  Climate-related disclosure based on TCFD-recommendations  DMG MORI COMPANY LIMITED intends to proactively disclose climate change-related risks and opportunities in accordance with the recommendations of The Task Force on Climate-related Financial Disclosures (TCFD), and hereby expresses its support for the recommendations.  The outline of TCFD is as follows:  At the request of the G20, the Financial Stability Board (FSB) established the industry-led Task Force in December 2015 to design a set of recommendations for consistent disclosure on climate-related information.  In June 2017, TCFD proposed a disclosure framework specializing in climate-related information as its final report.  In 2018, the Ministry of Economy, Trade and Industry has confirmed the recommendations and published a guideline in Japan.   Governance  DMG MORI COMPANY LIMITED (hereinafter referred to as CO), and its fully owned German holding company DMG MORI AKTIENGESELLSCHAFT (hereinafter referred to as AG) have each established the "Carbon Neutral Promotion Office" as the department in charge of assessing climate change risks and opportunities, and then planning, implementing and monitoring associated countermeasures. While the ultimate responsibility of the entire Group’s climate-related issues lies with Dr. Mori, President & Group CEO, the department is under the direct supervision of Mr. Tamai, Executive Vice President for CO and Mr. Thönes, CEO and Dr. Eschweiler, Chief Representative, for AG, respectively. The department regularly reports the calculation results of the Company's CO2 emissions to the Board of Directors, and requests approval of the CO2 emissions reduction plan and important capital expenditures related to it. In addition, the department has already completed calculation of CO2 emissions by group companies from Scope 1 to Scope 3 upstream categories for 2020 and established a CO2 emissions reduction plan until 2030. The department monitors progress continuously and reports at the monthly operating officers’ meeting.   In quantifying greenhouse gas (GHG) emissions, we have contracted with Germany-based specialist Fokus Zukunft GmbH & Co. KG who supports us comprehensively regarding our group-wide greenhouse gas (GHG) assessment and mitigation process. Since January 2021, we have shipped our machines labeled as "GREENMACHINE", as they are climate-neutrally produced from the procurement of components up to machine shipment from our factories by utilizing internationally accepted emission certificates. The climate-neutrality was assessed and confirmed by independent auditor, PricewaterhouseCoopers GmbH.   
Figure 1 Climate-related Governance Structure at DMG MORI           
Table 1 Role of Climate-related Organizations at DMG MORI 
Organization Role Frequency to discuss climate-related matters 
Board Meeting Both assessing and monitoring climate-related issues, and making investment decisions as necessary 
At least once per quarter (Board meeting itself is generally held once per month) 
Operating Officers Meeting Assessing climate-related risks and opportunities and examining alternative measures to deal with assessed issues 
Once per month 
Environmental Issue Committee (sub-committee of Operating Officers Meeting) 
Implementing and monitoring group-wide climate-related measures, such as GHG emissions reduction actions 
Strategy  Regarding climate change, we believe that our machine tool business itself will contribute to protecting the environment. Process integration machines such as 5-axis machines and mill-turn centers save various resources, including electric power by replacing multiple machine tools by one. In addition, the superior processing accuracy, geometric accuracy, and volumetric accuracy offered by our company contributes to the effective use of resources through optimizing the bonding between parts by improving the friction coefficient, which will lead to reduction of energy loss during product use and to prolonged product life. Furthermore, by promoting automation and digitization, we will maximize the resource management of our customers and our own factories by streamlining the entire machining process from work production planning to actual processing, measurement, and maintenance services. Since a machine tool has a usage period of 10 to 20 years or more, the year-by-year improvement of our "GREEN mode" technology, which saves 
Board Meeting 
Environmental Issue Committee 
Operating Officers Meeting 
Proposal Decision 
Reporting DMG MORI CO DMG MORI AG 
Administration office 
Carbon Neutral Promotion Office 
Carbon Neutral Promotion Office 
Reporting 
power consumption of the machine tools, contributes to the cumulative reduction of power consumption over the equipment usage period.  Risk & Opportunity  Regarding climate-related risks and opportunities in our machine tool business, we examined both "transition" risks and opportunities caused by changes in policies, regulations or social demands of customers and other stakeholders, and "physical" risks caused by natural disasters and rising temperatures.   1. Transition risks   Introduction of emissions trading and carbon taxes are planned or discussed by the governments around the world, and associated costs would directly and indirectly increase the procurement costs of materials and fuels if they are introduced. In reaction to these trends, we have already introduced green electricity procurement, and at the same time, we are promoting the reduction of CO2 emissions by installing solar power generation and biomass thermo-electric supply system in our own facilities, as well as compensating remaining emissions by means of certified and internationally recognized climate protection projects such as hydropower plant in Brazil and solar power generation project in India. We believe that such measures mitigate our transition risks.  Regarding business risks, customer needs are changing, such as a shift from internal combustion engine (ICE) vehicles to electric vehicles (EVs). There is a view that machine tool demand will therefore decrease since the number of parts per EV is reduced to two-thirds compared to an internal combustion engine car. At the same time however, the shift to EV is creating new demand for higher precision parts and lightweight parts to reduce battery consumption, and this development can hence be a great opportunity for such machine tool manufacturers that can meet the emerging demand.  Another example is a reputational risk due to a shift in investors' perceived corporate value. Currently, there is no unified evaluation standard and disclosure framework for climate-related issues, and there is a risk that related efforts of a company will not be properly evaluated from the outside. For the time being, we will disclose our response to climate change based on TCFD recommendations and through CDP.  2. Transition opportunities  As mentioned above, the transition to a decarbonized and energy-saving society requires high-precision machining, so we expect an increase in demand for ultra-high-precision and high-speed machine tools with single-chucking process such as 5-axis machines and mill-turn centers. We also expect increased demand for automation and digitization to improve the efficiency of machining production processes. The shift to EVs is progressing rapidly in Europe and the United States. Associated changes not only appear in drive trains and battery-related parts. Model changes, architectural changes, changes in used materials are also leading to an increase in 
demand for additive manufacturing machines, ultrasonic machines as well as conventional cutting machine tools. In addition, an increased demand for machine tools can be expected from changes in power generation systems. According to the World Energy Outlook 2019 published by the IEA (International Energy Agency), the share of wind power, including offshore wind power, in global electricity generation will increase to about 13% in the so-called Stated Policies scenario or to about 21% in the so-called Sustainable Development scenario by 2040 (from about 5% in 2018). Offshore and onshore wind power generation systems consist of about 20,000 parts per unit and require a lot of metal processing. Last, industries such as ships, trucks, buses, construction machinery, and agricultural machinery, that use diesel engines, are being equipped with more energy-efficient engines, due to the tightening of GHG emission regulations, which should be another factor for increasing demand for machine tools.  3. Physical risk  We operate 14 factories and 137 offices in 43 countries around the world (as of December 31, 2020). Floods caused by rising sea levels due to rising average temperatures, increased severity of cyclones, floods, etc. may affect our production facilities. At this point, we believe that the risks from rising sea levels are extremely low because most of our factories are located inland. We have been expanding local procurement, while considering mutual supply between regions in the event of supply chain interruptions, which will mitigate risks associated with extreme weather events. We recognize that it is a future task that these risks should be evaluated objectively with third-party experts. We plan to carefully examine physical risks in the process of reviewing our BCP (Business Continuity Plan).    
Table 2 Climate-related Risks at DMG MORI 
Type Climate-Related 
Risks 
Potential 
Financial Impacts 
Magnitude of 
impact 
Specific description CDP 2021 
reported 
Transition Risks Increased pricing of GHG emissions 
(e.g. carbon taxes) 
Increased direct costs Medium Increased procurement costs due to the introduction of carbon taxes Yes 
 Enhanced emissions-reporting 
obligations 
Higher compliance costs Medium-Low  Yes 
 Increased cost of raw materials and energy  
Increased production costs due to changing input prices (e.g. energy, water) and output requirements (e.g. 
waste treatment) 
Medium-Low In particular, renewable-sourced electricity prices may rise due to the increased demand for such energy 
 Changing customer behavior Reduced demand for goods and services due to shift in consumer preferences 
Medium Manufacturers may choose climate-neutrally produced capital goods in the efforts to achieve climate-neutrality throughout their supply chain. In case the company fails to  respond to such trends, it may lose 
the competitive advantage. 
 Increased stakeholder concern or negative stakeholder 
feedback 
Reduction in capital availability or increased equity cost 
Low Since our business is not a carbon-intensive industry, we assume that the risk of being subject to divestment is relatively low. 
Physical Risks Increased severity of extreme weather events 
 Reduced revenue due to supply chain interruptions  Write-offs of existing assets due to 
damages to 
Low Most of our production facilities are not located in “high-risk” locations.  No 
property and assets caused 
by e.g. flood. 
 Rising mean temperatures Increased operating costs (e.g. air-conditioning for factories) 
Medium More strict temperature control in the factories will be required to guarantee the precision of machine tools, which will lead to increased power consumption.  
 Table 3 Climate-related Opportunities at DMG MORI 
Type Climate-Related 
Opportunities 
Potential 
Financial Impacts 
Magnitude of 
impact 
Specific description CDP 2021 
reported 
Products and Services Development and/or expansion of low emission goods 
Increased revenue through demand for lower emissions products and 
services 
Medium Customers may prefer our carbon-neutral products in their efforts to reduce GHG emissions throughout their supply chain 
Markets Access to new markets Increased revenues through access to new and emerging markets 
High  Newly emerging demands, such as those for offshore wind power generation system or electric vehicle(EV)-related parts  Increased demand from industries such as ships, trucks, buses, construction, etc., that use diesel engines, in pursuit of more energy-efficient engines with 
lower GHG emissions. 
In analyzing the risks and opportunities, we refer to the following sources:  IEA (International Energy Agency): World Energy Outlook 2019  IPCC (United Nations Intergovernmental Panel on Climate Change): Fifth Assessment Report (AR5: 2014), Special Report (October 2018)  World resources Institute：Aqueduct   
Risk Management  In the DMG MORI Group, climate change-related risks are continuously identified and assessed by Carbon Neutral Promotion Office, and reported to the Environmental Committee which convenes once a month at the Operating Officers Meeting. In case urgent matters arise, the Carbon Neutral Promotion Office will report to Mr. Tamai, Executive Vice President (Dr. Eschweiler, Chief Representative on the AG side), and who is in charge of the division, in a timely manner. The Board has established a process for discussing and deciding on climate-related issues, at least quarterly or whenever climate-related matters that may have a significant impact on the business arise.  Metrics and Targets:  Since 2019, DMG MORI has quantified group-wide greenhouse gas (GHG) emissions with the support of Fokus Zukunft. DMG MORI confirmed CO2 emissions from Scope 1 to Scope 3 upstream categories at 784,000 tons in FY2019 and 488,000 tons in FY2020, respectively. Because around 70% of CO2 emissions in DMG MORI depend on the purchased materials and components from suppliers, i.e. Category 1 of Scope 3, as shown in Table 4, the group’s total GHG emissions depend on the production volume.   Targets  Because our total CO2 emissions depend on production volume, we believe that intensity-based metrics, or CO2 emissions per machine tool produced are more appropriate than absolute figures. In 2019, CO2 emissions per machine unit amounted to 78 tons. Compared to 2019 level, we aim to reduce CO2 emissions by 30% until 2030, i.e.  55 tons per machine unit.  Initiatives to achieve our CO2 reduction goals until 2030: We are planning a 60% reduction in Scope 1 and Scope 2 mainly in the areas where emissions reduction is feasible, and a 20% reduction in Scope 3 mainly in the supply chain. While Tokyo Global Headquarters has for example already introduced electricity with zero CO2 emissions since April 2020, we will further introduce green electricity at our plants in Iga and Nara, and in other group companies in Japan in 2021. AG has already achieved about 80% green power procurement at all of its locations, and is introducing further measures towards 100%. In addition, we will introduce a biomass thermo-electric supply system using wood chips at the Iga plant within this year (2021), which will contribute to the disposal of waste materials in the neighboring areas. In material procurement, we will introduce a state-of-the-art electric furnace at Watanabe Steel Works (Shimane prefecture, Japan), a domestic group company, for castings which by their nature account for large amounts of CO2 emissions from production and transportation. This facility will produce two-thirds of castings required for domestic production. As a result, imports of casting from overseas can be reduced. CO2 emissions from the procurement of castings will be reduced by a total of 32,000 tons, representing an emissions reduction of about 70% compared to 2020. This will result in competitive advantages in terms of our supply chain. In addition, we will introduce solar power 
generation equipment at Iga and Nara campuses and introduce company vehicles with high fuel-efficiency. AG plans to replace all company-owned vehicles with electric vehicles by 2030. Regarding CO2 reduction in the supply chain, we requested cooperation in CO2 reduction at our so-called Partner Summit, in Japan and Europe. We will share our own CO2 reduction know-how to build a win-win relationship with our suppliers.  DMG MORI CO2 emissions reduction target: 30% reduction by 2030 in CO2 emissions (base year 2019)  Scope (Scope 1, Scope 2, upstream categories of Scope 3) 
2019 Actual  2030 Target 
Total emissions by the Group Emissions per unit produced  Emissions per unit produced 
Approx. 784,000t 78t/unit  55t/unit 
 For 2021, we aim to commit to emissions reduction targets, to get those targets officially validated by the Science Based Targets initiative (SBTi), to announce our targets to our stakeholders, and to report and track target process annually.  Table 4 DMG MORI’s global carbon footprint 
  2019 2020 
Scope Source of Emission tCO2 (‘000) Share tCO2 (‘000) Share 
Scope 1 Internal Combustion 
43 5% 34 7% 
Business Travel with own Vehicles 
Scope 2 External provision of Energy（Electricity） 70 9% 43 9% 
Scope 3 Category 1: Purchased Material 581 74% 352 72% 
Category 3: Upstream Processes not included in Scope 1 or Scope 2 
17 2% 17 3% 
Category 4: Transports 31 4% 18 4% 
Category 5: Waste 1 0% 1 0% 
Category 6: Business Travel (Flights, Trains, Ferry, Bus, Rental Cars + Taxis) 
23 3% 8 2% 
Category 7: Employees Commute (e.g. Cars, Public Transport) 
18 2% 15 3% 
 TOTAL CO2 Footprint ‘000 ton 784 100% 488 100% 
source:  DMG MORI Integrated Report 2020 
Recommendations and Supporting Recommended Disclosures Disclosure Reference 
[Governance]  
Disclose the organization’s governance around climate related risks and opportunities. 
a) Describe the board’s oversight of climate-related risks and opportunities.  CDP2021 
b) Describe management’s role in assessing and managing climate-related risks and opportunities.  CDP2021 
[Strategy] Disclose the actual and potential impacts of climate-related risks and 
opportunities on the organization’s businesses, strategy, and financial planning where 
such information is material. 
a) Describe the climate-related risks and opportunities the organization has identified over the short, medium, and long term.  CDP2021 
b) Describe the impact of climate related risks and opportunities on the organization’s businesses, strategy, and financial planning.  CDP2021 
c) Describe the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario.   
[Risk Management] Disclose how the organization identifies, assesses, and manages 
climate-related risks. 
a) Describe the organization’s processes for identifying and assessing climate-related risks.   
b) Describe the organization’s processes for managing climate-related risks.   
c) Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organization’s overall risk management.   
[Metrics and Targets] Disclose the metrics and targets used to assess and manage 
relevant climate-related risks and opportunities where such information is material. 
a) Disclose the metrics used by the organization to assess climate related risks and opportunities in line with its strategy and risk management process.   
b) Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks.  Carbon Footprint report, Integrated Report 2020 
c) Describe the targets used by the organization to manage climate-related risks and opportunities and performance against targets.  Integrated Report 2020 