Nissan Chemical Corporation Integrated Report 2023

Integrated Report20 2 3WHERE
IT ALLBEGINS

Issued: October 2023

https://www.nissanchem.co.jp/eng/

Corporate Slogan

WHERE IT
ALL BEGINS
Nothing is going to change the world to bebetter without beginning.
The slogan means Nissan Chemicalcreates such “beginning” to realize thehope of human by exploring the future.

Brand
Statement

Our goal is to fill the world with hope and happiness.
Our value is to produce a whole new excitement utilizing our imagination and creativity.
Our pride is our team of specialists believing in the infinite possibilities of chemistry and striving
to achieve the impossible.
We are Nissan Chemical, an ever evolving company the world can’t do without.

Nissan Chemical Corporation

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Nissan Chemical Corporation

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Corporate Ethos Structure
Based on changes in the business environment, social issues, and management challenges,
we recognized the importance of the corporate philosophy once again.

Course of
ActionTo determine our direction for the future and clarify the raison d’etre of the Group, we redefined our
corporate philosophy in 2022.

1C onduct sensible
business activities as amember of the international
community in compliance withlaws and regulations.

2E nhance corporate value by providing safe and useful products
and services.
3S trive to achieve no-accidents & no-disasters and protect the global
environment.
4D isclose information appropriately with a focus on communication
with stakeholders.
5C reate a cheerful and pleasant workplace by respecting
the individuality and personality of employees, andpromoting their health.
6C
 onduct ourselves as good corporate citizens
and decent members of society.

MissionStatement(Our Values)“ Contribute to society withexcellent technologies andproducts.”“Promote prosperity and welfare through concerted efforts toconstantly develop new areas.”“Respect people who exhibit a sense of responsibility, originality andmotivation.”Contribute to the protection of the global
environment and the existence/development of humanity,
offering the value sought
Corporateby society.
Philosophy(Raison d’etre /Corporate Purpose)

Nissan Chemical Corporation

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Nissan Chemical Corporation

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Integrated Report 2023
“WHERE IT ALL BEGINS”

contents

To Our Stakeholders 8
Sustainability Promotion Structure 67
Information Disclosure in line with TCFD Recommendations 68
The History of Nissan Chemical 9
Financial and
Non-Financial Highlights 11

Responsible Care 73

ProfileImprovement of Products Quality 76
Compliance 77
Risk Management 80
Respect for Human Rights 83

Value Creation& Growth
Strategies

Message from the President 13
Value Creation Process 19

Sustainability

Human Capital 21Intellectual Capital Research and Development 25
Intellectual Property 28
Financial Capital and Manufacturing Capital 29
Social Capital and Natural Capital 30
Materiality 31

Corporate
Data

Financial Review 85
Corporate Information 97

Corporate Governance 33
Messages from Outside Officers 41
Business Plan	Long-term and Mid-term Business Plans
Overview and Progress 43

Nissan Chemical’s initiatives are highly regarded
by external analytics and research organizations.

“Atelier2050” Long-term Business Plan 45“Vista2027” Mid-term Business Plan 47
Long-term and Mid-term Business Plans Topics 48
Message from the CFO 49
Business Segments 53
Main Products and Services 55
Business Strategies 57

Third-party
Evaluation* F TSE Russell confirms that Nissan Chemical Corporation has been independently
assessed according to the index criteria, and has satisfied the requirements to become a constituent of the FTSE Blossom Japan Sector Relative Index.
The FTSE Blossom Japan Sector Relative Index is used by a wide variety of market
participants to create and assess responsible investment funds and other products.

Nissan Chemical Corporation

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Nissan Chemical Corporation

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Editorial Policy
In 1992, we introduced responsible care activities, and have dis-Guidelines Used as Reference

closed the details of these activities via Environment and Safety⚫ International Financial Reporting Standards (IFRS) Foundation “IFRS Sustainability Disclosure Standards”

Report from 1999. The Report transformed into CSR Report in2013 and Annual report in which business overview and financial⚫M inistry of Economy, Trade and Industry “Guidance for Col-section were included since 2016.

To Our Stakeholders

laborative Value Creation”⚫G RI “Sustainability Reporting Guidelines Standard”

Since 2018, we have comprehensively summarized the materiality, value creation process, business strategies, and de-⚫M inistry of the Environment “Environmental Reporting

tailed financial information in addition to the business overview

Guidelines”

and E (Environment), S (Social), and G (Governance) information⚫ T ask Force on Climate-related Financial Disclosures (TCFD)

as an integrated report to make this report easier to understandOur company was founded as Japan’s first chemical fertilizer manufacturer in1887 to solve food issues which Japan faced under the founding spirit “to dedicate
ourselves to prosperity of the nation by agricultural fertility”. The pioneering spirit

mid-to long-term value creation of Nissan Chemical Group to all

has been still very much alive at Nissan Chemical as we have continued putting ef-

stakeholders, including shareholders and investors.

fort into innovative technologies and projects that promote social progress, great-

We aim to make this report as a valuable communication

ly transforming our business operations.

tool by deepening our business activities and enhancing the con-

To realize corporate vision in a new era, we currently provide products andtent of the report.

services on a global scale in four business domains, such as Chemicals, Performance Materials, Agricultural Chemicals, and Healthcare on the basis of ESG (En-Information Disclosure System

Reporting Periodvironment, Social and Governance) and SDGs (Sustainable Development Goals)

Summarized
Information

FY2022 (April 2022 to March 2023)

established by the United Nations.

The occupational accidents data (P12 and P75) is from January to December 2022.

Integrated Report(this report)

IssuedThe social and economic environment surrounding us continues to change
dramatically, including climate change, aggravated food and health issues, a de-October 2023

cline in the labor force due to low birthrate and aging population and widening(The previous edition was issued in October 2022, and the next edition isplanned to be issued in October 2024.)

economic divides threatening the sustainability of society. From the time of our
Detailed
Information

Frequency of IssuanceFor general users

Annually

founding to the present, we have been working to solve social issues.

WebsiteFor investors

By thoroughly pursuing our corporate philosophy “Contribute to the protection of the global environment and the existence/development of humanity, offer-

Contact for Inquiries About This Report
Consolidated subsidiaries:
Nissei Corporation, Nissan Butsuryu Co., Ltd.,
Nissan Green & Landscape Co., Ltd.,
Nissan Engineering, Ltd., Nihon Hiryo Co., Ltd.,NC Tokyo Bay Corporation,
Nissan Chemical America Corporation (NCA),
Nissan Chemical Europe S.A.S. (NCE),
NCK Co., Ltd. (NCK),
Nissan Bharat Rasayan PVT. LTD. (NBR)

Nissan Chemical Corporation
Sustainability Promotion Group,
Sustainability Promotion & IR Department
TEL: +81-3-4463-8404
E-mail: sus_pro@nissanchem.co.jp

Scope of Reporting
The initiatives are described mainly in the financial and ESG
information of the activities of Nissan Chemical Group.

ing the value sought by society”, and continuing to take on the challenge of creating unprecedented possibilities and value, we will strive for sustainable
development of society and our group in the future.

Entities accounted for using equity method:
Sun Agro Co., Ltd., Clariant Catalysts (Japan) K.K.
Group Companies:
In addition to the above consolidated subsidiaries andentities accounted for using equity method,
NC Agro Hakodate Corporation,
Environmental Technical Laboratories, Ltd.,
Nissan Chemical Taiwan Co., Ltd. (NCT),
Nissan Chemical Product (Shanghai) Co., Ltd. (NCS),
Nissan Chemical Agro Korea Ltd. (NAK),
Nissan Chemical Do Brasil (NCB),
Nissan Agro Tech India PVT. LTD. (NAI),
Nissan Chemical Materials Research (Suzhou) Co., Ltd. (NSU)

Nissan Chemical Corporation

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KINOSHITA Kojiro
Representative Director, Chairman & CEO

Nissan Chemical Corporation

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The History of Nissan ChemicalCore Technologies for Sustainable Growth[Existing Technologies]

Japan’s first chemical fertilizer manufacturer founded 136 years ago by TAKAMINE Jokichi, who was called “Father of
Biotechnology”.
His pioneering spirit has been passed down and continues to this very day.

Fine Organic Synthesis

Functional Polymer
DesignUltrafine Particle
Control

250,000

Optical Control[New Technologies]
Microbial Control(million yen)

Biological Evaluation

Information Science

1887

1923

1965

1989

2016

At the time of founding

Establishment of company foundation
for business diversification

Acquired new technological ideas
through entry into the petrochemical businessRestarted as a value-creatingcompany

To be a future-creating company with sustainable growth
based on our core technologies

Tokyo Jinzo Hiryo, the Nissan Chemical’s predecessor organization, started in 1885 when
TAKAMINE Jokichi, who was called the “Father of
Biotechnology”, brought phosphoric ore from the
US back to Japan. Takamine, who strongly felt
the need for improve the fertilizer used in Japanese agriculture to help make Japan a modern
nation, approached SHIBUSAWA Eiichi, known
as the “Father of Japanese Capitalism”, the following year with the idea of the commercialization of fertilizer. SHIBUSAWA Eiichi, who wasfrom a wealthy farming family, deeply agreed
with Takamine’s proposal. He establishedJapan’s first chemical fertilizer manufacturer in1887 becoming chairman (president) himself.
With the Company policy “to dedicate ourselves to prosperity of the nation by agricultural fertility”, the company contributed to the increase of domestic food production.

In the first half of the twentieth century, amid avariety of M&A activities by domestic corporates, the three companies were joined in 1923.
The Company then promoted business diversification and entered under the umbrella of Nissan
zaibatsu (Nissan Concern Company Group) in
1937, which was the 50th anniversary of its founding, renamed Nissan Chemical Industries.
After World War II, under the separation directive based on the Corporate Reconstruction
and Improvement Law, the fat and oil section
was separated into Nippon Oil and Fats (currentNOF) in 1949 and Nissan Chemical Industries
newly started.

In 1965, we established Nissan Petrochemicals and entered the petrochemical business. However, the petrochemical industry experienced a structural slump due tothe impact of the oil crises. The Company
worked to rebuild its business, but it was
unable to improve its profitability and began rationalization. The Company exitedthe petrochemical business in 1988.
Although resulting in a large deficit,
this business brought the penetration oft e c h n o l o g i ca l i d e a s t o t h e C o m p a n y,which led to the development of new technologies and businesses such as finechemicals.

In 1989, we launched our mid-term business plan declaring the comeback as a value-creating company oriented with its
two pillars: high-tech fields such as agrochemicals and pharmaceuticals, and technology fields such as functional products
and chemicals. The results of continued
R&D investment in this difficult situation
emerged. By the early 1990s, we releaseda large number of agrochemicals on themarket and entered the semiconductor
field. In the 2000s, sales of the active ingredient of LIVALO®*, an anti-cholesterol
drug, increased significantly and we acquired exclusive marketing rights inJapan to ROUNDUP®, the world’s largest
herbicide. This was followed by the creation of new agrochemicals that are themain products at present.

In 2016, the Company launched the longterm business plan “Progress2030” looking ahead to 2030, recognizing the importance of expanding its business domains
for sustainable growth.
We expand our business transcending
the framework of industry and accelerate
this effort toward the future. In order toclarify this stance, in 2018, we changed ourname to Nissan Chemical Corporation.
In 2022, in light of the significant changes in the business environment, which
was the premise for the formulation of
Progress2030, we have launched the newlong-term business plan “Atelier2050”,
looking ahead to 2050, in order to chart a
course for the Group to continue to develop and contribute to solving social issues.

* LIVALO® is a registered trademark of Kowa Company, Ltd.

SHIBUSAWA Eiichi (second from left) visiting Oji
Plant just after the completion of the three-company joint.
Seen on the left is TANAKA
Eihachiro who served ascompany president from
1923 to 1941.

200,000

40(%)

Nissan Petrochemicals Chiba Plant (1968)

Three-company Joint
Manufacture of sulfuric acid, soda, etc.

Kanto Soda

150,000

30

Nippon Kagaku Hiryo(renamed from Nippon Seimi Seizo)
The land in Ojima 1-chome, Koto-ku, Tokyo, now known as Kamayabori,
had been selected for its convenience in transporting raw materials
and products. In 1888, the production of superphosphate (fertilizer)
started.

Dainippon Jinzo Hiryo(surviving company)

100,000

Collapse of Lehman
Brothers

20

50th anniversary of its founding
Entered under the umbrella of
Nissan zaibatsu and renamed

Nissan Chemical Industries

50,000

Expansion of theimports ofpetrochemical
products in JapanFounder TAKAMINE Jokichi (left)
Jinzo Hiryo advertisement from an agricultural magazine in 1891(right)Impact of the two oil
crisesBlooming of researchfindings

Entering thesemiconductor field

10⚫ T he changes in sales and operating margins for the Nissan Chemical on a non-consolidated basis from FY1950 to FY1976 and for the Nissan Chemical Group on a consolidated
basis from FY1977 to FY2022.
⚫  The figures for November and the following May or October and the following April are totaled so that the figures for the year are close to the March results.

Sales (left axis)⚫ Including effects of changes in accounting policies from FY2021.

0

1886

1896

1906

1916

Nissan Chemical Corporation

1926
9Integrated Report 2023

1936

1946

1956

1966

1976

1986
Nissan Chemical Corporation

1996
10

Operating margin (right axis)

2006

Integrated Report 2023

2016

0
(FY)

Financial and Non-Financial Highlights
Operating profit / Sales / Operating margin(billion yen)

24.5

250

18.1

200

18.7

20.3

Net income attributable to owners of parent / ROE(%)(billion yen)

25

45

22.9

20

150

204.9

206.8
38.6

50 37.1

208.0

209.1
42.5

228.1

17.5

(%)

(billion yen)

20

20

15

15

10

10

Number of patent held
(%)

8.7

7,000

10

8.3

7.9

7.7

7.4

6,000

7.3

(Forecast)

25
20

29.4

15

30.8

38.8

33.5

41.1

5

10

5

17.8

17.2

16.5

16.8

16.0

17.4

0

2018

2019

Operating profit (left axis)

2020

2021

Sales (left axis)

2022 (FY)02018

Operating margin (right axis)

Net income (left axis)

Operating profit reached record highs for nine consecutive years.
Operating margin achieved the Mid-term Business Plan (FY2022-2027) target of 20% or more.
* Including effects of changes in accounting policies from FY2021(%)(¥/share)

35

100

300

25

75

75

76
12.0

20

9.0

15

10.0

78

250

9.0

10.0

12.1

5
0

2018

13.1
2019

15.0

2020

50

Total amount of dividend (left axis)
Total payout ratio (right axis)

42.8

0

0

198

210

(number of people)

60

2,000

50

82

90

2018

Share repurchase (left axis)

2019

Dividend per share (left axis)

2020
EPS (left axis)

EBITDA (operating profit + depreciation)

2022 (FY)

0

-1.1

0

48.0

49.2

53.0

20
10

10

2018

2019

2020

2021

0

2022 (FY)EBITDA

-5.7
26.6

2018

24.6

2019

-4

-5.2
-6.1
22.7

2020

Liabilities with Interest (left axis)

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Integrated Report 2023

27.3

2021

2022 (FY)

D/E ratio (right axis)

0.8

0.4

22.7

* D/E ratio = (Loans payable -Cash and deposits) / Shareholders’ equity

Nissan Chemical Corporation

2018

15

2019

2020

2021

2022 (FY)

Overseas(hours)

(%)

20

85

12.5

80.6
19

13

1,929

1,924

1,959

76.0

75.8
18

11

73.2

19.7

10

2019

2020

2021

2022 (FY)

18.9

9

17

80.0

(target)

80

12

2018

2019

75

71.0
17.7

18.4

2020

2021

17.7
70

2022

2027 (FY)Monthly average overtime (left axis)
Annual paid leave acquisition ratio (right axis)

-8

0.0

GHG emissions(1,000 tons)

1.48

1.6

1.2

-3.4

63.3

1,701

14

12.5

1,890

(%)

Number of full-time employees (left axis)
Ratio of females among full-time employees (right axis)
Ratio of female researchers in regular positions (right axis)

30

61.2

1,861

(%)

50

30

1,540

* Figures from FY2019 also include annual paid leave acquisition by managers

40

40

1,469

Monthly average overtime / Annual paid leave acquisition ratio*

Lost-time injury frequency rate*

50

60

0

1,600

14.8

11.9

11.5

11.1

Dividend payout ratio (right axis)(billion yen)

70

20

1,800

1,700

Liabilities with interest / D/E ratio*(billion yen)

2018
Japan

Sales-to-R&D expenses ratio (right axis)

12.6

12.2

Dividends have increased for 11 consecutive years from FY2012 to FY2022.
Dividend payout ratio achieved the Mid-term Business Plan (FY2022-2027) target of 55%
maintained.

Total payout ratio achieved the Mid-term Business Plan (FY2022-2027) target of 75% maintained.

1,168

0

2023 (FY)

13.4

1,900

10

2021

2022

2021

14.5

20

164

122

104

30

291

272

232

2020

Number of full-time employees / Ratio of females among full-time employees /Ratio of female researchers in regular positions

(%)

44.9

44.9

2019

0

Placing importance on R&D, we have maintained a high sales-to-R&D expenses ratio of 7-9%.
R&D expenses temporarily decreased between FY2020 and FY2022 due to the COVID-19
pandemic.

40

100

2018

R&D expenses (left axis)

56.3
41.5

50

2022 (FY)0

ROE (right axis)

150

17.3

2021

2022 (FY)

200

23.1

10

2021

Dividends / EPS (net income per share) / Dividend payout ratio(billion yen)

72

2020

1,324

4,560

2,000

5

Net income reached record highs for 10 consecutive years.
ROE exceeded the previous year’s result and achieved the Mid-term Business Plan
(FY2022-2027) target of 18% or more.

Total amount of dividend / Share repurchase / Total payout ratio

30

2019

4,169

3,707

3,238

1,000
0

4,010

4,406

3,000

(Forecast)

5
0

5,479

4,000

5

6,261

5,709

5,031

5,000

30

10

52.3

51.0

16.9

19.4

35

15

100

16.6

40

19.2

R&D expenses / Sales-to-R&D expenses ratio

400

1.11
0.76 0.81

0.88

0.81

0.90 0.94 0.93

1.07

350

1.16
1.10

0.73

0.37 0.37

250

19

150

90
18

230

219

2018

2019

100

0.00

0.00

0

Chemical industry

25

203

2020

Dinitrogen monoxide (CO2 equivalent)
CO2 emissions from energy use* Number of deaths and injuries due to occupational accidents per million actual working hours

Nissan Chemical Corporation

91

100
29

121
25

216

254

181

(target)50(target)2014 2015 2016 2017 2018 2019 2020 2021 2022 2027 (Year)
Nissan Chemical

114

200

0.37
0.00

300

12

Integrated Report 2023

2021

2022

2027(FY)

CO2 emissions from non-energy use

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

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

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

Progress of the four basic strategies

Vista2027

YAGI Shinsuke
Representative Director,
President & COO

2022

2023

2024

2025

Vista2027 Stage I

2026

2027

FY2022 Result

Sales: 285.0 billion yen

Sales: 228.1 billion yen (+20.1 billion yen)

ROE: above 18.0%

ROE: 19.4%

Operating profit: 67.0 billion yen

Major Non-financial Targets for FY2027

55%) shows comparison to FY2021

FY2022 Result
Progress

Achievement of thetarget to maintainat least

Nissan Chemical Corporation

13

Integrated Report 2023

30%

Compared
to FY2018

Progress

Reducedby

9.8%

Nissan Chemical Corporation

14

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

GHG emissions (Scope1+2)

Reducing
at least

3

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

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

Total payout ratio: 78%(

at least

2

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

Total payout ratio: Maintain 75%

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

Major Financial Targets for FY2027

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

Compared
to FY2018

Integrated Report 2023

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

Value Creation & Growth Strategies

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

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

Message from the President

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

Value Creation & Growth Strategies

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

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

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

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

Business Areas (expansion into new areas)
1

Information &Communication
Semiconductormaterials
Display materials

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

Renovate management andbusiness foundations

Photofunctional
materials

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

Accelerate the value-creation
process by utilizing digitaltechnology

Environment &3 EnergyS econdary battery
materials and fuelcell materials

Industrial chemicals
Colloidal silica
Affiliate companies

Next-generation
solar cell materials
CCUS materials

Microbiome<Agriculture/Healthcare> <Microbial materials>
Biostimulant

CO2 reduction
systemGrowing businesses

Nissan Chemical Corporation

Materials &4 Services

15

Integrated Report 2023

Core businesses

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

Nissan Chemical Corporation

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

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Integrated Report 2023

Message from the President

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

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

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

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

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Integrated Report 2023

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

Nissan Chemical Corporation

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

Our company’s products
lead to the resolution ofsocial issues

Creating products
chosen by society

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

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Integrated Report 2023

Value Creation & Growth Strategies

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

Value Creation Process
The Nissan Chemical Group is now at an unprecedented turning point in its history, and we are determined to be a leader
in creating the future. With our Corporate Philosophy as the foundation of our business activities, we aim to fill the futureof people and society with hope and happiness through the provision of irreplaceable “Must-Have” products and services
by leveraging the technologies we have cultivated over the years.

Contribute to the protection of the global environment
and the existence/development of humanity,
offering the value sought by society.

Social Issues (External Environment)
Global environmental conservation
Climate change
Labor shortage
Food issues

InputsLow birthrate and aging population
Health issues

Business Model(Fiscal year ended March 31, 2023)

Nissan Chemical’s Strengths

Human Capital(Non-consolidated)

R&D capabilities

Number of employees: 1,959(Number of Researchers*1: 465)

Marketing Ability◎ Related Information: “Research and Development” P25-27

Financial Capital

Concentrate on Four Business Domains

Net assets: 221.5 billion yen
Total assets: 298.7 billion yen
Equity ratio: 73.1%

Intellectual Capital

Information &Communication

Life Science

Materials & Services

Environment & Energy

Outputs

Outcomes(Fiscal year ended March 31, 2023)

Vista2027
To Be An Enterprise That Faces Challenges
Toward The Future Through Co-creation

Human Capital (Non-consolidated)・Engagement with stakeholders(Emphasis on dialogue with employees)

2022-2027 Numerical Targets

Ratio of high engagement level employees*4: 16.3%(FY2021: 16.2%)

Ratio of researchers in regular positions: 38% (FY2021: 39%)

Financial Indicators

Financial Capital◦ Operating Margin: Above 20%

Sales: 228.1 billion yen (FY2021: 208.0 billion yen)
Net income: 41.1 billion yen (FY2021: 38.8 billion yen)
ROE: 19.4% (FY2021: 19.2%)◦ ROE: Above 18%◦ Dividend Payout Ratio: 55%◦ Total Payout Ratio: 75%◎Related Information: “Financial Review” P85-92

Non-financial IndicatorsIntellectual Capital

Number of patents held: 6,261
R&D expenses: 16.8 billion yen
Sales-to-R&D expenses ratio: 7.4%

Number of Patent Applications: 378 (FY2021: 415)

Manufacturing Capital

Manufacturing Capital (Non-consolidated)◦ Nissan Chemical Sustainable Agenda(A plan to pursue “what we can do for the future of the globe andhuman” by providing products and services that contribute tosolving social issues)

Providing Nissan Chemical’s
unique "Must-Have" products
and services

CAPEX: 20.3 billion yen
Manufacturing base
Japan: 7 sites, Overseas: 3 sites(products that are irreplaceable)

Social Capital

Actualizing a sustainable
future for our planet

Production volume: 563,130 tons (FY2021: 736,436 tons)

Social Capital

Actualizing sustainable
comfort for all

Reduce CO2

Solve health issues
for humankind andanimals

Reduce waste

Achieve a smart
society

Conserve aquatic
environments

Solve foodshortages

Key Performance
Indicator (KPI)
Rate of total sales of
products and services
that contribute to solvingsocial issues in
consolidated net sales

Maintainat least

55%

・Engagement with stakeholders

Engagement with stakeholders(Emphasis on dialogue with investors and analysts)

 aintenance and promotion of good relationships with local communities・M◦ GHG emissions:

Reducing by at least 30% from FY2018 level→ Aiming for carbon neutrality in 2050

(natural observations in Nissan Bio-Park, plant tours, etc.)◦ Positive response rate in survey of employee attitude

Strategic Decisions by the Board of Directors

Natural Capital(Non-consolidated)
Raw materials: 423,024 tons
Energy input: 90.6 thousand kL*2
Water resources: 27.8 million m3 *3Management Foundation

Natural Capital (Non-consolidated)
GHG emissions from business activities:
328 thousand tons-CO2e

on human resources development: ◦ Proportion of females in the regular position:At least 13%◦ Proportion of female researchers in the regular position:(FY2021: 345 thousand tons-CO2e)(Corporate Governance / Compliance / Risk Management)

At least 18%◎ Related Information: Human Capital, Intellectual Capital, Financial Capital,
Manufacturing Capital, Social Capital, Natural Capital P21-30*4 In an employee questionnaire survey on work enthusiasm and attitudes, 28 indicators were determinedbased on questions related to “spontaneous action”
and “positive emotions”, etc., to measure the level ofengagement.

*1 approximate number*2 crude oil equivalent*3 w
 ater resources input minus
effluent

Nissan Chemical Corporation

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Integrated Report 2023

At least 65%

Nissan Chemical Corporation

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Value Creation & Growth Strategies

Nissan Chemical’s Corporate Philosophy

Human Capital
Based on our corporate philosophy of “contribute to the protection of the global environment and the existence/development of humanity, offering the value sought by society”, we believe that enhancing human capital is one of the most important issues for our growth as a “future-creating company" to develop together with society. To strengthen our businessfoundation, we are promoting initiatives aimed at developing human resources and creating comfortable workplaces.

Under the long-term business plan “Atelier2050”, we have set
out the ideal state of our organization for 2050 as “a group of
co-creators that face challenges for change with a strong passion”. We have also defined a basic stance for our employees
around the three ideas of, “valuing the integrity as the strength”,“taking a step forward with the vision”, and “transcending collaboration to co-creation”. As such, various initiatives are being
taken to develop human resources and improve the workplaceenvironment in order to realize an organization in which diverse
human resources can take on challenges toward their own goals
and they aspire toward personal growth, while upholding Nissan
Chemicalʼs strength and identity of “integrity”. We have set targets for each initiative to human capital management for FY2024,
the final year of the mid-term business plan “Vista2027 Stage I”,
as a key milestone, and promote initiatives.

Key factors for realizing the organization’s vision
Human resource
development

Producing leading human resources whowill continue to challenge toimprove value

Producing co-creators who transcend
domains

Creating a culture of diversity that respects individuality
Improvement of
an internal
environment

Producing discerning human resources
who able to judge business potential andcommercialize it

Creating a culture of understanding and empathy toward thecorporate philosophy●Ai Campaign
This activity unique to Nissan Chemical attempts to make improvement proposal from small group activities at each plant. It
started in 1978 with almost all operators from each plant taking
part every year. We aim to improve our stance to continue tomake improvements that lead to improve value from on-site
perspective, and to improve our ability to make proposals without being bound by precedent.

Key factor 2: Producing co-creators who transcend domains
number. In addition, we aim to create a state that outside parties
can be involved and co-created in order to newly acquire, improve the value of, and develop, our own technologies. We will
promote cross-border collaboration, not fixed solely to one area,such as joint research and joint patent applications with othercompanies, as well as the loan, transfer, and dispatch of humanresources outside the Company.

To continuously produce new products, services, and seeds oftechnology that contribute to solving social issues, our challenge is to produce human resources who can “co-create” newvalue by collaborating across borders rather than closing insolely on their own areas (technologies or departments). Therefore, we have set the “number of co-creation themes” in our hypothesis verification-based training, the 10% Challenge, and theAi Campaign, as an indicator, and making efforts to increase thisIndicator

Result (FY2022)

Target (FY2024)

Number of co-creation themes

134 cases*

160 cases* The number of initiatives for the 10% Challenge introduced from FY2023 is not included in FY2022 results.

Promoting employees’ mental and physical health◎Related Information: “Ideal State in FY2050” P45

Key factor 1: Producing leading human resources who will continue to challenge to improve value
have set the “positive response rate in survey of employee attitude on willingness to take on challenges” as an indicator of thisfactor. We aim to improve this figure through initiatives such as
hypothesis verification-based training, the Ai Campaign, and the
10% Challenge starting in FY2023.

For Nissan Chemical to continue to grow in the future, our challenge is to produce human resources who can drive the business forward by thinking independently and challenging themselves, based on “vision (self-motivation)”, to make improvements
and proposals that will lead to improve value. Therefore, we
Indicator

Result (FY2022)

Target (FY2024)

Positive response rate in survey of employee attitude on
willingness to take on challenges

67.0%

70.0%

●Hypothesis Verification-based Training(updated from FY2020)
In the training before promotion to C3 class (equivalent to subsection manager), participants formulate a vision for the futureand initial hypotheses (questions and answers) and then spend
several months examining and revising the vision and hypothesis to refine the action plan for the purpose of “acquiring future-creating leadership skills”.
In training before promotion to managerial position (equiva-

Nissan Chemical Corporation

lent to section manager), with the aim of “acquiring leadershipthat unleashes the future creativity of people and organizations”, participants train their ability to interpret information byaccessing the knowledge of the world, and collect and analyze
valuable information, while demonstrating leadership and promoting transformation. Based on this, they conceive ideas for
new businesses, products and services, and go through the process of hypothesis verification that leads to the commercialization of products and services for the Company.

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Integrated Report 2023

Key factor 3: Producing discerning human resources who able to judge business potential and commercialize it
And by actively rotating staff across job categories, such as
research, manufacturing, and sales, we will provide opportunities for researchers and engineers to directly discuss with customers as much as possible, and foster the ability to identify
business opportunities not only from a perspective of technological point, but also from the perspective of the customer, market,
and social issues.

To develop new products and services that will be the source ofgrowth for the next generation, our challenge is to produce discerning human resources who can identify the product needs
that is irreplaceable “Must-Have” while taking into account market needs, and judge the growth potential of the value chain. To
produce such discerning human resources, we are implementing an intrapreneurship program aimed at developing the abilities of entrepreneurs and fostering in-house entrepreneurs.

●Intrapreneurship Program (started in FY2019)
We have started an intrapreneur (in-house entrepreneur) training program in FY2019 with the goal of developing the abilities ofentrepreneurs and fostering them. With the support and coaching of active entrepreneurs, participants practice behavioral
skills through actual project in mixed teams selected from multiple departments. By repeatedly gathering information from potential customers in Japan and overseas and verifying hypothesis in a short cycle, they will promote the brushing up of promising
themes and learn how to act as innovators.

Nissan Chemical Corporation

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Value Creation & Growth Strategies

Promoting Human Capital Management●10% Challenge (starting FY2023)
In FY2023, we newly introduced a system that allows employees
to devote 10% of their annual working hours to challenges in areas outside of their normal work or in areas not specified in department policies, based on self-motivation. With this 10% Challenge, we hope to foster a culture of enjoying the challenge,
regardless of success or failure, and to broaden employeesʼ own
possibilities through the experience of taking on new challenges.

Human Capital

Key factor 5: Creating a culture of understanding and empathy toward the corporate philosophy

To develop human resources who will continue to challenge toimprove value, our challenge is to create a corporate culturethat respects and accepts diversity of all people who work together, and at the same time, allows the exchange of ideas (different opinions) held by such diverse individuals. Therefore, wehave set the “positive response rate in survey of employee atti-

For Nissan Chemical to contribute to solving social issues andgrow together with society, our challenge is for each and every
employee to align the corporate philosophy with their own individual purpose to increase their sense of understanding toward
the corporate philosophy, which is the basis of our business activities. Therefore, in order to foster a corporate culture in which
each employee can work with the feeling that they are contributing to the realization of our corporate philosophy and vision, wetude on diversity and career planning” as an indicator to assess
this factor. We aim to improve this figure by setting opportunities for direct dialogue between employees and the officer incharge of human resources, career dialogue to develop individual career plans, and introducing various systems to promote
work styles that match the lifestyles of each employee.

Indicator

Result (FY2022)

Target (FY2024)

Positive response rate in survey of employee attitude on diversity
and career planning

65.5%

70.0%

●Career Dialogue (starting in FY2023)
In FY2023, we began holding dialogues between employees andtheir superiors once a year to develop their career plans, separately from the performance evaluation interviews, in order tomake the most of each personʼs individuality and foster job satisfaction.
Going forward, content of the dialogues will focus not only
on their “work”, but also on the “people” themselves, so that
employees can see their careers not only in terms of “career =work experience at a company, and transfer” but also as “career= life experience based on oneʼs own values and way of being”.

●Promotion of Diversity
Nissan Chemical has a diverse workforce, regardless of age,gender, or nationality, working in a wide range of fields. In the future, we will further promote diversity in order to enhance corporate value by taking advantage of diversity in terms of values,
abilities, and experience, which cannot be expressed in terms of
attributes.
Innovation
Social needs

Individual purpose

Conflict and Fusion
Diversity of Talent *2

Diversity of Opinion *1●Introduction of Systems for Promoting a Good Work-Life

Gender,Nationality,etc.

Balance
We are working to improve the rate of employees taking annual
leave (target rate of at least 80% of available annual paid leave)by introducing a flextime system, an hourly annual leave system,
and a system that allows expired paid leave to be used for nursing/caregiving. Since FY2022, the telecommuting system has
been made a permanent system. Also, in 2023, we were granted
the Next Generation Accreditation Mark (Kurumin) by the Ministry of Health, Labour, and Welfare for our efforts as a company
to support childcare. This is the second time we have received
such accreditation following 2018.

Experience,
Expertise,etc.
Values,etc.

All kinds of diversity*1 Diversity of Opinion (fusion of diverse opinions): A state in which diverse opinions are expressed and fused ina free and open atmosphere*2 D iversity of Talent (demonstration of diverse talents): A state in which individual strengths are recognized anddemonstrated, and high performance is achieved by the organization as a whole

are promoting efforts such as holding sustainability and IR inhouse briefings and having the president visit each site every
year to provide opportunities to speak with employees and engage in direct dialogue. Through these efforts, we aim to improve the “positive response rate in survey of employee attitude
on the degree of understanding and empathy toward our corporate philosophy.

Indicator

Result (FY2022)

Target (FY2024)

Positive response rate in survey of employee attitude on the
degree of understanding and empathy toward our corporate
philosophy

64.4%

70.0%

Key factor 6: Promoting employees’ mental and physical health
And through our responsible care management system, we
are working to prevent occupational accidents, promote thegood health of staff, and create a comfortable workplace environment in our efforts to improve the level of health and safetyat each business site.
As a result of these and other efforts, we aim to reduce productivity loss by presenteeism and continue to acquire comprehensive and objective certifications related to health management, such as the White 500.

We are implementing various measures based on the belief that
employeesʼ health is a “foundation that supports sound corporate growth” with the goal of maintaining and improving thephysical and mental health of employees. Specifically, we arepromoting regular health checkups, conducting stress checks,
and holding seminars on improving the ability to manage healthfor all employees, with the aim of reducing the ratio of employees with high stress and increasing the ratio of employees with
optimal weight (body mass index (BMI) of between 18.5 and 25.0).

Indicator

Result (FY2022)

Target (FY2024)

Ratio of employees with high stress

8.1%

7.0% or less●Mental Health Care ertified Health and Productivity Management Organization●C

We introduced a stress check in 2015. Each year, organizational
analysis of the results is conducted and the reporting session isheld at each business site. More than 200 people, including
heads of plants and laboratories, management level employees,
and union officers, etc., participate in the reporting session toformulate workplace environment improvement plans.
For management level employees, Line-Care Training is provided on a regular basis. For employees, we have introduced
e-learning for Self-Care and counseling services available toemployees and their families.

(White 500)
In cooperation with the
Health Insurance Association, we are implementing
measures to promote thehealth of our employees, focusing on lifestyle-relateddiseases and mental healthcare, etc. which are key
items in our Basic Health
Policy. As a result of these efforts, we have been certified by the
Ministry of Economy, Trade and Industry and the Nippon Kenko
Kaigi as a “White 500 Health and Productivity Management
Outstanding Organization” for seven consecutive years.

Web

Promotion of Diversity
https://www.nissanchem.co.jp/eng/csr_info/communication/employee/respect.html
Creation of a Comfortable Workplace
https://www.nissanchem.co.jp/eng/csr_info/communication/employee/dialogue.html

Nissan Chemical Corporation

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Maintenance and Improvement of Employees’ HealthWeb https://www.nissanchem.co.jp/eng/csr_info/communication/employee/workplace.html

Nissan Chemical Corporation

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Value Creation & Growth Strategies

Key factor 4: Creating a culture of diversity that respects individuality

Research and Development
Research and Development -Our Five Core TechnologiesPerformance Materials(Inorganic Materials)

SUNEVER®
ARC®*1
Multi layer process materials(OptiStack®*2)
EUV

Silica sol
Colloidal products

Chemicals

Chemicals

Agrochemicals

Healthcare

TARGA®, PERMIT®, LEIMAY®,
ALTAIR®, Fluralaner, GRACIA®,ROUNDUP®, QUINTEC®, DITHANE®

LANDEL®*3, LIVALO®*4,
Contracting Businessof Technological
Development APIsand Intermediates(Fine Chemicals)

High-purity
chemicals forsemiconductors

Environmental
rerated products
TEPIC®

In-house developed
Pharmaceuticals /Contract Pharmaceuticals

Heterocyclic
Chemistry❶ Ultrafine Particle
Control

Existing
pharmaceuticals

Chemicals(Basic Chemicals)
Nitric acid, Urea,
Isocyanuric acid

Interface Chemistry❷ Functional Polymer Design❺ Optical Control

Managing Executive Officer
CTO
Head of Planning andDevelopment Division.

Heterocyclic Chemistry

Purification
Technology

ENDO Hideyuki
Polyimides

Sulfuric acidIn-house developed
Agrochemicals

Ammonia❷ Functional Polymer Design❸ Biological Evaluation❹ Fine Organic Synthesis＊3
L ANDEL® is a registeredtrademark of Zeria
Pharmaceutical Co., Ltd

Fertilizer
Petrochemicals
High-density Polyethylene (discontinued)

PVC (discontinued)

ness domains. It is important that we do not let these “enclaves”
that we have never addressed remain untouched, and that welink really promising themes and technologies to our core technologies and apply them to our customersʼ needs and key technologies.
Development investment and capital investment for equipment introduction required from our research laboratories areapproved at the management meeting and the Board of Directors after confirmation by the Planning and Development Division and the business divisions. If we are unable to overcome
technological issues and reach target criteria and standards, wewill decide to interrupt and withdraw through an evaluation
meetings on research theme. We then engage in thorough selection and concentration while continuously establishing newthemes.

I have been Head of the Planning and Development Division
since 2022 and was freshly appointed to the role of CTO. The appointment of a CTO is a first in our companyʼs history. My role isto elaborate a strategy from a technical perspective and to leadto achievement of the vision and targets set in the long-termbusiness plan “Atelier2050” which defines our targets for 2050,
and in the mid-term business plan “Vista2027” which was formulated as a stepping-stone to attain the long-term businessplan.
To that end, I have designed a roadmap to steadily build up
businesses toward 2027, and to achieve our targets and vision
for 2050.

Expanding business domains by linking promising
themes to our core technologies
The Planning and Development Division, which I oversee, is involved in the three growing businesses of Information & Communication, Life Science, and Environment & Energy, those wehave focused on to achieve the targets of Atelier2050. We are responsible for building high value-added new products and businesses that fit social needs by combining new materials andtechnologies with our core technologies.
Rather than allocating management resources to all business domains, we are focusing on short-term and mid-term priority themes to promote the early launch of businesses likely to
succeed in the future. Among them, we are sometimes taking on
the challenge of fields that we have never addressed before,
which is considered promising in the future.
It is not an easy task for even talented the researchers tocontinue research and development in a field unrelated to busi-

Nissan Chemical Corporation

Brushing up technologies and products together withcustomers
The sources of our R&D capability is that we consistently maintain the highest level R&D expenses among chemical manufacturers to create the seeds of new technologies and nurture theminto businesses. We have transformed the business operations
from the time of our founding. We have continued to take on thechallenge of creating new technologies and businesses by nurturing the five core technologies of “Fine Organic Synthesis”,“Functional Polymer Design”, “Ultrafine Particle Control”, “Biological Evaluation”, and “Optical Control”, and fusing themacross fields.
In order to improve these technologies, we are accompanied
our researchers to visit our customers. After I joined Nissan

25

Integrated Report 2023

Agricultural Materials

Licensing-inAgrochemicals＊4
L IVALO® is a registeredtrademark of Kowa Company, Ltd.

external environment are leading to a worldwide reduction in
the use of agrochemicals. We have also started R&D in microbial
agrochemicals and established the Biological Group in the Biological Research Laboratories. Microbial control is a very important technology that can also use in the Healthcare business.
In addition, the progress of digital transformation (DX) is remarkable, and “Information Science” is indispensable as a fundamental technology. We will establish technologies that will
become the source of value creation for all business domains,
by driving new value creation through simulation and data science, and promoting company-wide DX as well as materials informatics (MI) in research departments.
At Nissan Chemical, we call the human resources “connoisseur” who able to deeply exploit R&D by checking for overlooked technologies in our business domains and applying themto technologies demanded by customers and the market. In
R&D, all themes do not always become successes with a path toward commercialization. Therefore, it is necessary to develop
human resources who can judge whether a technology or atheme can grow into a business in the future. We provide the opportunities for young employees to discuss directly with customers, participate in academic conferences, and receive external
technical training in order to acquire the basic knowledge necessary for a researchers. Developing discerning human resources
is also one of the roles of CTO.
I am committed to playing my part in management, considering which technologies are necessary to achieve our targets
from a long-term perspective, and deciding on our direction that
we aim for and our policies on technology.

Chemical in 1990, I was assigned to the Polymer Materials Research Department, the Central Laboratory (currently the Chemical Research Laboratories and the Materials Research Laboratories). Since then, I have been involved in R&D for liquid crystalalignment materials, one of our mainstay businesses, and havebeen in charge of fundamental research and technical sales. By
having the technical discussions with the customerʼs engineers,
we can grow as researchers, and improve our knowledge andinsight into problem solving. I accompanied customers as well,grasped their needs and accumulated experience in brushing up
the development of products and technologies that the market
required from us.
In hiring for researchers, we dedicate the most of interview
time to technology and research aspect. Our approach is so
unique that we are told by applicants that the process was atechnological discussion rather than an interview. I believe that
one of the strengths of our R&D is that we are able to hire human resources who have expressed strong thought on researchduring their interviews.

Developing discerning human resources who candeeply exploit R&D
In Atelier2050, we are challenging to create completely newtechnologies and products related to three growing businesses,
Information & Communication, Life Science, and“Environment &Energy”, by adding “Microbial Control” and “Information Science” to our existing core technologies.
Until now, we have contributed to food production throughchemical fertilizers and agrochemicals. Our policy of contributing to the resolution of food issues through the Agricultural
Chemicals business remains unchanged, but the changes in the

Nissan Chemical Corporation＊1, 2
A RC® and OptiStack® areregistered trademarks of
Brewer Science, Inc.

26

Integrated Report 2023

Value Creation & Growth Strategies

We will lead to the achievement of
our targets by determining the direction oftechnology management and elaborating
strategies from a long-term perspective

Performance Materials(Displays and Semiconductors)= Five core technologies ❶ ～ ❺Research and Development

Intellectual Property
Our Group regards research and Development (R&D) and the intellectual property it results in as“the foundation of business” and “the source of growth.”

R&D Expenses
Science that combined with Agricultural Chemicals and Healthcare account for about 40% each. In addition, about 40% of employees of regular position are allocated as researchers.

R&D expenses

Composition of regular
position personnel■Chemicals ■Performance Materials ■Agricultural Chemicals ■Healthcare* ■Others
20

17.8

16

17.2

2.0
2.5

12

16.5

2.0

2.4

2.5

4.5

2.4

4.6

0.4

0.4

4.2

4.3

4.8

7.0

7.6

0.6

4.4

8.2

7.7

7.0

Performance
Materials
190

R&D
465

Others760

8
4Planning and Development Divisionand others 160
Chemicals
5

4.4

4.2

3.9

38% of regular-position
employees are researchers

17.4

16.8

16.0

Composition of researchers by segment

Healthcare
15

7.6

Agricultural Chemicals
95(As of September 2022, non-consolidated)

00.6(billion yen) 2018

0.4

2019

0.3

2020

0.3

2021

0.3

2022

0.2

2023 (FY)(As of September 2022, non-consolidated)(forecast)*The figures of FY2018-2020 are the former Pharmaceuticals Division.

Voices of Researchers

Possibility of MI
for efficient theme creation

Driving value creation by combining Biological Evaluation
and Information Science!

FURUHASHI Takamasa

TERATANI Kohei

Biological Research Laboratories
Agricultural Chemicals Research & Development
Department

Materials Research Laboratories
Advanced Materials Research Department

Our department has record of utilizing bioinformatics such as
plant metabolomics in agricultural chemicals research. With therapid progress of information science technology in recent years,
new doors have been open in applying information science suchas image analysis and prediction models using AI to biologicalevaluation, which is our existing core technology. In imaging for
instance, the types and quality of images that can be used foranalysis are changing, with aerial photography of farmlands andtest fields by drone as one example. In addition, we accumulate
data by setting up sensors in test fields all over Japan and monitoring information on weather conditions in real time. We arenow engaging in efficacy evaluation based on image data ofcrops and weeds, and building ofAI models to predict crop growth,and are promoting activities to“build a digital technology foundation” as set in Vista2027. Our
goal is to contribute to productdevelopment by strengthening
the value creation and co-creation process, in the process ofmaking Information Science our
new core technology.

Our team makes full use of materials informatics (MI) to carryforward predictions on the level of roughness of inkjet printing
layers in soluble materials for OLED. With collaborations withoutside consultants and the Research Management Dept., Planning and Development Div., we aim to build more precise prediction models. If our efforts bear fruit, an experiment that takes
one month could be reproduced in a few days. Research optimization which applies computational science, including sophisticated predictions like these, is a priority for us. By introducing analysis that uses programming languages such as Python in daily
research, we are promoting the creation of an environment
where research result can be obtained efficiently.
My goal is making it possible to handle many themes with asmall number of people by maximizing the benefits of MI. As a research and development department with the mission of creating
new products, our directionthat we aim is clear. We
aim to create new themesthat becomes next business pillar by using MI toverify many themes more
efficiently and to derive innovative discoveries.

Nissan Chemical Corporation

27

Integrated Report 2023

Basic Policy and Features
Nissan Chemical carries out its intellectual property activities
based on the “Management Policy of Industrial Property” formulated in 1997, with the three following pillars: “prompt acquisitionof intellectual property rights,” “appropriate utilization of intellectual property,” and “intellectual property risk management.”
In addition, “utilization of intellectual property information” and“intellectual property contracts and external relations support”
have grown into important activities these recent years and theIntellectual Property Department is spearheading initiatives inthis realm as a “navigator of R&D benefits.”
The biggest feature of our intellectual property activities isthat “R&D departments, business divisions, and Intellectual
Property Department unite seamlessly”. This feature has beenachieved through our emphasis on R&D, with 70% of new employees and 40% of regular positions being researchers. Outsideof the Intellectual Property Department, business divisions andplanning departments at the Head Office also include many employees with experience in research, and a large number of personnel familiar with both R&D and intellectual property leads tolively discussions on patents and measures regarding othercompaniesʼ rights. Moreover, intellectual property liaisons are
established in each division to engage in intellectual property
activities in collaboration with the Intellectual Property Department. In addition, “Intellectual property conference” held in thebusiness divisions and planning departments of the Head Office
and in all laboratories and plants are another our characteristic
activity. These conferences lead to the sharing of internal andoutside issues related to intellectual property and promote thecultivation and elevation of a company-wide intellectual property mindset.
In this way, we implement three-pronged intellectual property
activities through business divisions, research and development
departments and the Intellectual Property Department, and possesses a high level of intellectual property literacy as a whole.

KAGESHIMA Satoshi
Executive Officer
Head of Intellectual Property Department

Seamless Intellectual Property Activities
One concrete example is “patent conference” attended by core
members of R&D and business. At Nissan Chemical, these patent conferences are opportunities to comprehensively discusseach strategy of intellectual property, research and business,
which is reflected in each policy and generates speed and competitiveness.
With respect to photo-alignment materials used in IPS-type
LCD panels, we built patent networks ahead of other companies,
consequently reached a 99% market share and successively established a monopoly.
In addition, our intellectual property strategy in the agricultural and pharmaceutical field includes the intellectual property thatis “global” and “can win in the case of litigations.” We have experienced disputes in many countries and, if necessary, will directly
eliminate other companies by litigating.

Aggressive Acquisition of Property Rights
As shown in the number of patents held (P12), we aggressively
acquire patent rights. We have compared the number of patents
held by our company and by major domestic chemical manufacturers using commercial databases and, as evidenced in the tablebelow, we are ranked first in the ratio of global patents (the number of patents held abroad divided by the number of patents heldin Japan) and second in the net sales ratio. We rank fifth out of 30
companies in the R&D expenses ratio but, excluding the agricultural and pharmaceutical field where the number of patents heldcompared to R&D expenses is fewer and focusing on the materials field, we have approximately twice as many patents as the average of the major domestic chemical manufacturers with respect to the R&D expenses ratio as well.
In this manner, we guarantee the business superiority of
Nissan Chemical though this extremely powerful patent networks.

Seamless intellectual property activities

Business
Divisions

Prompt acquisition of
IP rights

Research &Development
Departments

Comparison of the number of patents
held using commercial databases ＊Appropriate utilization of IP

Nissan Chemical
Ratio of global patents

208 (1)

206

Number of patents held/
Net sales

253 (2)345

Number of patents held/
R&D expenses

129 (5)212

IP risk management
Utilization of IP information
IP contracts and external
relations support

Intellectual
Property
Department

Nissan Chemical Corporation(As of June 2023)

Nissan Chemical(materials field)*For all figures, the average of major domestic chemical manufacturers is set at 100. The
rank is given by the parenthesized figure.

28

Integrated Report 2023

Value Creation & Growth Strategies

We consider R&D is the source of growth, and have intensively
invested our management resources in R&D.
Over the last five years, R&D expenses have totaled 84.3 billion yen. The R&D expenses in Performance Materials and Life

Financial Capital and Manufacturing CapitalSocial Capital and Natural Capital

Financial CapitalSocial Capital◎Related Information: Message from the CFO P49-52, Financial Review P85-92

Shareholder Returns

Financial capital is essential for conducting business activities.
Nissan Chemical has built up a robust financial base, having given careful consideration to a balance between shareholdersʼ equity and debt. Our equity ratio continues to climb, while our debt
is falling. As a result, the D/E ratio, one of the key indicators offinancial soundness, remains at a low level (the lower the ratio
the sounder a companyʼs financial position). We are in a very favorable state in terms of cash flow and can continue to utilize
this cash for investment and shareholder returns as needed.

Nissan Chemical emphasizes ROE, an indicator of earnings power, while aiming to take full advantage of shareholdersʼ equity.
Since ROE recorded at 9.5% in FY2011, it has continued to rise,
and the result for FY2022 was 19.4%. The dividend payout ratio
has been gradually increasing from 30.7% in FY2015, and the result for FY2022 was 56.3%. The total shareholder payout ratio
has also been at a high level, hovering around 70% since FY2015.
Our proactive approach to returning profits to shareholders,which combines dividends and share repurchase, has attracted
long-term capital investment and contributed to the enhancement of shareholdersʼ equity.

Debt: Equity ratio: D/E ratio
Equity ratio (%)■Debt (billion yen)(billion yen)

40

68.1

69.9

71.0

73.0

D/E ratio (%)

73.7

74.9

73.6

30
20

33.1

30.8

28.6

10
0

26.6

24.6

22.7

-1.6

-3.2

-5.7

-5.7

-3.4

-5.2

2015

2016

2017

2018

2019

2020

22.7

-6.1

2021

Total payout ratio / Dividend payout ratio

(%)

73.1

27.3

-1.1

80
70
60
50
40
30
20
10
0

Dividend payout ratio

80
60

71

70

71

-10

0

2022 (FY)

(%)

75

75

76

43

45

45

78
56

40
20

72

31

2015

33

2016

Manufacturing Capital

38

2017

42

2018

2019

2020

2021

2022 (FY)◎Related Information: Corporate Information P93-96

Our plants are located in five prefectures in Japan, and while thestone-built facilities, which have been designated as a chemical
heritage, still remain, state-of-the-art equipment and facilities
are being steadily introduced. With a history of over 130 years,
we are still moving forward focused on the stable manufactureof products.

monia chemical plants, backed by abundant water and electricity. The plant is still manufacturing many derivatives. In recent
years, the plant has also made inroads into the field of electronicmaterials, contributing greatly to the advancement of the global
semiconductor industry and IT technology. The plant has research laboratory, which enables us to respond quickly tonext-generation needs.

● The Sodegaura Plant (Chiba Prefecture)● The Nagoya Plant (Aichi Prefecture)
Facing the Port of Nagoya, the Nagoya Plant has developed
mainly through the production of sulfuric acid, and has developed products ranging from industrial use to high-grade products for semiconductor cleaning in response to the needs of thetimes. The plant currently produces refined sulfuric acid, highpurity sulfuric acid, sodium bisulfite, and AdBlue®, a high-gradeurea solution for purifying emissions from diesel vehicles.

Located in the petroleum complex in Chiba Prefecture, theSodegaura Plant is a core plant of our Specialty Chemicals business. It engages in production of inorganic materials and electronic materials used in a wide range of industrial fields, including the cutting-edge information and electronics industries.
The plant is a development-oriented plant that works closelywith research laboratories.

● The Onoda Plant (Yamaguchi Prefecture)
Located in the southwestern part of Yamaguchi Prefecture, theOnoda Plant has a history of more than 130 years, having produced Japanʼs first agrochemicals in 1910. It currently produces
veterinary drugs and agrochemicals such as insecticides, acaricides, and herbicides, as well as pharmaceuticals such as hyperlipidemia treatments, and organic fine chemical products.

● The Saitama Plant (Saitama Prefecture)
Located in the rich natural environment of northwestern
Saitama Prefecture, the Saitama Plant produces herbicides forpaddy rice, insecticides and fungicides, and contributes to agriculture in Japan and around the world.
● The Toyama Plant (Toyama Prefecture)
Located in the central part of Toyama Prefecture, the Toyama
Plant has developed into one of Japanʼs leading integrated am-

Nissan Chemical Corporation

Interaction with Local Residents
We hold plant tours and explanatory meetings on regular basis
for local residents and schools. In particular, during these meetWeb

Total payout ratio

100

ings we explain our initiatives for disaster prevention and environmental protection in an effort to show that the plants aresafe and secure. In addition, we also participate in local beautification activities such as cleaning of public roads and nearby stations around the plants, and planting flowers together with local
residents. In FY2022, we started activities such as cleaning andthe preservation of nectar source plants for insects, at a park in
Chuo-ku, Tokyo, where our head office is located.

The relationships of trust that we have cultivated over a long period of time with a variety of stakeholders, including investors, local
communities and NPO/NGOs, form the basis for supporting ourbusiness activities. With the Nissan Chemical Groupʼs sites as thefoundation for social contribution, we are engaged in a variety ofsocial contribution activities as a corporate citizen, focusing on thefour areas: promotion of education, science, and culture; contribution to local communities; conservation of the global environment;
and promotion of health and welfare and promotion of sports.

Contribution to Communities and Society
https://www.nissanchem.co.jp/eng/csr_info/communication/community.html
Biodiversity Conservation
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/conservation.html

Scene of conservation activities (Chuo-ku, Tokyo)

Natural Capital◎Related Information: Responsible Care P73-75

In manufacturing products, it is difficult to avoid placing burdens
on the environment, such as the use of energy, water and raw
materials as well as greenhouse gas (GHG) emissions. We identified “Continuous improvement of responsible care activities” as
one of our materialities. We have identified the mitigation of climate change and reduction of industrial waste and pollutant
emissions as key materiality factors, and are striving to reduce
our environmental impact through responsible care activities
that consider the environment, health, and safety.

Carbon efficiency

Nissan Chemical
Major domestic chemical manufacturers (average)(tons / million yen)

10.00
8.00
6.00
4.00

8.15

7.53

Initiatives to Reduce GHG Emissions

2.33

2.04

1.96

2.03

1.79

2017

2018

2019

2020

2021

2022 (FY)

Initiatives to Reduce Energy Consumption (Logistics)

At the Toyama Plant and the Onoda Plant, we have significantly
reduced CO2 emissions by converting naphtha that is raw material and fuel for ammonia, and heavy oil that is fuel for boilers into
natural gas. The Companyʼs carbon efficiency (GHG emissionrate) is relatively good in the chemical industry due to the
low-carbon investments it has made to date and the characteristics of its products.

As a cargo owner, we are working together with Nissan Butsuryu Co., Ltd., a group company that handles our logistics operations, to promote the rational use of energy for transportation.
We have received the Eco Rail Mark certification in 2018, andwill continue striving to improve our energy consumption rateby promoting modal shifts, replacing vehicles with energy-saving, and practicing eco-driving.

Web

Responsible Care Management
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/management.html
Mitigation of Climate Change
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/environment/reduction.html
Reduction of Industrial Waste and Pollutant Emissions
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/environment/management.html
Management of Chemical Substances
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/chemical.html
Water Resources Conservation
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/environment/effective.html
Biodiversity Conservation
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/conservation.html

29

Integrated Report 2023

Nissan Chemical Corporation

8.69

2.58

2.00
0.00

8.45

30

Integrated Report 2023

Value Creation & Growth Strategies

Financial StandingMateriality
Materiality Initiatives and KPIMateriality

Strengthening of
Nissan Chemical’sbusiness baseContinuous
improvement ofresponsible care activities

We aim to provide new value
for helping to enrich people’s lives through four businesses based on core technologies.

We aim to strengthen ourbusiness base to improve
our ability to respond to increasingly diverse and sophisticated marketing needs.

We aim to enhance the maintenance of environment,
health, and safety throughthe operation of the Nissan
Chemical Responsible CareManagement System.

Social issues and social changes looking ahead to 2050 and issues to be addressed by Nissan Chemical
were discussed across the Company in the “Business Planning Project” led by the President and the Vice
President, and it was confirmed that there have been no major changes in social issues and social changes since the previous formulation.

SocialEconomy◦Advanced climatechange◦Global crisis◦Increase of requests forconsideration of health and safety
in the work environment◦Advent of a smart society◦Intensification of inter-corporate competitions◦Diversification of risk factors◦Exacerbation of thefood issues◦Changes in lifestyle◦Labor shortage◦Worsening health issues

Review of Materiality
and Materiality Factors◦Increase of requests for sustainability
considerations in the supply chain◦Increase of interest in corporate governancereform◦Increase of requests for information disclosure● Net sales: +6% compared to FY2021● Net sales: +15% compared to FY2021● Net sales: +22% compared to FY2021

Contribution to theimprovement of thequality of life

● Supply of disinfectants for drinking water● Contribution to maintaining the health ofcompanion animals● Net sales: +15% compared to FY2021● Net sales: +34% compared to FY2021

Contribution to healthissues● Supply of generic drugs● Offer of contracted manufacturing andservice for pharmaceuticals● Development of materials for regenerative
medicine market● Development of drugs for intractablediseases● Net sales: +5% compared to FY2021● Net sales: +4% compared to FY2021

Nissan Chemical
Sustainable Agenda● Provision of products and services that
contribute to solving social issues● M aintaining at least 55% in consolidated
net sales● Above 55%

Enhancement of R&D
capability● Acceleration of R&D through the use of AI● Expansion of core technologies● Further use of open innovation● Total number of patent applications(FY2022 to 2027): 2,500● Number of patent applications: 378● Number of serious complaints: Zero
● Attendance rate of quality training: At
least 90%

● Number of serious complaints: 1● Attendance rate of quality training: 85%

Maintenance andimprovement of
employees’ health● Promotion of measures against lifestylerelated diseases● Rate of employees within appropriate● Implementation of mental health measuresweight*: At least 70%● Awareness activities for employees on*BMI (body mass index): 18.5 to 25.0
maintaining their health● Promotion of female’s health● Promotion of work-life balance● Implementation of measures against

Creation of a comfortableharassment
workplace● Support for childcare and nursing care,

Strengtheningof Nissan
Personnel retention andChemical’s
trainings
business base● Introduction of a new personnel system(role grading system)● Strengthening of career development● Enhancement of self-development support
programs

Identification ofMateriality andMateriality Factors(through resolution at theBoard of Directors)

From the perspective of incorporating outside opinions, we exchanged opinions in intensive discussions
with directors and audit & supervisory board members, including outside officers, regarding the materiality and materiality factors that had been reviewed in the Business Planning Project.

The Board of Directors confirmed and resolved the appropriateness of the materiality, materiality factors,
and key performance indicators (KPIs) for each materiality factor, which were identified based on the discussions in the Business Planning Project and the opinions of the officers.

Continuous
improvementof responsible
care activities● 81%● Positive response rate in survey of
employee attitude on human resources
development: At least 65%● 60.5%● Promotion of active participation of females ● P roportion of females in the regular
position: At least 13%● Recruitment of international students
 roportion of female researchers in the● Promotion of employment of persons with ● P
regular position: At least 18%
disabilities● Proportion of females in the regular
position: 11.0%● Proportion of female researchers in theregular position: 14.8%

Promotion of fair-trading● Holding in-house training sessions, andconduction of other educational andawareness activities● Conduction of educational and awarenessactivities for compliance● Number of violations of antitrust laws: 0● Number of bribery of foreign public
officials: 0

standards

Exchange of Opinions with
Directors and Audit &Supervisory Board Members,
including Outside Officers● Utilization rate for annual paid leaves: At
least 80%

Promotion of diversity● Provision of feedbacks on results ofsustainable procurement survey

In regards to the 30 materiality factors, we considered and analyzed the social issues and social changes,
and then made arrangements to manage the impact on the Group.

● 68%

encouraging male employees to takeparental leaves

Promotion of sustainable● Provision of supports in improvement for
procurement
suppliers that do not meet the Company’s

Management of Impact
on Our Group

Relationwith SDGs● Net sales: +16% compared to FY2021● Net sales: +55% compared to FY2021● Prevention of serious complaints

We reviewed materiality and materiality factors with reference to the SDGs, evaluation items of
ESG-related evaluation organizations such as DJSI and FTSE, and sustainability information disclosure
guidelines such as SASB, and determined that the materiality identified in the previous mid-term businessplan “Vista2021” remains a priority issue for Nissan Chemical. On the other hand, in light of the priority of
Nissan Chemical’s business base and the results of our activities under Vista2021, we have added “safetyand disaster prevention” as a new materiality factor, and summarized into 30 materiality factors.

FY2022 Result● Supply of agrochemicals to increase crop
yields and conserve agricultural labor infood production● Contribution to the maintenance of healthof livestock

Improvement of products● Prevention of quality fraud and data
qualitytamperingSocial Issues and Social Changes

Environment

FY2027 Target● Supply of materials that contribute tohigher capacity/speed of data
communication and sensing

Contribution to smart

Provision ofsociety
new value forhelping toContribution to the foodenrich people’s issues
lives

Materiality Identification Process

Gain Understanding
About Social Issues andSocial Changes

Vista2027 Major Initiatives● Development of materials that contribute to
the expansion of renewable energy● Development of materials that contribute to
the achievement of a circular economy● Reduction of the application amount ofSupply of environmentalagrochemicals
Net sales: +10% compared to FY2021
friendly products and● Introduction of recyclable packaging materials ●services● Supply of exhaust gas removal materials● Supply of disinfectants and water treatment
for septic tanks● Supply of materials that enable reduction ofoil and fat waste

Three Materiality of Nissan Chemical Group
Provision of newvalue for helping toenrich people’s lives

Materiality factor

 ero violations of antitrust laws●Z
 ero bribery of foreign public officials●ZProvided feedback to suppliers who● Provision rate of supports in improvement ● responded to the previous mid-term
for suppliers that do not meet thebusiness plan and those who responded
Company’s standards: At least 90%
in the first half of FY2022

Adaptation to climatechange● M aintaining and improving the resilience of ● Update and maintenance of BusinessUpdated or maintained BCPs for products
business activities in the event of natural
Continuity Plans (BCPs) for products that ● that account for 41% of ordinary income
disasters
account for 50% of ordinary income

Mitigation of climatechange● GHG emissions reduction● GHG emissions: Reducing by at least 30%
from FY2018 level● GHG emissions: Reduced by 9.8% from
FY2018 level

Promotion ofoccupational health andsafety● Strengthening of occupational safety
management● Zero accidents requiring staff time offfrom work● Number of occupational accidents:
Reducing by half compared to FY2020● Number of accidents requiring staff time
off from work: 2● Number of occupational accidents: 7(FY2020: 8)● Held e-learning course on occupationalsafety (at Nissan Chemical and 2 Group
companies)

Biodiversity
conservation● Promotion of biodiversity conservation
activities

 stablishment and operation of Bio-Parks●E
at Nissan Chemical’s plants● Established the Saitama Plant Bio-Garden

 ontinuation of zero serious violations of●Claws and regulations● Number of serious violations of laws andregulations: 0 (maintained)

Management of chemical ● Compliance with laws and regulations
regarding the use of chemical substances
substances
Reduction of industrial
waste and pollutant
emissions eduction in final disposal ratio at Nissan● Reduction of industrial waste and pollutant ● R
emissions for final disposal
Chemical’s plants (compared to FY2020)● 22.6% (FY2020: 14.3%)

Safety and disasterprevention● Strengthening of the management of safety ● Zero fires, explosions and chemical spills
and disaster prevention
 ero safety accidents●Z● Number of fire: 1, Number of explosions: 0,
Number of chemical spills: 0● Number of safety accidents: 1

Materiality and SDGs Web https://www.nissanchem.co.jp/eng/csr_info/management/materiality.html
Nissan Chemical Corporation

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Nissan Chemical Corporation

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Integrated Report 2023

Value Creation & Growth Strategies

In order to realize our ideal state in 2050 as set out in our long-term business plan “Atelier2050”, to be “a future-creatingcompany that grows through seeking to enrich people and nature”, and “a group of co-creators that face challenges forchange with a strong passion”, in FY2022, we reviewed the materiality that we need to address. With the aim of achieving
sustainable development for society and the Nissan Chemical Group, we are managing our progress on an annual basis byusing the KPIs up to FY2027 set in our mid-term business plan for “Vista2027” as indicators for sustainable management.

Corporate Governance
Based on our culture of “integrity” and “transparency”, we have strengthened our governance system in line with thechanging times. We have implemented various initiatives, such as increasing the number of female directors and deliberating on the formulation of succession plans for the President and CEO at the Nomination and Remuneration Advisory
Committee. We will continue to strengthen our governance in the future as well.

ReportAccounting Auditor

Accounting
Audit

Nomination andRemuneration Advisory
Committee

Board of Directors

Audit

Indicator

Consult
Four out of the ten directors
are outside directors

ReportAdvice(Business execution framework)
Sustainability Promotion
Committee

Audit & Supervisory Board

Chairman & CEO
President & COO

ReportReportManagement Meeting

Risk Management &Compliance Committee

Quality Assurance Committee

Unit

FY2019FY2020

FY2021

FY2022People

6

6

6

6

6

Outside directors (Independent)

People

3 (3)

3 (3)

4 (4)

4 (4)

4 (4)

Total

Cooperate

Climate Change Committee

Environment & Safety
Committee

Scope
Inside directors

Three out of the four members are outside
Audit & Supervisory Board members

Directors*1

Internal Audit Department

audit assistants from our employees to respond to the requests
from them. To enable Audit & Supervisory Board to fulfill theirduties efficiently and smoothly, the audit assistants serve as coordinators for holding hearings pertaining to divisions, etc., Audit & Supervisory Board and other meetings, help conduct audits, and collect information.

People

9

9

10

10

10

Ratio of Independent Outside Directors*1

%

33

33

40

40

40

Ratio of female directors*1

%

0

0

10

10

20

Number of executive directors*1

People

6

6

6

6

6

Average terms of positions held*1

Years

6.7

5.2

5.1

4.0

4.2

Times

12

11

12

12

-

Meetings of the Board of Directors*2
Attendance of directors at meetings of the Board of Directors

％

99

96

99

98

-

Attendance of Audit & Supervisory Board members at meetings of the Board of Directors*2

％

100

100

100

100

-

*2

Each Division/
Department

Audit

FY2023*1 Data is as of after the General Meeting of Shareholders held in June of each fiscal year. *2 Data from April to March of each fiscal year

Group Companies

Audit* Numbers pertain to officers appointed during the 153rd
General Meeting of Shareholders held on June 28, 2023.

● Execution and Supervision of Operations

ment of the Head Office and plant/laboratory to exchange opinions.

By introducing a system with executive officers, we clarify the
managementʼs function of prompt decision-making and supervision and the function of executing operations, thereby strengthening both. We also strive to improve managementʼs capabilities
to develop and execute our management strategies. In addition,
we have set a one-year term for each director and executive officer, thereby clarifying the management responsibility and the
responsibility for executing operations.

● Nomination and Remuneration Advisory Committee
We established a Nomination and Remuneration Advisory Committee mostly consisting of independent outside directors underthe Board of Directors for the purpose of strengthening theBoard of Directorsʼ independence, objectivity, and accountability
in relation to matters such as the nomination and remunerationof directors and further strengthening corporate governance.
The Nomination and Remuneration Advisory Committee convened 10 times in FY2022. It deliberated matters, such as appointment of candidates as directors and Audit & Supervisory Board
members and management executives, succession plans for
management executives, and remuneration for directors in response to consultation from the Board of Directors, and reported
the content of their deliberations to the Board of Directors.

● Board of Directors
Our Board of Directors members meet monthly in principle, toresolve important management matters. It also supervises theexecution of operations by directors and executive officers. We
ensure that important management matters are determinedthrough careful deliberations at the Board of Directors or management meetings in our efforts to eliminate or reduce businessrisks. In addition, the details of decisions made at the management meetings and the results of business executions based on
decisions made at the Board of Directors are reported to theBoard of Directors to enhance the supervising function of theBoard of Directors. We strive to ensure and improve effectiveness in execution of roles and responsibilities of the Board of Directors by conducting the effectiveness evaluation on the overall Board of Directors every year.

● Accounting Audit
We have appointed the Yaesu Audit Company as our accounting
auditor. They audit at the end of each fiscal year, and during the
fiscal year as necessary.

● Internal Audit
We have established an Internal Audit Department to pursue theachievement of the Groupʼs management objectives effectively.
With the object of ensuring the proper duties under the internal
control system, the Internal Audit Department conducts internal
audits for the Group. The department submits its internal audit
activity plan and reports the outcomes to the Chairman & CEO,the President & COO, the directors in charge, and the Board of
Directors. It also shares information with our accounting auditor and the Audit & Supervisory Board members to cooperatewith them.

● Audit & Supervisory Board
We have established the Audit & Supervisory Board. In accordancewith auditing plans formulated by the Audit & Supervisory Board
with a majority that consists of independent outside members, theAudit & Supervisory Board members audit the execution of directorsʼ operation by participating in the Board of Directors and otherimportant meetings, and by regularly visiting each division/depart-

Nissan Chemical Corporation

33

Integrated Report 2023

View on the Appropriate Balance between Knowledge, Experience and Skills of the Board, and on Diversity
quired for its directors (skills requirements): “corporate management”, “research and development/technologies”, “financeand accounting”, “legal/risk management/internal control”,“personnel affairs/personnel strategies”, and “global experience”. And the Company makes the board consist of appropriate
persons as its directors, who have met the above-skills requirements appropriately, and who are healthy, physically and mentally, and trusted and respected for their excellent characters, ahigh level of insight, and a sense of ethics.
We will review the above skills requirements as necessary
based on the management strategy and relevant policies.

The Company considers the board to be formed by members selected from various viewpoints to make decisions appropriately
and expeditiously and oversee the execution of business activities in diverse fields (including chemicals, performance materials, agricultural chemicals, and healthcare). Those points include the balance of knowledge, experience, skills, and othercapacity and diversity, including gender, internationality, andpractical experience in totality of the board.
To ensure a well-balanced and diverse board composition,
based on the company philosophy and management strategy,
the Company has identified the expertness and experience re-

The expertness and experience required for the Company’s directors

Director

Corporate
Management

R&D/
Technologies*

Finance &Accounting◎

Legal/Risk Management/ Personnel Affairs/
Internal Control
Personnel Strategies

Representative Director, Chairman

KINOSHITA Kojiro◎

Representative Director, President

YAGI Shinsuke◎

Director, Senior Executive Vice President

HONDA Takashi◎

Director, Senior Managing Executive Officer

ISHIKAWA Motoaki◎

Director, Senior Managing Executive Officer

DAIMON Hideki

◎

◎

◎

Director, Managing Executive Officer

MATSUOKA Takeshi

◎

◎

◎

Outside Director

OBAYASHI Hidehito◎◎

Outside Director

KATAOKA Kazunori◎◎

Outside Director

NAKAGAWA Miyuki

Outside Director

TAKEOKA Yuko

GlobalExperience

◎

◎

◎

◎

◎

◎

◎

◎

◎

◎

◎
◎
◎

◎
◎
◎

◎
◎

* “R&D/Technologies” include the expertness and practical experience in the fields of IT, DX (Digital Transformation), environmental safety, and quality assurance.

Policy and Procedures in the Nomination of Officer Candidates
visory Committee and submit to the General Meeting of Shareholders. In addition, nominations of Audit & Supervisory Board
member candidates are approved by the Audit & Supervisory
Board in advance.

Proposal of nomination of director and Audit & Supervisory
Board member candidates are explained in advance to independent outside directors. After receiving proper guidance fromthem, the proposal is finalized by the Board of Directors throughdeliberation/reporting by the Nomination and Remuneration Ad-

Nissan Chemical Corporation

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Integrated Report 2023

Value Creation & Growth Strategies

General Meeting of Shareholders● Support for Outside Directors and Outside Audit &Supervisory Board Members
The Corporate Planning Department supports outside directors
by providing them with explanations of the contents of the agenda and other matters to be discussed at the Board of Directors inadvance and also provides management information necessary
for growth strategies, enhancement of governance, etc. For outside Audit & Supervisory Board members, we have appointed

Corporate Governance
Performance Evaluation Coefficient
PolicyDirectors

Audit &
Supervisory
Board
Members<Outside Directors>
People who are capable of giving opinions proactively, raising questions and giving advice on growth strategies, the enhancement of governance and other issues from the viewpoints of various stakeholders and society.
Each outside director may serve up to six terms of one year in total; provided, however, that shall not prevent the director from serving up to
eight terms of one year in total under a special circumstance. In addition, each outside director may concurrently serve as a director or Audit &Supervisory Board member of five listed companies, including the Company, at a maximum in principle.
People with experience and knowledge in a wide range of fields including finance, accounting, and law who are capable of giving opinions andadvice to the management from a fair and neutral standpoint, in addition to auditing the execution of operations.
Each Audit & Supervisory Board member may serve up to two terms of four years in total; provided however, that shall not prevent the member from serving up to three terms of four years in total under a special circumstance. In addition, each Audit & Supervisory Board member
may concurrently serve as a director or Audit & Supervisory Board member of five listed companies, including the Company, at a maximum inprinciple.

Officersʼ Remuneration
The fundamental principle in directorsʼ remuneration is to maintain its system that is in line with management policy by ensuring that directors contribute to increasing operating performance on a continual basis over the mid- to long-term andtoward increasing the overall value of the Group, thereby meeting shareholder expectations. At the same time, the basic policy(Policies on determining details of remuneration, etc. for individual Directors) is to set remuneration at an appropriate level, taking into account such factors as the management environment,
operating performance and consistency with the treatment of
employees.
The remuneration system for directors consists of monetary
remuneration (base remuneration and performance-related remuneration) and performance-linked stock compensation. However, the outside directorsʼ remuneration package shall consistof only the base remuneration as a monetary payment. In thelight of their roles and independence from the Company, theirremuneration package does not contain the performance-related remuneration as monetary payment nor the performancelinked stock compensation.
Regarding performance-linked stock compensation, we haveadopted in FY2019, with the aim of increasing awareness about improving earning over the mid- to long-term and contributing to enhancing corporate value by clarifying the link between the Companyʼs performance and its stock price, and by having directors
share with the shareholders not only the benefits of increases inthe stock price, but also the risk of decreases in the stock price.

Excluding performance-linked stock compensation, the remunerations of individual directors are determined at the Board of Directors after deliberations of the Nomination and Remuneration
Advisory Committee mostly consisting of independent outside directors as well as within the total amount determined by resolution of the General Meeting of Shareholders. The remunerations ofindividual Audit & Supervisory Board members are determinedthrough discussions among Audit & Supervisory Board members.

Overview of performance-related remuneration
We establish the base amount for each title and determine theannual amount according to the fluctuation of performance indicators. Those indicators consist of the profit indicators for theprevious fiscal year (the net income attributable to owners ofparent, EBITDA, and the like) and ESG indicators (the third-party
evaluation result, the reduction of GHG emissions, and the like).
ESG initiatives are an important management issue that is
indispensable for the sustainable growth of the Company. In order to further improve the effectiveness of sustainable management, we have decided to link it with remuneration.

Overview of Performance-linked Stock Compensation Plan

The Company grants its directors points based on its net income attributable to owners of parent (average rate of change over the last
three years), EBITDA (average rate of change over the last three
years), ROE (actual result for the current fiscal● Composition of Officers’ Remuneration*year), and comparison of rates of year-on-year
volatility with respect to the Companyʼs stock
price and TOPIX. Each fiscal year, the Company
Performance-related
Base remuneration 65%
remuneration 28%
determines whether the points are to be granted
or not and the number of points to be granted.
Remuneration Upon their retirement, directors are to be paidin stock 7%
performance-linked stock compensation equivaProfit-linked
ESG-linked
％
％
90
10
lent
to their accumulated points. (For details on
portionportionhow
to calculate performance- linked stock com[Evaluation Indicators][Evaluation Indicators]
pensation plan amounts, etc., please refer to P50●Net income attributable to owners●ESG evaluation by third-partyof parent
organizations“Compensation, etc. for Officers” of the 153rd Se●EBITDA●Rate of reduction of GHG emissions
GHG emissions in FY2027
curities Report.)
Reducing by at least 30% comparedto FY2018

Nissan Chemical Corporation

formance- linked stock compensation.
(Mid- to long-term net income attributable to owners ofparent coefficient ×30%) + (Mid- to long-term EBITDA
coefficient ×30%) + (ROE coefficient x 30%) + (the Company
stock price and TOPIX year-on-year volatility comparison
coefficient × 10%)

Effectiveness Evaluation of Boards

Issues Identified in the Effectiveness Evaluation for FY2021

Nissan Chemical believes that the primary roles and responsibilities of the Companyʼs Board of Directors are defined as: (1) establishing a strategy for achieving sustainable growth and increase in corporate value over the mid- to long-term, andfacilitating the execution of the foregoing; (2) establishing an environment that supports risk-taking by the management, including the internal control system and the risk management system; (3) strengthening the swift management decision-making,and oversight function and the execution function through clarification of both functions; and (4) further enhancing managementtransparency, soundness and objectivity through, among otherefforts, appointment of outside officers who monitor and oversee the management from external viewpoints, and from FY2015,
the Company performs analysis and evaluation (the “Effectiveness Evaluation”) every year to see if the Board of Directors has
fulfilled these roles and responsibilities. In addition, we carryout a third-party evaluation every three years using an externalorganization that holds no relationships of interest with us in order to ensure neutrality and objectivity. The latest third-party
evaluation was conducted in FY2020. The Effectiveness Evaluation in FY2022 was conducted in the form of a self-evaluation by
the Companyʼs Board of Directors.

1) To consider how to share the status of deliberations at theNomination and Remuneration Advisory Committee with theBoard of Directors.
2) To consider how to set and sort out appropriate agenda andstreamline the process to administer the Board of Directors toenable its members to focus on the matters requiring resolution and spend enough time deliberating them.

Effectiveness Evaluation Result for FY2022
As a result of the Effectiveness Evaluation for FY2022, it was
concluded that our Board of Directors was generally operating
appropriately overall from the perspective of carrying out its
primary roles and responsibilities, and that the effectiveness of
the Board of Directors was ensured as improvement measures
were taken with regard to issues identified in the EffectivenessEvaluation for FY2021.

Points of Future Improvement
Through the discussion that was conducted this time, we recognized the following issues to address for further enhancing theeffectiveness of the Board of Directors and determined to workon improvements.
1) To provide a forum for “free discussion” at the Board of Directors to deepen the debate on the roles and responsibilities tobe fulfilled by it.
2) To consider at the Nomination and Remuneration Advisory
Committee the measures to sufficiently share the status of its
deliberations with the Board of Directors.
By enabling deeper discussion in the Board of Directors
based on the recent evaluation result and continuing to implement measures to improve the effectiveness of the Board of Directors, the Company will ascertain the status of improvement
on a regular basis through the Effectiveness Evaluation and further enhance the effectiveness of the Board of Directors in an effort to achieve sustainable growth and increase in corporate value.

Evaluation Procedure
The evaluation procedure is in the form of a questionnaire answered by all directors and Audit & Supervisory Board members
to grasp the current status and identify issues from two perspectives, quantitative evaluation and qualitative evaluation, througha combination of five-grade evaluation and free writing. An external organization is contracted to collect the responses and collate the data in order to ensure anonymity, which enhances theself-evaluation.
During the self-evaluation conducted in FY2022, based on
the results of the questionnaire responses, an opinion-exchange
meeting was held in April 2023 (with independent Officers (3 outside directors and 3 outside Audit & Supervisory Board members <including 2 full-time Audit & Supervisory Board members>), the Chairman and the President) to discuss issues andresponses and conduct analysis and evaluation. The results of
the analysis and the evaluation were discussed and confirmed
at the Board of Directors held in May 2023.

* The ratio of the portions of thecomposition varies according to
the Company’s performance

35

Integrated Report 2023

Nissan Chemical Corporation

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Integrated Report 2023

Value Creation & Growth Strategies<Inside Directors>
People who have expertise, knowledge and other capacities in each business field such as corporate planning, personnel, finance & accounting, research and development, production technology, environment, safety & quality assurance and others.

If a director subject to performance-linked stock compensation is
dismissed through the General Meeting of Shareholders or the
Board of Directors during the period until retirement (excluding
dismissal when the director concerned is appointed as an Audit &Supervisory Board member), commits any illegal act during tenure
and retires, commits any inappropriate act that causes damage to
the Company during tenure, or if the director is found to have violated laws, regulations, articles of incorporation, or internal rules,
etc., the director will be unable to acquire the right to receive per-

Corporate GovernanceDirectors and Audit & Supervisory Board Members
Officers appointed during the 153rd General Meeting of Shareholders held on June 28, 2023.

Attendance at meetings of the Board of Directors(Representative Director, Chairman & CEO)

Reason for appointment

1977 Joined the Company
2002 Director, Head of Corporate Planning Department
2006 Managing Director, Head of Corporate Planning Department
2008 Representative Director, President & CEO
2021 Representative Director, Chairman & CEO (to the present)

Mr. KINOSHITA served as General Manager of the Business Strategy Department, Chemicals General Headquarters and also as Head of the Corporate Planning Department. In addition, as President & CEO of the Company sinceJune 2008, and as Chairman & CEO since April 2021, he has
been promoting strategies to enhance the corporate valueof the Company group. Considering his wide-ranging experience, achievements, and insights, the Company judgesthat Mr. KINOSHITA is qualified to be a director that performs decision- making on business operations and oversees the execution of duties by directors.

12/12

YAGI Shinsuke

Attendance at meetings of the Board of Directors(Representative Director, President & COO)

Reason for appointment

1985 Joined the Company
2013 Deputy Plant Manager of Onoda Plant
2016 Executive Officer, Plant Manager of Sodegaura Plant
2018 Managing Executive Officer, Head of Production Technology
Department
2020 Senior Managing Executive Officer, Head of Production
Technology Department
Director, Senior Managing Executive Officer, Head of Production
Technology Department
2021 Representative Director, President & COO (to the present)

Mr. YAGI has been engaged in production technology formany years, and served as the Deputy Plant Manager of the
Onoda Plant and the Plant Manager of the Sodegaura Plant.
He has been contributing to the improvement of production
systems for the Company groupʼs products and to their stable supply. In addition, as President & COO of the Company
since April 2021, he has been promoting strategies to enhance the corporate value of the Company group. Considering his wide-ranging experience, achievements, and insights, the Company judges that Mr. YAGI is qualified to be adirector that performs decision- making on business operations and oversees the execution of duties by directors.

12/12

HONDA Takashi

Attendance at meetings of the Board of Directors(Director, Senior Executive Vice President)

Reason for appointment

1981 Joined the Company
2012 General Manager of Planning & Development Department,
Agricultural Chemicals Division2014 Executive Officer, Deputy Head of Agricultural Chemicals
Division,
General Manager of Planning & Development Department,
Agricultural Chemicals Division2017 Managing Executive Officer, Head of Agricultural Chemicals
Division
Director, Managing Executive Officer, Head of Agricultural
Chemicals Division
2021 Director, Senior Managing Executive Officer, Head of Agricultural
Chemicals Division
2022 Director, Senior Executive Vice President (to the present)

Mr. HONDA has been engaged in the agricultural chemicals
business focused on agricultural chemicals development
and business development for many years. He served as
General Manager of the Planning & Development Department and as a Division Head, and since April 2022, he has
not only been leading the agricultural chemicals businessbut also managing all of the Companyʼs life science business and research. Considering his wide-ranging experience, achievements, and insights, the Company judges thatMr. HONDA is qualified to be a director that performs decision-making on business operations and oversees the execution of duties by directors.

12/12

Nissan Chemical Corporation

37

Integrated Report 2023

ISHIKAWA Motoaki

Attendance at meetings of the Board of Directors

10/10(Director, Senior Managing Executive Officer)

Reason for appointment

1986 Joined the Company
2009 General Manager of Display Materials Department, Electronic
Materials Division2012 General Manager of Display Materials Research Department,
Electronic Materials Research Laboratories
2015 General Manager of Business Strategy Department, Performance
Materials Division2016 Executive Officer, Deputy Head of Performance Materials
Division, General Manager of Business Strategy Department,
Performance Materials Division2020 Managing Executive Officer, Head of Performance Materials
Division
2022 Senior Managing Executive Officer, Head of Performance
Materials Division
Director, Senior Managing Executive Officer, Head of
Performance Materials Division(present post)

Mr. ISHIKAWA has been engaged in the performance materials business focused on display materials for many
years. He has served as General Manager of the Business
Strategy Department, a Division Head, and as head of theCompanyʼs overseas business locations, and since April
2022, he has been managing all of the Companyʼs performance materials business and research, which is a driverof the Company groupʼs growth. The Company judges that
Mr. ISHIKAWA is qualified to be a director that performs
decision-making on business operations and oversees theexecution of duties by directors.

DAIMON Hideki

Attendance at meetings of the Board of Directors

10/10(Director, Senior Managing Executive Officer)

Reason for appointment

1988 Joined the Industrial Bank of Japan, Ltd.
(current Mizuho Bank, Ltd.)2014 General Manager of Trust Business Department IV of Mizuho
Trust & Banking Co., Ltd.
2016 Executive Officer, General Manager of Corporate & Institutional
Coordination Department of Mizuho Trust & Banking Co., Ltd.
2018 Managing Executive Officer in charge of Trust & Banking ofMizuho Trust & Banking Co., Ltd.
2020 Executive Officer, Head of Finance & Accounting Department of
the Company
2022 Managing Executive Officer, Head of Sustainability Promotion &IR Department
Director, Managing Executive Officer, Head of Sustainability
Promotion & IR Department
2023 Director, Senior Managing Executive Officer, Head of
Sustainability Promotion & IR Department(to the present)

Mr. DAIMON has leveraged his abundant experience andwide-ranging insight cultivated at financial institutions inJapan and overseas to formulate financial strategy and actively lead IR activities since joining the Company as the
Head of the Finance & Accounting Department in April
2020. Since April 2022, he has made a significant contribution to enhancing the Companyʼs corporate value as the
Head of the Sustainability Promotion & IR Department. The
Company judges that Mr. DAIMON is qualified to be a director that performs decision-making on business operations
and oversees the execution of duties by directors.

MATSUOKA Takeshi

Attendance at meetings of the Board of Directors(Director, Managing Executive Officer)

Reason for appointment

1996 Joined the Company
2017 General Manager of CSR & Public Relations Office, Corporate
Planning Department
2019 Executive Officer, Head of Internal Audit Department
2021 Executive Officer, Head of Chemicals Division
2022 Managing Executive Officer, Head of Corporate Planning
Department
Director, Managing Executive Officer, Head of Corporate Planning
Department (to the present)

Mr. MATSUOKA joined the Company with wide-ranging
business and planning experience in the chemicals industry. He has been involved in formulating major strategies
not only in the Chemicals Division, but also in operational
divisions including the Corporate Planning Department,
CSR & Public Relations Office, and Internal Audit Department. Since April 2022, he has been focusing on assessing
the status of operations across the entire Company andachieving group-wide targets as Head of the Corporate
Planning Department. The Company judges that Mr.
MATSUOKA is qualified to be a director that performs decision-making on business operations and oversees the execution of duties by directors.

10/10

Nissan Chemical Corporation

38

Integrated Report 2023

Value Creation & Growth Strategies

KINOSHITA Kojiro

Corporate Governance

OBAYASHI Hidehito Outside

Reason for appointment

1969 Joined Hitachi, Ltd.
2001 Director of Hitachi High-Technologies Corporation (current Hitachi
High-Tech Corporation)
2003 Vice President and Executive Officer of Hitachi High-Technologies
Corporation
2006 Representative Executive Officer, Senior Vice President and Executive
Officer of Hitachi High-Technologies Corporation2007 Director, Representative Executive Officer, President and Chief
Executive Officer of Hitachi High-Technologies Corporation2011 Chairman of the Board of Hitachi High-Technologies Corporation2013 Consultant of Hitachi High-Technologies Corporation
2015 Honorary Consultant of Hitachi High-Technologies Corporation(to the present)
2019 Outside Director of the Company (to the present)

As an experienced manager of a corporate group active indiverse sectors of global business, Mr. OBAYASHI has reflected his abundant experience and wide-ranging insight inthe management of the Company from an outside perspective and from an objective standpoint. The Company judgesthat Mr. OBAYASHI will appropriately perform his duties as
outside director. In addition, he has contributed to the selection of candidates for the Companyʼs directors and the determination of director compensation, etc., from an independent standpoint as a member of the Nomination andRemuneration Advisory Committee.

KATAOKA Kazunori Outside

Attendance at meetings of the Board of Directors 12/12(Director)

Reason for appointment

1979 Research Associate of Institute of Biomedical Engineering at Tokyo Women’s
Medical University
1988 Associate Professor of Institute of Biomedical Engineering at Tokyo Women’s
Medical University
1994 Professor of Faculty of Industrial Science and Technology at Tokyo Universityof Science
1998 Professor of Graduate School of Engineering at The University of Tokyo
2004 Professor of Graduate School of Medicine at The University of Tokyo
2015 Director General of Innovation Center of NanoMedicine, Kawasaki Institute ofIndustrial Promotion (to the present)2016 Project Professor at The University of Tokyo
Professor Emeritus at The University of Tokyo (to the present)
Deputy Chairman of Kawasaki Institute of Industrial Promotion(to the present)
2020 Outside Director of the Company (to the present)
Outside Director of NanoCarrier Co., Ltd. (current NANO MRNA Co., Ltd.)(to the present)

Mr. KATAOKA has been engaged in research involving the applicationof nanotechnologies in the fields of biomedical engineering and biomaterial engineering for many years and is currently serving as the Director General of Innovation Center of NanoMedicine, Kawasaki Instituteof Industrial Promotion. As a doctor of engineering, Mr. KATAOKA has
reflected his expertise, abundant experience, and wide-ranging knowledge in the management of the Company from an outside perspective
and from an objective standpoint. The Company judges that Mr.
KATAOKA will appropriately perform his duties as outside director. In
addition, he has contributed to the selection of candidates for the Companyʼs directors and the determination of director compensation, etc.,from an independent standpoint as a member of the Nomination andRemuneration Advisory Committee.

NAKAGAWA Miyuki

Attendance at meetings of the Board of Directors 12/12

SUZUKI Norihiro Outside

Reason for appointment

1990 Prosecutor, Tokyo District Public Prosecutors Office2008 Counsellor, Judicial System Department, Minister’s Secretariat, Ministry of Justice2011 Counsellor, Cabinet Secretariat, Assistant Chief Cabinet Secretary Office2013 Prosecutor, Tokyo High Public Prosecutors Office
General Manager of General Administration Department, Saitama District Public
Prosecutors Office2015 Specially Appointed Professor and Public Prosecutor, Chuo Law School, Chuo University
2019 Retired as Prosecutor
Qualified for attorney-at-law Professor, Chuo Law School, Chuo University (to thepresent)
Outside Director of NITTO KOGYO CORPORATION (to the present)
2021 Outside Director of the Company (to the present)
Outside Audit & Supervisory Board Member of FANCL CORPORATION (to the present)
2022 Outside Audit & Supervisory Board Member of Shinsei Bank, Limited (current SBI Shinsei
Bank, Limited) (to the present)
Outside Audit & Supervisory Board Member of ASKUL Corporation (to the present)

Ms. NAKAGAWA worked for many years as a prosecutor in theTokyo District Public Prosecutors Office and the Tokyo High
Public Prosecutors Office and she has abundant practical experience in legal circles. She has reflected her legal expertise,abundant experience, and wide-ranging insight in the management of the Company from an outside perspective and from an
objective standpoint. The Company judges that Ms.
NAKAGAWA will appropriately perform her duties as outside
director. In addition, she has contributed to the selection of candidates for the Companyʼs directors and the determination of
director compensation, etc., from an independent standpoint
as a member of the Nomination and Remuneration Advisory
Committee.

TAKEOKA Yuko Outside

Attendance at meetings of the Audit & Supervisory Board

Reason for appointment

2001 Assistant Professor of Department of Chemistry, Faculty of Scienceand Technology, Sophia University
2002 PRESTO Researcher of Japan Science and Technology Agency
2006 Lecturer of Department of Chemistry, Faculty of Science andTechnology, Sophia University
2010 Associate Professor of Department of Materials and Life Sciences,
Faculty of Science and Technology, Sophia University
2018 Professor of Department of Materials and Life Sciences, Faculty of
Science and Technology, Sophia University (to the present)
2023 Director of Center for Research Promotion & Support, Sophia
University (to the present)
Outside Director of the Company (to the present)

Ms. TAKEOKA has been engaged in research centered on the synthesis
and characterization of functional polymers for many years, and is currently serving as a Professor of Department of Materials and Life Sciences, Faculty of Science and Technology, Sophia University. As a doctor ofengineering, Ms. TAKEOKA has reflected her expertise, abundant experience, and wide-ranging knowledge in the management of the Company
from an outside perspective and from an objective standpoint. The Company judges that Ms. TAKEOKA will appropriately perform her duties as
outside director. In addition, she has contributed to the selection of candidates for the Companyʼs directors and the determination of director
compensation, etc., from an independent standpoint as a member of theNomination and Remuneration Advisory Committee.

Nissan Chemical Corporation

39

Integrated Report 2023

1983 Joined the Norinchukin Bank
2003 General Manager of Naha Branch2008 General Manager of Cooperative Finance & Administration (Kanto
Area) Div.
2010 Seconded to Eiraku Co., Ltd. as President (current Norinchukin
Facilities Co., Ltd.)2012 Managing Director of The Norinchukin Bank
2014 Director of Nochu Business Support Co., Ltd.
Director of Nochu Information System Co., Ltd.
2016 Outside Audit & Supervisory Board Member of the Company (to thepresent)

Mr. SUZUKI has a wide range of knowledge, including extensive experience and finance expertise those are cultivatedthrough many years of business at financial institutions. We
believe that he has reflected his knowledge in our corporate
audit with objective and neutral standpoint, and will continue to fulfill the duties appropriately.

12/12

TAKEMOTO Shuichi Outside

Attendance at meetings of the Board of Directors 12/12
Attendance at meetings of the Audit & Supervisory Board

12/12(Audit & Supervisory Board Member)

Reason for appointment

1982 Joined the Fuji Bank, Limited (current Mizuho Bank, Ltd.)
2002 Deputy General Manager, IT & Systems Control Department of Mizuho
Bank, Ltd.
2004 General Manager, Human Resources Division of Mizuho Information &Research Institute, Inc. (current Mizuho Research & Technologies, Ltd.)
2008 General Manager, Fukuoka Branch of Mizuho Bank, Ltd.
2009 General Manager, IT & Systems Planning Department of Mizuho Trust& Banking Co., Ltd.
2010 Executive Officer, IT & Systems Planning Department of Mizuho Trust& Banking Co., Ltd.
2011 Managing Executive Officer of Mizuho Trust & Banking Co., Ltd.
2013 Managing Executive Officer of Mizuho Trust & Banking Co., Ltd., andManaging Executive Officer of Mizuho Financial Group, Inc.
2014 Deputy President of Mizuho Private Wealth Management Co., Ltd.
2017 Advisor of Mizuho Trust & Banking Co., Ltd.
Outside Audit & Supervisory Board Member of the Company(to the present)

Mr. TAKEMOTO has a wide range of knowledge, including
extensive experience and finance expertise those are cultivated through many years of business at financial institutions. We believe that he has reflected his knowledge in our
corporate audit with objective and neutral standpoint, andwill continue to fulfill the duties appropriately.

OHRAI Kazuhiko(Audit & Supervisory Board Member)

Reason for appointment

1987 Joined the Company
2007 General Manager of Pharmaceutical Research Department,
Chemical Research Laboratories
2016 Executive Officer, Head of Pharmaceuticals Division
2021 Executive Officer, Head of Internal Audit Department
2022 Audit & Supervisory Board Member (to the present)

Mr. OHRAI has extensive expertise in the Company groupʼsbusiness based on many years of involvement in researchand development, particularly of pharmaceuticals, and experience serving as the General Manager of the Pharmaceutical Research Department, Head of the Pharmaceuticals
Division, and Head of the Internal Audit Department. Considering his abundant work experience and specialized knowledge, the Company judges that Mr. OHRAI is qualified to be
an Audit & Supervisory Board member with responsibility
for ensuring the appropriateness of Directorsʼ execution ofduties.

Attendance at meetings of the Board of Directors 10/10
Attendance at meetings of the Audit & Supervisory Board

10/10

KATAYAMA Noriyuki Outside

New(Director)

Reason for appointment

Attendance at meetings of the Board of Directors 12/12

Outside(Director)(Audit & Supervisory Board Member)

Attendance at meetings of the Board of Directors 12/12
Attendance at meetings of the Audit & Supervisory Board

12/12(Audit & Supervisory Board Member)

Reason for appointment

1990 Qualified for attorney-at-law, Joined Nagashima & Ohno (current
Nagashima Ohno & Tsunematsu)
1996 Qualified for attorney-at-law in New York State, USA
Joined Tokyo City Law & Tax Partners
2003 Joined City-Yuwa Partners (to the present)
2004 Statutory Auditor of Deutsche Asset Management (Japan) Limited (tothe present)2014 Outside Audit & Supervisory Board Member of the Company (to thepresent)
2017 Supervisory Director of HEIWA REAL ESTATE REIT, Inc. (to the present)2018 Outside Director of Nippon Denkai, Ltd. (to the present)
2019 Outside Corporate Auditor of Livesense Inc. (to the present)
2021 External Statutory Auditor of AIDA ENGINEERING, LTD. (to the present)
2022 Outside Director of create restaurants holdings Inc. (to the present)

Mr. KATAYAMA has reflected his extensive experience andexpertise as an attorney in Nissan Chemicalʼs audits andhas been involved in the management of several companies
as an outside officer. We believe that he will fulfill the duties
appropriately.

Nissan Chemical Corporation

40

Integrated Report 2023

Value Creation & Growth Strategies

Attendance at meetings of the Board of Directors 12/12(Director)

Messages from Outside Officers
Further strengthening the foundation to achieve sustainable growth

OBAYASHI Hidehito

Flexible research and development unconstrained by frameworks
Nissan Chemicalʼs distinctive feature lies in its flexible and comprehensive capabilities in which the four business divisions of Chemicals,
Performance Materials, Agricultural Chemicals, and Healthcare function in a mutually complementary way, like the wheels of a fourwheel drive car, in response to changes in the economic and social environment. The Groupʼs strength further rests in the fact that the
Planning and Development Division and laboratories have established a system tostrongly promote the creation and development of new materials and technologies byexchanging skills and human resource beyond these four business divisions. And basedon my own many years of experience in R&D, I feel that the high reliability of the Materials Analysis Research Department and the Toxicology & Environmental Science Department plays an extremely important role in quality assurance of developed products. The
Internal Audit Department and outside directors also actively exchange opinions on aregular basis, and I am convinced that the mindset of fostering unwavering trust in quality throughout the Company is growing.
The speed and depth of future technological development, such as introduction of
AI and promotion of digital transformation, continues to accelerate at an increasing rate.
While introducing innovative products based on our R&D capabilities with a broad perspective that clearly understands the ideals of a future world, Nissan Chemicalʼs longterm business plan, Atelier2050, requires flexibility to accurately respond to the paradigm shift in technology by promptly incorporating an awareness from a different
perspective into R&D. To that end, it is necessary to take measures that appropriately
nurture and engage highly specialized human resources who can play an active role
globally under a system that transcends conventional frameworks. I will offer advice
and guidance so that a diverse range of human resources full of individuality and vitality
Outside Director
can flourish to generate highly agile research and development that quickly produces
products with new social value.

KATAOKA Kazunori

Nissan Chemical Corporation

41

Integrated Report 2023

Nissan Chemical works in a wide range of business fields, including Chemicals, Performance Materials, Agricultural Chemicals, andHealthcare. As an outside director, I am expected to provide opinions and suggestions so that the Companyʼs corporate management isconducted from the perspective of whether the provision of products and services ineach field meets customer needs, and whether they contribute to the existence and development of humanity and the protection of the global environment. With my many
years of experience as a public prosecutor squaring up to injustices in society, I believethat I have been able to bring a certain viewpoint on whether decisions are being madeat the Board of Directors with a long-term perspective and multifaceted approach.
In such a chaotic and uncertain world, I intend to discuss how we can develop andimprove our superior technical capabilities and R&D capabilities for the next generation.
So that the perspective of a third party, so often overlooked, is not lost, I will contribute to ensuring the effectiveness of the Companyʼs corporate governance with a Boardof Directors that respects diverse opinions in an open and natural atmosphere.
In addition, the Company outlined its Diversity Statement in April 2021, to promote
initiatives for a healthy work-life balance. Last year, I had a lunch meeting with female
employees at the head office, and I was able to see that female employees raising children are capable of balancing their work life with childcare. Going forward, I would liketo continue to make various proposals with the aim of creating a workplace environment where women can work more easily.

Outside Director

NAKAGAWA Miyuki
Aiming for more effective governance:
As a bridge between the workplace and management
While the Board of Directors is responsible for making decisions on important management matters and supervising the execution of duties by directors and executive officers, the Audit & Supervisory Board is responsible for auditing the execution of duties by these directors. I believe that Outside Audit & Supervisory Board Members should conduct audits from an independent standpoint of the Company
by leveraging their strengths of not working for the Company, and from a more objective and professional standpoint based on their work experience outside the Company.
Although I have no actual experience working in Nissan Chemical, I am able to understand present actual work conditions, difficulties, concerns, and issues at each sitethrough annual on-site inspections of each plant, laboratory, sales office, and head office
department. In addition, I am making use of my experience in sales, planning, human resource, and systems in my previous jobs to provide in-depth communication and advice
during my on-site inspections.
At the Board of Directors, I ask various questions to check whether sufficient consideration has been given, especially in deliberations on management policies and large investment projects. By doing so, I hope to facilitate discussions so that everyone at theBoard of Directors can make decisions based on a true understanding of the matters inhand. Moreover, I feel that more effective decision-making can be achieved by providing
opinions and suggestions where necessary based on my perspective from on-site inspections and individual work experience.
In addition to the Board of Directors, I actively attend various committees such as
the management meeting and the Sustainability Promotion Committee where I strive
for better decision-making by asking questions and giving my opinion. And in terms of
Outside Audit & Supervisory Board Member
my on-site inspections, I also examine from various perspectives and through open dialogue whether managementʼs decision-making has permeated to the workplace, andwhether management is making decisions based on present workplace conditions.

TAKEMOTO Shuichi

Nissan Chemical Corporation

42

Integrated Report 2023

Value Creation & Growth Strategies

Nissan Chemical is a development-oriented company that focuses resources on research and development in order to achieve sustainable growth. Until now, we have expanded and grown the business operation by developing new businesses and products in response tochanges in society. In order to fulfill our social responsibilities into the future, we must further enhance governance from all angles inour business. To that end, I will provide supervision and advice on measures on executive side from a broad social perspective.
I also believe that sharing the knowledge I have gained from my many years of experience in R&D, as well as factory management and corporate management, with the
management of Nissan Chemical, will lead to sustainable growth and at the same timestrengthen our corporate structure. My activities are centered on the Board of Directors
and the Nomination and Remuneration Advisory Committee, but I will actualize thosethrough on-site visits and various internal meetings.
Nissan Chemicalʼs financial strategy is extremely sophisticated, and quick decisions
are made on business structural reforms, research and development strategies, andchanges in the social environment to enable sustainable growth. I would like to actively
disclose my experience in this regard. I will continue to focus on strengthening measures as we face challenges in implementing Group-wide strategies that form our business foundation, for example, with consolidated management, capital investment, andsafety and health.
As the social environment changes on a global scale, prompt management decision-making and execution are crucial to fulfill the social responsibilities expected of us.
Hence, I will do whatever I can to establish “right and wrong over profit and loss” and“business basics and ethics” as Nissan Chemicalʼs values, and to make Nissan ChemiOutside Director
cal a company with integrity where each and every employee can work vigorously.

Contributing to the maintenance and development of the next generation humanity and the global environment

Long-term and Mid-term Business Plans Overview andProgress

The Nissan Chemical Group will take on the challenge of co-creating the future by explaining to stakeholders our direction
to aim for and gaining their understanding and empathy. We aim to contribute to the realization of a sustainable society
as a member of society by achieving mid- to long-term growth and improvement of corporate value with a strong desire
and rich imagination to create the future.

2024

Operating profit: 51.0 billion yen
ROE: 19.2%
Total payout ratio: 76%

Long-term Business Plan

2022

Atelier2050

Mid-term Business Plan

FY2021

Vista2027 Stage II

Mid-term Business Plan

Ideal State in 2050
Corporate State	A “future-creating company”
that grows through seeking toenrich people and nature
Organizational State	A group of co-creators that facechallenges for change with astrong passion

Vista2027 Stage I

Progressof FY2022

Financial Indicators
300

Non-financial Indicators■Operating profit ■Sales

200

255.0

237.3

228.1

208.0

200

285.0

100

(billion yen) 0

52.3

51.0

54.7

58.5

67.0

2024 (plan)

2027 (plan) (FY)

2021

2022

2023 (forecast)

2021

2022

2023 (forecast)

2024 (plan)

2027 (plan)

208.0

228.1

237.3

255.0

285.0

(billion yen)

Sales
Operating profit

51.0

52.3

54.7

58.5

67.0

Ordinary income

53.7

55.8

55.5

59.5

68.0

Net income

38.8

41.1

41.5

44.0

50.0

Operating profit and ordinary income reached the record high for 9 consecutive years, and net income reached the record high for 10 consecutive years

2021

2022

2023 (forecast)2024-2027 (plan)

Operating margin

24.5%

22.9%

23.1%

Above 20%

ROE

19.2%

19.4%

18.6%

Above 18%

Dividend payout ratio

44.9%

56.3%

55.1%

55%

76%

78%

Total payout ratio

FY2027 Target

Above 55%

Maintain at least 55%

327,663 tons-CO2e(9.8% reduction compared to FY2018)

254,377 tons-CO2e(Reduce by at least 30% compared to FY2018)

Positive response rate in survey of employee
attitude on human resource development

60.5%

At least 65%

Proportion of female researchers

14.8%

At least 18%

GHG emissions (Scope1+2)

150

50

FY2022Rate of total sales of Nissan Chemical
Sustainable Agenda target products andservices in consolidated net sales

Nissan Chemical Corporation

43

75% (target)

Integrated Report 2023

75%

R&D Expenses and Capex■Total FY2019-2021 ■Total FY2022-2024

60
50

55.0

55.3*249.7
42.5*140
30
20
10(billion yen) 0*1 Acceptance basis*2 Production commencement
basis

R&D Expenses

Nissan Chemical Corporation

Capex

44

Integrated Report 2023

Value Creation & Growth Strategies

2027“Atelier2050” Long-term Business Plan
“Vista2027” Mid-term Business Plan
Start

Sales: 208.0 billion yen

2050

“Atelier2050” Long-term Business Plan
resolved. This plan sets out the path for the Group to contributeto solving social issues and keep growing for the future, with theideal corporate state in 2050 of “a future-creating company thatgrows through seeking to enrich people and nature” and theideal organizational state in 2050 of “a group of co-creators thatface challenges for change with a strong passion”.

Business Areas
Solving
Social Issues

Protect the global environment

Mitigate climate changes

Address health issues

Solve food issues

Achieve a smart society

Improve quality of life

Information &Communication

1

Ideal State in 2050

Corporate State

Semiconductormaterials
Display materials
Photofunctional
materials

Organizational StateA “future-creating company” thatgrows through seeking to enrichpeople and nature

2

A group of co-creators that facechallenges for change with a strong
passionBusiness

3

Life Science
Agrochemicals
Animal health products
Biomedical materials
Pharmaceuticals(small molecules,
oligonucleotides, peptides)

 ensing Systems
S<IoT sensor materials><Biomimetic sensors>

Expansion
into
new areas

Metamaterials

Environment &Energy4Secondarybatterymaterials and fuel cellmaterials

Next-generation
solar cell materials
CCUS materials

CO2 reduction system

Growing businesses

Business Areas

Social InvolvementG rowth is achieved with Information &Communication, Life Science, and Environment & Energy as growing businessareas, and Materials & Services as acore business area.

E xpanding businesses and productsthat contribute to solving social issues

L ife Science business is expanding withthe microbial control technology as thecore, and Information & Communication
business is growing with sensing materials and other products. Environment& Energy business is full-fledged andcontributes greatly to the global environment.

A dvancing the Groupʼs business management that prioritizes less effect on
the global environmentB ecoming a corporate group that istrusted and valued by the local community and whole society

Employees State[Basic Stance]Valuing the integrity as thestrength
We trust and respect people. We
achieve things with responsibility. We
make efforts for someone else andwork together as well. Integrity is theadvantage and identity of the Group.
Taking a step forward with thevisionWe explore individual ideals. To realize
that, we transcend the traditional framework, go through repeated trial and error and face challenges for change.
Transcending collaboration toco-creation
We evolve collaboration into co-creation,
having the courage to go through clashes of diverse ideas and enthusiasm.

[

Existing
technology]

Functional Polymer
DesignFine Organic Synthesis[

New
technology]

Microbial Control

Core businesses
Ultrafine Particle
Control

45

Integrated Report 2023

Biological Evaluation

Optical Control

Information Science

Basic Strategy

1

2

3

Deeply exploit and expand
business areas

Pursue sustainable management
further

Renovate management andbusiness foundations

Expand into new areas related to
growing businesses

Develop business activities that
contribute to solving environmental and social issues

Accelerate the value-creation
process by utilizing digitaltechnology

Attainthe “Nissan Chemical Sustainable
Agenda” and expand product/service lines
specified in the Agenda

Fusevirtual and physical space and strength
en AI analysis

Information & Communication- Develop materials for the next-generation
display and join that market, and provide
materials that are compatible with the
evolving semiconductor technologies- Enter into new businesses, such as thesensing area and photofunctional material
marketAchieve carbon neutrality (Scope 1+2)
Cultivatea corporate culture where the fu
ture is co-createdLife Science- Expand into microbial agrochemicals, andadvance into healthcare and environment-related areas with microbial control
technology
Environment & Energy- Develop materials related to batteries/cells
that contribute to solving environmental issues, renewable energy materials, andCCUS materials

Nissan Chemical Corporation

I ndustrial chemicals
Colloidal silica
Affiliate companies

Microbiome<Agriculture/Healthcare> <Microbial materials>
Biostimulant

CoreTechnology

Materials &Services

Nissan Chemical Corporation

46

Integrated Report 2023

U tilize digitalization, automatization, and robotization to focus on creative work

Value Creation & Growth Strategies

Considering that the business environment has changed significantly since the previous long-term business plan was formulated, we once again discussed the social issues and social changes with a view to 2050. As a result of these discussions, we haveformulated a long-term business plan “Atelier2050”, by backcasting from the necessary initiatives and issues that need to be

“Vista2027” Mid-term Business Plan

Long-term and Mid-term Business Plans Topics

Mid-term business plan “Vista2027” is a six-year business plan,
starting in FY2022, formulated as a stepping-stone on the way tothe ideal state set forth in our long-term business plan

1 Nissan Chemical Sustainable Agenda“Atelier2050”. We aim to achieve sustainable growth with thisplan which set the first three years (2022-2024) as Stage I, andthe second three years (2025-2027) as Stage II.

Ideal State of theCompany in 2027
While existing businesses
are robustly driving thebusiness performance,
new core technologies are
consistently acquired for
expanding and enhancing
business areas

Areas of Contribution through Sustainable Agenda Target Products and Service

As the digital foundation is
being established, businessactivities are conductedbased on the latest information on clients and markets

Key Performance
Indicator (KPI)
Actualizing a sustainable
future for our planet

Refine existing core technologies and deeply exploit and expand development areas
Incubate new core technologies (microbial control and information science)Enhance marketing power and planning ability

Reduce waste

Conserve aquatic
environments

Rate of total sales of products
and services that contribute tosolving social issues in
consolidated net sales

Maintainat least
Solve health issues
for humankind andanimals

Achieve a smart
society

Solve foodshortages

55％◎ Related Information: Materiality P31-32❶

We strive to enhance our
R&D capability and improve our planning ability, towards the realization of the ideal state in
FY2050

Reduce CO2

Organized sustainability-related initiatives are promoted and related information
is offered internally andexternally
Actualizing sustainable
comfort for all

Deeply exploit
business areas andincrease marketing
ability

We define the rate of total sales of products and services that
contribute to solving social issues in relevant areas in consolidated net sales as a key performance indicator (KPI), setting a targetof “maintaining at least 55%” in the mid-term business plan Vista2027. Looking ahead to 2050, we would like to further expand
our target products and services by fostering core technologies,
and realize sustainable development for society and the Group.

Basic
Strategies❷❸
Strengthen thecreation andco-creation processof values

Promote sustainable
management

We foster our efforts
and propel measures forsustainability and facilitate offering sustainability-related informationinternally and externally

We propel building ourbusiness foundations andenvironment that help
mutual communicationand improvement in efficiency and facilitate thecreation and co-creationof new values

S trengthen corporate
governanceR evise the existing personnel system and humanresource development for
attaining business strategies

S et up “Sustainability
Promotion & IR Department” and propel related measures in an organized approachSet up “Digital Transformation Department” andfacilitate digital transformation (DX) and businessfoundation renovation

Enhance committee activities (intensifying company-wide cross-sectional efforts by setting up
the Sustainability Promotion Committee and section meetings)

Nissan Chemical Corporation❹
Expand market sharesand profits of existing
businesses

To extend the sales of existing products, that are
the sources of growthand develop new products consistently, we will
implement measures
such as infrastructuredevelopment and cost
reductions for existingproducts.
◎ Related Information:
Business Segments P53-54
Main Products and Services P55-56
Business Strategies P57-66
Research and Development P25-27
Intellectual Property P28

2 Achievement of Carbon Neutrality by 2050
In order to achieve carbon neutrality by 2050, we are working onconverting fuel and feedstock, promoting energy saving, adopting renewable energy, and examining zero emissions of N2O
from nitric acid production facilities.

In FY2022, GHG emissions decreased due to the melamine
production shutdown, and the conversion of boiler fuel at the
Onoda Plant.

● Trend of GHG Emissions (SCOPE1+2)

△30%

400
300

363

327

318

345

Integrated Report 2023

328
254

200
100
0
(1,000 tons-CO2e)[Major Initiatives]

Net Zero

2018
Vista
2021

2019

2020

2021

- Conversion of naphtha (raw material) to LNG- Conversion of heating furnace fuel and auxiliary boiler
fuel from heavy oil to LNG

Nissan Chemical Corporation

2022

2027

2050

(Target)(Target)- Zero N2O emissions from nitric acid plants- Melamine production shutdown- Fuel conversion- Improvement of production
technology and processes- Upgrade to energy-efficient equipment- Electrification of fossil fuels◎ Refer to P68-72 for information disclosure in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).

47

Carbon Neutrality

48

Integrated Report 2023

- Introduction of renewableenergy- Introduction of carbon
negative technology

Value Creation & Growth Strategies

In FY2022, we started the Nissan Chemical Sustainable Agenda,
a plan to pursue “what we can do for the future of the globe andhuman” by providing products and services that contribute tosolving social issues. We have set “Actualizing a sustainable future for our planet (To Tomorrow)” and “Actualizing sustainable
comfort for all (Be Happy)” as areas of contribution.

Message from the CFODAIMON Hideki

Director,
Senior Managing Executive Officer,
CFO
Head of Sustainability
Promotion & IR Department

dialogue with stakeholders from both a financial and non-financial perspective, and will continue to do so going forward.
Since the mid-2000s, Nissan Chemical has placed ROE as
its most important financial indicator, and this will remain thecase in the future. ROE, an indicator of capital efficiency, isthe financial indicator that best matches our business strategy of efficiently investing limited management resources tocontinue producing essential products in highly profitablebusiness fields, and is widely supported by investors as aneasy-to-understand single indicator.
Since the early 2010s, our ROE has steadily increased. And
although we aimed to maintain above 16％ in our previous midterm business plan “Vista2021 Stage II” (2019-2021), this target
was further raised to maintain above 18% in Vista2027 (20222027), achieving an ROE of 19.4% in FY2022. This is approximately twice the average of chemical manufacturers in the same industry.
We have achieved proactive shareholder returns over thelong term, and we will continue this policy. The total payout
ratio, including share dividends and share repurchases, istargeted at 75％ of net income after taxes in Vista2027. Our
total payout ratio for FY2022 was 78％. Furthermore, while

Execute Unwavering Financial and Non-financial
Strategies to Improve Mid- to Long-term Value
With the mission to constantly meet the expectations of themarket and society, it is our responsibility to increase themid- to long-term value of the Company as a going concern,by viewing its economic and social value as two wheels. As
CFO, I consider it an important mission to achieve our returnon equity (ROE) target, which is our most important management indicator, to improve our economic value. At the sametime, it is extremely important to increase our social value
and levels of contribution by promoting sustainable management so that we can continue to achieve sustainable growth
while contributing to solving social issues.
Investors are increasingly interested not only in financial
aspects but also in non-financial aspects, such as ESG (Environment, Social, and Governance). Which is why, in the current mid-term plan “Vista2027”, we have decided to specify
and disclose equally both financial and non-financial aspects
as the management indicators that Nissan Chemical should
aim for. The Sustainability Promotion & IR Department, which
was newly established in April 2022, is actively engaging in

Nissan Chemical Corporation

49

Integrated Report 2023

Operating profit in FY2022 was 52.3 billion yen, marking arecord high for the 9 consecutive years(billion yen)

18.1

200

18.7

10.1

100

206.8
9.1

22.9

(billion yen)

25
25

45

20
20

208.0
11.5

8.9

228.1

15
15

10.6
10
10

204.9

5

50
0

(%)

40

20.3
209.1

150

42.5

38.6

37.1
2018

2019

52.3

51.0

2020

2021

2022 (FY)* Including the effects of accounting policy changes from FY2021●Net income attributable to owners of parent / ROE
ROE in FY2022 was 19.4%. Maintained high ROE by focusing on
creating high value-added products(billion yen)

25
25
22.9
In FY2022, we achieved increased
sales and profits with oper20.3
18.7
18.1
ating
for
20
200profit and ordinary income reaching record highs 20
the 9 consecutive years, and net income reaching a record
228.1
209.1 Whilehighfor the 10 consecutive years.
more than half15
15of
150
208.0
206.8
other companies in thesame industry reported
dropin
profit,
11.5
10.6
10.1
we 100offset a decline in9.1
profits in8.9
Performance Materials which
1010
was affectedby the market slowdown, with a significant in204.9
creasein profits in Agricultural Chemicals, which continued
50
5
to be strong. We believe that the strength of our52.3
resilient and
51.0
42.5
38.6 portfolio was fully demonstrated.
37.1 businesswell-balanced000
Our ROE
also peaked20182019 at 19.4%,
2020exceeding
2021the mid-term
2022 (FY)target of above
18%. In
addition,
been
Operatingprofit(left axis) we have
Sales (leftaxis)selected as a conNissanofChemical
operatingmargin(rightaxis) in June 2023, andstituent stock
the JPX
Prime
150
Index
Major domestic chemical manufacturers (average) operating margin (right axis)
we were rated
as having an excellent equity spread, or differ* Including the effects of accounting policy changes from FY2021
ence between ROE and cost of equity.
While achieving these results, we are also steadily making much needed growth investments. In addition to the construction of an agrochemicals manufacturing facility in India,
Nissan Bharat Rasayan, and the construction of a new semiconductor plant in South Korea, NCK, we have been actively
investing in key areas, including DX-related investments andincreased R&D expenses on plants and Company-wide bases,
to ensure sustainable growth for the future.
High standards have also been maintained in terms of external evaluations. In April 2023, we were selected as a Most
Honored Company in the Chemicals sector by Institutional Investor, a prominent U.S. financial magazine, for the 5 consecutive years. And the Company was ranked first in “Best IR
Teams” and second in “ESG Rankings”.
I would also like to add that the message issued by the
Tokyo Stock Exchange to listed companies in March 2023 has
become something of a talking point. More specifically, thisconcerns the situation in which approximately half of all com-

250

19.2

45
40

16.6

16.9

19.4

17.5

35
30
25
20
15

(%)

20

15

10.5
29.4

10

7.2
30.8

5.7

9.0

9.2

38.8

41.1

10

5

33.5

5
0

2018

2019

2020

2021

2022 (FY)0

Net income (left axis)
Nissan Chemical ROE (right axis)
Major domestic chemical manufacturers (average) ROE (right axis)●Total amount of dividend / Share repurchase / Total payout ratio
Total payout ratio achieved the Mid-term Business Plan
(FY2022-2027) target of maintaining 75%(billion yen)

(%)

35

100

30
25
20
15

75

72

9.0

10.0
51.3

45.0

10
5
0

75
10.0
47.8

76
12.0

78
9.0
57.9 50

40.5

12.1

13.1

15.0

17.3

2018

2019

2020

2021

23.1

2022 (FY)0

Total amount of dividend (left axis)
Share repurchase (left axis)
Nissan Chemical total payout ratio (right axis)
Major domestic chemical manufacturers (average) total payout ratio (right axis)

50

Integrated Report 2023

35
30
25
20
15
10
5

0
0

Operating profit (left axis)
Sales (left axis)
Nissan Chemical operating margin (right axis)
Major domestic chemical manufacturers (average) operating margin (right axis)

Achieved Record High Profits for 10 Consecutive(billion yen)
(%)
Years
and Received External Recognition
24.5 in FY2022

Nissan Chemical Corporation

24.5

250

Value Creation & Growth Strategies

We will steadily implement
the Vista2027 plan andactively deepen dialogue
with our stakeholders●Sales / Operating profit / Operating margin

taking into consideration feedback from our investors, wehave increased the dividend payout ratio from 45% to 55%,
increasing dividends for 11 consecutive years. In terms ofshareholder returns, dividend on equity (DOE) is often discussed, but since DOE = ROE x dividend payout ratio, there isno need to make it a direct target for us as we maintain a highROE.
In addition, our capital policy is to actively invest in research and development (R&D) expenses that are necessary
and sufficient for our business and still return ample cash toshareholders. Our target is to invest 7-9％ of sales each year
in R&D expenses to ensure continued growth in the future.
Since the average in the chemical industry is 3-4％ of sales,
this shows how Nissan Chemical is continually investing its
management resources in producing high value-added products. In terms of human resources, about 40% of employees
in regular positions are assigned as R&D personnel (onnon-consolidated basis).
I believe that a major factor in our operating margin of
23% in FY2022, which has remained above 10% for 20 consecutive years since FY2003, is our unwavering strategy basedon such a long-term perspective.

0Message from the CFO

Identified materiality (priority issues) to be addressed in order to realize the ideal state of the Company in 2027
Aiming for sustainable growth together with society by promoting initiatives

Promoting a Sustainable Management towards Carbon
Neutrality

100 100
80 80
60 60
40 40 39.0 39.0
20 20
0
0
(%)

50
40
30
20
10
0

Strengthening of Nissan Chemical’s
Business Base

Continuous Improvement of
Responsible Care Activities

Nissan Chemical Sustainable Agenda*

Personnel Retention and Trainings

GHG Emission Reduction Target
Compared to FY2018

Positive response rate in survey of
employee attitude on human resource
development
At least 65%

Reducing by at least 30%

Promotion of Diversity
At least 18%* A plan to pursue “what we can do for the future of the globe and human” by providing products and services that contribute to solvingsocial issues

forward, we will continue to respond to changes in the external environment through the Climate Change Committee,
such as updating disclosure in line with TCFD recommendations and reviewing our ICP.
Under Vista2027, the products and services identified in
our materiality of “provision of new value for helping to enrich peopleʼs lives” are included in the Nissan Chemical Sustainable Agenda with a target of maintaining a ratio of at least
55% of all sales. Fortunately, we were able to achieve thisgoal in FY2022. Looking ahead to 2050, in addition to our existing core technologies, we will foster new core technologies
such as microbial control and information science to further
expand our target products and services in the four businessareas of information & communication, life sciences, environment & energy, and materials & services.
Meanwhile, with the aim of clarifying on individual roles● R&D expenses / Sales-to-R&D expenses ratio
Sales-to-R&D expenses ratio is maintained at around 7-9%,
with a target of 7-9% annually in the future as well20

81.6 81.6

20

8.7

8.7 8.3

8.3

7.9

7.9 7.7

7.7

4.3 4.4

4.4 4.1

4.1 3.9

7.4

(%)

(%)

10

10

7.3 7.3
7.4(Forecast)(Forecast)

15

15

10

5
5
3.9
17.4 17.4(Forecast)(Forecast)
17.8 17.817.2 17.2
16.5 16.516.0 16.016.8 16.8

6.7 6.7

Chemicals
Performance
Agricultural
Healthcare
Chemicals
Performance
Agricultural
Healthcare
Materials
MaterialsChemicals
Chemicals(%)

50
44.8%44.8%
40
30.8%30.8% 28.3%28.3%
30
20
10 3.6% 3.6%0

50Chemicals
Performance
Agricultural
Healthcare
Chemicals
Performance
Agricultural
Healthcare
Materials
MaterialsChemicals
Chemicals

10
4.1

4.1 4.3

5

0

0

0

(FY) (FY)2022 2022
2023 2023
2018 20182019 20192020 20202021 2021

R&D expenses(left axis)
R&D expenses(left axis)
Nissan Chemicalsales-to-R&D
expensesratio (rightNissan Chemicalsales-to-R&D
expensesratioaxis)(right axis)
Major domestic
chemical chemical
manufacturers(average)(average)
sales-to-R&D
expenses expenses
ratio (rightratioaxis)(right axis)
Major domestic
manufacturers
sales-to-R&D

Sales bySales
businessdomaindomainOperating
margin margin
by businessdomaindomain
by business
Operatingby businessNissan Chemical Corporation

Provision of New Value for
Helping to Enrich People’s Lives

Proportion of female researchers(billion yen)(billion yen)

82.6 82.6

3

Maintain at least 55%

Further strengthen the current business portfolio althoughconsidering it to be in good balance(billion yen)(billion yen)

2

Rate of total sales of products and services
that contribute to solving social issues in
consolidated net sales

One of the basic strategies of our new long-term businessplan “Atelier2050”, is to pursue sustainable management further, and as such, we aim to achieve carbon neutrality by
2050. To put this into practice, we established the Climate
Change Committee in June 2022. The committee is chaired by
the President, Mr. Yagi, and is comprised of the heads of divisions and departments related to climate change issues at
Nissan Chemical. Focusing its efforts on the increasingly serious issue of climate change, the committee is responsible foranalyzing and evaluating risks and opportunities, formulating
strategies and mid- to long-term plans for addressing them,as well as annual activities and targets, and promptly reflecting its results in our business strategies.
Task Force on Climate-related Financial Disclosures(TCFD) recommendations which we have support, call for a
scenario analysis to understand how the risks and opportunities caused by climate change give impact on a companyʼs finances. We published a qualitative 2°
C and 4°
C scenario
analysis up to 2030 in FY2020. Although, in FY2022, we havereviewed the risks and opportunities related to climatechange, including the financial impact, using 1.5°
C and 4°C
scenarios by the Climate Change Committee over a period of
more than half a year, resulting in an extended analysis up to
2050. Furthermore, we have revised our internal carbon pricing (ICP) and fully implementing it from this fiscal year. Going● Sales and operating margin in FY2022 by business domain

151Integrated Report 2023

Nissan Chemical Group’s top priority issue
Strengthening of Corporate Governance, Risk Management and Complianceand the introduction of behavioral evaluation, and making themost of each employeeʼs unique abilities, we revised our personnel system in November 2022. The system was changed
from a membership-type system based on an employeeʼs
job-qualification system in the Company, to a job-type system
where the right employee is placed in the right job. While respecting diverse values and career aspirations, we have also
started a so-called career dialogue with employees and theirsuperiors from FY2023 in order to support employeesʼ career
design. Besides, we started extending the retirement age instages, and are considering training for older people so thatthey can play a more active role.
We have added a new section titled Approach and Initiatives on Sustainability to our annual securities report released in June 2023, where in addition to our sustainability
promotion system and efforts for climate change, we havestarted to include information on human capital disclosure asa third topic. Further details are available in the report, but
we have set indicators for major items related to our humanresource development policy and internal environment improvement policy with targets set for FY2024.

Continuing to Deepen Dialogue with Investors
We regularly hold financial results briefings for institutional
investors, analysts, and the media as well as for individual investors to provide an overview of our business, and also proactively share information on our mid- to long-term growthstrategies and sustainability activities.
In FY2022, we held business briefings (June 2022: Performance Materials R&D Briefing, September 2022: Agricultural
Chemicals Business Briefing, and March 2023: ESG Briefing)to help investors and others to better understand the content
of our mid-term business plan announced in May. The business division briefing sessions were attended by the heads
and other personnel of divisions and research laboratories,
providing explanations of mid- to long-term R&D strategies.
Since the ESG Briefing was held for the first time, a wide
range of explanations was given, from corporate philosophy
and long- and mid-term business plans, to materiality, Nissan
Chemical Sustainable Agenda products, intellectual property
strategy, and human capital, with all briefings generally wellreceived.
We will continue to properly disclose information regarding our non-financial initiatives which are of great interest toinvestors, such as our mid- to long-term strategies and climate change issue.

● Number of dialogue with investors in FY2022
Dialoguewithinstitutional
investors

Dialoguewithindividual
investors

Dialoguewithanalysts

ESG related
dialogues

Business /ESG
briefings

306

2

54

5

3

Nissan Chemical Corporation

52

Integrated Report 2023

Value Creation & Growth Strategies

panies listed on the Prime Market, where we are also listed,
have an ROE of less than 8% and a price-to-book ratio (PBR)
of less than 1.0. The Company has for many years consistently given returns to shareholders with the aim of increasing
ROE. Our PBR is about four times as high, so we can say that
we have clearly differentiated ourselves from other companies in terms of market evaluation of our corporate value.

Business Segments
In the Mid-term Business Plan “Vista2027”, we have set “expand market shares and profits of existing businesses” as oneof the basic strategies. While keeping a close eye on changes in the environment surrounding our customers and markets, we will promote the expansion of existing products, which are the source of growth, and the steady development of
new products.

Chemicals

Performance
Materials

Our Chemicals business started with the manufacture of sulfuric acid and ammonia, which are basic
raw materials for fertilizer. In addition to general industrial use, we provide our customers with products and technologies that are used in a wide rangeof fields, including high-purity chemicals for electronic material applications, high-grade urea solution for removing air pollutants, and isocyanuric
acid derivatives for use in water quality improvement applications.

Advancements in semiconductors, sensors, and displays are required to realize a smart society. Performance Materials Division contributes to the realization of a smart society through the expansion of
applications for existing products and the development of new products in the three pillars of displays,
semiconductors, and inorganic materials.

Sales (left axis)(billion yen)Social Issues and Needs
Advent of a smart society
Escalation of global environmental issues
Emergence of new needs in various fields
reflecting social issues

Business VisionProduct development focused on advanceduser requirements
Provision of products and technologies that
contribute to solving social issues

50
40

34.3

20

3.8

Expansion of IoT and 5G communications,evolution of AI and autonomous driving
technology
Response to carbon neutrality

Business Vision
Development and provision of key materials
that contribute to the realization of a smart
societyDevelopment of new environmental-friendly
materials

Agricultural
Chemicals

Healthcare

Planning andDevelopment
Division

Since entering the pharmaceutical business in 1982,
Nissan Chemical has developed and launched various products. With the technology we have cultivated so far, Healthcare Division will provide superior
pharmaceuticals and medical materials for the sakeof irreplaceable lives and smiles around the world.

The mission of the Planning and Development Division is to create new materials and new businesses
that will become future pillars in the fields of Information & Communication, Environment & Energy,
and Life Science. As a future- creating company, we
will challenge the unlimited possibilities of chemistry and strive to create high value-added productsthat meet the “trust” of our customers.

Social Issues and Needs
Stable food supply
Growing need for low-risk pesticides that
reduce residual agrochemicals in harvested
crops and reduce environmental burden
Agricultural sustainability, transition tosmart-agriculture

Social Issues and Needs
Growing importance of medical services andpharmaceuticals due to low birthrate and aging
population
Growing awareness of extending healthy life
expectancy
Safer and more effective pharmaceuticals in addition
to personalized medicine and preventive medicine

Social Issues and Needs
Solving social issues that arise toward asustainable society, such as climate change
issues, global environmental conservation,
low birthrate and aging population , andtransformation to a smart society, etc.

Business Vision
Provision of chemically synthesized
agrochemicals with distinctive features
Development of biological agrochemicals
Provision of services for smart agriculture100In addition to the manufacturing of
conventional pharmaceuticals, themanufacturing of new products in the broader
healthcare area, including medical materials
Contribution to solving health issues byaddressing unmet medical needs

Business Vision
Building new businesses that contribute tosolving social issues
Co-creation of new materials that meet market
and customer needs and promotion of realdemand for them by deepening coretechnologies, introducing new technologies,
and integrating them

2020

2021

65.5
26.0

80
60
40

71.6

17.0

20

2019

53

Integrated Report 2023

2022

81.7

40

19.3

20

25.4

26.5

2020

2022

7.0

6.7

2021

2

6.0
0.4

0.9

0

2019

2020

23.6
2023

2021

2022

2027 (FY)0(plan)

(%)

40

7.2

30

2.1

2023

2024

(forecast)

10

20(plan)

102027 (FY)0(plan)

Chemicals 1.4

38.3

Total

Agricultural
Chemicals

Performance
Materials

23.1

Other Asian
countries

Total

52.3

29.3

Performance
Materials

25.4

82.6

54

21.0

Europe, USA,
etc.

228.1

Nissan Chemical Corporation

20

2.3

39.0

81.6

40

4.3

Chemicals

Agricultural
Chemicals

0(plan)

11.5

38.3

Healthcare 3.02027 (FY)Operating margin (right axis)●FY2022 Segment results and sales according to region
Others*1 ‒0.6
Others*1 18.2

Healthcare 6.7

20
10

21.7

(plan)

6.0
3.0

38.0

30

2024

(forecast)

Operating profit (left axis)

2.8

(%)

40

82.3

77.8

23.1

6.7

117.2

Operating margin (right axis) (%)

28.0

44.8

(plan)

32.1(plan)

28.3

2022

2027 (FY)

12
10
8
6
4
2
0

30

2024

84.2

81.6

18.1

6.6

12.9

4

2023

(forecast)

Operating profit (left axis)

42.4

10
6

87.5

102.9

27.6
2021

3.9

Operating margin (right axis)

22.4

12
8

(plan)

30.3

Sales (left axis)(billion yen)

2024

30.8

18.2

2019

2023

(forecast)

82.6

63.8
64.0
65.8
30.2
28.5
27.5

60

3.5

Operating profit (left axis)

100
80

3.2

33.8

2020

Sales (billion yen)

Nissan Chemical Corporation

3.6
1.4

31.3

Sales (left axis)(billion yen)0

Business Vision

2019

Sales (left axis)

0

Agricultural Chemicals Division provides customers
with agrochemicals, agents for green space management, and veterinary pharmaceuticals based on theidea of a stable food supply for people around theworld and agrochemicals that are also friendly to
the global environment. As a company that provides
products which contribute to a stable food supply,
we are promoting various efforts to solve social issues.

3.8

120

40.1

37.6
7.7

4.7
1.5

(billion yen)

Operating margin (right axis) (%)

41.3

37.610.1 39.0

1.3

10
0

Social Issues and Needs

31.9

30

Operating profit (left axis)

Operating profit (billion yen)

Total

228.1

Japan

105.9

South Korea

24.0 China
30.5

Sales according to region*2 (billion yen)

*1 Others: trading, others, and adjustment*2 S
 ince figures are rounded off to the nearest unit, discrepancies may
exist between total and sum of itemized amounts.

Integrated Report 2023

Value Creation & Growth Strategies* Organizational restructuring was implemented in April 2022. Figures for FY2019-2020 are for the former organizational classification; figures for FY2021 and thereafter are after changing the organizational classification.

Main Products and Services
In response to the ever-changing needs of society, we will advance R&D on “Must-Have” products and services so that we
can hear our customers’ voice, such as “it doesn’t work without this product” and “this product is irreplaceable”.

Agricultural Chemicals

Basic Chemicals
High-purity chemicals

Agrochemicals
ROUNDUP®

ROUNDUP® is a herbicide used all over the world which has low toxicity to humans and animals
and does not remain in the soil or in the environment. In 2002, we acquired exclusive marketingrights in Japan from Monsanto.

ALTAIR®

Agents used for semiconductors/LED require extremely high purity. We provide sulfuric
acid, nitric acid and ammonia to this industry, receiving high acclaim in the process.

ALTAIR® is a wide-spectrum herbicide that is highly effective in eliminating bulrush and cyperaceousperennial weeds. It is also effective for weeds that are resistant to conventional sulfonylurea-basedherbicides. We market this product in Japan, South Korea, China and other Asian countries.

AdBlue®*1

AdBlue® is a high-grade urea solution used in “urea SCR system”, a technology for purifying emissions. When sprayed onto emissions from diesel vehicles, it breaks down nitrogen oxide (NOx) into harmless nitrogen and water, which helps to reduce environmental
impact.

GRACIA®

GRACIA®, a pesticide developed in-house, is fast-acting on a wide range of crop pests and has little impact on honeybees which are useful insects. Released in South Korea in 2018 and went onsale in Japan in 2019.

Fine Chemicals

Veterinary Pharmaceuticals

HI-LITE®

Chlorinated isocyanulate is the main ingredient in this product. It is used for sterilization anddisinfection of swimming pools and water purification tanks, and thus contributes to publichygiene.

TEPIC®

TEPIC® is an epoxy compound which possesses excellent heat resistance, weather resistance, and transparency. It is widely used in semiconductors, LEDs, and substrate-related electronic materials as well as in powder coating curing agents.

Fluralaner

Fluralaner is a compound invented by Nissan Chemical used as an active ingredient in the veterinary pharmaceutical “BRAVECTO®*3” developed by MSD Animal
Health (MAH). We manufacture and supply it to MAH as an API of veterinary pharmaceuticals. Fluralaner has remarkable features: it is highly safe and acts rapidly
against major species of fleas and ticks and has a longer insecticidal effect thanexisting products as its effects remains even when highly diluted.
*3 BRAVECTO® is a registered trademark of Intervet International B.V. and Intervet Inc.

*1 AdBlue® is a registered trademark of the Verband der Automobilindustrie (VDA).

Performance Materials

Healthcare

Display Materials

Healthcare

SUNEVER®, Rayalign®

These are polyimide-based liquid crystal alignment materials used to coat the surface of theouter glass panels to align liquid crystal molecules in a certain direction.

Featured by its potent LDL cholesterol-lowering effect and few drug-drug interactions, LIVALO® is used in thetreatment of hyperlipidemia.

LANDEL®*5 (API)

Semiconductor Materials
ARC®

LIVALO®*4(API)LANDEL® is a long-acting calcium antagonist featured by its renoprotective effect and used in the treatment ofhypertension and angina pectoris.

*2

ARC® is an anti-reflective coating developed for semiconductor lithography. It is used to coatthe part under the photoresist, to resolve a number of issues with lithographic exposure suchas reflection from varying substrate levels. This makes it possible to significantly reduce thedevice failure rate.

Inorganic Materials

Custom Chemicals
The Onoda Plant manufactures active pharmaceutical ingredients (APIs) and theirintermediates. In addition to GMP compliance, it is regularly inspected by domestic and foreign regulatory authorities as well as by customers to whom it delivers
APIs, and its level of quality is highly evaluated.

Maxacalcitol

SNOWTEX®

SNOWTEX® is a colloidal solution in which ultrafine particles of silicic acid anhydride are dispersed in water using water as a dispersion medium. Utilizing various functions, it is used for awide range of products such as coating materials for optical films and abrasives for electronic
substrate materials.
*2 ARC® is a registered trademark of Brewer Science, Inc.

Nissan Chemical Corporation

55

Integrated Report 2023

Maxacalcitol is used in the treatment of psoriasis vulgaris and secondary hyperparathyroidism.

Eldecalcitol

Eldecalcitol increases bone mass and is used in the treatment of osteoporosis.
*4 LIVALO® is a registered trademark of Kowa Company, Ltd. *5 LANDEL® is a registered trademark of Zeria Pharmaceutical Co., Ltd.

Nissan Chemical Corporation

56

Integrated Report 2023

Value Creation & Growth Strategies

農業化学品事業

Chemicals

Business Strategies

Chemicals

Progress in FY2022

OKIKAWA Toshiaki

Executive Officer,
Head of Chemicals Division

1 Isocyanuric Acid
Isocyanuric acid is a material used in TEPIC®, HI-LITE®, and melamine cyanurate, which is used as a flame retardant. In order to facilitate the stable provision of TEPIC® and HI-LITE®, which are sources of growth of thisdivision, to the market, we expanded our isocyanuric acid production facilities in December 2020, which contributed to an increase in sales.

2 TEPIC®
Basic Chemicals
We sell industrial chemicals such as sulfuric acid, nitric acid,ammonia, and urea, and their derivative products to a wide variety of industries. The Company is further improving the efficiency of our production system in order to create a stronger business foundation to minimize the impact on our earnings due toexternal factors, such as changes in economic trends in Japanor oversea and fluctuating fuel prices.
We are also manufacturing and supplying products to support cutting-edge fields, and providing products to the market
such as high-purity sulfuric acid, nitric acid, aqueous ammonia
and liquid ammonia from which impurities are removed to utmost level.
In addition, we established a manufacturing and supply system for our high-grade urea solution AdBlue®* that decomposes
nitrogen oxide contained in exhaust gas from diesel vehicles,
which is considered to be the cause of air pollution, into nitrogen
and water, thereby reducing environmental impact.

Fine Chemicals
We offer environmental chemicals such as HI-LITE®, used forsterilization and disinfection of swimming pools and water purification tanks, and Venus® Oilclean, a microorganism formulationthat decomposes oils and fats in wastewater from food factories,
as well as other chemicals such as FINEOXOCOL®, higher alcohol used in products including cosmetics.
In addition, TEPIC®, a high-performance chemical derived
from isocyanuric acid, a derivative of urea, and melamine cyanurate are positioned as key products for earnings growth. In addition to being used as a curative agent for coating powders,
TEPIC® is seeing an increase in demand for use in electronicmaterials such as solder resist ink and sealants for LED.
Melamine cyanurate is used as a non-halogen flame retardantor an auxiliary flame retardant for various engineering plastics.
In addition to focusing on the expansion of applications for these
existing products, we are promoting R&D of our own isocyanuric
acid derivatives.

*AdBlue® is a registered trademark of the Verband der Automobilindustrie (VAD).

The high-performance chemical TEPIC®, which has a distinctive triazine ring, is used in a wide range of applications.

For electronic material applications, we expect that demand for TEPIC® will continue to grow in various fields,
including the information & communication field (5G base stations for solder resist ink applications, substrates
for autonomous driving, etc.). In FY2022, we fell short of our plans notably due to the lockdowns in China, but in
FY2023, we forecast an increase in sales along with the recovery from COVID-19 pandemic. For general-purpose grades, we revised the sales prices in response to soaring international market prices due to rising raw
fuel and materials costs and logistics costs. We will pursue a well-balanced sales strategy by expanding salesof high-quality grades while avoiding low-price competition in general-purpose grades.

3 HI-LITE®

“Clean Water and Sanitation”, one of the SDGs, is an important global issue. We have exported some grades of
HI-LITE® since they have been certified as materials for disinfectants for drinking water in areas where hygiene management is insufficient, such as in developing countries. We will respond to the global demand fordisinfection, as well as the demand for disinfectant applications for drinking water.

4 High-Purity Sulfuric Acid
Demand for high-purity sulfuric acid is expected to grow in the information & communications field, a businessfield which will continue to grow. In FY2022, we fell short of our plans due to production adjustments at customerʼs semiconductor facilities, but we are forecasting that production adjustments will be complete andshipments will increase in the second half of FY2023. We will continue to maintain high quality and high availability.

Vista2027 Business Strategies
Opportunities and Risks

Strengths●Rising prices of raw materials and fuels●Expansion of semiconductor market●Increasing demand for environmental-friendly
products●Introduction of carbon pricing● Manufacturing process for products with highself-extinguishing rates as well as high value-added
products by developing derivative products using
ammonia as a core raw material● Accumulation of more than half a century of research and know-how regarding ultra-high purity ofindustrial chemicals

Main Measures
1. Improve profitability of ammonia-related business after the withdrawal from themelamine business
2. Expand sales of high purity sulfuric acid
3. Expand sales and improve profitability of isocyanuric acid and HI-LITE®
4. Develop the business of Venus® Oilclean (a microorganism formulation)

Nissan Chemical Corporation

57

Integrated Report 2023

Efforts toachieve
Vista2027

In June 2022, the first year of Vista2027, we discontinued the production of melamine, which had been acore product in our ammonia-related products formore than half a century. Meanwhile, for sulfuric acidproducts, we will make capital investments and upgrade facilities in response to increasing demand. The
Chemicals business is susceptible to the effects offuel prices, supply demand balance, and market environment. Therefore, we will continue to strive to secure stable earnings while flexibly reviewing businessstrategies in response to environmental changes.
As a source of sustainable growth for the business, we will focus on the development and deployment of new products, mainly isocyanuric acid derivatives, while strengthening sales of products for theelectronic materials field. We started the full-fledgedcommercialization of STARFINE® (zinc cyanurate),

Nissan Chemical Corporation

58

from which effects as an additive for paints and adhesives can be expected. Together with the new gradesof TEPIC®, it has already been evaluated by many users for various purposes. We will also contribute towaste reduction with Venus® Oilclean, a microorganism formulation.

Exhibited STARFINE® at Converting Technology Exhibition
2023 (STARFINE®)

Integrated Report 2023

Value Creation & Growth Strategies

Most of the products of this division are comprised of industrial chemicals, such as ammonia and sulfuric acid, and derivative products/ high-purity products that have beendeveloped downstream with added value. These products are supporting people’s
lives in a wide range of fields. By building an efficient production system, we strive
to provide excellent products and technologies while reducing the environmental
burden.

Business Strategies

Progress in FY2022

ISHIKAWA Motoaki

Director, Senior Managing Executive Officer,
Head of Performance Materials Division

Display Materials
We are working on alignment materials for aligning liquid crystal molecules in a certain direction. SUNEVER® was made available for sale in 1989, and we have expanded our market share byincreasing the functionality of alignment materials, even when
the liquid crystal type used is changed from TN to STN or TFT. In
addition, in 2014, we started the sale of Rayalign®, a photo-alignment material for IPS liquid crystal, and this has become ourmain product. This product has been used in many smartphones,
tablets and laptops. In the future, it is expected that product demand for Rayalign® will further increase as resolutions in monitor and automotive applications increase.

With the mass adoption of EUV exposure technology (wavelength: 13.5 nm, semiconductor circuit width: 7 nm and under) in
2018, we are promoting high-quality improvements in the mass
production and next-generation development of EUV materials
and also focusing on three-dimensional (3D) packaging technology preparing for the limits of optical shrink.
*1,2 ARC® and OptiStack® are registered trademarks of Brewer Science, Inc.

Inorganic Materials
SNOWTEX®, a nano silica water dispersion serving as a fiber
processing agent, went on sale in 1951. Now we also offer organosilicasol serving as an organic solvent dispersion, and monomer sol, a product that can be used without solvent. These products are indispensable materials used in coating materials for
optical films and in abrasives for electronic substrate materials
and for other purposes. In the future, we will work on the development of CCS/CCUS-related materials and expand their applications to new eco-friendly products.

Semiconductor Materials
We started the manufacture and sale of ARC®*1 in 1998 based ona licensing agreement with US company, Brewer Science, Inc.
ARC® is a coating material designed to prevent issues such as
irregular reflection and interference of light, and coating failure
during micro-fabrication of the photoresist. We launched
OptiStack®*2 (multi-layer process material) in 2007 which greatly
expanded our business.

1 Liquid Crystal Alignment Materials for TVs
Currently, our major materials for displays are alignment materials for smartphones and tablets, and especially thephoto-alignment material for IPS liquid crystal. In the future, we will also use them for TVs. Although demand for LCD
TVs is predicted to decrease somewhat, we predict that demand for alignment materials will continue to increase basedon screen sizes. Also, since we believe that screen resolutions will continue to improve, we recognize that it is an important theme to accurately respond to technical requests from customers and expand the market share of our products. In
FY2022, we were able to expand our share of alignment materials for VA liquid crystal because some customers
switched from the competing product.

2S trengthening Development Capabilities and Establishment of a Structure to Increase Production for Semiconductor Materials
We strengthened the development capabilities in EUV materials for cutting-edge applications. We also focused our efforts on increasing the quality of current EUV materials and developing the next-generation versions. Moreover, in order
to increase the speed of development for South Korea market, we established the Semiconductors Division of R&D center at NCK on April 1, 2023. We are also preparing to operate the 3rd NCK BARC plant in Dangjin, South Korea, in order to
respond to the future growth in demand (Construction completed on May 15, 2023).

3 Oil and Gas Applications and CCS, CCUS Applications
We expanded sales of inorganic materials for use in improving oil and gas
recovery rate. The sharp rise on oil prices led to our acquisition of new customers and sales increased year on year in FY2022. We also engaged in initiatives related to CCS and CCUS applications, as a way to develop applications toward carbon neutrality. In FY2022, we were able to obtain usefuldata for demonstration test.

Strategies of Vista2027

Vista2027 Business Strategies
Opportunities and Risks

Strengths●Expansion of applications of photo-alignment materials
for IPS liquid crystal and growth of the OLED market●Expansion of the semiconductor market and progressin 3D packaging technology●Development of a smart society●Intensification of inter-corporate competitions●A sales and research system closely linked to customers in China, Taiwan, and South Korea●Optical control technology●Functional polymer design technology●Ultrafine particle control technology

Main Measures
4. Start the commercial operation of the
new NCK plant
5. Improve profitability of the inorganic
material (inorganic colloid) business

1. Improve existing products and expand
their applications
2. Reinforce and increase manufacturing
facilities and other facilities
3. Develop and launch new products

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59

Integrated Report 2023

Efforts toachieve
Vista2027

Next-Generation Display Materials
OLEDs are thinner and lighter than liquid crystals, offer high-speed response, and provide added value
such as foldability. They are being used more often insmartphones, premium TVs and other products. Recently, following OLED, next-generation self-luminous
displays incorporating technologies of quantum dot(QD) and LED, which promise higher image quality,
have been actively developed. We will aim to commercialize new products by developing proprietary materials, such as materials that enhance light extraction
efficiency, release layer materials, and QD-relatedmaterials.

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60

Semiconductor Packaging Materials
Technologies related to high-speed, large-capacity information and communication such as IoT, 5G, andsensors, are making rapid progress. For this reason,
further miniaturization and higher integration in theformation of electronic circuits are occurring. As wehave been working on the development of materials
for the process of 3D packaging with thinned semiconductor wafers, we plan to expand sales the materials
in the growing market.

Integrated Report 2023

Value Creation & Growth Strategies

Performance
Materials

In this rapidly evolving business, it is necessary to quickly and accurately grasp theneeds and technological trends of the market. For this, sales, research, and production,
including overseas bases, are integrated, and we emphasize activities that are closely related to customers. We aim to contribute to the development of society by providing products and services based on the reliable technical capabilities that wehave cultivated.

Business Strategies

Agricultural
ChemicalsValue Creation & Growth Strategies

We contribute to a stable food supply through consistent business activities from the research for new agricultural chemicals to their development, manufacture, and sales,and expansion of a broad product lineup through the acquisition of ingredients fromother companies and joint development of products.

Progress in FY2022

SATO Yuji

Managing Executive Officer,
Head of Agricultural Chemicals Division

Agrochemicals
Our agrochemical business started in the 1910s when our predecessors Nippon Seimi Seizo and Kanto Soda began manufacturing and selling insecticides and fungicides. Starting with TARGA®
(herbicide for grassy weeds) launched in 1984, we have continued to manufacture and sell products developed in-house such
as SIRIUS® (herbicide for paddy rice), SANMITE® (insecticide/acaricide) and PERMIT® (herbicide for paddy rice and corn),which have steadily improved profitability.
Afterwards, we experienced hard times as a result of inhouse development delays and intensifying competition withcompetitors. However, since the launch of LEIMAY® (fungicide)in 2008, we have returned to introducing products developed inhouse, and started sale of STARMITE® (acaricides) in 2009,ALTAIR® (paddy rice herbicide) in 2012, and GRACIA® (general
purpose pesticide) in 2018. In addition, we are actively pursuing
the acquisition of other companiesʼ agents and have enhanced
our agricultural chemical product portfolio by taking over the
global product Quintec® (fungicide) in 2019 and Japanese andKorean operations for the versatile DITHANE® (fungicide) in
2020.

Veterinary Pharmaceuticals
Through our development of agricultural pesticides, we havediscovered compounds that are not only effective for use on agricultural crop pests, but also on fleas and ticks that are parasitic in dogs and cats, and have continued to examine these compounds as veterinary pharmaceuticals. In 2008, we entered alicensing agreement with Intervet Inc. Development of veterinary pharmaceuticals using Fluralaner, a compound invented byus, as an active ingredient has advanced.
Since launched in Europe and the United States under thebrand name BRAVECTO®* in 2014, veterinary pharmaceuticals
containing Fluralaner as an active ingredient are now used in
more than 100 countries and are leading the growth of Agricultural Chemicals Division. In addition to our products for dogs
and cats, “EXZOLT®”* for chickens, cattle, and sheep is also obtaining a marketing authorization in an increasing number ofcountries.

1 GRACIA®
GRACIA®, a pesticide developed in-house, is fast-acting on a wide range of crop pests andhas little impact on honeybees which are useful insects. It was released in South Korea in2018 and went on sale in Japan in May 2019. The product was launched in Indonesia in
2021, in India in 2022, and will be launched progressively in various Asian countries from2023 onward.

2 ROUNDUP®
ROUND NOZZLE® ULV5, a product that allows for dispersion of ROUNDUP® MAXLOAD in a way that reduces
farmer workload, is gaining popularity. We are working to increase sales of ROUNDUP® MAXLOAD by utilizing
the boom sprayer nozzle for large-scale farmers released in FY2021. Sales of ROUNDUP® MAXLOAD AL for
general consumers are expected to increase due to continued acquisition of new users and expansion of retail
distribution.

3 Fluralaner
Veterinary pharmaceuticals for companion animals and livestocks containing Fluralaner as an active ingredient are available in more than 100 countries. In FY2022, sales of animal health products containing Fluralaneras an active pharmaceutical ingredient continued to increase year on year, mainly for companion animals.
Along with the low birthrate and aging population, the idea that companion animals are like a family to theirowners is growing in popularity. We expect that the demand for veterinary pharmaceuticals will increase in
the future as people become more aware about companion animal health.

*BRAVECTO® and EXZOLT® are registered trademarks of Intervet International B.V. and Intervet Inc.

Strategies of Vista2027

Vista2027 Business Strategies
Opportunities and Risks

Strengths●Labor shortage due to the population decline in Japan●Growing need for measures to increase food production due to the increase in global population●Growth of bio-based agrochemicals and materials●Expansion of market for companion animals●Ability to create distinctive, new agrochemicals
from the core technologies of fine organic synthesis
and biological evaluation●Experiences and track records spanning many years
from research for new agricultural chemicals to
manufacturing and sales●High level of motivation cultivated through maintaining high profit margins and continuous growth

Main Measures
1. Popularize and expand sales of main products such as GRACIA®, and continue to enhance our respective
marketing efforts for large-scale farmers and agricultural corporations, and general consumers
2. Conduct steady development of NC-653 (novel herbicide), NC-656 (novel herbicide) and NC-520 (novel
nursery-box insecticide for paddy rice), and create new pipelines
3. Establish a biological research teamNissan Chemical Corporation

61

Integrated Report 2023

Efforts toachieve
Vista2027

In order to enhance our product portfolio, we will continue to introduce and jointly develop products fromother companies, including biological agrochemicals.
In addition, as in-house developed products, following the development of a herbicide for paddy rice
flooding treatment (development code NC-653), we
also started to develop a herbicide for application on
stems and leaves of paddy rice (development code
NC-656) and a nursery-box insecticide for paddy rice
(development code NC-520). Moreover, we have established a joint venture (Nissan Bharat Rasayan PVT.
LTD.) in India for the purpose of manufacturing the active ingredients in agrochemicals. It started commercial operation in March 2023. By having this joint ventureʼs manufacturing plant together with the Onoda
Plant, we can respond to growing demand for our ag-

Nissan Chemical Corporation

62

rochemicals. We expect it will contribute to thegrowth of our agrochemicals business by establishinga robust active production and supply system that iscost-competitive.

Integrated Report 2023

Business Strategies

Healthcare

Progress in FY2022

ISHIWATA Norihisa
Executive Officer,
Head of Healthcare Division

Healthcare
In the 1970s, a number of companies from other industries entered the pharmaceutical business. We focused our researchand development on lifestyle-related diseases and launchedefonidipine hydrochloride, an antihypertensive drug, in 1994. It is
distributed in Japan by Zeria Pharmaceutical and Shionogi as
LANDEL®*1, and in South Korea by GC Biopharma as FINTE®tab.
In 2003, Kowa Company launched the anti-cholesterol drug
pitavastatin calcium hydrate as LIVALO®*2, which is currently
sold in over 30 countries around the world. After domestic substance patent have expired in 2013, the decline in market shares
due to generic drugs and the impact of drug price revisions haveresulted in a continuing difficult situation in Japan. The creationof new drugs is an urgent issue for us.
With the organizational restructuring in April 2022, the drug
discovery research function was transferred to the Planning andDevelopment Division, where it is handled by the Healthcare
Business Development Department. The Healthcare Division istaking charge from the out-licensing stage, developing the business from a comprehensive perspective of broader healthcare
together with medical materials.

Custom Chemicals
We operate a “solution proposal” contract business and a joint
development business that provide total support for the development of active pharmaceutical ingredients (APIs) in response
to customer needs. We accept contracts for the development of
manufacturing processes at each stage from preclinical to commercial production, as well as for the manufacture of APIs andintermediates under GMP-compliant conditions. Accompanying
this, we also handle services such as quality design, stability
testing, impurity/metabolite sample synthesis, and preparationof application materials for the drug master file.
Recently, we have expanded our business of supplying APIsfor generic drugs, and are not only handling highly active APIs
that require containment, but also efficiently manufacturinghighly active vitamin D3 APIs in addition to prostaglandin derivatives using our proprietary two-component coupling method
based on our diverse fine organic synthesis technologies.
In addition, we have developed our proprietary liquid-phase synthesis technology “SYNCSOL®” for innovative contract peptide
production.
*1 LANDEL® is a registered trademark of Zeria Pharmaceutical Co., Ltd.
*2 LIVALO® is a registered trademark of Kowa Company, Ltd.

 onstruction of Basic Technologies to Accelerate Oligonucleotide Drug Discovery and Promo1Ction of Joint Drug Discovery with Pharmaceutical Companies
Oligonucleotide therapeutics are attracting attention in their main roles as next-generation pharmaceuticals. In addition to accelerating our research by strengthening our unique technologies in oligonucleotide drug discovery, we
have been jointly working with multiple pharmaceutical companies to create development compounds since 2019and expanding these partnerships.

2 Advancement of Strategic Alliance with Modulus Discovery, Inc. to Accelerate Small Molecule
Drug Discovery
With recent advances in supercomputers, it is becoming possible to design small molecule drug candidates fortarget molecules with high precision. Since 2021, we have engaged in a strategic drug discovery collaborationagreement with Modulus Discovery, Inc., which leverages its basic technologies such as cutting-edge computational technology. In this agreement, Nissan Chemical share the development of drug candidates and jointly
out-license them to pharmaceutical companies with Modulus Discovery, Inc.

3 Establishment of an Efficient Peptide Manufacturing Technology
In 2018, we invested in PeptiStar, which is aiming to establish a stable supply system for APIs of constrained peptides.
Meanwhile, we have developed a novel liquid phase peptide synthesis technology (SYNCSOL®) that enables dramatic
cost reduction. In the future, we intend to develop this technology for not only APIs but also peripheral medical materials.

4C ontinuous Launch of Highly Bioactive Generic Drugs
The demand for eldecalcitol, a drug for treatment of osteoporosis, is growing because the number of patientswith osteoporosis is expected to increase due to population aging. Based on the production results of maxacalcitol, a highly active vitamin D3 API, in FY2020 we started the sale of eldecalcitol, which requires high-quality
control because of the susceptibility to decomposition and impurities caused by oxygen, moisture, and heat in
the air. In the future, with an eye to expanding into overseas markets in addition to new development, we will
establish a stable supply system and nurture it as a source of growth.

Strategies of Vista2027

Vista2027 Business Strategies
Opportunities and Risks

Strengths●Increasing demand for generic drugs●Expanded efforts in middle molecule drug development●Aging population and diversification of healthcare●Intensification of inter-corporate competitions●Fine organic synthesis technology●GMP compliant high-level containment technology●Chemistry, Manufacturing, and Controls (CMC)
support for APIs
●Cutting-edge evaluation functions

Main Measures
1. Healthcare: Concentrate investment in the oligonucleotide drug discovery and commercialize and expand
sales of medical materials (biointerface control materials, cosmetic materials, etc.)
2. Custom Chemicals: Strengthen highly profitable business models, expand into overseas markets, and aim forjoint development (peptides, etc.)

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63

Integrated Report 2023

Efforts toachieve
Vista2027

We will focus on oligonucleotide therapeutics utilizing
our proprietary basic technology for oligonucleotide
drug discovery and steadily promote joint drug discovery platform with pharmaceutical companies. In
the area of small molecule drugs, we will work on theuse of AI as a shift from existing drug discovery method. The API of LIVALO® will be developed by taking advantage of economies of scale. As for medical materials, we will promote commercialization and sales
expansion of new products, including biointerface
control materials and cosmetic materials. In addition
to the generic drug maxacalcitol, which was launched
in FY2015, eldecalcitol, which was launched in FY2020,
has achieved significant growth as a pillar of our business. In the future, we will accelerate the development of new generic drug APIs which leverage our

Nissan Chemical Corporation64

strength, and be fully engaged in business not only inJapan but also in overseas markets. Furthermore, leveraging the overwhelming technological superiorityof our proprietary liquid-phase synthesis technology“SYNCSOL®”, we will develop the peptide contracted
business and the joint-development business.
Through these measures, we will further develop
Custom Chemicals into a highly profitable business.
It will take time to obtain results for new pharmaceuticals and medical materials. Until then, we willcontinue to boldly take on the challenge of developing
new pharmaceuticals and medical materials while
supporting the backbone with our highly profitable
Custom Chemicals business.

Integrated Report 2023

Value Creation & Growth Strategies

In order to appropriately respond to changes in the business environment and achieve
mid- to long-term growth, we are accelerating the selection and concentration of business areas. In addition, we contribute to the resolution of health issues by developing
and launching new pharmaceuticals, generic drugs and medical materials based on
our unique technologies.

Business Strategies

Progress in FY2022

ENDO Hideyuki

Managing Executive Officer, CTO,
Head of Planning and Development Division

Healthcare
We carry out drug discovery, mainly oligonucleotide therapeutics, and development for commercialization of materials for regenerative medicine and raw materials for cosmetics.
In the drug discovery, we are focusing on oligonucleotide
therapeutics. In order to contribute to improving patientsʼ quality of life through the creation of innovative new drugs, we arestrengthening our platform through collaboration with academia
and our partner companies and building our robust R&D portfolio through alliances with pharmaceutical companies.
In the field of regenerative medicine, as well as starting investigator-initiated clinical research using Cellhesion®, a scaffold that enables 3D mass culture of undifferentiated mesenchymal stem cells said to be highly safe, we started paid shipmentsof Advance-CR, a material for non-frozen transportation andstorage of cell clumps (spheroids). In addition, prevelex®, anagent to prevent adhesion of proteins and cells, etc. to containers has contributed significantly to the start of clinical trials atpartner companies. We will continue to aim for applications in
the containers for test and research, fields of gene medicines
and antibody pharmaceuticals.
In the cosmetics field, in addition to the increased use
of NFG® (NANOFIBERGEL®) in skin care products provided bycosmetics manufacturers, it gained adoption in hair care products. We are working to further expand its use.

Environment & Energy
We are committed to product development that contributes tothe realization of a sustainable society through Green Transformation (GX).
As for lithium-ion batteries (LIB), we are developing slurry
additives with the aim of improving input/output characteristics,
extending service life, and reducing process costs, for their earlycommercialization. We are developing materials for catalyst layers in polymer electrolyte fuel cells and ammonia electrolyte
synthesis catalysts for utilizing hydrogen energy, as well as
charge transport materials that contribute to improve the efficiency of lightweight flexible solar cells.
With the aim of realizing a recycling-oriented society, we arepromoting the development of a gas separation membrane technology expected to reduce costs for CO2 separation and recovery, and the early commercialization of ECOPROMOTE®, a resin
additive, that contributes to cost reduction in the molding process and improving a heat-resisting property of polylactic acid
which is rapidly spreading as a biodegradable bioplastic.
Animal Care
We are working on planning and development for commercialization in the field of veterinary pharmaceuticals. We are planningand developing new veterinary drugs using the R&D technology
of small molecule drugs cultivated by Nissan Chemical overmany years, and formulating strategies for establishing a sales
and distribution system for veterinary drugs in Japan.

Information & Communication
We are working on the development of new materials that support cutting-edge devices required to realize Society 5.0.
We are promoting market development for materials including μLED-related materials attracting attention as next-generation displays with high brightness and high reliability, wafer-level package-related materials that enable miniaturization andthinness, SUNCONNECT®, an optical interconnect material that
support high-speed, large-capacity data communications, andliquid metal-based thermal interface material developed by
Arieca Inc.

Nissan Chemical Corporation

New Material Planning and Research Management
Through venture capital based investment and other means, we
are working to discover high-quality start-up companies andnew development themes. We are working at the revitalizationof development themes by introducing new materials and technologies in each field and accelerate commercialization by strategically investing in startup companies.
Also, through the training of researchers and the support of
R&D themes, we are working for enhancement of R&D capabilities by creating a mechanism that leads to the evolution of existing technologies and the creation of new technologies.

65

Integrated Report 2023

1 Cellhesion®-MS
As a result of our joint research with Incorporated Medical Institute Saiseikai SOBAJIMA Clinic, we commenced
the clinical research on knee osteoarthritis (OA) using adipose-derived mesenchymal stem cells cultured with
Cellhesion®-MS. Compared with plane-cultured mesenchymal stem cells in conventional culture vessels, theyshow improvements in the potency of accumulation in involved and injured sites, the anti-inflammatory effect,
and the angiogenesis potency and other aspects. Therefore, it is expected to exert a higher efficacy on the OA
treatment.

2 prevelex®
prevelex® series developed by Nissan Chemical are anti-adhesion coatings for biological substances that are
applicable from test and research to clinical applications. Heartseed announced that they had successfully
dosed the first patient in a phase I/II clinical trial, an investigational cell therapy for heart failure. prevelex®
CC1 was used for the production of iPSC-derived cardiomyocyte spheroids for the clinical trial.

3 SUNCONNECT®
SUNCONNECT®, an optical interconnect material with high heat resistance and low optical loss, has been evaluated by customer companies as a material for polymer optical waveguides, and its paid sales have alreadystarted. For opto-electronic hybrid technology, which is expected to see further development in the future, wewill widely deploy this material, mainly to semiconductor package substrate manufacturers in Japan and overseas.

4 Charge Transport Materials for Solar Cells
Regarding organic photovoltaics (OPV), lightweight and flexible solar cells that practical application preceded,
efficiency improvement by adopting next-generation active layers, has become one of the most important issues, and our charge transport materials are being evaluated by customers. Currently, we are utilizing thisknowledge to develop materials for perovskite solar cells.

Strategies of Vista2027

Vista2027 Business Strategies
Opportunities and Risks

Strengths●Expansion of regenerative medicine market, growth ofbeauty and health market●Development of digital society and expansion of ICT
market●Increasing demand for technological development
aimed at the realization of a low-carbon society●Development delays and late arrival of expected new fields●Fusion of fine organic synthesis, functional material
design and biological evaluation●Thin film coating based interface control technology●Extensive network with external research institutes

Main Measures
1. Accelerate development by allocating resources to important themes
2. Incorporate new technologies and materials from inside and outside the Company
into in-house technology
3. Improve contact with customers and strengthen solution proposals capability

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66

Integrated Report 2023

Value Creation & Growth Strategies

Planning andDevelopment
Division

By combining our core technologies with new materials and technologies, we are striving to create new products and businesses with high added value that meet the needsof society. To further accelerate development, the Planning and Development Division
was established in FY2020. In FY2022, we established the Healthcare Business Development Department by integrating functions of drug discovery and medical
materials, and in FY2023 we newly established the Animal Care Planning Group.

Information Disclosure in line with TCFD Recommendations
Sustainability Promotion Structure●System

We have also established the Sustainability Promotion Committee, the Climate Change Committee, the Risk
Management & Compliance Committee, the Environment& Safety Committee, and the Quality Assurance Committee in order to promote sustainability activities. The
Board of Directors supervise these initiatives by discussing and resolving the content of deliberation at each committee.

Board of Directors
Chairman & CEO
Submission(more than once per year)

Supervise

Management
Meeting
ReportChair:
Officer responsible for
Sustainability Promotion &IR Dept.
Members:
Managing executive officers
responsible for divisions &departments*1
Secretariat:
Sustainability Promotion &IR Dept.
Matters to be deliberated: olicies related to●Psustainability including
climate change ateriality identification●M
and KPI setting/progress
management
 ong- and mid-term plans●L valuation of the results of●Eannual activities andtargets for the next fiscal
year based on theevaluation, etc.

Climate Change Committee(more than once per year)
Chair:
President & COO
Members:
Heads ofbusiness divisions
Planning and Development
Div.
Purchasing Dept.
Corporate Planning Dept.
Sustainability Promotion & IR
Dept.
Finance & Accounting Dept.
Production Technology Dept.
Environment, Safety & Quality
Assurance Dept.
Secretariat:
Sustainability Promotion & IR
Dept.
Matters to be deliberated:● Analysis and assessment ofrisks/opportunities andcountermeasures
dedicated to climate change● Strategies, long- andmid-term plans, annual
activities, targets, etc. forrisks and opportunities

Risk Management &Compliance Committee(twice per year)

Environment & Safety
Committee(more than once per year)

Quality AssuranceCommittee(more than once per year)

Chair:
Chief Risk Management Officer(CRO)

Chair:
Officer responsible forEnvironment, Safety & Quality
Assurance Dept.

Chair:
Officer responsible forEnvironment, Safety & Quality
Assurance Dept.

Members:
Heads ofbusiness divisions
Planning and Development
Div.
Purchasing Dept.
Corporate Planning Dept.
Personnel Dept.
Sustainability
Promotion & IR Dept.
Production Technology Dept.
Environment, Safety & Quality
Assurance Dept.
Heads of plants andlaboratories*2

Members:
Heads ofbusiness divisions
Planning and Development
Div.
Purchasing Dept.
Corporate Planning Dept.
Personnel Dept.
Sustainability Promotion & IR
Dept.
Production Technology Dept.
Environment, Safety & Quality
Assurance Dept.
Heads of plants andlaboratories*2

Secretariat:
Environment, Safety & Quality
Assurance Dept.

Secretariat:
Environment, Safety & Quality
Assurance Dept.

Matters to be deliberated:● Long- and mid- term plans
for responsible care (RC)
activities, including
responses to climate change● Annual RC activity resultsfor Nissan Chemical andaffiliated companies● Summary of company-wide
RC activities● Targets, goals, and actionplans for RC in the next fiscal
year, etc.

Matters to be deliberated:●M id- term quality targets forthe following year and every
three years●A nnual quality assurance
activity results for Nissan
Chemical and affiliatedcompanies

Members:
Risk & Compliance Managers(Heads of divisions/departments* and plants/
laboratories, Presidents ofeach domestic consolidated
subsidiary)
Secretariat:
Risk Management &Compliance Office,Corporate Planning Dept.
Matters to be deliberated: isk identification and●Rassessment including
climate change-relatedrisks, and formulation ofcountermeasure plans elf-assessment for status●S
of implementation of thecountermeasure plan andsubject, and formulation of
improvement plan nnual activity plan for the●A
next fiscal year, etc.

* [Divisions & Departments] Internal Audit Dept., business divisions, Planning and Development Div., Intellectual Property Dept., Purchasing Dept., Corporate Planning Dept., Personnel Dept., Sustainability Promotion & IR Dept., Finance & Accounting Dept., Digital Transformation Dept., Production Technology Dept., Environment, Safety & Quality Assurance Dept.

Nissan Chemical Corporation

67● Risk Management & Compliance Committee(twice per year)

Our initiatives to address climate change are considered and deliberated by the Sustainability Promotion Committee, the Climate Change Committee, the Risk Management & Compliance
Committee, and the Environment & Safety Committee. The
Board of Directors then supervise these initiatives by discussing
and resolving the content of deliberation at each committee.
As we have identified “mitigation of climate change” as oneof our materiality factors, we newly established the Climate
Change Committee in June 2022 where issues focused on climate change are specifically discussed and examined.

This committee was established to enhance the effectiveness ofrisk management, and to maintain and promote compliance.
The committee is chaired by the Chief Risk Management Officer(CRO/ Director, Managing Executive Officer) appointed by the
Board of Directors.
The Risk & Compliance Managers (heads of divisions/departments and plants/laboratories, presidents of domestic consolidated subsidiaries) who are members of this committee, periodically identify, assess, and formulate countermeasure plans
for risks including climate change-related risks, conduct self-assessments for the issues and status of implementation of therisk countermeasure plan, and formulate improvement plan. In
addition to this, they regularly provide education and training at
each division/department, plant/laboratory and domestic consolidated subsidiary.
The above risk management activities and activity plans forthe next fiscal year are deliberated, and their appropriateness isvalidated and reviewed at least once a year at the management
meeting. After approval at the management meeting, the following matters will be submitted to the Board of Directors.

● Sustainability Promotion Committee (twice per year)

President & COO
Validation, Review

Sustainability Promotion
Committee(twice per year)

GovernanceIntegrated Report 2023

This Committee considers and deliberates on material issues inorder to more strategically tackle global social issues, including
climate change. The committee is chaired by the officer responsible for the Sustainability Promotion & IR Department (Director,
Senior Managing Executive Officer). Policies, targets, and plans,
etc. related to sustainability, including climate change, are deliberated, and after approval at the management meeting, the following matters are submitted to the Board of Directors.
Resolving matters at the Board of Directors:- Policy planning related to sustainability- Long- and mid-term plans and annual plan forsustainability

Resolving matters at the Board of Directors:- Identification of group major risks and theircountermeasures- Mid-term plan and annual plan for risk and compliance● Climate Change Committee (more than once per year)●E nvironment & Safety Committee(more than once per year)

This Committee was established to accurately grasp the risks
and opportunities that the Company faces due to the increasingly serious climate change problem, and connect them morestrongly with our management strategies to strengthen ourcomprehensive climate change measures. The committee ischaired by the president (COO).
Analysis of risks and opportunities related to climatechange, as well as policies, targets, plans, etc., are deliberated,
and after approval at the management meeting, the following
matters are submitted to the Board of Directors.

This committee oversees and promotes responsible care (RC)
activities within Nissan Chemical and affiliated companies. The
committee is chaired by the officer responsible for the Environment, Safety & Quality Assurance Department (Director, Senior
Managing Executive Officer).
At this Committee, while sharing information with the Sustainability Promotion Committee, long- and mid-term plans including the response to climate change, annual activities in eachplant/laboratory, summary of company-wide activities, and thetargets, goals, and action plans for RC in the next fiscal year, etc.
are deliberated.
The contents of deliberations are validated and reviewed atleast once a year at the management meeting. After approval at
the management meeting, the following matters are submitted
to the Board of Directors.

Resolving matters at the Board of Directors:- Scenario analysis and countermeasures for identified
risks and opportunities- Long- and mid-term plans and annual plan focused on
measures against climate change

Resolving matters at the Board of Directors:- Policy planning related to RC- Long- and mid-term plans and annual plan for RC◎ Related Information: Sustainability Promotion Structure P67

Nissan Chemical Corporation

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Integrated Report 2023

Sustainability

Amid unpredictable and volatile world, Nissan ChemicalGroup has made its corporate philosophy of “Contributeto the protection of the global environment and the existence/development of humanity, offering the value
sought by society” the basis of its business activities. We
have established the Sustainability Promotion Group
within the Sustainability Promotion & IR Department toenhance our sustainability activities with the mission “todraw up sustainability strategies in response to social
trends, to raise awareness of sustainability internally,
and to send relevant information”.

Nissan Chemical announced our support for recommendationsof Task Force on Climate-related Financial Disclosures (TCFD) in
August 2020. We will strive to increase our corporate value by
not only continuing to promote our initiatives to address climatechange such as measures for reducing GHG emissions but also
improving our information disclosure step-by-step.

Information Disclosure in line with TCFD Recommendations
Strategy

In the framework of the Risk Compliance Committee, we clarify
risks including climate-change related risk taking into accountthe business characteristics of each division and the surrounding businesses, including global political, economic and social
conditions. For each risk identified, a risk assessment is conducted from the viewpoint of probability and impact on business, anda risk map is subsequently created based on the results of therisk assessment to identify the Group Major Risks. The Group
Major Risks are deliberated at the Risk Management & Compliance Committee, approved at the management meeting, andthen resolved by the Board of Directors.

The TCFD recommendations require a scenario analysis* to understand how the risks and opportunities caused by climatechange impact a companyʼs finances.
In 2020, reffering both 2°C scenarios in which transition to
decarbonized society realizes (mainly transition risk and opportunity) and 4°C scenarios in which climate change progresses(mainly physical risk and opportunity), we identified businessrisk and opportunity, examined their importance, and summarized impact on the Company and our strategies. However, in response to the agreement that was reached to pursue efforts tolimit the increase in average temperature to 1.5°C at the Conference of the Parties to the United Nations Framework Convention
on Climate Change (COP26) held in 2021, we revised our scenario analysis in July 2023.

● Management Process of Group Major Risks
The department in charge and the risk owner are decided foreach selected Group Major Risk, the Group Major Risks countermeasure plan is formulated mainly by the Risk & ComplianceManager of the department in charge, and after deliberation at
the Risk Management & Compliance Committee, countermeasure plan is resolved at the Board of Directors. Implementation
status of countermeasures are deliberated at the Risk Management & Compliance Committee, and the results of the deliberation are reported to the Board of Directors.
Regarding typhoon and torrential rain, which are one of theGroup Major Risks, we set the KPI of “Update and maintain BCPs
(business continuity plans) for products that account for 50% of
ordinary income by FY2027” at each plant as a response to therisk of increasing equipment restoration costs and reducing production at major plants. As of the end of FY2022, we completed
updating and maintaining our BCPs for products that accountfor 41% of ordinary income.
Identification of risks and assessment of the impact on thebusiness and the probability are conducted on a regular basis toperiodically review the Group Major Risks.

*Scenario analysis is a method for anticipating the effects of global warming and climate change and changes inthe business environment caused by long-term policy trends related to climate change, and for examining theimpact that such changes may have on the company’s business and management.

●Referenced Scenarios
1.5°C Scenario*1

4°C Scenario*2● IEA-WEO*3● IPCC SSP, ETP*4, Net Zero Scenario (NZE)
1-1.9、1-2.6*5● IEA-WEO Stated Policies Scenario (STEPS)● Scenario Analysis Results(climate change risks/opportunities)
As a result of scenario analysis and quantifying the financial impact using the 1.5°C scenario, we identified important risks,such as increased operating costs with the introduction of carbon pricing and decreased sales from an inability to provide
low-carbon products. In response to the introduction of carbon
pricing and decrease in demand for products with high life-cycle
carbon emissions, we will work to reduce the risks by not only
further promoting the use of renewable energy and conversionof fuel and feedstock at our plants, something which we havebeen working on thus far, but also by further promoting decarbonization investments that take into account reducing GHG
emissions through the use of internal carbon pricing.
And in response to market changes due to increasing demand for environmental considerations, we assume that demand for environmentally friendly biological agrochemicals andlow-carbon products, such as materials for secondary battery,
will increase. In terms of biological agrochemicals, we established the Biological Group within Agricultural Chemicals Research & Development Department, Biological Research Laboratories in April 2022 and conduct R&D toward commercialization.

●Risks/Opportunities and Countermeasures identified in the 1.5°C Scenario● IPCC SSP5-8.5*1 Scenarios when necessary measures will be implemented to keep global average temperature rise below 1.5°C
compared to pre-industrial levels*2 Scenarios in which the global average temperature will rise by 4°C at the end of the 21st century compared
to pre-industrial levels*3 International Energy Agency “World Energy Outlook” (2022)*4 International Energy Agency “Energy Technology Perspectives” (2023)*5 The UN Intergovernmental Panel on Climate Change (IPCC) “Shared Socio-economic Pathways”

Scenario●Analysis period:

Factors

Risk

Opportunity

2030 and 2050

●Process of Risks and Opportunities Identification
Step1

https://www.nissanchem.co.jp/eng/csr_info/risk_management/policy.html

the factors that affect our business● I dentify risks and opportunities based on the above

scenarios and other external data

1.5°C Scenario

Step2● Changes inenergy policy● Changes inenergy demandand supply● C larify the value chain and stakeholders, and sort out

from those of Step2, considering the probability andthe impact on our business (human loss, financial
impact, etc.)● Increase in raw material procurement costs due
to introduction of carbon pricing such as carbon
taxes, and compliance with regulations anddecarbonization investment, by suppliers● Increase in operating costs due to introduction ofcarbon pricing such as carbon taxes, andcompliance with regulations and decarbonization
investments

Risk

 eduction of operating costs from high energy●Refficiency and energy saving
 cquisition of funding opportunities (grants and●A
subsidies, etc.)

 ecrease in sales due to inability to provide●D
low-carbon productsD●  ecrease in demand from customers due toretention of products and businesses with large
GHG emissions

Nissan Chemical Corporation

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Integrated Report 2023

Risk

 amages of ESG evaluation and reputation,●Ddecrease in market capitalization, and difficulty inraising funds due to delay in measures to address
climate change, such as heavy use of fossil fuels

Opportunity● Improvement of ESG evaluation and reputation,and increase in market capitalization throughadvanced initiatives and information disclosure

Nissan Chemical Corporation70● Optimization of logistics routes, systems, etc.

Agri

● Development of environmentally friendly agrochemicals● Development of biological agrochemicals● Acquisition of biostimulant technology● I ncrease in the number of registered countriesAll● E xpand sales of low-carbon products● Development of environmentally friendly products andservices● E stablishment of innovative manufacturing technologies● Review of business portfolio● Promotion of decarbonization investment with theintroduction of internal carbon pricing● F urther use of renewable energy● F uel and feedstock conversion at plants

Agri● Development of environmentally friendly agrochemicals● Development of biological agrochemicals● Acquisition of biostimulant technology

All● E fforts to further reduce GHG emissions and appropriate
information disclosure

Opportunity● I ncreased
demand frominvestors andothers foraddressing
climate change● U pdate to energy-saving equipment, etc.
● Optimization of manufacturing processes● U pdate to energy-saving equipment, etc.
● Optimization of manufacturing processes● Advanced GHG emission reduction efforts and appropriate
information disclosure● Increase in demand and sales of parts andmaterials for low-carbon products● Increase in demand for biological agrochemicals,etc.

● F uel and feedstock conversion at plants● U pdate to energy-saving equipment, etc.
● F urther use of renewable energy● Zero N2O emissions from nitric acid production capacity(planned investment: 500 million yen)
● Optimization of manufacturing processes● Promotion of decarbonization investment with theintroduction of internal carbon pricing● Pass on the price to the product● Multiple sourcing of key raw materialsAll ecrease in sales of agricultural chemicals●Dbusiness due to introduction of regulations on
the use of agrochemicals● Market changes
due toincreasing
demand forenvironmental
consideration

All● Increase in our raw material procurement costs
due to renewable energy procurement at
suppliers● Increase in operating costs due to in-houserenewable energy procurement

Measures● Pass on the price to the product● Multiple sourcing of key raw materials

 voidance of carbon pricing impact by reducing●A
GHG emissions● Increase in logistics costs
Opportunity● I dentify particularly important risks and opportunities

Step3

Risk

All: All businesses and Planning and Development Division
Agri: Agricultural Chemicals Business
Chem: Chemicals Business

Relevant
Business

Impact on Business● Regulations on
GHG emissions●Scope of analysis: 	Chemicals, Performance Materials,
Agricultural Chemicals, Healthcare,
Planning and Development Divisions

Please see the following web page for process for identifying Group Major Risks, risk map, Group Major risks,and countermeasures against risks.

Additionally, in the Environment & Energy field, we aim to commercialize the secondary battery materials, the energy harvesting materials, and CCS/CCUS materials, by accelerating the development of them.
Meanwhile, regarding the risk of flood damage, which we
recognize as a risk in the 4°
C scenario, we have identified thepossibility of flooding at our major production and distribution
bases as a material risk. To address this risk, we will continue toformulate and revise the BCPs for our plants and major products from time to time, raise the floors and foundations of ourplant equipment, secure product inventory, and purchase multiple sourcing of key raw materials.
And in response to market changes owing to rising temperatures and abnormal weather, we assume that demand for agricultural chemicals and disinfectants for drinking water will increase due to the increase in pests and weeds, as well as water
shortages and spread of infectious diseases. Based on the prospect of market growth, we aim to expand our opportunities. Furthermore, by building a business portfolio that is less susceptible to the effects of climate change, we will increase theresilience of our business activities and strive to minimize risks
and maximize opportunities.

Integrated Report 2023

Sustainability

Risk Management

Information Disclosure in line with TCFD Recommendations

Metrics and Targets●Risks/Opportunities and Countermeasures identified in the 4°C Scenario

Risk

4°C Scenario

Risk
Market changes
caused by risingtemperature andabnormal weather

Opportunity

 eduction of production capacity (such as●Rinsufficient cooling capacity, etc.) and increase inproduct and material management costs, due towater shortages caused by droughts and heatwaves
 eduction of planted area due to increase in●Rfrequency and enhanced intensity of heavy rain /flooding, and to difficulties in securing irrigationwater
 hanges in crop distribution and reduction of●C
planted area due to temperature rises● F ormulation of BCP for major products at each plant● Implementation of higher foundations and floors according to
risk
All

● Increase in the number of registered countries
 nhancement of the agrochemical portfolio●E
Agri● Increase in sales of existing agrochemicals andincrease in opportunities to develop new
agrochemicals due to the increase in pests,
weeds, and pathogenic bacteria and higher
resistance● Increase in sales of disinfectants due to lessavailable water (freshwater) resources andhigher global demand for drinking water, etc.

● F ormulation of BCP for major products at each plant ptimization of existing cooling systems●O ater conservation and introduction of water recycling●Wequipment● Introduction of energy-saving air conditioning and coolingequipment evelopment of new agrochemicals●D nhancement of the agrochemical portfolio●E● Increase in the number of registered countriesChem xpansion of sales of disinfectants for drinking water●E●Long- and Mid-term Targets●Financial impact
Scenario

Category
Impact on Business● Increase in operating costs due to introduction ofcarbon pricing such as carbon taxes, andcompliance with regulations and decarbonization
investments● Increase in operating costs due to in-houserenewable energy procurement
Risk

1.5°C Scenario

 ecrease in sales of agricultural chemicals●Dbusiness due to introduction of regulations on
the use of agrochemicals

 ecrease in sales due to inability to provide●D
low-carbon products

 voidance of carbon pricing impact by reducing●A
GHG emissions

Calculation Method
Calculation of the increase in operating costs in 2030 due to theintroduction of carbon pricing from estimated emissions and carbon
price*A ssuming the cases in which emissions reductions do not progress ascompared to the base year (FY2018) results*C arbon price (2030): $140/t-CO2 (Ref: IEA WEO2022 NZE)

Calculation of the increase in operating costs for procuring
renewable energy in 2030, where all electricity used is switched torenewable energy, based on the sales plan for 2027

Financial Impact(☆2027)

5.9 billion yen/year*E stimated renewable energy power procurement unit prices taken fromnon-fossil certificate prices, etc.

Calculation of the sales decrease in 2030 due to regulations ofAgrochemicals such as Farm to Fork and Green Food System
Strategy
Calculation of the sales decrease in 2030 where decarbonization in
the company’s chemical manufacturing process does not progress,
and sales volume of existing products with high product life cycle
emissions (product carbon footprint) decreases

5.1 billion yen/year

4.2 billion yen/year* FY2021 actual figures used for sales of existing products* F orecasted decrease in sales volume of existing products is estimated byreferring to IEA Net Zero by 2050, etc.

Calculation of the avoided increase in operating costs in 2030 due tothe introduction of carbon pricing when the FY2027 GHG emissions
reduction target (reducing by at least 30% from FY2018 level) is
achieved● Increase in demand and sales of parts andmaterials for low-carbon products

4°C Scenario● Increase in risk of impacts on plant operations,equipment, inventory, and supply chains due toflooding caused by heavy rains, floods, and sea
level rises, etc.

For low-carbon products that demand is expected to increase,calculation of sales increase from FY2021 based on formulated sales
plan for FY2027

1.8 billion yen/year☆1.2 billion yen/year

Nissan Chemical Corporation

71

Integrated Report 2023

2030: 7.6 billion yen
2050: 12.8 billion yen

Metrics
GHG emissions (Scope1+2)

Scope

FY2027 Target

2050 Target

Absolute
emissions

Nonconsolidated

Reducing by at least 30% from
FY2018 level

Carbon Neutrality●Climate change-related data
Scope

Unit

2018

2019

2020

2021

2022

FY2027 Target

Scope1

Nonconsolidated

t-CO2 e245,469

221,264

216,276

231,713

223,388―

Scope2

Nonconsolidated

t-CO2 e117,926

105,390102,182

113,623

104,275―

Scope1+2

Nonconsolidated

t-CO2 e363,395

326,654

318,458

345,336

327,663

254,377

GHG emission rate perunit to sales*1(Scope1+2)

Nonconsolidated

t-CO2 e/million yen

2.33

2.04

1.96

2.03

1.79

―

Scope3*2

Nonconsolidated

t-CO2 e703,562

767,799

763,007803,461

885,046―

Energy consumption
rate*3

Nonconsolidated

*4

82.8

79.4

76.2

81.5

63.3

―

Scope1

Consolidated*5

t-CO2 e253,785

228,791

220,243

238,958

230,424―

Scope2

Consolidated*5

t-CO2 e128,647

116,724

116,516

124,663

115,893―

Scope1+2*6

Consolidated*5

t-CO2 e382,432

345,514336,759

363,621346,316

―

％

95.0

94.5

94.6

95.0

94.6

―

Non-consolidated /consolidated(Scope1+2)

Calculation of decreased sales and damage to equipment andinventory during the period when production sites, which have aparticularly large impact, have ceased operations as the financial
impact in the event that a site is flooded, based on 2030 and 2050
assumptions* Aqueduct floods used to analyze flood depth amage rate due to flooding is set with reference to Manual for Economic*D
Evaluation of Flood Control Investment (Draft), etc. published by the Ministry ofLand, Infrastructure, Transport and Tourism.
 he amount of financial impact is calculated as the maximum risk where floods*Toccur at a site with a large impact and no countermeasures taken, based on
FY2021 site sales, equipment and inventory levels, etc.

Reduction of GHG
emissions0.46 billion yen/year* Carbon price (2030): $140/t-CO2 (Ref: IEA WEO2022 NZE)

Opportunity

Risk

and feedstock to natural gas at the Toyama Plant, reducing theamount of dinitrogen monoxide (N2O) emissions generated fromthe reactor through optimizing production capacity of nitric acidin FY2017, as well as energy saving by replacing aging facilities
and improving the equipment capacities. In FY2021, GHG emissions increased from FY2020 due to increased production of ammonia-based products. Although, in FY2022, despite increased
GHG emissions due to nitric acid plant trouble, etc., GHG emissions decreased from FY2021 as a result of melamine production
shutdown, and boiler fuel conversion at the Onoda Plant.
The Companyʼs GHG emissions and energy consumption
have been subject to third-party verification since FY2018. Goingforward, we will continue to consider reducing GHG emissions
and strive to reduce our environmental impact as well as disclose highly reliable information.

We have identified mitigation of climate change as one of ourmateriality factors, and believes that reducing emissions at theCompany, which accounts for approximately 95% of Group-wide
GHG (Scope 1 and 2) emissions, is crucial for mitigating its climate change-related risks. For this reason, we set long-termtarget of “achieving carbon neutrality by 2050” and mid-termtarget of “reducing GHG emissions by at least 30% from FY2018
level by FY2027”, as target of reducing Nissan Chemical Corporationʼs GHG emissions (Scope1 + 2). These targets have positioned as non-financial targets in our long-term business plan
Atelier2050, and mid-term business plan Vista2027, and the progress is managed. In addition, the degree of progress for these
reduction targets is also reflected in the ESG-linked portion of
executive officersʼ performance-related remuneration.
We are steadily reducing GHG emissions by converting fuel*1 Amount of emissions (t-CO2e)/non-consolidated sales (million yen)
*2 Data of each category: https://www.nissanchem.co.jp/eng/csr_info/index/esg_data.html*3 Energy consumption/non-consolidated sales*4 FY2013 as a base of 100*5 Nissan Chemical Corporation and consolidated subsidiaries with manufacturing facilities. (Nihon Hiryo Co., Ltd., Nissan Chemical America Corporation, NCK Co., Ltd.)*6 Due to rounding, some figures for total of Scope 1+2 in the upper rows do not match.

Mitigation of Climate Change
Web https://www.nissanchem.co.jp/eng/csr_info/responsible_care/environment/reduction.html

Nissan Chemical Corporation

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Integrated Report 2023

Sustainability

Rising temperaturesand increase inabnormal weather● Increase in risk of impacts on plant operations,equipment, inventory, and supply chains due toflooding caused by heavy rains, floods, and sea
level rises, etc.

Responsible Care
As a company that handles chemical substances, Nissan Chemical Group has a great responsibility to society. In order tofulfill this responsibility, we engage in Responsible Care (RC) activities. RC activities aim to voluntarily ensure environment, health and safety throughout the entire process from development of chemicals to manufacturing, distribution, use,
final consumption, disposal and recycling. These activities also serve as a form of communication with society throughthe announcement of their results.

Volume of industrial waste generated*
50.0

Responsible Care Management

20.0

Mitigation of Climate Change and Environmental Conservation

Environment &Safety Committee(Report, annual plan development)

Changes in GHG emissions(1,000 tons-CO2e)

PLAN
Responsible Care Code
ACT
Corrective actions
Annual results
report0(1,000 tons)

Nissan Chemical actively works to protect the environment, including taking efforts to reduce greenhouse gas (GHG) emissions,and have been promoting initiatives to mitigate climate change
which include energy savings, fuel conversion, and dinitrogenmonoxide emissions reduction. With regard to reducing our GHG
emissions (Scope 1 and 2), we have set a FY2027 target of “reducing GHG emissions by at least 30% from FY2018 level” aiming forachievement of carbon neutrality in 2050.
In FY2022, although GHG emissions increased due to nitricacid plant trouble, etc., GHG emissions decreased from FY2021 asa result of melamine production shutdown and boiler fuel conversion at the Onoda Plant.

* International standard for environmental management system. All of our plants have acquired ISO 14001 third
party certification.

Environmental Protection /Safety and Disaster Prevention/
Occupational Safety and Health /Logistics Safety /Chemicals and Products Safety /Dialogue with Society

Implementationin accordancewith annual plan

400
300

DO

△30％
114
19

200
100

CHECK
Internal Audit

0

230

2018

100

90

91

18

25

219

203

216

2020

2021

2019

29

CarbonNeutrality

RC audits are activities for checking RC
activities at each plant, laboratory andaffiliate. They are carried out by Environment, Safety & Quality Assurance
Department in accordance with the RC
audit guidelines. In these audits, the auditors check whether RC activities, aswell as internal audits and patrols, are carried out appropriately
and the PDCA cycle is implemented steadily, and complianceabout environment, health and safety (EHS) at each site. Environment, Safety & Quality Assurance Department clarifies visible orpotential problems related to EHS and promotes improvements in
response after clarifying the problems, if any.
In FY2022, total of 27 RC audits were conducted for ourplants, research laboratories and affiliates.

25

38.0

38.2

39.6

2018

2019

2020

2021

2022

181

2022

(FY)

Recycled volume/Final disposal volume*■Recycled volume ■Final disposal volume

10.0
8.0
6.0
4.0

8.7

0.9

0

2018
(1,000 tons)

8.1

7.1

6.4

5.8

2.0

1.2

1.1

2019

Saitama Plant Bio-Garden*

1.2* A coined word combining biotope and garden.

2021

2020

5.7

2022

(FY)

pose of “creating spaces with biodiversity, mainly waterfrontand community-based forests that are suitable to inhabit forplants and animals, to provide places where employees of theplant and local residents can relax”. Since then, this Bio-Park
has been operated by Toyama Plant and in April 2023, the “Tulip
Viewing Mini Concert” was held at the Park to commemorate
the 15th anniversary of its opening. Approximately 100 people, including not only our employees but also local residents, retired
employees of the Nissan Chemical Toyama Plant, and their families, who cooperate with maintenance and management of thepark on a daily basis, visited the venue. Local brass bands also
performed and the concert was great success.

* Waste soil from plants was added to calculations from FY2021

FY2027 recycling rate target of “50%” by promoting recycling efforts at plants and refining the data at research laboratories. Going forward, we will continue to promote initiatives such as recycling.

254

Amount of plastic
waste

Recycling rate ofplastic waste

FY2021795t

44%FY2022830t

55%

Net Zero
2027 Target 2050 Target(FY)

Efforts to Reduce Industrial Waste

Responsible Care Management
Web https://www.nissanchem.co.jp/eng/csr_info/responsible_care/management.html

35.0

121

■Dinitrogen monoxide (N2O) ■CO2 emissions from non-energy use■CO2 emissions from energy use

RC Audits

34.0

10.0

Efforts for Reducing Greenhouse Gas (GHG) Emissions

We have been engaged in RC activities since 1992. To achieve our
RC mid-term plan (2022-2027), established in FY2022, we manage
targets and make continuous improvements through PDCA (Plan,
Do, Check, Act) in our RC management system based on ISO14001*
throughout the Company. In addition, we have established the Environment & Safety Committee, which is chaired by the officer responsible for the Environment, Safety & Quality Assurance Department, as the organization in charge of promoting RC activities,
and hold its annual meeting. The contents of the discussion, including targets for the next fiscal year, are reported to the management meeting. After approved at the management meeting,the contents are resolved at the Board of Directors.

30.0

Sustainability

System40.0

Through our RC activities, we further promote the 3Rs (Reduce,
Reuse, Recycle) and strive to reduce industrial waste emissions,while at the same time thoroughly implementing control measures to ensure the proper disposal of waste. In FY2022, the volume of industrial waste generated and the recycled volume increased slightly compared to FY2021, and the final disposal
volume increased significantly. This is because the waste soil generated from construction work at plants was disposed as industrial waste.
In line with the enforcement of the Act on Promotion of Resource Circulation for Plastics (enforcement date: April 1, 2022),
we have started counting the amount and recycling rate of plastic waste since FY2021. In FY2022, the amount of plastic waste increased slightly compared to FY2021. However, we achieved the

Biodiversity Conservation
Our corporate philosophy is “Contribute to the protection of the
global environment and the existence/development of humanity,
offering the value sought by society”. We at the Nissan ChemicalGroup engage in business activities that take into account biodiversity and help protect the global environment. We have set the“establish and operate Bio-Park at Nissan Chemicalʼs plants” as atarget for FY2027, and are promoting biodiversity initiatives. In
FY2022, a new Bio-Garden was completed at the Saitama Plant. It
is a garden that provides a habitat for living things in a form similar to the nature of a satoyama (woodland close to the living area).
We also established the “Nissan Bio-Park Nishi-Hongo” in2008 with the theme of returning to the lost nature, and the purTulip Viewing Mini Concert at Nissan Bio-Park Nishi-HongoWeb itigation of Climate ChangeMhttps://www.nissanchem.co.jp/eng/csr_info/responsible_care/environment/reduction.html
Reduction of Industrial Waste and Pollutant Emissions
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/environment/management.html
Water Resources Conservation
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/environment/effective.html
Biodiversity Conservation
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/conservation.html

Nissan Chemical Corporation

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Integrated Report 2023

Nissan Chemical Corporation

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Integrated Report 2023

Improvement of Products Quality

Responsible Care

Safety and Disaster Prevention

Our Quality Policy is “Providing products and services that satisfy customers”, and based on this policy, we set mid-term
quality targets and work on quality activities.

Lost-time injury frequency rate*
1.48
1.5
1.2

1.11

0.88 0.85 0.82

0.9

0.81

Nissan Chemical
Chemical industry

0.90 0.94 0.93

0.88

1.10

0.37

0.3

0.36 0.37 0.37

0.02011 12130.37 0.37
0.00

0.00
14

15

16

17

18

19

20

21 2022 (Year)* Number of deaths and injuries due to occupational accidents per million actual working hours

Web

Promotion of Safety and Disaster Prevention, and Occupational Safety and
Health
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/safety.html
Management of Chemical Substances
https://www.nissanchem.co.jp/eng/csr_info/responsible_care/chemical.html

Management of Chemical Substances andProducts Safety
Risk Assessment in Products Lifecycle
We conduct a risk assessment (prior assessment) at each stepin handling chemical products, such as R&D, manufacture, sales
and revision. The risk assessment is performed based on legal
and regulatory information, safety data evaluated by internal orexternal laboratories or obtained from SDS (Safety Data Sheet)for raw materials and literature, and data on physicochemical
properties and work environment conditions. Based on the results of risk assessment, we take appropriate measures; i.e., legal and regulatory compliance, improving facilities to reduce
worker exposure at manufacturing sites, improvement of operation procedures, clarification and documentation of the procedures, and the training, etc. Moreover, these results are reported to all the relevant people in the Company.
In addition, we also participate in Long-range Research Initiative, an international initiative promoted by Japan Chemical
Industry Association (JCIA) that seeks to provide long-term support for research on the impact of chemicals on human healthand the environment. The activities we engage in aim to advanceresearch on the assessment of risks to human health and theenvironment.

Disaster drills (Toyama Plant)

Promotion of Occupational Safety and HealthThrough our RC management system, we prevent occupational
accidents, promote the good health of staff, and build a comfortable workplace environment in our efforts to improve the levelof safety and health at each business site. In addition, we carryout various drills and training sessions annually with the aim of
ensuring safety, achieving stable operations, and improving ourprocess safety capability to make us ready to respond to emergencies or accidents in a reliable manner.
In 2022, there were 3 accidents requiring staff time off fromwork, and 4 accidents not requiring staff time off from work
were occurred. We will continue aiming to achieve zero accident
by promoting risk assessment, prior-work risk predictions, risk
predictions training, HHK*1, 5S*2, and appropriate wearing of protective equipment and by raising awareness of safety throughthe safety meeting and the occupational safety newspapers.

Management of reagentsand synthetic compounds

Disposal

Products LifecycleUse*1 HHK stands for Hiyari-Hatto (near miss incident) and Kigakari (alarming). It means the discovery of nearmiss
incidents that are not linked directly to serious injuries or accidents but could have resulted in such injuries
or accidents.

External communication*2 5S stands for Seiri, Seiton, Seisou, Seiketsu, Shitsuke. These words mean “Sort” “Set” “Shine” “Standardize”“Sustain” respectively

Response to revision of laws and regulations
Laws and regulations revision information service●

Manufacture
Sales

Prevention of Quality Fraud and Data Tampering
In FY2020, we established and began implementing the guidelines aimed to prevent fraud and tampering regarding quality
control. In FY2022, we confirmed the conformity of the contents
of notifications from authorities such as authorization documents, customer requests, and manufacturing records. No fraud
and inconsistency were found as a result.

Indicators

Fostering Quality Culture

Since the number of complaints increased in FY2020, we conducted improvement activities with narrowed down priorities,
resulting in a slight decrease in the number of complaints since
FY2021. The percentage of complaints attributable to contract
logistics suppliers, such as packaging and delivery, remains
high.The number of serious complaints was in a declining trendwith 3 cases in FY2020, 2 cases in FY2021, and 1 case in FY2022.
We aim to achieve zero cases in FY2023.

In 2021, we established the Quality Behavior Model aiming to enhance the quality of our employeesʼ behavior, and disseminatedit as our top message.
In FY2022, we conducted in-house training on “Non-conformity on Quality” for whole company, and a training on “Change
control” with the aim of reducing quality risks due to change forour all business departments and plants. We will continue to develop company-wide in-house training on quality compliance.

The number of complaint cases

25
20■FY2020■FY2021■FY2022

Logistics and Supplier Management
We aim for total quality assurance, considering not only the quality of the manufactured products themselves, but also the packaging materials, transportation, attached documents, anddemonstration of function at the customers, as part of our products.
Since a high percentage of our abnormal quality attributableto packaging and transportation work process, we share our improvement targets with contract logistics suppliers and strive
for improvement. In addition, we have established internal
guidelines for suppliers including contract manufacturers, andconduct evaluations through quality audits to maintain appropriate management.

15
105Function or Foreign-substance
Ingredient

Packaging

Delivery* Complaints with identical details are counted as one caseWastemanagement
systemRaw materials and products
management system●

The quality assurance office at each plant, which is independent
from the manufacturing divisions, inspect the quality of eachproduct. In addition, the quality assurance division at the head
office, which oversees the company-wide quality assurance activities, conducts quality audits at each plant and affiliated company. To promote quality assurance activities on a company-wide basis, the Quality Assurance Committee meets regularly
to report the results of quality activities, the results of quality
audits and the status of improvements, and complaints and status of corrective actions. The committee discusses the nextyearʼs action policy of quality assurance, etc. The reports andcontents of the discussions are reported to the Board of Directors, and quality management systems are in place under management review.

0●

Development

our products and to take necessary corrective action. Customer
feedback is promptly communicated to each division to enable
response to customers and quality improvements.
Since April 2023, we have operated the new company-wide
electronic quality-information system that centrally manages
raw materials abnormalities, all internal quality problems andcorrective & preventive actions, supplier information and quality-related documents, as well as complaint-related information.

System(Cases)Reagents management system●Synthetic compounds database●Laws and regulations check system●

Research[Quality Targets] - “Elimination of Quality Risks” with thorough governance- “Logistics and Supplier Management” to maximize quality performance- “ Visualization of Quality Management and Quality Activities” that leads to enhancement of corporate value

0.73

0.81

0.76

0.6

1.07

1.16

Activities
Internal Network of Product-quality Intelligence
We have established an internal network to promptly collect andevaluate customer feedback (complaint information) regarding

Environmental data management system
Safety data sheet creation and management system●●

Improvement of Products Quality
Web https://www.nissanchem.co.jp/eng/csr_info/communication/customer.html

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Sustainability

We carry out risk assessment, process risk predictions, and facility risk predictions by prior assessment for manufacture withthe aim of ensuring safety, achieving stable operations, and improving our process safety capability. As a result, there were no
explosions or other accidents in FY2022, but a small fire brokeout at the Toyama Plant. The accident occurred due to the leakage of the heating medium used in manufacturing because of a
failure to close the valve. The temperature of the heating medium exceeded its ignition point because of added heat generated
by the oxidation of it, resulting in a small fire. Employees immediately put out the fire, and there was no human and property
damage, and no environmental and neighborhood impact. We
are taking thorough measures to prevent such a small fire fromhappening again, and deploying measures to all plants and laboratories. Our plants, laboratories, and affiliates carry out various
drills and training sessions such as earthquake fire prevention
drill every year, and are designed to make us ready to respondto emergencies or accidents in a speedy and reliable manner.

Compliance
Since our Group regards compliance with laws and social norms as a condition for the survival and development of thecompany, our course of action stipulates that we need to conduct “sensible business activities” and conduct ourselves as“good corporate citizens and decent members of society”. In response, we have recognized that compliance means complying with laws and social norms and established a compliance basic policy, in addition, we have been promoting compliance activities such as training sessions on corporate ethics for all employees.

Activities
a system that allows us to provide peace of mind by clearly defining in our rules the prohibition of interference with investigations, finding informants, and harassment.

Top Message Transmission
Every year, top message is transmitted to all employees in orderto clearly convey the Groupʼs stance for compliance.

Compliance Basic Policy

We hold training sessions on corporate ethics for officers andemployees, including new employee, working to ensure thateach and every one of us looks at compliance and actively promotes it.
In addition, regarding various laws and regulations, we regularly hold training on important business themes such as antitrust laws, insider trading regulations, and regulations on the“Combating Bribery of Foreign Public Officials”. We also conduct training with an emphasis on practicality, such as systematically holding in-house seminars themed on familiar legal matters, lectured by internal instructors.
Various trainings are provided to officers and employees ofour company as well as those of affiliated companies as efforts
to improve the knowledge of the entire Group.

Twice a year, the entire Group, including each division/department, plant/laboratory, and affiliate, checks the status of compliance, and in case of a risk of compliance violation or potential
compliance violation, the Risk Management & Compliance Officereceives reports including the response status. The content isreported to management and shared within the Group throughthe Risk Management & Compliance Committee to help prevent
recurrence.

1. W
 e consider compliance to be an important management issue and ensure thoroughcompliance in every aspect of its business activities, thereby establishing corporate ethics.
2. A ll officers and employees of Nissan Chemical Group shall be sufficiently aware of compliance and prevent the occurrence of a compliance violation.
3. In the event that a compliance violation has occurred or is likely to occur, we take aprompt and appropriate response.

Consultation Hotline

SystemIn our Group, the Risk Management & Compliance Committee,
which is held twice a year, has been established as an organization to enhance the effectiveness of risk management, and tomaintain and promote compliance. The committee is chaired by
the Chief Risk Management Officer (CRO), who is appointed at theBoard of Directors, and is composed of the Risk & ComplianceManagers of each division/department, plant/laboratory, and domestic consolidated subsidiary appointed by the CRO. The important matters and countermeasure plans, etc. related to compliance are approved at the Board of Directors after discussion at
the committee.
The Risk Management & Compliance Office under the Corporate Planning Department has been established as a specializedorganization to promote continuous improvement in all of ourgroupʼs compliance activities. In addition to providing educationand guidance on risk management and compliance, the Risk
Management & Compliance Office receives reports on the statusof compliance with laws and regulations and measures related
to compliance, etc. in each department on a regular basis from
Risk & Compliance Managers, and when necessary, supports
improvement, and shares information within our group.
Furthermore, we have established a system to prevent compliance violation or resolve the problem early on, including theConsultation Hotline as an internal reporting system based on
the Whistleblower Protection Act.

●Number of compliance violations
Indicator
Consultation Hotline Reports
Legal actions received for anti-monopoly/
anticompetitive practices (under investigation)

Scope

Unit

2019

2020

2021

2022

Consolidated*

Cases

2

2

1

8

Consolidated*

Cases

0 (0)

0 (0)

0 (0)

0 (0)

Fines charged and settlement fees foranti-monopoly/anticompetitive practices

Consolidated*

1,000 yen

0

0

0

0

Confirmed corruption incident (underinvestigation)

Consolidated*

Cases

0 (0)

0 (0)

0 (0)

0 (0)

Fines charged and settlement fees for corruption

Consolidated*

1,000 yen

0

0

0

0

Other incidents related to compliance(excluding environmental)

Consolidated*

Cases

0

0

0

0

Fines charged and settlement fees for othercompliance related incidents(excluding environmental)

Consolidated*

1,000 yen

0

0

0

0

* Includes domestic unconsolidated group companies

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We have set up a Consultation Hotline as an internal reporting
helpdesk to prevent compliance violations or resolve problems
early on. When an employee discovers a compliance violation or
potential compliance violation, the employee shall address the
problem in normal operation in principle, through measures that
include reporting the matter to their superior. However, if theemployee thinks it would be difficult to address the problem
promptly and effectively, they can use the Consultation Hotline.
The contact point for reporting shall be the Risk Management & Compliance Office, outside attorneys, or outside Audit &Supervisory Board members, and the means for reporting may
be selected from e-mail, mail, or telephone. Upon receipt of a report, the contents are reported to the Audit & Supervisory Board
members. The Board of Directors periodically receives reports
from the Risk Management & Compliance Office on the status of
the operation of the internal reporting system and supervises it.
While accepting anonymous consultations, we have established◎ Refer to the list on P79 for information on training in FY2022

Compliance Manual
The Compliance Manual sets forth rules so that executives andemployees, etc. (regular employees, contract employees, parttime workers, temporary workers and dispatched workers) of
the Nissan Chemical Group comply with laws and regulations,company rules, social norms, and ensure compliance. It is regularly reviewed depending on the situation, such as the enforcement and revision of laws and regulations. In addition, by including information about the Consultation Hotline system anddetails about its features in the Compliance Manual, we are raising awareness about our internal reporting system.

Compliance Manual Rules
As a corporate citizen

As a manufacturer

As a stakeholder of the Company

 omply with the laws/regulations of the industry●C nsure the safety of products●E rohibit conflict of interest●P● Restrict contributions and political donations

 rotect the environment●P● Terminate any relationships with antisocial forces● I mplement safety and disaster● Comply with antitrust laws
 onduct fair transactions with suppliers and●Ccomply with the “Act against Delay in Payment of
Subcontract Proceeds, Etc. to Subcontractors”● Prevent unfair competition
 omply with laws and regulations related to●Csecurity trade control
 omply with laws and regulations related to●Cimport/export● Prohibit excessive entertainment and gifts● Prohibit bribery of foreign officials, etc.
● Implement appropriate marketing and advertising● I mplement appropriate tax payment based on the
tax systems in each country and international tax
standards

prevention measuresAs a public corporation
 isclose management information●D onduct appropriate accounting●C

processing

As a member of the workplace omply with work regulations●C espect human rights; prohibit●R

discrimination
 rohibit sexual harassment●P rotect privacy●P nsure the health and safety of the●Eworkplace rohibit political and religious●P
activities

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 se corporate assets appropriately●U rohibit insider trading●P

As a person who handles
work-related information
 anage confidential corporate●M

information appropriately

 se information systems●Uappropriately

 anage personal information●M

appropriately

 rotect intellectual property rights●P

Sustainability

Compliance Training

Compliance Status ReportingRisk Management

Compliance
Anti-corruption Initiatives

Risk Management Basic Policy
1. W
 e place top priority on the safety of the lives of officers and employees of the Nissan
Chemical Group.
2. W
 e consider risk management as an important management issue, and engage in the activities from a company-wide perspective.
3. A
 ll officers and employees of the Group shall be sufficiently aware of risk management,
strive to improve their abilities, and endeavor to prevent the occurrence of loss risk.
4. We promptly share the information on risk throughout the Group.
5. W
 e make efforts to respond promptly and accurately to the occurrence of loss risk and tominimize losses.

Nissan Chemical Group Anti-Corruption Policy
1. Definitions“Corruption” means the abuse of entrusted official authority for personal or company gain, including bribery.
“Bribery” means that, when company conducts its businesses,- any of its officers or employees provides improper benefits to a third party for the purpose of inducing a third party to conduct fraudulent or illegal acts, or upon request from a third party, or- any of its officers or employees demands or receives improper benefits from a third party.
2. Commitment to Anti-Corruption
The Nissan Chemical Group has zero tolerance for corruption of any kind.
It shall not engage in any form of corruption relating to public officials, governmental agencies and any other clients (“Business
Partners”).
It shall also continuously ask the Business Partners not to engage in any corruption.
3. Compliance with respect to Anti-Corruption
The Nissan Chemical Group shall comply with and require the Business Partners to comply with domestic and internationallaws and regulations concerning the prohibition of bribery and corruption, such as the Unfair Competition Prevention Act, theU.S. Foreign Corrupt Practices Act and the Anti-Unfair Competition Law of the Peopleʼs Republic of China (commercial bribery
rules). It shall also keep and maintain accurate financial records relating to business transactions involving itself.
4. Remediation
In the event that the Nissan Chemical Group violates this Policy in the course of its business activities, it shall make efforts toremedy and correct the said violation through appropriate means and fully cooperate with investigations by the relevant authorities.
Web

Compliancehttps://www.nissanchem.co.jp/eng/profile/compliance.html
Promotion of Fair-Tradinghttps://www.nissanchem.co.jp/eng/csr_info/communication/employee/acp.html●Measures for promoting compliance (FY2022)
General ComplianceDirector and management level compliance training, newly-appointed managers compliancetraining, new employee training

Anti-monopoly Act and Act
against Delay in Payment of
Subcontract Proceeds, Etc. to
Subcontractors

Training related to the Anti-monopoly Act and Act against Delay in Payment of Subcontract
Proceeds, Etc. to Subcontractors; Internal audit related to the Act against Delay in Payment of
Subcontract Proceeds, Etc. to Subcontractors

Information Management

Information management training; Internal audit related to information management and My
Number Act related management

Insider Trading Regulation

SystemThe Risk Management & Compliance Office under the Corporate
Planning Department has been established as a specialized organization to promote continuous improvement in all of our risk
management activities.
In addition, the Risk Management & Compliance Committee,
which is held twice a year, has been established as an organization to enhance the effectiveness of risk management, and tomaintain and promote compliance. The committee is chaired by
the Chief Risk Management Officer (CRO), who is appointed at
the Board of Directors, and is composed of the Risk & Compliance Managers of each division/department, plant/laboratory,
and domestic consolidated subsidiary appointed by the CRO.
The Risk & Compliance Managers periodically conduct risk
identification and assessment, formulate countermeasure plans,conduct self-assessment for status of implementation of thecountermeasure plan and subject, formulate improvement plan,and regularly perform education and training at each division/

Security Export Control

Foreign Exchange Law related training

Consultation Hotline

Continuous dissemination of related information via the in-house newsletter and posters

Others

We clarified risks taking into account the business characteristics of each division and the surrounding businesses, including
global political, economic and social conditions. Subsequently,
risk assessment was conducted from the viewpoint of probability and impact on the business. By following the assessment, arisk map was created and Group Major Risks were identified.
The contents of major risks were deliberated at the Risk Management & Compliance committee and approved at the Board of
Directors.

Risk Management &Compliance Committee
CRO

Training for insider trading prevention
Training for the prevention of corruption and Combating Bribery of Foreign Public Officials

Overall Risk Assessment Process

Board of Directors

Risk & Compliance Manager
Anti-bribery

department, plant/laboratory and domestic consolidated subsidiary.
The important matters related to risk management andcountermeasure plans, etc. are approved at the Board of Directors after discussion at the committee.

Risk Management & Compliance Office,Corporate Planning Department(Secretariat office)(Each division/department,
plant/laboratory, anddomestic consolidated subsidiary)

ReportTraining for newly-appointed board members, training for board members, and contract-related
training

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Nissan Chemical Corporation

Sustainability Promotion Committee
Climate Change Committee
Environment & Safety Committee
Quality Assurance Committee

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Sustainability

ti-corruption advocated by the 10 principles of the United Nations
Global Compact (UNGC), in April 2018, we joined the UNGC, and in
2019, we formulated anti-corruption policies covering our company, affiliated companies and their subsidiaries in April 2018. Furthermore, we have established a system to prevent complianceviolation or resolve the problem early on, including the Consultation Hotline as an internal reporting system based on the Whistleblower Protection Act.

Our Group strives to ensure the transparency of transactions. In
our compliance manuals, we have specified matters to be observed: Comply with antitrust laws, Conduct fair transactions
with suppliers and comply with the “Act against Delay in Payment of Subcontract Proceeds, Etc. to Subcontractors”, Prevent
unfair competition, Prohibit excessive entertainment and gifts,
and Prohibit bribery of foreign officials, etc. With regard to an-

We are promoting risk management under the supervision of the Chief Risk Management Officer (CRO) with the aim ofcontributing to the achievement of our management strategic goals through recognizing the various risks involved in the
Nissan Chemical Group, preventing the occurrence of loss risk and minimizing the impact of their occurrence.

Risk Management●Overall Risk Assessment Process
Creation of risk list (tentative) andrisk-related questionnaire■ Create risk-related questionnaire based on the list
created

Identification of Group Major Risks

Implementation of survey

Aggregation/Analysis of survey results■ Conduct risk-related survey targeting Risk &Compliance Managers at each division/department,
plant/laboratory, domestic consolidated subsidiary,
and affiliate■ Aggregate the survey results and assess the Groupʼsrisks based on degree of impact and probability ofoccurrence

Creation of overall Group risk map■ Select Group Major Risks based on the risk map andcurrent conditions of the Group■ Create an overall Group risk map based on the
results of executive interviews■ Deliberate regarding Group Major Risks at the Risk
Management & Compliance Committee and approvethem at the Board of Directors

Summary of Risk

Countermeasures against Risk

Delay/Discontinuance of Product andTechnology Development Advent of
Innovative Technology

Risk of the failure of payback of invested capital to R&D
Risk of losing competitive power of our products

Failure of Business Portfolio Strategy

Risk of decline in business performance due to thefailure of the business portfolio strategy

Expanding/reviewing existing
businesses and products evaluating
periodically the degree ofachievements of strategies establishedin the mid-term business plan for new
businesses and products, and making
correction

Difficulty in Procurement of Specific
Raw Material

Risk of being unable to supply the product to customer
due to the discontinuance of specific raw material

Taking countermeasures to stabilize
procurements based on the nature of
the businesses

Fire/Explosion

Risk of suspension of business activities and the deathor injury of many employees, and being sued byneighborhood resident for the damage by fire/
explosion at plant

Establishing and operating a safetyand disaster prevention management
systemQuality Defect/Recall
Quality Falsification

Risk of reimbursement for large expenses bycustomers and discontinuance of transactions when aproduct liability-related accident or examination data
fraudulent occurs involving a product containing
materials provided by our company

Preventing troubles/misconducts
about quality through thoroughgovernanceInfringements of Intellectual Property
RightsRisk of being subjected to a large amount of damages
and product injunction claims from other company due
to infringement on other company’s patent

Making continuous improvements of“IP verification process” to reduce therisk of infringing on other companies’
patents, and promoting education withand prevailing the process

Occupational Accident

Risk of being subjected to a damage claim due toserious accidental deaths and injuries involving
employees

Establishing and promoting an
occupational safety management
systemViolation of Laws
Revision/Tightening of Laws/
Regulations
Revocation of Governmental
Approvals, Licenses, or Registrations/
Procedural Mistakes
Revocation/Lapse of License/
Qualification due to Incomplete
Renewal Procedures

Risk of administrative disposition or sanction, such assuspension of business or payment of surcharges, due
to violation of laws or regulations, and, along with this,risk of unwilling discontinuance of sales of product, or
unwilling change in business or capital investment
plan

Optimizing the operation ofmanagements of legal regulations andenhancing education to improve all
employees’ mind and knowledge

Torrential Rain/Flood
Earthquake/Tsunami
Typhoon/Storm Surge

Risk of damage of facilities, death or injury of many
employees, and suspension of business activities due
to a massive earthquake or a large typhoon

Reviewing and strengthening
countermeasures to enable earlyrecovery/business continuity

Risk of shut-down of operations for a long period oftime, and losing credibility of customer and society
because of leak of customer’s or the Company’s
confidential information by cyber attack

Considering and promoting
countermeasures from the prospectiveof “prevention”, “damage
minimization” and “education”

Executive interview■ Have an interview with each executive about theirviews on the Groupʼs risks from a management
perspective

Severe●Risk Map

Risk Category
Key Process Risk
Supportive Process Risk
External Environmental Risk
Management Process Risk

Group Major Risk
Fire/Explosion

Impact on the businessGroup Major Risk

Earthquake/
TsunamiQuality Defect/
RecallQuality
Falsification

Violation of Laws

Revocation of Governmental
Approvals, Licenses, orRegistrations/
Procedural Mistakes

Infringements ofIntellectual
Property Rights

Delay/Discontinuanceof Product andTechnology Development

Insufficient
Consideration for
CSR at Suppliers

Difficulty in
Procurement ofSpecific Raw Material

Damage or
Failure of Facility
and Machinery

Cyber Attack/Information Leakage

Revision/Tightening of Laws/
Regulations

Advent ofInnovative
Technology

Torrential Rain/
Flood

Failure ofBusiness Portfolio
Strategy

Insufficient Governance of Overseas
Subsidiaries and Offices

Risk of losing credibility due to detection of fraud atoverseas subsidiary and office caused by inadequate
control

Establishing rules and systems tostrengthen governance of thecorporate group

Insufficient Consideration for CSR at
Suppliers

Risk of deterioration of reputation and decline inbusiness performance due to environmental
destruction and violations of social ethics by suppliers
where we procure raw materials

Making CSR evaluations of andfeedbacks to suppliers and supporting
their improvements

Failure to Achieve the Target of
Reducing GHG Emissions

Risk of deterioration of reputation from ourstakeholders due to delay in efforts to reduce GHG
emissions

Establishing a company-wideorganization, promoting initiatives andmanaging the progress

Delay in Human Resource
Development (Cultivation of Diverse
Human Resources)

Risk of personnel shortage which occurs in eachdivision due to delay in the human resource
development

Enhancing programs to strengthen
recruiting and education for realizing
the ideal organizational state/humanresource image

Outbreak of infection/
Disease in a Group

Risk of being affected to the business continuity due toa large number of employees contracting the disease
and their inability to work

Continuously promoting
countermeasures to prevent being
infected and the spread of the infection

Outbreak ofinfection/
Disease in a Group

Labor Dispute/
StrikeDiscrimination/
Harassment in
the Workplace

Revocation/Lapse ofLicense/Qualification
due to Incomplete
Renewal Procedures

Bribery

Drain-out of
Human Resources

Typhoon/
Storm Surge

Failure to
Achieve theTarget of Reducing
GHG Emissions

Inadequate
Response to
Customer

Cyber Attack/
Information Leakage

Probability

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Occupational
Accident

Delay in
Human Resource
Development

Market Change

Insufficient Governanceof Overseas
Subsidiaries andOfficesHigh

Risk Management
Web https://www.nissanchem.co.jp/eng/csr_info/risk_management/policy.html

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Sustainability■ Create risk list (tentative) after identifying potential
risks faced by the Nissan Chemical Group●Group Major Risks and Countermeasures

Respect for Human Rights
In April 2019, the Nissan Chemical Group formulated the Nissan Chemical Group Human Rights Policy with advice of outside experts and approved at the Board of Directors, in accordance with the principles on fundamental rights listed in theInternational Bill of Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work and other international norms on human rights.

Activities
Revision of the Nissan Chemical Group Human Rights Policy
As social changes, stakeholdersʼ awareness of human rights is
becoming more diverse and complex. Therefore, based on theopinions of outside experts and ESG rating agencies, we revised
this policy in January 2023 in order to clarify the Groupʼs humanrights initiatives.

The Nissan Chemical Group supports international standards including the International Bill of Human Rights,
the ILO Declaration on Fundamental Principles andRights at Work, the United Nations Global Compact, theUnited Nations Guiding Principles on Business and Human Rights, and any other relevant standards for humanrights. This Nissan Chemical Group Human Rights Policy(this “Policy”) has been established to promote efforts
aimed at respecting human rights of all relevant stakeholders including employees.
This policy complements the Nissan ChemicalGroupʼs position with respect to compliance and respectfor human rights.

Educational Activity/Awareness-raising Activity
With the aim of education and awareness-raising about humanrights policy and promoting understanding for the purpose ofpracticing respect for human rights, we conducted awareness-raising activities. In FY2020, we conducted group-type training for the Directors and managers, and since FY2021, we haveconducted e-learning for all employees.

1. Scope of the application
This Policy shall apply to all officers and employees
working for the Nissan Chemical Group. And the Nissan Chemical Group will also continuously encouragebusiness partners and suppliers to support and respect this Policy.

Investigation of Human Rights Risk

Human Rights Risk Assessment■ Based on the UNEP FI (United Nations Environment Programme Finance Initiative)
Human Rights Guidance Tool and other guidances on various human rights, aswell as our existing internal information such as risk assessment, we investigatedhuman rights risks that could arise in our business activities, and identified which
stages of our value chain could occur and what impact they could have on anyone.

■ We assessed the “impacts on human rights” and “relations with the Group” foreach identified risk. “Impacts on human rights” was assessed based on “impact(severity)” and “probability” based on the UN Guiding Principles on Business andHuman Rights (UNGP). “Relations with the Group” was evaluated based on theconcept of the “Arc of Human Rights Priorities” of the Danish Institute for Human
Rights.

Identification of Risks to be PrioritizedDialogue with Stakeholders Including Experts■ According to the human rights risk map, we identified risks which we need toprioritize. The result was discussed by the CSR Committee (current Sustainability
Promotion Committee) and resolved at the Board of Directors.

■ Based on the risk assessment results, we had dialogues with stakeholders
including experts.
■ In keeping with the opinions and advices, we conducted a reassessment of humanrights risks and created the human rights risk map.

●Risks to be prioritized
Risks to beprioritized

Access to
RemedyGroup could be
affected

Major human rights risks

All Stakeholders

Lack of appropriate action whenhuman rights violations occur

Status of Efforts● E stablishment of whistle-blowing hotline (consultation hotline) foroverseas affiliates● R aising awareness of the whistle-blowing hotline on the intranet,compliance training, posters, etc.

[Human Rights Training]
For Directors and managers
● Importanceof human rights due diligence (conducted in
FY2020)e-learning training● NissanChemical Group Human Rights Policy● Elementaryknowledge of business and human rights

2. Respect for Human Rights
3. No Infringement of Human Rights● R egular health checkups● S tress check test

● P romotion of appropriate work hours

Employee
Health and
SafetyEmployees of
the Group

Danger, harsh working environment(related to overall occupational
health and safety, including mental
illness), fire and explosion● P rior risk assessment for R&D, manufacturing and sales● P rior assessment for manufacture● D rills for comprehensive disaster prevention/earthquake disasterprevention/initial fire fighting/communication notification● Trainings for harassment prevention/compliance/occupationalsafety and health/safety and disaster prevention● R aising awareness through the safety meeting, occupational safety

4. Employment and Labor“Prohibition of Forced Labor and Child Labor”, “Good Labor-Management Relations”, “Proper Working Hours”,“Fair and Equitable Remuneration”, “Elimination of Discrimination”, “Occupational Health and Safety”

newspapers and others

Human Rights Due Diligence Initiatives
Our group is working to establish a system of human rights due
diligence to identify and mitigate negative impacts on humanrights. With the cooperation of outside experts, we identified andassessed risks that could have a negative impact on humanrights through our business activities in major businesses andtheir value chains (risk mapping). We also exchanged opinionswith stakeholders on the results, reflected them in the results ofthe evaluation, and identified the risks which we need to prioritize for the Group.
For the priority risks identified, we survey the status of efforts to address each risk through an in-house questionnaire.
We plan to continue to strengthen measures with reflecting theopinions of stakeholders, and regularly review our human rights
risk assessment and priority risks.

5. Remediation
In the event that the Nissan Chemical Group causes
or contributes to an adverse impact on human rights
in the course of its business activities, it will provide
remedy and make efforts to correct such impact
through appropriate means.

System
Our group has established the Sustainability Promotion Committee, whose secretariat office is Sustainability Promotion Group
under Sustainability Promotion & IR Department, as an organization to promote the activities for human rights. The committee isheld twice a year. The long- and mid-term plan and annual plan
related to activities for human rights issues, evaluation of results of activities, and issues to be improved and examinedbased on the evaluation etc. are approved at the Board of Directors after discussion at the committee.

● R C audits● P rior risk assessment for R&D, manufacturing and sales

Community
Health and
SafetyLocal Communities

Damage to local communities andhealth due to fires, explosions,chemical leaks and pesticide
spraying● D rills for comprehensive disaster prevention/earthquake disasterprevention/initial fire fighting/communication notification● Training for compliance/occupational safety and health/safety anddisaster prevention● R C audits● P rior risk assessment for R&D, manufacturing and sales

Product
SafetyCustomers

Sales of unsafe products, including
misuse● S afety test of products● C ompliance with chemical substance● C linical trials (healthcare products)● D istribution of safety data sheet

Responsible
MarketingCustomers

Interference with consumer choice
due to lack of adequate productinformation, inadequate explanationof health risks, and inadequate
response to unexpected productrelated crises● P rior risk assessment for R&D, manufacturing and sales● S afety test of products● C ompliance with chemical substance● C linical trials (healthcare products)● D istribution of safety data sheet● A ppropriate application description

Health and
Safety in the
Supply Chain

Suppliers

Danger, harsh working environment(related to overall occupational
health and safety, including mental
illness), fire and explosion● A ssessment by questionnaire* on Sustainability for supplierChild Laborin the Supply
Chain

Suppliers

Labor of children under legal
working age/under 15 years old,placement in hazardous work, harshworking environment● A ssessment by questionnaire* on Sustainability for supplier

Conflict
Minerals

Local Communities

Procurement and use of raw materials
containing conflict minerals● R esponsible mineral procurement**Sustainability questionnaire and Responsible Mineral Procurement: https://www.nissanchem.co.jp/eng/csr_info/communication/supply.html

Nissan Chemical Corporation

83

Integrated Report 2023

Nissan Chemical Corporation

84

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Sustainability

Nissan Chemical Group Human Rights
Policy (Excerpt)●Human Rights Due Diligence Process

Financial Review
Long-term Financial Performance Trend(Billions of yen)

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

Sales

153.8

163.7

171.2

176.9

180.3

193.4

204.9

206.8

209.1

208.0

228.1

Operating Profit

19.5

22.2

25.3

28.6

31.4

35.0

37.1

38.6

42.5

51.0

52.3

Ordinary Income

20.5

23.7

26.4

29.5

31.7

36.2

39.1

40.0

43.9

53.7

55.8

Net Income

13.9

16.7

18.2

22.4

24.0

27.1

29.4

30.8

33.5

38.8

41.1

EBITDA

29.1

30.8

33.8

38.3

40.3

45.5

48.0

49.2

53.0

61.2

63.3

Operating Margin

12.7%

13.6%

14.8%

16.2%

17.4%

18.1%

18.1%

18.7%

20.3%

24.5%

22.9%

ROE

11.4%

12.7%

12.7%

14.6%

15.1%

16.1%

16.6%

16.9%

17.5%

19.2%

19.4%

EPS(¥/share)

83.74

102.11113.99143.37156.97180.30197.67210.09231.73271.88291.36

Dividend(¥/share)

26

30

36

44

52

68

82

90

104

122

164

Dividend Payout
Ratio

31.0%

29.4%

31.6%

30.7%

33.1%

37.7%

41.5%

42.8%

44.9%

44.9%

56.3%

Share Repurchase

5.0

5.0

6.0

9.0

9.0

9.0

9.0

10.0

10.0

12.0

9.0

Total Assets

199.2

208.0

223.9

228.2

231.7

246.0

247.0

249.5

265.5

279.7

298.7

Net Assets

126.7

137.8

151.3

156.9

163.7

176.4

182.1

185.5

200.6

208.0

221.5

Cash

31.9

30.8

31.3

35.3

35.7

37.7

36.2

30.6

32.4

34.7

29.6

Liabilities with
Interest

38.1

36.1

35.1

33.1

30.8

28.6
(Billionsof yen)

26.6

24.6

22.7

22.7

27.3

Equity Ratio

63.0%

65.7%

66.9%

68.1%

69.9%

71.0%

73.0%

73.7%

74.9%
204.9

Capex

7.9

8.8

9.8

10.2

14.3

13.7

Depreciation

9.5

8.5

8.5

9.7

8.9

10.5

R&D Expenses

13.7

14.2

15.0

15.8

16.1

17.2

R&D Expenses/
Sales

8.9%

8.7%

8.7%

8.9%

8.9%

8.9%

250
200

153.8

150
100
50
0

●Sales (over time)

2012

200

153.8

163.7

171.2

176.9

180.3

193.4

204.9

206.8

209.1

208.0

228.1

60

193.4

15.8

11.0

20.3

10.9

10.5

10.4

10.2

11.0

17.8

17.2

16.5

16.0

16.8

8.7%

8.3%

7.9%

7.7%

7.4%

2013

2014

2015

2016

2017

2018

2019

(Accounting policy has changed since FY2021)
2020
2021
2022 (FY)Operating profit
Ordinary income
Net income attributable to owners of parent

50
40

150

30
100

20

50

60

180.3
176.9
15.7

228.1
73.1%

(Billions of yen)

250

(Billions of yen)

171.2

73.6% 208.0
209.1●Key financial indicators (over time)(Billions of yen)

0

9.9
163.7

206.8

10

2012

2013

2014

2015

2016

Nissan Chemical Corporation
Operating profit
Ordinary income

2017

85

2018

2019

2020

2021

Integrated Report 2023

53.7

2022 (FY)

55.8

0

20.5
19.5
13.9
2012

26.4

23.7
22.2

25.3

16.7

18.2

2013

2014

29.5

31.7

28.6

31.4

22.4

24.0

2015

2016

Nissan Chemical Corporation

53.7

36.2
35.0
27.1

2017

86

39.1

40.0

37.1

38.6

29.4

30.8

2018

2019

Integrated Report 2023

43.9
42.5
33.5

2020

55.8

51.0

52.3

38.8

41.1

2021

2022

(FY)

Corporate Data

2012

Financial Review

Financial Review of the Year Ended March 31, 2023

Overview by segments
Financial Position

The Chemicals Segment

The Healthcare Segment

In the current fiscal year (April 1, 2022 to March 31, 2023), although consumer spending showed a recovery trend due to therelaxation of behavioral restrictions, the domestic economy did
not achieve a full-fledged recovery due to soaring raw fuel material prices, inflation, as well as continued weak exports against
the backdrop of sluggish overseas economies. Under these circumstances, in the Chemicals Segment, sales of both Basic
Chemicals and Fine Chemicals increased. In the Performance
Materials Segment, although sales of Display Materials declined,
Semiconductor Materials and Inorganic Materials performed
well. In the Agricultural Chemicals Segment, sales increased. In
the Healthcare Segment, sales of “Custom Chemicals” (custom
manufacturing and solution proposal business for pharmaceutical companies) increased.
As a result, sales, operating income and net income attributable to owners of parent fell short of the forecasts announced in
February. However, compared to the same period last year,
sales and each income increased. In addition, operating and ordinary income achieved record highs for the ninth consecutive
year, and net income attributable to owners of parent for thetenth consecutive year exceeding the earnings outlook announced in November.

● Position of Assets, Liabilities and Net Assets
Total assets as of March 31, 2023 were 298,715 million yen (an increase of 19,027 million yen from the previous year). It is mainly
due to the increase of merchandise and finished goods, raw materials and supplies, and construction in progress.
Total liabilities as of March 31, 2023 were 77,188 million yen(an increase of 5,510 million yen). It is mainly due to the increaseof short-term loans payable.
Net assets as of March 31, 2023 were 221,526 million yen (anincrease of 13,516 million yen).
As a result of these factors, equity ratio was 73.1% (a decreaseof 0.5% from March 31, 2022).

In Basic Chemicals, sales of urea and AdBlue®* (high-grade urea
solution) increased due to price revisions in response to higher
raw material and fuel. Sales of melamine (adhesives agent forparticle board) declined as a result of the termination of sales inthe third quarter under the structural reforms announced inAugust 2021.
In Fine Chemicals, sales of TEPIC® (powder coating agent
for paint, sealants, etc.) decreased, but environmental chemicals(sterilizing and disinfecting agents for pools and septic tanks,etc.) and FINEOXOCOL® (raw materials for cosmetics, etc.) increased.
As a result, sales of this segment were 39,034 million yen (anincrease of 1,385 million yen) and operating income was 1,379
million yen (a decrease of 2,408 million yen). Compared to theoutlook, sales were below 0.7 billion yen and operating income
was below 0.3 billion yen.

Sales of LIVALO® (anti-cholesterol drug) were at the same level
as the FY2021. In “Custom Chemicals”, sales increased due to
steady sales of generic active pharmaceutical ingredients.
As a result, sales of this segment were 6,673 million yen (anincrease of 83 million yen) and operating income was 2,990 million yen (an increase of 176 million yen). Compared to the outlook, sales were above 0.1 billion yen and operating income wasabove 0.1 billion yen.

● Position of Cash Flow
Deducting income taxes paid from income before income taxes
and non-controlling interests, depreciation and gain and loss inworking capital, net cash provided by operating activities for the
consolidated fiscal year ended March 31, 2023 was 35,226 million
yen (41,949 million yen for the previous year).
Due to investment on plant and equipment, etc. net cashused in investing activities for the consolidated fiscal year ended
March 31, 2023 was19,643 million yen (12,395 million yen for theprevious year).
Due to share repurchase, payment for dividends and the decrease in loans payable, net cash used in financing activities forthe consolidated fiscal year ended March 31, 2023 was 25,030
million yen (27,868 million yen for the previous year).
As a result of these factors, cash and cash equivalents forthe consolidated fiscal year ended March 31, 2023 were 29,647
million yen (34,658 million yen for the previous year), reflecting
exchange of 1,320 million yen. It decreased by 5,010 million yen
compared to the previous year.

Operating Results
As a result, the Companyʼs results for the current fiscal year
were net sales 228,065 million yen (an increase of 20,093 millionyen), operating income 52,283 million yen (an increase of 1,323
million yen) and ordinary income 55,793 million yen (an increaseof 2,103 million yen), and net income attributable to owners ofparent 41,087 million yen (an increase of 2,311 million yen).
ROE was 19.4% and we have achieved the Mid-Term Plan
“Vista2027” StageⅠ target (maintain above 18%) in the current
fiscal year.
Dividend was 164 yen and dividend payout ratio became
56.3%. We have repurchased share of 9.0 billion yen and total
payout ratio was 78.0%.

Trading
Sales of this segment were 99,066 million yen (an increase of
18,629 million yen) and operating income was 3,701 million yen(an increase of 797 million yen). Compared to the outlook, sales
were above 0.1 billion yen and operating income was above 0.4
billion yen.

* AdBlue® is a registered trademark of the Verband der Automobilindustrie (VDA).

OthersThe Performance Materials Segment

Sales of this segment were 26,384 million yen (an increase of
2,789 million yen) and operating income was 879 million yen (anincrease of 187 million yen).

In Display Materials, sales of SUNEVER® (LCD alignment coating) declined. In Semiconductor Materials, sales of ARC®* (anti-reflective coating for semiconductors) increased due to strong
sales through the first half of the year, however, customer utilization declined from the third quarter of the year. In Inorganic
Materials, sales of SNOWTEX® for polishing electronic materials
and hard coating and Oilfield materials (solvents to improve theefficiency of shale oil and gas extraction) were steady.
As a result, sales of this segment were 82,606 million yen (anincrease of 941 million yen) and operating income was 25,449
million yen (a decrease of 2,171 million yen). Compared to theoutlook, sales were a below 0.9 billion yen and operating income
was below 0.8 billion yen.
* ARC® is registered trademark of Brewer Science, Inc.

The Agricultural Chemicals Segment
Sales of Fluralaner (active ingredients for veterinary pharmaceuticals) increased due to the completion of customer inventory adjustments in the previous fiscal year. In Japanese domestic
market, sales of ROUNDUP® (non-selective foliar application
herbicide), ALTAIR® (paddy rice herbicide) and GRACIA® (insecticide) were firm. In the overseas market, sales increased significantly due to strong sales of LEIMAY® (fungicide), GRACIA® and“TARGA” (herbicide).
As a result, sales of this segment were 81,584 million yen (anincrease of 15,765 million yen) and operating income was 23,130
million yen (an increase of 5,002 million yen). Compared to theoutlook, sales were above 0.2 billion yen and operating income
was below 0.4 billion yen.

Nissan Chemical Corporation

87

Integrated Report 2023

Nissan Chemical Corporation

88

Integrated Report 2023

Corporate Data

Overview

Financial Review

Consolidated Balance Sheets [1] (For FY2022 and FY2021)

Consolidated Balance Sheets [2] (For FY2022 and FY2021)(Millions of yen)

◎Assets

FY2022(Thousands of U.S. dollars)

FY2021(Millions of yen)

◎Liabilities

FY2022(Thousands of U.S. dollars)

FY2022

FY2021

FY2022Current liabilities

Current assets

29,64734,658222,008

Notes and accounts payable - trade

19,942

19,043

149,334

82,67079,979619,065

Short-term loans payable

25,327

20,981

189,659

Merchandise and finished goods

46,95037,664

351,580

Current portion of long-term loans payable

624

552

4,673

18

15

135

Income taxes payable

7,879

8,710

59,001

Raw materials and supplies

17,703

14,496

132,567

Provision for bonuses

2,413

2,285

18,069Accounts receivable - other

2,113

2,824

15,823

Provision for business structure improvement

418

-

3,130

Work in process

Short-term loans receivable

3,088

1,541

23,124Other

15,556

14,398116,489

Other

7,305

4,140

54,703

Total current liabilities

72,161

65,971

540,370

Allowance for doubtful accounts

(44)

(41)

(329)

Non-current liabilities

189,454

175,279

1,418,706

Long-term loans payable

1,338

1,182

10,019Non-current assets

Deferred tax liabilities

98

69

734

Property, plant and equipment

Provision for business structure improvement

-

698

-

Total current assets

Buildings and structures

72,52069,443543,058

Provision for loss on business of subsidiaries and affiliates

626

626

4,688

Accumulated depreciation and impairment loss

(46,567)(45,158)(348,712)

Provision for share awards for directors (and other officers)

256

200

1,917

Buildings and structures, net

25,952

24,284

194,339

Net defined benefit liability

377

290

2,823

Machinery, equipment and vehicles

151,653

145,129

1,135,637

Other

2,331

2,638

17,455

Accumulated depreciation and impairment loss

(136,861)(132,567)(1,024,869)

Total non-current liabilities

5,027

5,706

37,644

Total liabilities

77,18871,678578,014

Machinery, equipment and vehicles, net

14,792

12,561

110,768

Tools, furniture and fixtures

42,153

41,345

315,658

Accumulated depreciation and impairment loss

(38,379)(37,384)(287,397)

Tools, furniture and fixtures, net

3,774

3,960

28,261

Land

8,817

8,809

66,025

Leased assets

149

-

1,116

Accumulated depreciation and impairment loss

(10)

-

(75)

Leased assets (Net)

139

-

1,041

Shareholdersʼ equity

Construction in progress

11,176

3,561

83,690484,147

Total property, plant and equipment

64,65353,177

Intangible assets
Software

1,722

1,736

(Millions of yen)

◎Net assets(Thousands of U.S. dollars)

FY2022

FY2021

FY2022

Capital stock

18,942

18,942

141,845

Capital surplus

13,613

13,613

101,939

Retained earnings

182,400

172,393

1,365,883

12,895

Treasury shares(6,111)(8,261)(45,762)

208,844

196,688

1,563,906

Other

9,813

10,04473,484

Total shareholders’ equity

Total intangible assets

11,535

11,78086,379

Accumulated other comprehensive income

Investments and other assets

Valuation difference on available-for-sale securities

7,678

8,304

57,496

Investment securities

1,735

898

12,992Long-term loans receivable

27,32230,217

204,598

Foreign currency translation adjustment

0

3,323

0

Remeasurements of defined benefit plans

159

21

1,191

9,574

9,223

71,694

3,107

2,097

23,266

531

918

3,976

Total accumulated other comprehensive income

Net defined benefit asset

2,140

1,844

16,025

Non-controlling interests

Other

3,186

3,256

23,858

Total net assets

221,526

208,009

1,658,874

Total liabilities and net assets

298,715

279,6872,236,895

Deferred tax assets

Allowance for doubtful accounts

(110)

(110)

(824)

Total investments and other assets

33,07139,450247,649

Total non-current assets

109,260

104,408

818,182

Total assets

298,715

279,6872,236,895

Nissan Chemical Corporation

89

Integrated Report 2023

(Note 1) This is an English translation of the consolidated financial statements of the Japanese annual securities report.
(Note 2) The consolidated financial statements are expressed in Japanese yen as of and for the year ended March 31, 2023 after being converted from the currency of the country in which the Company operates. The translation of Japanese
yen amounts to United States dollar amounts is included solely for the convenience of the readers outside Japan, and has been made at the rate of ￥133.54 to US $1, which is the approximate closing exchange rate reported by the
Tokyo Foreign Exchange Market on March 31, 2023. This translation should not be construed to indicate that the Japanese yen amounts shown can be converted to United States dollars at the above rate.

Nissan Chemical Corporation

90

Integrated Report 2023

Corporate Data

Cash and deposits
Notes and accounts receivable - trade, and contract assets

Financial Review

Consolidated Statements of Income and Consolidated Statements of Comprehensive Income (For FY2022 and FY2021)(Millions of yen)◎Consolidated Statements of Income(Thousands of U.S. dollars)

FY2022

FY2021

FY2022228,065
121,262
106,80354,51952,283207,972
106,883
101,089
50,12950,9591,707,840
908,058
799,783
408,260
391,516

203
1,323
1,485
1,296
694
5,004

49
768
950
1,134
918
3,821

1,520
9,907
11,1209,705
5,197
37,472

252
817
5
198
220
1,493
55,793

73
682
116
108
109
1,090
53,690

1,887
6,118
37
1,483
1,647
11,180417,800

1,461
1,461

3,366
3,366

10,941
10,941650
650
56,605
14,554633
15,18741,417329
41,087

477
1,792
626
2,896
54,16014,713
312
15,026
39,134357
38,776

4,867
4,867
423,880
108,986
4,740
113,726
310,1472,464
307,676(Millions of yen)◎C onsolidated Statements ofComprehensive Income
Net income
Other comprehensive income
Valuation difference on available-for-sale securities
Foreign currency translation adjustment
Remeasurements of defined benefit plans, net of tax
Share of other comprehensive income of entities
accounted for using equity method
Total other comprehensive income
Comprehensive income(Comprehensive income attributable to)
Owners of parent
Non-controlling interests

Nissan Chemical Corporation

91

Shareholders’ equity

Balance at beginning of current period
Changes of items during period
Dividends of surplus
Net income attributable to owners of parent
Change in scope of consolidation
Share repurchase
Disposal of treasury shares
Cancellation of treasury shares
Net changes of items other than shareholders’ equity
Total changes of items during period
Balance at end of current period

Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotal shareholders’equity¥18,942¥13,613¥172,393(¥8,261)¥196,688(11,097)(9,002)
55
11,097(20,084)
41,087101(9,002)55-

10,006¥182,400

2,150(¥6,111)

12,156¥208,844(20,084)
41,087
101¥18,942¥13,613(Millions of yen)

Accumulated other comprehensive income
Total accumulated
Foreign
Valuationother
difference on currency Remeasurements ofNoncomprehensive controlling
available-for- translation defined benefit
Total
incomeplans
sale securities adjustment
interests net assets
Balance at beginning of current period
Changes of items during period
Dividends of surplus
Net income attributable to owners of parent
Change in scope of consolidation
Share repurchase
Disposal of treasury shares
Cancellation of treasury shares
Net changes of items other than shareholders’ equity
Total changes of items during period
Balance at end of current period¥8,304(625)(625)¥7,678

¥898

837
837
¥1,735

¥21

138
138
¥159

(Thousands of U.S. dollars)

FY2022

FY2021

FY2022

41,417

39,134

310,147

(625)
760
138

(3,055)875(442)(4,680)
5,691
1,033

0

0

0

273
41,690(2,622)36,511

2,044
312,191

41,270420

36,095416

309,046
3,145

Integrated Report 2023

(Millions of yen)

Nissan Chemical Corporation

92

Integrated Report 2023

¥9,223350
350¥9,574¥2,097¥208,009

1,009
1,009
¥3,107(20,084)
41,087101(9,002)55
1,360
13,516¥221,526

Corporate Data

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Equity in earnings of affiliates
Foreign exchange gains
Other
Total non-operating income
Non-operating expenses
Interest expenses
Loss on disposal of non-current assets
Loss on sales of non-current assets
Plant stop losses
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on sales of investment securities
Total extraordinary income
Extraordinary losses
Loss on valuation of investment securities
Business restructuring expenses
Loss on business of subsidiaries and associates
Total extraordinary losses
Income before income taxes and non-controlling interests
Income taxes - current
Income taxes - deferred
Total income taxes
Net income
Net income attributable to non-controlling interests
Net income attributable to owners of parent

Consolidated Statements of Changes in Net Assets (For FY2022)

Financial Review

Consolidated Statements of Changes in Net Assets (For FY2021)

Consolidated Statements of Changes in Net Assets (For FY2022)(Millions of yen)(Thousands of U.S. dollars)

Shareholders’ equity
Capitalstock

CapitalsurplusRetainedearnings

TreasurysharesTotal shareholders’equity¥18,942¥13,613(¥7,340)¥18,942¥13,613¥161,708(1,548)¥160,160(¥7,340)¥186,923(1,548)¥185,375(15,468)
38,776(12,003)8
11,313¥196,688(15,468)
38,776¥18,9420(0)(11,074)(12,003)
8
11,074¥13,613

12,233¥172,393(920)(¥8,261)

Capitalstock
Balance at beginning of current period
Changes of items during period
Dividends of surplus
Net income attributable to owners of parent
Change in scope of consolidation
Share repurchase
Disposal of treasury shares
Cancellation of treasury shares
Net changes of items other than shareholders’ equity
Total changes of items during period
Balance at end of current period

CapitalsurplusRetainedearnings

TreasurysharesTotal shareholders’equity$141,845 $101,939$1,290,947($61,862)$1,472,877(83,099)(67,411)
412
83,099(150,397)
307,676756(67,411)412-

74,929$1,365,883

16,100($45,762)

91,029$1,563,906(150,397)
307,676756$141,845 $101,939(Thousands of U.S. dollars)(Millions of yen)

Accumulated other comprehensive income

Accumulated other comprehensive income
Total accumulated
Foreign
Valuationother
difference on currency Remeasurements
Nonavailable-for- translation of defined benefit comprehensive controlling
Total
incomeplans
sale securities adjustment
interests net assets
Balance at beginning of current period
Cumulative effects of changes in accounting policies
Restated balance
Changes of items during period
Dividends of surplus
Net income attributable to owners of parent
Share repurchase
Disposal of treasury shares
Cancellation of treasury shares
Net changes of items other than shareholders’ equity
Total changes of items during period
Balance at end of current period¥11,359¥81¥463¥11,904¥1,733¥11,359¥81¥463¥11,904¥1,733¥200,562(1,548)¥199,013

363
363¥2,097(15,468)
38,776(12,003)8(2,317)
8,995¥208,009(3,055)(3,055)¥8,304

Nissan Chemical Corporation

93

816
816
¥898

(442)
(442)
¥21

Integrated Report 2023

(2,680)(2,680)¥9,223

Total accumulated
Foreign
Valuationother
difference on currency Remeasurements
Nonavailable-for- translation of defined benefit comprehensive controlling
Total
incomeplans
sale securities adjustment
interests net assets
Balance at beginning of current period
Changes of items during period
Dividends of surplus
Net income attributable to owners of parent
Change in scope of consolidation
Share repurchase
Disposal of treasury shares
Cancellation of treasury shares
Net changes of items other than shareholders’ equity
Total changes of items during period
Balance at end of current period$62,184$6,725(4,680)6,268
6,268(4,680)$57,496 $12,992

Nissan Chemical Corporation

94

$157

1,033
1,033
$1,191

Integrated Report 2023

$69,065

2,621
2,621
$71,694$15,703$1,557,653

7,556
7,556
$23,266(150,397)
307,676756(67,411)412
10,184
101,213$1,658,874

Corporate Data

Balance at beginning of current period
Cumulative effects of changes in accounting policies
Restated balance
Changes of items during period
Dividends of surplus
Net income attributable to owners of parent
Share repurchase
Disposal of treasury shares
Cancellation of treasury shares
Net changes of items other than shareholders’ equity
Total changes of items during period
Balance at end of current period

Shareholders’ equity

Financial Review

Consolidated Statements of Changes in Net Assets (For FY2021)

Consolidated Statements of Cash Flows (For FY2022 and FY2021)(Thousands of U.S. dollars)(Millions of yen)

Shareholders’ equity
Capitalstock$154,742$111,208$154,742$111,208$154,7420(0)$111,208

Retainedearnings$1,321,036(12,646)$1,308,390
0(126,362)
316,772

Treasuryshares($59,962)

Total shareholders’equity(90,466)(98,056)
65
90,466$1,527,024(12,646)$1,514,378
0(126,362)
316,772(98,056)
65-

99,935$1,408,324(7,516)($67,486)

92,419$1,606,797($59,962)(Thousands of U.S. dollars)

Accumulated other comprehensive income
Total accumulated
Foreign
Valuationother
difference on currency Remeasurements
Nonavailable-for- translation of defined benefit comprehensive controlling
Total
incomeplans
sale securities adjustment
interests net assets
Balance at beginning of current period
Cumulative effects of changes in accounting policies
Restated balance
Changes of items during period
Dividends of surplus
Net income attributable to owners of parent
Share repurchase
Disposal of treasury shares
Cancellation of treasury shares
Net changes of items other than shareholders’ equity
Total changes of items during period
Balance at end of current period$92,795$92,795(24,957)(24,957)$67,838

$662
$662

6,666
6,666
$7,336$3,782$3,782(3,611)(3,611)$172$97,247$97,247(21,894)(21,894)$75,345$14,157 $1,638,445(12,646)$14,157 $1,625,790(126,362)
316,772(98,056)
65
2,965(18,928)
2,965
73,483$17,131 $1,699,281

FY2022

FY2021

FY2022

Cash flows from operating activities
Income before income taxes and non-controlling interests

56,60554,160423,880

Depreciation and amortization

10,878

10,11981,459Business restructuring expenses

-

1,792

-

Loss on business of subsidiaries and associates

-

626

-

Loss on valuation of investment securities

650

477

4,867

101

103

756

Interest and dividend income

Amortization of goodwill(1,527)(817)(11,435)

Loss (gain) on sales of investment securities(1,461)(3,366)(10,941)

Interest expenses

252

73

1,887

Loss (gain) on disposal of non-current assets

817

682

6,118

Decrease (increase) in notes and accounts receivable - trade(2,360)(5,704)(17,673)

Decrease (increase) in inventories(12,382)(6,230)(92,721)

Increase (decrease) in notes and accounts payable - trade
Other

217
(3,057)

2,523(1,163)

1,625(22,892)

Subtotal

48,73453,277364,939

Interest and dividend income received
Interest expenses paid
Income taxes paid

2,153
(251)
(15,408)

1,913
(73)
(13,168)

16,123(1,880)(115,381)

Net cash provided by (used in) operating activities

35,226

41,949263,786

Cash flows from investing activities
Purchase of investment securities

(506)

(190)

(3,789)Proceeds from sales of investment securities

2,499

4,248

18,713Purchase of shares of subsidiaries

(25)

(22)

(187)

(18,236)(11,253)(136,558)

(716)

(466)

(5,362)(1,221)(1,133)(9,143)-(3,322)-(1,505)(262)(11,270)

(282)
352

(188)
196

(2,112)
2,636

Net cash provided by (used in) investing activities(19,643)(12,395)(147,095)

Cash flows from financing activities
Net increase (decrease) in short-term loans payable

3,940

(345)

29,504

780

550

5,841

Purchase of property, plant and equipment
Payments for retirement of property, plant and equipment
Purchase of intangible assets
Payments of long-term loans receivable
Net decrease (increase) in short-term loans receivable
Purchase of long-term prepaid expenses
Other

Proceeds from long-term loans payable
Repayments of long-term loans payable
Cash dividends paid
Dividends paid to non-controlling interests

(552)

(552)

(4,134)(20,084)(15,468)(150,397)

(105)

(48)

(786)

Share repurchaseOther(9,002)(12,003)(67,411)

(6)

0

(45)

Net cash provided by (used in) financing activities(187,434)(25,030)(27,868)

Effect of exchange rate change on cash and cash equivalents

1,320

591

9,885

Net increase (decrease) in cash and cash equivalents(8,126)

2,277(60,851)

Cash and cash equivalents at beginning of period

34,65832,380259,533

Increase in cash and cash equivalents resulting from inclusion of subsidiaries in consolidation

3,116

-

23,334

Cash and cash equivalents at end of period

29,64734,658222,008(Note 1) This is an English translation of the consolidated financial statements of the Japanese annual securities report.
(Note 2) The consolidated financial statements are expressed in Japanese yen as of and for the year ended March 31, 2023 after being converted from the currency of the country in which the Company operates. The translation of Japanese
yen amounts to United States dollar amounts is included solely for the convenience of the readers outside Japan, and has been made at the rate of ¥133.54 to US $1, which is the approximate closing exchange rate reported by the
Tokyo Foreign Exchange Market on March 31, 2023. This translation should not be construed to indicate that the Japanese yen amounts shown can be converted to United States dollars at the above rate.

Nissan Chemical Corporation

95

Integrated Report 2023

Nissan Chemical Corporation

96

Integrated Report 2023

Corporate Data

Balance at beginning of current period
Cumulative effects of changes in accounting policies
Restated balance
Changes of items during period
Dividends of surplus
Net income attributable to owners of parent
Share repurchase
Disposal of treasury shares
Cancellation of treasury shares
Net changes of items other than shareholders’ equity
Total changes of items during period
Balance at end of current period

Capitalsurplus(Thousands of U.S. dollars)Corporate Information
Domestic Bases

List of Offices, Plants and Laboratories
Offices

PlantsHead OfficeToyama Plant
Nagoya Plant

Maruito Sapporo Building 1-1, Kita-Nijyo-Nishi, Chuo-ku, Sapporo,
Hokkaido 060-0002
Tel: +81-11-251-0264

Sendai Sales Office

Laboratories

Biological Research Laboratories

Located in Shiraoka City, Saitama
Prefecture, Biological Research Laboratories serves as a research center
for life sciences, including evaluation
research on the usefulness and safety of agricultural chemicals, pharmaceuticals, and medical materials.

Nagoya Sales Office

Minamimachi-dori MK Building 2-7-12, Ichibancho, Aoba-ku,
Sendai, Miyagi 980-0811
Tel: +81-22-266-4311

Nagoya KS Building 3-1-18, Taiko, Nakamura-ku, Nagoya,
Aichi 453-0801
Tel: +81-52-452-8623

Osaka Sales Office

Hiroshima Office

Kintetsu Dojima Building 2-2-2, Dojima,
Kita-ku, Osaka 530-0003
Tel: +81-6-6346-7200

Dai-ichi Uenoya Building 8-8, Kamihatchobori, Naka-ku,
Hiroshima 730-0012

Fukuoka Sales Office

Tokyo Tatemono Hakata Building 1-4-4,
Hakata Ekimae, Hakata-ku, Fukuoka 812-0011
Tel: +81-92-432-3421

PlantsOnoda Plant

This plant is located in Sanyo-Onoda
City, Yamaguchi. It is our base for the
production of fine organic synthetic
compounds, such as agrochemicals
and pharmaceuticals.

Sodegaura Plant

Sodegaura Plant Goi Works

11-1, Kitasode, Sodegaura, Chiba 299-0266
Tel: +81-438-63-2341

12-17, Goiminamikaigan, Ichihara, Chiba 290-0045
Tel: +81-436-22-2110

Saitama Plant

Chemical Research Laboratories

Located in Funabashi City, Chiba Prefecture, Chemical Research Laboratories is Nissan Chemicalʼs core R&D
site, and is responsible for our corporate research. In addition to R&D ofagricultural chemicals and pharmaceuticals that utilize the fine organic
synthesis technology, Chemical Research Laboratories performs research on companywide processes,
material analysis research, etc.

Saitama Plant

This plant is located in the northwest
area of Saitama. Here we manufacture agricultural formulations.

Toyama Plant

235-1, Aza Nishidai, Oaza Jimbohara-machi, Kamisato-machi,
Kodama-gun, Saitama 369-0305
Tel: +81-495-34-2810

635, Sasakura, Fuchu-machi, Toyama 939-2792
Tel: +81-76-433-9602

Nagoya Plant

Onoda Plant

7, Tsukiji-cho, Minato-ku, Nagoya, Aichi 455-0045
Tel: +81-52-661-1676

6903-1, Oaza Onoda, Sanyo-Onoda, Yamaguchi 756-0093
Tel: +81-836-83-2800

Laboratories
Chemical Research Laboratories

Materials Research Laboratories

10-1, Tsuboi-Nishi 2-chome, Funabashi, Chiba 274-8507
Tel: +81-47-465-1112

488-6, Suzumi-cho, Funabashi, Chiba 274-0052
Tel: +81-47-419-3810
11-1, Kitasode, Sodegaura, Chiba 299-0266
Tel: +81-438-64-2881
635, Sasakura, Fuchu-machi, Toyama 939-2792
Tel: +81-76-465-7133

Biological Research Laboratories

1470, Shiraoka, Shiraoka, Saitama 349-0294
Tel: +81-480-92-2513

Group Companies
Japan
Nissei Corporation

Materials ResearchLaboratories

Sodegaura Plant

These plants are located in the industrial area in Sodegaura and Ichihara
City, Chiba. These are our bases forthe production of performance materials.

Nissan Butsuryu Co., Ltd.

1-10-5, Nihonbashihon-cho, Chuo-ku, Tokyo 103-0023
Tel: +81-3-3241-2548■Sales of chemical products and insurance, and real estate business

1-10-5, Nihonbashihon-cho, Chuo-ku, Tokyo 103-0023
Tel: +81-3-5255-6901■Transportation

Nissan Green & Landscape Co., Ltd.

Creates highly unique new materials,
allowing us to respond quickly to increasingly sophisticated and diverse
market needs. At the same time, theLaboratories focuses their efforts on researching next-generation materials inan effort to create new markets.
Funabashi, Chiba

Nissan Engineering, Ltd.

PMO Ochanomizu 4-4-1, Kandasurugadai, Chiyoda-ku, Tokyo 101-0062
Tel: +81-3-3256-4031■Landscaping and civil engineering634-1, Sasakura, Fuchu-machi, Toyama 939-2753
Tel: +81-76-465-5711■Plant engineering services

NC Tokyo Bay Corporation

Nihon Hiryo Co., Ltd.

14, Kitasode, Sodegaura-shi, Chiba 299-0266
Tel: +81-438-62-0611■Manufacture of sulfuric acid559-3, Tozaki, Okanogo, Fujioka, Gumma 375-0011(Inside Nihon Hiryo Shinmachi Plant)
Tel: +81-274-42-1247■Manufacture and sales of fertilizers and agricultural materials

Sun Agro Co., Ltd.

Clariant Catalysts (Japan) K.K.

Nihonbashikoami-cho Square Bldg. 17-10,
Nihonbashikoami-cho, Chuo-ku, Tokyo 103-0016
TEL: +81-3-6311-4310■Manufacture and sales of fertilizers and agrochemicals

2-28-8, Honkomagome, Bunkyo-ku, Tokyo 113-0021
Tel: +81-3-5977-7300■Manufacture and sales of catalysts for petrochemical and petroleum products

NC Agro Hakodate Corporation

Toyama, Toyama

Nissan Chemical Corporation

97

Integrated Report 2023

Sodegaura, Chiba

Environmental Technical Laboratories, Ltd.

9-23, Kitahama-cho, Hakodate, Hokkaido 040-0078
Tel: +81-138-41-1251■Manufacture of agrochemicals
Nissan Chemical Corporation

2-11-17, Kohoku, Adachi-ku, Tokyo 123-0872
Tel: +81-3-3898-6643■Consultation of environmental conservation and environmental analysis services

98

Integrated Report 2023

Corporate Data

This plant faces the Port of Nagoya.
Here we manufacture sulfuric acidand high-grade urea solution, among
other products.

Sapporo Sales Office

5-1, Nihonbashi 2-Chome, Chuo-ku, Tokyo 103-6119
Tel: +81-3-4463-8111

This plant is located in the center of
Toyama Plain. Here we manufacture
various groups of products, such as
basic chemicals, environmental
chemicals, and performance materials.

Corporate Information

Overseas Bases (As of March 31, 2023)

Corporate Profile (As of March 31, 2023)

FranceIndia

America

Nissan Chemical Europe S.A.S.

Nissan Agro Tech India PVT. LTD.

Nissan Chemical America Corporation

Parc d’Affaires de Crécy -10A rue de la Voie
Lactée69370 Saint Didier au Mont d’Or, France
Tel: +33-4-37-64-40-20■Sales support and promotional services for
agrochemicals

10333 Richmond Avenue, Suite 1100,Houston, Texas
77042, U.S.A.
Tel: +1-713-532-4745
Manufacture and sales of inorganic materials

Nissan Bharat Rasayan PVT. LTD.
502-504, 5th Floor, Tower B, Spazedge
Commercial Complex, Sector-47, Sohna
Road,Gurgaon-122002, Haryana, India
Tel: +91-124-4214446■Manufacture and export of active ingredients ofagrochemicals

Nissan Chemical Corporation

Head Office

5-1, Nihonbashi 2-Chome, Chuo-ku, Tokyo 103-6119
TEL: +81-3-4463-8111

Founded1887

Capital Stock

18,942 million yen

Number of Employees

Consolidated: 2,965

Stock Listing

Tokyo Stock Exchange Prime Market

Transfer Agent

Sumitomo Mitsui Trust Bank, Limited 4-1 Marunouchi 1-chome, Chiyoda-ku,
Tokyo 100-8233

Corporate Data

■Sales of agrochemicals

502-504, 5th Floor, Tower B, Spazedge
Commercial Complex, Sector-47, Sohna
Road,Gurgaon-122002, Haryana, India
Tel: +91-124-4214446/47

Corporate Name

Share Information (As of March 31, 2023)
Total Number of Authorized Shares

360,000,000

Shares of Common Share Issued

141,300,000*

Shareholders

13,817*Includes 876,572 treasury shares

Major shareholders (Top ten companies)

Number of shares held (1,000 shares) Investment (%)

The Master Trust Bank of Japan, Ltd. (Trust Account)

35,56925.3

Custody Bank of Japan, Ltd. (Trust Account)

14,996

10.7

Custody Bank of Japan, Ltd. as Trustee for Mizuho Bank Retirement Benefit
Trust Account Re-entrusted by Mizuho Trust and Banking Co., Ltd.

5,767

4.1

China

BrazilThe Norinchukin Bank

4,800

3.4

Nissan Chemical Product (Shanghai) Co., Ltd.

Nissan Chemical Do Brasil

Nissan Chemical Corporation Customer Shareholders Association

3,671

2.6

STATE STREET BANK WEST CLIENT-TREATY 505234

2,200

1.6

Meiji Yasuda Life Insurance Company

1,861

1.3

JP Morgan Chase Bank 385781

1,756

1.3

Sumitomo Mitsui Trust Bank, Limited

1,600

1.1

Sompo Japan Insurance, Inc.

1,547

1.1

Rm.3210 Office Tower 1, Raffles City Changning, No.1133
Changning Road, Changning District, Shanghai
200051 PRC
Tel: +86-21-6236-8300

Avenida Gisele Constantino, 1850, Salas
1518 a 1520, Parque Bela Vista,
Votorantim, SP, 18110-650, Brasil
Tel: +55-15-3019-8772■Sales support and promotional services
for agrochemicals■Sales support and promotional services for agrochemicals

Nissan Chemical Materials Research (Suzhou) Co., Ltd.
Room101, NW-10, Nanopolis Suzhou 99 Jinji Lake Avenue,
Suzhou Industrial Park 215123, China
Tel: +86-512-62732080■R&D, sales support and promotional services for performancematerials

TaiwanNissan Chemical Taiwan Co., Ltd.

5F., No.67, Luke 2nd Rd., Luzhu Dist., Kaohsiung City
82151, Taiwan (R.O.C.)
Tel: +886-7-695-5252■R&D and sales support for display and semiconductor materials

South Korea
NCK Co., Ltd.

127, Chupalsandan-ro, Paengseong-eup,
Pyeongtaek-si, Gyeonggi-do, 17998, Korea
Tel: +82-31-691-7044■Manufacture and sales of display and(Note) Investment percentages are calculated excluding treasury shares

semiconductor materials

Financial
institutions

Securities
companies

Other domestic
companies

Overseas
investors

Individuals/
OthersTreasuryshares

51.0

3.8

9.1

24.8

10.7

0.6

Nissan Chemical Agro Korea Ltd.

Percentage of share held (%)■Sales of agrochemicals

Organization
Web https://www.nissanchem.co.jp/eng/profile/soshiki.html

Room 2001, 74, Sejong-daero, Jung-gu,Seoul
04526, Korea
Tel: +82-2-774-6470

Nissan Chemical Corporation

99

Integrated Report 2023

Nissan Chemical Corporation

100 Integrated Report 2023