Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental
• Social
• Governance

Environmental Achievements

• Reduced landfill indices to 12% (target was ≤16% of 2002/3 levels)
• Reduced VOC emissions by 50% from 2001/3 levels (target was ≥40%)
• Reduced PRTR substance emissions by 66% from 2002/3 levels (target was ≥40%)
• Improved energy intensity by 0.8 percentage points (target was ≥1% improvement)

Social Achievements

• Achieved 99.9% attendance in e-learning programs on compliance
• Increased the number of women in managerial positions to 3.3% (target was 4%)
• Increased the annual paid leave acquisition ratio to 70%

Governance Achievements

• Implemented measures to enhance discussions on management strategy and provide External Directors with necessary information
• Established the Compliance Help Line System (Whistleblowing System)

Climate Goals & Targets

Environmental Challenges

• Decline in business performance over four consecutive years
• 17 occupational accidents (12 in the previous year)
• 3 small fires and 1 process incident

Mitigation Strategies

• Implemented fundamental organizational reform of corporate divisions
• Focused on preventing serious occupational accidents such as heatstroke and injury caused by hazardous substances
• Systematically addressed issues associated with safety infrastructure and corporate culture
• Strengthened security at business sites

Supply Chain Management

Responsible Procurement

• Established Basic Purchasing Policy and Daicel Group CSR Purchasing Guidelines

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: GRI Standards

Certifications: ISO 14001, ISO 9001, IATF 16949

Third-party Assurance: Japan Chemical Industry Association

Sustainable Products & Innovation

• Improved Petlyuk process and vapor recompression (VRC) technology to reduce energy consumption of distillation towers
• Excipients that make it easier to swallow tablets

Awards & Recognition

• Responsible Care Award at the JCIAʼs 9th Responsible Care Awards (RC Awards)
• Outstanding Award under the JCIA’s 10th Annual Responsible Care Awards Program

Environmental Metrics

ESG Focus Areas

• Climate Change
• Waste Reduction and Recycling
• Chemical Substance Emission Management
• Water Resource Preservation
• Biodiversity
• Human Rights
• Product Safety
• Occupational Health and Safety
• Corporate Governance
• Sustainable Procurement
• Community Investment

Environmental Achievements

• Reduced GHG emissions by 5% year-on-year to 2,131 thousand t-CO2 in FY2021/3.
• Reduced energy consumption by 4% year-on-year to 695 thousand kL in crude-oil equivalent in FY2021/3.
• Reduced industrial waste by 21% year-on-year to 146 thousand tonnes in FY2021/3.
• Achieved a 94% recycling rate for industrial waste in FY2021/3.
• Reduced landfill waste by 54% year-on-year to 2.1 thousand tonnes in FY2021/3.

Social Achievements

• Achieved 100% employee medical examination rate.
• Achieved 73.6% annual paid leave acquisition ratio in FY2022/3.
• Increased the ratio of women in managerial positions to 4% (32 women) in February 2021.
• Increased the ratio of women in senior roles to 10.6% (122 women) in February 2021.
• Launched the Diversity Promotion Project "WellBe" in January 2020.
• Implemented an e-learning program on human rights with 95% participation rate.

Governance Achievements

• Established the Sustainable Management Committee, chaired by the president.
• Increased the ratio of Outside Directors to 50% in June 2015.
• Established the Risk Management Committee in 2006.
• Established the Internal Control Council in August 2010.
• Implemented an effectiveness evaluation of the Board of Directors through questionnaires and individual interviews.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to the COVID-19 pandemic.
• Rising costs associated with achieving carbon neutrality.
• Managing risks associated with climate change and human rights.
• Maintaining compliance with environmental regulations and international chemical regulations.
• Ensuring the safety of its products and processes.

Mitigation Strategies

• Implemented an asset light strategy.
• Developed new technologies for energy savings and GHG emission reductions.
• Developed new biomass product trees using completely new methods.
• Implemented an autonomous production system based on AI logic.
• Conducted regular risk assessments and implemented preventive actions.
• Provided education and training on environmental, health, and safety matters.
• Established a system of human rights due diligence.
• Implemented a Total Environmental, Health and Safety Assessment System.

Supply Chain Management

Supplier Audits: 797 major suppliers assessed in FY2021/3 (83% response rate). Quality audits conducted for current suppliers.

Responsible Procurement

• Daicel Group CSR Purchasing Guidelines
• Conflict Minerals Reporting Template (CMRT) survey
• Cobalt Reporting Template (CRT) survey
• RSPO certification for palm oil-derived raw materials

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters (earthquakes, tsunami, flooding)

Transition Risks

• Regulatory changes related to climate change
• Market shifts towards sustainable products

Opportunities

• Development of energy-efficient products and processes
• Development of new biomass product trees

Reporting Standards

Frameworks Used: GRI, UN Global Compact

Certifications: ISO 14001, ISO 9001, IATF 16949, ISO 13485, ISO 22000, FSSC 22000, JISQ 9100, OHSAS 18000

Third-party Assurance: Deloitte Touche Tohmatsu LLC

UN Sustainable Development Goals

• Goal 7 (Affordable and Clean Energy)
• Goal 9 (Industry, Innovation and Infrastructure)
• Goal 12 (Responsible Consumption and Production)
• Goal 13 (Climate Action)
• Goal 8 (Decent Work and Economic Growth)
• Goal 17 (Partnerships for the Goals)

Daicel's initiatives contribute to these goals through various sustainability programs and projects.

Sustainable Products & Innovation

• BELLOCEA Spherical Cellulose Acetate Particles
• Konjac Ceramide
• TOPAS COC

Awards & Recognition

• WHITE 500 organization (2021)
• Top-tier rating from DBJ for employee health management (Polyplastics)
• Chairman’s Award from the High Pressure Gas Safety Institute of Japan (Hirohata Plant)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Waste Reduction and Recycling
• Chemical Substance Emission Management
• Water Resource Preservation
• Air Pollution Prevention
• Biodiversity Preservation
• Human Rights
• Product Safety
• Process Safety
• Occupational Health and Safety
• Diversity and Inclusion
• Employee Well-being
• Sustainable Procurement
• Corporate Governance
• Compliance

Environmental Achievements

• Scope 1 and 2 GHG emission reduction rates (compared to FY2019/3) FY2022/3 results: 1%
• Industrial waste recycling rate* FY2022/3 results: 97.7%
• Obtained “OK biodegradable MARINE” certification for CAFBLO™, a highly biodegradable cellulose acetate
• Obtained certification for COC as a recyclable high density polyethylene (Polyplastics USA)

Social Achievements

• Launched brands of new energy systems One Time Energy™ and DAISI™
• Improved gas generant combustibility and developed a new gas generant manufacturing process
• Implemented the Career Challenge System to enable employees to challenge themselves in new ways toward achieving a career plan of their own devising
• Revised the human resources systems for managers in April 2021 and for non-managers in April 2022
• Held training and other internal events with the theme of “Design Your Own Career” as part of the “Wellbee” diversity promotion project
• Increased number of holidays for shift workers as an initiative to shorten working hours
• Established the Employee Wellness Promotion Center to improve health management throughout the Group
• Achieved zero logistics accidents

Governance Achievements

• Increased the ratio of Outside Directors to 50%
• Improved the method for evaluating the effectiveness of the Board of Directors
• Partially revised the Basic Policy on Building an Internal Control System
• No reports of anticompetitive behavior, serious violations of laws or regulations governing corruption, bribery or other illegal activities, or fines or monetary penalties in FY2022/3

Climate Goals & Targets

Environmental Challenges

• Increase in GHG emissions caused by higher production volume
• Increase in industrial waste generated due to plant removal work
• Increase in PRTR substance emissions due to increased production volume and equipment malfunction
• Increase in VOCs emissions due to a rise in production volume
• Challenges in separating cellulose from pulp due to high energy consumption
• Declining capabilities in maintenance skills
• Difficulties in visualizing prevailing circumstances due to the COVID-19 pandemic

Mitigation Strategies

• Energy-saving efforts, including increasing usage of steam and electricity
• Promoting the 3Rs (reduce, reuse, recycle) for industrial waste
• Reinforcing monitoring of PRTR-regulated chemical substances and process/equipment modifications
• Risk assessments of chemical substance safety
• Joint research with Kanazawa University and Kyoto University to develop a technology that melts wood using less energy
• Opening a new research institute at Kanazawa University
• Opening the Maintenance Dojo for practical training
• Implementing measures to maintain a vibrant organizational culture that enables “Visualize, Voice, Listen and Respond”

Supply Chain Management

Supplier Audits: 796 major suppliers (over 85% of total procurement) received Certificates of Confirmation; 73 suppliers received follow-up interviews based on SAQ results

Responsible Procurement

• Daicel Group CSR Purchasing Guidelines
• CSR clauses added to basic purchasing and sales contracts
• SAQ (Self-Assessment-Questionnaire) on CSR procurement
• Conflict minerals reporting template (CMRT) survey
• Cobalt Reporting Template (CRT) survey
• Multi-sourcing and safety stock accumulation

Climate-Related Risks & Opportunities

Physical Risks

• Natural disasters (drought, torrential rain, flooding, landslides)

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Development of energy-efficient products and technologies
• Development of new biomass product trees

Reporting Standards

Frameworks Used: GRI

Certifications: ISO 14001, ISO 45001, ISO 9001, IATF 16949, ISO 13485, ISO 22000, FSSC 22000, JISQ 9100

Third-party Assurance: Deloitte Touche Tohmatsu LLC

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Biodegradable cellulose acetate (CAFBLO™)
• Biodegradable biomass plastic (CELBLEN EC)
• Energy-efficient products and technologies

Awards & Recognition

• FTSE4Good Index Series constituent
• FTSE Blossom Japan Index Series constituent
• FTSE Blossom Japan Sector Relative Index constituent
• WHITE 500 organization (Certified Health & Productivity Management Outstanding Organizations Recognition Program)
• Governor’s Award for Human-Scale Town Planning
• Responsible Care Award (RC Award)

Environmental Metrics

ESG Focus Areas

• Climate Change
• Waste Reduction and Recycling
• Chemical Substance Emission Management
• Water Resource Preservation
• Air Pollution Prevention
• Biodiversity Preservation
• Human Rights
• Product Safety
• Occupational Health and Safety
• Diversity and Inclusion
• Sustainable Procurement
• Corporate Governance
• Compliance
• Risk Management

Environmental Achievements

• GHG emissions for the Daicel Group decreased by 6 thousand t-CO2 to 2,342 thousand t-CO2 (down 0.3% year-on-year).
• Industrial waste generated by Daicel’s business sites and the domestic Group companies decreased by 2% compared to the previous fiscal year to 142 thousand tonnes.
• Recycling rate for industrial waste was 98.4%
• Landfill rate for industrial waste was 0.9%
• Achieved 70% reduction of PRTR-regulated substance emissions from FY2002/3 levels (57 tonnes in emissions)
• Water intake reduction of 1.6% compared to FY2019/3 levels

Social Achievements

• Launched the Employee Wellness Promotion Center for health management.
• Implemented a same-sex partnership system.
• Increased the ratio of women in management positions to 4.9%
• Increased the ratio of women in positions immediately under section managers to 10%
• Annual paid leave usage rate of 77.9%
• Percentage of eligible male employees taking childcare leave was 97.9%

Governance Achievements

• Increased the ratio of Outside Directors to 60%
• Implemented organizational reforms to strengthen management base with safety, quality, and compliance as top priority.
• Established the Safety and Quality Auditing and Safety and Quality Assurance Headquarters to centrally conduct safety and quality audits and training.

Climate Goals & Targets

Environmental Challenges

• Delay in the recovery of automobile production due to semiconductor supply insufficiency and decline in demand for electronic devices.
• Inability to procure coal for acetic acid plant due to Russia’s invasion of Ukraine.
• Need to increase the endurance of new businesses and identify opportunities for new businesses and M&As.
• Low ROIC despite increased capital expenditure.

Mitigation Strategies

• Restructured existing businesses, changed organizational structure to be more market-oriented, withdrew operations, closed down sites, and sold off businesses.
• Made Polyplastics Co., Ltd. a wholly owned subsidiary.
• Revised operations plan for acetic acid plant to adapt to different types of coal and increase stability in raw material procurement and production.
• Exploring potential of metal adsorption technology and nanodiamond for new businesses.
• Expanding businesses in the field of life sciences.

Supply Chain Management

Supplier Audits: 768 major suppliers (over 85% of total procurement) received Certificates of Confirmation; 73 suppliers deemed in need of improvement were interviewed.

Responsible Procurement

• Daicel Group CSR Purchasing Guidelines
• CSR clauses added to basic purchasing and sales contracts
• Self-Assessment-Questionnaire (SAQ) on CSR procurement
• Conflict Minerals Reporting Template (CMRT) survey
• Extended Minerals Reporting Template (EMRT) survey

Climate-Related Risks & Opportunities

Physical Risks

• Not disclosed

Transition Risks

• Regulatory changes, market shifts

Opportunities

• Development of energy-efficient products
• Development of technologies for melting wood at normal temperature and pressure
• Development of technology for recycling carbon dioxide

Reporting Standards

Frameworks Used: GRI, TCFD

Certifications: ISO 14001, ISO 9001, ISO 45001, IATF 16949, ISO 13485, ISO 22000, FSSC 22000, OK biodegradable MARINE

Third-party Assurance: Deloitte Touche Tohmatsu LLC

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Biodegradable cellulose acetate products (CAFBLO™ and CELBLEN)
• Microfluidic devices for energy-efficient polymer manufacturing

Awards & Recognition

• WHITE 500 organization under the Certified Health & Productivity Management Outstanding Organizations Recognition Program (4 consecutive years)
• Top-tier rating under the Employees’ Health Management Loan Program of the Development Bank of Japan Inc. (Polyplastics)
• Logistics Grand Prize / Environmental Contribution Prize from the Japan Institute of Logistics Systems (Daicel Logistics Service)
• RC Excellence Award at the Japan Chemical Industry Association’s 10th Responsible Care (RC) Awards (Fuji Plant)
• RC Effort Award for proactive communication with local residents during COVID-19 (Fuji Plant)
• Responsible Care Award (RC Award) at the JCIA’s 9th Responsible Care Awards (TRC)