CORPORATESOCIAL RESPONSIBILITYREPORT 2022

CORPORATESOCIAL RESPONSIBILITYREPORT 2022-2023

About CSR report publication
At DAITO KASEI GROUP, we believe CSR is at the core of our activities. This is why, forthe past 10 years we have set standard of conduct, followed UN Global Compact andISO26000 as well as pursued our CSR activities. We have since 2015 published ourannual CSR reports on our website. This is because we believe that a company values
dwells in part in its CSR which contributes to a better society by answeringstakeholdersʼ needs.
For our company, CSR activities started as a demand from society to comply withindustrial moral and ethical codes but now it has become an objective to make society
more sustainable where both economic and social value coexist. It then became clearthat we had to deal with SDGs.
We conduct our CSR activities with SDGs in mind. This CSR report was made based on
the 17 SDGs as in previous years. We think that by answering stakeholdersʼ
expectations, conducting CSR activities while respecting SDGs, we can increase ourvalue to society and grow more ethically. At DAITO KASEI GROUP, we have set up a
CSR promotion bureau which aims at spreading the words to every employee. The
point is that everyone understands that 「individual actions」can make the difference.
Furthermore, not only do we commit to respect laws and compliance, workersʼ healthand working conditions, but we also put a great deal of effort in improving stakeholders
trust and employeesʼ well-being.
This report includes major topics from 2022 to the first half of 2023 and activities at
exhibitions around the world. We hope that these will help you better understand the
direction of our activities.
Our efforts to SDGs will be of humble scale but we will pursue our management effort.
Our actions will be presented in every CSR report in a transparent manner.
21st August 2022
DAITO KASEI KOGYO Co., Ltd
CSR bureau

1

INDEX
1. Company Profile ( 4-5p )1.1

Our activity

1.2

Organization

1.3

General data

2. CSR comittment (5-6p )2.1

CSR standard

2.2

Conducting activities with SDGs

3. Appropriate business conduct ( 6p )3.1

Decision-making

3.2

Accounting

3.3

Fair transactions

3.4

Intellectual property

3.5

Corruption prevention

3.6

Rejecton of criminal groups

3.7

Business continuity plan

4. Involvement in exhibition and topics during the period ( 7-11p )4.1

Acquisition of EFfCI GMP Certification

4.2

ISO 14001 Certification

4.3

One podium and three poste presentations accepted at IFSCC 2022

4.4

6th IPCE CONFERENCE

4.5

Winner of the Gold Mak-Up Bar Award(for the second time)

4.6

CITE JAPAN-SILVER AWARD in the environment categorory

4.7

Activities at trade shows around the world

5. Quality Policy and Environmental Policy ( 12p )6. Aiming for a happy workplace ( 13-15p )6.1

Tolerant working conditions

6.2

Compliance with labor laws and improvement of workplace

6.3

Employeeʼs safety and hygiene

27. Employee’s fulfilment through learning ( 15-17p )8. Product development and market expansion for a sustainable society(17-20p)
8.1

Aiming a reducing plastic pollution

8.2

Protection the richness of water Sacran

8.3

Aiming at renewable resources provisioning

9. Customer satisfaction ( 20-22p )9.1

Quality control system

9.2

CSR activity evaluation

10. Measures for protecting the environment for a better future ( 22-23p)
10.1

Compliance with environment-related laws and regulations

10.2

Individual effort to reduce greenhouse gas emission and 2030 target

11. Partnership (23-25p )11.1

Answering stakeholdersʼ needs

11.2

Organization to which we belong

11.3

Job creation and local partnership

12. DAITO KASEI original actions (26-29p )12.1

Health monitoring of employees

12.2

Work condition

12.3

Compensation for absence from work

12.4

Comfortable workplace

12.5

In-house event and awards

12.6

Governance and compliance31. Company profile
1.1

Our activity

DAITO KASEI is a private manufacturer of cosmetic ingredients that was established in1950 in Osaka, Japan. Our main range of products consists of surface-treated powders
and pigments, but we also offer a variety of functional materials such as emulsifiers andfilm formers as well as plastics and inks for the industry. Cosmetic ingredients represent
90% of our products.
Our customers range from small businesses to multinational corporations.

4 plants in Japan3

1 plant in France

sites

in

France, Italy, and China

Our business is spread in more than 50
countries.

1.2

distribution

4 formula development labs

Organization

DAITO KASEIGROUPDAITO KASEI KOGYO
Headqaurter and 4
plantsJapan

4

DAITO KASEI EUROPEDAITO KASEI CHINA

Distribution site

Distribution site

FranceChine

DAITO KASEI INDUSTRIESFRANCE
Factory
FranceDAITO KASEI ITALIA
Distribution site
Italy

1.3

General data

Number of employees
Group: 296 employees (210 men, 86 women)
DAITO KASEI KOKYO : 235 people (182 men, 53 women)
DAITO KASEI EUROPE : 27 people (6 men, 21 women)
DAITO KASEI INDUSTRIES FRANCE : 25 people (19 men, 6 women)
DAITO KASEI CHINA : 5 people (2 men, 3 women)
DAITO KASEI ITALIA : 4 people (1 man, 3 women)
Managerial positions
Group: 45 people (26 men, 19 women)
Percentage of men with managerial position among male employees 12.4%
Percentage of women with managerial position among female employees 22.1%
The proportion female managers in double that of men proportionally.
R&D spending and production data in year 2022
DAITO KASEI KOGYO and DAITO KASEI INDUSTRIES FRANCE manufactured a
combined total of 2650 tons of products in 2022, an increase of 500 tons compared toprevious year.
R&D is mainly conducted in Japan sometime in cooperation with universities and otherestablishments. A total of 300 million yen (about 2.2 million euros) was invested.
Sales by territories
Sales for the year 2021 by region. Japan: 34%, Europe: 33%, other countries: 33%

2. CSR commitment
2.1

CSR standard

We set the following 4 standards to strictly follow CSR.
⋅

Code of ethics⋅

Environmental policy⋅

Risk management policy⋅

Responsible purchasing policy

The above standards were established based on the 10 principles of the United Nations
Global Compact. They constitute our essential guidelines for corporate ethics, labor,human rights, environment, and sustainability. More information is available on our
website, in the “Sustainability” section.
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2.2

Conducting activities with SDGs

Along with complying strictly with the action plan set in our standards we conduct ouractions following SDGs. We think we can contribute to making a sustainable society
where social and economic values coexist.
We conduct all our activities in respect of existing laws and social ethics.

3. Appropriate business conduct
In order to conduct our business in an appropriate way DAITO KASEI GROUP (fivecompanies in Japan, France, China, and Italy) applies the following.
3.1

Decision-making

The board of directors decides on management planning, business decisions,investments above a certain amount, organizational change, etc. To make decisionmaking faster, board meetings are organized immediately when needed and decisions
are taken promptly.
3.2

Accounting

To prove the transparency of our financial situation we receive guidance and are
regularly audited by certified public accountants with evaluation by a third party. We
received congratulations from the tax office for how well our finances are managed.
3.3

Fair transactions

Business transactions are conducted to be fair as regards the other party.
3.4Intellectual property

We respect our company and our trade partnersʼ intellectual properties.
3.5

Corruption prevention

We do not get involved in activities such as bribery, excessive gifts and treats, conflictsof interest, and so on.
3.6

Rejection of criminal groups

We do not hold any relation with criminal groups.
3.7

Business continuity plan

We arrange for a business continuity plan for natural disasters.
6

4. Involvement in exhibition and major topics during the period
4.1

Acquisition of EFfCI GMP Certification
In June and July 2022, our three factories in Okayama, Niigata,and Fukui obtained EFfCI GMP for Cosmetic Ingredients (2017)
certification, which is GMP for the production of cosmetic
ingredients, thereby strengthening our system for managing
product quality and safety.
EFfCI GMP was created by the European Federation of Cosmetic
Ingredients and adopts ISO9001 as its framework, but it
includes GMP requirements that are not covered by ISO9001.
Currently, there are 10 factories in Japan that have obtained
this certification, three of which are our three factories.
We will continue to manufacture under a strict quality control
system to provide high-quality and safe cosmetic raw materials
and deliver peace of mind to our customers.

4.2

ISO 14001 Certification

Daito Kasei Kogyo Co., Ltd. has undergone a multi-site
certification audit for all of its sites: Head Office, Okayama
Plant, Fukui Plant, Niigata Plant. In July 2023, the company
received official certification.
The company has obtained ISO9001, EFfCI GMP, and RSPO
certifications

asexternal

certifications.

certificationforenvironmental management systems.
4.3

One

podiumandthreeposterpresentations accepted at IFSCC 2022
IFSCC : The International Federation of Societies of Cosmetic Chemists
The International Federation of Societies of Cosmetic Chemists (IFSCC), an umbrellaorganization for the Society of Cosmetic Chemists of Japan (SCCJ), has about 16,000
members in 49 societies around the world.

7

The Congress is held every two years at a site to be decided. Cosmetics engineers fromaround the world gather to present their latest research results and engage in lively
discussions. Various awards are given to outstanding presentations.
At the 32nd IFSCC Congress held in London, England in 2022, one podium and threeposter presentations were accepted.

PODIUM PRESENTATION
The approach for SDGs based on cultivation of
Suizenji-nori, as a raw material of theingredient, Sacran, for cosmetics (Teruaki
Mori)

POSTER PRESENTATIONSDevelopment of novel cosmetic formulation using sphericalcellulose beads, “feeling like using silicone elastomer beads” (MakiKitanouma)

Characteristics of natural derived surface treated pigments forthe achievement of SDGs (Reiichiro Tsuchiya)

Posterpresentation

Study

of

cosmetic

applications with unmodified cellulose fiber asnovel gel type ingredient (Atsuko Ota)

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4.4

6th IPCE CONFERENCE
Characteristics of natural derived surface
treated pigments for the achievement ofSDGs (Reiichiro Tsuchiya)
While focusing on the development ofenvironmentallyfriendly

products,

ourresearch on natural surface treatment witha focus on SDGs was highly evaluated, andwe were able to give an oral presentation
at a conference in Sardinia, Italy, on June
7-8, 2023.

4.5

Winner of the Gold Make-Up Bar Award (for the second time)

At the in-cosmetics global 2022 France, held from April
5 to 7 2022, DAITO KASEI EUROPE presented four
formulations titled Naturality & sustainability with highperformance sensoriality. The company was awarded
the Make-Up Award Gold Prize.
The formulas were developed based on the concept offocusing on naturalness and sustainability, but without
sacrificing the excellent feel and finish.

4.6

CITE JAPAN – SILVER Award in the environmental category

Our product, SACRAN, was nominated at CITE JAPAN held on May 17-19, 2023, andreceived a SILVER AWARD as a result of the screening process.
In the environmental category of the
CITE Awards, nominations are madefor products that focus on productdevelopment

andtechnologicalinnovation with an emphasis on thesustainable use of resources, and six
products were eligible for this year's
awards.
9

SILVER AWARD WINNER! SACRAN", a natural skin barrier
SACRAN is a naturally derived ingredient extracted from the suizenjinori, which can only
be found in a limited number of pure spring waters at the foot of Mount Aso. It not only
acts as a moisturizer that provides moisture to the skin, but also, due to its uniquemolecular structure, creates a film on the skin when applied to the skin, protecting itfrom cigarette smoke and automobile exhaust fumes. It is possible to give skin careproducts properties that protect sensitive skin.

4.7

Activities at trade shows around the world

We set up booths at trade shows held around the world to introduce our products basedon the concept of natural origin and sustainability.
April 5-7, 2022, in-cosmetics global 2022 France
DKE, our European branch, participated in the exhibition, titled Naturality &sustainability with high performance sensoriality, presenting four formulations that
achieve a superior feel and finish with a focus on naturalness and sustainability.
At the exhibition, as mentioned above, we received the Make-Up Bar Award, which is
given for the most innovative formulation. This award is given to the most innovative
formulation.
October 25-27, 2022, ICI 2022
Indonesia November 7-9, 2022,
in-cosmetics Asia Thailand
In cooperation with the local Chemico Group
companies, at the two exhibitions we introduced
the concept of "Perfect Long Lasting Makeup"
supported by samples cosmetic ingredients andreference formulas.

March 28-30, 2023, in-cosmetics global Spain
DKE, our European branch, exhibited at the show
and mainly introduced reference formulas based on
the concept of eco-friendliness with many naturalingredients and the cosmetic ingredients used inthese formulas.
10

May 17-19, 2023, CITE JAPAN 2023
Under the exhibition theme of "Fusion of Nature andTechnology - Value-added Products", we introduced
our products, focusing on raw materials of natural
origin and examples of formulations. SACRAN",
which was nominated for the "CITE Award", received
the SILVER AWARD as a result of visitors' voting.

June 7-8, 2023, ICI 2023 Indonesia
We exhibited at ICI 2023 in Surabaya. Under theexhibition concept of "Natural ×

Natural",weintroduced our natural ingredients and formulas fornatural finish. We received many inquiries about our
new lip balm formulation with glossy and longlasting effects.

11

5. Quality Policy and Environmental Policy
At the beginning of each year, we revise our Quality Policy and Environmental Policy forthe current year and disseminate them to all employees.
Each department and site determine its quality and environmental activities for the year
based on the policy, annual management reviews, and internal and external issues thatare also the output of these reviews, as well as targets, risks, and opportunities.
Activities are conducted in accordance with ISO9001, EFfCI GMP, and ISO14001, but we
do not consider our activities to be solely for the purpose of obtaining and maintaining
certification.
We view them as closely related to improving management issues and the environmentand consider them important indicators of management with the aim of developing ourbusiness, realizing a rewarding workplace, and enhancing the trust of our stakeholders.
Through these activities, we have been able to increase training and education
opportunities for our employees, which has helped them improve their skills andimprovement capabilities.

126. Aiming for a happy workplace
Protecting the rights of our employees and ensuring a friendly workplace is mostimportant to us. We are constantly working to improve our employeesʼ workplace.
6.1

Tolerant working conditions

Guarantying employeesʼ rights is indispensable to conduct business fairly. Without
consideration for gender, race, age, or disability we behave equally towards every
employee so that everyone can work to their full potential. Similarly, salaries are paid
without consideration for gender, race, age, or disability.
6.2

Compliance with labor laws and improvement of workplace

Protect employeesʼ rights.
In order to comply with labor laws, we conduct internal regulation training andinformation cession with licensed social insurance consultants. We also consult lawyers
when needed.
Regarding harassment and complaints an inquiry counter has been established andeach employee will have to undergone proper training in 2020.
We also conduct harassment training for new
employees at the time of their induction training.

現場リーダー研修を開始
2022.8月と9月に実施
対象︓岡山工場、福井工場

Based on the idea that the work environment for anindividual is determined by communication withseveralpeoplearound

him

or

her,

we

also

＊知識能力の全体像＊離職者は何故発生するのか（演習）＊信頼関係を良好にし、チーム力をアップさせるコミュニケーションは何か（演習と行動目標設定）
個人にとっての職場環境は周りの数人の人とのコミュニケーション
で決まるという前提に立った研修です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 less than 300 employees that are proactive in recruiting and training young people
and have excellent employment management. As of the end of 2022, the number ofcertified companies in Osaka Prefecture is approximately 50.

13Women friendly work environment
In 2022, 3 women took childcare leave (acquisition rate:100%). In 2022, one woman
returned to work.
Male employees taking childcare leave
In 2022, 3 men took childcare leave. (acquisition rate: 50%)
Consideration for Employees' HealthWhenemployees

undergoperiodic

healthcheckups,

they

can

also

undergoexaminations other than those required by law (breast cancer, colon cancer, cervicalcancer, 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 for family members who live with the employee.
Certification as an Excellent Health Corporation
In March 2022, we were certified as an excellent healthcorporation, as we have been since 2021, as a company thatstrategically manages the health of its employees.
Employment of People with Disabilities
In 2022, the number of employees with disabilities was 6,
meeting the legally mandated employment ratio.
6.3

Employeeʼs safety and hygiene

A safe and healthy environment is a fundamental right for all employees and is essential
to ensure 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 have continued after the transition to corona virus epidemy. We believethat telecommuting and staggered work hours will help to improve the working
environment by reducing workloads, such as avoiding commuting congestion, and byenabling more effective use of time.

14

Chemical Substance Management
Chemical substances are handled at our factories, and we ensure the safety of theworking environment through technical safety measures and the wearing of appropriate
protective equipment. In addition, SDSs for raw materials used in manufacturing are
kept at each location, and employees can access them at any time.
Risk Management
When new products are manufactured or new equipment is introduced, risk
management is conducted to determine if there are any potential hazards to employeesor the environment. A list of workplace chemicals, their storage locations, and inventory
quantities is maintained and properly controlled. Exposure to chemicals or situations iscontrolled to the lowest possible level.
Health Consultation by Industrial Physician
In Japan, it is mandatory to appoint an industrial physician to workplaces with 50 ormore employees. On the day of the inspection, individual employee health consultations
are also available, and employees can meet with an industrial physician.

7. Employeeʼs fulfilment through learning
Building a work environment where employees can fulfil themselves is related to thepossibility for them to learn new abilities and be satisfied overall. There is absolutely no
doubt that employeesʼ fulfillment is necessary to company growth. To make thispossible, we enforce the following measures:
New employeesʼ 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 andprocedures) and training related to improvements are mainly conducted through onthe-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 our quality management system with higher
reliability.

15

ISO 14001 Training
In May 2022, a one-day internal auditor training was conducted by an external
instructor, and 20 employees participated in the training. In addition, training(understanding of rules and procedures) 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, the Harassment Prevention Act will be enforced in 2020.
The Law for the Prevention of Harassment in Japan was enforced in 2020 and will apply
to large 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 and French conversation training (once a week) to
employees who need it for their work.
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 thediscretion of division managers.
Rewards for those who acquire qualifications
Rewards are given to employees who acquire qualifications in hazardous materials,
health management, and information processing to motivate them.
Personnel Evaluation Interview System
Interviews with supervisors or leaders are held every six months for general employees
to foster communication and employee development.
Training for employees who receive salary increases and promotions
We are working to establish a company-wide
personnel system, and as part of this effort, wehave conducted training for employees who havebeen promoted to higher positions.

16

The training included an understanding of the company's current status, anunderstanding of basic company figures and exercises, and group work on the role of amanager. The training also provided an opportunity for interaction among the target
group.
We encourage employees to participate in other seminars, exhibitions, and othereducational and information-gathering opportunities necessary to improve their skills.

8. Product development and market expansion for a sustainable
society

8.1

Aiming a reducing plastic pollution

CELLULOBEADS
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 the world today exceeds 300 million tons. However,this plastic waste is spreading into the world's oceans, causing environmental pollution
and adverse effects on ecosystems. In particular, it is said that there are more than 5
trillion pieces of microplastics all over the world, defined as microplastics by the United
Nations Environment Programme (UNED), with a diameter of 5 mm or less.
Many cases of fish and birds mistakenly swallowing them havebeen reported, and their impact 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 the food 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

17

Certified wood 1 as the original raw material.
CELLULOBEADS" is already on the market as an alternative to marine degradable
microplastics, and we plan to make further capital investments to increase production
volume in the future.
In July 2021, we opened a page on "IPSROS Pharmaceutical and Food Technology," adatabase site for pharmaceutical and food technology, and introduced plant-derived
biodegradable spherical particles "CELLULOBEADS".
8.2

Protection the richness of water Sacran

SACRAN is a polysaccharide extracted from suizenjinori,
an alga that only grows in the pure water springs locatedat 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 the purest water to live.
At DAITO KASEI, we are committed with local villagers toprotect and develop the habitat of suizenjinori to allow it
to thrive and prosper.

8.3

Aiming at renewable resources provisioning

RSPO certification
Palm oil, obtained from oil palm trees in Africa, is widely used for consumer products
such as processed foods, pharmaceuticals, cosmetics, and detergents, as well as
biofuels.
About 70 million tons of palm oil are produced worldwide, which is about twice theamount produced 20 years ago. This has led to a rapid expansion of oil palm
plantations, but improper plantation management and other factors are having a
1

FSC certification: A system to deliver products from well-managed forests that meetenvironmental, social, and economic benefits to consumers and return economic benefits to
producers. FSC certification is issued after an audit by an accredited independent third-party
certification body, if it is determined that the product meets the standards.

18

serious impact on the environment. Problems such as deforestation, loss of naturalforests and peat swamps with high conservation value, loss of biodiversity, and childlabor have occurred.
Some of the raw materials we use are also derived from palm oil. We support
environmental sustainability activities and human rights advocacy, and in March 2019we obtained RSPO certification (Mass Balance) 2. We will continue to supply cosmetics
manufacturers with products using appropriate raw materials, and in April 2022, we
continued our supply chain certification.
Binchōtan powder
Trees in the mountains do not grow well without humanintervention. Human intervention in the process of tree growth
keeps the mountains alive and green. Ubame oak trees andother broadleaf forests that grow 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
and roasted to make charcoal, which has a long-lasting fire without smoke or flames,
and can be preserved. This technology was a major fuel revolution for mankind at thetime. 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

hasdeveloped

charcoal-making

technology while protecting and nurturing broadleaf forests,
and has perfected the technology for producing binchotan, ahard charcoal unparalleled anywhere in the world. Binchotan is
known for its amazing hardness, harder than aluminum or
stainless steel and approaching that of diamonds.
Binchotan powder is made from Kishu binchotan and is anaturally occurring powder, not a petroleum product such ascarbon black. We have developed and marketed products made from binchotan powder.

2

RSPO certification: A certification system based on the "Principles and Criteria" forsustainable palm oil.

19Natural origin productAs previously mentioned, we are pursuing the development and use of natural origin
ingredients to support sustainability in our society. For more details, please take a lookat our product information on our HP(https://www.daitokasei.com/product/chemical.php).
For interested customers, we also have a range of more than 60 COSMOS certified
products.

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 ofresource 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 of our work. We think it also benefits our stakeholders andcustomers.
Quality management system audit by big customers
We have been audited by large customers concerning our quality control system andexcept for minor problems results were satisfactory. We are working on solving the
problems that were pointed out rapidly and efficiently.
Improving employees understanding a quality system to respond to global needs
In February 2019, DAITO KASEI KOGYOU Co., Ltd. acquired ISO 9001:2015
certification for all of 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, anddesigning a system that guarantees high quality, so that "everyone can work with thesame quality and high quality products. We have continuously implemented activities tobuild 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.
20

Going forward, we will continue to improve our systems based on this international
standard to enhance reliability and customer satisfaction.
9.2

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 trustwith our customers.
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 theseassessments and can share them with us. We are also subject to on-site CSR audits bymajor clients on a site-by-site basis, and we cooperate with CSR surveys conducted byindividual clients. We respect the results of these evaluations and reflect them in our
improvement activities for a better CSR system.
Summary of evaluation results by EcoVadis, CDP, and Sedex and our response
The evaluation items of each platform and our latest evaluation results are as follows.
EcoVadisA

comprehensive

corporatesocialresponsibility

assessment service, EcoVadis is a platform that evaluatescompanies in four areas: environment, labor practices
and human rights, ethics, and sustainable sourcing. We
received a silver rating in the top 13% of eligible
companies in the 2022 assessment.

21

CDP
The CDP is a platform that assesses companies on their climate change strategies andgreenhouse gas emissions disclosure.
We received a B- rating for both climate change and water security in 2022.

Sedex
Sedex is a platform that assesses the management of risks related to labor practices inthe supply chain. We received a high rating from a major customer for our response in
2021.
Respecting the Platform's Assessment
We respect the evaluation results and make company-wide efforts such as obtaining
ISO 14001 certification in order to make further improvements.
We implement these efforts and acquire the certification in 2023.

10.

Measures for protecting the environment

for a better future
We believe contributing to a more sustainable society is a mission that we must
accomplish for us and our children. We develop new products and markets inconsideration of our objective of making society more sustainable, to reducegreenhouse gas and preserve the environment in compliance with environmental laws.
10.1

Strict compliance with environmental laws

We believe that contributing to a sustainable society is a mission we must fulfill, andthat our environmental initiatives in particular are fundamental to this mission. We willcomply 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 a sustainable society.
22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 inaccordance with the laws and regulations (ordinances) set forth by each municipality inwhich we operate our plants. We receive regular audits from each municipality toensure 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, were identified, 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.
10.2

Individual Efforts to Reduce Greenhouse Gas 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
business sites, which was completed in 2021.
Regarding CO2 reduction targets, the Group's targets were determined at a meeting
held in France in 2022 in order to meet national guidelines and customer expectations.
The combined target for Scope 1 and 2 was set at less than 2,250 tons by 2030.
Actual CO2 emission in 2022 was 3,862 tons. Our target is 48% reduction over 2013.

11.

Partnership

11.1

Answering stakeholdersʼ 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, and business by passing on the modern environment and culture to future
generations without destroying them. To meet these expectations, we comply with laws
23

and regulations, respect the 10 principles of the UN Global Compact, ISO 26000, theguideline standard for CSR, and the 17 goals of the SDGs, and take various actions in
our corporate activities. We believe that through the continuous accumulation of suchactions, in addition to "sustainability," we can manage our business with considerationfor various stakeholders and contribute to the realization of a "happier society" that is
the goal of the SDGs.
11.2

Organizations to which we belong

DAITO KASEI belongs to the following organizations. By joining these organizations, we
can earn 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)•

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 parkof Western Japan 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.
11.3

Job creation and local partnership

We contributed to local job creation and environmental protection by cooperating withlocal 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, a24

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 and produce 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 forwestern customers whose demand in growing. To be able to answer the demand linked
to an increase of attention to the environment we outsource production to Rengo Co.,
Ltd. We are working on spreading the use of CELLULUBEADS to contribute to theprotection of the environment.
Protection of the environment with local stakeholders
Forest protection activity: “The forest of smiles”
In 2017 we joined the “Kogyō no Mori” project which helps
protecting forest in Wakayama.
This project aims at promoting and keeping ancestral knowledge
and 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 no Mori”, the forest of smiles. Employees from our subsidiaries in France andChina 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 each other, and all enjoyed the beauty of nature.
However, in 2021 we were unable to conduct this action due to corona virus. We will
resume our action as soon as possible.
We started with 3,000 ubamegashi trees and now have more than 6,000 trees. In the
future, when they are bigger, we estimate that they will absorb about 10,700kg ofcarbon dioxide25

per year.

12.

DAITO KASEI original actions

At DAITO KASEI, we do not just comply with the law we go step further by enforcing a
set of original measures. Some of them aim at improving employees well-being andconcern the following matters: health and work conditions, communication, and good
governance. Other measures are meant to improve stakeholdersʼ trust. We firmly
believe that improving employeesʼ well-being and stakeholdersʼ trust is an important
objective of CSR, this is why we intend to pursue our efforts continuously.
These measures are presented below.
12.1

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.
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 these visits employees can freely consult about their health in addition toundergoing physical examination.
Excellent Health company certification
As a company that considers employeesʼ health is more that an individual matter but
our responsibility, we have been conducting thorough health management company
wide. For that reason, we received “Healthy company” certification by the Ministry of
Economy, Trade, and Industry.
12.2

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.
26

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, thissometimes resulted in employees being forced to go to work, which not only had anegative impact on their health, but also led to a decline in work efficiency. Therefore,
we have decided to grant 5 days 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 twohours each month to attend to government offices, hospitals, childcare, etc. No salarydeduction is made for this time.
Overtime
By law, employees are required to work at least 8 hours, but we require at least 7.5hours.
Youth Yale Certification
This is a government certification program for small and mediumsized enterprises that are proactive in recruiting and training young
people and have excellent employment management conditions(turnover rate, working hours, annual leave, health management,etc.).
12.3

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 (2 million yen, including work-related accidents).
27

12.4

Comfortable Workplace

Harassment Training
The Anti-Harassment Law has been in effect since June 2020. Although the law will
apply to small and medium-sized enterprises from 2022, we agreed with the purpose of
the law and conducted harassment training for all employees in 2020, not waiting forthe 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 isdetermined by communication 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.
12.5

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 beenwith the company for many years, providing an opportunity to deepen interaction
among employees.
Employee Trips
Before Corona, a company trip was held once every five years to promote interaction
among employees. We will continue to do so in the future, while keeping an eye on thesituation at Corona. We select 3 or 4 destinations from among domestic and overseas
destinations, and spouses are welcome to accompany their spouses.
12.6

Governance and Compliance

CPA Audits
We have our accounting audited annually by a certified public accountant as a thirdparty audit of our accounting. This is not a legally mandated audit, but one that we
conduct on our own initiative. The audit is strictly conducted to ensure that accounting
procedures are appropriate in order to maintain governance.In addition, we also
undergo expense-related audits to ensure that there are no improper transactions.
28Superior Taxpayer Filing Corporation
The tax office will honor corporations that continue to file appropriate tax returns andpay taxes in accordance with the purpose of the tax return system and are recognized
as a model for other taxpayers. The evaluation is based on the proper storage,
management, and organization of books, no confusion between public and private
affairs, no unclear financial transactions 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 theirinduction 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
the company. Relationships with honest suppliers are indispensable for maintaining
mutual trust and are an important element of corporate compliance. We have set up acomplaint 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 amonthly basis regarding labor-related laws and various regulations, or personnel andlabor matters within the company. We are working to create a better workplace andworking environment by revising internal regulations and improving compensation.
Creating Local Employment
SACRANʼs business creates employment for people involved in the cultivation ofsuizenjinori. In addition, the binchōtan powder business and the "Smile Forest" forest29