Vision 2030
Originality. Acceleration. Global Reach.
Transforming Lives Through the Power of Chemistry.
01

Vision 2030

About ISK

Value Creation Strategies Foundation for Value Creation

ISK Group’s Purpose

To continue contributing to better living environments through chemical technologies
Along with Vision 2030, we ISK Group formulated Corporate Purpose, our reason for existence in society. Corporate Purpose expresses our resolve to provide better living
environments for people all around the world. We will achieve this through our “chemical technologies”—such as fine particle synthesis technology, surface treatment,ultrafine particularization, and organic synthesis—the core of our competitiveness, our “corporate philosophy” anchored in ESG (environment, social, governance),“a willingness to embrace challenges” that has been in our DNA since our foundation and the three strengths; quality, technological development capability andmanagement capability.

Basic Philosophy

p03

Environment

SocialGovernancequality,
Safe and stableety,
friendly to socinment
life and enviror
rt capability foState-of-the-avelopment,
technological deunderpinned
orkforce
by a diverse w

pability withManagement ca
e mindhigh complianc

ISK’s three strengths derived from our corporate philosophy and DNA
p07

A willingness to embrace challenges,
passed down from the founder

Code of conduct stipulating legal compliance,
safety, human rights, and transparency

p03

PurposeTo continue contributing to better living environments through chemical technologies.
02

Corporate Data

Corporate Philosophy

About ISK

Value Creation Strategies Foundation for Value Creation

Basic Philosophy• Contribute to social development, protection of life and environmental preservation• Respect shareholders, customers, suppliers, local communities and employees• Abide by laws and regulations; maintain transparency in business activities

Co r p or at e
Ph i l osop h y

Code of Conduct• At ISK Group, we will strictly observe laws, regulations, social norms and Company rules,
while steadfastly adhering to high ethical standards, so as to gain social trust in ourbusiness.
• In manufacturing activities, we will place the utmost priority on global environmental
protection, as well as on worker safety, and will work to prevent any workplace accident
or disaster.
• On the basis of respect for human rights, we will promote mutual understanding andcooperation among employees, in order to create an open and friendly workplace.
• To maintain transparency in our business activities, we will promote communication withlocal communities and society, and will disclose corporate information in a timely andappropriate manner.

03

Corporate Data

Contents

About ISK

About ISK

01 Introduction
02 ISK Group’s Purpose
03 Corporate Philosophy
04 Contents
At a Glance
05 Main Businesses
06 Serving the World

Value Creation Strategies Foundation for Value Creation

Message from the President

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

Conduct Business“Aggressively”
Looking Outward andForwardWith my appointment as Executive Director and President
on June 25, 2021, now I brace myself for an important responsibility to guide all Ishihara Sangyo Kaisha (ISK) Groupas the company enters the 101st year since foundation.
With our aim of “transforming lives through the power ofFoundation for Value Creation

07 Message from the President
11 Vision 2030
15 Value Creation Process
16 Input and Outcome
17 Materiality
19 Financial and Non-Financial Highlights
21 Message from the Director of Finance & Accounting Headquarters
Overview by Business23 Inorganic chemicals business
25 Organic chemicals business
27
29
31
34
35
43
45
47
51

Stakeholder Engagement
Outside Directors Conversation
Board of Directors and Executive Officers
Message from the Chairman
Corporate Governance
Responsible Care Activities
Environmental
SocialSpecial Feature: The Dawn of New Products

chemistry”, I will lead our business aggressively and takethe risks that we avoided in the past. We appreciate everyone’s continued advice and guidance that kindly provided
former President over the years.
Executive Director and President

Hideo Takahashi

07

Message from the President

Conduct Business “Aggressively” Looking Outward and Forward
With my appointment as Executive Director and President on June 25, 2021, now I bracemyself for an important responsibility to guide all Ishihara Sangyo Kaisha (ISK) Group as
the company enters the 101st year since foundation. With our aim of “transforming lives
through the power of chemistry”, I will lead our business aggressively and take the risks
that we avoided in the past. We appreciate everyone’s continued advice and guidance thatkindly provided former President over the years.
Materiality

About ISK

53
55
59
60
61
62

Corporate Data

In formulating our “Vision 2030 Stage I”; medium-term business plan, ISK Group identified priority
issues (Materiality) that would impact corporate value in the medium-to-long term. Based on thisMateriality, we are implementing measures that contribute to the sustainable development of society
and ISK Group, as well as formulating relevant, non-financial objectives.

STEP 1
Issue
identification• Issue Importance Evaluation• In accordance with GRI, SASB and other guidelines, as well as ISKGroup’s long-term vision and medium-term business plan, we identified
the issues we need to focus on and prepared longlist

Very
high

• Dealing with climate change,
reducing environmental impacts• Technological development capabilities• After consolidating and combining similar issues, the initial list of roughly
200 issues was turned into a list of 28 identified topics• Stable supply of crops• Contribution to deepening
IPM for biorational products• Contribution to healthcare• Each issue was considered in terms of consistency with ISK Group’s
purpose, philosophy, etc., and assessment at workshops held withbusiness divisions and management, and we carefully examine the“level of importance to ISK” (horizontal axis)

STEP 2
Prioritization• Contribution to a smart society• Key issues in the chemical industry, key corporate ESG topics that
institutional investors require to companies, results from employee
surveys and various other considerations were used to carefully
examine each issue’s “level of importance to stakeholders” (vertical axis)• Related issues were consolidated and combined to narrow the list
down to 16 issues, from which 8 issues were identified as the highest
priority for ISK Group and its stakeholders

Corporate Data

Value Creation Strategies Foundation for Value Creation

Materiality Identification Process

Level of importance to stakeholders

Value Creation Strategies• Supply chain management• Occupational health and safety,
operation safety and disaster prevention• Diversity and inclusion• BCP, risk management• Corporate Governance• Reforming workstyles by pursuing
digital transformation (DX) andstreamlining operations• Information security• Coexistence withlocal communities• Quality• Stakeholder engagement• Outside experts reviewed the identification process and the identified
Materiality to confirm their adequacy

Financial and Non-Financial Summaries
Consolidated Financial Statements
History of ISK
Company Profile / Group Bases
Stock Information
Editorial Policy

STEP 3
Materiality
identification• The identified Materiality for ISK Group was finalized following
deliberation by the Executive Management Committee and approved by
the Board of Directors

Level of importance to ISK

High

Very
high

17

Materiality

Materiality Identification Process
In formulating our “Vision 2030 Stage I”; medium-term business plan, ISK Group identified
priority issues (Materiality) that would impact corporate value in the medium-to-long term.

04

Corporate DataAt a Glance

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

Main Businesses

Inorganic
Chemicals
Business

Organic
Chemicals
Business

Contributing to the environment and the development ofdigital society through the creation of new value

Contributing to the nutrition, health,and life of people worldwide

The flagship product of our inorganic chemicals business is titanium dioxide, which is primarily used as awhite pigment in paints, plastics, inks and other industrial products, cosmetics, synthetic fibers, and more.
In addition to the more common sulfate process, we are the only manufacturer in Japan to utilize the moreenvironmentally friendly chloride process* in manufacturing titanium dioxide. We develop and sell highly
functional and high value-added products, including electronic component materials, electro-conductive
materials, and other functional materials and heat shield materials.

The flagship products of our organic chemicals business are agrochemicals, including herbicides, fungicides, and insecticides. In Japan, we were the first to introduce synthetic agrochemicals technology. Our
products are highly rated overseas, including in the American and European markets, and the value of ourexports is among the largest in Japan. Additionally, we have applied the organic synthesis technology cultivated in our agrochemicals business to the development of active pharmaceutical ingredients and animal
health products as new growth areas.

*A technologically demanding manufacturing process, which produces little industrial waste

Titanium Dioxide

Agrochemicals

TIPAQUE™ is our top brand of titanium dioxide white
pigment and the leading brand in Japan, as well as awell-established brand overseas, thanks to its brilliant
whiteness, high hiding power, powerful tinting strength whenused with plastics, and various other properties.

Since the introduction of herbicides to Japan some 70
years ago, ISK has been a domestic pioneer in the agrochemicals business, cultivating world-class development
capabilities to become a global supplier of agrochemicals
that are safe for humans and the environment. We help
ensure the stability of the global supply of crops.

Functional Materials(Electronic Component Materials)
We supply highly pure titanium dioxide and other materials
for use in ceramic electronic components, such as capacitors and filters. In particular, our barium titanate, which ismanufactured using an oxalic acid process requiring stringent quality control, is highly regarded in the industry as amaterial for multilayer ceramic capacitors.

Inorganic
chemicals

49.0%

Consolidated
net sales ratio

Otherbusinesses

3.5%
05

Organic
chemicals

47.5%

Animal Health Products
We manufacture and sell in Japan BRENDA™, the world’s
first anti-pancreatitis drug for dogs. We also supply the
co-developers of this product with the active pharmaceutical ingredient. Additionally, we are working to secure
approval for full-scale release of BRENDA™ onto theAmerican and European markets. Moving forward, we willcontinue to provide products tailored to the needs of pet
owners and animal healthcare professionals.

At a Glance

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

Serving the WorldEver since it was founded, ISK Group has used its technological development capabilities to create high-value-added products, which it has brought to worldwide customers via an expansive
global network.
Note: The photos below illustrate the types of applications for ISK products.

ISK

EuropeChina, Asia

Inorganic chemicals

Organic chemicals

Titanium dioxide

Agrochemicals

North America

Japan

AfricaInorganic chemicals

Organic chemicals

Functional materials

Animal health productsSouth America

Australia

06

Message from the President

About ISK

Conduct Business“Aggressively”
Looking Outward andForwardWith my appointment as Executive Director and President
on June 25, 2021, now I brace myself for an important responsibility to guide all Ishihara Sangyo Kaisha (ISK) Groupas the company enters the 101st year since foundation.
With our aim of “transforming lives through the power ofchemistry”, I will lead our business aggressively and takethe risks that we avoided in the past. We appreciate everyone’s continued advice and guidance that kindly provided
former President over the years.
Executive Director and President

Hideo Takahashi

07

Value Creation Strategies Foundation for Value Creation

Corporate Data

Message from the President

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

My Position and Responsibilities

What Must We Do 10 Years From Now?

Internally, our policy is to boost our strategic planning capabilities. As our products have stable demand, there has beena tendency to be conservative in business and hard to foster an outward-looking culture in the company. However, thisis no longer suffice. We must forge ahead in building systems that allow us to plan strategically with an eye to 10 and
20 years ahead. To this end, I will study whether to strengthen our current Corporate Administration & Planning Headquarters, or take a different approach.

I was first approached by former President Mr. Tanaka about taking on this job in late March 2021, when I was Directorof Yokkaichi Plant. He was visiting the plant on another matter, but he told me he was leaving his post and showed mea succession plan, on which my name appeared as President. “Why me?”, I asked. “Only you can do it,” he replied.
Former President Mr. Tanaka had used to discuss management issues with me, but I didn’t think it was relevant to me
as Plant Director. It all became clear on that day he visited the plant.
Although I didn’t respond clearly to his offer then and there, in my heart I had already decided to accept. I vowed to dowhat I want to, and what I have to, and if not successful, I just take responsibility and leave the post. Now, as the current
position, I still feel that way.

I joined ISK in 1980. After studying applied chemistry in university, I was assigned to the company’s inorganic chemicals
business, and for 35 years I worked at the laboratory in Yokkaichi Plant developing functional materials. After that, I
spent four years at our Tokyo Branch in sales of functional materials, because my boss told me that people making new
products should also sell them. For the last two years, I was Director of Yokkaichi Plant. My home is in Yokkaichi City, but
I currently live alone close to the Head Office in Osaka, which is fine since I was born and grew up in Osaka. However,I’m surprised to know summer in Osaka is much hotter than it used to be.
Around the time I joined the company, ISK Group didn’t have functional materials, and discussion started as to whether
we could survive with only white pigments. I was assigned to one of the members to leverage the unique properties oftitanium dioxide, and since that time I have been involved in one way or another with all of ISK Group’s development offunctional materials. In those days, we went through seemingly endless trial and error and sometimes worked throughthe night to solve problems.
When I became Director of Yokkaichi Plant, former President gave me five tasks. The first was to make a comprehensive
plan to update the aging facilities at Yokkaichi Plant—which had been operating for 82 years—so that it could continue
running into the future. The second was to revise our system for facilities maintenance. To do this, I paved the way to
reduce costs by transferring maintenance work, which had been previously outsourced to our subsidiary, to our neworganizational structure at Yokkaichi Plant. The third task was to secure a waste disposal site. Extracting titanium dioxidefrom the feedstock ore generates about 200 to 300 tons of waste, mainly iron oxide, per day. Our disposal capacity was
stretched to the limit, so we acquired a new disposal site. This enables us to extend the limit for the next 20 to 30 years.
The fourth task was to utilize various feedstock ore as efficiently as possible. Going above and beyond our in-house standard for feedstock, we actively conducted on-site trials in utilizing a wide range of quality. The fifth task was to reduce
our CO2 emissions. The large amounts of electricity and steam for manufacturing titanium dioxide and other products
depend on coal-fired boilers, which generate a lot of CO2. We have to improve this.
Although replacing all of our aging equipment and reducing CO2 emissions are medium- to long-term tasks we are stillworking on, we are currently creating roadmaps for them. The CO2 emissions problem requires us to coordinate withneighboring chemical plants. It will take some time, but as the President I want to tackle these problems so that by 2030
we will have made progress.

Former President Mr. Tanaka’s six years as President at first saw the Ferosilt problem still lingered, which existed before
his appointment, and he devoted the utmost effort to redress the situation. Therefore, it is understandable that thecompany’s management stance tended to be relatively passive. In the latter half of his presidency, however, he finallyachieved his goals of resuming dividend payments and implementing new capital investment. Today, as we can clearlyfind the path to solve the problems, we believe that what we need to do is look outward and forward, and be aggressive
to the matters.
In the next three years, we will examine what we want to do and what we have to do to achieve the goals of Vision 2030,
targeted at 10 years from now. The weaknesses that beset the company have been eliminated thanks to the six yearsof work by former President Mr. Tanaka. Now is the time for us to look seriously into any project that will potentially reap
big rewards, even if it carries risks and requires investment.
ISK Group’s existing businesses can earn large profits when external factors such as the economy and the weather arefavorable, but they also risk losing money when these factors are very unfavorable. This is what we want to change. It’s
not enough just to develop new products in existing businesses; we have to develop entirely new businesses.
This is the mission assigned to me. In our organic chemicals business, besides our existing agrochemicals, we will makeour recently launched animal health products the third pillar of business at the earliest possible stage. In our inorganic
chemicals business, we will bring to market our new specialty and functional materials as much as possible. Even if it isdifficult to realize everything during my tenure, I will at least pave the way to the goal.
On the other hand, these days it’s no longer enough simply to turn a profit. A company must conduct work that satisfies
all stakeholders. ISK Group is continued today through existing businesses due to not just making money, but also continuously contribution to society’s needs like comfortable lives and food safety. We want to continue moving ahead withbusiness by always being aware of our contribution.

08

Message from the President

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

Vision 2030 and Medium-Term Business Plan

3 Years of Preparation,
Followed by Implementation and Realization

ficiency equipment; and renewal investment for updating existing equipment. At the moment, there is likely to
be more demand for the latter. However, the updated equipment will be different from the existing, and we havestarted to install equipment that uses new methods to achieve higher productivity. We are also looking to takea scrap-and-build approach to antiquated equipment. Regarding capital investment in new facilities, we foresee
putting this into action from the final year of Stage I onwards.
Research and development spending during Vision 2030 has been set at about 8 to 9 billion a year. About 80%
will be for agrochemical-related, with priority placed on registration fees to countries’ regulatory authorities, andtesting costs prior to seeking the registration. In addition to chemical control agents, we see biological control
agents taking on increasing importance and will therefore focus on their development.

Vision 2030 clearly states the direction that ISK Group must take: “Transforming lives through the power of chemistry”. We believe it is our mission to provide our products that transform society through the power of chemistry.
With our agrochemicals, we help feed the world, and we do so by providing highly safe chemicals. With ourtitanium dioxide products, we have always done more than simply help make paints; for example, we provide
photocatalytic titanium dioxide that eliminates viruses and heat shield materials that contribute to energy savings.
Climate change continues to inflict damage on agricultural production around the world. Increasing food production is one of the pressing issues for the human race. Crops must be produced more efficiently on the limited
arable land, and one supportive way is to use agrochemicals. Additionally, with rapid advancements in IT, newelectronic component materials are garnering increasing attention. Titanium dioxide holds tremendous potential in
the field. For example, barium titanate demand is definitely growing since it is necessary to make the condensers
that are indispensable to IT equipment and electric vehicles.
Against the background of these megatrends, our Vision 2030 has set targets including annual net sales of over
200 billion yen. The first step towards this is the Vision 2030 Stage I as medium-term business plan, which welaunched in April 2021.
ISK Group medium-term business plans had previously looked no further than the coming three years. Therefore,

ESG

Sustainability Promotion Committee
Positioned Directly under President
An important element of Vision 2030 is to contribute to the realization of a sustainable society. While ISK Group’sbusiness and products sustainably protect people’s lifestyles and health, we are seeking to go further and becomea good corporate citizen through a focus on ESG (environmental, social, governance).
Environmentally, we want to recover valuable resources from the waste that goes to landfills. Reducing the amountof waste serves the dual purpose of reducing environmental impact and cutting costs. In the medium to long term,
we should replace the coal-fired boilers at Yokkaichi Plant with clean energy such as hydrogen or ammonia. Costwise, however, this will be difficult to do all at once.
Socially, struggling through the difficult problem of Ferosilt, we were able to make great strides in compliance,
safety, and quality. To deal with HR issues, in October 2020 we launched a new human resources system to improve the way we evaluate and compensate our employees. By properly operating this new system, we will foster
individuals who can change ISK Group for the better, and also continue to build training and other systems toencourage employees’ growth. Furthermore, we should tackle the problem that the number of female managers
at ISK Group is much less than others. We will place more women in previously male-centered divisions in orderto even out the personnel composition.
Governance-wise, we are building a company system that complies with Japan’s revised Corporate GovernanceCode. In order to better deal with sustainability issues, we launched a Sustainability Promotion Committee directly
under the President. We continue to consider the organizational changes that comply with the revised Corporate
Governance Code.

the business plans sometimes contained wishful thinking. Regarding Stage I, however, it is a plan outlining whatshould be done in the next three years based on the precondition of attaining the goals of Vision 2030, 10 years
in the future. Including precarious targets would jeopardize the next three years, so we prepared our Stage I thatis highly likely to be realized.
Targets for Stage I include annual net sales exceeding 125 billion yen, with one focus being to grow our organic
chemicals business. As it prioritizes viability, it does not calculate contributions from new businesses other thanfrom animal health products. In our inorganic chemicals business, Stage I aims to achieve its targets by increasing
the sales ratio of highly functional and high-value-added products, and sales of electronic component materials
and electro-conductive materials. In our organic chemicals business, it aims for lower cost production and stablesupply of our main agrochemical ingredients, and reduced production costs for upcoming main agrochemicals.
Stage II starting in fiscal 2024 will see us embark on efforts such as new businesses and industry alliances. StageIII from fiscal 2027 aims for higher revenue. In other words, the positioning for Vision 2030 is as follows: Stage I
for preparation, Stage II for implementation, and Stage III for realization.
As for capital investment during these three stages, we estimate from 7 to 8 billion yen annually. Capital investment is divided into two categories: new facility investment such as building new plants and installing high-ef-

09Message from the President

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

Business Environment and the Future

Larger and Stable Dividends
Through Increased Revenue
Let’s look at the current business environment surrounding ISK Group. Although COVID-19 has adversely affected
the world economy and caused much uncertainty, we have so far managed to escape any major negative effects
on performance because our products are directly linked to essential sectors like lifestyles and food.
In our inorganic chemicals business, thanks to robust demand for IT equipment resulting from people staying at
home during the pandemic, demand increased for our electronic component materials. Titanium dioxide sales havealso performed well, thanks to rapid economic recovery, mainly in China.
In our organic chemical business, demand shows further growth as crop manufacturers move to procure agrochemical products as early as possible. The reason is that with strong demand for soybeans and other grains,producers want to increase their yield by using more fungicides.
This trend shows no signs of changing, and sales are good as we approach the fiscal term end. However, the
COVID-19 lockdown in India is causing delays in plant construction. For the present, we are taking measures tominimize the impact on our business.
We forecast that shareholder dividend will be 25 yen per share, up 7 yen over our initial forecast of 18 yen per
share. But we still don’t feel this is sufficient. We want to continue paying stable dividends—and even steadilyraise them—by boosting business performance. We will monitor the situation and look at other return besides
dividends to give back to our shareholders.
In my 41 years at ISK, I have come to understand that ISK Group has three great assets. The first is the ability to
get things done. Our employees have been able to work together and solve difficult matters such as the Ferosilt
problem. Fundamental to this is the second asset, the power of solidarity. The third asset is our technological development capabilities. In our inorganic chemicals business, we have some one-of-a-kind products. In our organic
chemicals business, it usually takes 7 to 10 years to develop one agrochemical product, but we have the stablecapabilities to cope with. We have also been developing and registering new agrochemical products in all thecountries around the world. ISK Group’s development and registration capabilities have become highly regarded
as global level due to the successful track record even in Europe, the increasingly strictly regulated markets.
Our business today, built on the continuous improvement through these assets, doesn’t just sustain our company;
it contributes to better living and eating for people worldwide. This ideal will never change, even as we launch new
businesses in the future. Although we’re not a flashy company that strongly attracts the general consumer, we doprovide products in order to support society. That’s the kind of company we want to be evermore.

10

Vision 2030

About ISK

Value Creation Strategies Foundation for Value Creation

Vision 2030 Summary

For Transforming Lives Through the Power of Chemistry
We ISK Group formulated Vision 2030 on our 100th anniversary. Here, we will explain the details
yet reported in the 2020 Integrated Report, as well as the path to realizing Vision 2030.

Preconditions: Megatrends and Stakeholders

Megatrends

Vision 2030 presupposes numerous worldwide changes that will likely arise by 2030, including
climate change and food problems. How will these changes affect our stakeholders such as
customers, shareholders, and investors? How can we contribute to our stakeholders in the faceof these changes? After much debate in-house, we have summarized the initiatives that must be
taken in our various businesses.

Climate change

Originality. Acceleration. Global Reach.
Transforming Lives Through the Powerof Chemistry.

Resource shortages and food problems
Urbanization
Rapid development of IT
Growth and aging of the global population

Stakeholders
Shareholders and investors
Local communities
Customers and business partners
Employees

Value Provided by ISK and our Initiatives
Inorganic chemicals business

Organic chemicals business

Create new value based on the technologies developed for titanium dioxide products, to support the environment and digital society, and contribute to realizing a sustainable society.
Titanium dioxide
Providing a variety of colors and hues
Functional materials
Creating a range of comfort
Environmental products Achieving both innovation and environmental protection-> Diversifying the optical characteristics of titanium dioxide to realize new value creation-> Contributing to the resolution of social issues such as the adoption of information and communications
technologies and the electrification of automobiles through functional materials-> Reducing environmental impacts while streamlining production through a revolution in production
structures

Supply unique products that directly enhance customer value across the world, and support
people’s nutrition, health and life to contribute to realizing a sustainable society.
Agrochemicals
Improving agricultural production stability and quality
Animal health products Protecting the lives and health of pets
Pharmaceuticals
Contributing to medical care-> Pursuing development and commercialization in a way that’s aware of the value chain-> Accelerating the creation of value and restoring our growth trajectory by improving and evolving
in-house technologies-> Manufacturing flagship products at the lowest cost in the world and supplying them in a stablemanner to customers

New businesses, others-> Building a new business portfolio-> Strengthening development of environmentally friendly products by investing resources (people and money) with an awareness of environmental, social, and corporate governance (ESG) considerations
in areas other than titanium or agrochemicals-> Establishing structures to pursue carbon neutrality by 2050

Management Targets (2030)• Net sales of greater than 200 billion yen • ROE 10% or more
• Operating margin of 15% or more
• Continued stable return for shareholders

11

Contributing to realization of a sustainable society together withimproving our corporate value through such business activities.

Corporate Data

Vision 2030

About ISK

Value Creation Strategies Foundation for Value Creation“Vision 2030 Stage I”, New Medium-Term Business Plan

Aiming for Sustainable Corporate Value Creation
As the first step towards the realization of Vision 2030, we formulated new three-year medium-termbusiness plan, “Vision 2030 Stage I” (April 2021–March 2024). This aims to create more value by
incorporating the perspectives of ESG and the SDGs into our management.

• Path to Realizing Vision 2030 Targets

Basic Policy

Vision 2030 targets
Net sales

Creating sustainable corporate value by strengthening
management performance from ESG and the SDGs perspective

Greater thanFY2023 Management Targets• Consolidated sales• Consolidated operating margin
• ROE

125
13
10

Over

Net sales
Greater than% or morebillion yen

Vision 2030
StageⅠ% or more• Shareholder return policy

125billion yen

Vision 2030
Stage Ⅲ

Stage I: FY2023 targets

billion yen

200

FY2027-2029

Vision 2030
Stage Ⅱ
FY2024-2026

FY2021-2023

Continue stable dividend paymentsthat reflect consolidated performance

Strategic Directions
Overall management
Strengthening sustainable management initiatives from the perspective of ESG and the SDGs

Inorganic chemicals businessContributing to the environment andthe development of digital society throughthe creation of new value• Expansion of highly functional, high-value-added products• Production structure reforms

Organic chemicals businessContributing to the nutrition, health,and life of people worldwide• Establishing a robust global value chain• Continuing steady efforts to lower costs

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Research and development
Embracing the challengesof technological innovation• Regularly creating new products• Developing products that are informed by ESG considerations

Corporate Data

Vision 2030

About ISK

Value Creation Strategies Foundation for Value Creation

Overview of Vision 2030 Stage I
Priority Measures in Our Businesses
Inorganic chemicals business

Organic chemicals business

Increasing the sales ratio for highly functional,
high-value-added products
Implementing a strategy to expand sales of high-purity materials
for electronic components, and electro-conductive materials
Accelerating development of new products that will serve as
drivers of further growth
Procuring feedstock ore in stable and favorable terms
Lowering costs at the Yokkaichi Plant by reducing wastes andimproving manufacturing and operational processes
Launching a master plan to optimize manufacturing sites
Creating a roadmap to reduce greenhouse gases

Increasing our share of the global market by manufacturing
flagship agrochemical ingredients at the lowest costin the world and supplying them in a stable manner
Reducing the manufacturing cost of next-generation
flagship agrochemicals and increasing demand
Developing and commercializing biorational products
and deepening integrated pest management (IPM)
Implementing strategic, innovative sales measures,for example by utilizing multiple agrochemical sales companies
Acquiring and maintaining agrochemical registrations
in various countries worldwide
Expanding the scale of our businesses by pursuing M&As
and partnerships with other companies
Strengthening our base for refining and passing on chemical
synthesis technologies
Rolling out animal health products worldwide*IPM: Integrated pest management; controlling pests with consideration for the ecosystem as a whole

Measures that apply to both businesses
Growing our top line (sales)
Strengthening our ability to create new businesses and products
Carrying out internal structural and awareness reforms
so that we can achieve the Vision 2030 goals

Capital policy
Strengthening shareholder return(continuing to pay stable dividends)
Aggressively pursuing capital cost management(realizing improvements throughout the cash conversion cycle, etc.)

Pursuing and strengthening sustainable management
initiatives from the perspective of the SDGs

Overallmanagement

Expanding the business opportunities available to us through managementfrom the perspective of ESG and the SDGs
Identifying materialities (SDGs) and strengthening initiatives to address them
Reforming workstyles by pursuing the digital transformation (DX) and streamlining operations
Continuing and strengthening compliance management
Strengthening risk management

13

Corporate Data

Vision 2030

About ISK

Value Creation Strategies Foundation for Value Creation

Results of the Previous Medium-term Business Plan and Remaining Issues
During the previous medium-term business plan (April 2018–March 2021), we had various successes including the resumptionof dividend payments and the sales launch of animal health products. However, as we yet achieve the targeted level forhigh-value-added products sales and cost reduction, those issues have been carried over into the new medium-term businessplan period.

7th Medium-term Business Plan Versus Results (100 million yen)
1,310
1,200
1,090

1,064

121
80
43 44

45

1,010

1,017

Inorganic business operating income
Organic business operating income
Consolidated operating income
Consolidated sales

113

68

60

50

61

48

32

24

51 51
33

△1

△2

FY2018 plan

FY2019 plan

FY2020 plan

FY2018

7th Medium-term Business Plan

FY2019FY2020Results

Results

Remaining Issues

We achieved resumed dividend payments in FY2019 and paid a dividend to commemorate the100th anniversary of our founding in FY2020
We joined Mitsui & Co., Ltd, in making a joint investment in Ouro Fino Química Ltda, a Brazilian
manufacturer and distributor of agrochemicals, in FY2019

Establishing business structures that will not be affected by the external environment• Inorganic chemicals: Impacts from trade friction between the U.S. and China (FY2019) andfrom the COVID-19 pandemic (FY2020)• Organic chemicals: Impacts from abnormal weather in Europe and the U.S. (FY2019)

We began selling animal health products in FY2018.

Ensuring implementation of both increased added value and reduced costs

We expanded production facilities for electronic component materials and electro-conductive
materials together with our subsidiary, Fuji Titanium Industry Co., Ltd.

Increasing resilience while minimizing the impact of external risks through business continuity
planning (BCP) and risk management
Recouping investments, including capital investments, quickly

14

Corporate Data

Value Creation Process

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

Chemical Technologies and our “3 Strengths”
We ISK Group have continued to contribute to the advancement of society by providing the chemical technologies developedsince our foundation, a core competence, and by leveraging our ”3 strengths”, quality, technological development capability,
and management capability. With the world entering a new phase of reform in economy, society and the environment, we will
adapt to it and pursue further growth under “Vision 2030”.

Megatrends Input

Value Creating Core

Outcomep16
Climate change

R&D

Financial capital

Technological development capabilities• Central Research Institute employs approx. 200

Manufacturing capital• Pursuit of new business in state-of-the-art fields

Urbanization

Human capital
Growth and agingof the global population

Rapid developmentof IT• Fine particle synthesis• Surface treatment• Ultrafine particle• Organic synthesis

Sales

QualitySocial andrelationship capital

Natural capital

p16

Chemical technologies

Intellectual capital
Resource shortages
and food problems

Economic value• Titanium dioxide production
by chloride process

Social value
Procurement

Management
capability• High compliance awareness• Established know-how
for manufacturing
pharmaceutical intermediates

Production• Transparent, trustworthy,
and sound management

Governancep34-4215

p16

Vision 2030
Originality. Acceleration. Global Reach.
Transforming Lives
Through the Power of Chemistry.

Main SDGs related to ISK Group businessInput and Outcome

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

Promote Value Creation through Continuous Input
ISK Group’s definitions of the inputs and outcomes of the “six capitals” of value creation are given below. These reflect our Materiality which first we have identified, and through ongoing enhancementof inputs we will realize “Vision 2030”.
Financial Capital Input• Total assets (FY2020 consolidated)• Interest-bearing debt (end of FY2020)• Shareholders’ equity (FY2020 consolidated)

Reason for Input
180 billion yen
60.1 billion yen
81.1 billion yen

Role in Value Creation

Outcome

Total assets from which revenue is generated, as well as inter- • By efficiently utilizing total assets, we will secure market share and • Top market share in domestic sales of titanium dioxide
est-bearing debt and shareholders’ equity, which serve as thethereby increase consolidated net sales.
primary means of raising capital in establishing these assets, • Adjusting a balance between interest-bearing debt and shareholders’ • Forecast performance for FY2021
are set as our main financial inputs. These were also incorpoequity will facilitate improved ROE along with greater capacity for future• Consolidated net sales
rated among the management targets for our medium-term
investment.
• ROEbusiness plan, “Vision 2030 Stage I”.

103 billion yen
4.4 %Manufacturing Capital
6.3 billion yen• Capital investment (FY2020 consolidated)• Titanium dioxide production capacity
168,000 tons
(No. 1 in Japan)• Expertise cultivated over many years,
essential to high-quality and stable manufacturing

In terms of manufacturing, the key inputs are production capac- • We achieve efficient facility operation sufficient to meet demand throughity, which underpins our top share of domestic titanium dioxthe application of our unique expertise coupled with timely replacement
ide market, and capital investment sufficient to maintain andinvestment in production equipment and facilities.
expand the production capacity. In addition, we have incorpo- • In April 2021, we installed new production line for highly functional
rated manufacturing expertise capable of operating the physicalproducts in anticipation of growing demand.
infrastructure into manufacturing capital.

Titanium dioxide production facility utilization
rate (FY2020 consolidated)

64.9 %[Functional materials production enhancement]• Work completed in April 2021 at Yokkaichi Plant(electro-conductive materials and high-purity titanium dioxide)

Intellectual Capital
R&D expenses (FY2020 consolidated)(Inorganic chemicals(Organic chemicals

8.6 billion yen Research and development have long been a priority for ISK • Drive the development and patenting, both in Japan and overseas, Number of patents held
We ensure that a certain threshold for R&D expensesof new agrochemicals and drugs, highly functional titanium dioxide (end of FY2020 non-consolidated)
1.5 billion yen) Group.
is met regardless of fluctuations in business performance.
materials and more, as well as facilitate the creation of new business7.5 billion yen) R&D activities at the Central Research Institute (Kusatsu, Shiga associated with them.
(JapanPrefecture) and Yokkaichi Plant account for the majority of R&D • Further expand registration activities worldwide, and utilize agrochemiexpenses, while some are used for the registration of agrocals registration as intellectual property.
chemicals in various countries.

(Overseas

2,593
296)
2,297)

Human Capital• Employees (FY2020 consolidated)• New graduate hires(FY2020 non-consolidated)• Percentage of R&D employees(FY2020 non-consolidated)

Securing and making the most of human resources is one of • We revamped our human resources system in FY2020. This new system • Participants in position-level-specific training
key priorities of ISK Group. Particular effort is made to secureprovides all employees with the opportunity to take on high-level job (FY2020 non-consolidated)
29 men, 10 women R&D professionals so that they consist of more than 20% of all challenges and to get various kinds of training. Through these proce- • Employees who took childcare leave
employees (non-consolidated). We also provide career design
dures, we draw out greater value from our human resources.
(FY2020 non-consolidated)seminar to employees at all ISK locations in order to support • We are also working to achieve greater diversity and thereby make the • Paid leave usage rate
20.9 %
their career development.
most of human resources representing different backgrounds.
(FY2020 non-consolidated)• Percentage of female managers(FY2020 non-consolidated)• Severity rate (FY2020 consolidated)

1,743 people

126 people
22 people
73.6 %
6.7 %0.07

Social and
Relationship Capital
Registered trademarks (end of FY2020)

1,837 cases

The main input is the number of our registered trademarks, • Through a combination of meticulous technical service and global, localwhich has been a key component for various kinds of productized marketing activities, we provide customers with solutions for theirlineups that have been used by many long-term and valued
problems and continue to earn their trust.
customers of ISK Group. In addition, as a chemical manufactur- • With regard to our initiatives for the health and safety, process safety
er, we also strive to contribute to local communities around ourand disaster prevention as a chemical manufacturer, we will keep close
production sites.
communications with local communities in order to maintain their trust.
• We work to burnish our brand power as a “strong and responsible
chemical company”.

Brand power as a strong and responsible chemicalcompany

Natural Capital
Yokkaichi Plant FY2020• Energy (heavy fuel oil equivalent)• Industrial water• Seawater• Titanium ore

We treat energy, water, and titanium ore consumption at • By reducing coal-fired boiler CO2 emissions as part of our efforts to Yokkaichi Plant FY2020

Plant and our subsidiary, Fuji Titanium Industry, as
mitigate global warming, we look forward to preserving a healthy living • CO emissions
130,000 kiloliters Yokkaichi
370,000 tons
2
key indicators so that we work to reduce the volume of our CO2
environment.
14 million m3 emissions, water usage, and industrial waste disposal.
24 million m3• Through more thorough chemical substances management, we are • Wastewater emissions into public water areas
reducing the amount, and amount transferred of, our emissions, with • Industrial waste (inorganic sludge)
10 million m3
81,000 tons
the goal of reducing our impact on humans and the ecosystem to as
110,000 tons
1,300 tons
PRTR-listed substances
close to zero as possible.

16Materiality

About ISK

Value Creation Strategies Foundation for Value Creation

Materiality Identification Process
In formulating our “Vision 2030 Stage I”; medium-term business plan, ISK Group identified priority
issues (Materiality) that would impact corporate value in the medium-to-long term. Based on thisMateriality, we are implementing measures that contribute to the sustainable development of society
and ISK Group, as well as formulating relevant, non-financial objectives.

STEP 1
Issue
identification• Issue Importance Evaluation• In accordance with GRI, SASB and other guidelines, as well as ISKGroup’s long-term vision and medium-term business plan, we identified
the issues we need to focus on and prepared longlist

Very
high

• Dealing with climate change,
reducing environmental impacts• Technological development capabilities• After consolidating and combining similar issues, the initial list of roughly
200 issues was turned into a list of 28 identified topics• Stable supply of crops• Contribution to deepening
IPM for biorational products• Contribution to healthcare• Each issue was considered in terms of consistency with ISK Group’s
purpose, philosophy, etc., and assessment at workshops held withbusiness divisions and management, and we carefully examine the“level of importance to ISK” (horizontal axis)

Prioritization

Level of importance to stakeholders

STEP 2• Contribution to a smart society• Key issues in the chemical industry, key corporate ESG topics that
institutional investors require to companies, results from employee
surveys and various other considerations were used to carefully
examine each issue’s “level of importance to stakeholders” (vertical axis)• Related issues were consolidated and combined to narrow the list
down to 16 issues, from which 8 issues were identified as the highest
priority for ISK Group and its stakeholders• Supply chain management• Occupational health and safety,
operation safety and disaster prevention• Diversity and inclusion• BCP, risk management• Corporate Governance• Reforming workstyles by pursuing
digital transformation (DX) andstreamlining operations• Information security• Coexistence withlocal communities• Quality• Stakeholder engagement• Outside experts reviewed the identification process and the identified
Materiality to confirm their adequacy

STEP 3
Materiality
identification• The identified Materiality for ISK Group was finalized following
deliberation by the Executive Management Committee and approved by
the Board of Directors

Level of importance to ISK

High

17

Very
high

Corporate Data

About ISK

Value Creation Strategies Foundation for Value Creation

Identified Materiality
Materiality

OutlineDealing with climate change,
reducing environmental
impacts• In carrying out business activities, we implement load reduction initiatives in the following environmental domains, including climate change,energy use, and pollutant emissions reduction• Set mitigation targets and take action in response to climate change• Preserve biodiversity• Recycle and reuse water• Reduce energy usage• Reduce greenhouse gas emissions and other initiatives for atmosphericemissions• Reduce industrial waste and pollutants emissions• Procure environmentally friendly resources, improve resource efficiency• Pollution prevention and chemical management

Technological development
capabilities• Work to further improve ISK Group’s technological development capabilities, which represent one of the Group’s strengths, through advancement of core technologies and the pursuit of innovation

Supply chain management• Address the environmental, social, and human rights-related issues
in the supply chain and implement fair and impartial procurement• Preserve the quality, cost, and supply stability in order to meet themarket needs

Message from an Outside Expert

Executive Fellow, Research Instituteof Capital Formation, Development
Bank of Japan Inc.

Mr. Keisuke TakegaharaSpecial mention should be made of ISK Group’s thorough preparation for, and meticulous executionof, the identification process, including its use of various reference guidelines, its selection of a wide
range of benchmark candidates from within and outside Japan, and its in-depth deliberation spanninga broad range of employees. This process shows the issue recognition of Stage I (2021–23) of Vision
2030, and it also establishes an excellent foundation that will hopefully be used for progressively
dynamic reviews.

Occupational health and safety,
operation safety and disasterprevention• Ensure the health and safety of labors at workplace, and make sureoperation safety and disaster prevention

I expect that ISK Group can capitalize on this in order to further distinguish and differentiate itself.
between Materiality and the story that ISK grows while contributing to society through the power

Diversity and inclusion• Create workplaces that value the individual, foster mutual respect, andempower all employees, regardless of gender, age, disability, nationality,
lifestyle, work backgrounds, values, or other attributes• Accommodate individual differences in experience, ability, and thinking,and facilitate skills development and improvement to help all employees
achieve maximum performance

BCP, risk management• Ensure the thoroughness of risk management and BCP (BusinessContinuity Plan) in order to minimize the impact from external risks

capability, and management capability, as a starting point. Another idea would be to secure the

Corporate Governance• Strengthen governance to improve organizational operation and performance• Ensure compliance and corporate ethics, foster operational transparency

Ideally, in light of the Group’s purpose and long-term vision, I look forward to stronger connectionof chemistry. With regard to climate change, in addition to the approach from the standpoint of social issues, such as capitalizing on the opportunities that the accelerating electrification, and theroles of organic chemicals business in adaptation-related domains, an effective strategy might
be to use the “three strengths supporting value creation”, i.e., quality, technological development
constituent elements of ISK Group’s management capability such as risk management and BCP,
as a firm foundation of strength, and they distinct from other factors to be strengthened by the

Reforming workstyles
by pursuing digital transformation(DX) and streamlining operations

Group over the years. In this latter case, the emphasis would be on bolstering intangible assets,such as intellectual capital and human capital, which support the Group’s core competencies;
technological development capability and quality. Given ISK’s diversity of strengths and potential,
I look forward to seeing its future growth and expansion.

• Pursue DX to streamline operations and implement work style reform

18

Corporate Data

Financial and Non-Financial Highlights

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

Financial Highlights (Consolidated)
Net Sales

Operating Income

Million yen

Million yen

108,001
101,601

106,441

101,066

Operating Margin

Net Income Attributable to Owners of Parent%

ROE

Million yen%

101,774
11,372

8,683

10,022
8,415

10.7

12.2

9.3
8.3

6,188
6.1

5,173

3,804

5.1

6.2

3,373
2,359
4.3

3,442
5.3

3.1

2016

2017

R&D Expenses

2018

2019

2020

Ratio of R&D Expenses to Net Sales

Million yen

9,150

8,173

8,070

2017

2018

Capital investment
%

8,706

2016

(FY)

8.0

8.1

7.6

Depreciation expense

8,639

2017

2018

2019

2017

2018

2019

Interest-Bearing Debt

6,142
5,407

(FY)

2016

4,214

2017

4,266

2018

19

2019

2020

(FY)

(FY)

D/E Ratio%

60,10358,781

6,092
4,669
4,445

2020

Million yen

8,062

8.5

2020

2016

(FY)

Million yen

4,215

2016

2020

Million yen

7,141
9.1

2019

0.9

51,32849,52852,531

0.8

2016

2017

0.7

0.7

2018

2019

0.8

2020

(FY)

Financial and Non-Financial Highlights

About ISK

Value Creation Strategies Foundation for Value Creation

Non-Financial Highlights (Non-Consolidated)
Environment

SocialCO2 Emissions

Energy Intensity
Energy intensity of the entire
Yokkaichi Plant

Year-on-year comparison of energy intensityof the entire Yokkaichi Plant

kl/t

%

97.3

96.2

0.84

0.81

2016

2017

100.2
0.81

2018

106.2
0.90
0.85

Frequency rate of lost-worktime injuries

Severity rate

%

3.32
103.6

100.4

99.1
90.4

447,451

2020

Year-on-year comparison of CO2 emissions
from the entire Yokkaichi Plant

t

104.9

2019

Occupational Accidents

CO2 emissions from the entire
Yokkaichi Plant

2016

(FY)

Note: Includes Yokkaichi Energy Service Corporation , which was merged in October 2018.

449,2572017

406,1872018402,5312019

91.3
367,512

2020

(FY)

0.88

0.84

0.00
0.00

0.13

0.00
0.00

0.02

0.03

2016

2017

2018

2019

2020

(FY)

Note: Includes Yokkaichi Energy Service Corporation , which was merged in October 2018.

SocialNumber of Employees

Female employee ratio

Headcount

Number of Female Managers
%

1,078

15.4

2016

1,040

16.3

2017

1,070

16.4

2018

1,106

16.9

2019

Female Manager ratio

Headcount

Paid leave acquisition rate
%

%

1,149
16.9

2020

15

13

8.0

8.0

6.7

2018

2019

2020

14

(FY)

12

12

7.2

7.1

2016

2017

20

(FY)

75.4

75.9

75.6

77.0

73.6

2016

2017

2018

2019

2020

(FY)

Corporate Data

Message from the Director of
Finance & Accounting Headquarters

Director of
Finance & Accounting
Headquarters

Yasunobu Kawazoe

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

Fiscal 2020 Results and Prospects for the First Half of Fiscal 2021

Direction of Financial Management

Need Attention to Economic Fluctuations
amidst a Continuing Recovery

Ensuring Greater Investment Capacity
by reducing Interest-Bearing Debt

In fiscal 2020 our business performance repeated ups and downs due to the COVID-19
pandemic. As a result of the stagnant performance of the inorganic chemicals businessduring the first half of the year, performance forecasts announced in May 2020 were revised downward six months later, while the rapid recovery in the titanium dioxide market
resulted in an upward revision in February 2021. In September, the automotive industry wason the rebound, but as of November we did not foresee any recovery in business because it
was not until paint manufacturers digested their stock that we began receiving orders. We
were relieved that we were able to achieve satisfactory results for the full year.
As for our organic chemicals business, the performance was affected by no major fluctuations due to no impact from COVID-19 and weather conditions.
In fiscal 2021 so far the recovery has been ongoing, and in August 2021 we revised our
performance forecast for the first half of the year upward. Production activities in China has
been recovering since the start of the year, with the strong demand for titanium dioxide,
which has driven the price up three times already overseas, and we also could increaseprice even within the Japanese market, resulting in increased shipments and sales turnover
for our inorganic chemicals. However, the Chinese economy is showing signs of slowdown,
and we need to keep a close watch on trend of local titanium dioxide manufacturers because they look ready to divert more of their excess inventory to exports.
For organic chemicals business, affiliates are keen to secure their inventories, given that
advance shipments of agrochemicals continue to be made worldwide. These advance shipments are causing no change in our annual plan.

Our inorganic chemicals business tends to be affected by the economy. The problem
areas are factory utilization rate and inventory levels. With factory utilization rate, everyone
is now aware that a drop in this rate leads directly to a drop in profits. Given the recent
painful lessons of fiscal 2020, when the market was severely disrupted by the pandemic,
we have a variety of measures to be implemented at the slightest signs of disruption.
On the other hand, with regard to inventory, because it is difficult to understand ‘viscerally,’
we have put in place mechanisms to facilitate awareness and control of it. As a result, while
we continue to work towards a greater margin, we expect that we will turn the fiscal 2020
1.4-billion-yen loss in free cash flow to a 1.4-billion-yen surplus in fiscal 2021.
We will use this cash to continue reducing our interest-bearing debt. This is to ensure wehave the capacity to respond to any new capital investment needs arising in around fiscal
2023 that is the final year of the Vision 2030 Stage I medium-term business plan.
We made investments aimed at boosting production capacity: in fiscal 2019 in our
subsidiary Fuji Titanium Industry Co., Ltd., and in fiscal 2020 in ISK. Currently, our levelof annual capital investment is around 8 billion yen. Nearly all of this is replacement
investment. However, there are any number of ideas for new investments which, if acted
upon, would instantaneously use up a large amount of cash. That is all the more reason
why we must improve profitability over the next three years during which no large-scale
investments are planned in order to build up a leaner corporate structure. In inorganic
chemicals, our focus is on finding ways of increasing the percentage of sales whichfunctional materials account for, given how little they are impacted by economic
fluctuations. For organic chemicals, we need to thoroughly reduce our manufacturing costs.
If we can achieve substantive reforms, this would enable us to shrink our interest-bearing
debt by 15 to 20 billion yen over three years, thereby freeing up the amount needed to makeour next large-scale investment. Also, one of the targets for the final year (fiscal 2023) ofStage I is operating income of 16.6 billion yen, and at that level of operating income, we• Free Cash Flow Trend
Free cash flow

Net income attributable to owners of parent

Million yen

Million yen

8,681

10,577

3,804

3,442

2016

2017

8,683
2,359
-3,682-3,60520182019

could increase the amount of our investment further.
We must strengthen our earning capacity. From a finance perspective, I believe that thisis the key point for Stage I. The degree to which we can improve our fundamental earning
capacity over these three years will determine the direction of Stage II and Stage III.

3,373
-1,413
2020

21

(FY)

Message from the Director of Finance & Accounting Headquarters

About ISK

Value Creation Strategies Foundation for Value Creation

FinancingCommunication with investors and Dividend Policy

Commitment Line Cancellation

Ensuring Continued, Stable Dividends
for Shareholders

When investment capital comes primarily from interest-bearing debt, it is essential tomaintain a high credit rating in order receive favorable financing terms. At the earning
capacity that is being sought in Stage I, a rating of BBB+ is likely possible. Going fromthere to a single A rating would be quite hard without net sales of at least 150 billion
yen or quite significant earning capacity. Although it may be difficult to achieve this in
the near future, I believe that an A rating is achievable in 10 or so years’ time.
Reaching an A rating opens up a broader range of financing options. For example, it
paves the way for direct financing via corporate bonds, where the amount of investment can be determined while in consultation with the market. Meanwhile, indirect
financing remains a flexible and essential procurement method. Staying in constantcommunication with financial institutions allows us to maintain relationships that canbe capitalized upon for borrowing in times of need.
In order to handle any economic fluctuations stemming from the pandemic, we had
asked financial institutions to set a two-year, 10-billion-yen commitment line, but,because of the clear recovery in ISK’s performance, this agreement was canceled in
September 2021.
• Interest-bearing Debt Balance
Million yen

58,781

2016

51,32849,52820172018

52,531

201960,103

2020

22

(FY)

Corporate Data

We endeavor to carefully explain our approach to earning capacity expansion and investment, to the satisfaction of investors and analysts. Some have pointed out the highaccuracy of Stage I, and commented how it differs from our past medium-term business plans. We will continue to carefully communicate information whenever possible.
Recently, in talking with institutional investors and shareholders, I have been struck by
their awareness that ESG and SDGs-focused management is not a temporary fad but,rather, a fundamental corporate issue. The other day I met with a representative of aproxy advisory firm, and the topic of business performance did not come up once. The
entire conversation revolved around our response to the revised Corporate Governance
Code and our creation of an integrated report. ESG and SDGs have permeated society
to the point that they are common knowledge, and any company that deviates fromthem in this day and age will find itself left out of the market. I brace myself for recognizing needs to consciously communicate this fact throughout the company.
Finally, I would like to talk about dividends. The total dividend for fiscal 2020 was 18
yen per share, which, when commemorative dividends are excluded, was six yen higher than the total dividend for fiscal 2019. Although there were various opinions within
ISK, we have settled on a dividend amount that strikes a balance between total dividend allocation and internal reserves. As discussed in the previous integrated report,
ISK Group’s policy is to pursue stable dividends on an ongoing basis. Given the factthat the inorganic chemicals business sees major performance fluctuations, I cannot
yet definitively say what our dividend payout ratio will be, but 18 yen is the minimum
line that we are holding firm at.

Overview by Business

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

• Revenue Trends for Inorganic Chemicals BusinessNet sales

Operating income

Billion yen

Inorganic
Chemicals
Business

544

548

475

Billion yen

515

498

Director of
Inorganic Chemicals
Sales & Marketing
Headquarters

Masaki Shimojo
69

40

60

24

-2

2016
Results for Fiscal 2020 and Trends for Fiscal 2021

2017

2018

2019

2020

(FY)

year by installing a new production facility. We are working to expand our sales to match
this capacity, but COVID-19 has made it hard to pursue sales activities overseas and thus

Favorable Performancefor Electronic Component Materials

hampered our developing new customers.

Just before the start of fiscal 2020, the impact of the COVID-19 pandemic caused production facilities throughout the world to suspend operations, where titanium dioxide, ourmain product, is used as its material, and our sales of the product dropped by 40 to 50 %temporarily. We were concerned about uncertainty in the market trend even in the latter halfof the year, but the demand started to recover from around November 2020 and the resultin the latter half was on par with that of fiscal 2019.
Moving into fiscal 2021, there has been a continued recovery in demand for titanium dioxide stemming from a recovery in automotive and construction-related business. However,
the entire manufacturing industry continues to be hampered by the shortage of semiconductors and additives, creating uncertainty about the direction ahead.
Despite favorable sales of electronic component materials due to increasing demand forhome appliances, mobile phones, and self-driving vehicles, the semiconductor supply
shortage is also a cause for concern. Sales of these electronic component materials
account for just under 10% in the entire net sales, so we will continue working for its
further growth.
With regard to electro-conductive materials, we have doubled our production capacity last

23

Vision 2030 Stage I

Aiming for 40% of Sales to Come from Highly
Functional and High-Value-Added Products
The overarching mission of the Inorganic Chemicals Sales & Marketing Headquarters
in the Vision 2030 Stage I medium-term business plan is to achieve sales figures byaccelerating our existing strategies to pursue quality with unique products. With anobjective to grow the revenue at 5-billion-yen worth in fiscal 2030 for each material
or category of highly functional and high-value-added products such as electronic
component materials and electro-conductive materials, we will create a foothold forthis growth while clarifying targets by material and growth strategies.
Specifically, this means not simply bringing materials to customers and saying, “Please
use this,” but, rather, coming up with a recipe for customers, in which their needs anddemand are incorporated. In the case of construction-related paints, one approachis to offer customers a product that combines titanium dioxide and a matting agent

Overview by Business

About ISK

into a single material, thereby alleviating them of the conventional hassle of having
to combine the two themselves. Because those kinds of materials are different fromconventional items, customers might not understand its significance without solid promotion on how to use them. Hence, we will pursue a marketing strategy that highlights
these points in its appeal.
Also, we will employ the same approach to overseas market development, which has
been an issue since the previous medium-term business plan. We will send young
engineers to the US and capitalize on the strength that comes from the three combined
elements: the recipes, human resources and materials in order to make up for setbacks to the previous business plan. Currently, highly functional and high-value-added
products account for roughly 30% of net sales of titanium dioxide. Through the approach described here, we aim to increase this to 40% by the final year of Stage I.
We also focus on new product development as a driver of future growth. Such products
include copper nanoparticles capable of low-temperature sintering and a highly transparent high-refractive-index material.
Copper nanoparticles, in addition to its excellent electrical conductivity, are able to besintered at a low temperature of 150°C, making them suitable for such applications
as wiring atop plastic substrates. Meanwhile, our high-refractive-index material is anext-generation material having a refractive index of 1.8 or higher and the ability tomaintain its transparency while offering performance that far exceeds conventional
zirconia. We anticipate that it will find use in image sensors and other next-generation
optical devices.
We are actively working on IR releases to attract media attention for these promising
new products. Our aim is to use media promotions to attract inquiries from a wide
range of fields which will, in turn, develop into actual demand. Even if we think a product is good, it doesn’t necessarily mean we can sell it. We will be continually monitoring
how the market responds at every step along the way.
Also, given customers’ increasing emphasis on safety and the environment, it is important that we use raw materials that reflect consideration for both.
However, there may be situations where those raw materials will drive up costs andlimit our choice. That said, because ISK Group’s purchasing volume is not as large
as other major companies in the same industry, we can capitalize on our “smallness”
to make us nimbler and more flexible, such as by consolidating small raw material
sources and finding partners for joint procurement.

Corporate Data

Looking Towards the Future

The Top Priority for This Decade:
Identifying Our Next Business Pillar
Expanding our top line is the first priority for Stage II and Stage III. General-purpose titanium dioxide is a bulk product for which business cannot be expected to grow further.
We are working to achieve solid growth in functional materials business to build up its
sales towards a certain target such as 5 or 10 billion yen for each category. With these
efforts, we must roughly double the current net sales in this business.
The point is what comes after the completion of Vision 2030. Things will get difficult
if we simply take the current path further. I believe the top priority for our inorganic
chemicals business within this decade is to identify our next pillar and get it ready. Another key priority would certainly be finding new applications that capitalize on titanium
dioxide’s functionality, such as its high refractive index and heat shielding capacity. We
would like to commit 10 years to this search.
Another important issue to address is to reduce CO2 emissions from the titanium dioxide manufacturing process. A large amount of electricity and steam is required for
manufacturing, and the current energy source for this is coal. How can we change
that? We have just started to investigate this issue. I feel that, if we can leverage ISKGroup’s technological strengths to achieve a breakthrough with this issue, it would leadto the establishment of a new foundation; hence, ISK Group must start doing whatever
it can to facilitate this.
• Revenue Planning for Inorganic Chemicals BusinessNet sales

Operating income

Billion yen

Billion yen

498

2020

Operating margin
%

2021

635

591

542

4
-1 -2

24

Value Creation Strategies Foundation for Value Creation

8

7

53

41

21

2022

2023

(FY)

Overview by Business

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

• Revenue Trends for Organic Chemicals BusinessNet sales

Operating income

Billion yen

Organic
Chemicals
Business

Billion yen

510

504

476

461

483

Organic Chemicals BusinessDirector of Biosciences
Business Headquarters

Kiyomitsu Yoshida

Results for Fiscal 2020 and Trends for Fiscal 2021

Concerns about Availability Move Up Anticipated
Second-Half Sales to the First Half of the YearNet sales and profit of the organic chemicals business for fiscal 2020 were just as
predicted. In Japan, although sales of our flagship nematicide declined, sales of otherchemicals increased, providing net sales higher than the same period of the previous
year. Overseas, as well, a variety of positive factors, such as booming grain productionin the Americas, cancellation of competitor product registration in Europe, and growing
sales of insecticides in Asia, contributed to robust business performance. In general,sales of agrochemicals in the northern hemisphere are mostly decided between September and October of the previous year. This is the period by which farmers havedecided on their planting and cultivation plans for the next year, and, barring somemajor change in the weather or other factors, they will purchase their agrochemicals
according to this plan.
In fiscal 2021, concern over delayed availability of agrochemicals due to the COVID-19
pandemic appears to have, similar to the previous year, motivated farmers and distributors to actively stock up, resulting in anticipated sales for the second half of the
fiscal year again moving up into the first half. In the Americas, because of the strong
performance of grain production, Brazil, where the cultivation season starts in October,

25

39

26

2016

2017

48

33

51

2018

2019

2020

(FY)

is able to expand its planted acreage, leading to sales anticipated to be above the initial planning forecast. Also, in the US, we are expecting major growth thanks to finallyhaving multiple new herbicides on the market.
With regard to COVID-19, we have felt its effects on shipping. Port congestion andcontainer ships stuck waiting offshore continue to delay international marine transport.
We are doing our best to minimize opportunity loss due to delayed delivery of raw
materials and products.

Vision 2030 Stage I

Increasing Global Market Shareby Manufacturing and Procuring Agrochemical
Ingredients at the Lowest Cost in the World
Within the Vision 2030 Stage I medium-term business plan, a major focus of the
Biosciences Business Headquarters is value chain creation. This is envisioned as inspection and enhancement of key agrochemicals-specific activities (functions), suchas raw materials procurement, manufacturing, sales, development, and registration, inorder to generate greater value provided to customers in a timely manner. Bringing an
agrochemical to market generally takes a long time, with 10 years not being uncommon. Our business headquarters functions operate together as one with a reaffirmed

事 業 別 概況

About ISK

commitment to value creation as we embark on a new medium-term business plan.
We seek to expand overseas sales, particularly outside Europe where we already havea strong market presence, with our focus being mainly on expanding sales of existingfluazinam and flonicamid agrochemicals in Brazil and the US.
In order to secure a competitive advantage for the future, one of our key objectives forStage I is to increase our global market share by manufacturing and procuring agrochemical ingredients at the lowest cost in the world. We will need to pursue a comprehensive approach that includes procuring low-cost raw materials, manufacturing
at optimal locations, and purchasing from generic agrochemical manufacturers if weare to succeed against increasingly intense competition. With regard to manufacturinglocation, the once-strong emphasis on China has shifted in recent years as a result of
geopolitical concerns, pivoting in due course towards India.
In 2015, ISK established a subsidiary in India, which has thus far focused on agrochemical development and registration and will, from 2022, progressively handle
new agrochemical registration and market roll-out. We are also continuing to makeprogress on our fluorine organic intermediate manufacturing project, which will begin
operation in India in early 2022. Procurement for this project advantageously combines
low-cost, ISK technology-driven manufacturing of intermediates with the option to buy
from other companies. The start of manufacturing has been delayed a year due to the
COVID-19 pandemic, but the impact of this on the overall plan is limited.
Another Stage I initiative that we are pursuing is sales channel diversification. We are
implementing a variety of strategic measures, including using the sales strength ofmultinational companies and major generic agrochemical manufacturers to expand
our sales reach in regions where we are highly dependent on specific distributors,
and finding new distributors in regions where we are either not established or lagging.
We also anticipate sales growth coming from the introduction of new herbicides andinsecticides onto the markets of Americas and India from early in Stage I.
Through these initiatives aimed at achieving the Stage I targets of the Vision 2030 goals,
we will achieve net sales of 58.7 billion yen and operating income of 11.2 billion yen.

Value Creation Strategies Foundation for Value Creation

Corporate Data

upon through active investment in expanding production technology development hubs
and overseas sales and production sites. This will lead to production technology innovation and refinement accompanied by a more robust business foundation supportingeven greater business expansion and development in Stage II and Stage III. We will also
explore M&A and business partnership opportunities.
In 10 years’ time, the Japanese agrochemicals market will be two-thirds of its current
size, and signs of industry restructuring are becoming increasingly apparent. In orderto maintain and develop ISK’s agrochemicals business in Japan, we will need to beopen to restructuring and, if possible, be a proactive leader in this regard.
We are also hopeful about the growth of our animal health products. We are alreadyselling BRENDA™, the world’s first anti-pancreatitis drug for dogs, on the Japanesemarket. Following approval by the United States’ FDA (Food and Drug Administration),
we expect to release it on the US market some time in fiscal 2022 under the brandname Panoquell®. This will be the first animal health product launched overseas thatwas created and developed by a Japanese manufacturer. We are also planning toacquire EMA (European Medicines Agency) approval around 2025. By bringing thisproduct to the European and US markets, where the number of pet dogs is at least 10
times as many as in Japan, we seek to greatly expand our revenue from 2022 onward.
Our company’s 101st anniversary represents the beginning of a new chapter, and theorganic chemicals business is set to get off to a flying start.
• Revenue Planning for Organic Chemicals BusinessNet sales

Operating income

Billion yen

Billion yen

Operating margin
%

587
522

483

460

19
11

Looking Towards the Future

Getting Off to a Flying Start on the New Chapter
That Begins with Our 101st Anniversary
Even from Stage II onward, agrochemicals will remain the core of our organic chemicals business. Our aim is to establish a growth trend during Stage I, which we will build

26

51

9
40

2020

2021

11

112

59

2022

2023

(FY)

Stakeholder Engagement

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

Ensuring We Continue to Earn Society’s Trust
It is important that ISK Group continue to earn society’s trust so that it can grow in a sustained manner.
We will help realize a sustainable society through our business activities while building trust-based
relationships with society by communicating with stakeholders and listening sincerely to what they haveto say.
Customers

Shareholders and Investors

We started distribution of BRENDA™, an anti-inflammatory drug for canine acute pancreatitis, supported by ourown field force in April 2021. ISK’s sales representatives visit animal hospitals throughout Japan with our partner
wholesalers both to provide technical information and to get feedback on cases treated with BRENDA™ fromveterinary practitioners, ensuring strong communication between ISK and our veterinary customers. Practitioners’
evaluation of our technical service activity is very positive, with warm words such as “That’s what I’d like to know”
and “I appreciate this useful information”. Some veterinarians have stated that the use of BRENDA™ has enabled
them to save the lives of dogs that would not have recovered using previous treatments. Communicating directlywith veterinarians makes it possible for dog patients to survive this potentially life-threatening condition. To support
the launch of BRENDA™ and the new ISK field force, we held a seminar, which was hosted online due to the
COVID-19 pandemic, with veterinary practitioners from across Japan. In a questionnaire collected after that seminar, participants expressed favorable feedback. Our sales team has also been communicating and sharing useful
information with all stakeholders in the veterinary hospital; not only veterinary practitioners but also veterinary technicians and veterinary receptionists through interactive, onsite seminars at animal hospitals. Most recently, on an
online veterinary practitioners community site, we introduced BRENDA™ and collected reviews from practitioners.
We received about 500 responses during the three weeks since the beginning of the review collection, indicating
growing interest in BRENDA™.

We believe that promoting constructive dialog with shareholders and investors helps facilitate the company’s sustained growth and increase medium- and long-term corporate value. We’ve put in place structures to promote suchdialog in accordance with the following policies:

Unsatisfied
3%

OK
22%

1. We’ve created an IR Committee, which reports directly to the president, as an entity charged with formulating the policies and strategies thatguide our IR activities, studying how information should be disclosed, and implementing associated measures.
2. We’ve appointed an officer in charge of public relations to oversee issues related to constructive dialog with shareholders and investors.
3. We hold two IR briefings each year as a means of dialog with shareholders and investors, where our president and the officer in charge of
public relations brief the stakeholders. We also work to enhance our information disclosure by making briefing notes available on our website.
Additionally, we actively accommodate requests from investors and analysts for phone interviews and other access to company executives.
4. We work to provide the materials we disclose in both Japanese and English to make it convenient for shareholders and investors who don’t
speak Japanese to learn about our operations. Shareholders’ meeting convocations are translated
into English in their entirety, including business reports. Those materials are made available on
our website, the website of the Tokyo Stock Exchange, and the electronic voting platform used byinstitutional investors.
5. We host an annual roundtable with major shareholders with voting rights about topics such as ourbusiness performance and Coporate Governance initiatives. In addition to reporting views and information from those events to the Board of Directors and sharing them with directors and members
2021 ordinary general meeting ofof the audit and supervisory board, we use them to improve our governance.
shareholders

Supply Chain

Very unsatisfied
0%

ISK Group Code of Conduct includes the following statement: “Together with our suppliers and subcontractors, wewill engage in socially responsible procurement activities.” In keeping with that priority, we carry out purchasing andprocurement activities in a way that takes CSR into account, for example by checking to be sure we do not purchaseconflict minerals, while securing cooperation from suppliers.
We make only limited use of tantalum, tin, tungsten, and gold (“3TG”), which are typically recognized as

Very satisfied
17%

conflict minerals, in the manufacture of our products. Only tin compounds, which we use as a raw material inelectroconductive materials and other substances, falls under the definition.
We deal with three suppliers of tin compounds, and we require each to submit a report using the Conflict Minerals
Reporting Template, a global standard for conflict mineral investigations developed by the Responsible Minerals
Initiative. In this way, we verify that the refineries producing the tin purchased by our tin compound suppliers havebeen certified as conflict-free by a third party. All three suppliers purchase tin from certified refineries, and ourinvestigations have unearthed no issues to date.

Satisfied
58%

Reference: Results of the questionnaire on the seminarcommemorating the beginning of distribution of BRENDA™
through ISK’s own channel

Brochure about BRENDA™,
an anti-inflammatory drug for canine acutepancreatitis.

27

Stakeholder Engagement

About ISK

Value Creation Strategies Foundation for Value Creation

Communication with the Local Community
Yokkaichi Plant
At the Yokkaichi Plant, we place emphasis on informing and understanding local residents about oursafety, disaster prevention, and environmental protection activities.
We hold regular plant tours twice a year and special classes for students from local junior high school
to build further trust with the local community. In terms of social contribution activities, we voluntarily
carry out clean-up activities around the plant, and we also place importance on local events, such as
participating in the annual Suzuka River clean-up activities (Suzuka River Clean Operation), which arecarried out in cooperation with local communities and companies.
In fiscal 2020, these activities had to be canceled due to the impact of COVID-19 pandemic.

Cleaning up the Suzuka River,
March 2019

Central Research Institute
Although the Central Research Institute delayed the volunteer clean-up that had been scheduled for May
2020 due to the pandemic, a rescheduled event the following November attracted around 50 volunteers,
who participated without incident while exercising care to prevent infection, for example by avoiding
the 3Cs of closed spaces, crowded places, and close contact. Nonetheless, the facility had to cancel aplanned tour for high-school students in fiscal 2020 due to the pandemic.

Volunteer clean-up

28

Plant tour for students from local junior high school,
July 2019

Corporate Data

Outside Directors’
Conversation

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

Making the Most of ISK Group’s Best Qualities
in consideration of Accommodating Changes in Society
Three of ISK’s nine directors are Outside Directors. They offer advice to the Board based on their respective knowledge and experience while serving
on committees like the Personnel Committee. We are brought together all of ISK’s Outside Directors to talk about the change in executive leadershipand other governance topics.

Tatsuo Hanazawa

Hiroshi Katsumata

Mr. Hanazawa, who originally worked for the Ministry of Agriculture
and Forestry (the present-day Ministry of Agriculture, Forestry and
Fisheries), has served as an officer at a number of organizations,
including an independent administrative agency and a foundation.
He brings both domestic and overseas expertise in agricultural policy to the position. He also chairs ISK’s Compensation Committee.

Mr. Katsumata, who started his career at the Ministry of International
Trade and Industry (currently Ministry of Economy, Trade and Industry), has served as a director and executive officer at private sector
companies including Taiyo Nippon Sanso Corporation. He brings
expertise in both government administration and private sectorbusiness to the position. He also chairs ISK’s Personnel Committee.

ISK’s New President Leadership

Unanimous Agreement in the Personnel
Committee on a Candidate Who Naturally
Became the Focus of Attention
Katsumata (K): It was three or four years ago that former President (and current Chairman)
Mr. Kenichi Tanaka remarked that it would soon be time to think about his successor. A numberof names were subsequently floated, but I remember it was around the fall of 2020 that Mr.
Hideo Takahashi began attracting attention.
As a result, the Personnel Committee unanimously selected him as new Executive Director andPresident. That’s because he’s able to bring the company’s employees together in the turbulent
times, and because he has an excellent overall understanding of ISK Group.
Hanazawa (H): Mr. Takahashi became a Director at ISK at the same time I did, in June

29

Satoshi Ando
Mr. Ando is an attorney and also serves as an Outside Director
at Toho Co., Ltd. He brings extensive expertise in corporate law
to the position.

2019, and I’ve had many opportunities to talk with him since I was seated next to him at Board
meetings. I may sound boastful, but I’ve watched him grow as part of the top management. His
perspective changed from ”Director of Yokkaichi Plant” to a position, which he expanded his
vision to see the whole company. I felt that if he continued to grow, he would be an excellent
leader as he actively spoke out, even in areas other than his field of specialization.
Ando (A): At the Personnel Committee, we had a free-wheeling discussion about who would
be an appropriate choice to lead the company, including people who were not officers. In myview, Mr. Takahashi was chosen due to a comprehensive evaluation; the result as Director of
Yokkaichi Plant, his popularity, and his ability to exercise excellent judgment in a pinch. Former
President Mr. Tanaka did his utmost effort to rebuild ISK Group. I carefully monitored candidates’
speech and behavior from the viewpoint of who was the suitable leader as we transition to be“aggressive” in business. As we proceeded with those discussions, attention came to focus on
Mr. Takahashi.

Outside Directors’ Conversation

About ISK

K: ISK keeps “evaluation sheets” that record recent achievements of candidates, their approaches, and assessments by their supervisors. Drawing on those materials, we carried out our discussions with better understanding to the candidates. Technological capability will be the key
going forward in an era of stiff competition. As Mr. Takahashi has a development background,
he will be able to evaluate technologies appropriately. Of all the candidates, he won the mostpraise in this area.
H: Everyone involved will find President Mr. Takahashi a convincing choice, and they are willingto follow his lead.
A: One of the roles and responsibilities of the Board of Directors as set forth in the Corporate
Governance Code is to “cultivate successors”. From that perspective, one question that remains
to be addressed is how well we’ve fostered human resources who take care of the entire ISKGroup, not just individual business unit. I’d like to see a greater awareness of the need to foster
the development of people who can serve as overall leaders.

Expectations towards the New Administration

Accelerating the Board’s Ability to Act
by Reviewing Agenda-Setting Standards
H: I fully understand the phrase “transforming lives through the power of chemistry” in Vision
2030. However, we ISK Group sometimes lack a sense of speed. To put in a good way, we are
cautious, but to put in a bad way, we are conservative. As we work to realize Vision 2030 going
forward, we’ll need to act without delay, even if that involves taking risks.
K: If we have good technologies, it would be useless if we miss the opportunity for the commercialization. The new administration led by President Mr. Takahashi is required to build structures
which quickly accommodate global market expectations.
H: I’ve been participating in the “Development Progress Meeting”, which discusses new product development, for the last year, and whenever decisions are made by employees who have been brought
up by ISK, we anyway end up adopting a slow and steady approach since they understand the difficulty. As an outsider, however, I wonder why they waste their time despite the existence of such goodtechnology. I believe it’s important to develop the ability to actively evaluate “sprouts” at the company.
A: From the standpoint of streamlining management, I think we should trim down the numberof decision-making items presented to the Board of Directors and the Executive Management
Committee. Discussion is a good thing, but we should be cost-conscious about tying up Directors
and Executive Officers at Board and committee meetings and spending much time preparing forthe meetings. I believe that it is worth considering for us to review our agenda-setting standards.
K: We’ve been making improvements over the last few years. Reports have become more concise. However, unfortunately, they’re still too long. Our rule of Items for resolution of the Board

30

Value Creation Strategies Foundation for Value Creation

Corporate Dataof Directors seems too strict. For example, what if the Executive Management Committee isconvened not once a month, but rather as necessary? In addition, we should loosen the rule, andmanagement issues are to be discussed and decided more frequently at the Executive Management Committee, rather than the Board of Directors. For Executive Management Committee, not
all Executive Officers need to participate in every time. To realize fast decision-making, we should
deeply consider and review how we manage those opportunities.

Looking towards the Future

Need to Improve Diversity andSustainability Awareness
A: Diversity has long been an issue for ISK Group. I’d like to see us aware that employment,
promotion and cultivation for women are required not because the Corporate Governance Coderefers to, but because they lead us to secure capable personnel resources and increase themotivation of all the women at ISK Group.
K: The revised Corporate Governance Code also includes diversity, and it requires our stancethat emphasizes sustainability. As for those diversity and sustainability, our responsibility as acompany is to respond immediately when questions are raised by society. If we’re talking aboutclimate change, when will Yokkaichi Plant stop using coal-fired boilers, and what will it use
instead? In these days, “We’re studying that” is no longer an acceptable answer. Both employees
and Outside Directors should use our ingenuity to the maximum so that we can support President Mr. Takahashi, who has the obligation to answer those questions.
H: If we can make progress on diversity and sustainability, taking this opportunity of the revised
Corporate Governance Code, that’s a good thing for the company. Awareness of ESG and theSDGs among Board members, Executive Officers and employees rose as a result of the recent
work to specifically identify Materiality. I’d like to see us make full use of those things to transform the way of thinking inside the company.
A: ISK Group has strong emphasis on compliance management. I would like to continue togive advice, drawing on my knowledge as an attorney and my experience as other company’s
Outside Director.
K: I’d like to offer advice on increasing corporate value. Although all companies have theirstrengths and weaknesses, I look forward to making the most of ISK Group’s best qualities inconsideration of accommodating changes in society.
H: My role is to bring the consumer’s perspective to discussions. As our principal customers
are other companies, we sometimes pay less attention to general consumers. For environmental
issues additionally, I'm going to introduce the voices and the views from government agencies,
related groups and people outside, taking advantage of my past experience.

Board of Directors and Executive Officers

About ISK

Value Creation Strategies Foundation for Value Creation

Board of Directors (As of June 30, 2021)

Kenichi Tanaka

Hideo Takahashi

Kiyomitsu Yoshida

Executive Director &Chairman

Executive Director

Director;
Senior Managing Executive Officer

President & Chief Executive Officer;
Chief Compliance Officer (CCO)

Organic Chemicals Business;
Director of Biosciences Business Headquarters

Yasunobu Kawazoe

Masaki Shimojo

Hisashi Takenaka

Director;
Managing Executive Officer

Director;
Managing Executive Officer

Director;
Managing Executive Officer

Director of Finance &Accounting Headquarters

Director of Inorganic Chemicals Sales &MarketingDirector of Yokkaichi Plant• Expertise and Skills of Board Members
Corporate strategy

8Overseas work experience

6

Legal and risk management
Marketing

Financial accounting

4

Personnel and General affairs

3

31

5

Production and R&D
2

5(Persons)

Corporate Data

Board of Directors and Executive Officers

About ISK

Value Creation Strategies Foundation for Value Creation

Board of Directors (As of June 30, 2021)

Hiroshi Katsumata

Tatsuo Hanazawa

Satoshi Ando

Outside Director

Outside Director

Outside Director

Audit & Supervisory Board Members (As of June 30, 2021)

Taizo Kato

Yoshihito Akiyama

Yoshitaka Akikuni

Masaaki Harima

Audit & Supervisory
Board Member

Audit & Supervisory
Board Member

Outside Audit & Supervisory
Board Member

Outside Audit & Supervisory
Board Member

32

Corporate Data

Corporate Governance

About ISK

Value Creation Strategies Foundation for Value Creation

Reasons for Appointment
Name and Position

Kenichi Tanaka

Executive Director & Chairman

Hideo Takahashi

Executive Director
President & Chief Executive
Officer

Kiyomitsu Yoshida
Director
Senior Managing Executive
Officer

Yasunobu Kawazoe
Director
Managing Executive Officer

Masaki Shimojo

Director
Managing Executive Officer

Hisashi Takenaka
Director
Managing Executive Officer

Attendance atBoard of Directors
meetings

Evaluation Compensation Personnel
Committee Committee Committee

Independent
outsideReasons for Appointment

14 times /14 meetings

Mr. Tanaka managed the entire ISK Group in a precise and efficient manner after becoming Executive Director & President in June 2015.
In addition to reforming ISK’s Corporate Governance, he demonstrated robust leadership in implementing Vision 2030, the company’s long-term vision,and its New Medium-term Business Plan.

14 times /14 meetings

Mr. Takahashi has worked primarily in research, product development, sales, and plant operations in ISK’s inorganic chemicals segment. He has carriedout important operational responsibilities and demonstrated appropriate decision-making and supervision in the company’s management. He continues
to be a driving force in the company’s management through leadership based on this experience and track record. He has been appointed because hecan be expected to help increase corporate value on an ongoing basis.

14 times /14 meetings

Mr. Yoshida has worked primarily in sales, R&D, and research institute operations in ISK’s organic chemicals segment. He has carried out important
operational responsibilities and demonstrated appropriate decision-making and supervision in the company’s management based on his extensive
experience and track record. He has been appointed because the Board has determined that he can help increase corporate value.

14 times /14 meetings

Mr. Kawazoe has carried out important operational responsibilities and demonstrated appropriate decision-making and supervision in the company’s
management by drawing on the specialized knowledge in finance and accounting that he accumulated over many years at financial institutions, alongwith his extensive experience and track record. He has been appointed because the Board has determined that he can help increase corporate value.

9 times /9 meetings

Mr. Shimojo has worked primarily in sales, research, product development, and manufacturing in ISK’s inorganic chemicals segment. He has carriedout important operational responsibilities and demonstrated appropriate decision-making and supervision in the company’s management based on his
extensive experience and track record. He has been appointed because the Board has determined that he can help increase corporate value.

New
appointment

Mr. Takenaka has worked in the manufacturing and engineering; environment, safety, and health; and administrative departments at ISK’s plant. He has
carried out his responsibilities in an appropriate manner based on his extensive operational expertise and experience. He has been appointed because
the Board has determined that he can help increase corporate value on an ongoing basis.

Hiroshi Katsumata

14 times /14 meetings

a)

a)

b)

a)

Mr. Katsumata has been appointed because the Board has determined that he will bring his extensive experience and knowledge as an executive at
an industrial gas company as well as his diverse experience in the field of government administration to bear on the company’s management from an
objective and neutral outside perspective.

Tatsuo Hanazawa

14 times /14 meetings

a)

b)

a)

a)

Mr. Hanazawa has been appointed because the Board has determined that he will bring his extensive domestic and international experience andknowledge in the field of government administration, particularly in agricultural policy, to bear on the company’s management from an objective andneutral outside perspective.

Satoshi Ando

9 times /9 meetings

a)

a)

a)

a)

Mr. Ando has been appointed because the Board has determined that he will bring his specialized knowledge as an attorney and his experience incorporate law to bear on the company’s management from an objective and neutral outside perspective.

14 times /14 meetingsa)Mr. Kato has been appointed because he can be expected to practice appropriate supervision and auditing of the company’s management based on his
service as an Audit & Supervisory Board member at ISK since June 2016 and his long experience in internal auditing operations.

New
appointmenta)Mr. Akiyama, who has worked in administration and sales at ISK and who has served as a director and Audit & Supervisory Board member at affiliates
in Japan and overseas, has been appointed because he can be expected to bring his experience and knowledge to auditing procedures at ISK.

14 times /14 meetings

a)

a)

a)

a)

Mr. Akikuni has been appointed because he can be expected to bring his far-ranging knowledge and insight, which were cultivated over many years at
financial institutions, as well as his extensive experience as an Audit & Supervisory Board member at chemical companies to bear on auditing procedures at ISK from an objective and neutral outside perspective.

14 times /14 meetings

b)

a)

a)

a)

Mr. Harima has been appointed because he can be expected to bring his specialized knowledge as an attorney and his mastery of corporate law tobear on auditing procedures at ISK from an objective and neutral outside perspective.

Outside Director

Outside Director

Outside Director

Taizo Kato

Audit & Supervisory Board
MemberYoshihito Akiyama
Audit & Supervisory Board
MemberYoshitaka Akikuni
Outside Audit & Supervisory
Board Member

Masaaki Harima

Outside Audit & Supervisory
Board Member

Note 1: Attendance at Board of Directors meetings from June 25, 2020 to June 24, 2021.
Note 2: Committee service is indicated by a) (member) and b) (chairperson).

33

Corporate Data

Corporate Governance
Message from the Chairman

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Data

I resigned the position of President and became ISK’s Chairman in June 2021.
There are primarily two reasons for my decision to make this succession. The first is that we were able to mark the100th anniversary of the company’s founding in 2020. Since we launched a new medium-term business plan in fiscal
year 2021, I believed that it was the right time for me to step down as we move towards new accomplishments of the
future described in our “Vision 2030”.
The second is that we have found a path towards resolving challenges such as improving our financial position andaddressing problems with Ferosilt, and in fiscal year 2019 we resumed dividend payments for the first time in 14
years. My background is in human resources , so I might not be so aggressive, but good at steadily keeping the existing
business. I determined that the stage of patience—in which we had worked to return to a “normal” company—was
over, and that it would be the best to proceed with the succession so that the next President can lead us to work withaggressive and forward-looking approach.
New-product development is essential for a chemical company. We’re continually called upon to develop products thatcan contribute to society. My successor, President Takahashi, has R&D background; he knows technical issues and how
to launch new products. Going forward, I hope that he often provides differentiated approach compared to me.
Our Personnel Committee, which comprises mainly Outside Directors and Outside Audit & Supervisory Board members,
played the central role in choosing my successor. The committee chose a few candidates and then engaged in a seriesof discussions to determine who was best suited to the post. Consequently, the Board of Directors resolved to appoint
the chosen candidate.

Ishihara Sangyo Kaisha, Ltd.
Executive Director and Chairman

Kenichi Tanaka

The resumption of dividend payments was the most significant event of my six-year tenure. At the outset, I thought thesituation was bleak, but with our employees’ hard work and devotion, we managed to achieve it. Internally, some peoplesuggested that it would be sufficient to resume dividends to mark the 100th anniversary year in 2020, but I wanted to
pay a commemorative dividend to mark that occasion, so we moved the resumption of dividends up one year to 2019.
It was quite challenging and troublesome to resolve a number of compliance-related problems, including Ferosilt,
occasioned much concern during my tenure. In the end, we somehow found a solution by obtaining the understandingof Authorities while receiving advice from third-party academic experts, which is a deeply emotional experience to me.
Marking the 100th anniversary year was also a memorable experience. Although we had no way but to withdraw a party
to commemorate the occasion due to the COVID-19 pandemic, we did mark the year by publishing a 100-year history
book. It was a great honor for me to work as President during this memorable time.
However, my only regret is that I was unable to increase corporate value as much as I had expected. Although weorganized and funded new departments in order to somehow launch new businesses, we failed to do so other than
animal health products. Future growth for the company should be limited if we continue to rely on titanium dioxide
and agrochemicals alone. This is precisely where I’d like to hand over the baton to our new President since he hasdevelopment background.
I appreciate your co-operation as I work as Chairman to support the new President, and as one of the Board members
I continuously do my best to stabilize and improve company performance and realize steady dividends to shareholders.

34Corporate GovernanceIn addition to making contributions to social development, protection of life andenvironmental preservation, ISK strives constantly to respect our shareholders,customers, suppliers, local communities and employees while maintaining transparency in business activities abiding by laws and regulations.
In order to enhance corporate value by maintaining steady business growth andsecuring profitability, efforts to improve business transparency, reliability and corporate health are among management’s most important concerns, and we haveworked hard to strengthen Corporate Governance through business management
and enhanced internal controls founded on compliance.

Corporate Governance Structure
Structurally, we operate as a company with an Audit & Supervisory Board. In addition, we set Executive Management Committee under the Board of Directors inorder to speed up decision-making by the Board of Directors and efficiently monitor
and assess progress in important activities and projects. We have also introduced
Executive Officer system with the aim of speeding up decision-making related tobusiness activities.
Furthermore, we have the committees listed on the following page in order tostrengthen our Corporate Governance.
Effective November 11, 2021, we repositioned the Compensation Committee andPersonnel Committee so that they play an advisory role to the Board of Directors
rather than President for ensuring their independence and neutrality. Additionally,
we set up Headquarter Team and Yokkaichi Team under the umbrella of Public Relations Committee for closer networking and more informative communication withinvestors, the local community, and other stakeholders. We also newly establishedSustainability Promotion Committee as part of an ongoing effort to strengthen thebasis of sustainable management.

Value Creation Strategies Foundation for Value Creation• Corporate Governance Structure

General Shareholders’ Meetingdion anSelectSelect issal
ion andism
dismis d
Selection andsaldismissal
A
itor/
Co-operation
Supervudit &dent Audisory B
Indepen ccountants
oardtion Public A
AuditinConsultagg
AuditinAuditin
Board
of
DirectorsgsOpinionittee
tion Comm
Executive
Compensa
Management
ittee
Coope
el CommCommittee
rationPersonn
Executive Director President

OffiIntern ce ofal AuditInterna
auditin lg
Ope(Execurating divisio
tive Of
ficers,ns
etc.)

35

Internal controlsemmittence Co
a
li
p
m
Co
ittee
ent Comm
ManagemkisRteCorpora
ittee
Comm
n
io
t
a
Evalu
e
mmitteions CotlaeR
Publicommitteemotion C
ro
P
y
it
il
b
Sustaina
itteescomm
Otherisionstrol divs, etc.)
n
o
c
l
a
Intern utive Officer(Exec

Advice andguidance

Corporate Lawyers

Basic Policy

About ISK

Corporate Data

Corporate Governance

About ISK

Value Creation Strategies Foundation for Value Creation

Committees That Report to the Board of Directors
Compensation Committee

FunctionsComposition

Responds to inquiries from the President, who is delegated by the Board of Directors about the remuneration of Directors, Executive Officers,
and others
Chairperson

Independent Outside Director

Members

Independent Outside Directors (2), independent Outside Audit & Supervisory Board Members (2)Note: All five positions on the committee (100%) are filled by independent officers.

Personnel Committee

FunctionsComposition

Responds to inquiries from the President, who is delegated by the Board of Directors about the appointment of CEO’s successor and candidates for
new Director or Audit & Supervisory Board Member positions, as advising the Board of Directors
Chairperson

Independent Outside Director

Members

Independent Outside Directors (2), independent Outside Audit & Supervisory Board Members (2)Note: All five positions on the committee (100%) are filled by independent Directors and Audit & Supervisory Board
Members.

Compliance Committee

FunctionsComposition

Develops compliance structures based on the corporate philosophy and promotes corporate management predicated on compliance, for example byconducting compliance education and responding to the issues that come from its whistleblowing system
Chairperson (CCO)

Executive Director and President

Special committee member

Executive Director and Chairman

Regular committee member

Audit & Supervisory Board Member

Committee members

Corporate Risk Management Committee

FunctionsComposition

Chairperson

Executive Director and President

Special committee member

Executive Director and Chairman

Committee members

Evaluation Committee

FunctionsComposition

Headquarters Directors (11), outside lawyer, ISK Labor Union chairperson, Directors of major affiliates (7)Assesses and manages corporate risk incurred in the course of operations, formulates countermeasures, and deals with risks that have manifested
themselves

Inside Directors (4), Directors of Headquarters (7)Analyzes and evaluates the overall effectiveness of the Board of Directors
Chairperson
Committee members

Independent Outside Director
Independent Outside Directors (3), inside Audit & Supervisory Board Members (2), independent Outside Audit &Supervisory Board Member (1)Note: Five of seven positions on the committee (71%) are filled by independent Directors and Audit & Supervisory Board
Members.

Public Relations Committee

FunctionsComposition

Sustainability Promotion Committee

FunctionsComposition

Ensures transparency by disclosing information to investors in a timely manner, ensures the timely disclosure of information from Yokkaichi Plant to the
local community, and promotes communication between our stakeholders and the company
Chairperson

Executive Director and President

Deputy chairpaerson

Inside Directors (4)Committee members

Headquarters Directors and others (5)Undertakes initiatives to address climate change, human rights, diversity and inclusion, and health and productivity management
Chairperson

Executive Director and President

Special committee member

Executive Director and Chairman

Deputy chairperson

Inside Directors (2)Committee members

Headquarters Directors and others (11)36

Corporate Data

Corporate Governance

About ISK

Independence Criteria for Outside Directors

Value Creation Strategies Foundation for Value Creation

Corporate Data

Analysis and Evaluation Results of Overall Board of Directors EffectivenessCompared with fiscal year 2019, the results showed improvement in the 6 areas of “Board of Directors
composition,” “Board of Directors operation,” “Individual Director self-evaluation,” “Board of Directors meeting
minutes,” “Progress on issues identified,” and “Ensuring overall Board of Directors effectiveness,” while there
was a drop in the 2 areas of “Board of Directors agenda” and “Board of Directors support systems.” Also, in
fiscal year 2019, effectiveness was assessed at 80% or higher in 7 areas, but none were above 90%; whereas,in fiscal year 2020, the same 7 areas were all above 80%, even 3 of them were above 90%.
With regard to “Ensuring overall Board of Directors effectiveness,” the results increased from 81.8% in fiscal
year 2019 to 83.5% in fiscal year 2020, i.e., the overall effectiveness of the Board of Directors was ensured.

Outside Directors and Outside Audit & Supervisory Board Members are considered independent if none of
the following applies to them.
1. A current or past (within the past 10 years) business executor*1 for ISK or its subsidiaries (collectively,“ISK Group”)
2. A current or past (within the past 5 years) principal ISK shareholder (i.e., a shareholder that owns 10% ormore of ISK’s voting shares) or a business executor of the principal ISK shareholder
3. An ISK Group client, or a business executor of an ISK Group client, whose business dealings with ISK Group
have accounted for more than 2% of ISK Group’s annual consolidated net sales for any of the most recent
three fiscal years
4. An ISK Group supplier, or a business executor of an ISK Group supplier, whose business dealings with ISKGroup have accounted for more than 2% of said party’s annual consolidated net sales for any of the mostrecent three fiscal years
5. An accounting professional, legal professional, or other type of consultant or a member of a consulting
organization, which receives significant financial or other economic benefit*2 from ISK Group, other than
Director remuneration
6. A party, or a business executor of a party, which receives or has received (within the past three years)
significant financial contribution or assistance*3 from ISK Group
7. A spouse, relative within the second degree of kinship, or relative living together, of anyone that meets thecriteria of #1 to #6 above• Fiscal 2020 Board of Directors Effectiveness Evaluation Results (Achievement Level)
I. Board of Directors composition

VIII. Ensuring overall Board of
Directors effectiveness

81.8%
83.5%
VII. Progress on issues identified
as needed to be addressed
this fiscal year in the previous
year’s evaluation*1 A person who meets the criteria stipulated in Article 2, paragraph (3), item (6) of the Ordinance for Enforcement of the Companies Act.
*2 Normal remuneration averaging more than 10 million yen over the past three years.
*3 Annual contribution or assistance totaling more than 10 million yen over the past three years.

95.0%
90.0%
85.0%
80.0%
75.0%
70.0%
65.0%
60.0%
55.0%
50.0%

Fiscal 2019
Fiscal 2020

82.8%
93.2%

II. Board of Directors operation

89.1%
92.2%
III. Board of Directors agenda

82.4%
82.1%

71.2%
72.8%

Board of Directors Effectiveness Analysis, Evaluation,
and Results
In view of the responsibilities for Boards of Directors stipulated in the Corporate Governance Code, and in orderto improve the functioning of the Board of Directors, an Evaluation Committee comprised of Outside Directors
and Audit & Supervisory Board Members has been established under ISK Board of Directors and in line with
Board of Director evaluation-related rules. Every year since fiscal 2016, this committee has analyzed andevaluated the overall effectiveness of the Board of Directors and provided the Board with its results for deliberation and approval, after which an outline of those results is released publicly. In fiscal year 2020, as well,an evaluation of the Board of Directors’ overall effectiveness was carried out in accordance with this policy.

VI. Board of Directors meeting minutes

IV. Board of Directors support systems

88.5%
92.3%

89.2%
87.2%

V. Individual Director self-evaluation

81.3%
85.3%
Future Initiatives

ISK published its first integrated report, Integrated Report 2020, in March 2021. This report provided
stakeholders with integrated information about various aspects of ISK Group, including business performance, medium-to-long-term value creation-focused management policies, and business strategies. It will
be updated every fiscal year. We are working to increase the overall effectiveness of the Board of Directors
in order to facilitate the formulation of value-creation strategies for ISK Group and to prepare the foundation
for implementing them.
Based on the analysis and evaluation results of the overall Board of Directors effectiveness, the Board of
Directors has identified the following nine priority initiatives, which it is proactively pursuing in order to effectsubstantial improvement in its overall effectiveness.

Method of Evaluation

The Evaluation Committee prepared a questionnaire, which looked at 45 items across 8 areas, and then gave
this questionnaire to all Directors and Audit & Supervisory Board Members. The responses were analyzed andevaluated, after which all 9 Directors were interviewed. Based on the evaluation results report from Evaluation
Committee, our Board of Directors made a determination on the evaluation of the overall effectiveness of theBoard of Directors for fiscal 2020.

37

Corporate Governance

About ISK

Value Creation Strategies Foundation for Value Creation

Corporate Datain line with Officer Compensation Regulations approved by the Board of Directors.
(2) Performance-based remuneration: Comprised of annual performance-based remuneration and long-term
performance-based remuneration, which are established in Officer Compensation Regulations approved by
the Board of Directors, and are intended to secure the connection with and objectivity about corporate performance.
1. Annual performance-based remuneration: Calculated based on a comprehensive consideration of net
income attributable to owners of parent, which is the final result of corporate activities, together withindividual performance evaluation.
2. Long-term performance-based remuneration: Calculated based on the achievement of medium-termbusiness plan profit target and other criteria.
(3) ISK adopts a monetary remuneration system.

(1) Formulation of an action plan mainly by the corporate planning department aimed at qualitative improvement and developmentof expertise among Officers; provision of training opportunities to achieve this improvement and expertise; and focused
discussion of long-term challenges for ISK.
(2) Clarification of the positioning and division of roles between the Board of Directors and Executive Management Committee; andfacilitation of free and spirited discussion about management strategy-related agenda items significant to the direction of ISKGroup, such as medium-term business plan and annual management targets, as well as the future vision for the Group.
(3) Proactive monitoring of group companies’ management.
(4) Proactive and dynamic action on sustainability-related issues, particularly social and environmental issues.
(5) Self-study by Directors to cultivate knowledge essential to the appropriate execution of their roles and responsibilities;
adequate monitoring of fellow Directors in the execution of their duties; utilization of internal auditing results from the Office ofInternal Audit; and proactive communication and action contributing not only to one’s own business area of responsibility but
to Group management overall.
(6) Appropriate reporting and discussion of medium-term business plan and annual management target progress, as well as ofthe maintenance and operation of compliance, internal controls about financial reporting and risk management systems.
(7) Timely proposal of resolutions, accompanied by adequate explanation by the Director responsible of not only the merits but
also the risks, and active and substantive discussion about individual agenda items, including any major risks to ISK business.
(8) Clear and written specification of all resolution items to be discussed, accompanied by supplemental materials, which can beshortly and clearly understood and which provide sufficient information for the decision.
(9) Efficient organization of reporting matters.

• Remuneration of Directors in Fiscal Year 2020
Director category

Basic Policy for the Internal Control System

Directors (excluding Outside Directors)
Audit & Supervisory Board Members(excluding Outside Audit & Supervisory Board Members)
Outside Directors
Total

We are continually working to expand and improve our Group internal control systems in order to ensure theappropriateness of subsidiary governance as well as the maintenance of compliance systems. For details,
please refer to ISK Corporate Governance Report.

Total remuneration by type
Total
Performanceremuneration
Fixed
based
(Million yen) (Million yen)
(Million yen)
179
151
27

Applicable
Directors(Persons)
6

36

36

-

2

53
269

53
241

27

5
13

Note: The relative percentage of individual remuneration for Directors takes into account annual business performance, and is decided by the Board of
Directors in consultation with the Compensation Committee.

Corporate Governance Report (in Japanese)
https://www.iskweb.co.jp/company/governance.html

Policy on Cross-Shareholdings

Remuneration of Directors

ISK maintains an amount of cross-shareholdings deemed to build a smooth, stable, and ongoing relationshipwith business partners, in line with our business strategy. The status of cross-shareholdings is disclosed inour securities report. Other shareholdings have been appropriately reduced.

Policy for Determining Remuneration of Directors

Director remuneration includes a base remuneration amount and other remuneration, such as performance-based remuneration. The maximum amount of remuneration for Directors is approved by the Boardof Directors within the limit of the total remuneration amount (460 million yen per annum), which had been
approved at the 82nd Ordinary General Meeting of Shareholders on June 29, 2005.
Outside Directors receive only a base remuneration.
The maximum amount of remuneration for Audit & Supervisory Board Members is limited to the total remuneration amount (90 million yen per annum) approved at the 71st Ordinary General Meeting of Shareholders
on June 29, 1994. It is only a base remuneration, and individually determined based on deliberation by the
Audit & Supervisory Board.

Verification of Reasonableness of Cross-Shareholdings

The reasonableness of currently held cross-shareholdings is regularly verified by the Board of Directors aboutsome factors such as the adequacy of the purpose, the benefits and risks in the context of capital cost, ofholding those shares. Based on the results of verification, the Board decides whether to continue holding or
sell cross-shareholdings.
Cross-Shareholding Voting CriteriaWith regard to the exercise of voting rights arising from cross-shareholdings, our decision is made based on
our comprehensive assessment, which includes the content of the proposal, the performance of the company,
its management policies, and from the viewpoint of whether or not the resolution will increase shareholder
value for the company, and even increase ISK’s corporate value.

Calculation Method for Director Remuneration(1) Base remuneration: Paid in accordance with the duties and roles as Directors and Executive Officers and38

Corporate GovernanceRisk Management

About ISK

Basic Policy on Risk Management

Risk
Mass
infection,diseaseRisk Management System

New
entries andintensifying
competition

We perform risk assessment and adequately evaluate the risks so that we put in place necessary measuresin advance to avoid, mitigate, or transfer the risk in order to maximize the effect and minimize the cost for ISKGroup, depending on the impact and likelihood for each risk. Also, in the course of business decision-making,we actively identify and take action against foreseen risks.

• Enhancement of competitiveness by reducing production
Risk of market share loss due to more competitive
costs
environment caused by entry of new competitors • Develop mixture products to differentiate in agrochemicals
or other factors
market• Increase sales ratio for high-value-added products

Earthquake,tsunami• Formulate and carry out BCP, conduct emergency drills
Risk of plant shutdown or distribution network• Carry out BCP-related seminar
disruption as a result of large earthquake• Check and confirm local hazard map

Difficulty
procuringmaterial,
problem at
supplier

Risk of supply shortage for specific raw materials
due to suppliers’ shutdown caused by riot orstricter environmental regulations in producing
regions or countries
Risk of reduced production volume or delayed
shipping of our products since their raw material’s
supplier has some problem occurred in production line

Decline inagrochemicalsales volume
due to abnormal
weather• Put in place system for gathering abnormal weather-related
Risk of decline in agrochemical sales volume led
information and for conducting the necessary production
by lower demand for agrochemicals as a result
adjustmentsof abnormal weather, such as typhoons, torrential• Maintain proper inventories
rains, or drought• Target multiple markets

Inadequate
ESG response

Risk of negative impact on our business activities
due to imposition of carbon taxes on coal-fired• Prepare roadmap for greenhouse gas reduction
boilers or other equipment, and due to stricter
emission regulations

Risk assessment by using each Headquarter’s “risk assessment questionnaire”

Delay in, or
stoppage of,product ortechnology
development

Risk of deadlock in the business plan due to• Check progress and status of development
delay or stoppage of new product or technology• Regularly review development themes
development

Visualization of risk assessment based on questionnaire results(development of “risk map”)

Technology
drain

Risk of reduced product competitiveness due to • Apply for process patent and acquire rights
drain of technology or expertise• Conclude rights protection-related agreements

Workshop-based confirmation of risk assessment (finalization of “risk map”)

Fire, explosion

Risk of asset damage or loss, as well as death • Formulate equipment preventive maintenance plan andor injury of employees, due to catastrophe atcarry out voluntary safety measures
our plant• Evaluate plant integrity

Board of Directors
Corporate Risk Management Committee
Secretariat
Corporate Planning & Administration Div., Legal Div., General Affairs Div.

Comprised of the President as chairperson,
the Chairman as special committee member,and Directors of each Headquarter
Comprised of GM
and Presidents of subsidiaries

GM of each division• Risk Assessment Implementation Process

Identification of priority risks
to assess and address

Measures• Implement measures spearheaded by Headquarters of
Risk of factory shutdown due to outbreak of
Infectious Disease Response
infectious diseases such as COVID-19 or seasonal• Utilize various work styles like remote work
influenza• Recommend online meetings for internal discussion

Aging and• Perform thorough repairs and preventive maintenance while
Risk of plant shutdown due to inoperable situation
breakdown ofannual maintenance shutdown
caused by aging, corrosion, etc., of key equipment
equipment and• Replace equipment when the right timeand machinery
machinery• Promote the structure for backup systems

Risk Management Policy

Risk assessment consolidation

Summary

Revised and
Risk of being unable to continue sales of existing• Appropriately gather information relating to laws andstricter laws
products due to more stringent product registraregulations
and regulations tion rules or regulations

We have established our “risk management regulations” governing our basic policy on risk management andrisk management system. We have also established Corporate Risk Management Committee chaired by the
President, which tries to appropriately manage various risks surrounding our business and to obviate thoserisks.

Assessment ofrisk impact and likelihood

Corporate Data

Risk Summary and Measures (extract)

We ISK Group pursue risk management with the aim of preventing various risks that could seriously impact
the smooth operation of our business, and in the event of an emergency, appropriately and swiftly addressing
it in order not to harm the health, safety, or interests of stakeholders, restoring our business operations assoon as possible, protecting our corporate resources, and minimizing the damage to our business.

Risk identification

Value Creation Strategies Foundation for Value Creation

Identification of risks from a company-wide perspective
Preparation of “risk assessment questionnaire” based on the identified risks
Identification of risks by each Headquarter

Discussion by top management to identify priority risks to be addressed39• Purchase from various suppliers in multiple countries• Closely coordinate with subcontractors and suppliers• Perform rapid planning adjustment and proper inventory
management• Expand the range of usable raw materials

Corporate GovernanceRisk Management

About ISK

Value Creation Strategies Foundation for Value Creation

Large

Risk Map (extract)
Key process risks (risks of major Operation-related such as procurement, manufacturing, etc.)
Support process risks (risks related to functional continuity such as general affairs, HR, etc.)
External environment risks

Level of effect on business

Management process risks (risks in management strategy)
Environmental risks
such as leakageof hazardous
material

Earthquake,tsunamiAdvent ofinnovativetechnology

Dependence on
Fire, explosion specificcustomer

Violation oflaw(Anti-Monopoly Act)

Lawsuit,contract
deficiency
troubleReversal ofdeferredtax asset

Failure of
new business,
capital investment,
M&A

Problems withcustomers or
suppliers
Workplace
accident

Incorrect
selection ofdevelopment
material

Inadequate
Abnormal weather Skyrocketing
ESG response (agrochemical sales) fuel prices

Economic
downturn

Failure of
IP strategy

Cancellation or
erasure of permits,
licenses,or registrations

Difficulty
procuring material, Crop injury by
agrochemical
problem at
products
supplierPoor
governance at
groupcompany

Aging andbreakdown ofequipment andmachineryMassinfection,diseaseDelay in,
Revised andor rejection of, stricter laws
product approval and regulations
or registration
Skyrocketingraw material
prices

New entries andintensifying
competition

Change in
Valuation loss
the customer/ of investment
supplier’s
securities
environment

Quality defect, Negligence inhandling
recallinformation

In-house
corruption
such as data
falsification

Delay in,or stoppage of,product ortechnology development

Technology
leakage

Inadequate ESG
responseby supplier

MissingSoiltax filing,
contamination misrecognitionof tax law

Stranded
assetsCustomerbankruptcy
and bad debt

Internationaltax risk

Natural disaster(except forearthquake andtsunami)Financial risk(exchange rate,etc.)

Changing
consumerawareness

International Worker shortage,
conflict/dispute, non-transfer ofterrorism,
skills andskyrocketing tariffs techniques

Cyberattack

Human rights issue(sexual harassment,
workplace power
harassment)

Probability of occurrence

Large

Notes:
1: Regarding level of effect on business and probability of occurrence, we set risk scenarios and assess each risk impact or damage in order for assessors to have a common understanding. The risk scenario used here is a worst-case scenario, i.e. the biggest threat
among the possibilities.
2: ISK defines risk as any possibility of physical or economic damage to ISK, loss of trust, or others causing disadvantages.

40

Corporate Data

Corporate GovernanceCompliance

About ISK

Value Creation Strategies Foundation for Value Creation

Basic Philosophy
ISK Group places the utmost importance on compliance. We have formulated a code of conduct in orderto carry out business rooted in our corporate philosophy, with the aim of thoroughly complying withlaws and regulations, conducting fair and equitable business practices, and maintaining a high level ofcorporate ethics.
Corporate Philosophy

Code of Conduct Message from Our CCO

Towardthe realization of“Vision 2030”

p03

ISK Group Code of Conduct
https://www.iskweb.co.jp/eng/compliance/observance.html

Initiatives for Compliance

Ishihara Sangyo Kaisha, Ltd.
Executive Director, President,
and Chief Compliance Officer (CCO)

Because a company cannot exist without society’s trust, we have launched a compliance committee
towards fulfilling our corporate responsibility and contributing to society. The committee puts compliancefront and center and ensures that we promptly report any compliance violations.

Hideo Takahashi
This year, I took over as CCO from former President Tanaka. I am determined to continue toengage in corporate activities built on strict compliance. After marking its 100th anniversary
in 2020, Ishihara Sangyo Kaisha, Ltd. (ISK) has taken the first step toward the next 100 years.
As the first initiative, ISK has developed a vision of what the company wants to be ten years
from now and established its long-term vision “Vision 2030: Originality. Acceleration. Global
Reach. Transforming Lives Through the Power of Chemistry.” Meanwhile, it has defined its
corporate purpose as “To continue contributing to better living environments through chemical
technologies.” This vision and purpose will help us contribute to the realization of a sustainable
society and concurrently improve ISK’s corporate value through our business activities. Compliance should be the basis of these efforts. Specifically, we must observe laws, regulations,and social norms. In addition, we need to operate based on the perspectives of ESG and theSDGs in our corporate management and daily operations. Many of the perspectives of ESG and
the SDGs are included in our Code of Conduct. Our Code of Conduct provides a guideline forthe daily efforts of each one of us working at our company and in our Group. I am expecting
all our employees to fully understand the contents of the Code of Conduct, and integrate thatawareness into daily business activities.
As the economy, society, and natural environment all enter a period of great change, I myself
would like to lead the way in making changes with a sense of urgency. So, let us strive together.

41

Corporate Data

Corporate GovernanceCompliance

About ISK

Compliance-Related Training andAwareness-Raising at ISK

Compliance library training

We provided a training program that made use of ISK’s compliance library (video materials), via thecompany intranet and DVDs. The program offered three-minute dramatizations of everyday, compliance-related situations that participants encounter in their jobs. Also, supervisors who provide dayto-day instruction to other employees in the workplace participated in seminars where they received
direct instruction using lecture tools and materials for instructors. (In total, 491 sessions were held,
encompassing 4,291 participants, including affiliate companies.)

ISK Group carries out compliance-related training for every employee level inaccordance with an annual plan, which is reviewed and approved by the Compliance
Committee. In addition, all Group members were thoroughly familiarized with therevisions made to ISK Group Code of Conduct in fiscal 2020.

• In fiscal 2020, workplace compliance-related training, which included library training was held a total of
584 times and encompassed 5,097 participants.

(1) Implementation Results and Status of Fiscal 2020 Compliance-Related
Training and Awareness-Raising Efforts
As in previous years, a substantial number of ISK Group members participated in education and awareness-raising efforts carried out in fiscal 2020, including employees from affiliates in Japan.

(2) Implementation Plan for Fiscal 2021 Compliance-Related Training andAwareness-Raising Efforts
Like the previous year, in fiscal 2021 distance learning for new employees, distance learning for newly
appointed L-grade employees, and group training for newly appointed managers is planned.
In addition, topic-specific training is being implemented, with compliance-related group training forexecutives, insider trading regulations e-learning for affiliate company managers, harassment e-learning
for L-grade and SV-grade employees, and compliance library training for S-grade and E-grade employees.
Training during the first half of fiscal 2021 has been carried out according to plan. However, training forexecutives has been delayed to March 2022 due to the COVID-19 pandemic.

1. Employee Level-Specific Training and Awareness-Raising in Fiscal 2020
Distance learning for new employees (Topic #1)• Focus: General compliance-related basic training• Participants: FY2020 new hires and FY2019 mid-career hires (mandatory)
ISK: 61 employees, Affiliates: 16 employees Total: 77• Learning materials: “Compliance Explained!” distance learning course• Completed by all participants
Advanced compliance training for newly appointed L-grade employees (formerly assistant managers)• Focus: Development of human resources who facilitate compliance-based management• Participants: Assistant managers promoted in FY2019 (mandatory)
ISK: 24 employees, Affiliates: 7 employees
Total: 31• Learning materials: “Learning Compliance by Case Example” distance learning course (self-study followedby an assessment test)• Completed by all participants

Fiscal 2021 Topics
Job grade-specific training• Group training (with help from the HR department) for newly appointed managers (appointed in FY2021)• Distance learning for newly appointed L-grade employees (appointed in FY2020)• Distance learning (Topic #2) for new employees (FY2021 new hires and FY2020 mid-career hires)Group training for newly appointed managers• Focus: Reiteration of compliance basics and instruction in compliance-related knowledge essential to
becoming managers• Participants: Managers newly appointed in FY2020
ISK: 10 employees• Group training led by a lawyer (Mr.Koike)New plan• Compliance-related group training for executives• Workplace-specific specialized law seminars• Insider trading regulations e-learning for affiliate company managers• Harassment e-learning for L-grade and SV-grade employees• Compliance library training for S-grade and E-grade employees

2. Topical Training and Awareness-Raising in Fiscal 2020
Insider trading regulations e-learning for all ISK managers• Provided to all ISK managers (302 people)• Participants were equipped with legal knowledge about insider trading under Japan’s Financial Instruments
and Exchange Act• Case studies were discussed in order to communicate more practical points• Completed by all participants

Value Creation Strategies Foundation for Value Creation

42

Corporate Data

Responsible Care Activities

About ISK

ISK’s Responsible Care
ISK Group undertakes “Responsible Care (RC)”
activities aimed at environmental, health, andsafety assurance. In particular, our activities
encompass chemical product and distribution
safety specific to the chemical industry, as wellas environmental protection, process safety and disaster prevention, and occupational
health and safety, along with dialog with society, common to many different industries.

Value Creation Strategies Foundation for Value Creation

Corporate Data

Basic Policy, Objectives, and Achievements of
Responsible Care Activities
Stakeholders

Category
Environmental
protection

Safety anddisasterprevention

Management
systemChemicals/
Occupational
health andproduct
safetysafetyDialog withsociety

Fiscal 2020
Objectives/Plans

Achievements

Evaluation

Promotion of sharing environmental protection-related information

Promoted to share environmental protection-related information through such approaches as sending out emails
and posting information on the company intranet. Sharedenvironmental protection-related information through suchapproaches as sending out emails and posting information on
the company intranet.

✓Compared with FY2019, occurrences of environmental-impact phenomena increased (FY2019: 8 occurrences–> FY2020: 14 occurrences).

−

Comply with Yokkaichi City’s pollution control agreement and manage voluntary control target values

For air and water quality, agreement values and wastewatervoluntary control standard values were not exceeded.

✓

Planned emission reduction of
PRTR-listed materials

Compared with the values achieved in FY2015 (five yearsago), the volume of emissions into the air, public water areas,
and transferred off-site was reduced.

✓

Reduce energy intensity and electricity demand leveling assessment intensity by 1% year-on-year

In FY2020, energy intensity increased by 6.2% andelectricity demand leveling assessment intensity
increased by 6.3% year-on-year.
The Yokkaichi Plant has set out energy efficiency
improvement plans and is putting them into action.

−

Achieve zero waste disposal-related failures and complaints

There were zero waste disposal-related failures and complaints.

✓

Reduce, reuse, and recycle ofwaste

We carried out a variety of recycling, such as recycling ofwooden pallets (materials with recoverable value), recyclingof PVC piping, and thermal recycling of used flexible containers.

✓

Reduce environmental load in
activities spanning R&D to manufacturing

We are reviewing raw materials and production processes,
and focusing on the development of products that contributeto environmental load reduction.
We were able to confirm an effective reduction in the volume
of inorganic sludge from a review of formulas used in thechemical product manufacturing process.

✓Carry out in-house, CSR activity-based environmental protection-related education

We held briefings on the current state and future direction of
CSR at all ISK sites (Head Office, Central Research Institute,
Yokkaichi Plant, Tokyo Branch).

✓Environmental
protection

Local residents
Customers
Government
Employees,
othersReduce environmental-impact
phenomena

Distribution
safety(targeting phenomena that rate atlevel 2 or higher on a six-level scale[level 0 to 5] for rating air and water
quality environmental impact)

What is Responsible Care?
Companies that handle chemicals voluntarily undertake Responsible Care activities to provide environmental,
health, and safety assurance covering everything from chemical substance development to production, distribution, usage, final consumption, disposal, and recycling.
The results of these activities are shared and discussed with stakeholders. Responsible Care originated in Canada
in 1985 and has subsequently spread to companies around the world.
Investment in Environmental Measures and Safety and Disaster Prevention Measures
Most investment is allocated to the Yokkaichi Plant. The graph below shows the trends of investment in environmental measures and investment in safety and disaster prevention. In fiscal 2020, we invested intensively
in measures to replace aging equipment and measures to prepare for earthquakes and other natural disasters.
(Fiscal year)

Investment in environmental measures
Pollution countermeasures (water quality)
Pollution countermeasures (atmosphere)
Energy conservation/CO2 emission reduction measures
Industrial wastes/recycling measures
Soil/groundwater contamination countermeasures
Other

2020
2019
2018
2017
2016
(Million yen) 0

500

1,000

1,500

2,000

2,500

Investment in safety and disaster prevention
Explosion, fire, and leakage countermeasures
Aging equipment countermeasures
Occupational safety/working environment improvement measures
Earthquake and other natural disaster countermeasures
Other
3,000

43

Responsible Care Activities

Category
Process safetyand disasterprevention

About ISK

Fiscal 2020
Objectives/Plans

There were two plant accidents (fire).

Systematically hold disaster training and drills

The Yokkaichi Plant held comprehensive disaster drills in
spring and September and special disaster drills in May,
during which training and drills focusing individually onearthquakes, tsunamis, and fires were systematically carriedout. The Central Research Institute held each departmental
disaster drill (July, August, September) and a comprehensive
disaster drill (October).

✓

We are reviewing earthquake disaster manuals and otherresources at each ISK site. We are in the process of formulating
a company-wide BCP framework.

✓

Achieve zero workplace accidents(resulting in no lost-work accident)
at each ISK site
Engage in regular opinion andinformation exchange via theoccupational health and safety
departments of each ISK site

On June 17, an occupational health and safety conference was held via teleconference, during which information was shared among ISK sites.

Promote initiatives aimed at better
health awareness and health hazard prevention.
Facilitate whole company-wide
sharing of awareness-raising
activities

We worked to boost employees’ awareness of health throughfollow-ups and health guidance after medical check-ups,
health-related seminars and courses, and other means. We
also conducted company-wide stress checks in July.

Achieve zero employee commuter car accidents resulting in lostwork timeDistribution safety

There were no accidents resulting in lost work time at any
ISK site.

There were zero employee commuter car accidents resulting
in lost work time.

Implement emergency responsecard (so-called Yellow Card), GHS
label, and SDS managements

We implemented company-wide managements in line withthe detailed regulations for Yellow Cards and SDS. We created or renewed 1,392 Yellow Cards, GHS labels, and SDS.

Strengthen legal compliance andsafety control systems relating to
the shipment of dangerous, toxic,
deleterious, or otherwise harmful
chemical substances

We widely communicated information about laws and regulations relating to the shipment of hazardous chemicals,
as well as SDS and Yellow Card-based information about
cautions relating to the properties, usage, and handling of
ISK products.

Category

Evaluation

Eliminate plant accidents (fire,
explosion, leakage)

Making a company-wide BCP(business continuity plan)
Occupational
health and safety

Achievements

Chemicals/
product safety

−

✓

✓

Corporate Data

Fiscal 2020
Objectives/Plans

Achievements

Evaluation

Continue sharing chemical
substance-related information
through prompt disclosure

We shared relevant information via quarterly meetings ofchemical substance control supervisors and via email communications, intranet postings, and other means.

✓

Comply with chemical substance-related rules and regulations (chemical substance registration, GHS system) in Japan andoverseas

We gathered information about regulatory tightening in Japanand overseas, which will require ISK to adapt, and took measures to comply with relevant laws and regulations.

✓

Properly manage chemical substances

We appropriately notified the authorities on the use of chemical substances at ISK sites (Yokkaichi Plant, Central ResearchInstitute).

✓

Continue to provide chemical substance handling-related education

We provided education on endocrine-disrupting chemicals at
each ISK site. This gave employees a better understanding of
crucial knowledge, focusing on SDS, shared understanding ofminor matters, international chemical substance-related laws
and regulations, export trade controls for chemical products,
Japanese chemical substance-related laws and regulations,and an outline of chemical substance-related reporting at ISK.

✓Put CSR reports on the ISK website and release them as a physical publication

We compiled CSR data and posted it on the ISK website.

✓

Regularly disclose environmental management data on the ISK
websiteWe posted the amounts of substances subject to total pollutant load controls that the Yokkaichi Plant released into theatmosphere and public water areas on the ISK website fourtimes a year.

✓

Promote communication andmutual dialog with residents of thelocal community

We gave local residents (residents’ association members) a
factory tour in November.

✓Contribute to integrated learning
at local educational institutions

Due to the COVID-19 pandemic, we could not visit schools
for special classes or give factory tours normally provided
each year to local middle schools.

−

Take part in Responsible Carerelated dialog with communities

Although a community dialog session in the Yokkaichi area
was scheduled for October 2020, it was postponed for thesecond year in a row due to the COVID-19 pandemic.

✓

Publish an informational booklet
for the local community

In January and August 2020, we published Kizuna(Shiohama community edition), an informational booklet.

✓

Pursue new development andexpansion of CSR activities

In light of the global push for sustainability and in order todevelop new CSR activities, we participate in an integrated
report production team as part of an ESG (environmental,social, governance) initiative.

✓✓
Dialog with
community

Value Creation Strategies Foundation for Value Creation

✓

✓

✓

Evaluation: ✓ Achieved − Unachieved

44

Environment

About ISK

Value Creation Strategies Foundation for Value Creation

Environmental Protection
At Yokkaichi Plant Material Balance in Fiscal 2020

Atmospheric emissions
Sulfur oxides (SOx)4,100 Nm

Nitrogen oxides (NOx)

182 tons

3

PRTR-listed substances

9 tonsCO2 emissions from energy used in production activities

370,000 tons-CO

2

Energy and raw materials
consumed

Production of chemicals,
waste generation

Energy*1

Products*2

130,000 kiloliters

120,000

tons(titanium dioxide equivalent)(crude oil equivalent)

Industrial waste
Raw materials
Titanium ore

Disposal volume

110,000 tons Others

81,000 tons

Industrial water

14 million m

3

PRTR-listed substances

1,300 tons

Seawater

10 million m

3

Emissions into public water areas
Wastewater

24 million m

COD

335 tons

Nitrogen

148 tons

Phosphorous

0.9 tons

PRTR-listed substances

64 tons*1 For energy it consumes heavy oil, LNG, steam, and electricity, but their usage volumes are all expressed as crude oil equivalent figures under Japan’s Energy Conservation Act.
*2 Besides titanium dioxide, we produce functional materials, chemical, organic, and other products. These have all been converted to titanium dioxide production figures using energy consumption intensity under Japan’s Energy Conservation Act.

45

Corporate Data

Environment

About ISK

Release and Transfer of PRTR-Listed Chemical Substances to Environment
The PRTR (Pollutant Release and Transfer Register) is a system under which the government announces,from where, to where and how much chemical substances are released and transferred that may be
harmful to human health and ecosystems. It also aims to encourage companies to exercise self-restraint
through disclosure. There are 27 PRTR substances in Yokkaichi Plant and we have reported them tothe government.
The graph shows the transition of emission and transfer in the Yokkaichi plant for the past five years.
Due to a decrease in the use of hydrogen fluoride, the amounts of hydrogen fluoride and its water-soluble salts transferred off-site has also decreased since 2018.

Atmospheric Emissions (kg)Triethylamine
Chloroform

295
1,200

The graphs show the amounts of substances, covered by total mass emission control, discharged into
the atmosphere and public waters at the Yokkaichi Plant.
SOx emissions in the atmosphere and COD (chemical oxygen demand) in water areas have stayed at low
levels. In addition, the Yokkaichi Plant has concluded an agreement with Yokkaichi City to set a voluntary
control standard value for these categories, which is stricter than the total mass emission control value
set by the law.
The ammonia recovery plant, installed in 2019, operated throughout the year in 2020, thus reducing thenitrogen load into public waters even further than in 2019.

Unnecessary by-product solids (inorganic sludge), generated by each production activity such as titanium dioxide, are properly transported to an industrial waste disposal site. After periodic maintenanceof the Yokkaichi Plant in October 2016, we switched to a new method to reduce the generation of the

1,867
1,200

328
1,100

1,947
25,000

1,800

7,300

0

0

2017

2018

7,300

36,000

0

7,700

5,258
26,0004,563

523,237 441,785

5,500
21,000

10,23140,0002016

2017

53,00044,00036,00020182019 2020 (FY)

Nitrogen Pollutant Load into
Public Water Areas (kg/year)

441,449 534,114
120,000 130,000
52,000 3,400 120,000 130,000 410,449
5,000 100,000
6,100
2,900
1,100,000 1,200,000 1,000,000 1,000,000

2016

2017

2018

4,062

COD in Public Water Areas (kg/year)

291,677

57,341

52,11442,277148,13420182019 2020 (FY)Disposed Volumes of Inorganic Sludge(tons)

79,03574,004201620172019 2020 (FY)2016

Air Radiation Dose Rate Originatingfrom Radionuclides Containedin Industrial Waste (Inorganic Sludge)

67,725 66,112

0.14
0.12

Controlling Air Radiation Dose Rate of Inorganic Sludge

2017

2018

Average air radiation dose rate (μGy/h)Maximum air radiation dose rate (μGy/h)Voluntary control standard value (0.14 μGy/h)*52,86020162018 20192020 (FY)

0.08
0.05

0.06

2016

2017

0.12

0.13
0.11

0.07

0.07

0.07

2018

2019

2020 (FY)*The voluntary control standard value (0.14 μGy/h) is
equivalent to 1 mSv/year, an estimate of a level safe to the general public.

46

2019 2020 (FY)

333,584

3,404

2017

830,000

398,391 385,025

4,503

4,289

47,000Hydrogen fluoride and its water-soluble salts
Others0

2019 2020 (FY)SOx Emissions (Nm2/year)

inorganic sludge and it has been decreased.

Ore, used as a raw material for titanium dioxide, contains trace amounts of radioactive impurities suchas uranium and thorium, and these are treated and disposed of as waste. Prior to removal as industrial
waste, radiation levels are measured in accordance with voluntary control standard to ensure that they
are safe.

3,672

18,0008,100

2016

Reduction of by-product Inorganic Sludge

534
1,200

Corporate Data

Amount Transferred Off-Site (kg)Manganese and its compounds
Chromium and trivalent chromium compounds

Hydrogen fluoride and its water-soluble salts
Manganese and its compounds
Others

7,600

2016

Reducing Environmental Impact on Atmosphere and Water Areas

Emissions into Public Water Areas (kg)HexaneOthers259
1,200

Value Creation Strategies Foundation for Value Creation

2017

2018

39,19435,1522019 2020 (FY)SocialAbout ISK

Occupational Health and Safety

Process Safety and Disaster Prevention

Overview of Occupational Health and
Safety Activities

Process Safety andDisaster Prevention Initiatives

ISK’s health and safety policy is to ensure the safety, security, andmaintain health of employees and local residents by complying
with health and safety-related laws, preventing accidents anddisasters, building a pleasant work environment, and constantly
raising the level of health and safety.
In fiscal 2020, the Yokkaichi Plant achieved its target of zero losttime accidents. However, there were three injuries that did not
result in lost work time. In one of these, a worker’s leg strucka steel corner beside a walkway resulting in a laceration. Thisseemed an unlikely place for an accident, so we are now
instructing workers to do their jobs with the awareness that
potential dangers are hidden everywhere. Regarding workers’
health, we are conducting follow-ups on health checkups toensure that medical treatment is provided as early as possible
when necessary.

Safety control is the foundation of ISK’s business. At Yokkaichi
Plant, our target is to eliminate fires, explosions, and any kindsof leaks. We conduct risk assessments with What-If Scenario
Analysis: when installing new equipment or upgrading existingones, when updating production methods, and when doing
safety assessments of existing equipment where high-risk
items such as hazardous substances and high-pressure gas
are handled. Then, countermeasures are taken for the extracted
potential risks.
We also focus on accident case study education, and company
executives conduct periodic safety patrols.
In fiscal 2020, there were two fires caused by faulty devices
and wiring. We instigated stricter inspection rules to ensure
this does not happen again. Earthquake and tsunami evacuation drills to prepare for a megathrust earthquake is held

At the Central Research Institute, although there were no
workplace accidents, an employee commuting to work by car
was rear-ended while stopped. Employees are being told todrive vigilantly to be ready for the likelihood of such accidents.

annually for all personnel and vehicles using our plant. This
improves our ability to respond quickly and appropriately tosuch emergencies.

Value Creation Strategies Foundation for Value Creation

Disaster Drills
Usually the Yokkaichi Plant’s fire brigade conducts emergency
drills jointly with the local fire station, on view to the inviting public.
Due to COVID-19, in fiscal 2020 the plant’s fire brigade conducted
the drills only itself, without the local fire station and the inviting
the public. To prevent viral infections, we conducted drills while
wearing masks and using megaphones to maintain appropriate
interpersonal distance. Although there were no joint drills again
in fiscal 2021, the plant’s fire brigade conducted lone drills thatwere verified by the Yokkaichi City Fire Department. We fine-tunes
the drills every year with the aim of raising the level of disaster
preparedness.
To raise disaster preparedness awareness at the Central ResearchInstitute, a disaster drill improvement team was launched consisting of one employee from each department. The team works withhealth and safety committee members in planning and conducting
drills in each department that focus on a different area (substanceleakage, fire, earthquake) each year. These departmental disaster
drills are thoroughly reviewed prior to holding a comprehensive
disaster drill for the entire Central Research Institute.

Disaster drill at the Yokkaichi Plant

Hands-on training with fluids at the Yokkaichi Plant

Executives conduct a safety inspection at the Yokkaichi Plant

Comprehensive disaster drill at the Central Research Institute47

Corporate Data

SocialAbout ISK

Value Creation Strategies Foundation for Value Creation

Message from the Director of General Affairs & Human Resources Headquarters

Promote the construction of a system andculture in which diverse human resources can play an active role
Strengthen investment in people who will be the path to increase corporate value
The world is at a turning point.
We face global problems like climate change and energy
crises, and people are having to adapt to new lifestyles
due to the COVID-19 pandemic. Amidst these and otherearth-shattering changes, companies are being forced to
examine the fundamental purpose for their existence.
In Vision 2030, which we released last year, we defined
ISK Group corporate purpose—to continue contributing to better living environments through chemical
technologies—and announced our aim to contributeto the realization of a sustainable society while also
improving our corporate value through business activities. With Vision 2030 as its compass, ISK will create
new value towards sustainable growth by continuously
improving our people and our organization—both of

Yoshio Nishiyama
Executive Officer
Director of General Affairs &Human Resources Headquarters

which are the backbone of value creation.
To this end, on the occasion of ISK’s 100th anniversary in
2020, we renewed our personnel system.
Of course, simply changing the system will not solve
all our problems. Under Vision 2030 Stage I, our
medium-term business plan starting this fiscal year,
the personnel division’s target is to firmly establish
the new human resources system. Specifically, we
will create systems supplementary to the new personnel
system, and we will focus on disseminating a high-levelcompany concept among employees through employee
training and education.
Put frankly, this reflects the fact that our current company
systems and employee mindset are outdated. The message
we are sending with our new personnel system is that ourcompany must “change to change”.What’s important is tomake all employees understand that we must “change tochange” in preparation the society’s change if our company
is to survive. I believe that what can our company do is toencourage such change using systems and mechanisms.
Therefore, along with the 2020 revision of our personnel
system, we have set the five ideal type human resource,which reflect philosophies that should be shared in humanresource management, and values that should be shared by
all employees. We will work with speedily than ever totackle numerous human resource issues so that we canfully support the realization of Vision 2030.

48• Ideal Employee Traits<Into new fields>
Take on new challenges

People who understand fundamentals andput them into action,
and who can change themselvesin order to initiate change<Work together><Security and trust>

Grow withstakeholders

Create environments andquality recognizedby customers

1: Human resources who have a sense of responsibility as aprofessional and produce high results
2: Human resources who are sensitive and flexible to changes,
with the strength to overcome difficulties
3: Human resources who understands the path the company
should take and the issues it should address, and takes
action4: Human resources who are constantly evolving, always
aiming to be one step higher and one step ahead
5: Human resources who can collaborate with stakeholders
and grow together through work

Corporate Data

SocialAbout ISK

Value Creation Strategies Foundation for Value Creation

Career Development Support
ISK reformed its personnel system in 2020. Previously, jobs were classified as career track (employees
can transfer to anywhere in Japan) and general staff (they can work only locally). But the new system has
only one classification, meaning everyone has the same opportunity to take on high-level job challenges
in the company.

their future, we hold career design training at all ISK locations and we offer employees support in pursuing their careers.
ISK’s retirement age is 60, but raising this to 65 is a pressing issue for us. We are currently revising oursystems for retirement packages and corporate defined contribution pension with an eye to making 65
the retirement age. In tandem with these system revisions, we hold second career training as part of efforts to provide opportunities for motivating work in which people can use their talents even after the ageof 60. This also allows ISK to create a succession plan for passing on leadership to the next generation.

For all employees to achieve personal growth through their jobs and continuously contribute to society,they must always have the chance to study and enlightenment. To enable each one to plan and pursue

Leaders

Managers

ISK Training and Education System
Role strengthening

Management strengthening

Organizational strengthening,career development

Global response strengthening

Role awareness, skills improvement

Top leader training
Cultivate the ability to think andact like a future top-level executive

Second career training
Prepare for a second career through succession planningand passing on leadership to the next generation

Global human resources
development program

Newly appointed manager training
Gain necessary knowledge, improve skills
Newly appointed supervisor training
Understand role in preparation to becoming a manager

Management leader training
Boost management skills of managers
holding key roles in each department

Mid-career employee training
Learn knowledge to do job, reconfirm positionin company, and understand role

Management skills improvement training

Working fundamentals, company understanding
3rd year training
As employees who will have an integral role in the company,
map out self-realization, promote action and reform

2nd year training
Learn efficient work proceduresthat lead to results

Persons in charge

1st year training
Look back on 1st year andmap out action plan

6-month training
Acquire fundamental skills, knowledge,
and mindset for working

New employee training
Learn about the company,
learn mindset of a working member of society

Problem-solving training
Take up actual company issues andlearn to solve them through outside instructors

Overseas assignment training
Through overseas language learningand internships,
learn real-world English
and acquire the skills to play an active role
anywhere in the world

Personal development support

Nurture leadershipand captaincy
Boost comprehensive capabilities• Logical thinking• Understand/solve problems• Financial knowledge• Facilitation• Team-building• Marketing
Brother/sister training
Mentally prepare for,and learn how to do, OJTSupport in acquiring
qualifications,educational degrees

SD(Self Development)
schoolRecommended
program forpersonal development

Compliance education

49

Careerdevelopment
supportSupport forindependent careerdevelopment withthe goal of building
a career ideal to theindividual andcreating value

Language school training
Learn practical English

Self-learning support
Support to improvesecond-language ability

Corporate Data

SocialAbout ISK

• Training Achievements Data (Participants, Cost)

Diversity and Inclusion
The achievement of Vision 2030 will require the creation of workplaces where people with diverse values
and attributes can play their roles. We therefore are implementing measures for hiring and retaining adiverse range of individuals throughout ISK.
During the transition period of the new human resources system, we must not only operate the systemproperly in order to give everyone an equal opportunity to be promoted to managers and executives,
but also cultivate an organizational culture where employees can be trained and work with acceptanceand full utilization of their unique ideas and differences. This will help ISK make the most of people fromvarious backgrounds, regardless of their gender, nationality, age, or physical ability.

126

By Job Level
Participants (persons)
Cost (1,000 yen)
Cost per person (1,000 yen/person)

94

102
5,487

109

6,346

4,142

82
4,484

44

55

54

45

50

2016

2017

2018

2019

2020

4,938

(FY)

25

Selective Training
Participants (persons)
Cost (1,000 yen)
Cost per person (1,000 yen/person)

21

18
6,792

6,985

377

333

2016

2017

182

Language training
Participants (persons)TOEIC test takers (persons)
Cost (1,000 yen)
Cost per person (1,000 yen/person)

3,857

13,093

14
897

462

524

2018

2019

2020

199

204

3,198

3,608

44

46

182
4,148

70

80

69

2016

2017

2018

• Recruitment System for Diverse Human Resources
To ensure we receive job applications from a diverse range of candidates through various channels, in2019 we introduced a new recruiter system encompassing all job categories, including referrals, newuniversity graduates, and mid-career hires. We also have a return employees system that allows employees who left ISK for unavoidable reasons to join us again with their newfound experience and knowledge.
These systems give us access to a larger pool of human resources.

12,558

8,329

60

60

55

18

182
4,791

Value Creation Strategies Foundation for Value Creation

73

2019

(FY)

• Pleasant Work Environment
We have systems such as flextime and shortened work hours for child care. So that employees can moreeasily and effectively use these systems, we are gradually revising them in response to society’s changes
and employee needs, in addition to revising the requirements for employees using these systems.
To invigorate our organization and adapt to the needs of employees’ changing work patterns and worklife balance, we have expanded the ways that employees can take days off, such as hourly-basis timeoff, and we have revised the requirements for taking accumulated holidays.
With an eye to extending ISK’s retirement age to 65 and allowing employees to enjoy a long and healthy
work career, we are studying different ways to hire people and new types of working arrangements.

78

2020

(FY)

Effort of Boosting Employee Engagement• Diversity and Inclusion Achievements

To achieve sustainable growth, it is essential to create a virtuous circle of (1) raising work productivity
through more employee engagement, (2) ensuring competitiveness by boosting customer satisfaction,and (3) improving business performance.
With the introduction of the new human resources system in 2020, we gave a survey to all ISK employees with the goal of making employee awareness and organizational issues more visible. Survey results
showed that while there was a high level of satisfaction among employees, many did not realize the impact that changes in the business environment have on our company. It also showed that our high-level
concepts (mission, values, strategies, etc.) have not permeated well throughout ISK.
In response to these survey results, we have concluded that raising engagement is a crucial part ofcorporate growth and that we must conduct an engagement survey that takes into account employee
engagement and work engagement. We will thus conduct periodic engagement surveys to gauge thesituation and use what we learn in building better mechanisms and a better organizational structure.

Item
Percentage offemale employees (%)
Percentage ofmanagers amongfemale employees (%)

50

Stance

(FY)

2016

2017

2018

2019

2020

Systematically promote female employees 15.4 16.3 16.4 16.9 16.9
and set numerical targets for the percentage
of managers among female employees, andaggressively implement measures for building 7.2 7.1 8.0 8.0 6.7
a work environment conducive to women.

Percentage of
employees withdisabilities (%)

Aim not just to meet the legally mandated employment rate, but ensure that each
employee plays a vital and rewarding role in
the organization.

Percentage of
employees rehired
after retirement (%)

To make the most of individuals who have a
wealth of experience and are eager to work,
94.4 86.4 88.9 100 86.4
implement systems for rehiring employees
who have retired.

2.3

2.4

2.1

2.2

2.0

Corporate Data

Special Feature: The Dawn of New Products

About ISK

Value Creation Strategies Foundation for Value Creation

Using Knowledge to Directly Benefit Agriculture
The Central Research Institute in Kusatsu, Shiga Prefecture is the heart of ISK’s research and development.
About 180 researchers work by day and night in ongoing R&D of new chemicals for the market. We spoke with
one researcher, Azusa Morito, about her daily research activities. Ms. Morito is involved in research on Bemidetach ™,an glycerin acetic acid fatty acid (released in 2019 ) that keeps the sweetpotato whitefly (Bemisia tabaci) from damaging
tomato crops.
Exploring the Possibilities of Insect Behavior Regulators

Azusa Morito
Central Research Institute
Bioscience Research Laboratory

Ms. Morito joined the final stage of development of Bemidetach andcurrently researches ways to expand its application. Of the three Bemidetach researchers, her job focuses on conducting experiments
using plant viruses and behavior regulation of the whitefly.
“Our group works a little differently than others. We basically eachwork alone and when necessary conduct experiments together. So
I have to pretty much do everything on my own,” Ms. Morito said.
Her work covers the entire spectrum, including breeding insects,
growing the test crops, and detecting DNA and RNA viruses usinga PCR test, which many people have come to know because of the
COVID-19 pandemic.
Bemidetach is a behavior regulator that confuses adult whiteflies.
“Using an insecticide will kill most of the whiteflies, but some will
manage to survive. If this continues, subsequent offspring will develop a resistance to that insecticide. For this reason, the type ofchemicals that can be used against whiteflies are limited in major
production areas for crops like tomatoes and melons. Bemidetach,on the other hand, does not really physically alter whiteflies so they
don’t tend to develop a resistance to it,” Ms. Morito said.
Whiteflies acquired and transmitted the virus when they suck thesap from the leaves of a plant. If an insecticide is used, the whitefly

51

continues to transmit the virus until the insecticide’s active ingredient finally kills it. Bemidetach confuses the whitefly and makes
it hard for it to suck the leaf sap, thus effectively preventing thewhitefly from transmitting the virus.
In addition, according to Ms. Morito, “Bemidetach also inhibits thewhitefly’s mating behavior. The whitefly female can lay eggs without having mated with the male, but the offspring will all be male.
This will prevent propagation of the next generation. Since whiteflies
reproduce at about one generation per month, the effects of Bemidetach will manifest in three months.”
ISK Group is not the only one working on new types of agrochemicals. To stay ahead of competitors, it must generate data that shows
the advantages of its products.
“There are other chemicals that also have repellant and density inhibition properties, but we know that Bemidetach has unique properties of its own. We work day in and day out looking for ways to
use the product that maximize such strengths,” Ms. Morito said.
Devising how to get such data is one of Ms. Morito’s jobs.
“Because Bemidetach is unlike anything that has come before, I
have to come up with out-of-the-box experimental methods. This is
hard, but very interesting.”

Corporate Data

Special Feature: The Dawn of New Products

Ms. Morito is now researching ways to expand the range of applications for Bemidetach.
“We are currently studying to see if it’s possible to inhibit the activityof other pests, such as aphids and leafhoppers, that harm a large
variety of crops. Farmers are telling us they’d like to try Bemidetachwith other crops too, so we’re studying what other crops it could
be used on.”

About ISK“My husband also works at the Central Research Institute. He also
took a month and a half off work during that time, which was a big
help. There are more and more cases recently of couples at ISK taking
childcare leave together. My boss is a woman, so she understands mysituation and gives me useful advice.”
Ms. Morito can use flextime to choose her work hours, and she
doesn’t have to hesitate to take time off in case her child suddenly
gets a fever. She says that the work environment is much more conducive to women than it used to be.

Visible Progress Makes Every Day Fun
After studying plant pathology in graduate school at an agricultural
university in the Kanto region (eastern Japan), Ms. Morito joined ISK in2016 because she wanted to use her knowledge in the field of agriculture. She has since dedicated herself to research and development.
“I love making new discoveries, and that’s something a researcher isdoing all the time. My experiments generate new data, which helps
sell more of the chemicals I handle. I can actually see the fruits of mylabor, which really makes my job fun.”
Although she tackles problems with crops and insects every day in her
work, Ms. Morito had never touched an insect before she joined ISK.
“I chose this path because I liked Biology, so insects don’t bother me.
To get anoplophora malasiaca (white-spotted longicorn beetle) to use
in experiments, I once went to a test fruit orchard in Oita Prefecture(western Japan) and spent eight hours to get 100 of the insects. Because they live at the roots of the trees, I patiently searched for themwith crawling. It was fun—I felt like a kid collecting insects.” Still, she
has an aversion to caterpillars.
Ms. Morito is also the mother of an infant. After giving birth in 2020
and taking a year of childcare leave, she came back to work in April
2021.

10-odd Years to Develop a New Chemical
Ms. Morito hopes to someday branch out from research and development into other work areas.
“I chose ISK because I wanted to focus on research, but coming
into contact with people in other departments has widened mysphere of interests. Of course I want to do research, but I also wantto take on challenges that lead to product sales, such as doing
strategy planning in the marketing department. I’ve also become
interested in training human resources through participation in the
ISK union’s youth branch.”That being said, she still wants research to be the driving force ofher work at ISK.
“With Bemidetach, I joined at the last stage of product development. Next time, I want to be involved from the very start of development of a new chemical. Although development takes from
10-odd years, I think that if I am thoroughly involved in cultivatinga new product, I will have a real passion for it. I want to take onchallenges in new fields; new discoveries and ideas are constantly
sprouting up at the Central Research Institute, and I want to help

52

Value Creation Strategies Foundation for Value Creation

bring these to market to contribute to world food production.”
Talking about her home life, Ms. Morito says, “It is ideal that myhusband and I cooperate so that we can attain a work-life balance.
The many women at ISK who used to have a tough time balancing
work and home life did everything they could to change the company’s systems. These have helped make it much easier to work
as a woman at ISK today. I’m the type of person who doesn’t justwant to stay at home; I’d rather do experiments at work as well. I
love research; it’s so much fun.” With a big smile, she says, “I feelso lucky still be able to continue work as a researcher after got
married and had a child.”

Corporate Data

Financial and Non-Financial Summaries

About ISK

Value Creation Strategies Foundation for Value Creation

Financial Summary (Consolidated)
Fiscal year

(FY)

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

Profit and loss

2020
(Million yen)

Net sales

99,057102,378

100,441

105,293

103,330

102,903

101,601

108,001

106,441

101,066

101,774

Operating income

9,038

9,760

2,792

3,038

11,104

8,314

8,415

10,022

11,372

6,188

5,173

Net income attributable to owners of parent

4,850

2,710

719

-8,207

6,661

9,151

3,804

3,442

8,683

2,359

3,373

Current assets

93,882102,277

103,693

96,321

105,204

109,386

102,565

103,387

107,080

110,324

117,003

Property, plant and equipment

56,10753,90455,04647,15944,52538,73339,18340,843

43,167

46,271

47,107

Financial status(Million yen)

Intangible assets, investments and other assets

22,43918,553

17,71921,051

17,932

14,935

15,121

15,536

18,442

15,841

15,909Total assets

172,429

174,734

176,459

164,532

167,662

163,056

156,871

159,767

168,689

172,437

180,021

Current liabilities

58,11365,71264,71359,49556,892

49,72547,31047,99044,712

43,73742,203Long-term liabilities

66,15759,78459,90460,33759,99054,396

46,57944,63848,64252,02958,302

Total net assets

48,15849,237

51,842

44,69950,77958,93362,981

67,13775,33576,66979,515Interest-bearing debt

79,057

76,84385,77277,65478,73867,68658,781

51,32849,52852,531

60,103

Cash flows from operating activities

7,563

7,435

-7,19812,067

6,351

10,268

14,631

16,607

4,907

3,317

4,749

Cash flows from investing activities-1,345-4,239-5,734-4,125-3,214

9,656-5,950-6,030-8,590-6,922-6,162

Other(Million yen)Free cash flow

6,218

3,195

-12,932

7,941

3,136

19,925

8,681

10,577-3,682-3,605-1,413

Depreciation and amortization

5,627

5,597

5,699

5,271

4,757

4,458

4,215

4,214

4,266

4,445

4,669

Capital investment

5,413

4,369

6,127

2,758

3,049

4,507

5,407

6,142

7,141

8,062

6,092

R&D expenses

6,776

7,884

8,451

8,965

9,330

8,988

8,173

8,706

8,070

9,150

8,639

121.20

67.73

17.97

-205.19166.58228.88

95.15

86.12

217.25

59.03

84.41

-

-

-

-

-

-

-

-

12.00

20.00

18.00

Operating margin (ROS, %)

9.12

9.53

2.78

2.89

10.75

8.08

8.28

9.28

10.68

6.12

5.08

Per share status
Current net income per share
Dividends per share(Yen)

Financial indicators

Return on equity (ROE, %)

10.43

5.57

1.42

-17.00

13.95

16.68

6.24

5.29

12.19

3.10

4.32

Return on assets (ROA, %)

5.21

5.62

1.59

1.78

6.69

5.03

5.26

6.33

6.92

3.63

2.94

D/E ratio (double)

1.64

1.56

1.65

1.74

1.55

1.15

0.93

0.76

0.66

0.69

0.76

53

Corporate Data

Financial and Non-financial Summaries

About ISK

Value Creation Strategies Foundation for Value Creation

Non-Financial Summary

(FY)

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

22,09914,23010,347

12,078

9,516

9,669

8,471

7,812

5,011

6,532

5,478

82,594

69,64564,922

76,16670,947

79,202

67,88066,95866,38857,88458,540253,608

214,817

224,140

267,245

269,579

290,538

350,008

419,233

406,233

306,657

159,843

-

108.0

102.7

95.7

100.9

105.6

97.8

98.2

99.3

106.3

106.9

0.92

0.99

1.02

0.97

0.98

1.03

1.01

0.99

0.99

1.05

1.12

Frequency rate of lost-worktime injuries

0.49

0.51

0.00

1.13

0.59

1.15

2.29

0.56

1.07

1.01

0.50

Severity rate

0.01

0.01

0.00

0.05

0.08

0.04

0.09

0.00

0.01

0.02

0.07

Fiscal year
Atmosphere SOx (consolidated)
SOx emissions (Nm3/year)
Water quality COD (consolidated)
COD (kg/year)
Water quality Nitrogen (consolidated)
Nitrogen pollutant load (kg/year)
Energy-related (consolidated)
Year-on-year comparison of energy intensity (%)
Energy intensity (kl/t)
Workplace accidents (consolidated)

CO2 emissions (consolidated)
Year-on-year comparison of CO2 emissions from
Yokkaichi Plant and Fuji Titanium (%)
CO2 emissions from Yokkaichi Plant and Fuji Titanium (t)

104.1

107.6

84.5

105.7

91.8

100.2

102.9

100.7

90.8

98.1

91.5

533,885574,292

485,346

513,222471,284

472,335

486,087

489,507444,557

436,283

399,181

116,377

102,566

100,708

100,095

98,353

96,21092,62988,99081,46977,93563,076

Number of male employees

983

1,032

1,019

1,008

967

935

912

870

895

919

955

Number of female employees

168

167

173

172

173

171

166

170

175

187

194

Male employee ratio (%)

85.4

86.1

85.5

85.4

84.8

84.5

84.6

83.7

83.6

83.1

83.1

Female employee ratio (%)

14.6

13.9

14.5

14.6

15.2

15.5

15.4

16.3

16.4

16.9

16.9

Waste (consolidated)
Disposed volumes of industrial waste (inorganic sludge) (t)Number of employees (non-consolidated)

Number of female employees, manager ratio(non-consolidated)
Number of female managers

5

6

8

8

10

12

12

12

14

15

13

Female manager ratio (%)

3.0

3.6

4.6

4.7

5.8

7.0

7.2

7.1

8.0

8.0

6.7

Number of employees taking childcare leave

11

9

8

15

21

14

12

14

13

18

22

75.1

77.6

72.0

71.6

74.4

77.6

75.4

75.9

75.6

77.0

73.6

Annual paid leave acquisition rate (%)
Other (non-consolidated)
R&D employee ratio (%)

24.2

23.9

24.4

24.1

23.1

21.6

22.7

22.9

22.0

22.0

20.9

Number of patents held

1,348

1,437

1,576

1,800

1,743

2,070

2,353

2,788

2,866

2,714

2,593

54

Corporate Data

Consolidated Financial Statements

About ISK

Consolidated Balance Sheet(Unit: millions of yen)Previous consolidated
FY (March 31,2020)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable – trade
Merchandise and finished goods
Work in process
Raw materials and supplies
Other
Allowance for doubtful accounts
Total current assets
Noncurrent 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
Land
Leased assets
Accumulated depreciation
Leased assets, net
Construction in progress
Other
Accumulated depreciation
Other, net
Total property, plant and equipment
Intangible assets
Leased assets
Other
Total intangible assets
Investments and other assets
Investment securities
Deferred tax assets
Net defined benefit asset
Other
Allowance for doubtful accounts
Total investments and other assets
Total non-current assets
Total assets

Value Creation Strategies Foundation for Value Creation(Unit: millions of yen)

Current consolidated
FY (March 31,2021)

20,92532,05932,664
6,047
15,004
4,683(1,060)110,324

25,941
34,23531,1805,040
18,253
3,456(1,104)
117,003

39,904(25,219)
14,685
111,047(93,371)
17,676
5,373
2,675(1,608)
1,067
6,632
3,922
(3,086)836
46,27140,810(26,136)
14,674
114,944(94,845)
20,0995,356
2,195(1,375)
820
5,319
4,026
(3,188)837
47,107

8
461
470

3
547
551

5,932
8,427
9
1,085
(84)
15,371
62,112
172,437

6,187
8,547
10
698
(84)
15,35863,017
180,021

Liabilities
Current liabilities
Notes and accounts payable – trade
Short-term loans payable
Current portion of long-term loans payable
Current portion of bonds
Lease obligations
Accrued income taxes
Accrued expenses
Accrued bonuses for employees
Reserve for sales returns
Provision for environment and safety improvement
Provision for maintenance
Provision for loss on business withdrawal
Other
Total current liabilities
Long-term liabilities
Bonds payable
Long-term loans payable
Lease obligations
Provision for environment and safety improvement
Provision for maintenance
Provision for loss on business withdrawal
Net defined benefit liability
Asset retirement obligations
Liabilities from application of equity method
Other
Total long-term liabilities
Total liabilities
Net assets
Shareholders’ equity
Capital stock
Capital surplus
Retained earnings
Treasury shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Total net assets
Total liabilities and net assets

55

Previous consolidated
FY (March 31,2020)

Current consolidated
FY (March 31,2021)

17,433
7,932
7,937
684
467
371
4,359
667
24
34
382
3,444
43,737

14,476
8,100
8,323
1,118
403
614
4,419
641
21
82
193
3,807
42,203

3,036
28,053686
2,052
12,884
682
399
4,234
52,02995,767

5,017
33,130
491
1,741
140
86
12,693
552
451
3,997
58,302
100,506

43,42010,62725,298(727)
78,61843,42010,627
27,872(730)
81,189(429)(1,216)(302)(1,948)76,669172,437(308)(1,286)(78)(1,674)79,515
180,021

Corporate Data

Consolidated Financial Statements

About ISK

Consolidated Statements of Income

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Share of profit of entities accounted forusing equity method
Foreign exchange gains
Reversal of allowance for doubtful
accounts
Gain on sales of raw materials
Other
Total non-operating income
Non-operating expenses
Interest expenses
Financial fees
Foreign exchange losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on insurance adjustment
Total extraordinary income
Extraordinary loss
Loss on disposal of non-current assets
Impairment loss
Loss on business withdrawal
Loss on liquidation of subsidiaries andassociates
Other
Total extraordinary losses
Income before income taxes
Income taxes – current
Income taxes – deferred
Total income taxes
Net income
Profit attributable to owners of parent

Consolidated Statement of Comprehensive Income(Unit: millions of yen)Previous consolidated
FY (April 1,2019 toMarch 31,2020)(Unit: millions of yen)

Current consolidated
FY (April 1,2020 toMarch 31,2021)

101,066
69,991
31,07424,886
6,188

Value Creation Strategies Foundation for Value Creation

Previous consolidated
FY (April 1,2019 toMarch 31,2020)

101,774
73,151
28,622
23,448
5,173

56
286

26
262

214

38

-

597

26

457

92
221
899

155
263
1,802

609
274
489
368
1,742
5,345

537
273
220
1,032
5,944

193
193

-

607
419
-

677
421
907

334

-

81
1,443
4,095
457
1,278
1,736
2,359
2,359

2,006
3,938
819
(254)
564
3,373
3,373

Net income

2,359

3,373

Other comprehensive income
Valuation difference on available-for-salesecurities
Foreign currency translation adjustment

(907)

120

Remeasurements of defined benefit plans
Share of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable toowners of parent

56

Current consolidated
FY (April 1,2020 toMarch 31,2021)

166

(48)

139

223

60

(21)

(540)

274

1,819

3,647

1,819

3,647

Corporate Data

Consolidated Financial Statements

About ISK

Value Creation Strategies Foundation for Value Creation

Consolidated Statement of Changes in Net Assets
Previous consolidated FY (April 1,2019 to March 31,2020)(Unit: millions of yen)

Shareholders’ equity
Capital stock Capital surplus
Balance at beginning ofcurrent period

43,42010,627Retainedearnings

Accumulated other comprehensive income

Total
Valuation difference Foreign currency Remeasurements Total accumulated Total net assets
Treasury share shareholders’ on available-fortranslationof defined benefit other comprehensive
equitysale securities
adjustment
plansincome23,419(722)

76,744477(1,443)(442)(1,408)75,335

Changes of items during period
Dividends of surplus

(479)

(479)

(479)

Profit attributable to ownersof parent

2,359

2,359

2,359

(5)

(5)

(5)

0

0

0

Purchase of treasury shares
0

Disposal of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of period

(907)

227

139

(540)

(540)

-

0

1,879

(5)

1,874

(907)

227

139

(540)

1,334

43,42010,62725,298(727)

78,618(429)(1,216)(302)(1,948)76,669Current consolidated FY (April 1,2020 to March 31,2021)(Unit: millions of yen)

Shareholders’ equity
Capital stock Capital surplus
Balance at beginning of current period

43,42010,627Retainedearnings
25,298

Accumulated other comprehensive income

Total
Valuation difference Foreign currency Remeasurements Total accumulated Total net assets
Treasury share shareholders’ on available-fortranslationof defined benefit other comprehensive
equitysale securities
adjustment
plansincome(727)

78,618(429)(1,216)(302)(1,948)76,669Changes of items during period
Dividends of surplus

(799)

(799)

(799)

Profit attributable to ownersof parent

3,373

3,373

3,373

(3)

(3)

(3)

Purchase of treasury share-

Disposal of treasury shares
Net changes of items otherthan shareholders’ equity
Total changes of items during
periodBalance at end of period

120

(70)

223

274

274

-

-

2,573

(3)

2,570

120

(70)

223

274

2,845

43,42010,627

27,872(730)

81,189(308)(1,286)(78)(1,674)79,51557

Corporate Data

Consolidated Financial Statements

About ISKStatement of Consolidated Cash Flows(Unit: millions of yen)

(Unit: millions of yen)Previous consolidated Current consolidated
FY (April 1,2019 to FY (April 1,2020 toMarch 31,2020)
March 31,2021)

Previous consolidated Current consolidated
FY (April 1,2019 to FY (April 1,2020 toMarch 31,2020)
March 31,2021)

Cash flows from operating activities

Cash flows from investing activities

Income before income taxes

4,095

3,938

Depreciation and amortization

4,856

5,052

419

421

-

907

Impairment loss
Loss on business withdrawal

Value Creation Strategies Foundation for Value Creation

Purchase of investment securities

(140)

(12)

Purchase of non-current assets(6,716)(6,150)

Proceeds from sales of noncurrent assets

107

92

Payments of loans receivable

(353)

(227)

Collection of loans receivable

159

142

Other

21

(5)

(6,922)(6,162)(68)

168

Proceeds from long-term loans payable

12,15013,400(11,959)(7,937)

Loss on liquidation of subsidiaries and associates

334-

Increase (decrease) in allowance for doubtful accounts

565

(436)

Increase (decrease) in net defined benefit liability

211

(69)

Increase (decrease) in provision for loss on liquidation of subsidiaries and associates(0)-

Increase (decrease) in provision for environment and safety improvement

(874)

(262)

Increase (decrease) in other provisions

159

(362)

Interest and dividend income

(343)

(289)

Interest expenses

609

537

Foreign exchange losses (gains)

31

(68)

(131)

(34)

Repayments of long-term loans payable
Proceeds from issuance of bonds

2,100

3,100

Redemption of bonds

(390)

(684)

Repayments of lease obligations

(534)

(491)

Repayments of installment payables

(261)

(393)

Dividends paid

(479)

(799)

(4)

(3)

552

6,358

(5)

69

Net increase (decrease) in cash and cash equivalents(3,058)

5,015

Cash and cash equivalents at beginning of period

23,98320,925

Cash and cash equivalents at end of period

20,92525,941

Share of (profit) loss of entities accounted for using equity method

180

148

Decrease (increase) in notes and accounts receivable – trade

1,696(2,155)Decrease (increase) in inventories(7,245)(627)

Decrease (increase) in other current assets(1,228)942

Increase (decrease) in notes and accounts payable – trade

2,387(3,187)

Increase (decrease) in other current liabilities

(920)

913

Other

(247)

(25)

Subtotal

4,556

5,341

Interest and dividends income received

340

268

Interest expenses paid

(601)

(571)

Proceeds from insurance income

302

27

Payments for loss on disaster

(282)

-

Income taxes paid

(997)

(315)

Cash flows from operating activities

3,317

4,749

Loss (gain) on disposal of noncurrent assets

Cash flows from investing activities
Cash flows from financing activities
Net increase (decrease) in short-term loans payable

Net decrease (increase) in treasury share
Cash flows from financing activities
Effect of exchange rate change on cash and cash equivalents

58

Corporate Data

History of ISK

About ISK

Value Creation Strategies Foundation for Value Creation

1920–1945:

1945–1960:

1960–1990:

1990–2010:2010–2020:

The Spirit of Challenge
in Our DNA

The Curtain Rises on
a New Era

Reaching Out toGlobal Markets

Social Responsibility
as a Global Citizen

Becoming a Strong,
Trusted Chemical Company

1920 ISK commences operation of an iron-ore
mine on the Malay Peninsula. ISK has been
meeting difficult challenges on the global
stage since its founding.

1950 ISK begins producing agrochemicals,a cornerstone of the organic chemicals business, and becomes a pioneer in selective
herbicides.

ISK responds to rapidly rising domestic andinternational demand for titanium dioxide by
expanding its production facilities, becoming amajor global producer.

1999 After embarking on pharmaceutical production, ISK takes on challenges in life sciences, including the gene therapy business.

ISK begins its shift from general products
to highly functional and high value-added
products, and launches full-scale sales ofsuper-weather-resistant titanium dioxide.

1924 ISK begins handling its own ore
shipping. Ships flying the company flagply the oceans.

1954 ISK begins producing titanium dioxide,a cornerstone of the inorganic chemicals
business, and becomes a top domestic
producer.

ISK weathers changes in the agrochemicals market and moves boldly to strengthen its in-housedevelopment capabilities. After careful preparation, the company sets a course for world markets.

2005 ISK embarks on 100% Ferosilt recovery and processing, achieving the goal in 10
years.

ISK enters the agrochemical business in
Brazil and India, strengthening its global
competitiveness.

1934 The opening of the Kishu Mine, and the1941 launch of operations at the Yokkaichi
Plant, lay the foundations of ISK’s domestic
business.

ISK’s business focus shifts from mining tochemicals. In 1958 it opens a research institute in Yokkaichi and embarks on extensive
R&D efforts.

ISK focuses its resources on environmental preservation, becoming one of the firstindustrial companies to build a comprehensive water treatment facility in 1970.

2008 ISK publicizes the results of its comprehensive compliance audit. The company
mounts a unified effort to rebuild trust.

2018 ISK receives approval for domestic
manufacture and sale of the world’s first anti-pancreatitis agent for dogs. In 2020, ISK celebrates the 100th anniversary of its founding.

100th anniversary special website

59

Corporate Data

Company Profile / Group Bases

About ISK

Company Profile

Value Creation Strategies Foundation for Value Creation

Network / Group Companies

Company Name

ISHIHARA SANGYO KAISHA, LTD.

Network

Head Office Location

3-15 Edobori 1-chome, Nishi-ku, Osaka
550-0002, Japan
Tel: +81-6-6444-1451

Head Office, Central Research Institute, Yokkaichi Plant, Tokyo Branch,

Founded

September 10, 1920

Affiliated companies

Incorporated

June 1, 1949

Representative

Hideo Takahashi, Executive Director & President

Capital43.4 billion yen

Sales

83.1 billion yen (Fiscal year ending March 31, 2021)

Number of Employees

1,149 (As of March 31, 2021)

Chubu Branch, Sapporo Sales Office, Sendai Sales Office,Fukuoka Sales Office, Argentina Branch, Singapore Branch(4 companies in Japan)

ISK BIOSCIENCES K.K.
ISHIHARA TECHNO CORPORATION
FUJI TITANIUM INDUSTRY CO., LTD.
ISK ENGINEERING PARTNERS CORPORATION(8 companies outside Japan)

ISK AMERICAS INCORPORATEDISK BIOSCIENCES CORPORATIONISK BIOCIDES, INC.
ISK ANIMAL HEALTH, LLC
ISHIHARA CORPORATION (U.S.A.)ISK MAGNETICS, INC.
ISK BIOSCIENCES EUROPE N.V.
ISK TAIWAN CO., LTD.

Other Affiliated Companies(4 companies in Japan)

ISHIHARA SANSO KAISHA, LTD.
ISHIHARA KOSAN CO., LTD.
GENOMIDEA INC.
HOKUSAN CO., LTD.
(10 companies outside Japan)

BELCHIM CROP PROTECTION N.V.
SUMMIT AGRO USA, LLC
ISK BIOSCIENCES DO BRASIL DEFENSIVOS AGRICOLAS LTDA.
ISK KOREA CORPORATIONISK BIOSCIENCES KOREA LTD.
ISK BIOSCIENCES (THAILAND) LTD.
ISK BIOSCIENCES INDIA PVT. LTD.
ZHEJIANG ISK & TAURUS CHEMICAL CO., LTD.
ISK (SHANGHAI) CHEMICAL CO., LTD.
AVC CHEMICAL CORP.

60

Corporate Data

Stock Information

About ISK

Stock Information (As of March 31, 2021)

Major Shareholders

Total Number of Shares Authorized

100,000,000 shares

Total Number of Shares Outstanding

40,383,943 shares

Number of Shareholders

27,032

Stock Exchange Listing

Tokyo Stock Exchange, First Section

Stock Code

4028

Investment in ISK
Shareholder

Shareholder Composition
Securities firms

Treasury stock

3.61%

1.06%

Foreign individuals

Individuals, other24.34%

32.86%

Number of shareholders

Value Creation Strategies Foundation for Value Creation

Number of shares held
(thousands)

Shareholding ratio (%)

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

2,513

6.29

Custody Bank of Japan, Ltd. (trust account)

2,094

5.24

MITSUI & CO., LTD.

2,019

5.05

Toagosei Co., Ltd.

1,722

4.31

BNP PARIBAS SECURITIES SERVICES PARIS/JASDEC/FBB SEC/BELCHIM MANAGEMENT

1,450

3.63

UPL Japan GK

1,170

2.93

Ishihara Sangyo Kaisha Client Stock Ownership Association

955

2.39

Ishihara Sangyo Kaisha Employee Stock
Ownership Association

809

2.03

INTERACTIVE BROKERS LLC

714

1.79

DFA INTL SMALL CAP VALUE PORTFOLIO

615

1.54

Note: The shareholding ratio is calculated after deducting treasury stock.

Stock Price and Trading Volume

27,032
Total number of shares outstanding

Price (Yen)

40,383,943

Volume (thousand shares)

1,500

15,0001,000

10,000500

5,000

Other Japanese corporations

16.57%

Financial institutions

21.56%

Total Shareholder Return(Unit: %)FY2016FY2017FY2018FY2019FY2020

ISK

144.5

169.1

148.1

75.8

124.8

TOPIX

114.7

132.9

126.2

114.2

162.3

TOPIX Chemical

128.3

158.9

152.4

141.6

191.4

0

10

11

2019

12

61

1

2

3

4

5

6

7

2020

8

9

10

11

12

1

2

3

4

5

2021

6

7

8

9

(Month) 0(Year)

Corporate Data

Editorial Policy

About ISK

Value Creation Strategies Foundation for Value Creation

Editorial Policy

WebsiteThis integrated report is intended to provide stakeholders with integrated financial
and non-financial information on ISK Group (on a consolidated basis), which operates
in and outside Japan. The report includes business results, as well as management
policies and business strategies for creating value in the medium to long term.

ISHIHARA SANGYO KAISHA, LTD. Official Website
https://www.iskweb.co.jp/eng

Corporate Data

Coverage
Organizations: Ishihara Sangyo Kaisha, Ltd. (ISK)		and its consolidated subsidiaries and affiliates
Period: Fiscal 2020
(April 1, 2020 to March 31, 2021)
Note: The report contains some information prior to and after this period.

Referenced Guidelines

Investor Relations
https://www.iskweb.co.jp/eng/ir/

Integrated Reporting, International Integrated Reporting Council (IIRC)
Guidance for Collaborative Value Creation; Ministry of Economy, Trade and Industry, Japan
Environmental Reporting Guidelines (2018 version), Ministry of the Environment, JapanGRI Standards, Global Reporting Initiative (GRI)• Latest stock price information• Topics• Latest IR materials• Management policies and organization• IR library• Stock information

Environmental Policy
https://www.iskweb.co.jp/eng/environment/• Basic policies on environmental protection andsafety/health promotion• Environment, safety, and health management system• Environmental protection activities• CSR report, Responsible Care data
• Others, joint efforts with government andoutside organizations62

3-15 Edobori 1-chome, Nishi-ku,
Osaka 550-0002, Japan
Tel: +81-6-6444-1451
Inquiries
https://www.iskweb.co.jp/eng/contact/