1 Promotion of Resource Recycling

Environmental Strategy

Recycling of waste materials

Initiatives toward the realization of the Daiken Global Environment Vision 2050
In October 2021, we formulated the Daiken global environment vision 2050, in which the Daiken Group’s attitude for the long-term
initiatives, policies, and goals for environmental issues are established We aim to contribute to the realization of a sustainable society
from the three perspectives of the promoting resource recycling, mitigating climate change, and coexisting with nature and will put
effort into the resolution of social issues, such as environmental issues.

VisionFor a future full of smile
The overall aim of the Daiken Group is to realize a sustainable society towards 2050 bypromoting resource recycling, mitigating climate change, and coexisting with nature.
Environment Policy● Promote material recycling and thermal recycling on

By actively taking advantage of properly managed sustainable forest resources, we can promote forest circulation and help to realize a circular economy of sustainable
resource circulation throughout society by reusing resources, material recycling, and thermal recycling, rather
than disposal.

2 Mitigation of climate change

the premise of cascade use.
● Zero final disposal of waste in landfills.
● Reduce waste through a series of processes fromprocurement of raw materials to the use and disposalof products.

2 Net zero greenhouse gas emissions● Promote energy conservation by improving productivity

and efficiency.

We will reduce our own greenhouse gas emissions, as wellas emissions throughout the entire supply chain. Also, byusing sustainable forests and wood resources, we will
help to expand carbon storage and contribute to themaintenance and circulation of carbon sinks as we work
together with society to achieve carbon neutrality.

● Expand the use of renewable energy.
● Expand the use of wood materials and products that

store carbon.
● Promote reforestation through the active use ofmaterials from managed forests.
● Contribute to the maintenance and recycling of CO2

sinks through afforestation.

3 Reduce the impact on the natural

3 Coexistence with natureenvironment– Conservation of biodiversity –In consideration of biodiversity, our objective is to coexist
with a sustainable natural environment and preserve ecosystems by contributing to environmental impact reduction, conservation, and restoration.

● Zero use of lauan wood.
● Appropriately manage chemical substances andreduce emissions.
● Promote the effective use of water resources.
● Reduce the use of plastics derived from fossil fuels.

Sustainability Promotion Committee

QEMS Manager

Secretariat: Quality Assurance Department
and Sustainability Promotion Department■ Chairperson: Representative Director, President■ Secretariat: Sustainability Promotion Department andCorporate Planning Department(Key Agendas Concerning Environment in Fiscal 2022)● Results and progress of the medium-term ESG plan
(Environment)● Response to the climate change-related issues

QEMS Internal Audit Team

Each Department/Group Company
QEMS Manager

47

5 offices and plants at 5 companies

Use for materials

28%

54%

(reused as energy)(reused as ingredients)

2

36%

120

reduction
42%
26% Greenhousegas emissions in 52%
Japan (Scope 1+2)
117.4
compared
Reduction
Reduction
Reduction
114.8
to fiscal
100 t-CO2)(1,000103.9
Target 2014of the medium-term
Goal of the medium-term management plan GP25 3rd Stage
140
99.3
initialgoal in 2030
(Japan): 26%
reduction(Compared
to fiscal 2014)
94.0Stage
management
Compared to fiscal 2022:The
10%
reduction(Compared
to fiscal
2014:
42% reduction)
93.9 plan GP25 2nd
127.1
91.1
80
81.4
10%
25% Reduction
82.5
120
36%
reduction
reduction
26%compared 42%
52%
New goal in 2030 (Japan): 46% reduction (Compared to fiscal 2014)
117.4
compared
73.2Reduction
60
Reduction
Reduction
to fiscal
114.8
to fiscal
100
2022
103.9
2014
99.3
The initial goal in 2030 (Japan): 26% reduction (Compared to fiscal 2014)
94.0
40
93.9
91.1
80
81.4
10%
25%
Reduction
To achieve net
82.5
reduction
zero greenhouse20
New goal in 2030 (Japan): 46% reduction (Compared to fiscal
2014)
compared73.2
gas emissions
60
to fiscal
Reduction image in the future(To realize carbon neutrality)
2022
0
2014
2022 2022
2026
2031
2051 (Fiscal year)
40
Results Target
TargetTargetTargetTo achieve net
zero greenhousegas emissions

20

Reduction image in the future
0

140

2014

2022 2022
Results Target

2026
Target(To realize carbon neutrality)

2031
Target2051 (Fiscal year)
TargetOverseas greenhouse gas emissions (Scope 1+2)

(1,000 t-CO2)

We took the opportunity ofthe start of the GP25 3rdStage and have expanded
the scope of calculation ofgreenhouse gas emissions
from Scope 1-3 in Japanto Scope 1-3, including theoverseas group bases andset the reduction goals inJapan and overseas.

100
140
80
120

Goal of the medium-term management plan GP25 3rd Stage
Compared to fiscal 2022: 10% reduction

10%

80.2

25%Reduction
reductioncompared
to fiscal 72.2
2022
Goal of the medium-term management plan GP25 3rd Stage

60 t-CO2)(1,000
100
40
80
20
60
0
40

Compared to fiscal 2022: 10% reduction

10%

80.2

reductioncompared
to fiscal 72.2
2022

2022
Results

Reduction image in the future(To realize carbon neutrality)

2031
Goals

2051 (Fiscal year)
Goals

To achieve net
zero greenhousegas emissions

Future Initiatives toward Reduction● Pursuit of the productivity
0 improvement and efficiency in
2022
2026

（%） production bases

To achieve net
zero greenhousegas emissions

25%Reduction

2026
Goals

20

37 offices and plants at 9 companies

Use for heat

Under the idea of effectively using timber that has the functions to fix and store carbon as a material for a longer period of time, the Daiken Group has
been implementing initiatives for the reduction of greenhouse gas emissions linked to the business activities by using wood chips derived from residual
wood offcuts and construction waste materials as raw materials. In the previous medium-term management plan, we could achieve a 36% reduction
against the reduction goal of the total CO2 emissions in Japan at a 26% reduction compared to fiscal 2014, thanks to the effects of using renewableenergy and productivity improvement. In addition, in the new medium-term management plan, we expanded the scope of calculation to our overseas
bases, instead of only in Japan, and upheld the goal of a 10% reduction compared to fiscal 2022. With an eye toward the medium and longer term,)as(1,000
thet-COgoals
in fiscal 2031, we set a 52% reduction in our domestic group bases that surpasses the goal of a 46% reduction by fiscal 2031 compared
Target of the medium-term
Goal of the medium-term management plan GP25 3rd Stage
to140
fiscal2014
upheldby theplan
Japanesegovernment
and aCompared
25% reduction
compared
toreduction
fiscal 2022
in our overseas
and will aim for the
management
GP25 2ndStage
to fiscal
2022: 10%
(Compared
to fiscalgroup2014:bases,
42% reduction)
127.1
realization of carbon neutrality upheld in the Daiken global environment vision 2050.

ISO 14001 Certificate Acquisition Status (As of the end of March 2022)(2) The percentage of the offices that acquired the certificate in all overseas
offices: 54.1% (Based on the consolidated number of employees)

92%

47,100 t

Initiatives for the reduction of greenhouse gas emissions linked to the business activities*QEMS: Quality and Environment
Management System(1) The percentage of the offices that acquired the certificate in all offices inJapan: 91.1% (Based on the consolidated number of employees)

RecyclingAmount of waste
generated:

Data

President

Simple incineration

3%

2 Mitigation of Climate Change

120

Structure to promote Environment Management

9%

Results

Goals

Reduction image in the future(To realize carbon neutrality)● Considerationof the introduction of internal carbon 2051
pricingfor2031(Fiscal year)
Goals
investment
decisions

Goals● Expansion of the use of renewable energy and100● Consideration of fuel conversion based on technology development,

consideration of purchasing green electricity

price trends, and negative emissions (collection
and storage of CO2)
MDF

（%）
100
80

22

22

21

Foundation Supporting Value Creation– Realization of carbon neutrality –Valuables

Strategy for Value Creation

1 100% waste recycling– Waste reduction and reuse of resources –Final volume disposed of in landfill

6%Note) Recycling rate = Amount of recycled resources / Amount of waste generated
x 100 (%)
Amount of recycled resources = Valuable + Use for materials + Use for heat

Long-Term Goals

1 Promotion of resource recycling

Amount of Waste Generated and Breakdown of Waste Processing(Fiscal 2022)

Daiken Group's Value Creation

Daiken Global Environment Vision 2050

The Daiken Group aims to realize a recycling-oriented society and puts
effort into recycling waste, such as reusing the defectives generated in
the manufacturing process as product materials to the extent possible,
and using those as fuel for production, if not suitable for material
itself. During the previous medium-term management plan period, bypromoting the initiatives to increase the use of waste for materials, inaddition to the promotion of use as fuel for production by stably operating
biomass boilers, we improved the percentage of final volume disposed ofin landfill by approximately 2 points compared to fiscal 2019. In the new
medium-term management plan, we have newly set the goal to reduce
the final waste volume disposed of in landfill by 15% compared to fiscal
2022 in the group production bases at home and abroad and will put
effort into the further improvement of the recycling rate.

21

20

Other

19

17

MDF
18

Plantation timber (Imported)
Domestic timber
Lauan wood (Imported)
Other

48

80.2

25%Reduction
reductioncompared120
72.2
to fiscal (1,000
t-CO )
2022 100
Goal of the medium-term management plan GP25 3rd Stage

60

2Compared to fiscal 2022: 10% reduction

40

Environmental Strategy

400Under the Daiken global environment vision 2050, which indicates the long-term direction of the initiatives for the environment, theDaiken Group expressed an agreement on the recommendation by the TCFD (Task Force on Climate-related Financial Disclosures)in October 2021. We acknowledge that environmental responses, such as climate change, are one of the important management
issues that lead to the risks and opportunities in business and disclose information on governance, strategies, risk management,
and indices and goals, which are the disclosure items recommended by the TCFD.

Reduction
image
in the future
Initiatives toward zerousage
of lauanwood

Risk & ComplianceManagement Committee(RCM Committee)

Chairperson: Representative Director,
President
Secretariat: Sustainability Promotion
Department and Corporate Planning Department

Chairperson: Deputy President
Executive Officer
Secretariat: Corporate Planning80
Department and Legal Department

100

22

22

21

Other
Other

CSR Promotion Departments

Department Responsible for Legal Affairs

21

19

2017

28

23
27

43
28

32

19

MDF17
18

27

20

0

Climate change is one of the important external risks and we acknowledge that it is the risk to be addressed by the entire company. We enhancethe effectiveness by the sustainability promotion committee and the RCM committee cooperating with each other and proceeding with it in theenvironment management system and the company-wide risk management system. We will put effort into the improvement of processes to further
evaluate the climate-related risks.

Indices and Goals
We have set Mitigation of climate change – Realization of carbon neutrality – as a pillar in the environment policy of the Daiken global environment
vision 2050 and aim for net zero greenhouse gas emissions as a long-term goal toward 2050. Toward the reduction of greenhouse gases that have asignificant impact on climate change, we have back-casted from how we should be in 2050 and set and proactively put effort into the following goals
in order to contribute the countermeasures against climate change in the medium-term management plan GP25 3rd Stage (fiscal 2023–2026).
Japan: 50% or more
Overseas: 40% or morePursue the sustainable use ofbase materials toward thestable supply of products

40

24

30

34

41

47

Domestic
timber51

Pursue the sustainable use of
To achieve thebase materials
toward the
Daiken global
environment
stable supply of vision
products

11

Active use of 4domestic timber

28

30

24

26

11
0

2015

2016

41use of lauan47
Reduction of the
wood
34
23

21

19

2017

2018

2019

Domestic
timber
51
17

2020

15

2050

Lauan
(Imported)
15

2021

Lauan (Imported)
7

2022

26

2016

Cross-section image of flooringmade from domestic timber

On the background where we were able to use plywood made of domestic timber as the

To achieve thezero use of lauanwood in 2050

flooring substrates, there is our unique special MDF. As much of domestic timber is mostly soft
Reduction of the useof lauan woodtree species, such as Japanese cedar, it was not suitable to be used as flooring substrates.

23
2015

Daiken global
2051 (Fiscal year)
environment
vision
2050

2026
Goals

Special MDF that will realize the reduction of the usage of lauan wood28

To achieve thezero use of lauan
Toinachieve
the
wood
2050

2017

Lauan
So, we uniquely developed 17
special MDF that
15has performance required for flooring substrates,
21such as surface
19 smoothness and water resistance,(Imported)and by laminating with plywood
made
of
Lauan
(Imported)
domestic timber, we have been improving the usage of domestic
timber for flooring substrates.
15
7
Moreover, as this special MDF made it possible for commercialization of flooring substrates

2051 (Fiscal year)

2018
2019
2020
2021
2022
2026
sing not only domestic timber but also plantation timber, the switching from lauan wood has
Goals

Plywood made of
Daiken’s special MDF domestic timberbeen significantly accelerated.

Data

Resilience● Improvement of the reliability of the supply chain by revitalizing investments for
BCP measures
Products, Services, and Markets
20● Formation of the markets for and expansion of demand for energy-saving products
and environmentally friendly products (New wood industrial materials etc.)● Mitigation of climate change and expansion of the sale of adaptive products(Expansion of the sale of timber products from the perspective of carbon storage)● Improvement of corporate value by newly developing and commercializing
environmentally friendly products by taking advantage of our strengths of thetechnologies to use timber
Resource Efficiency● Appeal to customers by recycling raw materials (Improvement of corporate value)● A decrease in costs by efficient transportation● Appeal to customers by increasing the usage of recycled materials (Improvementof corporate value)● An increase in demand due to the establishment of the production processes
that do not emit greenhouse gases

Lauan wood (Imported)

Foundation Supporting Value Creation

Transition Risks (Risks associated with transition to a low-carbon economy)● Difficulty in obtaining wood chips (product raw materials and fuels) bypromoting biomass power generation● Responses to the regulations on products and materials● Procurement risks and an increase in costs due to the shift to environmentallyfriendly raw materials and materials● An increase in costs associated with the responses for decarbonization of theexisting production facilities (Capital investments etc.)● An increase in procurement costs due to the timber price hike (Regulations fortree trimming etc.)

Lauan wood (Imported)
Domestic
timberActive use of domestic timber

20

4

Opportunities

Plantation timber (Imported)

Plantation
timber (Imported)
Domestic timber

timber
(Imported)
16

60

Risks

MDF
MDF

MDF
18

Plantation
timber
(Imported)
20
Plantation
23
16

40

43

Renewable energy
utilization ratio

20

60

40

10% reduction (Ascompared to fiscal 2022)
6% reduction (Ascompared to fiscal 2022)

21

32

Departments Responsible for Risks

Each Department/Group Company

22
21

22

80

Cooperate each other in regard to the risks

Sustainability Promotion Department(To realize carbon neutrality)

To achieve
net
2022
2026
2031
2051
(Fiscal year)
zero
greenhouse
20
With
a view to reducing the risksof stable timber procurement
and currency exchange fluctuations, in addition to the reduction Goalsof environmental
Results
Goals
Goals
gas emissions

ReportingResponsible
Sustainability
for TCFD Promotion Committee

To achieve net
zero greenhousegas emissions

Ratio of Flooring Substrates

100

Risk Management

49

25%Reduction（%）

We grasped the risks and opportunities related to the Daiken Group’s businesses in regard to the climate change and organized important risks andopportunities.
We organized them based on the results of the risks that had been sorted out, evaluated, and responded by the RCM committee.
40
As the next step, we will serially implement scenario analyses from the risks and opportunities that are judged to have a significant impact on business,
conduct impact evaluations, apply the results of scenario analyses, and lead to the formulation of countermeasures and development of plans.

Gross emissions in Japan andoverseas (Scope 1+2)
Gross emissions in Japan andoverseas (Scope 3)

reductioncompared
to fiscal 72.2
2022

The Board

Strategy

Physical Risks (Risks associated with physical changes due to climate change)● Damage on and shutdown of production and sales bases due to natural
disasters and delays in member procurement, shipment, and delivery due todisruption of the logistics network● Delays in goods deliveries due to suppliers and logistics warehouses being
affected by natural disasters● An increase in investments due to the BCP measures● An increase in insurance premiums for damage caused by natural disasters

3 Symbiosis with Natureburden, we have been proceeding with the switch from natural lauan wood (tropicalnaturalto plantation timber, MDF,
andcarbon
domestic
Reduction
imagewood)in the future(To realize
neutrality)0timber to be used for flooring substrates
produced by ourcompany. As a result,
we have reduced the percentage of use of2051
lauan
wood, which
2022
2026
2031
(Fiscal year)
Resultsto approximatelyGoals
was approximately 28% in fiscal 2015,
15% in fiscal 2022. Goals
From fiscal 2023, we also started the initiativesGoals
for the reduction by
50% compared to fiscal 2022 that was newly set as the goal toward fiscal 2026. We further envision beyond that and will further put effort into
technological development toward Zero use of lauan wood in 2050 upheld as how we should be in the Daiken global environment vision 2050.

（%）
Promotion Structure

10%Strategy for Value Creation

In the sustainability promotion committee in which the representative
director and president is the chairperson, we identify important climaterelated risks and opportunities, disseminate them to each department
and group company, and appropriately conduct management.
Regarding risks, as we established the risk and compliancemanagement committee (hereinafter referred as the “RCM committee”)
in which the deputy president and executive officer is the chairperson
and disseminate them to each department and group company, thesustainability promotion committee is responsible for the responses tothe climate-related risks and opportunities and has been proceeding withthe responses by cooperating with the RCM committee. These results
are regularly reported to the Board.
From now on, through the promotion of the Daiken global environment
vision 2050, we will analyze the risks and opportunities to be brought tothe Daiken Group’s businesses and value chains, as well as the financial
impacts associated with them, incorporate them into the management
strategies, and disclose information.

80.2

Daiken Group's Value Creation

GovernanceGreenhouse gas

60

20

Response to TCFD

Fiscal 2026
Goals

80

Initiatives for the reduction of chemical substances
The Daiken Group had upheld the appropriate management and reduction ofchemical substances in the medium-term ESG plan (fiscal 2020–2022) as a theme
and had set the goal to reduce the amount of substances released subject to the
PRTR law by 70% in the final fiscal year as compared to fiscal 2019. The releaseamount and transfer amount of substances subject to the PRTR law in fiscal 2022
decreased by 59% compared to fiscal 2019, but we could not achieve the goal;
however, regarding methylene chloride, we made significant reductions as theestablishment of technology for the product specification change was completedin October 2020 and totally abolish the use in production processes in our group.
We will continually put effort into the reduction of other target substances andpromote the reduction of environmental burden in the entire group.
*As the substances subject to reporting by the PRTR regulations have been newly specified, therelease amount and transfer amount were revised retroactively.

Trend of the Release/Transfer Amount of the Substances
Subject to the PRTR Law/Methylene Chloride（t）

20

Release/transfer amount of the substances subject to the PRTR law
Release/transfer amount of methylene chloride

17

16

15

10

8

8

8

7

5

2
0

0
2019

2020

2021

2022 (Fiscal year)50