C.I. TAKIRON Group

Integrated Report

Group Corporate Philosophy
MissionCreating a people- and earth-friendly future
That is to say, we will carry on fulfilling our responsibility androle in people’s lives and the global environment. And to do so,
we will tap into the various business resources we have built over the years.
Since our founding in 1919, the C.I. Takiron Group has been supporting
people’s daily lives and creating a better tomorrow, and we will continue to be a corporate groupthat provides peace of mind and comfort for the future.

Aspired Corporate Culture

Pride in our accumulated value and the courage to transform
These are things that are important for us to have in order to achieve our Mission.
While remaining proud of the fact that we have refined our technology and built up trust overthe past 100 years, we will continue to nurture a corporate culture that never settles for the statusquo, is willing to transform, and always has the courage to boldly take on new challenges.

Sustainability VisionCorporate Message

Supporting today, changing tomorrow
The C.I. TAKIRON Group supports the lives of people today and always works tobuild a better future for people and the environment with the courage to change toward
more prosperous, comfortable lifestyles in tomorrow.

1

C.I. TAKIRON Group Integrated Report 2023

Editorial Policy

Contents

C.I. TAKIRON Group regards the Integrated Report as an important
communication tool. We issue this report to help stakeholders understand our efforts to enhance our corporate value over the medium to long term, and to further deepen dialogue and enhance
the sustainability of our company.
For Integrated Report 2023, we focused on inputs to and outputs
from our value creation process to clearly show the interplay between our business strategies and our foundation for businessgrowth. We have also presented both financial and non-financial
information relevant to our efforts to build sustainable growth.

Group Corporate Philosophy, Sustainability Vision.................................... 1
A History of Taking on Challenges and Expanding
Business Domains........................................................................................................................................................................ 3
Business Overview..................................................................................................................................................................... 5
Financial/Non-financial Highlights .................................................................................................... 6

Top Message.........................................................................................................................................................................

7

Value Creation

Reporting Period

Value Creation Process.............................................................................................................................................. 13

FY 2022 (Friday, April 01, 2022 to Friday, March 31, 2023)* This report includes some information outside of this reporting
period.

Capital Enhancement................................................................................................................................................... 15

Reporting Organizations

Sustainability Management.......................................................................................................................... 19

C.I. TAKIRON Corporation and its Group Companies

Engagement with Stakeholders.......................................................................................................... 20

Publication Date

Strategy

September 2023

Financial Capital Strategy ................................................................................................................................ 17

One-year Management Plan....................................................................................................................... 21

Main Reference Guidelines

Construction Materials Business................................................................................................ 23●	Ministry of Economy, Trade and Industry“Guidance for Collaborative Value Creation”●	Ministry of the Environment“Environmental Reporting Guidelines”●	International Integrated Reporting Council (IIRC)
International Integrated Reporting Framework● GRI (Global Reporting Initiative)”Sustainability Reporting Standards”● The SDG Compass

Environmental Materials Business ....................................................................................... 25
High Functional Materials Business................................................................................... 27
Specialty Films Business.................................................................................................................................. 29

Foundation
Source of Sustainable Growth (Materiality)......................................................... 31
Source of Corporate Growth
Research & Development.......................................................................................................................... 33
Production Technology................................................................................................................................... 37
Quality ................................................................................................................................................................................................. 38
Respect of Individuality
Human Resource Strategies................................................................................................................. 39
Workplace Health and Safety......................................................................................................... 43

Special Feature: Roundtable Talk on

Introduction of Communication Tools
You can find more information about C.I. TAKIRON Group on thecorporate website. General information is available in the Corporate section and more detailed management information is available in the Investor Relations section.

Women’s Participation andAdvancement in the Workplace.....................................................................

44

Responsibilities to Society
Initiatives toward Carbon Neutral Society ....................................................... 47

Corporate Information
https:// www.takiron-ci.co.jp/corporate/

Respect for Human Rights, CSR Procurement............................................ 51
Social Contribution Activities........................................................................................................... 52
Management Platform

Investor Relations
https:// www.takiron-ci.co.jp/ir/

Special Governance Roundtable....................................................................

53

Enhance Corporate Governance............................................................................................... 57
Compliance & Risk Management............................................................................................ 61

Inquiries regarding this report:
Corporate Communication Dept.
TEL: +81-3-6711-3718

Directors, Audit & Supervisory Board Members,
and Executive Officers...................................................................................................................................... 63

Data
Financial and Non-Financial Data (Five-Year) ................................................... 65
Corporate Profile and Stock Information..................................................................... 67
IR Communication............................................................................................................................................................... 68

C.I. TAKIRON Group Integrated Report 2023

2

A History of Taking on Challenges
and Expanding Business Domains
Our company has led the way in developing products to address customer needs
since its founding in 1919 by accurately understanding the changes of the times.
We remain unafraid of change and will continue to take on new challenges in order tosafeguard people’s affluent lives, support societal growth, and create a people- and earth-friendly future.

Concepting thecircular economy
since our founding tohelp support society

1919

Launch of Remanufactured Celluloid
Remanufactured celluloid is made bymaking recycled celluloid sheets fromthe waste celluloid produced whenprocessing new celluloid sheets (average of 20% of waste celluloid isgenerated). Orders from processors
boomed for these recycled celluloid
sheets after the recycled product was
praised for having almost the samehigh-quality as new celluloid sheets.

Celluloid Sheet

Shift toward
Materials that
Meet Market
Needs

Drip, Dust, andMist Prevention

1955

Mist inside of greenhouses
causes diseases in crops. We
set out to prevent fog and mistin greenhouses from around1976 in light of feedback fromfarmers about mist forcing
them to wear rain gear during
work and other such concerns.
After three years of testing,our research discovered a way
to mitigate mist by applying a
special silicone to change thedisposition of wet film surfaces. This led to the acquisition ofa patent and the start of Sky 8
sales in 1978.

1978

Launch of Sky 8

Launch of Rigid Vinyl
Chloride Sheet Sales
Our research into vinyl chloride resin
as flame-retardant materials began in1948 to overcome the shortcomings ofcelluloids. TAKIRON Plate started sales
in 1955 as a rigid vinyl chloride sheet.
We began to manufacture rain guttersin 1957, rigid vinyl chloride corrugatedsheet with extrusion processing in 1958,
and polycarbonate plate in 1961. We
also transitioned metal products (galvanized iron sheet/tin rain gutters) to lightplastics which does not rust.

Prototype Machine and Research Group

With mist prevention (Sky 8)

Water-sealing/
Waterproofing
Panels and Shields

1982

Launch of Vynon Aqua ATR(current Vynon Hydrotite)
Hydrophilic Water Sealing
MaterialA
specialized
production
method succeeded in blending and molding composite
and water-absorbing resins.
These panels and shields swellin water to obstruct the penetration of ground water. It is
used as a segment sealant inunderground tunnels and as a
joint sealant in concrete, and iscurrently being used in subway
construction throughout Asia.

Example of application: Tokyo Bay Aqua-Line
Trans-Tokyo Bay Highway Umihotaru
Undersea Tunnel

History of C.I. TAKIRON

1919

1935
Takigawa Celluloid Plant
incorporates under the nameTakigawa Celluloid Co., Ltd.

1957

1959

Itochu Corporation Takiron Chemical Co., Ltd.
invests in Takigawa changes its corporate
Celluloidname to Takiron Co., Ltd.

1961
Takiron Chemical Co., Ltd.
is listed on the Second Sectionof the Osaka Securities Exchange.

1963

Takigawa Celluloid Plant. founded(former Takiron Co., Ltd.)

Yokohama Rubber Co., Ltd.
establishes Hama Kasei Co., Ltd.
(former C.I. Kasei Co., Ltd.)

as a joint capital venture with
the Zeon Corporation and other
Furukawa Group companies.
3

C.I. TAKIRON Group Integrated Report 2023

1965
Kobe Resin Co., Ltd.
founded with 100%
investment from
Itochu Corporation

1967
Itochu Corporation
invests in Takigawa
CelluloidSafe Even Under
Outdoor Rainy Condition

1995

PVC Stair Treads with Sound
Absorption and Slip Resistant
Function
Industry-first sound insulation andslip-resistant flooring material forstairs Through repeated testing, wehave continued to improve the qualityof Takistep in terms of its materials,
design, and the stair nosing method. Consequently, Takistep is now
renowned across the industry for its
unique features.

Construction
Materials Business

Lightweight andHighly Rigid withHigh Heat Insulation

Polycarbonate building materials,
housing materials, piping andpluming equipment, flooringmaterials, decorative materials,
water damage prevention
materials

2007

Launch of Lume Carbo
Large Polycarbonate Plastic
Double-layer Panel
The Lume series provides a lineup
of products to drive energy savings by letting plenty of naturallight into buildings while dramatically reducing the heat lost from
openings. Applications include
Lume Wall and Lume Roof.

Environmental
Materials Business

ExpandEnvironmentfriendly
Products

Agricultural materials, binding
materials, infrastructure materials,
civil engineering products,
liquid chemical tanks

2021

Development of Cellulose
Compound
TAKISTEP

Lume Wall

Preventing the
Spread of Fire
DamageAnti-bacteria/
Anti-virus

1999

Launch of Flame-retardant
Plastic Sales
We developed FM Plate thatprevents the spread of fireand smoke by forming a carbon layer that acts as an oxygen shield against a fire heatsource. This contributes to theenhancement of fire safety.

Wedeveloped
Cellulose
Compound, a polyolefin resin blended with cellulose,a natural fiber. It contributes
to the reduction of CO2 emissions by reducing the use of
petroleum-derived resins.

ExpandingBusiness Domains

2021

Launch of Antibacterial and Antiviral
Products: Belbien (Fireproof
Decorative Adhesive Film) and
Neo Clean (Flooring Material)

High Functional
Materials Business
Cellulose Zipper

These products have an antibacterial activity value of at least 2.0.
They also have antiviral properties
that can kill 99% or more of viruses. By restricting the spreadof bacteria and viruses, they help
maintain a more hygienic environment.

Plastic sheets, machining
materials, micro motors

Specialty Films
Business
Shrinkable film,
zipper tape

FM Plate Burning Test

Walls: Belbien Flooring: Neo Clean

1973
Takiron Chemical Co., Ltd. listedon the First Section of the Tokyo
Stock Exchange.
Takiron Chemical changes its
name to Takiron Co., Ltd.

1971
Takiron merges with Kobe Resin,
forming C.I. Kasei Co., Ltd.

1993

1995

C.I. Kasei Co., Ltd. C.I. Kasei Co., Ltd.
listed on second
listed on firstsection of TSE
section of the Tokyo
Stock Exchange

2009

2017

2022

Takiron and C.I. Kasei
integrate their businesses,

C.I. TAKIRON Corporation
listed on the Tokyo Stock
Exchange Prime Market

forming C.I. TAKIRON
Corporation

C.I. Kasei Co., Ltd.
becomes fully
consolidated subsidiaryof Itochu Corporation

C.I. TAKIRON Group Integrated Report 2023

4

Business Overview
C.I. TAKIRON contributes to better life and development of society in addition to solutions toward environmental and social issues in four business sectors.

Construction Materials Business
Polycarbonate building materials, housing materials,
piping and pluming equipment, flooring materials,
decorative materials, water damage prevention
materials

Small-scale Rainwater Storage
and Filtration Tanks

We comprehensively create urban spaces
and provide future-oriented safe andcomfortable living environments.
We of course provide safety and durability but also have abroad track record which has earned a high level of trust in theconstruction field where aesthetics and comfort are essential.
Our wide-ranging product lineup supports comfortable living
and urban environments.

Flooring for Apartment
Corridors

Fireproof Decorative Films with
Adhesive

High Heat Insulating Honeycomb structured
Polycarbonate Panels

Environmental Materials Business
Agricultural materials, binding materials, infrastructure materials, civil engineering products, liquid
chemical tanks

High Stiffness Polyethylene Pipe
(Civil Drainage Pipe)

We propose optimal environment with our widearray of agricultural materials and contribute tobuilding, maintenance, and improvement of asafe and secure social infrastructure.
We contribute to the revitalization of agriculture by providing
high-quality agriculture materials, such as agricultural films,
agricultural supports and irrigation tubes. We also offer materials
that support the functionality and safety of social infrastructure
according to the various applications and purposes.

Waterproof Geomembranes(Industrial Waste Disposal Facilities)

Pipe Rehabilitation
Work (Sewer Pipes)

Agricultural Plastic Film/Resin-coated Steel Pipe

High Functional Materials Business
Plastic sheets, machining materials, micro motors

We support the growth of next-generationindustrial fields through our advanced
material processing technology.
C.I. TAKIRON high functional materials play an important rolein many fields from industrial applications in technically highdemanding semiconductor and liquid crystal manufacturing
to the high reliability needs of cameras and RC servos.

Industrial Plastic Plates(Semiconductor Manufacturing
Equipment)

Micro Motors

Static Dissipative Plastic Plates(Clean Room Partitions)

Specialty Films Business
Shrinkable film, zipper tapes

From a global perspective such as responding
to the environment, we propose shrinkablefilms and a range of high-precision zipper
tapes demanded by markets.
The mainstay products in this business are shrink films andzipper tapes, both a fixture of everyday life. We provide
easily recyclable label films and zippers for mono-material
packaging that can contribute to the recent trend toward
transitioning to a circular economy.

5

Zipper Tapes

Shrinkable Films

C.I. TAKIRON Group Integrated Report 2023

Financial/Non-financial Highlights
Financial
Net Sales

Ordinary Profit

 rofit Attributable toP
Owners of Parent¥
FY2022

FY2021

145,725

141,936

millionEarnings Per Share¥FY2022

FY2021

5,923 million

9,084

Capital Investment

FY20216,660

FY20222,460 million

Research & Development Expenses¥

FY202168.47

FY202225.30 Yen

5,070 million

4,145

Non-financial information
 ew Female Graduate
N
Employment Ratio*

FY2022

FY2021

FY2021

1,214

FY2022

1,355 million* non-consolidated

 ate of Paid Leave Taken
R
by Employees*

Percentage of new hires who leave
within three years (career-track)*

1

FY2021

28.6

FY202263.6 %

 hanges in Energy Use
C
and Consumption Rate

FY2021

13.6

FY202189.4

FY2021(Joined 2019)

FY202290.5 %

7

CO2 emissions at Scopes
1 and 2

FY2022

13.1GJ/Manufacturing Ton

FY202181

FY202271 kt-CO2

FY2022(Joined 2020)

0%

Water Consumption

FY2021981

FY2022953 km3

Third-party validation
 ertified as excellent corporation forChealth and productivity management
In fiscal 2023, C.I. TAKIRON was once
again certified as an out-standing organization for health management under the
Certified Health & Productivity Management Organization Recognition Program
for the second consecutive year.
To maintain this designation, we’ll go evenfurther to implement the Management
Commitment on Enriching Lives.

Kurumin Certification
The Minister of Health, Labour and Welfare
recognized C.I. TAKIRON as an organization
striving for a high level of childcare support
through the 2021 Kurumin Certification.
*	The Kurumin Certification is an initiative to recognize companies meeting certain require-ments for childcare support
that provides work-life balance to employees based on
the Act on Advancement of measures toSupport Raising
Next-Generation Children.

C.I. TAKIRON Group Integrated Report 2023

6

Top Message

Yuji Fukuda
President & CEO

Top Message

Striving to be an excellent company
expected by all stakeholders
Fiscal 2022 in Review

Termination of the Medium-term Management Plan in Light of Changes
in the External Environment Ensuring to Achieve Our One-year Plan,
Preparing the Next Medium-term Plan
Back in fiscal 2021 (ended March 2022), we launchednounced in May 2023 and to prepare a new medi-

a medium-term (three-year) management plan titledum-term management plan for the three years that fol-Commit to Transformation 2023 (CX2023). CX2023 set

low. We are determined to achieve the annual targets

out quantitative three-year targets along with six priority

without fail so that we can restore stakeholders’ confi-

actions.

dence in us, which is an absolute must.

Over the first two years, we have been conducting
business activities based on the plan. However, we faced
a volatile business environment. As well as the pandemic impact, we faced global economic volatilities culminating in high material and energy costs, along witha reduction of civil engineering projects. These factors

Performance, targets
Net Sales
Operating
ProfitROE
Operating Profit margin
ROA

CX2023¥141.9 billion¥145.7 billion

Annual targets for fiscal 2023
(outlined in one-year
management plan)¥154.0 billion

created a wide divergence between actual performanceand the performance targets set out in CX2023, withthe effect that profit dropped markedly in fiscal 2022.
After taking all circumstances into account, we decided to end CX2023 a year early, at the end of year 2. We
did so because we felt that sticking to unachievable tar-

7.6%
¥8.6 billion
6.1%
4.6%

4.0%¥5.8 billion

gets would be dishonest to our stakeholders and would
demotivate employees.

2.7%

3.3%

2022

2023 (forecast)

1.7%

Our focus in fiscal 2023 (ending March 2024) is toachieve the targets set out in our one-year plan an-

5.3% ¥7.8 billion
5.1%

2021

Tasks for TodayThree Actions to Achieve the Growth Promised Prior to the Merger:
Boosting Profitability, Empowering R&D Capability, and Reforming
Organizational Management Structure
Against this challenging backdrop, I took over as C.I.
TAKIRON Corporation’s CEO in April 2023. I previously
served Itochu Corporation as its representative director
and executive vice president, and as president of one of

Itochu’s business divisions.
Itochu had held a stake in C.I. Kasei since before C.I.
Kasei merged with TAKIRON. C.I. Kasei became a consolidated subsidiary of Itochu in 2009. Back when I was

C.I. TAKIRON Group Integrated Report 2023

8

Top Message

managing Itochu’s chemicals division, I felt that integrating C.I. Kasei with TAKIRON would unlock synergies between the two companies. At that time, Itochu, as wellas having a stake in C.I. Kasei, had a stake of just over
30% in TAKIRON. The merger occurred, as I anticipated,in 2017, by which time I was working outside Japan ashead of Itochu’s Asia and Oceania bloc and its East Asia
bloc.
However, the post-merger picture was not entirely as expected. True, TAKIRON’s plastic plate businesssynergized with C.I. Kasei’s film business, enabling themerged entity to deliver value-added resins efficiently and unlocking higher revenue potential. Ultimately,
however, the merged entity struggled to grow its sales
revenue and profit. I was particularly concerned that thecompany seemed to have lost its profitability. After becoming president, I reviewed the post-merger results.
The findings were stark.
So what does C.I. TAKIRON Corporation need today?
Last year, when I was serving as executive vice presidentof C.I. Takiron, I identified three areas that we need tofocus on: boosting profitability, empowering R&D capability, and reforming organizational management structure.
To start with boosting profitability, as a manufactur-

9

ing company, our top priority should be to enhance
productivity through a process of rationalization. Better
productivity means lower production costs. With lower
production costs, we can increase profit without raisingsales prices. That way, we can beat the competition. In
short, we need to regain our Gembaryoku or frontline
strength. To that end, we must adopt a more aggressive
footing: Instead of sticking to what we did yesterday,
we should invest in advanced assets to boost production
capacity while using a production management system
to save labor. In this way, we must keep raising the bar
so that our production centers stay competitive.
Crucially, we can only boost profitability by leading
the market in delivering new products with added value.
This is where the second priority, empowering R&D capability, comes in. We must waste no time in synergizing
the technical prowess of former TAKIRON and C.I. Kasei
in order to accelerate expansion into new sectors. I fearthat we still haven’t sowed enough seeds of growth in
this field.
To implement these aggressive strategies, we need toreform organizational management. For the first part ofthis reform, Head Office will take over from the Production Division in allocating budgets to production centers
so that we can centrally manage the growth capital expenditure and other elements of theaggressive plan for production. Alongside this change, we’ll consolidate
the digital transformation team with
the IT team into a single team. Thesechanges will create an organizationalfooting in which we can identify, andthen address, new issues that emerge,such as lack of coordination with manufacturing factories and the lack of anorganization-wide, dynamic vision for
digital transformation.
Only by pressing ahead with theseactions simultaneously can we raise
our future prospects for true growth.
It will take some time to get all the
production teams united behind thisagenda and unleash our potential
once again. But the market won’t wait
for us to be ready. For the time being,
then, we must produce solid resultswith what we have. That means wemust, without fail, achieve the targets
in the one-year management plan weannounced back in May.

C.I. TAKIRON Group Integrated Report 2023

One-year Management Plan

Improving Profitability to Ensure to Achieve Our Quantitative Targets,
Reforming Business to Improve Growth Prospects
We set the following quantitative targets for fiscal
2023: \154.0 in net sales, \7.8 billion in operating profit,\8.0 billion in ordinary profit, and \5.0 billion in net income. Given the problems I’ve been discussing, we canonly achieve these targets by taking three actions: 1)
improving profitability, 2) reduce deficit companies andthose total net loss, and 3) pursing M&A opportunities
to drive business reform. [See p. 21: Annual targets forfiscal 2023]. [See p. 21: Annual targets for fiscal 2023]
To improving profitability, we must adapt to the harshbusiness climate by reducing costs, raising sales prices,and consolidating product categories. We’ve endured
headwinds for some years now. Fiscal 2022 was particularly tough, with high prices for materials and energy
undercutting our profit. Global financial and geopoliticalconditions remained as volatile as ever. Prospects of economic recovery were slim in Europe, where some of ourfactories are located. In the United States, inflation andthe accompanying interest rate hikes stifled demand,
leading to a big drop in sales of shrink films, our mainstay product for the US market.
However, as we go into the second half of fiscal 2023,
we see signs of a possible economic recovery in Europe.
Japan, too, appears to be on a recovery path now. In thesecond half, I expect to see a return to sales growth in
one of our mainstay products, industrial plastic plates forsemi-conductors. With this growth, we can achieve theannual targets despite the harsh conditions.
Regarding the second action—reduce deficit companies and those total net losses—we’ve already started
a process of identifying group companies that require
close attention and monitoring them on a monthly basis.
From now on, we’ll conduct such monitoring centrally
from Head Office, instead of delegating it entire to business units as we did before.
The third action is to actively pursue M&A opportunities with a view to driving business reform. We’ll pursue two types of M&A deals: those that will increase ourshare of the Japanese domestic market, and those thatwill enable us to acquire new technology. An exampleof the first type is our acquisition, in March 2023, of
MIYOSHI Corporation, whose forte lies in smoke-proof
hanging partitions. The latter type would involve acquir-

Annual targets for fiscal 2023

(Unit: 100 million)

Change fromprevious
year's result

Plans
Net Sales
Operating Profit
Ordinary Profit
Profit Attributable to
Owners of Parent

1,540
78
80

+82 (106%)50+25 (203%)+20 (135%)+20 (135%)

ing new nanotech, motor tech, and the like. We’ll explore leads far and wide using a global patent searchtool that we installed last year. We must secure our coretech and concentrate resources in areas with bright
growth prospects.
On the financial side, we do, I believe, have ample finances to fund these aggressive investments. However,it’s also true that we don’t always operate as efficiently
as we could. We should therefore evaluate our business
units based on ROIC to see how much return we are
getting for cost of capital. By gaining precise data about
capital efficiency, we can pursue a selection and focus
strategy that will improve our consolidated revenue andprofit. [See p. 17: Basic financial strategy]
There’s only so much we can do in just one year. But
we must press ahead with what we can do now so that
we can deliver outcomes as soon as possible. To demonstrate our commitment and confidence to shareholders
and investors, we’ve pledged that the dividend for thecurrent fiscal year (ending March 2024) will be no lessthan \22 per share, with a payout ratio of no less than
40%. After we announced this pledge, our share price,
previously on a downward trend, traced an upward pathacross the first quarter (April–June 2023). This trend suggests that stakeholders were reassured to some extent.
But I also feel that stakeholders will give us no more than
one year to turn performance around. We must makethe most of this grace period. The management andstaff have pulled themselves together and committed topreparing a new medium-term management plan thatwill start in fiscal 2024.

C.I. TAKIRON Group Integrated Report 2023

10

Top Message

Toward the Next Medium-term Management Plan

As Well as Enhancing R&D and Production, the Lifeblood of Any
Manufacturer, We'll Go Further in Empowering the Talent that will Drive
Future Growth
I was determined that the management, as well as
setting annual targets, should send out a clear message
communicating the kind of organization we want to bein the longer term. That’s why we announced in May,
along with the one-year plan, seven strategic themesthat we would integrate into the forthcoming medium-term management plan.
We have a wide-ranging portfolio, encompassingbuilding materials, agricultural materials, civil engineering materials, industrial materials, and general goods.
But what we need now is an overall vision to guide ourstrategic direction, which might be to channel our existing strengths—polycarbonate auto parts, for example—
toward new frontiers, or it might be develop eco-friendly
products that help build a sustainable world. We mustthen back-cast from this vision to determine which capabilities and assets we should enhance at short-, medium-, and long-term time frames. Particularly critical is
the need to enhance what are the core capabilities ofany manufacturer: R&D and production. To that end, weneed talent.
Manufacturers live and die on the excellence of theirtechnicians and researchers. To help attract the top talent that will carry our vision forward, we should locate
our R&D sites in accessible areas. Currently, we haveseveral R&D sites in disparate locations. It might be agood idea to build a new R&D facility in the outskirts ofa big city. At the same time, we must facilitate the professional growth of younger employees, who represent
the next generation. One idea is to adopt a talent management system that offers fast-tracked promotion tojunior employees who excel. Since fiscal 2019, our orga-

nization has made fair progress in rolling out its agenda
of workstyle reform and of health and productivity management, in accordance with the Management Commitment on Enriching Lives. Building on this progress, we’llbalance the existing elements of this agenda with a system for evaluating employees’ motivation to grow andexcel. [See p. 39: Talent strategy]
I want C.I. TAKIRON to be an organization that always
embraces new challenges. This is an age of high labormobility. Even in Japan, young people increasingly hopfrom one employer to the next as they forge their careers. This trend makes it all the more important to be
an inspiring organization that people want to work for.
I mentioned earlier that we need to regain our Gembaryoku and expand into new business sectors. Bothtasks will require an organizational culture that emphasizes employee engagement and active idea-sharing.
Such a culture will support both employee growth andprofit growth, leading to greater business success.
Strategic themes for the next medium-term
management plan:
1

Restructure and strengthen business divisions

2

Develop new products, new tech, and a stronger
structure for driving new business development

3

Overhaul R&D

4

Enhance Production Division

5

Enhance Planning and Administration Division

6

Enhance the talent management system so that itsupports sustainable growth7

Establish an investment strategy

Sustainability Management

What's Expected of Us: Sustainability, Governance
Another important part of our next medium-term
management plan will be sustainability. Sustainability
management must underlie everything we do as an organization. As a B2B manufacturer, we have a complex
supply chain consisting of clients and suppliers aroundthe world. With such a supply chain, we must take a dy-

11

namic, adaptive approach to building business relationships, keeping an eye on the relevant industrial trends.
The trend toward sustainability is here to stay. We must
understand the societal expectations and discharge oursocio-environmental responsibilities as a public company.
That’s not to say we’ll ever neglect our business im-

C.I. TAKIRON Group Integrated Report 2023

perative: to pursue profit growth and deliver value toour employees, shareholders, investors, and other stakeholders. Our price-to-book ratio has remained lower
than 1.0 for some years now. The question is how we
can increase the value of our organization. To offer attractive wages, deliver generous dividends, and contribute to society, we need above all to boost our earning
power. After all, if we can’t achieve sustainable growthfor ourselves, how can we be expected to deliver sustainable value to society?
Key to ensuring our own sustainable growth is corporate governance. Hence, one of the policies in our
one-year plan for fiscal 2023 was to strengthen ourgovernance structures. I’m confident we can succeedin this task with the leadership and extensive expertiseof members of the Board of Directors and of the Audit
and Supervisory Board, including those who are outside
directors. The model of corporate governance we’ve adopted is that of a company with an audit and supervisoryboard. Under this model, we’ve worked to build a robust
system of corporate governance to satisfy our parent
company’s demand for greater transparency and address
the concerns raised by minority shareholders. On top ofgovernance, we now face an urgent need to improve
profitability and enhance capital efficiency as well. Board

members all agree on the need to allow for more engaged and nuanced debate on strategic direction. Since
April 2023, we’ve worked to further separate management from business execution and to further enhancethe deliberation criteria for board meetings. We have theGovernance Committee, whose membership comprises
outside directors, members of the Audit and Supervisory
Board, and myself. In this committee, we discuss a rangeof matters, from vetting prospective transactions for potential conflicts of interest to portfolio management. I feelmost reassured by all the fresh insights and astute points
members contribute. [See p. 53: Governance roundtable]

To All of Our Stakeholders

A Vision for Sustainable Growth with Society, and a Pledge to Achieve it
Our immediate priorities are to achieve the quantitative and qualitative targets set out in the one-year planfor fiscal 2023 and to regain our Gembaryoku and profitability. Drawing on our ample financial resources, we’ll
invest dynamically in projects to boost our prospects ofgrowth and deliver the profits back to our shareholders
and investors. Through such balanced capital allocation,
we’ll build up the value of our organization. We’ll also
invest in our talent, the source of our growth, by paying
decent wages and providing a workplace that is motivating and offers plenty of opportunity for growth. Allof these actions are essential and must be taken simultaneously. That’s no easy feat, but it’s something we must
accomplish.
One of our advertising slogans, literally translated,reads, “The Questioner, that is the Earth.” This slogan

communicates our resolve to deliver solutions by our
manufacturing products to the global challenges to sustainability represented in the SDGs. In our next growthphase, we’ll focus on ideas for specific products andservices that address socio-environmental problems. By
delivering real value to society, we’ll increase our profits,creating a positive cycle of sustainable corporate development. As leader, my duty is to craft a vision for thisvery purpose.
The first step is to solve our immediate business problems so that we clear the way for growth during the next
medium-term period. We can then achieve the excellence that our stakeholders rightly expect of us. In closing, I wish to thank our stakeholders for your confidence
in our organization and I look forward to continuing ourjourney together.

C.I. TAKIRON Group Integrated Report 2023

12

Va l u e C re a t i o nValue Creation Process
By creating value through sustainability management, we can continue to produce products and services thatcreate a people- and earth-friendly future.

Value Provided

Dialogue with
Stakeholders
P.20 Engagement with
Stakeholders[Mission]

OutputCreating a peopleand earth-friendly
futureSafety andSecurity

P.23 Business Strategy

Construction
Materials Business
Polycarbonate building materials,
housing materials, piping andpluming equipment, flooringmaterials, decorative materials,
water damage prevention
materials

Comfort andPeace of Mind

Environmental
Materials Business
Agricultural materials, binding
materials, infrastructurematerials, civil engineering
products, liquid chemical
tanks

C.I. TAKIRON
2030 Vision

Net Sales ¥200 billion
Operating Profit ¥20 billion
Operating Profit Margin 10%

Materiality
P.31

tainability Management
19 Sus▶P.

To become a corporate group thatdelivers peace of mind and comfort
to the future of our planet
through creative evolution.

High
Functional
Materials Business
Plastic sheets,
machining materials,
micro motors

Environment
Specialty Films
Business
Shrinkable film,
zipper tape

New capital acquisitionolog
i c al
G ui

Prod
uct
ion

A f t e r- s ale s S e r vi c e s / T e ch n

d an

❶ Polymer Processing
Technology❷ Product Development
and Design Capabilities❸ Customers First❹ Trusted Relationships
with Business Partners❺ Climate Leveraging
Individuality

ity
ial
er

Five Strengths

Mant Planmege trategy
na S

Pro
cu
re

1
P.2

pment
evelo
&D
ch
r
a
ese
/R

t
en
m

Ma
rke
tin
g

M
at

Resilience
The ability to recoverfrom and address social
challenges and crises,
such as natural disasters
and damage to social
infrastructure.

CapitalFinancial capital

P.15 Capital Enhancement

Manufacturing capital

ce

Sales

Human capital

Natural capital[Corporate Culture]

Pride in our
accumulated value
and the courage
to transform

13

Social capital

C.I. TAKIRON Group Integrated Report 2023

Intellectual capital

Creating new buds of growth
Construction Materials

Safety and Security

Resilience

Simple Waterproofing Panels that are Lightweight and Reliable
Climate change has increased the frequency and severity of flooding incidents, creating a greater needfor measures to control flooding and prevent water ingress. We produce a range product for preventing
and mitigating natural disasters. Recently, we added to this lineup plastic waterproofing boxes, “Flood
Safe Box”, that are a lightweight and durable. Each box has a bottom plate and washers to resist water
ingress into the floor-facing side, frame, and coupling parts. The boxes are easy to use and require no
great exertion of physical strength—you simply assemble them and lay them in place. With a foldable
design that allows for easy storage, the boxes can be stored away in non-emergency times so thatthey don’t take up space or create an eyesore. We market the boxes to disaster-readiness businesses,
apartment buildings, and factories. In this way, we contribute toward a more disaster-resilient society.

Environmental Materials

Safety and Security

Environment

Multipurpose Sheets for Clean Energy and Disaster Mitigation
One of the problems with solar panels is their variable output; the power they produce depends on the amount ofsunshine and other climatic conditions. Another issue is that solar installations must be designed to minimize impacts
to the local environment. To address these problems, we developed Multilining, a multipurpose sheet that increases theefficiency of solar panels. Placed under the panels, the sheets reflect sunlight, enabling the panels to generate energy
more efficiently. They also absorb ultraviolet rays to reduce radiant heat, thereby minimizing panel heating and reducing
the risk of fire. When integrated with our highly durable anti-grass mats, they can restrict the growth of grass for atleast 20 years. They also have a waterproofing function to protect the soil. In this way, they prevent situations in which
panels sustain damage and contaminate the environment. By providing a solution for the safe management of power
generation at a competitive price, we’re supporting the transition to clean energy.

High Functional Materials

Environment

Polycarbonate Plates Made from 99% Recycled Material
In April 2021, we launched an internal project called the Eco Plastics Project. This purpose of the project was
to design an eco-friendly product that incorporated customer feedback. The result was PCECO, a polycarbonate plate. The product is made from 99% recycled material, an industry first. In just one year, we turned
an idea into a product, stealing a march on the competition. Specifically, we recovered re-cycled pellets using
waste materials generated during production (this process is known as pre-consumer recycling) and subjected
them to extrusion molding so that they could be reused as plates. The product’s durability and transparency
hold up against that of virgin material, while. Moreover, since less energy is used in the polymerization process, CO2 emissions from procurement to production are reduced by 90%. The product bears the Eco Mark(an ecolabel issued by the Japan Environment Association). It is used as a safety cover for machinery.

Speciality Films

Scrap and defective products are recovered

The material is ground into pellets

The material is subjected
to extrusion molding

The Eco Mark andcode number
22 118 011

Environment

Shrinkable Film Making Plastic Bottles Easier to Recycle
Packaging design has become a critical factor in the competitive edge of everyday products such as drinks. In
the United States, people rarely remove the label and dispose of it, creating an urgent need for label material
that can be easily removed from a plastic bottle. In the United States we have a subsidiary called Bonset
America Corporation, which has gained a large market share in manufacturing and selling shrinkable film forplastic bottles. Bonset has developed Bonpet Renew, a shrinkable film that allows for easy removal and thus
removes an impediment to recycling. Bonpet Renew is approved by the APR*. Ahead of the competition,
Bonpet succeeded in creating an eco-friendly product that has the same functionality as its mainstream counterparts. Bonpet already boasts an output of 5 metric kilotons. It aims to reach 10 metric kilotons by 2025.
In this way, our subsidiary is encouraging more people in the United States to recycle their plastic bottles.
* The Association of Plastic Recycle

C.I. TAKIRON Group Integrated Report 2023

14

Value Creation

Capital Enhancement
In the course of our century-long history, C.I. TAKIRON Group has honed six types of capital, which are sources of value creation: financial capital, manufacturing capital, intellectual capital, human capital, social capital,and natural capital. We’ll continue deploying a wide variety of capital as effectively and efficiently as possible.
We’ll also keep enhancing the capital in the course of our business activities.

Ensuring the financial health necessary for sustained investment toward higher growth

Financial
capitalSound financial health provides a foundation for our sustainablebusiness growth. To strengthen our finances, we manage our portfolio in a way that drives profit growth. In other words, we reinvest
profits into areas with bright growth prospects and into M&A deals
aligned with our growth strategy. We fully recognize, on the other
hand, the need to deliver continuous and stable dividends to ourshareholders. By striking a balance between reinvesting profits andreturning them to the shareholders, we strive to increase our organization’s overall value. (See p.17: Basic financial strategy)■ Total capital (consolidated, net)

¥92.6
■ Equity ratio

61.1

%

How we strengthen this capital● Enhance earning power by managing ROIC
● Pursue fruitful M&As
● Maintain a balance between continuous reinvesting profits and return to the shareholders

billion(as of March 31, 2023)(as of March 31, 2023)■Profit attributable to owners ofparent¥2.4

billion(FY2022)An international production network that adapts to changing conditions inbusiness environment and customer needs

Manufacturing
capitalOur corporate group encompasses 25 producition sites in Japan andfive overseas. While we aim to bolster our production capacity insectors with growth potential, our overseas sites work to gain competitive edge by sourcing locally and producing products for local
consumption. We’ll also adopt the principles of a smart factory to
streamline operations and reduce production processes and optimize human resources, thereby increasing efficiency and reducing
production costs. (See p. 37: Production technology)

How we strengthen this capital● Bolster production capacity in Japan and overseas●A dopt the principles of a smart factory to build competitive edge
● Establish a policy and structures for managing business continuity planning■ Production sites
Japan:

25
5

Overseas:(in four countries)(as of March 31, 2023)■ Capital investment¥5.0

billion(as of fiscal 2022)■ Raw materials
Resins, processing agents,
steel materials, etc.

Core technology for sustainable growth
Our core technology consists of technologies related to material compounds,
fabrication, and assay evaluation. Using this core technology, we aim tobuild a differentiated and truly compelling value proposition. We also planon overhauling our R&D activities as well as the organizational structures
themselves. As part of this, we’ll define our medium- and long-term portfolio strategies and concentrate resources on selected R&D themes. We’llalso pursue alliances and M&A deals, both in and outside Japan, in order toacquire the technologies we need to launch new businesses. (See p.33: R&D)

Intellectual
capital15

How we strengthen this capital● Adopt a concentration strategy as part of portfolio
management● Embrace open innovation● Use alliances and M&As to acquire tech from outside

C.I. TAKIRON Group Integrated Report 2023

■ Diverse technology and technical expertise
Technology related to material compounds,
fabrication, and evaluation■ R&D expenses¥1.3

billion (as of fiscal 2022)■ New products sales composition (non-consolidated)

21.5％ (as of fiscal 2022)■ Number of patents held (non-consolidated)Japan:

446
36

Overseas:(as of March 31, 2023)

Diverse group of talent to create innovation

Human capital

We invest unsparingly in talent development, as we recognize how essential
human capital is for delivering future growth and achieving business strategies. Central to our talent development strategy are the priority actions set
out in our Better-Life Management Declaration. Through these actions, we
aim to create a workplace that values every member and to foster an organizational culture conducive to professional growth. We also aim to create apositive cycle for attracting talent, nurturing talent, and promoting diversity
and inclusion. In this way, we aim to be an organization that fully unleashes
the potential of its talent. (See p.39: Talent strategy)

How we strengthen this capital● Invest strategically in developing and educating talent● Strengthen efforts to manage employee health andproductivity and to reform work-styles● Promote diversity & inclusion■ Number of employees (non-consolidated)

1,095(as of March 31, 2023)■ Amount invested in talentdevelopment (non-consolidated)¥130

million(FY2022)■Ratio of women in leadership
positions (non-consolidated)

5.7%(as of April 1, 2023)

A stakeholder network built upon solid trust
In an effort to increase our organization’s value, we engage in active
and constructive dialogues with internal and external stakeholders. We also aim to build a sustainable supply chain founded ontrust with our valued partners. Similarly, our business sites engage
in local activities to deepen the trust and understanding of local
communities. In this way, we are building a strong network with all
stakeholders to help create a better world. (See p.20: Stakeholder
engagement)

Social capital

How we strengthen this capital● Engage actively and constructively with stakeholders● Build a sustainable supply chain● Ensure mutual prosperity between business sites andlocal communities

Limited natural resources are essential
for business activities

Natural capital

We make sustained efforts to use natural resources as effectively and efficiently as
possible and to use as few resources as possible in our business activities. We identify
climate-related risks relevant to business activities across our corporate group, assess
their probability and impact, and take action to treat the risks. Having committed
to becoming carbon neutral (net-zero emissions) by 2050, we’ll take action to cut
emissions across our entire supply chain. We will also contribute toward a sustainableeconomy by supplying a wide range of eco-friendly products. (See p.47: Supportingthe carbon transition)

How we strengthen this capital● Improve engagement based on TCFD-compliant disclosures and press ahead with the goal of carbon neutrality● Use natural resources effectively● Develop and provide eco-friendly products

C.I. TAKIRON Group Integrated Report 2023

■ History
Years in business:104(as of 2023)■ Networks

Domestic and overseas
supply chain network■ Number of social contribution
activities at various business sites

233(as of fiscal 2022)(See ▶p.52: Social Contribution Activities)■ Amount of water used:953

km3 (as of fiscal 2022)■ Reduction in amount of water used:

28 km (year on year)3■ CO2 emissions at scopes 1 and 2:

71 kt-CO (as of fiscal 2022)
2■Reduction in CO2 emissions at scopes 1 and 2:

10 kt-CO (year on year)2■ Changes in energy use and consumption rate

13.1 GJ / manufacturing ton (as of fiscal 2022)■Reduction in energy consumption rate

0.5 GJ / manufacturing ton (year on year)16Va l u e C re a t i o n

Financial Capital Strategy
While maintaining financial health,we improve the accuracy in our businessportfolio, and continue to invest in
projects to further our growth prospects.
Toshio Tamaki

Director, Managing Executive Officer, Chief Operating
Officer of the Corporate Planning Division, CCO

Sound financial foundation
Improving earning power to bolster our finances
Although our finances remain solid, our operating cash flow
have dropped considerably as a result of the sharp drop in profit we recorded in fiscal 2022. Our debt-to-equity ratio remains
below 0.1, indicating sound financial health. Still, we’re working in a top-down fashion to improve our earnings so that we
can invest further in sectors with bright growth prospects, in
M&A deals to expand our business portfolio, in digital solutions, in R&D, and in the human capital we’ll need for sustainability management. We’ll also ensure that we can keep
delivering a stable dividend to our shareholders and investors.

We use return on invested capital (ROIC) as a measure in our
portfolio strategy. If a business’s ROIC falls below the benchmark figure, we’ll first give the business a period of time toturn performance around. If the necessary improvements failto materialize by the end of that period, we’ll consider sellingor divesting it. We also endeavor to make our investments asefficient as possible and to allocate our resources optimally inorder to enhance our ability to generate cash. In this way, we
aim to drive sustainable business growth and build the overallvalue of our organization.

Debt-to-equity ratio*

Operating cash flow / Free cash flow*1

0.08

0.07

0.07
0.06

0.06

(Billion Yen)
16

OCF

12

11

0.05

9.8

11.9
8.5

8

0.04

0.04
4

0.02
0.00

FCF
14

0

FY2018FY2019FY2020

FY2021

FY2022* In this calculation, we excluded lease liabilities and guaranteed deposits frominterest-bearing liabilities.

FY2018

5.7

4.3

3.3

FY2019-0.1*2
FY20201.0
FY2021

FY2022*1 In this calculation of free cash flow, deposits to Itochu Corporation are excluded.
*2 Free cash flow in fiscal 2020 resulted in negative due to taxes on gains fromthe sale of real estate in the previous fiscal year.

Business portfolio management
Using ROIC as a measure to evaluate businesses more precisely and visualize our fields of strategic
investments
In our business portfolio management, we use ROIC to provide a dashboard to visualize current performance value ofeach business. ROIC has an advantage over other profitability
indicators in that it can provide granular data for each business
unit. In other words, we can get an ROIC breakdown for eachfront-line within the business unit in question. With this granular data, we can track and review the ROIC calculation values
in a continuous manner, improve our business portfolio man-17

agement by promoting improvement of the return of capital.
While making these improvements on each business foundation, we’ll also make swift and discerning decisions at a higher strategic level, such as decisions on strategic investments ingrowing businesses and whether to divest an under-performing
business. In this way, we aim for optimum business portfolio
management.
For the next medium-term plan, we’ll monitor market trends,

C.I. TAKIRON Group Integrated Report 2023

enhance our performance indicators—ROIC included—and incorporate them into our business strategy, taking into accountthe market value of the company. Specifically, for each business“growth rate” and “capital profitability”, we’ll plot a graphusing sales growth rate as a measure of the business’s growthrate and ROIC as a measure of its profitability. For growth rateand capital profitability, we’ll factor in a minimum acceptable
rate (hurdle rate) and assign each business to one of the fol-

Four-quadrant matrix

Breakdown by front-line workplace(ROIC improvement tree)

Operating
ProfitMarginROIC

Marginal profit
to sales ratio
improvement

Reduction of
fixed costs
per unit of sales

lowing quadrants based on its results: growing business, corebusiness, mature business, under-performing (low profit, low
growth) business. This matrix will help us track the status ofeach business and to analyze and evaluate our business portfolio more accurately and precisely. We’ll keep improving the accuracy and precision of our business portfolio analysis througha plan-do-check-act cycle.

Growth rate
Increased sales prices
Reduction of cost to sales ratioI
Growing business

II
Core business

IV
Under-performing
business

III
Mature business

Reduction of transportation costs
Optimization of labor costs
Consolidated fixed assets
Increased sales volume

Capitalprofitability

Increased accounts receivable turnover ratio

Sales tocapital ratio

Hurdle rate

Increased inventory turnover ratio
Increased fixed asset turnover ratio

Return on invested capital (ROIC)
7.0%■ Inter-year ROIC

6.5%

In fiscal 2022, we recorded a consolidated average ROIC
of 4.2% (the formula is presented in the graph on the right).
This ROIC drop was associated with the sharp drop in profit inthat year. For fiscal 2023, senior management and front-line
staff are both committed to a program of business reform forprofitability improvement. We’re also working to entrench an
ROIC-focused approach across our organization.

6.7%
6.2%
5.6%
Operating profit × (1 – Effective tax rate)
Trade receivables + Inventory assets +Fixed assets – Accounts payableROIC=

FY2017FY2018FY2019FY20204.2%
FY2021

FY2022

Capital allocation
Balancing reinvestment with shareholder returns to improve corporate value
In the previous mid-term management plan, CX2023, we’dallocated a budget of ¥33 billion over three years. Ultimately,
we spent a total of ¥7.34 billion over two years (fiscal 2021 andfiscal 2022). Having switched to the annual plan, we’ll continue
investing in fiscal 2023, and we’ll set a new investment strategy
as part of the next medium-term plan. This investment strategy
will focus on expediting our agenda for business reform. We’ll
be investing in new products, new technology, productivity
improvements, as well as in stronger structures for promoting
new businesses. Alongside this, we’ll also invest in M&As to
expand our business portfolio.

Spend vs budget

Inter-year comparison in dividend and payout ratio(JPY)

Dividend per Share40

Dividend Payout Ratio

(%)

59.5%

60

→

Future policy

Business
investments¥4.21 billion

Digitalinvestments

Research &Sales
Development
composition:
Expenses
2.0% or above* As of fiscal 2021

¥0.38 billion

30

40.2%

20

¥2.75 billion

Expedite digitaltransformation

10

22.0

0.9%

Acquire tech, including
M&As

0

FY2020C.I. TAKIRON Group Integrated Report 2023

50
40

27.0

FY2021Dividend
Payout Ratio
42.9%

39.5%
Initialforecast
22.0→¥33.0 billion

Invest to expedite
business reform agenda→
Develop sustainability
initiatives→

Investment budget

Medium-term Management Plan
(fiscal 2021 to fiscal 2022)
Target*Results

Environmental
investments

On the other hand, we fully focus on the need to return profits to shareholders. By striking a balance between reinvesting
profits and returning them to shareholders, we aim to build
our organization’s overall value. For fiscal 2022 (ended March
2023), the dividend paid at the end of the year was ¥4 pershare (for an annual dividend of ¥15). For fiscal 2023 (ending
March 2024), we’re determined to stick to our target of no lessthan ¥22 per share. Based on our benchmark payout ratio of
40%, we may make an upward revision on the dividend forecast if we perform better than expected.

At least ¥22
30

Revisedforecast(Feb.)
15.0

22.0

FY2022

FY2023

20
10
0

18

Va l u e C re a t i o n

Sustainability Management
C.I. TAKIRON Group keeps raising the bar in sustainability management to be an organization that contributes to the sustainable development of society, in line with our sustainability vision: Supporting today,changing tomorrow.

The Basic Design of Sustainability Management

Accomplishments in fiscal 2022

Sustainability Management at the C.I. TAKIRON Group focuses on the following two points:

1. Adopted a human rights policy
We published the C.I. TAKIRON Group Human Rights Policy.
• The policy is based on international standards on human rights,(1) Business and management at “outside-in” point of view
(2) Focus on stakeholder communication

including the Guiding Principles on Business and Human Rights
adopted by the UN Human Rights Council.
• The policy affirms that respect for human rights underlies all of ourbusiness activities.

2. Established new carbon neutrality strategy

Corporate Philosophy

We defined our approach to carbon neutrality and started
combating climate change based on this approach.

Group Corporate
Philosophy• Fiscal 2050 target: Net-zero carbon emissions

Sustainability Vision•
Fiscal 2030 target: 35% reduction (compared to fiscal 2018 level) in

VisionSupporting today,changing tomorrow

CO2 emissions at Scopes 1 and 2
	Reduction in CO2 emissions at Scope 3 (emissions
in the entire supply-chain)

Sustainability
Vision3. Addressed climate change issues

Action

We identified potential risks and opportunities associated withclimate change, and their potential impacts on our corporategroup (initial scope) over the short, medium, and long term.

Code of Conduct• We disclosed the information in line with the TCFD’s recommendations

Sustainability Management System(governance, strategy, risk management, and metrics and targets).
• We performed a scenario analysis (for transition risks and physical risks)•W e disclosed financial impact evaluation and specific measures for the

Until fiscal 2022, the Sustainability Committee took charge ofplanning and facilitating sustainability management at C.I. TAKIRON Group. However, in April 2023, we adopted a new approach. Now, the Sustainability Committee serves as an advisory
body to the Management Committee and is chaired by thechief operating officer of the Corporate Planning Division. Our
aim in having the committee advise the management was toenhance the linkage between sustainability and corporate strategy. We also changed Sustainability Committee’s membership.
By selecting members from divisions closer to front-line operations, we enhanced the ability of the committee to facilitatesustainability and communicate with stakeholders.
Management

Board of Directors(Reports to)

Executive

Management Committee(Tables resolutions, reports to)

Sustainability Committee
Secretariat: Corporate Planning Div.
Each department of C.I. TAKIRON

Affiliate companies

Chair: Chief operating officer of the Corporate Planning Div.
Membership: Corporate Planning Div.
Legal & Compliance Dept.
Human Resources & General Affairs Dept.
R&D Dept.
Production Planning Dept.
Quality Assurance Dept.
	
Business segments (construction materials, environmental
materials, high-function materials, specialty films)
Production sites (Shiga Plant, Ibogawa Office)19

risks and opportunities

4. Promoted CSR procurement
We integrated corporate social responsibility into our criteria for
selecting suppliers, and selected suppliers based on these criteria.
• We requested key suppliers in Japan to comply with our CSR Procure-ment Guidelines.
• We requested overseas group companies to comply with our CSR Pro-

curement Guidelines.
• We surveyed suppliers to check the degree to which our supply chain

consents to the CSR Procurement Policy.

Priority sustainability themes for fiscal 2023
In fiscal 2022, we identified a set of priority sustainability themes:
climate change, biodiversity, and human rights. We will continue towork on these themes in fiscal 2023. We will also work to raise sustainability awareness among employees across our corporate group,
including their awareness of the value of sustainability initiatives, sustainability targets, and concrete actions to meet these targets. In fiscal
2023, we will establish and disseminate a basic policy on sustainability,
which we failed to adopt in the previous year.
◦General sustainability actions• Establish a basic policy onsustainability• Prepare a master plan forsustainability◦Climate change (TCFD)• Update items and refine actions(and work out implications for the
next medium-term plan)• Organize education program to
improve awarenessC.I. TAKIRON Group Integrated Report 2023

◦Biodiversity (TNFD)• Ascertain trends in Japan and overseas
and plan actions◦Human rights• Plan and implement measures toimprove respect for human rights• Ascertain trends in Japan and overseas• Organize education program to
improve awareness◦Other• Identify new themes

Engagement with Stakeholders
C.I. TAKIRON Group aims to be an organization that retains the confidence of, and shares values with stakeholders. To that end, we work to build trust with stakeholders and create, together with stakeholders, abetter future for people and the planet.

Stakeholders

C.I. TAKIRON Group Responsibilities

In order to meet the expectations of
our shareholders and investors, we
Shareholders will strive to increase corporate value
and Other through high capital efficiency, fairand impartial information disclosure,
Investors
proper return of profits, and sustainablegrowth.

Stakeholders’ expectation and interests● Increased corporate value● Decent share value● A return that exceeds cost of capital● True, fair, and timely disclosures● Constructive dialogue● Active and sustained ESG action

Frequency of Communication
Corporate Governance Department●General Shareholders’ Meeting.................................... Once a year
●Report to shareholders (Notice to Our Shareholders)....Twice a year
●Corporate governance reports..................................... Occasionally●Shareholder surveys.................................................... Occasionally
IR Department●Financial results briefings............................................Twice a year●Individual investor briefings............................ Several times a year
●News releases............................................................. Occasionally
Sustainability Department● Integrated reporting..................................................... Once a year
● Responding to ESG rating agency surveys................... Occasionally
PR Department●Website and advertisements....................................... Occasionally

Customers

We listen sincerely to our customers,
provide products and services that
continue to be nominated withoutstanding technology and quality, andstrive to build long-term relationships oftrust with our customers.

●High-quality products and services● Fair sales prices● Supply continuity● Continuous adaptation and innovation to keep

abreast of evolving needs● Global expansion

Sales Department●Sales activities and social media....................................Daily basis● Exhibition spaces, showcases, and events.................. Occasionally
Quality Assurance Department●Quality certificates.........................................................Daily basis● Inspection certificates....................................................Daily basis● Delivery specifications....................................................Daily basis
Customer Support Department●Contact point for inquiries..............................................Daily basis

Business
Partners

When procuring materials, we base
our actions on openness, fairness andimpartiality, legal compliance, mutual trust,and consideration for the environment,
striving for coexistence and mutual
prosperity by deepening partnerships andthrough impartial transactions.
We will also work to promote CSR andcompliance with the cooperation of ourbusiness partners.

We contribute to the development oflocal communities through our business,coexist with them, and emphasize
Local
environmental conservation. We
Communities
consider and implement measures thatmeet the needs of each region andpromote trusted business activities.
We comply with laws and regulations andstrive to disclose information in a timely
Government and appropriate manner. In addition, we
andsupport disaster recovery and reconstruction
Municipalities through various efforts in cooperation withthe government and municipalities. Plants
and offices

Employees

We support the challenging spirit
possessed by our employees andpromote the creation of a rewarding
workplace where each and every oneof us stands out and diverse humanresources play an active role.

● Fair, equitable, transparent, and stable trading

practices● Socially and environmentally conscious trading
practices● Collaboration and open innovation that benefits
both parties● Action to improve quality● Promotion of CSR procurement across supply
chain● Coordination in emergencies●Co-existence and prosperity with local communities● Job creation, contributing to local development● Conserving local environment● Minimizing environmental impact (restricting

emissions from business operations)● Compliance with legal and regulatory requirements● Safe operation● Contribution to a carbon-neutral society● Contribution to a circular economy● Contribution to a sustainability in the entire

society● Engaging workplace● Diversity and inclusion● Work–life management (balancing work andprivate life, giving employees control over how
they work)● Talent management (providing opportunities
and spaces for self-actualization and growth)

PR Department● Website and advertisements....................................... OccasionallyCompliance Department● Consultation and Report Desk..................................... OccasionallyPurchasing Department●Material procurement activities......................................Daily basis● Supplier briefing sessions.................................................Regularly● CSR procurement surveys.............................................Once a year
PR Department●News releases............................................................. Occasionally
Sustainability Department● Employees' volunteer activities........................................Regularly● Dialogue with NPOs and NGOs................................... Occasionally
Plants and offices● Exchanges with local communities, study support,
and plant tours.................................................................Regularly
Sustainability Department● Employees’ volunteer activities........................................Regularly
Plants and offices● Coordination with relevant government organizations....................................................................Regularly/occasionally
PR Department● Messages from the president...................................... Occasionally● Employee surveys (surveys published in-house,
job training, etc.)......................................................... Occasionally● Intranet ...................................................................... Occasionally● In-house bulletin.........................................................Twice a year
Compliance Department● Internal reporting system............................................ Occasionally
Human Resource Department● Counseling with occupational physicians.....Regularly/occasionally● Health and Safety Committee..........................................Regularly● Labor–management talks.............................Regularly/occasionally
Each department● One-on-one sessions held between
a manager and employee.................................................Regularly

C.I. TAKIRON Group Integrated Report 2023

20

Strategy

One-year Management Plan
CX2023, a mid-term management plan launched in fiscal 2021, set out quantitative three-year targets along with six
priority actions. We proceeded with the plan for the first two of the three years. However, the external business environment suddenly changed. As well as the pandemic impact, we faced global economic volatilities culminating in highmaterial costs, along with a reduction in orders for, and cancellation of, civil engineering projects. These factors created a wide divergence between actual performance and the performance targets set out in CX2023, with the effectthat profit dropped markedly in fiscal 2022.
After taking all circumstances into account, we decided to end CX2023 a year earlier than scheduled and switch to anannual plan for fiscal 2023, which was initially set as the final year of CX2023.
Our focus now is to take three priority actions designed to achieve the quantitative and qualitative targets set out inthe annual plan and to regain our manufacturing capability and earning power. At the meantime, we aim to ensure
certain business growth during the next medium-term period as part of our endeavor for sustainable growth.

Fiscal 2022: Qualitative review
We made some progress in SDGs-aligned initiatives, such as fostering an organizational culture that values environmentalismand diversity. We made less progress, on the other hand, by comparison in core business tasks, including creating new businesses that will lead the next generation (part of our business reform agenda), expanding globally, and developing consolidated
business strategies.

1 Solving social issues
We will contribute to solving specific social issues by
being conscious of social sustainability and steadily
implementing business activities and materiality
based on the SDGs.

Initial goals for fiscal 2023
Number of environment1 friendly productdevelopment themes

15 per year
28%
reduction

2

CO2 emissions reduction
rate (compared to FY2018)

3

Number of participants in
At least 1,200
waterside clean aid activity

2 Acquire new businesses, products, and technologies

3 Accelerate borderlessness

With an eye on future changes and demands, we will
tackle on the challenge of creating new businesses,
products, and technologies that will lead the next
generation.

We will enhance corporate value and pursue business growthfrom a “borderless” perspective, including global expansionof sales and production bases, marketing based on new value
standards, and achieving diversity (gender, race, nationality,
religion, and age) in the organization and corporate culture.

Accomplishments
in fiscal 2022
6 per year
35%
reduction

Accomplishments
in fiscal 2022

Initial goals for fiscal 2023
1

¥6 billion or
more

Sales from new
business areas

New product sales
2 composition(non-consolidated)¥0.26 billion

1 Overseas sales composition

20% or
above

17.7%

21.5%

Ratio of female to male
2 employees in management
positions

3% or
above

*3.0%

5% or
above

*5.7%

Ratio of Female Employees
4in Career-track Positions

20% orabove*19.4%

Percentage of career-track5
female hirees

40%
or＊2023年4月1日時点
63.6%
above

20% or above

Number of new
At least
3 technologies created
50 applications/(number of patent filings)
year

2,074

Accomplishments
in fiscal 2022

Initial goals for fiscal 2023

50 per year

3

Ratio of Women in
Leadership Positions* As of April 1, 2023

4 Adopt digital technology

5 Restructure group management

6 Further improve our management baseWe will explore the use of cutting-edge technology in all businessprocesses to pursue results such as improved work efficiency, laborsavings, and cost reductions. We will promote the use of digitaltechnology to create new added value in our sales activities andcreate a new business model.

We will create value as a consolidated entity by
maximizing the efficiency of complex businesscollaboration and investment.

We will further improve our program design with a focus on worklife balance and carry out the commitments made in the Management
Commitment on Enriching Lives for all employees. We will also strive tocreate a safe and secure workplace by re-evaluating our work environmentand daily communication to ensure no accidents and harassment takes place.

Initial goals for fiscal 2023
1 Digital maturity score

Accomplishments
in fiscal 2022

At least 3.0

2.09

Accomplishments infiscal 2022

Initial goals for fiscal 2023
1
2

Consolidated operating
profit margin
Businesses/companies
running at a loss

7% or
above

4.0%

Zero

1 business
operation,
6 companies

Accomplishments
in fiscal 2022

Initial goals for fiscal 2023
1

Employee Work Engagement
Score

2 Employee Loyalty Score
3 Critical compliance violations

At least
3.0

2.5

At least
3.0

2.8

0

0

2 sources of growth
Investment budget

1

21

Investment
budget33 billion

Total spend in fiscal 2021
and fiscal 2022

7.34

billionBreakdown
Business investments ¥4.21 billion
Environmental¥0.38 billion
investments
Digital investments ¥2.75 billion

2 R&D budget

C.I. TAKIRON Group Integrated Report 2023

TargetAccomplishments
in fiscal 2022

Sales composition

Sales composition

2.0 % or above

0.9%

Basic policies of the one-year management plan for fiscal 2023

I Achieve the one-year quantitative plan without fail
Quantitative plan
Net Sales
Operating Profit
Ordinary Profit
Profit Attributable to Ownersof Parent

Unit: 100 million yen

Measures

FY2023
Plan

Year on Year

1

1,540
78
80

Steady implementation of improvement inbusiness earnings+82 (106%)+20 (135%)+20 (135%)

2

Reduce the number of companies in the red
and the amount in the red50+25 (203%)

3

Implement M&A that contributes to businessrestructuring

II Certain Execution of One-year qualitative plan
1. Promotion of business restructuring

Using ROIC as a performance measure, we will reevaluate existing businesses to overhaul our business portfolio. In addition, we will strengthen
managing capability, including establishment of an organization dedicated to managing group companies, to take other steps to manage groupcompanies more precisely.

2. Deepen the governance system

We will revise the discussion criteria for meetings of the Management Committee and Board of Directors, clearly distinguish supervisory roles fromexecutive roles, and expedite decision making. We will reskill administrative personnel to slim down the organization and tighten risk management.

3. Promote DX implementation

We will use digital transformation tools to visualize and digitize production processes, and then use this data to optimize production processes. We
will also use digital labor-saving solutions, including robotic process automation (software robotics), to streamline routine tasks. Alongside this, wewill look into a adoption plan of a new LOB system.

4. Promote SDGs Management

Societal expectations toward companies have changed amid rising concern about socio-environmental issues (as exemplified by the SDG agenda)
and the rise in ESG (environment, society, and governance) investing. In response to these changes, we identified 10 materiality issues (sustainability
priority issues). We will endeavor to achieve our materiality targets for fiscal 2023 and take other action to integrate sustainability into our businesses,
including going further toward the carbon neutrality goal.

III Draft and implement measures for the next mid-term management plan
1. Restructure and strengthen business departments

We will reorganize business divisions and consolidate sales companies to optimize the corporate group and generate synergies. Having used ROIC toreevaluate our existing businesses, we will launch a new business portfolio strategy and look into increasing production capacity to penetrate sectors
with bright growth prospects.

2. Develop new products, new technologies, and strengthen new business promotion framework

Our fledgling businesses are struggling to grow sales. We will therefore take steps to enhance business development. One option is to establish across-organizational body for spearheading business development. Another is to establish a new R&D facility.

3. Radical review of research and development

We will review and consolidate the entire R&D themes under examination and establish category-specific R&D portfolios. We will also explore opportunities for bringing in new technologies from outside, including joint projects with universities and overseas firms and M&As.

4. Strengthen the functions of Production Division

To enhance horizontal function of production sites across our corporate group, we will reorganize/restructure our production divisions and prepare amaster plan for consolidating production sites. We will also get each plant to adopt smart-factory principles to optimize production planning.

5. Strengthen management planning functions

We will enhance strategic planning functions to enable more effective strategic planning and execution.

6. Deepen personnel systems for sustainable growth

While we keep applying our Better Life Management Declaration for all employees as part of our ongoing effort to provide a positive workplace, wewill shift to a new talent management system in which position/rank and wages reflect employee performance (as opposed to seniority) and allocate
human resources as necessary to advance our strategies. Through these efforts, we will build a talent management system geared toward fostering
the talent that will drive our future growth, and foster an empowering, team-challenging organizational culture.

7. Develop investment policy

For aggressive investment to expedite our business reform agenda, we will prepare a budgetary framework for the next mid-term management plan
period.

C.I. TAKIRON Group Integrated Report 2023

22

Strategy
FYE 3/23 Result

Construction
Materials Business

Net Sales

Construction Materials
Business
Our wide-ranging product lineup
supports comfortable living and urban
environments

Up 2.7%¥44,795 million
30.7%

Operating Profit

Construction
Materials Business¥145,725 million
Year-on-year change¥5,791

millionYear-on-year change

Down 33.1%¥2,484 million
42.9%

Construction Materials Business Growth Strategy
Business Description

Strengths● Comprehensive development capabilities
offering functionality to construction materials● ’te building materials, housing materials,
and slip-resistant vinyl flooring materials,
all with high market share● Global expansion through overseas
production sites (BLX)● ’te fabrication technology and the best
manufacturing capacity in Japan

Weaknesses● Limited expansion of overseas flooring andconstruction business sites● Small flooring and construction businesscompared to major competitors● Our flooring and fixtures business is not acomprehensive interior design company● Overseas sales channels for housing andconstruction materials products● Expansion in untapped overseas markets● Demand expansion due to higher living
standards in developing nations● Enforcement of the Livestock Barn Special
Provisions Act

The Building Energy Efficiency Act, revised in June 2022, requires accelerating energy efficiency in construction fields, which
account for around a third of the country’s energy consumption. To capitalize on this opportunity, we’re working to expand
sales of Lume Wall, our brand of honeycomb-structured polycarbonate panels that serve as high-performance thermal insulators without compromising safety or blocking daylight. Today’s lifestyles and values emphasize sustainable and higher-quality
living spaces. To capitalize on these needs, we are marketing flooring solutions that combine durability, design values, easy
maintenance, and safety of slip resistance. We are also marketing an environmentally-friendly product (recycled Bonlex) globally to attract new customers. In connection with this, we’re leveraging our integrated global production system to flexibly
accommodate customer requirements.

Threats● Decrease in new housing starts● Shrinking market due to declining
domestic population● Rapid changes in weather environment● High raw material prices● Marine plastic pollution● Higher electricity and transportation costs
combined with reduced transportation
capacity (the 2024 logistics issue).
● Demand stagnation caused by geopolitical risks

We’re responding to the growing frequency and intensity of natural disasters by stepping up sales and development of disaster prevention/mitigation. To address the potential threat of soaring electricity and transportation costs, we will establish a system that enables price pass-through with understanding from customers.
To address the threat of lower number of housing starts, we will reorganize our sales and production systems
in a flexible manner. To address the threat of a shrinking domestic market, we will ramp up global expansion,leveraging our foothold in the European market provided by our European subsidiary Bonlex Europe S.R.L.

23

We handle rain gutters, drainage,and other water processing products
essential to housing construction,
as well as a wide range of construction materials used in residential andnon-residential buildings, such as theLume Wall high heat insulating honeycomb structured polycarbonate
panels that contribute to a decarbonized society.

Flooring and Decorative Materials Business

Opportunities● Increase in long-term superior housing● Expansion of the scope of application of
the Building Energy Conservation Law● Changing lifestyles and values● A ging domestic population and declining birthrate

Housing Materials Business

C.I. TAKIRON Group Integrated Report 2023

We provide flooring materials offering excellent slip-resistant function
for aquatic facilities, safety in apartment corridors, safety on stairs, etc.,
and beautifully designed decorative
films that make room interiors andbuildings look attractive.

Use of capital
Use and developmentof human resources
We will develop global human resources highly skilled and knowledgeable in manufacturing, technology, development, and sales fields.
We will actively post these humanresources around the world.

Building intellectual
property portfolio
We will enhance our polycarbonate
fabrication and processing technology, for which we already boast thebest manufacturing capacity in Japan.

Messages from the Chief Operating Officer

We will promote global manufacturing that contributes
to solving social issues by integrating product-out andmarket-in approaches.
The Construction Materials Division commits to supporting sustainable construction. Part of this involves working toward carbon
neutrality through energy saving as well as the adoption of recycled and bio-based materials. It also involves meeting customers’ needs
for safety and security by providing disaster prevention/mitigation products, in addition to products with high durability, comfortability,and design aesthetics.
In fiscal 2022, sales were sluggish because companies reduced spending on physical assets amid higher prices for construction
materials and livestock feed prices. However, the segment’s sales revenue ultimately remained at a similar level to that of the previous year.
This is because net sales increased after we raised product prices and because we saw a recovery in orders for apartment/condominium
repair and renovation projects, which had stagnated during the pandemic years. On the other hand, profit declined from the previous
year’s level. Despite our efforts to reduce fixed costs and passing on cost increases to product prices, we were unable to fully absorb thecost increases. We are committed to maximizing profitability in this segment. We will waste no time in accelerating price pass -throughto reflect the increases in material, electricity, and transportation costs. Alongside this, we will work to increase the market share of ourmainstay products. In particular, we will step up efforts to design and develop environment-friendly products. Overseas, we will leverage
the strengths of our local production assets to improve supply continuity and customer responsiveness. Meanwhile, we will also tighten
control over group companies and drive forward the digital transformation to increase our competitive edge.

Objectives for fiscal 2023

● Development of environmentally friendly and disaster prevention/mitigation products● Minimize costs and revise
product prices to reflect highraw material costs and soaring
electricity costs.

● Pass on prices to reflect high raw material costs and soring
electricity and transportation costs.
● Expand existing businesses through increase in market shareof mainstay products.
● Tighten control over group companies and drive forward digital transformation to increase competitive edge.
● Step up efforts in design proposition and development of environment-friendly products as part of the carbon neutrality agenda.
(Millions of Yen)
Net Sales
Operating Profit

FY2022
26,506
1,628

Fiscal 2023 outlook
29,5202,060

Accomplishments in fiscal 2022

Objectives for fiscal 2023

● Expanded sales of recycled
products in Europe and otheroverseas markets.
● Expanded sales of long-life
non-slip flooring materials
with stain resistance and easy
maintenance.

● Develop quiet flooring materials that make living spaces more
comfortable, based on the concept of safety and assurance.
● E xpand sales of environment-friendly products in overseas markets.
●Strengthen marketing/sales in North America and China;
boost local production capacity to enable better customer
responsiveness in Europe.

Slip-resistant Vinyl Flooring Sheet

FOCUS

In March 2023, we acquired a
100% stake in MIYOSHI Corporation by buying up all its
outstanding shares, making thecompany an equity-method affiliate. Miyoshi is renowned in
the industry, and has extensive
expertise for creating compelling added-value solutions, including
environment-friendly
products and solutions for social
issues. We will work with Miyoshi to streamline production
and unleash synergies.

Managing Executive Officer
Chief Operating Officer of theConstruction Materials Div.

Accomplishments in fiscal 2022

Polycarbonate Plates

Expanding our group
network

Hiroji Kimura(Millions of Yen)
Net Sales
Operating Profit

FY2022
18,288856

Fiscal 2023 outlook
19,430
1,610

Examples of creating social value

Dan Smoke N(smoke-proof
hanging partition
wall made of sheet)

Belbien (fireproof
decorative films
with adhesive)

We developed Dan Smoke N, an anti-smoke
solution consisting of fire-proof plastic panels that hang from the ceiling. We observed
a rising demand for anti-disaster panelingthat is lightweight and that will not break or
shatter if it falls during a disaster.

Belbien is a popular choice in all manner of interior spaces. Belbien includes WR Series, a range ofwood color tones, which allow customers to selecta color scheme to create a refined and sophisticated feel. It also includes Ex Series, which offers
weather resistance and anti-friction properties.
Customers can choose the properties to suit theirrequirements for interior or exterior decoration.

C.I. TAKIRON Group Integrated Report 2023

24

Strategy
FYE 3/23 Result

Net Sales

Environmental Materials
Business
Offering materials that support the function
and safety of social infrastructure¥145,725 million
Year-on-year change

Up 2.7%

Environmental
Materials Business¥54,816 million
37.6%

Operating Profit¥5,791

millionYear-on-year change

Down 33.1%

Environmental
Materials Business¥304 million
5.5%

Environmental Materials Business Growth Strategy
Business Description

Strengths● Industry share and brand strength● Production technology capabilities● Sales system and customer support capabilities● Support capabilities from manufacturing
and sales to processing and installation

Weaknesses● New Group product development system● System for collaboration with external
partners

AgribusinessWe contribute to agricultural development by expanding
a product lineup centered onhighly functional agriculturalfilms that are able to realize theoptimal environments for growing vegetables and fruit to satisfy customer needs.

Opportunities● Rising demand for labor-saving solutions● Expansion of demand for infrastructureamid the labor shortages
redevelopment and renewal● Expanding demand in emerging countries● Expansion of demand for environmental
responsiveness and product longevity
The Agricultural Materials Business develops and markets resource-efficient products to meet the rising demand for ecological sustainability. We have a horticultural testing lab, which helps us align our production
system more accurately with real-world needs, expediting development.
We target the growing demand for redeveloping social infrastructure. Recently, we started marketing ourservices for airport-related contracts. Meanwhile, we continue expanding sales of Hydrotite, a hydrophilic water-sealing material, which served as a shielding material for subway tunnels in Manila and Jakarta. We focus
on developing products that align with local climatic conditions and local quality requirements. While we continue developing plant-based materials, we have started to develop a joint-filler product for repairing concrete
structures in the fields of hydropower installations and agricultural irrigation systems.

We support social infrastructure
by developing and renewing
waterproof/impermeable sheets,
high-density polyethylene pipes,
and other related materials increasing the lifespan and emergency readiness of facilities
through redevelopment and renovations of social infrastructure.

Use of capitalStrengthening partnerships

Threats● Soaring construction and management
costs amid the labor shortages● Quality improvement among overseas
manufacturers
The Agricultural Materials Business will work to gain a larger share of the value-added market and pursue
M&A opportunities, in response to the shrinking domestic market. We will strive to cut costs by developing
labor saving materials as well as tightening control of construction operations across our corporate group. In
an effort to promote plastic recycling, we will develop products made from scrap plastics generated duringsecondary processing.
The Infrastructure Materials Business will penetrate new markets as quickly as possible by developing environment-friendly products and improving existing products. To gain a competitive advantage over overseas
manufacturers, we are developing products with functions that no other company offers in the local market(namely, Vynon FPA sheets with signal layers). We are also working with Tochigi Plant and Hatsukaichi Plant to
explore applications for pre-consumer recycled polyvinyl chloride (PVC).
● Decline in domestic demand in existing
businesses● Plastic materials recycling issues

25

Infrastructure Materials Business

C.I. TAKIRON Group Integrated Report 2023

We have an extensive supply chain encompassing many downstream partners, including sales companies anddistributors. Through these partners,
we aim to offer a rich product lineupthat covers a wide array of needs. We
will also build stronger brand awareness by communicating product information effectively through social
media and other digital media and byenhancing the experience and satisfaction of end consumers. By deploying our social capital as effectively as
possible, we continue to strive to build
strong customer loyalty.

Messages from the Chief Operating Officer

We work with group companies to build a stronger value
chain, expediting efforts to create added value and improveearnings growth
The Environmental Materials Business is working to develop environmentally friendly products that deliver highquality, high performance, safety and security. In this effort, we draw on our impressive share in the industry,
our branding prowess, and our customer responsiveness covering up to construction/installation processes that
accommodate variety of customer requirements. To gain a greater competitive advantage, we’ll improve oursale power and product development capability, while thinking outside the box to find ways to reduce costs andgain a greater market share. To build a sustainable business foundation, we’ll foster organizational openness,emphasizing mutual contributions within our corporate group, and keep pursuing goals with passion.
In fiscal 2022, sales volume declined because producers had less appetite for investing amid soaring raw
material prices and higher prices for agricultural materials including livestock feed. To build our growth potential
in this situation, we will work for greater profit growth, while reorganizing our production and sales organization
structure for thorough cost cuts and turning around unprofitable products. We will also tighten control over groupcompanies, and use an agenda of business reform and M&As to rebuild our supply chain. In overseas markets, wewill increase profitability by developing and marketing value-added products tailored to customer requirements.

Agricultural Films

Kenji Matsui
Managing Executive Officer
Chief Operating Officer of theEnvironmental Materials Div.

Accomplishments in fiscal 2022

Objectives for fiscal 2023

●Developed environment-friendly
products and tested their performance ahead of market launch infiscal 2023.
●Adopted six product development
projects, two of which were moved
to the design review phase with aview to commercialization.
●Worked on joint-development projects with group companies.
●Proceeded with digital transformation and started training in its use.

● Launch and expansion of sales of environmentally friendly products●G reater ability to respond to producer needs● E xpansion of business domains by further strengthening cooperation
with Group companies and deepening sales capabilities●A dvancement in commercialization of smart agriculture with horticulture-related materials●M arket penetration and expansion of Japanese-quality agricultural
coverings in East Asia

Accomplishments in fiscal 2022

Objectives for fiscal 2023●With stable contract orders related to an official development
assistance project provided by
Japan as well as successful negotiations by overseas distributor, overseas sales of Vynon Hydrotite is increasing in a stablemanner.

● Offer new products for disaster prevention/mitigation and clean
energy, while developing environmentally friendly products● Capture opportunities created by the demand for infrastructure renewal, including upgrading and maintaining expressways, tunnels, sewerage systems, etc.

(Millions of Yen)
Net Sales
Operating Profit(Millions of Yen)
Net Sales
Operating Profit

FY202235,658597

FY2022
19,158-292

Fiscal 2023 outlook
36,880940

Fiscal 2023 outlook
21,110530

Waterproof Geomembranes

FOCUS
Bolstering production capacity
We will develop a more sophisticated strategy for boosting productivity,with a high-level and group-wide perspective in evaluating each production
site. Under this approach, we willbuild an integrated production system
to optimize productivity by, for example, sharing production assets among
multiple production sites and reallocating resources. To improve competitiveness, we will take into account thecharacteristics of each production siteand local market needs to refine product portfolios and differentiate our
products from our competitors’.

Examples of creating social value

Reduction, reuse,
and recycling ofplastics

Waterproof
geomembranes
that safeguard soil
and ecosystems.

We recover scrap plastics generated in secondary processing, pelletize them, and use themas product materials. In a resource-efficiency
initiative, we launched a polyolefin film that isthinner and more lightweight but no less durable than conventional films. The product canhelp reduce transportation costs, labor costs,
and the costs of after-use disposal.

Our waterproof geomembranes serve in disposal sites. They help ensure that the site contains
the waste without adversely affecting the local
environment. They have sufficient long-term
durability to hold the material until it is stabilized. We are developing a number of productsthat have added functionality not seen in conventional waterproof geomembranes.

C.I. TAKIRON Group Integrated Report 2023

26

Strategy
FYE 3/23 Result

High Functional
Materials BusinessHigh Functional
Materials Business

Net Sales¥22,729 million
15.6%

Sustainably provide products that support
the accelerating growth of advanced
industrial sectors and enrich people’s lives¥145,725 million
Year-on-year change

Up 2.7%

Operating Profit

High Functional
Materials Business¥5,791

millionYear-on-year change¥2,603 million
44.9%

Down 33.1%

Growth strategy for the High Functional Materials BusinessBusiness Description

Strengths● Abundant product Lineup● High market share andbrand strength● Solid sales channels● Meticulous technicalsupportWeaknesses● Large product assortment
limits production
efficiency● High dependence on thesemiconductor and FPD
industries

High Functional Materials Business
By improving basic performance and adding various functions,
we have enhanced the added value of our products and are
deploying them domestically and internationally. We provide
products in a wide range of fields, from those that support industrial infrastructure, including semiconductor manufacturing
equipment, to raw materials for products that enrich our lives.
<Plate>General-purpose andfunctional resin plates,
mainly PVC, PC, PET, etc.

<Engineering plastic materials>

Opportunities
manufacturing● AI, automation, andequipment amidchanging work styles
proliferation of 5G, 6G,● Growing demand fordata centers, metaverse,
energy efficiency
and EVs(shift to lightweight and● Increased public
use of resin)
expectations for SDG● Unprecedented demand
initiatives
for semiconductor
The number of data centers is expected to increase sharply, creatinga need for better cooling efficiency. We propose FM plates as a material for partitions to achieve high cooling efficiency in data centers,
through which we also contribute to reduce fire risk.

Threats● Sharp fluctuations
in demand forsemiconductor and
FPD manufacturing
equipment● Changes in standards andregulations● Opportunity loss due toshortages of materials

for semiconductor
manufacturing
equipment● Raw material pricehikes and supply chain
disruptions due to social
conditions● High utility costs(electricity, gas)With customers urging us to increase production, we continue totake action to increase production capacity year after year. In fiscal 2023, we will continue the phased capacity increase for pressed
products.

27

Industrial plastic plate

Super cast nylon

Use of capitalStrengthening
partnerships

Technologicalenhancements

The solid rapport we havewith our international supply-chain partners has enabled us to build up the C.I.
Takiron brand and gain aformidable share in the semiconductor and LCD production industry. We will actively
continue holding dialogues
with customers to further
strengthen this network.

We have amassed technologies forformulating PVC resin, fabricating
plastic plates, and nanoizing substances. We enhance these technologies,
while exploring ways to register themas intellectual properties through theirutilization and application.
By using these technologies to theirfullest effect, we will proceed withproduct development for the semiconductor industry, which is expected
to grow further, as well as for untapped sectors.

C.I. TAKIRON Group Integrated Report 2023

Messages from the Chief Operating Officer

We will establish a profit base that is resistant to change, anddriven by market growth in advanced technology fields suchas semiconductors.
The High Functional Materials Business offers proprietary materials that support different industries. Among them,the semiconductor industry is expected to grow further and whose importance is increasing. To meet chipmakers’ needs,
we will boost our production capacity so that we can ensure supply continuity in resin plates, machining materials, andnanomaterials. This is especially true for industrial plastic plates. To prepare for the next surge in demand for semiconductor
equipment, we will increase our capacity to produce these plates and strengthen ties with customers.
We also aggressively engage in developing new markets, including data centers and aircrafts, as well as developing
environment-friendly products to accelerate market entry. To expand sales in the micro motors sub-segment, we will leverage
our responsiveness to individual customers to penetrate untapped markets such as medical solutions and robotics. We will
also strive to increase sales further by expanding our lineup of function-added products, such as gears and air conditioners.
Meanwhile, we will keep pushing forward in our internal digital transformation and aggressively go further in digitally
streamline quality management and development, thereby enhancing overall efficiencies and improving our service. We willcontribute to our corporate group by producing value-added products with high profit margins, improving the organization’s
business resilience to external changes.

<Acetate board>

Eyeware frame materials<Micro motors>

Takahisa Miyake
Senior Managing Executive Officer
Chief Operating Officer of theHigh Functional Materials Div.

Accomplishments in fiscal 2022

Objectives for fiscal 2023

● We invested in new production assets and structures to boost capacity to produce industrial plates
and engineered plastic materials, enabling us torespond swiftly to the next recovery in the semiconductor market.
● Motors: We developed new products with gearhead and encoder functions, explored untapped
overseas markets, and developed range of applications.
● Nanomaterials: We significantly grew sales of materials for circuit boards and displays and invested
in assets for boosting production.
● Environment-friendly products: We launched recycled polycarbonate plate (PCECO) with Eco Mark
Certification (see p.14).

<Plate>●
Expand production capacity to meet increasing demand for semiconductor manufacturing equipment.
● Develop environment-friendly products.
● Explore untapped markets to complement
semiconductor market.
<Micro motors>● Develop a controller/driver and roll out automation for better productivity and profit
margins through modularization.
● Explore untapped markets.
(Millions of Yen)
Net Sales
Operating Profit

FY2022
22,7292,603

Fiscal 2023 outlook
23,5202,380Coreless and brushless motors

FOCUS

Examples of creating social value

Laser shielding
plates thatexcels in safety
and visibility

Ultrafine Particle
Materials that help
drive the evolutionof semiconductors

Compact andreliable highprecision motors

The shift to electric vehicles is expected tolead to growing demand for batteries andelectric motors. These goods are produced
using a hybrid (blue and near infrared laser.
In anticipation of the growth of this laser
market, we launched a laser shielding plate,HTSLA CP807. This product delivers safety
and visibility in wielding and other processes.

To make further inroads in the semiconductor market, we are developing materials thatenhance functionality of CPU and memory
circuit boards (miniaturization, multi-layering, 3D) as well as display materials thatenables high resolution and flexible display.

People are increasingly switching to digitalkeys to enhance security. Our micro core-lessmotors, when fitted in cylinders, can recognize the correct key and release the lock,thereby reducing the risk of lock-picking.

C.I. TAKIRON Group Integrated Report 2023

28

Strategy
FYE 3/23 Result
Specialty Films
Business

Specialty Films Business
Develop and design products that best supply
the market's needs¥22,442 million
15.4%

Net Sales¥145,725 million
Year-on-year change

Up 2.7%

Specialty Films
Business¥126 million
2.2%

Operating Profit¥5,791

millionYear-on-year change

Down 33.1%

Specialty Films Business Growth Strategy
Business Description

Strengths● We can manufacture a variety of
products according to application with
our unique compounding technologies● Global consumption-based production
and sales system with production
bases in Japan (Hiratsuka, Okayama
and Tochigi) and overseas (China,
U.S.A., Uruguay).

Weaknesses● Few new products launched, otherthan existing ones
● Competition in technology
development, including IP strategy● Poor brand recognition overseas (tapes)● Shrinking and aging workforces at
production sites

Opportunities● Expanding demand and applications
both domestically and internationally(food, chemical products,
pharmaceuticals, etc.)

BONSET, our brand ofheat-shrinkable films, hasproperties that enable a range
of applications, including labels,
cap sealing, and molded goods.
SANZIP, our brand of plastic
zipper tapes, is used in various
fields, including food packaging
and medical packaging. With
the pandemic years making
people more aware of the needfor hygiene, demand for the
product has risen.

● Strict quality standards in Japan impede
entry of inexpensive foreign products● Growing demand for environmentfriendly products

To contribute to the growing demand for a transition to a circular economy, we actively promote the use ofrecycled and biodegradable resins as well as reduction of waste products. To supply the growing demand inJapan for zipper tapes used in packaging for food products and medical goods, we opened a new plant inTochigi Prefecture in October 2022. By opening this second plant in Japan, we have increased our capacity tomeet the demand.
To be able to deliver exactly what the volatile packaging industry requires in a timely manner, we consolidated
business operations into the packaging business in fiscal 2023 and adopted a new organizational frameworkin which product development departments work in lockstep with sales departments.

Threats● Securing stable raw materials for● Increasing environmental concerns
business continuity
leading to a shift to alternative
materials for packaging materials● High raw material costs and utility costs● U.S.-China friction and China risk
To gain the agility to adapt to trends among consumers (end-users) and the changing demand landscape for packaging in the environmental perspectives, we made organizational changes to consolidate organizations in the Head
Office business division to enable the product development and sales departments to share information with eachother, facilitating development in environmental fields.
For our current production site in China, we plan to strengthen sales in the local market and, taking a global perspective, explore the possibility of opening a new plant.
When it comes to raw material procurement, we will enhance resilience in our production by forming strategic
partnerships and continually evaluating available options with potential alternative materials should the need arise.

29

Packaging Business

C.I. TAKIRON Group Integrated Report 2023

Use of capital
Bolstering production capacity
Okayama Plant and Hiratsuka Plant,as the “mother factories” (production units that support overseas factories), maintain supply continuity
to the domestic market, while developing new products to support
our overseas production sites. Withproduction systems geographicallycloser to local consumption aroundthe world, we engage in business
continuity planning, and incorporating global trends into product design. We plan to digitize our plants
in Japan to mitigate the risk of ashrinking domestic workforce.

Messages from the Chief Operating Officer

We will accelerate improvements in productivity
and environmental responsiveness while enhancing
performance through structural reforms.
Our division is expanding global sales of our mainstay light packaging products: shrinkable films
and zipper tapes. To that end, we focus on fast response to two major themes: environmental
problems and global economic trends. We strive to add further value to our products and improve
profit growth by delivering plastic products that contribute to the three Rs, streamlining andoptimizing our production sites, including three overseas plants, and offering product lineup thatsatisfies the needs of customers around the world. We are expanding our lineup of environmentfriendly products, such as Bonpet Renew, mono-material zippers, and bio-based films, and working
with key customers on joint development projects so that our production and sales activities
contribute to the SDG agenda.
During the period in which the next medium-term plan applies, we will focus on developing
human resources to drive forward digital transformation and rolling out robotic process automationin order to boost productivity. We will also look into opening a second overseas site for SANZIP
production. To strengthen competitiveness, we will develop an intellectual property strategy andintegrate competitor targeting into our strategy for increasing our market share.

Shrinkable film
(for drink bottle labels, etc.)

Akihiro Ueda
Senior Managing Executive Officer
Chief Operating Officer of theSpecialty Films Div.

Accomplishments in fiscal 2022

Objectives for fiscal 2023

● We increased revenue from shrinkable film by raising sales prices in Japanese and European markets
to absorb higher raw material costs. In the US market, sales volume flagged because raw material
shortages occurred in H1 and because customers
were dealing with excess channel inventory in H2.
However, revenue ultimately increased because ofhigher sales prices and the weak yen.
● We opened a second domestic production site for
SANZIP.
● As an active action to realize the recycling-oriented society, we accelerated development and sales
expansion of environment-friendly products withvarious concepts.
● We expanded our lineup of high functional products, including Sound Zipper and child resistantzippers.
● We allocated marketing staff to Europe (Düsseldorf)● Expand environment-friendly product lineup● Work on strategic initiatives with material
suppliers to expand in new markets. Recover profit through enhanced sales andoperation at Bonset America Corporationin the North American market.
● For SANZIP, we will improve production
capacity and supply continuity at three
production sites in Japan and Shanghai.
Plans for optimized production, including
building the second overseas plant● Further price pass-through of SANZIP andincrease of market share with clear market(Millions of Yen)
Net Sales
Operating Profit

FY2022
22,442126

Fiscal 2023 outlook
26,0801,370

Zipper Tapes(for food package laminates)

Cultivating intellectual capital

FOCUS

We integrate our technologies and expertise in manufacturing and processing with
our proprietary compounding technologies in order to unleash all our corporategroup’s overall strength and to develop
solutions for socio-environmental issues in
the packaging sector.

Bonpet Renew:
Promoting plastic
bottle recycling in
the USAPolyethylene zipper
for mono-material
packaging

Building a diverse workforce

Bonpet Renew is a next-generation shrinkable film that
the US public demands today. Approved by the Association of Plastic Recyclers (APR), plastic bottles can be recycled without removing the labels. Bonpet Renew also
has properties equivalent to those of mainstream products in the US market. Bonset America Corporation is
working to get drink manufacturers to switch to its label
as soon as possible. (See p.14: Value creation process)We will promote a zipper for mono-material
packaging, as part of our environment-friendly products, which can be easily recycled.
Excelling at low-temperature sealability, theproduct helps improve the production of mono-material pouches, which involves complex
processes.

We leverage our global networks to nurture a diverse workforce and an organizational culture of engagement, where
different values are respected, where value
creation goes hand in hand with higher
productivity, and where employees feelpassionate about their jobs.

Examples of creating social value

C.I. TAKIRON Group Integrated Report 2023

30

Foundation

The source of sustainable growthMateriality
The C.I. TAKIRON Group identified ten materiality subjects (priority sustainability issues) to prioritize our efforts
in fiscal 2019 based on changes in social issues, such as
SDGs as well as environmental, social, and corporate governance (ESG) issues.

With numerical targets for each subject formulated asa three-year Materiality Mid-Term Plan, we have madeorganizational arrangements to promote sustainability
management in a practical manner.

Source of Corporate Growth

Responsibilities to Society(1) Cultivate a Corporate Climate Supporting
Value Creation(2) Advancement of Polymer Processing
P. 33
Technology(5) Address marine plastic pollution(6) Promote CSR procurement(7) Reduce environmental impact(8) Expand environmentally friendly products

P. 47

Materiality
Respect of Individuality

Management Platform(3) Promote diversity(4) Management Commitment on
Enriching Lives(9) Comprehensive Compliance and Risk
Management(10) Enhance Corporate Governance

P. 39

P. 53

Process to Define Materiality
C.I. TAKIRON collected feedback from each business division throughout the Group about potential materiality
items while keeping in mind the corporate philosophy
as well as international standards such as the United Nations Global Compact, the SDGs, ISO 26000, and the OECD
Guidelines for Multinational Enterprises. Next, with reference to the social-and business environments as well
as social trends that matter the most to our business andstakeholders, we identified a shortlist of 30 potential materiality issues based on the evaluation of our initiatives
to create our corporate value from perspectives of risks/

opportunities and advantage/disadvantage. We thenevaluated the potential issues from both quantitative andqualitative aspects, and sought advice from external experts. Having done this, we plotted the issues on a matrix
with their priority and weighting. To narrow down theissues, we held internal discussions and conducted a questionnaire. Finally, through a review by the management,
ten issues were identified. For each issue, we defined avision (the desired future scenario), a strategy, and KPIs.
and a medium-term annual plan.

Materiality Matrix

Identify potential materiality issues

ExtremelyHigh

Create a materiality matrix

Set objectives by departments in charge andmanagement per issue

Importance to
Stakeholders

Define the materiality through a management review

High

Importance to the C.I. TAKIRON Group

Extremely HighManage the progress, including revision of material issues
See our corporate website for more about materiality and our
process for defining the materiality issues.
https://www.takiron-ci.co.jp/sustainability/policy/materiality.html

31

C.I. TAKIRON Group Integrated Report 2023

10 Materiality Items DefinedMedium-term Plan for Materiality
Relevant Sustainable
Development Goals Relevant(SDGs)Page
FY2021 Results FY2022 Targets FY2022 Results FY2023 Targets( P.2)
Medium-term Roadmap

Respect of Individuality

Source of Corporate GrowthMateriality Subject

Number of Challenge Promotion Measures
Implemented During the Period

3

4

3

4

1

Cultivate a
Corporate Climate
Supporting Value
Creation

Survey-based Evaluation of the Extent the
Corporate Culture Where Employees Take on
Challenges has Permeated―

70% or above

62%

70% or above

2

Advancement of
Polymer Processing
Technology

New product sales composition(non-consolidated)

20.8%

18% or above

21.5%

20% or above

34

42+ per year

50

50+ per year

Rate of Participation in In-house Training Classes
Related to Diversity & Inclusion

100%

100%

100%

100%

Level of Understanding Regarding Diversity &Inclusion Identified Through Surveys Conducted
After Training

90%

―

94%

60%

Ratio of female to male employees inmanagement positions*(as of April 1, 2024)

2.4%

―

3.0%

3% or above

Ratio of women in leadership positions(as of April 1, 2024)

4.6%

―

5.7%

5% or above

Ratio of female employees in career-track
positions (as of April 1, 2024)

―

―

19.4%

20% or above

Percentage of career-track female hirees

28.6%

―

63.6%

40% or above

Ratio of Employees Who Return To Work After
Leave

81%

―

80%

80%

Employee Work Engagement Score

2.5

―

2.5

At least 3.0

3 Promote Diversity

Better Life

4 Management
Declaration
5
Responsibilities to Society

Evaluation Standards (KPI)

Handle Marine
Plastic Pollution

6 CSR Procurement
Reduce the7 Environmental
Impact8

Expandenvironmentallyfriendly products

Number of New Technologies Created(Number of Patent Filings)

2.8

―

2.8

At least 3.0

Recognition
statuscontinued

Continued

Continued

Continued

Number of Waterside Clean Aid Activity
Participants (total participants for the year,
including community clean-up activities)

859

At least
1,000

2,074

At least
1,200

Number of Marine Plastic Related Events and
Seminars Held (Total number of seminars andevents held for the period)

85

30

157

30

Request rate for major domestic business
partners to comply to the CSR procurement
policy (based on monetary amount in purchase)

100%

100%

100%

100%

Request Rate for CSR Procurement Policy by
Important Domestic Business Partners in Overseas
Group Companies (% of purchase base)

0%

100%

99%

100%

Level of Agreement with CSR Procurement Policy(Based on business partner survey)―

Level ofAgreement:
100%

100%

Level ofAgreement:
100%

CO2 emissions reduction rate (Scope 1 and 2)(compared to FY2018)

26%

27%
reduction

35%

28%
reduction

Number of environmentally friendly productdevelopment themes16

10 per year6

15 per year

Environment Related Awards

―

―

―

Aim toreceive anenvironment
related award
by FY2025

100%

100%

100%

100%

Employee Loyalty Score
Recognition Status as an Excellent Corporationfor Health Management

Management Platform

Compliance Related Enlightenment and
Education Implementation (percentage)

9

Engage in
Number of Critical Compliance Violations
comprehensive
compliance and risk Rate of Completion of Response to Important
Risk Issues Within Period
management

0

0

0

0

80%

80%

At least 80%
on all items

80%

1

At least
once

1

At least
once

Board of Directors Attendance Rate

97.6%

85% or above

100%

85% or above

Formulation of Corporate Governance
Guidelines

Information
gathering

Formulation

Withdraw
themes―Regular Important Risk Reviews

Enhance Corporate

10 Governance

Number of Times
Explanatory Meetings
Were Held for
Shareholders/Investors

Financial results
briefings

2

2

2

2

Meetings with
Individuals

1

At least
two time

2

At least
three time

Small-sized Meetings

―

―

0

At least
once

89

―

269⓫

P.33

58⓾

P.42

8

P.40

⓮

P.52

⓬⓱

P.51

⓭⓮⓯

P.47

269⓫⓭
⓮⓯⓱

P.35

5⓰

P.61

5⓰

P.57

*: Includes positions at or equivalent to management rank

C.I. TAKIRON Group Integrated Report 2023

32

Foundation: Source of Corporate Growth

Research & Development
Overhauling our R&D strategy
We choose R&D themes that help our organization build formidable corporate value and concentrate resources on them. With a solid portfolio, we will then make the necessary organizational enhancements andembrace open innovation and select dynamic opportunities (adoption of external technologies, M&As, forexample).

Overall R&D Strategy to Realize our 2030 Vision

Technological development strategy
CoreTechnologies

Elemental Technologies

Functions & customer value

Fabrication

High-rate dispersal, functional
integration, multi-layer molding,stretching, reinforcing fibers,
and reducing distortion, etc.

Use of recycled materials, contribution
to mono-material production

Material
compounds

Elastomer composites,
renewable material compounds,
and nanomaterials technologies, etc.

Material surfacefunctionalization

Surface decoration technologies,
hardcoat technologies, coating
technologies, paint design, etc.

Evaluation& design

Environmental impact assessment,
weatherproof/durability assessment,
light/thermal control,
elastic function design, etc.

Volume reduction and weight reductionof plastic by blending natural materials
and enhancing the strength

Aggressive capital in
Financial investment

Use of outside experts● Introduction of external
technology● Improvements in assets fortesting and analysis●

Proposition of films that controls
required elastic function
Increased surface hardness to enable
glass substitute, decorative sheets as
an alternative to paint

Existing
Sectors
Construction
Materials

Highly dispersed nanomaterials for
improved functions

Environmental
Materials

High
Functional
Materials

Marketing Strategy
Market environment changes /social issues

Perspectives on New Value
Creation(1) Adaptation to asustainable society

Climate change initiatives
Helping advance resource recycling(2) Aging society withfewer children

Contribution to healthy and secure living
Contribution to labor saving in industry(3) Prevalence of electricvehicles/self-driving
vehiclesCASE, MaaS, and contribution tolightweight advancement(4) Breakneck pace ofdigital innovation

Contribution to a smart society
Contribution to new production process

Specialty
Films

Shorter lead times
Open Innovation
Joint development with end-users
Collaboration with raw material
manufacturers● Joint projects with university andresearch institutes●

33

C.I. TAKIRON Group Integrated Report 2023●

Messages from the Chief Operating Officer

Improving R&D performance andpushing harder into new areas

nvestment
Strengthen human resource
development

Hire external expert consultants
Dispatch personnel to external
research institutes and universities● Leverage internal knowledge effectively
with digital transformation●●

Hideharu Iwasaki
Managing Executive Officer,
Chief Operating Officer of the R&D Division

New
Sectors
Mobility

Healthcare

Semiconductors

5G and 6Gcompatibility

Packaging

DX Utilization
Share know-how, know-who
Make development process
management visible● Adopt innovation tools●●

2030 Vision
To become a corporategroup that delivers peaceof mind and comfort tothe future of our planet
through creative
evolution.

To support our organization’s growth, we will address societal demands and fulfill our corporate mission. We must thenstrengthen our existing businesses, develop new products topenetrate new sectors, and pursue technological innovation.
In a project to radically overhaul R&D operations, we’re
subjecting all R&D themes to a review to decide which toabandon and which to retain. For those we do retain, we’ll redraft the development plan, setting clearer objectives. We’ve
already identified growing markets as our new target areas:
mobility, healthcare, semiconductors, 5G and 6G compatibility, and packaging. To enter these markets, we will focus ondeveloping functional films using our film-fabrication technology, nanotechnology, and surface-processing technology,
while setting relevant themes, including provision of thesefilms as modules and devices.
To meet the demand for environmental sustainability, we
will develop technologies that enable us to practice the three
Rs on our existing products. We will also develop mono-material substrates and cellulose-resin composites that contributeto recycling and reduction of packaging materials.
To build an effective structure for R&D, we will go further inembracing open innovation, while looking into M&As involving venture and startup companies. We will also train up R&D
human resources and actively hire external experts.
To protect our IP, we will use patent landscaping to gain
insights for building a competitive IP strategy, and build an IP
portfolio during R&D stages, ensuring IP readiness ahead ofcommercialization.

C.I. TAKIRON Group Integrated Report 2023

34

Foundation: Source of Corporate Growth

Research & Development System
The R&D Department accelerates further development of thetechnologies possessed in each business division across threeresearch and development sites and six groups. We have driven
forward activities to develop new products, acquire new technologies, and create new businesses to contribute to businessexpansion. Our focus in fiscal 2023 is to overhaul R&D operations and structures. This means deciding which R&D themes
to abandon and which to retain and preparing a new portfolio
strategy for the R&D themes to focus on in the future. In thisoverhaul, we will identify medium-to long-term themes for ourcore themes, prepare an R&D strategy and roadmap alignedwith the next medium-term management plan, and prepare
an IP strategy. Currently, we have several R&D sites in disparate locations. We will look into consolidating these sites in accordance with the R&D areas we will be focusing on. We will
also work with external research institutes and universities toacquire the technologies needed for creating new businesses,
while pursuing business alliances and M&As with organizationsin Japan and overseas.

Core Technology
Number of new technologies
developed (number of patent filings)

50(FY2022)For our existing businesses, we acquire and develop surfacefunctionalization technologies (paint design and coating technologies) based on our core technologies (advanced material
composite technology, various fabrication technologies, performance and analysis evaluation technology) to give our mainstay
products (films, sheets, panels) unique qualities that create aformidable competitive advantage. Looking beyond our corearea of construction materials, we aim to create value for theglass alternatives sector, including mobility products. To expand
the business portfolio, we are also developing film substrates

with elastic properties. These are now being tested in healthcare and semiconductor sectors. Ecological sustainability is another focus. Based on Japan’s Plastic Resource Circulation Act(the New Plastic Law), we also focus on developing mono-material packaging materials that enable functionality equivalent
to conventional materials with single materials (Topic ①), develop cellulose compounds that allows to significantly reduce
petroleum-derived plastics (Topic ②) and other functional packaging materials.

TOPIC ①Development of mono-material plastics that
support resource circulation and recycling

Recyclable mono-material packaging materials
Picture: Packages using C.I. TAKIRON Group’s mono-material
SANZIP tape and mono-material
film

Amid the rising global interest in sustainability, we are developing mono-material packaging materials that allow for easierrecycling. These packaging materials retain properties required fora wide variety of packaging materials (gas barriers and permeability to water vapor). We are marketing them to major packaging
converters and brand owners.

Creation of new and environmentally friendly products
We have completed the process of digitally transforming development design review (step management) across the wholeorganization. The system is now in operation. The purposeof this project was to expedite product development, provide
graphical data for tracking progress, and create a databank toenable analytics. The ability to visually track progress accelerates development. The system can also track and aggregate
KPIs (number of environmentally friendly development projects,
number of IP filings, percentage of total sales revenue attributable to new products). This data provides insights for setting
and reviewing goals, leading to significant improvements inoperational efficiency.
Developing environment-friendly products is an organization-wide endeavor. Embracing “3R+Renewable” environmental initiative, we actively promote reduction, recycle, and use

35

of biomass plastics and biodegradable resins. For the themeof reduction, we have developed resin-waste composites (thewaste component includes food and drink waste) such as ourcellulose compound. For recycle, we procure pre-consumer
recycled materials and recycle them back to products (known
as “horizontal recycling”). We are also rolling out schemes ineach business sector for recycling aged materials. In developing
biomass plastics, we follow the mass balance approach in our
supply chain. As such, we encourage key production sites toobtain certification from the ISCC (International Sustainability &Carbon Certification) system so that we fulfill our responsibility
in supply chain management.
Using our composite technologies and shaping technologies,
we are stepping up development of environment-friendly products in all directions.

C.I. TAKIRON Group Integrated Report 2023

TOPIC ②
Development of a cellulose compound forblow-molding and inflation molding
To commercialize our olefin resin cellulose compound, we havedefined the specific target applications (films, bottles) and upgraded our design mix. We are also taking on the challenge to
give the material the same properties as the conventional material
for containers and packaging. This means equipping the material
with gas barriers and vapor barriers. Because of significant reduction of less petroleum-derived resins, the product helps reducing
CO2 emission to meet the requirement of Japan’s Plastic Resource
Circulation Act.

FOCUS

Cellulose compound (left), a roll of film and a bottle (right)

Protecting our intellectual property

Our IP initiatives<Basic Policies for IP investing>

One of the policies in our annual management plan forfiscal 2023 is to use our IP to strengthen R&D. This policy
requires us to invest in IP. Shown on the right is our basic
policy for IP investing.

1. Practical action to create intellectual property to establish a competitive advantage
2. Intellectual property clearance to ensure business execution
3. Development of intellectual property human resources
to support business promotion

According to these basic policies, we take the following four actions to enhance organization-wide IP activities:
1. Using IP-related information
more effectively
We used patent landscaping to understand the patent situation related
to strategies for plastic recycling businesses. We will continue using patent
landscaping and actively incorporating
the results into business strategies.

2. Taking a strategic approachto acquiring IP protections
Having identified key strategic
themes, we file patent applications in a targeted manner tobuild a patent portfolio.

3. Reinforcing infrastructure
for IP protection
We identify relevantinternal documentation andtimestamp them to ensure
prior-use rights.

4. D eveloping the talentnecessary for facilitatingorganization-wide IP activities
We have established an IP promotion
committee in charge of improving IP
literacy across our workforce. We also
provide relevant e-learning to all of
our engineers.

IP activities
Phase

Reinforcing infrastructure
for IP protection

Developing the talent necessary forfacilitating organization-wide IP activities
Establishment oforganizational
infrastructure for
IP activities• Clearer idea of our position in market• Potential M&A deals (proposal / review)• Organizational infrastructure for IP activities• Business expansion and growth in sales and profit by establish-

ing competitive advantage

IP acquisition activities

Buildup of IP portfolio(allowing horizontal expansion of IP rights)• Buildup of infrastructure for IP protection, including priorTimestamps on works

Further mitigation of IP-related threats to business

Nurture talent for patent
landscaping Nurture core IP talent
within product development andengineering departments• Proposal to potential customers (new and existing products)• R&D themes reviewed and presented

R&D activities
Product development
activities

Business Activities(those related to IP)

Strategic approach toacquiring IP protections

Acquisition of rights for peripheraltechnologies and multi-layered rights

R&D strategy
Product development
strategy

Using IP-related information
more effectively

Patent landscaping

Organization-wide
strategy
Business Strategy

Specific initiatives

Outputs of IP activities

use rights and rights for publicly worked inventions.
• Greater business scope thanks to cross-licensing(cases)Patents held and patentapplications filed in Japan
Future enforcement 19%

Security 40%

Other 2%570

Currently
in force

39%

Number of patentapplications(domestic/international*)
International
Japan* “International” refers
to PCT applications.

C.I. TAKIRON Group Integrated Report 2023

50
40
30
20

5

10
36

10
0

15

2

FY20181025FY201918
FY202029
FY202135

FY202236

Foundation: Source of Corporate Growth

Production Technology
Messages from the Chief Operating Officer

To become one of the world’s leading production sites, we will raise the bar in termsof environmental impact reduction, quality, efficiency, and cost competitiveness
Hironori Kikuchi

Managing Executive Officer, Chief Operating Officer of the Production Division

We will use our processing techniques and production technologies to make our production
sites first-class in terms of carbon footprint reduction, quality, efficiency, and cost competitiveness.
To that end, we must prioritize two actions. The first is safety. Safety must always come first. We
will develop an effective strategy for reaching zero occupational accidents. The second priority
is quality. We need to reach zero customer complaints. Accordingly, we will keep striving for
top-quality workmanship, reducing repeat complaints to zero and minimizing quality assurance
risks.
Besides these two priorities, we also digitize and automate our production sites. This task
involves implementing wireless technologies, digital forms, and robotic process automation inorder to improve operations and consolidate production processes, so that we can allocate staff
optimally. In this way, we can keep raising production efficiency.
The Production Division is also committed to reduction of negative environmental impact.
Our actions include optimizing production lines to save energy and reduce CO2 emissions, aswell as promoting recycling to reduce plastic waste.

Creating value with our resin-forming technologies
The C.I. TAKIRON Group can mold virtually any kind ofresin. From the foundation of our business, our resin-forming
technologies have undergone unique evolution. These
technologies support livelihoods and industries across a wide

Our strengths in production
technology

Key products
・Hydrophilic Water Sealing Materials
Properties
The ability to consolidate multiple
resins with disparate functions into asingle cross section enables theformation of water sealing material
to be formed into shapes based on
unique concepts.
Key products
・Flooring sheets, stair flooring
Properties
The flooring material retains its
color scheme even when thesurface is removed, enabling
aesthetic design that withstands
weather and abrasion.
Key products
・Piping and plumbing equipment
Properties
With excellence in mass-producing
complex-shaped products, we have a lineup ofover a hundred different product categories,
covering a wide range of needs.

spectrum of sectors.
We aspire to be a leader in resin processing and one thatcreates value for the future by delivering safety and comfort. In
pursuit of this vision, we keep honing our technological prowess.

Key products
・Shrinkable films
・Corrugated plates
Properties
With our wide array of resin materials, we can create all manner offilms and sheets across the thickness scale, covering a wide array ofneeds, from building materials to medical goods and food products.

Profileextrusion
molding

Powdermolding

Sheets,films,
extrusion
molding
Calendaring

Extensivetechnologicalprowess
Injection
moldingPressmolding

Inflation
molding

Key products
・Decorative films for interior andexterior surfaces
Properties
With our ability to create sheets withhigh thickness accuracy, we canpost-process laminates and prints to
produce exterior and interior surface
materials that are highly functional
and aesthetically pleasing.
Key products
・Industrial plastic plates
Properties
With manufacturing technology rare in
Japan, we create high-quality industrial
plastic plates. Additionally, when subjected
to heat, difference between lengthwise
and lateral expansion is minimized.
Key products
・Agricultural Films for greenhouses
Properties
We have a forming technique specially forbag-shaped films. With the first technology in theindustry to form five-layer film with five materials
we contribute to the crop farming environment
with multifunctional greenhouse film.

Other forming technologies we have include vacuum molding, rotational molding, blow molding, spiral-winding molding, composite-extrusion molding (for steel pipe and iron wire
coating), and solid-extrusion molding. Our extensive technological portfolio enables us to cover a broad array of needs.

37

C.I. TAKIRON Group Integrated Report 2023

Quality
Quality Assurance Initiatives
In addition, each production site operates a Quality
Management System (QMS) which complies with the ISO
9001 standard as the core framework of our quality assurance
activities (see the diagram below). Customer requests relating
to products serve to clarify product and service needs, which wethen reflect in at every stage of product planning, design andmass production. We have also established a system to provide
new and improved products while closely examining such items
as safety, quality, cost, and environmental impact. In order to
respond to changes in the external environment and realize asustainable society, we conduct SDG contribution evaluations
and environmental conservation evaluations at the productdesign stage. We are particularly focused on strengthening ourperspective on helping solve social issues.

The C.I. TAKIRON Group promotes quality assurance
activities to fulfill the needs of customers and ensure quality inorder to provide the quality able to satisfy our customers underthe motto to be the best of the best. The C.I. TAKIRON Grouphas defined its Basic Quality Policy as: We build and strengthen
trustful relationships with our customers and improve customer
satisfaction in all our business activities, which serves as thecore of our Quality Management System (QMS).
As for specific quality assurance activities, we facilitatecontact points as a means of communication with ourcustomers such as a contact form on our homepage and a tollfree telephone number to our customer service center in orderto improve customer satisfaction by responding to customer
inquiries and requests.

Framework of the Quality Management System
Plan

Do

Planning

Customer Needs
Market Trends

DesignCheck

Preparation

Sales Services

Act

Customers
Satisfaction
Complaints/Claims

Customer Needs

Handling Chemical Substances Contained in Products
We have not registered with the EU REACH Chemical
Compliance Services because more than half of the products
at C.I. TAKIRON are molded products. Given our position in the
middle of the supply chain, however, we will remain constantly
aware of how we are handling substances of very high concern(SVHC), which are added from time to time, and we willcommunicate this information to our customers and respond
appropriately.
We will respond appropriately to the recent strengtheningof chemical substance regulations worldwide based on our
response flow and provide information to our customers.

Handling Framework for Substances Contained in Products

Customers
Business
Partner A
Business
Partner B

Applicable
Information

Various Reports(SDS, RoHS, REACH, etc.)

SDS

Head Office/Production Sites(Quality Assurance Department)
Information
about Legal
Amendments

Various Amendments and Other Information(The Law Concerning Examination and Regulationof Manufacture, Applicable Information etc.
of Chemical Substances, the Law Concerning Pollutant
Release and Transfer, the Food Sanitation Act, etc.)
Browsing/Distribution of Information

Various Amendments andOther Information (RoHS, REACH, etc.)

Product Information

Administrations/
Industrial Associations
Business
Divisions

Various Databases

C.I. TAKIRON Group Integrated Report 2023

38

Foundation: Respect of Individuality

Human Resource Strategies
Our Management Commitment on Enriching Lives commits us to fostering an organizational culture andworkplace environment in which every employee feels valued, continually training our workforce, accommodating diversity, and attracting top talent, so that we can become an organization of continuous creative
evolution, as envisaged in the C.I. TAKIRON 2030 Vision.

Messages from the Chief Operating Officer

Toward personnel management that aligns individual growth with corporate
success
Noboru Fukushima

Director, Managing Executive Officer, Chief Operating Officer of the Corporate Administration Division, CIO

Since fiscal 2019, under Management Commitment on Enriching Lives, we have been working to build
systems and raise awareness for our initiatives: Support for Diverse Work Styles, Support for Purposeful Work,and Support for Better Health. In response to the advances in uses of information technology and new ways
of working that have taken root amid the COVID-19 pandemic, we are working to improve the work
environment with an emphasis on increasing productivity. Our 2023 Vision requires a swift and effective
talent strategy that will enable us to achieve our next medium-term management goals without fail.
Specifically, we are in process of shifting to a promotion/reward system based on performance, drawing up a
staff allocation plan aligned with corporate-level strategy, reformation of the personnel system to attract,
retain, and nurture the talent who will drive our growth in the future, and establishing a more systematic andstrategic approach to talent development.
No less important is the need to inculcate a culture of accountability, in which employees take ownershipof their work and experience high levels of motivation and engagement. One of material issues involves
cultivating a corporate culture that supports value creation, meaning that we must create a corporate culturethat supports and empowers diverse human resources. To that end, we will focus on raising employee
engagement and ensuring that employees’ individual growth contributes to business growth.
In short, we aim to manage our human capital in a way that links employee growth with long-term,
sustainable growth in our organization’s value.

ent
pm
o
el

C.I. TAKIRON 2030 Vision
To become a corporate group that delivers peace of mind
and comfort to the future of our planet
through creative evolution.

Di
ve
r

Support for Diverse Work Styles

usion
Incl

Management
Commitment on
Enriching Livesy&sit

Human resourcedev

Human resource strategies that
support sustainable business growth

Ideal Human Resources

Communicate, Commit, Be Proactive.
Take Initiative and Drive Forward

Support for Purposeful Work

Communicate

Support for Better Health

Human resources capable of actively communicating with everyone
inside and outside the company and conveying their thoughts

CommitAttr

a c tin g tal e n t

Group Corporate Philosophy
MissionCreating a people- and earth-friendly future

Aspired Corporate Culture
Pride in our accumulated value and thecourage to transform

39

Human resources who think for themselves,act for themselves, and fulfill their responsibilities

Be Proactive
Human resources who can anticipate situations andactively realize new business and innovations
Our Ideal Human Resources concept strongly calls for awareness as
expressed by “Communicate,” “Commit,” and “Be Proactive.”
We are developing human resources who are responsible for their work,
who can complete the work without discarding it, and who canincrease their own value of existence by completing their work.

C.I. TAKIRON Group Integrated Report 2023

Management Commitment on Enriching Lives

Busin
es
greate s growth,r value

Vitalize Organization/
Improve Productivity

Our company provides a quality workplace where
employees can work easily in accordance with theManagement Commitment on Enriching Lives, andemployees contribute to the lasting growth of thecompany through realization of the Ideal Human Resources concept.

Enriching Life/
Employee Growth
Quality
Workplace

Key programs related to the Management Commitment on Enriching Lives
To support employee wellbeing, we offer, and encourage
the use of, the key programs. We also foster a positive corporate culture. In fiscal 2020, we established the Management
Commitment on Enriching Lives Promotion Committee with
the Chief Operating Officer of the Corporate Administration
Div. as the chair. The committee is held three times a year. The
committee consists of representatives from various business departments and production sites. In fiscal 2022, to add diverse
values to the committee activities, a female employee was appointed to attend the committee as an observer, whose active
participation helps vitalize the committee. The observer system
drops the gender restriction from fiscal 2023.

Support for
Diverse Work Styles

Support for
Purposeful Work

Realization of a Workplace
Where People Can Work
According to the Stageof Their Life

Realization of a Workplace
Where Everyone Can Work
EnthusiasticallySupport for
Better HealthRealization of a Workplace Where
People Can Work Efficiently
with a Healthy Body
and Mind■ Support for Diverse Work Styles

C.I. TAKIRON adopts systems such as an hourly leave system
and a telework system with the goal of realizing a workplace
where each can employee can select a working style according
to their stage of life. Since April 2023, we overhauled our telework system, expanded during the pandemic years to protect
employees from the risk of infection, to our new labor management rules with the aim of increasing productivity.

■ Supporting employees’ career growth

C.I. TAKIRON implemented career consulting and job rotation
programs as a framework to support the purposeful work of
its employees. Career counseling provides career development
support through counseling with supervisors. Employees createan action plan and confirm a growth process after sharing theirideal future and their thoughts about their career with theirsupervisor and colleagues based on a career vision sheet drafted by the employee themselves. The job rotation program is a
program in which employees move to a different department
five years after joining the company with the hope of aidingin their development by providing a wide range of experience.
These frameworks support the expectations from the company
and the passion that employees have about a career as a means
to help facilitate a better professional life and purposeful work.

Consultation programs for goal management andcareer advice (each once a year)(1) Feedback interview for achievement-based assessment of
the prior-year(2) Interviews for current fiscal year goal-setting(3) Mid-term review interview for current fiscal year goals(4) Skill assessment interview(5) Career consulting■ Improving employee engagement

We have set two KPIs for measuring the extent to which ourManagement Commitment on Enriching Lives has gained traction: employee work engagement score and employee loyalty
score. We use an annual employee survey to track employees’
passion for their job and their motivation to contribute toward
the organization’s success. The survey results are analyzed using HR technology to identify issues. We swiftly act to resolve
management issues and organizational issues.

■ Recognition as Excellent Corporation for
Health Management
In fiscal 2023, we were certified, forthe fourth consecutive year, as Excellent
Corporation for Health Management (inthe enterprise section). To maintain thisdesignation, we’ll go even further toimplement the Management Commitment on Enriching Lives.

 elework implementation●T
rate*
FY202143.0%

FY202245.6%

 ate of paid leave taken●Rby employees
FY202189.4%

FY202290.5%● Rate of smoking employees ● S pecific health guidance
implementation rate
FY2021
27.1%

FY202226.8%

FY2021
60.2%

FY202266.0%* Calculated by dividing “total days at home” with “total days of office attendance” among those eligible for telework.

C.I. TAKIRON Group Integrated Report 2023

40

Foundation: Respect of Individuality

Human resource development
C.I. TAKIRON has established an education system, and provides a broad range of opportunities to foster the development of the employees who help enhance the value of the company and to help the employees to grow on their own initiative. Our training programs
include rank-specific trainings to equip employees with the required skills, education programs to foster global human resources (language
proficiency training for selected employees), an e-learning for self-development, and incentive programs to gain qualifications.

Executive
officers

Ideal Human Resources

Managers

Group education(including
courses atexternal venues)

Rank-specifictraining
Elective
education

Equips employees with theskills required for a particularhierarchical layer

Senior level
employees
Middle level
employees
Junior level
employeesNew
employees●

Management support programs●

Multifaceted viewsD epartment manager training (Management
Candidate Development Program)

●

●
●

N
 ewly hired senior level employee training
Labor management training●T raining to strengthen problem-solving skills
Training in finance and accounting
New employee-mentor training●

Third-year training (at MORIUMIUS)●

Follow-up training for new employees
New employee training●●●

Course atSpecialized skills education (cross-industrial exchange)
external venues

Global humanresource
development
programSelfdevelopment

Study abroad
Languagetraining

Employee trainings for those
who can take on international
assignments or secondment

e-learning

Support for acquisition of skills
required for work

Study abroad
Language courses in JapanTOEIC score improvement training (e-learning)* Mandarin-language course in fiscal 2023 in addition
to English.
●●●

 BA curriculum (including M&A, business strategy,Mfinance, leadership)
Business skills (including communication, management, coaching)● Basic skills for digital transformation●●

Incentive programs
Support for acquisition of
to acquire
qualifications required for work
qualifications■ Building a globally human resource

To help our employees equip themselves with skills to excel
on the world stage, we subsidize fees for the Test of English forInternational Communication (TOIEC) institutional program toencourage employees to take the exams, and provide e-learning courses for English-language proficiency. Additionally, weoffer elective courses for language learning within Japan, which
consists primarily of one-on-one online sessions. We also offer
foreign language study abroad programs and practical training
programs at overseas group companies.

Education Plan (Human Resource Development Plan)

Education System■ Grooming future leaders

We offer an externally run program for leadership candidates.
The program is for selected chief operating officers, who leadefforts to foster an organizational culture for continuous creative evolution. Attendees participate in inter-company competitive events (cross-industrial exchange) to gain experience inleadership skills needed for business leaders, particularly using
strategic thinking to communicate a corporate vision and thenlead the organization in implementing the vision.

Message from the General Manager of the Human Resources and General Affairs Department

Nurturing and empowering the next generation of leaders
Tatsuya Uchida

General Manager of the Human Resources & General Affairs Dept.

The external business environment is highly volatile, and the outlook is unclear. Against thisbackdrop, we have embarked on a strategy for acquiring and nurturing the talent who will drive our
future growth and implement our business strategies.
For talent acquisition, our main policy is to step in-bulk recruitment of fresh graduates. Graduate
hires are assigned to cross-organizational projects. Our department then works in lockstep with thedepartments to which the hires are assigned in order to uncover hidden gems—the high-potential
employees our organization requires. We want our junior level employees to excel and to be highly
motivated, which is something we have struggled with under our past talent management system.
Accordingly, we will waste no time in restructuring our human resource management and talentdevelopment and creating a new talent management system that will raise employee engagement.

41

C.I. TAKIRON Group Integrated Report 2023

Diversity & Inclusion
We believe that respect for diverse human resources regardless of physical or non-physical differences as well as understanding awide range of values and viewpoints vitalizes the organization and helps employees grow. At first, we provide in-house training sothat each employee can better understand the concepts of “diversity & inclusion,” respect the various values and differences of eachindividual, and create a corporate culture in which all people can fully demonstrate their abilities.

■ Initiatives to Promote the Active Participationof Women■ Encouraging employees to take childcareleave

We have formulated an action plan and raise awareness both
inside and outside of the company in accordance with The Act
on Promotion of Women’s Participation and Advancement in
the Workplace while building a workplace where everyone canwork enthusiastically regardless of their gender.
We also routinely educate employees in diversity and inclusion. In fiscal 2021 and 2022, we provided all employees with
an e-learning course on the basics of diversity and inclusion. In
July 2023, management staff attended a webinar about unconscious biases.

To encourage male employees, as well as females, to takechildcare leave, we advised eligible employees, as well as their
managers, individually about the childcare leave program. Thisaction led to an increased number of childcare leaves. All of themen and women who had taken childcare leave returned tothe company during fiscal 2022.
In recognition of this achievement, the Minister of Health, Labour and Welfare awarded
our organization with Kurumin Certification in
2021, denoting that we strive for a high level ofchildcare support.

Action plan aligned with Japan’s Act on the Promotion of Women’s
Active Engagement in Professional Life (April 2023 - March 2025)(1) Females to account for 40% of career-track hires● Set a quota so that women account for 40% of career-trackhires in fiscal 2023 and fiscal 2024.
(2) Paid leave take-up rate at 80% or above● Each department will set a plan for encouraging take-up of
paid leave and track progress.
(3) Foster an organizational culture that supports job satisfaction
among female employees● Improve structures and programs for supporting careers offemale employees.
● Take action to change employee attitudes.
● Build organizational infrastructure to support flexible work
styles.

● New Female Graduate
Employment Ratio
FY2021
28.6%

63.6%

● Number of Mid-Career Hires
FY2021

8

FY202218● E mployment Ratio of
Disabled Persons
FY2021
2.12%

FY2022

2.20%● R atio of Employees Who
Return to Work after Leave
FY2021
80.9%

Roundtable Talk on
Women’s Participation
and Advancement in
the Workplace

FY2022

FY202288.4%● Acquisition Ratio of Childcare
Leave for Employees
FY2021100%

FY2022

122.2%*● Number of Employees Taking
Childcare Leave
FY202132

FY202227● Number of Employees Returned toWork after Childcare Leave
FY2021100%

FY2022100%● Rate of In-house D&I Course
Participation
FY2021100%

FY2022100%● L evel of Understanding Regarding D&I Identified through Surveys
Conducted after Training
FY2021
89.6%

P.44

FY2022

93.5%* Take-up rate in fiscal 2022 represents (b) the employees who took childcare leave during fiscal 2022
as a percentage of (a) the total number of employees who had a child during fiscal 2022 (b dividedby a). The take-up rate can potentially exceed 100% because (b) includes employees who had a childbefore fiscal 2022 but did not take childcare leave during the year in question.

Attracting talentWith an eye on rapid technological advances in the businessfield and an increasingly uncertain and opaque business environment, we are strengthening recruitment of new graduates in order to nurture the next generation of human resources from a medium- to long-term perspective. As well as hiring fresh graduates,
we are open to mid-career hires. We conduct internal interviews
to ascertain the strategic needs of each department and then hire
individuals with the experience and skills to hit the ground running, thereby improving our organizational agility to respond tochanges in the external environment swiftly and flexibly. For both
fresh graduates and mid-career hires, we monitor internal and external trends and update our hiring processes and criteria as necessary to ensure that our hiring practices align with our workforce
plan and our concept of the ideal human resources.
We also encourage the use of reemployment programs so that
senior personnel can work longer with their wealth of experience.

■ Improving the process for recruiting fresh
graduates into career-track positions
We encourage university students to understand our organization’s corestrengths and develop an emotional connection with our businesses, so thatthey develop a strong desire to join our organization and, after joining, remain
loyal. In our company briefing sessions and initial screenings (which involvegroup discussions), students interact with employees of different ages and occupations other than HU team members, giving the students a better idea ofwhat it would be like to work for us. For the second round of screening, which
consists of a personal interview, we now check the candidates’ competencies.
In this process, we focus on the candidates’ behavioral characteristics. After
unofficial employment offers, we follow up the candidate by inviting them tosocial gatherings and pre-employment training sessions. For the fiscal 2024
intake of fresh graduates, we have started course-specific hiring (clerical, engineering), meaning hiring with limited initial job roles. We have also upgradedinternships for engineering students. These actions have increased the percentage of candidates who accept our job offers.

C.I. TAKIRON Group Integrated Report 2023

42

Foundation: Respect of Individuality

Workplace Health and Safety
Health and Safety Management System
Based on the C.I. TAKIRON Group’s stated health and safety
policy of “Building a safe and comfortable workplace by penetrating employee safety awareness,” each group companies
developing and promoting health and safety activities to pre-vent occupational accidents and recurrences. We also mutuallyshare and utilize information among our Group companies tobuild a system that promotes a higher level of health and safety
as well as risk reduction.

Important Safety Measures

Framework of Health and Safety Activities for Group Companies[Safety][Health]Group Safety
Committee

Group HealthManagers Council

General Manager
Safety: Chief Operating Officerof the Production Division
Health: Chief Operating Officer of
the Corporate Administration Division
Secretariat
Safety: Production Planning Department
Health: Human Resource & General
Affairs Department

Health and Safety
Committee at
Each C.I. TAKIRON
Business Site

Health and Safety
Committee at
Each Group
Company

Composition of theCommittee in Accordancewith the Industrial
Safety and Health Act.

Important Measures(1) Ensure awareness of and compliance with basic safety rules(2) Foster safety awareness by reviewing rules that cannot be followed(3) Practice measure to mitigate risks by thoroughly investigating
accident factors(4) Comply with relevant laws and regulations and fully respond tolegal reforms

Provide education and practice basic safety activities(5) Ensure candidates undergo secondary examinations necessary due
to the results of physical examinations(6) Ensure candidates undergo specific health guidance(7) Ensure that no employees work prolonged hours due to overtime
work

Employees

Safety Activities at Group Production Sites
C.I. TAKIRON Group conducts various activities at each production site with the health and safety committees at the core.
In fiscal 2022, we continued working on the same priority
actions we worked on in fiscal 2021: (1) in-depth investigation of the causes of occupational accidents and implementation of more effective countermeasures by the Safety Review
Board, and (2) identification of the level of safety management
through safety management level assessment.

plants, we deliberate and share them cross-organizationally.

(1) Safety Review Board
Established in fiscal 2021, the Safety Review Board reviews
incidents that have occurred in plants. In these reviews, members of relevant plants participate. The board aims to bring ina third-party perspective to help identify in depth the causes ofoccurrences that otherwise may be difficult to notice and lackobjective perspective at our won plants where occupational
accidents occurred, and to take effective countermeasures. In
addition, when we encounter cases that are applicable to other(3) Incident risk checks
In fiscal 2022, a third-party assessment was held at the C.I.
TAKIRON plants for fire risk. Its purpose was to bring in an expert perspective from outside so that we could be alerted to,and then take action to control, fire risks that we may fail tohave noticed otherwise. In fiscal 2023, we will roll out this assessment to plants owned by our group companies to further
mitigate the fire risks.

(2) Evaluated the level of safety management
In fiscal 2022 too, we conducted safety level assessment at
plants owned by our group companies. The objective of thisassessment was to clarify each site’s strong and weak points insafety management with a view to encouraging better safety
awareness and more effective safety practices.

FY 2022 Industrial Accidents (Including Injuries with No Leave of Absence for All Group Companies)

16%

Pinching/
Entanglement

25%

Reactionary/
Unreasonable Movement

10%

10%

5%

Between 10 toless than 15 Years7%

Accident Ratio
by Tenure

Ratio by Type

Traffic
accidents

Between 5
to less than
10 Years

Falling

18%

13%

20%

Cuts/Scratches

18%

43

At Least
20 Years

Between 15 toless than 20 Years

Other

C.I. TAKIRON Group Integrated Report 2023

Less than
5 Years

58%

Special Feature

Roundtable Talk on Women’s Participation and Advancement in the Workplace

Supporting Women in a Way that Speaks
to C.I. TAKIRON’s Distinctive Values
In October 2022, the C.I. TAKIRON Group launched the Subcommittee for Empowering Women in the Workplace, as a
subcommittee of the Management Commitment on Enriching Lives Promotion Committee. The subcommittee, chairedby the COO of the Corporate Administration Division, consists of two external officers, the COO of the Human
Resources and General Affairs Department, and five core union members. It is designed to facilitate labor–management
dialogue. Three officers leading this subcommittee discussed the outlook for empowering women at C.I. TAKIRON.

Noboru Fukushima

Director, Managing Executive Officer,
Chief Operating Officer of the
Corporate Administration Division,
CIO, and Chair of the Subcommittee
for Empowering Women in the
Workplace

Topic

Yoshiko Kosaka

Independent Outside Director
Member of the Subcommittee for
Empowering Women in the Workplace

Masako Osuna

Independent Outside Audit &Supervisory Board Member
Member of the Subcommittee for
Empowering Women in the Workplace

Background of the establishment of the subcommittee

Fukushima: Empowering women in theworkplace was one of the topics we’ddiscussed at the Management Commitment on Enriching Lives Promotion Committee, along with other policies in theManagement Commitment on Enriching
Lives, such as promoting diverse workstyles, purposeful work, and employee
wellbeing. However, we increasingly feltthat empowering women was a wholeseparate topic that required time andattention in its own right. Our commitment to empowering women serves asa critical indicator of its commitment topromoting diversity and inclusion. We
therefore decided to launch a subcommittee dedicated to discussing the topic

in depth. We wanted the subcommittee’s
membership to reflect the opinions andinterests of women and to offer expertiseand leadership. That’s why we asked you
two, Ms. Kosaka and Ms. Osuna, to join
the subcommittee.
Kosaka: Like many chemical manufacturers, C.I. TAKIRON has relatively few
women in its workforce. I’d long felt thatthe company should hire more womenand do more to empower women in theworkplace, so I felt delighted when I was
asked to join the subcommittee—finally,
it seemed, the company was taking thematter seriously. The subcommittee’s
membership represents a diverse spectrum of ages and backgrounds. During

C.I. TAKIRON Group Integrated Report 2023

meetings, we have meaningful discussions that consider women’s perspectives.
It’s now widely held that diversity andempowering women in the workplace
are essential for corporate development,
but I’ve noticed a widening gulf between
companies that are committing to theseprinciples and those that are not. C.I. TAKIRON, for one, must fully recognize thatempowering women in the workplace isa first step toward diversity and its promotion leads to enrichment of the livesof all employees. It must act to ensurethat it doesn’t lag behind in this task.
Having said that, however, change won’t
happen overnight. Short-term fixes aren't
enough. The company must set medi-

44Special Feature

Roundtable Talk on Women’s Participation and Advancement in the Workplaceum-term goals and take sustained action.
Osuna: I felt similar to how you did,
Ms. Kosaka, about the lack of female
participation in this organization. At themeantime, in a time when people aresaying that Japan must close its gender
gap to boost economic growth, C.I. TAKIRON, by committing wholeheartedly toempowering women in the workplace,is catching up with a Japan-wide trend,
and that in itself deserves praise. On thismatter, in June 2023, a discussion session
was held with female employees at Shiga
Plant, and they said that they can now
speak up with confidence, which helps
them engage in work in a positive manner. Hearing this, I felt assured that thecompany is, slowly but surely, changing
its culture.

Topic

C.I. TAKIRON should takebold action that speaks to
its distinctive values.

Empowering women and diversity in C.I. Takiron today

Fukushima: As a part of our main activities, the subcommittee holds a series of
discussions with female employees about
the issues we need to address. One of
the themes that came up in these discussions was the need for psychologicalassurance. It is important that, with sucha male-dominated workforce, the company must provide a workplace environment in which women can feel assured
when doing their work and speaking up.
One thing we must do first is to increase
the overall number of women in theworkplace. Another issue concern is thelack of female representation in the decision-making process at the Management
Commitment on Enriching Lives Promotion Committee. While the core members of the Committee are all managers,
women make up just 3% of management
roles at the company. This imbalance may
mean that, when communicating theInsights gained from thesubcommittee will guide
us in developing flexible
and concrete measures.

45

If a company is a great place for women
to work at, then it’s also a great place foranyone to work at, regardless of gender,
nationality, or age. In that respect, I think
our discussion is making an impact on themain committee, Management Commitment on Enriching Lives Promotion Committee. In addition, by recognized as a
women-friendly company, you can attract
top female talent. This reputation willthen grow, and you’ll attract more andmore female workforce with a passion forwork. The effect will spread to men too,creating a positive atmosphere in general and results in a strong organization. If
only for this benefit, you should commit
to empowering women in the workplace.

committee’s decisions to front line workplaces, women’s perspectives and sensibilities tend to be less acknowledged. To
increase female representation in management positions, we need to prepare aworkplace environment in which womencan continue working and pursuing theircareer. We also need to look into hiring
women from outside.
Kosaka: I agree—increasing female representation in management is an urgent
task. It is unlikely to make much progressin a year or two. But we should set medium-term targets and then develop andimplement effective actions to achievethem.
On the other hand, from the subcommittee discussions and interviews at production sites, I can tell that progress has
been made in establishing the organizational support for empowering womenin the workplace, and visible changes are
occurring. The next step is to foster an organizational culture in which women feel
confident in accessing the support programs when they need to, without worrying that they may be bothering others.
By going forward in this discussion about
empowering women, you can come up
with policies that will enhance the wellbeing of all employees, men included.
Osuna: I think so too. The Management
Commitment on Enriching Lives has beenrefined over the years: C.I. TAKIRON’s
former chairman, Yosuke Minamitani,
originally came up with it; the current
chairman, Kazuya Saito, improved on it;
and this year, it was handed down to President Fukuda. President Fukuda, adopting
a powerful leadership style, has signaled
his desire for reform and has placed paramount importance on improving earning

C.I. TAKIRON Group Integrated Report 2023

power. To improve earning power, I think
it is important to provide an employee-friendly workplace as its foundation.
I’ve visited a number of production
sites, and learned that work hours andwork patterns are deal breakers for prospective employees. I realized how important it is to adopt smart factory principles to enable automation and laborsaving. And by incorporating female perspectives into the workplace—a strong
concern for health, safety, and the environment issues, for example—we’ll ultimately increase competitiveness. Like you
said earlier, Ms. Fukushima, managers
need to think about how they communicate the initiatives and programs for empowering women to their team and how
these initiatives and programs work inpractice. We’ll first need to confirm psychological assurance and then follow up
employees when they use the programs
to make sure the programs are working
as they should.
Fukuda: Follow-up is vital, right. We’rea very earnest organization; once we’vecreated a system or program of some sort,
we tend to put our heart and soul into it.
Take, for example, childcare leave takeup
rate among men. When you include carry-over from the previous year, the rate
is 122%. The rate has topped 100% inthree consecutive years. We’ll be applying this earnest attitude in our efforts toempower women in the workplace. On
the other hand, some employees mightfeel reluctant to take childcare leave but
end up taking it anyway because they
don’t want to be the odd one out. Issues
like this will need to be uncovered anddiscussed if the program in question is tooperate more effectively.

TopicFiscal 2022–2023 in review

Osuna: When I visited the plants in Hokkaido, Ibaraki, and Shiga, it made me appreciate anew how physical factory work
is. I learned that women occupy many ofthe packing and clerical roles and thatthe number of young female R&D staff
members is rising. I got the sense thatthe women, while facing their personal
problems and challenges in their workplaces and in job roles, have a passion foradvancing their careers. By channelingthe women’s passion and competence totheir greatest effect, we can improve thecompany’s competitiveness—that’s surely
an opportunity too good to miss. Even ina traditional male space like a factory, I
think this is doable.
Kosaka: I had a discussion with female
staff at Shiga Plant, and they all seemed

Topic

to be happy and engaged in their job
roles. People have a preconceived notionthat that women would struggle in a malespace like a factory, but that’s another example of unconscious bias—something
our subcommittee has discussed in thepast. Such misplaced concerns may infact lie at the very heart of the problem.
Ms. Osuna mentioned physical work
is required at factories to some extent.
However, with President Fukuda’s commitment to the smart factory, we should
see a decrease in barriers related to sex
differences in physical strength, opening
up more opportunities for women.
Fukushima: When we discussed examples of unconscious bias, I learned thephrase “old boy’s network.” The phrase isused to express concern that a closed-off

network of men is making all the important business decisions. Indeed, it wasn’t
too long ago when they’d have cliques ofmen doing favors for each other in business—and I’m not just talking about ourcompany. I’d always thought of this as anormal part of life and hardly questioned
it. Now I realize that such networks candiscourage women from pursuing careers. This is just one of the many insights
I have gained at the subcommittee. I
want to disseminate these insights rightacross the organization.

Looking to the future

Kosaka: Workplace diversity, including
an empowering environment for women, is crucial in attracting young talent.
So, the management should broadcast
externally, as well as internally, how it ispromoting diversity. The management
should first check whether its diversity
program is suited to the company’s realities and whether it’s practical, and thenrefine the program as necessary to tailor
it to employees’ practical needs. Having
done this, we can then create a programthat delivers a compelling message aboutn’s values.
Osuna: Yes, the company should develop policies that speak to its distinctive
values and identity. Take, for example,
offering grandpa and grandma leave—
leave that allows employees leave tolook after their grandchildren. Such ameasure makes a lot of sense. Grandpa leave would give male managers ataste of the hardships of childcare andmay encourage them to change theirapproach. The first step toward greater diversity is to create an environment
in which people can express their own
opinions in the knowledge that we are
all different. Just listen to what university
students say nowadays. Amid the drastic changes in social norms, students areprepared to work hard for a company,
but they also want to know when thecompany will give them something in
return. You know, some will even tellthe CEO point-blank that they’ll give thecompany three years and see if it’s worth
it. Against this backdrop, companies willneed a more flexible design if they are todevelop the talent they need.
Fukushima: Our discussions in the subcommittee bring home the sheer magnitude of the changes in society, in thetimes, and in people. Ms. Kosaka broughtup the need to tailor support to the individual’s career plan. Would you mind
elaborating on that?
Kosaka: I mean that empowering women in the workplace shouldn’t be justabout getting more women into management roles. Sure, it is important to support women who want to take on management roles and engage in strategic
decision-making. But it is also importantto support those who have a longer-term
career plan; they may want to put theircareers on hold to care for their children,and then resume their careers once thechildren have grown up. We should avoid
one-size-fits-all policies that pigeonhole
employees into categories like man,woman, parent, or caregiver. Instead, weneed to figure out a more nuanced, individuated approach that will support any
employee’s growth and career over the
medium and long term.

C.I. TAKIRON Group Integrated Report 2023

The program shoulddeliver a compelling
message externally,
as well as internally.

Osuna: As we’ve discussed several times
at the subcommittee, the companies that
do well are those that provide one-onone consultations or similar opportunities
for employees to discuss their life planwith their supervisor or manager. C.I. Takiron, likewise, should listen carefully toeach employee’s career plans and support
the careers of individual employees in a
way that aligns with their life stage.
Fukushima: It would be a mistake tothink that we could just launch some
initiatives and then consider the work
done. We need to keep working at it,
uncovering hidden problems, and making one change after another. This year,
we launched a course on unconscious
bias. We’re also making arrangements
to launch one-on-one meetings. I hopethat you two will continue to share yourinsights with me. Instead of dreadingchange, we’ll keep moving forward in implementing policies that fit with the times.

46

Foundation: Responsibilities to Society

Initiatives toward Carbon Neutral Society
Environmental Management
The C.I. TAKIRON Group is working toward the goal of production activities and new product development that take into
consideration their environmental impact in accordance with ourEnvironmental Philosophy and Basic Environmental Policy. In fiscal
2022, after considering global trends in environmental sustainability, we announced a strategy for carbon neutrality and started
disclosing information in line with the TCFD framework to clarify
our commitment to our corporate mission.
In fiscal 2023, the committee structure is reviewed and establish
a new structure to manage progress for environmental management at a division or plant level. This new arrangement will help us
achieve our goals aligned with the carbon neutral agenda.

Environmental Philosophy
We will strive to manufacture products that take into
consideration the people, earth, and future while always
keeping the conservation of our planet in mind.

Basic Environmental Policy(1) Promote decarbonization and reduction of environmental
impact in all of our corporate activities.
(2) Develop technologies and offer products in anenvironmentally-friendly manner.
(3) Engage in active communication with community.

Environmental strategies(1) Strategy for Carbon Neutrality(2) Medium-term Plan for Materiality

Legal & Regulatory Compliance■ Organizational framework
Sustainability Committee
Responsible for the arrangement of environmental measures from a
mid- to long-term perspective, and for monitoring of eachcommittee.

Board of Directors

Meeting to Promote Environmental Conservation
Committee members selected from divisions closely related to
production activities report regularly on the status of environmental
conservation activities and issues at each site, and manage progress.

Management Committee
Tables resolutions,
reports toAdvises

ReportingMeeting to Promote
Environmental Conservation
Chair
Members

COO of the Production Div.
Production Planning Dept.
Production and Equipment
Engineering Dept.
Corporate Planning Dept.
Secretariat Production Planning Dept.

Reporting
Reporting

Advises

Sustainability Committee
Chair

Reporting

COO of the Corporate
Planning Div.
Members Corporate Planning Div.
Legal & Compliance Dept.
Human Resources & General
Affairs Dept. R&D Dept.
Production Planning Dept.
Quality Assurance Dept.
Business Div. Two plants
Secretariat Corporate Planning Div.

Reporting

Advises

Advises

Advises

Subcommittee

Subcommittee (CN Taskforce)
The subcommittee takes charge of actions for reducing greenhousegas emissions; it devises reduction measures, coordinates reduction
action across group companies, identifies and devises measures toaddress issues related to such, monitors and regularly reports on
progress made in implementing planned measures.
Meeting to Promote Environmental Conservation:
General actions to protect the environment
Devise basic environmental strategy● Set and review environmental action plan
● Set and review environmental metrics and targets● Set and review measures for protecting the environment● Undertake actions related to the above actions● Review CO2 emissions● Ensure regulatory compliance, gather external information, research trends
among other companies, coordinate with other members of Itochu
Corporation’s corporate group*Duplicated actions are omitted●

Meeting to Promote
Environmental
Conservation(CN Taskforce)

Committee Meeting(relevant departments/
committees)

Reporting

Advises

Chair
Members

COO of the Corporate Planning Div.
Corporate Planning Div.
Production Planning Dept.
Production and Equipment
Engineering Dept. R&D Dept.
Secretariat Corporate Planning Div.

Taskforce: Ensure accomplishmentof goals in carbon neutrality
strategy (for all three scopes)
Reform carbon neutrality strategy(strategy for 2050 and 2030)
Review and monitor progress madein CO2 reduction measures● Develop CO2 reduction measures,
coordinate reduction action acrossgroup companies●●

Taskforce

Duplicated action:
Review CO2 reduction measures

Strategy for Carbon Neutrality
The C.I. TAKIRON Group aims to achieve carbon neutrality (net-zero emissions) by fiscal 2050.
Shown below are our mid-term goals for reductions in greenhouse gas (GHG) emissions in fiscal 2030.

47

Scopes 1 and 2

Scopes 3

35% reduction (compared to fiscal 2018 level)

Reduction actions across corporate group

C.I. TAKIRON Group Integrated Report 2023

Initiatives to Reduce CO2 Emissions
In order to demonstrate that the C.I. TAKIRON Group is asustainable company with long-term greenhouse gas reduction
targets consistent with the Paris Agreement, we have revised
our target for CO2 reduction upward from the previous target
in line with the WB2°C* (30% reduction in Scope 1 and 2 infiscal 2030 compared to fiscal 2018) to 35%.
* Well-below 2°C: Greenhouse gas reduction targets aimed at limiting global temperature increase to significantly less than 2°C above pre-industrial revolution levels.

■ Emissions Analysis

Greenhouse gas (CO2) emissions in fiscal 2022 were 570,000(t-CO2). Of these, Scope 1 and 2 accounted for 71,000 (t-CO2),or about 12% of the total, and Scope 3 accounted for 499,000(t-CO2), or about 88% of the total

Scope 1 and 2 CO2 emissions

Unit: kt-CO2

FY2018FY2019FY2020

FY2021

FY2022

109

89

93

81

71

Scope 3 CO2 Emissions

Unit: kt-CO2

FY2018FY2019FY2020

FY2021

FY2022

261

244

223

544*

499*

* In fiscal 2021, the scope of calculation was expanded to include the entire Groupand all 15 categories of Scope 3 emissions.

Solar panels on the roof of Yasutomi Plant■ Scope 1 and 2 CO2 emission reduction measures

In an effort to reduce our emissions at Scopes 1 and 2, production sites of our consolidated subsidiaries have committed
to energy-saving practices and, since fiscal 2021, to energy
generation (using solar panels) and to using more renewableenergy. Consequently, in fiscal 2022, emissions at these scopes
were down 35% from the fiscal 2018 level.
We will keep exploring bold reduction measures while stepping up efforts to save energy in order to use energy as efficiently as possible.

2%■ Scope 3 Calculation and Emission Reduction
Measures

10%

For Scope 3, calculations were expanded in fiscal 2021 tocover the Group as a whole and all categories from 1 to 15.
In fiscal 2022, emissions at this scope were down 45,000 (tCO2) compared to the fiscal 2022 level. Category 1 (purchased
goods and services) and Category 12 (disposal of sold products) account for about 57% and 27% of Scope 3 emissions,
respectively. We will continue to improve the accuracy of ourcalculations while prioritizing reductions in categories 1 and
12, and working to reduce Scope 3 emissions throughout the
supply chain.

Scope 1
Scope 2
Scope 388%

Unit: Thousand t-CO2
Category

FY2019FY2020

FY2021

FY2022

1 Purchased Goods and Services

177.0

178.0

318.7

283.9

2 Capital Goods

24.0

8.0

14.7

14.6

3 Fuel and Energy Activities Excluded from Scope 1 and 2

13.0

13.0

17.2

14.5

4 Upstream Transportation and Distribution

25.0

22.0

38.5

35.9

5 Waste Generated from Business

1.0

2.0

2.0

1.8

6 Business Travel

3.0

1.0

3.0

3.7

7 Employee Commuting

0.4

0.4

1.0

8 Upstream Leased Assets

Outside Scope

Outside Scope

Outside Scope

9 Downstream Transportation and Distribution(Not Calculated)(Not Calculated)

10 Processing of Sold Products(Not Calculated)(Not Calculated)

11 Use of Sold Products(Not Calculated)(Not Calculated)

8.0

7.8

12 Disposal of Sold Products(Not Calculated)(Not Calculated)

137.7

132.4

13 Downstream Leased Assets(Not Calculated)(Not Calculated)

Outside Scope

Outside Scope

14 Franchises(Not Calculated)(Not Calculated)

Outside Scope

Outside Scope

15 Investments(Not Calculated)(Not Calculated)

Outside Scope

Outside Scope

C.I. TAKIRON Group Integrated Report 2023

4.0

1.0
Outside Scope

Outside Scope

3.7
Outside Scope48

Foundation: Responsibilities to Society

Actions for the TCFD Framework in Our Climate-related Disclosures
In May 2021, we endorsed the Task Force on Climate-related Financial Disclosures (TCFD). Viewing events related to the climatechange issue as a management risk, we will identify new business opportunities and enhance corporate value, while actively promoting
reduction of greenhouse gas emissions and development and provision of environmentally friendly products.

■ GovernanceAs part of our governance structure, we have establishedSustainability Committee to ensure overall control from a higher and long-term perspective. The structure and roles are as
follows:

Board oversight is provided by the following procedure: Sustainability Committee reviews important climate-related matters and then reports its findings to the Board of Directors via a
proposal raised at the Management Committee.

■ Structure: Sustainability Committee, chaired by the COO of the of
the Corporate Planning Division, consists of members delegated from relevant business divisions. The committee
meets four times a year.
■ Roles: The committee facilitates short-, medium-, and long-term actions to address the identified risks and opportunities by evaluating climate-related risks and opportunities pertaining to agiven business, setting and tracking goals, devising measuresrelated to disclosures and business planning.

Management■ Strategies

We identified certain transition risks and physical risks thathave a high potential impact in the short, medium, and longterms, and then run scenario analysis as follows:● We identified risks and opportunities associated with a 1.5°C and
4°C increase in temperature with time horizons of 2030 and 2050,
then complete the study of impact factors, impact elements, andbusiness impact assessments to finalize the results.
● From among the risks we had identified, we extracted those witha high business impact and subjected them to analysis to identify
relevant parameters and formulas for financial impact assessments.
● We quantified the data as much as possible, starting with the risks
for which we had identified a formula.
● We defined our TCFD goal images.

Board of Directors(Reporting)Management Committee

Executive(Tables resolutions,
reports to)

Sustainability Committee
Secretariat: Corporate
Planning Div.
Each department of C.I. TAKIRON

Affiliate companies

In the future, we will continue to expand the number ofcategories subject to scenario analysis and conduct more sophisticated and accurate scenario analyses in order to enhance
our information disclosure initiatives. We will also apply theclarified risks and opportunities to the environmental strategies
of each business, incorporate them into environmental targets
and action plans. Alongside this, we will establish a system formonitoring progress and delivering feedback, and continue to
strive to mitigate risks and capitalize potential opportunities.

Goal
Step 3
Step 2
Step 1
Ascertain anddisclose status quo(initial step)
Disclose climate impacts on ourbusinesses; disclose ourbusiness resilience
Ascertain, analyze,
and review status quo
Disclose information■ Risk management

Enhance qualitative andquantitative disclosures
Enhance qualitative andquantitative disclosures
regarding climate impacts on
our businesses and ourbusiness resilience
Uncover more informationthat should be disclosed
Increase disclosure coverage

We visualize risks that we have identified as severe risks tobusiness in our corporate group and manage them systematically on a yearly basis. We also have a risk management system
for avoiding or mitigating risk of loss. In the event that suchrisks materialize, we consider and implement measures to minimize their impact.

Identify strategic
implications
Product strategy, sales strategy
Purchasing strategy,organizational strategy
Production strategy
Identify feasibility ofmeasures
Incorporate into businessstrategy
Create roadmap

Improve financial value
Manage impact on
non-financial value
Minimize risks andmaximize opportunities
Align with carbon
neutrality agenda
Implement business strategy

Climate change issues are also managed within the risk management system, and specific measures to address risks andopportunities identified in scenario analyses are studied andadvanced.

● Learn more about our risk management system, how it works, andwhat processes it involves at the following webpage:https://www.takiron-ci.co.jp/sustainability/governance/riskmanagement.html

49

C.I. TAKIRON Group Integrated Report 2023

■ Metrics and targets

Our carbon neutrality strategy for fiscal 2022, set out in ourEnvironmental Vision, includes a goal of net-zero greenhousegas emissions by 2050.
In addition, we have set 2030 as a milestone, the halfway

point to 2050, and will take measures to address climate-related risks and opportunities while targeting a 35% reduction in
Scope 1 and 2 compared to FY 2018.

■ Scenario analysis

With 2030 and 2050 as the target years, the C.I. TAKIRONGroup conducted a scenario analysis based on the TCFD recommendations. We have now finished assessing the qualitative business impacts of each of identified risks and opportunities in the+1.5°C and +4°C scenario perspectives.
Anticipated Risk Items
Broad
Category

DetailPolicy andlegal

GHG emissions prices(e.g., carbon pricing,introduction of carbon
tax)

Technology
Transition
Risks

Acute Risks

Actions to address climate-related
opportunities

Risks

Time frame

Evaluation

Costs

・Increased costs due to theintroduction of a carbon tax
・Increased costs due to purchase ofemission credits

Mediumterm

Major

Contribution to CO2 reduction and carbon
neutrality: Purchase less petroleum-derived
virgin materials and switch to alternative
resins such as bioresins and recycled resins

Development of energy
conservation andrenewable energy

Costs・Increased energy costs
・Increased costs due to investment in
power generation facilities

Mediumterm

Major

・Commit to energy saving and roll out
energy generation to reduce electricity
consumption
・Promote recycling

Changes in customerneed

Net sales
・Decrease in demand due to delay in
Costs
low-carbon transition

Mediumterm

Major・Achieve targets for reducing CO2 emissions
at Scopes 1 and 2・Supply the demand for environment-friendly
products made from low-carbon materials

Changes in waterand raw materials
procurement volumes

・Cost increase due to transition to
low-carbon raw materials
Net sales ・Risk of product type consolidation
Costs
due to restrictions on procurement of fossil-derived raw materials
・Decrease in demand due to sales
price pass-throughMediumterm

Major

・Work with suppliers to ensure supply
continuity of resins

Change in precipitation
patterns

・Damage and suspension of
Net sales
operations due to disaster
Costs
・Supply chain fragmentation
・Decrease in demand due tosuspension of shipping operations

Mediumterm

Major

・Enhance business continuity planning(enhance business continuity plan or
strategy)・Diversify inventory across multiple
warehouse locations

MarketPhysical
Risks

Anticipated Business Impact

Naturaldisasters

Intermediate

From among the risks we identified, we extracted those witha high business impact and subjected them to analysis to identify relevant parameters and formulas for financial impact assessments. We will continue conducting precise scenario analyses andmaking our disclosures as comprehensive and clear as possible.

Material Flow and Total Emissions Management(1) Reduce Generation of Plastic Industrial Waste
To reduce industrial plastic waste, production sites in our
corporate group are improving productivity and separating out
waste.
Thanks to these efforts, our group used a higher rate of recycled materials in fiscal 2022 than it did in fiscal 2021. We willcontinue to reduce, reuse, and recycle.

(2) Development of Environment-friendly Products
The environmental impact assessment checklist for the design review system used in internal product development wasrevised to link it to the environmental considerations in the government’s Guideline for design of Plastic-containing Products
and the SDGs. We will continue our efforts to develop products
and systems from a 3R + Renewable perspective.

Production StageUse Phase

Areas the C.I. Takiron Group already identified
Resin Input(Including plasticizing
agent and fillers)

100%

15%
Recycled Plastic
Intake Volume

Areas that need to be identified in the future
DurableGoods

Product
Warehousing

87%

85%

8%
4%
Recycling1%
Production Loss

13%

Material
RecyclingUse
Recycled Materials (Recycled within Group)

Waste Valuables (Trades at a Price)

C.I. TAKIRON
Group
Production
Sites

Processing/Disposal Phase

Simple Incineration
Less than1%

Landfill
Less than

Nondurable
Goods

ChemicalRecycling

ThermalRecycling
Not Yet Used
(SimpleIncineration)(Landfill)
TBD

1%

C.I. TAKIRON Group Integrated Report 2023

50

Foundation: Responsibilities to Society

Respect for Human Rights
Human Rights Policy

 aising Awareness of Human Rights
R
Among Employees

C.I. TAKIRON Group Human Rights Policy is based on international standards on human rights, including the UN Guiding
Principles on Business and Human Rights. The policy guides ourefforts to ensure respect for human rights in all our businessactivities.

● C.I. TAKIRON Group Human Rights Policy
https://www.takiron-ci.co.jp/news/2023/post_327.html■ Ongoing trainings

Subject: New managers, mid-career hires, and fresh graduate hires■ Human rights workshop
Date: August 1, 2022.

Organizational infrastructure
At the C.I. TAKIRON Group, the Human Rights Secretariat andrelevant departments coordinate with each other to combat potential threats to human rights, including harassment. We also
work with Purchasing Dept. and business departments to address human rights issues in our supply chain.

Organizational infrastructure for human rights■ SDGs Challenge 2030: Webinar series on businessand human rights
Date: March 1 - 14, 2023.

Board of Directors(Reporting)Management Committee(Reporting)ReliefCompliance Committee(Addresses human rights abuses and disputes)(Reporting)(Tables resolutions, reports to)

Sustainability Committee(Devises strategy and policies)

Relief(Progress reports) annual

Human Rights Officer: COO of the Corporate Planning Div.
Human Rights Secretariat: Corporate Planning Div.
Relevant departments(Business departments, Human Resources & General Affairs Dept., Production
Planning Dept., Purchasing Dept., Legal & Compliance Dept., Quality Assurance Dept.)

The C.I. TAKIRON Group strives never to engage in or abethuman rights abuses. In case we receive complaint matters related to human right risks or human rights, the representatives
in charge respond in a timely manner through our internal hotline or a public contact point.

CSR Procurement
Material Procurement Policy
Our mission is to find harmony with the environment andprovide people friendly products to society in all of our activities
founded in plastic materials and material processing technologies. We seek for material procurement partners who understand our Material Procurement Policy and can persevere inboth business and product development with us in our procurement (raw plastic materials, secondary and metal materials,
as well as processed goods).
To build a sustainable supply chain, we have establisheda CSR procurement policy, and we engage with suppliers tomonitor their ESG performance and helping them make improvements as necessary. C.I. TAKIRON and domestic Group
companies have explained our CSR Procurement Policy andCSR Procurement Policy Guidelines to, and gained consent regarding such from, suppliers whose transaction amounts exceeds a certain level (they share 90% of all of our suppliers).
In fiscal 2022, we explained the policy and guidelines to, and51

gained consent from, overseas group companies. We will stepup engagement with our suppliers.
See page 32 (Mid-Term Plan for Materiality) for more information.
C.I. TAKIRON Group CSR Procurement Policy (April 1, 2021)
1. Respect human rights and the labor environment.
2. Always consider health and safety.
3. Maintain or enhance environmental action
4. Ensure and improve product safety and quality.
5. Maintain and strengthen information security.
6. Practice fair trade and adhere to business ethics.
7. Dialogue with local communities and participate in social
contribution activities.

C.I. TAKIRON Group Integrated Report 2023

Social Contribution Activities
Coexisting with Communities in Areas Around Business and Production Sites
As a plastics producer, we are duty-bound to contribute to
SDG 12, Responsible Consumption and Production. One of ourmateriality issues is to address the marine plastics problem. To
address the issue, we have launched Waterside Clean Aid, a
program in which employees of our business and production
sites volunteer, along with their family members, to clean up
coastal areas, rivers, and lakes.
In fiscal 2022, a total of 233 community-engagement activities were undertaken, exceeding the total in fiscal 2021. This
increase reflects the fact that the pandemic impact had lessened in fiscal 2022.
These activities included cleanups (including those organizedas part of Waterside Clean Aid), donations to local communities, participation in local events, voluntary welfare services,
contribution to neighborhood school events, and activities re-

Official logo flag of Waterside Clean Aid

Arakawa Clean Aid (Tokyo Head Office)lated to blood donations, first aid, and fire and rescue services.
For our fifth materiality issue, Handle Marine Plastic Pollution, the KPIs include number of Waterside Clean Aid activities
and number of participants. In fiscal 2022, we recorded 157
activities, exceeding the target of 30. For participants, we recorded a total of 2,074, far exceeding the target of 1,000. This
activity enhances, in addition to (1) coping with the problemof marine plastic waste and contribution to the resolution ofsocial issues, (2) our engagement in 3R + Renewable initiatives
by widening our awareness about the environmental pollution
caused by plastic products, as well as (3) focuses on improvement in communication within the Group. For fiscal 2023, weraised the target of total participants to 1,200. We will continue the program activities, aiming at improving employees’
awareness.

Miyakojima Clean Aid (Osaka Head Office)Cleanup along coast of Hiratsuka(Hiratsuka Plant)

Promoting Recycling of PET bottles

Promotion and Development of Sports

Companies often brag about their schemes for recycling
plastic (polyethylene terephthalate or PET) bottles, but little is
known about what the caps can be recycled into. Dailite Co.,
Ltd., one of our group companies, participates in a university–
industry undertaking, Mottainai Upcycle Project (MUP), led by
Asahi Group Japan, Ltd. and Asahi You Us Ltd. In this project,
Dailite uses its expertise in rotational molding to grind usedcaps and upcycle them into chairs. The project spearheads
awareness about cap recycling by showcasing a technique forupcycling plastic caps.

C.I. TAKIRON concluded an official Japan swimming teamsponsorship agreement with the Japan Swimming Federation(JASF) in fiscal 2015 as a way to cheer on the Japan swimming
team (TOBIUO Japan). Group company Takiron Matex Co., Ltd.,a non-slip flooring material provider for poolside
safety, promotes swimming by sponsoringswimming tournaments
held by the Japan Swimming Federation and acting as an official sponsorof the Japan Swimming
Federation for Persons
with an Intellectual Disability.

A MUP booth showcasing a stool manufactured withrecycled plastic bottle caps.

C.I. TAKIRON Group Integrated Report 2023

52

SpecialfeatureGovernance Roundtable

Messages from Governance Committee Members

Toward stronger corporate governanceand ensured effective
The Governance Committee, dominated by outside directors, is in charge of enhancing governance to enrich
the corporate value of the C.I. TAKIRON Group while ensuring transparency and health in management,
through discussions and advice to the Board of Directors on important matters concerning governance.
As we did last year, four outside officers from the Governance Committee attended a roundtable to exchange
their views about the current state of corporate governance in the company and their outlook on corporate
governance, including what the mid- and long-term strategy for ideal corporate governance.

Members of the Governance Committee(as of June 2023, the time of the roundtable discussion)Committee
Chairperson

Independent Outside Director

Kenichi Hatano

Members

Director President
Independent Outside Director
Independent Outside Director
Independent Outside Audit &Supervisory Board Member

Yuji Fukuda
Yoshiko Kosaka
Takeshi Kaide
Takashi Araki* Takeshi Kaide assumed the position of chair in July 2023.

What do you think about the1 committee’s activities during
fiscal 2022, and what should
the committee be focusing
on in the future?
Hatano: The Governance Committee
convened nine times. During the meetings we discussed topics, focusing on
the need to form a general mindset forbuilding stronger governance and theneed for a deeper strategic discussion
about governance with a medium- andlong-term perspectives. On the first topic,
forming a general mindset for building
stronger governance, we discussed thekind of governance system that would
best support the organization’s value
creation. We also discussed the gap between the system and what happens inpractice and considered strategies forclosing this gap, including the possibilityof changing the company's governancemodel. During this discussion, the second
topic, the need for a deeper strategic discussion about governance, came up. We
agreed that improvements to the way the
Board of Directors operates would help in

53

Key agenda items in fiscal 2022–2023
・State of the company’s compliance with Japan’s
Corporate Governance Code・	Key transactions or actions that potentially pose aconflict of interest with the controlling shareholder
and minority shareholders
・Basic approach to corporate governance・Evaluation of board effectiveness(evaluation process, results)

addressing the lack of discussion on medium- and long-term strategic planningand ESG themes. As a result, members
started devoting time to discussing thecurrent situation in and the problems
each business faces, and strategies withmedium- and long-term perspectives.
A discussion on a structure for portfolio
management also got started. All in all,
I would say that the committee was run
strategically, and the discussions and activities were to a high standard.
Kosaka: Yes, I agree with the chair Hatano. The committee had robust discussions
throughout the year. What particularly
impressed me was the scrutiny of transactions with the parent company. We vetted
each transaction for conflict-of-interest
issues. Monetary amount associated withthese transactions were by no means
large, but members scrutinized them frommultiple angles, drawing on their professional expertise and backgrounds. Ultimately, the committee decided to change
the review criteria designed by this committee the previous fiscal year. Such scrutiny brought home to me just how valuable
and effective this committee is.

C.I. TAKIRON Group Integrated Report 2023

For the optimal governance systemthat the chair Hatano mentioned, wedelved into matters like how to ensuretransparency and impartiality, with input
and insights from external experts. On
the basis that the current governancemodel is that of a company with an audit
and supervisory board, we discussed howTakeshi Kaide

Independent Outside Director

Kenichi Hatano

Independent Outside Director

the Board of Directors chooses its agenda
items and how to ensure that members
have time for discussing medium- andlong-term strategic matters and ESG. It
was great that we all saw eye to eye on
these issues.
Kaide: Fiscal 2022 was my first year. I examined the company’s current situationand issues with a pair of fresh eyes and expressed my opinions and thoughts. One of
the issues I expressed my opinion on was
the separation of supervision from execution. Having observed the trend toward
monitoring boards, which monitor thecompany from a higher perspective, I felt
concerned by the company’s lack of progress in separating execution from monitoring. In my view, the board should spend alittle less time on business execution andenhance its monitoring function, so thatmembers can focus more on strategic
matters such as changing the portfoliowith medium- and long-term perspectives.
With this in mind, I measured the time theboard spent on discussing each agenda
item. I then presented my findings andsuggested a new approach to agenda-setting and better time allocation.

Takashi Araki

Yoshiko Kosaka

Independent Outside Director

Consequently, in fiscal 2023, the company changed its approach to setting theagenda for meetings of the Management
Committee and Board of Directors. I expect the board members can share issues,enabling the board to improve and increasingly gain the functionality expectedto the board.
Hatano: The more experienced, the easier one may fail to capture clear insight.
I think having fresh eyes is really important. What do you think, Mr. Araki?
Araki: Like Mr. Kosaka, I was particularly
impressed with the rigorous scrutiny ofpotential conflicts of interest. Given thatmarkets often take a dim view of listed
subsidiaries, our committee has an important role to play in helping this listed
subsidiary play to its strengths and in allaying the concerns of investors. In thissense, it was great to see this committee
vet each transaction for conflict of interest issues.
I’d also like to mention that the dramatic changes in the external businessenvironment prompted board members
to ask hard questions: What is stopping
the organization from being more resil-

C.I. TAKIRON Group Integrated Report 2023

Independent Outside
Audit & Supervisory
Board Member

ient? Can we really continue with ourexisting governance structure? Members
started delving into the topics like reforming the business portfolio over the longterm and creating new businesses. This,
too, impressed me greatly.

2

What topics do you think
the committee should befocusing on in fiscal 2023?

Kosaka: I think that more must be done
to provide deeper strategic discussion
with medium- and long-term perspectives. This is in my mind since the lastyear. When we consider the frequency ofthe company’s board meetings and thetime spent in each meeting, it’s hard toargue that the board lacks time for scrutiny. The first step, then, is to improve theway the board is run, specifically, how theagenda is set and how time is allocated.
Araki: I agree. When it comes to vetting
business transactions, it’s a good idea to
use ROIC as a yardstick, as we started doing last year. This can help in enhancing
the quality of longer-term strategic discussions and in changing the vetting method.

54

Special feature

Governance Roundtable

One problem the company faces is thatits share price is lower than it should be.
Price-to-book ratio was down to 0.5 at
one point. The shareholders and investors
are pressing the company to improve its
valuation on the market. We, too, needto engage squarely in this issue. To that
end, I would like the committee in thisfiscal year to focus on specific measuresrelated to portfolio measurement andshare its findings with the management.
Hatano: While performance is one factorof the low stock price, I hear feedback
that the company appears to have noplan for its next stage of growth or no
overall sense of direction. The company isexperiencing rapid change in the businessenvironment today. I think arrangements
must be made so that the company candeliver a clear, compelling message to
stakeholders about its future growth process and how it will engage in socio-environmental issues while achieving sustainable corporate development and higher
corporate value.
The company has so much potential.
If it can just surmount this hurdle, things
will be very different. To achieve this, thecompany needs to reshape its businessportfolio into one that fits with the newenvironment and era, and then proceed
toward the next stage of growth.
Kosaka: I agree with you on the need topresent a growth narrative to the outside.
But the same can be said for the company’s efforts in plastic-related environmen-

55

tal issues and recycling, topics that often
come up at shareholders’ meetings. The
company engages with these matters seriously, but it could do more to broadcast
its efforts.
Araki: It is indeed necessary for the company to invest in new businesses andtechnologies in order to achieve steady
growth in, as Ms. Kosaka mentioned,
the worldwide backlash against plastics.
Investing in new business sectors, including pursuing M&A opportunities, will always involve an element of risk. To avoid
missing out on opportunities to expand
into new frontiers, the company needs asurefooted approach in which it preparesa budget for spending on new technologies, for example, while controlling therisks. Finding the right balance between
growth and risk—that should probably
be a theme to discuss in the future.
Kaide: I agree with Mr. Araki. Bringing
in new technology will take a while, but
the company should start pressing aheadin the task. M&As offer quick results, but
the risks are high. It’s important to pickout the M&A leads with decent prospects
and then vet them thoroughly.
Hatano: It is no easy matter to find an
M&A deal that suits the company. While
corporate culture outside Japan tends tobe unsentimental about M&As, certain
arrangement and concerns should begiven to the employees in the acquiredcompany.
Kaide: Amid the sluggish domestic demand, companies that consider only theJapanese market tend to assume that the
only way they can achieve growth is to
produce new products or cultivate newmarkets.
But if they looked overseas, they wouldfind that there is still so much untapped
potential. This is especially true in overseas Asian markets; the company, withjust its existing products, could gain an
impressive competitive edge here.
Another thing that must be done—and
this is something President Fukuda raisedat the Management Committee—is to go
further in analyzing fluctuations in performance. The Governance Committee
should closely supervise the management
to see how it is analyzing its past performance and incorporating the findings
into its growth strategy.

C.I. TAKIRON Group Integrated Report 2023

3

The company is trying tomanage talent in a waythat contributes to sustainable business growth.
What aspects of the company’s talent management are you focused on?

Kaide: Talent management is somethingthat chair Hatano has had particular interest. The committee is keeping a close
watch over the management’s talent development strategy and the progress ofthe strategy. In advising the managementon this, I’ll be checking whether management has looked beyond the next generation to envisage the subsequent generations. I’ll also be emphasizing the needto train up the key people who will play
an essential role in managing overseas
sites—ensuring that they run smoothlyand strengthening them as necessary.
Hatano: When all is said and done, acompany is as good as its people. If a
company’s talent management strategy
fails to empower employees, then thecompany has no prospect of growth.
C.I. Takiron is actively trying to improveand transform by seconding more employees to overseas group companies
and building up a team to drive its digitaltransformation. Empowering women in
the workplace is part of this; men vastly outnumber women at the moment,
but that’s all the more reason to radicallyreform employee treatment and help female employees fulfill their potential.
Kosaka: On this matter let me say as amember of the committee for Promotion

of Women’s Active Engagement in Professional Life. I am confident that thatthe company has made the workplacemuch more women-friendly by setting
the Better Life Management Declaration
and radically overhauling employee wellbeing programs. Provided that the company can now listen to employee feedback
and take the radical steps that employees
want, then its programs will be better understood in the company, and they will
become entrenched. On the matter ofproviding a positive workplace environment, it’s equally important to focus on
the process that comes before talent development—talent acquisition. The company needs to communicate its values andidentity to the individuals who will become
new hires in the future. The committee
should keep discussing and advising themanagement on an approach to that end.
Araki: I concur with you all on the matter of talent acquisition. I’d just add that,when it comes to talent management,
the company has an ace up its sleeve: Asa listed subsidiary, it can draw on a broad
spectrum of interpersonal networks. For
example, as we discussed earlier, regarding management techniques for prospective investments, the company can learnmuch about post-merger integrationfrom Itochu Corporation, which has extensive experience in M&As.
Hatano: Nowadays, companies of all
kinds grapple with the task of creating atalent management strategy that contributes to sustainable business growth. Oneof the key points, it seems, is to foster anorganizational culture that is diverse andinclusive. Also important is nurturing ateam with high digital literacy, making fulluse of employees’ experience and skills,
and helping employees rebuild their career when necessary—and that includes
reskilling. The company has already put
in place measures that take into accounteach employee’s unique characteristics;
it needs to go further in developing thisnuanced, bespoke approach.
On the other hand, I feel concernedat the lack of improvement in employee engagement score and loyalty score,especially among front line employees.
I’ve urged the management to improve
communication with front line workplaces. At the same time, as a board member
myself, I want C.I. Takiron to be a dreamorganization where employees feel motivated to excel.

4

What should the Governance Committee and theBoard of Directors be focusing on in order to help
the company achieve 2030
Vision?

Kosaka: In fiscal 2023, the GovernanceCommittee is focusing on two topics. The
first is ensuring that the right system ofcorporate governance gains traction. The
second is something we could not get too
far with in the previous year: transforming the business portfolio. The committee’s roles will probably change, depending on how the discussions proceed in thenext fiscal year. With its new executive
officer system, the company will probably
start acting more expeditiously. We’ll be
keeping watch on its actions and consider
how we may have to change in response.
Araki: I increasingly feel that a long-termview is crucial for building up the organization’s value. Casting my mind backto when I just left university, I recall that
the Japanese approach to business management, deeply entrenched in Japan society at the time, had a long-term view
to it. Yes, the situation was quite different then, but then, like now, there was adesire for sustainability. We need to getback, in a sense, to having a long-term
view. I’ll be raising this matter afresh withmembers of the Board of Directors andwith the management. As a member of
the Governance Committee, I want the
management to take a long-term viewand continue on our journey together.
Kaide: The demands placed on businessleaders today are very heavy. Mr. Araki
mentioned the Japanese approach to business management. The conditions backthen made it easier to sustain growth overthe long term. For a start, Japan had muchstronger economic growth, and markets
and investors were less rigorous than they
are now in evaluating corporate performance. These factors meant that business leaders had more breathing space inmaking decisions. Nowadays, however,business leaders have to recover earnings,
present a narrative of growth, and deliver
the growth—all with markets scrutinizing
their every move; that’s a very hard mission.
That being the case, what approach to
governance should the company take?
You of course need defensive governance, an approach that emphasizes defending against risks. But what’s needed

C.I. TAKIRON Group Integrated Report 2023

even more is offensive governance. C.I.
TAKIRON has a host of amazing products, so offensive governance will prove
effective in pushing executives to drive
growth. When the company starts implementing its next mid-term plan in fiscal
2024, I really hope to see actions taken inbuilding offensive governance.
Hatano: The company’s efforts so far tostrengthen corporate governance havehelped ensure impartiality and transparency in business management, and theBoard of Directors now functions effectively, with a high overall score for board
effectiveness. The company should therefore continue with this same approach
but tweak it as necessary to reflect thechanges in the external environment.
Based on this, I think five major themes
call attention: clearer separation between
monitoring and execution, enhancing
business portfolio management, rollingout group governance, and engaging
in dialogues with investors. I particularly
want serious actions on the last theme.
By effectively communicating with shareholders and investors, the management
will foster understanding of and confidence in the company. It will also gain
insights and ideas that can guide efforts
to create new businesses.
Strengthening governance will help thecompany grow and build its value overthe medium and long term while also
contributing to socioeconomic development. The management should continue
treating this as a top strategic priority.

56

Foundation: Management Platform

Enhance Corporate Governance
Basic Philosophy
Under the corporation philosophy “<Mission> The corporate culture to which we aspire, Creating a people- andearth-friendly future, with Pride in our accumulated value and the courage to transform,” The C.I. TAKIRON Group
aim to achieve a sustainable society and enhance our corporate value over the medium and long term.
To that end, we place utmost importance on building a system of corporate governance that is robust, effective, and that can flexibly adapt to changes in the external environment. To earn trust and meet expectations
from stakeholders, we continually strive to enhance our corporate governance system. Our efforts include improving transparency, enabling swifter decision-making, and strengthening oversight.

Basic Policy on Corporate Governance
1. We will strive to rapidly disseminate information toensure the highest level of shareholder equality as
well as build an environment to guarantee every
shareholder has and can properly exercise their rights.
2. 
We will actively cooperate with all C.I. TAKIRON
stakeholders in activities to achieve the targets laidout in the medium-term management plan from thestance of connecting success to the profit of every
stakeholder.
3. We will disclose the information in accordance withstatutory compliance as well as other information
deemed necessary for stakeholders in a proper andtimely manner through mediums that include thecorporate website in order to engage in fair andhighly transparent management.
4. We will dene the ideal direction for the C.I. TAKIRONGroup internally and externally by setting the medi-

um-term management plan as a core of management strategies of the entire Group to build a consensus toward accomplishing the corporate goals.
In addition, C.I. TAKIRON has adopted an executive
officer system to clearly separate auditing and business execution functions in governance while theBoard of Directors conducts highly effective supervision of director and executive officer performanceas well as business execution.
5. We will actively engage in a dialogue with shareholders to reflect their ideas and hopes in management. In addition, C.I. TAKIRON also actively addresses questions from shareholders and investors,
such as establishing opportunities for a dialogue
with shareholders and other investors, to bring understanding about its corporate management strategy and management plan.

Corporate governance framework
General Shareholders’ Meeting

Elect, Dismiss

Make decisions
and Supervise

Elect, Dismiss
Audit

Board of Directors: 7 Directors(of which 3 outside Directors)

Audit & Supervisory Board:
4 members(of which 2 outside members)

Consult/Report
Proposal of important matters
Reports on business execution

Nomination and Remuneration Committee

Appoint/
Supervise

Accounting
AuditsManagement Committee
Sustainability Committee

Internal Audit OfficeCompliance Committee

Proposal of important mattersregarding business execution

Corporate
Administration
Div.

Audit

Construction
Materials Div.

Environmental
Materials Div.

High Functional
Materials Div.

Specialty
Films Div.

Production
Div.

4 Business Segments* Refer to our corporate governance report for more information. https://www.takiron-ci.co.jp/corporate/governance.php

57

Accounting Auditor

President

Business Execution

Corporate
Planning
Div.

Audit

Governance Committee

Elect, Dismiss

C.I. TAKIRON Group Integrated Report 2023

R&D Div.

Initiatives to Strengthen Corporate Governance

Organizational
design

FY2000 -FY2015 -2000 ●Introduction of an executive officer system

2018 ●Establishment of the Nomination andRemuneration Committee
2018 ●Increase in the number of independent
outside directors (From 1 to 2)

2000 ●Amendment to the number of directors in
Director
the Articles of Incorporation
Audit & Superviso(no more than 20 to no more than 12)
ry Board●Changes in the number of Directors (From 17 to 9)
Member2011 ●Appointment of an independent outside director

FY2020 2021 ●Establishment of the Governance Committee
2020 ●Increase in the number of independent outside directors(from 2 to 3, comprising more than 1/3)
●Increased the number of independent outside Audit & Supervisory Board Members (0 to 2)●Diversification of the Board of Directors and Audit & Supervisory Board Members(Appointed one female director and one female Audit & Supervisory Board Member)2017 ●Implementation of an effectiveness evaluation for the Board of Directors (conducted
every year since implementation)

EffectivenessEvaluation

Nomination andRemuneration

Other2018 ●Introduction of a Stock Remuneration
System (Share Delivery Trust)2020 ●Appointment of an Independent Outside Director to Chair the Nomination andRemuneration Committee
2021 ●Revision of Existing Stock Remuneration System (Share Delivery Trust) andIntroduction of a Performance-Linked Stock Remuneration System●Introduction of a Share-based Remuneration System with Restrictions on Transfer of Shares●Disclosure of the Skills Matrix for Directors and Corporate Auditors

2019 ●Strengthening Systems for Dialogue with
Shareholders (Investors) (established a new
department specializing in IR)

2021 ●Enhancement of Feedback to the Board of Directors on IR activities
2022 ●Changed basic approach to corporate governance

Composition of the Board of Directors and Audit & Supervisory Board
Board ofDirectors

Independent
Outside Directors

43%

Audit &
Supervisory
Board

Male

Female(3)

Independent
Outside Audit &Supervisory Board Members

50

Male

%

Female(2)

7 Directors

4 Audit & Supervisory Board Members

Nomination and Remuneration Committee

Governance Committee

C.I. TAKIRON set up the Nomination and Remuneration
Committee as an advisory body to the Board of Directors withmajority of the members made up of independent Outside Directors and chaired by an independent Outside Director, in order to heighten the independence, objectivity and transparencyof the Board of Directors in the nomination of directors, Audit& Supervisory Board Members and executive officers as well as
in the remuneration of directors and executive officers.

We set up the Governance Committee made up of a majority of independent Outside Directors as members, including its
chairperson, as an advisory body to the Board of Directors inorder to enhance the level of our corporate governance.

Results
The committee met nine times in fiscal 2022 (April 1, 2022,
to March 31, 2023). Every member attended all nine meetings.

Results
The committee met ten times in fiscal 2022 (April 1, 2022,
to March 31, 2023). Every member attended all nine meetings.

Main Committee Agenda
1. 
Selection criteria for director, Audit & Supervisory Board
Members, and executive officer candidates
2. Examination of independent election proposals for directors,
Audit & Supervisory Board Members, and executive officers
3. Matters related to the appointment and dismissal of representative and executive directors
4. Remuneration policies for directors and executive officers
5. Examination of processes to determine remuneration for directors and executive officers

Main Committee Agenda
1. Important governance matters
2. Effectiveness Evaluation of the Board of Directors
3. Material transactions or actions that conflict with the interestsof the controlling shareholder and minority shareholders*Composition of the Committee

Composition of the Committee

Committee Independent
Outside
Chairperson Director
Director
President
Members Independent
Outside 
Director

Kenichi Hatano
Yuji Fukuda* Deliberations only involve committee members with practical independence, including Outside Directors.

Independent
Outside Directors

67

Committee Independent
Chairperson Outside Director

%(2)

Yoshiko Kosaka

3 Members

Members

C.I. TAKIRON Group Integrated Report 2023

Director
PresidentIndependent
Outside Director
Independent Outside
DirectorIndependent Outside
Audit & Supervisory 
Board Member

Takeshi Kaide
Yuji Fukuda
Kenichi Hatano
Yoshiko Kosaka

Independent
Outside Directors

60

%

(3)

5 Members

Takashi Araki

58

Foundation: Management Platform

Initiatives to Improve Effectiveness■ Effectiveness Evaluation of the Board of Directors
C.I. TAKIRON analyzes and evaluates the effectiveness of the Board of Directors every year and strives to address challenges discovered as a result
for the purpose of improving Board of Directors functions. The effectiveness evaluation conducted in fiscal 2022 is shown below.
Analysis/evaluation methods
Governance Committee
discussion on theevaluation process

Conduct survey for self-assessment
by directors and Audit &Supervisory Board Members.

Opinion exchange among
directors and Audit &Supervisory Board Members

Governance Committee
discussion on theevaluation process

Evaluation by the
Board of Directors

Items Improved in FY2022● Enhancement of discussions from a medium- to long-term perspective
We have started clarifying the key themes and tasks for building a system of business portfolio management. We have also enhanced the way the
Board of Directors operates to provide more opportunity for board members to discuss mid-term and long-term strategies, as well as ESG themes.
● Reorganization of basic mindsets to strengthen governance:
The Governance Committee devised, and advised the board of Directors on, a basic approach to corporate governance.
● Expansion of management support programs
In preparation for the operation of the programs in fiscal 2023, we worked to enhance our system for relaying information to executive officers andprovide more systematic and strategic content in the training program for executive officer candidates.
● Strengthening measures on sustainability issues
On April 1, 2022, we established the Sustainability Committee to spearhead sustainability management with big-picture thinking and a long-term
perspective. The committee reported actions taken after each meeting to the Board of Directors.
● Enhancement of dialogue with shareholders and investors
To enhance the quality and quantity of dialogue with shareholders and investors, we continued holding briefing events and launched a webpage for individual investors.

FY2022 Effectiveness Evaluation and Future Initiatives● Evaluation results:
C.I. TAKIRON received an overall positive evaluation for the board composition and for measures to invigorate deliberations by the Board of Directors, which was
determined to be functioning appropriately and ensuring effectiveness.
We will promote initiatives to improve the three items below as priority issues in an effort to further enhance the effectiveness of the Board of Directors.
● Priority issues:(1) Expansion of discussions from a medium- to long-term perspective; (2) rebuilding governance system and structures;(3) improvement of management support programs and talent development programs■ Policy for training corporate officers and executive officers● Policy
We will keep providing knowledge and information necessary to execute the given roles and responsibilities—to make important executive
decisions we well as to advise, audit, and supervise the management.

Directors andAudit & Supervisory ● Key programs and objectives
Provide seminars by external lecturers on how to stay abreast of the latest trends that have important strategic implications
Board members
Provide opportunities to attend external seminars and workshops for enhancing knowledge and skills pertaining to one’s duties(including outside
Inform corporate and executive officers about general trends and strategic issues
officers)● Policies for outside corporate officers
Executive Officer
Briefing to improve the officers’ awareness about the organization in general, including the organization’s businesses, corporate philoso(Chief Operating
phy, and business strategies
Officers)
●

●

●

●

●

●

E vent participation to improve the awareness about the organization’s businesses, including visits to production sites and R&D sites (including those of group companies) and new products and technology release events
Briefing in advance about the agenda for an upcoming board meeting to enhance the quality of discussion in that meeting● Policy
To groom future leaders, we will provide leadership talent with on-the-job training and other opportunities for gaining the business acumen
required of executives and corporate officers.

Executive Officer● Key programs and objectives(excluding Chief
Operating Officers) Provide opportunities to attend external seminars and workshops for gaining the knowledge and skills that corporate officers of listed●●●companies requireProvide seminars delivered by an external lecturer designed to improve attendees' awareness of certain topics and improve various literacy
Give timely updates about the organization's situation

Accomplishments in fiscal 2022
● All corporate officers and executive officersW e hired an external instructor to deliver a workshop on sustainability
management, digital transformation, and value creation.
O fficers attended announcement and review meetings for new
products and technologies.
●●● Outside directors and outside Audit & Supervisory
Board members
We briefed the outside corporate officers about our businesses, corporate philosophy, and business strategies.
The outside corporate officers attended announcement meetings
for new products and technologies.
The outside corporate officers were briefed in advance about theagenda for an upcoming board meeting.
Information exchange among directors and executive officers.

●

●

●

●



* Refer to our corporate governance report for more information. https://www.takiron-ci.co.jp/corporate/governance.php

59

C.I. TAKIRON Group Integrated Report 2023

Executive Remuneration
The remuneration systems for directors and other officers (directors and executive officers excluding non-executive directors) consistsof the basic polices below, acting as a guide to fulfill the duties required of C.I. TAKIRON in the management plans and policies.
Basic Policy
1. We shall provide remuneration linked to mediumto long-term corporate value to realize sustainable growth.
2. We shall encourage all to independently and actively take on challenges without fearing failure.
3. We shall assess our competitors and set standards thought appropriate for C.I. TAKIRON in recruiting and retaining outstanding
human resources.
4. We shall ensure objectivity and transparency through deliberations at Nomination and Remuneration Committee, which is madeup of a majority and chaired by outside directors.
Framework of Executive Remuneration
Director and other executive remuneration consist of fixed compensation, performance-linked remuneration, and other short-term
incentives (bonuses) as well as mediumto long-term incentives (stock remuneration) as non-monetary compensation. The estimatedratio of the various types of remuneration if all of the KPI are achieved is 61% for fixed compensation, 28% for short-term incentives(bonuses), and 11% for medium- to long-term incentives (stock remuneration). Not that profit-linked bonus is omitted here.
Remuneration Distribution Ratio
Monetary

Fixed Remuneration: Approx.

Stock

61

%

Bonuses: Approx.

28%

Share-based
Share
Ownership Remuneration
with Restrictions on
Trust:
Approx. Transfer of Shares:
Approx.

5.5 5.5%

Short-term
Incentives%

Mediumto Long-term Incentives

Fixed Remuneration

Short-term Incentives (Bonuses)

Mediumto Long-term Incentives (Stock Remuneration)

C.I. TAKIRON determines fixed
remuneration as monthly
compensation based on therole assigned according to theperformance and skills ofexecutive officers as well as anevaluation of the magnitude
of contributions tomanagement in that role.

This component has two sub-components: performance-linked bonuses andprofit-linked bonuses.
Performance-linked bonuses are designed to raise awareness about improving
business performance each fiscal year and to reflect the level of achievements
related to annual consolidated operating profit and net income. C.I. TAKIRON
also applies qualitative and quantitative evaluations of each executive officer
in the calculation of bonuses to pay at a certain time each year.
A profit-linked bonus, paid at a certain time each year, reflects the amount ofgrowth in a consolidated net income from the previous year's level. It also
reflects the role/status of the recipient.

Mediumto long-term incentives consist of a stock ownership trust (performance-linked remuneration) andshare-based remuneration with a restriction on the transfer of shares.
At a certain time each year, eligible executives are allocated a certain number of points determined by two
factors: the extent to which the company achieved its target for consolidated operating income in the fiscal
year in question, and the role/status of the executive. When an executive retires, the share-delivery trust
will deliver to those executive shares (or cash of the same value) in an amount based on the total points
the executive has.
At a certain time each year, eligible executives receive stock with restriction on transfer in an amountcommensurate with their role/status. The restriction on transfer is lifted when the executive retires. The
purpose of paying restricted stock is to enhance corporate value and share value with shareholders.

Calculation Formula for Performance-linked Compensation
Bonuses= (standard amount × performance achievement rate) ＋ (standard amount × individual evaluation coefficient) ＋ (year-on-year increase in profit × role/status coefficient)

Stock remuneration (Share Delivery Trust)=basic ownership points by position

×

percentage of annual target achieved

Protection of Minority Shareholders
In order to protect the rights of minority shareholders, weevaluate our business transactions with our parent, Itochu Corporation, to ensure that they are fair, appropriate, and justifiable. In this evaluation, we consider whether the transactions
are really necessary and whether the terms of transactions differ markedly from arm’s length transactions (transactions between two unrelated parties).
Purchase transactions for raw materials and other items are
determined based on market prices.
In addition, we strictly manage all transactions in accordancewith the various rules and regulations established in advance.
In particular, for important transactions with the parent company, we confirm the appropriateness and reasonableness of suchtransactions after consulting and receiving a report from theGovernance Committee. The Board of Directors believes that theappropriateness and rationality of the transactions are ensured
and that the transactions are not detrimental to our interests.

The following is an excerpt from the Itochu Corporation’policy on the governance standards to be applied by its listed
subsidiaries.
ITOCHU Corporation
Policy on the Governance of its Listed Subsidiaries,
etc. (excerpt)
ITOCHU respects the autonomy of the listed subsidiaryand prohibits any acts that contradict the principle of shareholder equality.
In particular, with the recognition that there is a potential conflict of interest between ITOCHU and the minority
shareholders of the listed subsidiary and in order to secure
the independent decision-making of the listed subsidiary,
we request the listed subsidiary to set up the governancestructure under which the independent outside directors of
the listed subsidiary are well functioned.

C.I. TAKIRON Group Integrated Report 2023

60

Foundation: Management Platform

Compliance & Risk Management
The C.I. TAKIRON Group is firmly maintaining and strengthening corporate compliance systems,
and promoting the optimal operation of risk management systems to provide sound and highly
transparent management.

Compliance■ Basic Philosophy

C.I. TAKIRON Group is deeply aware of its corporate social responsibilities as a member of society to conduct corporate activities. Our Group complies thoroughly with the relevant laws andregulations as well as with the articles of incorporation for eachcompany in addition to defining the C.I. TAKIRON Group Corporate Code of Conduct for the purpose of taking action deemedsuitable by social ethics.
Also, the C.I. TAKIRON Group Compliance Program has been
established for the purposes of improving and strengthening thecompliance system for following the C.I. TAKIRON Group Corporate Code of Conduct. In fiscal 2023, we reformed the program.
While our basic philosophy remains the same, we changed
our compliance structures to enable us to detect problems earlier
and address them quickly and effectively.

Compliance System
C.I. TAKIRON Board of Directors
President of C.I. Takiron(C.I. TAKIRON Management Committee)
CCO

Compliance Committee

C.I. TAKIRON

Applicable companies other than C.I. TAKIRON

Persons in Charge of Compliance

Persons in Charge of Compliance■ Internal Reporting System (Hotline)

Basic Policy
1. Create a sound organizational culture and climate

C.I. TAKIRON and Domestic Affiliate Companies

2. Establish and maintain a proper system
3. Maintain a high level of awareness about compliance4. Fair and impartial compliance

General Managerof the Legal &Compliance Dept.

■ Main Compliance Results in FY2022
Violations of laws and regulationsin the socio-economic sector

None

Violations of environmental
laws and regulations

None

Number of Internal Reports

85

Audit &
Supervisory
Board

Attorneyat law(External)

Business Operating
the Hotline Service(External)

Overseas Affiliate Companies

General Managerof the Legal &Compliance Dept.

Business Operating
the Hotline Service(External)■ Main Activity Results in FY2022
Preparation of systems and frameworks by persons in charge of compliance after raising awareness about the
Preparation of systems and Compliance Commitment in staff
frameworks
We reformed our compliance programs as part of an effort to change compliance structures, and informed all
employees about the changes.
For all officers and employees: Compliance Training (webinar or by viewing recorded materials)
For managers and leaders: e-learning courses on preventing workplace harassment

Education/ Enlightenment

For all officers and employees: e-learning courses connected with the whistleblowing hotline guideline.
For all officers and employees: Five announcements to inform everyone about compliance
For all employees: Employee training.

Surveys61

For all officers and employees: Survey about their compliance awareness.
For officers in charge of compliance: A monitoring review survey

C.I. TAKIRON Group Integrated Report 2023

Risk Management■ Risk Management System

PersonC.I. TAKIRON: General Manager of each division
responsible forAffiliate Companies: President of each company
risk management

We have put in place a risk management system and formulated Risk Management Regulations for the purpose of reducing and preventing losses as well as enhancing corporate value
through the organizational management of risk throughout
the Group.
The Corporate Planning Department acts as the risk management secretariat and operates the risk management processeach fiscal year by placing a risk manager at C.I. TAKIRON as
well as each affiliate company.

Departments
supervising risk
assessment

Each C.I. TAKIRON business planning & management
dept., production planning dept., purchasing dept.,finance & accounting dept., quality assurance dept.,
legal & compliance dept., intellectual property dept.,
IT & digital strategy dept., human resources & generalaffairs dept., and other departments designated by
the risk management secretariat

Risk management
C.I. TAKIRON Corporate Planning Dept.
secretariat■ Risk Management Operations

C.I. TAKIRON has a system to address the intrinsic risks of theGroup through ongoing reduction efforts in accordance withthe risk management regulations. The Management Committee determines measures against risk through risk identificationand evaluation results for the entire Group.
The risk management secretariat operates risk management

Departments
handling the risk

Each department of C.I. TAKIRON designatedby the risk management secretariat and affiliatecompanies

each fiscal year based on the selection and handling processes
for critical risks defined as the following.

■ Selection and Handling Process of Critical Risks
Risk Management Process (Target: C.I. TAKIRON Group)
Identification and Evaluation of Risk
Conduct Risk
SurveysAnalyze/
Evaluate Risk

Identify
Critical Risks

Review

Determine Measures
Against Risks(1) Surveys for risk managers (generally once every three
years)
Assess the level of impact and likelihood based on a common list of risks created by the risk management secretariat
according to the social landscape and risk examples.
(2) Analysis/evaluation
Collect and analyze survey results and other information
about risk via the risk management secretariat and selectcritical risk candidates.
(3) Identification of critical risks
Identify critical risks (corporate risks or operational risks) at
management workshops made up of C.I. TAKIRON executive officers.

Gain Management
Approval

Execute Measures
Against Risks

Report toManagement(4) Formulation/approval of measures against risks
Departments supervising the handling of risks plan and propose measures against risks for the next fiscal year throughdiscussions with the risk management secretariat, and thenthe risk management secretariat seeks approval from the
C.I. TAKIRON Management Committee.
(5) Execution of measures against risks
Departments handling the risk handle risks based on themeasures against risks. For corporate risks, departments
supervising risk assessment monitor the progress of thosemeasures against risks.
(6) Review of the results from measures against risks
The risk management secretariat reports to the C.I. TAKIRON Management Committee based on the results of themeasures against risks for the current fiscal year.

FY2023 Selection of Critical Risk Management Items
Risk Management
Items

Risk Category

Risk of declining
profits

Corporate

Quality assurance
risks

Operational

Supervising Department

Risk Items

Assessment
Department

Each business division(1) Shrinking domestic market, lateness in
expanding overseas(2) Lateness in developing new products(3) Lateness in adapting to customer needs

Corporate
Planning Dept.

Quality Assurance Dept.
Each plant(1) Inappropriate or false representations,misleading representation(2) Ineffective (or oversights in) quality testing－－

Risks in adapting to
new system

Operational

IT & Digital Strategy Dept.

(1) IT strategy failure(2) Lateness in adapting to DX and operational
technology(3) Delayed returns from DX investment effect

Human resource risks

Operational

Human Resources & General
Affairs Dept.

Difficulty in attracting engineers－

Distribution risks

Operational

IT & Digital Strategy Dept.
(C.I. TAKIRON LOGISTICS)

The 2024 problem－

C.I. TAKIRON Group Integrated Report 2023

62

Foundation: Management Platform

Directors, Audit & Supervisory Board Members,
and Executive Officers (as of June 28, 2023)
Director
Kazuya Saito

Yuji Fukuda

Director Chairman

Representative Director President

1981 Joined ITOCHU Corporation
2019	Representative Director, President,
and COO of C.I. TAKIRON
2023	Director, Chairman of C.I. TAKIRON(current position)

1979 Joined ITOCHU Corporation
2022	Representative Director, Executive Vice
President of C.I. TAKIRON
2023	Representative Director President of
C.I. TAKIRON (current position)

Kenichi Hatano

Yoshiko Kosaka

Director

OutsideIndependent

OutsideDirector

Independent

2003 Became registered attorney
2016	Joined Irokawa Law Office (currently
Irokawa Legal Professional Corporation)(current position)2020 Director of TAKIRON (current position)
2022	Kanemitsu Corporation’s Audit & Supervisory Board member (current position)

1966	Joined Sumitomo Chemical Industry
Company Limited (current Sumitomo
Chemical)2018 Director of TAKIRON (current position)

Audit & Supervisory Board Member
Toshiro Okajima

Masamichi Kanatomi

Audit & Supervisory Board Member

Audit & Supervisory Board Member

1988 Joined TAKIRON
2020	Audit & Supervisory Board Member of
C.I. TAKIRON (current position)

1990 Joined ITOCHU Corporation
2022	CFO of the Energy & Chemicals
Company, ITOCHU Corporation(current position)
2022	Audit & Supervisory Board Member of
C.I. TAKIRON (current position)■ Skills Matrix for Directors and Audit & Supervisory Board Members

The following skills matrix represents the skills that our corporate officers (members of the Board of Directors and Audit and Supervisory
Board) are required to have in order to help build our organization’s value and achieve our long-term vision.
Corporate
Environment/
Management
SocialAudit & Supervisory
Board Member

Director

SkillsKazuya Saito●

Yuji Fukuda●

Toshio Tamaki●

Noboru Fukushima●

Kenichi Hatano

OutsideIndependent

Yoshiko Kosaka

OutsideIndependent

Takeshi Kaide

OutsideIndependent

Human
Resource
Development

Legal/
Governance

Sales/
Marketing

●

●

●

●

●

●

●

●

●

●
●

●

●

●
●

OutsideIndependent●

Takashi Araki

OutsideIndependent

●

●

●
●

●

Masako Osuna

Global

●●●●Masamichi Kanatomi

Technology,
Research &Development●●

Toshiro Okajima* Refer to our corporate governance report for more information.

63

Finance/
Accounting

●
●

●

●

●

https://www.takiron-ci.co.jp/corporate/governance.php

C.I. TAKIRON Group Integrated Report 2023

●

●
●

●
●

●

●

●

Toshio Tamaki

Noboru Fukushima

Director Managing Executive Officer
COO of the Corporate Planning Div., CCO

Director Managing Executive Officer
COO of the Corporate Administration Div., CIO

1984 Joined TAKIRON
2023	Director Managing Executive Officer of
C.I. TAKIRON (current position)

1987 Joined ITOCHU Corporation
2023	Director Managing Executive Officer of
C.I. TAKIRON (current position)

Takeshi Kaide
Director

OutsideIndependent

1979	Joined Mitsui Petrochemical Industries,
Ltd. (current Mitsui Chemicals, Inc.)
2022	Director of C.I.TAKIRON(current position)

Masako Osuna

Takashi Araki

Audit & Supervisory Board Member
OutsideAudit & Supervisory Board Member

Independent

Outside1979	Joined	JETRO (Japan External Trade Organization)2017	Professor, Industry-University Collaboration,
Kanazawa Institute of Technology (current position)
2019	Director of Hibiya Engineering, Ltd. (current position)2020	Audit & Supervisory Board Member of C.I. TAKIRON(current position)
2022	Outside Director of EIZO Corporation [Audit &Supervisory Committee Member] (current position)

FY2022 Audit& Supervisory
Board Meetings
Attended

GovernanceCommittee

FY2022 Boardof Directors
Meetings
Attended
17/17

－

〇

〇

13/13

－

－

－

COO of the R&D Div.

－－COO of the Production Div.

〇

17/17

－

〇

〇

17/17

－

◎
Committee
Chairperson

13/13

－

17/17

19/19

〇

17/17

19/19

17/17

19/19

17/17

19/19

1996	Joined Aoyama Audit Corporation (current PwC Aarata LLC)
1997	Registered as Certified Public Accountant
2013	Head of Takashi Araki Accounting Office (current position)2014	Representative Director of Transaction Support Co., Ltd.
(current position)2015 Registered as licensed tax accountant
2015	Head of Takashi Araki Tax Accounting Office (current position)2020	Audit & Supervisory Board Member of C.I. TAKIRON (current
position)

Senior Managing Executive Officer

Nomination
andRemuneration
Committee◎
Committee
Chairperson

Independent

COO of the High Functional Materials Div.
COO of the Specialty Films Div.

Takahisa Miyake
Akihiro Ueda

Managing Executive Officer

COO of the Construction Materials Div.

Hideharu Iwasaki
Hironori Kikuchi
Hiroji Kimura

COO of the Environmental Materials Div., Representative
Director President of C.I. TAKIRONCIVIL Corporation

Kenji Matsui

Executive Officer
Deputy COO of the R&D Div.
General Manager of the Corporate Planning Dept.
General Manager of the High Functional Materials Dept.
General Manager of the IT & Digital Strategy Dept.

C.I. TAKIRON Group Integrated Report 2023

Akihiko Shiraishi
Kazuhiro Kinpara
Tetsuya Tsukaguchi
Yasunori Hayashida

64

Data

Financial Data
Unit: Millions of Yen

Management Performance
Net Sales

FY2018FY2019FY2020

FY2021150,650

139,432

134,470

141,936

Operating Profit

9,080

7,372

8,511

8,651

Ordinary Profit

9,200

7,611

8,807

9,084

Profit Attributable to the Owners of Parent

6,391

13,091

5,332

6,660

Depreciation

4,533

4,682

5,378

5,244

Capital Investment

7,430

12,388

5,149

4,145

Research & Development Expenses

1,109

1,165

1,134

1,214

Total Assets

138,251

144,956

142,743

147,061

Net Assets

74,31082,84087,367

92,055Equity Capital

72,68081,36285,707

90,243

FY2022
145,725
5,791
5,923
2,460
5,434
5,070
1,355

Financial Status
149,274
92,65891,186
9,026*
43,003

Interest-bearing Liabilities

4,911

5,085

4,438

3,914

Accumulated Surplus

26,571

36,73838,75743,175

Cash Flow from Business Activities

9,805

11,017

4,365

11,942

Cash Flow from Investment Activities(9,620)(5,922)(2,191)(7,516)

Cash Flow from Financial Activities(9,160)(3,115)(4,292)(3,166)

184

5,095

2,174

4,425

5,729
(6,787)(1,262)(1,057)

6,835

8,746

6,712

7,790

5,603

97,50097,50097,50097,50097,553

26

37

22

27

39.6

27.5

40.2

39.5

15
59.5

* Lease liabilities and guaranteed deposits included.

Cash Flow

Free Cash Flow
Balance of Cash and Cash Equivalents(End of Term)

Stock Information
Total Number of Issued Shares(Thousand Shares)
Dividends Per Share (Yen)
Payout Ratio (%)

Information about One Share of Company Stock
Current Net Income Attributable to the
Owners of Parent (Yen)

65.62

134.47

54.77

68.47

25.30

Net Assets (Yen)

746.42835.82880.28928.28937.34

ROA (%)

4.6

9.2

3.7

4.6

ROIC (%)

7.0

5.6

6.2

6.5

ROE (%)

8.8

17.0

6.4

7.6

Debt-to-Equity Ratio (D/E Ratio)

0.07

0.06

0.05

0.04

Operating Profit on Sales (%)

6.0

5.3

6.3

6.1

Capital-to-Asset Ratio (%)

52.6

56.1

60.0

61.4

Overseas Net Sales Ratio (%)

15.5

15.8

16.0

17.7

1.7
4.2
2.7
0.10*
4.0
61.1
17.7

Management Index* In this calculation, we included lease liabilities and guaranteed deposits.

65

C.I. TAKIRON Group Integrated Report 2023

Non-financial Data
Environmental Index

FY2018FY2019FY202012.6

FY2022

Energy Consumption Rate (GJ/Manufacturing Ton)

13.0

CO2 emissions at scope 1 and 2 (kt-CO2)

109

89

93

81

CO2 emissions at scope 3 (kt-CO2)

261

244

223

544*

Unit CO2 emissions at scopes 1 and 2 (t-CO2/manufacturing ton)

12.2

FY2021
13.6

0.63

0.55

0.52

0.50

13,083

13,21012,627

12,654

Water consumption (km3)

1,176

1,053

1,000

981

Wastewater (km3)

1,004

809

801

796

Total Waste Emissions (t)

13.1
71
499*
0.48
11,831
953
794* From fiscal 2021, the scope of calculation was expanded to include the entire Group and all 15 categories of Scope 3 emissions.

Social Indicators*
Number of Employees (Consolidated) (Persons)

3,412

3,369

3,299

3,227

Number of Employees (non-consolidated) (Persons)

1,186

1,180

1,167

1,084

1,009

997

969

906

177

183

198

178

3,172
1,095
903
192

47 (1)48 (2)

53 (4)

61 (5)

71 (9)

Male (Persons)Female (Persons)  Number of women in career-track roles (number ofwomen in management roles)

―

―

14.9

15.0

Employment Ratio of Disabled Persons (%)

2.11

2.26

2.34

2.12

Rate of Paid Leave Taken by Employees (%)
Number of employees who started using childcare leave
program in year under review

62.4

91.2

88.2

89.4

3.0
19.4
20.3
14.8
2.20
90.5

―

―

36

32

27

―

―

29

27

Female (Persons)
Percentage of employees on childcare leave who havereturned to work
Turnover rate: Percentage of employees who voluntarily
resigned
Turnover rate: Percentage of new hires in career-trackroles who left within three years

―

―

7

5

23
4

―

―

100

100

100

―

0.90

1.05

1.02

1.18

―

0

0

7

0

Number of New Graduate Employment (Persons)

14

11

13

14

Male (Persons) Number of New Graduate Employees (including those inclerical roles) who are women

10

5

9

10

11
4

4

6

4

4

7

Female Employment Ratio (%)

28.6

54.5

30.8

28.6

Labor Union Membership Rate (%)

68.7

69.7

66.7

71.1

63.6
63.1

  Percentage of management roles held by women (%)

0.4

0.9

1.8

2.4

Average years of service

18.3

18.4

18.0

19.4

―

―

18.6

20.2

Male (Years)
Female (Years)

Male (Persons)* In the social indicators table, the top row shows the consolidated data. All other rows show non-consolidated data.

Governance Indicators
Numberofdirectors

Numberof Audit &Supervisory
Board
members

Total
Number/Ratio of Outside
Directors
Ratio of directors(male/female)
Total
Number/Ratio of Outside
Audit & Supervisory Board
Members
Ratio of Audit & Supervisory
Board Members (male/female)

July 2018

July 2019

July 2020

July 2021

July 2022

July 2023

8

9

8

6

7

7

2 / 25.0%

2 / 22.2%

3 / 37.5%

3 / 50.0%

3 / 42.9%

3 / 42.9%

8 / 0

9 / 0

7 / 1

5 / 1

6 / 1

6 / 1

4

3

4

4

4

4

2 / 50.0%

2 / 66.7%

2 / 50.0%

2 / 50.0%

2 / 50.0%

2 / 50.0%

4 / 0

3 / 0

3 / 1

3 / 1

3 / 1

3 / 1

C.I. TAKIRON Group Integrated Report 2023

66

Data

Corporate Profile and Stock Information (As of March 31, 2023)
Corporate Profile
Trade Name

C.I. TAKIRON Corporation

Main Affiliations (As of May 30, 2023)

Established

October 10, 1919

Incorporated

December 20, 1935

Tokyo Head Office

Shinagawa Intercity Building A, 2-15-1 Kōnan, Minato-ku,
Tokyo, 108-6031

Osaka Head Office3-1-3 Umeda, Kita-ku, Osaka 530-0001, Japan(North Gate Building)Websitehttps://www.takiron-ci.co.jp

Capital¥15,216 million (As of August 22, 2023)

Kansai Chemical Industry Association
Kansai Economic Federation
CLOMA(Japan Clean Ocean Material Alliance)
Japan PVC Pipe and Fittings Association
JA Packaging & Horticulture Materials Association
Nippon Interior Association
Japan Vinyl Goods Manufacturer’s Association
JAPAN PLASTIC SHEET ASSOCIATIONNOUGYOUYOUFILM RECYCLE ACCELERATIONCOUNCIL

Number of employees 3,172 (consolidated)

Business Sites
Head Office
Tokyo Head
OfficeOsaka Head
Office2-15-1 Konan
Minato-ku, Tokyo
3-1-3 Umeda,
Kita-ku, Osaka

Branches/Sales Offices

Production Sites

R&D Centers

Sapporo Sales Office Chugoku/Shikoku
Tohoku Branch
BranchChubu Branch
Kyushu Branch

Aboshi Plant
Tokyo Plant
Tochigi Plant
Ibogawa Plant Shiga Plant
Hiratsuka Plant
Yasutomi Plant Okayama Plant Sano Plant

R&D Center

Affiliate Companies
Construction Materials BusinessHigh Functional Materials Business

Other Affiliate Companies

SANWA SIGNWORKS CO., LTD.
MIYOSHI CORPORATION
C.I. TAKIRONPLUS CORPORATIONBONLEX EUROPE S.R.L [Italy]
TAKIRON MATEX CO., LTD.

TAKIRON-ROWLAND LIMITEDTAKIRON POLYMER CO., LTD.
CIK NANOTEK CORPORATIONSHANGHAI CIK ELECTRONICS CO., LTD. (China)

TAKIRON TECH CO., LTD.
SHANGHAI C.I. KASEI TRADINGCOMPANY LTD. (China)
C.I. TAKIRON LOGISTICS CO., LTD.
DAIPLA WINTES CO., LTD.
MAVERIQ PARTNERS INC.

Specialty Films Business

Environmental Materials Business

BONPACK CO., LTD.
BONSET AMERICA CORPORATION [United States]
BONSET LATIN AMERICA S.A. [Uruguay]
SHANGHAI SANPLUS PLASTIC CO., LTD. (China)

HOKKAIDO SANPLUS CO., LTD.
C.I. TAKIRONAGRI CORPORATION
C.I. MATEX CORPORATIONDAILITE CO., LTD.
C.I. TAKIRONCIVIL CORPORATION

Stock Information
Securities Code4215

Total Number of 97,597,530
Issued Shares(as of August 22, 2023)

67

Number of
Shareholders

13718

Stock Listing

Tokyo Stock Exchange
Prime Market

Share Unit

100

Administratorof Shareholder
Registry

Sumitomo Mitsui Trust
Bank, Limited

Accounting
auditor

Deloitte Touche
Tohmatsu LLC

Major Shareholders (Top 10)
Foreign Persons

8.08%

Financial
Institutions

Securities Firms

0.58%
0.02%
Treasury Stock

8.93%

Individuals andOther Shareholders

16.49%
Other JapaneseCorporations

65.90%Name of Shareholder
ITOCHU Corporation

Ratio of Share Holding (%)
55.51

The Master Trust Bank of Japan, Ltd. (trust fund)5.98

Custody Bank of Japan, Ltd. (trust fund)

1.91

TAKIRON Employee Stock Ownership Association

1.38

KANEKA CORPORATION

1.35

Sekisui Jushi Corporation

1.09

DFA INTL SMALL CAP VALUE PORTFOLIO

1.01

Watanabe Pipe Co., Ltd.

0.90

RE FUND 107-CLIENT AC

0.66

JP MORGAN CHASE BANK 385781

0.46

Note: The ratio of shareholdings is calculated by excluding treasury
stock.

C.I. TAKIRON Group Integrated Report 2023

IR Communication
We engage in IR activities in line with the C.I. TAKIRON Group Corporate Code of Conduct. By engaging in active
dialogues with shareholders and other stakeholders, we aim to build their confidence in our organization so that
our organization can earn a good valuation.

	Promotion of constructive dialogue
with shareholders and investors
We have put in place the policies below to establish systems
and initiatives to encourage constructive communication withall shareholders, analysts and institutional investors.
(1) The COO of the Corporate Administration Division will oversee communications with shareholders and investors.
(2) Relevant internal departments will ensure active and close
cooperation to share information with other relevant departments in order to support communication with shareholders and investors.
(3) C.I. TAKIRON will properly conduct investor briefings as wellas surveys and other dialogues with shareholders.
(4) 
C.I. TAKIRON will regularly report feedback from all theshareholders earned through the initiatives in (3) at meetingsof the Board of Directors meeting and Management Committee. Furthermore, the Board of Directors will review thevoting results and reflect the feedback from shareholders inmanagement.
(5) C.I. TAKIRON must never disclose material facts not yet officially disclosed in communications with shareholders andmanagers will thoroughly adhere to regulations on insider
trading.

Dissemination of Information
The C.I. TAKIRON Group complies with the Financial Instruments and Exchange Act, timely corporate disclosure regulations of the Tokyo Stock Exchange as well as other laws andregulations to properly and fairly provide accurate corporate
information to shareholders and other investors. C.I. TAKIRON
discloses important information through the Electronic Disclosure for Investors’ NETwork (EDINET) for the disclosure of securities reports and other financial materials in accordance with
the Financial Instruments and Exchange Act provided by the
Financial Service Agency as well as the Company Announcements Disclosure Service (TDnet) provided by the Tokyo Stock
Exchange. We also publish information on the corporate website quickly after it is released.
Flow of Internal System for Timely Disclosure
C.I. TAKIRON and each Group company
Financial information, decisions and incidents(Consideration of materialities and timely disclosure information)

Corporate Planning Div., Legal & Compliance Dept.,
Finance & Accounting Dept., Corporate Communication Dept.
Board of Directors and Management Committee
Timely disclosure

Frequency of Communication
General Shareholders’ Meetinghttps://www.takiron-ci.co.jp/ir/stock/meeting.html

Financial results briefings for
institutional investors

https://www.takiron-ci.co.jp/ir/library/presentation.html

Financial results briefings forindividual investors

https://www.takiron-ci.co.jp/ir/individual/

One-on-one meetings withanalysts and institutional
investors, response to media
requests

https://www.takiron-ci.co.jp/ir/

Corporate website

https://www.takiron-ci.co.jp/

Integrated Reporthttps://www.takiron-ci.co.jp/ir/library/
integrated/

Report to shareholders(Notice to Our Shareholders)

https://www.takiron-ci.co.jp/ir/library/stakeholder.html

GeneralShareholders’Meeting
背厚：4 mm

タキロンシーアイグループ 統合報告書 2023

東京本社

〒108-6031
東京都港区港南二丁目15番1号 品川インターシティA棟
TEL （03）6711-3700（代表）

Integrated
Report

Notice to Our
Shareholders

Messages from the Corporate Communication Dept.
Thank you for taking the time to read C.I. TAKIRON Group Integrated Report 2023. We hope that it has given you a better ideaof, and greater confidence in, our process of transformation to achieve Vision 2030 and our efforts to build up the value of ourorganization. We will continue to engage in active dialogues with you and provide timely disclosures to conduct IR activities that
leads to better corporate value.

C.I. TAKIRON Group Integrated Report 2023

68

Tokyo Head Office〒108-6031
Shinagawa Intercity Building A, 2-15-1 Kōnan, Minato-ku, Tokyo
Tel (03)6711-3700 (main switchboard number)