Integrated Report 2023

November 30, 2023

Integrated Report2023

Corporate Philosophy and DNA

Katsutaro Inabata
Founder

Love (ai ) and Respect (kei )MissionPeople come first, based on the spirit of “love (ai ) ”
and “respect (kei ),” and together we strive towards
contributing to the development of society

VisionTo continually evolve, serving clients and society,through global operations and meeting theirchanging needs

IK Values- To cherish integrity and respect for people (ethics)- To continually challenge the limits with high ideals,
big dreams and great passion (aspiration)- To prize dialogue and teamwork, and to treasureprofessional growth of employees (organization)- To become the best partner of our clients, providing
solutions from the clients’ standpoint (role)

Respecting all people as a member of society
We have continued to pass down our people-first spirit of“love (ai )” and “respect (kei )”. Guided by this spirit, we
believe our purpose is to serve society and contribute toits development through our business activities.

Aiming for continuous evolution and growth
To respond to change, we will further enhance our networkof people and information while continuing to hone ourexpertise that creates value and ability to act with initiative.
In this way, we will aim for unceasing evolution and growth
as a shosha, or Japanese trading company.

Since our founding, we havecontinued to manage our businesswith respect for people.
“Honesty is the only way to earn trust of society”
This is one of the sayings left behind by our founder, which describes
our spirit of “love (ai )” and “respect (kei ).” Our company’s history ofover 130 years boasts a lineage of creating diverse businesses that
contribute to social interests relevant to the times, and our emphasison managing our business with respect for people links with today’s
sustainability management.

Together with diverse stakeholders
We have defined common values that serve as a
guideline in the current business environment where
each person must make decisions and act swiftly
and appropriately. By sharing the ethics andaspirations that form these values with not
only employees but all of our diverse
stakeholders throughout the world, we
believe we can evolve together.

Our founder, Katsutaro Inabata,
washing silk threads in the
Rhone river in the winter during
his study abroad in France(by Sekka Kamisaka)

Inabata Senryoten at the timeof founding

The IK logo emblazoned on
Inabata Shoten’s tenugui towel- To grow with people across borders, sharing
and respecting diverse values with the aim ofco-prosperity (symbiosis)

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2

Net sales (Billions of yen)

Our History of Business Evolution and Growth

800

2010
IK Values established

We have continued to evolveand grow as a company while
responding to the changing needsof our clients and society.
Founding story

Since

700

1976
Overseas sales
base establishedin Singapore

1890

600

1990
100th anniversary
500

1890

Inabata Senryoten established in Kyoto

As Kyoto declined following the transfer of the capital,

400

our founder, Katsutaro Inabata, studied abroad in France,sponsored by the prefectural government
Following the Meiji Restoration, the capital of Japan
was transferred to Tokyo, resulting in a dramatic
reduction of Kyoto’s population and the beginning of an
economic decline. Against this backdrop, our founder,
Katsutaro Inabata, who was born in Kyoto Prefecture
and attended teacher’s school, was selected by the
Kyoto Prefectural government in 1877 to visit France tostudy. He was only 15 at the time. While attending two
industrial preparatory schools in Lyon, Europe’s largest
silk fabric producing region, he studied thefundamentals of industrial chemistry and undertook practical training forthree years at the Marnas dyeing factory. He later studied dyeing theory
and applied chemistry at the University of Lyon while also visiting other
European countries. Supporting him through his eight years abroad was astrong sense of mission to contribute to not only the revitalization of Kyoto
but also to the modernization of all of Japan.
As Japan worked urgently to modernize its industries,

Katsutaro brought Europe’s world-leading dyeing
techniques back to Kyoto Prefecture
When Katsutaro returned to Japan in 1885, he was offered a position as an
agriculture and commerce engineer by the Meiji government. He turned it
down, however, instead wishing to serve Kyoto Prefecture. Starting as ateacher at a Kyoto dyeing institute, he later assisted in the establishmentof a textile company in Kyoto and was recommended for the position ofchief engineer. In this way, he worked to spread the world-leading dyeing
techniques that he had learned while studying abroad. In 1890, he founded
Inabata Senryoten, the predecessor to Inabata, contributing significantly tothe development of Japan’s dyeing industry as a whole.

Contributing to the modernization of culture

Holds Japan’s first cinema show;
Nikkatsu succeeds the business

300

1908
Branch established in
Tianjin, China

100

Net sales(Billions of yen)

1890

0

1910

1916

Amid the suspension of dye imports
during World War I,

Katsutaro contributed to theestablishment of Japan
Dyestuff Manufacturing

When the dye imports came to acomplete halt during World War I, theGovernment of Japan encouraged thedomestic production of synthetic dyes,
leading to the establishment of Japan
Dyestuff Manufacturing Co., Ltd. inOsaka in 1916. Katsutaro was involved in
the establishment of the company andwas appointed as its president in 1926.
He actively managed the company,
contributing to the domestic productionof dies and their popularization.

On a business trip to France in 1896, he purchased a cinematograph, films,
and screening rights from his friend, Auguste Lumière. He used these tohold the first cinema shows in Japan. A newspaper
at the time wrote that the audience was surprised
and amazed by the moving picture. He thentransferred the rights to a company which would
later become Nippon Katsudo Shashin Corporation,
Replica of a cinematographwhich is now known as Nikkatsu Corporation.
The Japan Dyestuff Manufacturing Co., Ltd.,established in 1916

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200

1930

1950

1970

1980

1990

2000

2010

2020

1959–

1984–

2010–

Inabata responded to demand for
petrochemicals by importing
polypropylene for the first timein Japan

Launch of the information &electronics business andrebuilding the business portfolio

Inabata strengthened andenhanced its multifaceted
capabilities and created a new
business model

In the 1980s, a government policy tosuppress medical costs resulted insignificant changes to the structure of
the domestic pharmaceutical industry.
While we made the difficult decision to
separate our pharmaceuticals division,
which accounted for approximately
one-third of our total net sales at thetime, we worked to restructure ourbusiness portfolio, defining this phase as
our “third founding period.” This resulted
in growth in our LCD-related business,
which shares a link with our current
information & electronics business.

In recent times, the expansion of
e-commerce and direct trading between
companies has caused the role oftrading companies to be questioned.
Amid these circumstances, we havestrengthened supplementary functions
based on our core role as a trading
company, such as manufacturing andprocessing, as well as logistics,
proposing integrated solutions and new
business models tailored to the needs ofour customers. This has enabled us tocreate unique value that ensurescustomers choose our company.

Amid the rapid rise of thepetrochemical industry with the
postwar recovery,

In 1955, government-led heavy chemicalindustrialization advanced and demandfor petrochemicals expanded. Against
such a background, Inabata had theforesight to set its eye on polypropylene,
which was said to be an all-purpose
resin. In 1957, Inabata concluded a
provisional import contract with an
Italian firm that had industrialized
polypropylene production that year, andimports to Japan began for the first timein 1959.

Early petrochemical
product that
contributed to thegrowth of theplastics businessSeparation of the pharmaceuticalbusiness following structural changes
in the pharmaceutical industry

Information &electronics
business grewwith the spreadof LCDs

With the intermediary role of trading
companies being questioned amid
the increase in online trading,

Mexicoplastic
compounding
factory
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Contents
Chapter1

Corporate Philosophy and DNA

3

Our History of Business Evolution and Growth5

Contents / Editing Policy /Information Disclosure System

2

Business Strategies by Segment and Region

63

Environmental Business(Products that Reduce Environmental Impact)

37

History of Our Business Portfolio

65

Employee Engagement / Human Resources Development

39

At a Glance

67

Human Rights and Supply Chain Management

41

Summary of Each Segment

69

Management

143

Business Strategies by Segment

71

Outside Director Three-Way Talk

51

Global Network

75

Corporate Governance

Growth Strategy

53

Reports by Region

86

Risk Management

90

Compliance / Anti-Corruption

91

Information Security

Chapter

7

Message from the President

13

The Process of Value Creation

15

Capital and Strengths

17

Businesses and Functions (Business Models)

ESG Information

93

Sustainability Data

21

Business Plan and Progress Review

55

Sustainability Management

101

Financial Information

25

CFO Interview

57

Materiality

109

Consolidated Subsidiaries and Affiliates

31

Feature: Toward the Creation of New Value

59

Climate Change

111

Corporate Information / IR Activities / Stock Information

Chapter3

Data

Information disclosure system for financial and non-financial information

Editing policy

Value creation story

We prepare the integrated report as an important toolthat enables Inabata’s stakeholders to understand thecompany’s business activities and distinctive initiatives
for value creation. In Integrated Report 2023, we return to
our mission and vision and once again illustrate ouroverarching approach of evolving our business in line with
the needs of clients and society.
• Guidelines referenced:
International Integrated Reporting Frameworkby the Financial Reporting Standards (IFRS) Foundation
Guidance for Integrated Corporate Disclosure andCompany-Investor Dialogue for Collaborative Value Creationby the Ministry of Economy, Trade and Industry (METI),
etc.
• Relevant period: From April 2022 to March 2023
(some information may not be limited to this period)• Relevant organizations: Inabata & Co., Ltd. and its domestic
and overseas Group companies
A cautionary note regarding future estimates
The data and future predictions contained in this report are basedon information available and judgments applicable at the time of
the report’s release. Consequently, the data and future forecasts
contained herein may include elements that are subject to change,
and the reader should be aware that this document and its contents
are no guarantee of future performance.

5 Inabata Integrated Report 2023

Cover design
The cover of this report is comprised of quadrangles
made up of shades of red that are based on our
corporate color and represent our four businesssegments. In the center is a quadrangle that depicts“bowing” inaho (rice ears). This embodies the principleof respect—a part of our IK Values that form ouremployee code of conduct. This design was used for theexterior wall relief of our former Tokyo Head Officebuilding. Although it will disappear as a result of current
construction work, the spirit it expresses will continue tobe passed down through the generations, living on in
the hearts of each employee.

Integrated report
Financial results briefing materials
Securities report
Financial

Shareholders newsletters
Financial statements

Investor relations pageNon-financial

Corporate governance report

Sustainability page(in Japanese only)
Detailed and comprehensive

We have created investor relations (IR) and sustainability pages on our website, on which we disclose financial andnon-financial information. We have published integrated reports since 2020. The report encompasses both financial andnon-financial information and is also available on our website.

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Chapter 1

Growth Strategy

Message from the President

We will evolve our business in line with changes
in society, continuing our pursuit of becoming asustainable trading company.

Lessons learned from a history of over 130 years

We have evolved the nature of our businessby responding to societal changes

Katsutaro Inabata
President

When I reflect on our 130-year history as a company, it isclear to me that rather than growing in accordance with
an elaborate strategy, our business domain has expanded
in a more organic and spontaneous manner. There havebeen quite a few episodes in our past where new
businesses have failed in a process of trial and error.
Inabata was originally founded as a dyeing business inKyoto in 1890 after our founder was dismissed as chiefengineer in his previous company following conflict withmanagement over his push for the introduction of
cutting-edge equipment.
Yet, despite our successes and failures, I believe we havealways responded to the societal changes in each era
with agility. For example, having anticipated increased
petrochemical demand in the postwar reconstruction
period, we imported polypropylene to Japan for the firsttime. Later, with the advent of internationalization in the
1970s, we rapidly advanced the establishment of bases
overseas, including those for manufacturing andprocessing. Thanks to the efforts of our predecessors,around 60% of our sales now come from overseas.
In 1999, with the market expansion of LCD and LED
materials, we established the IT & Electronics segment,
which later became the Information & Electronics
segment. Conversely, our founding business of textiles
and dyes now accounts for less than one percent of our
total sales. As society’s needs continue to change, thetime will undoubtedly come when the products andservices that are before us now will no longer be needed.
Yet, ideas will eventually lead to the emergence of new
items that will guide the evolution of society. This obvious
fact can be seen throughout the history of our company.

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Our people-first spirit reflectedin our management philosophy

Management based on an understanding of
human nature
In the management of our company, the most importantvalues that we adhere to are “love (ai )” and “respect(kei ),” which comprise the spirit we have inherited since
our founding. While it is natural that we emphasize
efficiency in our daily operations, ultimately those weinteract with at work are always people. When we
engage with others, I think the act of starting byrespecting them as human beings is something welearn by watching our seniors. At our company, thisapproach is passed on to younger generations, and I feelthat it is thanks to this that our employees often sharesuch warm relationships with our business partners. We
also thrive on curiosity, asking ourselves the question“Can we think of anything interesting that doesn’t exist
at the moment?” This sort of character and mindset isthe driving force behind our ability to expand ourbusiness in line with the changing times.

Calligraphy of founder Katsutaro Inabata with thecharacters ai and kei (IK)

Organizations can differ in various ways depending on
the view of human nature that they position at their core.
While I believe that human beings are inherently inclined
to do good, we must not forget that we also have atendency toward weakness. To me, an understandingof human weakness is the starting point for the
management of the organization. Autonomous
organizational management would be possible if people
had the strength never to be swayed by temporary
emotions and temptations. However, in reality, we are
not that strong. Frameworks such as those for internal
control and risk management are needed precisely

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Chapter 1
Growth Strategy

Message from the President

because we are human. Rather than simply “suppressing
wrongdoing,” I believe that it is important to establish
appropriate checkpoints to steer employees away frommaking mistakes because of their weaknesses.
Our management approach stems from this philosophy
and view of human nature, and it has been tested on anumber of occasions as to whether it can be applied
across generations and borders between countries.
Though I repeatedly had to seek answers each time I
faced challenging situations, I have remained steadfast in
believing that we should continue to pass down our spiritof “love (ai )” and “respect (kei )” for people.

Understanding the future business environment

Demand for sustainable products andservices continues
In May 2023, COVID-19 was reclassified as a Class 5
infectious disease, which is the same category as
diseases such as seasonal influenza. However, I do notthink society will return to its pre-COVID state. There arestill risks of the global economy falling into a recession,
persistent inflation, albeit with some ups and downs, andenergy and material prices are unlikely to drop suddenly
soon. Moreover, in order to tame inflation, central banks
around the world have been forced to raise their policy
interest rates. While inflation is starting to ease to someextent, the low-interest rate environment that has been
maintained now for many years across the globe is surely
coming to an end. We must therefore focus on businessthat yields higher profits given the current interest costs.
We also expect demand for sustainability-related
products and services to continue over the medium tolong term. The increased activity in this field is no longer a
temporary boom. While it is necessary to remain vigilantof the so-called “greenwashing,” at Inabata, we aim toleverage our diverse capabilities to steadily develop
environmental business that is unique to our company.
Specifically, we have already launched businesses formaterial recycling and the generation of biomass powerfrom unutilized thinned wood.

Materiality (key issues for management)
Contributing to a decarbonized and circular society, sustainable use of natural capital
Creating
sustainable
value

Contributing to safety, security, and well-being
Providing value through resilience in procurement and supply functions
Respecting human rights in the spirit of love (ai ) and respect (kei )and growing together with local communities

Strengthening
the foundation
for business
continuity

Fostering and strengthening the human capital driving the value creation
Enhancing governance and risk management

Materiality and future focus areas

Supplier diversification is a new business
opportunity
Accelerating the development of business related
to renewable energy, health, and foodIn 2022, we identified six material issues for theachievement of sustainable growth. Of these, one issue
that we recognize as particularly important is “providing
value through resilience in procurement andsupply functions.”
In terms of corporate procurement and purchasing,customers are increasingly making efforts to diversify
suppliers and engage in multi-sourcing as a result of
pandemic-driven logistics disruptions and heightened
geopolitical tensions. For a trading company like us,
responding to these needs represents both a mission andan opportunity. By providing procurement and processing
functions that leverage our global network, we will strive
to fulfill the expectations of our customers.

With our first material issue, “contributing to a
decarbonized and circular society,” we recognize thatfor us to continue to achieve sustainable growth as acompany, we must directly address the needs of society.
While I touched on this briefly before, we have madesignificant progress within our company in terms ofsustainability-related initiatives, such as those concerning
renewable energy and energy storage. We are also
working to expand our operations in the fields of life
science and medicine, which support the health ofpeople, as well as the field of food, which includes
agriculture, aiming to establish a firm foundation
for profitability.
The theme of sustainability-related business can be easily
adopted across divisions, and cases where multiple
divisions are working on similar themes have increased.
Rather than creating project teams for the sake of
appearances, we have prioritized exploring themes sothey can evolve to a larger scale, harnessing theadvantages of a section-based approach. However,

To contribute to enhancing the sustainability
and resilience of society, we must first ensure thesustainability of the Inabata Group.

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Chapter 1
Growth Strategy

Message from the President

I believe that we will soon reach the point where we must
advance to the next stage.

Enhancing non-financial capital to achievesustainable growth

Aiming for sustainable and global growthby fostering human resources andharnessing information
To contribute to enhancing the sustainability andresilience of society, we must first ensure thesustainability of the Inabata Group. As someone
responsible for management of the company, I recognizethat protecting the lives and livelihoods of employees
and their families is a duty of highest importance. To an
employee, a company is a place that provides themwith their sustenance to live. However, meeting thisrequirement is merely the baseline; a company canalso serve as a place that fosters the growth of eachindividual. A company’s true purpose in society is toprovide such a place. Accordingly, the establishment ofan environment that fosters the growth of people andenables them to thrive is essential for the sustainablegrowth of a company.
At present, I believe that developing global humanresources and putting in place a system that enables
them to play active roles is an issue of utmost priority.
Throughout the over 40 years we have spent expanding
our overseas business in the post-World War II era, wehave chosen not to install our Head Office’s humanresources system overseas, and each base has instead
developed its own systems. Although such an approach
had its benefits, given that overseas business now
accounts for over 60% of our sales, there is now anurgent need to create more opportunities that empower
our employees to thrive on a global level. Of course, as
the various systems and cultural backgrounds differ
among each country and region, it is not rational to unify
all of the different personnel evaluation practices andlabor management rules, and I believe a “relaxed
standardization” is a more realistic solution. Beyond
employee treatment and evaluation systems, there are arange of other issues that we must also consider, such as
the development of training systems.
Following human resources, the second-most importantmanagement resource that a trading company possesses
is information. While our employees are skilled inacquiring current information that can only be obtained on
the front line, we still have room for improvement in terms

11 Inabata Integrated Report 2023

of accumulating and sharing information and using it in asystematic manner. In this sense, there is much potential
for us to grow. Though it was quite some time ago now,
I can still recall an article in an IT-related magazine that
described information as “symbols plus meaning.” While
recent advancements in AI have been truly remarkable, I
believe that humans possess an advantage in the processof assigning meaning to such “symbols,” or in otherwords, data. We will further utilize digital technology todraw meaning from the data accumulated each day at ourbases around the world, and in addition, use it to identify
insights from data for new businesses and create valuethat can contribute to resolving clients’ challenges.

A trading company with a lasting future

Continuing to address ever-changing needs
by not settling for where we are now
IK Vision 2030, our long-term vision formulated in 2017,begins by stating our goal of “further enhancing
multifaceted capabilities such as manufacturing, logistics,
and finance, in addition to trading.”
At the 120th anniversary of our company, we
communicated this goal to our employees along with themessage that we must “further leverage our strengths
as a shosha, or Japanese trading company.” Our trading
function includes not only our intermediary role but also
encompasses a variety of other elements including
logistics, manufacturing and processing, finance, andLong-term vision: IK Vision 2030

To constantly evolve and fulfill a valuable role
while we meet the needs of clients and society,we must leverage our strengths as a shosha,
or Japanese trading company.

business investment. Our purpose as a trading company
is to flexibly combine these functions to serve society.
In order to respond to society’s ever-changing needs,
we will further enhance our network of people andinformation, while also continuing to hone our expertise,

which is the key to understanding information, and ourability to take action. This is what the words “leverage
our strengths as a trading company” truly refer to. Since
this means we cannot simply be content with where weare now, this course of action is by no means easy, but itis worthwhile.

What Inabata envisions for its future around 2030

Function

Scale of operation

Achieving more than 1 trillion yen inconsolidated net sales at an early stage

Net sales andoperating profit
generated outsideof Japan

70% or more

Portfolio

Recently, while participating in discussions with ouroutside directors, I was asked, “Is your company content
with remaining as a trading company forever?” As I feelthere is still a long path ahead before we fully harness
our strengths as a trading company, I cannot envision a
different form at this stage. However, if we continue totransform, our business may one day no longer be calleda trading company.

Further enhancing multifaceted
capabilities such as manufacturing,logistics, and finance, in addition
to trading

At least one-third of sales andoperating profit from businesssegments other than the Information& Electronics and Plastics segments

I do not feel we have to conform to a particular businessstructure, and I will leave the formulation of our distantfuture vision to the next generation.

President Inabata with employees of Inabata Singapore

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Chapter 1
Growth Strategy

The Process of Value Creation

We create value that contributes to serving clients andsocial development based on the people-first spirit of“love (ai )” and “respect (kei ).”Capital and strengths(Inputs)

Value creation(Outcomes)

Businesses and functions (Business models)
p. 17

p. 15

Inabata Group Maximizing corporate value
SocietyHumancapital

Employee satisfactionlevel indicated by theengagement survey

Medium-termbusiness plan:
New Challenge 2023
(NC2023)76%
Chemicals

Approximately

companies

Financial
capitalLong-term
vision:IK Vision 2030

p. 21-22

Life Industry

FinanceInabata Group• Maximizing cash flow

Operational
Inabata Group

Product
Development

Consolidated
net sales
800 billion yen

Consolidated
net sales
1 trillion yen• Building a resilient supply chain• Providing diverse products andsolutions that respond to change

Environmental
Society• Creating a decarbonized andrecycling-oriented society• Conserving biodiversity

SocialNet D/E ratio

0.16

p. 21-22

Financial

Creating value
by evolving our businessTrading(Suppliers and customers)

10,000

Manufacturing& Processing

Logistics

Client baseSocial andrelationshipcapitalRealizing a sustainable society

Information & Electronics

Inabata Group

Plastics• Building solid and trusting
relationships with stakeholders• Improving employee well-being
and value creation

times

Society

Governance• Creating a society that respects
human rights• Building an enriched society witha high quality of life and ensured
safety and security

Enhancing our strengths and increasing financial andnon-financial capital
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Chapter 1
Growth Strategy

Capital and Strengths

The Inabata Group’s capital and strengths that support thecreation of sustainable value
The source of value creation at the Inabata Group lies in the capital and strengths we have refined for over
130 years since our founding. By fully leveraging these assets, we create value that meets the needs of thechanging times, and the experience we gain in this process enables us to strengthen them even more.
This positive cycle is the driving force for the sustainable growth of the Group.

Client base(Suppliers and customers)

10,000Approx.

Social andrelationshipcapitalcompanies

As a trading company, the client base is an important form of capital for the Group and a lifeline that
supports our sustainable growth. One of our material issues is “providing value through resiliencein procurement and supply functions.” The Group’s robust and diverse client base enables us to
integrate different elements, including country, region, industry, technology, and supply chain. This
represents a major strength of the Group.
Our suppliers and customers are also important partners in our value creation process, and weseek mutual development together.

Employee engagement score

I am satisfied with the work I am doingat Inabata now.

HumancapitalI can relate to Inabata’s philosophy, vision,and management policies, and I want toparticipate in achieving them.

76%
73%

The Group’s greatest capital is its
approximately 4,300 employees who workwith the spirit of “love (ai )” and “respect (kei ).”The relationships of trust between us and our
suppliers and customers form the foundation
for the Group’s value creation. Supporting thisfoundation is our employees, who possess
trustworthiness and integrity as individuals.
With these relationships of trust, we havecreated a cycle in which important information
can be easily acquired, leading to the provisionof higher-quality value.
For employees to fully demonstrate theirabilities, they must understand and trust theircompany, and have a high level of satisfactionin their work. We conduct an employee
engagement survey once a year to ascertain
the state of our employees. We then takeappropriate measures to address any issues
that are identified in the results, working toenhance engagement.

Net D/E ratio*

Financial
capital

0.16

times

The core function of the Group’s business is trading. For over 130 years,
we have gained the trust of clients in the chemical industry while evolving
and developing our trading business. This has been made possible not
only because of our strength in sales, but also because we have afinancial base that enables clients to engage in transactions safely.

President Inabata with employees of Inabata Vietnam (Hanoi)

Human Capital Strategy

Special Feature 3 p. 35

Employee Engagement

p. 65

Our finance function is a key capability that complements trading.
A strong financial base is essential for providing proposals that address
the various challenges that clients face, such as reducing capital burden
and avoiding foreign exchange risks. In our medium-term business plan,
we place importance on the net debt-to-equity (D/E) ratio as amanagement indicator, working to maintain and enhance our financial
soundness. For the current medium-term business plan, NC2023, we aretargeting a net D/E ratio of 0.5 times or less. As of March 31, 2023, weachieved a ratio of 0.16 times, well beyond our target. We will continue tomaintain a robust financial base with the aim of expanding our business.
* Net D/E ratio = (Interest-bearing debt − Cash and deposits) / Equity capital

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Chapter 1
Growth Strategy

Businesses and Functions (Business Models)By performing a variety of business functions with tradingat the core, we evolve our business to create new value.

Business Model

Manufacturing and processing functions that complement trading

1

Business model for the plastic compound business

ExampleOperating in four major segments, Inabata maintains a diverse range of functions with trading at the core.
We create value that meets the needs of our clients and society by maximizing these functions andproposing optimal business models to resolve challenges.

Creating value through new business models
Information & Electronics
With LCD components, materials for digital printing, materials forsemiconductors, and other products as our income-generating pillars,
we are also venturing into new fields such as automobiles and life
science. In addition, we are focusing on the fields of IoT andrenewable energy, which are expected to grow.

ChemicalsWith firm roots in our founding business of dyes, we deal inchemicals that serve as a platform for all kinds of industries. In
2019, we integrated the Chemicals Division and the Housing & Eco
Materials Division, which was dealing with materials that are close
to final products, to provide optimum products and services to theentire value chain.

Manufacturing& Processing

Logistics

The plastics business, which is one of Inabata’s key
businesses, expanded overseas using the strength of theplastic compound manufacturing business (compounding
business) and grew to a segment that accounts for 50%*of our consolidated net sales. As Japanese electronics
manufacturers transferred their production bases toSoutheast Asia in the latter half of the 1970s, we followed
suit, building our first overseas manufacturing andprocessing base in Singapore. And as our customers in theoffice automation (OA) and automotive industries
broadened their businesses globally, we expanded our
network of trading companies and manufacturing andprocessing bases in Southeast Asia, China, and Mexico.
Many of our major customers have production basesaround the world and need supply and distribution services
for materials of the same quality.

By starting the compounding business at seven locations inseven countries, mainly in Asia, we are able to offer not only
trading functions but also the added value that ourcustomers expect, and this has become the strength forwhich we are preferred by our customers.
What are plastic compounds?
Kneading and coloring
pigments, additives,
other resins, etc.
Base resin

Plastic compounds
Coloring, addition of
weather resistancefunction, etc.

Trading
Life Industry
We contribute to creating healthy and comfortable lives for consumers
as a provider of pharmaceuticals, consumer goods, and food products.
In our food business, we are expanding our vertically integrated modelthat covers from upstream to downstream, while in our pharmaceuticalbusiness, we are focusing on the field of regenerative medicine with aneye to the future.

Business model for the plastic compound business

Product
Development
Finance

Asia
Local factoryof resinmanufacturer

Plastics

Base resin

We deal in a wide range of products from commodity resins tohigh-performance resins, operating seven plastic compounding
factories overseas and five film manufacturing factories in Japan andabroad. We also strive to develop environmentally friendly products
such as biomass, recycled, and biodegradable plastics.

North America

Inabata’s
local trading
operation andcompounding
factory

Plastic
compoundproducts

Local factoryof parts
molding
manufacturer

Local factoryof resinmanufacturer

Base resin
Relatedmaterials

Inabata’s
local trading
operation andcompounding
factory

Plastic
compoundproducts

Relatedmaterials

Automotive,
OA, homeappliances

Local factoryof parts
molding
manufacturer

Mainlyautomotive

Information sharing allows for immediate
response to the transfer of customer sites

Inabata’s supplementary functions
Manufacturing &Processing
Our manufacturing andprocessing functions play a
critical role in complementing
our trading business. We
increase the added value that
we provide to customers byoffering the manufacturing
and processing functions
needed in areas close to theirproduction bases. We also
contribute to the expansion of
our trading business bydelivering a one-stop service
in various regions throughout
the world, covering the
procurement of materials.

17 Inabata Integrated Report 2023

Logistics
While drawing on the productknowledge and expertise that
we have accumulated overmany years, we propose andprovide the optimum logistics
solutions to clients bypartnering with warehousing
and transportation companies.
For clients operating businesses
around the world, we offer
inventory management andreplenishment systems thatleverage our global network,
thereby contributing to local
production and sales operations.

Finance
We propose and implement
solutions for clients’challenges such as reducing
capital burden and avoiding
foreign exchange risks. A
robust financial base isnecessary to provide thefinancing functions thatclients expect. Having
positioned the net D/E ratio*
as an important management
indicator, we work to enhanceand maintain our financial
soundness.
* Net D/E ratio = (Interest-bearing
debt − Cash and deposits) /Equity capital

Product
Development
We combine the expertise we havecultivated at our trading bases andmanufacturing and processing
bases in Japan and overseas todevelop a range of products thatmeet the needs of our clients. As a
trading company, our manufacturing
and processing operations mainly
involve consigned processing.
However, to provide even greater
added value to clients, we also
develop and propose our own
branded products that leverage themarket information and specialist
knowledge that we possess as achemical trading company.

Information sharing on
customers and markets

Updated information on customers andmarkets through compounding business contributes
to expansion of trading businessInformation sharing on
customers and markets

Japan
Inabata
Head Office

Resin manufacturer’shead office

Collaborative value leveraging
specialized knowledge andnetwork of bases

Providing diverse
value throughone-stop service

Parts molding maker

Product manufacturer’shead office

Having a manufacturing function enables us to gain more in-depth access to our customers’ production plans, newproduct development, and other information, which is a huge strength in the trading company business.
* Of the 735.6 billion yen in consolidated net sales for FY2022, sales in the Plastics segment amounted to 363.9 billion yen (49.5%).

Inabata Integrated Report 2023

18

Chapter 1
Growth Strategy

Businesses and Functions (Business Models)Creating value through co-creation with local government

Business utilizing sustainable anddomestically produced wood fuel undera community co-creation scheme

Business Model
Example2Power generation with woody biomass composed ofunused wood materials such as forest residues is expected
to serve as a source of renewable energy that can contributeto the sustainable development of communities. At present,
however, most woody biomass is imported from overseas,
while the forestry industry in Japan continues to decline in all
but a few areas.

Business Model
Exampleresources. The second point is the stable supply of fuel andthe stabilization of prices. We will build an efficient and stable
operations system by providing support for the leasing of
high-performance forestry equipment and operating capitalnecessary for forestry management. We will also conduct
fuel procurement from upstream sources, beginning withthe purchasing of trees, working to ensure stable prices. The
third point is collaboration with local companies and business
operators. As forestry business is intertwined with regional
characteristics, collaboration with companies that possess
expertise and networks is essential. While working together
with companies that lead in supplying biomass fuel inregional areas, we will establish new forestry companies
through joint ventures, contributing to the development of
the forestry industry by harnessing each other’s strengths. In
addition, we will increase partners in each area for operations
such as felling, transportation, and wood chip processing toconstruct a framework for regional cooperation over a wider
area and drive business efficiency. In this way, we will
expand business that utilizes domestically produced wood
fuel and can contribute to sustainable development.

To address this issue, we have taken up the challenge ofcreating “business utilizing sustainable and domestically
produced wood fuel” by engaging in co-creation with local
communities, such as through collaboration with local
governments and organizations.
This business focuses on three points. The first is theeffective utilization of wood processing residues as fuel. By
using these residues, the forests become tidier, and work
can progress to tree planting and afforestation, which is thenext phase of the forestry circulation cycle. Through thisprocess, we will regenerate forests where growth isstopping/slowing, aiming to enable the recycling of forest

3

Logistics solutions developed with local partners

Own warehouse operation in Indonesia

In Indonesia, which has seen remarkable economic growth
in recent years, the logistics infrastructure had not kept up
with the rapid increase in the flow of goods, and the
problem of overdue deliveries had become a serious
problem. PT. Inabata Indonesia set up large warehouses witha storage capacity of 5,000 tons to solve this problem in 2016,
and it has expanded them even more at present, managing
warehouses with a scale of 11,000 tons. It has developed a
new warehouse business in Indonesia by managing its own
inventory storage and transportation of plastics products,
which was earlier being outsourced to local warehouses.
If the logistics route is complicated, such as going throughmultiple locations, it can adversely affect the efficiency ofdesign in the production process. To eliminate theseconcerns, the company selected an optimal location for
constructing the warehouse. The ground at the site is stable
and located along the main road connecting the port and theindustrial park. To improve the efficiency of logistics, thecompany carefully selected a site where it would bepossible to consolidate warehouses for inventory storage.
Moreover, the company was also able to achieve the samelevel of logistics management as in Japan and meetcustomer expectations by using a warehousing company
with which we have a long relationship of trust in Japan as
our local partner for our own warehouse operations.

Inabata’s warehouse (Indonesia)

Logistics solutions using our own warehouses
BeforeCommunity co-creation scheme

Transportation,
wood chipprocessing,felling

Supplier:
Resin manufacturer

Local woodtransportation andprocessing company

Procurementof logs

Consignmentof transportation,
wood chipprocessing,felling

Purchaseof logs

Sale of logs

Furusato Inabata forest
Co., Ltd.

Parts molding maker:
Local factory

Logs / Forest residues
Forest owners / Bids for national forests / Purchase of trees

Investment
Wholesaleof woodchips

Inabata
Sale of logs

Sale ofwood chips
and logs

Local biomass
power generation company
Timber mills, paper production
companies, etc.

Biomass fuel supply scheme to contribute to the forest rejuvenationand the sustainable development of community forestry
Inabata jointly operates Furusato Mokuzai Logistics K.K. under a business tie-up. It is a leading company for biomass in
Tohoku that covers the full supply process for biomass fuel, from securing forest resources to felling, crushing, andtransportation. By increasing the number of business partners we have in each area through Furusato Mokuzai Logistics,
we believe we can contribute to the development of forests and the rejuvenation of forests over a wider area.

19 Inabata Integrated Report 2023

Supplier:
Resin manufacturer

Inabata’s
local warehouse

Leasing offorestry machinery

New joint
venture company

Parts molding maker:
Local factory

Enables the cycle’s next stage of tree planting
and afforestation and forest rejuvenation

Furusato Mokuzai
Logistics K.K.

Investment

Warehouse

After

Consolidating warehouses that had been scattered across locations
to cover all the steps up to product storage in-house
Before establishing our own warehouse operation, we were using five warehouses belonging to local warehousing
companies. However, by consolidating our own warehouses to three locations, we have greatly improved our
logistics efficiency. This has not only solved the problem of delayed deliveries but has also enabled us to respondwith even shorter delivery times. Inabata Indonesia has succeeded in differentiating itself from its competitors as asales agent capable of storing customers’ products at its warehouse.

Inabata Integrated Report 2023

20

Chapter 1
Growth Strategy

Business Plan and Progress Review

With an eye to the next stage to realize our long-term vision

Megatrends

Environmental
certification

Global fragmentation,
geopolitical conflict
Demographic changes
Climate change and transition toa decarbonized society
Shift to a circular economy
Increase in concerns regarding
energy and resource supply stability
Increase in demand for health care
Diversification of lifestyles, values,
and needs
Evolution of technology

Main
opportunities

Further strengthening of financial base
Emergence of new sales channels andregions, and new demand
Expansion of business opportunities forhealth care and household goods

Expansion of business opportunities for renewable energy
and energy-saving products, and low-carbon materials
Expansion of business opportunities for recycling
materials and biomass materials
Expansion of business opportunities by buildinga resilient supply chain

Enhancement of employee engagement and appeal to job
seekers by implementing appropriate human capital strategies
Creation of new products and business models
by utilizing technology

Financial stability risks
Geopolitical risks

Climate change risks

Labor risks· Strengthening of policies and laws and regulations· Market changes· More intense and frequent extreme weather eventsand natural disasters· Average temperature rise

· Shortage of workers· Physical and mental health impairment

Main risks*

Human rights risks
Cybersecurity risks· System failure due to cyberattacks* Limited mainly to medium-to-long terms risks based on megatrends.
Please refer to page 86 for information on business and other risks, including those based on a short-term perspective.

Materiality(Key issues for management)

Business Plan
Our vision for 2030

Creating sustainable value
Contributing to a decarbonized
and circular society,sustainable use of natural capital

Contributing to safety, security,
and well-being

Long-term vision

IK Vision 2030
Medium-term business plan

Further enhancing
multifaceted capabilities

Strengthening the foundation
for business continuity
Respecting human rights in the spiritof love (ai ) and respect (kei ) andgrowing together with local communities

New Challenge 2023
Key initiatives
1. Further development of core businesses and horizontal
expansion into growth sectors

20.5

¥
ROE

10%

Enhancing governanceand risk management

21 Inabata Integrated Report 2023

Ordinary profit

21.5

¥

billion0.5

or more22.5¥

billionEquity ratio
times or lessApprox.

70%

or more

634.7

600.3

Net sales

14.0

13.2

Consolidated
net sales

1¥

trillion or more

800.0 billion¥

New Challenge 2020 (Billions of yen)
621.1

Consolidated
net sales target

40−50% ¥800.0 billion
billionStage 1

4. Further improvement of global management information
infrastructure

6. Enhancement of human capital utilization efforts

Profit attributable to ownersof parent

Net D/E ratio

2. Multifaceted approach to markets with potential for future
growth and steady monetization efforts

5. Continuous review of assets and further improvement of
capital and asset efficiency

or moreNet sales and operating
profit generated outsideof Japan

Quantitative targets (FY2023)
Operating profit

3. Intensification of investment targeting future growth
Fostering and strengthening thehuman capital driving the value creation

1trillion¥

such as manufacturing, and finance,in addition to trading

Stage 2

Providing value through resiliencein procurement and supply functions

At least one-third of sales andoperating profit from businesssegments other than Information &Electronics and Plastics segments

Consolidated net sales

680.9
577.5

20.0

735.6 billion

¥

20.3

¥
billion21.0¥
billion

14.9

Operatingprofit5.9
FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2023(forecast)

Around 2030

Inabata Integrated Report 2023

22

Chapter 1
Growth Strategy

Business Plan and Progress Review

Progress for the NC2023 medium-term business plan

Net sales by business segment
Information & Electronics

Chemicals

Operating profit by business segment
Life Industry

Plastics

Others(Billions of yen)

0.1

FY2023

ActualForecast

TargetNet sales¥735.6 billion¥800.0 billion¥800.0 billion

Operating profit¥20.3 billion¥21.0 billion¥20.5 billion

Ordinary profit¥19.1 billion¥20.0 billion¥21.5 billion

Profit attributable to owners of parent¥19.4 billion¥21.0 billion¥22.5 billion

ROE

11.0%

10% or more

10% or more

Net D/E ratio

0.16x

0.5 times or less

0.5 times or less

Equity ratio

47.2%

Approx. 40−50%

Approx. 40−50%¥135.5/USD¥130/USD¥120/USD

Exchange Rate

730.0

800.0

0.2

0.2

382.8

363.9

326.8

43.6
89.8

47.0
83.0

52.0
119.0

238.0

273.0

246.0

FY2022
ActualFY2022
PlannedFY2023
Forecast

In the second year of NC2023, progress by segment was
as follows.
In the information & electronics business, net sales andoperating profit fell short of the plan, impacted by significant
production adjustments for FPDs. While sales for FPD-related
products stagnated, OA-related products and environmentand energy-related products saw solid performance.
In the chemicals business, demand was strong overall, andnet sales and operating profit achieved the plan. Sales werefavorable for resin materials and additives, automobile
component materials, and construction materials.

Note: As of August 2023

In the life industry business, net sales and operating
We have been implementing our three-year
medium-term business plan, New Challenge 2023
(NC2023), since April 2021. It is the second stage of IK
Vision 2030, our long-term vision which outlines how theGroup envisions itself around 2030. FY2022 was thesecond year of NC2023.
While demand for flat panel displays (FPDs) declined
sharply, rises in selling prices, such as for resins, as well
as a tailwind from a weak yen, led to record highs for net
sales and operating profit, which exceeded the plan forthe second year of NC2023. On the other hand, due tofactors including a rise in procurement interest rates
overseas, ordinary profit and below fell short of the plan.

With regards to the forecast for the third and final year ofNC2023, in consideration of such factors as the current
economic environment and business situation, a yenthat is expected to be weaker than assumed in NC2023,
and rises in procurement interest rates, especiallyoverseas, we anticipate net sales of 800.0 billion yen,operating profit of 21.0 billion yen, ordinary profit of 20.0
billion yen, and profit attributable to owners of parent of
21.0 billion yen.

8.5%

7.4%

11.0%

8.6%

23 Inabata Integrated Report 2023

NC2023 key initiatives
development of core businesses and1 Furtherhorizontal expansion into growth sectors

2

Multifaceted approach to markets with potential
for future growth and steady monetization efforts

3

Intensification of investment targeting future growth
Further upgrades to global management

4.7%
On the financial front, the net D/E ratio was maintained ata sound level of 0.16 times, while we continued toacquire treasury shares to improve capital efficiency. As aresult, we maintained a return on equity (ROE) of at least
10%, which is the target in NC2023.

FY2017

4 information infrastructureContinuousof assets and further improvement
5 of capital andreview
asset efficiency
FY2018FY2019NC2020

FY2020

FY2021

NC2023

FY2022

Life Industry

Plastics

Others

20.31

0.13

19.5

21.0
0.1

0.1

10.2

8.9

10.0

1.93
2.77

2.3
2.0

2.65

5.26

6.2

5.2

FY2022
ActualFY2022
Planned3.05

FY2023
Forecast

profit fell short of the plan. While sales were strong for life
science-related products and agricultural products, sales
for marine products were slow, affected by weak demand
for seafood products in the United States and domestic
conveyer-belt sushi products.
In the plastics business, net sales and operating profit
achieved the plan, with rises in selling prices and a weak yen
having a positive impact. While shortages in electronics
components caused automobile-related sales to struggle andOA/home appliance-related sales to remain flat, products
associated with films and sheets saw strong performance.
Progress in the second year for the key initiatives ofNC2023 was as follows.

Key initiatives

ROE
12.8%

Chemicals(Billions of yen)

735.6
FY2022

Information & Electronics

6

Enhancement of human capital utilization efforts

Specific measures• Focus on the automotive field, Especially EV field

p. 43, 45, 49• Acquisition of Maruishi Chemical Trading Co., Ltd.
as a subsidiaryp. 46• Participation in biomass power generation business(Fukuyama, Sakaiminato)p. 44• Expansion of sales of products that reduce
environmental impact

p. 63• Acquisition of Daigo Tsusho Co., Ltd. as a subsidiaryp. 31• Establishment of a U.S. subsidiary that manufactureslithium-ion battery-related materials

p. 33• Strengthening of the information security system

p. 91• Reduction of strategic shareholdings

p. 85• Introduction of a restricted stock incentive plan for
the employee shareholding association

p. 35• Utilization of employee engagement surveys

p. 65

Inabata Integrated Report 2023

24

Chapter 1
Growth Strategy

CFO Interview

We will actively invest for future growth,
accelerating the enhancement of theGroup’s corporate value.

exceptional character of our employees, demonstrated
through their integrity and enthusiasm, that played a major
role. Their qualities were undoubtedly noticed by thepresident of Daigo Tsusho and helped in gaining his
support for the proposal. While it can be slightly difficult to
explain these qualitative factors to our shareholders andinvestors in a logical sense, our management teambelieves that our founding spirit of “love (ai )” and “respect(kei )” along with the IK Values are deeply instilled among
our employees and practiced in our daily operations, andthis acquisition serves as a proof.

Kenichi Yokota
Sales of strategic shareholding progressing
as planned
Steadily reorganizing the allocation ofmanagement resources

Director, Senior Managing Executive Officer
Administrative Affairs

In the medium-term business plan, one of our quantitative
targets for FY2023 is an ROE of at least 10%. While ourcurrent ROE level is above this target, it reflects gains onsales of strategic shareholdings, which will only contribute

Record highs for consolidated net sales andoperating profit
Aggressive investments, including M&A
In the second year of the medium-term business plan,
NC2023, sales for FPDs, which are a core product in our
information & electronics business, were lower than
expected due to factors such as deteriorating market
conditions and inventory adjustments, negatively
impacting our overall financial performance. However, as
the yen has depreciated significantly compared to theprevious fiscal year, our plastics business recorded
earnings that surpassed the plan, supported by strong
demand overseas. As a result, the Group’s consolidated
net sales and operating profit exceeded initial targets,reaching record highs. Ordinary profit and net profit wereslightly lower than targets, affected in part by an increase
in interest paid due to rises in rates overseas.
In NC2023, one of our priority policies is the“intensification of investment targeting future growth.”
Accordingly, we have been exploring opportunities for
growth investment, including M&A.

25 Inabata Integrated Report 2023

In February 2023, we acquired shares in Daigo Tsusho Co.,
Ltd., making it a subsidiary. Its operations involve the
manufacture and sale of agricultural and marine products
and the sale of materials for food packaging. Thisacquisition was the first project carried out by our Business
Planning Office, which was established in 2021 and is
responsible for sourcing investment projects. In making
Daigo Tsusho a subsidiary, we aim to strengthen ourfunctions and expand our business domain by incorporating
its capabilities and expertise in areas such as e-commerce
into our Group.
Over two years have now passed since the Business
Planning Office was established, and it has deepened
collaboration with members of each sales division. Whileutilizing their expertise in finding and approaching target
companies for investment, as well as the networks
developed on the sales front lines, members from bothsides are closely sharing opinions and ideas, working todiscover promising investment projects and carry out
business planning. While this internal collaboration
framework was a key component in the successfulacquisition Daigo Tsusho, I also feel that it was the

temporarily. Therefore, to ensure that a high level of profit
is maintained despite this fact, we must grow our businesswhile steadily taking the next steps. One of our measuresconnected to this aim, the “intensification of investment
targeting future growth,” has become increasingly
important. In regard to this point, our outside directors
have offered a number of suggestions that we endeavor toremain constantly mindful of. This has led us to further
accelerate investment in fields such as renewable energy,
food and agriculture, mobility, and recycling.
Our main means of funding our growth investments is the
allocation of cash acquired from the sale of strategic
shareholdings. As previously announced, we plan toreduce the balance of strategic shareholdings by 50%
during the current medium-term business plan period, andby approximatively 80% by the end of March 2027, relative
to the balance at the end of March 2021. Rather thankeeping these gains on sales as retained earnings, we will
use them to invest in targets that will lead to future
growth, with a focus on sustained generation of returns
that exceed the cost of capital. We will also emphasize

Net sales

Operating profit(Billions of yen)
1,000(Billions of yen)
25.0

577.5

680.9

735.6

800.0

20.3

21.0

FY2021

FY2022

FY2023(forecast)

14.9
12.5

500

0

20.0

FY2020

FY2021

FY2022

FY2023(forecast)

0

FY2020

NC2023

NC2023

1. Further development of core businesses and horizontal expansion into growth sectors
2. Multifaceted approach to markets with potential for future growth and steady monetization efforts

Medium-term businessplan NC2023
Key initiatives

3. Intensification of investment targeting future growth
4. Further improvement of global management information infrastructure
5. Continuous review of assets and further improvement of capital and asset efficiency
6. Enhancement of human capital utilization efforts

Inabata Integrated Report 2023

26

Chapter 1
Growth Strategy

CFO Interview

shareholder returns, aiming to continue to pay progressive
dividends while further enhancing returns. In addition, we
will focus on maintaining a balance between long-term andshort-term interest-bearing debt through measures suchas issuing corporate bonds, while also diversifying ourfunding methods.
We are making steady progress toward two quantitative
targets in our long-term vision, IK Vision 2030: “1 trillion
yen in consolidated net sales” and “sales and operating
profit generated outside of Japan of 70% or more.” We arealso continuing efforts to build a “third pillar of business”
to stand alongside our information & electronics andplastics businesses. I believe it is important to continue tocommunicate the importance of appropriately reorganizing
the allocation of management resources while responding
to societal changes in each era.

Strategic shareholdings*(Millions of yen)
60,00050% reduction

40,00080% reduction
20,0000March 31, March 31, March 31, March 31,
2021
2022
2023
2024

March 31,2027

NC2023* Strategic shareholdings: Stocks listed in Japan

Investments and lending
FY2021

FY2022

Cumulative

Growth investment

1.20

2.86

4.07

Fixed investment

2.01

2.78

4.78

Total

3.21

5.64

8.85

(Billions of yen)

Dividends per share
(Yen)
150

110
100

50

0

40

FY2017

48

53

63

115

120

Progressive dividends

FY2018 FY2019 FY2020 FY2021 FY2022 FY2023(planned)

Note: As of August 2023

27 Inabata Integrated Report 2023

Employee well-being as a focus point forenhancing human capital
As a trading company, one of the six material issues we
identified in 2022 was “fostering and strengthening thehuman capital driving the value creation.” However, atpresent we have not sufficiently implemented measuresfor developing and enhancing human resources, and I
believe this remains a challenge for our Company. In
particular, given that our business overseas is rapidly
expanding, we have not sufficiently provided careerdevelopment opportunities for the national staff working at
our Group companies and bases in various countries andregions overseas. Therefore, in FY2023, we will put inplace a support system for career development that aligns
with each individual’s experience, strengths, and goals.
Alongside this, in order to reward employees, who are thesource of our growth, I feel it is also essential to improvetheir treatment, especially by developing improved pay
structures at our overseas bases.
In addition to reviewing salary standards and other suchfactors concerning employee treatment, another of our
focus points for the enhancement of human capital isemployee well-being. Taking this as the foundation, we
consider it an urgent priority to establish systems and an
environment that empowers each employee todemonstrate their potential through their own initiative.
As an indicator for this, we have been conducting an
employee engagement survey since 2021. We haveanalyzed employee’s satisfaction levels with respect toelements such as working environments, pay levels, andhuman resources systems on a division and office basis,
as well as a country and region basis. We observed thatneeds for flexible work styles such as telework varysignificantly according to country and region. Our Global
Human Resources Management Department, which wasestablished in 2022, is responsible for thoroughly
identifying such needs, redesigning flexible systems foreach area, and formulating polices for labor management.
In addition, from the perspective of enhancing employee
benefits and sharing value with shareholders as a listedcompany, in FY2023, we determined to grant restricted
stock (RS) to employees. We also increased financial
incentives for the employee shareholding association at
the same time. While these measures contribute to theformation of long-term assets for employees, they are also
expected to help build affinity toward the Company. In thisway, I feel they play an important part in the enhancementof human capital in the wider sense.
To fully leverage our people, which are the most importantmanagement resource, and increase business continuity
potential, the promotion of diversity is essential, including
women’s empowerment. Particularly in Japan, as the
population continues to decrease, it is critical that we
actively recruit women and establish an employment
environment that enables them to play active roles. I feelthat we must now examine the introduction of a new work
system that gives equal opportunity regardless of genderand nationality and is not bound by conventions.

Main human resources measures implemented
in FY2022• Centralized management and development of global
human resources• Developed systems to improve diversity(empowering women and senior employees)• Continued to conduct the employee
engagement survey• Certified as a 2023 Certified Health & Productivity
Outstanding Organization• Introduced a restricted stock incentive plan for theemployee shareholding association

Pursuing a resource recycling business model
while addressing environmental and social issues
In recent years, there has been growing social demand forcompanies to practice sustainable management. In theindustrial world, there has been a notable increase inefforts aiming to reduce environmental impact

throughout the entire supply chain, and at our Company,
customers are increasingly seeking assistance through oursales representatives. While the concept of sustainability
is now directly linked with trading, we are aware that theGroup could lose customers if we steer our business thewrong way. Our outside directors also have a strong
interest in sustainability, and offer a wide range ofrecommendations and advice. The Sustainability
Committee, which was established in 2021, promotes
cross-divisional discussions on important themes, such as
climate change. Through our business activities, we arealso steadily expanding our range of products andsolutions, including in the field of renewable energy, that
contribute to decarbonization and waste reduction.
While climate change poses significant risks to trading
companies, the opportunities it presents are expected tooutweigh these significantly. For our Company, customers
working to address decarbonization have consulted withus about material procurement methods, while we havebeen able to acquire information from suppliers about thelatest technology. Currently, we are applying the insights
we gain through these sorts of negotiations to identify
potential markets, and are developing new businessmodels for resource recycling by coordinating multiple
business operators. Compared to manufacturers, trading
companies require less funds for capital investment whenstarting a business. Accordingly, we understand that ourbusiness structure can respond to the changing times andnew risks with more flexibility.
On the other hand, we must also pay attention to risks
such as human rights issues, which can be hidden in the
supply chain, the lifeline of a trading company. As a specificInabata Integrated Report 2023

28

Chapter 1
Growth Strategy

CFO Interview

example of our activities, we have begun to constructmechanisms for human rights due diligence based on the
United Nations Guiding Principles on Business and Human
Rights. As our mission as a company is “people come first,
based on the spirit of ‘love (ai )’ and ‘respect (kei ),’ andtogether we strive towards contributing to the developmentof society,” we acknowledge our accountability andresponsibility to investigate human rights risks.

diverse perspectives and external knowledge.
Independent outside directors now comprise the majorityof the Board’s members, and I feel the content of
discussions has naturally turned toward businessstrategies and medium- to long-term issues. In addition,
we have made it possible to delegate some decisionmaking for business execution to the executive side, thus
allowing the Board of Directors to concentrate more on
monitoring. As a result, decision-making has become
considerably swifter than compared to when we were acompany with an audit & supervisory board. As mentioned,
the outside directors offer a wide range of ideas andperspectives, and this has also contributed to enhancing
the effectiveness of the Board of Directors. In FY2023,
we intend to arrange meetings where directors cangather on a separate day to the regular Board meetings
to engage in more free discussion.

Accelerating decision-making and improving
governance through transitioning to a company
with an audit and supervisory committee
Over a year has now passed since June 2022, when we
transitioned from a company with an audit & supervisoryboard to a company with an audit and supervisorycommittee. We have clearly shifted toward having theBoard of Directors operate in a monitoring capacity as asupervisor of business execution while incorporating

In 2023, we will begin to formulate our next medium-termbusiness plan. Our outside directors have expressed thatthey would like to engage in discussions from a mediumto long-term perspective before the plan is formulated. In
light of this, we intend to ensure enough time before theyear’s end to conduct discussions that will facilitate more
effective planning.
In terms of risk management, as work-from-homearrangements triggered by the COVID-19 pandemic
continue to expand, companies are closely monitoringrisks, such as ransomware and targeted attacks, which arerising ever year. As we have increased remote work at our
Company, we are working to build a zero-trust network
alongside our existing perimeter-based security model.
Specifically, we are reviewing our authentication
infrastructure (SAML* authentication) and access control,

while also bolstering endpoint security through means
such as introducing endpoint detection and response(EDR), including at bases overseas, as our existinganti-virus software is no longer sufficient. In terms of ourframework, we have established a security incident
response team (IK-SIRT) within our Company and arestrengthening information sharing both internally andexternally, while an external security operations center(SOC) provides monitoring 24 hours a day, 7 days a week.
* Security assertion markup language

Reflecting the diverse opinions and suggestionsof stakeholders in management
To improve our long-term corporate value, we place
importance on engaging in dialogue with investors in both
Japan and overseas. Nevertheless, given our aggregate
market value, we often do not have the chance to enter theinvestment universe or reach the point of holding meetings
with investors. Recently, however, our aggregate market
value has begun to rise, and we are gradually receiving

Indicators for
performance-linked
remuneration(excluding Audit and Supervisory
Committee members)

7(Audit and Supervisory
Committee members)

5

Percentage of independent
outside directors

In order to be a trading company that is needed by society
in a timeless way, we will directly address the challenges
faced by the world and our clients, linking our efforts to thegrowth of the Group. I will also strive to communicate thethemes and management issues that I have mentioned
here to all stakeholders in an open and respectful manner.

Performance-linked remuneration is calculated by multiplying the fixed remuneration for each position by acoefficient for:• Profit before income taxes and non-controlling interests (excluding gains on sales of certain strategicallyheld shares)• Returns on capital (ROIC and ROE)
• Stock price• Each level of ESG scores from multiple external evaluation organizations (FTSE Russell and MSCI)FY2012
Stock price at the end of the fiscal year ¥699
P/B ratio 0.45 times
ROE 7.6%

Directors

For some time now, we have engaged in consistent IR
activities, such as regularly providing a fact sheet to
institutional investors. We will continue these efforts andactively listen to the diverse opinions and suggestions
raised in meetings. One step we took in 2022 based on
previous suggestions was to change the calculation methodfor director remuneration. While performance-linked
remuneration has been linked only with net profit until now,
we have added return on invested capital (ROIC) as a new
indicator in consideration of capital efficiency andinvestment yield. Placing importance on addressing
sustainability, we have also included environmental, social,and governance (ESG) scores provided by multiple external
evaluation agencies as an indicator.

Relative comparison of Inabata’s stock price with TOPIX (FY2012–FY2022)

Composition of the Board of Directors

Directors

more opportunities for meetings.

(%)
400

Inabata

FY2022
Stock price at the end of the fiscal year ¥2,687
P/B ratio 0.84 times
ROE 11.0%

TOPIX

300

58

%

200

(7 out of 12)

Outsidedirectors

Outsidedirectors

100

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022 (Year)

Notes: 1. Represents the relative stock price’s initial value for the month, assuming 100 as the closing value on April 1, 2013.
2. P/B ratio is calculated by dividing the stock price at the end of the FY (TSE closing price) by net assets per share.

29 Inabata Integrated Report 2023

Inabata Integrated Report 2023

30

Chapter 1 Growth Strategy

FeatureToward theCreation of
New Value

1

FeatureIncreasing earnings
through M&A and strengthening

upstream to downstream

operations in the food business

Expanding earnings in the food business through synergies suchas product and customer expansion

Vertically integrated business model

Integrated
managementby our Group

Cultivationof agricultural/marine products

Manufacturing
and processing

Trading

Retail sales

Strengthening
procurement andproposal capabilities
by sharing
information on
products andcustomers/suppliers

Developing
products for
e-commerce
Developing our own
products andbrandsAcquisition of Daigo Tsusho, an e-commerce business operator
for processed eel products and carefully selected foods
Inabata has acquired the shares of Daigo Tsusho Co., Ltd.
(headquarters: Shizuoka), whose operations include
e-commerce business for processed eel products and otherfoods, as well as the wholesale of packaging materials andmachinery, and the manufacture and sale of dried
vegetables. We have engaged in business operations
together since Daigo Tsusho became part of our Group inJune 2023.
In our medium-term business plan NC2023, one of ourpriority initiatives is the intensification of investment
targeting future growth, and we are investing in growthmarkets such as environment, energy, and food to secure
medium-term earnings. In 2021, we established theBusiness Planning Office as the unit responsible for carryingout the actual work of M&A. While coordinating with M&A
brokerage firms, banks, and investment funds, it screensand reviews various investment projects, sharing information
with each sales division. Among such projects, we exploredthe possibility of working with Daigo Tsusho.
Daigo Tsusho primarily operates businesses involving theplanning and sale of food packaging materials and foodmachinery and equipment, and the manufacturing and saleof agricultural and marine products such as processed eel
and dried vegetables. They sell processed eel and otherproducts not only on their own e-commerce site but also
through other e-commerce malls, and their products arehighly regarded, frequently winning 1st place in theircategory in the malls.

Yuichirou Funayama

Daisuke Hatsuta

Senior Manager,
Affiliate Management Department
Life Industry Division

Senior Manager,
Food Department
Life Industry Division

Value creation
throughout theentire value chain

Branding andcreating added
value as producer

Optimizing
operations throughcollaboration acrossInabata bases

Our strategy for the food business is based on theestablishment of a vertically integrated business model.
This enables us to expand synergies and enhance ourfunctions and added value through an integrated
management approach covering cultivation of agriculturaland marine products, as well as manufacturing,processing, trading, and retail sales. We have followed
this strategy in making Daigo Tsusho our subsidiary,
aiming to strengthen our functions in procurement,
manufacturing/processing, and sales.
There is also considerable potential to engage incross-selling to provide our respective products tocustomers in the downstream area of the value chain, so
we will utilize Daigo Tsusho’s e-commerce channels to
tap into new sales avenues. The e-commerce market for

Eel products produced by Daigo Tsusho

31 Inabata Integrated Report 2023

Daigo Tsusho e-commerce site

https://www.unagi-koubou.jp/ (in Japanese only)
food products is growing every year. However, among
sales to general consumers, where e-commerce
accounts for over 8.7%, food only comprises around
3.8%. Considering this, there is still significant room formarket expansion. By gaining e-commerce businessexperience and expertise in this field, along with newsales channels, we will be able to greatly enhance our
retail sales functions and drive the future growth of ourbusiness. Furthermore, not only can we share Daigo
Tsusho’s factories in Japan and overseas as bases forprocessing, frozen/refrigerated storage, and distribution,
but we also expect to create synergies in Daigo Tsusho’s
business fields of food packaging and machinery. We willcontinue to evolve our vertically integrated business inthe food sector to diversify the proposals we offer tocustomers and further improve our profitability.

Inabata Integrated Report 2023

32

Chapter 1 Growth Strategy

FeatureToward theCreation of
New Value

2

FeatureJoint establishment of a
new U.S. company that
manufactures lithium-ion
battery-related materials for EVs

Expanding business for lithium-ion battery components
in the U.S. market through a partnership with the Toyo Ink Group
Inabata has partnered with Toyo Ink SC Holdings Co., Ltd.
to jointly establish a new company named LioChem
e-Materials LLC in the U.S. state of Kentucky for the
production and sale of conductive carbon nanotube (CNT)
dispersions for lithium-ion batteries. We are now
accelerating efforts in preparation for the commencementof operations and mass production in 2025.
In the United States, a presidential executive order was
issued in August 2021, calling for at least 50% of all new
passenger cars and light trucks sales to be comprised ofzero-emission vehicles by 2030. As the shift tozero-emissions mobility accelerates, a series of large-scale
investment plans for EV and automotive battery plants has
been announced by major industry players, and due tothese circumstances, the production capacity of
automotive batteries in the United States, is forecasted to
grow to more than eight times the 2022 level by 2030.

New company: LioChem e-Materials LLC

Harnessing our competitive advantage in technology and a market tailwind
to strengthen our business models

Prior to this, we began collaborating with the Toyo Ink
Group to acquire new customers for lithium-ion
battery-related materials in 2018. These efforts led amajor overseas battery manufacturer to adopt the Toyo
Ink Group’s CNT dispersions in 2019. The manufacturer
then developed a plan to establish a new plant in the
United States, through a partnership with an automaker.
As a new supply base was needed for this development,
we resolved to establish a new company with the Toyo
Ink Group that will produce and sell CNT dispersions
exclusively to the battery manufacturer.
The investment in this company aligns with a key
measure in the medium-term business plan NC2023,
the “intensification of investment targeting future
growth,” which focuses in part on the environmental andenergy field.

With the capacity of lithium-ion batteries continuing toincrease, challenges are emerging in terms of maintaining
and improving conductive performance. As CNT has highelectrical conductivity, it is drawing attention as a material
that can resolve these issues. However, because it iscomposed of intertwined long and thin fibers, if it is notprocessed, it cannot be mixed with the electrode material
in a uniform concentration and cannot be used forcoating. In response, the Toyo Ink Group has applied theknowledge it has cultivated over many years to
successfully develop a technology that enables uniform
CNT dispersions at a high concertation.
Sales forecast for lithium-ion
battery-related business (consolidated basis)* Presented as a ratio where the results for FY2021 represent 100

462%

Previously, our lithium-ion battery-related material
business had focused mainly on carbon black and binders.
Going forward, as demand for battery materials is
expected to grow significantly, especially in theautomobile industry, we expect that our consolidated net
sales in this business area will increase to several times
the scale of FY2021 levels by FY2024.
With the establishment of the new company, we aim tofirmly meet the needs of existing customers and also
expand our business through sales activities that target
new customers. As the automobile industry represents aonce-in-a-century transformation due to electrification,
our efforts over the following 10 years will be of paramountimportance. We will continue to proactively participate
in investment projects like this, seeking to strengthen
our business models and organization.

330%
Growth prediction for the global storage battery market
For energy storage systems(GWh)
12,000For EVs

Approx. ¥5 trillion

183%
Approx. ¥100 trillion

Approx. ¥40 trillion

3,400

10,000Approx. ¥47 trillion
8,000

CNT Dispersions

6,000

4,000

2,000

100%

10x
Approx. ¥7 trillion

Approx. ¥1 trillion

Approx. ¥4 trillion

10x
16x

3,294

2.5x

FY2023
Forecast

FY2024
Forecast

7,546
Approx. ¥53 trillion

Approx. ¥33 trillion

0

2019

FY2022
Actual

370

30
200

FY2021
Actual2030

2050

Kazunari Konno
Senior Manager
Information & Electronics Division III
Sales Department III

Source: “Storage Battery Industry Strategy” published by the Storage Battery Industry Strategic Council, METI, August 31, 2022.

33 Inabata Integrated Report 2023

Inabata Integrated Report 2023

34

Chapter 1 Growth Strategy

FeatureToward theCreation of
New Value

3

FeatureAiming for sustainableimprovement of corporate value
through the enhancement of

human capital

Developing a systematic human capital strategy basedon our fundamental spirit of treating people with love and respect
People are the most important asset of the Inabata Group,
and we believe that enabling employees with diverse
backgrounds and strengths to fully demonstrate theirabilities will increase the Group’s competitiveness andlead to sustainable growth. We therefore consider thedevelopment of human resources and the creation of anenvironment that maximizes their potential as one of ourmost important management issues.
The foundation of the Group’s human capital strategy is our
spirit of “love (ai )” and “respect (kei ).” We are engaging ina variety of efforts that align with this fundamental spirt oftreating people with love and respect, working to expand
the human capital driving the value creation.

We plan to set indicators and targets based on our humancapital strategy by the end of FY2023.

Hiroyuki
Furubayashi

Level-based training (critical thinking)

Human capital strategy system diagram

Our unchanging values:
Mission, Vision, and IK Values

Inabata Group vision

Ideal humanresources

People who work with the spirit of “love(ai )” and “respect (kei )” and are trusted
as a best partner both within and outside
the Company

People who, through the refinement of
their individual abilities, respond tochanges in society and business models,consistently offering value thatcompetitors cannot imitate

Outcomes

Employee well-being

Value creation

General Manager,
Human Resources
OfficeThemes

1 Employee engagement survey

3 External training for managers

We conduct an employee engagement survey once a year toascertain the state of our employees in terms of diversity andtheir values.
Please refer to page 65 for more details.

To foster business leaders who can drive the achievement of theGroup’s long-term vision and sustainable growth amid a radicallychanging environment, we dispatch members of management toparticipate in external training. Carried out over 12 sessions
across three months, this training adopts a model whereindividuals from different companies gather, enabling them tobuild broad networks and develop their abilities while engaging
in friendly rivalry.

2 Restricted stock incentive plan for the employee

shareholding association

Under this plan, each of our employees and temporary
employees (excluding executive officers, employees seconded
from other companies, and temporary staff) are granted 100 of
our restricted common shares (acquisition through the employee
shareholding association).
The plan aims to aid employees in accumulating assets andprovide them with an incentive for seeking the sustainableenhancement of our corporate value. It also contributes to thefurther sharing of value between employees and shareholders.
Transfer restriction period
From July 31, 2023 to May 1, 2027

35 Inabata Integrated Report 2023

Each individual works enthusiastically and with a sense of satisfaction
Our vision

Main human resources initiatives

4 Overseas training system
In FY2023, we introduced a system for short-term overseas
training. Focusing mainly on third-year new graduate employees
in Staff positions, the system aims to support the careerdevelopment of young employees and extensively develop
human resources that can thrive globally. By dispatching
employees to overseas Group companies for a period of threemonths so that they can experience business and life overseas,
we seek to develop their abilities as global-minded people.
Please refer to page 66 for more information on our training systems.

Long-term vision: IK Vision 2030

Individuals

Increase employee engagement to create an even stronger team of trading
company professionals

Individuals who can work
autonomously and independently
in a global environment

Appropriate humanresources allocation(right person in theright position)
Human resources allocationthat ensures individuals canaccumulate a wealth ofexperience and develop an
insatiable sense of curiosity
through their work

Base

Career development
Career development
support that fosters
motivation and careerawareness

3 4Organization

1

An organization that nurturesindividuals and enables them todemonstrate their abilities tothe fullest

Richly diverse
organization

Employment
environment

Human resources
evaluation andremuneration
systems

Creation of a richly
diverse organization
comprised of people
with knowledge of
local markets, newperspectives, andmultiple experiences

Creation of an
employment
environment where
people can work
comfortably andmaintain a goodwork-life balance

Development ofvarious systems
that ensure fairness
and transparency
and contribute to
the growth of eachindividual

Spirit of love (ai ) and respect (kei )Health management

Ensure phycological safety

Instill the basic attitude of
Inabata members

Protect the mental andphysical health of each employee

Create a culture where employees candiscuss any issues and take on challenges

Governance / DX / Human capital investment

2

Note: The numbers 1 to 4 in the diagram correspond with the “main human resources initiatives” listed on page 35.

Inabata Integrated Report 2023

36

Chapter 2

History of Our Business Portfolio

Business Strategies
by Segment
and Region

Since starting from importing dyes in 1890, we have expanded our businessaround chemicals that form the foundation of all kinds of industries,
responding to the changing needs of our clients and society.

1890 –

1945–

Early period

The era of founding and growth

1984–

Growth period

The era ofrestructuring
and revival

We started with the import and sales of dyes and dyeing &weaving machines and expanded our business aroundthe chemicals field.

We advanced into new domains
while strengthening thepharmaceuticals business,amid postwar chaos in
the country.

Mask blanks

Founder and dyes

April 1959

February 1920

The era of progressand creation

We created new value by
separating the pharmaceuticals
business and expanding
overseas bases.

We are striving to become ourclients’ best partner as a shosha,
or Japanese trading company,
providing manufacturing, logistics,
and finance solutions backed byour highly specialized knowledge.

Polarizing film materials
for LCDs

Pellicles

Machinery division

Spinning machine (Société Alsacienne deConstructions Mécaniques)

April 1977

Machinery and
Metals division

February 1941
Closed down

May 1983

Machinery andHousing Materials
division

Encapsulant for LEDs

Information &Electronics
Information &Electronics Division I

April 1999

Machinery andElectronics Materials
division

IT and Electronics
division

Restarted business with Société Alsacienne deConstructions Mécaniques in 1959 andestablished the Machinery and Metals division

Materials for solar power
generation

June 1918

Silicone

Chemicals for papermaking

Dyes for printers

Note: There is no capital relationship with our Company now.

Dyeing division

Chemicals

June 1918

Perfumes
Imported
pharmaceuticals

Information &Electronics Division III

The Perfume division separated in 1926 to become an independent
entity and the limited partnership company Inabata Koryoten is established.
The name was changed in 1966 to Inabata Koryo.

Dyes

Dye samples of Nippon Senryo Seizo K.K.

Information &Electronics Division II

Renewable energy materials

Limited partnership company Inabata Koryo

Additives for plastics and rubber

The fourthfounding period

The era of challenges
and hardship

Our founder went to study in France on government sponsorship at the age of 15. There, he studied cutting-edge
synthetic dyes and dyeing techniques of the time for eight years and brought back the knowledge to Japan.
1897

2010 –

Reform period

January 1958

Trading division
October 1946

Pharmaceuticals
division

Pharmaceuticals
division

Pharmaceuticals

Chemicals Division

Chemicals division

January to
November 1933

Materials for insecticides

Succeeded the pharmaceutical substances businessPharmaceuticals business separated October 1984
Sumitomo Pharmaceuticals Co., Ltd. (now Sumitomo
Pharma Co., Ltd.) was established as a joint venturewith Sumitomo Chemical Industry Co., Ltd. (nowSumitomo Chemical Co., Ltd.)Cornstarch

October 1975
Food division

Poleon Tablets
1941
Advertisement inShukan Asahi

Particle boards

Shrimp for processing

Adhesives for plastics

Started sellingcornstarch, which is apaste for cardboards, tothe food industry as an
auxiliary raw material forbeer brewing

Blueberries

April 2012

Life science-related
products and servicesof the Chemicals
division integrated
with the Food division

April 2019

Chemicals Division and Housing& Eco Materials Division
restructured

Life Industry
Life Industry Division
Materials for regenerative
medicine

October 1963
Housing Materials division

Vinyl chloride

October 1961

Plastics

1963 Entered the housing materials industry withthe sale of adhesives for plywood

Plastics Division I

Plastics division

Plastics Division II

Plastics division spun off from Chemicals division
Also expanded market to durable consumer goods as the types of plastics
increased and processing methods advanced

Flow of major structural
reorganization and the timing of
the start of dealing in major items

37 Inabata Integrated Report 2023

Resins(polypropylene, etc.)

Compounding of resins

Sporting goods

Film products

Inabata Integrated Report 2023

38

Chapter 2
Business Strategies by Segment and Region

At a Glance

Growing alongside clients and society while adapting tochanges in more than 130 years of history
Operating profit

20.3 billion¥

Net sales

735.6 billion¥

Net sales

Operating profit(Millions of yen)

(Millions of yen)

800,000

20,000600,000

15,000400,000

10,000200,000

5,000

0

3/01 3/02 3/03 3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17 3/18 3/19 3/20 3/21 3/22 3/23

Net sales and operating profit trends*1 In FY2019, the Housing & Eco Materials Segment was integrated into the Chemicals Segment. The performance figures prior to FY2019 are also based on the revised categories.
*2 In FY2012, the Life Industry Segment was established by integrating the life science-related elements of the Chemicals Segment and the Food Segment. The performance figures
for the Food Segment prior to FY2012 are presented as the Life Industry Segment.

Information & Electronics

Chemicals*1

Life Industry*2

Plastics

Overseas sales

Net sales by region / Number of employees (FY2022 / As of March 31, 2023)

Net sales

Net sales

19.9¥

billion181.0

Number of
employees¥

73

Number of
employees

3/01 3/02 3/03 3/04 3/05 3/06 3/07 3/08 3/09 3/10 3/11 3/12 3/13 3/14 3/15 3/16 3/17

470

-5,000Information & Electronics

Net salesJapanbillion3/19 3/20 3/21 3/22 3/23
3/18

Chemicals*1

Life Industry*2

¥

41.7

Plastics

Net sales by business segment (FY2022)

The Americas

Northeast Asia
Europe0

Number of
employees

Information &Electronics

285

billion

238.0

Net sales

735.6

¥

¥

billionNet sales

296.9

¥

Southeast Asia and India
Net sales

195.9

¥

39 Inabata Integrated Report 2023

billionNumber of
employees

2,492

ChemicalsbillionNumber of
employees

billion996

Overseas network

19

countries

Approx.

60

89.8

¥
bases

Number of employees
Consolidated

Non-consolidated

4,316 709

billionLife Industry

Plastics

363.9¥

billion43.6¥

billionInabata Integrated Report 2023

40

Chapter 2
Business Strategies by Segment and Region

Summary of Each Segment

Establishing a unique presence in anticipated growth areas
while nurturing the strengths of each business segment
Business segments

Composition of products and materials

Net sales / Operating profit

Strengths(Based on the amount of net sales)

Information & Electronics
Segment assets

103.2
1

¥

billionSemiconductors
and 5G

Chemicals

Dyes and others

46.9
2billion

Displays

300

247.7

238.0

Automobile
componentmaterials

0

FY2021

FY2022

Net sales
Functional chemicals¥
90

Coating materials

billion
89.8

78.6

billion1

FY2021

43.6

60

FY2022billionMaterials forautomobiles¥

FY2021

363.9(Billions of yen)400

billionFilms andsheets

OA, electrical andelectronic products

billion
2.77

2.20

0

FY2021

1.93

¥

43.6

3

billion

2.61
1.93

2

FY2022316.2

0FY2021

FY2022

Operating profit
billion
363.9

10.20

¥

(Billions of yen)

12

8.67

billionFY20220

FY2021

Global material procurement support for everything fromconsumer goods to pharmaceuticals
A life science business that contributes tohealthy lifestyles

Resin professionals with the ability to combine
trading and manufacturing/processing
functions across domains ranging from commodity
resins to engineering plastics

FY2022

Ability to tap into new potential fornext-generation plastics throughrecycling and biomass

4

FY2021

Vertically integrated food businesswith the motto “from visible producers tovisible consumers”

10.20

8

Molding materials

A client base and supply chain network
built over a long history

FY20222000Ability to challenge cutting-edge fields
such as renewable energy and digitaltransformation (DX)

Meticulous attention to detail as
chemical experts with highly specialized knowledge

10Compounds
and others

2.77(Billions of yen)

20

Pharmaceuticals

Experts in the display, digital printing,and semiconductor industries

FY2022

Operating profit

38.2

40

FY2021¥30

Net sales

Number of manufacturing
and processing subsidiaries

5.26(Billions of yen)

2¥
Food products

03(Billions of yen)

Plastics

165.7
15

6.42

8

60

0

Number of manufacturing
and processing subsidiaries¥

billionOperating profit

89.8(Billions of yen)Consumer goods

24.9
2

5.26

200

Net sales¥¥(Billions of yen)(Billions of yen)

Construction
materials

Life Industry

Segment assets

billion100

Number of manufacturing
and processing subsidiaries

Segment assets

Operating profit

4

Digital printing

¥

238.0

¥

Environment
and energy

Number of manufacturing
and processing subsidiaries

Segment assets

Net sales

OthersNote: As of March 31, 2023

41 Inabata Integrated Report 2023

Inabata Integrated Report 2023

42

Chapter 2
Business Strategies by Segment and Region

Business Strategies by Segment

Information & Electronics

Segment performance overview
Net sales

Operating profit

With FPD components, materials for digital printing, materials forsemiconductors, and other products as our income-generating pillars,
we are also venturing into new fields such as automobiles and life
science. In addition, we are focusing on IoT and renewableenergy-related products, which have recently been expected to grow.

(Billions of yen)(Billions of yen)
10

400
300

• Net sales and operating profit declined mainly due to weak sales for
products related to FPDs.
• The FDP-related business saw a significant reduction in sales for related
components, impacted by continued production adjustments due toexcess inventories. Sales also declined in the organic LED-related
business due to continued production adjustments.
• In the LED-related business, sales of components decreased due to a
decline in demand.
• In the inkjet printer business, sales in the consumer field remained strong.
The industrial field also recovered, leading to an increase in sales for
related materials.
• In the photocopier-related business, sales of related materials increased.
• While sales for materials deceased in the solar cell-related business, sales
for materials in the rechargeable battery-related business were strong.
• Photomask-related materials performed well.
• Sales declined in the semiconductor and electronic components business.

247.7

238.0

6.42

246.0

200

5.26

5.20

FY2022

FY2023(forecast)

5

100
0

FY2021

FY2022

FY2023(forecast)

0

FY2021

Note: FY2023 forecast is as of August 2023.

Strategies for the NC2023 medium-term business plan
Taking on the challenge of developing new
products and markets while swiftly andflexibly responding to the changing times
Overview of FY2022
Digital printers, automotive rechargeable batteries, andLED-related component materials performed well.
However, FPD-related component materials, which area profit driver in this business, saw a significant decline
in sales. This was attributable to continued production
adjustments among manufacturers, mainly due to a drop
in demand in China, where FPD production is centered,and increases in inventories of various components.
Sales also declined for electronics-related products,
making it a very challenging year on the whole.

Business environment awarenessand opportunities/risks
In recent years, friction between the United States andChina has had a significant economic impact. This has
made it difficult to forecast demand in the information &electronics business, where the market centers on
China. However, new business opportunities can becreated by responding to this change.
The Group plans to continue to develop promisingmarkets such as those relating to display parts forautomobiles and power semiconductors for power
control, which are highly profitable, and theenvironment-related market.
Business strategy
For our key product of FPDs, given that we do not expect
a recovery in demand and profitability to previous levels

such as proposing biomass power generation schemes
based on local promotion for local consumption andregional collaboration.

based on current market conditions, we will aim forhorizontal business expansion focused on newcomponent materials, mainly component materials forautomobiles and organic LEDs. In addition, in our
EV-related business, where solid growth is anticipated,
we will build our next pillar of earnings through focusing
on such products as power semiconductors, which areseeing increasing demand, and industrial inkjet printers,
for which the market is expanding. In the environmental
field, we will continue to expand our existing renewableenergy business while also taking on new challenges

Toward sustainable business growth
In the rapidly changing information and electronics
market, we believe that the pursuit of new business
opportunities is not only crucial but also intrinsic to our
purpose. By continuing to pass on and foster thismindset, we will develop new work styles andstrengthen our competitiveness.

Business environment and strategies
Displays

Digital printing

Semiconductors and 5G

Business environment ( Opportunities

Toyohiro Akao

Masahiro Sugiyama

Director, Senior Managing
Executive Officer

Director, Managing
Executive Officer

Risks)

Expansion of IoT- andMobility as a Service(MaaS)-related markets
Intensifying global
competition

Overconcentration in the
Chinese market
Expansion of display parts forautomobiles
Addressing intensifying
competition and changes in trends

Expansion of theindustrial inkjet market
Advancement of
paperless environments

Collaboration with major
Japanese materials
manufacturers

Top-level information networkin each industry as a trading
company

Environment and energy

Increase in global interest in
renewable energy
Addressing variations in related
laws and regulations in different
countries and regions

Strengths
Specialized skills in mask blanks,
which is one of our key products

A wide array of renewableenergy materials

A global network to maintain closeness with customers and thecapability of providing processing and distribution services

Activities and strategies
Expand business with a dual focus
on China and Southeast Asia
Expand product lineup centeredon components related to displays

43 Inabata Integrated Report 2023

Set up at the earliest possible
opportunity a supply system fornew materials with rising demand
Start new transactions withmaterial makers and expand
product lineup

Expand product lineup forautomobiles and strengthen
supply system
Expand our handling of
5G-related materials

Start multidimensional new
businesses catering todifferent regions and needs
Develop employees withspecialized knowledge

Inabata Integrated Report 2023

44

Chapter 2
Business Strategies by Segment and Region

Business Strategies by Segment

Chemicals

Segment performance overview
Net sales

Operating profit

With firm roots in our founding business of dyes, we deal in chemicals thatserve as a platform for all kinds of industries. We have a track record ofseparating businesses that show growth and pursuing new potential, andwe are currently exploring new avenues for business overseas. In 2019,
we integrated the Chemicals Division and the Housing & Eco Materials
Division, which was dealing with materials that are close to final products,
to provide optimum products and services to the entire value chain.

(Billions of yen)(Billions of yen)

140

78.6

119.0

4

89.8

2.20

3.05

2

70

0

2.77

• Net sales and operating profit increased due to strong overall demand andrises in selling prices.
• In raw materials for resins and additives, sales for urethane raw materials
were strong.
• In automobile component materials, sales for heat-dissipating materials for
EVs were particularly strong.
• Sales were favorable in the paint, ink, and adhesive fields.
• In chemicals for paper manufacturing, sales were strong for raw materials
for corrugated containerboard and sanitary paper.
• In housing materials, in addition to a recovery in demand as the lumber
sticker shock eased, orders increased for new materials, and sales
centered on house makers were strong.

FY2021

FY2022

FY2023(forecast)

0

FY2021

FY2022

FY2023(forecast)

Note: FY2023 forecast is as of August 2023.

Strategies for the NC2023 medium-term business plan
Making proposals that leverage our global
procurement capabilities and network ofbases, and promoting sales expansions for
eco-friendly products
Overview of FY2022
In FY2022, sales reached a record high as businessperformed well in the second year of the medium-termbusiness plan.
This was attributable to increased sales of materials for
EVs in the automobile field and materials in the functional
chemicals field, strong performance by coating materials,
increased orders for new materials in the housing field,
and strong overall performance across other fields.

Masahiro Sugiyama
Director, Managing
Executive Officer

Business environment awarenessand opportunities/risks
As this segment encompasses a wide range ofbusinesses that deal in many different products, it isunlikely that a single factor could cause the businessenvironment to change dramatically. Nevertheless,domestic demand is shrinking amid a long-term andglobal trend in which chemical manufacturers are
restructuring and increasing business scales. These
circumstances, however, represent an opportunity forus as a company that excels in overseas business.
Business strategy
With regulations in the chemical industry tightening
throughout the world, it is becoming more necessary tofind new suppliers for materials to strengthen business
continuity planning (BCP). We will work to meet suchneeds by harnessing our global connections andprocurement and supply networks that we havedeveloped over many years.
The overseas market is growing rapidly for EV-related
products, while business opportunities are also emerging
in new fields such as display materials for automobiles.
We will promote new imports and exports of various
materials and accelerate the globalization of our businessfrom the standpoint of product procurement and supply.

manufacturers and customers, and it is also working
to enhance the training of expat employees from Japanand local employees at overseas bases to develop theminto specialists.
In March 2023, we acquired Maruishi Chemical Trading
Co., Ltd., making it a subsidiary. As new opportunities
and risks continue to emerge, we will strive to build amanagement structure and foster human resources thatwill enable us to stay a step ahead of change.

Toward sustainable business growth
To respond to the swiftly expanding EV market, in theChemicals Division, we have established a department
specializing in the mobility field to examine trends innecessary materials and technology. In addition, as it has
become increasingly essential to have specialists withexpert knowledge, we established the Marketing &Development Section in 2022. This department engages
in dialogue on cutting-edge technologies with

Business environment and strategies
Functional chemicals

Automobile component
materials

Coating materials

Business environment ( Opportunities
Increase in need for materials andnew formulations in light ofenvironmental regulations
Unstable supply of materials andprice fluctuations

Increase in demand centered on
developing countries
Response to global industrial
restructuring

Sales demand from foreign makers
Enhancing awareness of the circular economy

Housing materials

Risks)

Expansion in demand for new
materials along with the structural
revolution of automobiles
Supply instability and price hikes
due to logistical dysfunction
Industry-specific quality control
standards and responsibility of supply

Need for construction anddistribution innovations in lightof labor shortage
Sluggishness of the domestic
marketShift from domestic markets to overseas markets

Strengths
Knowledge of chemicals and a customer base nurtured over 130 years
Competence in organizing a global supply chain suitable for our customers

A wide range of products and materials spreading from upstream to downstream
Local handling through overseas manufacturing and processing bases of the Group

Activities and strategies
Develop and offer new materials
Collaborate with Japaneseand new formulation solutions
companies expanding overseas
Accelerate overseas expansion
Expand business by leveraging
using the Group’s strengths
consigned production andprocessing companies
Respond to needs for thestrengthening of BCP
Propose a supply chain leveraging our strengths

45 Inabata Integrated Report 2023

Expand EV-related products andmulti-display-related products
and materials
Build a circular business model

Collaborate with major housemakers and housing materials
manufacturers for domestic
and international expansion

Strengthen the business foundation through means such as M&A

Inabata Integrated Report 2023

46

Chapter 2
Business Strategies by Segment and Region

Business Strategies by Segment

Life Industry

Segment performance overview
Net sales

Operating profit

We contribute to creating healthy and comfortable lives for consumers as
a provider of pharmaceuticals, consumer goods, and food products. In our
food business, we are expanding our vertically integrated model thatcovers from upstream to downstream, while in our pharmaceuticalbusiness, we are focusing on the field of regenerative medicine with aneye to the future.

(Billions of yen)(Billions of yen)

60
40

38.2

43.6

52.0

3

1.93

2
1

20
0

2.65

2.61

FY2021

FY2022

FY2023(forecast)

0

FY2021

FY2022• The life science-related business and food (agricultural products)
performed well and sales increased.
• In the life science-related business, sales were strong for raw materials
for pharmaceuticals, cosmetics, and consumer goods.
• In the food-related business, agricultural products saw strong sales forfrozen vegetables and fruits for volume retailers, however, sales ofprocessed marine products for conveyor-belt sushi stores and volumeretailers declined. Sales for processed marine products and Japanese foodproducts on the U.S. market declined, impacted by slow demand for eatingout due to inflation.

FY2023(forecast)

Note: FY2023 forecast is as of August 2023.

Strategies for the NC2023 medium-term business plan
Pursuing a wide range of profit-making
possibilities, with food products andadvanced medicine as growth drivers
Overview of FY2022
For FY2022, we set business targets that reflected abacklash from strong performance in FY2021 andintensified competition associated with the normalizationof logistics. However, sales for marine products weresignificantly affected by unforeseen factors, such as slow
demand for eating out in the United States due to
inflation and a slump for restaurant chains in Japan.
Although sales were strong for raw materials forpharmaceuticals and household goods, as well as frozen
vegetables and fruits for volume retailers, it was notenough to compensate for the decline in marine productearnings, leading to a decrease in sales overall.

Toyohiro Akao
Director, Senior Managing
Executive Officer

47 Inabata Integrated Report 2023

Business environment awarenessand opportunities/risks
While supply instability for raw materials forpharmaceuticals and household goods as well as
increasing prices are risk factors for the industry as awhole, global manufacturers are diversifying procurement
routes from the perspective of BCP. Recognizing thisdemand as an opportunity, we plan to accumulate profit in
the short term by securing a position as a global supplier.
In addition, as a long-term opportunity, we are focusing on
the advanced medicine and regenerative medicine fields,
where Japan has taken the initiative. While leveraging ourknowledge, experience, and expertise in the pharmaceuticalindustry, we are expanding efforts with leading companies
in the regenerative medicine field.
Business strategy
In our food business, which handles agricultural andmarine products and is currently a key profit driver, we
will accelerate investment and new initiatives to achieve
further profit growth. We aim to have this business hold aunique position within our company, adopting a verticallyintegrated model that enables us to add depth to our
profits by being widely involved in sales channels fromupstream to downstream. In the upstream area, in
addition to strengthening our production functions suchas our blueberry farm in Hokkaido, we will enhance our
production and processing functions through investment.
In the downstream area, we will aim to make ourbusiness more profitable by utilizing our diverse sales
channels for corporate customers while also owning
e-commerce channels for consumers.
To build a stronger profit base for the future, one area weare making a range of efforts in is the field of regenerative
medicine. We have invested in a startup that handles
media for cell culture, and we are also providing othergrowth. In particular, it is critical that we secure and foster
human resources with specialized knowledge in fields
such as advanced and regenerative medicine. On theother hand, from a management perspective, it is also
necessary to develop human resources with knowledge
across segments. To this end, we are working to secureand appropriately position specialists, including throughexternal recruitment, and are developing their future
career paths. Through such efforts, we aim to steadilybuild our next pillar of business.

peripheral materials. In addition, we have commenced
efforts such as participating in a project for the express
transport of domestically produced induced pluripotent
stem (iPS) cell-derived products to overseas. We willcontinue to engage in initiatives with an eye to the next
five or 10 years.
Toward sustainable business growth
Human resources, which are key to our non-financial
capital as a shosha, or Japanese trading company, arevital for the achievement of medium- to long-term

Business environment and strategies
Food products

Consumer goods

Pharmaceuticals

Business environment ( Opportunities
Expansion of advanced medicine andregenerative medicine markets
Unstable supply of materials and soaring prices
Diversification of suppliers for raw materials forpharmaceutical products

Risks)

Expansion in demand for Japanese products indrugstores in the Asia region
Speed of change in market trends

Increase in interest in safety of food products
Boom of Japanese food overseas
Easing of agriculture and fishery regulations in Japan
Sluggish domestic demand
Quality risks specific to food products

Strengths
Collaboration with superior suppliers and information network on latest research and development
Processing and distribution services using Group bases in each field

Years of know-how on a broad business range
from production to distribution

Teams and individuals with expertise

Activities and strategies
Expand peripheral solutions in advanced andregenerative medicine
Catch up with and provide information on PMD
Act and cellular medicine
Propose alternative sources and introduce
multiple suppliers

Support expansion and development ofJapanese products for Asian markets
Maintain hygiene management-related
products business, which is a stable profit baseRespond to new customers’ needs for thestrengthening of BCP

Accelerate expansion to overseas markets
Strengthen upstream businesses such as
blueberry production
Develop products in conjunction with upstream
businesses and expand collaboration withprocessing manufacturers
Strengthen downstream business throughe-commerce

Inabata Integrated Report 2023

48

Chapter 2
Business Strategies by Segment and Region

Business Strategies by Segment

Plastics

Segment performance overview
Net sales

Operating profit

We deal in a wide range of products from commodity resins tohigh-performance resins, operating seven plastic compounding factories
overseas and five film manufacturing factories in Japan and abroad. We
also strive to develop environmentally friendly products such as biomass,
recycled, and biodegradable plastics.

(Billions of yen)(Billions of yen)

600

316.2

363.9

12

382.8

10.00

FY2022

FY2023(forecast)

8.67
6

300

0

10.20

• Sales increased due to a recovery in demand, a weak yen, and rises inresin prices.
• Food packaging sales were strong in the commodity resin business.
• Performance was weak in the compounding business, partly due to a
reduction in automobile manufacturing and increases in transport andutility costs.
• Sales of polyolefin resins increased, primarily due to price rises.
• In the plastic films business, sales increased for flexible packaging, mainly
due to price rises.
• Sales for plastic sheet products were strong as products for convenience
stores recovered.
• In sporting goods, grip tape sales were strong.
• The recycled material business grew steadily.

FY2021

FY2022

FY2023(forecast)

0

FY2021

Note: FY2023 forecast is as of August 2023.

Strategies for the NC2023 medium-term business plan
Enhancing human resources development
and manufacturing and processing functions
with the aim of becoming a truly unique
shosha, or Japanese trading company
Overview of FY2022
In FY2022, despite various changes in the external
environment, such as material shortages and otherissues, we persistently expanded our business, achieving
growth in both sales and profit. Sales for plastic film
products and grip tape were particularly strong. On theother hand, while plastic compounds saw an increase insales, profit declined partly due to sharp rises in naphtha
and energy prices. The weakening yen had a positiveeffect on sales and profit in this segment, where theproportion of overseas sales is high.

Koji Nakano
Managing Executive Officer

49 Inabata Integrated Report 2023

Business environment awarenessand opportunities/risks
Factors such as the growing awareness of the issue ofplastic waste, along with changing laws and regulations,present both risks and opportunities for this business. In
the last few years, demand for recycled materials in fields
such as OA-related products has increased dramatically.
While growth in the sales of recycled materials is linked
to a reduction in sales for virgin materials, the emergenceof a market environment where proposals based onrecycling needs are easily accepted presents anopportunity for developing new business. In terms of
medium- to long-term risks, there is a lack of certainty inthe business environment due to the restructuring of the
global resin industry. Traditional transaction prices andbusiness practices may be eroded by changes in thepositions of Japanese manufacturers, which are our main
business partners, and the increasing expansion of large
global corporations due to industry restructuring.
Business strategy
In our core plastic compound business, our materials andproducts for automobiles have not been significantly
affected by the shift toward EVs, and we will continue toaim to expand our market share. For recycled plastics,
which are seeing increased demand, there are issues interms of used plastic collection and supply stability forrecycled resin materials. However, we will aim to resolvethese issues through adopting a customer-centeredmethod of collection involving coordination withcustomers. In 2022, we began an initiative in Thailand inwhich used plastic collected by customers is recycled,
commercialized, and sold back to them. We intend of
expand this initiative to other bases in the future. We havealso implemented similar initiatives in other productfields, and our domestic recycling business for film

business model in which they manufacture and propose
their own grades (product varieties). To continue to growamid a globally competitive environment, we believe it isnecessary to switch to a similar approach. To achieve this,
it is essential that we increase our technical talent and ourtechnology development bases. While working to acquireand foster people, technology, and expertise from a
medium-term perspective, we will offer tailor-madesolutions and meticulous service, aiming to establish amanufacturing position unique to Inabata.

products is now on a growth trajectory. We will continue
to expand our material recycling business, leveraging ouradvantage in providing total solutions that cover a fullrange of processes.
Toward sustainable business growth
While compounding companies in Japan, including
ourselves, compound plastics according to the
instructions of material manufacturers, large U.S. andEuropean companies, called compounders, adopt a

Business environment and strategies
Materials forautomobiles

Molding materials

OA, electrical andelectronic products

Business environment ( Opportunities
Need for environmental
considerations with weight
reduction and the shift to EVs
Expansion in demand
for materials due tocompositional changes
in automobile industry
Industry-specific quality
standards and supplier
responsibility

Potential for expansion ofoverseas business
Withdrawal of a major
general trading company
that was a rival
Fluctuations in domestic
demandStable demand among
Japanese OA device
manufacturers
Reduction in supply
volume due to reduction
in component size

Sporting goods

Films and sheets
Risks)
Potential for developing
new markets for sheet
products
Intensifying competition
for film products indomestic market

Restructuring among resin material manufacturers on a global level

Expansion of global
marketShrinking domestic
market due to diminishing
population

Growing needs for recycled plastics

Strengths
A client base built over the company’s long history
Detailed local response capability using network of bases around the world
Ability to provide added value including plastic compounding in own factories and vendor
management inventories (VMIs)

Ability to propose monoHigh share in nichematerials and eco materials
markets
from outside of Japan
Ability to develop and propose new products using own
manufacturing bases in Japan and abroad

Activities and strategies
Strengthen and expand overseas business structure
Strengthen and expand plastic compounding and logistics function
Strengthen customer proposal ability
Respond to a circular society

Expand biodegradable
biomass plastic business
Demonstrate leadershipwith the aim of restructuring
the industry
Expand recycled material business

Offer products foroverseas markets as wellas other sporting fields

Inabata Integrated Report 2023

50

Chapter 2
Business Strategies by Segment and Region

Global Network

Inabata’s network extending acrossapproximately 60 bases in 19 countries worldwide
Trading company

Manufacturing & processing base

EuropeThe Americas
Northeast Asia

Japan

Southeast Asia

EuropeSoutheast Asia / India / Australia

Germany

Dusseldorf

Singapore

FranceWissous(suburb of Paris),
Normandy

Malaysia

Kuala Lumpur,
Penang, Johor

Indonesia

Jakarta, Surabaya
Bekasi (suburb of Jakarta)

Philippines

Binan (suburb of Manila)

VietnamHanoi, Ho Chi Minh City,
Haiphong, Da Nang

United Kingdom Shrewsbury(suburb of
Birmingham)
TurkeyIstanbul

Czech Republic

PragueThailandNortheast Asia
BangkokSamut Prakan(suburb of Bangkok),
Ayutthaya,
Sriracha(suburb of Laem Chabang),
Chonburi

Myanmar

YangonIndia

Gurugram (suburb of Delhi),
Chennai, Pune, Ahmedabad

Australia

Brisbane

China

Hong Kong, Shanghai,
Wuxi, Ningbo, Chengdu,
Nanjing, Hefei, Chongqing,
Beijing, Dalian, Tianjin,
Guangzhou, Dongguan,
Wuhan, Shenzhen

TaiwanHsinchu, Tainan,
Taichung, Taipei

South Korea

Seoul

Japan

The Americas

Tokyo, Osaka, Nagoya,Shiojiri, Shizuoka,
Hamamatsu, Kirishima

United States

New York,
Los Angeles,
Detroit,
Novato (California)

MexicoQueretaro,
Tijuana,
Silao

Brazil

Sao Paulo(As of July 1, 2023)

51 Inabata Integrated Report 2023

Inabata Integrated Report 2023

52

Chapter 2
Business Strategies by Segment and Region

Reports by Region

Southeast Asia and India

Note: Figures for net sales and operating profit are based on FY2022, and the consolidated number of employees is as of March 31, 2023.

195.9 billion yen Operating profit 8.0 billion yen
Consolidated number of employees
2,492
Net sales

We have 11 manufacturing and processing bases in the region and are focusedon expanding business in each segment.

Koji Nakano
Managing
Executive Officer
General Manager,
Southeast Asia

Action

India

Hanoi

Myanmar

Pune

Chennai

Haiphong

Vietnam

YangonAyutthaya Da Nang
Bangkok
Binan
Samut Prakan
Sriracha Chonburi
Ho Chi Minh City Philippines

ThailandPenangKuala Lumpur

Malaysia

Executive Officer
General Manager,
Northeast Asia

Singapore
Indonesia

JakartaBekasiSurabaya

181.0 billion yen Operating profit 3.1 billion yen
Consolidated number of employees
470
Net sales

ActionIn this core region that accounts for 25% of our consolidated net sales, we offer businesses
leveraging our network spread over 20 cities in China, Taiwan, and South Korea. Starting mainlywith FPD components, we are focused on plastics for automotive, OA, and electric and electronic
products. We expect further increase in profits in our China business, where we seek to proactively
invest our management resources in growth sectors, such as semiconductors, energy, EV andmobility, medical products and medicine, agriculture and food products, high-tech materials, andTrading company
Manufacturing & processing baseenvironment-related products.

Strengthening collaboration with business locations anddivisions to expand sales
In the Northeast Asia region, which has undergone significant change
in the business environment due to the COVID-19 pandemic, wewill expand sales in the mobility and semiconductor sectors bystrengthening collaboration among locations and divisions within theregion and offering products with new functions that only we canprovide. We will also increase exports of Chinese-made chemicals,
plastics, and environmental products.

53 Inabata Integrated Report 2023

ActionTianjin

Seoul

ChengduChongqing

Hefei
Wuhan

Taipei
Guangzhou

DongguanHong Kong
ShenzhenTainanTaiwanHsinchuTaichung

285

Main Business• Electronics materials(including those related to semiconductors)• Digital printing material (inkjet, toner)• Functional chemicals • Plastics• Processed products in agriculture
and marine industries• Components related to the environment
and energy industry (including those for
EV batteries and solar power)• Raw materials for pharmaceutical products

Trading company

Manufacturing & processing baseDetroit
NovatoLos Angeles United States
Tijuana

New York

MexicoSilaoQueretaro

BrazilNet sales

Sao Paulo

19.9 billion yen

Operating profit

Consolidated number of employees

0.8 billion yen

73

We operate businesses centered on chemicals, energy, automobiles,
life science and other fields, taking advantage of our unique mobility.
In Europe, we deal in a wide range of products in various segments, such as inkjet ingredients,
energy-related products, automobile components, and functional chemicals. Our Group companies
manufacture and sell medical products, materials for cosmetics, and other products in France. In the
future, we will also seek to focus on businesses in the environmental sector, such as selling thermalinterface materials for the EV battery field and developing plant-based materials for the cosmetics field.

Kenichi Oba

South Korea

Nanjing
Wuxi
ShanghaiNingboConsolidated number of employees

1.2 billion yen

We are involved in businesses in the automotive, environmental and energy, food products, andlife science fields, which are our key areas. We mainly deal in electronics materials, functional
chemicals, plastics, and digital printing materials. In addition, we are developing food-related
businesses at a subsidiary, DNI Group LLC. Our theme is to expand the plastics business throughout
the region of North America, as we have expanded into home appliance and aviation businesses,
among others, in addition to selling plastics for the automotive industry in Mexico. In Brazil, we
are focused on selling plastics for automobiles and motorcycles, and functional chemicals.

EuropeDalianChina

Operating profit

In Mexico, which is continuing to grow as a major production base for
automotive parts in the Americas, we will move forward with investments
to improve the production facilities at our Company’s plastic compounding
factory (IK Plastic Compound Mexico, S.A. de C.V.), and aim to expand oursales base for plastics products by integrating manufacturing and sales.

President, Inabata
Europe GmbH
Beijing41.7 billion yen

Improving production facilities at our plastic compounding
factory in Mexico

Johor

We are expanding Inabata’s core businesses by harnessing our network spreadover 20 cities in China, Taiwan, and South Korea.

Main Business• Plastics for the EV and mobility, OA,
and electric and electronic segments• Components for FPDs
• Functional chemicals compliant withenvironmental regulations

General Manager,
The Americas

Gurugram

We began handling biomass materials to be used for power generationfuel for Japanese electric power companies as part of our “expansionof products that reduce environmental impact,” a key initiative in our
medium-term business plan, NC2023. In addition, we linked the
manufacturing and processing functions of Group companies in Japan andoverseas, including those in Thailand, to develop garbage bags composedof biomass materials. As a shosha , or Japanese trading company, handles
resin products, we will continue developing environmentally friendly
commercial products, while also helping to bring about a sustainable society
by launching sales activities in India in the solar power generation business.

Takaharu Ookura

Max Inoue

Ahmedabad

Initiatives for a decarbonized society

Northeast Asia

Manufacturing & processing baseTrading company

Net sales

In addition to developing our businesses in the United States and Mexico,
we are working toward expansion in South America with a focus on Brazil.

Southeast Asia is an important region where our processing bases for plastic compound, our key
business, are concentrated. We produce plastic compound products, mainly for the three major fields
of electric and electronic products, OA, and automobiles and motorcycles, at 30 bases across 9
countries. In the future, we seek to expand our business in the automotive field, which is rapidly
growing in Southeast Asia, while also focusing on developing new products and materials for thefields of energy, agriculture, and food products. Within the energy field, we particularly wish to workon products that reduce environmental impact and generate solar power.
Main Business• Plastics for automobiles, home appliances,
OA equipment• Materials for printers• Rubber materials and additives for the
automotive industry• Materials and products for packaging

The Americas

Main Business• Inkjet products and materials• Various materials for secondary cells• Medical products, materials for cosmetics• Functional chemicals

ActionEstablishing logistics bases at each location to cover theentire region
In April 2023, we established a base in Prague, Czech Republic to which
we dispatched employees, aiming to strengthen sales of plastics. We will
also establish logistics bases in Poland, Hungary, Belgium, Italy, andTurkey to cover the entire region. This fiscal year we will expand into
North Africa.

Trading company

Manufacturing & processing base

United Kingdom

Shrewsbury Germany
Düsseldorf
PragueNormandy
ParisFranceCzech Republic
Istanbul

TurkeyInabata Integrated Report 2023

54

Chapter 3

ESG Information

Sustainability Management
Management system
We have established a Sustainability Committee, which
is chaired by the president. In principle, the committee
meets at least once a year and holds extraordinary
meetings as necessary. It formulates, authorizes, andmonitors the Group’s sustainability policies and measures.

Basic concept
People come first, based on the spirit of “love (ai )”and “respect (kei ),” and together we strive towards
contributing to the development of society. This is the
management philosophy we have adopted, and we havecontinued to manage our business with respect forpeople which is based on trust. We believe that ourcommitment to valuing people and society also
contributes to the realization of a sustainable society,which is a goal of the international community.
We also recognize that while environmental issues suchas climate change, resource circulation, and natural
capital, as well as societal issues such as human rights
and labor conditions, present risks to us in terms ofbusiness continuity, they also present opportunities forbusiness growth.

We have also stipulated in the Regulations of the Board of
Directors that the director in charge of sustainability is toreport on the status of sustainability initiatives to the Board of
Directors. The details of deliberations and reviews conductedby the Sustainability Committee are also appropriately
reported and escalated to the Board via this process.

Sustainability promotion system
Reporting, authorization

Board of Directors
Direction
President

Supervision /AdviceSustainability Committee

Management Council

Accordingly, we are focusing on sustainability as a major
issue for management. We will further strengthen
sustainability initiatives, taking steady steps towardachieving our long-term goal of realizing a sustainable
society and the sustainable growth of the Group.

Report• Chairperson: President• Vice chairperson: Director & Senior Managing Executive Officer• Committee members: Directors and executive officers in chargeof each business segment, and selected heads ofadministrative offices

Direction
Executive Officers

ReportObservers• Outside directors• Non-executive directors• Audit and supervisory officers

Project planning, promotion, execution

Secretariat
Sustainability Promotion Department
Collaboration

Inabata Group
Sustainability Basic Policy
The Inabata Group’s corporate mission is People
come first, based on the spirit of ‘love (ai )’ and‘respect (kei ),’ and together we strive towards
contributing to the development of society. Under
this mission, we will also make it a management
priority to address various environmental andsocial issues.
We will continue to respond to society’s evolving
needs in all the Group’s business activities, as we
aim to enhance our long-term corporate value andInabata Group
Sustainability Code of Conduct(items only)
1. Respect for Human Rights
2. Healthy, Safe, and Secure Working Conditions
3. Fostering an Open Culture for Active
Participation by Diverse Staff
4. Environmental Conservation
5. Crisis Management
6. Constructing a Sustainable Supply Chain
7. Compliance8. Collaboration with External Stakeholders
9. Sustainability Information Disclosure

contribute to building a sustainable society.
Sustainability Committee
Established in November 2021
Revised in June 2022

Sustainability Promotion Members• Members from each sales divisionand selected administrative offices

Collaboration
Sales Divisions / Administrative Offices / Group Companies Worldwide

Main sustainability-related matters discussed by the Sustainability Committee and reported to the Board of Directors
FY2021

Establishment of the Sustainability Basic Policy, Sustainability Code of Conduct, and Human Rights Policy

FY2022

Participation in the United Nations Global Compact, Carbon Neutrality Declaration 2050, information disclosure inaccordance with TCFD recommendations, status of external evaluations by FTSE Russell and MSCI, progress regarding
calculation of GHG emissions (Scope 1, 2, and 3), TCFD-compliant scenario analysis, and human rights due diligence.

Sustainability promotion overview
The Group will operate a plan–do–check–act (PDCA) cycle with respect to its materiality and their related indicators, targets,and plans, with the aim of improving long-term corporate value and realizing a sustainable society. We intend to set metrics,
targets, and plans in FY2023.
Love (ai ) and
Respect (kei )MissionVisionIK Values

Sustainability
Basic Policy
Sustainability
Code of Conduct

Materiality

Metrics, targets, andplans for individualmaterial issues
Note: To be set in FY2023

P
Governance(Board of Directors /Sustainability Committee)

Act

A

Information disclosure
Inabata Group sustainability pagehttps://www.inabata.co.jp/
sustainability/（in Japanese only）

Plan

D Do

Check C

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Chapter 3
ESG Information

Materiality

Identifying key issues to be addressed

Inabata Group materiality

In June 2022, we identified six material issues (keyissues to be addressed as a priority) linked to theresolution of various challenges related to the planet andsociety, as well as the sustainable improvement of theGroup’s corporate value.
We intend to set metrics, targets, and plans for individualmaterial issues in FY2023.

The Group’s material issues were evaluated based on
their importance from the dual perspectives of financial
and non-financial impacts. In terms of financial impacts,
we expect three material issues associated with thecreation of sustainable value to have short-term anddirect impacts on the Group, and three material issues
associated with the foundation for business continuity
to have medium- to long-term and indirect impacts.

Materiality (key issues for management)

Materiality identification process

Contributing to a decarbonized and circular society, sustainable use of natural capital

To identify our materiality, we followed the process
outlined below as it was crucial to consider multiple
internal and external perspectives and narrow down
issues of key importance to the Group’s growth froma broad and comprehensive range of areas.

Active discussions were held over two meetings of the
Sustainability Committee, in which outside directors
participated as observers. We also held stakeholder
dialogues with external experts, which enabled us toobtain useful suggestions.

Creating
sustainable
value

Contributing to safety, security, and well-being
Providing value through resilience in procurement and supply functions
Respecting human rights in the spirit of love (ai ) and respect (kei )and growing together with local communities

STEP 1 List social issues
A list of social issues was created with reference to international guidelines (GRI, SASB, SDGs, ISO 26000, UNGC Ten Principles, etc.) andexternal evaluations and requests (various ESG surveys such as FTSE Russell and MSCI, investor requests, etc.).

Strengthening
the foundation
for business
continuity

Fostering and strengthening the human capital driving the value creation
Enhancing governance and risk management

STEP 2 Extract issues and evaluate importance
The Sustainability Committee Secretariat and Sustainability Promotion members narrowed down 23 issues from the four fields of business,environment, society, and governance, and evaluated them according to the two criteria of importance to the Group and importance tostakeholders. Based on the results, issues were consolidated, descriptions were reviewed, and tentative material issues were identified. The
Sustainability Committee deliberated on tentatively identified material issues.

Please refer to our website’s sustainability page for a description of individual material issues.
https://www.inabata.co.jp/sustainability/about/materiality/(in Japanese only)

Results of importance evaluation (materiality map)
Sustainable procurement and supply
Environmental business, clean technology
Compliance /Anti-corruption

Risk management
Business
continuity(BCP/BCM)

Materiality and the business segments

Responsibility to our customers
GHG emissions reduction

Information security

Waste reduction / Resource circulation

Importance tostakeholders

Human rights
Next-generation
mobility

Initiatives in adaptation to climate change
Pollution prevention
Effective utilizationof water resources

Business related
to safe andsecure lives

Community contribution

Corporate
governance

Health andsafetyDiversity and inclusion

Human resource
development,
skill development

Contributing to a decarbonized andcircular society

Labor practices, employee engagement
Conserving biodiversity

Business

Environment

Information &Electronics

Chemicals

Renewable energy●●

Alternative fuels●

Recycling

●

●

●

EVs

●

●

●

Group
governanceSociety

GovernanceImportance to the Group

Creating
sustainable
valueLife Industry

Plastics●

Building materials
Sustainable use of natural capital

●

Food

STEP 3 Verify validity from an external perspective
Stakeholder dialogues were held with external experts who have a broad knowledge of sustainability, the director in charge of sustainability(Director, Senior Managing Executive Officer), and the Sustainability Committee Secretariat.

Mobility
Contributing to safety, security,
and well-being

●

●

●

Food

●

Life science●●

STEP 4 Management makes decision
The Sustainability Committee discussed and decided on candidate material issues based on external opinions.

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Chapter 3
ESG Information

Climate Change

Basic concept

Strategy

Climate change is one of the most pressing issues facing
global society. Unprecedented extreme and intense
weather events are already occurring with greater
frequency and they are seriously impacting both thenatural environment and people around the world. The
Group fully recognizes the effects of climate change andthe need for countermeasures and has stated in its
Sustainability Basic Policy and Sustainability Code of
Conduct that it will use its business to conserve theearth’s environment. We also listed “contributing to a
decarbonized and circular society” in our materiality,
placing measures to address climate change andenvironmental issues as a management priority.
We consider climate change as presenting both risk andopportunity for the Group and, while taking steps toreduce greenhouse gas (GHG) emissions, we will seek toprovide products and solutions that contribute to creating acarbon-free society. In addition to endorsing therecommendations issued in June 2017 by the Task Forceon Climate-related Financial Disclosures (TCFD)* of the
Financial Stability Board (FSB), we are also working toaccurately ascertain the impact of climate change on ourbusiness and disclose related information.

1.5°C scenario
Information & Electronics* The TCFD was established by the FSB in 2015 at the request of the G20. It
encourages companies and other organizations to make disclosures on governance,
strategy, risk management, and metrics and targets with respect to climatechange-related risks and opportunities.

Core elements

Description

Inabata’s response

Governance

Disclose the organization’s
governance aroundclimate-related risks andopportunities.

Sustainability issues, including climate change, are deliberated on and examined at the Sustainability
Committee, which is chaired by the president.
The Regulations of the Board of Directors require the director in charge of sustainability to report to the Boardof Directors on the status of initiatives to address sustainability issues. The content of deliberations andexaminations at the Sustainability Committee is also reported and escalated appropriately to the Board of
Directors as part of the abovementioned process.

Disclose the impacts ofclimate-related risks andopportunities on theorganization’s businesses,
strategy, and financial
planning.

• Regarding the 4°C scenario, whereas the Group’s bases in Japan and overseas are assumed to suffer
damage due to intensifying extreme weather events, the risk is not estimated to be so great as tosignificantly impact business operations. In terms of opportunities, demand for products adapted to risingtemperatures and changing weather patterns is expected to increase. Accordingly, it is concluded that theGroup will be able to maintain its resilience.
• Regarding the 1.5ºC scenario, we identify the increase in operating costs due to carbon pricing introduction
and steep rises in the electricity price as a risk. However, the risk is projected to be more than offset bygaining revenue opportunities from future growth in technologies and products that contribute to a
low-carbon economy and reduced environmental impact. We recognize once again the great relevance of
expanding sales of products that reduce environmental impact—which is part of our multifaceted approachto markets with potential for future growth and steady monetization efforts, a key initiative under theNC2023 medium-term business plan—to our growth in the decarbonized society of the future.

Risk
management

Metrics
and targets

In addition to 2030, which is the year for achieving ourlong-term vision IK Vision 2030, the scenario analysis below

assumes 2050, which is the year for achieving our carbon
neutrality target. We consider both qualitative andquantitative aspects with reference to the 4°C scenario,
which assumes no implementation of more ambitious
climate change measures and intensifying extreme weather
events, and the 1.5°C scenario (partly combined with the 2°C
scenario), which assumes implementation of more ambitious
climate change measures aimed at decarbonization.

Results of scenario analysis and key responses for each business segment (qualitative)

TCFD’s core elements of recommended climate-related financial disclosures and a summary of responses by
the Inabata Group

Strategy

The Inabata Group strives to understand the business risks
and opportunities arising from the transition risks andphysical risks from climate change, and to reflect this in theformulation of climate change countermeasures andbusiness strategies.

Disclose how theorganization identifies,
assesses, and manages
climate-related risks.

At the Group, the Sustainability Committee manages climate-related risks. The committee deliberates risks
identified and examined from both qualitative and quantitative perspectives based on scenario analysis, andreports to the Board of Directors as necessary.
The Board of Directors oversees Group-wide risks of high importance in an integrated manner, taking into
account reports from the Sustainability Committee as well as other risks reported by the Risk Management
Office, the Financial Management Office, the Compliance Committee, and other units.

Disclose the metrics andtargets used to assessmanage relevant
climate-related risks
and opportunities.

To commit to achieving the global goal of limiting the increase in temperatures to 1.5ºC as stated in the Paris
Agreement, the Inabata Group has set the long-term goal of carbon neutrality by FY2050 (covering Scope 1
and 2 emissions of the consolidated Group). Since FY2021, we have calculated Scope 3 emissions in order tounderstand emissions for our entire supply chain. In the future, we will expand the scope of calculations andconsider medium-term targets to achieve the long-term goal.

Chemicals

Plastics

Life Industry• Introduction of carbon pricing• Gradual reduction of existing products derived from fossil fuels resulting in less demand for related products• Operating costs up due to rising electricity prices

Main risks• Poor growth and insufficient yields
for agricultural and marine products
causing procurement costs to rise

• Proliferation of xEVs leading to • Proliferation of xEVs leading toincreased demand for related
increased demand for related
Main
products
products
opportunities • Increased demand for products • Increased demand fornon-fossil and recycling
related to renewable energy andtechnologies
energy-saving technologies• Higher demand for domestically
produced materials as need for
local production for local
consumption, and ethicalconsumption, grow

• Proliferation of xEVs leading toincreased demand for related
products• Increased demand for biomassor recycled plastics, andbiodegradable plastic materials• Actively considering the purchasing of non-fossil certificates• Electrification and switch to more energy-efficient equipment at manufacturing bases• Preemptive development of new and alternative low-carbon technologies, and formation of partnerships
Responses• Formation of partnerships to develop • Planning to obtain biomass
domestically made products withcertification from thethe aim of reducing transport CO2
International Sustainability andemission through local production
Carbon Certification
for local consumption• Construction and operationof biomass power plant in
Sakaiminato City, Tottori
Prefecture (planning to go into
operations in May 2026)

4°C scenario
Information & Electronics

ChemicalsLife Industry

Plastics• The Group’s bases hit by intensifying extreme weather events • Damage due to supply chain disruptions• Losses due to business shutdown • Transport costs up due to sharp rise in fossil fuel prices• Intensifying competition over the sale and procurement of products adapted to climate change• Higher prices and lower qualityof active ingredients andmaterials due to poor tree
growthMain risks• Higher procurement costs
caused by poor growth andinsufficient yields of agriculturaland marine products• Decline in the food service industry
due to fewer opportunities for
consumers to go out• Increased demand for products adapted to climate change• Increased demand for insulated • Higher demand for frozen foods,
glass and other products
take-out meals, and otheradapted to rising temperatures
products adapted to the trendof consumers having fewer
opportunities to go out• Increased demand forpharmaceuticals due to the
spread of infectious diseases

Main
opportunities

Responses• Increased demand forgreenhouses and other productsthat help farms control thequality of agricultural products• Increase in processing contracts
at the resin compound
manufacturing business bases
due to advances in BCP measuresby plastic manufacturers• Development and expansion of products and services adapted to climate change• Enhancement of resilience to extreme weather events, such as by drawing up BCPs and diversifying suppliers• Review of materials, and diversification of, and strengthening of relationships with, suppliers• Greater localization, such as by outsourcing processing locally• Fulfillment of orders with stock and management of multi-location inventory by leveraging financial resources• Expansion to upstream
businesses (cultivation andaquaculture) to stably secure
agricultural an marine resources

Note: Items in the red frame are common to all segments.

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Chapter 3
ESG Information

Climate Change

Financial impact estimates
We have estimated the financial impact based on predicted values for the future. Note that these financial impact
estimates were obtained by narrowing down the scope of the analysis and establishing hypothetical situations based on
the limited information and data available at this point in time.

1.5°C scenario
Minusapprox.
¥1.4
billionMinusapprox.
¥0.4
billionDamage fromflooding andhigh tides

Minus
approx.
¥0.05
billionChangesin electricity
pricesIntroductionof carbon tax
Approx.
¥20.0
billion

4°C scenario

Plusapprox.
¥0.5
billionPlusapprox.
¥4.7
billionApprox.
17% upMinusapprox.
¥2.5
billionGrowthin market
for renewableenergyproducts

Growth inmarket forenergy-saving
products

Minus
approx.
¥0.02
billionDamage fromflooding andhigh tides
Approx.
¥23.4
billionApprox.
¥20.0
billionChangesin electricity
pricesIntroductionof carbon tax

Plus
approx.
￥0.3
billionPlusapprox.
¥1.0
billionPlusapprox.
¥0.02
billionApprox.
6% down

Growthin market
for renewableenergyproducts

Growth inmarket forenergy-saving
products

Metrics and targets
The Inabata Group set the long-term goal of carbon
neutrality by 2050* in order to commit to achieving the
global goal of limiting the increase in temperatures to
1.5ºC as stated in the Paris Agreement. While we havealready established an environmental management
system compliant with ISO 14001 and have been
implementing energy management and other initiatives,
we will further strengthen decarbonization initiatives
going forward to achieve carbon neutrality. We are also

focusing our business activities on providing various
products and solutions that contribute to a decarbonizedsociety. Since FY2021, we have calculated Scope 3
emissions in order to understand emissions for our entire
supply chain. In the future, we will expand the scope of
calculations and consider medium-term targets toachieve the long-term goal.
* Covers GHG emissions from the business activities of the consolidated Group(Scope 1 and 2).

Approx.
¥18.8
billionInabata supply chain emissions (FY2022)
FY2022Inabata supply chain emissions
FY2021
operating profit

FY2050assumption

FY2021
operating profit

FY2050assumption

GHG emissions(t-CO2eq)

Ratio of total(%)

Scope 1*1

2,755

0.1

Scope 2*

43,666

2.2

1

Scope 3*

1,960,235

97.7

Total for Scope 1, 2, and 3

2,006,656

100.002

Scenario analysis results
Regarding the 4ºC scenario, whereas the Group’s basesin Japan and overseas are assumed to suffer damage
due to intensifying extreme weather events, the risk is
not estimated to be so great as to significantly impact
business operations. In terms of opportunities, demandfor products adapted to rising temperatures and changing
weather patterns is expected to increase. This has madeus recognize anew the potential to contribute to society
by helping society as a whole adapt to global warming
while maintaining the Group’s resilience.
Regarding the 1.5ºC scenario, we identify the increase inoperating costs due to carbon pricing introduction andsteep rises in electricity prices as a risk. However, the risk
is projected to be more than offset by gaining revenue
opportunities from future growth in technologies andproducts that contribute to a low-carbon economy andreduced environmental impact. We recognize once again
the great relevance of expanding sales of products that
reduce environmental impact—which is part of ourmultifaceted approach to markets with potential for future
growth and steady monetization efforts, a key initiative
under the NC2023 medium-term business plan—to our
growth in the decarbonized society of the future.

Scope 3 breakdown by category

Upstream

Risk management
At the Inabata Group, climate-related risks are managed by
the Sustainability Committee as we believe that traditionalrisk management methods alone are insufficient to manage
long-term impacts that include elements of uncertainty. The
committee discusses risks identified and examined fromboth qualitative and quantitative aspects based on scenario

analysis, monitors the progress, and reports to the Board of
Directors as necessary.
Please refer to page 86 onward for information on ourcompany-wide risk management.

Downstream

Category 1

Purchased goods and services

Category 2

Capital goods

Category 3

Fuel- and energy-related activities notincluded in Scope 1 or Scope 2

Category 4

Upstream transportation and distribution

Category 5

Waste generated in operations

Category 6

Business travel

Category 7

Employee commuting

Scope 3 ratio(%)

GHG emissions(t-CO2eq)
1,435,020

73.207

2,984

0.152

71

0.004

55,189

2.815

53

0.003

2,377

0.121

234

0.012

Category 8

Upstream leased assets

Not applicable since the category is includedin Scope 1 and 2.

Category 9

Downstream transportation and distribution

Excluded from calculations since it is difficult to ascertain
actual conditions and make reasonable estimates for thewide variety of products sold and transportation destinations.

—Category 10

Processing of sold products

Excluded from calculations since it is difficult to ascertain
actual conditions and make reasonable estimates for thewide variety of products sold and transportation destinations.

—Category 11

Use of sold products

Not applicable since there are no activities in this category.

—Category 12

End-of-life treatment of sold products

464,24223.683Category 13

Downstream leased assets

64

0.003

Category 14

Franchises

Not applicable since there are no activities in this category.

—Category 15

Investments

Not applicable since there are no activities in this category.

——

Scope of calculations*1 Scope 1 and 2: Inabata & Co. and domestic and overseas consolidated subsidiaries*2 Scope 3: Inabata & Co.
Please refer to our Corporate Governance Report and our website’s sustainability page for more information on disclosures based on the TCFD recommendations. Past performancedata is also available on the sustainability page.

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Chapter 3
ESG Information

Environmental Business (Products That Reduce Environmental Impact)

ExampleBasic concept
The Inabata Group believes that climate change and otherglobal environmental issues pose both risks to business
continuity and new opportunities for growth.

issues, and we have declared to contribute to resolving
environmental issues through our business. As statedin medium-term business plan NC2023, we areworking to expand our lineup of products that reduce
environmental impact in all segments.

“Contributing to a decarbonized and circular society” and“sustainable use of natural capital” are two of our material

Fields of products that reduce environmental impact and results
Since the FY2021 report, we have reviewed the fields ofproducts that reduce environmental impact, reorganizingthese products mainly in the clean-tech field. In FY2022, wehave steadily grown our sales thanks to stronger efforts inthe Energy & Power and Resources & Environment fields.
Net sales have also grown significantly over the previous
fiscal year in the Materials & Chemicals field.

Environmental
certification

1%

Energy & Power

Materials &Chemicals

65%

Total

26.9

¥

Resources &Environment

its inclusion in Goal 12, Responsible Consumption and Production, of the Sustainable Development Goals(SDGs) adopted by the United Nations. The Life Industry Division has launched a business to reduce the volume
of sludge, which is one of the most discharged industrial waste in Japan.

State of industrial waste in Japan

Our business experience with food manufacturers helped us

Sludge is a muddy waste mainly generated in the process ofidentify the potential to expand into wastewater treatment attreating wastewater produced by business activities. According

food factories, which is where we began this business. Now, weto the State of the Discharge and Treatment of Industrial Waste,provide our microorganism formulation to local governments as

published by the Ministry of the Environment, sludge is the mostwell. We intend to achieve growth for the Company and reduce

discharged industrial waste in Japan. Sludge is divided into

waste within Japan through the expansion of this business.

contaminated wastewater discharged from food factories andCase study Yahaba Town, Iwate Prefectureother facilities, and the latter containing mainly sand and metal

In Yahaba Town, Iwate Prefecture, sludge treatment costs acrosscomponents discharged from civil engineering sites, metal

three treatment plants were approximately 23 million yen during

factories, and other facilities.

FY2021. We provided an original microorganism formulation
blend tailored to the purpose and target materials, generating
the following benefits.

Overview of sludge reduction businessbillionWastewater (sewage) from homes and factories must be treatedsuch that sludge falls below standard levels before discharge.

28%

In FY2023, we plan to establish metrics and targets andwill continue to work to enhance our products that reduce
environmental impact.

Waste management and reduction is an environmental issue of great importance worldwide, as evidenced byorganic and inorganic sludge, the former containing organically

FY2022 net sales

6%

Sludge Reduction Business Resources & Environment

Sewage treatment plants and other facilities therefore treat thiswastewater. In the activated sludge process, a common purification
method, oxygen is supplied to activated sludge (organic sludge),

Industrial sludge volume* Sludge treatment expenses(%)
100(Millions of yen)
23

Approx.

40% reduction

stimulating microorganisms in the sludge to feed on anddecompose contaminants (organic matter), thereby cleaning the

Fields and main items that reduce environmental impact(9.2 million yen per year)

water. However, the microorganism husks (dead bacteria) remain

FieldsMain items

100%
reduction50

as excess sludge, which becomes industrial waste.

Approx.

23 million yen

Approx.

Energy & Power

Renewable energy, batteries, etc.

Resources & Environment

Sustainable materials, recycling, water, etc.

Materials & Chemicals

Low-carbon materials, environmental pollutant reduction, etc.

Agriculture & Food

Food waste reduction, soil improvement, etc.

Transportation & Logistics

EV charging, green logistics, etc.

Environmental certification

Forestry certifications (FSC*1 and PEFC*2), marine product certifications (MSC*3 and ASC*4), etc.

14 million yen

The microorganism formulation we provide produces enzymes
that break down the dead bacteria in excess sludge. These0

enzymes are capable of breaking down the cell walls of the deadbacteria, thus reducing the amount of sludge (industrial waste)discharged. Sludge reduction also has the side effect ofcontributing to the reduction of CO2 emissions.

BeforeAfter0

BeforeAfter* One of the three treatment plants has already achieved zero sludge withdrawal as of
October 2022. The above results are a simulation assuming that the remaining two
plants progress at the same rate. Introduction began at the second plant in April
2023, and as of June, no sludge has been discharged.

*1 Forest Stewardship Council *2 Programme for the Endorsement of Forest Certification *3 Marine Stewardship Council *4 Aquaculture Stewardship Council

Results (FY2021 and FY2022)

Basic flow of activated sludge process
FY2022 vs. FY2021 difference

FY2021 results(millions of yen)

FY2022 results(millions of yen)Amount (millions of yen)%

Energy & Power

13,463

17,518+4,055

130

Resources & Environment

4,201

7,585

+3,384

181

735

1,537

+802

209

Agriculture & Food

0

0

0

—

Transportation & Logistics

0

0

0

—

Environmental certification

328

317

(12)

96

18,727

26,957+8,230144

FieldsMaterials & Chemicals

Total

Notes:
1. Coverage: Inabata Group (consolidated)
2. There are no results for Agriculture & Food or Transportation & Logistics in FY2021 or FY2022.
3. Totals are simple sums.
4. FY2021 net sales have been recalculated to match a 2023 review and partial reclassification of products within each field.
Although there are variations in figures for each product and field reported in 2022, totals remain unchanged.

63 Inabata Integrated Report 2023

Treatment facility

Microorganism
formulation
Households

Discharge

Water

Wastewater(domestic/factory)
Partial return

Factories

Aeration tankIndustrial
waste treatment

Excess sludge
Sedimentation tank
Microorganism
formulation
reduces
excess sludge

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Chapter 3
ESG Information

Employee Engagement / Human Resources Development

Employee engagement

Human resource development

The source of value creation at the Inabata Group is our approximately 4,300 employees in Japan and overseas. We believethat the energetic and self-motivated participation of each and every employee in the organization, and their devotion totheir work, will ultimately lead to the growth of the entire Group.

People are the most important asset of the Inabata Group, and the development of human resources is one of ourmanagement issues. By providing diverse work experiences and growth opportunities, and conducting training according torole, we develop human resources who have expertise and can lead organizations and businesses in Japan and overseas.

Employee engagement survey
In FY2021, we began annual employee engagement
surveys to identify changes over time. The main purpose

Number of
employees
surveyed (people)of the survey is to discern current issues and to revitalize
the organization through the creation and improvement ofsystems and organizational development.

Total

2022

2023

1,400

1,697

1,901

Inabata & Co., Ltd.

587

606

652

Main overseas trading offices

813

1,091

1,249

49

73

72

Engagement
I am satisfied with the work I am doing at Inabata now.

70

73

76

Relationship with superiors
I have the necessary collaboration with my supervisor at work.

75

80

80

Response rate (%)

Organizational culture
When a problem occurs in the course of my duties, my supervisor
and the people around me provide appropriate support.
Main items* (%)

2021

Corporate philosophy
I can relate to Inabata’s philosophy, vision, and management
policies, and I want to participate in achieving them.

83

85

83

New training system
In the FY2021 employee engagement survey, we discoveredthat support for employee training to improve their skills was
an issue. We therefore began stepping up investments inhuman resource development starting the following fiscal
year, such as enhanced training for managers.

Key revamps• Expanded level-based training for each band
(qualification category) and changed to a voluntarytraining system• Implemented elective training that can be attended by
all personnel regardless of their position• Implemented cross-industry training and group training
on organizational development for professionals*

Recently, the working environment has undergone majorchanges, including the introduction of a new humanresources system. Against this backdrop, in June 2023, werevamped our training system to support an environment inwhich each employee can think independently and proactively
about their own career and actively learn and grow.

New training
system overview• Started a training application system via our humanresources management system* “Professionals” refers to those in management positions engaged in core
duties, while “Staff” refers to those in non-management positions engaged
in core duties, and “Assistants” refers to those engaged mainly in support duties.

Mandatory training Recommended forElective

Optional participation range

Professionals

Staff

Voluntary training

Assistants

Temporary employees/senior employees/re-hired senior employees after retirement working on a fixed-term contract
Assistants

70

73

73

Human resources system and benefits
Inabata’s salary standards are satisfactory, compared to othercompanies in the same industry.

59

Human resources system and training
Inabata supports employee training to improve their skills.

41

48

54

Work-life balance
Overtime is kept to a level that is acceptable for me.

64

69

75

55

57

SA

AH

Staff
AM

AL

8

7

Professionals

6

5

4

3

2

1

Global communication (for expat employees)

New elective
training

Excel

Participation
recommended
for youngworkers

Time management
English emails
Work efficiency

Anger management
Diversity* From among a five-point evaluation by employees (5. Strongly agree / 4. Agree / 3. Neither agree nor disagree / 2. Disagree / 1. Strongly disagree), the ratio of positive responses (5.
and 4.)
Resilience
Assertive communication
Revitalizing organizational culture

Overview of 2023 survey results
The 2023 survey was able to capture more employee
input than in previous surveys, as the number ofMain items with improved scores

respondents increased, and the response rate was
essentially unchanged from the previous year. Positive
responses to the main items also showed increases,• I am having sufficient discussions with my superior
about matters like my career and job transfers. (3.38 to
3.50)

which we believe shows that our various measures(career training, open recruitment system, job rotation,etc.) implemented based on past survey results arebearing fruit. On the other hand, scores declined from theprevious year for some items, and we plan to analyze thetrends and causes for each region and base, and workwith each of our bases to make improvements.

Career design training (by age: 38, 45, and 50)

Enhanced
Staff training• I feel job satisfaction in my current work. (3.86 to 3.91)

Mid-level
employees

School training (cross-industry training)

MarketingManagement training (organizational development)

Credit• I try not to overly burden others in terms of work hours
or content. (3.46 to 3.62)

Goal management
Critical thinking
Chemical laws
and regulations

Main items with worsened scores

Enhanced
Professionals
training

New employee training• I have good interpersonal relationships at my company.
(4.17 to 3.97)• There is a culture where I can have mutual discussions
with peace of mind. (3.87 to 3.71)

Enhanced
Assistants
training

Increasedfollow-up
opportunities
for Assistants

Selected members

Comprehensive
workshops

Leaders

New managers

Global Staff Meeting

Human rights and harassment training

65 Inabata Integrated Report 2023

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Chapter 3
ESG Information

Human Rights and Supply Chain Management

Human rights and supply chain management

25 categories of human rights risks

The Inabata Group strives to give due consideration to human rights in its business activities in accordance with the
Inabata Group Human Rights Policy, which was established in March 2022 through a resolution of the Board of Directors.
In addition to human rights, we also advance supply chain management that takes into consideration compliance, labor,
and the environment.
Human rights due diligence
We practice human rights due diligence (DD) in accordancewith the United Nations Guiding Principles on Businessand Human Rights, divided into three categories: “DD for
Inabata and Group companies,” “DD for the supply chain,”and “foundations for human rights DD.” First, we believe
it is important to identify human rights risks both at
Inabata and Group companies and work to foster aculture of respect for human rights. This is to protect thehuman rights of our employees, which are our greatest
asset, and to ensure that our own awareness of humanrights has a significant impact within the Groupand in our supply chain.
To that end, we conducted a Human Rights DD Digital
Survey for Company employees.
In addition, because the Inabata Group handles a wide
range of products and solutions, its supply chain spreads
across the entire world, including Japan, and involves avariety of stakeholders. For this reason, we are working
on DD of supply chains in two ways: identification of risks
in businesses, which covers as far as upstream

companies in the supply chain, and DD for business
partners (new and existing), which covers direct business
partners where we can more easily exert influence.
(1) Human Rights DD Digital Survey
In June 2023, we carried out the Human Rights DD
Digital Survey with the assistance of external experts
such as SDG Partners, Inc.
This survey measures the degree of human rights risk in agiven company based on the 25 human rights risks (shownat the top of the page on the right) listed in the Ministryof Justice’s “Addressing Business and Human Rights
Demanded of Companies Today,” and quantitatively
measures the psychological safety and unconscious biasthat can be factors behind these risks. This sampling
survey was conducted for 166 Company employees.
We will use response data to analyze incident trends andbackgrounds for various human rights risks from ourunique perspective and consider the next measures to betaken. Analysis results are to be reported on our website’ssustainability website.

DD for the supply chain(2)
Identificationof risks inbusinesses

Considering future rollout to Group companiesGroup
companies
in Japan(1)
Human
Rights DD
DigitalSurveyGroup
companies
outside Japan

Inabata & Co., Ltd.

2 Excessive and unreasonable
working hours
3 Occupational health and safety
4 Right to social security

8 Care harassment
9 Forced labor
10 Freedom of residence
relocation
11 Freedom of association

5 Power harassment

12 Rights of foreign
workers

6 Sexual harassment

13 Child labor

7 Maternity harassment/paternity harassment

Tier 4
suppliers

Tier 4
suppliers

Tier 4
suppliers

Tier 4
suppliers

Tier 3
suppliers

Tier 3
suppliers

Tier 3
suppliers

Tier 3
suppliers

Tier 2
suppliers

Tier 2
suppliers

Tier 2
suppliers

Tier 2
suppliers

Tier 1
suppliers

Tier 1
suppliers

Tier 1
suppliers

Tier 1
suppliers

Business A

Business B

Business C

Business D(3)
DD forbusiness
partners

14 Human rights issues related
to technology and AI

20 Indigenous and local
people’s rights

15 Right to privacy

21 Human rights issues related
to the environment andclimate change

16 Consumer safety andthe right to know
17 Discrimination

22 Intellectual property rights
23 Bribery and corruption

18 Human rights issues related
to gender (including sexual
minorities)

24 Human rights issues inthe supply chain

19 Freedom of expression

25 Right of access to relief

Source: “Addressing Business and Human Rights Demanded of Companies Today,” Ministry of Justice(2) Identification of risks in businesses
We identify risks in businesses with the help ofoutside experts.
We collected data on products we handled and interviewed
sales division employees to identify the state of the Group’sbusinesses. Using a dual axis of products and regions, weanalyzed the potential human rights risks for each businesswith reference to international guidelines and indicators.
Then, human rights risks were evaluated from perspectives
including severity and likelihood of occurrence. Goingforward, we will implement human rights DD initiatives
while incorporating field surveys as well.
Analysis results and other relevant information will bereported on our website’s sustainability page as necessary.

Overview of human rights DD
DD for Inabata and Group companies

1 Insufficient and unpaid wages,
living wages

Flow: Identification of risks in businesses
Collected data on products we handled andinterviewed sales division employees to identify
the state of our businesses

Using a dual axis of products and regions, analyzed thepotential human rights risks for each business withreference to international guidelines and indicators

Evaluated human rights risks from perspectives including
severity and likelihood of occurrence• Risks identified in businesses to be addressed by means
including field surveys• Analysis results and other relevant information to bereported on our website’s sustainability page as necessary(3) DD for business partners (new and existing): Introduction of screening systemA screening system was introduced in FY2023 as part ofbroad-based risk checks in the supply chain. We are
DD for business partners (new and existing) to address
also considering opening individual dialogues withnot only human rights risks but also compliance,
problematic business partners.
environmental, and social risks.
Going forward, we will consider supplementing
By screening and monitoring new and existing businessscreening and monitoring via this system with direct
partners with this system, we plan to conduct
questionnaire surveys with business partners.

(new andexisting)

Foundations for human rights DD
Inabata Group Human Rights Policy

67 Inabata Integrated Report 2023

Supply Chain CSR Action Guidelines

Human rights training

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ESG Information

Corporate GovernanceCorporate GovernanceManagement (As of June 21, 2023)
Directors

Directors, Audit and Supervisory Committee Members

Katsutaro Inabata

Toyohiro Akao

Kenji Hamashima

Satoshi Tamai

Director, President

Director, Senior Managing Executive Officer
Information & Electronics, Life Industry,
the Americas, Europe

Director, Chairperson of the Audit andSupervisory Committee

Director, Audit and Supervisory
Committee Member
Apr. 1984 Joined Sumitomo Corp.
Oct. 1991 Joined Century Auditing Corp. (now Ernst& Young ShinNihon LLC)
Mar. 1995 Registered as certified public accountant
Jul. 2017 Representative of Satoshi Tamai Certified
Public Accountant Office (present)
Mar. 2018 Outside Auditor, Toho Lamac Co., Ltd.
(present)
Jun. 2020 Outside Audit & Supervisory Board
Member, Inabata & Co., Ltd.
Outside Auditor, PC Depot Corp. (present)
Jun. 2022 Outside Director, Audit and Supervisory
Committee Member, Inabata & Co., Ltd.
(present)

Jan. 1989 Joined Inabata & Co., Ltd.
Dec. 2005 Director, President (present)

Kenichi Yokota

Masahiro Sugiyama

Apr. 1982 Joined Ushio Inc.
Apr. 1999 President and Chief Executive Officer,
Ushio America, Inc.
Nov. 2000 Chairman and Chief Executive Officer,
Christie Digital Systems USA, Inc.
Oct. 2014 President and Chief Executive Officer,
Ushio Inc.
Apr. 2020 Special Adviser, Ushio Inc. (present)
Jun. 2020 Outside Director, Inabata & Co., Ltd.
Jun. 2022 Outside Director, Audit and Supervisory
Committee Member, Inabata & Co., Ltd.
(present)
Outside Director, Nichirei Corp. (present)

Director, Senior Managing Executive Officer
Administrative Affairs

Director, Managing Executive Officer
Chemicals, Information & Electronics (assisting),
Northeast Asia

Minoru Sanari

Tomokazu Fujisawa

Director, Audit and Supervisory
Committee Member

Director, Audit and Supervisory
Committee Member

Apr. 1983 Joined Tokyo Gas Co., Ltd.
Apr. 1995 Bar admission (Daini Tokyo Bar Association)
Apr. 2008 General Counsel, Legal Section, General
Administration Department, Tokyo Gas Co., Ltd.
Apr. 2017 Executive Officer, Tokyo Gas Co., Ltd.
Apr. 2019 Senior Advisor, Tokyo Gas Co., Ltd. (present)
Jun. 2022 Outside Director, Audit and Supervisory
Committee Member, Inabata & Co., Ltd.
(present)

Jul. 1984 Joined Fujisawa Pharmaceutical Co., Ltd.
(now Astellas Pharma Inc.)
Apr. 1999 Director of Planning, Medical Supply
Business, Fujisawa Pharmaceutical Co., Ltd.
Apr. 2003 Assistant to CEO, Fujisawa Healthcare Inc.
(now Astellas US LLC)
Jun. 2014 Full-Time Audit & Supervisory Board
Member, Astellas Pharma Inc.
Jun. 2018 Director, Audit & Supervisory Committee
Member, Astellas Pharma Inc.
Jun. 2022 Outside Director, Audit and Supervisory
Committee Member, Inabata & Co., Ltd.
(present)

Apr. 1982 Joined Inabata & Co., Ltd.
Jun. 2015 Director, Senior Managing Executive
Officer (present)

Jul. 1996 Joined Inabata & Co., Ltd.
Jun. 2017 Director, Senior Managing Executive
Officer (present)

Jul. 2002 Joined Inabata & Co., Ltd.
Jun. 2018 Director, Managing Executive Officer(present)

Takashi Shigemori

Takako Hagiwara

Director

Director, Chairperson of the Nominating andRemuneration Committee

Apr. 1983 Joined Sumitomo Chemical Co., Ltd.
Apr. 2012 Executive Officer, Sumitomo ChemicalCo., Ltd.
Apr. 2016 Managing Executive Officer, Sumitomo
Chemical Co., Ltd.
Apr. 2019 Senior Managing Executive Officer,
Sumitomo Chemical Co., Ltd.
Jun. 2019 Director, Senior Managing Executive
Officer, Sumitomo Chemical Co., Ltd.
Jun. 2021 Senior Managing Executive Officer,
Sumitomo Chemical Co., Ltd.
Director (non-executive), Sumitomo Seika
Chemicals Co., Ltd. (present)
Apr. 2023 Advisor, Sumitomo Chemical Co., Ltd.
(present)
Jun. 2023 Director, Inabata & Co., Ltd. (present)

Noriya Yokota

Apr. 1984 Joined Sony Corp. (now Sony Group Corp.)
Apr. 2008 General Manager, Diversity Development
Div., Corporate Human Resources,
Sony Corp.
Apr. 2014 Representative Director, Sony Hikari Corp.
and Sony Kibou Corp. (now Sony
Kibou/Hikari Corp.)
Jul. 2020 Representative Director, DDD Corp.
(present)
May 2021 Outside Director, Twinbird Corp. (present)
Jun. 2021 Outside Director, Inabata & Co., Ltd.
(present)
Outside Director, NEC Capital Solutions
Ltd. (present)

Osamu Chonan
Director
Apr. 1980 Joined Kewpie Corp.
Sep. 2008 Corporate Officer, Manager of Osaka
Branch, Kewpie Corp.
Jul. 2012 Corporate Officer, Manager of Tokyo
Branch, Kewpie Corp.
Feb. 2014 Director, Manager of Tokyo Branch,
Kewpie Corp.
Feb. 2016 Director, Executive Corporate Officer,
Kewpie Corp.
Feb. 2017 Representative Director, President andChief Executive Corporate Officer,
Kewpie Corp.
May 2021 Chairman, Kewpie Miraitamago
Foundation (present)
Feb. 2022 Advisor, Kewpie Corp.
Jun. 2023 Outside Director, Inabata & Co., Ltd.
(present)

Director, Audit and Supervisory
Committee Member
Apr. 1984 Joined Kirin Brewery Co., Ltd. (now Kirin Holdings Co., Ltd.)Mar. 2014 Executive Officer, General Manager, Production & Quality Control
Department, Kirin Brewery Co., Ltd.
Mar. 2017 Senior Executive Officer, Kirin Holdings Co., Ltd.
Director, Senior Executive Officer, Kirin Co., Ltd.
Director, Kyowa Hakko Kirin Co., Ltd. (now Kyowa Kirin Co., Ltd.)Mar. 2018 Director, Senior Executive Officer, Kirin Holdings Co., Ltd.
Mar. 2022 Director, Kirin Brewery Co., Ltd.
Jun. 2023 Outside Director, Audit and Supervisory Committee Member,
Inabata & Co., Ltd. (present)

Koji Nakano

Kazuhiro Hanaki

Shinya Kawai

Yutaka Takahashi

Katsutoshi Tanaka

Managing Executive Officer
Plastics,
Southeast Asia
General Manager,
Southeast Asia

Executive Officer
General Manager,
Nagoya Branch

Executive Officer
Plastics (assisting)General Manager,
Plastics Division I;
General Manager,
Plastics Compound
Business Office

Executive Officer
Life Industry (assisting)General Manager,
Chemicals Division

Executive Officer(President,
Inabata Fine Tech
Co., Ltd.)Tsuyoshi Maruta

Koichi Noda

Takaharu Ookura

Masato Tsunoda

Executive Officer
General Manager,
Information &Electronics Division I

Executive Officer
General Manager,
Financial Management Office

Executive Officer
General Manager,
Northeast Asia

Executive Officer
General Manager,
Risk Management Office

Note: The title in parentheses is his position at the company to which he has been assigned.

Note: Directors Takako Hagiwara, Osamu Chonan, Kenji Hamashima, Satoshi Tamai, Minoru Sanari, Tomokazu Fujisawa, and Noriya Yokota are independent outside directors.

Nobukazu Kuboi
Audit and Supervisory Officer
General Manager, Audit andSupervisory Committee Office

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Chapter 3
ESG Information

Corporate Governancedepartment and provided explanations. We are also given
opportunities to study business prospects and backgroundinformation related to the trading industry, which issomething I greatly appreciate.

Outside Director

Three-Way
Talk

Sato:
As we will soon be discussing the new medium-termbusiness plan, I think it is also excellent that Inabata has
a system in place that will enable us to participate indiscussions from an early stage.

Part 2Growth investment

Through the Business Planning Office, which screens
investment projects, an M&A agreement has been
established with Daigo Tsusho Co., Ltd. What are yourthoughts on M&A?

Kenji Hamashima

Kiyoshi Sato

Takako Hagiwara

Director (Audit and Supervisory Committee Member)Time in office: Jun. 2020–present*

Director
Time in office: Jun. 2019–Jun. 2023

Director
Time in office: Jun. 2021–present

My roleMy roleMy roleI spent many years abroad and have accumulated
experience with various negotiations, which I believe
carries over to the shosha, or Japanese trading company,
business. I also have experience in M&A, so I hope tooffer support in the area of growth investing. That said,
manufacturing and shosha have different perspectives, so
I hope to use this as a strength in discussions and help
boost the creation of new business and growth strategies.

The last company I worked for developed andsold semiconductor production equipmentused to manufacture products such as FPDs.
Inabata deals in materials and products forsemiconductors and displays, so I think I havean affinity for that field. I also feel it is my duty
to support further globalization using myexperience in corporate management andoverseas business.

Over the years, I have been involved withhuman resource development for manufacturing
and service organizations, and I also haveexperience with new business creation in the
global marketplace. Notably, since I have along history with planning and promoting
human resource development and organizational
strategies, I would like to contribute todeveloping human resources and organizations
that can continue to take on the challenges ofchanging times at Inabata.

* In June 2022, Inabata transitioned to a company with an audit
and supervisory committee, and he was appointed as adirector (member of the Audit and Supervisory Committee).

Outside directors are expected to monitor and supervise management from an objective viewpoint.
We asked them to evaluate the current status of the Inabata Board of Directors and the challenges it faces.
(The three-way talk was held in late May 2023.)

Part 1

Reflections on FY2022

One year has now passed since Inabata transitioned to
a company with an audit and supervisory committee.
What changes have you noticed?
Sato:With increasing the number of outside directors, thediscussions of the Board of Directors have come toinclude more varied opinions that reflect each individual’s
experience and expertise. While board members, including
outside directors, have always engaged in lively discussions
at Inabata, I feel more diverse views are now being taken
into consideration.
Hamashima:
I think that the awareness of the internal directors on theexecutive side has also gradually changed. The inclusion of
more outside directors with diverse backgrounds has led toquestions like, “Why was this decision made?” and “Whatdo you think of these risks?” being raised more frequently.
In response, the executive side has come to reconsider
certain matters, and this has resulted in more viewpoints

71 Inabata Integrated Report 2023

being reflected in the Board’s decision-making. I feel there
is also a greater sense of continuity between discussions
than before, with directors often saying, “Let’s discuss thisagain more deeply next time.”
What do you think of the support the outside directors
receive from the Company?
Hamashima:
Before Board meetings, we receive preliminary explanations,where a Company representative thoroughly answers
our questions, which are often quite specific.
Sato:
Our questions or opinions regarding such explanations arealso communicated to directors so that matters can be
explained to us again during the actual Board of Directors’
meetings. In this way, I feel an effective support system has
been established.

Sato:
I believe that M&A should serve as a means for achieving
major strategies such as entering markets or developing
markets around new technologies. In this sense, I think weare still in the midst of exploring the potential of M&A. I am
hopeful that we can expand on major strategies in the next
medium-term business plan and would like to engage infurther discussion.
Hagiwara:
For the Company to take the next leap forward, rather thansimply building on its current culture and experience, it is
crucial to have a strategy that enables it to break throughto a new level. Now that more and more people are
becoming aware of this fact and are participating in relevant
discussions, I expect considerable changes can occur
within the Company.
Hamashima:
While we have increased net profit through the sale ofstrategically held shares, we cannot always rely on thismethod. Over the next few years, it is important to firmly
build the next pillar of business for generating profit. Rather
than simply looking at organic growth, I think it is essential
to take on bold investment challenges for growth.

How would you like to contribute to future growthinvestment?
Sato:
When it comes to a field that is outside my area ofexpertise, I would like to offer advice on assessing theappropriateness of strategies.
Hagiwara:
I specialize in human resources and diversity, and I thinkhaving the right people is of vital importance to a trading
company. Especially when tackling new strategic fields, wemust examine how to effectively develop human resources
and the organization. I would like to contribute my expertisewith respect to this point.
Hamashima:
I think I can offer input when it comes to new ideas, suchas creating frameworks for building new business models.
For example, in addition to the traditional trading company
business model of buying and selling, it is also possible
to create new models by utilizing partnerships andcoordinating with external parties. Here, I believe thattrading companies possess the advantages of having
flexibility, numerous channels, long-standing relationshipsof trust, and financial power.

Part 3

Human capital

Ms. Hagiwara, you mentioned in last year’s three-way
talk that you had high expectations for the Company’s
growth potential.
Hagiwara:
My expectations have not changed. In terms of diversity,
since I was given the opportunity to join Inabata, we haveincluded articles on diversity in our internal newsletter andhave continued to actively carry out measures to support
female employees. We are also steadily implementing
various initiatives to ensure that the Company enables each
employee to work comfortably and with strong motivation.
More people are joining the Company as mid-career hires
and are actively involved in various departments. I believe
this is also contributing to the organization’s transformation.

The increase in outside directors
has led to more diverse opinions
and more lasting discussions.
— Kenji Hamashima

Hagiwara:
When we would like to know more about specific matters,
we are connected with a member of the relevant

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ESG Information

Corporate GovernanceSato:
We now have executive officers that started as mid-careerhires, so in this sense, I think the Company is doing
exceptionally well in providing opportunities for employees
to thrive, and offering proper evaluations, appointments,
and promotions. On the other hand, there remain someissues in terms of effectively utilizing employees overseas.
In particular, for the appointment of presidents of overseas
subsidiaries, I have discussed the importance of recruiting
locally, rather than developing employees in Japan andpromoting them to such positions abroad.
Hamashima:
If Inabata’s customers were only Japanese companies,
perhaps having Japanese presidents at overseas
subsidiaries would be fine. However, considering that
IK Vision 2030 aims to increase the proportion of sales fromoverseas, it is essential to appoint outstanding local leaders
to energize the business model across our overseas bases.
What are your thoughts on measures and frameworks
for human resources development?
Hagiwara:
Human resource development measures and personnel
systems aim to show employees how they are expected to
grow and contribute to the Company. In order to develop
human resources more effectively, it is important that the
management team continues to verbally communicate
their expectations for employee growth. People of theyounger generation and employees with diverse values
place significant importance on how they can grow within
their company. Given this fact, in addition to providing fair
employee evaluations, it is becoming increasingly vital tocommunicate expectations for growth and make conscious
efforts toward employee development.
Hamashima:
Corporate training has evolved considerably, going beyond
simply classroom-style learning to incorporate a wide
variety of forms, such as training linked to personal
development, where individuals are empowered to think
deeply for themselves.

Sato:That’s right. In addition to focusing on internal training, I
think Inabata could also benefit from implementing external
training programs that enable participants to experiencevarious ways of thinking.
Hagiwara:
Continuing internal training helps to instill the language andvalues of the Company. However, to foster an organizationthat leverages diversity among all employees, including
mid-career hires, and to acquire an advantageous businessposition through negotiation and competition with external
parties, internal training alone is not sufficient. For this, it isalso important that employees acquire the knowledge,
skills, and flexible mindset that allows them to compete
among other companies and industries.

Part 4

Importance of the supply chain

The importance of the supply chain is positioned as
one of the Group’s material issues. What do you think
about this theme?
Sato:
It has always been necessary to have flexibility and arecoverable procurement network, and companies placed
considerable focus on business continuity plans (BCPs) 10
to 20 years ago. However, as having too many suppliers andchannels can lead to a drop in business efficiency, it is vitalto maintain a proper balance.
Hamashima:
If a company takes a drastic measure like decoupling frombusiness with China, as the United States is calling for,it could face escalating costs and become completely
unprofitable. To avoid this, it is necessary to explore
de-risking, which involves thoroughly assessing strategic
product placements and supply routes. With many
companies now facing such challenges, Inabata, which
possesses a diverse network of suppliers, must see thisnot as a risk, but as an opportunity to introduce more
suppliers to customers.

Having mid-career hires play activeroles in various departments will help
to transform the organization.
— Takako Hagiwara

73 Inabata Integrated Report 2023

Communication is vitalin determining a truly effective
growth strategy for the Company.
— Kiyoshi Sato

Part 5

Activities of the Nominating andRemuneration Committee

All of you are also members of the Nominating andRemuneration Committee. Could you tell us about
its activities?
Hagiwara:
Inabata has created an environment that enables
committee members to openly voice their ideas, with Mr.
Sato serving as chairperson. We are not only able to shareadvanced information on new directors and officers, but arealso able to express our opinions to them directly throughinterviews. When discussing the actual remuneration
system for directors and officers as well, we are able tocommunicate our opinions frankly as to how we incorporate
various perspectives essential in today’s society.
Sato:
While I have served on similar committees in othercompanies, I feel Inabata’s efforts here are very proactive.
Every year, the Company recommends candidates foroutside directors. This last year, we have interviewed andprovided feedback to three candidates after receiving
relevant briefings. We also hold interviews with executive
officer candidates, and provide feedback to the president
before finally reporting to the Board of Directors.
Hamashima:
Inabata prepares a list of management successors. As
outside directors, we are able to ask questions about
the director and officer candidates who are included in
the list. As a next step, if we can have the candidates givepresentations so that we can confirm whether they share
Inabata’s values, I think the whole process will become
even more transparent.

Part 6

Corporate value enhancement anddialogue with shareholders

With the Tokyo Stock Exchange calling for “Action to
Implement Management That Is Conscious of Costof Capital and Stock Price,” management with anawareness of capital efficiency has become increasingly

important. What are your thoughts on this?
Hagiwara:
I think external demands represent a positive opportunity
for change; they prompt companies to reexamine theirinternal frameworks and elements that have been thought“good enough as is,” encouraging them to acknowledge
and resolve any identified issues.
Hamashima:
Stock prices can often rise in the short term with the payment
of dividends or share repurchases. What is important,however, is to increase fundamental corporate value, andfor this, it is vital to boost business performance. I thinkincreasing business performance results in a higher return on
equity (ROE), which in turn leads to a higher price/book value
ratio (P/B ratio). Only focusing on the short term is notconducive to sustainable growth. We must thoroughly
discuss matters such as what proportion of generated profit
and cash flows should be allocated to shareholder returns or
growth investment, and adjust our pace accordingly.
Hagiwara:
The P/B ratio and stock price are often brought up during
Board of Directors’ meetings, and we also consider
feedback from shareholders when discussing measures.
Hamashima:
I think the reason Inabata’s stock price has risen recently is
because we have properly considered matters raised byinvestors, implemented appropriate measures, andprovided clear explanations. To further increase our stock
price, it is important to clarify our growth strategy. At Boardof Directors’ meetings, I have spoken about how this is alsoessential for consistently maintaining a P/B ratio of 1x ormore. The other outside directors have also voiced that amore proactive approach to announcing M&A and growthinvestments would be beneficial.
Sato:
I believe it is vital to actively engage in communication withshareholders and investors in determining a truly effective
growth strategy for the Company—while envisioning how
it will grow and meet everyone’s expectations.

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ESG Information

Corporate Governance

Basic approach

Transition to a company with an audit
and supervisory committee

The Inabata Group’s Mission is “People come first, basedon the spirit of ‘love (ai )’ and ‘respect (kei ),’ and together
we strive towards contributing to the development ofsociety.” With a foundation on this mission, the Company
aims to respond to the directive of all stakeholders who
support the Company’s activities including shareholders,business partners, and employees, and sustainably
improve corporate value. For this, the Company believes it
is essential to have a strong corporate governance systemfor ensuring transparency and fairness in business andspeed and resolution in decisions.

We have positioned the enhancement and improvementof corporate governance as an important management
issue, and have been working to improve theeffectiveness of the Board of Directors by shifting the
focus of meetings of the Board of Directors frombusiness execution to management strategy andmedium- to long-term issues. In June 2022, wetransitioned to a company with an audit and supervisorycommittee in order to further promote these initiatives,
further strengthen the Company’s supervisory function,and establish a system to accelerate management
decision-making. The majority of the Board of Directors is
composed of independent outside directors in order toembody a monitoring-type Board of Directors, thereby
enhancing corporate value.

Corporate governance system (As of July 1, 2023)

Corporate governance system (As of July 1, 2023)

Changes in initiatives tostrengthen governance

Organizational design

Company with an audit andsupervisory committee

PeriodDirectors not on the Audit andSupervisory Committee

7 (including 2 independent outside
directors)

June 2003

Executive officer system introduced

Directors on the Audit andSupervisory Committee

5 (including 5 independent outside
directors)

June 2006

Term of appointment of directors reduced from two
years to one year

June 2013

Appointment of two outside directors

June 2015

Appointment of three outside directors

Chairperson of the Board of Directors President
Term of office for directors not on the
Audit and Supervisory Committee

1 yearTerm of office for directors on the
Audit and Supervisory Committee

2 years

Executive officer system

Yes

Advisory committees to theBoard of Directors

Nominating and Remuneration
Committee

Accounting auditors

KPMG Azsa LLC

November 2015P. 81

https://www.inabata.
co.jp/english/investor/
library/governance/

Corporate Governance Report

Nominating and Remuneration Committee(voluntary) established
Evaluation of the Board of Directors introduced

June 2022

Transition to a company with an audit andsupervisory committee
Transition to having outside directors comprise themajority of directors

Board of Directors

Audit and Supervisory Committee

The Board of Directors makes decisions on importantmatters set out in laws and regulations, Articles ofIncorporation, and Regulations of the Board of Directors.
These matters include formulation of business plans andannual budgeting as well as making basic management
policies and appointing executive officers. The Board of
Directors consists of 12 members, including seven directors
who are not Audit and Supervisory Committee members
and five directors who are Audit and Supervisory
Committee members. Among the 12 members, seven are
independent outside directors, comprising the majority.
By shifting to a company with an audit and supervisorycommittee, we have transitioned to a monitoring-type Boardof Directors with strengthened supervisory functions andmade it possible to delegate important business decisions
to business executives, establishing a system that enables
us to make management decisions more quickly.

Inabata is a company with an audit and supervisorycommittee, and the Audit and Supervisory Committee
consists of five Audit and Supervisory Committee
members, all of whom are outside directors. The
committee audits the decision-making of the Board of
Directors and the execution of duties by executive officers.
Directors who are members of the Audit and Supervisory
Committee are extremely well-versed in finance,accounting, and law, and are also highly independent.

General Meeting of Shareholders
Election / Dismissal

Nominating andRemuneration Committee

AdviceElection / Dismissal

Proposal / Report

Board of Directors

Audit /
ReportReport

Audit

Sustainability Committee

Direction

Accounting
Auditors

Audit andSupervisory
Committee OfficeDirection

President

ReportAudit and Supervisory
Committee

Business Execution System

Election /Dismissal

Report / Statementof Opinions

ReportAccounting
Audit

Internal Audit Office

ReportCompliance Committee
Management
CouncilInternal Control Committee
Human Rights Affairs Committee
Export Control Committee

Collaboration

Internal Audit
Executive Officer

Sales Divisions / Administrative Offices / Group Companies Worldwide

Percentage of independent outside directors
Directors (excluding Audit andSupervisory Committee members)

7

Outsidedirectors

75 Inabata Integrated Report 2023

In addition, the Audit and Supervisory Committee Officehas been established as a dedicated organization to assist
the Audit and Supervisory Committee in its duties, andsuitable persons independent of the directors (excluding
directors who are members of the Audit and Supervisory
Committee) have been assigned to this office.

Directors (Audit and Supervisory
Committee members)

558% (7 of 12)

Outsidedirectors

Inabata Integrated Report 2023

76

Chapter 3
ESG Information

Corporate GovernanceNominating and Remuneration Committee

Skills that our Board of Directors’ members are expected to have

We voluntarily set up the Nominating and Remuneration
Committee in 2015. The committee, the majority of which
consists of independent outside directors and which
is chaired by the lead independent outside director,
engages in deliberations when making decisions on
issues such as the selection and dismissal of executives,nomination of candidates for positions of director andexecutive officer, and the remuneration of directors. The
Board of Directors strives to ensure objectivity, fairness,and transparency by fully respecting the deliberation
results of the Nominating and Remuneration Committee.

Members of the Nominating and Remuneration
Committee:
Three outside directors (of these, one director who is
an Audit and Supervisory Committee member)
One internal director
Chairperson: Lead independent outside director
Number of times held: FY2022 10 times

Director experience and expected roles (skills matrix)
Business strategy & industry knowledge

Name

Katsutaro Inabata

GlobalElectronics
management & energy

Materials&
chemicals

Legal, risk
management,
Finance && internal
HR & labor IT & digital
Food & life accounting
control●●●●

Toyohiro Akao●●●

Masahiro Sugiyama

Osamu Chonan*●

Kenji Hamashima*

●

●

●

●

●

●

●

Takako Hagiwara*

Satoshi Tamai*
Directors(Audit andSupervisory Minoru Sanari*Committee
members)
Tomokazu Fujisawa*●●●Takashi Shigemori●●

Kenichi Yokota
Directors

●

ESG

●

●

●
●

●

●

●

●

Noriya Yokota*

●

●
●

●
●

●

●

●

* Independent outside director

Skills Matrix Approach
Our mission is that “People come first, based on the spiritof ‘love (ai )’ and ‘respect (kei )’, and together we strive

In identifying the skills expected of directors, we havedetermined what skills are necessary to build a system

towards contributing to the development of society,” andwe seek to take the approach of “To continually evolve,
serving clients and society, through global operations andthat can fulfill the decision-making and supervisory
functions related to business execution of the Board of
Directors of our globally operating company, based on our

meeting their changing needs.” We have also set forth our
long-term vision, IK Vision 2030, which is how weenvision ourselves around 2030, and have positioned ourMission, Vision, our long-term vision IK Vision 2030, andmedium-term business plan, NC2023. From thisperspective, we have specifically identified the skills

medium-term business plan, NC2023, as the second
stage toward fulfilling that long-term vision.

listed on the right and developed a skills matrix.

77 Inabata Integrated Report 2023

Global management
We are developing our business globally, and inparticular, our long-term vision IK Vision 2030
envisages increasing the ratio of our businessconducted overseas to 70% or more. From thisperspective, we believe that it is extremely useful toappoint people with knowledge of global corporate
management to the Board of Directors in order topromote our future growth. When inviting outside
directors, we take particular care to ensure that theirexperience includes top management of companies
with global operations, or equivalent experience.
The “global management” item in the skills matrix
is based on the presence or absence of top
management or equivalent experience at companies
with global operations.
Business strategy & industry knowledge
In managing a specialized trading company such as
ours, first and foremost, executives must havein-depth expertise and experience in each businessfield. In particular, it is extremely important for
executive directors to have broad knowledge,
experience, and personal connections in each of ourbusiness fields in order to develop a trading company
business like ours. When appointing executive
directors, we consider the balance of those withknowledge in our business fields. When inviting
outside directors, we aim to include individuals who
have broad knowledge and experience in theirrespective business fields and are able to provide
supervision and opinions on business strategies froman objective perspective.
Finance & accounting
The importance of financial strategy (corporate
finance) in corporate management goes without
saying. We believe that it is necessary for some
executive directors to be in strategy, and to spearhead
initiatives to enhance corporate value through various
dialogues with investors. In addition, in order tostrengthen the supervisory function over businessexecution, we believe that it is useful to ensure that
directors who are familiar with finance and accounting
are included on the Audit and Supervisory Committee.
Legal, risk management, & internal control
As a company with a wide range of global operations,
we are exposed to a variety of risks, including credit
risks of our customers, risks associated with business
investments, country risks associated with overseas
operations, currency exchange risks, and commodity
market fluctuation risks. Therefore, risk management

is extremely important for management. We arecommitted to management that emphasizes
compliance above all else, and in order to strengthen
the supervisory function over business execution, we
believe that it is useful to always have directors who
are familiar with the law as members of the Audit andSupervisory Committee.
In addition, we have adopted the company with an audit
and supervisory committee system, with the aim of
speeding up management decision-making andstrengthening the supervisory function of businessexecution. A company with an audit and supervisorycommittee must effectively utilize the company’s
internal control system and conduct systematic audits.
From this perspective, we believe it is essential thatthe directors who are members of the Audit andSupervisory Committee include persons with expertiseand experience in internal control and auditing.
HR & labor
For a trading company such as Inabata, humanresources are our greatest asset, and human resource
development is an important management issue overthe medium to long term. In our medium-termbusiness plan, NC2023, we are working to improve
our initiatives for training global human resources,
further enhancing our systems to increase diversity,
boosting employee engagement, and reforming work
styles. From this perspective, we believe that it isdesirable to have directors with experience and skills
in human resources and labor affairs, and place
importance on these perspectives when inviting
outside directors.
IT & digital
Knowledge of IT and digital technology is
indispensable for promoting DX. In addition, threats to
information security are increasing year by year, andwe believe that IT and digital skills are necessary tostrengthen our countermeasures against such threats.
ESG
We established the Sustainability Committee in
October 2021, and regard the promotion ofsustainability as an important management issue.
We also consider the improvement of external ESG
assessments to be an important issue. From thisperspective, we believe that it is necessary to include
persons with knowledge of sustainability and ESG incorporate management on the Board of Directors, andwe take these points into consideration when inviting
outside directors.

Inabata Integrated Report 2023

78

Chapter 3
ESG Information

Corporate GovernanceAttendance status for FY2022

Name

TakakoHagiwara
join online) from across the world hold direct discussions
with the management.

Number of times convened: FY2022
Management Council 13 times, Shinsa Kaigi 20 times

Accounting auditors
Accounting audits, audits of financial statements,
quarterly reviews, and internal control audits for Inabata
are conducted by KPMG Azsa LLC. The Audit andSupervisory Committee formulates evaluation criteria,
including autonomy, specialized knowledge, andassessment, for the appointment and suspension of

accounting auditors, and makes decisions based on theevaluation results.
Cooperation among the Audit and Supervisory
Committee, accounting auditors, and the Internal
Audit Office
The Audit and Supervisory Committee, accounting
auditors, and the Internal Audit Office collaborate throughperiodic reporting and discussion of audit results. In
investigating the status of our operations and assets
and performing other auditing duties, the Audit andSupervisory Committee works closely with the Internal
Audit Office to ensure that audits are conducted in an
organized and efficient manner.
In addition, the Audit and Supervisory Committee,
accounting auditors, and the Internal Audit Office meet
regularly to collaborate and share information.

Osamu
Chonan2 years

Newly
appointed

100%

100%

16/16 times 10/10 times

—

—

Kenji
Hamashima(Nominating andRemuneration
Committee member,
Chairperson of the
Audit and Supervisory
Committee)

Satoshi
Tamai

MinoruSanariTomokazu
Fujisawa

NoriyaYokotaOutsidedirectors

7

Internal
directors

5

Takako Hagiwara served as representative director of Sony Hikari Corp. and Sony
Kibou Corp., as well as a director of Green House Co., Ltd., and currently serves asrepresentative director of DDD Corp. and outside director of Twinbird Corp. and
NEC Capital Solutions Ltd. For many years she oversaw human resources in a
major global electronics manufacturer with multiple businesses including
audiovisual equipment, movies, and music, and has experience in management.
Inabata appointed her in expectation of gaining advice on human resources
strategies and diversity promotion.
Osamu Chonan has served as representative director, president, and chief
executive corporate officer of Kewpie Corp. He currently serves as chairmanof the Kewpie Miraitamago Foundation. He held positions of responsibility formany years in the sales division of a food manufacturer with a global presence
centered in China and Southeast Asia, in addition to which he has also served inmanagement, and accordingly has extensive knowledge and experience. Basedon this, Inabata considered him suitably qualified and appointed him as outside
director. It is expected that he will use his abundant experience and extensive
knowledge as a manager to provide oversight and advice in relation to theCompany’s execution of business operations from an objective perspective.

3 years

1 year

1 year

1 yearNewly
appointed

100%

100%

16/16 times 10/10 times

100%
13/13 times

100%
13/13 times

100%
13/13 times—

Kenji Hamashima has served as director and senior executive vice president, andpresident and chief executive officer of Ushio Inc. He currently serves as special
adviser of the same company and outside director of Nichirei Corp. As he possesses
global and abundant experience and wide-ranging expertise as a member of the
management of a manufacturer which produces applied optics products, suchas industrial light sources, and industrial machinery, Inabata appointed him in
expectation of accurate auditing and supervision of overall management.

—

Satoshi Tamai serves as representative for the Satoshi Tamai Certified Public
Accountant Office, and an outside auditor for Toho Lamac Co., Ltd. and PC Depot
Corp. As he has experience working for a major trading company, has a CPA
qualification, and has served as a representative partner for a major audit firm inJapan and an outside auditor for multiple companies, in addition to possessing
knowledge as an accounting expert and wide-ranging expertise, Inabata appointed
him in expectation of accurate auditing and supervision of overall management.

—

Minoru Sanari served as General Counsel, Legal Section, General Administration
Department for Tokyo Gas Co., Ltd. before serving as an Executive Officer (incharge of governance), and is currently a Senior Advisor for said company. As he
has expert knowledge and an abundance of experience from his involvement withcorporate legal matters and corporate governance over the course of many years
in his capacity as an attorney at the largest city gas company, Inabata appointed
him in expectation of accurate auditing and supervision of overall management.

—

Tomokazu Fujisawa has served as full-time corporate auditor and director as amember of the audit & supervisory committee of Astellas Pharma Inc. He has
worked as the Director of Planning for a business division in a global pharmaceuticalcompany that develops pharmaceutical businesses around the world, also has
experience in overseas subsidiaries and auditing operations, and has served as adirector on the audit & supervisory committee, which is why Inabata appointed him
in expectation of accurate auditing and supervision of overall management.

—

Noriya Yokota has served as director and senior executive officer of Kirin Holdings
Co., Ltd., director of Kirin Business System Co., Ltd., and director of Kirin BreweryCo., Ltd. He has served as a factory manager and head of the production
department at a manufacturer that produces and sells alcoholic beverages,
beverages, and pharmaceuticals around the world, and after serving as managerof an overseas subsidiary of the same company, he has been in charge of humanresources, finance, IT, and management strategy as an executive officer. He
accordingly has a great degree of insight and abundant experience. Based on this,Inabata has determined that he can be expected to provide accurate audit andsupervision for the overall management of the Company and appointed him as
outside director who is an Audit and Supervisory Committee member.

Notes: 1. Kenji Hamashima’s attendance at meetings of the Board of Directors includes the period in which he served as an independent outside director from April 1, 2022, to theclosing of the 161st Ordinary General Meeting of Shareholders held on June 22, 2022.
2. Satoshi Tamai’s attendance at meetings of the Board of Directors does not include three meetings attended during the period in which he served as an Audit & Supervisory
Board member from April 1, 2022, to the closing of the 161st Ordinary General Meeting of Shareholders held on June 22, 2022.
3. Please refer to page 99 for more details on the attendance of all directors at meetings of the Board of Directors, the Audit and Supervisory Committee, and the Nominating andRemuneration Committee.

Training for outside directors
Meetings of outside directors only
Number of times held: FY2022 2 times

79 Inabata Integrated Report 2023

Reason for appointment

Directors on the Audit and Supervisory Committee

Structure for outside directors
In electing outside directors, Inabata aims to appoint
candidates who have abundant experience and knowledgeof corporate management, the ability to oversee thedecision-making and business execution of the Board of
Directors of the Company which conducts business on a
global basis, and who provide appropriate advice from an
objective perspective. The proportion of outside directors
stands at 58% (seven out of 12 directors).

(Leading independent
outside director,
Chairperson of theNominating andRemuneration
Committee)(Nominating andRemuneration
Committee member)

Audit system
Internal audits
We have established the Internal Audit Office and areworking to strengthen its ranks in order to enhanceinternal audits. The office complies with the internal
control reporting system related to financial reporting
based on the Financial Instruments and Exchange Act,and also conducts internal audits as necessary from time
to time. The Internal Audit Office reports regularly to thepresident, the Board of Directors, and the Audit andSupervisory Committee on audit plans and audit results.

Meetings Nominating andof the Board Remunerationof Directors
Committee

Directors not on the Audit and Supervisory Committee

Management Council and Shinsa Kaigi
We set up the Management Council as an institution forbusiness execution. This council deliberates on basic
policies and important matters related to managementand decides their direction. We have also established theShinsa Kaigi as an institution to review important mattersrelated to business execution, investment and loan
projects, and credit. Its participants (including those who

Years
Autonomous in office

In order to deepen outside directors’ understanding of
the Group’s business activities, we provide opportunities
for them to meet with the heads of each division, as
well as opportunities to visit overseas (including online
meetings) and conduct on-site inspections. Even after

directors have assumed office, we offer and facilitate
training opportunities to help them acquire the necessary
knowledge and promote an understanding of their roles
and responsibilities. The status of directors’ training isreported to the Board of Directors once a year.

Inabata Integrated Report 2023

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Chapter 3
ESG Information

Corporate Governance

The effectiveness evaluation of the Board of Directors

In addition, the following improvements and progress have been confirmed with regard toaddressing the issues that were identified in the previous self-evaluation.

• Inabata has been conducting the effectiveness evaluation of the Board of Directors since FY2015.
• Each cycle lasts for three years in which self-evaluation is carried out for the first two years and third-party evaluation iscarried out in the third year.
• The overview of the evaluation and issues to be considered are published on the Company’s website.
• Self-evaluation was carried out in FY2022.

• Discussions on the succession plan and sustainability issues
Matters concerning succession planning and sustainability initiatives have been shared by the Board of
Directors and discussions are progressing, but it is believed that further discussions are necessary.

FY2020Third-party
evaluation

FY2021
Self-evaluation

FY2022
Self-evaluation

Distribution ofquestionnaire(all directors)

Aggregation(external
experts)

Simplified
analysis(in-house staff)• Communication among outside directors, which has been insufficient due to COVID-19
Improvements were seen, such as holding opinion exchange meetings among outside directors,
but it is believed that there is still room for improvement, considering matters such as the inability
to hold in-person meetings due to the COVID-19 pandemic.

FY2023
Third-party evaluation(planned)

3. Summary ofanalysis andevaluation

FY2022 Self-evaluation process (questionnaire format)
Discussion onquestionnaire(in-house staff
and external
experts)• Sufficient provision of information from the Nominating and Remuneration Committee to theBoard of Directors
Although the Nominating and Remuneration Committee has provided information for discussion
by the Board of Directors, it is still considered insufficient.

Report to theBoard ofDirectors andverification

Disclosure on
websiteNext third-party
evaluation• Further enhancement of information dissemination to the capital market
Improvements were seen, such as reviewing the numerical targets and indicators of medium-termbusiness plan NC2023, and enhancing the disclosure of sustainability-related information, whilereferring to the opinions gathered through dialogue with shareholders and investors; however, it isstill believed that there is room for further improvement.
On the other hand, we recognized the following issues to be considered in the future.
• Further discussion on medium- to long-term management policies and issues related tosuccession planning for top management and for outside directors• Provision of sufficient information and communication by the Nominating and Remuneration
Committee to the Board of Directors• Further communications among outside directors

Evaluation results for FY2022• Further enhancement of information dissemination to the capital market

1. Target of
evaluation

In addition, among the major risks facing the Company, credit risks of customers, product market
fluctuation risks, and latent risks of overseas activities were recognized as being of particularlyhigh importance.

All directors (11) in office as of the end of March 2023
• Question items were distributed to the subjects, and the answer results were aggregated by anoutside consultant.

2. Evaluation
methodology• The working group for the evaluation of the Board of Directors carried out a simplified analysis andcompilation of the aggregated results, and the director in charge reported at the Board of Directors’
meeting held in March 2023.
• After verification by the Board of Directors of the content of the report, the direction of future
measures was decided.

3. Summary ofanalysis andevaluation

As a result of analysis and evaluation, the operations of the Company’s Board of Directors have been
generally appropriate and assessed highly, with open and active discussions. We also confirmed thefollowing: (1) in general, the Company provides sufficient support to outside directors, who arethought of as making significant contributions to discussions at Board of Directors’ meetings; (2) the
Nominating and Remuneration Committee is thought of as operating appropriately; (3) the Audit andSupervisory Committee is thought of as operating appropriately; (4) the status of dialogues withinvestors and shareholders is considered to be adequately provided to the Board of Directors; and(5) improvement efforts are believed to be made based on the results of Board of Directors
evaluations, among other topics. It has been confirmed that the Board of Directors of the Company
is generally functioning properly and that its effectiveness is secured.

81 Inabata Integrated Report 2023

4. Future courseof action

Based on the results of this analysis and evaluation, we will strive to further enhance theeffectiveness of the Board of Directors by addressing the issues identified.
In FY2023, an effectiveness evaluation (third-party evaluation) is scheduled to be implemented.

Questions
1. Operational status of the Board of Directors
2. Function and role of the Board of Directors
3. Composition of the Board of Directors
4. Composition and role of the Nominating andRemuneration Committee
5. Operational status of the Nominating andRemuneration Committee

6. Composition and role of the Audit andSupervisory Committee
7. Operational status of the Audit andSupervisory Committee
8. Support system for outside directors
9. Relationship with investors and shareholders

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Chapter 3
ESG Information

Corporate Governance

Remuneration of directors and Audit and Supervisory Committee members

2. Remuneration for directors who are Audit andSupervisory Committee members

A summary of information on remuneration and other benefits is as follows.

Fixed
remuneration

Fixed remuneration only

1. Remuneration for directors who are not Audit and Supervisory Committee members(1) Fixed
Minimum guaranteed amount by position
remuneration*1(2) Performancelinked
remuneration

Calculated by multiplying the fixed remuneration for each position in (1) by a coefficient for:• Profit before income taxes and non-controlling interests (excluding gain on sales of certain
strategically held shares)*2• Returns on capital (ROIC and ROE)*3• Stock price*3• Each level of ESG scores from multiple external evaluation organizations (FTSE Russell and MSCI)*4

3. Actual remuneration of directors in FY2022*6,*10

Classification

A system under which executive directors receive the points granted to them during their term in
the form of shares and cash upon their retirement. The calculation method of points granted todirectors is as follows.

(3) Board Benefit
Trust (BBT)*5(Method of calculating points awarded to directors)
Points granted for the current year = Service points + Performance points
50% of the base points determined for each position (fixed)
Service points × performance coefficient
Performance coefficient: Coefficient determined by the achievement rate for consolidated sales
targets and consolidated operating profit targets
Target achievement rate: Actual performance compared to the rate externally announced in themedium-term business plan

*1 Remuneration for directors who are not executive directors is fixed remuneration only.
*2 Executive directors are responsible for all business activities of the entire Group, including the operating and financial activities of Group companies, and we believe that the results ofthese activities are reflected in consolidated profit before income taxes and non-controlling interests, which is used as one indicator.
*3 We have adopted ROIC as an indicator because one of the key initiatives in our medium-term business plan, NC2023, is “intensification of investment targeting future growth,” andwe believe that capital efficiency and investment yield should also be considered in light of requests from the capital market and trends among listed companies. In addition, as partof our measures to realize management conscious of cost of capital and share prices, we are using ROE and share price (specifically, the difference between the year-on-year growthrate of TOPIX and the year-on-year growth rate of our share price) as new indicators.
4* Since we recognize that addressing sustainability is an important management issue for our company, we obtain ESG scores from several external evaluation organizations and use
them as an indicator.
*5 We have introduced the Board Benefit Trust (BBT) as a performance-linked stock compensation plan in order to clarify the linkage between the compensation of executive directors
and our business performance and stock value. Having directors share not just the benefits of higher stock prices, but also the risk of lower stock prices with shareholders, will
increase their awareness, so that they can contribute to improving business performance and increasing corporate value over the medium to long term.

Of the remuneration for directors who are not membersof the Audit and Supervisory Committee, (1) fixed
remuneration and (2) performance-linked remuneration
are determined by the Board of Directors within thescope of the total amount of remuneration approved by
the Ordinary General Meeting of Shareholders. The
maximum amount of remuneration for directors who are
not members of the Audit and Supervisory Committee as
per the resolution of the Ordinary General Meeting of
Shareholders is 430 million yen per year (of which 50
million yen is for outside directors). In addition, as aperformance-linked stock compensation plan for
executive directors, the Company has resolved (3)compensation limits for the Board Benefit Trust (BBT).
The individual remuneration of directors who are not
Audit and Supervisory Committee members is designed
to be calculated automatically using a formula andcoefficient defined in regulations resolved by the Board of

83 Inabata Integrated Report 2023

Directors, without taking qualitative factors into
consideration, and the Human Resources Office willcalculate this in accordance with regulations. The resultsof the calculations are reviewed by the Nominating andRemuneration Committee, which is chaired by the leadindependent outside director and at which independent
outside directors have a majority. The Board of Directors
determines the compensation of directors who are not
Audit and Supervisory Committee members with fullrespect for the results of the deliberations of theNominating and Remuneration Committee.
These sorts of procedures ensure objectivity, fairness,and transparency in the determination of individualcompensation for directors who are not Audit andSupervisory Committee members, and the determinationof individual compensation is never delegated to specificdirectors or other parties.

Remuneration for directors who are Audit andSupervisory Committee members is decided via
discussions by directors who are Audit and Supervisory
Committee members, within the scope of total
remuneration approved by the Ordinary General Meetingof Shareholders. The maximum remuneration amount for
directors who are Audit and Supervisory Committee
members, as per the resolution of the Ordinary General
Meeting of Shareholders, is 80 million yen per year.

Total amount of remuneration and other benefits by type (millions of yen)
Total amount of
Performance-linked
Board Benefit
No. of eligible
remuneration and other
remuneration
Trust (BBT)
persons
benefits (millions of yen) Fixed remuneration

Directors (excluding Audit andSupervisory Committee members
and outside directors)*7,*11,*12,*13

335

140

128

67

6

Directors (Audit and Supervisory
Committee members; excluding
outside directors)*8

—

—

—

—

—

Audit & Supervisory Board members(excluding outside Audit &Supervisory Board members)*9

6

6

—

—

1

Outside directors and auditors

58

58

—

—

10

* The above includes one director, one outside director, one internal Audit & Supervisory Board member, and three outside Audit & Supervisory Board members who retired at theconclusion of the 161st Ordinary General Meeting of Shareholders held on June 22, 2022. On June 22, 2022, we transitioned from a company with an audit & supervisory board to acompany with an audit and supervisory committee.
7* Remuneration and other benefits for directors (excluding Audit and Supervisory Committee members) before and after the transition to the company with an audit and supervisorycommittee system is as follows.
After the transition to a company with an audit and supervisory committee
At the 161st Ordinary General Meeting of Shareholders held on June 22, 2022, the annual amount of remuneration for directors (excluding Audit and Supervisory Committee
members) was approved at up to 430 million yen (of which 50 million yen is for outside directors). In addition, at the same General Meeting of Shareholders, remuneration limits for
the Board Benefit Trust (BBT), the introduction of which was approved at the 157th Ordinary General Meeting of Shareholders held on June 22, 2018, were reapproved.
Before the transition to a company with an audit and supervisory committee
At the 145th Ordinary General Meeting of Shareholders held on June 29, 2006, the annual amount of remuneration for directors was approved at up to 430 million yen. Separate to
the above remuneration limit, at the 157th Ordinary General Meeting of Shareholders held on June 22, 2018, the introduction of a BBT as a performance-linked stock compensation
plan for directors (excluding outside directors) was approved.
8* At the 161st Ordinary General Meeting of Shareholders held on June 22, 2022, the annual amount of remuneration for directors (Audit and Supervisory Committee members) wasapproved at up to 80 million yen.
*9 The remuneration amount for Audit & Supervisory Board members is the amount received while in office by four Audit & Supervisory Board members who retired at the conclusionof the 161st Ordinary General Meeting of Shareholders held on June 22, 2022. Of the four members, one was newly appointed as a director (Audit and Supervisory Committee
member) after retiring as an Audit & Supervisory Board member at the conclusion of the said meeting. Consequently, the stated amounts paid and number of persons paid includes
their term of office as an Audit & Supervisory Board member in the “Audit & Supervisory Board members” row and their term of office as an Audit and Supervisory Committee
member in the “Directors (Audit and Supervisory Committee members)” row. Furthermore, at the 145th Ordinary General Meeting of Shareholders held on June 29, 2006, theannual amount of remuneration for Audit & Supervisory Board members was approved at up to 80 million yen.
10
* The number of persons paid shows the cumulative total; however, the actual number of persons eligible for payment is 15 (of which eight are outside directors/auditors).
11* BBT is the amount of provision for the reserve for directors’ stock benefits included in the fiscal year under review.
*12 The Company has not established a guideline on deciding the payment ratio between performance-linked remuneration and other types of remuneration for directors (excluding
directors who are Audit and Supervisory Committee members and outside directors) because these forms of remuneration are determined automatically based on their respective
performance indicators and formulas, and therefore have no possibility of being adjusted arbitrarily.
13* Remuneration for directors for the fiscal year under review was deliberated on at a meeting of the Nominating and Remuneration Committee held on May 23, 2022, and approved ata meeting of the Board of Directors held on June 22, 2022. The Board of Directors has checked that the determination method for, and the details of, the individual remuneration for
directors in the fiscal year under review are consistent with the determination policy approved by the Board of Directors, and has deemed that they are in accordance with suchdetermination policy.
6

Ratio of performance-linked remunerationand fixed remuneration in FY2022
Performance-linked remuneration

Fixed remuneration

58.2%

41.8%

Reference: Past remuneration of directors*
FY2018248 million yen

FY2019300 million yen

FY2020318 million yen

FY2021319 million yen

FY2022335 million yen* Before FY2019, excludes non-executive directors.
After FY2020, excludes outside directors.

Inabata Integrated Report 2023

84

Chapter 3
ESG Information

Corporate Governance / Risk Management

Risk Management

Strategically held shares
Basic views
Close business and cooperative relations with various
companies are valuable assets to Inabata, and theCompany believes the establishment, maintenance anddevelopment of these relations improve the Company’s
corporate value in the medium and long term and leadto the benefit of shareholders and investors. Also, asInabata believes that strategically holding shares of suchcompanies continues to be an effective way to establish,
maintain, and develop good cooperative relations, theCompany owns strategically held shares.
Policy related to holding and reducing strategicallyheld shares
Inabata forms a judgment concerning the pros and cons ofstrategically held shares based on whether holding them
contributes to the establishment of cooperative relations,enhances the Company’s corporate value in the medium
and long term, and leads to the benefit of shareholders andinvestors. To be specific, the Board of Directors will makeannual comprehensive reviews of the appropriateness ofholding each individual stock, taking into account thefinancial condition of the investee company, the liquidity ofthe stock, trends in the volume of transactions and profits
related to business with the Company or its Group
companies and their medium- to long-term prospects,
economic rationales such as whether the risk and returnare commensurate with the cost of capital, and otherqualitative information. The Company follows a policy of
reducing the shares that the holding of which is notconsidered significant, while considering timing and theeffect on the market and the business.
Note that we have set “continuous review of assets andfurther improvement of capital and asset efficiency” asa key initiative in our three-year medium-term businessplan, NC2023, which ends in FY2023. Specifically, thepolicy is to reduce the balance of strategically held sharesby 50% over the three-year period during the promotionof NC2023, relative to the balance as of March 31, 2021.
We will also reduce strategically held shares over the
medium to long term, aiming to reduce the balance byapproximately 80% by March 31, 2027, relative to thebalance as of March 31, 2021. Based on this policy, we
will further reduce our strategically held shares by more
rigorously verifying the significance of our holdings.

Risk management system and relevantorganizational units

Basic concept
Operating globally with approximately 60 bases across
19 countries, mainly in Asia, our Group faces various
kinds of risks.

Strategic shareholdings*(Millions of yen)
60,00050% reduction

40,00080% reduction
20,0000March 31, March 31, March 31, March 31,
2021
2022
2023
2024

March 31,2027

NC2023

We manage risks by establishing and implementing
various regulations related to credit management, export
management, product management, and others, with our
Risk Management Office at the core. Additionally, we
prepare ourselves for risks arising from daily work byorganizing and implementing the operational rules for
trading bases and manufacturing bases in multiple
languages, along with executing appropriate risk checking
functions from head offices using regulations for
managing Group companies in Japan and abroad.

We have identified the 14 risks shown in the below risk
matrix as the main risks faced by our Group. Mapping
has been done on the matrix based on the probable
impact of each risk on the Group’s business performanceand the possibility of its occurrence using the responses
on risk awareness of managers in the effectivenessevaluation of the Board of Directors conducted in
FY2022 and other factors.

* Strategic shareholdings: Stocks listed in Japan

From the next page, we will explain risks that are of highimportance to our Group.

Sales of strategically held shares
FY2017

9,017 million yen

FY20185,298 million yen

FY20193,026 million yen

FY20202,944 million yen

FY2021

9,367 million yen

FY2022

10,076 million yen

Risk management system and relevant organizational units
Board of Directors
President

Management
Council

Shinsa Kaigi

Sales Divisions

Administrative Offices

Sustainability
Committee

Compliance
Committee

Export Control
Committee

Compliance
Working Committee

Personal Information
Protection
Working Committee

Committees and meeting bodies
responsible for risk response

Information Security
Working Committee

Pharmaceuticals
Management
Working Committee

Group Companies

Organizational units responsible for risk response

Criteria for exercise of voting rights
In principle, Inabata exercises voting rights for all
agendas in order to exercise its rights as a shareholder.
The Company reviews the merits and demerits of eachagenda and exercises voting rights based on the
judgment criteria of whether sustainable growth of theheld company and improvement of its corporate value
in the medium and long term can be expected.

Plastics Compound
Business OfficeFinancial
Management OfficeBusiness Planning
OfficeRisk Management
OfficeGeneral Affairs
OfficeDigital Promotion
OfficeBusiness Process
Management Office

Risk matrix
Impact on
business
performance

2

Large

Risk related to businessrestructuring
7 Environment-related risks
6

Medium

13 Risk related to laws

Smalland regulations
14 Risk of fluctuations inretirement benefit obligation
Low

85 Inabata Integrated Report 2023

At Inabata, individual risks are continuously monitored byresponsible organizational units, and relevant committees
and meeting bodies collaborate to promote effective
risk management.

Risk of fluctuationsin product markets

Risk related to information
systems and security
10 Risk related to quality
8

12 Risk of natural andother disasters

Medium1
3

Credit risk of customers
Potential risks ofoverseas activities

Risk related to business investment
Risk of fluctuations in foreignexchange rate
9 Risk related to interest rates
4
5

11 Risk of decline in value of

securities held

High

Possibility of occurrence

Inabata Integrated Report 2023

86

Chapter 3
ESG Information

Risk Management

Risks of high importance and related countermeasures
1 Credit risk of customers
Our Group companies grant credit to many customers
in Japan and abroad. Although we carry out credit
management on a global scale, including our overseas
customers as well, we cannot guarantee full collections.
Therefore, there is a risk of adverse impact on ourGroup’s financial position and business performancedue to the aggregation of bad-debt losses and allowancefor doubtful accounts through bankruptcy and civil
rehabilitation procedures and so on from contingencies
concerning customers.

As of the end of the consolidated fiscal year, the Group’s
notes receivable–trade and accounts receivable–tradewere 23,247 million yen and 153,640 million yen,respectively, and inventories were 88,890 million yen,
the total of which accounted for 70% of total assets.
Screening for credit of significant importance is conductedby the Shinsa Kaigi, which is composed of members ofmanagement and holds discussions on investments, loans,and credit projects. With regard to inventories, we monitor
and manage the balance of each consolidated Group
company on a monthly basis.
Relevant organizational units: Risk Management Office
Risk of fluctuations in product markets
Many of the information electronic materials, chemical raw
materials, food products, and plastics handled by our Groupare impacted by fluctuations in commodity prices. Failure
to respond flexibly to market fluctuations could adversely
impact the financial position and business performance of
our Group. Each sales division gathers market information,
monitors price trends, and thoroughly manages inventory.
2

In the consolidated fiscal year, the Group was affected bya decline in the market price for components for FPDs,
which are a core product in the information and electronics
business. Furthermore, in the food business of the life
industry business segment, where we carry out inventorytransactions, we were impacted by a drop in prices ofmarine products for the food service industry in the U.S.
market.
Relevant organizational units: Financial Management
Office, each sales division
Potential risks of overseas activities
Our Group’s production and sales activities overseas cover
multiple regions, including Southeast Asia and Northeast
Asia, North America, and Europe. There are inherent risks in
3

87 Inabata Integrated Report 2023

operating in these foreign markets, which include
unexpected changes in laws or regulations, adverse
political or economic factors, difficulty in recruiting andretaining personnel, underdeveloped technologicalinfrastructure, potentially adverse tax consequences, andsocial disruptions due to other factors.
To ensure that we can reduce such risks, we haveestablished a framework for adapting swiftly to changes,
and we carefully monitor laws and regulations throughout
the world, environmental laws and regulations, and trends
among society and our business partners.
For sales in the consolidated fiscal year by region, Asia
accounted for 51% of the total, having the largest influenceon our business. Our performance was affected byconstrained economic activity due to the impact of
COVID-19, mainly in China. While the conflict in Russia andUkraine has also presented risks, they have not had a direct
and major impact on the financial position and businessperformance of the Group.
We have formulated and are implementing business
continuity plans (BCP) at our major overseas bases to serveas countermeasures for emergencies such as infectious
disease outbreaks.
Relevant organizational units: Risk Management
Office, Financial Management Office
4 Risk related to business investment
When developing business at the Inabata Group, in manycases, we make investments and acquire equity in a joint
enterprise or joint venture. Notably, with respect to ourinvestments in consolidated affiliates, there is a risk that theGroup’s financial position and business performance could
be adversely impacted by trends in the financial status andperformance of such Group companies.

In principle, our Group invests in minority interests with themain objective of expanding the shosha trading business,and limits the risks and amounts for investments in majority
interests. In addition to focusing on the “intensification of
investment targeting future growth” as a priority initiative inNC2023, we have also established a department
specialized in M&A. For investment projects of highimportance, this department collaborates with each sales
division and evaluates and analyzes risks from aquantitative and qualitative perspective. Projects are thendeliberated on by the Shinsa Kaigi, which is composed ofmembers of management. After the execution of
investment, risks are monitored regularly, and appropriate
measures are taken for projects that do not meet an
established criteria.
Relevant organizational units: Risk Management
Office, Business Planning Officeto eco-friendly products. In addition, the plastics businessmay be impacted by the transition to plastic-free products.
Alongside working to diversify suppliers, in each of ourbusinesses, we are focusing on the sale of recycled
products and other materials that reduce environmental
impact to contribute to a decarbonized and circular society.

Risk of fluctuations in foreign exchange rate
Our Group engages in the production, sales, and trading ofproducts and materials for overseas business development.
In principle, we conduct hedging transactions throughmeasures such as forward exchange contracts. However,
we may be impacted by exchange rate fluctuations
associated with foreign currency-denominated transactions.
Furthermore, we convert items (including sales, expenses,
and assets in each region) denominated in local currencies
into Japanese yen for the preparation of consolidated
financial statements. Consequently, the exchange rate
at the time of conversion may impact the value afterconversion into yen.

With regard to climate change-related risks, we endorsed
the recommendations of the TCFD in April 2023 and areworking to accurately ascertain the impact of climatechange on our business and disclose related information.
Relevant organizational units: General Affairs Office5

For the consolidated fiscal year, foreign exchange losses
were 703 million yen, and foreign currency translation
adjustment was 17,187 million yen.
Relevant organizational units: Financial Management
Office6 Risk related to business restructuring
In order to promote business selection and concentration,
our Group continues to restructure its business by
withdrawing from unprofitable businesses and selling or
reorganizing subsidiaries and affiliates. These measures
may adversely impact the performance and financial
condition of our Group. We may be unable to execute ourbusiness restructuring plans in a timely manner due tofactors such as government regulations and employment
issues in each country. There is no guarantee that theGroup will be able to achieve all or part of the original
objectives through the implementation of businessrestructuring. We have established criteria for considering
withdrawal from businesses, and hold deliberations on
withdrawal, etc., from the relevant Group companies
at the Shinsa Kaigi, which is composed of members ofmanagement and holds discussions on investments, loans,and credit projects.
Relevant organizational units: Risk Management Office8

Risk related to information systems andinformation security

As we operate business as a shosha, or Japanese trading
company, group, we hold confidential and personal
information relating to our business partners andconfidential and personal information relating to the Group.
To ensure that this information is not leaked externally,
destroyed, or falsified, we have established our Information
Security Policy, prepared manuals that define information
management procedures, and developed a Group-wide
management framework. Based on this, we engage inthorough management practices, enhance information
security, and implement employee education and othersuch measures. For our regulations and manuals, we review
them continuously to adapt to new risks and technologies.
Moreover, given that remote work has increased withthe advancement of work-style reforms, in addition to
traditional antivirus software, we have introduced an
endpoint security system that monitors the behavior ofdevices, thereby working to enhance security in alignment
with a “zero trust” approach. To address security incidents,
we have established an internal Computer Security
Incident Response Team (CSIRT) to respond quickly andaccurately and are strengthening information sharing bothinternally and externally. Security monitoring is also
performed 24 hours a day, 7 days a week by an external
security operations center (SOC). Nevertheless, ascyberattacks are becoming increasingly sophisticated, it isdifficult to completely block unauthorized external accessand other threats, and the Group’s financial position andbusiness performance may be adversely impacted if such
unforeseen events occur.
Relevant organizational units: Digital Promotion OfficeEnvironment-related risks
Our Group handles a wide range of products in fourbusiness fields in Japan and overseas. The manufactureand sale of these products may be impacted by factors
including regional environmental regulations and changes
7

Inabata Integrated Report 2023

88

Chapter 3
ESG Information

Risk Management / Compliance / Anti-Corruption

9 Risk related to interest rates
The Group raises capital for its operating activities andbusiness investments through means such as borrowing
from financial institutions or issuing corporate bonds. We
ascertain interest rate trends in Japan and overseas,
manage interest rate risk by adjusting the ratios of funds
procured from fixed-rate sources and floating-rate sources,
and work to reduce interest expense. However, a sharp risein interest rates could adversely affect the Group’s financial
position and business performance.

In the consolidated fiscal year, interest expenses were1,823 million yen.
Relevant organizational units: Financial Management
Office10 Risk related to quality
While we are a shosha, or Japanese trading company,
group, we also own companies involved in manufacturing
and processing in a variety of fields, including plastic

compounding, plastic film, materials for medical products,
and processed marine products, in Japan and abroad. We
conduct quality management to ensure the reliability andsafety of the products manufactured and processed bythese companies. As a shosha, we also procure a diverse
array of materials and products from our business partners
in the four business areas of information and electronics,
chemicals, life industry, and plastics, and sell them to ourcustomers. For these materials and products, we ascertain
global changes in relevant laws, regulations, and standards
related to the environment and safety, working to manage
quality accordingly.
However, it is difficult to completely avoid quality issues,and if any arise and result in loss, the Group may be held
responsible. In such an event, the Group’s financial position
and business performance could be adversely affected.
Relevant organizational units: Risk Management
Office, Plastics Compound Business Office,each sales division

Addressing other risks
Tax compliance
All officers and employees of the Group strive to comply
with laws and regulations as well as internal regulations,regardless of the country, to manage Inabata with a focus
on compliance.
With regard to taxes, we recognize that one of our social
responsibilities is to pay taxes according to related laws
and regulations in each country or region and maintaintransparency. We think that proper tax payment
contributes to economic development of the country or

region and in return results in sustainable growth of ourGroup and improvement of our medium- to long-term
corporate value. Therefore, we strive to minimize tax risk
and maintain as well as improve tax compliance.
Note: Responses to the following sustainability-related risks are described in thesection entitled “ESG Information.”• Compliance, Anti-Corruption p. 90• Climate Change p. 59

Note: Please refer to pages 75–86 for more information on corporate governance.

Compliance
Basic concept
To establish management practices that emphasize
compliance, the Inabata Group advocates thoroughcompliance per the Inabata Group Sustainability Code of
Conduct. We have also adopted the Inabata Declarationof Compliance and the Compliance Guidelines. Inabataconsiders its corporate activities shall be in fullcompliance not only with legal regulations but alsowith social rules.

We also believe that carrying on the spirit of our
founder—love (ai ) and respect (kei ) for people—isessential to fostering a corporate culture that emphasizes
compliance. Hence, we strive to promulgate our Mission,
Vision, and IK Values within the Company.
We have also formulated a policy on tax compliance.

Internal whistleblowing system
The Inabata Group’s internal whistleblowing system
consists of two separate routes. The “compliancehotline” is primarily for reporting violations of laws andregulations, such as bribery and other types of corrupt
activities, and incidents of serious breaches ofcompliance, including organizational fraud. The“counseling desk” provides mediation and coordination
to help employees resolve issues related to the work
environment and work relationships. For both reporting
routes, contact and consultation are possible by oral
communication, telephone, email, and postal mail.
Inabata operates its internal whistleblowing system inaccordance with the Internal Whistleblowing Rules. As
regulations common to the above two whistleblowing

routes, the rules clearly stipulate that persons engaged in
responding to whistleblowing are obliged to keep theprovider anonymous, and that any attempts to identify
the provider or any adverse treatment of the provider or
those who cooperate with the investigation are strictly
prohibited, ensuring that employees who use the system
to provide information do not suffer consequences forwhistleblowing. When information is received, the rules
provide clear procedures for communicating and verifying
the information promptly and appropriately.
The President of Inabata, who chairs the Compliance
Committee, regularly reports the operational status of theinternal whistleblowing system to the Board of Directors.

• Human Rights and Supply Chain Management p. 67

Anti-Corruption
Business continuity plan (BCP)
We have been formulating and introducing business continuity plans (BCPs) since 2018 so that we can promptly
restart and continue business activities after a crisis takes place.
In 2020, we suspended the formulation of plans at some bases due to the spread of the COVID-19 pandemic.
However, in 2021, we organized issues identified during the pandemic and reviewed bases’ completed plans, andin 2023, we began to work on BCPs again at the bases where formulation had been suspended.
As a result, we are now managing formulated BCPs at 38 bases in 13 countries, covering the consolidated Group’s
key bases in Japan and overseas.

Basic concept
The Inabata Group Sustainability Code of Conduct andthe Inabata Declaration of Compliance outline themeasures that we take to prevent corruption, including
bribery and illegal payments to foreign public officials. In
addition, the Supply Chain CSR Action Guidelines for ourbusiness partners and other stakeholders also states ourcommitment to not engaging in corrupt business practices.
To raise awareness and assist our employees inpreventing corruption, we have produced and made89 Inabata Integrated Report 2023

readily available on the Company intranet portal site ourCompliance Guidelines and manuals on antitrust law,subcontracting law, unfair competition prevention law,insider trading regulations, and bribery.
The Compliance Committee, which is chaired by thepresident, oversees and regularly reports to the Boardof Directors on serious cases of compliance violation,
including bribery, law violations, and organizational fraud.

Inabata Integrated Report 2023

90

Chapter 3
ESG Information

Information Security

Basic concept

Supply chain security

To protect its information assets from information
security risks, the Inabata Group has establishedprinciples concerning information security in its
Information Security Policy.

In addition to our Group companies with trading
functions, we implement policies with a similar standard
among our manufacturing bases in Japan and abroad,enhancing information security measures throughout theentire Inabata Group.

Compliance Committee

Japan Foreign Trade Council
ISAC

Security Operations Center(SOC)

Supply chain

Related companies
CSIRTs of each company

Information Security
Working Committee

Nippon CSIRT Association

In addition, to improve the Group’s supply chain security
as a whole, we continuously enhance technical measuresthat address our confidential information management
and information system vulnerability management.

Implementation of technical measures for supply chain information security

Information security promotion system
External security groups

In regard to information security in areas of the Group’s
supply chain comprised of suppliers and customers, we
fulfill our accountability by answering questionnaires andsurveys from individual business partners.

Suppliers

Warehouse

Trading company
Inventory
management

Manufacturing

Logistics

Foreignsubsidiaries

Divisions/
OfficesCustomer

Sales

Product
information

Inventory
information

Customer
relationshipmanagement

Productmanagement

Requirements
planning

Block

Block

Block

Block

Block

Security Incident
Response Team (IK-SIRT)

Domestic
subsidiaries

Logistics operator

Business partners/
affiliated companies
Attacker

Systematic technical measures

DX security support

To respond to security incidents with systematic
technical measures, we introduce and operate systems
that align with an international framework for incident
response. For the detection, analysis, containment, anderadication of cyberattacks, we deploy an endpoint
security system that monitors the behavior of devices
and enables remote containment and eradication ofdamage. In addition, while utilizing a security informationand event management system that collects logs from awide range of systems including security products andnetwork devices, we engage in post-incident activities
such as analyzing the causes of incidents and developing
recurrence prevention measures.

On March 1, 2023, we were certified under the DX
Certification System of the Ministry of Economy, Tradeand Industry.
While promoting DX strategy in line with our management
policies, to address information security risk,

we verify that company policy is communicatedthroughout the organization and adhered to by regularly
conducting information security audits. In addition, wedevelop and retain information security specialists toachieve business strategies while also ensuring
information security.

Certified under the DX Certification System of the Ministry of Economy, Trade and Industry
Introduction of systems aligned with an international framework for incident response
Preparation

Detection

Analysis

Containment

Eradication

Recovery

Digitalization
Post-incident
activities

New business
Developmentof policy
and system

DX Certification

Accumulation

EDR
Endpoint security system that monitors the behavior of devices

Information security
Analysis

SIEM

System that collects and analyzes logs from a wide
range of systems including security products andnetwork devices

SIEM

Incident response framework
An incident response model created by the U.S. National Institute of Standards and Technology and the U.S. Cybersecurity andInfrastructure Security Agency

Management policies

Information security audit

Company policy

91 Inabata Integrated Report 2023

Inabata Integrated Report 2023

92

Data

Sustainability Data

Environment

Pollution prevention / Resource circulation

Energy and climate

Nitrogen oxide (NOx) (t)Sulfur oxide (SOx) (t)Volatile organic compounds (VOC) (t)Item

Energy consumption

Item
Electricity (MWh)Hot water / cold water (GJ)
Volatile oil (gasoline) (kL)
Kerosene (kL)Light oil (kL)
Liquefied petroleum gas (LPG) (t)Other combustible natural gas (1,000 m3)City gas (1,000 m3)

FY202044,131
—
—
—
—
—
—
—

FY2021
58,209
0
87
3
121
61
0.2
19

FY2022
81,041
1,119
517
1.2
310
74.7
0
237

FY2021747
036,93037,18037,67737,9279.4

FY20222,755
043,66643,933
46,421
46,688
6.3

Notes: 1. FY2022 coverage: Inabata & Co. and domestic and overseas consolidated subsidiaries
2. FY2021 coverage: Inabata & Co., seven domestic consolidated subsidiaries, and seven overseas plastic compounding factories
3. FY2020 coverage: Inabata & Co. and seven overseas plastic compounding factories

FY2020——31,475—31,475—
10Notes: 1. FY2022 coverage: Inabata & Co. and domestic and overseas consolidated subsidiaries
2. FY2021 coverage: Inabata & Co., seven domestic consolidated subsidiaries, and seven overseas plastic compounding factories
3. FY2020 coverage: Inabata & Co. and seven overseas plastic compounding factories
4. Domestic Scope 2 emission factors are calculated using the emission factor provided by the Ministry of the Environment and the Ministry of Economy, Trade and Industry foreach electric power company. Overseas Scope 2 emission factors until FY2021 are calculated using the country-specific emission factors in the List of Grid Emission Factors
published by the Institute for Global Environmental Strategies, while the emission factors for FY2022 are calculated using the International Energy Agency (IEA) Emissions
Factors 2022.
5. Figures reported for FY2020 have been recalculated in accordance with updated emission factors.
6. The emissions intensity per sales is based on the simple net value of sales within the calculation scope.
7. Emissions intensity is based on Scope 1 + Scope 2 (market-based) GHG emissions.

GHG emissions (Scope 3)
Item
1. Purchased goods and services
2. Capital goods
3. Fuel- and energy-related activities not included in Scope 1 or Scope 2
4. Upstream transportation and distribution
5. Waste generated in operations
6. Business travel
7. Employee commuting
8. Upstream leased assets
Subtotal (upstream)
9. Downstream transportation and distribution
10. Processing of sold products
11. Use of sold products
12. End-of-life treatment of sold products
13. Downstream leased assets
14. Franchises
15. Investments
Subtotal (downstream)
Total(t-CO2e)

FY2021
1,827,367
1,394
80
52,54752
888
218
Not subject tocalculation
1,882,546
Not subject tocalculation
Not subject tocalculation
Not subject tocalculation
536,788
70
Not subject tocalculation
Not subject tocalculation
536,858
2,419,404

FY2022
1,435,020
2,984
71
55,18953
2,377
234
Not subject tocalculation
1,495,928
Not subject tocalculation
Not subject tocalculation
Not subject tocalculation
464,24264
Not subject tocalculation
Not subject tocalculation
464,306
1,960,235

Notes: 1. Coverage: Inabata & Co.
2. Category 8 is not applicable as it is included in Scope 1 and 2.
3. Categories 9 and 10 are excluded from calculations as they are difficult to determine or reasonably estimate since there is a wide range of products sold and forwarding
destinations.
4. Categories 11, 14, and 15 are not applicable as they are outside the scope of relevant business activities.
5. Category 12 is calculated based on items for which weight-based data can be collected.
6. FY2021 data for Category 3 was recalculated and reported due to an error in the scope of calculation.

93 Inabata Integrated Report 2023

Waste recycling rate (%)*
Hazardous waste (t)*Paper purchased (copy paper) (thousands of sheets)
Green purchasing ratio of office supplies, etc. (%)

FY2021
0
0
0
76
57
19
75
0
2,925
76

FY2022
1
0
101
8,645
5,005
3,640
58
1,929
2,442
68

Notes: 1. FY2022 coverage (excluding paper purchased, green purchasing ratio of office supplies, etc.): Inabata & Co., domestic consolidated manufacturing subsidiaries, and overseas
consolidated manufacturing subsidiaries
2. FY2022 coverage (paper purchased, green purchasing ratio of office supplies, etc.): Inabata & Co.
3. Waste for overseas resin compound manufacturing business bases is calculated based only on resin, the main material.
2. FY2020 and FY2021 coverage: Inabata & Co.

Water resources

GHG emissions (Scope 1 and 2)Item
CO2 from energy sources
Scope 1(t-CO2e)Other (CO2 from non-energy sources, CH4, N2O, HFCs, PCFs, SF6, NF3)
Market-based
Scope 2(t-CO2e)
Location-based
Scope 1 + Scope 2 (market-based)
Total(t-CO2e)
Scope 1 + Scope 2 (location-based)
GHG emissions intensity per sales (t-CO2e / ¥100 million)

Total
Waste recycled
Waste non recycled

Waste (t)*FY2020
0
0
0
67
48
19
72
0
3,563
64

Item
Total
Ocean
Discharge amount by discharge
River / lake (fresh surface water)
destination (1,000 m3)
Groundwater
Sewage (third-party treated)
Total
River / lake (fresh surface water)
Groundwater
Water withdrawal amount bywithdrawal source (1,000 m3)
Water supply / industrial water
Rainwater
Sea water
Water withdrawals/consumption in water-stressed regions (m3)
Number of violations related to water quality / water withdrawals (violations ofpermits, standards, regulations, etc.)

FY2020
6
0
0
0
6
6
0
0
6
0
0
0

FY2021
6
0
0
0
6
6
0
0
6
0
0
0

FY2022
156
0
0
0
156
270
0
6
264
0
0
0

0

0

0

Notes: 1. FY2022 coverage: Inabata & Co., domestic consolidated manufacturing subsidiaries, and overseas consolidated manufacturing subsidiaries
2. FY2020 and FY2021 coverage: Inabata & Co.

Environmental management
Item
Number of environmental law violations
Environmental fines and penalties (yen)FY20200
0

FY20210
0

FY202200Notes: 1. FY2022 coverage: Inabata & Co. and domestic and overseas consolidated subsidiaries
2. FY2020 and FY2021 coverage: Inabata & Co.

Environmental business (Products that reduce environmental impact)
Sales of products that reduce environmental impact by field
Fields
Total
Energy & Power
Resources & Environment
Materials & Chemicals
Agriculture & Food
Transportation & Logistics
Environmental certification

Main items
Renewable energy, batteries, etc.
Sustainable materials, recycling, water, etc.
Low-carbon materials, environmental pollutant
reduction, etc.
Food waste reduction, soil improvement, etc.
EV charging, green logistics, etc.
Forestry certifications (FSC and PEFC), marine
product certifications (MSC and ASC), etc.

FY2021(millions of yen)
18,727
13,4634,201

FY2022(millions of yen)
26,957
17,518
7,585

735

1,537

0
0

0
0

328

317

Notes: 1. Coverage: Inabata & Co. and domestic and overseas consolidated subsidiaries.
2. There are no results for Agriculture & Food or Transportation & Logistics in FY2021 and FY2022.
3. Totals are simple sums.
4. FY2021 net sales have been recalculated to match a 2023 review and partial reclassification of products within each field. Although there are variations in figures for each item
and field reported in the previous fiscal year, totals remain unchanged.

Inabata Integrated Report 2023

94

Data

Sustainability Data

Society

Labor practices / diversity
Item

Employee status

Number of employees, managerial position ratio, gender ratio (non-consolidated / consolidated)
Item
Inabata Group(consolidated)

Men

FY2020
Women

Total (people)
Management
Non-management

Management
Non-management

Domestic
consolidated
subsidiaries

Total (people)

Overseas
consolidated
subsidiaries

Total (people)

Management
Non-management

Management
Non-management

FY2021
Women

—

—

—
—

—
—

Total (people)
Inabata & Co.

Men

—
—

—
—

536

552

—
—

—
—

115 (95%)
219 (51%)  6 ( 5%)212 (49%)

—

399

—
—

—
—
—

77 (92%)219 (70%)  7 ( 8%)96 (30%)
3,312

—
—

—
—

  254 (66%)
1,547 (53%)  130 (34%)
1,381 (47%)

Notes: 1. As of the end of each fiscal year (March 31). FY2021 figures for overseas consolidated subsidiaries are as of July 31, 2022.
2. Numbers for domestic and overseas consolidated subsidiaries include employees seconded from Inabata & Co..

Number of employees, gender ratio (by area)
Item
Total (people)
Japan

Management
Non-management951
192 (94%)438 (59%)

Total (people)
Southeast Asia

Management
Non-management

Management
Non-management  129 (61%)
1,154 (51%)

Management
Non-management

77 (72%)172 (47%)

Management
Non-management

30 (28%)196 (53%)304

31 (76%)195 (74%)

Total (people)
Europe   84 (39%)
1,092 (49%)
475

Total (people)
The Americas

13 ( 6%)308 (41%)
2,459

Total (people)
Northeast Asia

Ratio is listed in ( )FY2021Men
Women

10 (24%)68 (26%)73

16 (73%)26 (51%)

6 (27%)
25 (49%)FY2022
Men
Women
996
642 (64%)354 (36%)
189 (93%)14 ( 7%)453 (57%)
340 (43%)
2,492
1,329 (53%)
1,163 (47%)  171 (60%)  112 (40%)
1,158 (52%)
1,051 (48%)
470
250 (53%)
220 (47%)
81 (73%)30 (27%)169 (47%)
190 (53%)285
207 (73%)78 (27%)35 (78%)10 (22%)172 (72%)
68 (28%)73
41 (56%)32 (44%)15 (65%)8 (35%)
26 (52%)24 (48%)Notes: 1. As of the end of each fiscal year (March 31). FY2021 figures for areas other than Japan are as of July 31, 2022.
2. Numbers for domestic and overseas consolidated subsidiaries include employees seconded from Inabata & Co..

Ratio is listed in ( )FY2022Women
4,316
2,469 (57%)
1,847 (43%)  491 (74%)  174 (26%)
1,978 (54%)
1,673 (46%)
589
345 (58%)244 (42%)118 (94%)  7 ( 6%)227 (49%)237 (51%)407
297 (73%)110 (27%)
71 (91%)  7 ( 9%)226 (69%)
103 (31%)
3,320
1,827 (55%)
1,493 (45%)  302 (65%)  160 (35%)
1,525 (53%)
1,333 (47%)
Men

Ratio of women in managerial positions (%)
Number of non-Japanese staff (people)
Total
Men / Women
Total
30–39 years old
Men / Women
Number of
Total
40–49 years old
employees
Men / Womenby ageTotal
50–59 years old
Men / WomenTotal
60 years old and over
Men / WomenTotal
New graduates (people)
Men / Women
Retention rate (3 years) for new graduates (%)
Number of hires
Total
Mid-career (people)
Men / Women
Ratio of regular employees hired mid-career (%)
Voluntary turnover rate (%)
Number of employees rehired (after mandatory retirement, etc.) (people)
Number of employees rehired under the job return system
Employment
Number of employees (people)of person with
1
Employment rate (%)
disabilities*
Total
Average age
Men / Women
Total
Average years of employment
Men / Women
Average annual salary (thousand yen)
All employees
Regular employees
Professionals
Gender wage
gap (%)*2
Staff
Assistants
Non-regular employees
Total annual working hours per employee (hours/year)
Monthly average overtime working hours (hours/month)Days taken (days)
Average annual
paid leave
Utilization rate (%)
Total
Number of employees
taking leave (people)
Men / Women
Total
Childcare leave
Utilization rate (%)
Men / Women
Rate of employees returning to work (%)
Number of employees taking nursing care leave (people)
Under 30 years old

FY2020
Men
Women
2.6
6
133
66
67
158
106
52
166
107
59
165
137
28
34
26
8
20
10
10
89
15
12
3
43
3.2
—
—

FY2021
Men
Women
3.6
11
139
64
75
156
105
51
163
106
57
168
140
28
46
33
13
24
13
11
88
20
13
7
45
3.5
—
—

FY2022
Men
Women
3.7
7
149
61
88
167
109
58
158
105
53
183
144
39
52
40
12
26
8
18
96
31
20
11
54
2.3
27
2

14

14

20

2.05

2.08

2.65

41.1
43.1

41.4
38.1

43.7

14.8
16.1

11.1

16.4

7

11.8

17

15.6

100

6

34.6

10.5
9,141
56.3
57.0
97.1
94.7
91.9
47.6
1,904
14.1
11.0
60.5
10

5

46.9

100
0

37.8
13.8

8,609
—
—
—
—
—
—
1,917
11.4
10.4
56.1
23

25.8
4.2

44.3

14.9

8,506
—
—
—
—
—
—
1,907
14.2
9.2
48.7
8
1

42.0
37.1

5
37.5

100
100
0

21.1

100
100
0

Notes: 1. Coverage: Inabata & Co. (including employees seconded to Group companies)
2. As of the end of each fiscal year (March 31)*1 The figures for each fiscal year are as of June 1 of the following fiscal year.
*2 “All employees” refers to regular employees and non-regular employees.
“Regular employees” includes employees in three position categories: “Professionals” which refers to those in management positions engaged in core duties; “Staff,” whichrefers to those in non-management positions engaged in core duties; and “Assistants,” which refers to those engaged mainly in support duties. Senior positions are calculated inaccordance with their respective grades and divided into the three aforementioned position categories.
“Non-regular employees” includes unretired senior employees working on a fixed-term contract or special fixed-term contract but excludes temporary employees. The difference in wages
between men and women is due to the difference in the personnel composition by position and the difference in the personnel composition for qualification classifications (“bands”); there areno gap in wages for the same duty type. Accordingly, there is minimal gap in wages between men and women for the positions of professionals, staff, and assistants.

Human resources development
Item
Total time for employee skills development training (hours)
Total number of employees participating in training for skills development (people)
Average training hours per employee per year (hours)
Average training expenditure per employee per year (yen)FY2020473
906
0.7
39,504FY2021
394
1,070
0.6
34,099FY2022
440
1,138
0.6
50,776

Note: Coverage: Inabata & Co. (including employees seconded to Group companies)

95 Inabata Integrated Report 2023

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96

Data

Sustainability Data

Society

Employee engagement

Occupational health and safety

Number of
employees
surveyed

Total

Response status

Response rate (%)
Engagement
I am satisfied with the work I am doing at Inabata now.
Relationship with superiors
I have the necessary collaboration with my supervisor at work.
Organizational culture
When a problem occurs in the course of my duties, mysupervisor and the people around me provide appropriate support.
Corporate philosophy
I can relate to Inabata’s philosophy, vision, and management
policies, and I want to participate in achieving them.
Human resources system and benefits
Inabata’s salary standards are satisfactory, compared to othercompanies in the same industry.
Human resources system and training
Inabata supports employee training to improve their skills.
Work-life balance
Overtime is kept to a level that is acceptable for me.

Employee engagement survey

Item
Item
Health checkup attendance rate (%)*1
Number of employees who attended
Stress check*1
Attendance rate (%)
Safe driving training (e-learning)
Number ofEarthquake/safety confirmation training*2
employees who
attended healthand safety training
Firefighting training (on-site training)*3(people)*1

Fatalities

Number ofoccupational
accidents(regular
employees)(cases)Lost-time
injuries

Nonlost-time
injuries

Fatalities
Number ofoccupational
accidents(temporary
employees
and contract
employees)(cases)Lost-time
injuries

Nonlost-time
injuries

Lost-time injury
frequency rate
(regular
employees)*4
Lost-time injury
severity rate
(regular
employees)*5

Total
Inabata & Co.
Domestic consolidated subsidiaries
Overseas consolidated
manufacturing subsidiaries
Total
Inabata & Co.
Domestic consolidated subsidiaries
Overseas consolidated
manufacturing subsidiaries
Total
Inabata & Co.
Domestic consolidated subsidiaries
Overseas consolidated
manufacturing subsidiaries
Total
Inabata & Co.
Domestic consolidated subsidiaries
Overseas consolidated
manufacturing subsidiaries
Total
Inabata & Co.
Domestic consolidated subsidiaries
Overseas consolidated
manufacturing subsidiaries
Total
Inabata & Co.
Domestic consolidated subsidiaries
Overseas consolidated
manufacturing subsidiaries

Total
Inabata & Co.
Domestic consolidated subsidiaries
Overseas consolidated
manufacturing subsidiaries
Total
Inabata & Co.
Domestic consolidated subsidiaries
Overseas consolidated
manufacturing subsidiaries

FY2020—501—
88
Approx. 600
Tokyo 52
Osaka 2000—

FY2021—
568—
51
May 603
December 609
77 self-defense firebrigade members inTokyo, Osaka, andNagoya00—

FY2022
100
617
87.5
32
May 633
December 623
80 self-defense firebrigade members inTokyo, Osaka, andNagoya000Main items (%)*1

Inabata & Co.
Main overseas trading offices

FY2021
1,400
587
813
49

FY2022
1,697
606
1,091
73

FY2023
1,901
652
1,249
72

70

73

76

75

80

80

83

85

83

70

73

73

59

55

57

41

48

54

64

69

75

0

0

0

—
—
—

—
—
—

28
0
1

—

—

27

*1 From among a five-point evaluation by employees (5. Strongly agree / 4. Agree / 3. Neither agree nor disagree / 2. Disagree / 1. Strongly disagree), the ratio of positive responses (5.
and 4.)

—
—
—

—
—
—

8
0
1

Social contribution activities

—

—

7

0
0
—

0
0
—

0
0
0

0

0

0

—
—
—

—
—
—

8
0
4

—

—

4

—
—
—

—
—
—

5
0
1

—

—

4

3.82
0
—

4.11
0
—

4.11
0
1.81

6.34

6.62

5.30

0.01
0
—

0.03
0
—

0.09
0
0.01

0.02

0.05

0.12

Item
Number of employees taking leave for volunteering*1
Total amount of donations, activity expenses, etc., that contribute tosociety*2 (millions of yen)Support for the activities of the Sociedade LusoNipónica de Osaka*3 (10,000 yen)
Académie de musique françaisede Kyoto
Number of participants*4
Results ofFrench music competition
main social
Number of winners of Inabata Award (since 1974)*5
contribution
activities
Acceptance of international students from the emlyon(since 1994)*6
Support for the Shougaisha Jiritsu Suishin Kikou
Association*7

FY2020—

FY2021—

FY2022
—

8

8

28

80

0

80

Canceled

67

101

1
Cumulative 47

1
Cumulative 48

1
Cumulative 49

Canceled

Canceled

CanceledBronze Partner

Bronze Partner

Bronze Partner

Note: Coverage: Inabata & Co.
*1 Activities approved for this system after the occurrence of a severe disaster. Four people used this system as volunteers for recovery after the 2016 Kumamoto earthquake.
*2 Main donations include cultural support for the Japan Philharmonic Orchestra, the Osaka Symphony Orchestra, the Osaka Philharmonic Orchestra, etc., and community support for
the Keidanren Nature Conservation Fund, etc.
*3 There were no expenditures in FY2021 as a result of regular meetings being canceled due to COVID-19.
*4 A Japan–France music exchange program sponsored by Inabata. Top-class musicians are invited from France and master classes are held for about two weeks. The program provides
a valuable opportunity for young Japanese musicians to receive high-quality education in French music. Canceled in FY2020 due to COVID-19. Held online in FY2021.
*5 At the French music competition sponsored by Fondation Culturelle Kansei de Ashiya, the Inabata Award (named after Inabata Co. & Ltd.) is awarded every year to the best performer
in the vocal or piano category.
*6 Friendship activities with Lyon, France, where our founder studied abroad. From FY2020 to FY2022, activities were canceled due to COVID-19. A cumulative total of 26 people were
accepted into the program as of FY2019.
*7 In addition to providing support as a partner, we used a work from Paralym Art, a program which is managed and operated by the association, as the design for our shareholder
incentive (QUO cards).

*1 Coverage: Inabata & Co. (including employees seconded to Group companies)*2 Due to factors such as using the earthquake/safety confirmation system to respond to COVID-19, we only ascertained the approximate number in FY2020.
*3 In FY2020, as a result of postponing on-site training due to the spread of COVID-19, there was voluntary training which consisted of viewing videos. In FY2021 and FY2022, due toconcerns about the spread of COVID-19, we postponed on-site training, and conducted first-aid training using videos for all self-defense fire brigade members at our offices in Tokyo,
Osaka, and Nagoya.
*4 (Number of casualties due to occupational accidents requiring at least one day off work / Total actual working hours) × 1,000,000. The industry average (wholesalers and retailers
with 100 or more employees) was 1.98 in FY2022 (based on the Ministry of Health, Labour and Welfare’s 2021 Survey on Industrial Accidents). Comparison with Inabata & Co..
*5 (Total working days lost / Total actual working hours) × 1,000. The industry average (wholesalers and retailers with 100 or more employees) was 0.05 in FY2022 (based on the
Ministry of Health, Labour and Welfare’s 2021 Survey on Industrial Accidents). Comparison with Inabata & Co..

97 Inabata Integrated Report 2023

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98

Data

Sustainability Data

GovernanceComplianceCorporate governance
In June 2022, we transitioned from a company with an audit & supervisory board to a company with an audit and supervisory committee.

Composition of directors and officers
Directors(excluding Audit and Supervisory
Committee members) (people)[Number of directors is shown for 2021]
Directors(Audit and Supervisory Committee
members) (people)[Number of Audit & Supervisory Board
members is shown for 2021]
Executive officers*1 (people)

Audit and supervisory officers (people)

Total
Internal
Independent
outsideTotal
Internal
Independent
outside
Total
Men
Women
Total
Men
Women

Men
Women
Men
Women
Men
Women
Men
Women

As of July 1, 2021
9
6
0
2
1
5
2
0
3
0
11
11
0
—
—
—

As of July 1, 2022
7
5
0
1
1
4
0
0
4
0
11
11
0
1
1
0

As of July 1, 2023
7
5
0
1
1
5
0
0
5
0
13
13
0
1
1
0

*1 Includes directors and executive officers (2021: 5; 2022 and 2023: 4).

Attendance status for meetings of the Board of Directors, Audit & Supervisory Board, Audit
and Supervisory Committee, and Nominating and Remuneration Committee (April 1, 2022, to March 31, 2023)
In June 2022, we transitioned from a company with an audit & supervisory board to a company with an audit and supervisory committee.



Attendance rate is listed in ( )Position
Name
Until
June 2022

Independent
outsideSince
June 2022—
Audit & Supervisory
Board members
Audit & Supervisory
Board members
Audit & Supervisory
Board members———

Number attended

Number attended

Number attended——

7/7 times(100%)

—

—

—

—

—

—

—

—

—

—

—

—

—

—

〇

Kenji Hamashima〇

Satoshi Tamai(appointed in June 2022)

Noriomi Yasue(retired in June 2022)
Kenji Ohno—

Number attended

Takako Hagiwara

Masahiro Sugiyama

Audit & Supervisory
Board members

Nominating andRemuneration
Committee〇

Kenichi Yokota

Directors(Audit and Supervisory
Committee members)
Directors(Audit and Supervisory
Committee members)
Directors(Audit and Supervisory
Committee members)
Directors(Audit and Supervisory
Committee members)

Meetings of the Audit
and Supervisory
Committee(From June 2022)

Kiyoshi Sato

Toyohiro Akao

Directors

Meetings of the Audit& Supervisory Board(until June 2022)

16/16 times(100%)
16/16 times(100%)
16/16 times(100%)
16/16 times(100%)
2/3 times(67%)
16/16 times(100%)
16/16 times(100%)
16/16 times(100%)

Katsutaro Inabata

Directors

Meetings of theBoard of Directors

FY2021
10
0

FY2022
2
0

0
0

0
0

0
0

0

0

0

Notes: Coverage: Inabata & Co.
*1 Includes the number of consultations to the “counseling desk” that was newly established from FY2021.

Participation in Initiatives

United Nations Global Compact (UNGC)In April 2022, we signed the United Nations
Global Compact (UNGC), which is advocatedfor by the United Nations, and wereregistered as a participating company.
The UNGC is the world’s largest
sustainability initiative in which the United
Nations and the private sector (companies
and organizations) work together to build ahealthy global society. Through responsible
and creative leadership by each company
and organization, participants act as goodmembers of society and achieve sustainablegrowth. Based on the commitments of their
top corporate executives, UNGC signatorycompanies and organizations are required
to make continued efforts toward realizing
the Ten Principles on human rights, labor,
environment, and anti-corruption.

TCFDThe Task Force on Climate-related Financial
Disclosures (TCFD) was established by the
Financial Stability Board (FSB) at the requestof the G20. It released its final report in June
2017, which sets out recommendations forcompanies to disclose financial informationon the risks and opportunities associatedwith climate change.
We endorsed these final recommendationsin March 2023 and disclose information
based on them.

TCFD Consortium
The TCFD Consortium was establishedby the Ministry of Economy, Trade andIndustry, the Ministry of the Environment,
and the Financial Services Agency. It
serves as a forum for corporations andfinancial institutions that support the TCFD
recommendations to discuss effective
corporate information disclosure andways for financial institutions to utilize
disclosed information in making appropriate
investment decisions.

Note: P lease refer to pages 59–62 for more informationon our disclosures based on the TCFD
recommendations.

We joined the TCFD Consortium in
April 2023. Through our participationin the consortium, we appropriately
disclose information on the risks andopportunities that climate changepresents to our business.

Alliance to End Plastic Waste (AEPW)
An international alliance which conducts
activities aimed at reducing the outflow ofplastics waste into the environment andpromoting a circular economy. The Alliance
to End Plastic Waste (AEPW) focuseson solutions in the four strategic areas ofinfrastructure, innovation, education andengagement, and clean up, supporting
multiple projects throughout the world.
The AEPW collaborates with government
agencies, environmental and economic
development NGOs, and civil society tocreate a plastics circular economy.

Japan Clean Ocean Material Alliance(CLOMA)A domestic (Japan) alliance working toresolve the problem of marine plastic
litter. The Japan Clean Ocean Material
Alliance (CLOMA) promotes collaboration
between different industries involved in
the plastics value chain. It also promotes
the sustainable use of plastic products,
and the development and introduction ofalternative materials.

—

—

—

—

16/16 times(100%)—

11/11 times(100%)

10/10 times(100%)〇

13/13 times(100%)

3/3 times(100%)

11/11 times(100%)—

Minoru Sanari(appointed in June 2022)〇

13/13 times(100%)—

11/11 times(100%)—

Tomokazu Fujisawa(appointed in June 2022)〇

13/13 times(100%)—

11/11 times(100%)—

Yoshitaka Takahashi(retired in June 2022)
Katsuya Yanagihara(retired in June 2022)
Nobukazu Kuboi(retired in June 2022)〇

3/3 times(100%)
3/3 times(100%)
3/3 times(100%)

3/3 times(100%)
3/3 times(100%)
3/3 times(100%)

—

—

—

—

—

—

Notes: 1. Interviews with director and executive officer candidates by the Nominating and Remuneration Committee (three times) were conducted only by independent outside
directors.
2. Kenji Hamashima’s attendance at meetings of the Board of Directors includes the period in which he served as an independent outside director from April 1, 2022, to theclosing of the Ordinary General Meeting of Shareholders held on June 22, 2022.
3. Satoshi Tamai’s attendance at meetings of the Board of Directors does not include three meetings attended during the period in which he served as an Audit & Supervisory
Board member from April 1, 2022, to the closing of the Ordinary General Meeting of Shareholders held on June 22, 2022.

99 Inabata Integrated Report 2023

FY20202
010/10 times(100%)
10/10 times(100%)—〇

Number of whistleblower reports/consultations*1 (cases)
Number of serious compliance violations (including labor standards)(cases)Political contributions (yen)Number of dismissals and disciplinary actions due to non-compliance with
anti-corruption policy (cases)
Penalties, surcharges, and settlements related to corruption (10,000 yen)

CDP
Based in the United Kingdom., CDP is aninternational non-governmental organization(NGO) working in environmental fields
including climate change. It calls for major
companies and cities throughout theworld to make disclosures on their efforts
to address issues such as climate change
and water management, and it carries ourrelated surveys and assessments.
In 2022, we participated in the CDP’s
climate change questionnaire, whilein 2023, we participated in its climatechange questionnaire and water
security questionnaire.

Inabata Integrated Report 2023

100

Data

Financial Information

Summary of 11 years(Millions of yen)

* From FY2013, the conversion rate for income and expenditure by overseas subsidiaries and such was changed from the rate on the last day of the
FY to average rate during the period. This has been applied retroactively to the figures for FY2012.
* From FY2018, Partial Amendments to Accounting Standard for Tax Effect Accounting was applied. This has been applied retroactively to the figures
for FY2017.
* We have applied Accounting Standard for Revenue Recognition (ASBJ Statement No. 29), etc., from FY2021.
Notes: 1. From FY2016, the business of designing, manufacturing, installation, and sales of cranes, which was part of the Others Segment, has been
included in the Information & Electronics Segment. The performance figures for FY2015 are based on the revised categories.
2. In FY2019, the Housing & Eco Materials Segment was integrated into the Chemicals Segment. The performance figures for FY2018 arebased on the revised categories.
3. Net D/E ratio = (Interest-bearing debt – Cash and deposits) ÷ Equity capital
4. ROE (%) = (Net profit ÷ Average equity capital at the beginning and end of the FY) × 100

101 Inabata Integrated Report 2023

5.
6.
7.
8.
9.

ROA (%) = (Net profit ÷ Average total assets at the beginning and end of the FY) × 100
Total market value (including treasury shares) = Share price at the end of the FY × Number of shares issued and outstanding at the end of the FY (including treasury shares)
P/E ratio is calculated by dividing share price at the end of the FY (TSE closing price) by net profit per share.
P/B ratio is calculated by dividing share price at the end of the FY (TSE closing price) by net assets per share.
Cancellation of treasury stock: 1,660,000 shares in FY2014, 2,700,000 shares in FY2021, and 3,685,100 shares in FY2022
We retired 1,200,000 shares on July 5, 2023, bringing the total number of issued shares to 55,914,127 as of July 31, 2023.
10. The number of treasury shares at the end of the FY includes shares owned by the Board Benefit Trust (BBT) introduced in FY2018 and equity-method affiliates in addition to shares
owned by Inabata.
11. Total return ratio has become the shareholder return index from FY2014. Total return ratio = (Dividend + Treasury shares acquired) ÷ Consolidated net profit × 100

Inabata Integrated Report 2023

102

Data

Financial Information

Consolidated Balance Sheets
FY2021(March 31, 2022)
AssetsCurrent assets
Cash and deposits
Notes receivable–trade
Accounts receivable–trade
Merchandise and finished goods
Work in process
Raw materials and supplies
OthersAllowance for doubtful accounts
Total current assets
Non-current assets
Property, plant and equipment
Buildings and structures
Accumulated depreciation
Buildings and structures, net
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles, net
LandConstruction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Investments and other assets
Investment securities
Long-term loans receivable
Retirement benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

103 Inabata Integrated Report 2023

(Millions of yen)
FY2022(March 31, 2023)

35,40322,548
162,149
72,145860
6,059
12,728(389)
311,505

36,35323,247
153,640
83,097802
4,990
13,623(382)
315,373

17,184(11,765)
5,419
18,648(14,551)
4,097
3,043
205
6,382
(3,834)
2,547
15,312
2,647

18,491(12,881)
5,610
20,351(15,976)
4,375
3,295
210
7,753
(4,640)3,113
16,606
2,403

48,303
1,448
6,390
1,105
7,380
(5,035)59,59377,553389,059

32,840
1,323
8,215
1,202
7,779
(5,300)46,06065,070380,443

FY2021(March 31, 2022)
Liabilities
Current liabilities
Notes and accounts payable–trade
Short-term borrowings
Income taxes payable
Accrued expenses
Provision for bonuses
Other
Total current liabilities
Non-current liabilities
Bonds payable
Long-term loans borrowings
Deferred tax liabilities
Provision for retirement benefits for directors (and other officers)
Provision for share-based remuneration for directors (and other officers)
Provision for loss on guarantees
Retirement benefit liability
Other
Total non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Share capital
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets(Millions of yen)
FY2022(March 31, 2023)

115,959
58,657
4,093
1,367
1,608
11,498
193,185

105,730
49,474
3,589
1,859
1,606
11,273
173,534

—
5,880
8,761
33
159
18
1,624
2,481
18,959212,144

7,500
7,795
5,176
37
206
—
1,713
2,972
25,402
198,936

9,364
7,044
130,540(7,398)
139,550

9,364
6,718
134,684(2,220)148,546

22,667398
11,793508
35,367
1,996
176,914389,059

12,805395
17,187526
30,914
2,046
181,507
380,443

Inabata Integrated Report 2023

104

Data

Financial Information

Consolidated Statements of Income

Consolidated Statement of Changes in Equity(Millions of yen)
FY2021
FY2022(April 1, 2021–March 31, 2022) (April 1, 2022–March 31, 2023)

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Non-operating income
Interest income
Dividend income
Gain on foreign exchange
Share of profit of entities accounted for using equity method
Miscellaneous income
Total non-operating income
Non-operating expenses
Interest expenses
Foreign exchange losses
Provision of allowance for doubtful accounts
Commission for purchase of treasury shares
Share of loss of entities accounted for using equity method
Miscellaneous losses
Total non-operating expenses
Ordinary profit
Extraordinary income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on valuation of investment securities
Impairment losses
Total extraordinary losses
Profit before income taxes
Income taxes–current
Income taxes–deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent(Millions of yen)
Shareholders’ equity
Share capital

Balance at beginning of period
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Cancellation of treasury shares
Treasury stock transfer of stock ownership trust
Purchase of shares of consolidated subsidiaries
Net changes in items other than shareholders’ equity
Total changes during period
Balance at end of period

680,962
623,591
57,37037,317
20,052735,620
672,745
62,87442,56020,314

244
1,429
53
370
780
2,877

249
1,938
—
—
847
3,034

674
—
151
129
—
326
1,281
21,648

1,823
703
71
13
1,065
560
4,237
19,110

Balance at beginning of period
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Cancellation of treasury shares
Treasury stock transfer of stock ownership trust
Purchase of shares of consolidated subsidiaries
Net changes in items other than shareholders’ equity
Total changes during period
Balance at end of period

8,975
8,975

8,661
8,661

FY2022 (April 1, 2022–March 31, 2023)

—
168
168
30,455
7,294
685
7,980
22,475
124
22,351250—
250
27,522
7,569
405
7,975
19,547
69
19,478

Capital surplus

9,364

Retained earnings

7,184

Treasury shares

116,794(4,401)
22,351(43)(4,203)(7,500)4,247
913,745130,540(3,243)(7,398)

(96)
—
9,364

(140)
7,044

Total shareholders' equity(4,155)

129,188(4,401)
22,351(7,500)—9(96)
10,362
139,550

Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

39,316

187

4,536(16,649)(16,649)
22,667

211
211
398

Remeasurements
Totalof defined
accumulated
benefitother comprehensive
plansincome

576

7,257
7,257
11,793

(68)
(68)
508

44,616(9,248)(9,248)35,367

Noncontrollinginterests

Total net
assets

1,999

175,803

(3)
(3)
1,996

(4,401)
22,351(7,500)—9(96)(9,251)
1,110
176,914(Millions of yen)

Consolidated Statements of Comprehensive Income(Millions of yen)
FY2021
FY2022(April 1, 2021–March 31, 2022) (April 1, 2022–March 31, 2023)
ProfitOther comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of parent
Non-controlling interests

105 Inabata Integrated Report 2023

FY2021 (April 1, 2021–March 31, 2022)

22,475

19,547(16,560)
206
7,276
(68)
(127)
(9,273)
13,202(9,873)
(12)
5,351
14
102
(4,417)
15,12913,102
99

15,025
104

Shareholders’ equity
Share capital

Balance at beginning of period
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Cancellation of treasury shares
Disposal of treasury shares
Treasury stock purchase of stock ownership trust
Treasury stock transfer of stock ownership trust
Purchase of shares of consolidated subsidiaries
Change in treasury shares arising from change in equity
in entities accounted for using equity method
Net changes in items other than shareholders’ equity
Total changes during period
Balance at end of period

Capital surplus

9,364

Retained earnings

7,044

Treasury shares

130,540(7,425)
19,478(40)
40(2,635)
7,949
379
(419)
13

(7,908)

(326)

—
9,364

(326)
6,718

Total shareholders' equity(7,398)4,143
134,684

139,550(7,425)
19,478(2,635)
—
419
(419)
13
(326)

(108)

(108)

5,178
(2,220)8,995
148,546

Accumulated other comprehensive income
Valuationdifference on
available-for-salesecurities

Deferred
gains orlosses onhedgesForeigncurrencytranslation
adjustment

22,667398

11,793

Balance at beginning of period
Changes during period
Dividends of surplus
Profit attributable to owners of parent
Purchase of treasury shares
Cancellation of treasury shares
Disposal of treasury shares
Treasury stock purchase of stock ownership trust
Treasury stock transfer of stock ownership trust
Purchase of shares of consolidated subsidiaries
Change in treasury shares arising from change in equity
in entities accounted for using equity method
Net changes in items other than shareholders’ equity
Total changes during period
Balance at end of period

Remeasurements
Totalof defined
accumulated
benefitother comprehensive
plansincome508

35,367

Noncontrollinginterests

1,996

Total net
assets

176,914(7,425)
19,478(2,635)
—
419
(419)
13
(326)

(9,861)(9,861)
12,805

(3)
(3)
395

5,394
5,394
17,18717
17526(4,452)(4,452)30,914

49
49
2,046

(108)
(4,402)
4,592
181,507

Inabata Integrated Report 2023

106

Data

Financial Information

Consolidated Statements of Cash Flows

Sales by business segment
FY2021(April 1, 2021–March 31, 2022)

Cash flows from operating activities
Profit before income taxes
Depreciation
Impairment losses
Increase (decrease) in allowance for doubtful accounts
Interest and dividend income
Increase (decrease) in retirement benefit liability
Decrease (increase) in retirement benefit asset
Interest expenses
Share of loss (profit) of entities accounted for using equity method
Increase (decrease) in provision for loss on guarantees
Loss (gain) on valuation of investment securities
Loss (gain) on sales of investment securities
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Decrease (increase) in other current assets
Decrease (increase) in other non-current assets
Increase (decrease) in trade payable
Increase (decrease) in other current liabilities
Other, net
SubtotalInterest and dividends, received
Interest paid
Income taxes paid
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of intangible assets
Purchase of investment securities
Proceeds from sales of investment securities
Purchase of shares of subsidiaries
Decrease (increase) in short-term loans receivable
Long-term loan advances
Collection of long-term loans receivable
Other
Net cash provided by investing activities
Cash flows from financing activities
Net increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Purchase of treasury shares
Proceeds from disposal of treasury shares
Decrease (increase) in money held in trust for acquisition of treasury stock
Dividends paid
Dividends paid to non-controlling interests
Purchase of shares of subsidiaries that do not result in change in scope of consolidation
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of period

107 Inabata Integrated Report 2023

(Millions of yen)
FY2022(April 1, 2022–March 31, 2023)

30,4553,160
168
22(1,673)(601)(3,035)
674
(370)
—
—
(8,975)(11,227)(20,037)(3,188)
(60)
4,363
3,864
407
(6,053)
1,793(666)(6,521)(11,448)

27,5223,532—(42)(2,187)(8)(1,795)
1,823
1,065
(18)
250
(8,661)
15,661(5,512)
2,004
115(15,328)(1,242)446
17,6232,203(1,800)(8,111)
9,915(6,780)5,742(1,669)
15
(317)
(197)
9,645
(554)
(35)
(151)
347
(597)
5,446

(6,681)
7,545(2,527)34(423)(1,424)
12,111
(445)
146
(167)
171
(58)
8,278

Information & Electronics(Billions of yen)800

Chemicals*1

Life Industry*2

Plastics

The Chemicals Segment has a

Lehman Brothers’ collapse

long history and is performing
steadily based on its strong600

foundation of business partners.
400

The Plastics Segment has
expanded its business since the200
0

rapid economic growth in the
1950s, ranging from home
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(Fiscal year)

Note: We have applied Accounting Standard for Revenue Recognition (ASBJ Statement No. 29), etc., from FY2021.

Chemicals*1

Life Industry*2

significantly along with the rapid
Plastics

growth of the LCD market from(Billions of yen)
25

2000 onward.

20

been operating in the fields of15

agriculture and advanced

The Life Industry Segment has

medicine in recent years and can

10

be expected to grow in the future.

50-5Impact of including allowance of doubtful accounts at a European subsidiary2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(Fiscal year)* In FY2019, the Housing & Eco Materials Segment was integrated into the Chemicals Segment.
The performance figures prior to FY2019 are also based on the revised categories.
*2 In FY2012, the Life Industry Segment was established by integrating the life science-related elements of the Chemicals Segment and the Food Segment.
The performance figures for the Food Segment prior to FY2012 are presented as the Life Industry Segment.
1

Sales by domestic or overseas market
Japan(Billions of yen)
500

Overseas
Lehman Brothers’ collapse

Overseas sales

60%

400

200

(13,072)
4,266(2,158)7,454(3,069)419(2,837)(7,450)
(35)
(326)
(757)
(17,568)
912
1,538
28,251
29,790postwar overseas subsidiary inintensifying its global business inalignment with production

Overseas
sales

transfer by Japanese companies

25%

to locations outside Japan. Over100
0Inabata established its first
1976 and has been rapidly

300

the 47 years since, its overseas
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(Fiscal year)

Note: We have applied Accounting Standard for Revenue Recognition (ASBJ Statement No. 29), etc., from FY2021.

21,488438(3,041)—(7,629)——(4,415)
(107)
(96)
(636)
5,999
2,270
2,268
25,98328,251

automobiles. The Information &Electronics Segment grew

Operating Profit by business segment
Information & Electronics

appliances, to OA andOperating Profit by domestic or overseas market
Japanbusiness has expanded, and the
proportion of overseas sales hasgrown from 25% in FY2002 to
60% in FY2022.

Overseas(Billions of yen)
14
12
10
8
6
4
2
0
-2

Impact of including allowance of doubtful accounts at a European subsidiary2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
(Fiscal year)

Inabata Integrated Report 2023

108

Data

Consolidated Subsidiaries and Affiliates (As of July 1, 2023)

Consolidated subsidiaries
Company Name

Trading company

Countries and Regions

Manufacturing & processing baseBusinessJapan
I & P Co., Ltd.

Japan

Osaki, Miyagi

Molding and processing of synthetic resins

Ikkoen Co., Ltd.

Japan

Sakai, Osaka

Processing and sale of marine products

Inabata Fine Tech Co., Ltd.

Japan

Osaka

Sale of chemicals

N · I · C Co., Ltd.

Japan

Tokyo

Processing and sale of plastic film products

Ordiy Co., Ltd.

Japan

Osaka

Processing of plastic film products andpackaging materials, design and marketingof supplementary equipment and systems

Countries and Regions

Business

Shanghai Inabata Fine Chemical Co., Ltd.

China

ShanghaiProcessing of coating materials

Shanghai Inabata Trading Co., Ltd.

China

Shanghai

Import & export and sale of synthetic
resins and chemicals

Inabata Korea & Co., Ltd.

South Korea

Seoul

Import & export and sale of electronicmaterials

Taiwan Inabata Sangyo Co., Ltd.

TaiwanHsinchu

Import & export and sale of electronicmaterials, semiconductor-related
equipment, and chemicals

Company Name

The Americas

Kansai Kobunshi Co., Ltd.

Japan

Yamato-Koriyama, Nara

Manufacturing of plastic films

IK Plastic Compound Mexico, S.A. de C.V.

MexicoSilao

Compounding of resins

Daigo Tsusho Co., Ltd.

Japan

Shizuoka

Sale of materials and machinery for foodpackaging, manufacturing and sale ofprocessed agricultural and marine products

Inabata Mexico, S.A. de C.V.

MexicoQueretaro

Sale of synthetic resins

NH Inabata, S. de R.L. de C.V.

MexicoQueretaro

Design and production, installation, anddistribution of overhead traveling cranes

DNI Group, LLC

United States

Novato (California)

Import & export and sale of foodInabata America Corp.

United States

New York

Import & export and sale of electronicmaterials, chemicals, and synthetic resins

Inabata France S.A.S.

FranceWissous (suburb of Paris) Import & export and sale of chemicals

Pharmasynthese S.A.S.

FranceNormandy

Manufacturing of pharmaceuticals,
materials for cosmetics, and fine chemicals

Dusseldorf

Import & export and sale of electronicmaterials, chemicals, and synthetic resins

Taiyo Plastics Co., Ltd.

Japan

Hasuda, Saitama

Manufacturing of plastic films

Maruishi Chemical Trading Co., Ltd.

Japan

Osaka

Sale of chemicals

Inabata India Private Ltd.

India

Gurugram(suburb of Delhi)

Import & export and sale of synthetic
resins, electronic materials, and chemicals

PT. IK Precision Indonesia

Indonesia

Bekasi (suburb of Jakarta)

Molding and processing of synthetic resins

PT. Inabata Creation Indonesia

Indonesia

Bekasi (suburb of Jakarta)

Processing of grip tapes for tennis rackets

PT. Inabata Indonesia

Indonesia

Jakarta

Import & export and sale of synthetic
resins and chemicals

Inabata Europe GmbHGermany

PT. S-IK Indonesia

Indonesia

Bekasi (suburb of Jakarta)

Compounding of resins

Inabata UK Ltd.

Inabata Malaysia Sdn. Bhd.

Malaysia

Kuala Lumpur

Import & export and sale of synthetic resins

Property management, warehousing
United Kingdom Shrewsbury(suburb of Birmingham)

SIK Color (M) Sdn. Bhd.

Malaysia

Johor

Compounding of resins

IK Plastic Compound Phils. Inc.

Philippines

Binan (suburb of Manila)

Compounding of resins

Inabata Philippines, Inc.

Philippines

Binan (suburb of Manila)

Sale of synthetic resins

Inabata Singapore (Pte.) Ltd.

Singapore

Singapore

Import & export and sale of synthetic
resins, electronic materials, and chemicals

Apple Film Co., Ltd.

ThailandSamut Prakan(suburb of Bangkok)

Manufacturing of plastic films

Hi-Tech Rubber Products Co., Ltd.

ThailandAyutthaya

Molding and processing of rubber products

Other affiliates

IKT Consulting Co., Ltd.

Thailand

Bangkok

Sale of machinery and provision of various
services

Company Name

Inabata Thai Co., Ltd.

Thailand

Bangkok

Import & export and sale of synthetic
resins, chemicals, food, and machineryJapan

SIK (Thailand) Ltd.

ThailandSamut Prakan(suburb of Bangkok)

Compounding of resins

Apple Film Da Nang Co., Ltd.

Vietnam

Da Nang

Manufacturing of plastic films

Inabata Vietnam Co., Ltd.

Vietnam

Hanoi

Import & export and sale of synthetic
resins, electronic materials, and chemicals

SIK Vietnam Co., Ltd.

Vietnam

Haiphong

Compounding of resins

Southeast Asia / India

China

Inabata Industry & Trade (Dalian F.T.Z.) Co., Ltd. China
Inabata Sangyo (H.K.) Ltd.

109 Inabata Integrated Report 2023

Equity-method affiliates
Countries and Regions

Business

Ulvac Coating Corp.

Japan

Chichibu, Saitama

Manufacturing of electronics and opticalindustrial materials

Clean Assist Co., Ltd.

Japan

Tokyo

Sale of plastic films and plastic sundries

Company NameCountries and Regions

Business

Aikei Farms Shakotan Co., Ltd.

Japan

Shakotan, Hokkaido

Production and sale of agricultural products

Aikei Farms Yoichi Co., Ltd.

Japan

Yoichi, Hokkaido

Production and sale of agricultural products

Inabata Optech Co., Ltd.

Japan

Kawasaki, Kanagawa

Research and development of encapsulants
for optical semiconductor devices

Thailand

Chonburi

Manufacturing and sale of recycled plastic

China

Tianjin

Import & export and sale of synthetic
resins, electronic materials, and chemicals

Brazil

Sao Paulo

Sale of chemicals and synthetic resins

Australia

Brisbane

Export of roughage, import and sale ofresin productsSoutheast Asia
Clover Plastics (Thailand) Co., Ltd.
Northeast Asia

Northeast Asia
Guangzhou Inabata Trading Co., Ltd.

EuropeChina

Guangzhou

Import & export and sale of synthetic resins,
machinery, electronic materials, and chemicals

DalianCompounding of resins, import & export
and sale of synthetic resins and chemicals

Hong Kong

Import & export and sale of synthetic
resins, machinery, electronic materials,
and chemicals

Tianjin Inabata Trading Co., Ltd.
The Americas
Inabata Brazil Import & Export Ltd.
Australia
Inabata Australia Pty. Ltd.

Inabata Integrated Report 2023

110

Data

Corporate Information

Company nameInabata & Co., Ltd.

Founded

October 1, 1890

Incorporated

June 10, 1918

Paid-in capital

9,364 million yen

Location ofhead offices

Osaka Head Office
1-15-14 Minami-semba, Chuo-ku, Osaka
542-8558
Tokyo Head Office (Temporary location)
Muromachi Furukawa Mitsui Building(COREDO Muromachi 2), 2-3-1 Nihonbashi
Muromachi, Chuo-ku, Tokyo 103-8448

Domestic offices

Osaka Head Office, Tokyo Head Office,Nagoya Office, Shiojiri Office, Shizuoka Office,Hamamatsu Office, Kyushu (Kirishima) Office

Overseas offices

Approximately 60 locations in 19 countries
including Singapore, Bangkok, Jakarta,
Shanghai, Hong Kong, Taipei, Los Angeles,
New York, Dusseldorf(As of March 31, 2023)

Non-consolidated: 709 (including employees
seconded to Group companies)
Consolidated: 4,316

Independent auditors

KPMG Azsa LLC

Securities code

Tokyo Stock Exchange Prime Market 8098

Number of employees

Websitehttps://www.inabata.co.jp/english/
Organization(As of July 1, 2023)

Information &Electronics Division I
Information &Electronics Division II
Information &Electronics Division III
Chemicals Division
Life Industry Division
Plastics Division I

GeneralMeeting of
Shareholders

Board of Directors

Audit and Supervisory
Committee
Audit and Supervisory
Committee Office

Plastics Compound
Business Office
Plastics Division II
General Affairs Office

Stock Information (As of March 31, 2023)

We are proactive in holding dialogue with shareholders andinvestors, as we believe it contributes to our sustainable growthand improves corporate value in the medium and long term.
(1) IR system• The president serves as the responsible person, and the director
in charge of IR has also been appointed. In principle, thepresident and the director in charge of IR lead dialogue withshareholders and investors.
• In cooperation with related sections within the Company, theIR Department collects and analyzes various management
information. The information is communicated internally andexternally, timely and appropriately.
(2) IR activities• Inabata handles meetings with investors positively andreasonably. We will also consider responding to applications
for outside directors within a reasonable scope.
• Inabata holds a briefing on financial results twice a year to
explain the progress of the medium-term business plan andprovide an overview of financial results.
• Inabata sets occasions for dialogue with individual shareholders
and investors through participation in IR events, etc.
• Inabata actively works to provide information through its
website, integrated report, shareholder news, and notices ofgeneral meeting of shareholders.
(3) Feedback• The director in charge of IR presents a report to the Board of
Directors regarding shareholder opinions and concerns obtained
through dialogue with shareholders.

Stock information

Sustainability Committee

Business Process
Management OfficeCompliance Committee

Human Resources
OfficeInternal Control Committee

Risk Management
OfficeHuman Rights
Affairs Committee

Business Planning
OfficeExport Control Committee

Internal Audit Office

Notice of temporary relocation of Tokyo Head Office
Due to reconstruction work on the Tokyo Head Office building (2-8-2
Nihonbashi Honcho, Chuo-ku, Tokyo), we are operating at thetemporary location stated above—from December 2022 toSeptember 2025.

Status of stock allocation by owners

Total number of authorized shares

200,000,000

Number of shares issued and outstanding

57,114,127

Number of shareholders

51,233We retired 1,200,000 shares on July 5, 2023, bringing the total
number of issued shares to 55,914,127 as of July 31, 2023.

Treasury stock
1.0% (1)

Individuals/others
22.3% (50,514)

Securities
companies
1.5% (32)57,114(thousand shares)

Domestic
corporations
33.6% (353)

Financial institutions
23.3% (23)Foreign investors
18.3% (310)
Figures in parentheses indicate the number of owners.

Principal shareholders (top 10)
Number of shares
held (in thousands)

Shareholding
ratio (%)

Sumitomo Chemical Co., Ltd.

13,836

24.5

The Master Trust Bank of Japan, Ltd. (trust account)

5,699

10.1

Custody Bank of Japan, Ltd. (trust account)

2,089

3.7

by Mizuho Trust and Banking Co., Ltd.)

1,736

3.1

Maruishi Chemical Trading Co., Ltd.

961

1.7

DFA INTL SMALL CAP VALUE PORTFOLIO

937

1.7

ASKA Pharmaceutical Co., Ltd.

785

1.4

Mizuho Bank, Ltd.

744

1.3

MUFG Bank, Ltd.

638

1.1

External evaluation

Sumitomo Mitsui Banking Corporation

624

1.1

Status of inclusion of indices
We were selected as a constituent stock for the JPX-Nikkei Index
400, which is calculated by JPX Market Innovation & Research,
Inc. and Nikkei Inc.; the FTSE Blossom Japan Index and the FTSE
Blossom Japan Sector Relative Index of FTSE Russell, which
belongs to the London Stock Exchange Group; and the S&P/JPX
Carbon Efficient Index (environmental stock index), which ispresented by the U.S. S&P Dow Jones Indices and the Japan
Exchange Group.

Note: Inabata & Co. owns 565,501 shares of treasury stock. This shareholding has not been included in the calculation of the shareholding ratio. However,
266,400 shares of Inabata & Co. held by Custody Bank of Japan, Ltd. (trust account E) as a trust property under the Board Benefit Trust (BBT) system are
excluded from the number of treasury shares, and hence, are included in the calculation of the ratio.

IR activities in FY2022
Activity

Implemented

Financial results briefings
Individual meetings with institutional investors,
analysts, etc. (including overseas)
Briefings for individual investors

2 times
54 times
1 timeDigital Promotion
OfficeFinancial
Management Office

111 Inabata Integrated Report 2023

IR Activities

2023

Other awards
We were awarded the Best Company (Silver Award) in the Gomez IR
Site Ranking 2022 and the Excellent Company Award in the Gomez
ESG Site Ranking 2023 announced by BroadBand Security, Inc., and
the AA Award in the 2022 All Japanese Listed Companies’ Website
Ranking announced by Nikko Investor Relations Co., Ltd.

Name of shareholder

Custody Bank of Japan, Ltd.
(Mizuho Bank, Ltd. Retirement Benefit Trust Account re-entrusted

Stock price
Stock price
(Yen)
3,000
2,800
2,600
2,400
2,200
2,000
1,800
1,600
1,400
1,200
1,000
800
600
400
200
0
FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022Rating agency
Credit rating
Rating and Investment Information, Inc. (R&I)

Issuer rating
A- (stable)

Inabata Integrated Report 2023

112