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INOAC CORPORATIONCSR REPORT 2023

CONTENTS
01

Corporate Philosophy

Introduction
02

INOAC Group history

03

Our products

04

Message from the president

Feature Story
08

Initiatives of IPG

10

Project working closely with thecommunity in Hakuba

Environment

Corporate Philosophy

Creating a beautiful forest,
comprised of many treesof varying character.

12

Environment

Social17

Improving value

21

Human resources development
for practical value improvement24

Supply chain management

25

Communication with society

GovernanceIn our efforts to enrich people’s lives, we at INOAC have specialized in not only a single business,but we have cultivated four business “seedlings”—polyurethane, rubber, plastics, and composite materials.
Today we have developed into a conglomerate,
supplying diverse products and services, thereby contributing to society.

Applicability of report
ReportingperiodThis report was prepared based on the business activities of INOAC
Corporation during FY 2022 (January 1-December 31, 2022).
* Also includes some information from FY 2021 and before, andfrom FY 2023.

Applicable
scope

Focusing on the business activities of INOAC Corporation on a
non-consolidated basis, including certain domestic and overseas
companies of the INOAC Group.

CSR REPORT 2023

26

Governance

Data & Statistics
28

ESG statistics

30

Company outline[Inquiries]
Year & monthissuedNovember 2023

Guidelines
for reference

 Environmental Reporting Guidelines FY 2018 Edition
 ISO 26000
 GRI Standards for sustainability reporting
2016/2018/2019/2020

PR Department, Corporate Planning Division
4F Osaki West-city Bldg., 2-9-3 Osaki, Shinagawa-ku, Tokyo 141-0032
Phone: 03-6680-8168 E-mail: csr@inoac.co.jp https://www.inoac.co.jp/en/

01

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

INOAC Group History

Expanded as a leading company in foaming technologies
for comfortable life and a sustainable society
Since our founding in 1926, we established ourselves as Japan’s first-ever producer of polyurethane foam and have gone on
to create an extensive range of products and services that make people’s lives better and more comfortable. The growth of
INOAC is also a history of development. For the sake of people and the planet, we continue challenging ourselves to generate
an abundance of new usage applications, while focusing particularly in recent years on consistently conducting
environmentally-conscious development.
 Entered the piping
materials businessBusinesshistory Implemented
polyurethane foam
technology from
Germany (1954)

 Established Inoue MTP
Co., Ltd. (1980)

 Entered the construction
materials business Established MTP Kasei
Co., Ltd.

 Entered the officeautomation business Entered the automotive
components business Established Inoue RubberCo., the predecessor ofInoue Rubber Co., Ltd.
(“IRC”) in Atsuta ward of
Nagoya, Japan (1926)

 Started exporting
IRC-brand tires and
tubes

1920
Producthistory

CSR REPORT 2023

 Entered the bedding andchildcare products
businesses
 Established firstoverseas joint venture
Associated Rubber
Industries Ltd. in Sri
Lanka

1950

Launched sales of Color Foam
mattresses

 Entered the furniturebusiness

 Changed company nameto INOAC Corporation(1990)

 Entered the distribution
materials business Full-scale entry into thecosmetic container
business Entered the packaging
materials industry

 Full-scale entry into
Southeast Asia

 Full-scale entry into the
US

1960

Launched Japan’s first-everproduction of polyurethane foam

 Held International PU
Forum 2015 for the 60th
anniversary of the startof manufacturing
polyurethane foam

 Entered the consumer
products business

Performed on-site thermal
insulation work on tankers
and shinkansen vehicles

1970
Developed cosmetic
bottles using injection
blow method anddecorative technology

 Entered the nursing careproducts businesses
 Full-scale entry into
China

1980
Developed in-mold coating(double-layered) integrally
molded instrument panels

 Established Jinno R&D
center in Nagoya, Aichi
Prefecture Entered the environment
business Bolstered and expanded
locations in Southeast
Asia Established theInternational
PolyurethaneTechnology Foundation

1990
Developed foaming
polyurethane R-PUR method
for road construction sites

 Established INOAC
Ryukyu Co., Ltd. as thefirst subsidiary of the
INOAC Group in Okinawa

2000
Produced MAPS® eco-friendly
interconnected fine cellpolyolefin foam

2010
Produced FOLEC® cleanpolyolefin rolled sheet foamusing the supercriticalfoaming technique Opened retail stores forbedding and more,primarily within businesssites nationwide

 Expanded Nagoya Head
Office and established
new company building

2020
Produced PureCell®
eco-friendly, ultrafine cell
foam sheet with anti-yellowing
properties

2024

Developed Ecolocel®
plant-based polyurethane
foam

02

CONTENTS

Feature Story

Introduction

Environment

SocialGovernance

Data & Statistics

Our products
Drone propellers

Right there beside you, making your everyday life better
Now and into the future

Crawlerpads

Covers for farming
equipment

Nursing care products

In everything from household consumer products, nursing care products, and everyday IT devices,
to industrial machinery used in production plants. Also in housing and construction materials, andat civil engineering worksites. Even in cars and other means of transport, and in infrastructure
facilities. INOAC materials come in many different forms. They can be found in every aspect of theneighborhoods that surround us, adding comfort to our everyday lives in various fields.

Heat radiation materials
in electronic equipment

Wheelchair tires
Incombustible thermal insulator

Food trays

Motorcycle &bicycle tires

Kitchensponges

Joint filler in house walls

Vibration dampers
for attache cases

Printerrollers

Computer chassis

Ink absorbers

LCD backcushions

Interior partsfor automotive

Bicycle seatpads
Exterior partsfor automotive

Water-stop materials
for waterproof mobile devices

Packaging materials

Sofas

Insoles
Bedding

Cosmetic
puffs

CosmeticbottlesIndustrial ducts
Yoga mats
Storage mediums

CSR REPORT 2023

Wheels ofloading carts

Sports bra
cups

03

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Message from the president

Committed to comprehensively addressing
sustainability-mindedness
and other social changes ourselves,
based on the consistent importanceof the manufacturing site
P R O F IL E
Mar 1985 Joined Inoue MTP Co., Ltd. (now INOAC
Corporation)

Feb 1991 Assigned to North America
Feb 2004 General Manager of the Technology
Department, Automotive-related
Products Division
Oct 2007 General Manager of Quality Assurance
Division, Automotive-related Products
Division
Oct 2008 President, Tohoku INOAC Co., Ltd.
May 2011 Automotive-related Products Division
Supervisor (stationed in Thailand)Feb 2015 Managing Director & General Manager
of Automotive-related Products Division
Apr 2018 Director
Apr 2019 Managing Director
Apr 2022 President & COO (Current)

Yasuhi Nomura
President & COO
INOAC Corporation
CSR REPORT 2023

04

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Message from the president

Confronting new cost increases

Digitalization to enhance the intrinsic value of
manufacturingStarting in 2020, the COVID-19 pandemic has been inflicting
tremendous damage on social and economic activities inFundamental to the manufacturing business is how well theJapan and throughout the world. Intensified demand for certainbalancing act of buy, make, and sell can be executed. The skill

supplies and materials, chaos in supply chains, and otherand strength with which you execute the make function isfactors have given rise to severe inflation, significantly

particularly decisive in terms of adding value that generates

impacting the procurement environment for companies and the

profit. While there may be various approaches we could take tolives of everyday citizens.

digitalization, what we emphasize most is digitalization that

Social activities have been returning to normal as the virus
was reclassified in Japan from class 2 to class 5 in May 2023,

bolsters the make function, which is a profit center.
For example, we prioritize digitalization that contributes toamong other changes that have been taking place. While raw

better productivity and quality. This includes functionality tomaterials prices have been stable or in some cases evencommunicate and store production status-related informationslightly decreased, our concerns in terms of costs have beensuch as defect rates and lot sizes in real time, alerts for whenfueled by skyrocketing energy costs, rising labor costs andsomething abnormal occurs or there are signs that one could

personnel shortages, and rising logistics costs. These haveoccur, and support functions that help to identify causes with

been major hindrances to our business operations.

high accuracy. While there are points such as cost

When confronted with high raw materials costs, we triedout various ways to minimize the impact such as searching for

For EVs which are considered to have far fewer

effectiveness to take into consideration, we are fundamentallycomponents that gasoline cars, Chinese and American

inclined toward incorporating digitalization.

manufacturers are completing development phases in six

more affordable materials and reducing material loss in our

As it becomes more difficult to secure engineers, there ismonths that take Japanese manufacturers of finished cars

production processes. Approaches such as these are ofalso plenty of room to leverage DX in development activities asaround two years, in some case even three or four. They arecourse effective, but we will probably need to take more drastic

well, including in compounding which is our core technology.

turning these out at the same general pace as new

action to address the wide-ranging cost increases that we now

Trial and error is essential in fields such as these. For instance,

smartphone models come out. As a result, Japanese suppliers

face, including energy, labor, and logistics costs.

until now we have been trying out 10 types of patterns andlike us are being criticized as slow. If we ourselves do notevaluating them. If we can use the power of AI to reduce theseaddress this situation urgently as a priority matter, we may getto three patterns for real experiments, that could significantly

left behind by the global competition. I think digitalization

cut down on lead time and boost operational efficiency.

shows promise as a means to bridge this gap.

CSR REPORT 2023

05

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Message from the president

on per-region basis.

Head Office’s role is to support true
localization that swiftly addresses each
community’s needs

young employees in their 20s to work temporarily overseas for

For that reason, our thought process as management will

period of a year without any particular responsibilities, otheralso need to change. In the past, the primary role of people onthan to build experience working together with the local people

the Japan side had been to facilitate technical transfers—inand experiencing the local culture.

other words, to bring technology from Japan to overseas

This system also functions to determine whether the

In terms of the differences between car development in the US,

locations, establishing and instilling it there. However, local

trainee is more suited to management or to becoming a

China, and Japan, there is no major divergence in what ispeople will now need to handle the management in order for us

specialist, while also helping the person realize what sort ofbeing done or the procedures being performed. The

to achieve true localization.

skills and qualities they need to cultivate to that end andoverwhelming difference lies in the sense of speed.

Not long ago, when I spoke to an old acquaintance fromutilizing that for their development going forward. The only

Catching up to this sense of speed will require us toanother country who had been handling local management, hecountry assignment we currently offer in the system is the US,

establish development organizations in each region. We will

told me, “You really should think a bit more carefully about thebut I would like to expand the range of locations in order toexpand our R&D center in the US. We will also establish an

Japanese people you’re sending over from Head Office.” This

provide opportunities for personnel who will handle

R&D center in China where we will conduct development inis someone I knew well, so when I told him, “You’re quite themanagement responsibilities to challenge themselves atways that are particular to China (see p.17). Materials

authority now, aren’t you?” he replied, “That’s right. We’ve

supervisory roles and grow our ranks of personnel capable ofmanufacturers have now clustered in South Korea and China,

grown too, you know.” The more I think about it, I realize hedriving localization effectively.

so we will establish development locations in each region andwas right.

perform development locally. If we can engage in development

Rather than just being technicians, or just handling sales,

Business development with sustainability at
its corewith our Global Technical Division in Japan playing the leadingor doing nothing more than overseeing improvements inrole and coordinating development activities with overseas

manufacturing, the role of our Japanese expat staff is to havelocations, we will make proposals to customers in thosethe discretion to formulate and execute business strategies on

respective regions and aim to have them use what wetheir own, and work alongside local management personnel toMany debates on the theme of “sustainability, environmental,

propose.

help them acquire knowledge as managers as well as

and ecological technologies” took place at the International PU

management capabilities that mirror INOAC’s distinctive

Forum 2023. This may be partly influenced by the EU’s

philosophy and policies. Those are the duties of the role.

regulations on polyurethane waste, but the overall trend is

Mattresses are one of the consumer products that we
produce, and the ideal softness and texture sought in amattress completely differs from country to country. Countries

How many such high-level individuals do we currently havefocusing on efforts to pursue carbon neutrality.
Recycling until now has mainly been material recycling,such as those in Southeast Asia where people used to sleepin the company? The number would fall well short of theon bamboo rugs and mats want softer mattresses, while Japan

number of overseas business locations that need them. If weinvolving collection, then crushing and solidifying again for

prefers mattresses that are relatively hard. This truly reflects thewere to raise the bar that high, it would place a heavy burden

reuse. Of course, this is insufficient on its own. In recent years,

differences in lifestyles between countries and regions. Sinceon our expats themselves. For that reason, we are dedicating

the process of chemical recycling to turn the collected items

needs vary by market, it is important that development is done

efforts to our Trainee System. This is a mechanism to assign

back into raw materials has been in the spotlight. This is not

CSR REPORT 2023

06

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Message from the president

must also express our own thoughts on the topic, compile

communication, which I consider to be most vital to

global procurement policies, and promote the same

management.

considerations for human rights as our own to all business

Fundamentally, it is important to have mutual

operators involved in our supply chain, including for work

understanding—in other words, understanding the otherenvironments, as we engage in these efforts together withperson and them understanding you. However, the more thatthem.

your employees and business locations increase in number, theFirst I think it is important that we disclose to ourmore difficult it becomes to communicate directly throughstakeholders our company’s own stance and thoughts on

face-to-face conversation. In such situations, we need a culture

respecting human rights. In this report, we have published “Ourof being interested in learning about what the company isApproach to Respecting Human Rights” (see p.21). In line withdoing and what other coworkers are doing, and recognizing

Our Approach to Respecting Human Rights, I am spreading

the value of those efforts. If we can develop such a culture, it

the message internally that I am taking the initiative myself towould be tremendously beneficial for us.

instill the spirit of commitment to respecting human rights.

Our company also gives interviews to interested members

necessarily new technologically, but we are working on

Going forward, we plan to advance effective initiatives basedof the media, and these often end up as articles in newspapers

verifications at the laboratory level, and we also plan to haveon this approach.

and magazines. In addition to people outside the company, thisscaled-up facilities go into operation before the end of thisIn our efforts for the Hakuba Circular Vision project in thealso gives employees in other departments that are not directly

fiscal year. Hopefully, we can accumulate additional data andvillage of Hakuba, we are working cooperatively with groups

related an opportunity to realize, “wow, this product from myalso roll it out to other plants (see p.13).

including local autonomous organizations, educational

company is gaining recognition.” That is also something that

institutions, and government agencies to create models forhappens.

We have carbon recycling in our sights as the next
evolution after that. Rather than foaming agent, we use carbon

resolving social issues in the local community from thedioxide to manufacture polyurethane. “Maybe we could

standpoints of technology, activity (recreation), nature, and thecan count on. Even without such opportunities to learn throughperform some processes without discharging any CO2 from oureconomy. Since needs also vary in each field domestically,

the media, our employees can know that those who haveplants by recovering and reusing the carbon dioxide emitted

through trial and error I would like to try building an ecosystemcome together under the INOAC name, in various locations

during foaming.” We are working on R&D with objectives suchthat can be horizontally rolled out to other regions as well (seeand departments in charge, are engaged in activities thatas these, and we are getting close to achieving them.

p.10).

deliver value to society and to our customers.

While that has value in and of itself, it is not something we

I would like us to go about reducing our environmental

If we can get to the point where our people learn about

footprint by putting into practice and refining the three initiatives

these efforts and recognize each other while at the same timeof materials recycling, chemical recycling, and carbon recycling.
In terms of sustainability, consideration for human rights

Communication that helps to boost ourbusiness value

CSR REPORT 2023

value of our company even higher. As we move forward, I will
be dedicating my own efforts to this type of internal

and related actions throughout the entire supply chain will be
an extremely important topic in conducting global business. We

striving to keep the pace themselves, I think it could drive the

In closing, I would like to share my thoughts oncommunication and internal branding.
07

CONTENTS

Feature Story

Introduction

Feature Story

SocialGovernance

Data & Statistics

Initiatives of IPG

Being a Company thattha People Choose
Sharing sustainability with society

Approach and systemization for sustainability

INOAC Group company INOAC Packaging Group (IPG) in North America is
an international manufacturer of high-quality bottles and containers madefrom PET. They manufacture containers for a broad range of customers
including global cosmetics brands, engaging in production aligned with theirbrand concepts. Consumers who the company’s customers serve are now
also keenly attentive to the quality of the products they use, recycling of
those products, and actions toward environmental issues. They think
together with their customers and strive to make proposals that address
consumers’ concerns and can solve problems.

Global manufacturers of cosmetics and everyday consumer goods
which are IPG’s main customers are placing heavy emphasis on
consumer awareness toward sustainability, which IPG also recognizes
as a critical issue. In the past, we had thoroughly pursued compliancewith laws and regulations on design, quality, environmental impact, andother areas, but we will now likely need to make proactive efforts
toward future issues as well. To address these issues, in 2018 weconstructed an all-encompassing engagement system as our EHS
management system.
The system enabled us to verify the environmental and social impactsof our business activities at all times and consistently make
improvements.

Products & services

CUSTOM
Molding plastic materials to manufacture
customized bottles in original styles. From theinitial concept to 3D CAD, 3D prototyping, bottle
samples, and label design, IPG works closelywith customers through all stages of theirprojects to produce containers that exceed their
expectations.

STOCK
IPG offers stock items suited to various capacity
sizes. Various label designs, colorings, andmatte options are also available. Equipped also
for pad printing, silk screen printing, and otherprinting styles, a wide array of surface
processing options are possible.

SPECIALITY
IPG also produces new types of containers bycustomer request. Applying metallic coatings,
embossing, and other design elements, thecontainers offer a striking level of originality. The
customer’s ideal concept can become a reality.

CSR REPORT 2023

Environment

Contributing to a sustainable society
A packaging company
that pursues innovations

Uniqueness of IPG
Competitive advantage

Satisfy market needs

Cost reduction

Speedier deliveries

Plant Manager

Juan
ManuelGarcíaEHS system outline

EHS managers (safety)

People handling EHS

EHS managers (environment, health)People handling EHS EHS assistants

NursesIn the management system for EHS, the plant manager is at the top,
and the managers in charge of safety and health and of environmental
aspects respectively manage the PDCA sequences of assessment,
formulating plans, learning and awareness, and monitoring. We acquire
external certifications such as BRS Certification*1 and ISCC PLUS
Certification*2 for this management system,
while also consistently finding ways toimprove them from the broader perspectiveof business partners’ preferences,
regulatory trends in each country, andchanges in international norms.
Recently we have been using supply
chain management-related evaluations
such as EcoVadis and other frameworks as
tools for validating our own initiatives as we
strive toward ongoing improvements thatBRS Certification
are more specific and in-depth.
*1: A globally operated certification body for Quality Management Systems, Environment, Food
Safety, Information Security, and other management systems*2: A scheme that is applicable for recycled plastics, bioplastics (organic plastics), andbiomaterials. Assures traceability of products throughout the entire value chain and verifies
that companies are meeting important environmental and social standards in this new field

Message

Achieved through processes
Unique designs

Not only have I become more aware
than ever of my contributions to thecompany through EHS management,
but it has also made me consciousof our relationships with society.

Doraly Coronel
EHS Manager (Environment, Health)08

CONTENTS

Feature Story

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Initiatives of IPG

Specific efforts
In EHS management at IPG, we believe it essential totake occupational safety and health, quality, andenvironmental impact into consideration at our
manufacturing sites. We consider occupational safety
and health to be a particularly important matter, not only
for employees but also their families, and we are striving
to cultivate a culture in which accidents and othermishaps do not occur.

IPG’s priorities

Environmental conservation efforts
Occupationalsafety& health
Quality &the environment

Spreading occupational safety& health awarenessOccupational safety is the most important thing at our
manufacturing sites. In order to achieve these aims, weneed to conduct the proper assessments and always be
eliminating risks.
After sorting out the risks involved in equipment anddevices themselves as well as their usage, and risks
related to aspects such as health, we thoroughly share
information and engage in learning, awareness-raising,access monitoring, and other related efforts.
Through these activities, we must continuously raise
the awareness of each and every employee and make
improvements down to the fine details. IPM, which is a
production department of IPG, has introduced anelectronic system. Employees can submit a report when
they notice something, and a system for awarding
incentives based on the content of those reports has
been implemented. There were 36 reports in 2023, andimprovement were made as a result.

Manufacturing

Our environmental conservation-related efforts aim totake our own production efficiency into consideration as
much as possible, based on compliance with the laws
and regulations in each country where we operate.
At IPG, we are engaged in various efforts with issues
such as energy management, water-related risks, andreducing environmental footprint as the primary focus.
These are the most recent measures and plans that
we are working on.

CO2 emissions reduction through clean
energy usage（t-CO2）

 Installing solar panels using space atop the roofs of plants
 Purchasing electric power produced from renewable energy

400

349.3

327.1

300

151.5

200

(projected)

100
0

2021

2022

2023

 Reducing volumes of water intake and discharge by switchingcooling systems to closed systems
Safety training initiatives in 2021
1. IPM’s priorities
2. Organizational chart
3. Safety rules
4. Results of unsafe behavior
5. What to do in emergencies
6. Using fire extinguishers
7. Safety mechanisms on machinery
8. The correct way to lift loads
9. Personal protective equipment
10. Pest prevention and safeguarding products
from contamination

 Developing various solvents that reduce environmental footprint

Thanks to efforts such as these, we are projecting a 54% year-on-year reduction of our CO2 emissions to
151.5 t-CO2 in 2023.

Co-creation with local communities
IPG puts heavy emphasis on relationships
with local communities and business
partners, and also regularly organizes
events for children in the community toparticipate in. In joint trainings withbusiness partners, we cover aspects suchas safety and the environment as we takesteps toward bettering our businesspractices.

Joint training with outside business partners

11. Preventive measures against COVID-19

Message
Efforts such as these are activities originating from new orders we received
thanks to acquiring BRC and improving our EcoVadis score. Through eachtype of activity, we improve our quality while at the same time contributing
to the community. This has made be proud of the company I work for. We
will maintain these efforts going forward.

Yutaka Matsui Executive Vice President

CSR REPORT 2023

09

Feature Story

CONTENTS

Project working closelywith the community in Hakuba

Introduction

Scattering the Seeds
of New Sustainable Life
Lifestyles
Setting the stage for excitement a century later
Hakuba Village in Nagano Prefecture issued a Climate Emergency
Declaration in December 2019, ahead of other municipalities inJapan. INOAC has been working with the Hakuba community tocreate a sustainable society and a beautiful forest for Hakuba by
bringing about innovations and putting them into practice
together with the locals.

The four seeds of “TANE”
INOAC is taking actions to address the community issues faced
by Hakuba by combining our products, materials, andtechnologies under the theme of the four “seeds” of TANE—
technology, activity, nature, and economy.

Technology

Activity

Addressing issues in the Hakuba
community through INOAC’s
technological innovation.

Creating the perfect place forrecreational activity through
INOAC products.

Issues in the community

Corporate philosophy

Environment

SocialGovernance

Data & Statistics

Sustainability efforts in Hakuba

Aim to create advanced ecosystems(establishing business models)On December 21, 2022, we opened the
Hakuba Office and Showroom in Hakuba.
There, we are leveraging INOAC’s materials,
technologies, and products (thermal
insulators, health-oriented bedding/reusable
bedding, attracting tourists, supporting
foreign residents, cooperating on businessdevelopment for companies in the village,
making green sports successful, etc.) tobring about solutions to social issues andbenefits for the village community. As weengaging in activities that are rooted in thecommunity, we will be developing businessmodels that are new to INOAC and putting
them into practical application.

Feature Story

HakubaINOAC

 Make hotel and inn operations more efficient Make the tourism business sustainable Increase tourist numbers fromyounger demographics
 Create new industries

 Contribute through technology
 Product adoption
 R&D according to needs
 Roll out business models to other areas

Be the tourist destination
Thermaland residential area
900 hotels
insulation effects
of choiceand inns
using THERMAX®

30,000 bed-use
mattresses
Opportunities
for visitors
in summer

GREEN WORKHAKUBA

Circular usageof bed-use
mattresses

INOAC

Mountain biking
support via iRC*
Issues in Hakuba

Environmental issues

Economics issues

 Lower snow accumulation due toclimate change Poorer heating efficiency due to aging facilities

 Aging clientele
 Business impact of surging energy costs* A brand of tires and tubes for motorcycles and bicycles owned by Inoue Rubber Co., Ltd., an INOAC Group company

Message
SUSTAINABILITYINNOVATION & ACTION

Develop the tourism industry

Creating a beautiful forest, comprisedof many trees of varying character,

Growth outside of the
tourism industry

rather than merely growing
a single tall tree

Adapt to the times and pass down
to the next generation
Create new industry& jobsFuture vision for Hakuba:

Future vision for INOAC:

Become anever-sustainable community

Become a company that iseven more necessary for society

NatureEconomyThinking up frameworks and methods
to protect Hakuba’s abundance of
nature.

Creating a new circular economy
that utilizes Hakuba’s resources.

CSR REPORT 2023

Hakuba village is a snow resort with 70% of its industry comprised of tourism, yet at the same time it is being severely
impacted by lower snow accumulation due to climate change and the aging of its visitor demographics. When we thought
about the future, we realized it was essential to create new industry. Thus, the Green Work Hakuba project* was born.
Since INOAC possesses not only products but also technological development capabilities and knowledge about manydifferent things, we can create products and services that solve Hakuba’s problems together. You have helped us toincrease the heating efficiency of hotels and inns by introducing THERMAX thermal insulator and to advance the creationof a circular economy by disseminating 30,000 reusable bed-use mattresses to hotels and inns, in addition to bolstering
the non-winter sports scene through iRC’s support in bringing mountain bikes to the area. It would make us tremendously
happy if new services or business initiatives could be created in Hakuba and your company could also offer those to othercommunities.
* Project to think up the future of Hakuba in three steps to make it a sustainable mountain resort
Green Work Hakuba: https://www.vill.hakuba.nagano.jp/greenworkhakuba/en/

Yojiro Fukushima
Director, Tourism Commissionof Hakuba Village

10Feature Story

CONTENTS

Project working closelywith the community in Hakuba

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Specific efforts
Co-creating with schools Co-creation through cooperation on project-based lessons
Starting with upgrades to the thermal insulation in Hakuba Minami
Elementary School buildings, INOAC supported actions by theschools to retrofit their own buildings and dormitories and also
provided THERMAX thermal insulator to Hakuba High School and
Hakuba International School (HIS). At HIS, INOAC is also actively
cooperating to conduct project-based lessons. In these lessons,students play a leading role in conducting marketing research tocreate a bed-use mattress recycling program for the 900 hotels andinns in the village of Hakuba. Together, we are creating a circular
economy in Hakuba while sharing many new discoveries along theway.

Tourism-based R&D on bedding and bike tires

Not only are winter sports thriving in Hakuba, but so is mountainbiking. iRC has been participating in events since the 1990s andbegan sponsoring the Hakuba Mountain Bike Club in 2022.
Through rentals of bicycles fitted with iRC tires and a kids’ school,
we are expanding the presence of mountain biking in Hakuba whileat the same time learning about customer needs and using thatknowledge for product improvements.

Regional development & government collaboration
Hakuba International School (HIS):
https://www.hakuba-is.jp/

Message
Hakuba International School is an integrated junior high and high school that emphasizes project-basedlearning* with the theme of sustainability in the community. Our aim is to educate students to think
independently and act based on their own ideas. In Hakuba, three high school students had a sense ofimpending crisis in 2019 due to the village being significantly impacted by climate change, which led to
the village issuing a Climate Emergency Declaration and shifting the focus of its efforts to the full-scalepursuit of a sustainable society. We want the students at our school to experience changes in the world
as a result of their actions and gain self-esteem and self-efficacy byworking on responsible projects together with companies and thecommunity. We are currently having discussions with your company about
the potential to create a business model out of a circular economy ofmattresses, and I have come to understand the high level of yourtechnology and strength as a manufacturing company. At the same time,the younger generation is overflowing with creativity, so they might be able
to somehow provide your company with new perspectives by involving
them in collaborations. Very few companies decide to think up business
Tomoko Kusamotomodels together with junior high and high school students, so this is an
Founder,
unparalleled opportunity for our school. Being able to create the vision of a
Hakuba International School
better future together is truly wonderful and dream-inspiring.
* An exploratory learning method in which educational institutions team up with municipalities and local companies
for hands-on efforts, including to identify and resolve issues in the community

CSR REPORT 2023

R&D

Planning circular furniture making that uses timber from forest thinning
One community issue that Hakuba Valley is facing is the effective
use of timber from forest thinning. Since heavy machinery
expenditures and labor costs arise when felling trees, we
conducted a verification test using horses to transport
approximately 200 kg of timber.
At INOAC, we are planning to make bed frames and furniture to
be supplied under the added-value Hakuba brand. INOAC iscooperating on solutions to issues confronting locals in the community through initiatives such as turning
paths used for forest thinning into mountain biking courses and walking trails afterward.
We are also cooperating with the Forestry Department of Nagano Prefecture to perform kiln drying which isnecessary for furniture production. The overall system is being designed at INOAC, linking together the local
landowners, Hakuba Village Hall offices, construction associations, people involved in mountain biking, andothers. We started the project in 2023 with the idea that this system can also be applied to other areas to help
resolve issues in those communities.

Hakuba Valley: https://sdgs.hakubavalley.com/

Future developments

Perspective of someone in charge
It was a struggle to gain the approvals internally for the launch of this new
business. In this project, we are co-creating together with people in the
Tourism Commission of Hakuba Village, educational institutions, and forestry
associations—designing a system that links together the related parties andlaunching a business to be welcomed by those both inside and outside of
INOAC. With people from the area now also having joined our company thisyear, we will continue working to create local jobs and contribute to thecommunity.

Takanori Kemuriyama
Director, Hakuba Office

11

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Environment

Environmental management▲●

Environmental management system

Environmental vision
INOAC respects the natural environment of ourirreplaceable earth and contributes to realizing anaffluent society that is comfortable to live in throughtechnology harmonized with our environment andenvironment-friendly corporate activities.

In order to engage in environmental activities in an organized fashion, the Person Responsible for Environmental Management
implements integrated management related to the environment, under the direct control of top management. In addition, thecompany as a whole also engages in environmental activities under the direction of the Environment Committee. We have organizedspecific section committees to handle industrial waste and energy saving, and we coordinate environmental management throughthese committees while seeking further improvements in mitigating our environmental impact. As we strengthen the connection
between environmental management and our main business in managing our objectives, we are also supporting the appropriate
efforts where changes are taking place, such as newly built business locations, buildings, and production lines.
Environmental Preservation Promotion System

Environmental policy

Person Responsible forEnvironmental Management

Energy Section Committee

Committee on Environment

Logistics Section Committee

Waste Reduction Committee

Departmental Section Committee

Chemical Substances
Management Committee▲

Internal environmental audits

accordance with ISO 14001:2015. No points requiring
improvement were identified in the FY 2022 examination, andour certification was renewed. Also, as overall findings, someissues were raised in terms of environmental aspects,
compliance obligations and evaluations, and processes suchas internal audits. We are working to improve what waspointed out as the opportunities arise.
▲

External environmental examinations▲

The Japan Quality Assurance Organization (JQA), an external
certification body, conducts examinations to check if ourenvironmental management system is functioning properly in* CN: Carbon Neutrality

CN-related training sessions●

We implement internal environmental audits to check theoperational state of our environmental management system.
The audit team consists of two to three employees who havecompleted the auditor training prescribed by the company.
The team checks if the environmental management system isbeing properly operated, maintained, and improved. We
create audit guidance and take steps such as revisingchecklists to emphasize efforts toward goal achievement andcompliance in order to improve the quality of the audits.
●

CSR REPORT 2023

(CO2 reduction)

Raw Materials Section Committee

Top management●(1) We observe environmental laws and regulations, thoroughly
ensure compliance, and engage in business activities thatsociety can trust.
(2) We work to reduce CO2 emissions such as by saving energy,
to help achieve a carbon neutral society and prevent global
warming.
(3) We work on resource conservation, waste reduction andrecycling to contribute to a recycling-oriented society.
(4) We properly manage chemicals that could impact theenvironment and seek to preserve our environment by reducing
risk.
(5) We actively develop products with less environmental impact,
contributing to the conservation of nature throughout the life
cycles of the products.
(6) We work to reduce our water usage through initiatives such as
circular water usage to use water resources sustainably.
(7) We engage in environmental management, educate employees
about the environment, implement environmental audits, andcontinue to improve.
(8) We contribute toestablishing a sustainable
society through local
environmental preservation
work as good corporate
citizens.

CN Committee

Person Responsible
for CN Committee

As awareness-raising activities, the CN Administrative Officeconducted training sessions for new employees and heldwebinars for employees in 2023. There were roughly 250
participants.

12

CONTENTS

Introduction

Feature Story

SocialEnvironment

Governance

Data & Statistics

Environment

Initiatives of our CN Committee

Energy Section Committee
MissionScope 1 & 2 Japan:

Raw Materials Section Committee-50% in 2030 (vs. 2013: total overall emissions)Set 2030 monitoring targets for scope 3 emissions (polyurethane, resin, rubber, and paint,

MissionOverseas: Launched efforts in 2023 with -3% year-on-year

which comprise a significant proportion of Category 1) and engage in activities to reduce CO2● Activities to reduce scope 1 & 2 CO2 emissions (case example 01 below)

Action plan

● Reduce usage volume (waste reduction, weight reduction, thickness reduction)● Promote introduction of eco-friendly parts and materials at INOAC Group companies

Action plan

(INOAC Housing & Construction Materials Co., Ltd.) (case example 02 below)● Replace with eco-friendly materials (shift from rubber to resin and biomaterials)● Begin compiling data from overseas business units

01

CO2 emissions by year in Japan (Head Office, associated & affiliated)

03

Emissions decreased 11%
Goal
year-on-year in 2022. Around 30% CO2 emissions by year
SCOPE1SCOPE2% totalof the reduction was from effects(t)emissions reductionvs.
2013
from horizontally rolling out energy 100,000
91,77490,305
81,337 83,876
saving standards, and 70% was
74,35575,000effects from reduced production
60,571and both elimination and60,45045,88753,611 53,937 46,816
50,000consolidation of production lines.
The decrease was 19% compared
25,000
to 2013.
31,20329,855 27,726 29,939 27,539
Adopting renewable energies
0and reorganizing plants will be
20132019 2020 2021 2022
2030
added to our activities targeting a
50% reduction in 2030.

5002● Shift to material and chemical recycling for materials (case example 03 below)

Polyurethane foam recycling initiative

In addition to our conventional material recycling, we have also been working to develop chemical recycling
technologies. Our aim is to reduce our usage volume of petroleum-based materials by recycling polyurethane
foam as a raw material. First we want to make effective use of material cutoffs generated in-house, and thenestablish chemical recycling of products reclaimed form the market.

Polyurethane foam recycling efforts at INOAC♻♻

Market releaseEnd-of-life (EOL)
products

Foaming

Promote implementation of eco-friendly parts and materials at INOAC Group companies
Foam material cutoffs

Decomposition& purification
Regenerated polyol
Impurities

Tohoku INOAC
Detached houses &housing complexes(Miyazaki Prefecture, 2015)
Air conditioning using
geothermal heat

INOAC Head Office(Nagoya, 2017)
Air conditioning using
geothermal heat

INOAC Tsukidate Plant(Miyazaki Prefecture, 2018
& 2021)
Air conditioning and ZEBs
using geothermal heat

Crush

Mold

1st
step

INOAC Group company INOAC Housing & Construction Materials Co., Ltd. produces many different partsand materials that contribute to energy saving. We are actively incorporating these parts and materials in ourown new office buildings and plants.

Tohoku INOAC
Hokkaido INOAC
Kitakami Plant(Hokkaido, 2013 & 2019)(Iwate Prefecture, 2007)
Snow melting using
Air conditioning & snow melting
geothermal heatusing geothermal heat
CSR REPORT 2023

Reclaim

Decomposition
agent

Regenerated
polyolChemical recycling

Effective useof material cutoffs
generated in-house

2st
step
Polyurethane foam

Chemical recyclingof products
reclaimedfrom the market♻♻

MIXEL®

Material
recycling

13

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Environment

Initiatives of our CN Committee

Logistics Section Committee

Departmental Section Committee

Targeting scope 3 (Category 4 upstream transportation and distribution). With 2023 as thebase year, set monitoring targets for 2030 and work to reduce CO2 emissions
in logistics

MissionMission● Expand the potential to achieve scenarios through closer coordination with other● Build systems to visualize CO2 emissions in logistics

Action plan04

join client milk runs, switch to low-emission vehicles) (case example 04 below)

05

BeforeAfter

Transported from plants to each customer in separate vehicles

Consolidate freight from each plant into one vehicle for transport

Saitama Prefecture& Tochigi Prefecture

Saitama Prefecture& Tochigi Prefecture

Aichi Prefecture

A Chemicals

A Chemicals

Cooperating
INOAC plant

Cooperating
INOAC plant
B Industries

B Industries

67%

Number of vehicles

REDUCED

reduction
Supermarket A

Supermarket B

CSR REPORT 2023

Food processing
plant

CO2 emissions

REDUCEDsection committees, customers, and suppliers (case example 05 below)● Calculate the carbon footprint of our main products, set target values, decide on items

to reduce and execute those reductions (case example 06 below)

We consult with logistics companies to transport mixed loads with neighboring manufacturers in otherindustries. This has reduced CO2 emissions by 67% while also successfully lowering logistics costs.

Food processing
plantAction plan

● Reduce CO2 emissions in logistics (improve loading efficiency, consider modal shifts,

More efficient loading in logistics

Aichi Prefecture

Plan and execute medium- to long-term strategies for major productswith risks and opportunities from the transition to a low carbon society in mind

Supermarket A

Supermarket B

Request for supplier to engage in CO2 reduction activities (coordinated with theEnergy Section Committee)

In April 2023, we held an in-house CN exhibition.
Suppliers were also allowed to attend, and theyobserved our CO2 emissions reduction activities.
Additionally, suppliers with high purchase amounts
whose sales ratios with us are proportionally higher wereselected for a kickoff that took place in July. First werequested that they research their CO2 emissions andconceptualize topics for CO2 reduction (energy-saving)items. We also asked that they set reduction targets attheir own discretion. To support them, we are sharing
our energy saving items and are also planning awards atthe end of the fiscal year for companies engaging inoutstanding activities.
06

Launch of CO2 reduction activities per product type (Automotive Division)

Every year there is increasing demand for CO2
reduction efforts from the automotive industry, which
comprises a large proportion of our sales. To meetthese demands, we launched CO2 reduction activities
per product type in 2023. Product leaders werechosen for eight main product types. The leadersgathered on a quarterly basis to share information on
their progress.
14

CONTENTS

Introduction

Feature Story

SocialEnvironment

Governance

Data & Statistics

Environment

Reducing our environmental footprint Summary of major activities in FY 2022
The results of our main environmental efforts in FY 2022 are shown in the table below.

●

To clearly express our reduction targets, we changed our targets from measured units tototal volume starting this fiscal year. In terms of reducing CO2 emissions that result fromenergy use, the CN Committee took the lead in production efficiency efforts to reach ourtargets. For industrial waste disposal, we moved forward with efforts to reduce our volume ofindustrial waste disposal including in recycling and disposal of items with salvageable value.
As a result, our disposal volume decreased and we achieved our target. We began
managing our water intake in 2022 and started managing related targets in 2023. Our water
intake in 2022 was 5.4% less than the previous year. Our volume of released PRTR
substances declined from the previous year by 3.2% due to progress in replacing these

Targets in FY 2022

Energyconsumption
reduction(in plants)

CO2 emissions(tons)

Waste reduction(in plants)

Treatment
amount(tons)

Water intake(thousand m3)

Manage chemical
substances

Revise green
procurement
rules

Environmental
incidents

Major accidents,
legal violations,
number ofcomplaints

315 or less

9,894

321

Targets in FY 2023

73,354 or less

10,440 or less

304 or less

ー

2,266

2,319 or less

No target

Revise green
procurement criteria(April 1, 2022)

Continue addressing
the newnessof this field

No target

00[2,392 (2021 result)]

Environment data is collected to summarize major activities from all INOAC Group business locationsin Japan.
CSR REPORT 2023

We use PRTR substances such as m-tolylene
diisocyanate, a raw material for polyurethane foam, as
well as xylene and toluene which coatings contain. To
reduce the amounts of these chemical substances that
we handle, release, and transfer, we made progress in
reducing dichloromethane which is partially left over as
foaming agent and in both improving and taking
measures against defects in its coating process. We
reduced emissions, but our measured units metricincreased due to its relationship with order volume.
▲

Water intake
reduction

10,098 or less

74,355

Activities to reduce the use ofenvironmentally hazardous substances

Efforts to address water-related risks●

PRTR substances Amount emitted+ amount
reduction intransferred
release and(tons)
transfer amounts

78,439 or less

Achieved in FY 2022▲

Initiative

Activities to reduce waste

In waste reduction, the company-wide Waste
Reduction Committee led efforts to improve our rate ofproduct commercialization by reducing defects andincreasing yield, and to reduce waste by reusing morematerial cutoffs. The committee is working ontechnology to recycle cross-linked polyethylenematerial cutoffs that we produce and is developing acyclical system to repurpose material cutoffs that
normally had been discarded as raw materials.
Production lines are currently being prepared for mass
production of recycled material. The committee isstriving to commercialize recycled materials and reduce
waste.

●

substances and other efforts, but this fell short of our targeted 5% decrease.

▲

Summary of major activities

Since we use large volumes of water for cooling ourfacilities and cleaning, we consider water to be a
precious resource. Our previous activities forwater-related risks involved efforts to address droughts,
water-related disasters, water pollution, and water
regulations. For water recycling, we recycle the water
we use to clean equipment in our coating processes.
As measures against water pollution, we prevent spills
or runoffs of raw materials and also monitor groundand drainage water. To reduce water usage, we started
conducting present state investigations in FY 2022,
and we will begin engaging in actual activities in pursuitof reductions going forward.

Waste treatment amount (tons)(t)

12,00010,166

9,671

2019

2020

10,814

9,894

9,000
6,000
3,000
0

2021

2022

PRTR (amount emitted + amount transferred) (tons)
(t)

400
320
300

301

331

321

2021

2022

200
100
0

2019

2020

Water intake (thousand m3)
Clean waterIndustrial use water

Groundwater(thousand m3)

3,000
2,392

2,377

2,352

2,266

2,000
1,918

1,971

1,990

1,901

206
228

182
224

168
234

146
219

1,000

0

2019

2020

2021

2022

15

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Environment

Environmental risk & information management

Fire Service Act, High Pressure Gas Safety Act

General & others

Factory Location Act, Act on Improvement of
Pollution Prevention Systems in Specified
Factories, Radio Act

Information collection through IMDS in INOAC—reporting process and chemical management system
Component supplier
Components

INOAC

In-house database
Products

Components list,
drawings, etc.

Material supplier

Component parts
Materials

IMDS
data

Chemical
substancesAutomanufacturers,
etc.

Materials
Chemical
substances

▲

▲

●

Promoting IMDS, chemSHERPA and more

INOAC registers information on chemicals and reports it to our customers through IMDS*1, particularly inthe automotive field which is our main field of business. We have a management system to obtain thenecessary information via our supply chain and to register the information into IMDS.

Establishment and implementation of green procurement criteria

We ascertain what chemical substances are regulated by laws, regulations, and by our clients,
based on which we create our green procurement criteria—a list of those chemical substancesthat we should work to reduce. We present these criteria to clients and use them to obtain
information on chemical substances contained in raw materials to be purchased. We are also
consistently monitoring the latest regulatory developments, based on which we revise these criteria
once each year.

Communication about chemical substance management●* Legal orders such as local government ordinances are omitted* Some of the above are abbreviated▲Disaster prevention

Creating an in-house database

The Automotive Division and Foam Products Division are creating an in-house database throughwhich information on chemical substances contained in parts and materials purchased from clients
is identified based on information about chemical substances, and centrally managed. This has
allowed us to be certain of our compliance with laws and regulations on chemical substances andclient requirements which increase each year, while also helping to improve the efficiency and thereporting accuracy of information we register in IMDS and when examining the chemical
substances contained in our products.

●

Air Pollution Control Act, Automobile NOx PM Law,
Act on Special Measures against Dioxins
Water Pollution Prevention Act, Purification Tank Act,
Water quality & soil Sewerage Act, Soil Contamination Countermeasures
Act
Regulation Act, Vibration Regulation Act,
Noise, vibration & odor Noise
Offensive Odor Control Act
Act on Confirmation, etc. of Release Amounts ofSpecific Chemical Substances in the Environment
Chemical substances and Promotion of Improvements to the Management
Thereof, Poisonous and Deleterious Substances
Control Act
Act on the Rational Use of Energy, Act on the
Promotion of Sorted Collection and Recycling ofand Packaging, Act on Rational Use andResource conservation Containers
Appropriate Management of Fluorocarbons, Act on
Special Measures concerning Promotion of Proper& recycling
Treatment of PCB Wastes, Waste Management andPublic Cleansing Act

Air▲

At INOAC, we identify environmental laws andregulations that are relevant to our business activities
and manage them on a daily basis. Throughmonitoring, measurement, and assessment at eachplant, we prevent environmental pollution andotherwise conduct environmental risk management toensure that we properly comply with laws andregulations related to noise and industrial waste
treatment as part of our environmental management
system. We will also strictly observe environmental
preservation agreements with local governments,
including thorough compliance with environmental
laws and regulations, by conducting regular audits
pertaining to environmental regulations.

Major environment-related laws and regulations
pertaining to our business

●

▲

●

Observing environmental laws and regulations

The Global Quality Assurance Division is a company-wide organization for environmental
stewardship, which organizes and leads internal coordination meetings for the chemical substancemanagement sections of each department
regular meetings
once every two months. They review theHoldgreen procurement criteria, check theProcurement
management system and establish or
sectionschange its operating rules, and exchange
Automotive
opinions concerning the latest trends inparts sections
chemical regulations, such as the REACH
Polyurethane
products
regulation and RoHS Directive. They also
Global Quality
sections
periodically audit the management system
Maintain andAssurance
Rubber products
improve
Divisionin each department We strive to maintainsections
management
and improve chemical substancesystems
Plastic products
management systems that are appropriate
sections
and reliable.

Training for emergencies▲●

We also collect information and report it to our clients using the chemSHERPA format, which is widelyused in the industrial world, especially the electrical machinery industry.
*2*1 IMDS (International Material Data System): A database for transmitting and obtaining information on materials and chemicals over theInternet for the automotive industry, which was originally developed to comply with the EU ELV Directive*2 chemSHERPA: A unified format to transmit information on chemicals contained in products in the supply chain, which the Ministry of
Economy, Trade and Industry took the initiative in developing

CSR REPORT 2023

ions
Imple
ment audits at each of the sect

We identify accidents and emergencies according to the characteristics of each business facility,and periodically conduct training to prevent and stop the spread of environmental pollution
resulting from earthquakes, fires and leakage of oils and raw materials. In 2022, disaster prevention
training was conducted at the Anjo Plant (in Aichi Prefecture) on March 25, and raw material spill
prevention training was conducted in manufacturing sections on October 19. These trainings were
smaller in scale due to the pandemic. In other facilities, training for emergencies and urgent
circumstances is conducted on a preparatory basis.
16

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Improving value

R&D efforts▲

Global Technology Development Division,
Sales, Tech depts. in divisions

What areour ideas?

Planning

What are market
needs?

We have launched a scheme to facilitate timely, efficienttransitions form R&D to commercialization by clarifying the rolesof technology departments throughout the company andestablishing departments to centrally manage information suchas market trends, customer needs, and internal ideas andtechnologies that could turn into new products. In our R&D
efforts, we are also incorporating a scheme to establish stage
gates and makeTechnology
decisions at the
departments
Globalappropriate times onin divisions
Technology
Development
 Usage application
matters such as whether
development
DivisionProduct
to proceed with efforts
 Materials
development
development
and what resources to(compositions,
methods)
allocate.

●▲●

Innovation management system

Types of battery materials

Flow from R&D to market release

Customers▲●

R&D centers aligned with the markets

Since we will not be able to keep up with the overwhelming
speed of progress overseas in the conventional arrangement of
R&D originating from Japan, we are moving and expanding our
R&D centers in the US and also establishing an R&D center in
China. We will be striving to accurately discern the needs ineach region, design material compositions and commercialize
products using locally-sourced raw materials, shift to R&D
efforts that originate locally, and make ourselves morecompetitive internationally.

▲

In addition to simply dealing with our customers’ needs, we also
propose additional and improved functionality as we engage indialogue to learn more about their usage purposes and applications,problems, and other details. We are dedicating efforts to developing
polyurethane- and rubber-centric materials for electric car batteries, amaterials market that is expected to
grow going forward. For thesematerials, we suggest specific usage
applications and strive to offer theideas that we have for them while
making value-added proposals.

▲

As a general manufacturer of high performance materials—
polyurethane, rubber, and plastic—we have strength in being
able to leverage technologies and expertise built up over longyears of R&D to perform everything from materials
compositions and compounds to design and processing, all in
one place. We also have the ability to conduct many different
types of product development that suit various needs by
combining high-performance materials with foaming andmolding technology.

▲●

Creating added value●

The strength as our foundation●

Basic approach

Focusing on R&D for polymer products, the INOAC Group
conducts research using the two most valuable resources in thedevelopment of advanced technologies—creative engineers
and cutting-edge evaluation instruments. We offer superior
added value both as a leader of global technology groups andin collaborations with raw materials manufacturers andcustomers.

What to make?

INOAC Technical Center Co., Ltd.

How to make it? Where to make it?
Buy

INOAC Technical Center:
Basic research (next-generation businesses,
new materials)

Make

Verify differentiation of basic technologies

Sell

Global Technology Development Division:
Verify commercializations (medium- tolong-term, new functionalities)
Verify business plans for basic technologies

MarketreleaseTechnology departments in divisions:Execute commercializations (put into
mass production)
Needs: Market trends, trends among competitors
Ideas: Technologies owned & core technologies
Verification for development phase R&D centers

R&D centers Basic development New development

CSR REPORT 2023Japan
INOAC Technical Center
Co., Ltd.

China
Shanghai INOAC Polymer
Products Co., Ltd.

North America
INOAC USA, Inc.

ThailandINOAC (Thailand) Co., Ltd.

Our technical center selects topics with a highdegree of novelty that go beyond the boundaries
of our existing business entities to develop
original future-oriented solutions. In order toestablish a personnel arrangement that canreflect market needs even more accurately, thecenter has recently been actively accepting
personnel rotations from the Global Technology
Development Division and technology
departments in divisions. The center has also
begun working to build an organizational structure
to conduct basic research in line with customer
needs.

Global Technology Development
Division
This division ascertains various industry needs
and conducts R&D for materials and products toaddress them. In addition to developing materials,
the division also works to establish more in-depth
manufacturing (developing production methods)
as well as analytical and evaluation technologies.
To acquire the intellectual property rights to theresults of these development efforts, anIntellectual Property Department has been
established within the division’s organization. This
department contributes to the creation of bothtangible and intangible intellectual property. At thesame time, to bolster industry-academia
collaboration we are sending personnel on
assignment to the New Energy and Industrial
Technology Development Organization (NEDO) andworking on public relations efforts to promote
geothermal heat pipes, with sights set on
achieving a carbon neutral society.

17

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Improving value

R&D efforts▲●

Intellectual property strategy

As an initiative to acquire patents in product development, wehave set a goal of 300 patent applications per year. In thedevelopment of our flagship products, we are also working tobolster our competitiveness by owning a concentration ofmultiple patents for each individual product.
Overseas, we are expanding the presence of our R&D
sections globally to address local needs that must be met
quickly. We are also establishing a support organization inparallel with this expansion in order to facilitate smooth local
patent applications.

Examples of technological development in each business field

Patent applications per year
(Applications)

300

237

265
257

(Forecast)

280(Goal)

300(Goal)

200

100
0

2021

2022

2023

2024

2025

▲

●

Open innovation

We engage in joint development with universities and otherinstitutions, primarily in medium- to long-term basic
development. Taking on new perspectives and mechanisms in
more specialized fields of research enables us to bolster ourdevelopment capability. To manage progress, we hold internalbriefing sessions twice per year to verify the progression anddirection of our research. Through participation in academicpresentations, we are able to further enhance our cutting-edge
technologies while at the same time sharing our researchfindings with society.
One example of our industry-academia collaboration isrevelatory research into residential thermal insulation
mechanisms. Our high-performance THERMAX thermal
insulator is capturing attention as a means to reduce CO2 andcombat global warming. To have this thermal insulator widely
deployed in housing and factories, we are working to explore
its insulating advantages from the structures of buildings toleverage in making widespread contributions to society. We arealso organizing seminars to introduce usage examples tobuilders and other industrial craftsmen. The seminars aremainly held in the Tohoku region.

CSR REPORT 2023

Development of THERMAX high performance
thermal insulator

SOFWA® for business in high-performance materials
SOFWA® is an elongated polyurethanerolled sheet foam characterized byhigh absorbency, capable of absorbing
approximately 20 times its own weightat thinness of 2.0 to 5.0 mm. As
opposed to purchasing the raw
materials from other companies, we
compound the raw materials for it byourselves, from scratch. For medical and hygiene products, SOFWA® shows
promise for deployment in usage applications requiring safety and cleanlinesssuch as the absorbers in wound dressings, diapers, and menstrual hygiene
products.

The Facet Care Mattress for business in bedding and furniture
Excessive sinkage in low resiliencemattresses can make it difficult to roll overin bed, which also leads to bedsores. For
this problem, we developed the Facet Care
Mattress with special slits that distributebody weight to prevent bedsores. With athree-layer structure combining different
low-resilience polyurethanes, it limits excessive sinkage
to make it easier to roll over.

For business in automotive-related products
As a company that has strong relationships with automakers, we are focusing on
industry changes such as CASE and MaaS as priority topics. The shift to electricvehicles requires functionalities such as weight reduction, sound absorption,
soundproofing, thermal insulation, and heat radiation. Leveraging our strengths incompounding and foaming technologies, we are working dedicatedly to develop
products that automakers desire. In addition to establishing the Production Prep
Review Panel that handles the function of checking on the progress of production
preparation, we are striving to shorten launch times for new products by improving
the quality of schematics starting from the initial stages of production preparation,and by setting targets in the design stages and improving quality in the process
designs.

18

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Improving value

Quality improvement efforts▲●

Basic approach

Based on our Quality Policy, we engage in manufacturing thatprioritizes our customers and quality. We also strive toward“gratifying quality creation” via thorough quality compliance andongoing improvements. We have implemented acomprehensive management system based on ISO 9001 toguarantee the quality and safety of products, and to provide
products and services that deliver satisfaction. Throughcollaborations with our customers, we are also pursuing further
improvements in quality.

Basic Quality Policy

1. Manufacturing that prioritizes our customers andquality
2. Observing laws, regulations, and arrangementswith customers
3. Continuously improving to meet the needs of the
times

▲

●

Comprehensive management system for quality
assurance

Three

Pillars

Quality
improvement
activities

Company-wide
quality training

Managing official certifications

TQM

QC-like approaches & methods

Auditing activities

ComplianceManaging important components
Managing emergency contact(prevent recurrence/reapply elsewhere)

Conducting QC activities

SQC

ISO 9001 & measurement control

Train ISO internal auditors

Managing changes in materials

Shift to systems management

Managing new products

Quality inspections (regional & affiliated)

Consumer-oriented productmanagement

Supplier guidance

Measurement control
Education in quality
for overseas expat staff
Company-wide quality training& e-learning

Compliance monitoring

CSR REPORT 2023

Guard

All INOAC departments

The
Prevent criticalquality problems
in advance

Proving that “INOAC means quality”

We are constantly working to improve quality through global
company-wide collaboration and by various standardizations
and ongoing updates to frameworks implemented underregular auditing activities in order to embody the concept of“INOAC means quality.” The three pillars of these efforts are (1)Preventing critical quality problems in advance, (2) Quality
improvement activities, and (3) Company-wide quality training.

(1) Prevent critical quality problems in advance• Managing official accreditations or certifications
When applying for official accreditations or certifications for our
products, we register them with the Global Quality Assurance
Division which is in charge of our management system for
quality. We verify whether there are any discrepancies between
what is written in the applications and the corresponding
products, production processes, and related specifications.
After registering the products, the division conducts regular
audits and ensures ongoing compliance.
• Managing important components
In areas such as performance and safety, lists of importantcomponents with higher social responsibility are managed in
the Global Quality Assurance Division, and critical quality risks
are prevented in advance by conducting regular audits.
Improvements are also made to quality and to work operations
as needed.
• Quality emergency contact system
For critical quality issues, we have established a quality
emergency contact system to deliver negative information to
management within 24 hours of it being communicated fromlocations.
After information has been communicated, the Global Quality
Assurance Division verifies the appropriateness,
implementation status, and effects of the recurrence prevention
measures.

We also check the operational state of the following year’s
important components in the global quality management audit.
Our critical quality issues are defined as (1) those which leadto recalls, (2) those which become social problems, (3) thosethat pose physical danger to individuals, and (4) those with ahigh level of impact from a department’s perspective.
• Managing changes in materials
For materials changes with high risk of serious quality issues,
we build frameworks in which the Global Technology
Development Division and the persons in charge of technology
and quality assurance at the departments in charge deliberateover the changes, and internal approval is given by the Global
Quality Assurance Division. In change proposals to customers,
we have established a robust management structure for
eliminating risks of quality issues in advance.
• Managing new products
For products created using new technologies, new materials,
new processes, or for new usage applications, we strive toprevent serious quality issues in advance through reviews bystaff members including our president to determine whether
they are ready for market launch.
Audit members
President, Global Technology Development Division, Global
Quality Assurance Division, persons in charge of technology,
quality assurance, and sales in the applicable departments
Audit areas
Material quality, product characteristics, productperformance, structure, exterior, comparison with similar
products, product safety, production safety, quality risks

19

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Improving value

Quality improvement efforts• Consumer-oriented management of products
For the products that we design, manufacture, and provide
directly to consumers, we employ a framework in whichdevelopment starts after holding review panels led by the
Global Quality Assurance Division starting from the planningstages and going through an approval process based onstrict validation of risks, so that consumers can use theproducts safely and with confidence.
Even after that, we continue ensuring quality in coordination
with the departments in charge of everything all the way
through post-mass production inspections.

Planning

Manufacturing

Review panels led
by Global Quality
Assurance Division

Consumers

have since expanded worldwide. Starting in 1985, INOAC
has held the World QC & Improvement Competition on a
global scale in order to share quality control activities taking
place throughout the group of companies.
Since 2020 we had been refraining from holding theactivity’s presentations in one venue due to the COVID-19
pandemic, but finally in FY 2023 we started inviting teams
from overseas again and held another world competition
with a total of 13 teams—with three teams from Japanjoining 10 teams from seven other countries.
With simultaneous interpretation streamed online, we aremaking this into a competition that bolsters the momentumof QC improvements in activities at all locations both
domestic and international. We will continue developing
human resources who can contribute to our customers andto society through this competition.

Steps of QC group activities(2) Quality improvement activities• Conducting TQM activities
Under the leadership of our president, all of our employees
in all departments work together in all stages with the aim ofproviding gratifying products and services that satisfy ourcustomers.
At full speed, we are working to improve our people,
organizational, development, and manufacturing capabilities
with all-inclusive participation as the foundation as we growour personnel, create jobs, and expand frameworks in an
effective, efficient manner.
• QC group activities
We have been carrying out QC (quality control) group
activities for small groups to voluntarily gather on the topic
of quality improvement since around 1965. These activities

CSR REPORT 2023

1
2
3

4

Select topic(decide members)

Draft action plan

Environment• Human resource development initiatives
We conduct mandatory training for new employees foracquiring the basic knowledge on quality which is importantto the manufacturing industry. In addition, we also work
toward increasing our employees’ knowledge pertaining toquality with the required curriculum designated for each levelon our hierarchy.
In FY 2023 we also began to incorporate e-learning, andwe have opened our Quality Library where anyone canreview the same lesson content at any time of the day.
Beyond that, we also offer encouragement and support
for taking the QC Kentei written exam as part of our push toraise levels throughout the company.
 Global quality management audits
In order to prevent any serious quality problems in advancethat could threaten the loss of social trust and credibility, we
conduct global management quality audits of critical quality
components and processes at our production sites in Japanand abroad and of all quality management systems.

Applicable locations
Locations in Japan and in Thailand, Vietnam, Indonesia,
South Korea, Taiwan, and China

Machinery Materials

PLAN

Standardize &establish management
Reflection &way forward

Mainly using a cause and effectdiagram (fishbone diagram)

MeasureMethod
ment

Ascertain current
state & set goals

ACT

7
8

Factor analysis(3) Company-wide quality training

PDCA

DO
DO

5

Consider &implement measures

6

Verify effects

Quality Cycle

CHECK

Applicable products
Production processes and plants such as those that make
INOAC’s main materials such as resin, rubber,polyurethane, and of processed components and mattressproducts

20

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Human resources development for practical value improvement

Consideration for human rights

Through a variety of programs, we are working to develop global
human resources. Our Overseas Trainee System is a program aimed atexperiencing the process of achieving results among other cultures
through on-the-job training (OJT) overseas. Younger employees inmany different industry types can achieve significant professional
growth by training at local subsidiaries overseas, confronting thedifferences in values and difficulties of getting people around them
involved, and overcoming difficulties.
This fiscal year, we launched new Intercultural Communication
training for personnel assigned to live abroad, enabling them to feel
more comfortable with working overseas by experiencing what
“intercultural” really means. For employees who are scheduled foroverseas assignments, we also began offering courses to learn
specialized knowledge for living and working overseas (financial
control, legal affairs, quality assurance, safety, etc.) and are assisting
their advance preparations and smooth transitions overseas.

▲●

President’s statement on respecting human rights▲

In addition to climate change, the consideration toward humanrights is also becoming increasingly necessary among social
issues in recent years. In the INOAC Group, we will also be
scrutinizing human rights-related issues and engaging them in all
aspects of our business. In line with our approach to respect forhuman rights outlined below, we ask that all employees embrace
the spirit of being committed to respecting human rights. I will betaking the initiative myself to spearhead these efforts.

Approach to respecting human rights
We recognize that we may directly or indirectly affect human rights in theprocess of conducting our business. We support international norms related tohuman rights, such as the United Nations’ International Bill of Human Rights, theILO Declaration on Fundamental Principles and Rights at Work of the

Human resource development that brings out theaspirations and motivation of each individual●

On August 1, 2023, our president communicated our “President’s
Statement on Respecting Human Rights” to all employees.

▲

At INOAC, we advocate the philosophy that diverse human resources
are the foundation for the continued existence of the company. Rather
than specializing in one particular business, we are an entity that
contributes to society by creating a diverse range of products andservices. By respecting the individuality of each employee who
constructs these products and services, taking quick actions and making
speedy decisions, we aim to develop human resources capable offorming a vibrant global team with an abundance of individual character.

▲We respect the Universal Declaration of Human Rights andinternationally recognized fundamental rights of workers, and we
dedicate effort to respecting human rights without being complicit inany human rights violations such as forced labor or child labor.

▲●

Global human resource development initiatives●

Basic approach●

Basic approach

Human resource development

Our human resources system changed two years ago with the aim of all
employees achieving their own professional growth and developing theirsubordinates. There is something that we emphasize at INOAC in order
to become an organization that instills this type of philosophy, where
each employee changes their own behavior more voluntarily andautonomously and can achieve swift professional growth. That is to bringout and enhance employees’ aspirations and motivation toward theirwork. We are designing training for everyone from general employees to
executives to identify an overlap between their own roles and ‘what they
aim to accomplish’ = “aspirations” at INOAC for the vision of thepersonnel they hope to become, and put it into practice while increasing
their capabilities. Our aim is to be an organization that raises eachindividual’s motivation toward their work and enables them to growautonomously.

At player training

International Labour Organization (ILO), and we hold ourselves responsible torespect the human rights of all people involved in our business activities.
We do not tolerate discrimination based on nationality, gender, age, beliefs,
religion, race, ethnicity, sexual orientation, disability, whether one is married or
has children, or for any other such reason, nor do we permit any form ofharassment such as power harassment, sexual harassment, or peer pressure, or
behavior that undermines an individual’s dignity. We also prohibit forced laborand child labor, and we guarantee freedom of association. In addition, we create
healthy and safe working environments for our employees.
August 1, 2023
Yasushi Nomura
President & COO
INOAC Corporation

CSR REPORT 2023

Using blocks to express
their own work
environments. For apanoramic outlook on
their current position andthe role required of themGradually taking a bigger-picture
outlook on their surrounding
environments—themselves, theirworkplace, related departments,and society—to gain a fresh newperspective on their own roles

Comments from an employee with trainee experience
For one year, from January through December 2023, I
underwent training mainly in plant engineering works and sales
activities at our plant in New Jersey and sales office inMichigan in the US.
Through the trainee system, I was able to see first-hand how
the expat employees stationed there are going about theirwork, which gave me a real sense of the challenges,
capabilities, and methods that will be required of me in order towork globally. I was also able to experience the differences
between the US andJapan in terms of the
independence and meansof communication that areneeded. I’ll be even morecommitted to my work
here in Japan to make themost of my experience
training overseas.

Naoya Oe
Research Section, Business Planning
Department, Corporate Planning Division

On a business trip with local employees

21

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Human resources development for practical value improvement

Diversity & inclusion

Promoting work-life balance

In the past, employees were considered to be responsible formanaging their own health individually. However, the idea that thecompany is responsible for establishing environments where
employees can be physically and mentally healthy at work has now
become prevalent. Improving workplace environments and promoting
health make individual employees feel more motivated for their work,
which in turn makes the workplace livelier as a whole.
With all three parties—the company, employees, and healthinsurance society—working closely together, we aim to mitigate healthrisks, prevent injuries and illnesses before they occur, and balance thebusiness of the company with the health management of its
employees.

Ratio of females
among all INOAC workers

Raise to 20% or higher

2

Ratio of female employees
in sales and technical roles

Raise to 15% in sales rolesand 7% in technical roles

3

Usage rate ofmanagers’ annual
paid vacation

Raise to equal usage rate
as that of general employees,
54.8%

CSR REPORT 2023

All employees take at least 50% of annual paid vacation days in thefiscal year they are allotted

Description of initiative
Create annual paid vacation schedules, communicate in the earlypart of each month about the number of days which must be taken,
and post results on the company intranet

Support systems to balance work and childcare(year enacted)
 Paternity leave (before 1980) Flextime system (1990)*1
 Regulations regarding family care leave (1990)
 Happy Holiday Leave (1991)
 Regulations regarding childcare leave (1992)
 Regulations regarding measures for maternity healthmanagement (1998)
 System for paid half days off (2000)
 Family support holiday leave (2005)
 Sick/injured childcare leave (2005)
 Regulations regarding childcare leave amended(leave period extension) (2005)
 System of reduced work hours for childcare (2008)*2
 Family care leave (2010)
 Regulations regarding telecommuting (2020)*1 Flextime was changed from “with core time” to “no core time” on April 1, 2020.
*2 Changed on July 1, 2022 for the duration of reduced work hours for childcare to end when
the child enters junior high school (March 31 when completing grade 6 of elementary
school) and to enable reduced work hours to be applied in units of calendar months

▲

Goals

Company goals

Health promotion initiatives●

1

Issues▲▲●

Project to promote employment of women

We enable female employees to demonstrate their skills andcapabilities, actively seeking out roles for them and creating
environments where they can contribute to the company. In our
General Employer Action Plan which was formulated based on the Act
on Promotion of Women’s Participation and Advancement in the
Workplace, we set three goals including specific numerical values for
current issues, and we are aiming to harness capabilities and develop
careers in many different departments.

●

▲

●

Global business operations

We began expanding overseas in the 1930s, and we now haveapproximately 70 overseas production plants and business facilities in
14 countries and regions. In the process of doing so, we haveconstructed a robust global network by respecting the various values,
practices, and national identities in the places where we do businessand establishing trusting relationships with the people.

Increasing our rate of annual paid vacation taken

Since fiscal 2021 we have been publishing our company goals andworking toward achieving the Japanese government’s target of at least
70% usage of annual paid vacation days.

▲

We are actively working to support balance between work and family
life, to have an employee-friendly workplace and promote theadvancement of women.

▲

The “many trees of varying character” expressed in our Corporate
Philosophy are the very definition of diversity. Thus, our philosophy itself
could be considered the fundamentals behind our basic policy ondiversity & inclusion. We do business with respect for diversity byemploying and developing people from all walks of life, which includes
actively hiring female employees and global human resources.

▲●

Basic approach●

Basic approach●

Basic approach

Health management

We are formulating annual schedules for the company as a whole
which include priority action items for each month. At each businessfacility, we are putting in place promotion organizations, formulating
Mental Health Promotion Plans, and carrying these out. Working
together with the health insurance society, we are also promoting
employee health based on our “Three Pillars.”Three Pillars
Prevent illnesses before they occur
For each individual employee to be healthy and thrive for longer, it isimportant to regularly prevent illnesses before they occur as opposed toonly getting treatment after becoming ill. We provide assistance for
employees to stay healthy, including subsidies for comprehensive
health checkup costs, mental health courses, stress checks, and more.

Specific health checkups
These health checkups identify individuals who require health guidancefor preventing lifestyle-related diseases. For health checkup categories,
we use examination categories that can accurately identify those who
require specific health guidance, which includes the addition of waist
measurements to observe buildup of visceral fat.

Specific health guidance
Those who have been identified in specific health checkups create
action plans based on guidance received from doctors, health nurses,
and registered dietitians, and make efforts to improve their lifestyle
habits.

22

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Human resources development for practical value improvement

Safety and health / Disaster prevention▲●

Principles and basic policy for safety

Prioritize safety and health as well as disaster prevention in
Principles all behavior, based on creating workplaces where
employees are healthy, safe, and comfortable carrying out
their work.
(1) Improve workplace environments while eliminating andBasicmitigating sources of danger
policy (2) Raise the safety and disaster prevention awareness of
all employees(3) Observe laws and regulations related to occupationalsafety & health

Japan

22

20

-30% from previous year

Overseas

16

21

Total accident frequency rate
Total lost-worktime accident
frequency rate

Japan

1.68

1.53

Japan

0.76

0.46

Severe employee occupational
accidents

Japan

0

0

Overseas

0

0

Japan

0

1

Overseas

00▲Occurrences: 0

Fires at business locations▲

Occurrences: 0

Having no more administrativeclassification III
work environments at worksites

Japan

6 worksites

12 worksites

The Safety Dojo lets employees experience potential work
hazards in safe settings using 15 simulators that enable themto see, hear, and feel the hazards. The experience helps tobuild workplaces capable of achieving the zero-disasterstandard by making employees more sensitive to potential
hazards, training their ability to predict them, and building
habits in safe work practices.
We introduced a virtual reality (VR) system and brought VR
equipment to each location for on-site interactive safety
training. To prevent occupational accidents caused byelectricity, we also addedtraining on handling
low-voltage electricity andopened up participation toemployees other thanmaintenance workers.

1

How to use inspection
and measurement
devices for electricalequipment▲●

All INOAC Safety and Health Committee meetings

As safety activities led by officers themselves and attended by all
employees, we hold safety meetings to increase company-wideawareness of safety, health, and disaster prevention, build
organizational culture, and prevent the recurrence of accidents.
CSR REPORT 2023

• Testers • Electroscopes• Clamp meters

Safety Dojo

2

Electrical wiring &self-holding circuits

3 CPR/AED practiceManagers are improving their skills andknowledge through initiatives that enable them tolead by example.
 Establishing outdoor smoking space to ensure
separation of smoking areas
 Taking environmental measures to reduce roadsurface temperature and lowering temperaturesinside plants via the Thermax ceiling cover method,
thermal insulation for furnaces, and more
 Organizing learning sessions and trainings byindustrial physicians and the health insurance
society Taking measures against heatstroke and extreme
heat, creating Wet Bulb Globe Temperature (WBGT)
visualizations, and systematically improving
workplace environments
 Improving work environments and having no moreadministrative classification III (noise, organic &specified chemical substances, etc.) worksites
 Measures to prevent the spread of COVID-19▲

Total occurrences of employee
occupational accidents

Developing safety-conscious workers with the
Safety Dojo

 Initiatives for healthier environments

Heat insulating pavement(reducing road surface temperatureby reflecting infrared rays)

Thermal insulation for furnaces

Roof covering methods

Disaster prevention activities●

2022
result▲2021
result▲

KPIs

Applicable
scope

Field safety inspections by officers●

We demonstrate “prioritize safety and disaster prevention above all”
through action and establish the practice to “stop it, call it in, and wait”
when a risk becomes known. After performing risk assessments, we
eliminate and mitigate sources of danger. We also set yearly activity
plans with critically important monthly activities focused on lessons
learned from past accidents. We strive to improve the safety, health,and disaster prevention levels at all of our locations by conducting
repeated inspections and educational training and improving any
weaknesses we find in our safety, health, and disaster prevention
assessments.

 Central Safety and Health Committee meetings:
Held four times per year Field inspections by officers: Held twice per year Safety Practitioners Conference:
Held four times per year Safety conferences: Held once per year
 Organizing safety presentations by outside instructors:
Held once per year Safety and Health Committee meeting at each location:
Held monthly

We take action according to our Crisis Management Regulations to minimize
damage by natural and other disasters, execute accurate first responses, andensure early recovery.
 Large earthquakes• Measures to alleviate earthquake damage tobuildings and facilities• Safety and disaster prevention equipment andstockpiles for earthquakes• Post-earthquake response• Stockpile of mattresses and other items to contributeto the community
 Measures against fires, storms, and floods
・Prevention of fires and explosions at production sites
・Preparedness and systems for dealing with storm
and flood damage
・Establishment of a weather information distribution
system Disaster prevention education
・Utilizing the Disaster Prevention Training Center andperforming disaster prevention training at worksites
 Disaster prevention agreements with local
communities
・Providing supplies such as water and mattresses
when disasters occur
・Organizing disaster prevention events andparticipating in disaster prevention training together
with local communities

Disaster Prevention Training
CenterFirefighting training

23

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Supply chain management

Supply chain management

In order to offer products that are friendly to the environment and ourdaily lives, we have defined our INOAC Green Procurement Standards.
We engage in manufacturing with low environmental impact byregularly updating these standards and investigating chemical
substances contained in our products. As part of our procurement
activities geared toward carbon neutrality, we also make visits to clientsand propose energy-saving measures to them. We also make efforts
such as conducting surveys to exclude products and other supplies
involving conflict minerals or human rights abuses.

(2) Building partnerships based on trust with our valued
suppliers(3) Achieving safety & quality(4) Consideration for human rights & labor(5) Consideration for the environment(6) Compliance(7) Consideration for proper information management(8) Engaging in the optimal procurement globally▲●

Strengthening partnerships with our valued suppliers

In addition to quality, price, and other parameters, it is now
increasingly important in procurement activities to work
together with clients on efforts such as improving labor
conditions and making considerations for the environment.
Once we have established our Supplier CSR Guidelines, we will
request that our partners be receptive and prepared to engage
in activities that lead to mutual prosperity as partners, based on
greater mutual trust than ever.
CSR REPORT 2023

Supplier Awards
We present awards for those clients who particularly contributed
throughout the year.

▲

We engage regularly in activities to decide on the appropriate level ofquality together with our clients while looking at the actual products.

Compliance●

Assembly to Address Quality Problems▲●(1) Promotion of fair, just, and sincere procurement
activities

Sustainable procurement

We engage in various activities through the INOAC Partnership
Assembly with 64 of our valued suppliers. Teaming up with our clients,
we engage in initiatives such as awareness-raising activities including
lecture presentations on plans to strengthen business continuity
capabilities and preventing lifestyle-related diseases, activities toascertain problems at worksites and take measures against them, andactivities to improve production processes. Through participation in the
QC Improvement Competition to present results of improvement efforts
and other such activities, we work toward mutually raising the levels of
our enterprises and achieving benefits for all sides while at the sametime developing human resources.

▲

Basic Procurement Policy

Specific efforts●

From tackling global environmental problems as well as
problems related to human rights and labor to carbon neutrality
initiatives to combat global warming, risk management against
natural disasters, and the pursuit of a sustainable society,companies are now expected to engage in very different
activities than they were in the past.
In response to changes in the surrounding environment suchas these, we revised our Basic Procurement Policy. We are also
engaged in CSR throughout our entire supply chain byestablishing Supplier CSR Guidelines and making all of ourpartners fully aware of them.

In basic business agreements entered into with our clients, we clearlystipulate that infringement on intellectual property rights is forbidden.
We also stipulate conformance with green procurement and eliminationof relationships with antisocial forces in order to comply with therelevant laws and regulations.
In order to thoroughly ensure our observance of the Subcontract Act(Act against Delay in Payment of Subcontract Proceeds, Etc. to
Subcontractors), we create a list of clients we do business with, andwe visualize the conditions of transactions with the clients to whom thisact applies. In sections that handle purchasing work, we establish
frameworks to ensure ongoing compliance through attendance at
Subcontract Act workshops and periodical in-house training, inaddition to internal audits conducted by legal affairs sections.

Visualizing transaction conditions
For new clients
When commencing business transactions, we verify whether thosetransactions are subject to the Subcontract Act. Before beginning
the transaction, we exchange payment conditions (including
offsetting conditions), basic business agreements, and notices ofunit price determination with those clients. We also create lists toenable centralized management of what notifications have been
exchanged with subcontracting clients.

For existing clients
Since the Subcontract Act could become applicable totransactions when terms and conditions are changed, we manage
our ongoing Subcontract Act observance by regularly checking
transaction conditions and updating our lists accordingly.

24

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Social | Communication with society

Initiatives in Japan and overseas
In the INOAC Group, we create opportunities for social interactions between people through social contribution activities, primarily in supporting culture and human resource development,
and we help to foster the interpersonal connections formed in these activities.

Activity category▲

Nishi Nihon INOAC is supporting the community-based club
Donguri Kitahiroshima Soft Tennis, which includes Japan’snationwide champion soft tennis player. They help the team getbetter sleep by donating bedding such as mattresses andpillows manufactured at
Nishi Nihon INOAC to the
club.

▲

INOAC Living Vietnam conducted a blood donation drive
through cooperation with the Red Cross. This was part ofongoing efforts to support patient care and emergency
response and to contribute toward the advancement ofvoluntary blood donation
movements in communities.

▲●

Supporting Donguri Kita Hiroshima Soft Tennis●

Helping to raise awareness for blood donations●

Support activities for disasters

In the INOAC Group, we donate relief supplies when
emergencies occur. Tohoku INOAC donated mattresses andsponges to evacuation centers when the Great East Japan
Earthquake occurred. Kyushu INOAC and Tohoku INOAC
donated mattresses toevacuation centers ofcommunities affected bytorrential rainstorms in July
2023.

Summary
Donated 2,000 character-design sponges to Shinagawa Children’s Center [INOAC Corporation Osaki Office]Community contributions

Donated kitchen sponges with municipalities’ official mascot character designs to community groups [Tohoku INOAC]
Donated mattresses to evacuation centers when torrential rains hit Kyushu and Tohoku [Kyushu INOAC] [Tohoku INOAC]
Contributed toward the advancement of voluntary blood donation movements in communities [INOAC Living Vietnam]
Awarded scholarship money for study abroad in Japan and overseas to students from Japan and other countries [INOAC International Education and Scholarship Foundation]

Supporting social studies(social studies support,
workplace experience)

Provided training on trademarks and raised awareness on intellectual property rights in business society for commercial high school students [Intellectual Property Department, INOAC Corporation] [Tohoku INOAC]
Provided workplace experiences for local junior high school students to learn about safety and health [INOAC Corporation Anjo Plant]
Accepting field trips at production plants [Kyushu INOAC]
Continuously conducting culture support activities including sponsoring ballet and opera as INOAC Innovation Support for many years [INOAC Corporation]

Supporting art & culture

Provided large and small polyurethane foam material cutoffs for workshops at Meguro Museum of Art [Higashi Nihon INOAC]
Regularly holding afternoon concerts to enjoy classical music at company-operated store location in Shinagawa, Tokyo [Color Foam Sleepmode Osaki Store]

Health services, medical, health
Environmental conservation
CSR REPORT 2023

Provided education and support for children with disabilities and orphans, and provided health management and rehabilitation for children with epilepsy, cerebral palsy, and Down syndrome.
Also donated daily necessities and supported the children’s physical therapy by donating funds for operating expenses [INOAC Polymer Vietnam]
Conducted cleanup activities (with over 100 employees in attendance) at Halong beaches to raise awareness about environmental conservation [INOAC Vietnam]

25

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

GovernanceCorporate governance▲●Corporate governance structure

Our Board of Directors comprised of eight members makes
decisions on key issues in INOAC’s business. Each board
member reports the execution, financial, and performancestatuses of his/her division, based on which the Board
supervises and controls the business execution of the company.
In order to also separate supervisory and executional
responsibilities in management, INOAC has introduced an

▲

▲

●

executive officer system. Each executive officer, endowed withhis/her own authority from the Board, acts as the head of thedepartment, group company or major functional organization to
speed up decision-making, optimize business operations, andhandle critical business execution.
For our auditing function, we have a Board of Auditors
composed of three company auditors including two external
auditors. The company auditors attend important meetings
such as board meetings and audit the execution of duties by
the directors by inquiring about the status of their business
operations.

Internal control system●

Basic approach

We consider the improvement of corporate governance to be a
key business issue for raising our performance, value, andsocial credibility.

We are implementing various measures to ensure that wecomply with applicable laws as well as the company’s articles ofincorporation in our business execution. For information
management, we determine the responsible department orsection and storage period for each document according to ourDocument Control Procedure. The Executive Management
Committee controls risk management, and Crisis Management
Committee meetings are held when a crisis occurs.
For associated and affiliated companies we have established
our Governance Rules for Associated Companies. We also
clarify rules for business operations and conduct both
operational and accounting audits as needed.

Corporate governance structure (organizational structure)

Appointment and dismissal

Accounting auditor

Business execution structure

Board of Directors
Chief Compliance Officer (CCO)

President & COO
Crisis Management
Committee

Compliance OfficeBusiness
execution

Executive
officers

Supervise

Business Auditors’
Office* When a crisis occurs

MonitorAccounting audit

Appointment and dismissal

Business units

Associated/affiliatedgroup companies

Cooperation

Audit
Internal audit

Board of Auditors(including outside company auditors)

Shareholders’ meeting

Appointment and dismissal

Cooperation

CSR REPORT 2023

26

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

GovernanceCompliance▲●

Basic approach

Compliance training

Whistle-blowing system

We are incorporating compliance portions into the regular training conducted
at major intervals in all employees’ careers (training for new employees,
employees hired mid-career, overseas assignment candidates, thosehandling core functions, etc.). In addition, we conduct separate compliancetrainings according to the characteristics of each region and department.
▲▲●

Implementation system

With authority independent of our directors and executive
officers, our Chief Compliance Officer (CCO) runs theCompliance Office, taking measures and actions forcompliance-related matters. Working together with theCompliance Office, with the CCO playing a leading role, we
conduct compliance activities while finding ways to strengthen
our overall global coordination.
If any compliance violations arise, the CCO directs theCompliance Office as the person in charge of the response. The
CCO establishes a task force at Head Office to address theviolation in a centralized manner according to the level of impact.
We continuously improve the program that determines ourcompliance organization through revisions made regularly by the
CCO. The Compliance Office also hosts a Global Compliance
Evaluation Conference once per year.

Specific efforts

Information Security Committee establishedWe established our Information Security Committee in September 2022 in order to operate properly in line with our Confidentiality
Management Regulations and to further improve our management of information. The aim of our activities is to implement these globally
throughout our organizations as we also work to reduce occurrences of cyber incidents and put response measures in place.

Activities

Goals

 Actions to reduce occurrences of cyber incidents
 Rule-making and training to be able to take quick action against cyberincidents when they occur
 Accommodate Cyber Security Guidelines Ver. 2.0 and various guidelines
set out by customers
 Take actions to bolster security which also include the INOAC supply
chain network

Information Security Committee

Appointment and dismissal

Members of Information
Security Committee

Director of the Information Security
Committee’s administrative office

Person responsiblefor department/section

Administrative officeCompliance organization
Chief Compliance Officer (CCO)

Departments/Plants

Reports

Person in charge of security

Compliance control
CSR REPORT 2023

 Visualize the issues to achieving 90% of the LV1 & LV2 categories ofCyber Security Guidelines 2.0 and how to deal with them, along with themain departments involved, deadlines, and amounts of investments (asneeded) by March 2024
 Conduct training based on the flow of steps to responses when cyberincidents occur
 Security awareness-raising activities (e-learning, workshops)

Chief Information Security Officer (CISO)

Board of Directors

Compliance Office(* Within the duration of our security specialist vendor agreement from February 2023 to February 2024)

Information security management structure(in normal circumstances)
Board members (Management)

Compliance organizational chart

Directions

We have established a whistle-blowing system to enable everyone whoworks for or with our company to consult or report matters involving
compliance violations that have or might have occurred. Our
whistle-blowing system connects both internally (to the Compliance
Office) and externally (to a law firm).

●

In order for INOAC to satisfy its corporate social responsibilities
and expectations from customers, it is not enough to simply
observe the applicable laws. Employees must also recognize
their social responsibilities as part of the corporation. We strive
to implement thorough compliance that goes beyond simply
defining a company policy and observing the applicable laws by
also holding each individual employee to high ethical standards
in their actions.

IT Department

DX Section

Group companies not connected to company intranet(in Japan)

Security support vendors

IT Department Security Team

Information Systems
SectionPlanning & Operations
SectionGroup companies connected to company intranet(in Japan)

28 companies

3 companies

Person in charge of security

Person in charge of security

27

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

ESG statistics

Environment(14 facilities in Japan and 27 related locations (including affiliates))

2018
Heavy oil (kL)
Energy consumption

3

Natural gas (x 1,000 m N)
Petroleum, etc. (x 1,000 kg)

Power purchased (x 1,000 kWh)

CO2 emissions (tons)

2019

2020

2021

2022

3,894

3,778

2,891

2,997

2,792

939

816

800

945

845

5,708

5,932

6,036

6,570

6,030

123,678

125,753

120,162

124,521116,324

90,43790,305

81,337

83,87674,355

Scope 1 (tons)

29,77429,85527,72629,93927,539

Scope 2 (tons)

60,66360,44953,61153,937

46,816

306

320

301

331

321

PRTR (handled & emitted) (tons)
Clean water (x 1,000 m³)

204

228

224

234

219

Water intake

Industrial water (x 1,000 m³)

249

206

182

168

146

Well water (x 1,000 m³)

1,939

1,918

1,971

1,990

1,901

Industrial waste

Volume (tons)

9,300

10,166

9,671

10,814

9,894

Social(Non-consolidated)

2018

2021

2022

1,745

1,853

1,903

1,889

1,884

1,544

1,628

1,642

1,611*

1,590

Female

201

225

261

*

278

294

54

45

52

46

52

Male

42

34

31

31

36

Female

12

11

21

15

16

42.9

41.9

41.6

41.6

41.6

Male

43.2

42.3

42.3

42.3

42.3

Female

40.6

39.3

37.8

37.7

37.9

New graduate recruits* April 1, 2022 through March 31, 2023

Employee-related data

2020

Male

Employees* As of April 1, 2023

2019

Average age (years)* As of April 1, 2023*

Departed employees * April 1, 2022 through March 31, 2023

96

88

114

113

153

Turnover rate (%) * April 1, 2022 through March 31, 2023

5.5

4.7

6.0

6.0

8.1

Hours actually worked (x 1,000 hours)* Employees only, April 1, 2022 through March 31, 2023

3,626

3,748

3,760

3,699

3,645

−

−

−

−

79.8

Full-time employees

−

−

−

−

80.7

Non-regular employees

−

−

−

−

81.5

Difference in pay between males & females(Ratio of wages for females compared to
wages for males) (%)* Figures revised due to change in counting method

CSR REPORT 2023

28

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

ESG statistics

Social(Non-consolidated)2018

Human resource development

Promoting diversity

2021

2022

Total training hours

37,892

25,562

18,60826,02325,018

1,830

1,345

1,442

1,971

1,390

Average training hours per year

20.7

19.0

12.9

13.2

18.1

Ratio of female employees (%) * As of April 1, 2023

12

12

14

15*1

16

Male managers * As of April 1, 2023

278

273

273

289

286

Female managers * As of April 1, 2023

8

9

9

13

13

Ratio of female managers (%) * As of April 1, 2023

2.8

3.2

3.2

4.3

4.3

Employees with disabilities * As of April 1, 2023

30

28

28

28

30

Ratio of persons with disabilities employed (%) * As of June 1, 2023

2.4

2.3

2.3

2.4

2.5

4

3

11

9

5

0

0

1

4

0

Male

−

−

−

−

89.6

Ratio of paid vacation taken (%)* April 1, 2022 through March 31, 2023

47.3

53.0

52.9

64.2

70.6

Average monthly hours of overtime work per person*2* April 1, 2022 through March 31, 2023

18.1

17.5

19.5

19.7

18.6

Members of labor union* Including members of quasi union as of April 1, 2022

1,417

1,486

1,491

1,481

1,486

Lost-worktime accident frequency rate*3

0.60

0.82

0.44

0.76

0.46

Near-miss & hazard prediction cases submitted

0.11

0.10

0.17

0.26

0.40

Health checkup screening rate (%)

96.1

99.9

100

100

100

Stress check screening rate (%)

86.1

90.1

93.9

94.6

97.0

Ratio of leave taken to care for children, including childcare leave (%)*4

Occupational safety & health initiatives

2020

Trainees

Individuals who took childcare leave* April 1, 2022 through March 31, 2023

Producing an employee-friendly
workplace2019*1 Figures revised due to change in counting method*2 Overtime pay + work on days off + legally mandated days off worked Excluding months with 0 workdays*3 Number of occupational accidents ÷ hours actually worked x 1,000,000*4 Submissions per month, per person

Actual number of overtime hours worked for general employees (ST through AM), sales & technicians

Governance(Non-consolidated)

2018

2019

2020

2021

2022

Board of Directors

Members of Board of Directors

10

10

9

8

8

Compliance

Compliance training participants

−

−

271

361

650

Information security training participants

82

87

57

1,034

53

Severe incidents

0

0

0

0

0

Information security

CSR REPORT 2023

29

CONTENTS

Introduction

Feature Story

Environment

SocialGovernance

Data & Statistics

Company outline▶ Company nameINOAC Corporation▶ Capital

720 million yen▶ Representatives

Soichi Inoue, Chairman▶ Head Oﬃce

2-13-4 Meieki Minami, Nakamura-ku, Nagoya, Aichi 450-0003

Ratio of domestic sales comprised by each businessYasushi Nomura, President & COO

2018

58%

2019

59%

▶ Head Oﬃce (Tokyo) 4F Osaki West-city Bldg., 2-9-3 Osaki, Shinagawa-ku, Tokyo 141-0032

2020

56%

▶ Established

1954

2021

58%

▶ Employees

1,835 (as of April 1, 2023)

2022

61%

▶ Sales163.2 billion yen (as of December 2022)

0500

Automotive

High performance materials

1,824

42%

1,894

41%

1,717

44%

1,763

42%

1,632

39%
1,000

1,500

2,000

(hundred million yen)

▶ Main Businesses

INOAC Materials for a Comfortable Life.
INOAC operates in five broadly-defined categories of business.
We make people’s lives more comfortable and enjoyable in many different
life scenarios, offering a wide range of products in various markets.
1

2

3

4

5

High Performance Materials
Operating in various fields closely
related to daily life, from consumer
products to information technology
equipment and housing andconstruction materials.
Automotive-Related Products
Offering products for interiors andexteriors, products for car functions,and seat-related products that help
make cars safer and more comfortable.
iRC Tire
This specialist manufacturer ofmotorcycle, bicycle, and wheelchairtires and tubes is the original founding
section of the INOAC Group.
Housing & Construction Materials
Operating mainly in housing,construction, civil engineering, andenvironment-related business.
Bedding & Furniture
Producing Color Foam bedding for a
comfortable night’s sleep, as well as
Smile nursing care furnishings, andHUKLA furniture.

CSR REPORT 2023

Major Group companies in Japan30

R&D centersin4countries

Japan, USA,
China, Thailand

North/Central AmericaUSA
13 companies
Canada 3 companies
Mexico 5 companies

China
Mainland China 16 companies
Hong Kong
1 company

Asia
Thailand13 companies
Taiwan3 companies
Indonesia
5 companies
Vietnam
4 companies
South Korea
1 company
Singapore
3 companies
Philippines
1 company
Malaysia
1 company
Sri Lanka
1 company

Ratio of global sales by region
China

17％

Japan

2022

32％

Total

Major Group companies overseas

70

China 17 companies
Asia 32 companies
North/Central America 21 companies

North America

24％

591.7

billion yen
Asia

27％
$1 = ¥132.7 (exchange rate on Dec. 31, 2022)30