VALQUA Group

Sustainability Report2022

Sustainability Materiality

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Special Feature 1. Visionary Management

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CONTENTS

Corporate Philosophy

Corporate Philosophy

THE VALQUA WAY
the VALQUA Group’s sustainability.

Editorial Policy

The VALQUA Group will continue to pursue the creation of value and improvement of quality in orderThis Sustainability Report is issued once a year to communicate
our basic approach to ensuring the sustained growth of the
VALQUA Group, and our sustainability related activities, to all of
our stakeholders. Some of the data is disclosed only on our
website, and URLs where this content will be posted areincluded in this Sustainability Report. We also make reference tointernational standards and guidelines such as the GRI
Standards, ISO26000, the UN Global Compact, Sustainable
Development Goals (SDGs), and RBA Code of Conduct.

Reporting Period

Four
Corporate
Principles

Ten
ActionPrinciples&

Create value andimprove quality- For the Benefit of Society- With Fairness- For Stakeholders Worldwide- Through Creative Technology

Sustainability Management

April 1, 2021 to March 31, 2022
Some of the reports include content from before or after theabove period. The information, such as the organizational chart,
policies, and standards, are current as of June 2022.

Changing the competitiveenvironment through the powerof digitalSpecial Feature 3. Human Resources Development

Challenges faced by female
managers who grow along with
VALQUA VIETNAM
01. Spread of the Corporate Philosophy
02. Strengthening of corporate governance
03. Promotion of Group’s global activities
04. Dialog with stakeholders

VALQUA, LTD. and its 18 consolidated subsidiaries(Hiring rates for persons with disabilities and percentage of womenin management positions are figures for VALQUA, LTD. alone.)

Timing of Publication
Issued in June 2022 (last issued in June 2021)

VALQUA Group Sustainability Report 2022

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Compliance
05. Prevention of corruption and bribery
06. Legal compliance

Scope

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Corporate Governance07. Compliance with environment-related laws andordinances, etc.

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Environment
08. Prevention and reduction of leakage ofenvironmentally hazardous substances

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09. Reduction of environmentally hazardous substancesin business

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Safety and HealthReporting Media

10. Occupational health and safety27

Supply Chain Management

1. Run a business that contributes to society
2. Be an inspiration to the customers
3. Hold respect for individuality and personality
4. Earn the trust of the shareholders
5. Exist with harmony to the community
6. Always treat health and safety with top priority
7. Respect compliance and work with full honesty
8. Aim for environmentally friendly production
9. Conserve and utilize resources effectively
10. “Learn and grow” with a spirit to face challenges

Brochure/
PDF
editionSummarizes high-priority sustainability
related activities in the form ofan annual report.
https://www.valqua.co.jp/
social/report/

11. Sustainable procurement
12. Ensuring of the diversity of human resources
13. Respect for human rights
14. Human resources development

Web
editionExhaustive posting of latest information andadditional information on our website.
Updated frequently.
https://www.valqua.co.jp/
social/28

Human Resources and Human Rights

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Customer Satisfaction
15. Improvement of quality and customers’ safety andpeace of mind

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Community
16. Promotion of sports, culture, and the arts
Coexistence with local community
Company Overview and Map of Bases

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CDO Message

This deep understanding and implementation of THE VALQUA WAY forms the basis of

Quality

Philosophy and Policy on SDGs

Special Feature 2. Promotion of DX

and “10 Action Principles” that aid employee understanding and facilitate implementation.

Value

VALQUA’s Relationship to Society

Further strengthening of visionary
management for sound andsustained growth“Value & Quality” from which the company name is derived, together with the “4 Corporate Principles”

Core
Principle

Top Message

Beyond the 100th anniversary of “THE VALQUA WAY”

The VALQUA Group’s Corporate Philosophy – “THE VALQUA WAY” – consists of the Core Principle of“To contribute to the richness of human race and global environment”.

Contents, Editorial Policy

VALQUA Group Sustainability Report 2022

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Top Message

Contributing to the “richness of human race andby exhibiting VALQUA’s strengths to the greatest“Thinking from a different angle” and taking
on the challenge of “bold CX” in order tocreate value with an eye to the future
Common sense and the things we took for granted as routine havebeen turned on their head by the events of the past few years, inwhich all manner of risks have surfaced. The spread of the
COVID-19 pandemic since 2020 has been compounded by new
problems that emerged this year, including the territorial rights
struggles in various parts of the world, human rights violations suchas forced labor and child labor, and issues of economic security.
At the same time, action on climate change – an urgent
issue for the global environment – has been greatly accelerated bydiscussion at the climate summit and forums such as G7 and COP26.
The VALQUA Group is strengthening its involvement in“environment, society, and corporate governance” as a reflection ofits decision to contribute to the richness of human race and global
environment as “a challenging company that challenges the future
and the unknown”, befitting the Corporate Image we would like tohave by 2027, the 100th anniversary of the company.
In the area of the environment, VALQUA provides
environmentally friendly products oriented toward the practicalapplication of hydrogen energy and the silicon wafer reclaiming
business while also striving to introduce renewable energy andpractice environmentally friendly manufacture, including the
installation of solar energy generation facilities, not only within
Japan but also at its new factories overseas.
VALQUA sees coping with climate change as an important
theme, and while expressing its approval of the May 2021
recommendations of the Task Force on Climate-related Financial
Disclosures (TCFD), it has joined the TCFD Consortium, a forum fordiscussion participated in by corporations and financial institutions
that have approved the recommendations. In the future, while
engaging in activities along the lines of the TCFD
recommendations, VALQUA will go on contributing to the global

environment through the proactive provision of environmentallyfriendly products and cooperation with partner corporations onenvironmentally friendly products and services.
In the area of society and corporate governance, VALQUA
adopted the slogan of “In a rapidly changing global situation, we
will uphold our customers’ trust according to “THE VALQUA WAY,”
aiming to become a company that continues to create new value
through both Hardware and Services (H&S)*1” in its new mid-termbusiness plan “New Frontier 2023” (NF2023) announced in April
2022, through which it has begun to respond immediately tochanges in the external environment, and it is accelerating these
efforts with the aim of growing by “expanding its existing businessareas” and “acquiring new business areas” with a core of H&S.
In this digital age, VALQUA is strengthening promotion not
only of DX*2 but also bold CX*3 to promote thinking from adifferent angle that leads to acquiring new business areas for its
products through VALQUA’s advanced technologies, and it isstriving to solve social problems in various fields by drawing upon
VALQUA’s broad-based strengths in cooperation with corporations
that have innovative technologies, products, services, and knowhow.
VALQUA is steadily proceeding with these efforts, and we
consider strengthening our management foundation to be more
important than anything else in promotion of the sustained
growth of the VALQUA Group. To this end, we are making efforts inrisk management from the standpoint of ensuring safety andsecurity, developing and strengthening compliance and BCP
systems, further promoting human resources development, andexpanding into new business fields.
*1 H&S: VALQUA is providing solutions oriented toward the maximization of customer value
by adding “S” (services) that take into account the perspective of the customer to “H”(hardware = products) with high added value.
*2 DX: abbreviation for digital transformation.
*3 CX: abbreviation for corporate transformation.

Basic policy of mid-term business plan, New Frontier 2023 (NF2023)
In a rapidly changing global situation, we will uphold our customers’ trust according to “THE
VALQUA WAY,” aiming to become a company that continues to create new value through both
Hardware and Services (H&S).
1. Adopt new materials and enter new markets and businesses by accelerating a bold strategy for M&As and business alliances
2. Decisively move forward with supply chain reforms in response to increasing geopolitical risks
3. Establish an AI/IT solutions business that can continuously create value for our customers
4. Accelerate R&D and human resource development in order to expand into new business areas
5. Further strengthen existing businesses by increasing capital investment and enhancing sales channels

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VALQUA Group Sustainability Report 2022

global environment”
possible extent.
From “CSR” to “Sustainability”
To prepare for the move into the “Prime Market” that
accompanied the restructuring of the Tokyo Stock Exchange
in April 2022, VALQUA has been enhancing governance andstrengthening its sustainability activities to accommodate theJune 2021 revision of the “Corporate Governance Code”. We
have strengthened our system by reframing the VALQUA
Group’s former “CSR” as “sustainability”, which we interpret as“realizing sound, sustained growth and a sustainable society
under ‘THE VALQUA WAY’”, and our system for promoting thesechanges, formerly known as the “VALQUA Group CSR
Promotion Committee”, has been newly designated the“VALQUA Group Sustainability Committee”.
We are also currently reviewing our CSR materiality torecast it as “sustainability materiality” that ascribes importanceto its relatedness to management strategy and business plans.

Enhanced HR development that enables
diverse human resources to exhibit theircapabilities to the fullest
The VALQUA Group considers human resources to be its mostimportant asset, and we have established a “VALQUA Group Basic
Policy on Human Rights”. We are also reinforcing our HR
development to expand into new business areas and promoting
the development of core human resources who will shoulder the
management of our bases in the near future through our CEO
cram schools, overseas executive training, early selection
education training, and other training programs. As programs for
improving the minds of employees, we have been making efforts
to improve engagement on the part of all employees throughout
the Group, and it has been possible to give even employees indepartments that do not directly come into contact withcustomers the opportunity to experience learning from theviewpoint of customers, for instance by having our employees
participate as staff members in the ballroom dance events that ourGroup promotes and supports as part of its sustainability activities.
In this way, we are making efforts to educate our humanresources from many different angles, and we expect that thedevelopment of autonomous employees will lead to therealization of “a challenging company that challenges the future
and the unknown” to contribute to the richness of human raceand global environment.
The basis of these business activities of the VALQUA Group is
our Corporate Philosophy, “THE VALQUA WAY”. Under “THE VALQUA
WAY”, the VALQUA Group is continuing to pursue further creationof value and improvement of quality, and is contributing to soundand sustained growth and the realization of a sustainable society.
We hope for your unwavering support and guidance of the
VALQUA Group in the future.

June 2022

Toshikazu Takisawa

VALQUA Group Representative
Representative Director, Chairman & CEO
VALQUA, LTD.

VALQUA Group Sustainability Report 2022

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N Medical institutions

VALQUA with Society

VALQUA’s Relationshipto Society

M Factories and offices

L Ships and vessels

Fluorocarbon resin skived tape

LED illumination

Gland packing

Reclaimed silicon wafer

These products use advanced technology
to cut fluorocarbon resin. Exceptionallyairtight and slid able, they are used forcoating syringe pistons, etc.

These products have the characteristics oflower power consumption and long life.
The extensive lineup can be applied to awide variety of needs, and they contributeto reducing the environmental burden.

These are products that prevent
leakage from around the working
axis, and they are used mainly inrotary pumps and valves that
fulfill the function of conveying
fluids or blocking their flow.

Silicon wafers used in checking theoperation of semiconductor manufacturing
equipment are polished and cleaned
with proprietary know-how, and recycled
and provided in the same way as new
products, thereby contributing to the
reduction of environmental burden.

Fluorocarbon resin lined
ISO tank container

Our “products & services” play an active role inall sorts of places.

These pipes use the characteristicsof fluorocarbon resins – chemical
resistance and surface smoothness– to ensure the purity of thefluids that pass through them
until they reach their destination.

A Rockets and satellites

A Rockets and satellites

Bonded gate seal
These are high performance elastomer
and metal seals with a unitary structure.
With high sealability, they are used intransfer gate valves for silicon wafers.

Photovoltaic power
generation business
The Mega Solar power generation facilityon the premises of KYUSHU VALQUA
produces clean energy daily andcontributes to the community and thepreservation of the global environment.

K Semiconductor plants
L Ships and vessels
B Solar power generation

G Chemical plants

J

Steel production plants

High performance sheet gasket

C Transformer

These metal-reinforced products
support safety operations in plants
operated at high temperatureand pressure.

M Factories and offices
N Medical institutions

Fluorocarbon resin material
Substrate material with the outstanding
electrical characteristics and weather
resistance of polytetrafluoroethylene(PTFE) contributes to safe, rapid,
high-capacity data communication in
antennas and self-driving vehicles.

Spiral wound gasket

D High-speed communications equipment

D High-speed communications equipment

J Steel production plants
With far better performance thanconventional products, these sheet
gaskets are widely used, particularly
in plants that require hightemperature resistance.

Processed fluorocarbon
resin products
The high electrical insulation
performance of these products is used
to good advantage in devices thateliminate the effect of lightning andcontrol the amount of power transfers.

Liquid chemical tanks with inner
linings consisting of fluorocarbon
resin sheets are indispensable in thestorage and transport of theultra-high purity chemicals used insemiconductor manufacture.

Products surface-treated with a special
low-impurity rubber maintain the clean
environment that is indispensable tosemiconductor manufacture.

B Solar power generation

C Transformer

Fluorocarbon resin lined tankHigh-performance elastomer

Metal hollow O-rings
These are high performance gaskets
that can even prevent leakage in outerspace. They are used not only in rockets
and satellites, but also in equipmentthat requires high temperatures, highpressure, and high vacuum.

K Semiconductor plants

Low friction seal (LFR SEAL®)

E Construction machinery

This seal material has outstanding
slidability and was developed for use in
the rotating and oscillating parts ofvarious kinds of production equipment.

H Portable media

E Construction machinery

I

O-ring

I Seal engineering services

Seal engineering services

These are typical static and dynamic
seal products. They accommodate awide range of industrial needs thanks
to the use of rubber material well
suited to the application.

Seal Training Center (STC)
STC shares VALQUA’s seal engineering technology with customers,
connecting it to safe plant operation and reliable equipment
operation. STC also provides a venue for human resources
development, with classroom lectures on the selection of sealmaterials and appropriate methods of use, as well as experiencebased training facilities for practical training using a simulation ofpipe flanges in actual factory settings.

F Automobiles

Thrust plate
When inserted into the gap in hinged
moving parts of excavators, etc., thrust
plates play the roles such as adjusting
the gap, preventing squeaking, andpreventing galling.

F Automobiles

G Chemical plants

H Portable media

Fluorocarbon resin lined ball valve

Fluorocarbon-resin envelop gaskets

Fluorocarbon resin lined productFluorocarbon resin tape

Adoption of highly chemical-resistantfluorocarbon resin in all parts that come into
contact with fluids gives these valves broad
applicability to fluid control.

Made of highly chemical resistant material,
these gaskets prevent liquid chemicals andgasses from leaking through the joints of piping
and equipment.

These pipes use the characteristics offluorocarbon resins – chemical resistance andsurface smoothness – to ensure the purity of thefluids that pass through them.

It has high insulation and excellent
workability, contributing to improved
performance and miniaturization ofcommunications equipment.

Seal Training VehicleTM (abbreviation: STV)
Seal Training VehicleTM is a mobile unit filled with training equipment
for educating customers on gasket installation.

Gasket for automatictransmission (AT)
These are the gaskets used in thehydraulic control device (valve body)that controls the AT. By sealing the oil
within the device, they make possible
smooth, responsive gear changes.

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VALQUA Group Sustainability Report 2022

VALQUA Group Sustainability Report 202207

Philosophy and Policy on SDGs

Sustainability Management

As a global citizen, the VALQUA Group is contributing to the realization of the SDGs and a sustainable society bymaking proactive efforts to deal with sustainability materiality through business activities.

The VALQUA Group has positioned “sustainability” as an important business challenge, and in 2022, it changed thename of the “VALQUA Group CSR Promotion Committee” to the “VALQUA Group Sustainability Committee”.
Under the Corporate Philosophy of “THE VALQUA WAY”, the Group is steadily executing “VALQUA Sustainable Action”
to contribute to the richness of human race and global environment.

Efforts to contribute to SDGs
As part of the “active engagement in ‘environment, society, andcorporate governance’ in becoming a better global citizen” that the
VALQUA Group established as its corporate image for the 100th
anniversary of its founding (2027), the Group is addressing the 17

OffenseSDGs and has specified 5 goals to which it thinks it can contribute
through its main business, as well as 6 goals to which it thinks it
can contribute through its corporate activities as a whole, and it ispromoting activities with 3 axes, adding “activities that contributeto society” to our offense (“solving social problems through our
main business (H&S)”) and our defense (“strengthening ourmanagement foundation”).

Solving social problems through our main
business (H&S)

realize a sustainable society as “VALQUA Sustainable Action”.

Sustainability for VALQUA
The VALQUA Group considers sustainability to be “realizing soundand sustained growth and a sustainable society under the
Corporate Philosophy of ‘THE VALQUA WAY’”.
The VALQUA Group will continue to promote sustainability
activities through business activities and pursue the creation ofvalue and improvement of quality in order “to contribute to therichness of human race and global environment”.

Activities that contribute to society

Organization for promoting sustainability

From “CSR” to “sustainability”• Efforts to solve social problems through products and services

Defense

1. Rethinking materiality that contributes tosustainability management
2. Setting concrete goals and managing progress foreach materiality
3. Expanded disclosure of the status of sustainability activities
that lead to management strategy through sustainability
reports, etc.

• Support for ballroom dancing• Activities that contribute to the local community

In April 2022, in order to accelerate its sustainability activities,
VALQUA expanded its former “CSR” into “sustainability” andstrengthened its system, changing the name of the system of
promotion from the “VALQUA Group CSR Promotion Committee” tothe “VALQUA Group Sustainability Committee”. Moreover, in the
future it will pursue the following activities, promoting efforts to

The “VALQUA Group Sustainability Committee” is positioned as animportant body for discussing the sustainability activities of theentire Group, and it is composed of the executive officers of the
VALQUA Group with the Managing Executive Officer as its
chairperson. Regular meetings are held every half-year, as well as
on an ad hoc basis, and the results are reported at the Managing
Directors Meeting every half-year.

Strengthening management foundation
Sustainability organization chart

Representative Director,
Chairman & CEO
Managing Directors
Meeting• Strengthening of governance, eco-friendly business, supply
chain management, and HR cultivation, etc.

VALQUA Group
Sustainability Committee

Sustainability Secretariat

Sustainable Development Goals (SDGs)
The Sustainable Development Goals (SDGs) were adopted by the United Nations in 2015 as
goals that should be achieved by 2030 in order to solve the problems of international society.
They consist of 17 goals and 169 targets toward which not only governments but also citizens
and private corporations are expected to contribute.

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VALQUA Group Sustainability Report 2022

Corporate
GovernanceGroup

CommunityGroup

Procurement
Group

ComplianceGroup

Environment
Group

Safety and
Health Group

Human Rights
and Labor
Practices Group

Quality andCustomer
Value Group(As of June 1, 2022)

VALQUA Group Sustainability Report 202209

Sustainability Materiality
The VALQUA Group has established 16 items of materiality with the 8 priority areas of corporate governance,compliance, environment, safety and health, supply chain management, human resources and human rights,
customer satisfaction, and community, and it is promoting concrete and proactive efforts along the lines of themateriality items.
Materiality

Why? For what purpose?

Basic policy

In April 2022, the former “CSR” was expanded into “sustainability”, and VALQUA is
proceeding to rethink its sustainability materiality, assigning more priority to therelationship between sustainability and management strategy and business plans.

Main efforts

01. Spread of the Corporate
Philosophy

To aim for sound and sustained growththrough visionary management with the
Corporate Philosophy at its center

Aim for sound and sustained growth through visionary
management with the Corporate Philosophy of “THE
VALQUA WAY” at its center

1) Activities to spread “THE VALQUA WAY” throughout the entire Group2) Presentations on personal understanding and practice of “THE VALQUA WAY” ateach level3) Activities to recognize visionary management inside and outside of the company

02. Strengthening of corporate
governanceBecause it is important to have an effective
decision-making mechanism for fulfilling
our social responsibilities

Construct a management system based on “THE VALQUA
WAY” and strive to perfect it

Activities to strengthen the system of global governance and expand
information disclosure

03. Promotion of Group’s
global activities

Because the Group needs to makeconcerted efforts to solve global problems

Make a concerted effort as the VALQUA Group to solve social
problems based on the Corporate Principle of “For
Stakeholders Worldwide”

Efforts to promote sustainability activities, contributions to SDGs, and upgrading of
information throughout the entire Group04. Dialog with stakeholders

To deepen mutual understanding throughdialog and work toward the solution ofcommon social problems

Build relationships of trust with stakeholders and promote
cooperation to lead to the solution of social problems inorder to fulfill the Action Principle of “Run a business that
contributes to society”

Efforts to expand opportunities for dialog with stakeholders

05. Prevention of corruption
and bribery

To prevent not only bribery but also
actions that raise suspicions

Conduct business on the basis of the “Compliance Manual”
under the Action Principle of “Respect compliance and workwith full honesty”

Strengthening of risk compliance, including prevention of corruption and bribery,and efforts to expand information disclosure

06. Legal compliance

To promote thorough compliancemanagement in order to fulfill our social
responsibility and meet expectations

Conduct business on the basis of the “Compliance Manual”
under the Action Principle of “Respect compliance and workwith full honesty”

Efforts to increase the effectiveness of legal compliance and expand disclosure

07. Compliance withenvironment-related laws
and ordinances, etc.

To avoid our business activities being
influenced by violation of increasingly strictlaws to prevent environmental pollution

Conduct business on the basis of the “Compliance Manual”
under the Action Principle of “Respect compliance and workwith full honesty”

Thoroughgoing environmental risk compliance08. Prevention and reduction ofleakage of environmentallyhazardous substances

To use advanced technology to contributeto the realization of a low-carbon society
through products and services that leadto reduction of environmentallyhazardous substances

Provide products and technology that contribute to thesolution of social problems under the Action Principle of“Aim for environmentally friendly production”

Combatting pollution and other social problems by developing and deploying
products and services

09. Reduction of environmentallyhazardous substancesin businessTo engage in business activities thatminimize deleterious effects on theenvironment, in order to fulfill our social
responsibilities as a manufacturing company

Give consideration to environmental assets in our activities
under the Action Principle of “Conserve and utilize
resources effectively”

Environmentally hazardous substance reduction

Safety and Health10. Occupational healthand safety

To lead to employee happiness and thedevelopment of business by creating anenvironment that considers health andsafety and is easy to work in

Create an environment that is easy to work in under the
Action Principle of “Always treat health and safety with
top priority”

Promotion of various industrial safety and health activities, such as educating
human resources to promote safety and healthSupply Chain
Management

11. Sustainable procurement(handling ofconflict minerals)

To solve problems that have become more
complex with the globalization of the
supply chain

Conduct business on the basis of the “Basic Procurement
Policy” under the Action Principle of “Aim forenvironmentally friendly production”

Education and promotion of procurement activities based on CRS
Procurement Guidelines

12. Ensuring of the diversity ofhuman resources

To lead to sound and sustained growth bycreating an environment that makes themost of the individuality of diverse humanresources and allows them to grow while
increasing their own value

Create an environment that respects the diversity,
personalities, and individuality of employees and makes it
easy for them to demonstrate their abilities under the Action
Principle of “Hold respect for individuality and personality”

Promotion of the activities of diverse human resources and promotion of flexible
ways of working

13. Respect for human rights

To give full consideration to human rights
through enlightenment activities based on
the Action Principle of “Hold respect forindividuality and personality”

Conduct business activities in line with the “VALQUA Group
Basic Policy on Human Rights” under the Action Principle of“Hold respect for individuality and personality”

Educational activities to promote understanding of various international norms forhuman rights

14. Human resources
development

To cultivate human resources that cancontribute to the expansion of
our business

Cultivate human resources that can continue to meet new
challenges by thinking for themselves under the Action
Principle of “‘Learn and grow’ with a spirit to face challenges”

1) Cultivation of the VALQUA Person2) Development of core Group managers
3) Development of core base managers
4) HR cultivation for each division and company

Customer
Satisfaction

15. Improvement of quality andcustomers’ safety and peaceof mindTo provide peace of mind and satisfaction
by solving safety-related problems forcustomers in Japan and overseas together

Promote safety and health not only for those within our own
company but also for customers in Japan and overseas
under the Action Principle of “Always treat health and safetywith top priority”

1) Information provision and services for product quality management and safe use2) Deployment of products and services that promote the safety and peace of mindof customers

Community

16. Promotion of sports, culture,and the arts
Coexistence with local
community

To contribute to the creation of a safe,
affluent society where people can havepeace of mind through the promotion andsupport of sports and sustainability
activities rooted in the community

Promote and support sports and make social contributions
rooted in the community under the Action Principle of “Exist
with harmony to the community”

1) Contributing to society through support for the growth of ballroom dancing
2) Contributing to society through greening of area around office buildings andthrough donations

Corporate
GovernanceCompliance

Environment

Human Resourcesand Human Rights

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VALQUA Group Sustainability Report 2022

SDGs to which thiscontributes

Process of defining thesustainability materiality matrix

Step

1

Recognition ofsocial problems

We first identified social problems byreferring to international standards andguidelines such as the GRI Standards,
ISO26000, the UN Global Compact,
Sustainable Development Goals (SDGs),
and RBA Code of Conduct.

Step

2

Identification of
stakeholders’ priorities

We then identified stakeholders’priorities by analyzing surveys by
evaluation organizations and customer
questionnaires to index the degree ofattention to the social problems
identified in Step 1.

Step

3

Identifying materiality
through mapping

We created a matrix chart mapping thesocial problems identified in Step 1 with“stakeholders’ priorities” identified in
Step 2 on one axis and “VALQUA Grouppriorities” on the other to extract itemswith the highest priority as materiality.

Step

4

Defining materiality

The VALQUA Group CSR materiality
items were decided upon with theapproval of the Managing Directors
Meeting in FY 2019.

Step

5

PDCA management
and materiality review

In April 2022, the former “CSR” wasexpanded into “sustainability”, and
VALQUA is proceeding to rethink its
materiality, assigning more priority to
the relationship between sustainability
and management strategy andbusiness plans.
In the future, we will promote theformulation of more concrete goals andindices and manage progress toward
those goals and indices.

VALQUA Group Sustainability Report 202211

Special Feature 1

Visionary Management

Beyond the 100th anniversary of “THE VALQUA WAY”

Further strengthening of visionary management
for sound and sustained growth
SDGs towhich thiscontributes:

New mid-term business plan starting
this fiscal year
In the current business period, when there are only 5 years left
until the 100th anniversary of our founding in 2027, the VALQUA
Group has begun a new 2-year mid-term business plan entitled“New Frontier 2023” (NF2023) and has established the slogan of “Ina rapidly changing global situation, we will uphold our customers’
trust according to “THE VALQUA WAY,” aiming to become acompany that continues to create new value through both
Hardware and Services (H&S)”.
Thanks to positive aspects of the external environment, theprevious mid-term business plan “New Frontier 2022” (NF2022)
initiated during the spread of the COVID-19 pandemic was able toachieve its goals one year ahead of schedule even under an
unstable pandemic business environment that was lacking intransparency. At the same time, this is thought to be in no small
way the result of the success of visionary management efforts
centered on the Corporate Philosophy of “THE VALQUA WAY” that
the VALQUA Group has worked with for long years.
However, the point of departure for NF2023 is the upheaval
in the social environment in recent years. Not only have we ceased
to be surprised no matter what transpires, we have arrived at an
overwhelming sense of crisis over what has happened or ishappening now, and that sense of crisis lies at the root of ourperception of the current situation.
This situation has made us recognize that in the execution of
the strategy of NF2023, we will need to see these changes as newopportunities for value creation and boldly meet the challenge of“CX” (corporate transformation) that rethinks the ideal form of thecompany from the fundamentals up, so as to flexibly and swiftly
follow a course correction that responds to risk.
* H&S: VALQUA is providing solutions oriented toward the maximization of customer value byadding “S” (services) that take into account the perspective of the customer to “H” (hardware= products) with high added value.

For sound and sustained growth
The corporate image that VALQUA established in 2020 for the
100th year since its founding is “a challenging company that

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VALQUA Group Sustainability Report 2022

Sharing “THE VALQUA WAY”
Top management

General managers and section managers

Sets forth the Corporate
Philosophy and talks
about the vision
Creates a corporate
climate that befits
the company
The staff
Understandthe Corporate
Philosophy
through thepractice of it
Think andact forthemselves

Core Principle

Talk about the Corporate
Philosophy in theirown words
Promote the growth ofmembers through actions
to put it into practice

Value & Quality
Create value andimprove quality

Four Corporate Principles

New employees
Understandthe Corporate
Philosophy
Come to lovethe company

Ten Action Principles

challenges the future and the unknown” in order to contribute to
the richness of human race and global environment. In NF2023,
the VALQUA Group will boldly challenge “CX” without fearing
failure, and will strive to create a foundation for the next round ofgrowth in order to realize sound and sustained growth at a time
when all countries, corporations, and individuals are being required
to make proactive efforts to realize a sustainable society.
The “Value & Quality” that has been our Core Principle since
our founding is the origin of our corporate name, and it exists as
the foundation for continuing to confirm for what the VALQUA
Group exists for and what is expected of it by society. The
unchangeable principle composed of the “Four Corporate
Principles” and “Ten Action Principles” into which the Core Principle
breaks down is none other than the Corporate Philosophy of “THE
VALQUA WAY”, and it is the foundation of the VALQUA Group.
“THE VALQUA WAY” is an original VALQUA Group concept thatcombines our company policy, code of conduct, vision, goals, etc.
Moreover, it has extremely practical aspects such as criteria formaking decisions in our daily activities, a compass for what to dowhen we are in doubt, and common communication tools that
also include the perspective of risk management, and it can also be

considered to be the guiding principles that give our employees
peace of mind, pride, independence, and a push toward growth.
This is why we have been holding a company-wide competition of“THE VALQUA WAY Understanding and Practice Activities” since2009 as a place for our employees to share their individual “MY
VALQUA WAY” discovered in the process of pursuing “THE VALQUA
WAY”. From aspects of offense that pursue the spirit of challenge
and try to move the customers, to aspects of defense that ascribe
importance to compliance and the obeying of rules, all employees,
including those overseas, establish their own themes of activity
and make presentations on that process and the results. To date, 14of these competitions have been held.
In the future, we will deepen visionary management throughthe presentations at “THE VALQUA WAY Understanding and Practice
Activities”, and we will strive to develop human resources filled withthe courage and readiness to work toward social development.

necessary to further strengthen the visionary management that
we have strived for for long years, and this fiscal year, we have
newly established “THE VALQUA WAY Promotion Office” to reformthe corporate climate that is the driving force behind thestrengthening of this visionary management. As measures for
improving the minds of employees, we are promoting remote
work that aims to improve the engagement of all Group
employees, carry out work-style reform, and improve productivity,
and we are proceeding to promote the “strengthening of theunderstanding and practice of the Corporate Philosophy” and the“development and establishment of corporate culture” whileconnecting them to the strengthening of visionary management.
The VALQUA Group will continue to promote visionary
management, and the entire Group will act as one to contributeto the realization of sound and sustained growth and asustainable society.
Progress of PracticePresentations

Further strengthening ofvisionary management
For the spread of “THE VALQUA WAY”
In the mid-term business plan NF2022 that covered up until thelast fiscal year, 2020 was positioned as the “first year of CX” for the
VALQUA Group in order to reconstruct a business foundation thatrealizes sounder, more sustained growth in the next era beyond
the 100th year of our founding. However, this did not take concrete
form in new activities in NF2022, so in NF2023, we will take on thechallenge of creating a foundation for new growth, decisively
taking concrete measures toward the realization of “a challenging
company that challenges the future and the unknown” with entry
into new materials, new markets, and new businesses through theacceleration of bold M&A and business alliances.
In order to swiftly and unerringly cope with extreme change
in the environment and reliably accomplish NF2023, we consider it

Scene from “VALQUA Group
Corporate Philosophy in PracticePresentations” held in Taiwan in 2008

Name changed to “THE VALQUA
WAY Practice Presentations” in2009. The company-widecompetition was held in Tokyo.

The company-wide competition in FY 2021 washeld online to prevent the spread of COVID-19.
Presenters participated remotely.

Through Creative Technology
We create original, advanced technologies in a free and frank corporate climate.
All employees, not only those in technology-related departments, are required to practice self reformation to adapt to environmental changes, whichmeans “doing things differently from the past, from other companies, and from other people”.

1952

1927 Company office building at thetime of our founding

1950s Scene of research at the timeCompleted research on processing
technology for polytetrafluoroethylene(PTFE, trade name Teflon®) developed by
E.I. DuPont (US), and manufactured thefirst Teflon® product in Japan. Began toproduce and market under the productname of “VALFLON®”

1982 Largest class ofpolytetrafluoroethylene-lined tank inJapan at the time

VALQUA Group Sustainability Report 202213

Special Feature 2

Promotion of DX

CDO Message

Changing the competitive environment
through the power of digital
SDGs towhich thiscontributes:

VALQUA, LTD.
Director, Managing Executive
Officer, CDO, Corporate
Transformation Division

Gota Nakazawa

I joined the company in March of 2021 and hold the position of Chief
Digital Officer (CDO). I will introduce a summary of the DX that is being
promoted as one of the CDO’s missions.
Utilizing digital technology in a way that surmounts the barriers between
departments to lead to the creation of new businesses while changing thestructure of the organization and the corporate culture is an important
flow in DX. With the experience I gained in my career thus far by creating
new businesses, I will take on the challenge of reforms that contribute to
the further improvement of the company’s sustained corporate value.

The reforms that DX brings
The term “DX” (digital transformation) has been around for sometime, but real DX has only just begun, not only in our company but
throughout the entire manufacturing sector as well. DX is somethingthat greatly changes a corporation’s conditions of competition andthe competitive environment of the entire industry. Even if we limit
our consideration to personal financial services, this was a businessthat only catered to “persons of property” 20 years ago, and the
KPIs of each company (indices that measure target values anddegrees of achievement) were transaction values, a kind ofinvestment value. However, with the spread of digital, the loweringof operation costs through elimination of the manual work
involved in opening accounts and the need to send out monthly
statements greatly and immediately expanded the range of target
customers. Moreover, the characteristic of digital that it“continuously connects the business with the customers” makes it
possible for the introduction of new products and services (sales)
to take place in the context of existing digital services, whichfurther spurs on the expansion of the customer target andchanges the important KPIs from transaction values to the numberof accounts. DX is not merely the utilization of digital technology
but also something that greatly changes the competitiveenvironment. With a shared recognition of these facts throughout
our company, we are accelerating the deployment of measuresthat drive reform in anticipation of reforms throughout the entire
industry, including the following efforts.

Expansion of customer base throughzero marginal cost
As stated above, one of the characteristics of digital is “zeromarginal cost”, and its effect creates a great deal of room for

VALQUA Group Sustainability Report 2022

Turning AI solutions into businessOne other pillar of our business that is separate from the efforts
mentioned above to expand our customer base using “zeromarginal cost” as our starting point and strengthen existing
businesses is the launching and development of the AI solutions
business. Through the provision of seal products, which are close
to the maintenance field, we are learning about the need for

Unified management website for providing plastics materials “Materials Pro”.
Easily search for available plastics materials, sizes, packing materials, etc. Can
also obtain estimates, etc.

14

growth in our company. Even if we take the example of the plastics
business, we grasp customer needs through sales activity andmanufacture and sell the needed products. An enormous numberof person-hours are generated in this flow. This means that we areforced to concentrate on large customers and cannot
accommodate demand from small customers (as used to be thecase in the financial industry), and it leads to the loss of sales
opportunities. Amidst this situation, we began to deploy a web
platform as an integrated means of providing plastics materials, as
the first step toward zero marginal cost and the expansion of thetarget customer. Customers can search the materials we offer, thesizes, the packing material, and other information with one click,and they can request estimates and place orders in one stop.
Digitizing the majority of the operations that take place behind thescenes is one way of moving toward zero marginal cost, if only inthe single area of material sales.
We are also further expanding these efforts in the plastics
materials field and promoting the construction of a similar systemin the processed plastics goods field as well. When it comes toprocessed goods, the work of reading blueprints and creating
estimates through digital means becomes more complicated, but
in the course of investigation and development over time, we havebeen planning our market development by the end of this year. Of
course, as we look beyond that, zero marginal cost is within ourfield of view, not only in plastics, but also in the seal products
business that is one of the pillars of our business, and we areproceeding with these efforts in an accelerated manner.

“maintenance solutions that go beyond hardware” from manycustomers, and in December of last year, we announced a capitaland business alliance with the AI venture “Ridge-i”. We will promote
the development of solutions based on this alliance, and as a result,
we will begin to develop a platform for the remote monitoring offacilities by the end of this year. With this platform, remotemonitoring and predictive management solutions for various
facilities can be utilized through the same management screen,
and the setting of user notifications and management of alerts canbe set up for each of the solutions in one stop. Currently, thesolutions that our company developed itself through the alliancewith “Ridge-i” form the core, but parallel to this, we are simultaneously
promoting alliances with external services, and in the future, wewill offer a varied lineup ranging from niche to major items.
While utilizing the “connection with customers” that is thecharacteristic of digital, we will introduce newly expanded
solutions within the platform, and step by step we will aim to growour business by creating an environment in which our customers
can easily try our solutions.

Strengthening our organization tofurther advance DX
As introduced above, the thing that will become more importantin the future as we steadily advance our efforts toward DX will betirelessly improving ease of use based on feedback from customers
and enhancing our functions. As the foundation for this, we began
last year to organize a digital development team that can complete
this development and improvement within the company. We are
improving our system by including not only programmers andsystem engineers but also web designers who can improve ease ofuse and data analysts who can drive the enhancement offunctions. In the future, we will ceaselessly strengthen ourorganization while expanding our solutions as we promote our
evolution into a solutions corporation.

Remote monitoring platform “Smart Facilities Management”. Possible to perform remote monitoring of various facilities and get predictive maintenance solutions from thesame screen.

VALQUA Group Sustainability Report 202215

Special Feature 3

Human Resources
Development

Challenges faced byfemale managers who grow alongwith VALQUA VIETNAM
SDGs towhich thiscontributes:(This section is based on an essay written by Ms. Pham Thi Phuong Minh in Japanese, with modifications)

Disappointed with a business climate
unbefitting a Japanese company
abroad, I resolved to grow along withthe company
After graduating from the university, I studied in Japan for 2 years,
and in 2013 I got a job at a Japanese company in Ho Chi Minh City.
Two years later, when I returned to my birthplace in Northern
Vietnam, I started to think that I would like to transfer to a place
where I could work for a long time. I was attracted by a classified
ad for the Hanoi Branch, which was entering its second year as asales base of VALQUA VIETNAM. The ad said, “Looking for sales
representatives who can work for us a long time and become key
persons in the future.” I decided to act on it, and I joined VALQUAVIETNAM in April 2016.
When I first joined the company, I found that Japanese wasrarely used at the Hanoi Branch, and I got no sense of the culture
or manners of Japan. This was very different from the factory I
visited at the time of my new employee’s interview, and I felt it
lacked the atmosphere of a Japanese corporation. At the sametime, I recall feeling that the difference in language and culture
raised a wall between superiors and subordinates. For me, as
someone aiming to work for a Japanese corporation, I worried
about whether things were okay the way they were, and when I
thought about the future, I asked myself many times over, “Will I be
able to work here a long time?”
The turning point came in August 2016, at the “VALQUAASEAN Conference” held for ASEAN customers. I was appointed toserve as the facilitator for the conference. Through the event, I met
with colleagues in Japan, Thailand, and Singapore. I was impressedwith their professionalism and enthusiasm for their jobs, and I feltthat I would like to continue working there.
I had the opportunity to undergo in-house training in Thailand
in 2017 and at the Head Office in 2018, and although I was working
in different countries and environments, I felt that VALQUA
employees everywhere did their jobs with the shared philosophy of“THE VALQUA WAY”, and I found that encouraging. I had had theexperience of living in Japan during my student days, so I used thefact that I understood the Japanese language and culture a little
more than the rest of the staff to play the role of a bridge between
the company and my colleagues. I came to feel more and more that16

VALQUA Group Sustainability Report 2022

I would like to increase engagement on the part of all involved.
I was later appointed subsection manager in 2018 andsection manager a half year later, and although there was heavypressure, I was given the environment to achieve the things I
wanted to do, and I got so that I wanted to approach my work withgreater motivation.
At the time of the inspection by CEO Takisawa in 2019, I had
the good fortune to be chosen to become a member of the CEO
Learning program. At first, I felt very tense, but the CEO responded toeach of my doubts and opinions, and of all the things that the CEO
said during the explanation, the message that impressed me themost was this: “The best person to serve as top manager of an
overseas production and sales base is a local person who is from thatcountry. Our company gives opportunities for career advancement
to highly motivated human resources, regardless of nationality or
gender, and we provide them with overall support.” I felt fortunatethat even I, who was hired locally, had the opportunity for growth,and my spirits rose as I felt myselfchanging into a forward-looking person
who wanted to contribute to thecreation of value in society and wanted
to move the customers with our
products and services.
With CEO Takisawa. Photo taken incommemoration of being awarded the firstplace at the FY 2019 company-widecompetition of “THE VALQUA WAY
Understanding and Practice Activities”.

Overcoming the business practices of
VALQUA VIETNAM to practice“THE VALQUA WAY”
The performance of the Hanoi Branch was not good until 2018. If
the business performance of the branch is poor, motivation also
suffers. Amidst this situation, I had the ideal opportunity toconnect important customers to our business performance in
2019. However, when I finally had the chance to meet with key
personnel from our corporate business customers, I was
sometimes disconcerted when they suddenly brought up sales
channels that did not meet our compliance policies.

Section Manager, Sales Section, Hanoi
Branch, VALQUA VIETNAM

Pham Thi Phuong Minh

After joining the company in 2016, I
experienced business at the front lines for 2
years as a sales representative, and after serving
as subsection manager, I was promoted tosection manager in the 3rd year. In my role as
the driving force behind the Hanoi Branch, I am
working hard every day to expand sales within
Vietnam and launch new businesses.

To be honest, I did think that going along with theirpreferences would be a golden opportunity for getting orders thatwould lead to better performance and allow us to achieve ourgoals, but when I considered it from the standpoint of “THE
VALQUA WAY” that we always put into practice, I could not justmeekly accept it, and I struggled mightily with the situation.
While consulting with my superiors and the related
departments, I responded in good faith to each of the points madeby the customers, asking them whether it would not be a mistaketo simply follow the “easy” path, and if it would be possible toensure that everything was done “With fairness” so we could“Respect compliance and work with full honesty”. This led to ordersthat both the customers and I could feel at ease with, and that year
we were able to achieve our highest results yet.
At this time, I got a real sense that I had not only contributed
to our business performance but also served as a bridge for “THE
VALQUA WAY” and the Ten Action Principles, and had forgedconnections within our Group, and I was happy to think that myunderstanding may have deepened a little.

Aiming to be a next-generation leader
Starting in April 2021, I was given the opportunity to participate in
the Overseas Management Training Course. This was anopportunity for two people from VALQUA VIETNAM and a total ofseven VALQUA persons from South Korea and Taiwan to spend 2
years learning how to grow as core managers.
In November of last year, during the COVID-19 pandemic, wewere visited at VALQUA VIETNAM by an executive who was the
director of the Head Office, and I heard directly from him that
“Expanding business performance is important, but we expect
more from you in terms of human resources development.” Hearing
that, I keenly felt the truth of what he said. At our branch, I have thelongest years of experience as a manager, and I was awarded theprestigious first place at the FY 2019 company-wide competition of“THE VALQUA WAY Understanding and Practice Activities”. With theawareness that I have been given lots of opportunities to learn andgrow by the company and my superiors, I would like to unpack thecompany’s ideas and strategies and devote energy to constructing
relationships of trust between the company and its employees.
Recently I have come to think that in order to help develop
subordinates by increasing work engagement, we should havefaith in our subordinates and take on the challenge of missions
that entrust work to them. I feel that I want to contribute to thefurther creation of value at the Hanoi Branch and by extension at
VALQUA VIETNAM by fulfilling these missions. The ASEAN region has
the dream of ultimately standing shoulder-to-shoulder with otherregions within the Group network, and I hope to contribute to thedevelopment of the region through my own company’s growth.

To contribute to Vietnamese society
through business
In April 2021, immediately after it was decided that I would
participate in the Management Training Course, I was honored tohave the opportunity to take part in the second CEO Learning
program. I will never forget CEO Takisawa’s message during the
Learning program: “Since you have gone to the effort of joining
VALQUA, I would like you to work here for a long time so that we
can accomplish something together!” Out of the recognition of thefact that we will not be allowed to survive if we do not change
within a business environment that is changing greatly, I take pridein the fact that the company has expectations for me as a nextgeneration overseas manager, and I am aware that I am “a humanresource that can develop other human resources” in the directionof next-generation leadership, so I am applying myself every day.
As a Vietnamese person, I love the country of Vietnam that I
was born in and am now living in, and I would like to contribute to
my own country and hometown, if only in some small degree. I
worried that perhaps it would have been better had I worked for agovernment agency or public service company in order to fulfill
that hope, but I am strongly aware that I “Run a business that
contributes to society” at VALQUA, where I am now working. I havecome to think that I can contribute to my own country andhometown through the work I do at VALQUA, and my earlier doubts
have completely cleared. Through contribution to the sustained
development of VALQUA, I would like to communicate my ardent
hope to contribute to the development of my own country andhometown to my other Vietnamese colleagues, and I would likeeveryone to come together to think and act with “THE VALQUA
WAY” as our standard so that we can accomplish bold reforms thattake us out of our comfort zone and grow into a VALQUA VIETNAM
that shines brightly in the new “CX” age” of our Group.

With the president of one of
our customers in 2021

With the staff of the Hanoi Branch at Tet (the old Vietnamese New Year) in 2021

VALQUA Group Sustainability Report 2022

17

Corporate Governance
SDGs to which this contributes:

Corporate Governance01

Spread of the Corporate Philosophy

02

Strengthening of corporate governance

Activities to promote understanding of“THE VALQUA WAY” and put it into practiceCorporate governance
Basic philosophy

At the VALQUA Group, the Corporate Philosophy common to our Group, “THE VALQUA WAY”, forms thefoundation for our daily activity as our compass and code of conduct. Each employee of the VALQUA Groupin the eight countries and regions where we have a presence determines how the mental outlook of theGroup is relevant to their own work and brings a consciousness of problem identification and solution totheir work in a way that leads to improvements and reforms in the work itself.
Moreover, in order to further spread “THE VALQUA WAY”, we hold the Practice Presentation annually as aplace for sharing our activities throughout the year. This Practice Presentation is a forum for making
presentations on how each employee has translated “THE VALQUA WAY” down to the level of their own work.
After the preliminary presentations held at the levels of individual countries and levels within thehierarchy, the company-wide competition of representatives who were selected at the preliminarypresentations is held every January, and the 14th competition was held in FY 2021. Up until FY 2021, a
Practice Presentation of core managers was held every October, but starting in FY 2021 the presentation
began to be held in two parts, one for presidents of affiliated companies and the other for personnel at thelevel equivalent to general manager, after making adjustments so that the activities and the content of thepresentation reflected the participants’ work responsibilities.
To enhance these activities, it is best to hold the presentation live in person, but there have been
numerous limiting factors, such as the continued COVID outbreaks, that made it necessary to hold it online
in FY 2021 as well.
However, even under the environment in which communication within and outside of the company islimited by the pandemic and remote work, we are proactively grappling with this environment through the
spread of “THE VALQUA WAY”, and the entire Group is working on CX (corporate transformation) and DX(digital transformation).
Moreover, in FY 2022, we newly established a promotion department known as “THE VALQUA WAY
Promotion Office” under the new mid-term business plan “New Frontier 2023” (NF2023) that aims to further
promote visionary management.
The entire VALQUA Group will continue to promote visionary management resolutely.

As a pioneer in seal engineering, the VALQUA
Group has constructed a management system fortransparent, fair, rapid, and bold decision-making
in order to increase its corporate value throughsustained growth of the corporation under the
Corporate Philosophy of “THE VALQUA WAY”, and it
continually pursues optimal corporate governanceand strives to perfect it.

Status of corporate governanceIn order to respond rapidly and unerringly tosudden changes in the business environment, weComposition of Board of Directors and Board of Auditors (as of June 1, 2022)

Directors

7 (5 men and 2 women)
Including 3 outside directors (1 man and 2 women)

Auditors

3 (3 men)
Including 2 outside auditors (2 men) nsuring the transparency andEreliability of business

General Meeting of Shareholders
Appoints/Dismisses
AuditsReports

Representative Director,
Chairman & CEO
Representative Director,
President & COO
Cooperates

Directs/Supervises

Compliance
Committee
Scene from the online
commendation ceremony* Certificates of commendation are sent towinners at a later date.

Employees from throughout the entire Group are divided
according to department, and the ones selected from eachdepartment go on to the company-wide competition. Award
ceremony is also held online.

Close look of the FY 2021 Company-wide Competition* Held online again for the second year because of the statusof the COVID-19 pandemic.

Internal Audit
Division
AuditsReports

Accounting Auditor
Accounting
auditsExecutive officers
Each division/
Each Group company

Appoints/Dismisses

Board of Auditors/Auditors

Board of Directors/Directors
Appoints/Dismisses/Supervises

Legal Advisor
Advice(As of June 1, 2022)

18

VALQUA Group Sustainability Report 2022

Internal Audit Division
An Internal Audit Division independent of theoperating divisions under the direct jurisdiction of
the Board of Directors has been established toperform internal audits of all of the Group’sbusiness activities. Based on the annual auditing
plan, the Internal Audit Division conducts audits
from a broad range of perspectives, includinginternal control, compliance, and risk
management, and performs evaluations andmakes proposals.

Internal control system

Corporate governance organization chart

Appoints/Dismisses

have established an agile group management
organization that introduces an executive officer
system and separates the roles of directors fromthose of executive officers. Moreover, by having
auditors, including one attorney and one certified
public accountant, audit the execution of businessby the directors and executive officers, supervisory
and auditing functions highly specialized to
management are fulfilled.

We are striving to improve and promote ourinternal control system by constructing highly
transparent business processes and an
appropriate risk management system. A “Basic
Philosophy regarding the Internal Control System”
based on the Companies Act, etc., was adopted by
the Board of Directors, and the content isreviewed as necessary in order to respond tochanges in the external environment and internal
environment. Moreover, to comply with theinternal control reporting system for making
financial reports basedon the Financial Instruments and Exchange Act,
we have constructed an internal control system
and maintain, evaluate, and improve internal rules
and regulations and business processes.
As part of this, our financial reports aredisclosed after receiving the unqualified opinionof an auditing corporation on the internal control
system reports describing the validity of the financial
reports, and we are continuing to make efforts toensure the reliability of the financial reports.

VALQUA Group Sustainability Report 2022

19

Corporate GovernanceCompliance03

Promotion of Group’s global activities

Sustainability activities andSHE activities
Promotion of sustainability activities
The VALQUA Group has a history of concerted
action on the part of Group companies in Japanand overseas to promote “activities revolving
around the concept of an H&S business”, “support
for ballroom dancing”, “Local Community
Thanksgiving Day”, and other activities based on
the Corporate Philosophy of “THE VALQUA WAY”.
Since 2021, we have been strengthening ourefforts to contribute to the SDGs by promoting
activities with 3 axes, adding “activities that
contribute to society” to our offense (“solvingsocial problems through our main business(H&S)”) and our defense (“strengthening ourmanagement foundation”).
In April 2022, in order to accelerate its
sustainability activities, VALQUA expanded its
former “CSR” into “sustainability” and strengthened
its system, changing the name of the system of
promotion from the “VALQUA Group CSR
Promotion Committee” to the “VALQUA Group05

Basic philosophy

Promotion of SHE activities
Promotion system for safety,
health, and environment (SHE)
related activities
https://www.valqua.co.jp/
social/safety_health_environment/

Risk management system
The VALQUA Group has established the “RiskManagement Committee” to strengthen risk
management.The Committee centrally manages
the risks that the Group incurs in the course of
doing business, which are becoming more diverse
with the rapid changes in the businessenvironment in Japan and overseas and the
expansion of the Group’s business area.
To enable us to swiftly gain control andrespond as a Group to events that threaten thecontinuity of business, such as major natural
disasters, we created a Business Continuity Plan
(BCP) Manual and began implementing it in 2020.
We will go on strengthening our risk
management to prepare for ever diversifying risk.

To achieve healthy, sustained growth, the VALQUA Group aims to build relationships of trust throughcommunication with all of our stakeholders under “THE VALQUA WAY” while continuously enhancing ourcorporate value.
Stakeholders

Engagement with stakeholders

Main methods of communication

Customers

As an H&S company, the VALQUA Group aims to realize the maximization ofcustomer value through true service solutions from the standpoint of thecustomer throughout the entire value chain, including development,
procurement, production, and sales.

Business activities in general: daily business activities / holding social
gatherings for store personnel / holding exhibitions / handling inquiries /
conducting CS questionnaire surveys / safety data sheets (SDS) / catalogues ofvarious products / issuing customer support tools and technical data

Shareholders andstock market
personnel

The VALQUA Group proactively engages in a constructive dialog withshareholders, investors, and other persons related to the stock market while
disclosing information in a fair, appropriate, and timely manner. Management isappropriately provided with feedback on the opinions obtained from the dialog,
and it is utilized in the realization of sustained improvements in corporate value.

IR activities in general: dialog with stock market personnel / holding General
Meeting of Shareholders and meetings to explain settlement of accounts /issuing IR tools and documents

Business partners(suppliers)

The VALQUA Group promotes fair and impartial CSR procurement based on
legal compliance, concern for the environment, and mutual trust.

Purchasing activities in general: meeting with customers / CSR Procurement
Guidelines / conducting CSR procurement questionnaires

National governments
and local governments

The VALQUA Group strives to obey laws and disclose information.

Employees

The VALQUA Group strives to create a work environment that enables
employees to exhibit their capabilities to the greatest possible extent,
based on the assurance of safety and health, respect for human rights, andpromotion of diversity.

Local community

Aiming for a symbiosis with the global community and the local community,
the VALQUA Group strives to reduce our environmental burden andcontribute to society.

 anagement of intellectualMproperty rights

In order to maintain relationships of trust withstakeholders and stably continue to do business,
the VALQUA Group has constructed amanagement system that can accurately assessand control diversifying risk and its impact.
We have been aiming for the reconstructionof our business foundation by increasing profits inexisting business areas through selection andconcentration and acquiring new business areas.
Moreover, we have been making efforts toenhance risk management and autonomouscompliance at the level of organizational units bycodifying them in an annual policy.
Even in the new mid-term business plan
NF2023 that came into effect in April 2022, we arecontinuing to make efforts to implement risk
management at the level of each organizational
unit and to strengthen autonomous compliance.

Dialog with stakeholders

04

Prevention of corruption and bribery

Risk management

Sustainability Committee”. We are also currently
reviewing our CSR materiality, ascribing more
importance to its relatedness to management
strategy and business plans.
In the future, we will come together as aGroup to promote sustainability activities toward
the solution of various social problems, and we aremaking efforts to disclose those activities.

A Group SHE Committee has been organized inthe VALQUA Group to centrally manage safety,
health, and environment (SHE) related activities.
The SHE Committee is composed of the Chief
Executive Officer as Committee Chairperson, theChief Operating Officer as Vice-Committee
Chairperson, and the executive officers in chargeof each Group company or business office. The
SHE Committee meets at least once a year todecide upon the annual policy and activity planfor VALQUA Group SHE activities and to confirm
the status of activities. The entire Group is involved
in SHE activities, with deployment by SHE teams ineach company or place of business.

SDGs to which this contributes:

Risk management system

Employees engagement activities in general: intranet / conducting employee
engagement surveys / various types of training / support for self-developmenttraining / holding joint labor management conferences / handling notifications
through internal whistle-blowing system / establishing Corporate Ethics Hotline
Social contribution activities in general: contributing to society throughsupport for sports / Local Community Thanksgiving Day / volunteer activities by
employees / dialog with local community and NPOs, and donation activitiesL egal compliance in Group companies
in Japan and overseas
In order to ensure legal compliance throughout
the entire Group, the VALQUA Group conducts
surveys of related laws, not only within Japan, butalso as they apply to our subsidiaries overseas, while
receiving support from law offices, consultants, andservices that provide legal information, so that its
business practices will be in compliance with thelaw. The entire Group maintains complete readinessto comply with laws and ordinances that greatly
differ in content in each country and region.

Prevention of corruption
Thorough prevention of bribery

Board of Directors Meeting
Managing Directors Meeting
Risk Management Committee
Secretariat

Various notifications, various conferences

With “Through Creative Technology” as one of its
Corporate Principles, the VALQUA Group aims to
be a “true solution provider” that integrates thiscreative technology with service. The Intellectual
Property Division properly protects the value
created through corporate activities and supports
the provision of products and services that lead tosolutions of the customer’s problems. It also
maintains internal rules and systems that respect
the intellectual property rights of others,
conducting exhaustive surveys at each stage of
research and development to ensure that ourcompany’s products and services do not infringe
upon the intellectual property rights of third
parties. Under a system of cooperation between
the Intellectual Property Division and the Research& Development Division, these surveys are
conducted globally to ensure that intellectual
property rights are respected not only in Japanbut overseas as well.

Quality risks

Tradecontrol risks

Legalviolation risks

Safety, health, andenvironment risks

Economic
security risks

Information
security risks

Quality
Assurance
Committee

SecureTransaction
Management
Committee

Compliance
Committee/
Compliance
PromotingCommittee

SHE Committee

Economic
Security
Committee

Information
Security
Committee

In the VALQUA Group, we make sure that all
employees are fully informed of the need toprevent bribery, and we review and revise ourrules as necessary in order to appropriately
accommodate regulations on bribery in Japan andoverseas. Moreover, we take rigorous measures toprevent bribery by conducting audits of the entire
Group, making no distinction between members
in Japan and overseas.

(As of June 1, 2022)

20

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21

Compliance06

Compliance

Legal compliance

Compliance
Basic philosophy
In the VALQUA Group, “compliance” does not stopwith legal compliance. We see compliance as
striving to respond to the demands and trust of
stakeholders and win the trust of society byproactively complying with business ethics that
hold us to an even higher standard than laws andregulations and practicing corporate behavior that
contributes to society and gives consideration to
the environment, so as to set an example for othercorporations. We firmly believe that understanding
the importance of this kind of compliance andputting it into practice is something that promises
constant growth and development for the
VALQUA Group.

Compliance Handbook
The “Compliance Manual” was established in 2003
as the guidelines for employee duties throughout

Compliance system
We have established a Compliance Committeewith the CEO as chairperson and Compliance
Promoting Committee under it, and we strive tomaintain and improve the Group’s compliancesystem with the Chief Compliance Officer (CCO)
appointed as the highest-ranking person responsible
for the promotion of compliance at its center.

the entire Group. It was translated into 6 languages(Japanese, English, simplified Chinese characters,
Korean, Thai, and Vietnamese) and has been usedas the manual that all employees throughout theentire Group must understand and comply with.
We greatly expanded the content of theCompliance Manual, reissuing it as the“Compliance Handbook” (Japanese Edition) in May
2020 together with the “Action Handbook for thePrevention of Harassment” (For Managers andLeaders). These publications incorporate concrete
examples and check sheets to reflect the social
environment and changing demands. They were
followed up in November 2020 with “Corporate
Management and Compliance – Management
Responsibilities and Important Issues for Directors
and Officers”.
Even at overseas bases, it has replaced theprevious “Compliance Manual”, and “ComplianceHandbooks” in each language that are based on
the Japanese version but reflect local conditions
were issued in February of 2022.

 eporting, consultation, andR
notification system
As a mechanism whereby all Group employees
can engage in reporting, consultation, andnotification related to laws and internal
regulations, we have established several lines of07

Compliance with environment-related laws andordinances, etc.

Environmental risk
management
Framework for activity

Compliance system

Board of Directors

Compliance Committee
Chairperson: CEO
Committee members: each director (excluding outside directors)

Reports

Directs/Supervises

Compliance Promoting Committee
Chairperson: CCO
Members: executive officers

Reports

Directs/Supervises
Each division/ Each Group company* chemSHERPA: Name of a data
entry support tool and informationtransfer files released in October
2015 at the initiative of the Ministryof Economy, Trade and Industry to
promote the appropriate provisionof information on the chemical
substances contained in products todownstream companies fromupstream companies throughout
the supply chaincommunication: (1) opinion boxes, (2) internal
consultation liaisons, (3) Direct Line to CEO, (4)External Corporate Ethics Hotline (in 7 languages),and (5) external attorneys.
This system is operated independently fromthe ordinary chain of command and ensures that
information is anonymized and that no employee
will be placed at a disadvantage for making areport, consultation, or notification. The number ofcases in which this system was used has
decreased because of the remote work
environment, and while there were over 10 casesin each of FY 2018 and FY 2019, there were only 4
in FY 2020 and again in FY 2021. We will continue
to handle these cases appropriately while carefully
monitoring the trend toward decreased use.

In FY 2021, with the strengthening of regulationsin China under the 14th 5-year plan, the frequency
of on-site inspections by the government increased
dramatically. There were numerous findings, but
we dealt with them immediately, and actually
there were no cases in which our company
actually produced environmental pollution. There
were zero cases of other environmental regulation
violations by VALQUA companies involved in
production in Japan or overseas. There were also
no complaints about odors or noise fromneighbors at any of our facilities.
At production-related companies both inside
Japan and overseas, we are continuing to engage
in environmental activities under the ISO14001
system, and third-party certification is continuing.
In particular, as regards compliance withlaws and regulations, we are using the internal
auditing systems for legal compliance within eachcompany to promote the construction of a systemfor preventing violations from occurring, which
includes preparing to accommodate the revised
environmental protection law that is scheduled tocome into effect in Vietnam, as well as collecting

information through the utilization of external
information agencies in each area, and continuing
to support the various production-relatedcompanies that utilize Japan’s external
information agencies.
Strengthening of risk management forchemical substances is being called for worldwide,
and information on the chemical substances thatour products contain is being appropriately
provided downstream through chemSHERPA*.

 aintenance, operation, and auditingMof legal compliance system for eachproduction-related company
Production-related companies in Japan share a listof laws and ordinances specified by ISO 14001,
and they continually engage in activity to prevent
oversights and differences in interpretation
between companies by verifying points of changemonthly. Even with respect to laws specified byeach of the overseas production companies,
monthly points of change have been sharedwithin the Group as a whole.
Internal auditing systems for legal compliancewere established in each production company
and have begun operations. They are promoting
continued improvement by responding tononcompliance discovered in internal auditing.

(As of June 1, 2022)

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23

Environment
SDGs to which this contributes:

Environment
08

Prevention and reduction of leakage ofenvironmentally hazardous substances

Efforts to prevent andreduce leakage
 nvironmental burden accompanying
Ebusiness activities in FY 2021
In the VALQUA Group, we get an overall picture of
the environmental burden of our businessactivities by grasping the INPUT such as theenergy and water that goes into business activities
and the OUTPUT, including CO2 emissions fromuse of energy and the wastes that emerge fromproduction process.
A sustainability information collection
system has been introduced for swift andaccurate collection and central control of
information from Group companies, to enablecalculation and disclosure with an appropriate
greenhouse gas coefficient.

 fforts toward practical use ofEhydrogen energy
To increase storage efficiency in high-pressurehydrogen storage tanks in fuel-cell vehicles, efforts
are being made to further pressurize compressedhydrogen, but a problem has been pointed
out:the risk of hydrogen leakage increases athigher pressure and lower temperature.
The VALQUA Group has succeeded in solving
this problem by developing seals for high-pressurehydrogen gas that can be used in a wide
temperature range.
The technological capabilities that are
VALQUA’s strength contribute to the practicalapplication of hydrogen energy.

Coping with climate change

Efforts to introduce renewable energy
Global introduction of renewable energy by the
VALQUA Group began in 2013 with theestablishment of a solar power generation facility
on unused land owned by KYUSHU VALQUA andthe start of renewable energy generation. At
VALQUA FFT, whose main business is reclaiming
the silicon wafers that become the substrate forsemiconductors in Nagasaki Prefecture, a solar
power generation facility was established toprovide power for consumption by the company
itself. Overseas, at the new TAIWAN VALQUAENGINEERING INTERNATIONAL factory that began
operation in January of 2022, a solar power
generation facility was established for thegeneration of renewable energy. These havecontributed to reducing CO2 emissions fromthermal power generation using fossil fuels.

* About the TCFD
https://www.fsb-tcfd.org
In response to the demands of G20,
recommendations on the disclosureof financial information related toclimate were publicly announced inJune 2017 by the task force
established in December 2015 by
the Financial Stability Board (FSB),
which comprises the finance-related
ministries and central bank of eachmajor country. At present, financial
institutions, corporations, andgovernments all over the world
have approved therecommendations of TCFD.

09

Efforts to save energy
VALQUA SEAL SOLUTIONS in Nara Prefecture
received a commendation for contributing to therealization of a low-carbon society throughactivities to save energy and reduce CO2 emissions
within the company through more rational andeffective use of electric power in FY 2020.

INPUT
EnergyVALQUA Group Sustainability Report 2022

OUTPUT

Total 173,071GJ

CO2 emissions

Total 22,940t

40,141MWh

Production related

22,282t

Electric power

Other

Amount supplied by solar power 46MWh

In the future, we will continue to aim forenvironmentally friendly production throughproactive energy-saving activities so as to realize
the kind of corporate image we want to project
as we reach the 100th anniversary of our
founding (2027).

A-type heavy oil

116,719kg

Natural gas
Municipal gas

Sustainability data control items
E nvironmental data (GHG, waste, chemical
substances, etc.)
E mployee data
(Number of regular employees, separated
into men and women; number of temporary
employees, etc.)

Object: VALQUA Group businessoffices in Japan and overseas(excluding 16 bases with small scale,such as some regional sales offices,
representative offices, and overseas
sales companies)
Period of tabulation:
April 2021 to March 2022

658t

175,300ℓ

Liquefied petroleum gas (LPG) 74,771m3

Sustainability data, beginning with environmental data

24

Reduction of environmentally hazardous
substances in business

Material flow

Nara Committee for the Rational Use of
Electric Power, First PrizeKinki Committee for the Rational Use of
Electric Power, Chairperson’s Prize

In recent years, corporations have increasingly been called upon to disclose information on
their efforts to address climate change and resource issues with the goal of realizing asustainable society. With continued emphasis on compliance, the VALQUA Group
introduced a sustainability information collection system in 2019 to accurately and swiftly
disclose environmental data and other sustainability data to stakeholders. Every year,
various kinds of data are collected from a total of 25 bases (12 in Japan and 13 overseas)and summarized.
In this way, we are striving to improve performance through action plans that makeenvironmental data and sustainability data visible through unified management, while also
making efforts to expand information disclosure along the lines of the GRI Standards,
TCFD, etc.

In May 2021, at the same time that it announced its approval of the recommendations of the “Task Force on
Climate-related Financial Disclosures” (TCFD*), VALQUA, LTD. joined the “TCFD Consortium” established topromote the recommendations.
The company promotes visionary management based on the Corporate Philosophy of “THE VALQUA
WAY”, and each employee practices corporate activities with a strong consciousness of the fact that “safety,
health, and environment” is an important common theme for all humankind. Moreover, in the long-term
management goals that conclude in the 100th anniversary of our founding (2027), VALQUA defined thecorporate image it was aiming for as “a challenging company that challenges the future and the unknown—to contribute to the richness of human race and global environment—”, and it is proactively making
efforts in the areas of “environment, society, and corporate governance” as a better global citizen as it aims tobecome a corporation that can contribute to the realization of a sustainable society.
At this time, VALQUA approved the recommendations of the TCFD and joined the TCFD Consortium asa concrete step toward proactively addressing environmental issues. In the future, we will first conduct ourown analysis of climate-related risk and opportunities and then, based on the results, make disclosures on
the items recommended by the TCFD as they arise.

335m

3

WastesTotal 860t

VALQUAGroup

Waste plastics

561t

Sludge107tBusiness
activities

Wastepaper

68t

Kerosene

155,570ℓ

Light oil

26,073ℓ

Gasoline (for company cars)

21,696ℓ

Other (waste acid, waste alkali, waste oil,wood chips, waste textiles,
124t
scrap metal, burnt residue)

Total 417,672m3

Chemical substances* – 21 types
260,163kg

Water use
Tap water

85,719m3

Industrial water, etc.

331,953m3* Chemical substances: Scope expanded to include
inflammable fluids, organic solvents, and specified
water contaminants in addition to the substances
requiring notification under the PRTR law

Other (human rights, welfare)(As of June 1, 2022)

VALQUA Group Sustainability Report 2022

25

Environment

Safety and Health
Change in main
environmental load
Greenhouse gas emissions (Scope 1/2)
In FY 2021, the absolute amount of emissions
increased compared to FY 2020 by 621 ton. The
breakdown of this was an increase of 3,817 ton
accompanying the increase in production volume,
a reduction of 242 ton owing to the rethinking oftemperature control through rationalization andcost reduction activities, and the updating ofoutdated facilities, and a reduction of 2,954 tonowing to the effects of other increases in
efficiency through production increases andchanges in the electricity emission factors of eachcountry. As a result, there was a 14% reduction interms of the basic sales unit.

Change in greenhouse gas emissions (production units + indirect units)(t-CO2)

Basic sales unit (t-CO2/¥M)

25,00020,583

20,24620,000

9,908

15,00010,00020,326

10,1680https://www.valqua.co.jp/
social/safety_health/(Japanese version website)

13,513

10,624

14,2020.50

0.49910.4216

10,023

400

392
2018

Domestic indirect

762

322
2019

2020

Domestic production

8,080

8,044

9,380

(1) Improvement of risk prediction
skills and compliance

0.45

We provide education to internal auditor
candidates by external lecturers and implement
mock inspections within each factory. We
promote understanding of compliance and theimprovement of skills that enable us to predict
disasters to ensure sound factory management.

658
2021
(Fiscal year)

0.40

0.35

(2) Elevation of safety consciousness
through learning and experience

Overseas production

Basic sales unit

Greenhouse gas emissions (Scope 3)
Starting in FY 2014, we began to calculate
greenhouse gas emissions for the entire supply
chain, and we have now been doing so for 8 years.
For details of Scope 3 and other environmentrelated data, please see our website.

Final disposal volume for wastes
In FY 2021, the absolute amount of waste
discharge decreased compared to FY 2020 by 84
ton. The effects of the production increase were
expected to result in an increase of 180 ton, but adecrease of 9 ton was achieved through the effectof improving defects and yield throughrationalization and cost reduction activities, and adecrease of 106 ton was also achieved throughthe convergence of the effects of improvementsin efficiency from increased production and the
optimal rearrangement of production bases. As aresult, there was a 23% reduction in terms of thebasic sales unit.

(t)

Basic sales unit (t/¥M)

1,200

0.025
960
770

758

860

600

620
0.0162

400

0.015

200
0

653

694

0.0159

252

250
7
2017

Domestic indirect

Safety and healthpromotion activities

0.020

0.0199

511

501

279

259

7
2018

Events to strengthen SHE activities

944
0.0211800

globalized, risks accompanying the differences inlegal regulations and customs in each country andregion have become manifest. We are convincedthat the Group’s key principle of “Always treat
health and safety with top priority” can be realized
by meticulously taking action to accommodate
the different legal regulations and customs in eachcountry and region without delay.
In terms of hygiene, while devoting efforts topromoting employee health from the standpointof health management, we are proactively
promoting health guidance by industrial
physicians and the creation of a happy, healthy
workplace from the standpoint of both safety andhygiene. Moreover, we have issued guidelines on
measures for preventing the spread of COVID-19,
and thoroughgoing infection control measures
are being taken in each office.

With the objective of improving the safety
consciousness of the managerial class, we
promote elevation of safety consciousness byusing a simulator to allow them to experiencemock disasters.

Change in final disposal volume for wastes (production units + indirect units)

1,000

Occupational healthand safety

Developing human resources
and increasing specialization

0.4017

9,938

2017

Management of mental andphysical health

0.55

0.43150.4254

5,000

0.60

22,94022,31910

SDGs to which this contributes:

Domestic production

2020

VALQUA Group Safety and Health Day

0.010

The VALQUA Group has designated May 18 as“VALQUA Group Safety and Health Day” to raiseawareness of safety. We have also established SHE(Safety, Health, and Environment) Week tocoincide with National Safety Week in July, andevents are held to strengthen SHE activities at all
Group bases, including those overseas.

233

12

7
2019

0.015

8
2021
(Fiscal year)

Overseas production

Basic sales unit

TAIWAN VALQUA ENGINEERING INTERNATIONAL, prayers forsafety at new offices

 ctivities that proactively promoteAsafety and health* Greenhouse gas emissions are calculated by annually reconfirming the emission factors for each fuel and electric
power in the greenhouse gas emission calculation, reporting, and announcement system based on the “Act on
Promotion of Global Warming Countermeasures” (Global Warming Act). Scope 1 refers to direct greenhouse gas
emissions from the business itself, Scope 2 refers to indirect emissions accompanying the use of electricity, heat, and/or steam supplied by another company, and Scope 3 refers to indirect emissions occurring from the procurement of
raw materials through production, sale, and disposal, excluding Scope 1 and Scope 2. Because the provision of
information on electric power from each country has become more robust, we started surveying and calculating
emission factors for each base in FY 2020.

As the VALQUA Group’s business becomes more
VALQUA FFT (Nagasaki), placing of a monitor in the lobby
and issuing warnings about heat stroke, etc.

Incidence of accident occurrence(Cases)16

15
12

Scope 3 (plan to post data in FY 2021)
https://www.valqua.co.jp/social/environment/(Japanese version website)

7

10

7

2

9

8

3
5

0

2017
Serious accidents

26

VALQUA Group Sustainability Report 2022

5
2018
Labor accidents

6
4

4
2019
Fires

3

3

1

7

9

2

2020
Commuting accidents

2021(Fiscal year)

VALQUA METAL TECHNOLOGY (Aichi), safety education andtraining through experiences

VALQUA Group Sustainability Report 2022

27

SDGs to which this contributes:

Human Resources andHuman Rights

Supply Chain Management
11

Sustainable procurement

Promotion of CSR procurement
CSR Procurement Guidelines
The VALQUA Group established the “CSR
Procurement Guidelines” in 2016 to promote
procurement activities that also give consideration
to society, the environment, and human rights,
etc. Based on the Corporate Philosophy of “THE
VALQUA WAY” and the “CSR Concepts”, 5 items
have been established as the “Basic Procurement
Policy”. These guidelines minimize risk throughout
the supply chain and promote soundprocurement activities.

12questionnaire was increased from 20 to 30 in FY
2020, including questions on corporate
governance, supply chain, and the environment.
We also expanded the scope of the survey,
including suppliers other than the main suppliers
to which the questionnaire has been administeredthus far.
In the future, we will continue to refine thecontent of the questionnaire in order to further
promote CSR activities, and we will make continued
efforts to collaborate with the suppliers andsupport them in order to realize CSR procurement
through individualized support for suppliers.

CSR procurement questionnaire

Handling of conflict minerals*

As one of the activities that promote CSR
procurement throughout the entire supply chain,a self-evaluation questionnaire is conducted inorder to confirm the status of CSR promotion ateach supplier.
In a new effort to make evaluations ofcompliance stricter, the number of questions inthe

The VALQUA Group considers the proper handlingof conflict minerals to be its corporate responsibility,
and we have established a related policy in the
CSR Procurement Guidelines and conduct
investigations of procured items. In cooperation
with our suppliers, we will redouble our efforts toavoid involvement in human rights violations.

Basic Procurement Guidelines,
VALQUA Group CSR
Procurement Guidelines

Section
CSR
Corporate governanceFair trade

Information/security

Whistle-blowing

12

Extending to business partners

Respect for human rights

BCP

Prohibition of discrimination

Prohibition of discrimination in hiring Providing equal opportunity for employees
Compliance with prohibitions Fair application of work hours, breaks, paid leave
Management of legally designated chemicals Management of wastewater, sludge and emissions
Sustainable and efficient utilization of resources Reduction of greenhouse gas emissions
Green procurement and waste reduction

Business continuity planning efforts

VALQUA Group Sustainability Report 2022

11.8

11.3

2

Worker safety

0

2017

 ate of employment ofR
persons with disabilities
(%)

2018

2.66
2.08

2.0
1.5

2019

2.0

2020

2021
(Fiscal year)

Target: Meet or surpass the statutory employment rate

3.0
2.5

2.46

2.41
2.3

2.20
2.2

2.2

2.3

2018

2019

2020

1.0
0.5
0.0

System that supports flexible ways of working
2nd job (short work week)
Remote work system (including allowance)
Family care leave (continuous for maximum of 3 years)
System for obtaining paid leave in 1-hour units
Day off on child’s birthday
Special paid leave for child careS hortened work hours for child care (until child reaches
3rd year of elementary school)Child-care leave (until child reaches age of 2 years and6 months)
Flex time system (core time 1:00 pm – 3:00 pm)
Shortened work hours for family care
Career return system(As of June 1, 2022)

Engagement
We have defined the goal for our 100th year inbusiness as becoming “a challenging company
that challenges the future and the unknown”, but
in order to realize this ideal, we need to switchfrom a passive to an offensive constitution andmeet challenges without fearing failure. To thisend, we are focusing on “engagement”, making
proactive efforts to improve all employees’
engagement with the company. The 1st Employee
Engagement Survey was held throughout the
VALQUA Group in August 2020, and the 2nd
survey was held in FY 2021. We are promoting
efforts to improve engagement to reflect actual
conditions in each department.

 reating an environment in whichCemployees can be active regardlessof gender

4

Management of intellectual property Personal/confidential information management
Prevention of attacks on computer networks

Environment in which employees can work safely and in good health
Disaster preparedness System for handling disasters and accidents

11.1

6

Prevention of abuse of superior bargaining position

Human rights

Safety and health

9.1

10.1

8

Compliance with laws, regulations, social norms, industry norms and standards
Use of conflict resources (tantalum, tin, tungsten, gold, and derivatives produced in conflict areas)

Environment

10

Proper import/export

Preventing corruption (political donations, bribes)
Ban on offers/acceptance of improper advantage

Target: 10% by FY 2020, 15% by FY 2027(%) 14

Supply chain

Labor

28

Internal control

CSR promotion

The VALQUA Group proactively hires foreign
nationals and engages in human resources
exchanges among Group companies. In order topromote the creation of an environment in which
employees can be active globally, the Group
provides employees who are to be posted
overseas with advance training and follow-up
during their tenure. Foreign nationals working inJapan are also supported with Japanese language
education, inclusion of foreign nationals in the
Human Resources Group, and periodic face-toface meetings and consultations on problems.
Working together with diverse human resourcesin an environment that transcends language andcultural boundaries is stimulating and leads to
new realizations.

 ercentage of women inP
management positions

Content of efforts
Legal compliance, preventing violations

 reating an environment in whichCemployees of various nationalities canbe active* Conflict minerals: Minerals thatprovide a source of funding forarmed groups that commit humanrights violations and corrupt
practices in conflict areas

Matters confirmed by CSR procurement questionnaire (increased by 10 to 30 items in FY 2020)

Ensuring of the diversity of human resources

Creating a workplaceenvironment and various systems

https://www.valqua.co.jp/
social/csrprocurement/(Japanese version website)

SDGs to which this contributes:

2017

Rate of employment of persons with disabilities

Statutory employment rate

2021
(Fiscal year)

We promote further innovation by incorporating
diverse viewpoints irrespective of gender. In
particular, we set targets for the percentage ofwomen in management positions and proactively
appoint women to these positions in the
management of overseas group companies, etc. tosupport women’s career development and growth.

 romoting employment of persons
Pwith disabilities
Aiming for harmonious coexistence with thecommunity, the VALQUA Group proactively accepts
interns with disabilities from special education
schools in the community. While communicating
the joy and significance of working to persons
with disabilities, we support job retention andindependence after joining the company.

VALQUA Group Sustainability Report 2022

29

Human Resources and Human Rights
SDGs to which this contributes:

Customer Satisfaction
13

Respect for human rights

Respect for human rights
The VALQUA Group established the “VALQUA
Group Basic Policy on Human Rights” in March of2017 on the basis of the United Nations Global
Compact. On the basis of this policy, and withreference to the GRI Standards, we have prepared
an assessment sheet, and a survey of Group
companies is conducted once a year to spreadknowledge of the human rights policy throughout
the Group, confirm understanding, and check thestatus of human rights efforts.
The results are analyzed, and while providing
support so that each Group company canautonomously grasp, prevent, and handle humanrights problems, we promote diversity and further
awareness of human rights.
At the VALQUA Group, we are making

14voluntary efforts to maintain and improve
consciousness of human rights by giving out
our Compliance Handbook and participating instudy groups and external training in eachGroup company.

VALQUA Group
Basic Policy on Human Rights

Quality Policy, Quality
Management System

https://www.valqua.co.jp/
social/human_resources/(Japanese version website)

https://www.valqua.co.jp/
social/safety_quality/(Japanese version website)

New Gaskets and GasketingTechnology
The industry’s first “gasket
manual”, which provides
easy-to-understand explanationsof the technological basics ofgaskets, bolting, and flange joints
https://www.valqua.co.jp/
technical/gasket-introduction/(Japanese version website)

VALQUA Group
Compliance Handbook

Human resources development

Human resources development
In the VALQUA Group, we provide various training
programs based on our “Declaration on Human
Resource Development” and “Policy on Human
Resource Development”. Through a balanced
combination of methods, we develop andcultivate human resources that match our “Profileof the Ideal Human Resource”.
In FY 2020, “HR cultivation” has been added
to our CSR materiality, and efforts to develop thehuman resources who will become the corporate
officers of the near futureand support the
management of our bases are being intensified
through the CEO cram schools, overseas executive
training, and early selection training.

 nhanced support for self-studyE(distance learning)
To support the autonomous growth of
employees, the VALQUA Group is enhancing its
self-study program. Special distance-learning
courses are set up every year with tuition fully
subsidized, etc. There is also a support system
including online public seminars and online
English conversation lessons.

30

15

VALQUA Group Sustainability Report 2022

 arget management and HRTevaluation mechanism
Initial targets for employees in the VALQUA Groupare set on the basis of annual company policy andthe mission of the division. The final targets arethen refined through discussion with the superior
as the subordinate strives to perform daily duties
in accordance with “THE VALQUA WAY” andemulate the level-specific “Profile of the Ideal
Human Resource”. In ongoing communication, thesuperior clarifies issues in the subordinate’s
self-evaluation and identifies points to improvenext time. HR cultivation thus supports thesustained growth of the VALQUA Group.

Declaration on Human
Resource Development
https://www.valqua.co.jp/
recruit/training/#sengen(Japanese version website)

VALQUA technical journal“VALQUA Technology News”
https://www.valqua.co.jp/
tech/technical/(Japanese version website)

https://www.valqua.co.jp/
recruit/training/#hoshin(Japanese version website)* To use the “Seal Quick
Searcher”, visit our website orscan the 2D code below.

A wide variety of training programs

A person who empathizes with our Corporate
Philosophy, “THE VALQUA WAY”
Acts & makes decisions from global perspectiveStrongly committed to learning and growth, and cancontinue to take on new challenges while thinking
for him/herself
Capable of speedy judgment and action. Can boldly
meet challenges in anticipation of changing times
and reforms

1. HR cultivation for
globalization
2. HR cultivation through early
selection
3. Level-specific training
4. Occupation-specific training
5. Self-study

Quality assurance systemand policy
In the VALQUA Group, we have organized a “Group
Quality Assurance Committee” to construct a
global quality system integrating the entire Group.
It consists of responsible persons from each unitthat is related to quality, such as procurement andproduction technology units, beginning with thebusiness divisions and groups that exercise control
over the production-related companies andsales-related companies in Japan and overseas.
The Committee increases the effectiveness of theentire Group by issuing instructions for theconcrete deployment of its decisions at thesame time that it takes responsibility for their
daily execution.
Moreover, the organization, as well as each
employee of the company, engages in quality
improvement activities by establishing concretegoals on the basis of the “Quality Policy”. This
provides the basis for complying with related legal
regulations and providing safe products andservices with the assurance that quality will meetthe demands of the customers.

Promoting the development
and spread of services for the
benefit of safety and peace ofmind of customers

Policy on Human
Resource Development

Profile of the Ideal Human Resource

Improvement of quality and customers’ safety
and peace of mind

https://www.seal.valqua.co.jp/
seal/(Japanese version website)

The VALQUA Group not only manufactures andsells seal products but also provides educational
support for technicians. Seal training is constantly
evolving to meet the demands of customers andreduce leaks from faulty seal installation, which is a
cause of accidents at plants.
We are also promoting our seal engineering
services, which combine the original technologies
cultivated by VALQUA with smart technologies
like IoT.
We are contributing to the safety and peaceof mind of all our customers by accelerating thedevelopment and deployment of services thatmeet the need for sophisticated safetyengineering in plants.

Evaluation technology
The use environments of seal products are diverse,
and in actual practice, it is difficult to perform
evaluation and verification for all customers. At the
VALQUA Group, we are addressing this issue by using
finite element analysis (FEA) to develop nextgeneration evaluation technology for reproducing
and verifying use environments on computers.
Through these efforts, it has become
possible to verify large-caliber apparatus underhigh-temperature and high-pressure conditions,which was previously difficult to evaluate, andprediction of service life has also become possible.
In addition, FEA is used for the efficient evaluationof diverse combinations of configuration andmaterials in product design, and it is effective as
design screening.
In the future, we will go on contributing to
the safety and peace of mind of all customers byproactively engaging in such researchand development.

Three-dimensional analysis

 earch for seal products with website
S“Seal Quick Searcher”
In response to demand from customers who havedifficulty selecting products, we have establisheda product search site with various portals toprevent trouble caused by faulty selection. With
services that make product recommendations
according to environment of use (fluid,
temperature, pressure, etc.), keywords, andindustrial field, or that automatically calculate thenecessary tightening force for the application, we
solve customers’ individual problems in real time,enabling them to select the optimal product rightaway or prepare technical documentation using
only the necessary data. We will continue toimprove this site to meet customer expectations
from a broad perspective.

VALQUA Group Sustainability Report 2022

31

Community
SDGs to which this contributes:

Community
16

Promotion of sports, culture, and the arts
Coexistence with local community

Promotion and supportof sports
 ew efforts to promoteN“ballroom dancing”
For long years, the VALQUA Group has been
involved in promoting and supporting sports topromote health and enrich people’s lives. Since
2014, we have been supporting the spread anddevelopment of ballroom dancing, which is lovedby everyone, regardless of age or physical ability.
The COVID-19 pandemic continued tospread in FY 2021, and what lies ahead cannot be
foreseen, but for the sake of the many athletes andfans, we have encouraged the persons involved toresume these events by supporting various
ballroom dancing events, such as the nationwide

Opening ceremony for the “VALQUA Cup All Japan Dance
Championships” held with a live audience for the first time in
2 years“Japan Blind Dance Championships” for visually
impaired persons and the “Junior Dance Festival”
held on a remote basis.
Our Group lends its special support to“VALQUA Cup All Japan Dance Championships”,
Japan’s top pro dance competition, and this event
was held in November with a live audience. Every
possible precaution was taken against the spreadof COVID, and the event heated up into a fierce
contest among participants.
At the Asian Open Dance Championships
held in February 2022, “Dance with Musical”, acollaboration between dance and musicals, washeld. This new experiment has highly rated not
only by the spectators but also by the many
people who watched it on live streaming, and it
was one big step toward promoting the spread of“ballroom dancing” and attracting new customers
in cooperation with the sponsoring organizations.

For more information on
activities to support groups that
contribute to society, and on
the various activities throughwhich we make contributions,please visit our website.
https://www.valqua.co.jp/
social/action_program/(Japanese version website)

Local Community
Thanksgiving Day
We at the VALQUA Group are always thinking
about what we can do to build a more
prosperous future for the people of the world,based on the Action Principle of “Exist in harmony
with the community”, which is part of the
Corporate Philosophy of “THE VALQUA WAY”, andevery year we hold a “Local Community
Thanksgiving Day” to conduct volunteer activities
rooted in the local community.
Employees and their families from 44 offices,
sales bases, and factories at Group companies
throughout the world participate.
In FY 2021, we made it possible to continue
these activities in spite of the pandemic by thinking
up ways that each base could conduct cleaning
activities and flower bed planting mainly throughfund-raising and contributions (donations).

Heated competition of top pros in the ballroom category

32

VALQUA Group Sustainability Report 2022

Donation ofmaterials to
support Rayong
Hospital

Donation of materials to support Samut Prakan Hospital

VALQUA VIETNAMAt VALQUA VIETNAM, the activity called “Rice
Porridge for Hospital Love” and the cleaning
activities that had been held before the pandemic
were discontinued, and a visit to the Chi Linh
Social Welfare Center (child care institution) was
made in October 2021. In addition to electricwater heaters, water cooler-heaters, and food likemilk, instant ramen, and sweets, consumables
such as hangers and masks were donated.

In the December activities, the families of our employees
also participated in the planting of mini marguerite.

VALQUA INDUSTRIES (THAILAND)

Many pairs of a visually impaired person and sighted person
took part in the Asian Open Blind Dance Championships, heldwith precautions against the spread of COVID-19.

Spathiphyllum (peacelily), a perennial herb thatmeans “pure heart” and“fresh days” in flower
language, was planted.

Osaki Office (Head Office)At the Osaki Office, we hope to see the city ofOsaki filled with flowers, and we have continued
to participate in a local beautification activity
called “Ohana Ippai Osaki” (flower-filled Osaki),which is held twice a year, in June and December.
The pandemic was still with us in FY 2021,
which limited the number of participants, but ouremployees and their families participated while
making efforts to prevent the spread of COVID.
Together with students from the local middle
school and participants from other companies, weplanted seasonal flowers in flower beds along theroad that leads to JR Osaki Station.

In June, we planted the seasonal flower of begonia.

At the Asian Open Dance Championships held in February2022, “Dance with Musicals”, an experiment in combining
dance with musicals, was held to promote the spread of“ballroom dancing”.

gloves, alcohol-based hand sanitizer, and drinking
water to the healthcare workers who protected
the safety of the local residents by treating
COVID-19, etc., as an expression of our thanks.

At VALQUA INDUSTRIES (THAILAND), planting
activities on the part of the BANGPOOHEADQUARTERS and support activities for medical
institutions (Samut Prakan Hospital, Rayong
Hospital) were held in October of 2021.
In support activities for medical institutions,
we presented support funds, medical rubber

Support goods were
donated to the directorof the Chi Linh Social
Welfare Center bycompany President
Murakami.

Memorial photograph after
presentation ceremony

VALQUA Group Sustainability Report 2022

33

Aiming to become a truly global corporation

Global Network

Company Overview and Map of Bases
Our corporate name represents a fusion of the two words “Value & Quality”. True to the words, we deliver “Value & Quality” toeveryone throughout the world in order to solve social problems in various industries and fields and realize a sustainable society
through our seal product business, high performance plastics products business, and silicon wafer reclaiming business, etc.

VALQUA Group businesses

Seal Training Centers (7 locations)	Overseas consolidated subsidiaries(12 companies)	Research and development bases(6 locations)

Sales by segment (¥M) * Rounded down to nearest 1 million yen
VALQUA KOREA CO., LTD.

Silicon wafer
reclaiming business, etc.

(Established 2004)

APPLIED R&D Institute

3,082High performanceplastics products
business

15,088(28.4%)(5.8%)

53,167

million yen(As of end of
March 2022)

Seal product business

34,995(65.8%)SHANGHAI VALQUA FLUOROCARBONPRODUCTS CO., LTD. (Established 1995)
ADVANCED FLON TECHNOLOGIES(SHANGHAI) CO., LTD. (Established 2013)
VALQUA SEAL PRODUCTS(SHANGHAI) CO., LTD. (Established 2000)
VALQUA CHINA RESEARCH INSTITUTEVALQUA (SHANGHAI) TRADING
CO., LTD. (Established 2002)

Consolidated subsidiaries in Japan(6 companies)• VALQUA SES CO., LTD.
• VALQUA TECHNO CO, LTD.
• VALQUA SEAL SOLUTIONS CO., LTD.
• KYUSHU VALQUA CO., LTD.
• VALQUA METAL TECHNOLOGY CO., LTD.
• VALQUA FFT INC.

(As of June 1, 2022)

VALQUA AMERICA, INC.

(Established 1998)

VALQUA, LTD.
VALQUA NGC, INC.

(Changed to consolidated subsidiary in 2017)

TAIWAN VALQUA INDUSTRIES, LTD.
VALQUA VIETNAM CO., LTD.

(Established 1969)(Established 2008)

TAIWAN VALQUA ENGINEERING INTERNATIONAL, LTD.

VALQUA
INDUSTRIES(THAILAND), LTD.

LINED TANK TECHNICAL CENTER(Established 2000)

Seal product business

The main business line of the VALQUA Group is providing seals for use in piping and equipment in various industries.
We provide new customer value for the frontier industry, equipment, and plant markets.

(Established 1988)

VALQUA INDUSTRIES SINGAPORE PTE. LTD. (Established 2017)

Sales

34,995 million yen
Proportion of sales

Sales by region (¥M)

Number of employees by region* Rounded down to nearest 1 million yen* Including temporary employees (171) on average

65.8%

North
America

Other

North America(0.3%)(2.2%)

43

167

4,886
(9.2%)High performance plastics
products business

Asia

These products, which take full advantage of the exceptional properties of high performance plastics, are usedin many fields, including semiconductor devices and industrial machinery. With strategic products for frontierindustries and the plant market as our main axis, we provide value globally.

13,530(25.4%)For other data, visit our website.
https://www.valqua.co.jp/

Sales

53,167

1,943

million yen

Asia(As of end of
March 2022)

Japan

34,583

1,014

people(As of end of
March 2022)

Japan

886

(45.6%)(52.2%)(65.1%)

15,088 million yen
Proportion of sales

28.4%

Silicon wafer reclaiming
business, etc.

While helping to protect the global environment with our silicon wafer reclaiming business, we will go on
contributing to a wide range of industries through the further development of our H&S business as anembodiment of new value creation.

Sales

3,082 million yen
Proportion of sales

5.8%

34

VALQUA Group Sustainability Report 2022

Company Overview

VALQUA, LTD.
Head Office: ThinkPark Tower 24F, 2-1-1 Osaki, Shinagawa-ku, Tokyo 141-6024 JAPANFounded: January 21, 1927
Established: April 8, 1932
Capital: 13,957 million yen

Listed: On the Prime Market of the Tokyo Stock Exchange
Employees: 410 (Group employees: 1,772, as of March 31, 2022)
Business: Design, manufacturing, processing, and sale of products made from fibers,
fluorocarbon resin, high performance rubber, and other materials to meet the needsof all industries, including industrial equipment, chemicals, machinery, energy,
communication equipment, semiconductors, automobiles, and aerospace

VALQUA Group Sustainability Report 2022

35

VALQUA Group
Address inquiries to VALQUA, LTD.
General Affairs Group TEL +81-3-5434-7370 FAX +81-3-5436-0560
ThinkPark Tower 24F, 2-1-1 Osaki, Shinagawa-ku, Tokyo 141-6024 JAPANhttps://www.valqua.co.jp/

Value & Quality

About the cover
The VALQUA Group used photographs of children on the coverof this Sustainability Report to reflect our wish to contribute to
the “Creation of a Bright Future” through business that provides
customers with safety, peace of mind, and prosperity, andthrough sustainability activities such as support for ballroom
dance. We would like to see a future in which all children can be
active and succeed in safety and peace of mind. The smilingfaces of children that grace the cover are photographs of
VALQUA Group employees’ children submitted in response to
our invitation for photo contributions.