For a Sustainable Future
Sustainability Report 2023

Sustainability Report 2023

Contributing to people around the world through increasedfood production while making full use of agritechnology

as mini-tomatoes, peppers, cucumbers, eggplants, and bitter

future of agriculture through crop protection, fertilizers andgourds at home for the past two years. Despite encountering

drip irrigation (cultivation technology), and biostimulants. Thisdifficulties in my cultivation endeavors, the joy and excitement

goal looks beyond our efforts to date. The second goal is tothat I feel from watching my efforts bear fruit is enormous.

become a change-oriented company that can take on the chal-

Insights gained from the use of OAT Agrio products in the culti-

lenge of creating new markets with original ideas. Here, we will

vation process will help improve and enhance the Company’s

monitor plant growth through cultivation to generate newlineup. By extension, each person’s participation in cultivation

ideas. Drawing on our existing proprietary technologies, as

will contribute to an increase in food production.

well as our research-and-development activities, we will utilize

Regarding human capital, issues requiring immediate

our findings to create new markets. The third goal is to become

attention are the development of international humana company that is sensitive to diversity, including changes inresources and the empowerment of women. With interaction

Using agritechnology to address
the world’s food issues

to how much land can be cultivated for agriculture. The ques-

the external environment and regional characteristics. Climate

between human resources continuing to progress through thetion then is “how can we improve the yield per unit of landchange impacts the crops that grow in each region as well as

exchange of technologies among Group companies world-

Since its establishment in 2010, OAT Agrio has maintained an

area?” As we work to provide an answer, I see an opportunity

the incidence of pests and diseases. Conversely, climate change

wide, OAT Agrio is focusing on developing the personnel who

unwavering commitment to its management philosophy offor our agritechnology to play an active role.

affords us the opportunity to capture new markets that havewill spearhead our global growth over the medium to longcontributing to people around the world with its agritechnol-

The OAT Agrio Group’s agritechnologies cover three core

yet to emerge. Against this backdrop and recognizing that

term. The share of female managers is affected by the low

ogy and sincerity. Although the term sustainability had yet todomains: crop protection (chemicals for plants) against pests,

pests build up a resistance to agrochemicals through repeated

number of women in science-related positions in Japan as a

attract the widespread attention it receives today, I felt a pro-fertilizers and drip irrigation (nutrients for plants) that provide

use, we are cognizant of the need to identify new agrochemi-

whole. Despite this impediment, we hope to achieve a ratio offound sense of crisis regarding the global environment andthe minimum amount of fertilizers and water required to help

cals with innovative effects. OAT Agrio’s vision is to develop

20% on a non-consolidated basis and 25% on a consolidated

water resources. The world’s population is projected tonourish plants according to their growth stage, and biostimu-

technologies that contribute to an increase in crop yields

basis as soon as possible by making conscious efforts toexceed nine billion by 2050. Against this backdrop, the Foodlants (increasing plants’ immunity to diseases) that enhance

without negatively affecting the rich biodiversity of the overall

increase the number of women in management positions.

and Agriculture Organization (FAO) has announced that foodcrop immunity against environmental changes and pests.

environment, whether that be humans, plants and the bees

production needs to increase by roughly 70% to accommo-

Cultivating the soil, which serves as our management philos-

they attract, local water resources, or aquatic animals. In bring-date this population growth.

ophy, while building on our three core agritechnology

ing this vision to fruition, we will enhance our corporate value

Focusing on growth drivers to achieve steadybusiness growth

COVID-19 has reiterated the importance of food todomains, we must determine the approach needed to pushby contributing to sustainable agriculture that is friendly to

Despite a challenging external environment due to such fac-

humankind. How we can continue to provide safe and secure

forward our business activities and how best to flourish

people and the environment while pursuing ultimate agritech-tors as soaring raw material prices, OAT Agrio has positioned

food is therefore a fundamental theme of our business. As

through leaf and branch growth. Building on this metaphor,

nology and nurturing our corporate culture.

the pursuit of growth drivers at the heart of its business growthsuch, I am convinced that the very essence of our work is

we set out the Group’s long-term vision in February this year

directly linked to sustainability management. Despite theand redefined our efforts based on three key goals.

importance of an increase in food production, there are limits

President, CEO

Hisashi Oka

01

On a personal note, I have been cultivating such produce

The first goal is to become a company that contributes to the

Message from the President, CEO

Message from the President, CEO

We will take steps toward realizing our long-term vision through the growthof our human resources, which sprout like leaves and branches from the trunkand soil of our management philosophy.

The essence of our long-term vision

while focusing on the launch of new products, participation in

Employee development a conduit
for corporate growthsmart agriculture, and the maximization of global synergies. In

The development of our employees is critical to realizing ourAgriculture, Forestry and Fisheries set the goals of reducing

long-term vision. OAT Agrio recognizes the undeniable impor-agrochemical use by 50% on a risk-equivalent basis and chem-

tance of its human resources. The Company has continued toical fertilizer use by 30% by 2050. In line with this road map, OAT

expand its global business through various means, including

Agrio is working to promote and expand the use of Green

M&As. As a result, more than 60% of the Group’s workforce is

Products, fertilizers and drip irrigation, and biostimulants. As

made up of international employees with a wide range of skills

far as Green Products (plant protection materials derived fromirrespective of nationality or gender. I take great pride in thenatural and food additives) are concerned, the use of Suffoil, afact that our employees continue to grow while fulfilling their

miticide and insecticide that employs both safflower and cot-designated roles with a clear understanding of the concept of

tonseed oils as its main ingredients, has exhibited steady

human- and eco-friendly sustainable agriculture. Honing one’s

growth. We are increasing sales by enhancing Suffoil’s appeal

expertise and skills as a professional in each field of work,

as an insecticide for hard-to-control pests for tomatoes andincluding R&D, sales, and accounting, is extremely important.

citrus. In addition, biostimulants are substances and technolo-

Of equal importance is the need to expand interest in one’s

gies that enhance the natural immunity and function of plants,

surroundings and gain new insights to ensure exponential per-increasing their resistance to cold, heat, and pests. Within oursonal growth. In this regard, I convey to all employees the value

biostimulant lineup, Potetoru, which stimulates photosynthe-of participating in the cultivation experience. Becoming a cor-sis and encourages growth, performed well. In the greenhouseporate entity where all employees engage in the cultivationhorticulture field, we have already successfully reduced theprocess is the epitome of our management philosophy.

amount of fertilizer used by approximately 25% compared to

its Strategy for Sustainable Food Systems, Japan’s Ministry of02

conventional farming methods, by promoting a drip fertigationof products globally. At the same time, we will place consider-technology system that delivers the right amount of fertilizer

able emphasis on fostering a corporate culture that experi-

and water at the right time while eliminating the stress caused

ences the pleasures and difficulties of cultivation and sharesby excessive application. Not limited to the current demand forthat with the world. The Company provides information on

its products, OAT Agrio will continue to further address the

how the public can easily enjoy its horticulture and cultivation

demands of producers. We have also developed an AI-based

through its cultivation media site and Instagram. I am con-automated growth diagnosis system and a comprehensive cul-vinced that these endeavors will have an enormous impact astivation solutions service to promote widespread participation

more and more people experience the joy of cultivating, theUnder the philosophy that “We contribute to people aroundcontribute to improved crop yields” based on our accumu-

in smart agriculture. Rather than relying solely on establishedemotion of watching that cultivation, and the contentment of

the world with our agritechnology and sincerity,” the OAT

lated technology and know-how, we aim to resolve foodproducers, we will work to ensure that new farmers can also

eating, and how everyone relates to food and agriculture is

Agrio Group develops and systematizes a comprehensive

issues and support an ever-increasing world population, as

secure higher yields. Evaluating seedling images, our AI-based

reevaluated. Moreover, we will work to have an impact ontechnology set that contributes to increased crop yields

well as to obtain high trust and evaluation from stakeholders

system diagnoses growth based on multiple parameters,society while simultaneously upgrading and expanding thethrough the development, manufacturing, and marketing ofand society, thereby maximizing our corporate value as our

including leaf color and size. If the supply of fertilizer is insuffi-

disclosure of sustainability-related information in connection

agrochemicals, fertilizers, and proprietary cultivation sys-

basic management policy.

cient, for example, adjustments are automatically made towith our business activities. The calculation of Scope 1, 2, andtems. By continuously developing “new technologies that

ensure application of the appropriate amount. The cultivation

3 GHG emissions and the disclosure of information by compa-

of Sachinoka strawberries generally yields three to four tons

nies listed on the Prime Market based on the recom­

per 1,000 square meters. Utilizing its greenhouses, OAT Agrio

mendations of the Task Force on Climate-related Financial

has developed a cultivation system that can increase this yield

Disclosures is indispensable in the consideration and man-to six tons. Based on the concept of cultivating products with-agement of risks. Among a host of initiatives, OAT Agrio also

out a physical presence in each facility, we have rolled out the

devotes resources to internal education and training to help

comprehensive cultivation solutions service, Agrio Ichigo

Group companies better understand the nature of Scope 3

Master, to practice our vision of smart agriculture from 2022.

emissions. In this regard, our business activities contribute

We at the OAT Agrio Group contribute to people around the world
with our agritechnology and sincerity.

directly to the achievement of SDGs from each of the environ-

Plant protection
products

Fertilizers anddrip irrigation

Realizing sustainability

mental conservation, improvement in resource efficiency,

Research on safer and more
effective chemicals for plants

Development of nutrients for plantsthat promise abundant harvests

In 2023 and beyond, OAT Agrio will continue to allocateand eradication of famine perspectives. As we work to achieve• Research at two laboratories

resources to the growth drivers of Green Products, biostimu-

our established goals, we ask for the continued support and• Cultivation technology• Fertilizers for hydroponic culture

lants, the greenhouse horticulture field, and the development

understanding of our stakeholders.

(in Naruto and India)• Discovery of new highly safe,
effective substances(largest share in the Japanesemarket)Philosophy / Table of Contents

Message from the President, CEO

Sustainability Report 2023

Biostimulants
Increasing plants’ immunity to diseases,
pests, and environmental stress

Brand film
Both agriculture and people’s lives passed down from one
generation to the next—
OAT Agrio has produced a video in the hope of conveying theimportance of food and agriculture through the life of ayoung girl growing up.
The video portrays an adult woman with tears in her eyes
as she remembers the taste of her mother’s food as a young
child. This is a scene with which we can all empathize, recollecting fond memories through food. Just as a mother passes
on her hopes and dreams for the future as she hands a single
pumpkin seed to her daughter at the beginning of the video,and both agriculture and people’s lives pass down from one
generation to the next, through this video, OAT Agrio is• Boosting the immunity of crops

conveying the message that it stands side by side with those
involved in agriculture. Our hope is to provide people everywhere with the joy of cultivating, the emotion of watching,
and the contentment of eating. In addition to the video on
YouTube, we have placed advertisements in the Yomiuri,
Asahi, Mainichi, Nihon Keizai, and Sankei newspapers to reachas many people as possible. Through these efforts, roughly
1.15 million people have watched the video. In doing so, we
believe that our wishes have been made known to a great
many people.
This video can be viewed using the two-dimensional
code below or on the OAT Agrio Group’s YouTube channel.

against diseases, pests, andenvironmental stress• Respecting the environment andthe biodiversity that boosts theimmunity of crops against
diseases and pests

Table of Contents
01 Message from the President, CEOOAT Agrio’s hopes
Video now available

04 Philosophy / Table of Contents
05 Progress under the New Mid-term
Business Plan

03

07 Progress and Targets forImportant CSR Issues

08 Society
09 Environment

11 Corporate Governance
13 Performance Highlights /Environmental Conservation Reports

14 Editorial Policy04

Sustainability Report 2023

Progress under the New Mid-term Business Plan

Basic Policy
Under its New Mid-term Business Plan, the OAT Agrio Group will, based on its management philosophy, implement the following:

Aiming to remain a company that can contributeto sustainable agriculture

to lay the foundation for sustainable growth by steadily pur-Under the New Mid-term Business Plan (2021–2023), formu-

Mid-term Business Plan (2023–2025)—Toward New Challenges

lated in February 2021, and its renewal the following year as

in February 2023, we are advancing toward a phase during

the New Mid-term Business Plan (2022–2024)—Further

which we will realize our long-term vision.

suing growth drivers. Having again reformulated the New

Strengthen growth
driver initiatives

Contribute to humanand eco-friendly sustainableagriculture

Challenges, we believe that successful steps have been taken

Build a corporate culture
and take on new businesschallenges

Pursue global synergies

Enhance its corporate value

Positioning the pursuit of growth drivers at the heart of our businessgrowth while focusing on the launch of new products, participation insmart agriculture, and the maximization of global synergies• Green Products (GP)• Biostimulants (BS)• Spurring demand in the greenhouse horticulture field(smart agriculture: utilization of AI growth diagnosis)• Developing products globally• Communications among Group companies• Globalization of R&D

Maximization of
Global Synergies

Building a corporate culture and working toward
management that contributes to human- and ecofriendly sustainable agriculture, while enhancing ourcorporate value
Building a
Corporate Culture

Business Indicators
Expand sales to Group companies (2022
result: up 22% year on year), initiate steps
to expand sales, enhance production, andstart purchasing/procurement projects
among Group companies

Shintomi Town Development Project• Putting into practice cultivation

FY2021 Results

FY2022 Results

FY2023 Plan

FY2024 Plan

FY2025 Plan

Net sales (Billions of yen)

22.67

26.96

27.70

29.20

30.70

Operating profit (Billions of yen)

2.00

3.34

3.20

3.40

3.70

Ordinary profit (Billions of yen)

1.98

3.38

3.12

3.28

3.60

Profit attributable to owners of parent(Billions of yen)

1.45

2.26

2.10

2.21

2.55

Operating profit margin

8.8%

12.4%

11.5%

11.7%

12.1%

Consolidated ROE

19.2%

23.4%

17.8%

16.5%

16.8%

technology (agritechnology)• Communicating the “fun” of cultivation

Contributing to Humanand Eco-friendly
Sustainable Agriculture• Engaging in sustainability management• Contributing to local communities

Enhancing
Corporate Value• Strengthening the management base

• Concluded a partnership agreement covering the promotion

and development of local agriculture with Shintomi, Miyazaki
Prefecture (January 2022)• Agrio Ichigo* Master comprehensive cultivation solutions
service• Demonstration of Probioponics, hydroponic cultivation forwhich organic fertilizers are used
* Ichigo is the Japanese term for strawberry.

Long-Term Vision of
the OAT Agrio GroupA ChangeOriented Company
Capable of facing thechallenges of creating newmarkets with original ideas

A Company
That Is Sensitive
to Diversity• Changes in the external
environment• Response to regional
characteristics, etc.

A Company
Contributing to the
Future of Agriculture• Plant protection products• Fertilizers and drip irrigation(cultivation technology)• Biostimulants

Summary of Fiscal 2022
In fiscal 2022, the outlook remained uncertain due to factors

the Group’s performance, and we believe that fiscal 2022 wasthat included the prolonged global impact of COVID-19,

a period for laying the foundation for the future. We feel thatchanges in demand trends arising from the conflict between

the activities advocated by the Group, which are said to

Russia and Ukraine, and supply chain disruptions. Also, given

spread the technology to increase food production (agritech-

the need to continue recognizing as risks various changes in

nology), will contribute to the Sustainable Development

the external environment, such as significant exchange rate

Goals (SDGs) for environmental conservation, improving

fluctuations and rising prices, the Group worked on the steadyresource efficiency, and the eradication of famine. Throughimplementation of its New Mid-term Business Plan (2022–

the development of new products, technologies, and2024), which was announced in February 2022. Based on ourservices, we will continue to promote business activities tomanagement philosophy of contributing to the people of thecontribute to human- and eco-friendly sustainable agriculture.

world with our agritechnology and sincerity, we took steps tomaximize global synergies through cooperation with Group
companies and partners. This included focusing on growth
drivers such as Green Products1, biostimulants2, the greenhouse horticulture field, and the promotion of global expan-

Management Philosophy

05

Progress under the New Mid-term Business Plan

Progress under the New Mid-term Business Plan

Pursuing Growth
Driverssion. The depreciation of the yen was a factor in improving

Notes:
1. Green Products: Safe and environmentally friendly plant protection products with no restrictions on the number of times they can be used, such as
natural/food additive-derived or organic, JAS-compliant pesticides.
2. Biostimulants: A generic term for substances and technologies that enhance
the natural immunity of plants and promote their resistance to cold, heat, diseases, and pests, as well as potential crop growth.

06

Sustainability Report 2023

Progress and Targets for Important CSR Issues
In addition to widely proposing the OAT Agrio Group’s tech-social (S), and governance (G) perspectives into our manage-

nologies and product functions, we will contribute to human-

ment. We believe that the corporate activities of the Groupand eco-friendly sustainable agriculture by undertaking

will help build a sustainable future together with society andactive product releases while working to enhance our corpo-

embody the intent of the Sustainable Development Goals

rate value. We will also actively incorporate environmental (E),

(SDGs).

Environment
Society
GovernanceImportantIssues

Initiatives for 2022

Reduction andrecycling of waste

Reduction of waste and plastic trash,cutback in production loss, practicalapplication of recycling of industrial
materials

Naruto Factory: Waste down 7.2% YoY

Naruto Factory: Waste down
17% YoY

Use of renewableenergy and reduction of greenhousegas emissions

Promotion of renewable energy use

Collection of Scope 1, 2, and 3 calculation data;
set reduction targets

Setting and implementing
reduction targets

Management ofemissions andwastewater

Management of consumption andwastewater at factories

Naruto Fertilizer Factory: Amount of wastewater
generated down 20% YoY

Naruto AL Factory
Continued strengthening of rinse
water quality management

Labor environment

Ensuring the safety of workplaces,with zero accidents

Naruto Factory: 296 zero accident days (ongoing
as of the end of December 2022)

Implementing regular education
on health and safety
Accident-free days
296 days + 365 days = 661
consecutive days

Quality of products

Strengthening the quality assurance
systemReviews of standards/manuals

Human resource development

Personnel affairs

Setting up new work styles and evaluation systems, observing and promoting the Act on the Promotion of
Female Participation and Career
Advancement in the Workplace

Creating comfortable working environments sothat employees can balance work and childrearing, formulating action plans that allow
all employees to demonstrate their abilities

Male childcare leave acquisition
rate 20%, expansion of employee
eligibility for staggered commuting, introduction of no overtime
days

Training anddevelopment of
personnel

Support obtaining qualifications
and training under each theme

TOEIC testing (held in-house), sales training,anti-harassment training, defined contribution(DC) pension training, compliance/risk management training

Reviews of qualification acquisition costs/allowances, management/evaluator training sessions,etc.

Supply chain
management

Establishing a distribution systemand ensuring the responsible procurement of materials

Implementing the joint procurement of raw
materials with associated companies

Implementing procurement
source diversification

Tightening governance and internal
controls, securing managementtransparency by disclosing information, and promoting stakeholder
engagement

Sustainability Report 2022 (published in March 2022)

Corporate
governanceRisk management

IT controls

Strengthening the security of core systems

Core system update, server
replacement

Compliance

Promoting compliance, maintenance, and renewal of ISO 9001
quality management

Adhering to compliance
Maintenance of ISO 9001:2015

Adhering to compliance
ISO 9001: 2015 renewal audit

2022 Results

Establishing the Sustainability Promotion
Committee (June 2022)
CDP Survey Responses (scores released December
2022)

2023 Targets

Meeting Prime Market listing
criteria
Sustainability Report update

Establishing a Structure and Environment for Diverse Human Resources to Maximize Their Abilities
Promoting the use of childcare leave andstrengthening communication within the Company
Japan’s Child Care and Family Care Leave Act was revised in
October 2022. It includes the establishment of a postpartum
father childcare leave system so that both men and women
can balance work and childcare. As part of efforts to create anenvironment conducive to the advancement of women, theOAT Agrio Group has set a goal of increasing the share offemale managers. We believe that for women to play an activerole, men’s participation in household duties and childcare
must be linked to that of women. This revision of the Act has
prompted us to formulate a General Employer Action Plan
based on the Next Generation Act, and we aim to achieve a
20% take-up rate of childcare leave among male employees
starting this fiscal year. Although some male employees havealready taken childcare leave, we are working to create anenvironment in which even more male employees will takechildcare leave.
Taking into consideration the fact that men might nothave the same level of access to external information networks
as women when it comes to childcare, the Group has decided
to create a venue for the mutual provision of information,
where both male and female employees are invited to
exchange information on childcare and other matters.
Although there are still many issues to be addressed regarding
the participants and themes to be selected, employees withpast childcare experience, those currently raising children, andthose who might be involved in childcare in the future will
gather to hold open and forthright conversations. The numberof male employees who want to be actively involved in childcare and to have access to information on how to take part in
the rearing of children is certainly increasing. We believe thatmeaningful information sharing is essential even when male
employees are unable to take childcare leave due to their individual circumstances.
The number of Group employees who are of child-rearing
age is increasing, and we have found that creating opportunities for them to interact affords them the chance to share information unique to the area in which they reside. In the future,
we will also make available to employees faced with nursing
care issues places to share information with those who have
similar problems, with the aim of creating a system in which
the diversity of human resources can be truly complementary.
We also believe in the critical nature of strengthening
communication between supervisors and subordinates as wellas among employees in the workplace. Deepening communication necessitates a mutual understanding and respect for
one another’s position. To avoid communication that flows

only in one direction, we believe it is important for employees
to refresh their understanding of the Company’s management
policy, to share their respective goals, and to properly evaluate
results. We also plan to provide opportunities to enhanceevaluation skills and training to deepen the understanding ofinternal systems. For managers, training will be provided toensure a proper understanding of management as well as toheighten their ability to manage and develop subordinates insuch areas as how to attain goals and stress management.
With harassment becoming an increasingly serious social
problem in recent years, the Group has implemented antiharassment-related training by department, job type, andposition. The type of harassment varies depending on the job
and position, so we simultaneously analyzed the trends ofeach work style. We will continue to enhance communicationand provide ongoing anti-harassment training with the goal of
creating a workplace where employees can carry out theirduties while accepting and appreciating one another.

Reform of work styles and promotionof health management
Our General Employer Action Plan based on the Next
Generation Act sets forth such goals as expanding staggered
commuting and establishing no overtime days. In addition to
those currently utilizing public transportation for staggered
commuting and external workers, we are looking to expand
staggered commuting, particularly to employees performing
childcare and nursing care. The establishment of no overtimedays will help reduce overtime work, thus curbing the chronic
working of extra hours, and will help us reassess and improve
work practices to facilitate efficient operations.
In considering the health management of employees, ouraim is to gain certification as an Excellent Health Management
Corporation, while advancing efforts toward certification as
an outstanding company by the Japan Health Insurance
Association. We also monitor the status of employees’ healthcheckups and thoroughly manage reexaminations. The Grouppays all fees for periodic health checkups and physical examinations (excluding optional services). In addition, to raise
employees’ health awareness, we have added a healthmanagement–oriented course to our suite of e-learning training courses from this fiscal year. This has led to more opportunities for employees to conduct self-checks and increase theirknowledge of health issues. We believe that by contributing to
the improvement of employees’ health, the Group can provide
a work environment where its human resources can maximize
their individual strengths.

Society

Progress and Targets for Important CSR Issues

ESG

07

Society08

Sustainability Report 2023

Environment
Greenhouse Gas (GHG) Emissions Calculation and Reduction Initiatives
Background
OAT Agrio has maintained an unwavering commitment tosustainability-conscious management since its founding andconsiders the calculation of GHG emissions to be essential. The
Group has calculated GHG emissions since fiscal 2020 and willcontinue to focus on the calculation, verification, and reduction of emissions to proactively help achieve carbon neutrality
by 2050. Collaborative calculation efforts among Group companies also serve to educate employees on environmental
issues and instill sustainability management within the
Company. We will continue communicating to our stakeholders how our agritechnology will contribute to the resolution ofenvironmental problems as part of the SDGs.

Scope 1 and 2 have been calculated at our major business sites
since 2020. During the first year of implementation, Scope 3
calculations were limited to OAT Agrio’s headquarters. Owing
to the substantial emissions attributable to Category 1“Purchased Goods and Services” and Category 4 “Upstream
Transportation and Distribution,” each was identified as animportant category. From 2021, we undertook Scope 3 calculations at major business sites. For Category 1, the quantity andamount of goods are accurately determined and refined frompurchasing information. For Category 4, we use distances thatare in line with the physical quantity of raw materials andactual conditions. For other categories, we use physical quantity data to the extent possible to calculate GHG emissions thatare realistic. While estimates are made for categories with low
emissions, actual data are obtained whenever possible andused for internal training purposes.

Analysis of results and improvement measures
In Scope 1, GHG emissions originate primarily from heatsources and fuel consumption for transport. For heat sources,
we continue to study low-carbon alternatives for boilers andfuels for in-house power generation. For transport fuel, gasoline and light oil are the main sources of emissions from passenger cars, and we will continue to promote the conversion to

EVs and low-carbon vehicles. As far as Scope 2 GHG emission
sources are concerned, OAT Agrio Naruto Factory and Chrysal
International (Chrysal) continue to use zero carbon electricity.
From the end of 2021, LIDA also began using electricity derived
from renewable energy sources, contributing to the reductionof CO2 emissions. We believe that there is an urgent need formeasures to increase the ratio of renewable energy in the
Asian region as well, given the large amount of GHG emissions
in line with the purchase of steam at the Naruto Factory, as wellas the electricity consumed by OAT & IIL India Laboratories
Private Limited and OAT Agrio Cultivation Research Center. The
main source of Scope 3 GHG emissions came from the purchase of raw materials in Category 1. Calculations are performed without omission by refining and linking to purchasing
information. We will analyze and consider countermeasures in
the future.

09

management level score of B-. This is an average score forchemical companies worldwide and above the average of C for
the Asian region and all industries globally. The Group will continue to promote sustainability activities, including the reduction of GHG emissions, using the CDP score as a benchmark
while striving to disclose information in an appropriatemanner. The Group’s responses and scores to the CDP Climate
Change Questionnaire are available on the CDP website.
https://www.cdp.net/

Ratio of Scope 1, 2, and 3 emissions
Scope 1

(0.7%)

Scope 2

(1.7%)

Scope 1 0.7%
Scope 2 1.7%

Scope 3 (97.6%)
Category 1(80.3%)

Category 4(8.5%)

144,522t-CO2

Total of Categories 2, 3, 5,
6, 7, 9, 11, and 12 (8.9%)

Scope 3 97.6%

Notes:
1. Of the 15 categories in Scope 3, Categories 8, 10, 13, 14, and 15 are not subject to calculation.
2. Figures in parentheses above are percentages using the total value of
144,522 t-CO2 of Scope 1 through 3 as the denominator.

Results of Scope 1, 2, and 3 emissions (t-CO2)
FY2021

FY2022

Scope 1

1,044

1,048

Scope 2

2,451

2,456

Scope 3

123,708

141,018

Note: As far as the Chrysal Group of affiliated companies is concerned, theshipping and transportation of Category 4 shippers are excluded from calculation due to the complexity of distribution channels. Plans are in place toremedy and refine this in the future.

Response to the Task Force on Climate-related Financial Disclosures (TCFD)
The Group is moving forward with efforts in response to the
TCFD recommendations. Based on the TCFD framework, wewill analyze the impact of climate change on the Group’s business as well as the risks and opportunities it presents, reflect

CDP is a nonprofit organization that asks companies, organizations, cities, and others questions about their environmental
impact, including climate change, and evaluates and scores
their responses for disclosure to investors around the world. In
2022, in response to a request from CDP, the Group responded
to a questionnaire that addressed the area of climate change
for the first time. While Scope 3 had not yet been calculated at
the time of our response, the Group’s overall efforts to reduce
GHG emissions were highly evaluated and we received aEnvironment

Environment

Method of calculation

Responding to CDP and Evaluationthat in our management strategies and risk management, andappropriately disclose progress with the aim of achieving thesustainable development of society and enhanced corporate
value over the medium to long term.

Chrysal’s efforts to realize a zero-impact flower industry
Group company Chrysal, a cut-flower nutrient manufacturer
based in the Netherlands, has been developing products toimprove the quality of cut flowers and potted plants for morethan 90 years. Through its worldwide distribution network,
the company offers products in major markets for cut flowers
and potted plants, from South America, Africa, and Asia,
where flower production is thriving, to Western Europe, theUnited States, and Japan, where demand is booming. In 2009,
Chrysal started its Chrysal Cares CSR program, which is
focused on realizing a zero-impact flower industry throughfour different ways: fighting climate change, contributing to asustainable economy, caring for people, and striving for apositive environmental impact. Among these initiatives,
Chrysal is looking to achieve carbon neutrality by 2030 in thefight against climate change, and has set its sights on respective goals from the perspectives of reducing CO2 emissions,improving energy efficiency, using sustainable energy
sources, and reducing environmental impact during transportation. Calculations are under way with the goal of a
global Life Cycle Assessment (LCA) for all entities and products, and the switch to renewable energy has also
progressed.

Looking to 2030, Chrysal will strengthen its efforts insupply chains, other than its own, which account for morethan 90% of its GHG emissions. For the transport of flowers,
CO2 emissions can be reduced by 90% just by switching from
air to marine transportation between Kenya and theNetherlands and Chrysal offers services to make thispossible.
Moreover, to contribute to a circular economy, Chrysal
will convert its packaging to fully recyclable, reusable, orcompostable packaging in 2025. In addition to these efforts,
Chrysal is promoting biodiversity conservation and sustainable land and water usage to further create a positive impact
on the global environment. For example, Chrysal supports
activities for the Bees for Development program in Africa toalleviate poverty through apiculture beekeeping, and has
established three bee colonies in the garden of its headquarters in the Netherlands as an initiative to tackle the issue of
declining bee populations at home and abroad.

10

Sustainability Report 2023

Corporate GovernanceCorporate Governance Structure

Message from an Outside Director

Guided by our management philosophy of contributing topeople around the world with our agritechnology and sincerity, the OAT Agrio Group aspires to an approach that can contribute to human- and eco-friendly sustainable agriculture,and engages in business activities with the mission of enhancing corporate value while contributing to the advancement ofsociety. In June 2022, the Group established the Sustainability
Committee with the president as its chair to achieve sustainable growth in corporate value through its business activities
and develop a sustainable society, for the purpose of promoting sustainability management across the entire Group. Under
the direction of the president, this committee deliberates onbasic management policies regarding sustainability, including

the issue of climate change, and planning regarding businessactivity policies and strategies. It also discusses the results ofthese deliberations with the Board of Directors. In addition, theRisk Management Committee deliberates on matters involving
the issue of climate change that might have a material impact
on the business continuity, financial standing, management
performance, and cash flows of affiliated companies, andreports on the results of these deliberations to the Board of
Directors in conjunction with Group-wide risk. Matters
resolved by the Board of Directors are then deployed and promoted Group-wide in cooperation with each business unit
under the leadership of the Sustainability Committee.

Shareholders’ meeting
Dismissal

Election

Dismissal

Election

Dismissal

Board of Directors
Directors(excluding Directors Who Are Audit andSupervisory Committee Members)
Appointment/OversightAdvisory Units

Reports
Audit
Cooperation

Reports

Instructions
Reports

Compliance Committee
Risk Management Committee
Internal Controls Committee
Sustainability Committee
Reports

Oversight

Representative Directors

Management Committee
Nominations andRemuneration Committee

Audit andSupervisory Committee

Reports

Instructions

Instructions

Internal Audit
Section

Secretariat &Cooperation

Accounting audit

Internal audit

Independent
Accountant

Instructions

Business units and subsidiaries

Risk Management
The Sustainability Committee identifies risks currently facedby the OAT Agrio Group, or those with the potential to arise in
the future, and implements systematic and appropriate preventive measures. The Committee similarly analyzes, evaluates, and recognizes matters relating to climate change that
hold the potential to materially impact the business continuity,
financial standing, management performance, and cash flows
of affiliated companies. In addition, the Committee broadlyclassifies these matters into short-, medium-, and long-term
categories from a standpoint specific to sustainability, andanalyzes, evaluates, and recognizes each from both qualitativeand quantitative perspectives.

11

Concrete process
Identify and evaluate risk for the purpose ofsustainability promotion at each Group company,
deliberate and request reevaluation as necessary,redesign countermeasures as required

Select countermeasures

Deploy and execute selected countermeasures at eachdepartment, verify and report on progress

Minoru Kimura
OAT Agrio’s corporate governance structure
OAT Agrio is a company with an audit and supervisory committee with all its outside directors serving as members. As such,
the Company’s Board of Directors consists of six internal directors and the three independent outside directors who are
Audit and Supervisory Committee members. With one-third or
more of its members made up of outside directors, theCompany’s Board of Directors meets the criteria required by
the revised Corporate Governance Code. As we have alreadyreleased the Board’s skill matrix, I recognize that each director
expresses various opinions and poses questions drawing on
his or her diverse skills, expertise, and knowledge as I look backon discussions through my participation in those meetings. As
such, I am confident that the directors are definitively fulfilling
their role. The Audit and Supervisory Committee consists ofthe three independent outside directors. The role of theCommittee is to oversee whether each director, including therepresentative director, can play an active role from the perspectives of sustainability, investment in human and intellectual capital, and risk regarding the Company’s corporate
governance system. As a company listed on the Prime Market,
OAT Agrio has been strengthening its governance system. For
the Company to build a more substantial governance system,
however, I feel there is a need to further deepen and verify discussions from the perspectives of sustainability, investment,
and risk. To that end, regularly reviewing and renewing thegovernance structure, policies, and procedures, as well as complying with the latest systems and best practices, are considered essential for building a more effective governance system
and improving the transparency of the internal control system.
The Company has also established the Nominations andRemuneration Committee as a voluntary advisory unit. This
Committee is chaired by the president and representative director and comprises three members, including two Audit andSupervisory Committee members who are independent outside directors. In addition to the election of directors, I am confident that the Committee is fulfilling its supervisory role as
required while performing a variety of functions including regular evaluation.

Disclosure of non-financial information
Recently, calls for the proactive disclosure of non-financial
information have increased to better measure corporate

sustainability. Of equal importance is the need to disclose
non-financial information that can be easily understood andaccessed by stakeholders. As far as the Company’s nonfinancial information is concerned, including its human capital
initiatives that are directly related to its growth, OAT Agrio
recognizes the need to investigate and verify indicators thatconvey such details as the diversity of its officers and employees, employee satisfaction, and status of skills in an easy-tounderstand manner. In doing so, the Company also acknowledges the importance of establishing a flow of regular reporting by incorporating information into quarterly, annual, andother disclosure systems. Over and above the disclosure of
information, every effort will be made to ensure that theCompany discloses as much information as possible regarding
its policies and plans for future initiatives.

Toward improving the effectiveness of Board of
Directors’ meetings
At Board of Directors’ meetings, we have discussed a variety of
topics, including monthly and quarterly financial conditions,strategic decision-making in each business unit, and potential
risks to compliance and internal control systems. Each director
strives to conduct discussions with openness and transparency, and consequently I believe that discussions are lively andfree flowing. Having verified the effectiveness of Board of
Directors’ meetings from a variety of perspectives—including
discussion and decision-making procedures and quality, independence and diversity, and management activities and strategies, as well as consistency with management policies—I am
confident that meetings are currently fully addressing the
expectations of stakeholders. In addition, outside directors,
who are Audit and Supervisory Committee members, work tocommunicate with individual directors through regular interviews, and effectiveness is ensured by having evaluations ofeach director and of the Board of Directors discussed during
Audit and Supervisory Committee meetings. Meanwhile, in a
fiercely competitive environment, it will become increasingly
important to make decisions that take the long-term view froma more sustainable perspective in the years to come. Looking
back at past Board of Directors’ meetings, I cannot deny that itwas easy to focus on short-term business performance and theresolution of immediate issues. I feel that there has been rather
little discussion about long-term sustainability or sustainabilityrelated issues, such as the environment, or of a social nature.
While bringing about improvements on this point, I would liketo devise ways to bring greater sophistication to the Company’s
corporate governance.

Corporate GovernanceCorporate GovernanceElection

Director (Outside Director)
Audit and Supervisory Committee Member

12OAT アグリオ

Performance Highlights
Sales
■ Net
売上高

(Millions of yen)

30,000■ Ordinary
経常利益 Profit(Millions of yen)

3,500
3,000

25,0002,500

20,0002,000

15,0001,500

10,000

1,000

5,000

500

0

0

9th

Dec 2018

10th

Dec 2019

11th

Dec 2020

12th

Dec 2021

13th

Dec 2022■ Shareholders’
自己資本比率 Equity Ratio

(%)

50

9th

Dec 2018

10th

Dec 2019

11th

Dec 2020

12th

Dec 2021

Assets■ Total
総資産額

13th

Dec 2022(Millions of yen)

35,00030,00040

25,00030

20,00015,00020

10,000

Performance Highlights /Environmental Conservation Reports

10
0

5,000

9th

Dec 2018

10th

Dec 2019

11th

Dec 2020

12th

Dec 2021

0

13th

Dec 2022

9th

Dec 2018<Formula> Shareholders’ equity ratio = Equity capital / Total assets × 100; Equity
capital = Net assets – Subscription rights – Share options – Noncontrollinginterests

10th

Dec 2019

11th

Dec 2020

12th

Dec 2021

13th

Sustainability Report 2023

お いしいを
Oishii wo

あたりまえに する
Atarimae ni suru

テクノロ ジー
Technology

Using its name as a play on words, the Company has coined the phrase
in Japanese “Oishii wo Atarimae ni suru Technology” for advertising
purposes.
Literally translated, this means “Technology that makes deliciousness amatter of course.”
The world population exceeded eight billion in 2022. There is no longer
enough food to feed this many people. The question then is how toharvest more high-quality crops on limited arable land unaffected bychanges in the environment. Taking on this challenge, OAT Agrio has
developed advanced agritechnology to increase food production. We areworking boldly to help resolve food problems through our three pillarsof crop protection, fertilizers and drip irrigation, and biostimulants.

Dec 2022

Note: OAT Agrio has applied the Accounting Standard for Revenue Recognition
effective from the fiscal year ended December 31, 2022. Data for the fiscal year ended
December 31, 2021, are presented after retrospectively applying the said Standard.

Environmental Conservation Reports (Naruto Factory)
Consumption■ Water
水使用量

Energy Consumption■ Steam
蒸気のエネルギー消費量(m2)30,000OAT Agrio’s hope is to provide all people everywherewith the joy of cultivating, the emotion of watching,
and the contentment of eating.

(kL-crude oil)

400
350

25,000300
20,000250

15,000

アタリ

200
150

10,000

100
5,000
0

50

2018

2019

2020

0

2022

2021

Waste,
Recycling,and Landfill■ Industrial
産廃排出量、
再資源化量、
埋立量
(t)

1,200
1,000

2018

2019

2020

2021

2022

Transfer and Release of Class I Pollutant
Release and Transfer Register (PRTR)■ System-designated
PRTR第一種指定化学物質の移動・排出量
Chemical Substances
20,000800

16,00014,00012,000400

10,000

200

8,000
6,000

2018

2019
Industrial waste

2020
Recycling

2022

2021
Landfill

4,000

Reported organization
The Group (our company and its associated companies) consists of
OAT Agrio Co., Ltd., 27 consolidated subsidiaries (including Asahi
Chemical Manufacturing Co., Ltd.; Runhe (Zhoushan) Plant Science
Co., Ltd.; OAT & IIL India Laboratories Private Limited; Asahi
Chemical Europe s. r. o.; PT. Oat Mitoku Agrio; Lida Plant Research,
S.L.; Inplanta Innovations Inc.; and Blue Wave Holding B.V.), two unconsolidated companies, and three associated companies.

2,000
0

2017

All PRTR-designatedsubstances

13

(kg)

18,000600

0Editorial policy
The OAT Agrio Group has published the Sustainability Report since2022, describing its initiatives for the environment (E), social (S),and governance (G) perspectives aimed at the establishment of asustainable society, as well as its management plans and otherinformation. We hope that this report will help communication
with the supply chain and other stakeholders and enhance the understanding of our company and Group companies throughout society. We will continue to improve the report with reference to yourinput and advice.

2018

2019

1,2-dichloroethane

2020
Triethylamine

2021
XyleneReported period
January to December 2022

Published
March 202314

www.oat-agrio.co.jp