Products to Enhance Sustainability

SEKISUI CHEMICAL Group will contribute to solving various social issues, including the SDGs, through its core business products. More than just contribute to the realization of a sustainable society, we will grow as a company essential to society. To this end, we will accelerate efforts to create and expand markets for Products to Enhance Sustainability that increasingly contribute to solving social issues while working to enhance global and social sustainability. At the same time, we will utilize the Products to Enhance Sustainability system to improve the sustainability of companies and products.

Products to Enhance Sustainability are products that make a significant contribution to solving issues in the natural and social environments. SEKISUI CHEMICAL Group evaluates and certifies these products’ degree of contribution based on certain internal criteria.
Vision 2030 positions Products to Enhance Sustainability as the outcomes of efforts to resolve materialities with important impact on management and society. By creating and expanding such product lines, SEKISUI CHEMICAL Group aims to solve social issues while growing its business.
We position our target* for the creation and expansion of Products to Enhance Sustainability as a key performance indicator (KPI), devising strategies and carrying out measures to achieve it.

SEKISUI CHEMICAL Group has continued to focus on training to enhance its ability to contribute to solving social issues, which is key to realizing Vision 2030, from fiscal 2020.
As a company, we provide education and training in an effort to encourage employees to take the initiative in understanding and solving social issues, while putting into practice their own thoughts, depending on their responsibilities and working environment.

Beginning in fiscal 2020, SEKISUI CHEMICAL Group is recommending activities that contribute to the SDGs and strengthening efforts to cultivate its people and spiritual climate. Our aim is to improve employees’ ability to contribute to solving social issues.

SEKISUI CHEMICAL Group has continued to promote a product evaluation system in order to accelerate the solving of issues related to the natural and social environments since fiscal 2006. Certification registration is based on the determination criteria established through discussions among internal committee members. We have received opinions and advice from outside advisors on the criteria and approach, as well as the validity of results, to ensure high standards and transparency.

In Vision 2030, ESG management is described as a strategy for achieving a sustainable society and sustainable corporate growth. To drive its achievement of the target state of Vision 2030, SEKISUI CHEMICAL Group is continuing its existing systems for improving its ability to contribute to solving social issues while launching two key changes starting in fiscal 2020. First, to bolster profitability, the Group is establishing a strategic framework called Premium Framing to match its business portfolio with the above systems and strategically expand them. Second, to boost its capabilities in sustainable management, the Group is implementing Sustainability Assessment, a program to confirm and evaluate items necessary to improve the sustainability of its products and businesses.

Ensuring the sustainability of the Group and Group products themselves is vital to continue making products that contribute significantly to solving social issues and expanding that contribution. For this reason, we adopted a new perspective on evaluating corporate and product sustainability in addition to the conventional process of certifying products that contribute significantly to the solving of issues based on internal criteria from fiscal 2020. Using confirmation assessments based on such factors as profitability, process evaluations, and Governance (Internal Control) across the supply chain, we are building and operating an evaluation system that confirms sustainability and promotes the implementation of activities to enhance sustainability.
In addition, SEKISUI CHEMICAL Group has established Premium Framing as a strategic framework for strategically expanding products that contribute to solving social issues and is committed to expanding this framework with medium-term targets. Our goal is to accelerate contributions to solving social issues by implementing strategies that balance the solving of social issues and profitability.

In fiscal 2012, SEKISUI CHEMICAL Group established an External Advisory Board. This board assembles experts from outside the Group who offer advice on standards and registration of Products to Enhance Sustainability, as well as future perspectives.
The External Advisory Board meetings are organized by the supervising director of the organization in charge of environmental issues and sustainability. Members of the internal certification screening committee for Environment-Contributing Products, including staff such as executive officer representatives from each divisional company who oversee the technical side, organization heads carrying out management project work with a grasp for business conditions as a whole, participate in External Advisory Board meetings. We also ask others from outside the Company coming from various backgrounds in industry, government, and academia who are currently engaged in environmental and other sustainability-related work to take part as external experts.
In addition to the existing five external members who will continue to serve, one other individual from outside the Company with knowledge and experience in ESG issues in both the financial and corporate sectors was added to the committee in fiscal 2021. By further expanding the committee, we hope to obtain opinions and advice from a variety of perspectives to address increasingly complex social issues while responding to diverse corporate requirements (Table A). The External Advisory Board held two online meetings in March. Through these meetings, SEKISUI CHEMICAL Group received opinions on the significance of contributions made to the natural and social environments by newly registered products and how best to convey that significance. Advice was also received on the evolution and direction of the product system based on various inputs including confirmation of the need to consider multiple issues, which is also required by the EU Taxonomy.

While Products to Enhance Sustainability fall under the Company’s registration system owing to their high degree of contribution to solving social issues based on internal criteria, steps are being taken to strengthen and review the system’s operations and criteria to ensure that the product portfolio continues to evolve in line with business strategies that account for social needs and business conditions.
Against this backdrop, we announced details of our fiscal 2021 resource recycling strategy and roadmap in response to the issue of resource recycling, which is one key aspect of the natural environment. Recognizing the need to accelerate the creation and market expansion of products that contribute to resource recycling and resource conservation based on this strategy and roadmap, we revised and clarified the following three resource recycling criteria for the registration of Products to Enhance Sustainability.

Of the 28 products newly registered in fiscal 2021, including the aforementioned criteria, six products contribute to resource recycling.
Products that employ biomass plastics and other candidates including resins that are derived from the horizontal recycling of materials collected internally in collaboration with raw material manufacturers were registered after newly confirming their high degree of contribution to solving issues.

To clarify the amount of return to natural capital up to fiscal 2019, SEKISUI CHEMICAL Group worked to visualize the degree to which each Environment-Contributing Product contributed to solving social issues. We calculated and quantified into a single indicator (damage costs) the various contribution vectors in the life cycle of Environment-Contributing Products. We multiplied the market impact, based on sales, by the environment contribution of each product to arrive at a quantifiable contribution by product, reflected in the Sekisui Environment Sustainability Index.
In calculating the impact on the environment for each Environment-Contributing Product until fiscal 2016, we broadly classified environmental issues into three areas that should be resolved in our aim to help realize an earth with maintained biodiversity. However, since broadening the scope of Environment-Contributing Products from fiscal 2017, we have since taken steps to integrate contributions across four areas adding the area of human health/social assets.
We began conducting environmental impact assessments based on the contribution to solving issues in the natural and social environments of Products to Enhance Sustainability throughout their respective life cycles from fiscal 2020. These contributions to natural and social capital are reflected in the Sekisui Environment Sustainability Index. In particular, we have started to explore the possibility of evaluating the social value of our products based on impact-weighted accounting.

Computation of the degree of contribution to environmental issues is based on the following calculations

Today’s companies are hearing growing demands to offer solutions in a timely manner to address issues such as the COVID-19 pandemic. In such times, innovations must be considered quickly and turned rapidly into action. However, we believe it is also important to accelerate the proposal and consideration of innovations aimed at solving social issues with a long-term view and to implement those innovations in a timely manner. By taking such quick and prompt action, SEKISUI CHEMICAL Group was able to fuse its 28 technological platforms for promoting the creation of Products to Enhance Sustainability. The result was the launch of the ESG Task Force, a forum for considering social issues in ways that transcend organizational boundaries.
In the future, we will take steps to normalize internal cross-sectional systems that enable development and business proposals aimed at addressing social issues, while at the same time putting in place a system that can accelerate innovation in case of emergencies such as the COVID-19 pandemic.

SEKISUI CHEMICAL Group has identified a subset, measures to support the expansion of Products to Enhance Sustainability, within its established limit for ESG investment. This investment subset is designed to encourage planning and proposal of measures to create products and services and expand markets. To propose solutions to social issues through fusion, this investment subset serves as a financial incentive in support of themes at the planning and testing stages to achieve internal fusion and contribute to the solving of social issues whose solutions are urgently needed or that require long-term measures to solve.
After submitting a theme or plan for assessment, a decision on whether or not to invest is made. In addition to evaluating the importance attached to solving a particular issue and the degree of contribution to enhancing sustainable corporate value, deliberations encompass how the promotion of a theme can be accelerated, the effects of each proposal, and whether investment will help increase corporate value.
In fiscal 2021, support measures were approved and implemented for eight new creation or market expansion themes.
Steps have been initiated to verify new recycling technologies that accelerate the recycling of waste into materials, an area which we are committed to strengthening as a part of our resource recycling strategy. Among a host of measures, we have also commenced efforts to identify new technologies that will trigger innovation and help promote improvements in the durability of products that support social infrastructure. Work to check progress on an interim and fiscal year-end basis are underway.

As a company that supports the basis of LIFE and solves social issues by delivering value to society including peace of mind for the future through its products and businesses, we introduced products at the following venues, provided education on the means to solve issues, and promoted the importance of finding solutions.

[Promoting efforts to mitigate climate change through products]

[Promoting effort to adapt to climate change through products]

Taking into consideration the needs of society and customers, the environmental value of Products to Enhance Sustainability reflects a variety of factors. This includes efforts to stay one step of the curve by promoting the value of low-carbon, decarbonized products that help mitigate climate change.
In order for low-carbon, decarbonized products to deliver value to customers, steps are taken to calculate each product’s carbon footprint carbon life cycle assessment (C-LCA).
While boundaries are set and calculations made according to the purpose and product, at this stage, calculations for raw materials are based on a database (IDEA) that applies publicly available average GHG emission coefficients. We believe that through the activities and collaboration of raw material manufacturers, positive steps can be taken to harness the low-carbon value and efforts of each company.
The volume of raw materials used and energy consumed at the time of production are calculated using actual measurement data at production plants.
In order to understand and better appreciate the significance of methods to undertake life cycle assessments (LCAs), which will become increasingly important in the future as an indicator of low carbon value, SEKISUI CHEMICAL Group is actively participating in a variety of endeavors including the LCA Utilization Promotion Forum, the LCA Forum, and the Institute of Life Cycle Assessment. In addition to brushing up on information on the handling of each method and solution, we are encouraging employees to take external training courses and conducting in-house LCA training.
Over and above online LCA training conducted in February, which attracted more than 100 participants, SEKISUI CHEMICAL Group provide archived courses. We are developing human resources that are capable of calculating and promoting the appeal of low-carbon values.
At the UIEP Company, which handles a large number of infrastructure products made from resin, we provide training for sales staff. Complementing this training, we prepare and distribute materials that help explain calculated value to customers, focusing on resin pipes and other products. As of March, the Company has trained more than 500 employees and launched sales activities to promote low-carbon value.
Recognizing that the growth of low-carbon values varies from industry to industry, we are first approaching business fields where value growth is slow. We believe this is helping to distinguish the Company’s efforts in each business and transforming risks into opportunities. In order to proactively meet the low-carbon, decarbonization requirements of products while also working with the supply chain, we will accelerate reforms in raw material selection and production processes, energy conversion, and studies that contribute to resource recycling, with the aim of achieving carbon-neutral products.