Climate Change Data

Environmental Metrics

ESG Focus Areas

• Agriculture
• Environmental Preservation
• Employee Satisfaction
• Corporate Governance
• Supply Chain
• Community Engagement

Environmental Achievements

• Reduced CO2 emission volume to 28,700t
• 28.7% of domestic sales were eco-products

Social Achievements

• Improved employee satisfaction (ES)
• Increased female employee ratio to 18%
• Held various training sessions for 1,429 employees
• Held 4 Nogyojoshi (female farmers) Seminars
• 76% of certified Green Suppliers
• 9,455 visitors to the factory tour, ISEKI Dream Gallery

Governance Achievements

• Implemented the Board of Directors evaluations (questionnaire surveys)
• Full dissemination of the importance of compliance through 41 intragroup training sessions
• Responses to items regarding Corporate Governance Code that have not been addressed yet
• Enhancement of dialogue with stakeholders

Climate Goals & Targets

Environmental Challenges

• Decline in and aging of the agricultural workforce
• Introduction of large-scale farming and crop conversion
• Global population growth and increased food demand
• Shortage in agricultural population due to economic development
• Environmental issues such as climate change
• Structural changes in agriculture in Japan

Mitigation Strategies

• Providing laborsaving and improved productivity through agricultural mechanization
• Developing and providing products that create new value taking advantage of advanced technological capabilities
• Strengthening proposal capabilities through the operation of the Dream Agricultural Research Institute and branches in various regions
• Developing and providing new products targeted at China and ASEAN countries
• Promoting environmental preservation through environmentally-friendly business activities
• Developing and providing eco-products
• Improving employee satisfaction
• Promoting fair and equitable trade with suppliers
• Improving corporate governance and promoting compliance

Supply Chain Management

Responsible Procurement

• Green procurement

Climate-Related Risks & Opportunities

Reporting Standards

Frameworks Used: ISO26000, UN Sustainable Development Goals (SDGs)

Environmental Metrics

ESG Focus Areas

• Governance
• Compliance

Governance Achievements

• Established a corporate governance system focused on sustainable growth and stakeholder relations.
• Appointed outside directors and auditors to enhance oversight and transparency.
• Implemented a group-wide whistle-blower system (Ethical Hotline).

Climate Goals & Targets

Environmental Challenges

• Maintaining compliance across the group.
• Preventing misconduct and scandals.

Mitigation Strategies

• Established a Compliance team to promote compliance awareness and training.
• Distributed the “ISEKI Group Code of Ethical Behavior” and “Compliance News”.
• Implemented compliance training programs across various employee groups.
• Established a group-wide whistle-blower system.

Supply Chain Management

Climate-Related Risks & Opportunities

Environmental Metrics

ESG Focus Areas

• Climate Change
• Human Rights
• Employee Health
• Diversity, Equity, and Inclusion (DE&I)
• Customer Satisfaction
• Supply Chain Sustainability
• Occupational Safety and Health
• Corporate Governance
• Compliance

Environmental Achievements

• Reduced CO2 emissions (Scope 1 & 2) by 44.9% compared to 2014 (entire ISEKI Group); 40.6% reduction in global production bases.
• Reduced water usage by 53% compared to 2013 (four manufacturing bases in Japan).
• Reduced final waste volume by 69% compared to 2013 (four manufacturing bases in Japan).
• Reduced total material input by 34% compared to 2013 (four manufacturing bases in Japan).
• Reduced used volume of chemical substances subject to PRTR law by 45% compared to 2013 (four manufacturing bases in Japan).
• Switched fuels for boilers and drying furnaces at ISEKI-Matsuyama MFG. Co., Ltd. to LNG, reducing annual CO2 emissions by approx. 1,400 tons.
• Eco-product ratio in domestic sales reached 58.5%.

Social Achievements

• Launched Group personnel open recruitment system to optimize human resources and raise productivity.
• Held roundtable training sessions for management position candidates to boost the ratio of female managers.
• Strengthened mid-career recruitment, increasing the ratio of mid-career hires in managerial positions to 8.5% in 2023.
• Introduced Study Sapuri ENGLISH, an online English learning application, to enhance language learning opportunities for employees.
• Improved utilization rate of paid leave for permanent employees to 66.6% in 2023.
• Increased ratio of male employees who took childcare leave to 72.2% in 2023.
• Improved industrial accident severity rate in 2023 compared to the previous year.
• Introduced the Thanks Point Program to improve employee relationships and organizational culture.

Governance Achievements

• Established the ESG Committee in August 2022 to centralize management of ESG-related issues.
• Revised the Directors’ compensation system to link compensation to business performance and shareholder value.
• Improved the effectiveness of the Board of Directors through reforms in agenda setting, advance explanation, and management strategy discussions.
• Increased the number of Outside Directors to three and appointed two female Outside Directors to ensure diversity on the Board.
• Implemented a 360-degree evaluation system for managers to facilitate personnel growth and enhance organizational capabilities.

Climate Goals & Targets

Environmental Challenges

• Changes in economic conditions and the environment of agriculture (aging farm workers, decreasing number of farm households, weakening purchasing sentiment).
• Exchange rate fluctuations.
• Price hikes of raw materials, difficulty in procurement, and supply chain confusion.
• Dependency on specific customers or suppliers.
• Competition with other companies.
• Serious defects in products and services.
• Stock market fluctuation.
• Price decline in land and other fixed assets.
• Government regulations on environmental issues.
• Risks derived from international business.
• Risk of legal violation.
• Risk of natural disasters, unexpected accidents, and infectious disease spread.
• Business alliances, joint ventures, and strategic investment risks.
• Debt.
• Ensuring human resources, shortage of human resources.
• Information security.
• Climate change.

Mitigation Strategies

• Building sales networks and formulating strategies anticipating market changes.
• Conducting export transactions in both foreign currencies and Japanese yen.
• Procuring raw materials and parts from overseas.
• Passing on soaring raw material prices to product prices.
• Using multiple suppliers and ensuring multiple transportation means.
• Ordering early and securing sufficient inventories.
• Conducting supplier credit checks and CSR procurement questionnaires.
• Optimizing transportation means and shortening freight waiting time.
• Keeping stable partnerships with suppliers.
• Developing products with high functionality and compliance with smart agriculture.
• Reducing prices following decreased demand for agricultural materials.
• Adding higher value in Japan to maintain competitiveness and obtain intellectual property.
• Increasing presence in overseas markets.
• Establishing quality control and quality guarantee systems.
• Strictly adhering to set processes.
• Carrying product liability insurance.
• Reassessing the significance of cross-holding of shares annually.
• Promoting and following up on “Project Z” initiatives.
• Reducing environmental burden of business activities.
• Properly handling waste.
• Collecting and analyzing information from local subsidiaries.
• Reviewing operation forms and supply chains.
• Ensuring thorough compliance by formulating ISEKI Group Code of Ethical Behavior.
• Establishing relevant systems, such as the group-wide whistle-blower system.
• Diversifying risks associated with natural disasters and establishing business continuity plans.
• Taking out various insurance.
• Adopting flexible workstyles.
• Ensuring close cooperation in business alliances and joint ventures.
• Deliberating and discussing measures in business alliances, investment, and lending.
• Reducing interest-bearing debt.
• Enhancing the capability to create cash flows.
• Securitizing credits to diversify financing methods.
• Recruiting and developing human resources.
• Strengthening mid-career recruitment and introducing referral recruitment and a return-to-job system.
• Strengthening programs to develop global talent and human resources for DX.
• Providing support for career development.
• Creating a sound, employee-friendly workplace environment.
• Continuously improving the information security management system.
• Establishing management regulations.
• Enhancing security measures.
• Utilizing renewable energy.
• Powering boilers with waste heat.
• Electrifying agricultural machinery.
• Introducing smart agricultural machinery and robotic agricultural machinery.
• Promoting farming methods that contribute to the reduction of methane emissions.
• Continuously reviewing business continuity plans.
• Reviewing product lineup and sales channels.

Supply Chain Management

Supplier Audits: CSR procurement questionnaires; 86% response rate in 2023.

Responsible Procurement

• ISEKI Group CSR Procurement Guidelines; responsible mineral procurement; prohibition of forced labor and child labor.

Climate-Related Risks & Opportunities

Physical Risks

• Damage to production and sales bases due to intensifying typhoon and flood damage.

Transition Risks

• Increase in operation costs due to stricter regulations; increase in procurement costs due to decarbonization; loss of business opportunities due to failure to meet demand associated with decarbonization.

Opportunities

• Electrification of agricultural machinery; introduction of smart agricultural machinery and robotic agricultural machinery; promoting farming methods that contribute to the reduction of methane emissions; business alliances with other companies regarding J-Credit initiatives.

Reporting Standards

Frameworks Used: TCFD

Certifications: ISO 14001 (EMS certification acquired by 100% of manufacturing and sales subsidiaries in Japan)

Third-party Assurance: Not disclosed

UN Sustainable Development Goals

• Not disclosed

Not disclosed

Sustainable Products & Innovation

• Aigamo-Robo weeding robot; eco-products.

Awards & Recognition

• Highest rating from the Development Bank of Japan Inc. for environmentally friendly business activities (18 times in a row).