2023
MGC REPORT
Integrated ReportContents

Value
Creation
Story
Page 2

Editorial Policy
3

The MGC Way

5

Value Creation Process

7

Message from the President

11 MGC Group’s History
13 Building Competitive Advantage
19 Value We Aim to Create
21 FOCUS: Aiming for Social Transformation
with CarbopathTM

Progress on
Management
Strategy
Page 23

24 Highlights of Activities in Fiscal 2022
25 Evolution of Management Strategy
27 Overview of Management Strategy
29 Management Performance and Financial
and Capital Policies
31 Business Portfolio Reform
34 Materiality
35 Materiality Progress at a Glance
37 Business Operations and Main Products

MGC Report 2023 was compiled as an integrated
report with a focus on our medium- and longterm growth strategies as well as stories of how
we have been creating value. In producing thereport, we referred to “Integrated Reporting” by
the International Integrated Reporting Council and“Guidance for Integrated Corporate Disclosure
and Company-Investor Dialogues for Collaborative
Value Creation” by the Ministry of Economy, Tradeand Industry, putting priority on the connectivity
and clarity of the information. We established
a company-wide system under the leadershipof the CSR & IR Division to compile and share
information, and worked to provide a broad varietyof quality content that we hope will help our diverse
stakeholders deepen their understanding of the
MGC Group.
Reporting Period
April 1, 2022–March 31, 2023 (fiscal 2022)
Note: Some activities taking place before or
immediately after the fiscal year are also
noted.

39 Specialty Chemicals Business43 Basic Chemicals Business
47 New/Next-Generation Businesses
49 Research and Development
52 Production and Environment
57 Human Capital (Human Resources andOrganization)

Governance
Section
Page 63

64 Members of the Board of Directors andAudit & Supervisory Board
67 Outside Directors Roundtable Talk
71 Corporate Governance
76 Risk Management
77 Compliance

Data Section
Page 7879 Performance Data
83 Consolidated Financial Statements
89 Corporate Data (Corporate Information /Shareholder Information /Business Locations)

Investor Information

Report Scope
Mitsubishi Gas Chemical Company, Inc.
and the MGC Group
Note: Where the scope of reporting differs, it isnoted in the data.
In Charge of Publishing
Motoyasu Kitagawa
Director, Managing Executive Officer
In charge of CSR & IR Division
Published
October 2023
Disclaimer
Plans, goals, and other forward-looking statements
included in this report are determined based on
information available to MGC as of the end of theconsolidated fiscal year under review, as well as
on certain assumptions MGC has judged to bereasonable, and may include uncertainties. Actual
results may differ significantly from these forwardlooking statements due to a variety of factors.

Sustainability Information

Value Creation Story
3

The MGC Way

5

Value Creation Process

7

Message from the President

11

MGC Group’s History

13

Building Competitive Advantage

19

Value We Aim to Create

21

FOCUS: Aiming for Social Transformation with CarbopathTM

Please refer toour website
for details.
Contains the latest financial information, various
releases, and stock and shareholder information.
https://www.mgc.co.jp/eng/ir/

1

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Introduces the MGC Group’s thinking, initiatives,and detailed data relating to CSR/ESG.
https://www.mgc.co.jp/eng/csr/

MGC Report 2023

2

The MGC Way

Our Values̶

The MGC Way
The Mitsubishi Gas Chemical (MGC) Group is
an R&D-oriented chemical manufacturer that
contributes to positive social change with
innovative materials and technologies. From basic
chemicals that sustain industrial foundations to
specialty chemicals that contribute to our daily
lives, we offer groups of products rooted in originaltechnologies to the global market. Our Group’s
Mission of “Creating value to share with society”
is also our reason for existence. To achieve thismission, we aim to be an excellent corporate groupthat continues to be a preferred choice around theworld by realizing our Value (conduct philosophy)
and embodying the uniqueness and presence
described in our Vision. As a member of the
global community, we will propose new valuethat contributes to solving social issues, whilelooking forward to a better world 10 and 20 years
into the future.

MISSION

VISION

VALUE
Conduct Philosophy

Creating value to sharewith society

An excellent company withuniqueness and presence
built on chemistry

As a professional group:
A professional is someone who has a high level of trustworthy
knowledge and ability, and a strong sense of responsibility. Our
aim is to assemble a group in which each member is a reliable
professional.

1. Courage that does not shy away from change

Advanced electronic devices, communication
systems, fossil-alternative energy, advanced
medicine, and food management. To theseindustries, which hold the keys to achieving the
Sustainable Development Goals (SDGs), theevolution of materials and technologies to processingredients is essential. Through chemical ingredientsand materials, MGC Group products are deeply
involved in both industrial and social innovation.
We will pursue new materials, ingredients, andtechnologies that can help to transform society while
always bearing in mind our Mission.

Often called the staple of all industries, chemistry
has limitless potential for application to human life,
environmental preservation and social infrastructure.
In our modern world of accelerating social change,
the MGC Group offers global niche lines of products
while honing its unique strengths. The Group rises
to the challenges of society and our customers,
applying unrivaled technologies. Our vision of “anexcellent company with uniqueness and presence
built on chemistry” describes what we aim to be in
the future.

Do not be content with the status quo, try new things, andhave the courage to break with convention. When the situation
changes, don’t merely adapt yourself to it – have the courage
to try to change your environment toward creating a better
state of affairs.

2. Aim for lofty goals
Always set goals that are above where you are now, and be
motivated to tackle these goals.

3. Perseverance in achieving goals
Overcome anything that confronts you with strong perseverance
until you have reached your goal and gotten results.

4. Build team spirit with communication
Expand your circle of communication in order to cooperate,build mutual trust and share goals.

MGC Corporate Behavior Principles
Sustainability Promotion Principle

MGC Group’s Management Resources (Fiscal 2022 / March 31, 2023)

Financial
Capital3TechnologicalFoundation

Corporate
CultureNatural Resources
and Energy

Partnerships

A Culture of
SafetyThrough a differentiation strategy
predicated on creating both socialand economic value, we will
work to shift to a profit structure
resilient to changes in the businessenvironment.

Inquiring minds in tireless search of
cutting-edge technologies are partof the MGC Group DNA. Diverse
original technologies represent the
primary source of our competitive
advantage.

We cultivate a welcoming corporate
culture, where open discussion
is part of the daily routine. An
enterprising spirit rooted inentrepreneurialism is another uniquetrait of MGC.

Our geothermal power businessemploys prospecting technologies
we developed through exploring fornatural gas. We entered the biomassenergy business in 2022.

Alliances and collaborations withvarious partners reinforce themanagement foundation of the
MGC Group, which enjoys a strong
industrial presence globally.

Under the philosophy that
ensuring safety is the top priorityof our business activities, we areenhancing our responsible care(RC) activities.

¥781.2 billion

90% or more

24

About 70 years

About 59%

0.28

Consolidated net sales

Products based on technologies
developed in-house (by productcategory)

Number of countries with businesslocations

How long we have been developing
natural gas

Overseas net sales ratio

Lost-time injury frequency rate*2¥1,029.3 billion

About 40%

75%

About 40

147

0.004

Total assets

Percentage of MGC productsthat hold the largest share of theirrespective global markets

Employee satisfaction*1

Number of research projects on
carbon neutrality

Number of Group companies

Lost-time injury severity rate*3

MITSUBISHI GAS CHEMICAL COMPANY, INC.

*1 From employee awareness survey results.
The subjects were all employees of MGC(non-consolidated), excluding those lent to
subsidiaries (effective replies: 71.9%).

*2 Total number of deaths and injuries caused bylabor accidents per one million actual hours
worked*3 Total number of working days lost per 1,000
actual hours worked
MGC Report 2023

4

Value Creation Process
Electronic chemicals(EL chemicals)

The MGC Group views social issues in anticipation of 2050 from the perspective of sustainability, suchas climate change, the international situation and the advancement of technology. We have establishedtarget areas associated with these long-term social issues. We develop products that will usher in a new
era through management resources supporting diverse businesses, and through a differentiation strategy
premised on the balance of social and economic value, which we then endeavor to provide to various target
areas. Through this process, we will fulfill our Group’s Mission of “Creating value to share with society.”

Outcomes

Engineering
plastics

Differentiation
strategy

Technological Base

OutputICT

Corporate Culture

Target areas
Pursue distinction

Social issues
in anticipationof 2050

Resourcesand Energy*bismaleimide-triazine

Management
strategy

Foamed plastic

for balancing socialand economic
value

Mobility
MethanolManagement
resources

Biodiversity
crisissupporting diverse
businesses

MissionCreating value
to sharewith society

Energy resourcesand environmental
businesses

Promotion ofcross-value
innovation

Partnership

MXDA

Balance socialand economic
value

MX-Nylon(MXD6)

Strengthen
discipline andfoundation
supporting
business
activities

ICT/mobility

Antibody drugs

Solve medical andfood problems
Medical/FoodCornerstone of business activity
Reference
The MGC Way
Diversity

5

Clim
ClimatechangeBehavioral
changesh

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Oxygenabsorbers

Infrastructure

Safety Culture

Environmental
impactreduction

Solve energy
and climatechange problems

EnergyValue co-creation witha variety of partners

Demographic
changes

Contribute todevelopment of
ICT/mobility society

IC plastic packaging
BT* materials

Uniquely among chemicalcompanies, has technologies andinsights cultivated fromdevelopment of natural gas

Changes ininternational situation

leading to
a new era

associated withthese long-termsocial issues

Diverse in-housedevelopment technology

Enterprising spirit
based onentrepreneurialism

addressing
social issues
through business

Optical resin/polymer

Reference
P3-4

MGC Report 2022
P11-16https://www.mgc.co.jp/eng/ir/files/
MGC_Report2022e.pdf

Message from the President
P7-10
Building Competitive Advantage P13-18
Overview of Management
Strategy
P27-28Materiality
P34-36
Human Capital (Human Resources
and Organization)
P57-62
Outside Directors Roundtable Talk P67-70

Reference
Building Competitive Advantage P13-18
Highlights of Activities in
Fiscal 2022
P24
New/Next-Generation Businesses P47-48
Research and Development
P49-51

Aromatic aldehydes

Reference
MGC Group’s History
Business Operations andMain Products
Specialty Chemicals Business
Basic Chemicals Business

Reference
P11-12
P37-38
P39-42
P43-46

Value We Aim to Create
FOCUS: Aiming forSocial Transformation
with CarbopathTM

MGC Report 2023

P19-20
P21-226

Message from the President

We pursue sustainablegrowth as we activelytransform ourselves to better
create value that helps
address global challenges.

Masashi Fujii
President andRepresentative Director

7

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Direction of Group Management

We take on structural changes insociety with a positive mindset for
creating new value
The social and economic activities that wereinterrupted by the pandemic are gradually returning
to normal. In fiscal 2022, however, the operationsof the MGC Group were substantially affected bysteep rises in prices for fuels and raw materials, aswell as worldwide economic slowing triggered by
the Russian invasion of Ukraine.
To continue producing solid results in thisunpredictable business environment, we have tothink positively in taking on environmental changes.
Looking back, the Group has gone through majorchanges several times. During the oil crisis a half
century ago, we overcame the sharp rise in oil prices
and other inconveniences, took advantage of thechanges and turned an idea into an unprecedented
project to expand our methanol business abroad.
Rather than deal passively with external conditions
and applying the “common sense” of the old days,
it has become more important than ever for us
to analyze our past, envision the large structuralshifts to come within 10 or 20 years, and activelytransform ourselves. We can think of chemical
manufacturers as future forerunners as we develop
and commercialize the materials and ingredientsthat industry will need, ahead of others. By reading
the signs of changing times, I’m proud to say that
the MGC Group contributes to industry around theworld.
The structural changes in society that I am
particularly interested in as a president of a chemicalcompany are the energy revolution in a broad sense
and progress in information technology. For theformer, the idea of a society based on hydrogenas a primary fuel has been discussed worldwide.
To help make that happen, it’s essential that weestablish renewable fuels as a main power source
for society, and produce and widely supply “green”
hydrogen extracted using renewable energy. If
renewable energy is reliably available at low cost,
it will trigger all sorts of social change, including
boosting the advancement of electric vehicles. The
MGC Group is the only chemical manufacturer
that owns technologies for natural gas prospecting
and development, operating businesses that are
generating energy from geothermal, biomass and
LNG resources, all of which are highly compatible
with our proprietary mining technologies. We

understand that an important theme for us is tohelp address energy-related challenges through ourfields of strength, as I’ve mentioned.
As for progress in information technology,
we see major business opportunities in the near
future as society advances towards 5G and 6G
telecom networks and quantum computing. We
must continue building new value into what we
make while anticipating customer needs for lighter,thinner, shorter, smaller and less energy-intensive
products. We must also carefully monitor factors
causing change in society, and turn what we learn
into business opportunities.
Addressing social challenges through thechemical business will not be an easy path for the
MGC Group to travel alone. Therefore, we havegathered knowledge from various companies andthrough that collaboration gradually expanded ourvalue chain, with the aim of creating value thathelps address global challenges. In implementing
these initiatives, I’ve come to freshly realize theimportance of our Mission to “create value to sharewith society.” I hope to give the MGC Group alarger presence in areas where it can maximize
its strengths, serve as a starting point for social
development, and grow with business partners andlocal communities.

Differentiation Strategy

We build our competitive advantage through differentiation and higher added value
Since its founding, the MGC Group has grownsustainably by operating diverse businesses
based on unique technologies. Intrapreneurshiphas been passed down for generations within
the organizations of the MGC Group, giving each
employee the ambition to be a leader in a given
chemical field and driving market transformation
by honing technologies within our forte. A good
example of this is how we rose to the challenge
during the oil crisis I mentioned in the beginning.
Constrained by sharply rising prices for raw
materials and fuels, some within the Company
believed that domestic production of methanol
would become increasingly hard to maintain, andbegan thinking about moving our operations abroad.
As the circle of people in support of that idea grew,management decided on an investment projectthat was exceptionally large relative to sales at thattime, and our operation in Saudi Arabia began. I
think of this as a symbolic episode representing
the Company’s DNA. This project positively raisedcompetitive consciousness for the first time among
MGC personnel. What followed was a stream of
ambitious proposals from other divisions as well,leading to a string of new projects starting in Japanand abroad. These became the foundations formany of our operations today, including thoseabroad. Recently, our business structure has beenshifting more toward products that differentiate
us from the rest. This was made possible byemployees who take the initiative in growing theirrespective fields of expertise, noting the markets

MGC Report 2023

8

Message from the President

that are most compatible with our fundamental
technologies and propagating successful practices
across the board.
A case in point is the world’s thinnest lenses for
smartphones and small cameras, realized using an
optical polymer with an extremely high refractive
index. Our employees take pride in the worldleading functions they create, in turn motivatingthem to move projects forward proactively. To
demonstrate this, I could mention various cases
in which our researchers developed new businessabroad through direct contact with prospective
clients, and this fueled their ambition to explore
higher levels of demand. It usually takes a decade to
develop a precision part for smartphones, requiring
advanced skills to design production plants andmanage operational phases. This is why our clientsjudge our parts to be the best in the world andadopt them as their smartphone products evolve.
As a result, our employees experience greater job
satisfaction and personal growth. This positive cycle

powers our differentiation strategy.
The businesses of the MGC Group follow twomodels: the market-oriented model, focusing on
specific industries and markets, and the productoriented model, where business develops basedon raw materials like methanol. By balancing
these models, MGC has been able to growcontinuously for over half a century. Today, in
response to changes in the market environment,
we have begun optimizing our business portfolio.
Specifically, we are applying a strategy to bolster
competitiveness across the board by increasing
the effectiveness of both functional and basic partsof our businesses. We will let go of products thathave lost competitiveness and become more likecommodities, and shift emphasis toward areasof higher added value. By effectively meetingnew market needs while motivating employees
and raising job satisfaction, I believe we areaccelerating our shift to a profit structure resilient toenvironmental changes.

Progress with the Medium-Term Management Plan

Reorganizing the engineering plastics business and pursuing monetization of
decarbonization solutions
In fiscal 2022, the second year of the Medium-Term
Management Plan, we brought in ¥781.2 billion
in sales and reported ¥49.0 billion in operating
profit. Our optical materials and products related
to automobiles struggled in their recovery, but I
think we made fairly good results overall for theyear, sustained by our better performing polyacetal
business and the positive effects of the weaker yen.
The business environment will remain difficult topredict, so we will not restrain investment towardachieving ¥1.0 trillion in sales and ¥100.0 billion or
higher in operating profit in fiscal 2030. We project
coming close to achieving our targeted ¥240.0
billion in investment over a three-year period. In
fiscal 2022, we invested in growth businesses,
including the MXDA plan in Europe and newelectronic chemical plants in the U.S., Taiwan and
China. We will continue investing in fields where wehave a competitive advantage and unique strengths
over the medium and long terms.
Due to the high level of investment, fixed
and amortization costs have been rising for theentire Group. This means investment can help

9

MITSUBISHI GAS CHEMICAL COMPANY, INC.

compress operating profit by a larger margin if themarket environment deteriorates. That said, we inmanagement place highest priority on sustainablebusiness growth, and make investment decisions
with medium- and long-term market growth inmind. I strongly believe that funds we have invested
in enhancing our differentiated businesses and new
and next-generation businesses will bear fruit. At thesame time, we are withdrawing from unprofitablebusinesses. We have decided to stop producing
formalin and polyol products and streamline that
operation, and have shifted to highly profitable highfunctioning products, such as adhesives used inconstruction of all-wood buildings.
A top-priority theme for fiscal 2023 is thereorganization of our engineering plastics business.
In April, we made Mitsubishi Engineering-Plastics
Corporation a consolidated subsidiary and began
working to increase its percentage of high-valueadded products among polycarbonates and raise
profitability by unifying certain grades.
Our long-term theme is accelerating to achievecarbon neutrality with the power of chemistry. For

the MGC Group, decarbonization presents anopportunity to build earnings as well. We alreadyhave about 30 research projects in progress. Two of
those have been selected as Green Innovation Fund
Projects by NEDO*. With our unique technologies
and specialists holding the key to decarbonization,
I believe we can achieve a level of results worthy ofsocial implementation. Because atmospheric carbon

dioxide, the major contributor to global warming,
has future potential as a chemical ingredient, wehave been discussing the underground constructionof CO2 capture-and-storage (CCS) facilities in theGroup’s natural gas field.
* New Energy and Industrial Technology Development
Organization

Promotion of Sustainability Management

As a Group, we work continuously to create more functional value than ever
The sustainability management practices of the
MGC Group are meant to ensure that we generatefunctional value while helping address social issues
to the best of our ability as a chemical company.
Toward realizing this, I told all employees at the
beginning of the year, “The conventional view ofmarket trends no longer works. Think with the newstandard of value and act accordingly.” Meaningembracing the paradigm shift currently under way
rather than denying it. In doing so, it’s importantthat we add new value to chemical products andfollow through on our resolve to help customers
and society address their challenges. By always
reminding ourselves to “create value to share withsociety,” we will naturally see our organization
through irreversible changes in economies.
The most important capital we can tap in
realizing this kind of value creation is our humanresources. The great majority of MGC Group
employees are career-minded individuals pursuing

higher-level job skills. So the Company focuseson supporting their ambitions by providing
opportunities to enhance their skills and improving
work environments to nurture personal growth.
Management has always valued the well-being ofeach employee, acknowledging and making themost of their desire to grow. We have assigned the
MGC Commons, our new innovation center opening
in October 2023, the role of promoting collaborationand synergy among Group employees, and evenwith outside partners.
I will continue to work to ensure that this uniquechemical group is valued highly by all stakeholders
in terms of both financial aspects, such as
business performance, and non-financial aspects,
specifically sustainability matters including advanced
proprietary technologies and health and productivity
management.

MGC Report 2023

10

MGC Group’s History

Performance and History of Typical Products
12.1%

0.3%

13.8%

13.0%

Fiscal 1972

18.1%

¥55.3

25.1%

Net sales (left axis)¥191.01918
Founding of Mitsubishi
Edogawa Chemical Co., Ltd.

400

1951
Incorporation of Japan
Gas Chemical Co., Inc.

40.4%
●Natural Gas Chemicals●Aromatic Chemicals●Specialty Chemicals●Information and Advanced Materials●OtherFiscal 2000

22.1%

¥323.0billion●Basic Chemicals●Specialty Chemicals●OtherFiscal 2021

¥705.6

35.2%

59.5%

billion(Billions of yen)
100

19.0%

13.7%
13.3%

600

25.5%
●Methanol●Xylene●Ammonia●Industrial Chemicals●Engineering Plastics●OtherFiscal 1980

0.1%

11.0%

19.6%

35.4%

(Billions of yen)800

Note: Non-consolidated figures shown for fiscal 1971-1976, consolidated figures shown for fiscal 1977 onward

0.4%

billionbillionOrdinary profit (right axis)

22.4%

80

60

40

200

1971
Establishment of
Mitsubishi Gas Chemical
Company, Inc.

20

0

0

1971

1975

1980

1985

1990

1995

2000

2005

2010

2015

2020

(FY)

1932 Hydrogen peroxide
1932 Yamakita Plant
1963 Yokkaichi Plant

1978
Kashima
Plant(Expanded in
1984, 1999)

1990 Indonesia
1979 Electronic chemicals (1986 Super-pure hydrogen peroxide, 1987 Super-pure
1986 Saga Plant
1987
Niigata Plant

1990 South Korea(A plant newly establishedin 2012)2009 China (Relocated in 2018)
ammonium hydroxide)
1995 United States (Plants newly established in 2020, 2021; scheduled to be expanded in 2023)
1998 Singapore (Expanded in 2001)
2000 Taiwan

1952 Methanol
1952 Niigata Plant

1983 Saudi Arabia(Expanded in 1992, 1997, 1998, 2008)

1994 Venezuela(Expanded in 2010)2010 Brunei

2020 Trinidad and Tobago

1960 Polycarbonate, 1971 Polycarbonate sheet
1960 Osaka Plant (Up to 2002)

1989 Kashima Plant (Expanded in 2001)
1993 Establishment of
Mitsubishi Engineering-Plastics
Corporation
1983 Specialty polycarbonate by interfacial polymerization method

1997 Thailand (Expanded in 2003）

2005 Establishment of MGC Filsheet Co., Ltd.
2011 China

1998 Lens monomer, 2000 Melt polymerization special PC (Optical resin/polymer)
1998 Naniwa Plant (Expanded in 2001)
2002 Kashima Plant (Expanded in 2010, 2016, 2019, 2022）

1981 Polyacetal
1981 Yokkaichi Plant (Expanded in 1984; up to 2023）
1986 South Korea

1996 Thailand(Expanded in 2003, 2012）2002 China

1984 MX-Nylon (MXD6)1984 Niigata Plant (Expanded in 1991, 1997）2004 United States1970 MXDA (1971 1,3-BAC)
2007 Mizushima Plant (1,3-BAC; expanded in 2017)1970 Niigata Plant (Expanded in 1982, 1992)
1968 Meta-xylene
1968 Mizushima Plant(Expanded in 1992, 1996, 2005, 2009, 2018）1981 Aromatic aldehydes
1981 Mizushima Plant（Scheduled to be expanded in 2023）

1975 Copper-clad laminates, 1981 BT resin
Basic Chemicals
Specialty Chemicals

1975 Tokyo Plant (Up to 2004)

1990 Establishment of Electrotechno Co., Ltd.

1977 AGELESSTM(now MGC Electrotechno Co., Ltd., expanded in 2007) (Newly established in 2013; expanded in 2022 in Thailand)
2004 PharmaKeepTM

1988 Establishment of AGELESS Service Center(now MGC AGELESS Co., Ltd.) (Newly established in 2001, Thailand; 2016, Fukushima)

1981 Development of geothermal power
1994 Establishment ofHachimantai Geothermal
Co., Ltd.

11

MITSUBISHI GAS CHEMICAL COMPANY, INC.

(now Hachimantai Green Energy Co., Ltd.)(Started operations in 1994 to supply steam to
Sumikawa Geothermal Power Plant)2010 Establishment of2015 Establishment of Appi Geothermal Energy Corporation
Yuzawa Geothermal Power
Corporation (Started operations in 2019 at Wasabizawa Geothermal Power Station)

MGC Report 2023

12

Building Competitive Advantage

Increase
communication
ability

Globalmarket share#1

Globalmarket share#1*

Super-pure hydrogen peroxide

Globalmarket share#1#1

Proprietary materials with superior low-reflectivity
and electrical properties, able to keep pace withthe evolution of the semiconductor market

Primary applications

Primary applications

Cleaning agents and etching agents for semiconductors

IC plastic package substrates (smartphones,
computers, IT appliances, etc.)

Optical resin/polymer

Globalmarket share#3

Primary applications

Primary applications

Automotive components, electronic
components, office automation equipment

Globalmarket share#1#1

MX-Nylon (MXD6)High gas barrier properties contribute toweight reduction of PET bottles

Primary applications

Primary applications

Epoxy resin curing agent (paint for bridges, ships andindustrial pipes and ducts), raw material for MX-Nylon

Food packaging materials, PET bottles,
engineering plastics

Aromatic aldehydes
Customized to customers’ requirements using proprietaryproduction methods that are efficient and have low
environmental impact
Primary applications

Resin additive (agent that renders polypropylenetransparent) and fragrances

Basic Chemicals

Production
capacity#3

Createdifferentiatedproducts

Accumulate
in-housedevelopment
technology

Ability tocustomizetechnology seeds

Optimize
research
investment

Technology, raw materials, resources

Combinefundamental
technologies

MethanolWorld's only comprehensive manufacturer with
proprietary catalyst technology and complete
methanol value chain, from manufacture tosales of derivatives
Primary applications

Raw materials for formalin, acetic acid, etc.,
intermediate materials

Specialty Chemicals(Global market share, etc. are estimates made by the Company)

Creating Differentiated Products through a Beneficial Cycle of Needs and Seeds

40%
Percentage of MGC productsthat hold the largest shareof their respective
global markets

13

Improvesolution quality

Polyacetal resin (POM)

Materials for smartphones and other compact camera lenses*As a highly refractive resin (concave lens)Meta-xylenediamine (MXDA)

Ability to
Maintain andidentify needs
strengthen leading
market share
Society, industry, customers

Engineering plastics offering superior wear
resistance, low friction and chemical resistanceSuperior rapid curing, anticorrosion andchemical resistance

Globalmarket share

BT products

Global production capability ensures a stable supply ofhigh-quality products to meet the needs of the mosttechnologically advanced customers

Balances high refractive index with low birefringence,
contributing to enhanced camera functionality

Globalmarket share

Increasecustomer
attraction

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Around 40% of the MGC Group’s products have captured
the top share in their global markets. We have created anumber of products with strong competitive advantages in
the market. Behind these are our distinctive technologies
and resources (seeds), which we have used in dialogue
with the markets before matching customer needs
identified in dialogue with high-quality information. In thisway, we have been working ceaselessly to expand higher
functionality product development and solutions. We
have strengthened our speedy technology development
structure based on a deep understanding of customer
needs, and we have established and maintained a leading

market share in certain fields. In other words, through a
combination of product-oriented and market-oriented
approaches, we have created distinctive products that are
difficult for other companies to imitate.
Over 90% of our products were developed in-house.
Internally, we have created a technology platform forresearch personnel on the Company intranet. We combine
a rich array of core technologies to customize our seeds
and develop new products and grades. For high-priority
themes, we have also provided an evaluation system forgenerously allocating research resources.

MGC Report 2023

14

Building Competitive Advantage

The Expected
FutureAdvanced semiconductor
Supply chain rebuilding
technology

Circular economy

Dealing withemerging countries

Expandingpresymptomatic needs

Developments in CASE

Dealing withthe environmentand climate change

Shift to smart cities

Advanced medical
technology

Tightened foodsupply and demand

ICT

Mobility

EnergyInfrastructure

Medical/FoodTarget Area

Business
Opportunities

Product
ExamplesTechnology
Platforms• Increased demand for raw materials forcomponents for cameras and electronic devices• Shift to renewable energy• Expanded need for materials that lead toweight savings• Expanded demand for infrastructure in
emerging countries• Expanded use of solid-state batteries• Progress in use of IoT/AI technology• Antibody drugs to become mainstream
in drug discovery field• Development of CO2 recycling technology• Diversification of allergy diagnostics• Response to food loss problem

Optical resin/polymer

Carbon fiber composite
materials

CO2-derived methanol

Geothermal
power generation

Allergy test chips

IC plastic packaging
BT materials

Solid electrolytes

CO2-derived
polycarbonate

MXDA

Oxygen absorbers

Catalysts

Polymer Science

Biotechnology• Superacid• Solid catalyst• High-pressure technology• Condensation polymerization• Bulk polymerization• Oxidative polymerization• Polymer design• Films and sheets• Resin processing• Continuous cultivation• Breeding• Antibody drug technology

Synthesis

Functional Products• Air oxidation• Liquid-phase oxidation• Hydrogenation• Oxygen absorbers• Varnish manufacturing• Chemicals for semiconductors

Process engineering/
analysis (common)

Target Areas and Technology Platforms
The Group has five technology platforms: catalysts,
synthesis, polymer science, functional products, andbiotechnology. MGC’s catalyst technology originatesin the development of a catalyst for methanol synthesis
and has been applied in the commercialization of many
original chemical synthesis processes. On the other
hand, polymerization technology acquired throughdownstream development is also used in functional designof mechanical and optical properties. We develop new
functional products by combining multiple raw materials
into compounds. Moreover, a raft of biotechnologies
are being developed from the culture technologies
accumulated while promoting R&D into microbial proteinsusing methanol as a raw material. The differentiatedproducts created from this technological foundation will
provide effective solutions to emerging issues in target
areas that the Company is focusing on.
Patents are one type of intellectual property that we
produce through daily research and development work.

15

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Our total patent value continues to grow as we focus on
R&D themes that will meet the needs of the times.

The DNA of a Company Built on Technology
From the 1950s to the 1970s, Japan’s chemical industry
experienced the post-war economic boom and entered a periodof growth. In most cases, companies were producing new
products by licensing technology from overseas. Mitsubishi
Gas Chemical was established in 1971 through an equal mergerof two manufacturers, both among the few in the industry
at that time who were focusing on technologies developed
in-house.
One of the predecessor companies, Japan Gas ChemicalCo., Inc., was incorporated in Niigata City in 1951 as Japan’s
first natural gas chemical industry manufacturer. Since
methanol derived from natural gas was cheaper and of higher
quality than existing products, Japan Gas Chemical quickly
became a leading manufacturer of methanol. In 1957, it
launched Japan’s first operation for producing ammonia fromnatural gas. Such initiatives made for highly competitive
business. Entering the 1960s, Japan Gas Chemical also entered
the petrochemical business, and started commercializing its inhouse developed xylene separation/isomerization technology.
It developed the world’s first HF-BF3 method, and applied thetechnology at the Mizushima Plant, which started operationsin 1968. Japan Gas Chemicalalso focused on nylon MXD6,
which has excellent gas barrier
properties against oxygen and CO2
and promoted the development ofmeta-xylenediamine (MXDA).
The other predecessor
company was Mitsubishi
1952 Methanol manufactured from Edogawa Chemical Co., Ltd.,*2
natural gas
which was founded in 1918
and in 1927 became the firstcompany in Japan to succeed in
manufacturing formalin. In 1933,
Mitsubishi Edogawa Chemicalbegan production of hydrogen
peroxide using a proprietary
electrolytic process. The product1968 Xylene separation technology was used in applications suchusing superacid HF-BF3
as bleaching paper. In 1937,

Mitsubishi Edogawa Chemical
started production of Japan’s firstlaminate materials for printed
circuit boards. In 1961, it started
production of polycarbonate (PC)using a proprietary interfacial
polymerization method. The
company maintained a high1927 Formalin manufactured
market share in the PC market,
while continuing to grow as acompany with strengths in formalinderivatives and engineering plastics.
With Japan Gas Chemicalhandling the upstream side of themethanol business using natural gas
as a raw material and Mitsubishi
Edogawa Chemical having strengths 1933 Hydrogen peroxide manufactured
using the electrolytic process
in raw materials such as methanol
derivatives on the downstream side, their merger was seen by
many as inevitable and logical. The merger was expected toenable efficiency gains through joint procurement of resources
and raw materials and the building of an integrated production
system, as well as the demonstration of competitive advantages
over the long term due to their mutually complementary
technologies. Furthermore, the start of the 1970s, when the
Company was established, was an era of increasingly strong
international competition in the chemical industry. In thisbusiness environment, retaining our identity as a chemical
manufacturer with a distinctive technological orientation
required massive investment in research and development
and investment in production facilities. The merger created astructure capable of carrying out such an investment strategy.
The two companies had each developed world-first andJapan-first businesses through their unstinting efforts, andtheir DNA has been passed down to the Group’s employees
today. We are proud of our corporate culture of originality
and pioneering spirit, which are the foundation of our value
creation.
*2 The company’s name at the time of its foundation was Edogawa Barium
Industry Co., Ltd.

Total Patent ValuePatent Asset Index*1 (2010=100)

Creation of Markets Based on a Differentiation Strategy

010

ince 2

0% s

ut 8
y abo

Up b
100

2010

2015

2020

(Year)*1 An index that visualizes the technological strength and influence ofan applied patent in global terms, obtained by objectively evaluating
quality (value based on how often the subject patent is citedworldwide) and quantity (number of applications)
Source: H. Ernst and N. Omland, World Patent Information, vol. 33,
pp. 34-41 (2011)

The oil shock of 1973 occurred just after the Company waslaunched. The event had a major impact on the management ofchemical companies as it caused energy and electricity prices
to soar and sparked an economic downturn. Furthermore, theimpact of the yen’s appreciation and the reverse oil shock
starting in 1985 was even more serious for the Company. The
advantage of using natural gas produced by the Company inJapan as a raw material was virtually eliminated, while market
competition became more intense for our other earnings pillar,hydrogen peroxide. Reforming our business structure to enable
increased functionality and added value in our product lineup
became an urgent task.
Anticipating these environmental changes, in 1983 theCompany led the industry by starting production of methanol
in Saudi Arabia. To maintain competitive pricing, we
dramatically overhauled our production site strategy, moving
our production sites away from consumption areas and closer
to raw material sources.

MGC Report 2023

16

Building Competitive Advantage

automotive materials in the2010s. The oxygen absorber
AGELESS™ experienced
rapid growth in the 1980s,
1983 Saudi Arabia (methanol)
1990 Indonesia (hydrogen peroxide)
1997 Thailand (engineering plastics)
providing an example ofsuccess in a different fieldfrom that of conventional
chemical products as a resultof market expansion efforts
made by the Company’ssales engineers.
After that, in the overseas
2010 Brunei (methanol)2020 Trinidad and Tobago (methanol)
2024 Netherlands (MXDA/construction
methanolbusiness, we
site planned)
expanded our production
sites to countries with natural gas reserves, such as Venezuela
Moreover, the late 1970s to the 1980s was also an era ofin 1994 and Brunei in 2010. In 2020, we started production
expansion for the electronics-related markets. We establishedin Trinidad and Tobago, strengthening our global supply
a specialist department for electronic-materials and preparedstructure. For super-pure hydrogen peroxide, we expanded
a structure that could respond immediately to new needs fromour production sites in consumption areas, moving into Southcustomers. BT resin was commercialized around this time,
Korea in 1991, the United States in 1996, Singapore in 1998,
and sales grew rapidly as it was adopted for use in laminate
and Taiwan in 2001.
materials for IC plastic packaging. Today, BT resin continues
In 2000, we introduced the internal company system
to contribute to miniaturization and performance gains forto thoroughly implement selection and concentration. We
electronic devices around the world. In hydrogen peroxide, toestablished a system to allow each internal company to makemeet the needs for higher integration of semiconductors, ininvestment decisions quickly at its own discretion. This
1986 we developed super-pure hydrogen peroxide with a metal
improved Group financial soundness and accelerated ourion concentration of 1 part per billion or less. Also in 1986, webusiness activities. While withdrawing from nonperforming
reorganized our research and development structure and madebusinesses, we proceeded further with globalization and market
large-scale capital investments. We strove to create markets
creation.
in Japan and overseas through application development ofIn building up a competitive advantage, we recognize thatexisting products.
the common point for both upstream and downstream products
Meanwhile, in polycarbonate (PC), which had mainly beenis the creation of new growth markets based on the MGC
used for miscellaneous items and construction materials, weGroup’s unique management resources and differentiation
continued to expand demand for new applications, including
strategy.
eye wear in 1990, optical film for LCD panels in 1999, andIncreasing Product Performance and Expanding Applications
DecadeHydrogenperoxide

~1950

1960

Share of sales
1970

1980

1990

Large

Medium

Small

2000

2010

2020

Paper pulp, fiber, and industrial
applications
Cleaning semiconductors, etching

Creating Value to Share with Society
In September 2015, the Sustainable Development Goals(SDGs) were adopted by the United Nations Summit, anda large number of organizations worldwide began activities
based on them. The 17 ambitious goals of the SDGs cannot be
achieved by individual companies working alone. Therefore,
the SDGs became a link connecting diverse organizations. As adistinctive chemical manufacturer, we believe the MGC Groupis able to accelerate proactive initiatives toward achieving theSDGs by teaming up with companies and organizations inother industries. As a first step, in 2021, the 50th anniversaryof our establishment, we announced the Group’s Mission,“Creating value to share with society.” Then, we started our
Medium-Term Management Plan, which looks ahead to the
future around 2050 and aims to “shift to a profit structure
resilient to changes in the business environment” and “balancesocial and economic value.”In the process of formulating the plan, we discussed ourpath toward creating long-term value based on the SDGs
and the Japanese government’s declaration that Japan willrealize carbon neutrality by 2050. This discussion concluded
that to achieve the SDGs and contribute to the formation of a

Development of Products and Technologies Conducive to Decarbonization
The schedule of promotion of the main businesses, products, and technologies conducive to decarbonization is as follows.
2030

Judgment on demonstration(up to 2025)

Clean ammonia

Consideration of factors such as where to conduct procurement, and conditions
thereof

CO2 to PC

Bench plantverification(up to 2024)

DAC

Basic research to scale-up

Promotion of utilization of
CCUS in the Higashi-Niigata
Oil and Gas Field*3
FS of viability
as business(up to 2023)

Commercialization (up to 2030)

Pilot plant demonstration (up to 2028)

(FY)
2050

Larger scale and full
introduction to primarymaterials industry

Circular carbon methanol

Promotion of utilization of
CCUS in water-dissolved
natural gas fields*3

Disinfection and sterilization

decarbonized society, it is crucial
that we accelerate our researchand development for advancing
chemicals and materials in fields
such as fossil fuel alternatives,
ICT and mobility, medicine, foodmanagement, and infrastructure.
In particular, global demand
Circular carbon methanol pilot facility
for realizing carbon neutrality(Niigata Plant)
should be viewed as a tailwind
for the MGC Group, rather than aheadwind, since we have extensive knowledge and solutions inthese fields, and the technological foundation to support them.
In 2020, we ended the internal company system that
we had introduced in 2000 and radically changed ourorganizational framework with a view to overall optimization.
We will continue to focus on creating products that enable us
to approach solutions to global-scale challenges, and we willcontinue to direct the combined capabilities of the MGC Group
towards creating value to share with society.

Commencementof procurement

Commercialization

Implementation

Judgment on commercialization (up to 2030)

Implementation

Judgment on commercialization (up to 2030)

Implementation*3 Injection of CO2 and utilization in increased production of oil and natural gas (EOR/EGR)
DecadePrinted circuit substrate materials
for calculators and clocks, etc.

~1950

1960

1970

1980

1990

2000

2010

2020

BT materials IC plastic package substrate materials
Chip LED substrate materials
High-frequency applications
DecadeOrganic photoconductors (OPCs)

Opticalmaterials

Spectacle lenses
Smartphone camera lenses
Automotive camera lenses

17

MITSUBISHI GAS CHEMICAL COMPANY, INC.

~1950

1960

1970

1980

1990

2000

2010

2020

Clean Ammonia

Promotion of Utilization of CCU*6

Promotion of Utilization of CCUS

Discussions are being held with four
domestic chemical manufacturers for the
stable securement of clean ammonia*4,
expected to serve as a next-generationenergy source. Furthermore, CCS*5
surveys are being conducted in Indonesia
by PAU, an ammonia manufacturer inwhich MGC has an indirect investment.

MGC is engaged in the manufactureof polycarbonate using CO2 as a raw
material. The Company has succeeded in
the development of a process that emits
less CO2 in the manufacturing process
than existing manufacturing methods,
and will conduct verification thereof ina bench plant until 2024, with plans tocomplete demonstrations in a pilot planton the scale of 2,000 tons of DPC and
600 tons of PC by 2028. Ultimately, theaim is the commercialization and social
implementation of the process.

MGC participated in a large-scale
CCS demonstration test by NEDO
in Tomakomai. Injection of CO2
underground commenced in 2016, and a
total of 300,000 tons of CO2 was stored
underground by 2019.
Furthermore, MGC is considering theinjection of CO2, mainly generated at the
Niigata Plant, into the Higashi-Niigata Oiland Gas Field to increase production ofoil and natural gas by utilizing EOR/EGR(enhanced oil/gas recovery).

*4 The collective term for blue ammonia, which
combines CCS storing CO2 emitted at the timeof ammonia production underground, and green
ammonia, which uses renewable energy hydrogenas a raw material for ammonia*5 Technology for capturing and storing CO2*6 Technology for capturing and utilizing CO2 as
a resource

MGC Report 2023

18

Value We Aim to Create

In the Medium-Term Management Plan, weestablished a vision for the next five to ten
years of each business sector. We believethat we can play a role in transforming
industry and society to unlock theirpotential through the creation of new value
through MGC’s unique products to help
solve social issues.

Contribute to Development of
ICT/Mobility Society
In the ICT area that is one of our target areas, DX throughthe utilization of AI, IoT and other technologies is expectedto advance in the future. The importance of chemicals usedin the high-performance semiconductors that form thefoundation for these is also continuing to increase. Meanwhile,in the area of mobility, new ingredients and materials thatmatch the needs of computerization and low environmental
impact are required. The MGC Group is strengthening
proposals for material development and solutions with a view
to such next-generation needs.

Solve Energy and Climate Change Problems

Solve Medical and Food Problems

Taking advantage of our many years of experience developing
natural-gas fields and producing methanol, we are working
to commercialize our carbon-negative*1 technology. We areconcentrating effort on R&D related to methanol synthesis from
CO2 as well as on CO2 capture, utilization and storage. We alsoendeavor to contribute to addressing issues related to energy
and climate change in a way that is unique to the MGC Group
as a chemicals company, such as the use of methanol andammonia as a hydrogen carrier, geothermal power generation,
which no other company in the chemicals industry is doing, andmaterials development to help extend the life of wind powergeneration equipment.

In light of accelerating global population growth and aging,
the MGC Group is expediating development of productgroups that will lead directly to the enhancement of preventive
and predictive medicine and the improvement of medical
productivity. As for addressing food-related challenges, in 1977
we began marketing an oxygen absorber that extends thestorage life of foods, and have been improving it for over 40
years. Taking full advantage of the management resources of
the Group, we will continue to develop advanced technologies
to help extend healthy life expectancy and support sustainable
food management.

*1 State in which absorption of greenhouse gases (GHG) is greater than emissions ofsame in business operations.

19Electronic Chemicals

Optical Resin/Polymer

Methanol

Energy Resources andEnvironmental Businesses

Global semiconductor demand will continue to grow in
the future, and the electronic chemicals essential for
their manufacture are also expected to see significant
growth. The MGC Group seeks to further increase thepurity of electronic chemicals used in the semiconductor
cleaning process, while contributing to the miniaturizationand increased functionality of semiconductors.

The optical materials offered by the MGC Group areprimarily used in camera lens materials for smartphones
and so forth. In the area of ICT and mobility, applications
and markets such as sensing devices for visualization of
objects not perceptible to the naked eye are expected to
expand.

Methanol, currently used as a chemical raw material,is also expected to be utilized as a hydrogen transport
medium. MGC, which is the only comprehensive
manufacturer of methanol in the world, is currently
promoting initiatives to commercialize a circular carbon
methanol production process using CO2 as a raw
material, called CarbopathTM.

BT Materials for IC Plastic Packaging

Engineering Plastics

The MGC Group’s laminate materials have maintained
the world’s top market share by improving IC plastic
packaging performance, optimizing form factor, andensuring ease of use. MGC will continue to contribute to
the early diffusion of ultra-high-speed communications
and the advent of IoT society through promoting researchthat anticipates trends in the semiconductor industry.

Polycarbonate (PC) and polyacetal (POM) are materials
that have contributed to making automobiles andelectronic devices more lightweight and extending theirlife. In recent years, they have been used instead ofexisting materials in a wider variety of industries. MGC
has started development of PC manufacturing technology
using CO2 as a raw material.

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Oxygen Absorbers

Antibody Drugs

The MGC Group is a unique chemical manufacturer inthe geothermal power generation business, and is also
participating in natural gas power generation projects. In
the future, we aim to contribute to realizing new energy
systems that combine CCS technology, for the captureand storage of CO2, and CCU technology, which utilizes
it as a resource.

AGELESSTM, a quality-improving agent preventing fooddeterioration by absorbing oxygen, brought about arevolution in the storage and transportation of food.
Going forward, we will focus on development of fresh
food applications with the aim of reducing food waste
and loss, and contributing to addressing the hunger
problem. Applications in pharmaceutical and industrial
areas are also increasing.

Based on our culture technology, we have establishedbasic manufacturing techniques for antibody drugs, andperform contract process development and manufactureof bio-pharmaceuticals. From the perspective ofsecurity, the importance of domestic production ofpharmaceuticals is increasing, and we will contributeto the stable supply of pharmaceuticals as a reliable
domestic manufacturing base.

Foamed Plastic

MXDA

MX-Nylon (MXD6)

Aromatic Aldehydes

Foamed plastic, being lightweight with excellent
vibration absorbency, contributes to the improvementof both collision safety and fuel efficiency, mainly as an
automotive material. As the shift to EVs accelerates,
areas in which it is used are expanding, such as rearseat cushion material and front seats.

MXDA has properties for preventing the deterioration of
metal. It is used as an epoxy curing agent in coatingsfor construction and industrial pipes, and its applications
have recently expanded to include maintenance of wind
power. MGC is also engaged in the development of highefficiency DAC*2 technology using MXDA.

MX-Nylon, which has superior gas barrier properties, isa material that reduces food waste and also contributes
to the weight reduction of PET bottles and automotive
components. At present, we are actively engaged inenvironmental initiatives such as the reduction of GHG
emissions through the transition to plant-derived raw
materials.

Aromatic aldehydes are used in diverse applications
including fragrances and resin additives. MGC’s
manufacturing process has the advantage of highpurity due to it being able to efficiently extract target
substances. For this reason, demand for these products,
which can be safely used for applications such as foodpackaging and fragrances, is increasing.

*2 Direct air capture is a technology that
captures CO2 directly from the air.

MGC Report 2023

20

FOCUS: Aiming for Social Transformation with Carbopath™

Overview of Circular Carbon Methanol Concept

Aiming to Expand Manufacturing Scale and Increase Commercial Viability in Three Phases

Carbopath™ Proposition for a Circular Economy through Circular Carbon Methanol

In Phase 1 of the production model, MGC modified asmall-scale pilot facility in its Niigata Plant, and started ademonstration trial of methanol production using CO2 andhydrogen as raw materials from July 2021.
At the same time, from 2022, we started a seriesof collaborations with other companies toward social
implementation of CCM. First, in March of 2022, weparticipated in a joint project with JFE Engineering
Corporation to achieve Japan’s first successful productionof methanol using CO2 captured from waste incineration
exhaust gas. In June, we started a feasibility study withchemical manufacturer Tokuyama Corporation regarding
the commercialization of methanol production using CO2
emissions and hydrogen generated by manufacturing

Hydrogen derived fromrenewable energy sources(Wind, geothermal and solar energy, etc.)

Gasification
Recycling

CO2 captured
Recycling

Circular Carbon Methanol
Waste /
Unusedresources

CO2
emissionsprocesses. In August, we collaborated with four othercompanies, including Kobelco Eco-Solutions Co., Ltd. in ajoint effort to launch Japan’s first demonstration project for
the gasification and methanol conversion of waste plastics.
Overseas, we started studying the manufacture and sale of
CCM with Cement Australia Pty Ltd in October.
From fiscal 2025, in Phase 2, we will establish abusiness model that can secure appropriate profits usinga plant with a production capacity of 100,000 tons. Fromfiscal 2030, we will increase the manufacturing scale up
to the 1-million-ton level in order to increase commercial
viability. We will further accelerate collaboration withcompanies and local governments, aiming to transformsociety with a circular economy.

Phase 3
Energy utilization
Hydrogen carriers

Chemicals
Plastics

Phase 2Phase 1
By-product hydrogen, etc. and utilization of recycled CO2
Demonstration of Circular Carbon Methanol

Power generation

Fuel

Catalyst Technology
Process & Operation Technology
Methanol Value Chain

Increasing international movement towards carbon
neutrality has presented the MGC Group with a newopportunity for business growth. One leading initiative is
the Circular Carbon Methanol (CCM) concept, in whichatmospheric CO2 emissions, waste plastics, and others
are converted into methanol, recycling them for use as
chemicals or fuel, and in power generation.
MGC’s history with methanol goes back to 1952, when
the Company became the first in Japan to succeed insynthesizing methanol from natural gas that it had produced.
Since then, we have accumulated expertise in catalyst
development, synthesis technology and manufacturing overmany years, along with plant operation experience. We also
became one of the first to engage in research on methanol
manufacturing methods using not only natural gas, but also
CO2 and hydrogen. Then, in 2020, based on the Japanese
government’s declaration of intent to achieve carbon
neutrality by 2050, we set a new direction, aiming to makeR&D on methanol made from renewable resources into abusiness to support our future growth.
Under this concept, MGC will invest in the methanol
production business, issue technology licenses, provide
operation and maintenance services, and conduct producttransportation and sales. Currently, we are aiming toachieve social implementation of CCM while working
to accelerate cross-industry collaboration between
companies and local governments that have essential
sources of renewable energy-based hydrogen and CO2
emissions needed for realizing this concept.
In 2022, the brand name Carbopath™*1 was adopted
for this concept. This brand name expresses MGC’s desire
to be a pioneer in promoting the CCM concept. MGC is
committed to realizing carbon neutrality and a circularcarbon society by promoting its environmentally advanced
methanol business.
*1 Carbopath™ is derived from “carbon” and “path-finder.”Image of Collaboration with Partners
Technology license
and remotetechnical support

CO2 to methanol
Creating value from CO2 that is derived from raw materials and that cannot be substituted as fuelTarget: Steel industry, petrochemical industry, local governments
Collaboration: CO2 separation and capture technology, renewable energy hydrogen technology

Cross-industry
collaboration

Waste to plastic methanol
Chemical recycling promotion (save petroleum resources)
Target: Waste plastic and industrial waste processing companies, local governments
Collaboration: Gasification technology, waste plastic transport and processing

Product transaction,
dividend

Biomass to methanol
Effective use of waste biomass*2
Target: Wood processing companies, paper companies, sewage processing companies
Collaboration: Gasification and fermentation technologies, renewable energy hydrogen technologies,
wood transport*2 Forestry thinnings, construction waste wood, food scraps, livestock dung, sewage digestion gas, etc.

21

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Larger scale for Circular Carbon Methanol
Full introduction to primary materials industry- Overseas: Dawn of market for materials and fuels- Domestic: Promotion of introduction for users• New project creation*3*3 Waste plastic-based projects also considered in parallel

Commercialization of Circular Carbon Methanol,using renewable hydrogen- Overseas: Expansion of market- Domestic: CCM value creation→ Establishment as a manufacturing andsales business• International projects, domestic renewable energybased projects, and utilization of existing business• Utilization of domestic excess renewable energy, etc.

- Expanding value of Circular Carbon Methanol- Reduced carbon and decarbonization in domestic
petrochemical industrial complexes→ Improvement and extension of business• Development of large-scale renewable energy overseas• Advance of conversion to materials by MTO
Up to 1 million tons

Up to 100,000 tons

Tens of thousands of tons
Fiscal 2021 onward

Fiscal 2025 onward

Fiscal 2030 onward

Initiatives for Social Implementation

Fully Engaged in Preparation
for First Commercial Plant
Kohei Shimada

Untapped Demand Related to
Decarbonization of the Maritime
Shipping Industry Presents a
Tremendous Opportunity

Business Development Department,
Methanol Division,
Basic Chemicals Business Sector

Takayuki Manabe

Methanol is a chemical that has excellent properties forcontributing to carbon neutrality. Despite this, it is generally
not as well-known as hydrogen and ammonia. When the
production model was first established, a considerable
number of hours were spent on advertising its usefulness
to people. In information dissemination, we strengthened
our cooperation with other departments and participated indiligent explanations and seminars to companies and local
governments in Japan and overseas, as well as issuingpress releases. As a result of these efforts, we have recently
seen an increase in new inquiries, showing that methanol’s
profile is truly rising. To establish Carbopath™ as amanufacturing and sales business required cross-industry
collaboration. Therefore, we are also striving to exchange
information and explore new proposals with companies
from other industries and local governments.
Currently, we are promoting preparations to start up
the first commercial plant for Carbopath™. We intend touse this plant as a launching point for developing newcustomers involved in decarbonization management, whilefurther growing our high-environmental-value business.

My role is to support the commercialization of Carbopath™,
mainly by working in logistics and demand development,
including offtaking methanol products manufactured
through projects that we are working on with partners inJapan and overseas. In addition to business discussions
with existing customers in Japan, I also focus on
approaching consumers and brand owners positioned
further downstream.
The methanol manufactured in Japan through thisCarbopathTM concept is consumed not only in diverse
applications as a basic raw material, but can also impartvalue to resources that have not been used until now,
such as CO2 and waste plastic. By making effective useof these resources produced in Japan, we believe we cancreate a new business model based on local production
and consumption.
Overseas, meanwhile, we expect to see growth indemand for methanol as a carbon neutral fuel for the
shipping industry, which is increasing the pace of its efforts
to decarbonize. We have already begun collaborating withshipping companies and bunker supply companies. We
aim to accelerate the commercialization of Carbopath™
through these initiatives.

Marketing Department, Methanol Division,
Basic Chemicals Business Sector

MGC Report 2023

22

Highlights of Activities in Fiscal 2022

Progress on Management Strategy
24

Highlights of Activities in Fiscal 2022

25

Evolution of Management Strategy

27

Overview of Management Strategy

29Management Performance and Financial and Capital Policies

31

Business Portfolio Reform

34

Materiality

35

Materiality Progress at a Glance

37

Business Operations and Main Products

39

Specialty Chemicals Business43

Basic Chemicals Business

47

New/Next-Generation Businesses

49

Research and Development

52

Production and Environment

57

Human Capital (Human Resources and Organization)

April 2022: Started business of sales
company for polyacetal (POM), etc. in Korea
KOREA POLYACETAL, which sells polyacetal, etc., started businessas part of the Group’s integrated management of the of POMrelated business, which is positioned as a differentiating business.

April: Expanded Thai subsidiary
manufacturing BT materials for
IC plastic packaging
Construction to expand production capacity at a high level for
not only general-purpose materials but also highly functionallaminated materials was completed at MGC ELECTROTECHNO(THAILAND), which manufactures BT materials, in order to swiftly
respond to semiconductor demand.

May: Started discussion on a partnershipwith Becton, Dickinson and Company indevelopment of next-generation prefillable
syringes
Discussions started for a partnershipwith Becton, Dickinson and Company,a leading medical device company,
to promote further utilization of the
OXYCAPT™ plastic prefillable syringes
with a multilayer structure developed by
MGC.

June: Began Japan’s first joint study onsocial deployment of circular carbon
methanol utilizing CO2
MGC and Tokuyama Corporation began consideringcommercialization of the manufacture and sale of circular carbon
methanol made from CO2 emitted and hydrogen generated at
Tokuyama’s Tokuyama Factory.

July: Completed plant for Iupizeta™EP
optical resin/polymer
Completed the third mass-production plant at the Kashima Plant
to boost production capacity for Iupizeta™EP optical resin/polymer used for highly functional precision lenses in smartphones
and various other products.

August: Started Japan’s first demonstration
project of gasification and conversion ofwaste plastic into methanol
Kobelco Eco-Solutions Co., Ltd., which possesses fluidized-bed
gasification technology, Daiei Kankyo Co., Ltd. and DINS Kansai
Co., Ltd., which promote the chemical recycling of waste plastic,
Mitsubishi Kakoki Kaisha, Ltd., which possesses hydrogenproduction and synthetic gas production technology, and MGC,
which promotes a circular carbon methanol vision, establisheda joint demonstration project in February 2022 with the aim ofcreating Japan’s first chemical recycling technology. In August
2022, the project was chosen by the Ministry of the Environment
as a “demonstration project for the creation of a recycling system
for resources such as plastic supporting a decarbonized society
subject to a grant for operating expenses for measures to curb
carbon dioxide emissions.”

August: Started construction of the MGC
Commons innovation center
Started construction of the MGC
Commons innovation center,a place for the MGC Groupto conduct human resource
development, creation of innovationand communication of information.
It is aimed to commence operationin October 2023.

23

MITSUBISHI GAS CHEMICAL COMPANY, INC.

October: Began joint study on the
production of green methanol using greenhydrogen and CO2 in Australia
Began a study with Cement
Australia Pty Ltd on thecommercialization of the production
and sale of green methanol using
green hydrogen and CO2 captured
at its plant. In addition to studying
the commercialization of green products utilizing hydrogengenerated from renewable electricity in the Gladstone area ofQueensland, Australia, there are plans for cross-industry initiatives
between the public and private sectors.

November: Start of operation of hydrogenstation and fuel cell forklifts
Completed a hydrogen station built
at the Niigata Plant, and started
operation of fuel cell forklifts usinghydrogen.

December: Received ISCC PLUS
certification for MX-Nylon
Received ISCC PLUS certification*1, which is an international
certification for sustainable products, for MX-Nylon produced at
the Niigata Plant. MGC will begin manufacturing and selling MXNylon using the ISCC PLUS-certified mass balance approach*2.
*1 ISCC PLUS certification, developed by ISCC (International Sustainability
and Carbon Certification), is an international certification that ensures andmanages the sustainability of raw materials in the global supply chain.
*2 The mass balance approach is a method of assigning a measure ofsustainability to a product when it has been manufactured using bothsustainable raw materials (e.g., biomass-derived raw materials) andnon-sustainable raw materials (e.g., petroleum-derived raw materials).
The measure is assigned according to the amount of sustainable raw
material input.

January 2023: Investment in recycled
carbon fiber operating company
MGC and ShinMaywa Industries, Ltd. jointly invested in Fuji
Design Co., Ltd., which conducts a recycled carbon fiber
business, to promote the recycling of used carbon fiber-reinforced
plastic.

February: Launched initiatives tomanufacture and market biomass
polycarbonate products
Launched initiatives to manufacture and market IupilonTM
polycarbonate resin using biomass raw material from Mitsui
Chemicals, Inc.

March: Started commercial operation of
Abashiri Biomass 3rd Power Plant
Started commercial operation of Abashiri Biomass 3rd Power
Plant, in which MGC has invested, in Hokkaido. The total output
combined with the 2nd Power Plant that began commercial
operation in October 2022 is 19,800 kW.

March: Selected as a “Supplier Engagement
Leader 2022” - the highest rating in the CDP
Supplier Engagement Rating
MGC was selected as a “Supplier Engagement
Leader 2022,” the highest rating, in the “Supplier
Engagement Rating” conducted by CDP, aninternational non-profit organization based in the
United Kingdom that conducts environmental
surveys and information disclosure.

MGC Report 2023

24

Evolution of Management Strategy

Expansion of Differentiating Businesses and Investments and Loans
Operating profit (Differentiating businesses(Billions of yen)
120

100

Other businesses)

Capital expenditure

Fiscal 2003–Fiscal 2008

Fiscal 2009–Fiscal 2014

Fiscal 2015–Fiscal 2020

Fiscal 2021–Fiscal 2023

Co-creation

MGC Will

MGC Advance

Grow UP 2023

Shifted focus to growth and expansion with the aim ofstrengthening presence in Asian markets. Also promoted
reorganization of domestic business sites and allianceswith other companies.

Actively invested in core businesses
while executing structural reforms of
unprofitable businesses. Also focused on
creating new businesses and improving
the capabilities of production sites.

Achieved significant growth among high-value-added products,
shifted to a corporate structure not susceptible to market
conditions. Promoted integrated management of the MGC Group.

(Billions of yen)

120

100

Steady growth of operating
profit of differentiating
businesses, lifting the overall
operating profit of the Company

80

80

60

60

40

40

20

20

0

0
(Forecast)

-20

-20

2003

2004

2005

Major Investments and Loans
Differentiating businesses
Other businesses

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

Expansion of MXDA production facilities (Mizushima)

Participation in Fukushima natural gas power generation project (Plants 1 and 2 commenced operation in FY2020)①Establishment of phase 5 methanol plant in Saudi Arabia

Establishment of ammonia plant in Indonesia⑦Establishment of QOL Innovation Center Shirakawa

Establishment of methanol plant in Brunei* The starting point is the fiscal year a decision or announcement
was made, and the end point is the fiscal year of completionof construction, or commencement of operation(FY)

Strengthening of Electrotechno’s production capacity for copper-clad laminates

Establishment of super-pure hydrogen peroxide production plants in Oregon and Texas

Expansion of meta-xylene production facilities (Mizushima)

Conversion of Japan U-PiCA into a consolidated subsidiary②Establishment of phase 2 methanol plant in Venezuela

Establishment of raw material hydrogen peroxide production facilities in Taiwan③Establishment of prototype mass-production plant for optical resin/polymer (Kashima)
Establishment of polycarbonate plant in Shanghai④Establishment of electronic materials plant in Thailand⑤Strengthening of polyacetal production capacity in Thailand
Strengthening of polyacetal production capacity in Korea

Integration of 3 trading companies within the Group, and establishment of Mitsubishi Gas Chemical Trading
Conversion of JSP into a consolidated subsidiary

Establishment of raw material monomer production facilities for optical resin/polymer⑥Participation in Wasabizawa geothermal power generation project (commenced operation in FY2019)
Establishment of methanol production plant in Trinidad and Tobago

Making J-CHEMICAL into a subsidiary
Participation in Abashiri Biomass Power Plant Project(Generators 2 and 3 commenced operations in FY2022)

Establishment of full-scale mass-production plant for optical resin/polymer (Kashima)Strengthening of aromatic aldehyde production capacity (scheduled for completion in September 2023)
Merger of J-CHEMICAL and Yutaka Chemicals to launch MGC Woodchem①②

Expansion of second mass-production plant for optical resin/polymer (Kashima)

Making Mitsubishi Engineering-Plastics into a subsidiary
Conversion of Japan U-PiCA into a wholly owned subsidiary

Strengthening of electronic materials production capacity in Thailand
Expansion of third mass-production plant for optical resin/polymer (Kashima)Strengthening of MXDA production capacity in the Netherlands (scheduled for completion in September 2024)
New development of water-dissolved natural gas by TOHO EARTHTECH
③

④

⑤

⑥

⑦

Strengthening of super-pure hydrogen peroxide production capacity in Oregon (scheduled for completion in FY2023)
Strengthening of electronic materials production capacity in Thailand

25

MITSUBISHI GAS CHEMICAL COMPANY, INC.

MGC Report 2023

26

Overview of Management Strategy

raw material cost increases to product pricing. Businesses
with strong ability to pass through cost increases tended
to have a high degree of differentiation, while those thatmade little progress on pass-through tended to have a
low degree of differentiation. In a business environment
marked by massive, overlapping changes, the ability of abusiness to maintain its earning power seems to rest on athorough differentiation strategy. We must shift to a profit
structure resilient to changes in the business environment
by reforming our business portfolio as we exit businesses
and product groups with a low degree of differentiation

We will allocate management
resources to strengthening
differentiating businesses andcreating and nurturing new/next-generation businesses
as we optimize our portfolio
and increase its resilience.
Motoyasu Kitagawa
Director, Managing Executive Officer
In charge of Compliance, responsible for Corporate Planning,in charge of Internal Audit Division, CSR & IR Division

Investment Strategy and Allocation of Management Resources

Concentrating resources on projects that contribute to business portfolio reform

Medium-Term Management Plan

In a complex and unpredictable business environment, we are confident of
the objectives we have set
The Medium-Term Management Plan that started in
April 2021 was formulated based on the backcasting
approach starting from our vision for the future, andtaking into account the social trends and evolution oftechnology around 2050. Even based on the assumptionthat the future is not going to be a linear extensionof the present, but rather a series of discontinuous
evolutionary steps, this past three years has had suchan unpredictable and complex business environmentthat it has felt longer than any other three year period in
the past. For example, during the first fiscal year of theMedium-Term Management Plan, stay-home demand andthe proliferation of telecommuting due to the COVID-19

pandemic drove increased demand for products for
the IT-related industry, and the market expanded
steadily. However, coming into 2022, in the second half
especially, the turmoil caused by Russia’s invasion of
Ukraine and persistent high inflation and interest rate
rises created a backdrop for growing fears of a global
economic recession, and the economy has now entered adownward cycle.
On the other hand, this environment has clearlyhighlighted the correctness of the objectives in theMedium-Term Management Plan, and the priority of ourmeasures. For example, the true power of each business
was thrown into relief by the passing through of fuel and

The MGC Way• Changes ininternationalsituation• Demographic
changes• Advancements in
ICT/mobility

Current Medium-Term Plan (April 2021–March 2024)
Shift to a profit structure resilient toenvironmental changes
Objective

1• Climate change

Solvingsocialissues–Business portfolio reforms–
1-1. Further strengthen competitively advantageous(“differentiating”) businesses
1-2. Accelerate creation and development of new businesses
1-3. Reevaluate and rebuild unprofitable businesses
Refer to P31 “Business Portfolio Reform”• Biodiversity crisis

Balance social and economic value• Environmental
impact reduction• Diversity• Behavioral
changes–Toward sustainable growth–
Objective 2-1. Solve social issues through business2

2-2. Harmonize value creation with environmental protection
2-3. Strengthen discipline and foundation supporting business activities
Refer to P35 “Materiality Progress at a Glance”

April 2021

27

MITSUBISHI GAS CHEMICAL COMPANY, INC.

March 2024

Fiscal 2030

My mission is to manage loans and investments andthe allocation of resources for the entire Company. It is
my role to evaluate the commercial viability of individual
businesses from a comprehensive perspective that
includes both financial and non-financial aspects, andto promote companywide strategies. Starting fromthe current Medium-Term Management Plan, we havebeen managing ROIC by business management unit,
setting “return” indicators such as ROE and ROIC as ournumerical targets. At Medium-Term Management Plan
performance review meetings and investment and loan
screening meetings, and so forth, we make evaluations
and exchange opinions based on efficiency indicators.
Internally, we have firmly established an awareness ofusing these indicators to gain an objective understandingof the competitive capabilities and earning power of ourown businesses.
Moreover, since we are in an era when the futureis hard to predict, we are also mindful of diversifying
markets and portfolios for each product and our levelof contribution to social issues. For example, aromatic
aldehydes are used in diverse applications including
raw materials for fragrances, resin additives, andpharmaceuticals and agrichemicals. This is an example of
how combining multiple markets and applications createsa market and portfolio diversification effect. Furthermore,
the higher the degree of differentiation of a product, theeasier it is to identify markets where its functionality andadded value will be highly valued, making it easier todevelop new applications.
The most important factor in determining whichinvestment or loan should receive limited management
resources is whether or not it will contribute tocompanywide business portfolio reforms. Among ourfour business portfolios categorized based on growthpotential, profit contribution, and capital efficiency, we
will allocate management resources to strengthening
differentiating businesses and creating and nurturing new/next-generation businesses as we optimize our portfolio
and increase its resilience from a long-term perspective.

Formulation of the Next Medium-Term Management Plan

[MISSION] Creating value to share with society[VISION] An excellent company with uniqueness and presence built on chemistrySocial issues

and replace them with stronger ones. I am currently very
aware of the importance of this strategy.
Furthermore, the Group is conducting a scenario
analysis to identify the risks and opportunities presented
to each business by climate change, in order to grasp
issues that impact directly on its competitive advantage
over the medium to long term. Through initiatives such asthese, we aim to enhance our adaptability (resilience) to theenvironment while achieving our Medium-Term Management
Plan objective of balancing social and economic value, andpromoting sustainability management more powerfully.

AchievingsustainablegrowthStart of plan formulation with a strong awareness of the approach of fiscal 2030
During the current Medium-Term Management Plan period,
we achieved great success in getting our employees to
accept the idea that social value and economic value
can be achieved together, rather than conflicting with
one another. In fact, at in-house reporting meetings forresearch results and so forth, the reports for almost all of
the themes highlight the level of their contribution to solvingsocial issues. I think it is reasonable to say that we have alldeveloped a common understanding that social value is an
essential element for business success.
Currently we are discussing the formulation of the next
Medium-Term Management Plan. The MGC Group hasannounced numerical targets for fiscal 2030 of net salesof at least ¥1.0 trillion and operating profit of ¥100.0 billion
or higher. The next Medium-Term Management Plan will
likely keep the achievement of these targets in sight, butwill also include a strong awareness of achieving the fiscal
2030 targets of our materiality KPIs, such as reducing
GHG emissions.

A continued point of emphasis in the next MediumTerm Management Plan will be MGC’s distinctive value
creation process that leverages its “Uniqueness” and“Presence.” MGC is a chemical manufacturer with arefined individuality expressed through the harmony ofneeds and seeds. We will refine our unique businessmodel even further, using our in-house development
pipeline technologies, known as seeds, to engage
with the market, and reflecting back hints derived from
customer needs into the seeds. Moreover, to strengthen
our differentiating businesses, it will become increasingly
important to make the strategic judgment for eachbusiness of whether to establish it in a location focused on
raw material procurement or in a location that prioritizes
proximity to markets. As we have outlined in our vision
within our philosophy system, the MGC Way, over the
coming three years, our goal is to continue to be an
excellent corporate group as we nurture our uniquenessand presence.
MGC Report 2023

28

Management Performance and Financial and Capital Policies

Numerical Targets and Progress

Financial, Capital and Shareholder Return Policies

Consolidated Performance

FY2021Results

FY2022
Results

FY2023
Targets

FY2023
Forecast

Net sales (billions of yen)
Operating profit (billions of yen)
Ordinary profit (billions of yen)
ROIC*1 (return on invested capital)
ROE*2 (return on equity)

705.6
55.3
74.1
10.4%
8.8%

781.2
49.0
69.7
8.8%
8.3%

730.0
70.0
80.0
10% or higher
9% or higher

850.0
54.0
58.0
6.4％
9.0%

Medium- to Long-term Objectives

FY2030Net sales:¥1.0 trillion or higher

Operating¥100.0 billion or higher
profit:(Assumptions) Exchange rate: ¥105/$; Crude oil price (Dubai): $60/bbl*1 ROIC = Ordinary profit/invested capital*2 ROE = Net profit/equity

Increase and Decrease Factors of Operating Profit(Forex rates)
FY2021: ¥112/$
FY2022: ¥135/$

Others
–1.5

49.0

54.0

Others–18.0

Three-year cumulative¥210.0 billion

Operating profit
+4.9

2021
Results

Active utilization of external funds

2022
Results

ROE, ROA, ROIC

Continuation of stable dividends andflexible purchasing of treasury stock

Operating CF(Forex rates)
FY2022: ¥135/$
FY2023: ¥130/$

Operating profit
–6.3

2023
Forecast

External Funds, etc.

Total Capital
Expenditure andInvestments

Make strategic investmentsthat lead to growthThree-year cumulative¥240.0 billion(FY)

Interest-Bearing Debt, Net Debt to Equity Ratio(%)(Billions of yen)

15

200

(Multiple)

0.20
166.9

11.3

150
8.8
7.7

8.7

8.4

7.1
4.9

5

8.8

• Our top management priority is maximizing our corporate value

0.10• While taking into account operating performance and other factors, we aim to maintain a stable level of dividend
distribution

117.6
100

8.3

0.11

98.4

95.7
74.7

7.1

6.2

4.3

50

0.05

3.9

0.04

0.03
0.01

0

0
2019

2020

2021

2022

(FY)

ROE (return on equity)
ROA (return on assets)
ROIC (return on invested capital)

2018

2019

Interest-bearing debt (left axis)

0

0.01
2020

2021

2022

Shareholder Return Policy

0.15

10.4

10.9

2018

*3 Total payout ratio against net profit attributable to owners of parent,
including purchases of treasury stock

Total payout ratio of 40% (target)

Quantity factors
–19.0

10

three-year cumulative operating cash flow. We makestrategic investments that lead to growth while actively
utilizing external funds.
Our basic policy regarding dividends is to continue toprovide stable returns while flexibly purchasing treasury
stock, with a total payout ratio*3 of 40% as a target for
medium-term shareholder returns.

Shareholder Returns
Forex factors–3.0

Price factors
Forex factors
+1.3
+12.9

55.3

Price factors+7.0

Quantity factors+19.0

Based on the belief that improving corporate value benefits
all stakeholders, the MGC Group seeks to maintain an
optimal balance between shareholder returns and internal
reserves from a comprehensive perspective encompassing
investment plans, financial soundness, and the outlook for
future business performance.
Total cash flow in capital expenditure and investments
are expected to reach ¥240.0 billion under the current
Medium-Term Management Plan, in excess of planned• With the level of internal reserves and shareholder returns in mind, we will continue to flexibly buy back our own
shares for higher capital efficiency and better shareholder return• The shareholder return policy has been defined more clearly under the current Medium-Term Management Plan,aiming for a total payout ratio of 40% as the medium-term target(FY)

Net debt to equity ratio (right axis)
8.7

In the Medium-Term Management Plan started in fiscal
2021, MGC introduced ROIC (return on invested capital)
as a KPI to promote management conscious of capitalefficiency, and set the numerical targets of ¥730.0 billion
in net sales, ¥70.0 billion in operating profit, ¥80.0 billion in
ordinary profit, ROIC of 10% or higher and ROE of 9% orhigher as targets for fiscal 2023.
During fiscal 2022, the global economy was supportedby the gradual normalization of socio-economic activities instep with the relaxation of movement restrictions aimed atpreventing the spread of COVID-19 infection. However, theprolongation of Russia’s invasion of Ukraine led to surges
in prices of raw materials, fuels and other items. Monetary
tightening policy trends in the United States, Europe andother nations resulted in a looming sense of vigilance against
major recessions. Because of these and other factors, theeconomic situation remained unstable.
Against this backdrop, the MGC Group aims to shift
to a profit structure resilient to changes in the businessenvironment. To this end, the Group has implemented
various measures that help push ahead with businessportfolio reforms. In addition, the Group has countered

29

MITSUBISHI GAS CHEMICAL COMPANY, INC.

surges in raw material and fuel prices and transportation
costs by revising sales prices upward to align with an overall
increase in costs. Through these and other initiatives, theGroup has endeavored to maintain and enhance its earnings
power.
In fiscal 2022, the MGC Group’s net sales increased,
despite lower sales of electronic materials and other offerings,
due mainly to the impact of foreign exchange fluctuations
and upwardly revised sales prices aligned with higher raw
material and fuel prices and growing transportation costs.
Meanwhile, operating profit and ordinary profit decreased,
despite the depreciation of the yen, robust polyacetal sales
and other positive factors, due primarily to surges in raw
material and fuel prices and transportation costs, along withlower sales of electronic materials and other offerings.
Although the recovery in sales of semiconductor-related
products and other factors are expected to boost operating
profit in fiscal 2023, it appears we will fall short of our target,
and therefore we will focus on additional efforts aimed atreaching the target, such as further accelerating businessportfolio transformation centered on growth investment andbolstering unprofitable businesses.

Share buybacks
Total dividends

7.0

7.0

(Billions of yen)
7.4

6.3

14.9

14.8

14.5

16.6

16.3

16.3

12.6

8.2
5.4

6.3

7.0

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023
(Forecast)

Net profit(Billions of yen)

14.9

43.3

34.1

48.0

60.5

55.0

21.1

36.0

48.2

49.0

56.0

Annual dividend(Yen per share)*4

24

28

32

38

59

70

70

70

80*5

80

80

(FY)

*4 With an effective date of October 1, 2016, MGC conducted a reverse stock split for MGC’s ordinary shares on a 2:1 basis. With this, the above
dividend figures predating the share consolidation have been adjusted to show what they would have been had the effects of the share consolidation
also applied to them
*5 Includes a commemorative dividend of ¥10

MGC Report 2023

30

Business Portfolio Reform

One objective set out in the Medium-Term Management
Plan is to shift to a profit structure resilient to changes inthe business environment. In advancing that objective,
we first classified the MGC Group’s businesses basedon growth potential, contribution to profit and capitalefficiency. Those with particularly high competitiveness andgrowth potential are defined as “differentiating businesses.”
The products included in these businesses are functional
ones such as electronic chemicals, IC plastic packaging
BT materials, optical resin/polymer, and ultra-high refractive
lens monomers. Further, MXDA, MX-Nylon, aromatic
aldehydes, Polyacetal (POM) and other chemical products
and materials are also included in the differentiating
businesses category. We focus on investing management
resources in developing markets and boosting production
capacity for these products, thus strengthening profitability.

Classification Criteria for Business Portfolio Reform

In addition to the above strategies, we acceleratebusiness portfolio reform by focusing on creating anddeveloping new businesses. Specifically, we are promoting
investment in research and development and increasing
research personnel; reorganizing our systems based onmarket needs; and progressing a more advanced, efficientresearch process utilizing the latest AI and MI, leading tothe ongoing introduction of new products. Further, in thecourse of shifting to a profit structure resilient to changes
in the business environment, we work on identifying andreorganizing unprofitable businesses. Note that in termsof quantitative targets, we aim to grow net sales fromdifferentiating businesses to more than 40% of overall sales
in fiscal 2023, while reducing net sales from unprofitablebusinesses or those needing rebuilding to less than 3%.

To build a profit structure resilient to changes in thebusiness environment, the MGC Group has reviewed thepositioning and classification of all of its businesses under
the current Medium-Term Management Plan, and classified
each business into one of four stages: differentiating
businesses; new/next-generation businesses; foundation
businesses; and unprofitable businesses or those needingrebuilding. Classification is made after setting qualitativeand quantitative criteria from the perspective of growthpotential, level of contribution to profit, and capitalefficiency. Under the current Medium-Term Management
Plan, management resources are given priority allocation
to differentiating businesses, which have both competitive
advantages and the potential for growth, and new/nextgeneration businesses, which can be expected to growas markets expand going forward, and which can lead tosolving social issues.

Existing Businesses

Classification Item

Shift to a Profit Structure Resilient to Changes in the Business Environment

Growth potential
Room in potential market

Level of contribution to profits(short-/long-term)

Small

Large

Low

Above certain level

Capital efficiency

Direction of Business Portfolio Reform

Below
Above
certain level certain level

Unprofitable businesses or
those needing rebuilding

Fiscal 2023 (Image)Low

New/next-generation
nextext-geneera
businesse
usinesses

Differentiating
businesses
Percentage of sales 30%

Unprofitablebusinesses oor
thosehose needingrebuilding

Further strengthen competitively
advantageous businesses
Accelerate creation anddevelopment of new businesses
Bring higher added value and higher
efficiency to foundation businesses

Foundation
businesses

Identify and reorganize
unprofitable businesses

New/next-generation
w/next/next-genera
eratibusinesses

Differentiating
businesses

Weak

StrongDifferentiating
businesses

New/next-generation
businesses

Progress in Fiscal 2022

Percentage of sales>40% (target)
Fiscal 2020→Fiscal 2022 Business Portfolio Changes (Image)Unprofitablebusinesses
sinesseor thoseose
se needingneneerebuilding
ebuildinguildFoundation
businesses

Weak

Competitive advantage = “Can win”

Differentiating businesses• Decrease in earnings from semiconductor-related products coveredby growth in earnings from POM

Differentiating
businesses

Percentage of sales<3% (target)
Low

Percentage of sales 6%

Foundation businesses

Identify competitive
advantage

Priority allocation of management resources todifferentiating businesses andnew/next-generation businesses

High

Room in potential market = “Growth”

Room in potential market = “Growth”

High

High

Ordinary profit, net assets, etc.

ROIC

Fiscal 2020 (Image)

New Businesses

StrongNew/next-generation
businesses• Consolidated POM to Global Polyacetal Co., Ltd. throughreorganization of Mitsubishi Engineering-Plastics Corporation (MEP).
Bolstered sales capabilities through reorganization of South Koreanbusiness. Increased global market share• Continued to execute growth investments aimed at growing markets

Competitive advantage = “Can win”

Foundation businesses• Methanol and the energy resources and environmental businesses
performed strongly, despite struggling PC products
Classification of Product Lines under Medium-Term Management Plan
Differentiating
businesses

MXDA, aromatic aldehydes, MX-Nylon, electronic chemicals, polyacetal, optical resin/polymer,
ultra-high refractive lens monomer, IC plastic packaging BT materials, and others

New/next-generation
businesses(Includes products indevelopment stage)

Medical/Food: OXYCAPTTM, bio-products, contract manufacturing of antibody drugs, factory-produced
vegetables, and others
ICT/Mobility: Solid electrolytes, cellulose fiber composite materials, Neopulim transparent polyimide resin,semiconductor-related materials, and others
Environment/Energy: CO2-derived methanol, CO2-derived polycarbonate, methanol fuel cells, and others

Foundation
businesses

Methanol, ammonia and methylamines, MMA products, energy resources and environmental businesses(geothermal and other types of power generation, water-dissolved natural gas, iodine), foamed plastic(JSP), hydrogen peroxide, polycarbonate/sheet film, oxygen absorbers, and others

Unprofitablebusinesses or thoseneeding rebuilding

Formalin and polyol products, and xylene separators and derivatives

PC-relatedFoundation
businessesUn
nprofifittablebuusinesses
or th
hose
needinng
reebuildding• Accelerated streamlining and integration of associates (in addition
to reorganization of PC business through consolidation of MEP,
also considering merger of Japan U-PiCA Company and JAPANFINECHEM COMPANY)• Made progress on initiatives including the Circular Carbon Methanol
concept CarbopathTM and implementation of CCS

Unprofitable businesses or those needing rebuilding• In the formalin and polyol business, stopped production of
unprofitable products. Meanwhile, strengthened integrated
production and sales system from formalin to adhesives throughM&A (launched MGC Woodchem). Returned to profitability• In xylene separators and derivatives, currently promoting a host of
initiatives to maximize earnings in the business overall, including
special MX derivatives such as differentiating product MXDA

New/next-generation businesses• Accelerated reviews by strategic customers. Focused on themes in
response to the climate change issue, such as projects selected by
GI Fund. Increased research personnel

31

MITSUBISHI GAS CHEMICAL COMPANY, INC.

MGC Report 2023

32

Business Portfolio Reform

Materiality

Progress of Business Portfolio Reform and Future Outlook

Identification of Materiality

Earnings in differentiating businesses vary in strength by business but are growing steadily overall. We do not expect to achieve
the current Medium-Term Management Plan targets of over 40% of sales from differentiating businesses and under 3% ofsales from unprofitable businesses or those needing rebuilding. However, we are promoting improvements aimed at the final
year of the plan, such as promoting higher added value towards differentiation of certain foundation products and improving
the earnings structure of unprofitable businesses or those needing rebuilding.

The MGC Group identified priority issues (materiality) to beaddressed by management in April 2020 with the aim of
conducting sustainability management. In the Medium-Term
Management Plan announced in April 2021, we stated ourgoal of “balancing social and economic value.” We have set
KPIs for fiscal 2030 materiality targets as well as fiscal 2023

Transition of Ordinary Profit in Differentiating Businesses
Differentiation of certain
foundation products expected

Percentage of Net Sales in Differentiating Businesses, andin Unprofitable Businesses or Those Needing Rebuilding
Differentiation of certain
foundation products expected

Differentiating
businesses
medium-termplan target

37%

2020

2021

2022

2023
(Forecast)

Promotion ofdifferentiation strategy

4%

2020

(FY)

2021

2022

Differentiating businesses
Unprofitable businesses or those needing rebuilding

Target:under 3%2023
(Forecast)Projected Investment Funds by Business Segment under Medium-Term Management Planbusinesses and R&D-related¥102.0 billion¥11.5 billion

Foundation
businesses

Others¥47.0 billion ¥6.5 billion

Maintenance/
improvement investments¥71.0 billion

Strategic investment ¥167.0 billion(including M&A)

Reference

Total ¥238.0 billion

Medium-Term Management Plan Targets: Total ¥240.0 billion, strategic investment ¥170.0 billion¥90.0 billion¥15.0 billion¥60.0 billion¥5.0 billion¥70.0 billion

Progress for Major Investment Projects
Investment approvals andpublic announcements

Fiscal 2021

Fiscal 2022

Fiscal 2023

Winnowing

Classified the terms by keyword related to societal issues and societal change, and then winnowed them down
to 39 materiality factors.

3

Prioritization

Assessed the priority of the materiality factors from the standpoint of both stakeholders and the MGC Group.
The Sustainability Promotion Committee drafted a materiality prioritization hierarchy and submitted it to the
Sustainability Promotion Council.

STEP

Management
deliberation/approval

The materiality submitted by the Sustainability Promotion Committee was deliberated and determined by the
Sustainability Promotion Council.

Revision ofidentified materiality

Materiality is subject to change in response to changes in societal imperatives and stakeholder needs andpreferences. Materiality will accordingly be updated as needed in response to changes in society and/or the
MGC Group’s business activities.

STEP

4
STEP

5

(FY)

* We expect to see migration in terms of business classification for the formalin
and polyol business due to it no longer being classified as an unprofitablebusiness or one needing rebuilding.

Differentiating businesses

Compiled list of over 600 terms related to societal issues/changes from various sources, including requirements
in GRI and SASB standards, ISO 26000 and SDGs and trends among other companies.

STEP

8%

7%

6%

Identificationof issues

1
2

Improvement of earnings structure
for unprofitable businessesor those needing rebuilding*

Slump inearnings ofPC products,
etc.

Differentiating businesses
Other businesses

34%

32%

30%

Target:over 40%

STEP

Fiscal 2024 Onward

Aromatic aldehydes: Boosting production capacity (Mizushima Plant)
Aromatic aldehydes: Establishing new production facilities(Mizushima Plant)
MXDA: Establishing new production facility(Netherlands)
EL: Establishing new raw material hydrogen peroxide plant (China)
EL: Establishing new raw material hydrogen peroxide plant (Taiwan)

Promotion of Sustainability Management
The MGC Group pursues sustainable growth balancing thesocial and economic value of the Group as “sustainability
management,” based on its Mission of “creating value toshare with society.”
The Company has established the Sustainability
Promotion Council, chaired by the President and primarily
made up of all directors, including outside directors, with
Audit & Supervisory Board members also attending. As anadvisory body to the Sustainability Promotion Council, theSustainability Promotion Committee is convened by theGeneral Manager of the CSR & IR Division and attended
by general managers of the head office’s corporate
sectors. Through these organizations, the Company has
established a system for promoting ongoing advancement
by applying a companywide PDCA cycle ranging from theidentification of materiality to the establishment of KPIs,
confirmation of progress and reviews.
The Sustainability Promotion Council deliberates anddetermines policies and measures that form the basis
for sustainability management, such as identification andmanagement of materiality, and receives reports on the

Optical resin/polymer: Establishing new raw material monomer plant(Niigata Plant)

Annual plan

POM: Investing in manufacturing
companies (China)

Unprofitable Businesses orThose Needing Rebuilding

33

Acquisition of shares of J-CHEMICAL, Inc. (made company into subsidiary) ⇒Establishment of MGC Woodchem Corporation

MITSUBISHI GAS CHEMICAL COMPANY, INC.

(Note: Initiatives aimed at withdrawing from
unprofitable businesses or those needing rebuilding)Corporate and Business Sectors/
Sustainability Promotion Expert Committees
Sectoralannual plans

Sustainability Promotion Council

IC plastic packaging BT materials: Boosting production capacity (Thailand)(Decided to increase further in May 2023)

Mitsubishi Engineering-Plastics Corporation (MEP):
Made company into consolidated subsidiary

Sectoral PDCA cycles for sustainability management

PDCA for promotion of sustainability management

EL: Establishing new super-pure hydrogen peroxide plant (China)
Optical resin/polymer: Boosting production capacity (Kashima Plant)

implementation status thereof from the Sustainability
Promotion Committee. The Sustainability Promotion
Committee confirms the status of implementationof measures in each division, and consults with the
Sustainability Promotion Council on the necessary
measures through periodic reviews. It also establishes
various expert committees as needed to consider
specialized and important matters. Sustainability
Promotion Department within the CSR & IR Division has
been established to serve as the secretariat for the council
and the committee. Sustainability Promotion Department
is responsible for administrative tasks such as overseeing
non-financial information within the Company, considering
policies and strategies on sustainability management, andhandling engagement within and outside the Company.
We aim to obtain the trust and congruity of a variety of
stakeholders and achieve ever greater corporate value bycontributing to the resolution of issues for the realization ofa sustainable society through our business more than everbefore.

Sustainability Promotion System

Differentiating Businesses

Foundation Businesses

targets for achieving those goals, and will apply the PDCA
cycle to make improvements throughout the course of thismanagement process.
Furthermore, materiality is revised around every three
years in conjunction with the Medium-Term Management
Plan.

Plan

Do

Act

Check

Review

Sustainability Promotion Committee

Sustainability Promotion Committee

Review

Progress checks

Implementation

P D
A C

ProgresschecksMGC Report 2023

34

Materiality Progress at a GlanceMateriality

CSV

Risks

• Strong in-house development technology
capabilities• Customer credibility backed by multiple
industry standards• Portfolio of distinctive, differentiatedproducts

Results of Key Initiatives in Fiscal 2022

[Specialty Chemicals Business]
Multiple BMUs boasting high profitability andgrowth, high ROIC, and ability to generate
stable cash flow
[Basic Chemicals Business]
Strengthening business infrastructure
through ongoing business portfolio reform,and development/commercialization of
products conducive to decarbonization

ICT/Mobility• Completion of construction of super-pure hydrogen
peroxide plant in China• Increase in production capacity for semiconductormaterials, etc.
Energy and climate change• Development of carbon recycling technology
Medical and food• Successful mass cultivation of antibody drug producing
cells at a scale of 2,000 L

KPIs

Fiscal 2022 Results

Fiscal 2023 Targets

Fiscal 2030 Targets

Sales from ICT and mobility¥283.5 billion
applications¥320.0 billion

Create new businesses that
accelerate digital innovation

Investments aimed atsolving energy and climatechange problems

Investment: ¥12.0 billion(3-year cumulative)
Investment: Acquisition;
Financing: Approval basis

Commercialize carbon-negativetechnology¥50.0 billion• Advance preventative/
predictive medicine; enhance
healthy longevity• Further advance foodpreservation technology

Sales from medical andfood applications

Projected investment:¥13.9 billion(3-year cumulative)¥56.2 billion

Foundation for
Shared-Value Creation

Cultivating a corporate
culture of job
satisfaction• Declining labor productivity and outflow of
personnel• Declining quality of stakeholder engagement• Strengthened foundation for creating
innovation• Improved employee engagement in theirwork

Promotion of diversity
and inclusion• Uniform thinking and loss of new business
opportunities due to imbalance in personnel
attributes and skills• Nurturing culture of collaboration among
diverse values that is conducive to new
ideas and technological innovation

Stakeholder
engagement• Loss of credibility among stakeholders
and damage to corporate value due toinappropriate responses• Forming fair market valuation• Improved management transparency

Promotion of socially
responsible sourcing• Negative impacts on business activity due
to illegal actions and compliance violations
by suppliers• Improved sustainability of society and longterm competitiveness

Friendly, fulfilling and vibrant workplaceenabling people to utilize strengths to
produce results at work and maintainwork-life balance
Fostering active culture where diverse ideas
are created due to employees with diverse
values and individuality working and being
stimulated
Company that earns society’s trust andempathy by contributing as a member ofsociety and fulfilling responsibilities to variety
of stakeholders
Promote groupwide CSR procurement
activities, and implement procurement of raw
materials derived from biomass, recycling
and CO2 to contribute to sustainable society• Formulated MGC Basic Policy on Health & Productivity
Management• Expanded support for balancing work and childcare• Conducted activities to promote use of paid leave

Percentage taking fewer
than 10 days of annual
paid leave*1,2

4%

0%

0%

• Publishing of a pamphlet for employees designed tofoster awareness of respect for diversity• Expansion of career training for female employees

—

—

—

—

• Response to ESG interviews and stewardship interviews• Carbon neutrality presentation for investors

—

—

—

—

• Implementation of supplier assessment through CSR
surveys

—

—

—

—

Serious occupational
accidents*1,3

1

0

0

Serious accidents*1,4

0

0

0

• Utilization of MGC Group process safety and disasterprevention guidelines• Promotion of safety activities through LINK activities• Introduction of KY hazard prediction assist system• Identification of water risks at manufacturing sites inJapan and overseas (floods, high tides, water shortage)• Promotion of responsible care (RC) activities by Group
companies

Occupational safety and • Risk of disasters or other problems due toinsufficient education and training
health/Process safety• Loss of societal trust due to accidents orand disaster prevention
scandals• Nurturing culture of safety• Accumulating expertise in preventive
maintenance

Identify cultural and technical factors ofoccupational accidents/process safety anddisaster prevention, create preventative
measures, and realize safe production sites
where occupational accidents and process
safety accidents do not occur

Highly energy- andresource-efficient
production• Cost of responding to regulations andsocietal demands• Cost of deploying high-efficiency equipment• Optimization of production conditions
through deployment of AI/IoT; improving
productivity by predicting and preventing
problems

Ultra-stable operation of production
equipment, improvement of outputs throughuse of high-efficiency equipment, pursuitof high-efficiency utilities, minimization ofequipment trouble through utilization of DX
technology• Introduction of PI systems in all plants• Trials and implementation of AI technology, IoT devices,etc.
• Examination of introduction of multivariable model
predictive control and soft sensors

GHG emissions intensity
compared to fiscal
2013*1

8.6% reduction

19.9% reduction

28.0% reduction

Chemical/productquality and safetyassurance• Loss of societal trust due to inaccurate
data handling and shipping of inappropriate
products• Strengthened chemical substanceregulations in each country• Facilitating continuous improvement andensuring customer satisfaction throughcompany- and groupwide quality assurance
activities (Q-MGC)• Sharing and centralization of information toenhance customer satisfaction and societal
trust

Creation of groupwide risk management
system for chemicals and products, andquality assurance system meeting variety ofhigh customer requirements• Maintenance and continuation of MGC Group Quality
Management Promotion Meeting activities• Promotion of introduction of quality data aggregation
systems in all plants

—

—

—

—

Promotion of innovative
R&D• Discontinuous change in social andindustrial structures• Securing and developing personnel
competent in cutting-edge technology fields• Strengthened technology platform andcreation of innovation built on collaboration
among Group’s own technologies

Clarify division of roles of R (research) andD (development) to promote positive spiralof research and accelerate R&D throughout
Group• Promotion of DX analysis• Implementation of education and practical exercises on
statistical analysis for researchers

R&D investments devoted
to solving climate change
problems*1,5

13% of R&D
expenditures

5% or more of R&D
expenditures

7% or more of R&D
expenditures• Promotion of reduction of GHG emissions• Identification of water risks in each business site
• Introduction of renewable energy aimed at reducing

GHG emissions comparedto fiscal 2013*1
Renewable energy as
percentage of electric
power purchased*1

34% reduction

28% reduction

36% reduction

19%

10%

50%

0.25％

0.3% or less

0.15% or lessE

Harmonization of Shared-Value Creation
with Environmental Protection

Proactive response to• Increased cost of responding to stronger
environmental regulations
environmental problems• Decline in competitive advantage due to delays• Air quality control
in technological response to resource and• Water and biodiversity
energy conservation needs
conservation• Reputational risks regarding environmental• Reduction of industrial
protection
waste

G

• Participation in Fukushima natural gas power
plant and geothermal project• Commercial development of methanol andammonia as hydrogen carriers and CO2-free
fuels• Participation in CCUS proof-of-concept testing

Minimization of air and water load, andrealization of a clean air environment,
preservation of water and sustainability of water
resources through introducing new technologies
and strengthening management

emission factor of purchased power• Consideration of investment for biodiversity conservation• Promotion of waste recycling• Reduction of occurrence of sudden waste generation
through stable production

Value-Creative Discipline

Strengthen systems• Corporate governance• Compliance• Internal controls• Risk management

35

Long-Term Targets for Fiscal 2030

Creating Shared ValueContribution throughbusiness operations• Increasing difficulty of development with• Contribute tointensifying competition; lengthening leaddevelopment of ICT/
times
mobility society• Shift in share of low-cost alternative• Solve energy and climate materials
change problems• Existing product obsolescence• Solve medical and foodproblems

S

Opportunities• Slumping business activity, loss of societal
trust and damage to corporate value due tocompliance violations

MITSUBISHI GAS CHEMICAL COMPANY, INC.

• Establish stable management foundation by
improving decision-making transparency andresponding appropriately to change• Gain stakeholder trust

Steady implementation of improvements
in environment, and creation of systems toaddress variety of social changes, enablinghigher level of response to and sharing of strongsocial needs• Consideration of General Meeting of Shareholders operationin response to Companies Act revision• Consideration of response to geopolitical risks

Zero waste emission
rate*1,6*1 On non-consolidated basis*2 For employees granted 20 days of annual leave*3 Accidents resulting in lost work days eligible for disability compensation, including death andpermanent disability, or potential disability, and those with four or more lost work days
*4 Accidents that threaten third parties, including those resulting in environmental pollution
involving community or that cause damage to local residents, and other accidents involving
serious damage*5 R&D investments including basic research, pilot plants, technical testing, etc.
*6 Amount of final disposal/total amount of waste generated

MGC Report 2023

36

Business Operations and Main Products

Specialty Chemicals

Basic Chemicals

Inorganic
Chemicals
Primarily focusedon cleaning agentsfor semiconductors

Electronic Chemicals (EL Chemicals)Super-purehydrogen peroxide

Hydrogen peroxide

Global market share

Super-purehydrogen peroxide#1Hybrid chemicals

Secures supply capacity matching the growth of customers in response to robust demand
from overseas semiconductor manufacturers. Also globally builds development facilities
adjacent to customers and continuously provides products contributing to the speedy
resolution of problems.

EnergyResources andEnvironment
Applies domestic
natural gas
exploration anddevelopment
technology, anddevelops it for otherenergy businesses

Natural Gas
Domestic gas field development• Higashi-Niigata Oil and Gas Field• Iwafune-Oki Oil and Gas Field

Top manufacturer ofsubstrate materials
for IC plastic
packagingChemicals company

Copper-clad laminates (CCL)
Prepreg

Global market share#1

Captures new demand as 5G progresses, and steadily responds to robust demand in
the semiconductor industry. Establishes and strengthens a marketing system consciousof end customers, and offers a wide range of high-performance products, primarily
targeting the mid-range and high end of the market.

BT products

OpticalMaterials
Raw materials

Contributes to higher
performance ofsmartphones withworld-leadingrefractive index

MethanolFirst in Japan toproduce methanolusing natural gas
as raw material

Methanolprotein research

FormalinLife sciencerelated products

Iupital™
(Polyacetal)

Opticalresin/polymer

Continues careful technical service along with timely development and introduction of newgrades with the aim of further expanding share in the smartphone area, and also focuses
on development of materials aimed at applications other than smartphones, such as
sensing applications.

Formalin

Iupital™ (Polyacetal resin) (POM)

MX-Nylon (MXD6)

Reny™ (High-performancepolyamide resin)

Bisphenol A

Polycarbonate resin(PC)

PC sheet(External procurement)

Polyacetal resin(POM)
Polycarbonate
resin (PC)

Performs business restructuring to make MEP*3 a consolidated subsidiary focusing on the
PC business, while increasing the percentage of high-value-added products such as highly
transparent grades, and shifting toward a structure less susceptible to market conditions.
Promotes research of PC mass-production technology using CO2 as a raw material.

Establishes a competitive position through active overseas expansion and a totalbusiness model encompassing the manufacturing process, catalyst technology,
a global sales network and the manufacture of derivatives. Uses accumulated technology
to focus on the establishment of processes for manufacturing methanol from CO2.

Methanol

HighPerformance
Products,
Basic
Chemicals II

Superacid
HF-BF3technology

Manufacturescompetitive products
and derivatives using
proprietary technology

Meta-xylene

Aromatic aldehydes#1

Wide range ofsolutions in daily food,electronic component
and pharmaceuticalmarkets#1#1

RP System™
PharmaKeep™
Anaero Pack™

#1

As momentum for extension of quality assurance and food waste reduction increases
in the food packaging material field, aims to establish a position by providing recyclable
barrier material friendly to the global environment. Also strengthens downstream
deployment such as weight reduction of vehicles by replacing metal parts with resin.

Aromatic aldehydes

Decided to increase its production capacity in response to steady growth in demand.
Also focuses on marketing activities, aiming to diversify applications, add value, andfurther strengthen relationships with customers by shifting from seed-oriented
development to product development that reflects customer needs.

Aims to expand market share in the food area and also focus on the expansion of sales
overseas. Also, provides total solutions for maintaining quality for non-food areas such as
pharmaceuticals, medical parts, electronic components, and cultural property protection.

JSP

#1

Foamed plastic

Backed by the tailwind of weight reduction in automotive parts, supplies next-generation
products supporting energy-saving and recycling requirements. Seeks to increase sales
backed by heightened needs for energy-saving housing in applications of residential
insulation material. Expands overseas operations in flat panel display protective materials.

*7 For automotive use

37

MITSUBISHI GAS CHEMICAL COMPANY, INC.

MX-Nylon (MXD6)

MX-Nylon (MXD6)

Global market share*7

Global market share

AGELESS™

Meta-xylenediamine(MXDA)

By building a new plant in Europe, where demand is greatest, establishes a morestable and competitive supply chain. In addition to stable growth of conventional
infrastructure applications, accelerating expansion into environmentally friendly
applications such as wind power blades.

Global market share*3 Mitsubishi Engineering-Plastics Corporation

AGELESS™

Purified isophthalic acid (PIA)

Meta-xylenediamine(MXDA)

Global market share
Supply capacity*2

OxygenAbsorbers

Cyanate ester
monomers

PC film

Conducts management globally overseeing production, sales and technologicaldevelopment through business restructuring, and seeks to optimize management
resources throughout the entire Group while making swift management decisions.

*2 As the Mitsubishi Group

Methylamines

BT resin

Global market share#3

Methylmethacrylate(MMA)*6 Total for all affiliates using MGC technology

Global market share#3

Ammonia

Dimethyl ether(DME)

Production capacity*6*1 As a highly refractive resin (concave lens)Develops
engineering plastics*5 Joint venture

Optical resin/polymer

1

MethanolUtilizing more than four decades of experience and accomplishments that distinguish
us as a unique chemicals company, contributes to the reduction of GHGs throughthe supply of clean energy, and establishes a base for stable earnings.

Methanol production using overseas gas*5• Saudi Arabia• Venezuela• Brunei• Trinidad and Tobago#3#1

Engineering
Plastics

Methanol,
Basic
Chemicals I,
Life Science(External procurement)

Global market share*

Geothermal power
generation*4 Only the Niigata Plant’s methanol pilot is currently operational

BT Products
BT resinNatural gas power generation*5• Fukushima Natural Gas Power Plant

Methanol/Ammonia production*

1

Cyanate monomers

Geothermal power generation*5• Sumikawa Geothermal Power Station• Wasabizawa Geothermal Power Station

4

Only

Electronic
Materials

Energy Utilization
Resource
development
technology(Global market share, etc. are estimates made by the Company)

MGC Report 2023

38

Specialty Chemicals Business

Basic Information

We will prepare an environmentthat can respond sensitively tochanges in the market, and makenew value proposals.

Ryozo Yamaguchi
Director, Managing Executive Officer
In charge of Specialty Chemicals Business Sector

Business Lines: Inorganic chemicals, engineering plastics, optical materials, electronic materials,
oxygen absorbers

Ratio of Net Sales andOrdinary Profit

Major Group Companies:
TAIXING MGC LINGSU CO., LTD., SAMYOUNG PURE CHEMICALS CO., LTD.,
MGC PURE CHEMICALS AMERICA, INC., MGC PURE CHEMICALS SINGAPORE PTE. LTD.,
MGC PURE CHEMICALS TAIWAN, INC., MGC Filsheet Co., Ltd., THAI POLYACETAL CO., LTD.,MITSUBISHI GAS CHEMICAL ENGINEERING-PLASTICS (SHANGHAI) CO., LTD.,MGC Electrotechno Co., Ltd., MGC ELECTROTECHNO (THAILAND) CO., LTD.,
Mitsubishi Engineering-Plastics Corporation, KOREA ENGINEERING PLASTICS CO., LTD.,
THAI POLYCARBONATE CO., LTD., RYODEN KASEI CO., LTD.,TAI HONG CIRCUIT INDUSTRIAL CO., LTD., GRANOPT CO., LTD., MGC AGELESS Co., Ltd.,
Yonezawa Dia Electronics Co., Inc.

Ratio of
Ordinary Profit

Ratio ofNet Sales

39.5%
55.5%
FY2022(Results)

Number of employees: 4,069

Slumping demand due to changes in theexternal environment. Starting work on
business reorganization and revision of
production and sales methods

We are promoting reforms aimed attransitioning to a highly profitable structure.
We are also focusing on environmental
technologies

In fiscal 2022, the Specialty Chemicals Business Sector had
a strong start, mainly reflecting a rush to secure inventory
due to supply chain disruptions. However, from the second
quarter, demand retreated rapidly, especially in China,
and stay-home demand due to the COVID-19 pandemic
slowed. From July onward, demand for semiconductorrelated products slumped, and in autumn, Europe andthe United States showed clear signs of an economic
slowdown. Due to the unevenness of supply and demand
globally, in some products negotiating positions became
stronger on the customer side, while in products such aspolyacetal we were able to maintain sales volume even after
passing through high raw material costs to our prices.
From another perspective, these changes in thebusiness environment offer opportunities to promote
differentiation and increase added value. In fact, there
has been increasing activity for rebuilding supply chains
and revising sales methods, not only in MGC, but in theindustry itself. We recognize the necessity of observing
the market with greater care than before, and exercising
flexible judgment regarding when, to whom, and what kindof approach to take.
In our business portfolio reform, we focused onincreasing the competitive capabilities of our engineering
plastics. Among them, the polyacetal business saw strong
effects from business reorganization in South Korea, where
the reforms have happened first. We have continued tomake changes, clearly demarcating manufacturing, sales,
and business management roles between our subsidiaries,
and we are now concentrating our management resourcesin preparation to ensure that our double brand strategy for
IupitalTM and KepitalTM will work well. I am confident that we
can expect significant synergies going forward. Meanwhile,having made Mitsubishi Engineering-Plastics Corporationa consolidated subsidiary in April 2023, we reorganized
it to specialize in the polycarbonate business, which has
been lacking momentum. With this change, we are driving
forward the strategy of integrating manufacturing, sales,
and technology, and we see recovering our competitiveedge as an urgent priority.

To realize a business structure that is able to respond to
rapid changes in society, the Specialty Chemicals Business
Sector is working to refine the points that differentiate it fromother companies, while attempting to explore uncharted“blue ocean” markets. Therefore, our ability to engage withmarkets and identify partners is becoming increasingly
important. With this in mind, in April 2023 we reorganized
the Planning & Development Division, which oversees
our development activities from an organization based on
business divisions to one based on markets and functions.
To take the example of the Electronics Materials Group,
the person in charge of the development of electronic
chemicals used in the front-end process of semiconductor
manufacturing and the person in charge of BT materials usedin the back-end process are working on the same team. By
combining the perspectives of both the front-end and backend processes for semiconductor manufacturing, we would
like to broaden our dialogue with customers and come up
with new value proposals for new chip architectures.
Furthermore, to promote strategies and measuresflexibly, we set quantitative indicators for each business.
We are building a structure that enables the Business
Administrative Division, Corporate Planning Division, andthe Finance & Accounting Division to coordinate andmonitor the progress of each project across all aspects.
In the final fiscal year of the Medium-Term Management
Plan, our top priority is to prepare a foundation to support
improvements in the PC business. We aim to change our
focus from quantity to quality, and get structural reforms
on track as soon as possible. Meanwhile, semiconductors
have come to be viewed as international strategic goods,
and we therefore have started discussing optimal supply
structures for related products in the lead up to our next
Medium-Term Management Plan.
Over the medium term, we will strengthen environmental
technologies for applications such as carbon neutrality
and plastic recycling. Creating specific technologies andservices aligned to the needs of society and markets is theproper mission of specialty products. By supplying added
value, we will win recognition in the market and achieve thegoal of balancing social and economic value. With a soundconcept of a decent scale that contributes to the further
advancement of society over the medium to long term, we
will transition to a highly profitable structure.

Overall Policy under the Medium-Term Management Plan

Overall Policy

39

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Numerical Targets (Announced in May 2021)• Increase ratio of high-value-added products,
strengthen cost competitivenessNet sales• Continue capital investments in growth markets

Operating profit

Ordinary profit¥330.0 billion ¥49.0 billion ¥53.0 billion

Performance

Net Sales / Operating Profit / Ordinary Profit (Billions of yen)
Net sales
Operating profit
Ordinary profit

309.0
257.8
210.0

224.3

225.4

222.4
32.9

26.5
17.1
8.2 8.7

2013*1

33.8

257.7

255.9

43.5

34.8

32.6
25.5

25.2

267.8

285.5
45.4

37.5
33.6

38.7
32.6

28.1

19.4

12.1 13.2

2014*1

2015*1

2016*1

2017*1

2018*1

2019

2020

2021

2022

(FY)

Capital Expenditure / Depreciation and Amortization (Billions of yen)
32.6

Capital expenditure
Depreciation and amortization

28.6

17.8
12.6

11.9 12.5

2013*1

2014*1

14.7

13.7

18.6

17.2

16.7
11.8

11.6

12.9 12.6

12.3

12.5

2015*1

2016*1

2017*1

2018*1

2019*1

13.0

2020

13.0

2021

13.7

2022

(FY)

*1 Aggregate of former segments (Specialty Chemicals/Information and Advanced Materials)

MGC Report 2023

40

Specialty Chemicals BusinessClassification of Product Lines under the Medium-Term Management Plan

Differentiating businesses

New/next-generation businesses

Differentiating businesses

Main products in development• XR materials• Post-5G materials• Materials for EVs• Electronic chemicals• Optical resin/polymer• IC plastic packaging BT materials• Polyacetal• Ultra-high refractive lens monomers

Unprofitable businesses or those needing rebuilding

Foundation businesses• Polycarbonate, sheet film
• Hydrogen peroxide• Oxygen absorbers

None

Business Strategy
Differentiating businesses

Electronic chemicals (EL chemicals)

Further strengthening the global
supply system.
Finding new opportunities in high-levelneeds for customized products
MGC’s electronic chemicals are comprised mainlyof super-pure hydrogen peroxide, which is used forwashing and etching silicon wafers for semiconductors,
and hybrid chemicals, which are custom products for
specific processes such as residue removal. For superpure hydrogen peroxide, we have strengthened our global
supply system by bolstering and increasing our productionin Japan and overseas to keep pace with the growth of
the semiconductor industry. For hybrid chemicals, ourmain strength is our research and development system,
which works closely with customer needs. We haveresearch and development locations in Tokyo and South
Korea, and we will also establish bases in the UnitedStates, Taiwan, and China to accelerate our development
speed in order to handle advanced technologies and new
semiconductor materials.
We have also established the Electronic Chemicals
R&D Group as a specialist organization to develop
new applications and promote strategies for intellectual

EL Chemicals: Transition in Net Sales(FY2020=100)

Hirokazu Hanawa
General Manager,
Inorganic Chemicals Division,Specialty Chemicals Business Sector

property. We have actively posted young employees
overseas as part of efforts to pick up on the latest
technology trends.
With the development of an information society,which is represented by Society 5.0, we plan to enhance
our position in the super-pure hydrogen peroxide market
by strengthening both our manufacturing capacity andcost competitiveness. We will increase our operational
efficiency at every step, from plant construction to raw
material procurement, production, and logistics. Since
super-pure hydrogen peroxide is an integral part ofwashing silicon wafers and is also a chemical with low
environmental impact, it is unlikely that it will be replacedby competitive new products. In hybrid chemicals, thelevel of the solutions sought by customers is becoming
increasingly advanced. This trend presents a huge
opportunity for MGC, which has been working on
product development in direct collaboration with theworld’s leading semiconductor manufacturers.

Super-Pure Hydrogen Peroxide Production Sites

South Korea
282,000 tons/year
China
90,000 tons/year
Operation started
in 2022

Japan (Yokkaichi, Yamakita, Saga)
61,000 tons/year
Production increase planned
Taiwan90,000 tons/year
Production increaseplannedSingapore
30,000 tons/year

2020

41

2021

2022

2023 (FY)(Forecast)

MITSUBISHI GAS CHEMICAL COMPANY, INC.

United States
140,000 tons/year
Production
increaseplannedOptical materials (optical resin/polymer)
Noriyuki Kato

Responding to increasing functionalityof smartphone cameras while expanding
into new fields such as VR, automotive,
and monitoring cameras

General Manager, Business
Development Department,
Optical Materials Division,Specialty Chemicals
Business Sector

MGC’s optical resin/polymer has been widely usedas materials for camera lenses in smartphones andother devices, as they are highly regarded for their
distinctive combination of a high refractive index*2 andlow birefringence,*3 which are unmatched by competingproducts. Recently, demand is expanding for applications
such as automotive and monitoring cameras, and VR
devices for experiencing the metaverse. Customer
demands increase in sophistication each year, placing
a burden on development. Therefore, we are always
delighted when we achieve the functional requirementsfor optical characteristics and so forth. Using a portal
website, the laboratories, plants, and business divisions
are able to share information in real time, enablingcustomer needs to be reflected rapidly in our in-house
technology seeds.
In 2022, we established a joint venture with Taoka
Chemical Co., Ltd. with the aim of further optimizing the
production systems, including raw material monomers.
In the same year, we also expanded our polymerization
plant for optical resin/polymer within the Kashima Plant
as part of efforts to ensure supply stability.

In the society of the future, with the seamlessmerging of virtual and real spaces, the quality of image
information used for input will be important, so theareas in which optical resin/polymer can contribute
will continue to expand. We are also working on
development of a technology for collecting and recycling
the molded pieces generated by customers’ injection
molding processes.

Differentiating businesses

Foundation businesses*2 The characteristic of light bending inside a material. Using materials
with a high refractive index allows lenses to be made thinner.
*3 Lower birefringence contributes to clearer images.
Trend in Increasing Resolution of Smartphones (Rear main camera)
(%)
100
80
60
40
20
0
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 (Year)
Forecast■~3 MP■5.0~48.0 MP■50.0 MP~
Source: Materials by Techno Systems Research Co., Ltd. published inJune 2023

Engineering plastics

We will pursue synergies through a new
structure having consolidated MEP and
accelerate the development of highly
competitive products
In the polycarbonate (PC) business, which is positioned
as a foundation business, in April 2023 we started a
new structure with Mitsubishi Engineering-Plastics
Corporation (MEP) as a consolidated subsidiary. This
new structure is intended to accelerate developmentof highly competitive products through rapid decisionmaking led by the Company.
Recently, competition has been increasing in thelargest market, China. As profits become increasingly
difficult to secure with our existing sales portfolio, we arefocusing on developing and expanding sales of productsthat are resilient to the impact of market fluctuations
and demonstrate the Company’s competitive strengths.
We will maintain this course, while making full use of
the management resources of MEP and the Company
to drive the development of applications that lead tosolutions for customers’ issues.
In polyacetal (POM), which is positioned as adifferentiating business, business performance has
been favorable, reflecting customers’ approval of thestable supply capacity and product quality of our three

Ichiro Koyanagawa
Executive Officer
General Manager,
Engineering Plastics Division,Specialty Chemicals
Business Sector

production sites in Asia, as well as our detailed technicalservice capabilities. From April 2022, supervisory
function for the POM business has been assigned towholly owned subsidiary Global Polyacetal Co., Ltd.
(GPAC), to create an integrated structure for managing
production, sales, and development. Under thisstructure, we will develop products with higher added
value, such as medical applications, for global markets.
MEP’s strengths• Customer-focused technical services• Marketing functions (Business locations: 27 in Japan and overseas)• Manufacturing base offering superior cost competitiveness
Make THAI POLYCARBONATE a consolidated subsidiary of Company
as well

GPAC’s strengths• Customer-focused technical services• Use of regional headquarters sales companies, such as KOREAPOLYACETAL• Manufacturing bases offering superior cost competitiveness(THAI POLYACETAL, KOREA ENGINEERING PLASTICS, etc.)

MGC Report 2023

42

Basic Chemicals Business

Basic Information

We will further strengthen
differentiating businesses while
contributing to carbon neutrality
over the medium to long term.

Business Lines: Natural gas chemicals, xylene chemicals, energy resources and environment,
life science

Ratio of Net Sales andOrdinary Profit
Ratio ofNet Sales

Major Group Companies:
JAPAN FINECHEM COMPANY, INC., JSP CORPORATION, MGC Terminal Company, Inc.,TOHO EARTHTECH, INC., Japan U-PiCA Company, Ltd.,MGC SPECIALTY CHEMICALS NETHERLANDS B.V., Japan Saudi Arabia Methanol Company, Inc.,METANOL DE ORIENTE, METOR, S.A., BRUNEI METHANOL COMPANY SDN. BHD.,
Japan Trinidad Methanol Company, Inc., Yuzawa Geothermal Power Corporation,
MGC Advance Co., Ltd., FUDOW COMPANY LTD., MGC Woodchem Corporation,
MGC ADVANCED POLYMERS, INC.

Naruyuki Nagaoka

Ratio of
Ordinary Profit

60.4%
43.8%
FY2022(Results)

Director, Managing Executive Officer
In charge of Basic Chemicals Business Sector
Number of employees: 5,521

Smoothly executing an investment
strategy designed to further strengthen
differentiating businesses
Fiscal 2022 was a year with an extremely uncertain outlook.
However, through steady execution of our policies andappropriate pricing strategies, among other measures, wehave achieved ordinary profit of ¥30.5 billion, coming close
to the ¥31.0 billion target for the Basic Chemicals Business
Sector under the current Medium-Term Management Plan.
Our investment strategy was aligned with the key
corporate strategy of further strengthening differentiating
businesses. We proceeded without delay to construct a
new MXDA plant in Europe and to increase production
capacity of aromatic aldehydes at the Mizushima Plant, andthese actions have been supported by steady demand. We
plan to start production of MXDA in 2024. While there has
been some impact from rising construction costs, we areconfident of being able to reflect this in the product pricing.
At the Mizushima Plant, we produce aromatic aldehydes.
A bottleneck issue here was resolved in April 2023 with the
improvement of production processes, and construction of
the new plant is scheduled for completion in November.
Within our business portfolio, the formalin businesshas been classified under unprofitable businesses or
those needing rebuilding. In August 2022, we stopped
production of formalin at our Yokkaichi Plant and stopped
production of formalin, paraformaldehyde, and hexamine at
our Niigata Plant in May 2023. Furthermore, in April 2022,
we established MGC Woodchem Corporation, building an
integrated production system spanning from formalin down
the value chain to adhesives. In May 2023, we announced
the transfer of the Company’s formalin sales business to
MGC Woodchem.
Meanwhile, the purified isophthalic acid (PIA) business
continued to be unprofitable due to worldwide oversupply,and we examined restructuring it, including the possibilityof stopping it during the Medium-Term Management Plan
period. However, we decided to maintain a certain levelof production from a perspective of optimizing our overall
product chain, including the raw material meta-xylene
and xylene separation co-products. If we become able toshift production of meta-xylene to a higher-value-added
European MXDA plant in the near future, we will revisit theidea of scaling down or stopping production of PIA.

Directing overall awareness of theorganization towards market needs.
Increasing successful examples ofdifferentiating businesses

Overall Policy under the Medium-Term Management Plan

Overall Policy

The Basic Chemicals Business is situated in the upstreamzone of the value chain. With no direct interface withtrends in final products, the business structure has astrong orientation towards technology seeds. However,this orientation has been changing as the Company has
clearly set out its contribution to carbon neutrality and ismoving toward execution. Currently, nobody can see clearly
whether we are truly meeting market needs when we
incorporate the larger trend of carbon neutrality into specificdetails. This is why we have recently been increasing
opportunities for dialogue with diverse people involved in
our value chain. As a result, the orientation of our overallawareness as an organization is gradually but palpablychanging from technology seeds to market needs.
Looking back, differentiated products such as MXDA
and MX-Nylon have arisen from technology seeds, but by
maintaining close contact with customers through detailed
technical services, they have stimulated latent demand.
It had taken time for these products to be sought bysociety. However, when the time was right, their market
developed, and now we are market leaders in their field.
We are working to realize successful examples like thismore quickly. For example, in the CFRP*1 business using
our specialty resin and recycled carbon fiber and so forth,
we have formed a consortium between Japan U-PiCA
Company, Ltd. which became a wholly owned subsidiary inMarch 2023, as well as JSP Corporation and other Group
companies, and having accurately grasped market needs,
we are now preparing a comprehensive structure coveringfrom upstream to downstream.
I see it as my mission to lay the foundations for the
future. An example of such foundations is Circular Carbon
Methanol. Currently, we are proceeding to examine
possibilities for various materials, including CO2, waste
plastic, and biomass. It may take some time for this initiative
to generate significant value; however, there is no doubting
the strong demand from society for this technology. Overa five- to ten-year span, we aim to develop this into a
differentiating business that will be a supporting pillar for theGroup in the future.

Numerical Targets (Announced in May 2021)• Turn products and businesses that respond tosocietal demands into business opportunities• Reduce volatility through portfolio reforms andrebuilding of unprofitable businesses

Net sales

Operating profit

Ordinary profit¥410.0 billion ¥25.0 billion¥31.0 billion

Performance

Net Sales / Operating Profit / Ordinary Profit (Billions of yen)
Net sales
Operating profit
Ordinary profit

336.3

478.9
425.3

381.5
348.0

320.9

31.8
28.2
20.5

400.0

387.8
38.8

363.8
36.6

31.1
25.7

20.8

18.8

18.0
12.8 14.2

11.2
5.7

2013*2

2014*2

30.5

30.0

27.6
19.3

5.6

335.7

4.7
2015*2

2016*2

2017*2

2018*2

2019

2020

2021

2022

(FY)

Capital Expenditure / Depreciation and Amortization (Billions of yen)
32.0

Capital expenditure
Depreciation and amortization

22.2
20.3

19.5
15.9
10.4

9.7

19.7

17.3
14.3

2015*2

13.5

13.6

14.2

2016*2

2017*2

2018*2

15.8

19.2
16.4

17.1

17.9

10.8

6.8

2013*2

2014*2

2019*2

2020

2021

2022

(FY)

*1 Carbon fiber-reinforced plastic*2 Aggregate of former segments (Natural Gas Chemicals/Aromatic Chemicals)

43

MITSUBISHI GAS CHEMICAL COMPANY, INC.

MGC Report 2023

44

Basic Chemicals BusinessClassification of Product Lines under the Medium-Term Management Plan

Differentiating businesses

New/next-generation businesses

Differentiating businesses

Main products in development• Bio-products• Contract manufacturing of antibody drugs• Carbon fiber composite material• Neopulim transparent polyimide resin• Methanol fuel cells• MXDA• Aromatic aldehydes• MX-Nylon

MX-Nylon

Exploring its strength as anenvironment-friendly product.
Creating value matching seeds andneeds at the Group’s global convention

Unprofitable businesses or those needing rebuilding

Foundation businesses• Formalin and polyol products• Xylene separators and derivatives• Methanol• Energy resources and environmental businesses• Ammonia and methylamines• MMA products• Foamed plastic (JSP)Sales Trend for High-Performance Products

MXDA Operations(Billions of yen)
50.0

MXDA, which we began producing in 1970, has been exhibiting its unique functions in special nylon
films, polyurethane paint, and epoxy resin curing agents. Using MXDA as a main ingredient we havebeen expanding our product line to include MX-Nylon with a superior gas barrier and 1,3-BAC which
are quick to cure and don't yellow under ultraviolet light.

40.0

Xylene separators and derivatives
Mixed xylene(external
procurement)

30.0Superacid technology(Xylene separation& isomerization)

20.0

Meta-xylene
Agrichemicals andpigments, etc.

Purified isophthalicacid (PIA)
Additive for PET and the like
High-performance products

10.0
Other rawmaterials(external
procurement)

0
2018

2019

2020

2021

2022

(FY)

Superacid technology(carbonylation)

Meta-xylenediamine(MXDA)Engineering plastics, etc.

MX-Nylon
Packaging materials, etc.

Aromatic aldehydes
Fragrances, etc.

1,3-BAC
Paint andcomposite material

MX-Nylon is an original MGC material featuring an
excellent barrier against oxygen and CO2 and superb
chemical resistance. Used as a raw material in food andbeverage packaging, it delays deterioration of flavorand quality, and extends “best-by” periods. Adding
fiberglass and other toughening agents in the resin
processing stage can produce materials with extremely
high strength and stiffness, which are currently used as
structural components in the automotive and industrial
machine industries.
We have many people involved in research anddevelopment, production and sales of MX-Nylon meet
twice a year at a global convention. The participants
share information on trends in market changes andlegal restrictions by nation or region, potential risks
and future prospects. Based on that they explore new
applications of MX-Nylon and create initiatives to marryseeds with needs.
I am excited to be exploring the strengths andpossibilities of MX-Nylon as an environment-friendly

Takahiro Takano
General Manager,
Polymer Materials Department,
High-performance Products Division,
Basic Chemicals Business Sector

product. I will work to make MX-Nylon the de-facto
standard in various industries by drawing attention towhat it can do, like reducing food waste by extending“best-by” dates and improving fuel efficiency by making
vehicle parts lighter. In 2022 MX-Nylon produced at the
Niigata Plant received the ISCC PLUS certificate. To
capitalize on this opportunity we will begin manufacturing
and selling ISCC PLUS-certified MX-Nylon withsustainable raw materials, including plant-derived raw
materials as per a mass balance approach.

Business Strategy
Differentiating businesses

MXDA

Plant construction in Europe is inprogress as planned.
Meeting growing demand related
to wind power generation
As a major supplier of MXDA, which is highly resistant tosalt water and chemicals, we hold over 90% of the world
market, producing it for over half a century. It is mainly
used in paint for structures that must resist corrosion,
such as bridges, marine structures, ships and plants.
We have begun constructing a new production
base in Europe, where demand is highest, with a plan tostart operation in July 2024. Prices for energy and raw
materials have risen substantially due to the continuing
Ukraine conflict, but we project that the new plant willproduce MXDA with a competitive advantage on a parwith that of our existing plant. When production begins,
we plan to sell not just in Europe but also in otherregions of high potential demand, like the Americas, theMiddle East and Africa. We will satisfy growing demandfor MXDA as an epoxy resin curing agent, which is used
for rapidly growing wind power generation facilities aswell as for conventional infrastructure applications.
We will promote research on possible MXDA uses
for solvent-free paint and water-based paint that emit

45

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Differentiating businesses

Aromatic aldehydes

Ryoji Otaki
Division Director,
High-performance Products Division,
Basic Chemicals Business Sector

low VOCs*3, as well as applications for direct air capture(DAC) of CO2 to allow for multifaceted contributions toenvironmental preservation. In the future, we will also
produce MXDA and 1,3-BAC*4 using green hydrogenand ammonia to raise their profile as environmentfriendly products.
*3 Volatile organic compounds*4 1,3-bis(aminomethyl)cyclohexane. This is widely used as an
epoxy resin curing agent for composite materials and paints.

Superacid realizes unprecedented
high quality.
Pursuit of market-oriented
development of fragrances
MGC produces and sells more than ten types ofaromatic aldehydes. With these it has been making
stable annual growth of about 5%, mainly for resin
additives and fragrances. Our products are excellent inpurity and safety, and highly evaluated as raw materials
also for agricultural chemicals and pharmaceuticals. The
superb quality is made possible by an original production
technology employing a continuous-reaction systemwith a superacid, which is extremely difficult to handle,
as a catalyst. The catalyst is collected and reused inside
the system, so very little is wasted, and large volumesof the product can be reliably produced. This is just one
example of our large fund of technical expertise built up
over the years, leaving our competitors far behind.
To address diverse customer needs and issues,
through dialogue with them we customize their orders
into unique products. This is a special feature of ourbusiness. Production facilities capable of producing
a wide variety of products while assuring reliable highquality are our strength as well.

Haruya Kubo
General Manager,
Chemicals Department,
High-performance Products Division,
Basic Chemicals Business Sector

It’s not easy to match the needs of prospective
customers with the seeds, such as the technologies andfacilities we own. Because of that, high-performancecustom products, the results of those matches, areindispensable to customers. Now we are surveying andunderstanding the market needs for fragrances withwhich aromatic aldehydes are highly compatible, whilesteadily working to expand the areas covered by the
R&D capabilities and production technologies of MGC.

MGC Report 2023

46

New/Next-Generation Businesses

New/next-generation businesses

Whenever speedy solutions areneeded, we will consider allianceswith other companies and even
M&A as alternatives.

Solid electrolytes

Development of LiBH4*1
and carborane-based solid
electrolytes for application invarious fields

Director, Managing Executive Officer
Responsible for Research & Development,in charge of Intellectual Infrastructure
General Manager of Intellectual Infrastructure Center

47

Unification of research systems improves
the perceived speed of progress and balancein marketability

Creating businesses of different wavelengths
by staying close to customer issues at a
deep level

To build an earnings structure that adapts to change inthe external environment, for the current Medium-Term
Management Plan we instituted a new segment called “new/next-generation businesses.” In new-product development
we used to create research themes under the four-internalcompany system, with organic growth in mind. Certain
research themes were looking to the next generation anddid not belong to any specific company. Calling them
“corporate research,” we explored new materials.
Looking at a market environment that has been rapidlychanging beyond imagination in recent years, we abolishedthe internal company system in 2020. With optimizationof the entire Group in mind, we brought together researchlaboratories that used to be under the internal companies
and the Advanced Business Development Division, whichused to be one of the administrative divisions, now under
the Research & Development Division. We expanded R&D
investment in the fields projected to have high mediumto long-term growth potential. At the same time we aim
for growth that is not simply the extension of existing
businesses.
Next-generation research used to carry challenges
like differences in speed between the research team andthe internal company overseeing the research when it isready for commercialization. Under the current system,
however, all research themes, including those for the
next generation, became visible on a single assessment
measure and assessment frequency, the senses of speed
and marketability are better balanced, and the sensitivity toreturn on investment has increased.
Research themes and product development projects
that we’ve been working on for a long time need newtime frames for management. To do that, we’ve stopped
insisting on doing everything on our own and would rather
look into alternatives, like business and capital alliances withother companies and even M&A, depending on the themes.
We flexibly adjust how research should be conducted andhow each internal organization should be run as we assess
performance and the sense of speed. That said, we avoid
going too fast to the point of impairing the creativity of theresearchers, considering it important to maintain our free,open-minded culture that allows for playfulness.

For those of us involved in new/next-generation businesses,
innovation means combining existing A and B to create C, a
new value. So people in administrative divisions doing office
work can innovate as well as our technical employees.
Within MGC people with diverse viewpoints and ideas get
together to improve one another and create new valueby having fun with it. If all our employees are looking inthe same direction, we can’t generate C by combining A
and B. By looking at things from different viewpoints, it’seasier to be inspired, leading to innovation. I often advise
employees, “You can’t find a solution if you stay in yourlab or office.” By getting out to the market side and talking
with customers with development agility in mind, we candeepen our understanding of the essences of issues eventhe customers aren’t aware of.
We used to win customer approval just by suggestinga single new material. Today it’s a new era, when we can’t
receive an order without suggesting a string of upstreamto-downstream solutions. So we are considering a businessmodel in which we decide on the core part of a businessthat we will take charge of, then share profits with leadingbusiness partners handling other parts.
When I was head of the Corporate Planning Division,
I was deeply involved in drawing up the current MediumTerm Management Plan, and determined five target fields
backcasting from 2030-2050 by imagining changes insociety and technological trends for those years. To getto the exit sooner, we will further narrow our researchand development subjects in the target areas more
precisely. We are creating several businesses of different
wavelengths, for example, with a portfolio of products withdifferent cycles and characteristics, and making our R&D
organizations capable of handling environmental changes
with resilience and flexibility.

MITSUBISHI GAS CHEMICAL COMPANY, INC.

With the proliferation of electric vehicles and electronic
devices, the rechargeable battery market is projected
to grow and the field’s technological trends are drawing
attention. We are developing solid electrolytes for allsolid-state Li-ion batteries*2, a type of next-generation
rechargeable battery. Solid electrolytes are divided into
three categories depending on the main ingredient:sulfides, oxides and complex hydrides. Our development
focus has been complex-hydride electrolytes. Theiradvantage is that they are softer than other solid
electrolytes, making them easier to use in producing
precision electrodes. They also minimize startup
investment by sharing existing production equipment for
liquid Li-ion batteries.
MGC has developed a method for producing LiBH4
solid electrolytes, but much has been desired in terms of
Li-ion conductivity for high output, as needed by electricvehicles. As a solution we developed carborane-basedsolid electrolytes, a type of complex-hydride electrolyte,that achieve Li-ion conductivity on a par with sulfide-

Associate General Manager,
New Business Development Department,
Research & Development Division

based solid electrolytes. With mass production of thiselectrolyte in mind, we plan to supply it at low costthrough a liquid-phase mass-production process that is
unique to a chemical maker. Now we are working with
universities to assess the properties of carborane-basedsolid electrolytes and explore new applications for it.
We will continue to explore applications for both LiBH4
and carborane-based electrolytes that employ theirrespective characteristics with a wide range of uses inmind, from stationary batteries to electric vehicles.
*1 Lithium borohydride. This compound reacts with water and alcohol
to generate hydrogen, and is generally used as a reducing agent.
*2 Conventional liquid Li-ion batteries use an electrolytic solution for
conductivity. On the other hand, all-solid-state batteries use solid
electrolytes rather than liquid electrolytes.
Cathode (positive electrode)

Solid electrolyte
Anode (negative electrode)

New/next-generation businesses

OXYCAPTTM

Supplying the healthcare industry
with the world’s only multilayer
plastic container with a glass-like
oxygen barrier
The syringes*3, vials*4 and other glass containers usedin healthcare provide an excellent oxygen barrier, butthey break easily and are low in pH resistance, to namea couple of disadvantages. In work to create plastic
alternatives, a weaker oxygen and UV barrier has beena challenge. Taking on this challenge, MGC began
developing a better plastic alternative in 2012. We
promoted projects that apply our own multilayer molding
technology for beverage containers using MX-Nylon andnon-crystal oxygen-barrier plastics we have developed.
In 2019 we commercialized OXYCAPTTM, the world’s
first container that has the advantages of both glass andplastic. In addition to its excellent gas barrier, it features
minimal leaching of inorganic materials, and is currently
in testing by pharmaceutical companies in Europe andthe U.S. for official adoption. When OXYCAPTTM is inwide use, we believe we can offer the healthcare industry
new environmental value, because its low weight can
reduce CO2 emissions in addition to preventing container
breakage during production and transportation.
In May 2022 we announced that we have opened

Tomohiro Suzuki
Associate General Manager,
New Business Development Department,
Research & Development Division

talks with Becton, Dickinson and Company of the U.S.*5
concerning a business alliance. We are discussing
specifics, including joint development of syringes. We arealso focusing on applying OXYCAPTTM characteristics
to low- and ultra-low-temperature storage of biopharmaceuticals and applications in regenerative
medicine.
*3 The cylindrical part of the injection syringe, excepting the needle*4 Sealed container for injectable medicine*5 A world-leading company for medical equipment

10-mL Vial
0.04
Oxygen permeability(cc/pkg/day/0.21 atm)

Yoshinori Isahaya

Takuo Ohshida

ClosureVial body

0.03
0.02

14 times
betterthan COP

0.01
0.00
COP

Glass OXYCAPT™-P• Measurement device: MOCON OX-TRAN® 2/61
• Conditions: 23°C/ In 100% RH, Out 50% RH

MGC Report 2023

48

Research and Development

Strategic Points(FY2022)

Relevant
Materiality• Establishment and operation of a research theme evaluation system using scoring. Objectively prioritize
evaluation of all research themes, and accelerate research and development by dramatically shifting
research resources to themes with high evaluations.
• Establish strategic research areas with consideration for suitability to the Company and growth potential
to create new products and new businesses, focus research resources and promote metabolism of
exploration of themes.
• Create a DX promotion system and education system aimed at further acceleration of research activity.
The goal of the Intellectual Infrastructure Center is to realize an IP landscape*1 supporting the formulationof research strategy.
• Promotion of innovative R&D*1 Management strategy emphasizing intellectual property. It indicates an overview of current conditions and future prospects concerning theCompany’s market position in light of research and development trends within the industry and technical information on individual patents.

Research and Development Strategy

Acceleration of Utilization of Digital Technology
In April 2021, we established a dedicated AI and MI
promotion team within the Research & Development
Division, and a DX Teams performing dedicated analysis
of computational chemistry and data science in threelaboratories to strengthen the system for promoting DX.
The DX Team applies DX technology to many research
themes and is effective in accelerating research anddevelopment. The AI and MI promotion team is contributing
to the spread of data science by creating a data scienceeducation system. Eventually, we will establish a working
environment in which all researchers are able to utilize thelatest digital tools as needed. In addition, the DX Technical

Exchange Meeting was launched for Group companies
in fiscal 2022. Through this DX Technology Exchange
Meeting, we will promote the deployment of DX technology
throughout the entire Group.

DX Team

AI and MI
Promotion TeamTokyo Research Laboratory
Hiratsuka Research Laboratory

Head Office R&D
Administration

Niigata Research Laboratory

Intellectual Property Strategy

A major objective of the Medium-Term Management
Plan, Grow UP 2023, is further increasing our competitive
advantage through the creation of differentiating
technologies and the expansion of differentiating
businesses to shift to a profit structure resilient to change
in the external environment. In order to achieve thisGroup objective, the research division needs to maximize
return on investment, meaning that it should increase
the efficiency of its investment in research activities. To
begin with, we introduced objective research evaluation
indices for determining the priority of research themesin fiscal 2020. Over the three years of the Medium-Term
Management Plan, we are concentrating management
resources on high-priority themes according to these
indicators.
While working closely with business sectors
responsible for product development, we aim to obtain
results commensurate with investment within the

period specified for each theme, as well as expand ourdifferentiating businesses.
Furthermore, when all research organizations were
unified in April 2020, the Research & Development Division
took the lead in strategically establishing new research
themes based on expansion of our business portfolio andfuture growth areas (see figure below).
Breakdown of R&D Expenditures
Other

Foundation
businesses(Company on
stand-alone basis,
FY2023 forecast)New/
next-generation
businesses

Differentiating
businesses

Key Points for Setting Research Themes
1. Business Portfolio
Target Area

2. High Suitability
to the Company

3. Future
Growth Areas

The importance of intellectual property (patents, knowledge
and general know-how) is increasing as chemical
manufacturers pursue sustained growth. In April 2021,
MGC established the Intellectual Infrastructure Centerto utilize DX to strategically accumulate and establish
rights for intellectual property, and moreover to deploy itthroughout the Group. In order to transform intellectual
property management through DX and bring about thetransition from conventional basic patent administration
operations to data-driven intellectual property operations,the Intellectual Property Department, which formulates
and implements strategy on intellectual property, andthe Technical Intelligence Department, which handles
the utilization of digital technology and technical studies
pertaining to intellectual property, have been establishedwithin the Center.
Operations involving collecting and analyzing vastquantities of intellectual property data, such as patents,
literature, and public releases from rival companies, arecharacterized by a high degree of compatibility with AI.

MGC combines AI with existing tools and the analyticalskills of analysts, with the aim of realizing a strategic IP
landscape. For example, to effectively utilize the intellectual
property information MGC has accumulated to date, wefirst create an overview using AI and associate it withgeneral information before classifying it into proprietary
categories and performing analysis. It is expected tohave effects such as matching the needs of society withthe technology and resources (seeds) of MGC, potential
competitive analysis and highly accurate customer analysis,
and discovery of new applications for existing products.
In addition, the following overview showing MGC’s patentvalue from the perspective of SDGs clearly shows that
we have a wide range of technology corresponding to thevarious targets set for SDGs. In the near future, we believethat AI will quantitatively indicate the suitability of ourresearch fields and themes including SDGs, and support
the formulation of research strategies, thereby contributing
to the MGC Group’s Mission of “creating value to sharewith society.”

Total Patent Value (Patent Asset IndexTM) of the MGC Group Identified from the Perspective of SDGs (As of December 31, 2022)

Type A: Theme in Growth Area of Existing BusinessPriority injection of resources driving future growthType B: Theme in Growth Area Outside Existing Business
Development of new markets such as contributing to a sustainable societyType C: Theme with Commensurate Return on
Investment in Existing Business

Please refer to page 15 for the changes in MGC’s total patent value.

Expansion of existing business through detailed response for each productPromotion of Research and Development Addressing Climate Change Problems

Research and Development System

Intellectual Infrastructure
CenterResearch & Development

Basic Chemicals Business

R&D Administration

Tokyo Research Laboratory

Intellectual Property

R&D Department of
Yokkaichi Plant

R&D Department of
Niigata Plant

Future Strategy

Niigata Research Laboratory

Technical Intelligence

R&D Department of
Kashima Plant

R&D Department ofMizushima Plant

New Business Development

Hiratsuka ResearchLaboratory

Chemical Analysis

R&D Department of
Yamakita Plant

Administrative

49

Specialty Chemicals Business

MITSUBISHI GAS CHEMICAL COMPANY, INC.

MGC is advancing research into “carbon recycling,” whichmakes effective use of CO2 as a chemical raw material, as
a viable technology for reducing environmental impact.
MGC was quick to begin working on development ofmethanol production technology using CO2 and hydrogenas raw materials, and succeeded in methanol production
using the methanol pilot facility at the Niigata Plant. At
the same time, we are proceeding with efforts aimed atachieving a decarbonized society through Circular Carbon

Methanol (CCM) production, in which CO2 emissions,waste plastics, etc. are converted into methanol, recycling
them for use as chemicals or fuel and in power generation.
In 2022, we successfully converted CO2 recovered fromwaste incineration exhaust gas into methanol for the firsttime in Japan.
Leveraging our knowledge regarding polycarbonate
research and manufacturing, in which we are developing
a business, we are working with Tohoku University, Osaka
MGC Report 2023

50

Production and Environment

Research and Development

Metropolitan University, NIPPON STEEL CORPORATION
and Nippon Steel Engineering Co., Ltd. to develop
technology for synthesizing polycarbonate intermediates
using CO2. Since fiscal 2021, this has been adopted
as “Green Innovation Fund Project / Development ofTechnology for Producing Raw Materials for Plastics
Using CO2 and/or Other Sources / Development ofTechnology for Producing Functional Chemicals from CO2/ Development of Technology for Manufacturing Functional
Plastic Materials Using CO2 as Raw Material” and we areengaged in resolving issues aimed at the industrializationof processes for synthesizing polycarbonate from CO2.
In fiscal 2022, we reduced the heat consumed in lab
experiments and also began construction of a bench plant.

13%
of R&D expenditures
R&D investments devoted to solving
climate change problems

The fiscal 2030 targets havealready been reached due toprogress in research themes
adopted as Green Innovation
Fund Projects.

Please refer to “Development of Products and Technologies
Conducive to Decarbonization” on page 18 for details on research
themes.

Development for commercialization of chemical raw material production using artificial photosynthesis*2
Development of new membrane-assisted reactive separation process with aim of significant improvement ofreaction efficiency
Mitsubishi Chemical Corporation (the contact company), MGC,
Japan Technological Research Association of Artificial Photosynthetic Chemical Process (ARPChem)
Fiscal 2021–Fiscal 2028 (8 years)

Existing process
Recycling(large cycle)

CO/H2

Project images

Membrane-assisted reactive separation process

High pressure
Low inversion
rate

MeOH

• At present, synthetic gas CO/H2 materials are mainly used
• With CO2/H2 materials, reaction efficiency is poor even underhigh-pressure conditions, necessitating recycling a large volumeof unreacted material (high construction costs and variable costs)• Catalyst deactivation due to byproduct water vapor also an issue

CO2/H2or CO/H2

Membrane reactor(catalyst + membrane)
No recycling

Lower pressure
Improved
conversion

MeOH• Reaction efficiency greatly improved by selectively extracting
products using zeolite membrane• This enables lower reaction pressure, and reduction or
elimination of recycling of unreacted materials(lower construction costs and variable costs)*2 Chemical material made from CO2 and green hydrogen obtained by using solar energy to decompose water with a photocatalyst

Manufacturing of Polycarbonates from CO2
We are researching an innovative soluble polycarbonate manufacturing process that has high environmental compatibility
and is highly effective for reducing carbon by using cerium oxide as a catalyst and 2-cyanopyridine (2-CP) as a dehydrating
agent to synthesize dialkyl carbonate from carbon dioxide and alcohol, and using this as an intermediate for DPC synthesis.
In fiscal 2022, we examined the reduction of energy consumption in the DRC synthesis process and the dehydrating agent
recycling process, and found the potential to significantly reduce energy consumption through a technological breakthrough,achieving the GHG emission reduction target in the Green Innovation Fund Project in the laboratory research phase. We are
currently proceeding with work to establish bench plant equipment to scale up and verify the laboratory test results.
Project overview
Implementation
structure
Project duration

https://www.mgc.co.jp/eng/csr/environment/rc_plan.html

MGC aims to balance ensuring safety, the foundation of
its production activities, with environmental protection andefficient production. We are constantly pursuing our targets
for all of these by raising the level of technical capability of
employees engaged in production activities, and by keeping
facilities (hardware) and systems (software) up to date.
We have endeavored to ensure the safety and stabilityof production activities through the technical improvementof processes and facilities, and will focus on initiatives aimed
at the realization of SMART-FACTORY to promote theutilization of DX technologies such as sensors, systems andmobile devices to realize an even higher level of stability.
In fiscal 2022, in order to engage in highly efficient
production saving resources and energy, we utilized digital
data on production equipment accumulated in the data
management systems we have introduced. Furthermore,
we conducted trials of quality forecasting and anomaly
sign detection systems and operational support and work
support systems using AI, and are gradually implementing
them. We have been able to reduce the workload in
inspection operations by around 50% in the visual inspection
system for corrosion of pipes in plants by applying “Human

Toward the Realizationof SMART-FACTORY

Improving businessefficiency
Optimal inventory

System for reporting accidents and problems

Quality

Carbon neutral
Operational
data system

Equipment
management system
Vibration

BPA

Incoming
order

Production
plan

Quality control
systemFlow Rate

Pressure

Integrated
Linkage
SystemLiquid Surface

DPC

reduction
GHG emissions intensity (comparedto fiscal 2013, non-consolidated)

SafetyControl Valves

DRC

Deteriorated from the previous
fiscal year due to fluctuation in
the production volume of specificproducts. We will continue withefforts to curb energy consumption
such as energy saving.

8.6%

SMART-FACTORY

SMART-OFFICE

CO₂

Progress of KPIs in FY2022

Environment

Fiscal 2021–Fiscal 2028 (8 years)④PC polymerization process

in the Loop Machine Learning,” which commenced
operation in the Niigata Plant in January 2022. At present,
we are engaging in further improving accuracy while
operating the system, and also expanding the scope of
application. In addition, we have continuously reviewed theintroduction of new devices, such as equipment inspections
by drones and the utilization of smart glasses and tabletsin the workplace. Data on plant operation is being used tobuild a SMART-FACTORY database and connect systems
with the aim of coordinating with SMART-OFFICE for
optimizing supply chains.
By utilizing such new technologies, we aim to prevent
accidents and other problems, and improve the efficiencyof routine operations, in addition to supplementing
people’s senses and judgment to realize a higher level ofstable plant operation.

Preventing accidents
and troubles

Accumulating
expertise

Optimal production

Tosoh (the contact company), MGC①Early process(DRC synthesis process)• Proactive response to environmental problems

Promotion of SMART-FACTORY

Development of technology for manufacturing functional plastic materials using CO2 as raw material

ROH③Late process(DPC synthesis process)• Chemical/product quality and safety assurance• Promotion of socially responsible sourcing• Occupational safety and health / Process safetyand disaster prevention• Highly energy- and resource-efficient production

Relevant
Materiality*1 RC Medium-term Plan 2023 (2021-2023)

Synthesis of Methanol from CO2
We are jointly developing a methanol synthesis process utilizing a separation membrane with Mitsubishi Chemical,
and MGC is handling catalyst optimization (only MGC) and development of reactor and process (jointly with Mitsubishi
Chemical Corporation). In the current initial phase, we are proceeding with acquisition of basic data using compact testing
equipment, and process evaluation and cost estimation based on simulations. In fiscal 2022, we created a membranereaction simulation model, and we have established an environment for proceeding with equipment design for bench testingscheduled for fiscal 2025.

Implementation
structure
Project duration

Strategic Points(FY2022)

Progress of KPIs in FY2022

Progress of Green Innovation Fund Projects

Project overview• Steady execution of the SMART-MGC DX promotion project. Promote the introduction of digital technology
through the two aspects of SMART-FACTORY aiming for stable plant operation and enhancement ofoperations, and SMART-OFFICE aimed at streamlining the supply chain.
• Implement a large-scale survey of all business partners concerning purchased materials. Promote building
environmentally friendly and safe supply chains through regular monitoring.
• Continuous improvements through companywide responsible care (RC) based on the RC Medium-term
Plan*1 and annual plans.

Imaging

Image analysis
systemInventory
management

Shipment

Electric Current

PC
Purchasing system

Project illustration

Environmental
safety system

Acoustics

Composition

Operationallog system

Logistics system

Temperature Actions

2-CP②Dehydrating agent
recycling process(2-CP recycling process)

51

MITSUBISHI GAS CHEMICAL COMPANY, INC.

2-PA

PhOH
H 2O
Blue Raw materials for the entire process
Red Products• Utilize latest IT• Link data from individual systems• Automate process of creating documents and plans• Generalize specialized work, optimize operations

Anomaly signdetection system

Production
management system

MGC Report 2023

52

Production and Environment

CSR Procurement
MGC has positioned improvement of the CSR level inareas such as the environment, labor conditions, andhuman rights throughout the entire supply chain, from raw
material procurement to manufacturing and sales, as oneof our management materiality priorities.
With the understanding and cooperation of ourbusiness partners, MGC shares its requirements throughthe “Basic Concepts Related to Raw Material Procurement
Activities” and “Mitsubishi Gas Chemical CSR Procurement
Guidelines” to promote CSR procurement.
In order to build a supply chain that complies with

Occupational Safety and Health /Process Safety and Disaster Prevention
Based on our Safety Philosophy that “ensuring safety is
the top priority of our business activities,” MGC formulated
Safety Principles and takes active measures to achieve
zero accidents and zero occupational injuries among both
MGC employees and the employees of our partners.
With regard to occupational health and safety, as wellas process safety and disaster prevention, each businesssite implements autonomous maintenance activities
under its own initiatives, and we are continuing companywide LINK safety activities commenced in fiscal 2021 tostrengthen and promote improvement activities.
LINK Activities are used to foster safety management
perspectives at a workplace level through case studies,with people in charge of safety practices in the workplace
serving as leaders.
Furthermore, although said activities were centered on
the manufacturing sector in the past, the scope has been
expanded to process safety and disaster prevention when

Quality Assurance andChemical Management
MGC promotes companywide quality assurance activities(Q-MGC) throughout supply chains under the MGC Group
Basic Policy on Quality in order to provide products andservices with a high level of safety and reliability.
In fiscal 2022, the quality assurance activity plan that
had been formulated for the entire company was also drawn
up in each division in an effort to deepen Q-MGC activities.
The MGC Group Quality Management Promotion Meeting
established to create a groupwide risk management systemshares Q-MGC through quality management promotion
meetings, quality personnel liaison meetings and quality
audits. Furthermore, we conducted support for the creationof safety data sheets (SDSs) and education and operational
support on security trade control for Group companies tocreate a chemical management and export control systemappropriate for the Group as a whole.
Going forward, we will actively proceed with theimplementation of IT and automation in operations through

53

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Please refer to the Sustainability website for details on CSR procurement.
https://www.mgc.co.jp/eng/csr/society/procurement.html

laws and regulations while taking environmental and safetyconcerns into account, with regard to important raw
materials we conduct surveys of our suppliers using the
CSR Procurement Self-Assessment Tool (SAQ) created by
the Supply Chain Working Group of the Global Compact
Network Japan. The survey began in fiscal 2020, and wehave received responses from 191 companies as of fiscal
2022. We have started asking our suppliers to respondto the SAQ when beginning new transactions, and we willcontinue to further promote CSR activities in the supply
chain in the future.
Please refer to the Sustainability website for details on the promotion
system and initiatives.
https://www.mgc.co.jp/eng/csr/society/safety/performance.html

conducting research and ensuring safety in construction,
filling and cargo handling work. Moreover, we are
implementing process risk assessments through HAZOP*2
in all plants to extract and identify risks. In addition, we
implement quantitative assessments according to the
MGC Group process safety and disaster prevention
guidelines. We also utilize RC audits of each plant alongwith environment and safety audits of Group companies
to assess the gap between the ideal level and the current
state, leading to the resolution of issues in an effort tocreate a positive spiral in the safety management system.
*2 An acronym for Hazard and Operability Studies, a technique for
identifying risks for complex processes and equipment

Proactive Response to Environmental Problems
MGC recognizes that curbing, and adapting to, climatechange, preserving biodiversity and other environmental
problems are important issues that have a significant
impact on business operations. At the same time, we
realize that they also represent business opportunities, andso here too we are engaged in a variety of activities aimed
at “creating value to share with society.”
MGC has established the target of reducing GHG
emissions by 28% from fiscal 2013 by fiscal 2023, as
it works toward achieving carbon neutrality by 2050.
Specific reduction measures include the promotion ofenergy-saving activities, discontinuing the use of heavy
oil in our in-house power generation facilities and boilers,
reducing the GHG emission factors of purchased power
and introducing renewable energy. Furthermore, to reduce
the environmental impact of business activities, we arepromoting the efficient use of resources such as energy,
raw materials, and water, and engaging in the reduction
and appropriate management and disposal of waste. In
addition, we are actively engaged in the development of
products and technology that reduce environmental impact
or help restore damaged ecosystems.
Progress of KPIs in FY2022

34%
reduction
GHG emissions (compared to fiscal
2013, non-consolidated)

We are steadily implementing
measures such as the introductionof renewable energy. In fiscal
2022, partial reconfiguration of
the business portfolio also had an
impact.

Progress of KPIs in FY2022

1

0

Seriousoccupational
accident

Seriousaccidents

The Serious occupational accident
is related to work, and we areengaged in displaying signs inhazardous areas in the workplaceand strengthening hazard
prediction before performing work.

Please refer to the Sustainability website for details.
Quality Assurance https://www.mgc.co.jp/eng/csr/society/safety/quality.html
Chemical Substance Management
https://www.mgc.co.jp/eng/csr/society/safety/initiatives.html

the introduction of previously implemented LIMS*3, theuse of a delivery specification database and an automated
SDS creation system, in addition to performing continuous
risk evaluation and management of MGC products throughsupport for domestic and overseas chemical management
laws and the use of a regional information-gatheringsystem.
*3 An acronym for Laboratory Information Management System

Quality Assurance Conference (management level)
Quality Assurance Supervisors Conference

Each division

D

P
Manufacturing Quality Assurance
Quality Control

Customerevaluations andexpectations

Q-MGC
Purchasing
andLogistics
Research andDevelopment

A
Quality Assurance
Supervisors Conference

Sales(Acquisition of ISO 9001
certification by each plant)

C
Quality audit

Introduction of Renewable Energy
MGC is promoting the introduction of renewable energy
by making lower emission factors than at present a
condition of purchases to reduce the GHG emission
factors of purchased power, and part of the electric powerpurchased by plants was switched to renewable energy
from fiscal 2022. The introduction of renewable energy
as 10% of purchased power by fiscal 2023 has been
established as a KPI in the RC Medium-term Plan 2023,
and we are proceeding with implementation.
Progress of KPIs in FY2022

19%
Renewable energy as a percentage
of electric power purchased(non-consolidated)

We introduced renewable energy
or effectively implemented the shift
to renewable energy through theutilization of non-fossil certificatesin three business sites. We reached
our target.

Reduction of Industrial Waste
MGC Group companies are working to reduce industrial
waste by encouraging the 3Rs (reduce, reuse and recycle),and by ensuring proper waste treatment in compliancewith laws and regulations.
The RC Medium-term Plan 2023 sets a target of
keeping MGC’s zero waste emission rate to 0.3% or lower.
We are proceeding with fractional recovery of waste andalso focusing on the reduction of waste from prototypes,
etc. We are endeavoring not to produce unintended wastecaused by operating anomalies through the continuation ofPlease refer to the Sustainability Data Book for environmental data.
https://www.mgc.co.jp/eng/csr/esg.html

stable operation of equipment in production sites.
MGC is also participating in the plastic recycling
business. Working with U.S.-based biochemical venture
Anellotech, Inc., R Plus Japan, Ltd., in which MGC has a
stake, is developing a low-environmental-impact, efficienttechnology for recycling used plastics.
Progress of KPIs in FY2022

0.25%
Zero waste emission rate(non-consolidated)

We reduced final disposal throughthe promotion of the 3Rs for waste
at each business site. We reached
our target.

Addressing Water Resource Risks
MGC uses large quantities of water, both as a raw
material for chemical products and for various otherpurposes, including steam heating and cooling in chemical
manufacturing processes, product refining and cleaning
containers.
To sustainably use water resources essential to
manufacturing chemicals, MGC manages a variety of risks.
Specifically, MGC monitors its actual water consumption
and uses water efficiently by measuring its withdrawal,
discharge, usage and recycling.
The RC Medium-term Plan 2023 sets a target of awater reuse rate of 95% or more to promote the effective
use of water resources. Furthermore, in order to facilitate
more efficient use, we are engaged in stable operation
by anticipating risks such as the occurrence of water
discharge due to sudden equipment stoppages.
To identify water risks, we conducted business sitehearings and document-based investigations at domestic
manufacturing sites, and document-based screeningsof overseas sites. Although no problematic risks werediscovered as a result, we will continue to conduct
investigations as needed in the future.

Biodiversity Conservation
To maintain a rich natural environment amenable toliving things, and to conserve biodiversity, MGC engages
in practices that contribute to greater biodiversity ineveryday life in each of our workplaces. These include
helping to maintain forest reserves around our plants
and a movement to plant flowers at our worksites, andparticipating in cleanup of rivers and harbors adjacent toour sites.
The establishment of a biotope is being planned at
the Niigata Plant. We will work with not only employees
but also residents and other groups active in the region,
with the aim of providing learning opportunities for greater
understanding of not only the nature but also the history
and culture of the region. We will continue to conduct
studies on the surrounding natural environment and livingorganisms to create a place facilitating the experience of
the appeal of biodiversity with local communities.

MGC Report 2023

54

Production and Environment

Response to Climate Change(Disclosure Based on TCFD Recommendations)

Please refer to the Sustainability Data Book for environmental data.
https://www.mgc.co.jp/eng/csr/esg.html

Evaluation Results (Scope: 65 Locations in Japan and Overseas)
Number of sites evaluated as highly hazardous
Baseline

Tackling climate change is a major challenge that calls
for initiatives on a global scale if we are to achieve asustainable society. MGC recognizes that solving energy
and climate change problems is an important challenge,
and is working to solve these issues from the perspectiveof both climate change mitigation and adaptation.
Specifically, MGC has formulated targets for reducing
Scope 1 and 2*4 GHG emissions and is working
toward their steady reduction. At the same time, MGC
is proactively disclosing information on Scope 3*5
GHG emissions and is taking action to reduce them incollaboration with its suppliers. MGC is also working to
improve energy efficiency and the carbon cycle of raw
materials, and to promote energy transition toward the goalof achieving a zero-carbon society by 2050. MGC will also
contribute to solving energy and climate change challenges
through business operations by deploying innovative
process technologies and factoring whole-lifecycle GHG
emissions into its design and development processes.
In May 2019, MGC also declared its support for the
Task Force on Climate-related Financial Disclosures (TCFD).
MGC has assessed the risks and opportunities climatechange represents for the Group, and is now endeavoring

to strengthen resilience through scenario analysis while
also engaging in sound dialogue with stakeholders. In
fiscal 2022, we implemented new scenario analysis on the
optical materials and oxygen absorbers businesses.
In March 2021, MGC announced a new objective forachieving carbon neutrality by 2050 with the goal of limiting
the increase in average temperature to below 2°C, andexpanded the scope to the entire Group in March 2022.
MGC encourages the development of energy systems
to achieve carbon neutrality, while aiming to expand therange of products conducive to carbon neutrality.
*4 Scope 1 emissions are GHG emissions directly generated by MGC;
Scope 2 emissions are indirect GHG emissions associated with useof energy (mainly electric power) purchased from external suppliers*5 Scope 3 emissions are indirect GHG emissions generated insupply chains through organizational activities such as raw material
sourcing, manufacturing, distribution, sales, and waste disposal

Long-Term GHG Emission Reduction Objectives ofthe MGC Group
2030

Reduce by 36% compared to 2013
2050

Achieve carbon neutrality

2°C scenario

4°C scenario

Mid-century

End of century

Mid-century

End of century

Flood risk

2

2

2

2

3

Storm surge risk

0

1*6

1*6

1

1

Drought risk

0

1

1

1

2

*6 Substituted with forecasts based on RCP 4.5 due to constraints on external information

Policies and Initiatives Going Forward
Based on these results, we will conduct a more detailed analysis on the sites evaluated as highly hazardous, and also
strengthen BCP, while proceeding with measures such as developing multiple manufacturing sites, buildup of inventory, andreduction of equipment stoppage risk.
Newly Implemented Scenario Analysis (Fiscal 2022)

Transition Risks and Opportunities
Assumptions behind Scenario Analysis• Evaluation points: 2030, 2050
• Scenario: Increased temperature
Main external information referred to in decarbonization scenario (below 2°C)
—IEA WEO 2021 SDS (World gradually reducing emissions to keep global increase in average temperature to less than 1.5°C)—SSP1 (Rapid development progressing on low-income countries, global economic inequality being resolved, and technological development
advancing rapidly)
Main external information referred to in baseline scenario (4°C)—IEA WEO 2021 STEPS (World in which average temperature increases by approximately 2.6°C in around 2100 due to course of emissions
according to plans announced by each country at present)—SSP2 (Growth anticipated to between that of SSP3 – with little international cooperation, little investment in technological development, and slow
economic growth – and that of SSP1 scenario of decarbonization)• Analysis scope: Optical materials and oxygen absorbers businesses• Conduct quantitative assessment of financial impact of risks and opportunities in existing business portfolio and draft response strategy

Evaluation Results
Risks and Opportunities (■ Risks ●Opportunities)

MGC’s Roadmap toward Its Ultimate Goal of Carbon Neutrality by 2050 (Non-consolidated)
Scope

1
Main initiatives(CO2 reduction)

2020–2023

2013–2019•Improve energy efficiency•Reconfigure businessportfolio
258 kt in total

2023 targets
23%
reduction 28% reduction258

2031–2050•Reconfigure business portfolio•Deploy new energy systems/CCUS, switch feedstocks (R&D/collaboration) 610 kt in total•Source 10% of energy
from renewables•Use transitional energy̶22024–2030•Improve energy efficiency 16 kt •Improve energy efficiency 28 kt •Improve energy efficiency 40 kt
13 kt•Stop using heavy oil

14 kt
10 kt

•Source 50% of energy
from renewables

2030 targets
36% reduction

55 kt•Source 100% of energy
from renewables
69 kt

2050 Achievecarbon neutrality

308
394

CO2 emissions

45% reduction 502(kt/year)

Risks andopportunities indecarbonization
scenario● Increased demand for high-value-added products due to higheconomic growth compared to the baseline scenario● Increased functionality of electronic devices● Changes in food culture such as the use of meat alternatives using
plant-based materials■ Strict regulations such as decarbonization● Significant increase in population compared to the decarbonization
scenario■● Decrease in agricultural land area and decrease in production due toRisks and
progress of warming
opportunities inbaseline scenario ■ Low economic growth compared to the decarbonization scenario due
to lack of international cooperation and inhibition of technologicaldevelopment■ Increased fossil fuel prices

Main Initiatives• Expansion of product lineup supporting high-valueadded products• Expansion of research and development, andimplementation of cross-value innovation• Reduction of weight through development of highly
refractive products• Acceleration of market development in emerging
countries• Acceleration of market development in long-term
food storage applications• Expansion of research and development, andimplementation of cross-value innovation• Reduction of size and weight of products, adoptionof environmentally friendly materials

Please refer to Corporate Report 2021 for details on scenario analysis of the hydrogen peroxide and MX-Nylon businesses implemented in fiscal 2020,
and MGC Report 2022 for details on scenario analysis of the polycarbonate and MXDA businesses implemented in fiscal 2021.
Corporate Report 2021 https://www.mgc.co.jp/eng/ir/files/MGC_eCorporateReport2021.pdf
MGC Report 2022
https://www.mgc.co.jp/eng/ir/files/MGC_Report2022e.pdf

Climate Change Risk Governance and Risk Management
1107
849

2013
Baseline

2019
Results

799

2023

714

55% reduction 610

2030

2050

Physical Risks: Impact on Business Sites Due to Increased Severity of Climate Damage (Flooding, Storm Surge, Drought)
Assumptions behind Scenario Analysis• Evaluation points: Mid-century and end of century• Scenario: Temperature rise (4°C: Continuation of current oil and coal-dependent economic activity; 2°C: Advance climate change countermeasures)• Analysis subjects: 11 MGC sites; 34 domestic Group company sites; 20 overseas Group company sites• We assessed flood, storm surge and drought hazards on five levels against current level (baseline), and confirmed number of sites where hazard levelis highest at middle and end of century when applying 2°C and 4°C scenarios• External reference information: Flood Hazard Map, WRI Aqueduct Floods, JRC Flood Hazard Map for World, WRI Water Risk Atlas, IPCC AR5, etc.

55

MITSUBISHI GAS CHEMICAL COMPANY, INC.

MGC deliberates and makes decisions on addressing
climate change risk and other sustainability key issues
in the Sustainability Promotion Council, chaired by the
President and primarily made up of all directors, including
outside directors, with Audit & Supervisory Board members
also attending. Important matters deliberated upon in the
Sustainability Promotion Council are decided by the Boardof Directors. The participation of corporate sector heads
in the Sustainability Promotion Committee, an advisory
body to the Sustainability Promotion Council, ensures key
sustainability issues are adequately considered.
To develop a response to climate change, MGC hasestablished the Carbon Neutrality Promotion TechnicalCommittee, a sustainability promotion expert committee, as
an advisory body to the Sustainability Promotion Committee.
As the administrative office for dealing with TCFD and CDP

disclosures, the Carbon Neutrality Promotion TechnicalCommittee promotes cross-business initiatives.
Long-term objectives for reducing GHG emissions havebeen incorporated in the Medium-Term Management Planand materiality, with management taking a leading role intheir implementation.
To gain a quantitative understanding of climate changerisks, in April 2021 MGC introduced an internal carbon
pricing system. In capital investment plans involving an
increase or decrease in CO2 emissions, the cost or effect ofapplying and converting the internal carbon price (10,000
yen/Mt-CO2 equivalent) will be used to help make investment
decisions, and encourage the creation of technologies
and products that promote CO2 emission reductions andcontribute to building a low-carbon society.
MGC Report 2023

56

Human Capital (Human Resources and Organization)• Cultivating a corporate culture of job satisfaction• Promotion of diversity and inclusion

Basic Approach
The MGC Group’s defining philosophy is “creating value toshare with society,” and the management concept includes“striving to create a place where there is job satisfaction
and a dynamic group in which motivations and abilities arerespected.” To realize this, Group companies are engaged
in the establishment and expansion of systems, along witheducation, etc.

Personnel System
The personnel system is characterized by individual
management based on the aptitudes, skills and goalsof each person, with an emphasis on human resource

development. Specifically, this is made up of threecomponents: a multi-stream vocation qualification grading
system, an evaluation system, and a wage system
clearly linked to these. We support all employees equally,
providing them with a range of career opportunities in linewith individual aspirations that meet their individual roles,
achievements, and capabilities.

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MITSUBISHI GAS CHEMICAL COMPANY, INC.

Managerial level• Organizational management training
Manager level• Mid-level manager training• New manager training• Manager candidate training• Mid-level employee training
5th year• Course selector training

2nd year• Junior employee training• New employee follow-up training
When joining the Company• New employee training• Logical communication• Problem-solving skills• Negotiation strategy• Facilitation• Coaching skills• Design thinking• Global human resource development training• Overseas short-term training• Technology networking events(production, research and engineering
departments)• Patent study sessions(research promotion departments)• Marketing education(research promotion departments)• DX education(research promotion departments)• Placements at research institutions,such as universities• Safety and environmental management
education (environment and safety
departments)• Quality management education(quality assurance departments)• Other specialized education andin-house seminars

the promotion of the assignment of personnel according
to individual skills. We are also engaged in strengthening
human resource development through such means asimproving education and training, and stimulating humanresource exchanges inside and outside the Company.
Furthermore, we are endeavoring to improve themanagement skills of managers such as by stimulating
dialogue between managers and their subordinates,
enhancing periodic interviews, and providing support for
the enhancement of managers’ personnel evaluation skills.

Concept of Personnel System• Classification according torole expectations and future
vision• Ranking according toability to execute duties
Grading

Education and Training

System
Evaluation
System• Evaluation of not only
results, but also motivationand processes• Also utilized to determine
direction and meansof development

Wage
System• Focused treatment
according to grade andevaluation systems

Cultivating a Corporate Culture of Job Satisfaction
MGC has identified “cultivating a corporate culture ofjob satisfaction” as a material priority, and our mediumto long-term goal is to enable each employee to utilize
diverse and flexible work styles, in addition to providing
opportunities and environments enabling them to refine
their individuality and capabilities and extend theirstrengths, making a highly productive organization.
Job satisfaction could be viewed as a state in which
satisfactory effects and rewards can be acquired throughworking. Said effects and rewards include a variety ofcomponents, such as monetary compensation, sense

General manager levelJob-specific education and training

Self-development, otherSelf-development• Language qualifications and language
training (includes English, other languages,
and theme-specific training)• Business skills and management• Finance, accounting, tax, and law• Basic chemistry• Basic safety technology• Other online training

Other• Compliance and internal control education• D&I promotion education• Education raising awareness for humanrights• Sustainability education

Note: The years for taking grade-specific education and training are in the case of technical employees (with a Master’s degree) for reference

Human Resource Development
Our people are our most important asset. With the aim ofrealizing our defining philosophy of “creating value to sharewith society,” we have established a human resource
development basic policy to enable employees to refine
their individuality as professionals, improve their knowledge
and capabilities and set high goals, and also to create
workplaces that are infused with vibrancy for realizing
self-improvement through the achievement of these. The
human resource vision articulated in the policy is to be“autonomous and highly-motivated employees,” “warmhearted and sensitive employees” and “employees thatthink and learn through work,” and we have established“development leveraging the characteristics of all
employees” as our development policy as we engage in theestablishment of a company environment enabling diverse
employees to participate by utilizing their individuality.

Grade-specific education and training

Mid-level
employees

Relevant
Materiality

MGC Education System

Junioremployees

Strategic Points(FY2022)• Establishment and expansion of systems enabling diverse and flexible work styles• Examination of wage curve, and consideration of reviewing criteria for promotions and wage increases• Consideration aimed at overhaul of education and training system, consideration of new training
curriculum with a view to the next generation• Establishment of the MGC Commons innovation center for realizing human resource development andhuman resource exchanges (starting operation in October 2023)• Planned strengthening of personnel system aimed at improvement of research and development (career
recruitment, expansion of recruitment of new graduates)• Further diversification and improvement of measures to maintain and improve health based on the MGC
Basic Policy on Health & Productivity Managementof achievement at work, feeling of personal growth,recognition from surrounding people, and a sense ofcontributing to organization, and what factors lead to job
satisfaction thus depends on the person. For this reason,
we believe it is important to perform appropriate humanresource management with an adequate understanding ofwhat constitutes the job satisfaction of each employee.
Based on these, we foster the independent careerdevelopment of each employee through measures suchas the implementation of career interviews discussing
medium- to long-term career formation with superiors, andIn order to achieve MGC’s defining philosophy, we are
implementing various education measures based on goals
with the aim of conducting human resource development
for utilizing the individuality of all employees and enabling
diverse participation.
In fiscal 2022, we introduced new programs related toorganizational management for newly appointed managerial
personnel, performance assessor training with a focus
on development of subordinates, problem resolution andcoaching skills. In addition, we are promoting the skill
development and stimulation of motivation of all employees
by expanding the lineup such as introducing career design
training for specific groups including new employees andfemale employees. Furthermore, we are increasing theeffectiveness of learning by expanding access, such asexternal training for the development of management
personnel, dispatching participants to cross-industry social
events and holding training with Group companies, inaddition to focusing on increasing quality of the MGC Group.

employees can choose their work locations and hours
through the introduction of working from home and flextime
without core hours in order to enable work styles that are
diverse, flexible and do not rely on long work hours.
At the same time, we are promoting the improvementof efficiency as well as the digitalization of operations, andhave confirmed the effect of reducing working hours andlevel of establishment of measures. In light of this, we havebeen engaged in the reduction of total labor time and theimprovement of productivity.
In terms of work-life balance, MGC also endeavors
to create an environment in which each employee canfeel secure and motivated by their work, taking an activerole over the long term in ways befitting their individual
circumstances. MGC’s percentage of taking annual paid
leave is around 80 to 85 percent every year, and in order
to raise employees’ awareness of taking annual paid leave,
we have established a KPI to measure the percentageof employees taking fewer than 10 days of annual paid
leave, and are aiming for 0% in fiscal 2023. To achievethis, we are taking the following steps to foster employee
awareness and establish an accommodating workplaceenvironment.
• Renewal of definition and message of taking annual leave,and communication through organizational channels• Strengthening of awareness-raising activities (publicationof internal quarterly newsletter “WORK LIFE THINK” anddisplay of posters)• Promotion of taking consecutive leave in summer• Establishing a day for encouraging taking annual leave• Individual announcement to managers and other
employees taking few days of leave

Promotion of Work Style Reforms
MGC promotes work style reforms as an initiative
essential for improving both employee job satisfaction andproductivity, and for the creation of innovation. Until now,
we have implemented initiatives such as the reductionof working hours by reviewing workflow and shortening
meeting times, and the creation of environments where

Progress of KPIs in FY2022

4.0%
Percentage taking fewer than 10days of annual paid leave(non-consolidated)

We are implementing multi-layered
measures such as awarenessraising activities and individual
action with the aim of improving
job satisfaction and productivity
through “active resting.”

MGC Report 2023

58

Human Capital (Human Resources and Organization)

Ratio of Taking Annual Paid Leave

ワーク・ライフ・シンク

magazine

特集

ワ ー ク と ラ イ フ を、 考 え る。

80

86.9

83.8

79.4

77.6

01

Sep.2022

(%)
100

80.9

Quarterly internal newsletter

Promotion of Diversity and Inclusion

みんなの働き方、
みんなの休み方85.4

Message from D&I Promotion Officer

60

Aiming to Be a Company Where Everyone Can Work Vibrantly

40
20
0
2017

2018

2019

2020

2021

2022

(FY)

Display of posters

Ratio of Males Taking Parental Leave(Non-consolidated)
(%)
60

51.1
40

31.3

20
0

14.8
0.0

3.1

2018

2019

2020

2021

2022

(FY)

Improvement of Benefits for a Wide Rangeof Generations
We are proceeding to review our personnel system with theaim of enabling all employees to participate more vibrantly.
In fiscal 2022, we implemented improvements tobenefits particularly for junior employees and reemployedretired employees, such as raising base pay for all
employees. Additionally, we are considering implementationof improvement of benefits contributing to activity byjunior employees. For reemployed retired employees, we
implemented improvement of benefits such as adding
performance-based incentives, with the expectation ofactivity by a wide range of generations.

COLUMN

MGC has set targets for the percentage of males taking
parental leave to be 40% or higher in fiscal 2023 and 80% or
higher in fiscal 2030 and is promoting taking of leave due to thepositive impact on employees and their families and increasing
job satisfaction. As a result, the percentage of males taking
parental leave was 51.1% and the average period of leave
taken was approximately one month. Furthermore, to createa culture that supports the balance of work and family life
throughout the entire workplace, we are engaged in expansionof pamphlets, etc. introducing systems and activities to raiseawareness of taking parental leave among all employees.

Revitalization of Organizations
MGC is implementing a variety of measures to create
revitalized organizations, enabling each employee tovibrantly and independently work toward the execution of
the organization’s goals. Specifically, we are promoting job
rotation conscious of medium- to long-term career building
and assignment of personnel according to their skills,
leading to the improvement of organizational skills. We areengaged in the creation of a human resource management
system for all employees, and are proceeding with thevisualization of human resource information.
In addition, we will conduct facilitation skill training for
promoting the revitalization of organizations, stress checkgroup analysis for improving the workplace environment,
and activities to foster D&I awareness for respecting each
employee.

Utilization of Employee Awareness Surveys

We conducted an employee awareness survey in July 2021 to investigate employees’
thoughts and feelings on satisfaction working at MGC, job satisfaction, and the status of
their workplace/work to facilitate the creation of a friendly working environment offering
job satisfaction. Based on the survey results, we are conducting analyses of the statusof employees and the workplace, and proceeding with effective initiatives.
Going forward, we will conduct periodic surveys, and utilize them in measures forfurther enhancing the fulfillment and satisfaction of employees.

59

Emiko Yokose

Promotion of Males Taking Parental Leave

COLUMNMITSUBISHI GAS CHEMICAL COMPANY, INC.

75%
Satisfied or somewhat satisfied
working at the Company

80%
Want or somewhat want to continue
working at the Company
Note: The subjects were all employees of
MGC (non-consolidated), excluding thoselent to subsidiaries (effective replies:
71.9%).

Manager,
D&I Promotion Department,
Administrative & Personnel Division

I have served as the D&I Promotion Officer since the Diversity Promotion Office was initiallyestablished within the Personnel Department in August 2019. In 2019, many companies
perceived D&I promotion to be the promotion of activities of certain people such as women,
foreign nationals and people with disabilities, but MGC believes it is important to utilize theindividuality and diverse thinking, experiences and skills of each employee, and began D&I
Promotion Activities in June 2020 as an initiative for promoting the activities of all employees
including work style reforms, human resource development and promotion of health. Initially,
it was commented that there were too many “activities for something,” but the activities have
now gained understanding, and it feels like employees’ awareness of work styles has graduallychanged, such as progress being made particularly with taking annual paid leave and males
taking parental leave. Going forward, we would like to work on a variety of new initiatives toenable all people to work vibrantly in MGC.

MGC defines diversity and inclusion (D&I) as all employees
utilizing their individuality to diversely work together while
recognizing one another and promotes D&I aimed atbalancing the sustained growth of organizations and theself-actualization of individual employees.

Vision for D&I Promotion Activities
By promoting D&I, we are engaged in maximizing theperformance of people and organizations throughactivities, in which diverse human resources fully exhibit
their skills, and engendering innovation and improving
decision-making quality through collaboration among
human resources with diverse values, approaches, views
and knowledge. Furthermore, by promoting not only
diversification of human resources, but also work stylereforms, human resource development and health together
as one, we aim to foster a culture of diversity and inclusion
utilizing the individuality of all employees with the aim ofresolving management issues in step with changes insociety. Initiatives aimed at the realization of the envisaged

COLUMN

organizational culture lead to the materiality of “cultivating a
corporate culture of job satisfaction.”

D&I Promotion Initiatives
The “Diversity and Inclusion Basic Policy” was formulated in
2020, and companywide diversity and inclusion promotion
activities based on the basic policy began. Throughthese activities, we selected fostering awareness, raisingawareness for human rights, work style reforms, women’s

Networking event for female employees

Initiatives Aimed at Promoting Women’s Empowerment

Promotion of women’s empowerment is considered to be essential to be a company able to achieve sustained growth, andwe are proceeding with career development support for female employees such as various training for female employees
and the managers handling their development. Furthermore,
Number and Percentage of
we are actively hiring women and also working to improve
Female Managerial Personnel
accommodating environments and systems for female(Number)(%)
40
4.0
employees.
The current number and percentage of female managerial30
3.0
personnel is steadily increasing, such as almost doubling20
2.0
compared to fiscal 2018. Furthermore, in contrast to the10
1.0
percentage of female managerial personnel (general managers,
managers) which lies at 3.3%, the percentage of female0
0.0
assistant managers who are potential managerial personnel is
2018
2019
2020
2021
2022
(FY)
approximately 15%, and the percentage of female managerial
Number of female managerial personnel (left axis)
Percentage of female managerial personnel (right axis)
personnel is expected to increase in the future. Although
Note: The percentage of female employees in personnel being promoted tothere is a difference in the average wages of men and womenmanagerial positions in the past five years excluding those lent to subsidiaries
throughout the Company as a whole, this is mainly due tois 8.9%, and the average age at the time of promotion is the same for men
and women.
a difference in the distribution of grades, and there is nodifference in wages for the same work.

MGC Report 2023

60

Human Capital (Human Resources and Organization)

empowerment, diversification of human resources,
organization development, human resource development,
promotion of health, and disease prevention as the nine
items required for the realization of D&I, establishedchallenges and targets for each initiative, and implemented
specific measures to those ends.
In fiscal 2022, we held a D&I lecture meeting forthe purpose of promoting understanding and fosteringawareness of D&I. As initiatives for promoting theimportant theme within D&I of women’s empowerment,
we conducted training under the themes of “leadershiptraining for women,” “training for balancing childcare andcareer” and “diversity management training for managers.”
Furthermore, networking events for female employees areheld for the purpose of identifying issues for the creation of
networks of female employees spanning workplaces andthe creation of accommodating workplaces for women.

Company Achieving sustained organizational growth
Individuals Self-actualization

Nations Global Compact (UNGC), and was registered asa participating company. With the signing of the UNGC,
we indicated our will to promote responsible businesspractices by ensuring our strategy and execution conformwith the ten UNGC principles*3 on “protection of humanrights,” “elimination of unjust labor,” “support for theenvironment” and “anticorruption.”
We strive to reinforce these principles on a day-to-day
basis through training sessions, internal communications,and Human Rights Week, and have also established a
special consultation desk. Furthermore, we are engaged
in the improvement of knowledge and the collection of
information through membership in the Mitsubishi Human
Rights Enlightenment Council and through participating ina variety of training and informationexchange meetings on humanrights. In addition, in fiscal 2022, weorganized human rights risks in key
value chains and selected significant
human rights issues as preparation for
the implementation of human rights
due diligence compliant with the UN
Guiding Principles on Business and Human Rights.
*2 (i) Freedom of association and the right to collective bargaining,(ii) elimination of forced labor, (iii) effective abolition of child labor,(iv) elimination of discrimination in respect of employment andoccupation, and (v) safe and healthy working environment*3 The Ten Principles of the UN Global Compact (external website)
https://www.unglobalcompact.org/what-is-gc/mission/principles

Growth strategy
Creation of innovation

Promoting Health Management

Autonomous human resource development

Envisaged organizational culture
Culture of diversity and inclusion utilizing the individuality of all employees
Diversity and Inclusion Basic Policy (foundation)
Promoting awarenessabout respect for diverse
values and waysof thinking

Creating an environmentthat ensures diverse
work styles

Diversifying humanresources and creationof an organizationthat makes the most ofeach and every employee

Developing humanresources able todemonstrate individual
strengths

Promoting mental
and physical health

Fiscal 2022 D&I Promotion Activity Plan
Basic Policy
Promoting awareness about respectfor diverse values and ways ofthinking

Creating an environment that
ensures diverse work styles

Diversifying human resources andcreation of an organization thatmakes the most of each and every
employee
Developing human resources able todemonstrate individual strengths

Promoting mental and physicalhealth (health management)

Item Promoted

Challenges and Targets

Fostering awareness• Improvement of understanding of promotion of diversity and inclusion (D&I)
within the Company• Improvement of awareness of D&I throughout the entire MGC Group

Raising awareness for humanrights• Promotion of human rights awareness activities• Strengthening of measures to prevent harassment

Work style reforms• Reduction of total working hours and improvement of productivity• Enhancement of systems enabling diverse and flexible work styles• Improvement of safety net

Women’s empowerment• Promotion of career development support for female employees• Promotion of support for balancing work and home life

Diversification of humanresources• Promotion of hiring of foreign human resources• Diversification of hiring formats• Promotion of more opportunities to people with disabilities

Development of organizations
and human resources*1• Improvement of organizational performance• Promotion of development of human resources able to exhibit theirindividual strengths

Promotion of health(improvement of nutrition,
exercise and rest)• Improvement of health awareness and knowledge• Establishment of exercise habits

Disease prevention• Enhancement of measures to address lifestyle diseases• Promotion of measures to address mental health

MGC made a renewed declaration that “health of working
colleagues and family members is more important
than anything else” to further promote the creation ofan environment in which employees can work in good
physical and mental health, and established the Basic
Policy on Health & Productivity Management in October
2022 for the purpose of instilling awareness that healthand productivity management is a companywide activity.
Based on this policy, we are further diversifying, expanding
and improving the effectiveness of measures to maintainand improve health with the aim of realizing “cultivating a
corporate culture of job satisfaction.”
The checkup compliance rate for regular healthcheckups of all officers and employees was over 99% in
fiscal 2022; industrial physicians and public health nurses
actively provide guidance when the results of tests indicate
the need for retesting or in the event that there are any
specific findings.
Health promotion activities include each businesssite holding various sports classes and health seminars,
participation in walking events and health programs hosted
by local governments, abolishing smoking areas andestablishing days banning smoking during working hours.
The comprehensive Employee Assistance Program(EAP), including a stress check, is implemented to ensure
mental well-being, providing employees with an environment
in which they can freely consult outside specialists regarding
their concerns. Furthermore, we endeavor to continuously
improve our workplace environment and raise employee

awareness by providing appropriate feedback of Groupanalysis results of the stress checks to each organization
head, and holding workshops on self-care and line care(consulting with managers and supervisors) at each businesssite and through e-learning, as well as by implementing
mental health training at the time of entry into the Company
and when a promotion is earned.
In recognition of the initiatives implemented to date,
MGC was certified as a Health & Productivity Management
Outstanding Organization (large enterprise category) by theJapan Health Council and the Ministry of Economy, Tradeand Industry in fiscal 2022 for the fourth successive year.

Ensuring the Safety of, and Providing Medical Support
for, Employees Traveling or Posted Overseas
By engaging an outside consultant for security and medical
assistance, and receiving advice based on analysis ofthreats to safety by country, we are able to promptly
acquire accurate information, and, when necessary,
provide that information to employees posted, or travelingon business, overseas, as well as using it to determine
whether it is advisable to travel or not, and on appropriate
safety measures for travel.
In terms of medical care, we have established acomprehensive support system for employees posted, or
traveling on business, overseas, including referrals to local
hospitals, telephonic consultations with doctors in Japanese,preventive advice on local infectious diseases, andarrangement of medical transport in case of emergencies.

Union and Labor-Management Relations*1 Related to the two basic policies of “creating organizations” and “developing human resources”

Respect for Human Rights
At our Company, we adhere to strict MGC Corporate
Behavior Principles and the MGC Group Code of Conduct,
which call for us to respect individual personality andhuman rights, while not discriminating on the basis ofrace, gender, nationality, age, religion, or place of origin,
as well as not harming the dignity of others. Our Code61

MITSUBISHI GAS CHEMICAL COMPANY, INC.

of Conduct also stipulates that sexual harassment andpower harassment are prohibited. These guidelines andcodes – along with the five fundamental principles*2 ofthe International Labor Organization (ILO) – have also
been communicated to our Group companies overseas.
Furthermore, in April 2020, MGC signed the United

Under a positive relationship of mutual trust and respect,labor and management at MGC work together to addressa variety of issues. We hold regular management council
meetings with the aim of sharing our understanding ofmanagement policies and the business environment,
including such key topics as work styles, employee
benefits, and treatment, and meetings of the Personnel
System Review Committee for joint labor-management
discussion of various programs throughout the year.

Together, we have revised the personnel system, thereemployment system, and our retirement plans. Other
issues such as wages and bonuses are determinedthrough yearly collective bargaining and administrativenegotiations.
Note that there were 1,888 labor union members asof the end of March 2023. Average employee tenure was
18.7 years (19.1 years for men, 14.5 years for women)*4.
*4 Including employees seconded to subsidiaries

MGC Report 2023

62

Members of the Board of Directors and Audit & Supervisory Board(As of June 30, 2023)

Directors

Toshikiyo Kurai

Masashi Fujii

Nobuhisa Ariyoshi

Representative Director, Chairman

Representative Director, President

Representative Director, Senior Managing Executive Officer
In charge of internal control & risk management,
Administrative & Personnel Division, Finance & Accounting
Division, Information Systems Division and Purchasing &Logistics Division

Attendance of Board of Directors Meetings: 12/12 (FY2022)

Attendance of Board of Directors Meetings: 12/12 (FY2022)

Attendance of Board of Directors Meetings: 12/12 (FY2022)

April 1975
June 2009

Joined MGC
Director, Managing Executive Officer, andPresident of Specialty Chemicals Company
Representative Director, Senior Managing
Executive Officer, Assistant to President, andPresident of Specialty Chemicals Company
President and Representative Director
Chairman and Representative Director(to present)

April 1981
April 2015

April 1984
April 2016

Reason for election: Following his service in important
positions, mainly in the Specialty Chemicals Department,
and his presiding over R&D, manufacturing and generalbusiness in the Inorganic Chemicals Division and theEngineering Plastics Division, he was appointed as Director
in June 2009, and served from June 2013 to March 2019as President and Representative Director, has served from
April 2019 as Chairman and Representative Director, andhas abundant experience and knowledge of MGC’s businessand management control as a whole.

April 2019

June 2012

June 2013
April 2019

June 2015

Joined MGC
Managing Executive Officer, Administrative
Management of LNG Project Team, andPresident of Natural Gas Chemicals
Company
Director, Managing Executive Officer,
Administrative Management of LNG
Project Team, and President of Natural Gas
Chemicals Company
President and Representative Director(to present)

Reason for election: Following his service in important
positions in the Administrative & Personnel and Natural Gas
Chemicals Departments, he was appointed as Director in
June 2015 and presided over the Natural Gas Chemicals
Department, has served from April 2019 as President andRepresentative Director, and has abundant experienceand knowledge of MGC’s business and administration ofmanagement, etc.

June 2018

April 2019

April 2020

April 2022

Joined MGC
Executive Officer, General Manager,
Electronic Materials Division
Director, Managing Executive Officer, incharge of Finance & Accounting Center,
Information Systems Division, andPurchasing & Logistics Center
Director, Managing Executive Officer, Chairmanof Internal Control Promotion Committee, incharge of Compliance, Risk Management,Internal Audit Division, Corporate Planning
Division, Administrative & Personnel Centerand Corporate Communications Division,
General Manager of Tokyo Techno Park
Director, Managing Executive Officer, incharge of internal control & risk management,
Corporate Management Sector
Representative Director, Senior Managing
Executive Officer (to present)

Reason for election: Following his engagement mainlyin the Information & Advanced Materials and Specialty
Chemicals Departments, he served in important positions in
the Administrative & Personnel and Information & Advanced
Materials Departments, was appointed as Director in
June 2018, was in charge of the Corporate Management
Sector and Compliance, and has abundant experienceand knowledge of MGC’s business and administration ofmanagement, etc.

Governance Section
64

Members of the Board of Directors andAudit & Supervisory Board

Naruyuki Nagaoka

Motoyasu Kitagawa

Ryozo Yamaguchi

67

Outside Directors Roundtable Talk

71

Corporate GovernanceDirector, Managing Executive Officer
In charge of Basic Chemicals Business Sector

Director, Managing Executive Officer
In charge of Compliance, responsible for Corporate Planning,in charge of Internal Audit Division, CSR & IR Division

Director, Managing Executive Officer
In charge of Specialty Chemicals Business Sector

76

Risk Management

Attendance of Board of Directors Meetings: 12/12 (FY2022)

Attendance of Board of Directors Meetings: 12/12 (FY2022)

Attendance of Board of Directors Meetings: 9/9 (FY2022)

Compliance

April 1985
April 2017

April 1986
April 2019

April 1988
April 2020

77

June 2019

June 2020

April 2021

Joined MGC
Executive Officer, Manager, Corporate
Planning Division
Managing Executive Officer, in chargeof Corporate Planning and Purchasing &Logistic Center
Director, Managing Executive Officer, incharge of Compliance and Corporate
Planning Sector
Director, Managing Executive Officer, incharge of Basic Chemicals Business Sector(to present)

Reason for election: Following his engagement mainly in the
Natural Gas Chemicals Department and the Administrative& Personnel, he served in important positions in the Natural
Gas Chemicals Department and the Corporate Planning
Division, was appointed as Director in June 2020, and hasabundant experience and knowledge of MGC’s business andadministration of management, etc.

63

MITSUBISHI GAS CHEMICAL COMPANY, INC.

June 2019
April 2021

June 2021

Joined MGC
Executive Officer, General Manager, Organic
Chemicals Division, Natural Gas Chemicals
Company
Executive Officer, Manager, Corporate
Planning Division
Managing Executive Officer, in charge ofCompliance, responsible for Corporate
Planning, in charge of Internal Audit Division,
CSR & IR Division (to present)
Director (to present)

Reason for election: Following his engagement mainly in
the Administrative & Personnel Department and Corporate
Planning Division, he served in important positions in the
Natural Gas Chemicals Department and Corporate Planning
Division, was appointed as Director in June 2021, and hasabundant experience and knowledge of MGC’s business andadministration of management, etc.

April 2021
April 2022

June 2022

Joined MGC
Executive Officer, Manager, Administrative &Personnel Division, Corporate Management
SectorExecutive Officer, in charge of Administrative& Personnel Division
Managing Executive Officer, in charge ofSpecialty Chemicals Business Sector(to present)
Director (to present)

Reason for election: Following his engagement mainly in
the Specialty Chemicals and Administrative & Personnel
Departments, he served in important positions in the
Administrative & Personnel Department, was appointed
as Director in June 2022, and has abundant experienceand knowledge of MGC’s business and administration ofmanagement, etc.

MGC Report 2023

64

Members of the Board of Directors and Audit & Supervisory Board

Audit & Supervisory Board Members

Ko KedoYoshinori Isahaya

Haruko Hirose

Masamichi Mizukami

Masato Inari

Go Watanabe

Yasuomi Matsuyama

Director, Managing Executive Officer
Responsible for Production Technology,
in charge of Environment Safety and Quality
Assurance Division

Director, Managing Executive Officer
Responsible for Research & Development,in charge of Intellectual Infrastructure

Outside Director Independent

Audit & Supervisory Board Member

Audit & Supervisory Board Member

Outside Audit & Supervisory Board Member

Attendance of Audit & Supervisory
Board Meetings: 14/14 (FY2022)

Independent

Outside Audit & Supervisory Board Member,Part-time Independent

Attendance of Audit & Supervisory
Board Meetings: 9/9 (FY2022)

Attendance of Audit & Supervisory
Board Meetings: 14/14 (FY2022)

April 1988
April 2015

April 1991
April 2019

April 1985
Joined MGC
June 2017
Director, Managing Executive Officer,
President of Aromatic Chemicals
Company
April 2019
Director, Managing Executive Officer, incharge of Production Technology Division,
Environment Safety and Quality Assurance
Division
April 2020
Director, Managing Executive Officer,
in charge of Internal Audit Division,
Environment & Total Production Sector
April 2022
Representative Director, Senior Managing
Executive Officer, responsible for Production
Technology, in charge of Environment Safety
and Quality Assurance Division, Purchasing& Logistics Division
April 2023
Director
June 2023
Audit & Supervisory Board Member(to present)

April 1982
Joined The Mitsubishi Bank, Ltd.
June 2009
Executive Officer of The Bank ofTokyo-Mitsubishi UFJ, Ltd. (BTMU)May 2012
Managing Executive Officer, Group Head,
Nagoya Corporate Banking Group of BTMU
June 2013
Managing Executive Officer, Chief Executive
Officer for Asia and Oceania of BTMU
July 2016
First Senior Vice President of Nidec
Corporation
August 2018
Senior Managing Executive Officer, Chief
Administrative Office of Nidec Corporation
September 2020
Chairman and Representative Director,
MST Insurance Service Co., Ltd.
June 2021
Outside Director, Mitsubishi HC Capital
Inc. (to present)
June 2022
Outside Audit & Supervisory Board
Member, MGC (to present)

April 1979
Joined Nippon Life Insurance Company
April 2011
Director and Senior Managing Executive
Officer, Nippon Life Insurance Company
June 2013
President and Representative Director,
Seiwa Business Link Co. Ltd.
Outside Audit & Supervisory Board
Member, MGC (to present)
June 2019
President, Nissay Culture Foundation(to present)
President, Tokyo Opera City Cultural
Foundation (to present)

June 2018

April 2019
April 2020
April 2021
April 2023

June 2023

Joined MGC
Manager, Planning & Development Division,
Natural Gas Chemicals Company
Manager, Planning & Development Division,
Natural Gas Chemicals Company, andManager, Life Science Division, Natural Gas
Chemicals Company
Executive Officer, Plant Manager, Mizushima
Plant, Aromatic Chemicals Company
Executive Officer, Plant Manager, Mizushima
Plant, Basic Chemicals Business Sector
Executive Officer, in charge of Research &Development
Managing Executive Officer, responsible
for Production Technology, in charge ofEnvironment Safety and Quality Assurance
Division (to present)
Director (to present)

Attendance of Board of Directors Meetings: 12/12 (FY2022)

April 2020
April 2021
April 2023

June 2023

Joined MGC
General Manager, Tokyo ResearchLaboratory, Specialty Chemicals Company
Executive Officer, Vice Manager, Corporate
Planning Division
Executive Officer, in charge of Corporate
Planning
Managing Executive Officer, responsible
for Research & Development, in charge ofIntellectual Infrastructure (to present)
Director (to present)

Reason for election: Following his engagement in R&D ofSpecialty Chemicals, he served in important positions in theSpecialty Chemicals Department and Corporate Planning
Division, and has abundant experience and knowledge of
MGC’s R&D and business management, etc.

Reason for election: Following his engagement mainly in
R&D of Aromatic Chemicals, he served in important positionsin the Natural Gas Chemicals and Aromatic Chemicals
Departments, and has abundant experience and knowledgeof MGC’s R&D and business management, etc.

December 1968 Appointed to the National Personnel
Authority of Japan
January 1992 Director, Bureau of Human Resources
Management of Headquarters (Paris), United
Nations Educational, Scientific and Cultural
Organization (UNESCO)
September 2002 Deputy to the Director General andManaging Director of Field Operations
Division of Headquarters (Vienna),
United Nations Industrial Development
Organization (UNIDO)
November 2006 Japanese Ambassador Extraordinary andPlenipotentiary to Kingdom of Morocco
April 2013
Specially Appointed Professor, Academy
for Global Leadership, Tokyo Institute ofTechnology
May 2014
President, Japan Morocco Association(to present)
June 2016
Outside Director, S&B Foods Inc.
March 2018 Outside Director, Nikkiso Co., Ltd.
(to present)
June 2020
Outside Director, MGC (to present)
Reason for election: She has many years of experienceoverseas and insight as a director at internationalorganizations on a global scale. She has served in important
positions at international organizations, etc., and it isdeemed that she would perform her duties as Outside
Director appropriately.

April 1983
Joined MGC
June 2016
Director, Managing Executive Officer,
Chairman of Committee on Future R&D,
in charge of Research & Development
Division and Advanced Business
Development Division
June 2019
Representative Director, Senior Managing
Executive Officer, Chairperson of Internal
Control Promotion Committee, in chargeof Internal Audit Division, Research &Development Division, Advanced Business
Development Division, Business Strategy
Division, General Manager of QOL
Innovation Center Shirakawa
June 2020
Audit & Supervisory Board Member(to present)
Reason for election: He has served inimportant positions in Specialty Chemicals,
Research & Development, and Internal
Control, etc., and has abundant experience
with MGC’s business and corporate
management.

Independent

Reason for election: Following his
appointment as Director in June 2017, heserved in important positions in the Aromatic
Chemicals, Production Technology, andEnvironment Safety and Quality Assurance
Departments, among others, and possesses
abundant experience in MGC's business andcorporate management.

Reason for election: He has many yearsof experience and insight as a manager
at a financial institute and possesses
considerable knowledge of finance andaccounting.

Reason for election: He has abundant
experience and insight as a manager at afinancial institution and in the manufacturingindustry, etc., both in Japan and overseas.

Independent officer as stipulated under Rule 436-2 of the Securities Listing Regulations of the Tokyo Stock Exchange

Expertise and Experience Sought in Directors and Audit & Supervisory Board Members

Toru Suzuki

Yasushi Manabe

Kazue Kurihara

Outside Director Independent

Outside Director Independent

Outside Director Independent

Attendance of Board of Directors Meetings: 12/12 (FY2022)

Attendance of Board of Directors Meetings: 12/12 (FY2022)

April 1979
April 2011

April 1979
April 2012

Joined Mitsui & Co., Ltd.
Managing Officer, Performance Chemicals
Business Unit, Mitsui & Co., Ltd.
April 2014
Managing Officer, Mitsui & Co., Ltd. andPresident of Mitsui & Co. Vietnam Ltd.
April 2015
Executive Managing Officer, Mitsui & Co., Ltd.
and President of Mitsui & Co. Vietnam Ltd.
June 2015
Executive Managing Officer, Chief Regional
Representative of Southwest Asia, Mitsui &Co., Ltd., and President of Mitsui & Co. India
Pvt Ltd.
June 2017
Outside Audit & Supervisory Board Member,
Mitsui Sugar Co., Ltd. (currently, Mitsui DM
Sugar Holdings Co., Ltd.)
December 2018 Audit & Supervisory Board Member, NutriCo., Ltd.
June 2020
Outside Director, MGC (to present)
Reason for election: He has many years of experienceoverseas and insight as a manager at a company operating
on a global scale.

65

April 2013
June 2013
April 2016

April 2017

April 2021
June 2021

Joined Hitachi, Ltd.
General Manager, Sales Division Infra
System Group Infra System, Hitachi, Ltd.
Executive Officer, General Manager Kansai
Area Operation, Hitachi, Ltd.
Outside Audit & Supervisory Board Member,
ShinMaywa Industries, Ltd.
Executive General Manager, Deputy Director,
General Corporate Sales & Marketing Group,
CMO of Industry & Distribution, Water &Urban Business Unit, Hitachi, Ltd.
Vice President and Executive Officer,
Deputy Director, General Corporate Sales& Marketing Group, CMO of Industry &Distribution Business, Water & Urban
Business, Hitachi, Ltd.
Executive Advisor, Yashima Denki Co., Ltd.
(to present)
Outside Director, MGC (to present)

Reason for election: He has many years of experience andinsight as a manager at a company operating on a global
scale.

October 1992 Associate Professor, Department of Applied
Physics, Faculty of Engineering, Nagoya
University
April 1997
Professor, Institute for Chemical
Reaction Science (currently, Institute ofMultidisciplinary Research for Advanced
Materials), Tohoku University
April 2010
Professor, Advanced Institute for Materials
Research and Institute of Multidisciplinary
Research for Advanced Materials, Tohoku
University
April 2016
Professor Emeritus, Tohoku University(to present)
April 2017
Professor, New Industry Creation Hatchery
Center, Tohoku University (to present)
December 2020 Outside Director, Hamamatsu Photonics K.K.
(to present)
April 2021
Research Professor, Tohoku University(to present)
January 2022 Director, SMILEco Measurement Co., Ltd.
(to present)
June 2023
Outside Director, MGC (to present)
Reason for election: She has highly advanced expertise inwide fields of study in chemicals, and it is deemed that she
would provide appropriate supervision and advice to MGC’s
management from such a perspective.

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Production
Business strategy
Corporatetechnology
Sales
management
R&D
MarketIndustry expertise Environment safety
development

Directors
Toshikiyo Kurai
Masashi Fujii
Nobuhisa Ariyoshi
Naruyuki Nagaoka
Motoyasu Kitagawa
Ryozo Yamaguchi
Ko KedoYoshinori Isahaya
Haruko Hirose
Toru Suzuki
Yasushi Manabe
Kazue Kurihara

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Finance
Accounting
Management
planning

Legal
Compliance
Risk management

HR
Labor
Talentdevelopment

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GlobalDiversity
Experience in othersectors

●

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●

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Audit & Supervisory Board Members
Masamichi Mizukami
Masato Inari
Go Watanabe
Yasuomi Matsuyama

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MGC Report 2023

66

Outside Directors Roundtable Talk

neutrality. MGC is a good corporation with strong technicalfoundations upstream to downstream, and it’s in goodfinancial health. This should be much better known.

Raising the Effectiveness of the Board of
Directors with Years of Management andInternational Experience

Suzuki: I did business with MGC when I was working for a
trading house. From the viewpoint of a business partner, I
was aware of MGC’s open culture. While it is a member ofa tightly knit corporate group, it does business with all sortsof companies, not confined to its group. My impression of
MGC from that time remains the same. I think this natureallows the kind of openness that allows all employees to
speak frankly with one another, without being hampered
by internal boundaries.
I was appointed as an MGC outside director in June
2020, just before the beginning of the three years mostimpacted by the pandemic. So I regret missing themany face-to-face meetings and direct talks that I could
otherwise have had with MGC employees. Ms. Hirose, youcame aboard about the same time as I did. Do you feel thesame way?

MC: In board meetings, when you offer advice andguidance as overseers of MGC management, what do
you think is particularly important?
Manabe: I keep an eye on how the R&D budget is
distributed. Under the current Medium-Term Management
Plan we envision society in around 2050 and create actionplans backcast from that future. To provide productsthat will be needed in the future we envision, we have tocontinuously allocate budget to basic research, along withthe technology development that extends our existing
business. That’s how we cultivate seedlings for the next
generation of growth. Circular carbon methanol is a casein point. Its commercial applications are in sight, and noother firm is touching it. It has strategic significance andhuge market potential. I hope to see more products likethis coming out of MGC.

Hirose: Yes, it was those three pandemic years.

67

Haruko Hirose

Yasushi Manabe

Toru Suzuki

Outside Director

Outside Director

Outside Director

We work to connect the uniquestrength of the MGC Group withnew growth while enhancing its
corporate governance system.

Characteristics of the MGC Group and
Its Unique Challenges

In recent years corporate governance has been
an important focus for publicly listed companies,
and initiatives to enhance these systems
are drawing more attention than ever. In thisroundtable talk we asked our three outside
directors to discuss corporate governance at
MGC. We asked about how they identify theCompany’s current leading issues, what theysuggest to address them, and how they thinkthey should be involved to help make the Boardof Directors more effective. They spoke in depthon these questions.

Manabe: Before joining MGC I was working for anelectronics manufacturer that prioritized technology
development. This is my first time on the management
team of a chemical manufacturer, but I see a common
thread between my previous employer and the MGC
Group in that it is also an R&D-oriented firm focused onhoning its proprietary technologies. Here people in chargeof technology development work with a relatively highdegree of freedom, and I see that MGC has a culture thatencourages this. It is also unique in that it built a chemical
manufacturer using natural gas as the primary ingredient.
MGC is the only chemical maker pursuing an energy
resources business, such as geothermal power generation,
by applying technologies for natural gas extraction. I
think this positioning is a strength through which MGC
can contribute to urgent societal concern about carbon

MITSUBISHI GAS CHEMICAL COMPANY, INC.

MC: In your eyes as outside directors, what special
characteristics does the MGC Group seem to have?
What do you think are its highest management
priorities and unique challenges?

Suzuki: In the fall of 2022 I finally had the opportunity
to visit our plants in person, then the research labs in
2023. On both occasions, I enjoyed talking frankly withthe employees. I’d like to zoom in on MGC to see it as it
is. From my perspective a unique issue for the Company
to address is that while its corporate culture encourages
taking on new challenges and supports efforts to overcome
them, it still isn’t easy enough to question and disagree
on what’s considered a challenge. To ensure that theorganization maintains a robust self-assessment function,
we have to encourage discussion involving multiple
viewpoints, including those opposing one another. To
that end we should never be a lion at home and a mouseoutside, instead remaining constantly aware of third-party
views outside the Company.
Hirose: I always think of MGC as a group of many
excellent, hardworking people, and a rock-solid company
that works seriously on the tasks in front of it. Thatsaid, we should all bear in mind our responsibility toencourage deep, forthright discussion, as extensively andfrequently as possible, till all involved feel it’s sufficient.
Some issues are taken into board meetings after going
through internal business-focused talks. Here at MGC,
however, I feel those cases are less common than inmost international organizations. I’d say this problem
is not unique to MGC, but common to all Japanesefirms. In international negotiations, thorough discussion,
suspending our personal “common sense” because it is
not necessarily shared with the other party, is the only
way to get anywhere. I understand the chemical industry
as an open world where we can discuss and collaborate
with engineers from anywhere on Earth, using science andtechnology as a common language. That’s why we have towork to sharpen our international competitiveness.

Suzuki: I’ve been talking about the importance of exit
strategies and personnel exchanges every chance I get. Ina board discussion about an unprofitable project, I asked
what the exit strategy for it would be. Trading houses
usually maintain clear exit strategies they can review quickly
and flexibly. For manufacturers, however, it takes moretime to get to the exit due to the production facilities andpeople working there. Following business portfolio reform
MGC is now making substantial progress in withdrawing
from or reorganizing unprofitable businesses, and getting
positive results. Going forward we have to direct these
efforts to energizing our people and business even further.
To identify the markets where a proprietary technology
can show its true worth and determine its best applications,it’s important to combine the scientific and humanities
viewpoints as a path to higher-quality conclusions. To
connect social needs with MGC’s technical seeds, I want tofocus on exchanges between sales personnel and technicalemployees, people with backgrounds in the humanities andthose in science, and will keep an eye on the progress.
When I saw the annual All-MGC Poster Presentation
for the first time, I was very impressed with its profitmindedness. This is an opportunity for technical employees
to present their R&D projects, progress and results.
They always provide explanations with profitability after
commercialization in mind. This came as a surprise to me,
in a good way.
Hirose: I want to help raise MGC’s corporate value
by giving objective management advice based on theknowledge and experience I’ve obtained abroad. There
are huge differences between Japan and any given foreigncountry in expressing opinions and the time they take tomake decisions. Japanese companies are in a crucial stage
now in learning about these differences and applying that
understanding to building and executing growth strategies.

MGC Report 2023

68

Outside Directors Roundtable Talk

It’s essential for the future of MGC
to increase diversity by actively
appointing women and non-Japanese,
as well as assisting in their careerdevelopment.

I want to help raise MGC’s corporate
value by giving objective management
advice based on the knowledge andexperience I’ve obtained abroad.
—Haruko Hirose

MC: How do the proceedings of the board meetings
look to you?
Suzuki: I think it’s important to have board meetings go
beyond finding official consensus to creating opportunities
for deeper discussion, ensuring that nothing is missed inour decision-making processes and verifying the rationalityof the decisions.
Hirose: I think Japanese companies are in a transition
phase in terms of corporate governance reform, andbeginning to apply the knowledge and experience ofus outsiders to raise the effectiveness of the Board of
Directors is an example. I feel it’s very hard to quickly
respond to government recommendations for achieving
quantitative goals, but I think we can come at these issues
with a positive mindset.
Manabe: For sustainable growth it’s important to beaware of capital cost, profitability, share prices and otherquantitative metrics, but we must not neglect MGC’s
unique defining characteristics, which can't be expressedin numbers. From that perspective I’d like to help raiseawareness, in board meetings and on other occasions.

accepted. The other was about a production subsidiaryfor basic chemicals that MGC established in Europe. After
broadly discussing the systems for executing an overseas
construction project, including the strength of overseas
contractors and what we should consider carefully about
them, the board decided to proceed with the projectas planned.
Hirose: MGC operates all over the world, with more
overseas sales than domestic sales. In practice, however,
we sometimes struggle to manage those operations. It’s
not easy to make clear distinctions between areas weshould entrust to local managers and those that should
be under strong oversight by Japanese headquarters. As
a result, we risk leaving management struggling with halfmeasures. This is not a problem unique to MGC; many
projects by Japanese companies abroad hit this wall. But
we should not fear failure. What's important is to closely
analyze the cause of failure and avoid repeating the same
mistakes.
MC: Let’s talk about the requirements andappointment of new executives and scenarios forcandidate training, which are important agenda items
for the Compensation and Nominating Committee.

—Toru Suzuki

In particular, which points do you think will be more
important in the future?
Hirose: I always think we should train executive candidates
who are confident and comfortable doing business inmarkets worldwide. To do that we first have to give themtime to get away from their turf in Japan and take selftraining trips abroad. I don’t think that people who are
working comfortably, believing the Tokyo head office iswatching over them to help if something bad happens, will
ever truly meet our needs for executive candidates.
Suzuki: I totally agree. I want to add something, and that’s
to develop programs and systems to train locally hired
people as future executives for our foreign subsidiaries.
Speaking from my experience in a trading house, I
think it’s ideal to promote local employees to head local
subsidiaries, even if it may take more time. It’s essential
for the future of MGC to increase diversity by actively
appointing women and non-Japanese, as well as assistingin their career development.
Hirose: To help women employees in their careerdevelopment, eliminating unconscious bias and wrong
beliefs will be a major point.

Specific Examples of Reflecting Outside
Directors’ Advice and Recommendations in
Making Decisions
MC: Tell us about the agenda items that led toparticularly active discussion in board meetingsin fiscal 2022.
Suzuki: There was a time when the opinions of board
members split over two projects MGC was working on
abroad. One of them was at a production site that had
expanded a few years before. Due to low selling prices andother factors it hadn’t turned an enough profit for several
years. We outside directors pointed to some overarching
management issues. After discussion our suggestions,
including increasing human resources investment, were69

MITSUBISHI GAS CHEMICAL COMPANY, INC.

While paying attention to thequantitative metrics, I hope MGC
will continue to cherish its uniquedefining characteristics, which can’t
be expressed in numbers.
—Yasushi Manabe

Manabe: Speaking from my experience, to selectexecutive candidates from among those in the corebusiness, we should ideally transfer them to subsidiaries
as presidents. That’s because the core business of thecompany usually enjoys favorable market environments
and good customers, which can make the people working
within it too laid-back. Even more ideally, we should findpeople who have led businesses in tough environments
and promote them as executives. They have gone
through hard times in unfavorable environments, so they
understand the difficulties of their employees while they’ve
built an acute sense of the risks ahead.

Integrate Ideas to Resolve Problems andPush the Company to Grow
MC: In concluding our talk, tell us about your hopes
and ambitions for MGC.
Suzuki: I think our employees are our most important
stakeholders. I think a company with happy employees
grows. I’d like MGC to take care of and train people
working in Japan and abroad for the Group, and also makea habit of thoroughly explaining its growth strategy and thelike to them.
Hirose: Let me reemphasize that there should be a systemthat assures tight governance of foreign subsidiaries by theJapanese head office. I’ll be happy to share my experience
with the promotion of diversity and inclusion and employee
development. I hope to see early incorporation of stateof-the-art technologies into products that can help build
a society focused on reducing waste and encouraging
recycling as a new growth field.
Manabe: I agree with you. The key to future growth, I
think, is in carbon neutrality and similar businesses. MGC
has great success potential, and I’m looking forward to ita lot. I’d like MGC to be a major presence in society as itincreases its capital efficiency while increasing the scaleof sales.

MGC Report 2023

70

Corporate GovernanceCorporate Governance, Risk and Sustainability Management Organization Chart

Basic Approach

General Meeting of Shareholders

The Company believes that meeting the expectations of all stakeholders, beginning with our shareholders, means working
to increase corporate value through business activities and contributing to the realization of a sustainable society, with theaim of achieving both social and economic value under its Mission of “creating value to share with society.” To this end, theCompany strives to operate effective corporate governance systems, and continuously reinforce and enhance those systems.

Election/Dismissal
Auditing

Board of Directors
Compensation and
Nominating Committee

Basic Policies(1) Ensure the rights of, and equality among, shareholders.
(2) Engage in appropriate collaboration with shareholders other than stakeholders.
(3) Conduct appropriate information disclosures and maintain transparency.
(4) Properly carry out the responsibilities of the Board of Directors and other bodies.
(5) Engage in constructive dialogue with shareholders.

Election/Dismissal
Auditing

Crisis Management

Election/Dismissal

Audit & Supervisory
Board
Audit & Supervisory
Board Members

Auditing

Independent Auditors

Supervision

Business Execution

Ad hocorganization

Investigation/Reporting/Auditing

Chairman

Main committees related to internal control

President

Crisis Response
Headquarters

Internal Control and Risk
Management Committee

Sustainability Response

Compliance Committee

Management Council
Operations Council

Sustainability Promotion
CouncilInternal Audit Division
Sustainability Promotion
Committee

Corporate Sectors/Business Sectors

Corporate Governance System
Auditing, management, and guidance through MGC’s internal control system

As a company with an Audit & Supervisory Board, MGC
has, for the purpose of business execution, established an
executive officer system that clearly separates management
decision-making and supervisory functions from thebusiness execution function. The Board of Directors
decides basic management policies, matters relating toitems stipulated by law and the Company’s Articles ofIncorporation, and other important management matters.
The Board of Directors oversees the execution of business,while executive officers are responsible for directly
managing business affairs. For matters arising in thecourse of business execution that may have a significant
effect on the Company, the Board of Directors makes
its decisions on the basis of multifaceted deliberations,

including deliberations on management policies by theManagement Council and deliberations on plans for
executing specific policies by the Operations Council. The
Board of Directors receives advice from attorneys andother experts when necessary in the course of its decision
making and supervision of business execution.
The Audit & Supervisory Board members also attend
important meetings, such as those held by the Board of
Directors and the Operations Council, conduct audits ofeach division and surveys of subsidiaries, and audit theexecution of business. The members also monitor important
decision-making processes and business execution in orderto ensure reasonable decision making and compliance withlaws and corporate norms.

Activities of Meeting Bodies and Committees

Board of Directors [Meetings held in fiscal 2022: 12]
The Board of Directors decides important matters pertaining to management policies, business, and management based onlaws, regulations, the Company's Articles of Incorporation, and the regulations of the Board. It also receives reports from eachdirector and others on the status of execution of duties, management performance, etc., and supervises the execution of duties
by directors. Candidates for director are nominated by the Board of Directors following consultation with the Compensation and
Nominating Committee, and directors are elected at the annual General Meeting of Shareholders.

Main Agenda Items• Appointment of executive officers• Implementation of interim dividends• Granting of restricted stock• Formulation of Medium-Term Management
Plan• Approval and reporting of competingtransactions• Approval and reporting of conflict-of-interest
transactions• Determining annual policy on establishment andoperation of internal controls, and reporting on
compliance and internal control risk management• Assessing effectiveness of the Board of Directors• Reassess strategic shareholdings

Organizational Format

Company with an Audit & Supervisory Board• Determination of convocation and agenda
of General Meeting of Shareholders• Approval of business reports, financial
statements, etc.
• Determination of candidates for director and
Audit & Supervisory Board member• Selection of Representative Director• Directors’ compensation

Composition of the Board of Directors

Twelve (of which four are outside directors)

Audit & Supervisory Board [Meetings held in fiscal 2022: 14]

Directors’ term of office

One year

Chair of the Board of Directors

Chairman

Audit & Supervisory Board members audit management decisions and the status of execution of business from an independent
position, such as by attending meetings of the Board of Directors and other important meetings. Furthermore, the Audit &Supervisory Board endeavors to work with the independent auditors and the Internal Audit Division, and also endeavors toincrease the efficiency of audits through such measures as the assignment of dedicated audit staff.

Establishment of a voluntary
advisory committee

Compensation and Nominating Committee: six(Chairman, President, four outside directors)

Main Deliberation Items

Composition of the Audit & Supervisory Board

Four (of which two are outside Audit & Supervisory Board members)

The Audit & Supervisory Board formulated audit policies and audit plans, and deliberated the status of the establishment andoperation of internal control systems.

Number of Independent Directors and Audit &Supervisory Board Members

Six

Compensation and Nominating Committee [Meetings held in fiscal 2022: 4]

Business Execution System

Executive officer system

Basic Information about Corporate Governance System

Composition of the Management Council

Eight (Chairman, President, one senior managing executive officer,
five managing executive officers)

Composition of the Operations Council

Twenty-one (All executive officers including the Chairman and President)

Introduction of a Hostile Takeover Defense Plan

71

Group Companies

MITSUBISHI GAS CHEMICAL COMPANY, INC.

None

The Compensation and Nominating Committee functions both to determine executive officer compensation and to nominate
and appoint key members of senior management. The majority of the committee is comprised of independent outside directors.
The Board of Directors is responsible for appointing and dismissing key members of management, including the Chairman andPresident, and for nominating directors and Audit & Supervisory Board members. In making decisions on policies regarding
executive officer compensation and total annual amounts, and in determining allocation of those amounts, the Compensation
and Nominating Committee is consulted prior to those matters being put before the Board of Directors for discussion. Note thatthe appointment, dismissal and nomination of said officers are judged in light of certain selection criteria that include whether
they have the appropriate internal and external work experience and knowledge for the position; whether they have the dignity
and ethical values appropriate to their responsibilities; and whether they have violated any laws, the Articles of Incorporation, or
company rules.

MGC Report 2023

72

Corporate GovernanceInternal Control and Risk Management Committee [Meetings held in fiscal 2022: 3]
As an organization directly under the President, the Internal Control and Risk Management Committee is a committee chaired by
the executive officer in charge of internal control and risk management. It provides direction and supervision for each department
and deliberates on problems that require a companywide response. It makes decisions on matters related to risk management
system policies, measures and plans; matters related to business and operational risk management, as well as matters related to
guidance, direction and oversight incidental thereto; and matters related to guidance, direction and oversight related to business
continuity planning.
For details on risk management, please refer to page 76.

Compliance Committee [Meetings held in fiscal 2022: 2]
As an organization directly under the President, the committee investigates compliance violations pertaining to the Company and
the Group, and formulates, deliberates and recommends corrective measures and preventative measures.
For details on compliance, please refer to page 77.

Management Council [Meetings held in fiscal 2022: 24]
The Management Council deliberates and determines the Group’s Medium-Term Management Plan, management policy, basic
policies on key operations, and so forth. The Board of Directors makes the final decisions on any proposals requiring it to makea resolution.

Operations Council [Meetings held in fiscal 2022: 26]
The Operations Council deliberates and determines the Group’s specific action plans and so on concerning the execution ofserious business matters. The Board of Directors makes the final decisions on any proposals requiring it to make a resolution.

Company’s businesses.
Accordingly, the Board of Directors will undertakea necessary review based on the assessment results,
primarily with respect to elements such as those for which

it was indicated that there exists room for improvement.
In doing so, we will be aiming to ensure a more effective
Board of Directors and continue to go about strengthening
and improving it as an organization.

Introduction of Diverse Perspectives
MGC has developed a global business that ranges widelyfrom basic chemicals to high-performance materials.
Because our management decisions require a highdegree of expertise, the Board of Directors as a whole
strives to maintain a well-balanced diversity of knowledge,
experience, and abilities, centered on those from within the
Company who are deeply familiar with our business andmanagement, with the addition of multiple independent
outside directors who, representing the perspectives ofshareholders and other stakeholders, provide advice andsupervision.
MGC currently has 12 directors (of whom four are
independent outside directors and half of those are
women), which we believe to be generally appropriate insize and effectiveness.
In order to ensure the fair and objective oversightof management, particular attention is paid to the
independence of outside directors and Audit & Supervisory
Board members, in accordance with criteria set by the
Tokyo Stock Exchange regarding independence. MGC
appoints only candidates who have no conflict of interest
with general shareholders.
MGC nominates as independent all outside directors
and Audit & Supervisory Board members who satisfy therequirements for being an independent director or Audit &Supervisory Board member.
For details on the criteria regarding independence of outside
directors and Audit & Supervisory Board members, please refer tothe MGC website.
https://www.mgc.co.jp/eng/corporate/governance.html
For details on the expertise and experience sought in directors andAudit & Supervisory Board members, please refer to page 66.

Sustainability Promotion Council [Meetings held in fiscal 2022: 2]
The Sustainability Promotion Council deliberates and determines policies and measures that form the basis for sustainability
management such as identification and management of materiality, and receives reports on the implementation thereof from theSustainability Promotion Committee.

Compensation of Directors and Audit & Supervisory Board Members
Directors’ Compensation

Sustainability Promotion Committee [Meetings held in fiscal 2022: 3]
The Sustainability Promotion Committee confirms the status of implementation of measures in each division, and consult with the
Sustainability Promotion Councils on the necessary measures through periodic reviews.

Assessing the Effectiveness of the Board of
Directors
Every year, we conduct assessments on the effectivenessof the Board of Directors. To assess the effectiveness of
the Board of Directors, a survey is issued to all directors
and Audit & Supervisory Board members, which presents
various kinds of questions using a five-point scale withrespect to the Board of Directors as a meeting, as anorganization, and from an overall perspective. The survey
is also purposed with obtaining opinions from respondents
in the form of separately provided comments to allow
for the obtaining of responses that are unrestricted by
the parameters of the five-point scale. The Board of
Directors then holds discussions based on the aggregate
results and opinions that were received. When deemed
appropriate, we review the content of questions presented
in questionnaires; we remove questions covering areas
where it has been deemed that reasonable levels havebeen met in relation thereto, add new questions, and soon. The survey regarding fiscal 2022 was conducted in
April 2023.
In the results of that survey, the Board of Directors
continues to be assessed highly in terms of its structure.
The results also provide an assessment that appropriate
supervision and information sharing are being carried out,
and that direction is indicated as necessary, with lively

73

MITSUBISHI GAS CHEMICAL COMPANY, INC.

questions, discussions, and exchanges of opinion (including
with outside directors) taking place in relation to various
important management issues, the status of executionof duties by each director, and other matters. As such,
the Company recognizes that the Board of Directors hasachieved a certain level of effectiveness.
Meanwhile, the responses to the survey and thediscussion on the day included opinions indicating roomfor further consideration regarding measures for deepening
the discussion in the Board of Directors. These included
the view that while admirable care is taken in the style,volume, and content of materials and explanation of
proposals for the Board of Directors meetings, they are
somewhat excessive in detail, and the view that the scopeof the items explained should be widened. Other opinions
were also expressed regarding matters such as the themesthat should be subject to deeper discussion in future
Board of Directors meetings, including the recent questionof measures for improving the price-to-book ratio (PBR).
The Board intends to continue discussing these with aview to further increasing its effectiveness. Furthermore,
now that COVID-19 appears to have abated to a degreeand conditions are finally becoming suitable, the Company
aims to actively revive visits to business sites by outside
directors and Audit & Supervisory Board Members tofacilitate their deeper understanding of the status of theCompensation to directors of MGC (excluding outside
directors) consists of annual compensation and restricted
stock compensation.
Annual compensation consists of a fixed amount ofbasic compensation based on the individual’s position andresponsibilities, and performance-based compensation thattakes into account various indicators of the Company’s
performance. Compensation is divided into monthly
installments and paid monthly, and a certain percentage isaccumulated annually as a reserved retirement benefit to be
paid at the time of retirement. This amount may be subject
to reduction based on the individual’s performance andother factors. Performance-based compensation is intended
to be an incentive for overall Company performance, andis determined using indicators such as ordinary income,based on actual results, level of achievement, and so on.
In addition, given the nature of MGC’s business, in which
each business reaches profitability through a variety ofprocesses over many years — including research anddevelopment, manufacturing process development andmarket development — annual compensation consists
primarily of basic compensation, with a general guideline ofabout 30% for performance-based compensation.
Restricted stock compensation, on the other hand,is compensation paid to directors once each fiscal year
in the form of grants of MGC stock; directors are granted
a certain number of shares based on their positions andresponsibilities. The purpose of restricting transfers ofthese shares and having recipients hold them for a certain
period of time is to share value with shareholders andprovide an incentive for working toward sustained growthof corporate value.
In addition to these forms of compensation, an amountthat is considered appropriate may be paid as a bonus
upon resolution of the General Meeting of Shareholders.
Note that outside directors, whose position is
independent of business execution, are paid only fixedbasic compensation.
Annual director compensation is determined by the
Board of Directors upon comprehensive consideration ofCompany performance, common standards, employee
salary trends, and so forth, after consultation with theCompensation and Nominating Committee. In addition,
allocation of individual compensation is entrusted to
the President by the Board of Directors, based on thedetermination that the President is the most suitableperson to evaluate each director while having a highlevel view of MGC as a whole. The President makes thesedecisions based on discussions regarding the allocationof compensation by the Compensation and Nominating
Committee.
The above policies are decided upon by the Board of
Directors after consultation with the Compensation and
Nominating Committee, comprised of a majority of outside
directors.

Compensation to Audit & Supervisory Board
Members
Compensation to Audit & Supervisory Board members
consists only of a fixed basic compensation amount withina range stipulated by the General Meeting of Shareholders,which is determined through deliberations by the Audit &Supervisory Board members.
MGC Report 2023

74

Risk Management

Corporate Governance

Composition of Compensation for Directors (Excluding Outside Directors) in Fiscal 2022
Basic compensation (fixed)

Performance-based compensation

Restricted
stock

298

147

37

Total Officer Compensation in Fiscal 2022

Basic

Performance

Restricted Stock

Number ofPeople Receiving
Compensation

482

298

147

37

9

Audit & Supervisory Board Members(excluding outside Audit & Supervisory
Board members)

52

52

—

—

2

Outside Directors and Audit &Supervisory Board Members

75

75

—

—

7

Total

611

Position
Directors(excluding outside directors)

Total Amount ofCompensation(millions of yen)

Total Amount of Compensation by Type (millions of yen)business primarily centers on manufacturing, we identify
and evaluate risks associated with business execution
beyond just manufacturing inherent in our operations
and internal control systems. We then take appropriate
measures. In the event that a serious risk is identified, we
set up a special group (Crisis Response Headquarters) toaddress it according to internal rules.

Specific Activities of the Internal Control and
Risk Management Committee (Fiscal 2022)

Board of Directors

Matters discussed

President

426

147

37

To grow corporate value across the entire Group, MGC
closely monitors the legal and regulatory complianceregimes of its Group companies, including listed
subsidiaries, as their parent company and major
shareholder, and plans to continue to do so.
MGC acquired majority ownership of listed subsidiary
JSP Corporation in the aim of boosting the Group’s
corporate value by effectively realizing greater mutualsynergies in pursuit of growth strategies, including
collaborations involving each other’s domestic andoverseas operational infrastructure, know-how andtechnical information.
Recognizing that the drivers of JSP’s corporate value
creation are management independence backed by anequity market listing and JSP personnel’s autonomy andcreativity, the Company respects JSP’s independence,

expects it to build and implement an effective governanceregime, and will provide assistance as needed.
MGC recognizes that a controlling shareholder of alisted company generally poses a risk of conflicts of interest
with minority shareholders. MGC will not act contrary to
the principle of shareholder equality.
Moreover, an organization serving as an advisory bodyto the Board of Directors, called the Special Committee
on Governance (which is comprised of four independent
outside directors selected through a resolution of the Boardof Directors), has been set up at JSP for the purpose ofenhancing corporate governance by ensuring adequate
protection of the interests of minority shareholders by
ensuring fairness, transparency and objectivity in relation totransactions carried out by JSP with the Company and our
subsidiaries.

Strategic Shareholdings
MGC owns listed equity holdings that it deems beneficial
to Group businesses in pursuit of medium/long-term
growth in corporate value.
The Board of Directors annually reassesses theobjectives and risks of owning each of these equity
holdings, the state of transactions with the investee, andreturns accruing from ownership, including returns from
actual transactions with the investee, relative to earnings
targets with cost of capital factored in. If the Board of
Directors deems MGC’s equity stake in any investee to belarger than appropriate, MGC opportunistically sells down
its equity holdings in the investee.
In fiscal 2022, MGC sold two equity holdings in partand one in its entirety.
When voting its cross-held shares, MGC generally
respects the investee’s management decisions. Undercertain circumstances, however, MGC gives extra

Periodic reports

18

Ensuring the Rights of and Equality among Shareholders

MITSUBISHI GAS CHEMICAL COMPANY, INC.

At MGC, all business divisions actively assess and prioritize
risk situations and devise risk reduction measures. The
Internal Control and Risk Management Committee, chairedby the executive officer in charge of internal control and risk
management, provides direction and supervision for eachdepartment and deliberates on problems that require acompanywide response. It periodically reports to the Boardof Directors on the state of risk management. While MGC’s
Risk Management Promotion System

Note: The amount of restricted stock compensation to directors is that of the provision for restricted stock compensation recorded for the fiscal year
under review.

75

Basic Approach

Basic Rules on Internal Control & Risk Management(Millions of yen)Internal Control and Risk Management Committee
Chair: Executive officer in charge of internal control and risk management
Vice-chair: Director designated by the President
Members: General Manager of Corporate Planning Division
General Manager of Research & Development Division
General Manager of Administrative & Personnel Division
General Manager of Information Systems Division
General Manager of Environment, Safety & Quality Assurance Division
Observers: Audit & Supervisory Board members
Secretariat(General Affairs Department,
Administrative & Personnel Division)

Risk-supervising departments

Respond to individual risks and crisis situations
as the responsible departments

Risk-related departments

Cooperate with the risk supervising departments;
these departments work toward risk reduction

Number of issues

Total value onbalance sheet(millions of yen)

Unlisted shares

56

2,602

Shares other thanunlisted shares

37

22,620

Matters reported• Report on audits of operations of Group companies
by supervising divisions• Report on the results of research on geopolitical risks

Please refer to the Corporate website for details on “Business and Other Risks.”
https://www.mgc.co.jp/eng/ir/policy/risk.html
1. Endogenous Business Risk
2. Overseas Business Risk
3. Joint Venture Risk
4. Product Quality Risk
5. Natural Disaster and Accident Risks

6. Information Security Risk
7. Compliance Risk
8. Human Rights Risk
9. Climate Change Risk
10. Investment Risk

Risk Management of Group Companies
scrutiny to management or shareholder proposals before
deciding whether to vote for or against the proposal. Suchcircumstances include an investee that has incurred losses
for three consecutive years and has questionable prospectsof a turnaround; an investee that has been involved in a
major scandal, has engaged in antisocial conduct or hasotherwise fallen into disrepute with questionable prospectsof rehabilitating its reputation; and other cases in which
MGC deems a vote in favor of a proposal to be adverse
to its overall medium/long-term interests, including theobjectives of its cross-shareholdings in the investee.

• Review of internal control and risk management
activities in each department• Details of disclosure related to risks in business, etc.
• Response to proposals from Internal Audit Division
based on internal audit results• Overview of annual activities• Policy of next fiscal year

11. Currency Risk
12. Financing and Interest Rate Risks
13. Litigation Risk

Formulating and Implementing BusinessContinuity Plans

While MGC’s approach is based on having Group
companies autonomously manage their own risk
management activities, MGC also surveys and exchanges
information on the status of each company’s efforts, while
asking them to further enhance their risk management.
Further, MGC divisions in charge of each company share
information and address any issues when necessary. Risks
that may have a significant impact are also reviewed by theInternal Control and Risk Management Committee.

Business divisions responsible for important products
and projects at MGC formulate business continuity plans(BCP). To fulfill their obligation to supply core materials thathave a significant impact on customers, each businessdivision implements disaster prevention and mitigation
countermeasures to ensure business is not suspended
in the event of a risk arising, or that the impact of suchsuspension is kept to a minimum. They also develop
manuals and other materials to ensure a reliable, prompt
recovery in the event that the requirements for business
continuity are lost, regardless of the cause. Specifically,
these include implementing plans according to the natureof each product and business for developing multiple
manufacturing sites (which, depending on the product,
may include sites in other countries), buildup of inventory,
and reduction of equipment stoppage risk.
MGC Report 2023

76

Compliance

Basic Approach
MGC has put in place, and is working to strengthen, asystem for practicing compliance with the aim of earning
the trust and understanding of the community.
MGC takes a broad view of compliance, one thatinvolves not only abiding by laws and Company rules
but also conducting fair, transparent, and free businessactivities in acknowledgment of its responsibilities
to society. Based on this understanding, we havesummarized the conduct expected of our executives andemployees in the MGC Corporate Behavior Principles andthe MGC Group Code of Conduct, the contents of which
are reviewed and revised from time to time based on
developments in society at large.
MGC decides policies, measures, and plans relating
to the compliance system in the Internal Control and Risk
Management Committee. In addition, the Compliance
Committee has been set up as an independent bodyreporting directly to the President to deal with individual
cases of compliance violation. The Compliance Committee
comprises the executive officer in charge of compliance(who serves as the chair), a director nominated by the
President (vice-chair), and heads of compliance-related
departments and others (members).
The results of the activities of this committee, which
include the investigation and recognition of violations
and the formulation, deliberation, and recommendationof corrective and preventive measures, are reported to
the President, the Board of Directors, and the Audit &Supervisory Board, with compliance violations being dealt
with according to prescribed internal procedures.
Furthermore, the Compliance Hotline has been set up
to quickly ascertain and correct compliance violations, andcan be used by all the people involved in the MGC Group’sbusiness activities, such as officers and employees of the
MGC Group including those who have retired in the past

77

year, their family members, or partner companies andcustomers. Our In-house Compliance Hotline is staffedby the Compliance Committee Secretariat, while ourExternal Compliance Hotline is available through the officeof specialized attorneys, including female attorneys. These
attorneys also provide advice to the Compliance Committee.
Consultations and whistleblowing brought to theattention of the Hotline and deemed to be potential
compliance violations are investigated by the Compliance
Committee, which takes any required corrective action ormeasures to prevent a recurrence. The results are also
reported back to the party who submitted the original
consultation or whistleblowing.

79

Performance Data

83

Consolidated Financial Statements

89

Corporate Data (Corporate Information /Shareholder Information / Business Locations)

MGC Compliance Consultation Structure
Board of Directors
President
ReportReportReportAudit &
Supervisory Board

ReportandConsultation*2

Outside Audit &Supervisory
Board Member

Compliance Committee
Compliance Committee
Chair
ReportCompliance Hotline
In-house
Compliance
HotlineCompliance Committee
Secretariat

External
Compliance
Hotline*1

Contracted
attorneys’ officeDirect Report*3

Consultation and Whistleblowing

Hotline Users*1 Coordinated response depending on the case*2 The Outside Audit & Supervisory Board Member is consulted formatters related to MGC officers*3 If a report received by External Compliance Hotline is deemed to bea serious problem related to MGC’s management or management
personnel, or if the response by the Compliance Committee, etc. isinadequate and an appropriate response cannot be expected, or if
the Hotline user refuses to provide information to the Compliance
Committee Secretariat, a direct report can be made to the Outside
Audit & Supervisory Board Member.

Compliance Education

Security Export Control Initiatives

MGC designates every October as “Corporate Ethics
Month,” during which we conduct compliance training for
all employees using our intranet and the President sends
out a notice to all business sites calling for the renewed
promotion of compliance.
Compliance education is also included in gradespecific training, and training is provided using educational
materials suited to each position.
Given an increasing need to respond to complianceissues, such as cartel involvement and providing
improper benefits to foreign public officials, at MGC
Group companies affiliated with our overseas businesses
in emerging countries and elsewhere we are working
to enhance the quality of compliance training for staff
dispatched as officers to overseas affiliates.

The MGC Group Code of Conduct stipulates that exacting
export screening procedures are to be followed, in partto ensure adherence with laws and international treaties
regarding exports, as well as to ensure appropriate control
over the export of cargo and provision of technologythat may relate to the development of weapons of mass
destruction and conventional arms.
Export control subject to screening includes all products
exported by MGC, regardless of whether the transaction
involves direct, indirect, or brokered trade, as well as alltechnology related to the design, manufacturing, and use of
those products. Export screening involves multiple checks bybusiness divisions in charge of products and an independent
export control division, which screen all exports to determine
if cargo and technology restrictions apply, as well as also
checking the final customer, destination, and use.
In addition, we endeavor to maintain and enhance theexport control setup by implementing internal audits andgrade-specific education annually.

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Data Section

MGC Report 2023

78

Performance Data

FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2022(Thousands of U.S. dollars)*2

Operating results (Millions of yen)
Net sales¥ 467,979

534,443

529,570

593,502556,480

635,909648,986

613,344595,718

705,656

781,211$ 5,850,453

Operating profit

11,421

11,48814,99634,01843,76262,741

41,38634,26044,51055,36049,030367,183

Ordinary profit

27,65130,80442,00045,43262,43080,711

69,19931,11650,24074,152

69,764522,459

Profit (loss) attributable to owners of parent(7,793)

14,921

43,34634,13448,01360,53155,00021,15836,07048,29549,085367,595

Share of profit of entities accounted for using
equity method

19,045

20,46627,895

16,683

21,125

18,27728,408(1,282)

5,162

14,883

17,546

131,401

EBITDA

53,32857,327

68,211

74,631

89,407

108,807

97,66861,67581,726

107,009

105,074

786,894(Thousands of U.S. dollars)*2

Financial position (Millions of yen)
Current assets¥ 261,397

287,642

372,166

341,237

326,674

384,249

378,845

358,669

402,141452,210483,249$ 3,619,029

Total assets

613,908

657,838

790,784

739,582

738,188785,687

804,038

771,733

836,364

928,651

1,029,317

7,708,507

Current liabilities

195,438

178,897

225,068

214,676

188,426

206,835

188,420

163,574

167,947

198,969

220,4421,650,880

Net assets

294,895

323,858

422,851

423,135

473,370

519,144553,282

548,141

581,411

630,887

671,249

5,026,953

Interest-bearing debt

182,644

204,489

215,614

181,427

118,713

106,964

95,751

74,713

98,476

117,650

166,944

1,250,236(Thousands of U.S. dollars)*2

Cash flows (Millions of yen)
Operating activity cash flow

¥ 31,169

27,182

76,982

84,671

82,71190,72064,042

74,23455,46452,09055,222

Investing activity cash flow

(30,818)(29,883)(23,531)(31,922)(31,119)(33,614)

Financing activity cash flow

(14,356)

7,124(25,005)(47,335)(60,217)(33,038)

Cash and cash equivalents at end of year

26,90737,31072,67875,82867,17790,30480,379$413,555(42,761)(33,922)(40,370)(64,954)(64,071)(31,396)(49,563)

5,154(3,666)

7,996

59,88270,04391,07592,257101,185

757,770(479,825)(U.S. dollars)*2

Per share data (Yen)
Earnings per share (EPS)*1¥(34.50)66.07

191.94153.85221.83281.39257.46100.50173.41

232.15239.08

Net assets per share*1

1,256.81

1,382.52

1,672.25

1,707.01

1,967.94

2,187.99

2,354.25

2,368.11

2,520.34

2,733.86

2,970.07

$

1.79
22.24

*1 With an effective date of October 1, 2016, MGC conducted a reverse stock split for MGC’s ordinary shares on a 2:1 basis. As a result, each amount
per share in the above table is calculated by retroactive adjustment applying the above share consolidation to preceding periods as well.
*2 U.S. dollar amounts are translated from yen, for convenience only, at the approximate rate of ¥133.53 = US$1 prevailing on March 31, 2023.

Net Sales, Overseas Net Sales Ratio

Operating Profit, Ordinary Profit, Profit
Attributable to Owners of Parent(Billions of yen)
800

781.2

(%)
90

600

613.3

60
400

54.9

54.0

60

55.0

50.2

58.7

55.7

30

200

41.3

30

34.2
31.1

44.5

11.3

90

10.4

10

55.3
48.2

0

0

Net sales (left axis)

2019

2020

2021

2022

49.0

10.9

49.0

8.7

7.7
7.1
4.9

5

36.0

Overseas net sales ratio (right axis)*3 MGC has applied the Accounting Standard for Revenue Recognition, etc. since
fiscal 2021. The impact of the application of said standard is a decrease inrevenue by ¥34.8 billion.

(Billions of yen)
80

(Billions of yen)
80

2019

2020

2021

2022

2018

74.2
55.4

20

31.9

27.4

30.6

19.6

19.9

21.0

23.5

18.6

(40)

2021

Depreciation and amortization
Capital expenditure
Research and development costs

79

MITSUBISHI GAS CHEMICAL COMPANY, INC.

2022

2022

(FY)

(FY)

2018

(Billions of yen)
200

75

150

59.0
671.2 50

100

928.6

600

836.3
62.7

Operating activity cash flow
Financing activity cash flow

2020

2021

771.7

62.6
553.2

63.8
548.1

61.2

581.4

2022

(FY)

EBITDA margin (right axis)(Multiple)
0.20

630.8

166.9
0.15

117.6
0.11

98.4

95.7

0.10

74.7
25

50

0.05

0.03

(49.5)
2020

2019

Interest-Bearing Debt, Net Debt to Equity Ratio(%)
100(40.3)

2019

10

0
2018

EBITDA (left axis)

300(31.3) (33.9)

(80)
2020

2021

(3.6)

0
2019

2020

1,029.3

7.9

5.1(42.7)

2018

2019

55.2

52.0

804.0

29.5

13.4

10.1

30

900

0

15.2

13.7

15.0

ROE (return on equity)
ROA (return on assets)
ROIC (return on invested capital)

54.7

33.5

7.1

6.2

0

(FY)

40

40.2

61.6

60

Total Assets, Net Assets, Equity Ratio

64.0

42.3

8.3

(Billions of yen)
1,200

64.6

39.2

8.4

20

3.9

Ordinary profit
Operating profit
Profit attributable to owners of parent

Cash Flows

40

8.8

0
2018

Capital Expenditure, Depreciation and Amortization,
Research and Development Costs

60

81.7

8.8

4.3

0

(FY)

105.0

97.6

69.7

21.1

2018

(%)
30

107.0
74.1
69.1

595.7
59.2

(Billions of yen)
120

(%)
15

705.6*3
648.9

EBITDA, EBITDA Margin

ROE, ROA, ROIC(Billions of yen)90

(64.9)(64.0)

2021

2022

Investing activity cash flow

0
(FY)

2018

2019

2020

2021

Net assets (left axis)

2022

(FY)

0.04

0.01

0

Total assets (left axis)
Equity ratio (right axis)

0.01

2018

2019

Interest-bearing debt (left axis)

0
2020

2021

2022

(FY)

Net debt to equity ratio (right axis)

MGC Report 2023

80

Performance Data

FY2012FY2013

FY2014FY2015FY2016FY2017FY2018FY2019FY2020

FY2021

FY2022

FY2022

Operating profit margin

2.4

2.1

2.8

5.7

7.9

9.9

6.4

5.6

7.5

7.8

6.3

6.3

ROE (return on equity)

(2.8)

5.0

12.6

9.0

12.0

13.6

11.3

4.3

7.1

8.8

8.3

8.3

ROA (return on assets)

4.6

4.8

5.8

5.9

8.4

10.6

8.7

3.9

6.2

8.4

7.1

7.1

ROIC (return on invested capital)

5.8

6.1

7.2

7.3

10.4

13.2

10.9

4.9

7.7

10.4

8.8

8.8

Equity ratio

46.2

47.5

47.8

51.0

57.5

59.5

62.6

63.8

62.7

61.2

59.0

59.0

EBITDA margin

11.4

10.7

12.9

12.6

16.1

17.1

15.0

10.1

13.7

15.2

13.4

13.4

Ratios (%)(Thousands of U.S. dollars)*2

OthersCapital expenditure (millions of yen)

30,982

25,40922,22630,51235,01030,95939,27942,38940,282

54,79364,650$ 484,161

Depreciation and amortization (millions of yen)

23,09623,52823,77026,70525,631

27,02727,451

29,59130,68631,99933,565

251,367

Research and development costs(millions of yen)

15,332

16,122

16,87318,936

19,267

18,987

18,607

19,696

19,90521,09323,512

176,080

Number of employees

5,323

5,445

8,254

8,176

8,034

8,009

8,276

8,954

8,998

9,888

10,05010,050

Ratio of taking annual leave (%)

78.6

80.1

82.6

83.9

80.9

79.4

83.8

86.9

77.6

80.9

85.4

85.4

Average overtime and holidays worked permonth (excluding management) (hours)

13.6

13.3

13.4

13.8

14.2

14.4

14.2

13.6

12.9

14.6

14.8

14.8

1,341

1,106

1,085

1,082

1,006

1,355

1,401

1,371

1,363

1,487

1,327

1,327

552

448

430

463

452

628

614

652

576

660

633

633

Work-life balance (MGC alone)

Environmental management
GHG emissions*4,5 (kt-CO2-e)
Energy use*4,5 (ML-crude oil equivalent)*4 Including domestic consolidated subsidiaries from fiscal 2015 and overseas consolidated subsidiaries from fiscal 2017. Others on a non-consolidatedbasis*5 Scope of consolidated subsidiaries changed in fiscal 2021

GHG Emissions

Energy Use(1,000 tons of CO2 equivalent)
1,600(ML-crude oil equivalent)
800

522

889

600

601

812

780

200

0

0
2019

83.8

86.9
77.6

80.9

14.2

85.4

285

13.6

14.6

14.8

2021

2022

12.9

10

216

396

726

400

2018

279

259

(Hours)
15

60

400

849

MGC (non-consolidated)(Non-consolidated/excluding management)

80

583

218
800

Average Overtime and Holidays Worked per Month(Non-consolidated)
(%)
100

675

512

1,200

Ratio of Taking Annual Leave

2020

2021

2022

40

380

359

348

5
20
0

0
2018

(FY)

Consolidated subsidiaries*5

393

2019

MGC (non-consolidated)

2020

2021

2022

(FY)

2018

2019

2020

2021

2022

(FY)

2018

2019

2020

(FY)

Consolidated subsidiaries*5

Evaluation from Society (As of July 31, 2023)
Final Disposal Volume and Zero Waste Emission Rate

Emissions Volume of Substances Subject to PRTR Law(Non-consolidated)(Non-consolidated)(Tons)
1,000
800

(%)
1.0

0.72

0.80

0.8

338
300

0.6

581

0.49

400

280

200

0.27
231

0.25

2021

2022

199

Final disposal volume (left axis)

81

0.2
0

2019

2020

250

CDP Supplier Engagement Leader:This evaluation examines how companies
engage with suppliers in promoting reductionof greenhouse gas emissions across theentire supply chain and responding to climatechange risk. In 2022, the top 8% of surveyed
companies were selected.

200

0
2018

CDP Climate Change: ACDP Water Security: B

277

234

0.4

388

(FY)

External Evaluation(Tons)
400

671
600

Inclusion in ESG Investment Indexes

100

0
2018

2019

2020

2021

2022

(FY)

Zero waste emission rate (right axis)

MITSUBISHI GAS CHEMICAL COMPANY, INC.

MGC Report 2023

82

Consolidated Financial Statements

Consolidated Balance Sheet
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
March 31, 2023
Thousands of
U.S. dollars

Millions of yen

2023

2022

2023

Assets

2023

2022

2023

¥ 88,342¥ 92,387

Short-term borrowings and current installments of long-term borrowings

47,91338,925358,818

Liabilities and Net Assets

Current assets:
Cash and deposits

Thousands of
U.S. dollars

Millions of yen

Current liabilities:¥ 108,378¥ 102,049

176,626

176,556

1,322,744

Securities

93

6

696

Lease obligations

1,074

565

8,043

Inventories

178,143

155,670

1,334,105

Accrued expenses

23,413

19,187

175,339

Other

20,775

19,381

155,583

Income taxes payable

5,274

11,99739,497(767)(1,453)(5,744)

Provision for bonuses

6,220

6,144

46,581

483,249452,2103,619,029

Notes and accounts receivable - trade, and contract assets

Less allowance for doubtful receivables
Total current assets$

811,638

Notes and accounts payable - trade

Other

$

661,589

48,20329,760360,990

220,442

198,969

1,650,880

Long-term borrowings

94,68066,621

709,054

Lease obligations

3,276

1,537

24,534Retirement benefit liability

4,453

6,252

33,348

279

285

2,089

Total current liabilities

Non-current liabilities:

Non-current assets:
Property, plant and equipment:
Buildings and structures

265,074

254,276

1,985,127

Machinery, equipment and vehicles

550,543

523,244

4,122,991

Land

43,84342,889328,338

Provision for directors’ retirement benefits

Leased assets

6,603

3,622

49,450

Deferred tax liabilities

12,514

11,45893,717

Construction in progress

66,46742,385

497,768

Asset retirement obligations

5,272

5,216

39,482

Other

57,61855,361

431,499

Provision for business restructuring

2,499

2,305

18,715990,151

921,780

7,415,195

Other

14,6495,115

109,706(676,384)(645,396)(5,065,409)

Total non-current liabilities

137,625

98,794

1,030,667

313,767

276,384

2,349,787

Total liabilities

358,068

297,7632,681,555

Common stock:
Authorized 492,428,000 shares; issued 222,239,199 and
225,739,199 shares in 2023 and 2022

41,97041,970314,311

Less accumulated depreciation
Total property, plant and equipment

Stockholders’ equity:
Intangible assets, net:
Goodwill

4,425

4,811

33,13934

4255

Additional paid-in capital

34,29334,339256,819

Software

3,479

2,992

26,054Retained earnings

521,426

492,455

3,904,935

Other

4,041

3,482

30,263

11,98011,29089,718Treasury stock, at cost;
17,660,740 and 17,693,673 shares in 2023 and 2022

(23,838)(21,525)(178,522)

573,852

547,239

4,297,551

8,950

11,37667,026

Leased assets

Total intangible assets

Total stockholders’ equity
Investments and other assets:
Investment in securities

171,446

1,498,547

Long-term loans receivable

8,184

5,159

61,290

Deferred tax assets

3,863

3,493

28,930

Deferred gains (losses) on hedges

110

(326)

824

22,894

9,861

171,452

1,805

614

13,51833,76021,526

252,827

Valuation difference on available-for-sale securities

Retirement benefit asset

1,387

1,226

10,387

Foreign currency translation adjustments

Other investments and other assets

8,706

8,047

65,199Remeasurements of defined benefit plans

Less allowance for doubtful receivables(1,922)(607)(14,394)

Total investments and other assets

220,320

188,765

1,649,966

Non-controlling interests

63,636

62,121

476,567

Total non-current assets

546,068

476,440

4,089,478

Total net assets

671,249

630,887

5,026,953¥ 1,029,317¥ 928,651$ 7,708,507¥ 1,029,317¥ 928,651$ 7,708,507

Total assets

83

Accumulated other comprehensive income:

200,101

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Total accumulated other comprehensive income

Total liabilities and net assets

MGC Report 2023

84

Consolidated Financial Statements

Consolidated Statement of Income

Consolidated Statement of Cash Flows

Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2023

Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2023
Thousands of
U.S. dollars

Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating profit
Other income (expenses):
Interest income
Dividend income
Interest expenses
Share of profit of entities accounted for using equity method
Gain on sale of investments in securities
Rent expenses
Loss on valuation of investments in securities
Personnel expenses for seconded employees
Impairment loss
Loss on valuation of shares of subsidiaries and associates
Loss on sale/disposal of non-current assets
Land maintenance expenses
Insurance claim income
Compensation income
Gain on recovery of money transfer scam at subsidiary
Reversal of Provision for loss on business of subsidiaries and associates
Gain on step acquisitions
Provision for business restructuring
Provision of allowance for doubtful accounts
Provision for loss on business of subsidiaries and associates
Fire loss
Loss on change in retirement benefit plan at subsidiary
Other, net
Total other income (expenses)
Profit before income taxes
Income taxes:
Current
Deferred
Total income taxes
ProfitProfit attributable to non-controlling interests
Profit attributable to owners of parent

2023

2022

¥ 781,211
613,031
168,179
119,149
49,030¥ 705,656
543,070
162,586
107,225
55,360$ 5,850,453
4,590,961
1,259,485
892,301
367,183

1,157
3,021
(1,745)
17,546
3,732
(735)
—
(1,852)(1,128)(846)(1,730)
(275)
151
649
215
128
—
(870)
(410)
—
—
—
4,199
21,20870,239

346
3,218
(858)
14,883
3,011
(818)
(286)
(1,361)(7,059)—(1,833)
—
2,616
—
—
—
796
(1,733)
(960)
(188)
(128)
(109)
4,734
14,267
69,628

8,665
22,624(13,068)
131,401
27,949(5,504)—(13,870)(8,448)(6,336)(12,956)(2,059)
1,131
4,860
1,610
959
—
(6,515)(3,070)———31,446
158,826
526,017

13,831
1,619
15,450

16,542555
17,098103,580
12,125
115,704¥ 54,788
5,703¥ 49,085¥ 52,530
4,235¥ 48,295$$

410,305
42,710367,595

Consolidated Statement of Comprehensive Income
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2023
Thousands of
U.S. dollars

Millions of yen

ProfitOther comprehensive income arising during the year:
Valuation difference on available-for-sale securities
Deferred gains (losses) on hedges
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Shares of other comprehensive income of entities accounted forby the equity method
Total other comprehensive income arising during the year
Comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests

85

MITSUBISHI GAS CHEMICAL COMPANY, INC.

Thousands of
U.S. dollars

Millions of yen

2023

2023

2022

2023

¥ 54,788¥ 52,530$ 410,305(2,430)
51
9,408
901

(3,118)
(14)
9,330
1,032

(18,198)382
70,456
6,748

7,033

6,471

52,67014,963¥ 69,751

13,701¥ 66,232

112,057$ 522,362¥ 61,319
8,432¥ 60,083
6,149$ 459,215
63,147

Cash flows from operating activities:
Profit before income taxes
Adjustments to reconcile profit before income taxes to net cash
provided by operating activities:
Depreciation and amortization
Amortization of goodwill
Loss on sale/disposal of non-current assets
Impairment loss
Share of profit of entities accounted for using equity method
Increase (decrease) in allowance for doubtful receivables
Increase (decrease) in net defined benefit liability
Increase (decrease) in provision for directors’ retirement benefits
Provision for business restructuring
Interest and dividend income
Interest expenses
Gain on sale of short-term investments and investments in securities
Loss on devaluation of short-term investments and investments in securities
Decrease (increase) in trade receivables
Increase (decrease) in inventories
Increase (decrease) in trade payables
Other, net
Sub totalInterest and dividend received
Dividend received from entities accounted for using equity method
Interest paid
Income taxes paid
Other, net
Net cash provided by operating activities
Cash flows from investing activities:
Purchase of non-current assets
Proceeds from sale of non-current assets
Proceeds from sale of investments in securities
Purchase of investments in securities and subsidiaries
Loan advances
Proceeds from collection of loans receivable
Purchase of shares of subsidiaries resulting in change in scope of
consolidation
Other, net
Net cash used in investing activities
Cash flows from financing activities:
Increase (decrease) in short-term borrowings
Proceeds from long-term borrowings
Payments on long-term borrowings
Purchase of treasury stock
Proceeds from sale of treasury stock
Dividends paid to stockholders
Dividends paid to non-controlling interests
Payments from changes in ownership interests in subsidiaries
that do not result in change in scope of consolidation
Other, net
Net cash (used in) provided by financing activities
Effect of exchange rate changes on cash and cash equivalents(Decrease) increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Increase in cash and cash equivalents resulting from inclusion ofsubsidiaries in consolidation
Cash and cash equivalents at end of year

2023

2022

2023

¥ 70,239¥ 69,628$ 526,017

33,565
405
1,653
1,128
(17,546)
531
(851)
(2)
870
(4,179)1,745(3,980)4
2,412(19,711)(6,868)(1,458)57,957
4,361
15,082(1,654)(20,686)
163
55,222

31,999
396
1,630
7,059
(14,883)
1,027
140
49
1,733
(3,564)858(3,041)
332(9,273)(28,992)
9,792(12,396)
52,497
3,526
4,439
(818)
(10,386)
2,831
52,090251,367
3,033
12,3798,448(131,401)
3,977(6,373)(15)
6,515(31,296)
13,068(29,806)30
18,063(147,615)(51,434)(10,919)434,037
32,659112,948(12,387)(154,916)
1,221
413,555(62,721)202
5,739(1,795)(2,354)
469(56,347)463
5,724(11,849)(824)
101(469,715)
1,513
42,979(13,443)(17,629)3,512—(2,668)—(3,612)(64,071)445(64,954)(27,050)(479,825)(7,062)50,289(7,965)(7,083)
0(15,464)(4,695)316
16,641(10,641)(5)
0(16,642)(2,551)(52,887)376,612(59,650)(53,044)
0(115,809)(35,161)(2,195)—(16,438)

2,173
7,996

9,216
(3,666)

16,27359,882

7,737
6,885
92,257

6,502(10,028)
91,07557,942
51,561
690,908

2,041

11,21015,285¥ 101,185¥ 92,257$ 757,770

MGC Report 2023

86Consolidated Financial Statements

Consolidated Statement of Changes in Net Assets
Mitsubishi Gas Chemical Company, Inc. and Consolidated Subsidiaries
For the year ended March 31, 2023
Millions of yen
Stockholders’ equity

Balance as of April 1, 2021

Common stock

Retained earnings

Treasury stock

Total

Valuation difference
on available-for-salesecurities¥ 41,970¥ 34,301¥ 459,790¥ (21,562)¥ 514,499

Cumulative effects of changes in accounting policies
Restated balance

Accumulated other comprehensive income

Additional paid-in
capital(50)
41,97034,301

459,739

Deferred gains(losses) on hedges

Foreign currencytranslation
adjustments

Remeasurements of defined
benefit plans¥ 14,419¥ (618)¥ (3,542)¥ (494)

14,419(618)(3,542)(494)

Non-controlling interests

Total net assets¥ 9,765¥ 57,146¥ 581,411

9,765

57,146581,360

Total

(50)
(21,562)

514,448(50)

Changes arising during year:
Cash dividends(16,642)

Profit attributable to owners of parent

48,295Purchase of treasury stock
Disposition of treasury stock39(16,642)(16,642)

48,29548,295

(5)

(5)

(5)

42

81

81

Change in scope of consolidation

441

441

441

Change in scope of equity method

620

620

620

(0)

(0)

Change in treasury stock of parent arising fromtransactions with non-controlling interests(0)

Net changes other than stockholders’ equity
Total changes during the year
Balance as of March 31, 2022

(3,043)291

13,404

1,108

11,761

4,974

16,736—38

32,71536

32,791(3,043)291

13,404

1,108

11,761

4,974

49,527¥ 41,970¥ 34,339¥ 492,455¥ (21,525)¥ 547,239¥ 11,376¥ (326)¥ 9,861¥ 614¥ 21,526¥ 62,121¥ 630,887

Changes arising during year:
Cash dividends(15,464)

Profit attributable to owners of parent

49,085Purchase of treasury stock(15,464)(15,464)

49,08549,085(7,083)(7,083)(7,083)

Disposition of treasury stock

23

47

70

70

Retirement of treasury stock(4,724)

4,724

(0)

(0)

Transfer of retained earnings to additional paid-in
capital

4,647(4,647)

—

—

(1)

(1)

(1)

7

7

Change in scope of consolidation
Change in treasury stock of parent arising fromtransactions with non-controlling interests

7

Net changes other than stockholders’ equity
Total changes during the year
Balance as of March 31, 2023—

(2,426)436

13,032

1,191

12,234

1,514

—

(46)

28,971(2,312)

26,612(2,426)436

13,032

1,191

12,234

1,514

13,74840,361¥ 41,970¥ 34,293¥ 521,426¥ (23,838)¥ 573,852¥ 8,950¥ 110¥ 22,894¥ 1,805¥ 33,760¥ 63,636¥ 671,249

Non-controlling interests

Total net assets$ 465,221$ 4,724,684

Thousands of U.S. dollars
Stockholders’ equity

Balance as of March 31, 2022

Accumulated other comprehensive income

Common stock

Additional paid-in
capitalRetained earnings

Treasury stock$ 314,311$ 257,163$ 3,687,973$ (161,200)

Total

Valuation difference
on available-for-salesecurities

Deferred gains(losses) on hedges

Foreign currencytranslation
adjustments

Remeasurements of defined
benefit plans

Total$ 4,098,248$ 85,194$ (2,441)$ 73,849$ 4,598$ 161,207

Changes arising during year:
Cash dividends(115,809)(115,809)(115,809)

Profit attributable to owners of parent

367,595

367,595

367,595(53,044)(53,044)(53,044)

Purchase of treasury stock
Disposition of treasury stock

172

352

524

524

Retirement of treasury stock(35,378)

35,378(0)(0)

Transfer of retained earnings to additional paid-in
capital34,801(34,801)

—

—

(7)

(7)

(7)

52

52

Change in scope of consolidation
Change in treasury stock of parent arising fromtransactions with non-controlling interests

52

Net changes other than stockholders’ equity
Total changes during the year
Balance as of March 31, 2023

87

MITSUBISHI GAS CHEMICAL COMPANY, INC.

—

(18,168)

3,265

97,596

8,919

91,62011,338—(344)

216,962(17,314)

199,296(18,168)

3,265

97,596

8,919

91,62011,338102,958
302,262$ 314,311$ 256,819$ 3,904,935$ (178,522)$ 4,297,551$ 67,026$ 824$ 171,452$ 13,518$ 252,827$ 476,567$ 5,026,953

MGC Report 2023

88

Corporate Data

Corporate Information (As of March 31, 2023)

Business Locations

Company name

MITSUBISHI GAS CHEMICALCOMPANY, INC.

Address

Mitsubishi Building,
5-2 Marunouchi 2-chome, Chiyoda-ku,
Tokyo 100-8324, Japan

Originally founded

January 15, 1918

Incorporated

April 21, 1951

Capital41.97 billion yen

Fiscal year

Accounts closed in March

Number of
employees

Shanghai Offic
Office /MITSUBISHI GASAS CHEMICALCHEMSHANGHAI COMMERCE
RCE LTD.
LT(trading company)
mpany)MITSU
ITSUBISHIGAS CHEGCHEMICALEUROPE GMBH
M
(trading company)
pa )

⓭

⓬

2,448 (non-consolidated)
10,050 (consolidated)❾

MITSUBISHIGAS CHEMICALAMERICA, INC.
(trading company))❸❼

MG TRADINGMGC((THAILAND) LTD.
(trading
trad
company)

⓱

❺❹
⓯

❻

Listing

Tokyo Stock Exchange
Prime Market㉖

Yokkaichi Plant

MITSUBISHIM
GAS CHEMICALSINGAPORE PTE. LTD.
(tradingrcompany)

QOL Innovation Center
Shirakawa④⑥④⑥

Mizushima Plant❷⓮⑨

Taiwanaiw
iwan
wa Office
O
Offi
fice

Saga Plant

⓫⓰
⓫
⓰

㉑
㉗ ①
⑦

❿

Kashima Plant⑩⑯

Tokyo Research Laboratory
Head Office

Ticker symbol

4182

Total number ofauthorized shares

492,428,000

Number of outstanding
shares222,239,199

Stock transaction unit

100

Major Group Companies

Number of shareholders

40,932

Overseas⓰ TAI HONG CIRCUIT INDUSTRIAL CO., LTD. E(Manufacturing and sale of printed wiring board)⑬ KOKUKA SANGYO CO., LTD. E❶ AGELESS (THAILAND) CO., LTD. C(Manufacturing of oxygen absorbers)⓱ TAIXING MGC LINGSU CO., LTD. C(Manufacturing and sale of hydrogen peroxide/performancechemicals)⑭ JSP CORPORATION C③⑤⑧⑫⑬⑭⑰⑱⑲⑳㉒㉓㉔㉘

Naniwa Plant
Yamakita Plant

Other companies in Japan
Financial
institutions

Securities
companies

46.3%

7.8%

Foreigninvestors
23.0%

Individuals
and others
19.1%

3.8%

E

Equity method affiliate

Investment in MGC
Name of shareholder❷ BRUNEI METHANOL COMPANY SDN. BHD. E(Manufacturing and sale of methanol)❸ JSP International Group LTD. C(Manufacturing and sale of expanded polyolefin beads andmolded bead products)⓲ THAI POLYACETAL CO., LTD. C(Manufacturing of polyacetal)⓳ THAI POLYCARBONATE CO., LTD. C(Manufacturing of polycarbonate resin)❹ KOREA ENGINEERING PLASTICS CO., LTD. E(Manufacturing and sale of polyacetal resins)

Major Shareholders (Top 10)

Percentage
Number ofof totalshares held
outstanding(thousands)
shares30,590

Custody Bank of Japan, Ltd. (Trust Account)

17,6688.6

Meiji Yasuda Life Insurance Company

8,797

4.3

Nippon Life Insurance Company

5,858

2.8

The Norinchukin Bank

5,026

2.4

AGC Inc.

3,526

1.7

National Mutual Insurance Federation ofAgricultural Cooperatives

3,235

1.5

The Bank of Yokohama, Ltd.

3,085

14.9

1.5

MUFG Bank, Ltd.

2,700

1.3

JPMorgan Securities Japan Co., Ltd.

2,694

1.3

Notes: 1. MGC holds 17,660 thousand shares of treasury stock, which
is not included in the above list of major shareholders.
2. Percentage of total outstanding shares does not include
treasury stock.

MITSUBISHI GAS CHEMICAL COMPANY, INC.

(Shipping)(Manufacturing and sale of foamed plastic)⑮ TOHO EARTHTECH, INC. C(Manufacturing and sale of natural gas and iodine, seismic
reinforcement work)⑯ Toyo Kagaku Co., Ltd. C(Manufacturing and sale of plastic injection molding)⑰ Japan Saudi Arabia Methanol Company, Inc. E(Business administration for AR-RAZI)❺ KOREA POLYACETAL CO., LTD. C(Manufacturing and sale of polyacetal resins, etc.)

Domestic⑱ Japan Trinidad Methanol Company, Inc. E❻ METANOL DE ORIENTE, METOR, S.A. E(Manufacturing and sale of methanol)① EIWA CHEMICAL IND. CO., LTD. C⑲ JAPAN FINECHEM COMPANY, INC. C❼ MGC ADVANCED POLYMERS, INC. C② MGC Advance Co., Ltd. C(Manufacturing and sale of nylons)

The Master Trust Bank of Japan, Ltd.
(Trust Account)

Hiratsuka ResearchLaboratory

C Consolidated subsidiary

Composition of shareholders

89

㉕

②⑮

❶❽⓲⓳
❽⓲
⓲⓳
⓳

Shareholder Information (As of March 31, 2023)⑪

Niigata ResearchLaboratory
Niigata Plant❽ MGC ELECTROTECHNO (THAILAND) CO., LTD. C(Manufacturing of copper-clad laminates)❾ MGC PURE CHEMICALS AMERICA, INC. C(Manufacturing and sale of super-pure hydrogen peroxide/
super-pure ammonium hydroxide/performance chemicals)❿ MGC PURE CHEMICALS SINGAPORE PTE. LTD. C(Manufacturing and sale of super-pure hydrogen peroxide/
super-pure ammonium hydroxide/performance chemicals)⓫ MGC PURE CHEMICALS TAIWAN, INC. C(Manufacturing and sale of super-pure hydrogen peroxide/
performance chemicals)(Investing in Trinidad and Tobago)(Manufacturing and sale of blowing agents)(Transportation storage, manufacturing and sale of life science
products, engineering maintenance)③ MGC Woodchem Corporation C(Manufacturing and sale of wood adhesives and formalins)④ MGC AGELESS Co., Ltd. C(Manufacturing and technical service for oxygen absorbers, etc.)⑤ MGC ENERGY Company Limited C(Provision and sale of electricity)⑥ MGC Electrotechno Co., Ltd. C(Manufacturing of copper-clad laminates)⑦ Otsuka-MGC Chemical Company, Inc. E(Manufacturing and sale of hydrazine hydrate)⓬ MGC SPECIALTY CHEMICALS NETHERLANDS B.V. C(Manufacturing and sale of meta-xylenediamine)⑧ MGC Terminal Company, Inc. C⓭ MITSUBISHI GAS CHEMICAL ENGINEERING-PLASTICS(SHANGHAI) CO., LTD. C(Manufacturing of polycarbonate resin)⑨ MGC Filsheet Co., Ltd. C⓮ PT PEROKSIDA INDONESIA PRATAMA C(Manufacturing and sale of hydrogen peroxide)⓯ SAMYOUNG PURE CHEMICALS CO., LTD. C(Manufacturing and sale of super-pure hydrogen peroxide/
performance chemicals)(Storage terminal for methanol and chemicals)(Manufacturing of polycarbonate sheets and films)⑩ KYOUDOU KASANKASUISO CORP. C(Manufacturing of hydrogen peroxide)⑪ GRANOPT CO., LTD. E(Manufacturing and sale of magneto-optic crystals)⑫ Global Polyacetal Co., Ltd.

(Manufacturing and sale of fine chemicals and electronic
products)⑳ Japan U-PiCA Company, Ltd. C(Manufacturing and sale of unsaturated polyester resins)㉑ FUDOW COMPANY LTD. C(Manufacturing and sale of thermoset resin molding
compounds, thermoplastic resin molding and various plastics)㉒ Polyols Asia Company, Inc. C(Sale of polyhydric alcohols)㉓ Mitsubishi Engineering-Plastics Corporation C(Manufacturing and sale of engineering plastics)㉔ Mitsubishi Gas Chemical Trading, Inc. C(Sale of chemicals, electronic materials and polymers)㉕ Yuzawa Geothermal Power Corporation E(Development and provision of geothermal energy resources)㉖ Yonezawa Dia Electronics Co., Inc. C(Manufacturing of mass molding laminates, processdevelopment)㉗ RYODEN KASEI CO., LTD. E(Manufacturing and sale of insulating materials)㉘ Ryowa Enterprise Co., Ltd. C(Property management/business support)

C(Manufacturing and sale of engineering plastics)
MGC Report 2023

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MGC Report 2023

Mitsubishi Building, 5-2 Marunouchi 2-chome, Chiyoda-ku, Tokyo 100-8324
Investor Relations Department, CSR & IR Division
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