Climate Risks and Opportunities

Identification of Climate Risks and Opportunities

Studio Dragon has identified a pool of climate-related risks and opportunities based on the IPCC (Intergovernmental Panel on Climate Change), TCFD (Task Force on Climate-related Financial Disclosures), and IFRS S2 (Climate-related Disclosures) standards, systematically analyzing the impact of climate change on its business. In identifying physical risks, transition risks, and opportunities, Studio Dragon comprehensively reflected internal and external environmental changes as well as industry characteristics, the operational characteristics of production sites, and policy and regulatory trends. To assess how these risks and opportunities affect the company, it has analyzed the entire value chain, spanning content IP sourcing (Upstream), in-house production processes (Operations), and content consumption (Downstream).

Climate-Related Risks and Opportunities

1) Impact periods are categorized as short-term, medium-term, and long-term. Key analysis points are set at 2035 and 2050, taking into account the CJ Group
    Net Zero Roadmap and the 2035 National Greenhouse Gas Reduction Targets (NDCs).
    - Short-term: Within 3 years (~2028)
    - Medium-term: 3 to 10 years (2028–2035)
    - Long-term: Over 10 years (After 2035)
 

Identification of Material Climate Risks and Opportunities

Studio Dragon has conducted a climate-related materiality assessment to identify risks and opportunities that may have significant impacts on its business operations and the value chain. Aligned with the TCFD recommendations and IFRS S2 standards, the assessment applies quantitative and qualitative evaluation methodologies↗ based on likelihood and impact. Based on the results of the climate-related materiality assessment, Studio Dragon categorizes climate-related risks into four management levels: ‘Top-Priority Risks’, ‘Core Risks’, ‘Major Risks’, and ‘Management Risks’. In the 2025 assessment, Studio Dragon identified ‘increased production costs due to intensifying heatwaves’ as a Top-Priority Risk and conducted in-depth analysis to inform strategic management of this risk.

Climate Materiality Assessment Results

Climate Risk and Opportunity Management Process

Risk and Opportunity Management Process

Studio Dragon operates a four-stage process—identification, assessment, materiality determination, and monitoring—to systematically manage climate risks and opportunities. During the identification phase, the company identifies physical risks, transition risks, and opportunity factors affecting the content production environment by incorporating global standards and recommendations such as IPCC and TCFD, policy and regulatory trends, and industry and production conditions. The subsequent quantitative and qualitative assessment phase applies a five-level evaluation for each identified factor based on likelihood and impact. For key risks, the company quantifies financial impact by incorporating the results of climate scenario analysis. In the materiality determination phase, the company derives a materiality matrix from the assessment results and establishes priorities by selecting key risk and opportunity factors with the highest potential impact. During the final monitoring phase, the company integrates selected key risks into its enterprise-wide risk management framework, continuously monitoring and refining the effectiveness of its climate response strategy. Studio Dragon manages climate risks and opportunities in conjunction with the company-wide risk management framework. The ESG organization oversees the climate risk management process and collaborates with major business units to regularly review the identification, assessment, and response status of climate risks and opportunities. Key climate risks are reviewed quarterly, and material matters are reported to management and the Sustainability Management Committee.
 

Climate-Related Risk and Opportunity Management Process

Materiality Assessment Criteriaㅣ Final materiality is derived by combining likelihood and impact, comprehensively reflecting the potential level of impact that each climate-related risk and opportunity factor may have on the business. Likelihood is assessed by considering climate scenarios, historical climate data, and changes in policy and market conditions. Impact is analyzed primarily through financial dimensions, including increased content production costs, reduced operational efficiency, and lost revenue opportunities. Studio Dragon comprehensively considers both likelihood and impact in establishing management priorities for climate risks. Risks assessed at Level 4 or above are designated as priority management targets and are subject to regular monitoring, while Level 5 risks are managed in connection with executive reporting and decision-making processes.
 

Likelihood and Impact Assessment Criteria

Metrics

As metrics for its climate change response, Studio Dragon has established and manages headquarters' Scope 1 and 2 emissions, Scope 3 emissions, GHG emissions intensity, energy consumption within the organization, energy intensity, and electricity usage. In 2025, the company expanded its Scope 3 GHG management scope by newly calculating emissions from Waste Generated in Operations (Category 5) and Employee Commuting (Category 7).

1) GHG emissions data were calculated based on the headquarters business site for the reporting period.
2) 2024 data have been corrected due to a change in decimal place standards.
3) GHG Emissions Intensity (Scope 1 + Scope 2) = Total GHG Emissions (Scope 1 + Scope 2) ÷ Annual Revenue (separate Basis)
4) Each item is rounded to the third decimal place; consequently, the sum of individual figures may not exactly match the total due to rounding.
     Scope 3 emissions for 2023 and 2024 were calculated for Category 6 (business travel) only.
     From 2025 onward, the calculation scope has been expanded to include business travel, employee commuting, and waste.
5) Data calculation began in 2025.
6) Energy consumption data were calculated based on the headquarters business site for the reporting period.
7) Energy Consumption Intensity = Total Energy Consumption ÷ Annual Revenue (separate Basis)

Targets

Studio Dragon has established targets for managing and reducing GHG emissions and is pursuing them in phases. Building on its management of Scope 1 and Scope 2 emissions, Studio Dragon is managing toward a target of reducing emissions by an average of 1–2% annually through 2028, using 2025 as the baseline year. For 2025, the company set a Scope 1 and Scope 2 GHG emissions reduction target of 2% compared to the previous year, equivalent to 7.83 tCO₂eq. However, actual emissions increased to 427.41 tCO₂eq, and the target was not achieved. This increase was due to greater use of editing studios and changes in the calculation methodology for certain emission sources. Going forward, Studio Dragon plans to strengthen its management approaches to achieve future reduction targets.
Additionally, Studio Dragon plans to progressively expand its scope of Scope 3 GHG management scope to track emissions occurring across the value chain beyond its own operations. The company plans to further extend its management scope to include emissions generated during subsidiary operations and leased assets (Category 8: Upstream Leased Assets). Energy consumption will be managed with the same reduction target as GHG emissions—an average of 1–2% annually through 2028, using 2025 as the baseline year. Over the long term, Studio Dragon aims to systematically manage GHG emissions across content production and overall business operations to advance the achievement of 2050 Net Zero.

GHG Emissions Reduction Target