RESONAC REPORT 2023

1

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Technological progress has enriched our lives from the perspective of physical belongings. However,the price for this progress has been paid by the global environment, which is currently in a state of crisis.
Society is thus now faced with the pressing task of finding a way to continue to progress while protecting
the environment.
Chemistry is a building block of all industries, and the chemical industry therefore has the potential tohelp find a solution to the dilemma through co-creation with a range of stakeholders.
The power of chemistry can indeed cast light on the fundamental changes that need to be made, but thispower may also cast a shadow.
Our goal is to use chemistry to ensure that future generations can find happiness in a healthy global
environment. Accomplishing this goal will require us to predict and create the technologies and functions
required of the times before they arise, and to use the power of chemistry in a responsible manner.
Our foundation remains our wide range of cutting-edge functional materials technologies, which
encompass areas spanning from midstream to downstream sectors.
We will leverage this solid base to ascertain the roots of today’s challenges and take the initiative infinding new solutions. To achieve this objective, we will think beyond the conventional boundaries
of our individual business activities.
We are committed to co-creating a better society together with stakeholders who share our ideals,
ranging from consumers to industry leaders, and to accumulating the strength expected of a global
company as well as acting and making decisions in an agile and flexible manner. As a “Co-creative
Chemical Company,” Resonac will “Change society through the power of chemistry.”

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Transforming to a Co-creative Chemical Company
to Become a World-class
Functional Chemical Manufacturer

2

3

RESONAC REPORT 2023

Purpose

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Change Society throughthe Power of Chemistry
Contribute to the sustainable development of global society by creating
functions required of the times as an advanced material partner

ValuesPassionate &Results-Driven

Agile & Flexible

Open Minds &Open Connections

Solid Vision &Solid Integrity

By taking pride and passion in
our work,

By learning through trial anderror,

By showing mutual trust andrespect,

We truly recognize the power
and potential of chemistry,

By focusing our strengths andperformance,

By thinking flexibly and acting
swiftly,

By collaborating openly
beyond boundaries,

We prioritize sustainability for
future generations,

We will become a globally
recognized top player.

We will transform into a
dynamic organization.

We will co-create new value
with all stakeholders.

We commit to upholding ourvalues of integrity to all stakeholders and ethics indeveloping chemical
technologies.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Co-creating a Better Society with
Partners That Share Our Ideals
Our goal is to use chemistry to ensure that future generations can find happiness in a healthy global environment.
Expansive co-creation with our partners is necessary in order to seek out and solve the various problems faced bysociety.
We aim to create a movement that resonates with people, through the combination of the ideas based on our
extensive business experience and customer base, our unrestricted advanced material technologies, and the wideranging technical prowess of our partners and their ability to implement this in our society.
By resonating far and wide, we also aspire to attract new partners and create an even bigger movement that transformsociety. As a “Co-creative Chemical Company,” Resonac will “Change society through the power of chemistry.”

P59 / Contributing to Society and Customers by Fulfilling Our Purpose through Resonac Pride Products & Services

Here
we
g
!
o
Here we go!

4

5

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

29 Letter from the02
Contents

RESONAC REPORT 2023

Where to Go
Our Goals

CSO
Maximizing corporate value
through strategic intelligence

32 Letter from the01

CTO
Resonac launches—Creating
an exciting future throughdialogue and co-creation!

What’s Resonac?
Re-introducing Ourselves

7

Path to the Birth of Resonac

19 Letter from the9

Overview of Resonac’s Business

11

Value Creation Process

A startup with 26,000 employees!
Striving to transform into a company
that will change society

13

Special Feature: What is a Co-creative

CEO

Chemical Company?
1735 Letter from the

CHRO
Employees hold the key tobusiness growth
Focusing on developing
co-creative talentFinancial and Nonfinancial
Highlights

37 Human CapitalManagement Dialogue

Collaboration
between the CEO andCHRO accelerates the
speed of management
25 Letter from the

CFO

Overcoming a number of challenges, Resonac takes a leap forward

Team Takahashi: Aspirations for Human
Resources Development
44 “Team Takahashi” Works to Fulfill Its
Potential at a Major Turning Point
41

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

03

How to Change

Why We Can

What We Will Focus on to Achieve Change

62 CTO Roundtable with Young Researchers
Creating Innovation throughCo-creation and Synergy whileleading Resonac as It Competeson the Global Stage

04

47

Overview of the Long-Term Vision

49

Financial and Capital Strategies

55

Promoting Sustainability

57

Material Issues and Non-financial KPIs

59

Special Feature: Contributing to Society

Organizational Capabilities toHelp Change Society

89

Resonac’s Human CapitalManagement

91

Special Feature: Human Resource

97

Measures to Combat Climate Change

Strategies(Disclosure in Line with the TCFD
Recommendations and Carbon Neutrality
Initiatives)and Customers by Fulfilling Our
Purpose through Resonac Pride
Products & Services

100 Realization of Recycling-oriented

65

R&D and Intellectual Property
Strategies

101 Environment Risk Measures

69

Marketing Strategies

71

Digital Strategies

Business Strategies

77

Semiconductor and Electronic
Materials

81

Mobility

83

Innovation Enabling Materials

85

ChemicalsSociety

102 Efforts for Preservation of Biodiversity
103 Occupational Health and Safety
104 Quality Assurance
105 Chemicals Management
106 Sustainable Procurement
107 Respect for Human Rights
108 Strengthening InternalCommunication within Our Group109 Risk Management
111 Compliance

Dear reader,This is the first Integrated Report by Resonac, which
experienced its second founding.
Last year, we started by presenting the long-term views of
our new management team, led by CEO Hidehito Takahashi,with the aim of garnering your trust and expectations. As wewere not yet able to provide enough information on ourachievements, we communicated our thoughts on the future
and plans to tackle the issues we recognized.
While also continuing to focus on the future, this year
we endeavored to provide details on how much progress
we are currently making toward these goals and ourtrial-and-error process. We explain how “Team Takahashi”
functions as a team, whether we’ve made progress withthe promise we made last year to develop co-creative
talent, and showcase the employees that have started toplay an active role in the company. We talk about whatkind of strategies we are implementing across ouroperations as we revamp our business portfolio. We also
discuss whether sustainability is truly at the root of ourmanagement, and whether Resonac’s governancestructure is functioning effectively as we strive to become
a company that can compete on the global stage.
While we haven’t yet reached the point where we cananswer all questions with results, we hope this reportshows that we are making efforts to promptly, but alsosteadily and carefully, achieve our goals. We also hope that
it will help facilitate dialogue and co-creation with you.
We want you to see how we are first trying to change
ourselves as a “startup with 26,000 employees” as we
strive to change society for the better. Please enjoy
Resonac as we are now.

Hideki Somemiya Chief Financial Officer (CFO)
Tomomitsu Maoka Chief Strategy Officer (CSO)

117 Directors
119 Audit & Supervisory Board

Members/Corporate Officers

121 Skill Matrix
122 Messages from Outside Directors and

73 Semiconductor Materials Global Top

Audit & Supervisory Board Members

Management Roundtable

The Semiconductor Materials
Business, a Key to Resonac’s
Growth123 Corporate Governance

113 Roundtable Discussion
Outside Director, Representative Director andChairman of the Board, CRO, CHRO

Our Transformation of the Board of
Directors

Data

129 Consolidated 11-Year Summary
131 Consolidated Balance Sheets
135 Corporate Data/Stock Information
136 Editorial Policies

Official Resonac YouTube Channel
We upload videos introducing Resonac so thatyou can learn more about us. Our channel also
has videos containing dialogue with internaland external stakeholders. Please check it out!

6

7

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

What’s01
Resonac?

1931
1908
Established Sobo Marine Products
K.K. (later Nihon Iodine K.K.) to
manufacture and sell iodine

Former Showa Denko
Originating in the field of electrochemistry, Showa Denko has
developed its technological capabilities over the course of years to
expand into the fields of inorganic chemistry, organic chemistry, andmetal materials. Many of its past technological achievements havebeen passed down to serve the development of a wide variety of
products in use today, including materials and components used for
IT equipment and mobility devices as well as essential daily items.

Started production ofammonium sulfate using
domestic technology(Showa Fertilizers K.K.)

1934

1939
Established Showa Denko
K.K. through the merger ofShowa Fertilizers andNihon Electrical Industries

Industrialized domestically produced
aluminum (Nihon Electrical Industries
K.K. (former Nihon Iodine K.K.))

Sobo Marine Products K.K.

The first block of aluminum

Former Hitachi Chemical (Showa Denko Materials)

What is Resonac? We will introduce Resonac’s past andnow, including the path to Resonac’s birth, how we create

Showa Denko Materials continues to create new functions and value centered on
semiconductor materials and other IT and mobility products.
These efforts are driven by its proficiency in developing products using
the material design technologies to capitalize on the material
characteristics it has fostered since its founding.

value, and what is the “Co-creative Chemical Company”
we are trying to achieve.
7

Path to the Birth of Resonac

9

Overview of Resonac’s Business

11

Value Creation Process

13

Special Feature: What is a Co-creative Chemical Company?

17

Financial and Nonfinancial Highlights

1912
Started research into
insulating varnish forelectrical motors aiming atdomestic production

1933

Started trial production ofphenol resin laminates

Started trial production ofcarbon brushes

1931
Electrical insulating
varnishes

1930’sSociety’s needs andthe value we provide
to society

1930

Society’s needs

Stable food supply
Value we provide

Ammonia production using Japanesetechnology
Succeeded in synthesizing ammonia for the first time inJapan using Japanese technology and machinery, a featconsidered impossible at the time. We then went on to
produce the first synthetic ammonium sulfate (inorganic
fertilizer) made using only Japanese technology, andstarted providing inexpensive fertilizer.

Started trial production of
porcelain insulators

1950’sSociety’s needs

Innovation oftechnology
Value we provide

Copper clad laminates for multilayer PWBs
Developed technique to enable complicated wiring ona single copper clad laminate board, which enabledmass production of electronic circuits, a key
contributor to the popularization of commercial
television and radio systems.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

1988

2003

2009

2017

Entered the hard disk media businessStarted the plastic
chemical recycling
business

Started production ofcooling devices for power
semiconductors

Acquired SGL GE, a
German graphite
electrode supplier

1969

2001

Oita Petrochemical
Complex started
commercial operation

Merged with Showa Aluminum
Corporation
Product lineup included aluminum coolingdevices, cylinders, and packaging

Kawasaki Plastic Chemical
Recycling (KPR) plant
Office of Oita Petrochemical
Complex

Graphite electrodes

2010

2006
Began contract manufacturing of SiC
epitaxial wafer
for power devices

Aluminum cylinders

2023

Cooling devices for power
semiconductors

Resonac established

Merged with Showa
Highpolymer Co., Ltd., the firstcompany to achieve domestic
production of synthetic resin
emulsion, unsaturated
polyester resin, etc.

2022
Substantive
integration

1955
Started production ofcopper clad laminates
for multilayer PWBs

1978

1984

1992

1998

Started sale ofphotosensitive filmof alkali-based
solvents

Started productionof circuit
connecting film fordisplays

Started sale of reflowresistance epoxy molding
compounds

Started mass production of carbon anodematerials for lithium-ion batteries
Started production of CMP slurry for shallow
trench isolation (STI)

2001

Resonac experienced its second founding, asa company that operates the semiconductor
and electronic materials, mobility, innovation
enabling materials, chemicals, and otherbusinesses, and possesses a broad lineup ofmaterial and technology offerings spanning
midstream and downstream areas.
As a “Co-creative Chemical Company,”
Resonac aims to continuously grow andimprove corporate value throughco-creation.

Started production ofmolded plastic rear door
modulesCircuit connecting film fordisplays

Epoxy molding compounds
CMP slurry

Photosensitive film ofalkali-based solvents

2000’sSociety’s needs

Society’s needs

Waste problem
Recycling

Innovation oftechnology(longevity)

Weight reduction

Value we provide

Plastic rear doors

Value we provide

Aluminum can recycling activities

Society’s needs

Value we provide

Anode materials
Resonac, the first producer of aluminum cans in Japan,
was the first to kick-start and spearhead recycling
activities in Japan to create a recycling-oriented
society. In 2021, the ratio of aluminum cans recycled
across Japan rose to as high as 96.6%.

Production of graphite material used to make anodes,
which affect the performance of lithium-ion batteries.
They enable electronic devices to be more energy
efficient, more compact, and charge more efficiently.

Society’s needs

Society’s needs

Innovation oftechnology

Energy saving

Value we provide

Value we provide

SiC

Hard disk (HD)
Succeeded in manufacturing molded plastic rear door
modules for the first time in Japan. Enabled moredesign freedom and lighter car bodies at a time whenmetal backdoor was the norm.

Successfully mass-produced the world’s firstlarge-storage hard disk media for perpendicularmagnetic recording. Used to safely and securely store
large amounts of data, such as at data centers.

A material used in next-generation power
semiconductors, expected to save energy. Used in
power supplies for data center servers, railcar
devices, etc.

8

9

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Overview of Resonac’s Business
Operating Income

Consolidated Net Sales

Total Assets¥ 61.7 billion¥ 1,392.6 billion¥ 2,093.7 billion

Down 29.2% year on year

Down 1.9% year on year

Down 2.3% year on year

Semiconductor and Electronic Materials
Net sales¥

Mobility

Operating income

427.2 billion ¥ 45.5 billion

Net sales¥

Innovation Enabling Materials

Operating loss

180.6 billion ¥ (0.7 billion )Net sales¥

Chemicals

Operating income

141.1 billion ¥ 10.1 billion

Net sales¥

Others and Intersegment Transactions

Operating income

527.8 billion ¥ 24.9 billion

The Semiconductor and Electronic
Materials segment supplies materials
used in front-end and back-end semiconductor production processes, SiC
epitaxial wafers for next-generation
power devices as well as hard disk
media.

The Mobility segment contributes to the
production of lighter-weight vehicles withmolded plastic rear door modules andplastic gears, while supplying lithium-ion
battery materials for use in theelectrification of vehicles.

The Innovation Enabling Materials
segment supplies a wide range oftechnologies and materials that support
the innovation and competitiveness of theResonac’s businesses. Offerings include
ceramics, functional chemicals, aluminumspecialty components, and coating
materials.

The Chemicals segment boasts a lineupof competitive, high-share products
including olefin, organic chemicals, basic
chemicals, industrials gases, andgraphite electrodes.

Major products

Major products

Major products

Major products

Front-end semiconductor materials: Electronic
chemicals, materials for chemical mechanicalsemiconductor planarization (CMP slurry)Back-end semiconductor materials: Epoxy
molding compounds, die bonding materials,
copper clad laminates, photosensitive dry film,
photosensitive solder resist

Automotive products: Molded resins, friction
materials, powdered metal products
Lithium-ion battery materials: SPALF aluminum
laminated film, carbon nanofiber additives,carbon anode materials

Functional chemicals, functional resins, coating
materials, ceramics, aluminum specialty
components

P 81

P83

¥

Operating loss

115.9 billion ¥ (18.1 billion )Semiconductor Materials
Global Top Management
Roundtable

Olefins and Derivatives: Olefins, organic
chemicals
Basic chemicals and Industrial gases
Graphite electrodes

P73

Device solutions: hard disk media, SiC epitaxial
wafers, compound semiconductors (LEDs)
P77

Net sales

P85

The semiconductor materials business is
positioned as a growth business in our
long-term vision. We present the roundtable discussion on this business, whichholds the key to Resonac’s growth, held byHiroyuki Yamashita, who oversees theElectronics Business Headquarters, theleaders of the U.S., Taiwan, and Singapore
sales offices, and CSO Tomomitsu Maoka.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Overview of Resonac’s Business
Consolidated Workforce Composition
In Japan

Consolidated Number of Employees

Net Sales Ratio

Outside Japan

In Japan

49.2% 50.8%

25,803

Outside Japan

44.3% 55.7%

Down 1.0% year on year

Global Business Composition

Europe

China

1,580
Number of companies
17¥

Composition

Mobility
Innovation Enabling Materials
Chemicals
Others¥Composition

Net sales¥

340.4 billion
Composition

24.4%

989
10

Net sales¥

617.3 billion

101.4 billion
Composition

7.3%

44.3%

Asia

6,680
Number of companies
32

Number of companies

Composition

13.7%

Number of employees

Number of employees

Net sales

190.3 billion

7.4%

Semiconductor and Electronic Materials

Number of employees

Net sales

102.7 billion

North America

12,706
Number of companies
25

Number of employees

Net sales
¥

Japan

3,407
Number of companies
23

Number of employees(As of December 31, 2022)

Other regions
Number of employees

Net sales

441

Number of companies

1¥

40.4 billion
Composition

2.9%

10

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

RESONAC REPORT 2023

Value Creation Process

Change Society through the Power of Chemistry
Contribute to the sustainable development of global society by creating functions required of the times as an advanced material partner(As of December 31, 2022)

Strengthen
co-creation &competitiveness andcreate social value
through innovation

Gain credibility
through responsible
businessmanagement

Develop autonomous,
creative, and active
human resources andcultureManufacturing capital
Worldwide production bases

Value creation model:

Provision of customer value by identifying downstream customer needs and producing innovation through the adaptation of multiple
technologies as made possible by possessing a broad lineup of material and technology offerings spanning midstream and downstream areas

Intellectual capitalIntellectual properties, material
technologies, functionengineering technologies,
assessment technologies, and awealth of expertise related toorganic chemicals, inorganic
chemicals, and aluminumRawmaterials

Evaluation,
simulation

Chemistry toSynthesize
Midstream materials technologies topromote Fundamental Technologies/
Materials businesses that lead tovarious businesses

Chemistry to
Formulate
Function design technologies topromote downstream application
business

Combination of broad-ranging technologies to create innovation

Chemistryto Think

MarketEvaluation
technologies
Simulations

Hard disk Olefins andBasicGraphite
media Derivatives chemicals electrodes

Innovation Enabling Materials

Value provision

Assessment of all elemental technologies, identification of “sources of competitiveness” key
for adaptation of technologies, and matching of sources to business and R&D strategies

Passionate & Results-Driven

Semiconductor Automotive Lithium-ion
materials
products battery materials

Identification of customer needs

Advanced materials partner for one-stop solutions

Natural capital
Effective use of energy andresources; technologies that
contribute to the resolution ofenvironmental issues

ValuesProcessing,molding,
assembly

Compositematerials

Downstream access

Human capital
Organizational culture anddiversity for creating diversity
Social capitalBase of long-term customers
and trusting relations built
through co-creation with a rangeof stakeholders“Co-creative Chemical Company”

Core Growth¥ 2,093.7 billion

Stable Earnings

Financial capital
Consolidated total assets

Fundamental
Technologies/Materials

Material issues forsustainability

Next-Generation

11

SiC

Corporate governance

Stakeholder engagement

SafetyComplianceAgile & Flexible

Open Minds & Open Connections

Solid Vision & Solid Integrity

Life Science

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Material Issues for
Sustainability

Strengthen co-creation &competitiveness and create social
value through innovation
We are creating social value through ourbusiness by taking the initiative in co-creationand enacting a process, spanning from theidentification of social issues to the provisionof solutions to these issues, by means oftechnology development and new businessmodels.

Ideal State(long-term vision)

Future we seek to realize throughthe power of chemistry2023,N W

Development of advanced semiconductor packaging materials
With an eye to 3 to 5 years down the road, we
collaborated with raw materials and assembly
process development at the Stage for
Co-creation, and started R&D of the materials(products) needed for the future generation ofadvanced semiconductor packages. Alongside
tackling the long-term themes of plastic
recycling and next-generation high-speed
communications composite materials, we arealso working to create value throughco-creation with the aim of solving medium tolong-term social issues.

World-class
Functional Chemical
Manufacturer
Company that can compete
on the world stage
World-class competitiveness andprofitability

2023,N W

Gain credibility through responsible
business management
We must cultivate a culture of safety and work
to eliminate accidents, while mitigating
strategy, operational, hazard, and other risks.
In addition, we should facilitate a flexible
response to the changing environment inorder to gain trust from stakeholders bycontinuously delivering distinctive value.

Building a safety infrastructure, safety culture
In keeping with Article 1 of Resonac’s Code of
Conduct, which stipulates “Safety First,” weare working to build a safety culture acrossour global operations under the leadership of
the CEO. Based on our safety code of conduct
and 10 safety principles, newly formulated in
2023, we carry out safety activities acrossworkplaces in Japan and overseas, and also
promote interactive safety patrols (SCP: Safety
Communication Program).

Video

2023,N W

Develop autonomous, creative, andactive human resources and culture
We aim to become a human resource
developing company, whose employees are
the envy of other companies, by fostering
creative and autonomous co-creative humanresources and building the corresponding
corporate culture.

Co-creative leadership training and training sessions to bolster theco-creative collaboration capabilities
In the pursuit of solving social issues, we seek
to foster co-creative talent that can take thelead in innovating and solving problems
creatively through co-creation founded on
autonomous bonds that go beyond companies
and departments, shaped by mutual
understanding and a resonance of values. We
encourage and support the development of
co-creative leader skills, the implementationof action based on our values, andautonomous career development.

Harmony with theglobalenvironment

Company that contributes toa sustainable global society
Capability to create innovations
and to develop new businesses

Company that develops
co-creative talent that
represents Japan’s
manufacturing industry
Ability to train competitive talent
with co-creation values
2030 targets

TSR: Aim to rank among thechemicals industry’s top

25%

over the medium to long term
Achieving Sustainability Vision

Happiness andprosperity ofpeople12

13

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

[Special Feature] What is a Co-creative Chemical Company?

Resonac Aims to Become a “Co-creative Chemical Company”

Why?

Chemistry is a building block of all industries, and the chemical industry should be able
to help find solutions to society’s issues through co-creation with a range of stakeholders

In today’s global society, the industrial structure is changing at a dizzying pace, and this speed continues to accelerate. Not only that, the challenges faced by various industries are too complex and large
to be solved by a single company alone. Since chemistry is a building block of all industries, the chemical industry should be able to solve society’s issues through co-creation with a range of stakeholders. Our current strategy is to focus our investment on the Semiconductor and Electronic Materials segment as a core growth area. Not only is the pace of technological innovation for semiconductors
extremely fast, the combination of various technologies is essential. Co-creation is thus indispensable both inside and outside the company in order to develop the required functions at a swift pace. As a
“Co-creative Chemical Company,” we will quickly create new functions together with diverse talent and change society with the power of chemistry.

Startups
FormerShowa
Denko

P45 / Long-term Vision

Future we seek to realize throughthe power of chemistry

Community

Customers

P11 / Value Creation Process

FormerHitachi
ChemicalConnect with a diverse range of
people and co-create optimal solutions

Achieve carbon neutrality andcreate a recycling-based society
Reduce environmental
impact during
manufacturing

Vehicle electriﬁcation

Use of renewable energy

Resource recycling

PurposeChange society throughthe power of chemistry

From diversiﬁed chemicals tofunctional chemicals

Contribute to the sustainable development of global society by creating
functions required of the times as an advanced material partner

Happiness and prosperity of people
Responding to a data-driven society

Suppliers

Academia

Other
companies(including rivals)

Create social value
by resolving social issues

Data centers

Fasterprocessing speeds

Next-generation
communications
technologies

AIPurpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

RESONAC REPORT 2023

Who?

In order to become a “Co-creative Chemical Company” that creates innovation,
we need “co-creative talent” that embody our purpose and values

To become a “Co-creative Chemical Company” that creates innovation and changes society with the power of chemistry, we need human resources that embody our purpose and values. In other words, weneed “human resources that can innovate and solve problems creatively through co-creation founded on autonomous bonds with people inside and outside the company as we work to resolve social issues.”
Based on the idea that employees have ownership of their own careers, we have prepared a variety of career paths and educational opportunities to fit each person’s individual aspirations, and havelaunched various systems to support connections both inside and outside the company.
One of these is AHA!, a global award that all Resonac Group employees can submit preliminary entries to. In addition to workplaces, cross-organizational teams establish declarations of action based on our
purpose and values, set targets and concrete initiatives based on these declarations, and submit entries themselves. At the subsequent judging events, entrants will talk about their experiences putting ourvalues into practice in carrying out our initiatives. This will result in feelings of mutual understanding (harmony) among employees, thus contributing to co-creation that transcends various boundaries.
We are working to nurture co-creative human resources by introducing unique training programs, such as co-creative leadership training and training sessions to bolster the co-creative collaboration
capabilities, so that a wide range of Resonac employees around the world can further realize their purpose as a team.

Source of value

1

Diverse range of technologies and customer base thathas been cultivated over many years held by Resonac

Problems are large,
Changes in thecomplex, and unknown external environment“Co-creative talent” that embody our purpose and value is necessary
In the pursuit of resolving social issues, we will innovate and solve problems creatively
through co-creation founded on autonomous bonds with people inside and outside the company

PassionCo-creation

Leading change

for solving social issues

across companies and departmentswith humility and persistence

Purpose: Change society through the power of chemistry

Open Minds & Open Connections

Entry

Team exchange event

First screening

Final judging event

AHA!
Meeting

January to
February 2023

June

AugustNovember

March 2024

*AHA!: Awards of Harmony, successor to the global awards held by former Showa Denko and former Hitachi Chemical.

Opportunities for personal growth01• Autonomously carry out activities• Collaboration with various people, cross-departmental activities• Find new friends• Engage in activities from a new perspective

POINT

A connection of equals

02• Interaction between entry teams• A place you can promote your activities (work) to the people around you

POINT

Agile & Flexible

Solid Vision & Solid Integrity

P91 / Human Resource Strategies

The name of the award comes from our wish to realize co-creation that transcends boundaries, throughcreating feelings of mutual understanding (harmony) from Aha moments, which is created by learning
about the activities of a wide range of teams and becoming inspired to do things that employees could
not do or understand before.

ValuesPassionate & Results-Driven

P35 / Letter from the CHRO

A global award that leads to the development of co-creative talent

2 Changes in value

To create innovation and social value

P19 / Letter from the CEO

14

15

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

How
and Where?
A platform for open innovation,
key to Resonac’s R&D efforts

We will establish a “place that fosters co-creation” with various
stakeholders, and co-create cutting-edge technologies to help
create a better society with a diverse range of people
Taking on technological innovation for nextgeneration semiconductors together with othercompanies

Stage forCo-creation
Web

With an eye to solving social issues by listening to the needs of the world and the views of society,we established the Stage for Co-Creation (in Yokohama City, Kanagawa Prefecture). This venue
serves as a platform for open innovation, which stands at the core of Resonac’s R&D activities. We
are integrating the organizations that house functions related to computational science, material
analysis, mass production technology & facility management, and chemical safety management&
evaluation, Resonac’s areas of strength. In doing so, we aim to develop advanced technologies that
can help create a better society through collaboration and co-creation with local communities, aswell as with venture companies and universities inside and outside Japan.
P65 / R&D and Intellectual Property Strategies

Function as a central venue
for R&D activities

A platform function thatbrings knowledge together

Speed up R&D activities through theconsolidation of R&D and research support
functions in cutting-edge fields, and the creationof development methods that combine
computational science and AI

Create value by solving social issues throughco-creation both inside and outside the company
Collaboration with venture companies anduniversities
Collaboration inside and outside the company
Use of AI promotion functions and learning
functions (VR equipment, etc.)
Combination of global conference/training
techniques

Launch of the Stage for Co-creation!

Packaging Solution CenterWeb

In 2019, we established the Packaging Solution Center (Kawasaki City, Kanagawa Prefecture) withthe aim of creating cutting-edge technologies that can handle increasingly complex and constantly
evolving semiconductor packages. The center’s greatest strength is its state-of-the-art equipment,
which can be said to be on par with the semiconductor package manufacturing equipment used bysemiconductor manufacturers. It enables the mounting, evaluation, and simulation of semiconductors themselves using materials for a variety of semiconductors. The ability to verify the entire
manufacturing process greatly contributes to the improvement of material functionality anddevelopment speed. The center is open not only for use by Resonac, but also to a wide range ofindustries. We are taking on the challenge of solving issues faced in next-generation semiconductor manufacturing while interacting with other companies and universities. In addition, JOINT2
was established as a consortium consisting of 12 companies* that manufacture semiconductor
equipment, materials, and substrates. JOINT2 is a project subsidized by NEDO, and is working todevelop technologies for high-density mounting of next-generation
semiconductors, such as through the mutual use of technologies
and information. The combination of member companies’ materials and technologies allows for the proposal of optimal one-stop
P77 / Semiconductor and Electronic Materials
solutions for customers.
*Members: Ajinomoto Fine-Techno Co., Inc., C. Uyemura & Co., Ltd., EBARA CORPORATION, SHINKO
ELECTRIC INDUSTRIES CO., LTD., Dai Nippon Printing Co., Ltd., DISCO Corporation, TOKYOOHKA KOGYO CO., LTD., NAMICS Corporation, Panasonic Connect Co., Ltd., MEC COMPANY LTD.,
Yamaha Robotics Holdings Co., Ltd., ORC MANUFACTURING CO., LTD.

Message from Professor Tadahiro Kuroda of the
University of Tokyo Graduate SchoolWeb

On April 4, 2023, Resonac held the Stage for Co-creation’s opening
ceremony. Executives, guests, and a number of employees involvedin the Stage for Co-creation cut the ribbon and talked about their
expectations for co-creation initiatives and their enthusiasm forworking at the venue. Ahead of the full-scale opening in 2024, mostof the development members will move in during 2023 and kick
operations into gear.
P32 / Letter from the CTO

Although Japan’s share of the global semiconductor wafer manufacturing market has declined in recent years, we still have the ability tocompete on the global stage in the fields of semiconductor materials
and manufacturing equipment. I am impressed that Resonac, one of thefirst Japanese companies to focus on the back-end processes ofsemiconductor manufacturing that possesses the latest equipment andan expansive network, has carved out a very good position for itself.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Now What?

16

Co-creation to solve various issues has been “started” andsteadily advanced to realize the vision we want to be

A long-term R&D theme undertaken at the Stage for Co-creation that
contributes to the next generation
Development of next-generation high-speed communications materials
Case 1

In order to achieve next-generation high-speed communication (6G), a new semiconductormaterial that significantly reduces transmission loss is required to achieve a transmission speed
100 times that of 5G. With the aim of creating new materials for next-generation semiconductors
used in 6G, Resonac is working with universities and venture companies to develop ceramics
and interface control technologies for resins and fillers from scratch through material synthesis.
By utilizing the power of computational science from the molecular and material design
stages, it is possible to verify as many as 90 types of combinations in the three months it previously required to verify a single combination.

Circular Economy; Plastic chemical recycling
In order to reduce the consumption of fossil resources, reduce CO2 emissions, and eventuallyachieve carbon neutrality, we are taking on the challenge of establishing plastic chemical
recycling, in which used plastics are decomposed, turned back into raw materials, and then usedagain to manufacture plastics.
Since 2022, we have been jointly developing technology with Microwave Chemical Co., Ltd.,and in experiments using model samples of used plastics, we have succeeded in extracting raw
material components such as ethylene and propylene with a yield of about 80%, reaching acertain point in establishing the basic technology. We are leveraging AI and computational
science to elucidate the decomposition mechanism of plastics and investigate catalysts, whichenables us to swiftly move forward with development.
Message from Microwave Chemical
When we were approached by Resonac, which was ahead of thetimes in launching a chemical recycling business, we wereconvinced that if we could combine our technology withResonac’s know-how, we would surely be able to create a new,one-of-a-kind chemical plastic recycling business in the world.
We believe that the way both companies are always on equalterms and can exchange opinions freely has led to the acceleration of technology development.
Left: Mr. Kitani, Group Leader of Research and Development Department, Microwave Chemical Co., Ltd.
Right: Mr. Kameda, Manager of Business Development Dept. / Head of Chemical Recycling Business Div., Microwave Chemical Co., Ltd.

Starting co-creation with customers in the evaluationof power module materials

Case 2WebThe Power Module Integration Center (located at the Oyama Plant in Tochigi Prefecture) has started
full-scale operations to strengthen the development of materials for power semiconductors, which
are essential for vehicle electrification, and the power modules packaged with these semiconductors. As an organization that modularizes and evaluates a wide range of Resonac’s power module-related materials, the center has utilized this technology to develop materials and speed up thisprocess. Since 2023, we have been evaluating materials under conditions similar to those set by ourcustomers, and sharing the verification details. In doing so, we provide technological innovation
support as far back as customers’ material development phases and help shorten the development
time for power modules. In fact, there have already been cases where customers have successfully
reduced the number of prototype evaluations by half. By 2025, we aim to establish a system for joint
evaluations with customers and help shorten development times further.
We have also started carrying out value proposition activities for power module-related
P70 / Marketing Activities in the Automotive Market
materials in the marketing process.

Sinteredcopper paste

Thermalconductive sheet

Heat-resistantsealing resin

SiC epitaxial
wafersCeramic heatdissipation ﬁller

RadiatorHeat-resistantcoating agent

Resin water
jacketUtilizing our wide range of power module-related materials in veriﬁcation
PrototypeEvaluation

Simulation

Different types of power modules

An electrical current is applied tomeasure under conditions similar
to actual operating conditions

We have many types of equipment, such as
simulation equipment that enables the veriﬁcationof evaluation results and pre-experiment prediction

By 2025, we aim to shorten the time taken from power module material development to customer adoption
Conventional
process

R&D

Evaluation ofmaterials andcomponents

OK

ProposalRequest for improvement based on evaluation results
Module evaluation at thePower Module Integration Center
Ideal process

R&D

Evaluation of materials/
components undercustomer’s conditions

ProposalCustomer evaluation

OK

Reducedevaluationtime
Customerevaluation

OK

Mass
productionMassproduction

Through co-creation withcustomers, shorten power
module development time
to meet growing demandfor EVs

Contribute to acarbon-free society

17

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Financial and Nonfinancial Highlights
Net sales (Millions of yen)

Figures include data for former Hitachi Chemicals after July 1, 2020.

Net income (loss) per share*1 ( Ye n )Operating income (Millions of yen)
Ratio of operating income (loss) to sales (%)
1,419,635

1,500,000

200,000

1,392,621

180,003

30

1,000

25

750

758.15150,000

1,000,000

992,136

906,45418.1

973,700

120,79820

13.3

100,000

87,19815

61,72650,000(19,449)

500,000

6.1

501.03500

179.02250

10(523.06)(77.40)

2020

2021

0

4.4

5
(250)

0

0

(2.0)

(500)
(5)

0

2018

2019

2020

2021

2022 (Year)Businesses that Resonac will continue to operate saw a growth in net
sales thanks to robust semiconductor demand, a recovery in automobile
production, and higher selling prices. However, net sales fell overall due tothe impact from the sale of multiple businesses in the previous fiscal year.

(50,000)

2018

2019

2020

2021

2022 (Year)

Operating income decreased, due partly to drags from the time lag at
which soaring raw material costs were passed onto selling prices andfrom the sale of businesses. The above figures have been revised since
the time of the earnings release due to changes in accounting policies.

Capital expenditures (Millions of yen)
Depreciation and amortization (Millions of yen)

(750)

2018

2019

While hefty extraordinary losses were recorded in the previous fiscal
year due to business restructuring, no such losses were booked in thecurrent fiscal year, resulting in a move back into the black.

Interest-bearing debt (Millions of yen)*2
Post-adjustment net debt/equity ratio (Times)*2

R&D expenditures (Millions of yen)
Ratio of R&D expenditures to sales (%)

120,000

1,200,000

107,074
97,726

100,000

69,052
68,64380,00046,75050,00047,135

1,060,146

91,96478,647

34,37940,00041,72739,4596.00

1.84

20,00010,000

0

0

2019

2.00

600,000

50,21637,70420,0002018

3.00

850,603900,000

40,0001,062,637

8.00

30,00060,0002022 (Year)

2020

2021

2022 (Year)

In line with the goals set in our long-term vision, we focused investments
on boosting the production capacity of the Semiconductor and Electronic
Materials segment, a Core Growth business.

19,735

1.99

3.53

20,605

3.29

3.38 4.00
300,000

2.27

2019

1.15

303,192

1.07
1.00

0.60

0.62
0

2018

287,968

2.00

2020

2021

2022 (Year)We are focusing efforts on R&D in a bid to swiftly create synergies fromthe integration of two companies that have been integrated.

0

0

2018

2019

2020

2021

2022 (Year)

We raised funds through subordinated loans for the acquisition of preferredstock, which resulted in an increase in interest-bearing debt. As a result,interest expense increased while preferred stock dividends decreased.

Our subsidiary former Hitachi Chemical (current Resonac Corporation) and its Japanese subsidiaries previously adopted the International Financial Reporting Standards (IFRS), but switched to Japanese Generally Accepted Accounting Principles (JGAAP) from fiscal 2023. This change has been applied retroactively and the figures for fiscal 2022
have been retroactively adjusted. Some of these retroactively adjusted figures include those that have not yet been audited.
*1 Net income (loss) per share has been computed based on the average number of shares of common stock outstanding during the respective fiscal year.
*2 From the third quarter of 2020, due to former Hitachi Chemical, becoming a consolidated subsidiary, the D/E ratio reflects the following situation: regarding preferred shares issued by HC Holdings K.K., a subsidiary, posted under non-controlling interests on the consolidated balance sheets, the value equivalent to 50% interest-bearing debt,
net value is indicated after excluding cash and deposits and adding debt on lease. For determination of the 50/50 allocation for preferred shares in light of the characteristics of the capital structure is based on the rating of Japan Credit Rating Agency, dated April 21, 2020. This change in accounting standards for the D/E ratio from 2020 has
been retroactively reflected in 2019 figures. Furthermore, in regards to the subordinated loans taken out in order to purchase preferred stock, 50% of this amount is deducted from interest-bearing debt and added to shareholders’ equity. Determination of the 50/50 allocation for the subordinated loan in light of the characteristics of the capital
structure is based on the rating of Japan Credit Rating Agency, dated October 4, 2022.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Financial and Nonfinancial Highlights
Number of employees (persons)Ratio of employees working outside Japan (%)
Consolidated

40,00033,46533,908100.0

26,05425,80320,00075.0

10,000

54.2

54.6

54.5

51.2

0

2020

2021

2022 (Year)

Former Hitachi Chemical joined the Showa Denko Group in 2020. We havebeen carrying out business portfolio restructuring, such as selling off
the energy storage devices and systems business in 2021, and areworking to optimize the allocation of employees.

Consolidated

4,562

4,213

4,422

2020

2021

2022 (Year)

7.1

7.3

2018

2019

2020

2021

Ratio of industrial waste sent to landfills (%)

3

Resonac (consolidated in Japan) and former
Hitachi Chemical subsidiaries (outside Japan)

80,00067,306

68,06067,52264,261

Consolidated

Resonac (consolidated in Japan) and former
Hitachi Chemical subsidiaries (outside Japan)

Resonac (consolidated in Japan)

68,2923.00

2.5

60,0004,000

2022 (Year)

We aim to recruit and train employees without being influenced bynationality, gender, or other factors, and maximize the value of individuality within our organization by accepting the meaningful value brought by
the unique and varying attributes of each person.

Amount of water used (excluding seawater; thousand m )

4,284

7.1

0

2019

The sale of domestic and overseas plants and Group company businesses, carried out as part of business portfolio restructuring, has led to a
P10
for the number ofchange in the number of employees. See
employees by region.

2

7.0
5.0

2018

Greenhouse gas emissions (Scope1+Scope2; kt-CO )

12.6

10.0

0

4,708

Consolidated

50.8

25.0

2019

Resonac (non-consolidated) and former
Showa Denko subsidiaries (in and outside Japan)

20.0

15.0

50.0

2018

Ratio of female managers (%)

33,68430,0005,000

Consolidated

3,000

2.00

40,000

1.8

1.8
1.4
1.0

2,000
20,000

1.00

0

0

1,000

0.2

0

2018

2019

2020

2021

2022 (Year)In a bid to reach our goal of becoming carbon neutral in 2050, we have
set the target of a 30% reduction in greenhouse gas emissions in 2030
from the level of 2013. We are reviewing the medium- to long-termtargets for each business, and are working to reduce our greenhousegas emissions and promote energy saving.

2018

2019

2020

2021

2022 (Year)

The Resonac Group regards a shortage of water as a global issue and is
working to make effective use of water and reduce its consumption. We
also treat the water used in our activities to reduce its environmental
impact before releasing it back into the environment.

2018

2019

2020

2021

2022 (Year)

We have set the target of achieving a ratio of industrial waste sent to landfillsof 0.5% or less in Japan, and are working to reduce the amount of waste we
produce and recycle and use our resources more efficiently. We also inspect
our sub-contractors for intermediate treatment and final disposal of waste toconfirm that they appropriately treat and dispose of our waste.

18

19

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

02
Where
to Go

— Leaders’ Letters

What Resonac Aims for

What kind of vision do we aim for to change society,what challenges do we face, and what transformations do we intend to bring about?
The passionate feelings of Resonac’s management are conveyed in these messages.

19

Letter from the CEO

25

Letter from the CFO

29

Letter from the CSO

32

Letter from the CTO

35

Letter from the CHRO

37

Human Capital Management Dialogue
Collaboration between the CEO and CHRO Accelerates the Speedof Management

41Team Takahashi: Aspirations for Human Resources Development

44

Team Takahashi—Excelling in Times of Change

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Letterfrom theCEO

A startup with 26,000 employees!
We are transforming ourselves
for Resonac to “change society”
What I Want to Achieve at Resonac
In January 2023, Showa Denko and Hitachi Chemical were integrated toform the functional chemical manufacturer Resonac. This is often
referred to as the second founding, and I rather consider myself as afounder. As the founder of a startup company with 26,000 employees,
what I want to realize, as stated in our purpose, is to change society
through the power of chemistry. It is true that the chemical industry
has its lights and shadows. Chemistry has contributed to the development of industries and affluent lives by creating materials for products
such as plastics, semiconductors, and electronic components, which
are indispensable in our daily lives. The reason I am in the chemicalindustry is that I was fascinated by the potential of chemistry. On theother hand, chemistry has continued to damage the global environment, such as CO2 emissions and marine plastics.

President and CEO

I have two favorite books. One is “Free to Choose” by Milton Friedman, and the other is “Silent Spring” by Rachel Carson. While Friedmanaffirmed the pursuit of growth by companies in a survival-of-the-fittest
capital market, Rachel Carson sounded the alarm about environmental
pollution caused by chemical manufacturers. The economy and theenvironment, once considered to be a dichotomy, we are now seeking abalance under the keyword sustainability. That’s why I believe we canchange society through the power of chemistry in this era.
The reason I want to take the lead in changing society through thepower of chemistry is driven by a strong sentiment. It is anger andintrospection regarding the current state of Japan. I love both Japanand the Japanese people, but I wonder why Japan is always trailingbehind the world in various fields, why many talented Japanese cannot
compete on a global level, why Japan’s GDP per capita is only half ofSingapore. I feel frustration about these things and regret that I
couldn’t change this situation as a business leader. I want to create aworld-class functional chemical manufacturer from Japan. I want tochange the industry’s conventional practice to achieve this. This is mydesire and responsibility.
However, my aspirations can’t be realized by my abilities alone. That’s
why we need to co-create with various companies, including competitors, and many stakeholders, innovate, and grow. For this to happen,
Resonac first needs to change. The new company name “Resonac” wascreated by combining the word “resonate” and the “C” of “chemistry.” As
the name of our company suggests, we seriously want to transform society as a Co-creative Chemical Company.

20

21

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

What We are Pursuing Now to Achieve thisA certain scale of business and high profitability are required to becomea world-class functional chemical manufacturer. If we don’t generate agood profit as a company, we cannot contribute to society or invest ininnovation. To be a “good company,” we first need to be a profitablecompany. For this reason, Resonac aims to achieve a 20% EBITDA
margin by 2025, while maintaining net sales of ¥1 trillion.
What Resonac wants to achieve after becoming profitable is to bringinnovation to society. Chemistry is the starting point of all industries.
We definitely need the power of chemistry to bring innovation tosociety. We will pursue the power of chemistry for that purpose, andeven if we acquire highly competitive technology and know-how
through co-creation, we do not intend to keep them to ourselves at all. I
believe that is our responsibility as a chemical company and the ideal
form of a Co-creative Chemical Company.
For example, one of the important innovations that Resonac should
bring about is reducing environmental load. We are currently taking
various measures toward carbon neutrality, and of course, various
chemical companies are innovating their own techniques and proceed-

Letterfrom theCEOing on their own paths. I believe that such efforts will reveal a winning
strategy in the near future. Even if we can seize that winning strategy, I
would like to make our technology and know-how open so that theentire industry can work on it.

The Moyamoya Meeting is a symbolic
initiative to maximize Resonac’s corporate
value.

There are three things Resonac should promote to change society
through the power of chemistry. The first is human resource development and corporate culture change. This is the most important issue.
The second is to refine material creation, in other words, to innovatematerials that support the evolution of semiconductors and electronic
components with as much added value as possible with the power ofchemistry. The third is to maximize corporate value by effective business portfolio management easily understandable for shareholders
and investors.
Development of Co-creative Human Resources and the Cultivation ofOrganizational Culture
The differentiating factor for corporate growth lies in whether the
management team has the gustiness to carry out the strategy andwhether the human resources to support it have been developed. As
the CEO of Resonac, what I prioritize the most is the development of
human resources to enhance individual capabilities and corporate
culture change. I believe that achieving this will lead to the maximization of corporate value.
To enhance individual capabilities, we have established several
training programs, such as training sessions to bolster the co-creative
collaboration capabilities and co-creative leadership training. For thecultivation of organizational culture, employees frequently hold roundtables, town hall meetings, and Moyamoya Meetings at their workplaces. The Moyamoya Meeting is a symbolic initiative to maximize Resonac’s corporate value, and it started this January. About 20 young
employees gather and raise three things they are typically frustrated
or concerned about, and I and CHRO Imai facilitate the discussion,
encouraging open and frank dialogue. The important thing is not to set
a theme in advance. Young employees always have something they areconcerned about. This meeting is not about solving these concerns but
an opportunity to think about how our Values can support them, and it’salso a chance to bring young voices to the management team.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company DataFirst, as the first round, we think about whether participants’ concerns
can be solved with our four Values, specifically, Passionate & Results-Driven, Agile & Flexible, Open Minds & Open Connections, and Solid
Vision & Solid Integrity. The issues are grouped into categories: thosethat can be resolved by an individual, those that can be resolved collectively, and those that cannot be resolved through our Values. By going
through this process, participants will understand how to use Values. In
the second round, participants prioritize the concerns that can be

Shifting towards specialty chemicals andco-creative, autonomous humanresources are the two key drivers for
maximizing corporate value.

resolved with Values in terms of effectiveness and importance andpropose solutions to the plant managers present. Employees’ concerns
often get stopped at their immediate supervisors and tend not to easily
reach the plant managers as the top management. Conversely, the plant
managers also have the opportunity to hear directly from young employees. Additionally, if there are any obstacles that make it difficult for aplant manager to decide whether to adopt a solution, I can also remove
those obstacles on the spot. While the purpose of the Moyamoya Meeting is to deepen understanding of Values, what I want to convey most is“enjoy your work and face things with a more open mind”. I believe it’s
essential for me, as the CEO, to actively participate and contribute inthese meetings in order to create an environment where we promote
co-creation based upon our Values.
There are two keywords for co-creative human resources. One isco-creation, and the other is autonomy. Japanese people often operate
efficiently within a vertical command system, following top-down directives, but there can sometimes be a lack of collaboration when it comesto lateral interactions. People who can navigate this are co-creative huP35 / Letter from the CHRO
man resources.
The portfolio strategy and human resources strategy must match inResonac’s human capital management. The portfolio strategy is totransform into a specialty chemical company. We must move frombeing a traditional diversified chemical manufacturer centered on
petrochemicals to a functional specialty chemical company. In specialty
chemicals, sales representatives listen to customer requests, and thedevelopment division purchases materials, produces prototypes,

verifies them, and then proposes them to customers. This requires
negotiation and communication skills. While it might seem obvious, inthe traditional bulk chemical industry, this kind of careful alignment
wasn’t necessary. Instead, top-down commands were most importantin petrochemical complexes to prevent accidents. Our company’s shift
toward specialty chemicals and developing co-creative, autonomous
human resources are the two main drivers for maximizing corporate
value, and this is the essence of Resonac’s human capital management.
P89 / Resonac’s Human Capital Management

The strength of Resonac’s human capital management lies in thecomplete synchronization of the CEO and the CHRO, dedicating our all
to it. Another strength I pride myself on is having a clear vision for thecompany 10 years from now. This is drawn from my experience at theGeneral Electric Company (GE), where I used to work for. They weresharing values and fostering competition. Although there was a senseof tension, because values were shared, everyone was able to feel asense of accomplishment when they succeeded. I strongly feel that I
want to create that world.
I tell our employees, “I will provide everyone with an equal opportunity. Choosing your career path is up to you. It’s not about work-life balance, but work-life choice.” While the company offers you the opportunity
to choose a way of living and working that makes yourself feel happy,
don’t think that you are unhappy because your way is different fromothers. Naturally, if profitability differs depending on the business

Letterfrom the

CEO

22

23

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

division in which you are enrolled, you may be envious of the business

Refining Materials Creation

division next door. That’s why we offer job rotations and internal job postings. Since learning opportunities vary by business, you can experiencevarious roles in sequence, promoting personal growth.

Within chemistry, semiconductors and electronic materials are one of
the fields where Resonac will be able to demonstrate its strengths. In thefield of semiconductor materials, Japanese companies, including Reso-At this year’s acceptance ceremony, I said, “I don’t know what thenac, have a dominant presence in the world. In order to improve theindustrial structure will look like 30 years from now, and I won’t makeany light promises about that future. Instead, I promise to turn you into
individuals who can thrive anywhere.” This, I believe, is the hallmark of aquality of functional materials used in semiconductor materials, it
requires the iteration of a wide range of experiments – an area where
persistent Japanese firms excel, building formidable industrial barriers.

genuinely employee-friendly company, and I want to make Resonac a

On the other hand, the petrochemical industry is difficult to demonstrate“dojo” - a place that trains individuals society needs.
Additionally, Resonac has adopted a Chief X Officer (CXO) system. We
have 23 business units and approximately 100 plants and offices, each

its competitiveness, and earnings tend to fluctuate, affected by market
conditions such as crude oil prices. In that sense, in the field of semiconductors and electronic materials, reorganization is needed to win, whileof which operates independently with diverse business management
methods. The CXO system facilitates cross-functional roles for them.
For instance, a person in charge of finance in a business unit reports
not to general manager of the business unit, but to the CFO. Similarly,

in the petrochemical industry, reorganization is needed to avoid losing.”
At Resonac, synergies are gradually beginning to emerge between
the strengths of the former Showa Denko and the former Hitachi Chemical. The fusion here is “Chemistry to Synthesize” of the former Showa

the CHRO serves as the supervisor of each business unit’s personnel
staff members. Finance and personnel representatives in each business unit, under the CFO and CHRO respectively, align with the policies

Denko, which is strong in raw materials, and “Chemistry to Formulate”
of the former Hitachi Chemical, which has a high market share infinished products for semiconductor manufacturers.

of the headquarters while also acting as partners to general managers
of business units. This organizational structure that emphasizes on

It is our strength that we can now address the performance requirements of semiconductor manufacturers comprehensively, going all thehorizontal connections can certainly be considered one of Resonac’s
growth engines.

way back to resin materials. For example, we have a product called“copper-clad laminate” in printed wiring board materials, which holds
the top market share globally. This product is manufactured by laminating copper foil, glass cloth, and resin, and the resin can be made fromthe molecular design level at the former Showa Denko. In addition, CMP
slurry, the world’s top market share product in the mixtures used forpolishing semiconductor wafers, can also be manufactured from themolecular design level of the particles, since the former Showa Denko
has ceramic business. Indeed, by merging the know-how and technologies of both companies, we have triggered a “chemical reaction” toproduce products with even higher specifications. The integration is not
something where results can be achieved overnight, but we believe it
P32 / Letter from the CTO
holds great upside potential for the future.

Reorganization to win in the field ofsemiconductors and electronic materials
Reorganization needed in petrochemicals
to avoid losing

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Building a Business Portfolio with a Focus on Shareholder andInvestor Perspectives
In terms of portfolio strategy, we aim to transition from a traditional
diversified chemical manufacturer centered on petrochemicals to a
specialty chemical company that performs specific functions. To
achieve this goal, we’ve been pushing for a transformation centered on
profitability, positioning semiconductors and electronic materials as
our core growth businesses, and have set a goal to increase their sales

Maximizing corporate value
by developing co-creative human resources
and bringing innovation to society

composition ratio from just over 30% to 45% by 2030. Growth should beachieved with this business. It is of utmost importance to continuously
grow by developing quality materials successively without lagging
behind the pace of our customers.
Meanwhile, we are currently reshuffling our portfolio, including
selling off several businesses. For the petrochemical business, thefocus is on increasing profit margins and safely operating the facilities.
In the ceramics and resins business, the goal is to advance R&D andsupply high-quality materials for semiconductors. If asked what
corporate value means to me, it is the stock price. However, the stakeholder I spend the most time with is our employees. I publicly declarethat the customer follows that. This does not mean that I take ourshareholders and investors lightly. By investing my time in our employees and enhancing their engagement, and by building a strong relationship with our customers, I believe we can maximize our corporate
value, leading to maximum returns for our shareholders and investors.
P25 / Letter from the CFO

KPIs based on materiality for sustainability and their progress, and theP25 / Letter from the CFO
process we take toward them.
The equity stories to persuade shareholders and investors are clear.
They consist of the story of growing the semiconductor and electronicmaterials business and the story of preparing people and the organization for transformation. I want to clearly communicate to our shareholders and investors that we will endeavor to realize these two stories.
P 7 3 / Semiconductor Materials Global Top Management Roundtable

The current stock price and PBR levels are far from the image ofResonac I envision for 10 years from now. However, as Resonac develops the ability to generate profits, and gains understanding from ourinvestors and shareholders that it will be able to achieve long term
growth through strengthened business portfolio, and for that goal it isdeveloping human resources and fostering an organizational culture, I
believe the stock price and PBR will gradually reflect these factors.
Recently, the number of long-term shareholders and investors who

Gaining Empathy from Shareholders and Investors
While we will thoroughly explain the changes in our business portfolio to
our shareholders and investors, we will not announce them as a medium-term management plan because I don’t see the point in setting numerical targets in the medium term. However, we will be sure to indicate thedirection Resonac should take in the future, explain our non-financial

resonate with Resonac’s story is undoubtedly increasing. We will continue topassionately tell the Resonac’s story through proactive IR and SR activities.
We hope you will join us in our excitement about Resonac’s mission
to change society through the power of chemistry. We hope for yourcontinued support in this endeavor.

Letterfrom the

CEO

24

25

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Contributing to the Improvement of the Performance of the Japanese Economy
When I entered the workforce, it was the end of the bubble era, precisely when the Nikkei
average hit its peak. Over the next 30 years or so, Japan’s economic competitivenessgradually declined. As a result of the deflationary economy, Japan became so inefficient thatit fell to the bottom of the OECD countries in terms of GDP per capita. Very recently, even the
Nikkei average, which is said to be at its highest post-bubble value, has yet to surpass its
peak level at the end of 1989. In the past 20 years, the average annual salary of workers inmajor countries has approximately doubled, but the average annual salary of Japanese
workers has decreased.

Overcoming
a number of challenges,
Resonac takes a leap forward

Letterfrom theCFO

Hideki Somemiya
Chief Financial Officer (CFO)

I strongly feel that our generation of Japanese people has a responsibility for causing such a decline
in Japan. I am driven by a strong sense of responsibility and frustration to put all my effort into breaking through this situation as long as our generation is involved in industry. The Japanese workforce inthe chemical industry has about 900,000 people. Let’s say that Resonac, with our 26,000 employees,
took actions to break the vicious cycle of Japanese industry and as a result, was able to significantly
enhance our corporate value. I have a wild dream that if we achieve this, through the chemical industry,
customers, suppliers, and other workers and their families, about 10% of Japanese households, or 5
million households, will become vibrant, which in turn will help invigorate the Japanese economy as awhole. Concepts sprout from a strong wild dream. Once a wild dream becomes a concept, it can bearticulated as a vision and turned into an action plan. Once you have a plan, all that’s left is to put it into
practice. I believe that Resonac’s core business in semiconductors and electronic materials is a global
treasure, and our long-term vision is the concept of taking this business to the next level.
Under this long-term vision of Resonac, I see my role as CFO in realizing the enhancementof Resonac’s profitability and corporate value. Through my past experiences at investment

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Databanks, extensive experience in the technology sector, serving as the CFO of a semiconductor

term vision, we have set a medium- to long-term ROIC target of 10%. Capital efficiency improvementbusiness at an electronics manufacturer, and launching new businesses, I’ve learned manythings such as the importance of replacing business portfolios, cash flow management, andhaving in-house pricing power, which is the key to improving profitability. While I am aware

is also a significant theme, and bold initiatives are required. Within the Company, we have introduced rules that will serve as a discipline for investment policies based on the portfolio attributes ofeach business to concentrate management resources on the semiconductor and electronic materi-that our company currently faces challenges in both financial and business efficiency, I

als business, which has the potential to realize high profit margins. We will limit investments inbelieve that by fully utilizing my past experiences, insights, and personal networks, we canresolve these issues one by one.
I describe the source of motivation as adrenaline. Given the various challenges ourStable Earnings businesses within the limits of depreciation and amortization, and actively expand
investments in growth businesses. We have also reformed our internal Investment Committee,
which asks the owners of each investment project to go beyond analyzing the appropriateness ofcompany faces now, I feel that my adrenaline levels are at their peak in my own history. I am

the investment from a numerical standpoint, and to ask

committed to working every day with the determination to accomplish the reformation of
Resonac at any cost and maximize the corporate value of Resonac.

whether they are prepared to achieve a reliable returnon their investment, and to request a thorough discussion of the issue. I am the chairman of the Investment

P49 / Financial and Capital Strategies

Committee, and members from a strategic perspective

Concentration of Resources on Resonac’s Advanced Semiconductor Packaging Technology
The reason I believe our semiconductor materials business is a global treasure is that thesemiconductor market is currently at a major turning point, and the next decade will be an era(CSO), engineering perspective (CMEO), risk management perspective (CRO), and technical strategy perspective (CTO) also participate, and we have in-depth discussions at each meeting. In some cases, multiple rounds ofin which material manufacturers hold the key to further advancements in semiconductor
performance. Until now, the improvement in the performance of semiconductor chips was
based on the world of More Moore, in which miniaturization technology in semiconductor
circuit formation (front-end process) has been the primary technology driver. In the world of

debate have been held at the Investment Committee, andI feel that we have a system in place for meaningful andserious discussions.

More Moore, semiconductor equipment manufacturers and wafer manufacturers enjoyed thebenefits. However, with the evident physical and cost limitations of miniaturization in thefront-end process, it’s said we have entered the era of More than Moore. In the world of Morethan Moore, we believe that our strong product lineup, which contributes to advanced packag-

In addition, I felt a strong discomfort at the end of2021, sh or tly af te r I jo ined t he C o m p a ny, a b o ut
cross-shareholdings that only generate only a return significantly lower than the cost of capital andcan be considered dormant assets from the standpoint of capital efficiency. In the process of confirming the validity and necessity of the reasons for holding cross-shareholdings in each business division, for example, when the business organization claims that transactions with its customers are made possible bycross-shareholdings, I ask, “Do you really need to own stock to have a business relationshipwith them? If you want, I can make an appointment and go talk to your business partner.” Asa result, the mindset of the parties involved was reset, and company-wide activities to eliminate these cross-shareholdings accelerated. And as a result of the diligent negotiations by
the business division members, we were able to almost reach a point where we could sell
P128 / Cross-Shareholdings
all of our cross-shareholdings.

ing technology in the back-end process, will be essential for improving the added value ofsemiconductors. Resonac, as a material manufacturer, will not only provide the materials that
semiconductor manufacturers, our customers, demand but will also draw and propose aroadmap for advanced packaging technology ourselves. In doing so, we can simultaneously
further improve presence in our industry, strengthen our profitability, and enhance ourcorporate value. This is a clear growth story that only the Company can envision in the world.
To realize this, the Company has decided to concentrate management resources on thesemiconductor and electronic materials business.
To ensure the successful execution of Resonac’s growth story, I have been moving forward witheach measure by acting swiftly and with a strong will of my own since I became CFO. In our long-

P52 / Strategic Allocation of Management Resources

26

27

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Overcoming Immediate Challenges in Pursuit of Our 2025 Targets
In order to ensure that Resonac will make great strides in the future, we must quickly overcome the challenges at hand. As CFO, I take seriously the fact that the financial results forfiscal 2023 will be severe, and we intend to take this opportunity to clean up the negative legacy of the past by removing the “pus” that has become visible in the current challenging
business environment. It is necessary to promptly reform our earnings structures andaccelerate our portfolio reforms.
In our core semiconductor and electronic materials business, due to sluggish demand forsemiconductors and data centers, we foresee a significant decline in profit for fiscal 2023.
This is the flip side of our decision to concentrate management resources largely on thesemiconductor and electronic materials businesses, and in this sense, we somewhat expected the influence of the semiconductor cycle on the business structure and prepared for suchcircumstances. However, the semiconductor industry, which is essentially our customer
base, serves a wide range of sectors like consumer goods, automotive, industrial, and data
centers. Accordingly, we believe that by diversifying our customer base and applications, we
can transform our business structure to one that targets more stable, higher growth. In
addition, in the Mobility segment, the parts business for internal combustion engines has
been affected by the market shrinking faster than anticipated, affecting our profits.
To address this situation, Resonac’s policy is to undertake radical, unconventional actions
and structural reforms based on an accurate understanding of demand projections andchanges in the business environment, and we are determined to secure a performancerecovery from fiscal 2024 onwards at any cost.
Our top priority for all business domains is to ensure that we provide appropriate added
value to our customers through products that enable us to secure our standard marginal
profit ratio, and to improve our business structure so that we can generate solid profits. In
other words, accelerating the elimination of unprofitable businesses is of utmost importance.
Eliminating unprofitable businesses is also key to achieving a 20% EBITDA margin in fiscal
2025, which is the focus of our long-term vision. In the mobility segment, 30% of sales arefrom unprofitable businesses, and other segments also have a fair share of such businesses.
For each unprofitable business division, we have set milestones for cost-cutting strategies
such as substantial price increases, and we have defined policies and action plans to downsize or withdraw businesses that cannot improve profitability within the specified period andP50 / Elimination of Unprofitable Products
are monitoring them quarterly.

It was also necessary to change the mindset of our business divisions’ employees towards
prioritizing profit margins, even at the cost of reduced sales. Accordingly, in our long-term
vision set three years ago, we lowered the sales target for 2025 of 1.6 trillion yen, signaling
our intent to prioritize the eradication of unprofitable businesses and enhancement of
profitability, and we have revised our sights to maintaining sales of 1 trillion yen or more.
While some measures require approval from our customers and can be time-consuming, weare already making progress, and the effects are gradually becoming apparent. In cases
where it is difficult for a business division to reach an agreement with the customer alone, I
personally step into negotiations with the customer.
On the other hand, in conversations with our shareholders, some express concerns that
we might be allocating too much management resource to solving our businesses facing
challenges. They point out that this could mean fewer resources for growth investments or
considerations of alliances and acquisitions in the semiconductor materials field, potentiallyposing a significant risk. Certainly, it’s true that we are currently investing a lot of resources
into businesses facing challenges. However, as mentioned earlier, we are continuously monitoring and gathering information about potential alliance targets, including opportunities inthe semiconductor material industry and capital expenditures in growth areas discussed in
the Investment Committee, and this includes listing potential companies in long and shortlists. While working on our businesses facing challenges., we also actively consider discontinuous growth and acquisition opportunities in collaboration with CSO Tomomitsu Maoka to
consider them in a timely manner.

For the Development of the Future Generation Supporting Resonac and a
Sustainable CFO Organization
Each of the initiatives to improve profitability and corporate value I am sharing with you, are by
no means something that only I can think of, but rather measures and ideas that may not be
common knowledge in our company or in the chemical industry, but are commonplace in otherindustries. We are currently in an intense period of change, and as someone who has come fromoutside, I’m leading the charge. However, in order for Resonac to continue to grow in the future,
it is essential to build a stronger CFO organization, develop the generation that will lead thecompany in the future, and foster a culture in which people can demonstrate their values.
In terms of the organization, I have been transforming the way the CFO organization operates
since taking my position. Firstly, I transferred teams responsible for budgeting, medium-term
management planning, and M&A considerations, which were previously under Resonac’s
strategy divisions, to be under my direct control in the CFO organization. I have strongly advocated for a reform of the CFO organization mission and transformed our CFO organization, which

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

had previously focused on supporting strategy, into an organization that can also lead strategic

Following last year’s first phase, in which participants were selected from the CFO organiza-

decisions. Additionally, over 150 accounting members, who were affiliated with individual
business units, were restructured to be under the CFO organization, rather than remaining
affiliated with their respective business units. By doing this, we have been able to promotetion, this fiscal year’s second phase had participants from other CXO organizations andbusiness divisions as well and even through the Some Lab, I strongly feel the motivation of
our employees has increased. I will use my time generously so as not to let that fire ofcross-divisional perspectives, and advance task standardization and human resource develop-

motivation die out, and I cannot wait to nurture the younger members.

ment from a Group-wide viewpoint rather than a strongly siloed mindset.
In terms of human resource development, I have placed a specialist dedicated to humanresource development directly under me. We have introduced systems unique to the CFO
organization, such as department-wide job rotations and career planning, and this includes
accounting members from individual business units. While we have many promising young
employees in our company, many had difficulty visualizing themselves as career owners, andit has become customary for them to work in the same department for long periods of time.
I’ve been promoting a system where you create your own career in order to transform themindset of each member of the CFO organization. At the end of last year, I personally explained using several career tree examples, and together we discussed possible future careerplans for all members of the CFO organization. Following that, we conducted career interviews
with all employees for each department at the beginning of this year, and the results showthat each individual, especially younger employees, is becoming much more motivated.
In addition, last year we started an in-house MBA program called Some Lab. For thisprogram, I myself served as a lecturer, and the program consisted of about half practicalcase studies based on my own experience and half lectures by university professors. In theend, each group was asked to formulate and present a strategic proposal to Resonac.
CFO area career tree
CFO area

Subsidiaries, headquarters, and other areas
SubsidiaryCEOHeadquarters
CXO

Business Divisions

CFO

Career path

Management

Planningand strategy
Specializedarea
CFO area
basics②
CFO area
basics①

Subsidiary
CXO

RHQ
CXO

RHQ
CFO

Leadership position
Planning
department head

Subsidiarymanagement

CMO
staff

CSO
staff

Financial

RHQ
staff

Subsidiary
staff

Leadership position
Financedepartment head

Accounting Managerial
consolidation accounting

Taxes

IR

M&A

Tax rate calculation

Professional
positionOfﬁce accounting
and ﬁnanceNon-consolidated
accounting

Ofﬁce cost calculation

Business area

FP&A

FinanceDX

Business division
results management

Business
division head

Business division
planning and strategy

Business
division staff

Business
division sales

To our stakeholders
I would like to reiterate that the Company has a clear story for future growth. Since last year, wehave been focusing on IR activities to convey what kind of company we want Resonac to be seenas. As a result, global institutional investors with long-term holding (long-only) who empathizewith our growth story and transformation story have been increasing as top shareholders.
However, at the same time, the current stock price and PBR of Resonac still show a small
conglomerate discount. We are aware that the Company is not yet fully trusted by all investors. To gain further trust from our investors in the future, it’s essential to ensure our scenarios are executed and promises with our investors are kept, and deliver solid results in terms ofbusiness performance. We are strongly aware of this part of our daily transformation.
Lastly, I want to mention three reasons why I believe Resonac will surely leap forward.
The first is that the Company has the ability to develop semiconductors and electronicmaterials, which can be said to be the world’s treasure, and above all, I personally have apassionate desire to achieve growth. As CFO, I want to take action myself and support theCompany in continuing to be at the forefront of the semiconductor industry, focusing on theevolution of advanced packages. The second is the quality of CEO Hidehito Takahashi as apresident. I believe that Mr. Takahashi will become a president that is representative of theJapanese manufacturing industry. As a key member of Team Takahashi, while committing to
the complete execution of various management policies, I strongly hope that Team Takahashi can bring about a reformation in Japanese companies that will lead to improved
performance not only at Resonac, but also in the Japanese economy as a whole, which has
lost its vitality. The third is the power of human resources. We are committed to humanresource development across the entire company, and within the CFO organization, we
passionately focus on human resource development, striving to unlock individual awareness and potential in an aim to drive transformation into a Co-creative Chemical Company,
ultimately enhancing corporate value.
We hope that you watch Resonac’s growth, as a company genuinely dedicated to changing
society through the power of chemistry.

28

29

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Materials Manufacturers Pressed to Transform to Compete on the World StageI joined the former Showa Denko in October 2021, and with the launch of the new system inJanuary 2022, I took on the role of CSO. The role of the CSO is to define what needs to be done
to become a world-class functional chemical manufacturer and broadly promote the purposeof the integrated new company to change society through the power of chemistry.
With the full integration of former Showa Denko and former Hitachi Chemical, the scale of
the Company has grown significantly. However, just because of this integration, the fundamental essence of the Company does not change immediately. To compete as a global company inMaximizing corporate
value through strategic intelligence
the global market, not only the size but the content and quality must also change. To makeResonac a world-class functional chemical manufacturer, we need to identify any gaps withthe world and chart a course to close those gaps through means such as reviewing ourLetterfrom theCSO

Tomomitsu Maoka
Chief Strategy Officer (CSO)

business portfolio, establishing a competitive business model, strengthening partnerships
inside and outside the company, and reforming organizational operations.
This gap was not something that only became apparent after the integration. Looking at thehistory of the semiconductor and electronic materials industry, which we position as our corebusiness, it is evident that Resonac must change.
I have built up my career at foreign-owned consulting firms, semiconductor and PC manufacturers, and Japanese semiconductor manufacturers. During this time, I witnessed thedecline of Japan’s high-tech industry firsthand. Particularly in the semiconductor device
industry, manufacturers are constantly merging, especially in the U.S., and I believed that theeffects of this industry reorganization, such as negotiation power between customers andsuppliers and technological concentration, would undoubtedly impact the surrounding ecosystem. However, I did not see any signs of this in the adjacent semiconductor materials industry,RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Dataand I wondered why, even though it should be compelled to transform as an industry tosources and utilize it for strategy. At the same time, it’s also essential for the Company tocompete globally.
Then, at the end of 2019, news came of the merger between Showa Denko and Hitachi
Chemical. I thought, “It’s finally here; it’s beginning.” Later, I met the current CEO Hidehito

proactively disseminate information.
As part of such efforts, we’ve set up a governmental liaison office directly under the
Corporate Planning Department and started its operation. Semiconductors are a business

Takahashi, and felt confident that our visions aligned. Driven by the desire to create a company

that is very sensitive to geopolitical factors. It’s clear from last year’s supply chain disrup-that could compete globally, I decided to join. I was convinced that I could demonstrate myabilities in this environment precisely because of the merger with Hitachi Chemical.

tions that situations arise that can’t be resolved with just private company measures.
However, despite our presence in the semiconductor materials market, we lacked the ability
to consolidate our various government contacts and build stable relationships. For thisConcept of the Strategic Intelligence Required
The key to our strategy is to transfer our technology and potential to the value of the actual
applications in which our products are used.
The former Showa Denko had expertise in changing the physical properties of materials,
having strengths in the upstream of the material supply chain. Meanwhile, the former

reason, we have established a function to strengthen our connections with government
agencies and to accumulate the knowledge and experience generated as a result on a
P73 / Semiconductor Materials Global Top Management Roundtable
regular basis as an organization.

Scenario Planning for Intelligence Enhancement and Establishment of RHQ

Hitachi Chemical had strengths in the downstream, combining materials to create functions
and offering them to customers. Being able to integrate material development and its combinations internally expands the options for optimizing product functionality. Moreover, understanding the downstream applications more profoundly allows us to direct development

Furthermore, we’re also engaging in scenario planning to probe the potential impact of geopolitical risks in the future. Scenario planning involves constructing various scenarios from both
long-term and short-term perspectives within teams. We estimate a wide range of impacts interms of business impact and risk without bias, even for events deemed unlikely. We actually

resources in a direction where added value increases. Understanding the entire supply
chain is crucial in building a business model as it bridges the gap between the buyer’s value
standards and the provider’s logic.
Regarding overall optimization as a company, until now there were business strategies

intentionally examine even those events seen as having a low likelihood of occurrence.
The essence of scenario planning is to prepare management for unforeseen events byconducting thought experiments on events that are not considered as an extension of daily
operations, such as the costs and methods of response tofor individual business units, but a comprehensive Companywide strategy had not been fullylaid out. What was previously called a Companywide strategy was a bundle of individual
business strategies with a simple addition of numerical aspects. To maximize growth andprofit Companywide, it is necessary to intentionally decide which businesses to expand andanticipated impacts. An urgent issue was the impact on business from Russia’s invasion of Ukraine last year. In the semiconductor field, the effects of U.S.-China decoupling arealready apparent, and we expect these effects to continue.

which not to. For this reason, we’ve emphasized distinctions among business units, meaning
we’ve clearly determined variations in the allocation of company resources across different
P52 / Strategic Allocation of Management Resourcesbusiness units.
In portfolio construction, we will focus our resources on the Semiconductor and Electron-

widely known, few companies incorporate it as a regular
activity. These efforts are essential for our long-term strategy
of being a company that can compete on the world stage, andic Materials segment as our Core Growth business. At the same time, for products thatcannot be expected to generate a certain level of profit on a regular basis, we will consider
price increases or withdrawals and make business decisions accordingly.
I believe it is essential to incorporate the concept of strategic intelligence to execute thisstrategy. We will analyze and process intelligence obtained from internal and external

one of the ways we are further accelerating this strategy is bystrengthening our regional headquarters (RHQ).
The background for establishing RHQs is the decentralization and diversification of business environments in eachcountry and region in terms of laws, regulations, and businessAlthough the scenario planning thought process is becoming

30

31

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

practices. Rather than only controlling each region directly from Japan, it is also necessary
to coordinate with each region’s unique business environment to find the optimal relationship. For this reason, we have set up four RHQs: in San Jose, U.S. as our North Americanbase, in Wiesbaden in Germany as our European base, in Shanghai as our Chinese base, andin Singapore as our Southeast Asian base.
We are building a chain of command between Japan and each region, customizing operational policies in each region, and strengthening support in corporate functions. Additionally, based on the information from the RHQ, we will clarify how the headquarters will makedecisions, or how the RHQ will make judgments promptly, establishing clear distinctions
between their roles.

Bringing the Resonac Brand of Functional Chemicals to the WorldThe company Resonac was born in January 2023. It was our second foundation. We havechanged our company name from Showa Denko to Resonac, shifted from a diversified chemical company to a functional chemical company, and we want to convey to everyone aroundthe world that our innovative management team is implementing company reforms. We arebuilding our brand strategy based on this sentiment.
To be honest, although the name Showa Denko was somewhat known, many people didn’tknow what the company did. To prevent this from happening for Resonac, we must communicate effectively that we are a global functional chemical manufacturer and that we are strong
in semiconductors and electronic materials. By strengthening the brand power of Resonac,

Positioning Sustainability at the Core of Management
Last year, the Company established three issues of materiality for sustainability as crucial
management issues to ensure sustainable growth together with society. At the same time, weannounced both internally and externally the policy that sustainability is at the core of management. This means that whether it’s a Companywide strategy or a management strategy,
both exist to support the realization of materiality. Realizing materiality is the key to achieving
our management strategy and long-term vision.
We launched the monthly Sustainability Promotion Council last year as a mechanism torealize materiality. The council is attended by all CXOs and business unit heads also participate once every three months. We have defined sustainability as a central issue that top
management must decide upon, and a system has been established to discuss and makewe hope to boost employee pride, gain widespread recognition in society, and attract humanresources who can compete globally. This will contribute to improving corporate value.
The field we will be competing in is the world, and we need to respond quickly. In the
future, there will be fewer and fewer things that can be solved by a single company. In orderto deepen collaboration both within and outside the semiconductor industry, we will put evenmore effort into digitalization and globalization in our brand strategy.

Now That We Have the Resources, We Need to Win in the WorldA year and a half has passed since a new system was established through the substantive
integration and I joined as CSO. In the midst of various matters related to the integration, I
have played the role of a compass. Even if it was sometimes unpleasant to hear, we havedecisions on a wide range of issues, including carbon neutrality and human rights, within the
Sustainability Promotion Council. We have set nonfinancial KPIs at the Companywide level
P55 / Promoting Sustainability
based on materiality and discuss initiatives to implement them.
Achieving sustainability requires Companywide involvement. We have added sustainabili-

always looked at the medium- to long-term and responded as a team.
From my own experience, it’s rare for a company of this size to make decisions and act
with such speed. I believe that I am able to exercise leadership because I am an outsider. I
want to be the catalyst for innovation by looking at the Company objectively, based on myty items to the performance evaluations of all CXOs and business unit heads from this year.

career experience developed outside of Resonac.
Resonac now has everything it needs to compete: human resources, technological capabilities, system, and strategy. I feel that resisting decline and aiming to win is a great motivation, and it’s an admirable thing. I don’t want to see any more Japanese companies lose, andI don’t feel like Resonac, which has all these resources, will lose. We hope for your continued support for Resonac competing on the world stage.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

The Job of the CTO is to Bring the Future Toward Us
I assumed the position of CTO at the birth of the new Resonac. The CTO is a technical specialist in the Company’s CXO structure, and the highest position of engineers for a typical manufacturer, but that role is evolving for Resonac today. For example, I come from the hard disk
media business of the former Showa Denko, so I don’t understand every aspect of technology,
especially when compared to frontline employees. This is even more the case for the former
Hitachi Chemical. So, what does a CTO do? I see the CTO’s role as pointing the direction
where Resonac should go from a technical point of view, or bringing the future toward us.

Resonac launches—Creating an exciting future through dialogue and co-creation!
Since the industrial revolution, manufacturers following a self-sufficient policy under

Letterfrom theCTO

Masato Fukushima
Chief Technology Officer (CTO)

capitalism and consumer-based economy have invested capital in technological development to produce goods and earn returns from society. The primary role of CTOs back then
was to refine technology as a weapon and unite the engineers. Now that the foundational
notion is crumbling, it is also important to point in the direction of technology that is goodfor the Earth and what employees can be proud of. To do so, there are limits to thinking only
by yourself and an overview of technology is essential. That’s the ability that “brings the
future toward us”, which a CTO should demonstrate.

A Ceaseless Sense of Urgency—If We Don’t Change, We’ll Decline
I’ve always thought that if we don’t change, we’ll decline. Perhaps change may be the only
way to even maintain the status quo. I see this integration as a very positive opportunity toincorporate new ways of thinking. Of course, change can be extremely stressful, but wemust and will change, even to the point of renaming our company. If we can’t overcome this,
we won’t remain a company that people around the world will support for the next 100
years. That’s why I believe we must be people who can enjoy change.

32

33

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

The hard disk media business, which I had been a part of for many years, began about 40
years ago and has continued to expand. However, during this time, the number of equipment
manufacturers, material manufacturers, and customers has decreased. Surviving thiscompetition is a testament to our success, and there’s potential for further growth with newtechnologies. However, it is true that both the technology and the market are saturated, andthe increased scale means less room for error, making it harder to take on the challenges of
new technologies or customer needs. Generations that experienced growth and failures see
things differently than those who joined after the company scale expanded, and I am contemplating how to share those perspectives and create spaces where failures are allowed, forinstance by using strategic personnel rotations as an alternative.

Accelerating Open Innovation by Promoting Dialogue Through the Stage for
P15 / What is a Co-creative Chemical Company?
Co-creation
Regarding open innovation not only internally but also with external parties, in 2017 weconceived the concept of providing a venue where diverse people can gather for the creationof new pipelines, and in 2022 we promoted this concept mainly through the Stage for Co-creation that was established in Yokohama. Not bound by conventional methods, the Stage for
Co-creation is positioned as a place to explore new initiatives. Under the direct supervision of
the CTO, Resonac is pursuing R&D themes that aim to “change society” as long-term R&D, and
it is also working on enriching the technology database andestablishing coaching and mentoring systems as platforms toachieve this goal.

The Dialogue Triggered by the Integration Creates Synergy
This integration, combining two companies each with a 100-year history, is quite challenging.
However, in the field of R&D, I feel that the straightforwardness that engineers from bothcompanies show to customers is very similar. Yet, the ways they fight against challenges differ.
The former Showa Denko has a strong belief in chemistry as the seed of industry. It has a strong
sense of being upstream in the value chain as a technological culture, with a history of seeking
electricity and building businesses based on electrochemical engineering. For this reason, it isgood at making and improving what it wants to make with the equipment it designed, and therelationship between its manufacturing equipment and processes is unique. Meanwhile, theformer Hitachi Chemical is located downstream, relatively close to the end consumers, and isvery skilled at understanding needs and mixing various materials to create new functions.
After two years of trial and error since the decision was made to integrate the two companies, we have come to know each other and have begun a dialogue about how we can bring
their different strengths together to create products that can be used in a certain way, given
their different technologies. For example, when a petrochemical business engineer from theformer Showa Denko develops a catalyst that is a key technology, an engineer from theformer Hitachi Chemical will consider it and try to apply it in another business. For anotherexample, if a midstream and downstream resin developer who asks, “Is there a resin likethis?,” gets to understand the upstream production technology, it will be possible to comeup with ideas such as, “If we improve the manufacturing equipment in this way, we can makeit,” or “If we redesign the raw material itself, it can express new functions like this.” We havethis way of creating synergies, and we would like to create a mechanism to maximize theP65 / R&D and Intellectual Property Strategies
expression of such synergies.

The situation for the Stage for Co-creation has changed
dramatically in the six years since the concept was created. I
believe that we must conduct a grand experiment on this Stagefor Co-creation. One of our long-term R&D efforts is the development of next-generation high-speed communications materials
with an eye toward 6G (Beyond 5G). In a 6G world, although thefrequency band used will exceed 100 giga, materials that can beused in that frequency band do not exist today. We would like tointegrate upstream and midstream technologies to provide
world-class composite materials in the 6G domain, and provide
essential technologies for the coming society. We are also
working to develop innovative technologies to achieve carbon
neutrality. Aiming for the “carbon resource recycling” of basic
chemical products, we are taking on the challenge of developing waste plastic-to-olefin recycling technologies in the plastic chemical recycling process, which involves collecting waste
plastics and turning them back into raw materials. Currently, we are pursuing open innovation with partner companies. We are also working with our petrochemical business on CO 2
separation, capturing and use initiatives as a method to develop technologies to replacefossil fuels. Ideas for such efforts stem from a love for our children and grandchildren,serving as motivation for engineers.
This development requires understanding what customers and various other stakeholders are currently contemplating and what they wish to achieve next, and jointly brainstorming newer perspectives, materials, and processes. Pursuing immediate R&D too much often
leads one astray from the actual intentions of the customers or the market trend. UnderRESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Datasuch circumstances, we must pause, verify the direction of the chosen research with stakeholders such as customers or partner companies, and then determine the best path to the
future that we should be working toward. Furthermore, the challenge lies in how we cantransform the material and chemical industries, which have traditionally been required in
the society where massive consumption of chemicals has been a premise. The Stage for
Co-creation going forward must be a venue where we will consider such issues from a broad
perspective, while technological trials and errors are continuously undertaken with an eye
toward the next 100 years.

Achieving Further Acceleration Through the Use of Materials Informatics
The changes as a result of the integration are not limited to the organizational culture,business portfolio, and human resources. The forms of open innovation, as well as the levels
and nature of computational and information sciences, are also evolving.
Materials informatics is a method that statistically processes how materials are combined
to create what kind of product, predictively determines combinations of materials andmanufacturing conditions that satisfy required functions, thereby significantly streamlines
and expedites development. In process manufacturing industries that utilize chemicals andpetroleum as raw materials like the Company, the application of this method is expanding,and I believe an era when engineers and customers routinely use computational scienceand information science is quickly approaching. For this reason, customization tailored to
specific needs will be important. While achieving this is highly challenging, members of our
Research Center for Computational Science and Informatics are striving to achieve it byunderstanding the aspirations of their customers (internal users). Members who have beenenvisioning the future and creating internal networks of partners since about a decade ago,
when there were even no budgets, are now leaders, and they’re deepening dialogues within
our company and the market and generating businesses with young engineers.
Having a diverse range of businesses has a major positive effect on the acceleration of our
R&D. In the market, our product portfolio ranges from petrochemicals and basic chemical
products to semiconductor material products, as well as materials like resins, metals, andceramics, and the combinations of these materials are endless. In some cases, answers thatmight take a century of experimentation can be produced in a few minutes to hours with thismethod. In addition, the evolution of materials supporting monozukuri (manufacturing) not
only drastically enhances performance but also enables the creation of new applications.

Becoming Engineers Who Take Pride in Changing Society Through the Power of Chemistry
It is important to realize that the starting point is the engineer. For example, take the concept ofcarbon neutrality. Up until now, there’s been a tendency not to be open about the progress of one’s
own technology. However, in an environment where no one knows if what we’re doing is 100%
correct, sharing information and using technology collectively would actually be a better option.
This is even more so if everyone has the same goal of helping the Earth. Of course, to continue
research sustainably, pursuing profit is necessary, and the balance is not easy to achieve. However,this may be solved by considering intellectual property strategies and new forms of alliances.
For this reason, engineers must think autonomously and go beyond their own boundaries.
When in doubt, our purpose and values are where we return to. We are also further increasing
opportunities for dialogue within our research centers, discussing how to specifically interpretthem from technological development perspectives.
Engineers are people who can’t help but enjoy testing hypotheses based on their own ideas
and insights. And of course, engineers want to win and succeed after all. However, R&D is a seriesof uncertainties. In order for such people to realize our purpose to “Change society through thepower of chemistry,” it would be necessary as the first step to ensure that what they createbrings joy to customers and the market, and that if that leads to profit, research and development
budget might eventually increase, leading to desired research opportunities. Another necessary
aspect is the pride in knowing that the technology engineers contributed to is protecting theP62 / CTO Roundtable with Young Researchers
Earth and guiding it in a better direction.
To this end, diverse career paths for researchers and engineers are desired. Although I spent most of
my career in development field in business unit , I also experienced being General manager of Marketing
Department before becoming General Manager of Production & Technology Control Department. In the
future, R&D theme leaders might even come from marketing backgrounds.

Heading Toward an Uncertain But Exciting Future
Lastly, let’s consider why Resonac needs a CTO like me today. Firstly, I already have a blueprint of what we are going to do in the future. I know the approach, having always aimed tocompete globally and having continued “co-creative” R&D. Having regrettably experienced asignificant restructuring during my time in business unit, I also understand how game-changing technologies emerge, how customers utilize them to innovate, and the pace of that change.
Secondly, I possess decision-making skills developed amidst rapid changes.
My other qualities are a certain confidence and generosity. Join me aboard the Spaceship Earthproposed by thinker Fuller and admired by Steve Jobs, and move together toward a bright,
positive, and uncertain but exciting future!

34

35

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Letterfrom theCHRO

Nori Imai Chief Human Resource Officer (CHRO)

People drive business growth
We focus on developing co-creative talent who can change society
Resonac’s Human Capital Management
Our portfolio strategy is to become a functional chemical manufacturer that can compete
and co-create globally. The value of a functional chemical manufacturer is not just sellingchemical products but providing functions that customers and society demand (such as
maintaining high adhesion even with ultra-thin films). A broad technology platform isnecessary to create such functions, and by integrating the former Showa Denko and theformer Hitachi Chemical, we have built a broad technology platform, both organic andinorganic. Using this platform as a starting point, we aim to combine technologies in unconventional ways through collaboration and co-creation with stakeholders, primarily customers, and provide new functions, which are achieved by “co-creative talent” *1 . Our humanresource strategy is to create co-creative talent, and Resonac’s human capital managementaligns our management and business strategies with our human resource strategies.
P37 / Human Capital Management Dialogue

P89 / Resonac’s Human Capital Management

Key Issues and Initiatives in Human Resource Strategies

chemical company that can compete on a global level”, aiming to establish uniform humancapital management globally.
We are currently focusing on the following three key measures.
The first is the creation of a corporate culture. Creating an environment in which all Group
employees can eliminate unconscious bias and maintain psychological safety is first of all
an important foundation for each individual to achieve their own potential. We then aim tocultivate a culture that promotes the activities of co-creative talent who autonomously
connect laterally based on purpose and values to drive projects with passion and ambition.
For example, the global award AHA! is one of the leading initiatives to generate co-creation.
While the demonstration of values has been incorporated into personnel evaluations, we
also want to encourage and praise people who practice these values from a different perspective. By sharing each initiative with all global employees, we aim to foster co-creation
beyond boundaries and create a culture of mutual growth and refinement. We have therefore carried over and restarted the global awards previously held by both the former Showa
Denko and Hitachi Chemical.
The second measure is the provision of growth opportunities. We view Resonac as a “man-We aim to grow as a functional chemical manufacturer through co-creative talent, and wehave identified four categories of human resources issues as key focus area in our strategies, and set as “HR Materiality”. KGI/KPI targets for 2030 have been set for each material
issue. In the two years from 2023, we will launch an initiative as “the start of co-creative
talent development”, and we aim to “deepen and establish a co-creation culture in theagement training ground ,” with a diverse range of businesses in different industries andstages. Experiencing different phases of business through strategic rotations significantly
broadens one’s perspective and enhances one’s adaptability. I always say that “If you’re
uncertain about your career, choose the harder path.” This is because it increases theGroup” by 2025. We have set the goal for 2030 as “making a leap forward to a co-creative

experience. In the age of VUCA, growth is less about acquiring knowledge and skills, but*1 Co-creative talent: “ People who embody ‘Purpose and Values (see P.03),’” as talent who can “autonomously connect with others beyond companies and departments with empathy and resonance, leading creative transformation and problem-solving through co-creation.”

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

more about first doing, gaining insights from such experiences, and then connecting it to thegy platform gets fragmented, and this strength disappears. Conversely, if we move in a direction

next action. Therefore, based on the idea that each and every employee is the owner of theircareer, we also have an internal recruitment system that contributes to autonomous careerdevelopment.

that connects these pieces of the platform, endless possibilities emerge. Especially since we do
not produce final products, there are countless opportunities to provide functions to any industry and create new growth businesses. It’s the people who can connect these pieces of the

The third measure is to provide learning opportunities to logically support growth ob-technology platform, forming teams that mutually enhance each other’s strengths.

tained from experience. We have prepared unique training programs tailored to our humanresource strategies, such as co-creative leadership training where one learns the leadership skills needed to develop subordinates, and training sessions to bolster the co-creative

Since the decision to integrate the former Showa Denko and former Hitachi Chemical, I led
the integration preparation as the person in charge of the integration at former Hitachi
Chemical. In fact, when the former Hitachi Chemical was choosing a partner, I was the firstcollaboration capabilities, which teaches methods required to lead co-creation beyond

to say, “Showa Denko would be a good choice!” There are many areas where the two compa-

departments, without relying on organizational hierarchy. In addition, we are conscious oftraining that focuses on the individuality and strengths of each employee, and we haveadopted the FFS theory*2 and competency assessment training.

nies can complement each other, and I sensed great potential. I am
confident that the functional chemicals we aim for can become agreat industry originating from Japan with a global presence. As

We will gradually expand these personnel measures starting from senior-level managers,

CHRO, I want to put Resonac on a growth trajectory and continuously

including officers, and roll them out to all employees. Although the penetration of theCompany’s purpose and values among employees has started to show results, it may takeabout 10 years to fully take root, so a steady approach is necessary. It’s important to drive

improve its corporate value.
There are two reasons why I think I can lead these efforts.
The first is my strong desire to thoroughly engage with the unique-transformation with the participation of all employees. Based on a recent comprehension
survey performed globally, although nearly 100% recognize the purpose and values, 80%
understand them, 60% empathize, and only 30% have implemented them. While each person
may proceed in different ways and speeds, it is important to increase the percentage ofness of each and every employee and unleash their potential. My
strong commitment to engage with each individual, regardless of
their position, gender, or affiliation, serves as a driving force inleading our human resource strategies. I travel to various locations

employees who implement the purpose and values.

with the CEO, directly interacting with employees, getting a feel forthe atmosphere in the field, and considering what initiatives are needed right now. The
Moyamoya Meeting was one of the measures I thought of during this process.
The second is the presence of encouraging team members from diverse backgrounds. My
capabilities alone are limited, so I always propose what I want to do to team members andtry to involve various departments in co-creation.
Since joining the former Hitachi Chemical, I have experienced different workplaces every
two to three years, from setting up a joint venture with DuPont to PR and IR, sales in the
U.S., and business planning. As a novice everywhere, the reason I managed in all these rolesis that I gradually acquired the ability to form a team while addressing each individual’s
uniqueness. I believe in the endless possibilities of a team once it is formed.
The Company is now in a period of transformation, and the key to leading it to a global,
top-level functional chemical manufacturer is co-creative talent. We will firmly establish thedevelopment of co-creative talent and achieve sustained growth in this age of VUCA. We
hope for your continued support in this endeavor.

P14 / What is a Co-creative Chemical Company? -Who?

P91 / Human Resource Strategies

Mission as CHRO
The key to the Company’s growth is to focus on the individuality and strengths of each employee, unleash their hidden potential, and create teams where everyone can demonstrate theirstrengths. We all should know the joy and excitement of succeeding as a team. I believe thatthe feeling of contributing to something greater than oneself is essential for happiness. A company is a perfect community for achieving this. I believe that my mission as CHRO is to build asystem that strengthens the three elements of individuals, teams, and corporate culture, as
well as environment where diversity can be sublimated into collective knowledge, and where
everyone can feel growth and happiness derived from their contributions.
The source of Resonac’s strength is its wide-ranging technology platform linked to diverse
businesses. However, as soon as each business unit begins to operate in isolation, this technolo*2 For FFS (Five Factors & Stress) theory, see

P44

.

36

37

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Human Capital Management Dialogue—Collaboration between the CEO and CHRO Accelerates the Speed of Management—
What should be the approach to management and human resource development to create co-creative talent?
We invited Hiroko Ozawa, who has a deep understanding of human capital management, to hold a dialogue with CEO Hidehito Takahashi and CHRO Nori Imai.

Hiroko Ozawa
ESG/Responsible Investment Research Center Head,Japan Shareholder Services Ltd.

Hidehito Takahashi

Researcher at People Analytics & HR Technology

Nori Imai

Chief Execut ive Off icer (CEO)Association

Chief Human Resource Officer (CHRO)RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

What Are the Trends and Essence of Human Capital Management?
Ozawa: I believe there are two main approaches Japanese companies take toward their
human capital currently.
One approach is companies that are rushing internally, driven by the need for disclosure.
With the advent of a human capital boom, companies are trying not to miss out and striving
to somehow make an appeal for what they are doing. The obligation to disclose in securities
reports has become a significant trigger, and many companies are pondering how to respond.
The other approach is from companies that genuinely understand the essence of theimportance of human capital and are seriously working to enhance human capital. Suchcompanies view respect for individuals as the source of a company’s competitiveness, andunder the commitment of the top management, place human capital at the core of theirbusiness. Compared to the former approach, the latter approach seems to be in the minority.

I don’t guarantee lifetime employment to new employees. Instead, I tell employees that “I
will make sure you become a valuable asset that can be useful in any company.” I believethat achieving this is what human capital management is all about. I have experience
working in major Japanese companies and top global companies, and I feel that Japanesecompanies should learn from the human capital management of top global companies.
Although many Japanese companies have strongly focused on ensuring transparency inpromotions, raises, and maintaining equality, I personally find this approach unsettling.
Whether Japanese companies will try to bridge this gap in the future is uncertain. Somecompanies might try to change, and others might not. However, in the long run, there might
be a shakeout.
Imai: The reason human capital management is gaining attention in today’s society is due tothe arrival of an uncertain era, known as the age of VUCA. From the two speakers today, I
have realized that this means that it has become impossible to solve problems by extending
existing solutions or making minor adjustments to the status quo. Given this age of VUCA,

companies focus on collecting and organizing data about their human resources, while the lattercompanies aim to express how important their human capital is in management at the heart oftheir business strategy. Even just looking at disclosure, such polarization is occurring.

we are genuinely required to solve problems with diverse team members who have entirely
different perspectives and thoughts.
Considering this, it means that it is necessary to think about how to bring out individual
abilities and how to form types of teams that are different from those up until now. We might

When looking specifically at the efforts of Japanese companies, many seem to focus
primarily on enhancing systems. Japanese companies have historically built personnel
systems based on lifetime employment. It might make sense to invest a lot of managerial
resources in system enhancement, given the assumption of long-term employment. Howev-

need to consider the diversity of combinations of the good qualities that each individual has,and to consider the division of roles.
Hierarchical command systems based on traditional hierarchies can’t solve our problems.
We need to genuinely engage with each individual, bringing out their strengths, and if weer, times have changed, and it’s only natural to think that the mobility of human resources
will accelerate further. Just like Western companies, a time will come when Japan will needhuman capital management that isn’t based on the assumption of long-term employment.
Incentives will be important in this process. People feel excitement when the achievements
of individuals or teams lead to organizational achievements. It’s important to think about
how to give back to individuals or teams based on organizational achievements. The systemthat creates excitement and the incentivization of returns from organizational achievements
should be considered as a set. Companies with a high amount of excitement, which isdifferent from a club of good friends, are very strong.
Takahashi: I completely agree. Japanese companies have traditionally had a package of thefour elements of mass hiring of new graduates, academic elitism, a seniority system, andlifetime employment, and I believe this package led to the stagnation of Japanese companies and the Japanese economy after the bubble burst. I do not think Japan can regain its

don’t treat people appropriately, management will suffer. I feel that this is becoming the fundamental challenge now.

The way of thinking about disclosure also differs between the two approaches. The former

vitality unless this package is dismantled.

The Purpose only leads to enhancing corporate value whenemployees make it a personal concern.
Resonac is trying to integrate the purpose and values into
individual behaviors and value judgments, which will be thekey to achieving human capital management.

Hiroko Ozawa

38

39

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Datameetings at each business site, “Let’s aim to be people who strongly hold these values andAs strategies are becoming commodities, the differentiating
factors between companies are the management team that
executes the plans and the people supporting that management. I see human resource development as the quickest pathto maximizing corporate value.

Hidehito Takahashi

are capable of taking action.”
Furthermore, we are also working to reflect these four values in our personnel evaluations this year. We are in the process of training all managers to be able to measure employees performance on the two focus points of achievement of KPIs and demonstration of thefour values, and to incorporate this appropriately in their evaluations. The Company has 23
business units, and I believe that by developing co-creative talents who share common
values and can thrive in any business unit, we can avoid the conglomerate discount to somedegree. By having the purpose and values as a shared language Companywide, when
discussions occur, we can say things such as, “That’s not open-minded,” or “Isn’t agility

Takahashi: The term human capital management seems to have taken on a life of its own,
and it is difficult to see the essence of the concept. It is a given that people are important,and the very idea of enhancing growth strategies and the business portfolio has alreadybecome a commodity. While every company may have a medium-term management plan
and an admirable approach, they are all essentially the same. What differentiates companies is whether they have a management team that can execute those plans and whether
they have developed human resources to support that management. In this sense, we view
human resource development as the shortest path for maximizing corporate value.
Ozawa: I agree. Among the various forms of management resources, only human capital has
a will. Because each person acts based on his or her own will, it takes time and involves difficulty to achieve results as an organization. The sum of each person’s will becomes theindividuality of an organization, which serves as the source of the organization’s competitiveness. In other words, the individuality of an organization is determined by the multiplication of the will of each individual member.

What Kind of Talents Are Needed to Become a “Co-creative Chemical Company?”
Takahashi: We have clearly defined the talents who support the Resonac Group as a “Co-creative Chemical Company.” One is a talent who can work while involving the people around
him or her, literally co-creating with them. Another is an autonomous talent who can takethe necessary action on their own, rather than waiting for instructions.
P14 / What is a Co-creative Chemical Company? -Who?

In order to develop such talents, we place importance on four values: “Passionate &Results-Driven,” “Open Minds & Open Connections,” “Agile & Flexible,” and “Solid Vision &Solid Integrity.” Ms. Imai and I continue to tell employees at events such as town-halllacking?” and return to the essence of who we are.
Imai: I believe that autonomy is based on having passion. The will to change society throughthe power of chemistry, the conviction that the Resonac Group can do it, and the passion to
make sure it gets done are important. It is important to extend this passion to other units
and other companies, and not just your own unit.
The Resonac Group’s style is to allow people to act freely and autonomously based on
their values, with the Purpose as the key and the Values that are the mode of action toachieve the Purpose as the basis of their decisions. We are trying to ensure that this style isfirst thoroughly implemented as an action of the management team, and then graduallyextended to all employees. We hold workshops at each workplace to discuss what the
Purpose is at the workplace and what it means to demonstrate our Values, and receive
feedback and clarification on how we are evaluated, so that we can make the purpose andvalues a personal concern and put them into practice. The ability to gain management
experience in different businesses based on shared values and a shared language is astrength of the Resonac Group that also fosters employee growth.
Ozawa: Indeed, for chemical manufacturers like the Resonac Group with diverse businessdomains, it’s easy to imagine they might fall into vertically segmented organizations where
each business unit develops its own customs and values and specializes in its own particular area of expertise. I believe that new business opportunities can be created by having ashared language as you have explained, recognizing differences in ways of thinking, andtranscending boundaries. We might see a new paradigm if such challenges bear fruit andmore people get excited about creating value across business units.
From this discussion, it’s clear that Resonac Group has explicitly defined its purpose andvalues, and is trying to spread them throughout the company and incorporate them into its
human resources system and evaluations. The numerous town-hall meetings andRESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

roundtables that are held and the intent of the management team to communicate directlywith all employees are truly commendable.
Many Japanese companies seem to just create and announce a purpose but fail to clarify
how they aim to link this purpose with daily business operations and tasks, what kind of people they are looking for, and how to reflect this in actions and decisions, and there seems to
be a lack of clear implementation in many cases. It’s quite a waste given the time and effort
invested. Needless to say, to link the purpose to maximizing corporate value, it is necessary
to instill it and link it to business activities. Rather than addressing a stated purpose as an
obligation, it won’t empower the organization unless employees should see the potential offinding a connection to their own work and have the will to take initiative.
In this respect, the Resonac Group has a well-crafted grand design of purpose and values,
and they’re addressing everything from individual actions to value judgments. I felt that
this is a significant strength.

Collaboration Between the CEO and CHRO Accelerates the Speed of Management
Takahashi: I believe the strength of the Resonac Group is that both the CEO and the CHRO
are firmly committed to human resource development and human resource strategies. If
there were just one of them, real reform would be a challenge. The reason I can commit to
HR to this extent is that we operate the business as a team. Goals related to the portfolio,
business reform, and strengthening the management foundation are shared at the management level, and it is possible to delegate things entirely to business unit heads and CXOs.
To return to the topic of human resources and cultural change, I have a rough idea of what
awaits me in the future through my accumulated experiences. Of course, while I won’t saythat everything is correct about my image of the future, we discuss talents with a sharedlanguage based on common values, and we aim to build on successes with an excellent
team that demonstrates teamwork and maintains a sense of tension. I envision achieving
success in 10 years by improving and adjusting our approach year by year. I will neverwaver from this belief in the future. Decision-making is quick with the CHRO as we share thesame objectives. It’s common to discuss the next measures with the CHRO on the spot
during roundtable discussions with employees.

Imai: Indeed, it’s surprising how aligned my vision is with Mr. Takahashi (laughs). Mr.
Takahashi is a visionary leader skilled at defining the why and the what. While I serve as asounding board for the why and what, my role is to think about the how, and I’m currently
implementing the reforms I’ve always wanted to make and saw as necessary. The humanresources domain is evolving at a surprisingly rapid pace. For example, while I sometimes
consider the necessary processes for driving change based on adult development theories,
in the future, we won’t just use psychology but also approaches from neuroscience. Changing a person’s mindset and achieving a state in which the purpose and values are fully
embodied isn’t easy and takes time. Firstly, based on hypotheses and while obtaining
feedback, while consistently applying a data-driven improvement cycle as scientifically as
possible, I want to achieve a transformation with the participation of everyone throughpersistent, direct dialogue with employees.
Ozawa: The collaboration between Mr. Takahashi and Ms. Imai, who share the same values
and goals, is truly wonderful. Unlike the two of you, I suspect that CEOs and CHROs in not a
few Japanese companies lack a common goal setting based on shared business strategies
or are unable to collaborate effectively. I believe the teamwork between the CEO and CHRO
ensures that the top management’s vision reaches all employees. Once town-hall meetings
or roundtable discussions are over and employees return to their daily tasks, their actions
and words are heavily influenced by the evaluations of their immediate superiors. I think
future challenges will involve getting leaders in the field and middle management on board.
I urge you both to overcome these challenges with your teamwork skills. I am very muchlooking forward to your future growth.
For Resonac’s human capital management initiatives, please also refer to Human Capital Management on
P89

and Human Resource Strategies on

P 91

.

We want to develop co-creative people who can passionatelychange society through the power of chemistry and involve
those around them. We aim to create a company where eachindividual embodies their own sense of purpose and values byconsistently engaging in dialogue with employees.

Nori Imai

40

41

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Team Takahashi
Thoughts on
Human Resource
Development—Toward a company thatdevelops co-creative talent—
Here, the Team Takahashi management team of
Resonac introduces what they keep in mind in
human resource development and what is
expected from employees.
What the management team holds in their hands are thevalues that each emphasizes the most in human resource
development within one’s organization. The Company’s four
values are “Passionate & Results-Driven,” “Agile & Flexible,”“Open Minds & Open Connections,” and “Solid Vision & Solid
Integrity.” We strive to practice these values in various
situations.

Hidehito
Takahashi
Chief Executive Officer
(CEO)
P19

P37

Keiichi
Kamiguchi
Chief Risk Management
Officer (CRO)

Passionat e &Results-D riven

P113

People who can execute strategy are what Resonac
needs for development

Supporting the Group’s initiatives with a strong
sense of ethics and becoming a trusted company

What I want to create is a group of people who can act autonomously. Whether acompany is good or not depends on how many people are able to executestrategies. This ability to execute means thinking about what should be done
toward a goal, deciding what needs to be decided, and having the power to see itthrough. We will implement various personnel reforms so that employees canunleash their potential and work with vitality and enthusiasm.

For Resonac to remain a trusted company, I expect the members of the CRO
organization to refine their knowledge and skills while maintaining a strong senseof ethics and foresight for the future as governance professionals. By doing so,
we believe we can firmly support the transformation of employee consciousness
and efforts toward co-creation, and provide services that satisfy both internal andexternal stakeholders.

Hideki
Somemiya

Tomomitsu
Maoka

Chief Financial Officer
(CFO)
P25

The most important value inhuman resource development
within one’s organization

Passionate &Results-Driven

Open Minds &Open Connections

P49

Chief Strategy Officer
(CSO)
P29

P55

Open Minds &Open Connections

P73

I want to develop the best financial navigators who
can demonstrate abilities beyond their roles

Communication beyond boundaries is vital, notbound by preconceived notions or precedents

I hope that members of the CFO organization will aim to be the best navigators for
Resonac as a whole and its operating companies. The more each individual canutilize their specialized skills beyond the confines of existing organizations anddaily operations, the closer we get to enhancing corporate value and achieving“best navigator.” As a CFO, I will ensure that everyone is conscious of this in theirwork.

Because the CSO organization plays a role in guiding the entire Company’s
direction while constantly communicating with internal and external
stakeholders, transcending boundaries is of utmost importance. In addition, as
Resonac takes on many new challenges, there is no need to follow any
preconceived notions or precedents. In other words, we demand members totranscend existing boundaries even in their ideas.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

MasamiTobitoShigeru
FujitaChief Marketing Officer
(CMO)
P69

Nori Imai
Open Minds &Open Connections

Chief Human Resource
Officer (CHRO)
P35

P89

Agile &
Flexi ble

P113

Chief Operations,
Manufacturing andEngineering Officer(CMEO); Chief Quality
Officer (CQO)
P97Open Minds& OpenConnec tions

Sharing information beyond business unit
boundaries to deliver additional value

Flexible thinking, changing processes, andmanagement skills to lead teams are essential

Open-minded communication is the key to achieving
results

As a cross-functional organization for the entire Company’s sales and marketing
functions, we aim to develop human resources who autonomously drive
Resonac’s sustainable growth and the expansion of high value-added products.
By sharing market and customer information beyond business unit boundaries,
each member broadens the scope of information, and by understanding Resonac’s
products and technologies, we aim to deliver more value to our customers.

Human Resources’ operations often tend to be approached with caution and taketime because of its significant impact on employees. However, sometimes testingon the go is necessary to respond quickly to changes in the world. We encourage
members of the CHRO organization to co-create with other units from theconceptual stage, move flexibly, link business strategies and Human Resources
activities, and support transformation according to the different ways ofdelivering value in each business.

Having an open mind toward the people we work with is the most important thing
for responding quickly and achieving results. We aim to foster a culture thatvalues psychological safety throughout the Group and encourages helping
professionals from various fields through “Open Minds & Open Connections.” Fora safe and secure workplace, we also promote the principle of “Bad News First,
Fast.”

Hideki
Shibata

MasatoFukushima

Chief Digital Officer(CDO)

Open Mind s& OpenConn ectio ns

P71

Chief Technology Officer
(CTO)
P32

Hiroyuki
YamashitaOpen Minds &Open Connections

P62

General Manager,
Electronics Business
Headquarters

Passionate &Results-Driven

P73

I want to nurture individuals who can flexibly andpositively accept diverse ideas and grow on their own

I want to develop people who have the courage to
win others over and create excitement

A deep commitment to results and taking onchallenges with pride“Open Minds & Open Connections” is a key for driving DX for improving corporate
value, and is essential for personal and organizational growth. We strive todevelop people who, without being constrained by fixed boundaries and biases,
can flexibly and positively accept diverse ways of thinking. We will promoteinternal and external collaboration, and encourage active engagement with new
ideas.

Co-creative technology development can only be achieved when a person with theability and confidence as a professional strives to win others over, possessing
respect for what they don’t know and the capabilities of others. We believe thatpeople who can transform the communication environment into a bright, fun, andmotivated world will shape the future of Resonac.

In units directly involved in the business, where the results of one’s efforts areeasily reflected in numbers, I indeed hope that members will remain focused on
outcomes. Although efforts might not always be rewarded, we still believe thatour pride of being “Passionate & Results-Driven” will contribute to the growth anddevelopment of the Company, which in turn will produce results that meet the
expectations of our customers, shareholders, many stakeholders, and future
employees.

42

43

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Yasushi
MakabeYoshito Ishii

General Manager,
Device Solutions
Business Unit

General Manager,
Mobility Business
Headquarters

P77

Op en Mi nd s
& Op enCo nn ec tio ns

MitsuoKatayose
Agile &
Flexible

Open Minds& OpenConnections

General Manager,
High Performance
Materials Business
Headquarters
P83

P81

Promote coaching to discover personal strengths
and desires

Developing teams that take on the challenge ofchange and lead transformations in the CASE era

Expanding connections with people and co-creation
to enhance the added value of materials

People have diverse perspectives, some conservative, others eager to take on thechallenge of trying various things. Though careers are self-designed, often people
might not realize what they want to do and what suits them. People are often
reminded of what they are good at by feedback from others. We emphasize humanresource development offering as many of these opportunities as possible.

The automotive industry faces a once-in-a-century transformation, and a radical
business turnaround is necessary to achieve SDGs and CASE. We are faced with
the need to consciously increase our speed, think flexibly without being anchoredin the past, and open up new businesses. We value the agility and flexibility tosupport the CASE era, transforming into teams that embrace the challenge ofchange without fear.

The High Performance Materials Business Headquarters possesses diverse
materials and members with diverse experiences. Through internal and external
co-creation, we will discover new market opportunities and enhance the added
value of Resonac’s materials. We believe that people who practice “Open Minds &Open Connections” and connect autonomously with others can achieve this.

Hirotsugu
FukudaGeneral Manager,
Olefins & Derivatives
Business Unit
P85

MakotoTakedaSatoshi Hara
Ope n Mind s& Ope n
Con nect ions

General Manager,
Basic Chemicals
Business Unit

Passionate &Re sults- Dr iven

P85

General Manager,
Graphite Business Unit

Open Minds& OpenConnecti ons

P85

Building relationships where one can discuss freely
without barriers leads to results

Working with passion and pride to realize theKawasaki Chemical Park*

Engaging with team members with an open mind
and supporting future potential

Trust and respect for values are the basics of not only business but also humanrelationships. Improving communication is essential to achieve this. It starts withthe person next to you, then moves on to the neighboring group, department, andbusiness unit. Only when barriers are removed and a relationship in which one
can freely discuss is built, can we fully harness the strengths of individuals andteams.

Although the basic chemicals business has a long history at Resonac, there is nobusiness that simply continues from the past to the future. We want to move
forward and continue creating new value, aiming to establish the Kawasaki
Chemical Park*. To this end, we want to be a group that possesses passion andpride, is thoroughly committed to results, and exhibits high capability throughco-creation.

Engaging with team members with an open mind and supporting future potential
In human resource development, it is important to gain a variety of experiencesfrom early stage of business career and not to limit future possibilities bynarrowing the boundaries of one’s career. We will realize a positive cycle ofhuman resource development by approaching each individual with an open mind
and managing our organization flexibly to ensure that employees can envision
their own careers and excel in the appropriate paths.

* Please refer toP86.

Team Takahashi—
Excelling inTimes of Change

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

The Five Factors & Stress (FFS) theory was developed in the study of stress and personality. It measures the patterns of how
people think and act, either deliberately or unconsciously, in five factors, and analyzes whether they react positively or negatively
in terms of stress values. As a result, an individual’s latent strengths can be objectively understood.

Diffusible
FactorLM

TG(leadership personnel)
Target Growth market, market

reform oriented(tugboat personnel)
Target New market oriented

Hidehito Takahashi

Thinking and action style Scouting

Thinking and action style Leading byahead

exampleResponsibility Business expansion

Hideki Somemiya

Satoshi Hara

Understanding whether an individual’s latent strengths are being
positively or negatively expressed
Enabling the optimal team configuration by objectively
understanding and evaluating the relationships between people
Developer: Dr. Keichi Kobayashi

Shigeru Fujita

Yoshito Ishii

Mitsuo Katayose

The following five items are quantified numerically, indicating whether
the characteristic is strong or weak.

The following becomes possible with quantification.

Responsibility Business development

Hideki Shibata

Five Factors & Stress (FFS) Theory

Condensable Factor: Intensity of commitment
Receptive Factor: Ability to accept unconditionallyDiscriminative Factor: Ability to distinguish between black and white
Diffusible Factor: Ability to break out and move forward
Preservative Factor: Ability to build up while maintaining

MasatoFukushima

Nori Imai

Condensable
FactorResonac’s current management team, Team
Takahashi, is structured in a manner suitable fora period of transformation. CEO Hidehito
Takahashi leverages the characteristics of LM(leadership personnel) to lead everyone, while TG(tugboat personnel) is responsible for pioneering,and ML (management personnel) is in charge ofimprovements. Going forward, Resonac will
utilize the FFS theory in its organizational
structuring to create teams where each individual
can demonstrate his or her strengths.

44

Receptive Factor

RESONAC REPORT 2023

Makoto Takeda

AN(anchor personnel)

Hirotsugu Fukuda
Tomomitsu Maoka

Keiichi KamiguchiML(management personnel)

Target Markets on the verge ofTarget Stable markets thatwithdrawal, markets thatare like wringing a dry towel

Yasushi Makabe

contribute to profits

Thinking and action style SteadyThinking and action style Strict rule

improvement

adherence

Responsibility Business maintaining

Masami Tobito

Preservative
FactorHiroyuki Yamashita

Responsibility Business improvement

45

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

03
How
to Change

Resonac’s Long-Term Vision

What We Will Focus on to Achieve Change

What are our specific measures to change society through the

2020

2021
Long-term vision for the Newly
Integrated Company (2021–2030) begins

power of chemistry?
This section describes our sustainability and business strategies tohelp you understand how we intend to accomplish our purpose.

45

Resonac’s Long-Term Vision

49

Financial and Capital Strategies

55

Promoting Sustainability

57

Material Issues andNon-financial KPIs

59

Resonac Pride Products &Services

62

CTO Roundtable with
Young Researchers

65

R&D and Intellectual Property
Strategies

69

Marketing Strategies

71

Digital Strategies

73

Semiconductor Materials
Global Top Management Roundtable

77

Semiconductor and Electronic
Materials

81

Mobility

83

Innovation Enabling Materials

85

Chemicals

Former Hitachi Chemical joins
the Showa Denko Group

Brief introduction of
future-oriented projects

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

2030

2025
2023
Complete integration
as Resonac

Goals of the long-term vision

Realize our ideal state

Establish a leading position and securestrong growth potential on acontinuous basis as a materials
manufacturer driving the high growthof cutting-edge semiconductors

Global top-level functional
chemical manufacturer
from Japan
TSR: Rank among the chemicals industry’s top
25% over the medium to long term

Financial targets for 2025

EBITDA margin

20 %10 % over the medium to long term
Net D/E ratio
Aim to achieve 1.0

ROIC

Yoshishige Okuno

Yohei Shimizu

General Manager,
Research Center for Computational
Science and Informatics

Materials Informatics Platform Group
Research Center for Computational
Science and Informatics

Now!!

Achieve Sustainability Vision

Future?

First semiconductor materials manufacturer in Japan to apply
virtual reality (VR) in product development

Promoting the space business through co-creation with ispace,inc., a startup

Molecular design applying VR leads to R&D achieving the required properties.
This initiative takes advantage of our advanced computational science andtechnology for deeper material analysis and discovery of new materials. First,
we intend to promote the use of VR throughout Resonac, and in the future, we
envisage positioning it as an in-house infrastructure. We will accelerate R&D by
fully utilizing computational science and simulation.

A team composed of people who aspire to contribute to the sustainable
development of global society by creating functions required of the times as anadvanced material partner in the field of space development are promoting a
project to establish a space business. Not only through cross-sectional
collaboration but also through open innovation with ispace, inc. and otherexternal partners, we are firstly focusing on branding that will lead toenhancement of corporate value with a view to future commercialization.

46

47

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Denko acquired Hitachi Chemical during the period of the medium-term management plan to 2021. The company set
Overview of the Long-Term Vision Showa
its course toward growth and declared its goal of becoming a global top-level functional chemical manufacturer by 2030. In
January 2022 Showa Denko and Hitachi Chemical substantially integrated their management and formulated the purpose.
In February 2022 Showa Denko revised its long-term vision announced in December 2020 and began value creation as a
Co-creative Chemical Company. In January 2023 Resonac was established.

Resonac’s Long-Term Vision: Our Ideal State for 2030
In order to become a global top-level functional chemical manufacturer, we must enable our unique essence to blossom while satisfying the requirements of stakeholders with respect to bothfinancial and nonfinancial aspects. Positioning sustainability as the cornerstone of its corporate strategy, Resonac has established measures and nonfinancial targets linked to its envisioned
ideal state and material issues for sustainability (materiality), with a view to achieving its long-term vision by promoting initiatives.

Long-term vision
Ideal state

Company that can compete on Company that contributes to a Company that develops co-creative talent thatthe world stage
sustainable global society
represents Japan’s manufacturing industry

World-class competitiveness andprofitability

Capability to create innovations
and to develop new businesses

Ability to train competitive talent
with shared values

Financial targets
and results
Net sales

Strengthen co-creation &competitiveness and createsocial value throughinnovation

Gain credibility throughresponsible business
management

Develop autonomous,
creative, and active humanresources and culture

Targets for

2025

2022

¥1.4 trillionOver¥1 trillion

EBITDA margin

12.2%

20%

ROIC

3.3%

% over the
medium to long term

Net D/E ratio

1.07

Aim to achieve

Results in

Targets for

2022

2025

Nonfinancial targets
and results (examples)

Material Issues for
Sustainability(Materiality)

Results in

Scores of the survey on
implementation of the
purpose and values

Greenhouse gas emissions

Serious occupational accidents

10

1.0

Degree of
implementation: 30%
Inculcation of theDegree of
empathy: 60%
purpose and values
and cultivation of a
Degree ofunderstanding: 80% co-creation culture
Recognition:
Almost 100%
thousand tons

4,284

30% reduction fromthe level of 2013

0

Zero occurrencePurpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

RESONAC REPORT 2023

Overview of the Long-Term Vision
Key strategies for achieving the long-term vision
Direction and progress

Establishment ofa world-classrevenue base

Improvement in
Portfolio Management

P25
Letter from the CFO
Scale and Profitability to be a Company that can Compete on
P49
the World Stage
P51
Instillation of ROIC-focused Management
Semiconductor Materials Global Top Management
P73
Roundtable
P77
Business Strategies

Financial and Capital Strategies

Analysis of Opportunities and Risks forAchieving the Long-Term Vision

TopicsWe held a workshop in June 2023 to analyze opportunities andrisks linked to Resonac’s three material issues. Participants
included the CFO, CSO, CHRO, CTO, and other executives anddiscussion ranged from financial aspects to nonfinancial
aspects such as human resources and R&D. In particular, weneed to keep a close eye on changes in the internal
environment as a result of company integration. Paying greaterattention to internal changes in the process of integration in
addition to changes in the external environment inmanagement’s monitoring and evaluation, we will reflect thoseinternal changes in goal setting.
Opinions expressed at the workshop held in June 2023
Opportunities

Transformation triggered by the integration of two
companies
New synergy derived from different technologicalfieldsGreater efficiency and creativity through businessprocess integration
Creation of new value, mindful that chemistry is abuilding block of industries

Risks

Decline in engagement of human resources due tochanges resulting from the integration of two
companies / human resources retention risk /loss of the heritable culture as well as experienceand know-how learned from failure
Decline in co-creation capabilities andcompetitiveness due to delays in industry
restructuring and portfolio reform
Weakening of the management foundation owing
to lack of understanding of potential risks and lackof risk-taking

P49

Strategic Allocation of Management Resources
Direction and Progress in Portfolio Reform

P52
P52

Special Feature: What is a Co-creative Chemical Company?
P13

Innovation (technology x
business model)

Strengthening ofmanagement foundation(platform)

Special Feature: Resonac Pride Products & Services
P59

CTO Roundtable with Young Researchers
R&D and Intellectual Property Strategies
P69
Marketing Strategies

P62
P65

P37
Human Capital Management Dialogue
Team Takahashi: Aspirations for Human Resources
P41
Development
P89
Resonac’s Human Capital Management
P71
IT and Digital Technology Strategies
Roundtable: Our Transformation of the Board of Directors
P113

Video

Workshop on opportunities and risks linked to materiality

48

49

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Financial and Capital Strategies
Scale and Profitability to be a Company that can Compete on the World Stage
Numerical Targets for 2025 under the Long-Term Vision

To Achieve EBITDA Margin of 20%

Resonac believes that management strength in both2025 (targets under the
Key financial KPI targets
2022 (results)
long-term vision)quantitative and qualitative terms is essential forcompeting on the world stage. In addition to qualitative
Net sales¥1.4 trillion
Over ¥1 trillion
evaluation of the company’s ability to contribute tosociety, especially from the perspective of
EBITDA margin
12.2%
20%
sustainability, we consider quantitative evaluation of
10% over the medium
the company’s scale and profitability to be important.
ROIC
3.3%
to long term
Our numerical targets for the scale and profitability
Aim to achieve 1.0
Net D/E ratio
1.07
for 2025 under the long-term vision, namely, net salesof ¥1 trillion or more and an EBITDA margin of 20% or
more, are “entry tickets” to be a company that cancompete on the world stage. We aim to maximize corporate value by achieving the numerical targets in pursuit of a solid
revenue base. Moreover, whereas we had been using ROE as a key performance indicator (KPI) for some time, we introduced
return on invested capital (ROIC) to replace ROE at the time of revision of the long-term vision in fiscal 2022.
To more accurately highlight our strategic intent and our efforts to improve portfolio management, we changed disclosure
segments in fiscal 2022. With the segment reclassifications, we will aim to show more clearly the effects of the strategic
allocation of management resources and continuous revision and replacement of our business portfolio, of which the mostobvious example is our focused investment on semiconductor materials.

Whereas our target of EBITDA margin for 2025 is 20%, theresult for 2022 was 12%, 8 percentage points lower thanthe 2025 target. We are implementing various measuresto achieve the target, including growth of highly profitable
P52
businesses (Strategic Allocation ofManagement Resources), structural reform ofP50
unprofitable businesses (Elimination of
Unprofitable Products), and restructuring of business
P52
portfolio (Direction of and Progress in Portfolio
Reform).
The scope of improvements required will vary in linewith changes in the business environment. We will aim toachieve the target by quickly adjusting the scope andallocation of resources for improvement in accordancewith the situation.

Segments for disclosure in line with the new business portfolio strategy
New segments

Subsegments

Semiconductor andElectronic Materials

Semiconductor Materials (front-end/back-end processes)

Device Solutions (HD)

Automotive Products

Lithium-ion Battery Materials

Mobility

To improve EBITDA margin
Restructuring ofbusiness portfolio
Structural reform of
unprofitable businesses

EBITDA margin(2025 target)
Device Solutions (SiC)

30% or more

Growth of highly
profitable businesses

3-4%2% or more

20% or more
3% or more

Innovation Enabling
Materials

Ceramics

Chemicals

Olefins and Derivatives

OthersAttribute of the business portfolio

Functional Chemicals (resins, etc.)

Aluminum Specialty Components

Basic Chemicals and Industrial Gases

Fundamental Technologies/Materials

Graphite Electrodes

15% or more
15% or more

20.0%
12.2%

Achieve critical massLife Science
Core Growth

Coating Materials

Stable Earnings

Next-Generation

2022

2025

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Financial and Capital Strategies
Management Cycle for Achieving the Long-Term Vision

Elimination of Unprofitable Products

We currently operate a management cycle to achieve the long-term vision and KPIs from medium- to long-

As part of our initiatives to improve profitability, each business unit

term and short-term perspectives. (See the figure below for details.)

calculates the profit margin for each customer and product and imple-

From the medium- to long-term perspective, we annually review our business strategies, strategy

ments specific improvement measures for low-margin products, such as

implementation, and numerical targets for the next five years, in light of the latest market trends and analysis

review of raw material suppliers, cost reduction through improved

based on the 3Cs model (taking into account customers, competitors, and the Company). The plan formulated

production efficiency, and price revisions in light of market conditions.

is referred to as a “five-year rolling plan.” This plan articulates our strategic direction for sustainable growthand maintaining competitiveness, serving as the foundation for the realization of our long-term vision.

However, for products judged to be unable to achieve expected profit
margins or cost reduction targets despite these measures, we formulate

From the short-term perspective, we formulate an annual budget based on the first year of the five-yearplans that include withdrawal from such products or scaling back, androlling plan. This annual budget allows the five-year rolling plan to be incorporated into a concrete action plan,manage progress on a quarterly basis. Through these initiatives, we areon which basis the progress of individual measures and achievement of KPIs are monitored quarterly,

concentrating resources on highly profitable products and businesses toenabling early detection of problems and implementation of countermeasures.

achieve qualitative improvement of profit.

By organically integrating the management cycle from both medium- to long term and short-term

Furthermore, the Mobility Segment has formed a team designated for

perspectives, while adhering to the long-term vision, we can flexibly respond to changing market conditions in

structural reforms to emphasize the initiatives (order to achieve sustainable growth and maximize profits.

Portfolio Reform). Progress in other business units is shown below.

Management cycle

P52

Direction of

Status of completion of the measures to improve profit
Incorporation in Companywide
policies and assumptions of changes
in the business environment each year

Estimate (December 31, 2023)
Results (March 31, 2023)

Long-term vision
Formulation ofrecovery strategies
Check the degree of achievementwith the long-term visonas the benchmark

Medium- to long-term
perspective

Five-year
rolling plan

Progress as of March 31, 2023*
Accumulation andreview of measures

Measures to improve profit (Price increase, withdrawal, etc.)
Completed: 51%
Under implementation: 28% (of which 80% is scheduled for completion by December 31, 2023)● Business issues● Impact of measures

73%

Recognition of gaps

Annual results● Risks and opportunities

51%

Quarterly review

Short-term perspective

Annual budget*The Mobility Segment, and the Olefins and Derivatives business which is largely affected by market conditions, are excluded.
*Completion of measures and their impact on revenue are not necessarily simultaneous.

● Forecast of the next quarter and of the full year

Implementation of
measures, promotion,
identification of issues

50

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Financial and Capital Strategies
Instillation of ROIC-focused Management
We are working to raise and instill awareness of ROIC-focusedmanagement throughout Resonac from the management level tofrontline employees.
In particular, in order to spread ROIC improvement to frontlines,
we are promoting initiatives to link frontline KPIs to ROIC, which isa management KPI, and the ROIC target is set under the long-term
vision.
Specifically, we set KGIs, KPIs, and KAIs at each level from the
management level to the frontlines. At the frontline level, we set
indicators that can be managed by business and product lineup
while serving as targets for improvement measures. Frontline
personnel set and prioritize targets based on the degree of impactof each indicator on KGIs, and manage milestones, such as whoshould do what and by when.
In the future, we will promote horizontal deployment of the bestpractices of businesses, in which ROIC improvement is steadily
progressing, to other businesses, thus facilitating Companywide
instillation of ROIC-focused management.

ROIC of the entire
business

Measure A

Cost

Measure B

Management level

Operating income

Measure C

Business unit
heads, generalmanagers ofbusiness units

Department
managers

Net sales
Selling prices

Noncurrent
assetsExpenses

Labor costMaterials cost

Working
capitalROIC of
Product III

Sales volumes

Invested capitalDeﬁnition ofindicators

Frontline level

ROIC of
Product II

Overhead cost

ROIC of
Product I

Depreciation andamortization

Management KPIs

Management KPIs and frontline KPIs (examples)

Frontline KPIs

51

Resonac’s Portfolio Management Policy

ROIC components are measured for each business unit and businesses
are ranked by ROIC. The semi-annual ranking results are communicatedto the management of each business unit so that highly transparent
management is achieved on Companywide. It also contributes to healthy
competition among business units.

Incorporation of ROIC as a mandatory item of training for managers
As part of Companywide training for managers, a lecture is provided on
the definition of ROIC and why ROIC is important, including actual
examples of business profitability improvement by making use of ROIC.

ROIC-linked executive compensation and bonuses for managers
ROIC was introduced as an evaluation indicator for short-term incentives(bonuses) in executive compensation
P126 / Short-Term Incentives
and bonuses for managers.

Key Goal Indicators

Key Performance Indicators

Key Action Indicators(KGIs)(KPIs)(KAIs)

Most important indicatorsthat must be achieved

Indicators of results of measures andprocesses for achieving KGIs

Indicators of impacts of speciﬁc
actions for achieving KPIs

Management KPIs

ROIC of the entire business

Operating income ratio byproduct lineup
Invested capital turnover byproduct lineup
Net sales, marginal proﬁt ratio,ﬁxed cost to sales ratio, direct
labor to sales ratio, working
capital turnover

Sectionmanagers /group leaders

Improvement in Portfolio Management
Sharing of ROIC ranking by businessSelling prices, sales volumes,
yield ratio, labor cost, inventory
turnover by product, material
cost, payment terms

Operating income ratio byproduct lineup
Invested capital turnover byproduct lineupManagement KPIs

Net sales, marginal proﬁt ratio,ﬁxed cost to sales ratio, direct
labor to sales ratio, working
capital turnover
Frontline KPIs

Selling prices, sales volumes,
yield ratio, labor cost, inventory
turnover by product, material
cost, payment terms

Portfolio management policy[1]
Fitness forstrategy

Net sales, marginal proﬁt ratio,ﬁxed cost to sales ratio, direct
labor to sales ratio, working
capital turnover
Selling price, sales volume,
yield ratio, labor cost, inventory
turnover by product, material
cost, payment terms
Number of personnel, overtime
hours, sales volume by product andcustomer, unit cost of materials,
and material usage by process

Frontline KPIs

Number of personnel, overtime
hours, sales volume by product andcustomer, unit cost of materials,
and material usage by process

We have adopted three criteria as the portfolio
management policy, as follows. (1) Fitness for strategy:
Whether a business matches the strategies ofResonac’s overall strategies and the strategies
reflecting the roles of each business unit in accordancewith the attributes of the portfolio, with sustainability
as a prerequisite. (2) Best owner: Who the best
management authority is to maximize the value of abusiness. (3) Profitability and capital efficiency: Whether
a business or investment will satisfy expectations interms of profitability and capital efficiency.
There is no final form of Resonac’s portfolio
management. We strive to further improve portfolio
management by continuously revising and replacing
the business portfolio.

To be set by each frontline[3]

Optimization of theportfolio throughcontinuous revisionand replacement

Proﬁtability andcapital efﬁciency[2]
Best owner

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Financial and Capital Strategies
Strategic Allocation of Management Resources
By concentrating management resources on Core Growthbusinesses, we expect the Core Growth businesses todrive Companywide profit growth, rather than uniform
growth of all businesses. In particular, the semiconductormaterials business is expected to outperform the highgrowth of the market. By focusing on investments in the
Semiconductor and Electronic M-aterials segment, we
aim to achieve sales growth and EBITDA growth as shownin the figure. From 2022 onward, we have engaged in
major capital expenditures focused on CMP slurries,
copper clad laminates, and dicing die bonding films, andwe are considering further investments in these areas in
the future.
Medium- to long-term sales forecast for semiconductor
and electronic materials segment*2

Moreover, as a means for concentrating management
resources on Core Growth businesses, we have establishedinvestment policies for businesses according to theirrespective portfolio attributes (Core Growth/Fundamental/
Stable Earnings/Next-Generation). With this in mind, we
will raise investment funds on a Companywide basis bystably generating cash through Stable Earnings businesses
such as Olefins and Derivatives and Graphite Electrodes.

Moreover, whereas previously we used the same
discount rate for investments throughout the Company,
in 2023 we introduced a risk premium by businesssegment and by country for investment, in order toaddress investment risk more appropriately. This change
enables more accurate assessment of investment risk
and will lead to higher investment efficiency and moresophisticated portfolio management.

Investment policies according to portfolio attributes

Direction of and Progress in Portfolio Reform

Core Growth businesses

Growth investment appropriate for market
expansion and sales expansion

Stable Earnings andFundamental businesses

Investment within the scope of depreciation
and amortization centering on investment for
maintenance, BCP, and profit improvement

Next-Generation
businesses

Upfront investment to ensure sales potential in
addition to market expansion¥850 billion+
CAGR 10%+¥550 billion+¥360 billion*1

Fiscal 2021

Fiscal 2025

Fiscal 2030

*1 A rough estimate based on internal management figures and taking into account the impact of thesale of a business, etc.
*2 The above forecast is based on the information currently available and does not consider the
impact of short-term market fluctuations. Actual results may differ materially from the forecast
due to a variety of risk factors and uncertainties in the future.
(Source: Our Policy toward Realization of a “Co-Creative Chemical Company,” material forpresentation on February 14, 2022)

In order to achieve optimal allocation of management
resources from a Companywide and long-term
perspective, in 2022 we reviewed the investment decisionmaking process.
As part of this revision, a new framework was introduced
to centralize information and increase transparency so that
the CFO, CSO, CMEO, and other executives can evaluate
investment risks and returns multifacetedly at investment
meetings where major investments are discussed.
As a result, information asymmetry between
departments proposing investment and screening
departments has been greatly reduced and active
discussions are held, resulting in more rational andspeedy investment decision-making based on thecharacteristics of individual businesses.

We are accelerating portfolio reform through businessdivestitures, in addition to organic growth of existing
businesses as described in the previous section.
Following the acquisition of the former Hitachi Chemicalin 2020, we carried out the following businessdivestitures.
Fiscal 2021: Sold aluminum cans, aluminum rolled
products, food wrap films, printed wiring boards, energy
storage devices businesses
Fiscal 2022: Sold ISOLITE GmbH, a manufacturer/
distributor of thermal insulations for automobiles,
aircraft and other industrial applications, which was partof the mobility business
Fiscal 2023: Sold the diagnostic reagent business in July
We are working to optimize the allocation ofmanagement resources, review and replace the businessportfolio to realize continuous growth, and spur
innovation through the integration of the technologies of
the two predecessors of Resonac. Regarding businessdivestitures, we meticulously examined each of thebusinesses for sale in advance and transferred them in astate with value to the best owners, who can fully utilize
the technological capabilities and strengths of thesebusinesses, including solid relationships with customers,
to facilitate their further development.

52

53

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Financial and Capital Strategies
Positioning of Each Business in Fiscal 2023
Regarding the positioning of existing businesses within
the Company, existing businesses are classified andmeasures are implemented as shown in the table below,
taking into consideration changes in the businessenvironment. For businesses that have not achieved the
profitability required by the portfolio to which they
belong, in addition to the management cycle describedabove, individual restructuring projects are being
promoted, and business units and the organization under
the CFO are working together to improve profitability. In
particular, for the automotive products business, forwhich a fundamental review of the business model andbusiness transformation are required, a team designatedfor structural reforms has been formed in the Mobility
Business Headquarters, and the resources of theorganization under the CFO have been allocated to thisbusiness to promote reform.

Semiconductor materials / SiC epitaxial wafers
Allocate resources to increase production capacity mainly of businesses
with high profitability, ahead of high market growthOlefins and Derivatives / Basic Chemicals and Industrial Gases / Graphite Electrodes
Implement measures to improve stability of profitability and increase
the probability of cash generation. Examine strategic compatibility of theOlefins and Derivatives business with the medium- to long-term
portfolio, with a view to industry restructuring

Pursuit of Capital Efficiency
Reduction of Interest-Bearing Debt

Efforts to Streamline Assets

Interest-bearing debt amounted to ¥1,062.6 billion asof December 31, 2022, an increase of ¥212.0 billion
compared with the figure as of December 31, 2021,
due to execution of subordinated loan financing forthe purpose of early purchase of preferred shares in2022. Despite the increase in interest-bearing debt,
the switch from preferred shares, for which a highlevel of dividends are payable, to subordinated loans
will reduce financing costs for the full year fromfiscal 2023. The net D/E ratio improved to 1.07 owing
to an increase in shareholders’ equity and anincrease in foreign currency translation adjustments
resulting from the yen’s depreciation.
We will continue to reduce interest-bearing debt inorder to stabilize finances and cut finance costs.

Under the long-term vision, we adopted a plan to generate acumulative total of ¥50 billion in funds by 2021 and worked to
improve working capital and sell cross-shareholdings and otherassets. We had raised a cumulative total of ¥90.7 billion by 2022,
far exceeding the original plan. Regarding cross-shareholdings,
at the end of 2021 we determined a policy to sell all of ourcross-shareholdings, in principle. Sale of almost all of the listed
shares held by Resonac on a non-consolidated basis amounting
to ¥46.9 billion had been completed by 2022. To complete sale of
all the cross-shareholdings, we will continue to promote sale ofshares, including those held by our operating subsidiaries.
We will continue to promote streamlining and cash conversionof assets, including sale of idle assets and consolidation of sites.

Post-adjustment Net D/E Ratio*,
interest-bearing debt, and preferred shares(Billions of yen)■Preferred shares ■LBO loan ■Subordinated loan ■Bonds■Other interest-bearing debt
Adjusted net D/E ratio (times)(Billions of yen)
■Listed shares held (converted to market value)■

1,335.1
1.84

Cross-shareholdings (listed shares)*■

Number of issues

54.5
1,125.6

1,062.6

Automotive products / HD media

106

Implement rationalization measures attuned to changes in the businessenvironment, including product selection and concentration andrestructuring of the production system for optimization, to achieve
profitability appropriate for portfolio attributes

1.15

27.3

1.07

67
19.5
35
3.0

Life Science
Considering whether we are the best owner, we decided to sell the
diagnostic reagent business, while continuing to consider whether tosell the regenerative medicine business.

December 31, 2020

December 31, 2021

December 31, 2022

*December 31, 2020 and 2021: {(Loans payable + Commercial papers + Bonds payable +Lease liabilities) - Cash and deposits + 50% of preferred shares} / (Total shareholders’equity + 50% of preferred shares)*December 31, 2022: {(Loans payable + Commercial papers + Bonds payable + Leaseliabilities) - Cash and deposits - 50% of subordinated loan} / (Total shareholders’ equity +50% of subordinated loan)
50% of preferred shares and 50% of subordinated loan (included in loans payable) areevaluated as equity capital based on the credit rating by Japan Credit Rating Agency, Ltd. on
April 21, 2020 and April 27, 2020, respectively.

December 31, 2019

December 31, 2020

December 31, 2021

12

December 31, 2022

*Listed shares held by Group companies are included. The figure as of December 31, 2019 includes shares held
by former Hitachi Chemical.

RESONAC REPORT 2023

Assets streamlining and cash conversion
Initiatives

Improvement in working
capital*1
Sale of crossshareholdings*2
Sale of other assets*2
Companywide total

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Cash allocation priorities

Management’s Communication with
Shareholders and Investors

Amount of improvement/sale compared withthose before the integration (billions of yen)
Long-term vision(forecast)Update (resultsfor 2022)

25.0

13.0

20.0

46.9

(cumulative total)(cumulative total)

5.0

30.9

(cumulative total)(cumulative total)

50.0

90.7

*1 Calculated by multiplying the difference between working capital turnover days at the end of2020 and working capital turnover days at the end of 2022 by sales figures of continuingbusinesses*2 Cumulative amount of proceeds from sale since 2020. Excluding sale of shares of affiliatedcompanies and divested businesses.

Capital Allocation
We allocate cash flows obtained from business growth

Cash

Repaymentof loans
Growthinvestments

Shareholder
returns(dividends)

In view of the post-integration situation, we must prioritize
to a certain degree the repayment of loans and growthinvestments aimed at expanding profits. Our policy is to allocate
half to two-thirds of cash to growth investments.

Shareholder Returns Policy

and business divestitures to growth investments

As for shareholder returns, we aim to achieve total

contributing to profit expansion and to repayment ofshareholder return (TSR)—a comprehensive indicatorloans in parallel, taking into consideration the post-

for improving corporate value—at a level in the top 25%

integration situation. Specifically, we plan to allocateof the chemical industry over the medium to long term.

half to two-thirds of the cash flow generated to capital

To enhance corporate value, as mentioned above, we

expenditures, and the remainder to reduction ofwill actively engage in capital expenditures centeringinterest-bearing debt and dividend payments.

on Core Growth businesses. Distribution of dividends

Moreover, to maximize cash flow, we will generate thewill be determined rationally, taking into considerationnecessary cash flow by promoting sale of idle assets,

the business conditions comprehensively.

business divestitures, reduction of expenses, and othermeans.

We emphasize communication with our shareholders andinvestors, and our management team takes a deep interest in
their feedback. Opinions and requests from shareholders andinvestors, as well as topics related to the stock price, areactively addressed and discussed at Management Committee
meetings attended by CXOs and business unit heads, and atforums for exchange of opinions with directors and otherexecutives.
We are also actively engaged in nonfinancial disclosure anddialogue aimed at enhancing corporate value. At the time of theannouncement of financial results for the full year of fiscal 2022,
in his presentation the CEO articulated his commitment tohuman capital management, positioning it as a top priority issue,
to develop co-creative human resources who can put portfolio
strategy into practice to achieve long-term enhancement ofcorporate value through the multiplier effect of portfolio reform,
individual capabilities, and corporate culture. In addition, the
CFO is actively engaged in dialogue with major shareholders
and institutional investors (people in charge of ESG and exercise
of voting rights).
In IR activities, we have been enhancing the quality ofcommunication in English, while also increasing the number of
personnel, with the aim of improving the quality of dialogue withinvestors, especially overseas investors, who are oriented
toward long-term holdings. Although communication had
centered on online briefings and telephone conferences due tothe impact of the COVID-19 pandemic, we resumed overseas IR
activities with the participation of the CEO and CFO in fiscal
2022.
Through disclosure on the Group’s vision, strategies, andcorporate information in an easy-to-understand, timely, andappropriate manner, we will continue proactive dialogue withshareholders and investors and reflect their feedback inmanagement to further enhance corporate value.

54

55

RESONAC REPORT 2023

Promoting Sustainability

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

To change society through the power of chemistry based on our purpose, we are strengthening our business execution system in accordancewith the belief that we must position the concept of sustainability as an essential component of management. As part of these efforts, wehave established Sustainability Vision 2030. We have also identified material issues for sustainability (materiality) and set nonfinancial KPIs
to implement initiatives so as to achieve our long-term vision.

Sustainability Management

Roadmap for Achieving Sustainability Vision 2030
Having established Sustainability Vision 2030, we are promoting

Sustainability Vision 2030

sustainability initiatives. In 2022, we established a promotion system,

Achieve corporate growth through the resolution of social issues
Develop into a company that realizes its own
continuous growth and corporate value improvement,by solving social issues and offering value to society
through its technologies and businesses

held active discussions on materiality, and defined nonfinancial KPIs
in each CXO area (functional aspects). From 2023, the year of

A company with like-minded partners throughout the world
Become a “Co-creative Chemical Company” that is thefirst choice of, and can choose, partners in creating asustainable and better society, including future generations of customers, employees, investors, andstakeholders

Resonac’s inauguration, we began incorporating sustainability
assessments into management’s performance evaluations anddelving deeper into each area, including the progress andappropriateness of initiatives aimed at achieving the KPIs. To enable
our unique essence to blossom from approximately 2026 onward, weare stepping up engagement with various stakeholders.

2026

Blossoming of Our Essence

2023-2025

Trial and Error

2022

Preparation and Launch● Harness initiatives through co-creation● Incorporate sustainability-oriented perspectives in● Identify material issues for sustainability(materiality) and establish KPIs

portfolio management and the development ofbusinesses and technologies● Bolster businesses and technologies that canchange society through the power of chemistry“Co-creative Chemical Company”● Improve stakeholder engagement● Integrate various types of data

Future we seek to realize throughthe power of chemistry
Cultivation of a sustainability mindset among employees based on our purpose and values

Roadmap for realizing the long-term vision
Results in 2022

Sustainability management
Management strategies andbusiness strategies
Cross-organizational specificmaterial issues
Engagement with external parties
Cultivation of the mindset within
Resonac

Identification of material issues for sustainability (materiality)and establishment of KPIs; partial disclosure

The CEO supervises Resonac’s sustainability and the CSO is
responsible for the promotion of sustainability. The Management
Committee deliberates and decides on important items such aspolicies and plans and then consults with and reports to the Board of
Directors. Starting in 2022, the Sustainability Promotion Council
convenes a monthly meeting that Group CXOs, including the CEO,attend, and a quarterly expanded meeting, which is also attended by
the heads of business units, to discuss wide-ranging agenda items
P56. In addition, to address specific issues with agility and on across-organizational basis, several projects have been established,which report to the council.
Starting in 2023, Sustainability Partners have been appointed inbusiness units and CXO organizations in order to link the matters
discussed at the council’s meetings to organizational operations anddisseminate them to employees. By means of communication
through Sustainability Partners, we aim to promote sustainability
reflecting the current status, issues, and interests of each unit.
Moreover, by creating opportunities for horizontal communication
among Sustainability Partners, we encourage active exchange of
information on changes in customer requirements and other issues
that transcend differences among the industries we serve, so that
Sustainability Partners can proceed with foresight.
Meetings of the Board of Directors

Plan for 2023
Incorporation of sustainability targets in management’s key
evaluation items, enhance nonfinancial KPIs

Management Committee
Business units

Sustainability Promotion Council
Chairperson: CEO, members: CXOs, BU heads

Sustainability Partners

Designing of a system for Resonac Pride products and services
and start of operation

Grasping of the Companywide current status about specificissues, such as climate change and human rights,
establishment of projects
Start of investor engagement, identification of issues for
improving external evaluation, consideration of improvement
measuresUpdating of the roadmap for climate change action, visualizationof Scope 3, expansion of the range of products within the scope of
CFP calculation by product, start of human rights due diligence

Planning and implementation of measures to cultivate
sustainability mindset

Expansion and continued implementation of measures tocultivate sustainability mindset

Start of multi-stakeholder engagement

Carbon Neutrality Project
Sustainability Department
Human Rights Project
Social Contribution Working Group, etc.

Sustainability-related
project leaders

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Promoting Sustainability
Sustainability promotion council agenda(examples)
January

Material issues and non-financial KPIs

February

External evaluation of ESG and strengtheningof initiatives

March

Sustainability issues in the CHRO area
Human rights initiatives

April

Sustainability issues in the CMEO area
Carbon Neutrality ProjectMay

Sustainability issues in the CRO area
Integrated report (planning)
Materiality and nonfinancial KPIs

June

July
AugustSeptember

November

December

Incorporation of Sustainability Evaluation in Executive
Performance Evaluation

Resonac’s materiality consists of management

Recognizing the importance from a medium- to long-term perspective of firststrengthening the current structure and promoting measures, in 2023 we began
incorporating sustainability evaluation items into short-term performance-linked
P126 . In the process of identifying theitems of executive compensation
evaluation items that vary according to executives, we again discussed the prioritiesof the nonfinancial KPIs related to materiality and the roadmap toward theirachievement. Moreover, these items are designed to link with employee evaluation
through management by objective (MBO). Positioning linkage with compensation as
an important measure for promoting sustainability, we will continue to consider how
best to incorporate sustainability evaluation in executive performance evaluation.

issues that contribute to realizing its long-term
vision in terms of both society’s expectations anddegree of importance to the Company. Materiality
is determined by reflecting the intent of thefrontlines through discussions with each CXO area
(function) and feedback from management at
Sustainability Promotion Council, and is continual-Integrated report (planning)
Climate change action and disclosure inaccordance with TCFD recommendations
Formulation of “Our Code of Conduct”

ly reviewed while exchanging opinions withinternal and external stakeholders.
In 2022, we identified materiality, set Companywide nonfinancial KPIs, and discussed initiatives

Social contribution activities
Sustainability-contributing businessto be promoted through concerted efforts. In 2023,

Application of nonfinancial KPIs to business
units
Sustainability issues in CDO, CMO, and CTO
areastaking into account actual applications of the KPIs

Carbon neutrality and five-year plan
Companywide implementation of carbon
footprint calculation

Sustainability Promotion Council to monitor,

P99

October

Identification of Materiality andManagement Cycle

Governance (sustainability evaluation of
executives and employees)
Integrated report (feedback)Cultivation of sustainability mindset
Responsible Care Initiatives
Response to customers’ requirements fordisclosure initiatives
Social contribution activities commendation
systemWrap-up of 2022 and 2023 action plan
Nonfinancial KPI monitoring

Sustainability evaluation items incorporated in short-term executive performance
evaluation in 2023 (examples)
Establishment of data infrastructure for strengthening human capital management
Promotion of visualization of GHG emissions
Introduction of CFP indicator to R&D themes
Implementation of specific measures to strengthen risk management
Holding of ESG briefings and implementation of measures to enhance ESG assessment

and discussions with external stakeholders, theappropriateness of the KPIs is discussed atenhance, and refine the KPIs. We began discussion
on risks and opportunities based on materiality
and reviewed our operating environment. To
achieve nonfinancial KPIs, we will discuss various
issues and intend to disclose revisions and enhancement of initiatives step by step.
P48 / Overview of the Long-Term Vision

TopicsNew Employee Training and Sustainability Roundtable to
Cultivate Sustainability Mindset

As part of measures to cultivate a sustainability mindset among employees, we conductedtraining on sustainability for new employees, continuing from the previous year. In 2023, thetraining consisted of group work with the theme “Let’s put into words what ‘sustainability’means to Resonac!” Moreover, on their own initiative employees launched the Sustainability
Roundtable, a forum for employees who are tackling sustainability-related issues. Employees
from various organizations gather and hold study sessions, lectures, and workshops.

56

57

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Material Issues and Non-financial KPIs Our goals and the value we aim to create are classified below according to three issues of materiality identified with
2030 as the time horizon. In 2023 we began considering the opportunities and risks associated with each issue.

Materiality

Our ambition

2030 targets

Strengthen co-creation
capabilities &competitiveness and createsocial value throughinnovation

The source of our growthlies in business activities
utilizing our technologicalcapabilities to change
society through the powerof chemistry. We will
strengthen our cocreation capabilities andcompetitiveness throughinnovation and ourbusinesses to createsocial value.

We create social value
through our businesses
via a series of processes—
from the identification ofsocial issues to thedevelopment oftechnologies and theprovision of solutions—and the harnessing of
initiatives throughco-creation.

Gain credibility throughresponsible business
management

We will conduct
responsible business
management fromperspectives including
safety, the environment,
and quality to realize asustainable society
together withstakeholders, such as
suppliers and customers.
In addition, we willreinforce and enhance oursystem for managing
increasingly diverse andcomplex risks bythoroughly implementing
soft-law-based
compliance going beyond
legal and regulatorycompliance.

In addition to cultivating asafety culture andeliminating accidents ofevery kind, we will earn
the trust of stakeholders
by minimizing andpreparing to tackle a wide
range of risks, including
strategic, operational, andhazard risks, to flexibly
address the changing
management andbusiness environments
and continuously offer
value that is unique to us.

Develop autonomous,
creative, and active humanresources and culture

We are cultivatingco-creative humanresources and nurturing a
corporate culture to solve
issues imaginatively via
co-creation by forming
connections
autonomously withcustomers andstakeholders throughempathy, including
various parties who willlead future generations.

Through the cultivation ofautonomous and creative
individuals and thenurturing of a corporate
culture conducive to theirdevelopment, we will aim
to become a developer oftalent whose employees
are the envy of othercompanies.

Social value

Environmental value

Maximization of our positive impact andminimization of our negative impact on society andthe environment through the thoroughimplementation of responsible consumption andproduction as a chemical manufacturer that serves
as the basis for a variety of industries

Economic value
Enhancement of corporate
value by achieving
business growth throughthe provision of social andenvironmental value

Enhancement of employee
motivation by helping
employees to gain a solid
sense that we are
realizing our purpose
through our businesses

Opportunities

Creation of social value basedon applicability to resolutionof wide-ranging social issues
Enhancement of corporate
value by flexibly responding
to changes in customers andcapital markets and to their
expectations

Risks
Obsolescence ofmaterial manufacturers’
technologies due todevelopment of digitaland AI technologies
Decline in co-creation
capabilities andcompetitiveness due todelayed response toenvironmental andsocial issues
Decline in co-creation
capabilities andcompetitiveness due todelays in industry
restructuring andportfolio reform
Loss of trust in society
due to environmental
and safety incidents

Reduction ofenvironmental impact
through reduction of
GHG emissions, waste
reduction, andimproved recycling
rates

Improvement ofmotivation, raising ofproductivity, reduction of
costs, and enhancementof brand value througheradication of all types ofaccidents and otherincidents and increased
efficiency of internal
processes

Resolution of social issues by co-creation andinnovation through the growth and active
involvement of autonomous and creative
individuals and the nurturing of a corporate culture
conducive to the attainment of such objectives

Active involvement of
employees and higher
employee motivation
through strategic job
rotations anddevelopment of leadersfrom the perspective ofCompanywide
optimization andrealization of highproductivity

Balancing of ourcontribution to theresolution of social
issues and duty as achemical manufacturer
through responsible
business management

Helping customers ensure
quality by offering safe andsecure products and services
Increased added value
through realization andmaintenance of advanced
manufacturing processes

Facilitation of innovation
through development andcreation of co-creative humanresources

Weakening of the
management foundation
due to lack ofunderstanding ofpotential risks and lackof appropriate
risk-taking
Decline in co-creation
capabilities andcompetitiveness due todelayed response toregional and nationallaws and regulations
and soft law, includinginternational norms

Personnel retention risk
due to inability tocultivate and maintainorganizational culture
and engagement
Stagnation of innovation
due to lack ofpsychological safety

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Material Issues and Non-financial KPIs

Materiality

Strengthen co-creation
capabilities &competitiveness and createsocial value throughinnovation

Gain credibility throughresponsible business
management

Develop autonomous,
creative, and active humanresources and culture

Constituent elements

58

Web and discussions by the
The nonfinancial KPIs were formulated based on the thoughts of frontline employees
management team in light of the external environment. We will continually revise the KPIs, reflecting the views and expectationsof various internal and external stakeholders through dialogues with them.

Key items (KPIs)

2025 targets

Relevance-1 Creation of social value through ourbusinesses-1-1 Resonac Pride products and services-1-2 CFP-related initiatives-1-1-1 Accreditation by open process-1-2-1 Calculation of CFP of major products

Businesses

P59-2 Identification of social issues and provisionof customer value through marketing-2-1 Vitalization of customer- and market-driven
activities-2-2 Promotion of digitalization-2-3 Enhancement of customer database-2-1-1 Enhancement of product pipeline that contributes to customer value-2-2-1 Strengthening overseas and regional information dissemination using digital marketing-2-2-2 Centralized Companywide pipeline management-2-3-1 Formulation of customer strategy for each business

MarketingP69-3 Promotion of open innovation-3-1 Co-creation with external parties-3-1-1 Promotion of open innovation and increase of the ratio of external themes-3-1-2 Number of papers and external presentations-3-1-3 Increase of the number of cross-organizational themes

R&D

P65

-4 R&D and intellectual property strategies
that resolve social issues-4-1 Strengthening of R&D and intellectual property
strategies-4-2 Human resource development-5 Facilitation of resolution of social issues
through digital transformation-5-1 Data-driven management-5-2 Promotion of digital transformation and developmentof professional-minded human resources-5-3 Enhancement of IT and digital literacy

Digital

P71-1 Establishment of environments where all
people can work with peace of mind

-1-1 Fostering of a culture emphasizing safety-1-2 Occupational accidents-1-3 Lost time incidents-1-4 Equipment-related accidents

Occupational Healthand Safety

P103-2 Provision of quality and safety to maximize
customer value-2-1 Product-related accidents-2-2 Quality compliance violations-2-3 Product stewardship-2-1,2 Zero product-related accidents and quality compliance violations-2-3-1 100% execution of risk assessment of priority risk assessment substances* (consolidated in Japan)

Quality Assurance

P104

Chemicals Management

P105-3 Reduction of environmental impacts
throughout the value chain, respect forhuman rights-3-1 Reduction of greenhouse gas emissions-3-2 Reduction of industrial waste sent to landfills-3-3 Environmental accidents-3-4 Respect for human rights-3-1-1 30% reduction (Scope 1 + Scope 2) from fiscal 2013 (consolidated) (2030 target)-3-2-1 0.5% or less of industrial waste generated (consolidated in Japan)-3-3-1 Zero environmental accidents (consolidated)-3-4-1 Establishment of human rights due diligence implementation frameworks

Environment

P97

Human Rights

P107-4 Creation of a sustainable society, working
together with suppliers-4-1 Improvement of quality of communication with
suppliers-4-1-1 Improved CSR questionnaire response rates, higher rate of suppliers exceeding the satisfactory threshold

Procurement

P106-5 Thorough implementation of soft-law-based compliancegoing beyond legal and regulatory compliance-5-1 Inculcation of “Our Code of Conduct”-5-2 Thorough implementation of Group global compliance standards-5-1-2 Increase of the degree of inculcation (survey)-5-2-1 Reduction in number of serious legal breaches

Compliance

P111-6 Reinforcement of our system for managing
increasingly diverse and complex risks-6-1 Development and operation of comprehensive
risk management systems-6-2 Reinforcement of the second line of defense-6-1-1 Operation of new comprehensive risk management systems for risks associated with change in the external
environment, operational risks, and hazard risks-6-2-1 Enrichment of the Group’s internal control framework through data linkage with the second/third lines ofdefense-6-2-2 Commencement of expansion of processes outside Japan and centralization of risk data within the Group

Risk Management

P109-1 Supply of human resources required by thebusiness-1-1 Workforce planning with enhanced linkage withbusiness strategies-1-2 Preparation of next-generation leader
candidates and visualization-1-1-1 Future talent portfolio fulfillment rate
-1-2-1 Succession planning preparation rate

-2 Cultivating and communicating
attractiveness to be chosen-2-1 Strengthening of employer branding-2-2 Enhancement of wellbeing-2-3 Human resources system integrated with thecorporate philosophy-2-1-1 Hiring plan fulfillment rate
-2-2-1 Detrimental voluntary turnover rate
-2-3-1 Engagement score

Human Resources

P89-3 Creation of autonomous, professionalminded human resources-3-1 Provision of opportunities to encourage careerownership-3-1-1 Internal promotion rate (key positions)-4 Cultivation of corporate culture conducive toco-creation-4-1 Inculcation of the purpose and values andcultivation of a co-creation culture-4-2 Realization of workplace environment conduciveto active involvement of diverse employees-4-1-1 Survey score of the degree of implementation of the
purpose and values-4-2-1 Survey score of psychological safety-4-2-2 Ratio of female managers-4-1-1 Increase of the ratio of introduction of life cycle assessment (LCA)-4-2-1 Assignment of leaders andprofessional-minded human resources-4-1-2 Enhancement of intellectual property indicators, such as Market
at an appropriate ratio
Coverage (MC), which indicates market value, and Technology-4-2-2 Completion of a venue for co-creation
Relevance (TR), which indicates technological value-5-1-1 Establishment of the platform for standardization and analysis of financial data
-5-3-1 Digital experience and education of all-5-1-2 Establishment of a process for obtaining ESG data
employees-5-2-1 Promotion of projects through collaboration between
centers of excellence and business units-1-1 Establishment of a culture emphasizing safety to eliminate occupational accidents-1-2,3,4 Zero serious occupational accidents (consolidated)-1-3-1 Lost time incident rate: 0.1 or less (consolidated, equivalent to zero accidents resulting in lost time over a
10-year period at a site with 500 employees)-1-4-1 Zero serious equipment-related accidents (consolidated)*Assess substances stipulated by the Company by issuing safety summary reports-5-2-2 Increase in number of reports throughthe whistleblowing system

59

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Special Feature

Contributing to Society and Customers by Fulfilling Our Purpose through Resonac Pride Products & Services
Approach to Resonac Pride Products and Services

Certification process

As an advanced material partner, Resonac aims to contribute to thesustainable development of global society by creating functions required of
the times, with the goal of contributing to the happiness and prosperity ofpeople and to harmony with the global environment. In order to achievethis, it is important to visualize how much value our products and services,which we provide in a wide range of areas from upstream to downstream in
the value chain, have provided to customers and society.
Upon integration, the SDGs-contributing products of the former Showa
Denko Group will be renewed as Resonac Pride Products and Services, and
the Group will place even greater emphasis on contributing to customers
and society going forward.
In terms of certification, we aim to integrate the points of view of third
parties in evaluation from the perspectives of value provided to customers
and society by changing society based on our purpose as well as theappropriateness of Resonac’s four values, risk assessment such as productenvironmental assessment and reputation, future potential and impact suchas sales plans and market share, and relevance to shared global goals(SDGs).

Until 2022, product and service certification was carried out in-house, but going forward, we will include

Main items of confirmation for certification
Implementation of
purpose and values

What is the value provided to customers
and society? (quantified as much as
possible)

Points of certification

third party participation to increase objectivity and transparency. We plan to involve various stakeholders,
including investors, experts, customers, and next-generation members, as third parties.
Entry(business units)

Contribution to the SDGs through businesses
focus of our corporate activities, and positioned goals that we contribute to through businesses and products as well as goals that wecontribute to through our business foundation as follows. In addition to the areas we are already working on, we are looking ahead withthe aim to contributing to the creation of a future that we seek to realize through the power of chemistry.

The issues we will identify andsolve that are not expressedin SDGs 1 to 17:

Page related to SiC

the future we seek to realize
through the power of chemistry

Risk perspectives
from third party pointsof view

Sales plans

Sales plans and market share

Future potential andimpactRelevance to SDGs

How does it contribute to the 17 goals
and 169 targets, and is it related to theessence of the SDGs?

Relevance to sharedglobal goals (including
future potential)

Pages related tographite electrodes

P79

P60

Pages related to plastic chemical
recycling
P16

P87

Pages related tocopper clad laminatesand solder resist
P61

P77

P85

P101

Appropriateness

What kind of risks are there whenevaluated from various perspectives
such as product environmental
assessment and reputation?

Recognition and commendation of
products and services that havecontributed the most to therealization of our purpose

Review board meetingwith third party
participation

Examination by thesecretariat

As a Co-creative Chemical Company that seeks to create a recycling-oriented society, we have made contributing to SDGs 12 and 17 theWhat kind of values are demonstrated?
Risk assessment

P90 / Dialogue with University Professors on Resonac Pride Products

Provision ofhighly recyclable
components
Development oftechnologies such as
next-generation
semiconductormaterials

Development ofmaterials for
low-power
semiconductor
applications

Provision of
products that help toreduce greenhousegas (GHG)
emissions“Co-creative
Chemical Company”

Development ofmaterials that
contribute to increasing
the performance ofelectric vehicles

Page related to VGCF,
SPALF, and anodematerials for electrified
vehiclesP81

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Iron recycling and greenhouse gas reduction for the realization of an advanced
recycling-oriented society using graphite electrodes
Realization of our
purposeResource circulation through iron recycling, greenhouse gas reduction
through hydroelectric and wind power generation and utilization

The process of manufacturing iron, which is an important material
that supports social infrastructure, from iron ore (blast furnace
method) is one of the largest sources of CO² emissions. However,
the electric furnace method, which melts and recycles scrap iron,is capable of reducing CO² emissions to 1/4, and is therefore an
important process for a sustainable society. Resonac is the number
one global manufacturer of graphite electrode materials, which areessential for the electric furnace method, and supplies stable andhigh-quality graphite electrodes manufactured in six plants aroundthe world to steel manufacturers in various countries through local
production and consumption. Currently, we are working on thegreening of electrodes at these six plants, and in order to avoid
emitting GHG emissions in the graphite electrode manufacturing
process, we are promoting 100% green power generation withhydroelectric and wind power generation at our European plants.
In addition, we have started to install solar cells on the roof of theplant in Malaysia. Our graphite electrodes will continue to support
people’s lifestyles through the recycling of iron products.

What are graphite electrodes?
Iron is familiar and indispensable to ourlives, used in such things as cars andbuildings. Graphite electrodes are used torecycle said iron. Graphite electrodes areused as electrodes in electric steelmaking
furnaces (electric furnaces) that produce
steel by melting scrap iron. A large current
is applied to the electric furnace, and thescrap is melted by arc discharge. The molten
steel temperature in the furnace reaches
1600°C, and the temperature at the tip of theelectrode reaches 3000°C.

Details of global co-creation

TARGET 7.2
Utilization of non-fossil power
generation such as hydroelectric power
generation at the plant in Austria
TARGET 6.4
Stable operation of thewater system in Japan(Omachi Plant)

PIN

Furnaceframe

Molten steel

Furnace bottom
tap hole

Cylinder

(EBT)

Ladle

Graphiteelectrode60

Graphite electrodes

Tilting equipment(joint)Three-phase AC electric
steelmaking furnace

TARGET 17.16
Consulting and technical services
Proposal of operating conditions forCO2 suppression

Our six global plants

Scrap ironElectric furnace
TARGET 13.2/13.3
Supplying electrodes of the same
quality at the six global plants
Reduction of CO2 emissions from transportation
through local production and consumption

End users

TARGET 13.2/13.3
Reduction of CO2 during transportationand movement within plants
Conversion of forklifts and company-owned
vehicles to hybrid vehicles and electric vehicles

Co-creation with local communities

In Omachi City, where one of our domestic plants is located,
agricultural production was being hampered by the lowtemperature of water from melted snow. Since 1954, we have been
operating a 36 km-long water utilization system that includes threehydroelectric power stations, and by raising the temperature ofwater before using it for irrigation, we contribute to a stable watersupply and improve yields for a wide range of local farmers. At ourplant in Austria, waste heat after baking electrodes is supplied to
the regional heating network in order to make effective use of it,
contributing to the reduction of CO2 emissions throughout theregion, and in this way, Resonac is working on co-creation withlocal communities on a global scale.

(electrodebody)

TARGET 13.2/13.3
Reduction of CO2 from logistics
Enhanced transportation
efficiency

P85 / Chemicals

Demonstrating
our values

GE

TARGET 7.2
Supplying heat to
the region at theplant in Austria

TARGET 12.2
Use of raw materials andpetroleum residue
Green purchasing

Suppliers

350 to 800 mm

1800 to 3600 mm

RESONAC REPORT 2023

TARGET 7.2
Utilization of solar
power generation at
the plant in Malaysia

Comments from stakeholders

TARGET 7.2
Utilization of wind
power generation
at the plant in Spain

TARGET 9.4
Effective use ofresources
Conversion to fuel, etc.

TARGET 11.6
Stable supply of high-quality
electrodesHigher electrode output

Mr. Leopold Schilcher, Mayor of Bad Goisern, Austria
The plant in Austria makes effective use of waste heat from electrode baking to provide a stable supply
of heat to the regional heating network. Especially in the current energy crisis, this supply of regional
heating unites more than 300 partner companies and local residents. In light of these efforts, Mr.
Leopold Schilcher, Mayor of Bad Goisern, Austria, stated that he is proud to have such a reliable
company as Resonac Graphite in the city of Bad Goisern, and that he believes Resonac Graphite brings
benefits to the community with its innovative concept.
Mr. Leopold Schilcher, Mayor of Bad Goisern, Austria (center of photo)

61

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Contribution to a digital society and reduction of environmental impact through copper clad laminates and solder resist
Realization of our
purposeSpread of infrastructure with advanced electronic materials for semiconductors,
advancement of digital communication technology, and reduction of environmental impact

As digital society progresses, digital communication technology using
semiconductors has become essential for sustainable social development. Throughthe supply of high-performance advanced electronic materials for semiconductors,
Resonac is contributing to AI technology that realizes new services and industrial
processes using large amounts of data, next-generation wireless communication
technology (5G, 6G, etc.), improved vehicle safety, improved transportation services
and the spread of communications and transportation infrastructure, advancement
in digital communication technology, enhanced device energy saving, and the
reduction of environmental impact.
Demonstrating
our values

Higher functionality and resource conservation of electronic devices using
copper clad laminates and solder resist, and co-creation through JOINT2

As electronic devices become lighter and smaller, we are developing cutting-edge
technologies in a timely manner that can respond to thinner and higher-density
semiconductor devices, while also supporting the sophistication of digitalcommunication technology and contributing to the reduction of environmental
impact. In addition to the conventional liquid type solder resist, we have developed
film products that do not contain solvents, thereby reducing their environmental
impact when used by customers, and by making them thinner, we are also
contributing to resource conservation. For copper clad laminates, we have createdhigh-performance substrate materials using our unique synthesis technology,
contributing to the increased functionality of electronic devices. Moreover, since they
can be applied to thin packages, they contribute to resource conservation. Bothsolder resist and copper clad laminates are halogen-free, which contributes to the
reduction of environmental impact.
All of these materials contribute to the resolution of technical issues in productionof next-generation semiconductor packages in collaboration with member companies
of JOINT2, and realize co-creation with other companies through the supply chain.
P15 / Packaging Solution Center

P78 / Semiconductor and Electronic Materials

In 2023, Resonac’s copper clad laminates (MCL-E-705G, 795G) received the GeneralAward from the Japan Chemical Industry Association, and were commended as
products that have contributed to the advancement of science and technology.

Contributing to a digital society with semiconductor materials
TARGET 9.1
Spread of communications
infrastructure
Next-generation wirelesscommunication technology

TARGET 9.1
Higher functionality of copper
clad laminates and solder resist
using unique technology

TARGET 7.3
Enhanced energy
savingBase station

Copper clad laminates

Co-creation through
JOINT2Basestation

HPC server

TARGET 12.4
Compatible withthinner models
Halogen-free
Semiconductor
packages

Mobility/transportation infrastructureIntelligent transportation systems(ITS)
Millimeter wave radar

Solder resist

CPU
GPU

Wearable/IoT devices

Smart watches

Wireless

sensor ADAS

TARGET 12.4
Compatible with thinnermodelsSolvent-free (film products)
Halogen-freeComments from stakeholders

Data centers

TARGET 9.1 TARGET 11.2
Spread of transportation
infrastructure
Improved vehicle safety

TARGET 9.1
Next-generation
wireless communication
technology

Mr. Koji Izumi, Division Manager of Global Purchasing Division, Strategic Corporate Planning Operation of IBIDEN CO.,LTD.

As digital transformation progresses, areas of data utilization will expand further, and the associated rise in data
center investments is expected to increase demand for large, highly functional IC package substrates. A stablesupply of highly reliable raw materials is essential in order to supply society with competitive IC package
substrates that meet the needs for higher functionality and energy conservation. Resonac is an important partnerthat supports our manufacturing, from copper clad laminates with excellent warpage reduction and flatness, tohighly reliable solder resist and photosensitive dry film such as Photec.* We hope to continue deepening ourcooperation with Resonac in order to supply highly reliable products and reduce energy consumption and waste
generation during production by improving production efficiency within our company.
*Photec is a registered trademark of Resonac.

Smartphones
Wi-Fi/AiPRESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

CTO Roundtable with Young Researchers

Creating Innovation
through Co-creation and
Synergy while Leading
Resonac as It Competeson the Global Stage(From the left of the photo)

Masato Fukushima Corporate Officer and Chief Technology Officer (CTO)
Keisuke Mameda Cross Functional Group, Functional Molecular Chemistry Research Department, Institute for
Polymer Technology (work location: Kawasaki Plant)

Mao Owada

Next-Generation High-Speed Communications Materials Group, Stage for Co-creation(work location: Stage for Co-creation)

Kohsuke Kakuda

Informatics Group, Research Center for Computational Science and Informatics(work location: Stage for Co-creation)

Yuzuru Kobayashi

Structural Control Group, Device Materials Research Department, Institute for Advanced
Integrated Technology (work location: Shimodate Plant)

Shared language required for co-creation and synergy
Fukushima: Resonac aims to achieve innovation and business development capabilities that
contribute to a sustainable global society. Innovation does not necessarily have to be
destructive. When we look at what we have accumulated so far from a different perspective,
or when we add something like beauty to a certain function, it can suddenly turn into
innovation. As a chemical manufacturer, we want to create important technologies for
products that make end users think, “Wow, this is innovative.” What do all of you think isnecessary to bring about innovation?
Kakuda: I think that the ability to keep up with cutting-edge technology, the ability toincorporate what you have learned into your own technology and implement it, and cocreation are necessary. At the Research Center for Computational Science and Informatics

P15
at the Stage for Co-creation, I mainly develop AI technology and use it to develop
semiconductor materials. So far, I have managed to cut the development period by half andformulate an experiment policy using AI technology. Since the Stage for Co-creation
consolidates internal research functions and domestic and overseas knowledge, I feel that
it is easy for a chain reaction to occur in which innovation by AI technology leads to further
innovation.
Kobayashi: At the Institute for Advanced Integrated Technology, I am currently working with
development departments to develop next-generation substrate materials by utilizing thetechnological synergies of the former Showa Denko K.K. and the former Hitachi ChemicalCo., Ltd. When it comes to synergy, I sometimes think that there is still a lack of a sharedlanguage due to differences in backgrounds. I think that a shared language involves those incharge sharing the technologies and expertise that they have cultivated thus far, and

62

63

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

spreads a common understanding of what must be done tocreate products that satisfy customers. I believe thatcultivating this kind of shared understanding will lead to new
discoveries and spark innovation.
Owada: I would also like to make full use of the synergy of our
in-house technologies. The mission of the Next-Generation
High-Speed Communications Materials Group, to which I
belong, is to develop materials and technologies for composite
materials that will be used in the telecommunications field in
the 2030s. We are co-creating with the Analysis Center for
Materials Science and the Research Center for Computational Science and Informatics fromthe perspective of establishing analysis methods and predicting properties throughsimulations. I sometimes think that a shared language would increase the speed of sharing
each other’s cultures and improve the speed of R&D.
Mameda: I believe that understanding customer needs is essential for innovation. I am incharge of an internal collaboration theme that deals with the development of low-thermalexpansion resins that aim to reduce the warpage of copper clad laminates. In thedevelopment theme that I was in charge of before, I regretted that I might not have fully
grasped the needs of external customers. Currently, there are related parties andcustomers in the company, which makes it is easier to understand customers and their
future needs. In order to deepen mutual understanding, we are promoting hands-on andface-to-face initiatives, such as creating data sharing sites with our partners and receiving
two-week practical training at our partners’ locations.
Fukushima: With the merging of the former Showa Denko K.K. and the former Hitachi
Chemical Co., Ltd., there should be opportunities to create new innovation in the process ofunderstanding each other’s cultures and finding inspiration to create one single culture. To
that end, how we go about creating a shared language is both important and challenging. I
believe that establishing a shared language starts with discussing the needs of customers
and society and what we must do to meet them.

Synergy starts with real communication
Kakuda: In order to deepen discussion, I feel that it isimportant to connect key people. In addition, I think it isimportant to connect others with your own abilities andknowledge.

Kobayashi: I feel the same way. When I think about co-creation and synergy, I feel that
although connections are currently being formed between divisions, there is still a lack ofpeople who truly understand each other’s positions and act accordingly. Resonac possesses
computational science technology in addition to material manufacturing and composite
technology, and I look forward to what kind of leaps will be made when these threestrengths come together.
Owada: I think that, to date, there are many technologies that have not been commercialized,
and I would like to create a system that promotes the sharing of such knowledge and utilizes
it on a person-in-charge basis.
Mameda: Technology and knowledge are shared at presentations and other events, and I
hope that this will lead to the integration of technologies, and that said integration will leadto the creation of value. To that end, it is necessary to promote not only systems but also
exchanges between human resources, and I believe that these people-to-people exchanges
will lead to the integration of technologies. In addition to understanding data such as thetechnologies and specifications of those we are co-creating
with, I believe that it is important to work together to grasp
what customers are truly struggling with and understandsignificant issues that may not be visible yet.
Fukushima: To achieve that, it is essential to have realcommunication where people gather and information flows
naturally. I’m looking forward to seeing what kinds ofreactions will occur as opportunities for communication
increase.

Co-creation that deepens empathy
Kobayashi: Since its creation, I have been participating in an in-house circle called“Dhemical,” which was voluntarily set up by young employees. In this circle, I belong to ateam that considers and researches ideas for new product themes, and I have been involvedin this for about three years. Resonac now has an environment that encourages suchactivities. I feel that this is symbolic of the new Resonac, in the sense that it will lead toco-creation, synergy, and innovation.
P96),” a new
Mameda: I have been participating in “REBLUC (Resonac Blue Creators
system that began in 2022. REBLUC is a purpose-driven thinking community that started toelicit mutual understanding, where the passions and senses of purpose of each and every
employee, such as the desire to change society or contribute to the world, overlap. For
example, even if I wanted to solve a problem that I had set myself, or wanted to make friends

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

to start a new business, I wouldn’t have known how to go
about doing that with the conventional systems within thecompany. I feel that REBLUC is a good system that allows
everyone to start thinking of such things more lightly andopenly.
Kakuda: I believe that creating a culture that facilitates thecreation of new businesses will benefit the company bothinternally and externally. By succeeding with a new business,
one can become a pioneer, which leads to motivation. By
establishing ourselves as a pioneer, excellent humanresources will gather at Resonac, where innovation and further new business development
will become possible.
Mameda: I agree that becoming a pioneer has a great impact on motivation. I think there is a
lot to be gained from being a number one brand, and I would like to take on the challenge of
how far we can establish that, even if it is difficult.
Fukushima: For engineers of a company, I’m sure it must be an irreplaceable joy to see yourcreations providing value to society and being recognized by the market and customers. I
would like for everyone to always pay attention to what kind of value your creations connect
to.
Owada: Of course. Customers are the closest to the market, but we are aware that we needto see the market directly, not just through customers.
Kakuda: The direct customers of the Research Center for Computational Science andInformatics are those in charge of experiments in each division within the company. I see thelack of opportunities to interact with customers beyond those as an issue, and I am trying toincrease opportunities to do so. When you interact with actual products and customers, it
becomes easier to empathize and understand how a certain calculation might be useful,which in turn makes it easier for innovation through co-creation to occur.
Fukushima: In both research and development, it is important to empathize with the target
group.

To Resonac engineers competing on the global stage
Fukushima: The process of growth is important, including what kind of career you all choose
to pursue, be it in research, development, manufacturing, sales, or something else. Whether
you become a specialist as a researcher, or a generalist after experiencing several positions,
I would like for you all to enjoy such decisions as part of figuring out your careers. The
company is in the process of designing a human resource development system that allows
such career choices.

Mameda: Ten years have passed since I joined the company. I have been thinking about
whether I should build a career as an engineer going forward, or whether I should gain
experience in another division. In order to change society through the power of chemistry, I
honestly think it would be wonderful if we could create an environment where everyone canproceed as they wish and fully demonstrate their individual strengths.
Fukushima: Creating such an environment is essential. In R&D, I would like to develop
human resources who can think strategically. People who can draw a roadmap forinvestment, personnel, scheduling, etc. when they want to develop new materials.
Owada: Since starting my current job, I have started observing the market and searching for
future changes more than ever before, and I find it both challenging and interesting. I would
like to be able to think about the next step based on what I want to focus on the most.
Kobayashi: Sometimes I feel like there is a gap between what I’m good at and what I want todo, and I’m trying to be conscious of the goals I should be looking at for the future. Rather
than wait for an appointment from the company, I am strengthening my determination to
pursue my own career.
Kakuda: It’s been four years since I joined the company, and for the first time, I became a
direct mentor to junior employees. While training him I mentor, I want to be inspired by myteam members and increase my own experience, so that in five to ten years, both myself andmy team members will have broadened our horizons.
Mameda: I would like to become a person who can understand the purpose of customers
and the society they want to realize, and contribute to that society. It is important forengineers to connect with sales and business divisions who research the market and comeup with ideas on how to connect it to society. As a company as a whole, I would like to think
about how to create a system to go from R&D to products.
Fukushima: I think we have entered an era in which engineers are led by people who havean understanding of what the world needs and people who can create systems that keep up
with that. I would like to create an environment in which you all can enjoy the current,
transitional period, and take on challenges without fear of failure. You all have ownershipover your own careers. As technology continues to develop, Resonac’s engineers should
stay strongly connected to each other,and compete openly on the worldstage without being bound by theframework of the company. I strongly
feel that all of you are ready for this.

64

65

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

R&D and Intellectual Property Strategies

Web

Mission of Creating Value
Inspired by its vision of generating synergies between “Chemistry to Synthesize,” “Chemistry to Formulate,” and “Chemistry to Think,” to contribute to the production of world-leading products
and technologies, Resonac is advancing R&D activities aimed at accomplishing three missions: broadening of technology portfolios to create innovation, promotion of cross-business technology
development, and changing society through long-term R&D projects.

Policies
We will pursue the following three missions torealize our purpose and contribute to resolvingsocial issues by creating the world’s No. 1
technologies and products through co-creativetechnological development.
Deepen materials technology and promotehorizontal deployment of technologies
Strengthen fundamental technologies such as
computational science and informatics,
analysis and evaluation analysis
Facilitate networking and open innovation
through the exchange of human resources
within the company and with people outside thecompany, transcending the boundaries ofbusiness and technology fields, and expand
added value through synergies
In order to drive creation of synergies bytechnological resonance of “Chemistry toSynthesize,” “Chemistry to Formulate,” and“Chemistry to Think,” the CTO organization is
executing corporate R&D activities, managementof R&D activities, and oversee Companywide
intellectual property (IP) activities.

Of

fer

n
ing

ew

f

ti
unc

ons

th

gh
rou

tec

hn

gy
olo

i

gr
nte

ati

on

Semiconductor andElectronic Materials
Microfabrication

High-speed polishing/
low scratch

Mobility
Low dielectric

Chemistry to Think

Chemistry to Synthesize Chemistry to Formulate Realization of Functions

Evaluation/simulation technology

Materials technology

Application technology

Organics/polymers analysis

Molecular dynamics calculation

Inorganics

Interface/surface control

Structure analysis

AI

Polymers

Mixing/dispersion

Quantum chemistry calculation

MI

Aluminum alloy

Materials processing

Business creation/development

Heat management

Innovation Enabling
Materials

Formulation
Weight reduction

Te c
h

nol

ogy

Thinning

enh

anc

em

ent

Chemicals
thr

oug

hb

usi

nes

ses

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

R&D and Intellectual Property Strategies
Mission of R&D organizations

Targets and results of KPIs on material issues

Institute for Advanced Integrated Technology

Institute for Polymer Technology

Create new businesses, and research and develop materials
including metal, inorganic and composite materials
Enhance values of existing businesses and products, andcultivate their surrounding areas, which may grow further inthe future
As a hub for evaluation technologies related to power
modules, promote the entire process from development ofmaterials and composites to design and evaluation of devices

Research Center for Computational Science andInformatics

Research and develop materials including organic andpolymeric materials
Enhance values of existing businesses and products, and cultivate
their surrounding areas, which may grow further in the future
As an analysis center for composition, general structure,surface structure and microstructure of organic and inorganic
materials, accelerate the product development cycle ofmaterial development, analysis and evaluation

Stage for Co-creation

Promote Companywide R&D with computational science andinformatics
Solve problems of products through atomic- and molecularlevel simulation/structural and fluid simulation/AI analysis
technologies; accumulate, analyze and utilize internal andexternal technical data
Establish the base of data-driven R&D and develop the talent

Promote long-term R&D projects that contribute to resolvingsocial issues in collaboration with a diverse range of people
inside and outside Resonac

P15 / Stage for Co-creation

KPIs and 2025 targets

P58 / Material Issues and Non-financial KPIs

Results in 2022

Co-creation with external parties:
Promotion of open innovation and increase of the ratio of
external themes
Number of papers and external presentations
Increase in the number of cross-organizational themes

Start of consideration of actions to facilitate open
innovation

Strengthening of R&D and intellectual property strategies
Increase of the ratio of introduction of life cycle assessment (LCA)
Enhancement of intellectual property indicators, such as
Market Coverage (MC), which indicates market value, andTechnology Relevance (TR), which indicates technological value

Started LCA calculation of research themes
Set targets of IP indicators

Human resource development
Assignment of leaders and professional-mindedpersonnel at an appropriate ratio
Completion of a venue for co-creation

Started discussion on personnel assignment
Opened the Stage for Co-creation

Intellectual Property Department
Oversee the intellectual property activities of the entire company and contribute to R&D, business, and management strategies

Priority Measures for 2023
R&D Planning Department
Ensure smooth operation of Companywide R&D activities based on Resonac’s diverse technologies and business domains
Formulate technology strategies, promote open innovation, and establish and operate various infrastructure and systems to support
the execution of R&D activities

Roadmap for realizing the long-term vision
Results in 2022

Plan for 2023

Vision for the future (2030)

Completed substantial integrationof functions with a view tocomplete integration. Pursued
synergy of the two companies’
technologies centering on
development of semiconductormaterials
With regard to deep-level digitaltransformation, deployedelectronic lab notebooks andstatistical analysis software
throughout the Company
Organized the internal structure to
vigorously promote open
innovation inside and outside theCompany
Clarified the ideal post-integration
state of R&D human resources

As projects to generate synergies,
accelerate and enrich developmentof advanced materials in thesemiconductor field and promote
vertical collaboration
With regard to deep-level digitaltransformation, accelerate R&D
utilizing computational scienceand data-driven R&D
Facilitate co-creation throughvigorous open innovation insideand outside the Company
Accelerate R&D activities
throughout the company toachieve carbon neutrality
Formulate a plan to develop leaders
who will drive R&D activities andprofessional-minded humanresources to develop core technology

Be a provider of technology andsolutions attuned to the needs ofsociety, the market, andcustomers
Be a driving force of unceasing
innovation by addressing andresolving technological issues
inside and outside the Company
Be the source of a stream oftechnologies contributing to atruly sustainable society byenhancing R&D activities from along-term perspective
Be the source of a stream ofleaders and professional-minded
human resources for the above
R&D activities

Based on the measures prescribed for realizing our long-term vision, in 2023 we are promoting
activities focused on four priority measures.
Promotion of projects to generate synergies and broaden our technology portfolio: Business
units and R&D organizations will work together to generate synergies and accelerate andenrich development of advanced materials in the semiconductor field and promote verticalcollaboration. The Power Module Integration Center is constructing a system to accelerate
P16
co-creation with customers for each material.
Implementation of deep-level digital transformation: We will accelerate R&D utilizing
computational science and data-driven R&D and construct a material informatics (MI)platform to foster a culture conducive to utilizing data and promote the evolution of digital
P67
technologies using MI and process informatics.
Promotion of co-creation: This measure will be advanced through the pursuit of internal
P15
P67
synergies as well as through open innovation with external partners.
Achievement of carbon neutrality: The path toward carbon neutrality will be paved by ourefforts utilizing the new Stage for Co-creation and activities based on long-term R&D themes,such as a carbon cycle through plastic recycling, CO² separation and recovery, andP16
conversion to chemicals.
Through such ongoing efforts, we aim to drive unceasing innovation leading to resolution oftechnological issues inside and outside the Company by 2030. We also aim to be the source of a
stream of technologies contributing to a sustainable society by enhancing R&D activities from along-term perspective.

66

67

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

R&D and Intellectual Property Strategies
Co-creation Initiatives to Resolve Social Issues
Digital Transformation of R&D usingDX
computational science and AI—Co-creation
with external parties and adoption of cutting-edge
technology
The Research Center for Computational Science and Informatics is
one of the few organizations in the world that integrates
computational science (molecular simulation, structural and fluid
simulation) and informatics (AI*1, MI*2, image analysis, natural
language processing, and development of the infrastructure fordata utilization) technologies at a single location. The Center’s
technologies are applied to R&D issues in all of Resonac’s businesssegments. The Center’s mission is to position Resonac as a worldclass functional chemical manufacturer by maximizing R&D
capabilities and business competitiveness.
In 2022, the Center had 35 opportunities to present its outcomes
externally, including lectures by invitation, publishing of papers,
and conference presentations in Japan and abroad. The Center’s
activities were also covered by numerous news releases andnewspaper articles. The Center’s initiatives for digitaltransformation of R&D based on “developing infrastructure fordata utilization that supports accumulation, analysis, and utilizationof data” and “fostering processes, culture, and organizations thatutilize data” have attracted great interest in society, and we haveinvited many government agencies and companies that haverequested our services to the Stage for Co-creation to exchangeWebopinions.
Moreover, through co-creation with a U.S. startup we are
adopting and utilizing cutting-edge technologies. We collaborated
with QSimulate, a company with cutting-edge simulation
technologies, on the development of a new capability for its
quantum simulation platform for materials development, which
reduces an experienced researcher’s workload by more than half.
Web We are also working with Enthought, a startup that
supports digital transformation of its partners, to transfer
Enthought’s cutting-edge AI and MI skills to our young data
scientists who are promoting deployment and utilization of AI and

MI applications throughout our material development
Web
departments.

Cases of Co-creation with Internal andExternal Partners in 2022 and Outcomes
Cases of Co-creation with Internal Partners We holdTechnology Forums as opportunities for employees
involved in R&D throughout the company to interact anddiscuss beyond the boundaries of their place of work and
R&D fields. In 2022, the forum had 730 participants.
Presentations of 67 themes and feedback on themstrengthened technology sharing and relationships
among engineers throughout the Group.
In addition, in-house working group activities are
conducted with the aim of solving problems in productdevelopment by combining the Group’s materials
technologies and evaluation and analysis technologies.
The application of technologies to new products isalready yielding good results.
Cases of Co-creation with External Partners We areconducting Open Innovation (OI)*3 activities to search forpartners and promote collaboration worldwide. In 2022,

our dedicated OI team, which promotes OI with external
partners, obtained information on more than 2,000
innovative startup technologies from affiliated venture
capital firms. Having meticulously examined the potential
synergy effects between these technologies and our own
technologies, we started collaboration with five startups
with a view to introducing their technologies.
On the Stage for Co-creation, we promote long-term
R&D themes that will lead to the creation of futurebusinesses.
As part of the initiatives, we have started collaboration
with Microwave Chemical to establish advanced recycling
technology that realizes plastic-to-plastic circulation.
Using microwave irradiation, ethylene and propylene,
which are feedstocks for plastics, can be efficiently
produced from used plastics. In addition to accelerating
R&D with a view to practical application of thistechnology, we aim to resolve social issues by expanding
the circle of co-creation to a wide range of stakeholders,
including local governments and consumers.
P16 / Long-term R&D Themes Contributing to the Next Generation

Open innovation through co-creation with a range of stakeholders

External research institutions

R&D frontlines inside and outside the Company(business units, plants, laboratories, etc.)

Universities/External institutions

Dedicated open
innovation teams
in Japan and overseas

Other companies(customers, suppliers, etc.)*1 Artificial intelligence*2 Materials informatics*3 OI is a methodology that incorporates the knowledge and technology possessed by external organizations in product development and technological innovation to break away from the self-sufficiency. It was proposed* by Henry Chesbrough in 2003.
Henry Chesbrough, “Open innovation: The new imperative for creating and profiting from technology,” Harvard Business School Press, 2003.

Venture capital

Consortium

Startups

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

R&D and Intellectual Property Strategies
Contribution to Business by Vigorous Utilization ofIntellectual Property

Utilization of IP Landscape to Develop Patent Application Strategies in line with the
Situation of Each Business Segment and Business

The objective is to increase the number of patents that attract theattention of other companies and obtain rights in countries with large
markets in cooperation with business units. By further increasing themarket value (measured by MC*1 ) and technological value (measured
by TR*2 ) of our patent network, we aim to raise MC and TR to the area
indicated by the dotted line in the center of the figure below by 2027 as
the first step, and eventually to be on par with global top-levelcompanies. In addition, our MC and TR are trending upward comparedwith the previous year, reflecting our commencement of a post-merger
portfolio review, and we are beginning to see positive results ofintegrated intellectual property activities.
We will enhance our business advantage through the timely andappropriate exercise of our intellectual property rights. To this end, we
will further strengthen our patent network to achieve differentiation of
our proprietary technologies from those of competitors.

For each business, the Intellectual Property Department, business units, and R&D organizations collaborate andutilize the IP landscape to visualize the patents held by Resonac and clarify Resonac’s position in eachtechnological field. Based on the results of IP landscaping and the issues of each business, such as the EBITDA
margin, we develop application strategies appropriate for each business to expand and strengthen our patent
network.
We have a wide range of technologies related to the semiconductor field, from front-end to back-end
processes. Our patents in this field are on a par with those of global companies. Taking CMP slurry, one of thesemiconductor materials, as an example, a bird’s-eye view of related patents shows that we hold patents related
to our key technologies such as nanoceria slurry, ceria slurry, silica slurry, and polymer additives, which are thesource of our strength. The IP landscape also indicates the technologies that are the source of our strength.

*1 Market Coverage (MC) is a score calculated based on information on countries where patent applications are filed.
*2 TR (Technology Relevance) is a score calculated based on the number of citations.

Company d

Number of Patents Held in the Semiconductor Field
Company aCompany b
2,370
1,514

Company e

1,200Company f

1,017

Company g

928

Company h

Silica slurry

907

Company i

Ceria slurry

1,000

2,000

3,000

2.0
Global top-level companies

Nanoceria slurry

701
0

TR (technological value)●Resonac●Company X●Company Y

3,126
2,394

Resonac
Company cTarget area of market value and technological value of the patent network

Competitive Advantage in the CMP Slurry Field

CMPスラリー分野での共創優位性

4,005

4,000

5,000

(Number of patents)*Evaluation of active patents using LexisNexis PatentSight® patent analytics

Polymer additives

Composite particle slurry* Evaluation using the ThemeScape function of Clarivate’s Derwent
Innovation patent analysis tool

Japanese companies
Japanese companies
1.5

Final
target area

Many Japanesechemical companies

Vigorous Dissemination of IP-related Information to External Parties

Web

With the aim of enhancing corporate value, we vigorously communicate our IP-related initiatives to external parties.
In addition to timely news releases on the gaining of patents related to our key technologies and the construction of2027
target area

1.0

our patent network, we promote IP landscape and technology trend research by utilizing our advanced IP information

Global companies

analysis technology, and disseminate the results of such research to external parties. Moreover, we have posted IP
Current

Bubble Size

information on our website as fact data on our ESG initiatives.

PS (Portfolio Size):
Number of active patent families

0.5
0.0

0.5

MC (market value)
1.0*Evaluation of active patents using LexisNexis PatentSight® patent analytics

1.5

Web

We will continue to strive to communicate

our intellectual property policies to investors in an easy-to-understand manner and enhance information disclosure.

68

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Marketing Strategies
Mission of Creating ValueTo resolve social issues, through proposal activities that help customers resolve their technological issues, we create new business and contribute to Resonac’s sustainable growth. Moreover,
we promote Companywide standardization of activities to offer problem-solving value propositions to make them Resonac marketing processes. Furthermore, we will promote construction andoperation of digital tools throughout the Company to improve the efficiency of marketing-related operations.

Policies and Management
Our marketing divisions (the CMO organization), comprising the Corporate
Marketing Department, Regional Account Planning Department, and the Innovation
Center, are executing marketing efforts in collaboration with business units, sales
departments, and site oversight departments in Japan and overseas.
In addition to planning of Companywide marketing strategies, the Corporate
Marketing Department formulates and implements market-specific or applicationspecific cross-divisional marketing plans and also constructs and operates themarketing platform common throughout the Company. The Regional AccountPlanning Department is planning and building a system to promote growthstrategies based on regions and customers. The Innovation Center serves as avenue for triggering co-creation and relationship building with stakeholders.
Hands-on exhibits enable visitors to experience some of our core technologies,
thus facilitating achievement of our goal of engaging in co-creation withcustomers, business partners, and all of our other stakeholders.

Roadmap for realizing the long-term vision
Plan for 2023

Vision for the future (2030)

Approached promising markets using
Resonac marketing processes andbegan creation of specific new projects
Promoted greater sophistication of themarketing platform utilizing digitaltechnology

Accelerate creation of new projects inspecific markets (EV, power module)
by promoting entrenchment ofResonac marketing processes
throughout the Company
Strengthen digital marketing
activities overseas and promoteutilization of CRM*3 systems tovisualize new projects throughout
the Company

Resonac marketing processes are
standardized and entrenchedthroughout the Company. Marketing
divisions (the CMO organization),business units, and sales divisions
including those overseas collaborate
and create new projects attuned tomarket needs of the times.
Digital marketing at overseas sales
companies is systematized. CRM
systems have become the standard
infrastructure for visualization of sales
and marketing activities.

Resonac marketing processes are activities to identify customers’ issues, transform Resonac’s strengths into value, and offer value propositions.
Creation of ideas

Strategy for Realizing the Long-Term Vision
We have collectively defined our activities for offering problem-solving value
propositions to customers as Resonac marketing processes, and utilize frameworks
such as MGAP*1 and VP*2 when considering new businesses. We use MGAP to
identify technological issues faced by customers, organize VPs in relation to thefeatures of our products (Features), differentiation from competing technologies(Advantages), and benefits to be gained by customers (Benefits), and repeatedly
verify product concepts in order to promote marketing. We are promoting
Companywide standardization of marketing activities, using the common
frameworks in cooperation with the R&D and intellectual property departments (theCTO organization) in the early phase of marketing, and with sales divisions in a later
phase once customer evaluation has progressed.

Results in 2022

Resonac marketing processes

Identification of
Resonac’s strengths(competitive advantages)

Identification ofcustomers’ issues

Conceptualization

Customer evaluation

Marketing process for new markets and applications
Process for marketing activities for existing markets and applications / sales activities of eachbusiness unit

Check items

69

Understanding of Resonac
products and technologies
Market analysis (PEST)
Identification of thetechnological turning
point of target
applications and its timing

Identification of customers’
development goals andtechnological issues
Formulation of value
proposition
Customers’ evaluation of
Resonac’s value

Obtaining data of theCompany’s evaluation of
products andcomparisons withcompetitors’ products
Narrowing down target
customers

Completion of 4P
analysisPrioritization of customers
Assumption of specificmass-production sites
and prices

Sample evaluation bycustomers
Completion of VP
verification
Completion of productpricing

Formulation of MGAP based on the above check items
VP: Concept verification based on Features, Advantages, and Benefits

Materializing as individual projects

Creation of a project for sales expansion

Horizontal deployment

Promote marketing in cooperation with the CTO organization and business units, using the above processes*1 MGAP: Multi Generation Application Planning*2 VP: Value Proposition*3 CRM: Customer Relationship Management

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Marketing Strategies
Targets and results of KPIs on material issues

P58 / Material Issues and Non-financial KPIs

KPIs and 2025 targets

Results in 2022

Vitalization of customer- and market-driven activities
Enhancement of product pipelines that contribute to customer
value

Marketing Activities in the Automotive Market
While promoting entrenchment of Resonac marketing processes throughout theCompany, we are promoting marketing activities in markets with sustainable

Execution of marketing based on MGAP and VP

growth potential in cooperation with R&D and intellectual property departments

Promotion of digitalization
Strengthening of overseas and regional information dissemination
using digital marketing
Centralized Companywide pipeline management

Execution of digital marketing activities mainly by principal
business headquarters
Identification of business issues for companywide application of
CRM

Enhancement of customer database
Strengthening of customer strategies of businesses, utilizing
customer database

Identification of key customers and clarification of issues forestablishment of a visualization system(the CTO organization) and business units. Specifically, we are focusing on value
propositions for batteries for EVs and motor-related materials, demand for whichis expected to grow rapidly in the automotive market, and for power modulerelated materials for the electronics market.
In line with the global expansion of the EV market, power modules are
attracting attention as a stable power source for driving the motors used in EVs
and for charging the batteries. Resonac has established a Companywide project

Co-Creation Initiatives to Resolve Social Issues

organization, the Power Module Cluster, to address this market, and is offering

Promotion of Digital MarketingDX

The use of digital platforms is indispensable for efficiently and comprehensively promoting value

value propositions through the combination of multiple products, rather thancreation of a business through provision of standalone products.
P16 / Co-creation with Customers Started for Evaluation of Power Module Materials

propositions in the market. The Corporate Marketing Department, in cooperation with the CDO
organization and the related parties in each business unit, is promoting digital marketing utilizing theWeb, email magazines, webinars, etc., and promoting the use of CRM systems to visualize and share theresults of marketing activities.

Objective
Anticipate next-generation power module specifications
and develop products ahead of competitors tostrengthen the Company’s competitiveness in power
module-related products

Overview of Activities of the Digital Marketing Team and the CRM Team
Supporting Companywide marketing activities based on the processes below

Agenda• Product features• Technologicaladvantages• Value to emphasize• Target markets/customers• KGIs & KPIs

Plan

Customer data
management
Database
More than 200,000
digitized businesscards (managed
within Salesforce)

Utilization of multiple
marketing channels
email magazine + web
marketingUtilization of Salesforce
Checking customer
response

Telemarketing

Phase 3
Proposal of solutions• Clarification of priorities among a group of target customers• Verification of VP• Pricing

Digital marketing process
Marketing activities
planning

Overview of the power module cluster concept

Creation ofopportunities for new
business talks

KGI
Adoption of all products by key customers

Phase 2
Hypotheses of solutions• Obtaining data of the Company’s evaluation

Data-based review• Establishment of VP

KPI
Improvement of the evaluation status; sales from the
project to exceed the investment required to realize thecluster concept

Sales representatives
meet with customers

Physical and digital
exhibitions

Phase 1
Trend/needs surveys• Identification of issues at the technological turning point and its timing

Collaborating organizations
Social media and webinars

Do
Action Implement a PDCA cycle, utilizing digital tools and data

CheckPower Module Integration Center and other R&D
organizations; Electronics Business Headquarters,
Device Solutions Business Unit, High Performance
Materials Business Headquarters, and other business
units, and sales divisions including those overseas• Identification of customers’ technological issues

Corporate Marketing Department
Overall process management
Measuring the effectiveness of the Power Module Cluster

70

71

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Digital Strategies
Mission of Creating Value
We will evolve and refine our business processes both internally and externally through advanced and thorough utilization of digital technologies and data and lead the transformation of ourorganizational culture. In addition, through the development of core digital-proficient human resources and their optimum assignment, we will continue improving and transforming ourbusinesses and contribute to co-creation with all stakeholders and the creation of social value.

Policies and Management

Digital Innovation Strategies

Our basic digital transformation policy is to contribute to the enhancement ofcompetitiveness and the creation of social value through the utilization of industry-leading
digital technologies. In other words, by creating an environment that enables thoroughutilization of digital technologies and promoting human resource development, we will
strengthen the Group’s innovation and business development capabilities andcompetitiveness. The eight departments that belong to the CDO organization closelycollaborate according to objectives and issues to achieve Resonac’s vision of becoming acompany that can compete globally, a company that contributes to a sustainable global
society, and a company that develops co-creative talent that represents Japan’s
manufacturing industry.
To this end, we will promote (1) development of human resources proficient in advanced
digital skills, (2) development of an internal digital environment, (3) standardization ofbusiness processes and evolution and transformation of business processes throughGroupwide utilization of digital technologies, and (4) operation of management-levelmeetings responsible for governance and monitoring of effectiveness to promote strategic
digital investment.

By updating our business systems to an open, secure, and modern architecture andorganically linking them to visualize business processes, we aim to enable management of
the data of all our business operations. We will analyze the issues and future prospects ofentire business processes through utilization of the data thus obtained within the Group anddigital technologies so as to continue the evolution of our business processes bothinternally and externally.
Moreover, having defined the three types of human resources needed to implement digitaltransformation, namely, high-level operational specialists, technology specialists, andcutting-edge business personnel, we are focusing on skill development. Furthermore, wewill clarify digital transformation issues common to the Group as a whole and assign
appropriate personnel according to the themes to promote DX swiftly.
Goal of IT and digital technology strategies● Leading value creation through co-creation

IT/ Digital Strategy

together with internal and external partners
Cyber Risk Management
IT Infrastructure

Conservative
IT

Lead the creation of value for society and the transformationof organizational culture through IT/digital as adriving force for realization of Resonac’s vision● Developing secure environment while

utilizing internal and external data

understanding with customers facilitated via IT anddigital technologies

Development of flexible, simple, standardized,
and systematized processes with IT and digital technologies

IT Application

CDO● Promotion of open communication through mutual● Utilization of internal and external data

Application of
innovativetechnologies

Advanced Technology Search
DX Promotion
Digital Training

Aggressive digitaltechnologies

Business modeltransformation

Transformation of theorganizational culture

Business
process reforms

Provision of Companywide
common infrastructure● Exhaustive data structuring and systematization● Development andutilization of virtual teams● Modern systems predicated on cloud infrastructure● Promotion of open innovation● Focus on high-value-added businesses● Creation of eco-systems for coordination

with suppliers
Data Management

Human resources supporting digital transformation initiatives(operational specialists / technology specialists / cutting-edge business personnel)

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

IT and Digital Technology Strategies
Targets and results of KPIs on material issues

Roadmap for realizing the long-term vision
Results in 2022

Plan for 2023

Start of vigorous recruitment
of digital-proficient humanresources
Formulation of digitaltransformation strategies
toward data-driven
management and launch of
Resonac Way Transformation(RWT) to standardize andsystematize businessprocesses, rules, and data

Start of visualization andanalysis of information on
business administration by RWTConcentration and developmentof human resources withexpertise in key themes byutilizing the iCompetency
Dictionary proposed by the
Information-technology
Promotion Agency, Japan (IPA)
Utilization of AMI’s humanresources with advanced
digital skill sets
P88

Digital transformation is promoted
in all businesses and operations,and non-core operational areasthat do not contribute to
Resonac’s competitiveness areautomated by 2030.
Resources are concentrated oncore operations that are thesource of our competitivenessand digital technologies are
utilized to promote co-creation
with stakeholders and contributeto creation of high social value.

Digital transformation at Resonac (Links to relevant pages and the website)
Classification

Application of innovativetechnologies

Title

Relevance

Establishment of integrated data pipeline to collect, format,
and accumulate data and analyze them with AI

WebCollaboration with QSimulate on the development of a system thatcan reduce man-hour of the workflow of quantum sciencecalculation for materials development by more than halfWeb

Participation in Enthought’s materials informatics (MI)acceleration program

Web

P67

P67

P67

Strengthening of mobility materials development
capabilities using MI

P82

Promotion of digital marketing

P70

Establishment of a database for centralized management ofsemiconductor supply chain information
Provision of digital solutions for operation of electric
furnaces through AMI

P80

P88
Web

Results in 2022

Data-driven management
Completion of financial data standardization concept, establishmentof Companywide standardized data analysis platform
Establishment of a process for obtaining ESG data

Start of utilization of software for visualization andanalysis
Launch of RWT activities

Promotion of digital transformation and development of professionalminded human resources
Promotion of projects through collaboration between centers of
excellence organization and business units

Start of a cross-organizational structure centering on the
Digital Transformation Department
Strengthening of the pool of digital-proficient human resources by hiring
personnel who can work effectively to promote digital transformation right away

Enhancement of IT and digital literacy
Digital experience and education of all employees

Improvement of a structure for education and training

Resonac Way Transformation Launched
Resonac Way is both the state to which our employees aspire and the fundamental manner in which we
do our work. In 2022 we began Groupwide initiatives, named “Resonac Way Transformation (RWT),” forunification of Resonac’s terminology, standardization of business processes, and structuring of data. The
objective is to eliminate, or minimize as much as possible, misunderstandings and rework caused bydifferent definitions of terms and inefficiency caused by differences in business processes, and to lay thefoundation for quick decision-making by structuring data.
We will promote RWT transcending business and regional boundaries to create an environment
and foundation where employees can focus on their essential work autonomously and efficiently. We
will promote visualization and analysis of business administration information to realize faster andsophisticated management decision-making by the end of 2023.

TopicsBusiness process reforms

Business modeltransformation

Targets for 2025

Vision for the future (2030)

P58 / Material Issues and Non-financial KPIs

Productivity Improvement by Using Internal Social Media (Workplace)DX

For swift information sharing among frontline workers and managers and supervisors at manufacturing sites, useof Workplace from Meta, an enterprise communication tool, is spreading, starting with manufacturing sites in Japan.
Until now, paper, whiteboards, and telephones have been the primary means of communicating information at
manufacturing sites, and workers do not have computers. Such workers are provided with smartphones and tabletsthat are configured to ensure information security so that use of Workplace is safe and secure.
This allows sharing of work know-how and information on problems that occur at frontlines together with images
and videos. In the event of equipment stoppages or other problems, supervisors, from wherever they are, canquickly issue instructions and address problems, enabling quick recovery. These initiatives are resulting in a seriesof cases of productivity improvement and reduction of overtime.

72

73

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Semiconductor Materials Global Top Management Roundtable

Semiconductor
Materials Business:
Key to Resonac’s Growth

Sim Mong Teck

Tomomitsu Maoka

Youjie Tsai

Chairman

Director, Managing Corporate Officer, Chief

Chairman and General Manager

Strategy Officer (CSO)

Resonac International

Resonac Holdings Corporation(Taiwan) Co., Ltd.

Resonac Asia-Pacific Pte. Ltd.

Characteristics of the Semiconductor Materials Business and Reason for Resonac’s Role
Maoka: Currently, the global semiconductor business is undergoing a period of drastic change as countries
are enclosing their production bases. The semiconductor materials field, which is Resonac’s main business, is
expected to grow in line with the increasing demand for semiconductors, with a CAGR of 5.2% until 2025. In

Hiroyuki Yamashita

Dennis Parker

Managing Corporate Officer, Resonac Holdings

President and COO

Corporation

Resonac America, Inc.

particular, double-digit growth rates are expected for materials for high-performance semiconductors, which
is our focus.

General Manager, Electronics Business Headquarters,

Yamashita: The Semiconductor Materials Business is characterized by the fact that it is difficult to commoditize

Resonac Corporation

products because it is necessary to communicate with customers collaboratively in pursuit of miniaturizationand package complexity. Resonac, which has a large number of products with the world’s top market share, isable to keep abreast of technological trends and customer needs through communication with customers, andThe Semiconductor Materials Business is positioned as a growth business in Resonac’s longterm vision. With strong demand expected to continue over the long term, there are growing
customer demands for further strengthening of technological development capabilities andsupply chain management including product supply, environment, and human rights, andResonac recognizes the need to respond proactively to these demands.
Hiroyuki Yamashita, who oversees the Electronics Business, the heads of sales in the U.S.,
Taiwan, and Singapore, as well as CSO Tomomitsu Maoka, all gathered to discuss Resonac’s
strategies, challenges, and responses.

is always ahead of the curve in technological development.

The semiconductor materials business has high barriers to entry.
Resonac, born from the integration of Showa Denko and Hitachi
Chemical, has developed a number of world-class semiconductor[ Maoka]materials and leads the industry.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Maoka: Production processes that are determined as a result of communication tend to avoid change. The
material design of semiconductor materials is highly challenging, requiring optimization by integrating
electrical engineering, thermodynamics, structural mechanics, and physical property chemistry. It is a

Resonac’s Semiconductor Materials Business Strategy
Maoka: Going forward, materials in which we have a high market share are also expected to grow across thebusiness with high barriers to entry.

board. We have positioned the Semiconductor Materials Business as our growth business, and our businessYamashita: This is a field where Resonac’s long-standing relationships of trust with its customers come intoand corporate headquarters will work together to analyze management resources and the externalplay. Another advantage is Resonac’s unique positioning within the semiconductor materials industry. Most

environment, set viable strategies based on cost-effectiveness and feasibility, and make focused investments.

semiconductor material manufacturers are niche market players that demonstrate strength in a few products,
and there are not many players like Resonac that are involved in multiple products with high market shares.
Maoka: In the age to come, as semiconductor manufacturing becomes increasingly enclosed within eachcountry, semiconductor material manufacturers will need to expand their production bases in each country,

Growth projection for semiconductor materials, in which the company has a high market share
High-purity Gas*1

and they will need to be large in size to survive. This is why M&A is becoming more active, and Resonac has

Increased use of high-purity gas due to increased number of 3D-NAND layers

become a pioneer in this field.

Ammonia gas, silane gas, tungsten hexaﬂuoride, propylene/acetylene gas,
PFC etching gas, HFC etching gas, carbonyl sulﬁde, chlorine gas,hydrogen bromide, nitrogen triﬂuoride, ﬂuorine gas mixture

Yamashita: Resonac has products with a high market share in the front-end and back-end processes ofsemiconductor production. Until now, technological innovation in semiconductors has been driven by frontend processes, which are responsible for the miniaturization of circuits formed on silicon wafers. However,2026 forecast¥616.4825.1 billion

billion¥

SiC epitaxial wafers (including manufacturer in-house products)*3

CMP Slurry*1
Increase in number of CMP layers due to increased number of
3D-NAND layers and structural changes

Rapid growth in demand for energy-saving
power semiconductors using SiC epitaxial wafers

2026 forecast¥188.12026 forecast

230.1 billion

billion162.1 billion

¥

¥
¥54.9
billionwith the 2 nm process approaching, further miniaturization has become difficult, and it will be necessary to

vs. 2021

vs. 2021

achieve higher functionality through back-end mounting technology. In this back-end process, multiple

34% increase

22% increase

2021

2026

2021

2021

2026

vs. 2021

195% increase2026

materials are used to achieve high functionality, and the complex three-dimensional structure of a so-called
2.X-dimension package requires the optimal combination of more than 10 materials. Resonac excels at

Molding compounds*2

matching up with its customers, which is why Resonac continues to grow with back-end materials accounting

Increased demand for semiconductors for EVs

for approximately 70% in semiconductor materials sales.
¥152.62026 forecast

billion186.3 billion

Copper clad laminates for semiconductor package substrates*2
Increased laminate usage due to larger andthicker FC-BGA semiconductor package substrates¥139.2

179.1 billion

2021

Front-end process (wafer process)※1
Company

Main materials

Company

Main materials

Company A

Silicon wafers

ResonacLaminated board materials,
photosensitive materials,
PKG/molding compounds

Company B

Silicon wafers

Company G

Package substrate materials

Company C

Silicon wafers

Company K

Polishing, laminating,photosensitizing PKG,
encapsulation, etching gas

Company D

Silicon wafers

Company L

Package substrate materials

Company E

Silicon wafers

Company M

Package substrate materials,
molding compounds

Company F

Photoresist, abrasives

Company N

Molding compounds

Company H

Specialty gases(deposition/cleaning)

Company O

Die bonding

ResonacAbrasives, etching gas

Company P

Molding compounds

Company I

Specialty gases (deposition/cleaning/etching),
cleaning solutions

Company Q

Package substrate materials,
die bonding

Company J

Photomasks

Company R

Dicing tape

81.2

※1 Process of forming circuits on wafers

Silicon wafers
Others

0

100

200

300

400

500

(Billions of yen)

※2 Process of cutting semiconductor chips from wafers and assembling them

Source: Company research (as of November 2022)(estimated)

Back-end process (packaging process)※2

185.3

0

50

100

150

200
(Billions of yen)

2026

2026 forecast

billion158.8 billion¥¥

Resonac’s position in the front-end and back-end processes of semiconductor manufacturing¥138.02026 forecast

billionPhotosensitive dry ﬁlm*2(dry ﬁlm resist)
Increased usage for semiconductor package
substrates¥

vs. 2021

vs. 2021

vs. 2021

22% increase

28% increase

15% increase2021(estimated)

2026

2021
(estimated)

Source: *1 Fuji Keizai, “2022 Current Status and Future Prospects of the Semiconductor Materials Market”*2 Fuji Chimera Research Institute, “2021 New Materials Handbook for Electronics Packaging”*3 Compound Semiconductor Market Monitor, Module I, Q2 2022, prepared by the Company based on data from Yole Intelligence three companies (as of November 2022)
Remarks: High-purity gas, CMP slurry, and SiC epitaxial wafers are converted to ¥130 per dollar.

Investing over ¥250.0 billion over the next five years. Resonac,
which has many products with the world’s No. 1 market share in
the semiconductor materials field, will formulate a strategy basedon risk analysis and promote co-creation on a global basis tofulfill its societal role.
[Yamashita]

2026

74

75

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Yamashita: We keep recognizing the importance of meeting customer expectations, strengthening ourdevelopment capabilities to keep up with the speed of the market, and accelerating the launch of new

In the U.S. market, where cutting-edge technology is in highdemand, it makes a lot of sense for Resonac to take the lead in[Dennis]expanding co-creation efforts.

products. To this end, we are considering the possibility of establishing in the U.S. a function similar to the
Packaging Solutions Center that we have established in Japan. We would like to make this a place for cocreation with semiconductor, materials and equipment manufacturers, as well as a place to consolidate
information on advanced technologies.
Maoka: In the U.S., the Chips Act is creating a unique semiconductor ecosystem. By entering this ecosystem,
rather than maintaining the status quo, we will have the opportunity to acquire information on cutting-edge

Yamashita: In 2022, sales increased on the back of strong demand for semiconductors. On the other hand,packages and to use our own materials in the early development phase, aiming to continue to be the global No.

operating income decreased due to the time lag in the transfer of raw material price hikes to selling prices and

1 in back-end processes. In fact, overseas customers who have observed our co-creation efforts in Japan haveother factors. In 2023, demand and inventory adjustment trends are becoming increasingly uncertain, and it isbeen both surprised and highly impressed. We expect that this co-creation will also help differentiate theextremely difficult to foresee the timing of recovery from the adjustment. Although the current external

Japanese semiconductor industry itself.

environment is severe, the semiconductor market will continue to expand over the medium- to long-term, andDennis: In the U.S. market, where cutting-edge technology is in high demand, we believe it is very meaningful

we want to make forward-looking investments for the next several years. We will execute timely capitalfor Resonac to take the lead in expanding this kind of co-creation initiative in order to increase its presence.

investments commensurate with the growth of the semiconductor market, especially strategic investments
related to increased production, rationalization, and new products, to ensure a steady return on ourinvestment.
Strengthening of Development Capabilities and Co-creation in Line with Market Speed

Regional Strategies and Supply Chain Management
Dennis: As geopolitical risks increase, major semiconductor manufacturers are increasing their investments andfacilities in the U.S., and demand for semiconductor materials in the U.S. is also growing. Improvements are expected
for our supply chain, which produces and fills products at our production facilities in Asia and transports them to the

Dennis: Resonac’s presence in the U.S. market has been also increasing, especially in recent years, including

United States.

inquiries for etching gases and CMP slurries. Customers demand high levels of technology, and Resonac

Sim: One of the major issues in the Asian region, especially in Singapore, is supply chain issues. Aiming to maintain

America, Inc. is working together with its customers to develop advanced design and manufacturing

stable supply and competitiveness, we are building a supply chain system and centrally managing information in thetechnologies.

Indo-Pacific region. In April 2023, we presented a case study on our global supply chain system in Malaysia. Due toenvironmental issues, production and logistics constraints, and geopolitical risks, there is a need to reduce risks andimprove the efficiency of the entire semiconductor supply chain.
Maoka: To address these issues, we have placed a dedicated liaison in the Corporate Planning Department at ourhead office since April 2022. As one of the leaders in the semiconductor materials industry, we plan to work with the
Ministry of Economy, Trade and Industry to expand our activities to reduce risks and improve efficiency throughout
the supply chain.

In response to the demand to reduce risks and improve efficiency
throughout the supply chain, including business continuity, theenvironment, and human rights, the Singapore base is also
[Sim]promoting proactive information management.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

As a Leader in the Global Semiconductor Materials BusinessIn response to the expected strong demand in the semiconductormaterials field, we have made large-scale investments in Taiwan
to increase production capacity for nanoceria slurries and copper
clad laminates. We are also preparing for geopolitical risks. [Tsai]

Maoka: Resonac has many products with the world’s No. 1 share in the semiconductor materials field, and we view
our responsibility to society as very important. The rapid deterioration of the global economy and the decline in
consumer demand are affecting the semiconductor market as well, and it is currently difficult to determine at what
point the market will recover. However, the semiconductor market will continue to expand in the long-term. With aneye on a sudden recovery, we will continue to monitor market trends and work to obtain early information on thetiming of a demand recovery.

Tsai: In order to build a foundation for growth in Taiwan, we have been making efforts with a focus on acquiring new

Yamashita: Our business headquarters’ three-year plan through 2025 focuses on developing new products andprojects in cutting-edge and growing fields such as next-generation communications (5G), HPC, AI, and xEV, which areproviding one-stop solutions centered on semiconductor materials, achieving highly efficient operations by

key trends. In January of this year, Resonac Semiconductor Materials (Taiwan) Co., Ltd. expanded its production

strengthening supply chain management, and building strong partnerships in the value chain.

capacity for nanoceria slurries, which are used in the formation process of semiconductor logic circuits for cutting-Maoka: It is all about co-creation, isn’t it. What can be solved by a single company will become less and less. Resonacedge devices, to meet the rapidly growing demand in these growth fields. In July, the company also increased thewill drive the global semiconductor materials business by creating together with all stakeholders.

capacity of its ceria slurries, which can achieve both high polishing speed and low scratches. Likewise, we plan to

Yamashita: Through semiconductor materials, we will support the future development of digital society andincrease our production capacity of copper clad laminates for semiconductor package substrates by 2025 with thecontribute to sustainable social development.

introduction of new production lines and equipment.
Yamashita: On the other hand, we have many customers in China and Taiwan, and our business strategy requires us
to closely monitor the trends and purchasing strategies of our customers in Greater China, including end users. The
Electronics Business Headquarters, which I lead, has a high ratio of employees in Greater China, about 30%, and I
believe that risk management, including employee employment and safety management, is important.
Maoka: In the semiconductor industry, with the major technologies being held by the U.S. and manufacturing in
Taiwan and materials in Japan, the division of labor is divided by country. Monitoring geopolitics and business
continuity management (BCM) are becoming increasingly important. We are working with the governments andadministrations of each country, gathering information and advancing scenario planning, to establish a systemcapable of immediate response.
Sim: We recognize that issues such as the environment and human rights are also important matters demanded bysociety and our customers, and we at the front lines of sales are determined to respond with a high level ofawareness. More and more, we recognize the need to collaborate with customers, suppliers, and our colleagues at
Resonac around the world.

76

77

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Fiscal 2022 Net Sales

Business Strategies

Semiconductor and Electronic Materials

Semiconductor and Electronic Materials

Segment net sales¥427.2 billion

Semiconductor materials:
Front-end
Semiconductor materials:
Back-end

Consolidated

Resonac products in everyday life

Segment operating income¥1,392.6 billion

Device Solutions¥100.2 billion¥188.3 billion¥99.3 billion¥45.5 billion

Photosensitive dry film Solder resist

Management Target

Semiconductors

EBITDA margin

30% or more in 2025

Electric vehicles

Strategy for Realizing the Long-Term Vision
Wind / solar power generation

As a leading global manufacturer, Resonac is driving the advancement of semiconductor technologies with its strength

Data centersin materials. Our front-end and back-end semiconductor materials are key technology contributing to people’s
happiness while protecting the environment through semiconductor manufacturing processes and end products.

SiC epitaxial wafers

Optical semiconductors

HD media

Semiconductormaterials
Front-end /Back-end

DeviceSolutions

Results in 2022

Plan for 2023

Vision for the future (2030)

Year-on-year increase in sales and decrease inincomeSales increased reflecting strong
semiconductor demand through the first half of2022, despite the impact of semiconductor
production adjustment starting in the second
half of the year. Operating income decreased
owing to the impact of soaring raw materials
prices.
Implementation of the largest investment planin the past several years to ensure capture ofstrong future demand (copper clad laminates
for semiconductor package substrates and
CMP slurry)

Enhancement of the business model to continue
winning with cutting-edge technology whilestrengthening the earnings base
Despite the current difficult market conditions
due to the deteriorating semiconductor market,
steady implementation of the following
measures to achieve sustainable growth overthe medium to long term
Promotion of carbon neutrality
Introduction of global supply chain
management system
Medium- to long-term R&D and accountstrategies
Response to geopolitical risks
Improvement of EBITDA margin

Goal of becoming a world-leading
semiconductor material manufacturer that
supports the advancement of a sustainable,
digital society
Contribution to the realization of a sustainable
society by conserving energy and reducing
environmental impacts through the supply ofadvanced semiconductor materials

HD
media

HD/SiC

Mobility

Wearable devices

Smartphones and PCs
SiC

Semiconductors

CMP slurry

Die bonding
film

Epoxy molding
compounds

Copper cladlaminates

High-purity
gases, etc.

Start of shipment of newly developed HD
media for near-line HDDs with the industry’s
Weblargest storage capacity of 26 TB
HDD demand, having expanded rapidly
during the COVID-19 pandemic, slowed
down and entered an adjustment phase in
the second half of 2022.
Completion of expansion of aluminum
substrate production capacity
Year-on-year increases in sales and income
as a result of maximization of production
and sales to meet strong demand
Strengthened partnerships with Infineon Technologies
AG (Germany) and other customers, and concluded
Web
long-term supply contracts
Acceleration of development and launch;
start of mass production of thirdgeneration six-inch epitaxial wafers andshipment of 8-inch epitaxial wafer samples
Eight-inch epitaxial wafer development
program selected for NEDO Green
Web
Innovation Fund Projects

HD
media

SiC

Continuation of industry-leading
development and mass production of
best-in-class HD media to leadtechnological innovation in media for largecapacity near-line servers
Optimization of production scale inresponse to adjustment of HDD demand,
which expanded rapidly until 2022
Year-on-year increases in sales andincome due to persistently strong demand
Realization of stable supply (stable andmaximized production of epitaxial wafers
and substrates, stable procurement of key
materials)
Thorough implementation of key accountstrategies and conclusion of long-term
supply contracts with more customers andrenewal
Acceleration of development of eight-inch
epitaxial wafers and substrates

HD
media

SiC

Contribution to storage demand supporting
increased data traffic volume andtransmission speed as a large-capacity
media technology leader
Pursuit of sustainable growth throughproduction activities and recycling of
post-sale products
Maintenance of top share as anindependent supplier of SiC epitaxial
wafers
SiC epitaxial wafer technology leader tolead the industry’s technologicalinnovation
Proactive supply of solutions in response
to more sophisticated and specialized
quality requirements
Expansion of production of eight-inch
wafers and productivity improvement tocontribute to further expansion of the SiC
device market

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

78

Business Strategies: Semiconductor and Electronic Materials
Competitive Edge (Semiconductor Materials)
Operating Environment Outlook and Resonac’s Strategy

Semiconductor Material Technology Trends

Affected by the rapid deterioration of the global economy anddeclining consumer demand in 2022, the semiconductor
market is experiencing a temporary decrease in demand.
However, we expect that technological innovation and market
growth are likely to continue in line with the advancement ofsociety’s digitalization. Moreover, the importance ofsemiconductors as specified critical materials designated by
the Economic Security Promotion Act is increasing, andcountries are making major efforts and introducing
regulations to secure the supply of semiconductors. We view
these developments as both a risk and an opportunity for us.
Risks include the potential for increases in raw material,
energy, or logistics costs or supply chain disruptions as aresult of geopolitical risks. Resonac is striving to develop a
resilient supply chain management system designed tofacilitate the swift detection of risks and the stable supply of
products to customers and is making steady progress step by
step.
There will be opportunities to capture new demand. In the
future, along with changes in the supply chain, changes in thebusiness formats of players and the entry of new
manufacturers are expected, and uncertainty and complexity
will increase. Capitalizing on a lineup that encompasses awide variety of front-end and back-end semiconductormaterials and the high market share, and the broad customer
network built on those strengths, as well as the JOINT2
consortium activities, which aim to establish advanced
semiconductor mounting technology through co-creation withindustry peers, we will quickly identify changes and createhigh value-added products that meet the needs in order todevelop highly competitive operations.

As semiconductors are endowed with more sophisticatedfunctions, there is a rising need for more minutely detailed
circuit patterns to be etched through front-end wafer
fabrication processes. Meanwhile, in back-end processes,
which generally entail mounting chips made from individual
wafers onto substrates, the number of components included
on chips and in electronic components is increasing at a rapid
pace, creating a rising need for new package structures thatuse 2.xD and 3D mounting technologies to achieve higher
mounting density.
These trends are boosting demand for Resonac’s existinghighly functional, high-share materials as well as for the new
cutting-edge materials under development.
Technological requirements
and Resonac’s products

In front-end processes, we facilitate customers’
development activities with our CMP slurry (nanoceria slurry)
capable of creating precise circuit patterns with 2 nm nodes
as well as with our precision etching gases and high-purity
solvents. At the same time, we assist production activities
around the world with back-end process offerings such as
photosensitive dry film, copper clad laminates, and die
bonding film supported by superior functionality and strong
supply capabilities. (See the figure below.)
Moreover, the JOINT2 consortium is collaborating on
substrates, materials, and equipment to help resolve
customer issues and accelerate development. Specifically, weare conducting collaborative evaluations with several leading
semiconductor manufacturers on 2.xD/3D packages.

Resonac’s lineup of 2.xD and 3D mounting products
Si interposers

Bump fabrication

Chip bonding

Underﬁlling

Molding

Temporary bonding + polishing

CMP slurry
Global top share(nanoceria slurry)

Front-end semiconductor materials
Technologicalrequirements

Precision polishing

Requirement-satisfying
products

CMP slurry

Film underﬁll

Buffer coat

Underﬁll

Solid molding compound

Bump fabrication

Photosensitive insulating material(nanoceria slurry)

Precision processing High-purity gases for(etching)
electronic materials

Global top share(HDM*)
Global top share

Global top share(HDM*)Core

Build upNo. 2 global shareNo. 2 global share

Pad fabrication

Exterior fabrication

Higher-quality solvents High-purity solvents
Back-end semiconductor materials
Technologicalrequirements

Requirement-satisfying
products

Close connection, resolution

Photosensitive dry film

Dielectric property,
low warping

Copper cladlaminates

Reliability

Die bonding
materials

Copper clad laminate

Global top share(for FC-BGA)*Shares of HDM (HD Microsystems, Ltd.) in the buffer coat and photosensitive insulating material markets
Note: The above global share figures for products are based on Resonac’s estimates.

Polishing

Substrate mounting

Underﬁlling

CMP slurry

Photosensitive dry ﬁlm

Solder resist

Underﬁll

Global top share(nanoceria slurry)

Global top share

Global top share(for FC-BGA)

No. 2 global share

Package evaluation

Thermal conductive material

Newly
adopted

79

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Business Strategies: Semiconductor and Electronic Materials
Competitive Edge (Device Solutions/SiC)
Society Realized by Power Semiconductors

Resonac’s Contribution to SiC Power Semiconductors

Power semiconductors control and convert electric power and are used in all types of devices that are powered byelectricity, everything from industrial equipment to familiar home appliances. With less power loss and heat generation thanconventional silicon-based power semiconductors, SiC power semiconductors are key devices that contribute to energy
conservation, achieving both voltage characteristics and conversion efficiency. GaN power semiconductors are also
attracting attention. Although, as a material for power devices, GaN has properties superior to those of SiC in some respects,
there are still issues to be resolved in terms of high current capability. SiC power semiconductors resolve this issue and arealso cost competitive. The market for SiC power semiconductors is expanding rapidly as they are widely used in various
applications, such as electric vehicles (EVs), renewable energy, high-speed charging stations for xEVs, and railcars.

Resonac is the world’s largest independent supplier of SiC epitaxial
wafers, which are key materials for SiC power semiconductors. As
a manufacturer specialized in epitaxial wafers, we aim to be an
optimal co-creation partner capable of providing epitaxial wafers
tailored to various customers and their respective SiC devices. Our
SiC epitaxial wafers have been used for various applications owing
to their high quality, including industry-leading low levels of
surface-defect density and basal-plane dislocation.
Regarding automotive applications for which especially highreliability is required, Resonac’s SiC epitaxial wafers have been
adopted for the drive element of the on-vehicle inverter installed in
the new model LEXUS RZ, based on our track record of supplying
SiC epitaxial wafers that have excellent features and quality.
Whereas 150-mm (six-inch) epitaxial wafers are currently themainstream for SiC power semiconductors, a shift to 200 mm(eight-inch) wafers is expected. The use of larger-diameter wafers
increases chip production output, enabling device manufacturers
to improve productivity and reduce costs. Recognizing such market
needs, we began sample shipments of 200 mm SiC epitaxial wafers
in 2022 and are working toward early mass production.

Power semiconductors used in everyday life
Data centers, storage batteries
Faster data processing, energy saving
Railcars, electric vehicles, hybrid vehicles

Solar/wind power generation
Stable supply of electricity

Weight reduction, higher performance,
extended cruising range, energy saving

Wind power generation
Data centers
ow

Fl
ty

ici

ctr
le

e
of

Solar power generation

Hybrid vehicles
Storage batteries

ow

Fl
i
ctr

le

e
of
y
cit

PCs, air conditioners,
other home appliances

Air conditioners
Railcars

Resonac’s business model as a manufacturer specialized in epitaxial wafers

Compactness, rapid charging
PCs

Electric vehicles

SiC substrates
Substrate+

Attractiveness of SiC Power Semiconductors
Compactness and weight reduction SiC power semiconductors have high withstand voltage and excellent thermal
characteristics. Compared to conventional silicon-based power semiconductors, SiC power semiconductors enable
compacter design and contribute greatly to weight reduction of electric units.
Extended cruising range It is known that the cruising range of vehicles using SiC power semiconductors is extended
due to the combined effect of weight reduction and battery performance improvement (loss reduction), making SiC
power semiconductors key devices for the diffusion of electric vehicles.

SiC epitaxial wafers

Epitaxial wafer+

Epitaxial wafer

Devicemanufacturers

SiC devices+

Manufacturers
specialized in devices

Devicemanufacturers

As a manufacturer specialized in epitaxial wafers that does not handle SiC
devices, attract device manufacturers that manufacture substrates andepitaxial wafers in-house as customers

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Business Strategies: Semiconductor and Electronic Materials
Co-Creation Initiatives to Resolve Social Issues
Establishment of a Database for Centralized Management of
Semiconductor Supply Chain Information to Reduce Risk and Improve
Efficiency Throughout the Semiconductor Supply Chain

DX

While demand for semiconductor materials is expected to remain robust as digitalization ofsociety advances, the supply chain is unstable owing to the combination of diverse issues,
including environmental problems, recent constraints on production and logistics, andgeopolitical risks.
In these circumstances, we have been building a supply chain system in the Indo-Pacific area toensure stable supply of semiconductor products and maintain and strengthen competitiveness.
We expect centralized management of supply chain information from suppliers to customers on acommon platform will enable us to respond quickly to customer needs and shorten lead times,
such as through early detection of risks and optimization of operations at each site. In addition, it
will enable us to promptly respond to the increasing number of requests from customers andother parties in recent years for assurances regarding the non-presence of environmentally
regulated substances and the absence of human rights abuses, such as forced labor.
This initiative was adopted under the Ministry of Economy, Trade and Industry subsidy
program for overseas market survey projects for building resilient supply chains for fiscal 2021.
Resonac took part in the Japan-Malaysia Public Private Industrial Policy Dialogue held in Kuala
Lumpur, Malaysia, in April 2023 and gave a presentation on its efforts to strengthen the supply
chain for semiconductor materials. We are making steady progress with the establishment of a
global supply chain management system step by step and we plan to expand it in the future to
reduce risk and improve efficiency throughout the supply chain.

Introducing Advanced HD Media Technology to the Market ahead ofCompetitors as the World’s Largest Manufacturer Specialized in HD Media,
Making a Significant Contribution to Development of the Data Economy
With the spread of cloud services and the increase in video content, the amount of data
generated and stored continues to increase dramatically worldwide, and data centers to store
data require larger-capacity hard disk drives (HDDs). Resonac is a supplier of HD media, key
components that determine the storage capacity of HDDs. For 35 years since we started ourbusiness in the late 1980s, we have continued to lead the world in providing and massproducing HD media while always co-creating new technologies with our customers.
As a newly integrated company, Resonac will continue pursuing further technologicalinnovation to realize higher-capacity HDDs and support the growing data economy.

Resonac’s revolutionary technological development in HD media■

Changes in storage density

Resonac’s technological development

Storagedensity(Gbpsi)Development of PMR media(World’s ﬁrst)

100000Heat-Assisted Magnetic Recording (HAMR)
10000
Microwave Assisted Magnetic Recording(MAMR) / Energy-assisted PMR (ePMR)
1000
Perpendicular Magnetic Recording (PMR)

Development of
Antiferromagnetically
Coupled Media (AFC) media

Development of Shingled Magnetic Recording (SMR) media(Industry’s largest storage capacity of 2.6 TB/disk)

100

Goals to be achieved through introduction of a global supply chain management system

Development of sputtering
method to replace
conventional coating method

10

Visualization of EOL*1/PCN*2 information
Registration and integration of relevant data
Customer information / supplier information /other information held internally

Acc

umu

re
Sha

late

Sharing of risk information

Development of MAMR
(World’s ﬁrst)

1

Companywide sharing
Visualization of progress statuses

World’s ﬁrst technology developed by Resonac

0.1

MAMR media

Database

Development of media using microwave-assisted magnetic

0.01

Realization of stable procurement
Suppliers ➡ Overseas sites, plants
Securing of quality

le

t
men

Imp

Global supply
chain management
systemAna

lyze

Higher customer satisfaction

Utilization of visualization tools
Consideration of measures
based on data analysis

Technological innovation
spurring increase in record
density of HD media year
after year

0.001

0.0001Higher planning accuracy ➡ Higher production efﬁciency➡ Shorter lead time

recording technology, a type of high-density data storage technology

PMR media
Development of media using vertical recording technology
for magnetic media to increase data density

Longitudinal Magnetic Recording (LMR)
0.00001

Conduct data-driven business operations and decision-making by centrally managing and sharing data,

1960

1970

1980

1990

2000

2010

2020

2030 ・・・・・・・(Years)analyzing the accumulated data, and implementing actions based on the analysis results.
*1 EOL (End Of Life): Suppliers’ termination of provision of products and services*2 PCN (Product Change Notification): Notification on changes of product specifications and process changes

1956: IBM developed
the world’s ﬁrst HDD

Progress of Windows PCs in the late 1990s led to HDD
miniaturization (2.5 inch) and higher record density

Explosive increase in data generated/stored
Rapid increase in demand for high-capacity HDDs for data centers

80

81

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Fiscal 2022 Net Sales

Business Strategies

Mobility Segment

Mobility

Segment net sales¥180.6 billion
Consolidated

Resonac products in everyday life

¥1,392.6 billion¥146.4 billion
Lithium-ion battery materials¥30.7 billion
Automotive products

Segment operating loss¥(0.7 billion)
Management Target
EBITDA margin

Disk brake pads

Molded plastic interiorparts

Resin rear door
modules

20% or more in 2025

Strategy for Realizing the Long-Term Vision
Currently, the Mobility segment is positioning the rising technological needs associated with CASE (connected cars,
autonomous/automated driving, shared, and electric) technologies, particularly those related to the development ofelectrified vehicles, as a business opportunity. As a growth strategy, the segment is taking advantage of Resonac’s
weight reduction, electrification, and heat control technologies to develop business and achieve growth. On the other
hand, for the business for internal combustion engine vehicles, whose market is expected to shrink, we will work tobuild a strong revenue base by optimizing production capacity and implementing measures for fixed costs. Throughbusiness portfolio management in this way, we aim to achieve our target of an EBITDA margin of 20% or more.

Interior
Exterior

Results in 2022

Plan for 2023

Vision for the future (2030)

Automotive
products

Performance lower than initial forecasts,
reflecting a decrease in automobile
production volume caused by supply
shortages for semiconductors
Commencement of production of reardoor modules and copper-free disk pads
for 12 new automobile models
Split off of the ceramics business*1 and theinsulating materials business

Higher sales and income, despite ongoingsemiconductor shortages, due to theresumption of the recovery trend as we
project for the second half of 2023
Launch of foam molded products for new
car models, plastic gears for new
applications, copper-free disk pads, etc.
Promotion of passing increased cost of
raw material and energy on selling price
Promotion of the establishment of a solid
revenue base through structural reforms

Top share acquired through aggressive
investment as a Core Growth businesstargeting niche markets
EBITDA margin of 20% to be targeted as aCore Growth business

Lithium-ion
batterymaterials

Expansion of a range of models using
Resonac anode materials for batteryelectric vehicles (BEVs) and developmentof new products
Winning new projects for SPALF
aluminum laminated film and expansionof production capacity for VGCF
Web
conductive additive

Development of new anode materials to
respond to rapid charging performanceand other technical needs of nextgeneration EVs
Acquisition of certification for high-end
SPALF models and steady expansion of
production capacity and construction of a
resilient supply chain for VGCF

Target of net sales of ¥115.0 billion to beachieved by incorporating rising needs
associated with the advancement of CASE
technologies and pursuit of carbon
neutrality

EngineBrakesPowdered metal products

Battery

Plastic gear

SPALF, aluminum
laminated film for
packaging material

VGCF high-crystalline,
high-purity carbon
nanotube

Anode materials forlithium-ion batteries*1 Former Hitachi Chemical’s automotive and semiconductor fields

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

82

Business Strategies: Mobility
Competitive Edge

Co-creation Case Study

The mobility market is currently in a period of great change. To work toward carbon neutrality and address social issues,
numerous countries have set CO² emissions reduction targets and implemented stricter environmental regulations (excluding
vehicles that use environmentally friendly fuels). This is driving growth in demand for electric vehicles (EVs). It has been
estimated that EVs will increase to represent more than half of the cars on the road within 10 years. Among EVs, Resonac will be
pursuing business growth by targeting battery-electric vehicles (BEVs), which will no doubt see growth over the long term.
The Mobility segment aims to expand its business by addressing the needs of the automotive market while positioning CASErelated needs as a key growth driver. This will require us to respond to new technical needs. Accordingly, Resonac will be offeringa lineup of battery-related solutions to accommodate smaller, lighter-weight, and electrified vehicles; materials for controlling
heat, sound, and electromagnetic waves; and modularization of components.
Specific measures will include the expansion of the range of existing customers’ models for which our molded plastic exterior
products, such as resin rear door modules and resin foam molded products, are used as well as approaching new customers. Our
main target in this endeavor will be market segments where we expect to see a strong need for reducing the weight whileaccommodating design concerns. As for composite materials, we will maintain our leading share for mainstay plastic gears while
approaching new customers with various heat management products, such as radiators, for which demand is expected to increasein line with the spread of electrified vehicles. In addition, we will develop a service model for advanced battery materials thatsatisfies customers’ development needs while boosting the quality of SPALF in order to earn the top share in the mobility market.

Reinforcement of Development Capabilities
through Materials Informatics

Growth strategy for the mobility business

Value provided by Resonac

Business opportunities

Rising technical needs due to the advancement of CASE technologies including the spread of electriﬁed vehicles
Weight reduction

Electriﬁcation

Heat control

Countermeasures against weight increases caused by heavier
batteries required in light of the spread of electriﬁed vehicles

Countermeasures against spread of 5G and increases
in network connection creating a need to address battery depletion

Heat management measures required in response to increased
performance burdens, as vehicles become smaller and lighter in weight

Resin rear door modules

Anode materials for lithium-ion batteries

Water jacket

Contributions to improved efﬁciency and reduced
CO² emissions through lower weightContributions to realization of lithium-ion batteries with greater
capacity and superior charge-discharge load characteristics

Contributions to weight reduction by allowing consolidation of functions
through an integrated structure as well as relaxing design constraints for ducts

Plastic gears

Advanced battery materials (SPALF, VGCF)

Aluminum radiators

Contributions to reduced weight, vibration, andnoise with high-durability and heat-resistant gears

SPALF: High-insulation, anti-erosive pouch-style container for lithium-ion batteries
VGCF: Lithium-ion battery conduction additive contributing to increased capacity and battery lifespan

Precise, low-proﬁle, and highly reliable radiators realized by applying
heat design technologies accumulated for aluminum products

DX

Currently, strong emphasis is put on shorter development leadtimes, in addition to responses to changes in technical needs
and values, such as the advancement of CASE technologies
and the pursuit of carbon neutrality. To this end, major
automobile manufacturers and suppliers are increasingly
embracing model-based design, which entails simulating theterminal component functions and performance features
necessary for overall automotive systems using virtual
models. This design approach makes it possible to adopt adevelopment style in which materials informatics is used to
combine various materials selected from databases before
computer-aided engineering methodologies are employed toperform analyses and thus conduct prototyping and testing ina virtual environment. For example, in the development oftechnology to improve the properties of lithium-ion battery
materials, by utilizing model-based design, which applies theknowledge, experience, and manufacturing know-how we havecultivated over many years with our customers, we achieved a
reduction of over 95% in the number of experiments, resulting
in a shorter development lead time. Going forward, we willcontinue collaborating with industry-academic-government
research institutions to develop materials and manufacturing
processes and to perform verification tests in local facilities.
Thus, we intend to continue supplying materials, components,
and parts that are useful to society.

Materials informatics(composition analysis)

Computer-aided engineering(characteristic analysis)

Linkage

Materials, components

Parts, modules

Resonac’s Intended Approach toward Model-Based Design

83

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

RESONAC REPORT 2023

Fiscal 2022 Net Sales

Business Strategies

Innovation Enabling Materials segment

Innovation Enabling Materials

Segment net sales¥141.1 billion
Consolidated

Resonac products in everyday life

¥1,392.6 billion

Segment operating income¥10.1 billion
Management Target
EBITDA margin

Resins for color filters

15% or more in 2025

Titanium oxide for multilayer
ceramic capacitors

Strategy for Realizing the Long-Term VisionTVs

The Innovation Enabling Materials segment features an extensive lineup of technologies and materials as a technology
platform business supporting innovation and competitiveness improvements in Resonac’s Core Growth, Stable
Earnings, and Next-Generation businesses.
This segment strives to remain a step ahead of the changing times by supplying the organic, inorganic, aluminum, andother functional materials deemed valuable by the market. In this way, the Innovation Enabling Materials segment will
become a vessel for the creation of new businesses over the medium to long term and a driver behind the fulfillment ofour purpose.

Aluminum radiators

Smartphones

Electrical insulating varnishes

Pin fins

Results in 2022

Plan for 2023

Vision for the future (2030)

Functional
chemicals

Implementation of price revisions in
response to rising costs
Decline in profitability due to the impact of the
lockdown in China and the decline in the electronicmaterials market from the second half of 2022

Increased income spread achieved through healthytransition of products
Increased profit margin by expanding sales inhigh-value-added areas

Leader in specific sectors of the global
marketProvision of value to society through theability to aggregate individual strengths

Resin materials

Implementation of price revisions in
response to rising costs
Enrichment of product lines for electrified
vehiclesImplementation of improvements to the product sales mix
achieved through a focus on the ratio of sales from new products
Profit stabilization by linking raw material prices to selling prices
Continued stable supply of products by building aresilient supply chain

Communication of the benefits of advanced
functional materials meeting changes insocial needs to help resolve social issues
through internal and external efforts

Coating

Promotion of extension of the production
system into other areas of the world
Implementation of reform of the earnings
structure
Regarding consumer goods, decline inEurope and the U.S. and expansion in
emerging countries (especially India)

Extension of the production system into other areas of the world
Capturing of demand for eco-friendly products in lightof environmental laws and regulations
Expansion of sales channels for consumer products inemerging countries
Expansion of scope of applications and regions ofoperation for industrial coating materials

Development of the non-stick coating
business to become a major global player
and creation of new businesses capitalizing
on our insight into proprietary formulations

Ceramics

Decline in profitability due to decline of theelectronic materials market
Development of new products for electronic
devices
Greater generation of synergies between
CMP slurry and heat dissipation materials

Securing of profit spread through flexible pricing
according to the market trend
Mass production of new products for electronic
devices
Improved productivity by strengthening crossorganizational functions among sites and integrated
operations

Supply of first-rate ceramics products andservices to customers that surpass their
expectations and contribute to theresolution of social issues

Aluminumspecialty
components

Decline in demand due to parts shortages,
particularly in semiconductors forautomotive components
Making improvement of forging line
productivity manifest
Promotion of reform of the earnings structure to ensure
resilience to change in the operating environment

Improvement of profit margin through price revisions
and product mix improvement, including review of
low-profit transactions
Acquisition of certification for scrap alloys andprocesses contributing to reduction of CO2 emissions
Promotion of internal synergy of automotive
components (electrification)

Creation of new value through the
combination of aluminum with othermaterials

Cars

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Business Strategies: Innovation Enabling Materials
Competitive Edge

Co-Creation Initiatives to Resolve Social Issues

The competitive edge of the Innovation Enabling Materials segment lies in (1) its unique
technologies and businesses that support next-generation technologies and industries and(2) its role as the technology platform business supporting technologies and businesses ofinternal business units. Regarding internal technological synergies, the segment aims toenhance the positioning of its unique technologies and businesses as well as its
technological capabilities through collaboration with the Institute for Polymer Technology
and the Stage for Co-Creation, which are parts of the CTO organization.

Next-Generation Semiconductor Area

Customers / Industry

Internal Business Units
Semiconductor and Electronic Materials
and Mobility segments

Innovation Enabling Materials
Functional chemicals Coating materials

Aluminum specialty
components

Resin materials

Ceramics

Support for internal technologies andbusinesses as a technology platform businessSupport for next-generation technologies andindustries through unique technologies and businesses

Next-generation communications, next-generation automobiles, metaverse, robots, factory automation

Cooperation

CTO organization

TopicsWe are contributing to the growing need for 2.xD/3D mounting technology required to realize
next-generation high-speed communications by providing advanced material technology.
Heat-dissipating fillers

Low-dielectric resin

Fine abrasive grains for CMP slurry

High-thermal-conductivity fillers
efficiently dissipate heat generated byhigh-density mounting and high-speed
communication and contribute tominiaturization of electronic
components.

Advanced low-dielectric resin design
technology contributes to suppressionof transmission loss in high-density
mounting and high-speed
communication areas.

They are used in the surface
planarization process for
multilayering of circuits on
semiconductor wafers and contributeto higher integration ofsemiconductors.

Mobility Area
In response to the growing needs for weight reduction, electrification, and thermal control in linewith the progress of the trend toward electrified vehicles, the segment is providing advanced
proprietary technologies and making a contribution.
Electrical insulating varnishes

Adhesives for automotive application

Aluminum radiators

In addition to promoting developmentof polyimide resin and other materials,
we are strengthening the supply
system in Japan and overseas andcontributing to high voltage reliabilityof drive motors for electrified
vehicles.

High-strength and highly reliable
adhesives between metal/resin andresin/resin and processing
technologies contribute to vehicle
body weight reduction.

Improved heat dissipation andreliability of power modules throughthermal performance simulation
technology, aluminum alloy design
technology, and processing
technology contribute toelectrification of automobiles.

Innovation Achieved through Integration of Showa Denko and Hitachi Chemical

Revival of Low-Dielectric Resin Whose Commercialization was Once Abandoned

Daisuke Fujimoto

Packaging Materials Research Department,
Institute for Polymer Technology

When the decision was made to integrate the two companies, I was engaged in R&D ofmaterials for 5G and 6G at the former Hitachi Chemical and had an opportunity tomutually share the technologies between the two companies. In the course ofnumerous discussions, I came across the former Showa Denko’s low-dielectric resin,which had been abandoned 20 years ago because it was difficult to use, and recognized
its superior characteristics that outweighed its shortcomings. Transcending theorganizational boundaries, we mastered the technology, and by reflecting in our
ongoing investigations what we had learned, my team was able to successfully
improve the performance of low-dielectric resin. I think we were able to recognize thepotential of dormant technology, because we had been a user of products of the former
Showa Denko. I continue to enjoy discovering technologies that can be utilized in future
development and creating new value with them.

New Value of Pin Fins Unlocked by AI Deep Learning

Rio Anzai

Yusuke Takeuchi

Automation Technology Promotion Department
Plant Solutions Center
Engineering Division

Aluminum Specialty Components Business UnitHigh Performance Materials Business
Headquarters

Pin fins, aluminum specialty components of the former Showa Denko,
became the first product that transitioned to the mass-production
phase, utilizing automatic inspection technology employing AI deeplearning, which the former Hitachi Chemical spent more than five
years developing. It all started when, at a technical resultspresentation held prior to the official integration of the two companies,
we realized the potential for deploying elemental technologies in the
product inspection process of pin fins. With technology enhanced to alevel outstripping commonsense expectations for the pin fin team, thestudy is progressing far faster than we had imagined possible, and weare excited about prospects for future development.

84

85

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Fiscal 2022 Net Sales

Business Strategies

Chemicals segments

Chemicals

Segment net sales¥527.8 billion
Consolidated

Resonac products in everyday life

¥1,392.6 billion

Segment operating income¥324.7 billion
Basic Chemicals and Industrial Gases¥87.1 billion
Graphite Electrodes¥115.7 billion
Olefins and Derivatives¥24.9 billion
Management Target
EBITDA margin

Plastic bottle caps

Polypropylene

15% or more in 2025

Strategy for Realizing the Long-Term Vision

Tap water

The Chemicals segment has a wide-ranging lineup of highly competitive, high-share products, including olefins, organic
chemicals, graphite electrodes and other carbon products, basic chemicals, and industrial gases. With this lineup of
products that function as the building blocks of various industries and infrastructure, this segment continues tocontribute to society through safe and secure operations. At the same time, improvements to production processes arebeing pursued with the goal of contributing to the happiness and prosperity of people and to harmony with the global
environment.

Sodium hypochlorite

Truck interiors
Results in 2022

Plan for 2023

Vision for the future (2030)

Olefins andDerivatives

Decrease in sales volume as a result of
shutdown maintenance conducted once
every four years
Year-on-year increase in sales due tohigher sales prices in line with thesoaring price for naphtha
Year-on-year decrease in operating
income due to lower sales volume andsluggish market

Increase in sales volume because of no shutdown
maintenance in 2023, optimization of plant operation byswiftly responding to the trend of supply and demand
Promotion of sales expansion of high-margin products andexpansion of technology licensing business
Promotion of initiatives to reduce CO2 emissions

Improvements to profitability and efforts
to limit volatility in earnings
Reduction of 30% in CO2 emissions fromthe Oita Petrochemical Complex incomparison to 2013

Basic chemicals
and industrial
gases

Vigorous promotion of price pass-on in
response to increased costs due to rising
raw material and fuel prices
Trend toward full capacity utilizationreflecting strong demand and operating
income level remained robust
Confirmation that greenhouse gas emissions
from production of ammonia from usedplastic are at least 80% less than in the caseWebof conventional methods

Forecast of strong demand and maintaining of high capacity
utilization
Logistics environment to improve and surge in raw
material and fuel prices to slow down
Acquisition of ISCC PLUS certification, an international
certification system for sustainable products, in March2023 for three products, namely, ammonia, hydrogen, andacrylonitrile, made from raw materials derived from usedWebplastics

Substantial reduction of CO2 emissions(raw materials for KPR* to be 100% plastic,
fuel conversion of power generation
facilities at the Kawasaki Plant)
Creation of a hydrogen use network
together with companies near the coastal
area of Kawasaki City
Initiatives for resource recycling in
Kawasaki City (utilization of usedplastics)

GraphiteelectrodesHigher performance due to improved unit
sales prices amid declining demand
Establishment of strategic relationships
with customers and promotion of
conclusion of long-term sales contracts
Greater use of renewable energy to
reduce CO2 emissions

Capturing of growing demand for electric furnaces for
decarbonization, strengthening of the supply system for and increasein market share of large-diameter electrodes (28-inch and larger)
Provision of services to optimize electric furnace operation
through AMI, an affiliate (engaged in sale of electric furnace
operation optimization software) and enhancement of thevalue provided to customers through sales of the highest
quality graphite electrodes
Decarbonization of manufacturing processes through theuse of hydrogen fuels, etc.
Promotion of conclusion of long-term stable procurement
contracts for raw materials

Supply of the highest quality graphite
electrodes worldwide, as theoverwhelming No. 1 global manufacturer,
to support electric furnace productionand economic growth around the world.
Promotion of decarbonization of
manufacturing processes to supply clean
electrode products with virtually zero
emissions

Dry ice
Food transportation (trucks)

Ammonia

Graphiteelectrodes

Thermal power generation plants

Steelworks*Kawasaki Plastic Chemical Recycling, plastic recycling business operated at the Kawasaki Plant

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Business Strategies: Chemicals
Competitive Edge

Policies

Olefins and Derivatives

Basic chemicals and industrial gases

Graphite electrodes

We will seek to boost competitiveness and help achievecarbon neutrality in 2050 based on our vision of developing
a sustainable business that consistently generates highprofits.

Collectively naming Resonac plants in the Kawasaki area
Kawasaki Chemical Park, we are laying the foundation
for realization of our vision.

By supplying the world’s best electrodes coupled with
unparalleled services, we will promote efficient andeco-friendly steel recycling and thereby contribute to thesustainable development of society.

Olefins, organic chemicals

Industrial gases, basic chemicals

Graphite electrodes

The Oita Petrochemical Complex is located in close proximity
to the Asian market, giving this export base one of the greatest
geographical advantages in Japan in terms of logistics.
The capacities of our equipment and our operating track record
enable us to accommodate a diverse range of ethylene
feedstocks, giving us the ability to respond flexibly to changes
in the volatile raw material market.
We boast a lineup of unique acetyl derivatives (ethyl acetate,n-Propyl acetate, and allyl alcohol) that take advantage ofproprietary catalysts and processes, and we hold high sharesin the Japanese market for these products.
Our stable lineup of olefin derivatives (polyethylene,
polypropylene, etc.) make us competitive in high-value-added
fields.
Development is underway for a low-concentration CO2
separation system employing an innovative separation agent tofurther our quest toward carbon neutrality in 2050
P87

Capitalizing on the advantageous urban location of the
Kawasaki Plant, we are catering to needs for a diverse range offunctional chemicals, including basic chemicals that support
everyday life, industrial gases, fiber materials, and medical andagrichemical materials.
Chemical recycling technologies are being utilized to produce
ammonia using hydrogen extracted from used plastic. We havebeen maintaining stable commercial production for 20 years
and the cumulative volume of used plastic recycled has
exceeded one million tons.
Ammonia produced by Resonac from used plastics is lowcarbon ammonia whose greenhouse gas emissions during
production are at least 80% less than those from conventional
production methods.
We are expanding chemical recycling for raw materials to
include not only used plastics but also used clothing and othertextile products and are promoting collaboration with a trading
company and the apparel industry.
P87

With production bases in six countries, we are able to stably produce
and supply graphite electrodes in Europe, the United States, and Asia.
Local production and consumption eliminate long-distancetransportation and country risk, ensuring stable supply.
We sell high-quality electrodes to more than 200 customers aroundthe world while, at the same time, providing support services forelectric furnace operation through AMI, thereby helping ourcustomers improve the efficiency of their electric furnace
P88
operations and providing value that only we can offer.
We will establish a production and supply system for largediameter products of 28 inches or larger in order to respond to
the expected shift of steel production from blast furnaces toelectric furnaces and to the increasing scale of electric furnace
production as a result of the trend toward decarbonization.
We will focus on supplying environmentally friendly and clean
graphite electrodes by vigorously promoting the use of ahydroelectric power plant we own in Omachi City, Nagano
Prefecture, renewable energy in Europe, and other measures toreduce CO2 emissions.
P60

Major Products
BusinessStrengths

TopicsVision and competitiveness of Kawasaki Chemical Park

Kawasaki Chemical Park

Chidori district

Oogimachi district

Okawa district

The Kawasaki Plant aspires to be a platform where basic chemicals
and high-value-added derivative businesses coexist and prosper
together, with strong cost competitiveness based on a safe, stable,
and secure business operation, and refers to its vision as“Kawasaki Chemical Park.” In addition to the business development
and manufacturing capabilities accumulated in the course of many
years of business activities, the Kawasaki Plant will lay new
foundations and acquire new skills in order to adapt to the times,
aiming to become a plant capable of carrying out businessactivities that meet the needs of the times in a timely manner.

Sustainability to

Sustainability to

Sustainability toinspire the worldtransform society

compete in the world

Business development capabilities to respond to needs of the times

Production foundations / manufacturing capabilities

Development and commercialization of newderivatives
Development and commercialization ofhigh-value-added products[Hardware aspect] Strong infrastructure, including electricity, gas, and watersupply, to support chemical plants[Software aspect] Procurement and logistics, security and disaster prevention,
maintenance design, and human resource development
accumulated through many years of experience86

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Business Strategies: Chemicals
Co-Creation Initiatives to Resolve Social Issues
Web

Olefins and Derivatives

Basic Chemicals and Industrial Gases

CO ² Capture and Use Initiatives to Achieve Carbon Neutrality

Commercialization of Low-Carbon Hydrogen for a Hotel

Resonac has teamed up with NIPPON STEEL CORPORATION and Kyoto University andfive other national universities in a co-creative venture to develop a low-concentration

As part of a demonstration project of the Ministry of theCO² separation system that employs an innovative separation agent. In May 2022, thislow-carbon hydrogen to Kawasaki King Skyfront Tokyu REI Hotelinitiative was adopted for the CO² separation and capture technology development
project of NEDO under its Green Innovation Fund, and full-scale technology
development began in October 2022. By using structure-flexible porous coordination

since June 2018. Following completion of the demonstration

polymer (PCP), which is completely different from the porous materials (zeolite,
activated carbon, etc.) used in existing separation agents, we are developing
technologies and processes for the low-cost separation and capture of low-pressure,
low-concentration CO² from sources such as factory exhaust gas, while verifying thefeasibility of technologies for producing chemical products from captured CO². We
anticipate that these technologies will allow us to develop and grow CO² separationand capture plant operations and separation agent operations. The technology is also
expected to give rise to chemical business models that use CO² and are thus notdependent on fossil resources, and thereby contribute to carbon neutrality.

Environment launched in 2015, the Company has been supplying

project in 2022, the hotel decided to upgrade its fuel cell facility,
and commercial supply of low-carbon hydrogen produced by
Kawasaki King Skyfront Tokyu REI Hotel

Resonac will start upon the completion of installation of the newfacility by the end of 2023.

We are supplying the new facilities with low-carbon hydrogen produced from used plastics, whichconstitute part of the raw materials, via a pipeline. The electricity, heat, and other energy generated bythis facility is equivalent to about 15% of the energy used by the hotel.

Collaboration with ITOCHU Corporation in Textile Recycling in the Chemical Recycling BusinessResonac announced conclusion of a memorandum of understanding with ITOCHU
regarding the ARChemia recycling project in March 2023. The objective is toinclude used textiles, such as clothing, as raw materials for the plastic chemical

NIPPON STEEL
Plants,Kyushu Works separation
agents(Oita Area)

Separation and capture of CO²
from gas from steelmaking

CO²

Manufacturers convertingto valuable resources

recycling business at the Kawasaki Plant (KPR), in addition to used plastics.
Resonac transforms recycled solid raw materials, a mixture of used plastics and textiles, into raw
materials for textiles, such as acrylonitrile, leading to resolution of waste-related social issues andOut-license recipients(IP licenses from Resonac
and NIPPON STEEL)

ITOCHUPetrochemical plants

Petrochemicals

Petrochemical
users

Acrylonitrile

CO²

Ammonia

Oita Petrochemical Complex

Supply ofrecycled solid
raw materials

Crushing and gasification

Resonac

Industrial waste
disposal companies

Establishment of a transaction network

Separation and capture of CO²
from petrochemical gas

Retail

Separation
agentscontributing to realization of a fiber-to-fiber recycling society.

Separation
agents CO²

Apparel manufacturers

Coordination with
Oita coastal areaindustrial partners

Acrylic fiber
manufacturers

87

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Business Strategies: Chemicals
Co-Creation Initiatives to Resolve Social Issues
Graphite ElectrodesDX

Project to Maximize Value of Co-Creation
by AMI and Resonac Graphite through Digital Solutions

Strengths created by combination of Resonac and AMI

Web

Resonac Graphite (RG) is the No. 1 global manufacturer of the graphite electrodes that are
indispensable for the electric furnaces used to melt iron scrap in the steelmaking process.
Following the acquisition of a stake in Mexico-based AMI Automation, a provider of services forWorld’s largest graphite
electrode supplierTechnology-oriented
company consisting of true
professionals in electric
furnace operation support
and power systems

The best quality

World’s largest groupproviding support for
optimization of the operationof electric furnaces

Truly global supply
systemCustomer-oriented
approach to sincerely
address customers’ issues

optimizing the operation of electric furnaces, in 2021, RG will make AMI Automation a whollyowned subsidiary in the third quarter of 2023. Through this partnership, RG is able to provide
customers with unique and advanced digital solutions to help them achieve the best
performance in the operation of their electric furnaces. By building strong partnerships with its
customers, RG will stabilize its graphite electrode business and strengthen its position as aworld leader. In 2022, the transformed business model started to yield good results in the North
America and Southeast Asia regions.
In December 2022, the Resonac AMI Synergy Project (RAS1 Project) was launched to take theglobal co-creation strategy to the next level, and discussions by global members selected fromboth AMI and RG are in full swing. In line with making AMI a wholly-owned subsidiary, throughmore intense and integrated co-creation by our multinational team, we aim to transform
ourselves into a service provider that further strengthens our global No. 1 position in theProvision of differentiated value through co-creationand digital transformationelectrode business as a partner (Digital Enabler) supporting customers’ digitalization.

Topics

Prospects for Utilization of AMI Human Resources Going Beyond the Graphite Business

AMI has approximately 200 digital transformation-related engineers, including about 20 AI engineers. Digitaltransformation of the entire Resonac Group will be accelerated in collaboration with the Research Center for
Computational Science and Informatics, which specializes in computational and information science, the sourceof Resonac’s strengths in digital transformation, and the CDO organization promoting digital transformation
activities. In addition to provision of operation optimization systems for electric furnaces, AMI also offers
production automation and control solutions for a wide range of industries, including paper, cement, andpetroleum. Going forward, we will also promote joint projects to support manufacturing frontlines.

RAS1 Project members drawn from both AMI and RG worldwide

88Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Resonac’s Human Capital Management
Resonac’s human capital management modelan organization that can compete on the global stage? We will share Resonac’s

resilient organizational development through our current initiatives.

97
100
101
102
103
104
105
106

Human Capital Management
Special Feature: Human
Resource Strategies
Measures to Combat Climate
ChangeRealization of Recyclingoriented Society
Environment Risk MeasuresEfforts for Preservation of
Biodiversity
Occupational Health and SafetyQuality AssuranceChemicals Management
Sustainable Procurement

107 Respect for Human Rights
108 Strengthening InternalCommunication within Our Group109 Risk Management
111 Compliance
113 Roundtable: Our Transformation of
the Board of Directors
117 Directors
119  Audit & Supervisory Board Members/
Corporate Officers
121 Skill Matrix
122 Messages from Outside Directors andAudit & Supervisory Board Members
123 Corporate Governance

HR Materiality 1

Supply human resources
required by the business

Strategic deployment

HR Materiality 3

Create autonomous,
professional-minded humanresources

HR Materiality 2

Build Become an Employer ofchoiceLabor Market

What areas are we strengthening, and what approach are we taking to become

Definition of human resource requirements (co-creative talent)

We Can89
91

Web

Organizational
capabilities to helpchange society

Definition of the business portfolio

RESONAC REPORT 2023

Purpose: Change society through the power of chemistry

04
Why

89

Support for career building (training)

Dissemination of our appeal insideand outside the Company
Appreciation of challenges
Development of more appropriate work style

HR Materiality 4

Cultivate corporate culture
conducive to co-creation

Inculcation of the purpose and values

Recruitment of diverse human resources

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

We are fostering co-creative talent who will provide new functions aimed at our vision for

Topics2030. Our human resources strategy is to create co-creative talent, and Resonac’s humancapital management aligns our management and business strategy with our human

A few Examples of
Stakeholder Engagement

resources strategy.
University student

Investment in human capital

Future talent portfolio formation

Succession planning

Skill acquisition

Leadership cultivation

Strategic job rotation

Experience
Co-creative leadership training

Reskilling

In-house recruitment

Autonomous career plan formation
Training sessions to bolster the co-creative
collaboration capabilities

Engagement

Well-being

Embodiment of co-creation culture
Psychological safety

Unconscious bias

AHA!

Resonating with purpose and values

Diverse Resonac workforce (statistically, cognitively, and skill-wise)

Business growth as a functional chemical manufacturer

Key factors of growth

Company’s investment

Realization of our purpose through co-creative talent (corporate strategy)

Flow of human growth

The report titled “The Japanese materials industry is the
key to Japan’s recovery by solving societal problems inJapan and around the world” resonated with us, so weheld a dialogue with Kyohei Sonoda, a university student
and leader of the writing team. We gained a fresh
perspective from hearing about why he focused onmaterials and what kind of companies he thinks will growin the future. We were excited to learn about the expectations of Gen Z for materials and chemicalVideocompanies. We will expand these kinds ofopportunities for dialogue throughout theWebGroup.

Kyohei Sonoda
Faculty of Economics,
Doshisha University

University professor

We asked Professor Hasegawa, an expert in sustainability management and ESG investment, for his opinion on
the concept and standards for Resonac Pride products
and services that we are promoting, as well as the futurerole of companies in society, including human resources
strategy. We were able to gain significant tips for the
future development of Resonac PrideVideo
products and services, communication withsociety, and sustainability strategy.
Web

Naoya Hasegawa
Professor

Faculty of Sustainability
Studies, Hosei University

Investors

We had the opportunity to discuss withparticipating investors our human resources strategy, which aims to continuously
increase corporate value by carrying out
our purpose and values, and the proposed
human resources capital management model under consideration. We will use thediverse and thought-provoking feedback
we received, such as how our businessstrategy and human resources strategy are
related, how the integration will affect ourorganizational culture, and how this will bereflected in our human resources strategy,
in our future initiatives andinformation dissemination.
Web

Institutional Investors
Collective Engagement Forum90

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Human Resource Strategies
Our human resources strategy, with an aim to sustainably
enhance corporate value by carrying out our purpose andvalues, consists of four HR Materiality. These four issues
are linked to our material sustainability issue of “fostering
creative and autonomous human resources andcultivating the associated corporate culture” and ourbusiness strategy. Based on these four Material Issues for
Human Resources that fosters co-creative humanresources talent over the long term, and in the short tomedium term, we will promote measures to enableco-creative talent to achieve business growth as afunctional chemical manufacturer.

HR Materiality 2

Become an Employer ofchoiceEmployer branding to become acompany that selects and is selectedby employees by disseminating ourappeal to the labor market andimproving the engagement ofinternal human resources
KGI
Hiring plan fulfillment rate
Detrimental voluntary turnover rate
Engagement score

Web

Purpose and values
Businesses
HR Materiality 1

Hire & Develop talent for the business
Fulfillment of an agile talent portfolio that can keep
pace with the speed of our operations as a functional
chemical manufacturer
KGI
Future talent portfolio fulfillment rate (focus theme*1)
Succession planning readiness rate

Fostering co-creative
talent to realize businessgrowth as a functional chemical
manufacturer(short- to medium-term plan)
HR Materiality 4

Actions linked to business strategy
Strategic workforce planning linked to business direction
Leadership development to drive businesses
Dissemination of our appeal to the labor market

HR Materiality 3

Develop self-driven
professionals
Creation of professional-minded
human resources who can pursue
vibrant and autonomous careersand maximize their individual
abilities
KGI
Internal promotion rate
(key positions*2)

Employees

RESONAC REPORT 2023

Labor Market

91

Cultivate corporate culture conducive to co-creation
Cultivating a rewarding corporate culture whereco-creation can occur, in which diverse individuals arerespected with a high degree of psychological safety
KGI
Purpose and values implementation survey score

Actions linked tosustainability strategy

Organization that creates co-creative talent(long-term plan)

Maximization of diverse
individual strengths
Development of autonomous
human resources
A culture of co-creation*1 In 2023, the development division of the Electronics Business Headquarters (semiconductor materials) as well as CTO and CDO organizations were selected as target organizations.
*2 Key positions refer to CXOs and leaders of organizations reporting directly to the head of the business.

Organization

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Human Resource Strategies
In order to make a leap forward to become a Co-creative Chemical Company that can complete on the world stage by fiscal 2030, we have divided the period from the present to 2030 into
three phases and defined what we are aiming for in each phase. In addition, to make our goal more concrete and feasible, we will identify the factors necessary for effectively addressing
material issues and monitor their progress by setting KPIs.

KGI
HR Materiality 1

Hire & Develop
talent for thebusiness

Future talent portfolio
fulfillment rate (focus theme)
Succession planning
readiness rate(2022 achievements: Company-wide
succession planning to select and train
potential leaders became operational, etc.)

Hiring plan fulfillment rate
Detrimental voluntary
turnover rate
Engagement score(2022 achievements: Design ofpost-merger engagement surveys, etc.)

HR Materiality 3

Internal promotion rate
(key positions)

Develop self-driven
professionals

Definition of human resource requirements
Assessing the status of fulfillmentof required human resources
Continuous readiness andvisualization of position successors
Realization of the flexible deploymentof required human resources
Enhancement of well-being

HR Materiality 2

Become an
Employer of choice

Factors forAchievement(2022 achievements: CEOannouncement on fosteringco-creative talent, direct dialogue
held with over 1,100 employees, etc.)

HR Materiality 4

Purpose and values
implementation survey score

Cultivate
corporate culture
conducive toco-creation(2022 achievements: Degree of
implementation of purpose and values by
employees: 30%; P 4 7 start ofco-creative leadership training, andtraining sessions to bolster the co-creative
collaboration capabilities, etc.)

Fair evaluation and remuneration
Defining Resonac’s unique appeal
and communicating them internally
Defining and communicating to thelabor market the unique appeal of
business partnerships
Provision of corporate
systems to encourage careerownership
Provision of autonomous
learning opportunities

FY2023-2024
Start of Fostering
Co-creative talent

FY2025
Deepening and Solidifying a
Co-creation Culture in the GroupFY2030Making the Leap to Become a
Co-creative Chemical Company That
Can Compete on the Global Stage

Visualization of domestic talent
Visualization of the skills required
for strategy achievement andestablishment of a talent portfolio
management method, using thesemiconductor materials development division as well as CTO andCDO organizations for the pilot test

Visualization of talents on a global scale
Visualization of the talent
portfolios of Resonac and majorgroup companies
Establishment of HRBP system

HR business partners accompany and are led by each CXO/BU
to achieve a talent portfolio withthe right people in the rightplaces to match the speed of
global businessStart of branding to increase
Resonac’s visibility in the labormarketFirm establishment of Healthand Productivity Management
and start of disseminatinginternal and external healthinitiatives

Increased recognition as theleading company that is selectedamong functional chemical
manufacturers
Building a well-being management structure

Recognition as a company that
produces leaders in the chemicalindustry
Establishment of status as anadvanced well-being company
Realization of simple and flexible
systems

Establishment of systems toenvision and realize one’s career
Establishment of selfimprovement systems for career
actualization

An organization in which Resonac
career models are establishedand employees autonomously
envision their aspirations andshape their careers
Fostering of a culture in which theorganizations (managers)
support employees’ careers

An organization in which
individuals can improve
themselves and professionals
who create new value arenurtured as the next generationof Resonac leaders

Awareness raising and recognitionof corporate culture in which our
purpose and values and participation of diverse human resources
create value
Establishment of integrated
operations

An organization in which a
co-creation culture is firmly
established and new output isproduced through collaboration
Start of a dedicated team responsible for data utilization in an
integrated infrastructure

Establishment of an organizationin which co-creation culture isthe corporate identity anddiverse human resources canthrive and generate innovation
Integration of global operations

Training of potential leaders
Inculcation of the purpose andvalues and cultivation of aco-creation culture
Participation of diverse
employees
Harvesting output by
embodying a co-creation
culture* See each page for KPIs

92

93

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Human Resource Strategies
HR Materiality 1

Hire & Develop talent forthe business
Fulfillment of an agile talent portfoliothat can keep pace with the speed of ouroperations as a functional chemical
manufacturer

As HR business partners, weare the advisor to organizational leaders in resolving
issues related to humanresources in order to achieve
global business growth.

Yutaka Suzuki
General Manager, HR Business Partner Department

Measures for Realizing the Long-Term Vision

Workforce planning with enhanced linkage with business strategy
Organization and definition of skills required for each position andvisualization of staff headcount we wish to fulfill in the future
In order to realize our business vision for the future, we will organize anddefine the skills and competencies required in the future for each position,
visualize the status of fulfillment of the required human resources, and createa plan to fill in any human resource deficiencies. In 2023, we began a pilot test
following discussions with the semiconductor materials development division
as well as CTO and CDO organizations.
Realization of the flexible deployment of required human resources
Strengthening our HRBP function to support the execution of businessstrategy and systematic hiring of experienced personnel, etc.
To satisfy future human resource needs, we will strengthen our HR business
partner (HRBP) function, which supports the CXO organization and businessdivisions’ strategy execution from a human resource perspective, and promote thesystematic hiring of experienced personnel according to the skills and competencies required for each business and position to realize transfers and deploymentsthat take advantage of individual experience and skills in focus businesses.
Continuously preparing position successors by training the next generationof potential leaders
Implementation of succession planning (talent review)
We regularly monitor the readiness of position successors in order to secure
suitable candidates for next-generation leaders and key positions in our focus
businesses and to achieve sustainable corporate growth. We are also strengthening our programs to train candidates for the next generation of leaders. In
the first half of 2023, we offered a camp-style program in which professional
assessors gave feedback on their actions during exercises. We also provided
opportunities for friendly competition with personnel outside the Company bysending employees to external organizations, such as graduate schools andNPOs for cross-border experiences.
Employee VoiceOur customers are located around the world and the market environment is changing at anaccelerating pace. That is why we, as HR business partners, pay attention to human resources inevery corner of every business division and promote solutions to human resource-related issues
with organizational leaders. On the other hand, in order to maintain a healthy relationshipbetween business divisions and the personnel division, we always keep in mind a Company-wide,long-term perspective in our words and actions. In order to identify actions regarding organizational leaders and future human resources and act as a conduit to strengthen the relationshipbetween business divisions and the personnel division, we are advancing the development of our
HR business partnership system and take pleasure in incorporating HR activities into the next
generation.

KG I

Future talent portfolio fulfillment rate (focus theme)
Succession planning readiness rate
In achieving a talent portfolio required bybusinesses, we believe it is important to refine
and grasp the business-specific and positionspecific skills required for executing strategies torealize our vision for the future, rather thansimply managing the employee headcount.
In this way, we can formulate strategies forapproaching the labor market and clarify thedetails of required training and reskilling, and webelieve that we can support human resource
problem-solving that can keep pace with the
speed of our businesses. To fulfill our talent
portfolio, we believe there is an urgent need tostrengthen our HR business partners (HRBPs),
who will serve as advisors to CXOs and businessdivisions heads, and we will train human resources to serve as HRBPs.
To visualize the implementation of the aforementioned initiatives, we will set the indicatorsof “future talent portfolio fulfillment rate (focus
theme)” and “succession planning readinessrate” as KGIs to manage their progress.
Examples of Process KPI

Indicators to measure progress of thetalent portfolio (under consideration)
Average number of days required forrecruitment, etc.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Human Resource Strategies
HR Materiality 2

Become an Employer of choice
Employer branding to become a company
that selects and is selected by employees
by disseminating our appeal to the labormarket and improving the engagement of internal human resources

As the General Manager of the Manufacturing Department, I am working
with my colleagues to develop our
vision for the future and create an
exciting work environment while also
pursuing safety and security.

Yuka Asai
General Manager, Second Electronic Materials Manufacturing
Department, Yamazaki Plant, Electronics Production Center,
Electronics Business Headquarters

Measures for Realizing the Long-Term Vision

Human resources system integrated with the corporate philosophy
An evaluation system that encourages the fostering of co-creative talent, anda remuneration system based on the labor market
To create an evaluation system that encourages the fostering of co-creative talent who
embody our corporate philosophy, in addition to the traditional evaluation indicator of
performance, we have established two new indicators of action and growth based on
the demonstration of the values we hold dear. We manage our goals by making ourcorporate philosophy a matter of personal significance for each employee. In addition,
by setting levels of remuneration according to the importance of roles and responsibilities with reference to external remuneration benchmark data, the Company is working
to administer a remuneration system that appropriately reflects its competitiveness
relative to the labor market.
Enhancement of well-being
Health and Productivity Management measures
We consider the health management of employees and others from a managerial
perspective and have established an operational system to support their work andphysical and mental health in order to bring vitality to the organization through the
improvement of productivity and other means. We are also advancing the formulationand implementation of Health and Productivity Management measures. In addition, weare enhancing health checkups and analyzing data in cooperation with the healthinsurance association, and through the expansion of measures, we are aiming for
certification as a Health and Productivity Management Outstanding Organization and a
White 500 company.
Strengthening of corporate branding
Defining Resonac’s unique appeal and communicating it inside and outside the Company
In order to raise recognition of Resonac in the first year of its integration, we are actively
communicating our corporate brand to the labor market through various media including
TV commercials. We will further expand the scope of our communication to spread awareness both inside and outside the Company about the uniqueness Resonac aims for as afunctional chemical manufacturer and the appeal of Resonac as a place to work.
Employee Voice
We are always conscious of maintaining a safe work environment where employees can work withpeace of mind, and of providing stable quality and supply of products that our customers can use
with peace of mind, and thereby contribute to society’s recognition and trust of the Company. In
addition, since last year, the manufacturing department has been discussing its vision for the
future. With everyone working toward the same goal and a gaining a deeper individual understanding of how our current work will affect the future, we now take greater initiative to make ourown proposals for a more comfortable work environment. While pursuing safety and security, we
will continue to develop our vision for the future and strive to create an environment where
people are excited to work.

KG I

Hiring plan fulfillment rate
Detrimental voluntary turnover rate
Engagement score
While there are concerns that the launch of
Resonac will diminish the brand and recognition we
have cultivated thus far, we also see it as an
excellent opportunity to actively communicate newvalue and appeal.
We will use this opportunity to continue tospread the word that each and every Resonac
employee can experience satisfaction in their workthrough co-creation and respect for diverse personalities, and make the appeal of Resonac widely
known in the labor market so that we can become acompany that is selected more than ever before.
To visualize the progress of the aforementioned
initiatives, we will set the following KGIs as indicators to monitor: “hiring plan fulfillment rate”
regarding new hires, “detrimental voluntary
turnover rate” regarding retirees, and “engagementscore” regarding employees within the Company.

Examples of Process KPIWork style satisfaction survey score
Feedback satisfaction survey score
Recognition from the market (underconsideration)

94

95

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Human Resource Strategies
HR Materiality 3

Measures for Realizing the Long-Term Vision

Develop self-driven professionals

Fostering a sense of self-development
Provision of opportunities for autonomous learning
In addition to rank-based and leadership training, approximately 500 employees use LinkedIn Learning as a learning opportunity to enhance selfdevelopment that contributes to employee career development. We are also
expanding in-house learning content that employees can engage in if theywish, such as sharing knowledge and case studies across organizationalboundaries and providing networking opportunities with outside experts.
Provision of opportunities to encourage career ownership
In-house recruitment system
As a measure to foster employees’ awareness of career ownership and provide them with opportunities for autonomous career development, we operate
an in-house recruitment system in which internal job openings are displayed
through the talent management system and employees can raise their hand to
apply for transfers. Taking advantage of opportunities for career development
and co-creation that are not bound by conventional transfer and deployment
practices, more than 70 in-house recruitments were approved in 2022.
Development guide deployment
We provide a development guide that systematically compiles resources on
the kind of human resources that Resonac seeks, how to develop a vision for
one’s career, effective dialogue including one-on-one discussion, and goal
management and evaluation. We encourage employees to use this guide as ahint for developing a vision for their own career and how to build a career atResonac, as well as to organize specific actions to experience and learn what
to do to achieve it.

Creation of professional-minded humanresources who can pursue vibrant andautonomous careers and maximize theirindividual abilities

When I raised my hand for in-house
recruitment, I was thinking seriously
about how to contribute to the Company
and society. My motivation towards work
has increased now that I have decided tobuild my own career for myself.

Tetsuya Yokoyama
Systems Group Leader, Production
Technology Department, Hikone Plant, Resonac Packaging Corporation

Employee VoiceIn July 2022, I took advantage of the in-house recruitment system and transferred to the Production Technology Department of the lithium-ion battery materials business with the desire toleverage my expertise in a business area with high growth potential to contribute to the organization. When I raised my hand for recruitment, I was thinking seriously about what kind of activities
I could perform in an organization with a different business and work location and how I could
contribute to the Company and society. I felt more excitement about the challenge than hesitation.
By making this choice to build my own career for myself rather than being assigned to anorganization and position, I feel I have fewer complaints about work and have a greater sense of
responsibility.

KG I

Internal promotion rate (key positions)

In order for co-creative talent to thrive andcontinue to create new value, we believe theorganization must be one in which eachindividual can continue to grow as an autonomous professional. The first step toward
creating such an organization is to put inplace the Company’s systems and structures. To ensure that these systems are
beneficial to employees and that they are
fully utilized, we believe that awareness andunderstanding of the measures are important, and we are strengthening communication from management and the deploymentof tools such as the development guide.
To visualize the progress of the aforementioned initiatives, we will set the KGI of“internal promotion rate (key positions)” as
an indicator to measure and monitor theextent to which we are developing humanresources who can be appointed to key
positions within the company through theimplementation of each measure.
Examples of Process KPIRate of career interview registrations conducted
Leadership development (participation rate andamount invested in training for potential leaders), etc.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Human Resource Strategies
HR Materiality 4

Measures for Realizing the Long-Term Vision

Cultivate corporate culture
conducive to co-creation

Inculcation of the purpose and values and cultivation of a co-creation culture
Educational policies and global award program that promote co-creation

Cultivating a rewarding corporate culture
where co-creation can occur, in which
diverse individuals are respected with ahigh degree of psychological safety

We believe organizations andpeople grow after going
through painful changes, andwe are working to create
corporate culture by first
resolving to change ourselves.

César Castiñeira
President and CEO, EMEA
COO, Graphite Business Unit

KG I

P 14

Through co-creative leadership training and other development support, we
will work to create co-creative talent that enable each and every employee tocarry out and embody our purpose and values. The global award program,which has been renewed as an opportunity to share activities that embody ourvalues without fear of taking on challenges and for mutual empathy andresonance throughout the Group, had a total of approximately 11,500 Resonac
employee participants in fiscal 2023, increasing the number of examples ofco-creation.
Realization of workplace environment conducive to active involvement ofdiverse employees
Various DE&I measures
We accept the individuality of each diverse person as an important value. The
co-creative collaboration enhancement training, which aims to maximize thevalue of individuality within the organization, thoroughly eliminate unconscious
bias, and ensure psychological safety, is scheduled to be attended by more than
1,200 officers and employees by the end of 2023 with the goal of creating a
corporate culture that can widely promote diversity as collective knowledge.
Creating output by embodying a co-creation culture Collaboration measures in each department
As an example of putting our co-creation culture into practice, we have recruited an internal community called Resonac Blue Creators (REBLUC) to carry out
and expand specific actions to change society through the power of chemistry,
which is our purpose, and engage in collaboration to make new businessproposals and conduct improvements across divisions. We also promote
co-creation activities with external organizations outside the corporate
framework, including industry-academia collaboration.
Employee Voice
Organizations in the EMEA (Europe, the Middle East, and Africa) region are strongly results-oriented,
and our corporate philosophy is shared by our employees. What’s important is that our direction isclear, and the CEO’s intentions are understood by all. Change takes time and effort, but with theleadership of our top management, we feel we are moving in the right direction. Our activities thatshowcase examples of value to customers visiting our manufacturing sites have been well received,
but we must further improve our practices based on our purpose and values in order to create abetter future. We believe organizations and people grow after going through painful changes, and weare contributing to the creation of corporate culture by first resolving to change ourselves.

P urpose and values implementation
survey score
In this day and age, when issues are complex
and large and it is difficult to predict the
future, we believe a corporate culture that
fosters co-creation is a source of competitiveness that generates new value. To date, wehave implemented many measures to raiseawareness and understanding of our purpose
and values in order to make Resonac a stage
for co-creation, and have achieved a certain
level of success. Going forward, we are in thephase of each employee carrying out our
purpose and values, and we believe that it isimportant to link specific co-creation toresults so that we can directly feel that thecorporate culture has taken root. To visualize
the progress of the aforementioned initiatives, we will set the KGI of “purpose andvalues implementation survey score” as anindicator to monitor.
Examples of Process KPI

P sychological safety survey score
Ratio of female managers(12.6% on a consolidated basis in 2022)
Total number of participants in the global
award program, etc.

96

97

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Measures to Combat Climate Change (Disclosure in Line with the TCFD Recommendations and Carbon Neutrality Initiatives)
Targets and results of KPIs on material issues

Mission of Creating Value
Although it uses fossil raw materials and fuels in its product manufacturing processes andemits a considerable amount of greenhouse gases (GHG), the Group has many products that
contribute to energy conservation and the carbon cycle. We regard measures to combat
climate change as a management priority in terms of both risks and opportunities. In May
2019, we announced our endorsement of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). In accordance with these recommendations, weare promoting dialogue with our stakeholders while evaluating risks and opportunities
related to climate change, conducting scenario analysis to inform initiatives that enhance
our resilience, and disclosing information based on the TCFD framework.

GovernanceRole of board of directors and monitoring system
Sustainability is a building block for our company management, and we define our Purposeas “change society through the power of chemistry.” To this end, we have establishedSustainability Vision 2030, identified material issues for sustainability including climate
actions to implement the major strategies of our long-term vision, and raised awarenessthroughout the Company.
The Group CEO supervises the risks and business opportunities, targets, and specificinitiatives associated with climate change, while the Group CSO takes responsibility forpromoting actions. After being discussed at the Carbon Neutrality Project, those issues aredeliberated at the Sustainability Promotion Council and the Management Committee. The
progress of each initiative is regularly monitored, and remedial measures are discussed
when needed.
The Board of Directors receives periodic reports of what the Sustainability Promotion
Council and the Management Committee discussed, and on which points they made decisions and deliberates and supervises them from the perspective of maximizing corporate
value. From 2022, we have aligned the evaluation indexes for inside directors and executive
officers with the initiatives in the long-term vision and countermeasures against sustainability issues, including climate change, with the aim to strongly incentivize them to manage theGroup from a long-term perspective and promote the sustainable growth of the Group.
Positioning of carbon neutrality project (As of June 30, 2023)

Web

P58 / Material Issues and Non-financial KPIs

KPIs and 2030 targets

Results in 2022

Reduction of greenhouse gas (GHG) emissions:3 0% reduction in GHG emissions (Scope 1 + Scope 2) from fiscal
2013 (consolidated)

7 .3% reduction in GHG emissions (Scope 1 +Scope 2) from 2013 (consolidated)*G iven the integration of the two companies, the actual reduction has been revised. Also, we consider starting the calculation and disclosure of Scope 3
emissions from upstream activities before setting a reduction target.

Risk Management
Process to assess, identify, and manage risks
The Group conducts a scenario analysis to assess “transition risks” and “physical risks” arising from climate change for each business, identifies material risks for the Group, and thendevelops countermeasures against them. Material issues in identifying risks and developing
countermeasures are reported to the Board of Directors. We will continue to conduct the
scenario analysis to update risks and countermeasures, along with monitoring the progressof the existing countermeasures.
Integration into enterprise risk management
Given the importance of building an enterprise risk management system, the Group pursues
integrated risk management using a common framework across the Group. Information on
climate change and other risks with the potential to impact the Group’s management isregistered in an integrated manner into our risk management system via companywide risk
identification activities (as part of risk assessment procedures). Top risks, which are deemed
to have a particularly high frequency or degree of impact, are deliberated by a dedicatedcommittee (Risk Management Committee). Important matters examined by the Sustainability Promotion Council and the Risk Management Committee are submitted to the Management Committee for deliberation and decision before being reported to the Board of
Directors.
Risk management structure (as of June 30, 2023)
Board of Directors

Approval of risk management policies and plans,
and oversight of activities

Management Committee

Discussion on risk management policies and plans,
and approval of activities

Board of Directors
Risk Management Committee

Management Committee
Sustainability Promotion Council*
Carbon Neutrality Project
Human Rights Project*The members are composed of CEO and all CXOs and business division heads.

CXO organizations, business headquarters’
plants, Group companies

Deliberation on serious risks

Management of strategy risks under the guidance of the CSO and CFO andof operational and hazard risks under the guidance of the CRO

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Measures to Combat Climate Change (Disclosure in Line with the TCFD Recommendations and Carbon Neutrality Initiatives)
Strategies
Short-, medium- to long-term climate change-related risks and opportunities and responses to them
Amid the successful transition to a carbon-neutral society, the Group sees climate change
as both a risk and opportunity. The Group will exercise its social responsibility as a company
and build further competitive advantages to reduce GHG emissions across the value chain
by providing products and services that contribute to decarbonization, achieving co-creation
with partners, improving energy efficiency, and increasing usage of renewable energy. Given
the above, the Group analyzes risks and opportunities to evaluate the impact of climatechange on the Group businesses under the following two scenarios: (1) The average global
temperature will increase by 4°C or more and (2) The average global temperature rise canbe kept well below 2°C and continue efforts to limit it to 1.5°C based on the Paris Agreement,
which were released by the Intergovernmental Panel on Climate Change (IPCC) or theInternational Energy Agency (IEA). Based on the analysis, we determine the necessary
countermeasures.

Transition risks affecting the Group businesses include increased operating costs due toa rise in energy taxes including carbon pricing. We aim to reduce CO2 emissions to about 3.2
million t-CO2 by 2030, or a 30% reduction from 4.6 million t-CO2 in 2013. Assume that Scope 1
and 2 emissions in fiscal 2030 resulting from sales growth are estimated to be about 5
million t-CO2 , the carbon pricing is set at ¥10,000/t-CO2 based on the IEA’s 2°C scenario(SDS)*1 and others, and we need to offset the portion that falls short of reduction target
through emission trading. In that case, if we fail to reduce emissions by 30%, the operating
cost will increase by about ¥18 billion per year, implying that hitting the reduction target
will lead to reducing operating costs. As a company that interrelates with society, we willcontinue to use other scenario analyses to contribute to realization of a carbon-neutral
society in various ways, take measures against climate risks, and achieve a sustainablegrowth.

Climate change-related risks and opportunities and major response measures (The following is a selected extract—please see our
Impact of climate change

DomainIncrease in tax (cost) due to the introduction ofcarbon pricing (ICP)

Risk category

Opportunity category

Policy/Regulation

Government support under the policies for
decarbonization initiatives of companies

Transition
risks andopportunities

Greater request for initiatives and disclosure
related to decarbonization from customers
Re-evaluation by investors depending on how
effectively the Group captures needs from society
and customers to solve environmental issues
Response to technological innovation andreductions to the electricity consumption ofsemiconductor devices
Growing demand for energy-saving, nextgeneration power semiconductors in conjunction
with an increase in data processing volumes
brought about by digitalization

Physicalrisks

Suspended operation of manufacturing sites due
to flooding, and decrease in profit caused by anincrease in the equipment repair cost

Semiconductorand Electronic
Materials

All businessdomains

for full details)
Response

Revision of GHG emissions reduction targets for 2030 and establishment of the roadmap
Implementation of carbon neutrality initiatives pertaining to chemicals and petrochemicals
Participation in the GX League

Development of eight-inch SiC wafers for next-generation green power semiconductors (adopted as part of the
P79
NEDO Green Innovation Fund project)
Development of a low-concentration CO2 separation system employing an innovative separation agent (adopted as
P87part of the NEDO Green Innovation Fund project)
Reinforcement of the global semiconductor material supply chain (adopted under the Ministry of Economy, Tradeand Industry subsidiary program for overseas market survey projects for building resilient supply chains in the
P80
Indo-Pacific area)
Promotion of products, development of new products, and improvement of competitiveness in response to theP59
needs of a decarbonized society
P 15
Advancement of R&D based on long-term themes at the Stage for Co-creation (new research facility)

Policy/Regulation

Product/Service/MarketMarket/Technology

Product/Service/MarketShort tomediumterm

Market/Technology

WebMediumterm

Short tomediumterm

All businessdomains
Increases/decreases in sales due to changes in
consumer behavior and awarenessTime frame*2

Short term

P99
P87

P66
Establishment of life cycle assessment (LCA)
and carbon footprint of products (CFP) calculation
P66
P99
frameworks, tracking of CO2 emissions, and formulation of reduction plans

Reputation

Product/Service/MarketShort tomediumterm

P59
Adding value to our products/services to help solve the problems that society and customers face
Attracting investments through proactive measures against climate change and promotion of a recycling-oriented
society

Market/Technology

Product/Service/MarketShort tomediumterm

Establishment of the JOINT2 consortium to develop next-generation semiconductor packaging technologies (adopted
as part of the advanced semiconductor manufacturing technology development project under the NEDO post-5G
P 15
telecommunications system platform reinforcement R&D program)
Assessment of environmental standard conformity of product designs, and development of low-carbon products

Market/Technology

Product/Service/MarketShort tomediumterm

HD media R&D to reduce electricity consumption of data centers
Response to increased demand for SiC power semiconductors

Short term

Analysis of flood risks at manufacturing sites
Regular risk identification and reduction activities, and enhancement of business continuity planningAcute*1 2°C scenario (SDS): Sustainable development scenario *2 Time frame: Short term: less than three years; Medium term: three to less than 10 years; Long term: 10 to 30 years

P79

P 10 998

99

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Measures to Combat Climate Change (Disclosure in Line with the TCFD Recommendations and Carbon Neutrality Initiatives)
Indicators and Targets
GHG emissions reduction targets and results
Toward carbon neutrality in 2050, upon the formation of the new company, we reviewed our
GHG emissions reduction targets for 2030 in 2021 and set the target of a 30% reduction
relative to the 2013 level. We will review medium- to long-term plans for each business, aiming to create a low-carbon economy. To achieve our GHG emissions reduction targets for2030, we will further reduce our GHG emissions and promote energy conservation. Carbon
neutrality will also be pursued leading up to 2050, to accomplish the goal of becoming acompany that contributes to a sustainable global society as put forth by our long-term
vision. In 2022, we reduced our GHG emissions by 7.3% compared to the level in 2013, due toa decrease in production volume in some products and a procurement of renewable energy.
Gold Award in the 2022 global award program: Initiatives toward carbon neutrality- Resonac Automotive Products (Thailand) Co., Ltd.
Resonac Automotive Products (Thailand) Co., Ltd. manufactures interior and exterior automotive parts
such as instrument panels and bumpers. To achieve our Purpose and respond to the requirements thatthe automotive industry should achieve a decarbonized and recycling-oriented society, we have established short-, medium-, and long-term goals and accelerated ourefforts. Specifically, we choose low-carbon, eco-friendly materials,
reduce component weight, review manufacturing processes,
switch fuels with lower CO2 emissions, reuse resources, electrifytransportation equipment, and train employees. As a result, wehave reduced GHG emissions by more than 20% compared with the2013 level (base year) at our plants.
We do not regard carbon neutrality as just a concept or philosophy that people must learn, but as an important theme changing
people’s minds and actions. We will continue to make efforts toachieve a net zero society.

Life cycle assessment and carbon footprint of products initiatives

Eriko Takeda
Sustainability
Department

Life cycle assessment (LCA) is a means of quantitative assessment of the environmental impacts of products and services throughout their entire life cycle, or withina specified portion of the life cycle. As part of measures to achieve the GHG emissions reduction target in the new company, based on the accumulated experienceand insight on life cycle assessments, we work to apply LCA methodologies tomeasure the total amounts of greenhouse gas emissions, or carbon footprint of
products (CFP).
During 2022, we accumulated the calculation data of our CFP through the pilot
operation, while preparing calculation guidelines and appointing persons in charge
at each business division to roll out the initiatives throughout the Group. In 2023,
we will prioritize the CFP calculation of products manufactured in Japan to grasp
the current status of the GHG emissions. Then, we will go further to reduce GHG
emissions throughout the supply chain and other environmental loads. With theseperspectives in mind, we will engage in research and product development basedon LCA.

Roadmap to carbon neutrality in 2050
Toward carbon neutrality in 2050, we will streamline our businesses, increase efficiency,
save energy, and switch to gas fuels (high-efficiency co-generation system) until 2030.
Furthermore, the Group will develop technology for sustainable plastic chemical recycling
and facilitate new technology for CO2 separation, capturing, and use. From 2030 onward,
with the aim to achieve 2050 target, the Group plans to promote fuel conversion and mixed
combustion to ammonia and hydrogen, as well as electrification of manufacturing processes. We will also change our manufacturing process to those using our own hydroelectric
power generation and renewable energy sources. We pursue carbon neutrality by implementing sustainable plastic chemical recycling technologies, applying innovative CO 2
separation and capturing technologies, and using recycled CO2 as chemical materials. To
achieve the target, we have broken it down to business division level targets, reduction measures, and actions.
Road to carbon neutrality(kt-CO2 )

5,000

4,620

4,000

*Given the integration of the two companies, the actual reduction has been revised.

Down 7.3%
from 2013

GHG emissions (Scope 1 + Scope 2)

Down 30%
from 2013

Decrease due to the reform at Oita
Petrochemical Complex and Kawasaki
Plant, and other businesses

4,284

3,000

3,234
Solutions found throughan innovative, newtechnology system

2,000
1,000

Net zero0

Results in Results in
2013
2022
Base year
Present
EmissionsourceTargets for 2030

Targets for 2050

2030 (low carbonization)

2050 (carbon neutrality)

Taking on the challenge of achieving 2030 targets

Tackling carbon neutrality

Implement/expand chemical recycling
Emissionsin tandem
withproprietaryproduction
activities(Scope 1)

Outsourcedenergy(Scope 2)

Processes

Thermal
power
plant

Electricity
Steam

Achieve energy conservationand high efficiency via
innovative technologies

Raw materials/fuels conversion
Streamlining/high efficiency
Energy saving

Fuel conversion (gasfuels, renewable energy)

Improve electrification rate

Fuel conversion andCO2 separation,
mixed combustion
capturing, and use(using ammonia
and hydrogen) Consider switching to outsourced energy

Reduce usage through energy
conservation and efficiency
improvement
Switch to renewable energy power sources

CO2 separation,
capturing, and use

Switch to CO2-free power generation,
including renewable energy
Use hydropower facilities*We consider starting the calculation and disclosure of Scope 3 emissions from upstream activities before setting a reduction target.

Convert CO2 intoa raw materialPurpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

RESONAC REPORT 2023

Realization of Recycling-oriented Society

100

Web

Targets and results of KPIs on material issues

Mission of Creating Value

P58 / Material Issues and Non-financial KPIs

KPIs and 2025 targets

Resonac globally promotes activities underpinning value creation by reducing the environmental load of our products throughout their life cycles and contributing to global environmental preservation.

Results in 2022

Reduction of industrial waste sent to landfills:
0.5% or less of waste generated (consolidated in Japan)

0.2% of waste generated (consolidated in Japan)* For more integrated reporting, targets for subsidiaries outside Japan are currently being reconsidered, and their results are also in the process of scrutiny.

Policies and Management
Cyclical use of resources and improvement of per-resource productivity are vital to the longterm use of limited natural resources and energy on the earth. Toward a recycling-oriented
society, we work hard to recycle waste and use resources efficiently. To this end, our business and R&D divisions promote their activities by paying attention to the entire product life
cycle from product design and development to disposal.

Water intake (excluding marine water)

Ratio of industrial waste sent to landfills

Resonac (consolidated in Japan) and former Hitachi Chemical
subsidiaries (outside Japan) (Thousands of m3)
Subsidiaries of former Showa Denko (outside Japan) (Thousands of m3)

Resonac (consolidated in Japan) and former Hitachi Chemical subsidiaries(outside Japan) (%)
Resonac (consolidated in Japan)

80,00067,306 68,060 67,522 64,261 3,513

60,00064,77940,000

3.0

2.5

2.5
2.0

1.8

1.8
1.4

1.5
1.0

20,000Strategy for Realizing the Long-Term Vision0

Toward a recycling-oriented society, we focus on the following agendas, while considering
setting specific goals and KPIs going forward.
Design and development: Reduce consumption of minerals, fossil fuels and other resources; Use recyclable materials; Control waste generation; Improve recyclability; Extend
product life; Quantify environmental impact of products through the life cycle assessment
Manufacturing: Minimize consumption of energy, water, and other resources throughout
the product life cycle
Value chain: Pursue co-creation with diverse stakeholders such as suppliers, customers,
government agencies, municipalities, and international bodies
Roadmap for realizing the long-term vision
Results in 2022
Resources
Captured/integrated data about
resource consumption and waste
volumeProducts
Recycling of plastic chemicals:
Achieved one million tons of
cumulative throughput

Plan for 2023
Resources
Reinforce global environment
management systems
Increase product-related initiatives
Boost up production capacity oflithium-ion battery conduction
additives by 30% to contribute toextending battery lifespan andreduce CO2 emissions
Conduct a joint study to promote
recycling businesses of usedplastics and fibers

1.0

0.5

Vision for the future (2030)
Implement a number of relevant
initiatives to realize a recyclingoriented society through the powerof chemistry (targets and KPIs
currently under development)
Improve traceability and visualization of recycling toward a
recycling-oriented society

0.2

0

2018

2019

2020

2021

2022 (Year)

2018

2019

2020

2021

2022 (Year)

Initiatives for reducing water consumption
The importance of water resources is recognized globally, and it is regarded as a social requirement touse water resources in an appropriate and efficient manner, thereby reducing the consumption of water.
It is also necessary to ensure that water circulates through its natural cycle with its quality and functions
maintained at a level that is suitable for human activities and environmental conservation. The Resonac
Group regards a shortage of water as a global issue and is working to make effective use of water andreduce its consumption. We also treat the water used in our activities to reduce its environmental impact
before releasing it back into the environment.
Electronics Production Center of the Electronics Business Headquarters is working to reduce water
consumption under the environmental target of efficiency improvement by 1% per year. The Environmental Management Committee, held monthly, monitors the status of efficiency improvement of eachdepartment to help achieve the water consumption reduction target. In 2022, we successfully improved
efficiency by about 1.8%. The Shimodate Plant took measures such as the reduction of the cooling water
consumption through improved efficiency of heat exchangers, the prevention of water leakage by
renewing aging underground piping, and the increase in the recycled and reused amount of coolingwater by bolstering chiller facilities. As a result, we reduced groundwater consumption by about 70%.

Initiatives for achieving zero emissions
By defining zero emissions as the state in which the ratio of industrial waste sent to landfills to total
waste generated is 0.5% or less, we reduce the generation of waste and promote the effective use andrecycling of resources. We also inspect our sub-contractors for intermediate treatment and final disposalof waste to confirm that they appropriately treat and dispose of our waste. In 2020, to enhance measuresagainst the inappropriate disposal of waste, the government mandated companies that generate
specially controlled industrial waste in the annual amount of 50 tons or more to use the electronic
manifest for the reporting of their wastes. The Resonac Group’s relevant sites have already put thissystem in place and started producing reports using the electronic manifest.

101

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Realization of Recycling-oriented Society

Environment Risk Measures

Basic chemicals and Industrial gases: Promotion of plastic chemical recycling and co-creation toward large-scale hydrogen use
Under the Kawasaki Plastic Chemical Recycling (KPR*1) operations, the Kawasaki Plant implements various
initiatives, such as providing hydrogen extracted through the decomposition of used plastics to fuel cells for hotels.
Resonac is the only provider of ammonia in the world with a long history of synthesizing ammonia by utilizing
low-carbon hydrogen extracted from gas produced through the process of used plastic chemical recycling, and as
a result, the total volume of used plastic recycled reached one million tons in January 2022. Moreover, theCompany aims toestablish hydrogen
Collect from municipalities
CarbonatedHydrogen production facilities
fueling stations in the
products
coastal area of Kawasaki
CO2
Used plastics
Liqueﬁedcarbon dioxide
City to create a virtuous
Use CO2 forcycle for expanding
producingDry icesupply and demand to usehydrogen. Since March
Use energy in2022, we have promoted
Hydrogeneconomic activities
this initiative by coordinating with six other partners
Primary uses of ammonia
across various sectors*2
Ammonia production facilities
Detoxifying
Nitrogenas a collaborative network
agent of NOx fertilizer
Supply to hydrogenfor hydrogen use to track
stations/commercial
Adhesives/Fiber
medium- to long-term
facilities
material Resin materials
hydrogen demand andsupply network feasibility
Detoxify NOx released from thermal power plants with
Co-creation towardwithin the area.
eco-friendly ammonia
large-scale hydrogen use*1 KPR is an acronym for Kawasaki Plastic Chemical Recycling, a plastic recycling business operated at the Kawasaki Plant.
*2 Six other partners across various sectors are Asahi Kasei Corp., Ajinomoto Co., Inc., ENEOS Corporation, East Japan
Railway Company, Toshiba Energy Systems & Solutions Corporation, and Kawasaki City.

P85 / Chemicals

Almic-can, an eco-friendly product that also contributes to reducing food loss
Almic-can enables the foods to keep their flavor and prevent their color fromchanging, whereby reducing food loss. KAWASHO FOODS CORPORATAION, known
as its flagship product, Nozaki’s Corned Beef, tested for preservation of its corned
beef using Almic-can. The test showed that Almic-can helped extend its best-before
date to three and a half years from three years when using the traditional trapezoidal “makura kan” (pillow-shaped can). Almic-can is suitable for an emergency foodstock as you can keep the foods at room temperature and eat without cooking.
Almic-can also contributes to eco-friendly packaging. These days, plastic containers are used for many food products, but microplastics are regarded as a cause ofextensive marine pollution. When TANEYA CO., LTD., a Japanese confectionerycompany, changed its packaging for Japan agar to Almic-can, the company
successfully reduced plastic usage per unit from 38.3 g to 12.1 g, or a whopping
68% reduction in plastics. Assuming that the amount of energy required to develop
aluminum base metal from mineral (bauxite) is 100, the amount of energy required
to create recycled base metal from collected aluminum would be only about three,meaning recycling aluminum contributes to decarbonization. Leveraging thestrengths of Almic-can, we plan to enter into the fields, such as nursing care foods,
pet foods, and pharmaceuticals.

Policies and Management
We appropriately assess the impact of our business on the environment and work to reduce ourenvironmental load and implement measures for preserving the environment based on thefindings of such assessments, while contributing to achieving a sustainable society. The GroupCEO is the highest authority for environmental preservation activities and environmental risk
measures. The environment & safety managers at each business division and site are appointed, and information on the environment is shared through the environment & safety managers
meeting. At the same time, instructions from the Management Committee are circulated
throughout the Group. At each site, the head of the site and the environment & safety manager
lead environmental preservation activities based on their environment and safety action plans.

Strategy for Realizing the Long-Term Vision
To identify environmental risks and opportunities, and compliance obligations, and to ensurethat we address them appropriately, we will establish and implement an environmental management system, which covers an implementation structure, securing of resources, education,communication, monitoring and measurement, emergency preparedness and response, andinternal audits, whereby consistently improving our environmental risk measures.
Roadmap for realizing the long-term vision
Results in 2022

Plan for 2023

Vision for the future (2030)

Developed the system to understand and manage environmental
risk events
Prepared the regulations forenvironment & safety management
systemEstablish a system to manage
environmental risk events
Roll out an environment & safety
management system globally
Implement the compliance system

An integrated environment & safety
management system is in place on a
global scale.
The environment management status isvisible on a global scale so that we canunderstand issues and take countermeasures against them promptly.

Targets and results of KPIs on material issues
KPIs and 2025 targets
Nozaki’s Corned Beef ofWeb

Zero environmental accidents
Zero environmental accidents (consolidated)

P58 / Material Issues and Non-financial KPIs

Results in 2022
0 (consolidated)

KAWASHO FOODS CORPORATAION

Honnama Yokan of
TANEYA CO., LTD.

Environmental measures in Kitakata City, Fukushima

Niigata Minamata disease

In October 2020, at our production base for thealuminum specialty components businesslocated in Kitakata City, Fukushima Prefecture,
substances including fluorine were detected in
an amount exceeding the regulatory standards
in the groundwater flowing beneath thepremises. In response, we have implemented
remediation measures in line with the Soil
Contamination Countermeasures Act.

Regarding the Niigata Minamata disease, the outbreak of which
was officially confirmed in 1965, we acknowledge that former
Showa Denko’s wastewater polluted the Agano River, causing
great inconvenience to victims and people living around thesite. Resonac, in cooperation with the national and local
governments, will continue to respond in good faith to thevictims of the incident and work to solve the related problems
in line with the laws and regulations that provide for compensation to be paid for the damage caused by the pollution.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Efforts for Preservation of Biodiversity

Web

Mission of Creating Value

Biodiversity conservation, restoration, and improvement activities at Kitakata Plant in Fukushima Prefecture

In order to pass down to the next generation the beautiful scenery provided by ecosystems
and rich natural resources, the Resonac Group will work to conserve, restore, and improvebiodiversity.

We survey aquatic life in the stream flowing within the premises of Kitakata Plant to protect endangered lifeand maintain biodiversity in the area. The survey confirmed the presence of many types of organisms,
including fish such as amur minnow and Japanese dace,amphibians such as Japanese tree frogs and wrinkled frog,
insects such as water stick insect and agabus japonicus, andshellfishes.
We will make a new plan of preparing waterway while
preserving the habitat of aquatic life and start biodiversity
conservation activities as the plant-wide initiative.

Policies and Management
While biodiversity, the gift of nature, supports human life and business activities, biodiversity is rapidly being eroded and faced by various environmental issues. The Group regards
biodiversity conservation as essential to recovering the natural power that ecosystems
generate. This is why we work to assess business activities’ impact on ecosystems so that
we can sustainably use natural resources including forests, soil, water, air, and biologicalresources. Not only assessing the impact of the business activities on ecosystems, but wealso cooperate with various stakeholders, such as society, customers, business partners,
central and local governments, international bodies, non-profit organizations (NPOs), andnon-government organizations (NGOs) to protect biodiversity.

Strategy for Realizing the Long-Term Vision

Wrinkled frog

Water stick insect

Biodiversity conservation in Kasumigaura area (Environmental Rehabilitation Activity around Kasumigaura)

For protecting biodiversity, we take the following to set concrete targets and KPIs in the future.
Evaluate and reduce the impact of the Resonac Group’s business activities on biodiversity
Work to restore threatened biodiversity
Reinforce initiatives through dialogue and cooperation with stakeholders
Roadmap for realizing the long-term vision
Results in 2022

Plan for 2023

Vision for the future (2030)

Actively engaged in a reduction ofenvironmental load by ensuring
appropriate maintenance andmanagement of green spaces andreducing wastewater
Surveyed aquatic life living in thestream flowing in Kitakata Plant
in Fukushima Prefecture
Engaged in conservation activities
of ecosystem in Kasumigauraarea in Ibaraki Prefecture
Volunteers from Resonac Asia
Pacific Pte. Ltd. participated incleanup program of national
gardens

Collect examples of activities
serving biodiversity conservationand draw up action plans
Examine biodiversity indicators
Reinforce existing initiatives

Assess impact of Group’s businessactivities on ecosystems and partnerwith various stakeholders to use
natural resources in a sustainable
way, while preserving, restoring,and improving them (Targets and
KPIs are currently under review)

The Resonac Group obtains water for industrial use from Kasumigaura.
From fiscal 2012, we are working with an NPO named “Asaza Fund” toundertake the Environment rehabilitation activity around Kasumigaura.
Specifically, we have been carrying out activities to regenerate theSatoyama environment (undeveloped woodland near populated areas)
while also growing rice and improving the environment on abandoned
cultivated land in Sakuragawa City, Ibaraki Prefecture, where we place
our operation base.
In cooperation with the locals, we improve the surrounding
environment by cutting grass and creating biotopes in line with
programs, such as rice planting, weeding, and harvesting, and keep theorganism living in the area under observation from certain point.
According to the observation, the abundance of life such, as pleuroceridae and brown frogs is increasing compared with those before theactivity, and we aim to see more organisms in the future. We also
confirm the existence of species such as giant water bug, whirligig
beetle, and Japanese eight-barbel loach, which are on the red lists
released by The Ministry of the Environment. We continue to work on
ecosystem conservation. Due to the spread of COVID-19, those on-site
activities had been suspended since 2020, but we resumed ouractivities in 2023.

April 2023: Rice planting and aquatic life survey

Jumbo dragonfly larvae

102

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Occupational Health and Safety

Web

Mission of Creating Value

Strategy for Realizing the Long-term Vision

We view safety as being what qualifies us to remain in the manufacturing business. As westrive to “gain social credibility through responsible business management,” we will bebuilding a safety infrastructure and safety culture for the Resonac Group, and globallypromote activities underpinning enterprise value creation.

We have declared the following strategy for building a safety infrastructure and safety
culture at Resonac:“Safety First” is stipulated in Article 1 of “Our Code of Conduct,” and our senior management haveexpressed a strong commitment to it. Based on our basic philosophy of “safety as our top priority,”
we will protect the health and safety of all our work colleagues, including those at partner companies, and ensure that our workplaces enable them to do their jobs with peace of mind.
The CEO is the highest authority for safety activities, and based on the mantra of “BadNews First, Fast,” information on safety within the Group is shared with the senior management team at safety meetings, which are normally held every other week, and instructions
are issued to the entire Group. In addition, we provide forums for discussion of mattersrelated to health and safety by executives and labor union representatives, and proactively
engage in activities that involve both the management and labor sides, such as jointly-run
workshops and patrols.

Initiatives in 2022
Global safety awareness survey
In 2022, we conducted a safety awareness survey of all our employees across the globe.
The results highlighted issues with the Group’s overall safety culture, and based on thosefindings, we set the following goals for our future activities: instilling the belief that the
number of accidents and disasters can be reduced to zero, fostering leadership, nurturing asafety culture in which personnel educate each other (mutual enlightenment), and implementing initiatives for giving praise where it is due.
Rollout of the SCP (Safety Communication Program)
The SCP is a program designed to help managers and supervisors improve their observation and communication skills toenable them to engage in interactive and constructive discussions with workers about safe work practices on the frontline.
The program is one of a number of initiatives aimed at
nurturing a safety culture of mutual enlightenment, i.e., one inwhich good behavior is praised and unsafe behavior is corrected, and problems are solved together, through patrols thatemphasize dialogue rather than repeatedly pointing out faults.

Safety patrols that emphasize dialogue

Video

Roadmap for realizing the long-term vision

Fostering of a cultureemphasizing safety

Policies and Management

Reform our safety culture by transforming it into one based on mutual enlightenment
Roll out a risk-based environment and safety management system globally and improve it on an ongoing basis
Ensure safe behavior and raise safety awareness based on our safety code of conduct and 10 safety principles
Reinforce efforts to prevent accidents and disasters by introducing process safety management
Disseminate information and increase the speed of responses by implementing a Groupwide safety data
management system

Results in 2022

Plan for 2023

Vision for the future (2030)

Conducted a safety awarenesssurvey and formulated an
improvement plan
Held safety workshops
facilitated by senior
executives
Introduced the Safety
Communication Program
Ran the “My Safety
Declaration” campaign

Promote mutual enlightenment throughlocal gatherings and activity presentation
meetings
Implement the Safety Communication
Program by senior executives

A mutual-enlightenment safety
culture has been instilled basedon leadership from the top

Established global rules forthe environmental and safety
management system

Begin operation of the environmental andsafety management system
Introduce process safety management
Begin operation of the safety data
management system

A safety infrastructure has
been established and theintegrated environment andsafety management system isin place on a global scale

Established our safety code of
conduct and 10 safety
principles

Promote comprehension and penetration of
our safety code of conduct and 10 safety
principles

All Group personnel maintainhigh levels of safety awarenessand behave in a highly safemannerTargets and results of KPIs on material issues[Zero accidents/disasters]

RESONAC REPORT 2023

Invigoration of Establishment ofsafety activities safety infrastructure103

P58 / Material Issues and Non-financial KPIs

KPIs and 2025 targets

Results in 2022

Fostering of a culture emphasizing safety:
Establish a culture emphasizing safety to eliminate occupational accidents

Drafted improvement measures based on the
results of the global safety awareness survey(launched the Safety Communication Program)
Harmonized safety standards (ongoing)

Occupational accidents:
Zero serious occupational accidents (consolidated)

0 (consolidated, includes partner companies)

Lost time incident rate:
0.1 or less (consolidated, equivalent to zero accidents resulting inlost time over a 10-year period at a site with 500 employees)

0.54 (consolidated, excludes partner companies)

Equipment-related accidents:
Zero serious equipment-related accidents (consolidated)

0 (consolidated)

RESONAC REPORT 2023

Quality Assurance

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Web

Roadmap for realizing the long-term vision

Mission of Creating Value
Through our quality assurance activities, we will continue to supply customers with products and services that are safe and provide peace of mind over the entire product lifecycle.
And by aiming to maximize the value that we deliver through co-creation with suppliers andvarious other stakeholders that is based on relationships of trust, we will contribute to thesustainable development of society.

Policies and Management

Results in 2022

Plan for 2023

Vision for the future (2030)In the final stage of the integration, weestablished and put into effect rules
related to quality assurance, thecornerstone of global governanceW e laid the foundations for the establishmentof an RHQ for Greater China, administered aquality-assurance integration education
program ahead of time, and strengthened thehead office quality assurance department’s
functions for audit and surveillance of eachbusiness siteT o increase solidarity among all thepeople involved in quality assurance asmembers of Resonac, and firm up thefoundations for their activities, we will
entrench integrated rules; launch the
RHQs; conduct a quality awarenesssurvey and feed the results back into
education plans; systematically build
quality-related IT systems; andcontinuously reduce complaints andnonconformanceT he entire Group is being administered under a globally-integrated
quality assurance frameworkT hrough quality, relationships oftrust have been established withcustomers, and the value provided
through business activities has beenmaximized

We have declared a quality policy of providing world-class quality that contributes to thesustainable development of society. The Chief Quality Officer (CQO) leads an oversightorganization responsible for the design of quality-related systems, human resource development, management, and audit, and we will be making improvements by following a PDCA
(plan-do-check-act) cycle that involves close coordination with the quality assurance
manager at each business site.
Furthermore, by establishing a group in charge of functions for strengthening global
governance and functions for moving forward with IT system development, our policy is totranslate these functions into superior quality assurance and more efficient and sophisticated operations for the Resonac Group as a whole.

Zero product-related accidents:
Zero product-related accidents (consolidated)

0 (consolidated)

Zero quality compliance violations:
Zero violations (consolidated)

1 (consolidated)

Strategies

Initiatives in 2022

<Priority measures>Reinforcement of quality assurance governance
We will entrench and continuously review rules, establish an RHQ* structure, and simplify
and standardize operations.
H uman resources development and fostering of a safety culture
We will improve quality-related education programs, and roll them out throughout theGroup. Through an e-learning program, we will endeavor to prevent the inappropriate
inspections that were uncovered at former Hitachi Chemical in 2018 from being forgotten,
and will strive to develop human resources with high levels of skills and ethics and tofoster a safety culture.
DX to maximize the value we provide
By building IT systems, we will make our quality assurance operations more sophisticated and efficient and strengthen functions for managing changes and modifications, and by
managing trends, we will enhance our administrative capabilities.

Regarding measures that constitute major modifications for internal departments, such as
the establishment and implementation of integrated rules related to quality assurance, we
conducted multiple rounds of awareness-raising activities to get the measures off to asmooth start. As a result, business sites have been implementing them in a systematic
fashion since the beginning of the fiscal year. We have decided to build the global governance structure in stages, and have embarked on the first stage by commencing a fact-finding survey of Greater China and starting work on determining a course of action for theregion.
As for quality compliance, the CQO sent out messages connected to our purpose andvalues. And besides taking such measures as providing periodic education, we used theinternal intranet to share information about the inappropriate inspections incident, andbegan building an archive of related information to facilitate mutual learning.
In the area of IT systems, we made progress with expanding systems for preventing
quality-related misconduct based on a medium-term plan. These systems included ones forautomatically importing inspection data and ones for automatically issuing test performance documentation.

*RHQ: Regional Headquarters (regional oversight companies) See

P30

Targets and results of KPIs on material issues
KPIs and 2025 targets

P58 / Material Issues and Non-financial KPIs

Results in 2022

104

105

RESONAC REPORT 2023

Chemicals Management

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Web

Roadmap for realizing the long-term vision

Mission of Creating Value
Our mission is to realize a “Co-creative Chemical Company” that transforms society throughthe power of chemistry. We are dedicated to ensuring chemicals management complianceand providing safety and peace of mind throughout the entire product lifecycle. With theconcept of new value through safety, we aim to maximize enterprise value through oureffort to ensure a sustainable society considering environmental impact and safety, health,and the genuine prosperity of individuals.

Policies and Management
As part of the integration of the two companies, a new chemicals management oversightorganization was established. The members of this organization are working collaboratively
to establish a global framework for ensuring chemicals management, and are striving forcontinuous improvement by employing PDCA cycles in areas such as regulatory compliance,risk management, global governance, and safety evaluation.
We provide safety and peace of mind through a commitment to rigorous compliance and thepromotion of product stewardship. We also aim to create new value for the future through theproactive identification and autonomous/self-motivated management of potential productrisks. Furthermore, we will work towards achieving our mission by creating mechanisms forcontinuously developing and producing professional personnel in chemicals management andsafety assessment, and by promoting the building of systems and infrastructure to ensurethat all initiatives related to chemicals management are implemented effectively.

Results in 2022

Plan for 2023

Vision for the future (2030)

Initiated the merger of the twocompanies with the integration ofrules, chemicals management
audits, and various education
programs, as well as the launch of
an internal chemicals management portal site
Achieved 100% execution rate forrisk assessment of priority risk
assessment substances(within Japanese business sites ofthe former Showa Denko)

Advance efforts to establish acomprehensive global management framework, encompassing
the enhancement of legal
compliance, implementation ofchemicals management audits andeducation, integration of chemicals
management systems, and themultilingualization of the portal
site
Select priority risk assessment
substances and conduct associated risk assessments

Establish global chemicals
management governanceframework to enable Resonac tocompete on the international stage
Contribute to maximizing
enterprise value by providing
safety and peace of mind throughco-creation with stakeholders

Targets and results of KPIs on material issues
KPIs and 2025 targets
Promotion of product stewardship:
100% execution of risk assessment of priority risk
assessment substances* (consolidated in Japan)

P58 / Material Issues and Non-financial KPIs

Results in 2022
100% execution of risk assessment of priority risk
assessment substances* (former Showa Denko
non-consolidated, 68 substances)*The assessment was implemented by issuing a safety summary report for substances stipulated by the Company.

Initiatives in 2022
Strategies<Priority measures>
Reinforcement of global governanceThrough the establishment of a chemicals management network function, formulating
Resonac group’s chemicals management rules, developing an integrated chemicals
management system, and comprehensive collaboration via RHQs*, we aim to further
enhance governance both domestically and internationally, and ensure comprehensive
chemicals management compliance.
Promotion of product stewardship
We will provide sustainable value through safety and peace of mind that reassures our
stakeholders by continuously performing chemical risk assessments, enhancing the levelof product safety assessments, and expanding product-related safety information.
Education/human resource development
We will implement a chemicals management professional development program that
focuses on e-learning and online seminars, enabling participants to take courses fromany location and at any time, and fostering human interaction and specialized training
within the Resonac Group.
*RHQ: Regional Headquarters (regional oversight companies) See

P30.

The departments responsible for chemicals management fromboth companies collaborated to integrate their efforts andestablish a united organizational structure. This culminated in
the inauguration of Resonac’s Chemicals Management Department in January 2023. As part of that process, we pressed ahead
with the integration of rules, chemicals management audits, andvarious education programs, as well as the launch of an internal
chemicals management portal site, laying the groundwork for
future initiatives to reinforce global governance and educate anddevelop human resources. Also in 2022, we conducted risk
JIPS award (first prize) plaques
assessments, similar to the previous year. Notably, we achieved(2021 and 2022)
a 100% assessment rate for our priority risk assessment substances (within Japanese business sites of the former Showa Denko), disclosing the results insafety summary reports. These were awarded the first prize in the Japan Initiative of ProductStewardship (JIPS) award program*, organized by the Japan Chemical Industry Association,
for the second consecutive year. This initiative has had the effect of invigorating risk communication both within and outside Resonac and boosting internal motivation among our personnel,
which will drive our ongoing product stewardship efforts.
*The JIPS award is presented by the Japan Chemical Industry Association (JCIA) to member companies that have conducted superior initiatives in disclosing
their safety summary reports as part of the autonomous/self-motivated initiatives in chemicals management.

RESONAC REPORT 2023

Sustainable Procurement

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Web

Mission of Creating ValueAs we endeavor to evolve into a “Co-creative Chemical Company,” the mission of procurement departments is to work with suppliers and all other stakeholders to contribute to therealization of a sustainable society. To that end, it will be essential to build long-term
relations of trust with suppliers, and we will therefore adhere to high ethical standards inour procurement activities and develop fair and impartial procurement frameworks topromote sustainable procurement as responsible procurement activities.

Policies and Management
To make our procurement sustainable, our basic policy comprises the following three
activity components:
C orporate social responsibility (CSR): Better fulfill our social responsibilities in all ourbusiness activities from development/manufacturing to final consumption
Fair procurement activities: Select optimal suppliers and conduct fair procurement after
comprehensively considering not only quality, safety, and economy, but also CSRPartnerships: Build equitable collaborative relationships with suppliers based on mutual
understanding and trust
To further entrench these activities, our procurement departments will play the leadingrole in sustainable procurement, establishing specialist teams to perform internal monitoringof purchasing, contracting, and legal compliance; provide compliance-related educationinternally; and conduct CSR questionnaire surveys of suppliers and give them feedback.

Strategy for Realizing the Long-term Vision
We pursue sustainable business activities throughout our supply chain, from raw materials
procurement to manufacturing, sale, and logistics, and have made available Sustainable
Procurement Guidelines Web detailing the efforts that we want suppliers to make alongside us. By jointly adhering to these guidelines, both Resonac and its suppliers are taking
action to enhance their value as enterprises. Procurement departments will be designingand implementing effective measures with the following objectives in mind:
E nsure penetration of the Sustainable Procurement Guidelines by distributing them tosuppliers and obtaining from the suppliers written confirmation that they have receivedthemB uild a foundation for high-quality communication by improving methodologies for CSR
questionnaire surveys and CSR visitsH elp strengthen the businesses of both Resonac and its suppliers through open exchanges of opinions with suppliersI mprove the skills and professionalism of purchasing managers by providing them withongoing education and conducting awareness-raising activities

Roadmap for realizing the long-term vision
Results in 2022

Plan for 2023

Vision for the future (2030)

Published the Resonac Group
Sustainable Procurement
GuidelinesC onducted a CSR questionnaire
survey (response rate: 92%)
Made CSR visits (47 companies*,
former Showa Denko suppliers)

Improve the functionality of CSR
questionnaire tools and make surethey are usedG auge current levels of CSR
efforts at suppliers, and set
evaluation standardsW ork with suppliers to raise effort
levels and realize a sustainable
society

Targets and results of KPIs on material issues

P58 / Material Issues and Non-financial KPIs

KPIs and 2025 targets
Improvement of quality of communication with suppliers:C SR questionnaire response rates improved, and a higher
proportion of suppliers exceeded the satisfactory threshold

Results in 2022B egan formulating the Sustainability Procurement
Guidelines for the newly integrated company

Initiatives in 2022
We conduct CSR questionnaire (self-assessment) surveys of important existing suppliers
once every three years, and all new suppliers normally have to respond to the questionnaire
when we start doing business with them. In 2022, we received responses from 339 companies (response rate: 92% of all those surveyed). The results were aggregated, and applicablesuppliers were provided with feedback reports that clarified their standing relative to theaverage of all suppliers and of their own industry and gave advice on making improvements.
We also made “CSR visits” to 47 companies, during which we exchanged various opinionswith them on how to practice sustainable procurement.
Results of Supplier CSR Self-assessment (CSR questionnaire survey) in 2022
Number of suppliers responded: 339 companies Average total score: 63.0
Score

Number of suppliers(% of total)

Improvement efforts

50 or more

273 companies (81%)

Suppliers were urged to work on matters that needed improvement and to pursue
higher-scoring initiatives

30 tobelow 50

52 companies (15%)

Suppliers were urged to work on matters that needed improvement, and offered
Resonac’s proposal on improvement measures

Below 30

14 companies (4%)

Suppliers were urged to work on matters that needed improvement, and offered
Resonac’s proposal on improvement measures

Note: V isits made as needed, to exchange opinions on efforts made by both parties and check thestatus of improvement at the next self-assessment.

Note: V isits made as needed, to discuss early improvement and check the status of improvement at thenext self-assessment.

106

107

RESONAC REPORT 2023

Respect for Human Rights

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Web

Roadmap for realizing the long-term vision

Mission of Creating Value
Conducting our business activities with consideration for human rights is essential toprotect our employees, as well as gain the trust of our business partners, customers andlocal communities in our collective aim to create a better society.
We respect human rights as the core of our business activities in all countries and regions
where we operate to help bring about a society that leaves no one behind and where thedignity of all is ensured and everyone is treated equally without exception.

Results in 2022

Plan for 2023

Vision for the future (2030)

Investigated human rights
issues in high-risk areas andchemical companies and began
to gain an understanding of thecompany’s risk profile

Conduct employee assessments,
including overseas, andinvestigate human rights risks
in the supply chain, identifying
high-risk areas and considering
improvement measures
Implement human rights
education for all Group
employees through ourdedicated e-learning system.

To have implemented measures forprevention and mitigation against
identified human rights risks, as wellas established a series of processes
to evaluate their effectivenessTo have established a corporate
culture in which all Group employees, including those overseas,
respect human rights and are able totransform diversity into co-creativeand competitive strengths

Policies and Management
In 2021, we published a human
Board of Directors
rights policy that places respect for
Monitoring & supervision
human rights at the core of ourbusiness activities in all countries
Commitment to the human rights policy
and regions where we operate. This
Companywide dissemination of the policy
policy was formulated not only for
all of our employees, but also for
our business partners, including
Disclosure
our suppliers, to understand andAssessing impact on
Human rights
Tracking & monitoringDue diligencehuman rights
adopt.
Establishing and implementing plans and measures
We are continuously deepening
to address identiﬁed human rights issues
our human rights due diligence inRemedies targeting victims of humanline with this policy.
rights violations
Our commitment to human rights
is driven by a company-wide,
Mechanisms for handling grievancescross-sectional human rights
Cooperation
project team. This comprises
members selected from our StrateFunctions and business divisions
gy, Personnel, Risk Management,
Occupational Safety, Procurement,
and other specialized departments,
as well as each Business Division that forms the core of our human rights initiatives. Alongside regular gatherings of the Sustainability Promotion Council, attended by the Group’s
CXOs including the CEO, matters of importance are deliberated and decided upon in management meetings and reported to the Board of Directors, thereby strengthening governance toreduce business risks.
P55 / Promoting Sustainability

Targets and results of KPIs on material issues
KPIs and 2025 targets
Respect for human rights:
Established a human rights due diligence
implementation framework

P58 / Material Issues and Non-financial KPIs

Results in 2022
Initiated an investigation into human rights risks, including within
our supply chain
Began raising awareness of Sustainability Procurement
Guidelines that reflect our human rights policy

Initiatives in 2022
In 2022, in preparation for the launch of Resonac, we formulated “Our Code of Conduct”
P 111
to reflect our human rights policy, and worked toward embedding it within theworkplace. In addition, on account of the increasing geopolitical risks and new businessactivities following the integration, we began identifying human rights issues, including
those in high-risk areas and within the supply chains of chemical companies. Along with
that, we also ensured that our human rights policy was reflected in our Sustainability
P 10 6 , which clearly set out matters for collaboration between
Procurement Guidelines
Resonac and our suppliers. These guidelines were subsequently shared with our suppliers.

Plan for 2023
In 2023, we will conduct employee assessments, including those overseas, and investigate
human rights risks in the supply chain, identifying high-risk areas and regions and considering improvement measures. At the same time, we will aim to further embed our humanrights policy throughout the Group via training.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Strengthening InternalCommunication within our Group

April 2020
Completed the TOB (Tender Offer Bid)for the former Hitachi Chemical

108

In January 2023, we embarked on a fresh journey under the new company name of “Resonac.” We are committed to fulfilling
our social responsibilities and delivering value to all our stakeholders. By doing so, we aim to earn their trust and esteem,
paving the way for co-creation. The foundation for this lies in internal communication within our Group. We are strengthening
our communication as a group to enhance sustainable corporate value and address societal challenges through our businessactivities.

January 2022
Effectively merged via the unificationof management structures

Strategy for Realizing the Long-term Vision
We aim to be a company that can compete on a global stage. To drive transformation, createsynergies through the merger of the two companies, and foster co-creation, it is essential
for us to bridge any gaps in understanding and awareness between management andemployees. We will do this through town hall meetings and face-to-face events with the CEO
and other members of the leadership team, as well as through transparent communicationsuch as Internal Group magazines that showcase the faces of our employees.

Initiatives in 2022
Since the effective merger of the two companies in January 2022, wehave been focusing on promoting mutual understanding, communicating the progress of the merger and other business information,
as well as encouraging dialogue between management and employees. This has included town hall meetings between the leadershipand employees, “Global Kickoff Meetings” where members of the
management team from all our worldwide locations convene, as
well as a New Year’s address by the President. Additionally, we havebeen actively disseminating information via our Internal Groupmagazines. The New Year’s address by the President was plannedand executed with a greater emphasis on two-way communication.
In the town hall meetings, our president has listened to employee
requests and concerns, and communicated his action plans. We’ve
further enhanced our direct communication with employees byholding sessions in Japanese, English, and Chinese, complemented
with real-time Q&A sessions. We have also revamped the traditional Internal Group magazine
format and launched the Internal Group magazine titled “BRIDGE,” which is centered around theconcept of showcasing the faces of our employees and communicating initiatives and achievements that can make us proud of the Group.” It overlays the company’s direction, management
policies, and sentiments with the efforts of our employees. The online Internal Group magazine
places emphasis on articles with the themes of co-creation, purpose & values, as well as ourJanuary 2023
Resonac is born (corporate merger)
Holding company: Resonac Holdings Corporation
Newly merged company (operating company):
Resonac Corporation“WITH UNSUNG LEADERS”* features. For employees who don’t typically use computers, we produce digests of our online Internal Group magazines that are displayed at our physical locations.
*“WITH UNSUNG LEADERS” features highlight those unheralded leaders in our company who bravely confront challenges and continuously
learn through trial and error, all in pursuit of a brighter future. We develop articles based on this concept on our website and in InternalGroup magazines.

To p i c s

WebGlobal Kickoff Meeting 2023

In February 2023, we held our first “Global Kickoff Meeting.”
At the meeting, 178 attendants, consisting of the Group’s
senior executives and presidents of our major affiliatedcompanies, shared the strategies and policies of eachbusiness unit and corporate function, and deepened theirunderstanding of the Group’s current priority initiatives.
Lively two-way discussions were held, fostering a sense ofunity within the management team.

To p i c sC reation of the “Resonac Pride Award” to Recognize and Encourage
Employee Sustainability Activities

We established the “Resonac Pride Award” to honor employees
who, through their involvement in social contributions,environmental conservation, and cultural or sporting activities,
embody our purpose and values. Their efforts contributetowards enhancing our company image and invigoratinginternal morale and vitality. In 2022, we received 65 nominations from ten different countries. Ms. Fujichika from our Oita
Office, who founded and manages the futsal club “ENTRADA” forthose with intellectual disabilities, received the gold award.

109

RESONAC REPORT 2023

Risk Management

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Web

Mission of Value Creation
We will endeavor to ensure that each individual possesses solid integrity and that all personnel manage risks with an eye to the future, and will contribute to the sustainable developmentof both Resonac and society. By considering our direction and appropriateness for addressing
risks, such as promotion of companywide risk assessment and business continuity management, and repeatedly following a cycle of verifying effectiveness, we will clarify the risks andtheir impact on business management to support management decision-making and thereby
facilitate the optimal allocation of resources.

Risk management organization
Board of Directors

Risk Management Committee
Resonac
Holdings

Crisis management system
Should a crisis occur, we set up a crisis response headquarters led by the CEO, which handles
the initial response in a swift and appropriate manner. For example, it assesses the extent ofdamage and its impact on our business operations, issues instructions to take steps to prevent any escalation of damage, and considers what information to provide to external parties.
Following the initial response, if the crisis is expected to have a significant impact on business continuity, BCPs (business continuity plans) developed in advance for selected products
are executed. In this way, we endeavor to maintain/continue or swiftly resume business operations in order to fulfill our responsibility to continue supplying customers with products essential for maintaining social infrastructure.

CSO/CFOCRO

Strategy risks

Operational/
hazard risks

CSO/CFO organizations

Risk/Crisis Management Systems
Risk management system
Resonac has established a risk management system that is compliant with the ISO 31000
standard. We have also organized the Risk Management Committee chaired by the CEO. The
Committee facilitates cross-organizational deliberations by senior executives on the risk
management system, key risks facing the Group, and countermeasures for addressing them.
The matters deliberated on by the Risk Management Committee will be discussed and approvedby the Management Committee, and then reported to the Board of Directors, which supervises
assessments of the appropriateness and effectiveness of the risk management system and theprogress being made with its implementation.
In addition, at business divisions/sites and major Group companies in Japan, we have assigned
risk owners, risk officers, and risk managers, who are responsible for identifying and assessing
risks in each business and workplace and implementing countermeasures to address them. We
have also clarified who is responsible for implementation in divisions performing risk assessment.
Furthermore, the CXO organizations, which are head office corporate departments, act as risk
oversight divisions by taking overall responsibility for controlling the risks under their purview.
They also conduct reviews of and provide support for the establishment of the companywide risk
oversight standards, risk assessments conducted by divisions performing risk assessments, andcountermeasures, all from a cross-departmental perspective over the entire Group. We havetherefore put in place a structure that allows risk management to be performed in an integrated
fashion with senior management and frontline personnel working together as a united team.

Management Committee

Cooperation

Internal audit departments
Risk Management Department

CXO organizations (head ofﬁce corporate departments)

Third line of defense
Assessment, monitoring, andadvice from independent
standpoint

Second line of defense
Overall responsibility for controlling risks under purview.
Identiﬁcation of cross-departmental Groupwide risks andmonitoring/support of operations

Operatingcompanies

Business units (business units, business sites, subsidiaries)
First line of defense
Risk exposed entities. Recognition/assessment of risks andimplementation of countermeasures

Roadmap for realizing the long-term vision
Results in 2022

Plan for 2023

Vision for the future (2030)

Establishment of risk management
systemDevelopment of risk management
systemEstablished risk management
system/rules and expanded
functions of secretariat aheadof launch of Resonac in January
2023
Risk assessment
Conducted the 2022 risk
assessment
Added review process by CXOs
BCM&BCP
Selected products for which
BCPs are to be established

Expansion of risk management processes
Sophistication of risk management system
Reinforcement of risk oversight throughaddition of control implementation andassessment processes
BCM&BCP
Formulation of BCM&BCP guidelines
Based on the guidelines, revise BCPs
for products for which BCPs havebeen established and establish aneffective administrative structure
Establishment of risk management
systems outside Japan
Establishment of structures forfunctional design and implementation
at core subsidiaries outside Japan
Provision of risk management
education and training
Production of educational content
and development/implementationof education plans

Achieve world-class management
by establishing and improving risk
management structure and systemthat support the three lines ofdefenseDevelop an effective administrative
structure that also covers
BCM&BCP formulation, and fulfill
social responsibilities even in
emergencies
Instill risk management principles
and approaches by propagating arisk-attentive culture among Group
personnel and developing theirrisk awarenessBegin establishing risk
management systems outside
Japan in 2025

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Risk Management
Targets and results of KPIs on material issues

P58 / Material Issues and Non-financial KPIs

KPIs and 2025 targets

Results in 2022

Development and operation of comprehensive risk
management system:
Operate the new comprehensive risk management systemcovering external environment change risks, operationalrisks, and hazard risks

Improved and codified comprehensive risk management system(including accountability structure for business execution
departments and oversight departments and processes
for reporting key risks to the Board of Directors and theManagement Committee)

Reinforcement of functions of second line of defense:
Expand the Group’s internal control framework throughdata linkage with the second/third lines of defense
Expand processes outside Japan and centralize risk data
within the Group

Produced FY2022 Risk Assessment Report based oncomparisons with external disclosure information, andgave feedback on companywide risk inventory status
Added “review process by CXO organizations for key risks” torisk assessments and further enhanced granularity of data

Initiatives in 2022
Risk map

Latest frequency assessment

Sophistication of risk assessment
In 2022 we made improvements to risk assessment
processes. Based on risk data registered by divisions
taking risk inventories, oversight divisions (CXO
organizations) reviewed current responses to risks
under their purview and plans for addressing them,and added a process for promoting communication,
including on the need for support.
Note that in 2022 the Risk Management Committee
deliberated on 22 key risks, including those related
to accidents/disasters, legal compliance, personnel/
labor, information security, supply chains, andchanges in market trends.

Key risks (22 items)
Latest impact assessment: Very highLatest frequency assessment: Very high

Very
high

87

68

43

22

High

134

108

49

34

Medium

339

279

122

93

Low

395

284

181

157

Low

MediumHigh

Very highLatest impact assessment

Serious risks identified through frequency andimpact assessments of approx. 2,400 risks

Main risks and countermeasures
Personnel/labor

Information security(cybersecurity risk)

Supply chains

Intensification of recruitment
or retention of top-flight talent
with excellent management or
technical capabilities
Countermeasures
Identified four material
issues for human resource
P91 ,strategies
determined KGIs and KPIs totackle them, and conductedperiodic monitoring

Adverse impact on production
activities, information leakage, etc.
resulting from cyberattacks
targeting internal systems or
manufacturing equipment
Countermeasures
Deployed global-standard
security solutions
Established/improved methodsof implementing Resonac’s global
information security standards

Supply chain interruptions and logistical disruptions due
to natural disasters, accidents, infectious diseases, etc.
Illegal/antisocial conduct or lack of respect for humanrights or protection of the environment by suppliersCountermeasures
Produced a manual for assessing damage tosuppliers and impact on our own business activities,
and provided BCP training based on the manual
Formulated Sustainable Procurement Guidelines, demanded that suppliers abide by them,and periodically confirmed their adherence

BCM Promotion
Formulate BCM&BCP guidelines
Business divisions/sites used to formulate their own BCPs, but with the aim of achievingGroupwide standardization of BCPs and making them more sophisticated, we put together aset of BCM&BCP guidelines. Previously, BCPs were based on scenarios by specific disastersuch as earthquakes. However, by producing BCPs that reflect outcomes, such as damage tocorporate resources, we switched the methodology to setting targets for resuming operations based on stakeholders’ business requirements.
We also reviewed the system for conducting BCP practice drills, which had been organized independently at each workplace, and will be developing guidelines and a system forassisting with practice drills by 2025.
We will be periodically reviewing our BIA (business impact analysis) and BCPs, while
following a PDCA cycle by verifying effectiveness through BCP practice drills, as we endeavor
to deepen employees’ understanding of BCP to make them more effective and standardized.
Selection of products for which BCPs are to be established and BCP development planning
From all of our products and services, we selected ones that we would prioritize for the allocation of corporate resources should an event that would hinder business continuity occur. The
selected products and services are primarily ones that are used in social infrastructure.
Based on the BCM&BCP guidelines, we are going to conduct a full review of the BCPs forthese selected products, and plan to redesign them by 2024.
Development of comprehensive risk management system that encompasses external
environment change risks
Nowadays, the global external environment is becoming increasingly complex and uncertain, with mounting geopolitical risks, changes in the economic security landscape, worldscale environmental issues such as climate change, and rapid advances in technologicalinnovation. However, we recognize that conventional risk assessment methodologies arelimited in their ability to extract risks that reflect such megatrends and discontinuous changes in the external environment.
Therefore, after identifying external environmental changes that we should watch closelyfrom among the myriad of megatrends, we will explore potential risks and their impacts,
and prepare plans for addressing them. By doing this, we will examine whether it would bepossible to introduce mechanisms for responding swiftly and flexibly to future changes inthe external environment (risk scenario formulation and impact assessment).
In addition, we will aim to put together a structure for making the risk events and countermeasures extracted using risk scenarios centrally identifiable and visible, establishingprocesses for periodically monitoring them, and managing them alongside risk information
drawn from conventional risk assessments.
P29 / Letter from the CSO
WebBusiness Risks

110

111

RESONAC REPORT 2023

CompliancePurpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Web

Targets and results of KPIs on material issues

Mission of Creating ValueKPIs and 2025 targets

We view soft-law-based compliance, which goes beyond legal and regulatory compliance, asa key principle for business continuity. We will endeavor to become a company that contributes to a sustainable society by ensuring that each individual possesses high ethical senses
and acts autonomously and independently based on the Group Code of Conduct.

Policies and Management
We are implementing systems and initiatives to entrench, throughout the organization, an
ethical value based on honesty, impartiality, and integrity alongside our commitment tocompliance with the laws, regulations, and social norms of every country and region that weserve. In January 2023 as Resonac, we began instilling awareness of corporate ethics andcompliance among all Group employees, including those outside Japan. And since then, we
have been installing and operating frameworks to appropriately monitor the state of compliance.
The Compliance Group in the Legal Department as a CRO organization takes the lead inspearheading compliance initiatives, and works with each chief officer organization andbusiness division to advance them. In addition, a compliance officer is assigned to eachbusiness site, Group company, corporate division, etc. The structure is designed to ensurecommunication between the Compliance Group and the officers, and to allow measures tobe taken to forestall legal violations, detect issues at an early stage, make improvements,
and prevent recurrences.

Results in 2022

Entrenchment of “Our Code of Conduct”:
Increase the degree of entrenchment(investigate through surveys)

The new code of conduct was resolved by the Board of Directors andits English and Chinese translations were published.
Rolled it out companywide via internal intranet

Penetration of Global Compliance Standards (GCS):
Reduce the number of serious legal violations
Increase the number of reports through thewhistleblowing system by raising awareness of it

GCS was resolved by the Board of Directors and its English andChinese translations were published.
The number of reports through the whistleblowing system reached
81 as a result of raising awareness of it

Group Code of Conduct
In January 2023, we formulated Our Code of Conduct as guidance to be followed by everyone
working in the new Resonac Group (it was drafted by the management team and an internal
working group and finalized following approval by the Board of Directors). It presents
specifics on how Group officers and employees should conduct themselves on a day-to-day
basis to realize our purpose, and during the preparation process we considered how it
relates to our values and material issues for sustainability as well as the perspectives of
stakeholders. We have produced versions in Japanese, English, and Chinese, and have been
taking systematic steps to make everyone aware of it. For example, we have held briefings
for personnel at Group sites both inside and outside Japan.
And to ensure that each and every employee acquires a deep-level understanding of thecode and incorporates its principles into their day-to-day work and social lives, we are planning to produce the Code of Conduct Handbook and provide related education during 2023.
Web

Strategy for Realizing the Long-Term Vision

P58 / Material Issues and Non-financial KPIs

Our Code of Conduct

Steps to entrenchment of the Group Code of Conduct

Roadmap for realizing the long-term vision
Results in 2022

Plan for 2023

Vision for the future (2030)

As the new company, weestablished the Global ComplianceStandards and a code of conduct,
and harmonized policies for thewhistleblower system. To roll out
these rules globally, we had themtranslated into major languages
and began preparations for
introducing them

Build a compliance network forconnecting the holding company
with operating companies’ key
departments and Group companies
Take action to entrench the code of
conduct. The Global ComplianceStandards and subordinate rules
are scheduled to be introduced
throughout the Group before theend of the year

Both individuals and organizations
are autonomously and independently practicing soft-lawbased compliance, which goesbeyond legal and regulatorycompliance, and we are getting
closer to the realization of our
purposeStep 1:
Recognition of its existence/
have a general understanding

Step 2:Gain a deep level of empathy
and comprehension

Step 3:
Foster an organizational
cultureAttributes
as anindividual

Recognize that the code of
conduct exists
Have an interest in the code of
conduct
Gain a general understanding of
the code of conduct

Have a deep level ofcomprehension of the code of
conduct
Improvements are seen in theindividual’s day-to-day conduct,
and they accept the code as anatural part of their work

An organizational culture isfostered as the code forms thebasis for judgements by eachindividual and they all conduct
themselves in accordance with it

Exampleapproaches

Organize briefings
Distribute various materials to
propagate awareness of thecode
Obtain written pledges to abideby the code

Provide training, e-learning
programs, etc.
Offer support to employees on a
day-to-day basis (e.g., being
available to give advice when
asked)
Praise best practices
Consider code adherence whenevaluating performance

Continue the measures taken at
Step 2
Conduct employee awarenesssurveys
Check understanding andconduct on an ongoing basis, andexplore additional measures if
personnel are still coming up
short

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Compliance
Establishment of Global Compliance Standards
To ensure compliance across the entire Group, we have established the Global ComplianceStandards (GCS). The GCS prescribe structures and frameworks that all Group companies
must deploy to ensure not only legal and regulatory compliance, but also conformance withthe standards of compliance demanded by the international community. We believe that theproper design and effective implementation of the GCS will allow misconduct to be prevented or spotted at an early stage, and also facilitate swift action in response should misconduct be uncovered. We plan to introduce the GCS and subordinate rules throughout theGroup before the end of the year.

Head office compliance department

GCS formulation/rollout

Group company

Group company

Group company

Based on the GCS, Group companies develop rules
and manuals, put structures in place to prevent,monitor, and address legal and regulatory violations, and drive action
Oversight division (head office compliance department):
Identifies changes in global regulations and the social
environment, and formulates a policy to cope with eachcompliance risk phenomenon and event.
Group companies (business execution department):
Implement rules based on the policy, autonomously andindependently endeavor to design mechanisms for ensuring legal compliance.

Positioning of the GCS
CodeGroup Code of Conduct

Internal rules(common for theentire Group)

Internal rules(speciﬁc to eachcompany)

Manuals, etc.

“Resonac Group Hotline,” consultation and whistleblowing system
Global Compliance Standards

Rules on Preventionof Bribery

Rules on Compliancewith Competition Law

Global Guidelines

Rules on Interactions
with Competitors

Standard Operating
Procedures for Supplier
Compliance Screenings
Standard forms, etc.

Q&A on Interactions
with Competitors

Rules on Prevention of
Dealings with Antisocial
ForcesStandard Operating
Procedures for Supplier
Compliance Screenings
Standard forms, etc.

Other: Whistleblowing System Administration Rules, etc.
Prescribes frameworks/standards for matters that should be addressed in the same way globally
Prescribe details such as locally-applied rules and operating procedures that reﬂect regional characteristics
and the circumstances of each company

In the Resonac Group, we have set up compliance hotlines that are available to all internaland external stakeholders who wish to seek consultation or report any issues regarding
compliance. We make proper and prompt responses to such reports, with due consideration
to confidentiality and the prevention of disadvantageous treatment of hotline users.
The whistleblowing system is one of important tools for early-stage detection of misconduct. To increase enterprise value and achieve sustainable development, we administer thewhistleblowing system in an appropriate manner to enhance the ability of our organizations
to self-cleanse. In this way, we strive to maintain the trust of our stakeholders and ensure
legal and regulatory compliance.
In 2022, we received 81 reports through the whistleblowing system. Among the 81 reports, there were 10 cases of suspected legal or regulatory violations, but none of themwere serious enough to be reported to the Management Committee. While aiming to reduce
the number of serious legal and regulatory violations by 2025, we also want the whistleblowing system to become widely known internally as an organizational self-cleansing device,and for usage of it to increase.
Each quarter, the head office compliance department conveys details of reports received
via the whistleblowing system to the Audit & Supervisory Board Members, who review the
progress made with dealing with them and the corrective action taken.

112

113

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

RESONAC REPORT 2023

Roundtable

Outside Director,
Representative Director and Chairman of the Board,
CRO, CHRO

Our transformation of
the Board of Directors
Why does the Board of Directors need to betransformed? And why should it be happening now?
Let us examine the role and function of Resonac’s Board,and how it will look going forward, as we strive tofurther enhance our value as an enterprise.

Kohei Morikawa

Tetsuo Tsuneishi

Keiichi Kamiguchi

Nori Imai

Representative Director andChairman of the Board

Outside Director

Director, Managing Corporate Officer,
Chief Risk Management Officer (CRO)

Corporate Officer,
Chief Human Resource Officer (CHRO)As Resonac endeavors to expand globally, what should be the relationshipbetween the Board of Directors and the execution side?
And what should be the role of the outside directors?
Morikawa Since the transition into Resonac, the biggest change has been that the goal of
expanding globally has really started to take shape. If the execution side is trying to get us
up to a level where we can compete worldwide, the Board of Directors, which monitors that,must also meet world-class level standards. And that means the Board needs to completely
reinvent itself. We’re kind of in an emergency, so going global makes monitoring all themore important. At normal times, gaps between targets and performance don’t occur allthat often, but in the midst of an emergency, there’s a danger of enormous gaps arising.

Tsuneishi Since taking on the role of an outside director at Resonac, what’s struck me isthat this is a company of the like that’s rare in Japan, as it has boldly set sights on achieving
large-scale growth, and is implementing a major transformation to accomplish that objective. Even though it’s a company with over a century of history and tradition behind it, it is, insome way, like a start-up. And this transformation has only one aim: to increase corporate
value. Strategy is consistent, and all the employees are working toward the same goal,
which is exciting and appealing to me. Because it’s the frontline personnel who are the ones
that will actually reach the goal, it’s vital to get every employee on board. The role of an
outside director is to verify that the company’s strategy is viable and that there are no risks
lurking out of view. Outside directors don’t know the ins and outs of the firm’s industry or
business, so in a sense they’re novices. Yet I think that the fact that they aren’t experts in the
sector means that they can sometimes notice hidden risks. On the other hand, there are also
outside directors who regard themselves as business administration professionals, and are

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

fully cognizant of the implications of the numerical targets, such as EBITDA of 20% and ROICof 10%, announced by President Takahashi. I hope that we will be able to provide supportand useful advice for hitting those numbers.
Morikawa I’d like you, Mr. Tsuneishi, to serve as Resonac’s navigator as we seek to enhance our corporate value. Not only are you knowledgeable about the semiconductor field,
but you’ve already played a central role on the board of a company that competes on theworld stage, and produced fantastic results in increasing its corporate value. I want you togive us a dose of that experience. Monitoring a board of directors is like being an athleticcoach in a car cheering a runner in an ekiden road race (long-distance running multi-stage
relay race, mostly held on roads), with the runner representing the execution function. I
hope that you can be our coach in a car.

Board transformation that began with free discussion
Invigorated debates and changed agendas
Kamiguchi When Japan’s Corporate Governance Code took effect, the Board of Directors ofShowa Denko discussed governance, and I also took part in these talks as the officer incharge. The evaluation of board effectiveness emerged as a key agenda, but we were unable
to hammer out a concrete proposal. However, the recent integration provided an impetus
for making changes to the authorities and responsibilities of the execution side, and at thesame time moves to transform the Board of Directors re-emerged. As part of that process,
Chairman Morikawa and the outside directors had open discussions last year, and we areable to settle on a general direction for reform.
Morikawa We decided to have free discussions because the atmosphere at Board meetings
can get a bit stiff, and we wanted to avoid that.
Kamiguchi What we all came away with from the discussions was recognition that theBoard always seems to get busy with examining individual projects or transactions, leaving
no time left for deep-diving into major themes that will affect the company’s value over the
medium to long term. We also agreed on the need to initiate essential discussions for
maximizing Resonac’s corporate value.
Morikawa Board meeting agendas have undergone a clear-cut change, with topics likemonitoring and medium-to-long range planning coming up.
Kamiguchi With the Board of Directors transformation, the plan was to start with changes thatwere easy to make, so last year we set about enriching pre-meeting explanations of agenda
items. We made sure sufficient time was allocated to properly explain agenda, and had anappropriate person from the department submitting the proposal, rather than the Board secretariat, give the explanations. We also revised the criteria for referring matters to the Board.
Matters to be resolved have to be more important and involve more money than before torequire Board authorization. This has reduced the time the Board spends to deliberate on individual projects or transactions and allowed it to pivot its focus to medium- to long-term strategy.

Even though it’s a company with more than a century ofhistory, it is, in some way, like a start-up. It’s intent onenhancing its value as an enterprise, and all the employees
have their eyes fixed on the same goal, which is anotherexciting aspect. Fostering a great corporate culture andemployee motivation will be critical for the success of this(Tsuneishi)“second inauguration.”
Tsuneishi Getting prior explanations of the issues up for
discussion has been helpful. And as a by-product of the COVID
pandemic, meetings can now be held online, which makes itmuch easier to get all the outside directors and auditors together at the same time. Arranging face-to-face meetings to suit everyone’s schedule would
have been a real headache.
Kamiguchi During the effectiveness evaluation process, some voiced the view that theexecution side and the outside directors ought to communicate with each other more. So, forexample, we’re thinking of having the outside directors visit our plants and offices andcreating opportunities for them to communicate with executives and employees. In thiscontext, I think that your visit to the Stage for Co-creation was a fantastic opportunity.
Imai There are lots of other things going on, too, so we’d love you to come and see someother sites.
Morikawa Mr. Tsuneishi, since you joined the Board, my impression is that discussions at
Board meetings have got a lot livelier. Because in the past, there was a proposal that didn’t
generate much in the way of opinions.
Imai With that proposal, it was made clearer how it would serve to increase corporate
value, and this facilitated discussion. And thanks to explanations being provided in advance,
there was also a drop in the number of questions aimed at just getting familiarized with anagenda.
Morikawa Yes, because there used to be questions about little details such as figures. So, I
feel that the discussions have moved up a level.
Kamiguchi When discussions are centered on individual projects or transactions, theperson putting forward the proposal inevitably tries to defend it, so the directors tend to
only ask detailed questions for them to get familiarized with the proposal. But if the themeis raising corporate value, the questions and discussions change. And I feel that this is when
big ideas for transforming the company get generated.

114

115

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Establishing a management structure and a governance approach that are
best suited and most appropriate for corporate value maximization
Tsuneishi To increase corporate value in a sustainable way, it will be critical to get all theemployees on the same page and moving in that direction, and to magnify that passion
across the entire corporate group. And of course, unless employees are happy, the company
will never be great.
Imai Corporate value is the product of three elements: strategy (including the businessportfolio), the individual competencies of employees, and the company’s culture, and among
these elements, fostering a corporate culture that enables each employee to demonstrate
their capabilities is crucial. The world has become so complex that it’s difficult to predict
what’s going to happen next. So, what’s required of companies is organizational agility, or
the ability of employees to adapt. That adaptability defines the corporate culture. And only
when it is embedded in the corporate culture can the company be trusted. I’m looking
forward to discussing with Mr. Tsuneishi how to nurture such a corporate culture andmaximize corporate value.
Tsuneishi Agreed. The objective of maximizing corporate value is shared by every company
in the world.
Imai We’ve also made changes in areas such as compensation, but with non-financial
indicators becoming increasingly important, more discussion will be needed. And thebiggest issue to be tackled is CEO succession, which will be discussed by the Nomination
Advisory Committee. We intend to allocate plenty of time to these discussions, considering
the unique characteristics of Resonac.
Tsuneishi The main tasks of the Nomination Advisory Committee members are to propose
the selection or dismissal of the CEO, prepare nomination proposals for the next Board
members, and check the effectiveness of the succession plan. Above all, having the authority to propose the selection or dismissal of the CEO means possessing one of the largest andmost important powers that a Board member can have. I therefore view discussion as to whom to entrust with that power asvital. Since nomination advisory committees have the power topropose the selection and dismissal of the CEO, it is the norm

When discussions are centered on individual projects ortransactions, the person putting forward the proposal
inevitably tries to defend it, so the directors tend to only ask
questions to get confirmation of the details. But if the themeis raising corporate value, the questions and discussions(Kamiguchi)change.

Organizational agility, or the ability of employees to adapt, iswhat defines corporate culture. And only when that adaptability is embedded in the corporate culture can the company
be trusted. I’m therefore looking forward to discussing how
to nurture such a corporate culture and maximize corporate
value.

(Imai)

internationally for the CEO not to be a member of such committees. However, President and CEO Takahashi is currently amember of the Nominating Advisory Committee. Resonac has
just undergone a major integration and a “second inauguration,”and I therefore view the composition of the Nomination Advisory Committee, including the
CEO succession plan, as appropriate for “now.” Every company is different, and it’s important for firms to choose the management structure and governance approach that are best
suited and most appropriate for them. That being said, the best way to position for growthinevitably changes over time, so I believe that changes should be made as appropriate in
response to the conditions at the time.
Imai This year we’ve deployed SAP Success Factors to make our human resources visible.
To start with, we’re having potential successors identified for all manager positions inJapan. Business divisions will confirm their respective lists of candidates, and finally all theManagement Committee members will review the succession plans for key positions. We’regoing to do the same for overseas personnel, and will be introducing global grading next
year. We are looking to accelerate the establishment of systems and develop talent in an
organized fashion to expedite the sustainable growth of our businesses. Regarding the CEO,it’s as Mr. Tsuneishi said earlier. I’d like the Nomination Advisory Committee to scrutinize
the succession planning process for the succession of officers other than the CEO.
Tsuneishi I doubt there’s a perfect textbook on how governance structures and advisorycommittees for areas like nomination and compensation should be organized. Increasing
corporate value as the cornerstone of growth requires thought to be given to the question ofwhat the optimal approach to take now to deliver results over the short, medium, and longterm would be. This applies to all companies, not just Resonac. This means it’s also important to evaluate and reconsider, as appropriate, Resonac’s current governance approach andadvisory committee structure, as well as the style of having an outside director chair the
Nomination Advisory Committee and the Remuneration Advisory Committee. Furthermore,
it’s crucial to always be conscious of what would be most appropriate in the context of theindividual company’s situation.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Morikawa It’s the same for executives, the Board of Directors, and employees in thateveryone’s aiming for a goal and aiming to get to the top. We’re all running together. I’d likepeople to look at Resonac from that perspective, but a variety of viewpoints are needed, so I
think it’s important to combine the views of people outside the company, which reflect theirown experience up to now, with those of people inside the company.

I feel that we developed a shared understanding that therole of the Board of Directors is to verify whether measures
proposed by the execution side are viable in terms of raising
corporate value. The key question here is how to develop(Morikawa)capabilities for verifying viability.

What sort of relationships between the Board of Directors and the executionside, and with employees, will Resonac need going forward?
Morikawa Resonac was officially launched this year, 2023, though the effective integration
took place last year. At the same time, we began discussions with the outside directors ontransforming the Board of Directors. This led to the determination of a general direction for
the role that the Board, centered on the outside directors, should play in increasing corporate value. To borrow a word Mr. Tsuneishi used, I feel that we developed a shared understanding that the role of the Board is to verify whether measures proposed by the execution
side are viable in terms of raising corporate value. The key question here is how to develop
capabilities for verifying viability. I think improving verification capabilities, including theability to identify hidden risks, will prove to be a considerable challenge.
Tsuneishi Indeed. With every merger or acquisition plan, there’s always a wonderful
growth plan, but when you actually start taking action, things often don’t go according toplan. When this happens, it’s imperative to examine what went wrong and quickly andcorrectly adjust your course.
Morikawa Yes, you need to take a look at why the deviation from the plan occurred, andwhether the verification carried out by the executive side was adequate.
Tsuneishi If further deviation occurs even after verification by the execution side, it would
beg the question of whether there’s something amiss on the execution side. The executives
will find themselves under pressure, being asked what on earth their previous explanationsand verifications were all about. The outside directors could havesome harsh words for them.
Morikawa But by eliciting various opinions in this way, both theexecution side and the Board of Directors will be raising the barfor one another.

I doubt there’s a perfect textbook on how nomination advisory committees and governance structures should be organized. This means it’s also important to evaluate and reconsider, as appropriate, Resonac’s current governanceapproach and style. Furthermore, it’s crucial to always be
conscious of what would be most appropriate in the context(Tsuneishi)of the individual company’s situation.

Kamiguchi Regarding issues that need to be addressed in the
future, such as agenda reform and communication, the execution side will first consider them carefully, after which measures
will probably be taken through a process of trial and error with
input from Mr. Tsuneishi and the other outside directors. So, the first thing that needs to bedone is determine an approach and structure for the execution side.
Imai As our operating environment and the management issues facing us change, what weneed to constantly be thinking about is what is required of us as a management team not in
the future, but right now. This means looking at things like who our directors and officers
are, and asking ourselves whether the current line-up is suitable. I also want to make theBoard a forum for testing out our reform processes in an agile manner through dialogue
with our various stakeholders. We will continue striving to enhance our value as an enterprise through co-creation with an even broader range of stakeholders and fulfilment of our
purpose of contributing to the protection of the earth’s environment and to society. I therefore hope that Board meetings will see plenty of unreserved discussion.
Tsuneishi As for nurturing corporate culture, I think it will be good if we can take the best
aspects of the cultures of pre-merger Showa Denko and Hitachi Chemical and combine theminto one. Also, I often hear that the engagement levels of all employees are being monitored,
and that they are being gauged in terms of numerical scores. However, while the numbers
coming back from engagement surveys are important, I also think that ascertaining engagement by asking how enthusiastic employees are and what their level of commitment is will
ultimately translate into better performance. Fostering a great corporate culture andemployee motivation will be critical for the success of this “second inauguration.” It will also
be important to show all employees what happens when performance improves and what
incentives are on offer, as this should substantially increase the likelihood of all employees
moving in the same direction.
Morikawa The Board of Directors mustn’t be allowed to backslide into ritual and ceremony,though conversely, it would be a problem if it became too powerful a presence. I’d like it to
be a presence that runs together with the execution side, and I intend to carry on thinking
hard about how to make this happen.

116

117

RESONAC REPORT 2023

Directors

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

(As of June 30, 2023)

Kohei Morikawa

Hidehito Takahashi

January 2016

Representative Director; Chairman of the Board
Attendance at BoD meetings in 2022: 14/14

Representative Director; President and Chief Executive Officer (CEO)Attendance at BoD meetings in 2022: 14/14

January 2017
March 2017
July
2017

April

Joined Showa Denko K.K. (currently the Company)

April

1986

Corporate Officer; General Manager,
Electronic Chemicals Division

Joined The Mitsubishi Bank, Ltd. (currently
MUFG Bank, Ltd.)

January 2020

February 2002

Joined GE Japan Holding Corporation(currently GE Japan Inc.) as General Manager, Business Development Department

June

October 2004

Asia Pacific President, GE Sensing &Inspection Technologies, GE Japan Holding
Corporation

October 2008

Joined Silicones Business, Momentive
Performance Materials Japan Inc. as
President & CEO

January 2013

Joined GKN Driveline Japan plc as
President and CEO

October 2015

Joined Showa Denko K.K. (currently theCompany), Senior Corporate Fellow

1982

January 2013
January 2016

Managing Corporate Officer; Chief
Technology Officer (CTO)

March 2016

Director; Managing Corporate Officer;
Chief Technology Officer (CTO)

January 2017

Representative Director; President andChief Executive Officer (CEO)January 2022

Representative Director; Chairman of theBoard (incumbent)(up to the present)

2020

January 2022

January 2023

Corporate Officer; General Manager,
Corporate Strategy Department
Managing Corporate Officer
Director; Managing Corporate Officer
Director; Managing Corporate Officer;
General Manager, Carbon Division
Director; Managing Corporate Officer;
Director; Managing Corporate Officer; Chief
Strategy Officer (CSO)
Director, Showa Denko Materials Co., Ltd. (currently Resonac Corporation)
Representative Director; President and Chief
Executive Officer (CEO), Showa Denko K.K.
(currently the Company) (incumbent)
Director, President and Chief Executive
Officer (CEO), Showa Denko Materials Co.,
Ltd. (currently Resonac Corporation)
Representative Director, President andChief Executive Officer (CEO), Resonac
Corporation (incumbent)(up to the present)

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Directors (As of June 30, 2023)
Keiichi Kamiguchi

Tomomitsu Maoka

Kiyoshi Nishioka

Noriko Morikawa

Director

Director
Attendance at BoD meetings in 2022: 11/11

Outside Director
Attendance at BoD meetings in 2022: 14/14

Outside Director
Attendance at BoD meetings in 2022: 14/14

April

1999

Joined A.T. Kearney, Inc.

April

1977

April

April

2005

Joined Infineon Technologies Japan K.K. as
General Manager in charge of Strategy in Japan

April

1997 Plant Manager, Thick Steel Plate Plant, Kimitsu
Works, Nippon Steel Corporation (General Manager)

September 1991 Joined Arthur AndersenMay

2009 General Manager, Industrial & Chip Card Business
Headquarters, Infineon Technologies Japan K.K.

April

2001

March

1995 Joined Motorola Inc.

October2010 General Manager, Industrial & Multi Market
Business Headquarters, Infineon Technologies Japan K.K.

June

2005 Director; General Manager, Technology Development
Planning Department, Technology Development
Headquarters, Nippon Steel Corporation

March

2005 Director, in charge of accounting and finance;
General Manager, Accounting and Finance
Headquarters in Japan, Motorola Inc.

June

2006

Corporate Officer; General Manager,
Technology Development Planning
Department, Technology Development
Headquarters, Nippon Steel CorporationJune

2009 Joined Bosch Corporation

August 2010 Director; Vice President, in charge of Administrative
Headquarters, Bosch Corporation
June

2018 Outside Director, CHORI CO., LTD.

June

2009

Counselor, Nippon Steel Corporation

March

November 2012

Special Professor, Research Center for Advanced
Science and Technology, The University of Tokyo

2020 Outside Director, Showa Denko K.K. (currently theCompany) (incumbent)

June

April

Adviser, Research Center for Advanced
Science and Technology, The University ofTokyo (incumbent)

April
1983 Joined Showa Denko K.K. (currently the Company)
September 2008 General Manager, Corporate Strategy Office
January 2011 Corporate Officer; General Manager, Corporate Strategy Office
January 2013 Corporate Officer; General Manager, Corporate
Strategy Department
January 2015 Corporate Officer
January 2017 Corporate Officer; Chief Risk Management Officer (CRO)
March 2017 Director; Corporate Officer; Chief Risk
Management Officer (CRO)
March 2020 Corporate Officer; Chief Risk Management Officer (CRO)
January 2021 Managing Corporate Officer; Chief Risk
Management Officer (CRO) (incumbent)
January 2022 Managing Corporate Officer; Chief Risk Management Officer (CRO),
Showa Denko Materials Co., Ltd. (currently Resonac Corporation)
January 2023 Representative Director; Chief Risk Management
Officer (CRO), Resonac Corporation (incumbent)
March 2023 Director; Managing Corporate Officer of theCompany (incumbent)(up to the present)

Hideki Somemiya
Director
Attendance at BoD meetings in 2022: 11/11
April

1990

June

1997

May

1999

January 2007
July

2009

July

2015

May
June

2016
2016

December 2016
June

2019

July

2020

March

2021

October 2021
January 2022
January 2022
March 2022
January 2023

Joined Nomura Research Institute, Ltd., and was
assigned to the Office for Research in Corporate Finance
Joined Nomura Securities Co., Ltd., as Deputy
Head Researcher, Institute for Financial Research
Joined Merrill Lynch Japan Securities Co., Ltd. (currently BofA Securities
Japan Co., Ltd.), and was assigned to the investment bank section
General Manager, Telecommunication & Media
Technology Group, Merrill Lynch Japan Securities Co., Ltd.
Joined JPMorgan Securities Japan Co., Ltd., as Managing
Director, Technology, Media & Telecommunication Group,
Investment Banking Division
Joined Sony Corporation (currently Sony Group Corporation),as Vice President Attached to CFO, Chief Financial Strategist
Temporarily transferred to Sony Semiconductor Solutions Corporation
General Manager, Corporate Strategy Headquarters,
Sony Semiconductor Solutions Corporation
General Manager, Planning & Administration Headquarters(CFO), Sony Semiconductor Solutions Corporation
General Manager, System Solution Division, Sony
Semiconductor Solutions Corporation
Corporate Officer in charge of the solution business,
Sony Semiconductor Solutions Corporation
Officer Attached to CFO in charge of special
assignments, Sony Corporation
Joined Showa Denko K.K. (currently the Company) as
General Manager, Preparation Office for Group CFOManaging Corporate Officer; Chief Financial Officer (CFO)Managing Corporate Officer; Chief Financial Officer (CFO), Showa
Denko Materials Co., Ltd. (currently Resonac Corporation)
Director; Managing Corporate Officer; Chief Financial Officer (CFO),
Showa Denko K.K. (currently the Company) (incumbent)
Director: Chief Financial Officer (CFO), Resonac Corporation (incumbent)(up to the present)

December 2011 Joined Lenovo Japan Corporation as
Lenovo/NEC Project Director
April2012 Strategy Director, Lenovo Japan Corporation

April

2013 Commercial Operations Director, Lenovo
Japan Corporation

December 2013 Joined Renesas Electronics Corporation as
General Manager, Corporate Planning,
Planning Headquarters

2017

December 2015 Corporate Officer; General Manager, Corporate
Planning, Renesas Electronics Corporation

Joined Nippon Steel Corporation

General Manager, Thick Steel Plate Sales
Department, Head Office, Nippon Steel Corporation

Visiting Professor, Ehime University (incumbent)

February 2016 Corporate Officer; Deputy General Manager, Second
Solution Business Headquarters, Renesas
Electronics Corporation

March 2018

Outside Director, Showa Denko K.K.
(currently the Company) (incumbent)

March2017 Corporate Officer; China Business Headquarters,
Renesas Electronics Corporation

July

2019

Representative Director, VCRI Co., Ltd.
(incumbent)

April2019 Corporate Officer; Deputy General Manager, Production
Headquarters, Renesas Electronics Corporation

May

2022

Research Adviser, Institute of Industrial Science,
The University of Tokyo (incumbent)(up to the present)

August 2019 Corporate Officer; Deputy General Manager,
Automotive Solution Business Headquarters,
Renesas Electronics Corporation
October 2021 Joined Showa Denko K.K. (currently theCompany) as General Manager, Preparation Officefor Group CSO
January 2022 Managing Corporate Officer; Chief Strategy
Officer (CSO)
January 2022 Managing Corporate Officer; Chief Strategy
Officer (CSO), Showa Denko Materials Co.,
Ltd. (currently Resonac Corporation)
March 2022

January 2023

Director; Managing Corporate Officer; Chief
Strategy Officer (CSO), Showa Denko K.K.
(currently the Company) (incumbent)
Director; Chief Strategy Officer (CSO),
Resonac Corporation (incumbent)

1981 Joined CHORI CO., LTD.

August 1988 Joined Daiwa Securities America Inc.

2020

Outside Director, Mitsubishi Heavy Industries, Ltd.

October 2020

Advisory Board member, Dai-ichi Life
Holdings, Inc. (incumbent)

June

Outside Director and Audit Committee Member,
Mitsubishi Heavy Industries, Ltd. (incumbent)(up to the present)

2021

Tetsuo Tsuneishi
Outside Director (Newly appointed)
April

1976

Joined Tokyo Electron Laboratories, Inc.
(currently Tokyo Electron Ltd.)

Kozo Isshiki

June

1987

General Manager, KLA Department, Tokyo
Electron Ltd.

Outside Director
Attendance at BoD meetings in 2022: 14/14

October 1990

General Manager, Semiconductor
Production Equipment 3rd Division, Tokyo
Electron Ltd.

July

1969 Joined Japan Development Bank (currently
Development Bank of Japan Inc.)

April

1992

General Manager, Overseas Marketing
Headquarters, Tokyo Electron Ltd.

April

1993 General Manager, General Affairs Department,
Japan Development Bank

June

1992

Corporate Director, Tokyo Electron Ltd.

June

1996

Executive Managing Director, Tokyo Electron Ltd.

May

1994 Executive Secretary, Japan Development Bank

June

1998

Representative Director; Executive
Managing Director, Tokyo Electron Ltd.

June

1996 General Manager, Industry & Technology
Department, Japan Development Bank

June

2003

May

1998 General Manager, Human Resources
Department, Japan Development Bank

Corporate Director; Senior Executive Vice
President, Tokyo Electron Ltd.

June

2013

June

2001 Executive Director, Development Bank of Japan, Inc.

Corporate Director, Tokyo Electron Device
Ltd. (incumbent)

June

2015

Corporate Director, Chairman of the Boardof Directors (part-time), Tokyo Electron Ltd.

June

2017

Representative Director; Chairman of theBoard of Directors(up to the present)May

2005 Chairman of the Board, Technology Alliance Investment, Ltd.

July

2007

External Director, Fukoku Mutual Life Insurance Company

June

2009

Standing Corporate Auditor (External),
Isuzu Motors Limited

June

2020

Corporate Director; Chairman of the Board of Directors

June

2015

Director, Medical System Network Co., Ltd.
(Outside Director) (incumbent)

May

2022

Vice Chairman, The Japan Association of
Corporate Directors (incumbent)

January 2019

External Corporate Auditor, Hirosaki
Lifescience Innovation, Inc.

March 2023

Outside Director of the Company (incumbent)

March 2019

Outside Director, Showa Denko K.K. (currently
the Company) (incumbent)(up to the present)(up to the present)

118

119

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Audit & Supervisory Board Members and Corporate Officers(As of June 30, 2023)

Toshiharu Kato
Audit & Supervisory Board Member
Attendance at BoD meetings in 2022: 14/14
Attendance at A&S Board meetings: 13/13
April

1981

Joined Showa Aluminum Corporation (currently the Company)

August 2014

General Manager, Finance & Accounting,Showa Denko K.K. (currently the Company)

January 2016

Corporate Officer; General Manager, Finance & Accounting Department

January 2017

Corporate Officer; Chief Financial Officer (CFO);
General Manager, Finance & Accounting Department

March 2017

Director; Corporate Officer, Chief Financial Officer (CFO);
General Manager, Finance & Accounting Department

January 2018

Director; Corporate Officer, Chief Financial Officer(CFO) in charge of Finance & Accounting andInformation Systems departments

January 2019

Director, Attached to President

March 2019

Audit & Supervisory Board Member (incumbent)

January 2023

Audit & Supervisory Board Member,Resonac Corporation (incumbent)(up to the present)

Jun Tanaka
Audit & Supervisory Board Member
Attendance at BoD meetings in 2022: 14/14
Attendance at A&S Board meetings: 13/13
April

1982 Joined Showa Denko K.K. (currently the Company)

January 2007

General Manager, Development Department,
Chemicals Division, Chemicals Sector

January 2011

Deputy General Manager, Advanced
Battery Materials Department

January 2012 Corporate Fellow; Deputy General Manager,
Advanced Battery Materials Department
January 2013

Corporate Officer; General Manager,
Advanced Battery Materials Department

January 2017Managing Corporate Officer; Chief Technology Officer (CTO)

March2017 Director; Managing Corporate Officer; Chief Technology Officer (CTO)

January 2019 Director; Managing Corporate Officer, Chief Technology
Officer (CTO) in charge of Advanced Battery Materials
Division, Institute for Integrated Product Development,
Advanced Technology Laboratory, Corporate R&D andIntellectual Property Departments
January 2020
March

2019

January 2023

Director, Attached to President
Audit & Supervisory Board Member (incumbent)
Audit & Supervisory Board Member,Resonac Corporation (incumbent)(up to the present)

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Audit & Supervisory Board Members and Corporate Officers (As of June 30, 2023)
Kiyomi Saito

Yasuyuki Miyasaka

President

Outside Member
Attendance at BoD meetings in 2022: 14/14
Attendance at A&S Board meetings: 13/13

Outside Member
Attendance at BoD meetings in 2022: 14/14
Attendance at A&S Board meetings: 13/13

Hidehito Takahashi Chief Executive Officer (CEO)Managing

Keiichi Kamiguchi

April

November 1975

1973

Joined Nikkei Inc.

Joined Tohmatsu & Aoki (currently Deloitte
Touche Tohmatsu LLC)

Chief Risk Management Officer (CRO)

Corporate
Officers

Hiroyuki Yamashita General Manager, Electronics Business Headquarters

September 1975

Joined Sony Corporation (currently Sony Group Corporation)

August 1984

Joined Morgan Stanley Investment Bank

March 1980

Registered as a certified public accountant (CPA)

Hideki Somemiya

Chief Financial Officer (CFO)

January 1990

Executive Director, Morgan Stanley Investment Bank

June

April

2000

Director; President, JBond Co., Ltd. (currently
JBond Totan Securities Co., Ltd.)

Partner, Deloitte Touche Tohmatsu (currently
Deloitte Touche Tohmatsu LLC)

Tomomitsu Maoka

Chief Strategy Officer (CSO)

August 1993

June

2005

Outside Corporate Auditor, Tri-Wall Limited(currently Tri-Wall Japan Co., Ltd.)

Resident at the Singapore Office, Deloitte &ToucheOctober 2010

Mitsuo Katayose

General Manager, Advanced Functional Materials
Business Headquarters

June

General Manager, Risk Management & Examination Office (International Financial ReportingStandards), Deloitte Touche Tohmatsu LLC
Established Yasuyuki Miyasaka CPA Office, andbecame President of the CPA Office (incumbent)

Shigeru Fujita

Chief Marketing Officer (CMO)

Yoshito Ishii

General Manager, Mobility Business Headquarters

Nori Imai

Chief Human Resource Officer (CHRO)

Masami Tobito

Chief Operations, Manufacturing and Engineering
Officer (CMEO)
Chief Quality Officer (CQO)

Hideki Shibata

Chief Digital Officer (CDO)

2006

Outside Corporate Auditor, Astellas Pharma Inc.

March 2012

Audit & Supervisory Board Member, Showa
Denko K.K. (currently the Company) (incumbent)

June

2012

Outside Director, Toshiba Corporation

June

2013

Outside Director, Japan Post Insurance Co., Ltd.

June

2015

Outside Director, Kajima Corporation (incumbent)

June

2021

Outside Director, Kadoya Sesame Mills
Incorporated (incumbent)
Representative Director, JBond Totan Securities
Co., Ltd. (incumbent)

October 2021

(up to the present)

1990

July

2017

June

2018

Corporate
Officers

Outside Director, ITOCHUSHOKUHIN Co., Ltd.
(incumbent)
Outside Corporate Auditor, Board of Corporate
Auditors, Santen Pharmaceutical Co., Ltd.

March 2022

Audit & Supervisory Board Member, Showa
Denko K.K. (currently the Company) (incumbent)(up to the present)

Masako Yajima
Outside Member
Attendance at BoD meetings in 2022: 14/14
Attendance at A&S Board meetings: 13/13
April

1994

Registered at Dai-Ichi Tokyo Bar Association
Joined Nishimura Law Office (currently Nishimura & Asahi)

March 2001
April

2004

Assistant Professor, Law School, Keio University
Partner, Nishimura & Tokiwa (currently Nishimura & Asahi) (incumbent)

April

2007

Executive
Officers

Taichi Nagai

Oita Complex Representative, Olefins & Derivatives
Business Unit

Hirotsugu Fukuda

General Manager, Petrochemicals Division

Hiroyuki Eda

General Manager, Aluminum Specialty Components
Business Unit, Advanced Functional Materials Business
Headquarters

Makoto Takeda

General Manager, Graphite Business Unit

Katsuyuki Tsuji

Deputy General Manager, Mobility Business Headquarters and General Manager, Advanced Battery Materials
Business Unit

Atsushi Doi

General Manager, Legal Department

Takuya Hirano

Deputy General Manager, Mobility Business Headquarters

Registered as a lawyer in the State of New York

January 2006

March 2020

Masato Fukushima Chief Technology Officer (CTO)

Professor, Law School, Keio University (incumbent)
Audit & Supervisory Board Member, Showa
Denko K.K. (currently the Company) (incumbent)(up to the present)

120

121

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Skill Matrix
The Company has prepared a skill matrix detailing the expertise and experience of directors and Audit & Supervisory Board members. The skills required of directors and Audit & Supervisory
Board members were identified based on the following three perspectives.

Three Perspectives for Skill Identification
Resonac’s Corporate Philosophy

Medium- to long-term strategy to realize Corporate Philosophy

The Resonac Group has set its Purpose (the meaning of
its existence) as “Change society through the power ofchemistry,” and has also set four Values which theGroup’s employees should consider important as “Passionate & Results-Driven,” “Agile & Flexible,” “Open Minds& Open Connections,” and “Solid Vision & Solid Integrity.”
The Group has defined combination of these Purpose andValues as the Group’s Corporate Philosophy. Under thisCorporate Philosophy, the Group strives to solve social
issues through its business activities.

The Resonac Group has set its management strategy as theLong-term Vision, periodically updates this Long-term Vision, andexecutes business portfolio reform. The Group has classified its
businesses into five segments, namely, Semiconductor andElectronic Materials, Mobility, Chemicals, Innovation Enabling
Materials, and Others. The Group expects that the markets for the
Semiconductor and Electronic Materials segment and the Mobility
segment will grow further, the Chemicals segment will make profit
stably, and the Innovation Enabling Materials segment will support technical development in all businesses of the Group. We
shall realize sustainable growth of the Group by making each ofthese business segments fill its role and achieve its target EBITDA.

Name

Directors

Inside /OutsideTerm of office(Years)Kohei Morikawa

7

Hidehito Takahashi

6

Keiichi Kamiguchi

3

Hideki Somemiya

1

Tomomitsu Maoka
Kiyoshi Nishioka

Global business

Innovation and fusionof technology

ESG andsustainability

Portfolio
management

Finance / accounting

Personnel management /development

Legal / risk
management

8

4

6

8

5

5

3

4

2

2

2

3

1

2

5

Kozo Isshiki

Outside4

Noriko Morikawa

Outside3

Tetsuo Tsuneishi

Outside-Toshiharu Kato

4

Jun Tanaka

3

Kiyomi Saito

Outside11

Masako Yajima

Outside3

Yasuyuki Miyasaka

Outside1

Total

To enhance the effectiveness of the Group’s Corporate Philosophy and medium- to long-term strategy
based on the Corporate Philosophy, it will be necessary for the Board of Directors to have lively discussion and quick decision making about “the way tocompete on the world stage,” “contribution to SDGs,”“well-disciplined business portfolio reform,” “innovation including technical synergy,” and “humanresource development.”

1
Outside

Total
Audit & Supervisory
Board Members

Major Issues to be discussed at the Board of
Directors’ meetings

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

RESONAC REPORT 2023

Messages from Outside Directors and Outside Members of Audit & Supervisory Board

Kiyoshi Nishioka

Messages from Outside Directors

Kozo Isshiki

Noriko Morikawa

For Mr. Tsuneishi’s message, please see “Special Feature” on page 113.

Kiyomi Saito

Masako Yajima

Yasuyuki Miyasaka

Messages from Outside Members of Audit & Supervisory Board

Kiyoshi Nishioka Outside Director

Kiyomi Saito Outside Member of Audit & Supervisory Board

I conduct research and development at a university on technologies related to, uses of, and practical applications of various base materials and composites. I am also endeavoring to improve theproduction engineering capabilities of Japanese manufacturing companies through the use of IoTtechnology, as well as working on human resource development, and I hope to leverage theinsights and experience I have gained from these activities to contribute to the advancement of the
new Resonac.

I founded an electronic trading company for Japanese government bonds and grew it into thedominant player in the repo market. In addition to performing my duties as an Audit & Supervisory
Board member, I seek to repurpose the skills I have honed running a start-up, albeit one in adifferent industry, to benefit the new Resonac as it moves forward from its so-called second
inauguration.

Kozo Isshiki Outside Director
In the world of finance, I have experience of long-term financing, and also of launching new technology companies through an investment fund. In the industrial field, I handle the chemical industry
and chemical companies, which has deepened my knowledge of various areas. In this era ofincredible transformation of the structure of industry across the globe, I will be doing whatever I
can to support Resonac as it aims to become the top functional chemical manufacturer.

Noriko Morikawa Outside Director
I wish to deploy the knowledge I have gained from my experience of management and overseas
assignments at Japanese and foreign global companies to help Resonac grow to become a company
that can compete in a dynamically changing world. To that end, I intend to help the company invest
in diverse human resources and promote a sustainable portfolio strategy.

Masako Yajima Outside Member of Audit & Supervisory Board
As an attorney at a law firm that focuses on corporate law, I handle cases related to crisis management and disputes. At Resonac, besides conducting legality audits, I will strive to contributeproactively by leveraging my knowledge and experience of preventative jurisprudence to provide
advice on preventing issues from escalating into legal disputes.

Yasuyuki Miyasaka Outside Member of Audit & Supervisory Board
In recent years, the company has been championing portfolio management and pursuing a select-and-focus approach to business. As such, assessing whether new business investments areappropriate is hugely important. From my standpoint as a specialist, I hope to provide usefuladvice on how Resonac can earn sufficient returns that exceed its cost of capital.

122

RESONAC REPORT 2023

Corporate GovernancePurpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Web

Ratio of Outside Directors

Basic Policies
The Company works to increase its corporate value and expand profit for both the company
and its shareholders by collaborating appropriately with stakeholders, including shareholders in line with its Corporate Governance Basic Policies.
We are committed to promoting our corporate governance to ensure the soundness,
effectiveness, and transparency of management and to continue enhancing our corporate
value, thereby earning more trust and receiving a higher rating from society. We describe
our efforts made to this end in our Corporate Governance Report, while fostering constructive dialogue with investors and shareholders.

44.4%
Ratio of Outside Officers(Directors, Audit & Supervisory
Board members)

Board of Directors

 e revised the remuneration system forW
directors and corporate officers. The
revised system increases the degree towhich remuneration is linked to the
management indicators and initiatives
defined in the Long-term Vision.

 e established a frameW
work to audit and oversee
the entire group throughcollaboration between the
Audit & Supervisory Board
members of both theholding and operatingcompanies.

P113

 he Board of Directors of theTholding company has assumed
the responsibility of overseeing
the entire group by exercising its
supervisory role over the Chief X
Officers (CXOs) and the business
unit (BU) heads.

Chairperson

50.0%

Board of Directors
Execution of duties

Consultation /Nomination Advisory Committee
reporting

Remuneration Advisory Committee

Audit & Supervisory
Board members

Consultation / reporting

President (CEO)Audit &
Supervisory Board

Accounting
auditorRisk Management Committee
Compliance Committee
Sustainability Promotion Council, etc.

44.4%
Ratio of Female Officers

Audit & Supervisory Board members

Chairperson

Inside full-time Audit &Supervisory Board member

Meeting
frequency

Once or twice a month

Meeting
frequency

3 or 4 times a year

Remuneration Advisory Committee

Chairperson

Meeting
frequency

Once or twice a year

(Directors, Audit & Supervisory
Board members)

Management Committee

LegendOperating Company (Resonac)

Once or twice a month

Chairperson Outside director

Internal Audit
Department

Management control

Meeting
frequency

Chairperson Outside director

Management Committee

Chief X Officers (CXOs)

Inside director responsible
for business execution

Nomination Advisory Committee

Chairperson

Auditing

Chairperson

Priority discussion topics in fiscal 2022: Nomination of candidates forchief executive officer and other management positions

Shareholders’ meeting
Decision-making andsupervision

Male Female

Audit & Supervisory Board

Ratio of Directors Not in
Charge of Business
Execution

Corporate governance structure (As of June 30, 2023)

Outside director and
Audit & Supervisory
Board member

Inside Audit &Supervisory
Board member

Insidedirector

Chairperson

Review of 2022

Resonac Holdings

123

Auditing
Reporting
Cooperation

21.4%

President, CXOs, and division
heads whose presence on thecommittee is deemed necessary
by the president

Chairperson President
Meeting
frequency

Twice a month inprinciple

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Corporate GovernanceEvaluation of the Board of Directors’ EffectivenessEvaluation method
Regarding the effectiveness of the Board of Directors in 2022, we conducted a survey inDecember 2022 in which the directors and Audit & Supervisory Board members answeredquestions and made free comments. Then, in March 2023, the Board of Directors held ameeting for all directors and Audit & Supervisory Board members to discuss the collected
self-evaluation results and the board reform deliberated upon during the opinion exchange
meetings among directors and corporate officers held in June and September 2022, create asummary of the evaluation results for fiscal 2022, and formulate an action plan for fiscal 2023.
To ensure the objectivity of the survey and further boost the effectiveness of the Board of
Directors, the survey is conducted, and the results are tabulated by an external organization.
Evaluation process of the Board of Directors’ effectiveness1. Self-evaluation

2. Board-levelevaluation
3. Disclosure ofsummarizedevaluation results

Those subject
to assessment

Directors, Audit & Supervisory Board members

MethodAn anonymous questionnaire survey conducted by an external organization

MethodDiscussions within the Board of Directors based on views shared during opinion
exchange meetings and other interactions among directors and corporate officers

Details

Evaluation methodologies, evaluation results, and overview of action plan

MethodCorporate Governance Report

Evaluation results
The evaluation results have determined that, in Board of Directors’ meetings, highly effective
Board members with a broad perspective and values reflecting a variety of experiences andexpertise are engaged in discussions that help to increase corporate value. Handouts andexplanations about agendas are standardized and provided beforehand to encourage themembers to take part in vigorous and constructive discussions and allow sufficient time fordiscussions. With regard to the action plan for 2022, which was made based on the results ofevaluation of overall effectiveness of the Board of Directors for 2021, members of the Boardof Directors and Audit & Supervisory Board have confirmed facts and issues as follows.
Concrete efforts were launched to increase efficiency of the Board of Directors by aiming to secure enough timeand opportunities for discussion.
Discussions began concerning the ideal state of the Board of Directors, and a common understanding was reached
as to necessary steps.

Our execution plan for fiscal 2023 will focus on the following:
Take specific measures to accelerate separation of execution and supervision
Set agenda for the Board of Directors in the future based on its objectives and roles
Secure additional communication opportunities and improve the current method
Make a new system for sharing information and improve the current method

Initiatives to harness the insights of outside officers
During the period, we held opinion exchange meetings for outside officers (remuneration for
directors and corporate officers was discussed at the meeting in May 2022), distinct fromthe activities of the Remuneration Advisory Committee. We are dedicated to sharing anddiscussing the latest trends concerning other companies, which includes integrating recent
executive remuneration regulations, compensation governance, and sustainability indicators into compensation considerations.

Nomination Process
Approach to nomination
The Company selects candidates for positions as director based on the criteria for knowledge, insight, fair judgment, ability to take actions, practical experience, and other requirements for directors. For the selection of management, individual performance as well as
corporate performance are also taken into consideration. Candidate Audit & Supervisory
Board members must possess sufficient knowledge, experience, and capabilities to fulfill
their obligations, including an appropriate level of expertise in the areas of finance andaccounting.
The Nomination Advisory Committee deliberates on the nomination of candidates for the
aforementioned positions and submits recommendations to the Board of Directors. The
committee is an advisory board to the Board of Directors, and more than half of its members
are outside directors designated as independent directors.
Dismissal of the chief executive officer and other members of management
In the event it is revealed that any of the directors, including the chief executive officer, has
substantially damaged the corporate value of the Company or does not meet the selection
criteria for directors, the Nomination Advisory Committee will discuss whether the person
is still suitable for the position and report the results to the Board of Directors, which will
make the final decision.
Implementing a succession plan
The Company is taking Groupwide and global steps to cultivate the future leaders who will
be necessary to advancing its growth strategies.
Corporate officers are responsible for selecting potential successors, with due consideration paid to diversity, and for formulating development plans. These plans are discussed
and confirmed by the Nomination Advisory Committee based on the Corporate Governance
Basic Policies. The Board of Directors monitors all succession planning initiatives based onreports from the Nomination Advisory Committee.
Composition of the Nomination Advisory Committee
Chairman: Tetsuo Tsuneishi(Outside Director)

Members: Kiyoshi Nishioka, Kozo Isshiki and Noriko Morikawa (Outside Directors)
Kohei Morikawa and Hidehito Takahashi (Inside Directors)

124

125

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Corporate GovernanceMatters discussed, etc.

Composition of the Remuneration Advisory Committee

Time of meeting and matters discussed

Participants

September 2022
Discussed the Nomination Advisory Committee’s structure and direction, and received an update on theimplementation status on the company-wide talent review

All members

October 2022
Discussed the structure of corporate officers and the Board of Directors for fiscal 2023

All members

November 2022
Discussed the structure of Board of Directors for fiscal 2023

All members

Chairman: Kiyoshi Nishioka (Outside Director)
Members: Kozo Isshiki, Noriko Morikawa and Tetsuo Tsuneishi (Outside Directors)
Hidehito Takahashi and Hideki Somemiya (Inside Directors)

Primary roles and authority of the Remuneration Advisory Committee

With the exception of Mr. Tsuneishi, who assumed office in March 2023, all the aforementioned members, along with Mr. Oshima, a former outside director and Chairman of the Committee, were present at every meeting.

Remuneration
Basic policies on remuneration
The policy for determining the remuneration for respective directors of the Company is established by the Board of Directors after the Remuneration Advisory Committee, comprising amajority of outside and independent officers, deliberates on the appropriateness of the policy
each fiscal year. While deliberating, the Remuneration Advisory Committee considers theevolving business environment, along with feedback from shareholders and investors. Additionally, it sources essential information for its discussions from third-party organizations withextensive global experience and knowledge.

Matters to be resolved

Matters to be deliberated or confirmed

Basic compensation for individual directors
Targets and evaluation of performance indicators
associated with short-term incentives (STIs) for
directors, and amounts paid to individual directors
Position-based standard points, TSR evaluation, and the number of earned points and shares to be delivered to individuals
associated with long-term incentives (LTIs) for directors

Policy for determining the remuneration for directors and corporate officers
Details of remuneration for respective corporate officers (excluding those
concurrently serving as directors), executive officers, and directors
Formulation, amendment, or revocation of significant company rules
and procedures related to remuneration for directors and corporate
officers, along with descriptions presented in important publicannouncements and other relevant communications

In order to appropriately fulfill its roles and exercise authority in deliberating on mattersentrusted or consulted by the Board of Directors, the Remuneration Advisory Committee
carefully considers consistency with the Policy for Determining Remuneration for Directors
and Corporate Officers, while also accounting for the evolving business environment andfeedback from shareholders and investors. Furthermore, the Committee obtains information,
advice, and other insights necessary for its deliberations from Willis Towers Watson (WTW), a
third-party organization with a wealth of international experience and knowledge.
Compensation consultants from WTW were present at all meetings of the Remuneration
Advisory Committee throughout the period. In addition, the Remuneration Advisory Committee
reported the matters deliberated upon or resolved to the Board of Directors in a timely andappropriate manner during the period. Accordingly, the Board of Directors confirmed thereasonableness and appropriateness of the reported matters.

[Directors (excluding Outside Directors)]
Establish a remuneration scheme appropriate for recruiting and retaining talented human resources from inside and outside Japan
suited to a global top-level functional chemical manufacturer.
Incentivize them to achieve performance targets and increase medium- to long-term corporate value, thereby driving the sustainablegrowth of the Group
Maintain a transparent, fair, and rational process for deciding remuneration from the viewpoint of accountability to shareholders and allother stakeholders

Matters discussed, etc.
Time of meeting and matters discussed

Participants

Establish a remuneration scheme appropriate for the role and responsibility of supervising management from an independent andobjective standpoint

December 2022
Collected and analyzed up-to-date information on domestic and international executive compensation practices to identify prevailing trends
Confirmed that the current remuneration aligns appropriately in level and composition with the Policy for Determining Remuneration for Directors and Corporate Officers after verifying the appropriateness of the composition and levels of remuneration for directors and corporate
officers through a comparison with global chemical or other material companies of a similar scale (No revision would be made in fiscal 2023.)

All members(excluding a
newly appointed
director)

In determining the remuneration for respective directors for fiscal 2022, the Remuneration
Advisory Committee, comprising a majority of outside and independent officers as outlined in
the adjoining section, conducted a multifaceted assessment utilizing objective and specialized
information necessary for deliberation, ensuring alignment with the Policy for Determining
Remuneration for Directors and Corporate Officers. The Board of Directors generally acknowledges decisions made by the Committee and deems the content to be appropriate and in linewith the aforementioned determination policy.

January and March 2023
Determined the individual standard compensation amounts and the number of LTI standard points to be granted to each director for fiscal 2023
Discussed the evaluation of performance indicators (consolidated financial results and personal performance) for the fiscal 2022 STI to
determine the individual amounts to be paid to each director. The process of personal performance evaluations for each evaluateddirector (President and CEO, CTO, CFO, CSO) began with an initial assessment by the President and CEO (including a self-evaluation for
the President and CEO). The final evaluations were then conducted through deliberation and confirmation of their appropriateness.
Opted not to grant shares for the fiscal 2022 LTI to a director (who is not an outside director) who resigned in March 2023, based on the
TSR evaluation through the end of the fiscal year immediately preceding his resignation
Discussed the targets of performance indicators for the fiscal 2023 STI, deliberated and confirmed the appropriateness of personal
performance targets after receiving explanations from each director and candidate for reappointment as a director (President and CEO,
CRO, CFO, CSO) who were under evaluation
Confirmed the details of remuneration for directors and corporate officers that were to be disclosed in the Business Report andSecurities Report for fiscal 2022

All members(excluding a
newly appointed
director)[Outside Directors]

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Corporate Governance
Composition and levels of remuneration
Directors (excluding Outside Directors)
The remuneration of directors (excluding outside directors) consists of basic compensation(fixed compensation) based on the position, a short-term incentive (STI) tied to annual performance, and a long-term incentive (LTI) contingent upon medium- to long-term performanceand corporate value.
The ratio of variable compensation (STI and LTI) to total compensation is set at 50% or higher,
with the intention to reinforce management’s commitment to improving business performanceand other results, as well as corporate value. Given the substantial responsibility for businessperformance and stock price, the Chairman of the Board and the President receive a greater
portion of variable compensation in comparison to other directors.
The levels of remuneration are established at appropriate amounts, aligning with benchmarks from other companies (comparison with global chemical or other material
companies of a similar scale to the Company) based on surveys conducted by external
specialized organizations.
Composition of remuneration for directors (standard amount) for fiscal 2023
Chairman of the Board and President, CEO

LTI
30%

Variable60%

Directors and CRO/CFO/CSO

LTI
25%

Basic
compensation
40%
STI
30%

Composition of remuneration for directors (standard amount) for fiscal 2023
Types of remuneration
Monetary /nonmonetary

Fixed /
variable
Fixed

Monetary
Variable

Nonmonetary

Composition

Recipients
Executive
directors,
corporate officers

Director andchairman of theBoard (without rightof representation)

Outsidedirector

Audit &
Supervisory
Board
members

Basiccompensation
Short-term incentive(bonuses)Long-term incentive(stock-based
compensation)

Short-term Incentive (STI)
The amounts to be paid to individuals as STI are calculated by multiplying the position-based
standard amount by two factors: (1) companywide performance evaluation coefficient (evaluation ratio of 70%); and (2) personal performance evaluation coefficient (evaluation ratio of30%). This approach aims to enhance incentives for achieving companywide performancetargets. The performance evaluation coefficient ranges from 0% to 200%, based on performance results and other factors.
Individual amount granted as STI = Position-based standard amount ×((1) Companywide performance evaluation coefficient + (2) Personal performance evaluation coefficient)

Basiccompensation
50%

STI
25%
Variable50%

Key performance indicators (KPIs) used to calculate the companywide performance evaluation coefficient and the personal performance evaluation coefficient are selected from thefinancial and strategic indicators prioritized by the Company to achieve its Long-term Vision.
Key Performance Indicators (KPIs) for the fiscal 2023 STI
KPIs

Outside Directors
Outside directors are paid basic compensation (fixed compensation) only.
The members and chairman of the Remuneration Advisory Committee or the Nominating
Advisory Committee receive additional allowances corresponding to their designated duties.
The levels of remuneration are established at appropriate amounts, considering the timeand efforts spent by each outside director to fulfill their expected roles and functions, aswell as benchmarks from other companies (comparison with global companies of a similar
scale to the Company) based on surveys conducted by external specialized organizations.

Companywide
performance
evaluation

Personal
performance
evaluation

Evaluation
weightEBITDA

20%

EBITDA margin (%)

30%

ROIC

20%

Endeavors aligned with thelong-term vision, actions to resolve
sustainability issues, and more.

30%

Reasons for selection
Driver for enhancing medium- to long-term profitability inthe newly integrated company
Strive for growth and innovation with a focus on electronics
and mobility businesses, while also implementing structuralreforms and addressing the recovery from the impact of
COVID-19, among other objectives.
Indicator of profit distribution to shareholders and investors
Strive to optimize the business portfolio and the net
debt-to-equity ratio of the newly integrated company, aiming
to enhance ROE over the medium to long term.
Strongly encourage management from a long-term
perspective to attain sustainable growth of the Company

EBITDA = Consolidated operating income + Depreciation and amortization + Amortization of goodwill, etc.
EBITDA margin (%) = EBITDA ÷ Consolidated net sales
ROIC = (Operating income + Equity in earnings of unconsolidated subsidiaries and affiliates – Income taxes) ÷ (Interest-bearing debt + Total net assets)
Sustainability issues are discussed at the Sustainability Promotion Council

126

127

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Corporate Governance
The performance evaluation coefficient is determined through an evaluation of financial
indicators and measures. The primary financial indicators include consolidated net sales
and consolidated EBITDA, which are management indicators the Company focuses on andsuitable for objective and clear evaluation based on business results.
Regarding the consolidated operating results for fiscal 2021, net sales amounted to¥1,419,635 million, exceeding the target of ¥1,280,000 million. EBITDA stood at ¥202,644
million, exceeding the target of ¥165,100 million. In light of the evaluation results and otherfactors, the STI payment to each director for fiscal 2022 was 160% of the standard amount.
Long-term incentive (LTI)
The LTI system is designed to deliver a certain number of shares calculated by multiplying thestandard points based on the position-based standard amount by a coefficient corresponding to
the Company’s TSR (Total Shareholder Return) over a three-year period, with the aim of enhancing corporate value in the medium to long term. To further enhance value sharing with shareholders, the actual delivery of shares is deferred to the time of resignation of each director.
Number of shares delivered to individuals as LTI = Position-based standard points x TSR evaluation coefficient

The TSR evaluation coefficient is decided based on a rank order of three-year TSR evaluationby comparison with companies (in the chemical and material industries with similar business models and of the same size of larger). The target for TSR ranking is set at mid-range
or higher to realize the long-term vision of “TSR: Aiming to be in the top 25% in the chemicalindustry in the medium to long term.”
This system has been operational since 2022, and the first TSR evaluation period (linked
with the fiscal 2022 LTI) spanned three years from 2022 to 2024. Subsequently, the TSR
evaluation period rolls over every year to maintain a three-year evaluation period.
Once the number of shares (points) to be delivered is determined through the TSR evaluation, the equivalent amount of dividends during the interval until the shares are physicallydelivered (until the time of resignation) is deemed to be reinvested, thereby adding thecount of shares (points) slated for delivery.
TSR evaluation period and timeline for determining the number of shares (points) to bedelivered under the LTI plan per fiscal yearPlan
2022 LTI
2023 LTI

2022

2023

2024

2025

←TSR evaluation period→←TSR evaluation period→

2026

Resignation

Fixing of points→ → →Shareissuance

Fixing of points→

Shareissuance

As this system was implemented in fiscal
2022 and the first TSR evaluation spanned
three years from 2022 to 2024, no LTIs were
subject to final evaluation in fiscal 2022. Yet,for a director (who is not an outside director) who is slated to resign in March 2023,
the shares of the Company’ stock will bedelivered as LTI based on the TSR evaluation performed up to the fiscal year immediately prior to his resignation. The Company
will not grant its shares to resigning
directors as the fiscal 2022 LTI due to theCompany’s TSR of 89.4% for the period
from January to December 2022. The
Company’s ranking was at the 18.9%ile
among the 22 entities in the chemical andtextile industries, namely between the 18thand 19th spots out of the 22 companies.

Calculation method for the TSR evaluation
coefficient for the fiscal 2023 LTI
TSR evaluation coefficient
200%

100%

33%
0%

TSR rank
ThresholdTarget20%ile60%ile(17th – 18th) (9th – 10th)

Maximum
100%ile(1st)

Adjustment of compensation, request for return of compensation, etc.
In case of deterioration in the Company’s business performance, or such problems that
could damage its corporate or brand value as quality issues, serious accidents, or scandals,
the Company reserves the right to temporarily decrease or withhold remuneration andother benefits for directors.
Regarding the short-term incentive (STI), if temporary special factors emerge, which was
not anticipated when the targets were set at the beginning of the period, individual bonus
amounts may be recalculated based on reassessed performance and other elements withthe exclusion of the impact of such factors.
Regarding the short-term incentive (STI) and long-term incentive (LTI), if a director or corporate officer is involved in misconduct or if payment was made based on incorrect financial
statements, the Company may nullify the right to receive associated benefits on account ofsuch fact or demand return of compensation already paid to the individual concerned.

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Corporate Governance
Remuneration of Directors and Audit & Supervisory Board members
Category

Cross-Shareholdings

Total amount paid by remuneration type (Millions of yen)
Total amount
paid
Basic
Short-term incentive Long-term incentive(Millions of yen) compensation
(STI)
(LTI)

Directors
Outside directors
Audit & Supervisory
Board members
Outside Audit &Supervisory
Board members

Number ofrecipients

557

340

65

65

4

104

104

6

38

38

4

106

109

12

Notes:
1 The amounts of basic compensation and short-term incentive above are the total amount of compensation paid in fiscal 2022 (all monetary compensation).
2 The amount of STI above is the total amount of compensation paid in March 2022 (all monetary compensation), based on the performance and other results
achieved during fiscal 2021. The amount of STI for fiscal 2021 for five directors excluding outside directors was resolved at the 113th Ordinary General
Meeting of Shareholders held on March 30, 2022 to be no more than ¥119 million in total.
3 The amount of LTI above is the total amount expensed in fiscal 2022. The Company’s LTI represents the number of shares of the Company’s stock determinedbased on the results of the three-year TSR (Total Shareholder Return) evaluation, to be deferred and delivered upon resignation. For the LTI management,
we utilize the Stock Benefit Trust of Mizuho Trust & Banking Co.
4 The amount of remuneration for directors from fiscal 2022 onward was resolved at the 113th Ordinary General Meeting of Shareholders held on March 30,
2022, and the details are as presented below. The STI and LTI amounts are paid to directors, excluding outside directors.

Stock-based compensation (LTI)(Amount of BBT contribution /Points granted)

Number ofapplicable
persons

Category

Date of resolution of
the General Meetingof Shareholders

Monetary remuneration(Basic Compensation + STI)

Directors

The 113th Ordinary
General Meeting of
Shareholders held on
March 30, 2022

Up to ¥850 million per year Up to ¥1.35 billion for 3 fiscal years 10(Of which, 4(Of which, outside directors: (Up to 410,000 points per fiscal
outside directors)
year)¥100 million)

Policy on reduction of cross-shareholdings
In principle, the Company adheres to a policy of not engaging in cross-shareholdings, andsteps are currently underway to reduce existing cross-shareholdings.
Review on the appropriateness of cross-shareholdings
The Board of Directors verifies each year whether the profitability and business feasibility ofholdings are rational given the associated capital costs.
Voting right exercise standard
When the Company exercises its voting rights of cross-shareholdings, the company shall decideapproval or disapproval of each item on the agenda by examining whether the item contributes
to increasing corporate value and maintaining/increasing shareholders’ returns or not.
Numbers of cross-shareholdings and amount on the balance sheet*
Holdings

Amount on the balance sheet (Millions of yen)

Unlisted stocks

52

1,924

Other stocks

4763

Holdings for which numbers of shares held increased in fiscal 2022*

5 The amount of remuneration for Audit & Supervisory Board members was resolved at the 96th Ordinary General Meeting of Shareholders held on March 30,
2005 to be no more than ¥12 million per month. The number of Audit & Supervisory Board Members as of the close of the said General Meeting of
Shareholders was four, including three outside Audit & Supervisory Board members.

Individual remuneration amounts (limited to the President and CEO or those with a total
amount of remuneration paid by the Group of ¥100 million yen or more)
Principal position andname during fiscal
2022

Total amount paid by remuneration type (Millions of yen)
Total amount
paid
Basic
Short-term incentive Long-term incentive(Millions of yen) compensation
(STI)
(LTI)

Unlisted stocks

Holdings

Acquisition costs of additional
shares (Millions of yen)

Reason for increase

356

Due to investments in decarbonization-related
businesses and organization restructuring

Other stocks
Company
category

Holdings for which numbers of shares held decreased in fiscal 2022*

Representative Director
and Chairman of the Board
Kohei Morikawa

135

66

46

22

Resonac
Holdings

Representative Director,
President and CEO
Hidehito Takahashi

117

75

17

24

Resonac
Holdings

Holdings

Sales proceeds associated with reduction in thenumber of shares (Millions of yen)

Unlisted stocks

10

2,462

Other stocks

18

15,875* Cross-shareholdings held by Resonac Corporation

128

129

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Consolidated 11-Year Summary

Resonac made former Hitachi Chemical a consolidated
subsidiary, and started on July 1, 2020 to incorporate
Hitachi Chemical’s sales figures and income/losses into
its consolidated financial statements.

Web

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022 *5¥739,675¥847,803¥ 872,785¥ 775,732¥ 671,159¥ 780,387¥ 992,136¥ 906,454¥ 973,700¥1,419,635¥1,392,621

28,10825,953

20,55133,50842,05377,708180,003

120,798(19,449)

87,19861,726

Ratio of operating income (loss) to sales (%)

3.8

3.1

2.4

4.3

6.3

10.0

18.1

13.3

(2.0)

6.1

4.4

Net income (loss) attributable to owners of the parent

9,368

9,065

2,929

921

12,30537,404

111,50373,088(76,304)(12,094)

32,422

Net cash provided by operating activities

53,31063,56566,996

61,17068,94967,235

149,785

78,554109,286

115,283

99,813

Net cash provided by (used in) investing activities(41,741)(55,203)(46,876)(42,497)(53,754)(29,866)(49,338)(48,156)(930,047)

28,606(54,667)

Free cash flow

11,5698,362

20,12018,674

15,19537,369100,447

30,397(820,761)

143,889

45,145

Net cash provided by (used in) financing activities(20,150)(6,805)(24,856)(21,336)(13,220)(18,370)(61,061)(18,546)896,521(121,741)(103,267)

R&D expenditures

20,633

20,43520,362

20,28917,313

18,53919,73520,60534,37946,75047,135

Capital expenditures

42,50344,37047,31844,05939,276

41,787

41,72750,216

69,05278,647

107,074

Depreciation and amortization

46,232

39,77940,67342,137

38,761

38,56539,45937,704

68,64397,726

91,964

Total assets

933,162

985,771

1,009,843

940,494

932,698

1,026,999

1,074,983

1,076,381

2,203,606

2,142,390

2,093,744

Total net assets

314,966

345,811

319,087

308,142

311,231368,994

465,340

519,433

718,080

818,452

574,718

Shareholders’ equity ratio(%)

29.2

30.6

29.7

31.5

31.8

34.3

41.5

46.4

18.4

24.0

26.3

Return on equity (ROE)(%)

3.6

3.2

1.0

0.3

4.1

11.5

27.9

15.5

(16.9)(2.6)

6.1

342,262353,686

383,124

368,835

359,929

346,726

287,968

303,192

1,060,146

850,603

1,062,637

1.09

1.02

1.20

1.20

1.16

0.94

0.62

0.60

1.84

1.15

1.07

6.26

6.06

1.99

6.45

86.27

262.44758.15501.03(523.06)(77.40)179.02

182.24201.27209.76

2,076.05

2,080.85

2,473.06

3,057.16

3,423.25

2,782.79

2,838.51

3,038.35

120.00130.00

65.00

65.00

65.00

Financial Highlights (Consolidated) Millions of yen
For the year
Net sales
Operating income (loss)

At year-end

Interest-bearing debt

*1

Debt/equity ratio (gross, times)*1*2

Per share (yen)Net income (loss)—primary*3
Net assets
Cash dividends (applicable to the period)

3.00

3.00

3.00

3.00

—

80.00

*4

*1 From the third quarter of 2020, due to former Hitachi Chemical, becoming a consolidated subsidiary, the D/E ratio reflects the following situation: regarding preferred shares issued by HC Holdings K.K., a subsidiary, posted under non-controlling interests on the consolidated balance sheets, the value equivalent to 50% isadded to each of interest-bearing debt, and shareholders’ equity, in consideration of the characteristics of the capital structure. For interest-bearing debt, net value is indicated after excluding cash and deposits and adding debt on lease. For Determination of the 50/50 allocation for preferred shares in light of thecharacteristics of the capital structure is based on the rating of Japan Credit Rating Agency, dated April 21, 2020. This change in accounting standards for the D/E ratio from 2020 has been retroactively reflected in 2019 figures. Furthermore, in regard to the subordinated loans taken out in order to purchase preferred stock,
50% of this amount is deducted from interest-bearing debt and added to shareholders’ equity. Determination of the 50/50 allocation for the subordinated loan in light of the characteristics of the capital structure is based on the rating of Japan Credit Rating Agency, dated October 4, 2022.
*2 Resonac consolidated every 10 shares of common stock into one share on July 1, 2016. “Per share” indicators for 2015 and 2016 (except for cash dividends) are calculated on the basis of the number of outstanding shares after this consolidation.
*3 Net income (loss) per share has been computed based on the average number of shares of common stock outstanding during the respective fiscal year.
*4 Resonac resolved payment of dividends of ¥30.00 per share based on the record date of May 11, 2017 at the extraordinary general meeting of shareholders held in June 2017. Cash dividends applicable to 2017 include this amount.
*5 Our subsidiary former Hitachi Chemical (current Resonac Corporation) and its Japanese subsidiaries previously adopted the International Financial Reporting Standards (IFRS), but switched to Japanese Generally Accepted Accounting Principles (JGAAP) from fiscal 2023. This change has been applied retroactively and thefigures for fiscal 2022 have been retroactively adjusted. Some of these retroactively adjusted figures include those that have not yet been audited.

RESONAC REPORT 2023

Consolidated 11-Year Summary

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

2018

2019

2020

2021

2022

33,46533,90833,684

26,05425,803

54.2

54.5

54.6

51.2

50.8

162

170

170

148

397

7.0

7.1

7.1

7.3

12.6

Web

2014
Nonfinancial data
Number of employees (persons)Ratio of employees working outside Japan (%)
Number of female managers (persons)Ratio of female managers (%)

Ratio of industrial waste sent to landfills (%)

2015

2016

2017

Scope up to 20172014-2017: Former Showa
Denko (non-consolidated)

2014-2017: Former Showa
Denko (consolidated)

Greenhouse gas emissions (Scope 1 + Scope 2; kt-CO2)

Amount of Water used (excluding seawater; thousand m3)

130

2014-2017: Former Showa
Denko (consolidated in Japan)

Scope in and after 2018
10,577

10,561

10,146

10,864

43.9

44.4

40.1

44.0

18

23

26

28

2.3

3.0

3.4

3.7

3,650

3,683

3,714

3,654

Consolidated

4,708

4,562

4,213

4,422

4,284

62,62060,04058,72059,4702018-2021: Resonac (non-consolidated) and former Showa Denko subsidiaries (in and outside Japan)
2022: Consolidated

67,306

68,06067,52264,261

68,292

1.08

0.95

0.32

0.38

Resonac (consolidated in Japan)
and former Hitachi Chemical
Subsidiaries (outside Japan)

1.8

1.8

1.0

1.4

2.5

Consolidated

2018-2021: Resonac (non-consolidated) + Subsidiaries of former
Showa Denko in and outsideJapan
2022: Consolidated

Note:
For non-financial data, boundaries (scope of data) differ depending on the item and time period.
Upon the integration of the former Showa Denko and the former Hitachi Chemical, we have re-examined boundaries and figures for past fiscal years, making some adjustments in our disclosures.
Additionally, water intake data up until 2017 is expressed in units of 10,000 m 3 .

For performance data on ESG (environment, society, governance) please refer to our website.

131

RESONAC REPORT 2023

Consolidated Balance Sheets

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Web

Note: The U.S. dollar amounts appearing on the following pages represent the arithmetical results oftranslating yen into U.S. dollars at the rate of ¥132.70 to US$1.00, the approximate rate of exchange as
at December 31, 2022.
Thousands of
U.S. dollars

Millions of yen

2022

ASSETS
Current assets
Cash and deposits
Notes and accounts receivable
Allowance for doubtful accounts
Inventories
Other current assets
Total current assets
Property, plant and equipment
Land
Buildings and structures
Machinery, equipment and vehicles
Leased assets
Construction in progress
Less : Accumulated depreciation
Net property, plant and equipment
Investments and other assets
Goodwill
Customer related assets
Investment securities
Long-term loans
Net defined benefit asset
Deferred tax assets
Other
Allowance for doubtful accounts
Total investments and other assets
Total assets¥

187,126
297,681(1,254)
250,574
54,057788,183

2021

¥

2022

236,237
319,546(1,426)
203,879
40,295
798,531$ 1,410,140
2,243,262(9,449)1,888,273
407,3635,939,588

234,425
361,289
1,039,169
28,74050,866
1,714,488(1,032,570)
681,918

242,556
343,574
955,138
30,42938,782
1,610,479(950,958)
659,521

1,766,577
2,722,599
7,830,963
216,580
383,313
12,920,032(7,781,238)
5,138,794

295,355
133,639
84,041
777
18,046
17,16981,915(622)
630,320¥ 2,100,421

311,766
141,141
103,798674
33,08815,207
79,131(466)
684,338¥ 2,142,390

2,225,735
1,007,079
633,318
5,853
135,990
129,379
617,291(4,687)
4,749,959$15,828,342

Thousands of
U.S. dollars

Millions of yen

2022

LIABILITIES AND NET ASSETS
Current liabilities
Short-term debt
Current portion of long-term debt
Notes and accounts payable
Income taxes payable
Provision for repairs
Provision for bonuses
Provision for bonuses for directors
Provision for stock payments
Other current liabilities
Total current liabilities
Noncurrent liabilities
Long-term debt less current portion
Deferred tax liabilities
Provision for repairs
Provision for stock payments
Provision for business structure improvement
Net defined benefit liability
Deferred tax liabilities for land revaluation
Other noncurrent liabilities
Total noncurrent liabilities
Contingent liabilities
Net assets
Shareholders’ equity
Capital stock
Authorized, 330,000,000 shares
Issued (2022): 184,901,292 shares
Issued (2021): 184,901,292 shares
Capital surplus
Retained earnings
Less: Treasury stock at cost (2022): 3,784,720 shares
Less: Treasury stock at cost (2021): 3,824,243 shares
Total shareholders’ equity
Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustments
Remeasurements of defined benefit plans
Total accumulated other comprehensive income
Non-controlling interests
Total net assets
Total liabilities and net assets¥

72,41942,677
263,402
5,983
19
9,489
47
21
68,495462,551

2021¥

74,451
72,857
239,897
17,180
4,848
8,815
71
39
70,492
488,6502022$

545,734
321,603
1,984,947
45,083143
71,505356
155
516,167
3,485,693

932,400
51,416
1,260
302
772
9,981
29,52537,5381,063,192

683,448
60,14496
196
812
17,52330,12842,941
835,287

7,026,372
387,457
9,495
2,272
5,819
75,212
222,497
282,877
8,011,999

182,146—
108,140
163,425(11,612)—442,100—
182,146
119,772
143,335—(11,655)
433,598

1,372,616—
814,922
1,231,540(87,505)—
3,331,573

559
1,461
27,91572,0086,211
108,154
24,423574,677¥ 2,100,421

2,838
1,167
28,92838,421
9,036
80,391
304,463
818,452¥ 2,142,390

4,214
11,007
210,362542,638
46,804
815,026
184,050
4,330,649$15,828,342

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Resonac Holdings Corporation and Consolidated Subsidiaries
For the years ended December 31, 2022 and 2021

Resonac Holdings Corporation and Consolidated Subsidiaries
For the years ended December 31, 2022 and 2021
Thousands of
U.S. dollars

Millions of yen

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Other income (expenses)
Interest and dividends income
Equity in earnings of unconsolidated subsidiaries and affiliates
Gain on sales of investment securities, net
Foreign exchange gain
Gain on sales of noncurrent assets, net
Interest expenses
Loss on retirement of noncurrent assets
Impairment loss
Business structuring expenses
Loss on sale of businesses
Loss related to the Antimonopoly Act
Other, net
Total
Income before income taxes
Income taxes
Current
Deferred
Net income
Net income attributable to non-controlling interests
Net income (loss) attributable to owners of the parent

2022

2021

2022

¥ 1,392,621
1,089,639
302,983
243,61159,371¥ 1,419,635
1,081,642
337,994
250,796
87,198$10,494,509
8,211,295
2,283,214
1,835,805
447,410

1,834
3,630
4,731
10,632
13,470(15,744)(6,045)(10,091)—(3,504)(5,579)(4,123)(10,788)
48,583

2,267
5,251
5,814
4,281
1,104
(10,006)(4,838)(11,564)(32,767)(12,078)—(11,737)(64,272)
22,926

13,821
27,35235,65480,124
101,505(118,642)(45,555)(76,042)—(26,405)(42,042)(31,068)(81,299)
366,111

18,617(8,092)
38,0587,265
30,793

26,957(6,688)2,657
14,751(12,094)140,291(60,976)
286,796
54,746232,051¥¥Yen

Per share amounts
Net income (loss) attributable to owners of the parent: Basic
Net income (loss) attributable to owners of the parent: Diluted
Cash dividends (applicable to the period)¥170.03170.03
65.00$

U.S. dollars¥(77.40)(77.40)
65.00

$1.28
1.28
0.49

Notes: Net income per share has been computed based on the average number of shares of common stock outstanding
during the respective fiscal year.
See notes to financial statements.

Thousands of
U.S. dollars

Millions of yen

Net income
Other comprehensive income:
Valuation difference on available-for-salesecurities, net of tax
Deferred gains or losses on hedges, net of tax
Foreign currency translation adjustments
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income ofunconsolidated subsidiaries and affiliates
accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable to:
Owners of the parent
Non-controlling interests
See notes to financial statements.

2022

2021

2022

¥38,058¥ 2,657$286,796(2,246)294
32,932(2,805)(949)
259
39,074
8,927(16,925)2,213
248,170(21,140)

1,763¥29,937¥67,995

958¥48,268¥50,925

13,285$225,602$512,399

59,5698,426

35,111
15,814

448,899
63,499132

133

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Consolidated Statements of Changes in Net Assets
Resonac Holdings Corporation and Consolidated Subsidiaries
For the years ended December 31, 2022 and 2021
Thousands
Number of sharesof capital stock

Balance as at December 31, 2020
Issuance of new shares
Dividends from surplus
Net loss attributable to owners of the parent
Purchase of treasury stock
Disposal of treasury stock
Increase by increase of consolidated subsidiaries
Increase by decrease of consolidated subsidiaries
Decrease by decrease of consolidated subsidiaries
Change in treasury shares of the parent arising fromtransactions with non-controlling shareholders
Changes in liabilities for written put options
over non-controlling interests
Reversal of revaluation reserve for land
Net changes of items other than shareholders’ equity
Balance as at December 31, 2021
Issuance of new shares
Dividends from surplus
Net income attributable to owners of theparentPurchase of treasury stock
Disposal of treasury stock
Increase by increase of consolidated subsidiaries
Increase by decrease of consolidated subsidiaries
Decrease by decrease of consolidated subsidiaries
Change in treasury shares of the parent arising fromtransactions with non-controlling shareholders
Changes in liabilities for written put options
over non-controlling interests
Reversal of revaluation reserve for land
Net changes of items other than shareholders’ equity
Balance as at December 31, 2022

Revaluation
reserve for land

Foreign currencytranslation
adjustments

Remeasurements ofdefined benefit plans

Non-controllinginterests

Total net assets

149,71135,190
—
—
—
—
—
—
—

¥140,564
41,583
—
—
—
—
—
—
—

¥ 78,190
41,583
—
—
—
0
—
—
—

¥165,572—(9,500)(12,094)
—
—
45
—
(690)

¥(11,657)
—
—
—
(6)
7
—
—
—

¥ 3,728
—
—
—
—
—
—
—
—

¥908
—
—
—
—
—
—
—
—

¥29,034
—
—
—
—
—
—
—
—

¥ (506)
—
—
—
—
—
—
—
—

¥ 128
—
—
—
—
—
—
—
—

¥ 312,119
—
—
—
—
—
—
—
—

¥ 718,080
83,165(9,500)(12,094)
(6)
7
45
—
(690)

—

—

—

—

—

—

—

—

—

—

—

—

—
—
—
184,901—————¥182,146—————¥119,772———
1—¥143,335—(11,788)———¥(11,655)
—
—

—
—
(890)
¥2,838————259¥1,167
—
—

—
—
(106)
¥28,928————
38,928¥38,421
—
—

—
—
8,909
¥9,036————(7,656)¥ 304,463———
1
39,443¥ 818,452—(11,788)

—
—
—
—
—
—

—
—
—
—
—
—

—
—
(0)
—
—
—

30,793
—
—
—
72
—

—
(3)
46
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

—
—
—
—
—
—

30,793
(3)
46
—
72
—

—

—

(29)

—

—

—

—

—

—

—

—

(29)

—
—
—
184,901———¥182,146(11,603)——¥108,140—
1,013—¥163,425———¥(11,612)——(2,279)
¥ 559

—
—
294
¥1,461——(1,013)¥27,915——
33,587¥72,008——(2,826)¥6,211——(280,040)¥ 24,423(11,603)
1,013(252,277)¥ 574,677

Thousands of U.S. dollars
Valuation difference
on available-for- Deferred gains or
Revaluation
sale securities
losses on hedges reserve for land

Foreign currencytranslation
adjustments

Remeasurements ofdefined benefit plans

Non-controllinginterests

Total net assets

Capital stock

Capital surplus

Retained earnings

Treasury stockThousands
Number of sharesof capital stock

Balance as at December 31, 2021
Issuance of new shares
Dividends from surplus
Net loss attributable to owners of the parent
Purchase of treasury stock
Disposal of treasury stock
Increase by increase of consolidated subsidiaries
Increase by decrease of consolidated subsidiaries
Decrease by decrease of consolidated subsidiaries
Change in treasury shares of the parent arising fromtransactions with non-controlling shareholders
Changes in liabilities for written put options
over non-controlling interests
Change due to merger
Reversal of revaluation reserve for land
Net changes of items other than shareholders’ equity
Balance as at December 31, 2022

Millions of yen
Valuation difference
on available-for- Deferred gains orsale securities
losses on hedges

Capital stock

Capital surplus

Retained earnings

Treasury stock

184,901
—
—
—
—
—
—
—
—

$1,372,616
—
—
—
—
—
—
—
—

$902,579
—
—
—
—
(1)
—
—
—

$1,080,141—(88,829)
232,051
—
—
—
544
—

$(87,830)
—
—
—
(23)
349
—
—
—

$ 21,390
—
—
—
—
—
—
—
—

$ 8,794
—
—
—
—
—
—
—
—

$217,996
—
—
—
—
—
—
—
—

$289,535
—
—
—
—
—
—
—
—

$ 68,097
—
—
—
—
—
—
—
—

$ 2,294,372
—
—
—
—
—
—
—
—

$ 6,167,688—(88,829)
232,051
(23)
347
—
544
—

—

—

(218)

—

—

—

—

—

—

—

—

(218)

—
—
—
—
184,901————$1,372,616(87,438)———$814,922

—
—
7,634
—
$1,231,540————$(87,505)———(17,175)$ 4,214

—
—
—
2,213
$11,007———(7,634)$210,362———
253,103$542,638———(21,292)$ 46,804———(2,110,322)$ 184,050(87,438)—
7,634(1,901,107)$ 4,330,649

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Consolidated Statements of Cash Flows
Resonac Holdings Corporation and Consolidated Subsidiaries
For the years ended December 31, 2022 and 2021
Thousands of
U.S. dollars

Millions of yen

2022

Cash flows from operating activities
Income before income taxes
Adjustments for:
Depreciation and amortization
Impairment loss
Amortization of goodwill
Increase (decrease) in net defined benefit liability
Interest and dividends income
Interest expenses
Equity in (earnings) losses of unconsolidated subsidiaries and affiliates
Loss (gain) on sales and valuation of investment securities
Loss on retirement of noncurrent assets
Loss (gain) on sales of noncurrent assets
Loss (gain) on sales of businesses
Business structuring expenses
Loss related to the Antimonopoly Act
Decrease (increase) in notes and accounts receivable-trade
Decrease (increase) in inventories
Increase (decrease) in notes and accounts payable-trade
Other, net
SubtotalInterest and dividends income received
Interest expenses paid
Income taxes (paid) refund
Net cash provided by (used in) operating activities
Cash flows from investing activities
Payments into time deposits
Proceeds from withdrawal of time deposits
Purchase of property, plant and equipment
Proceeds from sales of property, plant and equipment
Purchase of investment securities
Proceeds from sales of investment securities
Proceeds from sales of investments in subsidiaries resulting in change in scope of consolidation
Net decrease (increase) in short-term loans receivable
Payments of long-term loans receivableCollection of long-term loans receivable
Other, net
Net cash provided by (used in) investing activities

2021

2022

¥ 48,583¥ 22,926$ 366,111

92,716
10,091
16,843(2,383)(1,834)
15,744(3,630)(4,952)
6,045(13,470)
3,504
—
5,579
23,653(40,083)(18,592)
1,157
138,9718,686(15,641)(31,667)
100,349

97,726
11,564
17,7204,038(2,267)
10,006(5,251)(5,101)
4,838(1,104)(3,045)32,767—(51,628)(43,739)
72,694(34,230)
127,9147,266(9,999)(9,898)115,283

698,690
76,042
126,923(17,960)(13,821)
118,642(27,352)(37,318)
45,555(101,505)
26,405—42,042
178,242(302,058)(140,106)
8,721
1,047,260
65,454(117,865)(238,635)
756,207(1,606)
2,570(87,857)
20,960(1,667)22,019
—
774
(410)
251
(9,701)(54,667)(1,666)
1,507(67,741)
2,223(3,270)9,318
84,133(1,230)(246)
14,271(8,693)28,606(12,105)
19,368(662,069)
157,947(12,561)
165,929—
5,830(3,088)
1,893(73,106)(411,962)

Thousands of
U.S. dollars

Millions of yen

Cash flows from financing activities
Net increase (decrease) in short-term debt
Proceeds from long-term loans payable
Repayments of long-term loans payable
Proceeds from share issuance of bonds
Redemption of bonds
Proceeds from issuance of preferred stock
Purchase of treasury stock
Cash dividends paid
Proceeds from stock issuance to non-controlling shareholders
Cash dividends paid to non-controlling shareholders
Purchase of investments in subsidiaries without change in scope of consolidation
Other, net
Net cash provided by (used in) financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the year
Increase in cash and cash equivalents resulting from newly consolidated subsidiaries
Cash and cash equivalents at the end of the year

2022

2021

(3,162)409,600(285,642)
112,536(20,000)—(3)(11,758)—(13,025)(287,635)(4,875)(103,964)
10,027(48,255)
234,938—¥ 186,683

11,352
24,300(307,247)
99,539(25,000)
82,405(7)(9,479)29,766(16,117)(5,293)(5,960)(121,741)
14,63436,782
197,928229¥ 234,938

2022(23,832)
3,086,662(2,152,536)
848,045(150,716)—(23)(88,609)—(98,152)(2,167,558)(36,745)(783,451)
75,565(363,641)
1,770,446—$ 1,406,805

134

135

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

Corporate Data/Stock Information
Corporate Data

(As of June 30, 2023)

Company Name

Resonac Holdings Corporation

Head Office

Tokyo Shiodome Bldg., 1-9-1,

Tokyo 105-7325, Japan

Authorized number ofshares330,000,000

Number of shareholders

June 1939

Capital(As of December 31, 2022)

Shareholders (Top 10)

Stake in the Company

90,689

Shareholders by Sector¥182,146 million(As of March 31, 2023)

Consolidated Number of Employees(As of December 31, 2022)

25,803Affiliates
Consolidated Subsidiaries: 104(As of March 31, 2023)
Subsidiaries (Japan)

Web

Subsidiaries (Global)

Web

Equity method applied: 12(As of December 31, 2022)

Name of shareholders

Number of shares outstand184,901,292
ing

Higashi-Shimbashi, Minato-ku,

FormedStock Information

Number of shares held Rate of shareholding(%)(in thousands)

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

28,13015.51

KOREA SECURITIES DEPOSITORY – SAMSUNG

9,062

5.00

Custody Bank of Japan, Ltd. (Trust Account)

7,667

4.23

STATE STREET BANK AND TRUST COMPANY 510312

4,905

2.70

STATE STREET BANK AND TRUST COMPANY 505223

4,850

2.67

Fukoku Mutual Life Insurance Company

4,517

2.49

Foreign corporate entities, etc.

61,317 thousand 33.16%

JPMorgan Securities Japan Co., Ltd.

4,474

2.47

STATE STREET BANK AND TRUST COMPANY 510311

4,135

2.28

SMBC Nikko Securities Inc.

3,051

1.68

HSBC BANK PLC A/C M AND G (ACS)

2,854

1.57

Financial institutions

58,550 thousand 31.67%

Individuals

41,998 thousand 22.71%

Securities firms

14,293 thousand 7.73%

Japanese corporate entities

5,188 thousand 2.81%

Treasury shares

3,554 thousand 1.92%

Note: Each rate of shareholding was calculated after deducting the number of treasury shares (3,554
thousand) from the number of shares outstanding.

Stock Price/Volume

Stock Information(Yen, points)

Daily average volume

Resonac Holdings Corporation (former Showa Denko)(Thousand shares)

TOPIX

120,000

8,000

7,000
100,000

6,000

Fiscal 2018

Fiscal 2019

Fiscal 2020

Fiscal 2021

Fiscal 2022

Year-end stock price (yen)

3,270

2,899

2,197

2,415

2,020

Dividends per share (yen)

120

130

65

65

65

Payout ratio (%)

67.7

40.5

34.8

33.1

35.5

Past year

Past 3 years

Past 5 years

Past 10 years

Resonac

86.3%

76.4%

51.2%

201.1%TOPIX (including dividends)

97.5%

118.1%

117.2%

274.2%

80,0005,000

60,0004,000

Total shareholder return (TSR)
3,000
40,0002,000

20,0001,000

00Jan. 2013

Jan. 2014

Jan. 2015

Jan. 2016

Jan. 2017

Jan. 2018

Jan. 2019

Jan. 2020

Jan. 2021

Jan. 2022

Jan. 2023 Jun. 2023

* TSR: Total shareholder return. The total rate of return on investments, consisting of capital gains and dividend
payouts.
* TSR for Resonac is calculated based on accumulated dividends and stock price fluctuations. TSR for TOPIX is calculated based on dividend included stock index (see Japan Exchange Group’s monthly statistics report data).

RESONAC REPORT 2023

Purpose and Values

What’s Resonac?

Where to Go

How to Change

Why We Can

Data

Resonac’s Purpose andValuesRe-introducing Ourselves

Our Goals

What We Will Focus on to
Achieve Change

Organizational Capabilities toHelp Change Society

Company Data

136

Editorial Policies
Editorial Policies

Disclosure Materials
Resonac discloses information through its integrated reports and a variety of other communication tools.

Publication Date

July 2023
Value Creation Narrative
January 1, 2022 to December 31, 2022
Some information on disclosure items and business activities from after January
1, 2023, is also provided.

Referenced
Guidelines

This report was prepared while referencing the International Integrated Reporting
Framework of the Value Reporting Foundation; the SASB Standards of the
Sustainability Accounting Standards Board of the United States; the Guidance forIntegrated Corporate Disclosure and Company-Investor Dialogue for Collaborative
Value Creation: ESG Integration, Non-Financial Information Disclosure, andIntangible Assets into Investment of the Ministry of Economy, Trade and Industry;
the Sustainability Reporting Standards of the Global
Reporting Initiative; and the final report of the Task
Force on Climate-related Financial Disclosures.

Display Methods inThis Report

Scope for Results
Data

Figures and information in this report refer to the Resonac Group. Official names areused when referring to Resonac Holdings Corporation or Resonac Corporation as a
non-consolidated entity. When figures or information for the former Showa Denkoor the former Hitachi Chemical (Showa Denko Materials) before 2023 is provided,
they are indicated as “former Showa Denko” or “former Hitachi Chemical.”Financial: Resonac Holdings Corporation and its 121 consolidated subsidiaries andaffiliates accounted for using equity method
122 companies in total
Others: Resonac Holdings Corporation and its consolidated subsidiaries*However, please refer to the relevant website for details on the scope ofWeb
environmental and safety data.

Third-Party Verificationof Environmental and
Safety Data

Data disclosed by the Company are submitted to third-party verification each year
to ensure reliability. For details, please refer to the relevant website.
Web

Caution Regarding
Forward-Looking
Statements

Performance forecasts and other forward-looking statements are based on
information available as of the time of publication of this report and certain
assumptions judged to be reasonable. Actual performance may vary materially
due to risks, uncertainty, or other factors.

Nonfinancial information

Financial information

Corporate governance reports*
Corporate brochures (for a variety of stakeholders)Internal Group magazines (for employees)
Business site CSR reports (for community
members and customers)
Sustainability website

Securities reports*
Financial results summaries*
Financial results presentations, etc.
Business reports
Annual financial reports (only available in English)
IR website

Comprehensive* Legally mandated disclosure

Process of Preparing Resonac Report 2023

Decision of direction and message during meetings of the Sustainability Promotion Council,
attended by the CEO and all other chief officers
Planning and preparation of content by means of monthly planning meetings
Members: CFO Hideki Somemiya, CSO Tomomitsu Maoka, and staff from the Investor Relations Department,
the Organization & Talent Development Department, the Culture Communication Department, the Corporate
Planning Department, the Brand
Communication Department, and theSustainability Department

Collaboration with content andsupport members from relevant
divisions and draft writing
Discussion and approval by theManagement Committee and theBoard of Directors

Kick-off of planning meeting

Financial

Resonac Holdings Corporation and its consolidated subsidiaries

For shareholders
and other investors

Scope

Integrated reports(For institutional investors and other stakeholders)Nonfinancial

Reporting PeriodA video highlighting Resonac’s corporate philosophy as a Co-creative Chemical Company is available on our YouTube channel.

Resonac Holdings Corporation
Resonac Corporation
Tokyo Shiodome Bldg., 1-9-1, Higashi-Shimbashi, Minato-ku, Tokyo 105-7325, Japan
Head Office of Resonac was relocated to Shiodome in June 2023.

https://www.resonac.com/
Video

Interactive safety patrol in new office