A Creator of
Unique Value
KURITA WATER INDUSTRIES LTD.
Integrated Report 2020
For the year ended March 31, 2020

Contents
Integrated Report 2020 

1

Kurita Group at a Glance 

2

History of Value Creation 

2

Kurita Group Philosophy System 

4

Kurita Group Business Fields and Strengths 

5

A Story of Value Creation 

6

Performance 

8

Kurita Group Business Strategy 

10Interview with the President 

10Financial Strategy 

15

Always striving to create
the development ofMedium-Term Management Plan: Maximize
Value Proposition 2022 (MVP-22) 

16

CSR Initiatives 

18

The Kurita Group’s Businesses 

22

Opportunities and Risks in Business Flow 

22

R&D and Intellectual Property 

24

Review of Operations by Segment:
Water Treatment Chemicals 

26

Review of Operations by Segment:
Water Treatment Facilities 

The Basis for Management Activities 

28
30

Directors, Members of the Audit &Supervisory Board, and Executive Officers 

30

Corporate Governance 

32

Governance Discussion with External Directors  40
Risk Management 

42

Human Resources Management 

44Compliance 

47

Environmental Improvement Activities 

48

Quality Initiatives 52

Safety Initiatives 

53

Corporate Citizenship Initiatives 54Integrated Report 2020

Financial Information 

55

Corporate Information 

63

The outbreak of novel coronavirus disease (COVID-19) has had
far-reaching consequences for the entire world. As we work to
overcome the limitations and disruption caused by the pandemic,
it’s becoming increasingly evident that our societies havechanged forever. However, at the same time, it’s also clear thatmany of mankind’s values will endure, even as we adjust to themajor changes forced upon us.
In the Kurita Group’s medium-term management plan
launched in April 2018, part of the basic policy is to “dismantle
preconceived ideas.” That’s because it will be risky to stick withexisting approaches, no matter how successful, if we want tobuild a robust earnings structure that remains viable well into
the future. Since launching the plan, we’ve implemented a whole

Disclaimer
This report contains forward-looking statements from Kurita
Water Industries Ltd. and its consolidated subsidiaries
pertaining to plans, forecasts, strategies, and results. These
forward-looking statements are based on currently available
information, and actual results may vary significantly from theforward-looking statements contained in this report due to arange of variable factors.
* Trademarks (products, services, logos) used in this reportbelong to the Company or to owners who have approved theCompany’s use of the trademarks.

new value that supportssociety and industry

range of initiatives to reform business processes and transformbusiness models, but there’s a fundamental value that we shouldstill adhere to – always strive to create new value that supports
the development of society and industry – which dates back to
the first days of the Company when we started providing value
with water treatment chemicals. That stance is also clearly
expressed in our corporate philosophy, which we work to put
into practice every day.
To communicate those values to stakeholders and create astarting point for discussion within and outside the Kurita Group,
we decided to publish our first-ever Integrated Report last year.
The Kurita Group is still exploring ways to achieve integrated
business management, but we hope this second report will help

to explain the Group’s stance on many issues, providing an
opportunity to spur constructive dialogue with all our
stakeholders.
July 2020

Michiya Kadota
President and Representative Director

Kurita Water Industries Ltd. Integrated Report 2020

1

Kurita Group at a Glance

History of Value Creation
Since its establishment, the Kurita Group has provided value to its customers by solving
water-related issues in various industries.
In 2018, the Kurita Group adopted as its corporate vision “A Creator of unique value
to the solution of water and the environment,” for contributing to the realization of asustainable society and started the medium-term management plan Maximize Value
Proposition 2022 (MVP-22), which positions CSR at the core. The Kurita Group willcontinue working to provide its stakeholders with new value, aiming to realize its
corporate philosophy, “Study the properties of water, master them, and we will create anenvironment in which nature and man are in harmony.”

1962

1949

Listed stock on the First Sectionof the Tokyo Stock Exchange
and the Osaka Securities
Exchange

Founded as a company in the Water
Treatment Chemicals business (boiler water
treatment chemicals) in Kobe

1965

Expanded into process
treatment chemicals

1975

1961

Established a water treatment
facilities operation andmaintenance subsidiary

Listed stock on the Second Sectionof the Tokyo Stock Exchange andthe Osaka Securities Exchange

1973

1958

Established first overseas
subsidiary in the Water Treatment
Chemicals businessEntered the electronics industry

Expanded into
maintenance services

1951

Entered the Water Treatment
Facilities business1953
Net sales

Expanded into
chemical cleaning
services

1950

1960

1970

Post-war recovery period (1949–1954) /High economic growth period (1954–1973)

Kurita Establishes
the Spirit andBusiness that Form
its Foundation

2

Kurita’s founder developed an innovative business model thatcombined optimal treatment and effect verification based on datawith the experience-based treatment that was the mainstream
approach to boiler water treatment in Japan at the time. The
principle of “Providing the unique value that only Kurita can create”
became the driving force for realizing the model, and it lives on today
in the Kurita Group’s DNA. Against the background of development
in Japanese industry, the Company established the three functionsof water treatment chemicals, water treatment facilities, andmaintenance services. By supporting the steel, pulp and paper, andpetrochemical industries with water treatment solutions, theCompany achieved steady growth.

Kurita Water Industries Ltd. Integrated Report 2020

1980
Stable growth period (1973–1991) /Development as an
Environmental Company
and Establishing a
Position in the Field ofWater Treatment forElectronics Industry

Kurita Group at a Glance

Medium-Term Management Plan
“Maximize Value Proposition 2022 (MVP-22)”(April 1, 2018 – March 31, 2023)

2020

Basic Policy:

Merged four U.S. subsidiaries, including
acquired companies

Maximize customer intimacy by dismantling preconceived ideas
and dramatically raising the quality and speed of our work.

A tool cleaning company in the U.S.
becomes a subsidiary

Management Targets:
Net sales organic growth rate

3% or more

2018

15%
Return on equity (ROE) 10% or more

Reshaped thegroup philosophy system

Business profit margin

Formulated a newcorporate vision

Adoption of management using return on invested capital (ROIC)
Aim for improved capital efficiency in each business segment
Priority Measures:■

Development of CSV business■

Enhancement of total solutions■

Rebuilding of manufacturing system
for water treatment facilities■

Creation of new business and thepromotion of innovation■

Strengthening the foundation andpromotion of research and development■

Establishment of the Group
governance system

1986

2015

Deployed tool cleaning services

Commenced the ultrapure water supply
business in South Korea
Acquired a water treatment chemicals
business in Europe

2002

Launched ultrapure watersupply business

2003

1991

Achieved 100%
wastewater reclamation

Launched soil remediation
services

2017
2019

Acquired water treatment-related companies in the
United States

1989

Established thecorporate philosophy

1990
Information society development period (1991–1999)
As areas all over Japan experienced worsening pollution
issues accompanying economic growth, Kurita made its markas an environmental company by working to solve pollution
due to industrial and household wastewater. In the 1980s,
Kurita established a firm position as a provider of water
treatment solutions for the electronics industry by meeting
the industry’s growing demand for advanced water treatment
with ultrapure water technology. In 1989, marking its 40th
anniversary, Kurita formulated the current corporate
philosophy. It shared its mission of creating shared value withsociety in the fields of water and environment, and expanded
its business to include soil remediation.

2000

2010

2020

Period of IoT advancement (1999–)

New Business Model
Deployment andGlobalization

In 2002, as the electronics industry continued todevelop even further with the advance of IT, Kurita
developed a new service contract-type businessmodel in the form of the ultrapure water supply
business. Subsequently, the Company continued totransform its business model, creating various newservices that identified customers’ issues from theperspectives of saving water, saving energy, andreducing waste, and provided solutions for them.
From 2015, the Company began full-fledged
expansion into overseas business through M&A, andis promoting global development of total solutions.

Kurita Water Industries Ltd. Integrated Report 20203

Kurita Group at a Glance

Kurita Group Philosophy System
The missions that the Kurita Group will fulfill in society into the future, its medium- and long-term visions, and its waysof thinking and values as the foothold for achieving them are stipulated as the Kurita Group Philosophy System.

Corporate Philosophy

Study the properties of water, master them, and we will create anenvironment in which nature and man are in harmony
1. Kurita Group will contribute to facilitate the coexistence and shared prosperity of the natural environment and humansociety by creating shared value with society through water.

2. Kurita Group will generate new functions and value for water, through further exploration and exploitation of thefundamental properties of water.

3. Each individual of Kurita Group will adopt its customers’ point of view and solve their water and environmental issues, bymaking full use of its unique technologies, products and services.
* The corporate philosophy was set out in 1989 to mark the 40th founding anniversary of the Company.

Corporate Vision“A Creator of unique value to the solution of water and environment,”
contributing to the realization of a sustainable society.
1. Kurita Group will seek to create shared value with society such as environmental preservation and the effective use ofresources, and will realize its corporate philosophy, by continuing to innovate and through businesses contributing to thenatural environment, industry and people’s lives.

2. Kurita Group will, as an indispensable partner, create value for customers such as “pursuit of safety,” “productivity
enhancement” and “reduction of environmental impact.”

3. Kurita Group will evolve its “service business” and will provide customers, at speed, with comprehensive solutions making
full use of Kurita’s technologies, products and services in water treatment chemicals, water treatment facilities andmaintenance services.

Basic Policy

The basic policy encompasses the management direction and aims of the Groupand forms the foundation of the Kurita Group Philosophy System.

1. Kurita Group Code of Conduct
2. Corporate Governance Policies
3. Basic Policies for Constructing an Internal
Control System

4. CSR Policy
5. Kurita Group BCM (Business Continuity Management)
6. Kurita Group Business Policy** The Kurita Group Business Policy is made up of 14 policies, including the Kurita Group Human Rights Policy, the Kurita Group Environmental Policy. (As of July 2020)

Core values
Stipulates the basic values guiding judgments and actions to be shared by all officers and employees in conducting business activities.

Fairness

Transparency

Integrity

Kurita Group Philosophy System

4

Kurita Water Industries Ltd. Integrated Report 2020

SafetyCompatibility

https://www.kurita.co.jp/english/philosophy_vision/index.html

Kurita Group at a Glance

Kurita Group at a Glance

Kurita Group Business Fields and Strengths
Business Fields

Issues for society and customers
Solutions

CO2 (Greenhouse gas)

Climate change(extreme weather andnatural disasters)
CO2 emission reduction

Customers in various sectors

Production process
Industrialwater
Tap water andsea water

Yield increase
Raw water
treatment

Water saving

WatersavingGroundwater

Utilities

Tight capacity of landfill sites
Waste reduction

Labor saving
Wastewater
treatment

Facilitypreservation

Energy saving

Wastewater reclamation
Soil and groundwaterpollution

Rivers, lakes,
and sea areas

Stable water
treatment

Soil and groundwater
remediation

Groundwater depletion,
ground subsidence

Water pollution

Strengths of the Kurita Group
Customers in various sectors
Realizing asustainable
societySociety

IssuesProviding solutions to issues based on
customer intimacy

Feedback

Feedback

Promoting total solutions
Leveraging AI and IoT

Possessing a wealth of waterrelated products and services
Corrosion
Analysis prevention anddispersion
Fluid andCoagulation
process
andanalysis
flocculation
Purification
andmodification

Kurita Group’s
technologicalfoundation

Sterilization
andbacteriostasis

Biological
Membraneengineering Deionization separation
andadsorption

Expertise andexperience

Water Treatment
ChemicalsIntellectual property
MaintenanceAccumulation of big data

Water
Treatment
Facilities

Kurita Water Industries Ltd. Integrated Report 2020

5

Kurita Group at a Glance

A Story of Value Creation
The Kurita Group strives to create shared value with society by providing optimal solutions that maximize the use ofmanagement resources to address various issues facing society. To this end, we maintain high sensitivity to social
issues, while working to improve our competence base as a company and provide total solutions that leveragecustomer intimacy.

Major Trends Facing
the Kurita GroupManagement Resources (Fiscal year ended March 31, 2020)
Financial Capital

Manufactured Capital
Global network of
manufacturing bases

Equity attributable toowners of parent

Damage to Social
Infrastructure Causedby Climate Change¥242,442

Property, plant and equipment¥106,358

million

Human Capital
Changes in Work Styles
and Lifestyles

Natural Capital

Number of employees

6,737
1,541

Consolidated:

The Advance of
Globalization and Increasing
Wealth Inequality

Parent:million m3

Energymillion GJ

Social and Relationship Capital¥5,693R&D personnel
180
R&D expenses

millionApprox.

Changing Energy
Policies

3
4.82

Water intake

Expansion of training opportunities

Intellectual CapitalFresh Water Scarcity
and Uneven Water
Distribution

millionR&D bases

Japan, Germany,
Singapore, etc.

Number of patents held

2,503

I nclusion in ESG IndexesC orporate citizenship initiativesA supply chain to support
society on a global scale
I SO certification

Industrialization and
Urbanization of
Developing Countries

Advances in Digital
Technology andInnovation Acceleration

Priority themes in CSR activities

Basic themes
Heightened Safety
Awareness

6

Kurita Water Industries Ltd. Integrated Report 2020

1 . Provide highly safe

services and products

2 . Conduct fair businessactivities

3 . Respect human rights

Study the properties of water, master them, and we will create anenvironment in which nature and man are in harmony

Corporate
Vision“A Creator of unique value to the solution of water and environment,”
contributing to the realization of a sustainable society.

Kurita Group at a Glance

Corporate
Philosophy

Impacts on Society
Solving issues related towater resources

Realizing sustainable energy use

Waste reduction

Value creations

Providing value that exceeds customer expectations

Total solutions

Customer intimacy

Core processes
Strategic
human resources
allocation

Deep
understanding ofcustomers

Thorough-goingcommitment tocustomers

Transformation ofbusiness processes

Transformation ofbusiness models

Increase
understanding of
CSV

Base for corporate activities
Recruiting andtraining of humanresources in linewith strategy

Accumulating,managing, and making
explicit our knowledgeof customer data andexpertise

Grasping global
market needs

Grasping social
issuesClose alignment
with the corporate
philosophy

Themes for growth opportunities

4 . Solve issues related
to water resources

5 . Realize sustainableenergy use

6 . Reduce waste

7 . Advance industrial

production technologies

Kurita Water Industries Ltd. Integrated Report 2020

7

Kurita Group at a Glance

Performance (Fiscal years ended March 31)
Financial Capital
OrdersSales by Region
Japan(Millions of Yen) 258,439

2019

259,545

Business Profit and Business Profit Margin
Business Profit (Millions of Yen)

25,667EMEA

2019

Other regions

264,807

2020

Sales in Asia were down due to a decrease in water treatment facilities sales inthe electronics sectors in China and South Korea. Sales in North America,
however, increased in line with the consolidation of U.S. Water Services, Inc. andAvista Technologies, Inc.

Return on Assets (ROA) and Return on Equity (ROE)Business Profit Margin (%)

26,654

North America(Millions of Yen) 257,331

2020

Although U.S. Water Services, Inc., Avista Technologies, Inc. in the US, and Avista
Technologies (UK) Ltd. in the UK were newly consolidated, water treatment
facilities saw a drop off in large-scale projects, resulting in only a modest year-onyear increase.

Asia

ROA

ROE

(%)

7.6

5.1
4.9
10.0

10.1

2019

2020

Excluding the effect of new consolidation, sales were down. Business profit
increased, however, thanks to improvement in the cost of sales ratio due to adecrease in additional costs for projects in the Water Treatment Facilities
segment, as well as the streamlining of low-margin products in the Water
Treatment Chemicals business, greater efficiency in global procurement, andreductions in SG&A expenses.

Dividends per Share and Dividend Payout Ratio
Dividends per share (Yen)

3.5

2019

2020

A loss on the sale of the European alumina business as well as an impairment loss on
goodwill at a Chinese subsidiary were recorded in the previous fiscal year. However,in the current fiscal year, we recorded a gain on sale of assets due to the partial saleof equipment in the ultrapure water supply business. Combined with improvements
in other income and expenditures, this led to higher ROA and ROE.
・ROA = Profit attributable to owners of parent ÷ Total assets (Average) × 100

・ROE = Profit attributable to owners of parent ÷ Equity attributable to owners of parent (Average) × 100

Total Assets Turnover

Dividend payout ratio (%)

62.0
54.0

(Times)

0.74

0.71

2019

2020

50.3
38.1

2019

2020

Under a policy of striving as much as possible for a continuous increase individends, dividends were increased for the 16th consecutive year. The dividend
payout ratio declined slightly, partly reflecting the increase in profit attributable toowners of parent.

8

Kurita Water Industries Ltd. Integrated Report 2020

Goodwill and equity-method investments increased due to acquisitions andinvestments, as did right of land use assets and lease liabilities, due to the acquisitionof fixed-term leasehold. In addition, borrowings increased as a result of execution of
a commitment line agreement, yielding a decrease in total assets turnover.
・Total assets turnover = Net sales ÷ Total assets (Average)

Kurita Group at a Glance

Human Capital
Ratio of Female Directors and Employees

Number of Employees by Region
Japan

Asia

5,481

North America

5,654

6,011

EMEA

Ratio of female directors
Other regions

6,613

(%)

6,737

2018

2019

10.0

ISO 9001
181

2017

2018

ISO 14001

23
20

167

153

2020

2019

194

155

18

18

2019

2020

118

114

2016

2018

Number of Certified Companies

Overseas

193

143

8.3

Social and Relationship Capital

Number of Patents Pending

170

9.6

8.5

7.6

2017

2020

Intellectual Capital

Japan

23.7
18.2

0.0
2017

24.1

23.1

22.6

8.6

2016

Ratio of female employees

Ratio of women in management positions

2019

2020

2019

2020

Natural Capital
The Kurita Group aims to see environmental
impact reduction* 1 in the operations of its
customers offset and even exceed theenvironmental impacts of its own business. To thisend, we have set numerical targets for the“amount of the reduction in environmental impactof customers - the amount of the Kurita Group’s
own environmental impact,” with regard to water,
CO2, and waste.
*1 The Kurita Group has defined products, technologies,
and business models that contribute significantly towater-saving, CO 2 emissions reduction, and waste
reduction compared to previous levels as the “CSV
business.” The reduction of environmental impact
from customers’ operations is calculated based on
results of applying the CSV business. Further
information about the CSV business can be found in“Environmental Improvement Activities” on page 48.
*2 Please see page 20 for the Company’s thinking on CO2.

Water (million m3)
55.18

54.12

Waste (1,000 t)
222

279

44.66

Reduction atcustomers

187

119

136

Japan
Overseas

Impact fromour businessactivities*2

CO2 (1,000 t)

26

29

0.68

Japan
Overseas

30
70

2.79

191

2020

2018

223

236

2019

2020

4.00
2018

2019

2018

2019

2020

Kurita Water Industries Ltd. Integrated Report 2020

9

Kurita Group Business Strategy

Interview with the President

Kurita is working to create sharedvalue together with society under
the MVP-22 plan, which puts CSR
at the core of our business.

Q

What operating climate did Kurita face in the year under review
and how did the business perform?
In the fiscal year ended March 31, 2020, persistent trade friction

higher profits year on year. Orders were lifted by the consolidation

between the U.S. and China and disruption surrounding the Brexitof a number of businesses – U.S. Water Services, Inc., which was

issue weighed on economic growth in China and Europe. Towards

acquired and became a subsidiary in the previous fiscal year, andthe end of the fiscal year, the slowdown was compounded by a rapid

U.S.-based Avista Technologies, Inc. and Avista Technologies (UK)

deterioration in economic growth caused by the widening outbreak

Ltd., which supply reverse osmosis (RO) membrane chemicals andof novel coronavirus disease (COVID-19). In Japan, production activity

services. However, total orders rose only slightly year on year due toweakened in the second half of the fiscal year due to an increase ina decline in major projects in the Water Treatment Facilities business.

consumption tax and sluggish exports. In the electronics industry –Net sales increased, driven by the new businesses that joined thethe Kurita Group’s main market – customers in Japan, China andGroup, but excluding that factor, net sales fell year on year. Several

South Korea delayed decisions on facility investment amid weakfactors weighed on net sales. Yen appreciation against overseas

smartphone sales and a downturn in the semiconductor market.

currencies pushed down sales at overseas subsidiaries in yen terms

Despite that challenging environment, the Kurita Group reported

10

Kurita Water Industries Ltd. Integrated Report 2020

compared with the previous fiscal year, the Group streamlined low-

ratio by adjusting the product mix in the Water Treatment Chemicals

and sales of water treatment facilities declined in Japan and overseas

business, cutting costs by overhauling global procurement activities,

amid weak demand from the electronics industry.

and reducing one-off additional costs in the Water Treatment

Although orders and net sales missed our projections, the Group

Facilities business. Operating profit also increased, supported byreported an increase in business profit* year on year thanks to an

those factors and a significant improvement in net other income andimprovement in the cost of sales ratio. We took steps to improve theexpenses.

Kurita Group Business Strategy

margin product lines in the Water Treatment Chemicals business,

Factors Affecting Business Profit (YoY)(Billions of Yen)New
consolidations

Decline in
net sales

+0.2

-4.8

30.0
25.0

25.7

Improvement in
Decline incost of sales ratio SG&A expenses

+5.2

26.7

+0.4

20.0
15.0
10.0
5.0

Fiscal year
ended
March 31,2019

Excluding new consolidations,net sales declined in overseas
water treatment chemicals andin water treatment facilities forthe electronics industry inJapan and overseas.

Cost of sales ratio improvedin domestic and overseas
water treatment chemicals
and additional costs declined
in water treatment facilities.

Fiscal year
ended
March 31,2020

0.0
* Business profit is an internal earnings indicator, which is calculated based on net sales after deducting cost of sales and selling, general andadministrative expenses to give a more consistent picture of earnings. Business profit is not defined under International Financial ReportingStandards (IFRS), but the Company voluntarily discloses the indicator for reference purposes.

Q

What progress did Kurita make with
MVP-22 initiatives in the plan's second year?
We are working to create shared value together with society underencompass contracts for products, technologies and services andthe Maximize Value Proposition 2022 (MVP-22) medium-term

are designed to be rolled out for a wide range of customers. In the

management plan, which puts CSR at the core of our business. Our

fiscal year ended March 31, 2020, we completed six solutions

aim is to help tackle and solve issues faced by society and provide

models, including one model that improves water quality andnew value to customers. We are doing that by dramatically

productivity on paper processing lines by combining our expertise inincreasing the quality and speed of our work, leveraging customer

water treatment chemicals, IT and sensing technologies. In addition,

intimacy as the clear source of the Kurita Group’s competitiveness.

we put in place a framework to promote the Group’s new total

As key initiatives to provide new value to customers, we are

solutions. Specifically, we integrated domestic sales departments

developing “Creating Shared Value” (CSV) business and totalsolutions. The Kurita Group defines CSV business as products,
technologies or business models that substantially reduce
environmental impact while also contributing to an improvement in
profitability. Under the MVP-22 plan, we are working to expand theGroup’s CSV business. In the fiscal year ended March 31, 2020, we
finished putting in place systems covering all aspects of CSV

Solutions Model Orders
Solutions models being adopted by a wider range of industries
Other

Pulp & paper

Electronics
Steelbusiness, from how CSV businesses, products and technologies are
selected to performance monitoring. CSV business orders also
exceeded our target for the fiscal year ending March 31, 2023.
We also made progress with developing total solutions. Working
groups that combine marketing, sales, technologies anddevelopment functions were formed for each market and began

Automotive
Food,
beverages,
pharmaceuticals

Orders in FY ended
March 31, 2020

¥1.9 billion

Petrochemicals

work on devising solutions models. Our solutions models

Kurita Water Industries Ltd. Integrated Report 2020

11

M&A and Measures by Region
North America
Company

History

Kurita America Inc.
1996
2017
2019
2020

Avista Technologies, Inc.

Established Kurita America, Inc.
Acquired Fremont Industries, LLC
Acquired U.S. Water Services, Inc.
Merger2019

Kurita Fracta Holdings, Inc.
2018

Acquisition

Pentagon Technologies Group, Inc.

Investment; became a consolidated
subsidiary

2019
2020

Investment; became an equitymethod affiliate
Additional investment; became aconsolidated subsidiaryBusiness details

Water treatment chemicals, water
treatment facilities and maintenanceRO membrane chemicals
and related services

Software services

Tool cleaning services

Current situationand measures

Aiming to increase profitability by
improving efficiency and providing totalsolutions after completing businessintegration

Aiming to expand into the global market
by utilizing the resources of the Kurita
Group

Aiming to contribute to more advanced
water treatment services by utilizing AI

Aiming to strengthen competitiveness inthe electronics industry

Company

Kurita Europe GmbH

EuropeHistory

2015
2017
2018

Acquisition
Purchase of production facility forpulp & paper chemicals
Sale of aluminum compoundbusiness

Asia
Avista Technologies (UK) Ltd.

Hansu Co., Ltd.
1974

2019

Acquisition

2017

Investment; became an equitymethod affiliate
Additional investment; became aconsolidated subsidiaryBusiness details

Water treatment chemicals

RO membrane chemicals

Water treatment chemicals

Current situationand measures

Profitability has improved due to efforts toincrease efficiency; aiming to expand
business in the Middle East region

Aiming to capture demand in new
European markets

Profitability has improved since theacquisition; aiming to increase market
share in South Korea

previously separated along product and business lines into a single

Group’s profitability through activities to establish a global supply

sales division targeting specific markets and regions. Another step

chain. We also created a personnel map of engineers in our

we took was to establish Kurita Kitakantou Co., Ltd. as a single sales

production system to help us train and better utilize humanentity to provide water treatment chemicals and maintenanceresources involved in production activities.

services on a one-stop basis, replacing several standalone sales

To support Group business management, we took a number ofoffices. These new business models and organizational changes

steps to reinforce group governance. Specifically, we launched ashow how the various initiatives to transform our business are now

Management Monitoring System for group companies in Japan andgaining momentum.

overseas, led by the Internal Auditing Department, which reports

We have also been working to expand and improve thedirectly to the president. Using the system, we upgraded governanceprofitability of overseas businesses, which along with therules in line with the Kurita Group Business Policy and verified

development of new business models, is a key theme for the Group.

implementation status. Additionally, in order to strengthen

To create a platform to provide total solutions in North America, wegovernance at group companies in Japan by enhancing themerged U.S. Water Services, Inc. with our existing subsidiaries in theeffectiveness of boards of directors, we verified conditions within the

U.S., Kurita America Inc. and Fremont Industries, LLC, to form aboard at each company and developed measures to tackle any

newly established integrated company, also called Kurita America

issues related to effectiveness. The Company itself also took several

Inc. The new company started operations in April 2020. In addition,

steps to improve governance, including making improvements towith the acquisition of Avista Technologies, we have gained highly

the Successor Planning Committee’s candidate selection process forcompetitive technologies in the RO membrane chemicals market

president and directors and reducing holdings of shares in otherand a RO membrane management service business model.

listed companies.

In January 2020, we launched Project Acorn, a global initiative thatdraws on the Group’s business resources related to RO membranechemicals, including products and technologies. Leveraging global

Project Acorn: Eight Task Forcessynergies, we aim to increase RO membrane chemicals-related sales

RO global
products

from ¥8 billion currently to ¥10 billion by the fiscal year ending
March 31, 2023. Separately, in order to strengthen our competitive
position in the electronics industry overseas, we acquired additional
shares in U.S. company Pentagon Technologies Group, Inc., making

Sales strategy

Technical support

it a consolidated subsidiary in April 2020. We expect the company’s
tool cleaning business to support the Group’s profit growth going
forward.
As part of efforts to reinforce the cost control structure, which is
key to improving profitability, we continued to rebuild our water
treatment facility manufacturing system. We have reduced errors in
the design phase by introducing an automated design system. In
procurement, our global supply team (GST) contributed to the12

Kurita Water Industries Ltd. Integrated Report 2020

Brand andmarketing strategy

Laboratory
services

Research anddevelopment

Supply chain
optimization

IT integration

Kurita Group Business Strategy

Q

What kind of company is Kurita aiming to be in the post-COVID-19 world?
The COVID-19 pandemic forced the lockdown of entire cities and led

improve emergency responses related to BCPs and to strengthen

to restrictions on movement worldwide, resulting in severe

frontline business capabilities is likely to increase. By reassessing thelimitations on economic and corporate activity. In just a few months

value of services that are best provided physically and by combining

from the initial outbreak, the value systems of society and industry

them with remote services, Kurita has a major opportunity towere completely upended. Business continuity plans (BCPs) havedramatically transform its business processes and business models.

become a priority issue for companies and the pandemic appears toUsing the pandemic as a rare opportunity to dismantle preconceived

be accelerating the shift to digitization in society and industry, withideas, I want the Kurita Group to become a vital partner for society

activities increasingly shifting from physical to remote and from realand industry in the new post-COVID-19 world.

to virtual interactions.
In last year’s interview, I also talked about how the digitaltransformation of society and industry represents a major
opportunity. However, I warned that if the Kurita Group is too late tocatch the wave of innovation, existing business models will become
outdated and be left behind by the market. The COVID-19 outbreakhas not changed those opportunities or risks, it has accelerated
them. By driving digital transformation (DX) in all our businessprocesses, we have the opportunity to create new value for society
through our total solutions for water treatment. Conversely, if we areslow to respond, we face the risk of losing markets to competitors oreven to new market entrants from other industries.
However, by supporting customer BCPs in the post-COVID-19
world, I see an opportunity for Kurita to show how it can play animportant role as a corporate Group that creates shared value withsociety by responding to public needs. Kurita Group companies
have continued to supply products and services worldwide despite
the pandemic. By ensuring our own businesses continue to operate,
we are keeping customer operations running smoothly and helping
to maintain the functions of society and industry.
In terms of business processes, our existing lineup of physicalservices, such as taking water samples at customer sites andanalyzing them offsite, are likely to see a decline in value as
digitization spurs the creation of alternative services. In parallel,
remote services, which use online design presentations, sensors andsoftware, are likely to gain in value. Not all physical services will fall by
the wayside. The value of services such as personnel training to

Q

What measures are planned for the third year of MVP-22?
In the fiscal year ending March 31, 2021, the plan’s third year, ourOur second aim is to transform business processes. In April 2020,

first aim is to promote CSV business and step up the deployment of

we integrated all the Group’s IT-related departments into a new

total solutions. We will fine-tune our sensitivity to social issues andDigital Strategy Division, which is tasked with driving digital

deepen our understanding of customers’ businesses to help ustransformation. We plan to utilize big data resources gathered fromcreate new business models and launch them in the market. Our

our ultrapure water supply facilities and the AI technologies andgoal is to increase profitability by building up earnings from high-expertise of U.S. subsidiary Fracta to create new value. In water

margin solutions models.

treatment facility manufacturing, we will also enhance the value we

Kurita Water Industries Ltd. Integrated Report 202013

provide customers by using more automation in design processes
and introducing a digital twin simulator.

Our third aim is increase profitability in overseas operations.
Leveraging the business platforms and technologies acquired

In the fiscal year ended March 31, 2020, we made the decision tothrough M&A, we plan to improve profitability from both a global

relocate the Kurita Global Technology Center, our main domestic

and local perspective. In terms of global initiatives, we will reinforce

R&D site. The new center, scheduled to open in April 2022, will also

our position in the RO membrane chemicals and services market,

transform the Group’s development processes. Our strong

centered on Avista Technologies. Locally, we aim to rapidly generatecommitment to scientific hypothesis and practical experiments willsynergies from the integration of our subsidiaries in the U.S. andremain the same, but we plan to maximize time allocated fordevelop new water treatment chemicals and technologies thatexperiments and analysis by encouraging remote working to ensurereflect the needs of each region. We also plan to expand ourthe development center is primarily a place for conducting

recurring income business in East Asia, using EPC projects as anexperiments. The new center will therefore be equipped with IT

entry point to provide other services such as membrane cleaning

infrastructure and technology that facilitates remote monitoring ofand resin regeneration.

experiments, virtual presentations and other innovative approaches.

Q

What is your closing message for stakeholders?
The COVID-19 pandemic has led to many changes in society’s values

flow-generating capabilities. We will also consider share buybacks

and priorities. However, the Kurita Group’s vital role of contributing

while balancing the Group’s cash on hand and funding requirements

to society and industry by providing solutions that address issues

and taking into account share price trends.

related to water and the environment is fundamentally unchanged.

I hope we can count on your continued support as we transform

We want to prioritize funds entrusted with us by shareholders andour business to create an unshakeable earnings base that is resilient

investors on growth businesses, such as new solutions models andto the toughest of operating environments.

the ultrapure water supply business, which is expected to be highly
profitable.
Despite the increasingly uncertain economic outlook, we have no

14

July 2020

plans to change our current dividend policy of working to continue

Michiya Kadota

raising the dividend, because we are confident in the Group’s cash

President and Representative Director

Kurita Water Industries Ltd. Integrated Report 2020

Kurita Group Business Strategy

Kurita Group Business Strategy

Financial Strategy
Key Investments

Shuji Shirode
Executive Officer
Deputy Executive
General Manager ofCorporate Planning andControl Division

Changes in the Group’s Balance Sheet
For many years, the Kurita Group’s balance sheet has effectively
been debt-free. Our policy is to use funds entrusted with us byshareholders to actively invest in growth, while also ensuring a
disciplined approach to investment. However, the Kurita Grouphas many strong cash-generating businesses, which has allowed
us to use shareholder funds for working capital as well as capital
expenditures. Since acquiring a water treatment chemicals
business in Europe in January 2015, Kurita has been actively
investing in overseas M&A, while also stepping up investment in
the ultrapure water supply business, which is based on a businessmodel that uses the Kurita Group’s proprietary assets. To meetsignificant demand for funds to support those activities, wesecured funding through a commitment line contract in the fiscal
year ended March 31, 2020, supplementing active use of theGroup’s internal funds. As a result, cash and cash equivalents at
the end of the fiscal year under review were at an appropriate
level, given the nature of the Group’s businesses and from theperspective of business continuity.

Actively Investing in Growth and Diversifying Funding(Fiscal Year Ended March 31, 2020)

In the fiscal year ended March 31, 2020, we invested in assets inthe ultrapure water supply business and acquired other property,
plant and equipment. In the U.S. and U.K., we acquired RO
membrane-related businesses, and in the U.S., we acquired shares
in Pentagon Technologies Group, Inc., which operates a toolcleaning business. In April this year, we bought additional shares inPentagon Technologies Group, Inc., taking our stake to 51% andmaking the company a consolidated subsidiary. In addition, theCompany decided to establish a new research and developmentbase to maintain and enhance technological competitiveness. We
plan to transfer R&D functions to the new location in 2022. The
new global technology center will cost approximately ¥30 billion tobuild and we plan to fund the project using internal funds anddebt.

Outlook
Going forward, we plan to continue investing aggressively while
also streamlining assets to improve capital efficiency and create
new sources of funds. Specifically, we are reducing our holdings ofshares in other listed companies to generate cash. In the fiscal
year ended March 31, 2020, we sold shares in only two listedcompanies, but we will continue to look into the feasibility offurther reducing our holdings while keeping a close eye on thebest timing for disposals.

Dividend Policy
In the fiscal year ended March 31, 2020, we increased dividends
paid from capital surplus for the 16th consecutive year, in line with
our policy of increasing dividends as much as possible, based on adividend payout ratio target of 30-50% over five years. Despite
considerable uncertainty about when the COVID-19 outbreak will
be brought under control, we will continue to work to increase thedividend without adjusting our existing dividend policy.

Dividends per Share and Dividend Payout Ratio
Dividends per Share (Yen)Dividend Payout Ratio (%)¥67.5 billion ¥67.5 billion
Increase in cash andcash equivalents

62.0

Borrowings, etc. (net)

54.0

Sale/purchase ofshares in other listedcompanies (net)

Purchase of property,
plant andequipment (net)Operating cash ﬂow

Payments foracquisition ofbusinesses/purchaseof investments
in aﬃliates

50.3
38.1

Dividends paid
Other

Sources offunds

Uses of
cash

2019

2020

Kurita Water Industries Ltd. Integrated Report 2020

15

Kurita Group Business Strategy

Medium-Term Management Plan:
Maximize Value Proposition 2022 (MVP-22) (April 1, 2018 – March 31, 2023)
Basic Policy

Maximize customer intimacy by dismantling preconceived ideas
and dramatically raising the quality and speed of our work.

Management Targets and Second-Year Results

Place emphasis on profitability
and capital efficiency

Net sales organic growth rate
Target3%

or moreBusiness profit margin
Target15%

Fiscal year ended
March 31, 2020 result:

10.1%

Return on equity (ROE)
Target10%

or moreFiscal year ended
March 31, 2020 result:

7.6%

Priority Measures

Priority
Measures

Development of CSV BusinessPriority
Measures

Enhancement of total solutions

1
2

Priority
Measures3

Priority
Measures4

Priority
Measures

Adoption of business segment
management using return on
invested capital (ROIC)
Target16

Improved capitalefficiency in eachbusiness segment

Kurita Water Industries Ltd. Integrated Report 2020

5

Priority
Measures6

Expand earnings with highly unique technologies,
products, and services that contribute to the naturalenvironment, industry and people’s lives.

Rapidly develop total solutions for customers that makefull use of Kurita’s technologies, products and services inwater treatment chemicals, water treatment facilities
and maintenance.

Rebuilding of manufacturing system forwater treatment facilities
Rebuild the manufacturing system and processes todramatically increase quality and speed.

Creation of new business andthe promotion of innovation
Expand and enhance existing business fields while
creating new business fields that will become major new
sources of earnings.

Strengthening the foundation andpromotion of research and development
Build a strong foundation as a technology-oriented
company and promote advanced research anddevelopment.

Establishment of the Group
governance system
Improve the effectiveness of internal controls
in Group companies.

Kurita Group Business Strategy

Initiatives by Priority Measure

Initiatives for the fiscal
year ended March 31, 2020

Initiatives for the fiscal
year ending March 31, 2021

Order targets and value provision targets achieved and reset

Continuously review CSV business


Scope
of CSV business selection expanded to include unique products
supplied by Group companies

 uild systems to ascertain profitability of CSV business andBunderpin new KPIs

Completed six new solutions models that create value for customers
Integrated
all of Kurita’s domestic sales functions to create platform for
deployment of total solutions
Established
Kurita Kitakantou to provide water treatment chemicals andmaintenance services

Establishedconcepts to use AI to overhaul design and engineering
processes
Identified
contractual and technical risks in design and engineering
processes

 reate solutions models that provide new value toCcustomers
 tep up market development using sales promotionS
activities in global and domestic markets

Establish UX GroupUse AI to automate design process and build digital twin
simulator
Use HR tech* to optimize deployment of personnel and teams* Stress-Strength Model: System to collate and share incompatible information* The application of big data analysis, artificial intelligence (AI), cloud computing
and other advanced IT-related technologies for a wide range of humanresource operations, including hiring, development, and assignment.


Acquired
Avista Technologies, highly competitive player in RO membranechemicals market

 ork with Fracta to digitalize businesses based on AI
W
technologies

Improved effectiveness and strengthened implementation of SSM*


Reinforced
fluid analysis capabilities, process simulation technologies,
micro-volume analysis capabilities as technological platform

Developed
advanced sludge treatment facility management support
system to reduce waste volume and personnel levels, developed
technology to control the conversion of waste into biogasD eveloped proprietary, advanced functional materials such as radioactive
substance absorption materials and high-performance water treatment chemicals

 nhance mathematical models for water treatment
Ephenomena to support use of IoT and AI, develop advanced
water treatment systems based on those models
 xpand and reinforce RO solutions by drawing on ROE
membrane treatment technologies from across the Group,
including Avista Technologies

Embed Management Monitoring System
Launched
Management Monitoring System to verify establishment andoperation of rules based on Kurita Basic Business Policy
Identified
issues related to effectiveness of Board of Directors atdomestic Group companies and developed measures to solve issues

Implement initiatives to improve effectiveness of rules inline with characteristics and situation at each Group
companyImplement measures to improve effectiveness of Board of
Directors at Group companies

Kurita Water Industries Ltd. Integrated Report 202017

Kurita Group Business Strategy

CSR Initiatives
The Kurita Group has positioned CSR at the core of its management strategy in order to realize its corporate
philosophy while achieving sustained growth and is strengthening its CSR initiatives accordingly.

Kurita Group’s CSR Framework
Under its MVP-22 medium-term management plan, the Kurita
Group is reorganizing the CSR activities it has conducted to dateand is strengthening initiatives with CSR at the core ofmanagement. The Group has determined that contributing to

global efforts like the UN’s Sustainable Development Goals (SDGs)
and ESG investment is indispensable to creating business
opportunities and securing a competitive advantage into the
future.

Reaffirmation of Corporate Philosophy
CSR Definition and Initiative Objectives
Consideration of Priority Themes (Materiality)

CSR Policy
Provide solutions to issues related to water and the environment,
and fulfill responsibility for the future

Priority themes
Basic themes

Themes for growth opportunities
4. Solve issues related to water resources
5. Realize sustainable energy use
6. Reduce waste
7. Advance industrial production technologies

1. Provide highly safe services and products
2. Conduct fair business activities
3. Respect human rights

Individual activities

Results

Activities organization

Business policy

Stakeholder
engagement

Disclosure

Verification andimprovement

Promotion System
The Kurita Group positions the themes stipulated in its CSR Policy asmaterial issues and engages on a Group-wide basis in individual
activities in the areas of 1) corporate governance, 2) product andservice liability, 3) fair operating practices, 4) respect for human rights,
5) appropriate labor practices, 6) environmental improvement, and 7)

corporate citizenship. The chairperson of the Environment & Social(E&S) Committee, who is the Company’s executive senior managing
director and representative director, is responsible for integrating
and promoting these activities, and directors and executive officers
are assigned as managers for individual activities.

Kurita's Board of Directors
Reporting

E&S Committee
Chairperson: Executive Senior Managing
Director and Representative Director▶

Secretariat

18

Managers of Individual Activities
Directors and executive officers

Committees and Responsible
Departments

Integrating and promoting individual activities

Risk Management Department and Corporate
Communications and CSR Department ofCorporate Planning and Control Division▶

ReportingInformation disclosure

Kurita Water Industries Ltd. Integrated Report 2020

Each division of Kurita
Group Companies▶

Quality management
Compliance consultation▶ Human rights awareness▶ Diversity promotion▶ Work-life balance, health management▶ Occupational accident prevention, safety awareness▶ Environmental improvements▶ CSR requirements for business partners▶ Corporate citizenship▶

Kurita Group Business Strategy

E&S Committee
The E&S Committee oversees the Kurita Group’s CSR initiatives andworks to increase the Group’s competitive advantage by further
enhancing business competition capabilities and risk response
capabilities.
Specifically, the committee sets the activity targets and key

performance indicators for each of the themes in the CSR Policy as the
CSR medium-term plan, then confirms progress on the targets while
identifying issues and making improvements. At the same time, thecommittee confirms stakeholders’ expectations of the Kurita Groupand their issues, and verifies the Group’s CSR initiatives.

CSR Policy
The CSR Policy comprises two types of themes: “Basic themes,”
which prevent damage to the Group’s value, and “Themes for
growth opportunities,” which promote creation of shared value
with society at large. We have set forth our “Initiatives toward2030” for each theme.
This policy was formulated upon deliberations on materiality by
the E&S Committee and subsequent confirmation by the Board of

Directors. Materiality was identified by specifying a total of 30
sustainability-related themes, making reference to the GRI
Standard, the OECD Guidelines for Multinational Enterprises, theUNGC, and the SDGs, among others, based on two aspects: 1)
stakeholders' expectations of the Kurita Group and 2) the Kurita
Group's impact on society.

Provide solutions to issues related to water and the environment, and fulfill responsibility for the future
Priority themes
1. Provide highly safe services and products

Basic themes

2. Conduct fair business activities

3. Respect human rights

4. Solve issues related to water resources

Themes for growth opportunities

5. Realize sustainable energy use

6. Reduce waste

7. Advance industrial production technologies

Initiatives toward 2030
Maintain social trust by developing andproviding services and products reflecting
considerations for safety, health, and theenvironment.

Maintain fair and transparent trade basedon free competition. Maintain soundrelationships with politics and administration.
Support and respect international norms
related to human rights and promote humanrights initiatives by following the Guiding
Principles on Business and Human Rights
established by the United Nations.

Targets for the fiscal year ending March 31, 2023
1) Rate of safety evaluations for
newly developed products*1

100%2) Rate of front-line employee participationin regular safety training directly related
to products and services

100%

Rate of participation in compliance-related
training among officers and employees

100%1) Rate of training conducted in relation tohuman rights among officers and employees

100%2) Rate of participation in safety training
related to site operations*2

100%

Supply water at the optimum quality and quantity
by securing as much water as necessary for thelife of all people and the development of industry
by applying technologies for saving, purifying,
and reusing water.

Water savings at customers – Amount ofwater intake used in our business activities

240
million m3 *3

Optimize energy use in living and inindustries, and introduce technologies
for creating energy throughout society.

CO2 emission reductions at customers –CO2 emissions from our business activities

10,000 t *3

Introduce technologies for using waste as
resources and technologies for controlling theamount of waste in order to achieve zerowaste.

Waste reduction at customers – Waste
generated from our business activities

300,000 t*3

Make full use of big data on water tocontribute to innovations in production
efficiency and product quality in industries.

Proportion of themes falling into“Contribution to improvement of production
process” to product development themes

35%*1 Regarding “Proportion of themes falling into ‘Safety improvement’ and ‘Response to legal changes’ to product development themes,” needs related to safety improvement andresponse to legal changes vary with the prevailing circumstances, so the target was revised in the fiscal year ended March 31, 2020 in order to facilitate more effective initiatives.
Refer to page 20 for more details.
*2 Regarding the “Severity rate,” definitions and calculation methods differ depending on the country, so the target was revised in the fiscal year ended March 31, 2020 so that it
could be pursued on a Group-wide basis. Refer to page 20 for more details.
*3 The products, technologies and business models selected for the CSV business, which contributes to environmental impact reductions by customers, have increased, andprovision of the CSV business to customers has made steady progress, so the target has been revised.

Kurita Water Industries Ltd. Integrated Report 2020

19

Kurita Group Business Strategy

CSR Initiatives

Achievement Status of Targets for the fiscal year ended March 31, 2020
TargetFiscal year ending
March 31, 2023
(initial plan)

Priority themes

Fiscal year
ended March
31, 2020

Result1) Proportion of themes falling into “Safety improvement” and“Response to legal changes” to product development themes

15%2) Rate of front-line employee participation in regular safety training directly
related to products and services

100%

100%

100%

2. Conduct fair business activities

Rate of e-learning course completion by relevant employees

100%

100%

100%

3. Respect human rights

1) Rate of training conducted in relation to human rights among officers
and employees

100%

100%

100%

2) Severity rate*

0.005

1. Provide highly safe services andproducts

2

Target changed*1〇〇〇

Target changed*

2

4. Solve issues related to water resources

Water savings at customers – Tap water used in our business activities

5. Realize sustainable energy use

CO2 emission reductions at customers – CO2 emissions from our business activities

0t-43,000 t

43,000 t

6. Reduce waste

Waste reduction at customers – Waste generated from our business activities

100,000 t

292,000 t

152,000 t

7. Advance industrial production
technologies

Proportion of themes falling into “Contribution to improvement of
production process” to product development themes

35%

30%

37%

50 million m3

Evaluation

77 million m3 52 million m3

△
〇
△
〇

〇: Achieved △: Partially achieved*1 Needs related to safety improvement and response to legal changes vary with prevailing circumstances, so revisions were made in the fiscal year ended March 31, 2020 to makeinitiatives more effective, and the target was changed to “Rate of safety evaluations for newly developed products.” Initiatives to achieve this target have been conducted since
October 2019. After revising the target, the rate of product safety evaluations in the fiscal year ended March 31, 2020 was 100%. Refer to page 19 for the post-revision target for
the fiscal year ending March 31, 2023.
*2 Definitions and calculation methods differ depending on the country, so revisions were made in the fiscal year ended March 31, 2020, and the target was changed to “Rate ofparticipation in safety training related to site operations.” Initiatives to achieve the target have been conducted since April 2020. Refer to page 19 for the post-revision target for
the fiscal year ending March 31, 2023.

Kurita Group KPI: Customer impact reduction – Kurita Group impact
The Kurita Group has set a unique KPI of “Customer impact reduction– Kurita Group impact” in themes for growth opportunities. The Kurita
Group aims to achieve a reduction of environmental impact throughits business that offsets and even exceeds the environmental impact
generated by its business and to this end it is compiling data for actual
reductions and impact.
Kurita’s carbon dioxide emissions for Theme 5 include data
corresponding to Scope 3 under the current Greenhouse Gas (GHG)
Protocol, but no changes will be made through the fiscal year ending
March 31, 2023, the period of the CSR medium-term plan, for the sakeof the continuity of CSR activities and KPIs.
GRI Standards were partially revised in 2018, and the Company’s
ultrapure water supply volume in its ultrapure water supply business
was defined as “water discharge (sent for use of other organizations).”
The ultrapure water supply business takes water from customers,
processes it at the Company’s facilities into ultrapure water andsupplies it back to customer production plants. Ultrapure water after
use is recovered and treated at the Company’s facilities and reused as
ultrapure water. Ultrapure water supplied is not discharged outside
factories as is, so the Company excludes ultrapure water supply
volume from the scope of calculations for wastewater volume.
Disclosure data from January 2021 will include ultrapure water supply
volume within the scope of calculations, so from the standpoint of thedata, the Kurita Group will become a company that uses a large
volume of water.
The Kurita Group will continue to enhance targets and data
disclosure in line with the GHG Protocol and GRI Standards. Two KPIs
will be utilized, one in line with international standards and one that
expresses the unique way the Kurita Group creates value, “Customer
impact reduction – Kurita Group impact,” and through this the Groupwill work to both improve the environment through its business andreduce environmental impact down the entire supply chain.

External Evaluation (as of July 2020)
Inclusion in ESG Indexes

FTSE4Good
Index Series

Evaluation by ESG Rating Organization

FTSE Blossom
Japan Index

MSCI ACWI ESG Leaders Index
MSCI World ESG Leaders Index

SOMPO
Sustainability
Index
The MSCI Japan
Empowering Women
Index (WIN)

ISS-ESG

Evaluation by Supplier Evaluation Organization
EcoVadis* The inclusion of Kurita Water Industries Ltd. in any MSCI index, and the use of MSCI logos, trademarks, service marks or index names herein, do not constitute a sponsorship,endorsement or promotion of Kurita Water Industries Ltd. by MSCI or any of its affiliates.
The MSCI indexes are the exclusive property of MSCI. MSCI and the MSCI index names and logos are trademarks or service marks of MSCI or its affiliates.

20

Kurita Water Industries Ltd. Integrated Report 2020

Kurita Group Business Strategy

CSR Activities: Topics

Promotion of CSV Business
The Kurita Group has defined products, technologies, andbusiness models that contribute significantly to increased
water-savings, CO2 emission reductions, and waste reduction
compared to previous levels as the “CSV business.” Throughtheir creation and provision to customers, we will promote thecreation of shared value with society. Furthermore,

External
evaluations
and helping
solve issues"Development of CSV Business" is one of the priority measuresof the MVP-22 plan, and we have established key performanceindicators (KPIs) for this, engaging in initiatives linked with theplan. Various measures are conducted to promote the CSV
business, including development from the standpoint of social
issues and establishment of an awards program.

Internal Environmental
Impact Reduction

The Kurita Group

Water

Total Solutions

SocialIssuesNew Products
Alliances

SelectCO2

Waste

Environmental
Improvement at
Customers

CSV
Business

Sharedvalue

Achievements

Higher Earnings

Internal/
External Awards

Awards1) Significantly more effective than previous orcompeting technologies.
2) New technologies or applications of existing
technologies in new markets.
3) Contribute to action plans presented in the SDGs.

KPI
Management

E&S Committee

Executive Committee

Participation in Water Resilience Coalition
The Company is pleased to announce that in July 2020 it joined
the Water Resilience Coalition (“WRC”) as a Co-Founder. The
WRC is a new organization established under the CEO Water
Mandate, a United Nations Global Compact initiative. It will
launch industry-driven initiatives for the preservation of water
resources in water-stressed basins all over the world. Throughits participation in the WRC, the Kurita Group works with othercompanies and organizations to preserve and restore theworld’s water resources with the aim of achieving the SDGs andrealizing its corporate philosophy.

The Company has also participated in the UN Global
Compact and has endorsed the CEO Water Mandate.

Promoting Response to Climate Change based on TCFD Recommendations
The Kurita Group views climate change as an urgent issue thatmust be addressed through collective global action. It continues
to reduce greenhouse gas emissions from business activities
while also using its business to help customers reduce their own
emissions. To realize sustained growth going forward, the Kurita
Group, in agreement with the TCFD* recommendations, will

promote initiatives and information disclosure on the basis of
the recommendations.
* Task Force on Climate-related Financial Disclosures

Kurita Water Industries Ltd. Integrated Report 2020

21

The Kurita Group’s Businesses

Opportunities and Risks in Business Flow

Post-COVID-19 Domestic Growth Strategy
The various constraints on our lives caused by the COVID-19 outbreak have also led to changes in the domestic
water treatment market, which has been growing at a slow pace in recent years. We have seen a spike in interest
from customers in automation, labor-saving and remote monitoring, not just to boost productivity, but also toensure business continuity. We think those needs will accelerate the introduction of IoT, AI, sensing and otherdigital tools in customer businesses. We also expect those trends to spur the creation of new markets where we
can offer our total service contract-based solutions. At the same time, our existing lineup of worksite-based
services, such as water sampling at customer sites and offsite analysis, have seen a decline in value and are likely
to be superseded by digital services using automated monitoring systems and other tools. Kurita has always
recognized the need to accurately identify the fundamental issues faced by customers in order to develop andprovide optimal solutions, but that approach is likely to become even more important going forward. If we fail toaddress and adapt to these changes, we could lose our markets to competitors. Going forward, the Kurita Groupwill redeploy human resources to optimal roles and take other steps to build a sales team that can provide valuethat customers really want.

Yoshio Yamada

Executive General Manager of Japan Sales Business Division

The Kurita Group’s Business Flow
Marketing

22

R&D

Sales and Orders

Technology

Digital Strategy Is Key to Change

Providing New Value Based on Customer Needs

The Group’s integrated digital strategy is vital to the success of businessmodel creation and business process reforms. Big data gathered fromnumerous water treatment facilities and AI technologies developed by
Kurita subsidiary Fracta present us with major opportunities in new
business model creation. By combining our expertise in water treatment
with automated operation, remote monitoring, AI and other technologies,
we can optimize facility operation and implement predictive maintenancethat helps customers boost productivity and achieve labor savings.
Communication using digital technologies will also improve the efficiencyof our sales activities by creating various points of contact withcustomers. Moreover, by building an IT system platform, we will be able
to share information across the Group, making cooperation easier
between Kurita sites worldwide. However, if we fail to keep up with theshift to digital technologies, there is arisk that competitors from other sectors
will move into our markets. Not only
that, we could fall behind the sector indata utilization and expose ourselves tothe risk of information leaks. Kurita will
accelerate the implementation of its
digital strategy, aiming to maximize
opportunities and minimize risks.

Product innovation is vital to dismantle preconceived ideas and drive thetransformation in our business from selling products to selling services
and value. Society and our customers will face a different set of priority
issues during and after the COVID-19 outbreak, which offers newopportunities for innovation, such as combining products with facility
operation management and other services. We anticipate growing
demand for solutions that are compatible with fewer workers in factories
and that ensure business continuity during a crisis or disaster. We also
expect customers to realign their global production sites and supply
chains. In response, the Kurita Group sees an opportunity to provide newvalue by developing proprietary solutions models that support regionwide improvements in water and energy efficiency. However, any failure
to maintain high-quality communication with customers could see theGroup lag behind changes in society
and markets, resulting in opportunity
losses. By accurately predicting changes
in our markets and fine-tuning ourability to understand customer needs,
business process and business model
reforms are likely to translate into newvalue.

Toshitaka Kodama

Masaya Kawai

Executive General Manager of Digital
Strategy Division

Executive General Manager of Solution
Business Division

Kurita Water Industries Ltd. Integrated Report 2020

The Kurita Group's Business

Delivering an Unprecedented Manufacturing User Experience to Customers
More than ever, society needs efficient manufacturing systems that ensure worker safety and business
continuity. Our division is working to address those needs by harnessing digital transformation (DX) andhuman resources (HR) tech. In manufacturing, DX is focused on the construction of digital twin simulators(DTS) to drive the automation of design processes. DTS can be used to assemble virtual facilities based on
customer specifications for water quality, facility scale and other criteria. It also allows designers to visualize
facility expansion several years after construction and the potential for savings in running costs. All thisinformation is shared with customers. Moreover, improvements in facility design using DTS can be combinedwith HR tech, which uses a scientific approach to optimize the management and development of humanresources, resulting in the deployment of the right people and teams within the Engineering division. By
seeing risks and changes as opportunities to overhaul production systems and strengthen cost control, we
aim to become an evolving engineering group that always stays ahead of the competition by providing
customers with an unrivaled user experience (UX).

Hirohiko Ejiri
Executive General Manager of Engineering Division

and Design

Procurement andQuality Control

Manufacturing andEngineering

MaintenanceDriving DX in Water Treatment

Reinforcing Our Global and Local Organizations

In line with the MVP-22 medium-term management plan, the Kurita Groupaims to create new products and technologies that will become the core of
its total solutions. As part of those efforts, we are developing new water
treatment technologies that utilize IoT and AI. The COVID-19 outbreak isspurring greater need for technology that allows customers to operate
manufacturing and assembly sites with fewer personnel, which is likely toaccelerate the pace of DX in order to boost productivity and ensure business
continuity. That presents a major business opportunity for the Kurita Group.
Conversely, the Group faces a number of risks if it lags behind peers in newtechnology development. To ensure that does not happen, we are working
to develop innovative chemicals and units for water treatment and steppingup the development of remote monitoring and diagnostic systems, facility
optimization control technology and water treatment simulation technology
incorporating IoT and AI. Drawing on theGroup’s many years of expertise in water
treatment, as well as engineering theory
and data gathered from customers’ sites,
we plan to formulate mathematical models
for complex water treatment phenomena
and integrate them with IoT and AI todevelop unrivalled, unique DX
technologies. We aim to use thosetechnologies to create solutions thatprovide real value to customers.

The Kurita Group plans to respond to customer needs by using its
business platform established through M&A to create an optimum global
and local framework. At the local level, we started work by integrating
four subsidiaries in North America into a newly formed company called
Kurita America Inc. in April 2020. In East and Southeast Asia, we are also
deploying regional managers to oversee operations in each region andaccelerate efforts to offer total solutions that cover water treatment
chemicals, water treatment facilities and maintenance. At the global level,
we plan to create a global network to provide services related to the RO
membrane-related services supplied by Kurita subsidiary Avista
Technologies. As the impact of COVID-19 becomes more widespread, theGroup’s businesses are increasingly seen as vital to society. In many
countries, Kurita is being asked by customers to help them ensure theirbusinesses continue to operate. To
support business continuity plans, weare using online channels to respond to
customers, while the provision of
remote services is likely to create
opportunities to develop new markets.
We will also strive to fulfill our corporatesocial responsibility, globally and locally,by helping customers tackle and solve
various issues while balancing efficiency
and risks.

Tatsushi Kuramae

Yasuo Suzuki

Executive General Manager of Research andDevelopment Division

Executive General Manager of Global
Business Division

Kurita Water Industries Ltd. Integrated Report 202023

The Kurita Group’s Businesses

R&D and Intellectual Property
R&D Promotion Framework
The Kurita Group uses R&D to reinforce core businesstechnologies, such as boiler and cooling water treatment
technology, ultrapure water production technology, wastewater
treatment technology, water reclamation technology, and soil andgroundwater remediation technology. The Group also strives toenhance fundamental technologies that support those areas, suchas diagnostic technology, analysis technology and new materials
development. The Group’s development centers in Japan,
Germany, Singapore and other countries work together in thoseareas by exchanging research engineers and conducting joint
research in order to maximize the Group’s technical and personnel
resources.

Achievements in the Fiscal Year Ended March 31, 2020
Research andDevelopment Bases
R&D staff
R&D expenses

Kurita Global Technology Center (Japan), Kurita Europe GmbH (Germany), Kurita R&D Asia Pte. Ltd. (Singapore) and othersites
Approx. 180¥5.7 billion (2.1% of net sales)

Water
Treatment
ChemicalsDeveloped an automated sludge dehydrating control system that optimizes the volume of chemical
additives to improve sludge dehydration in wastewater treatment processesD eveloped an onsite system to produce microorganism growth inhibitors in factory and airconditioning cooling water systems and in blow-water reclamation and reuse systems
Developed chemicals to reduce the cost of manufacturing decorative paper and to make the paper
stronger when wet

Water
Treatment
Facilities eveloped technology to reduce the time needed to restart production lines after installing orDreplacing water treatment membrane units in ultra-pure water production systems
Developed control system technology to ensure the stable generation of methane gas from various
types of waste in biogas power generation facilities, which convert methane gas from the fermentationof food leftovers and other waste into energy
Developed technology to rapidly decontaminate highly polluted soil and groundwater below factories
and other buildings, and simulation technology that forecasts the required decontamination time
based on the level of pollution

Main Results

Initiatives in the MVP-22 Medium-Term Management Plan
Under the MVP-22 plan, the Kurita Group is using R&D to create
core products and technologies for the CSV business and totalsolutions, and to reinforce the Group’s technological foundation.
R&D is divided into four themes – product development, advanced
technology development, advanced digital technology
development, and reinforcing the Group’s technologicalfoundation – which are managed separately in line with thecharacteristics of each theme.
In product development, we are developing technologies for
products and solutions to support the creation of service contractbased businesses that address the needs of society and ourcustomers from the standpoint of water and energy efficiency andwaste reduction. At the same time, in advanced technology
development, we are stepping up efforts to create advanced
technologies by prioritizing development resources on key
projects to support our business strategy, while using also working
with external research partners in Japan and overseas throughopen innovation.
In advanced digital technology development, we are mainly
working on the development of technologies that use IoT and AI to24

Kurita Water Industries Ltd. Integrated Report 2020

optimize and automate water treatment processes in order toimprove the profitability of ultra-pure water supply facilities andservice contract-based businesses.
To reinforce the Group’s technological foundation, we focus onunderstanding the mechanisms and limitations of water treatment
processes to support product development, and on creating
mathematical models for IoT- and AI-based water treatment
technologies. We are also working to establish ultra-pure water
analysis technology, which will be required for next-generation
semiconductors.
The Kurita Group plans to relocate the functions of the Kurita
Global Technology Center to a newly constructed technology
center in Akishima, Tokyo in April 2022. The relocation will allow
Kurita to address issues with ageing facilities at the current site
and accelerate the development of advanced technologies andtotal solutions related to water and the environment. Positioned
as the core site in the Group’s global R&D framework, the newtechnology center is designed to be an open research anddevelopment facility that drives innovation by drawing on ideas
from interactions with customers and various other stakeholders.

The Kurita Group's Business

TOPICS
Project Acorn: Kurita launches global project to develop RO membrane chemicals
In January 2020, the Kurita Group launched Project Acorn,a global initiative aimed at expanding its business byenhancing the capabilities of reverse osmosis (RO)membrane chemical solutions. Under the project, we aim
to create a global product lineup and support network for
RO membrane chemicals by combining the innovative
products and technologies of US Group company Avista
Technologies, Inc., a leading player in RO membranechemicals, with the Group’s products and technologies inJapan, Asia and Europe. These efforts will be backed by abrand marketing strategy and an optimized supply chain.
In research and development, we have formed a single
team of RO membrane chemical engineers from the US,
Japan and Singapore. The team is leveraging the strengthsof each Group research center to develop new chemical
products, application evaluation technology and chemical
application software.

Kurita Water Industries
Develop new RO membranechemicals

R&D Framework and
Key Roles of Each Location

Avista Technologies
Develop software to optimize
application of RO membranechemicals

Kurita R&D Asia
Understand mechanism of RO
membrane chemicals and demonstrate
treatment effectUtilizing Intellectual Property
The Kurita Group strives to secure and appropriately manage
intellectual property to increase the competitiveness of its coreproducts and technologies in Japan and overseas. In the fiscal year
ended March 31, 2020, we worked to acquire intellectual property
rights to support the Company’s efforts to promote total solutions
and establish a global business framework. In promoting totalsolutions, we need to build solution models that incorporate
products and sales methods and that can be deployedhorizontally. However, to leverage these models as a strength of
the Company, each model must be protected as intellectual
property. In the fiscal year under review, we identified the sourcesof the Group’s competitiveness from the solutions model
development stage, earmarked them for patent protection andworked to create a patent network covering patents for
fundamental technologies and patents for business models. We
also adjusted the reward payment system for employee inventions
and started operation of the system to support the developmentof solutions businesses.
In the fiscal year ended March 31, 2020, the total number ofdomestic patent applications filed by the Company was 118, lower
than in the previous fiscal year, but the number of solutions
business-related patents increased. In addition, the Grouptransferred a record 194 patents* to other countries, spurred by
the Group’s overseas business expansion.
Going forward, we will continue to protect the Group’s
intellectual property by building a patent network for totalsolutions and by strengthening patent protection for strategic
products overseas. In addition, the Group faces a growing risk ofintellectual property infringement as its global business expands.
To mitigate that risk, we will establish rules and conduct training toensure all Group employees comply with intellectual property
rights.
* Total number of patents transferred to other jurisdictions under the Patent
Cooperation Treaty (PCT) and patents filed in other countries and regions not party
to the PCT.

Patent filings and registrations Fiscal years ended March 31
Japan

Registered patents

Filed patents

Overseas

Registered patents

Patents transferred to other countries

1,644
1,505

1,523
980

791
821

193

181
167

114
2018

2019

194
118
2020

Kurita Water Industries Ltd. Integrated Report 202025

The Kurita Group’s Businesses

Review of Operations by Segment: Water Treatment Chemicals

Results in the Fiscal Year Ended March 31, 2020

Orders¥113,777¥113,632

Net
Sales

Year-on-Year Change

million ＋

10.5%

Year-on-Year Change

million ＋

11.3%

Business
Profit¥11,667

Operating
Profit¥10,127

Year-on-Year Change

million＋ 19.2%Year-on-Year Change

million ＋

137.8%

OrdersNet Sales

Business Profit

Operating Profit(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

113,777
102,939

11,667

113,632
102,126

10,127

9,791

4,258

2019

2020

2019

2020

2019

2020

2019

2020

Fiscal years ended March 31

Overview of the Fiscal Year Ended March 31, 2020

26

Orders and Net Sales

Business Profit and Operating Profit

In Japan, orders declined slightly and net sales edged up 1% year
on year. Demand was firm overall in the first half of the fiscal year,
but demand started to weaken from the second half as the
economy lost momentum. Overseas, orders and net sales bothincreased sharply, reflecting the consolidation of the water
treatment chemicals business of U.S. Water Services, Inc., as wellas Avista Technologies, Inc. and Avista Technologies (UK) Ltd.
Excluding the consolidation of those businesses, net sales declined
year on year. Three main factors weighed on net sales: the transferof the aluminum compounds business in Europe at the end of thefirst half of the previous fiscal year, which led to lower sales in thefirst half of the year under review, yen appreciation against othercurrencies, and moves to streamline and rationalize low-margin
product lines in each market as part of efforts to improve
profitability. The COVID-19 outbreak had only a minimal impact onorders and net sales in the fiscal year under review.

Business profit increased year on year despite the decline in sales
after excluding new consolidations. Profit growth was supported
by an improvement in the cost of sales ratio on the back of
product line rationalization and other initiatives, and by tighter
control of selling, general and administrative expenses. Again,
there was only a modest impact on business profit from the
COVID-19 outbreak.

Kurita Water Industries Ltd. Integrated Report 2020

The Kurita Group's Business

Principal Products and Services

01

02

03

Boiler water treatment
chemicals

Cooling Water Treatment
Chemicals

Wastewater Treatment
Chemicals

Boilers are widely used for production processes
in plants and air conditioning in office buildings.
Boiler water treatment chemicals are used toprevent faults that may arise in boilers andensure stable, efficient operation. They also help
to save energy by preventing loss of heatefficiency in the boiler.

Cooling water treatment chemicals are used totreat cooling water used in plants and officebuildings. By preventing problems in pipes andheat exchangers and inhibiting the growth ofharmful Legionella bacteria in cooling towers,
these chemicals help to save resources andenergy and contribute to safer workplaces.

Wastewater treatment chemicals are used totreat the many forms of industrial wastewater
discharged by plants and domestic sewage toprevent any negative impact on the local
environment. Proper treatment of wastewater
contributes to the reduction of environmental
impact.

04

05

06

Process Treatment Chemicals

Reverse Osmosis (RO) Membrane
Treatment Chemicals

Treatment Chemicals for
Automobile Painting Booths

RO membrane treatment chemicals remove
suspended solids that can reduce the filtering
performance of RO membranes used inwastewater reclamation and seawater
desalination facilities. By preventing clogging of
the membranes, the chemicals contribute tostable, efficient operation of the facilities.

Water treatment chemicals that separate
residual paint contained in water in automobile
painting booths ensure that circulating water isof appropriate quality, helping to improve
productivity and reduce environmental impact.

07

08

09

Treatment Chemicals for
Incinerators

Treatment Chemicals for Civil
Engineering

Treatment chemicals for incinerators provide
consistent treatment of hazardous substances,such as heavy metals contained in fly ash, andcontrol emissions of dioxins, thereby helping to
reduce environmental impact.

In civil engineering projects, the Group uses
chemicals to develop greenspaces, treats
construction sludge appropriately and reduces
sprayed concrete dust, among otherapplications.

Process treatment chemicals are used in
manufacturing processes in the oil refining,
petrochemical, steel, and pulp and paperindustries, where they help to maintain andimprove production efficiency and productquality.

Chemical Dosing and Injection Equipment
The Kurita Group provides water treatment-related
equipment for a wide range of applications, suchas automatic water quality management systems
that use chemical dosing and injection
equipment and sensing technologies. By
enabling stable operation of customers’ facilities,
this equipment contributes to labor saving andreduced environmental impact.

Kurita Water Industries Ltd. Integrated Report 2020

27

The Kurita Group’s Businesses

Review of Operations by Segment: Water Treatment Facilities

Results in the Fiscal Year Ended March 31, 2020

Orders¥145,768¥151,174

Net
Sales

Year-on-Year Change－ 6.3%

millionYear-on-Year Change

million－ 2.6%

Business
Profit¥15,061

Operating
Profit¥17,390Year-on-Year Change－ 5.1%

millionYear-on-Year Change

million＋ 12.1%

OrdersNet Sales

Business Profit

Operating Profit(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

(Millions of Yen)

155,500

155,204

17,3902019

145,768

2020

2019

151,174

2020

15,8782019

15,061

2020

15,5182019

2020

Fiscal years ended March 31

Overview of the Fiscal Year Ended March 31, 2020

28

Orders and Net Sales

Business Profit and Operating Profit

In Japan, orders and net sales for equipment supplied to theelectronics industry declined year on year, reflecting a pullback
from major projects booked in the previous fiscal year. Net sales
from maintenance services provided to the electronics industry
increased, supported by demand from customers that increased
production capacity and upgraded facilities. Orders for water
treatment systems for general industrial use declined due to atighter focus on high-margin projects, but progress with work on
major orders secured in the previous fiscal year led to higher
sales. In soil remediation, orders and net sales declined, reflecting
a drop-off in orders and net sales from major projects. In thedomestic ultrapure water supply business, revisions to a contract
for one customer pushed down sales, but sales increased overall
due to the start of new water supply contracts.
Overseas, orders for water treatment facilities increased, mainlyreflecting the consolidation of results from the water treatment
facility business of U.S. Water Services, Inc. However, sales declined
year on year due to a pullback from multiple major orders bookedin the previous fiscal year and a negative impact on sales in yen
terms amid yen appreciation against overseas currencies.

Business profit declined year on year. The cost of sales ratio forwater treatment facilities improved due to efforts to tightly control
expenses after one-off additional costs were booked in theprevious fiscal year, while profits from maintenance services forthe public sector and from chemical cleaning also increased.
However, those positives were outweighed by the impact of
weaker sales from water treatment facilities for the electronics
industry in Japan and overseas.
Operating profit increased year on year. The business recordeda loss on the sale of fixed assets related to the sale of researchand development facilities, which was booked under otherexpenses, but that was outweighed by a gain on the sale of fixed
assets related to the sale of some buildings and facilities in theultrapure water supply business.

Kurita Water Industries Ltd. Integrated Report 2020

The Kurita Group's Business

Principal Products and Services

01

02

Ultrapure Water Production
Systems

Water Treatment Systems for
General Industrial Use

Ultrapure water production systems remove
ions, microscopic particles and bacteria fromwater to produce water that is as close as
possible to theoretically pure H2O—an essential
ingredient in the production of semiconductors
and FPDs.

Kurita provides water treatment systems tocover a wide range of industrial uses, including
water for food products and beverages, andboiler water for use in the electric power andsteel industries.

04

05

Wastewater Reclamation
Systems

Maintenance Services andSystems Management

Kurita provides systems for reclaiming andrecycling wastewater. Moreover, by reclaiming
valuable substances included in the wastewater,
the systems help to conserve resources andreduce costs.

Kurita provides maintenance services to prevent
deterioration in performance and problems
arising in water treatment facilities and to meetclient needs for lower environmental impact andgreater productivity. Kurita also manages
systems and facilities for clients.

03
Wastewater Treatment Systems
Wastewater treatment systems detoxify the
many forms of wastewater discharged by plants
to ensure that it does not negatively impact thesurrounding environment.

06
Ultrapure Water Supply Business
Kurita installs water treatment systems at
customers’ plants, handles the operation andmaintenance of those systems, and charges
customers for the supply of ultrapure water.
This service reduces the level of investment
required and the burden of system operation
management for customers.

07

08

09

Tool Cleaning

Soil Remediation

Chemical Cleaning

Using its own facilities, Kurita cleans andremoves any deposits that adhere to tools andjigs used by customers in the manufacture ofsemiconductors and FPDs. The provision of toolcleaning services helps customers to maintainand improve productivity.

Kurita conducts pollution assessments andremediation of soil and groundwater polluted byharmful substances. Using various
decontamination methods, Kurita helps
customers to hedge against the risk of soil
pollution. Other services include support for theeffective use or sale of restored land.

Kurita provides chemical cleaning services usingchemicals and high-pressure water to clean
accumulated deposits from boilers, heatexchangers and pipes, ensuring that large-scale
plants such as industrial complexes and electric
power plants continue to operate safely andefficiently.

Kurita Water Industries Ltd. Integrated Report 2020

29

The Basis for Management Activities

Directors, Members of the Audit &Supervisory Board, and Executive Officers(As of June 29, 2020)

Directors

President and Representative Director

Michiya Kadota

Executive Senior Managing Director andRepresentative Director

Kiyoshi Itou

2016 President and Representative
Director (to present)2014 Director
2013 Executive Officer
1983 Joined Kurita Water Industries Ltd.

2019 E x e c u t i v e G e n e r a l M a n a g e r o f
Corporate Planning and Control
Division (to present)2018 Executive Senior Managing Director
and Representative Director (topresent)
2013 Managing Director
2009 Director
2007 Executive Officer
1979 Joined Kurita Water Industries Ltd.

Managing Director

Managing Director

Managing Director

Director

Yoshio Yamada

Hirohiko Ejiri

Yasuo Suzuki

Toshimi Kobayashi

2019 Executive General Manager of Japan
Sales Business Division and Chief
Business Officer for Chemical
Business (to present)2018 Managing Director (to present)2014 Director
2011 Executive Officer
1982 Joined Kurita Water Industries Ltd.

2020 E x e c u t i v e G e n e r a l M a n a g e r o fEngineering Division and Chief
Business Officer for Facility Business(to present)
2019 Managing Director (to present)2016 Director
2014 Executive Officer
1985 Joined Kurita Water Industries Ltd.

2020 Managing Director (to present)
Executive General Manager of Global
Business Division and Chief Business
Officer for Global Business (topresent)
2018 Director
2014 Executive Officer
1997 Joined Kurita Water Industries Ltd.

2020 Senior General Manager of East
Japan Group, Japan Sales Business
Division (to present)2018 Director (to present)
2011 Executive Officer
1982 Joined Kurita Seibi KK** Kurita Seibi KK was merged to Kurita Water
Industries Ltd. in 1997.

Executive Officers

30

Koichi Iioka

Toshitaka Kodama

Shuji Shirode

Tatsushi Kuramae

Kunihiro Kuse

Senior Executive Officer

Senior Executive Officer
Executive General Manager
of Digital Strategy Division

Deputy Executive General
Manager of Corporate Planningand Control Division

Executive General Manager ofResearch and Development
Division

Senior General Manager ofEngineering Group, Engineering
Division

Kurita Water Industries Ltd. Integrated Report 2020

The Basis for Management Activities

External Directors

External Director

External Director

External Director

Tsuguto Moriwaki

Ryoko Sugiyama

Keiko Tanaka

2015 External Director of Kurita Water
Industries Ltd. (to present)
2004 P r e s i d e n t a n d R e p r e s e n t a t i v e
Director of Shinsho Corporation
2002 E x e c u t i v e V i c e P r e s i d e n t a n d
Representative Director of Kobe
Steel, Ltd.
1999 P r e s i d e n t a n d R e p r e s e n t a t i v e
Director of Kobelco Construction
Machinery Co., Ltd.
1967 Joined Kobe Steel, Ltd.

2017 External Director of Kurita Water
Industries Ltd. (to present)2015 External Director of UACJ Corporation(to present)2010 E x t e r n a l D i r e c t o r a n d A u d i t a n d
Supervisory Committee Member of
LECIP Holdings Corporation (to present)2010 Professor at the Faculty of Social andEnvironmental Studies of Fuji Tokoha
University (current Tokoha University)
2007 D i r e c t o r o f S u g i y a m a & K u r i h a r aEnvironmental Consultants, Inc. (to present)
1996 Established Sugiyama & Kurihara
Environmental Consultants, Inc.,
Representative Director

2019 External Director of Kurita Water
Industries Ltd. (to present)2018 Vice President of Nissan Financial
Services Co., Ltd. (to present)2014 Ambassador Extraordinary andPlenipotentiary of Japan to Uruguay
2013 Acted as Vice President of JATCO Ltd.
1984 Joined NISSAN MOTOR CO., LTD.

Members of the Audit & Supervisory Board

External Member of the Audit &Supervisory Board

Kenjiro Kobayashi
2016 External Member of the Audit &Supervisory Board of Kurita Water
Industries Ltd. (to present)2010 R e p r e s e n t a t i v e D i r e c t o r a n d
Executive Vice President of Japan
Industrial Solutions Co., Ltd.
1977 Joined Japan Development Bank
(current Development Bank of Japan
Inc.)

Member of the Audit & Supervisory Board

Yukihiko Mutou
2019 Member of the Audit & Supervisory
Board (to present)2018 Director
2016 Executive Officer
1991 Joined Kurita Water Industries Ltd.

External Member of the Audit &Supervisory Board (Part time)

Toshiaki Tada
2020 External Member of the Audit &Supervisory Board of Kurita Water
Industries Ltd. (part time) (to present)2012 Audit & Supervisory Board Member,
ITOCHU Techno-Solutions Corporation(to present)
2005 Partner, HIBIYA SOGO LAW OFFICES(to present)
1996 Joined HIBIYA SOGO LAW OFFICES
1996 Registered as an attorney

Masaya Kawai

Takehiro Nozue

Shingo Yamaga

Hiroaki Mori

Tatsuhiro Oosuga

Executive General Manager of
Solution Business Division

Senior General Manager ofMarketing Group, Solution
Business Division

Senior General Manager ofEurope and the U.S. BusinessGroup, Global Business Division

Senior General Manager of
Administration Group, Japan
Sales Business Division

Senior General Manager ofWest Japan Group, Japan
Sales Business Division

Kurita Water Industries Ltd. Integrated Report 202031

The Basis for Management Activities

Corporate Governance
Basic Concept
The Kurita Group aims to contribute broadly to society through corporate
activities in the fields of water and the environment in accordance with the
Kurita corporate philosophy, “Study the properties of water, master them,and we will create an environment in which nature and man are inharmony.” The Kurita Group will work to promote sustainable growth andenhance its corporate value in the medium and long term, deferring to therights and position of various stakeholders such as customers, business
partners, employees, shareholders, and local communities while striving tomeet their expectations. To this end, the Kurita Group is striving to establish
corporate governance, with the aim of realizing transparent, fair, prompt,and decisive decision-making measures and highly effective management
supervision.

General Meeting
Election &Dismissal

Election &Dismissal

Audit & Supervisory
Board
Accounting Auditor
Grant Thornton Taiyo LLC

As a company with an Audit & Supervisory Board, Kurita’s Board of Directors
is responsible for decision-making and supervision of business execution.
The Board sets the strategic direction for the Kurita Group and supervises
management in general. It also makes decisions on business execution
related to important investment and financing projects, the transfer ofbusiness, and other key matters. For other matters, business execution isdecided by the Executive Committee, which is composed of management
executives, or by management executives who have been given authority
under the Internal Decision Approval and Review Rules.

Cooperation

Cooperation

Corporate Governance StructureMembers of the Audit& Supervisory Board
3 (Of which, external
members: 2)

Cooperation

Audit

Internal Auditing
Department

Audit
ReportInternal
Audit

Composition of the Board of Directors
The Board of Directors shall be organized in a way that complements thenecessary knowledge, experience and diversity over the entire Board forappropriate management decision making and supervision of businessexecution. The Company will ensure that the Board will consist of personnel
with a high degree of expertise in various business fields, management
planning, finance and accounting, legal affairs, and technologies, etc., taking
into consideration gender, international experience, etc.

Accounting Audit & Internal Control Audit

Distribution of Knowledge and Experience in the Board of Directors
Sales
Name

Management
planning

Finance andaccounting
Legal affairs
Humanresources

R&D
Production
Technology

Knowledge and experience expected ofexternal directors
Corporate
management

Environment

International

Michiya Kadota

―

―

―

Kiyoshi Itou

―

―

―

Yoshio Yamada

―

―

―

Hirohiko Ejiri

―

―

―

Yasuo Suzuki

―

―

―

Toshimi Kobayashi

―

―

―

Japan

Overseas

Tsuguto Moriwaki

―

―

―

―

―

Ryoko Sugiyama

―

―

―

―

―

Keiko Tanaka

―

―

―

―

―

(external director)(external director)(external director)

Note: This table is created based on the brief personal histories, positions and assignments in the Company, and reasons for deciding to make the person a candidate for director
provided in Proposal No. 2 of the Notice of Convocation of the 84th Ordinary General Meeting of Shareholders.

32

Kurita Water Industries Ltd. Integrated Report 2020

The Basis for Management Activitiesof Shareholders

Business Execution Structure❶ Executive Committee

Election &Dismissal

Nomination &Remuneration
Advisory Council

The Executive Committee reviews matters to be resolved at Boardof Directors meetings when necessary to expedite and facilitate
the decision-making process. The Executive Committee consists ofthe president and representative director, directors at the level ofmanaging director and above, the executive general manager of
the Corporate Planning and Control Division, and directors andexecutive officers designated by the president.

Successor Planning
Committee❷ Executive Officers

Advisory Bodies
Board of Directors
9 (Of which, external
directors: 3)
Term of office: 1 year

Consultation

Advisory

Audit
ReportActivities of eachorganization
Resolution
Election &Supervision⇒ P.34

Discussion &ReportBusiness Execution❸ Investment Committee

President

Report❶ Executive Committee
E&S Committee
Instruction

Discussion & Report❷ Executive Officers
Operating Divisions

The Company introduced an executive officer system in June 2005 tostrengthen business execution capabilities. As of June 29, 2020, there
were 10 executive officers, including two senior executive officers.
Executive officers are employed based on appointment contracts. In
the fiscal year ended March 31, 2020, the Company created the new
post of senior executive officer to further strengthen businessexecution. Individuals who have served as managing director or inhigher posts within the Company, or in posts with equivalent statusat other companies, are eligible for the new position.

❸ Investment Committee
Various Committees

To enhance and strengthen the screening of investments and financingof the Kurita Group, the Company established the Investment
Committee in April 2017. The role of the Investment Committee is topre-screen investment and financing projects to be discussed by the
Board of Directors or the Executive Committee and report the prescreening results and major discussion points to the Board of Directors
and the Executive Committee. The Investment Committee has helped
enhance the quality of discussions and the speed of investment
decision-making by the Board of Directors and the Executive
Committee by organizing major discussion points prior to meetings.
In accordance with the policy of striving to maintain return on equity(ROE) at levels above the cost of shareholders’ equity, when making an
investment decision, the Kurita Group sets a hurdle rate inconsideration of risks for each investment project against the cost ofshareholders’ equity.

Roles and Results of the Investment Committee (The fiscal year ended March 31, 2020)
Roles

Pre-screening of investment projects to be discussed by the Board of Directors or the Executive Committee
Report the pre-screening results and major discussion points to the Board of Directors or the Executive Committee

Constituent members

Chairperson: Deputy executive general manager of the Corporate Planning and Control Division
Members: General manager of the Corporate Planning Department, general manager of the Risk Management
Department, general manager of the Finance and Accounting Department, general manager of the International FinanceControl Department, and general managers of business management departments in charge of sales and production

Results in the fiscal year
ended March 31, 2020

Number ofmeetings held

15

Number of
projects
pre-screened

Equity investment and M&A projects: 9
Capital investment projects: 1
Financing and fund procurement projects: 2
Company establishments, relocations, reorganizations: 7

Results(Reference)
Investment Standard

Total:

19

Improved quality of discussion at the Board of Directors and the Executive Committee meetings.
Enabled earlier filing of requests by requesting departments and increased request activity as a result

Hurdle rate calculated as “cost of capital + risk premium for each project”

Kurita Water Industries Ltd. Integrated Report 2020

33

The Basis for Management Activities

Corporate Governance

Advisory Councils for the Board of Directors
Nomination & Remuneration Advisory Council
The Company has in place a Nomination & Remuneration Advisory
Council, a voluntary committee to increase transparency in thedecision-making process regarding remuneration for directors andnomination of directors and members of the Audit & Supervisory
Board. In the fiscal year ended March 31, 2020, the Council met fourtimes to discuss nominations (directors and members of the Audit &Supervisory Board) and three times to discuss remuneration. The
Council is chaired by an external director, with the main members

being the external directors and the external members of the Audit &Supervisory Board.
The chairperson of the Board of Directors consults with theNomination & Remuneration Advisory Council beforehand when
proposals are made to the Board of Directors regarding candidates for
director or member of the Audit & Supervisory Board or remuneration
for directors. Having received the request, the Council reports on thesuitability or unsuitability of the candidates to the Board of Directors.

Profile of Nomination & Remuneration Advisory Council (Fiscal year ended March 31, 2020)
Constituent members

Results in the fiscal year ended
March 31, 2020

Candidates for directors
Candidates for representative directors
Candidates for executive directors

Three external directors
President
One full-time external member of the Audit & Supervisory
Board

Determining the appropriateness of
all candidates for director

Candidates formembers of the Audit &Supervisory Board

One full-time external member of the Audit & Supervisory Board
President
One full-time member of the Audit & Supervisory Board
Executive general manager of the Corporate Planning andControl Division

Determining the appropriateness ofcandidates for members of the
Audit & Supervisory Board

Three external directors
President
One full-time external member of the Audit & Supervisory
Board

Performance evaluation of directors
Discussion of the appropriatenessof incentive remuneration
Discussion of the appropriatenessof fixed remuneration

Nomination

Remuneration

Successor Planning Committee
The Company has in place the Successor Planning Committee,
mainly comprising external officers, as an organization for
selecting successor candidates for the president, directors, andexecutive officers and deciding on measures for theirdevelopment. The committee references objective informationsuch as external organization assessment results for the successor

candidates and selects successor candidates for the president,
directors, and the executive officers, as well as setting thedevelopment measures for the successor candidate for president
and directors, and reports these to the Board of Directors.
In the fiscal year ended March 31, 2020, the selection process
was improved to include candidates from a wider range of
employee ranks and positions.

Selection of successor candidate
Assessment

Candidaterecommendation

Selection

Successor candidate development
Interview
assessment

Confirmation

Interview

Review result andselect points forstrengthening

Set measures

Confirmation

Successor for president
President

President
Successor
Planning
Committee

Externalorganization

Board ofDirectors

Externalorganization

Directors

Executive senior
managing
director or above

President

Executive senior
managing
director or above

Successor
Planning
Committee

Board ofDirectors

Director successors
Feedback to candidate, assignment, appointment, etc.

Successor Planning Committee members
Matter for discussion

Members

Selection of president’s successor candidate

Three external directors
One full-time external member of the Audit & Supervisory Board

Selection of directors’ successor candidates
Selection of executive officers’ successor candidates
Setting of development measures for successor candidates, etc.

In addition to the above four, the president,
chairman, and executive senior managing directors(Fiscal year ended March 31, 2020)

34

Kurita Water Industries Ltd. Integrated Report 2020

The Basis for Management Activities

Fulfilling the Function of the Audit & Supervisory Board Members
In the fiscal year ended March 31, 2020, the Audit & Supervisory
Board held 11 meetings, which were attended by all members of
the board. Key matters considered and discussed by Audit &Supervisory Board members included the formulation of audit
policies and plans, the preparation of audit reports, selection of the
Accounting Auditor, remuneration for the Accounting Auditor anddetails of proposals to be presented to the Annual General Meetingof Shareholders. The Board developed and implemented audit
plans targeting priority areas, such as the internal control system(including internal control over financial reporting), the development
and implementation of the risk management system and audits ofprogress regarding priority measures in business plans.

Cooperation with the Accounting Auditor, theInternal Auditing Department and External Directors
In regular meetings between the president and all members of the
Audit & Supervisory Board, the president provides details about
the Company’s management policy, growth strategies, businessissues and other topics, while members of the Audit & Supervisory
Board provide recommendations based on audit activities. The
members of the Audit & Supervisory Board also hold regularmeetings with the Accounting Auditor to confirm theindependence of the Accounting Auditor, verify the performanceof their duties and discuss and exchange opinions aboutaccounting audits. Regular meetings are also held with external
directors to exchange opinions about the Company’s business
management in general.
The members of the Audit & Supervisory Board discuss internal
audit plans with the Internal Auditing Department in charge ofinternal audits of the Company and exchange opinions with them
about audit results and evaluations of internal control overfinancial reporting, risk management, etc.

Participation in Key Meetings and Audit ofGroup Companies
Full-time members of the Audit & Supervisory Board attend
meetings of the Board of Directors, Executive Committee, the E&S
Committee and other important meetings, and audit businessexecution by the directors and oversight duties of the Board of
Directors. In addition, they conduct audits of key management
departments and carry out field audits of business sites andGroup companies to verify the asset position of the entire Kurita
Group and the development and operation of the internal control
system by directors at Group companies. Full-time members of
the Audit & Supervisory Board share information from meetings ofthe Executive Committee and other key meetings and the details
and results of audits and field audits with the part-time member ofthe Board on a timely basis. In addition, the part-time member ofthe Audit & Supervisory Board proactively provides opinions
during meetings of the Board of Directors and during regularmeetings with the president, drawing on their legal expertise andbackground.
Onsite audits of three domestic business sites scheduled forthe start of the fiscal year were cancelled due to the COVID-19
outbreak. However, as an alternative, appropriate audits of thesites were conducted by reviewing audit evidence documentation.
Additionally, business reports, financial documents and othermaterials were appropriately audited through increased use of
online meetings and electronic files.

Experience, Capability, and Knowledge of the Audit & Supervisory Board Members
Attendance(Fiscal year ended March 31, 2020)
Name

KenjiroKobayashi

External member ofthe Audit & Supervisory
Board
Independent officer

Board ofDirectors’
meetings

Mr. Kenjiro Kobayashi has been active in different fields to those of
the Kurita Group’s businesses and has high expertise in the areasof finance, management planning, new business development,
M&As, etc., along with a wealth of international experience.
Mr. Yukihiko Mutou has held important positions in the
Administrative Division. He possesses a wealth of knowledge andexperience in the areas of finance, accounting, and management.

Yukihiko
Mutou

Toshiaki
Tada

Experience, Capability, and Knowledge

External member ofthe Audit & Supervisory
Board
Independent officer

Mr. Toshiaki Tada has special knowledge as well as a wealth ofexperience and deep insight into corporate legal affairs as an
attorney who has worked in Japan and overseas.

Audit &
Supervisory
Board meetings

11

15
15
12

11
8

12
―

8
―

Kurita Water Industries Ltd. Integrated Report 2020

35

The Basis for Management Activities

Corporate GovernanceEvaluation of the Effectiveness of the Board of Directors
The Board of Directors analyzes and evaluates its effectivenessevery year in order to fulfill its expected roles and functions more
effectively.

Issue

Evaluation Method

Measures

The evaluation is carried out via a written survey with each of the
respondents identified. Following a discussion using theaggregated results, the Board of Directors evaluates its
effectiveness, identifies problems, designates issues to beaddressed and establishes measures. These matters are thenadopted by a resolution of the Board. The survey is revised eachfiscal year based on the results of the previous year’s survey.

We provided opportunities to consider value creation stories
based on all aspects of integrated reporting and how management
capital is used to realize those stories, drawing on input fromexecutive officers, senior general managers and individuals inother positions who will take responsibility for the Company's
future management. Outcomes of the process were discussed by
the Board of Directors.

Evaluation
MethodSelf-Evaluation
This evaluation was conducted via a written survey,
with each of the respondents identified. Following a
discussion using the aggregated results, the Board of
Directors evaluated its effectiveness, clarified issues
and adopted measures for the future.

Evaluation
items

The following six themes were evaluated
1) Roles and responsibilities of the Board of Directors
2) Collaboration with members of the Audit &Supervisory Board and external directors
3) Composition of the Board of Directors4) Operation of the Board of Directors5) Contributions of individual directors and membersof the Audit & Supervisory Board
6) Dialogue with shareholders

Evaluation
periodIdentify and deepen discussion on specific themes in order tosupport the creation of long-term corporate value.

Status of Initiatives to Tackle Issues Raised in
Evaluation Results in the Previous Fiscal Year
Based on evaluation results for the previous fiscal year, we
identified the issue that “Further improvement of governancestandards is required for the Kurita Group as a whole, includinggroup companies in Japan and overseas.” We implemented thefollowing initiatives to tackle the issue.
We developed a framework that allows the Company’s Internal
Auditing Department to monitor the implementation of the Kurita
Group Business Policy and other policies by Group companies inJapan and overseas.
We assessed the effectiveness of each domestic Group company’s
Board of Directors, identified specific issues at each company andprovided support as necessary.

January to December 2019

As part of concrete initiatives to “reinforce systems to complete
PMI*, including the increased deployment of Company personnel
to acquired Group companies,” which was identified as an issue

Evaluation Results
According to the evaluation results for January to December 2019,the average self-evaluation of all directors and members of the
Audit & Supervisory Board was generally good in all six areas,indicating that the Board of Directors is operating effectively. The“contributions of individual directors and members of the Audit &Supervisory Board” category received the highest evaluation, withlimited variation in responses from internal directors, external
directors and members of the Audit & Supervisory Board.
However, in the “roles and responsibilities of the Board of
Directors” category, certain items related to deepening discussion
and providing specific goals on business strategies andinvolvement in the environment and society received relatively low
valuations compared with other items.

36

Kurita Water Industries Ltd. Integrated Report 2020

from evaluations in the previous fiscal year, we established a
specialist team to integrate and advance businesses in the North
America region and enhanced cooperation with overseas Group
companies.
*Post-Merger Integration

The Basis for Management Activities

Remuneration for Directors and Members of the Audit & Supervisory Board
The Company’s remuneration system for directors excluding
external directors is composed of fixed remuneration as baseremuneration, and incentive remuneration linked to businessresults. External directors and members of the Audit & Supervisory
Board, who perform oversight functions, receive only fixed
remuneration. Amounts of fixed remuneration are decided foreach job title in the case of directors and for each work
arrangement in the case of members of the Audit & Supervisory
Board. A portion of the remuneration is appropriated for the
directors’ and Audit & Supervisory Board members’ Shareholding
Scheme to purchase the Company’s shares so that directors andmembers of the Audit & Supervisory Board share the risk of stock
price fluctuation with shareholders.
To provide an incentive to directors (excluding external
directors) to continuously increase corporate value, theC o m pa ny pro v ides short-term and long-term i n c en t i ve
remuneration. The short-term incentive remuneration isvariable depending on the degree to which consolidated

operating income achieves an annual business target and theperformance of duties for which each person is responsible.
For the long-term incentive remuneration, the Company has
introduced a performance-linked stock compensation program
under which points are awarded according to businessperformance and job title during the term of office, and sharesof the Company are granted at the time of retirement in an
amount corresponding to the number of accumulated points.
The system and level of remuneration and the performance
evaluation of directors are adopted by resolution of the Board of
Directors after consulting in advance with the Nomination &Remuneration Advisory Council. Based on reports provided by the
Nomination & Remuneration Advisory Council, the Board of
Directors decides the allocation of remuneration of the directors
within the total amount determined by the Annual General
Meeting of Shareholders. The allocation of remuneration for eachmember of the Audit & Supervisory Board is adopted by resolutionof the Audit & Supervisory Board.

Remuneration System for Directors and Members of the Audit & Supervisory Board
Payment Ratio of Base Remuneration and Incentive Remuneration (Average)
Base remuneration

Performance-linked remuneration

Of which, payment toshareholding scheme

Short-term incentive
remuneration

Long-term incentive
remuneration

10%-20%0%-30%

10%-20%50%-90%

Total

100%

Remuneration for Directors and Members of the Audit & Supervisory Board
Total amount of remuneration, etc., for each officer classification, total amount by type of remuneration, etc.,
and number of eligible officers (Fiscal year ended March 31, 2020)

Officer classification

Total amount of
remuneration, etc.
(millions of yen)

Total amount of remuneration by type(millions of yen)
Base remuneration

Performance-linked
remuneration

Number of eligible payees
for base remuneration

Directors(excluding external directors)

415

283

131

10

Members of the Audit &Supervisory Board(excluding external members)

34

34

―

2

External officers

85

85

―

5

Kurita Water Industries Ltd. Integrated Report 2020

37

The Basis for Management Activities

Corporate GovernanceIndependent External Directors
The Company’s external directors are appointed for a term of one
year and may concurrently hold positions at up to three listedcompanies including the Company. The external directors use
their knowledge and specialist insight accumulated throughmanagement experience to evaluate business management andprovide opinions from the perspectives of the Kurita Group’s
sustainable growth and increasing corporate value over the
medium to long term, helping to enhance the rationality andtransparency of decision-making by the Board of Directors.
The activities of the independent external directors include
making proactive statements and proposals in Board of Directors’

meetings, as well as attending as observers in internal committees
such as the E&S Committee, the Solutions Business Committee,
and the Health and Safety Committee. They also make onsite visits
to gain a deeper understanding of operations for evaluating
management.
As members of the Nomination & Remuneration Advisory
Council and the Successor Planning Committee, external directors
also help to enhance the suitability and transparency of
discussions in both bodies and work to ensure appropriate
evaluations of executive candidates through individual interviews
with candidates.

Status of External Directors (As of June 29, 2020)
Post

Directors

Name

Number of meetings of theBoard of Directors attended

Reasons for election as a director(Fiscal year ended March 31, 2020)

TsugutoMoriwaki

Board of Directors’
meetings: 15/15

Mr. Tsuguto Moriwaki is an individual who possesses a great deal of knowledge about
manufacturing and corporate reform. The Company judged that he could takeadvantage of his knowledge and experience, having held important positions such as
representative director in other companies, to deliver opinions from an outside
perspective and increase the rationality and transparency of the Company’s
management.

Ryoko
Sugiyama

Board of Directors’
meetings: 13/15

Ms. Ryoko Sugiyama is an expert on the environment and waste and has held
important positions such as an external director of listed companies. The Company
judged that she was capable of providing opinions from an outside perspective,
different from those within the Company, and increasing its rationality andtransparency.

Keiko
TanakaBoard of Directors’
meetings: 11/12

Ms. Keiko Tanaka has experience in business fields that differ from those of the Kurita
Group and a great deal of knowledge about public relations and marketing, as well asinternational experience. The Company judged that she was capable of using theseskills to express opinions from an outside perspective to increase the rationality andtransparency of the Company’s management.

Dialogue with Shareholders and Investors
The Kurita Group respects the interests of shareholders inmanagement and strives to listen to its shareholders and investors
and promote constructive dialogue with them in order tocontribute to increasing medium- to long-term corporate value. In
communicating information, the Company emphasizes fairness
and transparency. The materials and summary of the Q&A
sessions of the Company’s presentation meetings are posted on
Kurita’s investor relations website to ensure fair information
disclosure.

IR Activities
The Group strives to secure opportunities for dialogue withinstitutional investors in Japan and overseas and individual
investors in Japan through various presentations, conferences, andindividual meetings. The president is the main speaker at thefinancial results presentations. The executive general manager of
the Corporate Planning and Control Division is responsible forroutine dialogue, except during silent periods, and works withpersonnel responsible for IR and CSR activities.

IR Activities in the Fiscal Year Ended March 31, 2020
Dialogue events

Institutional investors(including shareholders)

Individual investors(including shareholders)38

Number of events

Financial results presentations (including teleconferences)

4 times

Small group meetings

4 times

Individual meetings

Total approx. 250 times

Overseas roadshows

2 times

Shareholders presentation after Annual General Meeting of Shareholders

1 timeLetter to Shareholders

1 timeKurita Water Industries Ltd. Integrated Report 2020

The Basis for Management Activities

Communication with People Responsible for Exercising Voting Rights
The Company is working to increase opportunities for dialogue
with institutional investors responsible for exercising voting rights
to listen to their opinions and use them to improve management.
In the fiscal year ended March 31, 2020, personnel responsible forinvestor and shareholder relations met with major investors inJapan eight times to hear the voting policies of institutional
investors and to exchange opinions on improving the Group’s
management and corporate governance. The opinions andrequests of institutional investors were swiftly relayed back to
management.

Initiatives to Continuously Improve Convenience for
Exercising Voting Rights
Initiative

Starting time

Adoption of full-color convocation notices

June 2018

Increase in English translation scope ofthe convocation notice

June 2018

Preparation of English version of the corporate
governance report

October 2016

Early disclosure prior to distribution of
convocation notice

June 2016

Preparation of English-language
convocation notice (reference documents)

June 2013

Shareholder relations visits

November 2011

Adopted electronic voting for exercise of voting

June 2006

Joined Electronic Voting Platform forexercise of voting rights

June 2006

Shareholdings of Other Listed Companies
The Company holds shares of other listed companies tostrengthen business relationships. We verify the economic
rationale for mutual shareholdings by comparing expected gains
based on capital cost and gains from holding the shares. We also
examine the relationships with companies whose shares theCompany holds by carefully examining our transaction histories

PolicyIn some cases, the Company holds shares of other listed companies to strengthen business relationships, etc.
 hen holding such shares, the Company makes efforts to minimize the risk of holding the shares. The rationale for holdingWeach stock is reviewed on a regular or timely basis by the Board of Directors. Based on the results of the examination, theCompany aims to reduce the holding of shares of other listed companies.
The Company exercises voting rights for each proposal based on whether it will contribute to an increase in shareholder
value.
If a shareholder indicates its intention to sell the Company’s shares, the Company will not prevent the shareholder frommaking such sale, etc.
Frequency

Once a year or as necessaryStandard

Total of operating profit and dividends received is less than expected return for five consecutive years
An improper incident occurs, etc.

Fiscal year ended
March 31, 2018

9 of 46 stocks

Fiscal year ended
March 31, 201913 of 37 stocks (includes partial sales)

Fiscal year ended
March 31, 2020

2 of 28 stocks

Review ofshareholdings

Record of sales

with them. Based on the results of this examination, the Board of
Directors reviews the appropriateness of holdings periodically andat other times as necessary, and reduces the number of shares
held. Funds gained from the sale of the shares are allocated tocapital investment and M&As.

Kurita Water Industries Ltd. Integrated Report 2020

39

The Basis for Management Activities

Governance Discussion with External Directors

TSUGUTOMORIWAKIRYOKO
SUGIYAMAKEIKOTANAKA

External Director

External Director

External Director

Succession planning anddirector appointments

outside consultants to identify and cultivate future leaders is alsocommendable.
Sugiyama From my experience, outside consultants are not very
useful in some cases, depending on what role they are given, but

Moriwaki Discussions by the Board of Directors are very dynamic.

Kurita seems to be making good use of them in succession planning.

The Kurita Group has also taken a number of innovative steps overWhen used to complement internal views, as in this case, outside

the years to enhance corporate governance. However, to keep

consultants add value to the planning process. I attend both themoving forward, I think Kurita needs to raise the level of discussion

Nomination & Remuneration Advisory Council and the Successor

surrounding succession planning and the appointment of directors.

Planning Committee, and they liaise well with each other on

Tanaka I was appointed as an external director in June 2019. My

identifying future leaders.

impression is that Kurita’s governance mechanisms are already

Moriwaki However, I think we can improve the discussions by using

robust. In terms of succession planning, I thought the opportunity

more input from people nominating the candidates and by providing

to interview each candidate face to face was very useful. The use of

more detail about why certain candidates have been selected. I
think that’s one area that could be tackled to improve corporate
governance.

Creating a diverse Board of Directors
Tanaka I’m the second women to be appointed to the board,but there’s more that Kurita can do, such as actively supportingthe careers of women already working in the Group. I think theCompany needs to proactively hire and cultivate female engineers,
using Kurita’s reputation as a company that contributes to theenvironment.
Sugiyama I agree. We need to offer more opportunities for womenin the workplace. In terms of skill levels, I think it would be good ifsome members of the board had a specialist background in the fieldof digital transformation.

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Kurita Water Industries Ltd. Integrated Report 2020

The Basis for Management Activities

encourage detailed, frank discussions about investment projects
between personnel, who may not necessarily be involved in the
project, and staff who are leading the project. In my view, the people
with the most knowledge of the project should lead the discussions,regardless of their position inside the Company. Steps need to betaken to prevent the committee from becoming a venue for people
simply to air outspoken opinions.
Sugiyama Discussions about investment projects by the Boardof Directors feature detailed explanations about projects andrelated risks, as well as input from inside directors. However, I think
the board could make better-informed decisions if they receive
information beforehand about the background and process of
discussions within the Investment Committee, particularly negative
opinions expressed by the committee.

The Kurita Group’s
longer-term growth strategy

Moriwaki To cultivate business leaders from an engineering
background, it might be worthwhile placing some of our engineers
with venture capital firms, where they can undergo trainingthat gives them the skills to evaluate the quality of business

Tanaka As the president likes to say, Kurita has to disrupt existing

management as well as technologies.

ideas and approaches. But I think that’s quite hard to do for a

Tanaka Diversity also refers to non-Japanese staff. Kurita has

relatively successful company like Kurita. For companies that faceacquired various overseas companies in recent years, so thea crisis such as bankruptcy, employees have to take the initiative

Company needs to think about promoting foreign personnel fromand tackle the crisis head on, or the company could go bust. In our

the ranks of executives at those firms to increase motivation.

case, the medium-term management plan (MVP-22) communicates

Promoting non-Japanese personnel to higher positions in the Groupin simple terms what each part of the Company needs to do, fromwould also give the Board deeper insights into its businesses.

management down to each division and department. Taking a

The role of external directors andsupport from the Company

lead from the plan, every employee needs to take the initiative anddecide what they need to do individually to contribute to the plan’sgoals.
Sugiyama The Group is currently working hard to complete

Moriwaki The number of external directors has increased fromits total solutions business model. Achieving the medium-term

two to three, which is not a big difference from when Kurita

plan targets in the fiscal year ending March 31, 2023 will lay theappointed a second external director, but I feel that our voice ingroundwork for the next stage. However, we have to consider how

management has increased.

total solutions fit with CSR and CSV – long-term initiatives for theSugiyama We were still free to express our opinions whenGroup – and whether CSR and CSV are objectives in themselves orthere was just two of us, but a group of three external directors

approaches we should follow.

means we can provide a broader range of ideas and opinions in

Moriwaki The people who wrestled with the development anddiscussions. For me, briefings about agenda items before Board

implementation of the current medium-term management plan areof Director meetings are a valuable opportunity to access key

now starting to see the fruits of their labor, which should lead to

information and share opinions.

improvements in the next five-year plan. Creating a new business

Tanaka The Company provides support in that respect. To

model will be challenging, but if more employees can switch to again a deeper understanding of Kurita, we attend research andvalue-creating mindset, I’m confident Kurita can achieve its aims.

development workshops and participate in Environmental & Social(E&S) Committee meetings and other events, which is helping me
get up to speed on the Kurita Group. We’ve also been taken on atour of an ultrapure water supply business site.
Moriwaki I’m satisfied with the amount of information I canaccess to keep me informed, as I’m well-versed in where to look
for the right information after five years as an external director.
In fact, there’s almost too much information, making it hard forexternal directors to know where to draw the line. When I’ve
attended meetings of Kurita’s committees, I’ve found that the levelof discussion can be very complex. That means we need to think
about how best to communicate the nature of discussions toordinary employees.

Role of the Investment Committee
Moriwaki The main role of the Investment Committee is to

Kurita Water Industries Ltd. Integrated Report 2020

41

The Basis for Management Activities

Risk Management
The Kurita Group defines risk as any event that makes its sustainable growth and enhancement of the Group’s
corporate value uncertain. We identify risks that need to be addressed while minimizing losses and damage by taking
measures to avoid and mitigate risks, so that we can continue securing business opportunities for further growth.

Risk Management System
The executive general manager of the Corporate Planning and Control
Division is responsible for monitoring risks and implementing risk
management in the Kurita Group. The executive general manager
regularly analyzes and evaluates the Group’s risks, conducts ongoing
monitoring based on the Company-wide risk map, and takes steps toprevent risks from occurring.
In the event of a risk that could have a serious impact on Kurita’sbusiness, the general manager formulates systems with those
responsible for responding to the risk, obtains approval from thepresident and the representative director, and immediately issues
instructions. Those responsible for responding to the risk promptly
take action and report to the president and the representative director
and the executive general manager of the Corporate Planning andControl Division regarding the impact of the risk, progress with
mitigation and measures to prevent reoccurrence.
The E&S Committee is responsible for tackling material risks related

to compliance and climate change, while the chairperson of the
Headquarters Health and Safety Committee is responsible for material
risks related to health, safety and disasters. The executive generalmanager of each division is responsible for responding to risks directly
associated with day-to-day business operations. Also, responding tocommonly seen risks relating to quality, the environment, information
security, export controls, and so on are handled by the respective
divisions responsible.
The executive general manager of the Corporate Planning andControl Division, the chairperson of each committee and the executive
general manager of each division report periodically to the Board of
Directors on the status of risk management implementation, andreport as necessary to the Board of Directors and the Audit &Supervisory Board on the occurrence and impact of material risks.
Furthermore, the Internal Auditing Department monitors the execution
status and improvement status of risk management measures.

Risk Management System
President and Representative Director
Proposes person
responsible and system

Board of Directors

Approval

Audit & Supervisory Board

ReportReportExecutive general manager of the Corporate
Planning and Control Division(officer in charge of risk management)
Instruct

ReportChairperson of E&S Committee

Chairperson of Headquarters
Health and Safety Committee

Executive general managers ofdivisions

Departments in charge

Compliance and climate change risks

Health, safety and disasters

Risks directly related to daily businessactivities

Routine risks such as quality, environment,
information security and export regulations

Monitoring implementation status and improvement status
Internal Auditing Department

Identifying Risks and Formulating Response Measures
The Kurita Group uses a Group-wide risk map to identify potential
risks in its business activities and assess risks against monitoring
benchmarks. The Kurita Group also determines material risks for
the Group based on the expected quantitative and qualitative
impact of those risks and the likelihood of them occurring.
Material risks are mapped and specific response measuresdeveloped for each division. Risks are also reflected in businessplans for each division and progress with risk response measures
is monitored. Progress is regularly reported to the Board of
Directors, which discusses and formulates material risk response
measures for the next fiscal year, including responses to emerging
risks caused by changes in the operating environment.

42

Kurita Water Industries Ltd. Integrated Report 2020

Risk Management PDCA Cycle

Plan・Prioritize risks and formulate response
measures・Incorporate into organizational goals
and business plans

Act・Review Group-wide risk map
・Determine Group-wide material
risks for the next fiscal year

Do・Monitor progress with risk response
measures in organizational goals
and business plans
・Rapidly identify and respond to
emerging risks

Check・Monitor risk response efforts
・Identify deteriorating or emerging risks

The Basis for Management Activities

Kurita Group Risk Map
Report section / information related toresponse measures

Risk category

Main risks

Operatingenvironment risk

Changes in demand due to fluctuations in factory operating rates and capital investment in clientindustries
Decline in prices for products and services due to intensifying competition
Price fluctuations for raw materials and other inputs
Impact on overseas operations due to changes in exchange rates and other factors

Opportunities and Risks

P22—

Country risk

Changes in regulatory frameworks and political and economic instability in Kurita’s markets

Disaster risk

Human and business losses caused by pandemics or natural disasters

BCM Policy

P43

Strategic risk

Failure to attain goals in medium-term management plan due to delays with organizational
reforms, business restructuringSlow pace of business expansion caused by delays with launching new businesses, executing
growth strategy
Delays with developing businesses matched to client needs and characteristics of each country/
regionFailure to remain competitive in water treatment market due to delays with introducing IT andbuilding digital businessesInterview with the President
Medium-Term Management Plan
Opportunities and Risks

P10
P16
P22

Business risk

 ailure to provide competitive products, services or solution models in a timely mannerFC laims for damages due to defects in products or services and delays with productivity
improvements
Loss of competitiveness due to outflow of technical expertiseOpportunities and Risks

P22

Financial risk


Loss
of public trust caused by inadequate internal controls related to financial reportingDeterioration in profitability or cash flow due to poor management of affiliated companies
Write-down of goodwill caused by weak earnings at acquired companies

 orporate GovernanceCMedium-Term Management Plan
Basic Policies for Constructing an
Internal Control System

P32
P16


Healthissues caused by long working hours
Decline in ability to adapt diversity and other changes in operating environment

Human Resources Management

P44

Infringement of intellectual property rights
Loss of public trust due to legal, regulatory or compliance violations and data breaches

 &D and Intellectual PropertyRCompliance

P25
P47

Labor risk
Legal andcompliance risk—

・The above table is not an exhaustive list of the Kurita Group’s risks.
・Please click on the link below for more details about risk factors related to the Group’s business conditions, financial accounts and other items in the Securities Exchange Reportthat could have material impact on investor decisions.

Business Risks and Other Risk Factors https://ir.kurita.co.jp/en/corporate_governance/risk_factors/index.html

Business Continuity Management (BCM) Policy
The Kurita Group has formulated a Business Continuity
Management (BCM) Policy to set out the Kurita Group’s principles
for handling emergencies that pose a risk to the continuity of theGroup’s businesses, such as severe earthquakes, typhoons or
pandemics. The policy enables Kurita Group officers and employees
to make judgements and act appropriately by clarifying our basic
approach as follows:mind and safety and security of officers and employees and theirfamily members.

1. Highest priority on ensuring the preservationof human life

3. Community support

The Kurita Group will place highest priority on ensuring the peace of

2. Early restoration of business operations

The Kurita Group will endeavor to quickly restore operations at its
own facilities, completed projects and projects under construction.
In this way, it will make efforts to supply products and services in astable manner and to support recovery efforts at clients.
The Kurita Group will support reconstruction of the local community
while working to prevent secondary disasters at its own sites

Measures to Ensure Business Continuity During the COVID-19 Outbreak
Infections caused by coronavirus disease 2019 (COVID-19) havebeen increasing since February 2020. In response, the Kurita
Group has introduced a backup personnel system for officers,
division managers and other individuals involved in businessexecution in the event that they become infected. Reporting lines
with Group companies have also been established to rapidly andaccurately gather information.
In addition, Kurita has identified operations within eachorganization that are essential to ensure business continuity forclients and the Group and to fulfill its responsibilities to society.
Infection prevention measures and backup personnel systems
have been developed for employees working at Group companies

and partner companies involved in essential operations.
Also, amid calls from the government for the public to stay athome, Kurita implemented rules on home working in regions
where stay-at-home requests were in place. In principle, allemployees in those regions were required to work at home unlessthey were involved in essential operations.
The Kurita Group will continue to flexibly adapt work systems in
response to infection trends in each country and the needs ofsociety and clients, while also developing new internal systems andreviewing work practices to align with the new realities of everyday
life and changes in work styles.

Kurita Water Industries Ltd. Integrated Report 2020

43

The Basis for Management Activities

Human Resources Management
The Kurita Group sees human resources as the bedrock for sustainable growth. We work to attract and develop
human resources while passing on our expertise in water-related technologies accumulated over many years. At thesame time, we are creating a work environment where individual employees can fully utilize their abilities andaptitudes and an organizational culture that allows diverse human resources to play a role.
Please visit our website for more information.

Human Resources Development https://www.kurita.co.jp/english/csr/csr_activity_human/index.html
Respect Human Rights https://www.kurita.co.jp/csr/csr_activity_basic/human_rights/index.html

Human Resources Development
The Company develops human resources through training programsfor employees in each class and position, which are run bydepartments responsible for human resources development, andthrough the Greater Adaptability to Globalization Course, which isdesigned to nurture human resources capable of working at a global
level. The Company also provides Kurita Group employees withspecialist knowledge training on Kurita Group products, technologies
and services, training on safety, legal matters and compliance, andtraining to acquire communication and problem-solving skills. We arealso working to develop personnel who will play central roles inoverseas Group companies by training future national executive
candidates, staff and managers.
Kurita established a committee in April 2020 to cultivate engineers
and other personnel. The Committee is chaired by the senior generalmanager of the Production Group in the Engineering Division.

Providing Opportunities to Increase Self-Development
In addition to training run by departments responsible for humanresources development, Kurita Water Industries offers a paid study
sabbatical system to provide employees with opportunities to study
at educational and research institutions in Japan and overseas inareas relevant to the Group’s business. We also offer a scholarshipprogram to provide financial aid to students who meet certain criteria.
Furthermore, we run in-house training courses such as our Specialist
Technical Courses, in which leading personnel from each technicalfield act as in-house instructors to pass on technical knowledge. In
addition, we offer over 200 correspondence education andclassroom-based courses to give employees the opportunities toacquire a wide range of knowledge and skills.

Human Resource Training System (Kurita Water Industries)

All target employees

General work skills

Specialized work skills

Acquirespecialized skills

Acquire basic skills

Selective

Acquire broad
perspective andsubjectivity

Business Group training

Management support skills

Acquire and develop management skills
Acquire additional skills in specialized fields
Basic Management Skills
CourseBetter Execution Skills forManagement Course

All managers: Diversity Training for Managers
Section Manager Management (3rd year)
Skills Reform Training
Follow-up Training

New Supervisor
Training
Domestic
Kurita GroupNew Employee
Training

Problem Solving
for 2nd-year
Employee
Training

Young
Employee
Training

Core Employee
Training

New managers: Group Training, Camp Training,
Review Training
Management training: Assessment Training

Female general/specialized work: Positive Action Seminar
Greater Adaptability to Globalization Course
Basic Knowledge Course

Specialized Knowledge
Acquisition Course

Skills required for current duties
New Employee
Training 2nd-year
Follow-up Training

44

Supervisor
Training

Young Employee
Training

Kurita Water Industries Ltd. Integrated Report 2020

For employees of overseas Group companies
Core Employee
Training

Kurita Management
Development Program

Kurita Executive
Development ProgramTo help employees achieve their potential, companies need to
conduct fair evaluations of each employee based on their roles
and performance and provide appropriate remuneration andeducation in line with their performance. At Kurita Water
Industries, employees have interviews with supervisors to confirm
their results and issues as part of transparent and fair evaluations.
Kurita Water Industries has introduced a Self-Reporting Systemfor employees to provide feedback about their duties andworkplaces and their intentions regarding career development
and fulfilling their potential. Once a year, supervisors meet with
employees to discuss their suitability for current duties, transfers
to develop their careers, family status and other matters. This

The Basis for Management Activities

Fair Personnel Systems

enables the Company to understand the employee’s thinking.
Information from the meetings is used to assist personnel
development and motivate teams.

Attracting Diverse Human Resources
The Company and its domestic Group companies work to attract
and retain diverse personnel by providing a wide range of
employment opportunities for people with disabilities, seniorcitizens and foreign nationals. Specifically, we recruit people withdisabilities through Group company With Kurita Ltd. and hire
employees who have reached mandatory retirement age andoverseas students living in Japan.

Developing Human Resources Post-COVID-19
The COVID-19 crisis has changed how people live and work
worldwide. The Kurita Group believes that presents a good
opportunity to overhaul its employment systems and humanresources management. We have accelerated the adoptionof digital tools and rapidly built systems to enable work in
virtual environments. As a result, working from home andmobile working has become established across the Group.
This new approach, which is not constrained by time orplace, is unlikely to be completely wound back after thecrisis.
Teleworking is likely to result in gaps in productivity
between employees due to differences in working
conditions, including the self-management skills of individual
e mplo y e es . In h u man resou rces management an devaluation, we anticipate a growing trend in Japan towards
job-based employment systems (people hired individuallyfor specific roles) to enable equitable assessment of work
performance.
The Kurita Group’s strengths are derived from the trust
society and clients place in us, backed by customer intimacy.
That trust is anchored by our cohesive workforce (the ability
to rapidly resolve issues by working together) and oursteadfast approach (a commitment to seeing through every
job to completion, no matter how difficult). The Group’s
strengths have been built up over time through ourmembership-based employment system (people hired as agroup for various roles as “members” of the company). As
teleworking becomes a normal part of work, Kurita will need
to focus on how to get the best out of each employee andhow to support their individual development, while
maintaining the Group’s strengths and retaining some
aspects of the membership-based employment system.
We will also need to address two important issues related
to changing work styles – how to ensure the Company
remains a place where employees feel affinity with theircolleagues, and what training systems and personnel
management systems to create to increase productivity,

given that new work styles are likely to lead to gaps in
output between employees.
As part of that process, I want employee happiness andwell-being to become the basis for personnel management.
That’s because, as views on work styles and work in generalbecome more diverse, employee happiness and well-being
can be the central focus of affinity, and highly satisfied
employees are likely to be people who want to make adifference and who take the initiative when faced with achallenge, rather than relying on others. For an organization
like Kurita, which is underpinned by trust from society andcustomers, employee happiness and well-being is the kindof value we will need to foster to help us build customer
intimacy. Of course, happiness and well-being means
different things to different people, but our goal inpersonnel management and human resources development
is to create an organization of highly motivated people whowant to play a meaningful role in society and who have aclear understanding of what happiness and well-beingmeans to them personally.

Kiyoshi Itou
Executive General Manager ofCorporate Planningand Control Division

Kurita Water Industries Ltd. Integrated Report 2020

45

The Basis for Management Activities

Human Resources Management

Creating a Flexible Work Culture
The Company is taking steps to support employees who want to balance their careers and family life by creating a flexible working environment
for employees.

(fiscal years ended March 31)

Status of System Use (Number of people)
Parental leave forchildcare
Caregiving leave system
Work less hours for
caregiving system

2019

2020

Status of System Use (Number of people)

Male

6

21

Female

25

25

Male

1

1

Female

0

0

Male

0

0

Female00

Short-term caregiving
leave system
Leave system due tospouse being transferred
Volunteer leave system

2019

2020

Male

10

9

Female

5

7

Male

0

0

Female

2

2

Male

3

1

Female22*In addition to the above systems, Kurita provides a short-term nursing leave system.

Promoting Women’s Participation and Advancement in the Workplace
The average number of years of service for female employees is
16.8, indicating a working environment that encourages women toremain with the Company for a relatively long period. However, formany years, little progress was made in appointing women to
management positions. However, with Japan facing a shrinking
population, the ability to successfully encourage women’s
participation and advancement in the workplace has become anurgent issue for the Company from the standpoint of securing
management resources. In response, we are working to improve
this situation under an action plan based on the Act on Promotionof Women’s Participation and Advancement in the Workplace andthe Act on Advancement of Measures to Support Raising NextGeneration Children. Kurita Water Industries is a constituent stockin the MSCI Japan Empowering Women (WIN) Index.
(fiscal years ended March 31)

2019
Ratio of female
personnel (%)

1.1

2.1

Employees

14.1

14.5

Average years of service for female personnel

In the five-year plan for the period from April 2018 to March 2023,
Kurita Water Industries has set the following targets.
 At least 15 women in management positions by April 1, 2023
Achieve a ratio of 30% or more for women among new graduate
recruits for career track positions
We will continue taking the following initiatives in order to achievethese targets.
(1) Career planning support for women in career track positions(2) Increase the ratio of female recruits(3) Expand the roles of female employees(4) Support career development through the self-reporting system

Action Plan Based on the Act on Advancement of
Measures to Support Raising Next-Generation Children
In the five-year plan for the period from April 2018 to March 2023,
Kurita Water Industries has set the following targets.
(1) Ease workplace regulations(2) Promote use of annual paid leave(3) Promote male participation in childcare(4) Provide time for childcare

2020

Management

Action Plan Based on the Act on Promotion of Women’sParticipation and Advancement in the Workplace

16.8

Work Style Reforms
The Company is promoting work style reforms centered on reducing
long working hours with a view to maintaining the physical and mental
health of employees and increasing their productivity.

Reducing Long Working Hours
Kurita is taking steps to reduce long working hours.

Measures
Restrict working hours
Promote use of paid annual leave46

 stablished no overtime day (Wednesday)ESet the hours that the Company’s Headquarters facilities can be used (until 8:00 p.m.)Encourage employees to take at least five days of continuous leave in the summer holiday period (June-October)

Change employee mindset

 rovide Work Style Reform Seminars for engineersPRun e-learning programs for acquisition of time-management skills and efficient meeting operation

Reform and introduction ofsystems and mechanisms

 se satellite offices
URun trial of interval system to break up work hours

Kurita Water Industries Ltd. Integrated Report 2020

The Basis for Management Activities

The Basis for Management Activities

Compliance
The Kurita Group conducts compliance activities that go beyond fundamental legal compliance, aiming to be a
corporate group trusted by society and held in high esteem by all Group members.

Basic Concept

Promotion System

The Kurita Group has formulated the Kurita Group Code of Conduct, whichsets out how all Kurita Group officers and employees should conduct
themselves in business activities and what conduct is prohibited. The Codeis positioned as the Group’s basic policy on compliance and is translated
into several languages and shared across the entire Group. To deepen
understanding of the Code and ensure it is implemented, eachorganization develops and regularly reviews its own more specificCompliance Guidelines that highlight key areas of behavior that must becomplied with and put into practice in the course of work duties.

The Kurita Group has established the E&S Committee
and the Group E&S Committee as organizations tooversee compliance activities. Both committees arechaired by an Executive Senior Managing Director of
the Company, and the Group E&S Committee’s
members are representatives of Group companies.
The committees are tasked with deciding polices andkey measures related to compliance activities, which
are conveyed to all employees through subcommittees
in each Company division and Group company.

Kurita Group Code of Conduct
https://www.kurita.co.jp/english/philosophy_
vision/pdf/philosophy_vision_01.pdf

Main Initiatives
Promoting Fair Business Practices

Whistle-Blowing and Consultation Desk

The Kurita Group has formulated the Kurita Group Anti-Bribery
Policy and the Kurita Group Antitrust Policy to ensure fair businesspractices are promoted throughout the entire Group. These policies
have been translated into several languages to raise awarenessamong all Kurita Group officers and employees and are used aspart of regular training activities. In the fiscal year ended March 31,
2020, all officers and employees at the Company and its domestic
Group companies took part in an anti-bribery and anti-corruption
e-learning program.

To ensure Kurita Group employees and dispatch staff feel
comfortable in the workplace, the Kurita Group has established aconsultation desk in the Group and outside organizations to provide
advice about questions or concerns related to the Kurita Group
Code of Conduct or laws and the Group regulations and to handle
reports about behavior that infringes the Code, laws and regulationsor the Group’s internal rules. The consultation desk is also available
for Kurita Group business partners to receive advice or report legal
violations or misconduct by the Kurita Group. Anybody using theconsultation desk to receive advice or report a violation is protectedfrom unfavorable treatment. Kurita uses the consultation desk to
rapidly identify and rectify misconduct. In the fiscal year ended
March 31, 2020, the consultation desk was accessed 24 times inJapan and four times overseas.

All-Employee Survey
The Kurita Group conducts an annual Compliance Behavior Surveyof all Group employees and dispatch staff to evaluate the outcomesof compliance activities and identify any potential compliance risks.
The results of the survey are used by the Company divisions andGroup companies to plan and improve compliance activities. In thefiscal year ended March 31, 2020, 7,054 employees and temporary
staff took the survey, equating to a response rate of 99.1%.

Preventive Compliance Measures
The Kurita Group develops compliance improvement targets andmeasures to prevent issues with compliance before they occur.
Specifically, based on a Non-Compliance Risk Map, which is a list ofroughly 60 legal infringement risks, the Company divisions andGroup companies set priority measures tailored to their respective
characteristics, referencing the results of the Compliance Behavior
Survey conducted in the previous fiscal year.

Promoting Equitable Relationships with
Business Partners
Kurita conducts an annual business transaction survey of small andmid-size suppliers as part of efforts to promote equitable business
relationships. If necessary, Kurita instructs the relevant department
to investigate the situation or make improvements, which areconfirmed later through follow-up contact. In the fiscal year ended
March 31, 2020, Kurita surveyed 1,058 business partners.

Kurita Water Industries Ltd. Integrated Report 2020

47

The Basis for Management Activities

Environmental Improvement Activities
The Kurita Group’s environmental improvement activities include initiatives to reduce internal water and energy use
and waste emissions. They also include activities to reduce environmental impact at customers who use products andservices related to water and the environment that the Kurita Group has developed over many years. These are linked
with the themes for growth opportunities in our CSR Policy. We are aiming to create shared value with society byworking to solve social issues through the reduction of environmental impact at customers and in the Kurita Group,
while simultaneously achieving business growth.
Definition of the Kurita Group’s Environmental Improvement Activities
1) Activities to comply with the environment-related laws and regulations of each country and region that apply to the Group’s businessactivities
2) Initiatives to solve international issues related to the sustainability of water and the environment through business activities
3) Disclosure of information related to 1) and 2), and engagement with customers, business partners, employees, shareholders andinvestors and local communities about the activities
Please click on the link below for more information.

Kurita Group Environmental Policy https://www.kurita.co.jp/english/csr/management/policy/environment/index.html

Environmental Initiative Promotion System
The Kurita Group has established the E&S Committee, which ischaired by an executive senior managing director of the Company,
and the Group E&S Committee, chaired by the same director andcomposed of representatives of Group companies. These
committees oversee environmental improvement initiatives in the
Kurita Group. The committees formulate unified medium-termgoals for the Kurita Group’s environmental improvement initiatives
and action plans for each fiscal year. Personnel responsible forpromoting the initiatives (committee members or personnel
designated by representatives of each company) are tasked withdriving efforts to achieve environmental improvement initiative
targets at their assigned company or organization. They report thestatus and results of the activities to the E&S Committee.
The E&S Committee ascertains stakeholder expectations andconcerns and reports them to the Board of Directors along withoutcomes from the Kurita Group’s CSR activities once a year.

Environmental Improvement of Customers’ Operations (Promotion of CSV Business)
CSV Business Selection Standards

The Kurita Group defines products, technologies and businessmodels that make significant contributions to water-saving, CO2
emissions reduction and waste reduction compared with previous
levels as “CSV businesses.” The advantages of CSV businesses are
expressed as coefficients in relative terms. The reduction ofenvironmental impact from customers’ operations is calculated
based on these CSV business coefficients and outcomes. CSV
businesses are also constantly reviewed in light of thedevelopment status of more competitive products, technologies
and business models.

CSV businesses demonstrate the following standards withregard to water-saving, CO 2 emissions reduction and waste
reduction:1) Significantly more effective than previous or competing
technologies.
2) New technologies or applications of existing technologies in
new markets.
3) Contribute to action plans aimed at achieving the SDGs.

Reduction of Environmental Impact at Customers* Years ended March 31
Water intake reduction (million m3)
Japan

Overseas

CO2 emission reduction (1,000 t)
Japan

55.18

54.12
44.66

279

3.51

187

2019

2020

39

Kurita Water Industries Ltd. Integrated Report 2020

119

2019

26
2020

*Reduction of environmental impact at overseas Group companies has been ascertained since the fiscal year ended March 31, 2019

48

222

240
145

2018

Overseas

41

136

41.15

2018

Japan

8.97

46.21

Waste reduction (1,000 t)

Overseas

2018

3

209

116
2019

13

2020

The Basis for Management Activities

TOPICS
Kurita Wins Energy Conservation Prize for
Kurita Dropwise Condensation Technology
Kurita Water Industries was awarded the Agency of Natural
Resources and Energy Director-General’s Award in the Productand Business Model category of the 2019 Energy Conservation
Grand Prize, organized by The Energy Conservation Center,
Japan (backed by the Ministry of Economy, Trade and Industry).
The prize was awarded for our dropwise condensation
technology, which improves heat transfer efficiency.
Condensation typically causes a layer of water to form on
metal surfaces at the steam end of heat exchangers that use
steam generated by boilers. While extremely thin, the layer ofwater drastically reduces heat transfer efficiency, resulting inhigher energy consumption and lower productivity due to thelarger volume of steam that needs to be used. Our dropwise
condensation technology adds water repellent properties tometal surfaces in heat exchangers, eliminating the layer ofwater and improving heat transfer efficiency. This in turn saves
energy thanks to a reduced amount of steam required,boosting productivity. Moreover, since the effect is produced bysimply adding a water treatment chemical with water-repellent
properties to the steam line immediately before the heatexchanger, the technology can be introduced while production
facilities are operating.

Kurita Dropwise Condensation Technology Mechanism

Comparison with existing approach

Active ingredients
Improved water
repellency

Metal surface

Heat SteamHeat SteamExisting approach

Kurita dropwise
condensation technology

No waterrepellency

With water
repellency

After application

Internal Environmental Improvement Activities
The Kurita Group works to reduce water usage, energy usage andwaste, while adhering to the environmental laws and ordinances ofeach country and region that apply to the Group’s businessactivities. These activities, including assessments related tocompliance with environmental rules and regulations, areimplemented in accordance with the Kurita Group Environmental
Policy in order to achieve targets related to the CSR Policy.

Participation in the Ministry of the Environment’s
Water ProjectEvaluation of Water Risk at Internal Facilities

Participation in Keidanren’s Challenge Zero Initiative

Kurita Water Industries assesses and ascertains water risk for areas
where Group production bases are located once a year using the
Aqueduct Water Risk Atlas provided by the World Resources
Institute. In the fiscal year ended March 31, 2020, we surveyed
production sites that use large amounts of water and identified foursites located in areas ranked “High risk” or above. We found that the
total amount of water intake for these sites equated to 3% of water
intake for all the Group’s production sites.

Kurita is taking part in Challenge Zero, an initiative run by Keidanren(Japan Business Federation) to develop innovative net zero
greenhouse gas emission technologies. As of July 2020, 137
companies and groups had signed up to the initiative, aiming torapidly achieve the net zero greenhouse gas emissions targets in the
Paris Agreement.

Kurita Water Industries participates in the Water Project run by the
Ministry of the Environment, which provides an opportunity todisseminate information about the Group’s technologies andbusiness activities related to efficient use of water resources andthe preservation of the water environment.

Kurita Water Industries Ltd. Integrated Report 2020

49

The Basis for Management Activities

Environmental Improvement Activities

Scope 3 Emissions Data Account and Initiatives

Participation in the Japan Society of Industrial Machinery
Manufacturers’ Basic Environmental Action Plan

From the fiscal year ended March 31, 2020, the Kurita Group has
ascertained data on Scope 3 emissions as part of efforts toaddress climate change in line with international standards. We
found that Scope 3 emissions account for 98.9% of the Kurita
Group’s combined emissions in the Scope 1-3 categories, with “useof sold products” such as pumps and motors generating a highproportion of Scope 3 emissions.
Using this data, we will set medium- and long-term targets for
reducing greenhouse gas emissions in line with the Recommendationsof the Task Force on Climate-related Financial Disclosures (TCFD)
and develop measures to achieve those targets. In addition, we will
increase the Group’s competitiveness by switching to solutions witha smaller carbon footprint.

Kurita Water Industries participates in the basic environmental
action plan of the Japan Society of Industrial Machinery
Manufacturers, which is working on countermeasures for global
warming. We report regularly on the status of our response to
climate change.

Requesting Business Partners to Make Environmental
Improvements
The Kurita Group believes it is vital to reduce environmental
impacts across the entire supply chain with the cooperation ofbusiness partners. To this end, we have established the Kurita
Group CSR Procurement Guidelines and have also asked business
partners to comply with environmental laws and regulations, takesteps to reduce their environmental impact by setting voluntarystandards to reduce water and energy usage, and to provide
information appropriately. In particular, we ask major business
partners to conduct a self-evaluation based on the guidelines andto implement improvement measures.

Fiscal year ended March 31, 2020
CO2 emissions (t)Ratio of total CO2 emissions (%)

Scope 1

9,384

0.3%

Scope 2

25,5200.8%

Scope 3

3,041,803

98.9%

Scopes 1+2+3

3,076,707

100.0%

Ratio of total CO2 emissions (%)

Scope 3 emissions by category (%)

Breakdown of Category 11 emissions (%)

Scope 3Category 11 (use of sold products)

Pumps

Scopes 1+2

Categories 1, 4, 9 (purchased goods and services,transportation and distribution)

MotorsCategory 13 (downstream leased assets)

Other

Other categories

1

Blowers

1
8

19

6

20
21

99

54

71

Internal Promotion of Environmental Improvements*1 Years ended March 31
Water intake and reclaimed amount (million m3)

CO2 emissions (1,000 t)*2

Waste amount (1,000 t)

Water intake (Japan)

CO2 emissions (Japan)

Waste amount (Japan)

Water intake (Overseas)*1

CO2 emissions (Overseas)*1

Waste amount (Construction sites in Japan) *3

Reclaimed amount (Japan)

Waste amount (Overseas)*1

Reclaimed amount (Overseas)*1

191

4.00

3.35

2.17
0.57

0.68

2018

0.61

0.01
0.56

0.65

0.62

2019

223

14

236 11

70 2
68

2.79

224

209

29

28

0.62 0.01
0.61

2020

30 2

2018

2019

2020

2018

2019

41

2020

*1 Environmental impact at overseas Group companies has been ascertained since the fiscal year ended March 31, 2019.
*2 Please see page 20 for the Company's thinking on CO2.
*3 Waste emissions from construction sites at Kurita Water Industries and domestic Group companies have been ascertained since the fiscal year ended March 31, 2020.

50

Kurita Water Industries Ltd. Integrated Report 2020

The Basis for Management Activities

TOPICS
Initiatives at Kurita do Brasil LTDA.
Kurita do Brasil LTDA. is an overseas Group company that produces Kurita Group water treatment chemicals by blending
previously manufactured chemical substances. The company sells the water treatment chemicals and supplies technical services
in South America. Overseas Group companies are also actively implementing internal environmental improvement activities.

Reducing Water Usage

Reducing CO2 emissions

Reducing waste

Most of the water used at the company’splant is for the manufacture of water
treatment chemicals, but water is also
used for cleaning production equipment
and for experiments.
The company carried out an
investigation to assess water use in its
plant in order to reduce water
consumption in non-product areas. The
investigation found that a large amount ofwater was being used to clean part of a
production line. Kurita do Brasil LTDA. took
a number of steps to address the issue inthe fiscal year ended March 31, 2020,
including making improvements tofacilities, such as adjusting production lines
and maintaining equipment, optimizing
cleaning methods and raising employee
awareness about the importance ofconserving water. Those steps reduced
water consumption by 5% year on year.

The company’s CO2 emissions are derived
from electricity used in production facilities
and offices and from fuel in customer
support vehicles.
To reduce CO2 emissions in the fiscal
year ended March 31, 2020, the company
adopted LED lighting, mainly in
production areas, and switched fromgasoline to ethanol fuel in customer
support vehicles. Many vehicles in Brazil
are compatible with ethanol fuel, as thecountry has a long history of producing
bioethanol from sugar cane. Those
initiatives reduced CO2 emissions by 14%
year on year.

Waste generated by Kurita do Brasil
LTDA. includes packaging for water
treatment chemical raw materials, noncompliant water treatment chemicals
and leaks of chemicals that generateindustrial waste.
To reduce waste volume in the fiscal
year ended March 31, 2020, thecompany requested suppliers of key raw
materials to switch to reusable
packaging, made improvements to
production processes to prevent theoutput of non-compliant products andestablished a maintenance routine toprevent leaks and losses of chemicals. As
a result, waste volume was reduced by
32% year on year.

Water consumption (m3)

CO2 emissions (t)Waste volume (t)Years ended March 31

Years ended March 31

Years ended March 31

50
7,745

2019

7,321

325

2019

2020

34

280

2020

2019

2020

ISO 14001 Certified Sites
Company

OfficeKurita Water Industries Ltd.

Shizuoka, Yamaguchi, Toyoura andTsuruga plants; Sakai Sub-branch

Kurita Chemical Manufacturing Ltd.

Head Office, Ako plant

Kurita Buil-Tech Co., Ltd.

Head office

Kuritaz Co., Ltd.

Head office, West Japan branch officeand nine other business sites

Kuritec Service Co. Ltd.

Iga, Mie, West Japan,
Oita and East Japan plants

Kurita-GK Chemical Co., Ltd.

Head office and Rayong branch

Kurita (Taiwan) Co., Ltd.

Company

OfficeHansu Co., Ltd.

Head office and two other business sites

Kurita Europe GmbH

Head office and two other business sites

Kurita Turkey Kimya A.S.

Head office and one other business site

Kurita do Brasil LTDA.

Head office and three other business sites

Hansu Technical Service Ltd.
Kurita (Singapore) Pte. Ltd.
Kurita Water (Malaysia) Sdn. Bhd.
PT Kurita Indonesia
Kurita America Inc.

Kurita Water Industries (Dalian) Co., Ltd.
Kurita Water Industries (Jiangyin) Co., Ltd.

Kurita Water Industries Ltd. Integrated Report 2020

51

The Basis for Management Activities

Quality Initiatives
The Kurita Group recognizes that continuing its business and growing as a company depends on maintaining its status
as a trusted supplier for its customers. We therefore strive to manage quality at every stage, from the development of
products and services to their manufacture and delivery. We have established the “Kurita Group Product Quality
Policy” as a groupwide policy for promoting these initiatives.
Please see the following website for our product quality policy.

Kurita Group Product Quality Policy
http://www.kurita.co.jp/english/csr/group/materiality/customer/index.html

Quality Initiative Promotion System
In developing products and services, we consider safety, healthand environmental impact throughout the product lifecycle.
Specifically, the Solutions Business Committee evaluates highperformance material and units, as well as development themes
for solution technologies, narrowing them down to the themesthat are expected to be most effective. The themes are used todevelop products and services by the Research and Development
Division and the Solution Business Division.

Quality management is carried out on a continuous basis frommanufacturing through to product supply by dedicated quality
management departments at each Group company, while theQuality Management Committee is tasked with overseeing efforts
to raise quality levels across the entire organization, including at
Group companies. The Committee confirms and evaluates
progress against quality-related targets and reports the results
annually to the Board of Directors.

Main Initiatives
Product Safety Evaluation

Courses and Training

The Company has a rule that, when it uses a new chemical
substance in the product development stage, it assesses the risk
the chemical substance poses to the environment and health basedon internal rules. In addition, when we manufacture a product, we
submit mandatory notifications and reports in accordance withcertain laws and regulations, including the Industrial Safety and
Health Act, the Act on the Evaluation of Chemical Substances andRegulation of Their Manufacture, etc., and the Fire Service Act. We
also provide information to customers via product labels and safety
data sheets.

In order to raise the quality of services provided to customers, theCompany runs training courses to improve the expertise and skillsof all Kurita Group employees. The courses comprise units on a
range of topics, including basic knowledge about water treatment
chemicals, technical training about water and wastewater
treatment, safety and legal training, communication skills andproblem-solving.
The Company runs a product safety e-learning course for all
employees except those in its administrative division. The course
is designed to deepen employee understanding about productsafety.

Conducting CS Survey
The Company’s engineering departments continuously conductcustomer satisfaction (CS) surveys of all customers who havepurchased large water treatment plants. Based on the results of thesurvey, the Company continually works to revise and improvevarious items, including its operations procedure manual andspecification sheets.
Question items
8 items, including specification,
quality management, andconstruction

52

Number of Surveys ConductedFiscal year ended
March 31, 201914

Fiscal year ended
March 31, 2020

12

Kurita Water Industries Ltd. Integrated Report 2020

Response to Problems
Problems that arise prior to installation at customers andcomplaints received from customers are entered in the in-house“problem information” database and that information is sharedwidely throughout the Company. In addition, to improve thequality of product design, Kurita became the first engineering
company in Japan to introduce a Stress-Strength Model (SSM)* inorder to prevent design flaws and stop issues from reoccurring.
*Developed by Yasuhiko Tamura of the Institute of Structured Knowledge Yielding Co.,
Ltd., SSM is a quality management approach mainly used in the manufacturingsector.

The Basis for Management Activities

The Basis for Management Activities

Safety Initiatives
Kurita has positioned occupational health and safety as the top priority in business operations. We are working to ensure
the safety and support the health of Kurita Group officers and employees, as well as employees of subcontractors, tocreate working environments where they can work with peace of mind. We have formulated the Kurita Group
Occupational Health and Safety Policy and we continuously promote initiatives based on shared policies across the Group.
Please see the following website for our Occupational Health and Safety Policy.

Kurita Group Occupational Health and Safety Policy
https://www.kurita.co.jp/english/csr/management/policy/health_and_safety/index.html

Safety Initiative Promotion System
The Company and its domestic Group companies have establisheda health and safety management system based on labor safety
laws and regulations such as the Industrial Safety and Health Act.
Under the Headquarters Health and Safety Committee, a jointlabor-management committee chaired by Executive Senior
Managing Director, each Kurita business site, division and Group
company has established a Health and Safety Committee, which
work to maintain and enhance the workplace environment. The

Headquarters Health and Safety Committee confirms andevaluates progress against safety-related targets and reports theresults annually to the Board of Directors. .
The Securing Safety Center, a specialist safety department in
the Engineering Division, supports safety initiatives at worksites,
develops and implements measures to prevent work-related
accidents and follows up on initiatives by Health and Safety
Committees.

Main Initiatives
Safety Patrols to Prevent Work-related Accidents
Kurita uses external specialists and the Securing Safety Center tocarry out worksite safety patrols to identify and mitigate risks and toraise safety awareness among employees and at subcontractors.
Safety patrols use a points-based system to evaluate worksite safetymeasures, with results provided as feedback to employees andsubcontractors to help them improve or correct any issues. If
accidents do occur, a specialist department tasked with improving
worksite safety visits the site to investigate the cause of the accident,
develops measures to prevent recurrence and shares theinformation with the Company and domestic Group companies.
Kurita also started implementing safety patrols at overseas
worksites from the fiscal year ended March 31, 2018.

Number of Safety
Patrols(Kurita Water Industries)

599

1,083
973

Special training
on full-harnesstype fall
prevention devices

2020

Fiscal year Fiscal year Fiscal year
ended
ended
ended
March 31, March 31, March 31,
2018
2019
2020

Safety training
for overseas
employees

Training on
handling
chemicals

Safety training
for new
employees

2019

The Company ensures that all employees receive regular healthexaminations, and all employees who handle items such asorganic solvents and designated chemicals receive special healthexaminations. In addition to promoting health management, theCompany offers mental health training to prevent mental healthdisorders and provides Stress Checks for all employees to help
them be more mindful of personal signs of stress, which can be
hard to notice.

(Kurita Water Industries)

OthersJapan

Health Management

Number of Participants in
Safety Education

Overseas471

In addition, Kurita has started using virtual reality (VR) tools on a
trial basis in safety training to create a more realistic experience ofwhat it feels like to face a crisis situation.

Training on
handling fires

2019

2020

Ratio of employees receiving
regular health examinations (%)

100

100

100

Ratio of employees receiving
special health examinations (%)

100

100

100

Number of health-related
seminars

2

10

20

Number of health-related events

13

40

46

Number of mental healthseminars

15

16

19

Ratio of employees receiving
stress checks (%)

99.6

98.4

98.5

Kurita Water Industries Ltd. Integrated Report 2020

53

The Basis for Management Activities

Corporate Citizenship Initiatives
The Kurita Group runs a number of ongoing corporate citizenship initiatives aimed at creating shared value withsociety. The Group’s corporate citizenship initiatives are centered on four fields: promotion of science and technology,
development of human resources, humanitarian support, and regional and community activities.
For more details, please visit the site below.

Corporate Citizenship Initiatives https://www.kurita.co.jp/english/csr/csr_activity_society/index.html

Key Initiatives in Priority Fields
Promotion of Science and Technology
The Kurita Group works to promote science and technology related
to water and the environment through its support for the Kurita
Water and Environment Foundation. In the fiscal year ended March
31, 2020, the foundation provided research grants to 112 projects
in Japan and Asia working in the fields of water and water
environments to assist with their research activities. As international
exchange support projects, the Foundation supports the Nepalese
NPO, Center of Research for Environment, Energy and Water(CREEW), and provides support for research and international
exchange to master’s course students at the Asian Institute ofTechnology.

Humanitarian Support
Supporting Access to Water
The Kurita Group works with NPOs and NGOs to support
disadvantaged members of society who find it difficult to obtain
access to safe water due to conflict, poverty or poor supplies ofusable fresh water. In the fiscal year ended March 31, 2020, we
made donations to NPO Reach Alternatives (REALs) and to
WaterAid Japan to support initiatives in the Republic of South
Sudan and the Republic of Mozambique to improve access toclean water and create hygienic living environments.

Development of Human Resources
The Kurita Group utilizes its specialist knowledge, skills and networks
related to water and the environment to cultivate human resources
who can help create a society where people live in harmony withnature.
In the fiscal year ended March 31, 2020, Kurita worked to provide
learning opportunities to students to help them understand theimportance of water and the environment and to encourage aninterest in science. Working with the Japan Aerospace Exploration
Agency (JAXA) and customers, we ran workshops for students atelementary, junior high and senior high schools and provided work
experience opportunities at Group business sites in Japan andoverseas. Kurita also supported experienced-based learning eventsat the National Museum of Emerging Science and Innovation andthrough the Japan Science & Engineering Challenge (JSEC), which runsa science and engineering independent research competition forhigh school students. In the JSEC competition, the Kurita Water
Industries Prize was awarded to a student from Notre Dame Seishin
Girls’ High School who conducted research into the water absorption
structure of rice shoots. Kurita employees also held a seminar about
the Group’s research activities to provide advice and encouragement
to students interested in pursuing a career in science.

Winner of the Kurita Water Industries Prize at JSEC

54

Kurita Water Industries Ltd. Integrated Report 2020

Toilets and washrooms at a refugee camp in South Sudan

Support for Areas Affected by Disasters
The Kurita Group provides assistance to areas affected by severe
natural disasters worldwide, taking into account the scale of thedisaster and the Group’s connections to the area. In the fiscal year
ended March 31, 2020, we provided emergency water supplies toareas in Japan that experienced water outages after typhoons andmade donations through the Japanese Red Cross Society.

Regional and Community Activities
The Kurita Group aims to develop with local communities as avaluable member of those communities by implementing various
environmental, health, welfare and disaster prevention activities
that help to stimulate the local area.
On September 28, 2019 at the Kurita Water Industries Akishima
Ground in Tokyo, Kurita’s rugby club and Akishima City ran achildren's rugby day. Roughly 200 children attended, frompreschoolers to upper-grade elementary school students.

Management Indicators/Segment Information 

55

Consolidated Statement of Comprehensive Income  59

Consolidated Statement of Financial Position 

56

Consolidated Statement of Changes in Equity 

60Consolidated Statement of Profit or Loss 

58Consolidated Statement of Cash Flows 

62Management Indicators

Segment Information

For the years ended March 31

For the years ended March 31(Millions of Yen)

2019

2020

Orders258,439

259,545

Net Sales

257,331

264,807

Business Profit

25,66726,65410.0

10.1

12,05018,2874.7

6.9

359,500

387,749

0.74

0.71

237,282

242,442

Equity Ratio (%) Note 4

66.0

62.5

Return on Assets (%) Note 5

3.5

4.9

Return on Equity (%) Note 6

5.1

7.6

Business Profit Margin (%)
Profit Attributable to Owners of Parent
Return on Sales (%)

Note 1

Total Assets (At Fiscal Year-End)Total Assets Turnover (Times)

Note 2Equity Attributable to Owners of Parent(At Fiscal Year-End) Note 3

Capital Expenditures(Excluding Intangibles)

40,00431,729Depreciation

15,58815,804R&D Expenses

5,490

5,693

(Millions of Yen)

OrdersNet Sales

Business
Profit107.33162.86Equity per Share Note 82,113.32

2,158.96

Dividends per Share

54.0

62.0

Dividend Payout Ratio (%)

50.3

38.1

Number of Employees

6,613

6,737

Notes:
1. Return on sales = Profit attributable to owners of parent ÷ Net sales
2. Total assets turnover = Net sales ÷ Total assets (Average)
3. Equity attributable to owners of parent = Total equity less Non-controlling interests
4. Equity ratio = Equity attributable to owners of parent ÷ Total assets × 100
5. Return on assets = Profit attributable to owners of parent ÷ Total assets (Average) ×100
6. Return on equity = Profit attributable to owners of parent ÷ Equity attributable toowners of parent (Average) × 100
7. Calculation of Basic earnings per share is based on average number of shares
outstanding (excluding treasury stock).
8. Calculation of Equity per share is based on the number of shares at fiscal year-end(excluding treasury stock).

2019

2020

Water treatment
chemicals

102,939

113,777

Water treatment
facilities

155,500

145,768

Total

258,439

259,545

Water treatment
chemicals

102,126

113,632

Water treatment
facilities

155,204

151,174

Total

257,331

264,807

Water treatment
chemicals

9,791

11,667

Water treatment
facilities

15,87815,061

(3)

(74)

Total

25,66726,654

Water treatment
chemicals

4,258

10,127

Water treatment
facilities

15,51817,390

83

(38)

Total

19,86027,479Water treatment
chemicals

115,017

119,960

Water treatment
facilities

200,975

209,015

Adjustment
Operating
ProfitAdjustment
AssetsEmployed(Yen)

Basic earnings per share Note 7

Financial Information

Financial Information

CapitalExpenditures

Depreciation
andAmortization

R&D
Expenses

Adjustment

43,507

58,774

Total

359,500

387,749

Water treatment
chemicals

4,182

6,853

Water treatment
facilities

37,071

26,428

Total

41,25433,281

Water treatment
chemicals

4,502

5,496

Water treatment
facilities

13,36913,204

Total

17,872

18,700

Water treatment
chemicals

1,899

2,002

Water treatment
facilities

3,590

3,691

Total

5,490

5,693

Kurita Water Industries Ltd. Integrated Report 202055

Financial Information

Consolidated Statement of Financial Position(Millions of Yen)
As of March 31

2020

2019

ASSETS
Current Assets
Cash and cash equivalents

35,54750,215Trade and other receivables

100,497

96,974

Other financial assets

1,709

2,562

Inventories

9,273

9,247

Other current assets

4,036

3,847

Total current assets

151,065

162,847

Property, plant and equipment

103,366

106,358

Right-of-use assets

12,274

17,784

Goodwill

43,75847,033

Intangible assets

12,355

13,381

956

7,469

Other financial assets

28,62928,465

Deferred tax assets

6,877

4,295

Other non-current assets

216

113

Total non-current assets

208,434

224,902359,500

387,749

Non-current Assets

Investments accounted for using equity method

Total Assets

56

Kurita Water Industries Ltd. Integrated Report 2020

Financial Information(Millions of Yen)
As of March 31

2020

2019

LIABILITIES AND EQUITYCurrent Liabilities
49,97735,680385

35,371

3,818

4,234

1

219

Income taxes payable

5,887

1,998

Provisions

1,338

1,557

Other current liabilities

12,112

15,345

Total current liabilities

73,521

94,408Borrowings

1,717

1,305

Lease liabilities

9,628

13,701Other financial liabilities

1,771

2,562

Retirement benefit liability

16,58016,913491

499

Deferred tax liabilities

1,219

1,346

Other non-current liabilities

15,385

12,903

Total non-current liabilities

46,79349,232

120,315

143,640

Share capital

13,45013,450Capital surplus

10,265

8,212

Treasury shares(10,932)(10,893)

4,838

216

Retained earnings

219,660

231,456

Equity attributable to owners of parent

237,282

242,442

1,902

1,666

Total equity

239,184

244,108

Total Liabilities and Equity

359,500

387,749

Trade and other payables
Borrowings
Lease liabilities
Other financial liabilities

Non-current Liabilities

Provisions

Total Liabilities
EquityOther components of equity

Non-controlling interests

Kurita Water Industries Ltd. Integrated Report 202057

Financial Information

Consolidated Statement of Profit or Loss
(Millions of Yen)
For the years ended March 31

2020

2019
257,331

264,807

174,670

172,092

82,661

92,715

Selling, general and administrative expenses

56,994

66,060

Other income

1,024

5,832

Other expenses

6,831

5,006

Operating Profit

19,86027,479Finance income

781

569

Finance costs

521

1,417

Share of profit of investments accounted for using equity method

146

60

20,267

26,691

8,279

8,378

11,98718,312

12,05018,287(63)

25

11,98718,312

107.33162.86――Net Sales
Cost of sales
Gross Profit

Profit before Tax
Income tax expense
ProfitProfit Attributable to
Owners of parent
Non-controlling interests
ProfitEarnings per Share
Basic earnings per share (Yen)
Diluted earnings per share (Yen)58

Kurita Water Industries Ltd. Integrated Report 2020

Financial Information

Financial Information

Consolidated Statement of Comprehensive Income(Millions of Yen)
For the years ended March 31

2020

2019
11,98718,312(1,044)

(462)

(72)

62

(1,116)(400)(4,593)(4,316)

Cash flow hedges

308

192

Share of other comprehensive income of investments accounted for using
equity method

(153)

(94)

Total of items that may be reclassified to profit or loss

(4,437)(4,219)Other comprehensive income, net of tax(5,554)(4,619)6,432

13,693

Owners of parent

6,543

13,717

Non-controlling interests

(110)

(24)

6,432

13,693

ProfitOther Comprehensive Income
Items that will not be reclassified to profit or loss
Net change in fair value of financial assets measured at fair value throughother comprehensive income
Remeasurements of defined benefit plans
Total of items that will not be reclassified to profit or loss
Items that may be reclassified to profit or loss
Exchange differences on translation of foreign operations

Comprehensive Income

Comprehensive Income Attributable toComprehensive Income

Kurita Water Industries Ltd. Integrated Report 202059

Financial Information

Consolidated Statement of Changes in Equity
For the year ended March 31, 2019

(Millions of Yen)

Equity attributable to owners of parent
Other components of equity

Share
capitalCapitalsurplusTreasurysharesExchangedifferencesontranslationof foreign
operations

13,45010,959(10,943)―2

16,783

Profit

―

―

―

―

―

Other
comprehensive
income―――(4,699)Other comprehensive
income―――Purchase of treasury
shares――Dividends―

Share-based
remunerationtransactions

Total

Retainedearnings

Total

Noncontrollinginterests

Total

―

16,785207,005

237,257

2,048

239,305―――

12,05012,050(63)

11,987308(1,046)(70)(5,507)―(5,507)(47)(5,554)(4,699)308(1,046)(70)(5,507)

12,050

6,543

(110)

6,432

(2)

―

―

―

―

―

―

(2)

―

(2)

―

―

―

―

―

―

―

(5,968)(5,968)(38)(6,006)

―

158

―

―

―

―

―

―

―

158

1

159

Changes inownership interestin subsidiaries

―

(294)

―

28

―

―

―

28

―

(265)

1

(264)

Transfer from othercomponents ofequity to retained
earnings

―

―

―

―

―

(6,538)70(6,467)

6,467

―

―

―

Other

―

(558)

14

―

―

―

―

―

104

(439)

―

(439)

―

(694)

11

28

―

(6,538)70(6,439)604(6,518)(35)(6,553)

13,45010,265(10,932)(4,671)

310

9,199

―

4,838

219,660

237,282

1,902

239,184

Balance as ofApril 1, 2018

Total transactions withownersBalance as ofMarch 31, 201960

Financial assets
measured at Remeasurefair valuements ofthrough otherdefinedcomprehensive
benefitincomeplans

Kurita Water Industries Ltd. Integrated Report 2020

Cash flow
hedgesFinancial Information

For the year ended March 31, 2020

(Millions of Yen)

Equity attributable to owners of parent
Other components of equity

Share
capitalCapitalsurplusTreasurysharesExchangedifferencesontranslationof foreign
operations

Financial assets
measured at Remeasurefair valuements ofthrough otherdefinedcomprehensive
benefitincomeplans

13,45010,265(10,932)(4,671)

310

9,199

Profit

―

―

―

―

―

Other
comprehensive
income―――(4,362)Other comprehensive
income―――Purchase of treasury
shares――Dividends―

Share-based
remunerationtransactions

Total

Retainedearnings

Total

Noncontrollinginterests

Total

―

4,838

219,660

237,282

1,902

239,184―――

18,28718,28725

18,312

192

(462)

63

(4,569)―(4,569)(49)(4,619)(4,362)

192

(462)

63

(4,569)18,287

13,717(24)

13,693

(3)

―

―

―

―

―

―

(3)

―

(3)

―

―

―

―

―

―

―

(6,521)(6,521)(24)(6,546)

―

103

42

―

―

―

―

―

―

145

8

154

Changes inownership interestin subsidiaries―(1,385)

―

0

―

―

―

0

―

(1,385)(196)(1,581)

Transfer from othercomponents ofequity to retained
earnings

―

―

―

―

―

10

(63)

(52)

52

―

―

―

Other

―

(771)

―

―

―

―

―

―

(21)

(792)

―

(792)

―

(2,053)

38

0

―

10

(63)

(52)

(6,490)(8,557)(211)(8,769)13,4508,212(10,893)(9,033)

503

8,747

―

216

231,456

242,442

1,666

244,108

Balance as ofApril 1, 2019

Total transactions withownersBalance as ofMarch 31, 2020

Cash flow
hedges

Kurita Water Industries Ltd. Integrated Report 202061

Financial Information

Consolidated Statement of Cash Flows(Millions of Yen)
For the years ended March 31

2020

2019

Cash Flows from Operating Activities
Profit before tax

20,267

26,691

Depreciation and amortization

17,872

18,700Share of loss (profit) of investments accounted for using equity method

(146)

(60)

Loss (gain) on sale of fixed assets

559(2,471)

Decrease (increase) in inventories

(259)

(169)

Decrease (increase) in trade and other receivables(9,059)

4,527

Increase (decrease) in trade and other payables

14,504(1,893)

Other

5,815

2,652

Subtotal

49,55347,977

Interest received

165

141

Dividends received

712

410

Interest paid

(371)

(305)

(8,915)(10,847)

41,14337,376

Payments into time deposits(19,408)(1,951)

Proceeds from withdrawal of time deposits

19,9991,545

Purchase of property, plant and equipment(28,600)(31,168)

479

5,942

Purchase of intangible assets(1,235)(1,534)

Proceeds from sale and redemption of investments

13,335

41

Payments for acquisition of businesses(after deduction of cash and cash equivalents included in acquired assets)(33,374)(8,501)―(5,915)(3,096)(2,140)(51,902)(43,683)(2,417)35,001

(594)

(384)

Repayments of lease liabilities(3,338)(4,514)

Dividends paid

(6,011)(6,539)Purchase of investments in subsidiaries not resulting
in change in scope of consolidation(1,094)(1,588)3

7(13,453)

21,981(771)(1,006)Net Increase (Decrease) in Cash and Cash Equivalents(24,984)

14,667

Cash and Cash Equivalents at Beginning of Period

60,53135,547

Cash and Cash Equivalents at End of Period

35,54750,215

Income taxes paid
Net cash provided by operating activities
Cash Flows from Investing Activities

Proceeds from sale of property, plant and equipment

Purchase of investments in associates
Other
Net cash used in investing activities
Cash Flows from Financing Activities
Net increase (decrease) in short-term borrowings
Repayments of long-term borrowings

Other
Net cash provided by (used in) financing activities
Effect of Exchange Rate Changes on Cash and Cash Equivalents

62

Kurita Water Industries Ltd. Integrated Report 2020

Corporate Information

Corporate Information

Stock Information (As of March 31, 2020)
Stock Exchange Listing:Tokyo Stock Exchange, First Section

Number of Authorized Shares:

531,000,000

Number of Shares Outstanding:

116,200,694 (Including 3,591,697 shares of treasury stock)

Number of Shares Per Lot:

100

Number of Shareholders:

24,346

Independent Accounting Auditor:

Grant Thornton Taiyo LLC
Akasaka K-tower 22F, 1-2-7, Motoakasaka, Minato-ku, Tokyo 107-0051, Japan

Transfer Agent:

Sumitomo Mitsui Trust Bank, Ltd.
1-4-1, Marunouchi, Chiyoda-ku, Tokyo 100-8233, Japan

Distribution of Shares by Shareholder Type

Major Shareholders
Shareholdings(Number ofshares)Percentage
of totalsharesissued (%)

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

7,581,200

6.52

Japan Trustee Services Bank, Ltd. (Trust Account)*

7,545,900

6.49

Nippon Life Insurance Company

5,979,883

5.14

Kurita Water Industries Ltd.

3,591,697

3.09

Japan Trustee Services Bank, Ltd. (Trust Account 5)2,202,100

1.89

Tokio Marine & Nichido Fire Insurance Co., Ltd.

2,155,826

1.85

MUFG Bank, Ltd.

2,056,131

1.76

State Street Bank and Trust Company 505025

2,056,110

1.76

JP Morgan Chase Bank 385151

1,935,305

1.66Japan Trustee Services Bank, Ltd. (Trust Account 9)

1,913,800

1.64* Japan Trustee Services Bank, Ltd. (Trust Account) includes 312,900 shares in the board
incentive plan.

Treasury Stock

Financial Institutions

Individuals

Securities Firms
Foreigners

Other Domestic Firms

Shareholdings(Number of shares)(%)

Financial Institutions

40,590,680

34.9

Securities Firms

1,598,721

1.4

Other Domestic Firms

5,339,266

4.6

Foreigners

53,358,087

45.9

Individuals

11,722,243

10.1

Treasury Stock

3,591,697

3.1

116,200,694

100.0

Total

Stock Price Range and Trading Volume
Stock price (Yen)

Trading volume (Thousands of shares)

4,000

40,0003,000

30,0002,000

20,0001,000

10,0000

0Jan. ’18
Stock priceJan. ’19

Jan. ’20

Trading volume

Kurita Water Industries Ltd. Integrated Report 202063Corporate Information

Corporate Data
Company Name

Kurita Water Industries Ltd.

Address

10-1, Nakano 4-chome,
Nakano-ku, Tokyo 164-0001, Japan

Date of Establishment

July 13, 1949

Paid-in Capital¥13,450,751,434

Number of Employees

6,737 (on a consolidated basis);
1,541 (parent company)(As of March 31, 2020)

Major Domestic Offices

Head Office:10-1, Nakano 4-chome, Nakano-ku,
Tokyo 164-0001, Japan
Tel: 81 (3) 6743-5000

Kurita Global Technology Center:
1-1, Kawada, Nogi-machi, Shimotsuga-gun,Tochigi 329-0105, Japan
Tel: 81 (280) 54-1511
Engineering Center:
MCC Mitaka Building, 8-7-2, Shimorenjaku,
Mitaka-shi, Tokyo 181-0013, Japan
Tel: 81 (422) 29-6200
Other Offices:
Shizuoka Plant, Tohoku Office, Nagoya Office,Hiroshima Office, Kyushu Office, etc.

Osaka Office:2-22, Kitahama 2-chome,
Chuo-ku, Osaka-shi, Osaka 541-0041, Japan
Tel: 81 (6) 6228-4800

Main Domestic Consolidated Group Companies (As of March 31, 2020)
Sale of water treatment chemicals

Sales & maintenance of water treatment facilities

Kurita Buil-Tech Co., Ltd.

Kurita Meiki Ltd.

Kurita BMS Co., Ltd.
Kurita Chemicals Hokkaido Ltd.
Kurita Chemicals Kantou Co., Ltd.

Operation & maintenance of systems and facilities
Kuritaz Co., Ltd.

Kurita Chemicals Tokai Ltd.

Soil remediation services

Kurita Chemicals Hokuriku Ltd.

Land Solution Inc.

Kurita Chemicals Kansai Ltd.

Chemical cleaning services

Kurita Chemicals Sanyo Ltd.
Kurita Chemicals West Japan Ltd.
Sale of water treatment chemicals andmaintenance of water treatment facilities
Kurita Kitakantou Co., Ltd.

Kurita Engineering Co., Ltd.
Miyoshi Industries Co., Ltd.
Tool cleaning services
Kuritec Service Co. Ltd.
San-ei Industries Co., Ltd.

Manufacture of water treatment chemicals

Nippon Fine Co., Ltd.

Kurita Chemical Manufacturing Ltd.

Aoi Industries Co., Ltd.

Water quality and environmental analysis

Manufacture & sales of water treatment equipment andproducts for general households

Kurita Analysis Service Co. Ltd.

Kurita Creation Co., Ltd.

64

Kurita Water Industries Ltd. Integrated Report 2020

Corporate Information

Main Overseas Group Companies (As of April 1, 2020)

RegionAsia

North
America

EMEA

OthersOverseas Consolidated Subsidiaries and AffiliatedCompanies

Year of
Establishment

Paid-in Capital(Millions)

EquityOwnership(%)

Kurita Water Industries (Dalian) Co., Ltd.

1995

¥550

90.1

Kuritec (Shanghai) Co., Ltd.

2001

¥30

100.0

Kurita Water Industries (Suzhou) Ltd.

2004

¥530

100.0

Kurita Water Industries (Jiangyin) Co., Ltd.

2015

US$16

100.0

Hansu Co., Ltd.

1974

W2,500100.0

Hansu Technical Service Ltd.

1988

W26,400

100.0

Kurita (Taiwan) Co., Ltd.

1987

NT$20

100.0

Kurita Water Technology (Taiwan) Ltd.

2017

NT$160100.0

Kurita (Singapore) Pte. Ltd.

1978

S$11

100.0

Kurita-GK Chemical Co., Ltd.

1989

BAHT204

85.0

Kurita-GK Vietnam Co., Ltd.

2016

US$0.50

85.0

P.T. Kurita Indonesia

1986

US$2

92.5

Kurita Water (Malaysia) Sdn. Bhd.

1994

RM$0.6100.0

Kurita R&D Asia Pte. Ltd.

2017

S$3

100.0

Kurita America, Inc.

2020

US$0.00001

100.0

Pentagon Technologies Group, Inc.

1998

US$0.002

51.0

Kurita Fracta Holdings, Inc.

2017

US$73

60.9

Avista Technologies, Inc.

1999

US$0.003719

100.0

Kurita Europe GmbH

2014

EUR50

100.0

Kurita France S.A.S.

2015

EUR5

100.0

Kurita Iberica SL

2015

EUR1

100.0

Kurita Turkey Kimya A.S.

2015

TRY5.7100.0

Kurita Sverige AB

2015

SEK0.1

100.0

Kurita Polska SP.z.o.o.

2016

EUR3.27

100.0

Kurita Middle East FZE

2016

AED2

100.0

Avista Technologies (UK) Ltd.

2001

￡0.000065

100.0

Kurita do Brasil LTDA.

1975

R$6.9

100.0

Business segment
Water
Water
Treatment Treatment
Chemicals Facilities

Others

Kurita Water Industries Ltd. Integrated Report 2020

65

Nakano Central Park East, 4-10-1 Nakano
Nakano-ku, Tokyo 164-0001, Japan
Tel: +81-3-6743-5000

https://www.kurita.co.jp/english/

This report was printed on FSC-approved paper using vegetable oil ink.
Printed in Japan