Sustainability
Briefing
Koshiro Kudo
President
Asahi Kasei Corp.
January 20, 2023

Outline

Sustainability with Green/Digital/People

Green Green Transformation
People HR Transformation
Risk Management

1

Sustainability with
Green/Digital/People31. Sustainability with Green/Digital/People

Major changes in 2022

Russia–Ukraine
situation

Resumption of
economic activity
after COVID-19

Growing divisions
in the international
community; higher
geopolitical risks

Inflation, rising interest
rates, falling stock
prices, lower yen value
Economic measures in EU, US, Japan, etc.

Launch of Prime market
segment on the Tokyo
Stock Exchange

New medium-term
management plan (MTP)and centennial of Asahi
Kasei’s founding41. Sustainability with Green/Digital/People

Our aims
Group Mission

We, the Asahi Kasei Group, contribute tolife and living for people around the world

Two aspects of sustainability for Asahi Kasei

G

Green Transformation

Green

Contributing tosustainable society(realization of Group Vision)

Maximum useof intangible
assetsSustainable growth ofcorporate value

Action aligned with Group Values

D
DigitalDigitalTransformationP

HR Transformation

PeopleStrengthening risk
management
5

2

Green

Green Transformation

6

2. Green Transformation

Initiatives regarding climate change
Climate change (from +1.5°C to over +4°C scenario)

Risks

Opportunities
Medium-term management plan 2024

Transition risks
Physical risks

Control

Be a Trailblazer
GG10*
Asset light
Structural transformation

Proactive
advancement

Mitigation
Adaptation*10 Growth Gears: Businesses to lead next growth7

2. Green Transformation

Risks

Risk control

Transition risks
Decarbonization

Changes in market
structureetc.

⚫ Efforts toward carbon neutrality⚫ Developing and promoting
practical application of recycling
technology⚫ Utilization of biomass raw
materials⚫ Optimization of management
resource allocation

Physical risks
Serious storm andflood damage

Rise intemperature⚫ Measures for manufacturing
sites and supply chains⚫ Improvement of work
environment

etc.

Obtaining
opportunities

82. Green Transformation

Action for carbon neutrality

Risks

Efforts for carbon neutrality are advancing based on our MTP 2024

Initiatives

GHG emissions (million tons CO₂e )Our own GHG emissions⚫ Identifying GHG reduction measures→ examining specifics, pursuing possibilities≥30% reduction(vs. FY2013)

4.11• Low-carbonization of in-house power generation(phasing-out coal; utilizing hydrogen, ammonia, CO2-freemethane, etc.)• Production process innovation• CCUS<3.60

4
1st STEP

2

2nd STEP

Reduction centered on
established technology

Carbonneutrality
Reduction centered on
new technology⚫ Creating scenarios for 2030 and 2050 goals,
calculating costs⚫ Business evaluation based on carbon pricing

0

2021

2030

2050

⚫ Studying collaboration with other companies
92. Green Transformation

Risks

CFP* calculation and systematization

Calculating CFP starting from businesses with high requirements + establishment ofcompany-wide standard CFP calculation system (scheduled to start operating in FY2023)
Background
1. Expectations for carbon neutrality
throughout society
2. Ascertaining and enhancing the GHGcompetitiveness of our products
3. Visualization as basis of CO2 reduction

Step 3
Optimization

Step 2
Prediction

Step 1

Future direction
Using CFP visualization to identify
points for reduction
Accelerating further reductions(minimization)

Visualization

Macro approach for the overall Asahi Kasei Group
Micro approach for each CFP* Carbon footprint of products: Amount of GHG emissions per product10

2. Green Transformation

Opportunity

Obtaining opportunities
Fields for
Businesses to lead next growth
10 Growth Gears (GG10)
provision of value

Environment& Energy

Risk
control+4°C+1.5°C

Opportunities related to climate change

Hydrogen-related

Mitigation

Clean energy

CO2 Chemistry

Mitigation

Carbon recycling

Energy Storage

Mitigation

Clean energy

Mitigation

IT, sensing, EVs, etc.

Adaptation

Resilience,
thermal insulation

Adaptation

Critical Care

Mobility

Car Interior MaterialLife Material

Digital Solutions

Home& Living

North American andAustralian Homes
Environmental Homes
and Construction Materials
Critical Care

Health Care

Relationship with climatechange scenarios1

Mitigation

ZEH2,
durability

Global Specialty Pharma
Bioprocess

1 Areas deemed to have a strong relationship, such as being directly mentioned in the Sixth Assessment Report of IPCC and WEO 2021, are indicated with double circle;

areas expected to be broadly related, although not as strongly, are indicated with a single circle.
2 ZEH (Net Zero Energy House) refers to houses with net energy consumption of zero or less through high insulation performance, energy conservation, and solar power
generation, etc.

11

2. Green Transformation

Opportunity

Hydrogen market

Substantial growth of the hydrogen market is forecasted (issues are also emerging); various
countries and regions are expanding support for achieving a hydrogen society
Forecasted market scale

Annual electrolyzer installations (GW)

Large-scale projects (≥1 MW)
85

Hydrogen investments (bn US$)

239
22

Decided160

Electrolyzer installations
projected to increase rapidly
from 2025
1
2022

10
2025

2030

680 projects in 2022($239 billion)of which, investment
decisions on ≈10%($22 billion)

Source: BloombergNEF, Global Electrolyzer Outlook 2030

Expanding support
for hydrogenmarket formation• REPowerEU• IPCEI• European Hydrogen Bank

20
109

Planned64

Announced
76

108

2021

2022

Source: Hydrogen Council, Hydrogen Insights Report, September 2022

• Infrastructure Investment
and Jobs Act• Inflation Reduction Act• Green Innovation Fund
• Subsidy for use as fuel togenerate power (proposed)

12

2. Green Transformation

Accelerating commercialization in concert withindustry associations and partner companies

Opportunity
2020

Water electrolysis
system development

2022

Accelerating activity
for commercialization

Commercialization

2025

Utilization of Green Innovation Fund (2021–2030): Development of large-scale alkaline
water electrolysis hydrogen production system and demonstration of green chemical plant
Alkaline water electrolysis system
for hydrogen production

CH4

Compression/liquefaction,
pipelines, physicalconversion, etc.

Electricity

PlantsRefineries,
chemicalcomplexes
Plants(in-house power
generation)

MCH

Steel mills
Hydrogenstations

Renewable energy

Production

Transportation

Use

Advancing collaboration with partner companies throughout the supply chain
Industry
associations

Hydrogen Council: Steering Member
Founded in 2017 as a global initiative to promote hydrogen utilization. Includes close to 150 companies andorganizations across the entire hydrogen value chain.
Japan Hydrogen Association (JH2A): Executive Board Member
Founded in 2020 for deliberation and activity among industry, academia, and government for practicalapplication of hydrogen in society. Includes 23 Executive Board Members and 207 Ordinary Members, etc.

13

2. Green Transformation

Opportunity

Helping the chemical industry provide
value for a sustainable society

Providing green chemical products to society

Plastics

Crude oil

NaphthaBasicfeedstocks

Synthetic fibers
Other chemical
products

Biomass
material

14

2. Green Transformation

Opportunity

Our solutions Creating basic feedstocks from bioethanol

Aiming for commercialization through technological development, improvement, and verification

Point 1

Point 2

Point 3

Point 5

Ethanol available inabundance by establishedtechnology

Creating basic feedstocks
equivalent to naphtha
cracking fractions

Able to utilize existing
petrochemical complexes
and processes

Providing materials
essential to society

Bio ethylene
Bio propylene

Point 4

Bioethanol

Bio BTX＊

Reduced GHG frommanufacturing process

Sustainable society
Contribution to the environment
Contribution to living* A mixture of benzene, toluene, and xylene

15

2. Green Transformation

Outline of a carbon neutral and sustainable society
Issues, keys to innovation

Practical application

Biomass utilization technology

Biomass-derived
raw materials

High-durability products,
changes in consumerawareness

Resource/energy-saving processes

Basic feedstocks
・Biomass-based
・Recycle-based

Synthetic resin,variouschemicals

Final products

Product use

Resource/energysaving products

Reuse

Used products

Recycling

Separation

Material and chemical recycling

Utilizing CO2 as raw material
CO2 utilization technology

Recycling technology

Recovery

Improved recovery rate(changes in consumer behavior)

Separation
technology

EnergyIndustry, commerce, mobility, housing, etc.

CO2 separation/recovery technology

MethaneSociety, factories, etc.
Air

CO2separation/
recoveryCCS
CO2 capture and storage

CO2

Ammonia

Power grid

Storagebatteries

Power transmission
infrastructure

Battery performance,
securing raw materials

Feedstocks, etc.
HydrogenHydrogen production technology,hydrogen infrastructure

Steel, chemicals, etc.

Renewable energy（Solar, hydro, wind, etc.）

Expansion of
power generation

16

2. Green Transformation

Outline of a carbon neutral and sustainable society
Main initiatives of Asahi Kasei

Issues, keys to innovation

Practical application
Biomass utilization technology

Biomass-derived
raw materials

High-durability products,
changes in consumerawareness

Resource/energy-saving processes

Basic feedstocks
・Biomass-based
・Recycle-based

Synthetic resin,variouschemicals

Final products

Product use

Resource/energysaving products

Reuse

Used products

Recycling

Separation

Material and chemical recycling

Utilizing CO2 as raw material
CO2 utilization technology

Recycling technology

Recovery

Improved recovery rate(changes in consumer behavior)

Separation
technology

EnergyIndustry, commerce, mobility, housing, etc.

CO2 separation/recovery technology

MethaneSociety, factories, etc.
Air

CO2separation/
recoveryCCS
CO2 capture and storage

CO2

Ammonia

Power grid

Storagebatteries

Power transmission
infrastructure

Battery performance,
securing raw materials

Feedstocks, etc.
HydrogenHydrogen production technology,hydrogen infrastructure

Steel, chemicals, etc.

Renewable energy（Solar, hydro, wind, etc.）

Expansion of
power generation

17

2. Green Transformation

Environmental contribution products contributing to total GHG reduction
including emissions by customers and end users

Promoting GHG reduction while expanding businesses by strengthening environmental contribution

Upstream

Asahi Kasei

Our customers

Emissionsfrom rawmaterials,
etc.

Our own emissions(Scope 1)

Scope 1

Emissions from purchased
electricity, etc.
(Scope 2)

Scope 2End users
Disposal stage(other than our products)

Use phase
Disposal stage(our products)

Blue box indicates Asahi Kasei’s major areas of Scopes 1, 2, and 3 (“use phase” is calculated for Hebel Haus)

Environmental contribution product examples

Environmental
contribution

Main reduction stages

1) High durability1) Raw materials, disposal stage2) Energy conservation

2) Use phase

Ion-exchange membrane process for chloralkali electrolysis

Electrolysis efficiency

Our customers’ Scope 2

Synthetic rubber for fuel-efficient tires

Rolling resistance of tires

Use phase

Purging agent for plastic molding machines

Cleaning efficiency

Our customers’ raw materials, Scopes 1 and 2

Hebel Haus18

3

PeopleHR Transformation

19

3. People: HR Transformation

Characteristics of Asahi Kasei HR
OpenWork workplace review site

8th
1st

2021 Engaging company ranking
2022 Overall evaluation ranking(chemical, petroleum, glass, and ceramicindustries)

METI case study report on HR management in corporations
METI (Ministry of Economy, Trade and Industry) Report in May 2022
Case 1: Asahi Kasei Corporation

HR creatively obtaining personnel and enhancing engagement as needed to create
value in diverse businesses
Asahi Kasei Corporation
Tokyo, founded 1922
Chemical manufacturing → manufacture and sale in Material, Homes, andHealth Care sectors

Satisfaction

Fairness ofevaluation

Motivation

Asahi Kasei
Compliance

Openness

HRX of The Year 2022 Excellence Award
by HR Executive Consortium

People are our most valuable assets,
everything starts from people
Long-term
training

Mutual respect
Empowermentof employees
in their 20s

Chemical, petroleum,
glass, and ceramicindustries

Lifelong growth of diverse individuals + system tofoster digital personnel for future competitiveness20

3. People: HR Transformation

The theory of evolution

It is not the strongest of the species thatsurvives, nor the most intelligent that survives.
It is the one that is most adaptable to change.

21

3. People: HR Transformation

Look back on the path we have travelled
Achieving growth by constantly transforming our portfolio and taking on the challenges ofsocial issues that change with the times over the 100 years since our founding

FY2021

History of net sales portfolio ■Material ■Homes ■Health Care ■Others
Founding(Asahi Fabric Co., Ltd.)FY1990Net sales

FY1960
FY1922

Net sales
Net sales¥1,301.4 bn¥44.9 bn
Operatingincome¥3.2 bn
Chemical fertilizers,
regenerated fibers,
explosives

Petrochemicals,
synthetic fibers

Transforming
further forsustainability¥2, 461.3 bn
Operating income

Operating income¥96.0 bn

Construction materials and homes,
pharmaceuticals and medical devices,
electronic components and materials

Business creation and development for social issues¥202.6 bn
Global healthcare,digital and environmental
solutions22

3. People: HR Transformation

Requirements of personnel and organizations,outline of HR strategy
A-Spirit
We will boldly challenge ourselves with high goals, not being satisfied with thecurrent situation

Promotingchallenge and growthLifelong growth

We will have a strong commitment to goals and focus on generating results

We will rapidly and boldly take actions with nimble connections and genuine
communication

Leveraging diversity

Co-creativity

We will create new ways of doing things without being constrained byexisting frameworks
Further enhance and apply

Group Values

Diversity

Open and frank corporate culture

Sincerity, Challenge, Creativity

Diversified technologies, businesses,
and market contacts

Friendly atmosphere between
top management and employees
23

3. People: HR Transformation

Human strategy – outline
People are our most valuable assets, everything starts from people
Discovering the future with lifelong growth and co-creativity of diverse individuals

Promoting challenge
and growthLifelong growth
Leveraging diversity

Co-creativity

Main KPIs

Autonomous careerdevelopment andrealization of growth

Improving management
capabilities to draw out
the strengths ofindividuals and teams

Expanding diversity
Diverse expertise,individuality, and work styles

Connecting diversity
Combination andintegration of knowledge

Number ofGroup Masters
FY2024: 300
FY2021: 259 in 64 fields

Growth behavior index
Continuous actions to monitor
and maintain/improve
Engagement survey results on 5-point scale
FY2020: 3.65, FY2021: 3.69

Enhancing employee
well-being andwork engagement

Strengthening
competitiveness of the
Asahi Kasei Group

Diversified HR index
Proportion of women working
as managers and Group Masters
FY2030: 10%(FY2018: 2.2％, FY2021: 3.4%)
Proportion of women and non-Japanese executive officers
FY2018: 8％, FY2022: 22%

24

3. People: HR Transformation

Human resources KPIs
Number of Group Masters

Employees work engagement
survey results on 5-point scale

Proportion of women working as
managers and Group Masters

Furtherincrease
Target294

300

Target
3.65

3.69

3.71

10%

250 259
229
180
124
90

2016 2017 2018 2019 2020 2021 2022

3.4%

2024

2020

2021

2022

2024

2.2%

2.3%

2018

2019

3.7%

2.8%

2020

2021

2022

2030

25

3. People: HR Transformation

HR strategy – specific measures
HR measures on 2 axes: company-wide and by each business unit
Measures bybusiness unit

Main company-wide measures
Autonomous career development
and realization of growthLifelong
growth⚫ Autonomous learning platform “CLAP”⚫ Promoting active participation of senior personnel(including extension of retirement age)

⚫ Open position posting system

Improving management capabilities to drawout the strengths of individuals and teams⚫ Employees work engagement survey⚫ Nurturing and obtaining⚫ Visualization of HR
management executives⚫ Executive⚫ Strengthening next-generation remuneration linked
leader development
to HR KPIs

Expanding diversity

Connecting diversity

Diverse expertise, individuality, and work styles

Combination and integration of knowledge

Co⚫ Nurturing professional human resources
as “Group Masters”⚫ Strengthening midcreativity ⚫ Promoting active
participation of women⚫ Flexible work styles notbound by time and place

career recruitment⚫ Obtaining HR by M&A⚫ Personnel transfers across business sectors⚫ Active recruitment of outstanding overseas
human resources⚫ Employee (expert) recommendation system⚫ Maximum utilization of IP

Business leaders
responsible for HR
measures
Measures by business unit
linked to company-widemeasures

Examples• Strengthening young
sales planningcapabilities in line withenvironmental changes
in Material sector• HR system construction
and operation unique toHomes sector

Bold blue: Additional description on following pages

26

3. People: HR Transformation

Co-creativity

Group Masters – overview

Continuous development of professional human resources who contribute to
new business creation and business enhancement
Roles

1) New business creation & strengthening operations, 2) Fostering younger personnel

Executive Officer

Executive Fellow

Managing Executive or
Senior Managing Executive

Principal Expert

Senior General
Managers, General
Managers, etc.

Lead Expert,
ExpertDr. Akira Yoshino27

3. People: HR Transformation

Co-creativity

Group Masters – significance and operation

Significance of Group Masters
Development, acquisition, and retention of professional
human resources necessary for business expansion

Sector-specific fields◼

Strengthening technologies that aresources of business competitiveness◼ Heightening business activities◼ Reinforcing risk management

Fields for appointment are reviewed annuallyin line with business strategy⚫ Homes⚫ Material⚫ Health Care

Core technology fields⚫ Membranes andseparation⚫ Electrochemistry⚫ Fibers, polymers⚫ Compound
semiconductors⚫ Catalysts, chemical
processes, andinorganic synthesis⚫ Analysis andsimulation⚫ Process development
and construction
technologies⚫ Product design andadvanced control⚫ Plant engineering⚫ Biotechnology

Main recent reviews of fields for appointment
FY2018Core platform field

FY2019Alignment of formerly dispersed digital-related technologies

FY2021

Core technology field

Core technology field

FY2022
Core Platform field

Core platform fields“Digital innovation” newly established“Biotechnology” newly established“Pharmaceutical marketing” and “China pharmaceuticalbusiness” newly established in Health Care
“Machine safety,” “Internal audits,” and “Trade and customs”
appointment requirements changed⚫ Process safety⚫ Quality assurance⚫ Chemical
management⚫ Digital innovation⚫ Trade and customs⚫ Accounting andtaxation⚫ Organizational
development⚫ Machine safety⚫ IT⚫ Intellectual property⚫ Legal affairs⚫ Internal audits, etc.

28

3. People: HR Transformation

Co-creativity

Group Masters – creating new businesses,
enhancing existing businesses

Group Masters lead R&D in core technology fields and connect various
technology and people to expand growth-driver businesses (GG10)Life Material
Health Care

Home & Living◀ Asahi Kasei’s patent map• Red shows patents concentrated in coretechnologies• Decreasing sequentially in yellow, green,
and blue
Environment & Energy

Mobility29

3. People: HR Transformation

Co-creativity

Personnel transfers across sectors

Fully leveraged personnel and know-how for overseas expansion of the Homes business
which had been focused on the domestic market
Leveraged know-how and personnel with M&Aexperience in the Health Care sector, corporate
venture capital (CVC), etc., to accelerate overseas
business development in Homes

Overseas sales in Homes business¥200.0 bn¥164.0 bn¥146.3 bn¥25.0 bn
Australia
North
America2017

Investment in McDonald Jones Homes; fully acquired in 2021

2018

Acquisition of building component supplier Erickson

2020

Acquisition of electrical, concrete, and HVAC group Austin

2020

2021

2022
forecast

2025
target30

3. People: HR Transformation

Lifelong growth

Vitality and Growth Assessment
to improve work engagement

Visualizing the work status of individuals and organizations and implementing PDCA cycle
Enhancing work engagement and action to take challenges and drive growthWork
engagement
surveyCharacteristics
1

Gauging the following 3 indicators

Superior–subordinate relationships,
workplace environments

Employeeempowerment

Action driving growth

2 Optimum proprietary framework designed together
with Osaka University
3 Appointed 3 Group Masters in HR and organizational
development fields → supporting line managers

Performed
annually
Initiatives toimprove theorganization ateach workplace

Dialogue
held at each
workplace basedon results

31

3. People: HR Transformation

Vitality
andGrowthAssessment
Lifelong growth
to improve work engagement
3 indicators on 5-point scale
Employeeempowerment

Superior–subordinate
relationships,
workplace environments

3.81

Rate of implementing workplace dialogue
Action driving growth

Closely monitored as action forimprovement at each workplace

Closely monitored as KPI of
taking challenges and growth

3.83

70%

3.77
3.69

3.71

60%

3.65
3.52

3.54

3.54

40%

2020

2020

2021

2022

2020

2021

2022

2020

2021

2022

2021

2022

⚫ Confirmed that dialogue leads to steady
improvements in the workplace32

3. People: HR Transformation

Co-creativity

Utilizing overseas personnel

Proportion ofoverseas personnel
Employees expected
to increase mainly
overseas in line withsales growthMarchforecast
Japan

Overseas
38%
March
Japan

Overseas
breakdown■ U.S.

2010
March
Japan

When acquiring overseas businesses,
outstanding personnel are brought into
Asahi Kasei Group management inaddition to serving as Executive Officersof core operating companies

Non-Japanese Executive
Officers of Asahi Kasei Corp.
2016

3

2022

6

Of the six, one has oversight of a businesssector while another has been assigned as
Chief Executive of another acquired business— human resources are utilized in ways that
extend beyond their original backgrounds

Fostering next-generation leaders

2020

Overseas8%

Locally hired HR managers in U.S. and Europe

Assignment to overall management
2030

Overseas51%

HR support systems tailored to regional characteristics■ China■ Other Asia

■ Europe

Outstanding personnel hired locally are not only utilized ineach respective business but also fostered to be leaders
who can contribute to the overall Asahi Kasei Group
ExampleIn formulating the MTP which began in 2022, next-generation leaders in the U.S.,
Europe, and China joined a workshop discussing the ideal future for Asahi Kasei

Overseas personnel with highly specialized skills are assigned
to head office in Tokyo, etc.
33

4

Risk Management34

4. Risk Management

Asahi Kasei Group risk management
Dramatic changes in the operating environment⚫ Changed values due to the COVID-19 pandemic⚫ Higher tension in international relations

etc.

Reinforcement ofAutonomous risk management in each organization

Reinforcement 1

Reinforcement 2

Clarification of risk

management
framework and rolesof involved parties

Enhancement of risk
management PDCA cycle

35

ClosingTHE COMMITMENT OF THE AS AHI KASEI GROUP:

To do all that we can in every era to help the people of the world
make the most of life and attain fulfillment in living.
Since our founding, we have always been deeply committed

to contributing to the development of society,boldly anticipating the emergence of new needs.
This is what we mean by “Creating for Tomorrow.”37