Daiseki Co., Ltd.

The collection, transport, and intermediate processing of industrial waste, which is the Group's core business, is a permit-based business requiring authorization from the relevant prefectural governor or government-designated city mayor under the "Act on Waste Management and Public Cleansing" (Waste Management Act). Should the Group violate this Act and receive an administrative disposition such as a business suspension order or permit revocation, continuation of its core business could become difficult, potentially having a material impact on its business operations. The Group currently holds the necessary permits and is engaged in appropriate waste processing.

In-situ treatment and soil excavation work in the soil contamination treatment business constitute civil engineering work and are subject to regulation under the "Construction Business Act." Although the Group holds a "Specific Construction Business" license, should it violate this Act and receive an administrative disposition such as a business suspension order or permit revocation, this could impede the continuation of the soil contamination treatment business and affect its business operations.

In the soil contamination survey and treatment business, being a "Designated Survey Organization" designated by the Minister of the Environment is a mandatory requirement for accepting orders to survey areas subject to mandatory investigation under the "Soil Contamination Countermeasures Act." Should the Group violate this Act and have its designation revoked, it would become unable to accept orders for surveys of legally mandated investigation areas, potentially having a direct impact on its business operations. The Group currently holds designation as a Designated Survey Organization.

The measurement certification business, which involves analyzing hazardous substances in soil and waste components, is subject to regulation under the "Measurement Act," and maintaining registration and accreditation is essential for continuing this business. Should the Group violate the Measurement Act and have its registration or accreditation for the measurement certification business revoked, continuation of the analysis business could become difficult, potentially affecting the Group's business operations. The Group currently holds accreditation for the measurement certification business.

Demand for soil contamination surveys and treatment is significantly influenced by regulatory trends such as the "Soil Contamination Countermeasures Act" and ordinances of local governments. If future enactment or revision of laws and ordinances expands survey and treatment opportunities and tightens standards, and the Group fails to respond to such regulatory tightening, it may be unable to convert expanding demand into orders, potentially adversely affecting business performance. Continuous management of both the opportunities from expanding demand and the capacity to respond is required.

Demand for soil contamination surveys and treatment is linked to corporate appetite for environmental investment and trends in the sale and redevelopment of former factory sites and real estate, creating a risk that demand may fluctuate due to economic changes or shifts in corporate capital investment policies. Because survey demand arises structurally when specific legally defined events occur, such as the discontinuation of facilities designated as using hazardous substances or notification of land use changes exceeding 3,000 square meters, deterioration of the macroeconomic environment could directly lead to a decrease in order opportunities.

Physical damage from natural disasters and extreme weather events associated with climate change may affect the Group's facilities, equipment, and business operations. Should industrial waste treatment facilities or soil treatment equipment be damaged, there is a risk that this could disrupt business continuity and adversely affect performance. The Group endorses the recommendations of the TCFD and is working to address climate change risks and appropriately disclose environmental information through integrated reports and other means.

Costs associated with tightening climate-related regulations and the transition to a decarbonized, low-carbon society may affect the business conditions of the Group and its business partners. Because the waste treatment and soil treatment businesses involve energy consumption through equipment and vehicles, there is a risk that operating costs could rise due to the introduction of carbon taxes or tightening of emissions regulations. The Group endorses the recommendations of the TCFD and is advancing efforts to address environmental issues; however, should events arise in the future that make adaptation to environmental regulations extremely difficult, this could affect business performance.