Climate Change Data

Environmental Metrics

ESG Focus Areas

• Environmental Load Reduction
• Technological Innovation and Creation of New Value
• Strengthening Partnerships
• Development of Human Resources
• Realization of a Work Style that is Both Fulfilling and Respectful of Human Rights
• Supply Chain Resilience
• Carbon Neutral

Environmental Achievements

• Reduced GHG emissions by 46% by 2030 (compared to 2013)
• Developed water-soluble, small-application-type die-casting release agent reducing waste liquid and extending mold life
• Developed plant-derived resin-blended hot melt adhesive (5 product lines with Biomass Mark certification)
• Recycling of used powder release agent
• Expansion of the use of recycled materials in lubricants
• Contribution to decarbonization of factories through environmental-related businesses

Social Achievements

• Certified as a Health Management Excellent Company (large-scale corporation sector) for two consecutive years
• Promoting employee health
• Promoting work-life balance

Governance Achievements

• Establishment of a Sustainability Committee
• Establishment of a clear sustainability policy and promotion system

Climate Goals & Targets

Environmental Challenges

• Raw material price increases
• Scope 3 emissions

Mitigation Strategies

• Price adjustments for products
• Adjustment of Scope 3 emission targets

Supply Chain Management

Responsible Procurement

• Consideration of human rights and origin of raw materials

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Water-soluble, small-application-type die-casting release agent
• Plant-derived resin-blended hot melt adhesive

Awards & Recognition

• Health Management Excellent Company (large-scale corporation sector) for two consecutive years

Environmental Metrics

ESG Focus Areas

• Decarbonization
• Human Rights
• Sustainability Management
• Circular Economy

Environmental Achievements

• Established MORESCO Green SX certification system for sustainable products, aiming for 50% of sales from SX products by 2030.
• Aiming to reduce greenhouse gas (GHG) emissions by 46% by 2030 and achieve carbon neutrality by 2050.
• Recycling of flame retardant hydraulic fluid, recovering used fluid and converting it into raw materials for production.

Social Achievements

• Established the MORESCO Group Human Rights Policy.
• Certified as a Health & Productivity Management Outstanding Organization for the third consecutive year.
• Promoting education internally and externally to foster a unified awareness of human rights.

Governance Achievements

• Information disclosure based on TCFD recommendations.
• Revamped R&D structure into a cross-divisional organization to stimulate the development of new businesses.

Climate Goals & Targets

Environmental Challenges

• Slowdown in corporate investment in data centers impacting Synthetic Lubricants Division sales.
• Diminished demand from the domestic polystyrene industry affecting Liquid Paraffine & Sulfonates Division.

Mitigation Strategies

• Upgrading overseas bases (acquisition in US, new manufacturing base in China for functional fluids).
• Focus on strengthening R&D system and expanding market share.
• Promoting collaboration with diverse partners (MOLGADC Project).

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD

Sustainable Products & Innovation

• MORESCO Green SX products

Awards & Recognition

• Health & Productivity Management Outstanding Organization (3 consecutive years)
• Kansai Branch Award (Research Award) of the Japan Society of Mechanical Engineers
• 2023 Outstanding Paper Award of the Adhesion Society of Japan
• 73rd (FY2023) Industrial Technology Award

Environmental Metrics

ESG Focus Areas

• Sustainability

Environmental Achievements

• Development of bit-application-type die casting lubricants that improve efficiency and contribute to environmental quality improvement.

Climate Goals & Targets

Environmental Challenges

• Increased procurement costs due to sharp rise in crude oil prices.
• Time lag between increased procurement costs and the effective implementation of selling price revisions.
• Unpredictable future trends in crude oil prices.
• Lockdowns in Shanghai and other areas.
• Increased geopolitical risks associated with the Russian invasion of Ukraine.
• Reduced auto production volume due to semiconductor shortages.

Mitigation Strategies

• Revision of selling prices of own products.
• Development of alternative raw materials.
• Multiple purchasing strategies.
• Strengthening of the supply chain.
• Framework to steadily implement revision on selling prices of own products.

Supply Chain Management

Climate-Related Risks & Opportunities

Sustainable Products & Innovation

• Bit-application-type die casting lubricants
• Hot melt adhesives with the least volatile organic compounds

Environmental Metrics

ESG Focus Areas

• Climate Change
• Human Rights
• Human Capital Management
• Nature-related Financial Disclosures (TNFD)

Environmental Achievements

• Supported recommendations of the Task Force on Climate-related Financial Disclosures (TCFD)

Social Achievements

• Disclosed its policy on human rights due diligence; planning to disclose policy on human capital management.
• Established an IR department under the CFO to conduct more proactive IR activities.

Governance Achievements

• Implemented application for adoption for Standard Market due to short-term uncertainty on compliance; scheduled listing change to Standard Market on October 20, 2023.

Climate Goals & Targets

Environmental Challenges

• Continued higher prices of raw materials and sluggish sales volume leading to significantly deteriorated profitability in FY02/2023.
• Time lag in passing on higher raw material prices to selling prices, resulting in declining gross profit margin.
• Supply shortage of semiconductors and automotive components leading to decreased sales volume in Japan.
• Declining sales volume of hard disc surface lubricants due to slowdown in data center investment.
• Impact of periodic repairs at a major customer's factory affecting sales volume of liquid paraffins.

Mitigation Strategies

• Introduced a formula to pass on changes in raw material prices to selling prices (currently in place for ~50% of raw materials).
• Focusing on passing on higher raw material prices to selling prices for the remaining 50% in FY02/2024.
• Focusing on development of new products for new energy vehicles to capture increased demand.
• Horizontally expanding applications on the Hot Melt Adhesives side to increase sales volume.
• Strengthening local development systems overseas and deepening cooperation with development in Japan.

Supply Chain Management

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: TCFD

Sustainable Products & Innovation

• Minimum-quantity-spray-type die-casting lubricants

Environmental Metrics

ESG Focus Areas

• Environmental impact reduction
• Sustainability

Environmental Achievements

• Increased sales composition ratio of MORESCO Green SX (MGS) products from 29% in FY02/2023 to 33% in FY02/2024; targeting 40% by FY02/2027.
• Wastewater treatment equipment (certified as MGS products) sales expanded significantly in Q1 to Q2 FY02/2025.

Social Achievements

• Not disclosed

Governance Achievements

• Not disclosed

Climate Goals & Targets

Environmental Challenges

• Sluggish auto production volume in Japan due to fraudulent certification issues.
• Slowing demand for hygiene materials (disposable diapers) in Southeast Asia.
• Supply problems with petroleum resins (raw materials for hygiene materials).
• Price hikes in raw materials beyond naphtha.

Mitigation Strategies

• Passing on raw material cost increases to unit selling prices.
• Focusing on sales promotions for MORESCO Green SX (MGS) products to improve sales mix and gross profit margin.
• Business acquisition of CROSS TECHNOLOGIES GROUP, Inc. to reinforce market share in the US for mold lubricants and secure a local production base.
• Technological innovation to efficiently increase production of sulfonates.

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

• Minimum-quantity spray-type lubricants
• Fire-resistant hydraulic fluids
• Liquid paraffins
• Wastewater treatment equipment
• Sealants for perovskite solar cells (planned)

Awards & Recognition

• Not disclosed