Oji Group
Integrated Report 2023
Fiscal year ended March 2023

Sarufutsu company-owned forest in Hokkaido, Japan

Management Philosophy

PurposeCreation of Innovative Value

Grow and manage the sustainable forest,

Innovation is essential for the Oji Group to make a big leap forward. Changes must take place in the research and technologicaldevelopment leading up to revolutionary new products. At the same time, our organizational systems and the behaviors ofeach and every employee need to be transformed. We will promote “challenging manufacturing” based on novel ideas andfulfill society’s latent needs.

Develop and deliver the products from renewable forestAnd

Contribution to the Future and the WorldOji will bring this world a brighter future filled with hope

The Oji Group comprises a diverse range of businesses. We have grown into a global corporate group, with an overseas sales
ratio of over 30%. The Group will continue to provide innovative value to all countries, regions, and societies and create a new
future through proactive global expansion in Asian and other countries.

The forest grown and managed sustainably not only absorbs and fixes carbon dioxide, but also mitigates floods,

Harmony with Nature and Society
Sustainable resource circulation based on forest resources is the foundation of the Oji Group. We will advance our initiatives
such that the business activities themselves contribute to a sustainable society. The initiatives include using vast areas ofcompany-owned forest in and outside Japan for multiple purposes and seeking measures to reduce the environmental burden
at manufacturing sites.

Corporate Slogan“Beyond the Boundaries”

cultivates water sources such as water purification and prevents natural disaster in addition to its contribution tobiodiversity, healing and health enhancement of people.
The products derived from wood utilizing forest resources are made of renewable materials and able to substitute forplastic, films and fuel derived from fossil resources.
Oji Group will confront global warming and environmental issues, and bring this world a brighter future filled with hopeby growing and managing the sustainable forest and by developing and delivering the products utilizing renewable
forest resources.

This slogan expresses the Oji Group's commitment to actively go beyond the“boundaries” of business domains, countries, and the respective capabilities ofindividual employees to contribute to the future, society, and the world, as wellas the determination of all Group members to maximize corporate value as a truly
global company.

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The Oji Group Integrated Report 2023

The Oji Group Integrated Report 2023

02

Regarding the Issuance of Integrated Report 2023

CONTENTS

We started publishing the Oji Group Integrated Report in 2019 to present financial and non-financial information concerning the Group

History of the Oji Group’s Value Creation

Governance Strategy

in an easy-to-understand manner to all of our stakeholders. We would like to convey a narrative of value creation in which we aim,

05 History of the Oji Group’s Value Creation
07 Major Affiliated Companies Distribution Map

63 Message from the Chairman
65 Corporate Officers
67 Corporate Governance
72 Compliance
74 Risk Management
78 Independent Outside Directors’ Roundtable

under the Long-term Vision for FY2030, to achieve a shift from growth to evolution and enhancement of corporate value through efforts on environmental issues, product development, and profit improvement.
The Oji Group has marked the 150th anniversary of its foundation. Through this Integrated Report, we will further deepen communication with our stakeholders and strive to make another leap forward in the next 150 years.

Scope of Coverage of this Report

Editorial Policies
When preparing this Report, reference was made to the following.
The ten principles in four areas found in the United
Nations Global Compact
International Integrated Reporting Framework (International Integrated Reporting Council)

GRI Standards (Global Reporting Initiative)
Guidance for Collaborative Value Creation (Ministry of
Economy, Trade and Industry)

Task Force on Climate-related Financial Disclosures(TCFD)

Ensuring Reliability
To ensure the reliability of this report, FY2022 figures marked
with a star ( ) have been assured in accordance with theInternational Standard for Assurance Engagements (ISAE)
3000 and ISAE 3410 by KPMG AZSA Sustainability Co., Ltd.

In general, this report covers Oji Holdings, 196 consolidated subsidiaries, and 21 equity-method affiliates (as of March 31, 2023).
In cases where coverage differs, this is indicated.

Reporting Period

The reporting period is from April 1, 2022 to March 31, 2023 (except for lost time injury frequency rate, and environmental data forcertain overseas sites, for which the period is from January 1,
2022 to December 31, 2022). With the exception of numerical
data, however, activities carried out from and after April 2023 arealso referenced.

Disclaimer Regarding Forecasts andOther Forward-looking Statements

Forecasts and other forward-looking statements in this report represent projections by Oji Holdings based on information available
at the time of publication and reasonable judgments and therefore
contain uncertainties. Actual results may differ substantially due tovarious factors.

This Report is Printed on Forest Certified
Paper

The report’s cover is printed on Oji F-Tex’s OK Muse Gulliver Gloss
CoC (157.0 g/m²), while the main body of the report is printed on
Oji Paper’s OK Pixeed 01 EF (80.0 g/m²). These products are
made with raw materials from responsibly-managed FSC™-certified forests, renewable resources, and other managed supply
sources (FSC™C005431, FSC™C014119).

What the Oji Group Aims for

09 Value Creation Process
11 Message from the President
19 Long-term Vision & Medium-term Management Plan
23 Message from the Director in Charge of FinanceInitiatives for Environmental Issues—Sustainability—

25 Mitigation and Adaptation to Climate Change
31 Sustainable Forest Management and Conservation of
Biodiversity

Initiatives for Product Development—Green Innovation—

35 New Value Creation through Green Innovation
Initiatives for Profitability Improvement

Discussion

82 Message from an Independent Outside Audit &Supervisory Board Member

Sustainability Strategy

83 Sustainable Business Model
85 Core Competencies and Material Issues
87 Material Issues and KPI
89 Circular Use of Resources (Water)
91 Circular Use of Resources (Recovered Paper)
93 Respect for Human Rights
95 Enhancing Human Capital
99 Ensuring Workplace Safety and Health
101 Responsible Raw Materials Procurement—Profitability—

43 Business Overview
45 Household and Industrial Materials Businesses
51 Functional Materials Business
55 Forest Resources and Environment Marketing
Business

59 Printing and Communications Media Business61 Corporate Management Group and Shared
Service Companies

Financial and Non-financial Data

103 Financial and Non-financial Highlights
105 Analysis and Evaluation of Management Performance
106 Financial Data Highlights
108 Consolidated Financial Statements
111 Third-Party Independent Assurance Report
113 Corporate Data / Stock Information / Evaluation from
SocietyCommunication Map

114 A Year at the Oji Group
Integration with Strategy(Narrative)

Integrated Reporthttps://investor.ojiholdings.co.jp/en/ir/library/integrated.html
Non-financial

Financial

Sustainability Report (online)

Investor Relations

https://ojiholdings.disclosure.site/en/

https://investor.ojiholdings.co.jp/en/ir.html

Climate Change Mitigation and
Adaptation
Biodiversity Conservation
Circular Use of Resources
Responsible Raw
Materials Procurement
Reduction of Environmental
BurdenContribution to Local
Communities and Society
Respect for Human Rights
Strengthening Human CapitalOccupational Safety and HealthCorporate GovernanceRisk Management
Compliance

Financial
Library
Stock

Cover Art: Manatsu no Mori no Nigiwai [Liveliness of a Midsummer Forest]
Hiroo Isono (1945-2013)

IR Schedule
IR News Releases
Stock Chart
Green FinanceWe commissioned Mr. Hiroo Isono, a master painter who worked with a lifelong theme of “forests oflife,” to create 28 paintings using our Oji Forests in Japan and overseas as motifs. We used thepaintings to publish the Oji no Mori no Nakamatachi Calendar [Calendar of Friends in Oji Forest]
series for a period from FY1999 to FY2002.
The setting of this report’s cover art, titled Manatsu no Mori no Nigiwai [Liveliness of a Midsummer
Forest], is a company-owned forest in Yonago City, Tottori Prefecture. It depicts the lively mannervarious animals spend a midsummer season in the forest, where a cool babbling sound of a brook is
almost heard.

Details(Comprehensive)©HIROO ISONO All Rights Reserved

03

The Oji Group Integrated Report 2023

The Oji Group Integrated Report 2023

04

History of the Oji Group’s Value Creation

History of the Oji Group’s Value Creation

Period of Foundation

Period of Development

1873–1909

1946–1972
Efforts toward New Technologies

Birth of the Modern Paper
Manufacturing Industry#1 machine at Kasugai Mill

2000–
Shift in the Business Structure and Further
Global Deployment
Paper production volume has been declining since 2008. Amid
the contraction of the domestic market, we pressed aheadstrongly with our overseas expansion, focusing on Southeast Asia. Our overseas sales
ratio is now close to 40% (FY2022). Issuesof a global scale, including global warming
countermeasures and marine plastics, haveemerged, and “breaking free from fossil materials” and “sustainability” have become key
themes. Taking maximum advantage of thepaper manufacturing technologies we havecultivated over our long history, in recent
years, we have been focusing our efforts on
the development of new materials derived
from wood.
Cellulose nanofiber

Bioethanol

GSPP PM3

Jiangsu Oji Paper Nantong MillTo meet burgeoning demand for paper, we ventured to Hokkaido insearch of the forests, water, and the vast land resources needed for paper manufacturing. We brought together the very best of technologies
and opened the Tomakomai Mill. In doing so, we established a domestic
supply structure for newsprint, breaking free from reliance on imports.

Output (million tons)
10

1,600
1,500
1,400

Period of Great Change

1910–1945
Establishment of Domestic Supply Structure

Tokyo 2020
Olympics
GlobalCOVID-19
pandemic

Period of EstablishimentTokyo Olympics

1946

Net sales (¥billion)
1,800
1,700

Post-war economic
reconstruction

1910

Kyoto
ProtocolMain gate of Oji Paper Oji Mill

(from the collection of the Paper Museum)

2000

1978 Oil Crisis

1973

Global Financial Crisis

Kasugai Mill in the 1960s

Korean War

1873(from the collectionof the Shibusawa
Memorial Museum)End of World War II

Japan’sWesternization era

Events inSociety

Eiichi Shibusawa

1973 Oil Crisis

The origin of the Oji Groupdates back to the establishment of Shoshi Kaisha, a paper manufacturing company,
advocated by Eiichi Shibusawa, the founder of the modern
Japanese economy. Shoshi
Kaisha was established in
1873, based on Shibusawa’s
belief that “paper and printing
businesses are the source of
civilization.” This company
would eventually become Oji
Paper and would underpin thegrowth of industry throughout
the whole of Japan.

Amid Japan’s post-War reconstruction, witha view to producing high-quality paper
quickly and in large quantities, we turned toa continuous digester, which was unprovenat that time but highly productive. We introduced the equipment at the Kasugai Mill.
We also developed technology for removing
ink from old newspaper, opening up major
paths for the use of recovered paper.

Period of Restruction

History of the Oji Group’s Value Creation

In February 2023, the Oji Group marked the 150th anniversary of its foundation. Since its founding in 1873, the Grouphas been growing through the expansion of business fields. While keeping abreast of the trends of the times, we havetackled changing social needs and evolved our business structure. In recent years, aiming for contribution to a sustainable society, we have been actively rolling out the technologies cultivated in our domestic business to the global market.

1973–1999
Paper Diversification and Response
to Environment
The growing abundance of people’s lives brought
major changes in their lifestyles. Expectations of paper grew, and we developed new products, such as
boxboard, thermal paper, and household paper, one
after the other. We also began expanding globally insearch of raw materials for paper manufacturing and new markets. On the otherh a n d , w e a l s o p l a c e d e ff o r t s i n t ocountermeasures against pollution at ourpaper mills.

8

1,300
1,200
1,100

Net sales

High-grade boxboard

6

Pulp output (overseas)
Paperboard output (overseas)
Paper output (overseas)05

The Oji Group Integrated Report 2023

4

Adampak Group acquired2

Oji Pharma established

Oji Fibre Solutions acquired (New Zealand and Australia)

Jiangsu Oji Paper established (China)

Oji F-Tex foundedMorishigyo Group acquired

Oji Materia and Oji Container founded

Oji Paper (merges with Honshu Paper)

Full-scale overseas forest plantation business starts
New Oji Paper (merges with Kanzaki Paper Manufacturing)

Disposable diaper production starts

Merges with Nippon Pulp Industries

High-grade boxboard production starts (former Nippon Pulp Industries)
Thermal paper production starts (former Kanzaki Paper Manufacturing)

Paper output (domestic)

Production of non-woven fabric starts (Oji Kinocloth)
Production of household paper (tissue paper and toilet rolls) starts

Production of coated paper and kraft paper starts

Corrugated container production starts (former Honshu Paper)
Trade name changes to Oji Paper

Develops DIP from old newspaper

KP continuous digester starts operation (Kasugai Mill)
Woodfree paper production starts

Splits into three companies (Tomakomai Paper, Honshu Paper, and Jujo Paper)

Merges with Fuji Paper and Karafuto Industries. An era of Great Oji

Oji Paper Tomakomai Mill opens

Events in
the OjiGroup

Established Shoshi Kaisha(from the collection of the Paper Museum)Sales of toilet rolls, tissue paper, andpaper towels began in the 1970s

Hydroelectric power plant built at Waterfall
Nassou on the shore of Lake Shikotsu

GSPP Group acquired (Malaysia)
Oji Papéis Especiais acquired (Brazil)
Transitioned to a pure holding company structure Celulose Nipo-Brasileira acquired (Brazil)

Paperboard output (domestic)
Tomakomai Mill0The Oji Group Integrated Report 2023

06

History of the Oji Group’s Value Creation

Major Affiliated Companies Distribution Map
Group companies in East Asia (Number of manufacturing sites: 13)

Germany (Number of manufacturing sites: 1)

China (Number of manufacturing sites: 11)

Decorative paper

Sunshine Oji (Shouguang) Specialty Paper Co., Ltd.

Thermal paper,
inkjet paper

Regional headquarters Oji Paper Management (Shanghai) Co., Ltd.

Label & other paper
printing & converting

Adampak Group

Heavy-duty packaging
Suzhou Oji Packaging Co., Ltd.
materials

Sales

Oji Paper International Trading (Shanghai) Co., Ltd.

Kanzan Spezialpapiere GmbH

Italy (Number of manufacturing sites: 2)
Aseptic packaging
and filling machines

Corrugated containers Dalian Mori Mitsui Packaging Co., Ltd.

IPI S.r.I.

Heavy-duty packaging
Cheng Yuan Paper Business Co., Ltd.
materials
Heavy-duty packaging
Oji Packaging Technology (Chongqing) Co., Ltd.
materials
Paper bags

Oji Packaging (Shanghai) Co., Ltd.

Filters

Kunshan Oji Filter Co., Ltd.

Filters

Nantong Oji Filter Co., Ltd.

Cut and processed
products of dry pulp
non-woven fabric,
thermal paper, andspecialty paper

Oji Kinocloth (Shanghai) Co., Ltd.

Household paper (basepaper, paper products),
disposable diapers
Pulp

COMPANY management Oji Industrial Materials Management Co., Ltd.
Containerboard,
boxboard,
packaging paper

Corrugated containers

Jiangsu Oji Paper Co., Ltd.
Folding cartons

Coated paper,
wood-free paper

Paper bags

Korea (Number of manufacturing sites: 2)
Heavy-duty packaging
Oji Interpack Korea Ltd.
materials

Household paper,
disposable diapers

Oji Materia Co., Ltd.

EnergyOji Green Energy Shiranuka Co., Ltd.

EnergyOji Green Energy Ebetsu Co., Ltd.

Morishigyo Co., Ltd.

Adhesive products,
medical

New Tac Kasei Co., Ltd

EnergyOji Green Energy Nichinan Co., Ltd.

Oji Packaging Co., Ltd.

Non-woven fabricOji Kinocloth Co., Ltd.

EnergyOji Green Energy Tokushima Co., Ltd.

Oji Seitai Co., Ltd.

Printing, processing,packaging materials

Chuetsu Co., Ltd.

EnergyMPM Oji Eco-Energy Co., Ltd.

Australia (Number of manufacturing sites: 5)

Vietnam (Number of manufacturing sites: 11)

Corrugated containers

Regional headquarters Oji Asia Management Sdn. Bhd.

Myanmar (Number of manufacturing sites: 1)

Corrugated containers Ojitex Haiphong Co., Ltd.

Forest plantation

Containerboard,
corrugated containers GSPP Group

Corrugated containers Oji GS Packaging (Yangon) Co., Ltd.

Paper bags

Japan Paper Technology Dong Nai (VN) Co., Ltd.

Forest plantation

Paper bags

Japan Paper Technology (VN) Co., Ltd.

Woodchips

Heavy-duty packaging materials,
Oji Interpack India Pvt. Ltd.
corrugated containers

Folding cartons

United Packaging Co., Ltd.

New Zealand (Number of manufacturing sites: 10)

Oji Fibre Solutions
Green Triangle Plantation Forest
Co. of Australia Pty. Ltd. (GPFL)
Albany Plantation Forest
Co. of Australia Pty. Ltd. (APFL)

Containerboard,
corrugated containers, Oji Fibre Solutions (Oji FS)
paper bags

Oji Asia Household Product Sdn. Bhd.

Corrugated containers Oji India Packaging Pvt. Ltd.

Forest plantation

Quy Nhon Plantation Forest Co. of Vietnam Ltd.(QPFL)

Label printing &converting

Hyper-Region Labels Sdn. Bhd.

Corrugated containers Empire Packages Pvt. Ltd.

Woodchips

Binh Dinh Chip Corporation

Thermal paper & carbonlesspaper printing & converting

Tele-Paper (M) Sdn. Bhd.

Thailand (Number of manufacturing sites: 6)

Indonesia (Number of manufacturing sites: 4)

Forest plantation,
pulp

Label & other paper
printing & converting

Adampak Group

Corrugated containers, S.Pack & Print Public Co., Ltd.
folding cartons
Heavy-duty packaging
Union and Oji Interpack Co., Ltd.
materials

Corrugated containers PT Oji Sinar Mas Packaging

Forest plantation,
pulp,
lumber business

Pan Pac Forest Products Ltd. (Pan Pac)

Disposable diapers

Label & other paper
printing & converting

Adampak Group

Philippines (Number of manufacturing sites: 1)
Label & other paper
printing & converting

Adampak GroupThe Oji Group Integrated Report 2023

Carbonless paper,
thermal paper
Adhesive paper,
release paper
Label & other paper
printing & converting

South America (Number of manufacturing sites: 2)
Brazil (Number of manufacturing sites: 2)
Thermal paper,carbonless paper
Forest plantation,pulp

Oji Papéis Especiais Ltda.
Celulose Nipo-Brasileira S.A. (CENIBRA)

North America (Number of manufacturing sites: 1)
America (Number of manufacturing sites: 1)
Thermal paper,film,
inkjet paper

Kanzaki Specialty Papers, Inc.

Albany Plantation Export
Co., Pty. Ltd.

Disposable diapers

Oji Interpack Singapore Pte. Ltd.

Newsprint, printing andpublication paper,
Oji Paper Co., Ltd.
communications paper

Oji Nepia Co., Ltd.

Corrugated containers Ojitex (Vietnam) Co., Ltd.

Sales

Oji Forest & Products Co., Ltd.

Oji Tac Co., Ltd.

Corrugated containers Harta Packaging Group

Singapore (Number of manufacturing sites: 1)

Woodchips,
lumber business, etc.

Oji Imaging Media Co., Ltd.

Cambodia (Number of manufacturing sites: 3)

PT Oji Indo Makmur Perkasa

Oji F-Tex Co., Ltd.

Adhesive products

Regional headquarters Oji Asia Packaging Sdn. Bhd.

India (Number of manufacturing sites: 4)

COMPANY management Oji Green Resources Co., Ltd.

Specialty paper,
films
Thermal paper

Malaysia (Number of manufacturing sites: 19)

Containerboard,
corrugated containers, Harta Packaging Groupplastic bags

COMPANY management Oji Functional Materials Progressing Center Inc.

Oji Container Co., Ltd.

Group companies in Oceania (Number of manufacturing sites: 15)

Group companies in Southeast Asia, India (Number of manufacturing sites: 50)

07

Manufacturing sites in Japan (Number of manufacturing sites: 104)

History of the Oji Group’s Value Creation

Europe (Number of manufacturing sites: 3)

Oji Paper (Thailand) Ltd.

Label & other paper Adampak Group
printing & converting

Lumber business

Pan Pac Forest Products (Otago) Ltd.

Oji Label (Thailand) Ltd.

SalesPT Indo Oji Sukses Pratama

Forest plantation

Southland Plantation Forest
Co. of New Zealand Ltd. (SPFL)

Adampak Group

Forest plantation,
woodchips,
wood pellets

PT Korintiga Hutani (KTH)

Industrial Materials BusinessHousehold and Consumer Products Business
Functional Materials Business
Forest Resources and Environment Marketing Business
Printing and Communications Media Business
Other Businesses (COMPANY management, Regional headquarters, Sales)
Listed only for major affiliated companies (As of June 30, 2023)
Production bases do not include sales companies and forest plantation sites.

The Oji Group Integrated Report 2023

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What the Oji Group Aims for

Value Creation Process
Toward a brighter
future filled with hope

The Oji Group conducts business operations that are rooted in forests, at the heart of which are our core competencies centered on our sustainable business model and forest resources. We will conduct business activities that reflect
our Management Philosophy, Purpose, and material issues and take action on various measures based on our Longterm Vision while cultivating the necessary elements as appropriate. In addition to making a further leap “Toward Further Growth and Evolution,” we will engage in value creation for the realization of a brighter future filled with hope.

Business Operations Rooted in Forest Resources

Value Creation

Human capitalIntellectual capital

Natural capital

Toward Further Growth and Evolution

Enhancement of
economic value

Initiatives forEnvironmental Issues

Initiatives for Profitability
Improvement

Initiatives for
Product Development— Sustainability —— Profitability —— Green Innovation —P25-34

Necessary elements ofvalue creation

R&D expenses: ¥9.3 billion
Number of patents, utility models,and design patents held: 3,245

Business strategy

Core forestation and paper
manufacturing technologies
that contribute to solutions
to social issues

Practice of value creation

Number of employees of
the consolidated Group: 37,845
Percentage of overseas
employees: 57.2%

Long-term vision

Global and diverse humanresources that support
value creation

Funds

P83-102

Human resourcesand education

P43-62

Digitalization

P35-42

Information andcommunication

Co-creation withoutside parties

Business activities (Household and Industrial Materials, Functional Materials,
Forest Resources and Environment Marketing, Printing and Communications Media)

Circular use of resources

Corporate slogan

Manufactured capital“Beyond the Boundaries”

Financial base andinvestment for the realization of
growth and evolution

The Oji Group Integrated Report 2023

Management
Philosophy• Creation of Innovative Value• Contribution to the Future
and the World• Harmony with Natureand SocietyCore competencies centeredUtilization of
on sustainable businessrenewable resources model and forest resources

P1-2

Environmental Action
Program 2030

Sustainable forest
management

Application of fundamental paper
manufacturing technologies

Development of new materials
derived from wood

Global networkand sales
P83-85• Action on climate change• Abundant forests creation
and resource recycling• Consideration forecosystem• Development of trusting
relationships with our
stakeholders

P86-88Foundation ofbusiness continuity

09

Management targets
for FY2030

Enhancement ofsocial andenvironmental value

Grow and manage
the sustainable forest,
Develop and deliver the products
from renewable forest,And
Oji will bring this world a brighter
future filled with hope.

Environmental Social GovernanceSocial and relationship capital

Number of companies surveyed
for supplier sustainability
P101
surveys: 895
Number of countries where our
products are sold: 113• Consolidated operating
profit of 150.0 billion yen
or more• Overseas sales ratio of 40%(With a target of 50%
in the future)

PurposeMaterial issues

Shareholders’ equity: ¥784.4 billion
Interest-bearing debts: ¥788.3 billion

Relationships of trust andco-creation with various
stakeholders

Heart of value creation

Financial capitalCore competencies

Overseas manufacturing sites:
85 sites in 17 countries
Capital investment, etc.: ¥100.1 billion

Medium-termManagement Plan
Management targets
for FY2022–2024• Consolidated net sales of
2.5 trillion yen or more

Oji Forests (conservation forests):603,000 ha (148,000 ha)
Rate of forest certificationacquisition: 96%(Japan: 100%, overseas: 94%)

Synergies created by
global network

What the Oji Group Aims forManagement Capital

Environmental Vision
2050

EnvironmentP25-34

P83-102

Compliance

SafetyP72-73

P99-100• Net-zero carbon• Harmony with nature andsociety

The Oji Group Integrated Report 2023

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What the Oji Group Aims for

Message from the President
On the 150th Anniversary of Oji’s
Foundation“Growing Forests,
Utilizing Forests”
We Will Continue Our Untiring
Challenge for the Next 150 years.
Over the past 150 years, the Oji Group has traveled a path of repeated innovation to meet the needsof the times. Moving forward, we will strive to develop our business rooted in forest resources as we
continue with our challenge of realizing a brighter future filled with hope.

Representative Director of the Board, President andGroup CEO, Oji Holdings Corporation

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The Oji Group Integrated Report 2023

Hiroyuki Isono

What the Oji Group Aims for

The Oji Group has traveled a long road since Eiichi Shibusawa advocated the establishment of Shoshi Kaisha
based on his belief that domestic production of modern
paper was necessary for the development of Japan's
cultural progress, in February 1873. In February this year,
we turned 150 years old. A comparison of our early years
with today shows the great progress that we havemade in those 1 5 0 years. Annual production has increased about 50,000-fold, from approximately 200 tons
in 1876 to around 10 million tons (including productionof pulp for sale), and we now have some 37,000 employees, which is about 1 0 0 times more than the 3 7 4 ofthose early days. These achievements are, I believe, thefruit of the support and cooperation we have received
over those many years from our stakeholders. They arealso due to the tremendous efforts of our predecessors,which cannot be adequately described in words.
The Oji Group of today owes its very existence to theway in which Eiichi Shibusawa overcame the hardship of
those initial years and carried through on his determination. In his memoirs, Shibusawa described the complications and struggles they faced in getting the business up
and running after the equipment had been installed andthe construction of the mill had been completed in June
1875.
“When we attempted to make paper, the machines would
move, but sheets were keep breaking. Hardly any paper
was produced. A few months later, in August or September, we were finally able to produce paper continuously,
but that paper was thick and coarse, and the company’s
losses snowballed. I have no doubt that anyone who witnessed that state of affairs would have thought that there
could be no hope for the company’s prospects. However, ... though the business may have been small, we were
almost the first company to start up a manufacturingbusiness in Japan by importing machinery and even employing technicians from overseas. If, by some misfortune, this company were to fail, ... it would surely deal amajor blow to the future advancement of Japan’s manufacturing industry. If, just as Japan was importing European culture and attempting to start up commerce andmanufacturing in a significant way, Shoshi Kaisha, tasked
as the pioneer of that movement, were to falter, it would
be many years before Japan would venture into the manufacture of machinery. No matter the anguish and complications, there was no way that we could stop the business once it had been announced and underway. I was
not willing to give up partway through the job that I had
set my heart on achieving. I wanted to carry through, nomatter what. Even as the losses accumulated before oureyes, we still had machinery. We also had raw materials.
Our product was undoubtedly one for which demand

The Oji Group Integrated Report 2023

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What the Oji Group Aims for

Message from the President

To give an overview of the current state of the Oji Group,
I have already mentioned our production volumes andthe size of our workforce, but it is not only in terms ofscale that we have expanded. The nature of our businessand the regions in which we operate have also changed
and expanded greatly with the times. The nature of our
Net sales¥1,706.6 billion(of which, overseas net sales:37.6%)

Operating profit¥84.8 billion

Number of employees

37,845(of which, overseas employees:21,653)

Number of consolidated
subsidiaries

196(of which, overseas companies:104)

business began with the Printing and Communications
Media Business, which includes paper for books andnewspaper. Today, we have expanded into the Household and Industrial Materials Businesses, which includes
packaging materials, household paper, and disposable
diapers, the Functional Materials Business, which includes specialty papers, thermal paper, adhesive products, and film, and the Forest Resources and Environment Marketing Business, which includes themaintenance and management of our forest plantations
and the manufacture and sale of pulp and renewable energy. In the years ahead, we will continue to apply thecore forestation and paper manufacturing technologies
that we have cultivated over many years to the creationof new value that will solve social issues. Today, supporting the lives of our customers all over the world and addressing environmental issues of a global scale have become major themes for the Group. In terms of the regionsin which we operate, our major manufacturing sites are
now found in 17 countries around the world, and over halfof our total workforce are of nationalities other than Japanese. Most recently, overseas companies that we havewelcomed into the Oji Group include the AdampakGroup, which prints and converts advanced-function labels in Southeast Asia and China, in September 2 0 2 2,
and IPI S.r.l., which manufactures and sells processed
paper for aseptic liquid packaging cartons and fillingmachines in Italy, in May 2023. We have great expectations of the outstanding sales management methods of
the Adampak Group. IPI S.r.l. brings to the Oji Group asales network that spans not only Europe but also Africa
and Latin America. Our 150 year history is a history ofadaptation and transformation. There are many things
that we can learn from our new members and manythings that their joining us will make possible. For thisreason, we will actively strive for interaction among ourvarious businesses, both in Japan and overseas, to elevate the comprehensive capabilities of the Oji Group as amore global enterprise.

Toward the Next 150 Years—
Long-term Vision
In discussing our steps toward our next 150 years, wewill consider how we can create social, environmental,
and economic value to accomplish a further leap forward.
It will not be enough to continue activities that are merely
an extension of what we are doing today. Last year, weformulated our Long-term Vision for looking to the futureand demonstrating “true value” as a company.
The Oji Group’s corporate slogan of “Beyond theBoundaries” expresses our strong commitment to go
beyond the boundaries of business domains, countries,
and the respective capabilities of individual employees
to contribute to the future, society, and the world as atruly global company. With this approach, we will aim
toward the three directions of “Contribution to the Future
and the World,” “Harmony with Nature and Society,” and“Creation of Innovative Value” declared in our Management

Fig. 1“Beyond the Boundaries”

Contribution to the Future and the World“Beyond the Boundaries”

Creation of Innovative Value

Current
state“Beyond the Boundaries”

Harmony with Nature and Society

Philosophy (Fig.1). To put this another way, throughour active global expansion, we will support the lives ofour stakeholders around the world, develop initiatives
to contribute to a sustainable society, and continue ourinnovative manufacturing to meet the latent and manifest
needs of the times. Our Long-term Vision for FY2030 is aclear expression of our concrete strategies to achieve this.

What the Oji Group Aims forcontinued to grow day by day. And so, collecting ourminds and dedicating ourselves to our goal, in October,we were able to produce white paper, and by December,
we were even able to attempt making newsprint. Then,on December 16,1875, we proceeded to hold a ceremony
to mark the opening of our business.”
The importance of not quitting easily and of “carrying
through” with strong determination is something that wewill continue to pass on.

In the Long-term Vision, we have set a central theme of“Toward Further Growth and Evolution.” To use the analogy of a living creature, “growth” refers to new life growing and becoming larger, but beyond that lies deterioration and, eventually, the end of that life. It is the same forcompanies. The business environment is constantly
changing, and there is no market that will continue to expand forever. If a company continues to chase growth in
the same business category, it will eventually reach its
limit. That is where “evolution” comes in. Just as living
creatures evolve into new species and adapt to the environment through gradual change over many generations,companies must also change and improve their capabilities themselves and advance into new fields to suit thetimes. Without “evolution,” there will be no “next 150
years” for the Oji Group.

Fig. 2Contribution to the Future and the World
Profitability Improvement (2)Promote Restructuring

Expand businesses into existingand new markets and further
enhance the value“ Expand”Creation of Innovative Value“ Encourage”

Product Development
Encourage and develop new
wood-derived products andfurther enhance the value

Harmony with Nature and Society
Profitability Improvement (1)Enhance existing
businesses andtheir value

Environmental Initiatives“ Enhance”“ Execute”

Execute measures to addressenvironmental issues andfurther enhance the value

Cope with Mid- to Long-Term Social Issues
13

The Oji Group Integrated Report 2023

The Oji Group Integrated Report 2023

14

What the Oji Group Aims for

Message from the President

First, in the printing and communications paper business,
unfortunately, paper’s function of “communicating information” is being replaced by digital media, which meansa fall in demand and a further contraction of the market in
the years ahead. To build business foundations that arecapable of withstanding the turbulent changes in the demand structure, in addition to cost reductions, we will reorganize our production facilities making full use of existing infrastructure, and at the same time, we will lookclosely at the circumstances and explore further responses. In the corrugated container business, we are proceeding with the expansion of facilities and sales in thegreater Tokyo area, where demand is particularly strong,
and in Southeast Asian countries, where demand is
growing in proportion with their economic growth. In linewith this, we will work steadily to distinguish ourselvesfrom our competitors by building integrated materials andprocessing systems and leveraging inter-site synergies toraise our competitiveness in terms of quality, service, andcost, as well as by offering environmentally-friendly products rooted in the individual locations. The same applies
to the Functional Materials Business. In South America
and Europe, to accommodate brisk demand, we are undertaking construction work to expand production ofthermal paper. At the same time, in Southeast Asia, we
are working to strengthen our competitiveness, including
Fig. 3

Profitability Improvement (2)Product Development

Promote Restructuring“ Expand”“ Encourage”

The second basic policy, “Initiatives for Environmental
Issues,” involves increasing the value of the Oji Group by
executing measures to address environmental issues andcontributing to sustainability. We will execute the initiatives
for our Environmental Vision 2050 formulated in September
2020 with the aim of achieving net-zero carbon by 2050,
as well as our Environmental Action Program 2030 which
serve as milestones toward the realization of that vision.
In the Environmental Action Program 2030, to reducegreenhouse gas emissions by 70% or more (comparedwith FY2018) by FY2030 as a response to climate change
issues, we are undertaking a review of our energy mix,
including shutting down coal-fired boilers, and expanding
the net increment in carbon stocks by expanding the landarea of our overseas forest plantations.
The third basic policy, “Initiatives for Product Development,” involves increasing value by encouraging anddeveloping new products and materials. It means leveraging our core forestation and paper manufacturing technologies and our renewable forest resources to develop
the Oji Group’s next core products and materials. This isa key element of our advance into new domains in ourgoal of “Toward Further Growth and Evolution,” and wewill pursue it without delay.

Profitability Improvement (1)“ Enhance”†

State after adaptation toenvironmental issues is complete

Cope with Mid- to Long-Term Social Issues

15in the thermal paper and printing and converting in label
businesses. The entry of the Adampak Group into the Oji
Group is one example of this. We will strengthen downstream businesses and their cooperation between upstream businesses and establish systems that will enable
us to correctly identify customers’ needs and immediately
deliver what they need. In the household paper business,
we will strive for the further improvement of value of “nepia” products. In addition to being the first in our industry
to obtain FSCTM certificates, we have changed from film
to paper for packaging and adopted biomass film andink. In this way, environmental response will become akey theme in this business. In order to act in environmentally-friendly ways that also involve our customers, we will
strive for the popularization and penetration of the kind ofenvironmental products that only we can offer. In the pulp
business, sales volumes are limited by the production capacity of our mills, and prices change according to market conditions. For these reasons, we will pursue cost reductions and production efficiency improvements, which
will be key to increasing our cost competitiveness. Securing forest plantation sites and their sound maintenanceand management, as well as securing forest resources atappropriate costs in the pulp business and other businesses will become extremely important going forward.

The Oji Group Integrated Report 2023

Even if we achieve a society that has adapted to environmental issues in 20 to 30 years’ time as a result of our“Initiatives for Environmental Issues,” I believe that we will
always need to enhance our businesses, that is, reduce
costs and improve productivity, and expand them, that is,

What the Oji Group Aims for

Under this theme of “Toward Further Growth and Evolution,” we will promote our three basic policies of “Initiatives for Profitability Improvement,” “Initiatives for Environmental Issues,” and “Initiatives for Product Development.”
The matrix below indicates the relationship between thethree elements of the Management Philosophy and thesethree basic policies (Fig.2). The first basic policy, “Initiatives for Profitability Improvement,” has two parts: increasing value by enhancing businesses and increasing
value by expanding businesses. This refers to strengthening our profit base by reducing costs and improving
productivity in our existing businesses, while venturing
into new markets by improving products and services,
expanding capacity, and undertaking M&As, to expand
sales and market share. I will now give an overview ofsome specific businesses.

advance into new markets and expand sales, including
the continued development of new products and materials (Fig.3). So, where will we be once we have enhanced
and expanded our businesses rooted in forest resources? I believe that this question has much in common with
the question of what purpose society seeks from the Oji
Group. Last year, we announced our Purpose, codifying
it as “Grow and manage the sustainable forest, develop
and deliver the products from renewable forest, and Oji
will bring this world a brighter future filled with hope.” Aspart of our 150th anniversary commemorations, we helda conversation with Mr. Ken Shibusawa , the 5th grandson of Eiichi Shibusawa. At that time, an employee posed
the question, “If Eiichi Shibusawa were alive today, whatkind of dream do you think he would talk about?” If Eiichi
Shibusawa, who moved the times forward by advocating
the establishment of Shoshi Kaisha 150 years ago for theadvancement of Japan’s cultural progress, were alive today, I feel that he would talk about wanting to move thetimes forward to bring the world a brighter future filledwith hope. How will the Oji Group face up to global
warming and environment issues, and how will we utilize
our renewable forest resources to contribute to the building of a sustainable society? I feel as though Eiichi Shibu-

sawa would be asking us about our determination toachieve those things.

Toward the Next 150 Years—
Core Competencies and Necessary
Elements
I believe that the driver for the Oji Group’s value creation
will be our core competencies centered on our sustainable business model and forest resources that we havecultivated over our 150 year history, namely sustainable
forest management, utilization of renewable resources,development of new materials derived from wood, application of fundamental paper manufacturing technologies,
and global network and sales. In addition, the following
five elements will be crucial to promoting our businesses
toward the next 150 years. They are funds, human resources and education, digitalization, information andcommunication, and co-creation with outside parties.
First, regarding funds, without sufficient funds, we will not
be able to make the necessary investments. In our
FY2022–2024 Medium-term Management Plan, with the
The Oji Group Integrated Report 2023

16

What the Oji Group Aims for

Message from the President

Human resources and education are also extremely important. The source of our value creation is always ourpeople, and we must work hard on initiatives that encourage them to demonstrate diversity and individuality andthat will cultivate and secure appropriate capabilities to suit
the business environment. In Japan, corporate spendingon skills development as a percentage of GDP is extremely
low compared with other countries. While some may believe that on-the-job training (OJT) is sufficient, OJT functions effectively only when the market is growing constantly and the company is able to continue in the same
industry. In fact, there are very few markets that grow organically, and such expansion has become more staggered. For this reason, the expansion of skills development
opportunities in line with the changes in the times, such as
sales, technology, languages, and DX, is essential.
The next is digitalization. I must admit that, until quite recently, I believed that the extent to which digital technologies would be of use in our industry was limited. However, when we look at the recent advances in generative AI
that are changing the world with astonishing momentum,
it is clear that the possibilities of DX have expanded significantly. A gap will naturally grow between those companies that do (or can) take advantage of those possibilities and those that do not (or cannot). What kinds ofchanges will our Group be able to achieve, including inensuring safety, improving production and operational efficiency, and the use of digital technologies in PR activities? The time has come in which we must give serious
thought to this question, starting by changing our awareness and trying out different things.
Meanwhile, people may ask if such progress in digitalization will lead to the swift exchange of useful information,
but this will not necessarily be the case. In terms of information and communication, individual awareness and organizational culture will be crucial. Whether or not we areable to properly manage information, including market
trends and production and sales information, and usethat information in our business operations will be a significant factor that will influence the speed of our corporate growth and our ability to evolve. The appropriate flow
within the organization of information that has immediacy
and certainty. The development of a free and open workplace culture. We will thoroughly instill an awareness ofthese two imperatives in all officers and employees, further promote effective sharing of information to demon-

17

The Oji Group Integrated Report 2023

strate synergies within the individual business companies
and among the Oji Group’s various locations in Japanand overseas, and enhance our comprehensive
strengths.
The fifth necessary element is co-creation with outside
parties. Today is not an age in which we can do everything we want to do by ourselves. To break free of thecurrent circumstances and stride purposefully in the direction of “evolution,” we will promote co-creation withoutside parties that have different specializations andcharacteristics from our own. To bring this world a brighter future filled with hope, we will steadily improve these
five elements, in addition to our core competencies andwork toward our Long-term Vision.

Our Top Priorities of Compliance,
Safety, and Environment

advance and promote cultural progress, and its impact
on general society is immense. However, while there areseveral large businesses among the various manufacturing industries that have developed in recent years, thesize of paper manufacturing companies must be described as small in comparison. Nevertheless, among theindustries described as Japanese manufacturers, I believe that it is none other than Oji Paper that should be
described as the origin of the machine industry in Japan.
To give an analogy, in the spring, there are hundreds ofdifferent flowers that bloom in competition with each other. And as truly bright and beautiful they all may be, theharbinger of all those flowers is the humble plum blossom. The plum blossom may not be the most beautiful
flower, but even amid the cold of early spring, it starts tobloom undaunted, and even the cherry blossom and thetree peony are no match for its wonderful fragrance. It is
an incontestable fact that Oji Paper may occupy that po-sition of the plum blossom among those flowers. I pray inearnest that, as the pioneer of the manufacturing industry
in Japan, as the plum blossom that is the harbinger ofthe spring flowers, it will continue, in both name anddeed, to prosper as an essential business for many years
to come.”
These are the final, concluding words of his memoirs.
And so, carrying on those intentions, we have marked
our 1 5 0th anniversary. Just like the plum blossoms thatbloom first as the harsh winter recedes and the signs ofspring appear, we will devote our efforts to ensure that
we will prosper for the next 150 years as a company thatis needed and that continues to create new value. I ask
from the heart that all of our stakeholders will continue toextend their support to the Oji Group.

What the Oji Group Aims forassumption that we will maintain a net D/E ratio of 0.7
times and anticipating three-year cash flows of 600.0 billion yen, we formulated a plan to allocate 400.0 billion
yen to strategic investments, excluding dividends andupkeep CAPEX. We must constantly think about the development of a profit base that will continue to generatecash flows and about the most effective use of cash
flows.

I will now discuss the three matters of compliance, safety,
and environment, which are the foundations of our business continuity and should be seen as the absolute priorities of the Oji Group for the achievement of further
growth and evolution. Firstly, in regard to compliance, if
we are to be needed and recognized by society, it is essential that every person who belongs to the Oji Groupaddress the demands of society with sincerity. We willthoroughly instill in all our officers and employees soundcommon sense, the sensibilities to immorality, and thecourage to take action, and we will strongly encourage
free and open exchanges of opinions. Regarding safety,
we recognized that the protection of the lives and physical and mental health of the valued people who work in
the Oji Group is the duty of every person in a management and supervisory position, including our officers. We
will devote our utmost efforts to instilling an awareness ofstrict compliance with the rules and to developing systems for the realization of zero accidents and injuries. Regarding the environment, we will comply with laws andregulations and strengthen our sustainable business operations rooted in forest resources without causing environmental accidents. Compliance, safety, and environment influence the very existence of the Oji Group. No
matter how many billions of yen in profit we may generate, if we are unable to uphold these three priorities, wewill have no worth as a corporation. We will share thatawareness among the entire Group.

So the Plum Blossoms Will Continue
to Bloom
Finally, I would like to present the “Final Thoughts” section of Eiichi Shibusawa’s memoirs of 1914, in which hetalks about the paper manufacturing business.
“The paper manufacturing business is a business that will
The Oji Group Integrated Report 2023

18

What the Oji Group Aims forLong-term Vision & Medium-term Management Plan

Basic Policy of “Toward Further Growth and Evolution” to Achieve FY2030 Targets

Business Strategy

Long-term Vision
The course we should take to realize our long-term goals
Basic Policy of “Toward Further Growth and Evolution”
1. Initiatives for Environmental Issues—Sustainability—
2. Initiatives for Profitability Improvement—Profitability—
3. Initiatives for Product Development—Green Innovation—

Management
Philosophy
PurposeFY2022–2024 Medium-termManagement Plan

Environmental Action Program 2030
Action on Climate Change
Reduce greenhouse gas (GHG)
emissions by at least 70% comparedto FY2018

FY2030 targets

Functional Materials Business
Consolidated Net Sales of 2.5 Trillion Yen or More
Based on our FY2021 results, we will strive to increase our consolidated net sales target for FY2030 by over 1 trillion yen to 2.5
trillion yen or more.
Amid an anticipated contraction in demand for a portion of our products, we will improve our profit ratio through such means as cost reductions and operational improvements. However, our goals go beyond
that. In order to achieve further growth and evolution as the Group, we
will expand existing promising businesses through strategic investment and M&As. At the same time, we will focus our efforts on developing, commercializing, and expanding the sale of new and eco-friendly
products. Further, through this process, we will aim to transform ourportfolio into one which meets the demands of the times.

Sustainable forest management(forest recycling)
Resource recycling(paper and water recycling)https://ojiholdings.disclosure.site/en/themes/150/

Increase from FY2021

The Oji Group Integrated Report 2023

* Good for the earth
Good things with
forests
Nepia with Oji forests

Autumn 2023 Revamped packaging to make environmental considerations more visible¥400.0 billion

Business Strategy
Actively develop high-function and eco-friendly products
Expand global sales of imaging media business and enhance competitivenessincluding printing and converting

We aim to expand profitability by expanding sales of thin capacitor films for electric vehicles
and other high-function and eco-friendly products; and by expanding our imaging media business, which is experiencing strong demand, through means such as construction to expand
production capacity.

Forest Resources and Environment Marketing Business

Aident Corporation in Malaysia, a subsidiary of Adampak
Group

Sales target for FY2030¥600.0 billion

Business Strategy
Expand & enhance pulp business as a “comprehensive pulp manufacturer”
Expand renewable energy and other energy businesses
Expand lumber processing businessthrough Development of new &eco-friendly products

Printing and Communications Media Businessthrough M&As

Business Strategy
Restructure production system and enhance competitiveness through collaboration
with other Group segments by maximizing the use of assets owned+ ¥300 bil.
+ ¥300 bil.

Pan Pac Mill (New Zealand)

Sales forecast for FY2030¥150.0 billion

through Strategic investments¥1.8 tril.

+ ¥400 bil.

¥1.7 tril.

We will strive for the optimum production system restructuring for the Group as a whole byassessing demand trends and continuing to implement thorough cost reduction and, at thesame time, by effectively utilizing owned assets such as pulp manufacturing facilities.

The #L-1 machine (for containerboard) at the Oji Paper
Tomakomai Mill¥1.5 tril.
FY2021 FY2022 FY2024

19*

Sales target for FY2030

In addition to expanding and strengthening our global pulp business, we will focus our efforts
on expanding other businesses which leverage forest resources such as our biomass power
generation and lumber processing businesses.

¥2.5 tril.

Challenge for zero environmental impact
Biodiversity conservation

Responsible raw materials procurement
and manufacturing
Expansion of products that contribute toa decarbonized society
Zero environmental accidents and zeroproduct liability accidents

Tochigi Plant, Oji Container

Changes in Consolidated Net Sales

Development of Trusting
Relationships with Our
Stakeholders

Abundant Forests
Creation and Resource
Recycling

Environmental Action Program 2030

Consideration for
Ecosystem¥1,250.0 billion

Within our Industrial Materials Business, demand for our corrugated container business remains robust. We aim to further expand and strengthen this business through M&As and newplant construction and, at the same time, by promoting restructuring of production systems
and the integration from base paper manufacturing to product processing. We will also be focusing our efforts on expanding our liquid packaging carton and filter businesses. In ourHousehold and Consumer Products Business, we will expand our market share of our domestic household paper business through enhancing our brand value, and expand andstrengthen our disposable diaper business overseas.

Consolidated net
sales of 2.5 trillion yen
or moreTargets We Aim to Achieve in FY2030
To Achieve Environmental Action Program 2030
In our Environmental Action Program 2030, we set a target of reducing our greenhouse gas (GHG) emissions by at least 70% in FY2030
compared to FY2018 levels, as a milestone for our target of net-zerocarbon in 2050 per our Environmental Vision 2050. By FY2030, weplan to invest 1 0 0.0 billion yen into the reduction of emissions and100.0 billion yen into increasing the net increment in carbon stocks
by forests, for a total investment of 200.0 billion yen.
In addition to realizing carbon neutrality, the Oji Group will also fully
engage in a wide range of initiatives as outlined in our Environmental
Action Program 2030.

Sales target for FY2030

Industrial Materials Business
Further expand & enhance packaging business in Southeast Asia, India & Oceania
Expand & enhance corrugated container business in Greater Tokyo area, Japan
Household and Consumer Products Business
Enhance branding & expand sales of household paper products in Japan
Expand & enhance overseas disposable diaper businessTo achieve
Environmental Action
Program 2030

P43 – 62

Initiatives for Profitability Improvement—Profitability—

Household and Industrial Materials Businesses
Long-term Vision

P25 – 34, 83 – 102

Initiatives for Environmental Issues—Sustainability—

What the Oji Group Aims for

The core of the Oji Group’s business is forests. The appropriate cultivation and management of forests not only produce renewable forest resources; they also help to enhance the multifunctional role of forests. In addition, at thesame time as supporting and enriching the lives of people around the world, we are also able to replace fossil resource-derived materials and products through products that utilize forest resources. We believe that our purpose isto leverage these characteristics to respond to such environmental issues as global warming and biodiversity conservation. Reflecting our Management Philosophy and Purpose, the Oji Group has formulated and is implementing
the Long-term Vision for 2030 and the FY2022–2024 Medium-term Management Plan as a roadmap for enhancing
corporate value, achieving sustainable growth amid societal changes, and realizing our long-term goals.

FY2030Initiatives for Product Development—Green Innovation—

P35 – 42The Oji Group Integrated Report 2023

20

What the Oji Group Aims forLong-term Vision & Medium-term Management Plan

Initiatives for Environmental Issues—Sustainability—

Overview of FY2022–2024 Medium-term Management Plan

Numerical Management Targets for FY2024
Consolidated operating profit

150.0 billion yen or more

Profit attributable toowners of parent

100.0 billion yen or more(Continue stable profit of 100.0 billion yen or more)

Overseas sales ratio

40%(With a target of 50% in the future)

Net D/E ratio

0.7 times maintained(End of March 2022: 0.7 times)

Key Initiatives
In response to the increasing importance of addressing
environmental issues, implement our Environmental Vision 2050
and Environmental Action Program 2030 action plans.
Make effective use of own facilities, promote further production
system restructuring.
Implement strategic investments and M&As, etc. in order to further
expand promising businesses in Japan and overseas businesses.
In addition to developing new materials and products, accelerate
rapid commercialization initiatives with regard to our green
innovation themes: “Development of new materials derived fromwood,” “challenge to the medical and healthcare field,” and“development of eco-friendly paper materials.”

Main FY2022 Results
June

Acquired forest plantation (Roundhill, New Zealand)
Acquired forest plantation (Shiranuka, Hokkaido)

AugustBuilt new Edogawa Warehouse at Oji Nepia, withelectricity supplied by solar power generation

September Acquired forest plantation (Invercargill, New Zealand)
Acquired forest plantation (Kuromatsunai, Hokkaido)
OctoberNovember Made PT Korintiga Hutani, a forestry company inDecemberStarted operation of biomass power plant in Tokushima Prefecture in a joint venture with ITOCHU ENEX

Main FY2023 Priority Measures †Timings of future measures are scheduled timings
Shut down coal-fired boiler at Oji F-Tex Ebetsu MillMay
September Start operation of solar power generation facility at
Tochigi Plant, Oji Container

Indonesia, a consolidated subsidiary

What the Oji Group Aims forIn the FY2022–2024 Medium-term Management Plan, we have set numerical management targets to serve as milestones on theway to achieving our Long-term Vision for 2030. Under the basic policy of “Toward Further Growth and Evolution,” we will steadily execute “Initiatives for Product Development,” “Initiatives for Profitability Improvement,” and “Initiatives for Environmental Issues” in a timely manner and strive for the enhancement of corporate value by achieving those numerical management targets.

Pick Up
Expansion of Forest Plantations in Japan and Overseas

Operation of Solar Power Generation Facilities

As one of our initiatives toward the achievement of the Environmental Action Program 2030, we are expanding our forest plantations in Japan andoverseas to increase the net increment in carbon stocks.

We continue to engage in the establishment of solar power generation
facilities and other measures to promote the use of renewable energy.

Solar panels at Edogawa Warehouse, Oji Nepia

FY2022 Results and FY2023 Priority Measures
Industrial Materials BusinessHousehold and Consumer Products Business
Functional Materials Business
Forest Resources and Environment Marketing Business
Printing and Communications Media BusinessResearch and development, others

Initiatives for Profitability Improvement—Profitability—
Main FY2022 Results

Main FY2023 Priority Measures †Timings of future measures are scheduled timings

AprilStarted operation of paperboard machine relocatedfrom Oji Materia’s Nayoro Mill to Oji Paper’s
Tomakomai MillMay

Acquire IPI, a company that operates liquid packaging
carton business in Italy

Shiranuka, Hokkaido

JulyStarted operation of nineth corrugated container
plant in Malaysia

July

Increase ultrathin OPP film machine at Oji F-Tex Shiga
Mill and start operation

Initiatives for Product Development—Green Innovation—

AugustStarted operation of sixth corrugated container
plant in Vietnam

September Acquired Adampak Group, a high-performancelabel printing and converting company withbusiness bases in Southeast Asia and China

January

Started operation of tenth corrugated container
plant in Malaysia

February

Relocated Oji Container’s Utsunomiya Plant andstarted operation as Tochigi Plant

in Vietnam
Start operation of filter production plant in Japan
Expand thermal paper production facilities in Germany

Pick Up
Business Expansion through Company Acquisitions and Plant Construction

As one of our key initiatives, we are proceeding with the expansion of ourbusiness through such means as strategic investments and M&As.

IPI Head Office in Italy

21

The Oji Group Integrated Report 2023

Main FY2022 Results

September Start operation of seventh corrugated container plant
January
January

Tenth corrugated container plant in Malaysia

Film Business: Expansion of Production Facilities

To meet the rapid expansion of demand for capacitor films for electricvehicles, we will expand our production facilities in 2023 and 2024.

New film machine building at Oji F-Tex Shiga MillPan Pac Roundhill on New Zealand’s North Island(plans to convert grazing land to forest plantation)

Main FY2023 Priority Measures †Timings of future measures are scheduled timings

April

Developed laminated paper using plant-derived
polylactic acid

May

Invest in venture capital fund specializing in materials
and scientific fields

May

Packaging material made with SILBIO BARRIER, apaper material with barrier properties, adopted forcoffee packaging by Nakabayashi

January

Start operation of bench plant for polymerization ofwood-derived lactic acid inside Edogawa Mill

July
OctoberDeveloped eco-friendly paper cup baseDecemberDeveloped eco-friendly anti-heat windshield film

February

Developed cellulose polymer pellets

Started sales of cell culture substrate, “CellArray”
Developed cellulose nanofiber and natural rubbercomposites

Pick Up
Development of Eco-Friendly Products

Demonstration Manufacturing of Wood-derived Plastics

Making full use of the technologies wehave built up over 150 years, we aredeveloping a wide variety of products
aimed at solutions to environmental
issues.

Aiming to popularize biomass plastics
derived from inedible materials, we will
demonstrate the manufacture of polylactic acid made with pulp.
Recyclable aqueous coated paper cup baseLaminated paper using plant-derived polylactic acidEco-friendly anti-heat windshield film

Wood-derived biomass plastic (polylactic acid)

The Oji Group Integrated Report 2023

22

What the Oji Group Aims forLong-term Vision & Medium-term Management Plan

Message from the Director in Charge of FinanceGroup Financial Strategies to Achieve
the Long-term Vision toward
the Realization of Our Purpose

Oji Holdings Corporation
Director of the Board,
Senior Executive Officer

Kazuhiko Kamada

Review of the First Year of the Medium-termManagement Plan and Future Strategies
Management Numbers
In FY2022, the first year of the FY2022–2024 Medium-term Management Plan, earnings fell due to the significant impact of cost
increases, such as soaring fuel and raw material prices, risingtransportation costs and rising commodity prices, as well as delays in passing those cost increases on to our product prices. In
addition, the net D/E ratio rose to 0.8 times because of the increase in working capital in response to those soaring fuel andraw material prices.
FY2022
Results

FY2023
Forecasts

FY2024
Targets

Consolidated operating
profit (¥billion)

84.8

100.0

150.0

Profit attributable toowners of parent (¥billion)

56.5

65.0

100.0

Overseas sales ratio

37.6%

33.0%

40.0%

0.8

0.7

0.7

FY2022–2024 Investment Plancrease in profits with consolidated operating profit of 100.0
billion yen and profit attributable to owners of parent of 65.0
billion yen through continuous cost reduction and steady realization of the effects of price adjustments in the domestic
business. In this second year of the Medium-term Management Plan, amid an unclear and uncertain global situation,
we aim to achieve our numerical management targets for
FY2024 by implementing, without delay, various measures
based on the basic policies of our Long-term Vision andMedium-term Management Plan, namely “Initiatives for Profitability Improvement,” “Initiatives for Environmental Issues,”
and “Initiatives for Product Development”.

In FY2023, the overseas business is facing a severe situation, with earnings plummeting due to the worldwide stagnation in movement of goods and the decline in the pulp
market. Nevertheless, we plan to achieve a year-on-year in-

Capital Allocation
In the Medium-term Management Plan, we plan to executestrategic investments worth 400.0 billion yen over three
years, while maintaining a net D/E ratio of 0.7 times. In
FY2022, although cash inflow fell short of initial expectations
due to the slump in earnings and increase in working capital, we made the necessary investments, including expansion of corrugated container production bases and installation of new film facilities in Japan, and the construction of
new corrugated container plants in Southeast Asia and expansion of forest plantations overseas. For the remaining

Consolidated Net Sales and Sales Composition by Business Segment

Operating Profit by Business Segment

Net D/E ratio¥ 150.0 billion
8.0

14.9%
15.2%
12.6% 14.4%

15.7%

18.0

40.9%

40.8%
38.6%

FY2022 Results¥1,706.6 billion
23¥ 84.8 billion
6.8

FY2023 Plan

¥1,800.0 billion

The Oji Group Integrated Report 2023

¥ 100.0 billion
6.0

63.5

21.0

13.9%

18.0
68.5

20.9% 10.9%
17.7%
11.9%
19.5%
12.1%

15.5

(1.2)
(4.8)

FY2022 Results
FY2024 Plan

1,800.0 billion yen or moresides of achieving our targets “the reduction of GHG emissions”
by improving energy efficiency and increasing our usage rate ofrenewable energy and “the increase in the net increment in carbon stocks by forests” by expanding our forest plantations,and we plan to invest 100.0 billion yen each into these two areas by FY2030, for a total investment of 200.0 billion yen.
We are also actively working to contribute to the reduction of
GHG emissions by other parties through the supply of renewable power, including biomass power generation and hydroelectric power generation.
To accelerate these efforts through the use of financing fromgreen bonds and green loans, we formulated a Green Financing Framework in January 2023.
Funds procured through green bonds and green loans will beallocated to investment in the following eligible green projects.

16.0

18.5

39.0

42.0

FY2023 Plan

FY2024 Plan

Household and Industrial Materials
Functional Materials
Forest Resources and Environment Marketing Business
Printing and Communications Media
Others

Project Category

Renewable Energy

Strategic investments
Sustainable Forest
Management

Install adult disposable diaper
machineInstall biomass power plants

Upkeep CAPEX¥ 150 billion

Construction to improve pulp
business profitability

Financial Strategies to Achieve Harmony with
Nature and SocietyGroup Financial Strategy in FY2023 and Beyond
Regarding the funds necessary for these investments based on
medium- to long-term strategies, while considering the balance
between self-financing and external procurement, where necessary, we will compare and consider various financing methods and schemes, including ESG bonds and other sustainablefinance, and procure the funds at the appropriate time.
It should be noted that the capital condition of the Oji
Group as a whole is being centrally managed by Oji Holdings. In line with our growing global expansion, demand forfunds from our overseas business companies is increasing.
We will engage in efficient, global fund management, allocating surplus funds generated by our overseas businesses to investment in new opportunities in their regions. We
will also conduct thorough funds management, including
reducing the balance of cash and deposits, in our efforts tofurther strengthen our financial governance.
Formulation of Green Financing Framework
The Oji Group has formulated an Environmental Vision 2050
and Environmental Action Program 2030 and has set targetsof achieving net-zero carbon in 2050 and, in the process, reducing greenhouse gas (GHG) emissions by 70% or more compared to FY2018 by 2030. We have positioned as the two

Biomass (power generation, heat supply)
Solar energy
Hydropower energy
Onshore wind energy

Build corrugated container plants
in Japan/overseas

Install film facilities for next
generation automobiles

Eligible Projects
Capital and operating expenditures relating to
the following renewable energy projects

Examples of Expanded
Investments to Growing
Segments¥ 400 billion

What the Oji Group Aims for

two years of the plan, we will also continue to accelerate investments in promising businesses, such as strengthening
and expanding existing businesses through the constructionof new facilities and plants and M&As, and creating corebusinesses through the development of new materials andproducts, in addition to environmental investments toachieve the Environmental Action Program 2030, while taking appropriate risks in consideration of the balance with financial soundness. In particular, we will focus on initiatives
for environmental issues and product development from along-term perspective, taking into account their future potential as well as being conscious of responses to social issues, even though short-term investment effects may not be
expected in some aspects.

Capital and operating expenditures relating
to acquisition and conservation of production forests and conservation forests†

Please refer to the Green Financing Framework page for details.
https://investor.ojiholdings.co.jp/en/ir/greenfinance.html

Involvement in Stakeholder Engagement
In accordance with the provisions of the Oji Group Corporate Code of Conduct, we will respect the diverse positions of our stakeholders and build relationships of trustwith them by pursuing our corporate activities based onawareness of our responsibilities as a corporate citizen andon high ethical principles appropriate for an organizationthat enjoys the trust of society.
In addition, as expressed in our Purpose that we formulated in May 2022, we will walk alongside all our stakeholders to bring this world a brighter future filled with hope.
For example, in addition to proactively sharing and disclosing
financial and non-financial information to shareholders and investors, we strive to achieve mutual understanding and build
relationships of trust through engagement and interviews.
We also maintain relationships with local communities
with an emphasis on trust, by providing appropriate information about our corporate activities, actively participatingin local activities such as groundwork, and striving to communicate with sincerity.
We will continue to build relationships of trust and walk alongside all our stakeholders going forward.
With regard to returns to shareholders, it is our fundamental policy to maintain stable dividends while at the same time
giving consideration to internal reserves in order to prepare
for future management measures. In FY2022, we have decided to pay an ordinary dividend of 16 yen per share , anincrease of 2 yen over the previous fiscal year. We will also
continue the well-received shareholder benefits program that
we introduced in FY2021.

The Oji Group Integrated Report 2023

24

— Sustainability —Initiatives for Environmental Issues

Mitigation and Adaptation to Climate Change

Basic Approach

The Oji Group established Environmental Charter in 1997 with the basic philosophy of rolling out its corporate activities in harmony withthe environment from a wide global perspective and contributing to the realization of a truly affluent, sustainable society. As our vision
toward mitigating climate change based on the Charter, in 2020 we formulated our Environmental Vision 2050 centered around thegoal of net-zero carbon, and we also set a milestone target to achieve that goal in our Environmental Action Program 2030 of reducing
our greenhouse gas (GHG) emissions by at least 70% compared to FY2018 levels. To achieve the target, we focus on reducing actual
emissions by reducing coal consumption and other emission sources, and increasing the net increment in carbon stocks by forests.

GHG Emissions Reduction Target and Emissions Results

GHG Emissions(kt-CO2e)10,000

Actual emissions (Scopes 1 + 2)
Net increment in carbon stocks by forests
Base year emissions (Scopes 1 + 2)

7,836

8,000

-16.5%
6,542

7,470

6,000

-20%
6,269

Net emissions

70%reduction
20%...... from reduction in actual emissions
50%...... from expanded net increment in carbon stocks by forests

4,000
2,000

2,351

0

-928

-2,000-50%-4,000-3,918Net
zero

FY2030targets

FY2050target-6,000

FY2022
results

FY2018 (base year)
resultRoadmap for GHG Emissions Reduction toward FY2030

Reduction in
actualemissionsCategory

Sub-category

Improve energy
efficiency

Maintain energy conservation

Increase thepercentage of
renewable energy
useReduce coal consumption
Install private solar powersystems, etc.

200

2.6%

1,007 12.9%
360

4.5%

2021

2022

3,918 50.0%
Plant fast-growing trees

Total

2024

2025

Shut down 1 boiler
To shut down 1 boiler
Technical research and test for changing the fuel composition

2026

2027

2028

2029

2030

Installation planningStudies and decisions on facility

Investment decisions

To shut down 6 boilers
Implementation
Installation

Install solar power systems on factory roofs and idle land
Reduction of 366 kt-CO2e (4.7%)
Overseas production forests 256,000 ha

Expand forest plantations

2023

Reduce energy consumption intensity by 1.0% or more per year, averaged over five years
Reduced by 3.8% on average between FY2018 and 2022

1,567 20.0%

Subtotal
Expansion of
net increment Invest in forest
in carbon conservation andstocks byplantation
forests

GHG
GHG
reduction reduction(kt-CO2e)rate

279,000 ha

400,000 ha

Assessment of business feasibility
Search for sites, land surveys
Consideration of acquisition, decision
KTH to be a consolidated subsidiary
Continue forest tree breeding (breed improvement) and elite trees’ plantation
Net increment in carbon stocks by forests: 928 kt-CO2e (11.8%)

Improve Energy Efficiency
We are working to improve our energy efficiency with a target
reduction in energy consumption intensity of at least 1% per
year, averaged over five years. Our mills and plants regularly
hold energy conservation meetings, attended by personnel
from energy management and manufacturing divisions to
discuss facility renovations and change of operation methods.
In FY2022, our domestic business companies made energy
conservation investments of 1.6 billion yen, thereby reducing
energy consumption corresponding to approximately 1%of the total energy consumption across the Group (crude oilconversion 47 thousand kL). Energy consumption intensity
was reduced by 3.8% per year on the average between
FY2018 and FY2022.

Increase the Percentage of Renewable Energy Use
The Oji Group has increased the percentage of renewableenergy use by utilizing black liquor (byproduct from its global
pulp production operations), wood residue, and bark as fuels.
Aiming to further improve energy efficiency, we are working
to reduce coal consumption while introducing solar power
generation systems.
In FY2022, the percentage of renewable energy use was
54.7%.
Reduce Coal Consumption
Of the 16 boilers in Japan that were burning coal as of FY2018,
we will disuse eight coal-only-fired boilers by FY2030 which do
not include backup boilers, and switch to gas fuels in a transition
phase toward decarbonization. We shut down a coal boiler at
Oji Materia Nayoro Mill in FY2021 as part of restructuring ofproduction systems, and also shut down a coal boiler at Oji
F-Tex Ebetsu Mill in FY2023. We are also considering reducing
coal consumption by changing the composition of fuels at coal
co-fired boilers. With the investment of about 100 billion yen,
we expect to reduce GHG emissions by about 1,000 kt-CO2e.
As achieving net-zero carbon emissions will require further
reduction of the use of fossil fuels including gas, in the future,
we will also consider using hydrogen, ammonia, and synthetic
methane (e-methane) as fuels.

Consumption (crude oil conversion)

Oji Holdings joined the GX League which began full-scale activities in May 2023.
The League is a forum for companies endeavoring for carbon neutrality to discussand carry out a transformation of the entire socio-economic systems (green
transformation) in cooperation with the Japanese Government, universities, andfinancial institutions.

Intensity per unit of net sales(1,000 kL oile)(kL oile / ¥ mil.)
7.00

7,000
6,000

5,822

5,660

5,000
4,000

3.75

3,000

3.75

5,219

5,400

6.00

5,440

5.00
4.00

3.84

3.19

3.67

3.00

2,000

2.00

1,000

1.00

0

0.00

2018
2019
2020
2021
2022 (FY)A star mark indicates that FY2022 figure for energy consumption has
been assured by KPMG AZSA Sustainability Co., Ltd.
For the calculation method, see page 111.

Changes in Fuel Composition Ratio
Fossil fuels
FY1980
FY1990FY2005
FY2022

Fuels made from waste

9.0%

53.0%
33.2%*

0.0%

Renewable fuels

1.0%
1.0%

71.0%
64.0%
12.1%

20.0%

40.0%

60.0%

28.0%
35.0%
38.0%
54.7%

80.0%

100.0%*Breakdown: Coal 11.4%, gas 8.7%, oil 7.3%, and purchased energy 5.8%

Installation of Solar Power Systems
We have been installing solar power systems on factory roofs
and idle land. A new warehouse built in August 2022 at Oji
Nepia Edogawa Factory uses electricity generated from solar
power. At Oji Container Tochigi Plant, a solar power generation
facility scheduled to start operation in September 2023 will
supply all of the power used by the plant during the daytime.

Solar power generation facility at Tochigi Plant, Oji Container

5,485 70.0%

TopicsParticipation in the GX League

Energy Consumption and Intensity

Initiatives for Environmental Issues — Sustainability —carbon stocks by forests.
In FY2022, the net GHG emissions were reduced by 16.5%
compared to the FY2018 levels, to 6,542 kt-CO2e.

Our goal is to reduce net emissions (actual emissions minus
net increment in carbon stocks) by at least 70% compared to
the FY2018 levels by FY2030. Of this, 20% is to be achievedby reducing actual emissions (total of Scope 1 and Scope 2),
and 50% is to be achieved by increasing the net increment in

Reducing Actual Emissions

We are working to improve energy efficiency and increase the percentage of renewable energy use to reduce GHG emissions throughour business activities. In FY2022, the actual GHG emissions were reduced by 4.7% compared to the FY2018 levels, to 7,470 ktCO2e.

Efforts for a Shift to Black Pellets FuelAt the boiler #6 of Oji Paper Tomakomai Mill, where waste-derived fuels (RPF, waste
tires, sludge, etc.) and coal are co-fired, a demonstration test for a shift from coal toblack pellets to reduce CO2 emissions is underway.
Three tests were conducted in FY2022 to collect basic data on the fuel such astransportability and combustibility. Now we will draw up a plan for a long-run testin view of stable regular operation, to identify issues and consider whether boiler
retrofitting is needed.
Black pellets (biomass-fuel wood pellets that aresemi-carbonized)

25

The Oji Group Integrated Report 2023

The Oji Group Integrated Report 2023

26

Initiatives for Environmental Issues— Sustainability —Mitigation and Adaptation to Climate Change

Expand Forest Plantations

TopicsRenewable Energy Power Generation BusinessWe sell electricity generated by biomass, hydropower, and solar power, indirectly contributing to the reduction of GHG emissions
by electricity consumers. In FY2022, we sold 1,103 GWh of electricity through the feed-in tariff (FIT) system for renewable energy
under which electric utilities purchase electricity from renewable energy at a fixed price. This is equivalent to a reduction of 480
kt-CO2e in electricity consumer emissions*.
* Calculated by multiplying the amount of electricity sold by the national average emission factor used to calculate emissions from electricity use under the
Mandatory Greenhouse Gas Accounting and Reporting System.

Expansion of Net Increment in Carbon Stocks by Forests
The Oji Group owns a total of 603,000 ha of forests(comprising 455,000 ha of production forests and 148,000 haof conservation forests) in Japan and overseas and practices
sustainable forest management taking into consideration theenvironment, society, and economy. The actual carbon stocksof these forests reached 122,450 kt-CO2 at the end of FY2022,
and the annual average net increment in carbon stocks byforests between FY2018 and FY2022 was 928 kt-CO2*1. The
amount of O2 released during the same period averaged 675 kt
per year*2. To achieve our Environmental Action Program 2030,
we aim to increase the net increment in carbon stocks by
Annual CO 2 absorption
with growth
The amount of carbon fixedby annual tree growth isconverted to CO2 (tons).

The net increment in carbon stocks by forests is calculatedby the gain-loss method (except for CENIBRA). CENIBRA
calculates the figure by the stock difference method which ismore accurate. CENIBRA has obtained assurance for the netincrement in carbon stocks by forests in FY2021 and FY2022
from a third party organization.

CO2 absorption with growth of trees

Carbon stocks in the trees felled

Felled during
the period

Stock Difference Method
The forest carbon stocks at the end of a period and the forest
carbon stocks at the beginning of the period are calculated andthe latter is subtracted from the former.
Forest carbon stocks at the beginning of the period

27

The Oji Group Integrated Report 2023

Artificial pollination of eucalyptus

Topics

Net increment incarbon stocks byforests:
928 kt-CO2/year

Forest carbon stocks : The CO2 stocks in Oji Forests as ofend of FY2022.
Net increment in carbon stocks by forests : The amount of
CO2 absorbed by the trees in Oji Forests minus the amount of
CO2 stored in the trees felled which are subtracted as emissions. Annual average between FY2018 and FY2022.

148,000ha

Production
forests
overseas279,000ha

Production
forestsin Japan

176,000ha

176,000ha

FY2022 results

FY2030 targets

Annual net incrementin carbon stocks by
Oji Forests928(kt-CO2/year)

400,000ha

4,000(kt-CO2/year)

more than 20 thousand trees obtained through artificial
pollination efforts. KTH, Indonesia, also continues to breed
forest trees. Planting high-quality tree species developedby each business increases the growth rate of forest trees,
facilitating carbon absorption and fixation.

*1 The figures of carbon stocks and net increment in carbon stocks exclude
those by CENIBRA’s forests planted by third parties and forests less than
two years after plantation.
*2 Calculation assuming that the same amount of O2 as CO2 absorbed (inmoles) is released.
Source: National Institute for Environmental Studies
https://www.nies.go.jp/kanko/news/25/25-3/25-3-04.html (Japanese only)

The amount of CO2 absorbed with growth of trees and theamount of carbon stocks by the trees felled during the period
are calculated and the latter is subtracted from the former.

Annual CO2
emissionswith felling

148,000ha
Conservation
forests

forests to 4,000 kt-CO2 by expanding plantations and planting
fast-growing trees.

Gain-loss Method

Forest carbon
stocks:122,450 kt-CO2

724,000ha

Initiatives for Environmental Issues — Sustainability —Woodchip carrier GT SELENE (built in 2022)

603,000ha

0

Plant Fast-growing Trees
In our overseas forest plantation business, we plant fastgrowing trees, including hardwoods such as eucalyptus andacacia as well as softwoods such as radiata pine. We harvest
and replant trees in a shorter cycle than general forestry
practices, for example, in a 6-to-10-year cycle for eucalyptus
and acacia and in an approximately 30-year cycle for radiatapine.
In addition, CENIBRA, Brazil, has long been breeding forest
trees. More than 10 types of high-quality varieties with highgrowth rate and pulp productivity were selected from among

Reducing Emissions from Wood Chip Carriers
Most of the wood chips used as raw material for paper are transported by shipfrom overseas plantations. With international efforts underway to reduce GHG
emissions from ships, Oji Group’s chip carriers now navigate at lower speeds toreduce GHG emissions by increasing fuel efficiency. In addition, newer vessels
built in recent years generate lower GHG emissions than conventional types,
contributing to GHG emissions reduction.

With KTH in Indonesia becoming a consolidated subsidiary in
FY2022, the net increment in carbon stocks by Oji Forests has
increased. We are considering acquiring more sites for forest
plantation primarily in South America, Oceania, and Southeast
Asia, where we have been operating our forest plantation
business. Our target is to expand the area of our overseas
production forests to 400,000 ha by FY2030, at an estimatedacquisition cost of about 100 billion yen.

Forest carbon stocks at the end of the period

Felled during
the period

Tree nursery, CENIBRA

Challenges for Japanese Forestry and Action to Mitigate Climate Changes

About two-thirds of Japan’s land area is covered by forests,of which plantations account for about 40%. Most of theseplantations were planted in the years after World War II to theAbsorption throughphotosynthesis
period of rapid economic growth. Now that half of these trees
are over 50 years old and are ready to be fully utilized (timeAbsorption/
to harvest).
emission
Because respiration relative to carbon absorption is greater
Emission from respiration
in a mature forest than in a young forest in the growing
phase, the net carbon absorption capacity decreases as a
Forest carbon stocks
plantation matures. For this reason, felling and replanting
trees in plantations is considered desirable not only forTree age
circular resource use, but also for mitigating climate change.
However, the rate of carbon fixation (approximately equal tocarbon dioxide absorption) by forests has been declining due to the gradual decrease of young forests in the growing phase, as
the circular use of forests has been impeded by such problems as declining number of forestry workers, the underdeveloped
forest road networks, and slow progress of replanting and cultivation due to falling timber prices.
In Oji Forests in Japan, we intend to fell and replant approximately 400 to 500 ha of plantations every year. We will continue towork to overcome challenges for forestry in cooperation with the government, local communities, and other companies to help
the circular use of plantations to increase carbon absorption.

The Oji Group Integrated Report 2023

28

Initiatives for Environmental Issues— Sustainability —Mitigation and Adaptation to Climate Change

TCFD

Strategy

The Oji Group announced its support for the Task Force on Climate-related Financial Disclosures (TCFD) in December 2020, and is

Climate-related risks and opportunities for us have been analyzed as shown below. We recognize the importance of transition risks due topolicies and regulations such as carbon taxes in the medium term toward 2030, physical risks such as changes in precipitation and weather patterns in the long term toward 2050, and opportunities for increased demand for low-carbon products in the medium to long term.
To meet challenges for transition to a decarbonized society, we have set our GHG emissions reduction targets and are working to reducecoal consumption, increase the net increment in carbon stocks by forests, and develop wood-derived products as a plastic alternative.
While continuing our present efforts, we believe, will limit the impact on our business from the transition to a decarbonized society, we willcontinue to analyze risks and strengthen our resilience*1.

working on climate-related information disclosure recommended by the TCFD.

The TCFD is a task force established by the Financial Stability Board (FSB) at the request of
G20 Finance Ministers and Central Bank Governors Meeting. In June 2017, the TCFD released its recommendations that encourage companies to disclose the financial implicationsof climate-related risks and opportunities to help investors make appropriate investment decisions.

Sustainability Promotion Structure
Board of Directors
Development
andsupervision

Sustainability Committee

Key issues
discussion Discussion
andandreporting reporting

Group Management Meeting
Development
andsupervision

Discussion andreporting

Chairman : Representative Director of the Board,
President (Group CEO)
Committee : Director of the Board, Officer responsible
for Corporate Sustainability Div.
Director of the Board, Officer responsible
for Corporate Governance Div.
Directors of the Board, COMPANY
President
Directors of the Board appointed byGroup CEO
Secretariat : Corporate Sustainability Dept.

Corporate Sustainability Div.
Corporate
Governance Div.

Innovation
Promotion Div.

GroupTechnology Div.

Oji Management Office Human Resources Div., Financial Div., Corporate
Planning Div., Oji Business Center, and Oji Green Resources

Risk Management
The Corporate Sustainability Division examines risks on a Group wide basis with assistance from external experts, and the Sustainability
Committee analyzes them while discussing their importance and priority. Impacts on our business, strategy, and finances are assessed
quantitatively and qualitatively, using scenarios for 1.5°C (2°C) and 4°C for the medium term (2030) and the long term (2050)*2.
The Corporate Sustainability Division is in charge of overall management of responses to climate-related risks based on the strategy
across the Group, and the Sustainability Committee manages the progress. Specifically, for the reduction of GHG emissions, we haveorganized a project team and are working to reduce coal consumption and expand the net increment in carbon stocks by forests.
Furthermore, climate-related risks are referred for discussion and reported to the Group Management Meeting depending on theimportance, and integrated into company-wide risk management.
*2 Transition risks were analyzed based on two scenarios: IEA’s 2°C Scenario (IEA 2DS) showing a pathway to possibly limit the warming to 2°C, and the Net
Zero Emissions by 2050 Scenario (NZE 2050) to achieve net zero CO2 emissions by 2050. Physical risks were analyzed based on the RCP1.9, RCP2.6,
and RCP8.5 scenarios. In RCP8.5, the average global temperature is projected to rise by more than 4°C and natural disasters are expected to become
more frequent.

Indicators and Targets
We have set the following targets based on the 1.5°C target in the Paris Agreement. The carbon price of 140 USD/t-CO2 (2030 level indeveloped countries) from the Net Zero Emissions (NZE) scenario of the International Energy Agency (IEA) is used as the internal carbon
pricing (ICP) for risk analysis and evaluation items for investment decisions.

Scopes 1 + 2

COMPANY

70% reduction by FY2030 andnet zero by FY2050 (including the net

16.5% down Reduction in actual emissions
4.7%(comparedNet
incrementincarbonstocksbyforests
11.8%
to FY2018)

increment in carbon stocks by forests)

Group companies

Climate-related Risks, Opportunities, Strategies, and Responses
Impact on our business
1.5°C (2°C)
4°C
scenario
scenario
2030 2050 2030 2050

Scope 3

Reduction of GHG emissions throughcollaboration with suppliers

Coalconsumption

Zero coal consumption by FY2050

FY2022
results

We conducted a fact-finding survey of GHG emissions
in a supplier sustainability survey
17.1% down (compared to FY2018)

Driver(Factor causing an impact on
our business)

Awareness of business environment

Fluctuation of fossil fuel-derived energy prices

Increase in costs related to procurement using fossil fuel-derived energy andelectricity due to changing energy mix

Small

Tightened CO2 emissions regulations

Increase in energy consumption and credit operating costs due to theintroduction of carbon tax and tightening of regulations on emissions trading

Large* Small* Medium* Small*Pursue thorough-going energy conservation and efficient operation of in-house power generation facilities to reduce fossil fuel consumption andelectricity purchase to optimize overall energy costs
Enhance the operation of renewable energy sources such as hydro and biomass energy toward net zero carbon emissions in FY2050

Increasing stakeholders’ interest in low-carbon
products and services

Increase in boycott activities toward products and services created using energy derived
from fossil fuels due to increased awareness of decarbonization among consumers

Small

Small

Convert to renewable energy and other fuels that emit less CO2, and enhance energy conservation measures
Further promote resource-circulation, environmentally friendly business initiatives such as forest recycling and recovered paper recycling

Negative feedback from stakeholders

Decline in demand for paper products because of the impression that
unnecessary tree felling facilitates global warming
Medium Medium Small
Lower evaluation and difficulty in obtaining financing due to a failure to respondto investors’ request

Small

Continuously disseminate information on the status of sustainable forest management initiatives to stakeholders
Promote the acquisition of forest certification, announcement of procurement policies, such as no illegal logging, and ensuring traceability of suppliers
Implement environmental education to communicate environmentally-friendly business activities in collaboration with environmental NGOs, etc.
Be registered as Type I or Type II Registered Wood-related Business Entity as defined in the Clean Wood Act
Conduct due diligence to prove the legality and verify the legality in connection with the procurement of wood raw materials and biomass fuels

Acute

Increasing severity of extreme weather events

Business stagnation such as facilities affected by and supply chain disruptions
caused by a large scale natural disaster

Small

Small

Small

Small

Formulate and regularly review a BCP, and enhance BCM
Keep abreast of and monitor the status of key raw materials
Enhance our relationship with suppliers, and stabilize procurement by diversifying suppliers

Chronic

Changes in precipitation and weather patterns,
and rising average temperatures

Increase in procurement costs primarily as a result of deterioration of growth conditions fortrees, key raw materials for our products

Small

Small

Large

Large

Enhance stable procurement through procurement from multiple sources in North America, South America, Oceania, etc.
Expand and promote effective utilization of company-owned forests
Conduct survey and research on impacts of temperature and precipitation on growth of trees, and select tree species suitable to the area

Resource
efficiency

Effective resource utilization
Reduction in water use and consumption

Increase in demand for advanced water treatment technology and water
management due to flooding, drought, precipitation fluctuations, and higher
demand for clean water in water stress areas

Small

Small Medium Medium

Type

Transition risks

Policies,
laws andregulations
Markets

Reputation

Physical risks
Opportunities

Energy sources Use of low emission sources of energy
Products andservices

Markets

Small

Small

Small

Small

Small

Increase in demand for renewable energy toward realization of a decarbonized society

Small Medium Small

Changes in consumer preferences
Development of new products and service
through R&D and innovation

Increase in demand for low-carbon and environmentally-friendly products due
to increased awareness of decarbonization and environment

Large* Large* Large* Large*

Use of incentives

Expansion of support for forest preservation activities under the forest usage and forestry
promotion policy
Possibility that carbon credit trading associated with forest absorption after 2050 will
increase the value of company-owned forests, and that requests for forest management/
assistance in management (providing know how) may increase

Small Medium Small

Small

Small

Initiatives for Environmental Issues — Sustainability —Governance
Recognizing efforts for sustainability including addressing climate change issues as one of the important management
challenges, the Oji Group established the Sustainability Committee and the Corporate Sustainability Division in April 2022.
The Sustainability Committee, chaired by the Representative
Director of the Board, President of Oji Holdings Corporation(Group CEO) and consisting of Directors of Oji Holdings Corporation (including Presidents of all COMPANIES), discusses
the Group’s risks associated with sustainability and measuresagainst those risks biannually. Matters discussed at the Committee are referred for discussion and reported to the GroupManagement Meeting depending on the importance, and after
deliberation by the Meeting, the Board of Directors makes adecision on execution of matters. In FY2022, the Group CEO
appointed a female Independent Outside Director as a newmember of the Committee.
The Corporate Sustainability Division carries forward mattersdetermined by the Sustainability Committee as a division
which oversees and manages the Group’s efforts for sustainability.

*1 The concept of climate resilience involves organizations developing adaptive capacity to respond to climate change to better manage the associated risks
and seize opportunities, including the ability to respond to transition risks and physical risks. (Source: TCFD recommendations)

Strategies and countermeasures

Investment toward Decarbonization
Investment in connection with coal reduction

Further expand the water treatment business primarily by promoting the expanded service for the production of water for daily use
Propose innovative technology leading to the effective utilization of water resources
Promote the power generation business such as wind power generation and micro hydroelectric power generation
Enhance the alternate use of biomass plastics made from biomass and the development of paper materials as an alternative to plastic packaging,and expand sales opportunities

Plan and implement the management of company-owned forests in line with national and local governments policies
Maintain and improve productivity of planted trees by conducting research and technology development tailored to the relevant areas

Approx. 100 billion yen
Investment in connection with acquisition offorest plantations

Approx. 100 billion yen
Financial Impact of Climate-related Risks
and Opportunities (2030)
Example of opportunities
Green innovation
Increase in sales from the environmentallyfriendly business300 billion yen
Example of risks
Burden of carbon tax

60.6 billion yen*
* Calculated by multiplying CO 2 emissions
from fossil fuel use by the carbon price* Impact amount Small: less than 10 billion yen Medium: not less than 10 billion yen but less than 50 billion yen Large: not less than 50 billion yen
Impact levels without asterisk mark (*) represent qualitative assessment.

29

The Oji Group Integrated Report 2023

The Oji Group Integrated Report 2023

30

Initiatives for Environmental Issues— Sustainability —Sustainable Forest Management and Biodiversity Conservation

Sustainable Forest Management
Basic Approach

Renewable Forest Resources

The appropriate cultivation and management of forests not only produces renewable forest resources; it also helps to enhance themulti-faceted functions of forests, including absorbing and fixing CO2, conserving biodiversity, cultivating water resources, and preserving soil. To meet such environmental challenges as dealing with global warming and conserving biodiversity, our purpose is to
fully leverage the functions of forests that are the precious assets of the Oji Group in pursuing our business activities. We believe that
continuing to “grow forests and utilize forests” will produce exceedingly important value, both for the environment and for society.

Forests are a renewable resource that can be planted, grown,
harvested, and re-planted. To make cascading use of trees(thorough use of every part of trees), the Oji Group utilizes the

Planting

Overview of the Oji Group’s Forests (Oji Forests)

Woodchips
Biomass fuels

Weeding

New ZealandIndonesia
Vietnam
Other (3 companies in Vietnam and Australia)
Overseas subtotal
Company-owned forests in Japan
Group total

Conservation Forests in Japan by Function

Businesscompany

Production forests Conservation forests
Total
Established(1,000 ha) (1,000 ha) (1,000 ha)

CENIBRAPan PacSPFL
Oji FS
KTH
QPFL

1973
1971
1992
2014
1998
1995
—

—

—

106
5
3
1
19
1
1
136
12
148

250
41
13
8
82
10
11
415
188
603

Production forests : forests primarily for producing forest products in consideration ofenvironmental conservation.
Conservation forests : forests primarily for environmental conservation, including protecting
biodiversity and basins.

TopicsCascading use of forest resources
The lumber, laminated lumber, and the raw materials
for plywood come from the thick trunk part of forest
plantation trees. The sawmill residue from the production of lumber, and the tips of those trunks which cannot be used for lumber, are thoroughly utilized aswoodchips for paper manufacturing or biomass fuel.

CENIBRA in Brazil: Production forest (left) and conservation forest (right)

Oji Group’s Forests by Country

144
36
10
7
63
9
10
279
176
455

Growth(In the case of larch :40 to 60 years until fullgrowth)Thinning

Of the 603,000 ha of forests owned and managed by the Group in Japan and overseas, approximately 25%, i.e., 148,000 ha areconservation forests, which are managed with consideration for the environment and ecosystems. Specifically, of the forests managed by CENIBRA, Brazil, conservation forests account for as much as about 42%.
In Japan, 12,000 ha out of 188,000 ha of company-owned forests are conservation forests designated for preserving biodiversity,
maintaining landscapes around recreational facilities (conservation for forest utilization), preventing soil runoff and collapse (land conservation), preserving water sources, and protecting scientifically valuable forests. Since one forest may have multiple functions, thecumulative total area of environmental conservation functions is 17,000 ha.
We will continue to maintain and properly manage conservation forests that contribute to the conservation and promotion of biodiversity.

Brazil

Sawmill residue is madeinto woodchips, etc.

Sustainable Forest
Management

Lumber, laminated lumber,plywood, etc.

Conservation Forests

Country

Pulp, paper,
particleboard,
etc.

Earned the Highest “A” Score in the CDP
Forests Category (Timber Products)

Conservation forest
functions

Forest area*1(actual area) (ha)Function area*2(cumulative total) (ha)Biodiversity conservation

9,742

9,495

Conservation for forest
utilization

710

4,357

Land conservation

818

2,735

Water conservation

275

532

8

8

11,552

17,127

Conservation for scientificresearch
Total*1 Each conservation forest is categorized by its main function,and forest areas are aggregated by category.
*2 Each function area shows the cumulative total of the areas offorests with that function regardless of their main functions’categories.

Social Contributions That Are Environmentallyand Economically Friendly to Local Communities
Sustainable forest management requires a mutual understanding between forest plantation companies and the local communities, grown through considering environmental, social,and economic effects for the community. To give an example
of economic contribution, our overseas forest plantation companies have created approximately 15,000 jobs locally. Another such example is our technical training primarily on planting and forest management provided to owners of small-scale
forests. Further, we cooperate with local governments, NGOs,
and civic groups in each region to create and share environmental and social benefits. Their activities include biodiversity
conservation programs in environmentally protected forests,
vocational and educational support in local communities, andassistance in areas that have poor access to medical services.

TopicsCENIBRA supports beekeeping

Initiatives for Environmental Issues — Sustainability —The Oji Group owns and manages extensive forests in Japanand overseas, amounting to 603,000 ha. The portfolio comprises 455,000 ha of production forests primarily for producing forest products in consideration of environment, and about
1 4 8,0 0 0 ha of conservation forests principally for preserving
biodiversity and basins.
Wood from production forests is expected to be used as
raw materials for paper manufacturing and fuels for biomass
power generation, and for new materials derived from woodcomponents under development. In order to maintain stablesupply of these wood raw materials, the Oji Group spends
approximately 14.2 billion yen annually for ongoing sustainable
forest management. In addition, our Environmental Action
Program 2030 states a goal of expanding overseas production forest area to 400,000 ha.

harvested wood for lumber, plywood, woodchips for paper
manufacture, wood biomass fuel, etc.
The Oji Group promotes the effective utilization of wood as
a comprehensive forestry business group.

Oji Fibre Solutions supports an
educational program of Graeme
Dingle Foundation

Establishment of Oji Forest Value-Creation & Promotion Department

The Oji Group established the Oji Forest Value-Creation & Promotion Department in October 2022 to utilize diverse functions of theforests it owns and manages toward achieving its Purpose. The Oji Forest Value-Creation & Promotion Department seeks to util i z e f o re s t re s o u rc e s t o c re a t e n e w
businesses and expand research areas,
while conducting various surveys, searchingfor partners, and sourcing investment opportunities to solve social issues and increase corporate value.

Forests’ Multi-functionality and Ecological Services
Landslide disaster prevention function / soil conservation function
Biodiversity conservation function
Global environment conservation function
Cultural function
Material production function

Oji Holdings was added to the “A list” of top-scoring companies selected by CDP, an international non-profit organization for the first timein 2022, which recognized its leadership in transparency and performance in corporate sustainability concerning forests (timber products).
Leisure and recreation function

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The Oji Group Integrated Report 2023

Water source cultivation function

The Oji Group Integrated Report 2023

32

Initiatives for Environmental Issues— Sustainability —Sustainable Forest Management and Biodiversity Conservation

Biodiversity Conservation
Basic Approach
The Oji Group has declared to seek “Harmony with Nature and Society” in its Management Philosophy and has set the goal ofconserving biodiversity and reducing our impact on the environment under its Environmental Vision 2050 and Environmental Action Program 2030. To that end, the Group works for forest management with consideration for ecosystems, protection and nurturing of rare plants and animals, research and development of biodegradable and biomass materials for ecosystem maintenance,and purification of wastewater and exhaust gases.
With regard to forests, in particular, as well as the need of sustainable forest management for the continuation of our businessas a company that use forest resources, we recognize the importance of conservation and promotion of biodiversity as a social
responsibility of a company that owns and manages vast forests. We maintain natural forests’ ecosystems rich in biodiversity, andproperly manage our plantations to help the formation of multilayered vegetation and healthy ecosystems.
In Japan and overseas, we work with governments, environmental NPOs, academic researchers, and local community to protect and nurture endangered species and maintain and restore ecosystems.

The 30by30 Alliance for Biodiversity
We have joined the 30by30 Alliance for Biodiversity, which was voluntarily launched by companies, local governments, and organizations in April 2022 under the initiative of the Ministry of the Environment in Japan, towards the international goal of protecting at least
30% of land and sea by 2030. The Alliance members provide support for registering their owned or controlled lands as OECM* andexpanding protected areas, and provide support.
* Other Effective area-based Conservation Measures. Areas where biodiversity is being conserved throughefforts by the private sector, such as corporate forests and satoyama.

The Oji Group has been working in collaboration with the Ecosystem Trust Society sinceAugust 2016 in activities to protect fairy pitta’s growing environment in the Koyagauchi
company-owned forest in Kochi Prefecture. For this company-owned forest, we have already applied for screening for certification under a “trial scheme to certify conserved areas*” conducted by the Ministry of the Environment in FY2022. We aim to obtain OECM
certification through final certification under the Ministry’s scheme.
* A national scheme to certify areas where biodiversity is being conserved through efforts by the private
sector or other parties. The certified areas, other than protected areas, will be registered as OECM on aninternational database.

In 2009, the Oji Group established the Sarufutsu Itou Conservation Council with a local NPO, administrative bodies,
researchers, and others for the purpose of protecting theJapanese huchen called itou, or the sea-run taimen (Hucho
perryi), an endangered species that lives in the river zone of
the Sarufutsu forest in Sarufutsu village, Hokkaido. An areaof 2,600 ha including the river zone was designated a conservation area. Activities include the removal of artifacts
that obstruct the itou from migrating upstream, and surveys
on spawning beds and the number of individuals migrating
upriver.

Nuptial-colored itou (male) Photo by Yo Chirai(Listed as an Endangered IB on the Ministry of the Environment Red List)

Alpine Plant Community Restoration Activities(Samani Company-owned Forest in Hokkaido)
The alpine plant community on Mt. Apoi is home to many endemic plants with place names such as “Apoi,” “Samani,”and “Hidaka,” and was designated a national special naturalmonument in 1952. While the local government and people
continue to work together to maintain trails to prevent trampling, patrol the area to prevent illegal digging, and conduct
restoration experiments, the Oji Group provides support
such as offering a site for restoring alpine plants.

Samani yukiwari blooming on the trailside

Apoi-azumagiku blooming in a test site

Initiatives for Maintenance and Restoration of Ecosystems
Protection against Forest Fires (CENIBRA, Brazil)
Fairy pitta in the Koyagauchi company-owned
forest. Listed as an Endangered IB on the Ministryof the Environment Red List.
Photo provided by the Ecosystem Trust Society

CENIBRA has introduced an innovative forest fire prevention
and fighting system using artificial intelligence (AI) for their250,000 ha forests. The company has installed 38 watchtowers equipped with 360 degrees rotating cameras in the forests. When the AI detects smoke and fires, the monitoring

Initiatives for Environmental Issues — Sustainability —Initiatives for Protection and Nurturing of Rare Animals and Plants

Itou Conservation Activities in Sarufutsu(Sarufutsu Company-owned Forest in Hokkaido)

room notifies fire crews nearest to the site of the incidents.
They start firefighting immediately. The AI-equipped cameras
are more efficient than human eyes and can locate the accurate fire site within one to two minutes. CENIBRA has reduced forest fire risks significantly.

Conservation Activity for Kiwi (Pan Pac, New Zealand)
Pan Pac conducts activities for protecting kiwi, a rare bird species, in cooperation with the
Ministry for the Environment of New Zealand, citizen volunteers, and other parties. For
these activities, the company has designated land of an area of approximately 40 ha as a
kiwi sanctuary for protecting kiwi chicks. Chicks and eggs in the surrounding area are captured and collected, and chicks that are captured or hatched from the collected eggs are
nurtured in the sanctuary before being returned to the wild.
In June 2019, Pan Pac was named Community Corporate Sponsor of the Year at a national kiwi conference held by “Kiwis for kiwi,” a kiwi protection organization.

Kiwi
Fire watchtower

Monitoring of Biodiversity Indicators (CENIBRA, Brazil)
In collaboration with external research institutions, universities, NGOs, and other organizations, CENIBRA monitors plants and animals and water resources, and conducts various
ecosystem protection and conservation activities.
Monitoring results up until 2021 confirm that endangered 31 species of birds and 17
species of mammals are
inhabited in CENIBRA’s
conservation forest.
CENIBRA is engaged in
activities for breeding
Plantation*2
Waste land*1
mutum (crax blumembaProtected forest
Protected
forestchii), an endangered bird
species, and several other species, and returningthem to nature, and is
implementing a Green
Corridor Program to link
Green Corridor Program
separated habitat areas.
*1 Expanding forest areas by restoring waste lands to connect neighboring
natural forests.
*2 Plantations also serve to protect protected forests from erosion from thesurrounding area.

33

The Oji Group Integrated Report 2023

Fire monitoring in the monitoring room

Firefighting training by firefighters

Efforts to Preserve and Restore Natural Forest (Pan Pac,
New Zealand)

Buffy-headed marmoset (CR)

Mutum (VU)
† IUCN Red List Categories: CriticallyEndangered (CR), Vulnerable (VU)

The forest land located just north of Pan Pac’s Whirinaki Mill
with a total area of 298 ha includes about 23% (68 ha) of
well-established indigenous (native) forest.
Pan Pac partnered with a government organization toplace the forest reserve into a conservation covenant. The
reserve area comprises tree species unique to the Hawke’s
Bay region, and given the forest’s age and previous protection from animal livestock and pests, the native tree population holds particular ecological and cultural importance. Pan
Pac will be working with specialists to harvest rare seeds toassist in local and national programs of native forest regeneration. The company also hopes to welcome schools to thearea for educational visits.
In June 2021, Pan Pac received funding approval throughthe government’s “Jobs for Nature Fund.” The money will be

used to fence the reserve area and plant an additional 12 haof native plants on bare land areas to speed up restoration.

A view of the reserve

The Oji Group Integrated Report 2023

34

Initiatives for Product Development— Green Innovation —Innovation Promotion Division’s Initiatives Using Our Abundant Wood Resources

New Value Creation through Green Innovation

Our role is to fully utilize wood
resources effectively to solve social
challenges

The Innovation Promotion Division is making use of
our abundant wood resources and various core technologies to contribute to the Oji Group’s green innovation.
In addition to the core technologies that we haveacquired in our paper production business, including
forest tree breeding technology, pulping technology,
paper manufacturing technology, and water treatment
technology, we are acquiring core technologies thatdiffer from conventional paper production industry
technologies, such as wood component refining technology, nano-fibrillation technology, enzymatic andfermentation technologies, and nanostructure processing technology, and promoting the developmentof new materials derived from wood, medical andhealthcare products, and eco-friendly products.

Oji Holdings Corporation
Corporate Officer
General Manager,
Innovation Promotion Div.

Kohei Michikawa
maceutical products using hemicellulose, a main component ofwood, and large-scale cultivation of medicinal plants for the
stable supply of high-quality, domestically-grown raw materials
for Chinese herbal medicines. In addition, we are promoting
the development of cell culture substrates for controlled cellorientation, which are expected to have applications in regenerative medicine.
In the area of eco-friendly products, we are developing products to meet a wide variety of needs for solutions to environmental issues, such as reducing plastic consumption. Specifically, we are manufacturing biomass plastic films for packaging
applications with the aim of reducing carbon emissions derived
from fossil fuels. In addition, we are developing recycling-friendly paper products and composites of biodegradable plastics
and cellulose. We also have developed functional products
such as anti-heat windshield films to reduce the burden on the
global environment.
Further, with the aim of accelerating our green innovationand steadily growing it into a pillar of earnings, we have established the Corporate Business Development Division, andbased on the technologies developed in the Innovation Promotion Division, we are promoting the commercialization of liquid
packaging cartons, including the development of plastic-free
products.
With the promotion of these kinds of new value creation
through green innovation, our target is net sales of 100.0 billion
yen by 2030.

Abundant wood resources

35

×
Newly
acquired coretechnologies

New materials derived from wood
Medical and healthcare
Eco-friendly products

The Oji Group Integrated Report 2023†

Includes those already commercialized

P40 - P42 and other

Various core technologies
Pulping technology

Paper manufacturing technology

Coating technology

Corrugated container converting
technology

Lamination technology

Non-woven fabric manufacturing
technology

Adhesive processing technology

Water treatment technology

Film forming technology

Sales target

Wood component refining
technology

Precise pulp-molding technology¥100.0billion/year

Nano-fibrillation technology

Fibrillation and mixing technology

Enzymatic and fermentation
technology

Chemical synthesis technology

Polymerization technology

Nanostructure processing
technology

P37

P39

Newly
acquired coretechnologies

Forest tree breeding technology

Future Green Innovation Initiatives
Core paper
manufacturing
and forestation
technologies

×Social challenges

2030 target

New materials
derived from
wood
P37

P38

Sugar solution
Ethanol
Biomass plastics
CNF (Cellulose nanofiber)
Cellulose polymer pellets
Cellulose mats

Challenge to a new field inlight of the future of
medicine and healthcare

Medical andhealthcare
P39

Wood-derived
pharmaceutical products
Cell culture substrates forcontrolled cell orientation

Initiatives for Product Development — Green Innovation —Under the Group basic policy of “Initiatives for Product Development—Green Innovation—,” our Innovation Promotion Division aims to grow healthy forests, create products that utilize
those forest resources, and deliver them to society. We arepromoting research and development focusing on threethemes to solve social issues by making full use of wood resources and refining various core technologies cultivatedthrough forestation and papermaking over the 150 years since
the company's founding.
First, in the area of new materials derived from wood, we aredeveloping new materials with the aim of creating new value
for pulp and venturing into new businesses. Specifically, weare compounding cellulose nanofibers (CNF) with natural rubber and exploring the possibility of new applications for thiscomposite material. Further, we are promoting the development of products such as cellulose mats and cellulose polymer
pellets to make effective use of cellulose materials. We arealso manufacturing sugar solution from wood that will becomea key raw material for a variety of biomanufacturing in test basis. By combining it with fermentation, we will be able to convert this sugar solution into polylactic acid and other biomass
plastics and into ethanol, which is expected to become a raw
material for sustainable aviation fuel (SAF), with the aim of decarbonization.
Next, in the area of medical and healthcare, with an eye on
the medical care of the future, we are expanding our business
into new fields. We are working on the development of phar-Core forestationand paper
manufacturing
technologies

Creating new value for pulp

Medicinal plants

Using technologies
cultivated over 150 years
to solve various
environmental issues

Eco-friendly products
P40

Polylactic acid laminated paper
Aqueous coated paper cup baseBiomass plastic films
Cellulose composites
Eco-friendly heat shielding film

The Oji Group Integrated Report 2023

36

Initiatives for Product Development— Green Innovation —New Value Creation through Green Innovation

New Materials Derived from WoodUse of Cellulose That Accommodates Social Changes

Creating New Value for Pulp

To accommodate changes in society and customers’ requirements, we are promoting development for the effective use of cellulose materials, from CNF to pulp.
In the course of developing applications for CNF, we have learned that, in addition to demand for unique functions that are only obtainedby conversion to CNF, there is also demand for the functions that cellulose originally possesses. To meet this demand, as well as expanding applications that make use of CNF’s unique functions, we also embarked on the development of applications for pulp, making
use of cellulose’s original functions. This will enable us to select and propose the cellulose materials that best suit the customers’ requirements, allowing us to expand the fields in which these materials are used.

As paper consumption declines, we will create new value for pulp as a raw material and we will pursue research to extract its potential, develop new materials, and enter new businesses.

Development of Biomanufacturing Technology with Wood
Resources as Raw Materials

Forecast demand for biomass plastics*

4

We are making major contributions to biomanufacturing innovation throughthe development of new materials utilizing our abundance of wood fromsustainable forest management.

Enzymerecovery

Pulp

2020

50,000 t

Challenge for the development of new materials derived from wood
Sugarcane andcorn starch etc.

Woody celluloseHigh
viscosity

Transparency

High elasticity

Ductility

Heat stability

Dispersion
stability

Thixotropy

Dimension
stability

Lightweight

High mechanicalstrength

Raw material
conversion
Expansion of demand for raw materials due
to population growth and hunger

Oji’s abundant resources
No competition with food resources*4 From Fourth Fundamental Plan for Establishing a Sound Material-Cycle Society,
Ministry of the Environment (2018)*5 From Government-Private Sector Council for the Promotion of Introduction of
Sustainable Aviation Fuel (SAF), Ministry of Economy, Trade and Industry (2022)

Polylactic acid

Biomass plastic
made with inedible(woody) raw
materials, so does
not compete withfood resources

Various types ofplastic products(packaging films,
cups, straws,
laminated products,
cutlery, teabags,
masks, etc.)

Polylactic acid synthesis plant

Distillation

Combined withmicro-organisms for use asa key raw material in the
manufacture of a variety ofbiomanufacturing

Fermentation

Separation

After being selected for the Ministry of the Environment’s Demonstration Project for a Plastic Resource
Circulation System toward a Decarbonized Society,we established technology for the manufacture ofwood-derived polylactic acid.

Ethanol

Ethanol and sugar solution pilot manufacturing facility
In addition to providing ethanol and sugar solution inlarge volumes, we will continue to improve our technologies and accelerate our initiatives with the aim of future commercialization. (Inside Oji Paper Yonago Mill)

Shifting fuels,
general-use
plastics, and othermaterials close todaily life tosustainable,
wood-derived
materials

SAF, various
plastics such aspolyethylene andpolypropylene

Proposing Cellulose Materials to Suit the Application

Exploration of Applications with Expected High Consumption of CNF

Effective Use of Cellulose’s Original Functions

To increase consumption of CNF, we are promoting the developmentof CNF composite materials that will enable the provision of CNF’s
unique functions in forms that are easy to handle, and we are exploring
the possibility of new applications for such composite materials.

We are trialing the provision of low-cost cellulose products thatare easy to handle to meet customers’ needs for automotive
components, with a focus on strength.

CNF-Natural Rubber Composite

Cellulose Mats and Cellulose Polymer Pellets

By compounding natural rubber with CNF, we successfully achieved both reinforcement effect (hardness) and stretch, and we discovered potential for anovel rubber material by replacing carbon black, the existing petroleum-derived
reinforcing material, with biomass. We will proceed with the development andpractical application of this material in anticipation of its future adoption for tire
applications, which are expected to yield high CNF consumption.

Making cellulose (pulp) into reinforcing fiber will help reduce the consumption of petroleum-derived plastic by up to 70%. A property of thisproduct is that molded forms show more rigid and less breakable thanconventional plastics. We will continue with product development toward practical applications for automotive components.

NaturalrubberConventional
fillers

Plant-derived
bio materials

CNF
Cellulose
nanofiber

Future Initiatives

Problems such as balancing hardness
with ductility and resilience

Cellulose(pulp)

Solve issues ofexisting fillers
Hard yet ductile
Returns to its original shapeafter being deformed
for a long time

Cellulose polymer pellets

Polymer

Future Initiatives
2024

Biomass
plastics

Bench plant
construction

Biofuels

Pilot plant
1,000 kl/year
construction

0.5 t/year

2027

Pilot plant
1,000 t/year
construction

2030

Planning of fullproduction
facilities

2033

2023

Commence
construction of full 20,000 t/year
production facilities

2030

Sales target

Sales target
CNF-Natural
rubbercomposite

Adoption for small
components

Expansion of applicable
components

Adoption for tire
applications

Cellulose mats
Polymer pellets

Sale for daily goods

Sale for automotive
components

Expansion of supply
structure¥10.0 billion/year
Construction of fullproduction facilities

Start of fullproduction

100,000 kl/year

2030 target

37

Molded cellulose
composite productCellulose matsHeat treatment

Alternative raw material topetroleum-derived or otherbiomass raw materials(ink, rubber, advanced
function plastics,
food products,
pharmaceuticals, etc.)

Development for the Expansion of Market for CNF

Adjust ratio

Used in manufacture ofethanol and sugar solution
as biomass energy

Saccharification

Digestion

LigninAble to convert
wood into biomass
materials efficiently

Sugar solution

Unique functions of CNF

2.5–5.6 million t
2020

780,000 t

Polymerization

Wood

1.97million t

Lactic acid

Proprietary
technologies

CNF

2030

Cellulose(pulp)

Functions of Cellulose

Initiatives for Product Development — Green Innovation —*1 Production of plastics, rubber, fibers, fuels, and other products using smart cells (micro-organisms that raise
the productivity of beneficial substances), with biomass-derived sugars as raw materials*2 Sustainable aviation fuel: Fuel seen as the trump card in the decarbonization of the aviation industry*3 Demonstration Project for Comprehensive Development of Cellulose-based Ethanol Production System (April
2015–March 2018)

2030

Forecast demand for biofuels*

Fiber width: Approx. 3 nm (complete nanofibrillation)

5

Functions of CNF

To contribute to a decarbonized society in which petroleum-derived fuels
and plastics are replaced with those derived from biomass, we are pursuing the development of new materials derived from the wood which is obtained from sustainable forest management. Needs are expected to increase for sugar solution, which is a key raw material of various
biomanufacturing*1 and for biomass plastics, such as polylactic acid, andethanol, which can be used in the manufacture of basic chemicals, SAF*2, a
focus of the aviation industry’s attention, both of which are obtained by
combining sugar solution with fermentation.
We refined our manufacturing technology for wood-derived ethanol after
it was adopted as a NEDO project*3 until 2018. For wood-derived sugar
solution as well, we have succeeded in the development of proprietary
technologies, including saccharification enzyme recovery, and are now undertaking sample work, which is being evaluated.

Fiber width: Approx. 30 μm (pulp)

Sudden Expansion of Demand for Biomass Plastics and Biofuels in JapanThe Oji Group Integrated Report 2023

¥6.0 billion/year¥3.5 billion/year
2030 target

The Oji Group Integrated Report 2023

38

Initiatives for Product Development— Green Innovation —New Value Creation through Green Innovation

Medical and Healthcare

Eco-Friendly Products

Using Technologies Cultivated over 150 Years to Solve Various Environmental Issues

As the super-aging society progresses and interest in extending healthy life expectancy grows, there is aneed for new and different form of medicine and healthcare. The Oji Group is taking on the challenge of new
domains through our efforts to utilize wood resources in the medical and healthcare field.

Toward solving environmental issues, such as reduction of CO2 emissions and plastic consumption, we develop eco-friendly products that meet a wide range of needs by making full use of our abundant fundamental
and core technologies cultivated over the years.

Drug Discovery from Wood Resources

Recycling-friendly Paper Products

Wood-derived Pharmaceutical Products

Human Cardiomyocyte Tissue (Conceptual Drawing)

Direction ofcell orientation

Dye : -Actinin

Direction of cellorientation

Dotted regions
and planar regionsinterleaved on
substrate

CellArray-Heart
CellArray-Heart™

Cultivating cardiomyocytes on this product enables reproduction of cell orientation similar to that in vivo.

Stable Supply of High Quality, Domestically Grown
Raw Materials for Chinese Herbal Medicines
Large-scale Cultivation of Medicinal Plants
Medicinal plants are used in a wide range of applications, including pharmaceuticals (primarily Chinese herbal medicines), cosmetics, and food products, making them an indispensable plantresource in daily life. However, in many cases, supply is dependent on wild plants imported from overseas, resulting in risks
such as resource depletion, export restrictions, and foreign exchange fluctuations, as well as issues such as environmental
conservation and traceability. For these reasons, a shift to domestic production is needed.
Amid such needs, leveraging our forest tree breeding technology, we have successfully established cultivation techniques forlicorice, the most used medicinal plant, and we are now working
on large-scale cultivation.

The Oji Group Integrated Report 2023

Sulfated hemicellulose• Anti-inflammatory effect• Anti-coagulant effect

Under development for use
in pharmaceutical products• Arthritis drug for animal use• Anti-coagulant drugs

Nanostructure Technology for Regenerative
Medicine and Drug Discovery
Cell Culture Substrate for Controlled Cell Orientation, CellArray-Heart™
The issue was that the cellular functions of cardiomyocytes
generated from human iPS cells were not developing as far as
in vivo cells (they were not maturing). Focusing on the fact thatcardiomyocytes are “oriented” (facing the same direction) in vivo,
we have developed CellArray-Heart™.
This product is a cell culture substrate fabricated by our original technology that has nanodot regions with a pitch of several
hundred nm and planar regions interleaved in parallel stripes.
When culturing human iPS cardiomyocytes, we can reproduce
the same cell orientation as they have in vivo. Because it has
been confirmed that iPS cardiomyocytes that have been oriented when cultured progress to maturation, it is hoped that thismethod will help avoid animal testing in drug discovery and haveapplications in regenerative medicine.
We are currently proceeding with the collection of detailed
data for use in promotional activities with our joint research partner, Juntendo University.

Laminated Paper Using Plant-derived Polylactic Acid

Recyclable Aqueous Coated Cup Base

The incineration of ordinary laminated paper as combustible waste results in the emission of fossil fuel-derived
CO2. Since the plastic layers of the laminated paper wedeveloped use plant-derived polylactic acid, combustionof the paper does not increase CO2 in the atmosphere. In
addition, this paper is biodegradable under compost
conditions.

Traditional paper cups, made of plastic laminated paper,
are not suitable for recycling and are generally treated as
combustible waste. However, by leveraging our technology to apply special aqueous resin to the cup base in athin and even manner, we successfully developed a paper cup base that still has the functions required for paper cups, while being recyclable as paper material.
Initiatives for Product Development — Green Innovation —The Oji Group aims to contribute to human and animal healththrough the development of “sulfated hemicellulose.” Sulfatedhemicellulose is a compound obtained by “hemicellulose,” one of
the major components of wood. It has been confirmed to haveanti-inflammatory and anti-coagulant effects. In addition, thiscompound is similar to heparin, an animal-derived pharmaceutical product used all over the world. By replacing this animal-derived pharmaceutical product with a wood-derived one, it is expected to accommodate a wide range of needs.
We are currently filing a prior application for an arthritis drug
for animal use, and we have obtained approval for the manufacture and sale of veterinary drugs. Going forward, we will develop it into a drug for human use and work on the building of
the pharmaceutical business, leveraging the compound’s property of being derived from wood.

39

Challenge to a New Field in Light of the Future of Medicine and Healthcare

Biodegradable Plastic-Cellulose Composites to Reduce Environmental Burdens
Cellulose Composite, Resoil-GreenWe have developed resin materials that are composites of biodegradable plastics and wood-derived cellulose (pulp). The useof pulp means that this product can achieve a high degree ofbiomass as well as a high biodegradation rate. In addition, theproduct improves various properties of resin such as strengthand stiffness. Since all raw materials of the products are biodegradable in soil, compared with regular plastics, the products
can contribute to reducing environmental burdens.

Emission Reductions of CO2 from Fossil Fuels by
the Development of Biomass Plastic Films

Contribution to Energy Conservation throughDevelopment of Heat Shielding Film

Biomass plastic film, Alphan G

Anti-heat Windshield Film

We have developed a polypropylene film containing polylactic
acid, which as the plant-based plastic has a low environmental
impact to reduce CO2 emissions from fossil fuels. This product,
Alphan G, was certified as a Biomass mark product* and has
been commercialized.
We are also working on the development of heat-sealing films
and will continue to develop a wide variety of products that
contribute to SDGs.

To mitigate soaring utilities costs and reduce the environmental
burden of increased use of electric power, heat shielding materials that can be adhered to windows in automobiles and buildings are attracting attention. Our heat shielding film offers both
high heat shielding performance and transparency, and in December 2022, we added a new product that uses recycled materials for release films to our line-up. It is currently available asfilm for automotive windshields, and we are considering expanding its application to building windows.

* Biomass mark certified by the Japan Organics Recycling Association

Example of use:
The Grand Hotel
New Oji guest
room

The Oji Group Integrated Report 2023

40

Initiatives for Product Development— Green Innovation —New Value Creation through Green Innovation

Business Promotion for Eco-Friendly Paper Packaging

Initiatives for New Business Development

Oji Group is promoting the development and commercialization of a variety of paper packaging products and the establishment of
new business models as an activity toward solving environmental issues, such as reduction of CO2 emissions and plastic consumption.

We will create business models and businesses
that will open up a circular future.
General Manager,
Corporate Business Development Division

Commercialization of Eco-Friendly Paper Packaging to Meet a Wide Variety of Needs

Teruyuki Mori

FlatSkin®: Cardboard That Enables Prolonged Shelf
Life and Attractive Presentation of Fresh Foods

As part of our structural reforms towards achieving the "long-term vision" goals, we established the Corporate Business Development
Division in October 2022 with the aim of developing businesses that will contribute to building of a sustainable society and growing
those businesses into future earnings pillars.
We will aim to expand our business by establishing the comprehensive management and promotion system for new business, suchas the liquid packaging carton business, one of our environmental response businesses, the effective utilization of company owned forests (P32: Oji Forest Value-Creation & Promotion Depertment), and eco-friendly paper products that will contribute to de-plasticization.

This is a package comprising cardboard and film that can beseparated for disposal. The vacuum packaging of meat and fish
suppresses drips, andprinting on the cardboard
offers attractive presentation of foods.

Liquid Packaging Carton Business

Acquisition of IPI (Italy) for the Expansion of Business into Overseas Markets
As part of our overseas strategy for the liquid packaging cartonbusiness, we acquired IPI S.r.l. (Italy), a manufacturer and distributor of converted paper and filling machines for aseptic
packaging cartons, in May 2023. This acquisition aims to enter
the aseptic carton market, which is the largest segment in the
global liquid paper carton industry.
This will enable integrated production of base paper and converted paper similar to our chilled cartons, allowing the Oji Groupto make a full-scale entry into the Asia and Oceania markets,
where the Oji Group has particular strengths. In addition, by leveraging IPI's sales network in newly emerging countries like Africa and other regions, the Oji Group anticipates the entry andexpansion of other businesses.

Flanged Paper Tray: Microwave-safe Packaging

This is a packaging that can be top-sealed and that has aflanged structure for ease of carrying and four-cornered adhesion construction that provides superior container
strength.
These containers aremicrowave-safe and canalso be used as tableware.

Chilled cartons

This is composed of three pieces;
paperboard top, tray, and divider.
Even without using plastic films, it isable to secure and protect the products inside. Because the package
can be printed on and window holes
can be made, this product offers
more effective presentation of thecontents such as daily goods.
Tapered Paper Tray: Food Tray with Separable
Cardboard and Film

This is a paperboard-based tray with a resin film that covers thesurface. It is designed sothat the cardboard andfilm can be easily peeled
away, making it easy toseparate for disposal afteruse. Because the flange isflat, there is no concern
about the contents leaking
after top-sealing.

Building of New Recycling System
Recycling System for Paper Cups

Conventional paper cups, made of plastic laminated paper, are not suitable for the existing
recycling systems, so are generally treated as combustible waste. Leveraging our recycling
technologies that we have cultivated over many years, Oji Group has built a system thatenables recycling of paper cups by incorporating paper cup crushing technology andwashing technology. The collected paper cups are reborn into other familiar paper products (corrugated containers, tissues, etc.)
We will also make an effort in the recycling of the paper cups used by our customers.
Aseptic packaging cartons* Cartons are sterilized in filling machine that keep contents for six months to ayear at room temperature.

Sales ofrecycled
products

Sorting
paper cups

Initiatives for Product Development — Green Innovation —In September 2020, the Oji Group established Ishizuka-Oji Paper
Packaging Co., Ltd. in a joint venture with ISHIZUKA GLASSCo., Ltd. and entered the liquid packaging carton business.
For chilled cartons for refrigerated storage, such as milk andjuice, we have already achieved an integrated structure in Japan covering the entire process from manufacturing base paper to converting and sales. In the Liquid Packaging Carton
Depertment that launched in October 2 0 2 2, we are actively
working to enhance a structure and promote sales activities todrive forward and expand the business

Paper-made Blister Pack: a Packaging That Offers
Effective Presentation of Contents

New
Recycling System

Recycling of
paper cups into
new productsCollection,
crushing,
and washing

IPI’s Sales Area (2022)

TopicsReduction of CO2 Emissions by Introduction of Paper Packaging

The calculation*1 and comparison of the life-cycle CO2 emissions of petroleum-based plastic packaging and sustainable paper packaging shows that
paper packaging emits less CO2 than plastic packaging*2. Therefore, the introduction of paper packaging can contribute to CO2 emission reduction. For
more details, please see our website.
Other

Central America
8.8%
Middle East
12.8%

Europe16.5%

41

The Oji Group Integrated Report 2023

Plastic packaging

Paper packaging

Disposal(Combustion)60%
reduction

Converting

8.4%
Net Sales
Composition
Ratio byCountry

Africa53.5%*1 CO2 emissions are calculated by converting greenhouse gas (GHG) emissions such as carbon dioxide (CO2),methane (CH4), and dinitrogen monoxide (N2O) into CO2. The calculation is made based on LCA (Life Cycle
Assessment) methodology.
*2 Calculation results of reduction rate will vary, depending on packaging material and layer structure. (It is assumed that the paper packaging material is MG bleached kraft paper 70 g/m2 and that the method of printing
is gravure printing.)

Obtaining raw
materials &manufacturing
materials

Sustainable packaging CO2 reduction effecthttps://solution.ojiholdings.co.jp/ojipaperpackage/sustainability/ (available in Japanese only)

OPP 20μ/Print/
Lamination/
Vapor deposition/
CPP 25μDisposal (Combustion)

Converting
Obtaining raw
materials &manufacturing
materials

Packaging material layer structure
Printing/
MG bleached kraft paper
70 g/m2/Heat-sealing layer(simultaneous printing)

The Oji Group Integrated Report 2023

42

Initiatives for Profitability Improvement— Profitability —Business Overview

O j i

Net sales¥1,706.6

billionOperating profit

H o l d i ng s

¥84.8

billionC o r p o r a t i o n
Changes in Net
Sales andOperating Profit

1,507.6
106.1

Household and Consumer
Products COMPANY

Functional Materials COMPANY

P45

P49

P51

1,800.0150.0

1,470.2

1,359.0

120.1

100.0

84.8

84.8

Net sales (¥ billion)
Operating profit (¥ billion)
2019

Industrial Materials COMPANY

1,800.0

1,706.6

Forest Resources and Environment
Marketing COMPANY
P55

2022

2021

2020

Printing and Communications
Media COMPANY
P59

2023 (plan)

2024 (plan)(FY)

Corporate Management Group andShared Service Companies
P61

Main businesses

Main businesses

Main businesses

Main businesses

Main businesses

Containerboard/corrugated containers,
Boxboard/ folding cartons,
Packaging materials/paper bags

Household papers,
Disposable diapers

Specialty paper, Thermal paper,
Adhesive products, Film

Pulp, Energy,
Plantation services,
Lumber processing

Newsprint,
Printing and Publication paper,
Communications paper

Real estate, Engineering,
Trading business, Logistics, etc.

Affiliated companies

Affiliated companies

Affiliated companies

Affiliated companies

Affiliated companies

Affiliated companies

Domestic

Domestic

Overseas

Domestic

1company

6companies

9companies 22companies

Overseas

43companies 44companies
Earnings structure

Overseas

Domestic

Earnings
structure

Net Sales
Composition
Ratio

%

Net sales

Earnings
structurebillionOperating profit

10.9¥219.9¥15.5

billionOperating profit

billionbillionDomestic

Earnings
structure

Net Sales
Composition
Ratio

20.9
¥423.8¥68.5

billionOperating profit

billionNet Sales
Composition
Ratio

13.9
¥281.0¥(4.8)%Net sales

Overseas

15companies 2companies

Earnings
structure%

Net sales

Overseas

7companies 1company

Net Sales
Composition
Ratio

%

Net sales

Domestic

17companies 29companies

Net Sales
Composition
Ratio

38.6
¥780.5¥(1.2)

Overseas

Initiatives for Profitability Improvement — Profitability —Main businesses

billionOperating profit

billion

15.7¥318.1¥8.4%

Net salesbillionOperating profit

billion† Net sales and operating profit of Oji Holdings Corporation include adjustments (primarily those for internal transactions).
Non-consolidated net sales, net sales composition ratio and operating profit do not include adjustments (primarily those for internal transactions).

43

The Oji Group Integrated Report 2023

The Oji Group Integrated Report 2023

44

Initiatives for Profitability Improvement— Profitability —Household and Industrial Materials Businesses Industrial Materials Business

Through offering innovative proposals using

Changes in Net Sales Composition Ratio, Net Sales, and Operating Profit*

sustainable paper packaging materials to* Total of the Industrial Materials Business and the Household and Consumer Products Businessprotect the environment while increasing

38.6¥780.5¥(1.2)Net Sales
Composition Ratio

profits, we will respond to the trust of our
stakeholders.

Net Sales

Oji Holdings Corporation
Executive Officer
President, Industrial Materials COMPANY

Operating Profit

Akio Hasebe

Net sales (¥ bil.)%billion

686.1
40.9

¥1,250.0billion

Sales target for FY2030:

Operating profit (¥ bil.)

780.5

698.8

647.5

866.0

39.0

38.1

880.0

42.0

26.2

billion
FY2019FY2020

FY2021(1.2)

FY2022

FY2023 Planned FY2024 Planned

Business Overview

Segment Overview

The Industrial Materials Business has production and sales structures that integrate material and converting from base paper manufacturing to product processing and packaging design for the packaging materials that are essential to industry such as corrugatedcontainers, folding cartons, and paper bags and responds in a timely manner to customer needs.

In FY2022, the Household and Industrial Materials Businesses had net sales of 780.5 billion yen (up 81.7 billion yen from FY2021) andoperating loss of 1.2 billion yen (down 27.4 billion yen from FY2021). In the domestic business, net sales increased with efforts for pricerevision in a number of products. Net sales of disposable diapers remained almost unchanged from the previous year. In the overseas
business, net sales of containerboard and corrugated containers increased mainly due to higher sales in Southeast Asia and India andpenetration of price increases, as well as the operation of new containerboard machines in Malaysia started in October 2021.
In FY2023, net sales of 866.0 billion yen (up 85.5 billion yen from FY2022) and operating profit of 39.0 billion yen (up 40.2 billion
yen from FY2022) are planned.

Corrugated Container BusinessAs well as corrugated containers used in foodstuffs, daily products, electronics, and other areas, we also offer heavy-duty packaging materials used fortransporting mainly industrial parts. We also provide automatic packaging systems adjusting the packaging dimension in order to fit each product size inside.

Business Strategy

Folding Carton Business

Further expand & enhance packaging business in Southeast Asia, India, and Oceania

For folding cartons used in a range of fields including confectionaries, cosmetics, and pharmaceuticals, we are combining aesthetically pleasing basepaper with structural design tailored to the application and appealing graphics,
thereby further enhancing the value of our customers’ products.

Expand & enhance corrugated container business in Greater Tokyo area, Japan
Challenges
Overseas : Build new plants, accelerate M&A

Paper Bag BusinessJapan : Expand business through our own plants in
the Greater Tokyo area and expand our market sharethrough M&A in other regions

We handle a wide range of customer needs—such as heavy-duty sacks for
packaging used for safe and secure transport of various products, paper bags
that are used for packaging of retail products which also play a role in sales
promotions, and bags for home delivery, which are seeing increased demand
given the growth in online shopping.

Measures
Overseas: Build a new plant in India
Overseas: Promote proactive capital investment
Japan: Expand business in the Greater Tokyo area,
mainly through new plants in Chiba and Tochigi
Japan: Plan M&A

Initiatives for Profitability Improvement — Profitability —Challenges for the Achievement of the Medium-term Management Plan and Priority Measures for 2023

Further Expansion & Enhancement of Packaging Business in Southeast Asia, India, and Oceania

Awareness of Business Environment
Increased consumer awarenessabout environmental issues
Growing interest in renewablematerials with the trend toward
de-plasticization
Economic development in emerging
markets such as Southeast Asia
and India
Expansion of the e-commercemarketSoaring raw material and fuel prices
and large fluctuations in exchange
rates

45

The Oji Group Integrated Report 2023

Business Opportunities and Risks
Expanding sales by proposing aswitch to paper packaging materials
Creating sales opportunities incollaboration with Oji Group companies in Japan and overseas
Increasing market share throughcapital investment and M&A tomeet rising demand
Soaring raw material and fuel prices
and passing the cost increase on
to product prices
Deterioration of base paper market
conditions in China and Southeast
Asia

Our Strengths
Stable supply and quality control
system enabled by integrating basepaper manufacturing and converting/processing
Reduced environmental burdens
through efficient base paper transportation, including at two integrated corrugated container plants inJapan
Corrugated container processing
bases at many locations in Southeast Asia and a strong containerboard sales organization aroundthese bases

To meet the increasing demand for packaging in various regions, we own a total of 47 manufacturing bases in nine countries throughout Southeast Asia, India, and Oceania, and we aredeveloping our business in the countries.
From 2022 to 2023, following the start of operation of new
corrugated container plants in Malaysia (two plants) and Vietnam (two plants), in June 2023, we decided to construct our
fifth corrugated container plant in India.
In Southeast Asia and India, we will continue to expand ourbusiness and increase our market share including through M&A.
In addition, we will strengthen our business foundation by improving our competitiveness in terms of cost and quality by proactively introducing the latest equipment not only at new plants
but also when renewing facilities at existing plants.
In Oceania, a new plant started operation in Christchurch,
New Zealand in 2022, and we intend to expanding our businessand strengthen our competitiveness through aggressive M&A in
the corrugated container business including in Australia, as well

as by introducing the latest equipment to existing plants.
We will also work on the development of plastic alternative
products to respond to the expected growing demand.

Our 6th corrugated container plant in Vietnam (started operation in August 2022)

The Oji Group Integrated Report 2023

46

Initiatives for Profitability Improvement— Profitability —Household and Industrial Materials Businesses

Industrial Materials Business

Main Overseas Sites

Initiatives for Environmental Issues

ThailandCorrugated containers : 1 /Corrugated containers & folding
cartons : 2

India
Corrugated containers : 5(including 1 site under construction)

Cambodia
Corrugated containers : 3

New corrugated container plantin the south (2024-)

Vietnam
Corrugated containers : 7(including 1 site under construction)
Folding cartons : 1 / Paper bags : 2

Myanmar
Corrugated containers : 1

New corrugated container plantin the north (2023-)

Malaysia
Containerboard : 2 / Corrugated containers : 10 /Plastic bags : 1
New ZealandContainerboard,packaging paper : 2 /Fiberboard : 1 /Corrugated containers : 3 /Paper bags : 1

New corrugated container plant in
Selangor (2023-)

Indonesia
Corrugated containers : 1

At the integrated containerboard processing plant in Tochigi
Prefecture, a solar power generation system with an output of
1.5 megawatts is being installed (scheduled for completion by
the end of September 2023). It is not the first solar power
generation system installed at our corrugated container plant,
but having a larger output, this system will be able to cover
the daytime electricity for the corrugated container processing
section when weather conditions are favorable.
We are also working to install solar power equipment in existing plants if their weight does not exceed the allowable roof
load or when the roof is repaired, and examining the possibility of fuel conversion for coal-fired boilers.
We will continue to work on initiatives for environmental issues along with business expansion.

Solar panels at the corrugated container plant in Tochigi Prefecture (to be completed by the end of September 2023)

Initiatives for Product Development
Development of Corrugated Cardboard Packaging Solution for Export Shipment of Car Seats

Expansion & Enhancement of Corrugated Container Business in Greater Tokyo Area, JapanIn February 2023, an integrated containerboard processing
plant in Utsunomiya City, Tochigi Prefecture, began operation, which had been constructed to meet increasing demand for corrugated containers in the Greater Tokyo area.
It is the second integrated containerboard processing plantfollowing the Kushiro Plant, in Hokkaido of the COMPANY.
The integrated plant is not only highly competitive in termsof cost and production efficiency, but also reduces greenhouse gas emissions generated during the transportation ofcontainerboard. It is a corrugated container plant for the newera, which is also in accordance with the Group’s long-term
vision of building a sustainable society through our businessactivities. We will continue to make investments that contribute to both competitiveness and sustainability and meet the
expectations of our stakeholders.

Voice

Chang Kee Soon

47

Corrugated cardboard packaging solution for export shipment of car seats developed by Oji Container

Integrated plant for corrugated containers in Tochigi Prefecture (started operationin February 2023)

Leading the Market as the Largest Integrated Paper and Corrugated Container Manufacturer in Malaysia

HPI Resources BerhadGroup Managing Director

Since 2010, Oji Group has established itself as a solid leader in the Malaysian corrugated container industry through strategic acquisitions of GSPP, UKB, and Harta. Continuous business expansion and
M&As over the past 12 years have led to have a market share of 35% in Malaysia.
Our commitment to innovation and growth are visible in our state-of-the-art GSPP’s 4th Plant (PP4) and
UKB’s 2nd Plant (UKB2), which are increasing the Oji Group’s competitiveness in the Malaysian market.
As the largest integrated paper and corrugated container manufacturer in Malaysia, we are committed
to providing our customers with competitive prices, outstanding quality, and sophisticated service while
always being a responsible corporate citizen.
While demand remains sluggish, we will continue to work to modernize our facilities to optimize staffing and operating costs. In addition, GSPP’s containerboard machine (PM3) with the state-of-the-art
technology started operation in 2021. Through integrating the upstream and downstream to strengthen
our packaging business in Malaysia, we will lead the market, and thus strive to maximize returns to ourshareholders by being proactive and always looking forward.

The Oji Group Integrated Report 2023

We developed a corrugated cardboard packaging solution forexport shipment of car seats as an alternative to steel packaging material that had been used. The solution made all ofcorrugated cardboard are expected to reduce cost, reduce
workload in packaging, and further facilitates recycling. In recognition of these, the solution received the WorldStar Winner
in the WorldStar Awards 2023 organized by the World Packaging Organization (WPO).
To promote paper recycling, which is one of the Group’s
sustainable business models, we will continue to develop
products that open up new possibilities for paper packaging
materials.

Initiatives for Profitability Improvement — Profitability —Australia
Corrugatedcontainers : 4“OJI FLEX PACK’AGE, ” Automated Packaging System
We sell “OJI FLEX PACK’AGE,” automatic packaging system,
which helps packaging adjust flexibly to the product size, andfanfold corrugated sheets “Rakudan,” its packaging material.
In addition to saving labor in packaging operations, they also
help reduce greenhouse gas emissions by reducing theamount of materials used and transportation. This has been
well accepted by customers in various industries as anext-generation packaging solution.
Having started the production of “Rakudan” in the Kansai
region in June 2022 following the Kanto region, now we canoffer this solution to an even more customers. We will further
accelerate its market rollout and work to strengthen the foundation of the “Rakudan” business and reduce environmental
burdens.

Rakudan,fanfold corrugated sheets“OJI FLEX PACK’AGE,” automated packaging system

The Oji Group Integrated Report 2023

48

Initiatives for Profitability Improvement— Profitability —Household and Industrial Materials Businesses Household and Consumer Products BusinessWe will maximize the internal resources of theOji Group to enhance the value of the “nepia”
brand and deliver products that stand by people and the environment to our customers.
Oji Holdings Corporation
Executive Officer
President, Household and Consumer Products COMPANY

Takayuki Moridaira
Business Overview
Oji Nepia has developed the “nepia” brand of household paper and conducts its business activities with the aim of being a brandthat stands by people’s lives and the environment.
“Perceived quality for life” as in the seeking of good texture, comfort, and functionality. “Environmental Quality” as in the adoptionof FSCTM certified paper for forest conservation and the tie-up with WWF. Oji Nepia pursues these two qualities and activities by integrating sales, marketing, and production functions. (FSCTM C018118)

Challenges for the Achievement of the Medium-term Management Plan and Priority Measures for 2023
Business Strategy
Enhance branding & expand sales of household paper products in Japan
Expand & enhance overseas disposable diaper business
Challenges

Measures

Develop products that respond to domestic
demand fluctuations and further enhance thevalue of the “nepia” brandRespond to changes in the overseas disposable diaper market environment
Strengthen cost competitiveness and sales capabilities

Strengthen the branding of “nepia” that stands by people’s
lives and the environment
Domestic household paper: Expand products using FSCTM
certified materials, implement events for the 20th anniversaryof the “Hana-Celeb” brand, and renew existing household
paper products
Overseas disposable diaper: Develop products that meet theneeds of local consumers, expand sales channels for adultdiapers, and thoroughly reduce costs

Enhancement of Branding and Expansion of Sales of Household Paper Products in Japan(of 306 companies), and the first (of 17 companies) in the
ranking by industry, in the “Cosmetics and Toiletries Category.”* Survey by Sustainable Brands Japan (15,300 samples nationwide,
web survey, male and female aged 18 –79, 306 companies)
Initiatives for Profitability Improvement — Profitability —Oji Nepia started using FSCTM certified paper in 2011 ahead ofothers in the industry. Since then, it has continued to produce
environmentally-friendly products, adopting biomass film andink and developing products using paper instead of film for
packaging.
In the Japan Sustainable Brands Index (JSBI) 2022, a corporate brand survey regarding SDGs as viewed by consumers* published in February 2023, Oji Nepia was ranked fourth

Initiatives for Product Development
nepia Tendar Hakudake Fit Pants

Launched “nepia Hana-Celeb facial towel”

nepia Premium Soft Tissues©Yanase/F·T·N
nepia Premium Soft Toilet
Rolls

We aim to be a company that stands by people’s
lives and the environment.
“nepia brings comfort to people and the earth”

As a member of the Oji Group,
we will contribute to theenvironment with “Power of
the Forest.”

Awareness of Business Environment
Low birthrate and super-aging society
Economic development in emerging
markets such as Southeast Asia
Hygiene awareness established since
the COVID-19 pandemic
Increased consumer awareness about
environmental issues
Soaring raw material and fuel prices
and large fluctuations in exchange
rates
Change in consumer behavior due tosuccessive price hikes of daily necessities

49

The Oji Group Integrated Report 2023

Environmental
value

Perceived
value for life

nepia Yasashii Genki!

We improve the quality of people’s
life by providing comfort in use
and ridding a few annoyances.

Business Opportunities and Risks
Growing needs for eco-friendly products
Capturing firm demand mainly in the
Greater Tokyo area in Japan by improving production and logistics systems and strengthening branding
Improving competitiveness by optimizing product lineup
Soaring raw material and fuel prices
and passing the cost increase on to
product prices

In response to concerns about cloth towel hygiene and dissatisfaction with rough or fluffy textures when wiping moisturefrom the face after washing, we developed a new “nepia Hana-Celeb facial towel” suitable for gently wiping wet skin.
Compared to Hana-Celeb boxed tissue, it absorbs water
about three times faster, boasts double the strength when
wet, and its embossed sheet quickly wipes away moisturefrom the face. Containing the same triple moisturizing ingredient as used in Hana Celeb Tissue, a proprietary technology ofnepia, it also provides a soft feel even with a larger thickness.
We will continue to develop products that bring consumers'
desires to life.

Our Strengths
A wide range of eco-friendly products, including FSCTM certified paperand filmless boxed tissues
Stable supply and quality control system enabled by integrating base paper manufacturing and converting/processing
Establishment of a finely woven product supply network with dedicatedwarehouses in the Greater Tokyo area

Initiatives for Environmental Issues
Launched “nepia nepinepi Tissue Filmless Box, 5-Pack 400 Sheets (200 Sets)”
We developed a filmless box having no film on the opening,which users can just push to take out tissues. The structure of
the box eliminates the film while still ensuring a smooth tissuepicking experience. The box is designed to be opened easily
by simply pressing on the opening at the beginning of use andproduce no waste. After use, the box can be effortlessly folded
for direct recycling as paper waste. In addition, eliminating thefilm on the opening has reduced about 25% of the plastic usedin the product, making it an environmentally-friendly productthat saves resources and plastic.

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50

Initiatives for Profitability Improvement— Profitability —Functional Materials BusinessWe aim to expand the business by enhancing

Changes in Net Sales Composition Ratio, Net Sales, and Operating Profit

the added value of existing products, as well
as developing “Only One” products andOji Holdings Corporation
Executive Officer
President, Functional Materials COMPANYNet Sales

Shigeki Aoki

Operating Profit

The Specialty Papers Business has a lineup of products with advanced special functions such as electrical material paper including insulation materials,
dry pulp non-woven fabric excellent in bulkiness and liquid retention, andglass paper excellent in size stability and heat resistance.
Glass paper (Oji F-Tex)

Imaging Media Business
The Imaging Media Business at the Oji Group develops thermal recoding
media that meet customer needs for household, industrial, logistic, medical,
and other various uses, leveraging diverse coating technologies, boasting a
top class global market share.

182.3

15.4

184.7
15.3

15.5

252.0

260.0

16.0

18.5

11.5

billion
FY2019FY2020

FY2021

FY2022

FY2023 Planned FY2024 Planned

In FY2022, the Functional Materials Business had net sales of 219.9 billion yen (up 35.2 billion yen from FY2021) and operating profit of 15.5
billion yen (up 0.2 billion yen from FY2021). In the domestic business, sales of specialty paper increased due to price revisions, despite a decrease in sales volume. Sales of thermal paper increased due to a recovery trend in demand, which had declined due to the impact of the
COVID-19 pandemic, as well as price revisions. In the overseas business, sales increased due to a recovery in demand for thermal paper,
spread of price increases, and the operation of a new facility in Brazil.
In FY2023, net sales of 252.0 billion yen (up 32.1 billion yen from FY2022) and operating profit of 16.0 billion yen (up 0.5 billion yen fromFY2022) are planned.

Business Strategy
Actively develop high-function and eco-friendly products
Expand global sales of the imaging media business and enhancing competitiveness including printing and con
verting
Challenges

Biodegradable pressure-sensitive adhesive paper for labels (Oji Tac)

Film Business
The Film Business handles OPP films for film capacitors to be incorporated
in motor control PCUs of electric vehicles, developed based on its thin film
technology that produces the world’s thinnest films, and optical double-sided adhesive films and hard-coated films that are adopted for smartphones
and other precision devices.

The Oji Group Integrated Report 2023

billion

219.9

214.7

Film used in capacitors (Oji F-Tex)

Business Opportunities and Risks
Increasing demand for the capacitor-use
OPP films due to the rapid popularizationof electric vehicles
Increasing demand for functional papermaterials due to growing needs for environmentally-friendly products for de-plasticization or reduced plastic use
Strong thermal paper demand in SouthAmerica and growing demand for highperformance labels in Southeast Asia
regionForeign exchange fluctuation risks andsecurity/safety situation risks in overseas
becoming visible due to the diversity of
production base locations

Our Strengths
We have high levels of core technologies
in “papermaking,” “converting (functional
and adhesive coatings),” and “filmforming”
Organizational structure for agile development of highly functional, high value-added products including environmentally-friendly products
Top global market share in the imaging
media business
Integrated production from base paper
manufacturing to converting

Accelerate the development of high-function, high value-added, and eco-friendly products
Expand business in Japan and the Asian region
through M&A

Measures
Realize effects of investment in the capacitor-use OPPfilm facilities in Japan and thermal paper facilities
overseas earlyJapan: Increase market share by adding more value toexisting products, developing “Only One” products,
and strengthening sales and marketing
Overseas: Realize synergies from the inclusion of theAdampak Group early

Initiatives for Profitability Improvement — Profitability —Using proprietary adhesive force control technology, the Adhesive Products
Business handles from familiar products like food/beverage labels, courier
labels, adhesive tape for packaging, and wound dressings to less familiar,
special applications like aluminum tape for construction material and forgery
prevention tape.

51%

Operating profit (¥ bil.)

Challenges for the Achievement of the Medium-term Management Plan and Priority Measures for 2023
Thermal paper for tickets (Kanzaki Specialty Papers)

Adhesive Products Business

Progress of global shift to a decarbonized society
Growing interest in highly functional
paper products with the trend toward
de-plasticization
Economic development in emerging
markets such as South America andSoutheast Asia
Soaring raw material and fuel prices
and large fluctuations in exchange
rates

Net sales (¥ bil.)

Segment Overview

Specialty Papers Business

Awareness of Business Environment

10.9¥219.9¥15.5

Net Sales
Composition Ratio

strengthening sales activities for them.

¥400.0billion

Sales target for FY2030:

Actively Develop High-function and Eco-friendly Products
In Japan, we have worked to develop products with high functionality and high added value with considerations for environmental issues.
In the field of film products, we developed an eco-mark certified“heat shielding window film” that combines high heat shielding
properties and light transmittance. In the field of paper, we developed “Semi-Through ,” translucent thermal paper through which
the backside of the label or the contents of the package is visible,
and in the field of non-woven fabric, “kinarito,” a biodegradable
non-woven fabric material made mainly from plant-derived cellulose and polylactic acid, and a water soluble “Texcell” series
made of 100% natural materials. We also worked on the development of “Cellulose Mat” and “Fine Press W ” for press molding
using wood pulp as a substitute for plastic, and “Cellulose Resin
Pellets” for injection molding.
In recent years, we have also developed new products to respond to the accelerating rise of expectations to address environmental issues in the agricultural materials field. Our productlineup includes “CALFRESH ,” a fruit and vegetable packaging
film that reduces industrial waste and food loss; “OJI Sustainable

Mulching Sheet ,” a paper mulching sheet that biodegrades after
agricultural use as a mulching sheet; and “HyBioth ,” a biodegradable, water soluble non-woven fabric made primarily from natural
pulp. Thus, we are developing new products to meet immediateuser needs.
In response to the rapid popularization of electric vehicles due
to a globalized trend toward decarbonized society, we will add
two more units of production equipment for the capacitor-use
OPP films in motor drive controllers at Oji F-Tex Shiga Mill, one ofwhich has been operating since July 2023 and the other is scheduled to start operation in FY2024. As a result, the production capacity is expected to double from the February 2022 level.

Agricultural mulching sheet “OJI Sustainable Mulching Sheet”

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Initiatives for Profitability Improvement— Profitability —Functional Materials Business

Main Overseas Sites

SILBIO Series
In the midst of the growing needs for paper products as replacement for plastic packaging, “SILBIO series” has a lineup
well-suited for light packaging applications in various fields, including a product that not only provides barrier property to paper packing materials but also has barrier and light-shielding
properties as high as aluminum deposited film, a product thathas transparency and barrier properties, a product that requires
no sealant such as PE. The lineup consists of the following.
“SILBIO BARRIER” which has oxygen barrier property ashigh as EVOH, and moisture barrier property as high as LDPE,
preventing contents from diffusing moisture or scent. “SILBIO
ALBA,” aluminum deposited paper material which has oxygen
barrier, moisture barrier, light-shielding and heat sealing properties, and is most suitable for applications requiring high barrier and concealability. “SILBIO CLEAR” which has a transparent feature in addition to barrier and heat sealing properties,
and is most suitable for packaging for items whose contents
you want to show such as food and daily products. “SILBIO
EZ SEAL” which has no barrier property, but is specialized inits easy heat sealing feature without using sealant, and is mostsuitable for secondary and delivery packaging for food, andindustrial material packaging.
The SILBIO series products can bear a paper identification
mark, and is adopted by customers who appreciate its features as packaging materials for food and soap.

Asia
China
Sunshine Oji (Shouguang) Specialty Paper
Production/sales of decorative base paper
Oji Kinocloth (Shanghai)Converting/sales of dry pulp non-woven fabricConverting/sales of thermal paper, etc.
ThailandOji Paper (Thailand) [OPT]
Production/sales of thermal paper andcarbonless paper
Oji Label (Thailand) [OLT]
Production/sales of adhesive paper/film andrelease
Malaysia
Tele-Paper Malaysia [TP]Printing/converting of thermal paper, etc.

Singapore, Malaysia, Thailand,
the Philippines, Indonesia,
and China
Adampak GroupHigh performance label printing &converting

EuropeHyper-Region Labels [HRL]
Printing/converting of label, etc.

North America

South America

Overseas, we have completed enhancing and expanding facilities
to practically double production capacity, and started full operation in Brazil in order to meet strong demand for thermal paper inSouth America. In Europe, construction work has started to increase the capacities of thermal paper production facilities, which
are scheduled to start operation in January 2024. In addition, in
September 2022, Adampak Group, a high performance label printing and converting company with its business bases in Southeast
Asia and China, became a member of the Oji Group. This addition of the high performance label business for electric products
and healthcare products to the thermal paper and adhesive paper business already operating in Thailand and the high performance label printing/converting and cutting/converting business
in Malaysia has enabled the integrated production from base paper manufacturing to converting. In the Asian market, which is
expected to continue to grow further, we will propose a wide

range of timely and optimal label products to increase customer
value, by picking up a broad range of customer needs in the highperformance label market and feeding them back to the upstream business to realize synergetic effects early.
In the emerging markets in Southeast Asia, South America, theMiddle East, and Africa, to meet the demand growing with economic development, we will aim to expand the areas in which we
operate while strengthening our competitiveness at our existingbases, based on the Group’s core technologies which arestrengths we have cultivated to date in “papermaking,” “converting (functional and adhesive coatings),” and “film forming.”
While continuing to advance our development of environmentally-friendly materials and products, we will keep on anticipating
market needs and proactively working to expand into new business areas so as to promptly provide products and services thatexceed expectations.

Germany
Kanzan Spezialpapiere [KANZAN]
Production/sales of thermal paper, etc.

Voice

Adampak Group (Head Office in Singapore)53

The Oji Group Integrated Report 2023

Adampak Group (Letterpress label printing presses at Aident Corporation in Malaysia, a subsidiary of Adampak Group)

BrazilOji Papéis Especiais [OPE]
Production/sales of thermal paper,carbonless paper, etc.

Creating Synergies among Group Companies to Further “Stick with Us”

Adampak Pte. Ltd.
Director, Chief Executive Officer

Tan Kok Kuang

United States
Kanzaki Specialty Papers [KSP]
Production/sales of thermal paper, etc.

Initiatives for Profitability Improvement — Profitability —Expanding Global Sales of Imaging Media Business and Enhancing Competitiveness Including Printing and Converting

Established and headquartered in Singapore since 1979, Adampak operates manufacturing footprint of
seven plants across six countries in Asia i.e. Singapore, Malaysia, Thailand, Philippines, Indonesia andChina.
Adampak’s regional presence is complemented by state-of-the-art production capabilities including
technologically advanced digital printing, multi-color high speed flexographic and letterpress presses,
precision die-cut machines as well as high-speed video auto-visual inspection units.
Adampak is the preferred partner for multi-national companies requiring premium, customized andhigh-performance label solutions including RFID tags as well as precision die-cut components acrossthe globe. Adampak serves a wide spectrum of end markets i.e. Storage, Electronics, Power & Renewables, Automotive, Logistics and Healthcare.
Adampak has built up a strong brand and reputation across its diversified and blue-chip customers
based on its excellent quality level, customer service, competitive pricing and on-time delivery. This has
resulted in long-term and sticky relationships i.e. in-line with Adampak’s slogan of “Stick with Us”.
Oji Holdings acquired Adampak Group on September 1, 2022 and together with Oji’s technologicallyadvanced products plus market leadership presence, Adampak is fully geared towards Oji’s vision of
being our customer One Stop Packaging Solution provider.

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54

Initiatives for Profitability Improvement— Profitability —Forest Resources and Environment Marketing BusinessWe are comprehensively leveraging wood
resources including pulp, renewable energy,
afforestation, and lumber processing to

Net Sales

Oji Holdings Corporation
Executive Officer
President, Forest Resources and Environment Marketing COMPANY

Operating Profit

Yuji Onuki

423.8

%

billionOperating profit (¥ bil.)

285.6

245.3

68.5

320.6
55.2

375.0

420.0
63.5

28.8
18.0

16.7

billion
FY2019FY2020

FY2022

FY2021

FY2023 Planned FY2024 Planned

In FY2022, we had net sales of 423.8 billion yen (up 103.2 billion yen from FY2021) and operating profit of 68.5 billion yen (up 13.3 billion yen
from FY2021). In the domestic business, despite the impact of higher raw materials and fuel prices on the pulp business, sales and profits
increased due to strong demand and rising market conditions. In the energy business, sales increased due to an increase in the amount ofelectricity sold as a result of the start of operation of a new biomass power plant in Tokushima Prefecture in December 2022. In FY2023,
because sales and profits are expected to decrease due to the global decline in the pulp market, net sales of 375.0 billion yen (down 48.8
billion yen from FY2022) and operating profit of 18.0 billion yen (down 50.5 billion yen from FY2022) are planned.

We produce a diverse lineup of pulp grades including hardwood and softwood
kraft pulp, and dissolving pulp. With 2.5 million tons per year market pulp supply
capacity, we sell our products globally including in Asia, Europe, and North America.
Energy Business

Dissolving pulp (for general rayon and special items)

Business Strategy

Lumber Processing Business

Expand & enhance pulp business as a “comprehensive pulp manufacturer”
Propel renewable energy and other energy businesses
Expand lumber processing businessWe are expanding production capacity, and are purchasing and selling lumber
and processed lumber products, primarily in Asia and Oceania. In Japan, we arealso seeking to strengthen profitability through sales expansion into the building
materials field and other measures.

Challenges
Pulp business

Forest Plantation BusinessWe grow and manage company-owned sustainable forests in Japan and overseas. Harvested wood are supplied for pulp raw materials, as well as for a range
of applications such as lumber, plywood materials, and biomass fuels. With thegoal of 400,000 ha of overseas production forests, we are also acquiring lands
and expanding forest plantations.

CENIBRA’s pulp products warehouse

Fuels/Chemicals and Other Material Procurement BusinessOur centralized purchasing team buys a variety of chemicals and raw materials
that are competitive and sustainable. We are committed to environmentally sustainable and socially responsible procurement in complying with Oji Group Partnership Procurement Policy.

Energybusiness
Lumberprocessing
business

Measures
Expand production and sales volume toward market growth
Strengthen cost competitiveness and sales
capabilities
Expand the renewable energy business
Strengthen biomass fuel procurement
Strengthen sales capabilities for lumber
products
Expand the lumber production businessConduct investigations for modernization andstable operation of pulp facilities, strengthen
cost competitiveness, and explore possibilities
to increase production capacities
Expand power generation and the lumber processing businesses leveraging our forest resources
Acquire lands and expand forest plantations tosecure forest resources

Enhancement and Expansion of Pulp BusinessWe continue to implement strategic profit measures at key business sites to reinforce business foundations that are resilient to fluctuations
in pulp markets.

Starch and Saccharification BusinessWe have been developing technologies for starch and saccharification products,
primarily of corn, to provide products that meet the needs of our customers.

Challenges for the Achievement of the Medium-term Management Plan and Priority Measures for 2023
Initiatives for Profitability Improvement — Profitability —We are promoting the electric power generation business by establishing and expanding electricity generation facilities using renewable energy, including woodbiomass, hydroelectric power, and solar power. Leveraging our sites in Japanand overseas, we are also working to strengthen purchase and market supply of
biomass fuels in line with the energy business expansion.

Growing demand for pulp due to economic development in newly industrialized countries and the trend toward
de-plasticization
Global moves to increase pulp production capacities
Intensifying competition for procurementof wood resources
Rising raw material and fuel prices, laborcosts, etc.

Net sales (¥ bil.)

Segment Overview

Pulp Business

Awareness of Business Environment

20.9¥423.8¥68.5

Net Sales
Composition Ratio

promote enhancement of the business.

¥600.0billion

Sales target for FY2030:

Changes in Net Sales Composition Ratio, Net Sales, and Operating Profit

Nursery where eucalyptus varieties are selected and raised(CENIBRA in Brazil)

Business Opportunities and Risks
Expanding and strengthening overseas
business
Expanding and improving competitiveness through M&A and strategic investments
Securing forest resources by expanding
plantations
Market fluctuation risk due to social andeconomic conditions, currency exchange
rates, natural disasters, etc.

Our Strengths
Abundant and sustainable forest resources and know-how in forest management
Integrated production from forest management to lumber processing and pulp
Organization for production and sale ofdiverse types of pulp
Procurement and sales capabilities thatleverage the Group’s collective strengths
and domestic and overseas bases

CENIBRA (Brazil)
Enhance cost competitiveness and sales capabilities,
and consider production increase, upon holding all
voting rights of the company in May 2021
Install most advanced & work saving manufacturing
facilities

Dissolving pulp
Work to increase production and sales of dissolving pulp
with growth potential in light of increasing demand for apparel, as well as to increase sales of high-value added
products

Pan Pac (New Zealand)
Consider production increase to meet growing demand
for folding cartonsOji Fibre Solutions (New Zealand)
Made the company a wholly-owned subsidiary in March
2022
Implement measures to stabilize operations, improveyields, and conserve energy by introducing Oji Group’s
operational techniques and management methods
Pulp being loaded onto a ship (Brazil)

55

The Oji Group Integrated Report 2023

The Oji Group Integrated Report 2023

56

Initiatives for Profitability Improvement— Profitability —Forest Resources and Environment Marketing Business

Main Overseas Sites (Pulp Production Sites)

Expanding Renewable Energy and Other Energy Businesses

Annual production capacity of market pulp

2,500,000

Jiangsu Oji Paper

340,000

tons

tons

Japan (Mills in Japan)

160,000 tons

600,000
Types of pulp

Hardwood kraft pulp

1,200,000

tons

tons

Softwood kraft pulp

Pulp for cement

Changes in Electricity Sales
(GWh)
2,400

200,000 tons
Dissolving pulp

In the energy business, we continue studying for various projects to strengthen our renewable energy business. In December
2022, a biomass power generation facility in Tokushima Prefecture built as part of a joint venture with ITOCHU ENEX CO., LTD.
commenced operations. We are also conducting studies forwind power generation projects utilizing company-owned forest
lands in Japan. For the procurement of biomass fuels, in Japan,
we are increasing the production of fuel woodchips by making
use of unused wood resources as well as fully utilizing branches(small branches and leaves), which were previously abandoned.
Overseas, we are working to increase procurement of palm kernel shells for use as fuel in Indonesia and Malaysia, while ensuring lawfulness and sustainability.

2,000
1,600

BC-TMP

1,200

Oji Green Energy Tokushima
Tomioka Eco-energy Power Station
Started operation in December 2022

800

0
2018

CENIBRA Mill (Belo Oriente, Minas Gerais, Brazil)

Oji Fibre Solutions Tasman Mill (North Island, New Zealand)

2019

2020

2021

2022

2023 Planned

The Oji Group owns and manages 188,000 ha of forests in Japan. This is the largest of all forests owned by private corporate entities in Japan. The Group initially owned forests primarily for producing raw materials for paper. However, now wehave been enhancing the multi-faceted values of forests, including environmental contribution through forest management.

Urahoro larch forest (Hokkaido)

Oji Yoshimoto Seizai’s lumber mill
(Hokkaido)

Initiatives for Profitability Improvement — Profitability —400

Initiatives for Environmental Issues
Awarded the Gold Medal in the EcoVadis Sustainability Assessment
CENIBRA received the Gold Medal in a sustainability assessment by EcoVadis, an international assessment organization
for supply chains based in France. In the assessment, companies are rated from the four aspects of environment, laborand human rights, ethics, and sustainable procurement. The
Gold Medal is awarded to the top 5% of more than 100,000
eligible companies worldwide. The award solidifies the company’s position of excellence under the circumstances of increasingly high environmental and social standards expectedof corporations.
For CENIBRA's Sustainability Advisor, Sandro Morais Santos, such a remarkable performance in EcoVadis assessment
is evidence of the Company's commitment and adherence tothe best ESG practices.
According to Sandra Maria Henrique, coordinator for Governance and Compliance at CENIBRA, this result proves thatsustainability concept and practices have been maturing continuously throughout the Company's growth and evolution.

Voice

CENIBRA celebrates its 50th anniversary
In September 2023, CENIBRA will celebrate its 50th anniversary, and I also celebrate 30 years of myworking at the company that welcomed me as a trainee engineer, became my second home, and allowed me to build a solid career of which I am very proud.
Since 2008, our annual production has been 1.2 million tons of high-quality bleached eucalyptus pulp,
mainly exported to customers in Europe, Asia, and the USA. However, we weren´t born big. We beganwith 0.26 million tons per year, and we grew and reinvented ourselves to quintuple the original production, and by the end of 2023 we will have produced close to the 35 million tons produced in our history.
We will see our 50th birthday with a renewed determination to take on further challenges to embody
Oji’s Purpose of “Grow and manage the sustainable forest, Develop and deliver the products from renewable forest” to contribute to the sustainability of the world and the Oji Group.

Director, CENIBRA

Júlio Ribeiro

57

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Initiatives for Profitability Improvement— Profitability —Printing and Communications Media BusinessWe are increasing profitability andChanges in Net Sales Composition Ratio, Net Sales, and Operating Profit

competitiveness by implementing the production
system restructuring, etc. in light of demand

13.9¥281.0¥(4.8)Net Sales
Composition Ratio

structure trends through cooperation acrossGroup segments.

Net Sales

Oji Holdings Corporation
Executive Officer
President, Printing and Communications Media COMPANY

Operating Profit

Takayuki Moridaira

Sales forecast for FY2030

Net sales (¥ bil.)
292.7
244.0

%

Operating profit (¥ bil.)
244.5

281.0

11.2

FY2019FY2020billionbillion

305.0
21.0

17.8
11.3

¥150.0billion
270.0
18.0

(4.8)
FY2021

FY2022

FY2023 Planned FY2024 Planned

Segment Overview
In FY2022, we had net sales of 281.0 billion yen (up 36.5 billion yen from FY2021) and operating loss of 4.8 billion yen (down 22.6
billion yen from FY2 0 2 1). In the domestic business, although demand for newsprint continued to decline, net sales of newsprint
were on a par with the previous year due to price revisions. Net sales of printing paper increased from the previous year due to risingdemand for domestic products caused by decrease in imported paper, as well as price revisions. In the overseas business, net sales
increased from the previous year at Jiangsu Oji Paper Co., Ltd.
In FY2023, net sales of 305.0 billion yen (up 24.0 billion yen from FY2022) and operating profit of 21.0 billion yen (up 25.8 billion
yen from FY2022) are planned.

Tomakomai Mill, one of the world’s leading newsprint mills, produces highquality newsprint with features requested by customers, such as lighter
weight and improved print reproducibility, making full use of a wide variety of
pulp. We hold approximately 30% share of the Japanese market with a stable supply to customers throughout the country including the Greater Tokyo
area. Newsprint production using a large amount of recovered paper also
contributes to paper recycling.

Challenges for the Achievement of the Medium-term Management Plan and Priority Measures for 2023
Business Strategy
Restructure production system and enhance competitiveness through collaboration with other Group segments by
maximizing the use of assets owned
Challenges
Utilize owned resources effectively
Focus always on cash flow

We provide various output media to support information processing systems, including copying paper and forms. Produced with our carefully built
quality design and quality control system, they can be used on printers withdifferent printing methods and models. We offer high quality products not
only superior in printability and workability in converting, but also capable tomeet the need for printing at ever-higher speeds for productivity improvement.

Awareness of Business Environment
Revitalized economic activities after the
pandemic
Increased consumer awareness about
environmental issues
Shift to paperless office with further utilization of ICT and spread of teleworking,etc.
Soaring raw material and fuel prices andlarge fluctuations in exchange rates

59

The Oji Group Integrated Report 2023

Business Opportunities and Risks
Advantages of paper as an information
medium (visibility, readability, reliability,
preservability, texture unique to paper,
reproducibility of photographs, etc.)
Strengthening competitiveness throughcooperation within the Group beyond theboundaries of businesses
Growing demand for environmentally-friendly paper products due to heightening awareness for the environment
Continuous decrease in demand forgraphic paper
Soaring raw material and fuel prices andpassing the cost increase on to productpricesOur Strengths
Large existing infrastructure including
pulp production facilities and biomass
power generation facilities
Full lineup of environmentally-friendly
products, including FSC-certified paper,
eco mark certified products, and products
compliant with the Green Purchase Act
Capabilities to develop products meeting
market needs

We are working to improve profitability and competitiveness,by deepening cooperation with other segments in the Oji
Group, anticipating future demand trends, and maximizing effective use of pulp manufacturing facilities, biomass boilers,and other assets.
In October 2021, we converted a newsprint machine to amachine for manufacturing containerboard at Tomakomai Mill.
In April 2022, we started operation of a special liner and special paperboard machine relocated from Nayoro Mill of Oji Ma-

Initiatives for Environmental Issues
Electric power is indispensable for paper manufacturing. The
Oji Group owns various types of power plants in Japan andworks to secure power sources for its mills while engaging in
the electricity sale business.
Among all, our Chitose No. 1 Hydroelectric Power Plant,
built in 1910, is the oldest industrial power plant still in operation in Japan. The five hydroelectric power plants in the Chitose River basin have a generating capacity of 37,000 kW and
are important sources of power for the Oji Paper TomakomaiMill, located about 25 km away. They also supply power to customers around the Lake Shikotsu. After the Hokkaido Eastern
Iburi Earthquake in September 2018, the power plant was restored in about an hour and a half, making it the only power

Measures
Maintain product selling prices revised in FY2022 in
response to continued increase in raw material andfuel prices
Continue with thorough cost reduction
Strengthen cooperation with other segments
teria at the same mill. Overseas, utilizing existing pulp manufacturing facilities and biomass boilers, etc., we built a newhousehold base paper machine at Jiangsu Oji Paper(China). (Started
operation in 2020)

Initiatives for Profitability Improvement — Profitability —We offer a wide range of printing papers to meet various needs, including art
paper used for photo albums and high-end catalogs, coated paper used formagazines and flyers, and woodfree paper used for books, each of whichplay a role in day-to-day communication of information. We also offer a full
lineup of environmentally-friendly printing paper, including FSC-certified paper and products compliant with the Green Purchase Act.

The #L-1 machine(retrofit of the #N-5 machine) at Tomakomai Mill

plant in Hokkaido to escape a blackout. Hydroelectric power
generation has been attracting attention recently as a renewable, clean energy source with high energy conversion efficiency that emits no greenhouse gas from power generation.
We will continue to contribute to the realization of a sustainable society throughvarious approaches,
including the effective use of energy.

Chitose No. 1 Hydroelectric Power Plant

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Initiatives for Profitability Improvement— Profitability —Corporate Management Group and Shared Service Companies

Environmentally-friendly containers using ISCC-certified biomass plastic

The Grand Hotel New Oji

Oji Homes Aoyama (Minamiaoyama, Minato-ku, Tokyo)

KyokuyoGinpo Pack

Hotel New Oji

Oji Real Estate

Kyokuyo Co., Ltd. is a trading company that proposes anddevelops solutions to customers’ problems from users’ perspective. It purchases and sells various products of the Oji
Group and other companies mainly in paper and packaging
fields. These products include synthetic resin materials andproducts, packaging materials, chemicals, and machinery,from upstream (raw and other materials) to downstream(finished products). Leveraging its proposing ability, development ability and comprehensive ability to accommodate diversifying needs in the changing social environment, it is working
to evolve paper and packaging, pursuing to create a more enriched society.

Ginpo Pack Co., Ltd. is a manufacturer which conducts integrated planning, production, and sales of plastic containers
for food packing. It offers high-quality packages with uniquepackaging materials, using its many patents and state-of-art
technologies. The new material “Pulfine” in which a high foaming ratio is realized with a single material, is more resistant toheat and more durable than ever and can reproduce steaming
hot home cooking when using a microwave oven. Ginpo isalso committed to the development of environmentally-friendly
containers using plant-derived biomass plastic.

Hotel New Oji Co., Ltd. is engaged in the hotel and flight catering businesses. Grand Hotel New Oji, a 16-story city hotel
which is located in the center of Tomakomai City, Hokkaido
and has banquet halls, three restaurants (Japanese, Western,
and Chinese), bar, and shops, is a landmark in Tomakomai. In
addition to this hotel business, we prepare a wide variety ofhigh quality inflight meals for domestic and overseas airlines in
the catering building at the New Chitose Airport and also load
the meals onto aircraft using large, specialized vehicles.

Oji Real Estate Co., Ltd. is a general developer active nationwide in the management and effective utilization of the Oji
Group’s owned land and the development and sales of quality-oriented condominiums, single-family homes, and developed residential land, as well as lease and management ofoffice buildings, condominiums, and commercial facilities, andthe renovation business. It also has a construction and design
division (first-class registered architect office) with good reputation for its technical capability, and conducts design, supervision, and consultation in a wide range of areas including factories and plants as well as public and private facilities.

Industrial water production system

A roll-on roll-off (RORO) ship that can transport vehicles carrying goods

Oji General Hospital

Drink cartons made using base paper manufactured by the Oji GroupOji EngineeringOji Logistics

Oji General Hospital

Ishizuka-Oji Paper Packaging

Oji Engineering Co., Ltd. leverages its technologies accumulated at paper mills to offer one-stop engineering services
ranging from proposals on facility design to proposals on operation methods. Under strict safety and construction quality
control, the company responds rightly to customer needs
through work management utilizing full use of IoT, and precise
designing using 3D scanners and 3D CAD. It also explores
new needs and provides solutions, for example, in the field ofenvironmental business, such as wastewater treatment andrenewable energy, or remote maintenance using thermal camera drones.

As a shared service company, Oji Logistics Co., Ltd. operates
mainly domestic and international logistics services for Oji
Group products. In 2022, it made full-scale entry to 3PL (third
party logistics) services, using Urayasu Branch as its base. It
is now changed into a warehouse, operating 24 hours a day
and 365 days a year as a hub for consumer goods and e-commerce whose demand is growing mainly in the Greater Tokyo
area. It is also accommodating a change in the operating environment surrounding the logistics industry such as “Logistics
2024 Issue,” to earn trust from customers of the Oji Groupand other companies.

Oji General Hospital has 440 beds (of which eight are in theICU) and 25 departments, providing advanced and quality
medical care as a key hospital in the Higashi-iburi and Hidaka
medical area. It is designated as disaster base hospital, designated cancer care hospital , and regional perinatal maternaland child medical center, and also provides guidance andtraining for residents as a designated clinical training hospital.
In addition, it has the geriatric health services facility, “CareLife Oji,” in-home nursing care supporting office Oji, and thecentral regional comprehensive support center entrusted by
Tomakomai City, working to provide safe and secure medical
service.

Ishizuka-Oji Paper Packaging Co., Ltd. operates the paper
beverage container business by combining the Oji Group’s
expertise in manufacturing and processing paper with ISHIZUKA GLASS Co., Ltd.’s expertise in processing and filling paper
containers for a diverse range of contents. By having in placea domestic integrated production system covering papermaking of base papers through to laminate processing and beverage packaging, and selling superior filling equipment fromboth Japan and overseas, as well as providing service andmaintenance, it is working to ensure the stable supply ofhigh-quality, safe, and dependable products to dairy and beverage manufacturers throughout Japan.

The Oji Group Integrated Report 2023

The Oji Group Integrated Report 2023

Initiatives for Profitability Improvement — Profitability —61

Environmentally-friendly paper food containers proposed by Kyokuyo

62