Climate Change Data

Environmental Metrics

ESG Focus Areas

• Corporate Governance

Governance Achievements

• Established a Nomination and Compensation Committee with a majority of outside directors and an independent chair to enhance the independence, objectivity, and accountability of the board's functions regarding the nomination and compensation of directors and auditors.
• Implemented a stock option system to enhance the motivation and morale of directors and employees regarding company performance improvement.
• Developed internal control systems to strengthen the functions of the shareholders' meeting, board of directors, board of auditors, and accounting audits.
• Established an internal reporting system to ensure early detection of compliance issues.
• Implemented regular performance monitoring meetings to oversee business execution.

Climate Goals & Targets

Environmental Challenges

• Considering the cost-effectiveness and future ownership ratios of institutional and overseas investors, the company will consider implementing electronic voting and English translations of meeting notices.

Mitigation Strategies

• The company will consider the cost-effectiveness and future ownership ratios of institutional and overseas investors before implementing electronic voting and English translations of meeting notices.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Governance

Governance Achievements

• Implemented electronic voting for shareholders (including via smartphone QR code).
• Established a Nomination and Compensation Committee with a majority of independent outside directors and an independent chair.
• Developed and implemented a policy on the holding of strategic equity investments.
• Established internal control systems to enhance the functions of the shareholders' meeting, board of directors, board of corporate auditors, and accounting audits.
• Implemented training for directors and corporate auditors by external experts.
• Regularly holds performance monitoring meetings involving directors and executives of major subsidiaries.

Climate Goals & Targets

Environmental Challenges

• Considering the translation of shareholder meeting notices into English, weighing cost-effectiveness against the increasing proportion of institutional and foreign investors.

Mitigation Strategies

• Ongoing consideration of cost-effectiveness before translating shareholder meeting notices into English.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Governance

Governance Achievements

• Implemented electronic voting for shareholders (including QR code usage).
• Established a Nomination and Compensation Committee with a majority of independent outside directors.
• Developed and implemented a policy on the holding of strategic equity investments.
• Established internal control systems to enhance the functions of the shareholders' meeting, board of directors, board of auditors, and accounting audits.
• Implemented a system for reporting transactions with directors and major shareholders to the board of directors.
• Regularly conducts training for directors and auditors, including sessions with external experts.

Climate Goals & Targets

Environmental Challenges

• Considering the translation of shareholder meeting notices into English, weighing cost-effectiveness against the increasing proportion of foreign investors.

Mitigation Strategies

• Ongoing consideration of cost-effectiveness and future needs before translating shareholder meeting notices.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Environment
• Social
• Governance

Environmental Achievements

• Developed energy-efficient heat exchange system "Heat Cluster" for geothermal business, achieving 3-5 times higher efficiency than conventional methods.
• Developing environmentally friendly materials and products (e.g., alternatives to plating and painting).

Social Achievements

• Promoting work style reform through active introduction of telework.
• Promoting diversity and inclusion.
• Supporting employee development and aiming for zero workplace accidents.

Governance Achievements

• Established a supervisory system with four outside directors (more than inside directors).

Climate Goals & Targets

Environmental Challenges

• Rising raw material prices (naphtha).
• Shrinking domestic market due to population decline.
• Competition from low-priced overseas products.

Mitigation Strategies

• Initiated price increase negotiations with customers.
• Focusing on cost reduction.
• Developing alternative sourcing strategies.
• Strengthening sales channels and optimizing distribution.
• Developing new solutions and exploring new markets.

Supply Chain Management

Climate-Related Risks & Opportunities

Opportunities

• Development of energy-efficient products (geothermal business)

Sustainable Products & Innovation

• Geothermal heat exchange system
• Environmentally friendly materials

Environmental Metrics

ESG Focus Areas

• Diversity and Inclusion
• Human Capital
• Environmental Business

Environmental Achievements

• Promoting environmental related business in Material Solutions business
• Innovex Inc. (subsidiary) is promoting SDGs initiatives.

Social Achievements

• Established CHRO in FY2022 to strengthen human resource strategy. Initiatives include talent management, personnel training and education, health promotion and support, and diversity & inclusion.
• Implemented LGBT training for all group employees.

Governance Achievements

• Established a Nomination and Compensation Committee with a majority of independent outside directors and an independent outside director as chair.
• Implemented an electronic voting system for shareholder meetings (including smartphone use via QR code).

Climate Goals & Targets

Environmental Challenges

• Low percentage of foreign shareholders (0.6% by number, 6.2% by shares), hindering the cost-effectiveness of translating shareholder meeting notices into English.
• No specific targets set for diversity metrics such as the percentage of women in management positions, due to a focus on individual ability rather than attribute-based evaluation.

Mitigation Strategies

• Will consider translating shareholder meeting notices into English if the percentage of foreign shareholders significantly increases.
• Continues to pursue gender-neutral and nationality-neutral hiring practices, with a focus on individual ability in evaluation and promotion.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• CO2 emissions reduction
• Geothermal energy business

Environmental Achievements

• Not disclosed

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Decreased sales in geothermal energy business
• Increased raw material and import prices
• Dependence on specific manufacturers for some raw materials

Mitigation Strategies

• Price revisions for low-profit products
• New product adoptions
• Negotiations with clients to increase sales volume
• Improved production efficiency
• Capital and business tie-up with RP Higashi-pura to optimize production, logistics, and organization

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

• Metal-like decorative film (lower environmental impact than plating or painting)

Awards & Recognition

• Not disclosed

Environmental Metrics

ESG Focus Areas

• Not disclosed

Environmental Achievements

• Developed plant-derived plastic sheets for food containers, reducing resin usage by 20% and lowering CO2 emissions during manufacturing and transportation.
• Developed micro-foam sheets for yogurt containers, reducing resin usage.

Social Achievements

• Developed a quickly deployable sheet for disaster relief, winning the Minister of Economy, Trade and Industry Award at JAPAN DIY HOMECENTER SHOW 2024.
• Developed a vehicle flood prevention cover, winning the Excellent Award at the Disaster Prevention and Mitigation × Sustainable Award 2024.

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Initial standard cost revision loss impact significantly reduced operating income.
• Continued rise in raw material and utility costs hindered profit growth despite increased sales.
• Sales decline in high-transparency multilayer films due to model end of some adopted car models.

Mitigation Strategies

• Price increases to offset rising raw material and utility costs.
• Production system enhancements in packaging solutions led to increased productivity and sales.
• Metal-tone decorative films compensated for the decline in high-transparency multilayer films.

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

• Plant-derived plastic sheets
• Micro-foam sheets
• Disaster relief sheet
• Vehicle flood prevention cover
• Heat-absorbing agricultural net

Awards & Recognition

• Minister of Economy, Trade and Industry Award (Disaster relief sheet)
• Excellent Award (Vehicle flood prevention cover)

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Actively implements initiatives to reduce plant CO2 emissions
• Conducts eco-friendly product development and pursues new environmental businesses (system that utilizes geothermal energy, metallic decorative film that replaces chrome and coating, etc.)

Social Achievements

• Promotes workstyle reforms through aggressive deployment of telework
• Encourages diversity
• Supports cultivation of human resources as the source of corporate value
• Targets zero labor accidents through workplace safety initiatives

Governance Achievements

• Promotes a monitoring and execution system led by outside directors (with four outside directors and three in-house directors)
• Seeks long-term profits and manages business from a medium- to long-term perspective
• Intends to share this viewpoint and policy internally and externally and actively disclose information

Climate Goals & Targets

Environmental Challenges

• Rise in the price of naphtha (main raw material) due to a rise in the price of crude oil, leading to a decrease in the profit margin
• Domestic construction materials, industrial materials, and food packaging materials markets entering periods of maturity, and the risk that these markets will contract due to Japan’s declining population
• Risk of income fluctuation in the Advanced Technology Business caused by volatility in orders from major customers because sales scale is still small
• Limited capacity at Koga Plant (production site for metallic decorative films), requiring consideration of a plant transfer or other actions to expand this business

Mitigation Strategies

• Started price-hike negotiations to offset pressure from higher material costs
• Intends to rebuild production operations to boost productivity (including collaboration with external partners) and enhance sales efficiency through optimization of distribution channels
• Plans to utilize surplus cash and borrowings from financial institutions and use other methods as necessary to acquire funds needed for growth investments
• Intends to build a robust quality control system that extends from product development to sales by acquiring IATF 16949 certification

Supply Chain Management

Climate-Related Risks & Opportunities

Opportunities

• Demand for geothermal business, which has a high energy-savings effect, is likely to expand amid calls for improvements in farming productivity and sustainability

Sustainable Products & Innovation

• Eco-friendly material products
• Geothermal energy system
• Metallic decorative film that replaces chrome and coating