Message from the President
municating directly to employees in that way, I foster a culture where we join forces and keep challenging ourselves together. This fiscal year, as the COVID-19 pandemic graduallywinds up, I plan to actively visit overseas business sites aswell.

Our company was founded in 1887 as Japanʼs first chemicalfertilizer manufacturer. We have now set up our corporate
slogan “WHERE IT ALL BEGINS” and are moving forward withour business with our vision to create innovation.
Since our founding, we have transformed to respond tothe occasional changes in the business environment. In an effort to determine our direction for the future and clarify theraison dʼetre of the Group, we have redefined our corporate
philosophy to “Contribute to the protection of the global environment and the existence/development of humanity, offering the value sought by society” in April 2022. As a new
growth strategy based on the business environment and social issues, we have formulated and launched two plans,“Atelier2050” and “Vista2027”. Atelier2050 is a long-termbusiness plan with a broad perspective for 2050, and Vista2027
is a mid-term business plan that serves as a stepping-stone
for Atelier2050.
I believe that our corporate philosophy and mid- to longterm direction of the Company have meaning only if they arethoroughly understood by each and every employee. For thisreason, since April of last year, when we redefined our corporate philosophy and started a new business plan, I have personally visited our business sites in Japan and abroad, andgiven lectures to entire sites or conducted informal discussions with smaller level-specific groups. During my visits, I
provide explanations while looking at the faces of the on-site
employees and answer their questions on the spot. By com-

Operating Profit and Net Income at Record Highs for
9th and 10th Consecutive Year
Steady Push of Vista2027
Regarding our results for FY2022, operating profit and net income reached record highs for the 9th and 10th consecutive
year, respectively. However, due to the sharp rise in price ofraw materials and the deterioration of market conditions, theoperating profit came short of its Vista2027 target for FY2022
by 1.2 billion yen.
I would like to explain the progress of the four basic strategies announced in Vista2027. With regard to our first strategy, “deeply exploit business areas and increase marketing
ability,” we established the Biological Group within our Biological Research Laboratories in April 2022, in order to accelerate the development of microbial control technology, a newcore technology. In information science, another new coretechnology, we are also conducting verifications in materials
informatics (MI). In addition, in April 2023, we newly established the Animal Care Planning Group within the Planningand Development Division, to consider developing veterinary
pharmaceuticals and building a sales system.
Regarding our second basic strategy, “promote sustainable management”, we newly established the Sustainability
Promotion & IR Department in April 2022 and the department
has since shown strong leadership in sustainability initiatives
and measures. It holds business briefings and ESG briefings● Progress of the “Vista2027” mid-term business plan

Progress of the four basic strategies

Vista2027

YAGI Shinsuke
Representative Director,
President & COO

2022

2023

2024

2025

Vista2027 Stage I

2026

2027

FY2022 Result

Sales: 285.0 billion yen

Sales: 228.1 billion yen (+20.1 billion yen)

ROE: above 18.0%

ROE: 19.4%

Operating profit: 67.0 billion yen

Major Non-financial Targets for FY2027

55%) shows comparison to FY2021

FY2022 Result
Progress

Achievement of thetarget to maintainat least

Nissan Chemical Corporation

13

Integrated Report 2023

30%

Compared
to FY2018

Progress

Reducedby

9.8%

Nissan Chemical Corporation

14

Strengthen the creation and co-creation
process of values● Newly establishment of the Digital Transformation
Department● Provision of a company-wide digitaltransformation (DX) platform● Adoption of a role grading system in the personnel
system4

GHG emissions (Scope1+2)

Reducing
at least

3

55%*A plan to pursue “what we can do for the future of the globe and human”

Promote sustainable management● Newly establishment of Sustainability Promotion& IR Department● Hold of business briefings and ESG briefing● Launch of the Nissan Chemical Sustainable Agenda

Total payout ratio: 78%(

at least

2

Operating profit: 52.3 billion yen (+1.3 billion yen)

Total payout ratio: Maintain 75%

Deeply exploit business areas andincrease marketing ability● Newly establishment of the Biological Group● Newly establishment of the Animal Care PlanningGroup● Verifications of materials informatics (MI)Vista2027 Stage II

Major Financial Targets for FY2027

Rate of total sales of Nissan Chemical Sustainable
Agenda* target products
and services in
consolidated net sales Maintain1

Compared
to FY2018

Integrated Report 2023

Expand market shares and profits ofexisting businesses● Construction of new plant and manufacturing
plants● Expanding the response ability of overseas
business sites

Value Creation & Growth Strategies

Become “a group of
co-creators that face challenges for changewith a strong passion” to continue creating
irreplaceable “Must-Have” products

Sharing the Direction for the Future and the Corporate
Philosophy with Employees
Building the Ideal State of Nissan Chemical Together
with Employees

Message from the President

tural reform after shutting down melamine business, in theChemicals business. Regarding Venus® Oilclean, a microorganism formulation that decomposes oils and fats, we joineda project to develop biofuels in order to reduce CO2 emissions
and have started exploring new applications outside of thetreatment of wastewaterʼs oils and fats.
When it comes to display materials in the Performance
Materials business, we set out to deepen photo-alignment
material for IPS liquid crystal as well as advanced the development of materials for next-generation displays such as micro LED displays. In semiconductor materials, we strengthened our development abilities of EUV materials in
anticipation of future growth, while expanding development
and sales operations in a bid to increase our market share in
multi-layer materials and packaging materials. In addition,
NCK, our South Korean affiliate, built a new plant in Dangjin
to strengthen its product supply abilities. The start of operations is scheduled for FY2024. NCK also newly established asemiconductor group in its R&D center located in Pyeongtaek,
so as to respond even more rapidly to customers in South
Korea and China. In inorganic materials, in addition to carrying forward sales promotion of oil and gas materials, we performed evaluations of CCS materials aimed at efficiently storage CO2 in the ground, in collaboration with Australian national research institutes and university.
In Agricultural Chemicals business, we promoted global
expansion of the insecticide GRACIA®. In addition, our Indian
joint venture Nissan Bharat Rasayan (NBR), whose goal is tostrengthen product supply abilities, started its commercial
operation in March 2023. The construction of manufacturing

Value Creation & Growth Strategies

both inside and outside of the Company, and actively sends
out related information.
In addition, we launched the “Nissan Chemical Sustainable Agenda” in April 2022. This plan aims to pursue “whatwe can do for the future of the globe and human” by providing products and services that contribute to solving social issues. We define the rate of total sales of products and services covered by the Nissan Chemical Sustainable Agenda asa key performance indicator (KPI). In Vista2027, we have set atarget of “maintaining at least 55%”in each fiscal year. In
FY2022, the first fiscal year of the plan, we achieved this target.
As part of our third strategy, “strengthen the creationand co-creation process of values”, we revised the personnel
system in November 2022. We have replaced the conventional function-based personnel system with a role grading system that more efficient allocation of human resources basedon potentiality and engagement of every workforce rather
than seniority. Furthermore, we newly established the Digital
Transformation Department in April 2022 and are making
progress in developing a company-wide platform for digitaltransformation (DX). In preparation for the full-fledged
launch of the data-driven system for Vista2027 Stage II whichstart from FY2025, we are currently steadily developing aplatform for data utilization. We aim to utilize data to visualize greenhouse gas (GHG) emissions in real time and optimize
the logistics systems.
As part of our fourth strategy, “expand market sharesand profits of existing businesses”, we promote measures toimprove profitability of ammonia-related products as a struc-ingless if we cannot assess whether there is demand for aparticular product or technology in the market, what the potential scale of the business is, or when it is most effective tocommercialize and launch the product in the market.
I think there is little value in coming up with outstanding
technologies if the market will not use it. Furthermore, there
are also methods to suggest and popularize a product ortechnology not on the market yet but which might become a“Must-Have” in the future. I regard business portfolio management as very important, in that it consists in investing limited capital such as people and money in promising businesses and maximizing corporate value.
Then, in order to develop “Must-Have” products and technologies that lead to sales and profit growth, it becomes important to have the marketing ability to judge the state of themarket, ability that results from the recognition and resolutionof customersʼ issues. I call this process “connoisseur”, and weput effort into developing discerning personnel. I repeatedly
mention the terms “Must-Have” and “connoisseur” and, as aresult, these terms seems to have absorbed to the employees
as keywords. Developing discerning personnel is not an easy
endeavor. The source of our corporate value is research andapproximately 70% of our annual hires in regular positions areresearchers, but an exclusive devotion to research does notdevelop discerning abilities. We offer opportunities for researchers to transfer to marketing positions so they can understand market trends. As a company, we support employees inthe enhancement of their discernment abilities.

plants in Japan is also progressing smoothly, with operations
scheduled to start in 2024.
In drug discovery in the Healthcare business, we are prioritizing human and capital investment in oligonucleotide
therapeutics. In biomedical materials, a bio-venture company
engaged in the realization of heart regenerative therapies
through iPS cells, used our companyʼs prevelex® when producing cell clumps to perform clinical trials.

Enhancing our Discernment Abilities to Create
Irreplaceable, “Must-Have” Products● Basic strategies and business domains of the long-term business plan “Atelier2050”

Atelier2050
Basic Strategy
Deeply exploit and expand
business areas
Expand into new areas related to
growing businesses

Business Areas (expansion into new areas)
1

Information &Communication
Semiconductormaterials
Display materials

Pursue sustainable
management further
Develop business activities that
contribute to solving
environmental and social issues

Renovate management andbusiness foundations

Photofunctional
materials

2 Life ScienceAgrochemicals
Animal healthproducts
Biomedical materials
Pharmaceuticals(small molecules,
oligonucleotides,
peptides)Sensing Systems<IoT sensor materials> <Biomimetic sensors>
Metamaterials

Accelerate the value-creation
process by utilizing digitaltechnology

Environment &3 EnergyS econdary battery
materials and fuelcell materials

Industrial chemicals
Colloidal silica
Affiliate companies

Next-generation
solar cell materials
CCUS materials

Microbiome<Agriculture/Healthcare> <Microbial materials>
Biostimulant

CO2 reduction
systemGrowing businesses

Nissan Chemical Corporation

Materials &4 Services

15

Integrated Report 2023

Core businesses

As a big theme across the Company, I tell our employees thenecessity to create unique products and technologies thatcannot be substituted in the market, and without which the
product cannot be manufactured or functioned, in order for
our Group to keep growing in the future. I explain that, for society, such products and technologies are indispensable“Must-Have” products. Whether in the semiconductor business or other businesses, the level of technology asked of us
is becoming quite advanced. In this context, if we create irreplaceable products and technologies inimitable by other companies, we will greatly contribute to the growth of our businesses and to the world.
For example, when conducting research and development(R&D) on new performance materials, which are growth drivers, if we pursue products and technologies that only we canprovide and other companies cannot imitate, such as the alignment materials needed for LCD production and the anti-reflective coating materials essential to semiconductor production,these will become “Must-Have” products on the markets andwe have an overwhelming competitive advantage.
“Must-Have” products and technologies are not easy tocreate. We allocate 8% of our sales to R&D, and we pride ourselves on the fact that this level exceeds that of other companies in our industry. However, large R&D expenses are mean-

Nissan Chemical Corporation

Creating Products that Contribute to Decarbonization
for the Protection of the Global Environment and the
Existence/Development of Humanity
As suggested by the expression “the era of VUCA,” Volatility,
Uncertainty, Complexity and Ambiguity have been increasing
recently and, as society undergoes drastic changes, the fu-

16

Integrated Report 2023

Message from the President

Nissan Chemical Corporationand outside directors, is making progress in its discussions
surrounding the President CEOʼs succession. We plan to define the ideal image of my successor and those coming afterwards, discuss what dispositions are required, what level ofhuman resources we must choose when it comes to talentdevelopment, and resolve these themes and others at theBoard of Directors.
Our company was founded in 1887 under the spirit “todedicate ourselves to prosperity of the nation by agricultural
fertility,” by the pioneers of the Meiji period Mr. TAKAMINE
Jokichi, Mr. SHIBUSAWA Eiichi and Mr. MASUDA Takashi, and
136 years have since passed. When comparing the time of our
founding with our current era, the handled products themselves have changed but, from the time of our founding when
there was no concept of sustainability, there is no change inour fierce passion for contributing to social development bysolving social issues through the power of chemistry.
We challenge ourselves to effect change not simply for
our Group but for the entire value chain, and engage in initiatives toward sustainability. In this way, we continue to be chosen as a corporation by all our stakeholders.

sion policies. They can work as an individual unit, but alsocollaborate with like-minded people inside or outside of theCompany to discover even newer ideas.
We started extending the retirement age in April 2023. We
are gradually raising the retirement age from 60 years of age
to 65 in 2032. The experience and knowledge cultivated byour veteran employees are one of our important assets. We
have created an environment in which they can make full useof themselves, renew their motivation and play an active roleon the front line. I have great hopes regarding the participation of professional veterans.
Human resources, often called human assets, are represent priceless capita for a company. As suggested by our ideal organizational state for 2050, “a group of co-creators thatface challenges for change with a strong passion,” we remaincommitted to building an organization that supports co-creation and taking on challenges.

Further Strengthening of the Groupʼs Corporate
Governance through Reforms toward a Board of
Directors Rich in Knowledge, Skill and Diversity

Securing Outstanding Personnel and Tackling the
Future through Value Co-creation
In Atelier2050, we drew up our ideal state in 2050 “a future-creating company that grows through seeking to enrichpeople and nature” for the corporate state and “a group of
co-creators that face challenges for change with a strong
passion” for the organizational state. However, labor shortages and the securing of outstanding personnel are management issues in both the short term and the mid- to long-term.
As initiatives in regard to these issues, we raised the salaryof young employees and, in November 2022, revised our personnel system and adopted a role grading system. The aim of
this system is to treat human resources appropriately according to their responsibilities and roles rather than seniority.
In FY2023, we have begun conducting career dialogue between superiors and subordinates, separately from the performance evaluation interviews conducted so far. We havecreated an environment where the right person can be at theright post, so that employees work in a pleasant atmosphereand the Companyʼs businesses continue to grow. We havealso launched the “10% challenge” system to encourage employeesʼ appetite for challenge and free thinking. With thissystem, employees can dedicate 10% of their working hours
to themes they want to work on independently, in areas outside of their day-to-day affairs or not explicitly stated in divi-

17

Integrated Report 2023

Revision to the Corporate Governance Code called for the further functional enhancement of the Board of Directors andanimated discussions in their meetings, outside directors included. Therefore, the Group is continuously working to strengthen governance. I think the Board of Directors must be composed of members selected from various perspectives tomake decisions in an appropriate and agile manner and supervise the execution of business activities in our companyʼsdiverse fields. Those perspectives include the balance ofknowledge, experience, skills, and other characteristics, anddiversity, including gender, internationality, and practical experience in the totality of the board.
In June 2023, Ms. TAKEOKA Yuko became the second
woman in the Companyʼs history to be appointed outside director. Ms. TAKEOKA has many years of experience as a researcher centered on the synthesis and characterization offunctional polymers, which is deeply related to our business.
In addition to her expertise as a Doctor of Engineering, she
has a rich experience and an extensive knowledge of the field.
With the appointment of Ms. TAKEOKA, half of the four outside directors are now women. I also hope that Ms. TAKEOKA
will contribute her female perspective on how to build a company where women can work easily and actively participate.
Our company has identified the expertness and skills requirements required for its directors: “corporate management,” “research and development/technologies,” “financeand accounting,” “legal/risk management/internal control,”“personnel affairs/personnel strategies,” and “global experience.” In the future, we will work to form a Board of Directors
comprised of talent with outstanding personalities and reputations, with a high level of knowledge and a strong sense of
ethics, and suitable for our board. We will emphasize this balance, as well as diversity in the formation of our board, andwill continue to implement reforms to that end.
Moreover, the Nomination and Remuneration Advisory
Committee, which is comprised of the Chairman, the President

Nissan Chemical Corporation

The lasting belief of Nissan Chemical,
unbroken since our founding
Improvementof Company
Value

Our company’s products
lead to the resolution ofsocial issues

Creating products
chosen by society

Improvementof Social
Value
Our founder Mr. TAKAMINE Jokichi wished to contribute to
the improvement of Japan’s national power through agriculture, our company’s strength, and he expressed that hope in
our founding spirit, “to dedicate ourselves to prosperity of
the nation by agricultural fertility.”

18

Integrated Report 2023

Value Creation & Growth Strategies

ture is anybodyʼs guess. Nissan Chemical is no exception inthat regard.
Despite the circumstances, our basic approach for the
management of the Group is to discover all sorts of risks, apply them to situations within our assumptions and take thelead by adopting the relevant measures. Delayed countermeasures against risk are due to a lack of imagination and may
prove fatal when it comes to corporate management.
One of them is climate change countermeasures. Regarding climate change countermeasures as well, “unexpected situations” are no excuse for us to continue our business. In
June 2022, we established the Climate Change Committee of
which I am the Chairman. In 2020, we announced our 2°
C and4°
C scenario analyses for the analysis period up to 2030 in theprevious long-term business plan, but in the Climate Change
Committee, we have also carried out new analyses on the 1.5°
C
and 4°
C scenarios, and we announced them in July 2023. In
these new analyses, we determined the impact on our business and the possible countermeasures, including the financial risks and opportunities, based on the 1.5°
C and 4°
C scenarios. We also extended the analysis period until 2050.
We have a target of net zero GHG emissions by 2050, andhave set the target of reducing by at least 30% from FY2018
level. We are also having discussions from a technologicalperspective, and are getting an understanding of which facilities we should improve. Moreover, we are conducting discussions on the best use of internal carbon pricing (ICP), as away to build a structure for GHG reduction. For example, theChemicals business generates a large amount of CO2 emissions but, by incorporating ICP in our managerial accounting
as a corporation, we can actively implement initiatives thatlead to increased profits for each business, while promoting
decarbonization of business activities to achieve both socialand economic value. We view our progress toward our ESG
target indicators, such as those related to climate change
countermeasures, and the following results not as formalities but as urgent issues to ensure our business continuance.
Last year, in order to signify our stance, we put in place amechanism which reflects the progress toward our ESG targets in officersʼ remuneration.
In order to realize our corporate philosophy “Contributeto the protection of the global environment and the existence/development of humanity, offering the value sought bysociety,” our company must continue to be chosen by stakeholders, and our products must continue to be chosen by themarket. For us, overcoming various issues such as the reduction of GHG emissions and being the perpetually chosen company is our social value, and is closely connected to our social
contribution.
By FY2027, the final year of Vista2027, we want to create
products that contribute to decarbonization and the technologies that support them, such as environment & energy materials or CCS materials, as well as develop products that fit
the slogan “where it all begins.” I believe it is important toplant the seeds of technologies by the end of Stage I in FY2024.
Then, after one or two sprout, I want us to work for the 20
next following years so that flowers blossom by 2050.