Climate Change Data

Environmental Metrics

ESG Focus Areas

• Respect for the Individual
• A Meaningful Company
• Coexistence and Co-prosperity
• Contribution to Society
• Climate Change
• Human Rights
• Human Capital
• Supply Chain Management
• Biodiversity
• Water Security

Environmental Achievements

• Reduced total amount of waste (intensity) by 13.2% in FY2022 (21,699 kg).
• Improved recycling rate to 99.8% in FY2022.
• Switched power source to 100% renewable energy at HDSI Ariake Factory and German subsidiary.
• Achieved 28.2% renewable energy introduction rate (as of the end of FY2022).
• Reduced electricity consumption through various energy-saving measures.

Social Achievements

• Established Well-Being Center in FY2020 to promote employee mental and physical health.
• Implemented remote work system and encouraged male employees to take childcare leave.
• Raised retirement age to 70.
• Conducted outreach classes at national technical colleges and high schools.

Governance Achievements

• Sustainability management is carried out by the Sustainability Committee, consisting of five executive directors and chaired by the President and CEO.
• Matters discussed in the Sustainability Committee are routinely reported at Board of Directors’ meetings.
• The current materiality has started to undergo review in line with formulation of the new medium-term management plan.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to more intense and frequent natural disasters.
• Water shortage due to changes in precipitation patterns.
• Damage to operating sites due to flooding and heavy rains.
• Labor productivity falls due to rising temperatures.
• Increased costs due to rising temperatures and need for air conditioning.
• Surge in energy and raw material prices.
• Tightening regulations related to sustainability.
• Reputational risk of inadequate response to climate change.

Mitigation Strategies

• Diversifying suppliers to create more resilient transport and distribution.
• Conducting water risk analysis at each site.
• Setting specific targets to reduce water withdrawal and wastewater amounts.
• Formulating new measures, including a transition plan, and KPIs for climate change.
• Reinforcing product development to reduce environmental burden for customers.
• Establishing a system to identify, assess, and respond to risks and opportunities related to climate change.
• Conducting risk assessment annually and formulating mitigation policies.
• Strengthening global network to identify and respond to procurement bottlenecks.

Supply Chain Management

Supplier Audits: Not disclosed

Responsible Procurement

• Sustainable procurement policy formulated in FY2022
• Supplier assessment criteria revised
• Sustainable procurement guidelines provided
• Supply chain chart created to strengthen resilience against geopolitical risks

Climate-Related Risks & Opportunities

Physical Risks

• Flooding
• Heavy rains
• Water shortage
• Rising temperatures

Transition Risks

• Surge in energy prices
• Surge in raw material prices
• Tightening regulations
• Spread of energy-saving technology
• Development of low-carbon technology
• Decrease in demand for existing technologies

Opportunities

• Gain greater trust from customers with transport and distribution more resilient to natural disasters
• Development of low-carbon technology
• Spread of energy-saving technology
• Increase in demand for low-carbon materials

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 14001

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Not disclosed

Awards & Recognition

• Certificate of Appreciation - Outstanding Quality (Nissan Motor Corporation, 2021)
• Certificate of Appreciation (ULVAC, Inc., 2022)
• Award of Excellence - Outstanding Supplier (Semiconductor Lithography Systems, Nikon Corporation, 2023)
• Certificate of Appreciation (Naka Manufacturing Division, Hitachi High-Tech Corporation, 2022)

Environmental Metrics

ESG Focus Areas

• Human Capital Value Maximization
• Realizing QCDs that Meet Customer Expectations
• Challenges and Creation of New Technologies and Skills Adapted to Environmental Changes
• Contribution to a Sustainable Society Through Business Activities
• Strengthening Corporate Governance

Environmental Achievements

• Achieved a recycling rate of 99.1% (HDS Hotaka Factory)
• Implemented water risk analysis at each base using AQUEDUCT and flood navigation.
• Set targets for water intake and discharge and worked to reduce usage.

Social Achievements

• Implemented a job rotation system, self-nomination system for career paths, and internal recruitment system.
• Improved male parental leave acquisition rate to 81.8% in FY2024.
• Established a health promotion center and implemented mental health support for employees.
• Implemented various diversity and inclusion initiatives, increasing the percentage of female employees to 20.7%.

Governance Achievements

• Established a Sustainability Committee in April 2023.
• Established an Nomination and Remuneration Advisory Committee in March 2024.
• Implemented a whistleblower system.

Climate Goals & Targets

Environmental Challenges

• Supply chain disruptions due to natural disasters (floods, heavy rain)
• Increasing water security risks due to climate change
• Increased energy and raw material prices due to decarbonization
• Strengthening of regulations related to sustainability
• Human resource development
• Maintaining high QCDS levels in the face of increasing customer demands
• Maintaining a strong supply chain in the face of regional challenges (e.g., succession issues for suppliers)

Mitigation Strategies

• Risk assessment of business bases and major domestic suppliers, implementation of countermeasures (e.g., installation of sandbags)
• Development of alternative sourcing strategies
• Strengthening of supply chain management through collaboration with suppliers
• Development and implementation of a human resource development program
• Implementation of a QCDS evaluation system for major suppliers
• Development of the HDS Group Sustainable Procurement Guidelines
• Support for supplier succession through employee training programs

Supply Chain Management

Supplier Audits: Annual audits of approximately 30 key suppliers based on QCDS evaluation criteria.

Responsible Procurement

• HDS Sustainable Procurement Policy (2022)
• HDS Sustainable Procurement Guidelines (2023)
• Sustainable Procurement Self-Assessment Questionnaire (SAQ)

Climate-Related Risks & Opportunities

Physical Risks

• Floods
• Heavy rain
• Water shortages
• Rising sea levels

Transition Risks

• Rising energy prices
• Rising raw material prices
• Strengthening of regulations
• Carbon pricing

Opportunities

• Increased demand for energy-efficient products
• Cost reduction through energy efficiency improvements

Reporting Standards

Frameworks Used: TCFD