TAIHEIYO CEMENT REPORT 2023

2023

TAIHEIYOCEMENTREPORT

Integrated Report— Protecting our lives and supporting society —BUNKYO GARDEN GATE TOWER,
1-1-1, Koishikawa, Bunkyo-ku, Tokyo 112-8503, Japan
https://www.taiheiyo-cement.co.jp/english

Contact Information
Sustainability Promotion Department

Tel. 03-5801-0335 Fax: 03-5801-0345
E-mail: webmaster@taiheiyo-cement.co.jp

Investor Relations and Communications Group,
General Affairs Department
Tel. 03-5801-0334 Fax: 03-5801-0344
E-mail: ir-com@taiheiyo-cement.co.jp

Contents
Taiheiyo Cement – Who We Are
An introduction to the Taiheiyo Cement Group, which
contributes to the building of safe and secure social
infrastructure through cement production, including theGroup's mission and domestic and global networks.

Drivers and Boosters of Value Creation
Mission of the Taiheiyo Cement Group ……………………………
Business Model …………………………………………………
The Social Value of Cement ………………………………………
Global Network of Taiheiyo Cement Group ………………………

2
4
6
8

Sustainability

An introduction to matters including our promotion ofsustainability management, environmental responsibility
and human capital.
Management

Fundamental Policies
for Promoting Sustainability Management …………………… 59

Management that aims for long-term improvement of corporate value

Top Commitment

The president is committed to fulfilling our mission while
addressing the transition to carbon neutrality, the mostimportant challenge for our survival

Message from the President …………………………………… 10

Medium- to Long-Term Vision, Value Creation Activities

Creating ValueAn explanation of Taiheiyo Cement's DNA, from its birth as a
cement manufacturer to the value creation process that continues
to support economic development and social infrastructure, as
well as the progress of the Medium-Term Management Plan.

Taiheiyo Cement's DNA ��������������� 16
Five Cultivated Strengths ��������������� 18
Materiality �������������������� 20
Value Creation Process ���������������� 24
Carbon Neutral Strategy 2050 ������������� 26
Strengthening Production Systems ����������� 28
Medium-Term Management Plan ����������� 30
Progress Summary of the 23 Medium-Term Management Plan  32
Direction of the Next Medium-Term Management Plan ��� 34
Financial Strategy - Message from the Officer in Charge ��� 36
DX Strategy �������������������� 40

Environment

Environmental Management ………………………………… 60
Mitigating Climate Change …………………………………… 62
Improving Resource Efficiency ………………………………… 64
Reducing Environmental Impact ……………………………… 66
Conserving and Restoring Biodiversity ………………………… 68
Appropriate Use of Water Resources ………………………… 70
Disclosure Regarding Recommendations of the TCFD ………… 71
Providing Environmentally Sound Products and Services ……… 72
External Economic Benefits …………………………………… 73

Business Strategies
The officers in charge of the Cement Business (Japan),
Cement Business (Overseas), Mineral Resources
Business, Environmental Business, Construction
Materials Business, Research and Development, andIntellectual Property will provide an overview of eachbusiness and their future strategies.

Scope and Boundaries of this Report

Reporting Period

FY2023(April 1, 2022 to March 31, 2023)
It is clearly stated where information about events that
occurred outside this period are included in the report.

Boundary of Reporting Organizations

The report covers Taiheiyo Cement Corporation(nonconsolidated) and includes our group companies.
“The company” refers to Taiheiyo Cement Corporation(nonconsolidated); when information pertains to oneof our group companies, the group company’s name is
explicitly stated.

Business at a Glance ���������������� 42
Cement Business (Japan) ��������������� 44
Cement Business (Overseas) ������������� 46
Mineral Resources Business �������������� 48
Environmental Business ��������������� 50
Construction Materials Business ������������ 52
Research and Development �������������� 54
Intellectual Property ���������������� 56• Boundary of Reporting Organizations by
Quantitative Data

Quantitative data are aggregated on a consolidated basis
and under the following categories.
Non-consolidated Taiheiyo Cement Corporation (non-consolidated)
GCCA The scope of data collected for reporting of
GCCA* KPIs.
The scope of ESG data is described on p. 118.

Disclaimer Regarding Forward-looking Statements

Plans and prospects included in this report are predictions
based on information available at the time of publication
and are subject to unpredictable risks and uncertainties.
Consequently, there are no explicit or implied guarantees
as to actual results, which may materially vary from the
projected figures or measures cited in this report.

Human Capital

Human Resources Strategy …………………………………… 78
Human Resource Development ……………………………… 80
Promoting Diversity and Inclusion …………………………… 81
Promoting Work-Life Management …………………………… 82
Health and Productivity Management Initiatives ……………… 83
Respect for Human Rights …………………………………… 84
Human Rights Due Diligence ………………………………… 85
Initiatives to Improve Engagement …………………………… 86
Discussion with the Independent Directors …………………… 87

Social and Relationship Capital

Value Chain Management …………………………………… 90
Stakeholder Engagement …………………………………… 94
Communities ………………………………………………… 96

Governance that Supports Value Creation and Strategy Execution

Group governanceAn introduction to the Group's governance structure
and our initiatives to strengthen it, as well asrecommendations from the independent directors.

Our Directors and Corporate Auditors …………………………… 98
Message from the Independent Directors …………………… 102
Corporate Governance ………………………………………… 106
Risk Management and Compliance …………………………… 114

Taiheiyo Cement by Numbers

Data
Strategy Implementation Status

Occupational Health and Safety..................... 74

An introduction to financial and non-financial
information as presented in numerical terms.

Editorial Policy

In the report we convey to our stakeholders how we
conduct activities to address social issues and sustainably
increase corporate value. We aim to deepen mutual
understanding through constructive dialog and further
evolve management while raising the level of disclosure.

ESG Data ……………………………………………………… 118
External Evaluation, Collaboration with Outside Organizations … 122
Financial and Non-financial Highlights ……………………… 124
11-Year Summary …………………………………………… 126
Financial Statements ………………………………………… 128
GCCA Key Performance Indicators …………………………… 130
GCCA Independent Assurance Report ………………………… 131
Glossary ……………………………………………………… 132
Company Information ………………………………………… 134
Stock Overview ……………………………………………… 136
The Wonders of Cement ……………………………………… 137

Guidelines Used for Reference• The International Integrated Reporting Framework (IIRC)• Guidance for Integrated Corporate Disclosure andCompany-Investor Dialogues for Collaborative Value
Creation (Ministry of Economy, Trade and Industry)• GRI Sustainability Reporting Standards (GRI Standards)
2016/2018• Environmental Reporting Guidelines 2018 Edition(Ministry of the Environment)• Environmental Accounting Guidelines 2005 Edition(Ministry of the Environment)• ISO30414

Publication Dates

November 2023
(Previous report: December 2022, next report: October
2024)* GCCA (Global Cement and Concrete Association)

1

Taiheiyo Cement – Who We Are
1881
Onoda Cement
Co., Ltd.

1883
Asano Cement
Co., Ltd.

We were the ﬁrst private company in Japanto produce cement.
It began with the productionof one tonne of cement and the mission to"build the nation using cement".

Mission of the Taiheiyo Cement GroupOur mission is to contribute to social infrastructure developmentby providing solutions that are environmentally efﬁcient,enhance our competitive position and bring value to our stakeholders.

1923
Chichibu Cement
Co., Ltd.

Corporate
Mission[Ideal Form]

1947

Our future visionand direction

Nihon Cement
Co., Ltd.

To fulﬁll our responsibility
to supply products needed by society
to "build the nation using cement"
To become an enterprise groupthat provides a sense of safety and security
to societies in the Paciﬁc Rim
by demonstrating the group’s overall capabilities.

Business Principles

Governing the Way the[Company
Conducts Business]

1994
Chichibu Onoda
Cement Corporation

1998
Primary crusher at Shaft 3 of Garo Quarry (Hokkaido)

Cement production begins with the mining and crushing of limestone.

2• We are committed to maximizing our corporate value by generating synergies among
Taiheiyo Cement Group companies.
• We aim to manage the environmental impact of our operations while supporting thedevelopment of a recycling-based society.
• We will act in an ethical manner and abide by the laws and regulations of those countries
in which we operate.
• We will openly communicate with our stakeholders and proactively report on ourbusiness activities in a transparent manner.
• We are committed to the ongoing development and application of innovative technologies in order to provide products and services that beneﬁt our customers and society.
• We are committed to maintaining an international outlook and conducting our businessin accordance with global standards.
• We will strive to anticipate the changing business environment to assess new opportunities for growth.
• We are committed to achieving our full potential through training and self-development.
• We are devoted to providing a safe and healthy working environment where our
employees are valued and the human rights of all individuals involved in our business
are respected.

3

Taiheiyo Cement – Who We Are
Business Model

The Taiheiyo Cement Group contributes
to building safe and secure social infrastructure.

• Supply critical materials for national resilience• Key player in the formation of a circular economy• Steady transition to carbon neutrality

Society
Kiln

Flow of raw materials, materials and products
Flow of waste and by-products

ia
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at
er

Raw material silo

Cement Business

Ready-mixed concrete
manufacturer
Ready-mixed
concrete manufacturer
Distribution terminal(service station)M
co atea n rien nd stru als
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In
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Steel, chemicals, paper

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Business
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um h,

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Concrete productmanufacturersC
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Construction
businesses

Material
manufacturers
Concrete productmanufacturers

Construction
companies

ExportConstruction Materials
Business

Industry sectors

Society4

Municipalities, local communities

5

Taiheiyo Cement – Who We Are
The Social Value of Cement

The Taiheiyo Cement Group will continue to fulfill its role as a supplier of critical materials for national resilienceand as a key player in the formation of a circular economy, while progressing with the steady transition to carbon
neutrality.

Cement protects against
tsunamis and high tides

Key player in the formationof a circular economy

Utilization of waste andby-products

Cement supports rebuilding andrestoration after a disaster
Cement effectively
uses by-products

Cement contributes todevelopments in sports and culture• Coal ash• Blast furnace slag
• Various industrial waste• Construction soil
• Municipal waste• Incineration residues• Household water andsewage sludge
etc.

Cement prevents
landslides

Cement facilitates convenient
travel and transportation

Cement makes
waste recyclable

Cement provides safe
and secure spaces

Uses in thedevelopment of social
infrastructure and theliving environment• Roads• Railways• Ports and harbors• Bridges• Tunnels• Housing • Schools• Hospitals• Commercial buildings• Dams• Levees• Seawalls• Underground facilities
and more

Steady Transition
to Carbon Neutrality
Cement plant
Supply of materials
and products• By truck• By rail• By seaetc.

Supply critical materials
for national resilience

67

Taiheiyo Cement – Who We Are
Global Network of Taiheiyo Cement GroupThe Taiheiyo Cement Group operates production and logistics sites in Japan and overseas, and establishes systems toensure stable supplies of cement and mineral products.
In addition, our cement production process deploys world-leading technologies for the use of alternative raw materials
and fuels to contribute to the formation of a circular economy and countermeasures to mitigate climate change.
CalPortland Company, Redding Plant(Redding, USA)

Taiheiyo Cement Group Profile

CalPortland Company, Mojave Plant(Mojave, USA)

CalPortland Company, Oro Grande Plant(Oro Grande, USA)

United States

Net sales

Consolidated: 809.54 billion yen
Non-consolidated: 309.4 billion yen
Employees
Consolidated:12,720
Non-consolidated:1,841 (not including seconded staff)
Subsidiaries	184 (including 111 consolidated subsidiaries
and 5 equity-method subsidiaries)
Affiliates
104 (including 38 equity-method affiliates)

TAIHEIYO CEMENT (CHINA) INVESTMENT

United States

SeattlePortlandRedding

DalianStockton

TAIHEIYO CEMENT HEADQUARTERS

Holding company
Cement plant
Clinker grinding plant
Representative officeDistribution terminal

Los Angeles

NanjingHong Kong
Hanoi

Las Vegas
Oro Grande
RillitoHo Chi Minh

Nha Trang

11.2%

11.0%

23.3%

Jakarta

Net sales (FY2023 consolidated)

90.57

billion yen

Number of employees (consolidated, as of March 31, 2023)

1,403

1,185
Female218
Male

Clinker production capacity(consolidated, as of March 31, 2023)

3,063

24.1%

Headquarters/Branches

Lae

Research Center

Hokkaido BranchCentral Research Laboratory
Tohoku Branch
Headquarters/Tokyo Branch
Kanto Branch
Chubu Hokuriku Branch
Kansai Shikoku Branch
Chugoku Branch
Kyushu BranchGroup Production Plants
DC Co., Ltd.
Cement Plants
Myojo Cement Co., Ltd.
Kamiiso Plant
Tsuruga Cement Co., Ltd.
Ofunato Plant
Kumagaya plant
Saitama Plant
Fujiwara Plant
Oita Plant

6,960

thousand tonnes

Male
Female2,761
302

Clinker production capacity

5,280

thousand tonnes

Cebu

TAIHEIYO SINGAPORE

Asia-Pacificbillion yen

17.7%

Singapore

Asia / Pacific227.8028.1%

Number of employees

Nghi Son
BangkokNet sales (FY2023 consolidated)

MojaveTAIHEIYO CEMENT U.S.A.

San Diego

TaipeiTaichung
Kaohsiung

CalPortland Company, Rillito Plant(Rillito, USA)

Japan
Japan

60.7%

64.9%

59.0%

Net sales (FY2023 consolidated)

491.17billion yen

Number of employees (consolidated, as of March 31, 2023)

8,254

7,132
Female 1,122
Male

Clinker production capacity

17,642

thousandtonnesTaiheiyo Cement Corporation Kamiiso Plant

8

Dalian Onoda Cement Co., Ltd. (Dalian, China)* Dalian Onoda Cement Co., Ltd. andJiangnan-Onoda Cement Co., Ltd. ceased
operations in December 2022 and February
2023, respectively.
Jiangnan-Onoda Cement Co., Ltd. (Nanjing, China)

Nghi Son Cement Corporation(Nghi Son, Vietnam)

Taiheiyo Cement Philippines, Inc.
(Cebu, Philippines)

PNG-Taiheiyo Cement Limited(Lae, Papua New Guinea)

Taiheiyo Cement Corporation Ofunato Plant

Taiheiyo Cement Corporation Kumagaya Plant Taiheiyo Cement Corporation Saitama Plant

Taiheiyo Cement Corporation Fujiwara Plant

Taiheiyo Cement Corporation Oita Plant

DC Co., Ltd.

Tsuruga Cement Co., Ltd.

Myojo Cement Co., Ltd.

9

Management that aims for long-term improvement of corporate value - Top Commitment

Message from the President

Since the production of the very
first tonne, we have and willcontinue to produce cement aslong as this country needs it.
Cement was first brought to Japan with theintroduction of Western architecture during the
Meiji era (1868-1912). As it could not be produced
domestically at that time, cement was imported from
Europe at prices 100 times higher than today. It wasexactly 150 years ago, in 1873, that the governmentrun Cement Manufacturing Plant was established, andeight years later, in 1881, Taiheiyo Cement became
the first private company to produce a tonne of cementwith the aspiration to "build the nation using cement".
Since then, we have contributed to Japan’s
development by delivering cement to every cornerof the country, with the belief of "making cement
because Japan needs it," rather than "making cement
because it is profitable". The history of cement inJapan, beginning with the very first tonne of cement,
mirrors the history of Taiheiyo Cement, which has been
involved all along the way.
As it was Taiheiyo Cement that made the first tonneof cement, if the time ever comes for the last tonne
to be made, we also want to be the ones who makeit. We will continue to make cement for as long as itis needed, while passing on the motto of "build thenation using cement" to the next generation.

Masafumi Fushihara

President and Representative Director

1011Management that aims for long-term improvement of corporate value - Top Commitment

Summary of the 23 Medium-Term Management Plan
Resolutely Implementing Growth Investments in Order to Realize Our
Future Vision and Direction, Even in a Difficult Environment.
Related articles:

Progress Summary of
the 23 Medium-Term
Management Plan
P.32-33

Related articles:

Financial Strategy Message fromthe Officer in Charge
P.36-39

The 23 Medium-Term Management Plan is positioned as the third step towards realizing our
future vision and direction targeting the mid-2020s. This year is the final year of the 23 Medium-Term
Management Plan, which has “becoming an outstanding leading company” as a fundamental policy.
During the Medium-Term Management Plan the hurdles to achieving the management targets havebecome higher due to a decline in domestic demand, which was a precondition for the plan, as wellas significant changes in the business environment, including soaring coal prices. However, we haveresolutely made growth investments, even in this difficult business environment, and I believe that wehave achieved the goals that we set 10 years ago as our future vision to "never stop moving forward"
and "become a corporate group with a strong presence in the Pacific Rim."
In addition, "becoming an outstanding leading company", a fundamental policy of the 23 MediumTerm Management Plan, is based on the concept of creating a corporate structure that can withstandeven the toughest business environment, in which our core businesses of cement, mineral resources,
environment, construction materials are thought of as four mountains, and a “Taiheiyo mountain
range” is built by each of the businesses functioning together in an integrated manner. Through theexperience of a war occurring in a foreign land, which hit the Japanese economy a month later in theform of soaring energy prices and exchange rate fluctuations, we have become acutely aware of theneed to build an even more resilient corporate structure.

Focus on the Growing U.S. and Southeast Asia.
Increasing Production and Supply Capacity to Capture Market Share.
Related articles:

Cement Business(Overseas)
P.46-47

In order to become a corporate group with a strong presence in the Pacific Rim, we believe it is ofutmost importance to increase our market influence by achieving a market share of at least 10% in the
countries and regions where we operate. In order to capture the strong demand in growing markets,
we have made investments to increase production and supply capacity.
In the U.S., further asset acquisitions have significantly increased our presence on the west coast,
resulting in our local subsidiary, CalPortland Company, expanding its market share in California to
40%. We expect strong demand to continue for about a decade as the U.S. continues its infrastructure
investment policy, with public investment of $1.2 trillion commencing in earnest and the 2028 Los
Angeles Olympics and Paralympics approaching.
In Asia, we have withdrawn from China, where we had been operating since the second half of the
1980s, and have progressed our southward shift to Southeast Asia, where the economy is growing
rapidly. In 2021, we formed a capital and business alliance with the Indonesian government-owned
Semen Indonesia Group, and have built a new logistics network in the Pacific Rim. This has alreadyyielded benefits in the trading business, and we plan to supply one million tonnes of cement per
year to our U.S. subsidiary starting in 2024. Meanwhile, the renovation of the production line at our
subsidiary in the Philippines will be completed in May 2024. In addition, we have also decided tobuild a new terminal to supply cement to the area around Manila, the country's largest market, inorder to capture the strong demand.

Carbon Neutrality is Our Important Growth Strategy.
Making Our Independently Developed Kiln the Global Standard.
Related articles:

Carbon neutrality
Strategy 2050
P.26-27

12

We see carbon neutrality as the greatest challenge to the survival of the cement industry, as wellas important growth strategy for our company. We have launched our "Carbon Neutral Strategy
2050" and have set targets to reduce our CO2 emissions by 2030. Thereafter, as well as achieving theinterim target, we plan to complete the development of innovative technologies that are effective inachieving carbon neutrality and gradually deploy them to the Group’s cement plants. In particular,

Message from the President

we are working on the development of our own "C2SP Kiln," which is world-first compact equipmentthat enables the separation and capture of CO2, with the aim of it becoming the global standard,
and are also considering licensing the technology as business development that actively utilizes theintellectual property rights.

Formulation of the Next Medium-Term Management Plan has Begun
Based on the Achievements and Challenges under the 23 Medium-Term
Management Plan.
We will formulate the next Medium-Term Management Plan by backcasting from the long-term"future vision and ideal form" to depict the vision we are aiming for 10 years from now. How quickly we
can recover the growth investments made under the 23 Medium-Term Management Plan is important,and the asset acquisitions on the west coast of the U.S. have already started to produce results from thesecond half of the previous year. In addition, we will expand our overseas businesses in Indonesia andthe Philippines while capturing the strong demand. Our discussions will also focus on what needs toaccelerated to achieve the interim goals of our carbon neutral strategy, which have been set for 2030.

Related articles:

Direction of the
Next Medium-Term
Management Plan
P.34-35

Medium- to Long-Term Strategy
Create a Strong Corporate Structure that is Unaffected by Changes in theExternal Environment.
The net sales ratio of the Taiheiyo Cement Group is very well balanced, with the domestic cementbusiness, the overseas cement business, and the mineral resources, environmental, and construction
materials businesses each accounting for one third. However, our businesses have been hit hard bychanges in the external environment, such as the spread of COVID-19 followed by soaring coal and fuelprices due to Russia's invasion of Ukraine. To become an outstanding leading company, we believe it isessential to build a strong corporate structure that will not be affected by such changes in the external
environment, and accordingly we will work on the following.

1. Firm pricing policies

In response to soaring coal and fuel prices, we announced unprecedented drastic price increases
totaling 5,000 yen per tonne. But this was still not sufficient to absorb the cost increases, and thedomestic cement business ended the previous year with an operating loss. The Taiheiyo Cement
Group's mission is to deliver safety and security to society, and we must have a business structure thatcan continue stable operations in order to do so.
In addition to coal prices, cement manufacturers are facing a variety of other cost-increasing factors,
such as carbon neutrality and the logistics industry's response to the shortage of drivers under therevision of regulations in 2024. In the future, we must have the pricing power to develop pricing
policies based on the cost of products and the resources for necessary future investments, and tosell products at the prices they should be sold at. Also, from the standpoint of co-existence and coprosperity, we believe it is necessary to create an environment in which the entire supply chain,including not only cement manufacturers but also users, can pass on cost increases to product prices
and secure profits.

2. Become leaders in decarbonization

We will invest a total of 300 billion yen by 2030 to develop our quarries and strengthen plantfacilities for the next 100 years, and to achieve carbon neutrality. This is an opportunity for our plants
to evolve into truly leading decarbonization facilities that will guide cement production and thedecarbonization of local communities. The goal is to utilize our plants, which are located in a wellbalanced manner throughout the country, to create decarbonization hubs for the use and storage of
CO2 that is separated and captured in each region, as well as the advancement of waste treatment

Related articles:

Cement Business(Japan)P.44-45

Related articles:

Environmental Business
P.50-5113

Management that aims for long-term improvement of corporate value - Top Commitment

and digitalization using DX to meet the characteristics and needs of each region. In addition, we will
optimize our limestone supply network by application according to the characteristics of the limestone
produced from our 13 quarries in Japan, and aim to become leading facilities in decarbonization thatcannot be found anywhere else.
Related articles:

Mineral Resources
Business
P.48-49

Related articles:

Environmental Business
P.50-51

Related articles:

Human Capital
P.78-89

3. Reducing risk through diverse and multifaceted businesses

A significant recovery in domestic demand for cement is not expected in the future due to thedeclining population in Japan. Therefore, not only are we aiming to expand our overseas businesses,
but also to develop a new core business in Japan that is not dependent upon cement production.
In the Mineral Resources Business we are working to commercialize functional materials and newmaterials that fully utilize our accumulated knowledge of minerals. In the Environmental Business weare expanding businesses that are less dependent on kilns, such as recovering useful materials fromlithium-ion batteries for automobiles and sewage sludge.
At the same time, we plan to participate in the Namie Town Reconstruction Farm Project to support
the reconstruction of Fukushima, utilizing our waste and by-product processing technologies.

4. Committed to human capitalTo this day, I continue to believe that “people are the greatest asset that does not appear on abalance sheet.” I believe that top management must focus their greatest effort on how to activate ourhuman capital. In order for us to be chosen by young people and for them to want to continue working
for us for a long time, it is important that we become a company with appeal. To this end, we willfurther proceed in creating a workplace where employees with diverse personalities and values canfeel fulfilled and thrive, regardless of their nationality, gender, or other traits, and develop a personnel
system that emphasizes work-life balance. In addition, we will improve the vitality and productivity ofeach and every employee by promoting “Kenkokeiei” health management that maintains the healthand safety of employees. Furthermore, we will commit to developing global human resources who canwork overseas and those who can pass on the core cement manufacturing technologies.

Continuing to produce cement and forming a circular economy.
That is our sustainability.

Related articles:

Strengthening
Production Systems
P.28-29

Related articles:

The Social Value of
CementP.6-7

Related articles:

The Wonders of Cement
P.137

14

Following on from the contract production for Hitachi Cement Co., Ltd. that started in 2019, we
took over the cement sales business of Denka Co., Ltd. in April of this year, and plan to take over its
cement business from 2025 onward by optimizing the production and supply system. Currently, there
are more than 10 cement manufacturing companies in Japan and, as domestic cement demand is notexpected to significantly recover in the future, we believe that the structure of the cement industry is
likely to change as a result of business restructuring.
However, as the top specialist manufacturer that produced the first private-sector cement 140
years ago, we are determined to continue to produce cement based on our belief that "the cement
Japan requires should be made in Japan," and we will work to strengthen our mining and production
systems with an eye to the next 100 years.
On the other hand, in addition to its mission to deliver critical materials that are indispensable for
infrastructure development, the cement industry has an important role as a key player in the formationof a circular economy with local communities and industries. The cement industry effectively uses
waste and by-products as alternative raw materials and fuels for cement production. More than 25
million tonnes of waste and by-products is received annually, which is more than 10% of the total
amount of waste and by-products recycled in Japan. In addition, we contribute to local communities by
accepting municipal waste and incineration residues.
The Taiheiyo Cement Group also mines limestone from 13 limestone quarries in Japan, half ofwhich is used for cement production and the other half for ready-mixed concrete aggregates andin many other industries such as electric power, steel and paper manufacturing. Furthermore, thewaste and by-products generated by the electric power and steel industries can be effectively used asalternative raw materials for cement, forming a circular economy with these industries, which is also acharacteristic of the cement industry and a truly sustainable model.
We believe that the state of the cement industry needs to be viewed as a challenge for Japaneseindustry as a whole in order to form and develop a sustainable society in the future.

Message from the President

To Our Stakeholders
Contributing to local communities.
Aiming for co-existence and co-prosperity is important.
We are aiming for co-existence and co-prosperity with the local and regional communities where
our plants and quarries are situated, giving maximum consideration to the environment in terms of
biodiversity and water resources, while keeping in mind at all times that the cement industry exists
due to being allowed to mine the nation’s land.
The cement industry has also contributed to the early recovery of areas affected by natural
disasters by receiving debris and other waste that is generated by a disaster for use as alternative raw
materials and fuels for cement. We began receiving and processing disaster waste after the Niigata
Chuetsu Earthquake in 2004 and, since then, we have concluded several comprehensive partnershipagreements with local governments where our plants are located as disaster preparation. Furthermore,from 2019 onward, we have also concluded comprehensive partnership agreements with local
governments where we do not have a cement plant, and have established a system to receive andprocess disaster waste at all of our cement plants located throughout Japan via regional transportationand processing.

Striving to build closer relationships with our stakeholders so they canunderstand our business more.
Cement is the foundation of our business and we will continue to grow with the cement businessas a keystone, pursue further possibilities for cement and concrete, and build a corporate group with astrong presence in the Pacific Rim. At the same time, as mentioned earlier, the cement industry exists
due to being allowed to mine the nation’s land, so we recognize the importance of co-existence andco-prosperity with the people in the areas where our plants and quarries are located. Through ourbusiness activities we will strive to resolve social issues on a global scale, not only by protecting theenvironment, creating a circular economy and combating climate change, but also by helping to build
a sustainable society, including efforts to protect human rights, water resources and biodiversity, whichhave been identified as common global goals set out in the SDGs.
We believe that our stakeholders need to know more about our business and our approach. We will
also make every effort to increase the opportunities to listen to the opinions of our stakeholders andbuild closer relationships with them.
This year marks 150 years since cement was first made in Japan. Since that time, we have continued
to produce cement. As the first private company to make atonne of cement we will continue to make it as long as it isneeded.

15

Medium- to Long-Term Vision, Value Creation Activities - Creating Value

Taiheiyo Cement's DNA

Taiheiyo Cement is continuing to support economic development
and social infrastructure while being environmentally conscious.
1960

1970

Social Conditions

Rapid economic growth

Soaring oil prices

Rapid increase inconstruction investment
and the bubble economy

Bursting of the bubble
economyRapid economic recession

EventsSurge in demand

Oil crisis

Increase in demand

Peak demand

Taiheiyo Cement's Major
Initiatives

Increased production
through development of andconversion to SP and NSP kilns

Energy source converted tocoal

Responding to further increases
in production and strengthening
energy conservation

The 2008 global financial
crisis

Improved earnings throughwaste processing

Overseas expansion of
cement businessIn addition to further adopting theuse of NSP kilns to meet rapidly
increasing public and private sector
demand, we progressed our energy
conservation by introducing waste
heat recovery power generation.

We began full-scale waste
processing using cement kilns asa measure to improve profitability.
In 1998, the industry went throughreorganization and Taiheiyo Cement
Corporation was established.

In addition to existing sites in the
U.S. and China, we accelerated
investment in Southeast Asia tobuild our cement business in the
Pacific Rim.

Conventional wet long kilns wereconverted to dry SP and NSP kilns
with high thermal efficiency andmass production efficiency.

1980

The oil crisis of 1973 was aturning point in our efforts to
reduce energy costs by convertingfrom heavy oil to coal for cement
calcination.

1990

2000

2010

2020

Increased frequency ofnatural disasters

National CO2 emission
reduction targets
established

We conducted businessrestructuring and improved
profitability.
We received disaster waste andassisted in the early recovery ofareas affected by disaster.

We have formulated the "Carbon
Neutral Strategy 2050" and areworking on the developmentof innovative technologies thatare positioned as a new growthstrategy.

Frequent torrential rains
United Nations Climate
and the Great East Japan
ChangeConferences (CoP)
Earthquake
Improve earnings throughStrengthening initiatives tostructural reforms andcooperation in disaster recovery achieve carbon neutrality

Trends in demand, exports, amount of waste, etc. utilized,
and consolidated net sales(million t)

100

80

−Domestic cement demand (1961-)−Cement exports (1961-)−Amount of waste, etc. utilized (1991-)

Consolidated net sales
Domestic cement
Overseas cement
Other

Data provided by: The Japan Cement Association(billion yen)

1,200

1,000

800
60
600
40
400
20

0

200

1961

1971

1981

1991

2001

2011

2021 2023(FY)

0* The figures for the volume of waste, etc. used are from when the Japan Cement Association started collecting statistics, and consolidated net sales are from when the disclosure of
information on overseas business was started.
* Changes to segments, etc. were made in FY2005.
* The "Accounting Standard for Revenue Recognition" (ASBJ Standard No. 29), etc. was applied from FY2022.

16

17

Medium- to Long-Term Vision, Value Creation Activities - Creating Value

Five Cultivated Strengths
The Taiheiyo Cement Group will fulfill its mission to build safe and secure social infrastructure and living environment
through the effective utilization of waste and by-products, with cement production and supply as the cornerstone.

A leading supplier of cement that supports the living
environment and infrastructure
The Taiheiyo Cement Group has a total of 16 cement plants inJapan and overseas, with an annual clinker production capacityof approximately 30 million tonnes. In Japan, we are investing
100 billion yen by 2030 to strengthen our production system
by upgrading our main facilities and building a solid supply
system. Meanwhile, a new production line at Taiheiyo Cement
Philippines, Inc. will start operation in May 2024.

Business portfolio that incorporates the Pacific Rim’s
growth markets
We continue to support infrastructure and the living
environment by supplying high quality cement and construction
materials, and applying advanced technologies at our nine
cement plants in Japan and seven in the United States and AsiaPacific region. Going forward, we aim to enhance our networks
by building a new business portfolio that incorporates growthmarkets and expanding our trading business.

Cement Consumption(million t)

Cement production process that boasts world-leadinguse of alternative raw materials and fuels
In addition to waste and by-products, municipal waste andincineration residues, in recent years we have been contributing
to the formation of a circular economy by also using waste anddebris from natural disasters as raw materials and fuels for
cement. Furthermore, based on the recognition that carbon
neutrality is the most important issue for the cement industry,
we have published our “Carbon Neutral Strategy 2050” and areaccelerating our efforts towards achieving carbon neutrality.

Japan

140
120

AmericaIndonesia

VietnamPhilippines

126.9

113.5

100
80
60
40
20
0

59.0

70.0
66.6

31.4
30.0

39.7
35.2

11.6
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Estimate Forecast Forecast(FY)

Data source: The Global Cement Report 2020, 14th Edition

Highly diverse human capital
Based on the idea that people are a company's greatest asset,
we are creating a workplace that gives highest priority to thesafety and health of our employees. In addition, we consider
diversity and inclusion to be initiatives that integrate our humanresources and are linked to the creation of new value, and arepromoting human resource development that enables each
employee to play an active role through various measures,
including the promotion of the active participation of women.

18

Stable financial footing that enables continued growthinvestments
Although the group had a weak financial structure at the timeof the merger in 1998, we have improved our profitability to theextent of recording operating income of 60 billion yen or morefor eight consecutive years from FY2014 to FY2021. In addition,
we have maintained a net debt/equity ratio (DER) of 0.7 times orlower and the issuer credit rating of A that we acquired in 2018.

19

Medium- to Long-Term Vision, Value Creation Activities - Creating Value

Materiality
The Taiheiyo Cement Group has worked to solve social issues through cement production for more than 140 years.
We recognize that these initiatives themselves are both our social mission and material to our business.

Identifying Risks and Opportunities

Materiality

Summary of the Collection, Evaluation and Identification of Company-wide Risks

The Taiheiyo Cement Group conducts “collection, evaluation and identification of company-wide risks” every three years. This time
(FY2023) the initiative was conducted with the purpose of identifying company-wide risks that could have a significant impact on
uncertainty of Group management in light of the significantly changed business environment and risks.

For more than 140 years the Taiheiyo Cement Group has supported the development of infrastructure and living environments bysupplying society with high quality cement and construction materials, while conducting our business in consideration of the global
environment. Based on these experiences, we have identified the materiality of sustainability issues in order to organize the form anddirection we should aim for when addressing the various environmental and social challenges we face, beginning with climate change.

Process of Collection, Evaluation and Identification of Company-wide Risks

Materiality Identification Process

Step 1

Conduct a comprehensive inventory of risks at our 38 business sites and identify risks that could hinder the achievement of
the goals of the 23 Medium-Term Management Plan and key sustainability issues that were reviewed in FY2023.

Step 2Gather and analyze information related to the situation of and concerns about the identified risks, and identify companywide risks that could have a significant impact on uncertainty of Group management

Step 3

Review company-wide risks (Risk Management & Compliance Committee)

Step 4

Determine company-wide risks (Sustainability Management Committee)

Identified "company-wide risks," business opportunities and business strategies
Company-wide risks

Business opportunities

Business Strategies

Risk of increase in thenumber and severity ofnatural disasters and aging
facilities and equipment• Increasing demand for environmentally sound products(with low CO2 emissions)• Measures to strengthen urban areas and prevent andmitigate natural disasters

Risk of business fluctuationsin the supply chain• Transition to a circular economy• Reorganization of supply chain, succession of businesses
from other companies• Steady transition to carbon
neutrality• Supply critical materials for national
resilience• Key player in the formation of acircular economy

Human resource-relatedrisks• Acceleration of DX and digitalization• Acquisition of human resources as a leading
sustainability company

The process was conducted in three steps, from identification of issues to validation. As a result, a total of 12 materialities wereidentified from financial aspects, environmental aspects and social aspects.
Step 3

Identification of issues andcategorization into themes

Prioritization and organization of themes

Verification• Candidate themes were mapped with the importance tostakeholders and the importance to our Group on separate
axes.
• Regarding importance to stakeholders, issues that are ofinterest or importance were evaluated, with reference toopinions and information obtained from ESG interviews
with investors and other stakeholders.
• Regarding importance to our Group, issues were
evaluated in accordance with the principle of double
materiality, taking into account the medium- to long-term
impact of the Company on the environment and society.

The identified
materialities were finallydiscussed and verified
by the Sustainability
Management Committee
and the Executive
Committee.

* SDGs, ISO 26000, GRI Standards, ESG assessment agency evaluation items, GCCA Sustainability Framework, etc.

Identified materialities

Twelve themes of "higher" and "extremely high" importance were designated as material.

P opularization ofenvironmentally soundproducts

Biodiversity
Conservation of water resourcesSustainable supply chain

 elivering of carbon neutrality
DContributing to the realizationof a circular economy

HigherR educing environmental
impactDiversity and inclusion
Respect for human rights
Stakeholder engagement
Corporate ethics and complianceC reating a safe and healthy
workplaceContributing to national
resilience
Group governanceHighDX promotionR isk management (crisis
management)

Human resource development

Extremely highImportance to stakeholders

Toshio Arima

Chairman of the Board
Global Compact Network Japan

Step 2

Issues specific to our businesses
were identified and categorized into
themes, using various disclosure
guidelines and evaluation tools fromESG evaluation organizations as
references*, as well as the opinions
and information received fromstakeholders through ESG interviews,
opinions from third parties, ourcompany's history and strengths,
and exchanges of opinions with eachrelevant department.

Third-party opinion
Your materiality selection process is orthodox and the KPIs and timeline, as well as
the associated guidelines, are sensible. “Carbon neutrality" and "circular economy" areyour two most important themes, and a "circular economy" will lead to CO2 emission
reductions while bringing growth and profitability at the same time. This is truly abusiness that has proven its strategic characteristics in the era of SX (Sustainability
Transformation). On the other hand, the new business model of expanding CO2 capture
and utilization under the CO2 recovery kiln commercialization concept with mechanicalplant companies and gas companies is a step up to a European-style circular economy. I
am confident that your company's historic corporate mission to "build the nation using
cement" will continue with its unifying force and brilliance in the future.

Step 1High

HigherImportance to the Taiheiyo Cement Group20

Extremely highFinancial aspects
Environmental and social aspects

21

Medium- to Long-Term Vision, Value Creation Activities - Creating Value

Materiality

List of Materialities and main KPIs

AspectMateriality

Themes to be addressed

Targets, KPIs, etc.

Relevant standards, targets,
guidelines, etc.

Relevant SDGs

• Delivering of carbon neutrality (by 2050)

Delivering of carbon
neutrality

Financial
Aspects• Reduce domestic CO2 emissions by at least 40% (by 2030,
compared with 2000)

Carbon Neutral Strategy
2050

Promote the use of alternative raw materials and fuels• Maintain waste usage intensity of 400kg/tonne-cement or more

Sustainable supply chain

Sustainability assessment• Assessment rate of major suppliers: 75% (2030)

Contributing to national
resilience

Maintaining a stable product supply system

Biodiversity

Develop quarry rehabilitation plans• Quarries with rehabilitation plans: 90% or more

GCCA guidelines on
biodiversity

Conservation of water
resources

Management of water resources• Promote management of fresh water usage intensity

GCCA Sustainability
Framework Guidelines

Accident prevention• Zero fatalities

CSR Objectives for 2025

Waste emissions reduction

Promotion of Health and Productivity Management (H&PM)

Diversity and inclusion

Promotion of the active participation of women

Respect for human rights• Maintain volume of waste to landfill at or below 40 tonnes• Upgrade of plant facilities to maintain stable supply• Serious quality complaints: 0• R atio of employees receiving periodic health examinations: 100%
• Ratio of female recruits: At least 30%

GCCA guidelines onalternative raw materials
and fuels
GCCA guidelines on supply
chainsISO 9001

Internal environment
improvement policy• Ratio of female employees: At least 10%

CSR Objectives for 2025

Promotion of human rights due diligence• Conduct steady human rights due diligence and take corrective
actionUnited Nations andgovernment, etc. standards

Engagement with shareholders, investors• Engagement with shareholders, investors: 150/year or more

GCCA Sustainability
Framework Guidelines

Group governance

Globalization of Whistleblower Program• Coverage of the Whistleblower Program: 90% or more (byFY2031)* Coverage = numberof companies who haveintroduced program andsubsidiaries that are covered

Corporate ethics andcompliance

Compliance education• Standards of Conduct training (e-learning) participation rate:
maintain at 90% or more

GCCA Sustainability
Framework Guidelines

Stakeholder engagement22• Reduce specific CO2 emissions by at least 20% (by 2030,
compared with 2000)

Contributing to therealization of a circular
economyCreating a safe and healthy
workplace

Environmental
andSocial Aspects

CO2 emissions reduction

Communication with local communities• Ratio of newly appointed female managers: At least 10%• Engagement with local communities: 1,500/year or more

23

Medium- to Long-Term Vision, Value Creation Activities - Creating Value

Value Creation Process[Management Capital]
A
A–

Manufacturing Capital

Domestic clinker production capacity(FY2023)

17,642thousand tonnes

Overseas clinker production capacity(FY2023)

12,240thousand tonnes
Intellectual Capital

Cementproduction processthat boasts
world-leading use ofalternative raw
materials
and fuels

A leading
supplier of
cement that
supports the living
environment andinfrastructure

Human Capital
Number of employees(as of the end of FY2023)

12,720Business
portfolio thatincorporates the
Paciﬁc Rim’s
growthmarkets

Stableﬁnancial footingthat enables
continued growthinvestments

2,538

IR Activities (FY2023)

164

Limestone quarries of the group(as of the end of FY2023)

19

Construction Materials
Business

Research and Development

Utilization of waste and by-products(FY2023)409.6 kg/t-cement24• Stabilizers:• Ready-mixed concrete:

8.16 million m³

Logistics
andsupply[Mineral Resources Business]• Limestone for cement raw material
million tonnes• Limestone for concrete aggregatesmillion tonnes• Limestone for industrial use(steelmaking, etc.)
million tonnes

20.20• Amount of waste and by-products processed
million tonnes• Limestone for industrial use (power plants)
million tonnes

7.27
0.72

[Construction Materials Business]• Construction-related materials:
million tonnes• Concrete products:
million tonnes• Ground Improvement,
repair and renovation projects(Cement and stabilizers)
million tonnes

0.21
0.31

Fundamental Policies ofthe 23 Medium-Term Management Plan
Aiming to become an Outstanding Leading Company
Financial Aspects

Delivering of carbon neutrality
Contributing to the realizationof a circular economy
Sustainable supply chain
Contributing to national resilience

Group Governance /0.27

Environmental and Social Aspects
Biodiversity
Conservation of water resources
Creating a safe andhealthy workplace
Diversity and inclusion

Compliance

Outcome
Supply critical materials
for national resilience
Key player in the formationof a circular economy
Steady transition to carbon neutrality[Economic Value (FY2023)]

809.5 billion yen(up YoY)
4.4 billion yen• Operating income:• Net sales:(down YoY)

• Total amount of dividends:[Environmental Business]

Use

Materiality

30.93 million tonnes
2.22 million tonnes

8.20

Environmental Business

Natural Resources Capital• Cement:

9.80

Mineral Resources
Business

Social and Relationship Capital
Engagement with communities(FY2023)

Production

Cement BusinessCollection/
Reuse

Taiheiyo Cement Group's
Main Products[Cement Business]

Highly diverse
human capitalRaw material
procurement

Patents held
(as of the end of FY2023)

1,439 in Japan
287 overseas

OutputTaiheiyo Cement's Strengths

Credit rating (as of August 2023)

R&I

To become an enterprise groupthat provides a sense ofsafety and security to societies
in the Paciﬁc Rim by demonstrating
the group’s overall capabilities.

Business model

Financial Capital
JCR[Our future vision and direction]

Respect for human rights
Stakeholder engagement
Group governanceCorporate ethics
and compliance

8.2
75.9
5.9

billion yen(shareholder returns, steady dividends)
billion yen• Capital expenditure:(maintenance and growth areas)billion yen• R&D expenses:(research and intellectual property areas)[Social Value (FY2023)]• Supply critical materials for national resilience
Cement, aggregates, etc.:

43.74 million tonnes
Ready-mixed concrete: 8.16 million m³• Key player in the formation of a circular
economy(resolving social issues)
Waste and by-products processed:

7.27 million tonnes

External economic beneﬁt (EEB)(non-consolidated):

87.2 billion yen• Steady transition to carbon neutrality(reduction of environmental impact)
CO² speciﬁc emissions:

10.2% reduction(compared with 2000)
Alternative energy usage rate:

19.9%(Contribute to reduction of fossil energy use)

• Highly diverse human capital(permanent employees, non-consolidated)
Overall employee engagement score:

66%
Ratio of newly appointed female managers:

13.6%

25

Medium- to Long-Term Vision, Value Creation Activities - Creating Value

Carbon Neutral Strategy 2050
Overview of Innovative
Technology Initiatives

Taking on the challenge to develop
innovative technologies and aiming
to become a leader in CO2 capture andutilization.

Chemicalabsorption method

Cementproduction
facilities

CO2 recovery

Carbonation

CO₂

CO2
utilization

CO2-recoveringcement production
facilities

Yuuichi Kitabayashi

CO2 storage

Towarddelivering
carbonneutrality

CO2 refining andshipment

Methanation

Stable supply of green hydrogen and energy

Vice President and Representative Director

Toward delivering carbon neutrality

Carbon neutrality is our significant growth strategy

Post-2030 transition plan

Challenges in the delivery of carbon neutrality

The Taiheiyo Cement Corporation has established the"Carbon Neutral Strategy 2050" to achieve carbon neutrality
throughout our supply chain by 2050, and have released
a transition plan to reduce CO2 specific emissions by 20%
or more and to complete the development of innovativetechnologies for CO2 capture and utilization by 2030. In
December this year, we started demonstration testing of the"Carbon Capture Suspension Preheater Kiln" (C2SP Kiln), aCO2-recovering cement production process, and also started astudy of a "carbon neutral model plant" at the Kawasaki Plant
of our Group company DC Co., Ltd., which will demonstrate CO2
capture, utilization and storage at the actual plant level.

We are aiming for our world-first, independently developed
C2SP Kiln, which can efficiently capture CO2 in a compact
facility, to become the global standard. There are currently
about 4,000 cement kilns worldwide, and we expect that there
will be a great need for C2SP Kiln as the achievement of carbon
neutrality is aimed for around the world. Further, regarding
methanation, which is the use of separated and recovered CO2
as energy, we are working with mechanical plant companies
and gas companies with the aim of not only reusing it incement production, but also using it widely in society.

From 2030 onwards we will sequentially deploy CO2
utilization technologies such as CO2 separation and capturein C2SP Kiln, CO2 mineralization by carbonation and CO2
utilization through methanation throughout the Group. We
estimate that the cost of implementing C2SP Kiln and CO2
utilization facilities will exceed 100 billion yen per kiln basedon the current technology, or 2 trillion yen for the entire
domestic Group. Although the cost of equipment will decline
as the technology evolves, there is a limit to how much capital
expenditure can be borne by a single private company. It istherefore necessary for the government and industry as a whole
to consider a mechanism for shifting the transition costs ofcarbon neutrality to cement prices and introducing appropriate
carbon pricing to ensure the burden is shared fairly.

We believe that our "Carbon Neutral Strategy 2050" isconsistent with the Paris Agreement. This is evident fromthe fact that in March 2023 the Development Bank of Japan
extended a transition-linked loan to the Company, based on
the Technology Roadmap for Transition Finance in the Cement
Sector published by the Ministry of Economy, Trade andIndustry as part of its efforts to align with the Paris Agreement.
On the other hand, immediately effective measures such as theuse of blended cement are necessary to achieve recognition
as a Science Based Target, but rapid deployment is not easy
due to market and product standard constraints in Japan. In
addition to the development and commercialization of various
innovative technologies, we will also accelerate our efforts
regarding establishing standards.

Raw material-derived
Innovativetechnology• Energy saving• Expansion of alternative energy

Use of renewable energy,hydrogen, synthetic methane, etc.

• Expanded use of cement admixtures• Development of low-CO² cement

Popularization of blended cement andlow-CO² cement• Establishment of CO² separation and recovery technology

Deployment of CO² separation and recovery technology
Popularization and use of CO² storage technology• Optimization of the transportation by using EVs and quarry greening• Standardization of accounting for CO² uptake by concrete carbonation (recarbonation)

Deployment throughout the supply chain

Reduction of emissions intensity
2030
by 20% or more throughout the supply chain
Interim Target

Carbon Neutrality
Transition Plancompared to 2000

2000

2020

2030

Energy-derived
Raw material-derived
CO² emissions reduction
2040

Gas flow of a C2SP Kiln
Raw material-derived+ energy-derived CO²

Carbon neutrality

Cement production
process

Energy-derived

Other than cement
production process

26

Stable supply of waste concrete and sludge

Innovative technology
Other than cement
production process

Gas ﬂow
Raw material ﬂow

Cementraw material

Raw material-derived CO²(captured as concentrated CO²)

Effective use of CO²

Preheater
Energy-derived
CO²
CO²-capture
calciner

EnergyMethanation
Reuse of CH4

Combustion gas(O² + CO²)

EnergyRotary Kiln

2050

By concentrating the calcination reaction of raw limestone in an oxygen-fired
calciner, highly concentrated CO2 can be recovered directly from the cement
process.

27

Medium- to Long-Term Vision, Value Creation Activities - Creating Value

Strengthening Production Systems
We will strengthen our production
system with "safety, maintaining
quality and environmental
preservation" as our top priorities.
Koshiro Hidaka

Fujiwara Plant No. 5 Kiln (installation of high-efficiency clinker coolers)

Inspection of kiln tires using a drone

Managing Executive Officer

Our production system: Strengthening
facilities, systems and engineers

Initiatives to reduce CO2 emissions

Realization of smart factories

Safety − aiming for zero fatalities

The Taiheiyo Cement Group's domestic plants have beenin operation for more than 60 years and their deteriorationis advancing. We have determined that drastic measures arenecessary to ensure stable production for the decades to come, andwe are proceeding with the upgrade of major facilities with a plan
to invest approximately 100 billion yen over the next 10 years,
including the period of the 23 Medium-Term Management Plan.
By introducing the latest facilities and digitalizing production andfacility management, we are aiming to reduce our CO2 emissions
and environmental impact, as well as progressing energy saving
and manpower conservation. We are also aiming to ensure thatthe core technologies required for cement production and facility
management are passed on to the next generation and that humanresources are developed through education and practical training.

The most significant feature of our cement production is theefficient use of various waste and by-products as alternative
raw materials and fuels on a scale of approximately six
million tonnes per year, while at the same time possessing
quality control and facility operation technologies to maintainconsistent quality. Recently, we have been working to expand
the use of alternative fuels in response to soaring coal prices.
With the installation of a waste heat recovery power generation
system at the Saitama Plant, the installation of such equipment
at all domestic plants has been completed. At the same time,
we will continue to upgrade aging power generation facilities
with gas turbines, with a view to using methanation, which isplanned as a carbon neutrality initiative. We will continue ourefforts to further reduce our CO2 emissions.

In view of the labor shortages that are foreseeable dueto the declining birthrate, we are working to realize smart
factories that utilize digital technology. Equipment inspections
can detect signs of breakdown and end of service life by using
AI to analyze data collected by sensors and cameras installed
throughout the plant. In addition, the development of a fully
automated system for operation management via AI is expected
to be completed by the end of FY2024. Furthermore, in the near
future, we aim to establish a support system for the operationand management of all plants through remote operation fromthe headquarters, which is to eventually include overseas plants
too.

We are committed to promoting safety, security and healthactivities as a Group, keeping in mind that "safety is the highest
priority." However, it is very regrettable that fatalities haveoccurred since FY2022 and the number of accidents is also on
the rise, and we recognize that we are in a critical situation.
We believe that to eliminate occupational accidents the mostimportant thing is for everyone from top management to theworkers on site to share a high awareness of safety and toalways follow the basic rules that have been communicatedat all times. We will strengthen our initiatives to achieve zero
fatalities through more thorough activities.

Main facility upgrade work performed from FY2023 to FY2024
Environmental
measures• Switching from electrostatic precipitators to bag filters(Of all 12 of our kilns, 11 are scheduled to be completed by FY2025)

Switching to a dust collection system that uses filters will improve the rate of dust
collection from exhaust gas generated in the cement production process

Energy-saving
measures• Introduction of high-efficiency clinker coolers (to be introduced sequentially)

Coal replacement
ratio improvement
measures• Installation of storage facilities to increase receipt of waste plastic (Kamiiso Plant, Saitama Plant),
installation of new burners (Kamiiso Plant)• Recycled oil processing capacity expansion work (Kumagaya Plant)

CO2 reduction andenergy cost reduction
measures• Waste heat recovery power generation systems at the Saitama Plant (Operation started in October
2022, completing the introduction of waste heat recovery power generation systems at all domestic
plants)• Gas turbine power generation facility at Saitama Plant (in operation from September 2023)

Will improve the recovery efficiency of the heat used for calcination in the clinker (anintermediate product of cement) production process and realize energy saving

Will reduce coal use by using waste as an energy substituteWill realize the reduction of CO2 emissions and energy costs

28

Promotion of engineer development
We are progressing the development of engineers based on the belief that "people are at the foundation of production."
In order to pass on the core technologies related to cement manufacturing that we have inherited from our predecessors, wehave established "Techno Schools" for mid-career engineers at each plant to intensively learn specialized knowledge, and“Maintenance Dojo” where facility maintenance skills are learnt, with eligibility expanded to include engineers from contractors.
In addition to improving cement-related skills, we haveestablished an "Overseas Trainee Program" in which young
permanent employees are sent to an overseas Group company
for about one month to hone their language skills and gain
experience living overseas. On the other hand, the renovationof the production line at Taiheiyo Cement Philippines, Inc., inwhich a state-of-the-art production line is being built, startingfrom the preparation of the land and foundation work, is aunique and valuable training opportunity and we are actively
sending young permanent employees to this project.
Maintenance Dojo Program (surface finishing of bearing metal)

29Medium- to Long-Term Vision, Value Creation Activities - Creating Value

Medium-Term Management Plan

Step 1

Step 217 Medium-Term Management Plan

20 Medium-Term Management Plan

(FY2016 to FY2018)

The 17 Medium-Term Management Plancovered the three years from FY2016
to FY2018 and is regarded as the firststep towards realizing our future visionand direction. It aimed to maximize ourcorporate value.

Fundamental Policies
1 To become a corporate group that

preempts future changes in theenvironment and seeks innovations in all
fronts, thereby progressing on a growthpath
2 To contribute to the establishment of asense of safety and security in society
through the provision of materials andtechnological development, furthering
national resilience as a member of thesocial infrastructure industry.
3 To vigorously push ahead with further
strengthening our earnings base andfinancial structure aiming at sustainable
development by strengthening
businesses through exhaustive costcutting

Performance
Profitability

Operating income on net sales: 7.5%
Return on assets (ROA): 6.3%
Growth investments: 100 billion yen• Acquisition of the Oro Grande plant(U.S.A.) and construction of its new mill
• Establishment of Ofunato Power Inc.
(biomass power plant)• DC Co., Ltd. made a wholly owned
subsidiary

Financial Structure

Net debt/equity ratio (DER): 0.6 times• Net interest-bearing debt of 234.8 billion
yen (end of FY2018)

Shareholder ReturnsI ncreased dividends and purchased
treasury shares.
• Payout ratio: 18% (3-year average)• Total return ratio: 26% (3-year average)• Treasury shares purchased: 10 billion yen

30(FY2019 to FY2021)

We built on the results of the businessand financial strategies implemented in thefirst step, the 17 Medium-Term Management
Plan, and continued addressing theremaining issues to open up a path onwhich we could move on to the next stepby ensuring the implementation of new
initiatives and establishing a solid businessfoundation for future sustainable growth.

Fundamental Policies
1 To become a corporate group that

anticipates future changes in thebusiness environment and seeksinnovation on all fronts, thereby
advancing along a pathway of growth.
2 To contribute to the establishment of asense of safety and security in society
through the stable provision of highquality products, solutions and advanced
technology development, in order tobuild national resilience as a member ofthe social infrastructure industry.
3 To push ahead with the strengthening of
our earnings foundation for businesses
and further improve our financial
structure through cost reductions as well
as by actively executing investments inpromising fields that will contribute to
the group’s sustainable growth.

Summary up to Step 2
Achievements

Although domestic
demand for cement isdecreasing, operating
income stayed in the 60
billion of yen range.
Maintained shareholder
returns (total return ratio)of 30%.
Achieved our target of a
net DER of 0.4 times orless ahead of schedule.
Growth investments
proceeding according toplan.

Step 323 Medium-Term Management Plan (FY2022 to FY2024)

Aiming to become an outstanding leading
company

We aim to construct a business model unique to us, where allbusinesses in our group function together comprehensively and integrally.
In other words, to become an outstanding leading company.

Fundamental Policies
1 Strive for sustainable growth.
2 As part of the social infrastructure industry, contribute to theestablishment of a safe and stable society.
3 Strengthen our earnings base for businesses and steadily
carry out growth investments.

Challenges

S ustained growthinvestment
Initiatives to deliver
Carbon Neutrality
Strengthening of plantfacilities and quarry
development
Restructuring ourbusinesses in Japan

Investment Strategy and Shareholder Returns
Cash flow from operating activities
and assignment of assets etc.
(3-year cumulative total): 

330 billion yen• New investment aimed at sustainable growth: Capital expenditure,and investment and financing: 280 billion yen (including growthinvestment: 120 billion yen)
• Shareholder returns: Total return ratio around 33% (one third of the
net profit for the year attributable to parent company shareholders)• Maintain and improve financial soundness: Maintain a net DER ofaround 0.4

Profitability
Operating income on net sales: Return on equity (ROE): 

11% or more
10% or more

Targets for FY2024

750 billion yen or more
Operating income: 85 billion yen or more
EBITDA*2: 
145 billion yen or more
Net debt/equity ratio (DER): 
Around 0.4
Net interest-bearing debt/EBITDA:  1.5 or less
Net sales*1: *1 Since we have adopted the Accounting Standard for Revenue Recognition(ASBJ Standard No. 29) etc. from FY2022, the net sales in the FY2024 planshow the amount after adoption of the new standard. (The adoption of the
new standard has a negative impact of -210 billion yen.)*2 EBITDA = Operating income + depreciation (including goodwill amortization)

Performance
Profitability

Operating income on net sales: 7.4%
Return on assets (ROA): 6.3%
Growth investments: 100 billion yen• I nvestment in the Semen Indonesia Group• Renovation of Taiheiyo Cement
Philippines, Inc.’s production line
• C onstruction of new waste heat recovery
power generation system (Saitama Plant)

Financial Structure

Net debt/equity ratio (DER): 0.4 times• Net interest-bearing debt: 175 billion
yen (end of FY2021)

Shareholder Returns

Steady dividend payments andpurchase of treasury shares• Payout ratio: 19% (3-year average)• Total return ratio: 30% (3-year average)• T reasury shares purchased: 15 billion yen

Key Strategies

1

Initiatives to deliver carbon neutrality

2

Sustained growth investment

3

Strengthening plant facilities

4

Quarry Development

Growthinvestments
Carbon neutrality
100 billion yen

20 billion yen
10 billion yen
35 billion yen

23 Medium-Term
Management Plan

Strengthening
plant facilities
100 billion yen
Quarrydevelopment
100 billion yen
FY2022 ~ FY2031

31

Medium- to Long-Term Vision, Value Creation Activities - Creating Value

Progress Summaryof the 23 Medium-Term Management Plan
Indicators

1
2
3
4
32

Initiatives todeliver carbon
neutrality

2050
Delivering carbon
neutrality

Sustained
growthinvestment
Reconstructing
the overseas
business
portfolio

Capturing growthmarkets

Strengthening
plant facilities

In order to establish a
production and supply
system with longterm stability, we will
renew key machinery,
upgrade production andequipment management,
and deploy AI

QuarryDevelopment

We will establish asystem aimed at thelong-term stable supplyof limestone resources

Targets2030 Interim Target
Reduce CO2 emissions
intensity by 20% or morethroughout the supply chain(compared with 2000)
Reduce domestic CO2
emissions by 40% or more(compared with 2000)

E xpand our business areain the U.S. and Asia-Pacificwhere demand for cement
is strong, and proceed withbusiness development that isrooted in the region

Initiatives

This year’s evaluation and challenges

Introduction of high-efficiency coolers andoperation of waste heat power generation aimed
at energy saving and improved efficiency

C ommencement of a study of the carbon neutralmodel plant concept

In addition to waste heat power generation at the
Saitama Plant and the introduction of high-efficiency
coolers at two plants in Japan, the use of alternative
fuels has expanded and CO2 emissions have been
reduced. In addition to starting construction of the
C2SP Kiln test facility as an innovative technology
for carbon neutrality and developing CO2 utilization
technologies, we participated in JOGMEC's CCS
research project. Furthermore, we have commenced
studying the concept of a carbon-neutral model
plant at DC Co., Ltd.'s Kawasaki Plant.

C ompletion of the acquisition by CalPortland
Company of a portion of the west coast cement
and ready-mixed concrete business assets ofMartin Marietta Materials, Inc.
The renovation of the production line at Taiheiyo
Cement Philippines, Inc.
Withdrawal from the cement business in China

CalPortland Company now has four plants and has
expanded its market share in California to 40%.
The renovation of the production line at Taiheiyo
Cement Philippines, Inc. is progressing well and isscheduled to begin commercial operation in May
2024. The company's annual production capacity
will be 3 million tonnes.

 evelopment of the C2SP Kiln, an innovative
D
CO2-Recovering cement production process
Development of technology for the effective useof CO2, CCS project feasibility studyC onversion of electrostatic precipitators to bag
filtersI mplement measures toaddress aging cement plants
and modernize production
and facility management by
2030

E stablish a long-term stablesupply system for limestone
resources, the foundation of
the cement business pgrade of electric motors and control
Uequipment
Upgrade of specified high-voltage cables andtransformers
Modernization of facility management systems
Development of technology for automated kiln
operation that utilizes AI

C ommencement of development of the Yato areaof the Shin-Tsukumi Quarry
Commencement of development of the summitof Mount Kurohime at the Toumi QuarryE nvironmental assessment and postdevelopment survey of the Yato quarry area
Installation of a stockyard at the Horoshi area of
the Ofunato Quarry

In addition to replacing electrostatic precipitatorswith bag filters, work to restore the health of electricalequipment such as electric motors, transformers
and cables was performed. We will not only upgrade
aging facilities, but also promote the digitalizationof plants and the increased sophistication of
production and facility management.

Development work was initiated at the Shin-Tsukumi
Quarry and the Toumi Quarry to ensure stable
operations over the long term. Development workcommenced in the Yato area of the Shin-Tsukumi
Quarry in May 2023 and the Mount Kurohime
summit of the Toumi Quarry in September 2023,
with the aim of commencing ore production in
2029.

33

Medium- to Long-Term Vision, Value Creation Activities - Creating Value

Direction of the Next Medium-Term Management Plan
We will backcast from the 2050 Vision
to formulate the next Medium-Term
Management Plan from both financial andnon-financial perspectives.
Hideaki Asakura

Director and Senior Executive Officer

Long-term vision and next Medium-Term Management Plan

Aiming for sustainable growth and increased corporate value over the medium to long term, we are in the process of formulating
our "2050 Vision", with sustainability positioned as one of our top priorities and climate change, safety and inclusiveness, the circular
economy and resilience, and biodiversity as the main pillars.
We will spend the entire current fiscal year formulating the next Medium-Term Management Plan, which will start in FY2025 andwill backcast from this 2050 Vision with a view to resolving current issues as well as the medium- to long-term perspective, and will
focus on five key issues: "strengthening our domestic earnings base," "diversifying our overseas earnings," "recovering the financialbase and reviewing investment recovery criteria," "approach to human capital," and "realization of carbon neutrality."

Climate change

1 Delivering carbon neutrality
2 Reducing environmental impact
3 Popularization of environmentally

Backcast

sound products

equality

2 Occupational health and safety
3 Engagement with local

communities

4 Sustainable supply chain

Circular Economy and Resilience
1 Key player in the formation of acircular economy

2 Contributing to national resilience

Biodiversity

1 Nature Positive
2 Conservation of water resources

Next
Medium-Term
Management Plan

Strengthening
our domestic earnings base
Diversifying our overseas earnings
Recovering the financial base
Human Capital
Carbon neutrality

23
Medium-Term
Management Plan

Initiatives to deliver carbon
neutrality
Sustained growth investment
Strengthening plant facilities
Quarry development

34

Strengthening our domestic earnings baseFirst, in our main domestic cement business, we believethat our top priority is to have a firm pricing policy andcreate an environment and system in which the entire
supply chain, including users, can pass on cost increases
to prices and secure profits. Currently, most users haveaccepted energy price fluctuation in the form of an increasein cement prices, but we will continue to discuss a surcharge
system with users as another option and work towardachieving appropriate prices.

Diversifying our overseas earnings

While our U.S. business has grown to become theGroup's main source of income, we will also strengthen
our business in the growth market of Southeast Asia.
As the annual production capacity of Taiheiyo Cement
Philippines, Inc. will increase to 3 million tonnes when the
new production line is completed in May 2024, we will also
launch measures to steadily capture the strong demand. We
believe that an EBITDA margin of around 25% is desirable forour overseas cement business and we will work closely with
our domestic cement business to achieve high profitability
across the Group.

Approach to human capital

Regarding human capital, above all else the mostimportant issue is to nurture the younger generation, andwe will promote investment in education and the creationof systems for career advancement. It is also important tocreate a system that allows for a balance between work andlife while incorporating challenging work, for example, bytransferring employees to Group companies, including
overseas companies, in order to gain experience in work thatexceeds their job level. In addition to salary and benefits,
we believe that a company can only be attractive if it is anorganization that rewards effort.

Toward the Delivery of Carbon Neutrality

Regarding carbon neutrality, in addition to revising
investment criteria in line with carbon price trends, we willcontinue to discuss the transfer of investments to cement
prices. Also, the Global Cement and Concrete Association,of which we are a member, is studying a method toquantitatively evaluate the characteristics of atmospheric
CO2 absorption by concrete buildings during service, which
is a very supportive move for the cement industry. We will
promote our initiatives toward carbon neutrality while also
taking into account such global trends.

Recovering the financial base and reviewing
investment recovery criteria

Safety and Inclusiveness1 Workplace diversity, gender

2050
VisionNext Medium-Term Management Plan

Although we posted a net loss in FY2023, interestbearing debt increased as a result of the growth investments
set forth in the 23 Medium-Term Management Plan, whichwere generally implemented as planned. We will continue
investing to expand our overseas business, develop ourquarries and strengthen our production systems, and wewill strive to quickly recover our financial base so that theseinvestments can be funded by cash flow from operating
activities. In addition, as cement is mainly an equipmentbased industry and the scale of investment is large andrequires a long time to recover the investment, we will also
incorporate indicators such as ROIC and discuss investment
recovery criteria.

The renovation of the production line (Taiheiyo Cement Philippines, Inc.)

35

Medium- to Long-Term Vision, Value Creation Activities - Creating Value

Financial Strategy − Message from the Officer in Charge

We will build a solid earnings base andsteadily execute investments for growthand strengthening production lines.

Correlation of PBR and ROE (based on FY2014-FY2023 results)
ROE(%)
25.0
20.0
15.0
10.0

Masahiro Ban

Managing Executive Officer

5.0

PBR tends to exceed 1x
if ROE is over 10%

0

Looking back at FY2023
In FY2023, both operating income and ordinary income
declined, with major factor being the worsening profitability of
our main domestic cement business due to higher production
costs caused by soaring coal prices. In addition, due torecording the expense of our Chinese subsidiaries withdrawing
from their business as extraordinary losses, the ultimate result
was a very severe net loss of 33.2 billion yen for the fiscal year.

1,104

1,000

711
63.6
61.0
46.8 46.7
39.1
28.9

58.0
40.0
4.4

2022

-0.2

2023

2024

(Forecast)(FY)

The domestic Cement Business posted an operating loss of
36.9 billion yen due to being unable to absorb cost increases
during the fiscal year, despite efforts to raise cement prices. As
for overall operating income, we were able to secure a profitof 4.4 billion yen, contributed by CalPortland Company Inc.,.
We believe this is the result of our global strategy functioning
well. As we made growth investments and investments tostrengthen our earnings base, including the acquisition ofassets in the U.S., renovation of the production line at Taiheiyo
Cement Philippines, Inc. and strengthening of plant and quarry
facilities, under a situation where we were not able to generate
the cash flow from operating activities that we had initially

36

248.1
0.4

2021

403.4

270.5

0.7

400.0

-10.0

0

0.5

1.0

1.5

2.0

2.5

PBR (Price to Book Value Ratio)

The ratio used to compare a company's current market value to its book value.

0.6

Progress of the 23 Medium-Term
Management Plan

0.4

2022

2023

2024

(Forecast)(FY)

Forecast for FY2024

-33.2
2021

266.1

-5.0

PBR (multiples)Interest-bearing debt (billion yen)
Net debt/equity ratio (DER)

2020

Operating income (billion yen)
Net income (billion yen)
Cash ﬂow from operating activities (billion yen)

2020

Interest-bearing Debt and Net Debt/Equity Ratio (DER)

0.5

 perating income, net income and cash flow fromO
operating activities

909

planned, interest-bearing debt increased 132.8 billion yen on
the previous fiscal year to 403.4 billion yen.

For FY2024, we forecast a 110.5 billion yen increase in
net sales to 920.0 billion yen, a 53.6 billion yen increasein operating income to 58.0 billion yen, a 55.0 billion yen
increase in ordinary income to 56.0 billion yen, and a 73.2
billion yen improvement in profit to 40.0 billion yen comparedto the previous fiscal year. We expect a significant improvementin earnings due to factors including the increase in domestic
cement prices and earnings in the U.S. We recently announced
our first quarter results, and although domestic cement
demand is on a downward trend, cement price increases areprogressing as expected. Meanwhile, U.S. earnings were weakin the first quarter from January to March due to heavy rainson the west coast, but have been favorable since the second
quarter starting in April. Coal prices have also stabilized since
the beginning of this year, and we believe that the figures inour earnings forecast are achievable.

This fiscal year is the final year of the 23 Medium-Term
Management Plan, and although we had set managementtargets of an operating income on net sales of 11% or higher
and ROE of 10% or higher, it will be difficult to achieve thesetargets given the current fiscal year's forecasts. The same
applies to the financial indicators that have been set as
guidelines for achieving the management targets; the net
debt/equity ratio (DER) of 0.41x that was achieved in FY2022
was 0.65x at the end of the previous fiscal year and is expected
to remain flat in the current fiscal year. This fiscal year is the
final year of the 23 Medium-Term Management Plan and, atthe same time, it will also be an important year as a launching
pad for the next Medium-Term Management Plan. It will be
important to ensure the implementation of any unfinishedelements of the plan, including increases to cement prices,achieving a V-shaped recovery and linking these to the next
Medium-Term Management Plan. Despite the challenging
profit and loss results in FY2023, we are steadily implementing
the growth investments set forth in the 23 Medium-Term
Management Plan. In the overseas cement business, we haveacquired assets on the west coast of the U.S., and the results ofthese acquisitions are already being seen from the second halfof FY2023. In addition, the renovation of the production line at
Taiheiyo Cement Philippines, Inc. is scheduled to be completed
in May 2024 as planned, and the annual production capacity
will increase from 2.2 million tonnes to 3 million tonnes. By

increasing production capacity we will steadily capture an
increased market share, which will lead to further revenue
growth in the overseas business.

Toward the Next Medium-Term Management
Plan
Analysis of PBR below 1x

Regarding the issue of PBR being below 1x, it has remainedat this low level since falling below 1x before 2021 when coalprices began to soar, and this will be discussed during theformulation of the next Medium-Term Management Plan. In
the case of our company, we can calculate from past data thatPBR will exceed 1x if ROE exceeds 10%, so it is important torecover ROE as soon as possible. We believe that the expected
rate of return (cost of capital) sought by our shareholders isaround 8%, but our feeling is that it is becoming higher than
before. While this is an industry-wide problem, we surmise that
it is also due to a sense of unease and uncertainty about thetransition to carbon neutrality, as cement is an industry thatemits a considerable amount of CO2. In addition, there may beinadequate disclosure of our non-financial strategy initiatives
such as human capital investment and intellectual capital
investment. The Investor Relations and Communications Group,
General Affairs Department, will work with the Sustainability
Promotion Department which was established this fiscal year todisseminate information on these matters. Another factor that37

Medium- to Long-Term Vision, Value Creation Activities - Creating Value

may have contributed to the higher cost of capital is the highvolatility of the domestic cement business’ profits relative tothe external environment, that is, the inability to immediately
pass higher coal and fuel prices on to cement prices. This is
the primary challenge in increasing ROE, but it will also be achallenge in lowering the cost of capital. The key will be thedomestic cement business’ pricing policy. We worked hard
to raise the price by a total of 5,000 yen per tonne since lastyear, but rather than just discussing whether the 5,000 yen
is a reasonable amount or whether we should simply passcost increases on to cement prices in the future, we would
like to clarify the approach to the appropriate price of cement
throughout the entire supply chain. On top of that, I believe it isnecessary to once again demonstrate to institutional investors
and our shareholders that the domestic cement business is acash cow that can generate stable earnings.

Financial Strategy − Message from the Officer in Charge

growth investments if we determine there is an opportunityfrom a medium- to long-term perspective of five to ten years.
More than 30 years have passed since our initial investment
in our U.S. business, which has grown to become theGroup's largest earner. I think this is a classic example of why
investments related to the cement business must not be judged
in the short term. In the future, in order to continue stable
growth as the domestic population declines and a significant
recovery in cement demand is not expected, we would like ouroverseas sales as a proportion of the Group’s overall net sales toincrease to 50%, but it is important not to focus solely on the U.S.
business, but to grow our existing businesses in the Philippines
and Vietnam, as well as Indonesia and the rest of Southeast
Asia, in a well-balanced manner.
Our investment in human capital will also accelerate.
Currently, the Group is under pressure to respond to labor
shortages, including the shortage of drivers under the revisionof regulation in 2024. Domestically, our first priority is toincrease labor productivity and we are working to improve
individual skills not only in production and sales, but also in
the administrative departments. The basic strategy of our groupfrom now on is to generate stable earnings with a minimum
number of employees in Japan and to generate new cash flow
overseas where growth can be expected. We believe that thefundamental element of this is human resources who can be
active on the global stage, and we will build mechanisms thatenable these individual abilities to be utilized.

Continuing the strengthening of our earnings baseand growth investments

We are implementing the strengthening of our plant andquarry facilities as an important investment that is fundamental
to our domestic cement business, and will proceed in a planned
manner to ensure long-term stable supply. We will also
continue to invest in the steady transition to carbon neutrality.
We have launched our "Carbon Neutral Strategy 2050" andplan to achieve interim CO2 emission reduction targets by
2030, as well as complete the development of innovativetechnologies such as CO2 capture and utilization at the actual
plant level. These initiatives will require 100 billion yen by
2030. From 2030 onward, we will sequentially deploy theinnovative technologies at each of our plants.
We will continue to expand our overseas business while
capturing growth markets, and we will not hesitate to make

Introduction of ROICAs businesses related to cement are mainly equipment
intensive industries, the scale of investment is large andrequires a long time to recover the investment. Solid

Overseas net sales and ratio
Net sales (billion yen)
Ratio (%)* Overseas net sales and ratios are based on the customer’s location

228.6

230.8

233.0

318.3
249.0
39.3
35.1

24.9

26.1

26.9

management and decision-making are needed based on an
unbiased, long-term perspective at the business level, regional
level and company level. We are considering making ROIC, theconcept of how much profit is produced from invested capital,
one of our target indicators in the future. While ROE uses net
income as the numerator, ROIC uses after-tax operating income
as the numerator and total investment plus interest-bearing
debt as the denominator, thus making earning power visible inits true sense. As the three core segments of our group, namely
the Domestic Cement Business, Mineral Resources Business andEnvironmental Business, are closely related in terms of humancapital and non-current assets, including internal transactions,
ROIC will be used as an indicator of overall management, anda KPI tree will be developed for each segment. We believethat its introduction into each of our overseas subsidiaries,
the Construction Materials Business segment and the otherbusiness segments that operate their respective businesses
independently will particularly significant.

Financial Strategy

JCRA

net loss in FY2023, we paid the same amount in dividends as
the previous fiscal year, in line with our basic stance of providing
stable and continuous dividends. In the next Medium-Term
Management Plan, we will develop a returns policy that will
provide institutional investors and our shareholders with evengreater peace of mind. We will strive to increase corporate
value with an awareness of TSR (Total Shareholder Return),which takes into account not only dividends and treasury sharepurchases but also stock price fluctuations.

Dialogue with stakeholders

In terms of dialogue with institutional investors and otherstakeholders, each year the opportunities to discuss not only
financial data, such as financial results and forecasts, but also
non-financial data are increasing. The opinions and suggestions
which we receive are reported to management in a timely
manner, and we intend to increase the opportunities for
management to engage in direct dialogue with stakeholders in
the future.

TSR (Total Shareholder Return)

R&I

A-

A stable financial footing is necessary for the continued
execution of investment and policies. For this purpose thecompany must maintain an A issuer credit rating at a minimum.
In the current fiscal year we received a JCR issuer rating of A
and an R&I rating of A-. In order to maintain this A rating in the
future, we will first improve the profitability of the domestic
cement business and return cash flow from operating activities
to over 100 billion yen as soon as possible. In addition,
approximately 35 billion yen of Group companies’ surplus
funds are circulating within the Group under our financial
subsidiary’s cash management system, and we will strengthen
this system with the aim of further improving capital efficiency.
Regarding the delivering of carbon neutrality, we will consider
the procurement of funds in a manner that is consistent withthe "Technology Roadmap for Transition Finance in the Cement
Sector” formulated by the Ministry of Economy, Trade andIndustry. As a start, in March of this year we procured funds
through a transition-linked loan that was a first for the domestic
cement industry. In the future, this ratio will be increased in linewith our gradual decarbonization.

TSR (Total Shareholder Return)
Comparison index: Dividend included TOPIX (%)

122.15 124.57
94.96

85.94

97.54

80.49
59.22

51.49
2019

131.82

2020

2021

2022

73.14
2023

(FY)

TSR (Total Shareholder Return)The ratio of the return (mainly dividends and capital gains) earned on a stock investment
divided by the stock price (investment amount), which represents the overall investment
return for the shareholder. Calculated using the closing price at the end of each fiscal year
(last day of March) and based on an investment having been made at the closing priceon the last day of March 2018.

Shareholder Returns
2019

38

2020

2021

2022

2023

(FY)

Under the 23 Medium-Term Management Plan, our plan forshareholder returns is a total return ratio of 33%. Despite the39Medium- to Long-Term Vision, Value Creation Activities - Creating ValueDX Strategy
External (customers, stakeholders, society)

Providing safety and security to ourinternal and external stakeholders
by utilizing increasingly
sophisticated digital technology
and data.

• Expansion of web portal

Promotion of defensive DX

In recent years, it has become important to rapidly
advance DX in corporate activities in order to maintain andstrengthen competitiveness and to develop new businessareas. We recognize the importance of organizational andbusiness transformation, as well as the promotion of our corebusinesses of cement production and sales, and research anddevelopment, through the use of increasingly sophisticateddigital technology and data in order to materialize "our future
vision and direction" for the mid-2020s. We believe that DX
promotion will be one of the key drivers of these efforts.

Based on the results of the IT environment survey conductedin the previous fiscal year when formulating the DX strategy, we
have decided to promote stable production through advanced
control and automation of cement production processes, aswell as promote management from a new perspective, improve
operations and enhance services such as information provision
to customers. In June 2022, we launched the "DX Promotion
Team" in order to strongly promote these initiatives. The
DX Promotion Team will handle, on a company-wide, crosssectional basis, the individual DX projects that have beenpromoted by each department until now, and is working tomaterialize new services by making maximum use of the latest
digital technology.

Roadmap
Step 2

Utilization of the latest digitaltechnology

Step 1

Digital infrastructure• Establishment of an information
sharing platform with groupcompanies to create group synergy
and resolve issues• Provision of an electronic transaction
system through a web portal site forbusiness partners• Cultivation of "DX human resources"
with both business knowledge andadvanced digital skills

40• Advanced facility maintenance throughoperation monitoring of cement
production facilities using digitaltechnologies• Rapid detection of facility abnormalities
through periodic inspection of cement
production facilities using drones• Development of a remote support systemfor cement production facility operation• AI learning aimed at fully automatedoperation of cement production facilities• Improved operational efficiency andoptimization of logistics by using AI inship allocation planning• Development of a slump forecasting
system using AI image recognition in
concrete production

DX initiatives
will contribute asa key driverof our future visionand direction• Promote DX human resource
development• Raise employees’ awarenessthrough understanding of DX, etc.

Reform of business processes

Promotion of offensive DX
Reform of plant and quarry productivity• Workflow and RPA utilization• Introduction of electronic contracts
and electronic seal services• Utilization of BI tools (data)• Introduction of AI ship allocation
planning optimization system, etc.

Director and Senior Executive Officer

Implementation system• Concrete slump prediction (PreSLump AI)• Structural diagnosis using RFID withsensors, etc.

Reform of corporate culture
and climate

Hideaki Asakura
Current environment and objectives

Advancement of customer services• Utilization of drone and 3D laser scanners• Kiln automation, remote operator assistance• Utilization of anomaly prediction anddetection, VR• Cement quality prediction system, etc.

Internal (within the company)

DX promotion
Initiatives will be progressed to realize measures thathave been promoted in each business division, such as
the restructuring of business systems, development ofcommunication infrastructure, strengthening of plant facilities
and quarry development, the smart factory concept, andoptimization of the allocation of cement distribution vessels
through AI. We also recognize that acquiring and developing
DX human resources is essential for DX promotion. From theseperspectives, we are working on the themes shown in the
diagram as new business development that utilizes digitaltechnology.

Benefitsforbusiness
partners• Documents such as shipment records and invoices are athand instantly• Electronic data can be used for shipping and invoicing
statements• Online ordering simplifies the process• Prevents typographical errors, improves operational
efficiency and progresses labor saving

Benefits
to ourcompany• The process of sending invoices, etc. is eliminated• Transcription errors in inquiry information, vehicle
information, etc. are eliminated• Information can be shared with business partners in realtime
• Prevents typographical errors, improves operational
efficiency and progresses labor saving

Example: Web Portal

This service digitalizes information including shipment
records, invoices and payment information, and provides it
online. Service provision commenced in the Cement Businessin 2019 and in the Mineral Resources and Environmental
Businesses in July 2023. For business partners, digitalization
eliminates the time lag in the transmission of information,and the downloading of text data enables the contents ofstatements to be reused, thereby improving operational
efficiency and saving labor. Orders and applications can also
be submitted through this service, eliminating mistakes anddouble entries, thereby improving accuracy and speeding up
procedures.

41

Strategy Implementation Status - Business Strategies

Business At a Glance
Net sales

10-year net sales and operating income
Net sales (left axis)(billion yen)

Cement Business(Japan)600

255.7
billion yen

400

Operating income (right axis)

60

397.0
412.1
46.1

200

392.7

33.0

385.0

28.5

29.5

408.5

434.8

415.1

237.4
25.5

21.4

16.6

-20

2014

2015

2016

2017

Net sales (left axis)

20182019 2020 2021 2022

Operating income (right axis)

Cement Business(Overseas)

200
150

158.5

137.9

Mineral Resources
Business

100

25.1

30

22.0

19.8

7.1

6.1

2014

2015

2016

93.8

95.9

10
5

2017

Net sales (left axis)

93.5

2018

2019 2020 2021 2022

2023

Operating income (right axis)

(FY)

10

84.2
82.7
81.4
80.1
77.1
75.7
8.0
7.7
8.2
7.1
6.0
5.5
6.0

8.1

8
6
4

20

2

2014

2015

Environmental
Business

100
80

2017

Net sales (left axis)(billion yen)

120

2016

2018

(FY)

73.4

7.4

(billion yen)

77.9

7.6

7.6

90.2
7.4

92.6
6.6

84.4
7.7

78.0
6.4

72.3
6.6

10

77.9

8

5.8

6

40

4

20

2

0

0

2014

2015

92.6

90.3

(billion yen)

Construction
Materials Business

100

2016

Net sales (left axis)

80
60
40

2017

5.4

5.4

2018

2014

2015

2023

Operating income (right axis)(FY)(billion yen)

10
80.8

6.1

74.0

77.0

2016

82.1

81.3

73.0

65.0

8

68.2

6
6.0

4.7

20
0

2019 2020 2021 2022

2017

2018

4.9

4.5

4
3.5

3.4

2019 2020 2021 2022

2.3
2023

2
(FY)

* The "Accounting Standard for Revenue Recognition" (ASBJ Standard No. 29), etc. was applied from FY2022.

42

0

12
74.7

8.4

2023

Operating income (right axis)

103.4

60

2019 2020 2021 2022

FY2023 Achievements

Based on a solid foundation for manufacturing,transportation and supply, our cement business in Japan
reliably provides cement and ready-mixed concrete to users
nationwide. As well as expanding our product lineup that
includes special cements, blended cement and cementbased soil stabilizers, we are building a sales system that canaccurately respond to changes in construction methods andthe diverse needs of users, such as by deploying user meeting
activities for each industry.

In response to cost increases due to soaring coal prices,
we implemented a price increase of 2,000 yen per tonne forshipments from January 2022 and an additional 3,000 yen per
tonne for shipments from October of the same year. Although the
2,000 yen price increase was achieved in the third quarter, thedelay in the progress of implementing the price increase resulted
in net sales of 255.7 billion yen (an increase of 18.2 billion yen
from the previous fiscal year) and an operating loss of 36.9 billion
yen (a decrease of 35.0 billion yen from the previous fiscal year).

P.44

In the overseas cement business, we produce and sellcement at nine plants in the Pacific Rim, including four on thewest coast of the United States, two in China, and one each in
Vietnam, the Philippines, and Papua New Guinea.* In addition,
we are developing a variety of other businesses, including theexport of cement and clinker and trilateral trade, as well as
increasing our handling of bulk materials.

In the U.S. business, although progress was made in passing
on higher costs to customers, effects were felt from sometechnical issues at plants and other factors. A decrease in sales
volume in the China business due to the effect of COVID-19,
a decrease in export volume from the Vietnam business, andhigher clinker import costs for the Philippine business, resulted in
net sales of 297.3 billion yen (an increase of 71.5 billion yen fromthe previous fiscal year) and operating income of 22.0 billion yen(a decrease of 4.0 billion yen from the previous fiscal year).

P.46

In addition to our main businesses of the aggregatesbusiness that handles products for ready-mixed concrete andour mineral products business that handles products for steel
and chemical manufacturers, the Mineral Resources Businessis also engaged in developing our geo-solutions businessthat processes construction soil and contaminated soil, as wellas the sale of new products developed by the group, such asfunctional hollow particles and ultra-pure silicon carbide.

The aggregates business remained strong, especially in
the Kanto and Chubu regions. In addition, price increases
were implemented in response to various cost increases,
such as electric power and fuel costs, and although they had
partial penetration they could not be fully passed on to prices,which resulted in net sales of 82.7 billion yen (an increase of
5.5 billion yen from the previous fiscal year) and operating
income of 5.5 billion yen (a decrease of 0.4 billion yen from theprevious fiscal year).

P.48

In the Environmental Business, our core business is recycling
waste and by-products generated at thermal power plants,
steelmakers and chemicals manufacturers, as well as recycling
materials such as municipal waste incineration residues
and household water and sewage sludge at the request ofmunicipalities. In recent years we have also been developing
the aquatics business via products such as water purificationmaterials, which also contributes to the formation of a circular
economy.

Sales of calcium carbonate for desulfurization, gypsum andcoal remained strong. On the other hand, the biomass fuelbusiness, which sells PKS (palm kernel shells), was affected byexchange rate fluctuations, resulting in net sales of 77.9 billion
yen (an increase 5.5 billion yen from the previous fiscal year)
and operating income of 5.8 billion yen (a decrease of 0.7
billion yen from the previous fiscal year).

The Construction Materials Business consists of theconstruction materials business, which manufactures and sells
products including premix products, concrete admixtures, ALC(autoclaved lightweight concrete) and interlocking blocks,
and the construction and civil engineering business which is
involved in ground improvement projects, sales of materials
for shield tunnels, and repair and renovation work for concrete
structures.

Although sales of building materials such as ALC remained
strong, the partial failure to pass on the sharp rise in raw
material prices and delays in various construction orders
resulted in net sales of 68.2 billion yen (an increase of 3.1
billion yen from the previous fiscal year) and operating incomeof 2.3 billion yen (a decrease of 1.1 billion yen from theprevious fiscal year).

0(billion yen)

80.1
6.8

20
15

0.2

6.7

25

40

0

billion yen

20.3

213.2

-40

(billion yen)

225.7
26.0

15.1

80
60

211.6

(FY)

9.3

(billion yen)

68.2

203.4
173.8

100

0

billion yen

182.0

2023

297.3

214.8

50

77.9

0

-36.9

250

billion yen

20

16.2

-200

300

82.7

40

255.7

-1.8

(billion yen)billion yen

406.2

0

-400

297.3

(billion yen)

Business Overview

0

P.50

P.52

* Dalian Onoda Cement Co., Ltd. and Jiangnan-Onoda Cement Co., Ltd. ceased operations in December 2022 and February 2023, respectively.

43

Strategy Implementation Status - Business Strategies

Cement Business (Japan)
We aim to achieve a V-shaped
recovery by generating profits
through optimization of
cement prices.
Naoyuki Kira

Managing Executive Officer,
Senior General Manager of
Cement Business Division

Concrete mixer truck (Harumi Onoda Remicon Co., Ltd.)

Profit projections for FY2023 and priceoptimization initiatives

Inheritance of cement business from
Denka Company Limited

Improving logistics efficiency

The future of the domestic cement businessIn response to the sharp rise in coal prices, in October 2022 we
implemented a second increase to cement prices, following theprevious increase in January, and the increase was accepted byalmost all users. Price increases for cement-based soil stabilizers
also steadily penetrated the market in the same manner as thosefor cement. Although we expect the price of coal to be purchased
this fiscal year to settle down, due to remaining inventory from theprevious fiscal year's contracts in the first half of the year, as well as
higher raw material prices, we expect operating income to improveby 44.2 billion yen to 7.3 billion yen. Learning from these priceincreases, we will consider cement price optimization in the next
Medium-Term Management Plan.

In April of this year, we began purchasing cement
produced at Denka Co., Ltd.’s Omi Plant and selling it
under the Taiheiyo Cement brand. Since the company has
decided to withdraw from the cement business in FY2026,
we plan to take over their business by optimizing the
production and supply system within our group. As the
population of Japan is declining and demand for cement
is not expected to recover significantly in the future, as acompany dedicated to the cement industry, we would liketo consider whether there is anything we can do to help,
with an eye to possible business alliances or acquisitions.

In order to respond to the shortage of drivers under therevision of regulation in 2024. we have begun to develop
systems using digital technology for both domestic marine
and land transportation. Until now, ship and truck allocation
has relied heavily on human experience, and the fact that only
veterans are able to perform the work accurately has becomea challenge. The development of a system for vessel and truck
allocation cannot be achieved overnight and requires repeatedtrial and error to improve its accuracy. However, we will continue
to work diligently to improve logistics efficiency, which will also
lead to labor savings and energy cost reductions.

Cement is an indispensable basic material that supports
infrastructure. While we will continue to produce the cement
needed in Japan as a dedicated manufacturer, we will also fulfill
our social responsibility by accepting waste and by-products
as raw materials and fuel for cement production. In order todo so the business must be profitable in order to survive, andwe recognize that the future sales price policy is the mostimportant challenge for the domestic cement business. We will
also actively work to develop the human resources that support
our business and to develop new applications for stabilizers
that will contribute to national resilience.

Cement and stabilizers

Business scheme

Ready-mixed concreteGroup ready-mixed
concrete companies

Domestic cement
production and supply sites
Cement plants: 9
Service stations: 106
Clinker production capacity:
17.64 million tonnes
Cement supply: 17.23 million tonnes

44

Our coastal cement tanker, Hokuyumaru

CementDomestic: 49 companies, 91 plants
Ready-mixed concrete supply: 3.88 million m³

Cement and stabilizers

Supply to Group Construction
Materials Business companies
Related material manufacturers: 3
Concrete product manufacturers: 2
Construction companies: 3

Related materials,
concrete products,
construction

Supply todomestic market• Construction businesses• Ready-mixed concrete manufacturers• Concrete product manufacturers

Expanding the range ofapplications and uses of
cement and concreteStrengths

Challenges

Ability to handle, transport, and supply
special products by utilizing the group's
comprehensive strengthLong-term:
Decrease in domestic demand

Short- to medium-term:
Decrease in demand due to a drop in
consumer confidence

Sales volume
Cement: 13.13 million tonnes
Stabilizers: 2.22 million tonnes

45Strategy Implementation Status - Business Strategies

Cement Business (Overseas)

We Will Steadily Achieve Resultsfrom Our Growth Investmentsin the U.S. and Southeast Asia.
Yoshifumi Taura

Director andSenior Executive Officer,
Senior General Manager ofInternational Business Division

Semen Indonesia Group visiting Taiheiyo Cement

Reconstructing the overseas
business portfolio

Profit forecast for FY2024

Carbon neutrality transitionin overseas business

Human resource development
for overseas businessWe have withdrawn from China where we had been
operating cement businesses since the second half of the
1980s, and have progressed the southward shift of ourbusiness portfolio to Southeast Asia. In addition to the capitaland business alliance with Semen Indonesia Group in 2021,
Taiheiyo Cement Philippines, Inc. has started construction of anew production line and plans to begin commercial operationin May 2024. Furthermore, in the U.S., CalPortland Company's
acquisition of the assets of Martin Marietta Materials, Inc.,
including its cement plants, significantly increased its presenceon the west coast of the U.S., particularly in California.

In the current fiscal year, we will steadily make good on theinvestments made under the 23 Medium-Term Management
Plan. Sales in the U.S. will increase by $194 million due to theeffect of asset acquisitions, and sales in China will decrease by$122 million due to the lack of sales from the current term. As
a result, net sales of our overseas subsidiaries, etc. will increaseby 24.7 billion yen to 322.0 billion yen, and operating income
will increase by 6.7 billion yen to 28.7 billion yen. In the U.S.,in addition to continued strong housing demand, we expect
public investment based on the $1.2 trillion infrastructure
investment bill to be implemented in earnest in the future,
which will lead to strong cement demand.

We will promote energy conservation and the use ofblended cement at our overseas production sites, aimed at thesteady transition to carbon neutrality. CalPortland Company
has switched all of its agitator trucks at its ready-mixed concrete
plants in central Los Angeles to natural gas-powered vehicles,
and Nghi Son Cement Corporation in Vietnam plans to installa waste heat recovery power generation system. Regarding
our initiative to shift to blended cement which can reduce CO2
emissions from cement production, CalPortland Company'splan to expand the sale of its limestone cement and our
TAIHEIYO GREEN CEMENT aimed at the Singapore market havereceived high acclaim. We also plan to double the percentageof blended cement exports from Japan to about 10%.

As our overseas business expands, the governance of theoverseas Group companies will be a challenge. In order todevelop human resources with skills in auditing, business
management and operation, it is essential to send employees
abroad to gain experience early in their careers. At the sametime, we believe that as a truly global company, it is necessary
for us to develop the foreign permanent employees within thegroup and instill the Taiheiyo ethic in them. We will continue todiversify our workforce by actively recruiting foreign permanent
employees at our headquarters.

Business scheme
Cement, Clinker

Domestic cement production
and supply sites
Cement plants: 9
Service stations: 106
Clinker production capacity:
17.64 million tonnes
Cement supply: 17.23 million tonnes

Clinker

CementU.S. Cement Business
Cement production andsupply sites
Cement plants: 4
Distribution terminals: 20
Clinker production capacity:
5.28 million tonnes
Cement supply: 4.26 million tonnes

Cement clinker supply
to the Asia-Paciﬁc market

1.9 million tonnes

Total 11.1 million tonnes
Vietnam 4.8 million tonnes
China 1.9 million tonnes
Philippines 1.5 million tonnes
6 other countries 2.9 million tonnes

8.2 million tonnes

Asia-Paciﬁc Cement Business
Cement production and supply sites
Cement plants: 5
Distribution terminal: 6
Clinker production capacity: 6.96 million tonnes
Cement supply: 5.74 million tonnes

0.6 million tonnes

46

Renovation of production line (Taiheiyo Cement Philippines, Inc.)

0.7 million tonnes

Cement, Clinker

Strengths

Overseas business portfolio that incorporates
the Pacific Rim’s growth markets

Challenges

Hedging the risk of a drop in demand on
the U.S. west coast and expansion of theSoutheast Asian business1.0 million tonnes

Southeast Asia
Partner Companies
Countries: 5 Companies: 5
Cement supply: 3.1 million tonnes

Cement andready-mixed concrete

CementCement: 5.3 million tonnes
Ready-mixed concrete: 4.28 million m³

1.4 million tonnes

Cement and ready-mixed
concrete supply to the U.S. market
Cement: total 6.7 million tonnes
Ready-mixed concrete: 4.28 million m³

47

Strategy Implementation Status - Business Strategies

Mineral Resources BusinessWe will build a solid supply chain
through quarry development with aview to the next 100 years.
Kunihiro Ando

Shin-Tsukumi Quarry (panoramic view)

Quarry site Greening (Buko Quarry)

Vice President and Director

Quarry development

Profit forecast for FY2024

Fostering new businesses− functional materials

Medium- to long-term strategy
of mineral resources businessTo ensure the long-term stable supply of limestone, we will
invest 100 billion yen in quarry development over 10 years,
including the period of the 23 Medium-Term Management
Plan. The core of the project is the development of the Yato
area of the Shin-Tsukumi Quarry in Oita, which will secure 100
years’ worth of limestone for the Oita Plant. Our Group currently
owns 13 limestone quarries in Japan, quarrying a total of 38.2
million tonnes of limestone per year. Half of this is used for
cement production and the other half is supplied as aggregatesfor ready-mixed concrete as well as for other industries such as
steel and electric power. We will further strengthen our logistics
sites and transportation systems to build a solid supply chain.

In response to soaring fuel prices, we have passed onhigher production and logistics costs to our sales prices, and in
FY2023 we raised prices to record highs. However, investments
are needed to secure limestone resources from a long-term
perspective in order to ensure a stable supply of high-grade
limestone in the future. We will implement price increases thisfiscal year that exceed those of the previous year, while gaining
users' comprehensive understanding of these factors. We
will also focus on improving profitability of the geo-solutions
business, and forecast net sales of 92.0 billion yen, an increaseof 9.3 billion yen from the previous fiscal year, and operating
income of 7.6 billion yen, an increase of 2.1 billion yen fromthe previous fiscal year.

We are working to develop flexible products that meetuser needs by fully utilizing our accumulated knowledge ofminerals. Functional hollow particles "CellSpheres" are highly
versatile products that can enhance the dielectric properties
and heat resistance of paints and resin-molded parts due totheir high level of hollowness. In addition, we have begun
supplying ultra-pure silicon carbide (SiC) as a material for power
semiconductors. These will require time for user evaluation, but
we will develop them into core businesses in alignment with
our intellectual property strategy.

Limestone is said to be the only natural resource in which
Japan is self-sufficient, but the development of new quarry
areas is essential to ensure stable a supply over the long term.
In addition, we are optimizing our supply network of limestone
for cement production, aggregates for ready-mixed concrete,
and other industries such as steel and electric power inaccordance with the characteristics of the limestone produced
from our 13 quarries in Japan. We recognize biodiversity
initiatives as an important issue and joined the 30by30
Alliance for Biodiversity in July 2023. We will make further
efforts toward being nature positive, including conservation ofrare plants and animals, revegetation of former quarries, andconservation of water resources.

Business scheme
Cement raw material
Raw material: Limestone
Processing: Crushing
Supply volume: 20.2 million tonnes

Limestone

Aggregates for ready-mixed concrete
Raw material: Limestone
Processing: Classiﬁcation, rinsing
Supply volume: 9.8 million tonnes

Limestone Quarries (Japan)
Limestone quarries: 13
Quarry area: 2,835 ha
Quarried volume: 38.2 million tonnes per year

Limestone

High-grade
limestone48

Industrial(steelmaking, etc.)
Raw material: High-grade limestone
Processing: Grinding, calcination
Supply volume: 8.2 million tonnes

Supply to
cement plants

Strengths

The 13 quarries in well-balanced locations
across the country can provide a stable,
long-term supply of high-quality limestone

Challenges

Strengthen synergies with group companies

Cement raw material:20.2 million tonnes(including supply to outside the group)

Supply to users
Aggregates for ready-mixed concrete,etc.:
9.8 million tonnes(including intra-group supply)Supply to users
To steel mills: 3.3 million tonnes(including export: 0.8 million tonnes)
To chemical and paper manufacturers,
etc.:
4.9 million tonnes

49Strategy Implementation Status - Business Strategies

Environmental BusinessParticipation in the Reconstruction Farm initiative(Namie Town, Futaba District, Fukushima Prefecture)

We will expand businesses that
contribute to the circular economy
based on the effective use of waste
and by-products.
Shinji FukamiWe have decided to participate in the large-scale dairy farm
(Reconstruction Farm) initiative in Namie Town, Futaba District,which is being led by the Fukushima Prefectural Dairy Cooperative
Association. The Reconstruction Farm is scheduled to commencebusiness in FY2027 with the aim of not only revitalizing the livestock
and agriculture industries in Namie Town, but also establish new
recycling-based farm operations. By applying the waste and byproduct processing technologies we have cultivated over the years,
we aim to contribute to the Restoration Farm by supporting thedevelopment of technologies to produce liquid fertilizer and compost
through the effective use of cattle manure and to utilize methanegas, a by-product of liquid manure production, and work together
with the local community to achieve sustainable development.

Cattle manure

Feed

Reconstruction FarmElectric power
Site area: approx. 25 hasupplyRaw milk production:
13,000 tonnes per year
Number of dairy cows kept:1,300

Feed crop
Liquid fertilizer
and compost

Methanefermentation

Liquid fertilizer andcompost production

Digestive fluids
and solids

Managing Executive Officer

Profit forecast for FY2024

Maximization of environmental businessusing cement kilns

Cultivation of businesses that are not affectedby cement production

Value creation compatible
with carbon neutrality

This fiscal year, in addition to properly reflecting foreignexchange fluctuations and higher transportation costs in our
prices, we are focusing on increasing the volume of wastes
processed as alternative fuels such as waste plastic and wasteoil, in response to the soaring price of coal. The current fossil
fuel substitution rate in cement production is approximately
30%, and we are studying specific measures to increase thisrate to 50% by 2030. In addition, sales of gypsum and otherproducts that are less dependent on kilns are expected toremain strong, and we forecast net sales of 81.0 billion yen,
an increase of 3.1 billion yen from the previous fiscal year, andoperating income of 6.9 billion yen, an increase of 1.1 billion
yen from the previous fiscal year.

The cement industry’s greatest feature is that it produces andsupplies to society cement with stable quality without emitting
dioxins or generating waste. At the same time, it uses waste andby-products as alternative raw materials and fuels in extremely
efficient kilns with an energy efficiency of over 80%. In addition
to various industrial wastes and by-products, our Environmental
Business can also make effective use of municipal waste andincineration residue. In addition, agreements have been signed
between all of our plants and local governments to facilitate
waste disposal in the event of a natural disaster. In the future
we will continue to be a key player in the circular economy.

While fulfilling the role of a venous industry that effectively
uses waste and by-products, we are cultivating businesses
that are not affected by cement production volumes. We are
expanding the recycling of vehicle lithium-ion batteries thatapplies the cement production process, developing technology
to recover phosphorus from dehydrated sewage sludge
separation liquid, working on reconstruction farms, and working
on the early commercialization of technology to reduce thevolume of contaminated soil and other materials containing
radioactive substances. In addition, because automobile
shredder residue, which is considered a difficult waste to disposeof, can be easily separated into metals and plastics using our
proprietary low-temperature embrittlement technology, we will
expand it as a business that contributes to the circular economy.

We aim to contribute to the circular economy and make asteady transition to carbon neutrality by 2050, by effectively
utilizing waste and by-products as alternative raw materials andfuels for cement. The goal is to fully utilize our plants which arelocated in a well-balanced manner throughout the country, andtransition finance and government support in collaboration
with governments, municipalities and leading companies inorder to create CCS and CCU decarbonization hubs for the CO2that is separated and captured in each region, as well as theadvancement of waste treatment to meet the characteristics andneeds of each region.

Business scheme
Handled by Mineral
Resources Business

Steel industry

Various waste

Industrial-use
limestone

Local communities

To power plants:
0.72 million tonnes

Various waste:
Total 0.66 million tonnes• Municipal waste
0.02 million tonnes• Municipal waste incineration
residue:
0.25 million tonnes• Household water, sewage
sludge, etc.: 0.39 million tonnes

3 companies, 12 steel mills
Steel production by-products• Blast furnace slag, etc.: 1.8 million tonnes

Coal-ﬁred
thermal power plants
90 power plants
Coal-ﬁred thermal waste and by-products• Coal ash: 2.03 million tonnes• Gypsum: 0.63 million tonnes

50

Blast furnace slag,
etc.

Coal ash,gypsumDomestic
cement production
and supply sites
Waste and by-products processed:
7.27 million tonnes

Strengths

Cement production process that boasts
world-leading use of alternative raw
materials and fuels

Challenges

Cultivation of businesses that are notaffected by cement production

Variousindustrial
waste andby-products

Other industry sectors
Various industrial waste
and by-products
Total 2.15 million tonnes

51

Strategy Implementation Status - Business Strategies

Construction Materials BusinessWe aim to realize appropriate pricing
and develop products and construction
methods that contribute to labor saving
and reducing labor demand.
Isao Matsui

Ground improvement project for road construction (Onoda Chemico Co., Ltd.)

Thermalbarrier ILB and blocks for guiding visually impaired persons (Taiheiyo Precast
Concrete Industry Co., Ltd.)Managing Executive Officer

Profit forecast for FY2024

Development of labor-saving and labor-demand
reducing products and construction methods

Overseas deployment

Initiatives to reduce environmental impact

We will continue to pursue the realization of appropriate
prices for building materials and construction and civilengineering projects, not to mention passing on increases in
raw material and fuel prices. In addition, as labor shortages atconstruction and production sites are becoming more serious,
as a pressing issue we are working on the development of
products and construction methods that are effective in saving
labor and reducing labor demand, which will lead to shorter
construction periods and lower costs. As a result, we forecast net
sales of 77.0 billion yen, an increase of 8.8 billion yen from theprevious fiscal year, and operating income of 3.2 billion yen, an
increase of 0.9 billion yen from the previous fiscal year.

In the Construction Materials Business, which manufacturesand sells products that include premix products, concrete
products and ALC (autoclaved lightweight concrete), we
consider responding to labor shortages at construction sites asa key issue, and are working together with our related groupcompanies to develop products and construction methods thatare effective in saving labor and reducing labor demand. In
the construction and civil engineering business, which carriesout ground improvement projects, repair and renovation of
concrete structures and seismic reinforcement work, we areproposing labor-saving and labor demand-reducing solutions
that combine materials and construction methods to addressincreasingly serious labor shortages, and introducing digitaltechnology to construction work sites.

In Southeast Asia, which is experiencing remarkableeconomic development, the performance requirements forconstruction materials are increasing rapidly, and we expectthat our group's products and construction methods, with
their high technological capabilities, will provide significant
business opportunities. In Indonesia, in particular, there areplans to relocate the capital to the eastern part of Kalimantan in
2024, and as there are many peat bogs in the relocation area,significant demand for stabilizers and ground improvement
projects is expected. We will consider the overseas expansion of
the ground improvement business while maximizing the effectsof the capital and business alliance with Semen Indonesia
Group.

In addition to maintenance and repair services to ensure
the continued safe use of existing concrete buildings andstructures, we are also working on the manufacture of productswith reducing environmental impact in mind. A familiar productis paving blocks, which are often used in locations such as
sidewalks because of their heat shielding, water permeability
and water retention properties. We will also cooperate in the
research and development of CCU technology to utilize in the
production of concrete products the CO2 that is generated andcaptured during cement production, with the aim for a steadytransition to carbon neutrality by 2050.

Business scheme
Supply to related material manufacturers
Group companies
SupplyRelated material manufacturers: 3
Product shipment volume: 0.21 million tonnes

Cement:0.06 million tonnes

Supply to concrete product manufacturers

Materials forconstruction andcivil engineering
projects

Concrete product manufacturers: 2
Product shipment volume: 0.31 million tonnes

Cement plants: 9
Service stations: 106
Clinker production capacity:
17.64 million tonnes
Cement supply: 17.23 million tonnes

52

Cement and stabilizers:
0.27 million tonnes

Development and sales expansion ofdiverse products and construction methods
through synergy with group companies

Challenges

Addressing labor shortages and the aging
workforce at construction sites

Concrete Products

Cement:0.06 million tonnes

Domestic
cement production
and supply sites

Strengths

Supply to domestic market
Supply toconstruction companies
Ground improvement companies,
repair and renovation companies: 3
Cement and stabilizer consumption:
0.27 million tonnes

Ground improvement projects
Repair and renovation projects

Shipped and used volume:
0.79 million tonnes
Main products• Premix products• Concrete admixtures• ALC (autoclaved lightweight concrete)• Interlocking blocks

53

Strategy Implementation Status - Business Strategies

Research and Development
Key Strategies for FY2024(1) Delivering carbon neutrality

We will support theefine infrastructure technologies andoverseassustainable development (2) Rexpandof our group through(3) B uilding circular economies and contributing
our research andto global environmental preservation
development capabilities
reation of innovative materials andtechnologies
and intellectual property (4) Cfuture-oriented
strategy.
• Technology development to achieve the 2030 targets• Development of innovative technologies related to CCUS

• Cement: Maintain and improve quality, cost reductions• Concrete: Enhance functionality and expand applications• Stabilizer/insolubilizing agent: Business expansion• Develop combustion and de-chlorination technologies• Research and development on biodiversity protection• Functional materials• Utilization of AI and the IoT to boost productivity andreduce labor demand

Takayoshi Okamura54(5) Strengthening the research anddevelopment system

Managing Executive Officer• Promoting early commercialization by strengthening
cooperation with business divisions and groupcompanies, etc.
• Conduct ‘market in’ based theme exploration

Direction and role of the Research andDevelopment Department

Major R&D initiatives and results

In the Research and Development Department, the Central
Research Laboratory, the Intellectual Property Department and theCarbon-Neutral Technology Development Project Team work in unisonand conduct activities in collaboration with the business divisions.
With the sustainable development of the group in mind, we areprogressing research and development on technological development
aimed at the resolution of social issues such as delivering carbon
neutrality and building a recycling-based society, and on R&D
strategies to contribute to the group’s sustainable growth.
Among our five key strategies, the first is delivering carbon
neutrality, which is the most important issue for the cement
industry, and we are progressing the establishment of innovativetechnologies aimed at this goal and development to achieve social
implementation. In addition, in order to maintain and develop"Taiheiyo quality," we are pursuing the further refinement of ourinfrastructure technologies and working to advance our recycling
resource utilization technologies to contribute to the establishmentof a circular economy and conservation of the global environment.
We are also focusing on the development of innovative functional
materials and the creation of future-oriented technologies. We havestrengthened our R&D system by accepting specialist engineers fromgroup companies as researchers, and we are also focusing on ‘market
in’ based theme exploration.
In addition, we are prioritizing themes that can contribute to ourbusiness as soon as possible, and have established an "Overseas
Technical Team" to respond to the strong overseas demand for
cement, and have strengthened our research and development ofcarbon neutrality related materials in addition to cement, concreteand stabilizers for overseas markets.
In conjunction with this research and development, we will
promote our intellectual property strategy to enhance the brandvalue and competitiveness of the Taiheiyo Cement Group andsupport the group’s aim to become an outstanding leading
company with our technological capabilities.

(1) Delivering of carbon neutrality and a circular
economyDelivering carbon neutrality
National resilience
Creation of a recycling-based society

CementBusiness(Domestic)

Environmental
Business

Maintain and improve cement quality
Cost reduction andenvironmental impact reduction

CementBusiness(Overseas)

Carbon neutrality

Reﬁning infrastructuretechnologies
Deployment overseas

Technology developmentthat contributes to overseas businessexpansion under the Glocal Strategy

Creation of
innovative materials andfuture-oriented technologies

MineralResources
Business
Discovering possibilityof our mineral resources

Building circular economies
and contributing to global
environmental preservation
Strengthening
the research anddevelopment system

Central ResearchLaboratory
Intellectual Property
Department(2) Prioritizing themes that can quickly contribute to
the business

Further advancement of recycled resources
utilization technology
Development of biodiversity protection technologies

Construction
Materials
Business
Synergies within the group
Developing new business areas
towards creation

Group
Companies

Carbon Neutral
Business development support thatTechnology Development contributes to the business expansionof group companies
Project Team(3) New business development and future-oriented
technologies

We are progressing the development of CCUS technology,of which the innovative technology of the C2SP Kiln as a key
pillar, with the aim of delivering carbon neutrality in 2050. On
the other hand, in order to achieve the 2030 Interim Target of
reducings specific CO2 emissions by 20% or more throughout
the supply chain, we are working to revise specifications toenable a reduction in the amount of clinker in ordinary cement,
and we are also considering new type of blended cement. We
have also developed CO2-absorbing/cured CARBOFIX cementand “CARBOCATCH”, an efficient system to fix CO2 into fresh
concrete. In addition, we aim to expand the use of combustible
waste as fossil fuel substitutes by promoting the advancementof burner combustion technology, etc., in order to deliver
carbon neutrality and fulfil our role as a key player in thecircular economy.

In order to meet the strong overseas demand for cement,
we are focusing on the development of cement that meets
local needs. We are resolutely supporting development by our
US subsidiary, CalPortland Company, of new types of blended
cement that utilize limestone and natural pozzolans, and the
supply of these cements to the market has already begun. We
are also working to demonstrate and disseminate the quality
and performance of TAIHEIYO GREEN CEMENT, a fly ash-based
blended cement that we are exporting to Singapore, and to
standardize it in Singapore, while building up a track record of
applications of low-heat cement to large concrete structures. We
will prioritize research and development that will contribute to
the expansion of our business, including overseas business.

We are promoting the development of functional materials
for the generation of new profits. In particular, “CellSpheres”,
which are functional hollow particles, and “Nanolitia” cathodematerials for lithium-ion batteries, are innovative materials
that we expect to expand as a core business in the future,
and we have already secured intellectual property rights andestablished stable production technologies in Japan andoverseas. We are also focusing on technological developmentthat will lead to innovation of production processes, such as
3D laser measurement technology for cement plant facilities
utilizing AI/IoT, and “PreSLump AI”, a system that uses AI toinstantly and accurately predict the slump of concrete after
mixing.

Trial laying of interlocking blocks manufactured with CARBOFIX cement

Transmission electron microscope (TEM) image of "CellSpheres" functional
hollow particles

Monitor display of the post-mix slump prediction system “PreSLump AI”

Interlocking blocks manufactured with CARBOFIX cement were laid in a parking lot to
confirm their applicability as paving blocks. Technology development is in progress tofurther expand their CO2 reduction effect.

A revolutionary material that achieves both a hollowness ratio of 75% or higher in the
microscopic range of 1 to 10 μm particle size. It has excellent heat insulation and low
dielectric properties, and is being developed for applications including in the electronicmaterials field.

Using AI-based image recognition, slump can be predicted instantly and with highaccuracy from images of the concrete mix inside the mixer. Sales by Pacific Systems
Corporation began in April 2023.

55

Strategy Implementation Status - Business Strategies

Intellectual Property
Aiming to improve brand value and strengthen competitivenessthrough "offensive" and "defensive" intellectual property strategies.

Fundamental Intellectual Property Policy
We are promoting activities that support the sustainablegrowth of the Group based on our fundamental policy ofboosting the competitiveness and brand value of the Taiheiyo
Cement Group via business-oriented intellectual property
activities. We have defined three key policy initiatives ofbuilding an inventory of intellectual property rights with a view
to future businesses, deepening and expanding information
analysis based on intellectual property, and strengthening theintellectual property capabilities of the entire Group.

Our intellectual property strategy aims to improve our brand value and strengthen ourcompetitiveness through “defensive” measures to acquire intellectual property rights and manage therisk of infringing on third-party rights, and “offensive” measures to proactively deploy our intellectual
property to our business. In particular, we are working on the development of our own "C2SP Kiln,"
which will be the world’s first kiln that enables the separation and capture of CO2 directly from thecement production process, with the aim of it becoming the global standard model, and also position
it as an important pillar of our intellectual property strategy.

Takayoshi Okamura
Managing Executive Officer

Intellectual Property Management
Intellectual Property Management System

Securing intellectual property rights

IP Consulting

In order to maintain and secure our business areas in the
future, we are promoting the construction of a patent portfolio
while also using means to protect the secrecy of our know-how.
The development of the "Carbon Neutral Strategy 2050" hasstimulated the development of related technologies and patentapplications in the relevant fields have increased rapidly. At
the same time, we are promoting patent applications related
to innovative materials and future-oriented technologies, inaddition to our cement and concrete infrastructure technologies
related to national resilience and recycling technologies
related to the formation of a circular economy. Overseas, we areproactively progressing with patent and trademark applicationsin the Southeast Asian countries where we are expanding ourbusiness. We are also focusing on brand building throughtrademarks, and have registered several trademark rights thatare mainly related to carbon neutrality. As of March 31, 2023,
we held 276 trademarks in Japan and 147 trademarks overseas,
an increase of 8 from the end of the previous fiscal year.

We are developing IP landscape activities thatcomprehensively analyze various types of information,
mainly patent information, and utilize it for R&D and businessdevelopment. We use IP landscapes primarily in the explorationof applications for developed technologies, the quantification of
the value of patents, and the consideration of the directionalityof development. Quantitative visualization of the distributionof patent clusters for developed technologies is used in thedetermination of the feasibility of technologies and products.
For example, the figure below displays the frequency offunctional material patent clusters as a topographic map with
contour lines and color tones (from blue increasing to yellow
at the peaks), with our technologies indicated by and priortechnologies by . This shows that our technology forms ahigh-density area that does not overlap with prior technologies,
making it a differentiating technology and a high barrier toentry (which prevents later entrants).

We are conducting various training programs to improve
the intellectual property literacy of the group's employees. We
also regularly review our education system and are promoting
education at each job level according to years of experienceand expertise. As an incentive related to intellectual property,
we have awards for employees who have created outstanding
inventions, discovered infringements or made otherachievements, in addition to rewarding inventors for filing
patents and other applications.
Our in-house training program includes sessions for newly
hired employees, basic training for employees who have little
experience dealing with intellectual property, patent description
training for young inventors, and training for newly appointed
managers, each of which are held annually, as well as patent
research skills training which is held regularly. We are also
incorporating training by external organizations such as theJapan Intellectual Property Association, to ensure that trainees
acquire knowledge appropriate to their level and expertise.

Tripartite intellectual property action promotion system

Patent application ratio by technical field (FY2023)

Example of analysis of functional material patent clusters

I n-house attendance at intellectual property training
sessions (FY2023)
(Unit: Persons)Carbon neutrality

Management

National resilience

29%

24%

Area of prior technology

Intellectual Property Rights Management CommitteeIntellectual Property
Strategy
Meetings

Intellectual
Property
Department

Research andDevelopment
Department

Business
divisions

1,500

1,357

1,000
1,142

Group Companies
Group Intellectual Property Promotion Committee Meetings

1,451

1,511

1,596

1,235

1,273

1,335

0

2019

216
2020

Total

50

41

91

46

9

55

12
108

13

63

25
171

Area of our technology
1,726

1,439

Building barriers to entry

500
215

Total

Taiheiyo
Group
CementCorporation Companies

Non-consolidated

In Japan
Overseas

2,000

External Training

15%

Number of patents held (Patents)

Patent Description Training

Circular economy
formation

32%
Intellectual Property
Promotion Committee
Meetings

Training Content
Basic Training

Innovative materials
and future-oriented technologies

56

Boosting awareness of intellectual property

We have established "Rules for Handling Intellectual Property
Rights" to encourage permanent employees to create inventions
and to promote the acquisition and use of intellectual property
rights. We have also established and are implementing "Taiheiyo
Cement Group Intellectual Property Management Guidelines" tocontribute to the reduction of intellectual property risks and theutilization of intellectual property throughout the group.
The Intellectual Property Department has established an"Intellectual Property Strategy Meeting" with the Research andDevelopment Department, which is at the core of invention creation,
to deliberate on applications and rights acquisition, and "Intellectual
Property Promotion Committee Meetings" with business divisions
and major group companies to promote intellectual property activities
according to their needs. In addition, the Intellectual Property Rights
Management Committee (chaired by the officer in charge of theIntellectual Property Department), which is attended by the managers
at business sites of relevant divisions, deliberates on the awarding of
performance rewards and company-wide intellectual property activities.

238
2021

261
2022

287
2023

(FY)

Recipients of the FY2023 Outstanding Invention Awards

57

Drivers and Boosters of Value Creation — Sustainability

Management

Our future vision and direction

Drivers and Boosters of Value Creation

Sustainability

To become an enterprise group that provides a senseof safety and security to societies in the Pacific Rim
by demonstrating the group’s overall capabilities.

Management
Environment

Basic Policy for Promoting Sustainability
Management

Sustainability /CSR Objectives for 2025

Occupational health and safety

1 Based on our Mission and Business Principles, the company

1. Prevention of accidents

Human CapitalSocial and Relationship Capitalwill clarify the ideal form of sustainability management
to be pursued and strive to advance operations based onsustainability.
2 Promoting a corporate culture that places great importanceon compliance, we aspire for all directors and all employees
to always make the most appropriate autonomous decisions.
3 We will manage the company in the awareness that
contributing to global environmental issues andcommunities, as well as respecting human rights are
conductive to our group sustainability.
4 We will proactively engage with key sustainability issues andundertake the most appropriate prioritization and resource
allocation.
5 We will practice appropriate information disclosure andcommunication with stakeholders, based on the state of oursustainability management, and build relationships of trust.
6 We will treat the promotion of sustainability management asa group-wide activity.

• Zero fatalities

2. Reduction of greenhouse gas emissions• Reduce specific net CO2 emissions by at least 10% or more(compared with 2000)

3. Diversity• Ratio of female recruits: At least 30%• Ratio of female employees: At least 10%• Ratio of newly appointed female managers: At least 10%

Mojave Plant (California, United States)
Blessed with a good location for wind power generation,
it owns some of the wind turbines seen in the background,which supplement the electricity used for cement production.

58

59

The Driving Force/Booster of Value Creation — Sustainability Environment

Environmental Management System
We are working to improve our environmental performance by formulating strategies across the company andproactively working to solve problems based on our Environmental Management Policy.

Internal Environmental Audits

Basic Approach
Our environmental management policy declares anactive commitment to environmental issues facing society,including not only preventing environmental pollution but
also building circular economies, delivering carbon neutrality,

reducing environmental impacts, protecting water resources
and conserving biodiversity as key management challenges.
Under this policy we are striving to improve our environmental
performance.

Environmental Management Policy
In January 2006 we formulated our Environmental
Management Policy, reflecting the fact that we consider
an active commitment to the environmental issues facing
society to be key management challenges. In addition
to initiatives emphasizing the six items in all business
operations, we strive to communicate with a wide rangeof stakeholders, from international society to local
communities, and to seek the ideal form for a sustainablecement industry as a member of the GCCA (Global Cement
and Concrete Association) and the UNGC (United Nations
Global Compact).
Formulated in January 2006
Revised in April 2023

1 Pursuing Environmentally Conscious Business Activities
2 Compliance with Environmental Laws and Regulations
3 Contribution to the creation of Circular Economy
4 Efforts to achieve Carbon Neutrality
5 Promoting Global Technology Transfer

During Environment Month each June we deliver a message
from the president and provide educational materials on theenvironment page of our portal site to increase awarenessand encourage learning about the environment, and about

Company-wide EMS Readiness

In June 1997, we initiated ISO 14001 certification of eachof our plants and attained certification of all six of our directly
operated plants by 1999. In April 2009, we established acompany-wide EMS that extends the scope of application not
only to plants but also to the headquarters, branch offices, andcentral research laboratory, and received ISO 14001 certification
registration from the Japan Testing Center for Construction
Materials. The company-wide system underwent a renewal
audit for the fourth time in March 2021, and from April 2021
the certification was renewed with the Tosa Office added to thescope.

60

Secretariat: Environmental Administration Group,
Production Department
Depts. with jurisdiction

PlantsQuarries

Branches

Training to respond to environmental accidents (Kumagaya Plant)

Status of Compliance with Environmental Laws

Company-wide EMS Readiness

Production Dept., Mining Dept., General Affairs
Dept., Cement Business Division Administration
Dept. and Sales Dept., Mineral Resources Business
Dept., Environmental Business Development
Dept., Sustainability Promotion Dept.

environmental preservation activities throughout Taiheiyo
Cement Corporation and group companies. Each workplace also
engages in a number of different activities, such as conducting
training sessions related to accident response, viewing
environment-related videos, holding lectures and taking partin local cleanup activities. In FY2023, more than 340 activities
took place.

Environmental Education

6 Ecosystem Conservation

Structure and Operation
We have established an Environmental Management
Committee chaired by the officer in charge of the Production
Department as one of the specialized committees under
the Sustainability Management Committee, which reports
directly to the Board of Directors, to promote environmental
management and implement the Environmental Management
System (EMS).

We conducted internal environmental audits at all our sites
in FY2023.
As priority items from this year’s audit, confirmation ofcompliance reviews regarding environmental laws and otherrequirements, external communications and corrective actions
for unachieved items were identified. The status of a follow-up,
including corrective and preventive actions for nonconformity
with environmental requirements, and the status of responses
to emergencies were identified as items that plants must deal
with. Verifying the compliance status of service stations was
implemented as an item that must be dealt with by branches.
The audit identified 29 findings, and corrective actions weretaken for all three findings for which improvements wererequested.

CNPT*
Headquarters,
business sites
Central ResearchLaboratory* The Carbon Neutral Technology Development Project TeamAll of our cement plants in Japan, including those ofgroup companies, have obtained ISO 14001 certification.
Furthermore, all of our overseas cement plants in countries
that adopt ISO have obtained ISO 14001 certification and are
actively committed to environmental conservation. Cement
plants in countries where ISO is not adopted as the mainstream
standard operate their own EMS.

Environmental Accidents

In FY2023, we had four minor accidents and have taken
measures to prevent their recurrence. There were no violationsof environmental laws that could result in fines or penalties, norwere there any major accidents that would have an effect on theenvironment or ecosystems.

we quickly travel to the site in question to check the situation,
investigate the cause and provide an explanation. If we findthat our activities are the cause we implement improvements.
In FY2023, we received 109 environmental complaints,
including those from outside sources. We responded to 36 ofthese, which were associated with our operations.

Response to Environmental Accidents

Each plant maintains emergency response plans in
preparation for possible environmental accidents. They also
conduct periodic fire-fighting drills in cooperation with local
fire departments. Other training includes how to reduce
environmental impact when an environmental accident occurs,
and how to report it to a government entity.

Environmental Complaints

As we increasingly utilize ever more diverse forms of waste
and by-products the number of environmental issues we needto consider also increases. Therefore, we are ramping up ourefforts to reduce environmental impact through activities
such as introducing indoor storage and sealed containers for
waste and by-products, and improving our flue gas stacks. On
receiving an environmental complaint, whenever possible

Number of Environmental Complaints Received(Complaints)

50

Air/ﬁne particles
Noise
Water quality
48
Vibrations
Odor
Other

40
30

Non-consolidated

36
29

29

7
25

8

20
11
10
10
0

2019

2020

2021

2022

2023

(FY)

61

The Driving Force/Booster of Value Creation — Sustainability Environment

Mitigating Climate Change
Promoting measures to reduce CO2 emissions from a medium- to long-term perspective to contribute to theprevention of global warming and for sustainable growth.

Total Heat Consumption for Clinker Production GCCA

Basic Approach
specific net CO2 emissions by 10% or more from 2000 levels.
In March 2022, we announced "2030 Interim Targets" towards
carbon neutrality, and set targets of reducing emissions
intensity by 20% or more throughout the supply chain andreducing total (domestic) CO2 emissions by 40% or more (eachcompared to 2000).

A significant amount of CO2 is generated during cement
production. This is because the production process requires
a high temperature of 1,450°C and limestone, used as a raw
material, is decarbonated through a chemical reaction during
the calcination process (CaCO3 → CaO + CO2). In 2015, wetherefore set in the CSR Objectives for 2025 a target for Taiheiyo
Cement Corporation and our group companies of reducing

Biomass fuels
Alternative fuels
Fossil fuels(TJ)
100,000
80,00091,37692,898
1,674
11,433

1,680
10,92889,401
1,770
10,93879,791

76,69374,866

Efforts Related to CO2 Emissions Reduction in the Cement Production Process

2019

2020

2021

2022

Ratio of Alternative Fuels and Biomass Fuels

Progress of the Group's CO2 Emissions Reduction Targets
TargetIndicators(compared to 2000)

CSR Objectives for 2025
Reduction rate of specific net CO2
emissions*¹:

10%
or more2030
Interim
TargetReduction rate of specific
CO2 emissions across the
supply chain*²:
Reduction rate of
total (domestic)* CO2emissions*³:

Performance

FY2022

8.3%

Progress and Evaluation

20

Improved by 1.9% from FY2022 due to increased
ratio of alternative fuels use

10

FY2023
10.2%

15

200
0

9.6%

36.0%

9.2%

42.7%

Decreased by 0.4% from FY2022 due to anincrease in Scope 2 and Scope 3 specificemissions due to clinker purchases, as a result of
the renovation of the production line at Taiheiyo
Cement Philippines, Inc.
Emissions decreased due to an increase in theratio of alternative fuels used and decreased
cement production, resulting in a 6.7%
improvement from FY2022.

Alternative fuels
Biomass fuels
13.8

(FY)

GCCA

19.9

14.1

14.2

15.3
17.6

12.0

12.3

12.2

13.3

1.8
2019

1.8
2020

2.0
2021

2.0
2022

5
0

20%
or more40%
or more(%)

In order to reduce CO2 emissions, we have been working toconserve energy by installing energy-efficient equipment andimproving the stability and efficiency of our kiln operations. We
have also been implementing measures such as expanded useof waste- and biomass-derived energy sources to decrease ourrate of use of fossil fuels. As a result of these efforts, specific net
CO2 emissions in FY 2023 were 661 kg/t-cementitious product,
achieving our FY2026 specific emissions target of 662 kg/
t-cementitious product.

62

Specific Net CO2 Emissions
Speciﬁc emissions (left axis)
Total emissions (right axis)(kg-CO²/t-cementitious)
725
22,624

GCCA

22,827

21,83230,00021,626

700

675(thousand t)

17,997

671

675

675

675

20,00010,000
661

650

2019

2020

2021

2022

2023 (FY)

0

742

731

658

2.3
(FY)
2023

Trend in direct specific CO2 emissions
across the supply chain

55

55

51

65

Benchmark
2000

2021

2022

2023

(FY)

Targets2030

Trend in Total Domestic CO2 Emissions

Total CO2 emissions from cement plants (Scope 1+2, but
excluding alternative fuels) have decreased significantly
compared to 2000 (our benchmark year). This is due todecreased coal use via an increase in alternative fuels and adecrease in cement production.
Regarding the reduction of total domestic CO2 emissions
by 40% or more (compared to 2000), which is one of our2030 Interim Targets, the reduction rate was 42% in FY2023,
exceeding the interim target.

Total Domestic CO2 Emissions 

GCCA(thousand t)
25,000

Scope 3 (category 1) specific emissions increased dueto the renovation of the production line at Taiheiyo Cement
Philippines, Inc. and due to clinker purchases. There wasa steady decline in Scope 1+2 emissions, with an 11.0%
reduction from 2000 levels.

21,64720,00015,00014,17013,8642021

2022

12,403

12,7292023

Targets
2030

10,0005,000
0*1 Scope 1 (excluding alternative fossil energy and CO2 resulting from on-site power generation)*2 Scope 1 (excluding alternative fossil energy) + Scope 2 + Scope 3 (Category 1,3)
*3 Scope 1 (excluding alternative fossil energy) + Scope 2

Trend in CSR Objectives for 2025

743

400

61,111

2023

GCCA

Scope 3600

20,000
0

822

800

1,807
76,291
11,741
1,787
13,39378,768

Scope 1+2

1,000

88,41460,00040,000Specific CO2 emissions in the supply chain

(kg-CO2/t-cementitious)

Benchmark
2000

(FY)

Reducing CO2 Emissions during Transportation
We contract the delivery of our raw materials, fuels andproducts to transportation companies, and are striving to reduce
CO2 emissions as a specified consigner designated under the
Act on Rationalizing Energy Use. In trucking, we encourage
not only the installation of digital tachometers on vehicles, butalso the planning of transporting goods on return trips, ecodriving and energy efficient devices such as digital eco-tires. In
shipping, we operate new ships that are equipped with various
energy-saving features. We are also supporting energy-saving
operations for conventionally powered ships.
Our FY2023 CO2 emissions were roughly 3% lower than in
FY2022.



CO2 Emissions by Mode of Transportation (FY2023)

Non-consolidated

Mode ofTransportation

Tonnagetransported(thousand t)

AverageTransported
CO2
distance
tonneemissions
transported
kilometers(thousandt)(km)(thousand tkm)

Ship

17,726447

7,920,429

105

Truck

14,87956

828,317

47

Railway

4,877

26

127,505

3

Total

37,482252

8,876,251

155

63

The Driving Force/Booster of Value Creation — Sustainability Environment

Improving Resource Efficiency
Promoting the recycling of waste and by-products into alternative raw materials and fuels for cement.
Through this, we are promoting the formation of a circular economy from the perspective of prolonging the life oflandfills and preventing the depletion of natural resources.

Waste and By-products Used in Cement
Manufacturing Processes

Resource Recycling with Industries
Electric power utilities

We accept coal ash produced at coal-fired power plants anduse it as a substitute for clay as a raw material in cement. In
addition, we operate ash centers to use more ash effectively. We
also supply power plants with limestone powder which is used
to scrub the harmful sulfur oxides from the exhaust producedby the burning of coal. The reaction of the limestone powder
with sulfur oxides forms by-product gypsum, which we makeeffective use of as a raw material for cement.

Steelmakers

In the iron and steelmaking process, impurities are removed
from iron ore to make iron. We supply the limestone andquicklime used in the refining process. We also use blast
furnace slag, a by-product that remains after the refining
process, as raw materials for cement and as cement admixtures.

Resource Recycling with Local Communities
In addition to industrial waste, we also use general waste
generated by local governments, municipal waste incineration
residues, water purification sludge and sewage sludge as raw
materials and fuel to manufacture cement. The total amountof waste generated in Japan in FY2022 was 40.95 million
tonnes, of which approximately 77% was incinerated, and 3.62
million tonnes of unused incineration residues were buried in

Examples of Waste and By-products Used
Raw materials

Coal ash, blast furnace slag
Dirt and sludge
Non-ferrous slag
Steelmaking slag
Construction soil
Molding sandlandfill sites.
The Group's systems for recycling municipal waste thatmeet the needs of society include the Incineration Residues
Recycling System, the AK System and the Ecocement System.
We use the set of these three technologies related to systems
for recycling municipal waste and strive to make effective use ofsuch resources and resolve environmental issues.
Limestone

All of our directly operated cement plants in Japan recycle
waste and by-products into alternative raw materials and fuels
for cement. This helps to prolong the life of landfills, preventthe depletion of natural mineral resources, limit greenhousegas emissions and reduce emissions of pollutants into theatmosphere.
In FY2023, the amount of waste and by-products useddecreased by 473 thousand tonnes from the previous fiscal year
due to a decrease in cement production, but the amount of dirt,sludge, waste plastic and municipal waste incineration residues
that was accepted increased.

T rends in Amount and Intensity of Waste and ByNon-consolidated
products Used
8,000

Total amount: left axis (thousand t)
Intensity: right axis (kg/t-cement)

6,478

6,625

6,387

6,000
4,000
2,000
0

64

409.4

6,108

409.5

600
6,244

402.7

5,771

405.2

500

409.6

300

267.3
2001

400

2019

2020

2021

2022

2023

(FY)

200

 mount and Intensity of Main Waste and ByA
Non-consolidated
products Used (FY2023) 
Waste and By-products

Coal ash
Blast furnace slag
By-product gypsum
Unburned ash, dust
Dirt and sludge
Construction waste
Waste oil
Wood chips
Waste plastic
Water treatment plant sewage
sludge and ash
Incineration residues frommunicipal waste
Municipal waste
Other
Total
Raw material-related
Fuel-related
Total

Amount used
Intensity(thousand t) (kg/t-cement)

1,820
991
514
471
367
148
148
19
221

129.2
70.3
36.4
33.4
26.0
10.5
10.5
1.4
15.7

350

24.8

147

10.4

19
557
5,771
5,212
559
5,771

1.3
39.5
409.6
369.9
39.7
409.6

Incineration residues frommunicipal waste
Household water and sewage
treatment sludge

Fuels

Waste oil, waste plastic
Waste tires, wood chips
RDF (municipal waste pellets)
Recycled oil

Raw mill

By-product gypsum

FGD gypsum
Chemically derived gypsum

Admixtures
Slag powder
Fly ashFinish millRotary Kiln

Various otherraw materials

Recycled-Waste-to-Cement System

Raw materials

Raw Material
Preparation Process

Limestone, iron waste, etc.
are mixed together, dried andground in a raw mill.

Burning Process

Finishing Process

After preheating, the materials
are burned in a rotary kiln. The
resultant material is then rapidly
cooled to form an intermediate
product called clinker.

A small amount of gypsum isadded to the clinker and groundin the finish mill to produce
cement.

Truck

Railway

Reference: Resources required to produce one tonne of cement
Iron waste: 30kg
Silica: 70kg
Clay: 225kg

Transportation
The cement is thentransported by ship, truck orrailway.

Limestone: 1,206kg
Clinker

Ship

Gypsum: 37kg

Data source: The Japan Cement Association

65

The Driving Force/Booster of Value Creation — Sustainability Environment

Reducing Environmental Impact
Air pollutants generated from cement production are primarily NOx, SOx and dust in combustion gases emitted from
cement kilns.
To ensure the appropriate management of these substances, we are striving to ensure proper operations throughmeasures such as continuous monitoring of emission concentrations in exhaust gases.

Preventing Environmental Pollution

Reducing Waste

Air Pollution

Air pollutants generated from cement production are
primarily NOx, SOx and dust in combustion gases emitted from
cement kilns. To ensure the appropriate management of thesesubstances we strive to reduce air pollutant emissions throughmeasures such as installing equipment to continuously monitor
emission concentrations, improving NOx reduction systems andinstalling bag filter equipment to capture dust emissions. Our
target is to maintain our FY2011 emissions levels. The details
regarding emissions are provided in ESG Data (p. 118).

Specific Emissions of Clinker for Main Pollutants GCCA
NOx (left axis)(g/t-clinker)

SOx (right axis)
Dust (right axis)

2,000
1,500
1,000

1,300
62
47

30
2020

42
20
2021

41
16
2022

50

41
19
2023

(FY)

0

75

GCCA

96.0 95.0 97.7 100.0 97.7 100.0 97.7 100.0 97.6 100.0 97.5 100.0
96.8
96.4
97.0
96.2
95.7

Separationtank

Oil film detectors,
turbidimeters, pH
metersOn-site power generation

Soil Contamination

2011

2019

2020

2021

2022

P ercentage of clinker volume manufactured in a kiln equippedwith continuous NOx measurement
Percentage of clinker volume manufactured in a kiln equippedwith continuous SOx measurement
Percentage of clinker volume manufactured in a kiln equippedwith continuous dust measurement* Calculation results were reviewed and retroactively revised.

2023

(FY)

Initiatives at Plants

Our cement plants reduce the amount of waste handled bydisposal contractors by reusing waste from operations as raw
material for cement production. We also endeavor to reduce
waste that ultimately ends up in landfill via measures such as
the use of chromium-free kiln bricks.
In FY2023, there was 1.9 tonnes of waste, compared to thetarget of 40 tonnes or less.

Volume of Waste to Landfill at Plants 

Non-consolidated

Initiatives at Service Stations

Service stations (SS) reduce the waste handled by waste
disposal contractors by returning any residual cement thatremains in silos after switching the cement products. Returned
cement is recycled as raw material.
In FY2023, the recycling rate was 73.4%, compared to thetarget of 50%.

Recycling RatioNon-consolidated

(%)

(t)

100

40.0

90

30.0

80

20.0

70

83.5

77.9

80.3

2020

2021

73.4

65.7

60

10.0
0

1.0

0

0.6

1.3

1.9

2019

2020

2021

2022

2023

50
2019

(FY)

2022

2023

(FY)

StreamchannelAppropriate management of chemicals
Ocean

59.0

25

66

Sedimentationtank

Cooling
tower

Water recovery
cistern
Seawater50

0Equipmentcooling

River
water

Monitoring Rate
100

Gutters63* Calculation results were reviewed and retroactively revised.

(%)

Rainwater

Cement kiln

2019

100

Water
sprinklers

2011

1,277

Example of Water Circulation Flow at a Cement Plant

Water cistern

0

27

1,282

1,227

150
1,434

Most of the water discharged from our plants to public
watercourses is cooling water and not polluted as definedin the Water Pollution Control Act. At our cement plants allwater resources are reused as circulation water to minimize
water discharge into public watercourses. Moreover, we aretaking measures to prevent the leakage of contaminants byinstalling bunds around oil tanks and acid/alkali tanks, as wellas installing sedimentation tanks, water-oil separation tanks,
oil film detectors, pH meters and suspended solid sensors on
water discharge routes that connect to public waters.

Ground
water

500

1,187
67

(g/t-clinker)

Water Contamination

Across FY2008 and FY2009, we evaluated the risks associatedwith cement plants that may be sited on contaminated groundby appointing an expert consultant to undertake a soil history
survey, conducted drilling surveys, and verified whether or not
the soil is contaminated. Actions have been taken as necessary
based on the findings, such as the installation of observation
wells to monitor ground water contamination and the removalof contaminated soil.
We are also working to eliminate the possibility of soil
contamination via measures to prevent the leakage of
wastewater from scrapyards or fluid from oil tanks, acid/alkalitanks, pipes and so forth.

Pollutant Release and Transfer Register (PRTR)

FY2022

FY2023

Safety Corporation (JESCO) in 2006 and have prioritizedprocessing.
In FY2023, one capacitor, one transformer and 1,110
electrical ballasts stored at the Kamiiso Plant, Ofunato Plant,
Kumagaya Plant, Saitama Plant, Fujiwara Plant, former Chichibu
Plant, former Kawara Plant, Garo Quarry and branch officeservice stations were processed, as well as three unprocessedcapacitors that were in the Kyushu, Chugoku and Shikoku area.
Pollutants such as electrical ballasts stored at the former
Osaka Plant and former Kawara Plant are planned forprocessing in FY2024, and we are scheduled to complete theprocessing of all high-concentration PCB waste.

198

186

Treatment of High-concentration PCB Waste Non-consolidated

The PRTR Law requires that we report on equipment
installed at our Kumagaya plant for the washing of municipal
waste incineration residues. This washing process uses water,and our total discharge of dioxins and ferric chloride into public
waterways in FY2023 are as shown below.

 eported Levels of Dioxins and Ferric ChlorideR
Non-consolidated
Emissions
Emissions
Dioxins (mg-TEQ)

FY2021Ferric chloride (kg)Management of PCB Waste

Reported Levels

0.0

170

0.0

0.0

We properly store and dispose of high and low
concentrations of PCB waste in accordance with the Amendment
to the Law concerning Special Measures for Promotion of
Proper Treatment of PCB Wastes (hereinafter referred to as the
PCB Special Measures Law).
For high-concentration PCB waste with an early disposal
deadline as stipulated by the PCB Special Measures Law, we
signed a processing contract with the Japan Environmental(Unit: No. of machines)

Waste

Storedin FY2022 New Targets(as of March for FY2023
31, 2022)

FY2022
processing
results

Treatedin FY2023

Treatment
Scheduledfor FY2024

Capacitors

4

0

4

0

0

Transformers

1

0

1

0

0

Electricalballasts

948

168

1,110

6

6

Total

953

168

1,115

6

6

67

The Driving Force/Booster of Value Creation — Sustainability Environment

Conserving and Restoring biodiversity
We recognize that our quarrying activities are most closely related to biodiversity.
We are aiming to achieve nature positive by working with local communities, from the development and operation ofquarries through to the use of old quarry sites.

Environmental Impact of Quarry Operations
Throughout the group we believe that balancing theconservation of ecosystems in local communities anddevelopment of the communities themselves are important inquarry operations. With this belief, we hold discussions with

Activities to Reduce Environmental Impact
Environmental Impact Assessment

local governments, local communities and academics while
operating quarries. This helps to ensure we not only prevent
pollution but also conserve biodiversity and water resources
while minimizing our environmental impact.

Surveying & Development

Operation (Quarrying)

Quarry Closure (end of quarrying)• Environmental Impact Assessment• Development Plan
• Environmental Measures Plan

• Rare animal and plant conservation• Measures to prevent quarry pollution• Quarry site greening• Site use

Reducing Environmental Impact

Cement production starts with quarrying limestone, theprimary raw material for cement. We also quarry many mineral
resource products used as aggregates and industrial raw
materials. Because forests are cleared, topsoil is excavatedand limestone is extracted at a quarry, it inevitably affects theenvironment and ecosystem of the quarry’s area. However,
because the limestone, sand and other materials that we quarry
only require crushing for particle size adjustment and sorting,our operations are unlikely to cause chemical contamination
to surrounding areas. In addition, we minimize the amountof waste stones generated during our limestone quarrying byusing them as construction materials.

The group operates 19 major limestone quarries around theworld, which are located near to our cement plants, with a totalsite area of 5,355 ha.
Based on the GCCA guidelines, and using the Integrated
Biodiversity Assessment Tool (IBAT) provided by BirdLife
International, we checked if any of our group’s limestone
quarries are in any of the protected areas defined by theInternational Union for Conservation of Nature (IUCN) andconducted a biodiversity assessment.
Two quarries in Japan are included in areas of biodiversity
value*, and none overseas. All these quarries have obtained thenecessary licenses from their local governments and conduct
environmentally sound quarrying operations. Greening atformer quarry sites is being implemented in accordance withplans for environmental restoration. They have no pending
litigation concerning biodiversity or other environmental
issues.
GCCA

Quarries

Site area(ha)

Applicable*
quarries

Japan

13

2,835

2

United States

4

1,903

0

Asia-Pacific

2

617

0

Ratio of quarries with rehabilitation plans (%)

95

RegionKanamaru-Maimai (provided by Mie Prefecture Environmental Conservation Agency)
One of the rare species of wild animals and plants designated by Mie Prefecture forwhich conservation activities are being promoted at Fujiwara Quarry.

Participation in the 30by30 Alliance

Limestone Quarries of the Group

Limestone Quarries of the Group* A protected area whose purpose is to conserve habitat mainly through management
activities. Includes IUCN Category IV (habitat or species management area) Protected
Areas.

68

Throughout the group we believe that balancing theconservation of ecosystems in local communities anddevelopment of the communities themselves are important inquarry operations. In developing quarries, we conduct ex-ante
assessments of environmental impact of quarry developmentswith the cooperation of experts, based on environmental
research of the development area such as on biodiversity andwater resources. We then discuss the results of the research withstakeholders before finalizing a development plan. Moreover,
we regularly monitor the surrounding environment during
the development and operations of quarries, and report to ourstakeholders on the environmental impact that the quarries
have in their areas.
We contribute to the realization of Nature Positive as
advocated by TNFD*¹ through biodiversity initiatives, conduct
our business activities based on our management philosophy,
and promote the conservation of rare flora and fauna inlimestone quarries related to biodiversity and the greening ofquarrying areas and former sites.
From FY2024, we will participate in the "30 by 30 Alliancefor Biodiversity" established by the Ministry of the Environment,
aiming to be registered in the OECM*² database.
30by30 refers to the target of preserving at least 30% of
terrestrial and marine areas as healthy ecosystems by 2030.
Achieving this target in each country was promised at the 2021
G7 Summit.

Biodiversity Protection

When environmental impact assessments determine that
protection is required at a limestone quarry that we own, we
protect rare species via measures such as installing protective
equipment, transplanting and restricting development work.
Chichibu Taiheiyo Cement Corporation is actively involvedin the conservation of rare plants. At Kanouyama Quarry locatedin Kanna Town, Tano District, Gunma Prefecture, 38 rare plants
native to the quarry have been transplanted into a botanicalgarden set up in the mine with the cooperation of a local nature
conservation group. At the same company’s Miwa Quarry, whichis conducting quarrying on Mt. Buko, located in Chichibu City
and Yokoze Town in Saitama Prefecture, we are preserving andincreasing the population of 68 native plant species together
with local experts and using the Central Research Laboratory’s
biotechnology.
At the Fujiwara Quarry of Mie Taiheiyo Mining Company(formerly Ishizaki Co., Ltd.), we have been engaged inconservation activities since 2012, including transplantationand post-event surveys, in cooperation with experts, for the
Kanamaru-Maimai, a Mie Prefecture-designated rare animal
species that is found in the limestone area around Mt. Fujiwara.

Iwakinbai(Kanouyama Quarry)*1 Abbreviation for Taskforce on Nature-related Financial Disclosures.
*2 Abbreviation for Other Effective area-based Conservation Measures. It refers to areasthat are being conserved through private and other initiatives, and areas wheremanagement that is not aimed at conservation also results in contributing to theprotection of the natural environment.

Oobiranji(Kanouyama Quarry)

69

The Driving Force/Booster of Value Creation — Sustainability Environment

Appropriate use of water resources

Disclosure Regarding Recommendations of the TCFD

In our use of water resources we are striving to analyze water risks and understand the status of water use as issues
that may emerge in the future, and are working to ensure the proper use of water resources.

We announced our support for the recommendations of the Task Force on ClimateRelated Financial Disclosures (TCFD) in June 2019 and have been performing
scenario analysis since then. Following the Glasgow Agreement at COP26 in
November 2021, we have conducted scenario analysis using 1.5°C and 4°C as the CO2 reduction scenarios applicable to us.

Appropriate use of water resources

Setting Scenarios

Water Risk Analysis

According to the results of the water risk analysis conductedusing the Water Risk Filter*, the average score for the total basinrisk for all our plants (weighted average taking into account thecement production volume) was 2.4. The highest total basin risk
score was 2.8, which was 0.4 lower than that of the previous
year. The volume of cement produced at the plant in question
accounted for about 17.6% of the production volume of all theplants. However, when we analyzed conditions at that plant, nourgent issues were identified.
* A water risk mapping tool developed by the World Wide Fund for Nature (WWF). It is
used to evaluate business impacts related to physical risks such as water scarcity andwater quality. The maximum score is 5.0, and the higher the score, the greater the risk.

Water Consumption

Most of the water used at our cement plants is for thecooling of production equipment, exhaust gas and on-site
power generators. Therefore, the water discharged from theplants is mostly cooling water, which is not polluted as definedin the Water Pollution Control Act. All the fresh water used at
the plants is circulated and reused, except for the household
wastewater, as we strive to reduce our water withdrawal andlessen the impact of wastewater on bodies of water. Seawater
is used to cool on-site power generation facilities at our plants
near the ocean and then released back into the sea after use.
Our total fresh water used in FY2023 was about 11.86
million m³ and our fresh water used to produce one tonneof cement was 0.387 m³. However, most of this water is not
used as a raw material and evaporates after being used to coolequipment or gas.

Water Consumption 
FY2021

FY2022

FY2023Ground water

16,884

18,65618,75918,706

17,673

Industrial water

3,251

3,325

3,078

2,108

1,630

26,656

27,607

27,192

26,341

24,649Total fresh water
withdrawal (I)
Total seawater
withdrawal

0.438

0.4

0.412

0.421

0.409

0.2
0.1
0
2019

2020

2021

2022

(FY)

At present there are no specific concerns regarding water
resources that may be raised by local communities. However,
we are striving to reduce water withdrawal with a view toconserving water resources. In the future, we will maintain close
communication with local communities and contribute to theappropriate use of local water resources.
Taiheiyo Cement Philippines, Inc. supplies clean water tolocal communities from wells drilled by the company for water
to use in its plants. At CalPortland Company’s Rocky Canyon
Aggregate Quarry in California, USA, a system for the sustainable
use of water has been built to improve the collection andstorage of rainwater and spring water at the site. Developing
these water resources has made it possible to secure a supply of
the water it needs in its work, without having to build new wells
or increase the volume of ground water it extracts, and also tokeep the amount of water that drains out of the site, which is
subject to strict regulations, to a bare minimum.

5,626

5,355

Reference Scenarios
Assumed Carbon Price

5,527

1

Scenario Overview
Business Impact
Category

2. Market

2

145,476

System for the sustainable use of water (CalPortland Company)

176,432

174,979

173,424

173,235

170,125

12,167

13,674

13,447

13,246

12,792

Water Resource Conservation

149,781

147,377

146,368

147,062

145,639

Total water discharge

161,948

161,051

159,815160,308

158,431

Total fresh water used (I-O)

14,48913,933

13,745

13,095

11,857

In quarrying we also pay close attention to protecting not only
terrestrial animals and plants but also water resources such as
rivers and natural springs. From the perspective of conserving
water resources, spring water and rainwater is discharged fromquarrying after treatment to minimize impact on the environment
outside of the quarrying area by passing through regulatory
pond. In some quarries we drill wells for domestic water andsupply this water to local communities for everyday use.

Create climate-related scenarios for each key driver,referring to the published climate-related long-term
scenarios that were developed based on scientific grounds

STEP

3

Evaluate the anticipated business impacts in eachscenario

STEP

4

Review responses to the business impacts, which are,in our view, positively or negatively significant in ourevaluation

STEP

5

1.5°C scenario (consistent with the Paris Agreement)

4°C scenario (ineffective response to climate change)

US$130 (approx. 17,550 yen)/tonne-CO2

US$30 (approx. 4,050 yen)/tonne-CO2

IEA net-zero Emissions Scenario (NZE)
Carbon Emissions Pathway: RCP 2.6

IEA Stated Policies Scenario (STEPS)
Carbon Emissions Pathway: RCP 8.5

3. Technologies
4. Reputation
5. Physicalevents4°C Scenario

Government and industry are working together toward
carbon neutrality. Development consistent with the industry’s
transition to carbon neutrality (CO2 capture, utilization andstorage technologies) is progressing. The effects of climatechange are being addressed to a certain extent throughnational resilience policies and other measures.

Drivers• Introduction of regulated carbon pricing
Tighter CO2 emission regulations

There is a mismatch between our efforts towards carbon
neutrality and the regulations applicable to the cement industry,
which would put us at a competitive disadvantage. Profits fromthe development of the innovative technologies that we promote
are limited. In addition, the effects of climate change are
becoming more severe, such as frequent extreme climatic events.

1.5°C Scenario
Negative
Positive

M
S• Increased demand for low-carbon construction materials• Reduced operation of coal-fired thermal power plants

146,894

Determine the causal relationships between climaterelated drivers, interim outcomes and implications.
Then identify key drivers

STEP• Soaring fossil energy prices

5,346

Conduct a benchmark survey to identify climate-relatedrisks and opportunities for the cement industry andidentify relevant drivers

STEP

1.5°C Scenario

1. Policy andRegulatory

146,232

Total seawater discharge

2023

Appropriate Use of Water Resources

147,372

Total fresh water
discharge (O)

0.387

0.3

149,776

Total water withdrawal

70

0.5

We focused our scenarios, evaluation and analysis on thebusiness risks and opportunities that climate change will poseto the Group by the year 2050. We identified events that willmaterially impact climate-related risks and opportunities,
based on climate-related, long-term scenarios founded on
science, such as the World Energy Outlook (WEO) and Energy
Technology Perspectives (ETP) published by the IEA and The
Fifth Assessment Report (AR5) published by the IPCC. Then wecreated two climate-related scenarios, 1.5°C and 4°C, that will
have impact on the business operations of the Group, alongwith appropriate carbon price assumptions for the 2030s using
the IEA World Energy Outlook 2021 as a reference.
To follow up, we analyzed the business impacts in every
scenario by size and time horizon (short, medium and long).

(Unit: thousand m³)

FY20206,521(m³/t-cementitious)

GCCA

FY2019Surface waterA mount of Fresh Water consumption per unit of
GCCA
production Process of Selecting Material Climate-related
Risks and Opportunities and ScenariosM• Progress in the development of CO2 capture andutilization technology

L

4°C Scenario
Negative
Positive

M
M
M
S

L

M

• Improved technologies for resource recycling andadvanced circular economies

M• Increased awareness of delivering carbon neutrality

M

M

S

• Chronic - Higher average temperatures, higher sea levels

S

S

M

S

• Acute - Intensification of climatic events (e.g., flooding,high temperatures)

S

S

L

S

[L](Large): Impact of about 100 billion yen in terms of net sales[M]Medium: Impact of about 1-10 billion yen in terms of net sales[S]Small:
Impact up to about 1 billion yen in terms of net sales

71The Driving Force/Booster of Value Creation — Sustainability Environment

Providing Environmentally Sound Products and Services

External economic benefit (EEB)In response to social needs for environmental conservation, we leverage the advantages of the cement and related
technologies we have cultivated over the years to provide environmentally sound products and services that
contribute to resource conservation and CO2 reduction.

We evaluate the socioeconomic benefits from environmental impact reduction due to increased recycling of waste inmonetary terms.

Low-CO2 emission limestone-blended cement "ADVANCEMENT"

Basic approach

Our U.S. group company, CalPortland Company, haslaunched a new product series called ADVANCEMENT, which
is a blend of Portland cement and limestone. By replacing
up to 15% of clinker with limestone ADVANCEMENT is a lowCO2 emission product that can reduce CO2 emissions byapproximately 10% compared to ordinary Portland cement as
specified by ASTM C150.
ADVANCEMENT TYPE 1L complies with ASTM C595
and AASHTO M240 and is also certified by the California
Department of Transportation, allowing it to be widely used
in infrastructure construction, including highways. Following
test marketing in 2021, CalPortland Company will graduallyswitch from ordinary Portland cement (TYPE II/V) produced at
its Mojave Plant to ADVANCEMENT TYPE 1L. Approximately 1.2
million tonnes of ADVANCEMENT will be produced annually,
reducing CO2 emissions by approximately 95,000 tonnes.
ADVANCEMENT LT is light-colored and aesthetically pleasing
while maintaining the low-CO2 emission performance, andcan be used in applications to meet the aesthetic expressionof architects and designers. In addition, ADVANCEMENT HS issuitable when particularly high sulfate resistance is required. In
this way, ADVANCEMENT is a series of low-CO2 emission cement
products that are tailored to the application and performancerequirements.

ADVANCEMENT delivery trucks

Thermal Insulating Paving Blocks "Thermalbarrier ILB”
At Taiheiyo Precast Concrete Industry, we sell "Thermalbarrier
ILB," which are paving blocks that suppress the absorptionof heat from solar radiation, thereby reducing the rise intemperature and heat retained in the road surface, andmitigating the hot environment in pedestrian and roadsideareas. The surface layer of this block is made of material thatis highly effective in reflecting near-infrared radiation, andthe base layer is made of concrete with cavities to reduce theabsorption and retention of heat from solar radiation. This
contributes to limiting the heat island effect by reducing not
only the daytime hot environment but also heat radiation atnight.
The performance of the Thermalbarrier ILB was confirmed tobe effective in reducing road surface temperature by 11.5°C or
more in a comparison test with asphalt pavement conducted by
the Japan Interlocking Block Pavement Engineering Association,and has been certified as "COOL BLOCK PAVE". In addition to its
excellent thermal insulation performance, the Thermalbarrier
ILB series also includes a product that, depending on thespecifications of the base concrete layer, provides the block
itself with water retention performance and permeability toallow rainwater to permeate into the roadbed. This product also
effectively uses crushed roof tiles, molten slag produced in the72

cooling process after incineration of municipal waste, and glass
cullet made from processed wine bottles, which would normallybe disposed of as industrial waste, as recycled aggregates.
Recently, Thermalbarrier ILB has been widely used inconstruction projects, such as Oi Central Seaside Park Sports
Forest and Kumagaya Sports Culture Park in Saitama Prefecture.

Construction example: Thermalbarrier ILB laid around the rugby field at Kumagaya Sports
Culture Park, Saitama Prefecture

We use the external economic benefit (EEB) evaluation
method with our Recycled-Waste-to-Cement System to express,
in monetary terms, our evaluation of the socioeconomic
benefits from environmental impact reduction due to increased
recycling of waste accepted from outside the company. We
calculate that we created a social benefit of 87.2 billion yen
in FY2023. The reduction in the amount of natural resources,
waste and by-products in FY2023 decreased from the previous
fiscal year, leading to an approximate 4% reduction in economic
benefit on the previous fiscal year.

Crude oil: import price. Natural resources: estimated price.
Waste: controlled landfill costs in the Tokyo area.
• A portion of the EEB is accounted for in our profit and loss
statement.

Climate change
mitigation

CO2

2,039,515

3,000

6.1

Taiheiyo Cement’s External Economic Benefit
Evaluation

Depletion of energy
resources

Crude oil

115,754

18,400

2.1

Depletion of mineral
resources

Naturalresources

4,545,574

1,000

4.5

Shortage of landfills

Waste

4,966,493

15,00074.5• We have developed a unique evaluation method to estimate
the overall environmental benefit to society by utilizing wastematerials from other industries.
• We use information, including data collected for the
GCCA Cement CO2 Protocol, to calculate the reduction in
consumption of fossil energy and natural resources associatedwith the use of waste and by-products.
• Economic benefits are calculated by multiplying reductions in
consumption (effects of environmental conservation) by set
market prices. The market values of the inventory items are
set at FY2001 levels, and are estimated on the basis of thefollowing considerations.
CO2: 3,000 yen/tonne (a hypothetical CO2 emission tax rate).

External Economic Benefits (FY2023)

Non-consolidated

Inventory
Inventory Reduction (t) Market Price(yen/t)ImpactTotal

External
Economic
Benefit(billion yen)

87.2

(billion yen)
120
90

89.2

90.8

87.2

2021

2022

2023

60
30

(FY)

Project Accounting — Ofunato Plant No. 5 kiln high-efficiency clinker cooler introduction
The clinker cooler uses air to cool clinker, an intermediate
product fired inside an ultra-high-temperature rotary kiln. The
high-temperature air obtained through heat exchange duringcooling is effectively used as combustion air for the rotary kiln.
The high-efficiency clinker cooler introduced to the No. 5
kiln at the Ofunato Plant in FY2023 is a new type of cooler thatcan recover high temperature air while cooling clinker witha small amount of air. This cooler significantly improves heatrecovery efficiency compared to conventional types. With thishigh-efficiency clinker cooler, the second we have introduced
in Japan, we will reduce the amount of thermal energy
required for clinker firing, further reducing CO2 emissions andenvironmental impact.

Investment amount: Approx.

9.2 billion yen

Ofunato Plant No. 5 kiln

Reduction in CO2 emissions:7,149 tonnes/year73

The Driving Force/Booster of Value Creation — Sustainability Occupational Health and Safety

Occupational Health and Safety
We are continuously promoting organizational safety, security and health activities with the aim of eradicating
occupational accidents, including those in the supply chain, and achieving a safe work environment.

Basic approach

Health & Safety System

Our Health & Safety Policy is shown below. Under this policy
our headquarters and business sites prepare health and safety
management policies that suit the actual conditions at theworkplace each fiscal year.

Taiheiyo Cement Health & Safety Policy

We recognize that ensuring the health and safety of ouremployees is a cornerstone of our company, and we invest
appropriate management resources to the prevention ofoccupational accidents and diseases in accordance with theIndustrial Health and Safety Act and the Mine Safety Act, andefficiently implement the fundamental policies shown below.

Fundamental Policies
1 Promote health and safety activities through consultation andparticipation between management and labor, with the aim ofeliminating occupational accidents.
2 Ensure the health and safety of our employees and those of ourcontractors by complying with health and safety-related laws
and regulations, the health and safety management regulations
created by us, and health and safety regulations created by ourbusiness sites.
3 Strive to improve the level of health and safety by actively
promoting the implementation and operation of our
Occupational Health and Safety Management System, and bycontinually ensuring the fundamental safety of our work andequipment, providing education and training, and raisingawareness of health and safety, as well as continually improving
our Occupational Health and Safety Management System.
4 Constantly improve workplace environments and work
procedures by applying improved technologies and new healthand safety information via the companywide, business site andgroup affiliate health and safety committees.
5 Ensure health and safety throughout the Taiheiyo Cement Groupby promoting action to eliminate occupational accidents under
the leadership of the companywide, business site, and groupaffiliate health and safety committees.

Safety Objectives (KPIs) for FY2023
KPI(1) Fatalities: 2(2) Lost-time injuries: 49(3) Total occupational accidents: 120(4) Absence rate: 0.935%

Eliminating Accidents Caused by Breaking
Workplace Rules
15% or less of total occupational accidents (ratioof accidents due to rule breaking)Violations, etc.,of the 7 safety principles: 26%• There were 9 cases of accidents involving"touching moving machinery," indicatinga lack of thoroughness. There were somecases of violations due to work priority.

Eliminating Heatstroke-related Accidents
Zero heatstroke-related accidents

Preventing the Recurrence of Similar
Accidents
Halving the three most common causes ofaccidents• Being trapped by or dragged into equipment• Falls from height• Flying/falling objects

74

Achievements and Issues This Fiscal YearFY2023 Company-wide Health & Safety
Committee Objectives(1) Zero fatalities across the group (CSR
Objectives for 2025)(2) 30 or less lost-time injuries across the group(3) 80 or less total occupational accidents acrossthe group(4) Absence rate of company employees: 0.5%level

No. of heatstroke-related accidents: 7• Reduction the risk of heatstroke occurring
whilst recognizing resistance to heatstroke
varies from person to person

Plans for Next Fiscal YearFY2024 Company-wide Health & Safety Committee Objectives(1) Zero fatalities across the group (CSR Objectives for 2025)(2) 30 or less lost-time injuries across the group(3) 80 or less total occupational accidents across the group(4) Absence rate of company employees: 0.5% or less

* Excluding the absence rate due to COVID-19 cases

Ratio of accidents due to rule breaking: 15% or less• I mprove comprehension through periodic education on rules• I dentification and improvement of facilities and behaviors that
violate rules•G uidance aimed at eliminating violation conditions throughregular patrols• S trengthen prevention of accidents among employees andworkers with less than 3 years experience
Zero heatstroke-related accidents• I mproved understanding of accidents through prior education• R eliable response to heat index• I mprovement of the work environment (development of rest
areas, cooling systems, etc.)• Guidance on checking the condition of countermeasures throughsafety patrols• E xpanded use of wearable devices to reduce risk according toindividual differences
Halving the five most common causes of accidents+11 case (55 cases) compared
to previous year
• Promote raising awareness and mutual
consideration through measures such as
displaying safety points at accident sites.

* Added "falling over" and "contact with high or low temperature objects".

• Confirmation of effectiveness of countermeasures throughaccident study support• Conduct case study education using the Accident Information
Database• Continual operational checks of accident prevention measures(periodic on-site patrols)• Promote "visualization" with signs, work procedures, etc.

Under the Taiheiyo Cement Health & Safety Policy weestablish health and safety management regulations thatcover the basic principles of the group’s health and safety
management, and promote health and safety activities. The
aim is to create comfortable working environments while also
ensuring the health and safety of our employees and those of
our contractors at the group’s business sites and other locations.
We established the Company-wide Health & Safety
Committee, chaired by the officer in charge of safety, as aSpecialized Committee under the Sustainability Management
Committee, which is itself under the direct oversight of
the Board of Directors. The Company wide Health & Safety
Committee supervises health and safety activities held by our
various business locations. It also collects safety-related datafrom not only the company itself but also our group companies
and provides guidance.
All plants, quarries and branches under the jurisdiction of
our divisions at Headquarters, and all group companies, havea health and safety committee consisting of representatives
from both management and labor, as well as a cooperative
committee promoting the health and safety-related activities ofeach business site.
Health and safety management at cement plants andquarries in Japan is carried out under our OSHMS*.
* OSHMS (Occupational Safety and Health Management System): Guidelines issued by
the Ministry of Health, Labour and Welfare in 1999. A framework for reducing potential
dangers at workplaces and promoting comfortable work sites by autonomously
practicing continuous, uninterrupted health and safety management.

Health & Safety System

Board of Directors
Sustainability Management Committee

Company-wide Health & Safety Committee
Chairperson: Officer in charge of safety

Specialized committees

Departments at Headquarters

Health and Safety Training

We have established procedures for the implementationof health and safety training, and are committed to providing
such training so that work can be carried out safely. Training
is provided at all our business sites. It can be categorized intotraining for newly-hired employees, training for newly-hired
employees with professional experience at another company,
specialized courses, training for newly-appointed managers,
skills training, and training for contractors when they start workat a site.

Occupational Accident Reports and Database

Any occupational accident is reported to the Companywide Occupational Health & Safety Committee immediately,
regardless of how insignificant it may seem. We promptly post
the details of any accident on the group bulletin board as a step
towards avoiding any recurrence.
We have maintained a occupational accident databasesince FY2009. It covers accidents involving employees of
the company and group companies as well as those of all
our contractors, including temporary workers. It categorizes
accidents according to the “4 Ms” (men, machines, methods
and management), analyzes the causes of unsafe behavior
and situations, and systematically stores occupational accident
review reports that include details of the countermeasurestaken. The database is also translated into English and Chinese
so that it can be widely used at our overseas business sites.

Occupational Accidents Registered in the Database*(Accidents)

Headquarters Central Research
Each plant
Each branch
Health & Safety Laboratory Health & Health & Safety Health & Safety
Committee
Safety Committee
Committee
Committee

Each quarry
SafetyCommittee

The Health and Accident Prevention
Safety Cooperative
Cooperative
Committee
Committee

SafetyCooperative
Committee

Contractors

is required for leaders of work groups. To further improvethe capabilities of those leaders, as of FY2016 we requireparticipants in the certification seminars held at the plants tohave completed the foreman training course stipulated in the
Industrial Safety and Health Act.

Group companies
Health & Safety
Committee
Safety Committee

Fatal

Leave of absence required

No leave of absence required

150
121

120
90

87

94

2019

2020

120
103

60
30
0

Safety Operation Officer Certification System

Since FY2008, we have been using the Safety Operation
Officer System which emphasizes the importance of improving
leadership capabilities to reduce occupational accidents.
This system provides safety operation officer certification that

2021

2022

2023

(FY)

* Taiheiyo Cement and group companies that are business sites required to submit
accident reports under our Safety, Security and Health Management Regulations are
the subject of aggregation75

Occupational Health and Safety

The Driving Force/Booster of Value Creation — Sustainability Occupational Health and Safety

Health and Safety Promotion Activities

The Company-wide Health & Safety Committee set thefollowing objectives for FY2023: zero fatalities, limit lost-time
injuries to 30 or less and the total number of occupational
accidents to 80 or less, while also setting the absence rate in
the 0.5% range. We therefore engaged in health and safety
promotion activities with a focus on: (1) improving the levelof safety management at group companies in order to achieve
our CSR Objectives for 2025, (2) eliminating accidents causedby breaking the rules, (3) eliminating heatstroke-related
accidents, (4) preventing the recurrence of similar accidents,(5) complying with health & safety-related legislation, and(6) preventing the spread of COVID-19 infections (preventing
employees from becoming infected or infecting others).
There were 120 occupational accidents, including two
fatalities, and a 0.935% absence rate due to the spread of
COVID-19 infections, so we failed to achieve the target. It is now
more important than ever for each business site to gather theopinions of workers, and for all employees to work together onsafety, security, and health issues.
Fatalities

Lost-time injuries

Total occupational accidents
Absence rate

2 (2)49 (36)120 (103)

operations and equipment, we will promote the prevention ofsimilar accidents and their recurrence.

Absence Rate

FY2019 FY2020 FY2021 FY2022 FY2023

Absence rate

0.580

0.337

0.604

0.935

(Unit: occurrences)

FY2019 FY2020 FY2021 FY2022 FY2023

By region

By gender
Injury or
sickness

Japan

81

92

117

98

115

Overseas

6

2

4

5

5

Male

83

89

120

100

112

Female

4

5

1

3

8

Injury

83

79

103

97

113

Sickness

4

15

18

6

7

45

40

52

40

51

42

54

69

63

69

Our
Our employees employees
or contractors
Contractors

Breakdown of Accidents by Type*FY2022* (figures in brackets are FY2022 results)

76

0.647

Occupational Accidents*

0.935% (0.604%)

Regarding the elimination of heatstroke-related accidents,
which we have identified as a key issue since FY2021, we aremeasuring WBGT (Wet Bulb Globe Temperature) values (heatindices) at each work site, have established break frequencies
based on WBGT values, and are promoting improvements inwork environment and work management. There were 7 casesof heatstroke in FY2023 (FY2022: 6 cases). Heat tolerance varies
from person to person, and wearable devices are being used toreduce the risk of developing symptoms. In addition, regarding
accidents involving the violation of workplace rules remained
high, accounting for 26% of all occupational accidents, so
we are progressing with guidance through periodic patrols,
education on rules, improvement of equipment and behaviors,and "visualization" of safety activities, such as displays of
accident lessons learned at the locations of the accidents.
Analysis of occupational accidents found that approximately
40% of accidents involved workers with less than three years ofexperience, so we will enhance initiatives to prevent accidents
involving less experienced workers.
Also, regarding accidents according to type, "trapped byor dragged into equipment" accidents remain high, while thenumber of "falling over" accidents is on the rise. By reviewing
the essence of safety measures from the perspective of both

Non-consolidated (Unit: %)Being trappedby or dragged
into equipment
17%

Other
23%

Falling fromheight 11%

Reaction to operation/
forced operation 8%
Collision 4%
Contact with highor low temperature
objects 8%

Fallingover
15%

Flying/falling objects
16%

Reaction tooperation/forced
operation 4%
Collision 4%

Contact with highor low temperature
objects 13%

Fallingover
18%

Being trappedby or dragged
into equipment
24%
Falling fromheight 12%
Flying/falling objects
12%* Taiheiyo Cement and group companies that are business sites required to submit
accident reports under our Safety, Security and Health Management Regulations are
the subject of aggregation

Initiatives for ISO 45001

In March 2023, a transportation company worker was run
over and killed by another company's vehicle at the cement
shipping yard of an overseas group company. The direct cause
was walking in a no-walking area, but another indirect factor
was inadequate visualization of the separation of the flow lines
between people and vehicles. We promote thorough separationof lines of flow between people and vehicles (work and walking
areas are defined and made visible with signs, paint markings,etc.) and the practice of pointing and calling out to others at all
workplaces.

In March 2018, the ISO 45001 standard for OSHMS
was established by the International Organization forStandardization. Since 2007, we have been operating OSHMS
based on the guidelines given by the Ministry of Health, Laborand Welfare. As an international company, in addition to quality(ISO 9001) and environmental (ISO 14001), we obtained ISO
45001 certification for Health and Safety for our Kamiiso andOita Plants.

(3) Expanding Safety Activities to Group Companies

The Company-wide Health & Safety Committee provides
support for safety activities at group companies. It started
conducting safety surveys at the group’s business sites in Japanand overseas in FY2019. Safety surveys were conducted atfour business sites in Japan and one overseas in FY2023. In
addition, at the Kumagaya Plant, safety personnel from fourGroup companies exchanged opinions on safety activities andreceived training using hazard simulation equipment.
Our group companies will continue to improve the level ofsafety management going forward.

Safety activity support (Nghi Son Cement Corporation)(4) Ensuring the fundamental safety of work
(acquisition of utility model rights)

Posting of warning to drivers (Taiheiyo Cement Philippines, Inc.)

FY2023Other
14%

Examples of Accident Prevention Initiatives(1) Recurrence prevention measures(in response to fatality)(2) Experiential Safety Training

In order to boost the safety awareness of our employees
we hold safety training where they experience risks inherent
in familiar operations. In FY2019 we introduced experiential
safety training equipment such as VR (virtual reality) devices atall our cement plants for employees to experience simulated
dangers related to safety harnesses, rotating equipment,
electricity and heavy objects suspended from a crane. We also
set up a system that can provide effective training for younger
or less experienced employees.
At each plant, we are striving to improve safety awarenessby adding hazard simulation equipment, providing safety
simulation training using on-site equipment, and combining
hazard simulation equipment training with VR training.

Each plant is working to make its operations and facilities
intrinsically safe by reflecting the opinions of its workers.
The Oita Plant has been striving to make the work ofcleaning the returned powder from the return roller of belt
conveyors intrinsically safe, and has developed a "safety coverfor self-aligning return rollers" that enables safe work without
stopping the belt conveyor, and obtained a utility model patentin February 2022.

Safety cover for self-aligning return roller
Registration No.: 03235767 (February 3, 2022)(5) Ensuring the Safety of Foreign Workers

The number of foreign workers is increasing each year and
we are becoming multinational. At our cement plants we are
striving to ensure safety through graphic displays in educational
materials, multilingual displays, and using DVDs.
VietnameseIndonesian
Simulated experience of an accesshole closing and trapping fingers(Ofunato Plant)

Safety training using VR(Saitama Plant)"Safety First" was translated into Vietnamese and Indonesian and posted in the plant(Ofunato Plant)

77

The Driving Force/Booster of Value Creation — Sustainability Human Capital

Human Resources Strategy
We motivate our employees andenhance their abilities, which inturn drives the improvement of ourcorporate value.
Tetsuya Ohashi Director and Senior Executive Officer
human resource strategy, including securing and training
human resources that can create added value.
We will realize human capital management by creating anenvironment in which our employees are rewarded for theirwork, maintain their physical and mental health, and work
efficiently.

We view human resources as "capital" and believe that
increasing the value of individuals by investing in people willlead to medium- and long-term improvements in corporate
value.
Based on this approach, we are deploying initiatives thatare conscious of the link between management strategy and

Improvement of corporate value
Personal growth

Motivated human resources
Human resources with diverse ideas
Human resources that can play
an active role in the world
Fostering motivation and a sense of fulﬁllment
Presence of specialists in each ﬁeld
Accumulation of micro innovations

Human resource system/training system
Devices and mechanisms to motivate

Supporting "personal" growth by fostering autonomy and self-reliance
Providing opportunities and support to experience challenges
Action plan to improve engagement

Work-life
management

Respect for
humanrightsHuman
Resources
Strategy(1) Have a ﬁrm pricing policy(2) Become leading plants in decarbonization(3) Versatile - Diversiﬁcation of risk through diverseand multifaceted businesses

Diversity
andinclusion

The Taiheiyo Cement Group has been continuously involvedin cement production for 140 years. During that time, we haveworked to achieve quality and cost competitiveness of our
products and services at all sites, from limestone mining tocement production and transportation.
Originally, cement was made purely from naturally occurring
materials such as limestone, clay, and silica stone, but in recent
years waste and by-products have been used as alternative
raw materials. Continuous operation and planned repairs at
the plant are the source of our cost competitiveness; however,many of the alternative raw materials can have a negative
impact on the cement manufacturing process, so making fulluse of them requires a certain amount of ingenuity.
For example, utilising sewage sludge as a raw material in
the cement production process can be unpleasant for operatives
on site. Similarly, in response to the recent surge in coal prices,plants are striving to make full use of lower-quality coal, so theaccumulation of "micro innovations" to overcome challenges
such as unpleasant or difficult to handle materials becomes a
specific skill. Therefore, the "motivation" of plant employees is
directly related to corporate value.

Human resources required for further growth

Sources of competition

Human
resource
development

Human resources strategy andmicro-innovation

Health andProductivity
Management(H&PM)Engagement(4) Focus on human capital- Highly diverse human capital- Securing human resources- Creation of a pleasant work environment

Expansion of our business in overseas markets is essential
for the further growth of the Taiheiyo Cement Group. To thisend, it is necessary to continuously develop human resources,
both technical and clerical, who can play an active role overseas.
There are programs such as overseas traineeships and overseas
language study programs, but nothing beats practical work
experience.
We are currently building a state-of-the-art cement plant in
the Philippines, and participating in this project is an extremely
good learning experience. It is a valuable opportunity because
we are building a plant from scratch and starting it up together
with local employees. Many of our employees, especially youngand "motivated" employees, are playing an active role on
location.
However, overseas projects do not always progress smoothly
and unforeseen things can happen frequently, so working on
location is usually a battle against schedules. Experiencing suchdifficulties is a way for an individual's ability to grow by leaps
and bounds. All of them will come back stronger and moremature.

Approach to human capital
The term "human capital" is now used frequently. We
believe "capital" includes the nuance that when an individual
grows, the overall "capital" of the firm will increase as a result.
Growth is the accumulation of what you were not able to doyesterday that you are able to do today. The driving force behind
growth is motivation. The Human Resources Department
is the place where mechanisms and systems are created tosustainably generate "motivation".

Towards improvement of corporate value
Starting this year, we have decided to conduct anengagement survey of all employees to gauge their willingness
to serve in the organization. Based on the survey results, eachdepartment will develop and implement an action plan to
improve engagement, and the PDCA cycle will be implemented.
In addition to regular job rotations, an in-house sideline system
is being implemented on a trial basis with the aim of gaining
experience in other departments. For example, a person froma research center can telework 20% of his/her time per week
to work in overseas sales, or a person from the general affairs
section of a plant can work in the human resources department
at Headquarters. If they are a good match, it is possible forthem to transfer directly.
We believe that individual growth based on "motivation"leads to increased corporate value.

Top Commitment

78

79

The Driving Force/Booster of Value Creation — Sustainability Human Capital

Human resource development

Promotion of diversity and inclusion

In addition to company-wide measures such as training for each job level of employees, we provide individual
learning opportunities that foster autonomy and self-reliance, thereby creating a corporate culture that motivates
employees to grow and proactively find the pillars of their careers.

The promotion of diversity and inclusion is one of the key issues for the creation of an innovative workforce, and weare making it a priority.

Basic approach

Basic approach

We have established the following six items as our "Human Resource Development Policy" for systematic and comprehensive
human resource development so that all of our human resources can demonstrate the full extent of their individual capabilities.

We are actively working with the aim of becoming a company where people with diverse values can play an active role.

Promoting Women’s Participation and Advancement in the Workplace

Human Resource Development Policy
1 Supporting "personal" growth by fostering autonomy and self-reliance among our diverse human resources.
2 Developing human resources through on the job training supplemented by off-the-job training.

3 Developing human resources to inherit the roles of their predecessors, playing central roles in the future in each field and at each level.
4 Developing human resources to take action in constant consideration of group management.
5 Developing human resources to global standards of competence.

Fundamental Policies

6 Developing human resources to protect the environment and to serve society through the promotion of sustainability.

Education System
In order to realize our Human Resource Development Policy,
we provide training across the entire company. Regarding onthe-job training, which is the foundation of human resource
development, we have clearly indicated skill maps for eacharea of work in which employees are engaged and utilize

Education System ChartOnthe-job
Training

them in on-the-job training in the workplace. For off-the-job
training, which complements on-the-job training, we provide
various training programs and support for the development of
individual skills.

Non-consolidated

Implemented Across the Entire Company
Off-the-job Training

Companywide Common
Training

Education Level

LeaderDevelopment

Management

External public
seminars

SafetyDepartmentSpecificTraining

With the aim of further enhancing corporate value by promoting innovation through the ideas and values of diverse humanresources, we will:• Promote active recruitment and retention of women in order to build an appropriate human resources portfolio;• Promote work-life management to improve productivity and build an organization that maximizes the capabilities of our diverse
workforce.

Program to train the next generation of female leaders
In Japan, the career development of working womenis prone to various uncertainties due to the influence oflife events and the absence of role models. To counter
this, we provide training aimed at developing the next
generation of female leaders.

Number of participants in FY2023: 29

Improving skillsin the image of a leader

Solid image ofcareer advancement

CareerdesignSTEP 1 (Introduction)

STEP 2 (Development)

Learn how to think about their career,solidify a career plan, and be awareof the next step in careeradvancement

Awareness of leadershipas an option in careerplanning

STEP 3 (Practical)
Gaining their own
speciﬁc image of aleaderIn order to respect the sense of spontaneous
learning, participation up to STEP 2 is voluntary.

Expanding recruitment of experienced persons

Selfdevelopment
supportDepartment-specific education

Techno Schools

Sessions for newly
hired employees

Program totrain the next
generation of
female leaders(introductory/
development
courses)

Individual Ability
Development

E-learning support
Foreign language learning for business
Qualification acquisition support
Support for correspondence education

Follow-up
courses

Overseas language study

Mental health

Global humanresource
development
program
Overseas internship

Legal

Program totrain the next
generation of
female leaders(practical course)

Overseas trainee

Careerdevelopment
coursesIntellectual property
Skills map

General Staff

Diversity and inclusion

Management Academy (Domestic Production Division)
Financial Leadership Program (Hitotsubashi University)
Global Human Resource Development
Program(Keidanren)
Dispatch to Women's Challenge Support Course(Keidanren), etc.

Managerial
training

Sustainability

Management training

Human rights

GlobalSelective external dispatch training

Training for new
deputy directors
Training forManagement overview newly appointed
managers
Information security

Diversity andinclusionin May 2015 and have been published both internally andexternally. The ratio of female employees was 9.6% at the endof March 2023 and we are continuing our efforts to achieve ourtarget of 10% or more.

We have established a basic policy regarding women's
participation and advancement in workplace and are
implementing initiatives. The current quantitative targets aredefined in our CSR Objectives for 2025 that were establishedWith regard to employee recruitment, we are actively
recruiting not only new graduates but also experienced persons.
Hiring people with diverse careers not only ensures immediate
workforce strength, but also revitalizes the organization withnew values. We have hired about 10 experienced workers ineach of the last five fiscal years, leading to diversity in our core
workforce.
In addition, "employee referral hiring" and "alumni hiring"were newly introduced to increase employment diversity.

Promoting Employment Opportunities for Persons with Disabilities
We have been working to improve the ratio of employeeswith disabilities, including the establishment of three special
purpose subsidiaries, and exceeded the statutory rate of
employment for 16 consecutive years since FY2009.
We will continue to proactively work to increase the numberof employees with disabilities while collaborating with schools
and support organizations for persons with disabilities.

Trends in the ratio of employees with disabilities
Non-consolidated(as of June 1 of each year)

(%)
3.0
2.5

2.30

2.50

2.55

2.58

2.84

2.0
1.5

Taiheiyo Cement
Statutory employment ratio (%)*

1.0
0.5
0

2020

2021

2022

2023

2024

(FY)

* Statutory employment rates: 2.2% from April1, 2018; 2.3% from March 1, 2021

80

81

The Driving Force/Booster of Value Creation — Sustainability Human Capital

Promotion of work-life management

Health and Productivity Management (H&PM) initiatives

Employee wellbeing is contributes to our sustainable growth. We are working to create a workplace where each andevery employee can enjoy job satisfaction.

As part of our efforts to improve labor productivity, we promote various measures to maintain the physical andmental health of our employees.

Basic approach

Basic approach

We have introduced various systems to realize flexible work styles and promote work-life management for our employees.

Various Employment Systems• Flextime system (Core time: 11:30 a.m. to 1:30 p.m. (headquarters,
branches, etc.))• Discretionary labor system• Telecommuting system• Inside side job system• Outside side job system• Shortened work hours in order to care for children up to sixth gradeof elementary school (hours can be shortened by up to 3 hours/day in
10-minute increments)• Shortened work hours in order to provide nursing care to family (hours
can be shortened by up to 3 hours/day in 10-minute increments, for a
total of 3 years per person requiring care)• Exemption from overtime work in order to care for children under 3
years old
• Restriction on overtime work, exemption from late-night work, andstaggered work hours in order to care for children up to sixth grade ofelementary school• E xemption and restriction on overtime work, exemption from late-nightwork, and staggered work hours in order to provide nursing care tofamily•H alf-day paid vacation• “ Special Reserved” leave (purposes of use: medical care, nursing care,
physical checkups, fertility treatment, self-development, etc.)• C hild nursing/nursing care leave (ten days per year)• Volunteer activity leave• P ersonnel management systems for each course, including areaspecific positions (with course change system)•M aternity leave and childcare leave system (up to two years and one
month)•N ursing care leave system (for a total of two years per person requiring
nursing care)• Work-life management leave• C areer comeback system (reemployment system) etc.

Support for balancing work and childcare/nursing care
To enable employees to balance work and childcare/nursing care, we have introduced a shortened working hoursystem for childcare up to the completion of the sixth gradeand for nursing care up to a total of three years (per person
requiring nursing care). We are working to make the systemeasier to utilize by, for example, allowing employees to choose
to work shortened hours under the flextime system (at theheadquarters, branch offices, etc.). In addition to leave forchildcare and nursing care, we also provide a long-term leavesystem (work-life management leave) for accompanying a
spouse on a new assignment, etc., to support work-life balance.



Ratio of male employees taking childcare leave, etc.

Non-consolidated

(%)
100
80

Ratio of male employees taking childcare leave or leave for childcare purposes
Ratio of male employees taking childcare leave, etc.
91
89
79
60

60

20

19

18

The physical and mental health of our employees and their families is a prerequisite for
us to realize our mission of contributing to social infrastructure development by providing
solutions that are environmentally efficient, enhancing our competitive position and bringing
value to our stakeholders. We hereby declare that we regard our employees as “human capital”
and that we will work to maintain and improve their health and that of their families, and aim
to create a rewarding workplace where employees can fully demonstrate their abilities.
Sep. 2022 TAIHEIYO CEMENT CORPORATION President and Representative Director

Masafumi Fushihara

Health and Productivity Management Promotion System

Fundamental Policies

2021

2022

Ultimate responsibility for H&PM: President

1 Under the Health-Conscious Management Declaration,

Sustainability Management Committee

the Taiheiyo Cement Group, led by the Human Rights &Labor Practices Committee, will work with each businesssite to promote efforts to maintain and improve thehealth of employees and their families and to create arewarding workplace.
2 Employees will enhance their physical and mental
wellbeing and improve their quality of life by actively
working to maintain and improve their health and thatof their families.

Planning, execution,
evaluation and improvement

Planning, execution,
evaluation and improvement

Human Rights & Labor Practices Committee(Chair: Director in charge of Human Resources)

Human Resources Department
D&I and Health Promotion Ofﬁce(Director of Promotion Ofﬁce:
General Manager, Human Resources Department)

Person in charge of Health andProductivity Management promotion

Please see our website for more information about
our promotion of “H&PM”.

(Headquarters, branches, plants,
research centers, ofﬁces)

https://www.taiheiyo-cement.co.jp/english/
csr/human_rights_fr.html#section13

Human Resources Department
Health management room
& clinics(industrial physician, nurse)

Cooperation

Taiheiyo Cement Health Insurance Association, Taiheiyo Cement Labor Union

0
2023

(FY)

careers and increase engagement by allowing employees todemonstrate their strengths and take on tasks that are in linewith their interests.

Increasing Understanding of the Systems
We have an exclusive website for our employees regarding the various systems called "Kirakira Palette" in order to increaseawareness of the various systems that can be utilized for work-life management. The site provides information on childand nursing care, health, self-development, and other information to support
employees’ lives, which can be accessed from anywhere at anytime. We are working
to enhance the content.

82

Taiheiyo Cement Group Commitment to Health40

Support for side jobs both inside and outside the company
We have introduced a system that allows employees to workside jobs, both inside and outside the company. We expect
this system to promote the autonomous formation of diverse

We have been implementing H&PM
initiatives since FY2019, and basedon the belief that the health of ouremployees and their families is thefoundation of our business activities, weview our employees as "human capital"
and work to maintain and promote
the health of our employees and theirfamilies, as well as promote a workplacethat provides job satisfaction.

Main Health and Productivity Management activities
Under our Health-Conscious Management Declaration,
we are promoting health management through the PDCA
cycle, which includes establishing a Health and Productivity
Employee health care
• Employees receiving periodic healthexaminations• Recommendation of secondary testingand specific health guidance• Health care system utilization, etc.

Management activity plan for each fiscal year, implementing
measures, verifying their effectiveness, and reflecting theresults in measures for the next fiscal year.

Health literacy education

Preventive measures against lifestyle-related diseases• Implementation of e-Learning for all
employees• Provision of health information, etc.

• Three walking events are held annually• Introductions of healthy employees in thecompany newsletter• Implementation of "eating inmoderation" campaign, etc.

Smoking rate reduction measures

Mental health measures• Smoking cessation aids provided free ofcharge• Assistance for smoking cessation therapy• Running of Smoke-Free Day, etc.

• Conducting of stress checks• Follow-up interviews with employees at
high-stress offices• Establishment of a mental healthcounseling services, etc.

83

The Driving Force/Booster of Value Creation — Sustainability Human Capital

Respect for human rights

Human Rights Due Diligence

In order to practice business activities in which respect for human rights is regarded as the most important issue forthe entire supply chain, we promote human rights awareness activities for the entire group.

Together with our suppliers, we will deepen our commitment to respect human rights and aim for sustainable growththroughout the supply chain.

Basic approach

Human Rights Due Diligence

We formulated our Basic Policy Concerning Human
Rights and Labor Practices in April 2015 with the awarenessthat respecting human rights and diversity is a fundamental
principle for a sustainable society, and taking into consideration
the Universal Declaration of Human Rights and the labor
standards of the International Labor Organization.
Furthermore, we signed the United Nations Global Compact
in May 2022 and are continuing to further enhance our efforts
to protect human rights.

Basic Policy Concerning Human Rights and Labor Practices

The United Nations Global Compact

The United Nations Global Compact (UNGC) is the world's
largest sustainability initiative, bringing together the United
Nations and the private sector (businesses and organizations)to build a healthy global society.
We signed the Compact in May 2022 and endorse theten principles related to the protection of human rights,
the elimination of unfair labor practices, environmental
responsibility, and the prevention of corruption, and we aretaking various steps to achieve these principles.

We recognize that respect for human rights not only means
not being complicit in human rights abuses ourselves, but also
taking responsibility for preventing and mitigating negative
impacts on our suppliers. The first Human Rights Due Diligence(Human Rights DD) was initiated in 2024 to identify potential
human rights risks in the Group's business activities andprevent or mitigate them by appropriate means.
The scope of the survey covered the Taiheiyo Cement Groupand several representative companies from the supply chain
centered on cement manufacturing, the backbone of the Group.

For the issues survey, we referred to the "Guiding Principles on
Business and Human Rights" issued by the UN Human Rights
Council, as well as several international norms and guidelines,
and identified 15 themes considered to be of particularimportance to the Group.
This year, based on the survey results, we will assess thecurrent status of human rights risks and examine corrective
measures and countermeasures, focusing on issues rated ashaving a high severity of impact.

1 R ecognizing that respecting human rights is a foundational

management concern, we will strive to address human rights issues.

Flow of human rights DD implementation

2 We will respect diversity and will not tolerate discrimination orharassment in any form.
3 Applying accepted international principles and laws and labor
practices in each country, we will respect the rights of all ourworkers, provide them with employment free of discriminationand strive to ensure equal employment opportunities.
4 We will strive for better working conditions and a workplaceenvironment that ensures the health and safety of our employees.
5 We will not tolerate child labor or forced labor under any
circumstances.

Educational Activities on Human Rights
CSR top management lectures for Group companies
were held on topics related to "Business and Human Rights
Responses Required of Companies". We also provided training
support to Group companies, distributed human rights
educational booklets, and provided information.
In FY2023, the theme of training for each job level of
employees was "Recent Dowa issues and efforts to prevent
harassment and how to use counseling services" andexplanatory meetings on understanding the importanceof harassment prevention and the procedures to use thecounseling services were held at all business sites.

Internal Training and Motto Submission (FY2023)
Training

Results

CSR top management lecture126

Human rights training for each job level at
headquarters

291

Human rights training at branches, research
centers and plants

1,412

Number of Human Rights Week mottos
submitted (employees and family members)

1,670

Our Human Rights Hotline
In addition to members of the harassment counselingcommittees and human rights committees conducting activities
to raise awareness of human rights to prevent harassmentand offering consultation, the Japan Institute for Women's
Empowerment & Diversity Management serves as an external
consultation service, providing an environment conducive toconsultation.
In FY2023, there were 14 consultations to the harassment
consultation service, all of which were handled appropriately inaccordance with the requests of the consulting parties.

Harassment Hotline
Internal

Human rights awareness promotion committee members
and harassment consultation members have been assigned
at all our business sites (56 in total)

External

Telephone and website consultations have been contracted
to the Japan Institute for Women’s Empowerment & Diversity
Management Harassment Hotline

N umber of Reports to the Harassment Hotline (FY2023) Non-consolidated
Internal
External

84

Sexual
Power
Other forms ofharassment harassment harassment
0
6
3
1

2

2

Total
9

Basic design• Identify critical human rights issues based on factors including international standards, external
requests, industry characteristics

Detailed design• Consider methods for evaluating human rights issues, and consider survey methods and techniques
for the purpose, as well as selecting priority targets to be surveyed

Grasping the current
situation• Conduct written and interview surveys

Evaluate and consider
response measures• Analyze survey results and create a risk heat map• Consideration of corrective measures to reduce human rights risks

Monitoring• Confirm the progress of corrective actions• Expand the scope of human rights DD• Design and implementation of grievance handling mechanisms

Human Rights Issues of the Taiheiyo Cement Group
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15

Respect for human rights
Non-participation in human rights violations
Access to legal remedies
Equality under the law and prohibition of discrimination
Harassment and abuse
Child labor
Forced labor
Occupational Health and Safety
Working hours
Appropriate working environment
Wages
Freedom of association and the right to collective bargaining
Rights of local residents and communities
Bribery and corruption prevention
Thorough procurement practices (supplier management)

First DD: Scope of survey
Major domestic primary suppliers (coal, limestone)
Production

Transportation

2 companies

Directly-controlled of domestic affairs

6 plants

Domestic Group

3 companies

Overseas Group

6 companies

Land transportation (domestic group)

1 company

Marine transportation (domestic group)

1 company

To be implemented from the second time onwards• Other domestic and overseas group companies• Major domestic secondary suppliers• Major overseas primary suppliers

585The Driving Force/Booster of Value Creation — Sustainability Human Capital

Initiatives to Improve Engagement

Discussion with the Independent Directors

Regular engagement surveys will lead to measures to motivate employees and increase their willingness tocontribute to the company.

The Stakeholder Communication Committee, a cross-functional organization within the Company, held a "Discussion
with the Independent Directors".

Basic approachWith Director Koizumi
engagement survey to visualize issues related to improving
employee engagement from the perspectives of whether
the workplace environment and ease of work are improving,whether there are changes in awareness regarding work styles,
and how we compare with other companies, and to link this to
the review and implementation of various measures.

Based on the belief that understanding and empathy
with the values of the Taiheiyo Cement Group, including its
mission and future vision, and increasing the willingness of
employees to contribute to the company will contribute tosustainable corporate growth, we are promoting the creationof a vibrant and comfortable workplace that respects humanrights and diversity. In June 2023, we introduced an employee

Conducting of engagement surveys
with company sizes ranging from 1,001 to 5,000 employees.
We will continue to conduct employee engagement
surveys on a regular basis and, while checking the scores, eachdepartment will deploy a PDCA cycle to analyse organizational
issues, formulate and implement action plans, and evaluate
and verify the effectiveness of such plans, aiming to improve
employee performance, revitalize the organization, andincrease corporate value over the medium to long term.

An engagement survey is one that visualizes "the willingness
to contribute to the organization and the psychologicalstate of being proactively engaged in one's work". In Juneof this year, we conducted engagement surveys to visualize
employees' "engagement with their work" and "engagementwith the organization's philosophy, culture, and environment,"
respectively, with the aim of aligning the direction of growth
between the company and employees.
Our engagement score of 66 was at a 3-point deviationfrom the benchmark score of 69. The scores by evaluation item
show that "provision of career opportunities" and "culture ofchallenge" need improvement, while "stress response," "worklife balance," and "satisfaction with salary" are expressed as ourstrengths. Note that the benchmark score here is the overall
average score for Wevox-using companies in all industries andAttendees T.Y. Tohoku Branch remote

S.T. Cement Business Division Administration Department
H.N. Kamiiso Plant remote

R.N. Chubu Hokuriku Branch

Carbon Neutral Technology Development Project Team
N.N. The
remoteA.N. International Business Division
Host

Q
Conceptual diagram of initiatives to improve engagement

Improvementof corporate
value
PLAN
Organizational
issue analysis

A
CHECK-ACTION
Evaluation andveriﬁcation ofeffectiveness86• Improvement of
employee performance• Revitalization of organization

P
D DO
C
Action plandevelopment andimplementation

Y.S. General Affairs Department

What are some of the characteristics ofthe company from the perspective of its
independent directors?
We strongly feel that each and every employee

A takes pride in being part of a leading company withover 140 years of history. There have been times ofhardship in the company's long history, but it has overcome
these hardships, is actively expanding overseas, and it is time
for the struggles of the past to blossom. On the other hand,looking within the group, there are only a few completely
different industries, giving the impression of a strong cement
specialization.

Our company now offers a wide variety of work

Q styles. Please share your advice on what you
value in future career development.

When I was giving birth and raising my children,

A we did not have the support that we have today, so I

feel that these are great times. It is important not tointerrupt your career, but to take advantage of all the support
you can get, because you will not be able to keep going if
you have to take on work, childcare, caregiving, and family
all by yourself. It is said that it takes the support of 10 people
to nurture a female businessperson, so it is difficult to do italone no matter how hard you work. Therefore, it is importantto always remain grateful to those around you, including yourfamily and colleagues. Since society is now promoting theactive participation of women, we should try to get on board
with this trend.

After the DiscussionA.N.
Normally, we rarely have the opportunity to hear directly from management, as their intentions
and ideas go through various internal processes before reaching us. Through the exchange ofvarious opinions at this discussion meeting, we were able to gain a clearer understanding of whatis expected of us in our daily work, and it was a valuable opportunity to increase our motivation.

87

Discussion with the Independent Directors

The Driving Force/Booster of Value Creation — Sustainability Human CapitalWith Director Emori

Attendees T.O. Chubu Hokuriku Branch

A.N. The Carbon Neutral Technology Development Project TeamremoteK.M. Nghi Son Cement Corporation remote

T.I. Kumagaya plant

S.Y. General Affairs Department
A.S. Production Department

Y.M. Corporate Planning Department
Host

Q

Y.S. General Affairs Department

We are in a difficult business environment rightnow, what will it take to keep us motivated?
It is important for young people to align their

A vectors with the president's vision of "becoming an

outstanding leading company in the Pacific Rim," andto look ahead to the future and work hard without being too
concerned about the situation in front of them. I hope that you

With Director Furikado

will face your work by embodying your own themes, such as"What is it that I can do?" and "What should I do?" to overcome
difficult situations. When encountering difficulties, actively
engage in dialogue with your superiors and seniors to get intouch with their humanity and outlook on life. That way, you
may find some constructive answers. I hope that all of you will
have an unshakable focus in your lives and become people
equipped with virtue.

Q

What is the experience that a young employee
should have?

I hope that you will make an effort to gain
experience and knowledge of company operations andmanagement. Furthermore, in order for our company
to accelerate global management in the future, language skills
that can be used overseas and the ability to communicate withlocal staff are also indispensable. In order to become suchsought-after human resources, I hope that you will actively lookoutward from a young age.

A

Attendees A.H. Central Research Laboratory
S.H. General Affairs Department
M.Y. Saitama Plant remote

S.I. Taiheiyo Cement Philippines, Inc. remote
T.H. Chugoku Branch

M.O. Human Resources Department
K.S. Accounts Department
Host

Q

Y.S. General Affairs Department

What are your expectations for young
employees in order for our company to become
an outstanding leading company?
While energy prices continue to soar, the priceA pass-through to cement has not progressed well,resulting in very difficult business conditions in
FY2023. However, times of trouble are opportunities to change

things radically. As the top manufacturer in Japan, we must
develop and lead the way on cement pricing policy. I would
like to encourage young employees, with their fresh andflexible senses, to proactively make various proposals from theperspective of "if I were the president".

Please tell us about what it is that our company

Q should communicate more to society.

Cement is the base material for infrastructure and,A as a necessary industry, it will not disappear in the

future. The fact that we have created a technology thatutilizes a wide variety of waste materials to produce cement andcontributes to the circular economy is proof that the cement
industry itself is sustainable. On the other hand, it is less wellknown that the company is actively working to achieve carbon
neutrality and that it is a global company with overseas factories
accounting for nearly 40% of its production capacity. I think thatshould be more widely communicated to society.

After the DiscussionS.H.
We asked them about the corporate culture that they felt was unique to our company. The
foundation of our company is the long 140-year history built by our predecessors, and I once again
recognize that it is my role to pass on this history to the next generation. I would like to use thisopportunity of this discussion meeting as an impetus to work harder than ever before.

88

89

The Driving Force/Booster of Value Creation — Sustainability

Social and Relationship Capital

Value Chain Management
Aiming to build a relationship of mutual trust with each stakeholder in the value chain and achieve sustainable
development together.

Safe Cement and Cement ProductsHigh quality and safe products
Basic approach
In 1998, the year of Taiheiyo Cement’s inception, weestablished a quality policy based on our management policy.
We have since revised our Business Principles by adding
content that expresses them in a way that is easy to understand,and we are working to disseminate them throughout theentire organization. It represents our aspiration to continue
to be a company that customers trust and rely on by sharing a
sense of achievement through each employee’s actions and byproviding high-quality products and services, leveraging ourhigh technological capabilities and quality assurance system.

Quality Policy
All of our employees adopt a global perspective, striving
to boost customer satisfaction and contribute to society byproviding environmentally-friendly products and quality thatmatches our customers’ needs.

In order to achieve the aims of our policy

1 We develop specific product quality targets based on our

Quality Policy, and disseminate them within the company.
2 We focus our efforts and work positively to achieve thequality targets.
3 We carefully review the levels of customer satisfaction andproduct quality that have been achieved.
4 We implement a quality management system andcontinually improve our products.

Quality Management
We focus on stabilizing and improving product quality while
capitalizing on the production and quality control technologies
we have developed over the years. We are further enhancing
product quality control by deploying advanced technologies
to ensure improved stability such as an online analysis system
for raw materials, clinker and cement, the measurement ofclinker minerals by X-ray diffraction and our proprietary Taiheiyo
Cement Quality Predictive System (TQPS). Whilst maintaining
quality, we also make effective use of waste and by-products
and in doing so manufacture cement that pays due attention to
the conservation of the global environment.
All of our Portland cement plants in Japan, including thoseof group companies, have obtained ISO 9001 certification,
the international standard for quality management systems.
Furthermore, all of our overseas cement plants in countries
that adopt ISO have obtained ISO 9001 certification. To ensure
product quality and improve business operations, we obtained
ISO 9001 (JIS Q9001) certification from the Japan Testing
Center for Construction Materials. The scope of our certificationencompasses the development, design and production ofa range of cement, cement clinker and cement-based soil
stabilizer products.
We will continue to enhance our efforts to "supply productsthat meet customer needs" and "improve customer satisfaction"whilst actively utilizing the ISO 9001 system.

90

Quality Management System
Customer

Quality requirements

Sales Division

Sales

Technical Services

Products and technical services

Distribution
Shipping inspection

Research & Technology Development Division

Production Division

Clarify quality requirements• Management of production
conditions• Building quality into the process• In-process inspections

Review quality requirements
Quality design in accordance with quality
requirements

Prototyping and evaluation
Material Procurement

Acceptanceinspection

Today every product is expected to be safe; as a construction
material that is indispensable for developing social
infrastructure cement is no exception. The cement industry
has long made use of industrial waste and by-products suchas blast furnace slag, coal ash and by-product gypsum assubstitutes for natural mineral resources. Furthermore, we use
technologies we developed to recycle household waste, such as
the AK system to recycle municipal waste and our incineration
residue recycling system. We also recycle construction-related
soil and waste materials into raw material and fuel for cement
production. When our cement plants accept waste we preventits dispersal and minimize the release of odor by transporting
the waste in a tightly sealed panel truck and storing it in a fully
enclosed facility to protect the environment of the surroundingarea as well as that inside the plant.
We have already established fixed standards for the
management of heavy metals contained in natural resources,
and are constantly enhancing the control of minor components
as the volume of waste we receive increases. When we receive
new types of waste or waste from new sources we strictly apply
rules under which we conduct three kinds of inspection related
to the source of the waste, its chemical composition and theresults of trial use to identify any potentially negative impact on
product quality or the surrounding environment. We will thenmake a final decision on whether to receive the waste. These
measures help us ensure product safety.

Ensuring Product Safety Following a Nuclear Accident

As a consequence of the nuclear accident at the Fukushima
Daiichi Nuclear Power Station of Tokyo Electric Power Company
Holdings, Inc. in 2011, we discovered that some industrial
waste used for making cement contained specified radioactive
material. We have established a system to ensure that theradioactive concentration in cement shipped from our plants
is below the safety limit* set by the Japanese governmentby strictly controlling the radioactive concentrations in raw
materials and fuels for cement. In the interest of full disclosure
we post the measurement results on our website every month.

* The Japanese government set a limit of 100 Bq/kg as the safety standard for radioactive
concentrations in cement, effective from May 2011.

Please see our website for more information about
radioactive concentrations
in our products in Japanese.

Provision of Information Using SDS and LabelingTo ensure the safety of cement users we prepare Safety Data
Sheets which contain hazard identification details and makethese sheets available on our website. GHS labels are also
attached to bags and flexible containers.

Minor Components of Ordinary Portland Cement(Unit: mg/kg)

FY1988FY2019FY2020

FY2021

FY2022

FY2023

Average

−

427

435

409

395

461

Max.

−

504

578

512

449

557

Min.

−

355

337

326

311

396

Average

−

77

84

79

75

79

Total
Max.
chromium

−

95

95

85

88

92

Min.

−

64

75

73

65

63

Average

17.4

8.6

7.9

8.0

7.1

6.4

Max.

32.3

11.4

9.8

11.1

8.9

7.2

Min.

5.3

5.4

6.6

5.5

5.9

5.6

Average

556

600

554

609

560

551

Max.

1059

772

677

734

742

702

Fluorine

Watersoluble
hexavalentchromium

Zinc

Lead

CopperArsenic

SeleniumCadmiumhttps://www.taiheiyo-cement.co.jp/english/
csr/fair_trade_fr.html#section02
Mercury

Min.

137

449

493

464

434

422

Average

221

62

63

66

61

54

Max.

668

84

77

88

82

72

Min.

18

38

43

39

43

37

Average

122

274

263

267

253

253

Max.

233

415

359

442

404

365

Min.

17

163

181

168

159

138

Average

17

18

13

15

14

15

Max.

39

47

28

47

39

54

Min.

2

6

7

6

6

ND

Average

−

0.5>

0.8

0.8

0.7

0.7

Max.

−

0.5>

0.9

0.9

0.8

0.9

Min.

−

0.5>

0.6

0.5>

0.5>

0.5

Average

1.5

1.3

2.0

1.7

1.5

2.0

Max.

2.6

2.0

3.0

2.0

2.0

3.0

Min.

0.6

1.0>

1.0>

1.0>

1.0

1.0

Average−0.005>

0.007

0.010

0.008

0.010

Max.

−

0.005>

0.011

0.020

0.012

0.020

Min.

−

0.005>

0.005>

0.005>

0.005>

0.005>

91

The Driving Force/Booster of Value Creation — Sustainability

Responsible Sourcing and Supply
Basic approach
We believe that we grow along with our business partners. In orderthat we may build relationships of mutual trust and work in tandemwith our business partners, our dealings with them are based on faircontracts and we strictly adhere to our agreements. We have establishedfundamental policies in order to clearly establish our stance towards fairtrade, under the “Dealing outside the company in good faith” sectionof our Standards of Conduct and based on the principle that “we will
act in an ethical manner and abide by the laws and regulations of thosecountries in which we operate” defined in our Business Principles, andour supply chain management is in accordance with these policies.

In addition, we established the Basic Policy Concerning
Procurement in October 2017 to consolidate commitments 2 (“Wewill maintain appropriate and transparent relationships with ourcontractors”) and 3 (“We will select business partners in a fair andequitable manner”), and request ethical conduct from our contractors.

Fundamental Policies

In response to the strengthening of international regulations
against acts of bribery, and to strengthen our initiatives against
corruption as stated in commitments 4 (We will not offer
entertainment or gifts to customers that go beyond what is legally andsocially acceptable) and 7 (We will maintain transparent relationships
with governments and local authorities), we established our AntiBribery Policy in January 2017, and concurrently released a statementby our president proclaiming the group’s stance against bribery.

1 We will conduct fair marketing and bidding, and not engage inunfair practices such as collusion and cartels.

2 We will maintain appropriate and transparent relationships withour contractors.
3 We will select business partners in a fair and equitable manner.
4 We will not offer entertainment or gifts to customers that go
beyond what is legally and socially acceptable.
5 Our advertising, displays and briefing sessions will be honest and sincere.
6 We will respond appropriately to customer feedback.
7 We will maintain transparent relationships with governments
and local authorities.
8 We will respect the cultures and customs of the places where we operate.

Please see our website for more information about the
Taiheiyo Cement Purchasing Basic Principle

https://www.taiheiyo-cement.co.jp/english/
csr/fair_trade_fr.html#section06

Please see our website for more information about
the Anti-Bribery Basic Principle (Policy).

https://www.taiheiyo-cement.co.jp/english/
csr/fair_trade_fr.html#section06

Our Business Partners
Our main business activities are involved with cement
and concrete. Limestone is the main raw material used andgroup companies are largely in charge of such aspects as theoperation and management of the quarries. Coal, however,which is a source of thermal energy and also part of the raw
materials we use, is sourced from companies outside thegroup. Moreover, the waste and by-products that we recyclein our cement production process come from many different
industries and a variety of locations.
Most of our production divisions are mechanized and there
are almost no labor-intensive processes, and tasks such as
production equipment maintenance are outsourced to partnercompanies and contractors as and when necessary.
Cement is sold mainly to ready-mixed concrete companies
and building materials distributors, and raw materials andproducts are transported by group companies and also
companies outside the group.
In our business activities we strive to communicate closelywith the local governments of the countries and regions where
our business sites are located. We deem it essential that our
supply chain respects human rights, in particular the banning offorced labor and child labor, complies with laws and responds
to requests.

Safety of Business Partners Working at Our Production Sites
Operations at our cement production sites and quarries
are increasingly being mechanized. Since some tasks are
performed in elevated places or at high temperatures, ensuring
worker safety at our production sites is essential. We do ourbest to ensure that employees of contractors working at our92

Value Chain Management

Social and Relationship Capitalsites avoid any accidents. They receive various types of training
when they start work at the site, are required to submit a work
plan that includes a safety plan, and are given guidance withregard to that plan.

Enhancing Our Relationship with Our Customers
We place the highest priority on achieving greater customer
satisfaction. Business units periodically exchange informationand link up to strengthen production focused on quality thatmeets user expectations.
We gather information about customer requirements
concerning product quality and services from our sales andtechnical staff at branches and sales offices. We then analyze
that information, make improvements, and provide feedback.
Furthermore, for our overseas customers, too, we have started
to incorporate local needs into product quality, just as we dofor domestic customers, and we are fine-tuning our products tomeet the requirements of each overseas market. We respondsincerely to every quality issue raised by our customers, andstrive to improve product quality and customer satisfaction.
We actively identify potential quality risks, investigate
their causes and implement stringent cross-divisionalcountermeasures with the aim of establishing an even morereliable quality assurance system.
In addition, we are working to improve our quality assurance
system to include the products of our group companies as well
as Taiheiyo Cement Corporation products. We systematically
strive to identify and address material issues via cross-divisional
initiatives, and aim to boost the reliability of the Taiheiyo brandas well as customer satisfaction.

User Societies and Industry Associations
We have founded and manage various cement user societies
and industry associations that support participants in vitalizing
their business operations and developing technologicalcompetitiveness. The National Taiheiyo Cement Ready-mixed
Concrete Society, the largest of these user societies, is madeup of ten Taiheiyo Cement Ready-mixed Concrete Societies, inlocations ranging from Hokkaido to Kyushu, and engages invarious activities. We hold technical sessions and presentations,as well as conduct activities under specific themes suited to
local conditions. We also focus on providing support for users in
obtaining qualifications such as Authorized Concrete Engineer,
Authorized Chief Concrete Engineer, and Authorized Concrete
Diagnosis and Maintenance Engineer.
In addition to the National Ready-mixed Concrete Society,
we have established other associations such as the Taiheiyo
Cement Association for the Paving Block Industry and SPLITTON
Association Japan to proactively deliver technical support forthe mutual development of concrete product companies. We
will continue to support activities that benefit cement users.

Activities of the National Taiheiyo Cement
Ready-mixed Concrete Society
RegionHokkaido
TohokuTokyo
Kanto
Hokuriku
Chubu
Kansai
Shikoku
Chugoku
KyushuDetails
Ran a contest for case studies of improvements
related to health and safety
Compilation of examples of how to proceed withmanagement review
Held (online) training sessions for personnel incharge of facilities
Held Concrete Forum (Online on-demand format)
Conducted trial mixing of low-carbon concrete
Conducted a workshop corresponding to JIS
A 1132:2020 "Method of making and curingconcrete specimens for a concrete strength test".
Survey of ready-mixed concrete basic data andpreparation of model basic data
Basic training course on concrete quality control(hybrid face-to-face and web-based)
Conducted survey on policy management
Publication of "Guide to Concrete Related Tests"

Initiatives of the Taiheiyo Cement Association for the Paving Block Industry
Since its establishment in 2003, the Taiheiyo Cement Association for the Paving Block Industry has promoted the increased use of block
paving through the exchange of information on concrete block pavement design, manufacturing and construction techniques, and thedevelopment of new products and technologies.
Labor shortages have become a major issue in recent years, which requires a prompt response via productivity improvement andreduction of labor demand in order to maintain and expand the volume of pavement block construction. In order to promote mechanized
construction and improved productivity of block pavement, the association is working together with its members nationwide to conduct
mechanized construction tours and other activities.
The association is also actively working to address the SDGs. Block paving has the ability to handle heavy loads, is highly durable
and also contributes to mitigating the heat island effect. It therefore has reduced life-cycle costs and contributes to the reduction ofenvironmental impact. For this reason, we are also focusing on advertising activities to gain the understanding of specifiers and end-users.
The association will contribute to society through more vigorous activities to expand the applications and popularity of block paving.

93The Driving Force/Booster of Value Creation — Sustainability

Social and Relationship Capital

Stakeholder engagement
Our Group's main business activities are involved with cement and concrete. In our business activities, we closely
communicate with our stakeholders such as shareholders and investors, local communities, customers and suppliers,
as well as our employees, and strive to meet their further requests by making compliance with the law a must.

Basic approach
We are promoting timely and appropriate information
disclosure and communication with our stakeholders based on
our belief that in order to remain a sustainable company, it isessential for us to fulfill our social responsibility and continue
to build good relationships in response to the expectations anddemands of our diverse stakeholders.

Stakeholders

Shareholders,investors

Local community

Customers andbusiness partners

We will continue to strive to make better use in ourmanagement of the opinions and requests we receive fromour stakeholders, and to further promote human capitalmanagement so that our employees, who are the greatest
capital of a company, can work enthusiastically.

Stakeholders’ Interests

Results (FY2023)

Financial strategy
Timely and appropriate disclosure
Our business and mission
Sustainability

IR activities• Financial results briefing (online live broadcast):
3• Individual investor meetings:
160• Investor conference:
1
Publication of Integrated Report:
1R eflecting the perspectives of shareholders
and investors
Promoting direct dialogue between
shareholders and investors and management
Timely and appropriate disclosure of
information and obtaining appropriate
evaluation from the market

Engagement with local communities
Biodiversity
Reducing environmental impact
Contributing to national resilience
Water resources conservation

Engagements with local communities:
2,538• Global environmental conservation activities: 1,253• Revitalization of local culture and exchange:
988• Regional development:
146• Education and human resources development: 119• Disaster relief:
4• Other:
28

E xploring activities based on the needs ofcommunities

Delivering carbon neutrality
Corporate ethics and compliance
Risk management (crisis management)
Contributing to the realization of a recycling-based society
Popularization of environmentally sound products
Sustainable supply chainE fforts Related to CO2 Emissions Reduction in the Cement Production ProcessB usiness activities based on our Basic Compliance Policy and Anti-Bribery PolicyR esource recycling with industry and local communitiesD isclosure of maintenance and management information on our six directly-controlled
domestic plants pursuant to the Waste Disposal and Public Cleaning Law: monthlyP romoting initiatives based on the Carbon
Neutral Strategy 2050
Ensuring compliance and anti-bribery
throughout the group
Achieving group environmental targets(reduction of CO2 and main air pollutant
emissions)Increasing customer satisfaction and trust in
the Taiheiyo brandContinuing support activities to meet theneeds of usersA cquisition of ISO 14001 certification through our company-wide environmental management
system (including plants, headquarters, branches, and Central Research Laboratory)A cquisition of ISO 9001 certification: 100% in Japan, 100% in overseas cement
production sites in countries where ISO is the mainstream standardV arious user societies• National Taiheiyo Cement Ready-mixed Concrete Society: Individual activitiesin 10 regions in Japan• Taiheiyo Cement Association for the Paving Block Industry• SPLITTON Association Japan

Our employees

94

Future Issues

Creating a safe and healthy workplace
Diversity and Inclusion
Human resource development
Respect for human rights
Group governanceDX promotionS afety promotion activities with KPIs set by the Companywide Health & Safety Committee
Promotion of initiatives based on the "General Employer Business Action
Plan" in accordance with the Act for Promotion of Women’s Participation andAdvancement in the Workplace.
Promotion of employment of people with disabilities: Exceeded the statutory
employment rate (16 consecutive years)
Signatory to the UN Global Compact: May 2022
Promotion of work-life management
Promotion of H&PM: periodic health examinations (once/employee), stresschecks (once/employee), mental health consultation service (as needed)A chieving safety-related KPIs
Continuing efforts to achieve the CSR
Objectives for 2025 (Diversity)
Promoting barrier-free accessibility at eachbusiness site
Identifying human rights risks throughout
the supply chain

95

The Driving Force/Booster of Value Creation — Sustainability

Social and Relationship Capital

Communities
The Group's business is built on being in harmony with the local community. We always remember to be grateful andplace the utmost importance on walking together.

Basic approachcommunities, we aim to understand their needs andchallenges, and by making contributions that leverage thecharacteristics of our business, we aim to build trust with local
communities and grow together with them.

We believe that by making social contributions in theareas where we operate, both domestically and overseas, we
can create social and environmental value and contributeto a sustainable society and sustainable development ofour business. Through active communication with local
No. of times
conducted per
year

Total numberof participantsof the1 Conservation
global environment

1,253

1,778

of local
2 Revitalization
culture and exchange

988

155,759

3 Regional development

146

3,898

and human
4 Education
resources development

11916,027

5 Disaster relief

417

Cooperation in rescue activities

6 Other

28

207,711

Cooperation in blood donation

Activity

Participation in the Miyagi Industrial Resource
Recycling Association Sendai Branch "Cleanup
Operation"
(Tohoku Branch)

In October 2022, our Tohoku Branch participated in the"Cleanup Operation" in Onuma, organized by the Sendai
Branch of the Miyagi Industrial Resource Recycling Association.
We collected empty cans, plastic bottles, plastic bags, scrap tires,and many other waste items, contributing to the beautificationof Sendai, the City of Trees.

96

Acceptance of high school students for internships

Participation in an elementary school Halloween
event
(CalPortland Company, U.S.)

Ryushin Mining offered an internship program for local
high school students. As part of their "Period for Inquiry-Based
Cross-Disciplinary Study," two second-year students from
Iwate Prefectural Takata High School participated in a company
overview and safety education, followed by a tour of thecompany and a ride on a dump truck.

CalPortland Company participated in a Halloween event
held at an elementary school in Nevada. Costumed employees
in front of a decorated mixer truck handed out candy to morethan 700 children. The children asked many questions about
mixer trucks and concrete.

(Ryushin Mining Co., Ltd.)

Examples of activities
Resident briefings, environmental reporting meetings,
environmental monitoring system, cleanup activities, forest andlocal nature conservation activities

Organizing, participating in, and cooperating with plant and mine
tours, facility openings, and events
Provision of materials, lending of heavy equipment, disasterprevention activities
Support for regional medical care and regional industrial
development
Scholarships, training for engineers, internships and work
experience

Cooperation in Mt. Fujiwara Rescue Efforts(Fujiwara Plant)

Our Fujiwara Plant received requests for cooperation fromthe local fire department for emergency incidents such as
fires and rescues on Mt. Fujiwara, and in FY2023, we used themine roads to deliver the department personnel to the topof the mountain three times. We also cooperate with annual
joint mountain accident drills conducted by the police and fire
departments.

Participation in "Career Day" at an elementary
school(CalPortland Company, U.S.)

CalPortland Company participated in a "Career Day" at anelementary school in California. Employees explained the workof the cement industry, including environmental management,
heavy equipment operation, and technological development,
and demonstrated concrete made in a cup.

Donation of medical supplies and equipment(Taiheiyo Cement Philippines, Inc., Philippines)

As one of its contributions to the community, Taiheiyo
Cement Philippines, Inc. interviewed local residents about the
medical supplies they needed and distributed medicines andmedical equipment to them free of charge.

97

Governance Supporting Value Creation and Strategy Execution — Group Governance

Our Directors and Corporate Auditors

Back
row

Independent Corporate Auditor

Front
row

Independent Director

98

Toshihito Aoki

Yoshiko Koizumi

Corporate Auditor (Standing)

Katsuhide Fukuhara

Independent Director

Shinhachiro Emori
Vice President andRepresentative Director

Yuuichi Kitabayashi

Director andSenior Executive Officer

Hideaki Asakura
President andRepresentative Director

Masafumi Fushihara

Director andSenior Executive Officer

Tetsuya Ohashi

Director andSenior Executive Officer

Yoshifumi Taura
Vice President and Director

Kunihiro Ando

Independent Director

Hideyuki Furikado

Corporate Auditor (Standing)Masahiro Karino

Independent Corporate Auditor

Wakako Mitani99

Governance Supporting Value Creation and Strategy Execution — Group Governance

Our Directors and Corporate Auditors
Directors
Masafumi Fushihara

Yuuichi Kitabayashi

Yoshiko Koizumi

Career Summary

Career Summary

Career Summary

Career Summary

Apr. 1978 Joined Onoda Cement Co., Ltd.

Apr. 1978 Joined Nihon Cement Co., Ltd.

Apr. 1972 Registered as a lawyer (Daini Tokyo Bar Association)

Apr. 1975 Toyo Soda Manufacturing Co., Ltd. (now Tosoh
Corporation)

President and Representative Director

Vice President and Representative Director

Apr. 2007 General Manager, Business Promotion Department ofEnvironmental Business Company of Taiheiyo Cement
Corporation

May 2009 General Manager, Kamiiso Plant of Taiheiyo Cement
Corporation
Apr. 2011 Executive Officer and General Manager, Production
Department

May 2009 General Manager, Sales Department of Environmental
Business Company

Apr. 2015 Managing Executive Officer
Jun. 2015 Director, Managing Executive Officer

Apr. 2016 Director, Managing Executive Officer and Senior General
Manager, Cement Business Division

Experience and Knowledge

Apr. 2017 Director and Senior Executive Officer, Senior General
Manager, Cement Business Division
Apr. 2018 President and Representative Director (to present)

Since 2015 Mr. Masafumi Fushihara has engaged in the management of the company as a director and was
appointed as president and representative director in April 2018 after serving as senior general manager of the
Cement Business Division. He possesses a wealth of managerial experience, achievements and management
insights. He continuously strives to increase the corporate value of the group and significantly contributes to its
development, while also identifying key management issues and supervising business execution.

Experience and Knowledge

Since 2013 Mr. Yuuichi Kitabayashi has engaged in the management of the company as a director and was
appointed as a representative director in 2016. He possesses a wealth of managerial experience, achievements
and management insights. In addition, as the officer in charge of the Carbon-Neutral Technology Development
Project Team and the Philippines Renovation Construction Project Team since 2021, he has significantly
contributed to the development of the group. He is effective in the role of a director in striving to continuously
increase the corporate value of the group as he significantly contributes to its development, driving themanagement of our group, while also identifying key management issues and supervising business execution.

Tetsuya Ohashi

Career Summary

Career Summary

Apr. 1980 Joined Onoda Cement Co., Ltd.
Apr. 2011 General Manager, Ofunato Plant of Taiheiyo Cement
Corporation

Apr. 1982 Joined Onoda Cement Co., Ltd.
Oct. 2010 President, Taiheiyo Cement U.S.A., Co., Ltd.

Apr. 2016 Managing Executive Officer

Apr. 2019 Managing Executive Officer

Apr. 2015 Senior General Manager of International Business
Division, Taiheiyo Cement Corporation
Apr. 2016 Executive Officer and Senior General Manager ofInternational Business DivisionJun. 2019 Director, Managing Executive Officer
Jun. 2020 Managing Executive Officer
Apr. 2021 Senior Executive Officer

Experience and Knowledge

Jun. 2021 Director and Senior Executive Officer (to present)

Hideaki Asakura

Yoshifumi Taura

Career Summary

Career Summary

Apr. 1982 Joined Nihon Cement Co., Ltd.
Apr. 2011 President of Nghi Son Cement Company
Apr. 2016 Executive Officer of Taiheiyo Cement Corporation
President of Nghi Son Cement Company
Apr. 2018 Executive Officer of Taiheiyo Cement Corporation General
Manager of Sales Department of Cement Business
Division
Apr. 2019 Managing Executive Officer
Jun. 2019 Director, Managing Executive Officer
Jun. 2020 Managing Executive Officer
Apr. 2022 Senior Executive Officer
Jun. 2022 Director and Senior Executive Officer (to present)

Apr. 1983 Joined Onoda Cement Co., Ltd.
Apr. 2013 General Manager of Sales Department of International
Business Division, Taiheiyo Cement Corporation
Apr. 2017 Executive Officer, General Manager of Sales Department
of International Business Division
Apr. 2019 Managing Executive Officer, Senior General Manager ofInternational Business DivisionJun. 2019 Director, Managing Executive Officer, Senior General
Manager of International Business Division
Aug. 2019 Director, Managing Executive Officer, Senior General Manager of International
Business Division, Chairman, Taiheiyo Cement (China) Investment
Jun. 2020 Managing Executive Officer, Senior General Manager of International
Business Division, Chairman, Taiheiyo Cement (China) Investment

Director and Senior Executive Officer

Since 2022, Mr. Hideaki Asakura has engaged in the management of the company as a director and significantly
contributes to the development of the group as the officer in charge of the corporate planning division and legal
department. He is effective in the role of a director in striving to continuously increase the corporate value of thegroup.

Experience and Knowledge

Apr. 2022 Managing Executive Officer, Senior General Manager ofInternational Business Division
Apr. 2023 Senior Executive Officer, Senior General Manager ofInternational Business DivisionJun. 2023 Director and Senior Executive Officer (to present), Senior
General Manager of International Business Division (to present)

Mr. Yoshifumi Taura was appointed director in 2023 and has made a significant contribution to the developmentof the Group as the officer in charge of overseas operations. He is effective in the role of a director in striving tocontinuously increase the corporate value of the group.

100

Jul. 2023 Director, Integrated Design & Engineering Holdings Co.,
Ltd. (to present)

After working as counsel and partner at law firms, Ms. Yoshiko Koizumi was appointed as a director of thecompany in June 2015. She has a wealth of corporate law experience, and provides precise recommendations
and advice from an objective standpoint, independent of the management team that executes business in the
Board of Directors, and also monitors and supervises overall management.

Jun. 2015 President and Representative Director of Taiyo Vinyl
Corporation

Experience and Knowledge

Jun. 2020 Independent Director of Taiheiyo Cement (to present)

After serving as representative managing director of Tosoh Corporation and president and representative
director of Taiyo Vinyl Corporation, Mr. Shinhachiro Emori was appointed as director of the company in June
2020. He possesses a wealth of experience, achievements and insight as a corporate manager. He provides
precise recommendations and advice from an objective standpoint, independent of the management team that
executes business in the Board of Directors, and also monitors and supervises overall management.

Hideyuki Furikado
Apr. 1977 Joined the Ministry of FinanceJul. 2004 Deputy Director-General of Financial Services Agency

Jul. 2010 President, Policy Research Institute, Ministry of Finance,
Japan

Experience and Knowledge

Dec. 2013 Retired from Ministry of FinanceJun. 2014 Senior Managing Director of Trust Companies Associationof JapanJun. 2021 Independent Director of Taiheiyo Cement (to present)

After serving at the Ministry of Finance and as the managing director of a general incorporated association, Mr.
Furikado was appointed as a director of the company in June 2021. He has extensive administrative experience
as a government official, and provides precise recommendations and advice from an objective standpoint,
independent of the management team that executes business in the Board of Directors, and also monitors andsupervises overall management.

Corporate Auditors

Since 2021, Mr. Tetsuya Ohashi has engaged in the management of the company as a director and significantly
contributes to the development of the group as the officer in charge of the human resources and sustainability
promotion division and the real estate division. He is effective in the role of a director in striving to continuously
increase the corporate value of the group as he significantly contributes to its development while also
identifying key management issues and supervising business execution.

Director and Senior Executive Officer

Experience and Knowledge

Experience and Knowledge

Director and Senior Executive Officer

Apr. 2013 Executive Officer and General Manager, Oita Plant
Apr. 2015 Executive Officer and General Manager, Mineral
Resources Business Department

Since 2016 Mr. Kunihiro Ando has engaged in the management of the company as a director and was appointed
as a vice president and director in 2022. He possesses a wealth of managerial experience, achievements andmanagement insights. In addition, as the officer in charge of the mining and mineral resources businessdivision, he is effective in the role of a director in striving to continuously increase the corporate value of thegroup as he significantly contributes to its development while also identifying key management issues andsupervising business execution.

Jun. 2012 Representative Director and Managing Executive Officerof Tosoh Corporation

Career Summary

Kunihiro Ando

Jun. 2016 Director, Managing Executive Officer
Apr. 2020 Director and Senior Executive Officer
Jun. 2022 Vice President and Director, Assistant to President(to present)

Jun. 2015 Independent Director of Taiheiyo Cement (to present),
Independent Director, Dowa Holdings Co., Ltd. (to present)
Jun. 2016 Independent Corporate Auditor, Sumitomo Bakelite Co., Ltd.
Sep. 2017 Independent Corporate Auditor, Nippon Koei Co., Ltd.

Independent Director

Vice President and Director

Experience and Knowledge

Apr. 2017 Vice President and Representative Director, Head ofCorporate Planning Department
Jun. 2022 Vice President and Representative Director, Assistant to
President (to present)

Jun. 2010 Director, Tosoh Corporation
Jun. 2011 Managing Director of Tosoh Corporation

Apr. 2009 Partner, City-Yuwa Partners (to present)

Jun. 2013 Director, Managing Executive Officer
Apr. 2016 Director and Senior Managing Executive Officer

Apr. 2012 Executive Officer, General Manager of Environmental
Business Department

Independent Director

Jan. 1980 Partner, Masuda and Ejiri Law Office (now Nishimura &Asahi)
Jan. 2008 Counsel, Nishimura & Asahi

Apr. 2013 Managing Executive Officer

Oct. 2010 General Manager, Environmental Business Development
Department

Shinhachiro Emori

Independent Director

Katsuhide Fukuhara

Masahiro Karino

Corporate Auditor (Standing)Experience and Knowledge

Corporate Auditor (Standing)

Career Summary

Career Summary

Apr. 1981 Joined Onoda Cement Co., Ltd.
Apr. 2013 General Manager, Corporate Planning Department of
Taiheiyo Cement Corporation
Apr. 2015 Executive Officer and General Manager, Corporate
Planning Department
Apr. 2017 Managing Executive Officer
Jun. 2017 Director, Managing Executive Officer
Jun. 2020 Managing Executive Officer
Jun. 2021 Corporate Auditor (Standing) (to present)

Apr. 1980 Joined Nihon Cement Co., Ltd.
Apr. 2004 General Manager, Legal Department of Taiheiyo Cement
Corporation
Apr. 2013 Executive Officer, General Manager of Legal Department
Apr. 2016 Managing Executive Officer
Jun. 2016 Director, Managing Executive Officer
Apr. 2019 Director and Senior Executive Officer
Apr. 2022 Directors
Jun. 2022 Corporate Auditor (Standing) (to present)

Mr. Katsuhide Fukuhara possesses a wealth of professional experience and expertise as a director and managing
executive officer with extensive responsibilities in construction materials business and group company
administrative divisions whose work includes advancing our group management. He effectively audits theexecution of duties by directors to continuously improve the corporate value of the group.

Experience and Knowledge

Mr. Masahiro Karino possesses a wealth of professional experience and expertise as a director and managing
executive officer with extensive responsibilities in the human resources, legal and auditing divisions, whose
work includes advancing our group management. He effectively audits the execution of duties by directors tocontinuously improve the corporate value of the group.

Wakako Mitani

Toshihito Aoki

Independent Corporate Auditor

Experience and Knowledge

Independent Corporate Auditor

Career Summary

Career Summary

Apr. 2000 Registered as a lawyer (Daiichi Tokyo Bar Association)
Jul. 2001 Joined Tanabe & Partners
Apr. 2012 Partner, Tanabe & Partners (to present)
Feb. 2018 Independent Corporate Auditor of Taiheiyo Cement (topresent)
Apr. 2023 Vice President, Daiichi Tokyo Bar Association (to present)
Jun. 2023 Independent Corporate Auditor, Seikagaku Corp. (topresent)

Oct. 1983 Joined Tetsuzo Ohta & Co.
(now Ernst & Young ShinNihon LLC)
Aug. 1987 Registered as certified public accountant
Jul. 1999 Partner, Ohta Showa LLC(now Ernst & Young ShinNihon LLC)
Aug. 2014 Retired from ShinNihon LLC(now Ernst & Young ShinNihon LLC)
Jun. 2023 Independent Corporate Auditor of Taiheiyo Cement (topresent)

After working as a partner at a law firm Ms. Wakako Mitani was appointed as a corporate auditor of the company
in February 2018. As a lawyer she has considerable experience, achievements and insights in the field ofcorporate legal affairs, and effectively audits the execution of duties by directors from an independent, objective
and fair standpoint.

Experience and Knowledge

After working as a partner in an auditing firm, Mr. Toshihito Aoki was appointed as an corporate auditor of
the Company in June 2023. As a certified public accountant he has abundant experience, achievements
and insights, including many years of practical experience in corporate accounting. He effectively audits theexecution of duties by directors from an independent, objective and fair standpoint.

101Governance Supporting Value Creation and Strategy Execution — Group Governance

Messages from our Independent Directors

I will support the further
strengthening of global
governance and crisis
management capabilities,
including responses to bribery
and corruption in overseas
operations.
Yoshiko Koizumi
Improvement of Governance Including Overseas Group
Companies

Shinhachiro Emori
Independent Director

Yoshiko Koizumi
Independent Director

Hideyuki Furikado
Independent Director

Based on their careers and expertise, our independent directors shared
their evaluations and recommendations for the Taiheiyo Cement
Group's governance structure and efforts to enhance corporate value.

I believe that improving the governance of our groupcompanies, both in Japan and overseas, is of utmost importancefor the sustainable development of our group. We haveseveral overseas group companies in the U.S. and Asia-Pacificregion, mainly in the Pacific Rim, and making governancework in countries with different histories, cultures, andclimates presents an extraordinary challenge. We must keep
in mind that if a scandal occurs in an overseas group company,
it will come back to the parent company. To build group
governance, a relationship of trust between Headquarters andgroup companies is of the utmost importance, and two-way
communication is extremely important for this purpose. It isessential for us to make steady effort, not just sending unilateral
instructions from the headquarters, but to constantly visit thesites and listen to the voices of the people on the ground,and then correct course if there are any issues. We are a top
company "aiming to be an outstanding leading company" andare always in the spotlight. As our overseas operations continue
to expand we feel that it is time to return once again to the spiritof the "three actuals" principle of "the actual place, the actual
thing and the actual situation," which are the foundations of amanufacturer.

Further Strengthening of Crisis Management
Capabilities

The Group is currently restructuring its overseas businessportfolio with a southward shift, strengthening its operations in
the Philippines, Vietnam and Indonesia, and further investingand expanding its business in the United States. Such global

102

Independent Director

expansion, on the other hand, exposes the company to threats
on a global scale, such as geopolitical and supply chain risks.
Therefore, thorough crisis management is required, as well asa thorough understanding of the risks in countries and regions
around the world. Another important risk management activity
is to work to tackle corruption. Attitudes towards bribery andcustoms vary from country to country and region to region.
Foreign laws, including those related to bribery, are constantly
being revised in each country, and there are limits to how muchthe Legal Department at the headquarters can continue tofollow up on all of these changes. Therefore, we believe that itis necessary to establish a mechanism for the Legal Department
and overseas offices to collaborate with each other by keeping
close contact with each overseas office and building a networkwith local law firms to obtain the latest information at all times.
In my capacity as an international lawyer, I would also liketo make recommendations on how to further strengthen risk
management with an eye to overseas group companies, such as
the establishment of anti-bribery rules.

Expectations of the Taiheiyo Cement GroupMy impression of the company when I was appointed as anindependent director in 2015 remains unchanged. As a leading
company in the domestic cement industry with over 140 yearsof history, we are an exceptionally solid company. On the other
hand, however, I feel that all things are completed only within
a limited industry, there is little interaction with different
industries, and we seem to be stuck in the traditional B to B
mindset. I hope that by looking more closely at the outside
world, we will be able to generate richer ideas and further
enhance the sustainability of our group.

103

Messages from our Independent Directors

Governance Supporting Value Creation and Strategy Execution — Group Governance

I will strive to make proactive
recommendations on board
member remuneration andsuccession planning, as well
as deepen the discussion on
the implementation of thestrategy.
Shinhachiro Emori
The Role of the Nomination and Compensation
Advisory Committee

With respect to the role of the Nomination andCompensation Advisory Committee, I believe it is important towork to improve the objectivity, timeliness, and transparencyof the procedures for determining director nominations andcompensation.
The compensation of directors, excluding independent
directors, currently consists of fixed compensation,
performance-based compensation and share-based
compensation, but eventually a compensation system thatis also linked to mid- to long-term business performanceis desirable. I would like to propose the ideal form ofcompensation for directors and corporate auditors, such as
by explicitly incorporating incentives such as the degree ofachievement of sustainability targets. On the other hand,regarding our succession plan, I believe it is most important
to train management candidates with a long-term concrete
plan. While managers are trained systematically according totheir positions, it is important for top management to consider
and implement their own training methods for selected senior
management positions in terms of transfers and promotions.
For example, I believe that systematic management experienceat group companies, including overseas companies, is aneffective way to develop the skills of employees, especially incompanies that are facing difficult circumstances. I would liketo use my experience in corporate management to vigorously
advocate for the succession plan.

Evaluation of the 23 Medium-Term Management Plan
This fiscal year is the final year of the 23 Medium-Term

104

Hideyuki Furikado

Independent Director

Management Plan, which is the third step toward our "ourfuture vision and direction for the mid-2020s." However,the business environment has changed significantly due tofactors such as a decrease in domestic demand, which wasa precondition, and rising coal prices, making it difficult toachieve management goals.
At the same time, however, it is precisely at times like thisthat we can clearly see how capable and how competitive weare, excluding external factors, and what issues we need toresolve in the future. Already, in our mainstay domestic cementbusiness, we are placing the highest priority on our sales pricepolicy, while in our resource and environmental businesses, weare focusing on developing high value-added core businesses
that do not rely on limestone or cement. As a top manufacturer
specializing in cement, we are expected to contribute to society
while generating stable profits. I expect that there will be athorough review of the 23 Medium-Term Management Plan,
and that the next medium-term plan will be formulated with afocus on the identified issues.

Role as Independent Director

I will advocate for stronger
engagement from a broad
stakeholder perspective anddo our best to build trust
between the two sides.

I believe that the role of independent directors is tosupervise management and to express their frank opinions tomanagement from a position free from internal ties. We also play
an important role in creating an atmosphere in which employees
can speak freely by speaking up on their behalf when they feel
uncomfortable saying things to management. The Company
is promoting workplace diversity and inclusion, including theadvancement of women, and has developed a strategy thatemphasizes diversity. I expect that innovation will be generated
by flexibly absorbing various values and ways of thinking.

Strengthening Engagement with Stakeholders

As a government official, I have been involved in designingsystems such as the Stewardship Code and the Corporate
Governance Code for constructive dialogue between investors
and companies, so I recognize and I understand the importanceof direct dialogue between investors and companies better
than anyone else. I also believe that the effectiveness of theBoard of Directors will be further enhanced by reflecting theperspectives gained through dialogue with investors in the
Board's discussions, and therefore I believe that there should beeven more opportunities for direct dialogue between investors
and management. I myself would like to actively engage indialogue with investors, if possible, to exchange frank opinions
about our management policies and medium- to long-term
growth strategies, and to contribute to the enhancement of ourcorporate value.
We must also always keep in mind that our cementbusiness, which is the foundation of our company, is supported
by various stakeholders, including the local communities
where our plants and mines are located, and can only exist if
we preserve the environment, including biodiversity and water
resources. I believe that the source of our sustainability is to bea trusted and loved company that aims for co-existence and coprosperity with local communities. To this end, I believe that weneed to actively communicate with our stakeholders and makeefforts to make them more aware of our business and our wayof thinking. I believe it is the role of independent directors toencourage the company to strengthen the dissemination ofsuch positive information, such as the effective use of waste

Independent Director

and by-products in cement production as raw materials and fuelfor cement, contributing to the circular economy, and advanced
efforts to achieve carbon neutrality.

Promoting Diversity as a Business Strategy

Today, diversity is respected from the perspective of humancapital, and I believe that diversity is also important in businessstrategy. The Group's business portfolio is very well balanced,
with the domestic cement business, the overseas cementbusiness, and the resource, environment, and construction
materials business each accounting for 1/3 of the Group's total
sales, and one of our strengths is that even if one of thesebusinesses were to hit a problem, our overall losses would be
minimized. Although we ended FY2023 with a severe net loss,
mainly due to the deteriorating profitability of the domestic
cement business, we were able to maintain a positive operating
income, supported by the strong U.S. cement business. Thisis the result of our efforts to diversify our business portfolio,
including overseas expansion, without relying solely on
our mainstay domestic cement business, and this is highly
evaluated.
Furthermore, in addition to diversity, I intend to makerecommendations in the future with a view to diversifying ourbusiness as a hedge against risk. For example, the U.S. cementbusiness, which is mainly focused on the West Coast, should
also look to the central and southern regions to avoid risks suchas political and demand fluctuations. I will contribute to theenhancement of corporate value, utilizing my perspective as
independent director.

105

Governance Supporting Value Creation and Strategy Execution — Group GovernanceCorporate Governance
We are working to strengthen corporate governance in order to achieve sustainable growth and increase corporate
value.

Outline of Our Governance Structure (As of June 29, 2023)

Basic Policy on Corporate Governance

Item

In keeping with the Mission of the Taiheiyo Cement Group,
we established the Basic Policy on Corporate Governance withthe aim of fulfilling our management responsibility towards
all our stakeholders, including shareholders, and helping toachieve sustainable growth while maximizing our corporate
value over the medium to long term. We are working to build asound, transparent, and efficient corporate governance system.

Please refer to our website for the "Taiheiyo Cement
Corporation Basic Policy on Corporate Governance”.

https://www.taiheiyo-cement.co.jp/english/company/pdf/corpgov_01_2112.pdf

Corporate Governance System
the performance their duties. We have set up an internal control
system in the Internal Auditing Department and, by means ofinternal audits, strive to ensure that operations are properly
executed in the company and group companies.
We have also established a Sustainability Management
Committee to promote sustainability. Under that we haveestablished specialized committees on human rights and labor,
environmental management, and quality control, and areworking to enhance our corporate governance.

We are building a system that accurately recognizes andaddresses corporate governance issues, effectiveness andthemes in order to deploy a sustainable business model on a
global scale.
Our management structure is based upon the Board of
Directors and Board of Auditors. We have also introduced
an executive officer system and are endeavoring to separate
management decision-making and monitoring/supervisory
functions from business execution. Our Corporate Auditor’s
Office provides comprehensive support for corporate auditors in

Organizational Structure

Company with a Board of Company Auditors

Chairman of the board

President

No. of directors (No. of female directors)
No. of outside directors included in that figure
No. of independent directors included in that figure

9 (1)
3 (1)
3 (1)

Tenure of a director

1 yearExecutive officer system

Yes

No. of corporate auditors (No. of female corporate auditors)
No. of outside directors included in that figure
No. of independent directors included in that figure

4 (1)
2 (1)
2 (1)

Major Meetings Held
Presence ofof times independent
Committees No. held
officers

Appointment/removal from officeAppointment/
removal from office

AuditsBoard of Auditors
Assistance

15

100%

100%

The Board of Auditors, consisting of two standing corporate auditors and two independent
corporate auditors, fulfills its supervisory and auditing function over management byattending the Board of Directors meetings and other important meetings, questioning
the directors and others about the performance of their duties, and inspecting important
approval documents. In addition, in order to enhance the audits, they visit branches,factories, and group companies, etc., to investigate the status of the business operations.
Also, regular corporate auditor liaison meetings are held for the corporate auditors to
exchange opinions among themselves (and including those in charge of related divisions
when necessary) and share information to build a system that enables fair and appropriate
auditing.

−

The Executive Committee consists of all internal directors and managing executive officers
and makes decisions on important matters other than those that are to be decided by the
Board of Directors in accordance with the Companies Act. A standing corporate auditor
attends the Executive Committee meetings. Although the independent directors andindependent corporate auditors do not attend these meetings, the Corporate Planning
Department reports regularly to the independent directors (weekly in principle), and aliaison meeting is held for independent corporate auditors (weekly in principle), where
the standing corporate auditors report on the details of important meetings such as the
Executive Committee and share information and assist them in the execution of theirduties.

Accounting Auditor

Findings

Nomination and Compensation
Advisory Committee

AuditsBoard ofAuditors

ReportAppointment/removal from office

Report16

Sustainability
Management Committee

Managing Executive Officer
Executive Committee(Review of important matters)
Final decision/instruction/
supervision

Executive Officer
Headquarters, branches, plants,
Research Center (business execution)
Group Companies

106

Consultation

Selection/removal/
supervision

Representative Director

Board ofDirectors

Corporate Auditor’s Office

Board of Directors(Management decision-making
and supervision)

Cooperation

Appointment/
removal from office

AuditsInternal Auditing
Department

For decision-making andbusiness execution tasks
requiring high levels of
expertise, we receive advice
from consulting law firms,
management consultants andother experts.

Executive
Committee

15

Overview

In principle, the Board of Directors meets once a month, and at other times whennecessary, to make decisions on matters required by law and important matters related tothe management of the company. The Board of Directors consists of nine directors, threeof whom are independent directors. In addition, all of the corporate auditors attend theBoard of Directors meetings. 15 meetings were held in FY2023, with 100% attendance bydirectors and corporate auditors.

Corporate Governance System
General Meeting of Stockholders

No. of people etc.

107Corporate Governance

Governance Supporting Value Creation and Strategy Execution — Group Governance

Changes in Governance2004

Management
Organization
Total
NumberDirectors

···

2009

2010

2011

2012

2013

2014

Corporate Auditors

2016

2017

2018

2019

2020

2021

2022

2023

2024

https://www.taiheiyo-cement.co.jp/english/company/pdf/corpgov_01_2112.pdf
22 10

13

8

10

11

1

2 years

13

14

2

7

9

3

Up to 1 year

4 5

Basic Policy on Corporate
GovernanceNomination andCompensation Advisory
Committee
Board Member
Remuneration System(Restricted Stock
Compensation System)

The president proposes prospective directors to the Boardof Directors, from a diverse pool of talent both within andoutside of the company, in accordance with the Basic Policy
on Corporate Governance. The Board of Directors deliberates
and nominates them as prospective directors, who arethen appointed by resolution of the General Meeting of
Shareholders. During the nomination of prospective directors,
the Nomination and Compensation Advisory Committee
deliberates and reports the results of its deliberations to theBoard of Directors.

Nomination and Appointment of Prospective Corporate Auditors
After gaining the approval of the Board of Auditors, the108

Activities of independent directors

The Nomination and Compensation Advisory Committee
met a total of four times in FY2023, with members consistingof three independent directors and one inside director. In
addition, two meetings were held exclusively for a total of
five independent directors, including independent auditors,
to frankly exchange opinions on current issues and thedeliberations of the Board of Directors.

2 womenRatio ofwomen

11 men15.4%

Independence of executives (Jul. 2023)
Ratio ofIndependent
Directors
Internal
directors

4

6

Independent
directors

3

33.3%

Operation of the Board of Directors
Implementation of the Basic Policy

Installation

Restricted Stock
Compensation
SystemOverview of Our Directors and Corporate Auditors
Nomination and Appointment of Prospective Directors

Ratio of women in executive positions (Jul. 2023)

Please see our website for more information about
the Independence Criteria (Appendix 1)

Executive Committee established; executive officer system introduced.

Independent
Directors
Term

2015

and appropriate advice based on their experience and insightsfrom careers in professions such as lawyer, corporate manager,
certified public accountant and government official.

president proposes to the Board of Directors prospective
corporate auditors endowed with the ability to fairly audit theoverall duties of the directors, suitable experience and skills,
and with adequate expertise in financial affairs, accounting
and legal affairs. After deliberation by the Board of Directors,
nominated candidates are appointed by resolution of theGeneral Meeting of Shareholders.

Nomination and Appointment of Prospective
Independent Officers

Prospective independent officers must satisfy the company’s
Independence Criteria for Independent Officers and be
capable of supervising our directors and management froman independent, external standpoint, and of providing proper

In FY2023, the Board of Directors met 15 times to discussand decide on important matters stipulated by law and the
Articles of Incorporation, as well as to supervise the execution ofduties by directors. In order to ensure the efficiency of directors'
duties, directors and executive officers who have been assigned
duties report on the status of execution of their duties. With
respect to management execution, a certain level of authority
is delegated to executive officers, who execute operations
through a policy deployment system in accordance with themedium-term management plan and annual management
policy (President's Policy), and the Board of Directors reviews
the progress of these operations.

 ajor matters discussed at Board of Directors
M
Meetings (FY2023)

Cement sales
price policy

Reports on details and status of sales pricerevisions

Strengthening plant Upgrade of manufacturing facilities andand mining facilities limestone quarry development

Carbon neutrality

Other forms ofharassment

Confirmation of progress on initiatives• Promotion of sustainability management• Acquisition of cement sales business fromother companies• Suspension of cement production and sales
business in China• Alternative sourcing for Russian coal andcoal market trends• Dialogue with institutional investors andshareholders• Promotion of diversity management

Attendance at Board of Directors meetings (FY2023)(Number of meetings attended/number of meetings held)

Full Name

Board of Directors

Masafumi Fushihara

15/15 (100%)

Yuuichi Kitabayashi

15/15 (100%)

Kunihiro Ando

15/15 (100%)

Tetsuya Ohashi

15/15 (100%)

Hideaki Asakura

11/11 (100%)

Yukimasa Nakano

11/11 (100%)

Yoshiko Koizumi

15/15 (100%)

Shinhachiro Emori

15/15 (100%)

Hideyuki Furikado

15/15 (100%)

Katsuhide Fukuhara

15/15 (100%)

Masahiro Karino

11/11 (100%)

Wakako Mitani

15/15 (100%)

Yoshio Fujima

15/15 (100%)

Number of Board of Directors meetings held during the term of office: 15, except for
Mr. Hideaki Asakura and Mr. Yukimasa Nakano, where 11 meetings were held after
they became directors, and Mr. Masahiro Karino, where 11 meetings were held after hebecame a corporate auditor.

109

Corporate Governance

Governance Supporting Value Creation and Strategy Execution — Group Governance

Skill matrix

Evaluating the Effectiveness of the Board of Directors

In order to ensure appropriate decision-making and a highlevel of oversight of our business activities, we review theknowledge, expertise, and experience expected of our directors
and officers in conjunction with materiality updates. This
year, it is represented as a six-skill matrix covering corporate
management, production technologies and R&D, sales

marketing, accounting and finance, legal and risk management,
and global business.
We make the most of such advanced knowledge, expertise,and diverse experience to manage our business in order torealize our mission, which is based on sustainable growth andsustainability.

Executive Skill Matrix and Composition of Nomination and Compensation Advisory Committee
Knowledge, expertise and experience

Full Name

Position
President andMasafumi Fushihara Representative
Director

Vice President andYuuichi Kitabayashi Representative
Director

Production

Committee

R&D

8 years
10 years
7 years

Tetsuya Ohashi

Director and Senior
Executive Officer

2 years

Hideaki Asakura

Director and Senior
Executive Officer

1 yearYoshifumi Taura

Director and Senior
Executive Officer—

Yoshiko Koizumi

Director

8 years

Shinhachiro Emori

Director

3 years

Hideyuki Furikado

Director

2 years

5 years

Toshihito Aoki

Corporate Auditor—(Chairperson)

We established the Nomination and Compensation
Advisory Committee in March 2021 with the aim of further
enhancing corporate governance by improving the fairness,transparency, and objectivity of the procedures for nominating
directors and managing executive officers and determining
their compensation. The Committee consists of four directors
appointed by resolution of the Board of Directors, three ofwhom are independent directors. The Committee is chaired byan independent director appointed by resolution of the Boardof Directors.
The Committee deliberates and reports to the Board of
Directors on policies regarding the nomination of directors, theappointment and removal of directors, policies for determining
the compensation of individual directors, and the details of thecompensation of directors.

The System to Promote Sustainability Management

To promote our sustainability management we havecreated a cross-departmental Sustainability Management
Committee, chaired by the president with all board directors
and all managing executive officers as committee members,
under the direct oversight of the Board of Directors. Reportingto the Sustainability Management Committee are sevenspecialized committees for individual subjects, each chairedby the director responsible for that area. The department mostclosely associated with any given issue acts as the secretariat
for the related committee. The Sustainability Management
Committee’s role is to screen important matters concerning
sustainability and the status of activities of specializedcommittees, and review their progress.

Sustainability Management Committee Structure
Board of Directors
President
Sustainability Management Committee Chair:
Secretariat: Sustainability Promotion Department• Organizational
Governance• Fair Business Practices• Human Rights• Labor Practices

All business sites• Human Rights, Environmental andConsumer Issues• Community Involvement and Development

AuditsCorporate Auditor

Activities of the Nomination and Compensation
Advisory Committee

Specialized committees

Wakako Mitani

Activities of the committee

Stakeholder Professional
Communication Committee

1 year• Enhancement of discussion on mediumterm management plan
• Further enhancement of Englishlanguage disclosure

Environmental
Management Committee

Corporate Auditor(Standing)

Challenges
for FY2024

Quality Assurance &Product Liability Committee

Masahiro Karino

Increasing the amount of time fordiscussion at Board of Directors meetings
regarding reports on the status of executionof business, etc.

Company-wide Health &Safety Committee

2 years

Assessment
Results for
FY2023

Information Security
Committee

Auditor
Katsuhide Fukuhara Corporate(Standing)

Enhancement of monitoring and otherreporting on the status of execution ofbusiness

Internal Auditing Department

Vice President andDirector

Challenges
for FY2022

Human Rights &Labor Practices Committee

Kunihiro Ando

Legal
GlobalRiskbusinessmanagement

Results of effectiveness evaluation (FY2023)

Risk Management &Compliance Committee

110

Nomination andIndependent Years in Compensation Corporate
Sales Accounting
Advisory
officer
officemanagement technologies Marketing FinanceWe strive to share information among the internal andexternal officers in order for the Board of Directors to supervise
the execution of the business and make appropriate decisions.
Efforts are made to enhance the effectiveness of the Board of
Directors by providing timely and appropriate information to
independent directors and providing them with opportunities
to inspect business sites, including overseas and affiliatecompanies. Furthermore, all directors and corporate auditors fillout a questionnaire to analyze and evaluate the effectivenessof the Board of Directors as a whole, including its composition,
operation, agenda and deliberation status. The Board of
Directors will review the contents of the report and we make
improvements to the structure and operations of the Boardof Directors on the basis of the results, ensuring the overall
effectiveness of our Board of Directors.

Group Companies

111Corporate Governance

Governance Supporting Value Creation and Strategy Execution — Group Governance

CSR Management Committee* meetings (FY2023)
Date
First:

Main Content• Preparation of the integrated report for enhancement of corporate value• Countermeasures against the spread of COVID-19 (review)May 12, 2022

Second: Sep. 27, 2022

• Interim report on the FY2023 activities of the seven specialized committees• Business and human rights

Third:

December 20, 2022

• Report on the status of response to ESG-related surveys• Report on the results of the 2023 employee awareness survey

Fourth:March 28, 2023

• Report on the FY2023 activities of the seven specialized committees• Planning of the FY2024 activities of the seven specialized committees• Revision of CSR Outline to Sustainability Outline* Sustainability Management Committee since FY2024

Activities of independent directors (Number of meetings attended/number of meetings held)
Full Name

Board
Meeting
Attendance

Yoshiko Koizumi

15/15

Shinhachiro Emori

15/15

Hideyuki Furikado

15/15

Details of Contribution
Providing appropriate comments mainly based on her extensive experience as an attorney
and broad insight into corporate legal affairs.

Directors (excluding independent directors)
Fixed compensation

Providing appropriate comments mainly based on his extensive experience and broad
insight as a national public servant.

From the perspective of maintaining and strengthening
stable and long-term business relationships with our business
partners, we acquire and hold shares in such business partners
as cross-shareholdings when it is determined that it willcontribute to the enhancement of our medium- to long-term
corporate value.
Furthermore, the Board of Directors confirms the necessityof such holdings each year by examining the medium- to longterm economic reasonableness and future prospects of eachindividual cross-shareholding, based on whether the purposeof holding the shares is appropriate and whether the benefits
and risks associated with holding the shares are commensuratewith the capital costs.
We do not hold any investment securities where the purpose
is purely investment.

Number of issues and amount reported on balance sheet

Shares other than unlisted
stocksNumber Total amount reportedof Issueson balance sheet(stocks)(million yen)

179

5,806

33

18,910Board Member Remuneration
Determining Board Member Remuneration

In the process for determining the compensation for
directors, the Nomination and Compensation Advisory

Share-based
compensation

Independent Directors, Independent Corporate Auditors
Fixed compensation

Annual Remuneration of Board Members

Remuneration for directors was decided at the General
Meeting of Shareholders on June 29, 2021, and after
said meeting, there are nine directors (of whom three are
independent directors), for whose annual compensation there
is a maximum of 1.2 billion yen (of which 100 million yen is forindependent directors). Included in that is a maximum annual
sum of 200 million yen (200 thousand shares) as transferrestricted share-based compensation.
Remuneration for corporate auditors was decided at theGeneral Meeting of Shareholders on June 29, 2000. Since
the said meeting, there are four corporate auditors, for whosemonthly compensation there is a maximum of 13 million yen.

Total amount of compensation for directors and corporate auditors (FY2023)
Category

Non-listed stocks

Performancebased
compensation* Fixed compensation: from approximately 90% to 45%
Share-based compensation: approximately 10% to 15%
Performance-based compensation: from 0% to approximately 40%

Providing appropriate comments mainly based on his extensive experience and broad
insight as the manager of a business corporation.

Cross-shareholdings

112

Composition of Compensation

respects those findings. The decision is then entrusted to
the representative directors, within the scope decided at theGeneral Meeting of Shareholders and determined by ourcompany regulations.
The compensation system for directors (excluding
independent directors) consists of fixed compensation, sharebased compensation and performance-based compensation,
while the compensation system for the independent directors
consists solely of fixed compensation. The compensation system
for auditors also consists solely of fixed compensation.
• Fixed compensation is set according to position.
• Performance-based compensation is calculated by multiplying
profit attributable to owners of parent company shares for the
fiscal year under review by 1% (up to 400 million yen) and acoefficient according to position.
• Share-based compensation is calculated according to position
and issued yearly in the form of share options with restrictions
on transfer. In principle, the restrictions on transfer are
rescinded on the day the director retires.
• The reason for the introduction of the share-based
compensation system and the adoption of profit attributableto owners of parent as an indicator for performance-based
compensation is to promote further value sharing with ourshareholders.

Committee, the majority of which consists of independent
directors and is chaired by an independent director, deliberates
and reports its findings to the Board of Directors, which

Total amount ofcompensation, etc.
(million yen)

Total amount of compensation by type (million yen)

Fixedcompensation

Performance-basedNon-monetarycompensationcompensation, etc.

Number of
officers covered

Directors

510

315

149

45

11

Corporate Auditors

72

72

—

—

5

(independent directors)

(67)

(67)

(—)

(—)

(5)

The above count of directors and corporate auditors who received compensation includes two directors and one corporate auditor who retired or stepped down at the conclusion of the 24th
Ordinary General Meeting of Shareholders held on June 29, 2022.

Internal Control System
We follow the Basic Policy for Building an Internal Control
System to ensure suitable and efficient operations at thecompany and group companies. Our basic approach is toimprove and strengthen systems that are currently in operation,and to review and reappraise essential matters.
In FY2023, we audited five of our offices, 11 domestic groupcompanies, and one overseas group company, identifying areas
for improvement and providing advice and recommendations.

113

Governance Supporting Value Creation and Strategy Execution — Group GovernanceRisk Management and Compliance
We manage risks based on our Basic Risk Management Policy with the aim to reduce management uncertainties andachieve management objectives.

• Risk Management and Compliance Promotion System

Basic Risk Management and Compliance Policies
Basic Risk Management Policy and Regulations

Annual action plans for risk management

Instruct

President

ReportCorporate Auditors

ReportReports and requests are handled properly in accordancewith normal company procedures. We have also set up
whistleblower hotlines to receive reports directly without
the need for the usual company procedures. Whistleblowers
have the option of either disclosing their identity, or reporting
anonymously to mitigate any potential psychological

Officer in charge of General Affairs Department• Results* of the Whistleblower Program (FY2023)
Hotline* Subject to risk management: 100 group companies (as of March 31, 2023)

Whistleblower Program

Instruct

Risk management practices and education

ReportIdentify and evaluate risks

General Affairs Department(Employees)

Protect(Employees)

ReportOfficers responsible forrisk management andcompliance
Risk management andcompliance promoters

External hotline

Officers responsible forrisk management andcompliance
Risk management andcompliance promoters

Internal hotline

Group
Companies

Whistleblower

Headquarters, business sites(including research centers)
Plants, branches• Whistleblower Program

Follow-up survey

https://www.taiheiyo-cement.co.jp/english/
csr/risk_management_fr.html

Secretariat:
General Affairs
Department

DetectPlease see our website for more information aboutrisk management and compliance.

Chair: Officer in charge (of General Affairs Department)
Members: Managers at Headquarters and business sites

Illegal actions

quality and safety of our products and services, protect
the lives and safety of our employees and their families,
and earn greater trust from our stakeholders.
2 We create a system to appropriately manage a wide
range of risks associated with our business activities.
3 We promote risk management through a plan-docheck-act cycle.
4 We quickly and appropriately deal with risks as they are
identified.
5 In collaboration with group companies we build asystem for immediately detecting new risks arising fromchanges in our business environment and for quickly
and appropriately dealing with risks at the group level.

• Compliance with our Mission, Business Principles andsocial norms• Maintaining internal systems and rules and ensuring
broad-based awareness of them
• Cooperation with all group companies and promotion of
educational and enlightenment activities• Establishing appropriate responses and policies forwhen problems occur• Timely and appropriate disclosure and communicationof necessary information• Compliance with international standards and rules, andrespect for local cultures and customs• Rejection of illegal and unwarranted demands fromantisocial forces or organizations

Risk Management &Compliance Committee

Evaluation system(Correction system)

Report on status of risk countermeasures

1 We prevent and reduce risks in order to ensure the

Basic Compliance Policy (Summary)

Officer in charge: Officer in chargeof General Affairs Department(Whistleblower Program)

Basic Risk Management Policy

Under our Business Principles we pledge that we will
act in strict compliance with the law and in accordance withsocial mores. Fully aware that compliance is the foundationof Sustainability management, we published the Basic
Compliance Policy and simultaneously created compliance rulesin March 2005. We do not limit our definition of compliance tolegal compliance; our definition includes compliance with thesocial mores from which our laws originate, the mission andbusiness principles of our group, and internal regulations.

Ultimate responsibility: President(Whistleblower Program)In our Business Principles we declare “we will strive toanticipate the changing business environment to assess newopportunities for growth.” We consider risk management
to be a foundation for reducing management uncertainties
and achieving management objectives. Based on our basic
risk management policy, we manage risks that make theachievement of management goals uncertain, such as socialchange, changes in the global environment, natural disasters,
accidents and scandals. In addition, we have established "RiskManagement Regulations" that include emergency responses
to ensure that the "Basic Risk Management Policy" is deployedin specific risk management activities.

Basic Compliance Policy

constraints. We have whistleblower hotlines both internally(Compliance Hotline) and externally (at a law firm) in order tosafeguard the privacy of those submitting reports. Our external
hotline is also available to all employees of group companies
in an effort to strengthen group governance, improve program
effectiveness and reduce the burden on individual companies.
In addition, we created the Whistleblower Program Regulations
so whistleblowers using the program are not subject tounfavorable treatment.

No. of cases

Internal (whistleblower hotlines)

4

External (law firm)1* Reportable cases according to the Whistleblower Program Regulations.
* Taiheiyo Cement Corporation and group companies subject to risk management by the
Risk Management & Compliance Committee are subject to aggregation.

Risk Management and Compliance Promotion Activities
Structure and Operation
Our president has ultimate responsibility for risk
management and compliance promotion. The officer incharge of both areas (officer in charge of the General Affairs
Department) is appointed by the president to preside overand run the Risk Management & Compliance Committee andsystematically promote organized activities.
The committee plays a core role in our risk management

114

and compliance promotion for the entire group. It deploys thepolicy, identifies, evaluates and specifies company-wide risks,
implements risk management activities based on PDCA cycles
and promotes compliance. Moreover, it creates and revises rules
for risk management and compliance, and provides instructions
for advancing the awareness and education of employees. Fourmeetings were held in FY2023.

Identifying, Evaluating andSpecifying Companywide Risks

We collect, evaluate and identify company-wide risks,
including those of group companies, every three years
and conduct an annual review of those risks. We carriedout a company-wide risk review in FY2023. The purpose ofidentifying risks is to "review the risks surrounding the Group
in light of significant changes in the business environmentand risks, identify risks that could have a significant impact on
the achievement and sustainability of the Group's businessplans and targets, and take measures to avoid or reduce such
uncertainties".

115

Risk Management and Compliance

Governance Supporting Value Creation and Strategy Execution — Group Governance• Summary of the Collection, Evaluation and
Identification of Company-wide Risks
Reference: Identifying Risks and Opportunities

P.20

Step 1

Identification of risks that may hinder materiality
initiatives

Step 2

Identification of company-wide risks that could
have a significant impact on uncertainties ingroup management

Step 3

Review company-wide risks

Step 4

Determine company-wide material risks

Specified Company-wide Risks- Risk of increase in the number and severity of natural
disasters and aging facilities and equipment- Risk of business fluctuations in the supply chain- Human resource-related risks

Measures to Reduce the Impact of Risks

FY2023 was the final year of the Risk Management &Compliance Committee leading the implementation of
measures based on the results of the identification andevaluation of company-wide risks that was conducted in
FY2020, and the challenges that were addressed were (1)the establishment of a system to prevent scandals such asaccounting irregularities, and (2) the revision of compliancerelated rules.
We are implementing activities to reduce risk impact
through PDCA cycles.

Examples of Overseas Risk Countermeasures

We have created and regularly revise the Riot/Terrorism
Response Manual. In addition, with regard to high-riskcountries to which our employees are dispatched, we clearlystate the procedure for deciding on local evacuations, havecreated a tool for evaluating the emergency evacuation levelaccording to changes in local situations, and provide training
using the tool. We also list and secure supplies (food, clothes,
hygiene supplies, and medicines), as well as cash and otherresources needed, in the event of evacuation or an emergency
at our overseas business sites.

Emergency Task Force

If an event such as a natural disaster, accident or
misconduct has occurred, the affected business site informs
the general manager of the General Affairs Department. The

116

general manager considers the severity of the event anddetermines if an emergency task force should be establishedor if the response to the event can be delegated to thesite management. Appropriate action is then taken by the
emergency task force or local management.
7 such events were reported in FY2023. Important
information, including how the situation is handled, is reviewed
by the CSR Management Committee (now the Sustainability
Management Committee).
As preparation for responding to natural disasters andaccidents, we also conducted Shake Out earthquake drills thatassumed a large-scale earthquake at each business site, andprovided training for plant staff so they would understand how
to appropriately handle complaints if an accident occurs.

To ensure and maintain the security of information assets
we have established the Basic Information Security Policy andthe Information Security Management Regulations. Under the
management system in accordance with these regulations, weare actively working to maintain information security.
Our president has ultimate responsibility for information
security. The president appoints the officer in charge of
information security (officer in charge of the Corporate Planning
Department), who presides over and runs the Information
Security Committee in order to advance systematic, organizedactivities to promote information security.

Risk Management and Compliance Promotion Training• Information Security Structure

We provide risk management and compliance training for
managers and promoters working at the company’s businesssites and group companies to ensure effective risk management
and compliance. In FY2023, we invited an independent lecturer
to give a talk in November to the managers at our groupcompanies about “Business and Human Rights Required ofCompanies Today” and “Precautions and Points to Actively
Utilize the Whistleblower Hotlines”, which was attended bymanagers from 84 companies. The training program wasconducted via streaming video due to COVID-19 measures.

Compliance Training

We have created and distributed to all our employees, aswell as all those of our main group companies, the Standardsof Conduct (Casebook), which describes specific examples on
how to act in line with the Standards of Conduct. We regularly
revise the Standards of Conduct (Casebook) to reflect the latest
information.
In addition, for all company employees, including those on
loan to group companies, we conduct monthly quiz tests as partof e-learning programs to provide education on the Standardsof Conduct (Casebook) and other materials so they learn how
to act in individual situations. In FY2023, 91.7% of employees
participated in the program.
Please see our website for more information about
our Standards of Conduct [Casebook](in Japanese).

https://www.taiheiyo-cement.co.jp/english/
csr/risk_management_fr.html

Information security
System to Promote Information Security

Sustainability Management Committee(ultimate responsibility for information security: president)
Information Security Committee

Officer in charge of information security
Director of information security
Business sites

Activities to Promote Information Security

In addition to conducting disaster recovery drills basedon hypothetical emergencies and drills for responding tosuspicious e-mails, we have also purchased cyber security
insurance in case of a security incident. We also routinely use a
portal site on our intranet to remind and educate all employees,
and increase awareness of information security.
Further, we conducted drills on how to respond to suspicious
e-mails and conducted a self-diagnostic security survey forgroup companies, and also conducted an infrastructure
security survey for one overseas group company. In addition,
we encouraged group companies to purchase cyber security
insurance, ensure the backing up of critical systems and data,and encryption of their websites. Furthermore, we held an
information department exchange meeting to share and spread
information security awareness with group companies.
No serious incidents related to information security occurredin FY2023.
We will continue our efforts to improve the security levels ofour domestic and overseas group companies.

Group Companies

Information management officer(business site manager)
Information handling officer (operations
department managers/selected individuals)
Please see our website for more information about our
Basic Information Security Policy and Privacy Policy.

https://www.taiheiyo-cement.co.jp/english/
csr/risk_management_fr.html#section05

Risk Management for Intellectual Property
Risk Management for Intellectual Property

To ascertain recent developments and prevent infringementof other companies’ intellectual property rights, we periodicallyshare information on applications filed by other companies
among related divisions, monitor the progress of examinationsof obstructive patents, and conduct various patent surveys.
Regarding other companies' applications that may be
obstructive, we take measures according to the degree of
impact on research and development and our business.
Regarding risk strategies for overseas intellectual property,
we are focusing on ascertaining and sharing information on

the differences from Japan in the legal systems and practices
concerning intellectual property in countries where businessdevelopment is anticipated, and building a support system thatdraws upon external country-specific experts.
In addition, at various in-house training on intellectual
property, we are providing education about the importance ofrespecting the rights of other companies with the same level ofawareness as the protection of their own rights.
To date, we have never been sued for infringing intellectual
property rights, and therefore have not suffered any ensuingbusiness obstacles.

117

Taiheiyo Cement by Numbers — Data Section

ESG Data
Scope of Data

Air pollutant emissions*¹

Non-consolidated: Taiheiyo Cement Corporation (non-consolidated)
Group 1:	Group companies that are business sites required to submit accident reports under the Taiheiyo Cement Group's Safety,
Security and Health Management Regulations.
Group 2:
Taiheiyo Cement Corporation, 184 subsidiaries and 104 affiliates
Group 3:
Group companies subject to risk management by the Risk Management & Compliance Committee
GCCA:
Cement plants and quarries owned by affiliates or affiliates’ groups

E Environment
Cement production (thousand t)
Cement production in Japan
Cement production overseas
CO2 emissions
Scope 1 emissions (raw material-derived and fuel-derived direct emissions) (thousand t)
Japan
Overseas
Gross emissions*¹ (raw material-derived and fuel-derived direct emissions (excluding on-site power generation))Japan
Overseas
Net emissions*¹ (raw material-derived and fuel-derived direct emissions (excluding alternative fuels and on-site power generation))Japan
Overseas
CO2 emissions per tonne of cement produced (kg-CO2/t-cementitious)
Specific gross emissions*¹
Specific net emissions*¹
Scope 2 emissions (indirect emissions from purchased electricity) (thousand t)
Japan
Overseas
Scope 3 emissions (indirect emissions other than Scope 1 and 2) (thousand t)
Category 1 (purchased goods and services)
Category 3 (fuel- and energy-related activities not included in Scope 1 and 2)

Reduction rate of specific net CO2 emissions (compared with 2000) (%) CSR Objectives for 2025: 10% or more
Reduction rate of specific CO2 emissions across the supply chain (compared with 2000) (%)*²
Reduction rate of total (domestic) CO2 emissions (compared with 2000) (%)*²
Clinker/cement ratio (%)*¹
Total heat consumption for clinker production
Heat consumption (TJ)
Fossil fuels
Alternative fuels
Biomass fuelsSpecific heat consumption (MJ/t-clinker)*¹
Rate of alternative fuel use (%)
Alternative fuel rate (%)*¹
Biomass fuel rate (%)*¹
Use of alternative raw materials
Alternative raw materials rate (%)*¹
Emissions of Main Pollutants
Ratio of clinker produced in kilns with monitoring systems for all air pollutants (%)*¹
Ratio of clinker produced in kilns with continuous measuring equipment for dust, NOx, and SOx (%)*¹
Ratio of clinker produced in kilns with monitoring systems (%)*¹
Dust
NOx
SOx
VOC (Volatile Organic Compounds)
Dioxins
Mercury
HM1*³
HM2*4

118

Scope

GCCA

GCCA

GCCA

GCCA
GCCA

FY202132,351
19,33413,01724,02914,653
9,377
22,672
13,295
9,377
21,832
12,4949,338

FY2022
32,041
19,096
12,94523,67914,362
9,318
22,525
13,207
9,318
21,626
12,3389,288

FY202327,22817,229
9,999

20,065
13,036
7,029
19,017
11,9897,028
17,997
10,983
7,014

701
675
855
318
537
1,769
752
1,017
8.3
9.0
33.2
82.4

703
675
983
371
612
1,639
635
1,004
8.3
9.6
36.0
83.0

698
661
868
373
495
1,766
893
873
10.2
9 .2
42.7
83.0

89,401
76,693
10,938
1,770
3,321
14.2
12.2
2.0

88,41474,866
11,741
1,807
3,291
15.3
13.3
2.0

76,291
61,111
13,393
1,787
3,375
19.9
17.6
2 .3

15.8

15.7

15.5

54
94

55
94

57
93

100
100
100
74
79
93
58
54

100
100
100
74
80
100
58
55

100
100
100
77
81
100
78
74

Scope

FY2021

FY2022

FY2023

Dust (t)*6

544

439

423

NOx (t)*6

34,75834,33032,425SOx (t)*6

1,139

1,091

930

VOC (Volatile Organic Compounds) (t)

1,183

1,822

1,469

Dioxins (mg)

5,644

2,270

2,652

Mercury (kg)

1,096

1,041

741

HM1 (kg)*³

220

164

135

HM2 (kg)*4

1,812

2,862

1,553

Dust (g/t-clinker)*6

20

16

19

NOx (g/t-clinker)*6

1,282

1,277

1,434

SOx (g/t-clinker)*6

42

41

41

VOC (Volatile Organic Compounds) (g/t-clinker)

59

92

84

Dioxins (ng/t-clinker)

265

105

129

Mercury (mg/t-clinker)

43

39

33

Specific emissions of clinker produced in kilns with monitoring systems (%)*¹

HM1 (mg/t-clinker)*³

13

10

7

HM2 (mg/t-clinker)*4

102

156

80

Total water withdrawal

173,424

173,235

170,125

Total water discharge

159,815160,308

158,431

Total fresh water used*¹

13,745

13,095

11,857

0.421

0.409

0.387
95

Water use (thousand m³)

GCCA

Amount of Fresh Water consumption per unit of production (m³/t-cementitious)*¹
Conserving and Restoring biodiversity

GCCA

Ratio of operating quarries with rehabilitation plans (%)*¹

94

94

Number of quarries located in or near areas of high biodiversity value

3

3

2

Ratio of quarries with high biodiversity value that have biodiversity management plans in place (%)*¹

33

33

50

Amount of waste and by-products used (thousand t)

6,108

6,244

5,771

Intensity of waste and by-products (kg/t-cement)

402.7

405.2

409.6

0.6

1 .3

1.9

6,006

7,592

10,707

Business area costs

3,964

3,249

7,998

Details Pollution prevention

1,904

1,599

2,068

1,667

1,351

5,861

Resource recycling

393

299

69

Upstream and downstream

1,255

2,594

2,176

Administrative

78

36

221

R&D

537

1,707

310

0

0

0

172

6

2

16,793

14,406

17,394

Business area costs

9,456

8,309

9,909

Details Pollution prevention

3,980

3,645

5,111
4,282

Amount and intensity of waste and by-products used

Non-consolidated

Volume of waste to landfill (t)Non-consolidated

Environmental conservation expenditure (million yen)

Non-consolidated

Environmental conservation investment

Global environmental conservation

Social activity
Environmental remediation
Environmental conservation expenses

Global environmental conservation

4,907

4,186

Resource recycling

569

478

516

Upstream and downstream

6,189

4,991

6,102

Administrative

151

12

311

R&D

867

949

912

Social activity

43

28

58

Environmental remediation

87

117

102

1,246

1,402

1,305

Total R&D expenses (million yen)

Non-consolidated

119

Taiheiyo Cement by Numbers — Data Section

S Social

Scope

Occupational Health and Safety
Fatalities (cases)
Lost time-injuries (cases)

ESG Data

FY2021

FY2022Scope

FY2023

Group 1CSR Objectives for 2025: Zero fatalities

Total number of work-related accidents (cases)
Absence rate (%)
Number of employees (consolidated)

Group 2

Permanent employees

FY2023

Ratio of smokers among employees 40 years and older (%)

29.7

30.1

29.3

2

2

Ratio of employees 40 years and older that drink (occasionally or daily) (%)

73.9

73.1

74.4

42

36

49

Ratio of employees 40 years and older that exercise regularly (30 minutes or more of exercise) (%)

25.9

26.9

27.9

121

103

120

82.3

80.8

80.5

0.337
12,5860.604
12,5420.935
12,720

Ratio of employees 40 years and older that eat breakfast (%)
Ratio of employees receiving specific health guidance (%)

29.9

19.1

20.7

Walking event participation rate (%)

3.47

4.44

6.79

Ratio of employees with BMI greater than 25 (%)

33.0

33.0

31.9
96.4

1,838

1,874

1,841

Number of female employees

205

213

210

Ratio of employees taking stress checks (%)

98.1

97.5

Ratio of female employees (%)

11.2

11.4

11.4

7 .1

8 .2

9.3

Ratio of women in management positions (%)

Ratio of employees with high stress (%)

1.1

1.5

2 .4

─

─

83.4

Average age (years)

Ratio of employees taking e-learning on education (%)

40.7

40.4

40.1

Number of employees (total)

2,339

2,337

2,284

216

218

219

Sexual harassment (cases)

1

1

0

9.2

9 .3

9.6

2

5

6

Ratio of women in management positions (%)

Power harassment (cases)

1.0

1.3

2 .0

0

0

3

Ratio of women in new management positions (%) CSR Objectives for 2025: 10% or more

Other (cases)

Number of female employees
Ratio of female employees (%)

CSR Objectives for 2025: 10% or more

Mental health support

Efforts to protect human rights

Non-consolidated

Number of reports to the internal harassment hotline

10.7

6.3

13.6

Average years of service (overall) (years)

18.5

18.1

17.8

Sexual harassment (cases)

0

0

1

Average years of service - men

19.2

18.8

18.4

1

3

2

Average years of service - womenPower harassment (cases)

12.3

12.8

13.3

0

0

2

Number of graduates hired (non-area specific positions)

Other (cases)

67

63

49

1,637

1,650

1,670

14

11

7

143

179

164

20.9

17.5

14.3

42

42

33

4

3

4

11

9

11

0

0

2

Number of females
Ratio of females (%)
Number of graduates hired (area specific positions)

CSR Objectives for 2025: 30% or more

Number of females
Number of mid-career hires
Number of females

FY2019 recruits
7 .6

Turnover rate within 3 years of employment (%)
Number of non-Japanese employees

FY2020 recruits FY2021 recruits
8.3
9.2

7

8

8

Ratio of employees with disabilities (%)

2.50

2.55

2.58

Total annual hours worked (hours)

1,921

1,911

1,891

Overtime and holiday work (monthly average) (hours)

17.5

17.9

17.6

Ratio of annual paid leave taken (%)

74.5

73.2

77.5

Days of annual paid leave taken (days)

14.2

13.9

14.7

Ratio of male employees taking childcare leave or leave for childcare purposes (%)

79

91

89

Ratio of male employees taking childcare leave (%)

19

18

60

Average number of days of childcare leave taken by male employees (days)

7 .1

18.4

28.9

1

2

2

33,893

41,97460,192

Number of employees taking nursing care leave
Education and training expenditure per employee (yen)

─

─

14.8

7,280,071

7,298,681

7,298,214

65.6

67.2

68.2

Full-time employees

65.9

67.4

68.5

Part-time and fixed-term employees

60.6

61.9

54.4

Ratio of employees receiving periodic health examinations (%)

100

99.9

99.9

Ratio of employees receiving secondary examination after periodic health examinations (%)

84.0

64.6

63.6

Education and training hours per employee (hours)
Average annual salary (yen)Ratio of women's wages to men's wages (%) All employees*5

Health management initiatives

Non-consolidated

Health examinations

120

FY20220

Non-consolidated

Number of employees (excl. seconded employees, etc.)

FY2021Preventive measures against lifestyle-related diseases

Number of reports to the external harassment hotline

Number of human rights slogan submissions (number)
IR Activities (cases)

G Governance
Governance structure

Non-consolidated

Scope

FY2021

FY2022

FY2023

Non-consolidated

Directors
Independent directors
Female directors
Ratio of female directors (%)
Corporate Auditors

7

9

9

2

3

3

1

1

1

14.3

11.1

11.1

4

4

4

Independent corporate auditors

2

2

2

Female corporate auditors

1

1

1

25.0

25.0

25.0

18.2

15.4

15.4

552(15)512(9)

510(11)

Ratio of female corporate auditors (%)
Ratio of female board members (%)
Annual remuneration of board members (million yen)
Directors
Corporate Auditors

72(4)

72(5)

72(5)

Internal carbon pricing (yen/t-CO2)

Non-consolidated

─

1,500

Ratio of employees taking e-learning self-check on Standards of Conduct (%)

Non-consolidated

77.4

87.8

1,500
91.7

7

7

5

Number of reports to the internal whistleblowing hotline
Intellectual property (Number)
Number of new patent registrations in Japan
Number of patents held in Japan

Group 3
Non-consolidated

158

136

156

1,273

1,335

1,439

*1 KPI based on GCCA Sustainability Guidelines*2 2030 Interim Target*3 Total of cadmium and thallium, and their compounds*4 Total of antimony, arsenic, lead, chromium, cobalt, copper, manganese, nickel, vanadium and their compounds*5 Calculated based on the "Calculation Method of the Gender Pay Gap" in the "General Employer Action Plan (July 2022 Revision)" based on the Act for Promotion of Women’s Participation
and Advancement in the Workplace.
*6 Calculation results were reviewed and retroactively revised.

121

Taiheiyo Cement by Numbers — Data Section

External Evaluation,
Collaboration with Outside Organizations
Inclusion in Investment Indices
DJSI[selected as a component stock in the Asia-Pacific region for the ninth consecutive year]

DJSI is an abbreviation of the Dow Jones Sustainability Indices, a leading global ESG
investment index developed by Dow Jones (USA) and RobecoSAM (Switzerland).

FTSE Blossom Japan Sector Relative Index

Created by the global index provider FTSE Russell and designed to be a sectorneutral index that reflects the relative performance of Japanese companies with superior
environmental, social and governance (ESG) performance in each sector.

R&I[Consecutive A- rating since 2018]

Rating & Investment Information, Inc. is one of the leading rating agencies in Japan,
focusing on major rating business.

Platinum “Kurumin” certification[Acquired in August 2023]

Certified by the Minister of Health, Labour and Welfare as a superior company thathas taken an especially high level of initiatives among those certified as a "Child Rearing
Support Company".

Health & Productivity Management Outstanding Organization
JPX/S&P CAPEX & Human Capital Index

An index developed jointly by the Japan Exchange Group, Inc., Tokyo Stock Exchange,
Inc. and S&P Dow Jones Indices that targets companies actively engaged in "capital
expenditure and investments in human capital".

Morningstar Japan ex-REIT Gender Diversity Tilt Index[Acquired in 2023]

A certification system established by the Ministry of Economy, Trade and Industry to
promote health and productivity management. A program to highlight corporations,
including large enterprises and SMEs, that practice particularly excellent healthmanagement based on initiatives that are in line with local health issues and healthpromotion efforts promoted by the Nippon Kenko Kaigi.

(GenDi J)

An index created by the leading U.S. financial services company Morningstar that
focuses on companies whose gender diversity policies are embedded in their corporate
culture and who are committed to equal opportunities for their employees regardless ofgender.

MSCI Japan ESG Select Leaders Index

Created by the leading U.S. financial services company MSCI and composed of the topranked Japanese stocks by market capitalization, selected from companies in each industry
with relatively superior ESG ratings.

S&P/JPX Carbon Efficient Index

An index developed jointly by S&P Dow Jones Indices and the Japan ExchangeGroup, Inc. that determines the weight of constituent stocks by focusing on the status ofenvironmental information disclosure and the level of carbon efficiency.

Evaluation by External Organizations
CDP[Scored A for climate change, B- for water]

An international NGO headquartered in the United Kingdom. The evaluation is basedon an 8-point scale from A to D- for the company's initiatives and information disclosure in
the environmental field, in the three areas of climate change, water resources, and forest
protection.

JCR[Consecutive A rating since 2020]

The Japan Credit Rating Agency is one of Japan's leading rating agencies that provides
ratings for long-term and short-term credit.

122

Collaboration with Outside Organizations
GCCA(Global Cement and Concrete Association)

The organization was founded in 2018 and took over the activities of the Cement
Sustainability Initiative of the WBCSD in January 2019. It is composed of approximately 40of the world's major cement companies and covers 40% of the world's cement production
capacity (80% excluding China). Taiheiyo Cement is a founding member and the only
Japanese manufacturer to participate in its activities.

INNOVANDI(Global Cement and Concrete Research Network)

INNOVANDI is a research network launched by GCCA in 2020. It conducts research anddevelopment such as sustainable concrete and cement and CO2 capture and recovery, andwe have participated since its inception.

UNGC(UN Global Compact)

An initiative proposed by the United Nations and signed by more than 21,200
companies and organizations in 160 countries as of 2022. It requires the top management
to commit to 10 principles related to the protection of human rights, elimination of unfair
labor practices, environmental considerations and preventing corruption.

Industrial Federation for Human Rights, Tokyo

Established in November 1979, the federation now consists of 122 companies, most ofwhich are headquartered in Tokyo. Under its basic philosophy of voluntary management
and full participation, the federation endeavors to resolve the “Dowa issue” (discrimination
against a caste-like minority of ethnic Japanese) and other human rights issues from acompany perspective.

123

Taiheiyo Cement by Numbers — Data Section

Financial and Non-financial Highlight
Financial Data

Non-financial Data

Net Sales, Operating Income andOperating Income on Net Sales

Total Assets, Ordinary Income andReturn on Assets (ROA)

Net sales (billion yen)
Operating income (billion yen)
Operating income on net sales (%)
916.0

884.3

66.0

63.6

809.5

708.2

2019

7.4

6.9

2020

2021

2.13

1,103.0
2

50.1
6.3

4.4
0.6
(FY)
2023

2019

2020

1.01

6.3

5.9

6.6

2022

1,268.8

1,034.4 1,032.9 1,044.2
65.7
64.3
60.5

46.7
7.2

Lost-time Injury Frequency Rate(per million working hours) GCCA

No. of Fatal Accidents

Total assets (billion yen)
Ordinary income (billion yen)
Return on assets (ROA) (%)

863.9

61.0

Prevention of Accidents

2022

1.0
0.1
(FY)
2023

0

0

0

2019

2020

2021

2023

(FY)
CSR
Objectives
for 2025

43.4
10.7

39.1
9.2

110.0

109.8

116.2

8.9

102.7

28.9
10.3

2020

2021

2022

5.9

10.2
8.3

8.3

Alternative raw materials
Alternative fuels

10.0

8.3

19.9

68.8

-33.2
2020

2021

2022

2023

(FY)

(FY)

Ratio of Alternative Raw Materials andFuels (%) GCCA

16.0

15.5

15.8

13.8

14.1

14.2

2019

2020

2021

-6.6

2019

2023

集計範囲の詳細はP128 ※1, 9をご参照ください。

Reduction Rate ofSpecific Net CO2 Emissions (%) GCCA

EBITDA (billion yen)

46.8

2019

Reduction of Greenhouse Gas Emissions

EBITDA

Proﬁt attributable to owners of parent (billion yen)
Return on equity (ROE) (%)

1.33

0
2022

※ 当社および当社安全保安衛生管理規程において労災報告対象事業所とされているグループ会社を集計対象としています。

Profit Attributable to Owners of Parent andReturn on Equity (ROE)

1.27

1

4.7

2021

1.16

2019

2020

2021

2022

2023

2019

(FY)

2020

2021

2022

2023

(FY)
CSR
Objectives
for 2025

15.7

15.5

15.3

2022

2023

(FY)

Workplace Diversity
Interest-bearing Debt andNet Debt/Equity Ratio (DER)
Interest-bearing debt (billion yen)
Net debt/equity ratio (DER) (multiples)

Capital expenditure (billion yen)
Depreciation (billion yen)
77.6
67.7

403.4
279.6
0.5

266.1
0.5

248.1
0.4

Ratio of female recruits (non-area specificpositions) (%)(as of April 1, 2022)

Capital Expenditure and Depreciation

270.5

44.0

0.7

66.0
48.8

52.6

36.4

73.3
56.0

124

2020

2021

20.9

64.4

17.5

9.0

20.3

9.2

2019

2020

2021

2022

2023

(FY)

8.0

CSR
Objectives
for 2025(FY)2019 2020 2021 2022 2023

10.0
or more
6.3

8.6

14.3

(FY)

10.7

9.3

(FY)

2023

13.6

9.6

75.9

0.4

2022

Ratio of newly appointed female managers (%)(as of March 11, 2023)

10.0
or more30.0
or more2019 2020 2021 2022 2023
2019

Ratio of Female to Male Employees (%)(as of March 31, 2023)

CSR
Objectives
for 2025

3.0
2019 2020 2021 2022 2023

(FY)

CSR
Objectives
for 2025

125

Taiheiyo Cement by Numbers — Data Section

11-Year Summary
FY2013

Statement of Income (million yen)
Net sales

Operating Income
Ordinary income

Profit attributable to owners of parent

Financial Condition (million yen)
Net assets

Total assets

Interest-bearing debt

Per Share Data* (yen)Book-value per share
Earnings per share

Closing share priceCash Flow (million yen)

Cash flows from operating activities

FY2014FY2015FY2016

916,071
66,01264,30643,452

884,350
61,00860,541
39,151

863,90363,61065,74446,800708,201
46,70150,193
28,971

809,542
4,456
1,015(33,206)

219,826
982,473473,959

273,3121,015,564
435,118

347,490
1,040,602
399,138

357,073
1,014,075
394,497

400,034
1,015,415
340,930

432,326
1,020,111
288,606

450,645
1,034,428
279,615473,241
1,032,923
266,115

506,8211,044,227
248,102544,799
1,103,007
270,587

528,857
1,268,862
403,485

1,558.5
92.2
2,210

1,955.7
286.7
3,720

2,463.1
359.1
3,670

2,591.1
296.3
2,590

2,930.2
383.9
3,720

3,193.7
311.4
3,865

3,388.4
351.7
3,690

3,567.6
319.9
1,850

3,971.3
387.8
2,911

4,362.2
245.8
2,019

4,228.5(283.7)2,487

94,43390,902

51,974

107,683(48,460)(65,818)
44,976

61,50588,55877,00075,62755,60450,645(4,027)50,072

EBITDA (million yen)

Net debt/equity ratio (DER) (multiples)

Other

Capital expenditure (million yen)
Depreciation (million yen)

R&D expenses (million yen)

FY2023871,113
65,12964,36638,52554,408Return on equity (ROE)FY2022

798,588
63,23559,80247,597

Cash and cash equivalents at end of fiscal year

Equity ratio (%)

FY2021

835,359
60,43360,22536,404(31,377)

Return on assets (ROA) (ordinary income)

FY2020842,848
65,40667,89044,114(27,926)

Operating income on net sales

FY2019840,288
70,43469,59035,223(16,441)

Financial Indicators

FY2018

747,616
40,65932,667
11,329Cash flows from investing activities

Cash flows from financing activities

FY2017(51,792)(62,269)(52,713)(71,099)(10,394)(81,855)(58,025)

97,283(65,534)

50,08445,748110,403(47,809)(43,952)
63,819(33,753)(29,436)

71,191(83,919)(268)(93,344)(3,742)50,213112,080
70,828

5.4
3.3
6.3
19.5
80,081
2.2

8 .4
7 .0
16.3
23.7
110,987
1 .6

7 .8
6 .6
16.3
29.1
107,807
1 .1

7 .2
5 .9
11.7
31.4
104,390
1 .1

7 .9
5 .9
14.0
35.6
107,694
0 .8

7 .5
6 .3
10.2
38.7
109,132
0 .6

7.2
6.3
10.7
40.1
110,020
0.5

6 .9
5 .9
9 .2
42.3
109,871
0 .5

7 .4
6 .3
10.3
45.1
116,293
0 .4

6 .6
4 .7
5 .9
46.3
102,711
0 .4

0.6
0.1
(6.6)
39.0
68,8750.7

32,52439,422
3,846

39,09440,553
4,052

42,16042,401
4,422

44,076
43,9574,228

54,38444,4594,538

58,08744,003
4,452

67,79644,008
4,311

77,677
48,863
4,431

66,003
52,683
4,606

73,37356,0105,284

75,93264,4195,903* The Company, effective October 1, 2017, conducted a reverse stock split for its common stock at a ratio of one for 10.
Per share information are calculated assuming the share consolidation took place at the year to March 2011.
* The "Accounting Standard for Revenue Recognition" (ASBJ Statement No. 29), etc. were applied from FY2022.

14 Medium-Term Management Plan
FY2013-FY2015

Business Strategies
Fulfill our social mission

Make maximum contributions to projects related
to recovery from the Great East Japan Earthquake

Pursue our main businesses

Establish sustainability in the domestic cementbusiness and fulfill our responsibilities as part ofa social infrastructure industry

17 Medium-Term Management Plan
FY2016-FY2018

Business Strategies

Enhance existing businesses, and formulate andimplement growth strategies
Strengthen management foundations
Provide support for national projects
Enhance research and development

20 Medium-Term Management Plan

Strengthen the earnings capacity of existing
businesses
Formulate and implement growth strategies
Provide support for national projects

Promote our materials business, and further
advance our overseas business expansion• Operating income on net sales: 7.8%
• ROA (ordinary income): 6.6%
• Net DER: 1.1

126

FY2018 results• Operating income on net sales: 7.5%
• ROA (ordinary income): 6.3%
• Net DER: 0.6

FY2022-FY2024

Business Strategies

Expand our growth fields

FY2015 results

23 Medium-Term
Management Plan

FY2019-FY2021

1

Initiatives to deliver carbon
neutrality

2

Sustained growth investment

3

Strengthening plant facilities

4

Quarry development

FY2021 results• Operating income on net sales: 7.4%
• ROA (ordinary income): 6.3%
• Net DER: 0.4

127Taiheiyo Cement by Numbers — Data Section

Financial Statements
Consolidated Balance Sheets
Item(Unit: million yen)

(Unit: million yen)

End of FY2022 End of FY2023

End of FY2022 End of FY2023(As of March 31, 2022)

AssetsCurrent assets
Cash and deposits
Notes, accounts receivable and contract assets
Electronically recorded monetary claims - operating
Merchandise and finished goods
Work in process
Raw materials and supplies
Short-term loans receivable
Other
Allowance for doubtful accounts
Total current assets

Buildings and structures
Accumulated depreciation
Buildings and structures (net)
Machinery, equipment and vehicles
Accumulated depreciation
Machinery, equipment and vehicles (net)Land
Leased assets
Accumulated depreciation
Leased assets (net)
Construction in progress
Other
Accumulated depreciation
Other (net)Total property, plants and equipment

60,271
143,178
23,35434,4091,277
58,502
1,921
17,942(307)
340,550

79,842
158,136
24,826
47,4601,529
89,383
1,459
27,920(150)
430,408

515,145(361,439)

531,889(374,577)

153,705
968,234(797,800)
170,433
156,031
39,955(20,891)
19,06432,67665,708(39,790)
25,917

157,3121,038,534(847,452)
191,081
165,027
26,217(12,819)
13,39834,286
101,217(42,240)
58,977557,829620,083

Intangible assets
Goodwill
Other

80
27,485

101
39,665

Total intangible assets

27,566

39,766

Investments and other assets

Current liabilities

Other

213
86,68584,162
11,613
149,573
27,00010,000
3,687
5,677
2,564
108
91,395

Total current liabilities

309,768

385,784

Notes and accounts payable - trade
Electronically recorded obligations - operating
Short-term borrowings
Commercial papers
Current portion of bonds
Income taxes payable
Provision for bonuses
Provision for loss on business withdrawal
Other provisions

Non-current liabilities

79,685
8,751
102,986
21,000
─

4,198
6,246
─

Other

478
13,481
8,703
42,35250,000166,911
18,32921,380
536
227
4,498
1,924
472
26,5149,379
54,045

Total non-current liabilities

248,440

354,221558,208

740,005

Bonds payable
Long-term borrowings
Deferred tax liabilities
Retirement benefit liabilities
Provision for retirement benefits for directors
Provision for special repairs
Provision for product compensation
Provision for loss on business withdrawal
Other provisions
Lease obligations
Asset retirement obligations

Total liabilities

60,00086,60010,02022,701
512
258
3,330
─

Net assets

Shareholders’ equity

Treasury shares

86,17449,729384,154(13,766)

86,17449,729342,880(13,738)

Total shareholders' equity

506,291

465,045
12,03803,610
13,730530

Share capital
Capital surplus
Retained earnings

Allowance for doubtful accounts

117,8392,376
23,697
8,167
27,832(1,309)Total investments and other assets

177,061

178,604

Remeasurements of defined benefit plans

11,737
6
4,897(11,322)(992)

762,457

838,454

Total accumulated other comprehensive income

4,325

29,911

1,103,007

1,268,862

Non-controlling interests

34,18133,899Total net assets

544,799

528,857

1,103,007

1,268,862

Long-term loans receivable
Retirement benefit assets
Deferred tax assets
Other

Total non-current assets
Total assets

Accumulated other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Revaluation reserve for land
Foreign currency translation adjustment

Total liabilities and net assets

Consolidated Statements of Cash Flows(Unit: million yen)Item

(As of March 31, 2023)

118,359
1,391
22,68011,081
25,431(1,883)

Investment securities

128(As of March 31, 2022)

Liabilities

Non-current assets
Property, plants and equipment

Item(As of March 31, 2023)

Consolidated Statements of Income andConsolidated Statements of Comprehensive Income

Net sales
Cost of sales
Gross profit
Selling, general and administrative expenses
Amortization of goodwill
Other
Total selling, general and administrative expenses
Operating income
Non-operating income
Interest income
Dividend income
Rental income from real estate
Share of profit of entities accounted for using equity method
Other
Total non-operating income
Non-operating expenses
Interest expenses
Share of loss of entities accounted for using equity method
Other
Total non-operating expenses
Ordinary income
Extraordinary income
Gain on disposal of non-current assets
Gain on sales of investment securities
Compensation income
Other
Total extraordinary income
Extraordinary losses
Loss on disposal of non-current assets
Loss on sales of investment securities
Loss on valuation of investment securities
Impairment loss
Business withdrawal loss
Product compensation expenses
Other
Total extraordinary losses
Profit (loss) before income taxes
Income taxes - current
Income taxes - deferred
Total income taxes
Profit (loss)
Profit (loss) attributable to non-controlling interests
Profit (loss) attributable to owners of parent
Profit (loss)
Other comprehensive income
Valuation difference on available-for-sale securities
Deferred gains or losses on hedges
Foreign currency translation adjustment
Remeasurements of defined benefit plans
Share of other comprehensive income ofentities accounted for using equity method
Total other comprehensive income
Comprehensive income
Comprehensive income attributable toComprehensive income attributable toowners of parent
Comprehensive income attributable tonon-controlling interests

FY2022

FY2023

708,201
532,818
175,382809,542
668,324
141,218

54
128,626
128,681
46,701

46
136,715
136,761
4,456

551
1,641
90
1,913
4,113
8,311

738
1,653
91

2,195

2,746
2,771
2,834
8,352
1,015

(Unit: million yen)

Item

April 1, 2021
From April 1, 2022
( Fromto March 31, 2022 ) ( to March 31, 2023 )

─

2,623
4,819
50,193
6,386
615

─

1,051
8,054

7,301
428
20
2,407

─

3,506
1,762
15,42642,820
11,542
227
11,76931,051
2,079
28,971
31,051

─

2,427
4,911

1,053
1,307
1,766
221
4,348
5,255
442
6
6,061
7,984
1,277
702
21,730(16,366)
7,671
10,20017,872(34,239)(1,032)(33,206)(34,239)(544)

518,596
1,447

369
(5)
25,042
1,389

2,559

2,196

22,063
53,11528,990(5,248)48,324(6,334)

4,790

1,086

Cash flows from operating activities

Profit (loss) before income taxes
Depreciation
Amortization of goodwill
Share of loss (profit) of entities accounted for using equity method
Loss (gain) on valuation of investment securities
Decrease (increase) in net retirement benefit asset and liability
Increase (decrease) in provision for retirement benefits for directors
Increase (decrease) in provision for bonuses
Increase (decrease) in allowance for doubtful accounts
Increase (decrease) in provision for loss on business withdrawal
Increase (decrease) in other provisions
Interest and dividend income
Interest expenses
Loss (gain) on sales of investment securities
Loss (gain) on disposal of non-current assets
Impairment loss
Decrease (increase) in trade receivables
Decrease (increase) in inventories
Increase (decrease) in trade payables
Other
SubtotalInterest and dividends received
Interest paid
Income taxes paid
Cash flows from operating activities

Cash flows from investing activities

FY2022

FY2023

April 1, 2021
From April 1, 2022
( Fromto March 31, 2022 ) ( to March 31, 2023 )

42,82056,01054(1,913)
20
(302)
8
(19)
(4,129)─

3,185(2,193)
2,195
(187)
914
2,407
(1,904)(15,714)
5,679(4,162)
82,7692,807(2,199)(12,186)
71,191(16,366)
64,41946
2,771
6(1,461)
23
(574)
(532)
4,452
997
(2,392)
2,746
(865)
4,202
6,061
(18,217)(37,165)
9,376(10,018)
7,508
3,211
(2,740)(8,247)(268)(67,326)
6,458
(440)

1,937
(63,401)
1,820
(595)

(24,123)
1,010(1,991)
2,048

10

355

(2,150)
2,458
─
(2)

(1,242)(30,930)(2,082)

Cash flows from investing activities(83,919)(93,344)

Net increase (decrease) in short-term borrowings
Increase (decrease) in commercial papers
Proceeds from long-term borrowings
Repayments of long-term borrowings
Proceeds from issuance of bonds
Redemption of bonds
Purchase of treasury shares
Dividends paid
Dividends paid to non-controlling interests
Other(5,936)21,00040,743(34,035)
10,000(10,000)(5,036)(7,648)(1,404)(11,423)(3,742)
2,864(13,606)
63,81923,2376,000
144,264(41,826)

112,080
2,048
20,51550,213

─

50

─

48
70,828Decrease (increase) in time deposits
Purchase of non-current assets
Proceeds from sales of non-current assets
Purchase of other depreciated assets
Proceeds from sales of other depreciated assets
Purchase of investment securities
Proceeds from sales and redemption of investment securities
Proceeds from sales of shares of subsidiaries
resulting in change in scope of consolidation
Loan advances
Collection of loans receivable
Payments for acquisition of businesses
Other

Cash flows from financing activities

Cash flows from financing activities
Effect of exchange rate change on cash and cash equivalents
Net increase (decrease) in cash and cash equivalents
Cash and cash equivalents at beginning of period
Increase (decrease) in cash and cash equivalents
resulting from change in scope of consolidation
Increase in cash and cash equivalents resulting from merger
Cash and cash equivalents at end of period

182

250,213

79

660

─
─

(12)
(8,204)(942)(10,435)

129

Taiheiyo Cement by Numbers — Data Section

GCCA Key Performance Indicators

GCCA Independent Assurance Report

The Taiheiyo Cement Group's key performance indicators (KPIs) for FY2023 have been subjected to independent limited
assurance by KPMG AZSA Sustainability Co., Ltd.

FY2023 Key Performance Indicators (KPI)*¹ *²
CO2 and climate protection (CO2 emissions and energy consumption)

Number of facilities using the GCCA “The Cement CO2 and Energy Protocol” guidelines for emissions inventory
Ratio of facilities using the GCCA “The Cement CO2 and Energy Protocol” guidelines for emissions inventory (%)
Scope 1 emissions*4
Total CO2 emissions (thousand t)
Gross emissions*5
Net emissions*6
Specific gross emissions
CO2 emissions per tonne of cementitious product*7 (kg-CO2/t-cementitious)
Specific net emissions
Emissions from electricity purchased (thousand t) (Scope 2 emissions)Indirect emissions other than Scope 1 and 2 (emissions of other companies related to the activities of the calculation entity)(thousand t) (Scope 3 emissions)*8
Category 1 (Purchased goods and services)*9
Category 3 (fuel- and energy-related activities not included in Scope 1 and 2)*11
Specific heat consumption for clinker production (MJ/t-clinker)
Alternative fuel rate: ratio of alternative fuels used by kilns (%)
Biomass fuel rate: ratio of biomass fuel used by kilns (%)
Clinker/cement (equivalent) factor: ratio of the total clinker consumption and cement produced, calculated according to the
GCCA Cement CO2 and Energy Protocol guidelines

Emissions monitoring and reporting

Percentage of clinker produced by kilns covered by a monitoring system, either continuous or discontinuous, for the main and other pollutants (%)
NOx*12
Percentage of clinker produced by kilns which have adopted continuous measurement forSOx*12the main pollutants (%)
Dust
NOx
Total emissions (t)
SOx
Dust
NOx
Specific emissions (g/t-clinker)
SOx
Dust

Water
Withdrawal (thousand m³)
Discharge (thousand m³)

Fresh water
SeawaterFresh water
Seawater

Health and Safety

Fatalities

Number of fatalities for directly employed personnel
Fatality rate per 10,000 directly employed personnel
Number of fatalities for indirectly employed personnel (contractors and subcontractors)
Number of fatalities involving third parties (not employed)
Lost-time injuries
Number of lost-time injuries for directly employed personnel
Injury frequency rate of directly employed personnel (per million working hours)
Number of lost-time injuries for indirectly employed personnel (contractors and subcontractors)

To the President and Representative Director of Taiheiyo Cement Corporation

FY2021
17100
24,02922,672
21,832
701
675
855

FY2022
17100
23,67922,525
21,629703
675
983

FY202316*3
100
20,06519,017
17,997
698
661
868

We were engaged by Taiheiyo Cement Corporation (the “Company”) to undertake a limited assurance engagement of theenvironmental and social performance indicators (the “Indicators”) included under the following headings in the GCCA Key
Performance Indicators section of its Taiheiyo Cement Report 2023 (the “Report”) for the fiscal year ended March 31, 2023.
• CO2 and climate protection (CO2 emissions, energy consumption) ¹• Emissions monitoring and reporting ¹• Water ¹• Health and safety ²

1,769

1,639

1,766

752
1,017
3,321
12.2
2.0

635
1,004
3,291
13.3
2.0

893*10
873
3,375
17.6
2.3

The Company’s Responsibility

82.4

83.0

83.0

FY2021
100
97.7
96.4
100
34,758
1,139
544
1,282
42
20

FY2022
100
97.6
96.2
100
34,330*12
1,091*12
439*12
1,277*12
41*12
16*12

FY2023
100
97.5
95.7
100
32,425
930
423
1,434
41
19

FY2021
27,192
146,232
13,447
146,368

FY2022
26,341
146,894
13,246
147,062

FY202324,649145,476
12,792
145,639

FY2021

FY2022

FY2023

0
0
0
0

0
0
0
0

0
0
1
0

15
1.27
18

15
1.33
19

23
2.13
12

*1 CO2 and climate protection, emissions monitoring and reporting, and water for FY2023 are in accordance with “GCCA Sustainability Guidelines for the monitoring and reporting of CO2 emissions
from cement manufacturing Ver. 0.1”, “GCCA Sustainability Guidelines for the monitoring and reporting of emissions from cement manufacturing Ver. 0.1”, “GCCA Sustainability Guidelines forco-processing fuels and raw materials in cement manufacturing Ver. 0.1” and “GCCA Sustainability Guidelines for the monitoring and reporting of water in cement manufacturing Ver. 0.1”.
*2 Health and safety for FY2023 is in accordance with “GCCA Sustainability Guidelines for the monitoring and reporting of safety in cement manufacturing Ver. 1.0”. We have aggregated datafrom the cement businesses of Taiheiyo Cement and 15 domestic and overseas group companies, and from the construction materials, aggregates and ready-mixed concrete businesses of 46
companies out of the affiliated companies that are considered to be business sites required to submit accident reports under our health and safety management regulations.
*3 Plants that ceased operations during the period are excluded from the current period's totals in accordance with GCCA guidelines.
*4 CO2 emissions that are not included in the items for disclosure mandated by the GCCA but are derived from raw materials and fuels in the cement manufacturing process (including from on-site
power generation) and fall under Scope 1.
*5 CO2 emissions derived from raw materials and fuels in the cement manufacturing process (excluding CO2 emissions generated from on-site power generation).
*6 CO2 emissions derived from raw materials and fuels in the cement manufacturing process (excluding CO2 emissions generated from alternative fuels and on-site power generation).
*7 Cementitious product: Sum total of clinker and admixtures*8 For Scope 3, we refer to the “Emissions Unit Values for Accounting of Greenhouse Gas Emissions, etc., by Organizations Throughout the Supply Chain (Ver. 3.2)”, Ministry of the Environment and“For Calculating Supply Chain Greenhouse Gas Emissions (FY2021: IDEAv2, FY2022 onward: IDEAv3.2)”.
*9 Calculated by multiplying the input volume (physical data) of raw materials purchased by the business site subject to the data collection of environmental performance in the GCCA KPI (hereinafterreferred to as “business site”) from outside the business site by the emission intensity of each raw material.
*10 Emissions increased due to the switch from in-house production of clinker to external purchasing due to the expansion construction at Taiheiyo Cement Philippines, Inc.
*11 Calculated by multiplying the amount of electricity, fuel, etc. procured by the business site by each specific emissions unit.
*12 Calculations were reviewed and revised retroactively.

130

Independent Assurance Report

1 Periodic accounting is based on the fiscal year 2022 for domestic plants and the calendar year 2022 for overseas plants.
2 Periodic accounting is based on the calendar year 2022 for domestic and overseas plants.

The Company is responsible for the preparation of the Indicators in accordance with its own reporting criteria (the “Company’s
reporting criteria”), as described in the Report.

Our Responsibility

Our responsibility is to express a limited assurance conclusion on the Indicators based on the procedures we have performed. We
conducted our engagement in accordance with the ‘International Standard on Assurance Engagements (ISAE) 3000, Assurance
Engagements other than Audits or Reviews of Historical Financial Information’ and the ‘ISAE 3410, Assurance Engagementson Greenhouse Gas Statements’ issued by the International Auditing and Assurance Standards Board. The limited assurance
engagement consisted of making inquiries, primarily of persons responsible for the preparation of information presented in theReport, and applying analytical and other procedures, and the procedures performed vary in nature from, and are less in extent
than for, a reasonable assurance engagement. The level of assurance provided is thus not as high as that provided by a reasonableassurance engagement. Our assurance procedures included:• Interviewing the Company’s responsible personnel to obtain an understanding of its policy for preparing the Report and reviewing
the Company’s reporting criteria.
• Inquiring about the design of the systems and methods used to collect and process the Indicators.
• Performing analytical procedures on the Indicators.
• Examining, on a test basis, evidence supporting the generation, aggregation and reporting of the Indicators in conformity with theCompany’s reporting criteria, and recalculating the Indicators.
• Visiting the following four plants out of a total of 16 plants of the Taiheiyo Cement Group, selected on the basis of a risk analysis.
(Scopes 1 and 2 CO2 emissions covered by these four plants correspond to 40% * of the combined total of the Group’s Scopes 1
and 2 CO2 emissions.)* Based on the amount of absolute gross CO2 for the fiscal year 2022 for domestic plants and the calendar year 2022 for overseas plants.

Overseas plants- Nghi Son Cement Corporation

Domestic plants- Taiheiyo Cement Corporation: Oita Plant- Myojyo Cement Co., Ltd.
- DC Co., Ltd.

• Evaluating the overall presentation of the Indicators.

Conclusion

Based on the procedures performed, as described above, nothing has come to our attention that causes us to believe that the
Indicators in the Report are not prepared, in all material respects, in accordance with the Company’s reporting criteria as described in
the Report.

Our Independence and Quality Management

We have complied with the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for
Accountants, which includes independence and other requirements founded on fundamental principles of integrity, objectivity,
professional competence and due care, confidentiality and professional behavior. In accordance with International Standard on
Quality Management 1, we design, implement and operate a system of quality management including policies or procedures
regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.
/s/ Kazuhiko Saito
Kazuhiko Saito, Partner, Representative Director
KPMG AZSA Sustainability Co., Ltd.
Tokyo, Japan
November 29, 2023
Notes to the Reader of Independent Assurance Report:
This is a copy of the Independent Assurance Report and the original copies are kept separately by the Company and KPMG AZSA Sustainability Co., Ltd.

131

Taiheiyo Cement by Numbers — Data Section

GlossaryA

AASHTO M240

A standard for blended cement specified by
the American Association of State Highway
and Transportation Officials.

Agitator truck

A truck that transports ready-mixed concrete
in a rotating cylindrical container whichagitates the concrete during transportation.
It is also sometimes called a cement truck or
concrete mixer truck.

A special cement that cures by absorbing
CO2. CO2 emissions are reduced by 60%
compared to ordinary Portland cement.

Carbon pricing

Concrete slump

Cathode material

Bag filter

Equipment that uses cloth to filter dust thatis contained in an air stream. When applied
to a cement kiln, the amount of dust in theexhaust gas can be reduced to extremely low
levels.

Blast furnace slag

A by-product of the iron and steel making
process to remove impurities from steel
products, and sometimes referred to simply
as slag.

Bulk materials

A generic term for materials such as fly ash
and crushed blast furnace slag that are soldin powder form as-is, without being packed
in bags.

C

C2SP Kiln

A clinker firing furnace capable of directly
capturing a high concentration of CO2 byseparating the combustion gas system fromthe oxygen-fired calciner. It inherits thefeatures of the NSP kiln.

CARBOCATCH

A CO2 mineralization technology thatuses carbonation. CO2 can be efficiently
mineralized in concrete by mixing cement
slurry that has absorbed CO2 with water.

CO2-cured

Career Day

Autoclaved lightweight concrete

B

Equipment that rapidly cools hightemperature clinker that has been fired ina cement kiln, using air supplied from a
cooling fan.
The process of absorbing CO2 whilst
hardening (curing). CO2-cured cement
absorbs CO2 during hardening.

ASTM are American industrial standards, andC595 is a standard for blended cement.
Concrete which contains many air bubbles
that is made from silica, cement, quicklime,
and aluminum, and cured under hightemperature and pressure conditions.

Clinker cooler

A policy approach that seeks to change thebehavior of emitters by putting a price on
CO2 emissions. Carbon taxes and emissions
trading schemes are typical examples.
An activity in which companies gather at aschool to explain their companies to students
and share information about the educationand skills needed for work and careeradvancement.

ASTM C595

132

CARBOFIX cement

Material used for the positive electrode of abattery.

CCS

Carbon Capture and Storage - A series ofsystems in which CO2 is captured fromthe exhaust gases of industrial processes
such as power and cement plants, and ispermanently stored in depleted oil fields andsubmarine formations.

CCU

Carbon Capture and Utilization - A seriesof systems in which CO2 captured from theexhaust gases of industrial processes such as
power and cement plants, and is reused inindustrial processes or for plant cultivation.

CCUS technology

A generic term for a series of technologies
that captures CO2 for utilization or permanentstorage.

Cement based soil stabilizer

A cement-based ground improvement
material that is used to provide long-term,
stable strength enhancement to a wide
range of soil types.

Cement calcination

Synonymous with clinker calcination.

An index that indicates the fluidity of fresh
ready-mixed concrete, where the higher thenumber, the higher the fluidity. One of thecontrol items during concrete production.

D

Distribution terminal

A material for mixing into soil that enables
the safer treatment of construction soil byinhibiting the leaching of heavy metals
that are specified in the Soil Contamination
Countermeasures Act.

I

Innovandi

A worldwide research network operated by
the GCCA. It conducts research and studies
on materials such as sustainable concrete.

K

Kiln

A combustion furnace used for clinker firing.
Usually a cylindrical rotary furnace with adiameter of 5-6 m and a length of 60-100 m
is used.

F

Kiln brickFly ashAsh derived from coal which is generated
from a coal-fired thermal power plant and iscollected from the exhaust gas airstream by
an electrostatic precipitator.

Minute, lightweight ceramic spheres which
provide weight reduction and thermal
insulation/shielding properties for use incoating materials for home appliances,electronic components, resin products etc.

G

GCCA

Clinker calcination

Glass cullet

Glass products that have been crushed forthe purpose of recycling. In addition to
being used as a raw material for glass, it isalso used as material for roadbeds and roadpaving.

A clinker firing kiln which boasts excellent
thermal efficiency and is equipped with apreheater consisting of four to five stages ofcyclones and a combustion furnace called acalciner.

O

OSHMS

A framework for reducing potential
dangers of occupational accidents at
workplaces and promoting comfortable
work sites by autonomously practicing
continuous, uninterrupted health and safety
management.

P

Semiconductors that control motors
and lighting or convert power, and arecharacterized by the high voltages andcurrents they handle.

Low-temperature embrittlement

Functional hollow particles

NSP kiln

Kiln operation

Fresh concrete

Concrete that has not yet cured (hardened),
which includes ready-mixed concrete.

A type of blended cement that is not includedin the product specifications for blended
cement, and is predicted to be made frommultiple types of diverse blended materials.

Portland cement

Fly ash blended cement

A blended cement that uses fly ash as a
blending material.

New type of blended cement

Refractory bricks that are laid inside a kiln
used for clinker firing in order to protect thesteel outer casing, as the temperature inside
the kiln can reach 1,450°C.
The series of operations in which the kiln is
operated and the cement material is fired.

An intermediate, nodular cement productproduced when the raw materials of cement
such as limestone and clay are fired in a kiln.
A process in which the raw materials of
cement such as limestone and clay areheated at 1450°C to obtain clinker.

Heavy metal immobilizer

An intermediate cement distribution center
that connects cement plants and users. It isalso called service station or SS in Japan.

The Global Cement and Concrete Association
is an industry association of approximately
40 cement manufacturing companies
worldwide, covering about 40% of global
production capacity.

Clinker

H

L

Technology that improves the shreddabilityof waste material that is difficult to process
due to plastic and metal being entwined,
such as automobile shredder residue, andseparates the constituents.

M

Methanation

The synthesis of methane from CO2 andhydrogen. This technology is attracting
attention as it is carbon neutral through theuse of green hydrogen.

N

Nanolitia

Lithium-ion battery cathode material thatfeatures high thermal stability and does notuse cobalt.

Nature positive

Being aimed toward halting the lossof biodiversity and moving towards
rehabilitation.

A generic term for commonly used cement,
and primarily refers to ordinary cement.

Power semiconductors

Premix products

Commercial products that contain cement,
sand, and other materials in a predeterminedratio and can be mixed with water to makematerials such as mortar.

R

Return roller return powder cleanup
work
The lower rollers of a conveyor belt arecleaned periodically because the material
which adheres to a conveyor belt tends toaccumulate there like a snowball.

Rotary kiln

A rotating cylindrical firing furnace for clinker
firing. It is sometimes simply called a kiln.

S

Shake Out drill

An earthquake response drill in which allparticipants simultaneously take actions fortheir own safety, such as hiding under a desk,
which provides an opportunity to confirm theeveryday disaster prevention measures.

Slag

Blast furnace slag.

SludgeA mixture of dirt and liquid. In particular,
concrete sludge is generated during the
production and laying of ready-mixed
concrete.

SP Kiln

A clinker firing kiln with a preheater
consisting of four to five stages of cyclones.
Thermal efficiency is improved by dry
blending the raw materials.

T

Total basin risk score

An assessment indicator of water risk; theWWF's Water Risk Filter and the WRI's
Aqueduct are standardly used.

U

Ultra-pure silicon carbide

A compound of silicon and carbon withextremely high purity such as 3N (99.9%
or higher). It is used as a raw material for
semiconductors that handle high electric
power.

V

Volume reduction technology

A generic term for technologies that reducethe volume of an object. For example,
incineration of solid municipal waste reduces
the load on landfills.

W

Wet long kiln

A clinker firing kiln in which the raw
materials are prepared in a wet consistency
and directly fed into the kiln. As the water
is removed through evaporation, thethermal efficiency is low and not suitable forincreased production.

SBT

Science Based Target for CO2 emissions
reduction. CO2 emission reduction targets
based on scientific evidence and consistent
with the Paris Agreement. Primarily, emission
reductions of at least 4.2% per year are
required.

133

Taiheiyo Cement by Numbers — Data Section

Corporate Information
Company Outline (as of March 31, 2023)
Company
name

TAIHEIYO CEMENT CORPORATION

EstablishedMay 3, 1881

Capital86.174 billion yen

List of Registered Trademarks inJapan of Taiheiyo Cement Corporation
Appearing in this Report
SFPC

CellSpheres

CARBOFIX

TQPS

CARBOCATCHTAIHEIYO GREEN CEMENTCOOL BLOCK PAVE*¹

Website Information
Home pagehttps://www.taiheiyo-cement.co.jp/english

Organizational andBusiness Information

About Us

https://www.taiheiyo-cement.co.jp/english/company/index.html

DENITE

Products and Services

BUNKYO GARDEN GATE TOWER, 1-1-1, Koishikawa,
Headquarters
Bunkyo-ku, Tokyo 112-8503, Japan

C2SP Kiln

Nanolitia

Number of
employees

Consolidated: 12,720 Non-consolidated: 1,841(not including seconded staff)*1 A registered trademark of the Japan Interlocking Block Pavement
Engineering Association.

Net sales

Consolidated:
809.5 billion yen
Non-consolidated: 309.4 billion yen

Ceraclean

https://www.taiheiyo-cement.co.jp/english/service_product/index.html

PreSLump AI

Research and Technology Development

https://www.taiheiyo-cement.co.jp/english/rd/index.html
Investor Relations

IR Information

https://www.taiheiyo-cement.co.jp/english/ir/index.html
Sustainability

Sustainability
Information

Onoda
CementCo., Ltd.

History of
Our Products
and Equipment

1881

2000 May

Acquired an exclusive licensefrom three French companies forthe inorganic composite material
Ductal2001 July

Started operating a municipal
waste incineration ash washingsystem (Ash Washing System) at
the Kumagaya plant.

2002 January

Expanded the scale of the coal
ash treatment business following
completion of the Kanto Ash
Center.

2002 November Started operating an AK system torecycle municipal waste as a raw
material for cement at the Saitama
Plant.

2006 July

1994

Chichibu
CementCo., Ltd.
2000
1998 October

2001

2002

2003

Taiheiyo Cement founded.

2004

2005
2002 June
2003 April

Nihon
CementCo., Ltd.
1947

Asano
CementCo., Ltd.
1883

History of1999 May
Business Activities
and Corporate
2000 October
EventsObtained ISO 14001 certification
at six directly operated cement
plants in Japan.
Acquired the management rights
to Grand Cement Manufacturing
Corporation in the Philippines(currently Taiheiyo Cement
Philippines, Inc.)

2000 November Completed construction ofNghi Son Cement Corporation(Vietnam).
2001 July

134

Completed construction of
Itoigawa Power Station andlaunched an electric power supply
business.

2006

2011 March

Suspended operations at the Ofunato Plant
due to damage from the Great East Japan
Earthquake.

2012 June

Resumed full operations at the Ofunato Plant.

The Global Financial
Crisis of 2008
2007

2008

2009

Formulated the Mission of the
Taiheiyo Cement Group.

2010 March

Grand Cement Manufacturing
Corporation made a wholly owned
subsidiary.
Company name changed to
Taiheiyo Cement Philippines, Inc.
in June 2003.

2010 April

2003 April

Launched a business to recycle
construction soil as a raw material
for cement.

2005 April

Launched an electric power supply
wholesale business at the Tosa
Power Station.

2006 January

Formulated the Environmentallyconscious Management Policy of
the Taiheiyo Cement Group.

2008 OctoberMarked the 10th anniversary of
the company.

2009 April

Registered company-wide ISO
14001 integrated certification at
six directly operated plants.

2014 August

2013 July

2018 May

Water purification material Ceraclean
obtained ETV mark certification from the
Ministry of the Environment.

2019 May

Developed AI technology for predicting
concrete slump.

The Great East Japan
Earthquake
2010

2011

2012

Adoption of theParis Agreement
2013

Announced business restructuring for thegroup.
Second production line of Nghi Son Cement
Corporation came into operation.

Their Majesties the Emperor Akihito andEmpress Michiko of Japan visited the Ofunato
Plant.

20142019 December Started operating a municipal waste
incineration bottom ash washing system at
the Kumagaya Plant.

August Harumi Onoda Remicon Co., Ltd.
completed construction of an environmentallysound (indoor) plant.

2007 December Ductal was used in the pier slabs of Haneda
Airport Runway D.

Developed Silica Fume Premix
Cement (SFPC) for ultrahighstrength cement.

The Kyoto Protocol comes into force

1923

Since 1998

Commenced selling DENITE, a heavy metal
immobilizer.

2002 December Started operating a facility
to recycle wood as a biomass
resource at the Oita Plant.

Chichibu
Onoda
CementCorporation

1999

2007 August

https://www.taiheiyo-cement.co.jp/english/csr/index.html

2015

2016

2020 January

Started commercial operations of a biomass
power station at the Ofunato Plant.

2021 February

Successfully developed Nanolitia, a cathodematerial for lithium-ion batteries.

2022 AugustStarted construction of a production line at
Taiheiyo Cement Philippines, Inc. (TCPI)COVID-19 spreads
2017

2018

2019

2020

2021

2022

2015 May

Formulated the CSR Objectives for 2025.

2018 OctoberMarked the 20th anniversary of the company.

2015 June

Acquired the Oro Grande plant (California,
U.S.).

2019 June

Supported the Recommendations of the Task
Force on Climate-related Financial Disclosures(TCFD).

2021 January

Concluded the agreement on capital alliancewith the Semen Indonesia (SI) Group.

2022 March

Established technology development
roadmap and 2030 Interim Targets for the
Carbon Neutral Strategy 2050.

2018 May

Jointly established the Global Cement andConcrete Association (GCCA) with the world’s
leading cement companies.

2022 May

Signed the UN Global Compact

2022 June

Acquired the Redding Plant and ready-mixed
concrete business assets (California, U.S.)

135

Taiheiyo Cement by Numbers — Data Section

The Wonders of Cement

Stock Overview• How is cement made?

The Distribution of Shares (thousand)by Owner Category (as of March 31, 2023)

Stock Overview (as of March 31, 2023)
Fiscal year

April 1 - March 31

GeneralMeeting ofStockholders

Late June

Commonstock

Registrar ofshareholders

Treasury shares

Financial
institutions

4,591
3.7%

Authorized

197,730,800

Outstanding

121,985,078(including 4,591,631 of treasury
shares)Number ofshareholders

49,096

41,53534.0%

Individual
investors
and others
16,884
13.8%

Brokerage
firms

5,027
4.1%

Sumitomo Mitsui Trust Bank, Limited

Foreign investors

Major Shareholders (as of March 31, 2023)
Sharesowned Holding(thousand) (%)

Shareholder

The Master Trust Bank of Japan, Ltd. (Trust Account) 20,397

17.3

Custody Bank of Japan, Ltd. (Trust Account)

8,688

7.4

STATE STREET BANK AND TRUST COMPANY 505001

4,425

3.7

JP MORGAN CHASE BANK 385632

4,228

3.6

JP MORGAN CHASE BANK 380072

2,445

2.0

Mizuho Bank, Ltd.

2,000

1.7

SSBTC CLIENT OMNIBUS ACCOUNT

1,845

1.5

JPMorgan Securities Japan Co., Ltd.

1,738

1.4

MSIP CLIENT SECURITIES

1,721

1.4

JP MORGAN CHASE BANK 385781

1,543

1.3

Miscellaneous
corporate bodies

46,758
38.3%

7,188
5.8%

The cement manufacturing process can be broadly
divided into the raw material preparation, burning,
and finishing processes. Cement used to be made fromnatural raw materials, with the main material being
limestone as well as clay, silica and iron, but the use ofwaste and by-products is progressing in modern times.
In the burning process, NSP kilns are the standard
worldwide due to their high productivity of around
5,000 tonnes per day and high thermal efficiency of
80%. The physical phenomena and chemical reactions
shown in the figures below (1-4) take place inside an
NSP kiln.

5,000
4,000

Blast furnace slag

CaO : 30-60%
SiO² : 20-45%
Al²O³ : 10-20%
Fe²O³ : 0-5%

Coal ash

CaO : 5-20%
SiO² : 40-65%
Al²O³ : 10-30%
Fe²O³ : 3-10%

Incineration
residues frommunicipal waste

CaO : 23-36%
SiO² : 11-27%
Al²O³ : 6-14%
Fe²O³ : 1-6%

Automobile
Shredder Residue

Glass (SiO²)
Metal fragments (Fe²O³)
Plastic

3,000
2,000
1,000
Mar. 2020

Mar. 2021

Mar. 2022

Mar. 2023* The Company, effective October 1, 2017, conducted a reverse stock split for its common stock at a ratio of one for 10. Prices prior to September 2017 have been calculated taking the reverse
stock split into account.

136

Preheater: 400 - 1,000°C inside the equipment. The
residual heat of the combustion gas heats the preparedraw material and calcination of the raw limestone
begins.

Examples of the waste and by-products used and their chemical composition(Yen)

Mar. 20191

In a cement plant, clinker is producedin the burning process by firing the raw
Calciner: 800 - 1,000°C inside the equipment.
materials prepared in a predetermined
2 Calcination of limestone is completed by the
combustion heat in the calciner.
chemical composition at a high temperature of
1,450°C. This high-temperature firing renders
Kiln: 1,000 - 1,450°C inside the equipment. Cement
3 minerals are produced through heating by the main
toxic substances such as dioxins completely
burner.
harmless, and the aluminum, silica, calcium,and iron that are the main components of thecinders and other residue can be used as raw
materials for cement minerals. In addition,organic components and combustible waste area substitute for coal. Furthermore, gypsum byproducts generated from
Clinker cooler:
the treatment of exhaust gas
4 100 - 1,200°C inside the equipment. The clinker that is produced
in a semi-molten state is rapidly cooled by blowing in outside air.
from thermal power plants
Finishing process:can be directly used as raw
5 A small amount of gypsum is added to the clinker, which isground in a finishing mill to complete the cement.
material for cement.

Stock Price Transitions

Mar. 2018

Various industrial wastes and by-products,
including from steel mills and coal-fired thermal
power plants, as well as the incineration residue
and sludge from municipal waste, are used as theraw material for cement, and a total of more than 400kg per tonne of cement is used. In addition, the useof waste such as debris and wood chips from natural
disasters has progressed in recent years.
Thus, the wonder of cement is that it effectively
utilizes a large amount of waste and by-products
without the quality of the cement product beingchanged or secondary waste being generated.

Why can waste and by-products be used in
cement plants?

* The Company owns 4,591,631 treasury shares.
* The shareholding ratio has been calculated after subtracting our treasury shares.

0• What is so great about cement?

Coal
substitute

Waste tires

Rubber (SiO²)
Steel (Fe²O³)
CarbonBy-productgypsumGypsum (CaSO4)

Cement calcination heat energy source
Chemical composition of cement

Calcium
CaO :63-65%

SilicaSiO² :
20-23%
Clinker

Aluminum
Al²O³ :
4-6%

Iron
Fe²O³ :
2-4%

GypsumCaSO4 :
3-5%

137