Integrated Report2022About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

A special world’s-first, from ISK

One & Only
Blue hue that you won’t find in the natural world.
Blue Gene™, which was developed by ISK, is the world’s firstphalaenopsis to produce natural blue flowers.
Using proprietary biotechnology, we added a gene for blue color
from the Asiatic dayflower to phalaenopsis, which doesn’t havegenes for producing blue pigment, to realize an elegant and refined
blue hue.
The project took 17 years from the start of development. After
carrying out numerous tests and surveys to verify that the plant
would not impact biodiversity, we received approval for it in Japan.
In June 2022, sales of the long-awaited flower began. The result
is a one and only product unique in the world and available only
from ISK.
01

2021 Business in Brief

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Key Figures Fiscal year ended March 31, 2022
Net Sales

110.9

11.5

billion yen

Capital Adequacy Ratio

49.5

%

EuropeAsia

Net Sales 16.4 billion yen

Net Sales 26.7 billion yen

Sales Composition
Ratio

15 %

Sales Composition
Ratio

24 %

Number of Group Bases 2

Number of Group Bases 8

Products

Products• Major countries and regions in each category (excluding number of group bases)
EuropeGermany, Netherlands, France, UK, Belgium, Italy, Eastern Europe, Middle East
Asia
China, Taiwan, South Korea, Thailand, Indonesia, Singapore, India
Americas US, Canada, Brazil, Argentina, Mexico
OthersAustralia, New Zealand, Africa• Pictograms representing major products( The product with the highest sales in each region is shown in a larger size.)

Operating Margin

Operating Income

10.4

billion yen

13.6

%

R&D Expenses

8.1

ROE

%

Number of ISK Group Employees

1,750

billion yen

JapanAmericas

Net Sales 50.4 billion yen

Net Sales 16.9 billion yen

Sales Composition
Ratio

Sales Composition
Ratio

46 %

15 %

Number of Group Bases 8

Number of Group Bases 10

Products

Products

OthersNet Sales 300 million yen
Products

Titanium
dioxideFunctional Agrochemicals Animal healthBluematerials
products phalaenopsis

02

Major Businesses and Distinctive Products

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

TIPAQUE™ titanium dioxide × Housing

Electronic component materials (functional materials) × Smartphones

products, is a main product of our inorganic chemicals business.

We’ve been rolling out a series of high-value-added titanium dioxide products with previously

We’re rolling out products with a variety of functions based on our proprietary inorganic synthesis

Among the titanium dioxide manufacturers in Japan, we’re theunavailable features, for example products having high weatherability, under the TIPAQUE™

technologies and particle control technologies. Among them, our high-purity titanium dioxide productonly company that owns the low-environmental-impact method

brand in the domestic and international markets through meticulous customer service andis contributing to developments in information and communication technology by accommodating

for producing the material (the chloride process). In recent

technological capabilities accumulated over many years. Those products are part of our strategy to

demand for more compact, higher-performance electronic components. We’ll continue to pursue

years, several highly functional, high-value-added products haverealize sustainable growth by supplying “valuable richness and colors.” This strategy is beneficial

functions that help improve life in a broad array of fields, including electro-conductive materials thatemerged as new growth sectors, including electronic component

from the perspective of the SDGs—for example by working to conserve resources—in a way thatprevent static buildup, ultrafine-particle titanium dioxide for use in sunscreens, and photocatalysts

materials, electro-conductive materials, and heat shield materials.

differs from the conventional approach of quantitatively expanding sales of commodity products.

for manifesting antibacterial and anti-virus properties in air purifiers.

Cyazofamid (agrochemical product) × Potatoes

BRENDA™ (animal health product) × Pet dogs

technology, we’re currently one of the leading exporters by value

Potato late blight is a major disease that caused a famine in Ireland during the 1840s. Even

Taking advantage of fuzapladib sodium hydrate, an active ingredient created using technology

in Japan. We’ve made solid progress in gaining a foothold in thetoday, this disease is so difficult to control that it can lead to a complete loss of affected crops

for producing new agrochemicals, we developed the anti-pancreatitis drug BRENDA™, theEuropean and U.S. markets. Our future focus will be on expansion

when they fail to control. Cyazofamid is highly effective against this disease even when usedworld’s first product of its kind for dogs. In September 2018, we received approval from theto the new fields such as active pharmaceutical ingredientsat low concentrations. The product is widely used in regions where late blight is problematicJapanese Ministry of Agriculture, Forestry and Fisheries to manufacture and sell the drug

and animal health products by taking advantage of our organic

since it offers particularly good benefit to harvested potatoes by preventing them from rotting.

indicated for use in improving the management of clinical signs symptoms associated with

Inorganic Chemicals Business“One & Only” products
for daily life, comfort,
and the environment
Paints, plastics, inks, cosmetics, chemical fibers... Titanium
dioxide, which is used as an excellent white pigment in numerous

Organic Chemicals Business“One & Only” products
for food, health, and life
In our organic chemicals business, we manufacture and distributeagrochemicals such as herbicides, fungicides, and insecticides.
As the industry pioneer that first introduced chemical pesticide

synthesis technologies.

acute onset of pancreatitis in dogs. We’ll continue to provide superb products that meet theneeds of pet owners and animal healthcare professionals.

03

Vision 2030

About ISK

Vision 2030 Summary

Value Creation Strategies

Foundation for Value Creation

Corporate Data

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

For Transforming Lives Through the Power of Chemistry
The ISK Group formulated Vision 2030, its long-term vision, in 2020 on the 100th anniversary of its founding. In addition to
helping realize a sustainable society in line with our corporate purpose of “To continue contributing to better living environments
through chemical technologies,” we will work to improve corporate value through our business activities.

Preconditions: Megatrends and Stakeholders

Megatrends

Vision 2030 presupposes numerous worldwide changes that will likely arise by 2030, including climate change and food problems.

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

How will these changes affect our stakeholders such as customers, shareholders, and investors? How can we contribute to ourstakeholders in the face of these changes? After much debate in-house, we have summarized the initiatives that must be taken
in our various businesses.

Value Provided by ISK and Our Initiatives
Inorganic chemicals business

Stakeholders

Shareholders and investors
Local communities
Customers and business partners
Employees

Organic chemicals business

Create new value based on the technologies developed for titanium dioxide products, to support the environment and digital

Supply unique products that directly enhance customer value across the world, and support people’s nutrition, health and life tosociety, and contribute to realizing a sustainable society.

contribute to realizing a sustainable society.

Titanium dioxide
Functional materials
Environmental products

Providing a variety of colors and hues
Creating a range of comfort
Achieving both innovation and environmental protection

Agrochemicals
Animal health products
Pharmaceuticals-> 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 andthe electrification of automobiles through functional materials-> Reducing environmental impacts while streamlining production through a revolution in production structures

Improving agricultural production stability and quality
Protecting the lives and health of pets
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 stable manner 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• Operating margin of 15% or more

• ROE 10% or more
• Continued stable return for shareholders

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

04

Purpose and Corporate Philosophy

PurposeTo continue contributing tobetter living environments
through chemical technologies.

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Corporate Philosophy
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

Code of Conduct• At Ishihara 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.

05

Contents

About ISK

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

01
02
03
04
05
06

Introduction
2021 Business in Brief
Major Businesses and Distinctive Products
Vision 2030
Purpose and Corporate Philosophy
Contents

Value Creation Strategies

Message from the President

About ISK

29
31
33
34
36
41
43
45
46
51
57
59
61
65
66
67
68

Stakeholder Engagement
Board of Directors and Executive Officers
StatusA Dialogue among ISK’s Outside Officers
Corporate GovernanceRisk Management
Compliance
Responsible Care Activities
Environment
SocialSpecial Feature: Diversity Messages
Financial and Non-Financial Summaries
Consolidated Financial Statements
History of ISK
Company Profile / Group Bases
Stock Information
Editorial Policy

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Corporate Data

Challenge of New Growth
Strategies to Achieve
Vision 2030

07
11
12
13
14
15
17

Message from the President
Value Creation Process
Source of Value Creation
Input and Output
Non-Financial Highlights
Materiality
Message from the Director of Finance & Accounting Headquarters
Overview by Business
1 9 Inorganic Chemicals Business
2 1 Organic Chemicals Business (Agrochemicals)
23 Organic Chemicals Business (Healthcare)
24 Message from the Director of the Central Research Institute
26 Special Feature: The story of Blue Gene’s development
27 Message from the Director of the R&D Strategy Headquarters

Foundation for Value Creation

One year has passed since I became president. I’ve been continually
thinking about what I should do, and at long last I’ve arrived at aconclusion. I’ve realized that I should create a new business and rebuild
the Yokkaichi Plant. The only way to change people’s lives for the betterby using the chemical technologies that are the ISK Group’s greatest
strength is to challenge new policies that are not merely extensions ofexisting ones. I want to help the ISK Group grow into an enterprise thatprovides satisfactory performance to all stakeholders.
Executive Director and President

Hideo Takahashi

07

Message from the President

Challenge of New Growth Strategies to Achieve Vision 2030
One year has passed since I became president. I’ve been continually thinking about what I should do, and atlong last I’ve arrived at a conclusion. I’ve realized that I should create a new business and rebuild the Yokkaichi
Plant. The only way to change people’s lives for the better by using the chemical technologies that are the ISKGroup’s greatest strength is to challenge new policies that are not merely extensions of existing ones. I want tohelp the ISK Group grow into an enterprise that provides satisfactory performance to all stakeholders.

Special Feature

About ISKDiverse Human Resources and Multifaceted Careers

Technical Improvement on
the Front Lines of
Manufacturing

Value Creation Strategies

Foundation for Value Creation

Corporate Data

All kinds of people—irrespective of their gender, nationality, and home life situation—work in the ISK Group. We

Diversity Messages

spoke with six of them about what makes their jobs worthwhile, how they achieve a work-life balance, and what
their future dreams are.

Maintaining Boilers,the Heart of
the Yokkaichi Plant

Seeking Sustainable
Solutions forWorldwide Agriculture

Kumiko Azuma
Manager, Organic Manufacturing Division,
Yokkaichi Plant

Yurika Hiramatsu
Energy Management Group, Yokkaichi Plant

Noureldin Ghazy
Manager, Bioscience Research Laboratory,
Central Research InstituteMy department produces and packages agrochemicals at the Yokkaichi Plant, andI majored in electrical science at a college of technology, and I have always wanted

I am a researcher in ICM (Integrated Crop Management) Group of the Bioscience

my main job is operations management of agrochemicals formulation. In addition toto work at a power plant.

Research Laboratory at the Central Research Institute. Finding creative solutions for

ensuring that daily manufacturing proceeds according to plan, I also work on improving

I currently conduct maintenance of all utilities equipment used in the Yokkaichi

agricultural pests is my primary responsibility. Efforts focus on implementing andyield and manufacturing capacity. Two assignments previous, in the department for

Plant, including things like boilers and generators. I also study ways to save energy

integrating beneficial organisms and natural products in pest control programs.

research into agrochemical formulation, I built up experience and confidence, and thethroughout the plant and to achieve carbon neutrality in future.

Working at ISK, a well-established company, provides me with career development

department supervisor recommended me for a managerial position.

At first I was a little hesitant because I was surrounded by male coworkers, butopportunities to put science into action and contribute to society.

My husband also works at ISK, and he spent about a year away working at anotherthey help me with the strength aspects of the job so I don’t have too big a physicalI worked in academia for nearly 20 years before joining ISK. I had never imagined

location. My request to be transferred to the same location was granted, and we now

burden. Because I manage utilities equipment, I must always be mentally awarethat working in industry would be this much enjoyable. The people here are nice andenjoy our home life together. We share housework duties as much as possible—forof the importance of preventing problems at all costs. But it’s this knowledge

friendly. They are ready and willing to give support at any time. With such a productive

example, whichever of us gets home from work first makes dinner—so things are easierthat I am supporting the plant’s lifelines that gives me a sense of reward andenvironment, we will leverage our diverse know-how to strengthen ISK’s business

now than when we lived apart.

accomplishment.

further, take on new challenges, and create new business.

I want to build up experience in the manufacturing department so that I can become

In order to advance my career and become a true professional, I am constantly

Contribution to the prosperity of humankind is my goal in life. I am aspired to be

more knowledgeable, get a better sense of my job, and eventually think in terms ofstudying and acquiring certifications.

an influential member of a corporation that aims to provide unique and innovative

linking agrochemical formulation research to manufacturing. And with the aim of

I have been able to broaden my horizons by taking part in various projects, and I

technologies and products that meet customers’ expectations. In line with the ISK

achieving a manufacturing site where anyone, no matter how strong they are, feels

hope to experience a wide range of work. My aim is to leverage this experience tophilosophy, I want to deliver intelligent, reliable, and sustainable solutions to agriculture

confident they can operate machinery, I want to give my input on how equipment canhelp women play a more active role at manufacturing sites, and eventually become

industries in Japan and worldwide. I strive to achieve scientific, social, and personal

be improved.

a manager myself.

success through my work at ISK.

57

Diversity Messages

Diverse Human Resources and Multifaceted Careers
All kinds of people—irrespective of their gender, nationality, and home life situation—work in the ISK Group. We
spoke with six of them about what makes their jobs worthwhile, how they achieve a work-life balance, and what
their future dreams are.

06

Message from the President

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Challenge of New Growth
Strategies to Achieve
Vision 2030
One year has passed since I became president. I’ve been continually
thinking about what I should do, and at long last I’ve arrived at aconclusion. I’ve realized that I should create a new business and rebuild
the Yokkaichi Plant. The only way to change people’s lives for the betterby using the chemical technologies that are the ISK Group’s greatest
strength is to challenge new policies that are not merely extensions ofexisting ones. I want to help the ISK Group grow into an enterprise thatprovides satisfactory performance to all stakeholders.
Executive Director and President

Hideo Takahashi

07Message from the President

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Growth Policies and Purpose

It’s been my experience that when people responsible for operating an existing business think about a new business, they’re prone to

A Better Living Environment by Pursuing “One & Only” Approach

think about it as an extension of their current strengths. We’ve already thought about such ideas in the past, and presumably so have ourOur two flagship products are titanium dioxide and agrochemicals. Both are essential for our lives. Although both markets are in quite

we fail to make such a leap, that business consequently would not yield net sales in excess of 10 billion yen. We’ll need to enlist outside

tough competition, we can compete sufficiently if we can supply standout products that make say “that’s ISK.” The key to future growthcooperation, particularly start-ups, but the likelihood of success will be low if we blindly check with them. In light of this fact, I decided

will be how well we can pursue our “One & Only” approach to realize products that differ from those of competitors.

we at first should determine the direction of our efforts. We do not narrow things down too much, and it might be possible that the new

The ISK Group’s inorganic chemical product when I came to ISK 40 years ago was general-purpose white pigment only. At the time, webusiness involves a field other than chemicals. The committee’s deliberations have the ambiance of a serious attitude for development

often discussed whether that would be enough to allow us to survive competition with major manufacturers in the world. We already knew

and exploration of unprecedented activity and business. We hope that we take advantage of the people’s knowledge and experience, whothat titanium dioxide had a variety of functions. After several years since I started working, I engaged in the development of functional

have made success in the new business and who have failed.

materials. We succeeded in developing some products such as electro-conductive materials, which we have been producing and selling

Once we’ve determined our general direction, we would like to look for the candidates as our partners, for example through startup events.

to date. One path forward leads ISK to survive in the future is to develop new products that don’t exist anywhere else. I have been keeping

The young and mid-level members of the committee will lead such effort to find potential partners, but I’m planning to attend it, too.

that faith, and still never change.

Our goal is to enable us to make the initial moves during the period covered by Vision 2030 Stage II, the next medium-term business plan

However, it’s not enough to just develop products just new to the market. We also need to develop materials and products that provide(fiscal 2024 to 2026). We will set up a new organizational entity, either a department or headquarters, and add new R&D personnel tosolution to challenges and realize “better living environment.” If there are no such materials and products, we should newly develop

accelerate the effort. I anticipate that operations will assume the shape of a business during Vision 2030 Stage III (fiscal 2027 to 2029).

competitors. What we do need is an idea that embodies a dramatic leap forward, something different than what we’ve done in the past. If

them. After spending 40 years here at ISK, I have a renewed appreciation of the fact that this is where ISK Group’s strengths lie. That
thinking is built into the ISK Group’s purpose of “To continue contributing to better living environments through chemical technologies.”

Furthermore, there’s another priority I’d like to accomplish as president. That’s the rebuilding of our flagship Yokkaichi Plant.

Every six months, I visit our Group companies across Japan to speak directly to employees about our company’s performance and theDue to my background in our inorganic chemicals business, I’m well acquainted with the Yokkaichi Plant. Some of its buildings are moreGroup situation. In some regions, this is a cozy gathering of a dozen or so people. I’ve also spoken about my thoughts with regard to ourthan 80 years old, and some production equipment and facilities are outdated. The maintenance and management cost for the facility

corporate purpose and our long-term vision, Vision 2030, at those events. Employees have asked a variety of questions. For example, one

requires billions of yen each year. In addition to it, as there are still issues with earthquake resistance, it’s apparent that some of theemployee asked me, “Would it be working out as you expect?” I however believe that such question means his/her interest to the matter.

equipment and facilities won’t last another 100 years. The plant itself needs to be renovated and updated.

I look forward to setting multiple opportunities in the future to try to get everyone on the same page throughout the Group.
Priorities

Striving to Launch New Business and Rebuild the Yokkaichi Plant
One of the targets set forth in Vision 2030, the long-term vision we formulated on the 100th anniversary of the Group’s founding, isto achieve net sales more than 200 billion yen. Since becoming president, I’ve spent the last year asking myself what we should do toachieve that target. As a result, I reached the conclusion that we need to create one more core business besides our existing ones. It
once again reminded me that my duty and responsibility are to get new business up and pave the way for growing, even if it yet reaches
growth period while I am president.
To that end, I set up the Business Creation Committee, which reports directly to the president, this June. I’m serving as the chairperson,
and I sought to fill its membership with Headquarters Directors as well as promising young and mid-level employees. We’ll spend the firstyear identifying a general direction of the type and genre of new business we’ll pursue.

08Message from the President

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

If you assume that saving up annual repair fees for 10 years, it will yield dozens of billions of yen. In that case, we can find it worthwhile

I believe that agrochemicals and animal health products are growth driver for the Group in the near term. Those segments have much

if we rebuild even whole Plant from square one since the repair costs would decrease afterwards. However, there would be no point inlarger potential compared to the inorganic chemicals business, where even hit products seldom reach 10 billion yen in sales. I envision

rebuilding a plant that’s exactly the same as the current one. We need to build a plant that can accommodate sustainable production

fostering the new business that will drive the next stage of our growth while the organic chemicals business is performing well.

systems. To meet the demand for decarbonization that is sweeping the world, it is difficult for us to keep using 100% coal fuel to power
our boilers. Now is the time to make our resolute decision.

Medium-Term Business Plan

What to do about energy is a difficult question, but as an initial goal, we’ll strive for 30% reduction in CO2 emissions by 2030, for

Bright Future Prospects amid Concerns over Rising Raw Material and Fuel Costs

example by switching to different fuel for coal-fired boilers. The way I see it, the future candidate would be ammonia fuel. Ammonia isa clean fuel that produces no CO2 when burned, but the Haber-Bosch process, which is currently the primary manufacturing method,

Changing topics, I’d like to talk about Vision 2030 Stage I, our current medium-term business plan (fiscal 2021 to 2023). Results forrequires a high-temperature and high-pressure environment so that it is unavoidable to consume enormous amounts of energy.

the first year were almost too good, thanks to the strong performance in the inorganic chemicals business due to the favorable business

However, research into synthesizing ammonia under normal pressure has been making progress in recent years, so if that researchsituation. However, if you drill down into those results, you’ll see that we haven’t made so much progress in the shift from commodity

bears fruit, ammonia could become a workable source for alternative energy.

titanium dioxide to highly functional and high-value-added products. This remains an issue.

We would probably continue to use coal in some form or another until around 2030, but we plan to conduct research into CO2 fixation

The second year results presumably wouldn’t be quite as robust, but I believe we’ll be able to sufficiently achieve our targets. I also expect

since the ISK Group has materials whose properties are close to zeolite, which can fix and store CO2. In any case, we’ll lay out aoperating profit in line with the plan for the third year, assuming that demand for upcoming flagship agrochemical products will rise anddirection within this year, and then move forward with measures geared to realize carbon neutrality by 2050.

that we’ll be able to lower manufacturing costs.

These two goals embody the key elements of Vision 2030 for my term as president.

Vision 2030 Stage I
FY2023 Management Targets

In addition, I’ve been thinking along various lines with regard to the organic chemicals business. In the agrochemical industry, it’scommon for active ingredients to be produced under contract, for formulations to be prepared at companies’ own plants, and forformulations to be outsourced. We ISK also follow the same approach, but it leads to a degradation in manufacturing technologies.
What we can do should be implemented by ourselves as much as possible.
Therefore, I’m planning to build our bench testing equipment and/or a pilot plant in Japan so that we can improve our manufacturing
technologies. Our concept is that we utilize the technologies accumulated there for our consideration upon contract production and ourown plant operation.

Consolidated sales
Consolidated operating margin
ROE

The plant we built at our manufacturing contractor in India is part of this approach. The project was delayed due to the COVID-19 pandemic,
but test operations finally began this May. We produce organic intermediates for our flagship fungicide Fluazinam based on our uniquemanufacturing technologies. We’re working to lower costs by several hundred million yen by transitioning away from existing suppliers.

Shareholder return policy

125
13
10
Over

billion yen% or more% or more

Continue stable dividend paymentsthat reflect consolidated performanceThis would be a head start for us on realizing the lowest cost of our flagship agrochemical ingredients in the world, which is one of
Vision 2030’s priority goals.

The rising cost of raw materials and fuel in the inorganic chemicals business is a cause for concern. For example, coal normally costs

Although a number of our existing flagship agrochemicals are selling well, there are no major products in the pipeline positioned toaround $70 to $80 per metric ton, and we have budgeted $120 to $130 in light of the recent market conditions. Nevertheless, the pricebecome the major products for the next generation in our portfolio. We expect to see the next candidates after two to three years, but due

has now risen to $300 to $400. As a result, our profitability depends on how well we can pass on those additional costs to sales prices.

to the time-consuming nature of development, it will take seven to eight years to launch them in the market. As some patents for flagship

Recently, a newspaper article reported that suppliers were imposing surcharges for inorganic materials in the same manner of fuelproducts will expire during those developments as well as others expired already, we have no way but compete with generic products. For

surcharges in air ticket prices. We may have to consider such measures ourselves.

this reason, it is important for us to keep manufacturing costs as low as possible. Developing our proprietary manufacturing technologies

For agrochemicals, with regard to the next-year prices, we have annual negotiation in major market, which would be set by this fall. We

is one way to help achieve that goal, and we’ll also work to reduce manufacturing costs by improving technologies.

need to negotiate carefully since we’re also competing with generic products.

09Message from the President

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Turning to ESG initiatives, we’ve identified Materiality and established KPIs. I consider such initiatives are essential elements in order

Recommendations of the Task Force on Climate-Related Financial Disclosures (TCFD), and we published a road map for realizing

for companies to survive from now on, and I would like to implement them in a steady manner. In this era, it is impossible forcarbon neutrality. We are also studying industrial waste, but that process remains still ongoing. We plan to study new initiatives, forcompanies to continue their business unless perceived as sustainable. Right now the Sustainability Promotion Committee, which

example to recover valuable elements from waste.

reports directly to the president, is leading these measures, but I believe it would be appropriate to set up a division or headquarters at

Regarding social measures, we formulated the “ISK Group Policy on Human Rights.” This policy calls on the Group to undertake humansome point. This is not because ESG has been booming, but because it allows us to ensure further measures and make them ongoingrights initiatives globally in line with international norms related to human rights. Merely formulating a policy doesn’t prevail throughout

activities.

the organization, so I also plan to undertake human rights due diligence and other related measures. This September, we offeredWith regard to environmental measures, we disclosed climate change-related risks and opportunities in line with final report:

training and communicated the significance of this issue, particularly to Board members.
As for governance measures, feedback from outside Board members submitted as part of our evaluation of the effectiveness of theBoard of Directors identified the need for more discussions of business strategy from a medium- and long-term perspective. Upon

• Identification of Non-financial Goals Related to Materiality

reflection, I also feel that discussions might have focused too much on matters that have demanded immediate decisions. Thosematters should properly be discussed by Officers. Directors, who have a supervisory role, need to adopt a different perspective. To
address this issue, in our Executive Management Committee from this year, we allocate time specifically to discuss medium- and longterm discussions.

E : Environment

Message for Stakeholders

Dealing with climate change

Valuing Relationships and Becoming a Company
That Provides Satisfactory Performance to All Stakeholders· Establishing medium- and long-term
environmental goals· Endorsing the TCFD
and disclosing information accordingly

Since April 2022, our shares have been listed on the Tokyo Stock Exchange’s Prime Market. As the listing standards and requirements
have been changed from the time of the former First Section, I suppose that our duties have become much clearer. We’ll make steady

S : Society

G : Governance· Fostering human resources· Diversity and inclusion· Undertaking human rights initiatives· Complying with the revised
Corporate Governance Code· Increasing the effectiveness of
the Board of Directors· Reviewing executive
remuneration structures(Formulating a human rights policy,
raising internal awareness,and carrying out human rights
due diligence)progress in carrying out those tasks.
What the ISK Group needs to do is summed up succinctly by Vision 2030: “Transforming lives through the power of chemicals.” We makecontributions to help improve people’s lives through our technologies. That is the entirety of what we should do going forward.
I studied applied chemistry at university and dreamed of working in R&D for a chemical manufacturer. However, it was difficult to findemployment in the aftermath of the oil crisis, and I eventually was offered a position at a chemical trading company. As I was trying todecide whether to accept the offer, my parents told me that a company called Ishihara Sangyo Kaisha was looking for R&D staff, and that
led to me joining the company. At the time, I didn’t even know what kind of company ISK was...
Since then, 40 years have passed. I’ve experienced a variety of successes and helped transform people’s lives for the better in somesmall way. In that sense, I feel I might be linked ISK by fate. I would like to value such relationships and new encounters. I look forward
to helping the ISK Group, with which I’ve been fortunate to be associated, continue to operate in a way that all stakeholders are satisfied.
My dream I have now is to help ensure that ISK grows into such an enterprise.

10

Value Creation Process

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Creating value through our purpose to achieve Vision 2030
The ISK Group will be continuing to expand its business by taking its corporate purpose as a starting point and leveraging its core competence of chemical technologies; its threeprincipal strengths, in the form of its ability to develop proprietary technologies, accommodate quality and environmental requirements, and collaborate globally; and its management
capability, which underpin those strengths. In this way, we’re striving to achieve Vision 2030, which seeks to balance economic value with sustainability value.

PurposeTo continue contributing tobetter living environments
through chemical technologies

Value Creation Core

Vision 2030 Goal

Providing a comfortable living environment

Originality. Acceleration. Global Reach.
Transforming Lives Throughthe Power of Chemistry.

p14

Research and development

Ability to collaborate
globally

OutcomeAbility to develop proprietary
technologies

Providing innovative lifestyle products

Chemical technologies

Basic Philosophy
p05
Sales and supply

Input
p13

Providing environmentally friendly products• Ultra-fine particle manufacturing• Surface treatment• Organic synthesis• Formulation manufacturing
technologies

Ensuring a stable supply of agricultural products
Procurement andproduction

Improving quality of life (QOL)

Ability to accommodate quality andenvironmental requirements

Management capability

Corporate GovernanceAn era characterized by VUCA (volatility, uncertainty, complexity, ambiguity)in which the future is unpredictable

Megatrends• Net sales of greater than 200 billion yen• Operating margin of 15% or more
• ROE 10% or more
• Continued stable return for shareholders
Contributing to realization ofa sustainable society together withimproving our corporate value
through such business activities.

Outputp13

Management foundation

Climate change

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

11

Source of Value Creation

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Our three principal strengths and management capability to tap the true value of chemical technologies
We tap the true value of chemical technologies, which is the source of our competitiveness, through our three principal strengths—the ability to develop proprietary technologies,
accommodate quality and environmental requirements, and collaborate globally—which are supported by our management capability. This is the mechanism by which the ISK Group
creates value. Going forward, we will be continuing to create new value and deliver a better living environment for people worldwide.

Ability to collaborate globally
Our global network, which has been built since our founding to deliver our products

Value Creation Coreto customers worldwide, is one of our strengths. Our logistics network, throughOne of our strengths is the ability to provide new value as a leading player in nichemarkets worldwide based on our ability to develop proprietary technologies, which

Research and development

which we are developing the agrochemical market in places like Brazil and India,

Ability to develop proprietary technologies

we’ve accumulated since our founding. In addition to developing new products andand our development and registration capabilities in Europe, where environmental

improving production technologies in both the inorganic and organic chemicals

and safety regulations are growing more stringent, have earned praise worldwide.

fields, we’re exploring new businesses in state-of-the-art domains such as theUnder our Vision 2030 long-term vision, we will work to achieve further businessgrowth by establishing a robust global value chain and bringing our animal health

Ability to collaborate
globally

products to markets worldwide.

Management capability
At the base of our strengths lies transparency in business activities abiding by laws
and regulations, which is a part of our corporate philosophy. Recently, we’ve also
incorporated the perspectives of ESG and the SDGs to implement and strengthen
initiatives for sustainable management. We will continue to embrace the challenge

Sales and supply

Ability to develop proprietary
technologies

environment, energy, biotechnology, and IT. We treat the increasingly rapid changes

Chemical technologies

in the business environment that we’ve seen in recent years as an opportunity, and• Ultra-fine particle manufacturing• Surface treatment• Organic synthesis• Formulation manufacturing
technologies

technological innovation by deepening our core technologies and pursuing

we’re accelerating the manner in which we embrace the challenges ofinnovation.

Procurement andproduction

Ability to accommodate quality andenvironmental requirements

Management capability

Ability to accommodate quality andenvironmental requirements
We’re working to create products that combine high quality with environmental
consciousness as part of a commitment to a sustainable society. This is also one of
ISK’s strengths. At our flagship Yokkaichi Plant, we’ve put in place Japan’s onlyof both realizing a sustainable society and increasing our corporate value so thatchloride process for manufacturing titanium dioxide, which is characterized by low

we can address environmental and social challenges through our businessenvironmental impact. We also thoroughly manage chemical substances to reduce

activities.

emissions and transfers in order to minimize the impact on the environment andecosystems. In response to climate change, we’re working to reduce greenhousegas emissions in our business activities.

12Input and Output

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 outputs of the six capitals of value creation are given below. We will realize Vision 2030 through ongoing enhancement of inputs.
Financial Capital

Input

Reason for Input

185.7 billion yen• Interest-bearing debt (end of FY2021)
50.4 billion yen• Shareholders’ equity (FY2021 consolidated) 91.9 billion yen

Total assets from which revenue is generated, as well as interest-bearing debt and • By efficiently utilizing total assets, we will secure market share and thereby increase • Top market share in domestic sales of titanium dioxide
shareholders’ equity, which serve as the primary means of raising capital in establishingconsolidated net sales.
• Forecast performance for FY2022
these assets, are set as our main financial inputs. These were also incorporated among • Adjusting a balance between interest-bearing debt and shareholders’ equity will
• Consolidated net sales
the management targets for our medium-term business plan, “Vision 2030 Stage I.”
facilitate improved ROE along with greater capacity for future investment.
• ROE• Total assets (FY2021 consolidated)

Role in Value Creation

Output

129 billion yen
6.60 %

Manufacturing Capital
5.1 billion yen The key manufacturing inputs are production capacity, which underpins our top • We achieve efficient facility operation sufficient to meet demand through the applica- • Change in the titanium dioxide production• Capital investment (FY2021 consolidated)• Titanium dioxide production capacity(No. 1 in Japan)

168,000 tons

• Expertise cultivated over many years,
essential to high-quality and stable manufacturing

share of the domestic titanium dioxide market, and capital investment sufficient totion of our unique expertise coupled with timely replacement investment in production
facility utilization rateincrease production of highly functional, high-value-added products. In addition, we
equipment and facilities.
(FY2020 consolidated -> FY2021 consolidated)have added plant operation expertise for titanium dioxide production, which is a type • We will take advantage of a new production line for highly functional products • Highly functional, high-value-added products as aof process industry, as one type of manufacturing capital.
installed in April 2021 to increase the share of inorganic chemicals business sales
percentage of inorganic chemicals business sales
accounted for by highly functional, high-value-added products.
(FY2021 consolidated)

13.5 % increase

32.4 %

Intellectual Capital
R&D expenses (FY2021 consolidated)(Inorganic chemicals(Organic chemicals• Percentage of R&D employees(FY2021 non-consolidated)

8.1 billion yen Research and development have long been a priority for ISK Group. We ensure that • Drive the development and patenting, both in Japan and overseas, of new • Number of patents held
1.2 billion yen) a certain threshold for R&D expenses is met regardless of fluctuations in business agrochemicals and drugs, highly functional titanium dioxide materials and more, (end of FY2021 non-consolidated)(Japan)
6.8 billion yen) performance. R&D activities at the Central Research Institute and Yokkaichi Plant as well as facilitate the creation of new business associated with them.
20.50 %

2,527
266

account for the majority of R&D expenses, while some are used for the registration • Further expand registration activities worldwide, and utilize agrochemicals(Overseas) 2,261
of agrochemicals in various countries.
registration as intellectual property.
• Products developed in-house as a percentage
of organic chemicals business sales
86.8 %(FY2021 consolidated)

Human Capital• Employees (FY2021 consolidated)• New graduate hires(FY2021 non-consolidated)• Mid-career hires(FY2021 non-consolidated)

1,750 people

Securing and making the most of a diverse group of human resources is one of the • We revamped our human resources system in FY2020. This new system provides
key priorities of the ISK Group. We strive to secure human resources with a chalall employees with the opportunity to take on high-level job challenges and to get
15 men, 3 women lenging spirit and a global mindset, regardless of their gender or nationality, as various kinds of training. Through these procedures, we draw out greater value
newly hired graduates or mid-career hires.
from our human resources.
22 men, 11 women We also help newly hired employees develop their careers in order to strengthen • We are also working to achieve greater diversity and thereby make the most of
their basic skills as working members of society, raise the awareness of employees
human resources representing different backgrounds.
at all levels of their roles, and prepare promising candidates for executive roles.

hours per• Training time per person (FY2021 non-consolidated)
20 person/year• Employees who took childcare leave
12 people(FY2021 non-consolidated)• Female manager ratio (FY2021 non-consolidated)
5.1 %• Paid leave acquisition rate (FY2021 non-consolidated) 77.00 %Social and Relationship Capital
Transparency in business activities abiding
by laws and regulations• Number of countries where we sell
our products

74 countries

In keeping with the Group’s corporate philosophy, we strive for the sustained growth • We promote two-way communication to earn the trust of local residents, for example • Coexistence with local communitiesof our business and growth in our corporate value through a commitment tothrough efforts to ensure safety and disaster prevention, environmental activities, and • Undertaking procurement activities that fulfill our social
compliance and management that is transparent, trustworthy, and sound. We’re also
active communication of information.
responsibility alongside suppliers and subcontractors
working to contribute to local communities, with a focus on areas where we • In addition to undertaking human rights initiatives, we observe the laws and regulations in • Dispersing geopolitical risk
operate.
every country and region in which we operate, and we ensure our purchasing activities arecharacterized by decency and adherence to social ethics.

Natural Capital
Yokkaichi Plant FY2021• Energy (heavy fuel oil equivalent)• Industrial water• Seawater• Titanium ore

We treat energy, water, and titanium ore consumption at Yokkaichi Plant and our • By reducing coal-fired boiler CO2 emissions as part of our efforts to address global Yokkaichi Plant FY2021• CO2 emissions
140,000 kiloliters subsidiary, Fuji Titanium Industry, as key indicators so that we work to reduce the warming, we aim to preserve a comfortable living environment.
380,000 tons
• Through more thorough chemical substances management, we are reducing the • Wastewater emissions into public water areas
15 million m³ volume of our CO2 emissions, water usage, and industrial waste disposal.
27 million m³
amount, and amount transferred of, our emissions, with the goal of reducing the • Industrial waste
11 million m³
91,000 tons
impact on humans and the ecosystem to as close to zero as possible.
PRTR-listed substances
130,000 tons
1,600 tons

13Non-Financial Highlights

About ISK

Environmental

GHG emissions

GHG emissions year-on-year

114.8

Thousand tons CO2

101.3

493

499

2017

2018

Foundation for Value Creation

Corporate Data

OthersGreenhouse Gas (GHG) Emissions (Japanese group companies*1)

100.3

Value Creation Strategies

Industrial Waste (Sludge) (Japan, consolidated*2)

Energy Intensity (Japan, consolidated*2)

Number of Patents Held (non-consolidated)

Tons

kl/t

Cases

%

88,634
98.1
490

2019

90.2

80,970

507

2021

0.99

0.99

2017

2018

1.03

2020

2021

2,788

2,866

2,714

2,593

2,527

2020

2021

62,625442

2020

74,96277,559

1.05

1.12

(FY)

2017

2018

2019

2020

2021

(FY)

2019

2017

(FY)

2018

2019

(FY)

SocialNumber of Employees

Workplace Accidents (Japan, consolidated*2)%%(non-consolidated)

Headcount

1,040
1.07

Female employee ratio(non-consolidated)

Severity rate

Frequency rate of lost-worktime injuries

Number of Female Managers(non-consolidated)

1,070

1,106

1,149

1,144
14

15

12
0.56
16.3

16.4

16.9

16.9

5.1
0.01

0.02

2017

2018

2019

0.07

0.01

2020

2021

(FY)

2017

2018

2019

*1 ISK Group (Japan, including Yokkaichi Energy Service Corporation, which the Group absorbed in October 2018.)*2 All production facilities operated by ISK and its 100% subsidiary Fuji Titanium Industry Co., Ltd.

2020

13

12

17.1

0.50

0.00

2021

(FY)

Paid Leave Acquisition Rate
%

%

%

0.93

1.01

Female manager ratio

Headcount

2017

6.0

6.4

5.4

5.1

2018

2019

2020

2021

(FY)

75.9

75.6

77.0

2017

2018

2019

73.6

2020

77.0

2021

(FY)

14

Materiality

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Materiality for the ISK GroupThe Group has identified materiality (key issues) with the potential to impact its medium- and long-term corporate value. We’ve established medium- and long-term key performanceindicators (KPIs) for eight key issues with an extremely high level of importance for both stakeholders and the ISK Group, which we’ve determined comprise the most important issues,
and will undertake specific initiatives to address them. By addressing these issues, we strive for the sustained development of society and the creation of sustainable corporate value.

Identified Materiality

Materiality

Dealing 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 atmospheric emissions• 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 oneof the Group’s strengths, through advancement of core technologies and the pursuit ofinnovation

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

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

Diversity and inclusion• Create workplaces that value the individual, foster mutual respect, and empower all employees,
regardless of gender, age, disability, nationality, lifestyle, work backgrounds, values, or otherattributes• 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 (Business Continuity Plan) in order tominimize the impact from external risks

Issue Importance Evaluation

Very
high

Stable supply of crops
Contribution to deepening IPM
for biorational products
Contribution to healthcare
Contribution to a smart society

Dealing with climate change, reducing environmental impacts
Technological development capabilities
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)and streamlining operations

Level ofimportance tostakeholders

Information security

Addressing
the 8 most important
issues of
the 16 identified topics

Quality

Coexistence withlocal communities

Stakeholder engagement

Very
high

High
Level of importance to ISKProcess for Identifying Materiality and Establishing KPIs
STEP 1

STEP 2

STEP 3

STEP 4

Issue identification

Prioritization

Materiality identification

Establishment of KPIs

• In accordance with GRI, SASB,
and other guidelines,
as well as the ISK Group’s
long-term vision and other resources,
we identified issues that deserve tobe emphasized.

• We carefully reviewed
the importance of issues
for ISK based on their alignment withour corporate purpose and other policies,
and the importance of issues for stakeholders
based on industry issues, key ESG themes,
and other resources.

Outline• Outside experts reviewed
the process and verified its suitability.

• We reviewed materiality-related
indicators highlighted by
ESG evaluation organizations.

Corporate governance• Strengthen governance to improve organizational operation and performance• Ensure compliance and corporate ethics, foster operational transparency• Finalized following deliberation by
the Executive Management Committee
and approval by the Board of Directors.

• We then established KPIs after conducting
interviews with business departments andother entities as necessary.

Reforming workstyles by pursuing digitaltransformation (DX) and streamlining operations• Pursue DX to streamline operations and implement work style reform

15

Materiality

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Eight Most Important Issues and KPIs
Materiality

Dealing with climate change,
reducing environmental impacts

OutlineKPI

TargetTargetfiscal year

Scope

Set mitigation targets and take action in response to climate change

CO2 emission reduction rate (Scope 1+2, vs. FY2019)30% or more

2030

ISK Group (Japan)

Reduce energy usage

Reduction in energy intensity

1% or more

Every year

Japan, consolidated

Reduce industrial waste and pollutants emissions

Industrial waste emission reduction rate (vs. FY2019)50% or more

2030

ISK

Pollution prevention and chemical management

Adherence to voluntary control standard values that are stricter thanenvironmental laws (wastewater, waste gas)

Continue2023

Japan, consolidated

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 Creation of new products and technologies in each business segment
the pursuit of innovation

Establish on
per-department
basis

2023

Japan, consolidated

Supply chain management

Address the environmental, social, and human rights-related issues in the supply chain
Establishment of basic policies and guidelines governing procurement
and implement fair and impartial procurement

Announce

2023

ISK Group

0 accidents

2023

ISK,
Fuji Titanium Industry

100%,
continuing
75% or more
80% or more

2022
2030
2022
2030

Create workplaces that value the individual, foster mutual respect, and empower all Female manager ratio
employees, regardless of gender, age, disability, nationality, lifestyle, work backgrounds,
values, or other attributes
Mid-career hires as percentage of managers (average for last three years)

10% or more

2030

ISK

30% or more

2022

ISK

Accommodate individual differences in experience, ability, and thinking, and facilitate Time spent in training and classes
skills development and improvement to help all employees achieve maximum
performance
Cost of training and classes

20 hours or more

2022

ISK

50,000 yen or
more

2022

ISK

Occupational health and safety,
operation safety and disasterprevention

Diversity and inclusion

Frequency rate of lost-worktime injuries, severity rate*
Ensure the health and safety of labors at workplace, and make sure operation safety andPercentage of employees undergoing health checkups and stress checks
disaster prevention
Paid leave acquisition rate

SDGs

ISK
ISK

BCP, risk management

Ensure the thoroughness of risk management and BCP (Business Continuity Plan) in
Implemented through Corporate Risk Management Committee initiatives
order to minimize the impact from external risks

Achieve plan

2023

ISK Group

Corporate governance

Ensure compliance and corporate ethics, foster operational transparency

Participation in at least 1 compliance training session

100%,
continuing

2022Japan, consolidated

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

Effective contribution to operational streamlining

3 or more

2022

ISK

Pursue DX to streamline operations and implement work style reform
DX certification

Acquire2023

ISK*Frequency rate of lost-worktime injuries: Number of employees injured or killed in occupational accidents per 1 million total working hours; indicates the frequency of occupational accidents.
Severity rate: Number of working days lost per 1 thousand total working hours; indicates the severity of occupational accidents.

16

Message from the Director of Finance & Accounting Headquarters

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Results for Fiscal 2021 and Outlook for Fiscal 2022

inorganic chemicals business went into the red. That has now been turned around.

Results Driven by Inorganic Chemicals Business;
Organic Chemicals Business Performance Also Strong

One of the special characteristics of our Group is that market conditions are not

In fiscal 2021, our inorganic chemicals business grew significantly and was thebut this was covered by our organic chemicals business. Happily, however, thedriving force behind the ISK Group’s results. There are three reasons for this. The

results for fiscal 2021 have been significant growth in our inorganic chemicals

first is the continuing economic recovery from the COVID-19 pandemic, whichbusiness as well as strong performance from our organic chemicals business. We

began in the latter half of fiscal 2020. This recovery has led to increased sales ofbenefited from favorable weather conditions globally, steadily increasing sales oftitanium dioxide, particularly in the automotive and construction sectors. Another

our agrochemicals in Europe, where they cleared the stringent regulations, and inreason is that costs were passed on to prices to improve profitability, with prices

Brazil, where the expansion in soybean production has produced expanded demand

being raised an unprecedented two times in one year, while, overseas, recovery

for agrochemicals.

in the Chinese economy contributed to a tightening of supply in the Chinese andThis situation has continued into fiscal 2022 as well and looks to be putting usSoutheast Asian markets for pigments used in construction. The steady increase inon track to reaching our sales targets under the Vision 2030 Stage I medium-the market price contributed to improvement in profitability. The last reason is theterm business plan (fiscal 2021–2023) a year early. However, we are experiencing

rapid drop in the yen since March 2022, which has bolstered our operating income.

inventory shortages in our inorganic chemicals business, which will need to be

Director of Finance & Accounting
Headquarters

What’s more, these factors have increased our production facility utilization rate,

restored to their appropriate levels. The prices of the titanium ore and coal needed

Yasunobu Kawazoe

which has led to increased productivity and improved profitability. Traditionally, it

to address this shortage have been rising since last fall, and, particularly after theis standard for us to run our titanium dioxide chloride processing at full capacity;

invasion of Ukraine by Russia, the pace of this rise has increased. This is a current

however, because of the effects of the pandemic, we lowered it to around 60%

point of concern for us.

always correlated between the inorganic chemicals business and organic chemicals
business. In fiscal 2020, we experienced a drop in our inorganic chemicals business,

capacity in the first half of fiscal 2020. This was one of the reasons why our
Net Sales

Operating Income

110,955

Million yen

108,001

106,441

101,066

Operating margin

Million yen

Net Income Attributable to Owners of Parent%

101,774

11,690
8,683

10.7

10.4

6,188

13.6

12.2

5,173
6.1

3,442

5.1

3,373
2,359

5.3
3.1

2017

2018

2019

2020

2021

(FY)

2017

%

11,557

11,372
10,022

9.3

ROE

Million yen

2018

2019

2020

2021

(FY)

2017

2018

2019

4.3

2020

2021

(FY)

17

Message from the Director of Finance & Accounting Headquarters

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Improvement of the Financial Position and Investment

The deciding factor for new investment is, essentially, whether or not we can recoup

Shareholder Returns and Contributing to Society

Implementing 100 Billion Yen of Capital Investment
Ahead of Schedule

our capital costs within seven to eight years. Of course, not all investments will be

Balancing Growth in Revenue
with Consideration for Society

The recovery in business performance contributed to free cash flow of 12.1 billion

other essential infrastructure for the Group as a whole.

With regard to shareholder returns, our policy is unchanged in ensuring continued, stableyen for fiscal 2021, greatly surpassing the 1.4 billion yen originally forecast.

Operating cash flow is our primary source of capital, but it alone will not cover

dividends for investors. It has been three years since the resumption of dividends. In

Because this cash covered all necessary business funding, we were able to reduce

everything; hence, we will increase our borrowing. This means we need to befiscal 2021, current net income grew significantly, resulting in a lowering of the payout

our interest-bearing debt to around 50 billion yen without borrowing from the bank.

mindful of our rating. Although our current rating is BBB, our outlook has recently

ratio, which drew harsh commentary from analysts. Given that our inorganic chemicals

In the past 20 years, this is unprecedented. Under Vision 2030 Stage I, we planned

been upgraded from ‘stable’ to ‘positive.’ I want us to focus on continuing thisbusiness, which has grown, is subject to industry-specific factors that can cause

to use fiscal 2021 to fiscal 2023 as a period for making our financial position leaner.

trend while, at the same time, putting in place mechanisms for the future that will,

significant fluctuations in performance, there is no guarantee that dividends will remain

However, as we have achieved our target early, we have the reserves available tofor example, alert us when our interest-bearing debt reaches a certain threshold. I

stable. Put simply, without profits there can be no dividends. Our aim is to stabilize

also carry out capital investment ahead of schedule.

believe we should use rating as an indicator as we work to keep overall investment

current net income and achieve an ROE of 10% or higher on a consolidated basis.

As the president discussed in his message, the investment will be focused on two

under control.

Recently, investors have also been asking a lot about our policies and efforts related toareas: the creation of new business led by the Business Creation Committee andAlso, with regard to the earning capacity that underpins our operating cash flow,

the Task Force on Climate-Related Financial Disclosures (TCFD) and carbon neutrality.

rebuilding the production system at the Yokkaichi Plant. Assuming we can continueeven if we are able to keep it growing by passing costs on to prices, there will comeFor the ISK Group, the issue of carbon neutrality is directly connected with the Yokkaichi

to secure the same level of operating income as fiscal 2021, we anticipate thea limit. This is a risk that must be calculated. Rating is one indicator we can use to

Plant, where we use coal as fuel in the production of titanium dioxide. Moving forward,

amount of investment will be 100 billion yen over five years, or 65 billion yen if

determine what the limit is.

we will announce a specific schedule for facilities and equipment replacement as

replacement investment is excluded. For the Yokkaichi Plant, already the project

Recapitalization is another means of securing financing, but we are not considering

evidence of our commitment to tackling the Sustainable Development Goals (SDGs). In

team is carrying out a careful examination, and a final report is expected by the

it at this time. This is because both our capital and capital reserves are sufficiently

this day and age, a company’s existence depends upon whether or not society deems it

end of the year. However, carrying out new investment requires that we keep downlarge enough already relative to the size of our company. I believe our equity ratio isessential. As a company listed on the Tokyo Stock Exchange Prime Market, we strive toreplacement investment and repair costs; hence, we are conducting a review of thejust right at its current level (49.5%), and the challenge will be figuring out how toensure we maintain a sustainable balance between growth in revenue and consideration

plant’s facilities management system.

fund investment while maintaining this level.

for society.

R&D Expenses

Ratio of R&D Expenses to net sales

Million yen

8,706

9,150
8,070

necessity of these investments. I also believe we need to properly invest in IT and

Capital Investment
%

8,639

profitable straight away, which is why we must consider the medium- and long-term

Depreciation expense

Million yen

Interest-Bearing Debt

Million yen

8,165

8.1

8.5

7.6

6,142

7.4

4,214

2017

2018

2019

2020

2021

%

8,062

60,103

7,141
9.1

D/E ratio

Million yen

(FY)

2017

6,092
4,266

2018

4,445

4,542 4,545

0.8

50,420
0.6

2020

2021

52,531

51,3280.8

49,528
0.7

0.7

2017

2018

2019

4,669

2019

2020

2021

(FY)

(FY)

18

Overview by Business

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Inorganic Chemicals Business• Revenue Trends for Inorganic Chemicals BusinessNet sales

Operating income

Billion yen

598

544

548

515

Major Products

Billion yen• TIPAQUE™ PFC105 super-weatherable
titanium dioxide

498

Coatings containing titanium dioxide will degrade when exposed
to sunlight and rain. Using this product dramatically improves
the long-term durability of coated surfaces, making it especiallysuited to heavy-duty coating applications, such as for bridges.
Director of Inorganic Chemicals Sales &Marketing Headquarters
Masaki Shimojo

69

60• Highly pure titanium dioxide4524This type of titanium dioxide contains fewer impurities than white

-2

2017

2018

2019

2020

2021

(FY)

pigments and is, thus, used as a raw material in barium titanate,
which is the main material in MLCCs. We make use of the chloride
process in manufacturing titanium dioxide—the only company in

Fiscal 2021 Results Overview (Consolidated)

Major Recovery in Net Sales to 59.8 Billion Yen (Year-on-Year Increase of 10 Billion Yen)
and Operating Income to 4.5 Billion Yen (Year-on-Year Increase of 4.8 Billion Yen)
[Titanium dioxide]• Major growth in sales volume due to domestic and international recovery in demand centered on the automotive andconstruction-related sectors.

Japan to do so—for the stable production of highly pure titanium
dioxide. We are also working on finer atomization of titanium dioxide
for use in increasingly miniaturized and sophisticated electronic
components, as well as working on new development focused on
the future.
• Electro-conductive materials
Our inorganic electro-conductive materials provide stable antistatic
performance when mixed into coatings and applied to areas where[Functional materials]

static electricity must be avoided. We have a titanium dioxide-based• Growth in automotive and 5G-related sales of electronic component materials; major increase in demand in the multilayer

white product and a transparent product. The white type is used for

ceramic capacitor (MLCC) market.

floor coating in clean rooms or as primer for the electrostatic• Strong sales of electro-conductive materials for automobile bumper primers and other applications.

finishing applied to automobile bumpers. The transparent type is[Overall]used for imaging films and other applications.

• Improved capacity utilization in response to a recovery in demand, along with product price revisions to deal with increased
costs of raw materials and fuel, facilitated a significant recovery in profitability over the previous fiscal year.

19Overview by Business

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Risks and Opportunities
Risks• Reduced earnings due to rising costs for electricity andraw materials, such as titanium feedstockOpportunities
While continuing to monitor market trends, pass costs on to product prices
and increase the sales percentage for high-value-added products.
Also, including technological improvement,
diversify raw materials used to expand the range of options• Accidents and other problems due to aging production
facilities and equipment

Carry out preventative maintenance and study the appropriate
timing for replacing equipment and facilities• Drop in market price and ISK market share as a result of growthamong Chinese titanium dioxide manufacturers

Work towards increased and stable revenue by continuing to provide the market
with high-value-added products based on ISK’s unique technology

Products Contributing to the SDGs
At ISK, we manufacture and sell black and white heat-shielding pigments to help with energy-saving measures during
extremely hot weather. These pigments are characterized by high reflectivity of the near-infrared rays in sunlight and areused as a heat-shielding coloring agent in a variety of applications. For example, applying a coating of these pigments
to construction materials keeps them from heating up too much under sunlight.
Our PFR404 white heat-shielding pigment, which is a proprietary titanium dioxide pigment containing rod-like particles,
has a high degree of whiteness and is used in road marking paints and other applications.
Our SG series of black heat-shielding pigments are characterized by a black color containing very little redness and are
chromium-free. These pigments are primarily used with construction materials, but we are pursuing other new and varied
applications, such as in automobile interiors and on sports shoes.
In addition, these pigments are being used as infrared reflection materials in LiDAR (laser imaging, detection, andStrengths and Factors That Set ISK Apart from Competitors

ranging) systems of self-driving automobiles.

• Our technological strength cultivated over many years, along with our meticulous customer service, allow us to stably bring

Effect of suppressing temperature rise with SG-101 black heat-shielding pigment(ASTM D4803-18)

60

high-quality products to market that meet customer needs.

50• Our titanium dioxide business has held the top market share in Japan for many years. We are the only company in Japan with40

manufacturing facilities for both sulfate and chloride processing, allowing us to provide a diverse range of products.

30
20• Super-weatherable titanium dioxide, black heat-shielding pigment, acicular white electro-conductive materials… We’ve been

Carbon black

10

venturing into a diverse range of applications with these unique product lineups that no other company offers.

0

5

10

15

SG-101

20

25

Vision 2030-Focused Business Strategy and Initiatives• 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 and improving manufacturing and operational processes• Launching a master plan to optimize manufacturing sites

Demonstration testing on a soccer field (black rubber chips
for artificial turf): Conventional black rubber is used on theleft, while black rubber with black heat-shielding pigment isused on the right

Applying black heat-shielding coating• Creating a roadmap to reduce greenhouse gases

20Overview by Business

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Organic Chemicals Business (Agrochemicals)• Revenue Trends for Organic Chemicals BusinessNet sales

Operating income

Billion yen

Major Products

Billion yen• Flonicamid (insecticide)504

Our major brands are ULALA™ and TEPPEKI™. This insecticide exhibits high insecticidal activity
476

461

483

482

against sucking insects such as aphids, white flies, and thrips. The main markets are cotton in India
and fruits in Europe. Flonicamid has a unique mode of action that makes it effective against pests thathave acquired resistance to other insecticides.
Flonicamid has long-term residual effectiveness against target pests but has hardly any adverse
effect on the surrounding environment or natural predators, making it suitable for use alongside

Director of Biosciences Business
Headquarters
Mikiya Horie

26

2017

48

33

51

66

2018

2019

2020

2021

biopesticides as part of Integrated Pest Management (IPM).
(FY)• Fluazinam (fungicide)
Our major brand is FROWNCIDE™. This highly active fungicide is used to control a variety of diseases

Fiscal 2021 Results Overview (Consolidated)

Net Sales of 48.2 Billion Yen (Almost the Same As Previous Fiscal Year),
Operating Income of 6.6 Billion Yen (Year-on-Year Increase of 1.4 Billion Yen),
and Strong Performance in Overseas Sales Contributed to Increased Profits[Americas]• In South America, increased cereal production and other factors contributed to strong performance for fungicides.
• In North America, sales of new herbicides were robust.
• Factors such as improved channel inventory contributed to good sales.
[Europe]in a wide range of crops. The main markets are Brazil for controlling soybean Sclerotinia stem rot,
the U.S. for controlling diseases in turfs, and Japan for controlling potato late blight and wheat snow
mold. Resistance is difficult to develop against Fluazinam, making it effective against fungi resistantto other fungicides.
• Cyazofamid (fungicide)
Our major brand is RANMAN™. This fungicide is specifically effective at controlling downy mildew,
late blight, and Brassicaceae clubroot disease. Its primary markets are potato and grape. It is also
excellent at controlling diseases in turfs and is widely used in golf courses.
It shows high activity at low dosages and has superior selectivity, which ensures it has almost no effecton crops and useful organisms, making it also well suited for IPM.

• Increased revenue due to higher demand for fungicides and herbicides.
[Japan]• Declined year-on-year due to lower sales for our flagship nematicide and fungicide.
[Overall]• Performance was not significantly impacted by the effects of the COVID-19 pandemic, extreme weather, or other factors.

21

Overview by Business

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Risks and Opportunities
Risks

Opportunities• Delay in, or failure to achieve,
product approval orregistration

Take proper approach to countries’ registration agencies and authorities; assess other companies’
agrochemicals registration and survey their registration status; secure personnel with expertisein highly specialized fields, ensure handover of registration know-how• Revised and stricter laws
and regulations

Appropriately gather information relating to laws and regulations and registration requirements• New entries andintensifying competition

Lower production costs to strengthen competitiveness; develop new molecule andmixture formulations that will enable ISK to stand out in the agrochemicals market• Crop injury
by agrochemical products

Strengthen safety confirmation by performing growing tests in fields; promote anddisseminate appropriate methods for using agrochemical products

Products Contributing to the SDGs
The “w Tenteki” Consortium, which ISK and ISK Biosciences K.K. are members of, received the grand prize in the adaptation
field of the development and commercialization category in the 2021 Environment Minister’s Awards for Climate Change
Action. This event is organized by Japan’s Ministry of the Environment as a means of spurring action against climatechange. The award was given in recognition of the establishment of a sustainable spider mite control system for fruit trees
utilizing complementary natural enemies, under the Ministry of Agriculture, Forestry and Fisheries’ Research Promotion
Project for Enhancing Innovation Creation, which we participated in from fiscal 2016 to 2018. The excellent controlling
effect of our natural enemy products, Miyako-banker™ and Swaru-banker™, was demonstrated on pears, grapes, andcitrus fruits. These products are included in a manual for controlling spider mites on new fruit trees.

Strengths and Competitive Differentiation from Competitors• Expand market share and improve profitability by launching new formulations and mixture formulations of existing products andby lowering production costs• Ensure a stable supply and cost reduction by having flexibility in procuring active ingredients through integrated manufacturingthat encompasses key raw materials or intermediates and active ingredients, purchasing of active ingredients from othercompanies, and joint procurement with other companies

Target pest: Spider mites

Target pest: Mandarin orange spider mites and thrips• Leverage ISK manufacturing technology to actively sell organic intermediate products• Shorten the registration schedule (initial registration, label expansion, change of manufacturing site, etc.)• Add other species of blue flowering plants (blue dahlia, large-flowered blue phalaenopsis)

Business Strategy and Initiatives towards Vision 2030
• 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

Installation in strawberry cultivation• Manufacturing flagship products at the lowest cost in the world and supplying them in a stable manner to customers

22Overview by Business

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Organic Chemicals Business (Healthcare)
Fiscal 2021 Results Overview (Consolidated)

Net Sales of 1 Billion Yen(Same As Previous Fiscal Year)• Domestic sales of animal health products in fiscal 2022 are expected to be double those of the previous fiscal year thanks to
Director of Healthcare Business
Headquarters
Hiroyuki Watanabe

further growth in direct sales by ISK. At the same time, we are

Risks and Opportunities
Risks

Opportunities• The pharmaceutical regulatory data protection period(i.e., the re-examination period)*,which guarantees exclusive sales, is extremely short

Improve formulations and dosage forms and expand
target diseases in order to strengthen the intellectual
property protection network and diversify opportunities for use* Japan = six years after approval; U.S. = five years after approval; Europe = ten years after approval• The more appealing the product, the greater
the risk of competitors entering the market

planning to secure approval and begin initial sales in the U.S.
market.

Major Businesses and Products

Create business opportunities by matching excellent
existing seed ideas with the plethora of unmet needsin the veterinary medicine market

Strengths and Competitive Differentiation from Competitors• Development, manufacture, and sales that integrate the various functions of R&D, marketing, and pharmaceutical regulatory
affairs management• Manufacture and sales of animal health products• Access to a global market centered on the U.S. and Europe

In 2018, we released the world’s first anti-pancreatitis drug for dogs onto the Japanese market. Since March 2021, we have expanded from our existing• Able to develop related products for product lifecycle management; a wealth of seed ideas for new product development

sales of the active pharmaceutical ingredient to directly selling the product (BRENDA™) itself, with the aim achieving greater market penetration. For
overseas markets we are releasing the product under the globally unified brand name PANOQUELL™ and plan to first introduce it onto the U.S. market
with a dosage form that greatly improves its convenience. Given that there are currently no therapeutic agents for acute pancreatitis on the U.S. market
and that there is an urgent need for one, the regulatory agency for the U.S., the Food and Drug Administration (FDA), has accepted PANOQUELL™ for
conditional approval under its accelerated approval program. We plan to secure conditional approval and introduce PANOQUELL™ on the market during
fiscal 2022. This will be the first time a Japanese manufacturer has released an animal health product overseas that it developed and manufactured.
Additionally, we plan to secure approval in fiscal 2025 from Europe’s regulatory agency, the European Medicines Agency (EMA). Moving

Business Strategy and Initiatives towards Vision 2030
• Pursuing a vision for the Healthcare Business Headquarters to sustainably contribute to people’s quality of life through fine chemical
technologies and marketing capabilities• Focusing on technological development and marketing, which are business processes that can make full use of ISK assets and strengths,
to maximize added value. In other words, accurately tying R&D results with the needs of the end-user market in order to create value• Capitalizing on the following main management resources of the healthcare businessforward, our sales and development teams will continue working together to come up with innovative ideas that will expand sales and busi-(1) Human resources and allocation ensuring effective business development via a synergistic merger of R&D strengths with sales functions

ness, and thereby revenue, in the U.S. and European markets, where the number of pet dogs is said to be more than 10 times that of Japan.

(2) U.S. and European business network-based product development and market access• Contract manufacturing of active pharmaceutical ingredients(3) CMO/CRO, consulting firms, and other external leverage that can be utilized globally

We manufacture the active pharmaceutical ingredient Cevimeline Hydrochloride Hydrate (under the brand name EVOXAC™) for the treatment of dry(4) Expertise in pharmaceutical manufacturing that conforms to global cGMP

mouth, which is caused by a salivary gland disorder due to Sjogren’s syndrome. For over 20 years, our pharmaceutical factory in the Yokkaichi Plant,• Making full use of the above management resources while minimizing all other tangible fixed assets. In other words, conducting fab-which conforms to the exacting standards (cGMP: current Good Manufacturing Practices) of the U.S. FDA, has leveraged the technological strength thatless (i.e., having no fabrication facilities) and asset-light (keeping fixed assets light) business and developing an open network-based

we have cultivated in our agrochemicals business to stably supply pharmaceutical manufacturers with high-quality active pharmaceutical ingredients.

business model in order to achieve growth under Vision 2030 of 20 to 25 billion yen

23

Message from the Director of the Central Research Institute

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Becoming an institute that can play a useful role in the world
while accommodating the changing times
A dual mission defined by improving existing products
and conducting R&D into new products—What does the Central Research Institute do?
The Institute invents and develops useful products that play a positive role in society while helping facilitate the company’s future. Broadly
speaking, we carry out two kinds of product development. The first consists of developing agrochemicals in partnership with the Biosciences
Business Headquarters in the organic chemicals business. We create new formulations and mixed formulations that accommodate regional
characteristics and users’ needs in response to requests from sales personnel who wish to market a particular product in a particular country inorder to achieve sales targets. Because launching new products will be critical in order for us to achieve the goals outlined in the medium-termbusiness plan, we create a schedule by working backwards from the date on which we plan to complete the registration process in the target
country and then proceed with development so as to meet that schedule.
The other type of product development consists of discovering, through research, new products that go beyond the conventional wisdom. To date,the ISK Group has invented or developed 16 agrochemical active ingredients, and now we’re working to create more. About 200 researchers
currently work at the Central Research Institute, and slightly less than half of them are working on those projects. Our research is not limited toagrochemicals. Products need only relate to agriculture or food. Blue Gene™, the world’s first blue phalaenopsis, which we launched this year,
falls under that category.
—How does the Institute differ from other research institutes?
One difference is that it brings together at a compact site of just 40,000 square meters not only search and synthesis, biology, formulation, safety, andindustrialization process synthesis research, but also all functions related to agrochemical R&D, including research planning, research support, and evensome intellectual property and registration. Another difference is a culture that fosters good communication and collaboration.
Proprietary technology related to a useful intermediate known as CF3-pyridines is yet another strength. With regard to this intermediate, which has
been used since the 1970s and which remains valuable today, we’re currently focusing on exploring how we can produce it as inexpensively as
possible while making maximum use of its potential.
Another characteristic of the Institute is that we’re investing significant resources into biopesticides so that we can provide environmentally friendly,
comprehensive solutions that draw on both biology and chemistry. For example, Banker-Sheet™ is an envelope-sized unit of easy-to-assemble
Director of the Central Research InstituteShigeru Mitani

components containing moisture-retaining material that maintains optimal humidity for mites that eat spider mites, such as the beneficial predatory
mites Neoseiulus californicus (McGregor) and Amblyseius swirskii Athias-Henriot. Developed under the 26070C Agriculture & Food Project led by
Japan’s National Agriculture and Food Research Organization, Banker-Sheet™ can help prevent infestation with spider mites for longer periodsof time than existing biological control agents. We hope to harness the product as a driver of future growth because it also complies with public
initiatives designed to ensure a safe food supply, for example Japan’s Green Food System Strategy and the EU’s Farm to Fork Strategy.

24Message from the Director of the Central Research Institute—How did the Central Research Institute originate?
The Institute was established in 1964 to develop the company’s R&D function, which was originally located at the Yokkaichi Plant.
Although initially it carried out R&D in both organic and inorganic chemistry, most inorganic chemistry research has since moved to

About ISK

Value Creation Strategies

Foundation for Value Creation

Training researchers with a research spirit imbued with merchant talent,and embracing the challenges of digital drug discovery

Yokkaichi, where production is located.

—As director, how are you trying to change the Institute?

All of ISK’s agrochemicals were created here at the Institute. Our best-selling product is nicosulfuron, a herbicide for use with corn. A

I want researchers to cultivate a marketing sense. Since it takes 10 years from the discovery of an active

CF3-pyridine-derived fungicide known as fluazinam also generates strong sales. Initially it was used to prevent potato blight in Europe,

ingredient to commercializing the corresponding agrochemical, researchers are prone to lose themselves inand currently it’s used to prevent soybean diseases in Brazil. Most recently, the insecticide flonicamid has developed into a driver of

day-to-day experimentation. They need to foster an awareness of the business side of things.

business growth.

To that end, I introduced a slogan that means “research spirit imbued with merchant talent” when

—What are some interesting research topics lately?
Biostimulants have become a hot topic recently. These substances and microbes allow crops to reach their innate potential even underchallenging conditions like dryness or heat by stimulating them. Sales of biostimulants are growing in the European and North American
markets.
Biostimulants were added to the targets outlined in the Vision 2030 Stage I medium-term business plan. I can’t provide details yet, but
we’d like to start sales during the Stage I period.
However, we can’t afford to spend all our time on buzzworthy topics that are generating the most attention. We’ve been launching new
chemical pesticides each year, on a constant basis. We launched five formulations in 2019, followed by two in 2020.

Corporate Data

I took over as director in 2018. We even made a logo. The goal is to foster human resources who combine specialist skills in
research with generalist skills in marketing. In fact, it was one of our researchers who designed this logo. If our researchers makethe most of their various skills in this way, I think it will help revitalize our organization.
Since it’s important to put in place an environment and ambiance that support those skills, I meet regularly with the ProductDevelopment & Marketing Division of the Biosciences Business Headquarters. The goal is to improve communication with themarketing department by talking about progress in research and discussing whether that progress is going the right way. The
Development Marketing Department has many employees with experience at the Central Research Institute, and some of them
have come back here now to contribute as human resources with experience at both.
“Output is everything” is another of our slogans. Since the researchers here in general like to study, they take the initiative toattend scientific conferences, where they encounter the latest knowledge. However, we don’t do enough to share and apply thatknowledge. I want to achieve good results by increasing the total amount of information in our organization.
Currently, we have about 25 employees doing research into active ingredient synthesis. If each of them discovered a new active
ingredient, we could produce 25 new agrochemicals, but in reality the process isn’t as easy as that. Luck plays a major role. If you only
recognize the final results as outputs, not everyone will be happy. That’s why I’m eager to recognize people who accumulate a series ofsmall outputs through their diligence and tenacity.
—What do you plan to pursue in the future?
Digital drug discovery. That consists of using digital technology to manage research data en masse and efficiently designing combinations using
artificial intelligence (AI). We’re currently building mechanisms to do that.
The first step is to build a platform for centralizing the necessary data, and we’ve made a fair bit of progress there. However, the AI part remains
to be accomplished. My plan is to work with an outside partner that specializes in AI drug discovery to turbo-charge our search for compounds,
under the leadership of computational chemistry experts at the Institute. The goal of this process is to gauge our own current abilities throughjoint development while learning new methodologies. Experts at the Institute are fired up about this new challenge.
We’re also soliciting research topics internally with the potential to contribute to agriculture as a way to create new value, and we’ve alreadychosen two to pursue. One involves research into RNA interference, a technique for interfering with the genes of pests that are difficult to preventwith chemical pesticides. The other is food-related and involves research into new protein sources. It will be exciting to see how each turns out.
My goal for initiatives like these is to create an institute that can accommodate our changing times by motivating everyone to conduct researchand generate results. Those results don’t need to be agrochemicals. As long as they play a useful role in the world.

25

Special Feature

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

The story of Blue Gene’s development

The world’s first blue phalaenopsis, which took 17 years to realize
Blue Gene™ is the world’s only blue phalaenopsis. It was Shunji Yuki, a researcher at ISK’s Central ResearchInstitute (in Kusatsu, Shiga Prefecture), who successfully developed it over the course of 17 years. What led
to the success of this long-running development project? We asked Dr. Yuki about the project.
Dr. Yuki came to ISK after studying chemistry in graduate school. Responsible for genetic modification, he gained experience,
including with pharmacological testing of the compounds that would become the archetype for the veterinary drug BRENDA™. He
then took on the challenge of applying those technologies to genetic modification of flowers. Starting in 2005, he began targetingorchids, which command high prices and enjoy a large market.
“By nature, the popular moth orchid lacks genes for producing blue pigments, so blue moth orchids of that genus did not exist in
the market as other than processed products,” explained Dr. Yuki, who saw opportunity in that fact. However, it takes four years
for the plant to produce flowers after the modified genes are introduced. He began the project with an understanding that it would
take a long time.
“At the outset, I introduced blue genes derived from petunias to moth orchid,” he said. “That attempt only yielded minusculepigment deposits. Next, I set my eyes on the Asiatic dayflower as a genetic source. It’s basically a weed, but one that’s distinguishedby an attractive blue hue. The cultivar Commelina communis var. hortensis has been grown in and around Kusatsu, where theInstitute is located, since long ago.”With genetic modification, the key question is whether you can find a gene that functions efficiently in the target organism. It’s
said that it sometimes takes 10 or more attempts, each with a different gene, to manifest a desired characteristic. In this case,Senior Manager, Bioscience Research Laboratory,
Central Research InstituteDr. Yuki used the blue gene from the Asiatic dayflower. When he did so, the orchid began to accumulate blue pigment five times

Shunji Yuki

as efficiently as in the attempt with the petunia. “It was good luck that the second attempt worked,” recounts Dr. Yuki. In 2006, hebegan conducting joint research with Masahiro Mii, then a professor at Chiba University and an authority on genetic modification.
However, sometimes luck went the other way. In 2008, the phalaenopsis research was halted as the company’s performance
rapidly deteriorated. “It was hard. But flower research was a far thing from ISK’s core business. I just felt like we had no choice but
to stop,” explained Dr. Yuki. Fortunately, Professor Mii carried on the research, and in 2012, a deep-blue phalaenopsis bloomed.

elegance. Chairman Sadaharu Oh of the professional baseball team SoftBank Hawks and floral artist Etsuko Shihomi both liked

In 2013, Dr. Yuki resumed the research following Professor Mii’s retirement and a recovery in ISK’s performance. Professor Mii’s

it, which made me feel like my hard work over many years had been rewarded.” Then Blue Gene won four awards, including Bestphalaenopsis exhibited a mutation that affected the shape of the petals, so Dr. Yuki set about breeding a blue phalaenopsis with

Flower, at the Japan Flower Selections, a large flower-themed event, in May. It quickly gained recognition.

normally shaped petals. After dozens of tests to investigate whether there were any risks due to toxicity or hybridization with wild

Dr. Yuki continues to work on the project. “Blue Gene is a smallish size known in flower circles as ‘medium,’” he explained. “If we

species, the variant finally received approval from the Japanese government in March 2021. The new phalaenopsis, named Blue

could make a larger size, the kind that’s often used for celebratory gifts, there would be even more demand. I also want to try

Gene following a company vote, debuted at the JGP International Orchid and Flower Show in Tokyo in March 2022.

introducing the Asiatic dayflower gene into other flowers, and to research how the lifespan of flowers can be extended. Some plant“The show attracts many attendees who are knowledgeable about orchids, and they praised Blue Gene for its rareness andvarieties have flowers that don’t last long, but genetic modification offers the possibility of improving that trait.”

26

Message from the Director of the R&D Strategy Headquarters

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Adopting new production processes
in an era when CO2 emissions are an issue
Pursuing general research into inorganic compounds
as well as production technologies—What kind of department is the R&D Strategy Headquarters?
It has general responsibility for all technology related to inorganic chemical products. In addition to searching for new technologies
that can contribute to profit, we develop new products, develop applications for existing products, and improve production
technologies. We also foster the development of engineering-related human resources. As a manufacturer of raw materials, the
ISK Group sees high demand in non-engineering departments as well for personnel who understand technology. We help them
master various technologies and have them fulfill important roles in production control and engineering sales.
Currently, we have 78 R&D employees as well as nine supporting staff members, including in the area of intellectual property
management. Another characteristic of the Headquarters is that 20% of its R&D staff specialize in production engineering, adiscipline whose task is to improve manufacturing operations.
—What product segments does the Headquarters mainly handle?
All inorganic compounds. Titanium dioxide is used in a variety of forms in many products, but we’ve long handled materials otherthan titanium, too, for example bismuth sulfide and copper paticles, as well as nanoparticles. If you look at the products we’vedeveloped in terms of sales, titanium dioxide for pigment application, which is currently utilized as a white pigment with excellent
hiding power characteristics, accounts for 70% to 80% of our sales. Going forward, we’re working to increase the number offunctional materials, for example electro-conductive materials and high-purity titanium dioxide.
—Where do the Headquarters core strengths lie?
Director of the R&D Strategy
Headquarters

Yasushi Nakao

In electro-conductive materials. The titanium dioxide particles that serve as the substrate for our white electro-conductive
materials, which are produced by surface-treating titanium dioxide with a tin oxide conductive material to which antimony has
been added, are shaped like needles or spheres. We have numerous competitors in the titanium dioxide field, but we’re the only
manufacturer that produces white electro-conductive materials using needle-shaped titanium dioxide.
The principal application is conductive primer for use with automotive paints. Currently, automotive bumpers and other parts are
made primarily of plastic, and to ensure paint bonds efficiently to plastic surfaces, it’s necessary to pass electricity through thesurface. Electro-conductive materials are used as a primer for that purpose. Carbon black is used in dark-colored paint, but ourwhite electro-conductive materials are used for light colors that approach white because carbon black would darken them. In thearchitectural field, these materials are also used to keep floors from building up an anti-static charge.

27

Message from the Director of the R&D Strategy Headquarters

We also have transparent electro-conductive materials; familiar uses include protective films for smartphones. They serve to preventthe build-up of static electricity by allowing electricity to flow to the surface and thereby keep dust from sticking to the screen.

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

A new step towards reducing CO2 emissions—How do you see the future direction of R&D?

—What are some of the Headquarters’ most recent research findings?

Products related to electronic materials are a growth area. I have high expectations for copper particles, which we’re working on

The high-purity titanium dioxide that we developed. High-purity titanium dioxide is used as a raw material in the production of

as a bonding material for use in power semiconductors instead of solder. We’re also pursuing pioneering joint research with ISK’sbarium titanate, which in turn serves as a primary raw material in the manufacture of multilayer ceramic capacitors (MLCCs), a

Central Research Institute and a university into organic synthesis technologies in relation to organic semiconductor solar cells.

small component widely used in devices like smartphones. Sales of our fine-particle, high-purity titanium dioxide have risen as

In addition, the role of production technologies will become even more important in the future. The sulfate and chloride processes

components become smaller. The ISK Group’s products help underpin this segment of the market, in which Japanese electricalthat the ISK Group uses to manufacture titanium dioxide were originally based on techniques introduced from overseas during thecomponent manufacturers have a strong presence. ISK subsidiary Fuji Titanium Industry also manufactures barium titanate. We

mid to late 20th century. They remain largely intact despite a variety of improvements made over the years. However, an era is

supply high-purity titanium dioxide and titanium tetrachloride for use as raw materials to barium titanate manufacturers, including

coming in which consumers will question how much CO2 was emitted in the manufacture of products, just as they examine priceFuji Titanium Industry.

and quality. We must develop new production processes to prepare for that era.

Another buzzworthy product into which we’re currently conducting R&D is Organic solvent dispersion of TiO2. Originally, titanium

The Yokkaichi Plant currently uses coal as its energy source, but we’re working to transition to natural gas by 2030 and havedioxide is a white substance with a high refractive index for light, but by reducing the particle size and utilizing our surface

formulated a plan for replacing and updating old equipment. We intend to finalize a vision for this process by the end of 2022.

treatment and dispersion technologies, we succeeded in giving the substance both a high refractive index and high transparency.

However, if our goal is to completely eliminate CO2 emissions by 2050, it will be difficult to get there with natural gas. We need to

A refractive index will be an important factor in maximizing the viewing angle in future imaging devices, and the new material

think about what lies beyond that, for example hydrogen power generation using ammonia.

is an optimal light-guiding material in such applications. Generating particles skillfully and dispersing them are both technically

We haven’t found the solution yet, but I hope to advance a step further towards our goal by using energy efficiently. Right now,

difficult processes, but the material holds future promise.

we waste a substantial part of the heat produced when burning coal fuel. I’d like to install a system for recapturing that energy.
We’re already working with an outside energy company to explore other options, for example to see if we can store the 400,000

Taking advantage of the experience with paradigm shifts

tons of CO2 that we release each year, and we’ll pursue those efforts even more actively going forward.

—What prompted the creation of the Headquarters?

we’ve accumulated in the process.

The ISK Group has continually worked to generate its own electricity and steam. I hope to make effective use of the DNA that

I’ve heard that it began as the Technology Section of the Titaium Dioxide Production Department. That became the current
organization during the second half of the 1970s, when we realized that it would be imperative to develop new products apart fromgeneral-purpose titanium dioxide. Later, it worked to develop ultra-fine titanium dioxide and electro-conductive materials, andduring the 1980s it developed magnetic iron oxide. One hit product we developed became famous as a brand of white automotive
paint. Later, we developed a series of unique products, for example high-purity titanium dioxide and other raw materials used in
the production of electronic materials.
—What was your job around that time?
In fact, I’ve only been at ISK for one year. I first spent 35 years working for a paint manufacturer, where my responsibilities
included designing automotive paints. That company had a longstanding relationship with ISK as a material supplier, and when
I reached retirement age and moved to an affiliate, I accepted an invitation to do development work at ISK since I figured I’d beable to develop new materials and to take advantage of my many years of experience.
I experienced numerous paradigm shifts during my previous career, for example the transition from solvent-based to water-based
paint, and I’ve seen my job change dramatically multiple times due to changes in the business environment. I’d like to realize
such shifts at ISK as well. I also have connections to various material manufacturers and hope to take advantage of those, too.

28

Stakeholder Engagement

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Ensuring We Continue to Earn Society’s Trust

Supply Chain

It is important that ISK Group continue to earn society’s trust so that we can grow in a sustained manner.

in socially responsible procurement activities.” In keeping with that priority, we carry out purchasing and procurement activities

We will help to realize a sustainable society through our business activities while building trust-based

in a way that takes CSR into account, for example by checking to be sure we do not purchase conflict minerals, while securing

relationships with society by communicating with stakeholders and listening sincerely to what they havecooperation from suppliers.

to say.

We make only limited use of tantalum, tin, tungsten, and gold (“3TG”), which are typically recognized as conflict minerals, in the

ISK Group Code of Conduct includes the following statement: “Together with our suppliers and subcontractors, we will engage

manufacture of our Group’s products. Tin compounds, which we use as a raw material in electroconductive materials and othersubstances, and tantalum, which we use in vacuum deposition, fall under the definition.
Shareholders and Investors

We require suppliers of tin compounds and tantalum to submit a report using the Conflict Minerals Reporting Template, a global

We believe that promoting constructive dialog with shareholders helps facilitate the company’s sustained growth andstandard for conflict mineral investigations developed by the Responsible Minerals Initiative. In this way, we verify the certification

increase medium- and long-term corporate value. We’ve put in place structures to promote such dialog in accordance

status of the refineries producing the tin and tantalum purchased by our suppliers. If necessary, we also confirm that the refineries

with the following policies:

have been certified as conflict-free by a third party.

1.We have an IR Committee, which reports directly to the president, as an entity charged with formulating the policies

Providing Quality That Earns Customers’ Trustand strategies that guide our IR activities, studying how information should be disclosed, and implementing associatedIn an effort to improve quality control, the Yokkaichi Plant holds a “Quality Control Committee” meeting every quarter.

measures.

The committee, which is chaired by the plant’s director, has a membership that cross-functional members from the facility’s

2.We’ve appointed a director in charge of public relations to oversee issues related to constructive dialog with shareholders
and investors.

organization, including departments responsible for production, quality, and engineering, as well as administrative and back-office
departments.

3.We hold two IR briefings each year as a means of dialog with shareholders and investors, where our president andIts activities are to identify quality issues that arise on a daily basis and the status of how each is being addressed, and then to:

the director in charge of public relations brief the stakeholders. We also work to enhance our information disclosure(1) share these information

by making briefing notes available on our website. Additionally, we actively accommodate requests from investors and(2) verify whether the response status are appropriate

analysts for phone interviews and other access to company executives.

(3) consider investigating the true cause of issues in order to resolve it

4.We work to provide the materials we disclose in both Japanese and English to make it convenient for shareholders andAs an organizational entity that cuts across departmental boundaries, theinvestors who don’t speak Japanese to learn about our operations. Shareholders’ meeting convocations are translated

committee is able to bring multiple perspectives to bear on its verification andinto English in their entirety, including business reports. Those materials are made available on our website, the website

study efforts in order to facilitate improvements in the plant’s managementof the Tokyo Stock Exchange, and the electronic voting platform usedstructures.

by institutional investors.

As an example of the results of this approach, quality-related issues whose

5.We host an annual roundtable with major shareholders with voting

causes cannot be identified can be addressed not on the level of individual

rights about topics such as our business performance and Corporate

employees, but rather on an organizational level through the cooperation ofGovernance initiatives. In addition to reporting views and information

production and engineering departments.

from those events to the Board of Directors and sharing them with

In addition, the results of the four annual “Quality Control Committee” meetings

directors and members of the audit and supervisory board, we use

contribute to ongoing improvements in the management review undertaken

them to improve our governance.

Management
accounting

Plant
director

Qualityassurance

Environmental
safetyQualitycontrol

Facilities
management

Production

Technical
development

Distribution
Utilities

for the management system annual report.
2022 ordinary general meeting of shareholders

29

Stakeholder Engagement

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Communication with the Local Community
Yokkaichi Plant

Disaster Drills

At the Yokkaichi Plant, we place emphasis on informing and understanding local

In preparation for emergencies, Yokkaichi Plant conducts annual joint drills withresidents about our safety, disaster prevention, and environmental protection

the plant’s Self Disaster Team and the local fire department, which are open to theactivities.

public. In fiscal years 2020 and 2021, due to the impact of COVID-19, we cancelled

We hold regular plant tours twice a year and special classes for students from local

the joint training with the fire department and the public was, and conductedjunior high school to build further trust with the local community. In terms of social

emergency drills in-house only. In fiscal year 2022, for the first time in three years,

contribution activities, we voluntarily carry out clean-up activities around the plant,

we held a joint drill with the local fire department, and also invited local community

and we also place importance on local events, such as participating in the annual

associations, with a limited number of people, to avoid the 3Cs (crowding, close

Suzuka River clean-up activities (Suzuka River Clean Operation), which are carriedcontact, and closed spaces) to observe the drill. This time, we used drones fromout in cooperation with local communities and companies.

both ISK and the fire department to project the aerial footage of the drill onto large

In fiscal 2021, these activities were canceled due to the impact of COVID-19

TVs for the visitors to see. We work to improve our level of disaster preparedness

pandemic.

each year by adding new elements to the drills.

Joint drill by ISK’s Self Disaster Team and the local fire department

Blood Drives
Our Head Office in Osaka and the Central Research Institute hold two blood drives

Central Research Instituteeach year, while the Yokkaichi Plant holds three blood drives each year. Between the

The biannual volunteer clean-up of the surrounding area was successfully

three of them, the sites attract a total of about 100 donors for each drive. The blood

conducted in May and November this year, after taking all possible measures

drives have earned ISK letters of gratitude from the governor and from the local

to prevent the spread of COVID-19. However, we were forced to cancel tours

branch of the Japanese Red Cross Society. In 2019, the Yokkaichi Plant received aof the Institute for high-school students again this fiscal year unfortunately,Gold Achievement Award from the Society’s Mie Prefecture Branch, making the site

due to the difficulty of undertaking sufficient steps to prevent infections.

one of just 13 corporations in the prefecture to be recognized with the honor andIn fiscal year 2018, the Institute formed a disaster drill improvement teamhighlighting the extent of its contribution.

consisting of personnel chosen from various departments to further raise

ISK will continue to hold blood drives as part of its community service program.

disaster prevention awareness. Each year the team selects a theme (suchas leaks, fires, or earthquakes), and individual departments hold separate
drills while studying how to improve training content. Comprehensive disaster
drills are then held for all personnel, taking into account lessons learned from

Volunteer clean-up
campaign near the Institutethe departments’ separate sessions. Following the disaster drills in fiscal year
2021, an earthquake-simulating vehicle was used to let employees experience
what it’s like to be in an earthquake in order to raise disaster preparedness
awareness.

Experiencing an earthquake in an earthquake-simulating
vehicleThe blood donation bus at the Yokkaichi Plant

30

Board of Directors and Executive Officers

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Board of Directors (As of June 30, 2022)

Kenichi Tanaka

Hideo Takahashi

Kiyomitsu Yoshida

Executive Director
Chairman

Executive Director President

Director;
Senior Managing Executive Officer

President & Chief Executive
Officer

Organic Chemicals BusinessYasunobu Kawazoe

Masaki Shimojo

Hiroshi Okubo

Director;
Managing Executive Officer

Director;
Managing Executive Officer

Director;
Managing Executive Officer

Director of Finance &Accounting Headquarters

Director of Inorganic Chemicals
Sales & Marketing
R&D Strategy Headquarters

Director of Corporate
Administration & Planning
Headquarters

Directors’ Expertise and Experience Up to three major areas of expertise and experience are noted for each director. The legend below defines the icons used.
The ability to discern changes in the environment in which ISK does business and drive the company
towards realizing its long-term vision in a timely manner based on experience in corporate management andimportant companywide decision-making.
The ability to improve ISK’s strengths in accommodating quality and environmental requirements and developing proprietary technologies. as ISK’s strengths.
Production and · Has production control knowledge and experience and the ability to facilitate improvements and reforms in the value
R&D
chain, productivity, and quality control.
· Has R&D knowledge and experience and the ability to plan and implement new businesses and new-product development.
The ability to exhibit leadership in the area of law- and compliance-based risk management, which isLegal andrisk management essential for sustained corporate activities.
Personnel and The ability to pursue personnel and organizational innovation to fuel growth in corporate value, for example
general affairs by spreading ISK’s corporate philosophy, based on knowledge and experience in human resources hiring,development, evaluation, and organizational operations.
Corporate
strategy7
43

Financialaccounting
ESG

4(Persons)

The ability to assess the needs of each region and set targets and growth strategies
Domestic andinternational market for each product. The ability to use business experience in Japan and other countries
to expand the market and attain competitive superiority.
expansion
The ability to respond flexibly to signs of change and achieve increase in baseearnings. The ability to propose and implement capital policy that ensures thecapability to respond to new investment needs.
The ability to take environmental, social, and governance measures that contribute toachieving a sustainable society. The ability to play a central role in advancing
environmental initiatives in plants and strengthening employee education andgovernance, particularly important for a chemical manufacturer like ISK.

3
2
4

31

Board of Directors and Executive Officers

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Board of Directors (As of June 30, 2022)

Hiroshi Katsumata

Tatsuo Hanazawa

Satoshi Ando

Outside Director

Outside Director

Outside Director

Audit & Supervisory Board Members (As of June 30, 2022)

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Board of Directors and Executive Officers

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

StatusName

Position

Term

Attendance AttendanceCommittees (see Note 2)
at Audit &Number of at Board of Supervisory
Independent
shares held Directors
Board
Evaluation Compensation Personnel Outside(as of March 31, 2022) meetings
meetings
Committee Committee Committee(see Note 1)

Reasons for appointment(see Note 1)

Director

KenichiTanakaExecutive Director
Chairman

8 years

Hideo
Takahashi

Executive Director President
President & Chief Executive
Officer

Kiyomitsu
YoshidaYasunobu
Kawazoe
Masaki
Shimojo
HiroshiOkubo

Mr. Tanaka has exhibited strong leadership since becoming Executive Director President in 2015. In addition to formulating medium-term business plans twice andVision 2030, our long-term vision for 2030 which serves as the basis for the current medium-term business plan, and managing the entire ISK Group in a precise
and efficient manner, he has focused on increasing the effectiveness of the Board of Directors and overseeing the company’s operations since becoming
Executive Director Chairman in June 2021. His appointment reflects the Board’s judgment that he is knowledgeable in the external environment in which the ISKGroup operates and in corporate governance and that he can be expected to help increase corporate value on an ongoing basis.
Mr. Takahashi became Executive Director President in June 2021 after working in research, product development, and sales and serving as plant director and director of the R&D
Strategy Headquarters. Since his appointment, 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 continues to be a driving force in the company’s management through his experience, track record,
and leadership as we strive to realize the Vision 2030 long-term vision. He has been appointed because he can be expected to help increase corporate value on an ongoing basis.
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. As head of
ISK’s organic chemicals segment, a position he assumed in June 2021, he has been involved with planning of business strategy and other policies, deliberations, andoversight of operations in both bioscience and healthcare. He has been appointed because he can be expected to help increase corporate value on an ongoing basis.
Mr. Kawazoe has carried out important operational responsibilities and demonstrated appropriate decision-making and supervision in the areas of finance,accounting, and governance based on expertise in finance and accounting that he accumulated over many years at financial institutions, along with his extensive
experience and track record. He has been appointed because he can be expected to help increase corporate value on an ongoing basis by using this experienceand expertise in the planning of business strategy and other policies, deliberations, and operational oversight by the Board of Directors.

22,600 shares100%(15/15)

-

-

-

-

-

3 years

11,100 shares100%(15/15)

-

-

-

-

-

Director
Senior Managing Executive Officer
Organic Chemicals Business4 years

9,200 shares87%(13/15)

-

-

-

-

-

Director
Managing Executive Officer
Director of Finance &Accounting Headquarters

3 years

18,900 shares100%(15/15)

-

-

-

-

-

7,000 shares100%(15/15)

-

-

-

-

-

Mr. Shimojo has worked primarily in sales, research, product development, and manufacturing in ISK’s inorganic chemicals segment. He has carried out important
operational responsibilities and demonstrated appropriate decision-making and supervision in the areas of R&D and domestic and international market expansion
based on his extensive experience and track record. He has been appointed because he can be expected to help increase corporate value on an ongoing basis byusing this experience and expertise in the planning of business strategy and other policies, deliberations, and operational oversight by the Board of Directors.

5,286 shares

-

-

-

-

-

-

Mr. Okubo has worked in production, environmental, and safety and health departments at our plant. After gaining management experience at an affiliate, hebecame an executive officer at ISK in 2020 and has since worked in corporate planning and administration. He has been appointed because he can be expected
to help increase corporate value on an ongoing basis through the appropriate performance of his responsibilities based on his extensive operational experienceand track record.

Director
Managing Executive Officer
Director of Inorganic Chemicals 2 years
Sales & Marketing
R&D Strategy Headquarters
Director
Managing Executive Officer
New
Director of Corporate
appointment
Administration & Planning
Headquarters

Hiroshi
KatsumataOutside Director

5 years

7,200 shares100%(15/15)

-

a)

a)

b)

a)

TatsuoHanazawa

Outside Director

3 years

2,400 shares100%(15/15)

-

a)

b)

a)

a)

SatoshiAndoOutside Director

2 years

1,000 shares100%(15/15)

-

a)

a)

a)

a)

Mr. Katsumata uses his experience as a director at an industrial gas company as well as his diverse experience and expertise in the field of government administration to offer appropriate advice and oversight, particularly in the areas of business strategy and R&D. He also contributes actively as the chairperson of the
Personnel Committee and as a member of the Compensation Committee and Evaluation Committee. He has been appointed because he can be expected to fulfill
his role as an outside director from an independent perspective.
Mr. Hanazawa offers appropriate advice and oversight, especially in the areas of domestic and international market expansion and the environment, based on his
domestic and international experience, particularly in agricultural policy, and his experience in environmental matters. He also contributes actively as the chairperson of the Compensation Committee and as a member of the Personnel Committee and Evaluation Committee. He has been appointed because he can be
expected to fulfill his role as an outside director from an independent perspective.
Mr. Ando draws on his highly specialized knowledge as an attorney and on his extensive experience and expertise in corporate law to offer appropriate advice andoversight of the company’s management from an objective and legal perspective in the areas of law, risk management, finance, and accounting. He also contributes actively as a member of the company’s voluntarily formed Compensation Committee, Personnel Committee, and Evaluation Committee. He has been
appointed because he can be expected to fulfill his role as an outside director from an independent perspective.

Audit & Supervisory Board Members

Taizo
Kato

Audit & Supervisory
Board Member

6 years

10,700 shares100%(15/15)100%(12/12)

a)

-

-

-

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

Yoshihito
AkiyamaAudit & Supervisory
Board Member

1 year4,382 shares100%(15/15)100%(12/12)

a)

-

-

-

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 Japanand overseas, has been appointed because he can be expected to bring his experience and knowledge to auditing procedures at ISK.

Yoshitaka
Akikuni

Outside Audit &Supervisory Board
Member

7 years

8,200 shares100%(15/15)100%(12/12)

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.

MasaakiHarimaOutside Audit &Supervisory Board
Member11 years

5,400 shares100%(15/15)100%(12/12)

b)

a)

a)

a)

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

Note 1: Attendance at Board of Directors meetings from June 25, 2021 to June 27, 2022.
Note 2: Committee service is indicated by a) (member) and b) (chairperson).

33

A Dialogue among ISK’s Outside Officers

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Progress in the division of functions between the Board of Directors and the Executive Management Committee
Of ISK’s 13 board members, five are Outside Officers (including
three outside directors and two outside audit and supervisoryboard members). They engage in lively discussions on a daily basis
at committee meetings Board of Directors sessions and others.
The five Outside Officers gathered together to talk about what
discussed over the last year.

Discussions at committee meetings

Discussions became both livelier and more
specific after the new president took office
Katsumata: After the change of president last year, discussions at meetings of the
Personnel Committee I chair have focused primarily on human resource matters about
the executive officers and directors who support the president and human resource
development to foster future board member candidates. The focus has shifted from thechange of president to how to create the support system of President Takahashi. For
example, we need a person who is suitable for managing committees like the newly
created Sustainability Promotion Committee effectively.
Hanazawa: One topic we continually talk about in the Personnel Committee issuccessors. It’s a topic we are continually aware of.
Ando: Since the new president took office, we’ve had more specific discussions, due inpart to the effects of the Japan’s Corporate Governance Code. For example, with regard
to human resources involving executive officers, we’ve asked what the new president
expects of them in the future and where he’d like us to make improvements. I think that
discussions are livelier than they were in the past.
Akikuni: We hold specific discussions about individual evaluations based on an
executive evaluation sheet that includes self-evaluations by those in executive
management positions as well as evaluations from supervisors and other information.
We also discussed mechanisms what would allow more fine-grained evaluations.
Katsumat: It’s a good system, one that offers a glimpse of the personality of theindividuals who are being evaluated. In addition to performance, you can find theHiroshi Katsumata

Tatsuo Hanazawa

Satoshi Ando

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

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

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.

Outside Director

Outside Director

Outside Director

Yoshitaka Akikuni

Masaaki Harima

Mr. Akikuni comes to ISK from Resona
Bank Ltd., and he has broad knowledge
in securities and asset management. He
had served as an outside audit andsupervisory board member at an asset
management and trust bank and at achemical manufacturer.

Mr. Harima became an attorney after
serving as a judge. In addition to serving
as an outside director at a listed company,
he has served in several civil servant
positions, including as chairperson of the
Osaka Prefectural Pollution Review Board(to date). He also chairs ISK’s Evaluation
Committee.

Outside Audit &Supervisory Board Member

Outside Audit &Supervisory Board Member

34

A Dialogue among ISK’s Outside Officers

underlying personalities, whether a given individual is humble or full of self-confidence.
There is room for improvement, for example how to incorporate not only supervisors’
evaluations of subordinates, but also subordinates’ evaluations of supervisors. We would
like to add that perspective in the future.
Harima: In personnel affairs, it’s important to have well understanding of people. That’s
why as a member of the Audit & Supervisory Board I try to meet as much as possible
with people in ISK’s business headquarters. With some people, their evaluations on theevaluation sheet may be fine, and you only find weakness when you meet with them
directly.
Akikuni: Since I’m the only full-time Outside Officer, it’s part of my role to communicate
information about operations and personnel affairs to the part-time Officers, although I
regret to say that I’m not yet fully capable of fulfilling that role.
Hanazawa: The scope of the Compensation Committee, which I chair, is morenarrowly defined than the Personnel Committee. Once the year’s accounts havebeen closed, we discuss performance-based remuneration, determine an overall
remuneration figure based on ISK’s net income and the extent to which other mediumterm targets have been achieved, and we decide the relative proportions of baseremuneration and performance-based remuneration. Then we discuss the amounts ofremuneration for individual directors. This year, our discussion focused on how to treat
the proportions that are based on evaluation sheets. In the end, we concluded not toweight evaluations excessively because evaluations are just evaluations, and are by
their nature incomplete.

On the evolution of governance

Carefully reviewing risks in order to be positive
Katsumata: In the dialogue featured in Integrated Report 2021, we talked about
the need to review agenda-setting standards for the Board of Directors Meetingsin order to streamline and accelerate management. Subsequently, we’ve had the
Corporate Administration & Planning Headquarters review suggested agenda items andshift those that do not need to be taken up by the Board to the Executive Management
Committee.
Ando: In fact, we reviewed the Board’s agenda-setting standards, but the number ofdecision-making items coming before the Board didn’t shrink as much as I thought itwould. It’s an issue that we need to continue to discuss.
Katsumata: Anyway, the Executive Management Committee increasingly takes time

About ISK

to discuss the long-term direction of the company and future prospects, such as topics
like how to improve production systems for inorganic chemical products at the Yokkaichi
Plant and how to address sustainability issues.
Hanazawa: Now when an agenda discussed by the Executive Management Committee
comes before the Board, a summary of the committee’s discussion is included. I think it’s agood change. The Executive Management Committee’s role as a venue for discussing
agendas before they make it to the Board has become clear. There’s a proposal from the
Corporate Administration & Planning Headquarters calling for a deliberate discussion of
the long-term direction of the company at least twice a year, and we’ll monitor whether
that actually comes to pass.
One other thing. The topic of how to optimize management speed and risk-taking cameup during last year’s dialogue.
Harima: If agendas that come before the Board only include advantages while leavingout disadvantages and risks, we as Audit & Supervisory Board members are left with nochoice but to point that out.
Hanazawa: If there’s no deliberate risk assessment process, then it’s not possible toembark upon endeavors that pose risks. Now that Mr. Harima and other Outside Officers
have talked about risk assessment, it’s gradually coming to be more clearly reported.
When it’s clear what the risks are, subsequent action can be taken more quickly. I thinkthat’s a good development.
Akikuni: My mission as a member of the Audit & Supervisory Board is to audit
directors’ execution of their responsibilities, but that doesn’t mean that all I do isapply the brakes. What I mean is that I want to support management backed bypositive and appropriate decision-making and risk-taking by monitoring directors’
management based on so-called the principles of management judgement.
Hanazawa: Sustainability issues are one aspect of risk, and the Sustainability
Promotion Committee handles those issues through careful discussion. President
Takahashi has been paying special attention to this committee, in which I also
participate, and I think it’s been effective at giving young people an opportunity
to think about related issues.
Katsumata: I participated online, and the committee probed discussions about topics
that external parties may have interests, for example climate change and human rights.
Since human rights is especially likely to be treated as a major issue, it will be necessary
to solicit the views of outside experts and to address the topic in a serious manner.
Ando: How do stakeholders see these issues? What should ISK do about them as acompany? Both the Executive Management Committee and the Board of Directors are

Value Creation Strategies

Foundation for Value Creation

Corporate Data

expressing their views from both of those perspectives.
Harima: One of the agendas raised in the evaluation of the effectiveness of the Board
involved the Sustainability Promotion Committee communicating with, and providing
adequate information to, us outside directors about sustainability-related issues. We
receive reports on discussions held by the committee, and I look forward to thosecommunications continuing.

Future management challenges

Forward-looking discussions by the Executive
Management Committee will impact ISK’s future
Hanazawa: The production equipment at ISK’s Yokkaichi Plant is becoming outdated,and doubts remain about how well the facility could withstand an earthquake. Rebuilding
the plant is an urgent issue.
Katsumata: Can the plant’s old manufacturing equipment make it until 2030 withoutcausing an accident? We can’t allow such an accident. A serious effort needs to be madeto address disaster preparedness.
Ando: Building new pillars to support the company’s business is also important. The
performance of the company’s businesses is inevitably prone to the effects of outside
factors. Typical examples include rising raw material prices and extreme weather events.
I think it would be a good idea to launch new businesses that can make up for theseweaknesses.
Akikuni: President Takahashi has raised the idea of building a new business as one
way to achieve the Vision 2030 Stage III sales target of over 200 billion yen, but even an
M&A, just to take one example, would not be easy. I think the road to success for ISK is
not limited to adopt a management policy of building and searching for new businesses,
but also to continue polishing its strengths a talented workforce as an R&D-oriented
company and adding value to new-product development and existing products as it
strives to establish a high and consistent level of profitability.
Harima: There’s growing momentum inside the company to discuss challenges thathave been insufficiently addressed to date such as the rebuilding of Yokkaichi Plant orinvestigation of new businesses. This is likely the ripple effect of Vision 2030. However,the direction in which the company should proceed remains unclear, even though it’s
become clearer than in the past. The future of ISK will likely be determined through future
discussions by the Executive Management Committee.

35Corporate Governance

About ISK

Basic Policy

Value Creation Strategies

Foundation for Value Creation

Corporate Data

• Corporate Governance Structure

In addition to making contributions to social development, protection of life and environmental preservation, ISK strives constantly
to respect our shareholders, customers, suppliers, local communities and employees while maintaining transparency in business

General Shareholders’ Meeting

activities abiding by laws and regulations.
In order to enhance corporate value by maintaining steady business growth and securing profitability, efforts to improve business
transparency, reliability and corporate health are among management’s most important concerns, and we have worked hard tostrengthen Corporate Governance through business management and enhanced internal controls founded on compliance.

Selec
tio
dismisn andsal

SuperAvuisdit &or y Boa

Auditinrdg

Corporate Governance Structure

Co-operation
Auditing

Structurally, we operate as a company with an Audit & Supervisory Board. In addition, we set Executive Management Committee
under the Board of Directors in order 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

Co-op

eratiodecision-making related to business activities.

n

Selection anddismissal
Consu

Board of Directors
Executive
Management
Committee

Opiniondtion aSelecmissal
dis

ditor/
dent Au
IndepenAccountants
Public Auditing
ltationnse
on CommitteCompensatieCommitte
Personnel

Furthermore, we have the committees listed on the following page in order to strengthen our Corporate Governance.
On June 28, 2022, we created a Digital transformation Promotion Team under the Sustainability Promotion Committee to

Executive Director and President

spearhead a companywide effort to strengthen our digital transformation (DX) initiatives.

O
Interfnfice ofal AudSustainability Promotion Committee activities(From its establishment in November 2021 to August 31, 2022)

Since its establishment last November, the Committee hasitInternauditinalg

finalized a set of policies concerning its future operations, andit convened five times to discuss topics such as:· Human rights policies· Health and productivity management· Approval of TCFD recommendations· Creation of a carbon neutrality roadmap

The inaugural meeting of the Sustainability Promotion Committee

Oper(Execu ating division
tive Of
ficers, s
etc.)

Internal controlseommitte
C
e
c
n
a
tee
Complint Commit
e
m
e
g
a
n
a
Risk M
Corporateittee
n Comm
io
t
a
lu
a
Ev
tee
Commit
s
n
io
t
la
e
Public R
mitteeotion Com
m
o
r
P
y
it
il
SustainabeeCommitt
n
io
t
a
e
r
sC
Businessmittee
m
o
C
Other
sions
rol divi, etc.)
t
n
o
c
l
Interna tive Officers(ExecuAdvice andguidance

Corporate
Lawyers

36

Corporate Governance

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Major Organizational Entities Related to Corporate GovernanceFunctionsBoard of Directors

Executive Management
Committee

Composition
FunctionsComposition
FunctionsAudit & Supervisory Board
Composition
Functions

Compliance Committee

Corporate Risk Management
Committee

Composition
FunctionsComposition
Functions

Evaluation Committee

Composition

FunctionsCompensation Committee

Composition

Functions

Personnel Committee

Composition

FunctionsPublic Relations Committee

Sustainability
Promotion Committee

Composition
FunctionsComposition

Meets at least once a month to make decisions concerning important matters, report on the progress of operational execution and action plan implementation, review performance, and discuss and make decisions
about how to deal with related issues.
Chairperson
Executive Director and President
Members

Directors

The Executive Management Committee under the Board of Directors in order to speed up decision-making by the Board of Directors and efficiently monitor and assess progress in important activities and projects.
Chairperson

Executive Director and President

Members

The chairperson may require the attendance of such personnel as deemed necessary.

Audits the Board of Directors’ execution of its responsibilities, for example by attending Board of Directors and other important bodies and visiting departments regularly to exchange views in accordance with anaudit plan adopted by the Audit & Supervisory Board, at least half of whose membership consists of independent outside Audit & Supervisory Board members.
Chairperson

Inside Audit & Supervisory Board member

Members
Inside Audit & Supervisory Board members, independent outside Audit & Supervisory Board members
Develops compliance structures based on the corporate philosophy and promotes corporate management predicated on compliance, for example by conducting compliance education and responding to theissues that come from its whistleblowing system
Chairperson (CCO)
Executive Director and President
Members

Directors, Audit & Supervisory Board members, Headquarters Directors, Outside lawyer, Directors of major subsidiaries, ISK Labor Union chairperson

Assesses and manages corporate risk incurred in the course of operations, formulates countermeasures, and deals with risks that have manifested themselves
Chairperson

Executive Director and President

Members

Inside Directors, Headquarters Directors

Analyzes and evaluates the overall effectiveness of the Board of Directors
Chairperson

Independent Outside Audit & Supervisory Board member

Members

Independent Outside Directors, Inside Audit & Supervisory Board members, Independent Outside Audit & Supervisory Board members

Note: Five of seven positions on the committee (71%) are filled by independent Directors and Audit & Supervisory Board members.
Offers views in response to requests for advice from the President, who is delegated by the Board of Directors about concerning the remuneration of directors, executive officers, and other personnel in its
capacity as an advisory body to the Board of Directors.
Chairperson
Independent Outside Director
Members

Independent Outside Directors, Independent Outside Audit & Supervisory Board members

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

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

Directors, Headquarters Directors, and others

Undertakes initiatives to address climate change, human rights, diversity and inclusion, health and productivity management, and DX
Chairperson

Executive Director and President

Members

Directors, Headquarters Directors, and others

37Corporate Governance

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Independence Criteria for Outside Directors

The Evaluation Committee gave this questionnaire to all Directors and Audit & Supervisory Board members. The responses were

Outside Directors and Outside Audit & Supervisory Board members are considered independent if none of the following applies to them.

analyzed and evaluated, 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 the Board of Directors

1. A current or past (within the past 10 years) business executor* for ISK or its subsidiaries (collectively, “ISK Group”)
1

for fiscal 2021.

2. A current or past (within the past 5 years) principal ISK shareholder (i.e., a shareholder that owns 10% or more 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 formore 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 ISK Group have accounted
for more than 2% of said party’s annual consolidated net sales for any of the most recent 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* from ISK Group, other than Director remuneration
2

6. A party, or a business executor of a party, which receives or has received (within the past three years) significant financial

Analysis and Evaluation Results of Overall Board of Directors EffectivenessResults fell from the previous fiscal year in all eight areas, as did total achievement for participants, which declined from 84.6%
in fiscal year 2020 to 76.9% in fiscal year 2021, because some questions were changed.
In addition to the effects of some questions were changed, our analysis indicates that these results reflect a divergence between
participants’ current understanding of issues and associated progress and achievement on the one hand, and an array of increasingly
sophisticated requirements on the other, including the status of initiatives to realize sustained growth and increase medium- and longterm corporate value in line with revisions to the Corporate Governance Code in June 2021, the principles required by the Prime
Market (both principles and supplementary principles), and management founded on the SDGs and ESG considerations.

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 the criteria of #1 to #6
above*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.

Board of Directors Effectiveness Analysis, Evaluation, and Results

Ensuring the Board of Directors’ Overall EffectivenessWith regard to ensuring overall Board of Directors effectiveness, the results differed significantly for inside directors (8 3.0%)
and Evaluation Committee members (75.7%), but the overall figure of 79.1%, while declining somewhat from the 80% level ofthe last three years, indicates that the Board of Directors’ overall effectiveness is being assured.
Future Initiatives
Based on the analysis and evaluation results of the overall Board of Directors effectiveness, the Board of Directors has identified theIn view of the responsibilities for Boards of Directors stipulated in the Corporate Governance Code, and in order to improve thefollowing six priority initiatives, which it is proactively pursuing in order to effect substantial improvement in its overall effectiveness.

functioning of the Board of Directors, an Evaluation Committee comprised of Outside Directors and Audit & Supervisory Board

The Climate Change Team (with responsibilities including complying with TCFD disclosures and creating a carbon neutrality

members has been established under ISK Board of Directors and in line with Board of Director evaluation-related rules. Every year

roadmap), the Human Rights and Diversity Promotion Team (with responsibilities including human rights policies, human rights

since fiscal 2016, this committee has analyzed and evaluated the overall effectiveness of the Board of Directors and provided thedue diligence, and promotion of diversity and inclusion), the Health & Productivity Management Promotion Team (withBoard with its results for deliberation and approval, after which an outline of those results is released publicly. In fiscal year 2021,

responsibilities including earning certification as a Health & Productivity Management Outstanding Organization), the Integrated

as well, an evaluation of the Board of Directors’ overall effectiveness was carried out in accordance with this policy.

Report Team (with responsibilities including production of the Integrated Report), and the Digital transformation Promotion Team(with responsibilities including managing and supporting DX initiatives), all of which report to the Sustainability Promotion

Method of Evaluation

Committee created last November, are spearheading specific initiatives to address a range of issues. In addition to identifying

In fiscal year 2021, the number of questions was changed to 39 (from 45 in fiscal year 2020). Principal changes included thelatent risks affecting the Group and determining the magnitude of their potential impacts and likelihood of occurrence, theremoval of questions with 100% achievement in fiscal year 2020 that were thought would be reliably achieved in the future,

Corporate Risk Management Committee is creating a risk map for the entire Group and taking measures to address them,and the addition of new questions to accommodate the revised Corporate Governance Code and integrate past questions. We

starting with the highest-priority risks.

invited participants to offer their free judgments of the Board of Directors’ overall effectiveness as part of the self-evaluation,

We see working to substantively increase the overall effectiveness of the Board of Directors in order to facilitate the formulation of

and we increased the size of the space for participant comments to better solicit views from directors and Audit & Supervisory

value-creation strategies for the ISK Group and to prepare the foundation for implementing them as ongoing issues, and we will

Board members.

strengthen initiatives in this area going forward.

38

Corporate Governance

About ISKSix Issues to Address in Fiscal Year 2022

Remuneration of Directors(1)We will reassess how the Board of Directors and Executive Management Committee operate in terms of their positioning and roles.

Policy for Determining Remuneration of Directors

Value Creation Strategies

Foundation for Value Creation

Corporate Data

As we look to realize sustained growth and increase our medium- and long-term corporate value, the Executive Management

Director remuneration includes a base remuneration amount and other remuneration, such as performance-based remuneration.

Committee will facilitate deep, high-quality discussion of important matters, including basic policies concerning our business

The amount of remuneration for Directors is approved by the Board of Directors within the limit of the total remuneration amountportfolio, topics that delineate major directions for medium- and long-term issues and business strategy, and formulation of(460 million yen per annum), which had been approved at the 82nd Ordinary General Meeting of Shareholders on June 29, 2005.

a vision for the future. In addition, the Board of Directors will work to realize efficient operations, for example by accelerating

Outside Directors receive only a base remuneration.

decision-making and fostering intensive discussion of important matters by reassessing how it transfers authority for the execution

The maximum amount of remuneration for Audit & Supervisory Board members is limited to the total remuneration amount (90of operations and conducts internal procedures.

million yen per annum) approved at the 71st Ordinary General Meeting of Shareholders on June 29, 1994. It is only a base(2)To ensure active oversight of group companies’ operations, we will require regular reporting on risks and issues while working
to ensure sufficient oversight of directors’ performance of their responsibilities and contributions to overall management.
(3)In addition to pursuing their own studies, for example to acquire necessary knowledge so that they can fulfill their own roles andresponsibilities, directors must provide sufficient oversight of their peers’ performance of their responsibilities.
(4)We will work to substantively strengthen the functions of our internal audit departments and to ensure collaboration between
directors and members of the audit and supervisory board. We will also actively use the results of internal audits and otherinvestigations to inform advice and action so that directors can contribute not only in their own area of responsibility, but also
to management as a whole.
(5)We will ensure to provide clear information about issues requiring decisions and compile materials so that the matters being
discussed are clear at a glance. We will also provide sufficient materials to facilitate decision-making. Directors must provide

remuneration, and individually determined based on deliberation by the Audit & Supervisory Board.
Policies for Determining the Nature of Performance Indicators and for Calculating the Amounts andQuantities of Performance-Based Remuneration and Other Compensation
The performance-based portion of directors’ remuneration (excluding outside directors) consists of annual performance-based
remuneration and long-term performance-based remuneration, which are structured to ensure both objectivity and a connection
with corporate performance in line with the Officer Compensation Regulations approved by the Board of Directors. Annual
performance-based remuneration is calculated based on a comprehensive consideration of the company’s performance, forexample in the form of net income attributable to owners of parent, which is the final result of corporate activities, together withindividual performance evaluation.

sufficient explanation of the agenda topics for which they are responsible, including major risks with the potential to impact

Policies for Determining Non-Monetary Remuneration and for Calculating Associated Amounts and Quantities

ISK’s businesses, so as to facilitate active, extensive deliberation.

The 99th Ordinary General Meeting on June 28, 2022 of Shareholders resolved to introduce a non-monetary remuneration(6)We will address issues related to sustainability in an active and engaged manner, ensuring that the state of their progress

program, which was subsequently adopted by the Board of Directors as described below.

and matters requiring discussion are deliberated by the Sustainability Promotion Committee, communicated clearly to outside

The non-monetary portion of directors’ remuneration (excluding outside directors) consists of transfer-restricted shares, and the

directors and members of the audit and supervisory board, and included in the form of general information in the Integrated

total amount of monetary claims necessary to grant those shares to directors (excluding outside directors) may not exceed ¥90

Report.

million per year (excluding the employee portion for officers who also serve as employees). In addition, the total number of normal
shares newly issued or disposed by the company may not exceed 95,000 per year. (However, if it becomes necessary to adjust

Basic Policy for the Internal Control System

the total number of normal shares that are issued or disposed of as transfer-restricted shares, for example due to a stock split orreverse split involving normal shares, including any gratis allocations, the total number may be adjusted within reason.) The Board

We are continually working to expand and improve our Group internal control systems in order to ensure the appropriateness ofof Directors is responsible for determining the specific timing and distribution of such awards to directors.

subsidiary governance as well as the maintenance of compliance systems. For details, please refer to ISK Corporate Governance

Types and Proportions of Remuneration and Other Compensation for Individual Directors

Report.
Corporate Governance Report (in Japanese)
https://www.iskweb.co.jp/company/pdf/corporate_governance.pdf?t=220705

The relative proportions of base remuneration and performance-based remuneration and other compensation is determined by
the Board of Directors after consultation with the Executive Director and Chairman, taking into account advice sought from theCompensation Committee by the Executive Director and President, to whom the Board delegates the task of considering eachyear’s performance and other factors.

39

Corporate Governance

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Policies for Determining the Timing and Conditions of Remuneration and Other Compensation for Directors

Policy on Cross-Shareholdings

The Officer Compensation Regulations adopted by the Board of Directors stipulate that base remuneration is calculated on a

ISK maintains an amount of cross-shareholdings deemed to build a smooth, stable, and ongoing relationship with businessmonthly basis and paid on the same day as employees’ monthly salaries, while performance-based remuneration and otherpartners, in line with our business strategy. The status of cross-shareholdings is disclosed in our securities report. Other

compensation is paid on the same day as employees’ summer bonus.

shareholdings have been appropriately reduced.

Delegation of Authority for Determining Remuneration and Other Compensation for Individual Directors

Verification of Reasonableness of Cross-Shareholdings

Responsibility for determining remuneration for individual directors at ISK has been delegated by the Board of Directors to

The reasonableness of currently held cross-shareholdings is regularly verified by the Board of Directors about some factors such

the Executive Director and President, who takes into account advice from the Compensation Committee and consults with theas the adequacy of the purpose, the benefits and risks in the context of capital cost, of holding those shares. Based on the results

Executive Director and Chairman.

of verification, the Board of Directors decides whether to continue holding or sell cross-shareholdings.

To ensure that this authority is carried out appropriately by the Executive Director and President, remuneration and othercompensation for individual directors is determined after consultation with the Compensation Committee, which consists of

Cross-Shareholding Voting Criteria

independent outside directors and independent outside audit and supervisory board members. In fulfilling its mandate to advise

With regard to the exercise of voting rights arising from cross-shareholdings, our decision is made based on our comprehensive

and report, the Committee draws on information from executive compensation surveys conducted by third parties and theassessment, which includes the content of the proposal, the performance of the company, its management policies, and fromknowledge of committee members.

the viewpoint of whether or not the resolution will increase shareholder value for the company, and even increase ISK’s corporate
value.

• Remuneration of Directors in Fiscal Year 2021
Total remuneration by type

Director category

Total
remuneration(Million yen)

Directors (excluding Outside Directors)

216

178

37

7

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

36

36

-

3

Outside Directors

55

55

-

5

Total

308

270

37

15

Fixed
Performance-based(Million yen) (Million yen)

Applicable
Directors(Persons)40

Risk Management

About ISK

Basic Policy

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Risk Summary and Measures (extract)

We in the 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 thehealth, safety, or interests of stakeholders, restoring our business operations as soon as possible, protecting our corporate
resources, and minimizing the damage to our business.

Risk Management System
We have “risk management regulations” governing our basic policy on risk management and risk management system. We havealso established the Corporate Risk Management Committee, aimed at appropriately managing and preventing various risks
surrounding our business. The Corporate Risk Management Committee is held twice a year, or whenever necessary, summarizing
risk assessments, selecting major risks with high priority, discussing plans for risk countermeasures, and confirming progress on
those countermeasures.
The Sustainability Promotion Committee’s jurisdiction includes priority issues (Materiality), climate change risk, and human rights

Risk
Aging andbreakdown ofequipment andmachinery

Chaired by the President,
comprising Directors of each Headquarters

GM of each division

Comprising GM and presidents of subsidiaries

Risk Management Process
Plan

Do

Check

Act

Risk of being unable to continue sales of existing• Appropriately gather information relating to laws and regulations and registration
products due to more stringent product registration
requirements
rules or regulations

Mass infection,disease• Establish Headquarters of Infectious Disease Response, study and implement
Risk of factory shutdown due to outbreak of infectious
measuresdiseases such as COVID-19 or seasonal influenza• Thoroughly conduct basic infection prevention measures and hygiene control• Utilize various work styles like remote work

Earthquake,tsunamiRisk of damage to facilities and products, suspensionof production and business operations, and humancasualties if the plant should suffer serious damage
due to tsunami, liquefaction, or other factors resulting
from a large-scale earthquake• Provide aging plant facilities with seismic reinforcement• Step up product storage at multiple bases (at elevated locations, etc.)• Update business continuity plans• Get business interruption insurance to cover business continuity expenses as a
response after earthquake• Sign committed line of credit with financial institutions, which is applied toearthquake disasters

Difficulty
procuringmaterial, problem
at supplier

Risk of supply shortage for specific raw materials due
to operational accidents, political instability, or stricter
environmental regulations in producing regions orcountries.
In the case of overseas toll manufacturers, risk oflimitations on procurement due to stricter regulationsin the country or their operational accidents• 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

Poor governanceat group
company• Organize and clearly stipulate the functions and roles of Three Lines model
Risk of accounting fraud, bribery, or quality fraud(business divisions, back-office divisions, internal audit division)
because of lack of thorough control over overseas• Make rules for group companies
group companies• Refine and publicize internal rules, strengthen internal auditing

Monitor progress on
implementation ofcountermeasures

Summary andimprovement plan

Technology drain

Risk of reduced product competitiveness due to drain • Apply for and acquire intellectual property rights such as patents
of technology or expertise• Conclude agreements to protect confidential information and rights

Worker shortage,
non-transfer ofskills andtechniques

Risk of not securing human resources, or skills andtechniques not being passed from the experienced to • Hire employees through diverse channels
younger employees, due to fewer young people, an • Improve visibility of know-how
aging population, change in the supply–demand • Train human resources, and study ways to make work environment more pleasantbalance of the labor market, and increased job
and expand employee support systems
mobility

Implement risk assessment
Identify risks from a company-wide perspective
Assess risk impact and probability
Select major risks to address
Formulate countermeasure plans against risk
Allocate risks to each person/division in charge
Decide on risk countermeasure policies
Decide on action plan for countermeasures

Implement risk
countermeasures

Review progress on
implementation

Report to management
Consideration on
countermeasure plans• Perform thorough repairs and preventive maintenance during annual
Risk of plant shutdown due to inoperable situation
maintenance shutdown
caused by aging, corrosion, etc., of key equipment• Replace equipment when the right timeand machinery• Promote the structure for backup systems

Revised andstricter laws andregulations

Report matters discussed to Board of Directors

Corporate
Risk Management Committee

Measures• Take proper approach to countries’ registration agencies and authorities
Delay in, orRisk of postponement, or abandonment, of launch of • Assess other companies’ agrochemicals registration and survey their registration
failure to achieve,
new agrochemicals due to stricter agrochemicalstatus
product approval
related regulations• Secure personnel with expertise in highly specialized fields, ensure handover ofor registration
registration know-how

risk, for which it advances their measures in coordination with the Corporate Risk Management Committee.

Board of Directors

Summary41

Risk Management

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Risk Map
Large

Risks related to major operations such as procurement, manufacturing, etc.
Risks related to functional continuity such as general affairs, HR, etc.
External environment risks
Risks in management strategy
Environmental risks
such as leakage ofhazardous material

Earthquake, tsunami

Advent ofinnovativetechnology

Fire, explosion

Lawsuit,Violation of law
contract(Anti-Monopoly Act)
deficiency trouble

Impact on
business

Dependence on
specificcustomer

Incorrect selectionof development
material

Difficulty procuring
material, problem
at supplier

Crop injury by
agrochemical
products

Aging and breakdown Delay in, or failure to achieve,
product approval orof equipment andregistration
machinery

Reversal ofdeferred tax
asset

Inadequate
ESG response

Abnormal weather(agrochemical sales)

Skyrocketing
fuel prices

Mass infection,disease

Economic
downturn

Poor governanceat group company

Quality defect,
recallNegligence inhandling
information

In-house corruption
such as data
falsification

Soil
contamination

Missing tax filing,misrecognition of
tax law

Cyberattack

Financial risk(exchange rate, etc.)

Failure of new business,
capital investment,
M&A
Problems withcustomers or
suppliers
Workplace
accident

Failure of
IP strategy

Cancellation or
erasure of permits,
licenses, or registrations

Revised and stricter
aws and regulations

Skyrocketingraw material
prices

New entries andintensifying
competition

Delay in, or stoppage of,product or technology
development

Technology
drain

Inadequate ESG
response by
supplier

Stranded
assetsCustomerbankruptcy
and bad debt

Internationaltax risk

Natural disaster(except for earthquake
and tsunami)

Changing
consumerawareness

International conflict/dispute, terrorism,
skyrocketing tariffs

Worker shortage,
non-transfer of skills
and techniques

Change in the customer/
supplier’s environment

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.

42Compliance

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Basic Philosophy
ISK Group places the utmost importance on compliance. We have formulated a code of conduct in order to carry out businessrooted in our corporate philosophy, with the aim of thoroughly complying with laws and regulations, conducting fair and equitablebusiness practices, and maintaining a high level of corporate ethics.
Corporate Philosophy

p05

Highlights from recent years include the following.
• Discussion and revision of the ISK Group Code of Conduct• Discussion of and response to whistleblowing and compliance violations• Preparation and monitoring of compliance training plans

ISK Group Code of Conduct• Report on and discussion of compliance activities in each divisionhttps://www.iskweb.co.jp/eng/compliance/observance.html• Training for board members on the following topics, led by outside instructors
Japan’s Companies Act and governance as they relate to corporations

Initiatives for Compliance
Because a company cannot exist without society’s trust, we have launched a compliance committee towards fulfilling ourHarassment and insider trading
How to approach the SDGs** Workshop studying the SDGs and ISK’s related strengths (see next page)

corporate responsibility and contributing to society. The committee puts compliance front and center and ensures that we
promptly report any compliance violations.

Compliance Promotion System (Overview)

Establishment of Whistleblowing Rules

Based on our reflection on the Ferosilt problem, in November 2005 we appointed a chief compliance officer and established theIn December 2021, ISK established its Whistleblowing Rules. Previous to that, in December 2005, the whistleblowing

Compliance Committee. This committee operates under the Board of Directors and is chaired by the President (as Chief

contact office was set up, and our code of conduct has since covered the whistleblowing system, but these newly

Compliance Officer), and comprises directors (excluding outside directors), directors of each headquarters, audit andestablished rules clarified the details.

supervisory board members, affiliate presidents, a labor union representative, an outside lawyer, and the secretariat. In

While the code of conduct stipulated that whistleblowers would not be disadvantaged within the company for

addition, each division has a compliance promotion manager and a compliance leader.

whistleblowing, the Whistleblowing Rules go further by stating that any person acting unjustly towards the

Since the first meeting on December 8, 2005, the Compliance Committee has met about twice a year. It currently meets every

whistleblower will be subject to disciplinary action.

March and September, with March 2022 marking the 32nd session.

As for the number of cases of whistleblowing or consultation related to compliance in recent years, there were two
in fiscal 2018, four in fiscal 2019, four in fiscal 2020, and two in fiscal 2021.

43

Compliance

About ISK

Fiscal 2021 Compliance-Related Training and Awareness-Raising at ISKISK Group carries out compliance-related training in accordance with an annual plan, which is discussed and approved by theCompliance Committee. Besides job grade-specific training, training on specific topics is planned and carried out according tosocial conditions. Many ISK Group members joined training.
Online learning for new employees

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Compliance library training program• Plant operators watch videos in the compliance library in their workplace, with the foreman providing explanations and guidance.
• The videos present short dramatizations of familiar, everyday compliance issues, which workers watch periodically at workplace meetings and other gatherings.
• In fiscal 2021, a cumulative total of 673 sessions were held, including the specialized law seminars and library training, witha cumulative total of 6,912 participants.

Focus: General compliance-related basic training
ISK: 48 employees, Affiliates: 21 employees Total: 69
Advanced compliance training for newly appointed assistant managers
Focus: Development of human resources who facilitate compliance-based management
ISK: 23 employees, Affiliates: 4 employees Total: 27

SDGs Training for Board Members
There are 17 Sustainable Development Goals (SDGs) with the aim ofcreating a better world. Participating in the SDGs gives companies
new business opportunities.

Group training for newly appointed managers

This training focuses on SDGs issues ISK should tackle, with participants

Focus: Acquisition of compliance knowledge required by managers

discussing concrete actions ISK could take using its management

ISK: 11 newly appointed managers

resources.

Insider trading regulations e-learning for affiliate company managers
Affiliates: 79 employees• Participants with legal knowledge about insider trading under Japan’s Financial Instruments and Exchange Act took thiscourse summarizing the key points for company employees.

Implementation Plan for Fiscal 2022 Compliance-Related Training
and Awareness-Raising Efforts

Harassment e-learning

In fiscal 2022, ISK is continuing its job grade-specific training, with online learning for new employees, online learning for newly

ISK: 97 employees, Affiliates: 47 employees Total: 144

appointed assistant managers, and group training for newly appointed managers. For topic-specific training, we are looking into

• Used teaching materials covering Japan’s Power Harassment Prevention Act.

holding training covering issues such as law revisions. For periodic workplace-specific training, we will urge each workplace toWorkplace-specific specialized law seminars

continue holding specialized law seminars and library training. We will also make more employees aware of our whistleblowing• Newly begun in fiscal 2021, these seminars give participants knowledge on laws covering their particular workplace with thesystem and the history of our compliance activities.

goal of strengthening adherence to laws, the basis of compliance.

Job grade-specific training• Managers select specialized laws that relate to their workplace and lead periodic seminars in that workplace.

• Group training for newly appointed managers (appointed in FY2022) • Online learning for newly appointed assistant managers• Workplace members take turns being the instructor in sessions in which they explain specialized laws, thus raising workplace(appointed in FY2022) • Online learning for new employees (FY2022 new hires and FY2021 mid-career hires)

knowledge from the bottom up.

Topic-specific training• Publicizing of whistleblowing system (Whistleblowing Rules) • Publicizing of the history of ISK’s compliance activities• Online learning on personal information protection
Workplace-specific training• Workplace-specific specialized law seminars • Compliance library training

44

Responsible Care Activities

About ISK

ISK’s Responsible Care
Stakeholders

assurance. In particular, our activities encompass

Environmental
protection

chemical product and distribution safety specific tothe chemical industry, as well as environmental

Safety anddisasterprevention

Local residents
Customers

and occupational health and safety, along withManagement
Occupational
Chemicals/
systemhealth andproduct
safetysafetydialog with society, common to many different

Distribution
safetyprotection, process safety and disaster prevention,

Dialogwithsociety

Government

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 andhas subsequently spread to companies around the world.

Institutional investors
Shareholders
Business owners
Employees, others

industries.

Responsible Care Achievements in Fiscal 2021 (Summary)Category

Evaluation

Planned emission reduction of
PRTR-listed materials

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

Reduced by 5.2% year-on-year,
thus achieving 1% reduction target.

✓

Reduce, reuse, and recycle waste

Continued reducing industrial waste by reusing and recycling materials with recoverable
value.

✓

Process safety anddisaster prevention

Eliminate plant accidents(fire, explosion, leakage)

There were no plant accidents.

✓

Occupational healthand safety

Achieve “zero lost time accidents” ateach ISK site

There were two lost-time accidents at the
Yokkaichi Plant and one at the Head Office.

−Distribution safety

Implement emergency response card
(so-called Yellow Card),
GHS label, and SDS management

Yellow Cards, GHS labelling, and SDSs wereappropriately implemented.

✓

Chemicals/
product safety

Properly manage chemical substances and provide customers with SDSs

We appropriately notified the authorities
on the use of chemical substances andprovided SDSs.

✓

Dialog with
community

Provide information to community
Interact more with local communities

More two-way communication was carriedout with local citizens.

✓

Most investment is allocated to the Yokkaichi Plant. The graph below shows the trends of investment in environmental measuresand investment in safety and disaster prevention. In fiscal 2021, we invested intensively to replace aging equipment, prepare forearthquakes and other natural disasters, boost occupational safety, and improve working environments.

Fiscal 2021
Achievements

Investment in Environmental Measures and Safety and Disaster Prevention Measures

Environmental
protection

Objectives(Fiscal year)
Investment in environmental measures

2021

Pollution countermeasures (water quality)
Pollution countermeasures (atmosphere)
Pollution countermeasures (noise, vibration, malodors)
Energy conservation/CO2 emission reduction measures
Industrial wastes/recycling measures
Measures to reduce hazardous chemical emissions
Soil/groundwater contamination countermeasures
Greening of company premises
Other

2020
2019

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

2018
2017
1,000

Corporate Data

Companies that handle chemicals voluntarily undertake Responsible Care activities to provide environmental, health, andaimed at environmental, health, and safety

500

Foundation for Value Creation

What is Responsible Care?

ISK undertakes Responsible Care (RC) activities(Million yen) 0

Value Creation Strategies

1,500

2,000

2,500

3,000

45

Environment

About ISK

Announcement of Support for TCFD Recommendations

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Strategy

ISK has announced its support for the Task Force on Climate-Related

Chosen Climate Change Scenarios

Financial Disclosures (TCFD)* recommendations.

Referencing climate change scenarios published by the IEA (International Energy Agency), we selected scenarios of a rise of*TCFD (Task Force on Climate-Related Financial Disclosures): The TCFD recommends that companies evaluate the financial impact of the risks
and opportunities posed by climate change on their business management and provide disclosure on the four areas of governance, strategy, risk
management, and metrics and targets. (TCFD website: https://www.fsb-tcfd.org/)

ISK Group has pursued and strengthened sustainable management initiatives from the perspective of SDGs for the “Vision 2030

1.5–2°C and 4.0°C. Recognizing that climate change’s impact on business becomes more evident in the medium- and long-term,
we analyzed the impact of climate change until 2050, as the time horizon.
Analysis of the scenario for the first year, fiscal 2022, covers the inorganic chemicals business, which accounts for about half of
ISK’s net sales and a major portion of CO2 emissions.

Stage I,” the Medium-term Business Plan of the Vision 2030. In view of emergency and importance, ISK Group is making efforts
toward the “Dealing with climate change, reducing environmental impacts” as an identified priority issues (Materiality). ISK Group

Average Worldwide Temperature Change Based on 1850–1900

strives to analyze, examine, and disclose the information related to the climate change issues under the TCFD recommendations,( ℃)
5and in carrying out business activities, ISK Group will contribute to address environmental and social issues to realize
a sustainable society and improve its corporate value.

SSP5-8.5

4

SSP3-7.0

3

SSP2-4.5

2

SSP1-2.6
SSP1-1.9

10

Governance

-1

1950

Concrete efforts in response to climate change are carried out
by our Climate Change Team. This team operates under the
Sustainability Promotion Committee, which reports directly to
the President.
The team comprises people from factory management,
manufacturing divisions, administrative department, and ISK

Board of Directors
Discuss, report

Decide, supervise

Executive Director President

affiliates.
The efforts and measures the team comes up with aredeliberated on at Sustainability Promotion Committee meetings

Sustainability Promotion Committee

2000 2015

4°C scenario (equivalent to SSP5-8.5)
Maximum emissions scenario with no climate policy anddevelopment dependent on fossil fuels(Stated Policies Scenario)

2050

2100

Source: IPCC 6th Assessment Report

1.5–2°C scenario (equivalent to SSP1-2.6)
Scenario with sustainable development and climate policy to keep
temperature rise under 2°C compared to pre-industrial levels(Sustainable Development Scenario, Net Zero Emission by 2050 Scenario)

Scenario Analysis Process
Identify major risks andopportunities• Gather information on risks and opportunities in the chemical industry.
• Identify climate change risks and opportunities for ISK, and narrow down the major potential risks
and opportunities that could have a large impact on our business.

held at least twice a year, and those approved are consulted on
and passed by the Board of Directors.
The progress of activities by the Sustainability Promotion
Committee, including the Climate Change Team, is reported
every three months to the Board of Directors, which supervises

Climate Change Team

Gather future forecast data

• Gather highly reliable, external future forecast data related to major risks and opportunities.
• Organize the future forecast data for each scenario and, along with relevant personnel at ISK,
examine possible future world outlooks.

Calculate impact on business• Using the collected future forecast data and in-house data, quantitatively assess what possible
impacts the highly important risks and opportunities will have on business for each scenario.

these activities.
Consider responses• Consider ways to deal with climate change risks and opportunities that have a particularly
large impact on business.
• Consider other efforts and ways to implement them when necessary.

46

Environment

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Risk Management

Scenario Analysis Results
The ISK Group used external information to analyze the main climate change risks and opportunities in the inorganic chemicals business, and gathered future forecast data

One of the eight priority issues (materiality) that the ISK Group has identified isrelated to each risk and opportunity.

“dealing with climate change and reducing environmental impacts.”

Based on this, we considered the risks and opportunities that arise from the transition to the carbon neutral society under each of the 1.5–2°C and 4°C scenario. We thenIn recognition of the urgency of climate change, the ISK Group has established theanalyzed the major risks and opportunities that could impact our business up until 2050.

Climate Change Team under the Sustainability Promotion Committee. This team

As a result, for the 1.5–2°C scenario, we identified risks such as greatly increased operating costs due to the imposition of a carbon tax on CO2 emissions.

identified climate change risks, the results of which are assessed and controlled by

Therefore, recognizing the importance of reducing CO2 emissions across the entire ISK Group, we will proceed with various planned measures towards achieving carbon

the Sustainability Promotion Committee. When necessary, matters are reported toneutrality by 2050.

the Corporate Risk Management Committee.

In our plan, we will expand our scenario analysis to include our organic chemicals business.
Business Risks and Opportunities Identified through Risk Level Assessment and Scenario Analysis (Inorganic Chemicals Business)
Major Risks and Opportunities

ExplanationTimehorizonIncreased operating costs due to the imposition of a carbon tax on CO2
Introduction of carbon tax, stricter CO2 emission emissions
Policies/regulations
Medium–longregulations(For 1.5°C: Cost increase of approx. 8.4 billion yen in 2030, approx. 16
billion yen in 2050*)
Technologies
Transition / 1.5–2°CTime horizon: Short term: 0–5 years, medium term: 5–10 years, long term: 10 years or more

Risks
Financial
impactBusiness Opportunities and Response

Large• Shift boiler fuel away from coal
• Rebuild manufacturing systems• Implement carbon capture and use renewable energy• Shift to meeting consumer needs for low-carbon
products
Delay in developing low-carbon products, delay in developing and• Increased demand for electronic component establishing manufacturing systems for electronic component materials
materials

MediumMedium• Expand sales of heat shield materials and others that reduce environmental
impact, create new technologies and products• Speed up development of and strengthen manufacturing systems for electronic
component materials for MLCCs (multilayer ceramic capacitors)

Rising raw material costs(titanium ore, coke, others)

Increased procurement costs, rising material prices due to limited availability

MediumLarge• Increase yields and reduce waste• Reduce CO2 in procurement through cooperation with suppliers and the industry

Energy cost fluctuations

Sharp price fluctuations in coal, fuel oil, gas, and electricity

Short–medium

Large• Diversify the energy sources• Pursue thorough energy savings

Greater awareness of environmental consciousness
Fewer product orders and lower investor ratings due to delay in decarbonization
among customers

Medium-Rise in severity of extreme weather events such as
Property damage and lost profits due to disasters
cyclones and floods

Short

MediumMarkets

Reputation

Physical / 4°C

Acute• Proactively strive to reduce environmental impact• Pursue thorough information disclosure• Expand and improve BCPs, conduct drills• Increase the number of suppliers• Consider a backup manufacturing system* 1.5°C scenario: Carbon pricing estimates: $130/t-CO2 in 2030; $250/t-CO2 in 2050 (IEA’s Net Zero by 2050 scenario)

47

Environment

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Drawing a Road Map to Carbon Neutrality

Indexes and Targets
GHG (Greenhouse Gas) Emissions of ISK Group in Japan (1,000 t-CO2)

The Yokkaichi Plant, our flagship production base, has been using a coal-fired cogeneration system to achieve optimal energy
costs in manufacturing. But because of the occurrence of extreme weather events due to climate change, reducing CO2 emissions

GHG emissions

FY2019 (base year)

FY2020

FY2021

Scope1

470

423

486

stage CO2 reductions, with the Yokkaichi Plant at the center of this effort.

Scope219

19

22

We aim to systematically reduce CO2 emissions (Scope 1 and Scope 2) 30% by 2030 compared to fiscal 2019. This will be

Total

490

442

507

achieved, for example, by replacing coal for boilers with low-carbon fuels, rebuilding manufacturing systems, thoroughly

GHG emissions calculated based on GHG Protocolhas become a priority issue. We have therefore drawn a road map to carbon neutrality for the ISK Group in Japan through multi-

saving energy, using renewable energy, capturing CO2 in various processes, and improving facilities. Towards achieving carbon
neutrality in 2050, in addition to the measures mentioned above, we will aim to dramatically reduce emissions through innovativetechnologies, and explore the development and implementation of decarbonization technologies such as CCUS (carbon capture,

ISK Group Aiming for Carbon Neutrality by 2050
With climate change becoming a major worldwide issue, the ISK Group has identified dealing with climate change and reducing
environmental impacts as priority issues (materiality) and aims to become carbon neutral by 2050.

utilization, and storage).
• CO2 Emission Reduction Road Map
Approx. 500,000 tons

30% reduction
Shift boiler fuel away from coal

Reduction Targets
The ISK Group in Japan has set the following reduction targets for CO2 emissions (Scope 1 and Scope 2). We willcontinue to strive for reduced emissions and carbon neutrality in order to promote Climate Change Mitigation andRebuild manufacturing systems+CO2

Use renewable energy, capture carbon

Adaptation.

Carbon neutral

Thoroughly save energy
Improve processes+CO2

2030: Target CO2 emissions reduction by 30% (against FY2019)
2050: Challenge carbon neutrality (net zero emissions)

Use innovative technologies, other

Carbon negative

2019

Base year

2030
Target

+CO2
-CO2
2050

Net zeroTarget48

Environment

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Environmental Protection
Yokkaichi Plant’s Material Balance in Fiscal 2021

Atmospheric emissions
Sulfur oxides (SOx)7,400 Nm

Nitrogen oxides (NOx)3

194 tons

PRTR-listed substances

12 tons

CO2 emissions from energy used in production activities
CO2 emissions

380,000 tons-CO

2

Energy and raw materials
consumed

Production of chemicals,
waste generation

Energy*1

Products*2

140,000 kiloliters

140,000 tons

(crude oil equivalent)(titanium dioxide equivalent)

Industrial waste
Raw materials
Titanium ore

Disposal volume130,000 tons Others

91,000 tons

Industrial water

15 million m

3

PRTR-listed substances

1,600 tons

Seawater

11 million m

3

Emissions into public water areas
Wastewater

27 million m

COD

3

39 tons

Nitrogen

146 tons

Phosphorous

1.3 tons

PRTR-listed substances

63 tons*1 Heavy oil, LNG, steam, and electricity are used as energy sources. The combined usage volume is expressed as a crude oil equivalent figure 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.

49

Environment

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 humanhealth and ecosystems. It also aims to encourage companies to exercise self-restraint through disclosure. The

About ISK

Atmospheric Emissions (kg)

Yokkaichi Plant and the Central Research Laboratory handle 27 substances and one substance covered by the PRTR,
respectively. These have been reported to the government.
The graphs show the change in the amounts released and transferred at the Yokkaichi Plant in the past five years.

Emissions into Public Water Areas (kg)n-Hexane
Chloroform
Others

259
1,200

1,457
1,867
1,200

3,672

328
1,100

36,000
8,100

7,300

7,300

40,000Due 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.

Reducing Environmental Impact on Atmosphere and Water Areas

2017

2018

2019

2020

2021 (FY)SOx Emissions (Nm3/year)

The graphs show the amounts of substances, covered by total mass emission control, discharged into the atmosphere

7,435

and public waters at the Yokkaichi Plant.

21,0002017

53,0002018

44,0002019

10,231

8,000

18,00023,00036,00032,0002020

2021 (FY)

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

Corporate Data

Hydrogen fluoride andits water-soluble salts
Others441,785
534,114537,990130,000 441,449
3,400 120,000 130,000 410,449 110,000
5,000 100,000 2,900
6,100
2,900
1,200,000 1,000,000 1,000,000

830,000 1,000,000

2017

2020

2018

2019

2021 (FY)

COD in Public Water Areas (kg/year)

398,391 385,025

The plant has voluntary emission standards that are stricter than the total mass emission control values set underJapan’s Air Pollution Control Act and Water Pollution Control Act.

5,500

9,800
7,700

Manganese and its compounds
Chromium and trivalentchromium compounds

5,258
26,000Foundation for Value Creation

Amount Transferred Off-Site (kg)

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

1,600
534
1,200

Value Creation Strategies

291,677
4,503

4,289

52,114
4,062

42,277

3,404

The ammonia recovery plant, installed in 2019, operated throughout the year in 2020, thus reducing the nitrogen

39,194

148,134 146,343

35,152

39,189load into public waters even further than in 2019.

2017

Reduction of By-product Inorganic Sludge

2018

2019

2020

2021 (FY)Disposed Volumes of Inorganic Sludge (tons)

Unnecessary by-product solids (inorganic sludge), generated by each production activity such as titanium dioxide,

2018

2019

2020

2021 (FY)

2017

2018

2019

2020

2021 (FY)

Air Radiation Dose Rate Originating from Radionuclides
Contained in Industrial Waste (Inorganic Sludge)
Voluntary control standard value (0.14 μGy/h)*Maximum air radiation dose rate (μGy/h)
Average air radiation dose rate (μGy/h)are properly transported to an industrial waste disposal site. After periodic maintenance of the Yokkaichi Plant in
October 2016, we switched to a new method to reduce the generation of the inorganic sludge and it has been

2017

74,004decreased.

67,725

66,11262,19052,860Due to the COVID-19 pandemic, production of titanium oxide was lower than usual in fiscal 2020, and subsequently

0.14
0.12

the amount of inorganic sludge generated also decreased.
0.06

0.12

0.14

0.13
0.11

0.07

0.07

0.07

0.07

2018

2019

2020

2021 (FY)

Controlling Air Radiation Dose Rate of Inorganic Sludge
Ore, used as a raw material for titanium dioxide, contains trace amounts of radioactive impurities such as uranium
and thorium, and these are treated and disposed of as waste. Prior to being transferred as industrial waste, radiationlevels are measured in accordance with a voluntary control standard to ensure that they are safe.

2017

2018

2019

2020

2021 (FY)2017*The voluntary control standard value (0.14 μGy/h) is equivalent to
1mSv/year, an estimate of a level safe to the general public.

50

SocialAbout ISK

Occupational Health and Safety

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Process Safety and Disaster Prevention

Overview of Occupational Health andDaily Calisthenics

Process Safety and Disaster Prevention Initiatives

Safety Activities

It’s not known exactly when ISK began holding daily

Safety control is the foundation of ISK’s business. At the Yokkaic-

ISK’s health and safety policy is to ensure the safety, security, andcalisthenics, but it has for sure been held every day before

hi Plant, our target is to eliminate fires, explosions, and any kinds

maintain health of employees and local residents by complying

work since the 1950s. Daily exercise helps prevent injuriesof leaks. We conduct risk assessments with What-If Scenario

with health and safety-related laws, preventing accidents andand are important in alerting employees to their physicalAnalysis: when installing new equipment or upgrading existingdisasters, building a pleasant work environment, and constantly

condition on that day. Daily calisthenics are also believed toones, when updating production methods, and when doing safetyraising the level of health and safety. The Yokkaichi Plant has

maintain good health. With average employee age increasing,assessments of existing equipment where high-risk items sucha target of achievinge “zero lost time accidents”. Following acalisthenics are growing in importance and ISK will continue

as hazardous substances and high-pressure gas are handled.

series of non-lost-time work accidents in the first half of fiscal

to hold them in earnest.

Then, countermeasures are taken for the extracted potential

2021, the plant declared a safety emergency and strove for zerorisks. We also focus on accident case study education, andworkplace accidents during a concentrated period. As a result, incompany executives conduct periodic safety patrols.

addition to achieving this target, it also raised safety awareness

Earthquake and tsunami evacuation drills to prepare for aamong employees. Regarding workers’ health, we are conducting

megathrust earthquake are held annually for all personnel andfollow-ups on health checkups to ensure that medical treatment isvehicles using the Yokkaichi Plant. This improves our ability toprovided as early as possible when necessary.

respond quickly and appropriately to such emergencies.

A safety patrol

At the Central Research Institute, although there were no employee
Hazard Simulation Classes for New Employees

accidents during their commuting time in fiscal 2021, there wereand Mid-Career Hires

two non-lost-time work accidents. Following these, we stepped up
measures to prevent further accidents, including reviewing work

Morning calisthenics

In 2019, we added hands-on training to our classroom-centeredhealth and safety training for new employees and mid-career

procedures and thoroughly informing and reeducating employees.

hires. Using model equipment so employees can experience
Heatstroke Prevention

risks such as being exposed to liquids when operating valves,

With increasingly hot summers prompting greater risk ofthe training gives all participants firsthand experience in on-siteheatstroke, we have been requiring relevant employees todangers.

take courses in preventing heatstroke in the pre-summer

ISK also sends groups of employees to take danger simulation

period. Led by instructors from beverage manufacturers,

seminars at outside training facilities, where they do things likethese courses explain how to prevent heatstroke by, forpractice hanging in mid-air with safety belts and experience a

example, staying hydrated and knowing the symptoms ofsimulated accident of getting pinched by or caught in equipment.

heatstroke. These courses are also recorded on video andThis heightens their awareness of precaution and teaches themmade available for viewing on company PCs for the education

to avoid dangers in their actual work.

Practice hanging by a safety beltof all employees.
Heatstroke workshop

51

SocialAbout ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

ISK Group Policy on Human Rights
We formulated the ISK Group Policy on Human Rights to further our efforts in respecting individuals. Based on international humanrights standards such as the International Bill of Human Rights, the policy proclaims ISK’s dedication to preventing discrimination

Message from an Outside Expert

and harassment and respecting individual privacy. It also details how we implement education and training to effectively achieve

The ISK Group Policy on Human Rights, which explicitly draws on the International

these goals and conduct due diligence, as well as disclose pertinent information. The ISK Group Policy on Human Rights will guideBill of Human Rights, the ILO’s core labour standards, and other relevant documents,

our efforts to further respect human rights at all our worldwide bases. The policy, which was formulated with advice from outside

provides a detailed accounting of the ISK Group’s responsibilities concerning respect

experts, was approved by the Board of Directors on April 8, 2022.

of human rights in its business activities. Its broad understanding of the foundations ofprohibited discrimination and its acknowledgment of the need to coexist with the local
community anticipate domestic laws, and as such, they deserve particular praise. In<ISK Group Policy on Human Rights (Summarized)>itself with the United Nations Guiding Principles on Business and Human Rights.

Attorney, New York State-licensed attorney
Member, Steering Committee,
Business and Human Rights Lawyers Network JapanThe ISK Group’s corporate philosophy embodies the following principles:

The process itself, in which ISK conducted an exhaustive series of internal

Emi Omura•Contributing to a better society, life and environment through chemical technologies; •Respecting shareholders, customers,

consultations so that it could ensure the new policy would permeate group companies’ operations and carefully sought input

suppliers, local communities and employees; •Abiding by laws and regulations and maintaining transparency in businessfrom outside experts concerning the latent negative impacts of its business activities on human rights (human rights risks), is

activities; and •Respecting the human rights of ISK Group’s stakeholders.

also rich in meaning and significance.

In light of these principles, ISK Group adopts the following Policy on Human Rights (this “Policy”).

As if to embody your purpose of "To continue contributing to better living environments through chemical technologies," your

1.Basic Commitment:

businesses are closely related to the living environments of the individuals who make up society. In light of that orientation,

making clear its expectations for suppliers and business partners, the Policy aligns

ISK Group is committed to the protection and advancement of human rights throughout its global business operations. ISK Group’s
Policy is guided by international human rights standards including the followings:•International Bill of Human Rights; •Declaration on Fundamental Principles and Rights at Work issued by the International Labour

I believe that focusing on people and undertaking initiatives that lead the industry in the area of human rights provide afoundation on which additional value can be created. Since ISK is also working to promote communication with residents living
near its plant, I expect to see stepped-up dialog with an even broader range of stakeholders in the future.

Organization (ILO); •Ten Principles of the UN Global Compact; and •UN Guiding Principles on Business and Human Rights.

Now that the human rights policy has been adopted, ISK will presumably also do its utmost to carry out due diligence in the area

2. Scope of Application and Expectations for Suppliers and Contractors:

effective manner. I will also pay attention to how ISK works to collaborate with the newly established Sustainability Promotion

3. Respecting Human Rights through Business Activities

Committee; ensure consistency with supply chain management, which has been identified as a materiality; and enhance disclosure.

1.Non-discrimination 2.Respect to Privacy 3.Anti-Harassment 4.Freedom of Association/Collective Bargaining

Both in Japan and abroad, efforts to develop laws and formulate guidelines related to human rights due diligence and to

5.Health & Safety 6.Fair Wages/Compensation 7.Forced Labour/Child Labour 8.Coexist with Local Communities

strengthen disclosure of non-financial information are accelerating. I am confident that ISK, as a company with a global

4. Measures for Respecting Human Rights
1.Education and Training 2.Human Rights Due Diligence 3.Response to Occurrence of Problems
4.Disclosure 5.Review of This Policyof human rights, implement a hotline for human rights concerns from both inside and outside the company, and operate it in an

business, will take advantage of its human rights initiatives to become even more responsive to expectations from not only
domestic investors, but also the international community.
Note: The above comments represent the views of Ms. Omura as an individual attorney. They do not reflect the views of any law offices ororganizations to which she belongs, or of any organizations for which she serves as an officer or member.

Visit our sustainability website for the entire ISK Group Policy on Human Rights and a message about the policy from an outside expert.
https://www.iskweb.co.jp/eng/environment/human_rights.html

52SocialAbout ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Message from the Director of General Affairs & Human Resources Headquarters

Attract Outstanding Human Resources
by Being an Appealing Place to Work

Fostering Global Human Resources Who Provide Value to Society through Innovation
Once employees enter ISK, the company develops their capabilities by holding courses at each business location company-wideat certain points in their careers in order to make them aware of their roles in society and the company and to boost various skills.
We also have courses to improve their global business skills, such as online courses they can take at home. They can also go to alanguage school to learn foreign languages, take part in overseas training, and attend a management school open to all employees

Human Resource Strategy to Boost Corporate Value medium- and long-term

to learn global communication skills and further leadership capabilities.
To train the next generation of executives, we hold training for middle managers where they have discussions with others in

The ISK Group’s purpose is “To continue contributing to better living environments through chemical technologies.” To achievedifferent industries, learn systematically about the “people”, “goods”, and “money,” that constitute management work, and boost

this requires maximizing the strength of our “human resources.” As represented by the word “diversity,” we fully understand thetheir power of logical thinking. Certain members in this training are selected for “top leader training,” in which ISK executive

importance of building a truly diverse environment where people’s personalities and values are accepted, where job placements,

candidates learn not only in-house issues but also interact with employees of other companies in order to learn how to think andeducation, and systems help them fully realize their individual talents, and where they have the opportunity to feel an attachment

act as top-level executives with a problem-solving mindset.

to their workplace and peers.
To this end, we aim to build a workplace where employees can feel secure yet full of vitality, where they can grow individually
through their jobs, feel pride and joy in their work, and respect each other’s diverse values. In today’s global, digital age, fosteringand increasing human resources who use innovation to create new corporate value leads to an expansion of human capital. We
believe that building an organization where employees say “I’m glad I joined ISK” will eventually make us a company that further
attracts outstanding people.
In a rapidly changing world that is aptly described by the acronym• Time and Money Invested in Employee Training Programs (Non-consolidated)
Training time per person

Training cost per person

Hour/person/year

10,000 yen/person/year

21
4.5

20
16

4.6

3.9

VUCA (volatility, uncertainty, complexity, ambiguity), it is crucial that
ISK keeps coming up with new value and innovation that continue
to solve society’s problems. This can only be done by “Human.” To
drive learning and growth, we need to understand ourselves and findthe point where our desired direction and goals meet those of ISK.
Our aim is to be a “company where employees enjoy rewarding,”

2019

Target year

satisfying work and can fully realize their creativity; a company that
Director of General Affairs &Human Resources Headquarters

Yoshio Nishiyama

2020

2021

(FY)

(Included training to improve employee capabilities, annual training by job level, career training, next-generation executive training, etc.)

KPI

Scope

fosters leaders who can build an environment that gives rise to new

Time spent in training and classes

FY2022More than 20 hours/person

Non-consolidated

and flexible ideas by enabling employees to enhance their strengths

Cost of training and classes

FY2022More than 50,000 yen/person

Non-consolidated

and expertise and continually take on new challenges with curiosity.

53

SocialAbout ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

• Development Program for Core Employees

Top leader training(selective)

Purpose: Train next generation of executives, boost their management abilities, and give them the power to think and act like executives.
Content: Participants take lectures from experts in management strategy, HR management, leadership, finance, accounting,etc., and discuss issues with members of other companies.

Management leader
training (selective)

Purpose: Cultivate the logical thinking skills necessary for middle management layer to become a future executive.
Content: Participants learn systematically the areas of “people”, “goods”, and “money.”

Foster executives

Role awarenessfor managers and chief

Improve mid-level
employees’ capabilities

Strengthening basic skills
as working members of society

Newly appointed
manager training

Purpose: Rethink the role of managers and improve workplace management abilities.
Content: Through lectures, participants learn management basics, business improvement, assessment methods, finance, and marketing.

Newly appointed
chief training

Purpose: Make new chief aware of their leadership role in the workplace as a stepping stone towards becoming managers.
Content: Participants learn what chief should know about the state of the organization, their roles and expectations, executing duties, and running an organization.

ISK Management
school (selective)

Purpose: Candidates in their 30s who appear ready to be managers are selected and learn how to improve their global communication and other business skills.
Content: Training includes leadership, finance, marketing, accounting, and English conversation.

Mid-level employee
training

Purpose: Teach mid-level employees (new graduate hires in their fifth year at ISK and Mid-Career Hires with about the same years of experience) how to assess
the current state of the company and what it should do in future.
Content: Learn the basics of marketing using own company as a theme. Develop presentation skills through public speaking.

3rd year training

Purpose: Employees in their third year reflect on themselves and how they can improve, and build a foundation for becoming effective leaders who can improve productivity in the workplace.
Content: Participants work on improving self-esteem.

2nd year training

Purpose: Employees in their second year learn to take action independently and proactively, work well with others, and contribute to the organization.
Content: Training covers self-management basics (time management and planning, how to raise and maintain motivation, and work well with others).

1st year training

Purpose: Participants reflect on their first year at ISK and learn about their role in working with and fostering younger employees so that they can succeed in their second year.
Content: Besides reflecting on their first year at ISK, participants learn team problem-solving processes.

6-month training

Purpose: Learn the duties of each ISK department. Learn the fundamentals of a working member of society, how to get jobs done, and what type of employee you should be.
Content: Participants take lectures by ISK’s legal and corporate planning departments, build the foundation for becoming a businessperson, and reaffirm the importance of making reports,
keeping the lines of communication open, and asking for advice.

54

SocialAbout ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Promoting Diversity
Empowering Women

Hiring a Diversity of Human Resources

Because actively promoting women’s empowerment and making workplaces more conducive to women lead to business growth

We strive to hire globally minded people with high aspirations and the love of a challenge, regardless of their gender or nationality,and greater corporate value, we are aggressively hiring women and helping them mold careers at ISK. We are also making it

or whether they are hired as new graduates or Mid-Career Hires. We strengthen our foundation of diverse human resourceseasier for employees to continue working after giving birth and while raising children with company systems that exceed legal

by hiring mid-career workers , former employees, and referrals. We also strive to make more women and Mid-Career Hires

requirements. For example, these systems cover days off, leave of absence, returning to work, and shortened working hours.

managers, with a goal of having women account for at least 10% of management and Mid-Career Hires at least 30% (average

Thanks to the publicizing of these systems and their availability to both men and women, in the past three years 24 women andfor the last three years).

13 men have taken childcare leave. In fiscal 2020, 24% of male employees took this leave.
We are striving to hire more women and provide career support and other measures so that more women can move to managementlevel jobs and enjoy rewarding work. To have more women play active roles at ISK in future, our goal is to increase the percentage
of female managers from the current 5% to at least 10% by 2030.

• Employees Hired (Non-consolidated)
Total hired

Women as percentage of hires

New Graduate Hires (persons)
Mid-Career Hires (persons)

68
38• Increasing Support for Work-Life Balance (Non-consolidated)
Childcare leave acquisition rate
Men (%)
Women (%)

59
39

51
27.5 18

Employees taking shortened work hours for childcare
Persons

100

%

100

100

18.6

20.6

33

30
20

20

20

24.0
6.1
2019

2020

20

2019

2020

(FY)

(FY)

Target year

KPI

Scope

Female manager ratio

2030

At least 10%

Non-consolidated

Women as percentage of managers(average for last three years)

2022

At least 10%

Non-consolidated

Mid-Career Hires as percentage of managers(average for last three years)

2022

At least 30%

Non-consolidated

15.6
2021

2021

55

SocialAbout ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Building a Pleasant Work Environment
Improving Employees’ HealthEngagement Surveys

ISK thinks of employee health from a management perspective. Besides sharing health information and making use of health-related

In 2022, we began having all employees take engagement surveys. Employees answered 21 questions in seven areas (businesswebsites, we work with the health insurance union to earnestly promote employees’ well-being by, for example, holding seminars

potential, work meaning/contribution, sense of self-growth, support from superiors, interpersonal relations, diverse work styles,

on lifestyle disease prevention and no-smoking campaigns (giving out free nicotine patches and nicotine gum). As key performancesense of fairness of treatment), grading each on a seven-point scale.

indicators for health and productivity management, we have set targets for fiscal 2030 of a smoking rate of less than 10%, at

The surveys revealed that ISK needs to improve the quality of communication between superiors and their subordinates.

least 80% usage by employees of paid leave, overtime of less than 10 hours a month per employee, and 100% attendance at

Taking into account ISK’s characteristics, the company is taking numerous improvement measures towards improving employee

health-related seminars. We also strive to create a workplace conducive to supporting employees’ mental health. Besides teaming

engagement. We will continue conducting surveys in order to help ISK and its employees enjoy a better mutual relationship.

up with outside organizations to carry out stress checks so that employees can keep track of their own stress, we offer support
in dealing with stress and hold programs to help employees return to work after stress-related leave.

• Engagement of Individuals with the Organization

In Japan, which has the world’s oldest population, companies must maintain employees’ health if the country is to realize a society
where people remain active throughout their lives. With the aim of being a company where employees can continue to enjoy safe

Business
potential

and secure work, ISK implements numerous health measures with a long-term view to raising corporate value.
Sense offairnessof treatment• Work Style Reform Index (Non-consolidated)
Overtime per employee
Hour/month

Paid leave acquisition rate
Percentage of employees over 60 rehired after retirement

100

%

77.0

73.6

88.9
77.0

8.8

9.7

11.1

2019

2020

86.4

Paid leave acquisition rate

Betteremployee-company
Diverse work
relationshipstylesTarget year
Rates for employee health checkups andstress checks

Work meaning/
contribution

2021
KPI

2022

100%

2022

At least 75%

2030

At least 80%

(FY)

Scope

Interpersonal
relations

Sense ofself-growth

Support fromsuperiors

Non-consolidated
Non-consolidated

56

Special Feature

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Diversity Messages

All kinds of people—irrespective of their gender, nationality, and home life situation—work in the ISK Group. We

Diverse Human Resources and Multifaceted Careers

spoke with six of them about what makes their jobs worthwhile, how they achieve a work-life balance, and what
their future dreams are.

Technical Improvement on
the Front Lines of
Manufacturing

Maintaining Boilers,the Heart of
the Yokkaichi Plant

Seeking Sustainable
Solutions forWorldwide Agriculture

Kumiko Azuma
Manager, Organic Manufacturing Division,
Yokkaichi Plant

Yurika Hiramatsu
Energy Management Group, Yokkaichi Plant

Noureldin Ghazy
Manager, Bioscience Research Laboratory,
Central Research InstituteMy department produces and packages agrochemicals at the Yokkaichi Plant, andI majored in electrical science at a college of technology, and I have always wanted

I am a researcher in ICM (Integrated Crop Management) Group of the Bioscience

my main job is operations management of agrochemicals formulation. In addition toto work at a power plant.

Research Laboratory at the Central Research Institute. Finding creative solutions for

ensuring that daily manufacturing proceeds according to plan, I also work on improving

I currently conduct maintenance of all utilities equipment used in the Yokkaichi

agricultural pests is my primary responsibility. Efforts focus on implementing andyield and manufacturing capacity. Two assignments previous, in the department for

Plant, including things like boilers and generators. I also study ways to save energy

integrating beneficial organisms and natural products in pest control programs.

research into agrochemical formulation, I built up experience and confidence, and thethroughout the plant and to achieve carbon neutrality in future.

Working at ISK, a well-established company, provides me with career development

department supervisor recommended me for a managerial position.

At first I was a little hesitant because I was surrounded by male coworkers, butopportunities to put science into action and contribute to society.

My husband also works at ISK, and he spent about a year away working at anotherthey help me with the strength aspects of the job so I don’t have too big a physicalI worked in academia for nearly 20 years before joining ISK. I had never imagined

location. My request to be transferred to the same location was granted, and we now

burden. Because I manage utilities equipment, I must always be mentally awarethat working in industry would be this much enjoyable. The people here are nice andenjoy our home life together. We share housework duties as much as possible—forof the importance of preventing problems at all costs. But it’s this knowledge

friendly. They are ready and willing to give support at any time. With such a productive

example, whichever of us gets home from work first makes dinner—so things are easierthat I am supporting the plant’s lifelines that gives me a sense of reward andenvironment, we will leverage our diverse know-how to strengthen ISK’s business

now than when we lived apart.

accomplishment.

further, take on new challenges, and create new business.

I want to build up experience in the manufacturing department so that I can become

In order to advance my career and become a true professional, I am constantly

Contribution to the prosperity of humankind is my goal in life. I am aspired to be

more knowledgeable, get a better sense of my job, and eventually think in terms ofstudying and acquiring certifications.

an influential member of a corporation that aims to provide unique and innovative

linking agrochemical formulation research to manufacturing. And with the aim of

I have been able to broaden my horizons by taking part in various projects, and I

technologies and products that meet customers’ expectations. In line with the ISK

achieving a manufacturing site where anyone, no matter how strong they are, feels

hope to experience a wide range of work. My aim is to leverage this experience tophilosophy, I want to deliver intelligent, reliable, and sustainable solutions to agriculture

confident they can operate machinery, I want to give my input on how equipment canhelp women play a more active role at manufacturing sites, and eventually become

industries in Japan and worldwide. I strive to achieve scientific, social, and personal

be improved.

a manager myself.

success through my work at ISK.

57

Special Feature

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Diversity Messages

Experiencea Range of Jobs,
from Development to Sales

Using Company Systems to
Balance Work andChild-Rearing

Striving Daily to
Better Solve
Customer Issues

Mayuko Wada
Sales & Marketing Inorganic Materials Division,
Inorganic Chemicals Sales & Marketing Headquarters

Takahiro Iizuka
Product Development & Marketing Division,
Biosciences Business Headquarters

Yukari Yanagigawa
Chief, Marketing Planning Office,
ISK Biosciences K.K.

Besides following up with existing customers through their product inquiries, I work

I handle product development, marketing, and sales for Thailand and the

My job is to study ways to more effectively sell ISK agrochemical products in Japan. I do

to promote the business of value-added products by making sales calls to both

Philippines. I am married with three children. The third was born in November

this by, for example, analyzing and forecasting the market environment, and analyzing

existing and potential new customers. Last year I transferred from the development

2021, and while my wife was in hospital and recuperating at that time, I took

customer needs. I never once considered that I wouldn’t be able to continue work after

department to the sales department. My work is new and exciting, because I getchildcare leave to look after our two kindergarten-age children.

getting married. I think I was able to continue my job because I set a target, worked withto actually show customers the products I was helping to develop and hear directly

I utilized flextime so that my wife didn’t have to do everything at home during

different kinds of people who helped me learn and grow, and gradually came to see howwhat people besides the developers have to say.

the day; for example, I started work later, at 10:00, to help the kids get readyrewarding my job is.

As a gateway to our company, my performance reflects on ISK’s reputation, so myfor school, and once a week I left work at 4:00 so I could prepare dinner. I am

To balance your work and home life, it’s important to set achievable housework goals

job keeps me on edge and is rewarding. There still aren’t that many women in our

grateful that my boss is so understanding about my need to use flextime and toand for you and your partner to complement each other. When my husband and I are

industry, but I’m not really conscious of this because I approach my work sincerely

take sudden paid leave when my children got sick.

both too busy to get everything done ourselves, we do things like hire a babysitter or aand think of my colleagues and me not as men or women but as ISK employees.

During my time off, my group members and boss took care of all my work.

house cleaner. I am thankful to my colleagues for considering my family needs at work;

On my recent sales calls, I seem to have more opportunities to speak with female

Another member of our group took childcare leave in June and July of this year,

for example, they schedule meetings so that I can get my kids to and from school, andsales reps at customer companies. I am working towards becoming a first-rate

and I managed their work for them. We all try to learn other group members’

they ask my family schedule before arranging business trips.

sales rep as soon as possible so that young people joining our company next year

jobs so that we can cover for each other during childcare leave or other times

I want to get better at my job so that I can help ISK solve Japanese agriculture’s manyand beyond will see that, whatever the industry or the job, women can play ansomeone is away.

issues and contribute to advancement of the industry, and so that I can give customers

active role in so many ways.

ideas to more effectively use ISK products. To this end, I have to continue bettering
myself.

58

Financial and Non-Financial Summaries

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Financial Summary (Consolidated)
Fiscal year

(FY)

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

100,441

105,293

103,330

102,903

101,601

108,001

106,441

101,066

101,774

110,955

2,792

3,038

11,104

8,314

8,415

10,022

11,372

6,188

5,173

11,557719-8,207

6,661

9,151

3,804

3,442

8,683

2,359

3,373

11,690

Profit and loss
Net sales
Operating income
Net income attributable to owners of parent(Million yen)

Financial status(Million yen)

Current assets

103,693

96,321

105,204

109,386

102,565

103,387

107,080

110,324

117,003

121,389

Property, plant and equipment

55,04647,15944,52538,73339,18340,843

43,167

46,271

47,10746,535Intangible assets, investments and other assets

17,71921,051

17,932

14,935

15,121

15,536

18,442

15,841

15,90917,834

Total assets

176,459

164,532

167,662

163,056

156,871

159,767

168,689

172,437

180,021

185,758

Current liabilities

64,71359,49556,892

49,72547,31047,99044,712

43,73742,203

46,731Long-term liabilities

59,90460,33759,99054,396

46,57944,63848,64252,02958,30247,157

Total net assets

51,842

44,69950,77958,93362,981

67,13775,33576,66979,51591,869Interest-bearing debt

85,77277,65478,73867,68658,781

51,32849,52852,531

60,10350,420Other
Cash flows from operating activities(Million yen)

-7,19812,067

6,351

10,268

14,631

16,607

4,907

3,317

4,749

Cash flows from investing activities-5,734-4,125

Free cash flow

-12,932

7,941-3,214

9,656

3,136

19,925

Depreciation and amortization

5,699

5,271

4,757

Capital investment
R&D expenses

6,127

2,758

8,451

8,965

-5,950-6,030-8,590-6,922-6,162-4,3198,681

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

12,182

4,458

4,215

4,214

4,266

4,445

4,669

4,545

3,049

4,507

5,407

6,142

7,141

8,062

6,092

4,542

9,330

8,988

8,173

8,706

8,070

9,150

8,639

8,165

Per share status
Current net income per share
Dividends per share

16,501

(Yen)

17.97

-205.19166.58228.88

95.15

86.12

217.25

59.03

84.41

292.58

-

-

-

-

-

-

12.00

20.00

18.00

36.00

Financial indicators
Operating margin (ROS, %)

2.78

2.89

10.75

8.08

8.28

9.28

10.68

6.12

5.08

10.42

Return on equity (ROE, %)1.42-17.00

13.95

16.68

6.24

5.29

12.19

3.10

4.32

13.64

Return on assets (ROA, %)

1.59

1.78

6.69

5.03

5.26

6.33

6.92

3.63

2.94

6.32

D/E ratio (double)

1.65

1.74

1.55

1.15

0.93

0.76

0.66

0.69

0.76

0.55

59

Financial and Non-Financial Summaries

About ISK

Value Creation Strategies

Foundation for Value Creation

Non-Financial Summary
Fiscal year
GHG (greenhouse gas) emissions (Japanese group companies*1)
Year-on-year comparison of GHG emissions (%)
GHG emissions (thousand tons-CO2)
Waste (Japan, consolidated*3)
Industrial waste (sludge) (tons)
Atmosphere SOx (Japan, consolidated*3)
SOx emissions (Nm3/year)
Atmosphere NOx (Japan, consolidated*3)
NOx emissions (kg/year)
Water quality COD (Japan, consolidated*2)
COD (kg/year)
Water quality …Total Nitrogen (Japan, consolidated*2)
Nitrogen pollutant load (kg/year)
Energy-related (Japan, consolidated*3)
Year-on-year comparison of energy intensity (%)
Energy intensity (kl/t)
Workplace accidents (Japan, consolidated*3)
Frequency rate of lost-worktime injuries
Severity rate
Number of employees (non-consolidated)
Number of male employees
Number of female employees
Male employee ratio (%)
Female employee ratio (%)
Diversity and inclusion (non-consolidated)
Number of female managers
Female manager ratio (%)
Number of employees taking childcare leave
Annual paid leave acquisition rate (%)
Other (non-consolidated)
R&D employee ratio (%)
Number of patents held

Corporate Data

(FY)

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

475

104.1
495

100.8
499

95.7
478

102.9
491

100.3
493

101.3
499

98.1
490

90.2
442

114.8
507

100,545

99,88898,133

95,921

92,162

88,63480,97077,55962,62574,962

10,347

12,078

9,516

9,669

8,471

7,812

5,011

6,532

5,478

10,223

129,849

122,908

114,549

112,007116,212118,167

115,200

112,033

182,147

194,198

64,981

76,21571,01079,26867,93867,02866,467

57,97858,62562,093

224,169

267,272

269,619

290,577

350,037

419,262406,274

306,695

159,884

163,706

102.7
1.02

95.7
0.97

100.9
0.98

105.6
1.03

97.8
1.01

98.2
0.99

99.3
0.99

106.3
1.05

106.9
1.12

91.9
1.03

0.00
0.00

1.13
0.05

0.59
0.08

1.15
0.04

2.29
0.09

0.56
0.00

1.07
0.01

1.01
0.02

0.50
0.07

0.93
0.01

1,019
173
85.5
14.5

1,008
172
85.4
14.6

967
173
84.8
15.2

935
171
84.5
15.5

912
166
84.6
15.4

870
170
83.7
16.3

895
175
83.6
16.4

919
187
83.1
16.9

955
194
83.1
16.9

948
196
82.9
17.1

8
3.1
8
72.0

8
3.2
15
71.6

10
3.9
21
74.4

12
4.7
14
77.6

12
4.8
12
75.4

12
5.1
14
75.9

14
6.0
13
75.6

15
6.4
18
77.0

13
5.4
22
73.6

12
5.1
12
77.0

24.4
1,576

24.1
1,800

23.1
1,743

21.6
2,070

22.7
2,353

22.9
2,788

22.0
2,866

22.0
2,714

20.9
2,593

20.5
2,527

*1 ISK Group (Japan, including Yokkaichi Energy Service Corporation, which the Group absorbed in October 2018.)*2 ISK and its 100% subsidiary Fuji Titanium Industry Co., Ltd.
*3 All production facilities operated by ISK and Fuji Titanium Industry Co., Ltd.

60

Consolidated Financial Statements

About ISK

Consolidated Balance Sheet(Unit: Million yen)Previous consolidated FY(March 31, 2021)
AssetsCurrent assets
Cash and deposits
Notes and accounts receivable – trade
Notes receivable – trade
Accounts receivable – trade
Contract assets
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
Leased assets
Software
Software in progress
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

27,073
3,768
29,525441
32,813
4,633
20,051
4,190(1,109)121,389

40,810(26,136)
14,674
114,944(94,845)
20,0995,356
2,195(1,375)
820
5,319
4,026
(3,188)837
47,10742,395(26,995)
15,400115,277(94,507)
20,7705,359
2,106(1,276)
829
3,327
3,933
(3,086)847
46,535

535
3
11
551

519
484
3
11
1,018

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

7,456
8,883
10
550
(85)
16,81564,369185,758

Corporate Data

(Unit: Million yen)

Current consolidated FY(March 31, 2022)

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

Foundation for Value Creation

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
Contract liabilities
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

Previous consolidated FY(March 31, 2021)

Current consolidated FY(March 31, 2022)

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

17,739
7,770
8,298
1,118
355
1,242
20
4,728
851
81
336
169
4,020
46,731

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

3,898
24,831555
1,384
83
13,058160
3,185
47,15793,88943,42010,627
27,872(730)
81,18943,42010,62738,592(734)
91,905(308)(1,286)(78)(1,674)79,515
180,021

405
(297)
(143)
(36)
91,869185,75861

Consolidated Financial Statements

About ISK

Consolidated Statements of Income(Unit: Million yen)

Consolidated Statement of Comprehensive Income

Previous consolidated FY
Current consolidated FY(April 1, 2020 to March 31, 2021) (April 1, 2021 to March 31, 2022)
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 for using 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
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on forgiveness of debts
Gain on change in equity
Other
Total extraordinary income
Extraordinary loss
Loss on disposal of non-current assets
Impairment loss
Loss on business withdrawal
Loss on valuation of investment securities
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

101,774
73,151

110,955
78,29728,622
23,4485,173

32,657
21,10011,557

26
262
38
597
457
155
263

16
180
533
1,597
103
288

1,802

2,720

537
273
220

539
258
206

1,032
5,944

1,005
13,272

-

552
2,736
170

-

3,459

677
421
907
-

969
163
2,344
162

2,006
3,938

3,640
13,091

819
(254)

1,533
(132)

564
3,373
3,373

1,401
11,69011,690

Value Creation Strategies

Foundation for Value Creation

Corporate Data

(Unit: Million yen)Previous consolidated FY
Current consolidated FY(April 1, 2020 to March 31, 2021) (April 1, 2021 to March 31, 2022)
Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income of entities accounted
for using equity method
Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)Comprehensive income attributable to owners of parent

3,373

11,690

120
(48)
223

714
971
(64)

(21)

17

274
3,647

1,638
13,328

3,647

13,32862

Consolidated Financial Statements

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

Consolidated Statement of Changes in Net Assets
Previous consolidated FY (April 1, 2020 to March 31, 2021)(Unit: Million yen)

Shareholders’ equity
Capital stock
Balance at beginning of current period

43,420Capital surplus
10,627Retainedearnings

Accumulated other comprehensive income

Valuation difference Foreign currency Remeasurements Total accumulated Total net assets
Total shareholders’
Treasury shareon available-for-saletranslationof defined benefit other comprehensive
equitysecurities
adjustment
plansincome25,298(727)

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

(799)

(799)

(799)

Profit attributable to owners of parent

3,373

3,373

3,373

(3)

(3)

-

-

(3)

Purchase of treasury shares
Disposal of treasury shares

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)79,515

Net changes of items other than shareholders’ equity
Total changes of items during period
Balance at end of period
Current consolidated FY (April 1, 2021 to March 31, 2022)(Unit: Million yen)

Shareholders’ equity
Capital stock
Balance at beginning of current period

43,420Capital surplus
10,627

27,872

(730)

(251)

Cumulative effects of changes in accounting policies
Restated balance

Retainedearnings

Accumulated other comprehensive income

Valuation difference Foreign currency Remeasurements Total accumulated Total net assets
Total shareholders’
Treasury shareon available-for-saletranslationof defined benefit other comprehensive
equitysecurities
adjustment
plansincome43,42010,627

27,621

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

(251)
(730)

80,93879,515
(251)

(308)

(1,286)(78)(1,674)

79,263

Changes of items during period
Dividends of surplus
Profit attributable to owners of parent

(719)

(719)

(719)

11,69011,69011,690

(4)

(4)

(4)

0

0

0

Purchase of treasury share0

Disposal of treasury shares714

Net changes of items other than shareholders’ equity
Total changes of items during period
Balance at end of period

988

(64)

1,638

1,638

-

0

10,970(3)

10,967

714

988

(64)

1,638

12,60543,42010,62738,592(734)

91,905

405

(297)

(143)

(36)

91,86963

Consolidated Financial Statements

About ISKStatement of Consolidated Cash Flows

Foundation for Value Creation(Unit: Million yen)Previous consolidated FY
Current consolidated FY(April 1, 2020 to March 31, 2021) (April 1, 2021 to March 31, 2022)

Previous consolidated FY
Current consolidated FY(April 1, 2020 to March 31, 2021) (April 1, 2021 to March 31, 2022)

Cash flows from investing activities

Income before income taxes

3,938

13,091

Depreciation and amortization

5,052

4,654

Gain on forgiveness of debts

-

(552)

Impairment loss

421

163

Loss on business withdrawal

907-

Loss (gain) on change in equity-(2,736)

Loss (gain) on valuation of investment securities

-

2,344

(436)

1

Purchase of investment securities

(12)

(15)

Purchase of non-current assets(6,150)(4,484)

92

77

Payments of loans receivable

(227)

(61)

Collection of loans receivable

142

104

(5)

60

(6,162)(4,319)

168

(330)

Proceeds from sales of noncurrent assets

Other

Increase (decrease) in net defined benefit liability

(69)

(94)

Cash flows from investing activities

Increase (decrease) in provision for environment and safety improvement

(262)

(288)

Cash flows from financing activities

Increase (decrease) in other provisions

(362)

352

Interest and dividend income

(289)

(196)

Interest expenses

537

539

Proceeds from long-term loans payable

13,400-Foreign exchange losses (gains)

(68)

(30)

Repayments of long-term loans payable(7,937)(8,323)

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

(34)

(518)

Proceeds from issuance of bonds

3,100

-

Loss (gain) on disposal of noncurrent assets

148

215

(2,155)

977

Redemption of bonds(684)(1,118)(627)(2,339)

Repayments of lease obligations

(491)

(432)

Decrease (increase) in notes and accounts receivable – trade
Decrease (increase) in inventories

Net increase (decrease) in short-term loans payable

942

(768)

Repayments of installment payables

(393)

(674)

(3,187)

2,823

Dividends paid

(799)

(719)

Increase (decrease) in other current liabilities

913

201

Other

(25)

(71)

(3)

(3)

Subtotal

5,341

17,7696,358(11,601)

Effect of exchange rate change on cash and cash equivalents

69

550

Net increase (decrease) in cash and cash equivalents

5,015

1,132

Cash and cash equivalents at beginning of period

20,92525,941

Cash and cash equivalents at end of period

25,941

27,073

Decrease (increase) in other current assets
Increase (decrease) in notes and accounts payable – trade

Interest and dividends income received

268

196

Interest expenses paid

(571)

(536)

27

30

Income taxes paid

(315)

(957)

Cash flows from operating activities

4,749

16,501

Proceeds from insurance income

Corporate Data

(Unit: Million yen)

Cash flows from operating activities

Increase (decrease) in allowance for doubtful accounts

Value Creation Strategies

Net decrease (increase) in treasury share
Cash flows from financing activities

64

History of ISK

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

For over a century, embracing challenges
Since foundation in 1920, the ISK Group has continued to grow by overcoming difficulties and flexibly changing its business to meet the needs of the times.
The bedrock has been a willingness to embrace challenges passed down from our founder and carried on to today.
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 theorganic chemicals
business, andbecomes a pioneer inselective herbicides.

1970
ISK focuses its resourceson environmental
preservation, becoming
one of the first industrial
companies to build acomprehensive water
treatment facility.

1999
After embarking onpharmaceuticalproduction, ISK takes onchallenges in life
sciences, including thegene therapy business.

1920 Company
founding

2010
ISK launches full-scale salesof super-weather-resistanttitanium dioxide, marking ashift from general products tohighly functional and highvalue-added products.

2022 Looking
ahead
1958
ISK’s business focus shifts from mining to chemicals.
It opens a research institute in Yokkaichi and embarks on
extensive R&D efforts.

1924
ISK begins handlingits own ore
shipping. Ships
flying the company
flag ply the oceans.

1974
ISK weathers changes in the agrochemicals market andmoves boldly to strengthen its in-house development
capabilities. After careful preparation, the company sets a
course for world markets.

1954
ISK begins producing
titanium dioxide, acornerstone of the
inorganic chemicals
business, andbecomes a top
domestic producer.

1934
The opening of the Kishu Mine, and the 1941 launch ofoperations at the Yokkaichi Plant, lay the foundations of
ISK’s domestic business.

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

1974
ISK responds to rapidly
rising domestic andinternational demand fortitanium dioxide by
expanding its production
facilities, becoming amajor global producer.

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

2020
ISK celebrates the 100th
anniversary of its founding.
By contributing to society
through technologicaldevelopment, the company
aims to help achieve asustainable world and raise
corporate value.

2018
ISK receives approval for domestic
manufacture and sale of the world’s firstanti-pancreatitis agent for dogs.

1924–1945

1945–1960

1960–1990

1990–20102010–2022

The origins of our willingness
to embrace challenges

Entering new businesses

Expanding overseas amidst
Japan’s rapid economic growth

Fulfilling social responsibility

To continue contributing tobetter living environments
65

Company Profile / Group Bases

Company Profile (As of March 31, 2022)

About ISK

Value Creation Strategies

Foundation for Value Creation

Corporate Data

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, Chubu Branch, Sapporo Sales Office, Sendai Sales Office, Fukuoka Sales Office, Argentina Branch, Singapore BranchFounded

September 10, 1920

Incorporated

June 1, 1949

Representative

Hideo Takahashi, Executive Director & President

Capital43.4 billion yen

Sales(Fiscal year ended March 31, 2022)
Consolidated: 110,955 million yen
Non-consolidated: 89,142 million yen

Group Companies
Japan

Number of Employees Consolidated: 1,750
Non-consolidated: 1,144

ISK BIOSCIENCES K.K.
Sales of agrochemicals
ISHIHARA TECHNO CORPORATION
Trade in organic and inorganic chemical products, others
FUJI TITANIUM INDUSTRY CO., LTD.
Manufacture and sales of titanium dioxide, functional materials, others
ISK ENGINEERING PARTNERS CORPORATION
Construction business
ISHIHARA SANSO KAISHA, LTD.
Manufacture and sales of industrial gases
ISHIHARA KOSAN CO., LTD.
Asset management
GENOMIDEA INC.
Asset management
HOKUSAN CO., LTD.
Manufacture and sales of agrochemicals

Taiwan

ISK TAIWAN CO., LTD.
Sales of inorganic chemical products

Korea

ISK KOREA CORPORATION
Sales of inorganic chemical products
ISK BIOSCIENCES KOREA LTD.
Sales of organic chemical products

Thailand

ISK BIOSCIENCES (THAILAND) LTD.
Agrochemical registration and market development in Thailand

India

ISK BIOSCIENCES INDIA PVT. LTD.
Agrochemical registration and market development in India

China

ZHEJIANG ISK & TAURUS CHEMICAL CO., LTD.
Sales of organic chemical products
ISK (SHANGHAI) CHEMICAL CO., LTD.
Sales of organic chemical products

Philippines

AVC CHEMICAL CORP.
Sales of agrochemicals

Belgium

ISK BIOSCIENCES EUROPE N.V.
Administration of agrochemicals business in Europe; manufactureand sales of agrochemicals
CERTIS BELCHIM B.V.
Sales of agricultural materials

United States

ISK AMERICAS INCORPORATED (Ohio)
Administration of U.S. subsidiaries
ISK BIOSCIENCES CORPORATION (Ohio)
Administration of agrochemicals business in Americas; manufactureand sales of agrochemicals
ISK BIOCIDES, INC. (Tennessee)
Sales of wood preservatives
IBC MANUFACTURING COMPANY (Tennessee)
Manufacture of wood preservative and agrochemicals
ISK ANIMAL HEALTH, LLC (Ohio)
Manufacture and sales support of animal health products
ISHIHARA CORPORATION (U.S.A.) (California)
Sale of inorganic chemical products
SUMMIT AGRO USA, LLC (North Carolina)
Sales of agricultural materials and manufacture of agrochemicals

MexicoISK BIOSCIENCES, S.A. DE C.V
Registration and sale of agrochemicals

Brazil

ISK BIOSCIENCES DO BRASIL DEFENSIVOS AGRICOLAS LTDA.
Agrochemical registration and market development in Brazil

Consolidated subsidiary company

Equity method affiliated company

Non-consolidated subsidiary company

Non-equity method affiliated company

66

Stock Information

About ISK

Stock Information (As of March 31, 2022)

Value Creation Strategies

Investment in ISK
Shareholder

Total Number of Shares Outstanding 40,383,943 shares
Number of Shareholders

26,853

Stock Exchange Listing

Tokyo Stock Exchange, Prime Market

Stock Code

4028

Shareholder Composition
Securities firms

Treasury stock

2.45%

1.06％

Foreign individuals

Individuals, others

21.27%
Number of shareholders

Corporate Data

Major Shareholders (As of March 31, 2022)

100,000,000 shares

Total Number of Shares AuthorizedFoundation for Value Creation

Number of shares held
(thousands)

Shareholding ratio (%)

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

4,626

11.58

Custody Bank of Japan, Ltd. (trust account)

3,764

9.42

Mitsui & Co., Ltd.

2,019

5.05

Toagosei Co., Ltd.

1,722

4.31

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

1,440

3.60

UPL Japan GK

1,170

2.93

Ishihara Sangyo Kaisha Client Stock Ownership Association
Ishihara Sangyo Kaisha Employee Stock Ownership
Association
Fumiya Shino

986

2.47

801

2.01

733

1.84

DFA INTL SMALL CAP VALUE PORTFOLIO

700

1.75

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

32.62%

26,853

Stock Price and Trading Volume

Total number of shares outstanding

40,383,943

Stock Price (Yen)Volume (thousand shares)

1,500

15,0001,000

10,000500

5,000

Other Japanese corporations

17.17%

Financial institutions

25.43%

Total Shareholder Return(Unit: %)FY2017FY2018FY2019FY2020

FY2021

ISK

117.0

102.4

52.5

86.3

104.5

TOPIX

115.9

110.0

99.6

141.5

144.3

TOPIX Chemical

123.8

118.8

110.3

149.2

137.3

0

10

11

12

2020

1

2

3

4

5

6

7

2021

8

9

10

11

12

1

2

3

4

5

6

2022

7

8

9

(Month)0(Year)

67

Editorial Policy

About ISK

Editorial Policy

WebsiteThis integrated report is intended to provide stakeholders with integrated financial and non-financial information on the ISK Group

Ishihara Sangyo Kaisha, Ltd. Official Website(on a consolidated basis), which operates in and outside Japan. The report includes business results, as well as management

https://www.iskweb.co.jp/eng/

Value Creation Strategies

Foundation for Value Creation

Corporate Data

policies and business strategies for creating value in the medium- and long-term.

Coverage
Organizations: Ishihara Sangyo Kaisha, Ltd. (ISK) and its
consolidated subsidiaries and affiliates
Period: Fiscal 2021
(April 1, 2021 to March 31, 2022)
Note: The report contains some information prior to and after this period.

Referenced Guidelines
Integrated Reporting, International Integrated Reporting Council (IIRC)
Guidance for Collaborative Value Creation; Ministry of Economy, Trade and Industry, Japan

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

Environmental Reporting Guidelines (2018 version), Ministry of the Environment, Japan• Latest stock price information

GRI Standards, Global Reporting Initiative (GRI)• Topics• Latest IR materials• Management policies and organization• IR library• Stock information

Sustainability
https://www.iskweb.co.jp/eng/environment/• Top commitment• Sustainability structures• Topics• Environmental initiatives• Social initiatives• Governance initiatives

68