Climate Change Data

Environmental Metrics

ESG Focus Areas

• Governance
• Quality
• Environment
• Labor Practices

Environmental Achievements

• Reduced CO2 emissions per manufactured automobile to 73.5 kg
• Reduced VOC emissions of new constructions by 2,200 t/year
• Achieved a 25.6% CO2 reduction rate (emission amount)
• Recycling rate of 86% for construction waste
• Green procurement amount of 4,270 million yen

Social Achievements

• Established On-site Support Team to improve on-site operational efficiency and reduce overtime work
• Implemented a global human resource system in Thailand to address high employee turnover and improve fairness in assessment and remuneration
• Established Technical Center in Zama City to enhance development capabilities and quality assurance
• Introduced paid time off system and interval system to address long working hours
• Increased ratio of female employees in managerial positions to 2.19%

Governance Achievements

• Strengthened corporate governance through the application of Non-executive Directors and the corporate officer system
• Established Nomination Advisory Committee and Compensation Advisory Committee
• Implemented a whistle-blowing system in 23 overseas affiliates
• Conducted audits at 50 sites (including 26 construction sites in Japan and 10 overseas business offices)

Climate Goals & Targets

Environmental Challenges

• Long working hours at construction sites
• High employee turnover rate at overseas affiliates
• Securing recruitable human resources overseas
• Risk of labor disputes and demands for improvement in personnel treatment rules overseas
• Lack of core human resources overseas
• Climate change risks (natural disasters, tightening environmental regulations)
• Air pollution in China

Mitigation Strategies

• Established On-site Support Team
• Implemented global human resource system
• Developed alternative sourcing strategies
• Established crisis management system and BCP
• Developed and implemented VOC exhaust-gas treatment systems (RTO)
• Developed NMP Recovery System
• Promoted green procurement
• Introduced paid time off system and interval system
• Enhanced safety management activities

Supply Chain Management

Responsible Procurement

• Green procurement
• Exclusion of anti-social forces
• Fair and transparent transactions

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons, heavy rain, and other natural disasters

Transition Risks

• Tightening of environmental regulations

Opportunities

• Expanding customer needs for environmental measures

Reporting Standards

Frameworks Used: GRI, ISO26000

Certifications: ISO 9001, ISO 14001

Sustainable Products & Innovation

• Energy Plant Optimal Control System
• Direct fired regenerative thermal oxidizers (RTO)
• NMP Recovery System
• Eco-friendly paint systems

Awards & Recognition

• Best Corporate Website Award in the “All Japanese Listed Companies’ Website Ranking 2018”

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Reduced energy consumption in paint finishing process by 50% from approximately 900 kWh to approximately 270 kWh per vehicle between 2005 and 2017.
• Reduced CO2 emissions per manufactured automobile to 72.2 kg in FY2019.
• Reduced VOC emissions of new constructions by 8,200 t/year.
• Achieved a recycling rate of 87% for construction waste in FY2019.

Social Achievements

• Launched various initiatives for employee well-being, including childcare and nursing care support, and an interval system.
• Maintained a 100% return-to-work rate for employees after childcare leave.
• Supported LIFELINE EXPRESS project in India, providing medical care to remote communities.
• Implemented initiatives to promote diversity and women's career advancement.

Governance Achievements

• Established a robust corporate governance system with independent outside directors and advisory committees.
• Implemented a performance-linked compensation system for executive directors.
• Strengthened risk management and internal control systems.
• Established a whistle-blowing system and conducted compliance training.

Climate Goals & Targets

Environmental Challenges

• Fluctuations in private-sector capital investment.
• Risks involved in overseas business operations.
• Intensified price competition.
• Shortage and aging of workers at construction sites.
• Impact of COVID-19 pandemic on business performance and supply chains.
• Transformation of the automobile industry and potential obsolescence of paint finishing.
• Competition from local subcontractors in overseas markets.
• Need for localization and technology transfer in overseas operations.

Mitigation Strategies

• Broadening client base and enhancing sales systems.
• Lowering costs and enhancing competitiveness.
• Tapping new markets and clients based on automation technology.
• Group-wide crisis management response to COVID-19.
• Implementing health and safety measures and infection prevention.
• Promoting staggered working hours and telecommuting.
• Proactive information collection on political, economic, legal, and regulatory information at overseas sites.
• Hedging risks through forward exchange contracts.
• Sophisticating overseas affiliates’ governance systems.
• Improving basic technological capabilities through training and on-site practical education.
• Creating an appealing workplace and securing human resources through work style reform.
• Introducing a global human resource system, securing and training key human resources, and promoting localization.
• Conducting compliance education programs and follow-up activities.
• Developing a culture and mechanism that prevents rules from being violated.
• Enhancing safety management systems.
• Taking out various non-life insurance policies.
• Expanding the Paint Finishing System Business’s portfolio to prepare against changes.
• Promoting automation of polishing and painting processes for aircraft and railway cars.
• Localization through technology transfer and minimizing the number of Japanese staff at overseas business offices.
• Enhancing national staff education and promoting technology transfer.

Supply Chain Management

Responsible Procurement

• Green procurement policy
• Exclusion of anti-social forces
• Fair and transparent transactions
• Basic agreements with business partners including clauses to exclude anti-social forces.

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons, heavy rain, and other natural disasters

Transition Risks

• Tightening of environmental regulations

Opportunities

• Expanded customer needs for environmental measures
• Utilization of Taikisha’s environmental technologies

Reporting Standards

Frameworks Used: GRI, ISO26000, IIRC

Certifications: ISO 9001, ISO 14001

Sustainable Products & Innovation

• Regenerative Thermal Oxidizers (RTOs)
• NMP Recovery System
• Energy Plant Optimal Control System
• i-Navistar system

Awards & Recognition

• Best Corporate Website Award in the “All Japanese Listed Companies’ Website Ranking 2019”

Environmental Metrics

ESG Focus Areas

• Climate change mitigation and adaptation
• Securing and developing human resources
• Creation of pleasant working environment
• Digital innovation and productivity improvement
• Highly effective corporate governance

Environmental Achievements

• Developed Low Air Volume Booth, reducing CO2 emissions by approximately 30%
• Developed a new heat source system eliminating the need for VOC after-treatment equipment, reducing CO2 emissions by approximately 20%
• Developed i-Navistar (AI/IoT system for paint finishing factories) for improved energy management and CO2 reduction
• Proposed CO2 reduction technology incorporating hydrogen and electrification

Social Achievements

• Certified for the second consecutive year under the “2022 Certified Health & Productivity Management Outstanding Organizations Recognition Program” (White 500)
• Introduced a telework scheme and digitized expense reports to promote diverse work styles
• Introduced a career-planning scheme to support employee upskilling and growth
• Introduced a global human resource system to facilitate career advancement of overseas local staff

Governance Achievements

• Increased the number of Outside Directors to four (up two) to achieve improved diversity on the Board
• Established the Nomination Advisory Committee, the Compensation Advisory Committee, and the Governance Committee
• Established the Risk Management Committee for integrated identification and management of risks

Climate Goals & Targets

Environmental Challenges

• Technological innovation making existing technologies and business models obsolete
• Loss of competitive advantage due to entry by other industries
• Increased costs associated with implementing and changing policies and laws and regulations, including the introduction of a carbon tax
• Loss of business opportunities due to delays in responding to changes in customer behavior due to climate change
• Outflow of human resources due to intensifying competition for human resources
• Lack of human resources that can create innovation
• Poor response to work-life balance leading to loss of talent and decrease in employee engagement
• Decline in social trust and business continuity risks associated with corporate governance malfunctions

Mitigation Strategies

• Enhance technological competitiveness and the ability to create innovation
• Strategically incorporate ESGs and other social issues as opportunities to create new businesses
• Address the challenges of climate change through mitigation and adaptation
• Secure, retain and develop capable human resources
• Improve business operation systems and productivity through the use of digital technologies
• Strengthen the corporate governance structure and enhance the effectiveness of the board of directors

Supply Chain Management

Responsible Procurement

• Green procurement

Climate-Related Risks & Opportunities

Physical Risks

• Typhoons, heavy rain, and other natural disasters

Transition Risks

• Tightening of environmental regulations

Opportunities

• Increased demand for environmental measures and utilization of Taikisha’s environmental technologies

Reporting Standards

Frameworks Used: GRI, TCFD

Sustainable Products & Innovation

• i-LAVB (low air volume booth)
• i-VACH (indirect furnace with VOC treatment function)
• i-Navistar (AI/IoT system for paint finishing factories)
• Dry decoration technology

Awards & Recognition

• “2022 Certified Health & Productivity Management Outstanding Organizations Recognition Program (White 500)”

Environmental Metrics

ESG Focus Areas

• Decarbonization
• Sustainable Global Environment
• Globalization
• Human Resource Development

Environmental Achievements

• Development of an energy management system (EMS) for automobile paint finishing lines to reduce wasted energy.
• Increased stake in Indian subsidiary Nicomac Taikisha Clean Rooms Private Limited to 100% to accelerate clean room construction market expansion in India.

Social Achievements

• Increased personnel exchanges to foster cross-cultural understanding, including bringing young overseas design personnel to Japan and sending young Japanese employees abroad as trainees.
• Launched a frontline DX-related initiative and built core business system infrastructure for global deployment.

Governance Achievements

• Considering a method by which personnel evaluations are left to each base, while governance-related matters are handled by global talents shared throughout the Group.

Climate Goals & Targets

Environmental Challenges

• Lack of enthusiasm for taking on more challenging projects.
• Sluggish sales growth from new projects compared to the growth of overseas markets.
• Need to globalize head office functions.

Mitigation Strategies

• Visiting domestic and overseas sites, chatting with employees, and holding discussions on how local subsidiaries can become more independent and take on new challenges.
• Expanding existing R&D centers in India, China, and the U.S. and promoting the sharing of development technologies and themes among affiliates.
• Establishing an online connection between R&D centers in Japan and head office, and promoting the use of the R&D Satellite.
• Increasing personnel exchanges to foster cross-cultural understanding.
• Considering a method by which personnel evaluations and the like are left to each base, while governance-related matters are handled by global talents who are shared throughout the Group.

Supply Chain Management

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Energy management system (EMS)

Environmental Metrics

ESG Focus Areas

• Climate change
• Human capital
• Governance

Environmental Achievements

• Improved coating efficiency and developed energy-saving technologies in paint finishing systems, resulting in a reduction of CO2 emissions.
• Developed a new energy management system (EMS) for paint finishing lines to visualize wasted energy and optimize energy management.
• Proposed a system capable of controlling energy used throughout a building’s lifecycle, and provided technologies for “low carbon” and “reducing environmental burdens”.

Social Achievements

• Increased the ratio of male employees who took childcare leave from 19.2% in FY2021 to 36.4% in FY2022.
• Extended the retirement age from 60 to 65 and introduced an optional retirement system.
• Established the Diversity & Inclusion Promotion Section.

Governance Achievements

• Renewed the executive structure.
• Strengthened the corporate governance structure.
• Incorporated non-financial factors (long-term strategy and reinforcement of governance) into the performance-linked compensation to Executive Directors.

Climate Goals & Targets

Environmental Challenges

• Technological innovation and obsolescence of existing technologies and business models.
• Decreased ability to create innovation and delayed response to new markets.
• Decline in corporate competitiveness due to delays in responding to digital technologies.
• Increased costs associated with implementing and changing policies and laws and regulations, including the introduction of a carbon tax.
• Loss of business opportunities due to delays in responding to changes in customer behavior due to climate change.
• Deterioration of the natural environment and adverse effects on human health due to hazardous chemical substances, air pollution, etc.
• Outflow of human resources due to intensifying competition for talent.
• Lack of human resources that can create innovation.
• Poor response leads to loss of talent, stagnation and decrease of employee engagement, and decrease in labor productivity.
• Decline in social trust.
• Business continuity risks associated with corporate governance malfunctions.

Mitigation Strategies

• Enhance technological competitiveness and the ability to create innovation.
• Strategically incorporate ESGs and other social issues as opportunities to create new businesses and enhance the business model.
• Reform the business model and improve labor productivity through the use of digital technologies.
• To address the challenges of climate change, tackle it from the two points of “mitigation,” to reduce and absorb greenhouse gas emissions, and “adaptation,” to prepare for damage from climate change.
• Work to reduce and remove VOCs and other air pollutants and make them harmless by using unique exhaust treatment technology.
• Develop new water treatment and generation technologies (such as MOF) from the viewpoint of maintenance and effective use of water resources.
• Secure, retain and develop capable human resources that create value (innovation) and support our competitiveness.
• Aim to improve diversity, work-life balance, and job/employee satisfaction, while introducing a wide range of flexible work styles.
• Strengthen the corporate governance structure.
• Build employee awareness of compliance.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Average temperature rise leading to deterioration of labor productivity and suspension of construction works.

Transition Risks

• Increased costs due to carbon taxes.
• Loss of business opportunities due to delays in responding to changes in customer behavior.

Opportunities

• Growth of demand for low-carbon buildings and painting plants.
• Development of energy-saving and renewable energy technologies.

Reporting Standards

Frameworks Used: GRI, TCFD, ISO26000, IIRC

Sustainable Products & Innovation

• i-LAVB (low air volume booth)
• i-VACH (indirect furnace with VOC treatment function)
• i-HEB (high-efficiency block oven)
• i-Navistar (AI/IoT system for paint finishing factories)
• Film decoration systems

Awards & Recognition

• Jury’s Award at SURCAR 2023

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance
• Digital Innovation
• Sustainable Value Creation

Environmental Achievements

• Initiatives to reduce GHG emissions
• Promote energy savings by mini-environmental control of HVAC equipment
• Downsize facilities through the improvement of coating efficiency and development of energy-saving technologies to achieve carbon neutrality
• Develop and examine equipment with low environmental impact, such as the introduction of hydrogen fuel burners
• Conduct scenario analysis based on TCFD and respond to risks and opportunities
• Direct Air Capture (DAC) of CO2 using exhaust gas treatment technology, use in plant growth, etc.
• Develop new water treatment and generation technologies (such as MOF) from the viewpoint of maintenance and effective use of water resources
• Reduce waste in construction sites, and manage chemicals appropriately

Social Achievements

• Systematically develop human resource value (management and professional human resources)
• Design global educational programs
• Support for career advancement and acquisition of certifications
• Promote health management
• Promote work style reform
• Create an organizational culture that fosters innovation
• Improve employee engagement
• Optimize human resources by reviewing the project management structure
• Improve the labor environment by promoting equalization of work volume and productivity improvement

Governance Achievements

• Strengthen the corporate governance structure
• Business portfolio management based on capital costs
• Enhance the effectiveness of the board of directors and auditing functions of affiliated companies
• Build employee awareness of compliance

Climate Goals & Targets

Environmental Challenges

• Decreased ability to create innovation and delayed response to new markets
• Decline in corporate competitiveness due to delays in responding to digital technologies
• Increased costs associated with implementing and changing policies and laws and regulations, including the introduction of a carbon tax, and strategic review
• Loss of business opportunities due to delays in responding to changes in customer behavior due to climate change
• Deterioration of the natural environment and adverse effects on human health due to hazardous chemical substances, air pollution, etc.
• Outflow of human resources due to intensifying competition for talent
• Lack of human resources that can create innovation
• Decline in social trust
• Business continuity risks associated with corporate governance malfunctions
• As technological innovation advances, existing technologies and business models become obsolete
• Loss of competitive advantage due to entry by other industries

Mitigation Strategies

• Pursue sustainability and increase profits by addressing social issues as a core business
• Create new businesses based on solving social issues
• Create new value through digital application, etc.
• Promote improved productivity and operational efficiency through DX promotion
• Increasing business opportunities due to the growing need for low carbon and decarbonization
• Create new businesses by contributing to climate change issues
• Respond to air pollution prevention and environmental impact reduction needs
• Expand human capital by securing and developing talented human resources
• Lead to the creation of new businesses and the provision of innovative services
• Gain trust from capital markets
• Appropriately respond to changes and establish a stable growth foundation
• Enhance technological competitiveness and the ability to create innovation, which are the sources of corporate competitiveness and customer satisfaction and also serve as the driving force for creating new businesses.
• Strategically incorporate ESGs and other social issues as opportunities to create new businesses and enhance the business model.
• Reform the business model and improve labor productivity through the use of digital technologies.
• To address the challenges of climate change, tackle it from the two points of “mitigation,” to reduce and absorb greenhouse gas emissions, and “adaptation,” to prepare for damage from climate change.
• Work to reduce and remove VOCs and other air pollutants and make them harmless by using unique exhaust treatment technology.
• Secure, retain and develop capable human resources that create value (innovation) and support our competitiveness.
• Aim to improve diversity, work-life balance, and job/employee satisfaction, while introducing a wide range of flexible work styles.
• Prevent impairment of brand value and financial losses, steadily execute strategies for fulfilling own business model to increase corporate value in a sustained manner.

Supply Chain Management

Climate-Related Risks & Opportunities

Opportunities

• Increasing business opportunities due to the growing need for low carbon and decarbonization

Reporting Standards

Frameworks Used: International Integrated Reporting Framework, TCFD

UN Sustainable Development Goals

• SDGs/Society 5.0

Pursue technologies required by SDGs/Society 5.0

Environmental Metrics

ESG Focus Areas

• Climate change mitigation and adaptation
• Human capital development
• Corporate governance
• Digital innovation
• Responsible supply chain management

Environmental Achievements

• Achieved record highs in net sales and profits.
• Successfully completed construction work for TSMC's plant in Japan.
• Dry decoration technology won the Jury’s Award at SURCAR.
• Opened TAIKISHA INNOVATION SITE AIkawa, a new research and development center.
• Set GHG emission reduction targets: 42% reduction in Scope 1 & 2, 25% reduction in Scope 3 by 2030 (vs FY2022 levels).

Social Achievements

• Launched global training program for top employees.
• Established the Sustainability Committee.
• Improved employee engagement through pulse surveys.
• Exceeded government's target for male parental leave uptake rate.
• Established Taikisha Group’s Human Rights Policy.

Governance Achievements

• Established the Business Development Headquarters.
• Introduced performance-linked stock-based compensation for executive officers.
• Strengthened corporate governance structure with committees and guidelines.
• Improved the effectiveness of the Board of Directors.

Climate Goals & Targets

Environmental Challenges

• Technological innovation and obsolescence of existing technologies.
• Climate change risks (carbon taxes, changing customer behavior).
• Human resource shortages and overtime work restrictions.
• Digital technology adoption delays.
• Overseas business risks (political instability, legal changes).

Mitigation Strategies

• Investing in R&D and open innovation.
• Developing low-carbon technologies and energy-saving solutions.
• Implementing digitalization and DX initiatives.
• Strengthening global training and human resource development.
• Implementing risk management strategies and crisis management plans.

Supply Chain Management

Climate-Related Risks & Opportunities

Physical Risks

• Average temperature rise, extreme weather events

Transition Risks

• Carbon taxes, changes in customer behavior, energy-saving technologies

Opportunities

• Growth of demand for low-carbon buildings and painting plants

Reporting Standards

Frameworks Used: GRI, TCFD, ISO26000, IIRC

Sustainable Products & Innovation

• FOLLOAS (target-guided airflow system)
• Dry decoration system

Awards & Recognition

• Jury’s Award at SURCAR for dry decoration technology
• Selected for multiple ESG investment indices

Environmental Metrics

ESG Focus Areas

• Energy Efficiency
• Environmental Protection
• Sustainable Growth

Environmental Achievements

• Implementation of Energy Plant Optimal Control System for energy-saving operation in air-conditioning systems
• High paint recovery rate using ultra filter (UF) membranes or reverse osmosis (RO) membranes in paint finishing systems
• Use of regenerative thermal oxidizer for high-efficiency treatment of organic solvents and malodorous gases

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Not disclosed

Mitigation Strategies

• Not disclosed

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Not disclosed

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Not disclosed

Opportunities

• Not disclosed

Reporting Standards

Frameworks Used: Null

Certifications: Null

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Not disclosed