Zeon Group Integrated Report 2022

Our Philosophy
Corporate Philosophy = Mission

Vision for 2030

Contributing to the preservation of
the Earth and the prosperity of the human race

A company that lives up to societal expectations andthe aspirations of employees

In keeping with its name, derived from the Greek words “geo” (Earth) and “eon” (eternity),
Zeon will contribute to a “Sustainable Earth” and “Safe and Comfortable Life for People”
by providing original technologies, products, and services.

SDGs targeted by Zeon

Sustainability of Society

Sustainability Policy*	We aspire to realize a “Sustainable Earth” and“Safe and Comfortable Life”

Let’s try first   Let’s connect   Let’s polish up

③

Fur
th

	We will firmly maintain fairness and integrity in
our activities to be a trustworthy company

Core Values

nt
mecial issues = Sustainab
to so
le d
s
n
eve
o
uti
l
lop
o
s
o
s
t
o
s
c
r
n
i
a
io
l issu
e
es
Solut
①

	Each of us will think and act proactively fora better future

SocietyZeon* Zeon Corporation Establishes Sustainability Policy
Zeon Corporation established a new Sustainability Policy, effective July 1, 2022, following a review of theBased on our corporate philosophy of “contributing to thepreservation of the Earth and the prosperity of the human race”,
sustainability at Zeon means achieving sustainable growth④

together with society. To achieve this, we will provide products
and services that are valuable for solving global and social issues,Zeon CSR Policy, which sets out the fundamental approach to its corporate activities. The Zeon Group will

② Pr o ﬁ t

F urt

h er proeg
ﬁt = S u stain a bl

ro

wth

Sustainability of Zeonbuild trust with our stakeholders through fairness and integrity
and have each one of us act proactively thinking how to create a

strive to achieve its Vision for 2030 under the Medium-Term Business Plan by advancing beyond its past
CSR management and embracing the broader perspective of sustainability management. We will continue
to work toward realizing a sustainable society by ensuring that all employees consider sustainability inevery action they take and by engaging in dialogue and collaboration with our stakeholders.

better future for the society and ourselves.

Contents

Editorial policy

1

Our Philosophy

25

Progress of the Medium-Term Business Plan

3

2021–2022 Topics

31

Business Strategy

5

Business Overview

39

Research and Development (R&D)

9Company Profile

43

Human Resources Strategy

10

Financial and Non-financial Highlights

47

Sustainability Management

15

History of Value Creation

49

TCFD

17

Value Creation Flow53

Directors and Officers

19

Message from the President

55

GovernanceIn compiling the Zeon Integrated Report 2022, we referenced the Guidance for Collaborative Value Creation issued by Japan’s
Ministry of Economy, Trade and Industry (METI), and also referenced the many suggestions that we had received from customers.
Plans, forecasts, etc. that are disclosed in this report have been drawn up based on the currently available information, and containsome degree of risk and uncertainty. Actual performance may vary from these plans, forecasts, etc. due to a variety of factors.

Reporting period
April 2021 to March 2022
(includes some information after April 2022)

Reporting scope
Zeon Corporation and Zeon Group companies inside and outside Japan. Some data covers only Zeon Corporation.

Zeon’s information disclosure
Basic information on Zeon Corporation and Zeon Group is available on the Company Information section of the corporate website. The
Integrated Report (this report) presents a wide range of information relating to Zeon’s business activities and ESG. The Sustainability
Report (available only in PDF format, and due to be issued in late 2022) contains detailed information about CSR-related initiatives.
The Site Reports (available only in PDF format) outline some of the initiatives adopted by the Zeon Group’s individual plants andgroup companies. More information about Zeon’s management and operations is available on the Investor Relations section of
the corporate website and in the Fact Book.

https://www.zeon.co.jp/en/

1

Zeon Group

Integrated Repor t 2022

2

2021–2022 Topics

1

2
New Products

R&D

Zeon to start production of high thermalinterface materials (TIM)

Zeon issued the following press releases between April 2021 and June 2022.

Zeon develops technology that is able topredict the physical properties of a materialusing images generated using AI

June 16, 2021

List of press releases* The dates given are the dates of the related press releases.
* Click on thesymbol to access the PDF for that press release.

Release dateAnnouncement
R&D

April 13, 2021
June 4, 2021

Business

1

June 16, 2021

AwardsAugust 24, 2021

2

August 30, 2021

September 3, 2021 3
October 1, 2021
October 1, 2021

R&D

Business	In collaboration with RIKEN and Yokohama Rubber, Zeon develops new technology for
producing biomass-derived butadiene
Zeon joins the Battery Association for Supply Chain (BASC)	A researcher from Zeon’s Analytical Technology Laboratory receives a Fellowship Award
from the Society of Polymer Science, Japan (SPSJ)	Zeon develops technology that is able to predict the physical properties of a material using
images of the material’s structure generated using AI	Zeon issues a Declaration for Health and Productivity Management and Code of Conduct
for Well-being

PR

Zeon launches its new “Door” corporate advertising campaign

	Zeon begins using a Technology Trends Predictive Analysis System that utilizes AI effectively

January 11, 2022

R&D

Zeon establishes proprietary technology for recycling Cyclo Olefin Polymers

R&D	Zeon develops technology for controlling the formation of lithium dendrites
utilizing sheets made using carbon nanotubes

February 4, 2022

Investment

Zeon Corporation reaches agreement for Aurora Microplates acquisition

February 7, 2022

Investment

Zeon establishes Zeon Ventures Inc. in the U.S., and begins strategic investment

February 10, 2022 4

Investment

Zeon invests in the AOI Fund 1 managed by UTokyo Innovation Platform Co., Ltd.

R&D

	“Development of a manufacturing technology that applies carbon recycling forcommodity chemicals used in synthetic rubbers,” a joint project between Zeon and
Yokohama Rubber, is selected by the NEDO as a Green Innovation Fund Project

R&D	Zeon’s “Development of photonic chips for higher performance, energy-saving non-volatilememories” project is selected by NEDO as a Green Innovation Fund ProjectFebruary 25, 2022
March 24, 2022
March 28, 2022

5

April 13, 2022
April 21, 2022

6

Business

Zeon decides to increase its production capacity for hydrogenated nitrile rubber

Investment

 eon becomes the first chemical manufacturer to forge an operations and capital tie-up
Zwith QunaSys Inc.

Environment

Zeon begins energy conversion toward achieving carbon neutrality

New Products Zeon launches the LNES®SL-03 cultivation-type artificial ornamental plant, which uses solar

power to provide health benefits while also contributing to the environment

April 22, 2022

Business

Zeon renovates its head office to help realize its Vision for 2030

April 27, 2022

Business

Zeon decides to increase its production capacity for lithium-ion rechargeable batteries

Zeon Group

Integrated Repor t 2022

4
Business	Zeon decides to establish an additional production line, the largest width of its kindin the world, for manufacturing optical film for use in large-screen TVs

IP

February 21, 2022

3

Zeon starts full-scale commercial production of acrylic rubber in Thailand

December 14, 2021

January 25, 2022

Zeon has succeeded in developing technology that canbe used to predict the physical properties of materials
with complex structures, such as carbon nanotubes.
With this technology, it is now possible, even for materials with complex structures which AI could not have beenused in the past, to perform an entire series of experimental
processes—from materials selection through to processing
and evaluation—using a virtual experimentation processthat utilizes high-speed, highprecision computer imaging,which can be expected toenable new material development to be completed
even more rapidly.

Zeon to start production of high thermal interface materials (TIM)HR

Business

October 28, 2021

3

New Products

August 30, 2021

High thermal interface materials (TIMs) are sheet-typematerial that are used as an interface between
heat-generating components, such as ICs, and heatsinks. By comparison with conventional grease-basedmaterials, TIMs provide higher thermal conductivity,
increased durability, and improved workability.
Zeon has already begun full-scale volume productionof TIMs, and they will be used for many different electronic devices, helping to solve heat problems thatderive from the enhancement in the performance ofelectronic components.

Press releases: https://www.zeon.co.jp/en/news/

Investment

Zeon starts full-scale commercial
production of acrylic rubber in Thailand

Zeon invests in the AOI Fund 1 managed
by UTokyo Innovation Platform Co., Ltd.

September 3, 2021

February 10, 2022

Zeon Chemicals Asia Co., Ltd. began commercial production of acrylic rubber in Rayong Province, Thailand, inAugust 2021. Acrylic rubber is a type of specialty rubberthat has superior thermal resistance and resistance to oil.
It is used as a material for seals, gaskets and hoses invehicles with internal combustion engines. With demand
for rubber with high thermal resistance having increased
in recent years, Zeon has strengthened its global supply
chain by adding Thailand as a fourth production basefor acrylic rubber,
alongside Kawasaki
and Kurashiki in Japan,
and the U.S.

The AOI Fund 1 was established to cultivate and provide
investment for startups established through open innovation at the University of Tokyo. This fund works actively
to promote the building of collaborative partnerships
between startups and longer-established companies,
aiming to contribute to society through the creation of
new businesses. Zeon’s investment in the AOI Fund 1
represents the first investment in the fund by a specialist
chemical manufacturer.

6

5

New Products
Investment

Zeon forms an operations and capitaltie-up with QunaSys, a company thatdevelops software for quantum computers
March 28, 2022
If quantum computers can be realized, they will offer alevel of performance that far exceeds that of today’s
super-computers, and they can be expected to be very
effective at facilitating high-speed materials simulations.
In this operations and capital tie-up with QunaSys, theaim is to respond to demand for new materials and help
solve social problems by integrating Zeon’s materials
development infrastructure and know-how withQunaSys’s expertise in advanced digital technology.

Zeon launches LNES®SL-03, the third
product to be commercialized throughproject LNES
April 21, 2022
Test sales began for LNES®SL-03, a cultivation-type artificial ornamental plant which has been developed
through project LNES, an open innovation project tocreate new value that was initiated in 2016.
LNES®SL-03 is a futuristic device that uses a SOLAR
CARD® ultra-small solar cell which has been madeincredibly thin and lightweight through Zeon’s carbon
nanotube technology. The amount of electric power
generated can be visualized using a smartphone app,
and the product also has entertainment functions,
including being able tocultivate original characters and allowing
users to enjoy a virtual
sunbathing experience.

4

Business Overview
Zeon’s main products are created from raw materials such as butadiene and isoprene, which are
extracted from the C4 and C5 fractions of naphtha using proprietary Zeon technologies.
Business segments are divided into the Elastomers Business, Specialty Materials Business, andOther Businesses.

C3 fractions Propylene

Main Products
Naphtha

C4 fractions

GPB
process

In 1959, Zeon became the first company in Japan to mass-produce synthetic rubbers. Comprising
three individual businesses—Synthetic Rubber, Synthetic Latex and Chemicals—the Elastomer
Business is a solid core business that underpins Zeon’s activities.
Synthetic rubbers

C2 fractions Ethylene

Crude
oil

Elastomers Business

Butadiene

General-purpose synthetic rubber is used
as a raw material for tires. Specialty synthetic rubbers are used for heat-resistant,oil-resistant rubber components that will
be in close proximity to an engine.

Synthetic latexes

Synthetic latexes are used for gloves(for sanitary and medical use), cosmetic
puffs, etc.

ChemicalsPetroleum resins and SIS thermoplastic
elastomers are used as raw materials for
manufacturing adhesives and adhesive
tape. Petroleum resins are also used in
the paint used for road markings.

Synthetic rubbers
Synthetic latexes

Zeon’s proprietary
technology
Extracting highly purebutadiene fromC4 fractions

C5 fractions

GPI
process

Isoprene

Synthetic rubbers
Thermoplastic elastomers

Piperylene

Petroleum resins

Dicyclopentadiene

Specialty plastics
RIM compound

Zeon’s proprietary
technology
Extracting isoprene andother highly-pure,useful components
from C5 fractions

2-butyne

Synthetic aroma chemicals

Specialty Material BusinessSpecialty materials are materials and components with high added value thanks to superior
macromolecular design and processing technology.

Specialty plastics and components

Polymerized tonerSpecialty chemicals

Electronics materials

Specialty plastics are used for opticallenses and medical devices. We also process these materials to create optical filmthat is utilized as a material for displays.
Synthetic fragrances are used in cosmetic/fragrance products, as well as for foodfragrances, etc. We also produce raw
materials for pharmaceuticals and agrochemicals, specialty solvents, etc.

Battery (energy) materials

Anode binders, cathode binders andfunctional layer materials for lithium-ion
batteries, etc.

Electro photographic toner for use withprinters, fax machines, digital copiers,
and multifunction devices

Coating insulation materials, etching
agents and photoresists, etc., for use in
semiconductor manufacturing

Medical devices

Gastrointestinal medical equipment (catheters, stents, etc.) and cardiovascular
medical equipment (FFR devices, IABP
balloon catheters, etc.)

Other Businesses

Engineering, packaging materials, building materials, deodorants, RIM compounds, single-walledcarbon nanotubes, paints/coatings, trading, etc.

Carbon nanotubes

Carbon nanotubes produced using theSuper Growth Method. R&D is undertaken
in relation to various types of applications
for carbon nanotubes, making effective
use of their special properties, which
include lightness and high strength aswell as extremely high levels of electricaland thermal conductivity.

5

Zeon Group

Integrated Repor t 2022

Reaction Injection Molding (RIM)
Resource-saving, energy-saving plastic
molding solutions, with which reaction
and molding are simultaneously performed inside the mold.

6

Zeon’s World-leading Products
Zeon derives its name from the Greek words “geo” (meaning “Earth”) and “eon” (meaning “eternity”).
In keeping with this name, which embodies our corporate philosophy of “Contributing to thepreservation of the Earth and the prosperity of the human race,” we contribute to the developmentof society and to technological innovation by supplying a wide range of products and services thatmake effective use of the original technologies that we have developed over the years.

Specialty Synthetic Rubbers
Zeon’s specialty synthetic rubber products have for many years
now been the backbone of our company’s operations, supporting
our growth.
Synthetic rubber products have an extensive range of uses,
mainly for components that are installed near a vehicle’s engine.
Zetpol® hydrogenated nitrile rubber (HNBR) is a world-leading
high-performance specialty rubber that we have developed.
With outstanding oil resistance, heat resistance and wear resistance, it is used for vehicle timing belts and as a material for use
in hydraulic machinery. Acrylic rubber has particularly impressive
heat resistance, and so is extensively used for vehicles’ oil seals
and hoses, etc.

Business Overview

Optical films “ZeonorFilm®”
ZeonorFilm® is an optical film that uses Zeon’s cyclo olefin polymers(COP) as the raw material. It is used as a material for various typesof display, including large-sized LCD TVs, tablet PCs, smartphones,
etc. With an integrated design approach that includes every stage
from polymer design through to product processing, Zeon has
been able to maintain high technological capabilities through close
linkage between its research institutes and its production facilities,
thereby enabling the company to keep creating products that meetthe needs of next-generation display devices.
By adopting the sheet extrusion process, the world’s first film
processing technology of its kind, Zeon has been able to realize highproductivity and a reduced environmental burden that overturnconventional wisdom. Using this technique, Zeon has succeeded in
rapidly establishing itself as a major player in the optical film sector.
For more details, see P.35.

Battery (energy) materials
Zeon has developed a battery materials business that includes
anode binders, cathode binders and functional layer materials, etc.
Responding to the need for lithium-ion batteries to provide highlevel performance, we are contributing toward the realization ofbatteries with high capacity, a high charging/discharging rate, highproductivity, superior safety, and long lifespan. In particular, ouranode binders hold very high global market share.
With the widespread adoption of electric vehicles throughout
the world in recent years, the demand for battery materials can be
expected to demonstrate strong growth in the future.

For more details, see P.33.

Cyclo Olefin Polymers (COP)
Zeon’s independently-developed Cyclo Olefin Polymer (COP) has
outstanding optical and chemical properties. Sold under the
ZEONEX® and ZEONOR® brand names, it is widely used in the lens,healthcare and biotechnology sectors, and has won widespreadpraise. As a material for use in various types of camera lenses and inlaser printer lenses, it boasts high global market share.
With superior workability and high suitability for precision
forming, our COP has a wide range of potential applications.
It is also an environmentally-friendly material, as it does notemit harmful substances even when burned.
For more details, see P.35.
Smartphone camera lenses

Pharmaceutical containers for medical use

7

Zeon Group

Integrated Repor t 2022

For more details, see P.36.

Single-walled carbon nanotubes
Carbon nanotubes were discovered by Dr. Sumio Iijima in 1991. In
2004, a team led by Dr. Kenji Hata at Japan’s National Institute ofAdvanced Industrial Science and Technology (AIST) invented theSuper Growth Method, which enables highly efficient production of
single-walled carbon nanotubes. With support from the New Energy
and Industrial Technology Development Organization (NEDO), in2015 Zeon began operation of the world’s first factory undertaking
volume production of single-walled carbon nanotubes using theSuper Growth Method, under the brand name ZEONANO®.
With its special properties, which include being strong but lightweight, and having very high electrical and thermal conductivity, this“dream” material is expected to have a wide range of applications.

The single-walled carbon nanotube production facility
at Zeon’s Tokuyama Plant

For more details, see P.37.

8

Company Profile

Financial and Non-financial Highlights

Name:

Zeon Corporation

Consolidated net sales

Segment net sales (consolidated)

Established:

April 12, 1950

Capital:24.211 billion yen (as of March 31, 2022)(million yen)(million yen)

400,000

400,000

Employees:

3,981 (consolidated), 2,107 (non-consolidated) (as of March 31, 2022)

Listed on:

Tokyo Stock Exchange (Prime Market)

350,000

Business segments: For more details about Zeon’s businesses,
Elastomer Business, Specialty Materials Business, Other Businesses    please see P.31 “Zeon’s Business Strategy.”

Head office:Shin Marunouchi Center Building, 1-6-2 Marunouchi, Chiyoda-ku, Tokyo 100-8246, Japan

Research laboratories: Research & Development Center
Offices:

Osaka Office, Nagoya OfficePlants:Takaoka Plant, Kawasaki Plant, Mizushima Plant,
Tokuyama Plant, Himi-futagami Plant, Tsuruga Plant

332,682

337,499

361,730
321,966

300,000

250,000

250,000

200,000

200,000

150,000

150,000

100,000

100,000

50,00050,000

0

2017

2018

2019

Specialty Material Business

350,000

301,961

300,000

Domestic network

Elastomers Business

2020

2021

0

(FY)

53,92886,47957,822

56,73353,473

198,087

2017

2018

46,977
106,791

85,142

194,570

Other Businesses

91,74995,465

178,847

161,626

2019

2020

200,566

2021

(FY)

* Please note that the sum of the sales of individual businesses may not be the same as
total consolidated sales due to eliminations or not including the group-wide portion.
Zeon North Co., Ltd.

Zeon Chemicals Yonezawa Co., Ltd.

3
4

2  Research & Development Center /Kawasaki Plant

6

5

Zeon Yamaguchi Co., Ltd.

1 Head office

3 Himi-futagami Plant

Osaka Office
Tohpe Corporation

3 Takaoka Plant

Zeon Opto Bio Lab Co., Ltd.

1
2

Tokyo Zairyo Co., Ltd.
Zeon Kasei Co., Ltd.
Zeon F&B Co., Ltd.
RIMTEC Corporation
Zeon Medical Inc.
ZS Elastomers Co., Ltd.
Okayama Butadiene Co., Ltd.
ZIS Information Technology Co., Ltd.

Nagoya OfficeZeon Polymix Inc.

Consolidated operating income andconsolidated operating margin(million yen)

Consolidated operating income

40,00044,432
38,881
33,40833,14711.7
30,00026,104

11.1(%)(million yen)

20.0

50,00016.0

40,000

Elastomers Business

12.0

30,0002,156
26,36016,742

2,098

16,1158.1

8.0

20,000

4.0

10,0006 Tokuyama Plant

21,96017,311

22,16918,623

17,691

Overseas network (Group companies)
Zeon (Shanghai) Co., Ltd.
Zeon Trading (Shanghai) Co., Ltd.
Shanghai Zeon Co., Ltd.
Takehara Zeon (Shanghai) Co., Ltd.
Zeon Kasei (Changshu) Co., Ltd.
Tokyo Zairyo (Shanghai) Co., Ltd.
Tokyo Zairyo (Tianjin) Co., Ltd.

Zeon Europe GmbHTokyo Zairyo Czech,s.r.o.

7

Telene S.A.S.

Zeon Korea Co., Ltd.
Zeon Shinhwa Inc.

Zeon Advanced Polymix Co., Ltd.
Tokyo Zairyo (Thailand) Co., Ltd.

8

0

2017

Zeon India Private Limited
Tokyo Zairyo (India) Pvt, Ltd.

2019

2020

2021

(FY)

0.0

9

Zeon Group

Co., Ltd.

Integrated Repor t 2022

8  Zeon Chemicals (Thailand)Co., Ltd.

Vietnam Co., Ltd.

10  Zeon Chemicals Singapore
Pte. Ltd.

2020

20,00035,000

16,48015,103

15,27415,00015,8692021(FY)

Elastomers BusinessSpecialty Material Business
Other Businesses
Group-wide (joint)

29,08830,0003,236

14,25825,00020,00010,0009  Zeon Manufacturing

2019(million yen)

5,000

8  Zeon Chemicals Asia

2018

(million yen)

10,00014,640
2,303
2,564
359
362
3,644
6,234

5,000

7,998

0

2017

15,000

7 Zeon Chemicals L.P.

2017

Capital investment by business (consolidated)

Zeon Asia Pte. Ltd.
Tokyo Zairyo (Singapore) Pte. Ltd.

Zeon Asia Malaysia Sdn. Bhd.
PT. Tokyo Zairyo Indonesia

0

R&D expenses (non-consolidated)

Zeon CSC Corporation
Zeon Taiwan Co., Ltd.
Zeon Research Vietnam Co., Ltd.
Tokyo Zairyo (Vietnam) LLC.

2018

* Please note that the sum of the operating income of individual businesses may not
be the same as total consolidated operating income due to eliminations or not including the group-wide portion.

9
10

Zeon do Brasil Ltda

12,283

9,642

Zeon Polymix (Guangzhou) Co., Ltd.
Zeon Medical (Guangzhou) Inc.
Tokyo Zairyo (Guangzhou) Co., Ltd.

Other Businesses

3,206
2,786

12.3

10,000

Zeon Specialty Materials Inc.
Zeon Ventures Inc.
Aurora Microplates, LLC
Zeon Kasei México S.A. de C.V.
Tokyo Zairyo México, S.A. de C.V.
Tokyo Zairyo (U.S.A.) Inc.

Specialty Material Business

2,318

9.8
20,0005 Mizushima Plant

Consolidated operating margin

50,000

Office / Plant
Group companies

4 Tsuruga Plant

Segment operating income (consolidated)

0

2017

2018

2019

2020

2021

(FY)

14,568

5,744
2018

95

17,965

19,6452,047
47

22,901
2,521
291
10,596

10,111

7,792

7,440

2019

2020

9,493

2021

(FY)

10

Financial and Non-financial Highlights
Number of employees (consolidated / non-consolidated))
No. of employees (consolidated)(No.)

No. of employees (non-consolidated)

5,000

CO2 emissions (Non-consolidated, Scope 1+2, estimation basedon the GHG Protocol standards)

Energy usage per unit of sales (non-consolidated)(t-CO2)(crude oil equivalent, kL / million yen)

1,000,000

1.20

3,981
4,000

3,502

3,462

3,405

3,328

800,000

746,012779,358

778,125

815,467

1.05

1.02
781,110

1.03

0.94

1.00

0.96

0.80
3,000

600,000
0.60

2,107
2,000

1,613

1,600

1,642

1,600

400,000
0.40

1,000

200,000

0March 2018

March 2019

March 2020

March 2021

0March 2022

Number of new hires (non-consolidated)
Recent graduates(No.)

Mid-career hires

2017

2018

2019

2020

2021

(FY)

2017

2018

2019

2020

2021

(FY)

* Performance of group companies is disclosed on their individual site reports.

Water resource usage (non-consolidated)

Emissions of substances subject to the PRTR Act (non-consolidated)

20,000(tons)

18,23418,09817,741

17,90530.00

17,811

25.21
25.00

16,00075

0.00* CO2 emissions of Himi-futagami Plant and Tsuruga Plant, which had previously been
subsidiaries and were incorporated into Zeon corporation in FY2021 have been added
to Zeon Corporation’s non-consolidated total for the year FY2019 onwards.

(1,000 m3)

95

100

0.20

23.69

23.26

23.44

2018

2019

2020

24.96

67
20.00

56
50

47

41

40

39

12,000
15.00
8,000

27

26

10.00

25
4,000

11

0

2017

2018

2019

2020

2021

(FY)

0

5.00

2017

2018

2019

2020

2021

(FY)

* Performance of group companies is disclosed on their individual site reports.

TOPICSThe United Nations Global Compact (UNGC)

The United Nations Global Compact (UNGC) is a voluntary
initiative aimed at realizing sustainable growth, by encouraging companies and other organizations to act as good corporate citizens through the exercise of responsible, creative
leadership, under the guidance of the United Nations. In July
2019, Zeon announced its support for the UNGC’s ten principles relating to protection of human rights, elimination of
improper labor practices, safeguarding the environment, andpreventing corruption.

26
25

Target for 2030

20

20

15

14

15

25

20%

18

20

CDP
10

5

0

11

Zeon Group

3.6%

3.6%

March 2018

March 2019

Integrated Repor t 2022

3.6
3.6
4.3
4.5

3.6％
3.6％
4.3％

4.3%

March 2020

4.5%

March 2021

5.3%
5March 2022

March 2030

0

(FY)

TCFD

Task Force on Climate-related Financial Disclosures(TCFD) was established under the Financial Stability
Board (FSB) in response to a request from financeministers and central bank heads of G20. The
TCFD recommendations encourage corporations
to recognize their own risks and opportunities inrelation to climate change and to incorporate these into their business strategy, withthe ultimate goal of having corporations disclose the impact of these risks and opportunities. Zeon expressed its support for the TCFD recommendations in August 2020.

External evaluations

15

10

2021

Commitments

Total no. of female managers
Female manager ratio(No.)(%)
30

2017* Performance of group companies is disclosed on their individual site reports.

Commitments and external evaluations

Female manager ratio and number of female managers (non-consolidated)

30

0.00

DISCLOSURE INSIGHT ACTION

CDP is an international environmental NGO which
focuses on three areas: Climate, Water, and Forests.
In each of these three areas, CDP administers
surveys to business enterprises and gives themone of eight scores: A, A-, B, B-, C, C-, D and D-. In
FY2021, more than 13,000 enterprises disclosed
data to CDP and Zeon received a B rating.

EcoVadis

EcoVadis assesses the corporate policies, strategies and performance of its participating firms in terms of their impact on theenvironment, labor practices, human rights, ethical issues andsustainable procurement, by using a platform on which morethan 90,000 registered buyers and suppliers in 200 different
industries from around 175 countries and regions share data. In
2021, EcoVadis was ranked in the top 50% of firms registeredwith EcoVadis, and received a Bronze rating.

12

Financial and Non-financial Highlights

Zeon Corporation (consolidated) Data for the Past 11 Years

Fiscal year: April 1 to March 31 of the following year

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

Annual performance2021
million yen¥ 262,842¥ 250,763¥ 296,427¥ 307,524¥ 295,647¥ 287,624¥ 332,682¥ 337,499¥ 321,966¥ 301,961¥ 361,730

Operating income

32,123

23,69629,901

28,24529,85630,76738,88133,147

26,10433,40844,432Adjusted net income before tax

31,404

23,42332,52829,791

26,26530,92824,85327,04427,48038,15846,226

Net income attributable to owners of the parent company

19,127

14,75019,65019,08018,07923,152

13,056

18,45820,201

27,71633,413

Capital investment

22,99523,48927,111

28,51627,65022,122

14,568

14,64029,08819,64522,902

Depreciation

19,885

18,122

17,06819,43920,904

20,431

20,53918,78017,44818,154

21,469R&D expenses

11,106

11,895

12,661

13,627

14,14813,233

15,103

16,48015,274

14,25815,869Cash flow from operations

32,00933,061

36,39634,00647,59949,042

54,46240,39328,43056,08033,140Cash flow from investment(27,644)(24,858)(31,513)(26,767)(34,847)(29,121)(14,951)(21,426)(24,570)(30,239)(26,436)

Cash flow from financial activities(5,960)(10,006)(10,105)(12,019)(9,010)(15,834)(11,625)(23,575)(8,276)(8,259)(11,883)

Net sales

Financial position

million yen¥ 311,925¥ 350,508¥ 370,872¥ 399,512¥ 384,753¥ 411,415¥ 443,917¥ 424,937¥ 405,131¥ 448,821¥ 484,660

Tangible fixed assets

97,774

108,937

122,721

134,227

138,526

138,058

115,559

102,323

114,791

117,579

118,299

Interest-bearing debt

67,584

66,48365,56558,88957,064

44,677

38,57324,12520,96018,96018,960Net assets

135,480

162,057

181,414215,631

215,586

244,634

259,940

259,156

260,358

298,246

321,836

Total assets

Per-share datayen

Net income per share

¥

82.75

¥

63.81

¥

85.15

¥

84.13

¥

79.86

¥

104.31

¥

58.81

¥

84.06

¥

92.44

¥

126.74¥ 153.22

Net assets per share

572.96685.64783.11

931.34949.91

1,082.02

1,158.30

1,172.40

1,176.87

1,349.89

1,487.33

Dividends per share

11

12

13

14

15

16

17

19

21

22

28

Return on assets (ROA)

10.5%

7.6%

9.0%

8.1%

8.2%

8.0%

9.6%

8.4%

6.9%

9.1%

10.6%

Return on equity (ROE)

15.5%

10.1%

11.7%

9.8%

8.6%

10.3%

5.3%

7.2%

7.9%

10.0%

10.9%

Return on sales (ROS)

12.2%

9.4%

10.1%

9.2%

10.1%

10.7%

11.7%

9.8%

8.1%

11.1%

12.3%

Key indicators

13

Zeon Group

Integrated Repor t 2022

14

History of Value Creation

The detailed history of the Zeon Group can be viewed on the updated website.
https://www.zeon.co.jp/en/company/special/history/In the 1950s, Zeon Corporation acquired technologies from B.F. Goodrich Chemical Company in the
U.S. and began manufacturing polyvinyl chloride and specialty synthetic rubber (NBR).
From the 1970s onwards, Zeon worked to develop original technologies, and generated a wide rangeof chemical products that used raw materials extracted through the GPB and GPI processes. As aresult, the company was able to expand into a wide range of business areas.

Changes in Social Circumstances and Needs

From the 2000s onwards, Zeon has pursued higher value for customers and brought chemical
products that provide greater functionality into the world. Today, thanks to its proprietary
technologies, Zeon has a number of businesses that control high shares of the global market, and iscontributing toward solving social and customer issues through its products and services.

1950–

1970–

2000–

2020–

This was the time of the rise of the petrochemical industry, whenpetrochemical complexes were established and quality and quantity of chemical materials were required for economic growth.

In response to the oil crises and the problem of pollution, chemicalmaterials that provide both efficiency and safety were demanded.

Higher functional chemical products are needed for the advancement of digitization and advanced information technology.

Entering an era of unprecedented demands to reduce environmental impact including zero CO2 emissions and closed loops

Business-Related Events
Zeon Group Business Results

Operating income (billion yen)

Net sales (billion yen)
500

1950s–1970s

1950	Establishment (start of polyvinyl chloridebusiness)
1959	Launch of synthetic rubber business (first inJapan)
1961 Listed on the Tokyo Stock Exchange
1965	Completed construction of a GPB plant.
Launch of butadiene production
1971	Completed construction of a GPI plant.
Launch of isoprene production, etc.

400

300

1980s

 stablishment of a “third pillar of business”
E
to follow polyvinyl chloride resins andsynthetic rubber sought
Focused on the comprehensive, effective
utilization of C5 fractions, and undertook
research and market development with respect
to thermoplastic elastomer SIS, C5 hydrocarbon resin, synthetic fragrances, opticalplastics, and products formed using RIM
Advance into the processing field progresses

1990sCompleted constructionof a COP plant

100

1950

1970

Net sales (left scale)Operating income (right scale)1980

Net sales composition ratios in 1970
(non-consolidated)* Non-consolidated through 1976, consolidated from 1977
Synthetic
resins34%

6%Synthetic
rubber 62%

Synthetic
resins32%

Non-consolidated
sales:

39.0

billion yen

Non-consolidated
sales:

129.4

billion yen

Net sales composition ratios in 2010
(consolidated)
OthersRubber 42%
Latex

Consolidated
net sales:

194.2

30

2010

24%

Chemicals 11%40

202020 Support for TCFD announced
102021	Formulated a Declaration for Health and Productivity
Management and Code of Conduct for Well-being
2022	Began a shift to using new energy sources, with theaim of realizing carbon neutrality

Net sales composition ratios in 2000
(consolidated)

Information,
environmentand health15%

 dopted working-from-home as normalA
practice for head office employees to help
prevent the spread of the COVID-19 pandemic
Began making a serious effort to realize adigital transformation (DX)2017	S-SBR business merges with Sumitomo Chemical,
ZS Elastomers Co., Ltd. established2019	Became a signatory to the United Nations Global Compact

2000

Others50

2020s

2010	Formulated a CSR Policy and CSR Codeof Conduct2013	Acquired Tohpe Corporation through atender offer and made it a subsidiary of
Zeon Corporation

2000	Made Tokyo Zairyo Co., Ltd. a Zeon
Group company, and positioned it as acore trading company
2005	Introduction of production innovations
using the Daicel method
2006	Research & Development Center No. 10
Building completed. Substantial
improvements made in analysis
technologies

1990

Net sales composition ratios in 1990
(non-consolidated)
OthersSynthetic
rubber 66%

 usiness development in Asia reinforced.
BBegan volume production of single-walledcarbon nanotubes
Strengthened BCP measures in the aftermathof the Great East Japan Earthquake of 2011

Optical films

The GPB production facility at the Tokuyama Plant

0

2010s

 evelopment of new manufacturing methD
ods for optical films. Focus on higher function materials and components
Introduction of
Daicel method
for production
innovations,which were
implemented
across all plants

1996	Safety Philosophy
established1989	
Specialty rubber business acquired from
B.F. Goodrich Chemical Company in the
U.S. Zeon becomes the world’s leadingmaker of specialty rubber

200

2000s

 verseas business development in the U.S.,O
Europe, Asia, and other regions accelerates
Launched new businesses,
including Cyclo Olefin
Polymer (COP) and binders
for lithium-ion rechargeable
batteries

18%

2020
Net sales composition ratios in 2021
(consolidated)
OthersSpecialty
Material
Business 18%

0

15%

Elastomers
Business 64%

Specialty
Material
Business 30%

billion yen

Consolidated
net sales:

Elastomers
Business 55%

8%billion yen

Consolidated
net sales:

270.4

361.7

billion yen

Examples of technologies and products developed by Zeon
Prior to the 1960s

1980s

1990s

2000s

2010s

2020s

Polyvinyl chloride (PVC) Powder slush compounds (PSC) Balloon catheters Ventricular assist device NBR latex Single-walled carbon nanotubes formed using
the Super Growth Method Crystalline Cyclo Olefin Polymer (COP)

Nitrile rubber (NBR) VP latex Binder for lithium-ion batteries Hydrogenated nitrile rubber Zetpol®

 Cyclo Olefin Polymers (COP) ZEONEX®, ZEONOR®

 ZeonorFilm® optical film, which is made using
the sheet extrusion process, with sequential
biaxial film stretching method, and diagonallystretched retardation Solution-SBR ZEORORA® etching gas Alicyclic hydrocarbon resin Polymerized toner

1960s
Geon Process of Butadiene (GPB) Emulsion Polymerized Styrene-Butadiene
Rubber (E-SBR) Butadiene Rubber (BR)1970s
 Geon Process of Isoprene (GPI) Isoprene rubber Thermoplastic elastomer SIS Polymerized color toner Asymmetric SIS Cyclopentyl methyl ether, an ether solvent Microfluidic chip prototype provision service Technology for creating butadienefrom biomass SOLAR CARD®

 High thermal interface materials (TIM) Technology for creating isoprene from biomass Cycle Olefin Polymer (COP) recycling technology Fractional Flow Reserve (FFR) measurement device Technology for controlling lithium dendrites
using CNT

 Synthetic aroma chemicals RIM products and compounds Electron beam resist Acrylic rubber C5 hydrocarbon resin

15

Zeon Group

Integrated Repor t 2022

16

Value Creation Flow
Taking the new Medium-Term Business Plan (implementation of which began in FY2021) as thefoundation, the Zeon Group is contributing toward building a “Sustainable Earth” and a “Safe andComfortable Life for People” through the provision of unique, innovative technologies and services.

SDGs

Being aware of social
issues and social change

Major trends* VUCA: Volatility, Uncertainty, Complexity and Ambiguity

Social issues
affecting thewhole world

Vision for 2030

A company that lives up to societal expectations
and the aspirations of employees

Difficulty inforecasting the future,both for businessand for society as
a wholeFinancial capital	Maintaining stable cash flow

24.2 billion yen
484.7 billion yen
321.8 billion yen

Capital
Total assets
Net assets

1. Promote a transformation of monozukuri to realize a carbon neutrality and circular economy
2. “Polish up” existing businesses“Explore” new businesses
Strengthen COP andbattery materials	Increase production
capacity	Improve resilience	Launch new products

Manufacturing capital	Strengthening production capacity
Within Japan

6 plants and 1 research center,and 18 group companies

Outside Japan

41 overseas group companies

	Risk diversification
	Improving safety
Intellectual capital	R&D expenses:

(including sales companies)

15.9 billion yen

(FY2021)

Ensure the survival ofexisting SBUs

Elastomers
	Strengthen products having acompetitive edge
	Raise the efficiency of eachproduction line
Specialty Materials
	Bolster our competitive edge
by developing products andincreasing production capacity

	CASE and MaaS	Healthcare and life science

1 	A high-level integrated use development model for C4 and C5
fractions, making use of Zeon’s unique technologies, including the GPB and GPI processes

Natural capital	Ensuring a stable supply of naphtha (an4 	Simulation technology that supports customer’s productdevelopment and evaluation activities (battery materials)

Social capital	Technology support for customers
	Collaboration with local communities

SDGs targeted by Zeon

Integrated Repor t 2022

	Providing products and services thatsociety cannot do without	Take vigorous action with the steps“Let’s try first,” “Let’s connect,” and“Let’s polish up”

	Energy conservation

FY2021 Results—OUTPUTS

361.7 billion yen
	Operating income:
44.4 billion yen

Business Areas
Existing Businesses

Specialty Material BusinessSpecialty plastics
Optical films
Specialty chemicals
Battery materials
Electronics materials
Toner
Medical devices

Elastomers Business	Synthetic rubbers
	Latex	Chemicals

New Businesses

Key Areas	CASE and MaaS	Healthcare and life science	Telecommunications (5G/6G)

Targets for 2030

50

	CO2 emissions:
% reduction(non-consolidated, as compared to FY2019, Scope1+2, estima	tion based on the GHG Protocol standards)

	Sales ratio of products that
contribute to the SDGs:
	Existing businesses:	Products that can contributetoward solving problems forsociety, including energy-saving
products, etc.

Core Values

Let’s try first

Zeon Group	Continuing to contribute toa sustainable society

Live up to the aspirations of employees	Telecommunications

Zeon’s Strengths and Competitiveness3 	A comprehensive, integrated development and manufacturing capability that covers every stage from plastics material
design through to component manufacturing using Zeon’s
unique technology (optical film, life sciences business, etc.)

17Live up to societal expectations

	Net sales:2 	Thoroughly clean plastics manufacturing technology(specialty plastics)

important raw material)	Reducing the amount of energy used in
production activities

Focus on 4 key areas

3. Work together to create “stages” to be active on	Keeping R&D and production activities inclose proximity

Directions for 2030
(what we want to be)

The New Medium-Term Business Plan —Group-wide Strategy(Group-wide, as of March 31, 2022)

HR development
	A human resources system that encourages
employees to challenge themselves

Value Creation—OUTCOMES

Zeon’s Business Model —VALUE DRIVERS

3,981



Contributing to the preservation of the Earthand the prosperity of the human race

VUCA*

Management Resources—INPUTS
Human capital
Employees:

Corporate Philosophy = Mission

Let’s connect

Let’s polish up	New businesses:

50%
ROIC 9.0%
Net sales+60.0 billion yen	Employee engagement:
75%(compared to FY2019)

	Ratio of foreign-nationaland female directors:

30% For more details about the Medium-Term Business Plan,
see P.25.

18

Message from the President
Zeon’s strengths, enabling us to overcome the changing business environment
in the medium to long term

Kimiaki Tanaka
President and CEO
Zeon Corporation* Based on an interview conducted on June 10, 2022.

Preparing for the Future with Sincerity

Key trends that warrant attention in the business environment in which our company operates include the growing
focus on the Sustainable Development Goals (SDGs) andthe acceleration of Volatility, Uncertainty, Complexity andAmbiguity (VUCA).
These trends can be expected to become even more
pronounced in the future. Our corporate philosophy and
Vision for 2030 will guide us to continue making steady
forward progress in this environment. Taking them as theaxis around which our operations revolve, and honing ourability to respond to change, is very important in terms ofenabling us to continue contributing toward the resolutionof social problems over the medium to long term, while also
continuing to grow as a company. There are two concrete
perspectives that we need to adopt. The first is to contributeto society through those of our businesses that are currently
already very strong, in other words by providing society with
innovative products that only our company can supply, andhaving customers use them. The second is to expand thosebusinesses that can respond to society’s needs in relation to
the realization of the SDGs or carbon neutrality.
Zeon’s strengths when it comes to business growth andenhancing corporate value are “original products and technology” that “cannot be imitated or imitated by others.” I
have believed this ever since I first joined the company.
Zeon has produced many innovative products and technologies, such as the GPB and GPI processes for separating
various types of materials from C4 and C5 fractions, ourhydrogenated nitrile rubber (HNBR) specialty rubber, andour optical film, which is made using an original extrusion
technique. Our stance, which we have cultivated throughout our long history, of continuing to pursue the creationof products that do not imitate others, and that others
cannot imitate, remains unchanged, and will remainunchanged in the future. I think that we can safely say that
this is one of our company’s strengths.
I feel that another of our company’s strengths is having
a corporate culture in which people are willing to listen to
the views expressed by young people. When I was still astudent, I happened to have the opportunity to talk toyoung employee of Zeon Corporation, a company that I had
not heard of until then. Intrigued by his comment, accompanied by a smile, that “Zeon Corporation is a company
where they listen to young people,” I visited the company,
and that was what led me to decide to seek employment
with Zeon. In point of fact, I am a product of this corporate
culture myself. Despite now being the President, I still have
many opportunities to listen directly to employees’ views in
relation to various projects, etc., and I never make negative
comments such as “That’s enough of that!” I believe that
this corporate culture of listening to young people has
been the foundation for the development of original products and technologies. The “Live up to the aspirations of
employees” element of our Vision for 2030 embodies adesire to continue maintaining this culture.

Zeon’s performance in FY2021 and our recent status
The attitude that underpins how I approach life can be summed up in one word: sincerity. I tell our
employees: “If you make a serious effort to pursue your dreams or your vision of the future, you cantransform everything.” Making a serious effort, in this sense, means sincerity. This is something that I
learned from my calligraphy teacher when I was a student, and from my homeroom teacher inelementary school, and it is a tenet that I have continued to hold to since becoming President and CEO
of Zeon Corporation.
During the discussion meetings that were held as a company-wide project when formulating ourcurrent Medium-Term Business Plan, I made frequent references to the meaning of sincerity. As I see it,
the suggestions that we received from the employees who volunteered to participate in these discussions
were all closely linked to our Core Values of “Let’s try first,” “Let’s connect” and “Let’s polish up.” So, I
feel that our Medium-Term Business Plan is based on sincerity, and I have high expectations of theimplementation of this plan. I hope that this kind of approach will continue to serve as the foundation
underpinning our company from 2030 onwards.

19

Zeon Group

Integrated Repor t 2022

In FY2021, not only did both our Elastomers Business andSpecialty Material Business benefit from consistently highdemand, there was also a favorable external environment
with the weak yen, and as a result we were able to post ourbest ever performance across a range of indicators fromnet sales to net income.
However, more recently, we have seen rising oil prices
due to the situation in Ukraine, and the yen has continued
to weaken against the U.S. dollar. Other raw materials
have also risen in price, and we have been affected by anumber of different impacts, including logistics disruptions.
Although Zeon does not have any production facilities in
Russia or Ukraine, we have still been indirectly affected by
the conflict.
As regards COVID-19, although the number of cases inJapan has been falling, our plants and offices in China havebeen affected directly by the lockdown, and indirectly
affected by the lockdowns that have affected Chinese industry in general. We have also had to pay close attention to theadditional impact of international events, such as the deteriorating relationship between the U.S. and Russia.

Furthermore, as noted in our financial statements forthe previous fiscal year, logistics issues such as the shortage of containers and rising sea freight costs have had amajor impact on our operations. Besides these factors,
which have increased our costs, there have been cases
where it has not been possible to ship goods on schedule.
In response to this situation, on May 1, 2022 we established a new Supply Chain Division. Whereas in the past
raw materials procurement and product delivery werehandled by separate departments, going forward we will
have a single unit exercising unified control over every
aspect of the supply chain. With the major changes taking
place in the external environment, we will be working toensure that we are not negatively affected by these external impacts, or that, if we cannot avoid their effects entirely,
we are at least able to minimize the impact.
To take an example, in the case of raw materials, wehave many products for which the raw materials are only
available from a limited number of suppliers. In fact,
because our company is focused on providing original
products and developing original technologies, in many20

Message from the President

Working toward carbon neutrality“ I believe that, over the medium to long term,

providing the world with large numbers of

products that contribute toward realizing theSDGs will help both to drive growth for ourcompany and to address social problems. With
this in mind, we have set ourselves the target of
having products that contribute toward the SDGs
account for at least 50% of our total sales, with
2030 as the target year for achieving this, and weare proceeding with discussions on theestablishment of a “System for Certifying
Products that Contribute Toward the Realization”of the SDGs.

cases we are dependent on only a single supplier for certain raw materials. In order to prevent this reliance on alimited number of suppliers from becoming a source ofrisk, we make sure that we maintain stockpiles of relevantmaterials, and we are examining strategies for securing

alternative suppliers. Regarding the issue of CO2 emissions
in the supply chain, given the need to collect and analyze
comprehensive data for the entire supply chain, and to
draw up and implement a supply chain strategy, we are
expecting the Supply Chain Division to play a key role here.

Zeon’s views regarding the electrification of the automotive sector
Zeon supplies components for use in vehicles across a wide
range of areas, and so the once-in-a-century transformationthat is taking place in the automotive sector can be expected
to have both positive and negative effects on our company.
Looking at recent trends in electrification of the automotive sector, it is apparent that the growth in sales ofbattery-powered vehicles is exceeding expectations. This is
an area where Zeon’s Energy Materials Business is particularly strong, with three main product categories: cathodebinders, anode binders, and functional layer materials.
With the process of electrification expected to continue forseveral decades, we have high expectations for the growthof our Energy Materials Business. At the same time, with
development of solid-state batteries (SSBs) continuing toprogress, we intend to develop carbon nanotube related
component businesses, so that our company’s materials
can be used in new sectors. For Zeon, therefore, the electrification of the automotive sector represents an opportunity to expand our business areas.
While demand for conventional vehicles equipped withinternal combustion engines is bound to shrink in the
future overall, there are some regions—such as Southeast
Asia and India—where there is still room for growth in thenear future, and we will be responding to these needs,

21

Zeon Group

Integrated Repor t 2022

including through the provision of technical services. Nevertheless, as the market for vehicles with internal combustion
engines starts to shrink, we will have to respond to this, andwe may be forced to withdraw from some market segments
where there are no factors that enable us to differentiate
ourselves from competitors. We will therefore be examining
all our products individually to determine whether there ispotential for differentiation.
Another important point is that both internal combustion engine vehicles and electric vehicles need tires thatoffer good fuel economy. Solution-styrene butadiene rubber(S-SBR), which is a raw material for making fuel-efficienttires, has been very well-received, and we anticipate that
this product will continue to do well in the future. Similarly, for air conditioning unit, suspension and gearbox
components, specialty rubber will continue to be used in
the future, regardless of whether the vehicle is an electricvehicle or not.
As I see it, the key points that we need to focus on with
our Elastomers Business in the future include addressing
the new demand that electrification stimulates and undertaking development of related new products, as well as
optimizing the business.

As a chemical manufacturer, the achievement of carbon
neutrality by 2050 is a vital issue for Zeon. To this end, we
spent the whole of last year considering how best to formulate our master plan for carbon neutrality, and in our
initial master plan we set ourselves the target of reducing
Scope 1+2 CO2 emissions by at least 50% by FY2030, compared to FY2019. While this target is a challenging one, italso represents an important milestone that we will needto pass in order to achieve carbon neutrality in the future.
By April 2022, four of our production facilities had
switched over to renewable energy for 100% of the electricity that they purchased ( P.27). Our other plants arealso proceeding with the adoption of renewable energy.
For those plants that are located within an industrial
complex, there is a need to coordinate the change withother companies in the vicinity. Zeon’s Tokuyama Plant has
already begun holding discussions in the Shunan Industrial
Complex where it is located. As regards our overseas production locations, in the case of ZCS* in Singapore, as
Jurong Island constitutes a single large industrial complex,
ZCS is participating in an island-wide plan to realize carbon
neutrality. This is being closely coordinated with the electric
power company to ensure a continued stable supply ofelectricity. Going forward, although the switch over to alternative forms of energy will be accompanied by increased
procurement costs, we will be able to market our products
as having reduced CO2 emissions.
* Zeon Chemicals Singapore Pte. Ltd.

Our current Scope 1+2 CO2 emissions currently standat approximately 780,000 t-CO2. By shifting over to green
energy, we can reduce this figure by around 80% by 2030.
To eliminate the remaining 20%, we will need to take on
various challenges in terms of energy-saving and process
improvement. We will meet these challenges by mobilizing
the combined wisdom of all our employees. Up until now,

we have implemented a series of measures that had
offered high cost-benefit performance. However, in orderto achieve further emissions reductions in the future, it will
unfortunately no longer be enough to implement emissions reduction measures on the basis of existing investment criteria, because of the issues relating to how long it
will take to recoup the cost of investment. In order toaddress this problem and proceed with related investment,
we will be adopting an internal carbon pricing (ICP) system
and we will be reflecting the amount of CO2 emissions
reductions that each measure can achieve in our investment return calculations.
For more details about the Carbon Neutrality Master Plan, see P.26.
 or more details about our internal carbon pricing (ICP) system,Fsee P.27.

As regards Scope 3 emissions, the reality of the situation is that there are many uncertainties regarding how
best to quantify CO2 emissions associated with the procurement of raw materials, and with the processing anduse of our company’s products by our customers. Accurate
estimation of Scope 3 emissions will need to be based afuture ruling by Japan’s Ministry of Economy, Trade andIndustry (METI), but we will be examining the existing strategic business unit (SBU) specific CO2 emissions reduction
measures and their effectiveness, and our Carbon Neutral
Endeavor Department will be making the necessary preparations for achieving visualization of the related data.
Regarding our efforts in relation to the circular economy,
we have developed technology for recycling cyclo-olefin
polymers (COP), which are used in a wide range of materials,
including optical film. We plan to have a COP recycling plant
operational at our Takaoka Plant by 2024. In addition, we
have begun to undertake joint research on creating raw
material for synthetic rubber from used tires and biomass.

Refining our existing businesses and exploring new business areas
I believe that, over the medium to long term, providing theworld with large numbers of products that contributetoward realizing the SDGs will help both to drive growth forour company and to address social problems. With this inmind, we have set ourselves the target of having productsthat contribute toward the SDGs account for at least 50% of
our total sales, with 2030 as the target year for achieving
this, and we are proceeding with discussions on the establishment of a “System for Certifying Products that Contribute
Toward the Realization of the SDGs.” As I see it, in order toachieve the objectivity and quantifiability that are needed inorder to be acceptable to society, there are three common
requirements: (1) Innovativeness; (2) Making a contribution
toward the particular SDGs that we are focusing on; and (3)Being capable of securing a positive reaction from society.
In addition to the above, I anticipate that products andservices that contribute toward at least one of the following will also be certified as contributing toward the realization of the SDGs: Responding to climate change or helping
to reduce the burden on the environment, and facilitating
effective utilization of resources or helping people to live
safely and contentedly. While the actual details of the certification system still need to be worked out, we will be adopting a flexible approach based on the current circumstances.
For more details of Medium-Term Business Plan measures, see P.25.

Our target for return on invested capital (ROIC) in our
existing businesses has been set at 9.0% by 2030. In pointof fact, in FY2021 we achieved an ROIC of 9.7%, partly due tothe weak yen. Going forward, it can be anticipated that there
may be a temporary fall in ROIC due to the implementationof investments, and there is a possibility that the target for
22

Message from the President“ Regarding our employees, they worked

tirelessly to keep production going during the
COVID-19 pandemic, and many employees are
currently participating voluntarily in theformulation of our new Medium-Term Business
Plan, so I would like to take this opportunity tothank all of the employees who have made such
unstinting efforts. Going forward, we willcontinue to attach great importance to our Core
Values of “Let’s try first,” “Let’s connect” and“Let’s polish up,” as we have done in relation to
the new Medium-Term Business Plan, and as afirst step I myself will be aiming to embody an”

example of sincerity.

2030 may need to be adjusted.
As regards our target of having sales in new businessareas increase by at least 60 billion yen by FY2030 compared to FY2019, as some of these new businesses have
only been got off the ground in FY2021, and as this is only
the first year of implementation of the new Medium-TermBusiness Plan, in absolute terms the new business sales
figures for the past year are not particularly high.
Besides developing our own technology in-house, we
are also aiming to strengthen our technological capabilities
by incorporating other companies’ technology. More specifically, this will involve M&A activity and investment instartups. The important thing is to ensure that there iscompatibility between our corporate culture and that ofthe partner company. We will be striving to develop an
in-depth understanding of the corporate culture so thateach business can continue to proceed smoothly, andgrow, after the initial investment.
Our initiatives in relation to new business areas are aimed
at cultivating businesses that can serve as an important newpillar of growth for our company in the medium to long term.
To this end, I anticipate that we will continue to expand ouroperations, looking ahead not just to 2030, but beyond thatto 2040 and 2050. Going forward, we will be strengthening
investment in four key areas—CASE and MaaS, healthcare
and life sciences, ICT (5G/6G), and energy-saving—including investment through M&A activity.

About our “work together to create ‘stages’ to be active on” strategy
The results of a survey conducted in FY2021 showed that
our employee engagement index stood at 52%. This is low
compared to our target for 2030, which is 75%. However,
the main purpose of the survey was to quantify the current
state of employee motivation, which will be a key driver for
us in working to enhance corporate value over the medium
to long term, and to identify areas where improvements canbe made. We are therefore taking a positive approach to the
FY2021 survey results, because they show that we have considerable room for improvement. In fact, we are looking
forward to seeing what kind of changes we will see as aresult of the measures that we implement in the future. I
believe that, to strengthen employee engagement, it isimportant to ensure that employees can visualize theircareer path, so that they can strive for personal growth in amore self-directed manner. With this in mind, we will be
23

Zeon Group

Integrated Repor t 2022

positioning “making job roles more transparent” as animportant current issue, and we will be making a start on
overhauling our personnel system for managerial staff,
taking “job roles” as the starting point.
When the COVID-19 pandemic began, we introduced ateleworking system, but there has been a problem with inadequate communication between employees. In response tothis issue, our head office building has been renovated andrenamed as “Z-SQUARE.” The aim is to transform the officefrom being merely a place for work, into a location for collaboration and co-creation related communication, and forthe holding of seminars and other educational and training
activities. My personal hope is that Z-SQUARE will be a place
where people can interact with sincerity, and which will help
to hone a new corporate culture.
Regarding the issue of diversity, we have launched a

DI&B Project, focused on the key themes of Diversity, Inclusion and Belonging. This choice of key themes reflects thefact that the project team that was brought together for
D&I promotion when formulating the new Medium-TermBusiness Plan considered a sense of belonging to theorganization to be important. The team’s proposal was
accepted, hence the inclusion of “Belonging” as one of thethemes. Zeon’s management team holds regular dialogs
with the DI&B Project team, aiming to deepen mutual
understanding, learn new approaches together and benefit from the stimulation provided.
Recognizing the need for concrete goals in order toform a diverse core talent pool, we have set new targets
for the female employee ratio and female manager ratio,
to be achieved by 2030. In both cases, the goal is to reacha ratio of at least 20% by 2030. As of March 31, 2022, only
13% of Zeon’s employees and only 5% of managers were
women. Going forward, we will be actively recruiting
women, including both new graduates and mid-careerhires, and we will also promote the appointment of women
to a wider range of positions beyond production line work.
However, our efforts to promote diversity will not be lim-

ited to gender. We will be implementing reforms with theaim of achieving real diversity, including the active recruitment of foreign nationals, persons with disabilities, andsenior citizens, while also aiming for diversity in terms ofskills and background.
 or more details about the “work together to create ‘stages’ to beFactive on” strategy, see P.29.
For more details about our human resources strategy, see P.43.

Regarding our employees, they worked tirelessly tokeep production going during the COVID-19 pandemic,
and many employees are currently participating voluntarily
in the formulation of our new Medium-Term Business Plan,
so I would like to take this opportunity to thank all of theemployees who have made such unstinting efforts. Goingforward, we will continue to attach great importance to ourCore Values of “Let’s try first,” “Let’s connect” and “Let’spolish up,” as we have done in relation to the new Medium-Term Business Plan, and as a first step I myself will beaiming to embody an example of sincerity, while striving togrow our businesses and the company.

Corporate governance and financial strategy
Zeon’s stock market listing has moved to the Prime Marketof the Tokyo Stock Exchange (TSE). The Prime Market ismore than just a rebranding of the old First Section of theTSE. It is best thought of as a market where listing is open
only to those companies that have demonstrated a highlevel of corporate governance. As befits a company listedon the Prime Market, we will be working to fulfil our mission with respect to not only our shareholders and investors, but all our stakeholders.
For the Board of Directors, we have set ourselves thetarget of having foreign nationals and women account for atleast 30% of all board members by 2030. As a first step in thisdirection, in June 2022 we appointed our first female director.
At the same time, besides diversity in terms of nationality andgender, diversity in terms of skills is also very important. Zeonhas for many years now held to an approach that emphasizes“having a Board of Directors characterized by diversity, withdirectors who have different backgrounds in terms of knowledge, experience and areas of special expertise.” In order torealize continued diversity of the Board of Directors, I
believe that it is vitally important to appoint directors who
possess these diverse skills, and to cultivate future candidates for board positions who have similarly diverse skills.
Our outside directors, who play an important role inproviding this kind of diversity of skills, have given us many
valuable opinions based on their extensive experience andknow-how, and they have made a valuable contribution
toward the management of the company. Zeon carries out
both quantitative and qualitative analysis of its own strategic
shareholdings on an annual basis, with the Board of Direc-

tors deciding whether such holdings should be retained. It
is also important to enhance share liquidity. In the future,when undertaking large-scale investments, we will consider
using stock as a source of funding for the investment.
Last year, we established the IR & SR Office as a dedicated contact window, to enhance communication withshareholders and investors. In this way, as I see it, we have
put in place an environment in which it will even easier forthe management team to listen to the views expressed byshareholders and investors. We will listen to these views withthe utmost seriousness, and I intend to continue engaging
in dialog with shareholders and investors while tackling thevarious management issues that the company is faced with.
As regards dividends, it has been announced that thecompany will be stepping up the returning of profits to shareholders in 2022. Our dividend policy emphasizing “stability
and continuity” remains unchanged for the time being.
Going forward, I hope to be able to continue returning profits to the shareholders who have supported our company,
while taking into account the company’s future operational
performance, cashflow situation and investment status, etc.
I look forward to receiving your continued support andencouragement in the future.

Kimiaki Tanaka
President and CEO
Zeon Corporation24

Progress of the Medium-Term Business Plan

Strategy 1

Overview of the Medium-Term Business Plan
In 2021, Zeon announced its Vision for 2030, and formulatedannounced key policies for implementation in 2021 and 2022.

three company-wide strategies to realize this vision.

In order to be able to adjust flexibly to changing circumstances

Zeon has also set targets for 2030, in line with the threecompany-wide strategies. To meet these targets, we havein this era of rapid transformation, the intention is to update
the key policies every two years.

Direction for 2030 and Company-wide Strategies

Regarding Strategy 1, in 2021 we formulated a preliminary

be estimating our Scope 3 emissions—which represents the

Carbon Neutrality Master Plan. We set emissions reduction

impact of CO2 emissions deriving from our purchasing of raw

targets for 2030, aiming toward the achievement of carbon

materials and from the processing and use of our company’s

neutrality by 2050. This target applies to the combined Scope

products, including any increase or decrease in this impact—

1 and Scope 2 emissions of Zeon Corporation. Going forward,

using an appropriate calculation method.

we will update this plan as necessary. In the future, we will also

Vision for 2030

Living up toSocietal Expectations

Promote a transformation of monozukuri torealize a carbon neutrality and circular economy

Living up to
the Aspirations of Employees

Progress in 2021

Targets for 2030

50.0% reduction in CO emissions

We drew up our preliminary
Carbon Neutrality Master Plan

2

Compared to FY2019 levels (Zeon Corporation’s Scope 1+2 emissions)

Directions for 2030 (what we want to be)
Continuing to contribute toa sustainable society

Providing products andservices indispensable to society

Take vigorous action with the steps“Let’s try first,” “Let’s connect” and “Let’s polish up”

Strategies

1

Promote a transformation ofmonozukuri to realize a carbon
neutrality and circular economy

2

Contributing toward
the solution of social problemsby “polishing up”
existing businesses and“exploring” new businesses

Carbon Neutrality Master Plan

By positioning low-carbon products as a source of value, and by creating value throughin-house emissions reductions and new product development, we will achieve carbon neutrality by
2050 and help to realize the resource-circulating society.

Value = Provision of products that contribute toward reducing carbon dioxide emissions

3
Create “Stages” on Which All Employees Can
Demonstrate Their Individual Strengths

In-house emissions reductions

New product development

Value creation

Scope 1+2

Energy saving, process innovation,and energy shift

Formulate 3 Strategies based on the directions for 2030

Scope 3Adopting alternative raw materials, and making productsthat contribute toward reducing emissions

2050 Carbon neutrality
Continuing to provide elastomers andhigh-functionality materials ina sustainable manner

Company-wide Strategies and Targets for 2030

1Strategies

Key Policies (2021–22)

Promote a transformation ofmonozukuri to realize a carbon
neutrality and circular economy

Formulate a master plan forachieving carbon neutrality looking
toward the year 2050

Targets for 2030

50.0% reduction in CO emissions
2

Compared to FY2019 levels(Zeon Corporation’s Scope 1+2 emissions)

Sales ratio of products that
contribute to the SDGs: 

2“Polishing up”
our existing businesses“Exploring” new businesses

Strengthen COP and battery materials
Ensure the survival of existing SBUs

Focus resources on key areas

Creating new businesses that
contribute toward the realization of
the resource-circulating society

Resourcecirculating
society

ROIC forexisting businesses: Net sales of
new businesses:

50%
9.0%

	Reducing Scope 1+2 emissions
Our strategy for reducing Scope 1+2 emissions combines

sources. Energy shift involves switching over to renewable

three approaches: (1) Energy saving, (2) Process innova-

energy or to fuels that has a non-fossil certificate* for the fueltion, and (3) Energy shift. The anticipated reduction rates

used in boilers, etc.

are 10% for energy saving, 10% for process innovation,*N on-fossil certificate: With a non-fossil certificate, the greenhouse gases generated in allprocesses from extraction through to fuel usage are offset by carbon credits, so on a
global scale, use of the fuel in question can be deemed to not generate CO2 emissions.

and 80% for energy shift, so the greatest benefits are
expected to be achieved through the shift to new energy

CO2 emissions (Unit: thousand t-CO2)+60 billion yen(compared to FY2019)

Targets for 2030

Scope 3Emissions associated with product use

50.0% reduction in CO emissions
2

Compared to FY2019 levels (Zeon Corporation’s Scope 1+2 emissions)

3
Work together tocreate “stages” to be active on

Providing a greater variety oflife choices

Employee engagement:

75%

Ratio of foreign-nationaland female directors:

30%

Scope 3Emissions associated withraw materials procurement

Energy saving,process innovation
Energy shift
To be set in the future

Scope 1+2
Emissions associated with manufacturing
2019

25

Zeon Group

Integrated Repor t 2022

778

2030

389
26

Progress of the Medium-Term Business Plan	Realizing the energy shift at five Zeon plants
in JapanIn April 2022, we shifted over to purchasing only electric
power generated from renewable sources* for four of our
production facilities in Japan (specifically, the Takaoka Plant,Himi-futagami Plant, Tsuruga Plant and Tokuyama Plant). In
addition, the Tokuyama Plant purchased a Green Heat Certificate. Furthermore, carbon-neutral municipal gas has been
adopted at the Takaoka Plant from April and at the Kawasaki
Plant from August. Through these initiatives, Zeon expects toachieve a company-wide reduction in annual CO2 emissions ofaround 120,000 t.
Other production facilities are also considering switchingover to renewable energy. We are also examining the potential
for making a similar shift at our overseas production locations.
* Electric power generated from renewable sources: Electricity derived from renewablesources such as hydroelectric power, solar power or wind power.

Himi-futagami Plant

Takaoka Plant

Tsuruga Plant

Kawasaki Plant

Tokuyama Plant	Adoption of internal carbon pricing

When it comes to reducing CO2 emissions, up until now, wehave implemented a series of measures that offered highcost-benefit performance. However, in order to achieve further
emissions reductions in the future, it will no longer be enoughto implement emissions reduction measures based on investment criteria, or on how long it will take to recoup the cost.
We are therefore adopting an internal carbon pricing (ICP)system, and for all capital investment projects we will bereflecting the amount of CO2 emissions reductions that the
project can achieve in our investment decisions, aiming topromote capital investment that contributes toward reducing
CO2 emissions.
Internal carbon price: 10,000 yen/t-CO2
Scope ofsystem application:

Capital investment that will lead to an increaseor decrease in CO2 emissions.

Method of application: The increase or decrease in CO2 emissions accompanying the capital investment project in question
will be converted into a monetary amount using
the internal carbon price, and this will be taken
into account when making the decision as towhether or not to invest in the project.

Strategy 2 -1

“Polishing up” existing businesses

By “polishing up” our existing businesses, we aim to achieve a
return on invested capital (ROIC) of at least 9.0% by 2030.
While we posted an ROIC of 9.7% in FY2021, we expect tosee a temporary fall in this figure due to aggressive investment, after which ROIC can be expected to rise again as theNon-volatile RAM (NRAM) is expected to make a major contribution toward the transformation of electronic devices
through optical technology, with the potential to reduce data
center power consumption to around 1% of its current level.
Making effective use of the properties of our single-walledcarbon nanotube products, Zeon Corporation has developed
technology that is aimed toward the commercialization ofhigh-speed NRAM with low power consumption and low

the realization of the circular economy, for example throughR&D which has been selected for inclusion as a NEDO Green
Innovation Fund Project.

27

Zeon Group

Integrated Repor t 2022

manufacturing costs, with the aim of commercializing thistechnology by the 2030s.

	Development of technology for recycling Cyclo
Olefin Polymers (COP)

Cyclo Olefin Polymers (COP) have a wide range of uses in optical lenses, optical film, and healthcare and life sciences applications, and represent a high-growth business for Zeon. We
have developed recycling technology that enables waste resin
generated during the optical film production process to berecycled. Waste resin can now be recycled to create product ofa similar quality to virgin resin, while maintaining high transparency and purity, which used to be a problem.
In October 2022, work began on the construction of arecycling facility within Zeon’s Takaoka Plant which will haveannual production capacity of 6,000 tons. The facility is
expected to begin operation in August 2024.

9.0 ％Particularly with regard to specialty plastics and battery materi-

We have adopted a strategy of “Bolster our competitive edgeals, two areas where there is steady high demand, we will be

by developing products and increasing production capacity,”

investing aggressively to strengthen productivity and resilience.

to ensure that existing SBUs survive and flourish.

Strengthening our production capability for specialty plastics

Mizushima Plant:	Production capacity increased by 4,600 tons per year
(July 2021)
Takaoka Plant:	Began work on construction of a recycling facility
with production capacity of 6,000 tons per year (dueto begin operation in August 2024)I ncreasing our production capacity for hydrogenatednitrile rubber

We are also looking to develop new applications for lithium-ion batteries,
and we are aiming to increase production capacity for hydrogenatednitrile rubber by around 10% (this additional capacity is scheduled tocome on-line in 2023).

Adding new production lines for optical film

We are positioning our original polymer design technology and sheet
extrusion method as key strengths. We are adding a new production
line, which is the world’s largest retardation film production line (due tobegin operation in October 2023).
Leaf alcohol is a material used to make synthetic fragrances that has awide range of uses in products such as perfumes, shampoos, and softdrinks. Increasing production capacity by 400 tons per year (coming
online in mid-2022).

Strategy 2 -2

“Exploring” new businesses

In exploring new areas, we are focusing on four key areas:munications (5G/6G), and energy-saving. We are aiming toincrease our sales in these four areas by at least 60 billion yen
by FY2030 (compared to FY2019).
Starting from FY2021, we are allocating a budget ofaround 100 billion yen over a ten-year period for investment in
new business generation, and funds will be made available asappropriate within this framework for investment in new business exploration.

	Establishing a Wholly-owned Subsidiary in the
U.S. as an Investment Firm
Zeon has established a wholly-owned subsidiary, Zeon Ventures
Inc., as an investment firm in Silicon Valley, California. The
new firm will be investing around US$50 million in startups in
Besides investment, Zeon will also be supporting theinvested companies by sharing the Zeon Group’s researchresources and other assets such as sales channels. ThroughResin made using Zeon’s newly-developed
recycling technology

2030
Net sales of
new businesses

healthcare and life sciences, CASE and MaaS, Telecom-

four key areas that Zeon is focusing on.

Resin made using conventional
recycling technology

ROIC

Increasing our leaf alcohol production capacity* The Green Innovation Fund Project system has been established by the Japanese government with the aim of bringing about a structural transformation of the energy sector and otherindustrial sectors, and accelerating innovation based on bold investment, to achieve the policy goal of reducing net greenhouse gas emissions to zero by 2050. Companies that undertake projects oriented toward these objectives can receive continued support over a period of 10 years at every stage from R&D through verification testing to social implementation.

	Using carbon nanotubes to develop
non-volatile memory2030	Ensure the survival of existing SBUs

R&D activity relating to carbon neutrality and the circular economy

Collaborative research by Zeon Corporation and Yokohama
Rubber has achieved the development of two new technologies—a highly-efficient method for making butadienefrom ethanol, and technology for making butadiene andisoprene from biomass material—with the aim of commercializing these technologies in the 2030s. Making butadieneand isoprene, which are the main raw materials for manufacturing synthetic rubber, from recyclable carbon resources
such as used tires and biomass will help to enhance resource
circulation in the tire and rubber industries, and will contributetoward the realization of carbon neutrality.

9.7 ％	Strengthen COP and battery materials

Strengthening our production capability for battery materials	Making rubber from used tires and biomass
raw material

ROIC

benefits from the investment make themselves felt.

It has been decided that a new production facility to manufacture
binder for lithium-ion batteries will be established by Zeon Chemicals
Asia Co., Ltd. (due to begin operation in 2024).

In order to realize the circular economy, there is a need to use
recyclable raw materials, or if products do have to be manufactured from hydrocarbons, then at least these products
should be recyclable. Zeon Corporation is contributing toward2021

the growth of these invested enterprises, Zeon will be exploring new businesses.
It is anticipated that Zeon Ventures Inc. will be investing an

2021
Net sales of
new businesses+60 billion yen(compared to FY2019)

Low(compared to FY2019)average of approximately US$3 million each in around 15
firms, mainly in the U.S., over the next three years.
Scope of investment

Healthcare and life sciencePromoting health tech utilization (health devices, personalized medicine, support for new drug creation etc.)
CASE and MaaSMobility, electric vehicles (EV), and batteries
Telecommunications (5G/6G)
5G and 6G implementation
Energy conservation
Accelerating R&D (MI, quantum computing, etc.)
Production technology automation (IoT, AI, robotics, etc.)
Green specialty materials (alternative plastics, recyclable chemical
products, etc.)28

Progress of the Medium-Term Business Plan	Developing new businesses in the healthcare
and life science area through M&A	Enhancing the performance of lithium-ion
batteries with carbon nanotube sheet

Zeon Corporation has acquired Aurora Microplates (head office:As an anode material, lithium-metal offers the advantage ofMontana, U.S.), a company that undertakes the manufacturing

having very high energy density. However, its performance inand sale of microplate, made from Cyclo Olefin Polymers (COP),

terms of safety and lifespan can be problematic, and so nor-

which is used in biochemical analysis.

mally the electrodes in lithium-ion batteries are made not from

Aurora Microplates had for some time been manufacturinglithium-metal alone, but from an alloy such as lithium cobalt

microplate made using Zeon’s COP as the raw material, and its

oxide. By using single-walled carbon nanotube sheet, Zeon

products have won a high reputation in Europe and North

has succeeded in developing technology that solves the prob-

America for the high level of value-added that they provide.

lems which can occur with lithium-metal anodes when

Through this acquisition, it is anticipated that it will bepossible to generate synergies in future product development,

charging or discharging, thereby enhancing capacity, lifespan,charging/discharging rate and safety.

and Zeon is also aiming to make effective use of Aurora Micro-

We are currently providing sample materials for the devel-

plates’ customer network to develop the European and Ameri-

opment of lithium-metal electrodes, with the aim of achieving

can healthcare and life sciences markets. We are aiming tocommercialization by 2024.

Creating a head office building where a wide
range of views can be canvassed
With the recent renewal of our head office building, a newissue that we faced was how to create opportunities forwhere people can form linkages with one another,” in line

communication and collaboration, given the widespreadwith the concepts of “Let’s connect” and “Let’s polish up.”adoption of teleworking as a formal system for which was
put in place in April 2021.
To address this problem, we launched an Office Renewal

The new head office building’s name, “Z-SQUARE,” waschosen by asking employees to suggest appropriate names.
The new head office building has been positioned as a

Project, with project team members selected from a wide“square” which will play a central role in realizing the things

range of departments. After repeated discussions over athat are important to us as a company: “Let’s try first,” “Let’s

period of around one year regarding our corporate philoso-

connect,” and “Let’s polish up.” Our concept is for Z-SQUARE

phy, company-wide strategies, our vision for the future andto serve as a multi-purpose facility where a wide range ofthe desired new workstyles, it was decided that the new headpeople can meet, work, chat, hold discussions, refresh

office building would be transformed into a “central hub

themselves and participate in special events.

achieve annual sales of around 7 billion yen for the same
applications within five years’ time.

Strategy 3Work together to create “stages” to be active on

Issues that need to be discussed in the future

The employee engagement survey that we conducted in 2021

employees with more options as to how to live their lives, we

showed that Zeon’s employee engagement index stood at justare laying the foundations for creating “stages” on which

52%. From this survey, it became clear that the main issue was

employees can be active and fulfil their potential.

the environment in which employees work. By providing* The target values shown here for the female employee ratio and female manager ratio
are the values announced in Zeon’s Corporate Governance Report, published in
November 2021; they are not newly-set targets.

FY2021 data

Employee engagement index:

Targets for 2030

52%

13%
Ratio of female managers: 5%

Ratio of female employees:

Employee engagement index:

75%

Ratio of foreign-national and female directors:

30%

First female director appointed (June 2022)
Started work on clarifying job descriptions
Expanded the cafeteria plan
Formulated a Declaration for Health and Productivity Management and Code of Conduct for Well-being (October 2021)
Renamed our existing project as the DI&B Project
Examined workstyle reform programs suitable for a wide range of working environments, including factory environments
For more details about our human resources strategy, see P.43.
Integrated Repor t 2022

Adopting a system for certification of products that contribute toward the realization of the SDGs
Zeon views the SDGs as representing society’s expectations. By

products that contribute toward the realization of the SDGs. We

implementing measures that contribute toward the realization ofare proceeding with the examination of the key requirements

the SDGs, we are aiming to achieve our Vision for 2030. To thisfor certification, emphasizing the objectivity and quantifiability

end, we are considering the adoption of a certification system forthat we will need in order to secure society’s approval.

SDGs targeted by Zeon

20%
Ratio of female managers: around 20%

Z-SQUARE head office renewal project (opened in April 2022)

Zeon Group

tives for 2030 are as follows.

Ratio of female employees: around	Main initiatives to lay the groundwork for building “stages” for new workstyles

29

Going forward, the three key issues that will need to be discussed at the level of senior management in order to realize our objec-

Ensuring the diversity of the Board of Directors
We have adopted a stance that emphasizes the need tovalue over the medium to long term, we recognize the impor-enhance the diversity of the membership of the Board oftance of diversity in terms of nationality and gender, and we

Directors across the board, to ensure that the board has theare proceeding with the necessary selection and cultivation ofskills needed to realize the Medium-Term Management Plan.

talented individuals.

From the perspective of maintaining and enhancing corporate

Clarifying our financial strategy
We will be proceeding with a close examination of our financial strategy, with no areas being off-limits, including cash flow andstrategic shareholdings.
30

Business Strategy
Message from the Director &Senior Corporate Officer
Elastomers andChemicals BusinessMessage from the Director &Corporate Officer
Specialty BusinessKazuyoshi Matsuura

Yuichiro Konishi

Director & Senior Corporate Officer

Director & Corporate Officer

Elastomers and Chemicals BusinessSpecialty Business Division Manager- Specialty Plastics

Zeon’s specialty rubber products are widely used in vehicles
equipped with internal combustion engines. Demand for this typeof vehicle is forecast to grow in the near term, particularly in the
Asia region, but over the long term, demand is expected to gradually decline. By contrast, adoption of electric vehicles (EVs) is proceeding very rapidly.
In the period of more than 60 years that has elapsed sinceZeon became the first company in Japan to successfully produce
synthetic rubber, we have supported the development of the global
automotive sector as a leading manufacturer of specialty rubbers.
However, with the continuing trend toward the electrification of thepower train, we now find ourselves facing a major transformation.
One of the group-wide strategies outlined in Zeon’s Medium-TermBusiness Plan, looking ahead to the year 2030, is to “polish up”
existing businesses. As part of our efforts in this regard, in April
2022 we conducted an organizational restructuring, with theEnergy Materials Division, which handles battery materials, being
placed under the Elastomers and Chemicals Business Headquarters, to which the Elastomers Division belongs.

Development of our company’s battery materials has proceeded
by integrating the polymer development technology cultivated byour synthetic rubber business with the dispersion technology
developed in our synthetic latex business. There is also a highdegree of affinity between the battery materials business and theelastomers business in terms of the fact that the automotive
market is a key market for both businesses. Going forward, we will
be working to enhance the synergy generated between these twobusinesses, including with respect to production locations, and wewill be refining these two businesses, which are already verystrong, to make them even stronger.
Customer needs and market demand are constantly changing. We
will be working to differentiate ourselves through our products,
our responsiveness to customers’ requirements, and the ways inwhich we provide value to customers. By leveraging the combined
capabilities of our Elastomers and Chemicals Business Headquarters, we will continue to make a contribution toward a “Sustainable
Earth” and a “Safe and Comfortable Life for People.”

Elastomers Business(million yen)
250,000

194,570

Net sales(million yen)(million yen)(million yen)

25,000120,000

30,00022,169200,566

198,087

20,000178,847

100,000

18,623

17,691

15,000100,000

12,283
9,642

10,00050,000

5,000

2018

2019

2020

Operating income

106,791
86,47985,142

91,74926,36095,46525,00020,00080,000150,0002017

A further aspect of the Medium-Term Business Plan is to “explore”
new businesses. As long-term strategies in this regard, we arefocusing on launching and expanding sales of high thermal interface materials (TIM), carbon nanotube products, and COP film.
As semiconductor performance has improved, controlling theamount of heat generated by semiconductors has become more
important. Our aim with TIM is to achieve a thorough solution tothis problem. Regarding Zeon-developed carbon nanotubes, weare proceeding with the development of applications that makeeffective use of their strengths, and we are focusing on developing
and building new markets. Film made from COP is already being
used for displays, but we are now working on market developmentthat exploits the advantages of COP film in new applications suchas electronics and the life sciences, aiming to realize effective
market entry.

Operating income

161,626

0

semiconductor market. In particular, by developing technology forrecycling CPN, we are working to strengthen our supply capability
using recycled CPN.

Specialty Material Business
22169
17691
9642
12283
18623

Net sales

200,000

Zeon’s Specialty Business handles materials and components thatprovide high value-added because of Zeon’s outstanding polymer
design and processing technology capabilities.
We put a particular focus on Cyclo Olefin Polymers (COP),
optical film, and specialty chemical products, to “polish up” existing
businesses as part of our Medium-Term Business Plan. The key
issue facing us at present is to further strengthen these areas.
With COP, we are aiming to further expand the business bystrengthening our production capacity to fully meet demand overthe near term and medium term. We are prioritizing sales inmarket segments where COP is able to differentiate itself effectively from rival products in terms of product applications, and also
allocating research resources to expand market share.
We are also expanding our production capacity for optical film
to grow the business, while working to reduce costs for existingproducts and striving to improve profitability.
As regards specialty chemicals, we are seeking to enhance oursystem for supplying cyclopentanone (CPN), a cleaning agent usedin semiconductor production, in response to the growth of the

2021

(FY)

0

2017

2018

2019

2020

2021

(FY)

60,00015,00040,00010,00020,000

5,000

0

2017

2018

2019

2020

2021

(FY)

0

21,96016,742

201716,1152018

17,311

2019

2020

2021
(FY)

31

Zeon Group

Integrated Repor t 2022

32

Business Strategy

Individual Businesses—Issues and Plans

Elastomers Business

Chemicals BusinessZeon’s Elastomers Business handles synthetic rubber,the main uses for which are in vehicle tires andvarious other rubber products, and synthetic latex,
which is used in rubber gloves, etc. We have acomprehensive line-up of different product categories
and grades to meet a wide range of needs.

Zeon’s Chemicals Business has developed productsthat include petroleum resin and thermoplastic
elastomers, which are used as raw materials foradhesive tape, labels and adhesives, as well as
polymerized toner, which is used in printers andmultifunction office machines.

The competitive strengths of Zeon’s products inrelation to social issues and needs
Synthetic rubber is mainly used for automotive applications. With
regard to automotive component applications, although demandfor components for vehicles that use conventional internal combustion engines remains strong at present, over the medium- tolong-term, with the shift toward EVs, the quantity of existing products that we will need to supply can be expected to fall, while atthe same time it can be anticipated that there will be changes in
the quality required for components intended for EVs.
As regards latex glove applications, overall demand has
expanded because of the enhanced hygiene consciousness thathas resulted from the continuing COVID-19 pandemic. Although
the temporary, sudden spike in demand that COVID-19 caused
has eased off, going forward, we can expect to see an increase indemand for gloves that do not cause an allergic reaction when worn.
At the same time, with rising environmental awareness, there are
growing demands for products to demonstrate more sustainabilityconsciousness, in terms of reducing the CO2 emissions generated in
raw materials procurement and in production processes, and interms of resource recycling, etc. When it comes to responding tothese kinds of societal issues and needs, I believe that the competitive advantage of the Elastomers Business lies in the following areas.
	Global brand awareness based on high quality standards(customer recognition)
	A comprehensive C4 fraction product line-up, with products thatare cost-competitive as a result of stable, high production
capacity utilization	Adoption of CO2 emissions reduction technology in our own
production processes

Production and R&D Locations ofZeon’s Elastomers Business andChemicals Business
Production location	Ability to provide energy usage reduction proposals for customers’
processes based on our high level of polymer know-how

Future issues and initiatives
The main risks and issues facing the Elastomers Business include
the supply chain disruption and rising logistics costs resulting
from the COVID-19 pandemic and the situation in the Ukraine, andthe need to respond to requests for localized production.
There is also the falling demand for crude oil that has accompanied the shift toward new energy sources in order to achievecarbon neutrality. With naphtha production volume falling, theprocurement costs for the C4 and C5 fractions which serve as
Zeon’s raw materials have risen, and there are concerns aboutprocurement difficulties. At the same time, there is a risk that the
adoption of more environmentally-friendly products and of new
recycling technology may lead to increased costs.
We are positioning these risks and issues as opportunities tocreate new value, and we are proceeding with the following measures.

Japan

Our strategic policy for FY2022 is “Let us all work together toovercome the challenges presented by the changing businessenvironment and make a positive contribution to society by promoting new products and new business models that help to realize the SDGs, and by achieving our financial objectives for thisfiscal year.” In order to generate new business with a supply chainthat extends from raw materials through to exported products, weare formulating hypotheses regarding product functions andbusiness models that can help to reduce the “loss” to society interms of logistics and energy, and we are proceeding with Proof ofConcept (PoC*) testing.
With regard to our existing label and special tape markets, ourwatchword is to "contribute to society through differentiatedproducts such as Asymmetric SIS,” and we will meet customers’
needs with great attention to detail through down-to-earth daily
sales activities and technical service provision.
The Medium-Term Business Plan emphasizes the concepts of“Let’s try first,” “Let’s connect,” and “Let’s polish up.” Rather thanallowing ourselves to be constrained by existing technologies andfacilities, or limiting ourselves to those that we possess in-house,
we need to pool our wisdom with that of many external partners,
so that we can begin to absorb new technologies and knowhow
from all around us.
* Proof of Concept: Implementing in-depth testing to confirm whether a new idea isactually viable, before it is implemented.

Asia	Zeon Chemicals(Thailand) Co., Ltd.
Petroleum resins

Takaoka Plant	Zeon Advanced
Polymix Co., Ltd.

Specialty rubbers

Rubber compounds

Mizushima Plant

	General-purpose
rubbers, thermoplastic
elastomers, andpetroleum resin

Tokuyama Plant

	General-purpose rubbers,
specialty rubbers, and latex

Zeon Group

Initiatives in FY2022

In order to realize our vision for 2030, we are targeting our activities
at four market areas: the three existing markets of labels, special
adhesive tape and diapers, and the development of new markets.
The strategies that we have formulated for addressing thesefour markets are: 1 Realizing various different types of adhesive
solutions by offering proposals for new products and services thatmake effective use of Zeon’s product design and adhesive compounding and design knowhow, and of the special properties ofZeon’s original Asymmetric SIS, for individual customers and forthe supply chain as a whole; 2 With respect to new markets,making the best use of the special characteristics of Zeon products, which are “user-friendly and soft,” to contribute towardmaking people’s lives more comfortable and more convenient.

	Developing new product applications in response to the trend
toward EVs
	Formulating solutions for optimized production systems in
response to supply chain disruption and raw materials procurement difficulties
	Strengthening production capacity for products where we areparticularly strong (such as hydrogenated nitrile rubber)	Development of technologies aimed at the realization of carbon
neutrality (including twin-shaft drying , eliminating the need forsecondary vulcanization and development of recycling systems
for tires.
For more details, see P.27, bio-rubber development)

R&D location

33

Chemicals Business Strategy

Integrated Repor t 2022

Kawasaki Plant

	Specialty rubbers
and latex

 esearch &R
Development
Center	Zeon Chemicals
Asia Co., Ltd.
Specialty rubbers

Americas
Shanghai Zeon Co., Ltd.

Rubber compounds	Takehara Zeon (Shanghai)Co., Ltd.

	Zeon Polymix (Guangzhou)Co., Ltd.
Rubber compounds

Zeon Chemicals Singapore Pte. Ltd.

General-purpose rubbers

Zeon Polymix Inc.

Rubber compounds

	Zeon Chemicals L.P.
Kentucky Plant

Rubber compounds

Asia Technical Support Laboratory	Zeon Chemicals L.P.
Texas Plant
Specialty rubbers

Specialty rubbers

 eon Chemicals L.P.
Z
R&D Center	Zeon Chemicals L.P.
Mississippi Plant
Specialty rubbers

34

Business Strategy

Individual Businesses—Issues and Plans

Specialty Plastics &Components Business

Battery Materials BusinessIn the Battery Materials Business, we provide anodebinder and cathode binder for lithium-ion batteries(LiB), as well as functional layer materials and battery
seal materials. While there has been rapid growth indemand for applications relating to plug-in hybrid
vehicles (PHVs) and other types of EVs, we are also
developing applications for PCs and mobile devices,
as well as for energy storage systems (ESSs) for use
with renewable energy.

Zeon provides the Cyclo Olefin Polymers (COP) that
we developed independently for use as a material inproducts such as optical lenses and medical devices.
We also process COP to develop high-functionality,
high-value-added optical film, and this has grown tobecome a core business for our company.

The competitive strengths of Zeon’s products“Polishing up” existing businesses“Exploring” new businesses

COP is mainly sold for use in optical applications and medical
applications. Our first priority is to grow our market share in these
two market segments, with the ultimate aim of having Zeon products become the de facto market standard.
For optical applications, we are positioning medium- andlarge-sized lenses (such as lenses for AR/VR and security camera),
for which Zeon’s COP is particularly well-suited, as important applications, and we are aiming to expand our market share in thisarea. With regard to small lenses (such as those used for smartphone cameras), we are developing new grades of COP products
and bringing them onto the market, with the goal of further
increasing our market share over the medium- to long-term.
In terms of medical applications, we are working to expand
our market share, focusing mainly on pre-filled syringes.
We have also developed COP recycling technology, and wehave begun construction of a recycling plant, aiming to begin
commercial operation by August 2024. For more details, see P.27.
To respond to an anticipated increase in demand for opticalfilm made from COP over the medium- to long-term, we are working to increase our production capacity in this area, aiming toramp up production in October 2023.

In regard to the semiconductor market, particularly in relation tosilicon wafer container applications, besides working actively toincrease our market share in our existing product grades, we are also
aiming to have our products become the de facto market standard.
As regards medical applications, in order to achieve a further
increase in sales, by developing new grades of product and bringing
them onto the market, we are aiming to boost our market share interms of vials and containers for use in biomedicine manufacturing, market segments which are expected to grow in the future.
In addition, as a vertical integration strategy, we are working toenter the life sciences sector (including microplate and microfluidic
devices) not only with sales of resin products, but also with finished
COP products, such as injection molding products and films.
In exploring new businesses and new applications, besides
developing our own original technologies, we are also working
actively to adopt technologies from third parties, and we are also
positioning M&A as an important strategy.

With strengths that include the polymer design and manufacturing technology that Zeon has cultivated over the years, as well as
the battery evaluation and analysis technology that we worked tostrengthen after LiBs began to appear on the market, Zeon’sbinder materials have played an important role in supporting theincreased functionality of LiBs.

Future issues and initiatives
In FY2021, the EV market benefited from policy support intended
to help realize carbon neutrality, and there was rapid growth,particularly in Europe and China. LiBs are the “heart” of an EV, andthe battery manufacturers are proceeding with development work
aimed at realizing rapid charging, long product lifespan, highcapacity and enhanced safety, with reasonable production costs.
Zeon recognizes the need to secure long-term demand in the
LiB market, which is expected to continue growing strongly in the
future, and we are working to expand and strengthen our business foundations in this area.
With regard to new product development, we are working tostrengthen development of water-based binders, an area where

Specialty plastics

Increased production capacity– Work completed in July 2021

Established a recycling plant– Due to start operation in August 2024

+4,600 tons

+6,000 tons

Zeon’s Specialty Chemical Products Business is activeon the global stage with unique fine chemical
products in two core areas—aroma chemicals andspecialty chemicals—which grew out of integrated
utilization of C5 fractions.
The competitive strengths of Zeon’s products inrelation to social issues and needs

Mizushima Plant

Takaoka Plant

Optical films
World’s first plant to adopt the sheet
extrusion process
Increased production capacity– Due to start operation in October 2023
2

Production capacity:
Increased to 269 million m2 (year)

35

Zeon Group

Integrated Repor t 2022

Battery materials
Decided to establish a new production
facility to make binder for use in LiB.
Preparations are underway to begin
production in 2024.

Zeon Chemicals Asia Co., Ltd.

Specialty Chemical Products BusinessSpecialty plastics+50 million m

Zeon excels, to secure and maintain high market share. Besides
binder for cathode and anode active material, and binder forheat-resistant separator layer, we are also rolling out new products
such as AFL®, a functional layer material that joins the electrodes
to the separator, and we are working to replace solvents withwater in production processes. We are also proceeding with thedevelopment of unique technologies in areas other than bindermaterial, and verification testing is underway at the large-scalebattery level. In addition to “polishing up” our existing binderbusiness, we are “exploring” the potential for new businesses inthe LiB market, and we continue to develop new product proposals aimed at enhancing battery performance.
On the manufacturing side, we are responding to the growing
demand for localized production, and we are working to put in placea truly global supply system. One element in this strategy is thedecision to invest in the establishment of a battery binder production
facility at Zeon Chemical Asia Co., Ltd., which is scheduled to start
production in 2024. Additionally, we are proceeding with efforts toincrease the production capacity of our production facilities in Japan.

Tsuruga Plant

Risks affecting the Business as a whole include increased logistics
and raw materials procurement risk as a result of the current
geopolitical instability, and the growing demand for product recycling deriving from the increase in societal initiatives aimed atrealizing the circular economy. Given these circumstances, it canbe anticipated that the aroma chemicals business will continue to
see a steady increase in demand for fragrance and flavoring applications, accompanying the population and GDP growth in emerging economies. With regard to specialty solvents, a generational
shift is underway in the solvent products used for chemical synthesis processes, as a result of increased global environmental
awareness, and it is anticipated that there will be growing demand

for more environmentally-friendly solvents.
Factors that can help to enhance the competitive strength of
our company’s products in relation to these needs include the costcompetitiveness deriving from our project to develop more closely
integrated use of C5 fractions, as well as other factors based on this,such as our strong global brand (i.e., high name recognition among
potential customers) deriving from our ability to provide a stablesupply of high-quality synthetic chemicals, and our extensive rangeof five-membered ring based solvents (including Cyclopentanone
and Cyclopentyl Methyl Ether) in the specialty solvent segment.

Future issues and initiatives
Issues that we will face in this business going forward include theneed to strengthen production capacity in response to growing
demand, and the need to enhance measures to help realize thecircular economy and carbon neutrality. In the aroma chemicals
business, we are working to increase our leaf alcohol production
capacity, with the new production facility having been completed
in July 2022. In the specialty solvents segment, we are working toincrease demand through sales promotion activities that emphasize how environmentally-friendly Cyclopentyl Methyl Ether is.

36

Business Strategy

Individual Businesses—Issues and Plans

Electronic Materials Business
In Zeon’s Electronic Materials Business, we have rolled
out four product categories: coating insulationmaterials, photoresists, electron beam resist, andetching agents (C5F8). The electronic materials sector(which includes the semiconductor market) is expected
to see steady market growth in the future, across a wide
range of applications that include not only conventional
consumer applications such as PCs, but also in-vehicle
devices, etc. Given this market environment, in orderto realize the goals of the Medium-Term Business
Plan, we are addressing the following issues.
“Polishing up” existing businesses
While continuing to expand the market for our four main productcategories, we will also be working actively to develop and begin
production of new products, which in turn will lead to continued
growth. For example, our ZEOCOAT® coating insulation material
has Zeon’s own COP as the main base material, and we are alreadydeveloping the Japanese and overseas markets for display applications such as touch sensors. By making effective use of COP’s
lower water absorption and its electrical properties, we will beworking to develop new applications in the high-speed communications sector.

Other Businesses
Our ZEP series positive electron beam (EB) resist is a productspecially developed for use in next-generation electronic components. As ZEP is a main-chain scission type resist, it allows holes tobe cut with more precision, and because the reaction is a simple
one, there are few defects. Volume production of the ZEP series
has already begun, and we have plans to develop applications that
include compound semiconductors for 5G mobile communications.

“Exploring” new businesses
We are also focusing on the development of new products, andexpanding sales of such products. For example, we are working to
expand sales of our high TIM, which were developed by making
effective use of the elastomer technology that Zeon has accumulated. For more details, see P.4. By comparison with conventional
grease-based thermal interface materials, Zeon’s TIM products
excel in terms of having good thermal conductivity (38W/mK forstandard models) in the Z axis, high durability, and superior workability. Besides the high-output server market, we are also working
to develop the market for materials for thermal interface solutions
that address the problems caused by the trend for devices to get
smaller, and the trend toward high-speed communications.
In addition, we are utilizing Zeon’s original polymer technology
to proactively develop product proposals for the semiconductor
market, where the process of miniaturization is expected to continue in the future.

The competitive strengths of Zeon’s products
Zeon’s ZEONANO® carbon nanotube products are single-walledcarbon nanotube (SWCNT) products manufactured using the revolutionary Super Growth Method discovered by Japan’s National
Institute of Advanced Industrial Science and Technology (AIST) .
They offer several advantages, including large surface area, length,
and high purity, and we anticipate developing a wide range ofapplications for them in the energy sector and electronics sector.

adopted by NEDO as a fund project. We are aiming to establish
NRAM as an alternative to DRAM that offers low power consumption, higher capacity and lower cost, with the goal of achievingsocial implementation in the 2030s. We expect NRAM to make apositive contribution toward the development of carbon-neutral
data centers and toward the realization of a sustainable society.
Besides manufacturing and selling SWCNT-related products,
we are also working actively to ensure society’s acceptance ofcarbon nanotubes by evaluating product safety and biodegradability and disclosing this information.
SWCNT safety information

https://www.zeon.co.jp/en/business/enterprise/nanotube/

FY2022 initiatives
Zeon is combining SWCNT with various other materials todevelop materials and products with new properties. We havealready commercialized conductive silicon rubber for medicaluse, which integrates SWCNT with silicone rubber. We are proactively conducting joint research with a number of companies andresearch institutes. By making effective use of the high purity
that characterizes Zeon’s SWCNT, we are developing hybrid materials such as clean, anti-static polytetrafluoroethylene (PTFE) andmaterials for use in electricity storage devices (such as lithium-ion
batteries). For more details, see P.29.
In addition, our research aimed at the commercialization of
non-volatile memory (NRAM) that uses carbon nanotubes has been

37

Zeon Group

Integrated Repor t 2022

All other businesses
Net sales

Operating income(million yen)(million yen)

70,0003,500

60,00053,92856,73357,822
46,9772,500

40,0002,000

30,0001,500

20,0001,000

10,000

500

0

2017

2018

2019

2020

2,786

3,000

53,47350,000

3,206

2021

(FY)

0

2,098

2017

2018

2019

2,156

2020

2,318

2021

(FY)

Zeon North

Carbon Nanotubes (CNT) Business
Carbon nanotubes (CNT) are a material invented inJapan that are expected to have a wide range ofapplications, because of their light weight, highstrength, and good electrical and thermal conductivity.

Those business segments that do not fall under either the Elastomers Business or the Specialty Material Businessare classed as Other Businesses. These include, for example, RIM compounds, RIM moldings, coating materials,
packaging materials, building materials, engineering services and trading. These businesses are mainly handled bygroup companies.

A wearable device that combines silicon rubber with CNT

Zeon North Co., Ltd. has its head office in Takaoka City, Toyama
Prefecture, and has seven business locations throughout Japan. Its
core business area is engineering, which accounts for over 70% of
total annual sales.
Zeon North’s engineering business include construction ofvarious types of plant facilities, air conditioning and sewage
system installation, general building construction, etc. In recent
years, Zeon North has built up an impressive track record withaluminum structures, with a particular focus on aluminum roofing.
More specifically, Zeon North installs roofs and covers to protect
water storage facilities such as water purification plants fromthreats such as terrorist attacks involving contaminants, and deterioration in water quality caused by algae. The need for covers is
becoming steadily more apparent, and it is anticipated thatdemand will continue to grow throughout Japan in the future.
Aluminum is durable but lightweight, and does not rust even whenit comes into contact with chlorinated drinking water; it is alsoeasy to recycle and reuse. Aluminum can thus contribute toward
the realization of SDGs No. 6 “Clear water and sanitation” and No.
12 “Responsible consumption and production.”
Zeon North has also undertaken the design and constructionof a rotary-type melting furnace that can be used to melt andrecycle aluminum that has been used in vehicles or electricalequipment; Zeon North leads the industry with this original technology. Zeon North’s meting furnaces make it possible for nearly
100% of used aluminum to be recycled, and will contribute toward
the realization of the carbon neutral society.
Zeon North has also established a trading business as asecond main business area, and is developing a unique productlineup that includes the sale of Zeon North’s original “Handnutter® ”
safety tools and “Flangeopener® ”, as well as the sale and installa-tion of the company’s coating agents, which provide high durability and superior chemical resistance.
Zeon North’s third main business area is the environmental
analysis business. In areas that include waste water, air, noise andvibration testing, as well as operating environment testing to support
operators’ health and safety compliance, Zeon North has a large
team of operatives with professional certification, who are contributing toward safeguarding the environment and workers’ health.
Going forward, Zeon North will continue to develop innovativetechnologies, providing high-quality services that customers cantrust. Zeon North aims to be a vigorous company that makes aneven bigger contribution toward the realization of carbon neutrality and the SDGs, which isappreciated by society, andwhich is full of highly-motivated, healthy employees.

Aluminum cover installed
at a water purification plant

Rotary-type melting furnace
for aluminum38Research and Development
Zeon’s Research and Development Center (R&D Center) is responsible for undertaking the Zeon Group’s
research and development activities. One aspect of our 2030 Vision is to “provide products andservices indispensable to society,” and to realize this goal, we are proceeding with R&D to “polish up
existing businesses” and “explore new businesses.”Aiming to Continue Creating
Innovative Products and Services

Tetsuya Toyoshima
Director & SeniorCorporate Officer
Research & Development
Division Manager – Research& Development Center

In order to realize Zeon Corporation’s corporate philosophy of“Contributing to the preservation of the Earth and the prosperityof the human race,” the R&D Headquarters mission is to provide, without interruption, innovative products and services thatmake a positive contribution toward a “Sustainable Earth” and a“Safe and comfortable life for people.” The R&D strategy that
we are following to achieve this goal can be explained in termsof four aspects: Key R&D fields, organizational structure, promotion methods, and effective utilization of human resources.

R&D expenses(billion yen)

Our Basic Philosophy
for R&D“Contribute to society bycreating world-leadingbusinesses throughdeveloping unique
technologies in the specificfields in which Zeon excels.”

15.1

2017

16.5

2018

15.3

14.3

2019

2020

15.9

2021

(FY)

1 	Key R&D fields: Zeon has identified Medical & Life Sciences,

R&D Structure
Research &Development Center

Elastomer Laboratory
C5 Chemicals Laboratory
Advanced Performance
Materials Laboratory
Specialty Chemicals Laboratory
Specialty Plastics Laboratory
Precision Optics Laboratory
Cell Bioscience Laboratory
Composite Material Laboratory
CNT Laboratory
Medical Laboratory
Manufactured ProductDevelopment Laboratory
Incubation Center
Analytical Technology Laboratory
Production Technology Laboratory
Carbon Neutral Laboratory* These five units on the rightare horizontal organizations,a type of organization which is
explained in item 2

R&DX“MONOZUKURI” Studio
Mobility Studio
Medical & Life Science Studio
R&D Planning
R&D Administration

39

Zeon Group

Integrated Repor t 2022

Mobility, Telecommunications, and the Circular Economy,
as areas where our company can effectively exercise its
strengths to help realize the SDGs.

2 	Organizational structure: In 2021–2022, we have establisheda number of horizontal, inter-departmental organizations that
extend over all of the units under the R&D Center, with the aimof generating new research topics in key fields. These neworganizations have researchers from multiple different laboratories assigned to them concurrently with the researchers’
regular positions, working collaboratively to explore research
topics in key R&D fields. Researchers from diverse backgrounds
spur one another on to generate innovative new products
and services through cross-departmental collaboration.

3 	Promotion methods: The process by which a research topic

progresses toward social implementation contains multiple
steps, from the initial idea through prototype creation, proof
of concept (POC) with the customer, to final implementation.
By changing the management methods used at each stage
flexibly, from giving researchers complete freedom to comeup with initial ideas, through to rigorous progress management after customer POC has been completed, we are able
to ensure that good ideas are brought to social implementation smoothly and efficiently.

Zeon’s R&D Strengths
Building on our technologies, namely monomer extraction, monomer synthesis, and polymerization, we have developed core technologies such as hydrogenation and impurity reduction. We consistently develop various unique technologies in line with the ongoing
expansion of our business.

Core Technologies and Products
Elastomers BusinessSpecialty Material Business
Coatable insulator
for OLED

Low-k materials

Cathode binders

IABP catheter
driving console

Synthetic latexes

Materials for OLED

Etching gas

Anode binders

Pressure sensor IABP

Thermoplastic elastomers

Polymerized toner

Binders for functional
layers

Bipolar rotating
hemostatic forceps

Sealants

Deflectable sheath for EP

Synthetic rubbers

Optical film

Petroleum resin
Plastics for optical / medical applications

ERCP device

4 	Effective utilization of human resources: Organizations andframeworks are the strategies through which the creation oforiginal value takes place, while the key element in actuallycreating value is people. To enable researchers to fulfill theirpotential in a self-directed manner, we have increased therange of options available to help them achieve personal
growth, for example through the provision of “double-track
career paths,” and by recruiting members for horizontal,
cross-departmental teams. We have also been working toinvigorate intra-departmental communication through oneon-one interviews and suggestion boxes.

Going forward, we will be taking on the challenge of realizing a
digital transformation (DX) of R&D through flexible coordination, and by controlling R&D processes in digital space. Bytransforming ourselves, we can continue to be an organizationthat provides an unbroken stream of innovative new products
and services in the future.

Multilayer extrusion
Diagonal stretching

Surface processing

Biaxial stretching

Resin modification

Melt extrusion

Compounding

Cyclo-olefin polymer

Nanoparticle dispersion

Thin film coating

Fluorination

Metal reduction

Balloon forming

Organic synthesis

Compounding

Extrusion

Impurity reduction technology
Hydrogenation technology
Polymerization technology
Monomer synthesis technology
Monomer extraction technology

40Research and Development

Overview of R&D Results

R&D that Utilizes Digital Technology Effectively
The R&DX office was launched in June 2021 as Zeon’s first

repeated process of limited-scope prototype building followed

large-scale, horizontal, inter-departmental R&D organization,

by verification.

with one staff member assigned to it on a full-time basis, andThis methodology, which is unique to Zeon, has amazedanother 68 personnel assigned to the office concurrently withand impressed numerous IT vendors, and Zeon has received

their regular positions.

requests for collaboration from several companies.

This new organization is promoting the putting in place ofGoing forward, the R&DX office will continue to promote a

the infrastructure needed for effective utilization of data, withshift toward data-driven R&D, serving as a hub for group-wide

the aim of “Utilizing digital technology effectively to enhancecoordination, exploring opportunities for expanding thethe quantity and quality of experiments.”

approach to include the entire supply chain, and striving to

Taking “cohesion and insight” as the foundation, the office
is putting in place the necessary educational infrastructure,enhance Zeon’s corporate value through the generation of
new products and new businesses.

while also promoting “agile” product development through a
Close-up 1

Conducting R&D Close to
Production Sites
Zeon has around 400 researchers. In addition to the
Kawasaki area in Kanagawa Prefecture, laboratories
are near each plant in Takaoka, Tokuyama, andMizushima. By placing our R&D organizations close to
our production sites, Zeon aims to unify its manufacturing and technology. We have also established aflexible and efficient R&D system by enabling speedy
implementation of lab-scale prototypes.

Close-up 2

R&D Hearings
Each laboratory holds a hearing on research once amonth to confirm the feasibility and competitive
advantage of research themes based on Zeon's
medium- to long-term strategy. Each research hearing
is attended by the president and other members ofmanagement, who receive a progress report on development projects directly from the researchers. Consistency between its management and R&D strategies isanother characteristic of the Zeon Group's R&D.

A Researcher from Zeon’s Analytical Technology Laboratory has Received
a Fellowship Award from the Society of Polymer Science, Japan (SPSJ)

Making a major contribution toward the development and widespread adoption of computational polymer science
In 2021, Takashi Honda, a researcher with Zeon Corporation’s
Analytical Technology Laboratory, was presented with the 2021
Fellowship Award by the SPSJ. The award was in recognition of
his contribution to the development of computing methods(particularly mean field methods) and to polymer science. It
should be noted that this was the first time that a serving Zeon
researcher had been a recipient of the SPSJ’s Fellowship Award.
The SPSJ is an academic association with more than 10,000
members. A Public Interest Incorporated Association, it wasestablished with the aim of promoting progress in polymer
science and technology—both fundamental research and practical applications—contributing to the development of academic
studies in this area, and fostering the cultivation of the humanresources needed to achieve these goals. Zeon is a corporate
member of the SPSJ, and has made an effort to encourage
research on polymer science, for example through the creationof the SPSJ Award for the Outstanding Paper in Polymer Journalsponsored by Zeon, which is presented to young researchers
who have had outstanding papers published in the SPSJ’s Polymer Journal. The SPSJ’s Fellowship Award was created in 2007. It

COMMENTIntellectual Property Strategy

is presented to full members of the SPSJ who have made asignificant contribution to the development of polymer scienceor technology, and who are expected to continue making avaluable contribution in the future.
Takashi Honda has participated in national research projects
while working at Zeon, and has achieved many research results,
including the development of the Simulation Utilities for Soft andHard Interfaces (SUSHI) program for the Self-Consistent Field(SCF) approach, which falls under the mean fields method (apolymer density functional theory), a simulation method used inpolymer science. All of his research results have been publishedin the form of easy-to-use software functions, and SUSHI and themean fields method are now widely used by research institutes
and corporate researchers both in Japan and overseas.
Recently, Takashi Honda has also achieved impressive
results in terms of integrating aspects of data science such asmachine learning with simulation technology, and the Fellowship Award represents recognition of his contribution throughcontinued, ground-breaking research using computer science.

I was honored to have received the 2021 Fellowship Award from SPSJ
for “contributing to the development of computing methods, particularly mean field methods, and to polymer science.” This was in recognition of my development of the SUSHI simulator, which is able to handle
the phase separation phenomenon in polymers, as part of the OCTA
project (a NEDO project which was conducted in 1998–2002 at Nagoya
University), and subsequent research on polymer materials that madeuse of SUSHI. I think we can also say that this award represented recognition of Zeon’s unstinting investment in the development of advanced
technology and its initiatives in the area of CSR.

Takashi Honda

Analytical Technology Laboratory

The new products that are born from Zeon’s technology

use of patent- and other IP-related analysis in management

platform, which is founded on original technologies, need todecision-making, we began operation of a new Technology

be matched to an expanding supply chain. With a closely

Trends Predictive Analysis System that utilizes IBM’s Watson

integrated business strategy, research strategy and intellec-

Discovery platform for hybrid search and text-analytics. Utiliza-

Date

Title

Journaltual property (IP) strategy, we work to secure and effectively

tion of this system makes it possible to undertake efficient,

April 2021

utilize patents, design rights and trademarks. We have also

comprehensive analysis of more than 100,000 items of com-

Development of Silicon Rubber Containing SingleWalled Carbon Nanotubes, for Medical Use

Polymer TECH, Vol. 9
https://www.gomutimes.co.jp/?p=163141

established a dedicated unit focused on the IP landscape.

plex patent data, enabling us to rapidly, accurately predict

June 2021

While aiming to adopt and expand the use of a wide range ofchanges in the market and in demand, and technology trends,

Development of O-Ring Materials with Superior
Heat Resistance

The Tribology , June 2021 issue
https://tribology.press-shinjusha.co.jp/backnumber2021/

IP-related tools, we are also cultivating the human resources

thereby supporting our goal of identifying ideas that will lead

August 2021

Japan Energy & Technology Intelligence (JETI) , August 2021 issue
https://www.center-net.jp/jeti/archives/data/2108.html

needed to make effective use of them.

to monozukuri manufacturing through which we can continue

Joint Value Creation Through Collaboration
Between Business Enterprises is Speeding up the
Adoption of Carbon Nanotubes in the Medical
Market—A Case Study of the Application of Carbon
Nanotubes for Wearable Devices for Medical Use

September 2021

The Properties and Applications of Heat-resistant
Cyclo Olefin Polymer

Material Stage (monthly journal published by the Technical Information Institute),
September 2021 issue
https://www.gijutu.co.jp/doc/magazine/m_2021_09.htm

September–October 2021

Development of Functional Binder Technology for
Lithium-ion Batteries

Clean Technology , September 2021
https://www.fujisan.co.jp/product/1281679691/b/2158607/
Function & Materials (published by CMC Publishing), October 2021 issue
https://www.cmcbooks.co.jp/products/detail.php?product_id=8435

March 2022

Global Cooperation on Polymers, Present and Future

Kobunshi (High Polymers, Japan) (published by the Society of Polymer Science,
Japan), March 20222 issue
https://main.spsj.or.jp/c5/kobunshi/kobu2022/kobu2203.html

In December 2021, in order to be able to make effective

Other Research Reports by Zeon Researchers Published in FY2021 (selected reports)

contributing toward the realization of a sustainable society.

For the latest information about Zeon’s R&D activity, please visit:https://www.zeon.co.jp/en/rd/

41

Zeon Group

Integrated Repor t 2022

42

Human Resources Strategy
Work Together to Create “Stages” to Be Active On
What Zeon aims to achieve in terms of “stages” is to help real-

We are also monitoring the results achieved with the “stages”

ize freedom (in the sense of having more life choices) and

Zeon’s human resources strategy—Seeking to put a smile on
employees’ faces, andmeeting their aspirations

Yoshiyuki Sone
Director & Senior Corporate Officer
Administration

Ever since Zeon Corporation was founded in 1950, we havea working environment in which each individual employee cancarried out our business activities in line with our corporate

fulfill their potential.

mission: “Contributing to the preservation of the Earth and theprosperity of the human race.”

By implementing this human resources strategy, Zeon’s
aim is to provide employees with more life choices and enable

In the past, we have focused on safeguarding employees’

employees to grow together with the company.

jobs and have relied on a handful of outstanding employees toenhance our competitiveness. However, looking back at theprevious Medium-Term Business Plan, it was clear that there
were issues in terms of needing to secure the humanresources required to underpin business expansion, and interms of creating a working environment that would allow us
to make effective use of diverse human resources.
Based on this analysis, in the current Medium-Term Business
Plan (implementation of which began in FY2021), we adopted ahuman resources strategy of “Work together to create ‘stages’
to be active on” as a group-wide strategy, with the aim of realizing our Vision for 2030, which is to “a company that lives up
to societal expectations and the aspirations of employees.”
The foundation for our human resources strategy is a commitment to “realize freedom and well-being for all employees,”
which includes Health and Productivity Management based onawareness of the fact that “employees and their family mem-

Declaration for Health andProductivity Management

well-being (meaning not only physical and mental health, but

and their current status, and utilizing employee engagement

also feeling integrated in society and having a satisfying life)

surveys as an indicator. The employee engagement surveys thatfor all employees, so that we become a company where

we use are global surveys, so that we can perform benchmark-diverse individuals are able to demonstrate their strengths.

ing against the average values for high-performing global

We are working to build these “stages” through a two-pronged

corporations and Japanese corporations. Survey implementa-

approach: intensifying DI&B, and strengthening engagement.

tion began in FY2021, and the latest survey results show an

Zeon defines DI&B (Diversity & Inclusion & Belonging) as

engagement rate of 48%. Whereas in the past the various“making effective use of diversity, and being able to work withissues affecting each organization could only be gauged sub-peace of mind and a feeling of trust that one is accepted.” Wejectively, we are now able to clarify these issues using data. We

have been fostering an organizational culture based aroundaim to build even better “stages,” with the target of raising the

DI&B, so that each individual employee, with their different

employee engagement rate to 75%, which is the average value

ideas and sensibilities, and their diverse backgrounds andfor high-performing enterprises worldwide, by 2030.

Using Our Human Resources Strategy to Support “Let’s Try First,” “Let’s Connect,” and“Let’s Polish Up”
The figure below shows the Freedom and Well-being aspects

employees to be able to volunteer, and will provide theof our human resources strategy in visual form. The state ofresources needed to make it easier for them to take time off

Freedom means using a variety of initiatives and projects towork. In this way, we will achieve employee Well-being, and we

enable employees to choose among a “greater variety of life

will be able to use our human resources strategy to support

choices.” For example, if there are employees who would likeZeon’s commitment to “Let’s Try First,” “Let’s Connect,” andto contribute to society through volunteering, we will put in“Let’s Polish Up.”

place the systems and corporate culture required for these(October 2021)

Our corporate philosophy is “Contributing to thepreservation of the Earth and the prosperity of thehuman race”. This mission will be accomplished byeach and every employee of Zeon Group fulfilling
his or her potential and playing an active andvibrant role in the company and in the society.
In order for us to continue contributing to a
“Sustainable Earth” and a “Safe and Comfortable
Lives for People”, we will create a work environment where employees can work cheerfully andvigorously and lead healthy lives, both physicallyand mentally, with their families and colleagues.

Support for medical check-ups
and vaccinations

Group-wide strategy and targets for 2030

Employee engagement

75%

43

Zeon Group

Integrated Repor t 2022

Provide a greater variety oflife choices

Ratio of foreign-national andfemale directors

30%

Support for childcare andnursing care

Cafeteria plan
Working styles unconstrainedby time or location

Career design

Well-being

Open recruitment projects

Recurrent education

Support for workplace dialogue
and associations
Side job
Volunteering

bers are our company’s most indispensable asset,” and creating

Work together tocreate “stages” tobe active on

experience, can demonstrate their respective strengths.

Strengthening DI&B

FreedomStrengthen engagement

A circumstance providing
a greater variety of life choices

Health and Productivity Management= Foundation for “Stages”

Employees

Company44

Human Resources Strategy

Specific Measures Included in the Medium-Term Business Plan
The core elements of Zeon Corporation’s human resources
strategy comprise three measures: 1 Health andProductivity Management promotion and workstylereform; 2 Reformation of the personnel system andimplementation of a clear framework for careerdevelopment; 3 and “organizational and human resources
development.” In this section, we outline some of thespecific initiatives adopted.

1

3

Health and Productivity
Management promotion
and workstyle reform

Organizational andhuman resources
development

2
Reformation of the personnel system andimplementation of a clear framework forcareer development

1 Health and Productivity Management Promotion and Workstyle Reform
Health and Productivity Management is the foundation for
creating “Stages” on which all employees can fulfill his or her
strengths. In October 2021, Zeon declared “Health and Productivity Management” and formulated “Code of Conduct for
Well-being”. By promoting Health and Productivity Management, we aim that each and every employee of Zeon Groupfulfilling his or her potential and playing an active and vibrantrole in the company and in the society. We are implementing
various health-related measures to reduce the risk of developing lifestyle diseases.
In order to respond to the need for more diverse workstyles, we have incorporated a remote working system, starting from April 2021. In addition, we are proceeding with the
adoption of a system whereby employees can take theirannual paid leave by the hour increments, and a system thatuses teleworking to eliminate or reduce the need for employees to be posted away from their families. We are also reviewing the optimal number of personnel required for factory
operation and encourage all employees to take annual leave,

Health and Productivity Management Strategy Map
Health and Productivity Management Goals
In order for us to continue contributing to a “Sustainable Earth”
and “Safe and Comfortable Lives for People,” each and every
employee of Zeon Group fulfills his or her potential and playing
an active and vibrant role in the company and in the society.

Health and Productivity Management Result
Reduced risk of employees developing lifestyle diseases
Reduction in presenteeism and absenteeism
Enhanced engagement metrics
Achievement of work-life balance

The key to organization and human resources development is
to link organizational goals and personal career goals. To realize
this, besides making job roles transparent, it is also importantfor each employee to understand their own goals, and toundertake self-improvement, and for the employee’s supervisors and the company to provide support for employee growth.

 nderstanding one’s own goals andU
exploring opportunities

Starting from FY2021, we have been implementing psychological assessments at the time of promotion reviews and whenemployees undertake training activities, so that employees canlearn about their latent characteristics (i.e., internal motivation,such as subconscious preferences). We also encourage
employees to take online seminars twice a year to undertake
self-improvement. Those employees who successfully complete
the training have 100% of the training free refunded to them.

(Supervisors / the Company)
Support for employee growth
Work content
Necessary skills and experience
Cultivation plan, etc.

Flow of Reformation of the Personnel System
April 2022

FY2023

FY2024 onwards

Introduction of the new personnel
system for senior employees

Reformation of the personnel systemfor executive employees(managers and specialists) (planned)

Reformation of the personnel system
for non-executive employees(planned)

Implementation of a framework for “providing a clear picture of the future in the case of personnel transfers”

As a measure for enhancing the linkage between organizational goals and personal goals, besides having employees’
supervisors implement one-on-one interviews on an ongoingbasis, starting from FY2021 we have also been redesigning theevaluator training.
By making job roles more transparent, from FY2023 onwards
we will have put in place a clear path for career development.
In parallel with this, we are also proceeding with the adoptionof a Learning Management System (LMS) that makes effective
use of digital technology to ensure that human resources
cultivation is implemented in line with the desires and capabilities of the individual, and that the right people are appointed
to the right roles.

(Subordinates / employees)
Understanding and self-improvement
Desired work
Skills and experience held
Career development plan, etc.

Allocating the right person to the rightrole in line with employee preferences
Bi-directional clarity and communication
AI-supported matching

reduce overtime work, and promote production innovationand human resources development for the realization ofsmart factories.

In this way, we can encourage personal growth and careerdevelopment among non-managerial role employees, who inthe past would have found it difficult to visualize their career
path. We are creating “stages” whereby, besides contributing
toward the realization of the company’s management strategy,
these employees can also hone their own capabilities.
In addition, we are proceeding with the putting in place ofa system for “providing a clear picture of the future in the caseof personnel transfers.” More specifically, besides the use ofdigital technology to build the foundations needed for effective human resources management, we are also implementing
measures to offer opportunities to discuss individual careerplan, provide transferred personnel with mission sheets, andmake effective use of our in-house job posting system.

 upport for employee growth from supervisors andS
the company

Using Digital Technology to Ensure that Human Resources Cultivation is Implemented in Line with
the Desires and Capabilities of the Individual and that the Right People are Appointed to the Right Roles

Health and Productivity Management Policies(Investments)

2 Reformation of the Personnel System and Implementation of a Clear Framework for
Career Development
In April 2022, we adopted a new personnel system for
employees who have already reached the normal retirement
age of 60, so that older employees who have cultivated ahigh level of expertise at Zeon can continue to be active at thecompany until the age of 70. We are also currently working onreformation of the personnel system for executive employees
in FY2023.
In our new personnel system, we have clarified roles andhuman resources requirements. By aiming to make thesemore transparent, we are enhancing the degree of integration
between organizational goals and personal goals. Furthermore,
making evaluations and compensation easier to understandand improving career path visualization will lead to improved
employee engagement.

3 Organization and Human Resources Development

COMMENT iming to realize the “creation of ‘stages’ on which all employees can demonstrate their individualA
strengths” and the “linking of management strategy with human resources strategy”
Zeon’s Medium-Term Business Plan, implementation ofwhich began in FY2021, emphasizes the need to “worktogether to create “stages” to be active on,” and to this end,
we are implementing measures that include Health andProductivity Management, workstyle reform, and the building of a corporate culture based around DI&B.
The next key issue that we face is the need to strengthen
the linkage between management strategy and humanresources strategy. Besides working actively to increase thenumber of employees allocated to growth sectors and toareas that will support management strategy implementation, we are also proceeding with the improvement of ourhuman resources portfolio for the medium and long term.
We are strengthening the diversity of our thinking and ourcapabilities as an organization by proactively recruiting
mid-career hires with experience at other companies formany of our units, including the Research & Development
Headquarters, the Elastomers and Chemicals Business Headquarters, the Specialty Business Headquarters, and the Digital Transformation Promotion Division . In addition, by taking

job roles as the starting point for human resources management, we are able to clarify the gap that exists between our
strategy and our available human resources, and we can plan
human resources retention, cultivation, recruitment andallocation from a medium- to long-term perspective.

Tomohiro Fukagata

Division Manager – Human Resources

Other framework building for promoting employee growth and career development

45

Zeon Group

Integrated Repor t 2022

46

Sustainability Management
System Structure (Summarizing the changes in the sustainability management system; correct as of September 2022)

Formulation of Zeon’s Sustainability Policy

Corporate Sustainability Headquarters

On July 1, 2022, we adopted a new Sustainability Policy to replace our existing CSR Policy .

Corporate Sustainability Division

CSR Department
Risk Management Department

Sustainability Policy

Sustainability of SocietyWe aspire to realize a “Sustainable Earth” and “Safe andComfortable Life”.

preservation of the Earth and the prosperity of the humanrace”, sustainability at Zeon means achieving sustainable

SocietyZeon

growth together with society. To achieve this, we will provide products and services that are valuable for solving
global and social issues, build trust with our stakeholders
through fairness and integrity and have each one of us act
proactively thinking how to create a better future for thesociety and ourselves.

Research & Development Center

Carbon Neutral Laboratory
Other laboratories

Administrative Headquarters

Supply Chain Division

Raw Material Procurement Department
Supply Chain Planning &Administration Department③

Based on our corporate philosophy of “contributing to the

Furthactivities to be a trustworthy company.
Each of us will think and act proactively for a better future.

Carbon Neutral Endeavor Departmentnt
me

ocial issues = Sustainabl
e des to s
n
o
i
vel
ut
l
op
o
s
ns to social issu
o
i
t
er
u
l
es
So
①

We will firmly maintain fairness and integrity in our

Research & Development Headquarters

Carbon Neutral Division④② Pr o ﬁ t

F urt

h er proeg
ﬁt = S u stain a bl

ro w

th

Sustainability of Zeon

Explanation of the schematic diagram
Zeon’s Sustainability Policy can be explained with reference to the schematic diagram shown above. Firstly, the inner arrows( 1 and 2 ) represent how, by helping to solve social issues and providing new value for society, Zeon itself can also obtainprofits in return for providing this value. Arrows 3 and 4 show how continuing to implement a “virtuous circle” can lead tosustainable development for society and continued growth for Zeon. The image in the middle representing two people
shaking hands denotes how, by realizing this kind of virtuous circle, the relationship of trust between society and Zeon canbe further strengthened.

Initiatives Relating to Respect for Human Rights
The Zeon Group positions initiatives relating to respect for

tion, group companies, and the supply chain—have been

human rights as one of the important foundations underpin-

proceeding with related measures, while also proactively dis-ning sustainability management. Recognizing the need toclosing the content of these measures in various reports.

respect the human rights of everyone who is affected by ourbusiness activities, starting from FY2021 we have begun to

Future Issues

implement full-scale initiatives in this area. First, we drew up a

We have identified future issues that include the need tohuman rights risk map based on the entirety of our business,

implement human rights due diligence at overseas groupand identified human rights risks. We also held seminars forcompanies, the establishment of contact windows for remedial

senior management and for related units, and worked tomeasures for the supply chain and the local community in the

spread awareness of the importance of respect for human

event that an infringement of human rights does actuallyrights within the company. Then, while receiving advice fromoccur, the formulation of a CSR-aware procurement guide, andexternal experts, we have been proceeding with the discus-

the incorporation of human rights provisions into standard

sion of concrete methods for implementing human rights due

procurement contracts, and we will continue to proceed withdiligence in related units. More specifically, we have set the key

measures aimed at furthering respect for human rights.

issues to be addressed in three categories—Zeon Corpora-

FY2022 Initiatives

Organizational StructureWith the aim of realizing carbon neutrality by 2050, in April 2022

reduce Scope 3 CO2 emissions in the supply chain. It also puts

the Carbon Neutral Endeavor Department which previously

in place the systems needed for the formulation, proposal,

reported directly to the President was placed under the Corpo-

adjustment and implementation of supply chain related poli-

rate Sustainability Division. In July 2022, we established a newcies to help ensure the building of the foundations needed for

Carbon Neutral Division to strengthen organizational functions

business growth, and accelerating initiatives aimed at realizing

such as strategy formulation, and the Carbon Neutral Endeavorcarbon neutrality.

Zeon Corporation

Besides the 25 risk categories noted in “The Response to the UN Guiding Principles on Business and Human Rights (UNGPs) that is
Expected from Business Enterprises Today,” published by the Human Rights Bureau, Ministry of Justice , we have added two additional risk
types: human rights issues in relation to advertising, and unnamed human rights issues. We have decided on the responsible units andspecified the issues to be addressed, and we are proceeding with efforts to reduce human rights risk in each category.

Group companies

In FY2022, we planned to make a start by setting the key issues to be addressed in relation to respect for human rights at each groupcompany, starting with major group companies in Japan. At overseas group companies, full-scale measures will need to begin starting fromthe next fiscal year, and we are already proceeding with preparations for this.

Supply chain

Starting from FY2021, we selected a group of 262 suppliers that accounted for over 80% of total procurement, and which were deemed tohave relatively high human rights risk, and conducted a CSR-aware procurement self-assessment questionnaire (SAQ) designed by the
Global Compact Network Japan. In FY2022, we sent a feedback sheet to all the companies that had completed and returned the SAQ, andidentified 16 companies, based on factors such as their questionnaire scores and whether or not the upstream segment of the supply chain
was felt to have a high level of risk, with which we are engaging in dialog to enhance CSR-aware procurement. We are also proceeding withthe process of securing letters from suppliers confirming that they are in agreement with Zeon’s CSR-aware procurement policies, and weare expanding the scope of application of our policies further up the supply chain.

Department was placed under it. In addition, a new Carbon
Neutral Laboratory has been established under the R&D Center,

Our System for Sustainability Management in the Future

and we have put in place a system for promoting R&D that is

Sustainability promotion will continue to be overseen by theoriented toward monozukuri manufacturing that helps to realize

CSR Conference, which is chaired by the President, and whichcarbon neutrality and the circular economy.

reports to the Board of Directors as necessary. At the same

Furthermore, in May 2022, we implemented an organiza-

time, in order to further strengthen sustainability efforts goingtional reform, with the existing Raw Material Division andforward, we will be examining ways to put in place a system

Logistics Division that had been under the Elastomers andfor group-wide discussion and promotion of various matters

Chemicals Business Headquarters being brought together torelating to carbon neutrality, human rights and Health andform the new Supply Chain Division, which is under the Admin-

Productivity Management, in order to build a governanceistrative Headquarters. The Supply Chain Division undertakes

system that is able to conduct sustainability promotion more

the comprehensive collection and analysis of all supply chain

effectively and more efficiently.

related information, and implements measures intended to47

Zeon Group

Integrated Repor t 2022

For a diagram showing our Corporate Governance System, see P.55.

Steps in the Implementation Process

Step5
Zeon Corporation

Step1
Risk map formulation

Step2
Considering how
to proceed

Step3
Advice fromexternal experts

Step4
Human rights education(Senior managers andresponsible personnel)

Step5
Group companies

Step5
Supply chain

48

TCFD
TCFD-based Analysis and Reporting

Zeon Group’s Climate-related Risks and Opportunities

Expressing support for the TCFD recommendations
and CO2 Emission Reduction Initiatives

Typeof risk

2020 Support for TCFD announced

Implementation, on a trial basis, of analysis of the
impact on Zeon’s rubber business of the 2°C and 4°C
climate change scenarios

denotes climate-related risks or opportunities that were identified in the FY2021 project.
Evaluation item
Category

Policy/Legal

2021 Implementation of Risk Severity Evaluation application trials
for businesses other than the rubber business.

* Implementing units: Business divisions other than the rubber business, aswell as manufacturing divisions, indirect departments and group companies

Reflection of certain elements in the new Medium-TermBusiness Plan

2022 Formulation of a Carbon Neutrality Master Plan, and presentation of metrics and targets
Establishment of a system for certifying products that contribute to the SDGs
Promotion of activities aimed at securing SBT certification

Transition

In August 2020, Zeon Corporation expressed its support for therecommendations made by the Task Force on Climate-Related
Financial Disclosures (TCFD).
Going forward, we will be aiming to strengthen our management fundamentals, as well as to help realize a sustainable society
and enhance Zeon’s corporate value, by undertaking analysis of therisks and opportunities that climate change presents for our businesses and reflecting this analysis in our management strategy.
These initiatives are reflected in the group-wide strategy of“Promote a transformation of monozukuri to realize a carbon
neutrality and circular economy” that is outlined in our new
Medium-term Business Plan. We have formulated a Carbon
Neutrality Master Plan, with 2050 as the target year, and weare disclosing the measures that will be adopted to realize thisplan and the progress made in reducing CO2 emissions.

*

Industry/
Market2023 Disclosure of measures relating to the metrics and targets

for the Carbon Neutrality Master Plan, and of the results
achieved in terms of reducing CO2 emissions through products that contribute to the SDGs
Promotion of CO2 emissions reduction based on SBTs

Reputation

Disclosure of Zeon’s Response to TCFD Requirements
Zeon views climate change as a key issue, and progress management and reporting in regard to related targets is undertaken by the Environmental & Safety Affairs Committee.
A Carbon Neutral Endeavor Department was established in
April 2021, reporting directly to the President, and has beenpromoting tasks such as the formulation of a basic strategy
and concrete plans for achieving the goal of making the Zeon
Group carbon neutral by 2050.
In April 2022, looking ahead to FY2022 which is the second
year of implementation of the Medium-Term Business Plan, theCarbon Neutral Endeavor Department was placed under thesupervision of the Corporate Sustainability Headquarters . The
Carbon Neutral Endeavor Department is now liaising with otherunits under the Corporate Sustainability Headquarters to planand promote concrete activities aimed at making the company
as a whole carbon neutral.

Strategy

Overview
Firstly, in order to clarify the group-wide climate-related risks
and opportunities, climate change scenario analysis was performed with respect to units other than the rubber business(including both business divisions and indirect departments),
based on the climate change scenario analysis that was performed for the rubber business in FY2020. Particular emphasis
was placed on identifying risks and opportunities that were
not seen with the rubber business.
As with the rubber business, the following steps were
implemented.
1. Assess materiality of climate-related risks
2. Identify and define range of scenarios
3. Evaluate business impacts
4. Identify potential responses
1 Assess materiality of climate-related risks (Identificationof risks and opportunities)
After internal and external discussion regarding newly recognized climate-related risks and opportunities that were identi49

Zeon Group

Integrated Repor t 2022

fied using group-wide scenario analysis, the materiality ofthese risks and opportunities was assessed (see the table“Zeon Group’s Climate-related Risks and Opportunities”).
Besides transition risks such as CO2 emissions costs (including carbon taxes, etc.), changes in customer behavior such asincreased sales of electric vehicles, and rising raw materials
procurement costs and utility costs, we also identified business opportunities related to strengthening competitivenessthrough technological advances. These include the development of products made from biomass raw materials that do
not use petrochemicals, and low-carbon products produced
using chemical recycling.
In addition to the risk of flood damage to Zeon business sites
and to the supply chain due to rising sea levels resulting fromclimate change, and the risk of damage to Zeon business sites
and to the supply chain due to increasingly severe abnormal
weather conditions, we also identified risks relating to increased
operating costs resulting from rising average temperatures asphysical risks. At the same time, we also identified business
opportunities relating to the provision of products and services
that will see increased sales opportunities associated with risingtemperatures and the serious disasters that result from these.
2 Identify and define range of scenarios
On the basis of the transition risks and physical risks that wereidentified on a group-wide basis, we examined the global
picture for the 4°C and 2°C scenarios, respectively.
	Anticipated global picture for the 4°C scenario (using 5
Forces analysis)
A trend toward adopting a “wait and see” attitude to theneed to achieve a low-carbon or post-carbon society leads tohigh physical risk, in terms of flooding, etc.
	Anticipated global picture for the 2°C scenario (using 5
Forces analysis)
Aggressive promotion of decarbonization, adoption ofcarbon taxes and an accelerated shift toward renewableenergy and the use of electric vehicles lead to an increased
need for the reduction of emissions from businesses and forthe implementation of product portfolio adjustments.

ImportanceAdoption of carbon taxes (resulting in increased
operating costs)

I ncreased opportunities for sale of products that contribute toward
reducing CO2 emissions (resulting in increased sales)

Individual countries’ carbon
emissions targets/policies

I ncreased emissions controls compliance costs (resulting
in increased operating costs)

As above

Key products / Increase or
decrease in product prices
Changes in raw materials
procurement costsR ising raw material prices (resulting in increased
operating costs)

Falling raw material prices (resulting in reduced operating costs)

Changes in energy demand
Changes in utility costs (fueland electric power)

Rising energy prices (resulting in increased operating costs)

Increased demand for energy (resulting in increased sales)

Evolution of next-generation
technologies—

Enhanced competitiveness due to technological advances (resulting inincreased sales)Increased competitiveness in the event of successful future development ofefficient manufacturing technologies or manufacturing methods that do
not use fossil fuels
Securing an advantageous position in the market through the developmentof biomass-based raw materials, etc.
Development of technologies and products (such as chemical recycling)oriented toward the low-carbon society and the circular economy

Changes in customer behavior

Worsening reputation of the company’s products and of
the company itself (resulting in reduced sales)I ncreased opportunities for sale of products that contribute toward
reducing CO2 emissions (resulting in increased sales)

Major

Rising sea levels

Negative impacts on operations from rising sea levels(reduced sales due to production stoppages and delays
and/or increased maintenance and repair costs)

—

Major

Rising average temperatures

Increased burden of responding to rising temperatures(resulting in increased operating costs)
Reduced capacity utilization rate due to an increase in theincidence of operatives suffering heatstrokeIncreased plant restoration costs and safety measures costs
Reduced productivity (due to reduced cooling capability,
or reduced GPB and GPI extraction capability)
Higher storage and transportation costs due to increased
need for low-temperature storage and transportation of
raw materials and products (affecting business divisions)

Increased sales accompanying rising temperatures
Increased demand for medical products due to the spread of certain
diseases, heatstroke, etc.
Increased demand for Zeon products due to reduced supply of natural products
Increased demand for plant growth regulators and fragrancesIncreased demand for thermal interface materials (TIM) to solve problems
with excessive heat generation

Disruption caused to operations by severe natural
disasters (resulting in reduced sales and increased
operating costs)

Increased sales opportunities resulting from large-scale natural disasters
Increased demand for gloves resulting from a worsening hygiene environment
Emergence of concerns regarding the existing electric power network as aresult of disasters
Diversification of the electric power grid, increased demand for storage
batteries, and increased sales of battery materials, due to concerns
regarding industrial operations and lifestyles

Chronic

Acute

Observations: Opportunities

Carbon pricing and carbon tax

PhysicalGovernanceObservations: Risks

Sub-category

Increasing seriousness ofabnormal weather conditions(trend toward larger typhoons
and hurricanes, etc.)

Strategy andresponse measures

Major
Major

Major

Major

Moderate
to Major

Moderate
to Major

Major

The 4°C Scenario—5 Forces Analysis
New entrants

Maintaining the existing product portfolio(no particular concerns)

BuyersVendorsA lthough renewable energy isadopted to some extent,
demand for fossil fuels suchas crude oil remains more orless unchanged, and procurement costs remain at roughly
the same level as now
Some factories and resource
procurement partners
experience actualization ofphysical risks, leading to
disruption in the supply of
raw materials and products

Consideration given tochanging suppliers who
have high levels of physicalrisk, or identifying asecond-source supplier
as a backup.

IndustryL imited external pressure to switch over to low-carbon
approaches, so little progress made in development andother activities aimed toward low-carbon solutions
As there is no significant change in demand for conventional
products, there is little need for a transformation of the
product portfolio
Reduced capacity utilization rate due to an increase in theincidence of operatives suffering heatstrokeIncreased plant restoration costs and safety measures costs
Reduced productivity (due to reduced cooling capability, or
reduced GPB and GPI extraction capability)
Higher storage and transportation costs due to increased
need for low-temperature storage and transportation of raw
materials and products
Reduced sales due to production stoppages, and dramatically increased maintenance and repair costs, as a result of
frequent flood damage in low-lying areas
Increased construction costs and costs relating to safetymeasures as a result of having to relocate own production
sites to countries or regions with a lower risk of flooding

Substitute products(no particular concerns)

 o substantial changes in the production
Nlines used to manufacture products, andcontinued purchasing of components forenvironmentally-unfriendly products suchas vehicles with internal-combustion engines
Increased demand for medical products
due to the spread of certain diseases,
heatstroke, etc.
Increased demand for Zeon products due toreduced supply of natural products
Increased demand for plant growth
regulators and fragrancesIncreased demand for thermal interface
materials (TIM) to solve problems withexcessive heat generation
Increased demand when large-scaledisasters occur (including demand forgloves and storage batteries)
Implementation of existing renewableenergy and energy-saving measures
Consideration of implementing additional capital investment in response tophysical risks, or relocating production
sites in response to physical risks
Consideration of using weather derivatives (insurance)

Government

 ot implementing policies
N
aimed at transitioning to a
low-carbon society, such as
the adoption of carbon taxes
Considerable variation among
countries in terms of emissions reduction targets, withmany countries, including
Japan, setting low targets
Systems of subsidies put inplace in response to natural
disasters

Investors andsociety as a whole

The scope of adoption of PHEVs
and ZEVs remains limited
Conventional products
continue to be used, due tolack of progress in the
adoption of products such as
EVs that place less burden on
the environment
Continued investment inproducts that use fossil fuels

50

TCFD

The 2°C Scenario—5 Forces Analysis

Risk management

R&D relating to productsthat are moreenvironmentally-friendly

IndustryL ower competitiveness on price due to increased production costs
resulting from higher carbon taxes
Increased external pressure to pursue a low-carbon approach,invigorating low-carbon oriented technology development andcapital investment
Strengthening of modal shift initiatives as part of measures to reducegreenhouse gas (GHG) emissions
Progress made in the development of technologies and productsoriented toward the low-carbon society and the circular economy,
and realization of chemical recyclingShift in consumer behavior toward purchase of sustainableproducts, and increased demand for environmentally-friendly
vehicles and components
Transformation of business models, and progress made in collaboration with other industries
Flood damage in low-lying areas, but the negative impact of falling
sales due to production stoppages and of rising maintenance andrepair costs is limited

Revised product portfolios

Promotion of low-carbon
initiatives at production sites

Investors and society as
a wholeI nvestment withdrawn frombusinesses that impose a heavy
burden on the environmentGrowing movement to achieve
net zero emissions
Utilization of hydrogen as a fueland of renewable energy andother forms of environmentally-friendly energy increases
Car-sharing and car-leasing using
environmentally-friendly vehicles
becomes mainstream

Expanded disclosure of ESG data

Substitute products

4 Future direction and response strategy
Going forward, based on the results of this scenario analysis,
we will be implementing response strategies in coordination
with the group-wide strategy outlined in the Medium-TermBusiness Plan. Regarding the decarbonization strategy, we will
be undertaking group-wide examination of policies aimed atmaking Zeon carbon neutral. With regard to the resource
strategy, we will be promoting the circular economy and proceeding with development of products that make use of biomass as raw material. We will also be aiming to expand ourbusinesses by undertaking product development and productportfolio management based on assumptions regarding
changes in customers’ behavior.
In particular, we will be integrating these efforts into the
Carbon Neutrality Master Plan that is being formulated torealize group-wide strategy number one: “Promote a transformation of monozukuri to realize carbon neutrality and thecircular economy.”

Zeon GroupI ncreased demand for electricvehicles, etc., and consequent
increase in purchasing of related
products

Widespread adoption of materials made using new raw materials andnew production methods

3 Evaluate business impacts (impact on financial planning)
The anticipated financial impact on Zeon’s business was analyzed for the 4°C scenario and the 2°C scenarios. It was foundthat, for the 4°C scenario, earnings would fall due to theimpact of physical risks and because of rising procurement
costs, while for the 2°C scenario, earnings would fall becauseof the adoption of carbon taxes and the widespread adoptionof EVs, but there would also be a positive contribution to earnings from new business opportunities.

51

BuyersGovernmentS tricter environmental regulations, leading to a continued risein carbon pricing and an active
market for emissions trading
certificatesImplementation of preferential
treatment for EV manufacturers
and subsidies for purchasing ZEVs

Integrated Repor t 2022

Metrics and targets

	On a group-wide basis, in order to achieve the goal of
becoming carbon neutral by 2050, we are aiming to reduce
CO2 emissions by 50%* by 2030 compared to FY2019.

Strategies to be implemented by the Zeon Group as a whole in response to climate change related risks and opportunities
Risk
category

Important items

Changes incustomer behavior
Raw materials
procurement costs
Utility costs (fuel andelectricity)

Under the 4°C scenario

Rising sea levels

Response
Raw materials
to abnormal
procurement
weather conditions

Adjusted
earnings

Under the 2°C scenario

Transition risk mitigation with the aim of realizing
decarbonization
Fuel shift (switching over to using carbon-neutral LNG,
hydrogen and ammonium)Adoption of renewable energy and expanded procurementof renewable energy
Adoption of internal carbon pricing
Setting of long-term reduction goals in line with the SBTs
Mitigation of raw materials procurement risk
Minimizing raw material inputs through the establishmentof an internal recycling loop
Development of products that use substitute raw materials(biomass- and CO2-derived materials)

Portfolio management aligned with changes incustomer behavior
Portfolio adjustment based on climate change related risks
and opportunities
Development of products that use substitute raw materials(biomass- and CO2-derived materials)a) Board’s oversight of climate related risks and opportunitiesb) Management’s role in assessing and managing
climate-related risks and opportunities

Widespread Raw materials Businessadoption procurement opportunities
of EVsAdjusted
earnings

Group-wide
Strategy 2“Polish up” existing
businesses & “Explore”
new businesses

Risk Management
P.49

P.19

Strategy
Carbon tax

Promote a transformationof monozukuri to realize
a carbon neutrality andcircular economy

Index of Disclosure Relating to TCFD Recommendations
GovernanceOperatingincomeGroup-wide
Strategy 1

Physical risk mitigation
Implementation of measures to prevent soil liquefaction atplant sites, realize seismic reinforcement of buildings, andprotect against tsunamis
Disaster prevention methods and response to disaster
resilience assessment

Cost of measures toprevent heatstroke

Increasing seriousnessof abnormal weather
conditions

Carbontax

Measures to be implemented by 2030

Carbon pricing andcarbon tax

Group-wide impact assessment

Operatingincome	In order to be able to disclose Scope 1, 2 and 3 emissions
data for the Zeon Group as a whole, we have established asystem for determining Scope 1, 2 and 3 data, includingthat of group companies, and on the basis of these results,
we are implementing CDP disclosure and aiming to secure
SBT certification.
	As a sectoral issue, with regard to the SDGs we are focusing in particular on setting metrics and targets for Goal 13of the SDGs (Take urgent action to combat climate changes
and its impacts).

* This denotes a reduction in the annual Scope 1+2 CO2 emissions of Zeon Corporation(unconsolidated) of at least 50.0%, compared to FY2019, by FY2030.

Response to risk

R&D relating to the trend
toward low-carbon
products and the trend
toward low-cost products

Rapid access to policy information(Policies giving preferential
treatment to manufacturers ofelectric vehicles, etc.)

Taking advantage
of opportunities

VendorsC arbon taxes imposed on
fossil fuels such as crude oil,resulting in increased
procurement costs
Dramatically increased
demand for substitute raw
materials
Development of biomassderived raw materials thanks
to advances in technology

New entrants

Potential for market entry by manufacturers that are strongin low-carbon technology

Physical risks

Securing suppliers ofenvironmentally-friendly
raw materials

With regard to climate-related risk, we have established a
Risk Management office, and climate-related risk is recognized in the group-wide risk management table. As regards
the response to risk, the Risk Management office performs
risk management, including risk assessment and clarificationof appropriate response strategies.

Transition risk

Strategy andresponse measuresa) Processes for identifying and assessing climate-related risks

P.52b) Processes for managing climate-related risks

P.52c) How processes for identifying, assessing, and managing
climate-related risks are integrated into the organization’s
overall risk management

P.52

Metrics and targetsa) Climate-related risks and opportunities the organization
has identified over the short, medium, and long term

P.49a) Metrics used by the organization to assess climate-relatedrisks and opportunities in line with its strategy and risk
management process

P.52b) I mpact of climate-related risks and opportunities on theorganization’s businesses, strategy, and financial planning

P.49b) Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas(GHG) emissions, and the related risks

P.52c) Resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C
or lower scenario

P.49c) Targets used by the organization to manage climate-relatedrisks and opportunities and performance against targets

P.52

52

Directors and Officers

More detailed information can be found in the Corporate Governance Report (Japanese version only).
https://www.zeon.co.jp/news/assets/pdf/220705.pdf

A total of nine directors, including three outside directors, have been appointed since the general meeting of shareholders at theend of June 2022.

Directors

President and CEO

Director & Senior Corporate Officer

Director & Senior Corporate Officer

Kimiaki Tanaka

Kazuyoshi Matsuura

Tetsuya Toyoshima

ProfileApril 1993 Joined Zeon
July 2014 Zeon Synthetic Rubber Division Manager– Rubber Sales Department II
June 2017 Zeon Corporate Officer
June 2019 Zeon Director and Corporate Officer (current)

ProfileApril 1989
Joined Zeon
January 2013 Zeon Division Manager– Specialty Plastics & Components Business
June 2015
Zeon Corporate Officer
June 2020
Zeon Senior Corporate Officer (current)

ProfileApril 1979 Joined Zeon
June 2005 Zeon Director
June 2007 Zeon Director and Corporate Officer
June 2011 Zeon Director and Senior Corporate Officer
June 2012	Zeon Director and Executive Corporate Officer
June 2013 Zeon President (current)

Elastomers and Chemicals BusinessDirector – TOHPE CORPORATION

Audit & Supervisory
Board Members

Audit & Supervisory Board Members (External)

Takeo Furuya

Akio Kohri

Research & Development Division Manager– Research & Development Center

Director & Senior Corporate Officer

Director & Corporate Officer

Director & Corporate Officer

Yoshiyuki Sone

Erisa Watanabe

Yuichiro Konishi

ProfileApril 1988 Joined Zeon
July 2017 Zeon Division Manager– Specialty Components
June 2018 Zeon Corporate Officer
June 2020 Zeon Senior Corporate Officer (current)

ProfileApril 1987 Joined Zeon
April 2013 Zeon Production Center Manager– Materials Procurement
June 2018 Zeon Corporate Officer (current)

ProfileApril 1991 Joined Zeon
July 2011 Joined Solvay Specialty Polymers
July 2012 Joined Zeon
July 2013 Zeon Division Manager – Electronics
Materials Division I
July 2015 Zeon Division Manager – Electronics
Materials Division;
Manager – Taiwan Representative Office,Electronics Materials Division
June 2020 Zeon Corporate Officer (current)

Corporate Sustainability Division Manager – Corporate
Sustainability General Manager – CSR

Outside Directors

Takao Kitabata

President – Kaishi Professional University

53

Zeon Group

Integrated Repor t 2022

Tadanobu Nagumo

Senior Advisor – The Yokohama Rubber Co., Ltd.

Adviser – ADEKA CORPORATION

Nobutake Nishijima

Hiroki Kimura

President – Asahi Mutual Life
Insurance Company

Corporate Officers

Tomoyuki Kose

Makoto Watanabe

Tsutomu Eguchi

Satoshi Tominaga

Yoshinobu Oi

Hiroshi Yamamoto

Kazuo Nakajima

Masahiro Nakamura

Haruhiko Takahashi

Masao Akasaka

Noboru Watanabe

Managing Director– Zeon Kasei Co., Ltd.

Administration

Sachio Hayashi

Plant Manager– Mizushima Plant

Division Manager– Corporate Administration;
President– Zeon F&B Corporation

Division Manager– C5 Chemicals

Specialty Business Division Manager – Specialty Plastics
President – Zeon Opto Bio Lab Co., Ltd.

Fumiaki Ikeno
Board Member, Co-Founder, Chief Medical Officer,
GP – MedVenture Partners, Inc.

President– Tokyo Zairyo Co., Ltd.

Assistant Division Manager– Corporate Planning

Division Manager– Production Center

President– Zeon Chemicals Singapore
Pte. Ltd.

Division Manager– Legal & Compliance

Division Manager– Energy Materials

Plant Manager – Kawasaki Plant

54

Governance

PDF

Corporate Governance Report ( Japanese version only)
https://www.zeon.co.jp/news/assets/pdf/220705.pdf

PDF

Basic Policy on Corporate Governance ( Japanese version only)
https://www.zeon.co.jp/csr/management/pdf/200281514.pdf

Corporate Governance
Basic Approach to Corporate GovernanceZeon aims to increase profits and enhance corporate value on an
ongoing basis while respecting and balancing the various interestsof its shareholders and other diverse stakeholders. To this end, weare continuing efforts to build a system that enables efficient andsound corporate management through corporate governance.

Maintaining a system of internal control allows us to clarify thefunctions and roles of each body and company organization andto carry out rapid decision-making and execution. We are also
improving corporate transparency through appropriate monitoring and disclosure of business activities and their effects.

Corporate Governance System (as of September 2022)

Decisions/Supervision(appointments/dismissals)
Requireadvice1
Suggestions

Executive
Committee(Appointments/dismissals)(Appointments/dismissals)

3

Decisions/Supervision(selections/dismissals)

Collaboration

2

Auditing

Board ofDirectors

Audit &
Supervisory
Board

Financial Auditors

Collaboration(assistance)

Auditing Personnel

Financial
Audits10
10

Risk Management Committee
Compliance Committee

Control/monitoring

Reporting(internal)

Subsidiaries and affiliates

External lawyers

Environmental and
Safety Affairs Committee
Quality Assurance Committee
PL Committee

90Reporting(internal)

Information Management
Committee

Business divisions, indirect departments,
laboratories, and plants

15

2018

InterimCSR Conference

Internal
audits18

Reporting(internal)

Reporting(external)

Public Relations Committee

Reporting (external)

1 Board of Directors
The Board of Directors meets, in principle, every month with
Audit & Supervisory Board members in attendance to ensurecompliance with applicable laws and the Articles of Incorporationin the execution of business. In addition to its statutory duties,
the role of the Board of Directors is to make important decisions
about basic management policy, strategy, and other aspects ofbusiness execution. As of July 2022, the Board of Directors consists of nine directors, including three outside directors.

3 Audit & Supervisory Board
The Audit & Supervisory Board comprises five members, including three external members. The Board reports on, discusses,
and adopts resolutions on important business matters. In accordance with the auditing guidelines established by the Audit &Supervisory Board, each member audits directors’ execution of
their duties through various means, such as attending Board of
Directors meetings and monitoring business operations, including subsidiaries’ operations.

2 Executive Committee
The Executive Committee, in accordance with the Executive Committee Rules, comprises the President and executive officers
ranked senior corporate officer or above and meets twice amonth in principle to examine and make decisions on importantbusiness matters after due deliberation involving consultation
with attending full-time Audit & Supervisory Board members.
Important business matters stipulated in the Board of Director
Rules are examined and decided by the Board of Directors.

4 Director and Officer Nomination andCompensation Committee
The Director and Officer Nomination and Compensation Committee is positioned as an advisory organ to the Board of Directors
for the purpose of strengthening the objectivity and transparency of the Board of Directors functions related to nominating
directors and officers and deciding their compensation. The
committee is composed of four members, of which three are
independent outside directors.

Integrated Repor t 2022

11

11

13

2019

2020

2021

18

2022

(FY)

(Forecast)

Strategic Shareholdings

When deciding whether to take strategic shareholdings in othercompanies, we undertake careful examination to determine
whether such shareholdings will help to strengthen our relationshipwith business partners, local community and other stakeholders,
and whether they will contribute toward the enhancement of ourcompany’s corporate value over the medium- to long-term. In cases
where, after such examination, we do acquire shares in othercompanies, every year we conduct close scrutiny for each individual stock to examine the appropriateness of the purpose for which
the stock is being held, and whether the benefits and risk of holding
the stock are commensurate with the capital cost, etc. Verification
was performed at the Board meeting held on October 29, 2021,
and it was determined that all of the stocks that we held at that time
as strategic shareholdings were appropriate. Going forward, if, asa result of verification, it is deemed that it is no longer advisablefor the company to hold shares in a particular company, then we
will consider the possibility of reducing our holding of that stock.
When making decisions regarding the exercise of voting
rights in companies in which we have strategic shareholdings,
we make such decisions based on a perspective that emphasizes
enhancing the corporate value of the investee company over the
medium- to long-term.
Changes in the No. of stocks held and the value of these holdings(Stocks)
100(million yen)

78,90973,087

68,40866,97475

80,00060,00050,323
50

84

86

87

81

83

25

0

Zeon Group

11

Year-end

40,00020,0002018/3

No. of stocks held

55

10

2019/32020/32021/3

Appointment and dismissal of directors and officers

Nominations of candidates for directors and auditors and appointments of corporate officers are made based on the requirements
provided in the Basic Policy on Corporate Governance, with advice
given by the Director and Officer Nomination and Compensation
Committee, a recommendation by the Representative Director, anda decision by the Board of Directors.
In the case of committing a serious violation of the law, or an act
violating company policy either intentionally or through gross negligence, or other reason that is cause for dismissal of the director or
officer as provided in internal company regulations, the Board of
Directors deliberates the case and dismisses the director or officer
concerned based on the Companies Act and other legislation.

Evaluating the Effectiveness of the Board of Directors

30

20

Reporting

CSR Basic Policy
Committee

40

Collaboration

Business Execution&
Internal Controls System

Department ofInternal Auditing

Dividends per share in FY2022 are forecast to
be 18 yen for the interim dividend and 18 yen
for the year-end dividend, for a combined
total of 36 yen (increase of 8 yen per sharecompared to the previous year).

(yen)(Dismissals)

Auditing

Representative Director

Internal
auditsOur basic policy is to pay out steady dividends of excess earnings
to shareholders.
In principle, Zeon Corporation distributes excess earnings twice
annually, through interim and year-end dividends. The General Meeting of Shareholders decides the year-end dividend amount, and theBoard of Directors decides the interim dividend amount. Retained
earnings are leveraged for proactive capital investments, development of innovative technologies, and production innovations.
Change in dividends per share, and forecast for FY2022

General Meeting of Shareholders

Director andOfficer
Nomination
4
andCompensation
Committee

Policy on the distribution of profit

2022/3

Questionnaires are conducted for directors including outside directors and auditors about the operations of the Board of Directors.
Questionnaire responses are analyzed and evaluated by a thirdparty outside lawyer entrusted to perform the task, who has provided the opinion that our Board of Directors operates with a highdegree of overall effectiveness.
We currently position increasing the diversity of directors as an
issue to be addressed. In June 2022, a female director and corporate
officer was appointed from within the company, taking the percentage of directors who are female up to 11%. In our Medium-TermBusiness Plan, we have set ourselves the target of increasing theshare of directors who are either female or foreign nationals to atleast 30% by 2030. Going forward, we will continue working toachieve even higher levels of diversity.

Appointment of Women and Foreign Nationals toManagement Positions

Over the past few years, we have been working actively to promotewomen’s empowerment. There has been an increase in the numberof female employees who are either holding or capable of holding
the positions of department manager or section manager, and weare striving to expand the opportunities for female employees tofulfil their potential. As of March 31, 2022, 12.7% of our company’s
employees were female, and 5.3% of managers were female.
Besides aiming to ensure that the share of recent graduates
recruited by the company each year who are women is maintained
at least 30%, and if possible higher than this, we are also taking
ongoing steps to build an environment conducive to the assignment, appointment and advancement of female employees, including areas such as recruitment, cultivation, and overseas
assignments, and to cultivate female employees’ ability to manage
their own career development. We are aiming to increase the shareof employees who are female to around 20%, and increase theshare of managers who are female to around 20%, by 2030, and wewill be working to increase the number of female employees who
can play a central role in managerial decision-making in the future.
We are also proceeding, on an ongoing basis, with the recruitment of foreign nationals of many different nationalities, including
recruitment from outside Japan. As of March 31, 2022, there were atotal of 27 foreign nationals working in the company, of which 3
held managerial positions.
Our Medium-Term Business Plan also includes a policy of
increasing the number of foreign employees who can play a central
role in managerial decision-making in the future. We are hoping toachieve an increase in the number of foreign nationals holding
managerial positions by 2030 compared to the total for March 31,
2021 (which was three).

0

Value as recorded on the balance sheet

56

GovernanceDirector and officer compensation

We use a performance-based compensation system as one typeof healthy incentive to achieve sustained growth.

Individual compensation is decided by the Representative
Director after receiving the advice of the Director and Officer
Nomination and Compensation Committee.

Compensation system
Directors and officers

Compensation structureInternal Directors

Fixed-amount cash compensation Performance-based cash compensation
Restricted stock compensation system

Corporate Officers

Fixed-amount cash compensation

Performance-based cash compensation

Fixed-amount cash compensation

Outside Directors

addition, in order to appropriately reflect in the company’s management policies, the opinions of persons with extensive experience and insight, such as outside corporate managers andpersons with administrative experience, and to ensure the effectiveness of independent and objective management supervision by
the Board of Directors, Zeon appoints several independent outside
Globalmanagement

Kimiaki Tanaka●

Kazuyoshi Matsuura●

President & CEO

Director & Senior Corporate Officer

Finance andaccounting

Compliance andrisk management

directors who are not involved in the execution of business.
Below is a list (a skills matrix) of the skills that members of theBoard of Directors should have in light of the Group’s management strategies and the combination of skills (up to three for eachdirector) that each director possesses and that the company particularly expects that director to demonstrate.
Sustainability
and ESGInternal Directors (4 directors)●

Director & Senior Corporate Officer

Total amount of compensation

Yuichiro Konishi

Internal Audit & Supervisory
Board Members (3 members)

54 million yen

Outside Director

External Oﬃcers (7 oﬃcers)

60 million yen●

Tadanobu Nagumo●

Fumiaki Ikeno●

Outside Director

With the aim of further strengthening communication with shareholders and investors, in 2021 we established the IR & SR office asa dedicated unit to handle such communication.
The IR & SR office is not subordinate to any other division, andreports directly to the head of the company’s Administrative
Headquarters. In this way, it is possible for the voice of the capital
markets to be transmitted directly to senior management, and bereflected rapidly in managerial measures. This system also enables
the timely, accurate and unbiased transmission of information tomarket participants in relation to the results of discussion regarding matters such as managerial measures.

External

HUB

1
Capital market
participants’
expectations

IR & SR
office5Disclosure to capital
market participants

Management Team

2
Internal feedback andformulation of
concrete strategies

3
Strategy
implementation

4
Feedback on
implementation results

We are also continuing to expand the range of methods used
for dialogue in addition to individual interviews, including theholding of quarterly briefings for investors, expanding the information disclosed on the company's website, participating in corporate presentations for individual investors, etc.

57

Zeon Group

Integrated Repor t 2022●●

Skills and diversity of directors and officers

The Board of Director comprises a diverse range of directors withdifferent backgrounds of knowledge, experience, expertise, and soon, and the number of directors is limited to 15 in accordance with
the Articles of Incorporation from the perspective of maintaining
an appropriate size to ensure thorough deliberations and prompt
and reasonable decision-making as an organizational body. In●●

Risk management
Risk management system

Number of internal reports in FY2021

Internal reporting flowchart

Crisis management

Compliance Committee

Prevention of law violations
Education and training in compliance with laws

Antitrust Law Regulatory Subcommittee
Export Security Control Subcommittee
Corporate Governance Subcommittee
Information Management Committee
Appropriate management of information

Internal reporting system

Zeon has put in place an internal reporting system, in order tocollect information about latent risks as early as possible so thatappropriate action can be taken. The channels for reportingrisk-related information are not limited to internal channels suchas reporting to one’s supervisor or directly to the Risk Management Committee. We have also established a Compliance Hotline
with an external lawyer as a contact window (see items 1 to 3 in
the figure on the right). The Risk Management Committee investigates the facts of reports that are made and responds as appropriate, such as by instructing the internal organization to implement
countermeasures based on the results of the investigation.

4

Notification and reporting
Feedback on investigation results

Superior1

1
Whistle-blower

Risk Management Committee

Risk prevention and resolution

We receive a wide range of opinions and requests through communication with shareholders and investors.
The main requests relating to governance are as outlined
below. We recognize that these are issues that we will need toconsider going forward.
Enhancing asset efficiency, with a focus on strategic
shareholdings
Reconsidering the necessity for anti-takeover measures
Further enhancing the independence of the Director and Officer
Nomination and Compensation Committee and the transparency of its operations
Considering the adoption of quantitative targets for returning
profits to shareholders
Enhancing the diversity of directors and officers●●

Risk management and compliance system

Shareholders’ and investors’ views and future issues●●

The Risk Management Committee promotes Zeon’s risk management. Activities to prevent legal violations and ensure legal
compliance are conducted under the Compliance Committee.
The Information Management Committee promotes the appropriate management of information from when it is received towhen it is destroyed.

Live-streaming of the shareholders meeting●●

CSR Conference

Functions of the IR & SR office●●Outside Director

At the annual general meeting of shareholders held in June
2022, besides providing a live video feed for those shareholders
who were unable to be present in person, we also provided
answers to questions that had been raised prior to the meeting.

●●Director & Corporate Officer

Takao Kitabata

Productionand SCM●●

Director & Corporate Officer(breakdown: cash compensation (fixed amount): 39 million yen, cash compensation (performance-based): 115 million yen,transfer-restricted stock-based compensation: 25 million yen)

Constructive dialogue with shareholders
and investors●

Erisa Watanabe

179 million yen

Researchand development●●

Yoshiyuki Sone

Sales
and marketing●

Director & Senior Corporate Officer

Directors and officers

Businessoverhaul●Tetsuya Toyoshima

Amount of compensation in FY2021

New businesscreation

Discovery of risks
Discovery ofcomplianceviolations

2

Risk Management
Committee

33External lawyer
reporting line

Review of facts andimplementation ofcountermeasures
Receive report, record
facts, notify of result

Compliance Hotline

BCP formulation and implementation ofrelated training

Recognizing the need on business continuity to mitigate theimpact of damage from disasters such as earthquakes andsevere storm and flood damage, we have formulated a BusinessContinuity Plan (BCP), and we implement training in order toenhance its effectiveness. Group-wide training was implemented
once in FY2021. On the assumption that teleworking for staff at
the company’s head office had become the new normal, Crisis
Management Team (CMT) training was conducted twice, andfactory training was conducted twice.
In addition, individual business divisions and factories haveformulated their own BCPs, and have put in place systems tofacilitate a rapid response in the event of an emergency. We arealso making necessary adjustments through Business Continuity Management (BCM) on an ongoing basis, and implementing
unique training.

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Online disclosure by Zeon Corporation
Websitehttps://www.zeon.co.jp/en/

Company Information
https://www.zeon.co.jp/en/company/
Corporate profile, Group information, etc.
Investor Relations
https://www.zeon.co.jp/en/ir/
Financial data, factbooks, etc.
CSR

https://www.zeon.co.jp/en/csr/
Corporate Report, CSR Report, Site Reports, etc.

Zeon Corporation CSR Promotion Department

Shin Marunouchi Center Building, 1-6-2 Marunouchi,
Chiyoda-ku, Tokyo 100-8246, Japan
Tel: +81-3-3216-0603 Fax: +81-3-3216-0604

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supporting sound forest management.