Foundation Underpinning ESG Management

TOP
Foundation Underpinning ESG Management
Foundation Underpinning ESG Management

Basic Concept
Major Initiatives

Stakeholder Engagement

Basic Concept

To build relationships of trust with its five stakeholders─customers, shareholders, employees, business partners as well as local communities and the environment─SEKISUI CHEMICAL Group considers that it is important to improve corporate value through constructive dialogue.
Positioning its stakeholders as partners in improving corporate value, having constructive dialogue with them, assessing their expectations and requests as well as solving social issues together with them, leads to great opportunities for SEKISUI CHEMICAL Group.
In addition, we will create a relationship of mutual prosperity with our stakeholders while continuing to promote sustainable growth.
In fiscal 2022, the ESG Management Department, which falls under the purview of the Representative Director, Senior Managing Executive Officer (Head of the ESG Management Department), took on the role of promoting constructive dialogue with all stakeholders. The various assessments and opinions of all stakeholders are reported to the Sustainability Committee, which is chaired by the Company president and made up of directors, and the Company strives to adequately reflect these views in its activities.
Moreover, SEKISUI CHEMICAL Group has formulated the Corporate Information Disclosure Regulations that encompass such items as the specific content of disclosure and disclosure systems based on its Principle of Corporate Information Disclosure in order to ensure the timely, appropriate and active disclosure of information. At the same time, the Company discloses information in accordance with its IR (disclosure) Policy.
There were no major concerns voiced by stakeholders through any of the engagements in fiscal 2022.

Responsibility of SEKISUI CHEMICAL Group to Each Stakeholder and Communication Methods

Stakeholders	SEKISUI CHEMICAL Group’s Commitment	Contact	Communication Methods	Frequency
Customers	We take the voices of our customers seriously, offer prominent products and services and strive to build a long-term relationship of trust with our customers.	● Departments in Charge of ESG ● Departments in Charge of Quality Control ● Sales Department	Customer Consultation Office(handles inquiries) CS surveys (customer satisfaction surveys) Sales activities Website, social media exhibition spaces, expos / events	Day-to-day As necessary (carried out whenever needed at each divisional company, business site, or sales office) Day-to-day Day-to-day As necessary(implemented through questionnaires and conversations at venues)
Shareholders	To meet the expectations of all our valued shareholders, we strive for highly efficient use of capital, fair ethical disclosure of information, adequate returns from profit, and increasing corporate value through sustainable growth.	● Departments in Charge of General Affairs ● Departments in Charge of IR ● Departments in Charge of Public Relations ● Departments in Charge of ESG	General Meeting of Shareholders Management briefings Integrated reports Responding to surveys from institutions that evaluate ESG	Once per year 4 times per year Issued once per year As necessary (handled in order of inquiry)
Employees	We foster among our employees a spirit of taking on new challenges and are actively creating workplaces where every employee can stand out and diverse human resources can both excel and feel that their work is worthwhile.	● Departments in Charge of Human Resources ● Departments in Charge of Safety ● Departments in Charge of Legal Affairs ● Departments in Charge of ESG ● Departments in Charge of Public Relations	Individual boss and subordinate interviews Counseling Labor-management meetings Central Occupational Safety Committee Internal whistle-blowing system Employee satisfaction surveys Various employee questionnaires Dialogues with management Intranet and internal newsletter	Regularly As needed(counseling available upon request through an inhouse occupational counselor or external clinical psychologist) Regularly Once per year As needed (handling for consultations and reports) Once every three years As needed(questionnaires implemented for internal publications, various types of training sessions, etc.) Regularly As needed(information updated when necessary), 4 times per year
Business partners	When procuring materials, we follow the fundamentals of being open, fair, compliant with the law and social norms, engaged in relationships of mutual trust, environmentally conscious, anti-corruption, and considerate of human rights. We aim to achieve coexistence and shared prosperity by building more robust partnerships with our business partners and engaging in fair trade. We are also engaged in promoting CSR based on cooperation with our business partners.	● Departments in Charge of Purchasing ● Departments in Charge of Legal Affairs ● Departments in Charge of ESG	Purchasing activities Explanatory meetings with suppliers CSR procurement questionnaires Points of contact for consultations from, and whistleblowing by, business partners Website	Day-to-day Regularly Once per business partner every three year As needed (handling for consultations and reports) As needed (information updated when necessary)
Local communities	We emphasize a perspective that encompasses contributions to the development of communities through our business, coexistence with communities, and environmental conservation. We think about how to make measures that are tailored to the needs of each community and practice business in ways that engender trust.	● Departments in Charge of ESG ● Factories and Offices ● Departments in Charge of Public Relations	Volunteering by employees Dialogues with NPOs and NGOs Support for learning(dispatching of instructors, factory tours, etc.) News releases	Regularly As needed(implemented as necessary before and after activities) Regularly As needed (latest information posted as necessary)
Global environment	We are engaged in expanding and creating the market for Sustainability contributing Products, reducing our environmental impacts, and conserving the natural environment— all with the aim of realizing “earth with maintained biodiversity.”	● Departments in Charge of ESG ● Factories and Offices ● Departments in Charge of Sales ● Departments in Charge of Purchasing	Volunteering by employees Dialogues with NPOs and NGOs Sales operations Purchasing activities	Regularly As needed(implemented as necessary before and after activities) Day-to-day Day-to-day

Major Initiatives

Meeting with the President/Top Management in 2022, an Opportunity for Direct Dialogue between Top Management and Employees

In fiscal 2021, we worked to promote awareness of our Long-term Vision, Vision 2030, and ESG management, the key to realizing this Long-term Vision. To this end, the president and senior managing executive officer held Vision Caravan 2021 and a Live Panel Discussion: Power of SEKISUI, where the president and senior managing executive officer spoke with all Group employees in Japan and overseas.
In the past, management identified opportunities to engage in direct dialogue with employees. In similar fashion to fiscal 2020, however, these opportunities were postponed in fiscal 2021 due to the impact of COVID-19. Instead, 10 online Vision Caravan meetings were held in Japan and two online panel discussion meetings overseas (North America, Europe, East Asia, ASEAN, India, and Australia).
During these events for employees, the president and senior managing executive officer directly outlined their personal thoughts on how to realize Vision 2030 while also explaining the Group’s ESG management. In response, employees took the opportunity to directly ask questions of management, and discussed among themselves and deepened their understanding toward how they should approach each business activity in order to realize Vision 2030. Taking into consideration a variety of factors, employees also looked into how they can link individual operations to the Group’s ESG management.
In response to questions and presentations that arise from deliberations among employees, the president and senior managing executive officer provide comments and feedback, while promoting lively interactive dialogue.

16-09
16-10
11-02

The President and Senior Managing Executive Officer,
Head of the Business Strategy Department interacting online with employees

Direct Dialogue with Investors to Promote Mutual Understanding

SEKISUI CHEMICAL Group believes it is extremely important to engage in constructive dialogue with shareholders and investors in order to achieve sustainable growth and enhance corporate value over the medium to long term.
We therefore have put in place Active Engagement Between Investors and Management as one of our key issues, while the President and Senior Managing Executive Officer, Head of the Business Strategy Department are taking the lead in proactively holding quarterly financial results briefings and direct dialogues with shareholders and institutional investors to leverage our management strategy to enhance corporate value. During fiscal 2022, we held 74 engagements.
We are strengthening information dissemination on our website with an awareness of fair disclosure while striving to reflect as much as possible the opinions and questions received through dialogue with shareholders and investors in the Integrated Report and other IR materials. In fiscal 2022, we held the Strategic Area Map & Life Science Business Briefing for institutional investors and analysts to deepen their understanding of SEKISUI CHEMICAL Group’s strategic areas of focus and the Life Science business. In addition, we made this briefing available on our website.
In recent years, interest in ESG investment has been growing globally, and ratings agencies are proactively undertaking surveys. SEKISUI CHEMICAL Group compiles and publishes its Sustainability Report based on rating agency questionnaires and third-party reviews, as well as referencing various report-drafting guidelines including GRI standards and considering the importance of the report to society and SEKISUI CHEMICAL Group.

Number of Times Active Engagement Conducted Between Investors and Management

	FY2018 Results	FY2019 Results	FY2020 Results	FY2021 Results	FY2022 Results
Number of engagements^*	87	67	54	82	74

The number of engagements represents the number of times the Company president and executives in charge of specific areas had dialogues with investors.

Promoting Understanding and Acceptance of ESG Management Concepts Among Employees

We are promoting a variety of initiatives to deepen the understanding and penetration of various issues including SEKISUI CHEMICAL Group’s approach to ESG management.
In order to deepen awareness and understanding toward the Long-term Vision, Vision 2030, and ESG management among employees, SEKISUI CHEMICAL Group in fiscal 2022 renewed our website dedicated to this vision and prepared and deployed on a global basis materials that summarize the Long-term Vision (booklets and videos that explain the vision statement, ESG management, challenge, and other management keywords, and that summarize the relationship between these).
In addition, we created an ESG Management Conceptual Diagram and are promoting awareness and education of the overall picture of ESG management and how it is connected to individual operations and initiatives on our intranet.
Furthermore, SEKISUI CHEMICAL Group implements ESG management training for new employees, newly appointed managers, and others based on their position.
We also carried out training sessions in fiscal 2022 covering methods for incorporating and conveying department visions and policies for managers at all Group companies in Japan to ensure that the Long-term Vision was thoroughly understood and incorporated into each business and their operations. Going forward, we will integrate the content of these sessions into existing training programs in an effort to further entrench the Long-term Vision.
We also held President Workshop Meetings for the presidents of each local subsidiary outside of Japan. During these meetings, participants learned about methodologies for encouraging employees to take on the challenges required to realize the Long-term Vision, as well as about the most effective communication methods to use with local employees in each country.

Communication tools with employees

SEKISUI CHEMICAL Group has published an in-house magazine (including a series of special features on ESG management) and the SEKISUI CHEMICAL Group ESG Management Reader’s Guide (introduction to ESG management), a tool to promote understanding of ESG management among all employees, in order to secure increased acceptance of the Group’s ESG management.
These communication tools and ESG-related materials are freely available for employees to download from the intranet, and are also distributed to all employees, regardless of whether they are regular or non-regular staff, on an as needed basis, for example when employees join the Company or when implementing ESG-related educational programs.
In the US and Europe, regional headquarters distribute ESG-related information to employees of each Group company.
In Europe, information is posted on the intranet once a month, while we conduct ESG training based on position in the US. In addition, we regularly hold Lunch & Learn, an online event to showcase various initiatives of each company and exchange opinions.

17-04
17-05

SEKISUI CHEMICAL Group’s ESG Management Readers’ Guide (ESG Management Introduction)/ Japanese edition
SEKISUI CHEMICAL Group’s ESG Management Readers’ Guide (ESG Management Introduction)/ English edition

Distributing Value to Stakeholders

SEKISUI CHEMICAL Group calculates distribution status based on financial statements by stakeholder, using GRI and other standards as a reference.

(Unit: Millions of yen)
Stakeholders	Method of Calculating Amounts	FY2018	FY2019	FY2020	FY2021	FY2022
Shareholders	Dividends	20,615	22,401	22,193	23,177	25,100
Business partners	Cost of Sales, Selling Costs / General Administrative Costs ( Excluding Personnel Costs )	840,514	829,809	778,554	858,944	926,822
Employees	Labor costs, Salaries and allowances as part of sales costs and general administrative costs, Provisions for bonuses, Provisions for retirement pay	206,511	211,675	210,705	210,122	224,034
Local communities	Donations	165	158	218	198	198
Global environment	Environmental conservation costs	21,882	17,850	16,207	27,522	26,373
Government and administrative bodies	Corporate taxes, local taxes, business taxes	22,261	22,619	19,902	31,099	28,727
Creditors	Interest paid as part of costs apart from sales	480	695	861	774	871