Japan Airlines Co., Ltd. regarding environmental conservation and regional development in Uken Village. As part of the collaboration, we organized an eco study tour and planted trees on Edateku Island in Uken Village. Since FYE 2017, we have continued to support a survey monitoring the number of green turtle spawns and a post-hatching survey conducted by the Ogasawara Marine Center of Everlasting Nature of Asia certified NPO that is working on marine conservation in the Asian region. The survey results suggest that the number of green turtles in Ogasawara has been stable in recent years.	Continue promotion of the endangered species Ayumodoki (Parabotia curtus) in collaboration with Shiga Prefecture and the Shiga Prefectural Lake Biwa Museum. Continue promotion of the mangrove planting project in collaboration with Uken Village of Amami Oshima Island. Continue promotion of the project for protecting green turtles, an Endangered Species.

Performance Data in Business Activities

• Performance Data Regarding Forest Certification and Legal Compliance, Sustainable Procurement Performance Data of Raw Materials for Papermaking
• Performance Data on Natural Rubber
• Performance Data Regarding Sustainable Palm Oil Procurement
• Performance Data on Sustainable Coffee Bean Procurement
• Performance Data on Traceability of Meat
• Performance Data Related to Certification of Marine Products
• Performance Data on Organic Cotton Procurement

Performance Data on Business-related Areas

Initiative Participation (Activities Through Business and Industry Groups)

We participate in the Japan Business Federation (Keidanren). We support nature conservation projects in developing areas mainly in the Asia-Pacific region and in Japan through the Keidanren Committee on Nature Conservation that was established in 1992 when the United Nations Conference on Environment and Development (Earth Summit) was held in Rio de Janeiro in Brazil. The Keidanren Committee on Nature Conservation has been working to build an environment in which the business community strives to conserve nature. This has included exchanges with NGOs, the holding of seminars and symposia, and the announcement of the Declaration of Nature Conservation by Keidanren, the Declaration of Biodiversity by Keidanren and the action guidelines for them (revised in October 2018). In addition, we have declared our approval of the Keidanren Initiative for Biodiversity Conservation announced on June 11, 2020. We are also participating in the TNFD Forum, which was established in September 2021, to accelerate discussions in the Taskforce on nature-related Financial Disclosures (TNFD).

Cooperation with External Organizations

It is especially important for the entire value chain to work together to realize sustainable business activities for businesses with a high dependency on natural capital such as forest commodities (food, timber, natural rubber, palm oil, etc.).

ITOCHU joined in the Roundtable on Sustainable Palm Oil (RSPO) in 2006. We have set a target of handling only RSPO certified palm oil or palm oil equivalent to that by 2030. We are working on the procurement and supply of sustainable palm oil through cooperation and collaboration with other member companies. We are also participating in the Sustainable Palm Oil Transparency Toolkit (SPOTT). This is a project by the Zoological Society of London (ZSL) that assesses major palm oil related companies in terms of more than 50 indicators based on data released to the public. We disclose information to stakeholders relating to the palm oil industry through two-way communication.

In addition, we also joined as a founding member in the Global Platform for Sustainable Natural Rubber (GPSNR). We have agreed to the 12 principles stipulated by this platform about natural rubber and comply with the applicable policy components.

We have also joined the Organization for the Promotion of Responsible Tuna Fisheries (OPRT) established for the sustainable use of tuna resources in 2012 in our skipjack and yellowfin business. We are promoting initiatives that comply with OPRT’s voluntary management regulations.

Through cooperation with external organizations as described above, we aim to achieve the goals set forth in the “Metrics & Targets” section.

• Roundtable on Sustainable Palm Oil (RSPO)
  Refer to: Initiative Participation
• Global Platform for Sustainable Natural Rubber (GPSNR)
  Refer to: Commitment to the Global Platform for Sustainable Natural Rubber (GPSNR)
• Organization for the Promotion of Responsible Tuna Fisheries (OPRT)
  Refer to: Sustainable Procurement: Policies and Initiatives by Product Type
• International Seafood Sustainability Foundation (ISSF)
  Refer to: Sustainable Procurement: Policies and Initiatives by Product Type