CORPORATESOCIAL RESPONSIBILITYREPORT 2023-2024

About CSR report publication
At DAITO KASEI GROUP, we believe CSR is at the core of our activities. This is why, for the
past 10 years we have set standard of conduct, followed UN Global Compact and ISO26000 as
well as pursued our CSR activities. We have published our annual CSR reports on our website
since 2015. The value of our existence as a company lies in our CSR activities, which meet the
expectations of our stakeholders and contribute to a sustainable society.
For our company, CSR activities started as a demand from society to comply with industrial
moral and ethical codes but now it has become an objective to make society more sustainable
where both economic and social value coexist.
For this reason, we have set important mid- to long-term issues for the continuation of ourbusiness. Furthermore, for each issue, we have drawn up mid- to long-term goals, KPIs andplans, and furthermore, we have clarified which SDGs each issue is related to and haveintroduced them in this report.
By continuing to address these issues, we believe that we can meet the expectations of our
stakeholders, increase the value of our company, and lead to ethical growth. In addition toaddressing important issues, our company has also been carrying out various CSR activities. By
introducing these activities in the report, we hope that our stakeholders will be able to get toknow our company better.
We may not be able to carry out CSR activities on a large scale, we will respect theirsignificance and continue to work on them as the basis of our business operations, using ourwisdom to make effective use of limited resources. In addition, we will regularly disclose thecontents of our efforts in a transparent manner in the form of this CSR report.

11th July 2024
DAITO KASEI KOGYO Co., Ltd
CSR bureau

1

INDEX

1.

Company profile

2.

Employee information

3.

Appropriate business condut

4.

Identificatuon of most important issues

5.

Product Development and Market expansion for a sustainable society

6.

Quality policy and Environmental policy

7.

Environmental conservation efforts – for a better future8.

CSR-related information at each site

9.

Customer satisfaction

10.

Exhibitions and topics during the period

11.

Eiming for a happy workplace

12.

Employee’s growth through learning

13.

Partnership

14.

DAITO KASEI original actions21. Company Profile
1.1

Our activity

DAITO KASEI is a private manufacturer of cosmetic ingredients that was established in 1950 in
Osaka, Japan. We manufacture and sell cosmetic raw materials, inks, and process plastic
compounds. In the chemical products division, our main range of products consists of surfacetreated powders and pigments and differentiated raw materials with special functions as
cosmetic ingredients. Cosmetic ingredients represent 90% of our products.
Our customers range from small businesses to multinational corporations.

1.2

Organization

The Daito Kasei Group is made up of five companies: the head office in Japan, two French
subsidiary companies, one Italian subsidiary, and one Chinese subsidiary.

DAITO KASEIGROUPDAITO KASEI KOGYO
Headqaurter and 4
plantsJapan

1.3

DAITO KASEI EUROPEDAITO KASEI CHINA

Distribution site

Distribution site

FranceChine

DAITO KASEI INDUSTRIESDAITO KASEI ITALIAFRANCE
Factory
FranceManufacturing sites of groupJapan: Okayama Factory, Fukui Factory, Niigata Factory, Higashi Osaka Factory
Overseas: DAITO KASEI INDUSTRIES FRANCE

1.4

Group sales channels

Our business is spread in more than 50 countries.

1.5

Formula development labs

We have three formulation rooms in Japan, France and Thailand（Cooperation with
Chemico） that conduct research and development of cosmetic formulations using ourraw materials.

1

Distribution site
Italy

1.5

R&D

R&D is mainly conducted in Japan, and joint research is also conducted with universities andother institutions.

1.6

Sales ratio by region

The sales ratio by region in 2023 was as follows.
Japan: 28% Europe: 34% Other overseas: 38%

2. Employee information
2.1

Number of employees

Group Total：２９７（including 93 women）
Breakdown：DAITO KASEI KOGYO ：２３８

DAITO KASEI EUROPE ：２８

DAITO KASEI INDUSTRIES FRANCE : ２１ DAITO KASEI CHINADAITO KASEI ITALIA

2.2

:

:

６

４

Employment status

The number of employees has remained the same over the past few years, but the number ofmanagers has increased.

Employment status for 2020 to 2023
350
300

20

295

297

296

288

16

250
200

18

10.3

10.0

11.0

8.2

8

6

100
38

46

45

38

4
2

0

0
2020年

2021年

Number of employees

2.3

12
10

150

50

14

2022年
number of managers

2023年
Average service years

Women employment status

The proportion of women among all employees is expected to exceed 30% by 2023. In addition,2

the proportion of female managers among all managerial positions was around 10% in 2020,
but in recent years the ratio has increased significantly to a high level of about 40%.
Incidentally, the ratio of female managers to female employees is 19.4%, significantly higher
than the ratio of male managers to male employees, which is 13.7%.

Female employment status for 2020 to 2023
100
90

83

82

60

93

86

50

42.2

80

39.1

70
60
50

31.3

40
30

19

20
10

0

0
2020年

2021年

Number of women

2.4

30

18

11

9

10

29.1

28.5

10.8

20

40

28.9

28.1

2022年

Number of women manager

2023年% to total employees% to total managers

Employee’ｓ age composition

There has been no significant change in the composition of employees under 30, between 30
and 50, and over 50.

Employee age composition for 2020 to 2023
350
300
250

51

48

49

55

159

161

165

156

85

79

82

86

2020年

2021年

2022年

2023年

200
150
100
50
0

Under 30 years

Between 30 and 50 years

3

Over 50 years

2.5

Maternity leave and parental leave

Number of employees took maternity leave and parental leave：6（4 women and 2 men）
Number of employees returning to work after above leaves: 4 (2 women and 2 men)

In recent years, the number of male employees taking parental leave has increased.
Regardless of gender, they return to their previous jobs after taking parental leave.

2.6

SafetyTotal working hours：525,863 hours Number of accidents at work with injury leave：2
At each site, we regularly inspect the workplace for safety and health. When an accident occurs,
we investigate the cause and plan and implement appropriate countermeasures.各

3. Appropriate business conduct
On September 5, 2023, the Group's CSR meeting was held in France and it was decided torevise the previous standards, establish the following code of ethical conduct, and make it theGroup's standard for conducting appropriate business.

ETHICAL CODE OF CONDUCT OF DAITO KASEI GROUP Issued on 2023.Sep.5

Five Daito Kasei Group companies (DAITO KASEI KOGYO CO., LTD. (Japan), DAITO KASEIEUROPE SAS(France), DAITO KASEI INDUSTRIES FRANCE SAS(France), DAITO KASEI(Shanghai) Cosmetics Science and Technology Co., Ltd. (China), DAITO KASEI ITALIA SRL(Italy),hereinafter referred to as we) complies with relevant laws and international rules , and conducts
its daily business with high ethical standards.
In addition, in order to contribute to the realization of a sustainable society, we will respect
international norms such as the United Nations Global Compact and ISO26000, and promote
concrete activities based on the SDGs.

HUMAN RIGHTS AND DIVERSITY
We do not discriminate in employment or in the workplace on the basis of race, sex, age,
language, religion, nationality, country/region of origin, illness, disability, sexual orientation, or
any other irrational reason.
We comply with relevant laws and regulations, respect basic human rights, and do not engage
in discrimination, abuse, child labor, or forced labor.

4

WORK ENVIRONMENT
We will create a safe, clean, healthy and comfortable work environment and make continuous
improvements.
We will strictly deal with harassment such as sexual harassment and power harassment in theworkplace and create a work environment with high psychological safety.
We give top priority to the safety of our employees and their families in the event of a disaster.
We continuously conduct self-assessment to improve safety and work environment at each site.

RESPECT FOR A SUSTAINABLE SOCIETY
We formulate an environmental policy based on the following and continuously work to reduce
environmental impact.
► Compliance with laws and regulations► Reduction of environmental load

► Environmental conservation and pollution prevention► Stakeholder expectations► Operation of environmental management system► Increased environmental awareness among employees
We comply with regulations and develop and supply environmentally friendly products.
We will continue to monitor and reduce emissions of carbon dioxide, which accounts for the
majority of GHS gases.

FAIR BUSINESS PRACTICES
We respect our business partners and conduct fair and mutually acceptable transactions in goodfaith.
We comply with contracts with business partners and protect confidentiality between companies.
We prohibit all forms of bribery, embezzlement and conflicts of interest.
We comply with the tax systems of each country and pay taxes appropriately.

INFORMATION MANAGEMENT
We will properly manage confidential information and personal information to prevent damage,leakage, loss, etc.
We will manage information properly when using the Internet and social media.
We regularly work with IT experts to check security risks and ensure safety.
We will appropriately protect and manage intellectual property rights such as patents owned byour company , and will not engage in business activities that infringe copyrights or intellectual
property rights owned by third parties.

5

ELIMINATION OF ANTI-SOCIAL FORCES
We do not have relationships with anti-social forces, which are individuals or groups that commit
illegal acts such as threatening social order and safety.
If we receive unreasonable demands from anti-social forces, we will take a resolute attitude.
We will not use anti-social forces for our own gain.

BUSINESS CONTINUITY SYSTEM

We prepare a business continuity system by creating a BCP for business continuity risks due tonatural disasters and infectious diseases.

DISCLOSURE OF INFORMATION
We disclose information to all stakeholders by introducing new news and posting CSR reports
on our website.

SOCIAL CONTRIBUTION
We will cooperate with local communities and other companies to contribute to environmental
conservation and the creation of employment in local communities.
We will interact with local communities and local governments where our offices are located,and participate in activities that contribute to the local community.

LEGAL COMPLIANCE
We comply with all laws regarding our business activities.
In addition, in order to respond quickly to changes in laws and regulations, we will respond
appropriately by obtaining the cooperation of third parties in addition to our own efforts.

ACCOUNTING
We conduct audits by certified public accountants and confirmation guidance by tax accountant
carry out appropriate accounting and accounting procedures.

COEXISTENCE AND MUTUAL PROSPERITY WITH BUSINESS PARTNERS AND FAIR TRADE
All of our domestic and international business partners are our good partners, and we aim for
mutual prosperity and survival based on long-term relationships of trust.
In addition, we will comply with domestic and foreign laws and international guidelines with ourbusiness partners and conduct fair transactions on an equal footing.
6

We will comply with confidentiality obligations regarding confidential information and personal
information obtained from business partners.

CONSIDERTION FOR THE ENVIRONMENT
We will conduct activities in our supply chain to provide environmentally friendly products andservices by eliminating wasted resources and energy, and will conduct procurement withconsideration for the global environment.

CONSIDERATION FOR HUMAN RIGHTS AND WORKING ENVIRONMENT
We will respect the human rights of our business partners and cooperate in improving theworking environment and ensuring safety.
Suppliers are required to make improvements if violations of human rights, unfair discrimination,
child labor or forced labor are confirmed.

NO USE OF CONFLICT MINERALS
We do not procure conflict minerals that promote human rights violations (tin, tantalum,
tungsten, gold, cobalt, etc.) or raw materials containing them.
In the event that conflict minerals are included in the raw materials we purchased, we will takeappropriate measures to eliminate them.

4. Identification of most important issues
In order to conduct sustainable business management, we have assessed the importance of
medium- to long-term issues based on the level of stakeholder interest and the impact on ourbusiness strategy, and identified five items of highest priority (materiality) for the Group. We
have positioned the five identified issues as our
ESG initiatives.
Furthermore, we defined KPIs (key performanceindicators) for each issue, drew up medium- tolong-term goals, specific measures and plans,
and identified which SDGs each issue relates to.
We have formulated medium- to long-term
action policies for the most important issues wehave identified as follows. We will continue to work in accordance with the plan. We will also
review the content at Group CSR meetings, etc.
7

5. Product Development and Market expansion for a sustainable society

As items related to the identified materiality, our company has been carrying out the following
activities to realize a sustainable society as items related to the identical materiality since
several years ago.

5.1 CELLULOBEADS ： Aiming a reducing plastic pollution
Since the beginning of the 20th century, along with the development of
petrochemistry, many synthetic polymers (plastics) have been produced
to support people's lives. The total amount of plastics produced in theworld today exceeds 300 million tons. However, this plastic waste is
spreading into the world's oceans, causing environmental pollution andadverse effects on ecosystems. In particular, it is said that there are morethan 5 trillion pieces of microplastics all over the world, defined as
microplastics by the United Nations Environment Programme (UNED), witha diameter of 5 mm or less.
Many cases of fish and birds mistakenly swallowing them have been reported, and their impact
8

on the ecosystem has been confirmed. In addition, microplastics absorb high concentrations of
toxic substances such as pesticides and flame retardants, which can affect humans through thefood chain. As a countermeasure, many countries are restricting the use of microplastics anddeveloping alternatives that are degradable in the ocean.
The "CELLULOBEADS" introduced here are spherical particles made of marine degradable
cellulose and are naturally derived products using FSC

5.2

SACRAN：Contribute the richness of water

SACRAN is a polysaccharide extracted from suizenjinori, an alga that
only grows in the pure water springs located at the foot of Mt. Aso volcano
in Kumamoto prefecture. Thanks to its excellent water-retaining
capacity, not only does it provide moisture to the skin, but it also forms aprotective layer.
However, suizenjinori is a delicate endangered species that requires thepurest water to live.
At DAITO KASEI, we are committed with local villagers to protect anddevelop the habitat of suizenjinori to allow it to thrive and prosper

5.3

RSPO certification : Aiming for sustainable resource

procurement and contributing to protecting the human rights of producers
Palm oil obtained from African oil palms is used widely in consumer goods such as processed
foods, medicines, cosmetics, and detergents, as well as biofuels, and about 70 million tons areproduced worldwide. This is about twice the production volume 20 years ago. As a result, oilpalm plantations have expanded rapidly, but improper plantation management has had aserious impact on the environment. Problems such as deforestation, loss of natural forests andpeat swamps with high conservation value, loss of biodiversity, and child labor have occurred.
Some of the raw materials we use are also made from palm oil. We support environmental
conservation activities and human rights protection, and obtained RSPO certification (Mass
Balance) in March 2019 and continue to be certified.

5.4

Binchotan powder : Commercialization of natural products,

contribution to biodiversity, and job creation
Trees in the mountains do not grow well without human intervention.
Human intervention in the process of tree growth keeps the mountains
alive and green. Ubame oak trees and other broadleaf forests that grow9

in clusters in the Kinan region contribute greatly to local mountain control, flood control, andnature conservation.
The fuel was developed in many parts of the world, where trees
were not burned as-is to make fuel, but instead were steamed androasted to make charcoal, which has a long-lasting fire without
smoke or flames, and can be preserved. This technology was amajor fuel revolution for mankind at the time. It is said that Kukai
brought back the latest charcoal-making technology from China(Tang Dynasty) in the early 9th century, and it spread throughout
Japan.Over the years, Kishu has developed charcoal-making
technology while protecting and nurturing broadleaf forests, and has perfected the technology
for producing binchotan, a hard charcoal unparalleled anywhere in the world. Binchotan is
known for its amazing hardness, harder than aluminum or stainless steel and approaching thatof diamonds.
Binchotan powder is made from Kishu binchotan such as carbon black. We have developed
and marketed products made from bonchotan powder.

5.5

Natural origin product : Contribution to sustainable society

As previously mentioned, we are pursuing the development and use of natural origin
ingredients to support sustainability in our society.
In terms of market development, the sales ratio of natural products in the total sales volume
of cosmetic raw materials over the past five years has more than tripled from 9.9% in 2019 to
30.5% in 2023. We are now aiming to increase this ratio to over 40% by 2030 as our mostimportant KPI.

% of Natural Origin Sales Amount to Total Sales Amount of
Cosmetic Product for 2019 to 2023
35.0
29.1

30.0
25.0
18.2

20.0

30.5

20.8

15.0
10.0

9.9

5.0
0.0
2019

2020

2021

10

2022

2023

For more details, please take a look at our product information on ourHP(https://www.daitokasei.com/product/chemical.php).
We also have a range of more than 60 COSMOS certified products in response to customer
requests.

６．Quality policy and Environmental policy
At the beginning of each year, we revise our quality policy andenvironmental policy for the current year and inform all
employees. On January 5, 2024, we held a New Year's party for
all employees at a hotel in Shin-Osaka. At the party, we
announced the quality policy and environmental policy for theyear, and also informed them of the "internal and external
issues, risks, and opportunities, and the needs and expectationsof stakeholders" that will serve as the basis for our annual
activities related to ISO9001 and ISO14001.
Each department and base determines its annual activities
related to quality and the environment based on the policy, theannual management review, and the internal and external
issues that are also the output of the review, and determines its
goals and initiatives for risks and opportunities. Our activities
related to quality and the environment are carried out in thefollowing cycle.
Company-wide dissemination of policies➡ Formulation of annual action plans➡ Regular activities in each department and each location➡ Reporting in management reviews➡ Formulation of policies for the next year
(Annual PDCA cycle)
These activities are carried out in accordance with ISO9001, EffCI
GMP, and ISO14001, for which we have obtained certification,
but we do not consider these activities to be solely for obtaining
and maintaining certification. We consider them to be closely related to the improvement ofmanagement issues and the environment, and we consider them to be important management
activities in which all employees participate, with the aim of developing the business, creating a
rewarding workplace, and increasing the trust of stakeholders.

11７．Environmental conservation efforts – for a better future
We believe that contributing to a sustainable society is a mission wemust fulfill, and that our environmental initiatives in particular are fundamental to this mission.
We will comply with environment-related laws and regulations, establish a company-wide
environmental management system, reduce greenhouse gas emissions, and take otherenvironmental conservation initiatives, and develop and market products that will help realize asustainable society.

7.1

Compliance with environment-related laws and regulations

We have agreements with the local governments in which all DAITO KASEI GROUP
manufacturing facilities are located regarding the environment and pollution in accordance withthe laws and regulations (ordinances) set forth by each municipality in which we operate ourplants. We receive regular audits from each municipality to ensure compliance with these
agreements.
In addition to that, in 2019 in Japan, we conducted a company-wide compliance survey on
environmental laws and regulations, including the Fire Service Law, Air Pollution Control Law,
PRTR Law, Waste Disposal and Public Cleaning Law, and Energy Conservation Law. As a result,no major problems were found, but areas requiring improvement, such as record keeping, wereidentified, and immediately corrected.
We will continue to periodically survey the status of compliance as part of our ISO 14001
activities and continue our efforts for further improvement.

7.2

Individual efforts to reduce CO2 emissions and 2030 emissions targets

DAITO KASEI EUROPE, our sales subsidiary in France, uses renewable energy for all electricity
consumption. DAITO KASEI INDUSTRIES FRANCE, our manufacturing base, also offsets carbon
emissions from its use of natural gas.
DAITO KASEI KOGYO Co., Ltd. is progressively converted to LED lighting at all of its businesssites, which was completed in 2021.
Regarding CO2 reduction targets, in order to meet national guidelines and customer
expectations, at a meeting held in France in 2023, the group's target was set at 2,250 tons orless for Scope 1 and 2 combined by 2030. Emissions in 2013 were 4,367 tons, so the target for2030 is a reduction of more than 48.5% compared to 2013. In Japan, the national policy is to
reduce CO2 emissions by 46% compared to 2013 by 2030. Regarding electricity, the Japanese
government has drawn up a power source mix plan up to 2030. According to this, the proportionof fossil fuels such as coal and oil, which accounted for 90% in 2013, is to be reduced to about
40% by 2030. This is a policy to reduce CO2 emissions by increasing the proportion of nonfossil fuels such as renewable energy and nuclear power, which have zero CO2 emissions,12

instead of fossil fuels. Naturally, this plan will result in a decrease in the CO2 emission coefficient
year by year.We will continue to grasp our CO2 emissions based on the CO2 emission factor
information issued annually by the Ministry of the Environment. We plan to purchase CO2-freeelectricity as necessary to achieve our 2030 target. As mentioned above, climate change andreducing the environmental load are one of our top materialities, and we will carry out
environmental load reduction activities through ISO14001 activities as a company-wide
initiative,and we will also verify the effect on CO2 emissions.

8. CSR-related information at each site
The four overseas companies in the group report the following items every year and reflect
them in the CSR report.
Employment status: number of employees, number of managers, new hires, retirees,

Equality and diversity: number of female employees, number of female managers,
employee age distribution, number of disabled employees
Health and safety: number of accidents, number of safety training attendees,
total working hours

Maternity and childcare leave :number of employees who have taken leave
number of employees returned and planed to return
In addition, DAITO KASEI INDUSTRIES FRANCE and DAITO KASEI EUROPE also compile CSRrelated site information every year.
DAITO KASEI INDUSTRIES FRANCE, a manufacturing site, mainly compiles information on
utilities, production volume, waste, etc.
DAITO KASEI EUROPE, a sales company, mainly compiles information on employment status,
number of managers, well-being, utilities, waste, etc.

９．Customer satisfaction
9.1

Quality control system

Quality management to maintain satisfaction
Proper quality control makes management more harmonious and efficient and improves
business transparency. It also has a positive impact on work environment and use of resource
by decrease energy consumption and waste or reducing employee working hours for example.
We are conscious that quality control goes beyond CSR activities, that it is an essential part ofour work. We think it also benefits our stakeholders and customers.
13

9.2

Quality management system audited by big customers

We have been audited by large customers concerning our quality control system and except
for minor problems results were satisfactory. We are working on solving the problems thatwere pointed out rapidly and efficiently.

9.3

Improving employee’s understanding quality system to respond global needs

In February 2019, DAITO KASEI KOGYOU Co., Ltd. acquired ISO 9001:2015 certification for all
its business sites in addition to those that had previously acquired ISO 9001 certification.
In 2020, we started activities to obtain EFfCI (GMP for the production of cosmetic raw
materials in Europe) certification, and by 2021, we will achieve the three principles of GMP:
minimizing human error, preventing contamination and quality degradation, and designing asystem that guarantees high quality, so that "everyone can work with the same quality andhigh quality products. We have continuously implemented activities to build a system that"produces products of the same quality and high quality no matter who is doing the work.
As a result, we were able to undergo audits for certification in 2022, and completed audits at
the Okayama, Fukui, and Niigata plants, and obtained certification in July 2022.
Going forward, we will continue to improve our systems based on this international standard
to enhance reliability and customer satisfaction.

9.4

CSR activity evaluation

We believe that our customers' evaluation of our CSR activities is essential for the future
development of our business and for enabling an ongoing relationship of trust with ourcustomers.

Respect for third-party evaluations of CSR activities
We are a member of EcoVadis and Sedex, international platforms for evaluating CSR activities,
and we participate in the CDP. Our clients have access to the results of these assessments andcan share them with us. We are also subject to on-site CSR audits by major clients on a siteby-site basis, and we cooperate with CSR surveys conducted by individual clients. We respect
the results of these evaluations and reflect them in our improvement activities for a better
CSR system.

14

Evaluation result of 2023 ecovadis
A comprehensive corporate social responsibility
assessment service, ecovadis is a platform that
evaluates companies in four areas: environment,labor practices and human rights, ethics, andsustainable sourcing. We received a silver rating in
the top 14% of eligible companies in the 2023
assessment.

Future initiatives
In recent years, efforts regarding SCOPE 3 CO2 emissions have been required. Our company
has not previously calculated its emissions, but in 2024 we plan to calculate emissions forthree of the 15 SCOPE 3 emissions categories for the previous year. In addition, we plan toreceive guidance from a third party and improve the level of our CSR activities toward 2025.

１０. Exhibitions and topics during the period
Below are the topics from July 2023 to June 2024.

10.1

Publication of paper in IFCC Magazine

IFSCC MAGAZINE Volume 26, No.3, September 2023
Characteristics of Naturally Derived Surface-Treated Pigments for the Achievement of
Sustainable Development Goals (SDGs)
Reiichiro Tsuchiya, Maki Kitanouma, Atsuko Ota, Haruka Nishioka, Takehiro Goto, Takumi
Tanaka, Urara Tsuchiya, Yoshimune Nonomura (Japan)

10.2

Exhibition in Cosmetic Asia November 7- 9, 2023 Location: Bangkok, Thailand

15

10.3

Corporate Forest Certification December 21, 2023 Osaka Headquarters

We are pleased to announce that ourenvironmental conservation activities, including
the amount of carbon dioxide absorbed, at our"Smile Forest" have been certified by Wakayama
Prefecture. The certified amount of CO2
absorbed is 1,000 tons per 100 years.

10.4

Exhibition PCHi 2024 March 20-22, 2024 Location: Shanghai, China

We introduced natural ingredients andunique functional ingredients that are
in line with recent market trends.
Many visitors showed interest in
surface treatments with excellent
adhesion and oil dispersibility (PDP,
MST, PGQ treatments), a wide lineup
of film materials (DAITOSOL), andfunctional ingredients that can be used in skin care formulations (CHARCOPOWDER, SACRAN,
MAKIMOUSSE).

10.5 in-cosmetics global April 16-18, 2024 Location: Paris, France

At this exhibition, we mainly introduced reference formulations
that focus on natural origins and cosmetic raw materials.

10.6

Exhibition ICI May 29-31, 2024 Location: Jakarta, Jakarta, Indonesia

We introduced ingredients that can be used in a variety of formulations, from makeup to suncare and skin care. We introduced reference formulations that make use of the characteristics
of ingredients in each category, including base makeup, point makeup, sun care, and skin
care.

16

１１．Aiming for a happy workplace
Protecting the rights of our employees and ensuring a friendly workplace is most important tous. We are constantly working to improve our employee’s workplace.

11.1

Tolerant working conditions

Guarantying employees’ rights is indispensable to conduct business fairly. Without
consideration for gender, race, age, or disability we behave equally towards every employee sothat everyone can work to their full potential. Similarly, salaries are paid without consideration
for gender, race, age, or disability.

11.2

Compliance with labor laws and improvement of workplace

Protect employee’s rights
In order to comply with labor laws, we conduct internal regulation training and information
cession with licensed social insurance consultants. We also consult lawyers when needed.
Regarding harassment and complaints an inquiry counter has been established and each
employee will have to undergone proper training in 2020.
We also conduct harassment training for new employees at the time of their induction training.
Based on the idea that the work environment for individual is determined by communication
with several people around him or her, we also conducted training for on-site leaders in 2022.

Preventing corruption
We established a claim contact bureau for our supplier regarding any eventual harassment or
bribery from our employees. We inform our employees internally about our policy regarding
bribery and conflicts of interest and all must agree.

Nurturing youth to create the future
Youth Yell is a national certification program for small and medium-sized companies with lessthan 300 employees that are proactive in recruiting and training young people and haveexcellent employment management. As of the end of 2022, the number of certified companies
in Osaka Prefecture is approximately 60.

Women friendly work environment
In 2023, 4 women took childcare leave and 3 woman returned to work.
17Men employees taking childcare leave
In 2023, 2 men took childcare leave.

Consideration for employee’s health
When employees undergo periodic health checkups, they can also undergo examinations otherthan those required by law (breast cancer, colon cancer, cervical cancer, gastroscopy, etc.). In
addition, health consultation is available for all employees during the industrial physician's
visit. The company pays for all flu shots for employees and subsidizes a certain amount forfamily members who live with the employee.

Certification as an excellent health corporation
In March 2022, we were certified as an excellent health corporation, as we have been since2021, as a company that strategically manages the health of its employees

Employment of people with disabilities
The number of people with disabilities employed at the end of 2023 was 4..
The number of employees has decreased due to retirements during 2023.
We recognize the employment of people with disabilities as an important issue for thecompany, and are continually working to establish a system for employing people withdisabilities, including the work environment, as part of our ISO14001 activities (addressing
risks and opportunities).

11.3

Employee’s safety and hygiene

A safe and healthy environment is a fundamental right for all employees and is essential toensure stable and efficient operations.

Working hours
DAITO KASEI GROUP complies with local regulations regarding working hours, and the
manufacturing department operates on two or three 7.5-hour shifts. In addition, flexible work
arrangements such as telework, and staggered work hours have been introduced and havecontinued after the transition to corona virus epidemy. We believe that telecommuting andstaggered work hours will help to improve the working environment by reducing workloads,
such as avoiding commuting congestion, and by enabling more effective use of time.

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Chemical substance management
Chemical substances are handled at our factories, and we ensure the safety of the working
environment through technical safety measures and the wearing of appropriate protective
equipment. In addition, SDSs for raw materials used in manufacturing are kept at eachlocation, and employees can access them at any time.

Risk management
When new products are manufactured or new equipment is introduced, risk management isconducted to determine if there are any potential hazards to employees or the environment. A
list of workplace chemicals, their storage locations, and inventory quantities is maintained andproperly controlled. Exposure to chemicals or situations is controlled to the lowest possiblelevel.

Health consultation by industrial physician
In Japan, it is mandatory to appoint an industrial physician to workplaces with 50 or more
employees. On the day of the inspection, individual employee health consultations are alsoavailable, and employees can meet with an industrial physician.

12. Employee’s fulfilment through learning
Building a work environment where employees can fulfil themselves is related to the possibility
for them to learn new abilities and be satisfied overall. There is absolutely no doubt that
employees’ fulfillment is necessary to company growth. To make this possible, we enforce thefollowing measures:

New employees’ training
All new employees are taught for four weeks about business manners, harassment, company
policy and safety regulation among other things.

ISO9001 & EFfCI GMP training
Training related to ISO9001 and EFfCI GMP (understanding of regulations and procedures) andtraining related to improvements are mainly conducted through on-the-job training. Training is
conducted in accordance with each department's annual plan. Continuous training helps
employees deepen their understanding of GMP and enables us to maintain and improve ourquality management system with higher reliability.
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ISO 14001 Training
In May 2022, a one-day internal auditor training was conducted by an external instructor, and20 employees participated in the training. In addition, training (understanding of rules andprocedures) and training on improvement are mainly provided through on-the-job training.

Harassment training
We believe that it is an indispensable mission of a company to realize such an ideal workplace
where "everyone can freely exchange opinions and work comfortably. In Japan, theHarassment Prevention Act will be enforced in 2020.
The Law for the Prevention of Harassment in Japan was enforced in 2020 and will apply tolarge companies. The law will be applied to small and medium-sized enterprises in 2022, but
we will establish a system and voluntarily apply the law before that date.
and conducted training for all employees.

Language training
We provide English conversation training (once a week) to employees who need it for theirwork.

External training
Employees participate in basic cosmetics technology seminars held by their affiliatedorganizations, as well as external training on skills required by each division, at the discretionof division managers.

Rewards for those who acquire qualifications
Rewards are given to employees who acquire qualifications in hazardous materials, healthmanagement, and information processing to motivate them.

Personnel evaluation interview system
Interviews with supervisors or leaders are held every six months for general employees tofoster communication and employee development.

New wage system/class-based education and training
The previous wage system was a seniority-based system in which salaries increased as
employees got older. However, in light of the current situation, we have introduced a wage
system based on job function from April 2024. This system divides employees' job functions
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into nine grades regardless of age or gender, and treats them fairly. At the same time, itclarifies what each person needs to do to grow and increases their motivation. We have also
reviewed family allowances. In light of the fact that dual-income households are the norm andthe problem of declining birthrates, we have reduced spouse allowances and increased childallowances. We have also introduced a personnel evaluation interview system for managers,which we did not previously implement. We are currently developing an education and training
system for employee growth, such as by rank, under the guidance of a third party.

13. Partnership
13.1

Answering stakeholders’ needs

Our value of existence in society is to meet the expectations of our valued stakeholders and to
conduct management that continuously contributes to a prosperous society. Our stakeholders
are customers, suppliers, financial institutions, employees, shareholders, local governments,
local communities, various affiliated organizations, and others who are directly affected by our
corporate activities.
Stakeholders expect management to achieve "sustainability" of the earth, nature, society, andbusiness by passing on the modern environment and culture to future generations without
destroying them. To meet these expectations, we comply with laws and regulations, respect
the 10 principles of the UN Global Compact, ISO 26000, the guideline standard for CSR, andthe 17 goals of the SDGs, and take various actions in our corporate activities. We believe thatthrough the continuous accumulation of such actions, in addition to "sustainability," we canmanage our business with consideration for various stakeholders and contribute to therealization of a "happier society" that is the goal of the SDGs.

13.2

Organizations to which we belong

DAITO KASEI belongs to the following organizations. By joining these organizations, we canearn and share information about regulation and laws. It also helps us reach SDGs.
•

Osaka Chamber of Commerce and Industry•

Osaka Prefectural Manufacturing & Industrial Association•

The Society of Cosmetic Chemists of Japan•

West-Japan Cosmetic Industry Association•

Japan Association of Pigment Technologies

In April 2021, one of our employees became head of the Kansai committee.
•

EFfCI－European Federation for Cosmetic Ingredients (DAITO KASEI EUROPE)
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•

Cosmetic Valley (DAITO KASEI INDUSTRIES)•

Tenma Association for Labor Standard•

General Incorporated Foundation - Japan Association for Safety of Hazardous Materials•

General Incorporated Foundation - Japan Traffic Safety Association•

Fukui Technoport Corporate Liaison Committee

The Fukui Technoport Corporate Liaison Committee is the biggest industrial park of WesternJapan and is located in Sakai city and Fukui city in the Fukui prefecture. There are more than
80 companies that cooperate together regarding issues in
the park. In April 2021 one of our employees becamechairman of the committee.

13.3

Job creation and local partnership

We contributed to local job creation and environmental
protection by cooperating with local society.

Suizenjinori aquaculture
The raw material for our marketed SACRAN - suizenjinori - is cultivated in Fukuoka andKumamoto prefectures, and it is known that the subsoil water of Mt. Aso in Kyushu, a clear
18-20 degree C water flow with high natural mineral content, is essential for its growth.
We are focusing on expanding our aquaculture business by working with the local community
to increase the environment in which the suizenjinori grows in order to use suizenjinori andproduce SACRAN. This will help preserve the environment and create local jobs.

Cooperation with other company to produce environment friendly products
CELLULOBEADS outsourced production
CELLULOBEADS is a biodegradable alternative to microplastic developed mostly for westerncustomers whose demand in growing. To be able to answer the demand linked to an increaseof attention to the environment we outsource production to Rengo Co., Ltd. We are working
on spreading the use of CELLULUBEADS to contribute to the protection of the environment.

Protection of the environment with local stakeholders
Forest protection activity: “The forest of smiles”
In 2017 we joined the “Kigyō no Mori” project which helps protecting
forest in Wakayama.
This project aims at promoting and keeping ancestral knowledge and22techniques as well as valorizing and protecting nature. The owner of the forest, inhabitants,
and employees of more than 80 participating companies teamed up together to achieve thosegoals.
At DAITO KASEI, we have been taking care of a terrain of 2.53ha that we baptized “Egao noMori”, the forest of smiles. Employees from our subsidiaries in France and China have joined
our Japanese employees to plant trees with the assistance of the inhabitants and local
associations. This has been a profoundly astonish experience as we learnt a lot from eachother, and all enjoyed the beauty of nature.
However, we were unable to conduct this action due to corona virus last few years. We will
resume our action as soon as possible.
We started with 3,000 ubamegashi trees andnow have more than 6,000 trees. In the future,when they are bigger, we estimate that they
will absorb about 10,700kg of carbon dioxide
per year.
(Wakayama Prefecture website)

１４. DAITO KASEI original actions
At DAITO KASEI, we do not just comply with the law we go step further by enforcing a set oforiginal measures. Some of them aim at improving employees well-being and concern thefollowing matters: health and work conditions, communication, and good governance. Other
measures are meant to improve stakeholders’ trust. We firmly believe that improving
employees’ well-being and stakeholders’ trust is an important objective of CSR, this is why weintend to pursue our efforts continuously.
These measures are presented below.

14.1

Health monitoring of employees

Financial aid for influenza vaccine
We support 100% of influenza vaccine cost for our employees and provide an aid of 2000JPY(15EUR) to their household members.

Health check additional item and reexamination aid
In addition to legally mandatory items, we support the cost of examinations for breast cancer,
prostate cancer, colorectal cancer, cervical cancer, endoscopy, and any required reexamination.
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Industrial physician and health examination
At DAITO KASEI, industrial physicians regularly visit each of our locations regardless of how
few employees there are, one step further that what is established by the law.

During thesevisits employees can freely consult about their health in addition to undergoing physicalexamination.

Excellent health company certification
As a company that considers employees’ health is more that an individual matter but our
responsibility, we have been conducting thorough company health management. For that , wereceived “Healthy company” certification by the Ministry of Economy, Trade, and Industry.

14.2 Work condition

Continuation of staggered work Hours and telecommuting
As part of our response to Corona, we have implemented staggered working hours andtelecommuting, and will continue to offer both as flexible work arrangements after May 2023.

Granting of annual paid Leave to new employees upon joining the company
Until now, in accordance with the law, 10 days of paid annual leave have been granted to new
employees at the end of their first 6 months of employment. However, this sometimes
resulted in employees being forced to go to work, which not only had a negative impact on
their health, but also led to a decline in work efficiency. Therefore, we have decided to grant 5days of annual paid leave in advance to new employees on their first day of work from April
2023.

Holiday pay
According to the law, employees who work on one legal holiday per week are entitled toholiday pay (35% increase), but we pay holiday pay for all company holidays.

Late night surcharge
The law stipulates a 25% surcharge for late-night work (10 PM to 5 AM), but we apply a 40%
surcharge to shift workers.

Going out and leaving early once a month
Employees are allowed to go out and leave early for short periods of time, up to two hours
24each month to attend to government offices, hospitals, childcare, etc. No salary deduction ismade for this time.

Overtime
By law, employees are required to work at least 8 hours, but we require at least 7.5 hours.

Youth Yale Certification
This is a government certification program for small and medium-sizedenterprises that are proactive in recruiting and training young people andhave excellent employment management conditions (turnover rate, working
hours, annual leave, health management, etc.).

14.3

Compensation for absence from work

Hospitalization assistance and additional death benefit
In the event of hospitalization due to personal injury or illness, the company provides
hospitalization assistance for up to 80 days, as well as a company-paid death benefit plan (2million yen, including work-related accidents).

14.4 Comfortable workplace

Harassment Training
The Anti-Harassment Law has been in effect since June 2020. Although the law will apply tosmall and medium-sized enterprises from 2022, we agreed with the purpose of the law andconducted harassment training for all employees in 2020, not waiting for the law to apply, as
part of our activities to realize a "comfortable and open workplace," which is the objective of
the company's personnel system.
In addition, based on the idea that the work environment for an individual is determined bycommunication with several people around him or her, we also conducted training for field
leaders in 2022.
We also continue to conduct training as an essential part of new employee education.

In-House Consultation service
We have established an in-house consultation service for employees to consult on various
issues.
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14.5

In-house events and awards

New Year's party and long-service awards
Although the New Year's party could not be held in 2022 due to the impact of Corona, a New
Year's party is held every year on the first day of work, where all employees gather together.
At the New Year's party, we give New Year's greetings and present awards (plaques,commemorative gifts, small gifts, etc.) to employees who have been with the company formany years, providing an opportunity to deepen interaction among employees.

14.6

Governance and compliance

CPA Audits
We have our accounting audited annually by a certified public accountant as a third-party
audit of our accounting. This is not a legally mandated audit, but one that we conduct on ourown initiative. The audit is strictly conducted to ensure that accounting procedures areappropriate in order to maintain governance. In addition, we also undergo expense-related
audits to ensure that there are no improper transactions.

Superior taxpayer filing corporation
The tax office will honor corporations that continue to file appropriate tax returns and pay
taxes in accordance with the purpose of the tax return system and are recognized as a modelfor other taxpayers. The evaluation is based on the proper storage, management, andorganization of books, no confusion between public and private affairs, no unclear financialtransactions by the representative, and efforts in tax awareness activities.

Anti-bribery and signatures from all employees
Since 2017, we have been explaining the prevention of bribery and conflicts of interest to all
employees and asking them to sign a pledge upon understanding and agreeing to its content.
The pledge is also explained and signed by new employees during their induction training. This
is in line with our strong commitment not to engage in bribery or conflict of interest.

Establishment of a complaint consultation desk
Bribery and harassment issues can occur not only within the company, but also outside thecompany. Relationships with honest suppliers are indispensable for maintaining mutual trust
and are an important element of corporate compliance. We have set up a complaint26

counseling service especially for our major suppliers in the event of inappropriate responses
by our employees and have notified them of the purpose of setting up the service.

Cooperation with the social insurance labor consultant office
We exchange information with the office of the labor and social security attorney on a monthly
basis regarding labor-related laws and various regulations, or personnel and labor matterswithin the company. We are working to create a better workplace and working environment byrevising internal regulations and improving compensation.

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