Governance

• This structure is as of July 2026.

We recognize the conservation of the global environment, including biodiversity, as one of our important management issues (materiality). Led by our Representative Director, President & COO as Chief Environmental Management Officer and, Senior Director, Sustainability Promotion as Corporate Officer in Charge of the Environment, we are working to achieve our medium- to long-term environmental targets under our medium- to long-term environmental vision, “ECO VISION 2050.”
The assessment of the dependences and impacts on nature and the identification and management of risks and opportunities are reviewed by the TNFD Working Group (TNFD-WG) and reported to the Environment Management Committee which is chaired by the Corporate Officer in Charge of the Environment. Subsequently, these matters are proposed to the Sustainability Strategy Meeting also chaired by the Corporate Officer in Charge of the Environment. The identified nature-related risks and opportunities, and their countermeasures are reported or proposed to the Management Meeting, which is attended by senior management and others. The matters reported or approved by these senior meetings are reported to the Board of Directors at least once every half year for its oversight.
In this way, biodiversity initiatives are consistently led and coordinated from the operational level by the Corporate Officer in Charge of the Environment, and are overseen by the Board of Directors. Please refer to the “Governance” section of the "Information Disclosure Based on the TCFD Recommendations" for the roles of each committee.

In July 2020, we established the ONO Group Human Rights Global Policy (revised in June 2023) based on the “United Nations (UN) Guiding Principles on Business and Human Rights” to ensure that we understand and respect the human rights, diverse values, personalities, and individuality of all stakeholders, including indigenous peoples and local communities, in all our business activities, both in Japan and abroad, and that we act accordingly. Furthermore, we established a system of human rights due diligence in accordance with the “the UN Guiding Principles on Business and Human Rights” to identify, prevent, and mitigate any adverse human rights impact that we may have on our stakeholders. In the process of advancing our human rights initiatives, we engage in sincere dialogue and consultation with our stakeholders.
For initiatives for human rights, please click here.

Strategy
- Analysis and evaluation of risks and opportunities related to biodiversity -

In line with the LEAP approach* recommended by the TNFD, the TNFD-WG took the lead in assessing the dependences and impacts of our business activities on nature, identifying risks/opportunities, and considering countermeasures.

• The LEAP approach is a systematic approach to assessing nature-related risks and opportunities and consists of four phases: Locate, Evaluate, Assess, and Prepare.

In FY2024, we assessed our dependencies and impacts on nature within the pharmaceutical manufacturing sector using the online tool ENCORE*. In FY2025, we expanded the scope of the ENCORE* assessment to cover our entire value chain, including both upstream and downstream activities, and conducted a comprehensive assessment of our business-related dependencies and impacts on nature. Based on the results, we developed assessment indicators to identify priority areas where significant dependencies on, or impacts to, nature are likely to occur. In addition, we newly conducted scenario analysis and evaluated the potential financial impacts of the identified nature-related risks.

• ENCORE (Exploring Natural Capital Opportunities, Risks and Exposure) is a tool to assess dependence and impact of individual sectors on natural capital (https://encorenature.org/en).

Assessing the dependences and impacts of our business activities on nature, identifying risks and opportunities based on the assessment results, and considering countermeasures

Assessment procedureWe identified nature-related risks and opportunities in our business activities in accordance with STEPs 1 through 4, below.

STEP 1:

Identification of key nature-related dependencies and impacts across the value chain

Level of dependency/impactLowMediumHigh

			Dependencies on nature					Impacts on nature
			Biological resources	Water resources	Nature's regulation service*	Natural disaster (flood) mitigation	Pollination and pest control	Climate change (GHG emissions)	Land/ Sea-use change	Overexploitation of water resources	Pollution	Waste generation
Upstream	Pharmaceutical formulation ingredients	Agricultural products (plant-based pharmaceutical excipients)	Low	High	Medium	Medium	High	Low	Low	Medium	Medium	Medium
		Wood (raw material for cellulose and pulp)	High	High	Medium	Medium	High	High	Medium	Low	High	High
		Chemicals (solvents, active pharmaceutical ingredients, etc.)	Low	Medium	Low	Medium	Low	Medium	Low	Medium	High	Medium
	Product packaging	Glass products	Low	Medium	Medium	Medium	Low	Medium	Low	Medium	Medium	Medium
		Paper products	Low	Medium	Medium	Medium	Low	Medium	Low	Medium	High	High
		Plastic and rubber products	Low	Medium	Low	Medium	Low	Medium	Low	Low	High	Medium
		Metal products	Low	High	Low	Medium	Low	High	Low	Medium	High	Medium
Direct operation		Research and development	Low	Medium	Low	Low	Low	Low	Low	Medium	Low	Medium
		Pharmaceutical manufacturing	Medium	High	Low	Medium	Low	Medium	Low	Medium	Medium	Medium
Downstream		Transportation and warehousing services	Low	Low	Low	Low	Low	Medium	Low	Low	Low	Low
		Healthcare facilities	Low	Medium	Low	Medium	Low	Low	Low	Low	Low	Medium

• Nature's purification, decomposition, and regulating functions

Using ENCORE, we identified and assessed the key nature-related dependencies and impacts across our entire value chain.

• Key nature-related dependencies: “Water resources” and “Natural disaster (flood) mitigation”
• Key nature-related impacts: “Overexploitation of water resources”, “Pollution” and “Waste generation”

STEP 2:

Comprehensive assessment of water-related risk (water stress and flood risk) and biodiversity risk (pollution and waste generation)
Targets: Upstream value chains (suppliers of pharmaceutical formulation ingredients and product packaging, and contract manufacturing organizations, etc.), direct operations (ONO Group), downstream value chains (storage and transportation providers and pharmaceutical wholesalers)

Criteria for assessing as “at risk”

• Water-related risk:
  We use the water risk assessment tool “Aqueduct*¹” to assess the water stress (baseline/2050 [Pessimistic scenario, RCP 8.5]) and flood risk (river/coastal) for each site. Sites where any of these values are rated “High” or higher are confirmed for water-related risks using the WWF Water Risk Filter*².
• Biodiversity risk:
  The WWF Biodiversity Risk Filter*² is used to assess “Protect/Conserved Area” and “Key Biodiversity Area” for each site.

• Aqueduct is an assessment tool developed by the World Resources Institute (WRI) that can identify global water risks based on location information (latitudes and longitudes) of business establishments (https://www.wri.org/aqueduct).
• WWF Water Risk Filter and WWF Biodiversity Risk Filter are assessment tools for water risks and biodiversity risks developed by World Wide Fund for Nature (https://riskfilter.org/).

STEP 3:

Identification of sites (priority locations) that are critical to our business continuity where there is concern about serious dependences and/or impacts on nature
For sites assessed as being at risk of water stress and/or flooding in STEP 2, we check the amount of water withdrawal/water consumption by source and/or whether there has been flood damage in the past, respectively, through desk surveys. For the upstream value chain related to pharmaceutical formulation ingredients and manufacturing, we conduct desk surveys to clarify environmental pollution risks while taking into account factors such as the chemical substances handled by searching for whether they have acquired an environmental management system (EMS) and whether they have had any past environmental accidents or violations. In addition, for sites identified in STEP 2 as being located in areas of high biodiversity vulnerability, we used IBAT* to assess nearby protected areas within a 20-km radius and indicators related to species threat abatement and restoration (STAR), in order to evaluate their importance for biodiversity conservation. Based on the above assessments, we identify sensitive locations on nature, and determined priority locations where a significant dependence or impact on nature is a concern, including in relation to our business activities.

• IBAT (Integrated Biodiversity Assessment Tool) is an assessment tool that integrates key biodiversity datasets provided by the IBAT Alliance (https://www.ibat-alliance.org/about).

STEP 4:

Identification of risks and opportunities, and consideration of countermeasures
To identify potential future nature-related risks and opportunities, we developed four scenarios in accordance with the TNFD guidance on scenario analysis*. While we aspire to achieve Nature Positive described in Scenario #1, we selected Scenario #2, under which nature-related risks are expected to be most severe for our business operations, to identify and assess potential risks and opportunities.

• Guidance on scenario analysis (https://tnfd.global/wp-content/uploads/2023/09/Guidance_on_scenario_analysis_V1.pdf?v=1695138235)

Assessment results

Based on the results of the assessments in STEPs 1 through 3, we identified 3 sites in direct operations and 5 sites in upstream value chains as priority locations that are critical to our business and have concerns about serious dependences and impacts on nature.

Our priority locations that are critical to our business and have concerns about serious dependences and impacts on nature, identified in accordance with STEPs 1 through 3
NA: Not applicable

Value chains	Site	Country	Factors for determining that the site is a sensitive location	Relationship with our business
Direct operation	Fujiyama Plant	Japan	Areas important for biodiversity conservation Risk of ecosystem degradation due to pollution	Our main manufacturing plant
	Yamaguchi Plant		Risk of ecosystem degradation due to pollution	Our main manufacturing plant
	Minase Research Institute		Risk of ecosystem degradation due to pollution	Our main research institute
Upstream	Supplier 1	China	Areas for flood risk	A supplier of pharmaceutical raw materials
	Supplier 2	India	Areas for water shortage	A supplier of pharmaceutical raw materials
	Supplier 3	India	Areas for flood risk	A supplier of pharmaceutical raw materials
	Supplier 4	USA	Areas important for biodiversity conservation	A supplier of pharmaceutical raw materials
	Supplier 5	USA	Risk of ecosystem degradation due to pollution	A supplier of pharmaceutical raw materials

In STEP 4, under Scenario #2, we comprehensively identified potential nature-related risks and opportunities. Taking into account the priority areas identified through the LEAP approach, we determined the material nature-related risks and opportunities that require priority attention. For the identified risks, we assessed their potential financial impacts and likelihood of occurrence. In addition, we considered measures to mitigate risks and realize opportunities.

〈Risks related to biodiversity〉

• Financial impacts were evaluated in alignment with the Enterprise Risk Management (ERM) framework using common risk assessment criteria: Negligible (〈 JPY 100 million), Minor (JPY 100 million–1 billion), Moderate (JPY 1–10 billion), and Major (JPY 10–100 billion).

• Short term (up to 3 years), medium term (3-10 years), and long term (10-30 years)

〈Opportunities related to biodiversity〉

• Short term (up to 3 years), medium term (3-10 years), and long term (10-30 years).

No nature-related risks with the potential to materially affect the continuity of our business were identified in the FY2025 assessment. We will continue to monitor trends in the international community and, in accordance with the LEAP approach, regularly evaluate our nature-related dependencies and impacts, identify related risks and opportunities, assess their financial implications, and examine appropriate mitigation and response measures.

Risk and Impact Management

The TNFD-WG and the Environment Management Committee manage the identified nature-related risks, opportunities, and countermeasures, while the Board of Directors manages and supervises the management of these risks and opportunities through the environmental governance system described in the “Governance” section, above. Nature-related risks and opportunities will be reviewed at least once every two years by the TNFD-WG. If an item is identified that could have a significant impact on finance and business continuity, it will be shared with the Risk Management Committee to manage the risk. For more details about risk management system, please click here.
In addition, in the upstream value chain, when a new contract is entered into, STEPs 1 through 3 described in the strategy above will be followed to identify the presence or absence of nature-related risks, and engagement to mitigate the identified risks will be conducted.

Metrics and Targets

To strengthen and accelerate our efforts to address global environmental issues, we have been promoting activities under our medium- to long-term environmental targets (more information on our mid- to long-term environmental targets, please click here). While minimizing the negative impact of our business activities on nature, we will promote initiatives to contribute to the realization of Nature Positive by 2030 through the development of green spaces on company-owned land and positive activities for nature through new biodiversity conservation activities.
In addition, among the indicators established to assess and manage our dependences and impacts on nature, risks, and opportunities, those for which we have not yet established targets will be considered and disclosed in due course.

〈Comparison table of TNFD core global disclosure metrics〉

• The metrics, FY2025 results and targets for Ono Pharmaceutical Co., Ltd. on a non-consolidated basis are shown in this table.

General Requirements (References)